Chapter 1 Business policy and Strategic Management

Business policy and strategic Management

Ø  Strategy and Strategic Management

Ø  Strategic intent- Vision, Mission, goals and objectives

Ø  SWOT Analysis

Ø  Environmental appraisal

Ø  Organizational Appraisal

Ø  Corporate level strategy

Ø  Business level strategy

Ø  Strategic Analysis and choice

Ø  Porter’s competitive Analysis

Ø  Value chain Analysis

Need of BPSA

• Enormous change is taking place in Business Environment both internal and external.
• Competition is almost cut throat in all sectors
• Considering  the changes and competition organization need t formulate  the strategies an polices which will help them to survive in  the market.
• Crunch of the resources  required for the business. Need strategies to utilize the resources at optimum level.

Business policy

“Guidelines which business need to follow considering the  impact of internal and external environmental factors.”

• Importance

ü      For learning the course

ü      For understanding the business environment

ü      For Understanding the organization

ü      For personnel Development

Purpose of Business Policy

• To integrate the knowledge gained in various functional areas of Management
• To adopt a generalist approach  to problem solving
• To understand the complex interlink ages operating within an organization

Strategy

Definitions

• The determination of the basic long term goals and objectives of an enterprise and the adoption of the course of action and the allocation of resources necessary for carrying out these goals
• The unified , comprehensive and integrated plan designed to assure that the basic objectives of the enterprise are achieved.

Strategic Management(SM)

Definitions

§  A stream of decisions and actions which leads to the development of an effective strategy or strategies to help achieve corporate objectives…….Glueck

§  The process which deals with the fundamental organizational renewal and growth with the development of strategy, structure , and system necessary to achieve such renewal and growth, and with the organizational system needed to effectively manage the strategy formulation and implementation processes……Hofer and others

 Need/Importance of SM

a)     To formulate strategies that provide competitive advantage to the business

b)    To survive for the long term in the market

c)     To cope up with the changes in the business environment

d)    To Change the product/ Service according to the customer needs and requirements.

e)     To increase the profitability of the organization.

   

Strategic Management Process

Chapter 2       Strategic Intent

Strategic Intent

Strategic Intent defines the Mission, vision and objectives of the Organization. It refers to the purpose the Organization strives for.

Vision

“ to be in the future”

• Description of something in the future
• Mental perception of the kind of environment organization aspires to create within a broad time of horizon and the underlying conditions for the actualization of this perception

Benefits of Vision

• Inspiring and exhilarating
• Helps to create shared sense of purpose
• Vision which is unique, competitive an original make sense in the marketplace.
• Foster risk taking and experimentation
• Foster long term thinking
• Clear the objectives of the organization

Process on Envisioning

• Core    Ideology
• Envisioned future
• Tata Steel

 

Example

 “ Tata steel enters the mew millennium with the confidence of a learning, knowledge based and happy organization. We will establish ourselves as a supplier of choice by delighting our customer with our service and our product

Mission

• what is our business?
•  what to do?
• What should it be?
• Definition

    “Essential purpose of the organization ,concerning particularly why it is in existence, the nature of the business it is in, and the customers it seeks to serve and satisfy

Example

United Trust of India

Mission:

“To keep the common man in sharper focus, to encourage saving and investment habits among them.”

Goals And Objectives

Goals

• Goals  denote what an organization hopes to accomplish in a future period of time. This is stated broadly

      Objectives

• These are the ends that specify how goals shall be achieved
• Objectives makes the goals operational
• Objective need to be stated in quantity
• They are measurable and comparable

Role of objectives

• I t defines he orgnisation’s relationship with the environment
• It helps to pursue its vision and mission
• Provides the base of strategic decision making
• It provides the standards for the performance appraisal

Characteristics of objectives

• objectives should be understandable
• objectives should be concrete and specific
• objectives should be related to a time frame
• objectives should be measurable and controllable
• objectives should be challenging
• objectives should be correlated with each other
• objectives should be set within constraint

Issues in objective setting

• Specificity
• Multiplicity
• Periodicity
• Variability
• Reality
• Quality

How objectives formulated

• The forces in the environment
• Realities of enterprise’s resources
• The value system of top executives
• Awareness of the management

Examples of Objectives

Corporate level

• 1.to Increase the profit level by 5 % at the end of two year

Business Unit level

• 1.to Increase the profit level of the  unit  by 10 % at the end of two year

  Functional level

• To increase the sales of product by 12 % by the end of two year
• To reduce the manpower cost by  15% of the last year

CSF (Critical Success Factor)

·         Critical success Factors are the factors essential to be successful in that particular business,

·         Indentifying the CSF s in an industry or business is to inject a concentration of resources into a PARICULAR area where the company sees an opportunity to gain significant strategic advantage over the competitors

·         The Use of CSF in objective setting and strategic choice distinguishing the successful organizations from the unsuccessful ones.

Example:

CSF s for automobile industry

1.      Engine technology

2.      Mileage

            CSF s for Telecommunication Industry

1.      Wide Network

2.      Cost Effective Service

Chapter 3  SWOT Analysis

SWOT Analysis:

Importance of SWOT analysis

• It provide the information about the complete business environment of organization
• It is base for the strategy formulation
• It is also base for the strategy analysis and choice

Steps for SWOT Analysis

  1.Decide objective for SWOT analysis

   2.Environmental Analysis……..OT

  3.Organizational Appraisal…….SW

   4.Prepare the profile of OT and SW

 5. Prepare the SWOT related to set objective