Strategic management

1. Master Strategy:

A master or grand strategy implies the entire pat­tern of goals, policies and resource deployment of an organization. It provides unified direction to the entire organization. For instance, deve­lopment of a new product to replace a declining product is a master strategy.

2. Programme or derivative strategy:

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It refers to the specific deploy­ mint of resources. It is designed to support the master strategy for the achievement of organizational goals. For instance, heavy advertising is a programme strategy for the master strategy described above.

3. Sub-strategy or minor strategy:

It is more specific and detailed and it is prepared to execute a programme strategy. In the above example, employment of a particular advertising agency may be a sub-strategy.

Strategies may also be classified as grand strategy, competitive strategy and growth strategy. Grand strategy determines the future pic­ture-of the organization while competitive strategy is designed to encounter the forces of competition. Growth strategy is formulated to achieve desired rate and form of growth of the organization.

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Strategy Formulation:

The responsibility for strategy formulation lies with the top management. Formulation of effective strategies requires a thorough analysis of external environment (for opportunities and threats) as well as of internal environment (for resources and capabilities). The main steps in strategy formulation are as follows:

1. Environmental Analysis:

A corporate strategy is a plan designed to provide an optimal match between the company and its environment. Therefore, evaluation of environment is the first step in strategy formula­tion. Such evaluation helps to identify environmental opportunities and threats.

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The environment of an organization is the pattern of all external influences that affect its life and development. It consists of governmen­tal policies and laws, political set up, -economic factors, social and cultural factors, etc.

2. Corporate appraisal:

Assessment of organizational strengths and weaknesses is essential. With the help of such appraisal, a strategy can be designed to capitalize on strengths while avoiding weaknesses.

3. Strategic decision making:

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This step involves three steps. First of them is developing alternative strategies. Secondly, the strategic alter­natives are evaluated. Thirdly, the most appropriate strategy alternative is selected in the light of the goals, values and anticipated environment of the organization.