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A presentation to give an introduction to Strategies, Policies and Planning Premises
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Strategies, Policies and Planning Premises
Learning ObjectivesThe nature and purpose of strategies and policiesThe strategic planning process which identifies the
aspect of formulating a strategyTool for systematically integrating internal and
external factors (“TOWS Matrix”)Tool for allocating resources (“Portfolio Matrix”)Major kinds of strategies and policiesIdentify Porter’s generic strengthsMake recommendation for effective implementation
of strategiesThe nature and types of premises and forecastsMake premising effective
IntroductionToday most business enterprises engage in strategic
planning, although the degree of sophistication and formality vary considerably. Conceptual strategic planning is deceptively simple: Analyze the current and future situation, determine the direction of the firm and develop the means of achieving the mission. In reality, this is an extremely complex process which demands a systematic approach for identifying and analyzing the factors extensively for the organization and matching them with the firm’s capabilities.
StrategyStrategy, a word of military origin, refers to a plan of action designed to achieve a particular goal.First attested in English 1810, the term strategy”, derived from the Greek word strategos, means to achieve the end points.
Policy
A policy is typically described as a principle or rule to guide decisions and achieve rational outcome(s).
It guides us in decision making.
Differences between Policies and Strategies
Policies Strategies 1. A policy is typically described as a principle or rule to guide decisions and achieve rational outcome(s).
A plan, or method of approach developed by an individual, group, or organization, in an effort to successfully achieve an overall goal or objective
2. The essence of policy is discretion
It concerns the direction in which human and material resources will be applied in order to increase the chance of achieving the selected objectives
3. It will guide our thinking in decision making – if a decision is to be made.
It implies that the that the enterprise has made to commit resources in a given direction.
Few Similarities
Strategies and policies are closely related. The key function is to unify and form the framework for the
plans Both are the basis of the operational plans Both affects the areas of managing
But standing alone, can they ensure that an organization will reach its goal?
The more carefully developed and clearly understood strategies and policies are, the more consistent and effective the ensuing plans will be .
Strategic Planning Process
TOWS MatrixThis is a conceptual framework for a
systematic analysis that facilitates matching external threats(T) and opportunities(O) with the internal weakness (W)and strengths(S) of organization.
It is a tool which helps in analyzing the situation.
TOWS MATRIX: CONTDThere are four alternative strategies based on the analysis of external environment( T & O) and internal environment( W & S):
WT(W and T decreased)WO(W is decreased and O is increased)ST(S is maximized and T is minimized)SO(aim of enterprise is move to this part of matrix)
The Tows Matrix For Strategy Formulation
Internal Factors
ExternalFactors
Internal Strengths (S) e.g. strengths in mgmt, operations, finance, marketing, engineering
Internal weaknesses e.g. Weaknesses in areas showing areas shown in the box of strengths
External Opportunities(O):e.g.. current and economic future conditions, political and social changes, new products, services and technology
SO Strategy: Maxi – MaxiPotentially the most successful strategy, utilizing the organization’s strengths to take advantage of opportunities
WO Strategy: Maxi – Maxie.g. development strategies to overcome weaknesses in order to take advantage of opportunities.
External Threats(T): e.g. lack of energy, competition and areas similar to those shown in the opportunities box above
ST Strategy: Maxi – Minie.g. use of strengths to cope with threats or to avoid threats
WT Strategy: Maxi – Minie.g.. retrenchment, liquidation or joint ventures.
Time Dimension and the TOWS Matrix
So far, the TOWS Matrix is pertained to analysis of particular point of time. External and internal factors are dynamic. Hence, these factors change over while others change very little.
Because of the dynamics in the environment, TOWS Matrix is designed at different points of time
Thus, one may start with past, continue with present and focus on different time periods of future.
The Portfolio MatrixDeveloped by Boston consultancy groupShows the link between growth rate of
business and relative competitive position
Stars Question marks
Cash Cows Dogs
Strong
High
Low
Weak
Relative Comptetion Position
Major Kinds of Strategies and Policies
GrowthFinanceOrganization PersonnelPublic relationsProducts or servicesMarketing
Generic CompetitiveStrategies by Porter
It suits all levels and different kind of organizations
Overall cost leadership strategyDifferentiation strategyFocused strategy
Effective Implementation of Strategies
Strategic planning may fail becauseManagers are inadequately preparedInformation is insufficient for planningGoals are too vagueBusiness units are not clearly identifiedReviews are not done effectively
Successful Implementation of Strategies
Communication of strategies to all key decision making managers
Developing and communicating planning premisesAction plans contributing to and reflecting major
objectives and strategiesRegular review of strategyDevelopment of contingency strategies and programsMaking organization structure fit planning needsContinuing emphasis on planning and implementing
strategyCreating a company climate that forces planning
Premising and forecastingPlanning premises are defined as anticipate the
environment which plans are expected to operate
They also includes assumptions or forecasts of future known conditions that will effect the operation plans
Forecasting with accuracy is more complicated one
Values and areas of forecastAreas include economic, social, political, legal
and technological
Forecasting with the Delphi Technique
Developed by Olaf Helmer and his colleagues at RAND cooperation
Convergence of opinion begins to evolve then the results are acceptable forecast
The sales forecast:
Why it is important?
Methods of sales forecastJury of executive opinionSales force compositeUser’s expectationStatistical methodsDeductive methodsCombination of methods
Effective Premising:Selection of the best premiseDevelopment of alternating premises for
contingency planningAssurance that premises are consistentCommunication of the premises
THANK YOU