basic model of sm

7/27/2019 Basic Model of SM

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Basic Model of StrategicManagement

Strategic Management consist of fourbasic elements.

1. Environment Scanning.2. Strategy Formulation.

3. Strategy Implementation.

4. Evaluation and ontrol.


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Environmental Scanning

Is t!e monitoring" evaluating" and disseminating ofinformation from t!e e#ternal and internalenvironments to $ey people %it!in t!e corporation.

purpose I&E'(IF) Strategic Factors*t!ose

e#ternal and internal elements t!at %ill determine t!efuture of t!e corporation.

Environmental Scanning S+,( analysis.

Internal Environment-+it!in organiation/Strengt!" +ea$ness" structure" culture" resources.


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(as$ Environment-industry/

s!are!olders" suppliers" employees"

customer"reditors

Societal Environment0 economic forces"tec!nological forces" politicallegal forces"

sociocultural forces.

Internal Environment0Structure" ulture" esources


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Strategy Formulation

Strategy formulation is t!e developmentof longrange plans for t!e effectivemanagement of environmental

opportunities and t!reats" in lig!t ofcorporate strengt!s and %ea$ness. Itincludes defining t!e corporate mission"

specifying ac!ievable obectives"developing strategies" and setting policyguideline.


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Mission0

n organiation5s mission is t!e purpose

or reason for t!e organiation5s e#istence.It tell %!at t!e company is providing tosociety" eit!er a service li$e!ousecleaning or a product li$eautomobile.


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obective

,bectives are t!e end results of plannedactivity. (!ey state %!at is to beaccomplis!ed by %!en and s!ould be

6uantified if possible. (!e ac!ievement ofcorporate obectives s!ould result in t!efulfillment of a corporation5s mission.

7oal0 as an open ended statement of %!atone %ants to accomplis! %it! no6uantification. %!at is to be ac!ieved and notime criteria for completion.

8rofitability-net profit/


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Efficiency-lo% costs./

7ro%t!-increase in total asset" sales"/

9tiliation of resources-return oninvestment or e6uity/

Mar$et leaders!ip-mar$et s!are/

Strategy strategy of a corporation forms a compre!ensivemaster plan stating !o% t!e corporation %illac!ieve its mission and obectives. It ma#imiescompetitive advantage and minimies competitivedisadvantage.

(ata group sold (omco" :a$me to ;::


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8olicies policies is a broad guideline for decision ma$ing

t!at lin$s t!e formulation of strategy %it! itsimplementation. ompanies use policies to ma$esure t!at employees t!roug!out t!e firm ma$edecisions and ta$e actions t!at support t!e

corporation


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Strategy Implementation

Strategy implementation is t!e process by %!ic! strategies and policies areput into action t!roug! t!e development of programs" budgets" andprocedure.

8rograms0

8rograms is a statement of t!e activities or steps needed to accomplis! asingle use plan. It ma$es strategy action oriented. It may involve restructuringt!e corporation" c!anging t!e company5s internal culture" or beginning a ne%researc! effort.For e#ample" consider Intel corporation" t!e microprocessormanufacturer. ealiing t!at Intel %ould not able to continue its corporategro%t! strategy %it!out t!e continuous development of ne% generations ofmicroprocessors" management decided to implement a series of programs0

(!ey formed an alliance %it! ;e%lett8ac$ard to develop t!e successor tot!e 8entium pro c!ip.

(!e assembled an elite team of engineers and scientists to do long term"original researc! into computer c!ip design.


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Budget0

budget is a statement of a corporation5s programs interms of dollars. 9sed in planning and control" a budget

lists t!e detailed cost of eac! program.For e#ample" 7eneral Motors budgeted =4.3 billionduring 2>>> t!roug! 2>>4 to update and e#pand itsadillac line of automobiles. +it! t!is money" t!e

company is increasing t!e number of models from fiveto nine" and offering more po%erful engines" sportier!andling" and edgier styling. (!e company !opes toreverse its declining mar$et s!are by appealing to a

younger mar$et.-t!e average adillac buyer %as ?@years old in 2>>>/


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8rocedure0

Steps or tec!ni6ues t!at describe in detail !o% aparticular tas$ or ob is to be done. (!ey typically detail

t!e various activities t!at must be carried out in orderto complete t!e corporation5s programs. For e#ample"Infosys faces t!e c!allenges of inducting or orienting allarge number of employees. (!e company %!ic!

currently !as around 3?">>> employees on its rolls" !asaddressed t!ese c!allenges t!roug! %!at it terms8rocess epository AInfosys for driving e#cellence. (!is!elps t!e company to ensure t!at an army of employee%or$s t!e same %ay" gains in process efficiency andproductivity and !ig!er 6uality.


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E:9(I,' '& ,'(,:

Evaluation and control is t!e process in

%!ic! corporate activities and performanceresults are monitored so t!at actualperformance can be compared %it! desiredperformance. It pin point t!e %ea$ness inpreviously implemented strategic plans andt!us stimulate t!e entire process to beginagain.

FEE&BCD:E'I'7 8,ESS


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+!at ma$es a decision strategic0

9nli$e many ot!er decisions" strategic decisions deal%it! t!e long run future of t!e entire organiation and

!ave t!ree c!aracteristics01. are0 Strategic decisions are unusual and typically

!ave no precedent to follo%.

2. onse6uential0 strategic decisions commitsubstantial resources and demand a great deal ofcommitment from people at all levels.

3. &irective0 strategic decisions set precedents for

lesser decisions and future actions t!roug!out t!eorganiation.

basic model of sm

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