Strategic Management

“ STRATEGIC MANAGEMENT is an art & science of

formulation, implementation & evaluation of cross

functional decisions that enable an organisation to

achieve its given objectives “-FRED DAVID

Overview of the Strategic Management Process

Formulation Implementation

Evaluation

Formulation

Mission - To be the best “digital εCompany”

Vision – “Inspire the World, Create the Future”

STUDYING THE ENVIRONMENT

Internal environment – Analysis of internal environment helps the business to know its strengths and weaknesses

External environment – Analysis of external environment helps the business to know its opportunities and threats

OBJECTIVE

To provide branded products and services  To provide superior quality and value that improves the

lives of the world's consumers

Higher leadership sales

Profit and value creation

Allowing people, shareholders and the communities to prosper

Gap analysisDifference between our current performance level and the desired performance level.EG:- ABC, a clothing company was a new entrant in the market and wanted to grasp at least 20% of the market share but by the end of the year they only managed 13%. Hence, there was a “gap” of 7%

Framing alternative strategiesHaving an alternative ( PLAN B ) always ready.EG:-ABC had adopted competitive pricing strategy but since it was not completely successful they decided to go in for aggressive marketing

Analyzing the strategy Questioning the purpose and weighing

the pros & cons. EG:-ABC decided to change their strategy

in order to create awareness of their brand being a new entrant

Choosing an appropriate strategy EG:-The Aditya Birla Group has a Corporate

Strategy and business development division to deal with business portfolio management, focusing on long term sustainability, profitability and value creation

Implementation

A Plan is a document which provides information regarding the different elements of strategic management & the manner in which an organization and its strategists propose to put the strategies into action

Identification of activities Ranges from launching & marketing the product, generating finance, awareness through advertising, target audience

Allocate and manage resources: Different resources in an organisation

are : Human resources, Financial resources, Technological resources, Physical resources

CHAIN OF COMMAND

• The chain of command, also called the scalar chain, is the formal line of authority, communication, and responsibility within an organization

• It is usually depicted on an organizational chart, which identifies the superior and subordinate relationships in the organizational structure

• Provides for clear

assignment of duties and responsibilities

Manage Process Monitor Control Evaluate Performace

Any other adjustments

EvaluationSETTING STANDARDS While fixing the standards, strategists

encounter questions such as - what benchmarks to set, how to set them and how to express them. In order to determine the benchmark performance to be set, it is essential to discover the special requirements for performing the main task

Measure PerformanceThe standard performance is a bench mark withwhich the actual performance is to be compared.The reporting and communication system helpin measuring the performance. If appropriatemeans are available for measuring theperformance and if the standards are setin the right manner, strategy evaluationbecomes easier.

Compare actual with Standard

The comparing step determines thedegree of variation between actualperformance standard.

Find out DeviationsSix Sigma is a strategic managementprocess that helps in finding out

deviations

Analyse DeviationsWhile measuring the actual performance andcomparing it with standard, there may be varianceswhich must be analysed. The strategists mustmention the degree of tolerance limits between actualand standard performance.

Take Corrective MeasuresAction taken by the company to prevent thereoccurrence of an event that caused the probleminitially.

Strategic Planning Strategic Management1.Concerned with

Developing a long range plan for a business enterprise

Enabling an organisation to achieve its goal by formulating, implementing & evaluating cross

functional decisions

2.NatureIt is not a strategy but a

procedure for formulating a strategy

It is a process of 3 stages: formulating, implementing &

evaluation

3.FlexibilityVery rigid Quite flexible

4.Working onPlanning strategies for various

units Managing strategies for various

units

Distinguish between

STRATEGIC MANAGEMENT

PROCESS

VISION

MISSION

VALUE Responsive Innovative Team Orientation Simplicity

OBJECTIVES

GOALS

It denote what an organization hopes toaccomplish in a future period of time S- SPECIFIC M-MEASURABLE A-ACHIEVABLE R-REALISTIC T-TIME BOUND.

POLICIESThey are the statements that

guide the manager to take the right decision and action.

PROCEDURESIt is step by step methodology to achieve a particular goal.

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