STRATEGIC MANAGEMENT Notes. Overview. The greatest challenge for a successful organization is change. This threatening change may either be internal or. strategic management exam strategy is defined as: the direction and scope of an organisation over the long term which achieves advantage in changing. notes, brochures, DVDs/ .. Strategic management is the organised development of the resources of the functional areas: financial, manufacturing, marketing.
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Strategic Management complete Notes - Ebook download as PDF File .pdf), Text File .txt) or read book online. Explain the importance and limitations of strategic management. Strategic management is .. Write short notes on strategic alliance. An arrangement between. Biyani's Think Tank. Concept based notes. Strategic Management. (BBA). Shiv Jhalani. Deptt. of Management. Biyani Institute of Science and Management.
It should be unique and distinctive to leave an impact in everyones mind. It should be analytical,i. It should be credible, i.
Strategic Management complete Notes
Vision A vision statement identifies where the organization wants or intends to be in future or where it should be to best meet the needs of the stakeholders. It describes dreams and aspirations for future. For instance, Microsofts vision is to empower people through great software, any time, any place, or any device.
Wal-Marts vision is to become worldwide leader in retailing. A vision is the potential to view things ahead of themselves. It answers the question where we want to be. It gives us a reminder about what we attempt to develop.
It contributes in effective decision making as well as effective business planning. It incorporates a shared understanding about the nature and aim of the organization and utilizes this understanding to direct and guide the organization towards a better purpose. It describes that on achieving the mission, how the organizational future would appear to be. An effective vision statement must have following featuresa. It must be unambiguous.
It must be clear. It must harmonize with organizations culture and values. Vision statements should be shorter so that they are easier to memorize. In order to realize the vision, it must be deeply instilled in the organization, being owned and shared by everyone involved in the organization. Goals and objectives A goal is a desired future state or objective that an organization tries to achieve.
Goals specify in particular what must be done if an organization is to attain mission or vision. Goals make mission more prominent and concrete. They co-ordinate and integrate various functional and departmental areas in an organization.
Well made goals have following featuresa. These are precise and measurable. These look after critical and significant issues.
These are realistic and challenging. These must be achieved within a specific time frame. These include both financial as well as non-financial components. Objectives 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. 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. These must be feasible, realistic and operational. Dimensions of Strategic Management Strategic management process involves the entire range of decisions.
Importance of strategic management: Strategic management used to play a different role in more predictable times after the Second Word War. Strategic plans of the past usually range 3 to 5 years. Some companies could even have plans for 10 good years. That's not possible today given rapid evolution of our society. What still matters in strategic management lies in the value of planning ahead.
There's an old saying that if you fail to plan, you are planning to fail.
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By acting on this, strategic management actually gives the organization direction, a sense of identity and unity towards what the business goal.
Therein lays the continued importance of strategic management towards business success. Every business has a vision and a mission. Strategic management takes into consideration both of these. Strategic management helps in achieving the organizational goals in an effective and efficient manner. Improved strategic management processes may also facilitate the development of the more complex management structural that are needed as firms grow. It also helps firms to articulate, communicate and monitor the implementation of strategy using a system interlinked with the long-term vision of the corporations.
Why Strategic Management is so important? Today management is needed in all types of organizations regardless of their size, at all organizations levels and in all work areas. Gives everyone a role Makes a difference in performance levels Provides systematic approach to uncertainties Coordinates and focuses employees Importance: Like mentioned before, strategic management can and will influence the organizations performance.
Thats why you can have organizations that face the same environmental conditions, but with different performance levels and considering recent studies, there is a wide belief that organizations that use strategic planning usually have better performance that the ones that dont.
Another reason that supports the importance of strategic management has to do with the continually changing situation that organizations face these days, because it helps managers to examine relevant factors before deciding their course of action, thus helping them to better cope with uncertain environments. Finally, strategic management is important most organizations are composed by diverse divisions and departments that need to be coordinated, else there would be no focus on achieving the organization's goals.
Strategic Management Process Much can be said about this process, but here i'll only present the general steps to give you an idea of what is this all about. Mission, goals and strategies: If you Google one of the well know companies, and search their website, you'll always find a section dedicated to their mission. That's because every organization needs a mission.
Because it defines the organization's purpose, their reason for being in business. It is also important to identify goals, because they are the foundation of planning and give managers a way to measure the performance their success.
Notes of Chapter 3 of Strategic Management
Finally, a manager needs to know the organizations strategies, to evaluate them and make the necessary changes. External Analysis: Pretty straightforward.
A manager needs to know what the competition is doing, to know how the current legislation affects the organization's activities An external analysis is needed to examine the changes occurring in the environment, in order to adapt to those changes.
Internal Analysis: Now we move to inside of the organization, instead of the outside.
Formulate Strategies: Considering the realities described above, managers formulate corporate, business and functional strategies. Implement Strategies: Sounds logical doesn't it? After strategies are formulated they must be implemented, and like in other aspects of life, a strategy is only as good as its implementation.
Evaluate the Results: And now the final step where we evaluate the results. A manager should ask himself if the implemented strategies helped the organization to reach their goals.
Strategic Management Process - Meaning, Steps and Components The strategic management process means defining the organizations strategy. It is also defined as the process by which managers make a choice of a set of strategies for the organization that will enable it to achieve better performance.
Strategic management is a continuous process that appraises the business and industries in which the organization is involved; appraises its competitors; and fixes goals to meet all the present and future competitors and then reassesses each strategy. Strategic management process has following four steps: 1. Environmental Scanning- Environmental scanning refers to a process of collecting, scrutinizing and providing information for strategic purposes.
It helps in analyzing the internal and external factors influencing an organization. After executing the environmental analysis process, management should evaluate it on a continuous basis and strive to improve it. Strategy Formulation- Strategy formulation is the process of deciding best course of action for accomplishing organizational objectives and hence achieving organizational purpose.
After conducting environment scanning, managers formulate corporate, business and functional strategies. Strategy Implementation- Strategy implementation implies making the strategy work as intended or putting the organizations chosen strategy into action. Strategy implementation includes designing the organizations structure, distributing resources, developing decision making process, and managing human resources.
Strategy Evaluation- Strategy evaluation is the final step of strategy management process. Evaluation makes sure that the organizational strategy as well as its implementation meets the organizational objectives. These components are steps that are carried, in chronological order, when creating a new strategic management plan. Present businesses that have already created a strategic management plan will revert to these steps as per the situations requirement, so as to make essential changes.
Components of Strategic Management Process Strategic management is an ongoing process. Therefore, it must be realized that each component interacts with the other components and that this interaction often happens in chorus.
Characteristics of Strategic Management: 1. Strategy often makes the difference between success and failure of a firm. Strategic management is a branch of management that studies how to organize the structure of a firm, what products the firm should sell, how it should position itself in the marketplace, where it should get its supplies and whether it needs to differentiate or compete on costs.
A course in strategic management is a part of many MBA programs.
For example, investing in the education of the company's work force may yield no immediate effect in terms of higher productivity. Still, in the long run, their education will result in higher productivity, and therefore enhanced profits. Competitive Advantage o Strategic management helps managers find new sources of sustainable competitive advantage. Executives that apply the principles of strategic management in their work continuously try to deliver products or services cheaper, produce greater customer satisfaction and make employees more satisfied with their jobs.
Effect on Operations o Good strategic management always has a sizable effect on operational issues. For example, a decision to link pay to performance will result in operational decisions being more effective as employees try harder at their jobs. Operational decisions include decisions that deal with questions such as how to sell to certain customers or whether to open a credit line to them.
Operational decisions are made in the lower echelons of the organizational hierarchy. Shareholders o Managing the organization in a strategic fashion requires that the interests of shareholders be put at the heart of all issues. Whether the question at hand is expansion into a new market or negotiating mergers and acquisitions, shareholder value should be at the core at all times.
Companys strategy and its business model: People will always stress that having a well researched business plan is key before you start your business.
Although creating a business plan is often an important step in the evolution of a business, particularly if you need financing or you are not experienced at running a business, it is not necessarily the essential first step.
IT leadership and management A brief explanation of how to be a collaborative and strategic IT leader. The strategic management process is a management technique used to plan for the future: Organizations create a vision by developing long-term strategies. This helps identify necessary processes and resource allocation to achieve those goals. It also helps companies strengthen and support their core competencies.
By determining a strategy, organizations can make logical decisions and develop new goals quickly to keep pace with the changing business environment. Strategic management can also help an organization gain competitive advantage and improve market share. SWOT analysis A SWOT analysis is a crucial element of strategic management by helping companies identify their strengths, weaknesses, opportunities and threats. If so, what lessons can be drawn from the steps they have taken and the experience they have gained?
To explore these questions, we embarked on a systematic examination of the relation between formal planning and strategic performance across a broad spectrum of companies see the sidebar. We looked for common patterns in the development of planning systems over time.
In particular, we examined their evolution in those giant companies where formal planning and strategic decision making appeared to be most closely and effectively interwoven.
A Quest for Common Patterns For two years, we and our colleagues studied the development of formal planning systems in companies, mainly industrial goods manufacturers client and nonclient in seven countries. The concept of strategic management described in this article differs somewhat from that of H. Igor Ansoff, who invented and popularized the term.
Igor Ansoff, Roger P. Declerch, and Robert L. Our findings indicate that formal strategic planning does indeed evolve along similar lines in different companies, albeit at varying rates of progress. This progression can be segmented into four sequential phases, each marked by clear advances over its predecessor in terms of explicit formulation of issues and alternatives, quality of preparatory staff work, readiness of top management to participate in and guide the strategic decision process, and effectiveness of implementation see the Exhibit.
Exhibit Four Phases in the Evolution of Formal Strategic Planning The four-phase model evolution we shall be describing has already proved useful in evaluating corporate planning systems and processes and for indicating ways of improving their effectiveness. In this article, we describe each of the four phases, with special emphasis on Phase IV, the stage we have chosen to call strategic management. In order to highlight the differences between the four stages, each will be sketched in somewhat bold strokes.
Obviously, not all the companies in our sample fit the pattern precisely, but the generalizations are broadly applicable to all. Phase I: Basic Financial Planning Most companies trace the origins of a formal planning system to the annual budgeting process where everything is reduced to a financial problem.
Procedures develop to forecast revenue, costs, and capital needs and to identify limits for expense budgets on an annual basis. Information systems report on functional performance as compared with budgetary targets. Companies in Phase I often display powerful business strategies, but they are rarely formalized.
Instead, they exist. Based on their knowledge of their own cost structure, can they estimate what the impact of a product or marketing change will be on their plants, their distribution system, or their sales force? If so, and if they do not plan for the business to grow beyond traditional limits, they may not need to set up an expensive planning apparatus. Phase II: Forecast-based Planning The complexities of most large enterprises, however, demand more explicit documentation of the implicitly understood strategies of Phase I.
The number of products and markets served, the degree of technological sophistication required, and the complex economic systems involved far exceed the intellectual grasp of any one manager. The shoe usually pinches first in financial planning. As treasurers struggle to estimate capital needs and trade off alternative financing plans, they and their staffs extrapolate past trends and try to foresee the future impact of political, economic, and social forces.
Thus begins a second phase, forecast-based planning. Most long-range or strategic planning today is a Phase II system. At first, this planning differs from annual budgeting only in the length of its time frame. Very soon, however, the real world frustrates planners by perversely varying from their forecasts. In response, planners typically reach for more advanced forecasting tools, including trend analysis and regression models and, eventually, computer simulation models.
They achieve some improvement, but not enough. Sooner or later plans based on predictive models fail to signal major environmental shifts that not only appear obvious after the fact, but also have a great and usually negative impact on corporate fortunes.
Nevertheless, Phase II improves the effectiveness of strategic decision making.
It forces management to confront the long-term implications of decisions and to give thought to the potential business impact of discernible current trends, well before the effects are visible in current income statements.
The issues that forecast-based plans address—e. One of the most fruitful by-products of Phase II is effective resource allocation. Under the pressure of long-term resource constraints, planners learn how to set up a circulatory flow of capital and other resources among business units. As practiced by Phase II companies, however, portfolio analysis tends to be static and focused on current capabilities, rather than on the search for options.
Moreover, it is deterministic—i. And Phase II companies typically regard portfolio positioning as the end product of strategic planning, rather than as a starting point. Phase II systems also do a good job of analyzing long-term trends and setting objectives for example, productivity improvement or better capital utilization.
But instead of bringing key business issues to the surface, they often bury them under masses of data. Moreover, Phase II systems can motivate managers in the wrong direction; both the incentive compensation program and informal rewards and values are usually focused on short- or medium-term operating performance at the expense of long-term goals. Phase III: Externally Oriented Planning In an environment of rapid change, events can render market forecasts obsolete almost overnight. Having repeatedly experienced such frustrations, planners begin to lose their faith in forecasting and instead try to understand the basic marketplace phenomena driving change.Procedures develop to forecast revenue, costs, and capital needs and to identify limits for expense budgets on an annual basis.
Encourages the identification of a few relevant high-level financial measures. A cost leader is not always a large national company that targets the average customer. Some Defensive Tactics are: Once a group of customers who share similar or specific need for a product has been identified, this group is treated as a market segment. Kaplan in conjunction with US management consultancy Nolan-Norton, and during this study described his work on balanced Scorecard. However, it also reduces flexibility, raises exit barriers for the company to leave that industry, and prevents the company from seeking the best and latest components from suppliers competing for their business.
The team members discovered that design improvements had given the competitor such a commanding advantage in production cost that there was no point in trying to compete on price.
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