strategic management 25

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Strategic Management - An IntroductionStrategic 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 Strategic

Management 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 identifythe direction in which an organization is moving 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. 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.


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DefinitionThe 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 Strategy1. 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

Components of a Strategy StatementThe strategy statement of a firm sets the firms long-term strategic direction and broad policy directions.

It gives the firm a clear sense of direction and a blueprint for the firms activities for the upcoming years.

The main constituents of a strategic statement are as follows:


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1. Strategic Intent

An organizations strategic intent is the purpose that it exists and why it will continue to exist, providing

it maintains a competitive advantage. Strategic intent gives a picture about what an organization must

get into immediately in order to achieve the companys vision. It motivates the people. It clarifies the

vision of the vision of the company. Strategic intent helps management to emphasize and concentrateon the priorities. Strategic intent is, nothing but, the influencing of an organizations resource potential

and core competencies to achieve what at first may seem to be unachievable goals in the competitive

environment. A well expressed strategic intent should guide/steer the development of strategic intent

or the setting of goals and objectives that require that all of organizations competencies be controlled

to maximum value.

Strategic intent includes directing organizations attention on the need of winning; inspiring people by

telling them that the targets are valuable; encouraging individual and team participation as well as

contribution; and utilizing intent to direct allocation of resources. Strategic intent differs from strategic

fit in a way that while strategic fit deals with harmonizing available resources and potentials to the

external environment, strategic intent emphasizes on building new resources and potentials so as to

create and exploit future opportunities.

2. 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 organizationspresent (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 Missiona. Mission must be feasible and attainable. It should be possible to achieve it.

b. Mission should be clear enough so that any action can be taken.


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c. It should be inspiring for the management, staff and society at large.

d. It should be precise enough, i.e., it should be neither too broad nor too narrow.

e. It should be unique and distinctive to leave an impact in everyones mind.

f. It should be analytical,i.e., it should analyze the key components of the strategy.

g. It should be credible, i.e., all stakeholders should be able to believe it.

3.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 following -effective vision features have statement musta. 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.

4.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-

A. These are precise and measurable.

B. These look after critical and significant issues.


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B.These are realistic and challenging.

B.These must be achieved within a specific time frame.

B.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-

a. These are not single for an organization, but multiple.

b. Objectives should be both short-term as well as long-term.

c. Objectives must respond and react to changes in environment, i.e., they must be flexible.

B.These must be feasible, realistic and operational.

Strategic Management Process - Meaning, Steps and ComponentsThe 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.


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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.

Environmental Scanning - Internal & External Analysis of Environment

Organizational environment consists of both external and internal factors. Environment must be

scanned so as to determine development and forecasts of factors that will influence organizational

success. Environmental scanning refers to possession and utilization of information about occasions,

patterns, trends, and relationships within an organizations internal and external environment. It helps

the managers to decide the future path of the organization. Scanning must identify the threats and

opportunities existing in the environment. While strategy formulation, an organization must take

advantage of the opportunities and minimize the threats. A threat for one organization may be an

opportunity for another.


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Internal analysis of the environment is the first step of environment scanning. Organizations should

observe the internal organizational environment. This includes employee interaction with other

employees, employee interaction with management, manager interaction with other managers, and

management interaction with shareholders, access to natural resources, brand awareness,

organizational structure, main staff, operational potential, etc.

As business becomes more competitive, and there are rapid changes in the external environment,

information from external environment adds crucial elements to the effectiveness of long-term plans. As

environment is dynamic, it becomes essential to identify competitors moves and actions. Organizations

have also to update the core competencies and internal environment as per external environment.

Environmental factors are infinite, hence, organization should be agile and vigile to accept and adjust to

the environmental changes. For instance - Monitoring might indicate that an original forecast of the

prices of the raw materials that are involved in the product are no more credible, which could imply the

requirement for more focused scanning, forecasting and analysis to create a more trustworthy

prediction about the input costs. In a similar manner, there can be changes in factors such as

competitors activities, technology, market tastes and preferences.

While in external analysis, three correlated environment should be studied and analyzed

immediate / industry environment

national environment

broader socio-economic environment / macro-environment

Examining the industry environment needs an appraisal of the competitive structure of the

organizations industry, including the competitive position of a particular organization and its main

rivals. Also, an assessment of the nature, stage, dynamics and history of the industry is essential. It also

implies evaluating the effect of globalization on competition within the industry. Analyzing the national

environment needs an appraisal of whether the national framework helps in achieving competitive

advantage in the globalized environment. Analysis of macro-environment includes exploring macro-

economic, social, government, legal, technological and international factors that may influence the

environment. The analysis of organizations external environment reveals opportunities and threats for

an organization.

Strategic managers must not only recognize the present state of the environment and their industry but

also be able to predict its future positions.

Steps in Strategy Formulation Process


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Strategy formulation refers to the process of choosing the most appropriate course of action for the

realization of organizational goals and objectives and thereby achieving the organizational vision. The

process of strategy formulation involves six main steps. Though these steps do not follow a rigid

chronological order, however they are very rational and can be easily followed in this order.

1. 1. Setting Organizations objectives - The key component of any strategy statement is to set thelong-term objectives of the organization. It is known that strategy is generally a medium for realization

of organizational objectives. Objectives stress the state of being there whereas Strategy stresses upon

the process of reaching there. Strategy includes both the fixation of objectives as well the medium to be

used to realize those objectives. Thus, strategy is a wider term which believes in the manner of

deployment of resources so as to achieve the objectives.

While fixing the organizational objectives, it is essential that the factors which influence the selection of

objectives must be analyzed before the selection of objectives. Once the objectives and the factors

influencing strategic decisions have been determined, it is easy to take strategic decisions.

2. Evaluating the Organizational Environment - The next step is to evaluate the general economic and

industrial environment in which the organization operates. This includes a review of the organizations

competitive position. It is essential to conduct a qualitative and quantitative review of an organizations

existing product line. The purpose of such a review is to make sure that the factors important for

competitive success in the market can be discovered so that the management can identify their own

strengths and weaknesses as well as their competitors strengths and weaknesses.

After identifying its strengths and weaknesses, an organization must keep a track of competitors moves

and actions so as to discover probable opportunities of threats to its market or supply sources.

3. Setting Quantitative Targets - In this step, an organization must practically fix the quantitative targetvalues for some of the organizational objectives. The idea behind this is to compare with long term

customers, so as to evaluate the contribution that might be made by various product zones or operating

departments.

4.Aiming in context with the divisional plans - In this step, the contributions made by each department

or division or product category within the organization is identified and accordingly strategic planning is

done for each sub-unit. This requires a careful analysis of macroeconomic trends.

5. Performance Analysis - Performance analysis includes discovering and analyzing the gap between the

planned or desired performance. A critical evaluation of the organizations past performance, present

condition and the desired future conditions must be done by the organization. This critical evaluationidentifies the degree of gap that persists between the actual reality and the long-term aspirations of the

organization. An attempt is made by the organization to estimate its probable future condition if the

current trends persist.


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6. Choice of Strategy - This is the ultimate step in Strategy Formulation. The best course of action is

actually chosen after considering organizational goals, organizational strengths, potential and limitations

as well as the external opportunities.

Strategy Implementation - Meaning and Steps in Implementing a Strategy

Strategy implementation is the translation of chosen strategy into organizational action so as to achieve

strategic goals and objectives. Strategy implementation is also defined as the manner in which an

organization should develop, utilize, and amalgamate organizational structure, control systems, and

culture to follow strategies that lead to competitive advantage and a better performance.

Organizational structure allocates special value developing tasks and roles to the employees and states

how these tasks and roles can be correlated so as maximize efficiency, quality, and customer

satisfaction-the pillars of competitive advantage. But, organizational structure is not sufficient in itself to

motivate the employees.

An organizational control system is also required. This control system equips managers with

motivational incentives for employees as well as feedback on employees and organizational

performance. Organizational culture refers to the specialized collection of values, attitudes, norms and

beliefs shared by organizational members and groups.

Following are the main steps in implementing a strategy:

Developing an organization having potential of carrying out strategy successfully.

Disbursement of abundant resources to strategy-essential activities.

Creating strategy-encouraging policies.

Employing best policies and programs for constant improvement.

Linking reward structure to accomplishment of results.

Making use of strategic leadership.

Excellently formulated strategies will fail if they are not properly implemented. Also, it is essential to

note that strategy implementation is not possible unless there is stability between strategy and each

organizational dimension such as organizational structure, reward structure, resource-allocation

process, etc.

Strategy implementation poses a threat to many managers and employees in an organization. New

power relationships are predicted and achieved. New groups (formal as well as informal) are formed

whose values, attitudes, beliefs and concerns may not be known. With the change in power and status

roles, the managers and employees may employ confrontation behaviour

.

Strategy Evaluation Process and its Significance


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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 todays 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 bymanagers, 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 isessential to discover the special requirements for performing the main task. The performance indicator

that best identify and express the special requirements might then be determined to be used for

evaluation. 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. If appropriate means are

available for measuring the performance and if the standards are set in the right manner, strategy

evaluation becomes easier. But various factors such as managers contribution are difficult to measure.

Similarly divisional performance is sometimes difficult to measure as compared to individual

performance. Thus, variable objectives must be created against which measurement of performance can

be done. The measurement must be done at right time else evaluation will not meet its purpose. For

measuring the performance, financial statements like - balance sheet, profit and loss account must be

prepared on an annual basis.

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. The positive deviation

indicates a better performance but it is quite unusual exceeding the target always. The negative

deviation is an issue of concern because it indicates a shortfall in performance. Thus in this case the

strategists must discover the causes of deviation and must take corrective action to overcome it.


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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. If the strategists discover that the

organizational potential does not match with the performance requirements, then the standards must

be lowered. Another rare and drastic corrective action is reformulating the strategy which requires

going back to the process of strategic management, reframing of plans according to new resource

allocation trend and consequent means going to the beginning point of strategic management process.

Strategic Decisions - Definition and Characteristics

Strategic decisions are the decisions that are concerned with whole environment in which the firm

operates the entire resources and the people who form the company and the interface between the

two.

Characteristics/Features of Strategic Decisions

a. Strategic decisions have major resource propositions for an organization. These decisions may

be concerned with possessing new resources, organizing others or reallocating others.

b. Strategic decisions deal with harmonizing organizational resource capabilities with the threats

and opportunities.

c. Strategic decisions deal with the range of organizational activities. It is all about what they want

the organization to be like and to be about.

d. Strategic decisions involve a change of major kind since an organization operates in ever-

changing environment.

e. Strategic decisions are complex in nature.

f. Strategic decisions are at the top most level, are uncertain as they deal with the future, and

involve a lot of risk.

g. Strategic decisions are different from administrative and operational decisions. Administrativedecisions are routine decisions which help or rather facilitate strategic decisions or operational

decisions. Operational decisions are technical decisions which help execution of strategic decisions. To

reduce cost is a strategic decision which is achieved through operational decision of reducing the

number of employees and how we carry out these reductions will be administrative decision.


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The differences between Strategic, Administrative and Operational decisions can be summarized

as follows-

Strategic Decisions Administrative Decisions Operational Decisions

Strategic decisions are long-term decisions. Administrative decisions are taken daily.

Operational decisions are not frequently taken.

These are considered where The future planning is concerned. These are short-term based Decisions.

These are medium-period based decisions.

Strategic decisions are taken in Accordance with organizational mission and vision. These are taken

according to strategic and operational Decisions. These are taken in accordance with strategic

and administrative decision.

These are related to overall Counter planning of all Organization. These are related to working of

employees in an Organization. These are related to production.

These deal with organizational Growth. These are in welfare of employees working in an organization.

These are related to production and factory growth.

Dimensions of Strategic Decisions

Wednesday, March 31, 2010 | Strategic-Management | 1 comments The process of Strategic decision

is an intellectual decision which is based on estimates and facts. Decisions taken in definite

circumstances are to be changed according to the changes in such circumstances. Managers preparing


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for strategic arrangements are continuously doing the valuation of circumstances and bring immediate

changes in the formerly taken decisions.

For strategic decisions following dimensions can be noted:

1. Function of Top Level Management:

Strategic decisions affect directly to the various activities of the business like finance, production

marketing and staff matters. Not only this but these types of decisions also affect directly to the risk and

profitability of the business. As a result it is taken collectively at the top level management by manager's

group Managing Director and Chief Executive Officers (CEO).

2. Intellectual Process:

Strategic decisions are not the day-to-day decisions. They are mostly long-term decisions and affect the

profitability and existence of the company. Therefore before taking decisions the future attitude of

various factors is studied through forecasting process. For this relation of work effectiveness is

developed between factors and their logical analysis and valuation is done. In short, the process of

strategic decision is said to be an Intellectual Process.

3. Long range effects:

Strategic Decisions affect the long-term activities of future. It can be sweetly said that their result will be

positive. If circumstances do not change, then the profitability and prosperity of the unit increase in the

long term. But if the forecasting of uncontrolled factors is wrong, then these decisions can be risky and

may decrease the profitability of the business.

4. Expert Advice:

While taking the Strategically Decisions, it is essential to think about Technical and Business matters. In

these circumstances advice of the expert advisers are taken from Technicians about Mechanical matters

and from Tax Advisers about Taxation matters. Besides these under strategic decisions cost

Accountant's advice is taken to reduce the cost of production of products. In short, the work of taking

decisions is done by Top Level Management with the help of Expert Advisers.

5. Future Oriented Decisions:

On studying the present situation the top level managers take the decisions about which types of

changes will be necessary in which activities in future increase in the profitability of the unit. Normallythe strategic decisions are future based decisions and future activities depend upon various estimates.

Estimates are prepared on the bases of forecasting process but forecasting is not always perfect/Many

times strategic decisions make future activities risky.

6. Functions and process fixing on strategic decisions:


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On the basis of strategic decisions, which work will be done and which should not be done, which

processes should be carried on and which should be stopped, which types of changes are to be brought

in existing processes etc. are being decided. Normally on the bases of strategic decision the product mix

commodity progress and production planning are framed. Besides this, for implements of new decisions,

necessary changes in system are made and accordingly necessary training programmes are undertaken.

In this way by Strategic Decisions new works and projects are prepared and the section doing this work

is known as Strategic Business Unit (S.B.U.)

7. Study of Internal Environment:

Internal Environment includes different matters like various skilled employees at present, mechanical

situation facilities, service section, organization, internal control method, rules and regulations of

managers procedures, methods rules and regulations of managers, procedures, methods, production

capabilities etc. Before taking any decision, the internal capabilities and weaknesses of the company

have to be well studied by the managers. The decisions taken without any such studies do not create

positive result at the time of its implementation.

8. Study of External Environment:

Factors like customer's fashions, habits and likings, competitor's products, society's attitude and

obligations, Government's regulations and controls, ups and downs in the economic market and natural

factors are included in External Environment. These factors are not under the control of managers.

Though their forecasting also helps a lot to the managers to take the decision. Decision is like "Shooting

blindly".

9. Allocation of huge financial resources:

Normally in Strategic Decision, the allocation of financial resources is the main question. In the context

of the necessity the strategically formation for selection of financial sources to acquire finance and the

strategically formation of allotment for various activities according to the priority of financial resources

of acquired finance are the most important strategically decisions. The allotment of appropriate and

balanced financial resources is necessary for mechanical resources, facilities, beneficent activities,

invention activities, professionals and technicians and various other marketing activities.

It is a modern idea to achieve the mission of the unit through strategic managements process. To stay

in the business competition, the maximum use of limited resources is necessary, launching the productin the market at right time, to arrange the appropriate marketing activity in context to competitors and

it is necessary to allocate the finance to each important activity according to its priority. By making

strategic arrangements, the managers can divert all these activities towards their mission. For this, the

activity of both the internal and external environments and their evaluation become very important.


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Following are the different decision making approaches:

a. Structured

b. Unstructured and

c. Semi structure

a. Structured decision making approach:

Structured decision making is a general term for carefully organized analysis of problems in order to

reach decisions which are focused clearly on achieving fundamental objectives.

In structured decision making, procedures are predefined for solving routine repetitive problems. These

decisions are made under the established situations and are preplanned which is possible only when we

have fully understood the situation.

b. Unstructured decision making approach:

We use to make unstructured decisions when the situation is complex and no standard solutions exist

for resolving the situation; when some or all of the structural elements of the decision situation are

undefined, ill-defined or unknown. For example:

Goals may be poorly defined, alternatives may be incomplete or non-comparable, choice criteria may be

Hard to measure or difficult to link to goals.

The unstructured decisions are basically the non-programmed decisions which are happening for the

first time and therefore require individual judgment, evaluation and insight varying on case-to-case

basis. Thats why such types of decisions are creative and are not preplanned.

c. Semi-structured decision making approach:

We follow semi-structured decision making approach where some aspects of the problem are structured

and others are unstructured.

Such decisions lie in the middle of structured and unstructured approaches and this is where most of our

true decision support systems are focused on. Decisions of this type are characterized of having some

agreement on the data, process, and evaluation to be used but are also typified by efforts to retain

some level of human judgment in the decision making process

Strategic Vision Statement


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Provides a motivating force, even in hard times.

Is perceived as achievable and at the same time is challenging and compelling, stretching us

beyond what is comfortable.

Vision is a dream/aspiration, fine-tuned to reality:

The Entire process starting from Vision down to the business objectives is highly iterative. The question

is from where we should start. We strongly recommend that vision and mission statement should be

made first without being colored by constraints, capabilities and environment. This can said akin to the

vision of armed forces, thats 'Safe and Secure country from external threats'. This vision is a non-

negotiable and it drives the organization to find ways and means to achieve their vision, by overcoming

constraints on capabilities and resources. Vision should be a stake in the ground, a position, a dream,

which should be prudent, but should be non-negotiable barring few rare circumstances.

Mission Statement

What is a mission?

Mission of an organization is the purpose for which the organization is. Mission is again a single

statement, and carries the statement in verb. Mission in one way is the road to achieve the vision. For

example, for a luxury products company, the vision could be 'To be among most admired luxury brands

in the world' and mission could be 'To add style to the lives'

A good mission statement will be:

Clear and Crisp: While there are different views, we strongly recommend that mission should only

provide what, and not 'how and when'. We would prefer the mission of 'Making People meet their

career' to 'making people meet their career through effective career counseling and education'. A

mission statement without 'how & when' element leaves a creative space with the organization to

enable them take-up wider strategic choices.

Have to have a very visible linkage to the business goals and strategy: For example you cannot have a

mission (for a home furnishing company) of 'Bringing Style to Peoples lives' while your strategy asks for

mass product and selling. Its better that either you start selling high-end products to high value

customers, OR change your mission statement to 'Help people build homes'.

Should not be same as the mission of a competing organization. It should touch upon how its purpose it

unique.

Mission follows the Vision:

The Entire process starting from Vision down to the business objectives, is highly iterative. The question

is from where should be start. I strongly recommend that mission should follow the vision. This is

because the purpose of the organization could change to achieve their vision.


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3. Markets

By defining markets, the company is declaring which types of customers it will target. Or who will be the

intended audience for which it will produce products or services. For example, a luxury car maker like

Rolls Royce has a potential market of only the richest of the rich in the world.

4. Technology

By defining technology, the company tells its current technology use in making of its products. It also

tells about the unique ways in which its products or services are technologically more advanced then

their alternates.

5. Concern for survival, growth and profitability

In this element of the mission statement business defines the means it seeks to survive in the longer

run. It not merely lists them out but also defines the logic behind them and how will the company strive

to achieve them.

6. Philosophy

Philosophy of a company is a much wider term to cover. By defining philosophy, the company defines its

way of working, its culture, its beliefs and how it sees work to be carried out. It is also an analytical way

of defining the norms on which it runs.

7. Self concept

By defining the self concept, the business is telling its heart out to the world. In this the company showsthe outside world, its core strengths and the place it sees itself in the future.

8. Concern for public image

The buzz word is usually corporate social responsibility mixed with concern for public image. First of all

these two terms are totally different and they can by no means be intermingled with each other.

Corporate social responsibility points the ways in which the business wants to contribute towards the

betterment of the society. Concern for public image is a much wider term and can include not only the

corporate social responsibility but the overall impact of the actions taken by the company on its image.

This may include from minor issues like installing manufacturing recycling plants by a company for

pollution reduction to improve its packaging to enhance a better brand image for one of its top line

brands.

9. Concern for employees

Earlier day corporations didn't care much about their employees. Thankfully the trend has started

shifting from no focus to a lot of concentration on working environment. In a mission statement a

company also defines the ways in which it is beneficial for potential and currently working employees to


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work at a certain organization. This also includes the ways in which the company will treat its employees

and how will it look towards this relation in a longer period of time.

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