principles of management chapter 4 gtu mba

7/31/2019 Principles Of Management Chapter 4 GTU MBA

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Strategies, Policies, and

Planning Premises


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Definition of Strategy and Policies

Strategy is the determination of the mission (or thefundamental purpose) and the basic long-term objectives

of an enterprise, and the adoption of courses of action

and allocation of resources necessary to achieve these

aims.

Policies are general statements or understandings thatguide managers' thinking in decision making.


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The Strategic Planning Process


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Inputs to the organization

Industry analysis

Enterprise profile

Orientation, values, and vision

Mission (purpose), major objectives, and strategic intent

Present and future external environment

Internal environment


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cont.

Development of alternative strategies

Evaluation and choice of strategies

Medium- and short-range planning

Implementation through reengineering, staffing, leadership,

and control Consistency testing and contingency planning


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Mission, Objectives, and

Strategic Intent

Mission relates to the kind of business.

Objectives are the end points for activities.

Strategic intent is the commitment to win in the

competitive environment.


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Definition of the TOWS Matrix

The TOWS Matrix is a conceptual framework for a systematicanalysis that facilitates matching the external threats andopportunities with the internal weaknesses and strengths ofthe organization.


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TOWS Matrix for Strategy

Formulation


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TOWS Matrix: 4 Alternative

Strategies

SO strategy: MaxiMaxi

WO strategy: MiniMaxi

ST strategy: MaxiMini

WT strategy: MiniMini


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Dynamics of the TOWS Matrix


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Application of the TOWS Matrix for

Mergers, Acquisitions, Joint Ventures, and

Alliances

Develop a TOWS Matrix for both companies before themerger, etc.

Develop a TOWS Matrix of the joint company after the

merger, etc.

See Illustration of DaimlerChrysler merger in the closingsection of Part 2


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Blue Ocean Strategy by Kim & Mauborgne

and TOWS Matrix by Weihrich

Explore opportunities in uncontested markets (Opportunitiesin the TOWS Matrix) Example: Southwest Airline

Be aware of competition in red ocean markets (bloodycompetition). Example, todays personal computers

Value innovation: total company commitment to create valuefor the customer

Blue ocean strategy and the TOWS Matrix (SO or WOstrategies in uncontested markets)


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Business Portfolio Matrix


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Two dimensions

Relative competitive position (market share)

Business growth rate

Four positions

Question marks

Stars

Cash cows

Dogs

Business Portfolio Matrix


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Major Kinds of Strategies and

Policies Products or Services

What is our business?

Who are our customers?

What do our customers want?

How much will our customers buy and at what price?

Do we wish to be a product leader?

What is our competitive advantage?

Do we wish to develop our new products?

What advantages do we have in serving customer needs?

How should we respond to existing & potential competition?

How far can we go in serving customer needs?

What profits can we expect?

What basic form should our strategy take?


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Major Kinds of Strategies and

Policies (contd..) Marketing

Where are our customers & why do they buy?

How do our customers buy?

How is it best for us to sell?

Do we have something to offer that competitors do not?

Do we wish to take legal steps to discourage competition?

Do we need, and can we supply, supporting services?

What are the best pricing strategy & policy for our operation?

How can we best serve our customers?


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Hierarchy of Company Strategies

The corporate-level strategy. Executives craft the overallstrategy for a diversified company.

Business strategies are developed usually by the generalmanager of a business unit.

Functional strategies. The aim is to support the business andcorporate strategies.


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Five Forces in Industry Analysis

(Michael Porter)

Competitiverivalry

Potentialentrants

Buyers

Substitutes

Suppliers


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Five Forces in Industry Analysis

(Michael Porter) contd..

The competition among companies

The threat of new companies entering the market

The possibility of using substitute products or services

The bargaining power of suppliers The bargaining power of the buyers or customers


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Porters Generic Strategies

Overall Cost Leadership Strategy

Differentiation Strategy

Focused Strategy (low cost or differentiation)


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Premising and Forecasting

Planning premises are the anticipated environments in whichplans are expected to operate.

Environmental Forecasting

Values and areas of forecasting

Forecasting with the Delphi technique


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Forecasting with Delphi Technique

A panel of experts on a particular area are selected from both within &outside the organization.

The experts are asked to make a forecast (anonymously).

Answers are compiled & composite results fed back to the panel members.

Further estimates of future are made with this result. Process may be repeated several times.

When convergence of opinion begins to evolve, the results are then used

as an acceptable forecast.

principles of management chapter 4 gtu mba

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