Strategy

The origin of the term Strategy is from a

Greek word Strategos, means The art of General The actual direction of military force. By Alexanders time (330 B.C.), it referred to the skill of employing forces to overcome opposition and to create a unified system of global governance.

Strategy Defined
Alfred D. Chandler (1962): The determination of

the basic long-term goals and objectives of an enterprise and the adoption of the courses of action and the allocation of resources necessary for carrying out these goals.
Igor Ansoff (1965): the common thread among the

organisations activities and product markets. That defines the essential nature of business that the organisation was or planned to be in future- this definition stresses commonality of approach that exists in the diverse organisational activities

 William F. Glueck(1972): A unified ,

comprehensive and integrated plan designed to assure that the basic objectives of the enterprise are achieved. Unified means Plan joins all the parts of enterprise together, Comprehensive means it covers all the major aspects of enterprise, & Integrated means that all parts of the plan are compatible with each other.
Michael Porter (1996): His ideas on competitive

advantage, five-force model, generic strategies and value chain are quite popular. He opines that strategy is core function of general management and strategy is developing and communicating the companys unique position, making trade-offs and forging fit among activities

Criteria for effective strategy

Although each strategic situation is unique, yet one clearly needs some guidelines to define an effective strategic structure. Clear, decisive, attainable objectives Maintaining the initiative- commitment Concentration-Concentrates superior power Flexibility Coordinated and committed leadership Surprise-Use of speed, secrecy, intelligence Security-secure resources required

Develop Vision and Mission Statement

Perform Internal Audit Establish long term objectives Perform External Audit

Generate Evaluate and select the strategies

Strategic Management Model

Implement strategies- management issue

Implement Strategies- Marketing, Finance, R & D, MIS issues

Measure and evaluate the performance

Benefits of Strategic Management

It allows an organisation to be more proactive

than reactive It helps organisation to frame better strategies through the use of a more systematic, logical and rational approach. Through this process managers and employees remain committed to achieve organisational objectives. It represents a framework for improved control of activities.

Financial Benefits
Research indicate that organisation implementing

strategic management concepts are more profitable than those that do not. They show significant improvement in profitability, sales and productivity. These firms can make more informed decisions and can anticipate both long term and short term consequences.

Non financial Benefits

It allows for identification, prioritization and

exploitation of opportunities. It provides an objective view of management problems. It represents a framework for improved coordination and control of activities. It allows major decisions to better support established objectives. It allows fewer resources and less time to be devoted to correcting erroneous or ad hoc decisions It creates framework for internal communication. Basis for classifying individual responsibility. It encourages forward thinking It provides a co-operative, integrated and enthusiastic approach to tackling problems and opportunities.

Corporate Planning
Corporate planning is comprehensive

planning at the corporate level for the company as a whole, which signifies its underlying philosophy, the basic approach and working principles.

Corporate planning process

Mission and objectives

Environmental scanning

Strategy formulation

Strategy implementation

Evaluation and Control

Corporate planning process

Corporate considerations, philosophy and standards Environmental analysis and forecast Identification of strategic opportunities, corporate

threats, strengths and weaknesses Identification of long range objectives Establishing policies, strategies and programs for the given future long-term in continuation of the past and present Reconciliation of short and medium term plans with long term objectives, revision of short and medium term plans to suit the long range corporate objectives

 Establishing sound organisational structure Marketing strategy options and priorities Examination of past, present, and the

projected future and making realistic projection for the future Strategic decision-making, developing alternatives and choosing the best alternative course of action Control of factors and measurement and control of progress as per standards Strategy implementation

Nature
It can be used as guide for corporate actions.

It is continuous, comprehensive, deliberate

involving all elements of the company To be effective should define objectives in short, medium and long run. It integrates functional areas Projection into long range future Vary in form & content from company to company.

Advantages
It enables the company & its corporate body

to gain advanced information about the cos environment in which it will have to operate in future. It enables to gain a systematic approach to the future of the company. Throws light on darker areas of future business Provide proper perspective for future action Ensures participation of all executives Better use of available resources

Disadvantages
Necessitates to collect volumes of information

which is costly Data may not be accurate Real time planning or adaptive planning may not be realistic in long run Rigidity of thought and action limits the scope for future action Subordinates should co-operate. Data cant be subjected to bias

Vision
Vision statement should answer the basic question

what we want to become?It articulates the position that a firm would like to attain. A vision provides a roadmaps, which enable people to see the direction in which the organisation should be heading. It is hazy and vague yet a powerful motivator for action. Well conceived vision consists of two major components : core ideology and envisioned future

Henry Ford visualized an affordable vehicle for the

masses, Walt Disney probably wanted to make people happy.

Characteristics of Vision:
An organizational charter of core values and

principles Ultimate source of our priorities, plans, goals A puller(not pusher) into the future A declaration of independence

Some Vision Statements

Indian oil aims to achieve international

standards of excellence in all aspects of energy and diversified business with focus on customer delight through quality products and services. Core Ideology is consumer delight and quality products Envisioned future is international standards of excellence To be a leading supplier of software products and services in the global marketplace, working within the framework

Mission
Mission statement answers what is our business?

What will it be? And what should it be? Peter Ducker

Mission states the purpose or reason for the existence

of the business and relates it to the need of the society that the business aims to serve. Mission statement gives a unique identification to the organisation than any other organisation working in the similar industry. Mission statement is usually based on the ideology and vision of the organisation.

Characteristics of Mission:
It should be flexible It should be precise

It should be clear
It should be motivating It should be distinctive

It should indicate how objectives are to be achieved

It should indicate major components of strategy

 Pepsi Cos mission is to increase the value of

Mission Statements

shareholders investment. We do this with sales growth, cost control and wise investment of resources. We believe that our commercial success depends upon offering quality and value to our consumer and customers; providing products that are safe, wholesome, economically efficient and environmentally sound and providing a fair return to our investors while adhering to the highest standards of integrity.

Dell computer: delivering the best customer experience in markets we serve . In doing so, Dell will meet customer expectations of highest quality; leading technology; competitive pricing; individual and company accountability; best-inclass service and support; flexible customization capability; superior corporate citizenship; financial stability
Ranbaxy Laboratories: To become researchbased international pharmaceutical company HCL: To be a world class competitor

An evaluation Matrix of Mission Statement

Organis Cust Produ Market Techno Growt Philoso ation ome ct/ser logy h/ phy rs vice Profit ability Concern for public image No Yes

Pepsi Dell

Yes Yes

No Yes

No Yes

No Yes

Yes Yes

Yes No

R.L.
HCL

No

Yes

Yes

Yes

Yes

Yes

No

No

No

No

Yes

Yes

Yes

No

Goals & Objectives:

Goals denote what an organization hopes to accomplish in a future period of time. They represent future state or outcome of the effort put in now. Objectives are the ends that state specifically how the goals shall be achieved. They are concrete & specific in contrast to the goals which are generalized.

Goals
The features of strategic goals of an organization

are: They address both financial and non-financial issues They facilitate reasonable trade-offs They can be reached through stretch
They cut across financial areas

Role of Objectives
Objectives define the organizations relationship

with its environment- to the employees, customers & society at large. Objectives help an organisation to pursue its vision & mission. Objectives provide the basis for strategic decision-making. Objectives provide the standards for performance appraisal.

Characteristics of objectives
Objectives should be Understandable Concrete & specific Related to a time frame Measurable & controllable Challenging Correlate with each other Set within constraint

Objectives
Profit- Return on investment, return on

shareholders capital, net profit on % of sales Marketing- Increase in sales volume, market development for existing products, new product development, reduction in cost, improve customer service Growth- Output, sales turnover,investment. Employees- Industrial relations, welfare & development Social responsibility- Community service, rural development, auxiliary industry development, family welfare

 The following are the objectives identified by General

Electric Co. and integrated into management theory for the first time by Peter Drucker: 1. Market standing 2. Innovation 3. Productivity 4. Physical and Financial Resources 5. Manager performance and development 6. Worker performance and attitude 7. Public responsibility

Levels of Strategy

Corporate Level Strategy

H.Q.

LEVELS OF STRATEGY

Business Level Strategy

BUS. UNIT 1 BUS. UNIT 2 BUS. UNIT 3

Functional Level Strategy

R&D MARKETING SERVICE IT,etc.

Levels of Strategy
Corporate strategy

where to invest adding value by linking units

Business strategy

what we sell to whom competitive advantage

Functional strategies