True or False
a) Strategic decisions are rare in nature. T
b) Strategic management involves the decision making which has long term perspective.
T
c) One way for organizations to adapt to changes in external environment is by imitating
successful organizations. F
d) The purpose of basic financial planning was to propose annual budget. T
e) Mission is the purpose or reason for the organization’s existence. T
f) Strategy is nothing but a plan. (T/F) T
g) Strategy operates at different levels of business.(T/F)T
h) Strategies are formulated at corporate, SBU (business) and ______________level. (Functional)
i) Strategic management is the Dynamic process of formulation, ____________, evaluation and
control of strategies to realize the organizations strategic intent. (Implementation)
j) The process of strategic management consists of four phases: establishing the strategic intent,
formulation, implementation, evaluation and control. (T/F) T
Short Answers type questions
a) Why strategic management is important for managers in current scenario?
b) What are the factors for evaluation of strategy?
c) What are the factors to be considered for setting of objectives?
d) What is VRIO framework?
e) What are the planning activities at corporate level?
f) Define SBU and also mention its characteristics.
a) What is Corporate Strategy?
b) Define Strategic Management and explain its meaning ?
c) Explain vision and mission?
d) Why strategic management is important in business now a days?
e) Explain the concept of planning?
f) How many types of planning we have?
Long answers type questions:
a) Discuss the different stages in evolution of strategic management.
b) What are the characteristics of strategic decisions? Discuss different approaches of
strategic decision making.
c) What is focus of planning at corporate, business unit and functional level?
d) What do you mean by functional strategy?
e) What do you understand by strategic decision making?
f) How corporate strategy is different from business strategy?
g) How is Porter’s five forces framework useful in analysing external environment?
h) What are the different ways with the help of which organizations can obtain fit with their
environment so that to sustain in long term?
i) What is value chain analysis? How can managers take advantage of this tool?
j) What do you mean by strategic management? Discuss its characteristics and scope?
k) Explain importance of Business policy and strategic management?
l) Explain the term ‘Business’ with the help of example?
m) What are the different dimensions of general environment that influence an industry and
firms within it?
n) Discuss the different elements of “Hierarchy of Strategic Intent”.
o) How can managers analyse internal environment on the basis of resource based view
framework?
p) What are the various levels at which strategy may exist in an organization?
q) What is your vision as an individual?
r) Explain BCG matrix with relevant example from industry?
IMPORTANT QUESTIONS FOR BBA V _ MID TERM EXAM:
Importance Of Strategic Management
Planning or designing a strategy involves a great deal of risk and resource assessment, ways
to counter the risks, and effective utilization of resources all while trying to achieve a
significant purpose.
An organization is generally established with a goal in mind, and this goal defines the purpose
for its existence. All of the work carried out by the organization revolves around this particular
goal, and it has to align its internal resources and external environment in a way that the goal
is achieved in rational expected time.
Undoubtedly, since an organization is a big entity with probably a huge underlying
investment, strategizing becomes a necessary factor for successful working internally, as well
as to get feasible returns on the expended money.
Strategic Management on a corporate level normally incorporates preparation for future
opportunities, risks and market trends. This makes way for the firms to analyze, examine and
execute administration in a manner that is most likely to achieve the set aims. As such,
strategizing or planning must be covered as the deciding administration factor.
Strategic Management and the role it plays in the accomplishments of firms has been a
subject of thorough research and study for an extensive period of time now. Strategic
Management in an organization ensures that goals are set, primary issues are outlined, time
and resources are pivoted, functioning is consolidated, internal environment is set towards
achieving the objectives, consequences and results are concurred upon, and the organization
remains flexible towards any external changes.
As more and more organizations have started to realize that strategic planning is the
fundamental aspect in successfully assisting them through any sudden contingencies, either
internally or externally, they have started to absorb strategy management starting from the
most basic administration levels. In actuality, strategy management is the essence of an
absolute administration plan. For large organizations, with a complex organizational structure
and extreme regimentation, strategizing is embedded at every tier.
Apart from faster and effective decision making, pursuing opportunities and directing work,
strategic management assists with cutting back costs, employee motivation and gratification,
counteracting threats or better, converting these threats into opportunities, predicting
probable market trends, and improving overall performance.
Keeping in mind the long-term benefits to organizations, strategic planning drives them to
focus on the internal environment, through encouraging and setting challenges for
employees, helping them achieve personal as well as organizational objectives. At the same
time, it is also ensured that external challenges are taken care of, adverse situations are
tackled and threats are analyzed to turn them into probable opportunities.
Factors of Evaluation of strategy:
Strategy Evaluation is as significant as strategy formulation because it throws light on the
efficiency and effectiveness of the comprehensive plans in achieving the desired results. The
managers can also assess the appropriateness of the current strategy in to days dynamic
world with socio-economic, political and technological innovations. Strategic Evaluation is
the final phase of strategic management.
The significance of strategy evaluation lies in its capacity to co-ordinate the task
performed by managers, groups, departments etc, through control of performance.
Strategic Evaluation is significant because of various factors such as - developing inputs for
new strategic planning, the urge for feedback, appraisal and reward, development of the
strategic management process, judging the validity of strategic choice etc.
The process of Strategy Evaluation consists of following steps-
1. Fixing benchmark of performance - While fixing the benchmark, strategists
encounter questions such as - what benchmarks to set, how to set them and how to
express them. In order to determine the benchmark performance to be set, it is
essential to discover the special requirements for performing the main task.. The
organization can use both quantitative and qualitative criteria for comprehensive
assessment of performance. Quantitative criteria includes determination of net
profit, ROI, earning per share, cost of production, rate of employee turnover etc.
Among the Qualitative factors are subjective evaluation of factors such as - skills and
competencies, risk taking potential, flexibility etc.
2. Measurement of performance - The standard performance is a bench mark with
which the actual performance is to be compared. The reporting and communication
system help in measuring the performance.
3. Analyzing Variance - While measuring the actual performance and comparing it with
standard performance there may be variances which must be analyzed. The
strategists must mention the degree of tolerance limits between which the variance
between actual and standard performance may be accepted.
4. Taking Corrective Action - Once the deviation in performance is identified, it is
essential to plan for a corrective action. If the performance is consistently less than
the desired performance, the strategists must carry a detailed analysis of the factors
responsible for such performance.
Factors/ Characteristics of Objectives
It must be understandable.
It should be concrete and specific.
It should be related to a time frame.
It should be measurable and controllable.
Different objectives must correlate with each other.
It must be set within constraints.
VRIO Framework:
The VRIO framework is a strategic analysis tool designed to help organizations uncover and
protect the resources and capabilities that give them a long-term competitive advantage. The
framework should be put into play after the creation of a vision statement, but before the
strategic planning process. Why? The differentiators and advantages you identify will
determine how to approach the marketplace and inform strategic decisions that shape the
fate of your company.
The VRIO framework uncovers “sustained competitive advantage.”
VRIO is an acronym for a four-question framework of value, rarity, imitability,
and organization. These four components are typically approached in the style of a decision
tree:
Value: Do you offer a resource that adds value for customers? Are you able to exploit an
opportunity or neutralize competition with an internal capability?
o No: You are at a competitive disadvantage and need to reassess your resources and
capabilities to uncover value.
o Yes: If value is established, move on in your VRIO analysis to rarity.
Rarity: Do you control scarce resources or capabilities? Do you own something that’s hard to
find yet in demand?
o No: You have value but lack rarity, putting your company in a position of competitive
parity. Your resources are valuable but common, which makes competing in the
marketplace more challenging (but not impossible). It’s recommended to go back one step
and reassess.
o Yes: With value and rarity identified, your next hurdle is imitability.
Imitability: Is it expensive to duplicate your organization’s resource or capability? Is it difficult
to find an equivalent substitute to compete with your offerings?
o No: If your resource has value and rarity, but is affordable or easy to copy, you have
a temporary competitive advantage. It will require considerable effort to stay ahead of
competitors and differentiate your services—go back one step and reassess.
o Yes: You offer something that’s valuable, rare, and hard to imitate—now the focus is on
your organization.
Organization: Does your company have organized management systems, processes,
structures, and culture to capitalize on resources and capabilities?
o No: Without the internal organization and support, it will be difficult to fully realize the
potential of your valuable, rare, and costly-to-imitate resources. Your company will have
a unused competitive advantage and will need to reassess how to attain the needed
organization.
o Yes: Your company has achieved the ultimate goal of sustained competitive
advantage when it has successfully identified all four components of the VRIO framework.
Planning Activities at corporate level:
Establishing Corporate Mission, Objectives and Goals:
Establishing Strategic Business Units:
A strategic business unit has the following characteristics:
Planning for Business Growth:
a. Market Penetration:
b. Market Development:
c. Product Development:
Characteristics/ features of SBU:
The strategic business unit (SBU) is a separate, specialized subsystem in the company, which
acts as an independent entity. SBU concept has been applied first time by the U.S. company
General Electric. Strategic business units are small businesses with a high functional
and decision-making autonomy. Such units may or may not need to work closely with
companies, from which they have been separated. They can be used to prepare
the diversified company's strategy.
The main features of strategic business units are: They are present in the organizational
structure, ... SBU has divisional structure, which is determined by the size of production,
technology and research activities, financial and accounting processes, and marketing
activities.
The main features of strategic business units are:
They are present in the organizational structure,
They are organizational units without separate legal personality,
They utilize "product-market" strategy,
Type of activity performed by them is of crucial and decisive importance for the whole
company,
Functional and decision-making autonomy include: laboratory testing, production
preparation, production, finance, accounting and marketing.
Different stages in Evolution of strategic management:
The process of strategic management includes goal setting, analysis, strategy formation,
strategy implementation, and strategy monitoring. Let’s take a look at how each of these
steps ties into the overall strategic management process.
Goal Setting
The first part of strategic management is to plan and set your goals. Set the short- and long-
term goals of the organization and make sure that these are shared with all members of the
organization. Explain and share how each member of the team will have an impact on the
organization reaching this goal. This will help give each member of the team a sense of
purpose and will give their job meaning.
Analysis
During this stage of the process, it is important to gather as much information and data as
possible. This information will be integral to creating your strategy to reach your goals. This
step of strategic management entails becoming aware of any issues within the organization
and understand all of the needs of the organization.
Strategy Formation
In this strategic management step, you will use all the intelligence and data you have gathered
to formulate the strategy that you will use to reach whatever goal you set. Identify useful
resources you have, and also seek out other resources you will need to set up your strategy.
Strategy Implementation
This is arguably the most important part of the entire strategic management process. At this
point, each member of the team should have a clear understanding of the plan and should
know how they play a part within it. This is the stage where your strategy is put into action.
Strategy Monitoring
During this stage, your strategy will already be in play. At this point, you should be managing,
evaluating, and monitoring each part of your strategy, and ensuring that it aligns with the end
goal. If it does not, this is the time where you would make tweaks and adjustments to
strengthen the overall plan. This is the stage where you will track progress and have the
opportunity to deal with any unexpected shifts in the strategy.
Characteristics and approaches of Strategic
decision making:
Strategic decisions are made by the top level management and by the strategists whereas the
operational decisions are made by the managers at lower levels. Strategic decisions are
related to the contribution to the organizational objectives and goals significantly. They
determine the direction and destination of the organization.
CHARACTERISTICS and approaches OF STRATEGIC
DECISIONS
The characters of strategy and strategic decisions are as follows:
1. Concerned with Scope of an Organization’s activity
Strategic decisions are likely to be concerned with the scope of an organization’s activities.
The activities vary from company to company. Some companies activities are limited to one
product whereas some other organization’s activities include a wide range of
products/services. The range of organizational activities are fundamental to strategic
decisions.
2. Matching of activities with environment
Strategy is to do with the matching of the activities of an organization to the internal and
external environment in which it operates. In fact, strategies are formulated, evaluated and
the best among the alternatives based on the environmental threats and opportunity —
analysis (ETOP) and strength weakness, opportunities — and threats (SWOT) analysis.
3. Matching of activities with resource capability
Strategy is also to do with the matching of organization’s activities to its resource capability.
Strategy analysis and choice is based not only on the opportunities and threats of the
environment but also on the resource base of the organization. The resource base includes
financial, human, material and informational resources.
4. Matching of activities with resource base
Strategic decisions have major resource implications for an organization. Basically, the
organization, while formulating a strategy, should be based on the available resources. The
organizations, then, search for the opportunities provided by the environment which would
match with the resource base to a greater extent.
5. Affects operational decisions
Strategic decisions affect operational decisions, strategic decisions are the basis for
formulating and making operational decisions. The changes in strategic decisions bring
corresponding changes in operational decisions.
6. Affects nature and magnitude of strategies
The strategies of organization will also be affected by the values and expectations of the
strategic decision-makers in addition to the environmental forces and resources base, for
example, the managing director, general managers and other strategists have the power to
formulate strategies. The values and expectations of these strategists affect the nature and
magnitude of the strategies.
7. Affects long-term direction of company
Strategic decisions are likely to affect the long-term direction of the company. Strategies are
formulated to achieve the company’s mission and objectives which determine the long run
direction of the company.
Corporate Planning at business unit and functional
level:
Read Corporate planning, corporate strategy, functional strategy.
Porter’s five forces framework:
Value chain analysis
Environmental appraisal :
(Macro and Micro, Internal and external environment of company, PESTLE)
