Strategic management new slide

STRATEGIC
MANAGEMENT
By
Dr. Rajiv Sikroria

What is Strategy…?
 Long Term Plan
 Decisions Taken By Top Management
 Business Policy
 Implementation of future plan after analysis

Features…
 Basic Financial planning
 Forecast based planning
 Externally oriented planning
 Strategic management

 Clearer sense of strategic vision for the firm
 Sharper focus on what is strategically
important
 Improved understanding of a rapidly
changing environment.
 To take competitive advantage of new
opportunities.
 Attainment of Objectives
Benefits/Advantages of Strategic
Management

BENEFITs of Strategic
Management
 Higher probability of Success.
 Systematic Decision Making.
 Effective organizational communication.
 Better Utilitization of Resources.

LEVELS:
i. CORPORATE STRATEGY: Top Level
ii. BUSINESS STRATEGY: Middle Level
iii. FUNCTIONAL STRATEGY: Lower Level
Management.
CORPORATE STRATEGY
BUSINESS STRATEGY
FUNCTIONAL
STRATEGY

Phases of Development of Strategic
Management
 Phase1 : Basic Financial Planning.
 Phase2: Forecast based Planning
 Phase3: Externally oriented planning.
 Phase4: Strategic Management with the help
of matching budget to planning for future
decisions.

Limitations of Strategic Management
 Complex and Dynamic Environment.
 Rigidity of organization.
 Inadequate appreciation of the need.
 Focus on short term achievement and goal.

Approaches to Strategic Management
1. Entrepreneurial opportunistic approach:
Family managed business Houses. Focus is
on capitalizing the opportunity.
a) Decision making- Centralized.
b) Objective: Growth and Expansion, in assets,
turnover and increased Market Share.

Formal –Structured Approach:
Proactive
2. Formal – Structured Approach: It is
applicable in formal institutions.
a) Decision making is in anticipation of the
future requirements., Decentralized and
Centralized. Proactive approach.
b) Follows systematic and structured
approach.

ADAPTIVE APPROACH
(Management by Exception)
3. Adaptive Approach
I. Reactive rather than Proactive.
II. Decision making is meant for assimilating
the changes in the various factors
III. Decision making is sequential step, initiated
by environmental changes.

Adaptive approach
a) Various interest groups and stake holders
put considerable pressure on decision
making.
b) Lack of integrative decision making.
c) Limitations-
d) Environmental changes are continuous,
need to adapt always.
e) Sometime, modifications wont work.

Hierarchy of Objectives (MBO
Approach)
1. Overall Organizational Objectives : Long
term and Short term Objective.
2. Departmental Objectives
3. Unit Level Objectives: Strategic Business
Level
4. Individual Level Objectives.

Areas/Scope of Objectives
 Profitability Objective: in terms of rate of
return, return on investment, EPS, Revenues
and Dividends.
 Market Standing Objectives: Market Share,
Brand Equity, Company image, positioning.
 Innovation Objective: Research and
Development objectives, Patents and Copy
right etc.

Areas/Scope of Objectives
 Productivity objectives related to Production
Level, quality of Products.
 Financial Objectives.
 Public or Corporate social responsibility
objectives.
 Worker Performance Index and Objectives.
 Objectives to Customer Services and
Grievance handling.

Characteristics/ Nature of Effective
Objectives
1. Effective and Specific Objective. –
Quantitative
2. Level of Effort required to attain the
Objective .
3. Objectives should be Changing.
4. Measurable in quantitative terms.
5. Consistent in Long run as well as in Short
short

Guidelines for Setting the Objectives
 Involve all those employees responsible for
carrying out the objective.
 All Objectives within an organization should
support the Overall objective.
 Set attainable objectives
 Set contemporary Objectives.
 Objective should be ranked as per priority.
 Objectives Should be in Balance.

CORPORATE STRATEGY
 Describes company’s overall direction
 Fits within three main categories as stability,
growth and retrenchment
 Shows vision of the management towards the
growth and various business products

BUSINESS STRATEGY
 Occurs at business unit or product level
 Emphasizes on improvement of the
competitive position of the firm

FUNCTIONAL STRATEGY
 To achieve the corporate or business unit
objectives
 Maximizes resource productivity
 It nurtures the competitiveness of the
company

Strategic management new slide

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