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STRATEGIC MANAGEMENT
FLOW CHART DOCUMENT SRIVINIVASA COACHING CENTRE CA COACHING CENTRE BANGALORE

WRITTEN, DRAWN & DESIGNED BY VENKATA NAGENDRA BABU.G M.Com, B.Com & CA PE-II FACULTY OF SRINIVAS COACHING CENTRE

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OM SRIRAM

THE VISION OF PROVIDING EDUCATION TO ALL HUMAN BEINGS FOR KNOWLEDGE


I would like to take active part in VISION 2020, I have selected teaching profession. I hope all the students who refer to this file with support in achieving my vision. I would like thank my parents, teachers & friends who supported me .I would like dedicate this document on Strategic Management to all my beloved Professors of Sree Krishnadevaraya University Prof. K.V.RAMANA REDDY (HOD, Dept. of Commerce) Prof.APPA RAO. Prof. C.R.REDDY Prof.P.B.PANISHWARA RAJU( Dean, BOS of Commerce & Management) Prof.P.SUBBA RAO Prof.A.V.RAMANA Prof.D.ANJEENEYULU Prof.C.S.RAIDU Special Thanks to C.A. VENKATA SAVI KUMAR.V

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AUTHOR

VENKATA NAGENDRA BABU.G


M.Com, B.Com & CA PE-II M.Com GOLD MEDLIST (2005- 07) SREE KRISHNADEVARAYA UNIVERSITY ANANTAPUR, A.P, INDIA FACULTY OF SREENIVAS COACHING CENTRE BANGALORE FINANCIAL RESEARCH ANALYST INVESTMENT ADVISORY DEPARTMENT THMSON REUTERS BANGALORE

Photo taken at Sree Krishnadevaraya University library

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BUSINESS ENVIRONMENT

Business Environment

Business

Environment

Definition

Objectives

Meaning

Characteristics

Influences

Survival Growth or Expansion

Efficiency Profitability

Complex Dynamic

Multi Faced Far-reaching impact

Pervasive

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BUSINESS ENVIRONMENT

Environmental Analysis

Meaning

Goals

Need

Problem in understanding

Understanding the changes Collection of inputs Facilitating strategic thinking

Decision making Evaluating present strategy Formulating future strategy Setting strategic Objectives To grow

Uncertainty Complex Diversity

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BUSINESS ENVIRONMENT

Business Environment

Micro components

Macro components

Organization Suppliers Intermediaries Customers Market Competitors

Demographic Environment Economic environment Political legal environment Socio-cultural environment Technological environment Global environment

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BUSINESS ENVIRONMENT

Demographic Environment

Age Income

Education Sex Ratio

Employment Status Living standard

Wage structure Growth rate

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BUSINESS ENVIRONMENT

Economic environment

Economic structure Capitalistic Socialistic Mixed economy

Business Cycle Boom Recession Depression Recovery

Economic Policies Industrial Monetary Fiscal Policies (taxes)

Economic Planning 5 years Plan 10 Years Plan Annual Govt Budget

Economic Indexes GNP GDP Industrial Growth rate Percapita income Balance of payment

Infrastructural Factors Financial Institutions Banks Transportation Communication

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BUSINESS ENVIRONMENT

Political & Legal Environment

Political System Democracy Monocratic

Legal Structure Law & Order Effiency of Govt agencies Judiciary Implementation of law

Political Structure Political Process Legislatures

Government intervention Govt. Policies towards business

Political Goal

Stability of the Govt

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BUSINESS ENVIRONMENT
Socio-Cultural Environment

Human Relationship Beliefs Social Attitude Values Cultural Values Norms Ethics in societies & monarities Education

Technological Environment

Education Technology needs. R&D needs Communications Cost Reduction Quality Productivity

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BUSINESS ENVIRONMENT
Global Environment

Globalization Global Economic Forces International


Trade & Commence

Geo Political Nations


Strategic interest nations

Global financial System

Global Markets

Global Legal System

SARC NATO G8

Strategic Response to Environment

Approach of least residence

Approach of Caution

Dynamic Approach

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BUSINESS POLICIES AND STRATEGIC MANAGEMENT

Levels of Strategies

Corporate Level Strategy

Business Level Strategy

Functional Level Strategy

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Generic Strategic Alternatives

Stability Strategy

Expansion Strategy

Retrenchment Strategy

Combine Strategy

Maintenance of Status Quo

Sustainable growth strategy

Intensive Growth Strategy

Diversification Strategy

Takeover Mergers

Joint-ventures

Horizontal Diversification

Vertical Diversification

Concentric Diversification

Conglometric diversification

Backward integration

Forward integration

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BUSINESS POLICIES AND STRATEGIC MANAGEMENT


R

Turnaround Strategy Spin-off

Divestment

Liquidation

Process of Strategic Management Function/Tasks of Strategic Management

Step 1 Identifying/ Defining Business Mission Purpose & Objectives

Step 2

Step 3 Revise Organizatio nal Direction

Step 4

Step 5

Step 6

Environme ntal Analysis

Alternative Strategic Choice

Strategy Implementa tion

Strategic Evaluation & Control

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BUSINESS POLICIES AND STRATEGIC MANAGEMENT

Strategic Decision Making

Top Management involment Allocation of resources Impact on Long term Prosperity of the firm Future Oriented Multifunctional & Multi-Business Consideration of external Environmental factors

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OrganisatiOn analysis
TOWS Matrix
Organizational Strengths 1 2 List strengths 3 4 SO Strategies 1 Use the strengths to 2 take the advantage of opportunities 3 4 ST Strategies 1 Use the strengths to 2 avoid threats 3 4 Organizational Weakness 1 2 List Weakness 3 4 WO Strategies 1 Over come the weakness by 2 taking the advantage of opportunities 3 4 WT Strategies 1 Minimize the 2 Weaknesses and and avoid threats 3 4

Always leave Blank

Environmental opportunities 1 2 List Opportunities 3 4 Environmental Threats 1 2 List Threats 3 4

ORGANISATION ANALYSIS

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SWOT ANALYSIS
The concept of SWOT Analysis is described in matrix form, S=Strengths, W=Weakness, O=Opportunities, and Threats

Potential Internal Strengths


1 2 3 4 5 6 7 8 9 10 Core Competencies in key areas Adequate financial resources Well thought of by buyers An acknowledge market leader Proprietary technology Cost advantages Product innovation skills Better advertising campaigns Better manufacturing capability Others 1 2 3 4 5 6 7 8 9 10

Potential Internal Weakness


No clear strategic direction Obsolete facilities Lack of managerial depth and talent Missing some key skills or competences Poor track record in implementing strategy Falling behind in R & D Weak market image Weak distribution network Lack of financial resources Others

Potential External Opportunities


1 Serve addition customer groups 2 Enter new markets or segments d 3 Expand product line to meet broader range of customer needs 4 Diversify into related products 5 Vertical integration forward or backward 6 Falling trade barriers in attractive foreign markets 7 Complacency among rival firms 8 Faster market growth 9 Others 1 2 3 4 5 6 7 8

Potential External Threats


Entry of lower-cost foreign competition Rising sales of substitute products Slower market growth Adverse shifts in foreign exchange rate and trade policies of foreign governments Vulnerability to recession and business cycle Changing buyer needs and tastes Adverse demographic changes Others ORGANISATION ANALYSIS

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BCG Matrix
Relative Competition position (Market Share) High Low

Business Growth Rate

High

Stars

Questions Marks

Low

Cash Cows

Dogs

ORGANISATION ANALYSIS

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Ansoffs Matrix
Existing products
Existing Markets

New Products

Market Penetration

Product Development

New Markets

Market Development

Diversification

ORGANISATION ANALYSIS

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GE-NINE-CELL MATRIX

Industry Attractiveness

LOW

MEDIUM

HIGH

STRONG

AVERAGE

WEAK

Business Strength/Competitive Position

ORGANISATION ANALYSIS

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Product Life Cycle Matrix


R AR HA

Dominant

S VE VE T

Business Strength

Strong

HOLD

Favoured

Tenable

BU ILD

Unacceptable ROI

Weak

Embryonic

Growth

Mature

Decline

Embryonic = Introduction

Product life cycle

ORGANISATION ANALYSIS

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Mc Kinsey's 7-S Framework


Structure

Strategy

Systems

Supper ordinate Goals

Skills

Style

Staff

STRATEGIC ANALYSIS

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What are the strategic level and Who are persons at different levels of a Corporate
Corporate Level Board of Directors

Business Level

Division A

Division B

Division C

Head of the Department A

Head of the Department B

Head of the Department A

Bitmap Head of the Department B

Functional Level

Head of the Department A

Bitmap Head of the Department B

STRATEGIC ANALYSIS

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The analytical sequence of strategic analysis is as follows

Strategic Appraisal of Firm's external and internal situation

Evaluation of Alternatives

Choice of strategy

STRATEGIC ANALYSIS

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BLANCING OF INTERNAL PONENTIALS & ENVIRONMENTAL OPPORTUNITIES

INTERNAL POTENTIAL

ENVIRONMENTAL OPPORTUNITIES

STRATEGIC ANALYSIS

STRATEGIC ANALYSIS

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RISK ANALYSIS
Short Term Long Term

External

Strategic Risk

Errors in interpreting the environment cause strategic failure

Changes in the environment lead to obsolescence of strategy

Organizational capacity is unable to cope to cope up with strategic demands

Inconsistencies with the strategy are developed on account of changes in internal capacities and preferences

Internal

STRATEGIC ANALYSIS

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What is situational analysis

SA SA SA SA SA

Product analysis Competitive situation Distribution situation Environmental Factors Opportunity and issue analysis

STRATEGIC ANALYSIS

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Thinking strategically about a company's external environmental Thinking strategically about a company's internal environmental

Form a strategic vision of Where the company need to head

Identify promising strategic tion the company

Select the best strategy and business model for the company

STRATEGIC ANALYSIS

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Five-Forces Model of Competition

FIRM IN OTHER INDUSTIES OFFERING SUBSTITUTE PRODUCTS

SUPPLIERS OF KEY INPUTS

RIVALRY AMONG COMPETING SELLERS

PUCHASING POWER OF BUYERS

POTENTIAL NEW ENTRANTS STRATEGIC ANALYSIS

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FUNCTIONAL STRATEGIES

Functional Strategies

Marketing Strategies Finance strategies

Production Strategies Research & Development Strategies

Human Resource Strategies Information Management Strategy

Logistics Strategies

FUNCTIONAL STRATAGIES

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FINANCIAL DECESIONS

Source of Funds

Working Capital Budgeting

Cash Level

Cost of Capital Financial Decision Dividend Policies

Treasury Management

International Sources of Funds

Capital Budgeting Debtors Management

Creditors Management

FUNCTIONAL STRATAGIES

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Logistics Strategies Questions to be answered effective Logistic Strategy

Which source of Raw materials and components are available?

How may manufacturing locations are there?

What modes of transportation should be used for various products?

What is the nature of distribution facilities?

What is the nature of materials handling equipment possessed? Is it idea?

What is the method for deploying inventory in the logistics network?

Should the business organization own the transport vehicles?

FUNCTIONAL STRATAGIES

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Research & Development Strategy

R&D Policies enhance strategy R&D Emphasize product or Process improvements R&D Stress basic or applied research R&D Be leaders or followers in R&D R&D

FUNCTIONAL STRATAGIES

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STRATEGIC IMPLEMENTATION

STRATEGIC IMPLEMENTATION
Some of the important statement for this captor are as follows
Implementation means "TRANSLATING DECESION INTO ACTION" CHANGE WILL COME FROM IMPLEMENTATION BUT NOT BY PALN

The Pyramid of Strategy Implementation

Strategies Plans Progammes Projects Budgets

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STRATEGIC IMPLEMENTATION

What are issues in Strategic Implementation

What are issues in Strategic Implementation

Project Implementation

Behavioral Implementation

Procedural Implementation Resource Allocation Functional and Operational Implementation

Structural Implementation

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STRATEGIC IMPLEMENTATION

What is the inter-relationship between strategy formulation and implementation

SOUND FLAWED

STRATEGY FORMULATION

A C
EXCELLENT

B D
WEAK

SOUND

Strategic Implementation

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STRATEGIC IMPLEMENTATION

OrganizatiOnal Structure
Functional Structure
CEO

Public Relation

Legal

Finance

Marketing

Personnel

Production

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STRATEGIC IMPLEMENTATION Finance

Divisional Structure
CEO

Corporate finance

Corporate legal/PR General Manager

General Manager

Marketing

Marketing

Operations

Operations

Personnel

Personnel

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STRATEGIC IMPLEMENTATION

Strategic Business Unit


Personnel CEO

Head SBU 1 Personnel

Head SBU 2

Head SBU 3

Division

Division

Division

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STRATEGIC IMPLEMENTATION

Matrix Structure

CEO Marketing

Marketing

Finance

Marketing

Personnel

Production

Project Manager A

Marketing FUNCTIONAL SPECIALISTS

Project Manager B

Project Manager C

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STRATEGIC IMPLEMENTATION

Network Structure

Project Group M Region A Function X

CORPORATE HEADQUARTER

Region B Project Group N

Function Y

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Case Study
Almost all business schools across the globe use the case method as the prime tecahing technique for the course on business policy management. Student of strategic management practice business policy and strategic management case analysis. What is case? A case is a description of management problem or situation as viewed or presented to a decision maker. It is a pedagogical tool which involves a discussion centered around the case. It sets a situation with all the ancillary facts, figures, emotions, opinions, views grapevine and the like. Need for case method in management practices Prof. Charles Gragg observed that managerial skill and expertise can not be acquired through mere listening to lectures and reading books. He suggested that readymade answers about the practice of management cannot be found in text books. This is because of the fact that each managerial situation is different from others with unique aspects, requiring its own diagnosis and judgment. Cases provide the tomorrows managers with a valuable way to practice wresting with the actual problems of actual managers in actual companies. Most of the management students have no or limited knowledge about the practical aspects of management. Cases brined this gap to some extent and help the students to substitute for practical knowledge by Giving broader exposure to different types of situations, companies and industries Placing the students in different roles of case Providing an opportunity to apply principles ,concepts and techniques of management to problem situations Including the students to prepare managerial action plans and to deal with related issues.

Objectives of Case Analysis: The objectives of the case analysis are: To increase the understanding of the students of what managers hold and should not do in guiding a business to success To build the student skills in conducting strategic analysis in a variety of situations, companies and industries. To provide the student valuable practice in diagnosing strategic issues, evaluating strategic alternatives with the help of SWOT analysis and formulating practicable plans of action based on the ground realities To enhance the students sense of business judgment as opposed to accepting the opinion of the teacher or back of the book answers

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To provided the student an in-depth exposure to a variety of companies and industries, thereby gaining something close to actual business experience.

How to analyze a Case? The student can follow the approach discussed below Read the case material quickly to get familiarity Read the case a second time for full command of the facts, information, opinions, views, company values etc. Read the exhibits, appendices etc. carefully Study the case ( Student should be very clear on the words read and study ) Identify the strategic issues Diagnose the key issues Check the diagnosis Support diagnosis and opinions with reasons and evidence Checkout conflicting opinions and make some judgment about the validity of the data and information provided Start analysis of the issues Identify and make notes of data and information required to solve the problem diagnosed Compare the data and information available in the case with the data required to offer recommendations Fill-in the gaps Re-check the diagnosis Use tools and techniques of strategic analysis Analyze the case Generate alternative solutions Evaluate the alternative solutions Rank of solutions Select the best solution Prepare an action plan Communicate the results to parties concerned.

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Contact SRINIVAS COACHING CENTRE 080-23469376 VENKATA NAGENDRA BABU.G e mail: babu_gvnagendra@yahoo.co.in Mobile .+91-9008893322 Feedback e mail: babu_gvnagendra@yahoo.co.in Subject Feedback SM

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