Introduction

Strategic Management is all about identification and description of the strategies that
managers can carry so as to achieve better performance and a competitive advantage
for their organization. An organization is said to have competitive advantage if its
profitability is higher than the average profitability for all companies in its industry.

Strategic management can also be defined as a bundle of decisions and acts which a
manager undertakes and which decides the result of the firms performance. The
manager must have a thorough knowledge and analysis of the general and competitive
organizational environment so as to take right decisions. They should conduct
a SWOT Analysis (Strengths, Weaknesses, Opportunities, and Threats), i.e., they
should make best possible utilization of strengths, minimize the organizational
weaknesses, make use of arising opportunities from the business environment and
shouldnt ignore the threats.

Strategic management is nothing but planning for both predictable as well as

unfeasible contingencies. It is applicable to both small as well as large organizations
as even the smallest organization face competition and, by formulating and
implementing appropriate strategies, they can attain sustainable competitive
advantage.

It is a way in which strategists set the objectives and proceed about attaining them. It
deals with making and implementing decisions about future direction of an
organization. It helps us to identify the direction in which an organization is moving.

Strategic management is a continuous process that evaluates and controls the business
and the industries in which an organization is involved; evaluates its competitors and
sets goals and strategies to meet all existing and potential competitors; and then
reevaluates strategies on a regular basis to determine how it has been implemented
and whether it was successful or does it needs replacement.

Strategic Management gives a broader perspective to the employees of an

organization and they can better understand how their job fits into the entire
organizational plan and how it is co-related to other organizational members. It is
nothing but the art of managing employees in a manner which maximizes the ability
of achieving business objectives. The employees become more trustworthy, more
committed and more satisfied as they can co-relate themselves very well with each
organizational task. They can understand the reaction of environmental changes on
the organization and the probable response of the organization with the help of
strategic management.

Thus the employees can judge the impact of such changes on their own job and can
effectively face the changes. The managers and employees must do appropriate things
in appropriate manner. They need to be both effective as well as efficient.

One of the major role of strategic management is to incorporate various functional

areas of the organization completely, as well as, to ensure these functional areas
harmonize and get together well. Another role of strategic management is to keep a
continuous eye on the goals and objectives of the organization.
 Definition and Features
The word strategy is derived from the Greek word stratgos; stratus (meaning
army) and ago (meaning leading/moving).

Strategy is an action that managers take to attain one or more of the organizations
goals. Strategy can also be defined as A general direction set for the company and its
various components to achieve a desired state in the future. Strategy results from the
detailed strategic planning process.

A strategy is all about integrating organizational activities and utilizing and allocating
the scarce resources within the organizational environment so as to meet the present
objectives. While planning a strategy it is essential to consider that decisions are not
taken in a vaccum and that any act taken by a firm is likely to be met by a reaction
from those affected, competitors, customers, employees or suppliers.

Strategy can also be defined as knowledge of the goals, the uncertainty of events and
the need to take into consideration the likely or actual behavior of others. Strategy is
the blueprint of decisions in an organization that shows its objectives and goals,
reduces the key policies, and plans for achieving these goals, and defines the business
the company is to carry on, the type of economic and human organization it wants to
be, and the contribution it plans to make to its shareholders, customers and society at
large.
Features of Strategy

1. Strategy is Significant because it is not possible to foresee the future. Without

a perfect foresight, the firms must be ready to deal with the uncertain events
which constitute the business environment.

2. Strategy deals with long term developments rather than routine operations, i.e.
it deals with probability of innovations or new products, new methods of
productions, or new markets to be developed in future.

3. Strategy is created to take into account the probable behavior of customers and
competitors. Strategies dealing with employees will predict the employee
behavior.

Strategy is a well defined roadmap of an organization. It defines the overall mission,

vision and direction of an organization. The objective of a strategy is to maximize an
organizations strengths and to minimize the strengths of the competitors.

Strategy, in short, bridges the gap between where we are and where we want to be
 Advantages & Disadvantage of Strategic Management

I. Discharges Board Responsibility

The first reason that most organizations state for having a strategic management
process is that it discharges the responsibility of the Board of Directors.

II. Forces An Objective Assessment

Strategic management provides a discipline that enables the board and senior
management to actually take a step back from the day-to-day business to think about
the future of the organization. Without this discipline, the organization can become
solely consumed with working through the next issue or problem without
consideration of the larger picture.

III. Provides a Framework For Decision-Making

Strategy provides a framework within which all staff can make day-to-day operational
decisions and understand that those decisions are all moving the organization in a
single direction. It is not possible (nor realistic or appropriate) for the board to know
all the decisions the executive director will have to make, nor is it possible (nor
realistic or practical) for the executive director to know all the decisions the staff will
make. Strategy provides a vision of the future, confirms the purpose and values of an
organization, sets objectives, clarifies threats and opportunities, determines methods
to leverage strengths, and mitigate weaknesses (at a minimum). As such, it sets a
framework and clear boundaries within which decisions can be made. The cumulative
effect of these decisions (which can add up to thousands over the year) can have a
significant impact on the success of the organization. Providing a framework within
which the executive director and staff can make these decisions helps them better
focus their efforts on those things that will best support the organization's success.

IV. Supports Understanding & Buy-In

Allowing the board and staff participation in the strategic discussion enables them to
better understand the direction, why that direction was chosen, and the associated
benefits. For some people simply knowing is enough; for many people, to gain their
full support requires them to understand.

V. Enables Measurement of Progress

A strategic management process forces an organization to set objectives and measures

of success. The setting of measures of success requires that the organization first
determine what is critical to its ongoing success and then forces the establishment of
objectives and keeps these critical measures in front of the board and senior
management.

VI. Provides an Organizational Perspective

Addressing operational issues rarely looks at the whole organization and the
interrelatedness of its varying components. Strategic management takes an
organizational perspective and looks at all the components and the interrelationship
between those components in order to develop a strategy that is optimal for the whole
organization and not a single component.

Disadvantages of Strategic Management

i. The Future Doesn't Unfold As Anticipated

One of the major criticisms of strategic management is that it requires the

organization to anticipate the future environment in order to develop plans, and as we
all know, predicting the future is not an easy undertaking. The belief being that if the
future does not unfold as anticipated then it may invalidate the strategy taken. Recent
research conducted in the private sector has demonstrated that organizations that use
planning process achieve better performance than those organizations who don't plan -
regardless of whether they actually achieved their intended objective. In addition,
there are a variety of approaches to strategic planning that are not as dependent upon
the prediction of the future.

ii. It Can Be Expensive

There is no doubt that in the not-for-profit sector there are many organizations that
cannot afford to hire an external consultant to help them develop their strategy. Today
there are many volunteers that can help smaller organizations and also funding
agencies that will support the cost of hiring external consultants in developing a
strategy. Regardless, it is important to ensure that the implementation of a strategic
management process is consistent with the needs of the organization, and that
appropriate controls are implemented to allow the cost/benefit discussion to be
undertaken, prior to the implementation of a strategic management process.

iii. Long Term Benefit vs. Immediate Results

Strategic management processes are designed to provide an organization with long-

term benefits. If you are looking at the strategic management process to address an
immediate crisis within your organization, it won't. It always makes sense to address
the immediate crises prior to allocating resources (time, money, people, opportunity,
cost) to the strategic management process.

iv. Impedes Flexibility

When you undertake a strategic management process, it will result in the organization
saying "no" to some of the opportunities that may be available. This inability to
choose all of the opportunities presented to an organization is sometimes frustrating.
In addition, some organizations develop a strategic management process that become
excessively formal. Processes that become this "established" lack innovation and
creativity and can stifle the ability of the organization to develop creative strategies.
In this scenario, the strategic management process has become the very tool that now
inhibits the organization's ability to change and adapt.

A third way that flexibility can be impeded is through a well-executed alignment and
integration of the strategy within the organization. An organization that is well aligned
with its strategy has addressed its structure, board, staffing, and performance and
reward systems.

This alignment ensures that the whole organization is pulling in the right direction,
but can inhibit the organization's adaptability. Again, there are a variety of newer
approaches to strategy development used in the private sector (they haven't been
widely accepted in the not-for-profit sector yet) that build strategy and address the
issues of organizational adaptability.

.
 Vision & mission Statement
Vision

A vision statement identifies where the organization wants or intends to be in

future or where it should be to best meet the needs of the stakeholders. It
describes dreams and aspirations for future. For instance, Microsofts vision is
to empower people through great software, any time, any place, or any
device. Wal-Marts vision is to become worldwide leader in retailing.

A vision is the potential to view things ahead of themselves. It answers the

question where we want to be. It gives us a reminder about what we attempt
to develop. A vision statement is for the organization and its members, unlike
the mission statement which is for the customers/clients. It contributes in
effective decision making as well as effective business planning. It
incorporates a shared understanding about the nature and aim of the
organization and utilizes this understanding to direct and guide the
organization towards a better purpose. It describes that on achieving the
mission, how the organizational future would appear to be.

An effective vision statement must have following features-

a. It must be unambiguous.

b. It must be clear.

c. It must harmonize with organizations culture and values.

d. The dreams and aspirations must be rational/realistic.

e. Vision statements should be shorter so that they are easier to

memorize.

In order to realize the vision, it must be deeply instilled in the

organization, being owned and shared by everyone involved in the
organization

Mission Statement

Mission statement is the statement of the role by which an organization

intends to serve its stakeholders. It describes why an organization is operating
and thus provides a framework within which strategies are formulated. It
describes what the organization does (i.e., present capabilities), who all it
serves (i.e., stakeholders) and what makes an organization unique (i.e., reason
for existence).
A mission statement differentiates an organization from others by explaining
its broad scope of activities, its products, and technologies it uses to achieve
its goals and objectives. It talks about an organizations present (i.e., about
where we are). For instance, Microsofts mission is to help people and
businesses throughout the world to realize their full potential. Wal-Marts
 mission is To give ordinary folk the chance to buy the same thing as rich
people. Mission statements always exist at top level of an organization, but
may also be made for various organizational levels. Chief executive plays a
significant role in formulation of mission statement. Once the mission
statement is formulated, it serves the organization in long run, but it may
become ambiguous with organizational growth and innovations.

In todays dynamic and competitive environment, mission may need to be

redefined. However, care must be taken that the redefined mission statement
should have original fundamentals/components. Mission statement has three
main components-a statement of mission or vision of the company, a statement
of the core values that shape the acts and behaviour of the employees, and a
statement of the goals and objectives.

Features of a Mission

Mission must be feasible and attainable. It should be possible to achieve it.

Mission should be clear enough so that any action can be taken.
It should be inspiring for the management, staff and society at large.
It should be precise enough, i.e., it should be neither too broad nor too narrow.
It should be unique and distinctive to leave an impact in everyones mind.
It should be analytical,i.e., it should analyze the key components of the
strategy.
It should be credible, i.e., all stakeholders should be able to believe it.
Importance of Vision and Mission Statements

One of the first things that any observer of management thought and practice asks is
whether a particular organization has a vision and mission statement. In addition, one
of the first things that one learns in a business school is the importance of vision and
mission statements.

This article is intended to elucidate on the reasons why vision and mission
statements are important and the benefits that such statements provide to the
organizations. It has been found in studies that organizations that have lucid,
coherent, and meaningful vision and mission statements return more than double the
numbers in shareholder benefits when compared to the organizations that do not have
vision and mission statements. Indeed, the importance of vision and mission
statements is such that it is the first thing that is discussed in management textbooks
on strategy.

Some of the benefits of having a vision and mission statement are

discussed below:

Above everything else, vision and mission statements provide unanimity of

purpose to organizations and imbue the employees with a sense of belonging
and identity. Indeed, vision and mission statements are embodiments of
organizational identity and carry the organizations creed and motto. For this
purpose, they are also called as statements of creed.

Vision and mission statements spell out the context in which the organization
operates and provides the employees with a tone that is to be followed in the
organizational climate. Since they define the reason for existence of the
 organization, they are indicators of the direction in which the organization
must move to actualize the goals in the vision and mission statements.

The vision and mission statements serve as focal points for individuals to
identify themselves with the organizational processes and to give them a sense
of direction while at the same time deterring those who do not wish to follow
them from participating in the organizations activities.

The vision and mission statements help to translate the objectives of the
organization into work structures and to assign tasks to the elements in the
organization that are responsible for actualizing them in practice.

To specify the core structure on which the organizational edifice stands and to
help in the translation of objectives into actionable cost, performance, and
time related measures.

Finally, vision and mission statements provide a philosophy of existence to the

employees, which is very crucial because as humans, we need meaning from

Goals and Objectives

A goal is a desired future state or objective that an organization tries to

achieve. Goals specify in particular what must be done if an organization is to
attain mission or vision. Goals make mission more prominent and concrete.
They co-ordinate and integrate various functional and departmental areas in an
organization. Well made goals have following features-

These are precise and measurable.

These look after critical and significant issues.
 These are realistic and challenging.
These must be achieved within a specific time frame.
These include both financial as well as non-financial
components.

Objectives are defined as goals that organization wants to achieve over a

period of time. These are the foundation of planning. Policies are developed in
an organization so as to achieve these objectives. Formulation of objectives is
the task of top level management. Effective objectives have following
features-

These are not single for an organization, but multiple.

Objectives should be both short-term as well as long-term.
Objectives must respond and react to changes in environment, i.e.,
they must be flexible.
These must be feasible, realistic and operational.

the work to do and the vision and mission statements provide the necessary meaning
for working in a particular organization.

As can be seen from the above, articulate, coherent, and meaningful vision and
mission statements go a long way in setting the base performance and actionable
parameters and embody the spirit of the organization. In other words, vision and
mission statements are as important as the various identities that individuals have in
their everyday lives.

It is for this reason that organizations spend a lot of time in defining their vision and
mission statements and ensure that they come up with the statements that provide
meaning instead of being mere sentences that are devoid of any meaning
 Strategic Management Process - Meaning, Steps and Components

The strategic management process means defining the organizations 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 its competitors; and fixes
goals to meet all the present and future competitors and then reassesses each strategy.

Strategic management process has following four steps:

 1. 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.

2. 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.

3. Strategy Implementation- Strategy implementation implies making the

strategy work as intended or putting the organizations chosen strategy into
action. Strategy implementation includes designing the organizations
structure, distributing resources, developing decision making process, and
managing human resources.

4. 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 its 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 situations 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.