1Strategy Module 1 2012

8/13/2019 1Strategy Module 1 2012

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Invitation to Strategic Management

Objectives:

What is the SM process?

Why SM takes place in modern business? How SM takes place in modern business?

Strategic decision-making process!

How SM is practiced in not-for-profit and public sectors?


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SM is a stream of decisions and actions which leads to the developmentof an effective strategy or strategies to help achieve corporateobjectives. The Strategic Management process is the way in whichstrategists determine objectives and marked strategic decisions.

Strategic Decisions: are means to achieve ends. These decisionsencompass the definition of business, products and markets to beserved function to be performed and major polices needed for the

Organization to execute these decisions to achieve objectives.


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Plans and policies are guides to action. They indicate howresources are to be allocated and how tasks assigned to theorganisation might be accomplished so that the function levelmanagers execute the strategy properly

Strategic Business Unit (SBU) is an operating direction offirm, which serves a distinct product portfolio marketsegment or a well defined set of customers or a geographicarea. The SBU is given the authority to make to its ownstrategic decision within corporate guidelines as long as tomeets corporate objectives.


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Compulsion: Environmental Changes

Changes in technology Proliferation of Products Faster Commercialisation of products

Overreaching technologies Socio political changes Governments bargain Emergence of Global Markets, Firms and Brands The New consumer


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Compulsion: New Demands

Strategically alert Future Oriented Able to take risks in tapping opportunities

Insulated against threats Develop competence Respond effectively and economically Generate Large resources Gain expertise in technology, marketing and decision


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The Strategic Planning Process

Clarifying the Mission of the Corporation Defining the Business Surveying the environment Internal Appraisal of the firm Setting the Corporate Objectives Formulating the Corporate Strategy Monitoring the Strategy


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A Model of Strategic Management

Enterprise Strategists Mission and Objectives

The General Environment

The Industry & International Environment

Internal Factors

Generise Strategy Alternatives

Strategy Variations

Strategy Choice

Resources & Structure

Policies, Plan and Administration

Evaluation and Control

To determine mission goalsand values of firm and keydirection makes

To Search the Environmentand diagnose the impact ofthreats and opportunities

To Examine and diagnose thefirms Strength & Weakness

To consider various alternatives andassure that the appropriate strategyis chosen

To match plans, policies, resources,structure and administrative style withstrategy

To ensure strategy of Implementation willmeet objectives.

Analysis and Diagnosis

Choice

Implementation

S

M

P

R

O

C

E

S

S

Feedback


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A model of Strategic Management

CorporateStrategy

SBU SBU SBU

Marketing Finance Resource AccountsPersonal

Corporate

Top

Mid


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What is Strategy?

A Strategy is a unified, comprehensive and

integrated plan that relates the strategic advantage

of the firm to the challenges of the environment. Itis designed to ensure that the basic objectives of

the enterprise are achieved through proper

execution by the organization.


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Strategic Management allows the firm toanticipate challenges and provide clear cut

objectives and direction for employees.

Components of Strategic Decision Process

AnalyticalRational

PoliticalBehaviour

IntuitiveEmotional


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Strategic Gap Analysis

The gap between existing to expected, to executed

Questions:

1. What business were we in?

2. What business we would be?

3. Why are we in business?


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Factors Affecting The Formulation or Objectives.

Set of FutureObjective/Mission

Internal Sources&Power

Post Developmentof The Firm

Forces in theEnvironmentStake Holders

Values of TopManagement


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Why do firms have objectives?

1. Objectives help define the organization in itsenvironment.

2. Objectives help in coordinating decision anddecision makers.

3. Objectives provide standards for assessingorganization performance.

4. Objectives are more tangible targets thanmission statements.


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How missions and objectives are formulated?

1. The forces of environment.

2. The realities of the enterprise resources and

internal power relationship.

3. Value system of top executives.

4. Awareness by management on the pastdevelopment of the firm.


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Discussions on translation of objectives of Corporate to SBU,which are quantified. eg. Improve profits ----- to 20%.

A mission statement defines the basicreason for existence of an management andhelps legalise to function is society. The

business definition clarifies the nature ofexisting products markets and functionsthe firm presently provides.

Objectives are those ends which theorganisation seek to achieve through itsexistence operations.


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Elements of Strategic Management

1. Action in process

2. Starting point of Strategic Managementprocess.

3. Discussions on how to derive Vision,Mission, Objectives of organization.

1. Case-1:

2.Case-2:3.Case-3:4.Case-4:


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Value ChainThis is an Analytical Tool that describes all activities that make up the economic

performance and capabilities of the firm; used to analyse and examine activities that create

value for the firm

Comprises of: Primary activities

Support Activities Upstream Activities


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Primary Activities

Economic Activities that relate directly to theactual creation, manufacture, distribution andsale of a product or service to the firmscustomer. Inbound Logistics Operations Outbound Logistics Marketing Sales Service


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Support Activities

Economic Activities that assist the firmsprimary activities Infrastructure

Human resource development Technology Development Procurement


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Upstream Activities

Economic Activities that occur close to thefirms suppliers but far away from theconsumer


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Infrastructure

HumanResourceManagement

TechnologyDevelopment

Procurement

PRIMARYACTIVITIES

The Value Ch ain

S U P P O R T A C T I V I T I E

S

InboundLogistics

Operations OutboundLogistics

Marketing/Sales

Service

d l h


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Infrastructure Acquire capital, perform accounting, legal and administrative tasks for each activity


Supervisewarehouse orfacilities /shippingpersonnel

Supervisekitchenpersonnel/training

Supervisedrivers/ ensuresafety

Overseemarketingpersonnel

Overseeservicepersonnel/waiters

Technology

Development

Improve supplychain to lower

cost foringredients

Develop newmenu items;

improve ovendesign

Develop neworderingsystems to

serve customs;improvedelivery time

Develop newpromotional

materials/media

Develop newrestaurant

formats/layouts

Procurement

Lease spacefor restaurantsor deliveryfacilities

Purchaseingredients andother supplies

Purchase orleasetelephone oronline orderingsystems

Buy TV timePurchasefurniture/tableware

PRIMARYACTIVITIES

Transportingredients torestaurantsand deliveryfacilities

Preparepizzas, salads,other foodtimes

Deliver pizzasto orderingcustomers

Developadvertisingcopy,programs,promotions

Serve food inrestaurants

Pizza Restauran t Ind us try Value Chain

S U P P O R T A C T I V I T I E S

InboundLogistics


Marketing/Sales

Service


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G l M t B i S t


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Infrastructure Administrative, legal and accounting tasks

managed systemwide


Overseepersonnelinvolved insuppliermanagementtasks

Develop new

virtual teams;union relations;overseeworkers

Oversee

personnelinvolved inmanagingdistribution

OverseeMarketingpersonnel


Streamlineturnaroundtime withsuppliers toship parts

Invest in newenginedesigns, carmodels;develop newfactories andtooling

Streamlineshipping time;web basedinventorytracking

Work withdealers toimprove sellingand productmix

No directservice tocustomers

Procurement

Streamlinedocumentationand orderingsystems

Source partsandcomponents;partner withkey suppliers

Purchasecapacity onrailroads/trucks

Buy mediatime; work withadvertisers

PRIMARYACTIVITIES

Adopt fastermeans to orderand receiveparts/components

Make andassemblecomponentsinto autos

Ship to dealersusing railroads/trucks, delivervehicles

Advertise to

promoteproduct topublic, workwithdealerships

General Motors Business System


InboundLogistics


Marketing/Sales

Service

Ph t i l


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Infrastructure Acquire land for manufacturing facility, legal formalities like drug licenses, GMP, setting up research labs,pellet machines, etc.

Human ResourceManagement

Hiring ofpharmacist,scientists.

Managingemployeerelationships

Chemists,distributors

MRs, Agents,Improvingrelationships withdoctors, healthorganizations

Employeebenefits, T&D forR&D personnel's,MRs


Liaison withchemicalsuppliers todevelop andenhance transport

of raw material

Developing SAD& medicinemanufacturingprocess, qualitycontrol

Works withdistributors &logistics firms toimprove delivery

Improvemarketingprogram with Drs,retailers,hospitals.

Moleculedevelopment(insulin), Drugresearch andpatents

Procurement

Negotiation withchemicalsuppliers, R&Dlabs to procurelow cost highqualityingredients.

Purchase labaccessories,injection & pelletmachines, vials,and factoryequipments.

Negotiate withC&F Agents tolower cost.

Tie ups withhealth journals,hospitals, CDRI,IMA, Doctors.

Purchase tools forlab personnel's,safety gears forthose inmanufacturingfacility

PRIMARYACTIVITIES

Transportcomponent to labsand factory set up

Medicine

manufacturingprocess, cuttinglead time,packaging,labeling andstoring

Delivery to C&F Agents, export,hospitals

Promote withdoctors,conferences,health journals,WHO

CRM feedbackfrom doctors,pharmacists andresearchers

Pharmaceut ical


InboundLogistics


Marketing/Sales

Service

RelianceBr oad Band


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Infrastructure Acquire land for facility, legal formalities like Increasing Bandwidth, setting up servers room, machines,etc.


Hiring of DataEngineers, RFEngineers

Training ofEngineers ByLUCENT TECh.

R-WORLDdistributors

Appointing Salesforce

CustomersBenefit & More

Advance software


Improve The Rateof DataTransferring, Byincreasing theBandwidth &Frequency

Installing ofWMAX & Wi-Fi,

Works with R-World and BTChouses

Improvemarketingprogram byCISCO, and Othertelecom industryfor joint venture

DecreasingNetwork Traffic &congestion

Procurement

Assembling ofcomponents andvarious Routersbrought fromCISCO in NHQMumbai

Purchasing ofrouters ,Switches,modem & otherequipments

Negotiate withCisco, Junifer &Lucent For theirMutualCoordination

Advertising ,Media planning

Setting ofFirewalls , & DataSecurity

PRIMARYACTIVITIES

All theEquipments andPower supply androtation of COWS

Installation andlay down of wiresin the city.

Delivery to theRetail Out lets

And R-worldOffices

Promote toCorporate Houses

CRM feedbackfrom customers &Corporate Houses

Reliance Br oad Band


InboundLogistics


Marketing/Sales

Service

TajGrou po fHotels


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Infrastructure Administrative, legal and accounting tasks

managed system wide


Overseepersonnelinvolved insuppliermanagementtasks

Develop newvirtual teams;;overseeworkers,manager

s,waiters,House-keepingpersonnel

Oversee drivers,chauffers

OverseeMarketing

personnel


Streamlineturnaround timewith suppliers-eSCM,

Invest in ePOS,eCRM,Customer/ClientDBMS

Real-time onlineticket booking;web basedinventorytracking,Cost/Fuelefficientautomobiles

Work with e-advertisers,

Latest spa,saloonetc.

Procurement

Streamlinedocumentationand orderingsystems

Procure Billingmachines, ATM,Wi-Fi,InteriorDesigners,Purchase supplies

Purchase taxis,buses, LeaseOnlineRoom/flightbooking

Buy media time;advertisers,spacebuying inmagazines/newspapers,Corporate tie-ups, andsponsorship,

Hire ancillaryservices

PRIMARY ACTIVITIES

TransportSupplies(Linen,Furniture,AC,Toiletteries,Cutlery, FoodRaw Ingredients,)

ProcessMgmt(Billing,Booking ofRooms,PreparingFood, ManagingLaundry

Taxi service forSight-seeing,

Airport Pick anddrop facility,

Promotional

campaigns inassociation withTourismMinistry,CorporateMeets, FoodFest,Exhibitions,

Spa,Naturopathy,Taxi services,

Gym,Saloon,Medicalfacilities,Roomservice,Security,provision forSeminars,Banquet halls

Taj Grou p o f Hotels


InboundLogistics Operations

OutboundLo istics

Marketing/Sales

Service


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Capability Drivers

The basic economic and strategic means bywhich a firm builds an underlying source ofcompetitive advantage in its market or industry

First Mover Advantage Economies of Scale Experience Effects Interrelationship among Business Units


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Common First Mover Advantage

The benefits that firms enjoy from being the firstor earliest to compete in an industry

Patents

License Location Channel Access Supply Access Reputation


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Major Contributors to Economies of Scale

Specialisation Fixed-Cost Spreading Purchase Discounts

Vertical Integration


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Economies of Experience

Employee Learning Product Redesign Process Improvement

Firs t Mover Ad van tages


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Infrastructure


HiringCreativePersons

Reputation


Patentprotection,license,

innovativedesign

Creativemarketing

Procurement Supplyaccess

PRIMARYACTIVITIES

Proprietary

processes,patentprotection,license

license

Location,channelaccess,reputation

Reputation,license

g

S U P

P O R T A C T I V I T I E S

InboundLogistics


Marketing/Sales

Service

Pizza Huts Sou rces o f Com pet i t ive Ad vantage


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Infrastructure


Technology

Development

Procurement Procurementof FoodProcurementof TV Time

PRIMARYACTIVITIES

Reputation, Advertising

p g

S U P

P O R T A C T I V I T I E S

InboundLogistics


Marketing/Sales

Service


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Comparative Financial Ratios This evaluates the condition of the Firms financial capabilities

(using ratio analysis) Return on Assets Net Income divided by Total Assets

Return on Equity Net Income divided by Shareholders Equity

Return on Capital Net Income divided by Total Capital Return on Investment

Net Income divided by total Investment Liquidity

The ability of the firm or business to pay or meet in obligations ( forexample debt payments, accounts payable) as they come due. Themore liquid the firm the easier its ability to meet these obligations

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1Strategy Module 1 2012

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