Introduction to Strategic Management: formula sheet

Key formulas

Corporate level

Corporate strategy = which businesses to be in + how to allocate resources among them

Whole-organisation scope. Set by board and top management. Long-term and hard to reverse.

Business level

Business strategy = how to compete in one business or SBU

Focus on competitive advantage in a particular product-market. Set by business or divisional heads.

Functional level

Functional strategy = how a department supports the business strategy

Marketing, finance, operations, HR and similar. Short-term, detailed and action oriented.

Flow of strategy

Corporate → Business → Functional (direction and resources flow down; feedback flows up)

Use this line to show how the levels relate.

Hierarchy of strategic intent

Vision → Mission → Goals → Objectives → Strategy

Moves from broad and long-term to specific and measurable. Strategy is the means to reach the objectives.

Vision in one line

Vision = what we want to become (future, aspirational)

No figures or deadlines needed.

Mission in one line

Mission = why we exist, what we do, for whom (present, purposeful)

Covers customers, products, markets, values.

Goals vs objectives

Goals = broad, general; Objectives = specific, measurable, time-bound

Some texts use the terms loosely. State your distinction.

Good objectives (SMART)

Specific, Measurable, Achievable, Relevant, Time-bound

Use as a checklist to test or write an objective.

Features of strategic decisions (memory aid)

Long-term + Organisation-wide + Top-level + Major resources + Uncertain + Hard to reverse + Environment-linked

Use as a checklist when asked for characteristics. Explain each point in one line.

Decision hierarchy

Strategic (top) → Tactical/administrative (middle) → Operational (lower)

Strategic sets direction, tactical allocates resources to functions, operational runs daily activity.

Comparison bases

Time horizon, level of management, scope, resources, risk, frequency, reversibility, information needed

Use these as rows in your strategic vs operational comparison.

Quick revision

• Strategic management is deciding direction, choosing actions, implementing them and reviewing results.
• Strategy is long-term in nature and affects the whole organisation's scope and competitive position.
• Three levels of strategy: corporate, business and functional.
• Corporate level decides the overall scope and portfolio of businesses.
• Business level focuses on competing successfully in a particular business or market.
• Functional level supports the business strategy through departments such as marketing, finance and operations.
• The process runs from setting direction through formulation and implementation to evaluation and control.
• Vision describes what the organisation wants to become; mission describes its purpose and what it does today.
• Objectives are specific and measurable ends; goals are broader, so learn the distinction in your study material.
• Strategic decisions are major, long-term, resource-heavy and hard to reverse.
• Strategists are the people responsible for strategic decisions, mainly top management and the board.
• A strategic business unit is a distinct business with its own mission, competitors and planning.

Common mistakes

• Treating strategy and tactics as the same thing. Fix: Check the time horizon and scope. Strategy is long-term and organisation-wide. Tactics are short-term and specific to a function or situation.
• Calling policy a plan of action instead of a guide for decisions. Fix: Remember that a policy guides thinking and keeps decisions consistent. It does not by itself say how to compete.
• Treating business level strategy as the strategy of the whole company. Fix: Remember that business level means one SBU or one product-market. The whole-group view is corporate.
• Calling a department's plan a business strategy. Fix: Marketing, finance and operations plans are functional. They support the business strategy and do not replace it.
• Mixing up strategy formulation and strategy implementation. Fix: Formulation is deciding what to do. Implementation is doing it through structure, resources and leadership.
• Skipping vision, mission and objectives and starting with SWOT. Fix: Always begin with direction. Analysis is done against stated objectives.
• Treating vision and mission as the same thing. Fix: Remember: vision is future and 'become', mission is present and 'do'. Write the time orientation in every comparison.
• Calling a broad aim an objective. Fix: Check for a measure and a deadline. If both are missing, it is a goal.
• Writing that strategic decisions are only about money or only about the long term. Fix: Give a full set of features: long-term, wide scope, high resource commitment, uncertainty, difficult to reverse.
• Giving a comparison with only two or three differences. Fix: Memorise six or more bases: time horizon, level, scope, resources, risk, frequency, reversibility, information.

Exam tips

• Definition and features questions are common for short notes, so prepare a seven-point features list with one line each.
• For difference questions, use a two-column layout with at least five bases to earn full marks.
• In MCQs, decide by time horizon and scope: long-term and organisation-wide points to strategy.
• Add a brief Indian company example to lift a descriptive answer, but keep it to one or two lines.
• Learn the importance points as a short list: direction, anticipating change, better resource use, sound decisions, competitive advantage.
• Expect both theory and case-based classification. Practise labelling decisions with the three-question test.
• For a 'differentiate' question, use a point-by-point comparison with four or five heads. Examiners reward clear structure.
• Always state who decides at each level and the scope. These are the most commonly tested points.