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CHAPTER 1

INTRODUCTION TO STRATEGIC MANAGEMENT

I. For concept clarity

a. What is Business
As per famous management guru
'Peter F Drucker,
Business exist for profit

b. Objectives of Business;
▪ Survival,
▪ Stability,
▪ Efficiency,
▪ Growth,
▪ Profitability,
▪ Wealth Maximization.

c. Relationship Between Organization & Environment

Environment

Internal Factor External Forces

Environment (S & W) (O & T)
Controllable Uncontrollable

External environment;
▪ Micro;
Affect any one or more organization.
▪ Macro;
Affect entire industry at large.

▪ Organization levels;
1. Top Level,
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 2. Middle Level, &
3. Lower Level.

▪ Strategic Levels of the Organizations;

1. Top Level,
2. Middle Level, &
3. Lower Level.

▪ For concept clarity

Planning ≠ Strategy?

Planning + Analysis + Course of Action = Strategy

Favourable - Attack - Growth & Expansion
Unfavourable - Defend - To maintain stability

PART A

Q.1 Enumerate business policy.

Business Policy;
 Introduction;
• Business Policy is "the study of the functions (i.e. roles) &
responsibilities of senior (i.e. top) management, the crucial
problems that affect success in the total enterprise and the
decisions.
Business Policy are the guidelines developed by an organization to
govern the actions of those who are a part of it.

• Business Policy defines the scope within which decisions may be

taken by the subordinates in an organization.

• With the inability of these techniques to adequately emphasize the

role of future, long-range planning came to be used.
Soon, long-range planning was replaced by strategic planning, and
later by strategic management, a term that is currently used to
describe the process of strategy formulation, implementation and
control.

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 PART B

Q.1 What is strategic management?

 Introduction;
• The term strategy has been derived from the Greek word 'strategos'
which means generalship.

• Business today is like fighting a war & Businessmen have to

respond to the dynamic & hostile (unfriendly) environment. Every
businessman makes use of strategies to face the tricks of his enemy
(rivals).

• Strategy may be defined as a long-range blueprint of an

organization, desired image, direction & destination.

What is strategy?
A unified, → Unique

Comprehensive and → Formulate, Implement, Evaluation

Integrated Plan → At 3 levels of Org.

designed to assure that the

Integrated Plan basic objective of the enterprise
A unified are achieved.
achieved.
What is strategic management?
Strategic Management can be defined as,
• The art and science of
• Formulating,
• Implementing &
• Evaluating
• Cross - Functional decisions

That enable an organization to achieve it's objectives.

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 Classification of Strategy based on approach;

Q.2 "Strategy is partly proactive and partly reactive." do you agree?

 Strategy is partly proactive & partly reactive;

• In Proactive Strategy, organizations will analyze possible
environmental scenarios and create strategic framework after
proper planning, set procedures and work on these strategies in a
predetermined manner.

• However, in reality no company can forecast both internal and

external environment exactly. Everything cannot be planned in
advance.

• It is not possible to anticipate moves of rival firms, consumer

behavior, evolving technologies and so on.

• There can be significant deviations between what was visualized

and what actually happens.

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 • Strategies need to be modified in the light of possible environmental
changes. There can be significant or major strategic changes when
the environment demands.

• It is based on unanticipated events such as Competitor's strategies,

Market changes, therefore it requires a change in planning.

• Reactive strategy is triggered by the changes in the environment

and provides ways and means to cope with the negative factors or
take advantage of emerging opportunities.
Hence Strategy is partly proactive & partly reactive.

Q.3 Define Strategy and its feature

 Features of Strategic Management;
• A typical dictionary defines the word 'strategy' as something that has
to do with war and ways to win over enemy.
• Strategy is forward looking it defines in broad terms the action which
an organization proposes to take in future.
• Strategy is designed to move an organization from its current
position to the desired future position.
• However, strategy is not a substitute for sound, alert and
responsible management.
• Strategy can never be perfect, flawless and optimal.
• Allowances (provision) are made for possible miscalculations and
• unanticipated events.
• In large organisations, strategies are formulated at the corporate,
business (divisional) and functional (operational) levels.
• Corporate strategies are formulated by the top managers.
• Strategic Management is essential for the survival and growth of
business organizations in dynamic business environment.

Q.4 Strategic management is a bundle of tricks and magic? Do you agree?

 No, The term 'strategic management' refers to the managerial process
of;
• Developing a strategic vision,
• Setting objectives,
• Crafting a strategy,
• Implementing,
• Evaluating the strategy and
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 • Initiating corrective adjustments where deemed
• appropriate.
Hence Strategic management is not a bundle of tricks and magic.

Q.5 Define Strategic management and objectives of strategic management?

 The overall objectives of SM are two-fold;
• To create competitive advantage, So that the
company can gain competitive advantage over
competition and dominate the market.
• To guide the company successfully through all
changes in the environment.

Q.6 What is Strategic Management? What benefits accrue by following a

strategic approach to managing?
 Importance (Benefits) of SM;
Introduction;
*(Refer intra of SM & its objectives)
• Importance of Strategic management;
✓ 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.
✓ 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.
✓ Strategic management attempt to prepare the organisation to
face the future and act as pathfinder to various business
opportunities.
✓ Strategic management serves as a corporate defence
mechanism against mistakes and pitfalls.
✓ It helps the organisation to develop certain core competencies
& competitive advantages that would facilitate assist in its fight
for survival and growth.

Q.7 Are there any limitations (Drawbacks) attached to strategic management

in organizations? Discuss.
 Limitations of Strategic Management;
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 Introduction;
The presence of strategic management cannot counter all hindrances
and always achieve success.
Limitations of Strategic management;
• Strategic management is a costly process.
• Strategic management is a time-consuming process.

• Environment is highly complex and turbulent (i.e. unstable).

• The organisational estimate about its future shape may inadequately
go wrong and jeopardise (i.e. causing harm to) all strategic plans.
• It is difficult to understand the complex environment and exactly
pinpoint how it will shape up in future?

• It is difficult to clearly estimate the competitive responses to a firm's

strategies.

PART – C

▪ Organisation levels;
1. Top Level,
2. Middle Level, &
3. Lower Level.

▪ Strategic Levels of the Organizations;

1. Top Level,
2. Middle Level, &
3. Lower Level.

*Only for academic interest

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 ▪ Corporate level of management consists of;
1. The Chief Executive Officer (CEO),
2. Other Senior Executives,
3. The Board of Directors (BOD) and
4. Corporate Staff

Those individuals are mainly strategic decision-making authority of the

organisation.

Q.8 What tasks are performed by a strategic Manager?

 Task performed by a strategic manager;
Introduction;
The primary task of the strategic manager is conceptualizing, designing
and executing company strategies. For this purpose, his tasks include.
Task;
• To set corporate vision, mission and goals,
• Determining what business it should be in,
• Allocation of resources,
• Formulating strategies,
• Implementing strategies,
• Providing leadership to the organisation, etc ...

Q.9 Explain the difference between three levels of strategy formulation

Difference between three levels;
1. Corporate Level;
Consist of? Chief executive officer and other top-level executives.
Role's; To oversee the development of strategies for the whole
organization.
Scope; Defining the mission and goals of the organization,
determining what businesses it should be in, allocating
resources among the different businesses and so on rests
at the Corporate Level.

2. Business Level
Consist of? General Manager or Divisional Manager & Staff.
Role's; To translate the general statements i.e. strategies into
concrete strategies of their individual businesses.
Scope; The development of strategies for individual business
areas.

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 To support corporate strategy. Such divisions are called
Strategic Business Units (SBUs).

3. Functional Level
Consist of? Functional Manager’s like, Finance Mgr., HR Mgr., etc......
Role's; Responsible for the specific business functions or
operations.
Scope; To develop functional strategies in their area that help fulfil
the strategic objectives set by business and corporate
level general managers.
To provide most of the information to formulate realistic
and attainable strategies.

 STRATEGIC INTENTION (PURPOSE)

Definition;
Strategic Management is defined as a dynamic process of;
• Formulation,
• Implementation,
• Evaluation, and
• Control of strategies to realise the organization's strategic intent.

Introduction;
The intentions with which organisational managers plans the future course of
action, that intention is known as strategic intent.
Strategic intent is the base of all the activities every manager at all levels are
doing to achieve organisational goals.
It is the fire within the organisational officers
which keeps them moving more closer to the
objectives and goals instead they face the
hardest challenge and unfriendly business
environment.
• Strategic intent refers to purposes of
what the organization strives for.
• Senior managers must define "what
they want to do" and "why they want to
do".
• "Why they want to do" represents strategic intent (purpose) of the firm.
• Strategic intent can be understood as the philosophical base of
strategic management.
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 • Clarity in strategic intent is extremely important for the future success
and growth of the enterprise, irrespective of its nature and size.

 Elements of Strategic Intent;

• Vision;
Vision implies the blueprint of the company's future position. It
describes where the organization wants to land. It represent the
organisation's aspirations and provides a glance of what the
organization would like to become in future.
Every sub system of the organization is required to follow its vision.

• Mission;
→ Mission describe the firm's business, its goals and ways to reach
the goals. It explains the reason for the existence of the firm in
the society.
→ It is designed to help potential shareholders and investors
understand the purpose of the company.
→ A mission statement helps to identify, ‘what business the
company undertakes.' It defines the present capabilities,
activities, customer focus and role in society.

• Goals and Objectives;

→ These are the base of measurement. Goals are the end results,
that the organization attempts to achieve.
→ On the other hand, objectives are time-based measurable
targets, which help in the accomplishment of goals.
→ These are the end results which are to be attained with the help
of an overall plan, over the particular period.
→ However, in practice, no distinction is made between goals and
objectives and both the terms are used interchangeably.

• Vision;
Introduction;
→ The most important issue organisational managers need to work
on is clarity of destination i.e. where they want the organisation
to be in specified time period.
→ Where to go is the most important question and should be always
asked before planning how to go.
(mean before selecting the approach)
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 → Strategic Vision thus points out a particular direction, draw a
strategic path to be followed in future, and moulding
organizational identity.

“to make people happy”

→ A Strategic vision is a road map of a company's future - providing
specifics about technology and customer focus, the geographic
and product markets to be pursued, the capabilities it plans to
develop, and the kind of company that management is trying to
create.
→ Vision implies the blueprint of the company's future position.
→ A strategic vision shows management's aspirations for the
business, providing a view of "where we are going”.
→ It describes where the organisation wants to land.
→ Every sub system of the organization is required to follow its
vision.

The three elements of a strategic vision are;

1. "Who we are and where we are now?"
2. "Where we are going?"
3. Communicating the strategic vision in clear, exciting terms that inspire
4. organization wide commitment.
• The entrepreneurial challenge in developing a strategic vision is to
think creatively about how to prepare a company for the future.
• A well-articulated i.e. developed strategic vision creates enthusiasm
among the members of the organisation.
• Forming a strategic vision IS an exercise in intelligent
entrepreneurship.
• The best-worded vision statement clearly enhances the direction in
which organization is headed.

 Mission;
Introduction;
• A mission is an answer to the basic question 'what business are we in
and what we do'.

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 • It has been observed that many firms fail to conceptualise and develop
the mission and business definition with the required clarity. Such firms
are seen to fumble in the identification of opportunities and fail in
formulating strategies to make use of opportunities.

• A company's mission statement is typically focused on its present

business scope - i.e. "who we are? And what we do?".

• Mission statements broadly describe organizations;

✓ Present capabilities,
✓ Customer focus,
✓ Activities, and
✓ Business makeup.

• Mission statement should reflect the philosophy of the organizations

that is perceived by the senior managers.

• A good mission statement should be precise, clear, feasible, distinctive

and motivating.

• The mission is a statement which defines the role that an organization

plays in the society.

• Mission and business definition, as the two ideas are absolutely central
to strategic planning.

“to entertain inform and inspire people”

 Why an organization should have a mission?
• To ensure consensus of purpose within the organization.
• To develop a basis, or standard, for allocating organizational
resources.
• To provide a basis for motivating the use of the organization's
resources.
• To establish a general tone or organizational climate.
• To serve as a focal point.
• To facilitate the translation of objective and goals into a work structure.
• To specify organizational purposes.
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 Points (tips) to be considered while writing mission statement;
• To establish the special identity of the business - one that typically
distinct it from other similarly positioned companies.
• Needs which business tries to satisfy, customer groups it wishes to
target and the technologies and competencies it uses and the activities
it performs.
• Good mission statements should be unique to the organisation for
which they are developed.
• The mission of a company should not be to make profit. Surpluses may
be required for survival and growth, but cannot be mission of a
company.

 Goals and Objectives;

Introduction;
These are the base of measurement.
• Goals are the end results, that the organization attempts to achieve .
• Objectives are time-based measurable targets, which help in the
accomplishment of goals.
However, in practice, no distinction is made between goals and objectives
and both the terms are used interchangeably.
Objectives are organization's performance targets. The results and
outcomes it wants to achieve. Objective function as yardsticks for tracking
an organization's performance and progress.
Business organization translates their vision and mission into goals and
objectives.

 Characteristics of Objectives:
• Objectives should define the organization's relationship with its
environment.
• Objectives should be facilitative towards achievement of mission and
purpose .
• Objectives should provide the basis for strategic decision-making.

Characteristics of Objectives:
✓ Objectives should be measurable and controllable .
✓ Objectives should provide standards for performance appraisal.
✓ Objectives should be concrete and specific .
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 ✓ Objectives should be related to a time frame .
✓ Objectives should be challenging.

 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.
• Long-term objectives represent the results expected from pursuing
certain strategies.
• The time frame for objectives and strategies should be consistent,
usually from two to five years.

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.

 Corporate Mission
1. Corporate Mission is an expression of growth of the Firm. [Firm's future
Visualized]
2. It provides dramatic picture of What the company wants to become.
3. Its a Colourful Sketch of how the firm wants its Future to look.
4. In other words the Mission is a grand design of the Firm's future.
5. Mission amplifies what brings the firm to this business or why it is there.
6. Mission is also an expression of the Vision of the Corporation, its
Founder / Leader.
7. It represents the Common purpose which the entire firm shares and
pursues.
8. It is not a confidential affair to be confined at the top it has to be open
to the Company entire
9. It adds zeal to the Firm and its People
Every organisation function through a network of goals and Objectives
it is foundation from which the network of goals are built.
A Mission however is not a PR document its main purpose is to give
internal direction for the future of the Company.

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 Concept 8: Values:
"Business, as I have seen it, places one demand on you: it needs you to
selfimpose a framework of ethics, values, fairness and objectivity on yourself
at all times." – Ratan N Tata, 2006 (Source: TATA Group Website)
A few common examples of values are - Integrity, Trust,
Accountability, Humility, Innovation, and Diversity. But why are values so
important? A company's value sets the tone for how the people of think and
behave, especially in situations of dilemma. It creates a sense of shared
purpose to build a strong foundation and focus on longevity of the company's
success. Employees prefer to work with employers whose values resonate
with them - the ones they can relate to in their daily work and personal life.
Interestingly, majority of consumers say that they would prefer to buy
products and services from companies that have a purpose that reflects their
own value and belief system. Hence, values have both internal as well as
external implications.
For reference, a lot of values were put to actions
during Covid 19 pandemic when leaders of the
organisations put people before everything
else. It projected how deep the foundation of the
organisations were and how important it was for
them to uphold their core values.

 Network of relationship between the three levels

The corporate level decides what the business wants to achieve, while the
business level draws ideas and plan to execute the same, which eventually
flow down to functional level to execute and achieve results. But there are
multiple ways in which all the 3 levels of management are interlinked, and
interestingly it depends on the organisation as a whole to decide what kind
of network of relationship suits their culture and aspirations.
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: where each function
division an independent relationship. 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.

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 while Divisions may depend on the products like for a toys
manufacturer kids toys, teenager toys, etc, could be divisions.
▪ Horizontal Relationship: All positions, from top management to staff-
level employees, are in the same hierarchical position. It is a flat
structure where everyone is considered at same level. This leads
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
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. In Matrix
relationship there are more than one business level managers for each
functional level teams. It is complex for smaller organisations, but
extremely useful for large organisations

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