Reaching Strategic Edge

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88 SREERAM ACADEMY (FORMERLY SREERAM COACHING POINT) REACHING STRATEGIC EDGE Business Process Reengineering (BPR) A process is a set of logically related tasks or activities oriented towards achieving a specified outcome “A process is a collection of activities which creates an output of value to the customer and often transcends departmental or functional boundaries, and also includes all other related activities in between. It also includes developing a new product or service, launching a new product in the market, procuring goods from suppliers, preparing the organization’s budget, processing and paying insurance- claims and so on. A business process comprises a combination of number of such independent or interdependent processes as: 1. Developing a new product 2. Customer order processing 3. Bill payment system This process involves a number of steps performed by different people in different departments. It is desired to achieve higher levels of efficiency and effectiveness, economy and speed, and quality and output in the processes. A business is a set of interconnected processes. The redesigning of process may provide powerful basis for improving the performance of a business enterprise. Some processes turn out to be extremely critical for the success and survival of the enterprise. BPR focuses on critical business processes out of the many processes which take place. All processes may not be crucial; only some processes are crucial to the company. A core business process creates value by the capabilities it provides to the competitiveness. Core business processes play an important role to satisfy the needs of the customers. They are vital for success and are crucial for generating competitive advantage. While some core business processes are easily identifiable, some core business processes may not always be immediately apparent. The core processes of a company may change over a period of time according to the shifting requirements of its competitiveness and internal and external environment. Hence the company has to focus on those processes which need to be focused on achieving the excellence.

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Reaching Strategic Edge

Transcript of Reaching Strategic Edge

  • 88 SREERAM ACADEMY (FORMERLY SREERAM COACHING POINT)

    REACHING STRATEGIC EDGE

    Business Process Reengineering (BPR) A process is a set of logically related tasks or activities oriented towards achieving a specified outcome

    A process is a collection of activities which creates an output of value to the customer and often

    transcends departmental or functional boundaries, and also includes all other related activities in

    between.

    It also includes developing a new product or service, launching a new product in the market, procuring

    goods from suppliers, preparing the organizations budget, processing and paying insurance- claims

    and so on.

    A business process comprises a combination of number of such independent or interdependent

    processes as:

    1. Developing a new product

    2. Customer order processing

    3. Bill payment system

    This process involves a number of steps performed by different people in different departments. It is

    desired to achieve higher levels of efficiency and effectiveness, economy and speed, and quality and

    output in the processes.

    A business is a set of interconnected processes. The redesigning of process may provide powerful basis

    for improving the performance of a business enterprise.

    Some processes turn out to be extremely critical for the success and survival of the enterprise. BPR

    focuses on critical business processes out of the many processes which take place.

    All processes may not be crucial; only some processes are crucial to the company.

    A core business process creates value by the capabilities it provides to the competitiveness.

    Core business processes play an important role to satisfy the needs of the customers. They are vital for

    success and are crucial for generating competitive advantage.

    While some core business processes are easily identifiable, some core business processes may not

    always be immediately apparent.

    The core processes of a company may change over a period of time according to the shifting

    requirements of its competitiveness and internal and external environment. Hence the company has

    to focus on those processes which need to be focused on achieving the excellence.

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    BPR is a fundamental rethinking of the business activities making changes in all the functional areas

    and non- functional areas in order to make optimum utilization of the available resources.

    The organization should re structure the process keeping in mind the overall organization goal rather

    the department goal.

    Nowadays with available technology, the organization can incorporate the required changes to

    improve the business.

    Business process reengineering means staring all over, starting from the scratch. Reengineering, in

    other words, means pulling aside much of the age- old practices and procedures of doing a thing by

    forgetting how work has been done so far, and deciding how it can be best done now.

    Reengineering begins with fundamental re- thinking. The organizations try to find out answers to such

    questions like why do we do what we do? and why do we do it the way we do?

    Reengineering does not begin with anything given or with any assumptions. The thinking process in

    reengineering begins with a totally free state of mind without having any preconceived notion.

    Reengineering first determines what a company must do. And then it decides on how to do it.

    Reengineering ignores what the existing process is and concentrates on what it should be.

    Another key element in the reengineering involves radical redesigning of process.

    Radical redesigning means going to the root of the problem areas, not merely attempting to make any

    superficial changes. Radical redesign involves completely discarding all existing structures and

    procedures and evolving completely new ways of doing the work.

    Reengineering is about business reinvention- not business improvement, business enhancement or

    business modification.

    The steps of BPR are:-

    1. Determining objectives and framework- It helps in building comprehensive foundation for the

    reengineering process. This will provide the required focus, direction, motivation, etc for the redesign

    process.

    2. Identify customers and determine their needs- The designers have to understand the customers

    needs and wants, their profits, their steps in acquiring, using and disposing a product and the purpose

    is to provide added value to the customer.

    3. Study the existing process- This will provide an important base for the redesigners. The purpose of this

    is to understand the what and why of the targeted process.

    4. Formulate and redesign a process plan- The information gained through the earlier steps is translated

    into an ideal redesign process. In this step, alternative processes are considered and the best is

    selected.

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    5. Implement the redesign- It is easy to formulate new process but to implement them is hard.

    Implementation of the redesign process and application of other knowledge gained from the previous

    step is to achieve dramatic improvement.

    Problems in BPR

    1. Only a few companies are able to go for a major and radical improvement in the business process.

    2. This restructuring may impose new challenges

    3. It disturbs established hierarchies and functional structures and involves resistance among the work-

    force.

    4. Reengineering takes time and expenditure

    5. Even there can be loss in revenue during the transition period.

    6. Setting of targets is complicated and difficult.

    7. If the targets are not properly set, or the whole transformation not properly carried out, reengineering

    efforts may turn out as a failure.

    Total Quality Management (TQM)

    TQM is seen as the most comprehensive approach to quality thinkable for an enterprise.

    The pillars of TQM are:-

    T stands for Total- It is the integration of staff, suppliers, customers and other stakeholders. It is away from

    party- specific thinking to a more holistic approach.

    Q stands for Quality- it is the quality if the work and the process of the enterprise leading to quality of

    products.

    M stands for Management- It stresses on the leadership task quality and quality of leadership form a

    scientific point of view TQM can be a seen as a leadership.

    Success of an organization is greatly influenced by and depends on the quality of its products marketed and

    services offered. In addition, the reputation of the organization is determined by the behavioral disposition of

    the people. The quality of products and services depends on the methodology and technology adopted, as well

    as on the work culture of the organization. Quality is the essential requirement for survival and growth. The

    importance of quality has commanded the strategic apex of the company to concentrate on quality and this

    led to the development of the new aspect of management. The philosophy of TQM means that the

    organizations culture is defined by and supports the constant attainment of satisfaction through an integrated

    system of tools, techniques and training. This involves the continuous improvement of processes, resulting in

    high quality products and services. As popularized by Deming and Later Juran, TQMs premises center on

    intrinsic quality control, removal of adversarial relationships, constancy of purpose, continual in- service

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    training, and attention to customer preferences. It holds that changes is inevitable, desirable and welcome and

    that it must be planned for with participation by the greatest number of constituencies.

    Benchmarking

    Benchmarking is basically a process of determining who the best, which sets the standard is and what that

    standard is.

    It is an exercise of identifying the best practices in the industry and to emulate them.

    The practice of benchmarking enables an organization to accelerate an organizations rate of

    improvement.

    Benchmarking promotes a thorough understanding of companys own processes. Thus, the companys

    own profile is well understood.

    The thorough study leads to identification of non- value adding activities

    Benchmarking, thus, is a part of larger profit effort usually a process of reengineering or quality

    improvement initiative.

    Types of Benchmarking: Benchmarking is essentially looking around and learning from others. Based

    on the objects to be benchmarked, four categories of bench marking are in practice, which are:

    1. Product Benchmarking - Customer satisfaction benchmarking or customer value Benchmarking

    are the alternatives names of product benchmarking. Engineering and qualitative comparison of

    products and services comes within the purview of this benchmarking.

    2. Performance Benchmarking One organization benchmarks the performance measures of other

    organizations. Performance measures may include return on assets, cycle time, percentage of on

    time delivery ,percentage of damaged goods, fraction defectives, mean time between failures

    (MTBF), time spent on administrative activities and the like. Thus, this is a process of intercompany

    comparison done through a set financial ratio, performance indicators where scope for

    improvement is high enough. National productivity council has recently prompted.

    3. Process Benchmarking- In process benchmarking, the phrases like know where, know how,

    know why, are found of paramount importance. In addition to knowing where a company is, we

    are also able to know, how and why it has reached that stage. Process benchmarking helps us

    to open our eyes and provides us with a more effective and efficient process to be implemented.

    This type of benchmarking contains all the elements of ideal benchmarking process. E.g. analysis,

    comparison and synthesis. National productivity council proposed a model process benchmarking

    methodology to be carried out by a team of process experts.

    The following are the steps:

    1. Identify the object or process to be redesigned

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    2. Map and measure the existing process in its entirety in terms of relevant critical dimensions.

    3. Identify the partner where the same process is known to be better performed.

    4. Analyze the partners process and find out the differences. This often requires collection of

    checklist/ questionnaire and / or physical visit to the partners side.

    5. Redesign the process and put up the proposal for management approval.

    6. Implement the redesigned process

    7. Monitor the performance of the redesigned process

    8. Recalibrate the process.

    4. Strategic Benchmarking - This benchmarking refers to the ability to see where one company wants

    to go. In case of strategic benchmarking, strategy is both forward looking (proactive PDCA), as

    well as side looking (Interactive). Indian firms started pursuing strategic benchmarking since 1990s.

    Based on the organization being benchmarked, there can be as many as five methodologies.

    1. Internal benchmarking: organization can benchmark within itself. One department can

    benchmark some other department. If there is collaboration, then benchmarking can be

    among organization collaborated.

    2. Industry benchmarking: Performances of other organizations, within the industry, producing

    the products or services of same nature are compared.

    3. Competitive benchmarking: Performances of competitors are directly compared.

    4. Best in class benchmarking: Implies comparison of best practices prevalent in an organization

    irrespective of products and services.

    5. Relationship benchmarking: Simply benchmarking an organization with another organization,

    already having relationship like customer supplier relationship, or joint venture

    management.

    Six- Sigma

    Sigma is a statistical term that measures how far a given process deviates from perfection. Six sigma stands for

    Six Standard Deviations (Sigma is the Greek letter used to represent standard deviation in statistics) from

    mean. Six sigma methodologies provide the techniques and tools to improve the capability and reduce the

    defects in any process. Six sigma is the methodology that improves the capability and reduces the defects in

    any continuous improvement and radical design. It is a statistical tool used for problem solving which reduces

    the defects by streamlining processes.

    Six Sigma was started in Motorola, in its manufacturing division, where millions of parts are made using the

    same proceeds repeatedly. Eventually, Six Sigma evolved and applied to other non- manufacturing processes.

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    Today, Six Sigma is applied to many fields such as Services, Medical and Insurance Procedures, call centers, etc.

    following Motorola, General Electrics, allied Signal, Honey Well, Ford, Etc also followed suit and realized

    powerful bottom line results in their organization.

    Higher the Sigma level, better the capability of the process to produce defect free work and vice versa.

    The process model for Six Sigma

    To achieve better results through involvement of all the people in continuous improvement of their processes,

    it is required to apply process model to a business. In six sigma, targets for improvement are set for a process

    and not for a function.

    Six Sigma methodology

    Six sigma methodology improves any existing business process by constantly reviewing and re-tuning the

    process. To achieve, this six sigma uses a methodology known as DMAIC (Define opportunities, Measure

    performance, analyze opportunity, Improve performance, Control performance)

    Define opportunity Define the goals and objectives of improvement project, which is derived from critical to

    quality characteristics, based on voice of customer, project charter, problem statement, milestones, scope of

    project and a high- level map of the process are developed in this phase.

    Measure Measure the process to find the current level of performance and to gauge improvement later.

    Calculate the sigma level as a measure against customer requirements and for comparison with other

    processes.

    Analyze Analyze the data connected in the measurement phase to identify problems in the process and to

    find the root causes of the variation. It is applied used of experience, data and a process review to find viable

    causes. It is repeated for refinement or rejection of possible causes, until the root cause is found and verified

    with data.

    Improve- Improve the system by finding ways to do things better, safer, cheaper or faster but most of all to

    satisfy your customers. In this phase test, refine and implement a solution to the root cause. Implement the

    new approach and validate the improvement.

    Control Control the improvement implemented on continuous basis. Institutionalize it by altering policies,

    procedures, budgets, instructions and other management systems, if necessary. Sell the project to your

    customer and internally, secure management support, and give final ownership to those working with it on day

    to day basis.

    SIX SIGMA PROJECT RETAIL DISPLAY.

    Define: Marketing has designed a "fancy" display unit that they think will outperform the "standard" display unit and they want to put one in every store. "Fancy" display is 10X cost of a "standard" display and all stores already have "standard" units. Should the new displays be purchased. Measures: Have data for each store on sales of this product for every day.

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    Analyze: The stores identified at least three other factors besides display type that could impact sales. Range for each factor was identified. Design of Experiments was conducted. Improve: "Fancy" display had no significant impact on sales. The "fancy" displays were not ordered for any more stores, with considerable cost savings.

    Control: Future changes will be tested and evaluated using statistical techniques.

    Tools of Six Sigma

    At each phase of Six Sigma specific tools are used:

    S.NO Phase Tools used at the stage

    1 Define Team charter, Knowing Voice of customer

    2 Measure SIPOC- Supplier Input- Process- Output

    Customer, Data collection

    Rejection trends, Rejection cost

    Defect Matrix, MSA

    3 Analyze Process stratification, Pareto analysis

    Root cause analysis, Why- why analysis

    4 Improve Action plan

    5 Control Training of the workforce, P Charts

    The steps to Six Sigma: Six sigma begins with shrinking the inherent variation in a process to half the

    specification range (Cpk= 2.0). At the same point of time the mean is to shift at most 1.5 sigma from the

    specification midpoint (the target quality)

    Motorola prescribes six steps to achieve the six sigma

    1. Identify the product or service you provide

    2. Identify the customers for your product or service and determine what they consider important.

    3. Identify your needs to provide the product or service that satisfy the customer.

    4. Define the process for doing the work.

    5. Mistake- proofs the process and eliminates waste effort.

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    6. Ensure continuous improvement by measuring, analyzing and controlling the improved process.

    Many companies are frequently adopting Measure- Analyze Improve- Control (MAIC) cycle to use six

    sigma. They adopt certain steps:

    1. Select critical to quality characteristics.

    2. Define performance standard (the targets to be achieved)

    3. Validate measurement systems (to ensure that data are reliable)

    4. Establish product reliability (how good are your products now)

    5. Define performance objectives

    6. Identify sources of variation (use 7 QC tools)

    7. Screen potential causes (apply correlation studies etc

    8. Ascertain relationship between variables (Causes of factors, fan and the output)

    9. Establish operating tolerances for input factors and output variables.

    10. Validate the measurement system (without validation you cant be sure)

    11. Determine the process capability (Cpk)

    12. Implement process controls

    Contemporary Strategic Issues

    If any organization wants to stay competitive, it needs to be in e- commerce. The strategy should be to

    integrate the Internet into all of the core business.

    The impact of the Internet and the rapidly emerging e- commerce environment is very much in the growth of

    the business. The real- time data processing and e-commerce applications make a lot of difference to the

    business growth. The coming of e-commerce has changed the character of the market, created new driving

    forces and key success factors and created new strategic groups.

    E- Commerce applications have enormous potential for the growth of the company. The internet economy

    provides opportunities and also poses threats that demand strategic response and that require managers to

    craft bold new strategies.

    What is Internet Technology?

    The Internet is an integrated network of banks of servers and high- speed computers, digital switches and

    routers, telecommunications equipment and lines, and individual users computers. The backbone of the

    Internet consist of telecommunications lines criss- crossing countries, continents, and the world that allow

    computers to transfer data in digital form at very high speed.

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    The bandwidth of the line determines the capacity or speed of the data transfer. These lines are connected to

    computer- like digital switches that move traffic along the backbone lines; many of these switches act as

    routers, deciding which way to direct the traffic and how to handle the requests of users computers to send or

    obtain data based on the destinations and line congestion.

    Users gain access to the network via a LAN server or an ISPs computerized switch that has the capability to

    route traffic to and from end users directly connected to it. Many different types of specialized software are

    required to make the Internet function and infuse it with attractive e- commerce capabilities.

    Characteristics of the e-commerce environment

    1. The internet makes it feasible for companies everywhere to compete in global markets. Internet opens up

    a much bigger geographical market.

    2. Competition in an industry is greatly intensified by new e-commerce strategic initiatives of existing rivals

    and by the entry of new, enterprising e-commerce rivals.

    3. Entry barriers into e-commerce are relatively low.

    4. The information is available to the customers throughout the day.

    5. The internet results in a much faster diffusion of new technology and new ideas across the world.

    6. Saves cost and time.

    COMPREHENSIVE LIST OF STATE WHETHER THE FOLLOWING ARE CORRECT OR INCORRECT

    Business environment:

    The basic objective of a business enterprise is to monitor the environment

    Incorrect: Monitoring environment is not the basic objective. The primary objective is to create and retain

    customers. Organizational objectives include: survival, stability, growth, profitability etc. Organizations monitor

    the changes in the environment, analyze their impact on their own goals and activities and convert their

    analysis in terms of specific strategies for survival, stability and growth.

    The first step of strategy formulation in strategic management model is to undertake internal analysis.

    Incorrect: Identifying an organizations existing vision, mission, objectives and strategies is the starting point

    for any strategic management process. This is because n organizations existing situation and condition may

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    include certain strategies and may even dictate a particular course of action. Determining vision and mission

    provides long term direction, and infuse the organization with a sense of purposeful action.

    Environmental constituents exist in isolation and do not interact with each other.

    Incorrect: Business environment consists of a no: of factors, events, influences etc. Which arise from different

    sources and interact with each other continuously to create new sets of complex influences.

    Profit may not be a universal objective but business efficiency is definitely an objective common to all

    business.

    Correct: The primary objective of business is to earn adequate profit but not maximum profit. Profit serves as a

    yardstick to measure the success of a business. To facilitate and sustain profit earning, certain other objectives

    are also pursued by business and efficiency is one of them.

    Business policy and strategic management:

    Retrenchment implies downsizing of business.

    Incorrect: In the context of strategic management, retrenchment implies giving up certain products and

    reducing the level of business as a compulsive measure to cope up with certain adverse developments on

    which the firm has little control. Downsizing is planned elimination of positions or jobs. Retrenchment

    does not imply downsizing however the latter is often used to implement a retrenchment strategy.

    Efficiency and effectiveness mean the same in strategic management.

    Incorrect: Efficiency is the relationship between inputs and outputs but only for a short time. Effectiveness

    on the other hand highlights the link between the organization and its environment.

    Strategy is a substitute for sound, alert, responsible management

    Incorrect: its no substitute for sound, alert, responsible management. Strategy can never be perfect,

    flawless and optimal. It is in the very nature of strategy that it is flexible and pragmatic. It is art of the

    possible and does not preclude second best choices, tradeoffs, sudden emergencies, pervasive pressures,

    failures and frustrations. However in a sound strategy, allowances are made for possible miscalculations

    and unanticipated events.

    Strategic management is not needed in non profit organisations.

    Incorrect: Strategic management refers to the managerial process of forming a strategic vision, setting

    objectives, crafting strategy implementing and executing the strategy and then overtimes initiating

    whatever corrective adjustments in the vision, objectives, strategy and execution are deemed appropriate

    and therefore, the steps required in all types of organization whether profit oriented or not as profit is not

    the sole motive of strategic management.

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    All strategies emerge from corporate vision.

    True: All strategies emerge from corporate vision as a strategy is meant to fill in the need of organizations

    for a sense of dynamic, direction, focus and cohesiveness. Strategies are made to evaluate and exploit

    beneficial opportunities, to perceive and meet potential threats and crisis, to make full use of resources

    and strengths, to offset corporate weaknesses and to make major decisions in general.

    Strategic analysis:

    Industry is a grouping of dissimilar firms.

    False: Industry is a group of firms whose products have same and similar attributes such that they compete

    for the same buyers.

    Strategic planning:

    Acquisition is a strategy.

    True: Acquisition is a cooperative expansion strategy. It provides a rapid means of gaining an established

    product or market.

    A companys strategy has always to be proactive in nature.

    False: Strategy is partly proactive and partly reactive. A companys strategy is typically a blend of proactive

    actions on the part of managers to improve the companys market position and financial performance and

    as needed reactions to unanticipated developments and fresh market conditions. Hence portion of a

    companys strategy is always developed on the fly, coming as a reasoned response to unforeseen

    developments- fresh strategic manoeuvre on the part of rival firms, shifting customer requirement and

    expectations, new technologies in the market opportunities, a changing political or economic climate in

    the surrounding environment.

    Formulation of functional strategy:

    Teleshopping is an instance of direct marketing.

    True: Direct marketing is the process of marketing through various media which interact directly with the

    customers and customers also make a direct response. I teleshopping customers make a direct response.

    Thus teleshopping is an instance of direct marketing.

    Strategy implementation and control:

    Functional level constitutes the lowest hierarchical level of strategic management.

    True: Functional level managers and strategies operate at the lowest hierarchical level of strategic

    management. Functional level is responsible for specific business functions or operations like human

    resources, purchasing, product development, and customer service and so on. It constitutes a company or

    one of its divisions. Although they are not responsible for the overall performance of the organization,

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    functional managers nevertheless have a major strategic role to develop functional strategies in their area

    that help to fulfil the strategic objectives set by business and corporate level managers.

    A core competence is a unique opportunity of an organisation not shared by the others.

    True: Core competencies represent distinctive skills which help a firm gain competitive advantage over the

    others. It is thus not shared by others and if the competitors imitate or develop similar core competencies,

    the firm has to continuously gain more and more competencies to stand aside.

    Strategy follows structure.

    True: Strategy does follow the structure as it is impossible to formulate or implement strategy without

    structure. Structure defines the framework within which the activities are to occur.

    Resistance to change is an impediment in building of strategic supportive corporate culture:

    True: It is strategy implementers work, once the strategy is chosen, to change whatever factors of the

    corporate culture whatever factors of the corporate culture hinders effective execution. This is because,

    once a culture is executed, it is difficult to change.

    Changes of any type are always disquieting, sometimes they may be threatening:

    Incorrect: The toughest management task is to talk about change. This is because of heavy anchor of

    deeply held values and habits people cling emotionally to the old and familiar. However favorable

    changes either in the external environment on internal environment are not threatening or disquieting.

    An organisations culture is always an obstacle to successful strategy implementation.

    Incorrect: Culture is not always an obstacle. Strong culture promotes good strategy execution. It does the

    following positives to the organization:

    Provides a system of informal rules and peer pressure regarding how to conduct a business internally

    and how to go about doing ones job.

    Shape the mood, temperament, and motivate the workforce, positively affecting organisational

    energy, work habits and operating practices, the degree to which organisational units cooperate, and

    how customers are treated.

    Nurtures and motivates people to do their jobs in ways conducive to effective strategy execution.

    It provides structure, standards, and a value system in which to operate and it promotes strong

    employee identification with the companys vision, performance targets and strategy.

    This makes the employees feel genuinely better about their jobs and work environment and the merits

    of what the company is trying to accomplish.

    Reaching strategic edge:

    The main focus of six sigma is o the shareholders.

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    Incorrect: Although any business action may result directly or indirectly i creation/erosion o shareholders

    wealth, the main focus of six sigma is on delivering value to customers. Six sigma aims in improving

    customer satisfaction. Primarily, six sigma means maintenance of the desired quality in processes and end

    products. It also means taking systematic and integrated efforts toward improving quality and reducing

    cost.

    Rest of the questions from may09-nov10:

    Non profit organisations are not required to have a strategy.

    Incorrect: Similar to commercial organizations non profit organizations must also have a strategy.

    It is required to give it direction, focus and efficient utilization of resources. In many not for profit

    organizations surpluses are important for their survival and growth.

    Control system run parallel with strategic levels.

    Correct: There are three strategic levels- corporate, business, and functional. Control systems are

    required at all the 3 levels. At the top level, strategic controls are built to check whether the

    strategy is being implemented as planned and the results produced by the strategy are those

    intended. Down the hierarchy management controls and operational controls are built in the

    systems. Operational controls are required for day to day management of business.

    Globalisation means different things to different people.

    Correct: Globalization refers to the process of integration of the world into one huge market. Such

    unification calls for removal of all trade barriers among countries. Globalization is an opportunity

    for organizations to expand their markets and reach out to different customers. Globalization can

    also have other meanings. For some it is a new paradigm- a set of fresh beliefs, working methods,

    and economic, political and socio-cultural realities in which the previous assumptions are no

    longer valid. For developing countries, it means integration with the world economy.

    Production strategy implements, support, and drive higher strategies.

    Correct: For effective implementation of higher level strategies, strategists need to provide

    direction to functional managers including production, regarding the plans and policies to be

    adopted. Production strategy provides a path for transmitting corporate and business level

    strategy to the production systems and makes it operational. It may relate to production

    planning, operational system, control and research and development.

    Benchmarking and BPR are one and the same.

    Incorrect: Benchmarking relates to setting goals and measuring productivity based on best

    industry practices. The idea is to learn from competitors and others to improve their own

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    performance. On the other hand BPR relates to analysis and redesign of workflows and processes

    both within and between the organizations.

    Strategic management is a bundle of tricks and magic.

    Incorrect: Strategic management in not a bundle of tricks and magic. It involves systematic and

    analytical thinking and action. Although, the success or failure of a strategy is dependent on

    several extraneous factors, it cannot be stated that a strategy is a trick or magic. Formation of

    strategy requires careful planning and requires strong conceptual, analytical, and visionary skills.

    The purpose of SWOT analysis is to rank organisations.

    Incorrect: SWOT analysis stands for the analysis of strengths, weaknesses, opportunities and

    threats. It is not used for ranking of organizations. It is a tool for organizational and environmental

    appraisal necessary to formulate effective strategies.

    SBU concepts facilitate multi-business operations.

    Correct: Organizing business along SBU lines and creating strategic business units has become a

    common practice for multi product/ service and global organizations. It is a convenient and

    intelligent grouping of activities along distinct businesses and has replaced the conventional

    groupings. SBU facilitates strategic planning, gaining product related /market related

    specialization, gaining cost-economies and more rational organizational structure.

    PLC is an S-shaped curve.

    Correct: PLC(product life cycle) which is a graphical depiction of sales overtime is an S-shaped

    curve with four strategies- introduction, growth, maturity and decline. The pattern is shared by all

    product group and families though the duration for each phase is different in each case.

    Identification of PLC stages for a product/service offers useful insights for marketing

    management.

    The rate and magnitude of changes that can affect organisations are decreasing dramatically.

    Incorrect: No, the reality is just the other way round. Business environment especially after

    globalization and liberalization is witnessing change that is fast paced and has far reaching

    implications for business. This is true for economic, political, technological, legal, and socio-

    cultural factors. This has created strong pressures on organization for proactive adaptation to

    environmental changes for survival growth and competitive edge.