Strategic Management

Process

Wal-Mart Story

Grown from a discount store in 1962 to become world’s largest Retailer.

Constant focus on Customer Service

Extensive use of technology

Management Structure that welcome change

Extensive effort to Grow business Globally

Sales from $44 billion in 1992 to $425 billion in 2012

How did it happen?

5 P’s of HR Strategy

PhilosophyPoliciesProgrammesPracticesProcess

the wall mart story

Now, I want you to raise your right hand……

I want you to repeat after me:

from this day forward I solemnly promise and declare

that every time a customer comes within 10 feet of me

I will smile,

Look towards the customer and greet …

I am Sam May I help You

the wall mart story

Success

Mission Strategy

a firm must define clearlyits Mission & what it means bySuccess in its mission Statement

Then it must develop a road map to accomplishthe mission which we call

strategy

Wal-Mart

"To give ordinary folk the chance to buy the same thing as rich people.“

‘Always Low Prices’

Mission Statement of Wal-Mart

‘Save Money Live Better’

A strategy is a set of goals and specific Action plans that, if achieved, provide the desired competitive advantage

SM involves identifying and implementingthese goals and action plans

What is a Strategy & Strategic Management ?

StrategyStrategic

Management&

04/08/23Paramjit Sharma 9

Goals2013

Objectives

2018

Mission

2036

StrategyStrategic

Management&

04/08/23Paramjit Sharma 10

Goals2014

Objectives

2019

Mission

2037

StrategyStrategic

Management&

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Goals2015

Objectives

2020

Mission

2038

What is Strategic Management?

Application of the basic planning process at the highest levels of the company

Strategic Management Process

FormulationFormulation

ImplementationImplementation

EvaluationEvaluation

EnvironmentScanning

EnvironmentScanning

Basic Concepts

Environment Scanning

StrategyFormulation

StrategyImplementation

Evaluation&

Control

External

SocietalEnvironmental

IndustryAnalysis

Internal

StructureResourcesAssetsSkillsCompetenceKnowledge

MissionReason for Existence

ObjectivesWhat to accomplishBy whom

StrategiesPlan to achieve mission &Objectives Policies

Guidelines for DecisionMaking

ProgrammesActivities needed to accomplish a plan

BudgetsCost of the Programmes

ProceduresSequence of Steps needed to do the job

Performance

ActualResults

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Strategic Management Process

Company’s SWOT Analysis toshape the strategies

SWOT Analysis

Process that allows companies to evaluate overall health

Internal (SW) and external (OT)

SWOT Analysis

Strengths

Weaknesses

Opportunities

ThreatsInte

rnal

Ext

ern

al

Strategy/Tactics

Appropriate inappropriate

Strategy information Matrix

Success

Trouble or Failure

Possible shortterm successbut ultimately

Failure

Failure

Excellent

Poor

Ma

rke

tin

g In

form

ati

on

Formulating Strategy

To understand the current position of the companyIdentify mission, identify past and present strategies, Diagnose the company’s past and present performance, Set goals & objectives for the company’s operation

Formulating Strategy

Identify the mission statement

•Outlines why the company exists

•Describes the company’s basic products and/or services

•Designed to accomplish goals and Objectives

Wal-Mart

"To give ordinary folk the chance to buy the same thing as rich people.“

Always Low Prices

Mission Statement of Wal-Mart

‘Save Money Live Better ,

Mission Statement

Saraswat Cooperative Bank

Business Turnover of Rs 25000cr by 2011

Saraswat Cooperative Bank

Business Turnover of Rs 25000cr by 2011

Mission Statement

Ford Motor (ford. com)

Provide personal mobility for people around the world

Ford Motor (ford. com)

Provide personal mobility for people around the world

Mission Statement

United Parcel (ups. com)

To move at the speed of business

United Parcel (ups. com)

To move at the speed of business

Mission Statement

Walt Disney (Disney. com)

To make people Happy

Walt Disney (Disney. com)

To make people Happy

Identifying Past and Present Strategies

Companies need to understand and appreciate their corporate history

Identifying Past and Present Strategies

Strategic managers should askHas past strategy been developed?

If not, can past history of the company be analyzed to identify the strategy that has evolved?

If yes, has the strategy been recorded in writing?

Diagnosing Past and Present Performance

A corporate planner must decide if past strategies worked and if strategic changes are

needed by asking:

•How is the company currently performing?

•How has it performed during the past few years?

•Is the performance trend moving up or down?

Kizashi

Setting Goals

•Concise statements that provide direction •Setting standards for achievement

•Goals must be re-evaluated as the environment and opportunities change

Objectives

•SMART•Specific•Measurable•Achievable•Realistic•Timely

Goals which are measurable

•Top line•Bottom line•Efficiency•Growth•Technology Leadership•Shareholder’s Wealth•Brand Equity•Corporate Social Responsibility•Market Share•Employees Package•Cost

Policies

Policies are broad general guidelines to action that establish boundaries within which employees must operate

“answering all written customer complaints in writing within 10 days”

‘Our organization wont give any Bribe”

Policies

No cost Reduction at the cost of the Quality

Policies

GE Must be number one or two wherever it competes

Policies

‘No question Asked when customer return merchandise’

Implementing Strategy

Implementing Strategy

It is the Process by which strategies are put into action through development of programmes, budgets and procedures

Amazon invented the retailing business modelthat all other dot - coms are struggling to copy

Amazon.com— list of items

BooksMovies ,Music & GamesElectronics & ComputersHome & GardensGroceryToys ,Kids, Baby CareApparel, Shoes & JewelryHealth& BeautySports & Outdoors

Strategy Implementation

•Programmes

•Budget

•Procedures

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Strategy Implementation

A programme is a statement of the activities or steps needed to accomplish a plan .

It makes a strategy action oriented .

It may involve restructuring the Firm, changing the internal culture or beginning a new research effort

Strategy Implementation

A Budget is a statement of Firm’s programmes in monetary value.

It has detailed cost of each programme.

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Strategy Implementation

Procedures , are a system of sequential steps or techniques that describe in detail how a particular task or job is to be done

Strategies

3 Types

Corporate Strategy

Business Strategy

Functional Strategy

CorporateStrategy

It describes a company’s overall direction in terms of general attitude towards Growth and Management of the Organization

CorporateStrategy

It deals with 3 main categories of Stability, Growth and Retrenchment

Maytag followed the strategy of acquiring other appliance companies

BusinessStrategy

It usually occur at the business unit & it emphasizes improvement of the competitive position of a corporation’s product or services in the specific industry or segment

Generic &Grand Strategies

Core idea of how best a firm can Compete in the market place is called Generic Strategy

Comprehensive General Plan of major actions through which objectives are to be achieved is called Grand Strategy

Generic Strategies

•Cost Leadership

•Differentiation

•Focus

developing a competitive strategy

Cost Leadership

developing a competitive strategy

Cost Leadership

Cost Leadership is a competitiveStrategy in which a firm succeedsin producing or sellingproducts or servicesat the lowest costs in the industry

NIRMA AMULBIG

BAZAARCAVINCARE

StrategyCost

Leadership

Required Skills &Resources

Capital InvestmentsProcess ReengineeringLabour SupervisionProduct Designing

•Product•Service•Personnel•Coverage•Image

Strategy

Differentiation

Required Skills &Resources

Strong Mkt AbilitiesProduct EngineeringCorporate ReputationUniquenessCompetent & Trained manpower

Grand Strategies

•Concentration•Market Development•Product Development•Innovation•Horizontal Integration•Vertical Integration•Joint Venture•Strategic Alliance•Concentric Diversification•Conglomerate Diversification•Turnaround•Divestiture•Liquidation

FunctionalStrategy

Followed to maximize resource productivityConcerned with developing and nurturing distinctive competence to provide a business unit with a competitive advantage.

Technology Leadership----TCSP& G—Huge Advertising Budget

• MARKETING STRATEGY

• FINANCIAL STRATEGY

• RESEARCH & DEVELOPMENT STRATEGY

• OPERATIONS STRATEGY

• PURCHASING STRATEGY

• LOGISTICS STRATEGY

• HUMAN RESOURCES STRATEGY

• INFORMATION TECHNOLOGY STRATEGY

Functional Strategies

PRODUCT DEVELOPMENT STRATEGY

MARKET DEVELOPMENT STRATEGY

DIVERSIFICATION STRATEGY

MarketPenetrationSTRATEGY

MarketingStrategies

Marketing MixIssues

ProductStrategy

PriceStrategy

PlaceStrategy

Promotion

Strategy

FinancialManagementStrategies

CapitalAcquisitionStrategies

ResourceAllocationStrategies

R& DStrategies

Level of Innovation

Leader or Copy Cat

Acquisition of Technology

Internally Developed or

acquired

OperationStrategies

ManufacturingLocation

Internal orOut sourced

DomesticOr

International

SystemLayout

Outsourcing (our firm buys everything)

• Buying on the Open Market

• Long-Term Contracts with Multiple Suppliers

• Sole Sourcing (only one supplier) improves quality

• Parallel Sourcing (two suppliers) provides protection

Purchasing Strategies

• TALENT ACQUISITION– Recruit from Outside v. Internal Development– Require experienced, highly-skilled workers v. “we will

train you”– Offer “top dollar” wages & benefits v. mentoring and a

career

• WORK ARRANGEMENTS– Individual Jobs v. Team Positions– Narrowly-defined jobs v. Positions with discretion and

autonomy– On-premises Work v. Telecommuting Options

• MOTIVATION & APPRAISAL– Assessment for development v. assessment for rewards

– Incentives for ideas & originality v. incentives for conformity?

Human ResourceStrategies

Red Oceans are all the industries in existence today – the known market space, industry boundaries are defined and accepted, and the competitive rules of the game are known. Here companies try to outperform their rivals to grab a greater share of product or service demand. As the market space gets crowded, prospects for profits and growth are reduced. There is cutthroat competition which turns the ocean bloody. Hence, the term red oceans.

Red OceanStrategy

Blue oceans, in contrast, denote all the industries not in existence today – the unknown market space, untainted by competition ,demand is created rather than fought over. There is ample opportunity for growth that is both profitable and rapid.Blue ocean is an analogy to describe the wider, deeper potential of market space that is not yet explored

Blue OceanStrategy

DirectionalStrategy

Directional strategy

is the game plan a company decides on and implements to grow business, increase profits, and accomplish goals and objectives. Small businesses to large corporations can create their own types of directional strategies that work for the focus and scope of each individual business. For example, certain companies may find that a directional portfolio strategy works best, while other businesses may choose to follow a parenting directional strategy.

CorporateParenting

Corporate parenting refers to the levels of management above that of the business units, and without direct interaction with buyers and competitors

CorporateParenting

.There are basically three styles of corporate parenting; •financial control,•strategic planning and •strategic control.

Strategic Evaluation

Evaluating and Controlling the Strategic Plan

Process of continuously monitoring the company’s progress toward its long-range goals and mission

Evaluating and Controlling the Strategic Plan

Basic evaluation strategies:

•Measure performance•Reviewing Performance•Take corrective action

Determine what to Measure

EstablishStandards

MeasurePerformance

Matching Performance

With Standards

CorrectiveAction

MeasurePerformance

Evaluation & Control Process

Dimensions of Strategic Decisions

•Involvement of Top Management•Require Large Resources•Affect Long Term Prosperity•Future Oriented•Multifunctional Consequences•Considering External Environment

Components of SMP

•Company Mission•Internal & External Analysis•Long & Short Term Objectives•Generic & Grand Strategies•Action Plans •Functional Tactics•Policies that Empower Tactics•Restructuring, Reengineering Org•Strategic Control & •Continuous Improvement

STRATEGIC HRM

STRATEGIC HRM

Strategic HRM is about how the employment relationships for all employees can be managed in such a way as to contribute optimally to the organization’s goal achievement.

STRATEGIC HRM

Managerial Process requiring HR Policies & Practices to be linked with the Strategic Objectives of the Company

HR Systems & Organizational structure is managed in a way that is congruent with organizational strategy

Matching Model

•Linking HR Policies & Practices with SMP

•Internalization of HR function

•Commitment of Workforce to strategic Goals

HR PRACTICES LINKED WITH Competitive Strategy

• Recruitment

• Training

• Career Path

• Promotions

• Socialization

• Openness

HR Strategy Models

Control Based Model

Resource Based Model

Integrative Model

HR Strategy Models

Control Based Model---

Management Monitor and control employees performance

Resource Based Model-

interactive and behaviour improvement is tried

Integrative Model

Integration of both Models

CommitmentHR Strategy

Collaborative Strategy

PaternalisticHR Strategy

TraditionalHR Strategy

Competitive HR Strategies

CommitmentHR Strategy

Competitive HR Strategies

Internal Development of Employees Competencies and keeping Control over them

PaternalisticHR Strategy

Competitive HR Strategies

Giving Learning Opportunities to Employees, Internal Promotions for their compliance with process based control Mechanism

Collaborative Strategy

Competitive HR Strategies

Sub Contracting work to external independent experts. Evaluation in terms of End Results

TraditionalHR Strategy

Competitive HR Strategies

External Recruitment of Competencies & Behavioural based Control

CommitmentHR Strategy

Collaborative Strategy

PaternalisticHR Strategy

TraditionalHR Strategy

Internal External

Outcome

Process

Competitive HR Strategies

Summary