After the economic liberalization announced in India in 1991, strategic management has gained greater relevance.
management in India
After the economic liberalization
announced in India in 1991, strategic management has gained greater relevance.
In fact it is a major thrust area after the WTO meet of December 2005 held in
Hong Kong. Figure 2.3 lists the environmental changes that have increased the
rele-vance of strategic management. In view of this to make strategic
manage-ment effective organizations are showing some new initiatives described
1. The abolition of public sector monopoly or dominance in a number of industries has enormously increased business opportunities. Many of them are high-tech and heavy investment sectors which make strategic management all the more relevant.
2. The delicensing has removed not only an important entry and growth
barrier but also a consumption (and, therefore, demand) barrier. In the past,
because of non-production/limited production and import restrictions, many
goods were non-available or had limited availability (in quantity and /or
variety). 3. The scrapping of most of the MRTP Act restrictions on entry, growth and
Mergers &Acquisitions (M&As) , along with the dereservation and
delicensing of industries referred to above, have opened up flood-gates of
business opportunities for large enterprises.
4. The liberalization in policy towards foreign capital and technology,
imports and accessing foreign capital markets provides companies opportunities
for enhancing their strengths to exploit the opportunities. 5. The liberalization in other countries, the expanding foreign markets,
the growing competition in India, the new policy environment etc., increase the
importance of foreign markets and strategic management. 6. The grant of more autonomy to the public sector enterprises, as in the
case of the navarathnas, increases the scope of strategic management.
Trend Setters in Indian Economy Source: Cherunilam, Francis( 2002)
Strategic Management, Himalaya
Publishing Company, New Delhi
(i) Developing learning organization Strategic flexibility demands a
long-term commitment to the development and nurturing of critical resources. It
also demands that the company become a learning organization – an organization
skilled at creating, acquiring, and transferring knowledge, and at modifying
its behavior to reflect new knowledge and insights. Organizational learning is
a critical component of competitiveness in a dynamic environment. It is
particularly important to innovation and new product development. For example, Hewlett-Packard uses an extensive
network of informal committees to transfer knowledge among its cross-functional
teams and to help spread new sources of knowledge quickly.
(ii) TQM Implementation The very purpose of strategic
management is to win over its competitors. Total quality Management (TQM) is an
organizational philosophy that aims at maximizing customer satisfaction by
constantly striving to enhance operational efficiency through out the
organization. It is a start to finish process that systematically integrates
the strategy and all the function activities of the organization. Most of the
Japanese companies adopted TQM practices in 1970 itself. TQM method measures customers’
needs, measures and evaluate customer satisfaction delivered by the product or
service ,and engages the organization in continuous improvement to stay
tuned-in to changes in customers’ needs”. The essential characteristics of
TQM are: A customer-driven definition of quality Strong quality leadership Emphasis on continuous improvement Reliance on facts, data, and analysis Encouragement of employee participation It is imperative for a company,
which has adopted the TQM to integrate it with every phase of the strategic
Environmental Analysis and TQM The environmental analysis of a
company with TQM connects the needs of the external customer (the entirety that
buys the good or service of the company) with the various activities of the
Organizational Decision and TQM TQM influences the organizational
direction by embodying the quality philosophy in the organizational mission.
Indeed, the missions of a number of organizations emphasize that quality and
continuous improvement must drive every action of the organization.
Strategy Formulation and TQM TQM helps make strategy
implementation very efficient because of the clarity of organizational goals
and direction, and the work and relationships culture fostered by TQM.
Strategic Control and TQM Systems established under TQM and
the favorable change in the organizational culture make strategic control more
effective. Benchmarking also helps efficient control.Information
technology adaptation Until the mid 1989 business firms
were successfully making profits without using Internet or launching their
websites. Today virtual shopping and online retailing supplement brick and
mortar sales. A great success is that of amazon.com, which do not involve in
brick and mortar retailing at all. All their sales come from online business
only today. Space providers like e-bay.com
are becoming increasingly popular in India after taking over bazee.com.
Executives today are electronic executives who cannot operate without World
Globalizing Operations Nike and Reebok, for example,
manufacture their athletic shoes in various countries thorough out Asia for
sale on every continent. Instead of using one international division to manage
everything outside the home country, large corporations are now using matrix
structures in which product units are interowen with country or regional units.
International assignments are now considered key for anyone interested in
reaching top management.
As more industries become global,
strategic management is becoming an increasingly important way to keep track of
international developments and position the company for long-term competitive
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