Q1. What Is Strategy?
Q1. What Is Strategy?
Q1. What Is Strategy?
The word “strategy” is derived from the Greek word “strategtia”, which was first used
around 400 BC. This word connotes the art and science of directing military forces.
Mintzberg (1979) Strategy is a mediating force between the organization and its environment:
consistent patterns in streams of organizational decisions to deal with the environment.
Prahlad (1993) Strategy is more then just fit and allocation of resources. It is stretch and
leveraging of resources
Q5. Vision
Ans : Vision is short , inspiring statement of what your organization intends to become and to
achieve at some point in the future. Corporate vision may contain commitment to :
Creating an outstanding value for customers and other stakeholders.
Developing a great new product & service
Developing a great company.
“What do we want to become?
Ford Motor Vision
'to become the world's leading consumer company for automotive products and services'.
Q6. Mission :
Ans : Mission is a statement that defines the role that an organization plays in the society.
Purpose is anything that organization strives for.
Mission is essential purpose of the organization ,concerning particularly why it is in existence.,
the nature of business. E.g. of mission statement
Maruti: building trust worldwide
HCL: world class competitor
“What is our business?”
Infosys' Mission Statement :
"To achieve our objectives in an environment of fairness, honesty, and courtesy towards
our clients, employees, vendors and society at large.
Q7. Objectives
Ans: Objectives are operational definitions of the organization’s goals. They provide the
measurable parameters for monitoring / evaluating the performance of the organization.
objectives include a time dimension . Thus objectives are measurable & comparable. An
organization may pursue multiple objectives.
Q8. Goal
Ans: Goal are financial or non financial and specifies the route the organization takes to achieve
the vision or mission. Goals are qualitative ,objectives are mainly quantitative
Q9.Strategic Intent :
Ans : Strategic intent is a high-level statement of the means by which your organization will
achieve its vision. It is a statement of design for creating a desirable future (stated in present
terms).
CK Prahald and Hamel coined the term ‘strategic intent’ to indicate an obsession of an
organization, some times having ambitions that may even be out of proportion to their resources
and capabilities.Simply put, a strategic intent is your company's vision of what it wants to
achieve in the long term.
Q10. Strategic Competitiveness
Ans: Achieved when a firm successfully formulates and implements a value-creating strategy
Q11 .Above-Average Returns
Ans: Occurs when a firm develops a strategy that competitors are not simultaneously
implementing Provides benefits which current and potential competitors are unable to duplicate.
Q12. Synergy
Derived form the Greek word “synergos,” which means “working together” exceeds the value
those units could create working independently.
Q Strategic fit
is central to the strategy school of positioning . Stretch refers to misfit between resources and
aspirations. It is positioning the organization by matching its organization resources to its
environment.
Q Leverage refers to concentrating , accumulating , complementing , conserving and recovering
resources in such a manner that resource base is stretched to meet the aspirations of the
organizations.
Social Programs
Environment Mission
Reason Activities
General
for needed to
forces
existence accomplish
External plans
Objectives Budgets
Task What
Cost of the
Environment results to
accomplish Program
Industry
Analysis by when Performance
Procedures
Sequence Actual Results
Strategies of steps
Internal Plans to needed
Achieve to do
Structure mission &
Chain of the job
objectives
command
Culture
Beliefs, Policies
expectation
Resources Broad
Assets , skills. guidelines
for decision
Knowledge,
making
competence
Feedback/ learning
Environmental scanning is the monitoring, evaluating, and disseminating of information from
the external and internal environments to key people within the corporation. Its purpose is to
identity strategic factors – those external and internal elements that will determine the future of
the corporation.
The external environment consists of variables (Opportunities and Threats) that are
outside the organization and not typically within the short-run control of top management. These
variables form the context within which the corporation exists.
The internal environment of a corporation consist of variables (Strengths and Weakness)
that are within the organization itself and are not usually within the short run control of top
management. These variables form the context in which work is done. They include the
corporation’s structure, culture, and resources.
The simplest way to conduct environmental scanning is through SWOT analysis . SWOT
is an acronym used to describe those particular Strengths, Weakness, Opportunities, and Threats
that are strategic factors for a specific company
Strategy formulation is the development of long-range plans for the effective management of
environmental opportunities and threats, in light of corporate strengths and weaknesses. It
includes defining the corporate mission, specifying achievable objectives, developing strategies
and setting policy guidelines.
Strategy implementation is the process by which strategies and polices are put into action
through the development of programs, budgets and procedures. This process might involve
changes within the overall culture, structure, and/or management system of the entire
organization. Most of the times strategy implementation is carried out by middle and lower level
managers with top management’s review. Some times refereed to as operational planning,
strategy implementation often involves day-to-day decisions in resource allocation. It includes
programs, budgets and procedures.
Evaluation and control is the process in which corporate activities and performance results are
monitored so that actual performance can be compared with desired performance. Managers at
all levels use the resulting information to take corrective action and resolve problems. Although
evaluation and control is the final major element of strategic management, it also can pinpoint
weaknesses in previously implemented strategic plans and thus stimulate the entire process to
begin again.
Q 5 . Different Levels of Strategy
Q4 . Role of strategists
Ans Strategists are individuals or groups who are primarily involved in the formulation,
implementation, and evaluation of strategy. In a limited sense, all managers are strategists.
There are persons outside the organization who are also involved in various aspects of strategic
management. They too are referred to as strategists. We can identify nine strategists who, as
individuals or in groups, are concerned with and play a role in strategic management.
1. Consultants
2. Entrepreneurs
3. Board of Directors
4. Chief Executive Officer
5. Senior management
6. Corporate planning staff
7. Strategic business unit (SBU) level executives
8. Middle level managers
9. Executive Assistant
A brief description of how the different strategists approach the process is outlined here.
1) Consultants: Many organizations which do not have a corporate planning department
owing to reasons like small size, infrequent requirements, financial constraints, and so on,
take the help of external consultants in strategic management. Besides the Indian
consultancy firms, such as, . They offer a variety of services. McKinsey and Company,
specializes in offering consultancy in the areas of fundamental change management and strategic
visioning; Andreson Consulting, is in business restructuring, and info tech and systems; Boston
Consulting helps in building competitive advantage; and KPMG Peat Marwick is in strategic
financial management and feasibility studies for strategy implementation.
2) Entrepreneurs are promoters who conceive the idea of starting a business enterprise for
getting maximum returns on their investment. They are awaiting for an environment
change and thereby for an opportunity to exploit the situation in their best interest. Thus
they start playing their role right from the promotion of the proposed venture. So, their
strategic role to make the venture a success is very conspicuous in a new business enterprise.
Therefore, it is expected of an entrepreneur that he should posses foresight, sense of
responsibility, desire to work hard and dashing spirit to bear any future contingencies. According
to Drucker, “the entrepreneur always searches for change, responds to it and exploits it as an
opportunity”. Here is an example of a successful women entrepreneur.
Kiran Mazumdar Shaw, a young entrepreneur, set up an export-oriented unit manufacturing a
range of enzymes. As an expert in brewing technology, Mazumdur entered the field of
biotechnology after experiencing problems in getting a job. Later she set up another plant for
manufacturing two new enzymes created by her own research and development (R&D)
department. As managing director, Mazumdar was actively
involved in all aspects of policy formulation and implementation for her companies.
3) Board of Directors are professionals elected on the Board of Directors (BOD) by the
shareholders of the company as per rules and regulations of the Companies Act, 1956.
They are responsible for the general administration of the organization. They are
supposed to guide the top management in framing business strategies for accomplishing
predetermined objectives. It is also the responsibility of the Board to review and evaluate
organizational performance whether it is as per the strategy laid down or not. The Board
is also empowered to make appointments of senior executives. In this connection, it
should be noted that the success of strategies much depends on the relative strength in
terms of power held by the Board and the Chief Executive (CE).
4) Chief Executive Officer : In the management circle, the chief executive is the top man,
next to the directors of the Board. He occupies the most sensitive post, being held responsible for
all aspects of strategic management right from formulation to evaluation of strategy. He is
designated in some companies as the managing director, executive director or as a general
manager.
5) Senior Management Starting from the chief executive to the level of functional or profit
centre heads, these managers are involved in various aspects of strategic management.
Some of the members of the senior management act as directors on the board usually on a
rotational basis. All of them serve on different top-level committees set up by the board
to look after matters of strategic importance and other policy issues . Strategic planning at MRF
Ltd. used senior management expertise by dividing them into five groups dealing with products
and markets, environment, technology, resources, and manpower. Each group had a leader who
helped to prepare position papers for presentation to the board. The executive directors in the
company were actively involved in SWOT analysis through the help of managers and assistant
managers.
6) SBU level executives “SBU” stands for strategic business unit. Under this approach, the
main business unit is divided into different independent units and is allowed to form their
own respective strategies. In fact, the business is diversified and thus the departmental
heads are supposed to act as the main strategist, keeping an eye on optimum benefit for
their departments. Hence strategists i.e., the departmental heads enjoy the maximum
amount of authority and responsibility within their strategic business units.
Interest rates.: The rate of interest affects the demand for the products in the economy,
particularly when general goods are to be purchased through borrowed finance. If the interest
rate is low, the demand for certain products like autos, appliances, capital equipments, housing
materials, etc. will rise. This provides good opportunity for these industries to expand whereas
rising interest rates pose a threat to these industries. Interest rates also determine the cost of
capital of the company. When rates of interests are lower, companies can adopt ambitious
strategy with borrowed funds.
Politico- legal environment
The various forces in political and legal environment direct and restrict business decisionmaking.
Political environment – Attitudes of Government and legislators change with social demands and
beliefs. Government affects every aspect of life. For instance, strong pollution norms many result
in closure of a company. Government not only promotes but also constrains business. Promotion
is possible by stimulating economic extension and development, by providing subsidies to SSIs,
tax advantages, support to R&D and protecting business in priority sector. Also, government can
be the biggest customer. The public announcements of government, the observations in plan
documents indicate government policies. E.g.: Industrial policy resolution, 1948 and the
economic policy, 1991. Several European Countries restrain the use of children in commercial
advertisements. In India advertisement of cigarettes must carry the statutory warning that
“Cigarette smoking is injurious to health.”
The prevalence of political uncertainty has effect on the business strategies. In the presence of
political uncertainty, no business likes to commit itself for long term strategies or investments
while the uncertainty countries. Therefore the companies focus more on preparing alternative
plans for different emerging situations.
Legal environment – It consists of judiciary and legislation. It constrains and regulates
business. There are several legislation like the Company act 1956, the Payment of wages Act,
1936 and Factories Act 1948. There are judiciary arrangements like courts and tribunals.
PEST Analysis
The Political, Economic, Social, and Technological (PEST)
Analysis is a useful framework that can contribute to strategic analysis in the following
ways: