23.07.2009 Strategic Management It is a means and a method you plan for better in business is known as Strategy.

It is a essential function of top management Arithmetic progress X,XX,XXX Geometric progress X,X^2,X^3,X^n GP is a good one and healthy one for the business What you are today- Mission What you will be tomorrow Vision

There is no one Ideal Method in Business Where you are now? Where and when you want to be? How you go about it?

Planning Looking forward Control Looking Back Strategy: It is a plan or pattern to get desired end (Step by Step approach0 Organizational Change 3 forces or process 1. Unfreezing 2. Changing 3. Refreezing Important aspect of Strategy 1. Competitive Advantage Risk Innovation

Analyze: - What you have? - What your competitors dont have? - What your competitors have? - What you dont have? 2. Strategic Intent Intention to out beat the competitors Red Ocean Business Rivalry between the Competitors

Blue Ocean No Competitor. You are No.1 Once you have discovered your market you are in Blue ocean You to need to move away from the red Ocean to Blue ocean Rediscover what are the wonders you can give:

3. Strategic Architecture It is also called as Road Map or Core drive. It helps to push organization forward. Present to the future. Management thinking plays nip role here. 4. Strategic Consistency To perceive the intention of the top management and they need to execute it in every level of organization Global Level Business Level Functional Level Unit Level

Market Situation Classical Market (Slow) Rapid Market (Faster) Blindfold Market (Every action of move of an opponent is blind fold) 5. Resource leveraging How well or intelligently you plan to achieve the objectives with minimum resources effectively and efficiently at all levels. 6. Strategic Fit Do everything provided it is ethical. The role of a strategic planner is to take the organization where it has to go but not to see the organization as it is. To clear out turn around situation and take the business to the peak is also a role of a strategic planner. Strategic Opinion Box Introduced by Japanese Two Ways: 1. Downward Strategy Top Management 2. Upward Strategy Low Level Management

30.07.2009 Strategy is a road map from the present position to the future position over a period of time. 2

Business

3 Customer Group Customer Needs Distinct Competencies

1. Who is being satisfied? 2. What is being satisfied? 3. How it is being satisfied?

Integration of 1, 2 and 3 is Business Generic Strategies: Michael Porters Generic Strategy Cost Differentiation Focus Strategy bridge the gap between vision and mission Business Model should comprise of the following How a business should 1. 2. 3. 4. 5. 6. 7. 8. 9. Select its customers Define and Differentiate its product offerings Create Value for its customers Acquire and keep customers Produce goods and services Deliver the goods and services in the market Organise activities in the company Configure its resources. Achieve and sustain a high level of profitability

10. Grow business over a period of time Model of Competitive Advantage Resources

Distinctive Competitiveness

Cost Advantage or Differentiation Advantage

Customer Value

Capabilities

Start off with resources build up distinctive competitiveness, maximum usage of utilities which results in cost advantage or differentiation advantage which has to be passed on to the customer ultimately. From Top to Bottom down streaming of strategy From middle up streaming of strategy

Integrated Strategy Formulation and Implementation Process

Environmental Analysis General Society & Culture Economic & Political Legal &Regulatory Technological Industry Competition Past Performance Firm Industry Domestic Global Managerial Policies

Shareholder Expectations Corporate Objectives &Goals E V A L U A T I O N O F S T R A G IC O P T I O N Managerial Aspirations

Opportunities and Threats

Chosen Strategy
Product Market Scope Competitive Advantage Key Thrust areas Functional policies Resource mobilization and development Acquisitions/ collaboration/ investment

Strategic History

Internal Capabilities and Resources Organisation system People Technology Cultural Financial resources Key Capabilities

Strength and Weakness

Implementation Structure and System People Skill Values & Culture Resources Leadership

06.08.2009 Strategy: The root or the charter or the map which take to the vision or mission. Definition of Strategic Management Oxford Dictionary defined strategy 1. A plan designed to achieve a particular long term aim. 2. The art of planning and directing military activity in a war or battle often contrasted with tactics. Strategic is defined as 1. forming part of a long term plan to achieve a specific purpose 2. relating to the gaining of long term military advantage The set of decisions and actions resulting in the formulation and implementation of strategies designed to achieve the objectives of an organization. Peace and Robinson Concerned with policy decisions affecting the entire organizations the overall objective being to position the organization to deal effectively with its environment. Gunnigre and Moore Strength and Weakness are always internal Opportunities and Threats are always external CORE COMPETENCE A companys competitiveness in the short run is derived from price/performance attributes its current products. But on fallout of global competition, all competitors are covering similar and formidable standards for cost and quality and the same have become less and less important as source of differential advantage. In view of this development competitiveness in the long run can be derived from an ability termed as core competence, to build at a lower cost and more speedily than the competitors. Core competence is defined by Pranalad and Hamel as Collective learning in an organisation, especially on how to co ordinate diverse production skills and integrate multiple streams of technologies. To facilitate coordination and harmonization there must be communication, involvement and a deep commitment to working across organisation boundaries. Strategic management is the art and science of formulating, implementing and evaluating cross functional team decisions that will enable an organization to achieve its objectives. 1. Specifying the organizations objective 2. Develop policies and plans to achieve this objective 3. Allocating resources to implement these policies and plans to achieve these objectives

Strategic Consistency: When the actions of an organization are consistent with the expectations of the management. Strategic Management is the ongoing process that assesses the business and the industry in which the company is involved. A step by step approach to strategic management 1. 2. 3. 4. Inject sense of purpose into firm activities Provide long term direction Give firm strong identity Decide who we are, what we do and where we are headed?

Specific questions that help to formulate a strategic vision 1. 2. 3. 4. 5. 6. 7. 8. What business are we in now? What business do we want to be in? What will our customers want in future? What are the expectations of our stake holders? Who will be our future competitors? Suppliers? Partners? What should our competitive scope be? How will our technology have an impact on the industry? What environmental scenarios are possible?

Levels of Strategies: 1. Functional Level: Directed at improving the effectiveness of operations within a company such as manufacturing, marketing, materials management, product development and customer service. 2. Business Level: which encompasses the business overall competitive theme, the way it positions itself in the market place to gain a competitive advantage and the different level of positioning strategies such as cost, leadership, differentiation, focus. 3. Global Strategy: addressing how to expand operations outside the home country to grow and prosper in a world where competitive advantage is determined at a global level. 4. Corporate Level: which answers the primary questions what business or business should be in to maximize the long run profitability increase the presence to gain a competitive advantage. The Meaning of strategy Understanding Strategy

Examine Dimensions Define Criteria

Two key ways to understand strategy will be 1. Examine the dimensions of strategy 2. Define criteria for evaluating an effective strategy. Quinn provides a framework for both. For eg., with regard to dimensions of strategy he suggested four aspects viz., a. b. c. d. Strategy contains three essential elements Goals and objectives to be achieved. Key policies that shall guide actions. Action programmes that are to be initiated to accomplish the goals.

Analyzing your environment 1. 2. 3. 4. 5. 6. The organization Political factors implications Economic factors implications Social factors implications Technological factors implications Legal factors implications

Strategic shows the intention Strategy shows the direction 20.08.2009 Stages in Management by objectives (MBO) 1. Define corporate objective at board level. 2. Analyse management tasks and devise formal job specifications which allocate responsibilities and decisions to individual managers. 3. Set performance standards. 4. Agree and set performance objectives 5. Align individual targets with corporate objectives 6. Establish MIS to monitor achievements against objectives. General Stages in Planning 1. 2. 3. 4. Definition of goals Identification of constraints and premises Development of alternative plans Selection of the best plan

Basic Actions 1. 2. 3. 4. 5. Setting objectives Organising the group Motivating and communicating Measuring performance Developing people including yourself

How to set Performance Goals? 1. Clarify Job understanding: Verify that the employees understanding of the job is same as yours. 2. Develop performance goals: To assist you with this step, complete the form, performance goals, supplied at the end of this chapter 3. Verify required resources: Identify what resources are required and how they are to be supplied and to assist you with this step to complete the form, required resources supplied. Strategic HRM HRM can be defined as a strategy and coherent approach to the management of an organisations most valued assets. The people working there who individually and collectively contribute to the achievement of its objectives. Characteristics of HRM 1. It emphasis the need for strategic fit the integration of business and HR strategies 2. Importance is attached to strong culture and values 3. It stresses the importance of gaining commitment to the organisations mission and values. It is commitment orientated 4. People are treated as human capital to be invested in as key assets-they are not regarded as a variable cost. 5. It involves the adoption of a comprehensive and coherent approach to the provision of mutually supporting employment policies and practices. 6. Employee relations are unicarist rather than collective. 7. It is a top management driven activity and the performance and delivery of HRM is a line management responsibility. 8. Organising principles are organic and decentralized with flexible roles, a focus on process (how things are done, especially across traditional organizational boundaries) and more concern for team work, flexibility and team building are important. 9. It contributes in measurable ways to the creation and maintenance of competitive advantage and the focus is on performance and adding value especially for share holders. 10. There is a strong emphasis on the delivery of quality to customers and the achievement of high level of customer satisfaction. 11. Rewards are differentiated according to performance, competence, contribution or skill.

5 FORCES MODEL OF PORTER Political and legal Risk of Entry by Potential Competitors Technologica l Environment Bargaining Power of Suppliers Intense rivalry among existing established firms Bargaining power of Buyers Social Environmen t

Threat of substitutes

Macro Environmen t

Demographi c

6th force? 6th force is Complimentor may turn out to be competitor

Process of Implementing Decision Making 1. Devils Advocacy Explaining Plan 2. Dialetic Inquiry Expert Plan I Thesis Expert Plan II Thesis

Devils advocate Criticizers

Debate Synthesis

Final Plan (Modification if any) 27.08.2009 Model of Competitive Advantage Proprietary know how Installed customer base Reputation of the firm

Final Plan

Distinctiveness competencies

Low cost and differentiated product

Customer Value

to bring product faster than competitor difficult to replicate

What is strategic HRM Strategic HRM has been defined as All those activities affecting the behaviour of individuals in their efforts to formulate and implement the strategic needs of the business---- Schuler The pattern of planned human resources deployments and activities intended to enable the firm to achieve its goals ---- Wright and Mcmahan Five Tasks of Strategic Management 1. 2. 3. 4. 5. Develop a strategic vision and mission Setting objectives Crafting a strategy Implementing the strategy Evaluating performance and initiating corrective adjustments.

Strategy consists of competitive moves and business approaches to produce successful performance. Managements Game Plan for 1. Running the business 2. Strengthening firms competitive position 3. Satisfy customers need 4. Achieving performance targets. Essential Ingredients of an effective strategy a. Objectives and goals that is clearly stated and understood or decisive and attainable. b. There is scope for initiative and freedom of actions- the chosen strategy should also enhance commitment. c. It should enable mobilization and use of resources at decisive points in order to ensure success and enhance the superiority of the firm vis--vis the competition. d. It should have flexibility and maneuverability to facilitate the alternative of a course of action and also to minimize the fixed allocation of resources to defend the firms, position in the market. e. It must be championed by a committed leadership, in other words, the interest and value of key managers must match the needs of their role. f. The strategy must make use of speed, secrecy and intelligence initiate a surprise attack on opponents with a view to alerting the relative competitive position g. The strategy must protect the resources base of the organization as well as the key operating points from attacks by competitors.

SWOT ANALYSIS Strengths New innovative product Customer loyalty and relationship Market leader Opportunities Moving into new market segment A new international market Buy local competitor to increase revenues Weakness Lack of awareness among prospective customer Profit margin too low Threats Market demand Taxation introduced in the products

SWOT ANALYSIS Strengths Integrity Trust worthiness Quality of service and continues improvement Speed accuracy Relationship with clients Variety of services Timely remittance of statutory payments Expertise knowledge in labour legislations and interpretations Opportunities we provide what required variety of service branches across India will help to do statutory compliance on time Technology is simultaneously improving to connect across India Weakness Old software tool for data processing Service charges are too high Too hard to understand the business process Financial shortage at the time of earlier statutory payment Rate of attrition need to be controlled

Threats Increasing no. of same kind of business Changing dynamic environment Govt. legislation need to be separately tracked out Wrong application and statutory provision by freshers will lead to great risk Increasing expenses due to inflation of our economy pushing us to increase the rate of services charges

Marketing Strategy No special marketing approach in the market No advertisement for our services Business expansion only through customer satisfaction and their recommendation Customer satisfaction through maintaining business confidentials, reduction and cost continuous updation and improvement in both knowledge and technology, timely remittance of all statutory payments, expertise compliance management etc HR Strategy Recruitment based on business requirement it covers all the age groups Providing employment opportunities to such region of Tamilnadu Recruitment through employee referral schemes consulting agencies and direct recruitment. Training and Development On Job Training till he gets fully trained Training will be given individually Mostly trainer will be insider Leadership programme and training will be given by the external experts. TWOS Analysis Internal Strengths Internal Weakness Focus only on group Identifiable corporate companies not providing name with a good service to small companies reputation Development required in data management software SO MAXI MAXI WO MINI MAXI Develop services with Focus international many options in different market as well as small charges across industry companies inside the Use the financial country agencies to meet the If you are going to financial requirement global market you need to improve technology as well for data management ST MAXI MAXI WT MINI MAXI Meeting the competition Overcome weakness by with high quality of services making them into strengths Concentration require on Develop the flexible updating legal provisions service line to reduce threat

External Opportunities Scope for international market Financial agencies are ready to lend money Small companies are eager to avail this service if charges comes down External Threat Government provisions need to update day by day Competition form other KPOs

High cost for technical people Growth Strategy

day by day

of competition

Our operations and services are managed on professional levels and are guided by principles that stem from our core values and business ethics like Integrity, trust, continuous learning and partnership progress. We believe that every encounter with the chart is a learning experience; an opportunity to continuously assimilate knowledge, relook processes in order to realign ourselves to serve our clients better every time. Enduring relationships with the clients; truly partnering mutual progress is what we strive for future growth. Implication of Budget: Based on the principle data available with the organization, industrial growth market potential and man power potential for the particular SBU is analyzed The budget of the SBU is basically designed region wise

PORTFOLIO ANALYSIS An analysis of the portfolio of potential applications within a firm to determine the risk and benefits and select among alternatives for information systems. It helps us to take major project decisions. PROJECT RISK HIGH HIGH LOW LOW and

Cautiously Identify examine develop Avoid Routine Projects

Financial Strategy Plan for public issues Investing to recession period Increase profit margin in the production Identify high profit margin within the production Develop small scale industries Quality linked with productivity Announcing reward scheme to the manufactures Concentrate distributors margin- focus Increase volume- less profit Concentrate cost cut for manufacturing, transportation

BCG Matrix and Portfolio Analysis Rising Stars High Industry Growth Rate questions the survia Question Marks ?

Low Industry Growth Rate Cash cows Dogs

High relative Market share

Low relative market share

Question Marks: It questions the survival of the firm. Need to create a turn around situation Dogs: It questions the survival of the industry. Need to redefine marketing boundaries. Need to change over business PRODUCT PORTFOLIO ANALYSIS PPA * Has to be done as a brain storming style * Helps us to analyze what kind of business is worth shutting down or continuing 1. 2. 3. 4. Decide who should participate in the planning exercise Agree the agenda and the proposed outcomes The meeting facilitation should explain the PPA tool briefly PPA DATA TABLE Name of the Market business Segment Current Revenue Current Market Share Market Growth

5. Enter in the table the names of each business (or line of business) that will be the basis for the discussion. Name and briefly describe each 6. Enter data relating to the market segment in which that business operates 7. Add data about the current revenue generated by the business 8. Add data about the percentage of market share that the business currently holds. 9. Record the groups best assessment of the growth potential of the market segment. 10. Plot the position of each business onto the PPA matrix 11. Consider the implications of the groups analysis. 03.09.2009 GEs Strategic planning Grid- is a very good plan for strategic planning. GEs Strategic Planning Grid

Business Strength

Strong M a r k e t A t t r a c t i v e n e s s

Medium

Weak

Protect Position High

Invest to Build

Build Selectively

Medium

Build selectively Selectively manage Limited for earnings Expansion or Strong Medium Weak harvest Protect and Refocus Manage for earnings Divest

Low

What business we are in?

What business we need to be in?

Factors of Business Strengths 1. Market Share 2. Share of Growth 3. Product Quality 4. Brand Quality 5. Distribution Network 6. Promotional effectiveness 7. Productive Capacity 8. Unit Costs 9. Market supplies 10. R & D Performance 11. Managerial Personnel Factors of Market Attractiveness 1. 2. 3. 4. 5. 6. 7. 8. 9. Market Size Market Growth Rate Historical profit margin Competitive intensity Technological requirement Inflational Vulnerability Energy requirements Environmental Impact Social/Political/Legal

Marketing Process 1. 2. 3. 4. Analysing market opportunities select market segments Designing marketing strategies Planning Marketing Programs Organising implementing and control of marketing effort

Questions on BCG Matrix 1. 2. 3. 4. What percentage should be the dividing line? Is market share related to profits? Is cash flow more than profits? Is marketing opportunity only based on growth rate?

SIZE OF ORGANISATION

STAGES OF EVOLUTION

Large

Phase I Stages of Revolution

II

III

IV Crisis of Red Tape

V Crisis of?

Crisis of Control

Growth through Collaboration Growth through Co-ordination

Crisis of Autonomy Medium Crisis of Leadership Growth through Direction Small Growth through Creativity Young

Growth through Delegation

Mature AGE OF ORGANISATION

Main Components of the Strategic Planning Process Strategy Formulation Existing Business Model

Mission Vision Values and Goals

External Analysis O------------T

SWOT/TWOS Strategic Choice Functional Level Strategies

Internal analysis S-------------W

Business Level Strategies

Global Strategies

Strategic Implementation

Corporate Level Strategies

Governance and Ethics

Designing and organizing Culture

Designing Organizational Culture

Designing Organisational Controls