BUSINESS POLICY AND STRATEGIC MANAGEMENT

CONTENT:

STRATEGIC CHOICE: Traditional approach, Strategic alternatives, various models- BCG,GE nine cell matrix , Hofer’s Model, Strickland’s Grand strategy Selection Matrix, SWOT analysis and its impact.

Basis of choice: Strategic choice- Michael Porter’s approach: Model, Generic competitive strategies, Cost advantage, Differentiation, Technology and Competitive advantage.Strategic Choice: Coevolving, Patching, Strategy as simple rules.

Process of strategic choice:Strategic choice is the evaluation of the alternative strategies and the selection of the best alternative.How we can arrive at the best alternative? The dynamic environment of the business activities does not allow any type of consensus where everyone agrees on one alternative.The strategy selected should rigorously evaluated in terms of its ability to meet the mentioned criteria:

1. Mutual exclusivity

2. success

3. Completeness

4. Internal consistency.

There are strategies which should be avoided:

Traditional approaches.

• Follow the leader• Hit another home run.• Arms race.• Do everything.• Losing Hand. • Intuition. • The traditional approach was based on the size of the

firm and functional departments.

Strategic Alternatives

• Defensive approach.• Creative approach.• Outsourcing.• Entrepreneurial approach.• Inside out planning.• Integrated approach.• Key-factor approach.

BOSTON CONSULTING GROUP. EVALUATING STRATEGIC

ALTERNAIVESBCG MATRIX:

On X axis- relative market shareOn Y axis—Market growth rate.

STARS QUSTION MARK???

CASH COW DOG

GE NINE CELL MATRIX:Supported by Mckinsey & co.

X-axis=Business strength and competitive position.Y-axis-Industry effectiveness.

GE model offers immediate classification of strong, medium and average ratings. Powerful tool to channel corporate resources to

business.

PROTECT POITION INVEST TO BUILD BUILD SELECTIVELY

BUILD SELECTIVELY

SELECTIVELY MANAGE

HARVEST

PROTECT AND REFOCUS

MANAGE FOR EARNINGS

DIVEST

SWOT ANALYSIS

• Strengths: attributes of the organization that are helpful to achieving the objective.

• Weaknesses: attributes of the organization that are harmful to achieving the objective.

• Opportunities: external conditions that are helpful to achieving the objective.

• Threats: external conditions which could do damage to the business's performance

CONTINUING-SWOT

HOFERS MODEL• Strategic management model, incorporating both planning and

control functions. • Their model consists of several basic steps: • (1) goal formulation, • (2) environmental analysis, • (3) strategy formulation, • (4) strategy evaluation, • (5) strategy implementation, and • (6) strategic control.

• According to Hofer, the formulation portion of strategic management consists of at least three sub processes:

• - environmental analysis, • - resources analysis, • - and value analysis

BASIC of Choice:STRATEGIC CHOICE

Michael Porters Model.

» PORTERS FIVE FORCES MODEL:

• Competitive Environment• Threat of Substitutes• Bargaining Power of Suppliers• Bargaining Power of Buyers• Threat of New Entrants

• Competitive threat of substitutes is stronger when they are:

• Readily available• Attractively priced• Believed to have comparable or better• performance features• Customer switching costs are low

Threat of Substitutes

Threat of New Entrants

• Seriousness of threat depends on Barriers to entry and Expected retaliation

• Barriers exist when Newcomers confront obstacles Economic factors put potential entrant at disadvantage relative to incumbent firms

Bargaining Power of Suppliers

• Suppliers are a stronger force the• more they can exercise power over:• Prices charged• Quality and performance of items

supplied• Reliability of deliveries

Bargaining Power of Buyers

• Buyers are a stronger competitive force the more they have leverage to bargain over:

• Price• Quality• Service• Other terms and conditions of sale

Competitor Analysis

• Gathering data• Analyzing data• Competitor array• Relative cost Competitor profiling• Value chain analysis• Benchmarking and Value chain reconfiguration• Competitive behavior analysis

Environmental Analysis

• External Environment• General - PEST• Competitive – Porter’s 5 Forces• Internal Environment• Strength and Weakness Analysis• Value Chain Analysis

Generic competitive strategies:It is a part of business strategy.

• Question arises: • Should we compete on the basis of low cost.• Should we compete head to head with the market leader. MICHAEL PORTER proposes two generic strategies:• LOWER COST• DIFFERENTIATION OF PROUCT. The dimensions of quality are: Performance, features, reliability, conformance, durability,

serviceability, aesthetics, perceived quality.

There are risks involved with every strategy.

TECHNOLOGY AND COMPETITIVE ADVANTAGE

• Competitive advantage• Above average returns• Returns in excess of what an investor expects to earn

from other investments With a similar amount of risk• In the long run, an inability to earn at least average

returns results in failure• Sustainable competitive advantage• A firm implementing a value-creating• Strategy which other companies find it too• Costly to imitate

Technology

• Product innovations,• Process innovations,• R&D.• Production systems.

Case of TOYOTA production system w.r.t technology and STRATEGIC management.

TOYOTA VISION

The force behind the emergence of Toyota Motor's rise is TOYOTA PRODUCTION SYSTEM(TPS). Toyota implemented the paint and body shops. The commercial sustainability sometimes expressed doubts about these changes these systems for the future perspectives and long term vision. Toyota is a Japanese car manufacturer which provides these systems for the future perspectives and long term vision. Toyota is a Japanese car manufacturer which provides TPS, which further adopted by various United states and UK companies. The main reason for the implication of changes to retain workers in the assembly and final assembly lines because most of the work was done manually like the press, the paint and body shops. The commercial sustainability sometimes expressed doubts about these changes

.

CoevolvingCombining strategic management, innovation management and organizational ecology theories, we try to review and explain the development of product innovation or process innovation through/among two or more firms. The two factors such as:

INTRA ORGANIZATION

INTER ORGANIZATIONplays an important role in the coevolving factor.

It’s a mixture of Strategic Management, innovation management, our ecological theories and various disciplines o management.

Patching: STRATEGIC INTENT.Patching: STRATEGIC INTENT.People, Process, TechnologyPeople, Process, TechnologyEffective Attributes of Effective Patch Management

Reduce operating Reduce operating costscostsIncrease productivityIncrease productivityIncrease securityIncrease securityIncrease qualityIncrease quality

Well documentedWell documentedClear guidanceClear guidanceRepeatableRepeatableProactiveProactiveIntegratedIntegratedReduce riskReduce risk

Security AwarenessSecurity AwarenessEnablers / ContributorsEnablers / ContributorsComplianceCompliance

PeoplePeople

Technology

TechnologyProc

ess

Proc

ess

Strategy as a simple rule:

• Strate + gy• Zeal • Dividing in to smaller portions.