Strategic Management Process and Steps.pptx

Strategic Management Process and Steps

2. The term strategic management process refers to the steps by which management
converts a firm’s mission, objectives & goals into a workable strategy.
The strategic management process has two parts:
Information process
It involves collecting & analyzing information about the external & internal
environments.
External factors are taken into account to find major opportunities & threats that
now or will confront the organisation.
Decision process
It covers fours major steps:
Analysis of alternatives
Choice
Implementation
Assessment

3. Organisational rationale
Corporate
mission
Corporate
objectives
Corporate
strategies
Business level
objectives
Business level
objectives
Functional
objectives
Functional
strategies
External
Environmen
t
Internal
Environmen
t
Strategies
Alternatives
Assessment
Implement
Choice
Information
Process
Decision
Process
Strategic Direction Components
Which
modify
About
Which provide
information to
Who engage in

4. Core competence
An organisations core competence is something it does exceptionally well in
comparison to its competitors.
It provides a distinct competitive advantage that provides the firm:
a) Access to variety of product/market
b) Contributes greatly to consumer benefits in the end products
c) Is an exclusive & inimitable preserve of the firm that is long lasting.
Synergy
When organisational parts interact to produce a joint effort that is greater than
the sum of the parts acting alone, synergy occurs.
Also called as 1+1 =3 effect.
When one product or service strengthens the sale of one or more other products
or services, market synergy occurs.
Value creation
Is the sum total of benefits received & costs paid by the consumer in a given
situation.

5. Vision
Mission
Objectives
Goals
Corporate
Business
Functional
International
Structural
Leadership
Behavioural
Evaluation
Evaluate
current
•Vision
•Mission
•Goals
•Strategies
External
analysis
Identify
Opportunities
Threats
Internal
analysis
Identify
Strength
Weakness
SWOT
Strategic IntentStrategic
Formulation
Strategic
Implementation &
Control
Information Process Strategic Direction Decision Process
Strategic Inputs Strategic Actions Strategic Outcomes
Feedback

6. The various steps involved in the strategic management process are:
Vision, Mission & Objectives
Vision is a picture of the organisation, the core values for which an organisation
stands & clear description what the organisation wishes to become in the years
ahead.
Mission statement specifies what an organisation is & why it exists.
The principle value of mission statement lies in its specification of firms ultimate
aims.
External Analysis
It has three important parts:
The general environment (elements in the broader society that affect industries &
their firms)
The industry environment (factors that influence firm, its competitive actions &
responses, & the industries profit potential)
The competitive environment (in which the firm examines each major rival’s future
objectives, current strategies, assumptions & capabilities)

7. Internal Analysis
A systematic internal appraisal helps a firm find:-
Where it stands in terms of its strengths & weaknesses
Pick up opportunities that are in tune with its resource base
Take step to bridge any resource gaps
Select appropriate areas that help consolidate its position in the industry

8. Corporate Level Strategy Formulation
Corporate level strategy pertains to the organisation as a whole & the
combination of business units & product lines that make up the corporate entity.
It addresses the overall strategy that an organisation will follow.
The process generally involves selecting a grand strategy & using portfolio
strategy approach to determine the types of business in which the organisation
should be engaged.
Grand strategy is the general plan of major action by which a firm intends to
achieve its long term goals.
It provides basic direction for the strategic actions of a firm.
Grand strategy fall into four general categories:-

a) Growth/Expansion Strategy
b) Stability Strategy
c) Retrenchment Strategy (Defensive Strategy)
d) Combination Strategy

9. Business Level Strategy Formulation
It deals with how a particular business competes.
The principle focus is on meeting competition, protecting market share & earning
profit at business unit level.
The strategies of growth, stability & retrenchment apply at the business level as
well as the corporate level, but they are accomplished through competitive actions
rather than by the acquisition or divestment of other businesses.

10. Functional Level Strategy Formulation
Functional level strategies are formulated by specialists in each area of a
business.
Outline the action plans that must be put into practice to execute business level
strategy.
Business level & functional specialists must coordinate their activities to ensure
that the strategies pursued by them are consistent & lead to achievement of
overall goals.
 Research & Development Strategy
 Operations Strategy
 Financial Strategy
 Marketing Strategy
 Human Resource Strategy

11. They are responsive to the external environment.
They offer a sustainable competitive advantage.
They are consistent with other strategies in the organisation.
They provide adequate flexibility for the business & the
organisation.
They conform to the organisation’s mission & long term
objectives.
They are organisationally feasible.

12. Measuring
performance
Controlling
deviations
Taking
rectification
steps
Strategy
Evaluation &
Control
Strategy
Implementation
Staffing
Directing
Strategy
Formulation
Planning Programmes
Budgets
Procedures
Feedback
Middle/Lower Level
Management
Top Management

13. Measure Performance
Is the strategy internally consistent?
Is it consistent with its environment?
Is it appropriate given organisational resources?
Is it too risky?
Is the time horizon of the strategy appropriate?
Compare Performance To Goals & Standards
Corrective Actions