Chapter 1

Theoretical Framework of the Study

The day management theory meets practice, the theory loses its value.

Anonymous
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Every organisation involves in a complicated pattern of decisions

from board of directors level about organisational objective setting to
specific decisions about day-to-day operations. Some of these decisions
have long-term effect while others have only short-term effect. From
decision-making poinf of view, the basic difference between these two
sets of decisions is that the first set of decisions does not fall within the
domain of a particular functional manager while the second set of decisions
falls within the domain of a functional manager. The first set of decisions
is of integrative nature involving more than one functional are^ of the
organisation. The emphasis on such decisions and implementing
them has led to the development of a new field of study, known as strategic
management. This branch of management focuses its attention on
the functioning of the entire organisation rather than its particular functions.

Strategic management has entered the businees field during 1980s in a

systematic way replacing the earlier approach of ad hoc strategy formulation
and its implementation. With increased complexity of managing business
organisations in the face of intense global competition, strategic
management concept was adopted by Western countries, particularly the
USA. In India, this concept was introduced by associates and subsidiaries
of multinationals operating in the country. However, the adoption of such a
concept evoked mixed reactions from Indian business. While there was
considerable admiration of the system from some quarters, there were
many who believed that it was not in tune with Indian context, particularly
the social and environmental context of Indian business. However, since
many of the multinationals adopting strategic management were
quite successful in terms of growth and profitably, it was assumed
that the success was partly because of the application of such a system.
This resulted into the gradual adoption of strategic management by
companies of Indian origin. With the liberalisation.of Indian economy,
 3

the competitive scenario of business has changed, and to face

environmental challenges successfully, many companies have adopted
strategic management in a systematic way.

Strategic management essentially involves strategy formulation and

its implementation. Therefore, before going through the concept of strategic
management and its process, it is desirable to understand the concept of
strategy and the levels at which strategies operate. Further, strategy
formulation involves a strategic decision. Therefore, concept of strategic
decision should also be understood.

CONCEPT OF STRATEGY

The concept of strategy is quite confusing because different

authors have used this term in different ways. Moreover, many early
authors in this field have not tried to define strategy precisely as they
have taken the stand of writing the books from practitioners’ point of
view rather than for the purpose of developing the concept. For example,
Christensen et al (1971) maintain that:
"Because we are less concerned with exactness
of language than we might be if development of
theory were our first objective; we do not argue
whether the term strategy should include the
selection of goals or denote only the resources
marshalled in pursuit of these goals. It is to us a
matter of indifference. Little confusion results so long
as we make clear what we are doing. In our experience, ^
■simplicity and convenience are served by combining
the choice of goals and the formulation of policy
into one activity. The choice of goals and formulation
of policy cannot in any case be separate decisions."
 4

No doubt, this stand serves the' purpose adequately, but this shows
the type of situation that prevails in the field. However, further progress
in the field can be made possible only when we are clear about the
term strategy. The term strategy has entered the field of management
more recently. At first, the term was used in terms of Military Science to
mean what a manager does to offset actual or potential actions of
competitors. The strategy is still being used in the same sense, though
by few only. Originally, the term strategy has been derived from Greek
word 'strategos' which means generalship. The word strategy, therefore,
means the art of the general. When used in military sense, strategy
refers to action taken in the light of action taken by opposite party. According
to Oxford Dictionary,' militqry strategy is the art of so moving or disposing
the instruments of warfare (troops, ships, aircrafts, missiles etc.) as to
impose upon the enemy, the place, time, and conditions for fighting by
oneself. Strategy ends or yields tactics when actual contact with the
ememy is made.'

In management, however, the concept of strategy is taken in slightly

different form as compared to its usage in military form; it is taken more
broadly. However, in this form, various experts do not agree about the
precise scope of strategy. Lack of unanimity has resulted into two broad
categories of definitions: strategy as action inclusive of objective setting
and strategy as action exclusive of objective setting. Some definitions in
both these categories help to conceptualise strategy properly.

Objective Inclusive Definition

When the present strategic management was in its formative stage,
Alfred Chandler (1962) made a comprehensive analysis of strategy-
structure relationship and has defined strategy as follows :
"Strategy is the determination of the basic long-
 5

term objectives and goals of an enterprise and

the adoption of the courses of action and the
allocation of resources necessary for carrying
out these goals."

According to this definition, there are three types of action involved

in strategy :
1. Determination of long-term objectives and goals.
2. Determination of courses of action to achieve those goals.
3. Allocation of resources for carrying out courses of action.

Thus, this definition is quite broad. Similar views have been held
by Professors at Harvard Business School, USA who have made
considerable contributions in the development of strategic management.
One of them (Andrews 1971) has defined strategy as follows :

"Strategy is the pattern of objectives, purpose, or

goals and major policies and plans for achieving
these goals, stated in such a way so as to define
what business the company is in or is to be in and
the kind of company it is or is to be."

The above definitions are quite broad and comprehensive and

include objective setting as part of strategy.

Objective Exclusive Definition

As against the above views, Stanford Research Institute, USA has taken
a different stand in defining strategy. It states that strategy is the way in
which the firm reacting to its environment, deploys its principal resources
and marshalls its main efforts in pursuit of its purpose. The basic theme
of this definition has been subscribed by many. For example, Igor Ansoff
(1965) has defined strategy as "the common thread among the organisation's
activities and product-markets that defines the essential nature of
 6

business that the organisation is in or planned to be in future."

Glueck (1980) had defined strategy in terms of unified, comprehensive,
and integrated plan designed to achieve the basic objectives of the
enterprise.

In a more recent publication, Michael Porter (1996) has

defined strategy as " the creation of a unique and valued position
involving a different set of activities." Thus, a company that is
strategically positioned "performs same activities differently from its rivals
or performs a different set of activities." He has taken this view on the
assumption that many companies believe that they can establish a
long-lasting competitive advantage by performing similar activities better
than their competitors. But today, competitors can rapidly copy the practices
of an operationally-effective company using benchmarking and other
tools, thus, diminishing the advantage of operational effectiveness.

In the present study, strategy has been taken as a comprehensive

plan through which an organisation can relate itself with the
environment so as to achieve its objectives. From this point of view, the
strategy has the following features :

1. Strategy is a major course of action through which an organisation

tries to relate itself with the environment to develop certain
advantages which help in achieving its objectives.

2. Strategy is a relative combination of actions aimed at to meet a

particular condition, to solve certain problems, or to achieve a
desirable end. This combination of actions differs from situation
to situation.

3. Strategy may involve even contradictory action. Since a strategic

action depends on environmental variables, an organisation
 7

may take contradictory actions either simultaneously or with a

gap of time.

4. Strategy is forward looking; it has orientation towards future. A

strategic action is required in a new situation, No new situation
requiring a solution can exist in the past and, therefore, strategy
is relevant to future.

LEVELS OF STRATEGY

Strategy operates at different levels of an organisation :

corporate level, business level and functional level. Organisations that
have several types of products or operate in different markets, structure
their businesses in the form of strategic business units (SBUs). The
fundamental concept in the SBU is to identify the discrete
independent product/market segements served by an organisation.
Since each independent product/market segment has a distinct
environment, a SBU should be created for each such segment. Thus, different
SBUs are involved in distinct business areas with each area serving the
distinct segment of the environment. In taking up strategic management
in multi SBU organisation, the following features become important :

1. Each SBU is managed as a portfolio of the organisation with a

clearly-defined product/market segment and clearly-defined
strategy.

2. Each SBU develops its strategy tailored to its capabilities and

needs with overall corporate capabilities and needs.

3. Each SBU is allocated resources - both physical and human -

according to its needs and contributions to the achievement of
organisational objectives.
 8

As against an organisation with multi-SBUs, a single product/market

organisation has single 5BU. In both these types of organisations, strategy
operates differently. In a single SBU organisation, corporate-level strategy
serves the whole business. This strategy is implemented at the next
/

lower level by functional strategies. In a multi-SBU organisaion, the

business-level strategies are inserted between corporate-level strategy
and fuctional strategies and the strategies of these SBUs are guided by
the corporate strategy.

Corporate-Level Srategy
Corporate-level strategy occupies the. highest level of strategic decision
making and covers actions dealing with the objectives of the
organisation, acquisition and allocation of resources, and
co-ordination of various SBUs for optimal performance. Such decisions are
made by top management of the organisation. The nature of strategic
decisions tends to be value-oriented, conceptual, and less concrete than
decisions at the business or functional level.

Business-Level Strategy

Each SBU sets its own strategies in order to make best use of its
resources and competitive competence. At the SBU level, strategy is a
comprehensive plan providing objectives for each SBU, allocation of
resources among functional areas, and co-ordination among various SBUs
for making optimal contribution to the achievement of corporate-level
objectives. SBU strategies operate within the overall strategies of the
organisation. The corporate strategies set the long-term objectives
of the organisation and the broad constraints and policies within which
each SBU operates. The corporate level helps a SBU to define its scope
of operations and also limits or enchances the SBU's operations by the
resources that corporate level assigns to it. Thus, there is a difference
 9

between corporate-level and business-level strategies. For example, Andrews

(1971) suggests that "in an orgainsation of any size or diversity, corporate
strategy usually applies to the whole enterprise, while business strategy,
less comprehensive, defines the choice of product or service and market
of individual businesses within the firm. In other words, business strategy
relates to the 'how' and corporate strategy to the 'what'. Corporate strategy
defines the businesses in which a company will compete preferably in
a way that focuses resources to convert distinctive competence
into competitive advantage."

Thus, corporate strategy is not the subtotal of business strategies of

the organisation but it deals with different subject-matter. While the
corporate strategy is concerned with and has impact on business strategy,
the former is concerned with the shaping and balancing of growth and
renewal rather than market execution.

Functional-Level Strategy

Functional strategy relates to a single functional operations and

activities involved therein. Decisions at this level are often described as
tactical. Such decisions are guided and constrained by overall strategic
considerations. Functional strategy deals with relatively restricted plan
providing objectives to a specific function, allocation of resources among
different operations within that functional area, and coordination among
them for optimal contribution to the achievement of the SBU and
corporate-level objectives.

STRATEGIC DECISION

Strategic decision and decision making are the core of strategic

management. Therefore, it is desirable to understand the nature of strategic
 10

decision so that strategists invlove themselves in making strategic decisions

rather focusing on operational decisions. A decision is a choice of a course
of action out of the several alternatives. Lopez (1977) has defined a
decision as follows: .
/

"A decision, represents a judgement; a final resolution

of a conflict of needs, means or goals; and a
commitment of action in face of uncertainty, complexity,
and even irrationality."

Thus, a decision has three elements - action which the decision

specifies, commitment of resources, and result which is expected to be
achieved out of implementation of the decision. Strategic decision is a
major one in the organisation and involves a major choice of action
concerning commitment of resouces with a view to achieve organisational
objectives. Thus, a strategic decision has the following features:

1.. Strategic decision is a major action that affects the entire

organisation or its significant part. It affects long-term prosperity
of the organisation because of long -term commitment of
resources. Once the resources are committed to a particular
alternative, these cannot be taken back.

2. Strategic decision involves heavy cost because of huge

commitment of resources - physical, financial.and human - to
implement the decision.

3. Strategic decision has high level of futurity because of commitment

of resources for long-term. Because of high level of futurity,
decision-making conditions for a strategic decision are
characterised by uncertainty and risk rather than certainty.

4. A strategic decision is made after analysing various factors bolh

within the organisation and its environment with more emphasis
 11

put on the environmental factors. Therefore, the strategic decision

makers have to look beyond the current operations of the
organisation.

5. A strategic decision is made by top management of the

organisation which has much wider perspective of the organisation
and its environment as compared to middle and lower
management though in decision making process, top management
may take help from managers at these levels.

Strategic versus Operational Decisions

As against a strategic decision which sets direction for organisational
operations, an operational decision is derived out of a strategic
decision and is confined to taking actions necessary for putting
a strategic decision into operation. Thus, an operational decision
differs from a strategic decision in the following manner:

1. Operational decision is concerned with how a chosen major

action is put into operation so that the objectives specified in
the major action are achieved. A strategic decision does not
bring results automatically but these results are achieved only
when the strategic decision is put into action through a series
of operational decisions.

2. Since operational decision is derived out of a strategic decision,

it is a programmed one. The operational decision can be
programmed through the prescription of policies, procedures,
rules, etc. Thus, the decision is made in the context of these
prescriptions.

3. Operational decision is of short-term nature and affects a narrow

part of the organisation. Since it is repetitive, similar decision
making is required frequently.
 12

4. Authority for making operational decisions is delegated to lower-

level managers. This is done becuase of two reasons. First, the
impact of an operational decision is narrow and has short-term
orientation. Therefore, the lower-level managers have adequate
perspective to make such a decision. Second, by delegating
authority for making operational decisions, higher-level managers
can devote more time on taking up strategic issues in the
organisation.

STRATEGIC PLANNING
Strategic planning is the most crucial aspect of strategic
management. Planning is a process which invloves the determination of
future course of action, that is, why an action, what action, how to take
action, and when to take action. These why, what, how, and when are
related with different aspects of planning process. Why of action
reveals that the action has some objectives or end result which an
orgainsation wants to achieve; what of action specifies the
activities to be undertaken; how and when generate various plans, policies,
procedures, rules, methods and other related elements. Thus, all these
elements speak about futurity of action.

Comprehensive planning process in an organisation is known as

corporate planning which comprises strategic planning and operational
planning. Strategic planning sets the direction for the organisation in
which it wants to proceed in future. Anthony (1965) has defined strategic
planning as follows :

"Strategic planning is the process of deciding on

objectives of the organisation, on changes in these
objectives, on resources used to attain these objectives,
 13

and on the policies that are to govern the acquisition,

use, and diposition of these resources."

Strategic planning encompasses all the functional areas of

business and is effected within the existing and long -term framework of
environmental varibales. Strategic planning also invloves the analysis of
various environmental factors particularly with respect to how the
organisation relates itself to the relevant environment. Strategic planning
is undertaken for longer period, however, the exact period of strategic
planning may differ from organisation to organisation depending on
the strategic management practices adopted by them.

As against strategic planning, operational planning covers usually one

year or so. It is aimed at sustaining the organisation in its
production and distribution of current products and services to the existing
markets. Thus, operational planning is the process of deciding the
programmes for most effective use of the resources already allocated
and to develop a control mechanism to assure effective implementation
of the actions so that organisational objectives are achieved; Operational
planning is, based on strategic planning and answers the following
questions related to an action :

1. Why is the action required?

2. What action is to be undertaken?
3. What are the results expected from the action?
4. . What are the conditions that must be met?

Since operational planning is derived out of strategic planning, both

these processes should be fully co-ordinated so that both proceed in the
same direction.
 14

STRATEGIC PLAN

Strategic plan emerges from the completition of strategic planning process.

There is a difference between planning and plan though both these
words appear to be similar. Pjanning is an activity. It can be considered
as a process; therefore, there are various subactivities involved in it. On
the other hand, plan is a commitment to a particular course of action
believed necessary to achieve specific results. Thus, a plan is prepared
through the planning process.

Strategic plan is a document which provides information regarding the

different elements of strategic management and the manner in which
the organisaion and its strategists propose to put the strategy into action.
A comprehensive strategic plan document may contain the following
information :

1. A statement covering the organisational mission, objectives, and

business definition.

2. Results of environmental analysis in the form of opportunities,

threats, and critical success factors.

3. Results of organisational analysis in the form of strengths and

weaknesses.

4. Strategies chosen and the assumptions under which these

strategies would be relevant and contingency strategists to be
used under different conditions.

5. Statement showing resources that are required to implement

these strategies and the manner in which these resources would
be procured and allocated.

6. Proposed changes in organisation structure and various systems

required for the implementation of strategies.
 15

7. Functional plans required to implement strategies and the way

these would be co-ordinated and integrated.

A strategic plan document may be quite lengthy running into several

pages or it may be brief showing the highlights of the actions to be
✓
undertaken, depending on the organisational practices in this regard.

STRATEGIC MANAGEMENT
Having explained the concepts of strategy, strategic decison,
strategic planning, and strategic plan, the concept of strategic
management may be elaborated. Strategic management is a process. A
process denotes that it has various activities and these must be
performed in a systematic manner. From this point of view, a process
appears to be very simple phenomenon. However, this simplicity appears
only on conceptual level. In actual practice, the process becomesmuch
more complex because it works as an identifiable flow of information
through interrelated stages of analysis directed towards the achievement
of objectives. The process is dynamic,continuous and flexible, and
as such , it must be considered as a whole; a dynamic interaction both
affecting and being affected by many varibales. This phenomenon
restricts the formulation of exact and precise definiton of strategic
management on conceptual basis. Therefore, operational definition of
strategic management is required. Pearce and Robbinson (1999) have
defined strategic management as follows :

" Strategic management is primarily concerned

with relating the organisation to its environment,
formulating strategies to adapt that environment
and assuring that implementation of strategies
takes place."

This definition emphasises on two major aspects : strategy

 16

formulation and its implementation and both these aspects are oriented
towards achieving organisational objectives. Ansoff (1984) has defined
strategic management without mentioning streategy formulation or
implementation. According to him -
✓
" Strategic management is a systematic approach
to a major and increasingly improtant responsibility
of general management to position and relate the
firm to its environment in a way which will assure
its continued success and make it secure from
surprises."

This definition puts emphasis on organisation-environment

interface and relating the organisation to its environment for continued
success. It may be mentioned that organisation-environ-ement
interface can be successful only through the formulation of appropriate
strategies and their effective implementation. Thus, strategic
management can be defined as a continuous process of relating the
organisation with its environment by suitable course of action involving
stgrategy formulation and ensuring that the strategy has been implemented
effectively. The strategic management has the following features :

1. Strategic management is a process. It has emerged out of

management in other fields where the concept of management
is taken as a process for achieving certain objectives of the
organisation. Thus, strategic management involves establishing
a framework to perform various relevant activities.

2. The focus of strategic management is on relating the organisation

to its environment. This emphasises that there is continuous
interaction between the organisation and its environment taking
an open system approach. Thus, .the organisation must create
 17

adequate channel through which external information should

pass to various points in the organisation.

3. Strategic management is basically top management function.

Thus, in order to ensure effective performance of top management
function, it is necessary to make a distinction between strategic
management and operational management which emphasises
day-to-day operations in the organisation. If such a distinction
is made, top management can concentrate more on strategic
aspects leaving the operational aspects to the lower-level
management. ""

STRATEGIC MANAGEMENT PROCESS

Strategic management is basically a process of relating an organisation to
its environment by suitable course of action. Every action has two
dimensions : substantive and procedural. Substantive dimension of action
involves determination of what to do and procedural dimension of
action involves'determination of how to do. Both these dimensions are
interdependent and, taken together, help in achieving the objectives for
which action is contemplated. In the case of strategic management,
substantive dimension involves determination of a strategy or a set
of strategies and procedural dimension involves putting a strategy
into operation. Strategy formulation and implementation involves
a number of fuctions fo be performed which are referred to as elements of
strategic managements process. However, strategic management being
a continuous and dynamic process, there are two problems in
identifying and sequencing these elements which are as follow :

1. Various authors and even practitioners are not unanymous

about these elements and the way they interact among
themselves. Thus, there is lack of precision so for as these elements
are concerned.
 18

2. Even if various elements are identified, another problem

emerges in the form of prescribing their sequential arragement
because strategic management is a continuous process without
an apparent beginning and end.

The above two problems are real and show the complexity of strategic
management process. Inspite of these problems, model of strategic
management can be prescribed. Figure 1.1 shows various elements of
strategic management process and the way they interact among
themselves.
 19

Figure 1.1 : Model of strategic management process

 20

The strategic management process shown in Figure 1.1 is

applicabole to a single strategic business unit (SBU) organisation. For
a mutiple SBU organisation, the process of strategic management as gvien
in Figure 1.1 is adjusted so that the process is conducted at corporate
level as well as at SBU levels because such an organisation inserts SBU
strategy between corporate strategy and functional strategies. Ftowever, the
basic process of strategic management and its various elements remain
the same in both types of organisations. Thus, various elements of strategic
management process are organisational mission (this may also include
long-term, enduring qualitative objectives like survival, growth, etc. and
exclude long-term quantitative objectives to be achieved during strategic
plan period), environmental anylysis, organisational analysis, identification
of alternative strategies, choice of strategy, implementation of strategy,
and strategic evaluation and control. Feedback is provided in the light
of strategic evaluation and control to take additional actions wherever
required so that objectives are achieved. A brief description of these
elements are provided here :

1. Organisational Mission and Objectives - Mission of an

organisation is the fundamental unique purpose that sets it
apart from other organisations and identifies the scope of its operation
in product and market terms. The mission is a general, enduring statement
of the organisation's intention. It embodies the strategic decision
maker's business philosophy and implies the image which the
organisation seeks to project. This mission becomes the cornerstone
for strategic management and all organisational functions revolve
around it. Organisational objectives are other factors which
determine strategy. Objectives are different from the mission in the
sense that latter prescribes the basic philosophy of the organisation
itself which is used in determining the objectives. Objectives are
+ h o n *-> r1 ko**' .!♦<* tha o rrtn n i c n t! n n ront'oq n. n r‘tf <"> iT> to, nrtvc'Ve
 21

2. Environmental Analysis - The second important element of strategic

management process is environmental analysis. An organisation operates
within the environment which consists of many factors such as society,

competitors, technology, legal framework, etc. The organisation has to interact

with these factors continuously. In this interaction process, the organisation

has to relate itself with the environment. Various environmental factors

have dual effect in the interaction process with the organisation; they

affect the organisational working and are also affected by this working.

However, the effect of environment is more on the organisation rather

than otherwise. The organisation-environment interaction provides opportunities

and threats to the organisation depending on the situation.

3. Organisational Analysis - Various opportunities and threats provided

by the environment can be handled by an organisation depending on

its strengths and weaknesses and how these are utilised. For identifying

organisational strengths and weaknesses, organisational analysis is

undertaken. Organisation's strengths and weaknesses help in identifying

the environmental sectors in which it would like to operate so that it

emphasises its strengths and overcomes its weaknesses.

4. Identification of Strategies - Interaction of the organisation with

its relevant environment in the light of its strengths results into

availability of various strategies. However, all strategies, identified at

this stage, cannot be chosen even if they produce the same results.

Therefore, strategists may like to limit themselves to the serious

consideration of some of the strategies so that they are saved from

unnecessary exercise. Only those strategies need serious analysis which

fit with environmental and organisational requirements.

5. Choice of Strategy - Identification of various strategies leads to

 22

the level where strategists consider some strategies and choose the
most acceptable one. This is the stage of strategic decision making and
all factors relevant for decision making are considered here. Since a
particular strategy attempts to affect organisational operations in some
predetermined manner' the choice process systematically considers how

each alternative strategy affects the various critical success factors of

organisational functioning.

6. Implementation of Strategy - Once the creative and analytical

aspect of strategy formulation is over, the organisation tries to convert the
strategy into something operationally effective. To bring the
desired results, the strategy should be put to action because mere choice
of even the soundest streategy will not affect the organisational operations
and achievement of its objectives. In strategy implementation, various
activites involved are redesigning organisation structure to suit the chosen
strategy, reshaping organisational culture and processes, development
and allocation of resources, and development of functional plans
and policies.

7. Strategic Evaluation and Control - Strategic evaluation and control may

be treated as the final stage of strategic management process.
However, since strategic management is an on-going process, strategic
evaluation and control should be taken as the process for future course
of action. For effective implementation of the strategy and consequently
achievement of organisational objectives, it is necessary that there is
continuous minitoring of strategy implementation so that suitable
action is taken when something goes wrong.

Strategic evaluation and control will provide feedback for taking

necessary corrective actions. Depending on the situation, such actions may
be required in the area of correcting strategy implementation, choice
 23

of strategy, or even change in organisational objectives. Thus, strategic

management process is not taken as static, but as dynamic so that new
action is taken whenever there is any change in any of the factors
affecting strategy.

REVIEW OF RESEARCH ON STRATEGIC MANAGEMENT

Strategic management, being a comparatively newer thinking in
management, has not been researched systematically so far. In Indian
context, some of the studies have been made on different aspects of
strategic management process. These aspects include long-term planning
process, objective setting, environmental analysis, and organisational
analysis. Further, many of these’studies are in the form of case studies
of individual companies. The findings of the relevant studies are
presented briefly.

Most of the companies specify their mission though not all of them
express this in the form of mission statement. Further, the contents of
mission statements of different companies show significant diversify. A
perusal of mission statements of 21 companies by L M Prasad (2002) shows
that differences among these statements exist in terms of contents as
well as details. Most of the companies include organisation's self-
concept, organisational philosophy that is used in dealing with various
stakeholders, and public image that they want to project. Few companies
include long-term objectives in the form of growth and profitability. Still
fewer companies include nature of their business in terms of products/
services being offered or to be offered, type of market segment to be served,
and type of technology used. Similarly, some companies define their mission
in quite.elaborated from running into two pages; others prefer to keep if
brief covering half a page or even lesser.

Companies define their long-term objectives in different areas. A

 24

strudy of objective setting practices of 65 large companies by Manohar

Bhatia (1981) shows that many of these companies have multiple
objectives. These companies set objectives in the area of corporate
growth, maximisation of profit or returns, supply of qualify products,
employee satisfaction,'and other objectives which include strengthening
of manufacturing base, product mix change, maintaining market leadership,
technological leadership, growing returns to shareholders, social
obligations, maintaining of assets as national assets, export development,
and funds management. In another sutdy of objective setting practices
of 28 large companies by B R Singh (1983), it has been found that companies
set objectives in the area of profit, growth, marketing, employee, and
social obligations. ,

Companies analyse different components of environment for identifying

opportunities and threats. A study by B R Singh (1983) shows that while
analysing their environment, companies put emphasis on economic,
technological, competitive, regulatory, political, and socio-cultural factors
in that order. On the basis of environmental anaylsis practices of 72
companies, Pramod Vaswani (1990) has found that companies used to
put emphasis on competitive and market, technological, political and legal,
economic, and socio-cultural factors in that order. On the basis of analysis
of 90 speeches by chairmen.in 1983 and 1998, L /V\ Prasad (2002) had
concluded that more emphasis has been put on competitive and technological
factors in 1998 as compared to 1983; He has concluded that this is
because of the globalisation of Indian economy which has generated
intensive competition.

For assessing organisational strengths and weaknesses, companies

analyse various internal factors. According to Pramod Vaswani (1990),
companies analyse marketing, production/operations, finance and
accounting, and human resources factors for assessing their strengths
and weaknesses and they put emphasis on these factors in that order.
 25

Companies use different time dimensions for formulating their strategic

plans. According to Pramod Vaswani (1990), while 16 per cent companies
plan for more than 5 years, 45 per cent companies plan for 1 to 2 years,
and the remaining 39 per cent companies plan for 3 to 5 years. A recent
survey of 160 companies by All India Management Association (1998)
shows that 16 per cent companies plan for more than 5 years while 44
per cent companies plan for less than 3 years. The percentage of companies
planning for 3 to 5 years is 40. In terms of size, 45 per cent of giant
companies plan for more than 5 years while 70 per cent of smaller
companies plan for less than 3 years.

No research finding is available on how companies implement their

strategic plans. The review of research on different aspects of strategic
management shows that there is lack of comprehensive research on \
strategic management practices. Further, most of the studies have been ^
conducted in pre-liberalised era. Therefore, their results may not be very \
relevant for post-liberalised era because the market situation has s
changed resulting into change in strategic management practices. ‘
Therefore, there is need for exploring these practices for wider ((

dissemination. The present study makes an attmpt to satisfy this need.

OBJECTIVES OF THE STUDY

The basic objective of this study is to identify strategic management
practices adopted by Indian companies, particularly the large ones. For
achieving this basic objective, following aspects of strategic management
have been studied :

1. Organisational mission and objectives.

2. Environmental analysis.

3. Organisational analysis.

4. Choice of strategy.
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5. Implementation of strategy.
6. Strategic evaluation and control.

Based on the analysis of the above aspects, conclusions have been

drawn about strategic management process which are likely to be helpful
✓
for those companies which have not adopted strategic management in
a formalised manner. It is also expected that the conclusions of the
study will enrich the existing literature on strategic management.