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Tactics is a scheme for a specific manoeuvre whereas strategy is the overall plan for deploying resources to establish a favourable position. Strategies are formulated at all these levels because single strategy is not only inadequate but also insufficient. These different levels of strategic decision making and strategic formulation in any organization include corporate-level, business-level and functional-level.
It takes major strategic decisions and formulates corporate level strategies. These corporate-level strategies basically involve taking decisions about allocation of resources among different businesses of the organization, transferring resources from one set of business to other and also managing and nurturing a portfolio of business in such a way that the overall corporate objectives are achieved.
Such as ITC a cigarette company diversified into the hotel industry. Bombay Dyeing, a textile organization took decision to enter into the readymade garment business. The corporate level strategies decide the investment portfolio of an organization. The middle level or business-level is the level, which includes business managers and corporate managers. Strategies formed at this level are comprehensive plans providing objectives for SBUs, allocation of resources and coordination of the SBUs for optimal performance.
At this level the strategies decided at corporate level, are translated into concrete objectives and strategies for individual business. At this level the courses of action are adopted by an organization for each of its business separately to serve particular customer group or groups, for providing value to the customers by satisfying their needs.
At business level an organization decides that it would take which route to achieve its corporate objectives. Whether it would be a cost leader, be different from others or focus at a particular market. For example Moser Baer India fulfilled corporate objectives by selecting to be a low cost leader in CD manufacturing.
Also Philips India Ltd. To have better strategic planning, business products can be grouped into strategically-related business units known as SBU, so that they are manageable.
These decisions may be concerned with possessing new resources, organizing others or reallocating others. It is all about what they want the organization to be like and to be about. The techniques for strategic planning may vary but the substantive issues are essentially the same.
A great deal of strategic thinking must go into developing a strategic plan and, once developed, a great deal of strategic management is required to put the plan into action. Strategic planning is a useful tool, of help in managing the enterprise, especially if the strategy and strategic plans can be successfully deployed throughout the organization. Senior management should focus on the strategic issues, on the important issues facing the business as a whole, including where it is headed and what it will or should become.
As many businesses had just started operations and were mostly in a single product line, there arose a need for policy making. As companies grew they expanded their products and they catered to more customers and which in turn increased their geographical coverage. The expansion brought in complexity and lot of changes in the external environment. Hence there was a need to integrate functional areas.
This integration was brought about by framing policies to guide managerial action. Especially after II World War there was more complexity and significant changes in the environment. Competition increased with many companies entering into the market. Policy making and functional area integration was not sufficient for the complex needs of a business. As the organization became large and the layers of management increased alongwith were environment al uncertainties, basic financial planning and foreast based planning became insufficient.
As the only focused on operational control. Strategic planning develops increasing responsiveness to markets and competition by trying to think strategically, later Strategic management evolved which seeks a competitive advantage and a successful future by managing all resources. Thus the evolution of the strategic management includes a consideration of strategy implementation and evaluation and control, in addition to the emphasis on the strategic planning.
General Electric, one of the pioneers of the strategic planning, led the transition from the strategic planning to strategic management during the s. By the s, most corporations around the world had also begun the conversion to strategic management.
A part of strategic management has now evolved to the point that its primary value is to help the organization operate successfully in dynamic, complex environment. To be competitive in dynamic environment, corporations have to become less bureaucratic and more flexible. In stable environments such as those that have existed in the past, a competitive strategy simply involved defining a competitive position and then defending it.
Organizations must develop strategic flexibility: the ability to shift from one dominant strategy to another. Strategic flexibility demands a long term commitment to the development and nurturing of critical resources. It also demands that the company become a learning organization It means an organization skilled at creating, acquiring, and transferring knowledge and at modifying its behaviour to reflect new knowledge and insights.
Learning organizations avoid stability through continuous self-examinations and experimentations. People at all levels, not just top the management, need to be involved in strategic management: scanning the environment for critical information, suggesting changes to strategies and programs to take advantage of environmental shifts, and working with others to continuously improve work methods, procedures and evaluation techniques.
At Xerox, for example, all employees have been trained in small-group activities and problem solving techniques. They are expected to use the techniques at all meetings and at all levels. 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. A good strategic management process will help any organization to improve and to gain more profits. Every organization should know that performance of the management process is very important. There is a big difference between planning and performing.
The organization will be successful only if it follows all the stages of the strategic management process. Strategic management process has following four steps- a 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.
After conducting environment scanning, managers formulate corporate, business and functional strategies. Evaluation makes sure that the organizational strategy as well as its implementation meets the organizational objectives. It can also cause an organization to define itself too narrowly.
Despite a substantial body of work establishing the strategic influence of middle managers, the belief in a simple link between top management team characteristics and performance, has persisted. In strategic management, strategist plays a major role because a process of strategic management involves careful consideration on the part of strategist. Strategists are key person involved in strategic management process.
They are individuals or groups who are primarily involved in the formulation, implementation and evolution of strategy. They perform key activities related to various aspects of strategic management. In an organization different persons at different key positions can play a major role in it.
All these individuals such as members of the board of directors, chief executive officer, corporate planning staff, entrepreneur etc are strategist and their roles are as follows: 1 Role of Board of Directors The Board of Directors of any organization is responsible for the governance of it.
The Board of Directors is a body of elected or appointed members who jointly oversee the activities of a company or an organization. The Board of Directors play different roles in different types of organization. Some of their major roles are as follows: i To guide senior management in setting and achieving corporate level objectives.
SBU-level strategy formulation and implementation are the chief responsibilities of the SBU-level executives. Their major roles in strategic management are as follows: i Articulates strategic vision and provides leadership. It helps the management in strategy formulation, implementation and evaluation. For example, Essar Steel had a corporate planning cell which helps in planning and developing diversification and growth plans for it. Several roles played by the corporate planning staff in strategic management are as follows: i Supporting role in strategic management.
These consultants may be individuals, academicians, consultancy organizations, specialising in strategic management. They perform various strategic roles required to render the services. They do not play any active role in strategy formulation, but they play a significant role in strategy implementation.
Some of their roles in strategic management are as follows: i Involved in implementation of functional strategy. Age, Value Systems, Intelligence, Cognitive style etc. It defines strategy as a course of action or a game plan.
Strategies are formulated and implemented at different levels. The corporate- level strategy applies to large organizations which are divided into a number of discrete units and is responsibility of the top level management. The business level strategy is related to different businesses of any organization and the functional level strategy is concerned with various functions in any organization. There are different types of decisions which are taken in any organization i.
Strategic decisions are more complex and varied in nature and related with strategic tasks and taken by the top level management. Strategic management has evolved gradually with the growing needs of the management. Strategic management process involves four significant steps i. Strategists are those key persons or groups who play vital roles in strategy formulation and implementation at different levels in any organization.
A host of issues in strategic decision making has been taken up finally. It involves four significant steps i. All the successful business enterprises today constantly take in new information about their markets, customers, and operating environments. Then management uses that knowledge and data to shape new strategic directions, to reorganize how they respond to marketplace demands, and to ensure that their views regarding all aspects of the business are fresh and viable.
In a case where such alignment is lacking, it is possible that the organization and its employees indulge in wastage of time and efforts to pursue a particular set of narrow objectives that do not necessarily take them towards their intended state of the future for example, focusing excessively on quality and manufacturing a product that is so expensive and unaffordable, at the cost of profitability.
Therefore, it is the broader intentions that define the specific milestones the short-term intentions that the organization needs to cross in order to reach the long-term intent. These terms become the base for strategic decisions and actions. Harvard Business Review, in which they argued that in order to achieve success; a company must reconcile its end to its means through Strategic Intent.
They were of the view that companies that have acquired global leadership over the past two decades or so invariably began with ambitions that were out of all proportion to their resources and capabilities.
Still, they were able to create an obsession with winning at all levels of the organization and then sustained that mindset over the entire period of achieving a global leadership. Strategic intent implies a considerable stretch for an organization. Current capabilities and resources are not going to prove sufficient which forces the organization to be more innovative for optimizing on them.
It is in a way coming out of the comfort zone. Top management then challenges the organization to close the gap by systematically building new advantages. This is more relevant with the quality of the top management think tank. It is what the firm would ultimately like to become. Vision states what an organization wishes to achieve in the long run. The definition itself is comprehensive and states clearly the futuristic position.
It refers to the broad category of long-term intentions that the organization wishes to pursue. It can be equated to a dream; the aspirations of the organization for its future. It may seem unreal to actually achieve it even in the long term; yet, it provides the direction and energy to work towards it. Shared vision, is a common mental image of the future being shared by the members of the organization, which integrates their efforts towards achieving that future state. The vision statement categorically tells us the direction in which the organization is headed.
It should be highly motivating, inspiring, and challenging. Good vision statements act like slogans that drive people towards a dream.
The larger purpose binds people together and creates enthusiasm for performing the set of activities that are required to reach the dedicated ends. The mission statement makes the vision statement more tangible and comprehensible. Although, these two terms are often used interchangeably, yet both stand for different meanings. David F. In the organizational context, the mission of an organization is its reason for existence, what it sees as its essential purpose.
This is often written down in the form of a mission statement, which embodies its philosophies, goals, ambitions etc. Any entity that attempts to operate without a mission statement faces the risk of going haywire without having the ability to verify that it is on its intended course.
Managers, especially in large organizations, may find it difficult to relate to broad vision statements. Mission has a societal orientation. It is a statement, divulging what an organization, intends to do for the society. Through the mission statement, an organization gives a public statement specifying the direction for different activities it would like to carry on. It motivates employees to work in the interest of the organization along with a sense of purpose.
It specifies the role, which the organization plays in society. It is the basic reason for existence. It has long term perspective. While a business must continually adapt to its competitive environment, there are certain core ideas that remain relatively steady and provide guidance in the process of strategic decision-making. These unchanging ideas form the business vision, as discussed in the above segment, and are expressed in the company mission statement. These include: o Business principles like commitment to various stakeholders.
The identity of the organization delimits the scope of the business and identifies the key sources of competitive advantage for that business. The scope of this definition typically serves as the basis of further decisions on corporate strategy and competition. MetLife Inc. We thereby earn their loyalty. NIKE Inc. To Bring Inspiration and innovation to every athlete in the world. ITC To enhance the wealth generating capability of the enterprise in a global environment, delivering superior and sustainable stakeholder value.
Coca Cola Our Roadmap starts with our mission, which is enduring. It declares our purpose as a company and serves as the standard against which we weigh our actions and decisions. The sequence of the statements in the mission typically signifies the relative priority of the various values added.
A well-conceived vision consists of core ideology and envisioned future. Core ideology rests on core values. Collins and Porras have popularized this concept. Core Values are the foundation of management style in any business. They provide the justification of behavior and, therefore, exert significant influence on marketing decisions.
These are few in numbers and are central to the firm. They reflect the deeply held values of the organization and are independent of the current industry environment and management short-term trends or fads. The beliefs may have economic orientation or social orientation. The entire organization structure revolves around the philosophy coming out of core values. Good core value statements clearly delineate the observable norms of behavior, which reflect the desired values of the organization.
These core values and the related norms of behavior reflect the culture of the organization. The ways to determine whether a value is core to the organization can be understood by asking whether it would continue to be supported if circumstances changed and caused it to be seen as a liability.
If the answer is that it would be kept, then it is core value. Another way to determine which values are core is to imagine the firm moving into a totally different industry. The values that would be carried with it into the new industry are the core values of the firm.
Core values will not change even if the industry in which the company operates changes. If the industry changes such that the core values are not appreciated, then the firm should seek new markets where its core values are viewed as an asset. For example, if innovation is a core value but then 5 years down the innovation is no longer valued by the current customers, rather than seeking a change in its values, the firm should venture into new markets where innovation is advantageous.
In pursuit of our goals, we will make no compromise in complying with applicable laws and regulations at all levels. A business definition is the clear-cut statement of the business or a set of businesses, the organization engages or wishes to pursue in the future.
It also defines the scope of the organization. Business can be defined along three dimensions i. It must reflect two features: Focus - Focus of business is defined in terms of the kind of functions the business performs rather than the broad spectrum of industry in which the organization operates.
Differentiation - The next feature involved in business definition is differentiationi. Differentiation can be on several bases like quality, price, delivery, service or any other factor which the concerned market segment values.
For example, an organization can charge comparatively lower price as compared to its competitors in the same product quality segment, then price is not the differentiating factor. As against this, if the organization is charging a much lower price in the same product group excluding quality, price becomes a differentiating factor. A clear business definition is helpful in identifying several strategic choices.
The choices regarding various customer groups, various customer functions and alternative technologies give the strategists various strategic alternatives. The diversification, mergers and turnaround depend upon the business definition. Customer oriented approach of business makes the organization competitive. Business can be defined at the corporate or SBU levels. Another version of the business definition explains the business of an organization in terms of customer needs, customer groups and alternative technologies.
Oerik Abell suggests defining business along the three dimensions of customer groups, customer functions and alternative technologies.
They are developed as follows: i Customer groups are created according to the identity of the customers. It may be a gift item also. Broadly, it is more convenient to use one term rather than both. The difference between the two is simply a matter of degree and it may vary widely. All people work to achieve the objectives. Long-term perspective is translated in short-term goals.
All decisions taken at all levels of management are oriented towards accomplishment of objectives. Corporate level 2. Business unit level 3. Functional or departmental level Corporate objectives are those that relate to the business as a whole. The top management of the business usually sets them and they provide the focus for setting more detailed objectives for the main functional activities of the business. They tend to focus on the desired performance and results of the business.
It is important that corporate objectives cover a range of key areas where the business wants to achieve results rather than focusing on a single objective. It begins with broad statement of vision and mission and ends with key specific goals. These objectives are made achievable at the lower level.
Organizational problems and relationship cover a multiplicity of variables and cannot be integrated into one objective. They may be economic objectives, social objectives, political objectives etc.
Hence, multiplicity of objectives forces the strategists to balance those diverse interests. This timeframe helps the strategists to fix targets.
If objectives set are beyond the reach of managers, they will adopt a defeatist attitude. Attainable objectives act as a motivator in the organization.
Clarity and simplicity should characterize the language of formulation. These factors are: Environmental forces, both internal and external, may influence the interests of various stakeholders.
Further, these forces are dynamic by nature. Hence, objective setting must consider their influence on its process. As objectives should be realistic, the efforts be made to set the objectives in such a way so that objectives may become attainable.
For that, existing resources of enterprise and internal power structure be examined carefully. The values of the top management influence the choice of objectives. A philanthropic attitude may lead to setting of socially oriented objectives while economic orientation of top management may force them to go for profitability objective. Past is important for strategic reasons.
Organizations cannot deviate much from the past. Unnecessary deviations will bring problems relating to resistance to change. Management must understand the past so that it may integrate its objectives in an effective way.
These are summarised below: Specific The objective should state exactly what is to be achieved. Measurable An objective should be capable of measurement — so that it is possible to determine whether or how far it has been achieved Achievable The objective should be realistic given the circumstances in which it is set and the resources available to the business.
Relevant Objectives should be relevant to the people responsible for achieving them Time Bound Objectives should be set with a time frame in mind. Shareholders are generally the most powerful of these stakeholders.
In developing markets like India, the firms mainly have their strategic intents limited to market leadership in domestic markets due to limited availability of resources, whereas in developed markets, firms may intend to capture a much larger share of the global market. Depending on the nature of the economy and industry the firm is operating in, the firm determines its scope or strategic intent.
Mission: We will meet the mobile communication needs of our customers through a Error-free service delivery, b Innovative products and services, c Cost efficiency, and d Unified messaging solutions.
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