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1. Business Policy and Strategic Management


- P Subba Rao

2. Business Policy and Strategic Management


- Azar Kazami

3. Strategic Management
- VSP Rao & V Harikrishna

4. Crafting & Executing Strategy


- Arthur Thompson, Strickland, Gamble & Jain
  

 
  

' Sole Supplier of Gas Cylinder Regulators since 1970


' Growing Demand, Expanding Market, No Competition
' Highly Profitable Business,
' Post 1991, Indian Economy opened to competition
' Big Players entered the scene.
' Cut throat competition, low margin
' No Product diversification, No Innovation
' Market share reduced, Sales nosedived, Loss YOY
' Golden Handshake of employees
' High Employee Turnover, Cannot attract talent,
' Hit on the Image, Poor Show everywhere.

Q : What has gone wrong ?


What could have been done to avoid the situation ?
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' Strategic Planning is a Stream of decisions and Action
Plans that lead to the deployment of an effective strategy
to help achieve corporate objectives which determines
survival, growth and progress of an organization.

' It consists of the analysis, decisions, and actions an


organization undertakes in order to create and sustain
competitive advantages

' It is concerned with the determination of the long-term


goals and objectives of the organisation.

' It focuses on the organization as a whole and impacts


every function of the organisation.
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A Strategy Consists of

' Competitive moves & business


approaches to produce successful performance

' Management¶s ³game plan´ for


- Running the business
- Strengthening firm¶s competitive position
- Satisfying customers
- Achieving performance targets
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' Where are we now ?

' Where do we want to go?


' Business Position the Company wants to take
' inancial outcomes to achieve
' Strategic outcomes to achieve
' Performance goals to achieve

' How will we get there ?


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' The essence of strategy lies in striking a harmonious


balance between firm¶s distinctive skills and
capabilities and the external environment in which it
operates.

' When the firm is able to perform activities more


effectively than its rivals, it stays ahead in the race and
emerges as a leader.

' Strategic Management enables a firm to formulate and


implement winning gameplans over a period of time.
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Strategic Management

' Directs the organization toward overall goals and


objectives to meet Stakeholders Expectations.

' Involves the inclusion of multiple stakeholders in


decision making.

' Needs to incorporate short-term and long-term


perspectives.

' Recognizes tradeoffs between efficiency and


effectiveness.
 
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Market-focused Strategy Resource-based Strategy

' Study the External Industrial ' Identify and Study irms
Environment Internal Resources, Strengths
& Weaknesses
' Locate an Industry with its
potential for above-average ' Determine firm¶s potential
returns capabilities and resources

' Identify the Strategy called for ' Locate attractive Industry with
by the industry to earn above- opportunities that can be
average returns exploited with firm¶s
resources and capabilities
' Develop or acquire assets and
skills needed to implement the ' Select Strategy that best
Strategy allows the firm to utilize
resources and capabilities

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' Strategy is a consciously intended   of action which is made


in advance.
' As plan, a strategy can be a  ! too, just a specific manoeuvre
intended to outwit a rival or competitor.
' When encompassing the resulting behaviour, strategy can also
be thought of as a  
 in a stream of actions - a
consistency of behaviour, whether intended or not.
' Strategy as a    refers to locating a firm in the external
environment ± mediating force, match or link between
organisation and external environment.
' Strategy as a 

 "
is not just a chosen position, but is
an ingrained way of perceiving world. Personality to individual,
is what the Strategy is to Organisation.
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Customers
Suppliers

Government

| ¢)
Employees
*+|
Community

Society Shareholders
Š !| 
   

,

' Globalization ± the world is coming close


' Changing Character of Society ± More awareness
' Customer is maturing ± Need to supply Quality Product
' Need to have Thin, Trim & Compact Organisation
' Right Talent to steer the organisation
' Legal compliances ± Governmental norms
' Retention of Employees
' Customer Loyalty and Retention
' Emphasis on quality of life ±comfort, health, safety
' Pressure on Margins ± Need to be cost effective
Š !| 
   

,

' Need of the Organization to know where to navigate and


how ± A roadmap.

' lexibility & Speed to keep current with Business needs

' Vagaries of Cut-throat Competition ± need to stay above


the Competition

' The Need for Survive, grow, progress and meet the
Stakeholders¶ expectations

' Need to utilize available resources effectively and


objectively

' Survival of the fittest


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' Provides roadmap for the organization for achieving


targets

' It helps the organisation to utilize available resources


optimally.

' It reduces the Business Risks ±

' It minimizes chances of mistakes and unpleasant


surprises

' Creates framework for internal communication,


teamwork and coordination in the employees
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Corporate level ormulated by CEO /


Strategic Planning ± Heads of Enterprise
Encompasses /Top Management
whole organisation Team

Business Unit level ormulated by GM /


Strategic Planning ± Business Heads of
decides Strategy of each Business Unit
Business Unit for each Business
Line
unctional-level ormulated by HODs
Strategic Planning ± / unction Heads in
restricted to specific each Business Unit
functions, HR, in, for each unction
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 !

' Business Policy is an implied guide for setting up


boundaries or limits for managerial actions

' It focuses attention on strategic allocation of scares


resources to achieve objectives of organisation.

' It deals with the decisions regarding future of an


ongoing enterprise.

' It represents the best thinking of the Management as


to how the objectives may be achieved in the
prevailing social and economic conditions

' Examples - Lines of Business Policies, Code of Ethics,


Product Lines, Marketing Policies, HR Policies, etc.
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' To focus the product to target Middle Income-Group


- uture Group

' To Position the Product in the lowest cost segment


- Ghadi Detergent / Nirma

' To shift focus to rural market segments rather than


Metros and big cities ± ITC, Arvind Mills,

' To operate in Premium Segments only. High price but


high quality tag. ± Mercedes, BMW

' To position the product to children between the age


group of 7 and 14. ± Electronic Gadgets,
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' An effectively crafted Strategy depicts a picture of the


organisation that the Management is trying to create

' It describes a forward-looking course that Management


has charted in respect of product / market / customer /
technology etc. that helps the Company prepare for the
future.

' Strategy is focused enough to provide Managers and


Executives guidance for implementation

' It is easy to understand and short to communicate /


explain to employees
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' Long Range Plans ' Short Range Plans

' Time rame => 3 Yrs ' Time rame <= 1 year

' Top Management ' Done usually at lower


responsibility levels

' Concerned with broad ' Covers day-to-day


objectives operations.
Implements internal
goals

' ocus is planning and ' Primary ocus is on


forecasting control
 

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1. Strategy and Ethics


' Strategic Actions must pass the taste of moral
scrutiny.
' Companies with strictures of unethical concerns find
it difficult to get Customers & Suppliers

2. Communication of Strategy to Employees


' Strategy needs to be communicated to all employees
to get their support
' Involving employees/getting suggestions for crafting
strategic vision gives buy-in from them