0

Topic Page No.

Strategic Management 1-3
Characteritics Of Strategy 4-5
Importance Of Strategic 6-10

Management
Advantages Of Strategic 11-14

Management
Limitations Of Stratetic 15-17

Managemnt
Conclusion 18
Bibliography 19

CONTENTS

STRATEGIC
MANAGEMENT
1

“Strategic management is the management of an organization’s

resources to achieve its goals and objectives. Strategic
management involves setting objectives, analyzing the competitive
environment, analyzing the internal organization, evaluating
strategies, and ensuring that management rolls out the
strategies across the organization.”
Understanding Strategic Management:
Strategic management is divided into several schools of thought. A
prescriptive approach to strategic management outlines how strategies
should be developed, while a descriptive approach focuses on how
strategies should be put into practice. These schools differ on whether
strategies are developed through an analytic process, in which all
threats and opportunities are accounted for, or are more like general
guiding principles to be applied.

KEY TAKEAWAYS:
 Companies, universities, non-profits, and other organizations
can use strategic management as a way to make goals and meet
objectives.
 Flexible companies may find it easier to make changes to their
structure and plans, while inflexible companies may chafe at a
changing environment.
 A strategic manager may oversee strategic management plans
and devise ways for organizations to meet their benchmark
goals. 

Business culture, the skills and competencies of employees,

and organizational structure are all important factors that influence
how an organization can achieve its stated objectives. Inflexible
companies may find it difficult to succeed in a changing business
environment. Creating a barrier between the development of strategies
and their implementation can make it difficult for managers to
determine whether objectives have been efficiently met.
2

While an organization’s upper management is ultimately responsible

for its strategy, the strategies themselves are often sparked by actions
and ideas from lower-level managers and employees. An organization
may have several employees devoted to strategy rather than relying
solely on the Chief Executive Officer (CEO) for guidance.

Because of this reality, organizational leaders focus on learning from

past strategies and examining the environment at large. The collective
knowledge is then used to develop future strategies and to guide the
behavior of employees to ensure that the entire organization is
moving forward. For these reasons, effective strategic management
requires both an inward and outward perspective.

Example of Strategic Management:

For example, a for-profit technical college wishes to increase new
student enrollment and enrolled student graduation rates over the next
three years. The purpose is to make the college known as the best buy
for a student's money among five for-profit technical colleges in the
region, with a goal of increasing revenue.

In that case, strategic management means ensuring the school has

funds to create high-tech classrooms and hire the most qualified
instructors. The college also invests in marketing and recruitment and
implements student retention strategies. The college’s leadership
assesses whether its goals have been achieved on a periodic basis.

Special Considerations:
Helping their company find ways to be more competitive is the
purpose of strategic management. To that end, putting strategic
management plans into practice is the most important aspect of the
planning itself. Plans in practice involve identifying benchmarks,
realigning resources—financial and human—and putting leadership
resources in place to oversee the creation, sale, and deployment of
products and services.
3

CHARACTERISTICS
OF STRATEGY
1. Strategy is a systematic phenomenon:
Strategy involves a series of action plans, no way contradictory to
each other because a common theme runs across them. It is not
merely a good idea; it is making that idea happen too. Strategy is a
unified, comprehensive and integrated plan of action.

2. By its nature, it is multidisciplinary:

Strategy involves marketing, finance, human resource and operations
to formulate and implement strategy. Strategy takes a holistic view. It
is multidisciplinary as a new strategy influences all the functional
areas, i.e., marketing, financial, human resource, and operations.
4

3. By its influence, it is multidimensional:

Strategy not only tells about vision and objectives, but also the way to
achieve them. So, it implies that the organisation should possess the
resources and competencies appropriate for implementation of
strategy as well as strong performance culture, with clear
accountability and incentives linked to performance.

4. By its structure, it is hierarchical:

On the top come corporate strategies, then come business unit
strategies, and finally functional strategies. Corporate strategies are
decided by the top management, Business Unit level strategies by the
top people of individual strategic business units, and the functional
strategies are decided by the functional heads.

5. By relationship, it is dynamic:
Strategy is to create a fit between the environment and the organisation’s
actions. As environment itself is subject to fast change, the strategy too has
to be dynamic to move in accordance to the environment.

Success of Microsoft appears to be very simple as far as software for

personal computers are concerned, but Microsoft strategy required
continuous decisions in a turbulent and dynamic environment to remain
leader.

6.The purpose of strategy is to create competence (things firm does

better than competitors), synergy (between different parts of the
organisation and their activities) and value creation so as to attain
vision and mission:
An organisation can reach its destiny (vision) only if it can create value for
the firm and its stakeholders (mission). Value creation involves economic
value addition (profits for the company), customer value addition (Value
customers perceive in relation to competitors), people value addition
(Value gained from enabling employees to be most productive resource.)
so as to fulfil the needs of all concerned.

7. Strategy requires searching for new sources of advantage:

5

To achieve sustainable long term competitive advantage the firm must

invent new rules and new games to become unique and create wealth.
Simply copying the leader means value is destroyed for all the firms. Thus
to look different, strategy differentiation is a must.

8. Strategy is almost always the result of some type of collective

decision-making process:
The vision, mission, objectives, and corporate strategies are determined by
top management. Business Unit strategies are decided by heads of business
units and functional plans by functional heads. But the top management
consent is a must. It is the senior management which resolves paradoxes
between the conflicting objectives, existing functions and future activities,
and the resources allocation.

IMPORTANCE OF
STRATEGIC
MANAGEMENT
Everything you need to know about the importance of strategic
management. Strategic management is the latest addition to the
management disciplines.

It is about success and failure, about the ability to plan wars and win
them. Effective strategic management can transform the performance
of an organisation, make fortunes for shareholders or change the
structure of an industry. Ineffective strategic management can
bankrupt companies and ruin the careers of executives.
6

Strategic management helps a decision-maker to get equipped with

management tools or anticipating changes and directing the
organizational activities along the right path.
Practice of strategic management reduces the risk of operation by
helping the enterprise to innovate in time and take an early action.

1. Accomplishment of Long-Term Objectives:

Business environment changes rapidly. A business concern cannot
achieve its long- term objectives of profitability — a higher rate of
return, productivity, technological leadership, market standing,
market leadership— industry leader etc., without formulating an
appropriate strategy and without implementing it effectively. Strategic
management thus enables to achieve the long-term objectives of an
organisation through its strategic management processes.

2. Helpful to Study the Business Environment:

Strategic management is helpful to a business concern to study the
external business environment accurately because every incident or
change in the business environment will have either positive or
negative impact on the business. Such a study enables the business
concern to formulate a suitable strategy to exploit the opportunities or
manage threats.

3. Helpful to Identify Business Opportunities:

Strategic management is helpful to a business concern to identify the
opportunities systematically with the help of its analytical tools,
SWOT analysis, BCG matrix etc., so that the business concern can
formulate an appropriate strategy.

4. Diagnosis of Business Environmental Threats:

Strategic management also enables a business concern to diagnose
business environmental threats systematically with the help of its
analytical tools, SWOT analysis, BCG matrix etc., so that the
business concerns can formulate a suitable strategy to overcome
threats.
7

5. Assistance in Identifying Strategic Advantages:

Strategic management assists business concern to identify its strategic
advantages in the areas of fiancé, production, marketing, technology,
research and development, and human resource management over
other firms in the industry through a thorough internal analysis of the
firm.
This will enable a business concern to formulate and implement either
intensive growth strategy of market penetration, market development,
product development or diversification growth strategies of concentric
diversification, conglomerate diversification when the external
business environment is favourable.

6. Suggestions to Overcome Internal Weakness:

Strategic management suggests a business concern how to overcome
internal weaknesses through its tools of strategic analysis. Such
analysis will enable the business concern to choose the growth
strategy of vertical integration or conglomerate diversification
externally when the external business environment is favourable.

7. Suggestions to Maximise Internal Strengths:

Strategic management suggests a business concern how to maximise
internal strengths through its tools of strategic analysis. Such analysis
will enable the business concern to choose the growth strategy of
horizontal integration or concentric diversification externally when
the external business environment is favourable.

8. Strategic Fit:
Strategic management matches the external business environmental
opportunities to the internal strengths of an organisation. This will
enable the business concern to deploy effectively its resources to
exploit the opportunities.

9. Helpful to Face Competition Effectively:

Strategic management suggests a business concern to select a suitable
strategy in order to face the competition effectively. This will enable
the business concern to survive, grow, and prosper in the industry.
8

10. Effective Control:

Strategic management ensures an effective control in an organisation
by providing continuous monitoring system and tracking the strategy.
This will enable the organisation to implement the strategy
successfully and to achieve the desired results.

11. Helpful to Face Uncertainties in Future:

Future is uncertain. But strategic management helps a business
concern to face uncertainties in the future with the help of the
techniques of business forecast. Such a forecast provides clues about
the future happenings. This will enable a business concern to
formulate a suitable strategy.

12. Maximisation of Profits:

Strategic management helps to formulate a suitable strategy
systematically after analysing the business environment, the industry,
the firm and to implement it successfully and to control it effectively.
This will enable a business concern to maximise its profits.

13. Diversification of Risk:

Strategic management enables a business concern to diversify its risk
or reduce its risk by formulating a suitable strategy of integration or
diversification when the external business environment is favourable.

14. Prevention from Incurring Losses:

Strategic management helps a business concern to formulate a
suitable strategy to prevent it from incurring losses by diagnosing
business environmental threats systematically with the help of its
analytical tools, SWOT analysis, BCG matrix etc.

Importance of Strategic Management – Financial

Benefits, Offsetting Uncertainty, Clarity in
Objectives, Increased Organisational Effectiveness
and Personnel Satisfaction
9

The importance of strategic management can be identified in the

following contexts:

1. Financial Benefits:
Effective strategic management results in financial benefits to the
organizations in the form of increased profit. Many research studies,
particularly in the USA, have confirmed this proposition. These studies
have measured the profit performance of those companies which have
adopted strategic management approach and those who have not adopted
this approach.

2. Offsetting Uncertainty:
Strategic management tries to offset environmental uncertainty by
prescribing the future course of action in the light of various forecasts
made by the organization. Forecasting and strategic planning are the basic
core of strategic management and these provide a clue about what is likely
to happen in future.

3. Clarity in Objectives and Direction:

Strategic management focuses on organizational objectives and direction
of action for achieving these objectives. Sometimes, people in the
organization may not be specific about its objectives because of lack of
clarity and precise definitions. For example, often we take profit as the
objective of a business organization. It is too abstract to be pursued.

4. Increased Organizational Effectiveness:

Strategic management ensures organizational effectiveness in several
ways. The concept of effectiveness is that the organization is able to
achieve its objectives within the given resources. Thus, for effectiveness, it
is not only necessary that resources are put to the best of their efficiency
but also that they are put in a way which ensures their maximum
contribution to organizational objectives.

5. Personnel Satisfaction:
10

Strategic management contributes towards organizational effectiveness by

providing satisfaction to the personnel of the organization. In an
organization where formal strategic management process is followed,
people are more satisfied by definite prescription of their roles thereby
reducing role conflict and role ambiguity.

ADVANTAGES OF
STRATEGIC
MANAGEMENT
1. Creating a better future:

There is always a difference between reactive and proactive actions. When

a company practices strategic management – the company will always be
on the defensive side and not on the offensive end. You need to come out
victorious in the competitive situation and not be a victim of the situation.

It is not possible to foresee each and every situation but if you know that
there are chances of certain situations then it is always better to keep your
weapons ready to fight the situation.

2. Identifying strategic directions:

11

Strategic management essentially and clearly defines the goals and mission
of the company. The main purpose of this management is to define
realistic objectives and goals – this has to be in line with the vision of the
company.

The strategic management provides a base for the organization on the basis
of which progress can be measured and on the basis of the same, the
employees can be compensated.

3. Make Better business decisions:

It is important to understand the difference between a great idea and a

good idea. If you do have a proper and clear vision of your company –
then having a mission and methods to achieve the mission always seems to
be a very good idea. You need to make better decisions and that too within
less time.

Here come the benefits of a strategic approach. It turns into a great idea
when you decide what is the type of project that you want to invest your
money; how do you plan to invest your time and also utilize the time of
your employees.

Once you are clear with your ideas about the project and the time each of
your employees and yourself will have to allocate, you will need to focus
your attention on the financial and human resources.
12

4. Business Longevity:

The times are changing fast and there are dynamic changes happening
every day. The industries worldwide are changing at a fast pace and hence
survival is difficult for those companies which do not have a strong and
perfect base in the industry.

The strategic management ensures that the company has a thorough stand
in the related industry and the experts also make sure that the company is
not just surviving on luck and better chances or opportunity. When you
look at various studies you would know that the industries which are not
following the strategic management will survive for not more than five
years.

This suggests that companies should have a powerful focus on the

longevity of the business. This suggests that without strategic
management, it is not possible for a company to survive in the long run.

5. Increasing market share and profitability:

With the help of strategic management, it is possible to increase the market

share and also the profitability of the company in the market. If you have
very focused plan and strategic thinking then it is possible for all the
industries to explore better customer segments, products and services and
also to understand the market conditions of the industry which you are
operating in.
13

Strategic management skills will help you to approach the right target
market. The experts will guide for better sales and marketing approaches.
You can also have a better network of distribution and also help you to
take business decisions which at the end of the day results in profit.

6. Avoiding competitive convergence:

Most of the companies have become so used to focusing on the

competitors that they have started imitating their good practices. It has
become so much of competition that is becoming difficult to part the companies
or identify them differently.

With the help of strategic management this magic is possible – try and learn all
the best practices of a company and become a unique identity which will keep
you apart from your competitors.

7. Financial benefits:

The firms which follow the process of strategic management proves to have
more profits over a period of time as compared to the companies that do not opt
for strategic management decisions.

Those firms which are involved in using strategic management use the right
method of planning – these companies have excellent control over their future.
They have a proper budget for their future projects; hence these businesses
continue for a long time in the industry.

8. Non-financial benefits:
14

Companies using strategic management also provides various financial and non-
financial benefits of strategic management. The experts informed that the firms
which practice strategic management are always ready to defeat the external
threats.

They have a better understanding of the strengths and weakness of the

competitor and hence they are able to withstand the competition. This paves
way for better performance and rewards for the company over a period of time.

Limitations of
Strategic
Management
1. Complex process:

The strategic management includes various types of continuous process which

checks all type of major critical components. This includes the internal and
external environments, long term and short term goals, strategic control of the
company’s resources and last but not the least it also has to check the
organizational structure. This is a lengthy process because a change in one
component can affect all the factors.
15

Hence it is vital that one understands the issues with all the concerned factors.
This generally takes time and at the end, the growth of the company is affected.

Being a complex process it calls for lots of patience and time from the
management in order to implement the strategic management.

In order to have proper strategic management, there should be strong

leadership and proper structured resources.

2. Time-consuming process:

In order to implement strategic management, it is necessary that the top

management spends proper quality time in order to get the process right. The
managers have to spend a lot of time researching, preparing and informing the
employees about this new management. This type of long term and time-
consuming training and orientation would hamper the regular activities of the
company.

The day to day operations are negatively impacted and in the long term, it could
affect the business adversely. For e.g. there are many issues that require daily
attention but this is not taken care because they are busy researching the details
about strategic management.

In case, proper resolution of the problems are not done on time then there could
be a great amount of attrition increase. Besides this, the performance of the
employees will also go down because they are not getting the required
resolution of their problems. This type of situation may lead the management to
16

divert all their critical resources towards employee motivation and performance

– while doing this your strategic management process will be sidelined.

3. Tough implementation:

When we speak the word strategic management then it seems to be a huge and
large word. But it is also a fact that the implementation of this management
system is difficult as compared to other management techniques. The
implementation process calls for perfect communication among the employees
and employer.

The strategic management has to be implemented in such a way that the

employees have to remain fully attentive; there should be active participation
among the employees and besides this, the employees have to be accountable
for their work. This accountability is meant not only for the top management but
for all employees across the hierarchy. The experts mention that implementation
is difficult because they have to continuously strive to make the employees
aware about the process and benefits of this system.

For e.g. if a manager was involved in forming of the strategic process and
he/she has not been involved in the implementation process then the manager
will never be accountable for any processes in the company.

4. Proper planning:

When we say management systems then it calls for perfect planning. You just
cannot write things on paper and leave them. This calls for proper practical
planning. This is not possible by just one person but it is a team effort.
17

When these types of processes are to be implemented then you need to sideline
various regular decision-making activities which would adversely affect the
business in the long run.

CONCLUSION
In recent years, most of the firms have understood the importance of
strategic management – it plays a key role in the upbringing and
downfall of any company. In a nutshell, we can conclude that the
purpose of strategic management is possible if a company can provide
dedicated resources and staff in order to formulate and implement the
entire system.

If strategic management is implemented in the company thoroughly

then there is no doubt that the company will survive all types of odds
and competition and remain in the market for a long period of time.
This is required in the present situation for all companies. It just calls
for proper planning and the right people in order to implement them
in the company.
18

You need to keep a regular check on all external and internal factors
affecting your industry; besides this check all your financial resources
whether they are enough to expand your business. If you could keep in
mind these things, the implementation will become very easy and
quick for any organization irrespective of their sizes.

BIBLIOGRAPHY
 Strategic Management - awareness and
change, john. l. thompson, internal
thomson business press.

 Strategic Management book – by

Archana Bhatia and Lalita Dhingra

 www.businessmanagementideas.com

 https://www.investopedia.com/terms/s/st
rategic-management.asp
19

 https://www.investopedia.com/terms/s/st
rategic-management.asp

ACKNOWLEDGEMENT

In successfully completing this project, many people have

helped me. I would like to thank all those who are related
to this project.
Primarily, i would thank god for being able to complete
this project with success. Then i will thank my Strategic
Management teacher, under whose guidance i learned a
lot about this project. His suggestions and directions have
helped in the completion of this project.
Finally, i would like to thank my parents and friends who
have helped me with their valuable suggestions and
guidance and have been very helpful in various stages of
project completion.
20