1. STRATEGIC MANAGEMENT
Kishore C. Mishra

3. Chapter Outline…..
• Concept of Strategy
• Levels of Strategy
• Strategic Management Process
• Vision, Mission, Objectives, Goals, Target, Approaches
to Strategic decisions
• Mintzberg’s Model

4. Concept of Strategy
• Strategy
• is the direction and scope of an organization over the long term,
• which achieves advantage in a changing environment
• through its configuration of resources and competences
• with the aim of fulfilling stakeholder expectations.
• Consists of competitive moves and business approaches to produce
successful performance.
• Large-scale, future-oriented plan for interacting with the competitive
environment to achieve objectives.

5. Strategic management :
• The process of
– specifying an organization's objectives,
– developing policies and plans to achieve these objectives, and
– allocating resources so as to implement the plans.
• Benefits of Strategic Management:
– Enhances the firm’s ability to prevent problems
– Emphasizes group-based strategic decisions likely to be based on best available
alternatives
– Improves employees’ understanding of the productivity-reward relationship
– Reduces gaps/overlaps in activities among employees as their participation
clarifies differences in roles
– Resistance to change is reduced

6. Levels of Strategy:
• Corporate level: board of directors, CEO & administration [Highest]
• Business level: business and corporate managers [Middle]
(SBU – Strategic business Unit)
• Functional level: Product, geographic, and
functional area managers [Lowest]

7. Characteristics of Strategic Management Decisions:
(Corporate)
• Often carry greater risk, cost, and profit potential
• Greater need for flexibility
• Longer time horizons
• Choice of businesses, dividend policies, sources of long-term financing, and
priorities for growth
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8. Characteristics of Strategic Management Decisions:
(Business)
• Help bridge decisions at the corporate and functional levels.
• Less costly, risky, and potentially profitable than corporate-level decisions.
• More costly, risky, and potentially profitable than functional-level decisions.
• Include decisions on plant location, marketing segmentation, and
distribution
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9. Characteristics of Strategic Management Decisions:
(Functional )
• Implement the overall strategy formulated at the corporate and business
levels.
• Involve action-oriented and operational issues.
• Relatively short range and low risk.
• Modest costs: depend upon available resources.
• Relatively concrete and quantifiable
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12. The Strategic Management Process:
• The process by which managers choose a set of strategies that will
allow a company to achieve superior performance.
• The elements in Strategic Management Process should be :
a. Strategic Intent
b. Environmental and Organizational Analysis
c. Identification of Strategic Alternatives
d. Choice of Strategy
e. Implementation of Strategy
f. Evaluation and Control

13. a. Strategic Intent
• The strategic intent makes clear why an organization stands for.
• It is reflected through vision, mission, business definition and
objectives.
– Vision is a statement of what an organization wishes to be like in long run/future.
– Mission is the reason for existence of an organization.
– The process of assigning a part of a mission to a particular department and then
further sub dividing the assignment among sections and individuals creates a
hierarchy of objectives.
– Goals are the intentions behind actions/decisions- the state of mind that derive
individuals to do what they do.

14. b. Environmental and Organizational Analysis
• It includes monitoring, evaluating and disseminating of information
from external and internal environments to key people within the
corporation.
• The factors which comprise firms environment are of two types:
• factors which influence environment directly including suppliers, customers
and competitors, and
• factors which influence the firm indirectly including social, technological,
political, legal, economic factors etc.
• There are two aspects involved in environmental analysis:
• Monitoring the environment i.e. environmental search and
• Identifying opportunities and threats based on environmental monitoring i.e.
environmental diagnosis.

15. c. Identification of Strategic Alternatives
• Strategic alternatives revolve around the question whether to continue or
change the business, the enterprise is currently improving the efficiency or
effectiveness with which the firm achieves its corporate objectives in its
chosen business sector.
• According to Glueck, there are basically four grand strategic alternatives:
– Stability
– Expansion
– Retrenchment
– Combination

16. d. Choice of Strategy
• The next logical step after evaluation of strategic alternatives is choice of
the most suitable alternative.
• While making a choice, two types of factors have to be considered:
– Objective factors
– Subjective factors
Objective factors are the ones which can be quantified while subjective factors are the
ones which cannot be quantified and are based on experience and opinion of people.
• The strategic choice is a decision making process which looks into the
following steps:
– Focusing on strategic alternatives
– Evaluating strategic alternatives
– Considering decision factors – objective factors and subjective factors.
– Finally, making the strategic choice.

17. e. Implementation of Strategy
• After the evaluation of the alternatives, the choice of strategy is made. This
choice now needs to be implemented i.e. strategy is now put into action.
• Implementation of Strategy includes the activation of the strategic
alternatives chosen.
• Strategy making and strategy implementation are two different things.
Strategy making requires person with vision while strategy implementation
requires a person with administrative ability.

18. f. Evaluation and Control:
• This is the last step of the strategy making process. This is an ongoing
process, evaluation and control have to be done for future course of action
as well.
• Evaluation of strategy is done by the top managers to determine whether
their strategic choice is implemented in a manner that it is meeting the
organization’s objectives.
• Evaluation emphasizes measurement of results of a strategic action. On
the other hand, control emphasizes on taking necessary action in the
light of gap that exists between intended results and actual results in the
strategic action.

19. Vision, Mission, Objectives, Goals, Target,
Approaches to Strategic decisions

20. Vision:
• A vision is an image of the future we aspire to create.
A Vision statement outlines:
- what the organization wants to be, or
- how it wants the world in which it operates to be.
- It concentrates on the future.
- It is a source of inspiration.
- It provides clear decision-making criteria.
Examples of Vision Statements….
To be reputed global Company in the Metals and Energy Sectors. NALCO.
A world class integrated power major, powering India’s growth, with increasing
global presence.“ NTPC

21. • Features of an effective vision statement include:
• Clarity and lack of ambiguity
• Vivid and clear picture
• Description of a bright future
• Memorable and engaging wording
• Realistic aspirations
• Alignment with organizational values and culture

22. Process for developing a strategic vision for an organization:
• Step 1 -- Silent Generation of Ideas/ thoughts:
• Step 2 -- Share individual ideas/ thoughts:
• Step 3 – Identify points of common ground and divergence:
• Step 4 – Develop 1st draft vision statements:

23. • Mission
– Defines the fundamental purpose of an organization or an enterprise, succinctly describing
why it exists and what it does to achieve its Vision.
– The mission could be either for the long term or the short term.
– Provides the framework or context within which strategies are formulated.
• Components of a Mission Statement :
– Customer-market
– Product-Service
– Geographic Domain
– Technology
– Self-concept
– Philosophy
Examples…. NALCO :
– To achieve sustainable growth in business through diversification, innovation and
global competitive edge.
– To continuously develop human resources.

24. • Characteristics of Mission Statement:
– It should be feasible-
– It should be precise-
– It should be clear-
– It should be motivating-
– It should be distinctive-
– It should indicate major components of strategy-
– It should indicate how objectives are to be accomplished-

25. Mission Statement
Components Mission
Examples of Vision/
1. Customer-market
Company Product- Market-oriented
2. Product-service
oriented Vision/ Mission
3. Geographic Domain Vision/
4. Technology Mission
5. Concern for Survival
REVLON We Make We sell Lifestyles
6. Philosophy Cosmetics and self expressions
7. Self-concept
8. Concern for Public Image
DISNEY We run Theme We provide fantasies
Parks and entertainments
A Mission statement tells you the fundamental purpose of the
organization.
It defines the customer and the critical processes.
It informs you of the desired level of performance.

26. Goals
• The setting of goals for the organization based on its vision and mission
statement.
• A goal is a long-range aim for a specific period.
– It must be specific and realistic.
– Long-range goals set through strategic planning are translated into activities that
will ensure reaching the goal through operational planning.
• The types of Goals are like:
• Survival – A firm that is unable to survive will be incapable of satisfying the aims
of any of its stakeholders.
• Profitability – A firm’s profitability is the mainstay goal of a business.
• Growth – A firm’s growth is tied inextricably to its survival and profitability.
Growth in this sense must be broadly defined.

27. • Objectives:
• Purpose of setting objectives
– Converts vision into specific performance targets
– Creates yardsticks to track performance
• Spell-out how much of what kind of performance by when
• Short-Term vs. Long-Term Objectives:
Short-term objectives
– Targets to be achieved soon
– Building Blocks for reaching long-range performance
Long-term objectives
– Targets to be achieved within 3 to 5 years
– Prompt actions now permit long-range performance later

28. Approaches to Strategic Management
As per Minzberg, the approach to strategic management needs to
be studied in two broad ways, those are: Predictive or
Prescriptive approach and Emergent approach.
Both the approaches are based on
• Strategic Analysis (SWOT analysis and determination of
mission and objectives).
• Strategy Development (evaluation of strategic alternatives
and choice of strategy).
• Strategy Implementation.

29. • Leads to Determination
of long term objectives.
• Plans for Organizational
development.
• Generalized process.
• Advance indicator of
demands on the
resources.

30. • Fit for short term
objectivity.
• Development and
implementation are
intertwined.
• Achieved through
constant monitoring and
control.
• Highly flexible and
situation friendly.

31. Derived Approaches to Strategic Management
– Classical:
Influenced, policy driven, focused on economics, military notions of command,
authoritarian view of the world and the issues at hand, Long term goals and objectives,
Top down driven, Confidence in the readiness and capacity of managers to adopt profit
maximizing strategies through rational long range planning.
– Evolutionary:
Mentality: Whatever methods managers adopt they are OK because over the long run
only the best performers survive. Organizations maximize their chances in the short
term by achieving perfect fit against their current environment and the unpredictable and
uncontrollable market forces. Investing in long term strategies can be counter-
productive.
View: Business survival depends on strategies of differentiation --- but do organizations
have the capacity to achieve differentiation and adaptation in a deliberate and
sustainable way?

32. – Process:
• Strategy can be a dangerous delusion.
• Companies tend to overestimate the power of strategy.
• If deliberate strategizing is ineffective, then what matters is an abundance of diverse
new initiatives from which the organization can select the best --- the mistakes and
relatively ill-adapted are ruthlessly deselected.
– Systemic:
• Strategies are not chosen; they are programmed
• Strategies, then are a way in which managers try to simplify and order a world which
is too complex and chaotic for them to comprehend --- the regular procedures and
precise quantifications of strategic plans are comforting managerial security
blankets
• Strategies only emerge from small successive steps, which eventually merge into a
pattern
• Strategic plans may be wrong, but it does not matter as long as they give managers
the confidence and sense of purpose to act

33. Classical Process Evolutionary Systemic
Rationale Profit maximize Vague Survival Local
Focus Internal Internal External External
(plans) (politics/ (markets) (societies)
cognitions)
Processes Analytical Bargaining/ Darwinian Social
learning)
Key Influences Economics/ Psychology Economics/ Sociology
military biology
Key Period ‘60s ‘70s ‘80s ‘90s
Key Authors Chandler Cyert & March Hannan & Freeman Granovetter
Ansoff Mintzberg Williamson Marris
Porter Pettigrew
Hax Hamel

34. Mintzberg’s Model

35. • Henri Mintzbergs (1980: Designing an Effective Organizations )
• According to Mintzberg organizations are formed of five main parts:

36. • Operating core
Those who perform the basic work related directly to the production of products and services
• Strategic apex
Charged with ensuring that the organization serve its mission in an effective way, and also
that it serve the needs of those people who control or otherwise have power over the
organization
• Middle-line managers
Form a chain joining the strategic apex to the operating core by the use of delegated formal
authority
• Techno-structure or Techno storm
The analysts who serve the organisation by affecting the work of others. They may design it,
plan it, change it, or train the people who do it, but they do not do it themselves
• Support staff
Composed of specialized units that exist to provide support to the organisation outside the
operating work flow

37. THANKS …