Business Strategic Management

What is a Strategy?

A decision taken at a suitable time relevant to achieve specific objective considering the micro and/or macro variables influencing at that time. Business Strategy of a firm includes the plans, policies and their implementation in a given time frame.
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What is a Tactic?

A tactic is a specific operating plan detailing how a strategy is implemented in terms of when & where it is to be put into action. Tactics are short term actions taken while implementing a strategy. It is the link between formulation & implementation of strategies.
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What is meant by Vision?

It is the first business intent of an entrepreneur. It is a statement of what a firm can do and what it wants to be. It can be defined as the broad intentions, all encompassing forward thinking, for the good of the customers and prospective customers. It may state how the firm would like to be in terms of employees, products or services.
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What is meant by a Mission?

It defines the fundamental unique purpose that sets a firm apart from other firms. Mission is the purpose or reason for the firms existence. It is a more tangible vision, which gives the firm its character and cultural stream. It acts a guiding force that propels the firm towards its vision. It also sets standards for its employees and their behavior. Mission statements enshrine the values, beliefs and character of the firm. It is the second of the strategic intents.
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What are Goals?

They are more specific than mission statements. It is a statement of what a firm wants to achieve. It may not have a time frame and can be an open ended statement with a generalised expression of a business intent. Goals set should be reachable, but with a stretch. It is the third business intent.
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What are Objectives?

These are goals operationalised. They are measurable, time-bound, and should reduce or eliminate conflicts and tensions within a firm. An objective statement says about what a firm wants to achieve with definitive commitment on quantity and time frame. It is the fourth business intent.
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What are Policies?

Policy is a broad guideline for decision making to link strategy formulation and strategy implementation. They are made for long run applications (and hence are different from tactics) & are useful for decision making at all levels and places. It offers guidance or orientation along which decisions are made. It considers the mission, objectives and vision of the firm and help it to make appropriate decisions or strategies.
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What is Strategic Management?

A continuous, iterative process aimed at keeping an organization as a whole appropriately matched to its environment (Certo and Peter) Keeping the business in tune with management and marketing forces both outside and inside the firm Planning for foreseeable eventualities as also, perhaps more importantly, for those impossible contingencies of which the firm has no prior knowledge.
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Benefits of Strategic Management

Establish the mission Formulate philosophy Establish policies Setting objectives Developing strategy Plan the organizational structure Provide personnel

Establish procedures Provide facilities Provide capital Set standards Establish programs and plans Control information Activate people
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Steps to Strategic Management

Environmental analysis Establish organizational direction Strategy formulation Strategy implementation Strategic control

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Environmental analysis

Process of examining the organizations environment to determine:

Strengths Weaknesses Opportunities Threats

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Environmental structure

General environment

Social, economic, political, legal, technical International, supplier, labor, competition, customer Organizational, marketing, financial, personnel, production
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Operating environment

Internal environment

Methods of environmental forecasting

Expert opinion Trend extrapolation Trend correlation Dynamic modeling

Cross-impact analysis Multiple scenarios Demand/hazard forecasting

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Establish organizational direction

Establishing an organizational direction for the company involves determining two indicators:

Organizational mission the reason why the organization exists Objectives measurable targets to track the growth of the business
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Key objective areas

Market standing Innovation Productivity Resource levels Profitability Manager performance and development Worker performance and attitude Social responsibility
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Types of objectives

Profitability Growth Market share Social responsibility Employee welfare Product Quality Service

R&D Diversification Efficiency Financial stability Resource conservation Mgt & labor development
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Strategy formulation

What are the purpose(s) and objective(s) of the organization? Where is the organization presently going? What critical environmental factors does the organization currently face? What can be done to achieve organizational objectives more effectively in the future?
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Growth-share matrix
22 20 18 Market Growth Rate (percent) 14 12 10 8 6 4 2 Cash Cows Dogs Stars Question Marks

10.0

5.0

2.0

1.0

0.5

0.1

Relative Market Share

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Formulating business strategies

Structural analysis of competitive forces

Threat of new entrants Bargaining power of suppliers Bargaining power of buyers Threat of substitute products Rivalry among existing competitors Strategic alternatives
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Formulating functional strategies

Operations strategy Financial strategy Marketing strategy Human resource strategy

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Strategy implementation

Commander approach

Organizational change approach

Collaborative approach

Cultural approach
Crescive approach
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The material for this presentation was taken from:

Strategic Management: Concepts and Applications

Samuel C. Certo and J. Paul Peter Random House Business Division

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Commander approach

Manager determines best strategy Manager uses power to see strategy implemented Three conditions must be met

Manager must have power Accurate and timely information is available No personal biases should be present
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Commander approach

Limitations

Can reduce employee motivation and innovation Managers focus on strategy formulation Works well for younger managers Focuses on objective rather than subjective
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Advantages

Organizational change approach

Focuses on the organization Behavioral tools are used Includes focusing on the organizations staffing and structure Often more effective than Commander Used to implement difficult strategies
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Organizational change approach

Limitations

Managers dont stay informed of changes occuring within the environment Doesnt take politics and personal agendas into account Imposes strategies in a top-down format Can backfire in rapidly changing industries
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Collaborative approach

Enlarges the Organizational Change Approach Manager is a coordinator Management team members provide input Group wisdom is the goal
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Collaborative approach

Advantages

Increased quality and timeliness of information Improved chances of effective implementation Contributing managers have different points of view and goals Management retains control over the process
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Limitations

Cultural approach

Includes lower levels of the company Breaks down barriers between management and workers Everyone has input into the formulation and implementation of strategies Works best in high resource firms
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Cultural approach

Advantage

More enthusiastic implementation Workers should be informed, intelligent Consumes large amounts of time Strong company identity becomes handicap Can discourage change and innovation
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Limitations

Crescive approach

Addresses formulation and implementation simultaneously Subordinates develop, champion, and implement strategies on their own Bottoms-up approach Ultimate strategy is sum of all successful approaches
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Crescive approach

Advantages

Encourages middle management to participate Strategies are more operationally sound Resources must be available Tolerance must be extended
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Limitations

Strategic control

Typically consists of three steps Monitoring performance Comparing performance to standards Taking corrective action where needed
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