Introduction to Strategic Management: formula sheet

Key formulas

Strategy (Chandler's idea)

Strategy = long-term goals + courses of action + resource allocation

Use as the base of your definition. Attribute it to Alfred Chandler.

Strategy (Porter's idea)

Strategy = choosing a unique, valuable position different from rivals

Link it with competitive advantage and trade-offs.

Strategic management

Strategic management = analysis + formulation + implementation + evaluation

It is a continuous process, not a one-time plan.

Strategic vs operational decisions

Strategic: long-term, top level, high resources, hard to reverse, uncertain. Operational: short-term, lower level, routine, low resources, easy to reverse

Compare on at least five points in answers.

Corporate level question

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

Owned by board and top management. Scope is the whole organisation.

Business level question

Business strategy = how to compete in one business

Owned by SBU or business head. Covers positioning, cost or differentiation.

Functional level question

Functional strategy = how each function supports the business strategy

Owned by functional heads. Detailed, short-term and action oriented.

Direction of flow

Corporate → Business → Functional (guidance down, feedback up)

Use this to explain how the levels interrelate.

Core sequence of the process

Vision, mission and objectives → Environmental scanning (external + internal) → Strategy formulation → Strategy implementation → Evaluation and control → feedback to earlier stages

Stage names vary by author. Keep this order and say that the process is continuous.

Three phases

Formulation + Implementation + Evaluation and control

Use these as headings when the question asks for the process in brief.

Scanning outputs

External scan → Opportunities and Threats; Internal analysis → Strengths and Weaknesses

These four together form SWOT, which feeds strategic choice.

Hierarchy of strategic intent

Vision → Mission → Goals → Objectives → Strategies

Each level is more specific than the one before. Use this order when you explain how they link.

Vision vs mission

Vision = what we want to become (future); Mission = why we exist and what we do (present)

The standard point of difference in exams. Always give both time orientation and purpose.

Goals vs objectives

Goals = broad, long-term, often qualitative; Objectives = specific, measurable, time-bound

State this distinction in your answer, since some books use the terms loosely.

Features of a good objective (SMART)

Specific, Measurable, Achievable, Relevant, Time-bound

A handy checklist for framing or testing an objective. Use it when a question asks you to frame objectives.

Typical content of a mission statement

Customers + Products/Services + Markets + Technology + Concern for survival and growth + Philosophy + Public image

Use as a checklist when asked to evaluate or draft a mission. Do not claim every mission must contain all items.

Board role in strategy

Board = direction + approval + oversight

The board sets and approves strategy and monitors performance. It does not manage daily operations.

CEO role in strategy

CEO = formulation + implementation + leadership

The CEO is the chief strategist and is accountable to the board for results.

Strategists by level

Corporate level: board, CEO | Business level: business heads | Functional level: functional managers

Use this to structure answers on who is responsible for which level of strategy.

Company Secretary role

CS = governance adviser + compliance guardian + board facilitator

The CS supports strategy through legal and governance advice and does not replace the CEO's role.

Quick revision

• Strategic management is a continuous process of setting direction, choosing, implementing and evaluating strategy.
• Strategy looks at the long term and the whole organisation, unlike operational decisions, which are short-term and routine.
• Three levels: corporate, business and functional, from broad to specific.
• Corporate-level strategy decides which businesses the firm should be in.
• Business-level strategy decides how to compete in a particular business.
• Functional strategy supports the business strategy through departments such as finance, marketing and operations.
• The process covers direction-setting, analysis, strategy choice, implementation and evaluation, and it loops back.
• Vision says what the organisation wants to become; mission says what it does and for whom.
• Goals are broad aims; objectives are specific and measurable steps towards them.
• Strategists are the people who shape and drive strategy, from the board and top management to unit heads.
• Context changes the challenge: size, ownership and sector all affect how strategy is made and applied.
• In answers, define, apply to the case facts, then conclude.

Common mistakes

• Treating strategy and strategic management as the same thing Fix: Say strategy is the plan and strategic management is the whole process of analysing, formulating, implementing and evaluating.
• Writing only a definition and no features or importance Fix: Add features and importance points with brief explanations whenever the question asks to explain or discuss.
• Treating business level strategy as the same as corporate strategy. Fix: Ask: is the decision about the portfolio of businesses (corporate) or winning in one business (business)?
• Calling functional strategy a separate, independent plan. Fix: State that functional strategy must support the business strategy and fit the corporate direction.
• Treating the process as a straight line with no feedback. Fix: Always draw a feedback arrow from evaluation and control back to earlier stages and mention it in writing.
• Mixing up formulation and implementation. Fix: Formulation is deciding what to do. Implementation is organising structure, resources and people to do it.
• Treating vision and mission as the same thing. Fix: Always tie vision to the future and mission to present purpose and scope. Give one example of each.
• Writing a vision or mission full of vague praise such as 'best in class' with no focus. Fix: Point out that a good statement is clear, specific enough to guide choices, and realistic. Say so in evaluation answers.
• Saying only the CEO is the strategist. Fix: State that strategy involves the board, CEO, senior managers, planners and others. Present the CEO as the chief strategist, not the only one.
• Giving the board a daily management role. Fix: Say the board provides direction, approval and oversight. Management, led by the CEO, runs operations and implements strategy.

Exam tips

• Memorise one-line ideas for Chandler and Porter and use them to open definition questions.
• For distinguish questions, draw a clean two-column table with five or more bases; this is easy to score.
• Always add a short, relevant example, preferably an Indian company or a realistic business scenario.
• In case-based questions, name the fact that makes a decision strategic before concluding.
• Link the topic to the strategic management process in a closing line to show connected understanding.
• Always give the key question, owner and an example for each level. Marks usually go for all three.
• In case questions, decide the level from the scope of the decision, then name it clearly in your first line.
• Add a short line on interrelation, even if the question does not ask for it. It shows understanding.