What is strategy

The word “strategy” is derived from the Greek word

“strategos”; stratus (army) and “ago”
(leading/moving).
An action that managers take to achieve an
organizational goals or “A general direction set for the
company and its various components to achieve a
desired state in the future. Strategy results from the
detailed strategic planning process”.
“Game plan of management”
 Alfred D. Chandler

“The determination of basic long term goals and

objectives of an enterprise and adoption of
courses of action and the allocation of resources
necessary for carrying out of these goals”.
 Features

 Top management responsibilities

 Allocation of large amount of resources
 Future oriented
 Multi- functional or multi businesses
consequences
 Consideration of the factors of external
environment
 Long term prosperity of the firm
 Levels of strategy
1) Corporate strategy
2) Business strategy
3) Functional strategy
Typical … Strategic Decisions Tactical Decisions Operational Decisions

Business functions, business

Scope Whole organization Day-to-day business
units, or products

Change involved Major Medium Minor

Major, often irreversible, risk

Resource implications Medium, often budgeted Minor
of sunk costs

Less complex
Complex Simple, routine
Often within a particular
Nature taken under uncertainty Highly structured
framework
unstructured Within defined processes
More structured

Lower-level management,
Taken at which level Top-management Mid-level management
operational staff

Medium-term effect Short-term effect of days or

Frequency and time- Long-term effect
More frequent, sometimes weeks
frame Infrequent and non-recurring
within a regular schedule frequent
Strategic management
 Strategic management
Strategic management is a set of management
decisions and actions that determines the long
term performance of an organization. It includes
environmental scanning, strategy formulation,
strategy implementations and evaluations and
control to achieve the organizational objectives.
 Fred R. David

Strategic management is an art and sciences of

formulating, implementing and evaluating cross
functional decisions that enable an organizations to
achieve its objectives.
 Strategic Management Process

The strategic management process means defining the

organization’s strategy. It is also defined as the process by
which managers make a choice of a set of strategies for the
organization that will enable it to achieve better performance.
Components of Strategic Management Process
Strategic management process have four
steps:

• Environmental Scanning

Environmental scanning refers to a process of collecting,

scrutinizing and providing information for strategic
purposes. It helps in analyzing the internal and external
factors influencing an organization. After executing the
environmental analysis process, management should
evaluate it on a continuous basis and strive to improve it.
 Strategy Formulation
Strategy formulation is the process of deciding best
course of action for accomplishing organizational
objectives and hence achieving organizational
purpose. After conducting environment scanning,
managers formulate corporate, business and functional
strategies.
 Strategy Implementation

 Strategy implementation implies making the strategy

work as intended or putting the organization’s chosen
strategy into action. Strategy implementation includes
designing the organization’s structure, distributing
resources, developing decision making process, and
managing human resources.
 Strategy Evaluation
Strategy evaluation is the final step of strategy
management process. The key strategy evaluation
activities are: appraising internal and external factors
that are the root of present strategies, measuring
performance, and taking remedial / corrective actions.
Evaluation makes sure that the organizational strategy
as well as it’s implementation meets the
organizational objectives.
 Strategic Intent

An organization’s strategic intent is the purpose that

it exists and why it will continue to exist, providing it
maintains a competitive advantage.

Strategic intent gives a picture about what an

organization must get into immediately in order to
achieve the company’s vision. It motivates the
people. It clarifies the vision of the vision of the
company.
 Mission Statement

Mission statement is the statement of the role by

which an organization intends to serve it’s
stakeholders. It describes why an organization is
operating and thus provides a framework within
which strategies are formulated. It describes what
the organization does (i.e., present capabilities), who
all it serves (i.e., stakeholders) and what makes an
organization unique (i.e., reason for existence).
Mission statement has three main components-

 Statement of mission or vision of the company

 Statement of the core values that shape the acts and
behavior of the employees
 Statement of the goals and objectives.
 Features of a Mission

 Mission must be feasible and attainable. It should be possible to achieve it.

 Mission should be clear enough so that any action can be taken.

 It should be inspiring for the management, staff and society at large.

 It should be precise enough, i.e., it should be neither too broad nor too narrow.

 It should be unique and distinctive to leave an impact in everyone’s mind.

 It should be analytical,i.e., it should analyze the key components of the strategy.

 It should be credible, i.e., all stakeholders should be able to believe it.

 Vision

A vision statement identifies where the organization

wants or intends to be in future or where it should be
to best meet the needs of the stakeholders. It
describes dreams and aspirations for future.

 “where we want to be”

vision statement must have following features

• An effective It must be unambiguous.

• It must be clear.
• It must harmonize with organization’s culture and
values.
• The dreams and aspirations must
be rational/realistic.
• Vision statements should be shorter so that they
are easier to memorize.
 Goals and Objectives

 A goal is a desired future state that an organization

tries to achieve. Goals specify in particular what
must be done if an organization is to attain mission
or vision. Goals make mission more prominent and
concrete. They co-ordinate and integrate various
functional and departmental areas in an
organization. 
 Features of goals
• These are precise and measurable.
• These look after critical and
significant issues.
• These are realistic and challenging.
• These must be achieved within a specific
time frame.
• These include both financial as well as non-
financial components.
 Objectives
Objectives are defined as goals that organization
wants to achieve over a period of time. These are the
foundation of planning. Policies are developed in an
organization so as to achieve these objectives.
Formulation of objectives is the task of top level
management.
 Features of Objectives
• These are not single for an organization,
but multiple.
• Objectives should be both short-term as well
as long-term.
• Objectives must respond and react to changes
in environment, i.e., they must be flexible.
• These must be feasible, realistic and
operational.
 Strategy Formulation
Strategy formulation refers to the process of
choosing the most appropriate course of action for
the realization of organizational goals and
objectives and thereby achieving the organizational
vision. 
The process of strategy formulation basically
involves six main steps. 

1. Setting Organizations’ objectives 

2. Evaluating the Organizational Environment 
3. Setting Quantitative Targets 
4. Aiming in context with the divisional plans
5. Performance Analysis
6. Choice of Strategy
 1. Setting Organizations’ objectives - 
The key component of any strategy statement is to set the long-term
objectives of the organization. It is known that strategy is generally a
medium for realization of organizational objectives. Objectives stress
the state of being there whereas Strategy stresses upon the process of
reaching there. Strategy includes both the fixation of objectives as well
the medium to be used to realize those objectives. Thus, strategy is a
wider term which believes in the manner of deployment of resources so
as to achieve the objectives.
While fixing the organizational objectives, it is essential that the factors
which influence the selection of objectives must be analyzed before the
selection of objectives. Once the objectives and the factors influencing
strategic decisions have been determined, it is easy to take strategic
decisions.
 2.Evaluating the Organizational
Environment
• The next step is to evaluate the general economic and
industrial environment in which the organization operates.
This includes a review of the organizations competitive
position. The purpose of such a review is to make sure that
the factors important for competitive success in the market
can be discovered so that the management can identify their
own strengths and weaknesses as well as their competitors’
strengths and weaknesses.
• After identifying its strengths and weaknesses, an
organization must keep a track of competitors’ moves and
actions so as to discover probable opportunities of threats to
its market or supply sources.
 3. Setting Quantitative Targets -
 In this step, an organization must practically fix the
quantitative target values for some of the
organizational objectives. The idea behind this is to
compare with long term customers, so as to evaluate
the contribution that might be made by various
product zones or operating departments.
 4. Aiming in context with the divisional
plans
 In this step, the contributions made by each
department or division or product category
within the organization is identified and
accordingly strategic planning is done for each
sub-unit. This requires a careful analysis of
macroeconomic trends.
 5. Performance Analysis
Performance analysis includes discovering and
analyzing the gap between the planned or desired
performance. A critical evaluation of the organizations
past performance, present condition and the desired
future conditions must be done by the organization.
This critical evaluation identifies the degree of gap that
persists between the actual reality and the long-term
aspirations of the organization. An attempt is made by
the organization to estimate its probable future
condition if the current trends persist.
 6.Choice of Strategy
This is the ultimate step in Strategy Formulation.
The best course of action is actually chosen after
considering organizational goals, organizational
strengths, potential and limitations as well as the
external opportunities.
 Strategy implementation
Strategy implementation is the translation of
chosen strategy into organizational action so as to
achieve strategic goals and objectives. Strategy
implementation is also defined as the manner in which
an organization should develop, utilize, and
amalgamate organizational structure, control systems,
and culture to follow strategies that lead to
competitive advantage and a better performance.
 Strategy Formulation Strategy Implementation

Strategy Formulation includes planning and decision-making Strategy Implementation involves all those means related to
involved in developing organization’s strategic goals and plans. executing the strategic plans.

In short, Strategy Formulation is placing the Forces before the In short, Strategy Implementation is managing forces during
action. the action.

Strategy Formulation is an Entrepreneurial Activity based on Strategic Implementation is mainly an Administrative

strategic decision-making. Task based on strategic and operational decisions.

Strategy Formulation emphasizes on effectiveness. Strategy Implementation emphasizes on efficiency.

Strategy Formulation is a rational process. Strategy Implementation is basically an operational process.

Strategy Formulation requires co-ordination among few Strategy Implementation requires co-ordination among many
individuals. individuals.

Strategy Formulation requires a great deal of initiative and Strategy Implementation requires specific motivational and
logical skills. leadership traits.

Strategic Formulation precedes Strategy Implementation. STrategy Implementation follows Strategy Formulation.
 Strategy Evaluation
It throws light on the efficiency and effectiveness of
the comprehensive plans in achieving the desired
results. The managers can also assess the
appropriateness of the current strategy in todays
dynamic world with socio-economic, political and
technological innovations. Strategic Evaluation is the
final phase of strategic management.
The significance of strategy evaluation lies in its
capacity to co-ordinate the task performed by
managers, groups, departments etc, through control
of performance
 Process of strategy evaluation
1. Fixing benchmark of performance
2. Measurement of performance
3. Analyzing Variance 
4. Taking Corrective Action
 Strategic Decisions
Strategic decisions are the decisions that are
concerned with whole environment in which the firm
operates, the entire resources and the people who form
the company and the interface between the two.
 Benefits of Strategic decisions
There are many benefits of strategic management and
they include identification, prioritization, and
exploration of opportunities.