UNIT – I STRATEGY AND PROCESS
|Conceptual Framework for Strategic Management – Concept of Strategy and Strategy Formation Process – Stakeholders in Business – Vision, |
|Mission and Purpose – Business Definition – Objectives and Goals – Corporate Governance – Social Responsibility |
CONCEPTUAL FRAMEWORK FOR STRATEGIC MANAGEMENT
Strategic management deals with decision making and actions which determine an enterprise’s ability to excel survive or die by making the best use of a firm’s resources in a dynamic environment. The main purpose of study of strategic management is to examine why some organization succeed while others fail and yet others ...view middle of the document...
The decisions regarding up-gradation of product mix, joint ventures and expansion have a long term impact on the activities and such crucial decisions are taken by senior management. The top management is mainly responsible for providing a sense of direction and guiding future course of action for any firm. Strategic management deals with long-term decisions taken up by top management which gives overall direction to the organization. Strategic Management provides a cooperative, integrated and enthusiastic approach for tackling problems and realizing opportunities.
Conceptual Framework for Strategic Management:
➢ Strategic Advantage
➢ Organizational capability
➢ Synergistic Effects
➢ Strengths and weaknesses
➢ Organizational Resources
➢ Organizational behavior
THE CONCEPT OF STRATEGY AND THE STRATEGY FORMATION PROCESS
Concept of Strategy
The term strategy is derived from a Greek word strategy which means generalship. A plan or course of action or a set of decision rules making a pattern or creating a common thread.
Strategy is a framework through which an organization can assert its vital continuity whilst managing to adapt to the changing environment to gain competitive advantage.
According to Igor Ansoff (1984), “Strategic Management is a systematic approach to the major and increasingly important responsibility of general management to position and relate the firm to its environment in a way which will assure its continued success and make it secure from surprises”.
Strategy Formation Process
Henry Mintzberg holds a different view about strategic management process. According to him, strategies can emerge from within an organization without any formal plan. Strategies may emerge from the grassroots of the organization in response to unforeseen circumstances. Strategy is more than what a company plans to do; it is what the company does actually.
Steps in Strategy Formation Process:
1. Existing business model
2. Mission – Vision, Values and goals
3. External Analysis, opportunities and threats
4. Internal Analysis, Strengths and weaknesses
5. SWOT Strategic choice
6. Functional level strategies
7. Business level strategies
8. Global strategies
9. Corporate level strategies
Strategy Implementation: Strategy implementation consists of four steps namely:
• Designing appropriate organizational structure
• Designing control systems
• Matching strategy, structure and controls and
• Managing conflicts, politics and change
Designing appropriate organizational structure: Structure involves allocation of duties, responsibilities and decision-making authority and integration among the ranks and files of organization. It is widely believed that structure follows strategy. Some of the options available in this regard are tall structure, flat structure, centralized decision making authority, decentralized...