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Strategic Management can be defined as “the art and science of formulating, implementing and
evaluating cross-functional decisions that enable an organization to achieve its objective.”
Interpretation:
1. On-going process:
Strategic management is a on-going process which is in existence through out the life of
organization.
2. Shaping broad plans:
First, it is an on-going process in which broad plans are firstly formulated than
implementing and finally controlled.
3. Strategic goals:
Strategic goals are those which are set by top management. The broad plans are made in
achieving the goals.
4. Internal and external environment:
Internal and external environment generally set the goals. Simply external environment forced
internal environment to set the goals and guide them that how to achieve the goals?
• Environment Scanning
• Strategy Formulation
• Strategy Implementation
• Strategic Formulation
• Strategic Implementation
• Strategic Evaluation
Strategic Formulation:
Strategic formulation means a strategy formulate to execute the business activities. Strategy
formulation includes developing:-
Allocation of resources
Business to enter or retain
Business to divest or liquidate
Joint ventures or mergers
Whether to expand or not
Moving into foreign markets
Trying to avoid take over
Strategy Implementation
Strategy implementation requires a firm to establish annual objectives, devise policies, motivating
employees and allocate resources so that formulated strategies can be executed. Strategy
implementation includes developing strategy supportive culture, creating an effective
organizational structure, redirecting marketing efforts, preparing budgets, developing and utilizing
information system and linking employee compensation to organizational performance.
Strategy implementation is often called the action stage of strategic management.
Implementing means mobilizing employees and managers in order to put formulated strategies
into action. It is often considered to be most difficult stage of strategic management. It
requires personal discipline, commitment and sacrifice. Strategy formulated but not
implemented serve no useful purpose.
Strategy evaluation:
Strategy evaluation is the final stage in the strategic management process. Management
desperately needs to know when particular strategies are not working well; strategy evaluation is
the primary means for obtaining this information. All strategies are subject to future modification
because external and internal forces are constantly changing
Development of Vision and Mission
Mission statements
• Describe the overall purpose of an organization: what we do, who we do it for, and how
and why we do it.
• Set the boundaries of the organization’s current activities.
• Are the starting point in developing a strategic vision.
A mission review gets an organization back to basics. The essential activity of determining whom
you serve can be a wake-up call for organizations that have started to skew their activities to
meet the needs other stakeholders (such as their funders or lobby targets) and not their actual
clients.
Vision statements
Strategy:
Strategic Decision
Strategic decisions are the decisions that are concerned with whole environment in which the firm
operates, the entire resources and the people who form the company and the interface between
the two.
Strategic hierarchy
In most (large) corporations there are several levels of strategy. Strategic management is the highest in the
sense that it is the broadest, applying to all parts of the firm. It gives direction to corporate values, corporate
culture, corporate goals, and corporate missions. Under this broad corporate strategy there are often
functional or business unit strategies.
Both business and military organizations must adapt to change and constantly improve to be
successful. Too often, firms do not change their strategies when their environment and competitive
conditions dictate the need to change.
• Economic
• Social
• Cultural
• Demographic
• Environmental
• Political
• Governmental
• Technological
• Competitive trends & events
Internal Strengths & Weaknesses
• Management
• Marketing
• Finance/accounting
• Production/operations
• Research and development
• Computer information systems
Organizations strive to pursue strategies that capitalize on strengths and improve weaknesses
Long-Term Objectives
Results to be achieved in pursuing the organization’s mission. Time frame is beyond one year.
• State direction
• Aid in evaluation
• Create synergy
• Reveal priorities
• Focus coordination
• Provide basis for effective management
• Geographic expansion
• Diversification
• Acquisition
• Product development
• Market penetration
• Retrenchment
• Divestiture
• Liquidation
• Joint venture
Annual Objectives
Policie
Important in strategy implementation as the means by which annual objectives will be achieved
External
Audit
Impleme
Long-Term Measure
nt
Objectives Generate, Implement &
Strategie
Evaluate, Strategies: Evaluate
s:
Vision Select Marketing, Performa
Mgmt
& Strategies Fin/Acct, nce
Issues
Mission R&D, CIS
Statements Chapter 8
Chapter 7 Chapter 9
Internal
Audit
Financial Benefits
1. Systematic planning
Nonfinancial Benefits