Strategic Management

01. What is strategy?

Von Neumann & Morgenstern:  Strategy is a series of actions by a firm that are decided according to the particular situation.

02. Define strategic management?

Strategic management is a process of analyzing, formulating, implementing and evaluating some set of actions taken or to be taken for the achievement of predetermined organizational goals and objectives.

03. What is an organization’s guiding philosophy?

An organization’s guiding philosophy establishes the values and beliefs of the organization about what is important in both life and business, how business should be conducted, its view of humanity its role in society, the way the world works and what is to be held inviolate. An organization’s Philosophy establishes the relationship between the organization and its stakeholders, employees, customers, shareholders, suppliers, government and the public at large.

Thomas peters and Robert Waterman found that the philosophies of excellent companies included the following basic beliefs.

·        Belief in being the best.

·        Belief in the importance of the details of execution the nuts and bolts of doing the job well.

·        Belief in the importance of people as individuals.

·        Belief in superior quality and service.

·        Belief that most members of the organization should be innovators and its corollary the willingness to support failure.

·        Belief in the importance of informality to enhance communication.

·        Belief in recognition of the importance of economic growth and profits.

The strategic management process: Strategic management can be broken down into three phases:

1.Strategy formulation is concerned with making decisions with regard to:                                                                                               

1.     Defining the organization’s guiding philosophy, purpose, and mission.

2.     Establishing long range objectives to achieve the mission.

3.     Selecting the strategy to achieve the long range objectives.

2.Strategy implementation involves making decisions with regard to:

1.     Developing an organizational structure, selecting leadership and providing motivational systems to achieve the strategy.

2.     Establishing short range objectives, developing budgets and developing functional strategy.

3.Strategy evaluation involves the following activities:

1.     Establishing standards of performance for the overall organization and its different units or functional areas.

2.     Monitoring progress in the execution of the organization’s strategy.

3.     Initiating corrective actions to ensure continued commitment to the implementation of the strategy.

04. Explain role of Ethics in developing guiding philosophies of organizations.

Codes of ethics should be formal, written and communicated to all employees. Although ethics codes differ in content, one study found that those of manufacturing firms often include the following elements:

1.     Conduct business in compliance with all laws.

2.     Comply with all antitrust and trade regulations.

3.     Provide products and services of the highest quality.

4.     Perform assigned duties to the best of your ability.

5.     Conserve resources and protect the environment.

6.     Comply with safety, health and security regulations.

This same study found that the codes of ethics of service organizations more often include the following elements:

1.     Avoid outside activities that impair duties.

2.     Do not use company’s property for personal benefit.

3.     Illegal drugs and alcohol at work are prohibited.

4.     Mange personal finance well.

5.     Make decisions without regard for personal gain.

6.     Dress in businesslike attire.

05. What is organizational mission? Discuss the contents of mission format.

An organization’s mission is an overall goal of the organization that provides a sense of direction and a guide to decision making for all levels of management.

Content of mission Format:

A mission statement should include the following components:

*Target customers and markets.

*Principal products and services.

*Geographic domain.

*Core technologies.

*Concern for survival, growth and profitability.

*Organizational self concept.

*Desired public image.

06. Categorize four approaches to establishing an organizational mission?

One study categorized four approaches to setting organizational missions:

Targeting: Targeting involves setting a cleat target and aiming for it.

Common enemy: Common enemy missions create a goal focused on defeating a common enemy.

Role model: .Role model missions are normally established by small and mid sized companies that want to be like a larger company.

Internal transformation: Internal transformation missions are generally found in order organizations that need to change themselves to stay competitive and healthy.

Questions that need to be answered are:

1.Who is the customer?-a.Where is the customer located? b.How does the customer buy? C.How can the customer be reached? 2.What does the customer buy?  3.What does the customer consider value? (What does the customer look for when he or she buys the product?)

07. What is the difference between long and short-range objectives?

Objectives with a time span of one year or less are classified as short range, objectives spanning more than one year are classified as long range.

08. Define the corporate strategies, business strategies, and functional strategies?

Strategies that address what businesses a multiple business unit organization will be in and how resources will be allocated among those businesses are referred to as corporate strategies.

Business strategies focus on how to compete in a given business. Narrower in scope than a corporate strategy, business strategy generally applies to a single business unit.

Functional strategies are narrower in scope than business strategies and deal with the activities of the functional areas production, finance, marketing, personnel, and the like. Functional strategies must support business strategies, but they are mainly concerned with how to issues.

09. What is strategies business unit? (SBU)?

Generally, the following criteria should be considered in classifying an organizational unit as an SBU:

*First an SBU should service an external rather than an internal; market that is it should have a set of external customers and not merely serve as an internal supplier.

*Second, it should have a clear set of external competitors, which it is trying to equal or surpass.

*Third it should have control over its own destiny.

*Fourth, its performance must be measurable in terms of profit and loss that is it should be a true profit center.

10. Briefly explain the process / model of strategic management.

A description of the strategic management process involves the use of terms and expressions that have a variety of meanings and interpretations depending on the author and source. For example, some of the phrases used interchangeable with strategic management are strategy and policy formulation, long range planning and business policy.

24. What is Hierarchy of strategies?

Strategies exist at different levels in an organization they are classified according to the scope of what they are intended to accomplish. Most organizations can be segmented into business units.

25. Which parties are involved in considering the objectives of an enterprise?

In considering the objectives of an enterprise there are several parties involved. The three most obvious parties are the shareholders, the managers and the employees.

26. Classify shareholder's interests

The shareholder's objective may be to maximize dividends, although with some differences in emphasis on the present benefits visa vis future benefits and on attitudes to risk. The state as a shareholder, either in a public company or in a statutory state enterprise, will have a number of wider and often conflicting interests.

27. What are the natures of employee interests?

Employees Interest: Employee interests and objectives are more straightforward: (a) high pay, (b) good working conditions, (c) job satisfaction (d) job security.

28. What are the interested parties in considering objectives?

The benefit of the three parties mainly concerned; shareholders, management and employees.

29. How the interest of a party may represent constraints?

In practice, firms are run primarily for the benefit of the three parties mainly concerned; shareholders, management and employees. The Interests of other parties represent a constraint rather than an objective. For the shareholders, maximum profits will be an objective and a good level of wages a constraint. On the other hand, for the employees, adequate dividends to satisfy the shareholders will be a constraint, and as high a level of pay as possible an objective.

30. Distinguish between goals and objectives.

(i)   Goals denote what an organization hopes to accomplish in a future period of time.

(ii) Objectives are the ends that state specifically how the goals shall be achieved.

31. What factors are considered in formulating objectives?

The factors that are taken into account for the formulation of objectives are the forces in the environment, realities of an enterprise's resources and internal power relationships, the value system of the top executives, and awareness by management.

32. What is meant by CSF?

Critical success factors (CSFs), sometimes referred to as strategic factors or key factors for success, are those which are crucial for organizational success.

33. Give a conception of 'Gap Analysis'.

The concept of a ‘strategic gap’ between the objective sought and the likelihood of achieving it is a simple but very useful analytical tool.

34. What are the characteristics of objectives? Objectives should possess certain desirable characteristics in order to be effective as given below:

* Objectives should be understandable to those who have to achieve them.

* Objectives should be concrete and specific.

* Objectives should be related to a time frame.

* Objectives should be measurable and controllable.

* Objectives should be challenging.

* Different objectives should correlate with each other.

* Objectives should be set within constraints, internal as well as external.

* In sum, objective‑setting is a complex process.

35. Explain the issues in objective setting There are many issues in objective‑setting as noted below: Specificity. Objectives may be stated at different levels of specificity.

Multiplicity. Objectives deaf with a number of performance areas, a variety of them have to be formulated to cover all aspects of the functioning of an organization.

Periodicity. Objectives are formulated for different time periods.

Reality. It is a common observation that organizations tend to have two sets of objectives‑ official and operative. Quality Objectives may be both good and bad.

Objectives have a number of characteristics and a variety of issues are involved in setting those.

36. What are the 'vital areas' of objective setting?

Objectives have to be set in all those performance areas which are of strategic importance to an organization. Objectives need to be set in the eight vital areas of market standing, innovation, productivity, physical and financial resources, profitability, manager performance and development, worker performance and attitude, and public responsibility.

37. What is meant by Strategy?

Strategies refer to’ the determination of the purpose and the basic long‑term objectives of an 'enterprise and the adoption of courses of action and allocation of resources essential to gain these aims & objectives.

38. What is meant by Policy?

Policies refer to general statements or understandings that guide managers in the preparation of decision‑making.

39. Name the steps involved in the strategic planning process.

* To identify mission, objectives and strategies of the organization;

* To analyze & interpret the environment;

* To identify opportunities & threats;

* To analyze resources of the organization;

* To identify strengths & weaknesses;

* To re‑evaluate mission, objectives and strategies of the organization;

* To formulate strategies;

* To evaluate results;

40. What is understood by SWOT?

The term stands for strengths, weaknesses, opportunities, and threats, SWOT analysis is a careful evaluation of an organization's internal strengths and weaknesses as well as its environmental opportunities and threats.

41. What may be the strengths and weaknesses of an organization?

Organizational strengths divides  into two categories:

1.A common strength: is an organizational capability possessed by numerous competing firms.

2.A distinctive competency: is a strength possessed by only a small number of competing firms.

Organizational weaknesses: are skills and capabilities that do not enable an organization ‘to choose and  implement strategies that support its mission.

42. What are opportunities and threat of an organization?

Organizational opportunities: are areas that may generate higher performance. Organizational threats: are areas that increase the difficulty of an organization performing at a high level.

43. Outline the three questions management must answer in deciding about the future direction of an organization

In deciding on an organization’s future direction, management must answer three basic questions: (a) What is the organization's present position?

(b) Where does management want the organization to be (i.e. what are its objectives)?

(c) How does the organization move from its present position to where management wants it to be (i.e., what strategy is to be used)?

47. Describe the four major environmental forces that can influence an organization

Every organization is subject to general forces that are felt in many industries and that are not usually amenable to influence by a single organization. These forces are as follows: economic, technological, social, and political (or regulatory).