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meaning,characteristics and component of strategic management

Evolution of Strategic management
What is the main responsibilities of modern executives?
Managing internal activities of the firm
But modern executives must also respond to the challenges posed by the firm’s immediate and remote external environment.
Immediate external environment components: competitors, suppliers, increasingly scarce resources, government agencies, government regulations and customers
Remote external environment components:
Economic and social conditions, political priorities, technological developments
Modern organizations need a long term horizon to cope with environmental change Globalization is making the world one big market.What ever the technologies are developed in the world market, that can be available in the Nepalese market with in 24 hours. It has brought competition everywhere.Strategy is a broad action plan for achieving objectives. It provides long-term direction and scope to the organization.It is the road map for future path.Its thrust is to seek competitive advantage for the organization.It is concerned with where the organization wants to be and how it is going to get there.

What is Strategy?
•         Large-scale, future-oriented plan for interacting with the competitive environment to achieve objectives
•         Company’s “game plan”
•         Framework for managerial decisions

What is Strategic Management?
The set of decisions and actions that result in the formulation and implementation of plans designed to achieve a company’s objectives.
Critical Tasks of Strategic Management
  1. Formulate the company’s mission
  2. Conduct internal analysis
  3. Assess the company’s external environment
  4. Analyze company’s options
  5. Identify most desirable options
  6. Select long-term objectives and grand strategies
  7. Develop annual objectives and short-term strategies
  8. Implement the strategic choices
  9. Evaluate success of the strategic process

Dimensions/Characteristics of Strategic Decisions
1. Top-management decisions
•         Because strategic decisions overarch (gather at top) several areas of a firm’s operations, they require top-management involvement.
•         Usually ,only top management has the perspective (view/perception) needed to understand the broad implications of such decisions and the power to authorize the necessary resource allocations.
•         At Marico Industries, the Kaya Skin Care initiative was the result of a need to guard against overdependence on the two mainline brands, Parachute and Saffola. At the main time Mr. RakeshPandey, CEO, Kaya Skin Care, was looking for alternatives to reduce the overdependence, he had an offer to market laser machines for removal of unwanted body hair. However, this did not appeal to him as this was not their area of competence. Instead, he decided to get into the broader area of skincare.
•         While most of the global players-like L’Oreal and Elizabeth Arden –followed the high margin, low-volume route to growth, Kaya ventured into services and 360 degree solutions in skincare, rather than the products. The decision was based on his perception of the changing social environment in India, where people were focused on becoming more presentable, and increasing their self esteem
2. Require Large Amounts of the Firm’s Resources
•         Strategic decisions involve substantial allocations of people, physical assets, or moneys that either must be redirected from internal sources or secured from outside the firm.
•         3. Affects the firm’s long term prosperity
•         Strategic decisions ostensibly (clearly) commit the firm for a long time, typically five years; however, the impact of such decisions often lasts much longer. Once a firm has committed itself to a particular strategy, its image and competitive advantages usually are tied to that strategy. Firms become known in certain markets, for certain products, with certain technologies. They would jeopardize their previous gains if they shifted from these markets, products, or technologies by adopting a radically different strategy. Thus, strategic decisions have enduring effects on firms-for better or worse.
•         For e.g., for years, Toyota had a successful strategy of marketing its Sedans in Japan. With this strategy came in an image, a car for an older customer, and a competitive advantage, a traditional base for Toyota. The strategy was effective, but as its customer base grew older its strategy remained unchanged. A younger customer market saw the image as unattractive and began to seek out other manufacturers. Toyota’s strategic task in foreign markets is to formulate and implement a strategy that will reignite interest in its image


4. Future Oriented
•         Strategic decisions are future-oriented. They are concerned with long-term direction and scope of the organization. The decision environment is uncertain. The consequences of strategic decisions are not known. They set precedents for future decisions and actions.
•         5.Strategic fit:
•         Strategic decisions are concerned with strategic fit.
•         They match activities and resources of the organization with the opportunities in the environment. They capitalize on opportunities.
Components of Strategic Management
•         Strategic management is concerned with strategic decisions and actions of top management. It focuses on formulation, implementation and control of strategy.
•         It provides guidance and long term future to organization.
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  1. Strategic Planning:
•         This is concerned with the strategic formulation. It involves:
a)      Environmental Scanning: It is acquiring information from the environment. It monitors ad evaluates the changes and developments in the external and internal environment. SWOT analysis is done for environmental scanning
b) Strategy formulation
Strategic management involves strategic choices for the formulation of the following strategies:
  1. Corporate level strategy
  2. Business level strategy
  3. Functional strategy

  1. Corporate- level strategy
•         It is organization-wide. It provides overall direction and scope to the organization. It is concerned with adding value to the organization.King Fisher Airlines has a total debt of 11Kharb, 20 Arab. Corporate level strategy should be formulated to overcome the debt
ii) Business level strategy
•         It is about how to compete successfully in a particular market.
•         It aims to achieve advantage over competitors.
•         It is concerned with identifying competitive advantage at business unit level.
•         The poll showed analysis expect Apple’s full-year shipments to grow to 167 million (16 crore 70 Lakh) this (2013) year from 134 million in 2012, while Samsung’s shipments are expected to grow to 283 million (28 crore, 30 Lakh) smartphones in 2013 compared to 210 million in 2012
iii) Functional strategy
•         It is function-specific for marketing, finance, research and development.
•         It is concerned with resources, processes and people.

2. Strategic Implementation
•         Strategic management is concerned with implementation of strategies.
•         It ensures that strategies are put into practice.
•         Implementation involves:
a)      Structure design
b)      Resource planning
c)      Management system
3. Strategic Control
•         This aspect of strategic management is concerned with monitoring of performance results.
•         Corrective actions are taken to resolve performance problems.
•         Strategy is adjusted to environmental changes.
4. Feedback
•         It involves revision or improvements of strategies as needed.
•         Control serves as the source of performance information.

•         Environmental changes necessitate revision of strategies.

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