Strategic Management PDF

Strategic management means carefully analyzed and chosen practical measures that can be used to effectively counter targeted challenges identified in advance. written The strategic management process helps company leaders assess their company\'s present situation, chalk out strategies, deploy them...

Strategic management means carefully analyzed and chosen practical measures that can be used to effectively counter targeted challenges identified in advance. written The strategic management process helps company leaders assess their company\'s present situation, chalk out strategies, deploy them and analyze the effectiveness of the implemented strategies. Strategic management typically involves: - Analyzing internal and external strengths and weaknesses. - Formulating action plans. - Executing action plans. - Evaluating to what degree action plans have been successful and making changes when desired results are not being produced. Strategic management involves the formulation and implementation of the major goals. taken by an organization\'s top management on behalf of owners, based on consideration of resources and an assessment of the internal and external environments in which the organization operates. Strategy is a contingent plan as it is designed to meet the demands of a difficult situation. - Strategy provides direction in which human and physical resources will be deployed for achieving organizational goals in the face of environmental pressure and constraints. - Strategy relates an organization to its external environment. - Strategic decisions are primarily concerned with expected trends in the market, changes in government policy, technological developments etc. - Strategy is an interpretative plan formulated to give meaning to other plans in the light of specific situations. The effective development and implementation of strategy depends on the strategic capability of the organization, which will include the ability not only to formulate strategic goals but also to develop and implement strategic plans through the process of strategic management. The strategy describes the way that the organization will pursue its goals, given the changing environment and the resource capabilities of the organization. **Components of strategy** - Scope; refers to the breadth of a firm's strategic domain i.e., the number and types of industries, product lines, and markets it competes in competes in or plans to enter. - Goals and objectives; these specify desires such as volume growth, profit contribution or return on investment over a specified period. - Resource deployment; strategy should specify how resources are to be obtained and allocated across businesses, product/markets, financial departments, and activities. - Identification of a sustainable competitive advantage; it refers to examining the market opportunities in each business and product-market and the firm's distinctive competencies or strengths relative to competitors. - Synergy; this exists when the firm's businesses, products, markets, resource deployments and competencies complement one another. Organizational objectives are usually established in accordance to the following aspects: - Profitability - Service to customers - Employee wellbeing and welfare - Social responsibility. *Formulation* of strategy involves the environment in which the organization operates, then making a series of strategic decisions about how the organization will compete. Formulation ends with a series of goals or objectives and measures for the organization to pursue. Environmental analysis includes the: - Remote external environment, including the political, economic, social, technological, legal and environmental landscape (PESTLE); - Industry environment, such as the competitive behavior of rival organizations, the bargaining power of buyers/customers and suppliers, threats from new entrants to the industry, and the ability of buyers to substitute products; and - Internal environment, regarding the strengths and weaknesses of the organization\'s resources (i.e., its people, processes and IT systems). - Strategy is Significant because it is not possible to foresee the future. Without a perfect foresight, the firms must be ready to deal with the uncertain events which constitute the business environment. - Strategy deals with long term developments rather than routine operations, i.e. it deals with probability of innovations or new products, new methods of productions, or new markets to be developed in future. - Strategy is created to take into account the probable behavior of customers and competitors. Strategies dealing with employees will predict the employee behavior. **Features of a Mission:** a. Mission must be **feasible** and attainable. It should be possible to achieve it. b. Mission should be **clear** enough so that any action can be taken. c. It should be **inspiring** for the management, staff and society at large. d. It should be **precise** enough, i.e., it should be neither too broad nor too narrow. e. It should be **unique** and distinctive to leave an impact in everyone's mind. f. It should be **analytical**, i.e., it should analyze the key components of the strategy. g. It should be **credible**, i.e., all stakeholders should be able to believe it. A vision statement identifies where the organization wants or intends to be in future or where it should be to best meet the needs of the stakeholders. It describes dreams and aspirations for future **Goals and Objectives:** A goal is a desired future state or objective that an organization tries to achieve. Goals specify in particular what must be done if an organization is to attain mission or vision. Goals make mission more prominent and concrete. They co-ordinate and integrate various functional and departmental areas in an organization. Well-made goals have following features- a. These are **precise and measurable**. b. These look after **critical and significant** issues. c. These are **realistic** and challenging. d. These must be achieved within a **specific time** frame. e. These include both **financial as well as non-financial components**. **Strategic management process has following four steps:** **Environmental Scanning-** Environmental scanning refers to a process of collecting, scrutinizing and providing information for strategic purposes. It helps in analyzing the internal and external factors influencing an organization. **Strategy Evaluation-** Strategy evaluation is the final step of strategy management process. The key strategy evaluation activities are: appraising internal and external factors that are the root of present strategies, measuring performance, and taking remedial / corrective actions.