Very Short Answer Question

1. State two characteristics of strategy.

Strategy is a long term action plan for achieving sustainable competitive advantage. Its two important characteristics are:

  • Long term direction: Strategy provides long term direction to an organization.
  • Competitive advantage: Strategic decisions always aim at achieving competitive advantage.
2. Define strategy.

Strategy is an action plan to achieve long-term objectives. It is likely to be concerned with the long term direction of an organization. It affects an organization’s long-term prosperity, thus is future-oriented. It has multifunctional or multidivisional consequences.

3. Write why strategy is important.

The present business world is highly competitive due to globalization and growth of information technology. In such a competitive business environment, organizations must cope up with the challenges that evolve from constantly changing business environment. In this regard, strategy serves as the base for achieving sustainable competitive advantage.

4. Enlist the different levels of strategy.

Strategy is formulated in different level as mentioned below.

  • Corporate level: It is related to the choice of direction for a firm as a whole.
  • Business level: It refers to the strategy pursued by a firm to gain a competitive advantage in specific product market.
  • Functional level: It aims at bringing effectiveness in different functions of a business.
5. What do you mean by strategic decisions? Give one example.

Strategic decision is selecting the best strategy among alternative strategies. It is a process of evaluating strategic alternatives and making choice of them which best suits for the achievement of organizational objectives. Merger with another company is an example of strategic decision.

6. What is strategic fit?

The internal environment of an organization determines the strength and weakness. Similarly, the external environment results in opportunities and threats. Strategic fit is matching the strategy of an organization to the internal strength and the opportunities in the external environment.

7. Define strategic management.

Strategic management is concerned with making and implementing strategic decision about an organization’s future direction. It is a set of managerial decisions and actions that determines the long term performance of an organization.

8. Define corporate level strategy.

Corporate level strategy is related to the choice of direction for a firm as a whole. It is the uppermost level of strategy. It follows the vision and mission of an organization. It involves selecting and managing a group of different businesses which are competing in different product markets to gain competitive advantage.

Short Answer Question

1. Define strategy and write its characteristics.

Strategy is a means to achieve long-term objectives. It is likely to be concerned with the long term direction of an organization. It affects an organization’s long-term prosperity, thus is future-oriented. It has multifunctional or multidivisional consequences. It requires consideration of both external and internal factors facing the firm. The essence of strategy lies in its effective management. Strategic management involves a number of actions and decisions by the top level management.

Characteristics of Strategy

  • Long term direction: Strategy provides long term direction to an organization. In other words, it provides roadmap of future activities to be carried out in an uncertain environment.
  • Rare: Strategic decisions are made rarely. They are different to routine decisions which are taken frequently.
  • Consequential: Strategy always aims at achieving the objective of an organization. Hence, it is result oriented.
  • Competitive advantage: Strategy always aims at achieving competitive advantage. The advantage taken over the competitors is competitive advantage. It enables an organization to sustain and grow in a competitive environment,
  • Strategic fit: Strategy is concerned with maintaining strategic fit. It is adapting the organizational resources and competencies with the opportunities in the environment. It enhances the advantage of an organization.
  • Define scope: Strategy clarifies the scope of an organization. It is concerned to with the activities to be carried out by an organization
  • Top management oriented: Strategy is formulated by top management. The results of the strategy are reflected in the operational level. Hence, top management commitment is essential for the effectiveness of strategy.
  • Involves resources: Strategy involves deployment of resources over a long period of time.
  • Dynamic: Strategy has dynamic nature since it is taken to exploit the opportunities from the environment. It also aims to protect the organization from the threats that arise from the environment.
2. Explain in brief the different levels of strategy with suitable examples.

Strategy is a means to achieve long-term objectives. It is likely to be concerned with the long term direction of an organization. It affects an organization’s long-term prosperity, thus is future-oriented.

Strategy is formulated in different levels.

Corporate level strategy

Corporate level strategy is concerned with the entire organization. It is related to the choice of direction for a firm as a whole. It is the uppermost level of strategy. It is derived from the vision and mission statement. It is related to financial performance, mergers and acquisitions, and allocation of resources.

The different types of corporate level strategies in are:

 a. Stability strategy: It aims to continue the organization’s current activities without any significant change in direction.

b. Expansion/ Growth strategy: It is designed to achieve growth in sales, assets, profits, or some combination.

c. Retrenchment strategy: It aims to reduce the size or diversity of a company.

d. Combination/Mixed strategy: If stability, expansion and retrenchment strategies are simultaneously used by an                                          organization in its different strategic business units, it is called combination strategy.

Business level strategy

 It is pursued by a firm to gain competitive advantage in specific product market. It indicates how a firm competes successfully in an individual product market. It directs a strategic business unit (SBU) towards competitive advantage.

The different types of business level strategies are mentioned below.

a. Cost leadership strategy: It is an attempt produce goods or services with features that are acceptable to customers the lowest cost, relative to that of competitors.

b. Differentiation strategy: It is an attempt to produce goods or services (at an acceptable cost) that customers perceive as being different.

c. Focus Strategy: It is an attempt to produce goods or services that serve the born needs of a particular competitive segment.

Functional strategy

It is concerned with each function of an organization. Functional strategy is related to making short term decisions for achieving competitive advantage. It involves the action plans prepared for each functions as production, marketing, human resource etc.

The different types of functional strategies are mentioned below.

 a.  Production strategies: It focus on improving production efficiency and controlling cost.

b. Marketing strategies: It focus on satisfying the consumers with proper marketing mix.

c. Financial strategies: It focus on optimum utilization of the financial for maximizing shareholders’ wealth.

 d. Human resource strategies: It focus on acquisition, development, utilization and retention of people needed in the organization.

 e.  Research and development strategies: It  focus on new products development through innovation, modification and imitation.

3. What are the components of strategic planning? Explain.

Strategic planning is related to long range planning of an organization. It provides direction to the organization over a long period of time. It aims at growth and development of an organization.

The components of strategic plan are mentioned below.

  • Vision: It is the picture of desired future state of an organization. It shows what a firm wants to achieve. It gives a shape to the intended future of an organization. It reflects a firm’s values and aspirations. It intends to capture the heart and mind of the employees as well as other stakeholders. It encourages people to focus on what’s important and better understand organization-wide change and alignment of resources.
  • Mission: A mission statement defines the business in terms of customers, employees, suppliers and the community. It reflects every facet of the business like the products, pricing, quality, service, marketplace position, growth potential, use of technology, and the relationships with the customers, employees, and suppliers. Vision is the base for a firm’s mission. In other words, mission is developed on the basis of vision.
  • Objective: The expected outcome of an organization is known as objective. They are the end result of planned activity. All the organizational activities are directed towards the achievement of objectives. Objectives may also be formulated in different levels as corporate, business and operational. They provide direction to an organization. Likewise, it also fixes the priority of organizational activities and establishes coordination. Objectives may be formed at corporate level, business level, functional level and individual level.
  • Strategy: Strategy is a means to achieve long-term objectives. It is likely to be concerned with the long term direction of an organization. It affects an organization’s long-term prosperity, thus is future-oriented. It has multifunctional or multidivisional consequences. It requires consideration of both external and internal factors facing the firm. The essence of strategy lies in its effective management.
4. Write why strategic management is important in modern organizations.

Strategic management is very important for a sustainable competitive advantage in the modern competitive business environment. The following points highlight the importance of strategic management.

  • Grab opportunity: Strategic management enables an organization to grab the opportunities or protect from threats that arise from the external environment.
  • Strategic fit: Strategic fit involves matching the strategies of an organization to the internal resources and the opportunities in the external environment. Strategic management ensures strategic fit i.e. matching the internal resources with the external opportunities and threats.
  • Enhances competitiveness: Strategic management involves development of long term plan for sustainable competitive advantage. It increases the competitive strength of an organization and helps survive and grow in a volatile and competitive environment.
  • Organizational unity: Strategic management covers the whole organization. It helps to unify the organization by improving the coordination among the departments and units for a superior performance.
  • Resource management: Resource management is very important for building up organizational strength. Strategic management facilitates the resource management in an efficient and effective way for a sustainable competitive advantage.
  • Proactive management approach: Strategic management always seeks to exploit the business opportunities and mitigate threats. Hence, it always creates a more proactive management approach.
  • Organizational effectiveness: Organizational effectiveness may be defined as the capability of an organization in achieving its objective. Strategic management increases the organizational effectiveness with the support and commitment of all the stakeholders along with the employees.
  • Manage change: In the modern dynamic business environment, managing change remains a central issue. Strategic management prepares an organization to accept and manage the changes that take place within the organization.
5. What do you mean by strategic plan? Write its characteristics.

Strategic plan is related to long range planning of an organization. It provides direction to the organization over a long period of time. It aims at growth and development of an organization. It has different components as given below.

  • Vision
  • Mission
  • Objective
  • Strategy

Characteristics of Strategic Plan

  • Long-term: Strategic plan is long-term in nature. It normally covers a period of over five years. Hence, it provides long-term direction to an organization.
  • Based on environmental analysis: Strategic plans are developed with environment analysis. They always seek to maximize business opportunities and mitigate threats.
  • Strategic fit: Strategic plan always aims at establishing strategic fit i.e. fit af between strength and opportunity through a proper plan. Strategic fit leads an organization towards the way of competitive advantage.
  • Involvement of top management: Since strategic plan is related to the long term growth and development of an organization, involvement of top level management in a must. Top level management has to play a dominant role the formulation and implementation of strategy.
  • A mean only: Strategic plan is a means of achieving organizational objectives. However, it is not an end itself. 6. Directional: A strategic plan is forward looking and describes the strategic course that the management has adopted.
  • Feasible: Strategic plan should be feasible in terms of resource and competencies required.
6. Write the role of the CEO in strategic planning.

The roles of the CEO in formulating strategy are mentioned below.

  • Determining strategic direction: Strategic direction involves specifying vision, mission, objectives and strategies. Strategic direction should be framed within the environmental conditions to address opportunities and threats. The CEO attempts to win stakeholders’ commitment to the new strategic direction considering the organization’s strengths.
  • Resource planning: Implementation of a particular strategy demands the commitment of resource for a long period of time. Resource planning is central in strategic management. Strategic management is often called resource management. The CEO has the most important role in resource planning so that all the parts of the organization function effectively.
  • Making participative strategic decisions: Strategic decisions affect the organization over along period of time. They are related to the products and market to be served, functions to be performed and major policies needed for the organization to execute these decisions. The CEO leads the strategic decision making process in the organization by involving the managers at middle and lower level in decision making process.
  • Ensuring acceptability of strategy: Acceptance of strategy is essential for the successful implementation of the strategy. They have different interest towards the organization. They continue to support an organization until the performance meets or exceeds their expectations. Hence, the CEO chooses strategy in such a way that relationships with stakeholders are managed effectively. He/she should act as bridge between the organization and its stakeholders.

Long Answer Question

1. What are the characteristics of strategic decision? Discuss the importance of strategic management.

Characteristics of Strategic Decision

  • Long term direction: Strategic decisions provide long term direction to an e organization. In other words, they provide a roadmap of future activities to be carried out in an uncertain environment.
  • Rare: Strategic decisions are made rarely. They are different from routine decisions which are taken frequently.
  • Consequential: Strategic decisions always aim at achieving the objective of an organization. Hence, they are result oriented.
  • Competitive advantage: Strategic decisions always aim at achieving competitive advantage. The advantage taken over the competitors is competitive advantage. It enables an organization to sustain and grow in a competitive environment.
  • Strategic fit: Strategic decisions are concerned with maintaining strategic fit. It is concerned with adapting the organizational resources and competencies with the opportunities in the environment.
  • Define scope: Strategic decisions clarify the scope of an organization. They are concerned with the activities to be carried out by an organization.
  • Top management: Strategic decisions are taken by top management. Hence, top management commitment is essential for the effectiveness of strategic decisions.
  • Involves resources: Strategic decisions involve deployment of resources over a long period of time.
  • Dynamic: Strategic decisions are dynamic in nature since they are taken to exploit the opportunities from the environment. They also aim to protect the organization from the threats that arise from the environment.

Importance of Strategic Management

Strategic management is very important for a sustainable competitive advantage in the modern competitive business environment. The following points highlight the importance of strategic management.

Some of the major points to focus the importance of strategic management are:

  • Grab opportunity: Strategic management enables an organization to grab the opportunities or protect from threats that arise from the external environment. An opportunity is a major favourable situation in a firm’s environment. If opportunity is exploited effectively, it helps a company achieve strategic competitiveness. A threat is a major unfavourable situation in a firm’s environment. It may obstruct a company’s efforts to achieve strategic competitiveness.
  • Strategic fit: Strategic fit involves matching the strategies of an organization to the internal resources and the opportunities in the external environment. Strategic management ensures strategic fit i.e. matching the internal resources with the external opportunities and threats.
  • Enhances competitiveness: Strategic management involves development of a long term plan for sustainable competitive advantage. It increases the competitive strength of an organization and helps survive and grow in a volatile and competitive environment.
  • Organizational unity: Strategic management covers the whole organization. It helps to unify the organization by improving the coordination among the departments and units for superior performance.
  • Resource management: Resource management is very important for building up organizational strength. Strategic management facilitates resource management in an efficient and effective way for a sustainable competitive advantage.
  • Proactive management approach: Strategic management always seeks to exploit the business opportunities and mitigate threats. Hence, it always creates a more proactive management approach.
  • Organizational effectiveness: Organizational effectiveness may be defined as the capability of an organization in achieving objectives. Strategic management increases the organizational effectiveness with the support and commitment of all the stakeholders along with the employees.
  • Manage change: In the modern dynamic business environment, managing change remains a central issue. Strategic management prepares an organization to accept and manage the changes that take place within the organization.

In this way, it may be concluded that strategic management is very important for business organizations to sustain in the globalised business environment and develop over a long period of time. It leads the organization towards success which eventually helps the development of trade and industry of a country.

2. What is strategic management? Discuss the process of strategic.

The present business world is highly competitive due to globalization and growth of information technology. In such a competitive business environment, organizations must cope up with the challenges that evolve from a constantly changing business environment.

Strategic management is concerned with making and implementing strategic decisions about an organization’s future direction. It is a set of managerial decisions and actions that determines the long term performance of an organization.

Process of Strategic Management

Strategic management is a process of strategy formulation, implementation and control. It always aims at achieving organizational objectives. It has a certain process as mentioned below.

  • Strategic planning: This is the first step of the strategic management process. si Strategic planning is concerned with the formulation of strategy. It includes development of vision, mission, objectives and strategy. Strategic planning involves the following.
  • Environmental analysis: Environmental analysis is the process through which the environment is continuously monitored to determine the n some opportunities and threats to an organization. It involves the determination of evils of the factors in the environment threatening the organization’s present objectives and strategies. Furthermore, it involves the ascertainment of the opportunities to achieve the present objectives and opportunities as well.
  • Strategy formulation: After proper analysis of the environment, different strategic alternatives are developed. The available strategic alternatives are evaluated on ground of suitability, acceptability and feasibility and the best alternative is selected. Strategies are formulated at corporate, business and functional levels.
  • Strategy implementation: This is the most important stage of strategic management. The overall essence of strategic management lies in the implementation of strategy. In this stage, the strategies are translated into action i.e. they are implemented. The essential elements of strategy implementation are given below.
  • Structure design: It establishes responsibility, accountability, flow of command and span of control.
  • Resource planning: Implementation of a particular strategy demands the commitment of resources over a long period of time.
  • Management system: Management system involves formation of an efficient management team, effective human resource management, information management, and leadership development.
  • Strategic control: Strategic control intends to verify that the firm is using appropriate strategies for the conditions in the external environment and the company’s competitive advantages. It is also used to evaluate the degree to which the firm focuses on the requirements to implement its strategies.
  • Feedback: This is the last stage of the strategic management process. Under this, information is constantly gathered from the environment to improve the process of strategic management.
3. What are the characteristics of strategic decision? Explain the importance of strategic decisions.

Characteristics of Strategic Decisions

  • Long term direction: Strategic decisions provide long term direction to an e organization. In other words, they provide a roadmap of future activities to be carried out in an uncertain environment.
  • Rare: Strategic decisions are made rarely. They are different from routine decisions which are taken frequently.
  • Consequential: Strategic decisions always aim at achieving the objective of an organization. Hence, they are result oriented.
  • Competitive advantage: Strategic decisions always aim at achieving competitive advantage. The advantage taken over the competitors is competitive advantage. It enables an organization to sustain and grow in a competitive environment.
  • Strategic fit: Strategic decisions are concerned with maintaining strategic fit. It is concerned with adapting the organizational resources and competencies with the opportunities in the environment.
  • Define scope: Strategic decisions clarify the scope of an organization. They are concerned with the activities to be carried out by an organization.
  • Top management: Strategic decisions are taken by top management. Hence, top management commitment is essential for the effectiveness of strategic decisions.
  • Involves resources: Strategic decisions involve deployment of resources over a long period of time.
  • Dynamic: Strategic decisions are dynamic in nature since they are taken to exploit the opportunities from the environment. They also aim to protect the organization from the threats that arise from the environment.

Importance of Strategic Decision

  • Long term direction: Strategic decisions provide long term direction to the organization. They act as road maps for the future. They indicate where the organization wishes to reach.
  • Organizational effectiveness: Strategic decisions bring organizational rigs effectiveness by reconciling the organizational goal and resources. Organizational effectiveness results in strategic advantage resulting in the sustainable growth and development of an organization.
  • Improvement in operational capability: Though strategic decisions are long term decisions, they have significant and direct effects on operational activities. They are related to resource allocation and work processes, hence affecting the operational decisions.
  • Competitive advantage: Strategic decisions are always directed towards achieving competitive advantage from the environment. Competitive advantage eventually helps to achieve the long term objective of the organization.
  • Resource management: Resource management is in strategic management. Strategic decisions ensure proper availability of resources, their allocation on various units and effective management. An effective resource management enhances the organizational capability and effectiveness.
  • Stakeholders’ interest: Stakeholders continue to support an organization when its performance meets or exceeds their expectations. Strategic decisions aim at fulfilling the interest of the stakeholders.
  • Strategic control: Strategic control is a continuous process and ensures the effective implementation of strategies. Strategic control is also used to evaluate the degree to which the firm focuses on the requirements to implement its strategies. Strategic decisions help to establish effective strategic control.

4. Strategic management is a critical element for the success of any enterprise in the present day globalized world. How far do you agree with the statement? Discuss with illustrations indicating the importance of strategic management.

Strategy is a means to achieve long-term objectives. It is likely to be concerned with the long term direction of an organization. It affects an organization’s long-term prosperity, thus is future-oriented. It has multifunctional or multidivisional consequences. It requires consideration of both external and internal factors facing the firm. The essence of strategy lies in its effective management.

Strategic management is concerned with making and implementing strategic decisions about an organization’s future direction. It is a set of managerial decisions and actions that determines the long term performance of an organization. It is an overall process of decisions and actions regarding the formulation and implementation of strategies designed to achieve the objectives of an organization.

More precisely, strategic management involves formulation, implementation and control of strategies to achieve the long run objectives of an organization.


Didn't Find Any Subjects/Contents?

Click on the contribute button to contribute subjects materials on Study Notes Nepal.

Contribute

Leave a Reply

Your email address will not be published. Required fields are marked *


Join Our Facebook Community Group

Study Notes Nepal