Strategic P[pyt.pdf

Chapter 1

Theoretical Framework of the Study

The day management theory meets practice, the theory loses its value. Anonymous

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Every organisation involves in a complicated pattern of decisions from board of directors level about organisational objective setting to specific decisions about day-to-day operations. Some of these decisions have long-term effect while others have only short-term effect. From decision-making poinf of view, the basic difference between these two sets of decisions is that the first set of decisions does not fall within the domain of a particular functional manager while the second set of decisions falls within the domain of a functional manager. The first set of decisions is of integrative nature involving more than one functional are^ of the organisation. The emphasis on such decisions and implementing them has led to the development of a new field of study, known as strategic management. This branch of management focuses its attention on the functioning of the entire organisation rather than its particular functions.

Strategic management has entered the businees field during 1980s in a systematic way replacing the earlier approach of ad hoc strategy formulation and its implementation. With increased complexity of managing business organisations in the face of intense global competition, strategic management concept was adopted by Western countries, particularly the USA. In India, this concept was introduced by associates and subsidiaries of multinationals operating in the country. However, the adoption of such a concept evoked mixed reactions from Indian business. While there was considerable admiration of the system from some quarters, there were many who believed that it was not in tune with Indian context, particularly the social and environmental context of Indian business. However, since many of the multinationals adopting strategic management were quite successful in terms of growth and profitably, it was assumed that the success was partly because of the application of such a system. This resulted into the gradual adoption of strategic management by companies of Indian origin. With the liberalisation.of Indian economy,

3 the competitive scenario of business has changed, and to face environmental challenges successfully, many companies have adopted strategic management in a systematic way.

Strategic management essentially involves strategy formulation and its implementation. Therefore, before going through the concept of strategic management and its process, it is desirable to understand the concept of strategy and the levels at which strategies operate. Further, strategy formulation involves a strategic decision. Therefore, concept of strategic decision should also be understood.

CONCEPT OF STRATEGY The concept of strategy is quite confusing because different authors have used this term in different ways. Moreover, many early authors in this field have not tried to define strategy precisely as they have taken the stand of writing the books from practitioners’ point of view rather than for the purpose of developing the concept. For example, Christensen et al (1971) maintain that: "Because we are less concerned with exactness of language than we might be if development of theory were our first objective; we do not argue whether the term strategy should include the selection of goals or denote only the resources marshalled in pursuit of these goals. It is to us a matter of indifference. Little confusion results so long as we make clear what we are doing. In our experience, ■simplicity and convenience are served by combining the choice of goals and the formulation of policy into one activity. The choice of goals and formulation of policy cannot in any case be separate decisions."

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No doubt, this stand serves the' purpose adequately, but this shows the type of situation that prevails in the field. However, further progress in the field can be made possible only when we are clear about the term strategy. The term strategy has entered the field of management more recently. At first, the term was used in terms of Military Science to mean what a manager does to offset actual or potential actions of competitors. The strategy is still being used in the same sense, though by few only. Originally, the term strategy has been derived from Greek word 'strategos' which means generalship. The word strategy, therefore, means the art of the general. When used in military sense, strategy refers to action taken in the light of action taken by opposite party. According to Oxford Dictionary,' militqry strategy is the art of so moving or disposing the instruments of warfare (troops, ships, aircrafts, missiles etc.) as to impose upon the enemy, the place, time, and conditions for fighting by oneself. Strategy ends or yields tactics when actual contact with the ememy is made.'

In management, however, the concept of strategy is taken in slightly different form as compared to its usage in military form; it is taken more broadly. However, in this form, various experts do not agree about the precise scope of strategy. Lack of unanimity has resulted into two broad categories of definitions: strategy as action inclusive of objective setting and strategy as action exclusive of objective setting. Some definitions in both these categories help to conceptualise strategy properly.

Objective Inclusive Definition When the present strategic management was in its formative stage, Alfred Chandler (1962) made a comprehensive analysis of strategystructure relationship and has defined strategy as follows : "Strategy is the determination of the basic long-

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term objectives and goals of an enterprise and the adoption of the courses of action and the allocation of resources necessary for carrying out these goals." According to this definition, there are three types of action involved in strategy : 1.

Determination of long-term objectives and goals.

2.

Determination of courses of action to achieve those goals.

3.

Allocation of resources for carrying out courses of action.

Thus, this definition is quite broad. Similar views have been held by Professors at Harvard Business School, USA who have made considerable contributions in the development of strategic management. One of them (Andrews 1971) has defined strategy as follows : "Strategy is the pattern of objectives, purpose, or goals and major policies and plans for achieving these goals, stated in such a way so as to define what business the company is in or is to be in and the kind of company it is or is to be." The above definitions are quite broad and comprehensive and include objective setting as part of strategy.

Objective Exclusive Definition As against the above views, Stanford Research Institute, USA has taken a different stand in defining strategy. It states that strategy is the way in which the firm reacting to its environment, deploys its principal resources and marshalls its main efforts in pursuit of its purpose. The basic theme of this definition has been subscribed by many. For example, Igor Ansoff (1965) has defined strategy as "the common thread among the organisation's activities and product-markets that defines the essential nature of

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business that the organisation is in or planned to be in future." Glueck (1980) had defined strategy in terms of unified, comprehensive, and integrated plan designed to achieve the basic objectives of the enterprise.

In a more recent publication, Michael Porter (1996) has defined strategy as " the creation of a unique and valued position involving a different set of activities." Thus, a company that is strategically positioned "performs same activities differently from its rivals or performs a different set of activities." He has taken this view on the assumption that many companies believe that they can establish a long-lasting competitive advantage by performing similar activities better than their competitors. But today, competitors can rapidly copy the practices of an operationally-effective company using benchmarking and other tools, thus, diminishing the advantage of operational effectiveness.

In the present study, strategy has been taken as a comprehensive plan through which an organisation can relate itself with the environment so as to achieve its objectives. From this point of view, the strategy has the following features : 1.

Strategy is a major course of action through which an organisation tries to relate itself with the environment to develop certain advantages which help in achieving its objectives.

2.

Strategy is a relative combination of actions aimed at to meet a particular condition, to solve certain problems, or to achieve a desirable end. This combination of actions differs from situation to situation.

3.

Strategy may involve even contradictory action. Since a strategic action depends on environmental variables, an organisation

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may take contradictory actions either simultaneously or with a gap of time. 4.

Strategy is forward looking; it has orientation towards future. A strategic action is required in a new situation, No new situation requiring a solution can exist in the past and, therefore, strategy is relevant to future.

LEVELS OF STRATEGY Strategy operates at different levels of an organisation : corporate level, business level and functional level. Organisations that have several types of products or operate in different markets, structure their businesses in the form of strategic business units (SBUs). The fundamental concept in the SBU is to identify the discrete independent product/market segements served by an organisation. Since each independent product/market segment has a distinct environment, a SBU should be created for each such segment. Thus, different SBUs are involved in distinct business areas with each area serving the distinct segment of the environment. In taking up strategic management in multi SBU organisation, the following features become important : 1.

Each SBU is managed as a portfolio of the organisation with a clearly-defined product/market segment and clearly-defined strategy.

2.

Each SBU develops its strategy tailored to its capabilities and needs with overall corporate capabilities and needs.

3.

Each SBU is allocated resources - both physical and human according to its needs and contributions to the achievement of organisational objectives.

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As against an organisation with multi-SBUs, a single product/market organisation has single 5BU. In both these types of organisations, strategy operates differently. In a single SBU organisation, corporate-level strategy serves the whole business. This strategy is implemented at the next /

lower level by functional strategies. In a multi-SBU organisaion, the business-level strategies are inserted between corporate-level strategy and fuctional strategies and the strategies of these SBUs are guided by the corporate strategy.

Corporate-Level Srategy Corporate-level strategy occupies the. highest level of strategic decision making and covers actions dealing with the objectives of the organisation, acquisition and allocation of resources, and co-ordination of various SBUs for optimal performance. Such decisions are made by top management of the organisation. The nature of strategic decisions tends to be value-oriented, conceptual, and less concrete than decisions at the business or functional level.

Business-Level Strategy Each SBU sets its own strategies in order to make best use of its resources and competitive competence. At the SBU level, strategy is a comprehensive plan providing objectives for each SBU, allocation of resources among functional areas, and co-ordination among various SBUs for making optimal contribution to the achievement of corporate-level objectives. SBU strategies operate within the overall strategies of the organisation. The corporate strategies set the long-term objectives of the organisation and the broad constraints and policies within which each SBU operates. The corporate level helps a SBU to define its scope of operations and also limits or enchances the SBU's operations by the resources that corporate level assigns to it. Thus, there is a difference

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between corporate-level and business-level strategies. For example, Andrews (1971) suggests that "in an orgainsation of any size or diversity, corporate strategy usually applies to the whole enterprise, while business strategy, less comprehensive, defines the choice of product or service and market of individual businesses within the firm. In other words, business strategy relates to the 'how' and corporate strategy to the 'what'. Corporate strategy defines the businesses in which a company will compete preferably in a way that focuses resources to convert distinctive competence into competitive advantage."

Thus, corporate strategy is not the subtotal of business strategies of the organisation but it deals with different subject-matter. While the corporate strategy is concerned with and has impact on business strategy, the former is concerned with the shaping and balancing of growth and renewal rather than market execution.

Functional-Level Strategy Functional strategy relates to a single functional operations and activities involved therein. Decisions at this level are often described as tactical. Such decisions are guided and constrained by overall strategic considerations. Functional strategy deals with relatively restricted plan providing objectives to a specific function, allocation of resources among different operations within that functional area, and coordination among them for optimal contribution to the achievement of the SBU and corporate-level objectives.

STRATEGIC DECISION Strategic decision and decision making are the core of strategic management. Therefore, it is desirable to understand the nature of strategic

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decision so that strategists invlove themselves in making strategic decisions rather focusing on operational decisions. A decision is a choice of a course of action out of the several alternatives. Lopez (1977) has defined a decision as follows:

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"A decision, represents a judgement; a final resolution of a conflict of needs, means or goals; and a commitment of action in face of uncertainty, complexity, and even irrationality." Thus, a decision has three elements - action which the decision specifies, commitment of resources, and result which is expected to be achieved out of implementation of the decision. Strategic decision is a major one in the organisation and involves a major choice of action concerning commitment of resouces with a view to achieve organisational objectives. Thus, a strategic decision has the following features: 1..

Strategic decision is a major action that affects the entire organisation or its significant part. It affects long-term prosperity of the organisation because of long -term commitment of resources. Once the resources are committed to a particular alternative, these cannot be taken back.

2.

Strategic decision involves heavy cost because of huge commitment of resources - physical, financial.and human - to implement the decision.

3.

Strategic decision has high level of futurity because of commitment of resources for long-term. Because of high level of futurity, decision-making conditions for a strategic decision are characterised by uncertainty and risk rather than certainty.

4.

A strategic decision is made after analysing various factors bolh within the organisation and its environment with more emphasis

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put on the environmental factors. Therefore, the strategic decision makers have to look beyond the current operations of the organisation. 5.

A strategic decision is made by top management of the organisation which has much wider perspective of the organisation and its environment as compared to middle and lower management though in decision making process, top management may take help from managers at these levels.

Strategic versus Operational Decisions As against a strategic decision which sets direction for organisational operations, an operational decision is derived out of a strategic decision and is confined to taking actions necessary for putting a strategic decision into operation. Thus, an operational decision differs from a strategic decision in the following manner: 1.

Operational decision is concerned with how a chosen major action is put into operation so that the objectives specified in the major action are achieved. A strategic decision does not bring results automatically but these results are achieved only when the strategic decision is put into action through a series of operational decisions.

2.

Since operational decision is derived out of a strategic decision, it is a programmed one. The operational decision can be programmed through the prescription of policies, procedures, rules, etc. Thus, the decision is made in the context of these prescriptions.

3.

Operational decision is of short-term nature and affects a narrow part of the organisation. Since it is repetitive, similar decision making is required frequently.

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4.

Authority for making operational decisions is delegated to lowerlevel managers. This is done becuase of two reasons. First, the impact of an operational decision is narrow and has short-term orientation. Therefore, the lower-level managers have adequate perspective to make such a decision. Second, by delegating authority for making operational decisions, higher-level managers can devote more time on taking up strategic issues in the organisation.

STRATEGIC PLANNING Strategic planning is the most crucial aspect of strategic management. Planning is a process which invloves the determination of future course of action, that is, why an action, what action, how to take action, and when to take action. These why, what, how, and when are related with different aspects of planning process. Why of action reveals that the action has some objectives or end result which an orgainsation wants to achieve; what of action specifies the activities to be undertaken; how and when generate various plans, policies, procedures, rules, methods and other related elements. Thus, all these elements speak about futurity of action.

Comprehensive planning process in an organisation is known as corporate planning which comprises strategic planning and operational planning. Strategic planning sets the direction for the organisation in which it wants to proceed in future. Anthony (1965) has defined strategic planning as follows : "Strategic planning is the process of deciding on objectives of the organisation, on changes in these objectives, on resources used to attain these objectives,

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and on the policies that are to govern the acquisition, use, and diposition of these resources."

Strategic planning encompasses all the functional areas of business and is effected within the existing and long -term framework of environmental varibales. Strategic planning also invloves the analysis of various environmental factors particularly with respect to how the organisation relates itself to the relevant environment. Strategic planning is undertaken for longer period, however, the exact period of strategic planning may differ from organisation to organisation depending on the strategic management practices adopted by them.

As against strategic planning, operational planning covers usually one year or so. It is aimed at sustaining the organisation in its production and distribution of current products and services to the existing markets. Thus, operational planning is the process of deciding the programmes for most effective use of the resources already allocated and to develop a control mechanism to assure effective implementation of the actions so that organisational objectives are achieved; Operational planning is, based on strategic planning and answers the following questions related to an action : 1.

Why is the action required?

2.

What action is to be undertaken?

3.

What are the results expected from the action?

4. . What are the conditions that must be met? Since operational planning is derived out of strategic planning, both these processes should be fully co-ordinated so that both proceed in the same direction.

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STRATEGIC PLAN Strategic plan emerges from the completition of strategic planning process. There is a difference between planning and plan though both these words appear to be similar. Pjanning is an activity. It can be considered as a process; therefore, there are various subactivities involved in it. On the other hand, plan is a commitment to a particular course of action believed necessary to achieve specific results. Thus, a plan is prepared through the planning process. Strategic plan is a document which provides information regarding the different elements of strategic management and the manner in which the organisaion and its strategists propose to put the strategy into action. A comprehensive strategic plan document may contain the following information : 1.

A statement covering the organisational mission, objectives, and business definition.

2.

Results of environmental analysis in the form of opportunities, threats, and critical success factors.

3.

Results of organisational analysis in the form of strengths and weaknesses.

4.

Strategies chosen and the assumptions under which these strategies would be relevant and contingency strategists to be used under different conditions.

5.

Statement showing resources that are required to implement these strategies and the manner in which these resources would be procured and allocated.

6.

Proposed changes in organisation structure and various systems required for the implementation of strategies.

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7.

Functional plans required to implement strategies and the way these would be co-ordinated and integrated. A strategic plan document may be quite lengthy running into several

pages or it may be brief showing the highlights of the actions to be ✓

undertaken, depending on the organisational practices in this regard.

STRATEGIC MANAGEMENT Having explained the concepts of strategy, strategic decison, strategic planning, and strategic plan, the concept of strategic management may be elaborated. Strategic management is a process. A process denotes that it has various activities and these must be performed in a systematic manner. From this point of view, a process appears to be very simple phenomenon. However, this simplicity appears only on conceptual level. In actual practice, the process becomesmuch more complex because it works as an identifiable flow of information through interrelated stages of analysis directed towards the achievement of objectives. The process is dynamic,continuous and flexible, and as such , it must be considered as a whole; a dynamic interaction both affecting and being affected by many varibales. This phenomenon restricts the formulation of exact and precise definiton of strategic management on conceptual basis. Therefore, operational definition of strategic management is required. Pearce and Robbinson (1999) have defined strategic management as follows : " Strategic management is primarily concerned with relating the organisation to its environment, formulating strategies to adapt that environment and assuring that implementation of strategies takes place." This definition emphasises on two major aspects : strategy

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formulation and its implementation and both these aspects are oriented towards achieving organisational objectives. Ansoff (1984) has defined strategic management without mentioning streategy formulation or implementation. According to him ✓

" Strategic management is a systematic approach to a major and increasingly improtant responsibility of general management to position and relate the firm to its environment in a way which will assure its continued success and make it secure from surprises." This definition puts emphasis on organisation-environment interface and relating the organisation to its environment for continued success. It may be mentioned that organisation-environ-ement interface can be successful only through the formulation of appropriate strategies and their effective implementation. Thus, strategic management can be defined as a continuous process of relating the organisation with its environment by suitable course of action involving stgrategy formulation and ensuring that the strategy has been implemented effectively. The strategic management has the following features : 1.

Strategic management is a process. It has emerged out of management in other fields where the concept of management is taken as a process for achieving certain objectives of the organisation. Thus, strategic management involves establishing a framework to perform various relevant activities.

2.

The focus of strategic management is on relating the organisation to its environment. This emphasises that there is continuous interaction between the organisation and its environment taking an open system approach. Thus, .the organisation must create

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adequate channel through which external information should pass to various points in the organisation. 3.

Strategic management is basically top management function. Thus, in order to ensure effective performance of top management function, it is necessary to make a distinction between strategic management and operational management which emphasises day-to-day operations in the organisation. If such a distinction is made, top management can concentrate more on strategic aspects leaving the operational aspects to the lower-level management.

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STRATEGIC MANAGEMENT PROCESS Strategic management is basically a process of relating an organisation to its environment by suitable course of action. Every action has two dimensions : substantive and procedural. Substantive dimension of action involves determination of what to do and procedural dimension of action involves'determination of how to do. Both these dimensions are interdependent and, taken together, help in achieving the objectives for which action is contemplated. In the case of strategic management, substantive dimension involves determination of a strategy or a set of strategies and procedural dimension involves putting a strategy into operation. Strategy formulation and implementation involves a number of fuctions fo be performed which are referred to as elements of strategic managements process. However, strategic management being a continuous and dynamic process, there are two problems in identifying and sequencing these elements which are as follow : 1.

Various authors and even practitioners are not unanymous about these elements and the way they interact among themselves. Thus, there is lack of precision so for as these elements are concerned.

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2.

Even if various elements are identified, another problem emerges in the form of prescribing their sequential arragement because strategic management is a continuous process without an apparent beginning and end. The above two problems are real and show the complexity of strategic

management process. Inspite of these problems, model of strategic management can be prescribed. Figure 1.1 shows various elements of strategic management process and the way they interact among themselves.

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Figure 1.1 : Model of strategic management process

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The strategic management process shown in Figure 1.1 is applicabole to a single strategic business unit (SBU) organisation. For a mutiple SBU organisation, the process of strategic management as gvien in Figure 1.1 is adjusted so that the process is conducted at corporate level as well as at SBU levels because such an organisation inserts SBU strategy between corporate strategy and functional strategies. Ftowever, the basic process of strategic management and its various elements remain the same in both types of organisations. Thus, various elements of strategic management process are organisational mission (this may also include long-term, enduring qualitative objectives like survival, growth, etc. and exclude long-term quantitative objectives to be achieved during strategic plan period), environmental anylysis, organisational analysis, identification of alternative strategies, choice of strategy, implementation of strategy, and strategic evaluation and control. Feedback is provided in the light of strategic evaluation and control to take additional actions wherever required so that objectives are achieved. A brief description of these elements are provided here : 1.

Organisational Mission and Objectives - Mission of an

organisation is the fundamental unique purpose that sets it apart from other organisations and identifies the scope of its operation in product and market terms. The mission is a general, enduring statement of the organisation's intention. It embodies the strategic decision maker's business philosophy and implies the image which the organisation seeks to project. This mission becomes the cornerstone for strategic management and all organisational functions revolve around it. Organisational objectives are other factors which determine strategy. Objectives are different from the mission in the sense that latter prescribes

the basic philosophy of the organisation

itself which is used in determining the objectives. Objectives are + h o n *-> r1

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2.

Environmental Analysis - The second important element of strategic

management process is environmental analysis. An organisation operates within the environment which consists of many factors such as society, competitors, technology, legal framework, etc. The organisation has to interact with these factors continuously. In this interaction process, the organisation has to relate itself with the environment. Various environmental factors have dual effect in the interaction process with the organisation; they affect the organisational working and are also affected by this working. However, the effect of environment is more on the organisation rather than otherwise. The organisation-environment interaction provides opportunities and threats to the organisation depending on the situation.

3.

Organisational Analysis - Various opportunities and threats provided

by the environment can be handled by an organisation depending on its strengths and weaknesses and how these are utilised. For identifying organisational strengths and weaknesses, organisational analysis is undertaken. Organisation's strengths and weaknesses help in identifying the environmental sectors in which it would like to operate so that it emphasises its strengths and overcomes its weaknesses.

4.

Identification of Strategies - Interaction of the organisation with

its relevant environment in the light of its strengths results into availability of various strategies. However, all strategies, identified at this stage, cannot be chosen even if they produce the same results. Therefore, strategists may like to limit themselves to the serious consideration of some of the strategies so that they are saved from unnecessary exercise. Only those strategies need serious analysis which fit with environmental and organisational requirements.

5.

Choice of Strategy - Identification of various strategies leads to

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the level where strategists consider some strategies and choose the most acceptable one. This is the stage of strategic decision making and all factors relevant for decision making are considered here. Since a particular strategy attempts to affect organisational operations in some predetermined manner' the choice process systematically considers how each alternative strategy affects the various critical success factors of organisational functioning.

6.

Implementation of Strategy - Once the creative and analytical

aspect of strategy formulation is over, the organisation tries to convert the strategy into something operationally effective. To bring the desired results, the strategy should be put to action because mere choice of even the soundest streategy will not affect the organisational operations and achievement of its objectives. In strategy implementation, various activites involved are redesigning organisation structure to suit the chosen strategy, reshaping organisational culture and processes, development and allocation of resources, and development of functional plans and policies.

7.

Strategic Evaluation and Control - Strategic evaluation and control may

be treated as the final stage of strategic management process. However, since strategic management is an on-going process, strategic evaluation and control should be taken as the process for future course of action. For effective implementation of the strategy and consequently achievement of organisational objectives, it is necessary that there is continuous minitoring of strategy implementation so that suitable action is taken when something goes wrong. Strategic evaluation and control will provide feedback for taking necessary corrective actions. Depending on the situation, such actions may be required in the area of correcting strategy implementation, choice

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of strategy, or even change in organisational objectives. Thus, strategic management process is not taken as static, but as dynamic so that new action is taken whenever there is any change in any of the factors affecting strategy.

REVIEW OF RESEARCH ON STRATEGIC MANAGEMENT Strategic management, being a comparatively newer thinking in management, has not been researched systematically so far. In Indian context, some of the studies have been made on different aspects of strategic management process. These aspects include long-term planning process, objective setting, environmental analysis, and organisational analysis. Further, many of these’studies are in the form of case studies of individual companies. The findings of the relevant studies are presented briefly. Most of the companies specify their mission though not all of them express this in the form of mission statement. Further, the contents of mission statements of different companies show significant diversify. A perusal of mission statements of 21 companies by L M Prasad (2002) shows that differences among these statements exist in terms of contents as well as details. Most of the companies include organisation's selfconcept, organisational philosophy that is used in dealing with various stakeholders, and public image that they want to project. Few companies include long-term objectives in the form of growth and profitability. Still fewer companies include nature of their business in terms of products/ services being offered or to be offered, type of market segment to be served, and type of technology used. Similarly, some companies define their mission in quite.elaborated from running into two pages; others prefer to keep if brief covering half a page or even lesser. Companies define their long-term objectives in different areas. A

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strudy of objective setting practices of 65 large companies by Manohar Bhatia (1981) shows that many of these companies have multiple objectives. These companies set objectives in the area of corporate growth, maximisation of profit or returns, supply of qualify products, employee satisfaction,'and other objectives which include strengthening of manufacturing base, product mix change, maintaining market leadership, technological leadership, growing returns to shareholders, social obligations, maintaining of assets as national assets, export development, and funds management. In another sutdy of objective setting practices of 28 large companies by B R Singh (1983), it has been found that companies set objectives in the area of profit, growth, marketing, employee, and social obligations.

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Companies analyse different components of environment for identifying opportunities and threats. A study by B R Singh (1983) shows that while analysing their environment, companies put emphasis on economic, technological, competitive, regulatory, political, and socio-cultural factors in that order. On the basis of environmental anaylsis practices of 72 companies, Pramod Vaswani (1990) has found that companies used to put emphasis on competitive and market, technological, political and legal, economic, and socio-cultural factors in that order. On the basis of analysis of 90 speeches by chairmen.in 1983 and 1998, L /V\ Prasad (2002) had concluded that more emphasis has been put on competitive and technological factors in 1998 as compared to 1983; He has concluded that this is because of the globalisation of Indian economy which has generated intensive competition. For assessing organisational strengths and weaknesses, companies analyse various internal factors. According to Pramod Vaswani (1990), companies analyse marketing, production/operations, finance and accounting, and human resources factors for assessing their strengths and weaknesses and they put emphasis on these factors in that order.

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Companies use different time dimensions for formulating their strategic plans. According to Pramod Vaswani (1990), while 16 per cent companies plan for more than 5 years, 45 per cent companies plan for 1 to 2 years, and the remaining 39 per cent companies plan for 3 to 5 years. A recent survey of 160 companies by All India Management Association (1998) shows that 16 per cent companies plan for more than 5 years while 44 per cent companies plan for less than 3 years. The percentage of companies planning for 3 to 5 years is 40. In terms of size, 45 per cent of giant companies plan for more than 5 years while 70 per cent of smaller companies plan for less than 3 years. No research finding is available on how companies implement their strategic plans. The review of research on different aspects of strategic management shows that there is lack of comprehensive research on \ strategic management practices. Further, most of the studies have been

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conducted in pre-liberalised era. Therefore, their results may not be very \ relevant for post-liberalised era because the market situation has

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changed resulting into change in strategic management practices.

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Therefore, there is need for exploring these practices for wider (( dissemination. The present study makes an attmpt to satisfy this need.

OBJECTIVES OF THE STUDY The basic objective of this study is to identify strategic management practices adopted by Indian companies, particularly the large ones. For achieving this basic objective, following aspects of strategic management have been studied : 1.

Organisational mission and objectives.

2.

Environmental analysis.

3.

Organisational analysis.

4.

Choice of strategy.

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5.

Implementation of strategy.

6.

Strategic evaluation and control. Based on the analysis of the above aspects, conclusions have been

drawn about strategic management process which are likely to be helpful ✓

for those companies which have not adopted strategic management in a formalised manner. It is also expected that the conclusions of the study will enrich the existing literature on strategic management.