Strategies Policies & Planning Premises

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Strategies, Policies and Planning Premises



THE NATURE AND PURPOSE OF STRATEGIES AND POLICIES

1. STRATEGY:

y

The determination of the mission or purpose and the basic long-term objectives of anenterprise, followed by the adoption of courses of action and allocation of resources necessary

to achieve these aims.

2. POLICIES:

y General statements or understandings that guide managers· thinking in decision making

y They ensure that the decisions fall within certain boundaries

SIMILARITIES:

y They give direction

y They are frame work for plans

y They are the basis of operational plans

y They affect all areas of managing

MAJOR DIFFERENCE:

y The essence of policy is discretion

y Strategy concerns the discretion, in which human and material resources will be applied in

order to increase the chance of achieving selected objectives

y Tactics: the action plans through which strategies are executed.



THE STRATEGIC PLANNING PROCESS

Inputs:

People, Capital,

Managerial skills,

Technical Skills,

Others

Goals of Stake

holders:

Employees

Consumers

Suppliers

Stock holders

Govt

Community

Others

Inputs:

People, Capital,

Managerial skills,

Technical Skills,

Others

Goals of Stake

holders:

Employees

Consumers

Suppliers

Stock holders

Govt

Community

Others

IndustryAnalysis

IndustryAnalysis EnterpriseProfile

EnterpriseProfile

Executive

orientatio

n values

vision

Executive

orientatio

n values

vision

�Mission

�Major

Objectives�Strategic

Intent

�Mission

�Major

Objectives�Strategic

Intent

Development of alternative

strategies

Development of alternative

strategies

Present &

Future

External

Threats &

Opportunities

Present &

Future

External

Threats &

Opportunities

�Internal

weaknesses &

Strengths

�Internal

weaknesses &

Strengths

Evaluation &

strategic choice

Evaluation &

strategic choice Implementation

Implementation

Medium &

Short Range

planning

Medium &

Short Range

planning

�Reengineering

Organizationstructure Staffing

�Reengineering

Organizationstructure Staffing

Leadership

Control

Leadership

Control

Consistency

Testing

ContingencyPlanning

Consistency

Testing

ContingencyPlanning




1. Inputs to the organization2. INDUSTRY ANALYSIS

y The competition and its kinds available

y Possibility of new firms entering

y Availability of substitute products or servicesy Bargaining position of the suppliers and buyers

3. ENTERPRISE PROFILE

y Mission

y Geographic orientation (would it operate in homecountry or in different countries

y Competitive position of the company itself

4. Orientation, vision and values of executives




4. Mission (purpose), major objectives, and strategic intenty MISSION: ´what is our businessµy OBJECTIVE: ´the end points towards which the activities

of the enterprise are directedµy STRATEGIC INTENT: ́ the commitment to win in the

competitive marketµ

6. Present and future external environment:7. Internal environment:8. Development of alternative strategies:

y To concentratey To diversify y

International expansiony Joint venturesy Strategic alliancesy Liquidationy Retrenchment




9. Evaluation and choice of strategies:10. Consistency testing and contingency planning

11. Medium and short range planning,

implementation through organizing, staffing,

leading and controlling



Strengths in internal

departments like

management,R&D, Finance,

marketing, OD etc

Eg weaknesses in internal

departments

Current and Future conditions in

respect of economy, politics,

financial regulations, new products,

services and technology

The most successful strategy,

utilizing the org·s strengths to

take adv of opportunities

Developmental strategy: to

overcome internal weaknesses

to take adv of opportunities

Energy shortages, competition

and other areas like conditions

mentioned above

Use of strengths to cope up

with threats or to avoid

threats

Retrenchment, liquidation,

joint ventures etc to minimize

weaknesses & threats

FOUR ALTERNATIVE STRATEGIES



APPLICATION OF THE TOWS MERGER MATRIX FOR

MERGERS, ACQUISITIONS, JOINT VENTURES AND

ALLIANCES

TIME DIMENSION AND THE TOWS

MATRIX



BLUE OCEAN STRATEGY



BLUE OCEAN STRATEGY

THE FOUR ACTIONS FRAMEWORKy Identify and eliminate those factors that may be

unimportant to the buyer

y If elimination is not an option, consider

reducing those factorsy Raise or strengthen those factors that are

unique

y Create new and unique factors that are wanted

by the buyers but are ignored by thecompetition

Companies may adopt both the SO and SW

alternative strategies



THE PORTFOLIO MATRIX: A TOOL FOR

ALLOCATING RESOURCES



This tool was developed by Boston consulting group in 1970s.

This is a relationship between Market Growth and Market share of a company/ its business unit or a product

This was developed for large corporations with several divisions,called as Strategic Business Units (SBUs) for the allocation of resources in the right place

y By dividing the matrix into four areas, four types of SBU can bedistinguished:

y Stars - Stars are high growth businesses or products competingin markets where they are relatively strong compared with thecompetition. Often they need heavy investment to sustain theirgrowth. Eventually their growth will slow down and, assuming

they maintain their relative market share, will become cashcows.

y Cash Cows - Cash cows are low-growth businesses or productswith a relatively high market share. These are mature,successful businesses with relatively little need for investment.

They need to be managed for continued profit - so that they

continue to generate the strong cash flows that the company needs for its Stars.





y Question marks - Question marks are businesses orproducts with low market share but which operate inhigher growth markets. This suggests that they havepotential, but may require substantial investment in orderto grow market share at the expense of more powerfulcompetitors.

y Management have to think hard about "question marks" -which ones should they invest in? Which ones should they allow to fail or shrink?

y Dogs - the term "dogs" refers to businesses or productsthat have low relative share in unattractive, low-growth

markets. Dogs may generate enough cash to break-even,but they are rarely, if ever, worth investing in.

y Criticism:y Its too simplisticy The growth rate criterion is insufficient for the evaluation of

an industry·s attractiveness

y The market share is also insufficient for estimating thecompetitiveness





y GROWTH

y FINANCE

y ORNANIZATION

y PERSONNEL y PUBLIC RELATIONS

y PRODUCTS OR SERVICES

y MARKETING

MAJOR KINDS OF STRATEGIES AND

POLICIES



y Planning premising:y The anticipated environment in which plans are

expected to operate

y Environmental Forecastingy Human and material resources and their opportunities

and threatsy Values and areas of Forecasting

y The making of forecasts and their review by managerscompel thinking ahead, looking to the future, andproviding for it

y

Preparation of forecast may disclose areas wherenecessary control is lackingy Forecasting, especially when there is participation

throughout the organization, helps unify and coordinateplans. By focusing attention to the future, it assists inbringing a singleness of purpose to planning

y

The areas of forecasting; usually are economic, social,political/ legal, and technological environments

PREMISING AND FORECASTING



y Forecasting with Delphi Technique:

y This technique was developed by Olaf Helmer ad his

colleagues at the RAND corporation for

technological forecasting

y The process is as follows:y A panel of experts on a particualr problem area is selected,

usually from both inside and outside the organization

y The experts are asked to make a forecast (anonymously) in

terms of discoveries and developments

y The answers are compiled and fed back to the audience

y Further estimates of future are made collectively

y Repetitions take place if required for further additions

y When a convergence of opinion begins to evolve, the results

are then used as an acceptable forecast

PREMISING AND FORECASTING

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Strategies Policies & Planning Premises