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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