J. K. SHAH CLASSES INTER C.A. – S.M.

CHAPTER 3 STRATEGIC MANAGEMENT PROCESS

CHAPTER 1 - INTRODUCTION TO STRATEGIC ANAGEMENT
STRATEGIC PLANNING:
i. Planning means deciding what
needs to done in the future and
generating blueprints for action.
ii. It is a process of strategic
planning that culminates
(Concludes) in the formulation of
corporate strategy.
iii. Planning is virtual attainment of
actual goals before organisation
achieves actual goals actually.
iv. Good planning is an important
constituent of good management. Planning involves determination of the
course of action to attain the predetermined objectives.
v. It bridges the gap between where we are to where we want to go. Thus,
planning is future oriented in nature.

Types of Planning
1. Strategic Planning 2. Operational Planning.

1. Strategic Planning;
i. Strategic plans are made by the senior management for the entire
organization after taking into account the organization’s strength and
weaknesses in the light of opportunities and threats in the external
environment.
ii. Strategic planning is the game plan that actually steers the firm towards
success.
iii. The degree of aptness of this game plan decides the extent of the firm’s
success.
iv. That is why formulation of corporate strategy forms the crux of the
strategic planning process.
v. Strategic planning determines where an organization is going over the
next year or more and the ways for going there.

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vi. It is the process of determining the objectives of the firm, resources
required to attain these objectives and formulation of policies to govern
the acquisition, use and disposition of resources.
vii. In simple words strategic planning means effectively deciding where to go
and then efficiently using every inch of resources organisation has to
reach to the target with least cost possible without compromising the
quality.

2. Operational Planning;
i. Operational plans on the other hand are made at the middle and lower
level management. They specify details on how the resources are to be
utilized efficiently for the attainment of objectives.
ii. Conversion of virtual goals in to actual are the prime responsibility of the
operational level managers. Operational level managers should be
efficient enough to understand the overall vision of the organisation and
work accordingly to fulfil it within the allocated time.

A major functions (task) of planning’s;

Dealing with uncertainty; Impact of uncertainty;
1. Dealing with uncertainty;
• Uncertainty in business is been developed because of continuous changes
in the business environment.
• These changes force business organisation to change their strategies and
create a fit between newly happened change and its new plan to achieve
the same objective.
• As discussed above these changes in the business environment develops
uncertainty and connected risk associated with it.
• Strategic uncertainty, which has far reaching implications, is a key
construct in strategy formulation.
• A typical external analysis will emerge with dozens of strategic
uncertainties.
• To be manageable, they need to be grouped into logical clusters or
themes.
• Strategic uncertainty is represented by a future trend or event that has
inherent unpredictability.Information gathering and additional analysis
will not be able to reduce the uncertainty.
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2. Impact with uncertainty;
• Each element of strategic uncertaintyinvolves potential trends or events
that could have an impact on present, proposed, and even potential
businesses.
• For example a trend toward Ayurvedic Products (natural foods) may
present opportunities for a firm producing / manufacturing herbal
product (juices) on the basis of a strategic uncertainty.

STRATEGIC DECISION MAKING;

• Decision making is a managerial process of selecting the best course of action
out of several alternative coursesfor the purpose of accomplishment of the
organizational goals.
• Decisions may be operational, i.e. which relate to general day-to-day
operations.
• They may also be strategic in nature.
• According to Jauch and Glueck “Strategic decisions encompass the definition of
the business, products to be handled, markets to be served, functions to be
performed and major policies needed for the organisation to execute these
decisions to achieve the strategic objectives.”

The major dimensions (Characteristics) of strategic decisions are as follows;

i. Strategic decisions require top-management involvement.
ii. Strategic decisions involve commitment of organisational resources.
iii. Strategic decisions are likely to have a significant impact on the long term
prosperity of the firm.
iv. Strategic decisions are future oriented.
v. Strategic decisions usually have major multifunctional or multi-business
consequences

STRATEGIC INTENTION (PURPOSE)

Strategic Management is defined as a dynamic
process of;
Formulation,
Implementation,
Evaluation, and
Control of strategies
(Why) to realise the organization’s strategic
intent.
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Introduction:
• The intentions with which organisational managers plans the future course of
action, that intention is known as strategic intent.
• Strategic intent is the base of all the activities every manager at all levels are
doing to achieve organisational goals.
• It is the fire within the organisational officers which keeps them moving more
closer to the objectives and goals instead they face the hardest challenge and
unfriendly business environment.
• Strategic intent refers to purposes of what the organization strives for.
• Senior managers must define “what they want to do” and “why they want to
do”.
• “Why they want to do” represents strategic intent (purpose) of the firm.
• Clarity in strategic intent is extremely important for the future success and
growth of the enterprise, irrespective of its nature and size.
• Strategic intent can be understood as the philosophical base of strategic
management.

Element of Strategic Intent;

Vision:
• Vision implies the blueprint of the company’s future position. It describes
where the organisation wants to land.
• It represent (depicts) the organisation’s aspirations and provides a glance
(glimpse) of what the organization would like to become in future.
• Every sub system of the organization is required to follow its vision.

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Mission:
• Mission describe (delineates) the firm’s business, its goals and ways to reach
the goals.
• It explains the reason for the existence of the firm in the society.
• It is designed to help potential shareholders and investors understand the
purpose of the company.
• A mission statement helps to identify, ‘what business the company
undertakes.’
• It defines the present capabilities, activities, customer focus and role in
society.

Business Definition:
• It tries to explain the business undertaken by the firm, with respect to the
customer needs, target markets, and alternative technologies.
• With the help of business definition, one can ascertain the strategic business
choices.
• Organisational restructuring also depends upon the business definition.

Business Model:
• Business model, as the name implies is a strategy for the effective operation of
the business, ascertaining sources of income, desired customer base, and
financial details.
• Rival firms, operating in the same industry rely on the different business
model due to their strategic choice.

Goals and Objectives:

• These are the base of measurement.
• Goals are the end results, that the organization attempts to achieve.
• On the other hand, objectives are time-based measurable targets, which help
in the accomplishment of goals.
• These are the end results which are to be attained with the help of an overall
plan, over the particular period.
• However, in practice, no distinction is made between goals and objectives and
both the terms are used interchangeably.
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The vision, mission, business definition, and business model explain the philosophy
of the organisation but the goals and objectives represent the results to be achieved
in multiple areas of business.

Vision:
• The most important issue organisational managers need to work on is clarity of
destination i.e. where they want the organisation to be in specified time
period.
• Where to go is the most important question and should be always asked before
planning how to go.

Example of Vision

ICAI: World’s becomes leading accounting body, a regulator and

(1) developer of trusted and independent professionals with world class
competencies in accounting, assurance, taxation, finance and business
advisoryservices.

(2) Google’s: “to provide access to the world’s information in one click.”
Amazon: To be Earth’s most customer-centric company, where
(3)
customers can find and discover anything they might want to buy
online.

TED: We believe passionately in the power of ideas to change attitudes,

(4)
lives and, ultimately, the world.

Tesla: To create the most compelling car company of the 21st

(5)
century by driving the world’s transition to electric vehicles.

• Strategic vision thus points out a particular direction, charts a strategic path to
be followed in future, and moulding organizational identity.
• A Strategic vision is,
- A road map of a company’s future providing particulars about,
- Product, Market to be pursued, Customer, Technology to be focused,
would improve its current market position and future prospects.
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• Vision implies the blueprint of the company’s future position.
• A strategic vision shows management’s aspirations for the business, providing a
view of “where we are going”.
• It describes where the organisation wants to land.
• Every sub system of the organization is required to follow its vision.
• Vision statement of Walt Disney “to make people happy.”
• The three elements of a strategic vision are:
1. “Who we are and where we are now?”
2. “Where we are going?”
3. Communicating the strategic vision in clear, exciting terms that inspire
organization wide commitment.

Essentials of a strategic vision:

• The entrepreneurial challenge in developing a strategic vision is to think
creatively about how to prepare a company for the future.
• A well-articulated (spoken) strategic vision creates enthusiasm among the
members of the organisation.
• Forming a strategic vision is an exercise in intelligent entrepreneurship.
• The best-worded vision statement clearly enhances the direction in which
organization is headed.
S. No. Questions
1. Describe the term Strategic Vision
2. State with reasons which of the following statements is correct/ incorrect:
Vision is one of the key elements of Strategic Intent

Mission:
• A company’s mission statement is typically focused on its present business
scope – i.e. “who we are? And what we do?”
• Mission statements broadly describe an organizations present capabilities,
customer focus, activities, and business makeup.
• Mission in simple words means what organisation is doing currently and what
organisation will be doing to achieve its Vision.
• It is the corporation’s guiding principle.
• The mission is a grand design of the firm’s future.
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• Mission is also an expression of the vision of the corporation, its founder/
leader.
• To make the vision come alive and become relevant, it needs to be spelt out.
• It is through the mission that the firm spells out its vision.

EXAMPLE OF MISSION STATEMENTS

1. ICAI: ICAI: ICAI will leverage technology and infrastructure and partner
withits stakeholdersto
• Impart world class education, training and professional development
opportunities to create globalprofessionals.
• Develop an independentandtransparentregulatory mechanism that
keeps pace with the changingtimes.
• Ensure adherence to highest ethicalstandards.

• Conduct cutting edge research and development in theareasof accounting,

assurance, taxation, finance and business advisory services
• Establish ICAI members and firms as Indian multi-national service
providers.
2. Google’s: To organize the world’s information and makeit universally
accessible anduseful”
3. Amazon: We strive to offer our customers the lowest possibleprices, the
best available selection, and the utmostconvenience.
4. TED: Spreadideas.
5. Tesla: To accelerate the world’s transition to sustainableenergy.

• Every organization function through a network of goals and objectives.

• Mission statement is the foundation from which the network of goals is built.

Mission statements broadly describe organizations;

√ Present capabilities, √ Customer focus,
√ Activities, and √ Business makeup
• Mission statement should reflect the philosophy of the organizations that is
perceived by the senior managers.
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• A good mission statement should be precise, clear, feasible, distinctive and
motivating.
• The mission is a statement which defines the role that an organization playsin
the society.
• Mission and business definition, as the two ideas are absolutely central to
strategic planning.
• For e.g:- Mission statement of Walt Disney “to entertain, inform and inspire
people.”

Understanding Mission and Purpose:

• Mission as “a statement which defines the role that an organization plays in the
society”, and purpose as “anything which an organization strives for.”
• Since both mission and purpose go hand in hand, they can be used together
while maintaining the basic difference between them.
• Mission strictly refers to the particular needs of the society, for instance, its
information needs.
• Purpose relates to what the organization strives to achieve in order to fulfil its
mission to the society.
• For Example: A book publisher and a magazine editor are both engaged in
satisfying the information needs of society but they do it through different
means. A book publisher may aim at producing excellent reading material while
a magazine editor may strive to present news analysis in a balanced and
unbiased manner.

Why an organization should have a mission?

• To ensure consensus of purpose within the organization.
• To develop a basis, or standard, for allocating organizational resources.
• To provide a basis for motivating the use of the organization’s resources.
• To establish a general tone or organizational climate.
• To serve as a focal point.
• To facilitate the translation of objective and goals into a work structure.
• To specify organizational purposes.
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Points (tips) to be considered while writing mission statement;
• To establish the special identity of the business - one that typically distinct it
from other similarly positioned companies.
• Needs which business tries to satisfy, customer groups it wishes to target and
the technologies and competencies it uses and the activities it performs.
• Good mission statements should be unique to the organisation for which they
are developed.
• The mission of a company should not be to make profit. Surpluses may be
required for survival and growth, but cannot be mission of a company.

S. No. Questions
1 Why an organisation should have a mission? What considerations are to
be kept in mind while writing a good mission statement of a company?

Goals &Objectives :
• Business organization translates their vision and mission into goals and
objectives.
• Goals are the end results, that the organization attempts to achieve.
• Objectives are time-based measurable targets, which help in the
accomplishment of goals.
• Goals are open-ended attributes that denote the future states or outcomes.
• Objectives are close-ended attributes which are precise and expressed in
specific terms.
• However, in practice, no distinction is made between goals and objectives and
both the terms are used interchangeably.
• Objectives are organization’s performance targets.
• The results and outcomes it wants to achieve.
• They (objective) function as yardsticks for tracking an organization’s
performance and progress.
• Business organization translates their vision and mission into goals and
objectives. They provide meaning and sense of direction to organizational
endeavour.
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Characteristics of Objectives:
• Objectives should define the organization’s relationship with its environment.
• Objectives should be facilitative towards achievement of mission and purpose.
• Objectives should be measurable and controllable.
• Objectives should provide the basis for strategic decision-making.
• Objectives should provide standards for performance appraisal.
• Objectives should be concrete and specific.
• Objectives should be related to a time frame.
• Objectives should be aggressive and challenging.

As a rule, a company’s set of financial and strategic objectives ought to include both
short-term and long-term performance targets.

Long-term Objectives:
• Long-term objectives represent the results expected from pursuing certain
strategies.
• The time frame for objectives and strategies should be consistent, usually from
two to five years.
• Established in following areas
Profitability. Productivity Competitive Position
Employee Development. Employee Relations. Technological Leadership.
Public Responsibility.

Short Term Objectives:

• Can be derived from Long term objectives
• Can sometimes be identical to long term objectives, especially if the company is
already achieving the objective.
• Most important situation when short term differ from long term objectives is
when managers are trying to elevate organisational performance and the long
term objective cannot be achieved in one year. Thus short term objective acts
as steps towards achieving the long term objective.

Strategic Management Model: Introduction;

Identifying an organization’s vision, mission, goals and objectives, is the starting
point for strategic management process. The strategic management process is
dynamic and continuous. A change in any one of the major components in the
model can necessitate a change in any or all of the other components.

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Therefore, strategy formulation, implementation, and evaluation activities should
be performed on a continual basis, not just at the end of the year or semi-annually.
The strategic management process never really ends. This model like any other
model of management does not guarantee sure-shot success.

Generally, there is give-and-take among hierarchical levels of an organization. Many

organizations conduct formal meetings semi-annually to discuss and update the
firm’s vision/ mission, opportunities/ threats, strengths / weaknesses, strategies,
objectives, policies, and performance. Creativity from participants is encouraged in
meeting. Good communication and feedback are needed throughout the strategic
management process.
Stages in Strategic Management; Crafting and executing strategy are the heart and
soul of managing a business enterprise.
1. Developing a strategic vision and formulation of statement of mission, goals
and objectives,
First a company must determine what directional path the company should
take and what changes in the company’s product – market – customer –
technology – focus would improve its current market position and its future
prospect.

2. Environmental and organizational analysis,

This stage is the diagnostic phase of strategic analysis. It entails two types of
analysis:
a. Environmental scanning: External environment of a firm consists of
economic, social, technological, market and other forces which affect its
functioning. The firm’s external environment is dynamic and uncertain.
b. Organisational analysis: Organisational analysis involved a review of
financial resources, technological resources, productive capacity,
marketing and distribution effectiveness, research and development,
human resource skills and so on.
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3. Formulation of strategy,
The strategic alternatives may be designated as stability strategy, growth /
expansion strategy and retrenchment strategy. A company may also follow a
combination these alternatives called combination strategy.
4. Implementation of strategy & Execution
Implementation and execution is an operations-oriented, activity aimed at
shaping the performance of core business activities in a strategysupportive
manner. It is the most demanding and time-consuming part of the strategy-
management process.
5. Strategic evaluation and control.
The final stage of strategic management process – evaluating the company’s
progress, assessing the impact of new external developments, and making
corrective adjustments – is the trigger point for deciding whether to continue
or change the company’s vision, objectives, strategy, and/or strategy-execution
methods.

S. No. Questions
1. Present a diagrammatic representation of a Strategic Management Model.

DISTINGUISH BETWEEN VISION & MISSION

Basis Vision Mission
Meaning A short statement that depicts the A statement that describes the
company's aspiration for the company's objectives and its
future position of the company. approach to reach those
objectives.
Talks A vision statement talks about A mission statement talks about
about organisation’s future. the present leading to its future.
Shows Where we want to be? Where we are at present?
Answer It answers the question, It answers the question, “What do
“Where do we aim to be?” we do? What makes us different?
Term Long term Short term
Purpose To inspire To inform
Example: Google – “to provide access to the Google – “to organize the world’s
Google world’s information in one click.” information and make it
universally accessible and useful.”

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S. No. RTP Questions
1. Shri Alok Kumar is having his own medium size factory in Aligarh
manufacturing hardware consisting handles, hinges, tower bolts and so
on. He has a staff of more than 220 in his organisation. One of the leading
brand of Hardware seller in India is rebranding and selling the material
from his factory. Shri Alok Kumar, believes in close supervision and takes
all major and minor decisions in the organisation.
Do you think Shri Alok should take all decisions himself? What should be
nature of decisions that should be taken by him.
2. What are the elements in strategic intent of organisation?
3. Distinguish between Vision and Mission
4. Rohit Seth in an informal discussion with his friend shared that he has to
move very cautiously in his organisation as the decisions taken by him
have organisation wide impact and involve large commitments of
resources. He also said that his decisions decide the future of his
organisation.
Where will you place Rohit Seth in organisational hierarchy? What are the
dimensions of the decisions being taken by him?
5. What are the elements in strategic intent of organisation?
6. Mr. Raj has been hired as a CEO by XYZ ltd a FMCG company that has
diversified into affordable cosmetics. The company intends to launch
Feelgood brand of cosmetics. XYZ wishes to enrich the lives of people with
its products that are good for skin and are produced in ecologically
beneficial manner using herbal ingredients. Draft vision and
mission statement that may be formulated by Raj.
7. What is strategic decision making? What tasks are performed by a
strategic manager?
8. With the help of a model explain strategic management process.

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MULTIPLE CHOICE QUESTIONS
1. __________________refers to the purposes an organization strives to achieve.
(a) Strategic Intent (b) Strategic Formulation
(c) Strategic Implementation (d) Strategic Control

2. ________ are short-term milestones or benchmarks that organizations must

achieve in order for longer-term objectives are to be reached.
(c) Vision (b) Mission (c) Plans (d) Goals

3. What is the starting point of strategic intent?

(c) Objectives (b) Goals (c) Mission (d) Vision

4. Which of these questions is addressed by a mission statement?

(a) What do we want to become?
(b) What is our business?
(c) How many employees must we have?
(d) Who do we want to serve?

5. Developing a ________ is like having a dream to be covered into reality in

future.
(c) Mission (b) Objectives (c) Goals (d) Vision

6. What is top-down planning?

(a) This takes place in someone's head, and the decisions may not be written
down in any extensive form
(b) This requires managers to spend time discussing the future opportunities
and threats and areas in which the organization might develop
(c) This involves managers throughout the organization, and ensures that
everyone involved in implementing plans will be consulted
(d) This relates to decisions taken at the higher parts of the organization and
passed on to other managers for implementation. These managers will
have had little or no input into the planning process

7. Good mission statements identify the of a firms products to its

customers.
(a) Utility (b) Price (c) Profit margin (d) Demand
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8. The vision statement answers which question?
(a) What is our business?
(b) How can we improve ourselves?
(c) What do we want to become?
(d) Who are our stakeholders?

9. The mission statement answers which question?

(a) What is our business?
(b) How can we improve ourselves?
(c) What do we want to become?
(d) Who are our stakeholders?

10. The purpose of a mission statement is to declare all of these except:

(a) A reason for being (b) An annual financial plan
(c) A statement of purpose (d) A statement of beliefs

11. Which statement should be created first and foremost?

(a) Strategic (b) Vision (c) Objectives (d) Mission

12. ________ Plans are made by the senior management for the entire
organization.
(a) Functional (b) Operational (c) Business (d) Strategic

13. ____________ decisions encompass the definition of the business, products to

be handled, markets to be served, functions to be performed and major
policies needed for the organization to execute these decisions to achieve the
strategic objectives.
(a) Operational (b) Routine (c) Strategic (d) Business

14. The major dimensions of decisions are:

(a) Strategic decisions require management involvement
(b) Strategic decisions commitment of organizational resources
(c) Strategic decisions are likely have a significant impact onlong-term
prosperity of the firm
(d) All of the above

15. Elements of Strategic Intent:

(a) Vision (b) Mission
(c) Business Definition and Model (d) All of the above

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16. _____________ implies the blueprint of company's future position.
(a) Vision (b) Mission (c) Objectives (d) Business Model

17. _________________ describes where the organization wants to land.

(a) Vision (b) Mission (c) Objectives (d) Business Model

18. ___________ depicts the organization's aspirations and provides a glimpse

what the organization would like to become in future.
(a) Vision (b) Mission (c) Objectives (d) Business Model

19. A _________ statement helps to identify, 'what business the company

undertakes".
(a) Vision (b) Mission (c) Objectives (d) Business Model

20. _____ defines the present capabilities, activities, customer focus and role in
society.
(a) Vision (b) Mission (c) Objectives (d) Business Model

21. __________ seeks to explain the business undertaken by the firm, with respect
to the customer needs, target markets, and alternative technologies.
(a) Vision (b) Mission (c) Objectives (d) Business Model

22. ____________ is a strategy for the effective operation of the business,

ascertaining sources of income, desired customer base, and financial details.
(a) Vision (b) Mission (c) Objectives (d) Business Model

23. _____________ points out a particular direction, charts a strategic path to be

followed in future, and moulding organizational identity.
(a) Strategic Vision (b) Mission
(c) Objectives (d) Business Model

24. A ____________ is an answer to the basic question 'what business are we in

and what we do'.
(a) Strategic Vision (b) Mission
(c) Objectives (d) Business Model

25. The _________ is an expression of thegrowth ambition of the firm.

(a) Strategic Vision (b) Corporate Mission
(c) Objectives (d) Business Model

26. _____________ is the firm's future visualized.

(a) Strategic Vision (b) Corporate Mission
(c) Objectives (d) Business Model

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27. provides a dramatic picture of what the company wants to become.
(a) Strategic Vision (b) Corporate Mission
(c) Objectives (d) Business Model

28. is the corporation's dream crystallized.

(a) Strategic Vision (b) Corporate Mission
(c) Objectives (d) Business Model

29. _________ is a colorful sketch of how the firm wants its future to look,
irrespective of the current position.
(a) Strategic Vision (b) Corporate Mission
(c) Objectives (d) Business Model

30. The ________ is a grand design of the firm's future.

(a) Strategic Vision (b) Corporate Mission
(c) Objectives (d) Strategic Intent

31. _____________ is an expression of the vision of the corporation.

(a) Strategic Vision (b) Corporate Mission
(c) Objectives (d) Strategic Intent

32. ___________ are organization's performance targets — the results and

outcomes it wants to achieve.
(a) Strategic Vision (b) Corporate Mission
(c) Objectives (d) Business Model

33. ____ function as yardsticks for tracking an organization's performance and

progress.
(a) Strategic Vision (b) Corporate Mission
(c) Objectives (d) Business Model

34. ___________ the most demanding and time-consuming part of the strategy
management process.
(a) Developing a strategic vision & formulation of statement of mission, goals
& objectives
(b) Environmental and organizational analysis
(c) Formulation of strategy
(d) Implementation of strategy

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35. Mission:
(a) Is an internally-focused definition of the organization's societal goals
(b) Is a statement of a firm's unique purpose and scope of operations
(c) Does not relate to the industry in which the firm intends to compete
(d) Is developed by a firm before the firm develops its strategic intent

36. Developing a vision and mission, identifying an organization's external

opportunities and threats, and determining internal strengths and weaknesses
are all _________ activities
(a) Strategy-formulation (b) Strategy-implementation
(c) Long-range planning (d) Short-range planning

37. The first step in strategic planning is generally:

(a) Developing a vision statement
(b) Establishing goals and objectives
(c) Developing a mission statement
(d) Determining opportunities and threats

38. During what stage of strategic management are a firm's specific internal
strengths and weaknesses determined?
(a) Formulation (b) Implementation
(c) Evaluation (d) Feedback

ANSWERS TO MULTIPLE CHOICE QUESTIONS

Qsn. Ans. Qsn. Ans. Qsn. Ans. Qsn. Ans. Qsn. Ans.
1 A 2 d 3 d 4 b 5 d
6 D 7 a 8 c 9 a 10 b
11 B 12 d 13 c 14 d 15 d
16 A 17 a 18 a 19 b 20 b
21 D 22 d 23 a 24 b 25 b
26 B 27 b 28 b 29 b 30 b
31 B 32 c 33 c 34 d 35 b
36 A 37 a 38 a

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