STRATEGIC MANAGEMENT 1. Explain the evolution, role and importance of business policy and strategic management.

What would be the role of manager in this age? Introduction: The term strategic management has been traditionally used. New title such as business policy, corporate strategy and policy, corporate policies is essentially and extensively used which means more less the same concept. Evolution of Strategic anagement: 1) In early !"#$%s and !"&$%s the managers used day'to'day planning methods to perform any tas(. 2) To anticipate the future, they tried using tools li(e preparation of budgets and control systems li(e capital budgeting and management by ob)ectives. ) The techni*ues were unable to emphasi+e the future ade*uately. !) The next step was they tried using long range planning which was replaced by strategic planning and later by strategic management. ") In mid !"&$%s, according to the nature of business the planning was done during ,dhoc policy ma(ing. #) ,s many businesses had )ust started operations and were mostly in a single product line, there arose a need for policy ma(ing. $) ,s companies grew they expanded their products and they catered to more customer and which in turn increased their geographical coverage.
%) The expansion brought in complexity and lot of changes in the external environment. -ence

there was a need to integrate functional areas.

&) This integration was brought about by framing policies to guide managerial action. 1') .olicies helped to have pre'defined set of actions, which helped people to ma(e decision. 11) .olicyma(ing was the owner%s prime responsibility. 12) /ue to increase in the environment changes, in !"&$%s and 0$%s policy formulation

replaced ad'hoc policy ma(ing, which led to emphasis shifted to the integration of functional areas in this rapidly changing environment. 1 ) Especially after II 1orld 1ar there was more complexity and significant changes in the environment. 1!) 2ompetition increased with many companies entering into the mar(et. 1") .olicy ma(ing and functional area integration was not sufficient for the complex needs of a business.

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!8 /ue to increase in the competition, in !"9$%s there was a demand for critical loo( at the bane corrupt of business. #8 The environment played an important role in the business. &8 The relationship of business with the environment lead to the concept of strategy. !

08 In early sixties, this helped the management to manage between the business and the environment. :8 In early eighties, as many companies were globalised which lead to the competition of the rivals access the world. 98 ;apanese companies along with other ,sian companies unleashed a force across the world and posed a threat for the <S and European companies, which led to the current thin(ing. =8 Strategic management focused on # aspects: ' Strategic process of business. 3esponsibilities of strategic management. >8 <nli(e others, in this phase the role of senior management is vital and of utmost importance. Their role was important in decision'ma(ing li(e ' a8 1hether a company promotes a )oint venture?new decision. b8 /ecides to go for an expansion. c8 Ta(es other important actions. >8 ,ll these actions and decision had a long'term impact on the company and its future operations, which was the result of senior management decision'ma(ing. "8 Strategic management is both about the present and future course of action, which was the prime responsibility senior management. I. II. III. I@. @. Strategic anagement is The study of function and responsibilities of senior management , crucial problem that affects success in total enterprise. The decision that determine the direction of the organi+ation and shape of its future Identity and molding of its character obilisation and their allocation of the resources.

-ence as managers had variety of choices, decisions were based on the circumstances, which would ta(e the company in specified directions.

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I. Strategic management integrates the (nowledge and experience gained in various functional areas. II. It helps to understand and ma(e sense of complex interaction in various areas of management. III. It helps in understanding how policies are formulated and in creating appreciation of complexities of environment that the senior management faces in policy formulation. I@. anagers need to begin by gaining an understanding of the business environment and to in control.

-ere are few steps Indian managers need to do. a8 They should (now to manage and understand information technology, which is changing the face of business. b8 ,s public and common investors own and more companies managers need to ac*uire s(ills to maximi+e shareholder value. c8 To have?ta(e a strategic perspective, managers should foresee the future and trac( changes in customer expectation. Intuitive, logic reasoning is re*uired for proper decision'ma(ing. d8 Successful companies depend on people. 6or people, management managers should create capability for imitating and manage things through leadership and should possess *ualities li(e patience, commitment and perseverance. e8 anagers need to provide speed responses to environmental changes through informational systems and organi+ational process. f8 ,s corporates are becoming more integrated with the public life, corporate governance is becoming important which manager may have to practice. g8 anagers should learn to deal with confused and complex situations. They should (now to deal with global managers, business protocols and mar(et conditions. h8 In complex and certain situations, managers should have the courage in decision' ma(ing to ma(e unconventional decisions. i8 anagers should possess high ethical standards in business and focus on social responsibility. 2onclusion Thus we can say the purpose of strategic management is manifold. To be successful in the business one should possess?have holistic approach and should (now to integrate the (nowledge gained in various functional area of management. Ay having generalistic approach, a senior manager can understand the complex inter lin(ages operating within the organisation and should have systematic approach in decision'ma(ing in relation with the changes which ta(es place in the environment. B#. What is strategy? (t what levels is it formulated? INT34/<2TI4N: ' To understand the process of strategic management the concept should be understood and controlled. The term strategy is derived from the 7ree( word CST3,TE74SD 7eneralship. The actual direction of military force, as distinct from governing its deployment. The word strategy means C T-E ,3T 46 7ENE3,5 D. Aased on the studies and views by various experts and management gurus Strategy in business has ta(en various connotations. ST3,TE7E: !. Aefore ma(ing a decision managers have to loo( into the course of deciding since Strategy involves situations li(e

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a8 b8 c8 d8 e8

-ow to face the competition. 1hether to underta(e expansions?diversification To be focused? broad based -ow to chart a turn around Ensuring stability?should we go in for disinvestments etc

#. ,n establishment and successful company would start to face new threats in the environment. This is due to its success and emergence of new competitors. It has to rethin( the course of action it has been following. This is called strategy. &. 1ith such rethin(ing and environment analysis, new opportunities may emerge and be identified. 0. To ma(e use of these opportunities, the company might fundamentally rethin( and reason the ways and means, the actions it had been following in the past. These are called C strategies C. :. 6or a company to survive and to be successful strategy is one of the most significant concepts to emerge in the field of management. ,ccording to ,lfred chandler the determination of basic long'term goals and ob)ectives of an enterprise and the adoption of the course of action and the allocation of resources for carrying out these goals. 1illiam 7luc( defines strategy as Ca unified, comprehension and integrated plan designed to assure that the basic ob)ectives of the enterprises are achievedD. 9. ichael .orter views strategy as the C core of general management is strategyD. anagers must ma(e companies flexible, respond rapidly, benchmar( the best practices, outsource aggressively, develop core competenciesF Infact should (now how to play new roles everyday. -yper competition is a common phenomenon that rivals copy very fast. =. 2ompanies can outperform rivals only if it can establish a difference it can preserve and deliver greater value at a reasonable cost. >. Strategy rests on uni*ue activities GC The essence of strategy is in the activities G choosing to perform things differently and to perform different activities than rivalsD. ". Strategy is long term. If company focus is only on operational effectiveness. It can become good and not better. 4veremphasis on growth leads to the dilutions of strategy. 7rowth is achieved by deepening strategy. !$. Strategy is the future plan of action, which relates to the companies activities and its mission?vision i.e. when it would li(e to reach from its current position. !!. It is concerned with the resource available today and those that will be re*uired for the future plan of action. It is about the trade off between its different activities and creating a fit among these activities. 5E@E5S 46 ST3,TE7E: !. 1hen a company performs different business? has portfolio of products, the company will organi+e itself in the form of strategic business units HSA<%s8. #. In order to segregate different units each performing a common set of activities, many companies are organi+ed on the basis of operating divisions?decisions. These are (nown as strategic business units. 243.43,TE 5E@E5

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6<N2TI4N,5 5E@E5 ST3,TE7IES &8 Strategies are loo(ed at 2orporate level SA< level 08 There exists a difference at functional levels li(e mar(eting, finance, productions etc. 6unctional level strategies exist at both corporate and SA< level. It has to be aligned and integrated. :8 243.43,TE 5E@E5 ST3,TE7E: It%s a broad level strategy and all its plan of actions is at corporate level i.e. what the company as a whole. It covers the various strategies performed by different SA<%s. Strategies needs should be in align with the company ob)ective. 98 3esources should be allocated to each SA< and broad level functional strategies. To ensure things there would need to have co'ordination of different business of the SA<%s. 6<N2TI4N,5 ST3,TE7E: ,s the SA< level deals with a relatively. Smaller area that provides ob)ectives for a specific function in that SA< environment are mar(eting, finance, production, operation etc. =8 6or most companies strategies plans are made at & levels. a8 6<N2TI4N,5 ST3,TE7E b8 S42IET,5 ST3,TE7E c8 4.E3,TI4N,5 ST3,TE7E Societal Strategy: 5arger 2ompanies li(e conglometers with multiple business in different countries needs larger level strategy. 1) , relatively smaller company may re*uire a strategy at a level higher than corporate level. 2) It%s how the company perceives itself in its role towards the society? even countries in terms of vision? mission statement? a set of needs that strives to fulfill corporate level strategies are then derived from the societal strategy. 4perational 5evel Strategy: In the dynamic environment K due to the complexities of business strategies are needed to be set at lower levels i.e. one step down the functional level, operational level strategies.

There are more specific K has a defined scope. E.g. ar(eting Strategy could be subdivided into sales Strategies for different segments K mar(ets, pricing, distribution etc. Some of them may be common K some uni*ue to the target mar(ets. It should contribute to the functional ob)ectives of mar(eting function. These are interlin(ed with other strategies at functional level li(e those of finance, production etc

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4.E3,TI4N,5 5E@E5 2orporate level is divided from the societal level strategy of a corporation S.A.< 5evel are put in to action under the corporate level strategy. 6unctional Strategies operate under SA< 5evel. 4perational 5evel is derived from functional level strategies Conclusion:

These are the levels at which strategies are formulated

What are the )ssues in *trategic +ecision ,a-ing? Explain the role of .arious *trategies. a(ing

Issues in Strategic /ecision

!. 1hile ma(ing a decision the company might have different people at different periods of time. #. /ecision re*uires )udgmentsF a personal related factors are important in decision' ma(ing. -ence decision ma y differs as person change. &. /ecisions are not ta(en individually, but often there is a tas( in decisions which could be Individual @s 7roup decision ma(ing. There will be a difference between the individual and group decision'ma(ing. 0. 4n what 2riteria a company should ma(e its decision, for evaluation of the efficiency K effectiveness of the decision ma(ing process, a company has to set its ob)ectives which serves as main bench mar(. :. & a)or 2riteria in decision a(ing are a. The concept of aximi+ation. b. The concept of satisfying. c. The concept of incrementalism. Aased on the concept chosen the strategic decisions will differ. 9. 7enerally decision'ma(ing process is logical and there will be rationality in decision' ma(ing. =. 1hen it comes to Strategic decision ma(ing point of view there would be proper evaluation K then exercising a choice from various available alternative resource, which leads to attain the ob)ectives in a best possible way. >. 2reativity in decision'ma(ing is re*uired when there is a complete situation K the /ecision ta(en must be original K different. ". There could be variability in decision'ma(ing based on the situation K 2ircumstances. Various Roles of Strategic Management Senior management plays n important role in Strategic anagement.

Role of !oard "f #irectors: Aoard of /irectors is the supreme ,uthority in a company. They are the owners? shareholders? lenders. They are the ones who direct and responsible for the governance of the company. The 2ompany act and other laws blind them and their actions K they sometimes do get involved in operational issues. .rofessionals on the A.4./ help to get new ideas, perspectives K provide guidance. They are the lin( between the company and the environment. Role of C E ": 2hief Executive 4fficer is the most important Strategist and responsible for all aspects from formulations?Implementation to review of Strategic anagement. -e is the leader, motivator K Auilder who forms a lin( between company and the board of directors and responsible for managing the external environment and its relationship. Role "f Entre$reneur: They are independent in thought and action and they set ? start up a new business. , 2ompany can promote the entrepreneurial spirit and this can be internal attitude of an organi+ation. They provide a sense of direction and are active in implementation. Role of Senior Management: They are answerable to A.4./irectors K The 2.E.4 as they would loo( after Strategic anagement a responsible of certain areas ? parts of terms. Role of S!% & 'evel E(ecutives: They 2o'ordinate with other SA<%s K with Senior anagement. They are more focused on their product ? burners line. They are more on the implementation role. Role of Cor$orate )lanning Staff: It provides administrative support tools and techni*ues and is a 2o'ordinate function. Role of Consultant: 4ften 2onsultants may be hired for a specified new business or Expertise even to get an unbiased opinion on the business K the Strategy. Role of Middle 'evel Managers: They form an important lin( in strategi+ing K Implementation. They are not actively involved in formulation of Strategies and they are developed to be the future management. Conclusion: These are the issues in strategic decision'ma(ing and the role in Strategic anagement.

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What is *trategic ,anagement /rocess? Explain each step briefly.

-ere are few definitions of Strategic anagement .rocess. 1) ,ccording to 7luec( it%s a stream of decisions and actions that lead to the development of an effective strategy? Strategies to help achieve 2orporate Strategies. 2) ,ccording to -ofer it%s the process, which deals with fundamental 4rganisational, renewal K growth with the development of strategies, Structures and Systems necessary to achieve such renewal and growth and with the organi+ational systems needed to effectively manage the strategy formulation and implementation process. ) ,nsoff defines it as C The Systematic approach K important responsibility of general management to position and relate the firm to its environment in a way that will assure its 2ontinued Success and ma(e it secure from surprisesD. !) Sharplin defines as the formulation K implementation of plans and 2arrying out activities related to the matters, which are vital, and of continuing importance to the total organi+ation. ") ,ccording to -arrison K St ;ohn G Strategic anagement is the process through which organi+ation learn from their internal K external environment, establish strategic decision create strategies that are intended to help achieve establish goals K execute there strategies achieve Establish goals and execute there Strategies all in an effort to satisfy (ey organi+ational sta(e holders.
COMPANY VISION &MISSION/ REQUIREMENTS OF MAJOR STOCK HOLDERS STRATEGIC INTENT EXTENAL & INTERNAL ANALYSIS / SWOT ENVIRONMENT ANALYSIS DEFINE STRENGTHS/WEAKNESS/ CORE COMPENTENCIES GENERATE STRATEGIC ALTENATIVES/ EVALUATE & SELECT IMPLEMENT/ FEEDBACK/CONTROL

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6rom the above bloc( diagram it states that Strategic anagement is a process, which leads to the formulation of Strategy? Set of Strategies K managing thru 4rganisational System for the achievement of @ision, ission 7oals and 4b)ectives. 2ompany @ision ? ission

1) 2ompany @ision is 1hat a 2ompany 1ishes to become or aspire to be. 2) 2ompany ission is what the 2ompany is and why it exists ) ;ames .arras K ;ames 2ollins divides @ision? ission into # .arts.

Vision* Mission

Core Ideolog+

Core Values Core )ur$ose

Envisioned ,uture Audaclous Goals Vivid #escri$tion

Core Ideolog+: Is the unchanging part of organi+ation. It is the character of an organi+ation, this would not change for a longer time even it were disadvantage. Core Values : what it believes in. Core )ur$ose: Existence of 4rgani+ation and that goes far behind Envisioned ,uture: ,re the goals to be reached. It is classified into: ,udaclous 7oals: These are the goals that the company would li(e to achieve. They are tough needs extraordinary commitment and effort. @ivid /escription: These 7oals are put into words that evo(e a picture of what it would be li(e to achieve the ,udaclous 7oals. S14T ,nalysis: External K Internal ,nalysis: !. The External Environment is made up of all the 6actors, 2onditions K influences outside the organi+ations. #. it gives rise to opportunities which can be exploited or it may give rise to threats which can wea(en ? cause problem to the organi+ation. ST3EN7T-S?1E,LNESS?243E 24 .ETEN2IES Strengths: it%s always in relation to the environment. It%s an unborn capacity, which needs to fulfill two conditions. !8 3e*uirement for success. #8 It gives the Strategic ,dvantage. It has strengths more than the competitorF it could gain more than the 2ompetitor. E.g. Superior research where new products K Innovations are re*uired.

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1ea(ness: It%s something re*uired for success is missing?inherent inade*uacy. It gives strategic disadvantage to the 4rganisation. E.g. 4ver dependence on a single product line in a mature mar(et. 2ore 2ompetencies: Is developed over a period of time, using these competencies exceeding well, it develops a fine art of 2ompetition with its rules. This capacity of exercing turns them to core competencies. 7eneral Strategic ,lternatives ? Evaluate K Select. It means that there is a proper evaluation and exercing a choice from various alternative available resources in such a way it may lead to the achievement of company%s ob)ective. Implement ? 6eedbac(? 2ontrol Implementation is the responsibility of 2E4. -e is responsible from implementation to review of Strategic anagement.

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Explain *trategic intent, stretch leverage 0 1it.

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Introduction: for an effective strategic intent one has to develop effective strategy, rather than focusing at the resourcefulness of 2ompetition K their pace at which they are building competencies one has to focus on existing position. Strategic Intent is something more than the unfettered ambition. It%s not a soft target. ,ccording to .rahlad K 7ray
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It forsee%s a desired leadership position and establishes the criteria the organi+ation will chart it%s progress. It 2aptures the essence of winning K is stable over time. It re*uires personal effort, 2ommitment and bit of luc( to achieve the target. The Important thing that a company as(s for is not C-ow 1ell Next Eear be differentDM Aut they as(, C 1hat must we do differently next year to get closer to our strategic intentMD ost companies loo( at change and innovations in isolation Innovations come from everywhere K top anagement role is to add value to it. Strategic intent leaves room for creativity, innovation K top anagement directs it. There must be a balance between resources as a 2onstrain @s 3esource as leverage so as to reduce ris(. 6ormer is done through building a balanced portfolio of cash generating and cash consuming business and in the latter a well balanced and sufficiently broad portfolio? collection of advantages is assured. It implies a seryable stretch for an organi+ation. Since the current capabilities K resources are not------- it will force inventiveness and the management will (eep on involving challenges and they give time to digest one challenge before launching another. 4ne important parameter is reciprocal responsibility ' 1hich means e*ual blame K credit for both operating levels K top management. 2ompanies with good strategic intent (now the importance of documenting failure but instead of blame fixing and nailing people they are more interested in the management reasons and the orthodoxy, that may have led to future.

Stretch: To ,chieve strategic intent one has to stretch forward and has to loo( at the resourcefulness instead of loo(ing at resources. 4ne has to ma(e use of Innovation and resources. Stretch leads to leverage. 5everage: 3efers to concentrating on the resources to achieve strategic intent, accumulating, learning, experiences K 2ompetencies in a manner to meet the aspirations by stretching the scarce resource that an organi+ational resource to the environment. Instead of allotting the competitors blindly K ta(ing their head companies must leverage the resources. 6it: Strategic fit is the traditional way of loo(ing at strategy. Strategic fit is conservative and seems to be more realistic but u may not be aware of the potential. <nder stretch K leverage Strategic extent could be impossible, idealistic but under fit strategic something far beyond possibilities and loo( at the potential possibilities.

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2onclusion. Thus Strategic intent is what the organi+ation strives for e.g. 2anon wanted to beat Nerox. It%s an obsession to an organi+ation K it is to win at all levels of the organi+ation, sustaining that obsession is in *uest for global leadership.

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Write a detailed note on 3oals and 4b5ectives.

Goals: Goal & Target a. It%s a target that a company wants to achieve in a future period of time. /. ,n organi+ation sets a combination of goals, which might be Bualitatively, Buantitative, and 6inancial K Non 6inancial. These 7oals must be clear and unambiguous. c. 4n an organi+ational level goals are broad in nature and they could set goals on turnover, profits, returns on assets?e*uity, mar(et share, 2ustomer satisfaction, Employee satisfaction. d. 7oals should be limited, manageable, and clearK 2onsistent with each other, otherwise it may lead to confusion K 2ontradictions.

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7oals may be Bualitative, Buantitative in specification.

"/0ectives: a. 4b)ectives are the ends that specify how the goals shall be achieved. /. They are concrete and specific and they are in contrast with the goals. c. 4b)ectives ma(e the goals operational and tend to Buantitative in specifications. d. 4b)ectives are set in a way that what the organisation has to achieve for its employees, shareholders, customers etc., e. 4b)ectives are in relation with the environment. They are the brains of Strategic /ecision a(ing. f. They are framed in line with the vision?mission of the organi+ation and it helps to pursue them. g. 4b)ectives are invariably Buantitative and provide clear measures and standards for performance. h. It helps to see whether the 4rganisation is in right trac( or not. i. 4b)ectives should be concrete, specific, and understandable K should have clearly defined time frame. 0. It must be measurable, actionable, challenging but controllable. 1. There must be co'relation with other ob)ectives. l. 1hile setting ob)ectives these are the factors to be evaluated. It should be specific at the level, which it is being set. It should not be either too narrow or too broad. m. There need to be multiplicity of ob)ectives. n. It should be formulated at different time frames li(e short term, medium term, and long term K should be lin(ed K consistent. o. Since its in relation with the environment it needs to chec( whether they are fulfilling the needs of customers, share holders etc., $. It should be In reality with the organi+ational resources and internal constraints, including policies K lower relationship. Conclusion: Thus an organi+ation is set up to ma(e .rompt and ,ccurate decision. -ence goals K ob)ectives are set for the accomplishment of an organi+ation. $) What is Environment ? 6ow is it 2hanging?

)ntroduction 7 8 Environment means the surrounding. It includes both internal and external ob)ects, factors K influences under which someone?something exist. Environment : The Environment of an organi+ation is the aggregate?total of all conditions events that influences itself K it%s Surroundings, 2) The dynamic K has relationships with each other. ) The factors in environment may affect the company and visa versa. !) It has a great impact on the company.
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Environment & Changes: ,ccording to

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ichael -ommer and ;ames 2hapey.

,n 4rganisation must be flexible enough to ad)ust *uic(ly with this changing environment. 2) The Efficiency of the company comes at the expenses of the efficiency of the company as a whole. ) It re*uires co'operation K 2o'ordination within the organi+ation. !) 6ew 2ompanies are rigid, non'competitive, inefficient and losing money because they are not able to ad)ust themselves with the changing environment. ") In !==9 ,dam Smith described in his boo(, CThe 1ealth of Nations.D The .rinciple of division of labour for increasing the productivity and there by reducing the cost of goods. ,merican 2ompanies became best in the world after applying the principles. #) Aut in today%s world, nothing is constant or predictable K these principles don%t wor(. $) ar(et growth, customer demand, the rate of technological change, and nature of competition (eeps changing. %) The three forces that drives company are 2ustomers 2ompetition K 2hange. 2ustomers : Earlier days, 2ustomers had little choice they used to buy the product that was offered to them. These days customers come with more specifications and they demand for customi+ed products and they want individual attention. -ence customers have upper hands these days. It%s difficult for an organi+ation to survive in the long run unless they satisfy customers needs. 2ompetition : ,s many companies emerges, the competition rises. They offer good *uality of products at lesser price and consumers prefer such products. Earlier the company could get into mar(et with an acceptable product?service at the best price would go to sell. Aut these days customers prefer high *uality at lowest price. The 2ompany, which offers these at best price, goes high *uality and best service becomes standard of all the competitors. 2hanges : 2hanges has become both pervasive and persistent because companies face a greater competitors and each one introduces a product and service innovation to the mar(et with the globalisation of the economy. -ence the companies need to move fast in pace with the changing environment otherwise it%s difficult to move. 24N25<SI4N: In today%s environment nothing is constant and predictable hence for a company to survive in the long run, it has to satisfy customer needs and cope with the changes in the environment at a faster rate.

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23. Explain the process of *W49 analysis? Elaborate what you would study in the environment? INTR"#%CTI"N
The e(ternal environment is made of factors4 conditions that influences outside the organi5ation The e(ternal environment gives rise to o$$ortunities4 which can /e accom$lished4 or it ma+ cause $ro/lems to the organi5ation

S14T ,N,5ESIS: The internal environment refers to all factors within the control of and within the organi+ation. These factors may impart strengths that can be utilised by the organi+ation or cause wea(ness, which becomes threat to the organi+ation. S G Strength 1 G 1ea(ness 4' 4pportunity T G Threats

Strength: GIt is an inherent capacity that is in relation to the environment. 6or an organi+ation to be a success it re*uires strength and it gives strategic advantage to gain more than the competition. E.g. Innovation and new products are re*uired for superior research and development facilities. !9

1ea(ness: ' It is an inherent inade*uacy that is again in relation to the environment. It gives strategic disadvantage and something that re*uired for success is missing. It leads to competition where wea(ness can be used to gain more due to inherent limitation ? constraint?inade*uacy. E.g.!8 In a mature mar(et over dependence on a single product line. #8 5ac( of capabilities for the development of new product, which is potentially ris(y for a company during the time of crisis. 4..43T<NITE: can be accomplished and can help to consolidate and strengthen the organi+ation. It%s a favorable condition for an organi+ation in its environment. E.g. /ue to better 7/. growth a company provides increase in demand for the products?services. It helps in strengthening its position. T-3E,TS: when the opportunities are not utili+ed properly it can cause problem to the to the organi+ation which causes threat. It is unfavorable condition for the organi+ation. It causes ris(?damage to an organi+ation. E.g. /ue to opening up of economy, the emergence of multinational companies, which are stronger and has good resources, offers stiff competition to the existing companies in an industry. C"NC'%SI"N ,n understanding of both internal and external environment in terms of opportunities, threat, strength, wea(nesses important for existence, growth and profitability of an organi+ation. , systematic approach and understanding the environment is S14T analysis all about.

Environment to /e studied !8 Events: Is some specific occurrence that ta(es place in different environmental sectors. E.g. Ailateral agreement between # countries in which the company is operating and facing competition from local companies. #8 Trends: is the way the environment is shaping up. They are he course of action along which events ta(e place li(e global warming, nuclear families etc. &8 Issues: are the current concerns that arise in response to events and trends. E.g. .ollution 2ontrol, Ausiness ethics after scams. 08 Expectations: are the demands made by interested groups in light of their concern. 5i(e corporate governance, greater transparency, stricted auditing norms.

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:&. What are the core competencies and organi;ation capabilities? 243E 24 .ENTEN2IES: 1) ,n organi+ation with its resources and the capacity of converting the resources in to outputs and the behaviour of there Hi.e. capability and resources8 develops certain strength and wea(ness, which their combined lead to synergistic effects. 2) Synergy G Total His greater8 sum of the parts. In terms of organi+ational competencies it manifest themselves in advantages over competition. ) 2ompetencies develop over a period of time. !) It%s a fine art of competing with its rivals over a period of time and it uses these competencies to exceed well. The capability of using these competencies to exceed well turns them into core competence. ") 2ore competencies have )oined greater currency and popularity as per 2.L .rahaled and 7ary -amel. It%s a portfolio of products?services?different business. #) In short run competencies for a company is derived from the price performance and in longer run it%s the ability to build at lower cost and speedily than others. $) , diversified company is li(e a large tree. 1hat are not easily visible and apparent G are the core products and leaves, flowers, fruits are the end product. %) 3oot is a(in to C2ore 2ompetenceD. &) 2ore competence is communication, collective learning and co'ordination of diverse production s(ills and deep involvement and commitment to wor( and delivery of value across all levels and functions. 1') 2ore competencies are the glue that binds existing business and guide mar(et entries instead of mar(et attractiveness. 11) 2ore competencies can be identified by conducting & tests i.e provides potential access to wide variety of mar(ets and significant contributions to the benefit of the end product difficult for competitors to imitate. 12) Auilding competencies are not sharing costs by SA<% Hor8 out pending rivals on 3 and /

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Ay not building competencies in emerging mar(ets you may lose the chance of competing in existing mar(ets. It%s important to maintain the competencies even it not active in the mar(et.
1 )

"RGANISATI"NA' CA)A!I'IT6: It%s the inherent capacity of an organi+ation to use its strengths and overcome wea(ness to exploit opportunities and face threats in the external environment. 2) It%s comparable K it%s very difficult to measure the capability of an organi+ation. ) Strategist would li(e to (now what capacity exist within the organi+ation K what potentials should be developed so that opportunities can be exploited K how it can face threats. !) 4rganisational capability includes 6inancial, ar(eting, 4perations, .ersonnel, and Information anagement K 7eneral anagement.
1)

6inancial 2apability:
1) 2) ) !) ") #)

Source of 6unds G -ow well the company can raise funds, their cost K availability. anagement K use of funds G how optimally it utili+es the funds where and how they are used. 6actor governing mar(eting capability are the from .%s i.e. .roduct, .rice .lace K .romotion related factors how it generates systematically. 6actors influencing personal capability are 3 K / System, production K 2ontrol Systems. 6actors leading to personal 2apability are industrial K personnel relations, organi+ational K employees 2haracteristics. 6actors that lead to information management capability are integrative, systematic K supportive factors.

The retrieval, usage, ,c*uisition, processing, synthesis, transmission K dissemination of information. 7eneral anagement methods K Techni*ues. To carry at the organi+ational study internal analysis tools can be used as mentioned below.
1) 2) ) !)

@alue 2hair ,nalysis Bualitative K Buantitative analysis both financial non financial. 2omparative analysis, bench mar(ing, industrial norms. 2omprehensive ,nalysis using new tools Aalance score card?(ey factor ma(ing.

2onclusion: These are the factors that influence them.

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