BUSINESS POLICY AND STRATEGY Unit 1&2.pptx
- 1. BUSINESS POLICY AND STRATEGY PREPARED AND PRESENTED BY : Dr. Gurpreet Kaur Chhabra Associate Professor
- 2. UNIT-I
- 3. “Strategy is…. The framework which guides those choices that determine the nature and direction of an organization” Kepner-Tregoe
- 4. Concept of strategy As per Clausewitz, “Strategy is the art of the employment of battles as a means to gain the object of war.” - It’s the art of the general. - Key decisions made to meet the objectives - relationship between strategy and tactic
- 5. What we need to know before formulating a strategy? What business are we in? What products and services will we offer? To whom? At what prices? On what terms? Against which competitors? On what basis will we compete?
- 6. LEVELS OF STRATEGY Corporate level SBU 1 SBU 2 SBU 3 Marketing HR Finance
- 7. THE STRATEGIC MANAGEMENT PROCESS Develop a strategic planning model: a) Environmental scanning b) Evaluation of issues c) Forecasting d) Goal setting e) Implementation f) Monitoring
- 8. CONCEPT OF STRATEGIC MANAGEMENT • Who am I? • What do I Do? • Where am I headed? • Who all are involved in the strategic decision making proces?
- 9. VISION Keeps the organization moving forward. ‘Meeting the everyday needs of people everywhere’ -Vision statement of HUL. ~A vision statement is the first step in the strategic planning process. ~ It fits the strengths of the organization with the market demands and makes the organization highly competitive with growth and profits as the rewards.
- 10. AIM OF VISION STATEMENT • BUILDING MOTIVATION • REFLECT CORE VALUES • REALISTIC, EASILY UNDERSTOOD AND RESPONSIVE TO CHANGE • ENCOURAGE INITIATIVE AND ENTHUSIASM AT ALL LEVELS IN THE ORGANIZATION • BE ALERT FROM VISION KILLERS
- 11. MISSION ~ It is the founders’ intentions at the outset of the organization- what they wanted to achieve. ~ In the dynamic environment of today, it must be re-examined and refreshed periodically. ~ Even the most exciting vision will remain only a dream unless it is followed up with striving, building and improving ‘mission statement’.
- 12. AIM OF MIISION STATEMENT ~ It is a statement of purpose and function ~ It sets the organization apart from others. ~ They give meaning to the reason for being, value-add, and define the business of the organization. ~ A well crafted mission statement must be narrow enough to specify the real area of interest.
- 13. COMPONENTS OF MISSION STATEMENT • THE KEY MARKET • CONTRIBUTION • DISTINCTION Ranbaxy “ Our mission is to become a research-based international pharmaceutical company”
- 14. “ To offer the fast food customer food prepared in the same high quality worldwide, tasty and reasonably priced, delivered in a consistent low key décor and friendly manner.”
- 15. HOW TO PREPARE VISION AND MISSION STATEMENTS Through Brain stroming and blue sky days. These statements give a common sense and purpose across the organization. it provides an explicit depiction of values to guide the organization in chossing among competing priorities, thereby setting the organization apart from others.
- 16. GOALS & OBJECTIVES GOALS OBJECTIVES Denote what an organization hopes to accomplish in a future period of time Are the ends that state specifically how the goals shall be achieved. They represent the future state or ourcome of effort and are generalized They are concrete and specific A broad category of financial and non- financial issues are addressed by the goals that a firm sets. Often qualitative in nature They are measurable and comparable and make the goals operational. Often quantitative in nature.
- 17. ORGANIZATIONAL OBJECTIVES • Strategic/Corporate objectives(no fixed time horizon)- Long term market position but no sure shot short term gains • Business Process Objectives(4-5 years)- short term objectives, developed at allthe levels. Measurable, time bound. Categories to be considered: Marketing, products, operations, HR, community etc. • Operational objectives/KRAs(1-2 years)- Areas where performance is essential for the ongoing success of the organization. Revised regularly.
- 18. Issues to be kept in mindwhile setting objectives • Balance your objectives-all functional areas to be involved. • Multiplicity of objectives- short list • Theme for objectives- single theme • Use result oriented instead of activity oriented objectives • Quantify your objectives • Network objectives, link them together • Make them challenging but attainable • SMART formula
- 19. EXTERNAL ENVIRONMENT ANALYSIS (SWOT) Positive considerations Negative considerations Internal aspects STRENGTHS (build) WEAKNESSES(reverse) External aspects OPPORTUNITIES(maximise response) THREATS(overcome)
- 20. PESTLE POLITICAL ECONOMIC SOCIAL TECHNOLOGICAL LEGAL ENVIRONMENTAL
- 21. ETOP ANALYSIS ENVIRONMENTAL THREAT AND OPPORTUNITY PROFILE (+) For an opportunity (-) For a threat
- 22. ANALYZING COMPANIES RESOURCES IN COMPETITIVE POSITION THREATS OPPORTUNITY WEAKNESS STRENGTH
- 23. COMPARATIVE TABLES Key success Factors Our Company Rival 1 Rival 2 Rival 3 Rival 4 Quality/product performance 8 5 10 1 6 Reputation / image in market 8 7 10 1 6 Technological skills 10 1 7 7 8 Distribution strength 9 4 10 5 1 Rating scale:1=V.weak;10=V.strong
- 24. MINTZBERG'S 5 Ps OF STRATEGY Deliberate strategy Intended strategy Realised strategy Intended strategy Formulated strategy Emergent strategy Unrealised strategy Implemented strategy
- 25. UNIT-2
- 26. Porter's five forces model • Central competitive force(Industry competitors) • Threat of new entrants • Threat of substitutes • Bargaining power of buyers • Bargaining power of suppliers
- 28. What is value chain analysis? • The value chain, also known as value chain analysis, is a concept from business management that was first described and popularized by Michael Porter. • A value chain is a chain of activities for a firm operating in a specific industry. • Reveals opportunities to add value by improving cost, responsiveness to customers, efficiency, quality, reliability and integrity.
- 29. What is value chain analysis? • Used to identify sources of competitive advantage • Specifically: • Opportunities to secure cost advantages • Opportunities to create product/service differentiation • Includes the value-creating activities of all industry participants
- 30. Activities • Value activities: the physically and technologically distinct activities a firm performs. • The primary activities include: inbound logistics, operations (production), outbound logistics, marketing and sales (demand), and services (maintenance). • The support activities include: administrative infrastructure management, human resource management, technology (R&D), and procurement. The costs and value drivers are identified for each value activity.
- 32. ENVIRONMENTAL FACTORS • Need & Characteristics Environmental factors can be explained as identifiable elements within the cultural, economic, demographic, physical, technological or ,political environment that effects growth, operations and survival of an organization. Environmental factors can be both internal as well external for the business. External factors can include economic and technological factors whereas; internal factors may include value system, objectives or internal relationships of a business.
- 33. CATEGORIZATION OF ENVIRONMENTAL FACTORS • Environmental policies- are considered the major external factor. Environmental policy impacts businesses because the law implies organizations to change their operational procedures and equipment so as to meet those standards which can cost businesses some good amount of money. • Climate Change- Climate change became an insidious threat to businesses as its pace can be recognized only when it is taken into consideration on the basis of decade-after-decade. • Green Agenda. Business-related activities impact the environment; however, the environment also has an effect on businesses and the market environment. Now enterprises have realized that in order to achieve business goals, there is a need to draft environmental-friendly policies.
- 34. • Pollution. Pollution can also have an impact over business strategies. Pollution may cause some major environmental events which can result in the disruption of supply chains or an increase in the cost of raw material. • Availability of natural resources. Amongst external environment factors, this factor refers to the physical environment of a business. Natural resources are very important for most businesses and many corporations have natural resources as their major raw material. • Recycling. Recycling is another aspect of a greener environment. The cost of dumping waste in landfills is increasing and is resulting in not only shortage of wastages but, it also provides harm to the environment. • Waste Disposal. Although, there has been a positive trend towards recycling of waste materials, still there is several businesses which dump wastage in landfills. This not only increases their cost of dumping waste but, is also harmful to the environment in which the business operates
- 35. ENVIRONMENTAL ANALYSIS TOOLS • SWOT • TOWS • ETOP • PESTEL • COMPETITIVE COMPARATIVE TABLES
- 36. RESOURCE AUDIT & STRATEGIC ADVANTAGE ANALYSIS
- 37. Functional area profile and resource deployment matrix