strategic management chapter-2 business policy · pdf fileframe work of strategic management...
TRANSCRIPT
P.S. Rathore
• Strategy – Origins 1 • Features of Strategy 2 • SWOT Analysis 3 • Define Strategy 4 • Fundamental Area 5 • Market 6
1 Customers / Consumers
2 Competitors
3 Value Chain / Supply Chain
4 Management
5 Strategic Management
6 Importance of Strategic Management
Benefits of Strategic Management
Frame work of Strategic Management
Strategic Decision Making
Strategic Management Model
Vision & Mission
Strategic Vision
1 • Feature of Mission
2 • Formulation of Mission
3 • Objectives & Goal
4 • Characteristics of Objective
5 • Management
6 • Dynamics of Competitive Strategy
Army
War
Vision Share
Shared Vision
Mission
LION DIAL
Long Term in Nature • Can have Short Term & Medium Term
Integration of all Resources • Man, Money, Machine, Material and Motivation
Orientation • The way you perceive and act to achieve the formed vision. • Includes: Patterns, Priorities, Sequence, Combinations,
Timing, Means and Approach
• Adversity of Competitive and Complex Business Environment Dynamic and Flexible
• to achieve destination
Negating
Intertwining the Elements of SWOT
• Vision • Mission • Goal • Objective
Achieving
Level of Management
An Intro.
SWOT
Strength
Weakness
Opportunities
Threats
Inherent Capability of an organization
Helps Organisations to gain Strategic Advantages over its Competitors
Inherent Limitation or Constraint
Creates Strategic
Disadvantage
Favourable Condition
Enables it to Strengthen its
Position
Unfavourable Condition
Causes a risk for, or damage to its
Position
Executing Ideas into Action
For Short Term, Medium Term and Long Term
"Without Strategy, an organization is like a ship without a rudder.”
Analytical Thinking, Future Planning
Commitment of Resources to the action
A Trigger to Target Dream
Opens Door of all possibilities.
Takes a company ahead of time.
Guiding Force or Driving Force of
Vision
Mission & Objective of Company
An Answer for Hostile & dynamic business environment
A Blueprint of organization's desire
Image, Direction and Destination
Formulated by top level, business level and functional level
Focus on Stability, Expansion, Retrenchment and Combination
1 Move with Perfect Planning, set procedure
2 Look at Opportunities grab in planned way
3 Help Organization to be leader
4 Fosters high risk and rewards
5 Deliberate game plan for product analysis
6 Seeking the buyers’ patronage
1 • Provides the triggers to move fasters.
2 • Provides extra power to take on external
environment.
3 • Does not care for risk and reward,
4 • Focus on Goal to be achieved.
• Market • Customers • Competitors • Skills • Technology • Knowledge • Orientation • Function MRP, OF, HLA • Value Chain • Supply Chain
Evaluation Areas
Know Meaning of Market closely
Allows the Purchaser and the Seller to invent
Gather information's
Carry out exchange of various products & services
A place where trading of goods take place
1 • Actual size of Market
2 • Attractiveness of Market
3 • Potential size of Market
4 • How is Law
5 • Growth of Market
6 • Trends and Development
Marketing mix can be explained with 4 Ps:
Product
Pricing Place
Promotion
Cost Structure
Price sensitivity
Technological structure
Distribution system
Maturity
Market is larger than customers
Situation
Performance Analysis
SWOT Analysis
Business Aim- create and retain customers
Pay Money to Acquire Products and Services
No Organisation can survive without customers
Consumer and Customer can be different
Evaluate change in customer tastes
Their preference and buying habits
No body buys products rather they buy benefits
Strategist must asks
Who are the customers/ consumers
Benefits are they looking for
Trends and buying patterns
Competitors are other persons
They fight to snatch resources and markets
Competitor forces to run on toe and invest sleepless nights
Direct Competitors
Indirect Competitors
Who are the competitors?
What are they up to?
What are their products and services?
What are their market share?
What are their financial positions?
What gives them cost and price advantages?
What are Their present Strategy ?
What are They likely to do next ?
What are Their Objectives ?
Who are Most Aggressive and Powerful Competitors ?
Who are Potential Competitors?
Capacity to Carry out
Predetermined Results.
Makes to get Maximum Results
• With minimum time
• Minimum energy
Usage and knowledge of tools • Techniques and crafts, or system • Or Methods of Organisation
Can be used in Different Areas: • Automobile Technology • Construction Technology • Medical Technology • State of the Art Technology
Expertise & skills acquired by a person
Through Experience or Education
Theoretical & Practical Understanding
Complete knowledge in a particular subject
Complete awareness or familiarity
Pattern
Priority
Sequences
Combination
Timing
Means
Approach
1 • Marketing Research
2 • Production
3 • Other
4 • Finance
5 • Human
6 • Logistic, Accounts
Porter Value chain :
Known as value chain analysis
Concept from Business Management
First Described and Popularized by Michael Porter
• Creating, • Sustaining • Superior performance.
In his book Competitive Advantages:
Chain of Activities for specific industry product
Pass Through all Activities
At Each Activity, Product gains some value
Gives the Products more added value
The chain has Significance, not the cost
A System of Organisations, people
Activities, Information
Resources involved in moving a product from supplier to customers
Activities transform natural resources
Finished Product Delivered to End Customers
Network of Retailers, Distributors
Transporters, Storage Facilities
Suppliers that participate in sale
Delivery and production of particular product
A set patterns consistently followed in each function of the organization
Harvard Business School introduced integrative course in management in 1911 We find capital budgeting policy
Cash budget policy Recruitment policy etc
According to William F Glueck
Business policy arose from developments in the use of planning techniques by managers
Managers tried to
anticipate future through
Preparation of budgets
Using control systems like
capital budgeting
Management by objectives
Long-range planning came to be used
Long-range planning replaced strategic planning
Later by strategic management
Describe process of strategic decision making
Term ‘management’ used in two major contexts
(a) As noun :
A key group in an organisation in-charge of its affairs.
Chief organ entrusted with the task of making it purposeful
Productive entity
Undertaking the task of bringing together
Integrating disorganised resources of manpower
Money, materials
Technology into a functioning whole
Include adoption of certain techniques
Tools and methods for carrying on activities
Through articulation of skills and efforts
Installation of communication and control systems
Ensure what is planned is achieved
As per Peter Drucker:
Management is a function
A discipline
A task to be done
And Managers practice this discipline
Carry out the functions and discharge these tasks
As per Dalton McFarland: A process by which managers create Direct, maintain And operate purposive organisations Through systematic Co-ordinated & co-operative human effort
An influence process to make things happen To gain command over phenomena To induce and direct events and people in a
particular manner Influence is backed by power Competence, knowledge and resources
Managers formulate their goals Values and strategies To cope with To adapt and to adjust themselves With behaviour and changes of environment
Managerial process of Knowing the mission
Forming a strategic vision Setting objectives Crafting strategy to
implementing Executing functions
Initiating corrective adjustments in Vision Objectives Strategy Execution are deemed appropriate
Most important action plan of management As propagated by Charles Darwin- “The principle of survival is the fittest” Fittest does not mean the largest and strongest Any creature cannot adopt to change, survive
However strongest it is ? example of dinosaurs
‘Survival of fittest position exist
Company follows the war principle of ‘win or lose’
Not necessarily win-win situation arises in business world
Organization to build its competitive advantage Over the competitors in the business warfare in
order to win
A structured plan or support of a project or plan A structure or frame supporting ideas or concepts
generated Knitting all frames collectively step by step
The five stages are as follows:
Stage Five How can we ensure arrival?
(Control) Introduction Stage Four Stage One Which way is Best? Where are we Now ? (Evaluation) (Beginning) Stage Three Stage Two How might we get There? Where do we want to be? (Means) (Ends)
Where are we Now? (Beginning): This is the starting point of strategic planning At this stage we must do following: ◦ Situational analysis ◦ Market position analysis ◦ Corporate image analysis ◦ Swot Analysis
Where are we Want to Be? (Ends): At this stage we must do following: ◦ Vision ◦ Mission (What, how ,and for whom) ◦ Setting objectives ◦ Goal setting
How Might we Get There? (Means): Here the organization deals with various strategic
alternatives
Which Way is Best? (Evaluation): All the alternatives generated in the earlier stage The best suitable alternative in line with its
SWOT analysis
How Can we Ensure Arrival? (Control): Implementation & control stage of suitable
strategy
Strategic decision making Decision making is a
managerial process Function of choosing a
particular course of action Decisions may relate to
general day to day operations
Strategic decision making They may be major or minor They may also be strategic in nature Strategic decisions are different in nature
Major dimensions of strategic decisions are: Issues require top-management decisions Issues involve thinking in totality There is lot of risk involved Problems to be considered by top management
Strategic issues : Involve large amounts of company resources: May require huge financial investment May require huge number of manpower Significant impact on the long term prosperity Results are seen on a long term basis
Develop Vision And
Mission Statements
Implement Strategies Marketing,
Finance, Accounting R&D, MIS
Issues
Establish Long-term Objectives
Generate, Evaluate, and select Strategies
Implement Strategies Manage-
ment Issues
Measure and Evaluate
Performance
Perform External Audit
Perform Internal Audit
Strategy Strategy Strategy Formulation Implementation Evaluation
Strategic Management Model: It is widely accepted It is very comprehensive Cannot assume it as sure-shot success formula
Strategic Management Model: A clear and practical approach for: ◦ Formulating ◦ Evaluating ◦ And implementing strategies
Annual, Semi-Annual Conferences for setting: ◦ Vision ◦ Mission ◦ Objective ◦ And Goal
Vision is: Road Map of Company Intention of Top Management Set Objective Indicator of Swot Utilisation Orientation
Three Primary Elements: Mission related Long term path Communication
Accountability Clarity in direction Competitive environment creation Change, if any, required Resources utilization
Mission statement is typically- Focused on its present business scope – “Who we are and what we do” Describe present capabilities Customer focus Activities Business makeup
Guidelines Profit is not only motive behind business Present evaluation & Reason to exist Orientation & Future oriented Indicator of Swot utilization Transparency
Why Mission To be dynamic and flexible Evaluation of SWOT analysis Ensure corporate vision achieved Ensure proper level of management
Objectives are organizations performance targets
Results and outcomes wants to achieve
Yardstick for Tracking Performance Translate Vision and Mission into
objectives Objectives is synonymous with goals
Objectives are open-ended attributes Denote the future states or outcomes Goals are close-ended attributes Precise and expressed in specific terms Goals are more specific Translate objectives
Competitive Strategy
COMPETITIVE STRATEGY
Industry Opportunities andThreats (Economic &Technical)
Company Strength &Weakness
Factors Internal to the Company
Factors External tothe Company
Personal Values of the keyImplementers
Broader SocietalExpectation
Figure: Context in which Competitive Strategy is formulated
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