The Study of Strategic Management
Strategic management is the art and science that helps organizations plan, implement, and improve strategies so they achieve their long-term goals, perform better than competitors, and grow sustainably
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Phases of Strategic Management:
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Environmental Scanning: Analyze both internal strengths/weaknesses and external opportunities/threats.
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Strategy Formulation: Develop plans and choose the best strategy based on the analysis.
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Strategy Implementation: Put the chosen strategy into action across all departments.
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Evaluation and Control: Measure outcomes and make adjustments if needed.
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Artistic Memory Aid:
Picture a navigator scanning the horizon (scanning), charting a course (formulating), sailing (implementing), and checking their map/compass (evaluating).
Benefits of Strategic Management
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Clear vision and sense of direction for the organization.
Knowing what is really important to focus on
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Increased adaptability to market changes, allowing quicker and better decisions.
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Stronger competitive edge and sustainable growth.
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Efficient use of resources, improved performance, and positive impact on all stakeholders.
Example:
“Imagine a football coach who studies players’ strengths, plans the best tactics, chooses a team, and adapts methods based on results. That’s strategic management for a company.”
Globalization, Innovation, and Environmental Sustainability
Impact of Globalization
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Businesses operate internationally; they must understand foreign cultures, markets, and competition.
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Example: Tata Motors adapting its cars for European, African, and Indian markets.
Impact of Innovation
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Products, services, and processes must constantly improve to stay ahead.
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Example: Apple releases new iPhone models with breakthrough features every year.
Impact of Sustainability
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Companies are expected to adopt eco-friendly and ethical practices.
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Example: Unilever uses sustainable sources for its products and reduces waste.
Memory Aid:
Picture three gears working together - a globe (globalization), a light bulb (innovation), and a leaf (sustainability).
Theories of Organizational Adaptation
| Theory | Main Idea | Example |
|---|---|---|
| Classical | Rules, structure, hierarchy | Assembly line in automobile factories |
| Human Relations | Focus on people, teamwork, motivation | Google workspace, open discussions |
| Systems | Organization as interconnected systems | Departments linked like organs |
| Contingency | No one-size-fits-all; adapt to conditions | Startups vs. Corporates; varied approaches |
Creating a Learning Organization
Learning organizations continually upgrade skills, knowledge, and capabilities at every level.
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Promote knowledge sharing, openness, and feedback
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Encourage and reward new ideas, creativity, and innovation.
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Adapt quickly to change by treating mistakes as chances to learn.
Example:
Infosys invests heavily in training programs and collaborative learning platforms.
Basic Model of Strategic Management
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Environmental Scanning: Find out what’s happening inside and outside the organization.
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Strategy Formulation: Create a clear plan based on the analysis.
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Strategy Implementation: Use people, money, and systems to put plans into action.
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Evaluation and Control: Track results and adjust as needed.
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Feedback/Learning Process: Learn from past actions for improvement.
Memory Story:
“A company is like a chess player: scan the board, plan moves, execute strategies, check if you’re winning, and learn to play better next time.”
Initiation of Strategy: Triggering Events
Events often “trigger” strategic changes in an organization:
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New CEO or leadership shake-up.
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Sudden drop in sales or profits.
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Emergence of disruptive technology or competitor.
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Change in laws, customer preferences, or global conditions.
Example:
Nokia switched from producing rubber boots to mobile phones when new technology and markets appeared.
Strategic Decision Making
What Makes a Decision Strategic
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Long-term, affects future growth and survival.
Large resource investments and risks.
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Multifunctional impact—touches many parts of the business.
Mintzberg’s Modes of Decision Making
| Mode | Key Feature | Example |
|---|---|---|
| Entrepreneurial | Bold, visionary, by one leader | Elon Musk at Tesla |
| Adaptive | Gradual “muddling through” | Indian public sector reforms |
| Planning | Structured, analytical | Infosys expansion strategy |
| Logical Incrementalism | Experiment, adjust incrementally | Startups testing product ideas |
Strategic Decision-Making Process
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Identify problems and opportunities.
Gather and analyze information.
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Generate strategic options.
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Evaluate options and decide.
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Implement and review outcomes.
Artistic Story:
“Imagine solving a mystery—gather clues, make a plan, act, check results, and refine your approach for the next puzzle!”
Strategic Audit: Aid to Strategic Decision Making
A strategic audit is a “health check” covering:
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Mission and Vision: Is the company’s purpose clear and strong?
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Environment Analysis: Are opportunities and threats understood?
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Internal Analysis: Are strengths and weaknesses identified?
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Strategy Check: Are plans aligned with goals?
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Implementation and Performance: Is execution effective?
Example:
Before a cricket team enters a match, they review skills, study competitors, plan tactics, and analyze previous games for improvement.
Key Terms
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Strategy: Plan for achieving competitive advantage and growth.
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Mission and Vision: The “Why” and “Where” of the firm’s existence.
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SWOT: Strengths, Weaknesses, Opportunities, Threats.
Summary Table
| Concept | Example/Memory Aid | Key Learnings |
|---|---|---|
| Strategic Management Model | Chess player, navigator | Scan, plan, execute, evaluate |
| Types of Organization Theory | Factory, Google, Network | Adapt structure to context |
| Decision Making Modes | Tesla, Indian reforms, Infosys | Strategy reflects leadership |
| Strategic Audit | Cricket team check-up | Know your strengths/weaknesses |
A great example of a strategic management process is a company planning to open a new branch office. Here’s how the process works step-by-step, using a real-world scenario:
Example: Opening a New Branch Office
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Environmental Scanning
The company first studies both internal strengths (like experienced staff, strong brand) and external factors (like local market demand, competitors, regulations) to decide where and when to open the new branch. -
Strategy Formulation
Based on this analysis, the company selects the best city, decides on the services to offer, and sets clear objectives (e.g., attract 1000 clients in the first year). -
Strategy Implementation
The company executes the action plan: rents a suitable location, recruits staff, launches a marketing campaign, and prepares everything for the grand opening. -
Evaluation and Control
Managers track progress by setting key deliverables (how many clients have signed up, sales numbers, satisfaction ratings) and check if goals are being met as planned. -
Feedback and Correction
If some targets aren’t met, adjustments are made: maybe more advertising, better offers, or extra staff training based on what worked or failed.study
Memory Tip:
Think of this process as launching a successful restaurant—start by scouting locations and market trends, plan the menu and staff, open the doors, monitor reviews and sales, and keep tweaking everything for perfection.
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