STRATEGIC MANAGEMENT –IMPLEMENTATION SESSION II

Hierarchy of Strategy
Five components of Strategy namely Scope, Goals & objectives, Resource Deployment,
Creating competitive Advantage & Synergy gives us a complete framework of strategy
formulation, however based on its objective, Implementation is done at three levels in Business
•Corporate Strategy
•Business Level Strategy
•Functional Strategy- covering aspects like Manufacturing, Marketing , Technology,
New Products/ Innovations Important Roles performed at each levels are tabulated below-

Strategy Components Corporate Strategy Business Strategy Functional Strategy

(Marketing Strategy)
Scope •Corporate domain- •Business domain- which •Target market
Which businesses should product market we be in definition
we be in? within the & industry •Product line depth &
•Corporate development •Business development breadth
strategy strategy- concentric •Branding policies
diversification (new •Product market
Conglomerate
products for existing
diversification (expansion development plan
customers or new
into unrelated businesses) •Line ext & product
customers for existing
vertical integration, elimination plan 1
products)
Acquisition/ divest
policies
Goals & •Overall corporate objectives
Objectives aggregated across businesses
•Revenue growth
•Profitability
•ROI
•Earnings per share
•Contributions to other
stakeholders
Allocation of •Allocation among businesses in
resources the corporate portfolio
•Allocation across functions
shared by multiple businesses
(corporate R&D, MIS)
Sources of •Primarily thru’ financial or
competitive human resource; more R&D
advantage better organisational processes or
synergies related to competitors
across all industries where the
firms operates
•Constrained by corporate
goals
•Objectives aggregated
across product market
entries in business unit
•Sales Growth
•Profitability
•ROI
•Cash flow
•Strengthening basis of
competitive advantage
•Allocation among
product market entries in
the business unit
•Allocation across
functional departments
within the business unit)
•Primarily thru’
competitive strategy
business units
competencies relative to
competitors in its industry
•Constrained by corporate &
business goals
•Objectives for specific
product-market
•Sales
•Market share
•Contribution margin
•Customer satisfaction
•Allocation across
components of the
marketing plans( elements
of the marketing mix)for a
specific product-market
•Primarily thru’ product
positioning superiority on
one or more components of
the marketing mix relative
to competitors within a
specific product- market 2
Sources of •Shared resources •Shared resources (including •Shared marketing
synergy technologies or functional favorable customer image ) or resources, competencies
competencies across functional competencies across or activities across
businesses within the firm product markets within an produce market entries
industry
Strategy- Operative steps
Environmental STRA TEGY FOR MU LATION STRA TEGY EVALUAT-
scanning IM PLEMEN TATION ION &
CONTROL
EXTERNAL Vision &
POLITICAL, Mission Objectives
ECONOMICAL Reason & Goals Strategies
ENVIRONMENT for Plan to Policies
existence achieve the
General forces What Broad Programs
results to mission & guidelines Activities Budgets
TASK objective
ENVIRONMENT accomplish for decision needed to Cost of the Procedure
by when making accomplish a
Industry analysis programs Sequence Performance
plan of steps
INTERNAL Actual results
STRUCTURE needed to
do the job
Chain of command
SWOT

FEED BACK & CORRECTION

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STEPS TOWARDS FORMULATING THE STRATEGY
VISION
It defines the very purpose of existence of a Co in terms of Corporate Philosophy, Scope of
Business, Competitive Status & Positioning in Industry & provides a framework of
relationships between share holders, customers, employees, suppliers, competitors & other
forces which influence the working of the Co
•It sets out the business philosophy at macro level & comes from the CEO of the Co
MISSION
•Defines the scope of Co’s Operations in terms of Product /Services, Market Positioning,
Deployment of Sources & Growth Plans
•Whereas the mission emphasizes as to what the organization is & where it is going, Vision
emphasis is on what the organization would like to become as a Corporate objective
•Many times the terms are used interchangeably & sometimes together
•Combined together it tells- Who We Are, What We Do & What We Would Like to
Become?( as a long term plan)
Examples -
Vision of Canara Bank-
Our vision is to emerge as the Best Bank in customer service, profitability, productivity &
innovations. It is something where each one of us can contribute irrespective of our placements
functionally, geographically & hierarchically. Let us pursue our vision assiduously,
BHEL Vision 2001
Vision
A world- class innovative competitive & profitable engineering enterprise providing total
business solutions mission
To be the leading engineering enterprise providing quality products, system & services in the
fields of energy, transportation, industry infrastructure & other potential areas
Values
•Meeting commitment made to external & internal customers
•Faster learning, creativity & speed of response
•Respect for dignity & potential for individuals
•Loyalty & pride in the in the Co
•Team playing
•Zeal to excess
•Integrity & fairness in all matters
OBJECTIVES & GOALS
•They are quantification of vision & mission & state what is to be achieved by when ?
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•Goals are more specific than the objectives & both are used interchangeably or in a combined
manner, but manifest the targets which the business has to achieve in a measurable manner
Areas for setting objective & goals in business are-
•Revenue & Profitability growth
•Productivity & Technology improvement (up gradation, innovation, training & development)
•Shareholders wealth
•Utilization of Resources- ROI, capacity utilization etc
•Market Share- Brand image
STRATEGIES
It is the comprehensive Master Plan worked out to achieve objective
It is built on SWOT analysis- maximizing competitive advantages & minimizing risks/
disadvantages
Strategies are made at three levels namely corporate, Business/ Divisional/ Product, Functional
Concept would be discussed in the class by taking live examples of Crompton Greaves Ltd,
Bajaj Auto Ltd & Hero Honda
POLICIES
•It is a broad guideline for taking uniform decisions in similar situations all across the Co like
Sales Policy, Service Policy (warranties etc, employee promotions, compensation Policy etc )
•Policies also lay down authorities at different level for smooth functioning of the Organization
Steps towards Strategy Implementation
This is done thru’ development of Programs, Budgets, Procedures.
Programs-
•Programs are series of activities or steps for achieving the desired goals
•It may involve restructuring, changing the culture, weeding out old products & adding new
products
Budgets-
•A budget is a statement of business programs expressed in monitory terms & is used both for
planning as well as control of detailed cost of each program activity
•Budgets are drawn for each functional activity like sales, production, engineering & technology,
R&D etc & are used for planning the resources as well as performance of each function & Co as
a whole
Procedures
•Also called Standard Operating Procedures also called SOP & lay down steps/ techniques as to
how a particular task or job has to be done. It helps to standardize / systematize how the activities
are performed in the same manner for the same job
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Evaluation & Control
•It is the process to monitor the actual performance vis a vis desired / budgeted performance so
that managers can take steps to correct the deviation
•The technique is also used to pin point weaknesses & strengthen the planning system
Performance
•It is the end result of strategic management cycle it helps the management to continuously
improve the organizations performance in important areas like return on investment,
improvement in productivity, growth in sales & addition of new processes / products
•It also helps the management to move towards the path of improving efficiency in all
operational areas
Feedback/ Learning Process
One of the main focus of the strategic management is to improve performance thru continuous
process of feed back / correction/ learning which is transmitted back to each of the steps for
correction & control