A

PROJECT REPORT
ON

“CONCEPT OF STRATEGY”

IN PARTIAL FULFILLMENT OF THE DEGREE OF

MASTERS OF BUSINESS ADMINISTRATION
(M.B.A.)

BY

2009-2010
 STRATEGY

A strategy is a plan of action designed to achieve a particular goal. The

word strategy has military connotations, because it derives from the Greek
word for general.

Strategy is different from tactics. In military terms, tactics is concerned with

the conduct of an engagement while strategy is concerned with how different
engagements are linked. In other words, how a battle is fought is a matter of
tactics: the terms that it is fought on and whether it should be fought at all is
a matter of strategy.

Strategic or institutional management is the conduct of drafting,

implementing and evaluating cross-functional decisions that will enable an
organization to achieve its long-term objectives. It is the process of
specifying the organization's mission, vision and objectives, developing
policies and plans, often in terms of projects and programs, which are
designed to achieve these objectives, and then allocating resources to
implement the policies and plans, projects and programs.

Strategic management is a level of managerial activity under setting goals

and over Tactics. Strategic management provides overall direction to the
enterprise and is closely related to the field of Organization Studies. In the
field of business administration it is useful to talk about "strategic
alignment" between the organization and its environment or "strategic
consistency".
Strategy formulation

Strategic formulation is a combination of three main processes which are as

follows:

• Performing a situation analysis, self-evaluation and competitor

analysis: both internal and external; both micro-environmental and
macro-environmental.
• Concurrent with this assessment, objectives are set. These objectives
should be parallel to a timeline; some are in the short-term and others
on the long-term. This involves crafting vision statements (long term
view of a possible future), mission statements (the role that the
organization gives itself in society), overall corporate objectives (both
financial and strategic), strategic business unit objectives (both
financial and strategic), and tactical objectives.
• These objectives should, in the light of the situation analysis, suggest
a strategic plan. The plan provides the details of how to achieve these
objectives.

Strategy implementation

• Allocation and management of sufficient resources (financial,

personnel, operational support, time, technology support)
• Establishing a chain of command or some alternative structure (such
as cross functional teams)
• Assigning responsibility of specific tasks or processes to specific
individuals or groups
• It also involves managing the process. This includes monitoring
results, comparing to benchmarks and best practices, evaluating the
 efficacy and efficiency of the process, controlling for variances, and
making adjustments to the process as necessary.
• When implementing specific programs, this involves acquiring the
requisite resources, developing the process, training, process testing,
documentation, and integration with (and/or conversion from) legacy
processes.

Strategy evaluation

Measuring the effectiveness of the organizational strategy, it's extremely

important to conduct a SWOT analysis to figure out the strengths,
weaknesses, opportunities and threats (both internal and external) of the
entity in question.

The strategy hierarchy

In most (large) corporations there are several levels of management.

Strategic management is the highest of these levels in the sense that it is the
broadest - applying to all parts of the firm - while also incorporating the
longest time horizon. It gives direction to corporate values, corporate
culture, corporate goals, and corporate missions. Under this broad corporate
strategy there are typically business-level competitive strategies and
functional unit strategies.

Corporate strategy refers to the overarching strategy of the diversified

firm. Such a corporate strategy answers the questions of "in which
businesses should we be in?" and "how does being in these business create
synergy and/or add to the competitive advantage of the corporation as a
whole?"
Business strategy refers to the aggregated strategies of single business firm
or a strategic business unit (SBU) in a diversified corporation. According to
Michael Porter, a firm must formulate a business strategy that incorporates
either cost leadership, differentiation or focus in order to achieve a
sustainable competitive advantage and long-term success in its chosen
arenas or industries.

Functional strategies include marketing strategies, new product

development strategies, human resource strategies, financial strategies, legal
strategies, supply-chain strategies, and information technology management
strategies. The emphasis is on short and medium term plans and is limited to
the domain of each department’s functional responsibility.

An additional level of strategy called operational strategy was encouraged

by Peter Drucker in his theory of management by objectives (MBO). It is
very narrow in focus and deals with day-to-day operational activities such as
scheduling criteria. It must operate within a budget but is not at liberty to
adjust or create that budget.
Reasons why strategic plans fail

There are many reasons why strategic plans fail, especially:

• Failure to understand the customer

o Why do they buy
o Is there a real need for the product
o inadequate or incorrect marketing research
• Inability to predict environmental reaction
o What will competitors do
 Fighting brands
 Price wars
o Will government intervene
• Over-estimation of resource competence
o Can the staff, equipment, and processes handle the new strategy
o Failure to develop new employee and management skills
• Failure to coordinate
o Reporting and control relationships not adequate
o Organizational structure not flexible enough
• Failure to obtain senior management commitment
o Failure to get management involved right from the start
o Failure to obtain sufficient company resources to accomplish
task
• Failure to obtain employee commitment
o New strategy not well explained to employees
o No incentives given to workers to embrace the new strategy
• Under-estimation of time requirements
o No critical path analysis done
Limitations of strategic management

Although a sense of direction is important, it can also stifle creativity,

especially if it is rigidly enforced. In an uncertain and ambiguous world,
fluidity can be more important than a finely tuned strategic compass. When a
strategy becomes internalized into a corporate culture, it can lead to group
think. It can also cause an organization to define itself too narrowly. An
example of this is marketing myopia.

Many theories of strategic management tend to undergo only brief periods of

popularity. A summary of these theories thus inevitably exhibits
survivorship bias (itself an area of research in strategic management). Many
theories tend either to be too narrow in focus to build a complete corporate
strategy on, or too general and abstract to be applicable to specific situations.

Strategy can be formulated on three different levels:

• corporate level
• business unit level
• Functional or departmental level.

While strategy may be about competing and surviving as a firm, one can
argue that products, not corporations compete, and products are developed
by business units. The role of the corporation then is to manage its business
units and products so that each is competitive and so that each contributes to
corporate purposes.
Consider Textron, Inc., a successful conglomerate corporation that pursues
profits through a range of businesses in unrelated industries. Textron has
four core business segments:

• Aircraft - 32% of revenues

• Automotive - 25% of revenues
• Industrial - 39% of revenues
• Finance - 4% of revenues.

While the corporation must manage its portfolio of businesses to grow and
survive, the success of a diversified firm depends upon its ability to manage
each of its product lines. While there is no single competitor to Textron, we
can talk about the competitors and strategy of each of its business units. In
the finance business segment, for example, the chief rivals are major banks
providing commercial financing. Many managers consider the business level
to be the proper focus for strategic planning.

Corporate Level Strategy

Corporate level strategy fundamentally is concerned with the selection of

businesses in which the company should compete and with the development
and coordination of that portfolio of businesses.

Corporate level strategy is concerned with:

• Reach - defining the issues that are corporate responsibilities; these

might include identifying the overall goals of the corporation, the
 types of businesses in which the corporation should be involved, and
the way in which businesses will be integrated and managed.
• Competitive Contact - defining where in the corporation competition
is to be localized. Take the case of insurance: In the mid-1990's,
Aetna as a corporation was clearly identified with its commercial and
property casualty insurance products. The conglomerate Textron was
not. For Textron, competition in the insurance markets took place
specifically at the business unit level, through its subsidiary, Paul
Revere. (Textron divested itself of The Paul Revere Corporation in
1997.)
• Managing Activities and Business Interrelationships - Corporate
strategy seeks to develop synergies by sharing and coordinating staff
and other resources across business units, investing financial
resources across business units, and using business units to
complement other corporate business activities. Igor Ansoff
introduced the concept of synergy to corporate strategy.
• Management Practices - Corporations decide how business units are
to be governed: through direct corporate intervention (centralization)
or through more or less autonomous government (decentralization)
that relies on persuasion and rewards.

Corporations are responsible for creating value through their businesses.

They do so by managing their portfolio of businesses, ensuring that the
businesses are successful over the long-term, developing business units, and
sometimes ensuring that each business is compatible with others in the
portfolio.
Business Unit Level Strategy

A strategic business unit may be a division, product line, or other profit

center that can be planned independently from the other business units of the
firm.

At the business unit level, the strategic issues are less about the coordination
of operating units and more about developing and sustaining a competitive
advantage for the goods and services that are produced. At the business
level, the strategy formulation phase deals with:

• positioning the business against rivals

• anticipating changes in demand and technologies and adjusting the
strategy to accommodate them
• influencing the nature of competition through strategic actions such as
vertical integration and through political actions such as lobbying.

Functional Level Strategy

The functional level of the organization is the level of the operating

divisions and departments. The strategic issues at the functional level are
related to business processes and the value chain. Functional level strategies
in marketing, finance, operations, human resources, and R&D involve the
development and coordination of resources through which business unit
level strategies can be executed efficiently and effectively.

Functional units of an organization are involved in higher level strategies by

providing input into the business unit level and corporate level strategy, such
as providing information on resources and capabilities on which the higher
level strategies can be based. Once the higher-level strategy is developed,
the functional units translate it into discrete action-plans that each
department or division must accomplish for the strategy to succeed.

Vision, Mission, Goals, Purpose, Objectives

Vision
Serve as the resource and representative for facility management.

Mission
Advance the facility management profession by providing exceptional
services, products, resources, and opportunities.

Goals

1. Support a community that fosters vitality, momentum and impact for

the facility management professional. (Stakeholder Perspective)
2. Anticipate and prioritize the resources required to enhance effective
delivery of products and services. (Internal Perspective)
3. Inspire passion for the facility management profession that compels
facility practitioners to want to join the IFMA network, engages
volunteer leaders and retains/attracts top-talent to the full-time staff.
(Learning & Growth Perspective)
4. Sustain IFMA’s financial integrity to achieve and fulfill our mission.
(Financial Perspective)
Purpose

IFMA is a member-centered association that exists to guide and develop

facility management professionals. In support of its members, IFMA
promotes the facility management profession by providing leadership,
recognition and standards of excellence.

Objectives

1. Provide and engage stakeholders with opportunities that expand and

leverage their collective knowledge and experiences
2. Provide career essentials for facility management professionals to
advance their careers
3. Magnify the importance of the facility management professional
worldwide
4. Ensure appropriate governance, systems and processes are in place
5. Understand and respond to stakeholder needs
6. Strengthen and build collaborative relationships that advance the FM
profession
7. Motivate and inspire members to become committed and involved
volunteer leaders
8. Create a culture and provide resources that instill innovation, passion,
challenge and meaning with staff and volunteers
9. Maintain viable fiscal position through good financial management,

diversification of revenues and optimized asset utilization.

Strategic Business Units Defined

A strategic business unit is a significant organization segment that is

analyzed to develop organizational strategy aimed at generating future
business or revenue.
Although SBUs vary drastically in form, they have some common
characteristics. All SBUs are a single business (or collection of businesses),
have their own competitors and a manager accountable for operations, and
can be independently planned for.
Characteristics of Strategic Business Units (SBUs)

1. It is a single business or collection of related businesses

2. It has its own competitors
3. It has a manager who is accountable for its operation
4. It is an area that can be independently planned for within the
organization

Strategic business unit (SBU)

Autonomous division or organizational unit, small enough to be flexible and

large enough to exercise control over most of the factors affecting its long-
term performance. Because SBUs are more agile (and usually have
independent missions and objectives), they allow the owning conglomerate
to respond quickly to changing economic or market situations.

Corporate planning: differentiation and Integration of the

process

PLANNING: There are various descriptions of corporate planning

methodology and each is done in accordance with the professional and/or
academic preferences of the writer.

Regardless of the model selected, the corporate planning process can be

adopted successfully if it is applied after studying the internal and external
environment in which the company or the authority exists.
Regardless of how successfully it was adopted elsewhere, the
implementation of a patent model without careful investigation of the
environment and the management systems, command practices and culture
of the organization will certainly lead to a marginal process.

Corporate planning

The central theme of the contemporary organizational environment is change

and renewal. Much has been written on this theme. Critics have described
today’s change and renewal as volatile, pervasive and significantly
discontinuous.

While many strategists discuss how change is affecting us psychologically,

socially and organizationally the “futurists” emphasize what changes the
future will bring.

The centrality and necessity of change, hence, should be a fundamental

consideration in the management of contemporary organizations or a part of
an organization.

Also, it is essential for the strategists of organizational change to understand

the continuous organization - environment interactions and to respond to
such environmental fluctuations.
The sequential process

* Assess the previous period’s plan which includes:

a. a review of the organization’s progress against the plan.

b. an examination of specific aspects / problems encountered.

c. a review of the planning material which is current.

d. an examination of the issues that needs to be included in the future.

* Analyze the customer’s/ user’s level of satisfaction with products /

services provided. All noticeable problems or prospects must be considered
during this stage.

* Set the direction of the organization’s strategy. CEO or the top manager of
the organization provides the insights of the planning process to all his or
her assisting staff.

* Assess the organization’s internal environment. This includes the

examination of physical, human and financial resources of the company.
Internal assessment deals with the organizational climate, culture and
general working conditions. The strengths and weaknesses of the
organization are usually addressed at this, level.

* Assess the organization’s external environment.

* Identify and evaluate the strategic goals.

The goals must relate to the SWOT factors. Also the goals should address a
range of performance outcomes the organization could achieve in order to
fulfill its mission. For example: to increase the market share of product
ABC.

Generally there goals are broad statements that guide the further planning
efforts of the organization.

* Choose the goals from among the list of long range goals that will form a
framework for this period’s operational planning.

* Prepare the “corporate plan.” In essence, this step deals with documenting
the planning process up to that point. Basically the plan is comprised of:

A. the top manager’s assessment of the company and his/her specific

direction under which the company must move.

B. a concise analysis of the company’s environment.

C. a detailed discussion of the SWOT factors.

D. listing of key goals including how various short - range goals will provide
guidance to support the long - range goals and illustrating its value as a
vehicle for communication.

E. develop operational plan to guide the execution of the goals. These short -
to intermediate term objectives define the major results that should be
accomplished for the organization to march closer to the goals.
Some terms for strategic evaluation

There is no shortage of terms used to describe different elements of project

work and it is easy to get lost in a sea of jargon. When conducting a strategic
evaluation, however, there are a few terms and concepts worth knowing.
Most projects will have the following distinguishable elements:
• Project Inputs which are the resources and revenues invested in
running the project. Depending on the particular project, project inputs
may include volunteer time, skills, funds received, in-kind contributions,
matching funds, income generated revenue and capital assets.

• Project Activities which are the things the project does with its
resources and revenues. Projects engage in a vast range of activities,
of which a few of the possibilities are listed below:
o providing services to people;
o running educational and training courses;
o providing opportunities for people from different backgrounds to
interact;
o organising festivals, sporting and cultural events;
o enabling civic engagement and participation;
o providing services to specific types of organisation;
o providing leisure opportunities and;
o producing publications.
• Project Outputs are the immediate results achieved by the project.
As with project activities, projects can deliver a huge variety of
Outputs. A few possibilities are listed below:
O people gaining qualifications;
O new participants in cultural and other sporting activities;
O improved access to information and resources;
O people and organizations receiving services;
O number of new jobs created;
O number of people engaged in challenging discrimination and
Prejudice;
O increase in the proportion of people who say that they
Regularly meet and talk with people from different ethnic
Backgrounds.

• Project Outcomes are the project’s long-term goals and desired

Improvements. Within Oldham Borough, the project’s long-term
Goals and desired improvements may link with priorities in the Local
Area Agreement, the Community Cohesion Strategy, the
Community Strategy and Oldham Beyond. These might include
Things such as:
O developing a highly-skilled and well-educated local
Population;
O eliminating health inequalities;
O eliminating discrimination and harassment;
O good community relations throughout the Borough;
O eliminating poverty;
O avoidance of a low wage economy.
• Project Impacts on community cohesion include the project’s effects

On:
O inequalities;
O community relations across various domains of difference
Including age, sexuality, disability, social background and ethnic
Group;
O opportunities for meaningful social interaction between people
From similar and from different backgrounds;
O engagement in local democracy;
O involvement in social, political and cultural life;
O the fairness and transparency (and perceived fairness and
Transparency) of service provision, access to services and
Resource allocation.

Evaluating Causal Connections between Activities,

Outputs and Outcomes
The purpose of evaluating causal connections between activities, outputs and
Outcomes, is to explore whether or not the project’s assumptions about the
Likely outcomes and effects of its activities and outputs are well-founded.
By Identifying places where the causal chain between activity, output and
Outcome may potentially break down; the evaluator may play a role in
Identifying supplementary activities which may improve the likelihood of
the project contributing to its desired outcomes. To do this, the evaluator
should consider:

• May the project’s activities have unplanned but predictable adverse

 Affects that impact on its ability to reach the desired outcome?
• Are there other factors that are likely to intervene between?
achievement of outputs and the desired outcome?
Asking such questions will sometimes lead the project to broaden its remit
or examine possibilities for liaison and joint working with other
organizations and Institutions.

Evaluation Purposes
There are various ways of describing various purposes of evaluation activity,
e.g. design, developmental, formative, implementation, process, impact,
outcome and summative. The evaluation purpose is best understood as
identifying what evaluation activity is going to be used for. Recent years
have seen evaluation move to develop types of evaluation that are of use
right across a programme lifecycle. It should be noted that any particular
evaluation activity can have more than one purpose.

The range of evaluation terms are used in various ways in the evaluation
literature. One way of defining them is as follows:

• Design, developmental, formative, implementation – evaluative

activity designed to improve the design, development, formation
and implementation of a programme.
• Process – evaluation to describe the process of a programme.
Because the term process could conceivably cover all of a
programme from its inception to its outcomes, it is conceptually
useful to limit the term process evaluation to activity describing
 the programme during the course of the programme, i.e. once it
has been initially implemented.
• Impact, outcome and summative – looking at the impact and
outcome of a programme, and (in the case of summative, making
an overall evaluative judgment about the worth of a programme).

One useful way of distinguishing between the purposes of evaluation is to

group them into the following three overall types:

Formative Evaluation

Formative Evaluation includes the terms -

design/developmental/formative/implementation evaluation – it is any
evaluation activity directed at improving a programme's design, planning,
development and implementation. Formative evaluation is a disciplined
approach to ensuring that a programme is well developed. It has been
developed relatively recently in the history of the evaluation profession
(McClintock 1986). There are various models for how it can be undertaken,
but it is directed at ensuring independent constructively critical input into
programme development. For instance, a separately funded independent
formative evaluation team can work alongside programme planners. This
team critically assesses the decisions that are being made and can provide
regular, formal feedback to programme planners and programme funders.
Formative evaluation may use both quantitative and qualitative techniques.
Process Evaluation

Process Evaluation is any evaluative activity directed at describing or

documenting what actually happened in the contest or course of a
programme. Process evaluation is sometimes seen to include formative
evaluation, but it is conceptually useful to separate formative evaluation out
as a specific type of evaluation. Process evaluation can provide extremely
useful information about what actually happened in a programme. It can be
crucial for communicating best practice to others who want to replicate
elements of a successful programme. For instance, taking as an example a
Programme X that has been shown to be effective after an outcome
evaluation. Just knowing that Programme X is effective is, in itself,
insufficient for someone elsewhere to replicate the programme. Process
evaluation gives someone who wants to replicate a programme detailed
information on what was done, what problems arose and the what solutions
were adopted.

A second use of process evaluation is in the interpretation of outcome

evaluation results. For instance, a programme may not have proved
successful on outcome evaluation. However, when looking at the process
evaluation from this programme, it will be clear that the negative outcome
was a result of specific events that derailed the programme. In the light of
this one should not dismiss the possibility that this type of programme, if
implemented as planned, could be effective.
A third use of process evaluation is when it is used to examine the context of
a programme and the decision making leading up to that programme being
introduced. For instance there may be “problem definition creep” in the
early decision making phase about the programme objectives and what type
of programme should be run.

Outcome Evaluation

Outcome evaluation also includes the terms - intermediate outcome

evaluation and impact evaluation - it is any evaluative activity directed at
determining the positive or negative intermediate or longer-term outcomes
of a programme. It is sometimes also referred to as summative evaluation,
which also includes the aspect of making an overall assessment of a
programme. Outcome evaluation looks at whether a programme has
achieved the outcomes it is seeking. Where this can be done, this is very
useful information for stakeholders, particularly if it is in a form in which
the effectiveness of the programme being evaluated can be compared with
other strategies for achieving the same outcomes. In real world programmes
the final outcomes being sought by a programme may take a number of
years to achieve and may be outside the timeframe of the measurements
being undertaken in an evaluation. Given this, there is a way in which
evaluation designers can give outcome-type results earlier within time
frames that are more useful for policy decision-making. This entails the
development of an “outcome hierarchy” for a programme or policy. This is a
set of outcomes that range from immediate outcomes of the programme or
policy through to intermediate and then final outcomes. An argument needs
to be mounted that each step in the outcome hierarchy is likely to imply that
the next step will occur. If this argument is sound then intermediate
outcomes can be measured at an earlier level, within reasonable time frames,
and the assumption made that there is a good chance that the later steps in
the outcome hierarchy will also take place in due course.

In the past, outcome evaluation in a number of sectors, has tended to be

largely quantitative. This notion is now being challenged and there is
discussion of the argument for using qualitative outcome evaluation in
addition to the use of qualitative evaluation for other evaluation purposes.

The three purposes for evaluation can be related to three stages in the
programme life-cycle, the start, middle and finish of the programme.

Evaluation Methods

In addition to evaluation purposes there are evaluation methods. These are

the specific research and related methods which evaluators use in their day-
to-day work. Evaluators will draw on any method that can assist in
answering the questions that are being asked in an evaluation. In the past
these tended to be methods originating from the physical sciences, but now
they also draw extensively on methods developed in the social and
organisational sciences and the humanities.
Evaluation Designs
Evaluation designs are the way in which the evaluation ingredients –
approach, purposes and methods – are put together into the final evaluation
in an attempt to answer a set of evaluation questions. Evaluation design will
indicate the overall evaluation approach, the mix of formative, process and
outcome evaluation it is planned to carry out in the evaluation and the
methods and analysis to be used. If there is to be an outcome evaluation
within the evaluation, the design will specify which of the many types of
outcome design are to be used.