Strategic Management Ppt

Strategic management ppt

1. 1. Presentation on Strategic Management Made By: Ayushi Jain MBA(4th sem)

1. 2. • What is Strategy? • Features of Strategy • Levels of Strategy- corporate-level, business- level and functional-level. • What is Strategic Management? • Process of Strategic Management

1. 3. What is strategy? • Strategy is a tactical course of action which is designed to achieve long term objectives. It is an art and science of planning and marshalling resources for their most efficient and effective use in a changing environment. • Strategy of a business enterprise consists of what management decides about the future direction and scope of the business. It entails managerial choice among alternative action programmes, competitive moves and different business approaches to achieve enterprise objectives. • Strategy once formulated has long term implications. It is framed by top management in an organization. In short, it may be called as the ‘game plan of management’.

1. 4. Definition of Strategy • As per Glueck, Strategy is unified, comprehensive and integrated plan relating the strategic advantages of the firm to the challenges of the environment. It is designed to ensure that the basic objectives of the enterprise are achieved. • As per Alfred D. Chandler, Strategy is “The determination of basic long-term goals and objectives of an enterprise and the adoption of the courses of action and the allocation of resources necessary for carrying out these goals.”

1. 5. Features of Strategy • Top management responsibility • Allocation of large amount of resources • Impact on long term prosperity of the firm • Future oriented • Multi-functional or multi-business consequences • Consideration of factors in the external environment

1. 6. Levels of Strategy
2. 7. Corporate-level Strategy • At this level, strategic decisions relate to organization-wide policies and are taken care by top-level management (BOD) with a vision of determining ‘Where the company wants to be?’ • It has two main aspects- Formulation of Strategy (strategic planning) and Strategy Implementation • The nature of strategy at this level tend to be value-oriented, conceptual and than other levels. • There is also greater risk, cost and profit potential as well as greater need of flexibility associated with this level. • Major financial policy decisions involving acquisition, diversification and structural redesigning belong to this level.

1. 8. Business-Level Strategy • Business-level strategy is more likely related to a unit within the whole. It is concerned with competition in a market. • The concerns are about what products or services should be developed and offered to which markets in order to meet customer needs and organizational objectives. • At this level, multifunctional strategies developed at corporate level are formulated and implemented for specific product market in which the business operates. Thus, managers at this level translate general directions and intent into concrete functional objectives. • Decisions at this level include policies involving new product development, marketing mix, research & development, personnel, etc.

1. 9. Functional/Operational-Level Strategy • Functional strategy involves decision-making with respect to specific functional areas- production, marketing, personnel, finance etc. • While corporate and business level strategies are concerned with “Doing the right things”, functional strategies stress on “Doing things right”. • Operating level strategy is concerned with strategic approaches for managing frontline operating units(like plants, sales, etc) and for handling day to day tasks of strategic significance(like advertising campaign, purchasing materials, inventory control, maintenance, etc.). Thus, it focuses on how the different functions of the enterprise contribute to the other levels of strategy. • Thus, functional level strategic management is the management of relatively narrow areas of activity, which are of vital, pervasive or continuing importance to the total organization.

1. 10. Strategic Management • Strategic management is a set of management decisions and actions that determines the long-run performance of a corporation. It includes environmental scanning, strategy formulation, strategy implementation and evaluation and control to achieve the objectives of an organization. • The study of strategic management emphasizes the monitoring and evaluating of external opportunities and threats in light of a corporation’s strengths and weaknesses. • As per Fred R. David, strategic management is an art and science of formulating, implementing and evaluating cross functional decisions that enable an organization to achieve its objectives. • As per Channon, strategic management is defined as that set of decisions and actions that result in formulating of strategy an its implementation to achieve the objectives of the corporation.

1. 11. Step 1: Strategic Intent • Vision- Vision is the statement that expresses organization’s ultimate long-run objectives. It is what the firm ultimately like to become. Vision once formulated is for forever and long lasting for years to come. Vision is closely related with strategic intent and is a forward thinking process. Eg- Microsoft- ’A computer software on every desk and in every home’. • Mission- It tells who we are and what we do as well as what we’d like to become. Mission of a business is the fundamental, unique purpose that sets it apart from other firms of its kind and identifies the scope of its operations in product and market terms. Eg- Microsoft- ‘Empower every person and every organization on the planet to achieve more’. • Objectives- These are the end results of planned activity that state what is to be accomplished by when and should be quantified if possible and their achievement should result in the fulfillment of a corporation’s mission. Objectives state specifically how the goals shall be achieved. Following are the areas for setting objectives- profit objective, marketing objective, production objective, etc.

1. 12. Strategy Formulation Strategy formulation refers to the process of choosing the most appropriate course of action for the realization of organizational goals and objectives and thereby achieving the organizational vision. For choosing most appropriate course of action, appraisal of organization and environmental is done with the help of SWOT analysis. • Environmental Appraisal- The environment of any organization is "the aggregate of all conditions, events and influences that surround and affect it". It is dynamic and consists of External & Internal Environment . The external environment includes all the factors outside the organization which provide opportunities or pose threats to the organization. The internal environment refers to all the factors within an organization which impart strengths or cause weaknesses of a strategic nature. • Organizational Appraisal- It is the process of observing an organizational internal environment to identify the strengths and weaknesses that may influence the organization's ability to achieve goals. The analysis of corporate capabilities and weaknesses becomes a pre-requisite for successful formulation and reformulation of corporate strategies. This analysis can be done at various levels: functional, divisional and corporate.

1. 13. Strategy Implementation Strategy implementation is the action stage of strategic management. It refers to decisions that are made to install new strategy or reinforce existing strategy. • Designing structure, process & system- Strategy implementation includes the making of decisions with regard to organizational structure, developing budgets, programs and procedures in order to accomplish certain activities. • Functional Implementation- Functional implementation is carried out through functional plan and policies in five different areas- marketing, finance, operation, personnel and Information management. • Behavioral Implementation- It denotes mobilizing employees and managers to put and formulate strategies into action and require personal discipline, commitment and sacrifice. It depends upon manager’s ability to motivate employees. • Operationalizing strategy- It includes establishing annual objectives, devising policies, and allocating resources.

1. 14. Strategy Evaluation & Control • Strategy evaluation- It is the primary means to know when and why particular strategies are not working well. It is the process in which corporate activities and performance results are monitored so that actual performance can be compared with desired performance. Thus strategic evaluation activities include reviewing external and internal factors that are the basis for current strategies. • Strategic control- In this step, organizations Determine what to control i.e., which objectives the organization hopes to accomplish, set control standards, measure performance, Compare the actual with the standard, determine the reasons for the deviations and finally taking corrective actions and review the policies and activities if needed.

1. 15. Thank You !

Strategic management

1. 1. Strategic Management
2. 2. Strategic Management Defined The 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.
3. 3. Benefits of Strategic Management Clearer sense of strategic vision Sharper focus on what is strategically importantImproved understanding of rapidly changing environment
4. 4. Three Key Strategic QuestionsWhere is the organization now?If no changes are made, where will theorganization be in one, two, five or tenyears? Are the answers acceptable?If the answers are not acceptable, whatspecific actions should managementundertake? What are the risks and payoffsinvolved?
5. 5. Strategic Management ModelEnvironmental Strategy Strategy Evaluation Scanning Formulation Implementation and Control External Mission Reason for Societal existence Environment Objectives General Forces What results to Task Strategies accomplish Environment by when Plan to Industry Analysis achieve the Policies mission & Internal objectives Broad guidelines for Programs Structure decision ProcessChain of Command making Activities to monitor needed to performance Culture Budgets and take accomplishBeliefs, Expectations, a plan corrective Cost of the Values action programs Procedures Resources Sequence Assets, Skills of steps Competencies, needed to Knowledge do the job Performance Feedback/Learning
6. 6. Environmental ScanningMonitoring, evaluating and disseminating informationfrom the environment to key people within thecorporation.Scan via SWOT analysis: Look for opportunities/threats in the external environment Look for strengths/weaknesses in the internal environment
7. 7. Strategy FormulationThe process of developing long-range plans to dealeffectively with environmental opportunities and threats inlight of corporate strengths and weaknesses.Composed of: Mission Objectives Strategies Policies
8. 8. MissionThe purpose or reason for the corporation’sexistence. It tells who the company is, what theydo as well as what they’d like to become.
9. 9. ObjectivesThe end results of planned activity. They stateWHAT is to be accomplished by WHEN. Theyshould be quantified, if possible.Should be specific, measurable and obtainable.
10. 10. StrategiesA strategy is a comprehensive master plan stating HOW thecorporation will achieve its mission and objectives. There are threetypes:Corporate - a corporation’s overall direction and the management ofits businesses.Business - emphasizes improving the competitive position of acorporation’s products or services in a specific industry or marketsegment.Functional - concerned with developing a distinctive competence toprovide a company or business unit with a competitive advantage.
11. 11. Hierarchy of Strategy Corporate Corporate Headquarters Strategy Strategic Strategic Strategic Business (Division Business Business Business Unit Unit Unit Level) Strategy Research Human FunctionalManufacturing Finance Marketing and Resources Strategy Development
12. 12. PoliciesBroad guidelines for making decisions.E.g. - 3M’s policy requiring researchers to spend15% of their time working on something otherthan their primary project.
13. 13. Strategy ImplementationThe process of putting strategies and policies into actionthrough 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.
14. 14. Evaluation and ControlThe process of monitoring corporateactivities and performance results so thatactual performance can be compared withdesired performance.
15. 15. Strategic Decision-Making Process 3(a) 3(b) Scan and Analyze Assess External External Factors: Environment: • Opportun- • Societal ities • Task • Threats1(a) 1(b) 2 5(a) 5(b) 6(a) 6(b) 7 8 Examine and Review Select Generate Evaluate the Corporate Strategic Review and and Select Implement Evaluate Revise as and Strategies: Evaluate Current Current: Governance: Factors Evaluate • Mission • Board of (SWOT) Necessary: Strategic Recommend • Programs and Performance • Mission Best • Budgets Control Results • Objectives Directors in Light of Alterna- • Strategies • Top Man- Current • Objectives tives Alternative • Procedures • Policies agement Situation 4(a) 4(b) Scan and Assess Analyze Internal Internal Environment: Factors: • Structure • Strengths • Culture • Weak- • Resources nesses Strategy Strategy Evaluation Formulation: Implementation and Steps 1 – 6 Step 7 Control: Step 8