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Unit II Environmental Analysis for Global Strategic Management Mcom Sem 3 Delhi University

Unit II Environmental Analysis for Global Strategic Management Mcom Sem 3 Delhi University

Unit II Environmental Analysis for Global Strategic Management Mcom Sem 3 Delhi University

Unit II Environmental Analysis for Global Strategic Management MCOM Sem 3 Delhi University : Organizations are facing exciting and dynamic challenges in the 21st century. In the gloabalized business, companies require strategic thinking and only by evolving good corporate strategies can they become strategically competitive. A sustained or sustainable competitive advantage occurs when firm implements a value – creating strategy of which other companies are unable to duplicate the benefits or find it too costly to initiate. Corporate strategy includes the commitments, decisions and actions required for a firm to achieve strategic competitiveness and earn above average returns. Strategic management has evolved as a primary value in helping organization operate successfully in a dynamic, complex environment 27 BHEL for example uses strategic management to create or modify its long-range plans, which range from 5 to 20 years. 

Unit II Environmental Analysis for Global Strategic Management Mcom Sem 3 Delhi University

Strategic management consists of four basic elements.

  • Environmental scanning
  • Strategy formulation
  • Strategy implementation
  • Evaluation and control F

Its purpose is to identity strategic factors – those external and internal elements that will determine the future of the corporation. The external environment consists of variables (Opportunities and Threats) that are outside the organization and not typically within the short-run control of top management. These variables form the context within which the corporation exists.

The internal environment of a corporation consist of variables (Strengths and Weakness) that are within the organization itself and are not usually within the short run control of top management. These variables form the context in which work is done. They include the corporation’s structure, culture, and resources. The simplest way to conduct environmental scanning is through SWOT analysis . SWOT is an acronym used to describe those particular Strengths, Weaknesses, Opportunities, and Threats that are strategic factors for a specific company.

Unit II Environmental Analysis for Global Strategic Management Mcom Sem 3 Delhi University

Strategy formulation is the development of long-range plans for the effective management of environmental opportunities and threats, in light of corporate strengths and weaknesses. It includes defining the corporate mission, specifying achievable objectives, developing strategies and setting policy guidelines. Strategy Implementation is the process by which strategies and polices are put into action through the development of programs, budgets and procedures.

This process might involve changes within the overall culture, structure, and/or management system of the entire organization. Most of the times strategy implementation is carried out by middle and lower level managers with top management’s review. Some times refereed to as operational planning, strategy implementation often involves day-to-day decisions in resource allocation. It includes programs, budgets and procedures.

Evaluation and control is the process in which corporate activities and performance results are monitored so that actual performance can be compared with desired performance. Managers at all levels use the resulting information to take corrective action and resolve problems. Although evaluation and control is the final major element of strategic management, it also can pinpoint weaknesses in previously implemented strategic plans and thus stimulate the entire process to begin again. Role of strategists Strategists are individuals or groups who are primarily involved in the formulation, implementation, and evaluation of strategy.

In a limited sense, all managers are strategists. There are persons outside the organization who are also involved in various aspects of strategic management. They too are referred to as strategists.

Unit II Environmental Analysis for Global Strategic Management Mcom Sem 3 Delhi University

We can identify nine strategists who, as individuals or in groups, are concerned with and play a role in strategic management.

1. Consultants

2. Entrepreneurs

3. Board of Directors

4. Chief Executive Officer

5. Senior management

6. Corporate planning staff

7. Strategic business unit (SBU) level executives 

8. Middle level managers

9. Executive Assistant

Unit II Environmental Analysis for Global Strategic Management Mcom Sem 3 Delhi University

Strategic management in India

After the economic liberalization announced in India in 1991, strategic management has gained greater relevance. In fact it is a major thrust area after the WTO meet of December 2005 held in Hong Kong. Lists of the environmental changes that have increased the relevance of strategic management.

In view of this to make strategic management effective organizations are showing some new initiatives described here.

1. The abolition of public sector monopoly or dominance in a number of industries has enormously increased business opportunities. Many of them are high-tech and heavy investment sectors which make strategic management all the more relevant.

2. The delicensing has removed not only an important entry and growth barrier but also a consumption (and, therefore, demand) barrier. In the past, because of non-production/limited production and import restrictions, many goods were non-available or had limited availability (in quantity and /or variety).

3. The scrapping of most of the MRTP Act restrictions on entry, growth and Mergers &Acquisitions (M&As) , along with the dereservation and delicensing of industries referred to above, have opened up floodgates of business opportunities for large enterprises.

4. The liberalization in policy towards foreign capital and technology, imports and accessing foreign capital markets provides companies opportunities for enhancing their strengths to exploit the opportunities.

5. The liberalization in other countries, the expanding foreign markets, the growing competition in India, the new policy environment etc., increase the importance of foreign markets and strategic management.

6. The grant of more autonomy to the public sector enterprises, as in the case of the navarathnas, increases the scope of strategic management.

Unit II Environmental Analysis for Global Strategic Management Mcom Sem 3 Delhi University

Trend Setters in Indian Economy Source:

Cherunilam, Francis( 2002) Strategic Management, Himalaya Publishing Company, New Delhi

Unit II Environmental Analysis for Global Strategic Management Mcom Sem 3 Delhi University

(i) Developing learning organization

Strategic flexibility demands a long-term commitment to the development and nurturing of critical resources. It also demands that the company become a learning organization – an organization skilled at creating, acquiring, and transferring knowledge, and at modifying its behavior to reflect new knowledge and insights. Organizational learning is a critical component of competitiveness in a dynamic environment. It is particularly important to innovation and new product development. For example, Hewlett-Packard uses an extensive network of informal committees to transfer knowledge among its cross-functional teams and to help spread new sources of knowledge quickly.

Unit II Environmental Analysis for Global Strategic Management Mcom Sem 3 Delhi University

(ii) TQM Implementation

The very purpose of strategic management is to win over its competitors. Total quality Management (TQM) is an organizational philosophy that aims at maximizing customer satisfaction by constantly striving to enhance operational efficiency through out the organization. It is a start to finish process that systematically integrates the strategy and all the function activities of the organization. Most of the Japanese companies adopted TQM practices in 1970 itself. TQM method measures customers’ needs, measures and evaluate customer satisfaction delivered by the product or service ,and engages the organization in continuous improvement to stay tuned-in to changes in customers’ needs”.

The essential characteristics of TQM are:

  • A customer-driven definition of quality
  • Strong quality leadership
  • Emphasis on continuous improvement
  • Reliance on facts, data, and analysis
  • Encouragement of employee participation

It is imperative for a company, which has adopted the TQM to integrate it with every phase of the strategic management.

Unit II Environmental Analysis for Global Strategic Management Mcom Sem 3 Delhi University

Environmental Analysis and TQM

The environmental analysis of a company with TQM connects the needs of the external customer (the entirety that buys the good or service of the company) with the various activities of the company.

Organizational Decision and TQM

TQM influences the organizational direction by embodying the quality philosophy in the organizational mission. Indeed, the missions of a number of organizations emphasize that quality and continuous improvement must drive every action of the organization.

Strategy Formulation and TQM

TQM helps make strategy implementation very efficient because of the clarity of organizational goals and direction, and the work and relationships culture fostered by TQM.

Strategic Control and TQM

Systems established under TQM and the favorable change in the organizational culture make strategic control more effective. Benchmarking also helps efficient control. Information technology adaptation Until the mid 1989 business firms were successfully making profits without using Internet or launching their websites. Today virtual shopping and online retailing supplement brick and mortar sales.

A great success is that of amazon.com, which do not involve in brick and mortar retailing at all. All their sales come from online business only today. Space providers like e-bay.com are becoming increasingly popular in India after taking over bazee.com. Executives today are electronic executives who cannot operate without World Wide Web.

Globalizing Operations

Nike and Reebok, for example, manufacture their athletic shoes in various countries thorough out Asia for sale on every continent. Instead of using one international division to manage everything outside the home country, large corporations are now using matrix structures in which product units are interowen with country or regional units. International assignments are now considered key for anyone interested in reaching top management. As more industries become global, strategic management is becoming an increasingly important way to keep track of international developments and position the company for long-term competitive advantage.

Unit II Environmental Analysis for Global Strategic Management Mcom Sem 3 Delhi University

Henry Mintzberg has given three most typical approaches of strategic decision making which include: Entrepreneurial mode, Adaptive mode and Planning mode. In India, abolition of public sector monopoly, the delicensing, scrapping of MRTP Act, liberalization policy towards technology and capital, expanding foreign markets and competition and grant of autonomy to navarathnas etc., created the need for strategic management. The key elements in strategic management are: developing learning organization, TQM implementation, and information technology adaptation and globalsing operations.

Unit II Environmental Analysis for Global Strategic Management Mcom Sem 3 Delhi University

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