 An Organisational strategy is a collection of all the actions a company intends to take to

achieve long-term goals.

 Strategic management is used to refer to the entire scope of strategic-decision making

activity in an organization. > it is the process of examining both present and future
environments, formulating the organization's objectives, and making, implementing, and
controlling decisions focused on achieving these objectives in the present and future
environments. > the set of decisions and actions resulting in the formulation and
implementation of strategies designed to achieve the objectives of the organization (John
A. Pearce II and Richard B. Robinson, Jr.).

Strategic management is closely linked to general management functions. However it focuses on:

 Top management roles responsibilities and functions

 Strategic issues e.g. Business lines, Markets, Technology, and Processes

 Broad issues requiring strategic decision i.e. decisions to commit substantial resources
e.g. IT, Advertising, Re -organization etc.

Definitions of Strategy

Alfred Chandler (1962): The determination of the basic long-term goals and objectives of an
enterprise and the adoption of courses of action and the allocation of resources necessary for
carrying out these goals.

William Glueck (1972): A unified, comprehensive and integrated plan designed to assure that the
basic objectives of the enterprise are achieved.

 **An organization is said to have competitive advantage if its profitability is higher than
the average profitability for all companies in its industry.

Strategic management may be defined as the process a manager goes through to;

 Analyze opportunities and threats or constraints that exist in the external environment.

 Analyze organizations internal strengths and weaknesses.

 Establish organizations mission and develop its goals

 Formulate strategies
  Implement the strategies

 Engage in strategic control activities.

Characteristics of strategic management

 The approach helps an organization create its future not just plan for it.

 The environment is a key element

 Strategic management emphasizes action

 It promotes thinking strategically about the future and creating a measure of consensus
on future priorities i.e. the emphasis is more on issues and less on data collection and
analysis.

 It is a political process that involves the realignment of interest groups into a coalition
for strategic change. This is in order to increase the chances of successful
implementation of the plan at a later stage.

 It’s both a top down and bottom up exercise i.e. it’s a continuous process.

Benefits of strategic management

 It enhances organizational ability to prevent conflicts/ problems and facilitates the

adaptation of organizational environmental changes.

 Strategic management provides organization with integrated and coordinated

management.

 It makes managers to be more alert to the winds of change and reduces gaps and
overlaps of individual activities.

 Resistance to change is reduced because employees participate in decision making.

 It allows for identification, prioritization and exploitation of opportunities.

 It represents a framework for improved coordination and control of activities.

  It helps to integrate behaviour of individuals into total efforts and gives
encouragement to individual forward thinking.

 It encourages favourable aspect towards change and creates a framework for internal
communication among personnel.

 It creates a more proactive management which is more conscious to the environment.

 It gives a degree of displine and formality to management of business.

Criteria for deciding whether an issue is strategic:

 Scope of Impact: If the impact is organizational then the issues is strategic

 Time dimension: More long term more strategic i.e. they are difficult to reverse.

 Financial implication: If the issue (decision) requires a lot of finances, it will require
attention at high level.

 Geographical scope: This is due to globalization/ internationalization

 Level at which strategic issues are dealt with

Strategic management responsibilities of managers

They are:

 Establishing the mission – deciding on business or businesses that the company or division
should engage in other fundamentals that will guide and characterize the business, such as
continuous growth. A mission is usually enduring and timeless.

 Formulating a company philosophy – establishing the beliefs, values, attitude, and

unwritten guidelines that add up to “the way we do things around here.

 Establishing policies – deciding on plans of action to guide the performance of all major
activities in carrying out strategy in accordance with company philosophy.
 Setting objectives – deciding on achievement targets within a defined time range.
Objectives are narrower in scope than the mission, and are designed to aid in making
operational plans for carrying out strategy.

 Developing strategy – developing concepts, ideas and plans for achieving objectives
successfully and meeting and beating the competition. Strategic planning is part of the total
planning process that includes management and operation planning.

 Planning the organization structure – developing the plan of organization and the activities
that help people work together to perform activities in accordance with strategy,
philosophy, and policies.

 Providing personnel – recruiting, selecting, and developing people to fill the positions in
the organization plan.

 Establishing procedures – determining and prescribing how all important and current
activities will be carried out.

 Providing facilities – providing the plant, equipment, and other physical facilities required
to carry on the business.

 Providing capital – making sure the business has the money and the credit needed for
working capital and physical facilities.

 Setting standards – establishing measures of performance that will enable the business to
best achieve its long-term objectives successfully.

 Establishing management programs and operation plans – developing programs and plans
governing activities and the use of resources that, when carried out in accordance with
established strategy, policies, procedures and standards, will enable people to achieve
particular objectives. There are phases of the total planning process, which include strategic
 planning.

 Providing control information – supplying facts and figures to help people follow the
strategy, policies, procedures, programs: to keep alert to forces at work inside and outside
the business; to measure overall company performance against established plans and
standards.

 Activating people – commanding and motivating people to act in accordance with

philosophy, procedures, and standards in carrying out plans of the company.
key terms are eight in number and are considered to be the base of strategic management.

 Strategists
 Vision & Mission Statement
 External Opportunities & Threats
 Internal Strengths & Weaknesses
 Long Term Objectives
 Strategies
 Annual Objectives
 Policies
1.Strategists:
The people in the organization who are fully responsible for the failure or success of the
organization are referred to as strategists. Strategies are formed by strategists. Examples of
strategists include chief executive officer, chair of board,president & owner, entrepreneur or dean
etc.
. The most crucial & visible strategic manager in the organization is the CEO. Moreover every
manager in the organization who has the responsibility for profit or loss results, responsibility for
division or unit, or having clear authority over some element of organization is said to be
strategist or strategic manager.
The personal philosophies of strategists also affect the selection of certain strategies. There are
some other foundations that differentiate one strategist from other like attitudes, ethics, values,
concern for social responsibility, willingness to take risks, management style, concern for
profitability, concern for long term versus short term objectives etc.
2.Vision & Mission Statement:
 Vision Statement: it provides answer to the question that should be the organization
wants to become.

Mission Statement: a long lasting statement that differentiates one organization from other
similar organization. . It guides the nature & scope of current operations of the business as well
as the future aspects of the market conditions & opportunities. The future direction of the
organization is most of the times highlighted or directed by the mission statement.
3. External Opportunities & Threats:

. One major fact about the opportunities & threats is that they are out of control of the
organization to much extent and hence they are “external” for the organization. Following are
some examples of external opportunities & threats.
 Computer revolution
 Population shifts
 Changing work values & attitudes
 Space exploration
 Increased competition from foreign companies
 Space exploration
 Recycle able packages etc
The external opportunities & threats are significant for the organization as opportunities need to
be availed while threats should be avoided.

4. Internal Strengths & Weaknesses:

Organizations need to adopt those strategies that capitalize their strengths while improve their
weaknesses. Moreover strengths & weaknesses of the organization can also be ascertained in
relative to the competitors.These are the activities of the organization that are under control of
the organization, and may show good and bad impact on the organization are known as internal
strengths & weaknesses of organization. These are present in the marketing, management,
production/operation, finance/accounting, and information technology & research &
development activities of the organization.

5. Long Term Objectives:

Long Term Objectives are referred to as particular results that organization wants to accomplish
in targeting the mission. The objectives are important for the success of the organization because
of the following reasons.
 The stakeholders of the organization see their future role through long term objectives of
the organization.
 The managers with different attitudes & values are assisted in consistent decision making.
 The potential conflicts in the implementation stage can be eliminated by consensus on the
long term objectives in formulation stage.
 The priorities of the organization are specified by the long term objectives which further
stimulate the action & accomplishment.
 Provide direction
 Helps in evaluation
 Create synergy
 Reveal priorities
 Focus coordination
 Assist in making plans, organizing data, motivating employee & controlling each and
everything in the organisation.
6. Strategies:
These are considered to be ways in which long term objectives are achieved. The following are
considered to be some of the strategies in an organisation.
 Retrenchment
 Market penetration
 Liquidation & Joint venture
 Geographic Expansion
 Diversification
 Product development
 Acquisition
Large amount of the resources of organization are required along with the decisions of top
management for the application of strategies in the form of actions.
7. Annual Objectives:

The annual objectives are short term targets that help the organisation in achieving the set out
long term objectives, they must be quantitative, measurable, realistic, challenging, consistent &
prioritized. These must be developed at functional, divisional & corporate levels in large
organizations. These objective must be stated in terms of marketing, management,
production/operations, finance/accounting and research & development.
8. Policies:
Policies contain rules, guidelines & procedures developed to assist efforts to accomplish stated
objectives. Decision making is guided through policies & recurring and repetitive situations are
also addressed through policies. Policies are usually mentioned in terms of marketing,
finance/accounting, management, and production/operation, activities related to information
technology and research and development. Policies may also established at functional level for
certain department or at divisional level or at corporate level for entire organization. Policies play
an important role in the implementation phase because the expectations of organization about its
managers & employees are specified through policies.

Mission Statement
This is a statement that states the purpose of the business or the company. Why it came to
existenice and the benefits that it is to offer its customers. . Your mission statement keeps you
headed in the right general direction.

Questions to Ask in Writing a Mission Statement:(Bobb Beihl)

 What single, solitary word is the focus for our organization? This is a single focus
word within our organization.
 What would be the 2 or 3 words that would explain why we exist?
 What one sentence would sum up what our organization is about, in a very
simple, clear, easy to understand way?

Missions may need to be revised every few years in response to every new turn in the economy.
A company must redefine its mission if that mission has lost credibility or no longer defines an
optimal course for the company.

Criteria for Evaluating a Mission Statement

 Is our mission statement focused on satisfying customer needs rather than being
focused on the product?
 Does our mission statement tell who our customers are?
  Does our mission statement explain what customer needs our company is trying to
satisfy?
 Does our mission statement explain how our company will serve its customers?
 Does our mission statement fit the current market environment?
 Is our mission statement based on our core competencies? (A core competency is
a company strength.)
 Is our mission statement motivating and does it inspire employee commitment?
 Is our mission statement realistic?
 Is our mission statement specific, short, sharply focused and memorable.
 Is our mission statement clear and easily understood?
 Does our mission statement say what we want to be remembered for?

Criteria of a good mission statement

 The Mission Statement is Specific, Short and Sharply Focused;

 A Mission Statement should motive and be an inspiration to employees commitment.
 A good mission statement should be very clear and easy to understand.
 The mission statement should fit in to the current business environment.
 A good mission statement should have a competitive advantage.

Features of a mission:
1. It must be feasible and attainable
2. It she should clear enough so that any action can be taken i.e should be inspiring to the
management, staff and society at large.
3. It should be precise enough i.e. not too broad nor too narrow
4. It should be unique i.e. distinctive to leave an impact on everyone’s mind.
5. It should be analytical i.e. should analyze key components
6. It should be credible i.e. people should believe in.

The process of strategy formulation basically involves six main steps.

 Setting Organizations’ objectives; The main aim is to come up with the long-term
objectives of the organisation.
 Evaluating the Organizational Environment; 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.

 Setting Quantitative Targets;

 Aiming in context with the divisional plans; The parts played by each department or
division or product category within the organization is identified and accordingly strategic
planning is done for each sub-unit.

 Performance Analysis; . 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

 Choice of Strategy;

Importance of organizational mission.

They are:
1. It helps focus human effort in a common direction. The mission makes explicit the major
targets the organization is trying to reach. Through these targets, management can ensure
that all organization members work together in a concerted effort to reach them.
2. Serves as a general rationale for allocating organizational resources. Organizations use
various resources to produce goods and services and avail them to customers. These
resources include monetary resources, human resources, raw materials and equipment.
3. Ensure that the organization will not pursue conflicting purposes. Sound mission
statements ensure that the organization is built on a foundation of clear, compatible
purposes and avoids waste and conflict.
5. Establishes broad areas of job responsibilities within the organization. People work specific
jobs within organizations in order to produce goods and services.
6. Acts as a basis for the development of organizational objectives.
Contents of mission statements. The topics include;

1. Company product or service.

2. Market.

3. Technology. Includes such topics as the tools, machines, materials, techniques and
processes used to produce organizational goods and services.

4. Company objectives. These include the intention to survive through continuing growth and
profitability.

5. Company philosophy. Statement philosophy (also called company creed) commonly

appears as part of the mission statement or in the supplemental material that accompanies
it. Company philosophy is a statement reflecting the basic beliefs and values that should
guide organizational members in conducting organizational business.

6. Company self-concept. Contain information on the self-concept of the company’s own

view or impression of itself. In essence, the company arrives at this self-concept by
assessing its strengths, weaknesses, competition and ability to survive in the market place.

7. Public image. Contain reference, either direct or indirect, to the type of impression

the company is attempting to leave with the organization’s public.

Organizational objectives
Objectives provide the foundation for planning, organizing, motivating and controlling. Without
objectives and their effective communication, behaviour in organizations can stray in almost any
direction. Managers should use objectives to guide their organizations in the following ways:

1. Should use organizational objectives as guide in decision making.

2. Should use organizational objectives as a guide for increasing organizational efficiency.
3. Managers should use organizational objectives for performance appraisal. Managers should
evaluate and reward work performance in terms of how instrumental the performance is in
helping the organization attain its objectives.

According to Certo and Peter, managers should develop high-quality organizational objectives
including:
i. Managers should develop organizational objectives that are specific

ii. Managers should set organizational objectives that require a desirable level of effort

iii. Managers should establish organizational objectives that are reachable

iv. Managers should establish organizational objectives that are flexible

v. Managers should establish organizational that are measurable

vi. Managers should develop organizational objectives that are consistent in the long run and
the short run. Managers should establish organizational objectives that reflect a desirable
mix of time frames and are supportive of one another. Long-term objectives must be
consistent with organizational mission and should represent targets to be hit within three –
to five-year period. Short run objectives must be consistent with long-run objectives and
should represent targets to be reached within about one or two years.