Lesson 2 - Strategic Management

LESSON - 2
STRATEGIC MANAGEMENT
TYPES OF PLANNING SYSTEMS: We discuss a few types of planning

systems relevant to business policy.
 OPERATIONAL PLANNING: Operational planning is lower-level
planning and is based on sub-goals derived from organizational
objectives. The focus is on managing the day-to-day affairs of the
company. The primary responsibility for implementation rests on the
operating level of management i.e. middle level executives or line
managers.
 PROJECT PLANNING: The nature of each project is unique and

planning is done for each project individually. The emphasis in
project planning is on working within set time and resource
constraints. An organizational strategy, for implementation, may
require many plans and programs; each program may consist of
several projects.
 MANAGEMENT BY OBJECTIVES: It is a systems approach to

managing. The organizational objectives are divided into divisional or
departmental objectives which are further subdivided into individual
objectives. Such an inter-locking system of objectives serves as the
basis for managing, evaluation and control of performance. Thus,
MBO is concerned with setting of objectives, goals and targets which
are a part of the planning function in any organisation.
 CONTINGENCY PLANNING: Long-term planning may become

ineffective because environmental condition. When much formal
planning does not seem to work under such conditions. A realistic
approach, to contain these problems, is to adopt contingency planning.
 SHORT-RANGE PLANNING: No time period can be defined to

identify as a short or long period. It depends upon the uncertainty
present in the plan. Ordinarily, plans for less than one year are termed
as short-range and those for 3 to 5 years are long-range plans. This
plan operate within the framework of long-range plans.
1
 LONG – RANGE PLANNING: This process involves a systematic
identification of opportunities and threats so that managers may use
the data to make current decisions in order to use the opportunities
and avoid the threats. So Long-Range planning deals with issues
which are of vital significance and have a long-term impact.
 CORPORATE PLANNING: It denote a formal, comprehensive and

systematic appraisal of environmental and internal factors in order to
evolve strategies to achieve organizational objectives. It is formal as it
requires formulation of plans, strategies, and policies and on the basis
of documents and figures. It is comprehensive as it deals with all
types of plans: short and long-range, corporate, divisional and
functional, strategic and operational plans. It is systematic as it covers
the whole planning process in a logical and sequential manner.
In practice, a team of corporate planners assists the senior

management in deciding objectives and goals to be achieved,
strengths and weaknesses of the company, the opportunities and
threats operating in the environment, and the strategies and action
plans to be adopted.
 STRATEGIC PLANNING: Strategic planning is a process which,

through an examination of external and internal factors for an
organisation, results in a set of mission, purpose, objectives, policies,
plans and programs for implementation. Thus strategic planning
results in action designed to implement a strategy. So it is considered
a part of a wider system of managing through strategy, i.e. strategic
management.
FROM STRATEGIC PLANNING TO STRATEGIC MANAGEMENT:

Strategic planning falls short of taking into account a few relevant aspects
like (i) with regard to managerial problems; it considers the external linkages
with the environment “under a basic assumption that the internal
configuration of the organisation will remain essentially unchanged”. (ii) In
dealing with the process of resolving managerial problems, it covers only
problem-solving (or planning) while assuming that implementation and
control will follow. (iii) The variables included in strategic planning analysis
are exclusively “Technological-economic-informational while social and
political dynamics both within and outside the organisation are assumed to
be irrelevant and unaffected”.
2
These sub-variables, which have been excluded from consideration,
have a major impact on resolving strategic problems. Strategic management,
a newer and broader concept of managing organisations strategically, takes
into account all the aspects of managerial problems, the processes of solving
them, and the many variables that operate in a problem-solving environment.
NATURE OF STRATEGIC DECISION-MAKING:

Decision-making is the part and parcel of management. While simple
decision-making pertains to all managerial functions, strategic decision-
making largely relates to the responsibilities of the senior management.
CONVENTIONAL DEVISION-MAKING:
Decision-making is the process of selecting a course of action from among

many alternatives. It is almost like
 Objectives to be achieved are determined;
 Alternatives ways of achieving the objectives are identified;
 Each alternative is evaluated in terms of its objective-achieving
ability; and
 The best alternative is chosen.
This is very simple deceptively but is very difficult in practice.
STRATEGIC DECISION-MAKING: Strategic tasks are, by their nature,

complex and varied. So Decision-making in performing strategic tasks is
extremely difficult, complicated and enigmatic process. The basic thrust of
strategic decision-making, in the process of strategic management, is to
make a choice regarding the courses of action to adopt.
What is our business? What will it be? What should it be? These are
the basic concerns in strategic management. Senior managers faced with
alternatives. Finally they exercise a choice from among a number of
strategic alternatives. Environmental opportunities and threats are abundant.
Similarly company’s strengths and weaknesses are also many. Senior
manager could focus only on few. So, strategic decision-making forms the
core of strategic management.
3
DEFINITIONS OF STRATEGIC MANAGEMENT: It is defined by persons
like Glueck (1984), Hofer and Others(1984), Ansoff (1984), Sharplin(1985)
and lastly Harrison and St. John(1998).
Harrison & St. John define Strategic management as “ the process
through which organisations analyze and learn from their internal and
external environments, establish strategic direction, create strategies that are
intended to help achieve established goals, and execute these strategies, all
in an effort to satisfy key organizational stakeholders”.
Note: Stakeholders – The stakeholders are groups or individuals who can

significantly affect or be affected by an organisation’s activities.
Different authors defined strategic management differently. Yet there

are some common elements in the way it is defined and understood. Like –
In strategic management the emphasis is on those general management
responsibilities which are essential to relate the organisation to the
environment in such a way that its objectives may be achieved.
PROCESS OF STRATEGIC MANAGEMENT: Definitions of str. mgt.

give us idea that strategic management as a process consists of different
phases which sequential in nature. There are four essential phases in the
strategic management process.
(i) Establishing the hierarchy of strategic intent,
(ii) Formulation of strategies,
(iii) Implementation of strategies, and
(iv) Performing strategic evaluation and control.
These phases are considered as sequentially linked to each other and

each successive phase provides a feedback to the previous phases.
_____________ __________ _____________ __________
| Establishing the | |Formulation| |Implementation| |Strategic |
|hierarchy of || of || of || |
|strategic intent | | strategies | | strategies | | evaluation|
| |
strategic control
The feedback arising from each of the successive phases is meant to

revise, reformulate or redefine the previous phases, if necessary.
4
Each phase of the strategic management process consists of a number
of elements, which are discrete and identifiable activities performed in
logical and sequential steps. Most or all of the following activities are
considered as parts of the strategic management process:
(1) Establishing the hierarchy of strategic intent:
1) Creating and communicating a vision,

2) Designing a mission statement,
3) Defining the business,
4) Setting objectives,
(2) Formulation of Strategies
5) Performing environmental appraisal,

6) Doing organisational appraisal,
7) Considering corporate level strategies,
8) Considering business level strategies,
9) Undertaking strategic analysis,
10) Exercising strategic choice,
11) Formulating strategies,
12) Preparing a strategic plan,
(3) Implementation of strategies;
13) activating strategies,

14) designing structures and systems,
15) managing behavioural implementation,
16) managing functional implementation
17) operationalising strategies
(4) Performing strategic evaluation and control;
18) performing strategic evaluation,

19) exercising strategic control and
20) Reformulating strategies.

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LESSON - 2

TYPES OF PLANNING SYSTEMS: We discuss a few types of planning

 PROJECT PLANNING: The nature of each project is unique and

 MANAGEMENT BY OBJECTIVES: It is a systems approach to

 CONTINGENCY PLANNING: Long-term planning may become

 SHORT-RANGE PLANNING: No time period can be defined to

 CORPORATE PLANNING: It denote a formal, comprehensive and

In practice, a team of corporate planners assists the senior

 STRATEGIC PLANNING: Strategic planning is a process which,

FROM STRATEGIC PLANNING TO STRATEGIC MANAGEMENT:

NATURE OF STRATEGIC DECISION-MAKING:

Decision-making is the process of selecting a course of action from among

This is very simple deceptively but is very difficult in practice.

STRATEGIC DECISION-MAKING: Strategic tasks are, by their nature,

Note: Stakeholders – The stakeholders are groups or individuals who can

Different authors defined strategic management differently. Yet there

PROCESS OF STRATEGIC MANAGEMENT: Definitions of str. mgt.

These phases are considered as sequentially linked to each other and

The feedback arising from each of the successive phases is meant to

(1) Establishing the hierarchy of strategic intent:

1) Creating and communicating a vision,

(2) Formulation of Strategies

5) Performing environmental appraisal,

(3) Implementation of strategies;

13) activating strategies,

(4) Performing strategic evaluation and control;

18) performing strategic evaluation,

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