management chap 3
DESCRIPTION
Strategies, Policies and Planning PremisesTRANSCRIPT
A Global and Entrepreneurial Perspective
MANAGEMENT
PRINCIPLES OF MANAGEMENT
Sr. No. Chapter No. Chapter Heading1 1 Management: Science, Theory and Practice (27th September 2010)2 4 Essentials of Planning and Managing by Objectives (4th Oct)3 5 Strategies, Policies and Planning Premises (11th Oct)4 6 Decision Making
5 7 The Nature of Organizing, Entrepreneuring, and Reengineering
6 8 Organization Structure: Departmentation7 9 Line/ Staff Authority, Empowerment and Decentralization8 10 Effective Organizing and Organization Culture9 14 Human Factors and Motivation
10 15 Leadership11 16 Committees, Teams and Group Decision Making12 18 The System and Process of Controlling
Sessional Evaluation External Evaluation15 15 20 50 50
Quiz per Class Assignment & Presentation Mid-term Total Sessional External Exam
Chapter 3
Strategies, Policies and Planning PremisesmQ
TABLE OF CONTENTS
1. The nature and purpose of strategies and policies2. The strategic planning process3. The tows matrix: a modern tool for analysis of
the situation4. Blue ocean strategy: in pursuit of opportunities in
an uncontested market5. The portfolio matrix: a tool for allocating
resources6. Major kinds of strategies and policies7. X:Hierarchy of company strategies8. X:Porter’s industry analysis and generic
competitive strategies9. Premising and forecasting
THE NATURE AND PURPOSE OF STRATEGIES AND POLICIES
1. STRATEGY: The determination of the mission or purpose and the basic long-term
objectives of an enterprise, followed by the adoption of courses of action and allocation of resources necessary to achieve these aims.
2. POLICIES: General statements or understandings that guide managers’ thinking
in decision making They ensure that the decisions fall within certain boundaries
SIMILARITIES: They give direction They are frame work for plans They are the basis of operational plans They affect all areas of managing
MAJOR DIFFERENCE: The essence of policy is discretion Strategy concerns the discretion, in which human and material
resources will be applied in order to increase the chance of achieving selected objectives
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:EmployeesConsumersSuppliers
Stock holdersGovt
CommunityOthers
IndustryAnalysis
Enterprise
Profile
Executive
orientation
values vision
•Mission•Major
Objectives
•Strategic Intent
Development of
alternative strategies
Present & Future
External Threats &
Opportunities
•Internal weaknesse
s & Strengths
Evaluation & strategic
choice
Implementation
Medium & Short Range
planning
•Reengineering Organization
structure Staffing
Leadership Control
Consistency Testing
Contingency Planning
THE STRATEGIC PLANNING PROCESS1. Inputs to the organization2. INDUSTRY ANALYSIS
The competition and its kinds available Possibility of new firms entering Availability of substitute products or services Bargaining position of the suppliers and buyers
3. ENTERPRISE PROFILE Mission Geographic orientation (would it operate in
home country or in different countries Competitive position of the company itself
4. Orientation, vision and values of executives
THE STRATEGIC PLANNING PROCESS
4. Mission (purpose), major objectives, and strategic intent
MISSION: “what is our business” OBJECTIVE: “the end points towards which the activities
of the enterprise are directed” STRATEGIC INTENT: “the commitment to win in the
competitive market”6. Present and future external environment:7. Internal environment:8. Development of alternative strategies:
To concentrate To diversify International expansion Joint ventures Strategic alliances Liquidation Retrenchment
THE STRATEGIC PLANNING PROCESS9. Evaluation and choice of strategies:10. Consistency testing and contingency planning11. Medium and short range planning,
implementation through organizing, staffing, leading and controlling
QUIZWhat is meant by TOWSHow is the tows matrix helpful for an
enterprise?
The TOWS MATRIX:
T:O:W:S:
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 STRATEGYTHE FOUR ACTIONS FRAMEWORK Identify and eliminate those factors that may
be unimportant to the buyer If elimination is not an option, consider
reducing those factors Raise or strengthen those factors that are
unique Create new and unique factors that are
wanted by the buyers but are ignored by the competition
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 productThis was developed for large corporations with several divisions,
called as Strategic Business Units (SBUs) for the allocation of resources in the right place
By dividing the matrix into four areas, four types of SBU can be distinguished:
Stars - Stars are high growth businesses or products competing in markets where they are relatively strong compared with the competition. Often they need heavy investment to sustain their growth. Eventually their growth will slow down and, assuming they maintain their relative market share, will become cash cows.
Cash Cows - Cash cows are low-growth businesses or products with 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.
THE PORTFOLIO MATRIX: A TOOL FOR ALLOCATING RESOURCES
Question marks - Question marks are businesses or products with low market share but which operate in higher growth markets. This suggests that they have potential, but may require substantial investment in order to grow market share at the expense of more powerful competitors.
Management have to think hard about "question marks" - which ones should they invest in? Which ones should they allow to fail or shrink?
Dogs - the term "dogs" refers to businesses or products that 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.
Criticism:Its too simplisticThe growth rate criterion is insufficient for the evaluation of
an industry’s attractivenessThe market share is also insufficient for estimating the
competitiveness
THE PORTFOLIO MATRIX: A TOOL FOR ALLOCATING RESOURCES
GROWTHFINANCEORNANIZATIONPERSONNELPUBLIC RELATIONSPRODUCTS OR SERVICESMARKETING
MAJOR KINDS OF STRATEGIES AND POLICIES
Planning premising:The anticipated environment in which plans are
expected to operateEnvironmental Forecasting
Human and material resources and their opportunities and threats
Values and areas of ForecastingThe making of forecasts and their review by managers
compel thinking ahead, looking to the future, and providing for it
Preparation of forecast may disclose areas where necessary control is lacking
Forecasting, especially when there is participation throughout the organization, helps unify and coordinate plans. By focusing attention to the future, it assists in bringing a singleness of purpose to planning
The areas of forecasting; usually are economic, social, political/ legal, and technological environments
PREMISING AND FORECASTING
Forecasting with Delphi Technique:This technique was developed by Olaf Helmer ad
his colleagues at the RAND corporation for technological forecasting
The process is as follows:A panel of experts on a particualr problem area is
selected, usually from both inside and outside the organization
The experts are asked to make a forecast (anonymously) in terms of discoveries and developments
The answers are compiled and fed back to the audienceFurther estimates of future are made collectivelyRepetitions take place if required for further additionsWhen a convergence of opinion begins to evolve, the
results are then used as an acceptable forecast
PREMISING AND FORECASTING