SCOPE/FEATURES of BP: Specific- Policy should be specific/definite.

If it is uncertain, then the implementation

will become difficult.Clear- Policy must be unambiguous. It should avoid use of jargons and connotations. There
should be no misunderstandings in following the policy.
Reliable/Uniform- Policy must be uniform enough so that it can be efficiently followed by the
subordinates.Appropriate- Policy should be appropriate to the present organizational goal.Simple- A policy
should be simple and easily understood by all in the organization.Inclusive/Comprehensive- In order to have a
wide scope, a policy must be comprehensive.Flexible- Policy should be flexible in operation/application. This
does not imply that a policy should be altered always, but it should be wide in scope so as to ensure that the line
managers use them in repetitive/routine scenarios.Stable- Policy should be stable else it will lead to
indecisiveness and uncertainty in minds of those who look into it for guidance.Scopes of Business Policy:It
should cover all the aspects of business.It includes the functions and responsibility of senior employees.Deal with
determination of future course of action.Involves a choice of purpose and defining the needs.Include the
resources by the help of which organization can achieve its goal.Importance of a Business Policy:Policies are
the key for success of the business. Policies offer great advantages to the management if they are stated with
clarity. It raises the confidence of the line managers. They make the decisions within a given boundary. The
managers act without the need for consulting the senior managers every time which minimizes the need for close
supervision. It also builds the confidence of the managers. The importance of business policies are discussed as
follows:1. Control: Policy facilitates effective control on the working of the organization. It indirectly controls the
managers at different levels without directly interfering in their routine working.2. Effective Communication:
Generally policies are written and well drafted statements. Hence there is not a remote chance of confusion or
miscommunication. By setting policies the management ensures that decisions made will be consistent and in the
best interest of the organization. Clearly laid down policies try to eliminate personal hunch and biasness.3.
Clarity: Policies clarify the viewpoint of the management for the purpose of running a particular activity /
activities.4. Motivation: Policy enables the line managers to be self reliant. They take the decision on their own
in the confined border of the policy. This raises their confidence and motivates them. A well drafted policy
provides a pattern within which delegation of authority is possible.5. Policy Review: Regular review of policy is
must to see to it that the existing policies are relevant in the given situation. If required policy may be modified or
altered depending on the business environment. Review of policy at regular intervals provides a method of
anticipating future conditions and situations and helps to resolve how to deal with them.6. Economical and
Efficient: Policy enables the management to carry out its operations effectively and efficiently. It enhances the
working of the organization.7. Coordination of Efforts: Policies ensure coordination of efforts and activities at
different levels in the organization. Activities and duties are assigned in such a way that all activities in the
organization are integrated effectively. Policy coordinates with individual efforts.8. High Morale: A well crafted
policy can raise the overall morale of an enterprise. Policy enables the managers to understand the intention of
the management.STEPS IN STRATEGY FORMULATION PROCESSStrategy formulation refers to the process
of choosing the most appropriate course of action for the realization of organizational goals and objectives and
thereby achieving the organizational vision. The process of strategy formulation basically involves six main steps.
Though these steps do not follow a rigid chronological order, however they are very rational and can be easily
followed in this order.Setting Organizations’ objectives - The key component of any strategy statement is to set
the long-term objectives of the organization. It is known that strategy is generally a medium for realization of
organizational objectives.Objectives stress the state of being there whereas Strategy stresses upon the process
of reaching there.Strategy includes both the fixation of objectives as well the medium to be used to realize those
objectives. Thus, strategy is a wider term which believes in the manner of deployment of resources so as to
achieve the objectives.While fixing the organizational objectives, it is essential that the factors which influence the
selection of objectives must be analyzed before the selection of objectives. Once the objectives and the factors
influencing strategic decisions have been determined, it is easy to take strategic decisions.Evaluating the
Organizational Environment - The next step is to evaluate the general economic and industrial environment in
which the organization operates. This includes a review of the organizations competitive position.It is essential to
conduct a qualitative and quantitative review of an organizations existing product line. The purpose of such a
review is to make sure that the factors important for competitive success in the market can be discovered so that
the management can identify their own strengths and weaknesses as well as their competitors’ strengths and
weaknesses.After identifying its strengths and weaknesses, an organization must keep a track of competitors’
moves and actions so as to discover probable opportunities of threats to its market or supply sources.
Setting Quantitative Targets - In this step, an organization must practically fix the quantitative target values for
some of the organizational objectives. The idea behind this is to compare with long term customers, so as to
evaluate the contribution that might be made by various product zones or operating departments.Aiming in
context with the divisional plans - In this step, the contributions made by each department or division or
product category within the organization is identified and accordingly strategic planning is done for each sub-unit.
This requires a careful analysis of macroeconomic trends.Performance Analysis - Performance analysis
includes discovering and analyzing the gap between the planned or desired performance.A critical evaluation of
the organizations past performance, present condition and the desired future conditions must be done by the
organization.This critical evaluation identifies the degree of gap that persists between the actual reality and the
long-term aspirations of the organization. An attempt is made by the organization to estimate its probable future
condition if the current trends persist.Choice of Strategy - This is the ultimate step in Strategy Formulation. The
best course of action is actually chosen after considering organizational goals, organizational strengths, potential
and limitations as well as the external opportunities.
LEVEL OF STRATEGY:The three levels of strategy are corporate level strategy, business level strategy,
and functional level strategy. Corporate Level StrategyCorporate strategies are the top-level of strategy in an
organization.The corporate strategy defines the organization’s overall direction and the high-level ideas of how to
move towards it. These plans are usually created by a select strategy group such as the CEO and the top
management.Generally, this is the group involved because they have a deep understanding of the company and
the strategic business knowledge needed to steer the organization in the right direction.A corporate strategy is
generally broader than the other strategy levels. Strategies at this level are more conceptual and futuristic than
business and functional level strategies. They usually span a 3-5 year period.A corporate strategic plan generally
encompasses:The vision for the organizationThe company’s valuesThe strategic focus areasThe strategic
objectivesThe most important KPIs Business Strategy LevelThe business-level strategy is the second tier in
the strategy hierarchy.Sitting under the corporate strategy, the business strategy is a means to achieve the goals
of a specific business unit in the organization.One thing to note, implementing this strategy level is only useful for
organizations with multiple business units. An organization with multiple business units may sell products and
services or may sell multiple products/services in different industries.A business level strategy exampleA large
Bank is a prime example of an organization selling multiple services in different industries.To name a few, it has
business units in corporate banking, wealth management, risk management, and capital raising. Each of these
business units would have distinct goals and a distinct business strategy to achieve these goals.Functional Level
StrategyThis is the level at the operating end of an organization.At the functional level of strategy, decisions
made by employees are often described as tactical decisions. They are concerned with how the various functions
of an organization contribute to the other strategy levels.These functions can include marketing, finance,
manufacturing, human resources, and more.Functional strategy deals with a fairly restrictive plan. It gives the
objectives for each specific function.In simple terms, this is the strategy that will inform the day-to-day work of
employees and will ultimately keep your organization moving in the right direction. The functional strategy
level is probably the most important level of strategy.This is because, without functional strategies, your
organization can quickly lose traction and “get stuck” while competition moves forward.
STRATEGIC MANGEMENT PROCESS means defining the organization’s strategy. It is also defined as the
process by which managers make a choice of a set of strategies for the organization that will enable it to achieve
better performance.Strategic management is a continuous process that appraises the business and industries in
which the organization is involved; appraises it’s competitors; and fixes goals to meet all the present and future
competitor’s and then reassesses each strategy.Strategic management process has following four steps:
Environmental Scanning- Environmental scanning refers to a process of collecting, scrutinizing and providing
information for strategic purposes.It helps in analyzing the internal and external factors influencing an
organization.After executing the environmental analysis process, management should evaluate it on a continuous
basis and strive to improve it.Strategy Formulation- Strategy formulation is the process of deciding best course
of action for accomplishing organizational objectives and hence achieving organizational purpose.After
conducting environment scanning, managers formulate corporate, business and functional strategies.Strategy
Implementation- Strategy implementation implies making the strategy work as intended or putting the
organization’s chosen strategy into action.Strategy implementation includes designing the organization’s
structure, distributing resources, developing decision making process, and managing human resources.Strategy
Evaluation- Strategy evaluation is the final step of strategy management process.The key strategy evaluation
activities are: appraising internal and external factors that are the root of present strategies, measuring
performance, and taking remedial/corrective actions.Evaluation makes sure that the organizational strategy as
well as it’s implementation meets the organizational objectives.These components are steps that are carried, in
chronological order, when creating a new strategic management plan.
STRATEGIC MANGEMENT is an ongoing process. Therefore, it must be realized that each component
interacts with the other components and that this interaction often happens in chorus. Strategic Management is
all about identification and description of the strategies that managers can carry so as to achieve better
performance and a competitive advantage for their organization.An organization is said to have competitive
advantage if its profitability is higher than the average profitability for all companies in its industry.Strategic
management can also be defined as a bundle of decisions and acts which a manager undertakes and which
decides the result of the firm’s performance.The manager must have a thorough knowledge and analysis of the
general and competitive organizational environment so as to take right decisions.The managers should conduct
a SWOT Analysis (Strengths, Weaknesses, Opportunities, and Threats) in order to - make the best possible
utilization of strengths, minimize the organizational weaknesses, make use of arising opportunities from the
business environment and shouldn’t ignore the threats.Strategic management is nothing but planning for
both predictable as well as unfeasible contingencies.Strategic management is a continuous process
that:evaluates and controls the business and the industries in which an organization is involved;evaluates its
competitors and sets goals and strategies to meet all existing and potential competitors; and thenre-evaluates
strategies on a regular basis to determine how it has been implemented and whether it was successful or does it
needs replacementSTRATEGY is an action that managers take to attain one or more of the organization’s
goals.Strategy can also be defined as “A general direction set for the company and its various components to
achieve a desired state in the future. Strategy results from the detailed strategic planning process”.A strategy is
all about integrating organizational activities and utilizing and allocating the scarce resources within the
organizational environment so as to meet the present objectives.Strategy is the blueprint of decisions in an
organization that shows its objectives and goals, reduces the key policies, and plans for achieving these goals,
and defines the business the company is to carry on, the type of economic and human organization it wants to
be, and the contribution it plans to make to its shareholders, customers and society at large.
FEATURES OF STRATEGYStrategy is Significant because it is not possible to foresee the future. Without a
perfect foresight, the firms must be ready to deal with the uncertain events which constitute the business
environment.Strategy deals with long term developments rather than routine operations, i.e. it deals with
probability of innovations or new products, new methods of productions, or new markets to be developed in
future.Strategy is created to take into account the probable behavior of customers and competitors. Strategies
dealing with employees will predict the employee behavior.Strategy is a well defined roadmap of an
organization. It defines the overall mission, vision and direction of an organization. The objective of a strategy is
to maximize an organization’s strengths and to minimize the strengths of the competitors.Strategy, in
short, bridges the gap between “where we are” and “where we want to be”. IMPORTANCE OF
STRATEGYA successful strategic plan does the following:1. Provides Direction and Action PlansIt establishes
in a clear, concise and strategically sound way the direction for the organization how this will be achieved,
including detailed action plans2. Prioritizes and Aligns ActivitiesStrategic planning is about making choices,
establishing priorities, allocating resources to strategic initiatives and coordinating to achieve desired results.3.
Defines AccountabilitiesIt defines clear lines of accountability and timelines for achieving expected results on
the agreed strategic initiatives.4. Enhances Communication and CommitmentIn clarifying the vision and
accountabilities, the strategic plan increases the alignment of all organizational activities and fosters commitment
at all levels.5. Provides a Framework for Ongoing Decision MakingSince all decisions should support the
strategy, the strategy and the strategic initiatives are the reference point for decision-making.You have to have a
plan for day-to-day business, but you also need to spend time looking and listening to the changes that are
happening in your industry. It is a matter of having both a daily plan to get things done and an overarching
strategy to guide those daily plans so you make progress towards your long-term goals.
STRATEGIC PLANINGStrategic planning is a process in which an organization's leaders define their vision for
the future and identify their organization's goals and objectives. The process includes establishing the sequence
in which those goals should be realized so that the organization can reach its stated vision.Strategic planning
typically represents mid- to long-term goals with a life span of three to five years, though it can go longer. This is
different than business planning, which typically focuses on short-term, tactical goals, such as how a budget is
divided up. IMPORTANCE OF STARTEGIC MANGEMENTBusinesses need direction and organizational
goals to work toward. Strategic planning offers that type of guidance. Essentially, a strategic plan is a roadmap to
get to business goals. Without such guidance, there is no way to tell whether a business is on track to reach its
goals.The mission. Strategic planning starts with a mission that offers a company a sense of purpose and
direction. The organization's mission statement describes who it is, what it does and where it wants to go.
Missions are typically broad but actionable. For example, a business in the education industry might seek to be a
leader in online virtual educational tools and services.The goals. Strategic planning involves selecting goals.
Most planning uses SMART goals -- specific, measurable, achievable, realistic and time-bound -- or other
objectively measurable goals. Measurable goals are important because they enable business leaders to
determine how well the business is performing against goals and the overall mission. Goal setting for the fictitious
educational business might include releasing the first version of a virtual classroom platform within two years or
increasing sales of an existing tool by 30% in the next year.Alignment with short-term goals. Strategic planning
relates directly to short-term, tactical business planning and can help business leaders with everyday decision-
making that better aligns with business strategy. For the fictitious educational business, leaders might choose to
make strategic investments in communication and collaboration technologies, such as virtual classroom software
and services but decline opportunities to establish physical classroom facilities.Evaluation and
revision. Strategic planning helps business leaders periodically evaluate progress against the plan and make
changes or adjustments in response to changing conditions. For example, a business may seek a global
presence, but legal and regulatory restrictions could emerge that affect its ability to operate in certain geographic
regions. As result, business leaders might have to revise the strategic plan to redefine objectives or change
progress metrics.STEPS IN STRATEGIC PLANNING:Identify. A strategic planning cycle starts with the
determination of a business's current strategic position. This is where stakeholders use the existing strategic plan
-- including the mission statement and long-term strategic goals -- to perform assessments of the business and
its environment. These assessments can include a needs assessment or a SWOT (strengths, weaknesses,
opportunities and threats) analysis to understand the state of the business and the path ahead.Prioritize. Next,
strategic planners set objectives and initiatives that line up with the company mission and goals and will move the
business toward achieving its goals. There may be many potential goals, so planning prioritizes the most
important, relevant and urgent ones. Goals may include a consideration of resource requirements -- such as
budgets and equipment -- and they often involve a timeline and business metrics or KPIs for measuring
progress.Develop. This is the main thrust of strategic planning in which stakeholders collaborate to formulate the
steps or tactics necessary to attain a stated strategic objective. This may involve creating numerous short-term
tactical business plans that fit into the overarching strategy. Stakeholders involved in plan development
use various tools such as a strategy map to help visualize and tweak the plan. Developing the plan may involve
cost and opportunity tradeoffs that reflect business priorities. Developers may reject some initiatives if they don't
support the long-term strategy.Implement. Once the strategic plan is developed, it's time to put it in motion. This
requires clear communication across the organization to set responsibilities, make investments, adjust policies
and processes, and establish measurement and reporting. Implementation typically includes strategic
management with regular strategic reviews to ensure that plans stay on track.Update. A strategic plan is
periodically reviewed and revised to adjust priorities and reevaluate goals as business conditions change and
new opportunities emerge. Quick reviews of metrics can happen quarterly, and adjustments to the strategic plan
can occur annually. Stakeholders may use balanced scorecards and other tools to assess performance against
goals.ETOP AnalysisEnvironmental scanning is the monitoring, evaluating, and disseminating of information from
the external and internal environment to key people within the corporation or organization. Business environment
analysis is a regular business feature. It results in a quantity of information related to forces in the environment. It
usually relates to events, trends, issues, natural calamities and expectations. ETOP analysis (environmental
threat and opportunity profile) is the process of gathering information about events and their relationships within
an organization’s internal and external environments. The basic purpose of environmental scanning is to
ais necessary to make them meaning full for strategy formulation. ETOP involves dividing the environment into
different sectors. Each sectors can be subdivided into sub sectors. For example oil & gas sector can be broken
down into sub-sectors such as exploration & production, integrated oil & gas, oil equipment & services,
pipelines, An organization’s internal environment consists of the elements within the organization, including
current employees, management, the organization’s culture which is defined by operating procedures and
employee behavior. Though some elements affect the organization as a whole, others affect only the
management. The external environment of an organization are those factors outside the company that affect
the company’s ability to function. Some external elements can be manipulated by company marketing, while
others require the organization to make adjustments. Organizations need to monitor the basic components of a
firm’s external environment, and keep a close watch on it at all times. The external environment consists of
customers, government, economy and competition.
Understanding SWOT Analysis
SWOT analysis is a technique for assessing the performance, competition, risk, and potential of a business, as
well as part of a business such as a product line or division, an industry, or other entity.
Using internal and external data, the technique can guide businesses toward strategies more likely to be
successful, and away from those in which they have been, or are likely to be, less successful. Independent
SWOT analysts, investors, or competitors can also guide them on whether a company, product line, or industry
might be strong or weak and why.SWOT analysis was first used to analyze businesses. Now, it's often used by
governments, nonprofits, and individuals, including investors and entrepreneurs. There is seemingly limitless
applications to the SWOT analysis.Components of SWOT AnalysisEvery SWOT analysis will include the
following four categories. Though the elements and discoveries within these categories will vary from company to
company, a SWOT analysis is not complete without each of these elements: StrengthsStrengths describe what
an organization excels at and what separates it from the competition: a strong brand, loyal customer base, a
strong balance sheet, unique technology, and so on. For example, a hedge fund may have developed a
proprietary trading strategy that returns market-beating results. It must then decide how to use those results to
attract new investors.WeaknessesWeaknesses stop an organization from performing at its optimum level. They
are areas where the business needs to improve to remain competitive: a weak brand, higher-than-average
turnover, high levels of debt, an inadequate supply chain, or lack of capital.Opportunities
Opportunities refer to favorable external factors that could give an organization a competitive advantage. For
example, if a country cuts tariffs, a car manufacturer can export its cars into a new market, increasing sales
and market share.ThreatsThreats refer to factors that have the potential to harm an organization. For example, a
drought is a threat to a wheat-producing company, as it may destroy or reduce the crop yield. Other common
threats include things like rising costs for materials, increasing competition, tight labor supply. and so on.
Understanding McKinsey 7S Model
The 7S Model specifies seven factors that are classified as "hard" and "soft" elements. Hard elements are easily
identified and influenced by management, while soft elements are fuzzier, more intangible, and influenced
by corporate culture. The hard elements are as follows:StrategyStructureSystemsThe soft elements are as
follows:Shared valuesSkillsStyleStaff
The framework is used as a strategic planning tool by organizations to show how seemingly disparate aspects of
a company are, in fact, interrelated and reliant upon one another to achieve overall success.The strategy is the
plan deployed by an organization in order to remain competitive in its industry and market. An ideal approach is
to establish a long-term strategy that aligns with the other elements of the model and clearly communicates what
the organization’s objective and goals are.The structure of the organization is made up of its corporate
hierarchy, the chain of command, and divisional makeup that outlines how the operations function and
interconnect. In effect, it details the management configuration and responsibilities of workers.
Systems of the company refer to the daily procedures, workflow, and decisions that make up the standard
operations within the organization.Shared values are the commonly accepted standards and norms within the
company that both influence and temper the behavior of the entire staff and management. This may be detailed
in company guidelines presented to the staff. In practice, shared values relate to the actual accepted behavior
within the workplace.Skills comprise the talents and capabilities of the organization’s staff and management,
which can determine the types of achievements and work the company can accomplish. There may come a time
when a company assesses its available skills and decides it must make changes in order to achieve the goals set
forth in its strategy.
Style speaks to the example and approach that management takes in leading the company, as well as how this
influences performance, productivity, and corporate culture.
Staff refers to the personnel of the company, how large the workforce is, where their motivations reside, as well
as how they are trained and prepared to accomplish the tasks set before them.1
The McKinsey 7-S Model is applicable in a wide variety of situations where it's useful to understand how the
various parts of an organization work together. It can be used as a tool to make decisions on future corporate
strategy.What Is a Value Chain?
A value chain is a series of consecutive steps that go into the creation of a finished product, from its initial design
to its arrival at a customer's door. The chain identifies each step in the process at which value is added, including
the sourcing, manufacturing, and marketing stages of its production.
A company conducts a value-chain analysis by evaluating the detailed procedures involved in each step of its
business. The purpose of a value-chain analysis is to increase production efficiency so that a company can
deliver maximum value for the least possible cost.Components of a Value Chain
In his concept of a value chain, Porter splits a business's activities into two categories, "primary" and "support,"
whose sample activities we list below.1 Specific activities in each category will vary according to the
industry.Primary ActivitiesPrimary activities consist of five components, and all are essential for adding value
and creating competitive advantage:Inbound logistics include functions like receiving, warehousing, and
managing inventory.Operations include procedures for converting raw materials into a finished
product.Outbound logistics include activities to distribute a final product to a consumer.Marketing and
sales include strategies to enhance visibility and target appropriate customers—such as advertising, promotion,
and pricing.Service includes programs to maintain products and enhance the consumer experience—like
customer service, maintenance, repair, refund, and exchange.
Support ActivitiesThe role of support activities is to help make the primary activities more efficient. When you
increase the efficiency of any of the four support activities, it benefits at least one of the five primary activities.
These support activities are generally denoted as overhead costs on a company's income
statement:Procurement concerns how a company obtains raw materials.Technological development is used
at a firm's research and development (R&D) stage—like designing and developing manufacturing techniques and
automating processes.Human resources (HR) management involves hiring and retaining employees who will
fulfill the firm's business strategy and help design, market, and sell the product.Infrastructure includes company
systems and the composition of its management team—such as planning, accounting, finance, and quality
control.
STRATEGIC ANALYSISStrategic analysis is a process that involves researching an organization’s
business environment analysis within which it operates. Strategic analysis is essential to formulate strategic
planning for decision making and smooth working of that organization. With the help of strategic planning, the
objective or goals that are set by the organization can be fulfilled.In a constant strive to improve, organizations
must periodically conduct a strategic analysis which will, in turn, help them determine what areas need
improvement and areas that are already doing well. For an organization to function efficiently, it is important to
think about how positive changes need to be implemented.Strategic analysis is essential if a company has a goal
and a mission for themselves. All leading organization who are well known for their achievements have years of
strategic planning being implemented at various stages. Strategic planning is a long-term task involving
continuous and systematic planning and resource investment. WHAT IS BUSINESS FORCASTINGBusiness
forecasting involves making informed guesses about certain business metrics, regardless of whether they reflect
the specifics of a business, such as sales growth, or predictions for the economy as a whole. Financial and
operational decisions are made based on economic conditions and how the future looks, albeit uncertain.
Companies use forecasting to help them develop business strategies. Past data is collected and analyzed so
that patterns can be found. Today, big data and artificial intelligence has transformed business forecasting
methods. There are several different methods by which a business forecast is made. All the methods fall into
one of two overarching approaches: qualitative and quantitative.STEPS IN B.FORECASTING
Set clear goals: Start by deciding what you want to predict and why. Figure out the purpose of the forecast, and
choose the time frame you’re interested in, whether short-term, medium-term, or long-term.
Gather information: Collect past data related to your forecast, like previous sales numbers, market changes, or
economic signs. Make sure the information is correct, trustworthy, and up-to-date to get the best possible
forecast.Choose a method: Pick the right forecasting technique based on your goals and the available data.
There are various methods, including qualitative approaches (like expert opinions) and quantitative methods
(such as statistical models and algorithms).Analyse the data: Use the chosen method to examine the data and
look for patterns, trends, or relationships. This analysis will help you make informed predictions about future
events or outcomes.Make the forecast: Based on your analysis, make educated guesses about what might
happen in the future. Keep in mind the limitations of forecasting and the uncertainty of the future while making
your predictions.Validate the forecast: Check your predictions against actual outcomes or historical data to see
how accurate your forecast is. This step helps identify any issues or inaccuracies in the forecasting process and
can guide improvements in future forecasts.Review and adjust: Regularly review your forecast and update it as
new information becomes available or conditions change. Stay flexible and be prepared to modify your
predictions and plans as needed.