STRATEGIC STRATEGIC BUSINESS BUSINESS

UNITUNIT

INRODUCTION A Strategic Business Unit (SBU) is an autonomous division or organizational unit, small enough to be flexible and large enough to exercise control over most of the factors affecting its long-term performance.

Because strategic business units are more agile and usually have independent missions and objectives, they allow the owning conglomerate to respond quickly to changing economic or market situations.

Strategic ManagementThe set of managerial decisions and actions that determines the long-run performance of a corporation. It includes:•environmental scanning (internal & external)•strategy formulation•strategy implementation•evaluation and control

It focuses on integrating management, marketing, finance/accounting, production/operations, research and development, and computer information systems to achieve organizational success.

STRATEGIC MANAGEMENT MODEL

Strategy Formulation

Strategy Implementation

Evaluation and Control

Mission

Objectives

Strategies

Policies

Environmental Scanning

Societal

Environment

General Forces

Task

Environment

Industry Analysis

Structure

Chain of Command

Resources

Assets, Skills

Competencies,

Knowledge

Culture

Beliefs, Expectations,

Values

Reason for existence

What results to accomplish

by when Plan to achieve the mission & objectives Broad

guidelines for decision making

Programs

Activities needed to accomplish a plan

Budgets

Cost of the programs Procedures

Sequence

of steps needed to do the job

Process to monitor performanceand take corrective action

Performance

External

Internal

IMPORTANCE OF STRATEGIC MANAGEMENT

A number of reasons are given, as why organizations should engage in strategic management. Many research studies show that a strategic-management approach to decision making can be derived form Financial Benefits The formalized strategic management process does make a difference in the recorded measurements of profits, sales, and return on assets. Organizations that adopt a strategic management approach can expect that the news system will lead to improved financial performance. Non-Financial BenefitsIt provides a way to anticipate future problems and opportunities.It provides employees with clear objectives and directions for the future of the organization.It results in more effective and better performance compared to non- strategic management organizations.It increases employee satisfaction and motivation. It results in faster and better decision making and cost savings.

STRATEGIC PLANNING• Strategic planning is an organization's process of

defining its strategy, or direction, and making decisions on allocating its resources to pursue this strategy.

• A strategic plan should not be confused with a business plan.

• It is a document that summarizes, that why a business exists, what it is trying to accomplish & how it will go about doing so.

Strategic planning involves a sequence of activities, each a vital element including:

1.Assessing the external environment2.Evaluating internal capacity of the organization3.Developing a vision and a mission for the future4.Implementing the plan and,5.Measuring the plan and altering the plan as needed.

STRATEGIC MANAGEMENTSTRATEGIC MANAGEMENT

PROCESSPROCESS

A strategy is a comprehensive master plan stating HOW the corporation will achieve its mission and objectives.

There are three types:

Corporate - a corporation’s overall direction and the management of its businesses.

Business - emphasizes improving the competitive position of a corporation’s products or services in a specific industry or market segment.

Functional - concerned with developing a distinctive competence to provide a company or business unit with a competitive advantage.

STRATEGY IMPLEMENTATION

The process of putting strategies and policies into action through the development of:

Programs - statements of activities or steps needed to accomplish a single-use plan.

Budgets - statements of a corporation’s programs in dollar terms.

Procedures - systems of sequential steps or techniques that describe in detail how to perform particular tasks or jobs.

HIERARCHY OF STRATEGY

Functional Strategy

Business (Division Level)

Strategy

Corporate Strategy

Manufacturing Finance MarketingResearch

and Development

Human Resources

Strategic Business

Unit

Strategic Business

Unit

Strategic Business

Unit

Corporate Headquarters

Strategy FormulationThe process of developing long-range

plans to deal effectively with environmental opportunities and threats in light of corporate strengths and weaknesses.

Composed of:

• Mission• Objectives• Strategies• Policies

MISSION Mission must be Feasible and Attainable. It should

be possible to achieve it. Mission should be Clear enough so that any action

can be taken. It should be Inspiring for the management, staff and

society at large. It should be Precise enough, i.e., it should be neither

too broad nor too narrow. It should be Unique and Distinctive to leave an

impact in everyone’s mind. It should be Analytical, i.e., it should analyze the key

components of the strategy. It should be Credible, i.e., all stakeholders should be

able to believe it.

OBJECTIVES

They are defined as goals that organization wants to achieve over a period of time. These are the foundation of planning. Policies are developed in an organization so as to achieve these objectives. Formulation of objectives is the task of top level management.

Effective objectives have following features- • These are not single for an organization, but multiple. • Objectives should be both short-term as well as long-

term. • Objectives must respond and react to changes in

environment, i.e., they must be flexible. • These must be feasible, realistic and operational.

STRATEGIC INTENT

⇒Strategic intent helps management to emphasize & concentrate on the priorities.⇒It is, influencing of an organization’s resource potential and core competencies to achieve what at first may seem to be unachievable goals in the competitive environment. ⇒Strategic intent includes directing organization’s attention on the need of winning; inspiring people by telling them that the targets are valuable.⇒It encourages individual and team participation as well as contribution & utilizing intent to direct allocation of resources.

CONCLUSION