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MGT 404

Strategic Management

TU BITM · Semester 7 · BITM curriculum and programme regulation

Requirement
required
Credits
3
Study Guide
5 units available

Chapter notes

Authoritative study guide across 5 syllabus units

Open a unit to read its study notes.

Unit 1: Introduction· 9 LHs· ~11 marks

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Part 1: Core Concepts (2 Marks)

Academic Definition of Strategic Management

According to Thomas L. Wheelen and J. David Hunger, “Strategic management is that set of managerial decisions and actions that determines the long-run performance of a corporation. It includes environmental scanning (both external and internal), strategy formulation (strategic or long-range planning), strategy implementation, and evaluation and control.”

The Hierarchy of Strategic Intent

  1. Vision: An aspirational, inspirational picture of what the organization ultimately wants to become in the distant future (“Where do we want to go?”).
  2. Mission: A formal summary of the fundamental, unique purpose that sets the enterprise apart from others, identifying its scope of operations in product, market, and geographic terms (“Who are we, what do we do, and why do we exist?”).
  3. Core Values: The enduring moral and operational principles that guide internal conduct and external relationships.
  4. Strategic Objectives: Concrete, quantifiable, measurable performance targets with specific completion deadlines (SMART: Specific, Measurable, Achievable, Relevant, Time-bound).

Part 2: Structural Frameworks (10 Marks)

1. The Three Tiers of Enterprise Strategy

CORPORATE-LEVEL STRATEGY

  • Board of Directors & Executive Suite (CEO):
  • “What overall industries and businesses should we be in?”
  • Portfolio allocation, mergers, corporate parenting
  • BUSINESS-LEVEL STRATEGY (SBU)
  • Divisional Presidents & General Managers:
  • “How do we compete and win in this specific market?”
  • Cost leadership, differentiation, niche focus
  • FUNCTIONAL-LEVEL STRATEGY
  • Department Heads (Marketing, Finance, Ops, HR, R&D):
  • "How do we execute daily operational excellence to
  • support the business strategy?"

2. The Four-Stage Strategic Management Process

Law of Variable Proportions (Total, Marginal & Average Product Dynamics)

MP=AP  ⟹  APmax⁡,MP=0  ⟹  TPmax⁡,MP<0  ⟹  Stage IIIMP = AP \implies AP_{\max}, \quad MP = 0 \implies TP_{\max}, \quad MP < 0 \implies \text{Stage III}
Economic State / Output Region Curve Trajectory & Relationships Analytical & Decision Rule
Stage I (Increasing Returns) MP rises to peak, then declines but remains MP > AP Sub-optimal; fixed factor underutilized
Stage II (Diminishing Returns) MP falls continuously from AP=MP to MP=0 RATIONAL OPERATING ZONE; optimal input allocation
Stage III (Negative Returns) MP becomes negative; TP actively declines Irrational; variable inputs overcrowd capacity

Part 3: Distinction Tables

Basis of Comparison Vision Statement Mission Statement
Temporal Horizon Future-oriented (Where we are striving to go over 10–20 years) Present-oriented (What we are doing today, our current reason for being)
Primary Audience Inspires internal employees, leaders, and prospective investors Informs external customers, communities, suppliers, and staff
Core Question “What do we want to become?” “Who are we, what business are we in, and who do we serve?”
Example “To be the most trusted and customer-centric bank in South Asia” “Providing accessible, secure digital banking services to every Nepalese household”

Part 4: Worked Problems & Exam Traps

Strategic Formulation Archetype: Crafting Vision and Mission for a Conglomerate

Scenario: A large traditional trading house in Nepal is reorganizing into a renewable energy conglomerate. Draft its new strategic intent statements.

Strategic Statements Formulation:

  1. Vision: “To power a carbon-neutral Nepal by becoming the Himalayan region’s foremost producer and exporter of clean hydroelectricity and green hydrogen by 2040.”
  2. Mission: “We develop sustainable, community-partnered run-of-the-river hydroelectric projects through world-class engineering, delivering stable clean energy to Nepalese industries while generating superior long-term returns for our shareholders.”
  3. Strategic Objective: “To commission 250 MW of clean hydro capacity across Gandaki province by Chaitra 2085, generating an annual ROE exceeding 18%.”

Exam Trap: Strategic management is NOT an annual event! It is a continuous, iterative feedback loop where environmental scanning constantly informs operational strategy.