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Lecture 3 - Role of Top Management

The document discusses the roles and responsibilities of top management in an organization. It covers setting objectives and policies, selecting and developing key personnel, integrating efforts to achieve goals, stimulating creative thinking, and evaluating results. Top management must demonstrate leadership qualities, formulate the organization's purpose, have officer-like qualities such as dynamism and decisiveness, and understand workers' needs. The document also discusses strategic management concepts such as different levels of strategy, basic strategic alternatives, criteria for selecting strategies, and generic strategies.

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swami vardhan
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40 views

Lecture 3 - Role of Top Management

The document discusses the roles and responsibilities of top management in an organization. It covers setting objectives and policies, selecting and developing key personnel, integrating efforts to achieve goals, stimulating creative thinking, and evaluating results. Top management must demonstrate leadership qualities, formulate the organization's purpose, have officer-like qualities such as dynamism and decisiveness, and understand workers' needs. The document also discusses strategic management concepts such as different levels of strategy, basic strategic alternatives, criteria for selecting strategies, and generic strategies.

Uploaded by

swami vardhan
Copyright
© © All Rights Reserved
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Role of Top Management

•Providing Direction
(What should the company do? Textiles
/Chemicals/ Photography/...)
 
•Providing Vision
(For short run/ and for long run)
 
•Setting Standards
(Developing a system of control, for example, by
ethics, by performance, etc.)
 
Functions of Top Management (Reilly)

• Setting objectives
• Establishing policies
• Assigning responsibilities
• Key personnel – Selecting, Developing
• Integrating people's efforts in achieving
company objectives
• Stimulating creative thinking
• Measuring and evaluating results.
Skills Required in Top Management
• Leadership qualities
• Ability to formulate organisation's purpose
• Officer-like qualities
• Dynamism
• Decisiveness
• Humane approach
• Conscientiousness
• Ability to understand workers needs
• Appealing personality
• Objectivity
• Ability to communicate
Managerial Roles (Mintzberg)

• – Interpersonal
• – Informational
• – Decisional
Operational effectiveness versus Strategic effectiveness

+Strategy (Strong) +Strategy (Strong)


+Operations -Operations
(Strong) (Weak)

-Strategy (Weak) -Strategy (Weak)


+Operations -Operations
(Strong) (Weak)
Business Objectives (Drucker)
• Drucker has proposed eight important areas
for business objectives: -
» Marketing
» Innovation
» Human Organisation
» Financial Resources
» Physical Resources
» Productivity
» Social Responsibility
» Profit Requirements

•  
Objectives & Goals
• Objectives and goals provide the foundation
for managerial activity because all activities
are directed to achieve these ends. Owing to
multiplicity of objectives, the reality is that
there are multiple goals. Goals can help in
coordinating the multiplicity of tasks in
organisations. Goals provide the standards for
measuring performance also.
Goals
• Organisational goals may be expressed as:
– a target of 10% increase in market share,
– an improvement in productivity by 5%,
– an annual cost reduction of 15% through a
materials-economy program.
Pyramid of Business Policies (Steiner, G.A.)
• Major Policy
• – Line of business
• – Code of ethics
•  
• Secondary Policies
• – Selection of geographic area, customers, products
•  

• Functional Policies
• – Marketing, Production, Research & Development.
•  

• Procedures and Standard Operating Plans (SOPs)


• – Handling incoming orders, servicing customer complaints
•  

• Rules
• – Delivery of paycheques, use of company car, smoking, loitering around the plant
– Source: Steiner, G.A. Top Management Planning, p.268.
Levels of Strategy

• Three Levels of Strategy


• Corporate-level
• Strategic business unit (SBU) – level, and
• Operating level
Kinds / Types of Strategies
• Basic Strategic Alternatives
• There are basically four broad strategic
alternatives as noted below: -
1. Stability
2. Expansion
3. Retrenchment
4. Combination
Basic Criteria for Selection of Strategy
• Stability implies that the company continues having the same product in
the same market and with the existing technology. This is appropriate
when the environment is quite stable. A stability strategy includes
improved customer service and allows modernisation to a small extent.
• Expansion implies that the company increases its customer groups and
perhaps upgrades technology as well; this is appropriate when the
environment is in business expansion mode. This strategy involves
mobilisation of more resources and it may involve a substantial ramp-up in
the working of the organisation. 
• Retrenchment implies that the company is reducing its customer groups
or services, or is reducing the size and scope of its business through partial
or even total withdrawal. This may be accompanied with reduction of staff
also. It is not necessarily ‘negative’ in its approach.
• Combination strategy implies that the company is eclectically using
different elements of the basic above-mentioned three strategies. This
may be appropriate for organisations with multiple portfolios of
businesses.
Expansion
• Intensification (market penetration or market
development or product development)

• Diversification (related or unrelated


diversification, horizontal or vertical
diversification) - (concentric diversification or
conglomerate diversification)
– Each alternative casts its own impact on ‘how to
accomplish’ the chosen strategy.
Commonly used terms
• Modernisation
• Integration: forward integration or backward
integration
• Growth
• Dependency Reduction: Maintaining
alternatives, building a ‘positive image’,
cooptation, contracting, coalitions, direct
confrontation
Several routes available for executing the
chosen strategy
• Start-up mode
• Mergers and acquisitions (M & A)
• Takeovers
• Joint Ventures
• Strategic Alliances, etc.
•  ----Each route has its own pros and cons.
Generic strategies (Michael Porter)
1. Cost Leadership
2. Differentiation
3. Niche
• A comprehensive list of strategies cannot be
provided, because the field is dynamic and
new and innovative strategies are emerging
from time to time.

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