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Edit Comment Close By: vinodmathews (56 month(s) ago) Good Presentation covering the broad aspects of Strategic Managements Saving..... Post Reply Close Saving..... Edit Comment Close Premium member Presentation Transcript Corporate Policy & Strategic Management. : Corporate Policy & Strategic Management. “To compete for the Future” Some fundamental questions… : Some fundamental questions… Does the senior management have a clear understanding of how the industry may be different in the next 10 years? Is it regularly defining new ways of doing business, building new capabilities and setting new standards of customer satisfaction? Some fundamental questions… : Some fundamental questions… Is management aware of the threats posed by new rivals? Do senior executives have a sense of urgency about the need to reinvent the current business model? Is my company pursuing growth and new business development? So what is Strategic Management? : So what is Strategic Management? As defined by Hofer and others, it is “ The process which deals with the fundamental organizational renewal and growth with the development of strategies, structures, and systems necessary to achieve such renewal and growth, and with the organizational systems needed to effectively manage the strategy formulation and implementation processes” Simply put by Edward de Bono, : Simply put by Edward de Bono, Strategy means putting things in place carefully, and with a great deal of thought. It is the opposite of just waiting for things to happen. In a changing environment one of the most difficult things in business is to know when to stick to your strategy and when to change it. Vision : Vision A vision articulates the position that an organization would like to attain in the distant future. Vision therefore is future aspirations that lead to an inspiration to be the best in one’s field of activity. Why should organizations have a “Vision” : Why should organizations have a “Vision” Good visions are inspiring and exhilarating. It creates a common identity and a shared sense of purpose. They are competitive, unique and simple. Good visions foster risk-taking and experimentation. They represent integrity. Mission : Mission Mission is what an organization is and why it exists. Mission is defined as “Essential purpose of the organization, concerning philosophical question s like What is our business, the nature of business it is in, who are our customers it looks to satisfy”. Mission statements : Mission statements They should be feasible: Though mission should aim high, it should be realistic and achievable. It should be precise: It should not be very narrow nor should it be too broad. It should have clarity: It should be clear enough to lead to action. It should be motivating: It should motivate employees to achieve its mission. Mission statements : Mission statements It should be unique and distinctive: A unique because an organization should be seen by market and customers as “different”. It should the major strategy components: It should indicate the strategy direction for the organization. Levels at which Strategy operates : Levels at which Strategy operates For many companies, a single strategy is not enough. There is a need for multiple strategies at different levels. Many companies are organized on the basis of operating divisions. These divisions are known as “Strategic business units” or profit centers. Strategy at different levels : Strategy at different levels Strategy at different levels. : Strategy at different levels. Corporate office : Corporate strategies. S B U’s : Business level strategies. Functional : Functional level strategies. Corporate level strategies. : Corporate level strategies. It is a plan of action, covering the various functions performed by different SBU’s. The plan deals with the objectives of the company, allocation of resources and coordination of the S B U’s for optimal performance. SBU Level strategy. : SBU Level strategy. SBU strategies is a comprehensive plan providing objectives for SBU’s, allocation of resources among functional areas, and coordination between them for making an optimal contribution to the achievement of corporate level objectives. Functional Strategies : Functional Strategies Functional level strategies deal with a relatively restricted plan providing objectives for a specific function, allocation of resources among different operations within that functional area, and coordination between them for optimal contribution to the achievement of SBU and corporate level objectives. Other strategy levels : Other strategy levels Societal strategies: These strategies are at a level higher than the Corporate level. Based on the mission statement a societal strategy is a generalized view of how the corporation relates itself to society in terms of a particular need or a set of needs that it strives to fulfill. Other strategy levels. : Other strategy levels. Some strategies are also needed to be set at lower levels, one step below the functional level. E.g. A functional strategy at the marketing level could be sub divided into sales, distribution, pricing, product and advertising. Strategists and their role in Strategic Management. : Strategists and their role in Strategic Management. Strategists are individuals or groups who are primarily involved in the formulation, implementation and evaluation of strategy. So all managers are strategists in a limited sense. Persons outside the organization are also involved in strategic management. They are also strategists. Various strategists : Various strategists Board of Directors: Is responsible for the governance of the organization. As directors, the members of the board are responsible for providing guidance and establishing the directives according to which the managers of the organization can operate. Various strategists. : Various strategists. The Chief Executive Officer: Is the most important strategist who is responsible for all the aspects of strategic management, right from formulation to the evaluation of strategy. He plays a very important role in strategic decision making. Various strategists : Various strategists Entrepreneurs: are persons who always searches for change, responds to it and exploits it as an opportunity. They play a very important and a proactive role in strategic management. They provide a sense of direction to the organization and set objectives and formulate strategies to achieve them. Various strategists : Various strategists Senior Management: When assigned with specific responsibilities senior managers look after modernization, technology up gradation, diversification and expansion, plan implementation and new product development. Senior managers perform a variety of roles by assisting the board and the CEO in formulation, implementation and evaluation of strategies. Various strategists : Various strategists SBU level executives: The idea for organizing to SBU is to manage a diversified company as a portfolio of businesses. SBU level heads are also known as profit center heads are considered as ceo’s of a defined business unit for the purpose of strategic management. Various strategists : Various strategists Corporate planning staff: It plays a supporting role in strategic management. They not only assist in whole planning process but also are responsible for the communication of strategic plans. They also conduct special studies and research related to strategic management. Various strategists : Various strategists Consultants: The main advantage of hiring consultants is getting unbiased and objective opinion from a knowledgeable outsider and availability of specialist’s skills. Some Consulting co’s are, Mc Kinsey and company, Accenture, AF Ferguson, KPMG, Boston consulting, S B Billimoria etc. Area of specialization : Area of specialization McKinsey and company: Fundamental change and strategic visioning. Accenture: Business restructuring, infotech and systems. Boston consulting: Building competitive advantage. KPMG: Strategic financial management and feasibility studies. Other strategy levels : Other strategy levels Societal strategies: These strategies are at a level higher than the Corporate level. Based on the mission statement a societal strategy is a generalized view of how the corporation relates itself to society in terms of a particular need or a set of needs that it strives to fulfill. Other strategy levels. : Other strategy levels. Some strategies are also needed to be set at lower levels, one step below the functional level. E.g. A functional strategy at the marketing level could be sub divided into sales, distribution, pricing, product and advertising. Strategic Decision Making. : Strategic Decision Making. Is a complex process. Cannot be analyzed and explained easily. These decisions are difficult to measure. For these reasons no theoretical model can adequately represent the different dimensions of the process of strategic decision making. Strategic decision making : Strategic decision making “Successful business strategies result not from rigorous analysis but from a particular state of mind”. Strategists do not reject analysis, but they use it only to stimulate the creative process, to test the ideas that emerge, to work out their strategic implications, or to ensure successful execution of high potential “wild” ides that might otherwise never be implemented” From “The Mind of The Strategist”….Kenichi Ohmae Issues related with Strategic decision making. : Issues related with Strategic decision making. Criteria for decision making. Rationality in decision making.( choosing best possible alternatives for achieving targets) Creativity in decision making.( decision must be original and different) Variability in decision making.( two different conclusions) Issues contd : Issues contd Person related factor in decision making.( age, education, intelligence, personal values, risk taking ability, creativity etc.) Individual v/s group decision making. Strategic Management Process : Strategic Management Process 1)Establishing the hierarchy of strategic intent: Creating and communicating a vision. Designing a mission statement. Defining the business. Setting objectives. Strategic management process : Strategic management process 2) Formulation of strategies: Performing environmental appraisal. Doing organizational appraisal. Considering corporate level strategies. Considering business level strategies. Strategic analysis. Formulating strategies. Preparing strategic plan. Strategic management process. : Strategic management process. 3) Implementation of strategies: Activating strategies. Designing structures and systems. Managing behavioral implementation. Managing functional implementation. Operationalysing strategies. Strategic management process : Strategic management process 4) Performing strategic evaluation and control: Performing strategic evaluation. Exercising strategic control. Reformulating strategies. Mission : Mission Mission is a statement which defines the role that an organization plays in a society. Mission is the “ purpose or the reason for the organization’s existence” Features of a Mission statement : Features of a Mission statement It should be feasible. It should be precise. It should be clear. It should be motivating. It should be distinctive. Some Mission statements… : Some Mission statements… Ranbaxy laboratories: “To become a research-based international pharma company. Marico Industries: The 3P’s of Marico, People, products, profits. HCL: To be a world class competitor. Ford: Quality is job no.1 Bajaj : Inspiring confidence. Hero Honda: Desh ki Dhadkan. Environmental Appraisal : Environmental Appraisal The environment of any organization is “the sum of all conditions, events and influences that surround and affect it” It is therefore crucial for any organization to understand the environmental influences on its business. Characteristics of Environment. : Characteristics of Environment. It is complex. It is dynamic. It is multi-faceted. It has a far-reaching impact. Various environmental components. : Various environmental components. Market environment: Client’s needs, preferences, perceptions, attitudes, values, buying behavior, satisfaction. Product factors like demand, image, features, utility, design, life cycle, price, promotion, distribution, differentiation etc Competitor factors like different types of competitors, nature of competition. Components contd.. : Components contd.. 2) Technological Environment: Sources of technology. Technological development, R&D, cost of technology. Effects of technology on environment, human beings. Components contd.. : Components contd.. 3) Supplier environment: Cost, availability, and continuity of supply of raw material, components, parts. Infrastructural support and ease of availability of the different factors of production. Components contd.. : Components contd.. 4) Economic environment: The economic stage at which the country exists at a given point of time. The economic structure adopted, capitalistic, socialistic or mixed. Economic policies, industrial, fiscal. Per capita income, balance of payments etc. Components contd.. : Components contd.. 5) Regulatory environment: Policies related licensing, monopolies, FDI, Policies related to distribution and pricing. Policies related to sick industries, public sector, backward areas, consumer protection etc. Components contd.. : Components contd.. 6) Political environment: The political system and its features, ideological forces, coalition compulsions. Political stability. Political funding of elections. Government’s role in business. Components contd.. : Components contd.. Socio-cultural environment: Demographics like population, its density and distribution, age composition, inter state migration, income distribution etc. Socio-cultural concerns like environmental pollution, consumerism, corruption etc. Family structure changes. Components contd.. : Components contd.. 8) International environment: Globalization process. Global economic forces. Global trade and commerce. Global financial system. Global markets and competitiveness. Global communication Global technology and quality systems. Organizational Appraisal : Organizational Appraisal It deals with the internal environment of the organization. Internal environment constitutes of behavior, strengths, weaknesses, synergy and competencies, all these put together determine the “ Organizational capability” Organizational appraisal : Organizational appraisal Organizational Resources. Tangible and intangible resources: All assets, capabilities, organizational processes, information, knowledge. Physical resources: Technology, plant, equipment, location, access to raw material etc. Organizational appraisal contd.. : Organizational appraisal contd.. Human resources: Training, experience, intelligence, judgment, relationships etc. Organizational resources: Formal systems, and structures. Organizational behavior : Organizational behavior It is the manifestation of various forces and influences operating in the internal environment of an organization that create the ability for, or place constraints in the usage of resources. It leads to the development of a special identity and character of an organization. Factors influencing Org.Beh. : Factors influencing Org.Beh. Quality of leadership. Management philosophy. Shared values. Culture Quality of work environment. Organizational politics. Strengths & Weaknesses. : Strengths & Weaknesses. Strength: It is an inherent capability which an organization can use to gain strategic advantage. Weakness: A weakness is an inherent limitation or constraint which creates a strategic disadvantage for an organization. Synergistic effects : Synergistic effects Synergy is the idea that the whole is greater or lesser than the sum of its parts. E.g. In marketing dept. synergistic effect can be achieved when product, promotion, distribution, advertising support each other. Competencies : Competencies Competencies are special qualities possessed by an organization that make them withstand pressures of competition in the market place. When a specific ability is possessed by a particular organization exclusively or in a large measure it is called as distinctive competence. Organizational capability : Organizational capability It is the inherent capacity or potential of an organization to use its strengths and overcome its weaknesses in order to exploit opportunities and face threats in an external environment. Strategic advantage : Strategic advantage These are the outcome of organizational capabilities. They are the result of organizational activities leading to rewards in terms of financial parameters. Functional capabilities. : Functional capabilities. Strengths supporting Financial capability. Access to financial resources. Good relationship with financial institutions. High level of credit- worthiness. Low cost of capital compared to rivals. High level of share holder’s confidence. Marketing capabilities : Marketing capabilities Wide variety of products. Better quality of products. Sharply-focused positioning. Effective distribution system. Effective sales promotion. Effective MIS. Operations capabilities : Operations capabilities High level of capacity utilization. Favorable plant location. Reliable sources of supply. Effective control of operational costs. Good inventory control system. High caliber R&D people. Technical collaborations. General management capability. : General management capability. Effective system for corporate planning. Reward and incentives for top managers. Risk taking. Favorable corporate image. Effective management of organizational change. SWOT Analysis. : SWOT Analysis. S: Strengths. W: Weaknesses. O: Opportunities. T: Threats Strength : Strength It is an inherent capacity which an organization can use to gain strategic advantage. E.g. superior r&d skills which can be used for new product development. Weakness : Weakness It is an inherent limitation or constraint which creates strategic disadvantage. E.g. over dependence on a single product line, which could be risky in crisis. Opportunity : Opportunity It is a favorable condition in the organization’s environment which helps it to consolidate and strengthen its position. E.g. growing demand for the products or services that a company provides. Threats : Threats It is unfavorable situation in the organization’s environment which creates risk for, or causes damage to, the organization. E.g. emergence of strong new competitors who are offering stiff competition. Grand strategies : Grand strategies Types of Grand strategies: Stability strategy. Expansion strategy. Retrenchment strategy. Combination strategy. Stability strategy : Stability strategy Is adopted by on organization when it attempts at an incremental improvement of its functional performance by marginally changing one or more of its business. E.g. A copier machine company provides better after sales service to improve its image and product image too. Expansion strategy : Expansion strategy This strategy is followed when a company aims at high growth by increasing the scope of one or more of its businesses in terms of their respective customer groups, functions and technology. Retrenchment strategy : Retrenchment strategy This is followed when a company aims at contraction of its activities through substantial reduction or elimination of its business. E.g. A pharmaceutical company may withdraw from its retail operations so that it can focus on institutional sales. Combination strategy : Combination strategy This is followed when a company adopts a mixture of all the strategies either at the same time in its different businesses, or at different times in the same business with the aim of improving its performance. Functional Strategies. : Functional Strategies. Financial plans and policies: It means, Sources of funds( borrowings, reserves & surplus) Usage of funds( capital investment, loans, dividend decisions) Management of funds (system of finance, accounting, budgeting) Marketing plans and policies. : Marketing plans and policies. Strategic use of Marketing mix. P: Product. P: Price P: Place P: Promotion Operation plans and policies : Operation plans and policies These decisions are related to production system, operational planning and control, and R&D. Personnel plans and strategies : Personnel plans and strategies These policies are related with the personnel system, organizational and employee characteristics and industrial relations. E.g. TISCO never had any industrial dispute for the past so many years. Strategic evaluation and control : Strategic evaluation and control The 4 basic type of strategic controls are, Premise control: Necessary to identify the key assumptions, and keep track of any change in them so as to assess the impact on strategy. Implementation control: It is aimed at whether the plans, programs, and projects are actually guiding the company towards its objectives. Strategic evaluation and control. : Strategic evaluation and control. 3) Strategic surveillance: It is designed to monitor a broad range of events inside and outside the company that are likely to threaten the course of a company’s strategy. Strategic evaluation and control. : Strategic evaluation and control. 4) Special alert control: This is based on a trigger mechanism for rapid response and immediate reassessment of strategy in view of sudden and unexpected events. THANK YOU ALL : THANK YOU ALL HOPE TO SEE YOU AGAIN You do not have the permission to view this presentation. In order to view it, please contact the author of the presentation.