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BP & SMUnit 1

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BP & SM skills Identification of core problems or issues in business

situation or case or incidents. Wide ranging assessments of internal environments Wide ranging appraisal of external environments. Analysis of strategic alternatives appropriate to a variety

of situations Formulation and selection of specific courses of action Focused application of analytical skills from functional

areas of mgt. Case analysis, presentation and judgement Decision making, implementation and evaluation.

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N ature It is a central understanding of the SM process. It is the determination of basic long term goals

and objectives of organization.

Determining the courses of action. Allocating the necessary resources for implementing the course of action.

Developing the company from its presentposition to future position.

Common thread pulls the policies, plans, goals,objectives etc.

Set a clear direction.

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Benefits of SM Helps organization to be proactive rather than

reactive Initiate and influence its environments Make effective strategy Commitments Decentralization Boost profits Order & discipline Minimize the effects of adverse conditions and

changes

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Phases of SM

Basic financial planning- one year Forecast based planning- 5 year Strategic planning- changing mkt and

competition SM- complete strategic plan.

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Phase I

Managers initiate serious planning whenthey are requested to propose next years

budget. Projects are proposed on thebasis of very little analysis, with mostinformation coming from within the firm.

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Phase II

As annual budgets become less useful atstimulating long-term planning, managers

attempt to propose 5 year plans. Inaddition to internal information, managersgather other available environmental data.

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Phase III

Top mgt takes control of the planningprocess by initiating SM. The companyseeks to increase its responsiveness tochanging markets and competition bythinking strategically.

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Phase IV

Integration of a series of strategic plansaimed at achieving the companys primaryobjectives. Strategic plans now detail theimplementation, evaluation, and controlissues.

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E lements of the concepts of SM

The environment scanning The firm- formulation of strategy Strategy implementation

E valuation and control with time.

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E nvironment scanningE xternal- 1. societal environment- socio culture,economic, technological and political-legal

2. Task environment (industry)- shareholders,suppliers, employees/labor Unions, competitors,trade associations, communities, creditors,customers, special interest groups, government.

3. Internal environment- structure, culture andresources. Structure (ie chain of command),culture ( beliefs, expectation and values),resources ( assets, skills, competencies,knowledge)

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E nvironment scanning

It is the monitoring, evaluating, anddisseminating of information from theexternal and internal environments to keypeople within the corporation. It is basedon SWOT analysis.

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Strategy formulation

Strategy formulation is the development of long range plans for the effectivemanagement of environmentalopportunities and threats, in light of corporate strengths and weakness. Itincludes mission, objectives, strategiesand policies.

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Mission

An organizations mission is the purposeor reason for the organizations existence.It tells what the company is providing tosociety, either a service like housecleaningor a product like automobiles.E g O NG C mission- to be a world class oil

and gas company integrated in energybusiness with dominant indian leadershipand global presence.

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Objectives

Objectives are the end results of plannedactivity. They state what is to beaccomplished by when and should bequantified if possible. The achievement of corporate objectives should result in thefulfillment of a corporates mission. E gDeere and Company, the worlds largestmaker of farm equipment, uses the phrasedouble and double again to express theobjective of the company.

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G oal

It is an open ended statement of what onewants to accomplish with no quantificationof what is to be achieved and no timecriteria for completion. E g increasedprofitability is goal but increase profits 10%over last year is objective.

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Strategy

A strategy of a corporations forms acomprehensive master plan stating howthe corporation will achieve its mission andobjectives. It maximizes competitiveadvantages and minimizes competitivedisadvantages.

Hierarchy of strategy- corporate, businessand functional.

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Policies

A policy is a broad guideline for decisionmaking that links the formulation of strategy with its implementation. Companyuse policies to make sure that employeesthroughout the firm make decisions andtake actions that support the corporationsmission, objectives and strategies. E g Intelpolicy is cannibalize the product line withbetter products before a competitors doesit to you.

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Strategy Implementation

Strategy implementation is the process bywhich strategies and policies are put intoactions through the development of programs, budgets, and procedures. Thisprocess might involve changes within theoverall culture, structure, and/or

management system of the entireorganization.

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Strategy Implementation

Program- a program is a statement of theactivities or steps needed to accomplish asingle-use plan. It makes the strategyaction oriented. E g Intel make programwith HP for Microprocessor business.

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Strategy Implementation

Budgets- a budget is a statement of acorporations program in terms of money.

Procedures- Procedures also known asSOP ( standard operating procedures) area system of sequential steps or techniquesthat describe in detail how a particular taskor job is to be done.

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The end

Thank you