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Notes of business policy and strategic management
1. Strategy :- It includes competitive moves and business approaches that
managers adopted because of satisfying the needs of the customer and to
achieve objectives of the organization. According to William F. Glueck “A
unified, comprehensive and integrated plan design to assure that the
basic objectives of the enterprise are achieved.”
2. Corporate Strategy :- It is the growth strategy of the firm. It is
formulated by the top managers. It includes major decisions like
determinations of business lines, expansion and growth, diversification,
takeover and mergers, new investment decisions and so on. It help an
organization to achieve and maintain success. It set the direction that the
organization has to follow. The basic objective of the corporate strategy is
to accept opportunities and remove threats. It also help to build
competitive advantage. The characteristics of the corporate strategy are
explained as below:
It is long range in nature but also valid for short range situations.
It is action oriented and specific then objectives.
Notes of business policy and strategic management
It is multi pronged and integrated.
It is flexible and dynamic.
It is formulated at top management level.
It is meant to cope with a competitive setting.
It flows out goals and objectives of the organization.
It gives importance to combination, sequence, timing, direction and
path for various moves and actions taken by managers to handle
uncertainties of the environment.
It is helpful in decision making process.
3. Strategic Management :- It refer to the process of forming a strategic
vision, setting objectives, crafting a strategy, implementing and
executing the strategy and then whatever the corrective adjustments are
taken in the visions, objectives, strategy and execution are deemed
appropriate. The framework of strategic management process can be
describes in five sequence steps which are as follow :
Stage I – Where are we now? (Beginning)
Stage II – Where are we wants to be? (Ends)
Notes of business policy and strategic management
Stage III – How might we get there? (Means)
Stage IV – Which way is best? (Evaluation)
Stage V – how can we insure arrival? (Control)
There are mainly two objectives for follow strategic management
process which are as follow:
To create competitive advantage so that the company can
perform well to have dominance over the market.
To guide the company successfully through all changes in the
environment.
The importance of strategic management process is explained
as follow:
It helps organization to be more proactive then reactive. It is
very helpful to organization to obtain information from the
turbulent and dynamic environment therefore they are able to
control their own destiny in a better way.
Notes of business policy and strategic management
It provides guidance to organization at any crucial or complex
issue. It also provide framework for all major decisions taken
in the organization.
It prepares the organization to face the future and act as
pathfinder for various opportunities from the environment.
It helps organization to know the mistakes and pitfalls. It
helps organization to avoid any costly mistake in product or in
investment.
Over a certain time period, it build certain core competencies
for the organization that help it in the fight of survival and
growth.
The major stages in the strategic management process are as
follow:
Develop vision and mission statements
Perform internal and external audit
Establish long term objectives
Generate, evaluate and select strategies
Notes of business policy and strategic management
Implement strategies considering management issues
Implement strategies marketing, finance, accounting etc.
Measure and evaluate performance
4. Strategic decision making :- It is a managerial process and a function
of choosing a particular course of action out of several alternative courses
for the purpose of achieving the organizational goals. They are different
in nature than all other decisions which are taken at various level of the
organization during day to day working. The major dimensions of it are as
follow:
Strategic issues require top-management decisions
Strategic issues involve the allocation of large amount of
company resources
Strategic issues are likely to have a significant impact on the
long term prosperity of the firm
Strategic issues are future oriented
Strategic issues have multi business consequences
Notes of business policy and strategic management
Strategic issues necessitate consideration of factors in the
firm’s external environment
5. Strategic Vision :- A strategic vision describe organization’s aspirations
for the business and provide view of the position where the organization
is going. It guides the organization in a particular direction, chart a
specific path to follow in preparing for the future and create identity of
the organization. It is a road map of the future of the company and
provide guidance about technology and customer, geographic and
product markets to be pursued and the kind of company that
management is trying to create. There are three elements of the strategic
vision are as follow:
Coming up with the mission statement that defines what business the
company is presently in and convey the essence of who we are and
what we are now?
Using the mission statement as basis for deciding on a long term
course making choices about where we are going?
Notes of business policy and strategic management
Communicating the strategic vision in clear terms that arouse
organization wide commitment.
6. Mission Statements :- It is describe the present capabilities of the
organization and an answer to the question who we are and what we do?
It describe what customer it serves, what need it satisfies, what type of
product it offer. It is an expression of the growth ambition of the
organization. It broadly describe an organization present capabilities,
customer focus activities and business make up. The following points
must be considered while writing a mission statement of the company:
To establish the special identity of the business that distinct it
from other similar companies.
Needs which business tries to satisfy, customers it wish to
target, the technologies it use and the activities it performs.
Good mission statements should be unique for the
organization for which they are developed.
Notes of business policy and strategic management
The mission of the company should not be to make profit.
Surplus may be required for survival and growth but cannot be
mission of the company.
7. Shared vision and vision shared :- When the individuals are able to
bring organizational vision close to their heart and minds they have
shared vision. It is a force that creates sense of commonality that
permeate the organization to diverse the activities. Vision shared shows
imposition of vision from top management. It may demand compliance
rather than commitment. For the success of the organization shared
vision is better than vision shared.
8. Three levels of strategy formulation :- A large organization is multi
divisional organization that convert in several businesses. It has separate
divisions and manages each of these. There are three level of strategy in
the management of business which are as follow:
Corporate level : This level includes chief executing officers and
other top management executives. There individuals have
responsibilities of decision making within the organization. The role of
Notes of business policy and strategic management
corporate level managers is to development of strategies for the
whole organization. This role includes defining mission and goals,
determining the different businesses it should be in, allocating
resources among different businesses and so on.
Business level :- The general managers are liable to develop
strategies for individual business areas for the different divisions like
finance, production and marketing. The main role of this managers is
to translate the statements of directions come from the corporate
level into strategies for individual businesses.
Functional level :- Functional level of managers are liable for the
specific business functions or operations such as human resources,
purchasing, product development, customer service and so on.
9. Difference between mission and vision :
Mission Vision
Mission statement concentrates on the Present. Vision concentrates on the future.
It provide path to realize the vision and Direct
impact on success.
It can be helpful to achieve defined
Objectives.
Notes of business policy and strategic management
It can remain same if crafted well. It cannot remain same for long time as
Change as per environment is made in it.
I hope that above notes are useful to all the students who are
appearing for May 2016 exam. All the best to all students. In case of
any query contact me into my mail id divyeshpithava@rediffmail.com.
Thank you.
CAclubindia
