Strategies, Policies and Planning Premises-Prince Dudhatra-9724949948

8/7/2019 Strategies, Policies and Planning Premises-Prince Dudhatra-9724949948

1/50

Strategies, PoliciesStrategies, Policies

and Planningand PlanningPremisesPremises


2/50

Strategys A companys strategy consists of the competitivemoves, internal operating approaches, and action

plans devised by management to produce successful

performance.

s Strategy is managements game plan for running the

business.

s Managers need strategies to guide HOW the

organizations business will be conducted and HOW

performance targets will be achieved.


3/50

Levels of Strategy


4/50

Levels of Strategy1. Corporate-level Strategy

The set of strategic alternatives that an organizationchooses from as it manages its operationssimultaneously across several industries and severalmarkets.

2. Business-level Strategy

Howthe organization conducts business in a particularindustry.

3. Functional-level StrategyStrategy developed for specific functional areas

such as marketing, finance, and so forth.


5/50

Corporate

Strategy

Business

Strategies

Functional

Strategies

Levels of Strategy-Making


6/50

BCG Matrix*

CashCash

CowsCows

?QuestionQuestionMarksMarksDogsDogs

Relative Market ShareRelative Market Share

M

arke

tGrow

thRate

M

arke

tGro

w

thRate

LowLow

HighHigh

HighHigh LowLow

StarsStars


7/50

BCG Market Share/Market Growth Matrix


8/50

What is Strategic Planning?

Strategic planning is a systematic process

through which an organization agrees on

and builds commitment among key

stakeholders to priorities that are essential

to its mission and are responsive to the

environment.

Strategic Planning guides the acquisition and

allocation of resources to achieve these

priorities.


9/50

Strategic Planning

vs. Operational Plannings Strategic Planning

formulation

What, where

ends

vision

effectiveness risk

s Operational Planning

implementation

how

means

plans

efficiency control


10/50

1

Three Big Strategic

Questionss Where Are We Now?

s Where Do we Want toGo?

s How Will We Get There?


11/50

1

Strategic Planning ProcessStrategic Planning Processs Developing a Vision and a Mission

s Assessment

s Setting Objectives

s Crafting a Strategy

s Implementing and Executing Strategy

s Evaluating Performance, Reviewing the

Situation and Initiating Corrective Action


12/50

1

Strategic Plannings First Stage of Strategic

Planning may involve:

s Futures Thinking Thinking about what the

business might need to do1020 years ahead

s Strategic Intents

Thinking about key strategicthemesthat will informdecision making


13/50

1

Strategic Plannings The Vision

Communicating to all staff where theorganisation is going and whereit intends to be in the future

s Aims and Objectives:

Aims long term target Objectives the way in which you are

going to achieve the aim


14/50

1

Strategic Analysiss Constantly evaluate their position

s

Strategic analysis includes different methodsof assessing the current position of thebusiness in the market place

s Two basic methods: Internal

External


15/50

1

Internal Auditss Productivity

s Efficiency

s Costs

s Other Internal Data

Labour turnover, absenteeism

Customer satisfaction surveys Quality procedures

Cash flow statements

Sales trends

Skills audits Strengths and weaknesses analysis

s Core competencies


16/50

1

External Auditss General business environment Inflation, competitiveness,

unemployment/employment, growth, consumer spending

s Competitors

s PEST factors

Political e.g. change of government

Economic Trends in economic growth, inflation, etc.

Social-changed outlook, age structure of population, etc.

Technological


17/50

1

SWOTAnalysis

sStrengths

sWeaknesses

sOpportunitiessThreats

Vision & Mission

An organizations fundamental purpose

Good Strategies

SWOT AnalysisTo formulate strategies that support the mission

Those that support the mission and:

exploit opportunities and strengths

neutralize threats

avoid weaknesses

Internal AnalysisStrengths(distinctivecompetencies)

Weaknesses Threats

External AnalysisOpportunities


18/50

1

Strengths

sStrengths Those things that you do well, theStrengths Those things that you do well, thehigh value or performance pointshigh value or performance points

s Strengths can be tangible: Loyal customers,Strengths can be tangible: Loyal customers,efficient distribution channels, very high qualityefficient distribution channels, very high quality

products, excellent financial conditionproducts, excellent financial condition

s Strengths can be intangible: Good leadership,Strengths can be intangible: Good leadership,

strategic insights, customer intelligence, solidstrategic insights, customer intelligence, solid

reputation, high skilled workforcereputation, high skilled workforce


19/50

1

Weaknesses

sWeaknesses Those things that prevent you fromWeaknesses Those things that prevent you fromdoing what you really need to dodoing what you really need to do

sSince weaknesses are internal, they are withinSince weaknesses are internal, they are within

your controlyour control

s Weaknesses include: Bad leadership, unskilledWeaknesses include: Bad leadership, unskilled

workforce, insufficient resources, poor productworkforce, insufficient resources, poor product

quality, slow distribution and delivery channels,quality, slow distribution and delivery channels,

outdated technologies, lack of planning, . . .outdated technologies, lack of planning, . . .


20/50

Opportunities

sOpportunities Potential areas for growth andOpportunities Potential areas for growth andhigher performancehigher performance

sExternal in nature marketplace, unhappyExternal in nature marketplace, unhappy

customers with competitors, better economiccustomers with competitors, better economic

conditions, more open trading policies, . .conditions, more open trading policies, . .

sTiming may be important for capitalizing onTiming may be important for capitalizing on

opportunitiesopportunities


21/50

Threats

sThreats Challenges confronting theThreats Challenges confronting theorganization, external in natureorganization, external in nature

s Threats can take a wide range bad pressThreats can take a wide range bad presscoverage, shifts in consumer behavior, substitutecoverage, shifts in consumer behavior, substitute

products, new regulations, . . .products, new regulations, . . .

sThe more accurate you are in identifying threats,The more accurate you are in identifying threats,

the better position you are for dealing with thethe better position you are for dealing with the

sudden ripples of changesudden ripples of change


22/50

Five Forces Model ofCompetition

Substitute Products(of firms in

other industries)

Suppliers

of Key

Inputs

Buyers

Potential

New

Entrants

Rivalry

Among

Competing

Sellers


23/50

Porters Five CompetitiveForces

1. Threat of new entrants

2. Competitive rivalry

3. Threat of substitute products

4. Power of buyers

5. Power of suppliers


24/50

Gap Analysis

Vision Assessment

Gap = Basis forLong-Term

Strate ic Plan

Gap = Basis forLong-Term

Strategic Plan


25/50

Setting ObjectivesSetting Objectivess The purpose is to convert

the mission into Specific

Performance Targets

s Yardsticks for tracking

company progress and

performance.

s Should be set at levels

that require stretch and

disciplined effort.


26/50

Crafting a StrategyCrafting a Strategy


27/50

Generic Strategiess Porters Generic Strategies

1. Differentiation strategy An organization seeks to distinguish itself from

competitors through the quality of its products orservices. Developing an image perceived as unique

1. Overall cost leadership strategy An organization attempts to gain competitive

advantage by reducing its costs below the costs of

competing firms.

1. Focus strategy An organization concentrates on a specific regional

market, product line, or group of buyers.


28/50

Types of Strategys Market Dominance

Achieved through:

Internal growth

Acquisitions mergers and takeovers

s New product development:to keep ahead of rivals and set

the pace

s Contraction/Expansion focus on what you are good at(core competencies) or seek to expand into a range of

markets?

s Global seeking to expand Global operations


29/50

Strategy ImplementationStrategy Implementation

s Technology

s Human Resource

s Reward System

s Decision Process


30/50

Characteristic of the GoodCharacteristic of the Good

Strategy ImplementationStrategy Implementations An ongoing exercise

s Proper Communication

s Contingency Plan

s Emphasis on Organisation Culture

s Regular Reviews Importance of Planning


31/50

DECISION-MAKING


32/50

What is Decision-Making?

Decision making

The process of choosing a course of

action for dealing with a problem or

opportunity.


33/50

Types of Decisions

Programmed decisions.

Involve routine problems that arise regularly

and can be addressed through standard

responses.

Nonprogrammed decisions.

Involve nonroutine problems that requiresolutions specifically tailored to the situation at

hand


34/50

Decision environments

Certain environments.

Risk environments.

Uncertain environments.


35/50

Certain environments.

Exist when information is sufficient to

predict the results of each alternative in

advance of implementation.

Certainty is the ideal problem solving and

decision making environment.


36/50

Risk environments

Exist when decision makers lack complete

certainty regarding the outcomes of

various courses of action, but they can

assign probabilities of occurrence.

Probabilities can be assigned through

objective statistical procedures orpersonal intuition.


37/50

Uncertain environments. Exist when managers have so little information

that they cannot even assign probabilities

.

Uncertainty forces decision makers to rely on

individual and group creativity to succeed in

problem solving.

Also characterized by rapidly changing: External conditions.

Information technology requirements.


38/50

Classical Vs. Behavioral Decision

TheoryClassical decision theory. Views the decision maker as acting in a

world of complete certainty.

Behavioral decision theory.

Accepts a world with bounded rationality

and views the decision maker as actingonly in terms of what he/she perceives

about a given situation.


39/50

Classical decision theory

The classical decision maker:

Faces a clearly defined problem.

Knows all possible action alternatives andtheir consequences.

Chooses the optimum alternative.

Is often used as a model of howmanagers should make decisions.


40/50

Rationality

s Problem is clear and unambiguous.

s

Single goal.s All alternatives are known.

s Clear and constant preferences.

s Maximum payoff.s The decision is in the best interest of

the organizationnot the manager.


41/50

Behavioral decision

theory Recognizes that human beings operate

with: Cognitive limitations.

Bounded rationality.

The behavioral decision maker:

Faces a problem that is not clearly defined. Has limited knowledge of possible action

alternatives and their consequences.

Chooses a satisfactory alternative.


42/50

Bounded Rationality

s Behavior that is rational within the

parameters of a simplified model thatcaptures the essential features of the

problem.

s Making a decision that is

good enough. (Satisficing Model)


43/50

Bounded Rationality

Limited

Search

Inadequate

Information

and ControlDecisionsSatisficing


44/50

Other decision making models

The garbage can model

A model of decision making that views

problems, solutions, participants, andchoice situations as mixed together in the

garbage can of the organization.

Incremental Model


45/50

Intuitive Decision Making

s An unconscious process of making decisions

on the basis of experience and accumulated

judgment.

Making decisions on the basis of gut feeling

It does play an important role in managerialdecision making.


46/50

Too Slow Too Quick

Procrastination

Indecision

Analysis paralysis

Ready, fire, aim

Impulsive, compulsive

Arbitrary

Range of decision makingRange of decision making


47/50

Cultural and Social Influences

Decision-Making Process

M

O

T

IV

A

T

I

O

N

Perception

Learning and

Memory

Attitudes

A

FF

E

C

T

Problem

RecognitionSearch Evaluation Choice Outcomes

Ethnicity, Race,

and Religion

Household and

ref. groups

Socio-Econ:

income,educ.

Demographic:

Gender, Age

Psychographics:

Lifestyle, Person.

Basic Psychological

Processes


48/50

Group Decision-Making


49/50

Forms of Group Decision

Makings Interacting groups

s Delphi Methods

s

Nominal groups


50/50

Decision-Making

Techniquess Marginal Analysiss Financial Analysis

s Break-Even Analysis

s Ratio Analysis

s OR Technique Linear Programming

Queuing Method Game Theory

Simulation

Decision Tree

Documents

Strategies, Policies and Planning Premises-Prince Dudhatra-9724949948