50. Strategic Management: Environment Analysis, SWOT, Formulation, Implementation & Control — Full Notes

CORE Key Points at a Glance

1. 1

   Strategic management is the continuous process of formulating, implementing, and evaluating strategies that enable an organisation to achieve its long-term objectives. Defined by Fred R. David: "the art and science of formulating, implementing, and evaluating cross-functional decisions that enable an organisation to achieve its objectives."

2. 2

   Strategy levels: (a) Corporate strategy — what businesses to be in (diversification, integration, mergers); (b) Business/Competitive strategy — how to compete in a given industry (Porter's generic strategies); (c) Functional strategy — how each function (marketing, HR, finance) supports the business strategy.

3. 3

   Strategic management process (5 steps): (1) Define vision/mission; (2) Environmental scanning (PESTLE external + strengths/weaknesses internal); (3) Strategy formulation; (4) Strategy implementation; (5) Strategic evaluation and control. This process is continuous and iterative, not a one-time exercise.

4. 4

   SWOT Analysis: Framework identifying Strengths and Weaknesses (internal) and Opportunities and Threats (external). Developed at Stanford Research Institute (SRI) in the 1960s by Albert Humphrey. The SWOT matrix generates four strategy types: SO (use strengths to exploit opportunities), ST (use strengths to counter threats), WO (overcome weaknesses using opportunities), WT (minimise weaknesses, avoid threats).

5. 5

   Porter's Five Forces Model (1979) — Michael Porter, Harvard Business School — analyses industry attractiveness: (1) Threat of new entrants (entry barriers); (2) Bargaining power of buyers; (3) Bargaining power of suppliers; (4) Threat of substitute products; (5) Rivalry among existing competitors.

6. 6

   Porter's Generic Competitive Strategies: (1) Cost Leadership — lowest-cost producer (e.g., Walmart, Dmart, Jio); (2) Differentiation — unique products/services commanding premium (e.g., Apple, Mercedes-Benz); (3) Focus — serving a narrow market segment either via low cost (cost focus) or differentiation (differentiation focus). Stuck in the middle = failing to achieve any strategy.

7. 7

   BCG (Boston Consulting Group) Matrix (1970) — Bruce Henderson — plots strategic business units on two axes: Market growth rate (high/low) and Relative market share (high/low). Four quadrants: Stars (high growth, high share), Cash Cows (low growth, high share), Question Marks (high growth, low share), Dogs (low growth, low share).

8. 8

   Ansoff's Growth Matrix (1957) — Igor Ansoff — four product-market growth strategies: (1) Market Penetration — existing products in existing markets; (2) Product Development — new products in existing markets; (3) Market Development — existing products in new markets; (4) Diversification — new products in new markets (highest risk).

9. 9

   Strategy formulation involves: (a) Setting Mission (what we do, for whom, how — e.g., TCS mission: "To help customers achieve their business objectives by providing innovative, best-in-class consulting, IT solutions and services") and Vision (long-term aspiration); (b) Establishing long-term objectives (3–5 year SMART goals); (c) Generating and evaluating strategic alternatives.

10. 10

    Strategy implementation is often called the "action stage" — translating strategies into action through: Allocating resources, establishing organisational structure, creating a supporting culture, linking performance management to strategy, managing change. McKinsey 7S Framework (Peters & Waterman, 1982): Strategy, Structure, Systems, Shared Values, Style, Staff, Skills — all must be aligned.

11. 11

    Strategic control monitors whether the organisation is moving toward its strategic goals and takes corrective action. Types: Premise control (validate planning assumptions); Implementation control (check if strategy is being executed as planned); Strategic surveillance (broad monitoring); Special alert control (crisis-driven). Balanced Scorecard (Kaplan & Norton, 1992) is the most widely used strategic control tool.

12. 12

    Corporate social responsibility (CSR) and strategy: India's Companies Act 2013, Section 135 mandates 2% of average net profit (3-year average) to be spent on CSR activities by companies with net worth ≥ ₹500 crore or turnover ≥ ₹1,000 crore or net profit ≥ ₹5 crore. India was the first country in the world to mandate CSR through legislation.