Thus, the need arises to have a blue print that tells how to go about it Companies need to diverse, differentiate, integrate backward or forwards, and manage business portfolio balanced. And hence they need to plan - develop a vision, set the mission, develop long term plans and further break them into objectives to achieve the desired goal. But it is important that the strategy is to be consistent with the organizational goals and policies, it should be flexible enough to respond to the faster changing environment in which it is operating, and it should add value to the organization and become a source of advantage over its competitors, and lastly, it should be feasible and practical enough to get through.
Strategic management can be defined as the art and science of formulating, implementing, ad evaluating cross-functional decisions that enable an organization to achieve its objectives (David F.R., Strategic Management). The process of strategic management involves three stages, viz. formulation of a strategy, implementing a strategy and lastly, evaluating the strategy. Since, organizations have limited resources thus they need to choose from amongst the alternatives available. Setting a strategy starts with developing a strategic vision so as to provide long term direction, and provide a purpose to the organization. The strategic vision is then converted into specific performance objectives for the company to achieve. And then forming strategies to achieve the desired outcomes that have been developed in the form of objectives. This all was the planning portion of the process; no strategy is useful until it is implemented and executed effectively and efficiently. In the end, evaluation stage begins which requires comparing actual i.e. the reality with the planned.
But as companies prosper and grow they need to diversify into new areas. Companies have to balance their portfolios well enough with cash cows, stars, dogs and question marks so that cash needs growth needs all are being fulfilled by the company. Strategy analysis requires companies to understand their markets, their cost structure, and also the capabilities underlying the firm i.e. any of the core competencies or the distinctive competencies that the company possesses. Companies need creativity and new ideas to identify any potential gaps in the strategy, the markets etc. which will lead them to make and implement a solid strategic plan to serve the new and existing markets.
Huge businesses are normally divided into the strategic business units. These strategic business units are the individual planning units contained within one large and diversified business serving either the external or the internal market. They make independent decisions for themselves and have a control over their own destiny. They have competitors and are profit centers for the company but still independent.
Companies already have so many products and services have many other growth initiatives because of the factors such as globalization, services, quality and the emerging e-businesses. Globalization is not only letting companies to enhance their revenue