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. ‘ Itentails 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’. «A sstrategy may include geographic expansion , diversification, acquisition, product development, market penetration, liquidation and joint venture. What the firm will do and not do are included in strategy indicates. A firms strategy also demonstrates how it differs from its competitors. ‘* Inancient Greece, the term Strategos was used in military science and implied the plan to win a battle. * However, in business, strategies are more about understanding the competition and preparing a plan to match/surpass the potential of the rivals. © “Strategy is the direction and scope of an organization over the long-term. It helps achieve an advantage for the organization through its configuration of resources within a challenging environment, (o meet the needs of markets and fulfill stakeholder expectations.” Characterities of Strategy 1. Goal Oriented Determines the long term goal of the organization Minimum 5-10 yrs ANalysis of both internal and external environmental analysis Guides the management to take necessary actions in changing environment to achieve the determined goal Action oriented © Should be action oriented and implementable Impact on long term prosperity of the organization «Before implementation, there must be provision of 3. Future-Oriented Strategy is future-oriented, it always considers the future businesses of the organization, and less consideration is given to current affairs. Typically strategies are formulated and implemented to utilize of 5 years goals. 4. Strategic Means Itis a strategic means that strategically handles the organizational performance ~ structures, poli functions, plans — and goes for proper implementation of plans reducing the likely failures while implementing. It creates a straightforward roadmap for the organization, stating “where is the organiz: now” and “where it will be in the future”. 5, General Means Not A Tacti Strategy is general means, not a tactic as its epistemological concept says. Tactics and strategies both talk about how to achieve a certain goal. Strategies talk about how to generally achieve goals and tactics talk about how to specifically achieve goals.Tactics are more tangible and strategies are abstract. As Chinese general and philosopher Sun Tzu wrote, “All the men can see the tactics I use to conquer, but what none can see is the strategy out of which great victory is evolved.” 6. Resource Allocation Strategies ensure effective allocation and utilization of organizational resources. The strategy helps to best allocate time, talent, and budget as such managers get enhanced performance and likelihood of achieving expected goals. Need of strategy 1. Show Direction: © shows the way or dire ion of doing work to achieve the organizational goal + involve' the determination of the best course of action for achieving predetermined objectives. * includes analysis of both internal and extend environmental forces. © guides the management for taking necessary measures based on changing environment of business so that predetermined objectives can be achieved. 2. Allocation of Resources: ¢ Success of organization depends on the proper allocation of the scares resources ( human resources, capital, physical resources and information technology) Strategy supports proper management and effective use of organizational resources. The proper use of resources will be supportive for the maximization of productivity It can support maintaining the competitive strength of the organization in the market. jitates Decision: + Strategy facilitates the managers for taking strategic decisions * In the course of doing regular organizational activities, there is the possibility of the creation of various issues and complexities. * Managers solve those problems by focusing long term performance and objectives of the organization. It maintain uniformity and smoothness in organizational activities. 4. Maintain Standard: ‘Strategy specifies the level of standard that is to be maintained both in behaviour and performance. Guides to construct a transparent and consistent standard of performance * Guides on creative thinking and the effective functioning of employees. helps the managers to develop a framework for showing a certain level of standard in the behavior and performance of employees. 5. Set Priority: © Helps to sets the priority of organizational activities and resource alloca * Develops action plan which sets the priority of jobs to be implemented. © Supportive of proper utilization of resources and providing quality products or services to the customers. 6. Environmental Adaptation: «Strategy guides the managers to develop and implement new action plans based on business opportunities. * The changing external environmental factors create both opportunities and threats for operating a business. Similarly, the intemal environment of the organization involves strengths and weaknesses in resources and capabilities.© Strategy facilitates to maintain strategic fit between opportunities created by changing the external environment with that of the internal strengths of the organization. Improve Performance: * Strategy defines a clear goal to be achieved for employees within the time frame which can improve their job performance. * Itencourages employees to work towards the company’s long-term plans for growth and development. Employees consider the core values of the company while devoting their duties. Business strategy creates an environment that motivates employees to produce high-quality work and maintain a high standard for themselves. Level of Strategy 1. Corporate strategy * Corporate strategy is such a strategy that describes the company’s overall direction in terms of its various businesses and product lines. ILis the uppermost level of strategy. ILis derived from the vision and mission statement. It is related with the choice of direction for a firm as a whole. The objective of corporate planning is to identify new areas of investment and marketing. Corporate strategy generally affects all the business-units under its umbrella. Itis mainly related to financial performance, merger and acquisitions and allocation of resources Corporate strategy, for example, of Unilever may be acquiring the major tissue paper companies in India to become the unquestionable market leader Corporate level strategy should include * Concentration: In single business e.g. fast food. Geographic expansion: New segments to be served in new areas. versificati Varieties of Varieties of products, service Varieties of products, services, and business units from current markets, * Growth & Stability Through merger, acquisition, reengineering, downsizing, rightsizing, strategic alliances, +Resource allocation: Among various business units. ‘Types of Corporate Level Strategy ‘© Corporate level strategy is consist of overall purpose and scope of the organization. It also describes how value can be added to the different business units of the organizations. # Different types of corporate level strategies are as follows Stability strategy © This strategy focuses to continue firm's current activities without any significant changes in direction existing product's market and activities. * itis issued in a stable and profitable environment or when there is no possibility of growth, © With this strategy, the existing product's market and activities the existing products market and activities are maintained. * profitability is sustained© Firm's current ‘operations are made efficient b, Expansion or growth strategy * This strategy focuses to achieve growth in sales and profits or a combination of these all. with this strategy, new products market and activities are added and production capacity also is increased. + This type of Corporate strategy is pursued in highly favorable environment. ‘m can achieve expansion or growth through to merge, acquisition, diversification, strategy and and globalization c. Retrenchment strategy + Retrenchment strategy is concerned with the ization of size and area of operation of business. It is applied when the firm is not performing well in terms of sales and revenue and find greater return elsewhere are the products and services is in the finishing stage of the product life cycle. + Retrenchment Strategies is applied in threatening environment. * With this strategy, the existing product, market and activities are used and product lines are dropped. under these, market share is dropped and organizational re-engineering as well as downsizing is done 4d. combination strategy The combination strategy is not a new strategy as it combines the other strategies. it is produced in diversed condition that keep on changing. Under this, the combination of stability, expansion and retention strategies are simultaneously used, Mostly this strategy is. suited in organizations with different strategic business unit in times of economic transition and also when are changes occurred in the product life cycle. 2. Business level strategy egy formulated for particular strategic business unit is business level strategy. Business level strategy is_ pursued by a firm to gain competitive advantage in specific product market. Each business unit have their own product / service, own customers and own competitors. It indicates how a firm competes successfully in an individual product market, Itdirects a strategic business unit (SBU) towards competitive advantage. Business level strategy should ¢ Positionis * Iti the positioning among competitors in a given business to gain competitive advantages. «Low cost leader : minimizing the cost than competitors by perfecting the value-chain activities «Differentiation: Reconfiguring the resources in some unique way to achieve differentiation. © Market focus: market niche by minimizing cost or differentiation or both, * Speed based strategy: build around functional capabilities and activities that allow the company to meet customer needs indirectly more rapidly than its main competitors. rectly or ‘Types of Business level strategy1. low cost leadership strategy A cost leadership strategy is an integrated set of actions designed to produce or deliver goods or services at the lowest cost, relative to that of competitors, with features that are acceptable to customers. Cost leadership is a term used when a company projects itself as the cheapest manufacturer or provider of a particular product or commodity in a competition. a tis difficult to deploy the strategy because the management must constantly work on reducing cost at every level to remain competitive. # In this strategy the business unit seeks to offer develop product or service that offers unique attributes that are valued by customers, * The essence of a broad differentiation strategy is to offer unique produet or service attributes that a wide range of buyers find appealing and worth paying for. * Finds out the ways for differentiation that creates values for buyers and that cannot be easily matched or copied by the rivals. © Differentiations can be based on product image or durability,after-sales quality,additional features. Customers perceive the product to be different and better than that of rivals, © Creates a brand identity that spurs additional sales withour additional investment in costly sales promotion 3. Focused strategy © Strategic plan under which a firm concentrates its resources on entering or expanding in a narrowly defined market segment. + The firm focuses on a narrow niche market in which to build a strong competitive advantage. © Itis usually employed where the firm knows its segment and has products to competitively satisfy its needs, + Focus allows businesses to compete on the basis of low cost, differentiation, and rapid response against much larger businesses with larger resources. # The objective of the firm is to do a better job at serving the buyers in the target market than the rivals. # In focusing strategy the key to success is choosing a market niche where buyers have distinetive preferences, special requirements, or unique needs and developing a unique ability to serve those needs. a, Focused low cost Here a business seeks a lower-cost advantage in just on ora small number of market segments. «The product will be basic - perhaps a similar product to the higher-priced and featured market leader, but acceptable to sufficient consumers. Such products are often called "me-too‘s' * For example: Unilever limited used a cost focus strategy in its Wheel detergent line, which it used to reach the price sensitive customers seeking affordable quality. b, Focused Differentiation # In this focus strategy, a business aims to differentiate within just one or a small number of target market segments «The special customer needs of the segment mean that there are opportunities to provide products that are clearly different from competitors who may be targeting a broader group of customers. * The important issue for any business adopting this strategy is to ensure that customers really do have different needs and wants - in other words that there is a Valid basis for differentiation - and that existing competitor products are not meeting those needs and wants. For Example, Ferrari and Rolls-Royce are classic examples of niche players in the automobile industry Both these companies have a niche of premium products available at a pretFunctional level strategy * Functional level strategies are the actions and goals assigned to various departments that support your business level strategy and corporate level strategy. © These strategies are the daily operations of specific departments (or functions) of your business. * Functional level strategies are concemed with tactical decisions, such as human resources, production, operations, marketing, research, development, etc. Each functional managers are responsible to develop function-level strategies. Functional level strategy should include: © Objectives: For a specific function, such as marketing. © Resource allocation: For sub-function of a function, such as product, price, place, promotion of marketing function. ‘Types of Functional Level Strategies 1. Production Strategy ‘* Production Strategy determines how and where a product or service is to be manufactured, and the evel of vertical integration in the production process. * Deals with the development of method for improving performance © Mainly related with product development, optimal resource utilization, efficiency improvement, technology adoptation, product design, quality control, inventory management etc 2. Marketing Strategies «These days, marketing is a key functional level strategy for all organizations, * Marketing strategy deals with activities related to marketing mix consisting of product, price, place, promotion and people Marketing helps businesses spread awareness of their product through promotion, collecting leads, and converting them into customers. * It does not end here; it constantly markets the product and communicates with customers to sa them and increase future sales. 3. Human Resource Strategies This deals with activities related to an organization's workforce. © This can include hiring employees, attendance, leave, indemnity, training, career growth planning, etc, + Itensures the proper office hygiene conditions and efficient operation of busin © Human resource strategies aim to ensure the required skill power is available at all times and that employees are given opportunities to grow their careers and stay with the organization. Financial Strategies nancial strategies deal with budgeting, expenditures, activities, «Financial strategies ensure the budget is spent the right way and accounted for. * Ithelps the managers to take valuable decisions in the organization © Italso takes care of taxes, shares, dividend payments, etc. .d monitoring and controlling financial 5, Research & Development Strategies ¢ Research and development play a key role in taking the organization to the next level. These strategies ensure that the organization has competitive and technical advantages over competitors. 6The goal of R&D strategies is innovation and improving the product and processes. * New products let organizations create new niches, increase the market share, and diversify the product portfolio. © Continuous improvement and updates in product features ensure the customers” requirements are met and satisfied at all times. Strategic Decision # Strategic decisions are the decisions that are concerned with whole environment in which the firm operates, Strategic desion is selecting the best strategy among alternative strategies. In this process, strategic alternatives are evaluated and best choice is made that best suits for the achievement of organizational objective ‘© Managers of successful businesses do more than simply find a way to make money and sell stuff. Not only do they handle the day-to-day tasks of selling, they also think of the big picture and make decisions that will get the company to where it wants to go. This is called strategic decision making, * Decisions are made according to a company's goals or mission. This type of decision making guides the choices that are made, aligning them with the company objective strategic decision-making is different from the routine choices which are made every day. # Itrequires out-of-the-box thinking as managers need to consider future scenarios that may or may not happen. # Strategic decisions are not limited to earning high profit in a short ort period of time, but it determines in which direction a company will go. © Instrategic decision, different alternatives are developed, match the internal strength and weakness with the opportunity and finally come to conclusion, * Some examples of strategic decisions may be new product line expansion, dropping a product line, diversification of business and changing policy etc. Characteristics of Strategic Decision 1, Rare and Non- programmed: © strategic decisions are unique and rare. They deal with uncertain and non- routine problem situations as they are complex in nature. Strategic decisions are not operational decisions which are taken in daily basis They are taken in the exceptional situation to solve the complex problem 2, Future oriente: Strategic decisions are future oriented. They are made on the basis of predictions and projections. They are concerned with long term direction and scope of the organization, 3. Dynamic: - They are dynamic in nature. They take place within a changing Changing political, economic, socio- cultural, legal and technological forces increase complexity in strategic decisions. 4, Mission and Goal based © Strategic decisions are made on the basis of mission and goal © They are prepared considering the long term goal of the organization. To achieve the goal, managers take strategic decisions by analyzing internal environment and opportunities in business environment4. Competitive Advantage: - Strategic decisions help in gaining competitive advantages in the market through searching for unique resources and care competencies. 5. Strategic fit Strategic decision match activities and resources of the organization with the opportunities in the environment 6. Top management oriented: - Strategic management decisions are made by top management of the firm. The values, philosophy and expectations of top management greatly affect strategic decisions. So, the strategic decisions are top management oriented. 7. Commitment: - strategic decisions are long term obje of resourc: 8. Choi s of the firm and involve long term commitment of large amount Strategic decision is about making choice from among the strategic alternatives. It is a choice among course of action for the long term future. 9. Show scope # Strategic decisions shows future scope of busin © Analyze the environment and find out the the turning point of the business which estimates the direction of the business * Detail study of business extemal environment helps to imagine opportunity and threats that defines the future of the business. Managers take decisions considering the competency and the scope of the busine: opportunity. n changing Importance of Strategie Decision 1, Long term direction: © Strategic decisions provide long term direction to the organization. They act as road maps for the future. * Itis based on organizational vision, mission and objectives They indicate where the organization wishes to reach. ¢ Itexplain the best way for the best use of resources for the improvement of competitive strength of the business 2. Organizational effect feness: Strategic decisions bring organizational rigs effectiveness by reconciling the organizational goal and resources for productive purpose Ithelps to solve the organizational complexities and problems that arises in the way of organizational activities Organizational effectiveness results in strategic advantage resulting in the sustainable growth and. development of an organization.3. Improvement in operational capability: Though strategic decisions are long term decisions, they have significant and direct effects on operational activities They are related to resource allocation and work processes, hence affecting the operational decisions, 4.Improves Competitive advantage: Strategic decision is not concern with high profit earning in small unit of time but it provides direction to achieve the long term objectives Strategic decisions are always based on the internal strength and opportunities in the environment. So it directs towards achieving competitive advantage from the environment, Competitive advantage eventually helps to achieve the long term objective of the organization, 5, Resource management: * Resource management is in strategic management. # Strategic decisions ensure the proper availability of resources, their allocation to various units and effective management, «Effective resource management enhances the organizational capability and effectiveness. * 6. Fulfill Stakeholders’ interest: * There are different stakeholders including employees, customers, suppliers, shareholders, government etc. + They have a direct and indirect interest in the functioning of the organization «Employees want fair wages, shareholders want good return and so on, * Stakeholders continue to support an organization when its performance meets or exceeds their expectations. Strategic decisions aim at fulfilling the interest of the stakeholders. « 7. Strategic control: Strategic control is a continuous process and ensures the effective implementation of strategies. Strategy provides the standard for the performance. Actual performance is compared with the the standard and applies remedial measures to remove the deviations. Strategic control is al implement its strategies. used to evaluate the degree to which the firm focuses on the requirements to Strategic decisions help to establish effective strategic control. Strategic Management # Strategic management can be defined as the art and science of formulating, implementing, and evaluating cross-functional decisions that enable an organization to achieve its objectives * Itis the process management of an organization’ resources to achieve its goals and objectives. It guides all the functional area like integrating management, marketing, finance/accounting, production/operations, research and development, and information systems to achieve organizational success,* Iisa set of managerial decisions and actions that determines the long term performance of an organization. * Ithelps the firm to anticipate future problems and opportunities. © It provides clear vision, mission, objectives and strategies that lead organization future. * Itis concerned with strategic decisions and actions of top level management. * Iisa process by which top level management decides and does for the success of the organization, * Ithelps to determine the best possible strategy so that organization could win in the game in the competitive environment. © Ibis the ongoing process of formulating, implementing and controlling broad plans that guide the organization in achieving the strategic goals within the given internal and external environment. nto the secures Characteristics of strategic management 1. Uncertain * Strategic Management is concerned with complexity arising out of ambitious and non-routine situation. ¢ Such situations bring uncertainty to organization trategic management provide guidance and future direction to the organization. Complex Uncertain situations bring complexity for strategic management. scope of strategic management is greater than that of any one area of operational management. Itis a comprehensive area that covers almost all the functional areas of the organization. That is why strategic management is complex. It deals with difficult issues. F Organization-wide Strategic management is not only related to a single specialization but covers cross functional or overall organization, It comprises all such functional areas like marketing, finance and account, human resource and production and operation into a top-level management, It coordinates all functional areas of an organization. 4, Fundamental * Strategic management is a fundamental hour basi organization, © It provides a basis for success in management, # It guides other organizational activities. for improving the long-term performance of the 5. Long-term implications * Strategic management is an ongoing process which is in existence to out the life of the organization. * Ithas long term implications. it is not concerned with day-to-day operations. «It makes strategic decisions that have enduring a long-term effect on the phone for better performance. 6. Implementation © Strategic management insurance that strategy is put into action. * itimplements and executes the chosen strategy efficiently and effectively in order to ill effective performance. It also evaluate the performance for future decision making. 7. Concerned with effectiveness and efficiency 10Strategic Management is concerned with enhancement of effectiveness and efficiency of organizational performance. © its facilities effective allocation and coordination of resources among various organizational activities, * This helps maintain and enhance organizational effectiveness and efficiency. Importance of Strategic Management Strategic management is very important for a sustainable competitive advantage in the modern competitive business environment. The following points highlight the importance of strategic management. 1. Grab opportunity: * Strategic management guides the managers to maintain continuous observations over the changing environment. © Observation shows the opportunities and threats to the business organizations. Management develops new strategies, plans and policies for the best use of opportunities © Strategic management enables an organization to grab the opportunities or protect from threats that arise from the external environment. 2. Strategic fit: * Strategic fit involves matching the strategies of an organization to the internal resources and the opportunities in the external environment. «Strategic management guides the manager to develop and implement a strategic plan plan on the basis of opportunitiy and strength * Strategic management ensures strategic fit i.e, matching the internal resources with the external opportunities and threats. 3. Enhances competitiveness: © Strategic management helps to maintain competitive strength of the organization. # Strategic management involves development of long term plan for sustainable competitive advantage. * Its related with optimum utilization of the resources to maintain competitive position in the market # It increases the competitive strength of an organization and helps survive and grow in a volatile and competitive environment, 4. Organizational unity: © Strategic management covers the whole organization. Ithelps to unify the organization by improving the coordination among the departments and units for a superior performance. 5. Resource management: Resource management is very important for building up organizational strength. Resources may be human, financial, physical or technological Strategic management supports for acquisition, allocation and proper utilization of the resources Strategic management facilitates the resource management in an efficient and effective way for a sustainable competitive advantage. * 6. Proactive management approach * Strategic management always seeks to exploit the business opportunities and mitigate threats. Hence, it always creates a more proactive management approach, 117. Organizational effectiveness: * Organizational effectiveness may be defined as the capability of an organization in achieving its objective. Strategic management increases the organizational effectiveness with the support and commitment of all the stakeholders along with the employees, 8. Manage change: In the modern dynamic business environment, managing change remains a central issue. Business organization operates it activities in continuously changing environment Strategic management prepares an organization to aecept and manage the changes that take place within the organization, Organization may not be successful if it doesn't keep its plans, policies and programs upto date based on external environment 9.Face future uncertainties * Strategic management helps to face future uncertainties created by external environment. It deals with rare and unroutined situation. Managers must be intellecutal enough to know about the impact of their decisions because of the creation of the unexpected situation. * It supports manager to develop new plans , policies, strategies and programs 10. Diversify Risk + Strategic management emphasizes on portfolio management by which risk can be minimized . * Ione business line is suffered from loss, its resources can be tilized in another business line providing good return. © If there is more scope of expansion of a business line, further investment decisions should be taken Components / Process of strategie Management * Strategic management involves many activities like such as strategy formulation, strategic implementation and strategic evaluation and control for the effective accomplishment of predetermined objectives of the organization, 1, Strategic planning * Strategic planning is the determination of long-term goal and objective in an organization and the adaptation of course of action and allocation of resources necessary for carrying out those goals. * it includes the strategies which are action-oriented programs in order to keep the organization unified direction Toward achieving the company's mission objectives and goal. + Itisthe planned course of action to achieve clearly defined objectives, in the face of limited resources, a changing environment and intelligent Competition. + Inconclusion, itis the process of choosing the best direction that an organization have to adapt to achieve its overall objective which concerns the decision with allocating resources among the business of its own, transferring resources from one set up business to another and mana; portfolio of the business. © it governs the overall direction of the organization a. Define organizations vision mission objectives and strategies the first step of strategic plan process is to define vision mission objectives and strategies of the organization 12i, vision * vision describes what an organization is to become in the future. It is a descriptive image of what the organization to be want to be known for. © Itis the aspiration of an organization. It reminds what the goal are. Ii, Mission ‘That is the reason for the existence of the organization. it Defines the product, market and competitive scope of the organization towards the long term. it describes the values and priorities. ii, Objectives they are the direction and commitment to mobilize resources for making the organizations future they are in resullts to be achieved in the long term. Iv. Strategies © They are the broad plans for achieving objectives. They are fundamentally concerned with activities relating to products and competitive advantage designed to guide to achieve organizational objective. 2. Analyzing external environment © Once the mission goal and strategies of the organizations are set, managers analyze the external environmental factors. * they are concern with political, economic, sociocultural and technological factors affecting the organizational capacity to pursue its mission. * it provides opportunities and threats to the organization, 3. Analyzing the internal environment © this analysis focuses on organizational resources and competencies. resources can be human financial physical and information. in this stage, the organization’s resource capacity is analyzed. resource availability is determined. © this analysis helps identify strength and weaknesses of the organization, 4, Industry and competitive analysis, * itis the tool used by managers to understand the competitive position of the industry. with decides whether an idea of entering into the market for the new venture is appropriate or not, © ithelps the managers to understand the various economic aspects of the market and how this scet can be used to gain competitive advantage of for the business. * ithelps to understand the position of the industry relative to Other industries in the market. 5. Identifying and selecting strategy © inthis step managers identify different possible alternative strategies best on organizational requirement. He can take support from different personalities and experts for the identification of alternative strategies. these strategies may be corporate level strategy, business level strategy and functional level strategy. + alter the identification of possible alternative strategies it is necessary to evaluate each of the strategies on the basis of cost and benefit analysis. * afterwards itis selected on the basis of suitable, physical and acceptability. © Suitability reports using the alternative on the basis of environmental sustainability, Expectations suitability and capability suitability. * Acceptability refers to the measurement of the return, risk and stakeholders reaction resulting from a particular strategy. 13Is ness has the resources, aptitude and abilities to actually implement the strategy in a successful way or not. 2. Strategy Implementation «Strategy implementation is the translation of chosen strategy into organizational action so as to achieve strategic goals and objectives. * Strategy implementation is also defined as the manner in which an organization should develop, utilize, and amalgamate organizational structure, control systems, and culture to follow strategies that lead to competitive advantage and a better performance. © Itis the means of effective utilization of resources # Itincludes allocation of resources, instruction and guidance, leading and controlling the activities of activities © It includes the following components a. Organizational structure * Organizational structure is the essential part for the effective implementation of strategy. # It includes division of work, hierarchy of authority, span of management, delegation of authority and responsibility. it is Organizational rules, regulations, working procedures and Systems. # tis assigning the jobs to subordinates and managers on the basis of skill knowledge and efficiency. it supports for systematic implementation of the strategic plan, b, resource planning * itis considered as the important part strategy Implementation. © The availability and application of different business unit is important for the effective implementation of strategy plan. * These resources include Human resource, capital, machine and equipment, materials information and technology. © It is essential fo manage resources best and the scope created by changing environment of the business. c. management system © For the effective implementation of strategic plan , an effective management system is nec: Managers must take initiation Each and every activity of the organisation * itis essential (o provide proper instruction, guidance and information to the subordinates for effective performance. * A ssystem of teamwork, communication, motivation, friendly supervision and coordination over the activities should be developed. Managers should evaluate the performance and control the activities of the subordinate if any deviation is found. * the effective implementation of strategy depends upon the leadership of the Manager. Strategic evaluation and control itis the process of determining the effectiveness of the strategy to achieve the organisational objective. © it actually compares The actual implementation of strategy with the plan and apply the necessary Remedial action to correct them «The mean of the strategy evaluation is to get feedback about the effectiveness of the strategy implementation. strategic evaluation and control based on the organisational requirement. © the provision of evaluation and control in strategic management helps to develop the feeling commitment and accountability among the managers and subordinates. + itperforms the crucial tasks of keeping the organisation activities on the right track, * Inthis, managers develop different evaluation models process, evaluation criteria control method and system 14Approaches of strategic management The notion of strategy emerged early on for the creation of military strategies and tactics to win the conflict. ‘© Strategic management was established in order to adapt swiftly and appropriately to the changing environment of wa © Later, with the establishment of a global liberal economy and the growth of rivalry among commercial companies, the concept of strategic management is also started to implement in the business. * The following stages can be used to study changes in strategic management approaches: 1. Business Policy Stage: © Itis believed that the business policy stage was the first step in the creation and execution of various strategie management principles in Commercial companies. * Usually, this period involved the beginning of the 20th century to before the 1950s + This stage focused on the development and execution of business policies for the firm's systematization of business activities, Business policies were developed by top level management. «Business policies play the central role of operation and coordination of all activities. * Business policies are changed on the basis of change in business environment 2. Strategic Planning Stage + From the 1950s until the early 1970s, the strategic planning stage emerged During the 1950s, the senior management team concentrated on budgetary planning and financial control. © Accounting strategies such as capit gain control over budgeting. * At the time, corporate compat their budgeting processes. The management team began focused on business planning in the 1960s and early 1970s. + They began to concentrate on SWOT analysis when developing the company plan. * Most businesses established corporate planning departments to prepare for development and diversification, and forecasting was the major way of achieving growth. il budgeting and financial planning were used by management to gained a competitive edge by coordinating and control 3. Strategic Management Stage: * This was a phase of competitive strategy in which the emphasis was on preserving competitive power. From the mid-1970s through the 1990s, the strategic management stage emerged. + Strategic management began to evolve and expand beyond budgetary planning and control and corporate planning by the 1970s. + Businesses began to concentrate on identifying specific market areas and positioning themselves for leadership, * During this period, business enterprises analyzed industry to determine attractiveness in terms of entry barriers, available suppliers, and potential buyers. * During the 1980s and 1990s, a resource-based perspective of strategy arose, in which an 's resources and capabilities were viewed as the major source of its profitability and the foundation for developing long-term strategy. «During this time, businesses strove to diversify and extend their operations by entering the global market. * Strategic management emerged as a distinct field during this time period, and it was viewed as a source of long-term competitive benefits. Global Strategic Management Stage: * This is the era of knowledge-based strategy, when the emphasis is on creati technological advancement, and globalization. ¢ From the 1990s until the present, the global strategic management stage has evolved. ity, innovation, 15Top-level managers have been more forced to adapt to rapid changes and new difficult global corporate environment. In such a circumstance, the managerial focus was on developing new thoughts, ideas, and expertise faster and better than rivals. © During this time, a resource-based view strategy is added to the knowledge-based view strategy, with an emphasis on innovation of new ideas as well as the optimum use of resources. ‘© Because of increased globalization and quick and drastic change in information and computer technology, the managerial focus has switched from market rivalry to innovation, and an enterprise's success is related with its capacity to manage knowledge. Strategic planning + Strategic planning means planning for making and implementing strategies to achieve organizational goals. * Strategic planning helps in knowing where we are and where we want to go so that environmental threats and opportunities can be exploited, given the strengths and weaknesses of the organisation. Strategic planning is "a thorough self-examination regarding the goals and means of their accomplishment so that the enterprise is given both direction and cohesion.” * Ibis "a process through which managers formulate and implement strategies geared to optimizing strategic goal achievement, given available environmental and internal conditions, © "Strategic planning is planning for long periods of time for effective and efficient attainment of organizational goals. © Strategic planning is based on extensive environmental scanning. It is a projection into environmental threats and opportunities and an effort to match them with organizational strengths and weaknesses. Strategic planning is done to comprehend, anticipate and absorb environmental vagaries. It ii continuous proce: «Every time business organisations want to increase the growth rate or change their operations, desire for better management information system, co-ordinate activities of different departments, remove complaceney from organisations; they make strategic plans. a Characteristics of strategic planning 1. Involves senior management A successful strategic plan comprises a collective understanding that senior management is largely responsible for the future success of a company. It's important that company leaders recognize their roles in an organization so that they understand how they can help the business achieve its long-term goals. When senior management completes its part of the business objectives, it may be easier for the company to achieve its goals, 2. Forward Looking Activity © Itisa forward-looking activity where in the future opportunities and threats are ascertained while considering its profitability, market share, product and competition, 3. Long term © Strategic plan is long-term in nature, * Itnormally covers a period of over five years. «Hence, it provides long-term direction to an organization 4, Based on environmental analysis: 16Strategic plans are developed with environment analysis. © They always seek to maximize business opportunities and mitigate threats. 5. Strategic fit * Strategic plan always aims at establishing strategic fit ie. fit of between strength and opportunity through a proper plan. * Strategic fit leads an organization towards the way of competitive advantage. Directional * A strategie plan is forward looking and describes the strategic course that the management has adopted. * It describes the activities to be perform to achieve the organizational goal Steps of strategie plan 1, Define Vision and Mission: The initial stage of the strategic plan is to define the vision and mission of the organization. Vision shows the big picture of what the organization wants to achieve in its lifetime. It provides a clear understanding of what the business organization would look like and provides support to take strategic decisions It provides a strong foundation for developing a comprehensive mission statement. The mission involves a general statement of how an organization will achieve its vision. It defined the role that an organization plays in society. It is an enduring statement of purpose that distinguishes one organization from another 2. Determine Objectives: After defining vision and mission another step of strategic planning is the determination of long-term objectives. Usually, objectives should be determined minimum for five years and more. The objective: determined must 6f specific and achievable through organizational resources. The achievement of objectives is the main reason for the existence and functioning of the organization. The objectives determined should be specific, measurable, achievable, realistic, and time-bound. Itis necessary to spell out clearly the quantity and quality of performance to be achieved within the specified time period. 3. Environmental Analysis Environment analysis is the further step of strategic planning after the determination of objectives. It involves the assumption and forecasting of changes in the environment that may occur in the future. It focuses on the analysis of internal strengths and weaknesses along with analysis of opportunities and threats that may create through changing the external environment. Therefore, environmental analysis involves the study of both internal and external environmental factors. a. Internal Environment Analysis: The internal environment involves forces within the organization which provide impact on the strategy implementation of organization. These forces are controllable to the management. These forces involve organizational objectives, structure, resources, policies, and culture. They represent strengths and weaknesses of the organization. For effective implementation of a strategic plan, it is essential to consider the internal strength of the organization, Therefore analysis of internal forces is essential for the formulation of the strategic plan, b. External Environment Analysis: # Itinvolves forces outside organization which can provide impact on the strategy implementation of the organization. + They are not controllable from management of an organisation «These forces involve the economic, socio-cultural, political-legal, global and techno environment. The change in external environmental forces provides both opportunity and threats to the busines activities of the organization. 7For the formulation of strategic plan, it is necessary to make a det iled analysis of changing external forces forecast their impact on strategy implementation, 4. Identify Strategic Alternatives: * another step of strategic planning is the identification of possible strategic alternatives, it is essential to consider organizational objectives. © the management can take support from professionals and experts for Identification of available alternative strategies. © These strategies involve corporate strategy, business-level strategy, and functiona -level strategy. 5. Choice of Strategy Formulation: Choice of strategy is the final step of strategic plam ing. * Ibis concerned with making fit between the internal strength of the organization with that of opportunity created by changing environment. * itis necessary to evaluate each alternative by considering cost and benefit anallysis. «The proper sirategy should be selected based on its suitability, feasibility and acceptability to stakeholders. Resource planning is essential for the effective implementation of strategic choice, * After implementation there should be the provision of evaluation of performance outcomes and taking necessary measures for effective control. Components of strategic planning Strategic planning is related to the long range planning n organization. It provides direction to the organization over a long periperiod. It aims at the growth and development of an an organization, The components of strategic plan are mentioned below. 1. Vision: * Vision is the mental image of desired future state of an organization, # It shows what a firm wants to achieve. # It provides the clear understanding of what the organi to take strategic decision © Itgives a shape to the intended future of an organization. It reflects a firm's values and aspirations. It intends to capture the heart and mind of the employees as well as other stakeholders. * Itencourages people to focus on what's important and better understand organization-wide change and alignment of resources. tion will look like and also provide support 2, Mission: + Mission of the organization explain the purpose of the organization and the reason of the existence, © A mission statement defines the business in terms of customers, employees, suppliers and the community. * Itreflects every facet of the business like the products, pricing, quality, service, marketplace position, growth potential, use of technology, and the relationships with the customers, employees, and suppliers, ion is the base for a firm's mission. In other words, mission is developed on the basis of vision. 3. Objective: The goal or aim of the organization for which the organization is established called Objective. * The expected outcome of an organization is known as objective. They are the end result of planned activity. All the organizational activities are directed towards the achievement of objectives. * Objectives may also be formulated in different levels as corporate, business and operational. They provide direction to an organization. 18‘© Likewise, it also fixes the priority of organizational activities and establishes coordination. Objectives may be formed at corporate level, business level, functional level and individual level. 4, Strategy: # Strategy is a means to achieve long-term objectives © Itis likely to be concerned with the long term direction of an organization, It affects an organization's long-term prosperity, thus is future-oriented. * Ithas multifunctional or multidivisional consequences, © Itrequires consideration of both external and internal fuctors facing the firm, The essence of strategy lies in its effective management Role of CKO in Strategie Management * The chief executive is the executive head of the organization in the form of chairman, managing director, general manager. He represents the top management. His main duty is to define long term direction and scope of the organization, He has ultimate responsibility for its succe He leads the formulation and implementation of the strategy. He is guided by the board of directors in major decision: nce strategic management involves teamwork of multiple ps ticipants, the CEO plays the key roles Role of CEO in Formulation of strategy: Strategy Provides future direction and scope to the organization for gai roles of CEO in strategy formulation are: \g competitive advantage. The Key Strategist Rol © The CEO plays the role of chief architect in defining vision, mission and objective of the organization. * He conceptualizes and crafts strategies to achieve objectives. © He plays influential role to employees to devote their effort in an effective way. © The CEO makes strategic decisions related to strategy formulation, © De is essential for the formulation of policies, management of resources, development of working procedure and solution of work related issues and problem. © CEO makes strategic choice from among strategic option for achieving This role involves taking. For making decisions, CEO can take help of subordinate level manager sk- Resource planning role: This role of CEO involves coordinated allocation of significant resources to plans. Such plans can be organization-wide or related to strategie business unit for function. Resources can be people, money, technology, time and information. Availability of sufficient resources affects on smooth operation of the organization. CEO tries fo fit the external opportunities with the internal strength. Negotiator rote: 19Strategy must fulfill the expectations of various stakeholders of the organization. The CEO balance conflicting interests of stakeholder by negotiating disputes. The stakeholders can be owners, customers, employees, suppliers, government, labour unions, and financial institutions CEO ensures the acceptability to strategy by stakeholders, Role of CEO in Implementation of Strategy: Implementation is putting strategy into action. The chief executive ensures that strategies are operationalized in His/her roles in strategy implementation are as Follows: a. Information Role: CEO collects different institution related information from different sources and preserves them in a systematic manner. The CEO disseminates information about strategy to the implementers within the organization. He serves as a spokesperson for strategy implementation. Effective communication serves as the key to effective implementation of strategy. b, Leadership Role: The CEO assumes overall leadership for the implementation of strategy. He inspire ust and self confidence among implementers of strategy. CEO ensures participation of those who involve in implementatioi CEO motivates them for higher productivity and also provides direction for implementation. c. Organizer Role: The CEO is an organization builder. He determines the organizational structure for the strategy and divide jobs among the subordinates on the basis of skill, knowledge and ability. He establishes reporting relationship and span of control and assigns authority and responsibility for positions and people in the organization for key result areas. c. Organizer Role: The CEO is an organization builder. He determines the organizational structure for the strategy and divide jobs among the subordinates on the basis of skill, knowledge and ability. He establishes reporting relationship and Span of control and assigns authority and respons positions and people in the organization for key result areas. . Conflict Management Role Conflict in an organization is common, Conflicts may be beneficial or destructive. Itis due to different interest, perception, attitude, experience, knowledge etc. CEO plays important role in managing such conflict among the employees. Role of CEO in Strategy Evaluation and Control 20i. Monitoring Activities Strategic evaluation and control is the process of determining the effectiveness of the strategy in i thieving the organizational objectives. The provision of evaluation and control n strategic management helps to develop the feeling of commitment and accountability among the managers and subordinates to accomplish the assigned job in an effective way. The following are the common role of CEO in strategy evaluation and control: The CEO has to maintain close observation over the activities of different strategic busi and functional departments of the organization. He has to monitor the regular activities to know about their progress and problems. He can use different tools and techniques for observing the activities of subordinates. Such a monitoring system helps to develop the feeling of responsibility among the subordinates for the accomplishment of the assigned job in time. eS units b. Strategic Control: The CEO play: organization, In evaluation, if it is found that actual progress of performance is not happening in accordance with the plan, he analyzes the reasons for deficiency in actual performance. The reason for deficiency in actual performance may be insufficiency of capital, the inefficiency of employees, shortage of raw materials, defect in machines and equipment, or due to external factors. The actual reason is detected and corrective measure is taken on time. a significant role in maintaining strategic control over the activities of the c. Evaluation of Performance: After implementation of strategy (or a certain period of time it is essential to evaluate the performance outcome of every business unit and functional department. It facilitates to know whether activities of the organization are progressing according to plan or not. For this purpose, the CEO has developed the system of getting a report of performance progress from all the units and departments at certain time intervals. 2a22