Strategic Management

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Management Science I

Prof. M.Thenmozhi

MODULE 9 9.1. Strategy Formulation : An Overview
The corporate world is in the process of a global transformation. Mergers, acquisitions, outsourcing and downsizing are becoming common word everywhere. Privatization is allowing free enterprise to take on functions that previously were the domain of government. International boundaries are fading in importance as businesses take on a more global perspective and the technology of information age is telescoping the time it takes to communicate and make decision. Strategic management takes a panoramic view of this changing corporate terrain and attempts to show how large and small firms can be more effective and efficient not only in today's world but tomorrow as well. Strategic management is the set of managerial decisions and action that determines the way for the long-range performance of the company. It includes environmental scanning, strategy formulation, strategy implementation,

evaluation and control. It emphasizes the monitoring and evaluation of external opportunities and threats in light of corporation’s strength and weakness. Business policy has a general management orientation and tends primarily to look inward with its concern for properly integrating the corporations many functional activities. But strategic management as a field of study integrates the business policy with the environmental opportunities and threats. Therefore strategic management has tended to replace business policy as the preferred name of the field.

Indian Institute of Technology Madras

Management Science I

Prof. M.Thenmozhi

Why Strategic Management?
Strategic management provides the route map for the firm. It lends a framework, which can ensure that decisions concerning the future are taken in a systematic and purposeful way. Strategic management also serves as a hedge against uncertainty, a hedge against totally unexpected developments on the business horizon. It lends a frame of reference for investment decisions. It aids the concentration of resources on vital areas of best potential. It offers a methodology by which the firm could anticipate and project the future and be internally equipped to face it. It helps to develop processes, systems, mechanisms and managerial attitude that are essential for this purpose.

Defining Strategy:
Management is an art as well as science. Many of the concepts used in building management theory have been derived from the practical experience of the managers. Chandler defined strategy as: "The determination of the basic long term goals and objectives of an enterprise and the adoption of the courses of action and the allocation of resources necessary for carrying out this goals". Andrews defined strategy as: "The pattern of objectives, purposes, goals and the major policies and plans for achieving these goals stated in such a way so as to define what business the company is in or is to be and the kind of the company it is or it is to be". Ansoff explained strategy as: "The common thread among the organization's activities and product markets, that defines the essential nature of business that the organization was or planned to be in the future"

Indian Institute of Technology Madras

Management Science I

Prof. M.Thenmozhi

Glueck define the strategy as: "A unified, comprehensive, and integrated plan designed to assume that the basic objectives of the enterprise are achieved" To put it precisely, strategic management is the set of managerial decisions and actions that determines the long run performance of an organisation that includes environmental scanning (both external and internal), strategy formulation, strategy implementation, evaluation and control.

Levels Of Strategy: Strategy
business level and functional level.

may be formulated at the corporate level,

Corporate strategy:
Corporate strategy is one, which decides what business the organization should be in, and...
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