ACTIVITY:

1. Sound strategy starts with having the right goal.

2. If a strategy meets a goal: It’s working.
If a strategy meets a target: It’s a success.
3. Great innovation only happens when people aren’t afraid to do things differently.
4. True knowledge comes with deep understanding of a topic and its inner workings.
5. Sustaining high business performance is a product of continuous strategic alignment.
6. Business analysis is not a job; it is a profession.
7. Build your weakness until it becomes your strength.

Factors affecting strategic choice

 Environmental constraints.
 Internal organizations and management power relationships.
 Values and preferences.
 Management`s attitude towards risk.
 Impact of past strategy.
 Time constraints- time pressure, frame horizon ,timing of decision.
 Information constraints.
 Competitors reaction.

Strategic Choice
Strategist collects and evaluates information to assess strengths and
weaknesses of the internal environment and opportunities and
threats of the external environment. Among the alternatives, choices
are made.

SC is the decision to select among the grand strategies considered,

the strategy which will best meet the enterprise’s objectives.

It addresses the question, “where shall we go”. Too many options

would make the process complex and frustrating. Therefore, the
choices have to be narrowed down to a manageable number of
feasible alternatives.

It involves 4 steps;

1. Focusing on a few alternatives.

2. Determining the selection factors.

3. Evaluating alternatives.

4. Making the strategic choice.

The Process of Generating and Selecting

Strategies
1. Strategists never consider all feasible alternatives that could
benefit the firm, because there are an infinite number of possible
actions and an infinite number of ways to implement those actions.
Therefore, a manageable set of the most attractive alternative
strategies must be developed.

2. Identifying and evaluating alternative strategies should involve

many of the managers and employees who earlier assembled the
organizational mission statement, performed the external audit, and
conducted the internal audit.

3. Alternative strategies proposed by participants should be

considered and discussed in a meeting or series of meetings.

Strategy-Formulation is a analytical Framework designed to

determine the relative attractiveness of feasible alternative actions.

Deciding such an alternative is difficult job because the decision

maker will always have a lingering doubt whether important things
have been left out or not. So Certain useful concepts have been
advanced by theorists.

Environment Analysis
Davis - Aggregate of conditions, events and influences that surround
and affect it. It has to work within the framework provided by the
society and its innumerable constituents.

Environment refers to all external forces, which have a bearing on

the functioning of business. Environment factors “are largely if not
totally, external and beyond the control of individual industrial
enterprises and their managements. The business environment
poses threats to a firm or offers immense opportunities for potential
market exploitation.

Environmental Management System (EMS), as it lays the foundation

for how the management system will run in the future and the
environmental improvements it should address. In basic terms, it will
assess environmental risk. It also has the ability to give information
on the level and amount of environmental impact, and to give
valuable information on other requirements of the system that might
be required, including training needs, operational control
requirements and the setting of objectives and targets within the
system.

Two types of Environment are;

1) Internal environment

2) External environment.

Internal environment includes the organisation’s mission, corporate

culture, owners and the board of directors.
External environment consists of those factors that affect a firm from
outside its organisational boundary.

Features of environment:

 Complex
 Dynamic
 Challenging.

Environmental analysis is the process of monitoring the

organisational environment to identify both present and future
threats and opportunities that may influences the firm’s ability to
reach its goal.

Technological Environment - Technology is understood as the

systematic application of scientific or other organized knowledge to
practical tasks. Technology changes fast and to keep pace with it,
businessmen should be ever alert to adopt changed technology in
their businesses.

Economic Environment - There is close relationship between

business and its economic environment. Business obtains all its
needed inputs from the economic environment and it absorbs the
output of business units.

Political Environment - It refers to the influence exerted by the

three political institutions viz., legislature executive and the judiciary
in shaping, directing, developing and controlling business activities. A
stable and dynamic political environment is indispensable for
business growth.

Natural Environment - Business, an economic pursuit of man,

continues to be dictated by nature. To what extend business
depends on nature and what is the relationship between the two
constitutes an interesting study.

Global or international Environment - Thanks to liberalization,

Indian companies are forces to view business issues from a global
perspective. Business responses and managerial practices must be
fine-tuned to survive in the global environment. 5 Social and culture
Environment It refers to people’s attitude to work and wealth; role of
family, marriage, religion and education; ethical issues and social
responsiveness of business.
ETOP Analysis: Environmental Threat and Opportunity Profile.
It is a technique to structure the environment for fundamental business analysis. It was
developed by William F. Glueck. The preparation of ETOP involves dividing the environment
into different sectors and then analyzing the impact of each sector on the organization.

It is nothing but the summarised picture of the environmental factors and their likely impact on the
organisation. The importance of each environmental factor is assessed closely and expressed in
qualitative and quantitative factors. It is a technique whereby managers try to predict the future
characteristics of the organisational environment and hence make decisions today that will help the
firm deal in future.

1. Assessing the impact

2. Combine to get a bigger picture

It helps to identify the segments in a chosen field of activity, presenting excellent growth
opportunities.

SWOT Analysis:
Strength – is an in-built capability which an organisation can use to
gain strategic advantage over its competitors.

Weakness – is an inherent limitation that creates strategic

disadvantages.
Opportunity – is a favourable condition in the organisation’s
environment that enables it to consolidate and strengthen its
position.

Threat – is an unfavourable condition that creates risk and causes

damage to an organisation.

Organisational capability profile:

Ability and capacity of an organization expressed in terms of its
(1) Human resources: their number, quality, skills, and
experience, (2) Physical and material resources: machines,
land, buildings, (3) Financial resources: money and credit, (4)
Information resources: pool of knowledge, databases, and (5)
Intellectual resources: copyrights, designs, patents, etc.

In order to develop successful strategies to exploit the

external opportunities or control the external
threats(Due to continual changes in external
environment) , analysis of an organisation’s capabilities
is important for strategy making which aims at
producing a good fit between a country’s resource
capability and its external situation. Internal analysis
helps us understand the organizational capability which
influence the evolution of successful strategies.
THE CRITICAL SUCCESS FACTOR (CSF)

Critical success factors are those which contribute to organization’s success in a

competitive environment and therefore the organization needs to improve on
them since poor results may lead to declining performance. Organizations
depending on the environment they operate in and their own internal conditions
can identify relevant critical success factors.

Critical success factors are those few things that must go well to ensure success
for a manager or an organization and, therefore, they represent those
managerial or enterprise areas that must be given special and continual
attention to bring about high performance. CSFs include issues vital to an
organization's current operating activities and to its future success."

STRATEGIC ADVANTAGE PROFILE.

Every firm has strategic advantages and disadvantages. For example, large firms have
financial strength but they tend to move slowly, compared to smaller firms, and often cannot
react to changes quickly. No firm is equally strong in all its functions.

strategic advantage profile is a summary statement which provides an overview of the

advantages and disadvantages in key areas likely to affect future operations of a firm. it is a total
for making systematic evaluation of strategic advantage factors which are significant for the
company in its environment. it involves functional areas like marketing, production, finance,
accounting, personnel, human resource and R$D

In other words, every firm has strengths as well as weaknesses Strategists must be aware of
the strategic advantages or strengths of the firm to be able to choose the best opportunity for
the firm. On the other hand they must regularly analyse their strategic disadvantages or
weaknesses in order to face environmental threats effectively. we shall examine the strategic
advantage factors that management analyses and
diagnoses to determine the internal strengths and weaknesses with which it must face the
opportunities and threats from the environment.

Corporate Portfolio Analysis:

An analysis of elements of a company's product mix to determine the optimum allocation of
its resources. Two most common measures used in a portfolio analysis are market growth
rate and relative market share.

Strategic portfolio analysis involves identification and evaluation of all products or service
groups offered by company on the market (so called product mix) and preparing specific
strategies for every group according to its relative market share and actual or projected sales
growth rate. It can be also used to make strategic decision about strategic business units.
Portfolio analysis in strategic management allows to answer key questions how to shape the
present and future business portfolio (of product or services) in order to reduce the risk of
functioning in a changing environment, and increase the effects of the implemented strategy.
GAP Analysis:
In management literature, gap analysis involves the comparison of actual performance with
potential or desired performance. If an organization does not make the best use of current
resources, or forgoes investment in capital or technology, it may produce or perform below
its potential.

Distinctive Competitiveness:
Distinctive competence refers to some characteristic of a business that it does better than
its competitors. Because the business is able to do something better than other businesses,
that business has a competitive advantage over other businesses.

Matrix:
 Input stage
1) Internal Factor Evaluation Matrix (IFE)
2) External Factor Evaluation Matrix (EFE)
3) Competitive Profile Matrix (CPM)
 Matching stage
1) SWOT Matrix
2) SPACE Matrix Stage
3) BCG Matrix
4) IE Matrix
5) Grand Strategy Matrix
 Decision stage
1) QSPM Quantitative Strategic Planning Matrix