Set of decision and actions resulting in formulating and implementation of strategies designed to achieve the objectives of an organization.
Art & science of formulating, implementing, and evaluating, cross-functional decisions that enable an organization to achieve its objectives.
2. Set of decision and actions resulting in
formulating and implementation of
strategies designed to achieve the
objectives of an organization.
Art & science of formulating,
implementing, and evaluating, cross-
functional decisions that enable an
organization to achieve its objectives.
2
Strategic Management –
Defined
3. Evolution
1. The corporation becomes large
2. The layers of management increase,
3. The environment changes substantially.
Phase 1 - Basic financial planning: seek better
operational control by trying to meet budgets.
Phase 2 - Fore-cast based planning: seeking more
effective planning for growth by trying to predict the
future beyond next year.
Phase 3 - Implementation and evaluation and control,
in addition to the emphasis on the strategic planning.
3
4. General Electric, one of the pioneers of the strategic
planning, led the transition from the strategic
planning to strategic management during the 1980s.
By the 1990s, most corporations around the world
had also begun the conversion to strategic
management.
Phase 4. Externally oriented planning (strategic
planning): Seeking increasing responsiveness to
markets and competition by trying to think
strategically.
Phase 5. Strategic management: Seeking a competitive
advantage and a successful future by managing all
resources.
Phase 6. in the evolution of the strategic management
includes a consideration of strategy 4
5. ELEMENTS
Strategic management consists of four basic
elements
1. Environmental scanning
2. Strategy Formulation
3. Strategy Implementation and
4. Evaluation and control
5
6. Importance of Strategic
Management
Gives everyone a role
Makes a difference in performance
levels
Provides systematic approach to
uncertainties
Coordinates and focuses employees
6
7. VISION
A strategic vision concerns a firm’s
future business path - “where we are
going”
Markets to be pursued
Future product/market/
customer/technology focus
7
8. Developing A Strategic Vision
Involves thinking strategically about
Firm’s future business plans
Where to “go”
Tasks include
Creating a roadmap of the future
Deciding future business position to
stake out
Providing long-term direction
Giving firm a strong identity
First Task of Strategic Management
8
9. MISSION
The mission statement of a firm focuses
on its present business purpose - “who
we are and what we do”
Current product and service offerings
Customer needs being served
9
10. EXAMPLES: MISSION STATEMENT
The mission of the American Red Cross
is to improve the quality of human life; to
enhance self-reliance and concern for
others; and to help people avoid,
prepare for, and cope with emergencies.
American Red Cross
11. SETTING OBJECTIVES
Converts strategic vision
and mission into specific
performance targets
Creates yardsticks to track
performance
Pushes firm to be
inventive and focused on
results
Helps prevent
complacency and coasting
Second Task of Strategic Management
11
12. WHAT IS STRATEGIC
PLANNING ?
What Is
Strategic
Planning?
Plan of results
Plan of changes
Realist
Responsibility of
rendering account
Participatory approach
Means of quality management
12
14. STRATEGIC MANAGEMENT
PROCESS
Step 1: Identifying the organization's
current mission, objectives, and
strategies
Mission: the firm’s reason for being
Who we are,
What we do, and
Where we are now
Goals: the foundation for further
planning
Measurable performance targets
14
15. Step 2: Conducting an external analysis
The environmental scanning of specific and general
environments
Focuses on identifying opportunities and threats
Step 3: Conducting an internal analysis
Assessing organizational resources, capabilities,
activities and culture:
Strengths (core competencies) create value for the
customer and strengthen the competitive position of
the firm.
Weaknesses (things done poorly or not at all) can place
the firm at a competitive disadvantage.
15
16. Step 4: Formulating strategies
Develop and evaluate strategic alternatives
Select appropriate strategies for all levels in
the organization that provide relative
advantage over competitors
Match organizational strengths to
environmental opportunities
Correct weaknesses and guard against threats
16
17. Step 5: Implementing strategies
Implementation: effectively fitting
organizational structure and activities to the
environment
Effective strategy implementation requires an
organizational structure matched to its
requirements.
Step 6: Evaluating results
How effective have strategies been?
What adjustments, if any, are necessary?
17
18. STRATEGIC DECISION
MAKING
Strategic Decision Making is a continuous
process. There are various models for strategy
generation (My Strategy Generation Model).
"6I's of Strategic Decision Making“ was
introduced.
Strategic decision making, or strategic
planning, describes the process of creating a
company's mission and objectives and deciding
upon the courses of action a company should
pursue to achieve those goals.
18
21. Ch 1 -21
Benefits of Strategic
Management
• Proactive in shaping firm’s future
• Initiate and influence firm’s activities
• Formulate better strategies
•Systematic, logical, rational
22. Ch 1 -22
Benefits of Strategic
Management
Financial Benefits
• Improvement in sales
• Improvement in profitability
• Productivity improvement
23. Ch 1 -23
Benefits of Strategic
Management
Non-Financial Benefits
• Improved understanding of competitors
strategies
• Enhanced awareness of threats
• Reduced resistance to change
• Enhanced problem-prevention capabilities
24. GENERAL MODEL OF
STRATEGIC MANAGEMENT
Mission Objectives Strategies Tactics
Company Profile
( SWOT )
Industry & Environmental
Analysis ( SWOT )
24
25. THE ROLE OF STRATEGIC
MANAGEMENT IN FINANCE
Financial metrics have long been the standard for
assessing a firm’s performance. The BSC supports the
role of finance in establishing and monitoring specific
and measurable financial strategic goals on a
coordinated, integrated basis, thus enabling the firm to
operate efficiently and effectively. Financial goals and
metrics are established based on benchmarking the
“best-in-industry” and include-
25
26. 1. Free Cash Flow
This is a measure of the firm’s financial soundness and shows
how efficiently its financial resources are being utilized to
generate additional cash for future investments
2. Economic Value-Added
This is the bottom-line contribution on a risk-adjusted basis and
helps management to make effective, timely decisions to expand
businesses that increase the firm’s economic value and to
implement corrective actions in those that are destroying its
value.
26
27. 3. Asset Management
This calls for the efficient management of current assets (cash,
receivables, inventory) and current liabilities (payables, accruals)
turnovers and the enhanced management of its working capital
and cash conversion cycle
4. Financing Decisions and Capital Structure
Here, financing is limited to the optimal capital structure (debt
ratio or leverage), which is the level that minimizes the firm’s
cost of capital
5. Profitability Ratios
This is a measure of the operational efficiency of a firm.
Profitability ratios also indicate inefficient areas that require
corrective actions by management; they measure profit
relationships with sales, total assets, and net worth.
6. Tax optimization etc 27
28. ROLE OF STRATEGIC
MANAGEMENT IN HRM
Role in Strategy Formulation: HRM is in a unique position to
supply competitive intelligence that may be useful in strategy
formulation. Details regarding advanced incentive plans used by
competitors, opinion survey data from employees, elicit
information about customer complaints, information about
pending legislation etc. can be provided by HRM. Unique HR
capabilities serve as a driving force in strategy formulation.
Role in Strategy Implementation: HRM supplies the company
with a competent and willing workforce for executing strategies.
It is important to remember that linking strategy and HRM
effectively requires more than selection from a series of practice
choices. The challenge is to develop a configuration of HR
practice choices that help implement the organization’s strategy
and enhance its competitiveness.
28
29. Following strategic choices can be considered which would help
today’s organizations to survive and grow.
Change Management: Manage change properly and become an
effective change agent rather than being a victim of change
itself.
Values: Adopt proactive HRD measures, which encourage values
of openness, trust, autonomy, proactivity and experimentation.
Maximize productivity and efficiency: Through qualitative growth
of people with capabilities and potentialities to grow and
develop thrive to maximize productivity and efficiency of the
organization.
Activities directed to competence building: HRD activities need
to be geared up and directed at improving personal competence
and productive potentialities of manpower resources.
29
30. ROLE OF STRATEGIC
MANAGEMENT IN
MARKETING
Role of
marketing
Strategic
marketing
Marketing
philosophy
executing
Analysis
Corporate business
and marketing g
strategy decisions
Marketing
management
30