Chapter 1 - Introduction to Strategic Management

Chapter 1- Introduction to Strategic Management

Strategy
● Strategy is the game plan that the management of a business uses to take market position, conduct its
operations, attract and satisfy customers, compete successfully, and achieve organisational objectives.
● Long-range blueprint of an organisation’s desired image, direction and destination, i.e., what it wants to be,
what it wants to do, how it wants to do things, and where it wants to go.
● Strategy provides an integrated framework for the top management to search for, evaluate and exploit
beneficial opportunities, to perceive and meet potential threats and crisis, to make full use of resources and
strengths, and to offset corporate weaknesses.
● However, strategy is no substitute for sound, alert and responsible management.

Strategy can never be perfect, flawless and optimal.

○ It is in the very nature of strategy that it is flexible and pragmatic;
○ it is art of the possible;
○ it does not preclude second-best choices, trade-offs, sudden emergencies, pervasive pressures, failures and
frustrations.
○ That is why in a sound strategy, allowances are made for possible miscalculations and unanticipated events.

Strategy is partly proactive and partly reactive

A company’s strategy is typically a blend of
● proactive actions on the part of managers
○ to improve the company’s market position and
○ financial performance and
● reactions to
○ unanticipated developments and
○ fresh market conditions.
● In other words, a company uses both proactive and reactive strategies to cope up with the uncertain
business environment.
● Proactive strategy is planned strategy whereas reactive strategy is adaptive reaction to changing
circumstances.
● A business organization cannot always plan all their strategies in advance and often need to blend planned
strategies with reactive strategies.

Strategy is partly proactive and partly reactive. Discuss.

(RTP, May 2018, NA) (SA, Nov 2018, 5 marks) (MTP1, Nov 2019, 5 marks) (RTP, Nov 2020, NA) (MTP1, May 2021, 5 marks)
(ICAI Study Material)
OR
"A business organization cannot always plan all their strategies in advance and often need to blend planned strategies with
reactive strategies." Do you agree with the statement? Give reasons.
(MTP2, May 2022, 5 marks) (RTP, May 2023, NA)

Yummy Foods and Tasty Foods are successfully competing in the business of ready to eat snacks in Patna. Yummy has
been a pioneer in introducing innovative products. These products will give them good sale. However, Tasty Foods will
introduce similar products in reaction to the products introduced by the Yummy Foods taking away the advantage gained by
the former.
Discuss the strategic approach of the two companies. Which is superior?
(RTP, Nov 2018, NA) (MTP1, Nov 2021, 5 Marks) (MTP2, May 2023, 5 Marks) (ICAI Study Material)

Kamal Sweets Corner, a very popular sweets shop in Ranchi, was facing tough competition from branded stores of packaged
sweets and imported goods. The owners realised that their business reduced by 50% in the last six months, and this created
a stressful business environment for them. To find a solution, they consulted a business consultant to help them develop a
strategy to fight competition and sustain their century old family business. The business consultant advised them to

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 Chapter 1 - Introduction to Strategic Management

innovate a new snack for the public and market it as a traditional snack of the region. The owners liked the idea and
developed a new snack called Dahi Samosa, which very quickly became popular amongst the public and it helped regain the
lost business of Kamal Sweets Corner.
One of the very crucial importance of strategic management was used by the business consultant to help the owners of
Kamal Sweets Corner. Which one could it be? Also, was this strategy Reactive or Proactive? According to you, who are more
beneficial in general parlance?
(MTP2, May 2021, 5 marks)

ALBELA' Foods and 'JustBE' Foods are successfully competing chains of restaurants in India. ALBELA' s are known for their
innovative approach, which has resulted in good revenues. On the other hand, JustBE is slow in responding to environmental
change. The initial stages of Covid-19 pandemic and the ensuring strict lockdown had an adverse impact on both the
companies. Realizing its severity and future consequences. ALBELA, foods immediately chalked out its post lockdown
strategies, which include initiatives like:
(a) Contactless dining
(b) New category of foods in the menu for boosting immunity
(c) Improving safety measures and hygiene standards
(d) Introducing online food delivery app
Seeing the positive buzz around these measures taken by ALBELA Food, JustBE Foods also thinks to introduce these
measures.
(i) Identify the strategic approach taken by 'ALBELA' Foods and 'JustBE' Foods.
(ii) Discuss these strategic· approach.
(iii) Which strategic approach is better and why?
(SA, July 2021, 5 marks)

Imagine you are a strategic consultant advising a retail company that is facing increasing competition from online retailers.
The company is considering several strategic options to improve its market position. Using the concept that strategy is
partly proactive and partly reactive, explain how the company can develop a strategic approach to address this challenge.
(MTP1, May 2024, 5 marks)

ABC retail chain regularly monitors consumer trends and supply chain flexibility. The retail chain tracks consumer trends to
adjust its offerings, ensuring they meet customer needs. Simultaneously, it maintains a flexible supply chain to respond
swiftly to demand fluctuations. This strategy enables the ABC retail chain to anticipate market shifts and adapt to them
effectively, ensuring its competitiveness and customer satisfaction. Which type of strategy is the retail chain employing?
(MTP2, May 2024, 5 marks)

Management
The term ‘management’ is used in two senses
a. It is used with reference to a key group in an organisation in-charge of its affairs
➢ chief organ entrusted with the task of making the organisation purposeful and productive.
➢ by undertaking the task of bringing together and integrating the disorganised resources of
manpower, money, material, and technology, which are then combined into a functioning whole.
b. The term ‘Management’ is also used with reference to a set of interrelated functions and processes carried
out by the management (Key group of people) of an organisation to achieve its objectives
➢ These functions include Planning, Organising, Directing, Staffing and Control.

Strategic Management
The term ‘strategic management’ refers to the managerial process of
● developing a strategic vision,
● setting objectives,
● crafting a strategy,
● implementing and evaluating the strategy,
● and initiating corrective adjustments where deemed appropriate.

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 Chapter 1 - Introduction to Strategic Management

Overall objectives of strategic management

The overall objectives of strategic management are two-fold:
● To create competitive advantage (something unique and valued by the customer), so that the company can
outperform the competitors in all aspects of organisational performance.
● To guide the company successfully through all changes in the environment.

“Originally called, business policy, strategic management emphasises the monitoring and evaluation of external
opportunities and threats in the light of a company’s strengths and weaknesses and designing strategies for the
survival and growth of the company.”

Importance of Strategic Management

‘Survival of fittest ‘as told by darwin is the only principle of survival for organization, where ‘fittest’ are not the
‘largest’ or ‘strongest’ organizations but those who can change and adapt successfully to the changes in business
environment.

The major benefits of STRATEGIC MANAGEMENT are:

Gives Direction / Define Goals And Mission, Realistic Objective
● The strategic management gives a direction to the company to move ahead.
● It defines the goals and mission.
● It helps management to define realistic objectives and goals which are in line with the vision of the
company.

Proactive (Action, Control, Vagaries)

● Strategic management helps organisations to be proactive instead of reactive in shaping its future.
● Organisations are able to analyse and take actions instead of being mere spectators.
● They are able to control their own destiny in a better manner.
● It helps them in working within the vagaries of the environment and shaping it, instead of getting carried
away by its turbulence or uncertainties.

Framework For Decisions (Decisions On ……, Better Guidance)

● Strategic management provides a framework for all major decisions of an enterprise
○ such as decisions on businesses, products, markets, manufacturing facilities, investments and
organisational structure.
○ It provides better guidance to the entire organisation on the crucial point - what it is trying to do.

Face The Future And Act As Path Finder / Opportunity

● Strategic management seeks to prepare the organisation to face the future and act as pathfinder to various
business opportunities.
● Organisations are able to identify the available opportunities and identify ways and means as how to reach
them.

Corporate Defense Mechanism

● Strategic management serves as a corporate defence mechanism against mistakes and pitfalls.
● It helps organisations to avoid costly mistakes in product market choices or investments.

Longevity (दीर्घाय)ु (लम्बी उम्र)

● Strategic management helps to enhance the longevity of the business.
● It helps the organization to take a clear stand in the related industry and makes sure that it is not just
surviving on luck.

Core Competencies And Competitive Advantage

● Strategic management helps the organisation to develop certain core competencies and competitive
advantages that would facilitate assistance in its fight for survival and growth.

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 Chapter 1 - Introduction to Strategic Management

Points Story

Limitations of Strategic Management

The presence of strategic management cannot counter all hindrances and always achieve success. There are
limitations attached to strategic management. These can be explained in the following lines

Environment is difficult to understand

● Environment is highly complex and turbulent. It is difficult to understand the complex environment and
exactly pinpoint how it will shape-up in future.
● The organisational estimate about its future shape may awfully go wrong and jeopardise all strategic plans.
● The environment affects as the organisation has to deal with suppliers, customers, governments and other
external factors.

Time consuming
● Strategic management is a time-consuming process.
● Organisations spend a lot of time in preparing, communicating the strategies that may impede daily
operations and negatively impact the routine business.

Costly
Strategic management is a costly process.
● Strategic management adds a lot of expenses to an organization.
● Expert strategic planners need to be engaged, efforts are made for analysis of external and internal
environments, devise strategies and properly implement.
● These can be really costly for organizations with limited resources particularly when small and medium
organizations create strategies to compete.

Difficult to estimate response

In a competitive scenario, where all organisations are trying to move strategically, it is difficult to clearly estimate
the competitive responses to a firm’s strategies.

Define Strategic Management.

(RTP, May 2018, NA)

The presence of strategic management cannot counter all hindrances and always achieve success for an organisation. What
are the limitations attached to strategic management?
(RTP, May 2018, NA) (MTP1, May 2019, 5 Marks) (MTP2, May 2021, 5 Marks) (MTP1, May 2022, 5 Marks) (MTP2, May
2022, 5 Marks)
OR
Define Strategic Management. Also discuss the limitations of Strategic Management.
(SA, May 2018, 5 Marks) (RTP, May 2021, NA) (RTP, Nov 2021, NA) (MTP1, Nov 2022, 5 Marks) (MTP2, Nov 2023, 5 Marks)
(RTP, May 2024, NA)
OR

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 Chapter 1 - Introduction to Strategic Management

Are there any limitations attached to strategic management in organizations? Discuss.

(RTP, May 2019, NA) (MTP1, May 2020, 5 Marks) (MTP2, Nov 2022, 5 Marks) (ICAI Study Material)
OR
‘Strategic Management is not a panacea for all the corporate ills, it has its own pitfalls which can’t counter all hindrances
and always achieve success’. Do you agree with this statement? Discuss.
(SA, May 2019, 5 Marks)
OR
"The strategic management cannot counter all hindrances and always achieve success for an organization." Do you agree
with this statement? Give arguments in support of your answer.
(SA, Nov 2022, 5 Marks) (RTP, Nov 2023, NA)

Ramesh Sharma has fifteen stores selling consumer durables in Delhi Region. Four of these stores were opened in the last
three years. He believes in managing strategically and enjoyed significant sales of refrigerator, televisions, washing
machines, air conditioners and the like till four years back. With the shift to the purchases to online stores, the sales of his
stores came down to about seventy per cent in the last four years.
Analyse the position of Ramesh Sharma in light of limitations of strategic management.
(RTP, Nov 2019, NA) (RTP, Nov 2020, NA) (ICAI Study Material)

Briefly explain the importance of strategic management.

(MTP1, May 2018, 5 marks) (RTP, Nov 2018, NA) (MTP2, Nov 2018, 5 marks)
OR
"Each organization must build its competitive advantage keeping in mind the business warfare. This can be done by
following the process of strategic management". Considering its statement, explain major benefits of strategic
management.
(SA, Dec 2021, 5 Marks) (RTP, Nov 2022, NA) (MTP2, May 2024, 5 Marks)
OR
What benefits accrue by following a strategic approach to managing?
(RTP, Nov 2018, NA) (MTP1, Nov 2020, 5 Marks) (RTP, May 2023, NA)
OR
Strategic management helps an organization to work through changes in the environment to gain competitive advantage. In
light of the statement, discuss its benefits.
(RTP, Nov 2019, NA) (MTP2, Nov 2021, 5 Marks)
OR
What is Strategic Management? What benefits accrue by following a strategic approach to managing?
(ICAI Study Material)

Is strategic management a bundle of tricks and magic? Elucidate the statement.

(MTP2, May 2018, 5 marks)

Strategic Intent (Vision, Mission, Goals, Objectives and Values)

Strategic Intent
● Strategic intent refers to purposes of what the organisation strives for; senior managers must define “what
they want to do” and “why they want to do”.
● “Why they want to do” represents the strategic intent of the firm.
● Strategic intent provides the framework within which the firm would adopt a predetermined direction and
would operate to achieve strategic objectives.
● Strategic intent could be in the form of vision and mission statements for the organisation at the corporate
level.
● Strategic intent is generally stated in broad terms but when stated in precise terms it is an expression of
aims to be achieved operationally, i.e., goals and objectives.
● Components of Strategic Intent
○ Vision
○ Mission
○ Goals and Objectives
○ Values/ Value System

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 Chapter 1 - Introduction to Strategic Management

Vision
● Vision implies the blueprint of the company’s future position.
● Top management’s views about the company’s direction and the product customer-market-technology
focus constitute the strategic vision for the company.
● Strategic vision describes
○ management’s aspirations for the business,
○ providing a panoramic view of the “where we are to go” and
○ a convincing rationale for why this makes good business sense for the company.
● A clearly articulated strategic vision
○ communicates management’s aspirations to stakeholders and
○ helps steer the energies of company personnel in a common direction.
● For Example - Henry Ford's vision inspired others, mobilized company resources, and guided strategic
decisions.

Essentials of a strategic vision

● The entrepreneurial challenge in developing a strategic vision is to think creatively about how to prepare a
company for the future.
● Forming a strategic vision is an exercise in intelligent entrepreneurship.
● A well-articulated strategic vision creates enthusiasm among the members of the organisation.
● The best-worded vision statement clearly illuminates the direction in which the organisation is headed.

Mission
● A mission is an answer to the basic question ‘what business are we in and what we do’.
● A company’s mission statement is typically focused on its present business scope – “who we are and what
we do”.
● Mission statements broadly describe an organisations present capability, customer focus, activities, and
business makeup.
● Every organisation must have a strong focus on mission and business definition, as these two are crucial for
strategic planning.

Why should an organisation have a mission?

● To ensure unanimity of purpose within the organisation.
● To develop a basis, or standard, for allocating organisational resources.
● To provide a basis for motivating the use of the organisation’s resources.
● To establish a general tone or organisational climate, to suggest a businesslike operation.
● To serve as a focal point for those who can identify with the organisation’s purpose and direction.
● To specify organisational purposes and the translation of these purposes into goals in such a way that cost,
time, and performance parameters can be assessed and controlled.
● To facilitate the translation of objective and goals into a work structure involving the assignment of tasks to
responsible elements within the organisation.

Essentials of a good mission statement - Points to be considered while writing a mission statement
A good mission statement should be precise, clear, feasible, distinctive and motivating. Following points are useful
while writing a mission of a company:
● One of the roles of a mission statement is to give the organisation its own special identity, business
emphasis and path for development – one that typically sets it apart from other similarly positioned
companies.
● A company’s business is defined by what needs it is trying to satisfy, which customer groups it is targeting
and the technologies and competencies it uses and the activities it performs.
● Good mission statements are – unique to the organisation for which they are developed.

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 Chapter 1 - Introduction to Strategic Management

What is our mission? And what business are we in?

Peter Drucker and Theodore Levitt Emphasised that every business firm must clarify the corporate mission and
define accurately the business the firm is engaged in. They also explained that towards facilitating this task, the
firm should raise and answer certain basic questions concerning its business, such as:
● What is our mission?
● What is our ultimate purpose?
● What do we want to become?
● What kind of growth do we seek?
● What business are we in?
● Do we understand our business correctly and define it accurately in its broadest connotation?
● Whom do we intend to serve?
● What human need do we intend to serve through our offer?
● What brings us to this particular business?
● What would be the nature of this business in the future?
● In what business would we like to be in, in the future?

According to Peter Drucker, every organisation must ask an important question “What business are we in?” and get
the correct and meaningful answer. The answer should have marketing or external perspective and should not be
restated to the production or generic activities of business. For example

Company Production-oriented answer Marketing-oriented answer

Indian Oil We produce oil and gasoline products. We provide various types of safe and cost-effective
energy.
Indian Railways We run a railroad We offer a transportation and material-handling
system.
Lakme In the factory, we make cosmetics. In the retail outlet, we sell hope.

Tata motor - Vision and Mission

Goals and Objectives

● Business organisations translate their vision and mission into goals and objectives.
● Goals are open-ended attributes that denote the future states or outcomes.
● Objectives are close-ended attributes which are precise and expressed in specific terms.
● Thus, the Objectives are more specific and translate the goals to both long term and short-term perspective.
However, this distinction is not made by several theorists on the subject. ICAI uses them interchangeably.
● Objectives are organisation’s performance targets – the results and outcomes it wants to achieve. They
function as yardsticks for tracking an organisation’s performance and progress.
● They provide meaning and sense of direction to organisational endeavour. Organisational structure and
activities are designed, and resources are allocated around the objectives to facilitate their achievement.

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 Chapter 1 - Introduction to Strategic Management

Characteristics of Objectives
Objectives To be meaningful to serve the intended role, must possess the following characteristics:
1. Objectives should define the organisation’s relationship with its environment.
2. They should be facilitative towards achievement of mission and purpose.
3. They should provide the basis for strategic decision-making.
4. They should provide standards for performance appraisal.
5. They should be concrete and specific.
6. They should be related to a time frame.
7. They should be measurable and controllable.
8. They should be challenging.
9. Different objectives should correlate with each other.
10. Objectives should be set within the constraints of organisational resources and external environment.

A need for both short-term and long-term objectives

As a rule, a company’s set of financial and strategic objectives ought to include both short-term and long-term
performance targets.
● Having quarterly or annual objectives focuses attention on delivering immediate performance
improvements.
● Targets to be achieved within three to five years’ prompt considerations of what to do now to put the
company in position to perform better down the road.

Long-term objectives
To achieve long-term prosperity, strategic planners commonly establish long-term objectives in seven areas.
● Profitability
● Productivity
● Competitive Position
● Employee Development
● Employee Relations
● Technological Leadership
● Public Responsibility

Long-term objectives represent the results expected from pursuing certain strategies.
● Strategies represent the actions to be taken to accomplish long-term objectives.
● The time frame for objectives and strategies should be consistent, usually from two to five years.

When an organization has already achieved its long-term goals and simply wants to maintain that level, their
short-term and long-term objectives can be the same.However, if elevating performance, short-range goals become
steps towards long-term objectives.

Clearly established objectives offer many benefits.

They provide direction, allow synergy, aid in evaluation, establish priorities, reduce uncertainty, minimize conflicts,
stimulate exertion, and aid in both the allocation of resources and the design of jobs.

Values
● Values are the deep-rooted principles which guide an organisation’s decisions and actions.
● A few common examples of values are – Integrity, Trust, Accountability, Humility, Innovation, and
Diversity.
● They can never be compromised, either for convenience or short-term economic gain.
● Values often reflect the values of the company’s founders—Hewlett-Packard’s celebrated “HP Way” is an
example.
● They are the source of a company’s distinctivenes
● A company’s value sets the tone for how the people think and behave, especially in situations of dilemma.

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 Chapter 1 - Introduction to Strategic Management

● Employees often seek employers with relatable values, impacting their work and personal life.
● Consumers often choose companies whose purpose aligns with their values, showing values' internal and
external impact.
● Values often drive intent, making them broader in scope than intent.

Define strategic intent. Briefly explain the elements of strategic intent.

(RTP, May 2018, NA)
OR
What are the elements in strategic intent of organisation?
(RTP, May 2019, NA) (RTP, May 2020, NA)
OR
"Strategic intent provides the framework within which the firm would adopt a predetermined direction and would operate to
achieve strategic objectives." In the light of this statement, discuss the elements of strategic intent.
(SA, Nov 2022, 5 Marks)

Distinguish between Vision and Mission

(RTP, May 2018, NA)
OR
Distinguish between vision statement and mission statement.
(MTP2, May 2018, 5 Marks) (MTP1, Nov 2018, 5 Marks)

Write a short note on Essentials of a strategic vision.

(RTP, Nov 2018, NA)
OR
What is strategic vision? Describe the essentials of strategic vision.
(SA, Nov 2020, 5 Marks)

‘Objectives’ and ‘Goals’ provide meaning and sense of direction to organizational endeavour. Explain.
(RTP, Nov 2018, NA)

What are the characteristics which must be possess by objectives, to be meaningful to serve the intended role?
(SA, May 2019, 5 Marks)
OR
What are 'objectives'? What characteristics must it possess to be meaningful?
(RTP, May 2021, NA) (RTP, May 2022, NA) (MTP2, May 2023, 5 Marks)

Mr Raj has been hired as a CEO by XYZ ltd a FMCG company that has diversified into affordable cosmetics. The company
intends to launch Feelgood brand of cosmetics. XYZ wishes to enrich the lives of people with its products that are good for
skin and are produced in ecologically beneficial manner using herbal ingredients. Draft vision and mission statement that
may be formulated by Raj.
(RTP, Nov 2019, NA) (RTP, Nov 2020, NA) (ICAI Study Material)
OR
ABC Pharmaceuticals, a leading pharmaceutical company, is in the process of formulating its strategic intent. The top
management of ABC Pharmaceuticals wants to define the company's future direction, objectives, and goals. Their aim is to
create a vision that sets the organization apart and provides a roadmap for future growth. ABC Pharmaceuticals aspires to
enrich the lives of people by producing high quality pharmaceutical products at competitive prices and wants to become the
world's leading pharmaceutical company by 2030." Based on this context, draft a vision and mission statement that could be
formulated by the top management of ABC Pharmaceuticals.
(RTP, May 2024, NA)

Why an organisation should have a mission? What considerations are to be kept in mind while writing a good mission
statement of a company?
(SA, Nov 2019, 5 Marks)
OR
What should be the major components of a good mission statement?

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 Chapter 1 - Introduction to Strategic Management

(RTP, Nov 2022, NA)

Mission statement of a company focuses on the question: ‘who we are’ and ‘what we do’. Explain briefly.
(MTP2, May 2021, 5 Marks) (MTP2, May 2022, 5 Marks) (RTP, May 2023, NA)

Explain briefly the key areas in which the strategic planner should concentrate his mind to achieve desired results.
(RTP, May 2021, NA) (RTP, Nov 2022, NA)

Strategic Levels in Organisations

● A typical large organization is a multi-divisional organisation that competes in several different businesses.
● It has separate self-contained divisions to manage each of these businesses.
Generally, there are three main levels of management:
● Corporate level
● Business level
● Functional level
General managers are found at the first two of these levels, but their strategic roles differ depending on their sphere
of responsibility.

SBU (Strategic business Unit)

● These are the key businesses.
● It is a unit of the company
○ that has a separate mission & objectives &
○ which can be planned independently from other company businesses.
● It can be a company division, product line within a division etc.

CHARACTERISTICS
1. Single business or collection of related businesses that can be planned for separately
2. Has its own set of competitors?
3. Has a manager who is responsible for strategic planning & profit.

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 Chapter 1 - Introduction to Strategic Management

Corporate level of management

● The corporate level of management consists of the
➢ Chief Executive Officer (CEO),
➢ Other senior executives,
➢ the board of directors, and
➢ corporate staff.
● These individuals participate in strategic decision making within the organization.
● The role of corporate-level managers is
1. to oversee the development of strategies for the whole organisation.
2. defining the mission and goals of the organisation,
3. determining what businesses it should be in,
4. allocating resources among the different businesses,
5. formulating and implementing strategies that span individual businesses, and
6. Providing leadership for the organisation as a whole.
● Corporate-level managers provide a link between the people who oversee the strategic development of a
firm and those who own it (the shareholders).
● Corporate-level managers, and particularly the CEO, can be viewed as the guardians of shareholders’
welfare. It is their responsibility to ensure that the corporate and business strategies of the company are
consistent with maximising shareholders’ wealth.
● If they are not, then ultimately the CEO is likely to be held accountable by the shareholders.

Business-level manager
● The strategic role of these managers is to translate the general statements of direction and intent that come
from the corporate level into concrete strategies for individual businesses.
● Thus, whereas corporate-level managers are concerned with strategies that span individual businesses,
business-level managers are concerned with strategies that are specific to a particular business.

Functional-level managers
● They are responsible for the specific business functions or operations (human resources, purchasing,
product development, customer service, and so on) that constitute a company or one of its divisions.
● Thus, a functional manager’s sphere of responsibility is generally confined to one organizational activity,
whereas general managers oversee the operation of a whole company or division.
● functional managers have a major strategic role
○ To develop functional strategies in their area that help fulfil the strategic objectives set by business-
and corporate-level general managers.

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 Chapter 1 - Introduction to Strategic Management

○ Functional managers provide most of the information that makes it possible for business- and
corporate-level general managers to formulate realistic and attainable strategies.
○ Functional managers, being closer to customers, can generate key ideas that might turn into major
strategies, therefore general managers must listen to functional managers.
○ An equally great responsibility for managers at the operational level is strategy implementation: the
execution of corporate and business-level plans.

Which is better - Top Down Approach or Bottom-Up Approach?

A top-down approach to decision making is when decisions are made solely by leadership at the top i.e. corporate
level of management, while the bottom-up approach gives all teams across the levels a voice in decision making.

Network of relationship between the three levels

● The corporate level decides what the business wants to achieve, while the business level draws ideas and
plans to execute the same, which eventually flow down to the functional level to execute and achieve
results.
● There are 3 major types of networks of relationship between the levels and also amongst the same levels of
a business;

Functional and Divisional Relationship

● It is an independent relationship, where each function or a division is run independently headed by the
function/division head, who is a business level manager, reporting directly to the business head, who is a
corporate level manager.
● Functions maybe like Finance, Human Resources, Marketing, etc. while
● Divisions may depend on the products like for a toys manufacturer - kids toys, teenager toys, etc. could be
divisions.

Horizontal Relationship
● In a horizontal or flat structure, all positions, from top management to staff, share the same hierarchical
level.
● This leads to openness and transparency in work culture and focused more on idea sharing and innovation.
● This type of relationship between levels is more suitable for startups where the need to share ideas with
speed is more desirable.

Matrix Relationship
● It features a grid-like structure of levels in an organisation, with teams formed with people from various
departments that are built for temporary task-based projects.
● This relationship helps manage huge conglomerates with ease where it is nearly impossible to track and
manage every single team independently.
● An important feature of this structure is that employees typically report to two managers - a functional
manager and a project manager. This ensures that employees have clear guidance and support for their
daily tasks (from the functional manager) and project-specific tasks (from the project manager).
● It is complex for smaller organisations, but extremely useful for large organisations.

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 Chapter 1 - Introduction to Strategic Management

Define the role of corporate level managers.

(RTP, Nov 2018, NA)

Distinguish between the three levels of strategy formulation.

(MTP1, Nov 2018, 5 marks)
OR
Explain the difference between three levels of strategy formulation.
(RTP, May 2020, NA) (MTP 1, May 2023, 5 Marks) (ICAI Study Material)
OR
Distinguish between the following: Corporate and business level.
(RTP, May 2019, NA)

List the different strategic levels in an organisation.

(SA, Nov 2018, 2 marks)

Enumerate the task to be performed as a strategic manager of a company.

(MTP2, May 2019, 5 marks)

ABC Limited is in a wide range of businesses which include apparels, lifestyle products, furniture, real estate and electrical
products. The company is looking to hire a suitable Chief Executive Officer. Consider yourself as the HR consultant for ABC
limited. You have been assigned the task to enlist the activities involved with the role of the Chief Executive Officer. Name the
strategic level that this role belongs to and enlist the activities associated with it.
(SA, Jan 2021, 5 marks) (MTP2, Nov 2022, 5 Marks) (ICAI Study Material) (MTP1, Nov 2023, 5 Marks)

Dharam Singh, the procurement department head of Cyclix, a mountain biking equipment company, was recently promoted to
look after sales department along with procurement department. His seniors at the corporate level have always liked his way
of leadership and are assures that he would ensure the implementation of policies and strategies to the best of his capacity
but have never involved him in decision making for the company.Do you think this is the right approach? Validate your answer
with logical reasoning around management levels and decision making.
(RTP, May 2021, NA) (ICAI Study Material)

Mr. Mehta shared with his friend in an informal discussion that he has to move very cautiously in his organization as the
decisions taken by him have organisation wide impact and involve large commitments of resources. He also said that his
decisions decide the future of his organisation. Where will you place Mr. Mehta in the organizational hierarchy and explain his
role in the organization.
(RTP, Nov 2021, NA)

ABC Ltd. currently sells its product in two major markets - Europe and Asia. While it is a market leader in Europe, ABC Ltd. has
struggled to penetrate the more competitive Asian market. ABC Ltd. hired a strategic consultant to analyze the situation and
submit his report to them. After the report received from the strategic consultant, it has therefore decided to pull out of Asia

Neeraj Arora | www.edu91.org 1.13

 Chapter 1 - Introduction to Strategic Management

entirely and focus on its European markets only. This decision relates to which level in ABC Ltd. and explain the role of
managers at this level in the organization.
(RTP, May 2022, NA)

“Management at all levels develop strategies”. Explain the different strategies formulated at different levels of management
(SA, May 2023, 5 Marks)

Swati is the marketing manager at a software company. She is responsible for developing and implementing marketing
strategies for the company’s products. Swati leads a team of marketing professionals and works closely with the product
development and sales teams to ensure that the company's products are effectively promoted in the market. She also
analyzes market trends and customer feedback to refine the marketing strategies. Which level is she working at, discuss the
roles and responsibilities of this level in organization?
(MTP1, May 2024, 5 Marks)

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Neeraj Arora | www.edu91.org 1.14