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&
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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.
1-45
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