2. Definition
“….the art and science of formulating, implementing and
evaluating cross-functional decisions that enable an
organisation to achieve its objectives”
Deals with developing a well thought-out systematic plan of
action to attain the company’s mission & objectives
The means by which the management establishes the purpose &
pursues the purpose through alignment of organizational
resources with environment, opportunities & constraints
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3. Anticipate future developments in business,
attempt to mould it and balance the company’s
short & long term goals accordingly
Formulated considering the possible positions,
defensive & offensive moves of competition &
their relative strengths & weaknesses with
respect to the company
1. Where are we now?
2. Where do we want to go?
3. How are we going to get there?
In essence, the
strategic plan is a
company’s game plan
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5. Strategic management process
Three sequential steps:
1. Strategy formulation
o A stage of committing the resources
o Developing a vision and mission (strategic intent)
o Environmental analysis (TOWS)
o Long-term objectives
o Generating alternative strategies
o Strategy selection
o Have a perspective on the ramification of strategy decision
Possible major issues in strategy formulation
New business opportunities
Businesses to abandon
Allocation of resources
Expansion or diversification
International markets
Mergers or joint ventures
Avoidance of hostile takeover
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6. 2. Strategy implementation
o The action stage
o Annul objectives
o Policies
o Employee motivation
o Resource allocation
o Developing & utilising information system
o Developing a strategy-supporting culture
o Create effective organisational structure
Issues in implementation stage
Most difficult stage
Mobilization of employees & managers
Interpersonal skills critical
Consensus on goal pursuit
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7. 3. Strategy Evaluation
o Attempt to decipher whether the strategies are working well or not
o Internal review
o External review
o Performance metrics
o Corrective action
o All strategies are subject to future modification, due to constant
change in external and internal factors
o Complacent firms experience sad demise
Issues in Strategy evaluation
Subject to future modification
Today’s success no guarantee of future success
New & different problems
Complacency leads to demise
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9. Model of SM model by Wheelen, Hunger & Rangarajan, P. 49
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10. Hierarchy of Strategy: 3 Types of Strategy
SM process occurs at three heirarchical levels in a large
organisation
1. Corporate strategy (SM atcorporate level
2. Business strategy (SM at business level
3. Functional strategy (SM at functional level
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11. Corporate Strategy
– Narrates over all direction in terms of general attitude
towards growth and management
– Typically fit in to Stability, Growth & Retrenchment
Business Strategy
– improvement of competitive position
– fit within Competitive strategies (uniqueness of Apple) & Co-
operative strategies (Air India with Luftansa for global operations)
Functional Strategy
– combine corporate & business strategies to maximise resource
productivity
–Technological leadership
–Technological followership
Refer: Wheelen , Hunger & Rangarajan (2004): Strategic Management and Business Policy ,
9 edn, pp.12 -13
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12. Attributes of strategy in Business decisions
1. Results in major financial & resource commitment.
2. Cause long term impacts in the organisation & often difficult to
reverse such decisions.
3. May result in sweeping changes in business activities.
4. Focus on matching organisational activities to the environment
5. Entails significant risks to the business.
6. Partly proactive (planned for) and partly reactive (to market &
competitor moves).
7. Emerges incrementally & then evolves over time.
8. Should be within the bounds of what is legal, ethical & moral.
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13. 9. An element of secrecy in the planning stage, but
unambiguous in the implementation
10. Strategic issues are future oriented. It is based on
what managers forecast rather than what they know.
11. Have cross-functional or multi-business impacts.
12. The company’s game plan to meet competition &
achieve its organisational objectives.
13. Require commitment of large amount of firm’s
resources & are therefore top management decisions.
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14. Role and Responsibilities of corporate board in SM
determining the direction and performance of the corporation
A corporation is a mechanism established to allow different
parties to contribute capital, expertise and labour for their
mutual benefit
The relationship among the board of directors, top management,
and shareholders
Shareholders: participates in the profits of the corporation
without taking any responsibility of operation
Management: runs the company without being
responsible for personally providing funds
Board of directors: elected from
shareholders have both authority and
responsibility to establish basic company
policies and to ensure that they are followed
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15. • Corporation is fundamentally governed by Board of Directors
over seeing top mgt *
Role of Board
Monitor
Evaluate and influence
Initiate and determine
Responsibilities of Board
Setting corporate strategy, over all direction, vision, mission
Hiring and firing the CEO and Top management
Controlling, monitoring and supervision of top management
Reviewing and approving the use of resources
Caring for shareholder interests
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16. A Continuum of Board of Directors
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17. Inside directors
• Management directors
• Officers or executives employed by the firm
Outside directors
• Non-management directors
1.Affiliated Directors
2.Retired Directors
3.Family Directors
Codetermination: inclusion of a corporation’s employees on its
board of directors
Interlocking directorate: nominate CEOs from other organisations
Direct interlocking: mutual arrangements
Indirect interlocking: board of directors of two firms serve on
the board of the third firm
Refer: Wheelen , Hunger & Rangarajan (2004): Strategic Management and Business Policy ,
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9 edn, pp. 24 -30
18. Role and functions of top management in SM
Comprises of CEO, COO, President, Executive VP, VPs of
divisions and functional areas
Role is multi-dimensional and oriented towards the total
welfare of the organisation
Task divisions
Handles tow primary responsibilities
1. Provide executive leadership and strategic vision *
o EL is the directing of activities towards the accomplishment
of corporate objectives
o SV is a description of what the company is capable of
becoming
2. Manage the strategic planning process
Refer: Wheelen , Hunger & Rangarajan (2004): Strategic Management and Business Policy ,
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9 edn, pp. 33 -34
