402- Strategic Management Short Notes

Unit-1 achieve its objectives.

1. What is meant by Strategic Management? Strategic management is different in nature from
Explain its nature, dimensions, benefits and
other aspects of management. An individual manager is
risks involved in it?
Introduction most often required to deal with problems of operational
Strategic Management is exciting and challenging. It nature. He generally focuses on day-to- day problems
makes fundamental decisions about the future such as the efficient production of goods, the management
direction of a firm – its purpose, its resources and how it of a sales force, the monitoring of financial performance
interacts with the environment in which it operates. or the design of some new system that will improve the
Every aspect of the organisation plays a role in level of customer service.
strategy – its people, its finances, its production Dimensions of Strategic Management:
methods, its customers and so on. Strategic  Top management involvement
Management can be described as the identification of  Requirement of large amounts of resources
 Affect the firm’s long-term prosperity
the purpose of the organization and the plans and
 Future-oriented
actions to achieve that purpose. It is that set of  Multi-functional or multi-business consequences
managerial decisions and actions that determine the  Non-self-generative decisions
long-term performance of a business enterprise. It Benefits of strategic management:

involves formulating and implementing strategies that  Liquidity Monitoring

will help in aligning the organisation and its  Solvency Planning

environment to achieve organisational goals.  Profitability Management

Definition:  Improved Revenue Generation

“Strategic management is a stream of decisions  Prevents Legal Risks

and actions which lead to the development of  Revitalize Human Resources

aneffective strategy or strategies to help achieve  Identify Problems

corporate objectives”.  Better Decision Making

– Glueck and Jauch, 1984  Improved Understanding of Competitors’

Nature of Strategic Management: Strategies

Strategic Management can be defined as the art &  Higher Stability
science of formulating, implementing, and evaluating, Risks involved in Strategic Management
cross-functional decisions that enable an organisation to The following are the limitations:

Dr. Karuna Moorthy V B MBA., Ph.D

Associate professor, Wings Business School,TPT.
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 402- Strategic Management Short Notes

1. It is a costly exercise in terms of the time that needs to 2. Strategic Choice: The analysis stage provides the
be devoted to it by managers. The negative effect of basis for strategic choice. It allows managers to
managers spending time away from their normal tasks consider what the organisation could do given the
may be quite serious. mission, environment and capabilities – a choice which
2. A negative effect may arise due to the non- also reflects the values of managers and other
fulfilment of the expectations of the participating stakeholders.
managers, leading to frustration and disappointment. 3. Strategy Implementation: Implementation depends
Another negative effect of strategic management may on ensuring that the organisation has a suitable
arise if those associated with the formulation of structure, the right resources and competencies (skills,
strategy are not intimately involved in the finance, technology etc.), right leadership and culture.
implementation of strategies. Strategy implementation depends on operational
2. Explain Strategic Management Process? Describe factors being put into place.
Strategic Management Formulation? 4. Strategy Evaluation and Control: Organisations set
Strategic Management Process up appropriate monitoring and control systems,
Developing an organisational strategy involves develop standardsand targets to judge performance.
four main elements – strategic analysis, strategic choice, Strategy Formulation
strategy implementation and strategy evaluation and Introduction
control. Each of these contains further steps, Strategy formulation is the process of determining
corresponding to a series of decisions and actions, that appropriate courses of action for achieving
form the basisof strategic management process. organisational objectives and thereby accomplishing
1. Strategic Analysis: The foundation of strategy is a organisational purpose.
definition of organisational purpose.This defines the Strategy formulation is vital to the well-being of a
business of an organisation and what type of company or organisation. It produces a clear set of
organisation it wants to be. Many organisations recommendations, with supporting justification, that
develop broad statements of purpose, in the form of revise as necessary the mission and objectives of the
vision and mission statements. These form the spring – organisation, and supply the strategies for accomplishing
boards for the development of more them. In formulation, we are trying to modify the current
specificobjectives and the choice of strategies to objectives and strategies in ways to make the organization
achieve them. more successful.

Dr. Karuna Moorthy V B MBA., Ph.D

Associate professor, Wings Business School,TPT.
CELL:9000537300 Page 2
 402- Strategic Management Short Notes

Aspects of Strategic Formulation: Importance of Business Environment:

The following three aspects or levels of strategy  Its impact on different firms with in the same
formulation, each with a different focus, need to be dealt industry differs
 It has a far-reaching impact
with in the formulation phase of strategic management.
 Environment is multi -faceted
The three sets of recommendations must be internally  It is Dynamic
consistent and fit together in a mutually supportive  Environment is Complex
manner that forms an integrated hierarchy of strategy, in  It may be an opportunity as well as a threat to
expansion
the order given.
 Changes in the environment can change the
1. Corporate Level Strategy competitive scenario
2. Competitive Strategy  Sometimes developments are difficult to predict
3. Functional Strategy with any degreeof accuracy

Unit-2
Porters Fiver Forces analysis
3. What is meant by External Environment? Explain
Michael Porter (Harvard Business School Management
Porters Five Forces Model?
Researcher) designed various vital frameworks for
Introduction:
developing an organization’s strategy. One of the most
At a time of fast growth, rapid changes and cut throat
renowned among managers making strategic decisions is
competition as exists in about all industries, it is a
the five competitive forces model that determines
challenge for the companies to establish a strategic
industry structure. According to Porter, the nature of
agenda for dealing with these contending currents and
competition in any industry is personified in the
to grow despite them. A company must understand
following five forces:
how the above currents work in its industry and how
i. Threat of new potential entrants
they affect the company in its particular situation. For
ii. Threat of substitute product/services
this a very useful tool is used by the analysts. The
iii. Bargaining power of suppliers
name of this tool is external analysis. External
iv. Bargaining power of buyers
assessment is a step where a firm identifies opportunities
v. Rivalry among current competitors
that could benefit it and threats that it should avoid. It
4. Explain SWOT Analysis, BCG Analysis and
includes monitoring, evaluating, and disseminating of
McKinsey’s 7s Framework?
information from the external and internal SWOT Analysis:
environments to key peoplewithin the corporation.

Dr. Karuna Moorthy V B MBA., Ph.D

Associate professor, Wings Business School,TPT.
CELL:9000537300 Page 3
 402- Strategic Management Short Notes

SWOT stands for strengths, weaknesses, opportunities and basis of their related market share and industry growth
threats. SWOT analysis is a widely used framework to rates.
summaries a company’s situation or current position. Any
company undertaking strategic planning will have to carry
out SWOT analysis: establishing its current position in the
light of its strengths, weaknesses, opportunities and threats.
Environmental and industry analyses provide information
needed to identify opportunities and threats, while internal
analysis provides information needed to identify strengths and Stars- Stars represent business units having large market
share in a fast growing industry. They may generate cash
weaknesses.
but because of fast growing market, stars require huge
investments to maintain their lead. Net cash flow is
usually modest.
Cash Cows- Cash Cows represents business units having
a large market share in a mature, slow growing industry.
Cash cows require little investment and generate cash
that can be utilized for investment in other business
units.
Question Marks- Question marks represent business
units having low relative market share and located in a
high growth industry. They require huge amount of cash
to maintain or gain market share. They require attention
to determine if the venture can be viable.
Dogs- Dogs represent businesses having weak market
shares in low-growth markets. They neither generate
cash nor require huge amount of cash. Due to low market
share, these business units face cost disadvantages.
BCG Analysis: Mckinsey’s 7s Frame Work
Boston Consulting Group (BCG) Matrix is a four The Mckinsey’s 7S Framework suggests that there is a
celled matrix (a 2 * 2 matrix) developed by BCG, USA. multiplicity of factors that influence an organization’s
ability to change and its proper mode of change. Because
It is the most renowned corporate portfolio analysis tool.
of the interconnections of the variables, it would be
It provides a graphic representation for an organization difficult to make significant progress in one area without
to examine different businesses in it’s portfolio on the making progress in the others as well.

Dr. Karuna Moorthy V B MBA., Ph.D

Associate professor, Wings Business School,TPT.
CELL:9000537300 Page 4
 402- Strategic Management Short Notes

can be categorized in to thirteen actions: forward

integration, backward integration, horizontal
integration, market penetration, market
development, product development, concentric
diversification, conglomerate diversification,
horizontal diversification, joint venture,
retrenchment, divesture, liquidation, and a
combination strategy.
I. INTEGRATION STRATEGIES
Unit-3
 Forward Integration
5.What is meant by balanced Score Card? Explain
types of strategies?  Backward Integration
The Balanced Scorecard  Horizontal Integration
Introduction II.INTENSIVE STRATEGIES
The balance scorecard is used as a strategic planning and  Market Penetration
a management technique. This is widely used in many  Market Development
organizations, regardless of their scale, to align the
 Product development
organization's performance to its vision and objectives.
The Basics of Balanced Scorecard III. DIVERSIFICATION STRATEGIES
Following is the simplest illustration of the concept of  Concentric Diversification
balanced scorecard. The four boxes represent the main  Horizontal diversification
areas of consideration under balanced scorecard. All four  Conglomerate Diversification
main areas of consideration are bound by the business IV.DEFENSIVE STRATEGIES
organization's vision and strategy.  Joint Venture
 Retrenchment
 Divestiture
 Liquidation
 Combination
Michael Porter’s generic strategies

According to porter, strategies allow organizations

to gain competitive advantage from three different
bases: cost leadership, differentiation, and focus.

Types of Strategies: Porter calls these bases generic strategies.

Alternative strategies that an enterprise could pursue  Cost leadership emphasizes producing

Dr. Karuna Moorthy V B MBA., Ph.D

Associate professor, Wings Business School,TPT.
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 402- Strategic Management Short Notes

standardized products at very low per-unit Business Unit Level Strategy

cost for consumers who are price sensitive. A strategic business unit may be a division, product line,
 Differentiation is a strategy aimed at or other profit center that can be planned independently
producing products and services considered from the other business units of the firm.
unique industry wide and directed at At the business unit level, the strategic issues are less
consumers who are relatively price about the coordination of operating units and more about
insensitive. developing and sustaining a competitive advantage for
 Focus means producing products and the goods and services that are produced. Competitive
services that fulfill the needs of small Strategy often called Business Level Strategy. This
groups ofconsumers. involves deciding how the company will compete within
6) Explain Strategic Analysis and Choice? What is each line of business (LOB) or strategic business unit
meant by Cost Leadership Strategy, Differentiation
(SBU).
Strategy and Speed and Market Focus Strategy?
Strategic Analysis and Choice: At the business level, the strategy formulation phase
Strategy analysis and choice seek to determine deals with:
alternative courses of action that could best enable the  positioning the business against rivals
firm to achieve its mission and objectives. The firm’s  anticipating changes in demand and technologies
present strategies, objectives, and mission, coupled with and adjusting the strategy to accommodate them
the external and internal audit information, provide a  influencing the nature of competition through
basis for generating and evaluating feasible alternative strategic actions such as vertical integration and
strategies. through political actions such as lobbying.
Unless a desperate situation confronts the firm, COST LEADERSHIP STRATEGIES
alternative strategies will likely represent incremental The aim of this strategy is to operate the business in
highly cost effective manner and open up a sustainable
steps that move the firm from its present position to a
cost advantage over rivals. Successful low-cost leaders
desired future position. are exceptionally good at finding ways to drive costs out
Alternative strategies do not come out of the wild blue of their business. A primary reason for pursuing forward,
backward, and horizontal integration strategies is to gain
yonder; they are derived from the firm’s vision, mission,
cost leadership benefits. But cost leadership generally
objectives, external audit, and internal audit; they are must be pursued in conjunction with differentiation. It is
consistent with, or build on, past strategies that have appealing to a broad spectrum of customers based on
worked well. being the overall low cost provider of a product or
service.
Dr. Karuna Moorthy V B MBA., Ph.D
Associate professor, Wings Business School,TPT.
CELL:9000537300 Page 6
 402- Strategic Management Short Notes

DIFFERENTIATION STRATEGIES should develop, utilize, and amalgamate organizational

The essence of a differentiation strategy is to be unique structure, control systems, and culture to follow
in ways that are valuable to customers and that can be
strategies that lead to competitive advantage and a better
sustained. Successful differentiation can mean greater
product flexibility, greater compatibility, lower costs, performance.
improved service, less maintenance, greater convenience, Following are the main steps in implementing a
or more features. Differentiation does not guarantee
strategy:
competitive advantage, especially if standard products
sufficiently meet customer needs or if rapid imitation by  Developing an organization having potential of
competitors is possible. carrying out strategy successfully.
SPEED AND MARKET FOCUS STRATEGY
 Disbursement of abundant resources to strategy-
A focus strategy may concentrate on a particular
essential activities.
group of customers, geographic markets, or product
 Creating strategy-encouraging policies.
line segments in order to serve a well defined
 Employing best policies and programs for
narrow market. A focuser’s basis for competitive
constant improvement.
advantage is either (1) lower costs than competitors
 Linking reward structure to accomplishment of
in serving the market niche or (2) an ability to offer
results.
niche members something they perceive is better.
 Making use of strategic leadership.
This strategy is effective when;
Short Term Objectives:
 The target market niche is big enough to be
profitable Strategic management tends to focus on long-term
 The niche has good growth potential objectives that can take several years to accomplish, but
 The niche is not crucial to the success of
competitors managers need to be aware of the importance that short-
 The focusing firm has the capabilities and term objectives play in business strategy. Short-term
resources to serve the niche
strategies can fall into one of four categories. Managers
 The focuser can defend itself against
challengers should understand what these objectives are and how
Unit-4
they can benefit a firm.
7. What is meant by strategic implementation?
Explain short term objective, functional Tactics?  Production Objectives
Strategy implementation is the translation of chosen  Sales Objectives
strategy into organizational action so as to achieve
 Employee Objectives
strategic goals and objectives. Strategy implementation is
 Financial Objectives
also defined as the manner in which an organization
Functional Tactics:

Dr. Karuna Moorthy V B MBA., Ph.D

Associate professor, Wings Business School,TPT.
CELL:9000537300 Page 7
 402- Strategic Management Short Notes

Financial Tactics  Delegate to develop

Financial management strategies are essentially general  Set clear expectations
principles that your company can implement to reap  Give employees autonomy over assignments
maximum benefits out of financial systems and  Provide necessary resources
processes. These strategies can be customized to suit  Give constructive feedback
your company’s specific goals, needs, and means in  Accept ideas and input
procuring and utilizing funds.  Communicate the vision of the organization
Types of financial strategies  Recognize employees for hard work
 Dividend strategy Allocation of Resources:
 Capital structure planning Resource allocation is the process of assigning and
 Investment planning
managing assets in a manner that supports an
 Working capital planning
organization's strategic planning goals.
Empowering Operating Personal:
How to allocate resources on a project
Empowering employees means giving your team
 Plan.
members permission to take action and make decisions  Gauge availability.
within your organization. It also means there is trust and  Schedule.
understanding in place to ensure these actions are in line  Track.
 Evaluate.
with company goals.
Benefits of resource allocation
Empowering Operating Personal:
 Collaboration.
Empowering employees means giving your team
 Efficiency.
members permission to take action and make decisions  Team morale.
within your organization. It also means there is trust and  Cost reduction.
Challenges of resource allocation
understanding in place to ensure these actions are in line
with company goals.  Resource scarcity
 Skill shortages.
How do you empower employees
 Resource overallocation
 Visibility.
 Miscommunication.
 Outdated technology.
 Scope creep.
Managing Resource Conflict:

Dr. Karuna Moorthy V B MBA., Ph.D

Associate professor, Wings Business School,TPT.
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 402- Strategic Management Short Notes

 Be aware of conflict relationship between strategy and structure can be

 Take a considerate and rational approach to thought in terms of utilizing structure -for strategy
conflict implementation because structure is a means to an end
 Investigate the situation and not an end in itself. The master appropriate end is the

 Decide how to tackle the conflict objectives for which the organisation exists in the first

 Let everyone have their say place, as revealed by its strategy. Without coordination

 Identify options and agree on a way forward between strategy and structure, the most likely outcomes
are confusion, misdirection, and splintered efforts within
 Implement what has been agreed
the organisation. Research evidence also suggests that
 Evaluate how things are going
structure follows strategy.
 Consider preventative strategies for the future
Improving effectiveness of traditional organizational
8) Explain Structure and Strategy? How to improve
structure:
effectiveness of traditional organization structure?
Changes in customer needs, business communication and
Structural implementation of strategy involves
the increasing amount of government regulation are
designing of organisation structure and interlinking
causing many businesses to abandon the traditional
various units and sub units of the organisation created as
organizational structure, according to online business
a result of the organisation structure. Organisation
resource All Business. Where the structure used to
structure is the pattern in which the various parts of the
consist of a board of directors, executive staff,
organisation are interrelated or interconnected. Thus, it
managerial team and then subordinate employees,
involves such issues as to how the work of the
changes in the business climate have necessitated the
organisation will be divided and .assigned among various
development of strategies to overcome the traditional
positions, groups, departments, divisions, etc. and the
organizational structures.
coordination, necessary to accomplish organisational
 Employee Empowerment
objectives: will be achieved. Thus, there are two aspects
 Vendor Competition
of organisational design: differentiation and integration.
There is close relationship between an  Decentralized Business Units

organization’s strategy and its structure. The Unit-5

understanding of this relationship is important so that in 9) What is a Meant by Leadership and culture?
implementing the strategy, the organisation structure is Explain Strategic Intent?
Effective leadership is one of the greatest fundamentals
designed according to the needs of the strategy. The to building great organisational cultures. A leader can be
Dr. Karuna Moorthy V B MBA., Ph.D
Associate professor, Wings Business School,TPT.
CELL:9000537300 Page 9
 402- Strategic Management Short Notes

anyone who has influence or authority, regardless of

title, and leaders set the tone for organisational culture.
Leaders can reinforce values while simultaneously
holding people accountable. This influence over others
can be either positive or negative based on the leadership
style and execution of strategy, but both effective and
ineffective leadership will influence and build
organisational culture in the workplace. 10) What is meant by Strategic Evaluation and describe
Why Is organisational Culture Important? its process? Explain Corporate Governance?
• Higher quality and safety Strategic Evaluation is significant because of various
• Better work/life balance factors such as - developing inputs for new strategic
• Excellent customer service planning, the urge for feedback, appraisal and reward,
• Greater retention rates development of the strategic management process,
• Growing profitability judging the validity of strategic choice etc.
What contributes to a strong organisational culture? Strategic Evaluation Process:
1) Meaningful Work The process of Strategy Evaluation consists of
following steps-
2) Appreciation 1. Fixing benchmark of performance - While
3) Wellbeing fixing the benchmark, strategists encounter
4) Connection questions such as - what benchmarks to set, how
5) Leadership to set them and how to express them.
What is Leadership culture? In order to determine the benchmark performance
7 Ways Leaders Can Focus on Culture to be set, it is essential to discover the special
1. Be a role model requirements for performing the main task.
2. Measurement of performance - The standard
2. Observe for insights
performance is a bench mark with which the
3. Provide an open communication platform actual performance is to be compared. The
4. Take meaningful action on feedback reporting and communication system help in
5. Empower employees measuring the performance.
6. Remind workers that failing isn’t fatal 3. Analyzing Variance - While measuring the
7. Recognise a job well done actual performance and comparing it with
Strategic Intent: standard performance there may be variances
which must be analyzed.
Strategic Intent can be understood as the philosophical
4. Taking Corrective Action - Once the deviation
base of the strategic management process. It implies the in performance is identified, it is essential to plan
purpose, which an organization endeavor of achieving. It for a corrective action.
is a statement, that provides a perspective of the means, Corporate Governance:
which will lead the organization, reach the vision in the Corporate Governance is a continuous process of
long run. Strategic intent gives an idea of what the applying the best management practices, ensuring the
organization desires to attain in future. law is followed the way intended, and adhering to ethical
standards by a firm for effective management, meeting

Dr. Karuna Moorthy V B MBA., Ph.D

Associate professor, Wings Business School,TPT.
CELL:9000537300 Page 10
 402- Strategic Management Short Notes

stakeholder responsibilities, and complying with

corporate social responsibilities.
Principles of Corporate Governance
 Accountability
Accountability means to be answerable and be obligated
to take responsibility for one’s actions. By doing so, two
things can be ensured-
1. That the management is accountable to the Board
of Directors.
2. That the Board of Directors is accountable to the
shareholders of the company.
This principle gives confidence to shareholders in the
business of the company that in case of any unfavourable
situation, the persons responsible will be held in charge.
 Fairness
Fairness gives shareholders an opportunity to voice their
grievances and address any issues relating to the
violation of shareholder’s rights.
 Transparency
Providing clear information about a company’s policies
and practices and the decisions that affect the rights of
the shareholders represents transparency.
 Independence
Independence means the ability to make decisions freely
without being unduly influenced. Decisions should be
made freely without having any personal interest in the
company.
 Social Responsibility
Apart from the 4 main principles, there is an additional
principle of corporate governance. Company social
responsibility obligates the company to be aware of
social issues and take action to address them. In this way,
the company creates a positive image in the industry.
The first step towards Corporate Social Responsibility is
to practice good Corporate Governance.

Dr. Karuna Moorthy V B MBA., Ph.D

Associate professor, Wings Business School,TPT.
CELL:9000537300 Page 11