BUSINESS POLICY AND STRATEGIC MANAGEMENT

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Strategy - Purpose

Business: Survive and Grow Non Business Organization: Effectively

discharge the purpose for which it is formed

Business Policy

Study of the functions and responsibilities of senior Management, the crucial problem that affect success in the total enterprise and the decisions that determine the direction of the organization and shape its future.

Christensen

Business Policy

Study of functions and responsibilities of the senior Management related to the organizational problems that affect the success of the organization as a whole

Future course of action Choice of purpose and defining what

needs to be done in order to mould the character and identity of the organization

Business Policy

Mobilization of resources for the attainment of goals

Strategy

The term ‘Strategy’ is derived from the Greek word ‘Strategos’ , which means generalship – the actual direction of military force.

Strategy means the art of general.

Strategy

Defined as, “Where the organization wants to go to fulfill its purpose and achieve its Mission, it provides the framework for guiding choices which determine the organization’s nature and direction and these choices related to the organization’s products or services, markets, key capabilities, growth, return on capital employed and allocation of resources.”

Strategy

Integrated set of actions aimed at securing a sustainable competitive advantage.

Hierarchy of Strategy:

Corporate Business Functional

Level Level Level

Strategy

Sustainable Competitive Advantage

Cost Leadership Differentiation Focus

Strategic Management

Dynamic process of formulation, implementation, evaluation and control of strategies to realize the organization’s strategic intent

Strategic Management

StrategicIntent

FormulationOf

Strategies

ImplementationOf

Strategies

StrategicEvaluation

Strategic Intent

Vision Mission Goals Objectives Plans

VISION

Broad category of long term intentions that the organization wishes to pursue

It is a dream, the aspirations the organization holds for its future

Ideal Vision statement Broad, all inclusive Aspirations for future A dream shared across the organization

VISION- Polyhydron Pvt Ltd.

“ We are an ethically Managed Organization. We will not exploit our customers, employees, suppliers, Government, society and nature”

VISION: AIRTEL

“ To make mobile communication a way of life and be the customers’ first choice

VISION - INDSEARCH

“Develop world-class Management professionals to meet the diverse and challenging demands of business, industry and society

VISION - NTPC

“ To be one of the world’s largest and best power utilities, powering India’s growth

NASA “ To improve life here, To extend life to

there, To find life beyond.”

MISSION

Mission statement makes the Vision statement more tangible and comprehensible

Mission statement clearly specifies: Why organization exists? What differentiates the organization? Basic beliefs, values and philosophy

MISSION- Polyhydron Pvt. Ltd.

We will create an island of Excellence through focus on Customer, Employee Empowerment and continuous improvement

MISSION - AIRTEL

“ We will meet the mobile communication needs of our customers through A] Error free service delivery B] Innovative products and services C] Cost efficiency and D] Unified messaging solutions

MISSION- IndSearch

Provide international knowledge environment that will enthuse and encourage students and faculty to develop sustainable competencies in emerging global business scenario.

CORE VALUES

Core Values of the organization represent the commonly held beliefs, mindsets and assumptions that shape how work is done in an organization.

Core Values are derived out of the MISSION of the organization.

GOALS

Goals provide the basis for actions towards the achievements of the organization’s MISSION in the form of specific milestones.

Goals are both, financial and non-financial and specify the route that the organization takes to achieve its MISSION & VISION

OBJECTIVES

Objectives are operational definitions of the organization’s Goals.

PLANS

Specific actions that will be taken by the organization in order to achieve the objectives.

Plans specify the roles to be performed by the members of the organization and resource allocation across sub units of the organization and departments along with the priorities and schedule of activities.

Formulation of Strategies- Reliance

Acquisitions in polyester segment for increase in capacity by 25%, which is more than double of the nearest competitor

Petrochemicals second growth platform Petroleum Refining Capacity from 0.66 to 1.24

million barrels per day Eight New Discoveries during the year, 40% of

India’s total indigenous production

Reliance

Identification Of Two Growth Avenues Fostering Rural Prosperity Through

Organized Retailing Alternative Energy

Strategies- Infosys

Continuous Improvement in Global Delivery Model [GDM]

Substantial Investments In Infrastructure And Processes

Developing Sophisticated Project Management Technology For Ensuring Timely, Consistent and Accurate Delivery Of Superior Quality Solutions For High Level Customer Satisfaction

Infosys

Increase Business From Existing And New Customers

Global Presence Investment In Infrastructure & Employees Enhance Solutions Set Deep Industry Knowledge Enhance Brand Visibility Pursue Alliance and Strategic Alliance Maintain Financial Strength

Formulation of Strategies

Value Chain Analysis

Firm Infrastructure Value

Human Resource Management

Technology Development

ProcurementInbound Operations Outbound M & S Service

Logistics Logistics

Formulation of Strategy

Environmental Internal Analysis

Analysis Opportunities & Threats Strengths &

Weaknesses Fix Internal Competencies With External Opportunities

Firm’s Strategies

Environmental Analysis

It is the aggregate of all conditions, events and influences that surround an organization and affects it.

Six Mega Trends likely to shape India’ future

1. Trend of acquiring the scale

2. Spread of connectivity and awareness

Environmental Analysis

3. Growing Problems of Growth

4. Increasing the openness to the world

5. Growth of Middle Class

6. Continuing Dominance of Youth

Environmental Analysis

Characteristics of Environment

1. Complexity

2. Dynamic

3. Multi-faceted

4. Far-reaching impact

Environmental Analysis

External Environment Internal Environment

Environmental Analysis

Economic Environment International Environment Political Environment Regulatory Environment Socio-cultural Environment Supplier Environment Technological Environment

Internal Environmental Analysis

Organizational Resources + Organizational Behavior Strength and Weaknesses Synergetic Effects

Competencies Organizational Capabilities Strategic Advantage

Internal Environmental Analysis

Organizational Resources:

I] Tangible and intangible

II] Physical, human and organizational resources

III] Characteristics: Valuable

Rare

Costly to imitate

Non substitutable

Internal Environmental Analysis

Organizational Behavior: Manifestation of the various forces and influences operating in the internal environment of an organization that creates the ability for, or place constraints on the usage of resources

Internal Environmental Analysis

Strengths and Weaknesses Synergistic Effects Competencies: Special qualities

possessed by an organization that makes them withstand the pressure of competition in the market place.

Internal Environmental Analysis

Organizational Capability: It is the inherent capacity or potential of an organization to use its strengths and overcome its weaknesses in order to exploit the opportunities and fact the threats in the external environment.

Organizational Capability

Financial capability Marketing capability Personnel capability Operations capability General Management capability

Implementation of Strategies

Nature of Strategy Implementation: Action oriented Comprehensive nature Integrated process

Implementation of strategies

Barriers in implementation Managing Change Ambiguous strategies Lack of guidelines on implementation Unclear responsibility and accountability Working against the organization’s power

structure

Implementation of strategies

Forward linkages Backward linkages Mintzberg’s Model

Implementation of strategies

Strategy Plans Programs Projects Budgets Policies, procedures, rules and regulations

Case Study: Madhya Pradesh Society for Rural Livelihood Promotion

Implementing the Madhya Pradesh Rural Livelihood Project

2004-07: Target of 822 villages 2007-12: Target of 3000 villages Strategy: Strengthening resource base

: Fostering micro – enterprise that provide employment and income opportunities

Case Study

Designing organization structure Funding of the project Implementation Transparency Results

Implementation of strategies

Structural implementation Behavioral implementation Functional and Operational

implementation Procedural implementation

Evaluation of Strategies – Value Creation

Value: What does it mean? Shareholder Value Stakeholder Value Value Parameters Financial Non-Financial