Strategic Managements Lecture Notes

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Strategic Management

Need of Strategic Management:-

1. Due to change

2. To provide guide lines

3. Research and development

4. Probability for business performance

5. Systemized decision

6. Improves Communication

7. Allocation of resource

8. Improves Coordination

9. Helps the managers to have holistic approach

Importance of Strategic Management:-

1. To the shape the Future of business

2. Effective strategic idea

3. Mangers and employer are innovative and creative

4. Its decentralized the Management

5. Its helps to increase the productivity

6. To Makes discipline

7. To Make control

8. To makes forward s thinking

The Strategic Planning Process:

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. A simplified view of the strategic planning process is shown by the following diagram: The Strategic Planning Process

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The Strategic Planning Process
|Mission & |
|      Objectives       |
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|[pic] |
|  Environmental   |
|Scanning |
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|[pic] |
|Strategy |
|    Formulation      |
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|[pic] |
|Strategy |
| Implementation   |
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|[pic] |
|      Evaluation       |
|& Control |
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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.

Environmental Scan

The environmental scan includes the following components:
• Internal analysis of the firm
• Analysis of the firm's industry (task environment)
• External microenvironment (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.

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 from which the firm can choose.

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...
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