Strategic Management


By

Phaneendra Kumar U.K.
MBA Student
AMC Engineering College
18th KM, Bannerghatta Kalkere, Bangalore-560083
 


Strategic management

Strategic management involves the analysis of internal capabilities and external environment of a firm in order to efficiently and effectively uses resources to meet organizational objectives. Strategic management is the process of systematically analyzing various opportunities and threats organizational strengths and weakness, formulating, and arriving at strategic choices through critical evaluation of alternatives and implementing them to meet the set objectives of the organization.   

Definitions of strategic management:

Systematic analysis of the factors associated with customers and competitors (the external environment) and the organization itself (the internal environment) to provide the basis for re-thinking the current management practices. Its objective is to achieve better alignment of corporate policies and strategic priorities.

According to Llord L. Byars, "Strategic management is concerned with making decisions about organization future direction and implementing those decisions."

According to Hofer, "strategic management is the process which deals with the fundamental organizational renewal and growth with the development of strategies, structures, and systems necessary to achieve such renewal and growth, and with the organizational systems needed to effectively manage the strategy formulation and implementation processes." 

According to Arthur Sharplin, "Strategic management is the formulation and implementation of plans and carrying out of activities relating to the matters which are of vital, pervasive or continuing importance to the total organization."

Levels of strategy:


Strategy may be formulated at the corporate level, business level and functional level.

Corporate level strategy:

Corporate level strategy is one, which decides what business the organization should be in, and how the overall group of activities should be structured and managed. Porter has described it as the overall plan for a diversified business. The strategies are then evolved for each strategic business unit and strategic business area.

Strategy at the corporate level is designated as corporate strategy. It is the top management's plan to direct and run the organization as a whole. Corporate strategy sheds light on how one should manage the business one is in and intends to be in so as to achieve the target levels of corporate performance. Corporate level strategy represents the pattern of entrepreneurial actions and intents underlying the organization's strategic interests in different businesses, divisions, product lines, technologies, customer groups and customer needs.

Normally corporate level strategy focus on all the factors which are dealing in the firm for short term as well as long term and all the departments. As a manager of the firm we need to forecast all the things in the market.

Business level Strategy:

Business level strategy is the managerial plan for directing and running a particular business unit. The fundamental concept in SBU is to identify the discrete independent product/market segments served by an organization. Since each product/market segment has a distinct environment, a SBU is created for each such segment.

The business level strategy is mainly concentrate on which the organization having more than one branch. Normally organizations will having so many branches in different places so according to that locality the business will make strategy and implement that in that locality is called business level strategy.

e.g. North India preferences change compare to South India preferences so the firm need to make different strategies in two places.

Functional Level Strategy:

Strategy that is related to each functional area of business such as production, marketing and personnel is called functional strategy. It is designed and managed in a coordinated way so that they interrelate with each other and at the same time collectively allow the competitive strategy to be implemented properly.

Normally any firm having different types of departments like production, marketing, human resource, R&D department, financial department etc, so the firm need to make strategy with all departments the strategy should focus on all the departments and they need to take the opinions of all departments while making the strategy and not only opinion all the information is necessary to make a strategy.

Characteristics of Corporate, Business and Functional Level Strategies:

Characteristic

Corporate Level

Business Level

Functional Level

Nature

Conceptual

Conceptual but related to business unit

Totally operational

Measurability

Non-measurable

Measurable to some extent

Quantifiable

Frequency

Large spans(5-10)

Periodic

Annually

Adaptability

Poor

Average

High

Character

Innovative and creative

Action oriented

Totally action oriented

Risk

High

Moderate

Low

Flexibility

High

Moderate

Low

Time

Long range

Medium range

Short range

Costs Involved

High

Medium

Low

Profit

Large

Moderate

Low

Co-operation needed

High

Medium

Low


Source: Hand Book (VTU 3rd SEM)
 

--> Article continued on next page, click here -->

Source: E-mail January 26, 2011

 

           

 

Occasional Papers Main Page