Chapter- 1

Introduction to strategy Management

 Concept of Strategic Management

Strategic management is set of

commitments, decisions, and actions
required for a firm to achieve strategic
competitiveness and earn above-average
returns. It is concerned with making and
implementing strategic decision about an
organization’s future direction. It is a set of
managerial decisions and actions that
determines the long term performance of
an organization.
By Hitt, Ireland and Hoskisson
“The strategic management is the full set of
commitments, decisions and actions
required for a firm to achieve strategic
competitiveness and earn above average
returns.”
 Importance of strategic Management
1. Builds Synergy
2. Delivers value
3. Exploits core competence
4. Deals with opportunity and threats
5. Strategic fit
6. Competitive capability
7. Organizational unity
8. Resource management
9. Organizational effectiveness
10. Manages change
 Elements/ Process of Strategic Management

1. Strategic planning: concerned with development of long term

perspectives of an organization. It includes development of vision, mission
and strategy. It involves the following activities: environment
analysis(internal and external)
strategy formulation ( corporate level. Business level and
functional level).
[Link] Implementation: turning strategy into action. The essential
elements of strategy implementation are: structure design, resource
planning, and management system.
3. Strategic control: a process of ensuring that the organization is moving
towards the right direction.
4. Feedback: under this information is constantly gathered from the
environment to improve the process.
 Need for Strategy
The prime objectives of strategy is to achieve sustainable
competitive advantage.
• To understand the competitive environment and compete
successfully.
• To adopt a suitable business model
• To acquire and utilize resources optimally
• To retain the customers by building long-term relationship with
them
• To expand the business
• To fulfill the stakeholders expectations
• To ensure sustainability of the business
 Level of Strategy
All multi business organizations prepares strategy at three level,
they are:
Corporate Level Strategy: Corporate level strategy is the
uppermost level of strategy. It is derived from the vision and
mission statement. It is related to the choice of direction for a firm
as a whole. It addresses the question as what business are we in?
Business Level Strategy: Business level strategy is related to
competing successfully in an individual product market. It directs a
strategic business unit (SBU) towards competitive advantage from
the market. A business level strategy follows the corporate strategy.
It deals with the question: how do we compete?
 Functional Level Strategies

The strategies which aim at bringing effectiveness in different functions of

a business are called functional strategies. They deal with the question as
how do we support the business-level strategy?
1. Marketing strategy: pricing, selling and distributing
2. Production/ Operations strategy: how and where products and
services is to be manufactured, physical resources, relationship with
suppliers.
3. Finance strategy: acquisition and management of fund
4. Human resource strategy: acquisition, development and facilities of
human resource.
5. Research and development strategy: innovation and development of
product and process
 Strategic Plan

Strategic plan is a long run plan or

road map of an organization. It
determines where an organization
is going over the time to come,
how it is going to get there and
how it will know if it got there or
not. Strategic plan normally covers
a period of more than five years. It
aims at environmental adaptation
and achievement of sustainable
competitive advantage. It also
addresses the resource planning
and allocation.
 Characteristics of Strategic Plan

1. Long-term
2. Based on environmental analysis
3. Strategic fit
4. Involvement of top management
5. Set of priority
6. A mean only
 Steps of Strategic Plan

1. Define vision and mission:

2. Environmental analysis:
3. Determination of long-term goal:
4. Strategy formulation:
 Concept of Vision
Vision is the picture of desired future state of an organization. It specifies the
direction that a company intends to follow in developing and strengthening its
business. According to Pearce and Robinson “ A vision statement presents the
firm’s strategic intent that focuses the energies and resources of the company
on achieving a desirable future.” characteristics of vision are as:
1. Future focused
2. Directional
3. Clear
4. Feasible
5. Values based
6. Challenging
7. Unique
8. Inspiring
 Concept of Mission
A mission statement defines the business in terms of customers,
employees, suppliers and the community. It helps clarify the scope and
objectives of the business. It also reflects the business' special niche.
According to wheelen and hunger “ an organization’s mission is the
purposes or reason for the organization’s existence.” characteristics of
Mission are as:
1. Broad in scope
2. Precise
3. Inspiring
4. Multi components
5. Distinctive
6. Components of strategy
 Concept of Objectives
Objectives are the expected outcomes of an organization. They convert the
strategic vision into specific performance or targets. They are the end result of
planned activity. Objectives may be formulated for a long-term as well as short
term. Similarly, they also be formulated in different level of business. Likewise,
they also fix the priority of organizational activities and establish coordination.
According to David “objectives can be defined as specific results that an
organizations seeks to achieve in the interest of the organizational
stakeholders.” components of objectives are as:
1. Specific 2. Measurable
3. Achievable4. Realistic
5. Timely 6. Motivating
7. Flexible 8. Hierarchical
9. Congruent across departments