Final Mb0052-Strategic Management and Business Policy

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SIKKIM MANIPAL UNIVERSITY

INTERNAL ASSIGNMENT

MBA (MB0052– Strategic Management and Business Policy)

|NAME |: |Kunal Mhatre | |ROLL NO. |: |581111279 | |LEARNING CENTER CODE |: | | |DATE OF SUBMISSION |: | |

|1) Define the term “Strategic Management”. Explain the importance of strategic management. |

Strategic management is a systematic approach of analyzing, planning and implementing the strategy in an organization to ensure a continued success. Strategic management is a long term procedure which helps the organization in achieving a long term goal and its overall responsibility lies with the general management team. It focuses on building a solid foundation that will be subsequently achieved by the combined efforts of each and every employee of the organization. Types of Strategies

1. Corporate level
The board of directors and chief executive officers are involved in developing strategies at corporate level. Corporate level strategies are innovative, pervasive and futuristic in nature. The four grand strategies in a corporate level are:

— Stability and expansion strategy
— Retrenchment
— Corporate restructuring
— Combination strategies – concept of synergy
Stability strategy
The basic approach of the stability strategy is to maintain the present status of the organization. In an effective stability strategy, the organization tries to maintain consistency by concentrating on their present resources and rapidly develops a meaningful competitiveness with the market requirements. Further classifications of stability strategy are as follows: — No change strategy – No change strategy is the process of continuing the current operation and creating nothing new. Usually small business organizations follow no change strategy with an intention to maintain the same level of operations for a long period. — Pause/Proceed with caution strategy – Pause/Proceed with caution strategy provides an opportunity to halt the growth strategy. It analyses the advantages and disadvantages before processing the growth strategy. Hence it is termed as pause/proceed with caution strategy. — Profit strategy – Profit strategy is the process of reducing the amount of investments and short term discretionary expenditures in the organization. Expansion strategy

The organizations adopt expansion strategy when it increases its level of objectives much higher than the past achievement level. Organizations select expansion strategy to increase their profit, sales and market share. Expansion strategy also provides a significant increase in the performance of the organization. Many organizations pursue expansion strategy to reduce the cost production per unit. Expansion strategy also broadens the scope of customer groups, and customer functions. Example – Prior to 1960’s most of the furniture industry did not venture into expanding their industry globally. This was because furniture got damaged easily while shipping and the cost of transport was high. Later in 1970’s a Swedish furniture company, IKEA, pioneered towards expanding the industry to other geographical areas. The new idea of transporting unassembled furniture parts lead to minimizing the costs of transport. The customers were able to easily assemble the furniture. IKEA also lowered the costs by involving customer in the value chain. IKEA successfully expanded in many European countries since customers were willing to purchase similar furniture. The further classification of expansion strategy is as follows: — Diversification - Diversification is a process of entry...
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