Implementing strategy

The development of organizational strategy is a complex and demanding process, and leaders who
have devoted time, effort and resources to the selection of a strategy they believe will secure the
ongoing success of their company may feel they have reason to be confident about the
future.Effective implementation is critical to the success of organizational strategy. If strategy is to
be more than an expression of hopes and aspirations for the future, the practical implications for
organizational operations and activities must be thought through and put into practice.Strategy
implementation requires organizations to put initiatives in place which are focused and realizable. A
strategic focus should encourage an organization to develop disciplined processes for feeding
strategic initiatives across the organization in a meaningful, realistic and achievable way.
Definition
Strategy implementation is the process by which an organization translates its chosen strategy into
action plans and activities, which will steer the organization in the direction set out in the strategy
and enable the organization to achieve its strategic objectives.

Diff Steps Involved

A. Ensure that plans are aligned with organizational mission, vision and values Strategic
development is an important business activity which involves defining the strategic direction
an organization will take and the objectives it aims to achieve. Obvious as this may seem, it
is vital to ensure that implementation plans are based on the stated organizational strategy
and objectives. Just as strategy must be derived from the organization’s mission and vision
and in line with organizational values, so implementation must follow the direction which
has been set out in the organization’s strategic documents and prioritise those things which
are seen to be most important for the future success of the organization.
B. Build an effective leadership team The optimal implementation of strategy is highly
dependent on the professional people management and leadership capabilities of both
strategic and operational managers. New strategies may create new requirements for
leaders and the organizations that they lead. Strategic change may require new personnel
with fresh perspectives, or differing skills and experience. Leaders may need to adjust their
leadership styles, or learn new management techniques and approaches. The
implementation of a new strategy may alter priorities, change resource allocations, and
involve a shift in relationships. Leaders will have to take an objective view of the existing
management team, including themselves, and assess whether the team is capable of
implementing the strategy.
C. Create an implementation plan A full implementation plan with milestones needs to be
created for all levels of the organization. The plan should lay out the steps necessary to
achieve the objectives and include schedules for key activities. The resources needed to
achieve the objectives must also be detailed. The plan should quantify the financial,
personnel, operational, time, and technological resources which will be required, as well as
identifying those responsible for individual initiatives.
D. Allocate budgetary resources securing a satisfactory budget is one of the main
requirements when implementing strategy. A new strategy may entail the development of
new processes, the purchase of new equipment, the recruitment of additional employees,
staff training or development activities, or the upgrading of information technology. The
budgeting process needs to ensure that strategic initiatives are properly resourced and can
be implemented in the agreed timescales. Organizations use budgets to make sure that
what is important gets done, but it is all too easy to focus on tactical challenges and short-
term financial targets and allow this to take up a large amount of time and resources.
E. Assign objectives and responsibilities A formal planning and measurement structure is
needed to implement strategy effectively. Strategic responsibilities and objectives need to
be clearly assigned so that individuals understand their roles within the strategy and are
able to take responsibility for or ownership of specific strategic tasks and outcomes. All
those who have a role to play in the implementation of the strategy need to be clear about
intended outcomes and their responsibilities for the achievement of these outcomes. The
task of ensuring that employees know and understand their roles and how these contribute
to organizational objectives rests with those who have drawn up the strategy and those who
are responsible for ensuring that it is being implemented effectively.
F. Align structures and processes All organizations have existing business processes, plans and
structures in place to manage their operations. Often these operate in isolation from one
another and can bear little relationship to each other or to organizational strategy. If
separate business units set their objectives independently, the contribution they make to
organizational success could well turn out to be less than expected. For an organization to
be capable of effectively implementing strategy, structures and processes need to be
aligned with the strategic objectives.
G. Align people The work of employees needs to be aligned with the strategy, so that their
efforts contribute to the achievement of organizational objectives. Organizations should
define the behaviors required throughout the organization. It may be necessary to ask
employees to change the way that they work. Organizations need to create a cohesive
strategy which employees can understand and get engaged with. Employees need to know
that they are making a meaningful contribution to the success of the organization and
senior leaders must ensure that employees at all levels can articulate and evaluate how
their personal job roles help to achieve specific strategic objectives.
H. Communicate the strategy all employees will need to have a clear understanding of the
core elements of the strategy and how it is to be executed, so the strategy must be
effectively communicated to everyone. This will encourage employee buying, commitment
and engagement and should have a positive impact on productivity. Develop a
communication strategy that will promote the overall vision and strategy of the
organization and articulate and define a set of well-defined goals.
 I. Review and report on progress Strategy reviews allow managers to track progress, reflect on
priorities and identify any issues that may need to be tackled. Remember, though, that
strategy reviews have more to do with whether the strategy is producing results than with
controlling performance. Review meetings must be held often enough to keep the
implementation process on course and to enable leaders to take decisions about any
strategic adjustments which are needed to be made. Initially, this may be weekly, bi-weekly,
monthly or quarterly. Frequency can be scaled back later when it is clear that the
implementation process has been established and is working well.
J- Make strategic adjustments as necessary Strategy implementation is a dynamic process
which takes place against the background of changing economic, social and competitive
circumstances. This is where the leadership skills, capabilities and judgement of managers
will be called upon to steer the organization, underlining what was said in section 2 about
the importance of building a good leadership team.
K- Develop an organizational culture that supports the strategy Organizational culture plays a
significant role in successfully translating strategic plans and initiatives into action. No
matter how good an organization’s strategy may be, implementation will be hindered if the
organizational culture does not support it. Culture is to the organization what personality
and character are to individuals. It consists of the assumptions, values and beliefs that
employees share and which influence their activities, opinions and behavior at work.

Vision (the dream)

Your vision communicates what your organization believes are the ideal conditions for your
community – how things would look if the issue important to you were perfectly addressed. This
utopian dream is generally described by one or more phrases or vision statements, which are brief
proclamations that convey the community's dreams for the future. By developing a vision statement,
your organization makes the beliefs and governing principles of your organization clear to the greater
community (as well as to your own staff, participants, and volunteers).
There are certain Essentiality that most vision statements have in common. In general, vision
statements should be:

-Understood and shared by members of the community

 Broad enough to encompass a variety of local perspectives

 Inspiring and uplifting to everyone involved in your effort

 Easy to communicate - for example, they should be short enough to fit on a T-shirt
Here are a few vision statements which meet the above criteria:
 Healthy children

 Safe streets, safe neighborhoods

 Every house a home

 Education for all

 Peace on earth
Mission (the what and why) Developing mission statements are the next step in the action planning
process. An organization's mission statement describes what the group is going to do, and why it's
going to do that. Mission statements are similar to vision statements, but they're more concrete,
and they are definitely more "action-oriented" than vision statements. The mission might refer to a
problem, such as an inadequate housing, or a goal, such as providing access to health care for
everyone. And, while they don't go into a lot of detail, they start to hint - very broadly - at how your
organization might go about fixing the problems it has noted. Some general guiding principles about
mission statements are that they are:

Concise. Although not as short a phrase as a vision statement, a mission statement should still get
its point across in one sentence.

Outcome-oriented. Mission statements explain the overarching outcomes your organization is

working to achieve.

 Inclusive. While mission statements do make statements about your group's overarching goals, it's
very important that they do so very broadly. Good mission statements are not limiting in the
strategies or sectors of the community that may become involved in the project.

The following mission statements are examples that meet the above criteria.

 "To promote child health and development through a comprehensive family and community
initiative."
 "To create a thriving African American community through development of jobs, education,
housing, and cultural pride.
 "To develop a safe and healthy neighborhood through collaborative planning, community action,
and policy advocacy."

While vision and mission statements themselves should be short, it often makes sense for an
organization to include its deeply held beliefs or philosophy, which may in fact define both its work
and the organization itself. One way to do this without sacrificing the directness of the vision and
mission statements is to include guiding principles as an addition to the statements. These can lay out
the beliefs of the organization while keeping its vision and mission statements short and to the point.
WHAT IS ENVIRONMENTAL ANALYSIS?
Environmental analysis is a strategic tool. It is a process to identify all the external and internal
elements, which can affect the organization’s performance. The analysis entails assessing the level of
threat or opportunity the factors might present. These evaluations are later translated into the
decision-making process. The analysis helps align strategies with the firm’s environment.
Our market is facing changes every day. Many new things develop over time and the whole scenario
can alter in only a few seconds. There are some factors that are beyond your control. But, you can
control a lot of these things.
Businesses are greatly influenced by their environment. All the situational factors which determine
day to day circumstances impact firms. So, businesses must constantly analyze the trade environment
and the market.
There are many strategic analysis tools that a firm can use, but some are more common. The most
used detailed analysis of the environment is the PESTLE analysis. This is a bird’s eye view of the
business conduct. Managers and strategy builders use this analysis to find where their market
currently. It also helps foresee where the organization will be in the future.
PESTLE analysis consists of various factors that affect the business environment. Each letter in the
acronym signifies a set of factors. These factors can affect every industry directly or indirectly
The letters in PESTLE, also called PESTEL, denote the following things:
 Political factors

 Economic factors
 Social factors
 Technological factors
 Legal factors
 Environmental factor

Often, managers choose to learn about political, economic, social and technological factors only. In
that case, they conduct the PEST analysis. PEST is also an environmental analysis. It is a shorter
version of PESTLE analysis. STEP, STEEP, STEEPLE, STEEPLED, STEPJE and LEPEST: All of
these are acronyms for the same set of factors. Some of them gauge additional factors like ethical and
demographical factors.
P for Political factors
The political factors take the country’s current political situation. It also reads the global political
condition’s effect on the country and business. When conducting this step, ask questions like “What
kind of government leadership is impacting decisions of the firm?”
Some political factors that you can study are:
 Government policies

 Taxes laws and tariff

 Stability of government
 Entry mode regulations
E for Economic factors
Economic factors involve all the determinants of the economy and its state. These are factors that can
conclude the direction in which the economy might move. So, businesses analyze this factorbased on
the environment. It helps to set up strategies in line with changes. Listed some determinants you can
assess to know how economic factors are affecting your business below:
 The inflation rate

 The interest rate

 Disposable income of buyers
 Credit accessibility
 Unemployment rates
 The monetary or fiscal policies
 The foreign exchange rate
S for Social factors
Countries vary from each other. Every country has a distinctive mindset. These attitudes have an
impact on the businesses. The social factors might ultimately affect the sales of products and
services.
Some of the social factors you should study are:
 The cultural implications

 The gender and connected demographics

 The social lifestyles
 The domestic structures
 Educational levels
 Distribution of Wealth

T for Technological factors

Technology is advancing continuously. The advancement is greatly influencing businesses.
Performing environmental analysis on these factors will help you stay up to date with the changes.
Technology alters every minute. This is why companies must stay connected all the time. Firms
should integrate when needed. Technological factors will help you know how the consumers react to
various trends.
Firms can use these factors for their benefit:
 New discoveries

 Rate of technological obsolescence

 Rate of technological advances
 Innovative technological platforms
L for Legal factors
Legislative changes take place from time to time. Many of these changes affect the business
environment. If a regulatory body sets up a regulation for industries, for example, that law would
impact industries and business in that economy. So, businesses should also analyze the legal
developments in respective environments.
I have mentioned some legal factors you need to be aware of:
 Product regulations

 Employment regulations
 Competitive regulations
 Patent infringements
 Health and safety regulations
E for Environmental factors
The location influences business trades. Changes in climatic changes can affect the trade. The
consumer reactions to particular offering can also be an issue. This most often affects agri-
businesses.
Some environmental factors you can study are:
 Geographical location
 The climate and weather
 Waste disposal laws
 Energy consumption regulation
 People’s attitude towards the environment

There are many external factors other than the ones mentioned above. None of these factors are
independent. They rely on each other.
If you are wondering how you can conduct environmental analysis, here are 5 simple steps you could
follow: PROCESS
1. Understand all the environmental factors before moving to the next step.
2. Collect all the relevant information.
3. Identify the opportunities for your organization.
4. Recognize the threats your company faces.
5. The final step is to take action.

COMPONENTS OF ENVIRONMENT
COMPONENTS / PARTS OF BUSINESS ENVIRONMENT
There are two major parts of or components of business environment known as -
III. Internal Environment
JJJ. External environment

The external environment is divided into two parts known as

A Micro component of environment and
B Macro component of environment

1-Internal Environment:
Internal environmental factors are these, which resides within company premises and are easily
adjustable and controllable. Company as per its necessity & requirements, moulds it and take
appropriate support from these factors, so that business activity can run safety & smoothly.
 Value System: The value system is helm (the position of control) of affairs of the founders.
Therefore it is widely acknowledge fact that the extent to which the value system is shared by all in
the organization is an important factor contributing to success. If the founder has strong value, then
he will never do any activity which is out of limit. For example, Murugappa group had taken over the
E.I.D. porry group, which is one of the most profitable businesses. Its one of ailing business was
liquor, which was sold off by Murugappa, as it did not fit into its value system.
 Mission and Objectives: Mission is basic or fundamental cause because of what the company
came into existence. It is company’s domain, priorities, or ways of development.
Generally company is objectives are consistent with mission statements. Therefore it is always
advisable to the company to Frame a mission statement and then to list out various objectives.
 Plans & Policies : Plans & policies are nothing but deciding in advance, of a particular activity
i.e. what is to be done, how it is to be done, when it is to be done etc. and according executing them
to attain the success. Here business unit need to frame there plans & policies with the consultation of
business objectives and available resources. Here internal environment analysis will help to the firm
to know the appropriateness of plans & policies.
 Human Resources: Human resources are most important resources among the required all types
of resources by the firm. There resources are very sensible; therefore every business need to tackle
them with carefulness and cautiousness, because the survival and success of the firm is largely
depends on the quality of human resources. The internal environmental analysis in respect of human
resources reveals the shortcomings of human resources and measures need to be undertaken for its
creativeness.
 Physical Resources: Physical resources consist of machines, equipments, buildings furniture’s
and fixtures. The analysis of these resources reveals the deficiencies of these resources. The business
may take corrective steps to remove these deficiencies.
 Financial resources: Finance is the back bone of each & every business. So every business
needs to have proper financial management, which includes the consideration of financial sources.
Financial policies, financial positions, capital structure, management of working & fixed capital,
build up adequate reserves for future etc.
The analysis of their resources reveals that the soundness of its financial position
 Labour management relations: It is stated that the business flourish to a greater extent, if it is
supported by labour / human resources well. Even if there are certain shortcomings on the part of
other physical, natural, resources, but there is good relation between management and labour then
there would not be a problem. To keep a good relationship with labours a management needs to take
care of all types of problems of the labour.
External Environment:
External environment is also important in survival and success of the business unit. External
environment means those factors or forces which resides outside the business, but has its influence
over the functioning of the business. As these forces resides outside, does not have control over them.
The environment factors are of two types known as i) Micro environment and ii) Macro
Environment.
 Micro Environment: Micro environmental factors mean those which are very close and
direct effect factors. It includes suppliers, competitor’s customers, marketing intermediaries and the
public at large. These factors are more intimately linked with the company than the macro factors.
These factors are giving individual effect on each company rather than a particular industry. Let’s see
the all these factors in detail.
 Suppliers : It is important force in micro environment. This force supplies the inputs like raw
materials and other supplies. This is important because of supplying smoother functioning of the
business. The supply is very sensitive. So many companies give high importance to vendor
development. The company never depended on a single supplier because if they back out, or any
other problem with that supplier may seriously affect the company.
 Customers : Customer is the king of the market. Therefore every company strives to create &
sustain customers in the market. So that it can survive & be success in the market.
There are different categories of customers like individuals, household industries and other
commercial establishments and govt. etc. Depending on a single customer is dangerous to the
company as it place to the company in poor bargaining position and customer’s switching to
competitors may lead to closure of the company.
Competitors: In simple word competition means the firms which market the same products. Here all
those who compute for the discretionary income of the consumer are considered as competitors.
Discretionary income of the consumers means creating consumers decisions for similar or equivalent
needs products.
Marketing Intermediaries: Marketing intermediaries’ means those who are helping company to
supply goods from manufacturing company to customer it includes agents and merchants who help
company to find customers sales it’s the products or those who are physically distributing the goods
from their origin to their destination. It includes warehousing, transportations, marketing firms, or
promoting companies products. These intermediaries are vital link between the company and the
final users. So the wrong choice of the marketing intermediaries may cost the company heavily.
Macro - Environment:
 Macro environment is not that much immediate environment of a company. This macro
environment factors are for away from the company but it gives indirect effects on companies
functioning. The micro environment operates in a large macro environment forces that shapes
opportunities and pose threats to the company. It includes demographic, economic, natural, social
and technological environmental forces or factors.
-Demographic environment: It is relates to human population with reference to its size, density,
literary rate, gender, age, occupations etc. By going through all these elements of demographic
environment business units decides its production and distribution strategies property.
-Economic Environment: The economic conditions of a country means the nature of the economy,
the level (slope) of development of economy, economic conditions, the level of income of the people,
or distribution of income and assets etc. These factors are important while determining the business
strategies, for example in a developing country the low income may be the cause for very low
demand for a product, here business can’t increase the purchasing power of the people to generate
higher demand for its product. So here the company should emphasis an reduction of prices for
higher sale.
-Natural Environment : If consists of geographical and ecological factors such as natural resources
endowments, weather and climatic conditions, location aspects in the global context, port facilities,
etc. which are relevant to business. The geographical and ecological factors influence the location of
certain industries.
-Social - Cultural environment: Socio cultural fabric is on important environmental factors that
would be analysed while formulation business strategies. For a successful business, the buying and
consumption habits of the people, their languages, beliefs and values, customs and traditions, taste
and preferences and education level should have to be considered and then it has to decide its
strategy so that it will be fit in social - cultural environment.
-Technological environment ;It is expected that business need to introduce and use latest
technology in their production. But technological developments sometimes pose problems to
business as business are not able to cope up with developed technology and hence its existence came
into danger. The technological development may increase demand for a production too.
-Political environment: The government is the care taker of all of us. So it also takes care of
business too. While working on business govt. frames certain policies as per its ideology. So
whenever govt. through its policy brightness the prospects of some enterprises
may pose a threat to same others.

STRATEGIC DECISIONS - DEFINITION AND CHARACTERISTICS

Strategic decisions are the decisions that are concerned with whole environment in which the firm
operates, the entire resources and the people who form the company and the interface between the
two.
Characteristics/Features of Strategic Decisions
 Strategic decisions have major resource propositions for an organization. These decisions may be
concerned with possessing new resources, organizing others or reallocating others.
 Strategic decisions deal with harmonizing organizational resource capabilities with the threats
and opportunities.
 Strategic decisions deal with the range of organizational activities. It is all about what they want
the organization to be like and to be about.
 Strategic decisions involve a change of major kind since an organization operates in ever-
changing environment.
 Strategic decisions are complex in nature
 Strategic decisions are at the top most level, are uncertain as they deal with the future, and
involve a lot of risk.
 Strategic decisions are different from administrative and operational decisions. Administrative
decisions are routine decisions which help or rather facilitate strategic decisions or operational
decisions. Operational decisions are technical decisions which help execution of strategic decisions.
To reduce cost is a strategic decision which is achieved through operational decision of reducing the
number of employees and how we carry out these reductions will be administrative decision

STRATEGIC MANAGEMENT PROCESS - MEANING, STEPS AND COMPONENTS

The strategic management process means defining the organization’s strategy. It is also defined as
the process by which managers make a choice of a set of strategies for the organization that will
enable it to achieve better performance.
Strategic management is a continuous process that appraises the business and industries in which the
organization is involved; appraises it’s competitors; and fixes goals to meet all the present and future
competitor’s and then reassesses each strategy.
Strategic management process has following four steps:
A.Environmental Scanning- Environmental scanning refers to a process of collecting, scrutinizing
and providing information for strategic purposes. It helps in analyzing the internal and external
factors influencing an organization. After executing the environmental analysis process, management
should evaluate it on a continuous basis and strive to improve it.
B.Strategy Formulation- Strategy formulation is the process of deciding best course of action for
accomplishing organizational objectives and hence achieving organizational purpose. After
conducting environment scanning, managers formulate corporate, business and functional strategies.
C.Strategy Implementation- Strategy implementation implies making the strategy work as intended
or putting the organization’s chosen strategy into action. Strategy implementation includes designing
the organization’s structure, distributing resources, developing decision making process, and
managing human resources.
D.Strategy Evaluation- Strategy evaluation is the final step of strategy management process. The
key strategy evaluation activities are: appraising internal and external factors that are the root of
present strategies, measuring performance, and taking remedial / corrective actions. Evaluation
makes sure that the organizational strategy as well as it’s implementation meets the organizational
objectives.
These components are steps that are carried, in chronological order, when creating a new strategic
management plan. Present businesses that have already created a strategic management plan will
revert to these steps as per the situation’s requirement, so as to make essential changes.
Components of Strategic Management Process
Strategic management is an ongoing process. Therefore, it must be realized that each component
interacts with the other components and that this interaction often happens in chorus.
MNC
Features of Multinational Corporations (MNCs):
Following are the salient features of MNCs:
(i) Huge Assets and Turnover:
Because of operations on a global basis, MNCs have huge physical and financial assets. This also
results in huge turnover (sales) of MNCs. In fact, in terms of assets and turnover, many MNCs are
bigger than national economies of several countries.
(ii) International Operations Through a Network of Branches:
MNCs have production and marketing operations in several countries; operating through a network
of branches, subsidiaries and affiliates in host countries.
(iii) Unity of Control:
MNCs are characterized by unity of control. MNCs control business activities of their branches in
foreign countries through head office located in the home country. Managements of branches operate
within the policy framework of the parent corporation.
(iv) Mighty Economic Power:
MNCs are powerful economic entities. They keep on adding to their economic power through
constant mergers and acquisitions of companies, in host countries.
(v) Advanced and Sophisticated Technology:
Generally, a MNC has at its command advanced and sophisticated technology. It employs capital
intensive technology in manufacturing and marketing.
(vi) Professional Management:
A MNC employs professionally trained managers to handle huge funds, advanced technology and
international business operations.
(vii)Aggressive Advertising and Marketing:
MNCs spend huge sums of money on advertising and marketing to secure international business.
This is, perhaps, the biggest strategy of success of MNCs. Because of this strategy, they are able to
sell whatever products/services, they produce/generate.
(viii) Better Quality of Products:
A MNC has to compete on the world level. It, therefore, has to pay special attention to the quality of
its products.
Advantages and Limitations of MNCs:
Advantages of MNCs from the Viewpoint of Host Country:
We propose to examine the advantages and limitations of MNCs from the viewpoint of the host
country. In fact, advantages of MNCs make for the case in favour of MNCs; while limitations of
MNCs become the case against MNCs.
(i) Employment Generation:
MNCs create large scale employment opportunities in host countries. This is a big advantage of
MNCs for countries; where there is a lot of unemployment.
(ii) Automatic Inflow of Foreign Capital:
MNCs bring in much needed capital for the rapid development of developing countries. In fact, with
the entry of MNCs, inflow of foreign capital is automatic. As a result of the entry of MNCs, India
e.g. has attracted foreign investment with several million dollars.
(iii) Proper Use of Idle Resources:
Because of their advanced technical knowledge, MNCs are in a position to properly utilise idle
physical and human resources of the host country. This results in an increase in the National Income
of the host country.
(iv) Improvement in Balance of Payment Position:
MNCs help the host countries to increase their exports. As such, they help the host country to
improve upon its Balance of Payment position.
(vi) Technical Development:
MNCs carry the advantages of technical development 10 host countries. In fact, MNCs are a vehicle
for transference of technical development from one country to another. Because of MNCs poor host
countries also begin to develop technically.
(vii) Managerial Development:
MNCs employ latest management techniques. People employed by MNCs do a lot of research in
management. In a way, they help to professionalize management along latest lines of management
theory and practice. This leads to managerial development in host countries.
(viii) End of Local Monopolies:
The entry of MNCs leads to competition in the host countries. Local monopolies of host countries
either start improving their products or reduce their prices. Thus MNCs put an end to exploitative
practices of local monopolists. As a matter of fact, MNCs compel domestic companies to improve
their efficiency and quality.
In India, many Indian companies acquired ISO-9000 quality certificates, due to fear of competition
posed by MNCs.
(ix) Improvement in Standard of Living:
By providing super quality products and services, MNCs help to improve the standard of living of
people of host countries.
(x) Promotion of international brotherhood and culture:
MNCs integrate economies of various nations with the world economy. Through their international
dealings, MNCs promote international brotherhood and culture; and pave way for world peace and
prosperity.
Limitations of MNCs from the Viewpoint of Host Country:
(i) Danger for Domestic Industries:
MNCs, because of their vast economic power, pose a danger to domestic industries; which are still in
the process of development. Domestic industries cannot face challenges posed by MNCs. Many
domestic industries have to wind up, as a result of threat from MNCs. Thus MNCs give a setback to
the economic growth of host countries.
(ii) Repatriation of Profits:
(Repatriation of profits means sending profits to their country).
MNCs earn huge profits. Repatriation of profits by MNCs adversely affects the foreign exchange
reserves of the host country; which means that a large amount of foreign exchange goes out of the
host country.
(iii) No Benefit to Poor People:
MNCs produce only those things, which are used by the rich. Therefore, poor people of host
countries do not get, generally, any benefit, out of MNCs.
(iv) Danger to Independence:
Initially MNCs help the Government of the host country, in a number of ways; and then gradually
start interfering in the political affairs of the host country. There is, then, an implicit danger to the
independence of the host country, in the long-run.
(v) Disregard of the National Interests of the Host Country:
MNCs invest in most profitable sectors; and disregard the national goals and priorities of the host
country. They do not care for the development of backward regions; and never care to solve chronic
problems of the host country like unemployment and poverty.
(vi)Misuse of Mighty Status:
MNCs are powerful economic entities. They can afford to bear losses for a long while, in the hope of
earning huge profits-once they have ended local competition and achieved monopoly. This may be
the dirties strategy of MNCs to wipe off local competitors from the host country.
(vii) Careless Exploitation of Natural Resources:
MNCs tend to use the natural resources of the host country carelessly. They cause rapid depletion of
some of the non-renewable natural resources of the host country. In this way, MNCs cause a
permanent damage to the economic development of the host country.
(viii) Selfish Promotion of Alien Culture:
MNCs tend to promote alien culture in host country to sell their products. They make people forget
about their own cultural heritage. In India, e.g. MNCs have created a taste for synthetic food, soft
drinks etc. This promotion of foreign culture by MNCs is injurious to the health of people also.
(ix) Exploitation of People, in a Systematic Manner:
MNCs join hands with big business houses of host country and emerge as powerful monopolies. This
leads to concentration of economic power only in a few hands. Gradually these monopolies make it
their birth right to exploit poor people and enrich themselves at the cost of the poor working class.

Business Long Term Objectives in Strategic Management

Long term objectives are prepared from the mission statement of the organization on the basis of
which all other activities depend. Long term objectives highlight the expected consequences that
emerged from application of certain strategies. All the strategies of the Business Organization are
formulated & implemented in the guidance of the long term objectives. These objectives are for
longer period of time ranging from two to five years & this time frame should also be consistent for
the resulting strategies.
Nature of Long Term Objectives
The nature of long term objectives is better explained from the following features.
 Should be quantitative
 Should be realistic
 Should be measurable
 Should be challenging
 Should be obtainable
 Should be hierarchical
 Should be according to other functional units of organization
The Advantages of Long-Term Business Objectives
Starting a business or expanding an existing operation is an extremely difficult task. Businesses can
face numerous obstacles, many of them unexpected, throughout their existence. Setting long-term
objectives will force you to organize your goals and plans. It will enable you to visualize possible
roadblocks and prepare your business for them. Long-term objectives are a necessity for any business
venture.
A.Anticipate Barriers and Problems
Setting long-term objectives will allow you to anticipate possible roadblocks on the road to your
business success. Prior to starting a new business or expanding an existing one, create a business plan
that specifically outlines all aspects of the venture. This will provide you with a clear picture of how
your business will operate, and will give you an opportunity to anticipate possible problems. Without
setting long term goals, you may be ill-prepared for any setbacks.
B.Establish Confidence
Many small businesses tend to fail in the first few years of operation because the owners did not
properly prepare themselves for the future. Strictly focusing on the present can make a business
owner extremely nervous about the state of the business in the future. By setting long-term
objectives, you are equipping yourself with the confidence needed to sustain a successful business.
Preparing for the future will allow diminish your worries and allow you to focus your energy on
completing your objectives.
C.Move Toward a Goal
Many businesses tend to reach a ceiling because they lack motivation. Without setting long-term
objectives, a business has nothing to work toward. Long-term goals induce concentration in the
venture and continuous management of every aspect of the company. The business owner will strive
to achieve his goal by encouraging employees and remaining passionate about the project. When that
goal is finally achieved, everyone involved will experience a tremendous amount of satisfaction and
pride.
Business Policy
The term "Business Policy" comprises of two words, Business and Policy/planning. Business:
"Business means exchange of commodities and services for increasing utilities." Policy:
Policies/planning may be defined as "the mode of thought and the principles underlying the activities
of an organization or an institution." Policies are plans in they are general statements of principles
which guide the thinking, decision-making and action in an organization. Business policy as a
principle or a group of related principles, along with their consequent rule (s) of action that provide
for the successful achievement of specific organization / business objectives. Accordingly, a policy
contains both a "principle" and a "rule of action." Both should be there for the maximum
effectiveness of a policy.
ROLE OF STRATEGIC MANAGER

A strategic manager is responsible for reviewing a business’ current strategy and goals to
identify its potential strengths, weaknesses and opportunities for improvement. They typically
lead and manage one to several corporate departments to meet specific challenges and goals
including production, finance, human resource and marketing departments.

1. Planning Strategic planning is the process of identifying the specific time and resources
needed to meet your business goal. A strategic manager develops the plan that will be
implemented by reviewing and establishing strategic priorities and converts them to
quantitative and actionable plans.
2. Risk management is evaluating potential threats and establishing plans to minimize
them. This process helps business leaders understand and manage expectations, which
helps improve relationships with suppliers, customers and employees.
3. Performance Mnagement; Strategic managers develop and manage their business's key
performance indicators (KPI) to forecast and analyze company performance. This, in turn, helps
facilitate accurate budgeting, resource planning and goal-setting.
4. Coaching Strategic managers coach department leaders to help them implement the plan and
meet their goals. They provide support in strategizing individual departments and review,
analyze and manage all existing department strategies to ensure all departments align with the
business's key strategies.
5. COLLABORATION Strategic managers collaborate with the senior executive leadership in setting
the businesses' agenda and vision. They work with planning teams and clients to develop and
implement the plan and then, collaborate with departments that will help them implement,
manage and assess the success of the plan.
6. Data analysis By analyzing the data results of their plans, strategic managers can see what
worked and what may be opportunities for improvement. 
7.  Crisis management During an economic breakdown and financial crisis, strategic managers
adopt strategies that try to raise customer value and cut costs. They also analyze the major
cause of the crisis and provide a constructive solution and preventative plan for the future.
8. Creative problem solving Strategic managers overcome political, behavioral and systematic
barriers to enable creativity, change and business growth. 
9. Ethics development Business ethics are the principles governing employee behavior in an
organization. It is the strategic manager's responsibility to develop a culture of ethical behavior
in the business to support continued growth, productivity and positive employee and client
relationships. Good ethics promote:
Employees' health by ensuring they work in a conducive environment

 Fair treatment of all employees regardless of race, nationality, gender or difference

 Production of quality products by setting standards
 Reduced crimes in the business by imposing punishments to instigators of violence
 Market leadership Strategic managers design and implement competitive products and
actions to acquire the most clients and sell the most goods in their market. They oversee
the market status and recommend the best actions to adopt to dominate the market.
Building market leadership entails other actions such as:
 Assisting in employee training

-Recruitment of new candidates

-Retention of employers and working strategie
-Performance evaluation
-Termination of worker's services when no longer needed
Creating value; Creating value for a business is ensuring its revenue always exceeds its
expenses. The primary aim of a business entity is value creation. Strategic managers ensure their
strategies in a business earn profit and promote economic development.

 Globalization; The strategic manager needs to be able to assist a company fit into the current
dynamic economy by identifying and implementing relevant methods for increased business
efficiency.
GOALS AND OBJECTIVES;
After selecting the vision and mission of your business the next step is to select company goals and
objectives of your business in the light of your vision and mission.
The objectives may be long or short term. Organizations must state the objectives in specific,
quantifiable, measurable terms. Selected objectives should be ambitious as well as realistic. Selecting
short term, intermediate and long term objectives are very important for strategic planning for any
organization. Objectives serve as milestones for a particular business. Company goals and objectives
are the broad results company wish to achieve over the long term. So company’s objective must flow
naturally from company’s goals
Company goals and objective should be "SMART", its mean that these should be
Specific Measurable Agreed-Upon Realistic Time-Specific
SMART is the measuring rod for selected goals and objectives.
Now summing up all together we can say that Strategic planning is like the life blood of an
organization. As trees cannot flourish and grows without light same like that no organization can
grow without defining vision, mission and set company goals and objectives to achieve them
efficiently and effectively.

INTRODUCTION TO INDUSTRY ANALYSIS

The basic purpose of industry analysis is to assess the relative strengths and weaknesses of an
organization relative to other players in the industry. It tries to highlight the structural realities of a
particular industry and the extent of competition within that industry.
Why is industry analysis important?
Small business owners often spend a large chuck of time planning their company’s operations. A
majority of that time is spent planning initial operations and expected financial returns. Once the
business is open and running, business owners continue the planning process to ensure their venture
remains profitable. Industry analysis is an important part of small business planning. This analysis
often looks at the external factors that will affect the company’s operations.
-Function ; Industry analysis involves reviewing information on current economic market
conditions. Industries studied can include retail, fast food, manufacturing, various repair services and
construction. The type and number of business industries analyzed depends on the local economic
market.
B.Types ;Business owners can conduct an industry analysis in one of two ways: quantitative or
qualitative. Quantitative analysis uses mathematical forecasting techniques to analyze specific pieces
of an industry's information. Decision trees, game theory or other forecasting methods are commonly
used in the industry analysis. Qualitative analysis involves business owners reviewing industry
information and making personal judgments or inferences from the information.
C.Purpose ;Industry analysis is important because it allows business owners to estimate how much
profit they can generate from business operations. Business owners also assess the number of
competitors currently selling consumer goods or services in their industry. High levels of competition
often create lower than desired profits.
D.Benefits ;Conducting a very detailed and intense industry analysis can provide business owners
with specific knowledge regarding the economic marketplace. Business owners may discover a
market niche not currently being met by other companies. Business owners can also conduct
consumer surveys to learn about new goods or services that could have high demand in the
marketplace.
E.Warning ;Industry analysis does not guarantee success in the business environment. Business
owners can misinterpret information or make incorrect judgments on the best way to pursue profits
with a new business venture. Spending too much time on industry analysis can also subject the
business owner to “paralysis of analysis.”
TYPES OF INDUSTRY ANALYSIS
There are three commonly used and important methods of performing industry analysis. The three
methods are:
A-Porter’s 5 Forces
B-PEST Analysis
C-SWOT Analysis
A.Porter’s 5 Forces
One of the most famous models ever developed for industry analysis, famously known as Porter’s 5
Forces, was introduced by Michael Porter in his 1980 book “Competitive Strategy: Techniques for
Analyzing Industries and Competitors.”According to Porter, analysis of the following five forces
gives an accurate impression of the industry and makes analysis easier.

-Ease of entry : This indicates the ease with which new firms can enter the market of a particular
industry. If it is easy to enter an industry, companies face the constant risk of new competitors. If the
entry is difficult, whichever company enjoys little competitive advantage reaps the benefits for a
longer period. Also, under difficult entry circumstances, companies face a constant set of competitors
-Power of suppliers ; This refers to the bargaining power of suppliers. If the industry relies on a
small number of suppliers, they enjoy a considerable amount of bargaining power. This can affect
small businesses because it directly influences the quality and the price of the final product.
-Power of buyers ;The complete opposite happens when the bargaining power lies with the
customers. If consumers/buyers enjoy market power, they are in a position to negotiate lower prices,
better quality or additional services and discounts. This is the case in an industry with more
competitors but a single buyer constituting a large share of the industry’s sales.
-Availability of substitutes The industry is always competing with another industry in producing a
similar substitute product. Hence, all firms in an industry have potential competitors from other
industries. This takes a toll on their profitability because they are unable to charge exorbitant prices.
Substitutes can take two forms – products with the same function/quality but lesser price or products
of the same price but of better quality or providing more utility.
 Competitors
The number of participants in the industry and their respective market shares are a direct
representation of the competitiveness of the industry. These are directly affected by all the factors
mentioned above. Lack of differentia differentiation in products tends to add to the intensity of
competition. High exit costs like high fixed assets, government restrictions, labor unions, etc. also
make the competitors fight the battle a little harder.

.PEST Analysis--PEST Analysis stands for Political, Economic, Social and Technological. PEST
analysis is a useful framework for analyzing the external environment.

To use PEST as a form of industry analysis, an analyst will analyze each of the 4 components of the
model. These components include:
-Political ; Political factors that impact an industry include specific policies and regulations related
to things like taxes, environmental regulation, tariffs, trade policies, labor laws, ease of doing
business, and the overall political stability.
Economic; The economic forces that have an impact include inflation, exchange rates (FX), interest
rates, GDP growth rates, conditions in the capital markets (ability to access capital) etc.
Social ; The social impact on an industry refers to trends among people and includes things such as
population growth, demographics (age, gender, etc), and trends in behavior such as health, fashion,
and social movements.
Technological ;
The technological aspect of PEST analysis incorporates factors such as advancements and
developments that change that way business operates and the ways which people live their lives (i.e.
advent of the internet).
C- SWOT Analysis
SWOT Analysis stands for Strengths, Weaknesses, Opportunities, and Threats. It can be a great way
of summarizing various industry analysis methods and determining their implications for the
business in question.

Internal
Internal factors which already exist and have contributed to the current position and may continue to
exist.
External
External factors which are contingent events. Assess their importance based on the likelihood of
them happening and their impact on the company. Also, consider whether management has the
intention and ability to take advantage of the opportunity/avoid the threat.
STEPS IN INDUSTRY ANALYSIS:
A: Identify industry and provide a brief overview. Management team may need to explore industry
from a variety of geographical considerations: locally, regionally, provincially, nationally, and
globally. It is necessary to define relevant industry codes. Provide statistics and historical data about
the nature of the industry and growth potential for business, based on economic factors and
conditions.
B: Secondly, evaluators must summarize the nature of the industry. This process include specific
information and statistics about growth patterns, fluctuations related to the economy, and income
projections made about the industry. It is important to document recent developments, news, and
innovations. Evaluators must discuss the marketing strategies, and the operational and management
trends that are predominant within the industry.
C: Third step is to provide a forecast for industry. Managers must compile economic data and
industry predictions at different time intervals. It is necessary to cite all of sources. Note: the type and
size of the industry will determine how much information company will be able to find about a
particular industry.
D: Industry analysts needs to identify government regulations that affect the industry. They must
include any recent laws pertaining to industry, and any licenses or authorizations company would
need to conduct business in target market.
E: Industry analysts have to explain unique position within the industry. After completing
competitive Analysis, analysts can list the leading companies in the industry, and compile an
overview of data of direct and indirect competition. This will support them communicate unique
value plan.
F: Industry analysts must list potential limitations and risks. They should write about factors that
might negatively impact their business and they predict in the short-term and long-term future.
PORTER'S FIVE FORCES ANALYSIS
The primary model to assess the structure of industries was developed by famous management
theorist, Michael E. Porter in his 1980 book Competitive Strategy: Techniques for Analyzing
Industries and Competitors. Porter's model demonstrations that rivalry among firms in industry
depends upon five forces: the potential for new competitors to enter the market; the bargaining power
of buyers and suppliers; the availability of substitute goods; and the competitors and nature of
competition. Main purpose of Five Forces is to determine the attractiveness of an industry. However,
the analysis also provides basis for articulating strategy and understanding the competitive scene in
which a company operates.
Porters Five Forces for industry analysis:

fiercely for a market share, which results in low profits. Rivalry among competitors is tough when:
The framework for the Five Forces Analysis consists of these competitive forces: A. Industry rivalry
(degree of competition among existing firms): Tough competition leads to reduced profit potential
for companies in the same industry. In competitive industry, firms have to compete
There are many competitors
i- Exit barriers are high; ii-Industry of growth is slow or negative; iii-Products are not
differentiated and can be easily substituted; iv-Competitors are of equal size; v- Low
customer loyalty.
B- Threat of substitutes (products or services): Availability of substitute products will limit
company’s ability to increase prices. This force in Porters model is especially threatening
when buyers can easily find substitute products with attractive prices or better quality and
when buyers can switch from one product or service to another with low price.
C- C. Bargaining power of buyers: Powerful consumers have a substantial impact on prices.
Consumers have power to demand high quality or low priced products. If the price of the
product is low, it directly impact in the revenue of producers. While higher quality products
usually raise production costs. In both situations, there is less profit for producers. Buyers
exert strong bargaining power when: Buying in large quantities or control many access points
to the final customer;
i.Only few buyers exist ii..Switching costs to other supplier are low iii.They threaten to backward
integrate iv..There are many substitutes v.Buyers are price sensitive

D. Bargaining power of suppliers: powerful suppliers can demand premium prices and limit
profit of company. Porter stated that strong bargaining power permits suppliers to sell higher
priced or low quality raw materials to their consumers. This directly affects profit of the
buying firms because it has to invest more for materials. Suppliers have strong bargaining
power in following conditions: There are few suppliers but many buyers;
 D- i-Suppliers are large and threaten to forward integrate; ii. Few substitute raw materials exist;
iii. Suppliers hold scarce resources; iv Cost of switching raw materials is especially

Barriers to entry (threat of new entrants): It acts as a deterrent against new competitors. This
force decides how easy (or not) it is to enter a particular industry. If an industry is lucrative
and there are few barriers to enter, rivalry soon deepens. When more organizations compete
for the same market share, there is less profit. It is crucial for existing organizations to
generate high barriers to enter to prevent new entrants. Threat of new entrants is high when:
i- Low amount of capital is required to enter a market; ii- Existing companies can do little to
retaliate; iii- Existing firms do not possess patents, trademarks or do not have established
brand reputation;
There is no government regulation; Customer switching costs are low (it doesn’t cost a lot of
money for a firm to switch to other industries);
i-There is low customer loyalty; ii- Products are nearly identical; iii-Economies of scale can
be easily achieved.
McKinsey 7-S Framework
The model was developed in the late 1970s by Tom Peters and Robert Waterman, former
consultants at McKinsey & Company. They identified seven internal elements of an organization

that need to align for it to be successful.

Use the McKinsey 7-S Model
You can use the 7-S model in a wide variety of situations where it's useful to examine how the various
parts of your organization work together.For example, it can help you to improve the performance of
your organization, or to determine the best way to implement a proposed strategy. The framework can
be used to examine the likely effects of future changes in the organization, or to align departments and
processes during a merger or acquisition.

The Seven Elements of the McKinsey 7-S Framework The model categorizes the seven elements as
either "hard" or "soft":The three "hard" elements include:  1.Strategy. 
Hard Soft
2. Structures (such as organization charts and reporting lines). Elements Elements
3.Systems (such as formal processes and IT systems.)
Shared
These elements are relatively easy to identify, and management can Values
influence them directly.The four "soft" elements, on the other hand, can be
harder to describe, and are less tangible, and more influenced by your Strategy Skills
company culture. But they're just as important as the hard elements if the
organization is going to be successful.
Structure Style

Let's look at each of the elements individually: Systems Staff

 Strategy: this is your organization's plan for building and

maintaining a competitive advantage over its competitors.
 Structure: this is how your company is organized (how departments and teams are
structured, including who reports to whom).
  Systems: the daily activities and procedures that staff use to get the job done.
 Shared Values: these are the core values of the organization and reflect its general work
ethic. They were called "superordinate goals" when the model was first developed.
 Style: the style of leadership adopted.
 Staff: the employees and their general capabilities.
 Skills: the actual skills and competencies of the organization's employees.
The placement of Shared Values  in the center of the model emphasizes that they are central to the
development of all the other critical elements.
The model states that the seven elements need to balance and reinforce each other for an organization
to perform well.

Mintzberg's Management Roles

Mintzberg published his Ten
Management Roles in his book,
"Mintzberg on Management: Inside
our Strange World of Organizations,"
in 1990. The 10 roles are then divided
up into three categories, as follows:

Category Roles

Figurehead
Leader
Interpersonal Liaison

Monitor
Disseminator
Informational Spokesperson

Entrepreneur
Disturbance Handler
Resource Allocator
Decisional Negotiator

BCG matrix; The Boston Consulting Group BCG Matrix is a simple corporate planning tool, to assess a
company’s position in terms of its product range. The purpose of the BCG Matrix (or growth-share
matrix) is to enable companies to ensure long-term revenues by balancing products requiring
investment with products that should be managed for remaining profits.
Four categories of BCG matrix The BCG growth-share matrix breaks down products into four
categories: Question marks – High Growth, Low Market Share (uncertainty) Dogs – Low Growth, Low
Market Share (less profitable) Stars – High Growth, High Market Share (high competition)
Cash cows – Low Growth, High Market Share (most profitable)

Question Marks; High Growth, Low Market Share

Question marks are products that grow rapidly and as a result,
consume large amounts of cash, but because they have low market
shares, they don’t generate much cash.Question marks need to be
analysed carefully to determine if they are worth the investment
required to grow market share. New assets enter the market as
Question Marks. Question mark examples: Mac Book Air of Apple,
FUZE Healthy Infusions of Coca-Cola, tablet from Philips.

Stars; High Growth, High Market Share Stars generate large sums of
cash because of their strong relative market share, but also consume large amounts of cash because of
their high growth rate. So, the cash being spent and brought in approximately nets out. Star
examples: iPhone of Apple, Vitamin Water of Coca-Cola, LED lamp from Philips
Cash Cow; Low Growth, High Market Share As leaders in a mature market, cash cows exhibit a return on
assets that is greater than the market growth rate – so they generate more cash than they
consume.These units should be ‘milked’ extracting the profits and investing as little as possible. They
provide the cash required to turn question marks into market leaders. Cash Cow examples: iPods of
Apple, Coca-Cola Classic of Coca-Cola, Philips energy-saving lamp, 
Dogs; Low Growth, Low Market Share Dogs have a low market share and a low growth rate and neither
generate nor consume a large amount of cash. However, dogs are cash traps because of the money tied
up in a business that has little potential. Such businesses are candidates for divestiture.
Dog examples: New Coke of Coca-Cola, Plasma TV from Philips.
Advantages of BCG Matrix
1.It is simple to implement and easy to understand.
2. Larger companies can use it for the seeking volume and experience effects. It predicts the future
actions of a company. Hence, the company can decide its proper management strategy.
3. Helpful for managers to evaluate balance in the firm’s current portfolio of Stars, Cash Cows, Question
Marks, and Dogs
4.The matrix indicates that the profit of the company is directly related to its market share. Therefore, a
company can increase market share if it seems profitable.
5.It has only four categories that make it in simple form to operate efficiently.
Limitations of BCG Matrix is discussed below:
1.BCG matrix classifies businesses as low and high, but generally, businesses can be medium also. Thus,
the true nature of the business may not be reflected.
2.The distinction between high and low is highly subjective.
3.The use of BCG analysis cannot help managers take into account synergies that may possibly exist
among the various SBUs within the product portfolio.
4.The market is not clearly defined in this model.
5.The problems of getting data on the market share and market growth.
6.The framework assumes that each business unit is independent of the others.

MEANING, DEFINATION&LIMITATION OF SWOT ANALYSIS

SWOT is an acronym for Strengths, Weaknesses, Opportunities and Threats. By definition,
Strengths (S) and Weaknesses (W) are considered to be internal factors over which you have some
measure of control. Also, by definition, Opportunities (O) and Threats (T) are considered to be
external factors over which you have essentially no control.
SWOT Analysis is the most renowned tool for audit and analysis of the overall strategic position of
the business and its environment. Its key purpose is to identify the strategies that will create a firm
specific business model that will best align an organization’s resources and capabilities to the
requirements of the environment in which the firm operates.
Strengths - Strengths are the qualities that enable us to accomplish the organization’s mission. These
are the basis on which continued success can be made and continued/sustained.
Strengths can be either tangible or intangible. Strengths are the beneficial aspects of the organization
or the capabilities of an organization, which includes human competencies, process capabilities,
financial resources, products and services, customer goodwill and brand loyalty. Examples of
organizational strengths are huge financial resources, broad product line, no debt, committed
employees, etc.
Weaknesses - Weaknesses are the qualities that prevent us from accomplishing our mission and
achieving our full potential. Weaknesses in an organization may be depreciating machinery,
insufficient research and development facilities, narrow product range, poor decision-making, etc.
Weaknesses are controllable. They must be minimized and eliminated. For instance - to overcome
obsolete machinery, new machinery can be purchased. Other examples of organizational weaknesses
are huge debts, high employee turnover, complex decision making process, narrow product range,
large wastage of raw materials, etc.
Opportunities - Opportunities are presented by the environment within which our organization
operates. These arise when an organization can take benefit of conditions in its environment to plan
and execute strategies that enable it to become more profitable. Organizations can gain competitive
advantage by making use of opportunities.
Threats - Threats arise when conditions in external environment jeopardize the reliability and
profitability of the organization’s business. They compound the vulnerability when they relate to the
weaknesses. Threats are uncontrollable. When a threat comes, the stability and survival can be at
stake. Examples of threats are - unrest among employees; ever changing technology; increasing
competition leading to excess capacity, price wars and reducing industry profits; etc.
Advantages of SWOT Analysis;
1. It is a source of information for strategic planning. -Builds organization’s strengths.
-Reverse its weaknesses. -Maximize its response to opportunities.
-Overcome organization’s threats. -It helps in identifying core competencies of the firm.
-It helps in setting of objectives for strategic planning. --It helps in knowing past, present and future
so that by using past and current data, future plans can be chalked out.
Limitations of SWOT Analysis;
Price increase; Inputs/raw materials; Government legislation; -Economic environment; -Searching a
new market for the product which is not having overseas market due to import restrictions; etc.
Internal limitations may include- Insufficient research and development facilities; Faulty products
due to poor quality control; Poor industrial relations; Lack of skilled and efficient labour; etc
Stability Strategy Definition: The Stability Strategy is adopted when the organization attempts to
maintain its current position and focuses only on the incremental improvement by merely changing one
or more of its business operations in the perspective of customer groups, customer functions and
technology alternatives, either individually or collectively.
Stability Strategies could be of three types: 1.No-Change Strategy 2. Profit Strategy 3.Pause/Proceed
with Caution Strategy

Important Characteristics of Stability Strategy are as follows:

1. Stability is basically a safety-oriented, status quo-oriented strategy.
2. It does not need much of fresh investments.
3. The risk is also less.
4. It is a commonly employed strategy.
5. It is not a ‘does nothing’ strategy. It involves keeping track of new developments to ensure that the
strategy continues to make sense in future also.
6. The firm tries to enhance functional efficiencies in an incremental way.
7. Only firms with modest growth objective will vote for this strategy as the growth objective of firms
employing this strategy will not be high.
8. Stability strategy does not involve a redefinition of the business of the corporation.
9. It involves concentrating its resources and attention on existing businesses/products markets.
10. But the strategy does not permit the renewal process of bringing in fresh investments and new
products and markets for the firm.

Strategic Analysis and Choice (SAC) Strategy analysis and choice focuses on generating and
evaluating alternative strategies, as well as on selecting strategies to pursue. Strategy analysis and
choice seeks to determine alternative courses of action that could best enable the firm to achieve its
mission and objectives. The firm’s present strategies, objectives, and mission together with the external
and internal audit information, provide a basis for generating and evaluating feasible alternative
strategies. The alternative strategies represent incremental steps that move the firm from its current
position to a desired future state. The techniques that have been discussed for the corporate level
include BCG matrix, GE nine-cell planning grid, Hofer’s matrix and Shell Directional Policy Matrix and the
techniques for business- level include SWOT analysis, experience curve analysis, grand strategy selection
matrix, grand strategy clusters.
Strategic Analysis at the Corporate Level: Techniques Strategic analysis at the corporate level treats a
corporate body constituting a portfolio of businesses in a corporate vase. The analysis considers the
various issues regarding the several businesses in the corporate portfolio.
Retrenchment Strategies: It means substantially reducing the scope of business activities. It includes
turnaround strategy (to bring back to health through internal and external restructuring); Divestment
strategy (Sell-off or hive-off – to sell off a non-core business divisions; Spin-off -demerging the business
activities; and Split-off – division of business into two separate ownership; Disinvestment – dilution of
control through sale of equity -very recently Government of India has sold stake through FPO in Power
Finance Corporation); and Liquidation Strategy (the last resort in retrenchment, Lehman Brothers of USA
was finally liquidated ).
Controlling Strategy;  is a method of managing the execution of a strategic plan. It’s considered
unique in the management process, as it can handle the unknown and ambiguous while
tracking a strategy’s implementation and the subsequent results. A strategy is usually
implemented over a significant period of time during which two major questions are answered:
a.  Is strategy implementation taking place as planned? 
b.  Taking the observed results into consideration, does the strategy require changes or
adjustments? 
The strategic control definition shows us that it’s an evaluation exercise focused on achieving
the strategic goals set by an organization. The process is crucial in bridging gaps and adapting to
changes during the implementation period
CRAFTING STRATEGY; Strategy, defined as plan, pattern, position, and perspective, is used to derive four
distinct processes of strategy formation: planning, visioning, venturing, and learning. Each is considered
as it applies to your organization and the session concludes with an integrative model that includes all of
these.

Factors that Shape A Company’s Strategy;

Societal, political regulatory and citizenship considerations: All organizations operate within a society.
Hence, social expectations, values, and ethical considerations play a vital role in shaping a strategy.
Moreover, economic, societal, political, regulatory, and citizenship factors limit the strategic actions a
company can or should take.Competitive conditions and overall industry attractiveness: A company’s
strategy should be tailored to fit industry and competitive conditions. Various competitive conditions
like price, product quality, performance features; service, warranties, and so on play a vital role in
shaping a strategy.

The company’s market opportunities and external threats: A good strategy aims at capturing a
company’s best growth opportunities. It also aims at defending against external threats to its well-being
and future performance.

Company resource, strength, competencies, and competitive capabilities: One of the most crucial
strategy-shaping considerations is whether a company has or can acquire the resources, competencies,
and capabilities needed to execute a strategy proficiently.

The personal ambitions, businesses philosophy, and ethical beliefs of managers:  Various studies
indicate that manager’s ambitions, values, business philosophies, attitude toward risk, and ethical
beliefs have an important influence on strategy.

The influence of shared values and company culture for strategy: A company’s policies, practices,
traditions, philosophical beliefs, and ways of -doing things come together to create a distinctive culture.
Culture can dominate the kinds of strategic moves a company considers or rejects .

Environmental Scanning- Environmental scanning refers to a process of collecting, scrutinizing and

providing information for strategic purposes. It helps in analyzing the internal and external factors
influencing an organization. After executing the environmental analysis process, management should
evaluate it on a continuous basis and strive to improve it . It helps the managers to decide the future
path of the organization. Scanning must identify the threats and opportunities existing in the
environment. While strategy formulation, an organization must take advantage of the opportunities and
minimize the threats. A threat for one organization may be an opportunity for another.
Internal analysis of the environment is the first step of environment scanning. Organizations should
observe the internal organizational environment.This includes employee interaction with other
employees, employee interaction with management, manager interaction with other managers, and
management interaction with shareholders,etc

Analysis of internal environment helps in identifying strengths and weaknesses of an

organization.As business becomes more competitive, and there are rapid changes in the external environment,
information from external environment adds crucial elements to the effectiveness of long-term
plans. Environmental factors are infinite, hence, organization should be agile and vigile to accept and
adjust to the environmental changes. in external analysis, three correlated environment should be
studied and analyzed —immediate/industry environment---national environment----broader socio-
economic environment/macro-environment.

Examining the industry environment needs an appraisal of the competitive structure of the

organization’s industry, including the competitive position of a particular organization and it’s main
rivals

Analyzing the national environment needs an appraisal of whether the national framework helps in

achieving competitive advantage in the globalized environment.

Analysis of macro-environment includes exploring macro-economic, social, government, legal,

technological and international factors that may influence the environment

Meaning of Forecasting:
In preparing plans for the future, the management authority has to make some predictions about what
is likely to happen in the future. It shows that the managers know something of future happenings
even before things actually happen. Forecasting provides them this knowledge. Forecasting is the
process of estimating the relevant events of future, based on the analysis of their past and present
behavior. On the basis of the definition, the following features of forecasting can be identified:
=Forecasting is needed for planning process because it devises the future course of action. -It
defines the probability of happening of future events. Therefore, the happening of future events can
be precise only to a certain extent. =Forecasting is made by analysing the past and present factors
which are relevant for the functioning of an organisation. -The analysis of various factors may
require the use of statistical and mathematical tools and techniques. - Forecasting relates to future
events.
Role of Forecasting:
Basis of Planning:
Forecasting is the key to planning. It generates the planning process. Planning decides the future
course of action which is expected to take place in certain circumstances and conditions. Unless the
managers know these conditions, they cannot go for effective planning.

Promotion of Organization: The objectives of an organization are achieved through the

performance of certain activities. What activities should be performed depends on the expected
outcome of these activities. Since expected outcome depends on future events and the way of
performing various activities, forecasting of future events is of direct relevance in achieving an
objective.
Facilitating Co-ordination and Control: Forecasting indirectly provides the way for effective co-
ordination and control. Forecasting requires information about various factors. Information is
collected from various internal and external sources. Almost all units of the organisation are
involved in this process.---Success in Organisation: All business enterprises are characterised by risk
and have to work within the ups and downs of the industry. The risk depends on the future
happenings and forecasting provides help to overcome the problem of uncertainties.

Steps in Forecasting:
The process of forecasting generally involves the following steps:
A. Developing the Basis:
The future estimates of various business operations will have to be based on the results obtainable
through systematic investigation of the economy, products and industry.
B. Estimation of Future Operations:
On the basis of the data collected through systematic investigation into the economy and industry
situation, the manager has to prepare quantitative estimates of the future scale of business operations.
Here the managers will have to take into account the planning premises.
C. Regulation of Forecasts:
It has already been indicated that the managers cannot take it easy after they have formulated a
business forecast. They have to constantly compare the actual operations with the forecasts prepared
in order to find out the reasons for any deviations from forecasts. This helps in making more realistic
forecasts for future.
D. Review of the Forecasting Process:
Having determined the deviations of the actual performances from the positions forecast by the
managers, it will be necessary to examine the procedures adopted for the purpose so that
improvements can be made in the method of forecasting
The Growth & Expansion Strategy is adopted by an organization when it attempts to achieve a high
growth as compared to its past achievements. In other words, when a firm aims to grow considerably by
broadening the scope of one of its business operations in the perspective of customer groups, customer
functions and technology alternatives, either individually or jointly, then it follows the Expansion

Strategy. The reasons for the expansion could be survival, higher profits, increased prestige, economies
of scale, larger market share, social benefits, etc. The expansion strategy is adopted by those firms who
have managers with a high degree of achievement and
recognition. Their aim is to grow, irrespective of the risk
and the hurdles coming in the way.

1. Expansion through Concentration

2. Expansion through Diversification
3. Expansion through Integration
4. Expansion through Cooperation
5. Expansion through
Internationalization