SM Short Material
SM Short Material
SM Short Material
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.
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.
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.
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
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