1

Evolution
The genesis of strategic management and
business policy
Evolution based on management practices
Historical perspective
Ad-hoc policy
Planned policy formulation
Strategy Paradigm
Strategic Management

2
The concept of strategy
plan or course of action or a set of decision rules making a
pattern or creating a common thread;
the pattern or common thread related to the organisation's
activities which are derived from the policies, objectives and
goals;
related to pursuing those activities which move an organisation
from its current position to a desired future state;
concerned with the resources necessary for implementing a plan
or following a course of action; and
It is forward looking; it has orientation towards future
the planned or actual coordination of the firm's major goals and
actions, in time and space that continuously co-align the firm with
its environment.
3
Levels at which strategy operates
Corporate
Office
SBU
A
SBU
B
Finance Marketing Operations HRM Information
LEVELS OF MANAGEMENT LEVELS OF STRATEGY
TOP CORPORATE-LEVEL
SBU BUSINESS-LEVEL
FUNCTIONAL
SBU
C
4
Strategic Management defined
Strategic management is defined as the dynamic
process of formulation, implementation, evaluation and
control of strategies to realise the organizations
strategic intent.


Strategic Management is defined as the set of decisions
and actions in formulation and implementation of
strategies designed to achieve the objectives of an
organization.

Features
Strategic management is basically a process.
The various steps of strategic management
may be formulation, environmental appraisal,
organizational appraisal, implementation and
evaluation.
The focus of strategic management is on
relating the organization to its external
environment.
Strategic management is basically top
management function.


Benefits
Financial Benefits
Offsetting uncertainty
Clarity in direction
Increased Organizational
effectiveness
Personnel satisfactions
Limitations
Complex and Dynamic Environment (high
level of technological and social changes, wide variation and
inconsistency in govt. policies towards business)
Rigidity (strategies are selected and implemented after
taking various parameters and variables into consideration)
Inadequate appreciation of strategic
management (managers use short-term outdated
evaluation techniques)
limitations in Implementation (The internal
conflicts among departments, individuals or organizational and
personal values cant be solved by SM)
8
Strategic decision-making
Objectives to be achieved are
determined;
Alternative ways of achieving the
objectives are identified;
Each alternative is evaluated in terms
of its objective-achieving ability; and
The best alternative is chosen.


Strategic Planning
&
Strategic Management
Strategic Management
Strategic Management is concerned with:

making decisions about an organizations
future direction for growth, renewal
and transformation and
implementing those policies.
The strategic management process can
be broken into two phases strategic
planning and strategy
implementation.


Strategic Planning
Strategic Planning is making decisions about:
Determining the organizations mission;

Formulating policies to guide the organization in
establishing objectives, choosing a strategy, and
implementing the chosen strategy;

Establishing long-range and short-range objectives to
achieve the organizations mission;

Determining the strategies that are to be used in
achieving the organizations mission.
Strategic Planning
Systematic determination of what to do in the future
in order to fulfill the organizations mission and
achieve its objectives.
The basic purpose of strategic planning is to
protect the organization against environmental
threats and hence ensure its long term survival.
Strategic Planning Process
Recognition of the need to plan
Analysis of the situation- (This may cover aspects such as
organizations strengths and weaknesses, environmental constraints and
resource allocations)
Determination of possible alternative courses of action
Selection of the best or optimum alternative
Implementation of the plan (This may involve possible
structural change, detailed allocation of tasks and resources,
coordination of activities, overcoming resistance to change etc.)
Monitoring the results ( This may involve changes to the plans in
case actual outcomes vary significantly from planned outcomes.)
Types of Planning Systems
Formal and informal Planning
procedures
Operational planning
Strategic planning and Strategic
management
Contingency Planning
Top-down/bottom-up planning





Formal and informal Planning procedures

Formal planning establish set rules for determining
plans.
It covers such areas as organizations objectives, plans
for converting objectives and combating threats, risk
projections, evaluation criteria, forecasts task allocation
etc.
Informal planning is flexible and user friendly. Large
amount of information remains in the hands of
individual executives.


Operational Planning
It is concerned with managing the day to
day affairs of the organization.
It is basically lower level planning and is
performed by middle level executives and
supervisors.
Apart from focusing on functional plans, it
is concerned with scheduling, internal
coordination, budgets and recruitment.
Strategic planning & Strategic
management
It involves assessment and analysis of an
organizations external environment and its
internal capabilities with a view to
conceiving its mission, setting objectives
and framing policies, plans and procedures
for implementation.
Contingency planning
Organizations prepare contingency plans to cater
for extraordinary situations. These contingent
situations may be caused by problems such as
strike, adverse government legislation, machine
breakdowns, major fires, loss of major customer or
supplier etc.
Top-down/bottom-up planning
Top-down planning involves strict supervision of the
entire planning process by the top management of the
firm. This approach has two alternate forms. The top
management may either determine and hand down the
plans to lower levels without their participation or it may
initially express broad guidelines or expectations and
subsequently issue concrete action plans.


In bottom-up approach the departments formulate their
own plans and the corporate plan is thereafter built on
the basis of the recommendations of these units
Planning Techniques
Gap analysis
Benchmarking
Performance indicators

a) Gap analysis
It is a formal assessment of evaluation of
the strategy currently being implemented.
The need for assessment arises when a
new strategy or change to the existing
strategy is proposed.

Existing Strategy
Desired outcome (ideal)
Expected outcome
(anticipated)
A
B
)
)
)
)
)
)
b) Benchmarking
The process involves the setting up of
benchmarks or standards to assess an
organizations own performance and at
the same time compare it with that of
its competitors.
Types: Internal, External and Functional
c) Performance indicators
These are measures of an organizations
performance and can be either result-
oriented or effort-oriented.
Eg: Sales volumes and revenues
Number of prospective customers
contacted
ORGANIZATION PLAN
An overview of the total corporate plan.
The strategic plan
The functional plans
Contingency plans
Divisional and departmental plans
Project plans
Budgets
Resource mobilization
Targets and definite time frames for achieving each
target

25
Four phases in strategic management

Formulation of
strategies

Implementation of
strategies

Strategic
evaluation
Strategic control
Establishment of
strategic
intent
26
Comprehensive model of strategic
management
Strategy Formulation

Environmental Organisational
Appraisal Appraisal
SWOT Analysis
Corporate-level Strategies
Business-level Strategies
Strategic analysis and choice
Strategic plan
Strategic Intent

Vision
Mission
Business definition
Business model
Objectives
Strategy
Implementation

Project
Procedural
Resource allocation
Structural
Behavioural
Functional &
Operational
Strategic control
Strategic
Evaluation

FINANCIAL
PERFORMANCE
CONTROL

SOCIAL
PERFORMANCE
CONTROL