Strategic Vjp

8/6/2019 Strategic Vjp

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STRATEGIC MANAGEMENT

INTRODUCTION:-

One can spontaneously say that the strategic management is the

process of management of strategic decision making,implemention and

control .It is not complete meaning of strategic management as it fails to

cover many important aspects of strategic management.

DEFINITION:-

Strategic management is concerned with deciding on strategy &

planning how that strategy is to be put into effect.

Strategic management is a continuous, iterative cross functional

process aimed at keeping an organization as a whole appropriately

matched to its environment.

Samuel C.Certo & J.Paul Peter.

Strategic AnalysisStrategic choiceStrategic Implementation

Evaluation Process

Strategic management is the continuous process of effectively

relating the organizations objectives & resources to the opportunities in the

environment.


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Schellenberger & Bosenan

NEED FOR STRATEGIC MANAGEMENT:-

i) Due to change

ii) To provide guidelines.

iii) Developed field of study by research.

iv) Probability for better performance.

v) Systematizes business decision

vi) Improves communicationvii) Improves coordination

viii) Improves allocation of resources.

ix) Helps the managers to have a holistic approach.

BENEFITS OF STRATEGIC MANAGEMENT:

i) Strategic management helps an organization to be proactive

rather than reactive.

ii) It encourages the organization to decentralize the management

process involving lower level managers & employees.

iii) It often brings order & discipline to a firm.

iv) It provides an objective, view of management problems.

v) It represents a framework for improved control of activities.

vi) It minimizes the effects of adverse conditions & changes.

vii) It gives encouragement to forward thinking.

viii) It encourages favorable attitude towards change.


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STRATEGIC MANAGEMENT PROCESS STEPS:

TYPES OF STRATEGIS MANAGEMENT :-

Idenifying, definingbusiness mission

purpose & objectives

EnvironmentalAnalysis

Revise organizationaldirection

Alternative strategic

choice

Strategy

implementation

Strategic Evaluation

& control

A) Stability

Strategy

I) Maintenance of

status quo.

II) Sustainable

growth.

A) Stability

Strategy

I) internal growth

II) Concentration

strategies

III) Mergers

IV) Takeovers/

Acquisition

V) Horizontal

Integration

VI) Conglomerate

diversification

VII) VerticalIntegration

VIII) Joint

ventures

D) Combination

Strategy

I) Portfolio

II) Restructuring

C) Retrenchment

Strategy

I) Turnaround

II) Captive co.

III)Transformation

IV) Divestment

V) Liquidation

Grand Strate ies


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A) Stability strategy:

Firm adopt the stability strategies due to the following reasons:-

i) Managers of small business desire a satisfactory level of profits

rather than increased profit.

ii) Maintenance of status quo involves less risk than a more growth

strategy.

iii) Change of any form may disrupt the current working relationships

& the consequences may be detrimental to the organization.

iv) Some executives maintain with the stability strategy due to inertia

for change.

There is also grater risk, cost and profit potential as well as greater

need for flexibility associated with corporate level strategic

activities. Major financial policy decisions involving acquisition,

diversification and structural redesigning belonging to the category

of corporate strategy.

Aspects of Corporate Strategy :-

Corporate Strategy has two main aspects

I) Formulation of strategy of strategic planning

II) Strategy implantation.

Formulation of strategy involves :

Determination of objectives, purposes & goals

Formulation of principal policies , plans &

Specification of the business the company intends to be in.


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Salient features of Grand Strategies:-

Stable Growth Strategy:-

Stable growth strategy implies that the company will continue in

the same or similar objectives.

Features

1. There is no major change in the product or service

line,markets or functions.

2. The focus is on maintaining and developing competitive

advantages consistent with the present resources and market

requirements

3. The rate of improvement continuing in the past is sustained.

Variants

Incremental sub strategy:

Growing but surely with a strong base.

Sustainable growth strategy:

Slow growth rather than stable growth.:

Growth strategy:-

When a firm increases the level of objectives higher than what it has

achieved in the immediate past, in terms of market share, sales revenue etc.

it is said to be growth strategy.


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Features :-

1. Increase in profit

2. Increase in sales.

3. Growth in market share.

4. Increase in performance objectives

Variants :-

Internal growth :

Increasing the sales revenue, profits and market share of existing

product line.

Diversification strategy:-

Adding new products/Markets

Horizontal :- parallel new products/services

Concentric: New product similar to technology, market, customer

etc

Conglomerate: Dissimilar products

Vertical :-Complementary to existing products.

Backward: Addition of activties to ensure the supply of firms

present inputs.

Forward : Higher upin the production process towards the end

consumer.

Mergers

Takeovers

Joint ventures


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i) Stable growth & Retrenchment

ii) Stable growth & Growth

iii) Retrenchment & Growth

iv) Retrenchment , Stable growth & Growth

Reasons:

A company may pursue the combination strategy for one or more

of the following reasons

a) Different products in different stages of life cycle

b) Industrial recession

c) Size of the firm

STRATEGIC EVALUATION & CONTROL:-

The basic premise of strategic management is that the chosen strategy

will achieve the organization objectives. The possibility of this not occurring

gives rise to the need for strategic control process. Although our heading

suggests that two things eg. Evaluation & control are involved but, in fact,

evaluation concept is the part of a much larger control concept.

Definition Of Control :-

Control consists of making something happen the way it was planned

to happen.

Control consists in verifying whether everything occurs in

conformity with the plan adopted, the instructions issued & principles

established.

HENRY FAYOL


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The control function includes three procedures viz,

I) Measuring actual performance

II) Comparing actual performance

III) Taking corrective action to ensure that planned events actually

occur.

General model of Control Process

Controlling

Begins

Work continues No corrective

action necessary

Measure ofperformance

Compare

measurement to

standard

Take corrective

action, change

plans,organisation

New work

situation begins

Performanceequivalent to

standards

Performance

significantly

different from stds


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Types of control:-

Three types of control viz; preliminary control ,concurrent control &

feedback control.

Purposes of strategic control :-

The purpose of strategic control are to answer the

questions such as

i) Are our internal strengths still holding good?

ii) Have we added other internal strengths?

iii) Are our internal weaknesses still holding goods?

iv) Do we have other weaknesses?

v) Are our opportunities still opportunities?

vi) Are there new opportunities?

vii) Are our threats still existing?

viii) Are there new threats?

ix) Are goal & targets being met?

Human,material capital &

financial resources

acquired & combined in

organization

Within which

planned activity

occurs

Leading to result

achieved

Preliminary control Concurrent control Feedback control


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Thus strategic control provides feedback about various steps

of strategic management to know, whether the strategic management

processes are appropriate, compatible & functioning in the desirable

direction.

Process of strategic control:-

the strategic control process consists of six steps top management ,

initially must decide what elements of the environment & the

organization need to be monitored.

STRATEGIC EVALUATION:-

The responsibility of top management does not end with the formulation of a

grand strategy,functional & operational plans & organizational plans but

strategies beyond it to encompass the task of evaluation of strategy.This is

due to the fact thata company to survive & grow successfully must assess

effectiveness of strategy in achieving desired results & its suitability in

changing environmental forces.

Purposes of strategic evaluation :-

The purpose of strategic evaluation are to answer the

question such as,

i) Are the decisions being made consistent with policy?

ii) Are there sufficient resources to get the job done?

iii) Are the resources being used wisely?


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iv) Are events in the environment occurring as anticipated/

v) Are goals & targets being met?

vi) Should we proceed with the plan as we originally formulated or it

needs some revision?

Before we proceed to he actual process of strategic

evaluation i.e. why & what aspects

Process of strategic evaluation :-

The process of evaluation basically deals with four steps:

1. setting standards of performance

2. Measurement of performance

3. Analyzing variances

4. Taking corrective action.

These are four elements of the evaluation process & how

they relate to each other , are depicted in following diagram


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2) Strategic leap control:- There are four techniques of evaluation used for

exercising strategic leap control

i)strategic issues management

ii)strategic field analysis

iii)systems modeling

iv)scenarios

(B) Evaluation techniques for operational control

1)Financial techniques ;-There are several techniques such as

Budgetory control

Zero based budgeting

Financial analysis

Pareto system

2)Network technique

3)Management by objectives (MBO)

4)Memorandum of understanding

Changes in environment:-

Information system

Control system

Appraisal system

Motivation system

Development system

Planning system


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How would you assess THE EFFECTIVNESS OF STRATEGY OF AN

ENTERPRISE?

OR

How is PERFORMANCE EVOLUTION DONE IN PUBLIC

ENTERPRISES IN INDIA

Effectiveness of strategy

i) Making strategy with objectives

ii) Making strategy with environmental forces

iii) Making strategy with corporate strategy

iv) Strategy & personal values of management

v) Matching strategy with operating plans & programmes

vi) Making strategy with current performance

vii) Strategy & organizational motivation.

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Strategic Vjp