business policies

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Business Policies

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Definition of Strategy

A firm’s theory about how to gaincompetitive advantage

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Art & science of formulating, implementing, and evaluating, cross-functional decisions that

enable an organization to achieve its objectives.

Strategic Management – Defined

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Strategic Management

In essence, the strategic plan is a company’s game plan.

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What Andrew Grove What Andrew Grove SuggestsSuggests

Continual change and quick Continual change and quick strategic decisions are essential strategic decisions are essential if a firm is to be successful in if a firm is to be successful in

the new world of hyper the new world of hyper competition competition

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Strategic Management achieves a firm’s success through integration --

Management

MIS

Production/OperationsFinance/Accounting

Marketing

Research & Development

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Vision & Mission

Strategy Formulation

External Opportunities & Threats

Internal Strengths & Weaknesses

Long-Term Objectives

Alternative Strategies

Strategy Selection

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Issues in Strategy Formulation

New Business opportunitiesBusinesses to abandonAllocation of resourcesExpansion or diversificationInternational marketsMergers or joint ventures

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Strategy Implementation

Annual Objectives

Policies

Employee Motivation

Resource Allocation

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Action Stage of Strategic Management –

Most difficult stageMobilization of employees & managersInterpersonal skills criticalOrganizational Culture & employee motivation

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Strategy Evaluation

Internal Review

External Review

Performance Metrics

Corrective Actions

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Strategy Evaluation

Final Stage of Strategic Management

Subject to future modificationToday’s success no guarantee of future successNew & different problems

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Peter Drucker: -- think through the overall mission of a business. Ask the key question: “What is our Business?”

Prime Task of Strategic Management

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Efficient: means to use resources—people, money, raw materials, and the like—wisely and cost-effectively

Effective: means to achieve results, to make the right decisions and successfully carry them out so that they achieve the organization’s goals

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Organizations must monitor events

• On-going process• Internal and external events• Timely changes

Adapting to Change

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How Globalization Effect on Strategic Management?

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Mission Objectives

ExternalAnalysis

InternalAnalysis

StrategicChoice

StrategyImplementation

CompetitiveAdvantage

The Strategic Management Process

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Objectives

ExternalAnalysis

InternalAnalysis

StrategicChoice



Mission

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Objectives:• specific, measurable targets

• the things a firm needs to ‘do’ to achieveits mission

• should influence other elements in the strategicmanagement process

Example: PTCL mission & objectivesSteel con: “to provide the safest, highly Quality shoes to the steel construction industry”

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External and Internal Analysis

External Analysis

Systematic Examinationof the Environment

Internal Analysis

• interest rates

• demographics

• social trends

• technology

• human resources(knowledge)

• manufacturingabilities

• technology

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Strategic Choice

ExternalAnalysis

InternalAnalysis

StrategicChoice

BusinessLevel

CorporateLevel

• positioninga business

• which businesses?

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• how strategies are carried out

• who will do what

• organizational structure and control

• who reports to whom

• how does the firm hire, promote, pay, etc.

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A Strategy Is Only As Good As Its Implementation



• every strategic choice has strategy implementationimplications

• strategy implementation is just as important asstrategy formulation

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The Strategic Management ProcessCompetitive Advantage

Definition: the ability to create more economic valuethan competitors

• all other elements of the strategic managementprocess are aimed at achieving competitive advantage

Mission Objectives

ExternalAnalysis

InternalAnalysis

StrategicChoice



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Competitive Advantage

The Ability to Create More EconomicValue Than Competitors

• there must be something different about a firm’soffering vis-à-vis competitors’ offerings

• if all firms’ strategies were the same, no firmwould have a competitive advantage

• competitive advantage is the result of doingsomething different and/or better than competitors

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Two Types of Difference

1) Preference for the firm’s output

2) Cost advantage vis-à-vis competitors

• lower costs of production/distribution

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ExternalAnalysis

InternalAnalysis

StrategicChoice



• identify and exploit differences that may leadto competitive advantage


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Q

P

D

MR

D

ATCMC

Q

P

(D=MR=Price)

Imperfect Competition Perfect Competition


ATCMC

Competitive AdvantageEconomic Models

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Q

P

D

MR

D

ATCMC

Q

P

(D=MR=Price)

ATCMC


Thriving! Surviving

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Applying Strategy to Your Career

• a solid understanding of strategy concepts willhelp set you apart from other job candidates

• you can use the process to identify andexploit difference between you and others

• you can use the process to determine if youwant to stay with a company

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Global Population Global Population ChangesChanges

US, EU, Japan , Population growth has slowed.

Population in China India Africa , Latin America Other third

world countries grow significantly

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Global Economic InterdependenceGlobal Economic Interdependence

After 2020 the Six largest economies will be the US, China, Japan, Indonesia,

India, & Korea

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Comparing Comparing revenue of revenue of the world's 10 the world's 10 most global most global firms to the firms to the gross gross domestic domestic product of product of nationsnations

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Political Technological

Personnel Economic

Top 20 Global NationsTop 20 Global Nations

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So What's Happening in the World??????

The globalization of Business has shifted The globalization of Business has shifted from trade & invetment to integrating from trade & invetment to integrating global operations, Management, & global operations, Management, &

strategic alliances.strategic alliances.

e.g, HP & Compaq, Demler Craylser,Sony Ericsson etc

http://www.hp.com/cgi-bin/sbso/exit.cgi?goto=hp/index

http://www.sonyericsson.com/

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Thank You!Thank You!

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