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Strategic Management ProcessComponents of SM:
Company Mission
&
Social Responsibility
External Environment
Remote
Industry
(global & domestic)
Operating
Internal Analysis
Strategic Analysis & Choice
Long Term Objectives Generic & Grand Strategies
Short Term Objectives Functional TacticsPolicies that empower
action
Restructuring, Reengineering &
Refocusing the organization
Strategic Control &Continuous Improvement
Feedback
Feedback
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Strategic Management
Company Miss ion:
Mission of a company is its unique purpose that sets itapart from other companies of its type & identifies the
scope of its operations.
In short, mission describes the companys product ,
market and technological areas of emphasis in a way
that reflects the values & priorities of the strategic
decision makers.
The mission statement must express how the company
intends to contribute to the societies that sustain it.
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Strategic Management
Internal Analys is:
The company analyses the quantity & quality of the
companys financial, human & physical resources.
It also assess the strengths & weaknesses of thecompanys management & organizational structure.
It analyses the company's past success with the
companys current capabilities in an attempt to identify
the companys future capabilities.
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Strategic Management
External Environment:
A firms external environment consist of all the conditions
& forces that affect its strategic options & define its
competitive situation.
Remote :Economic, Social, Political, Technological,
Ecological
Industry : Entry Barriers, Supplier Power ,Buyer Power,
Substitute Availability, Competitive RivalryOperating Environment : Competitors, Creditors,
Customers, Labour, Supplier
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Strategic Management
Strategic Analysis & Choice:
Simultaneous assessment of the external environment
and the company profile, enables a firm to identify a
range of possibly attractive interactive opportunities.
These opportunities are possible avenues for
investment.
Options in line with company mission is generated fromwhich strategic choice is made.
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Strategic Management
The process is meant to provide the combination of long
term objectives & generic & grand strategies that
optimally position the firm in its external environment to
achieve the company mission.
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Strategic Management
Long Term Object ives:
The result the organisation seeks over a multi year
period are its long term objectives.
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Strategic Management
Generic & Grand Strategies:
Many businesses adopt one or more generic strategiescharacterizing their competitive orientation in the market
place.
Low Cost, differentiation or focus strategies are the three
fundamental options.
Intelligent managers seek to create ways their firmspossess both low cost and differentiation competitive
advantage as part of their overall generic strategy.
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Strategic Management
Companies combine these capabilities with a
comprehensive, general plan of major actions throughwhich their firm intends to achieve its long term
objectives in a dynamic environment called the Grand
Strategy.
Every grand strategy is a unique package of long term
strategies : concentration, marker development, product
development, innovation, horizontal integration. vertical
integration, joint venture, strategic alliances,
diversification, liquidation.
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Strategic Management
Ac t ion Plans & Short Term Object ives:
Action Plans translate generic & grand strategies intoaction by incorporating four elements.
First : they identify specific functional tactics & actions
to be undertaken in the next week, month or quarter as
part of the business effort to build Competitive
Advantage.
The second element is a clear time frame for
completion.
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Strategic Management
Third, action plans create accountability by identifying
who is responsible for each action in the plan.
Fourth, each action in an action plan has one or more
specific immediate objectives that are identified asoutcomes that the action should generate.
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Strategic Management
Func t ional Tact ics:
Business functions need to identify & undertake
activities unique to the function that help build a
sustainable competitive advantage.
Functional tactics are detailed statements of the means
or activities that will be used to achieve short term
objectives & establish Competitive Advantage.
S
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Strategic Management
Pol ic ies that Empower Ac t ion:
Policies guide & preauthorize the thinking, decisions
and actions of operating managers and their
subordinates in implementing the business strategy is
essential for establishing & controlling the ongoingoperating process of the firm in a manner consistent with
the firms strategic objectives.
Policies often increase managerial effectiveness bystandardizing routine decisions & empowering or
expanding the discretion of managers & subordinates in
implementing business strategies.
St t i M t
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Strategic Management
Restruc tur ing , Reeng ineer ing & Refocus ing the
organisat ion:
Until this point in the SM process, managers have
maintained a decidedly market oriented, focus as they
formulate strategies & begin implementation through
action plans & functional tactics.
Now the process stakes an internal focus, getting work
of the business done effectively & efficiently so as tomake the strategy successful.
- What is the best way to organise ourselves to
accomplish the mission?
St t i M t
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Strategic Management
- What values should guide our daily activities - what
should the organisation & its people be like?
- How can we shape rewards to encourage
appropriate action?
The intense competition in the global market place has
made this tradition internally focused set of questions.
The company's structure, leadership, culture and rewardsystem may all be changed to ensure cost
competitiveness and quality demanded by unique
requirements of its strategies.
St t i M t
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Strategic Management
Strategic Contro l & Cont inuous Improvement:
Strategic Control is concerned with tracking a strategy
as it is being implemented, detecting problems or
changes in its underlying premises & making necessary
adjustments.
Continuous improvement provides a way for strategic
control that allow their organisation to respond more
proactively and timely to rapid development in hundredsof areas that influence a business success.
St t i M t
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Strategic Management
SM as a Process:
A process is the flow of information through interrelated
stages of analysis towards the achievement of an aim.
Thus, SM is a process. the flow of information involveshistorical, current & forecast data on the operations &
environment of the business.
Managers evaluate these data in light of the values andpriorities of influential individuals & groups (often called
stake holders) that are vitally interested in the actions of
the business.
St t i M t
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The aim of the process is the formulation &
implementation of strategies, that work achieving the
companys long term mission & short term objectives.
Viewing SM as a process has several important
implications:First a change in any component will affect several; or all
of the other component.
Most of the arrows in the model point two ways,suggesting that the flow of information is reciprocal.
St t i M t
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The second implication is that strategy formulation and
implementation are sequential.
The process begins with development or reevaluation of
the company mission.
Followed by development of a company profile &
assessment of the external environment.
Then follow in order, strategic choice, definition of longterm objectives, design of the grand strategy, definition
of short term objectives, design of operating strategies,
institutionalisation of the strategy ,review & evaluation
St t i M t
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The third implication is the necessity of feedback from
institutionalisation, review and evaluation to the early
stages of the process.
Feedback can be defined as the collection of postimplementation results to enhance future decision
making.
St t i M t
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The fourth implication is the need to regard it as a
dynamic system.
The term dynamic characterizes the constantly
changing conditions that affect interrelated andinterdependent strategic activities.
Since change is continuous, the dynamic strategic
planning must be monitored constantly for significantshifts in any of its components as a precaution against
implementing an obsolete strategy.