Strategies Policies and planning premises

ObjectivesNature and purpose of strategies and policiesStrategic planning processTOWS Matrix and Business portfolio matrixHierarchy of strategiesPorters generic strategiesNature of premises and forecast

Assumption and ForecastPlanning is done in an uncertain environment both

internal and external Therefore we need to make forecasts and

assumptions while planning in the premises( anticipated environment in which plans are expected to operate)

One of the technique used is DELPHI TechniqueExample The GNP is a forecastIt becomes an assumption for setting the sales target.This in turn forms the basis for production

Why do we need to know strategy development and role of policies in planning? What is its importance?

Need for strategyStrategy refers to the determination ( make

or establish precisely) of the mission/ purpose and the basic long term objective of an enterprise, followed by the adoption of courses of action and allocation of resources necessary to achieve these aims.

Difference between Vision and Mission   A mission statement concerns what an organization is all about. A vision statement is what the organization wants to become. A mission statement answers three key questions: What do we do? For whom do we do it? What is the benefit? A vision statement, on the other hand, describes how the future will look if the

organization achieves its mission. A mission statement gives the overall purpose of an organization, while a vision statement describes a picture of the "preferred future.”

Examples: Centres for Disease Control Mission To promote health and quality of life by

preventing and controlling disease, injury, and disability Vision Healthy People in a Healthy World

Vision of Reliance communicationBy 2015, be amongst the top 3 most valued

Indian companies,providing Information, Communication

& Entertainment services, and being the industry benchmark in

Customer Experience, EmployeeCentricity and Innovation

Mission of Reliance CommunicationWe will create world-class benchmarks by:Meeting and exceeding Customer expectations with a segmented

approachEstablishing, re-engineering and automating Processes to make them

customer centric, efficient and effective Incessant offering of Products and Services

that are value for money and excite customersProviding a Network experience that is

best in the industryBuilding Reliance into an iconic Brand which

is benchmarked by others and leads industry in Intention to Purchase and Loyalty

Developing a professional Leadership team that inspires, nurtures talent and propagates RCOM Values by personal example

Strategies of Reliance communicationTo achieve this mission on daily basis the company will need

to draw strategies in marketing , human resource branding and Pricing.

Example of product launch strategy. - GSM launch strategy The necessary actions taken were campaigns, ‘ Go Colour

Campaign’ and ‘ Bus baton dabao campaign’ Cheap life time validity offers Resource allocation- Additional towers across the country,

Human resource, cabling.

While strategies give direction for decision making, Policies give discretion or guidance for decision making

The Strategic Planning process Inputs to the organization- Consider the people , capital, Managerial skills and technical

skills and goals of consumer, employees and share holders Industry Analysis- Study the industry, the growth, new opportunities, competitors, present

market share, threats. Enterprise profile- Where does the company want to be? This is determined by the below

two variablesa. Executive orientation values and mission eg. The top management values of a trading

company is that they do not allow insider tradingb. Mission and strategic intent of the company . To be a pioneer, to beat Competitor Development of alternate strategies- An organization may pursue many different kinds

of strategies. It may concentrate only on high end market segment clients. It may provide only a limited product range, or it may diversify into many products, liquidation strategy or retrenchment strategy . These strategies are established to direct its mission and objective

Alternate strategies are developed on the basis of External and internal environment Evaluation and choice of strategy- Two main criteria for evaluating a strategy choice

are A. Risk: A strategy may be profitable but the risk involved may turn the company bankruptB. Timing: Launch of the best product may be a failure if launched at the inappropriate time.

Also the time when a firm needs to change or implement a new strategy depends on the external factors like competition.

Consistency testing and contingency planning: The future cannot be certain of our assumptions that a certain consistency will be maintained. Therefore a contingency plan needs to ne in place . Example- the demand for print media may decline due to faster literacy of computers and internet usage and reach

The following steps like organizing staffing leading and controlling will follow the process

Techniques for strategy analysis and implementation

TOWS MATRIXIt is a conceptual framework for a systematic

analysis that facilitates matching of the external threats and opportunities with the internal strengths and weaknesses.

This matrix addresses the limitations of SWOT analysis. It combines these factors ( SWOT) with distinct strategic choices

It begins with T ( Threats ) cause in most situations a company undertakes strategic planning as a result of perceived crises and problems

TOWS Matrix for Strategy Formulation

Internal Factors

External Factors

Internal Strengths (S)Strengths in Human resource, location, marketing finance,

Internal Weakness ( W)Weakness in areas shown as strengths

External Opportunities (o):New products, markets, technology, economic growth, infrastructure growth

SO Strategy: Most successful strategy using the organizations strengths to take advantage of its opportunitiesEg: The company has a location to open a new food outlet and the area is getting developed with schools and residential colonies

WO Strategy: To overcome weaknesses to take advantage of the opportunity. The firm needs to develop in areas in order to develop needed competencies Eg: Skilled people, up gradation in technology.Placing procedures in place I

External Threats (T) ST Strategy WT Strategy minimize threats and weaknesses through joint venture or liquidation or retrenchment.

The Portfolio matrix or BCG MatrixThis is called the Portfolio framework,

advocated by the Boston Consulting group.It focuses on 3 aspects of a business unit:

Sales, growth of its market and whether it produces cash in its operations

It aims at developing a balance among business units that use up cash and those that supply cash.

Star Modest cash flow ( High growth rate and high market share )Cash flows are moderate•This category would require more investment to keep pace with the rapid market growth and will consume more cash than earned.

Question Mark ( High growth rate and low market share)Cash flows are negative• The market is in rapid growth and requires high investments , however the firm is not using the right strategy to take advantage of this growth rate. If a proper business strategy and funds are implemented than an exciting opportunity can be captured

Cash Cow (Low growth rate and High market share )Cash flows are huge •The slow growth of the industry does not require huge investment to maintain its high market share .

Dog (Low growth rate and low market share )Cash flow are moderate•The dog category has low investment since the market has a low growth rate. Therefore the cash that is generated will not be utilized at a rapid rate .•The excess cash of successful dogs can be used to enable Question marks to Stars.

Porters Industry Analysis or Porters FrameworkAccording to Michael Porter there are 5

environmental forces that determine an organizations ability to compete in in a given market

Porter states that strategy formulation requires an analysis of the attractiveness of an industry and the company’s position within the industry. This analysis becomes the basis for generic strategy formulation

The Industry

( positioning among current

competition

Threat of new

entrants

Bargaining power

of customer

s

Threat of substitut

es products

or services

Bargaining power

of suppliers

Generic strategies – strategies which can be used at broad level for different kinds of organizationsOverall cost leadership strategy- low cast

compared to competitors . The organization needs experience and huge market share

Differentiation strategy- To offer something

unique

Focused strategy – concentrates on special groups of customers specially product line, specific geographical region. It can be low cast focused strategy or differentiated focused strategy

Test your selfNote the premises for Grand Hyatt Goa to

operate in the next 5 years in Goa.Why are contingency plans required in

strategy panningUsing the TOWS Matrix implement a strategy

alternative for the No.1 event company in Goa and a company that is already existing but does not have contemporary designs and concepts