MANAGEMENT INFORMATION SYSTEM

Third Year Information Technology

Part 04Management of Business

Tushar B Kute,Department of Information Technology,Sandip Institute of Technology and Research Centre, Nashikhttp://www.tusharkute.com

CONCEPT OF CORPORATE PLANNING

A plan is predetermined course of action to be taken in the future.

The goals and objectives that a plan is supposed to achieve, are the pre-requisites of the plan.

Planning is a dynamic process. As the future becomes present reality, the course of action decided earlier may require a change.

Planning involves a chain of decisions, one dependent on the other, since it deals with a long term period.

CONCEPT OF CORPORATE PLANNING

Long Range A period of five or more years. Deals with resource selection, acquisition, allocation.

Short Range For one year at most.

DIMENSIONS OF PLANNING

Time Long range or short range.

Entity The production in terms of quantity or new product. It could

be about finance, marketing, capacity, manpower or research and development.

Organization The corporate plan could deal with the company as whole.

Elements The plan begins with the mission and goal which the

organization would like to achieve.

DIMENSIONS OF PLANNING

Characteristics The choice of characteristics is a matter of convenience

helping to communicate to everybody concerned in the organization and for easy understanding in execution.

The typical characteristics of a corporate plan are goals, the resources, the important milestones, the investment details and a variety of schedules.

ESSENTIALITY OF STRATEGIC PLANNING Market forces

Demand and supply. Technological change

Made product obsolete, threatening current business, and created new business opportunities.

Complex diversity of business Expansion: vertical or horizontal Integration: Forward or backward.

Competition Fighting a number of fronts.

Environment (Threats, Challenges and Opportunities)

DEVELOPMENT OF BUSINESS STRATEGIES Long range strategic planning

Mission: purpose of organization for which it work. Set targets for detailed working and reference: the

objective of the business is to be translated in terms of functional and operational units.

STRATEGY FORMULATION MODEL

Environment Socio-economicPurpose Mission, Goals

Factors for Strategy

Formulation

Strength and Weakness of

the organizationBusinessStrategy Competition

TYPES OF STRATEGIES

Overall company Strategy Growth Strategy Product Strategy Market Strategy

OVERALL COMPANY STRATEGY

A very long term business perspective, deals with the overall strength of the entire company and involves those policies of the business which will dominate the course of the business movement.

It is the most productive strategy, if chosen correctly and fatal if chosen wrongly.

Other strategies act under the overall company strategy.

OVERALL COMPANY STRATEGY: EXAMPLES A two wheeler manufacturing company will have a strategy of

mass production and aggressive marketing. A computer manufacturer will have strategy of adding new

products every two or three years. A consumer goods manufacturer will have a strategy of maximum

reach to the customer and exposure by way of wide distribution network.

A company can have a strategy of expanding very fast to capture market.

A third company can have strategy of creating a corporate brand image to build a brand loyalty. E.g. Escorts, Kirloskar, Godrej, Tata, Bajaj, BHEL, MTNL.

GROWTH STRATEGY

Growth may be either mean the growth of existing business turnover, year after year, or it may mean the expansion and diversification of the business.

Growth strategy means the selection of a product with a very fast growth potential.

These are adopted to establish, consolidate and maintain a leadership and acquire a competitive edge in the business and industry. It has a direct, positive impact on the profitability.

PRODUCT STRATEGY

Product strategy means choice of a product which can expand as a family of products and provide the basis for adding associated products.

Examples: A company producing low prices detergent pressure cookers

enter the business of making ovens, boilers, washing machines and mixers- the products for home markets.

A company producing s low prices detergent powder enters the business of washing soap and soap bath.

A company producing refrigerators offers wide range of models with different capacities and features and further enters into the market of coolers, window air conditioners etc.

MARKET STRATEGY A marketing strategy deals with the distribution,

services, market research, pricing, advertising, packing and choice of the market itself. Examples: Many companies adopt the strategy of providing after sales

service of the highest order. A company can offer its product in different packages keeping

in mind the consumer budget. A company can arrange for loan facilities to buy its products

and keeps prices low. A computer company manufactures computers and markets

them through the market leader under their brand name. Marketing strategy generally centered around quality, price

service and availability.

SHORT RANGE PLANNING

Its deals with the targets and the objectives of the organization. Based on the goals and objectives, a short range plan provides the scheme for implementation of the long range plan.

Short range plans are made for one year in terms of the targets which are to be achieved within the given budgets. Details of resources required to achieve targets. Control mechanism. Self-motivating tool for achieving operational performance.

ADVANTAGES OF SHORT-RANGE PLANNING It gives the manager to clear target of achievement. Specifies manager to resource allocation for a given task and the

freedom to use it. Provides manager with information on performance. Provides an efficient tool to coordinate all the efforts within

organization. Provides management selective information on the shortfalls and

overruns, for immediate action. Provides all the information in monetary terms for comparison

between any two business entities in the organization.

TOOLS FOR PLANNING

Creativity Systems Approach Sensitivity Analysis Modelling

CREATIVITY

Ability to generate number of ideas rapidly. Ability to change quickly from one frame of

reference to another. Originality in interpreting an event and

generating different views on the situation. Ability to handle with clarity and ease a complex

relationship of various factors in a given situation.

SYSTEMS APPROACH

It uses all the areas and branches of knowledge. It follows a scientific analysis to identify the problem. It uses a model of complex situation to handle the problem. It weighs cost against benefit for assessment of alternatives. It deals with problems where time context is futuristic. It considers the environment and its impact on the problem

situation. Every solution is tested on the grounds of rationality and

feasibility and accepts a given criterion for selection of most preferred alternatives.

It uses operation research models if the problem is well defined.

SENSITIVITY ANALYSIS

It helps to test validity of the solution in variable condition. The problem situation is handled with certain assumptions and

conditions. If various factors are involved, the sensitivity analysis helps to

assess the criticality of the factor against the impact it make on that solution.

The sensitivity analysis helps to test the validity of the optimal solution under changed conditions.

The sensitivity analysis helps to test the solution on the principal of utility.

MODELING

A model is meaningful representation of a real situation on a mini scale, where only the significant factors of the situations are highlighted.

There are several types of models Physical: house, park, or a sport complex. Mathematical: break even analysis, linear programming, queuing, network.

A complex situation is represented using variables, constants and parameters which play significant role in that situation.

A model could be static of dynamic.

BALANCE SCORE CARD, SCORE CARD AND DASH BOARD

It was developed in nineties by Dr. Robert Kaplan, and Dr. Davie Norton.

They recognized somewhat weaknesses and ambiguity in then prevailing traditional approach to strategic management and thought of new approach termed as, Balance Score Card (BSC).

It takes comprehensive balance view of four business aspects: Finance, Process, People and Customer.

The view talks about objectives, measures, targets and initiatives in these four aspects of the business.

BSC SYSTEM DEVELOPMENT PROCESSBSC Process

StepProcess description Understanding of the step

1 Set vision Where are we and where should we be after some period?

2 Evolve strategies to achieve vision How do we reach there?

3 Decide strategic actions to implement strategy

Which actions or decisions will make strategy a success?

4 Take BSC perspective and determine CSFs and link them to strategy and action

Which CSFs will be affected by strategy and actions?

5 Determine the measures and targets to evaluate perspectives and impact on CSFs

How to measure and evaluate the effectiveness and impact on CSFs?

6 Prepare action plans, fix responsibilities and implement BSC

How it will happen and who will be responsible?

DASHBOARD

It monitor and measure processes performance. The common industry perception is that a dashboard is

more real-time in nature, like an automobile dashboard which informs driver continuously of current speed fuel level and engine temperature at a glance.

It follows that dashboard is linked directly to operating system of the car and its performance. It warns driver through 3As (Attention, Alert and Action).

SCORE CARD

Scorecard charts progress at a point of time, day, time, week or month towards reaching objectives.

Scorecard is built for key result areas in business operations by choosing key operation indicators.

The common perception of score card is that it displays periodic snapshots of performance associated with an organization’s strategic objectives and plans.

MIS: STRATEGIC BUSINESS PLANNING Deciding goals and objectives. Determine the correct status of the further business and projects. Provide the correct focus for the attention and action of the

management. Evolve, decide, and determine the mix of strategies. Evaluate the performance parameters and give a critical feedback

on the strategic failures. Keep the score card updated. Display on dashboard real time status of performance

parameters.

MIS AND STRATEGIC MANAGEMENT

Strategic Planning

Management Control

Operations Control

Tactical Planning MIS

Implement Pure and Mixed strategies

Implement Pure and Mixed strategies

Achieve Goals andObjectives

Survival BreakthroughOverall Company Growth, Product

Marketing Strategies

Through

Strategy

Revise

Strategy

Helps to

REFERENCE

Waman Jawadekar, "Management Information Systems” , 4th Edition, Tata McGraw-Hill Publishing Company Limited.