Business Policy & Strategic Management -Ak

8/18/2019 Business Policy & Strategic Management -Ak

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BUSINESS POLICY &STRATEGIC

MANAGEMENT

Amit Kane

MMS-Marketing, MBS-HR, DMM, Naturopath


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Consider a local baker that operates asmall ca!e business" #he ca!e is open !rom$am to %pm, Monda to &rida" Competition!rom a nearb supermarket and !ast !oodoutlets is pre'enting the ca!e business !romgro(ing" )hat action could the ca!e take toincrease sales*


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The key issue to identify is why customers are choosing other outlets. Is itbecause of location, price or product quality? Analysing a problem of this kind

needs a systematic approach.

Talking to customers about what they like, visiting other outlets to see the

competition and examining inhouse data on costs, pricing and service could

provide valuable information. !ased on this research, alternative courses of

action might include cutting costs in order to reduce prices or promoting the cafe

in different ways.


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Books Recommended:- +" A A #hompson r", A Strickland , . /amble, Cra!ting

0 .1ecuting Strateg 2 #he 3uest !or Competiti'e Ad'antage, #ata Mc/ra( Hill,

%th ed", 4556" 4" Ran7an Das, Cra!ting the Strateg8 Concepts and Cases

in Strategic Management, #ata Mc/ra( Hill, 455%" 9" Henr, Mint:berg, Bruce, Ahlstrand and oseph, ;ampel

" Strateg Sa!ari" &ree ?ress, Ne( @ork" %" /ar, Hamel and ?rahalad, C" K" " Competing !or

the &uture" HBS ?ress" 6" .d" C"A" Montgomer, M"." ?orter, Strateg 2 Seeking

and Securing Competiti'e Ad'antage, Har'ard Business Re'ie( ?ublications, +$$+" " ?eter &" Drucker, Managing in a #ime o! /reat Change, #ruman #alle Books ?lume ?enguin /roup, +$$="


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Star!cks" Strate#$:T%e e$ E'ements

"xpand number of #tarbucks stores domestically by blanketing

metropolitan areas, then adding stores on the city$s perimeter %ake #tarbucks a global brand by opening stores in an

increasing number of foreign locations &iew each store as a contributor to building the company$s

brand and image

!roaden instore products to include coffeeflavored ice cream,teas, fresh pastries, music '(s, and coffee accessories

)ully exploit the growing power of the #tarbucks$ name andbrand image with outofstore sales

(isplay corporate responsibility and

environmental sustainability 'ontrol costs of opening new stores *romote customerfriendly service and enhance store

ambience by making #tarbucks a great place to work


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()*t%o!t a strate#$ t%e

or#an*+at*on *s '*ke a s%*,

*t%o!t a r!dder./

0oe' Ross and M*c%ae' am*


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B!s*ness Po'*c$ and Strate#*c Mana#ement

B!s*ness Po'*c$ de1n*t*on $ C%r*stensen :

Business ?olic is the stud o! the !unction andresponsibilities o! Senior Management, the crucial

problems that aEect success in the total enterprise,and the decisions that determine the directions o!the organisation and shape o! its !uture"F


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Strateg is the determination o! the long-termgoals and ob7ecti'es o! an enterprise and theadoption o! the courses o! action and theallocation o! resources necessar !or carring outthese goals"

(Strate#$ can e de1ned as t%e determ*nat*on o2t%e as*c 'on#-term #oa's and o3ect*4es o2 anenter,r*se5 and t%e ado,t*on o2 co!rses o2 act*on

and t%e a''ocat*on o2 reso!rces necessar$ 2orcarr$*n# o!t t%ose #oa's./

6A'2red 7. C%and'er Strate#$and Str!ct!re8

=

7e1n*t*ons o2 Strate#$


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M*'*tar$ Or*#*ns o2 Strate#$ Strateg is a term that comes !rom the /reek

(ord, GStratos" means 9arm$" & 9a#e*n"

means 9to 'ead", .

In the military, strategy often refers to manoeuvringtroops into position before the enemy is actually

engaged. In this sense, strategy refers to thedeployment of troops. +nce the enemy has beenengaged, attention shifts to tactics. ere, theemployment of troops is central.

#ubstitute -resources- for troops and the transfer ofthe concept to the business world begins to takeform.


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The Evolution of Strategic ManagementThe Evolution of Strategic Management

DOMINANT

THEME

MAINISSUES

CONCEPTS

&

TECHNIQUES

IMPEMENT!

ATION

1950s 1960s Early-mid Late1970s Late 1980s Late 1990s

1970s early 1980s early 1990s early 2000s

"u#getar$ Cor%orate Cor%orate Anal$i of Quet for Strategic

%lanning & %lanning trateg$ in#utr$ & com%etitive innovation

control com%etition a#vantage The 'Ne(

Econom$)

*inancial control Planning gro(th Diverifica! Poitioning Com%etitive Innovation &ion a#vantage +no(le#ge

"u#geting *orecating & Portfolio Anal$i of ,eource D$namic

%ro-ect a%%raial invetment %lanning. in#utr$ & anal$i. ource of

%lanning S$nerg$ com%etition Cae a#vantage

mar+et com%etence /no(le#ge

hare management

coo%eration

Em%hai on ,ie of Diverifi! In#utr$0mar+et ,etructuring 1irtual orga!

financial cor%orate %lanning cation. electivit$. "P,. ni2ation.

management #e%artment Quet for Active aet ,efocuing Alliance

& formal glo3al management Outourcing Quet for

%lanning mar+et hare critical ma


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E4o'!t*on o2 B!s*ness Po'*c$ asd*sc*,'*ne. +rigin /0// arvard !usiness #chool Integrated

'ourse in %anagement aimed at providing general

management capability.

/012 /0324 "nvironment change4 5ew *roducts4'ontinuously changing market4 )ord )oundationrecommended report, by 6ordon and owell, suggested

a 'Ca%tone) course of !usiness *olicy which wouldgive the students an opportunity to pull together whatthey have learned in the separate business fields andutilise this knowledge in the analysis of complexbusiness problems.

/0304 The course was made mandatory by American Assembly of 'ollegiate #chool of !usiness 7AA'#!8

/0024 The course has become an integral part ofmanagement education curriculum.


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E4o'!t*on o2 B!s*ness Po'*c$ as d*sc*,'*ne.

E4o'!t*on o2 B!s*ness Po'*c$ %as !nder#one 2o!rParad*#ms

?aradigm ne8 Ad-%oc Po'*c$ mak*n#. +$55 -+$958 Era o2 Mass Prod!ct*on 2 Ma1imising

output, Normall a Single ?roduct, Standardised andlo( cost product, catering to uniIue set o! customers

ser'icing limited geographical area 2 n!ormal controland co-ordination" #he Strategic planning (ascentred on ma1imising output"


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E4o'!t*on o2 B!s*ness Po'*c$ %as !nder#one 2o!r Parad*#ms

*aradigm Two Integrate# Polic$ *ormulation.

/012/0924 Change in Technolog$, Turbulence in*olitical environment, "mergence of new industries,(emand for novelty products even at higher costs,*roduct (ifferentiation, %arket segmentation inincreasingly competitive and changing markets. These all

made investment decisions increasingly difficult. This wasera of integrating all functional areas and framing policiesto guide managerial actions.

*aradigm Three The Conce%t of Strateg$. /092 /0324 *lanned policy became irrelevant due to

increasingly complex and accelerating changes. )irmshad to anticipate environmental changes. A strategyneeded to be formed with critical look at basic concept of!usiness and its relationship to the existing environmentthen.


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+%+%

Parad*#m ;o!r T%e Strate#*c Mana#ement.

+$=5 0 on(ards8 #he !ocus o! StrategicManagement is on the strategic process o! businessJrms and responsibilities o! general management"

.'erthing out side the !our (alls is changing rapidland this phenomenon is called as (7*scont*n!*t$/ b Mr" ?eter Drucker" ?ast e1periences are noguarantee as science and technolog is mo'ing!aster" #he !uture is no more e1tension o! the past or

the present" #he (orld is substantiall compressed and managing

the .1ternal 0 nternal en'ironment becomes crucial!unction"

)hat to produce, (here to market, (hich ne(

business to enter, (hich one to Iuit and ho( to getinternall stronger and resource!ul are the ne(stakes"

Strategic ?lanning is reIuired to be done to endo(the enterprise (ith certain !undamental

competencies distincti'e strengths (hich couldtake care o! e'entualities resulting !rom une1pected


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nderstanding ho( Jrms create5 ca,t!re,and s!sta*n competiti'e ad'antage"

Anal:ing strategic business situations and!ormulating strategic plans"

mplementing strateg and organi:ing the Jrm!or strategic success"

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)%at Is Strate#*c Mana#ement Ao!t<


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Strategic management is deJned as theart and science o! !ormulating,implementing, and e'aluating cross-!unctional decisions that enable the

organi:ation to achie'e its ob7ecti'es"

/enerall, strategic management is notonl related to a single speciali:ation but

co'ers cross-!unctional or o'erallorgani:ation

)=AT IS STRATEGIC MANAGEMENT<


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+

)%at Is Strate#*c Mana#ement Ao!t<

S!sta*na'e com,et*t*4e ad4anta#e

occurs (hen a Jrm implements a 'alue-creating strateg o! (hich other companiesare unable to duplicate the beneJts or Jnd ittoo costl to imitate"

An important basis !or sustainablecompetiti'e ad'antage is the de'elopment o!resources and capabilities"

Core com,etenc*es are resources andcapabilities


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#he heart and soul o! an strateg are actions acompan makes to

◦ mpro'e its Jnancial per!ormance,◦ Strengthen its competiti'e position, and

◦ /ain a competiti'e ad'antage o'er ri'als

A creative, distinctive strategy that sets a

compan apart !rom ri'als and ields acompetiti'e ad'antage is a companLs mostreliable ticket to abo'e a'erage proJtabilit

◦ perating (ith a competiti'e ad'antage is moreproJtable than operating (ithout one

◦ perating (ith a competiti'e disad'antage nearl al(asresults in belo(-a'erage proJtabilit


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A compan achie'es sustainablecompetitive advantage (hen◦ An attracti'e number o! buers pre!er its

productsser'ices o'er those o! ri'als and ◦ #he basis !or this pre!erence is durable

ts nice (hen a strategy produces

◦ A temporar competiti'e edge but ◦ A sustainable edge o'er ri'als greatl enhances acompanLs prospects !or abo'e-a'erageproJtabilit

)%at se,arates a powerful strategy 2rom an ord*nar$strate#$ *s mana#ement"s a*'*t$ to 2or#e a ser*es o2 mo4es5 ot% *n t%e market,'ace and *nterna''$5 t%at

produces sustainable competitive advantage!


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)%at Strate#$ *s: Ga*n*n# and S!sta*n*n#Com,et*t*4e Ad4anta#e

)%at *s Com,et*t*4e Ad4anta#e<

◦ S!,er*or ,er2ormance re'at*4e to com,et*tors

E>am,'es: Goo#'e5 P1+er"s L*,*tor

)%at *s S!sta*na'e Com,et*t*4e Ad4anta#e<

◦ S!sta*na'e com,et*t*4e ad4anta#e occ!rs %en a

1rm *m,'ements a 4a'!e-creat*n# strate#$ o2 %*c%ot%er com,an*es are !na'e to d!,'*cate t%e ene1tsor 1nd *t too cost'$ to *m*tate.

An *m,ortant as*s 2or s!sta*na'e com,et*t*4ead4anta#e *s t%e de4e'o,ment o2+245


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Com,et*t*4e Ad4anta#e E>am,'es

Stri'e to be industrLs lo(-cost pro'ider◦ Wal-Mart

◦ Southwest Airlines

utcompete ri'als on a ke diEerentiating

!eature◦ Johnson & Johnson 2 Reliabilit in bab

products

◦ arley-avidson 2 King-o!-the-road stling

◦ "ole# 2 #op-o!-the-line prestige◦ $MW 2 .ngineering design and per!ormance

◦ Ama%oncom 2 )ide selection andcon'enience

http://www.amazon.com/http://www.amazon.com/


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Com,et*t*4e Ad4anta#e E>am,'es 6con"t8

&ocus on a narro( market niche

◦ e$ay 2 nline auctions

◦ $est $uy 2 Home electronics

◦ McAfee 2 irus protection

◦ Starbuc's 2 ?remium coEees and coEee drinks

◦ (he Weather )hannel 2 n!o about the (eather

De'elop e1pertise, resource strengths, andcapabilities not easil imitated b ri'als

◦ Walt isney 2 #heme park management and !amil

entertainment◦ ell )omputer 2 Build-to-order manu!acturing

capabilities

◦ "it%-)arlton 2 ?ersonali:ed customer ser'ice


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Strate#$ as a T%eor$ o2 =o to Com,ete

Pro4*des a Mana#er?s Roadma,

◦ T%e strate#*c mana#ement ,rocess *s a c$c'eo2 ana'$s*s5 2orm!'at*on5 *m,'ementat*on5 and

2eedack.

A,,'e Neton @o,s *n Pa'mP*'ot 60eD =ak*ns8 'earned 2rom A,,'e

Neton"s m*stakes

)a'-mart? 6Sam )a'ton"s8 ass!m,t*ons ao!t 'ocosts5 'o ,r*ces5 and %*#% 4o'!me to dr*4e,ro1ta*'*t$


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)%at *s Strate#$<

DeJnition: Strategy is the *uest to create, captureand sustain competitive advantage

• t is the managersL theoriesmaps about ho( to gain andsustain competiti'e ad'antage"

• t is about being diEerent !rom our ri'als"• t is about creating 'alue (hile containing cost"• t is about deciding (hat to do, and (hat not to do"• t combines a set o! acti'ities to stake out a uniIue position"• t has alternati'es, conseIuences, and choices in'ol'ing

signiJcant resources, tpicall made under some le'el o!uncertaint"

• t reIuires long-term commitments that are not easilre'ersible.

+24%


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The :ole of #trategy In !usiness is to 6enerate and#ustain &alue via the ;inkages !etween *osition, :esources,

and +rgani


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4

Pos*t*on*n#

Sco,e o2 t%e ;*rm:

◦ Geo#ra,%*c Sco,e

◦ Prod!ct-market Sco,e: C%o*ce o2 !s*nesses6cor,orate

,ort2o'*o ana'$s*s8

◦ Prod!ct Market Pos*t*on*n#*t%*n a !s*ness

◦ ert*ca' *nte#rat*ondec*s*ons


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4

Reso!rces

Tan#*'e Reso!rces◦ e.#.5 ,%$s*ca' ca,*ta'

Or#an*+at*ona' Ca,a*'*t*es◦ e.#.5 ro!t*nes and standard o,erat*n#

,roced!res

Intan#*'e Reso!rces◦ e.#.5 trademarks5 (kno-%o/


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4=

Or#an*+at*on

Str!ct!re◦ ;orma' 7e1n*t*on o2 a!t%or*t$◦ Con@*ct Reso'!t*on

S$stems◦ R!'es5 Ro!t*nes5 E4a'!at*on and reards

Processes◦ In2orma' comm!n*cat*on5 netorks5

recr!*tment


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4$4$

Core conce,ts & c%aracter*st*cs o2 Strate#$

A plan or course o! action or a set o! decisions rules

!orming pattern or creating a common thread"

#he pattern or common thread related to theorganisationLs acti'ities (hich mo'e an organisation

!rom its current position to a desired to a desired

!uture stage

Related to pursuing those acti'ities (hich mo'e anorganisation !rom its current position to a desired

!uture state,

Concerned (ith the resources necessar !or

implementing a plan or !ollo(ing a course o! actionand,

Connected to the strategic positioning o! a Jrm,

making trade-oEs bet(een its diEerent acti'ities, and

creating a Jt among these acti'ities"


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95

The Basic Framework

Strateg$4 the in+ 3et(een the

*irm an# it Environment

The Basic Framework

Strateg$4 the in+ 3et(een the

*irm an# it Environment

THE *I,M

5oal &1alue

,eource &

Ca%a3ilitie

Structure &

S$tem

THEINDUST,6

EN1I,ONMENT

Com%etitor

CutomerSu%%lier

ST,ATE56ST,ATE56

)%$ 7o Strate#*es


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)%$ 7o Strate#*esE4o'4e<

A companLsstrategy

is awor' in progress

)hanges ma be necessary to react to

◦ &inancial crisis

◦ &resh mo'es o! competitors

◦ .'ol'ing customer pre!erences

◦ #echnological breakthroughs

◦ .merging market opportunities

◦ Changing political or economic climate

◦ Ne( ideas to impro'e strateg

A Com,an$"s Strate#$ Is a B'end o2


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, $ #$Proact*4e In*t*at*4es and React*4e Ad3!stments

+-94

E O2 St t


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9999

Essence O2 Strate#$

Strateg includes the determination and e'aluation o!alternati'e paths to an alread established Mission andb7ecti'es o! enterprise and choosing the alternati'e to beadapted" &our important aspects o! Strateg are8

. Lon# Term O3ect*4es: t emphasises on long term gro(thand de'elopment" #hese b7ecti'es gi'e direction !orimplementing Strateg"

F.

Com,et*t*4e Ad4anta#es: #he e1ternal en'ironment iscontinuousl monitored 0 Strateg is made to ha'e the Jrma continuous Competiti'e Ad'antage"

. ector: is a Direction (ith &orce" Series o! actions are to betaken 0 the should ha'e same direction !or (hole

organisation". S$ner#$: nce a series o! decisions are taken to

accomplish the ob7ecti'es in same direction, there (ill besnerg" Snerg can happen due to Competiti'eAd'antages and /ro(th ector" #he b7ecti'es need be

measurable and could be 8 R, Sales /ro(th Rate,

Strate#$ 4Hs Po'*c*es


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9%9%

Strate#$ 4Hs Po'*c*es

Strateg 0 ?olic are notsnonmous"

?olic is guideline !or

decisions 0 actions to betaken b subordinates !orthe !ulJlment o! the set o!ob7ecti'es"

?olicies are commonlaccepted understandingo! decision making"

?olicies are thoughtoriented"

?olicies ha'e to beintegrated so that

Strateg is implementedsuccess!ull andeEecti'el"

Strateg and policies bothare the means directedto(ards meeting

organisational ob7ecti'es"

Strategies are concerned(ith the direction in (hichhuman and phsical

resources are deploed toma1imise the chances o!achie'ing organisationalob7ecti'es in !ace o!'ariable en'ironment"

Strategies are speciJc

actions suggested toachie'e ob7ecti'es"

Strateg is action orientedand empo(ers concernedto implement them"

Strateg cannot bedelegated do(n(ards" Strateg is rule !or

making decision and?olic is contingentdecision"


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9696

Henr Mint:berg


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99

ne might start (ith a ,ers,ect*4e and

conclude that it calls !or a certain ,os*t*on5

(hich is to be achie'ed b (a o! a care!ull

cra!ted ,'an5 (ith the e'entual outcome and

strateg rePected in a ,attern e'ident in

decisions and actions o'er time"

#his pattern in decisions and actions deJnes (hat

Mint:berg called reali:ed or emergent strateg"

M*nt+er#"s Ps o2


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9=9=

M*nt+er#"s Ps o2strate#$

The @ -*s,- adusted where necessary to fit into theprofessional services B Industrial firms, are as follows4

7. Strateg$ i a PAN

To almost anyone you care to ask, strategy is a plan some

sort of consciously intended course of action, a guideline 7or

set of guidelines8 to deal with a situation. A kid has a

-strategy- to get over a fence> a firm has one to dominate a

market for a particular service or practice area. !y thisdefinition, strategies have two essential characteristics4 they

are developed consciously and purposefully .


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9$9$

8. #trategy as a *;+C4 #trategy can be a ploy , too, which isreally ust a specific -manoeuvre- intended to outwit anopponent or competitor. The kid may use the fence as a ployto draw a bully into his yard, where his (oberman *incher

awaits intruders. ;ikewise, a firm may threaten to establish anew practice area in order to discourage a competitor fromtrying to do the same. ere the real strategy 7as plan, that is,the real intention8 is the threat, not the new practice areaitself, and as such is a ploy. Threatened litigation often falls

into this category.

1. #trategy is a *ATT":54 #trategy 7whether as generalplans or specific ploys8 is pointless if it cannot be reali we also need a definition that encompasses theresulting behaviour. Thus, strategy is also a pattern specifically, a pattern in a stream of actions. !y thisdefinition, strategy is consistent in behaviour, whether or notintended. The outcome of strategy does not derive from thedesign, or plan, but from the action that is taken as a result .


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%5%5

. Strate#$ *s a POSITION: Strateg is also a positionQspeciJcall a means o! locating a Jrm in its en'ironment"n ecological terms8 strateg becomes that JrmOsniche" n management terms8 a domain consisting o!

a particular combination o! ser'ices, clients and markets"?osition is o!ten deJned competiti'el


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%+%+

Plan provides the roadmap by which the firmintends to achieve its goals. Plo$ add a

dimension of feint and manoeuvre, where onefirms gain is anothers loss and competitiveadvantage is critical.

Pattern emphasi


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%4%4

T%e Strate#$ =*erarc%$ n most corporations there are se'eral le'els o! strateg"Strategic management is the highest in the sense that it is thebroadest, appling to all parts o! the Jrm" t gi'es direction to

corporate 'alues, corporate culture, corporate goals, and corporatemissions" nder this broad corporate strateg there are o!ten

!unctional or business unit strategies

7*Derent Le4e's o2 Strate#$

Le4e's Str!ct!re Strate#$

Corporate Corporate ;e'el

SB - A SB - B SB - CSB Business le'el

&unctional&inance Marketing perations

?ersonnel n!ormation

&unctional ;e'el

Corporate ce

S ; ' * d I ' * A


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Strate#$ ;orm!'at*on and Im,'ementat*on AcrossLe4e's:Cor,orate5 B!s*ness5 and ;!nct*ona' Strate#$

Strate#$ Across t%e Le4e's


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Strate#$ Across t%e Le4e's

)%ere to Com,ete<

◦ Should /. mo'e more

aggressi'el into thehealth care industr*

=o to Com,ete<

◦ Should /. 7et enginesha'e better !uel eciencthan Rolls Roce*

=o to Im,'ement


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Le4e's o2 Strate#$

Cor,orate Le4e'8 #picall in'ol'es decision-making b

the top management team that includes the C.,senior e1ecuti'es, the board o! directors, and thecorporate staE" Decisions include 'ertical integration,di'ersiJcation, strategic alliances, acIuisitions, ne('entures, and restructuring"

B!s*ness Le4e'8 ncludes the strategic choice o!generic strategy and the beneJts and costs o! Jrst-mo'er ad'antages"!ten an enterprise participating in multiple businesses

(ill ha'e diEerent business strategies"

;!nct*ona' Le4e'8 #picall directed at impro'ing theeEecti'eness o! !unctional operations (ithin a compan,such as manu!acturing, materials management, human

resources, marketing, R0D and operations management"+2%6

#he lo(estF le'el o! strateg is o,erat*ona' strate#$ At this


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%

%

#he lo(est le'el o! strateg is o,erat*ona' strate#$" At thisle'el, detailing is done to add completeness to Business 0&unctional Strategies" t is 'er narro( in !ocus and deals (ith da-to-da operational acti'ities such as scheduling criteria" t mustoperate (ithin a budget but is not at libert to ad7ust or createthat budget" perational le'el strateg (as encouraged b ?eterDrucker in his theor o! Management B b7ecti'es "perational le'el strategies are in!ormed to business le'elstrategies (hich, in turn, are in!ormed to corporate le'elstrategies" #hese strategies are e1ecuted b GBrand ManagersL,

Gperating ManagersL, G?lant managersL" mportant acti'ities likeAd'ertising, )eb site operations, distributions are in'ol'ed at thisle'el"


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%

%

Strate#*c Mana#ement Process -

7e1n*t*on o2 Strate#*c Mana#ement: Strategicmanagement is deJned as the dynamic process of

formulation, implementation, evaluation and controlof strategies to realise the Organisation’s Strategicintent.

.stablish

Strategicntent

&ormulation

o!Strategies

mplementation

o!Strategies

Strategic.'aluation

Strategic Control

Strate#*c Mana#ement Process


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%=

Strate#*c Mana#ement Process-

Strate#*c Intent: Creating 0 Communicating the ision"

DeJning the Business" Designing a Mission Statement" Adopting the Business Model" Clari!ing the business mission, purpose 0 setting

broad b7ecti'es and /oals";orm!'at*on o2 Strate#*es:

" .1ternal .n'ironment Sur'e" S)# Analsis"

" nternal Appraisal o! the Jrm"

=" Setting Corporate b7ecti'es"

$" &ormulating the Corporate ob7ecti'es"

+5" &ormulating the Corporate strategies"

++" .1ercising Strategic Choice"

+4" ?reparing a Strategic ?lan"

Strate#*c Mana#ement Process-F


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%$

Strate#*c Mana#ement Process-F

Im,'ementat*on o2 Strate#*es:

+9" Acti'ating Strategies"

+%" Designing Structure, Sstems and processes"+6" Managing Beha'ioural mplementation"

+" Managing &unctional mplementations"

+" perationalising Strategies"

Per2orm*n# Strate#*c e4a'!at*on & Contro':+=" ?er!orming Strategic e'aluation"

+$" .1ercising Strategic Control"

45" Re!ormulating Strategies"


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)inancial benefitsimproved growth D profitability "nhanced capacity of problem preventions Improved quality of strategic decision through group

interaction "mployee motivation :eduction of gaps D overlaps in activities %inimum resistance to changes

Re'e4ance o2 strate#$ *n c!rrent!s*ness en4*ronment


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Strate#*c Intent & Strate#$;orm!'at*on

Strate#*c Intent


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64

#trategic Intent is combination of four levels in the %anagement. Itinvolves discussions of &ision, %ission, !usiness (efinition D 6oalsand +bectives.

#trategic Intent refers to the purposes the +rganisation strives for. #trategic Intent lays down the frame work within which firms would

operate, adopt a predetermined direction, and attempt to achieve the6oals.

#trategic Intent envisions a desired leadership positioning and

establishes the criterion the +rganisation will use for charting itsprogress. In addition to ambitions of the +rganisation> it encompasses active

%anagement *rocess that includes focussing the organisation$sattention on winning.

It covers motivating the people by communicating the values,

targets. The intent encourages individual and team contributions andattempts sustaining enthusiasm by providing new operationaldefinitions. The #trategic Intent guides the organisation throughchanging circumstances and guides use of resource allocations.

P 2 t t


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+" setting compan ob7ecti'es 4"Analusing the en'ironment 9"J1ing Iuantitati'e targets

%" Relate targets to Di'isional ?lans 6"?er!ormance Analsis "Selection o! appropriate strateg

Process o2 strate#$2orm!'at*on

7e1n*n# t%e !s*ness


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6%

7e1n*n# t%e !s*ness :- A clear-cut statement o! the business, the Jrm is

engaged in or planning to enter" t is elaboration o! thebusiness arena and the boundaries in (hich it (ill pla"

)hat is our business* )hat (ill it be* )hat should it be* DeJning business in'ol'es three dimensions, namel

Customer &unctionsF, Customer /roupsF andAlternati'e technologiesF"

Business DeJnition clariJes the opportunities businesscan pursue and the areas in (hich these opportunitiesare to be looked !or" t clariJes to the Jrm the 'arioussources !rom (hich threats and competition (ill come!or"

DeJning Customer !unctions and Customer groupspro'ides Blue ?rint and a re!erence point !or ?roduct-market strateg" Mission Statement pro'ides the basicinputs !or Business deJnition and pro'ides a broad !rame(ork"


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66

66

Some B!s*ness de1n*t*ons:

Mod* Jero> 8 &ocus as a ser'ice organisation rather than'endor o! :ero1 machines" Customer !ocus8 ceCommunication (ith high priced and lo( pricedeIuipments, marketing ser'ices o! maintenance and percop price" Customer &unction8 A'ailabilit o! spares,

Drums, #oner, good a!ter sales ser'ice" #echnolog8Collaboration (ith Rank ero1F

=e'en C!rt*ce8 )e are in beaut enriching business" )e(ill pursue ideas that (ould generate products enhancing

beaut and outh!ulness o! men and (omen"

Inte'8 )e are in the business o! computing technolog andto consistentl de'elop the artiJcebuilding blocks o!computing technolog !or the entire computer industr o!

the (orld is our business"


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strategic planning process


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*olicies

A policy is a broad guide line for decision

making that links the formulation of strategy with

its implementation. 'ompanies use policies to

make sure that employees throughout the firm

make decisions D take actions that support the

corporation$s mission, obectives D strategy.*hilosophy #he statement o! philosoph is deJned as ane1planation o! the sstems o! belie!s that

determine ho( a mission or a purpose is tobe achie'ed" An organisationLs philosophstates the belie!s, concepts and principles o!an organi:ation"


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Mission states (hat is our businessF ision states (hat do (e (ant to becomeF ision Statement is permanent statement o! a compan" ision is

!uture aspirations that lead to an inspiration" t deJnes the 'erpurpose o! e1istence o! a compan" #he 'ision o! a compan is adirection !or action !or emploees" #he essence o! a 'ision is!or(ard looking 'ie( o! (hat an organisation (ishes to become"

Kotter deJnes ision as a description o! an enterprise"


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6$

*s*on Statement *s*on Statement Sam,'es:

@ear a!ter ear, )estin and its people (ill be regarded as thebest and most sought a!ter hotel and resort managementgroup in North America"

#o be recogni:ed and respected as one o! the premierassociations o! HR ?ro!essionals"

*s*on Statement o2 (TATA STEEL/#A#A Steel enters the ne( millennium (ith the conJdence o!learning, kno(ledge based and happ organisation" )e (illestablish oursel'es as a supplier o! choice b delighting ourcustomers (ith our ser'ice and products" n the comingdecade, (e (ill become the most cost competiti'e steel plantand so ser'e the communit and the nationF"

*s*on Statement o2 ;arm ;res% Prod!ce “We help the families of ain !own live happier and healthier

lives by providing the freshest, tastiest and most nutritiouslocal produce: "rom local farms to your table in under #$hours.%


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M*ss*on


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+

M*ss*on A Mission Statement deJnes the organi:ationOs purpose and

primar ob7ecti'es" ts prime !unction is internal 2 to deJne theke measure or measures o! the organi:ationLs success 2 and

its prime audience is the leadership team and stockholders"Mission statements are the starting points o! an organisationLsstrategic planning and goal setting process" #he !ocusattention and assure that internal and e1ternal stakeholdersunderstand (hat the organi:ation is attempting to accomplish"

MISSION AN7 PURPOSE Mission and purpose are used interchangeabl, though at

theoretical le'el, there is a diEerence bet(een t(o" Missionhas e1ternal orientation and relates the organi:ation to thesociet in (hich it operates" A mission statement helps the

organi:ation to link its acti'ities to the needs o! the societand legitimi:e its e1istence" ?urpose is also e1ternall !ocusedbut it relates to that segment o! the societ to (hich it ser'esQit deJnes the business (hich the institution (ill undertake"

M*ss*on Statement


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4

M*ss*on Statement

M*ss*on o! a compan is e1pressed it terms o! products

and geographical scope" t includes a methodolog o!

attaining the desired goal in 'ision" t deJnes the

competiti'e strength o! a compan and it emanates

!rom corporate 'ision and strategic posture o! a

compan"

#hus the mission o! a business is a statement, a build-

up philosoph o! its current and !uture e1pected

position (ith regards to its products, market leadership" Mission is statement (hich deJnes the role o!

organisation plas in a societ"

#he corporate mission is gro(th ambition o! the Jrm"

M*ss*on


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9

M*ss*on

C%aracter*st*cs o2 a M*ss*on Statement

t should be !easible 0 t should be precise"

t should be clear 0 t should be distincti'e"

t should be moti'ating"

t should be indicati'e o! ma7or component o!

strateg

t should be indicati'e o! ho( ob7ecti'es are to be

accomplished"

M*ss*on Statement o2 Ranaa>$


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%

M*ss*on Statement o2 Ranaa>$

#o become a U + Billion research based global compan pharmaceutical companF

M*ss*on Statement o2 Gra,%*te Ind*a L*m*ted #o be (ithin top three companies in the (orld bachie'ing +,55,555 M# ?roduction o! /raphite.lectrodes be!ore 45+4F

T%e m*ss*on statement o2 ;arm ;res% Prod!ce

*s:“!o become the number one produce store in ainStreet by selling the highest &uality, freshest farm

produce, from farm to customer in under #$ hourson '() of our range and with *+) customersatisfaction.%

ur goal is simpl stated" )e (ant to be the bestser'ice organi:ation in the (orld"

#o gi'e ordinar !olk the chance to bu the same

thing as rich people"

http://www.ibm.com/us/http://www.walmart.com/http://www.walmart.com/http://www.ibm.com/us/


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SN #he Belle'ue hospital

is the leader inpro'iding resources

necessar to reali:ethe communitLshighest le'el o! healththroughout li!e"

MSSN )e, (ith respect,

compassion, integritand courage, honor

the indi'idualit andconJdentialit o! ourpatients, emploeesand are progressi'e inanticipating and

pro'iding !uturehealth care ser'ices"

Be''e4!e =os,*ta'

CALI;ORNIA ENERGY


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SN t is our 'ision !or

Cali!ornia to ha'eenerg choices that

are aEordable,reliable, di'erse, sa!eand en'ironmentallacceptable"

MSSN t is our mission to

assess, ad'ocate and

act throughpublicpri'atepartnerships toimpro'e energsstems that pro'ide

a strong econom anda healthen'ironment"

CALI;ORNIA ENERGYCOMMISSION

a'!es


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a'!es

alues are traits or Iualities that are considered

(orth(hileQ the represent an indi'idualLs highest

priorities and deepl held dri'ing !orces"


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=

#o preser'e and impro'e human li!e" At Merck, corporate conduct is inseparable !rom the conduct

o! indi'idual emploees in the per!ormance o! their (ork".'er Merck emploee is responsible !or adhering to businesspractices that are in accordance (ith the letter and spirit o!the applicable la(s and (ith ethical principles that rePect thehighest standards o! corporate and indi'idual beha'iour"""

At Merck, (e are committed to the highest standards o!ethics and integrit" )e are responsible to our customers, toMerck emploees and their !amilies, to the en'ironments (einhabit, and to the societies (e ser'e (orld(ide" ndischarging our responsibilities, (e do not take pro!essional orethical shortcuts" ur interactions (ith all segments o! societmust rePect the high standards (e pro!ess"

?atriot ;edger


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/oals are broadQ ob7ecti'es are narro(" /oals are general intentionsQ ob7ecti'es are

precise" /oals are intangibleQ ob7ecti'es are

tangible" /oals are abstractQ ob7ecti'es are concrete"

/oals canOt be 'alidated as isQ ob7ecti'escan be 'alidated

T%e 7*Derence eteen #oa's and o3ect*4es

BUSINESS5 OB0ECTIES AN7 GOALS


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A business isan organi:ation engaged in the trade o! goods, ser'ices, or bothto consumers" Businesses are predominant in capitalist economies, in

(hich most o! them are pri'atel o(ned and administered toearn proJt to increase the (ealth o! their o(ners"

Businesses ma also be not-!or-proJt or state-o(ned" A businesso(ned b multiple indi'iduals ma be re!erred to as a compan,although that term also has a more precise meaning"

/oals 8 t is (here the business (ants to go in the !uture, its aim" t isa statement o! purpose, e"g" (e (ant to gro( the business into.urope"

b7ecti'es8 b7ecti'es gi'e the business a clearl deJned target" ?lanscan then be made to achie'e these targets" #his can moti'ate theemploees" t also enables the business to measure the progressto(ards to its stated aims"


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+

O3ect*4es o2 B!s*ness Po'*c$:

nderstand 'arious concepts, like" Strateg,

policies, plans, programmes"

Kno(ledge o! internal and e1ternal en'ironment

and ho( it aEects the !unctioning o! the

organisation" Application o! generalised approach to deal (ith

(ide 'ariet o! situations"

De'elopment o! analtical abilit to understand

situation" denti! !actors rele'ant to decision

making" Analse strength, (eakness, opportunities

and threats to organisation" De'elopment o!

attitude o! generalist and asses a situation !rom all


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.

#takeholders are those parties which are affected by


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9

p y

itBthose who affect it


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%

.ntities such as customers, suppliers, lenders, or

the (ider societ (hich inPuence and are inPuenced

b an organi:ation but are not its Ointernal partO Stake%o'der: An part that has an interest in an

organi:ation" Stakeholders o! a compan include

stockholders, bondholders, customers, suppliers,

emploees, and so !orth"

#he stakeholders in a corporation are the

indi'iduals and constituencies that contribute,

either 'oluntaril or in'oluntaril, to its (ealth-

creating capacit and acti'ities, and that are

there!ore its potential beneJciaries andor risk

bearers"

Sta+ehol#er Main Interet Po(er an# influence

f #

http://www.businessdictionary.com/definition/entity.htmlhttp://www.businessdictionary.com/definition/customer.htmlhttp://www.businessdictionary.com/definition/supplier.htmlhttp://www.businessdictionary.com/definition/lender.htmlhttp://www.businessdictionary.com/definition/influence.htmlhttp://www.businessdictionary.com/definition/organization.htmlhttp://www.businessdictionary.com/definition/organization.htmlhttp://www.businessdictionary.com/definition/influence.htmlhttp://www.businessdictionary.com/definition/lender.htmlhttp://www.businessdictionary.com/definition/supplier.htmlhttp://www.businessdictionary.com/definition/customer.htmlhttp://www.businessdictionary.com/definition/entity.html


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Sharehol#er*rofit growth, #hare price

growth, dividends"lection of directors

Cre#itorInterest and principal to be

repaid, maintain credit rating

'an enforce loan covenants

and 'an withdraw banking

facilities

Director an# manager#alary ,share options, ob

satisfaction, status

%ake decisions, have detailed

information

Em%lo$ee#alaries D wages, ob security,

ob satisfaction D motivation

#taff turnover, industrial

action, service quality

Su%%lier;ong term contracts, prompt

payment, growth of purchasing

*ricing, quality, product

availability

Cutomer

:eliable quality, value for

money, product availability,

customer service

:evenue B repeat business,

Eord of mouth

recommendation

Communit$"nvironment, local obs, local

impact

Indirect via local planning and

opinion leaders

5overnment+perate legally, tax receipts,

obs

:egulation, subsidies,

taxation, planning

CORPORATE GOERNANCE


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Corporate go'ernance generall re!ers to the set o! mechanisms

that inPuence the decisions made b managers (hen there is aseparation o! o(nership and control"

#he e'olution o! public o(nership has created a separationbet(een o(nership and management" Be!ore the 45th centur,

man companies (ere small, !amil o(ned and !amil run" #oda,man are large international conglomerates that trade publicl onone or man global e1changes"

n an attempt to create a corporation (here stockholdersOinterests are looked a!ter, man Jrms ha'e implemented a t(o-

tier corporate hierarch" n the Jrst tier is the board o! directors8these indi'iduals are elected b the shareholders o! thecorporation" n the second tier is the upper management8 theseindi'iduals are hired b the board o! directors"

CORPORATE GOERNANCE

S%are %o'ders


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A shareholder or stockholder is an indi'idual or institution that legall o(ns one or more shareso! stock in a public or pri'ate corporation" Shareholders o(nthe stock, but not the corporation itsel!"

Stockholders are granted special pri'ileges depending on theclass o! stock" #hese rights ma include8

#he right to sell their shares, #he right to 'ote on the directors nominated b the board, #he right to nominate directors


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=IARAC=Y

Chairman

SC S S


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$

SCA; R.S?NSB;#@

Corporate social responsibilit is the interactionbet(een business and the social en'ironment in

(hich it e1ists" Bo(en argued that corporate social

responsibilit rests on t(o premises8 social

contract, (hich is an implied set o! rights andobligations that are inherent to social polic and

assumed b business, and moral agent, (hich

suggests that businesses ha'e an obligation to act

honorabl and to rePect and en!orce 'alues that areconsistent (ith those o! societ"

•Business pro'ides goods 0 ser'ices to Societ !or (hich it pas theprice


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=5

Society

Business

price"•Societ pro'ides goods and ser'ices to Business !or (hich it pasthe prices"•Business re(ards inputs to societ b paing

(agesproJtsdi'idends etc"•Societ and Business are interdependent" #heir gro(th 0 (el!are isdependent on this mutualit" Business o(es responsibilit to(ardssociet" A Jrm carring 'er positi'e image in societ has 'er strongprobabilit o! lasting gro(th"

The three perspectives of corporate social responsibility are economic responsibility,

public responsibility and social responsiveness


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public responsibility, and social responsiveness.

The three perspectives represent a continuum of commitment to social

responsibility issues, ranging from economic responsibility at the low end and social

responsiveness at the high end.

The economic responsibility perspective argues that the only social responsibility of

business is to maximi


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g

remarkable impact on issues of social responsibility. As

organi

:eaction, defense, accommodation, and proaction. "xamples

of firms that have pursued these strategies are as follows4

•:eaction4 +ver 92 years ago, the medical department of the %anville'orporation discovered evidence to suggest that asbestos inhalation causes a


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debilitating and often fatal lung disease. :ather than looking for ways to

provide safer working conditions for company employees, the firm chose to

conceal the evidence. It appears that tobacco companies have done the

same thing.•(efense4 +ver the years, rather than demonstrating social responsiveness in

terms of air pollution reductions, vehicle safety, and gas shortages, the

automobile companies did little to confront the problems head on. 'urrently,

the high demand for pickup trucks and #H&s encourages the problem to

continue.• Accommodation4 %any financial service companies, along with meeting the

minimum requirements of disclosure regulations, maintain a more proactive

code for voluntary, ondemand disclosure of bank information requested by

customers or by any other member of the public.•*roaction4 !ecton (ickinson D 'ompany is a medicalsupply firm that has

targeted its charitable contributions to proects it believes Fwill help eliminate

unnecessary suffering and death from disease around the world.G #imilarly,

#tarbucks makes contributions to literacy programs and was one of the first

companies to give health benefits to partners.

Cor,orate Go4ernance : Soc*a' Res,ons**'*t$


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=%

Sole aim o! a business is and should be ma1imisation o!ShareholdersL 'alueF, as stated b Milton &riedman, doesnot hold good anmore" All modern large corporate ha'e

attained their present si:e due to support o! societ interms o! shareholders, suppliers, lenders, emploees,go'ernment, local communit and societ at large"

.'er business unit o! the countr must aim at becominggood corporate citi:en o! the countr and the (orld as

(hole" )orld Class 3ualit o! goods and ser'ices,reasonable prices is minimum reIuirement" )ith thiscompanies (ould en7o e1cellent image (ithin area,countr and (orld" ndian e1amples are #atas, Birlas,Reliance, Ba7a7, ;0#, Hero Honda, HD&C, Dr" Redd

;aboratories" #CS, etc" ndustrial Corporate Citi:ens are trustees and should

utilise their (ealth !or the (el!are o! the societ communit" #rusteeship in'okes code o! discipline, ethicalbeha'iour and strong principle o! accountabilit" Capital

and ;abour ha'e to ha'e mutual, peace!ul co-e1istence"

Cor,orate Go4ernance : Soc*a'R **'*t


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=6

Res,ons**'*t$ Code o2 Et%*cs 2or Ind*an B!s*ness

t is belie'ed that the best (a to promote highstandards o! business practice is through sel!

regulation"

Business should be conducted in a manner that earns

the good(ill o! all concerned through 3ualit,ecienc, transparenc 0 good 'alues (ith ob7ecti'es

as under8

a> Be !aith!ul and realistic in stating claims"

b> Be responsi'e to customer need and concerns"c> #reat all stakeholders !airl and (ith respect

d> ?rotect and promote the .n'ironment and

Communit interests

+#amples of a company sta'eholders

St + h l# E l f i t t


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=

Sta+ehol#er E9am%le of interet

O(ner %rivate0harehol#er *rofit, *erformance, (irection

5overnment Taxation, &AT, ;egislation, ;ow unemployment

Senior Management taff *erformance, Targets, 6rowth

Non!Managerial taff :ates of pay, ob security

Tra#e UnionEorking conditions, %inimum wage, ;egalrequirements

Cutomer &alue, Juality, 'ustomer 'are, "thical products

Cre#itor 'redit score, 5ew contracts, ;iquidity

ocal Communit$ obs, Involvement, "nvironmental issues, #hares

L*nk*n# Strate#$ )*t%Et%*


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Et%*cs .thical and moral standards address

What is the right thing to do. #(o criteria o! an ethical strateg

◦ Does not entail actions and beha'iors that crossthe line !rom should doF to should not doF

◦ Allo(s management to !ulJll its ethical duties toall stakeholders

A ;*rm"s Et%*ca' Res,ons**'*t*esto Its Stake%o'ders


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to Its Stake%o'ders

/wners0shareholders R*#%t2!''$ e>,ect some2orm o2 ret!rn on t%e*r *n4estment/wners0shareholders R*#%t2!''$ e>,ect some2orm o2 ret!rn on t%e*r *n4estment

+mployees R*#%t2!''$ e>,ect to e treated*t% d*#n*t$ and res,ect 2or de4ot*n# t%e*r

ener#*es to t%e enter,r*se

+mployees R*#%t2!''$ e>,ect to e treated*t% d*#n*t$ and res,ect 2or de4ot*n# t%e*r

ener#*es to t%e enter,r*se)ustomers R*#%t2!''$ e>,ect a se''er to,ro4*de t%em *t% a re'*a'e5 sa2e ,rod!ct orser4*ce

)ustomers R*#%t2!''$ e>,ect a se''er to,ro4*de t%em *t% a re'*a'e5 sa2e ,rod!ct orser4*ce

Suppliers R*#%t2!''$ e>,ect to %a4e an

eK!*ta'e re'at*ons%*, *t% 1rms t%e$ s!,,'$and e treated 2a*r'$

Suppliers R*#%t2!''$ e>,ect to %a4e an

eK!*ta'e re'at*ons%*, *t% 1rms t%e$ s!,,'$and e treated 2a*r'$

)ommunity R*#%t2!''$ e>,ect !s*nesses to e#ood c*t*+ens *n t%e*r comm!n*t$

)ommunity R*#%t2!''$ e>,ect !s*nesses to e#ood c*t*+ens *n t%e*r comm!n*t$

+-==

Ro'e o2 Sen*or E>ec!t*4es:


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Ro'e o2 Sen*or E>ec!t*4es:L*nk*n# Strate#$ *t% Et%*cs

&orbid pursuit o! ethicall Iuestionable

business opportunities nsist all aspects o! compan strateg

rePect high ethical standards Make it clear that all emploees are

e1pected to act (ith integrit nstall organi:ational checks and balances

to◦ Monitor beha'ior

◦ .n!orce ethical codes o! conduct◦ ?ro'ide guidance to emploees in gra areas

Displa genuine commitment to conductbusiness acti'ities ethicall


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A com,an$?s strate#$ can e cons*dered (et%*ca'/A. *2 a'' o2 *ts d*Derent act*ons and e'ements are 'e#a' and

*n com,'*ance *t% #o4ernmenta' r!'es and re#!'at*ons.

B. so 'on# as *ts act*ons and e%a4*ors can ,ass t%e test o2(mora' scr!t*n$/ and are ao4eoard *n t%e sense o2 note*n# s%ad$ or !nconsc*ona'e5 *n3!r*o!s to ot%ers5 or

!nnecessar*'$ %arm2!' to t%e en4*ronment.

C. on'$ *2 a'' e'ements o2 t%e strate#$ are *n accord *t%%at *s #enera''$ cons*dered as e*n# *n t%e o4era'' est*nterests o2 soc*et$ at 'ar#e.

7. so 'on# as re'*#*o!s a!t%or*t*es and noted et%*cs e>,erts

1nd not%*n# (ron#/ *n t%e com,an$"s act*ons.E. *2 *t *s *n com,'*ance *t% t%e com,an$"s code o2 et%*cs

and %as een a,,ro4ed $ t%e com,an$"s c%*e2 et%*csocer.


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Strategic anal$i

St t * A ' *


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Strate#*c Ana'$s*s

De'eloping a theoreticall in!ormed understanding o! the

en'ironment in (hich an organisation is operating, together (ith an

understanding o! the organisationLs interaction (ith its en'ironment

in order to impro'e organisational ecienc and eEecti'eness b

increasing the organisationLs capacit to deplo and redeplo its

resources intelligentlF"

#he t(o most important situational considerations are8

◦ ndustr and Competiti'e Conditions

◦ CompanLs o(n competiti'e capabilities, resources, internal strength,

(eakness, and market position"

nderstanding companies en'ironment

(ill create a (inning strateg or else compan (ill loose its

competiti'e ad'antage and companies per!ormance (ill be aEected"

Iss!es to Cons*der 2or


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Strate#*c Ana'$s*s

Strateg e'ol'es o'er a period o! time8 t in'ol'es stud o!

possible implications o! small routine decisions taken o'er a

e1tended period o! time and these decisions must be balanced"

Balance8 Strategic analsis in'ol'es (orkable balance bet(een

di'erse and conPicting considerations" &or e1ample matching

internal potential o! Jrm (ith en'ironmental opportunities"

Constraint !orces 'ar in nature, degree, magnitude, and

importance" #hese !actors can be managed to certain e1tent"

Risk8 As competiti'e markets gro(s, liberali:ation, globali:ation,

technological ad'ancements, inter countr relations pose risks

at 'aring degree" #hus strategic analsis should identi!

potential imbalance risk and assess their conseIuences"

S*t!at*ona' Ana'$s*s


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S*t!at*ona' Ana'$s*s

.1ternal .n'ironment

nternal .n'ironment

.1ternal .n'ironment

nternal .n'ironment

?roduct Situation 2 M current products

Competiti'e Situation 2 Anal:e the main competitors

Distribution Situation 2 Re'ie( our distribution sstem

.n'ironmental &actors 2 Anal:e the e1ternal and internal en'ironment

pportunit and ssues Analsis 2 S)# analsis

;rame )ork o2 Strate#*c Ana'$s*s


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;rame )ork o2 Strate#*c Ana'$s*s

.1ternal Analsisnternal Analsispportunities, #hreats, #rends, and Strategic ncertaintiesStrategic Strengths, )eaknesses, ?roblems, Constraints, and )eaknesStrateg dentiJcation and Selection

L*ke'$ Strate#*c Mo4es o2 R*4a's


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L*ke'$ Strate#*c Mo4es o2 R*4a's

A JrmLs o(n best strategic mo'es are aEected b◦ Current strategies o! competitors

◦ &uture actions o! competitors

?roJling ke ri'als in'ol'es gathering competiti'e intelligence

about their

◦ Current strategies

◦ Most recent mo'es

◦ Resource strengths and (eaknesses

◦ Announced plans

Pred*ct*n# R*4a's" Ne>t Mo4es


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#In4o'4es

Anal:ing their current competiti'e positions .1amining public pronouncements about (hat it (ill take to be

success!ul in industr

/athering in!ormation !rom grape'ine about current acti'ities and

potential changes

Studing past actions and leadership

Determining (ho has Pe1ibilit to make ma7or strategic changes

and (ho is locked into pursuing same basic strateg


98/112

Anal:ing CompanLs Resources and Competiti'e ?osition


99/112

Anal:ing Compan s Resources and Competiti'e ?osition

A Com,etence is something an rganisation is good atdoing" t results out o! accumulated learning and built-up

proJciencies" .1amples are ?roJcienc in Merchandising,)orking (ith Customers, ?roJcienc in speciJc technolog,?ro'en capabilities"A Core Com,etence is a proJcientl per!ormed acti'it thatis central to the rganisation Strateg" #hese are importantacti'ities in (hich Compan is better than other internalacti'ities" .1amples are /ood a!ter sale ser'ice, Skills in

Manu!acturing, High Iualit product at lo( Cost"A Core Com,etence is kno(ledge 0 skill based residing inpeople, and in CompanLs intellectual capital

7*st*nct*4e Com,etence


100/112

+55

A 7*st*nct*4e Com,etence is a competiti'el'aluable acti'it that Compan per!orms betterthan its ri'als" t is Competiti'e superiorit inper!orming Core acti'it generating competiti'elsuperior resource strength"

A strength that is superior distincti'e tocompetition is com,et*t*4e ad4anta#e"

Competiti'e ad'antage is a back-up !or strateg

(ithout (hich strateg (ill not (ork" Competiti'e ad'antage Jnall results in either

cost ad'antage or diEerentiation ad'antage" Creating entr barrier is also a (a to built up

competiti'e ad'antage" Building Competiti'e ad'antage is a conscious

and long term process" ?reparing Competiti'e Ad'antage ?roJle !or the

organisation is based on internal appraisal andindustr-competition"


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rganisational Capabilit rganisational Capabilit is inherent capacit or

potential o! an organisation to use its Strengthsand o'ercome )eaknesses to e1ploitpportunities 0 !ace #hreats" t is a skill !orcoordinating resources and putting them toproducti'e use" )ithout capabilit, resources,e'en though 'aluable 0 uniIue, (ill be (orthless"

rganisational Capabilit, though measurable,remains a sub7ecti'e attribute"

Or#an*+at*ona' Ca,a*'*t$ Pro1'e &


102/112

+54

Strate#*c Ad4anta#e Pro1'e:

Or#an*sat*ona'Reso!rces

R includes tangible,Non-tangible, assets,capabilities,

organisationalprocesses, #echnolog,?lant 0 .Iuipments,Human resources,n!ormation,Kno(ledge, etc

&our #pes o! Resourcese"g" aluableF, RareF,Costl to mitateF andGNon-SubstitutableF, (ille'entuall, lead toStrategic Ad'antage"

Or#an*sat*ona'Be%a4*o!r

B is mani!estation o!!orces and inPuence o!nternal .n'ironment" B aEects abilit o!organisation to use itsresources"

R is Hard(are 0 B isso!t(are

rganisationalResources

rganisationalBeha'iour


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+59

Resources Beha'iour

Strength 0)eaknesses

Snergistic.Eects

Competencies

rganisationalCapabilities

StrategicAd'antages

Strate#*c Ad4anta#e


104/112

+5%

#trategic Advantage is result of +rganisational

'apabilities. The advantages can be measured in terms

of *rofit, %arket #hare, 6rowth etc. 5egative resultsindicate #trategic (isadvantages. Ehen compared with

known identified rivals, the #trategic Advantage is also

known as 'ompetitive Advantage. In an abundantly

profit making company, 'ompetitive Advantage is usedas stimulus.

Or#an*sat*on Ca,a*'*t$ Pro1'e 6OCP8:


105/112

+56

Or#an*sat*on ca,a*'*t$ is nothing but sum totalo! capabilities o! 'arious !unctional areas" ;argel

accepted main !unctional areas could be named as&inance, Marketing, perations, ?ersonnel,n!ormation and /eneral Management" #hese couldbe diEerent !or diEerent tpes o! organisations"

O,erat*ons Ca,a*'*t$: includes ?roduction o!?roducts and Ser'ices" se o! material resources,some !actors are8

?roduction Sstem8 Capacit, ;ocation, ;aout,?roduct Design, )ork sstems, Automation, etc"

perations 0 Control8 ?roduction ?lanning, MaterialSuppl, n'entor, Cost control, 3ualit control,Maintenance Sstem, ?rocedures, Standards etc"

R0D or Design8 &acilities, ?roduct de'elopment,?atent rights, #echnolog, Collaboration, etc"

Or#an*sat*on Ca,a*'*t$ Pro1'e 6OCP8: F

;*nanc*a' Ca,a*'*t$: is basicall a'ailabilit


106/112

+5

;*nanc*a' Ca,a*'*t$: is basicall, a'ailabilit,usage and management o! &unds" t depends upon'arious !actors !or e1ample8

Sources o! !unds8- Capital Structure, Capitalprocurement, controllership, Jnancing pattern,(orking capital a'ailabilit, borro(ings, reser'es 0surpluses, relations (ith banks, audit authorities"

sage o! !unds8- Capital n'estment, &i1ed assetacIuisition, Current assets, ;oans 0 ad'ances,Di'idend distributions, Relations (ith Share Holders"

Management o! !unds8- &inancial Accounting 0Budgeting Sstems, Management control sstems,

State o! &inancial health, Cash inPation, Credit 0 Riskmanagement, Cost reduction 0 Control, #a1 planning"

rganisational Strength 0 )eaknesses related toabo'e !actors is a measure o! &inancial Capabilit"



107/112

+5

Market*n# Ca,a*'*t$: is basicall, pricing,promotion, penetration and distribution o!

?roduct or Ser'ice" Marketing Capabilit &actorsare8

?roduct8 3ualit, ariet, ?roduct Mi1,DiEerentiation, ?ositioning, ?ackaging etc"

?rice8 ?ricing ob7ecti'es 0 policies, Changes,?rotection etc"

?lace8 Distribution, #ransportation, ;ogistics,Marketing Channels, marketing intermediaries

etc" ?romotion8 #ools used !or promotion, Sales

?romotion, Ad'ertising, ?ublic Relations etc" Sstemic8 Marketing Mi1, Market Standings,

Compan mage, marketing Sstem, Marketing

Or#an*sat*on Ca,a*'*t$ Pro1'e 6OCP8: Personne' Ca,a*'*t$: is related to use o! Human


108/112

+5=

, $

resources 0 skills, aspects about abilit to implement

strategies" Some o! the &actors are8

?ersonnel Sstem8 Manpo(er planning, selection,

de'elopment, compensation, communication, appraisal,

?osition o! ?ersonnel Dept" in organisation, etc"

rganisational Characteristics8 Corporate mage 0mage as .mploer, 3ualit o! Managers, StaE 0

(orkers, )orking conditions, De'elopmental

opportunities, etc"

ndustrial Relations8 nion-Management Relations,Collecti'e bargaining, Sa!et, )el!are, .mploee

satis!action and moral, etc"


In2ormat*on Mana#ement Ca,a*'*t$: relate


109/112

+5$

In2ormat*on Mana#ement Ca,a*'*t$: relateto design 0 management o! Po( o! in!ormation!or decision making" Some !actors are8

AcIuisition and retention o! in!ormation8 Sources,3uantit, 3ualit, #imeliness, retention, securit,etc"

?rocessing o! n!ormation8 Database

Management, Computer Sstems, So!t(areCapabilit, Abilit to snthesise" #ransmission 0 Dissemination8 Speed, Scope,

)idth, depth o! co'erage, ntegrati'e, Sstemic, Supporti'e !actors8 #

in!rastructure, its rele'ance 0 compatibilit toorganisational needs, p-gradation, Computer?ro!essionals, #op management Support, etc


G ' M t C *'*t l t t


110/112

++5

Genera' Mana#ement Ca,a*'*t$: relates tointegration, co-ordination and direction o! the

!unctional capabilities" Some !actors are8 /eneral Management Sstem8 Strategicmanagement sstem, Strateg !ormulation,Strateg implementation machiner, MS,Corporate planning, Re(ards, ncenti'es, etc"

/eneral Managers8 rientation, Risk-propensit,'alues, norms, competence, track records, etc"

.1ternal Relationship8 nPuence 0 rapport (ith/o't", &inancial institutions, socialresponsibilities,

rganisational Climate8 rganisational cultures,political processes, balance o! 'ested interests,Acceptance o! management o! change,rganisational Structure 0 Control, etc"

Or#an*sat*on ca,a*'*t$ Pro1'e 6OCP8 :

#he O * t* *'*t P 1' 6OCP8 can


111/112

+++

#he Or#an*sat*on ca,a*'*t$ Pro1'e 6OCP8 canbe prepared b sstematicall assessing the'arious &unctional areas and sub7ecti'el assign'alues to the diEerent !unctional capabilit !actorsand sub-!actors along a scale ranging !rom the'alues -6 to V6"

Ca,a*'*t$ ;actor Rat*n#

--------------- ------------------------------------------------ ;actor )eakness Normal Strength

-6 5 V6

----------------------------------------------------------------- Sources o! &unds -6-%-9-4-+-5V+V4VV%V6W V9 A!ter completion o! charts !or all the !actors and

sub-!actors mentioned abo'e, Strategists canassess )eaknesses and Strengths o! theorganisation in each o! the si1 !unctional areas"

Pre,ar*n# t%e Strate#*c Ad4anta#ePro1'e 6SAP8:


112/112

Ca,a*'*t$ ;actor Stren#t% & )eaknesses &inance High cost o! capital" Marketing secured

perations ?lant 0 Machiner in critical situation

?ersonnel good

Management

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