1.  the conduct of drafting, implementing and evaluating
cross-functional decisions that will enable an
organization to achieve its long-term objectives.
 It is the process of specifying the organization's
mission, vision and objectives, developing policies and
plans, often in terms of projects and programs, which
are designed to achieve these objectives, and then
allocating resources to implement the policies and
plans, projects and programs.
Dr. Harish Purohit
1

2. “Strategic management is an ongoing process that
evaluates and controls the business and the
industries in which the company is involved;
assesses its competitors and sets goals and
strategies to meet all existing and potential
competitors; and then reassesses each strategy
annually or quarterly [i.e. regularly] to determine
how it has been implemented and whether it has
succeeded or needs replacement by a new strategy
to meet changed circumstances, new technology,
new competitors, a new economic environment., or
a new social, financial, or political environment.”
Dr. Harish Purohit
2

3.  In today's highly competitive business environment,
budget-oriented planning or forecast-based planning
methods are insufficient for a large corporation to
survive and prosper.
 The firm must engage in strategic planning that clearly
defines objectives and assesses both the internal and
external situation to formulate strategy, implement the
strategy, evaluate the progress, and make adjustments
as necessary to stay on track.
Dr. Harish Purohit
3

4. Dr. Harish Purohit
4

5. Mission and Objectives
 The mission statement describes the company's
business vision, including the unchanging values and
purpose of the firm and forward-looking visionary
goals that guide the pursuit of future opportunities.
 Guided by the business vision, the firm's leaders can
define measurable financial and strategic objectives.
 Financial objectives involve measures such as sales targets
and earnings growth.
 Strategic objectives are related to the firm's business position,
and may include measures such as market share and
reputation.
Dr. Harish Purohit
5

6. Environmental Scan
 The environmental scan includes the following components:
- Internal analysis of the firm
- Analysis of the firm's industry (task environment)
- External macro-environment (PEST analysis).
 The internal analysis can identify the firm's strengths and
weaknesses and the external analysis reveals opportunities and
threats. A profile of the strengths, weaknesses, opportunities, and
threats is generated by means of a SWOT analysis.
 An industry analysis can be performed using a framework
developed by Michael Porter known as Porter's five forces. This
framework evaluates entry barriers, suppliers, customers, substitute
products, and industry rivalry.
Dr. Harish Purohit
6

7. PEST analysis:
 “Political, Economic, Social, and Technological analysis"
 describes a framework of macro-environmental factors
used in the environmental scanning component of
strategic management.
 The model has recently been further extended to
STEEPLE and STEEPLED, adding education and
demographics factors.
 It is a part of the external analysis when conducting a
strategic analysis or doing market research and gives a
certain overview of the different macro-environmental
factors that the company has to take into consideration.
Dr. Harish Purohit
7

8. PEST analysis: The Model's Factors
1. Political factors:
How and to what degree a government intervenes in
the economy.
- tax policy,
- labour law,
- environmental law,
- trade restrictions,
- tariffs, and political stability.
Political factors may also include goods and services
which the government wants to provide or be provided
(merit goods) and those that the government does not
want to be provided.
Furthermore, governments have great influence on the
health, education, and infrastructure of a nation.
Dr. Harish Purohit
8

9. PEST analysis: The Model's Factors
2. Economic factors include:
economic growth, interest rates, exchange
rates and the inflation rate.
These factors have major impacts on how
businesses operate and make decisions.
For example, interest rates affect a firm's cost of
capital and therefore to what extent a business
grows and expands. Exchange rates affect the
costs of exporting goods and the supply and
price of imported goods in an economy
Dr. Harish Purohit
9

10. PEST analysis: The Model's Factors
3. Social factors
- the cultural aspects and include health consciousness,
population growth rate, age distribution, career
attitudes and emphasis on safety.
Trends in social factors affect the demand for a
company's products and how that company operates.
For example, an ageing population may imply a
smaller and less-willing workforce (thus increasing the
cost of labor). Furthermore, companies may change
various management strategies to adapt to these social
trends (such as recruiting older workers).
Dr. Harish Purohit
10

11. PEST analysis: The Model's Factors
4. Technological factors
ecological and environmental aspects, such as
R&D activity, automation, technology
incentives and the rate of technological change.
They can determine barriers to entry,
minimum efficient production level and
influence outsourcing decisions.
Furthermore, technological shifts can affect
costs, quality, and lead to innovation.
Dr. Harish Purohit
11

12. PEST analysis:
 It is a useful strategic tool for understanding market
growth or decline, business position, potential and
direction for operations.
 The growing importance of environmental or ecological
factors in the first decade of the 21st century have given
rise to green business and encouraged widespread use
of an updated version of the PEST framework.
 STEER analysis systematically considers Socio-cultural,
Technological, Economic, Ecological, and Regulatory
factors.
Dr. Harish Purohit
12

13. 5. Legal factors
- discrimination law,
- consumer law,
- antitrust law,
- employment law, and
- health and safety law.
These factors can affect how a company operates, its
costs, and the demand for its products.
Dr. Harish Purohit
13

14. 6. Environmental factors
- weather, climate, and climate change
- which may especially affect industries such as
tourism, farming, and insurance.
Furthermore, growing awareness to climate change is
affecting how companies operate and the products
they offer--it is both creating new markets and
diminishing or destroying existing ones.
Dr. Harish Purohit
14

15. Strategy Formulation
 Given the information from the environmental scan, the
firm should match its strengths to the opportunities that
it has identified, while addressing its weaknesses and
external threats.
 To attain superior profitability, the firm seeks to develop
a competitive advantage over its rivals.
 A competitive advantage can be based on cost or differentiation.
Michael Porter identified three industry-independent generic
strategies (Cost leadership, differentiation, focus) from which the
firm can choose.
 Strategy can be formulated on 3 levels:
- corporate level - business unit level - functional / dept’al level
Dr. Harish Purohit
15

16. Strategy Implementation
 The selected strategy is implemented by means of
programs, budgets, and procedures. Implementation
involves organization of the firm's resources and
motivation of the staff to achieve objectives.
 The way in which the strategy is implemented can have
a significant impact on whether it will be successful. In a
large company, those who implement the strategy likely
will be different people from those who formulated it.
For this reason, care must be taken to communicate the
strategy and the reasoning behind it. Otherwise, the
implementation might not succeed if the strategy is
misunderstood or if lower level managers resist its
implementation because they do not understand why
the particular strategy was selected.
Dr. Harish Purohit
16

17. Evaluation & Control
 The implementation of the strategy must be monitored
and adjustments made as needed.
 Evaluation and control consists of the following steps:
1. Define parameters to be measured
2. Define target values for those parameters
3. Perform measurements
4. Compare measured results to the pre-defined standard
5. Make necessary changes
Dr. Harish Purohit
17