Strategies, Policies and Planning Premises

1. A Global and Entrepreneurial Perspective
MANAGEMENT

2. PRINCIPLES OF MANAGEMENT
Sr. No. Chapter No. Chapter Heading
1 1 Management: Science, Theory and Practice (27th
September 2010)
2 4 Essentials of Planning and Managing by Objectives (4th
Oct)
3 5 Strategies, Policies and Planning Premises (11th
Oct)
4 6 Decision Making
5 7
The Nature of Organizing, Entrepreneuring,
and Reengineering
6 8 Organization Structure: Departmentation
7 9 Line/ Staff Authority, Empowerment and Decentralization
8 10 Effective Organizing and Organization Culture
9 14 Human Factors and Motivation
10 15 Leadership
11 16 Committees, Teams and Group Decision Making
12 18 The System and Process of Controlling
Sessional Evaluation External Evaluation
15 15 20 50 50
Quiz per Class Assignment & Presentation Mid-term Total Sessional External Exam

3. Chapter 3
Strategies, Policies and Planning Premises
mQ

4. TABLE OF CONTENTS
1. The nature and purpose of strategies and policies
2. The strategic planning process
3. The tows matrix: a modern tool for analysis of the situation
4. Blue ocean strategy: in pursuit of opportunities in an uncontested
market
5. The portfolio matrix: a tool for allocating resources
6. Major kinds of strategies and policies
7. X:Hierarchy of company strategies
8. X:Porter’s industry analysis and generic competitive strategies
9. Premising and forecasting

5. THE NATURE AND PURPOSE OF STRATEGIES AND
POLICIES
1. STRATEGY:
 The determination of the mission or purpose and the basic long-term objectives of an
enterprise, followed by the adoption of courses of action and allocation of resources
necessary to achieve these aims.
2. POLICIES:
 General statements or understandings that guide managers’ thinking in decision making
 They ensure that the decisions fall within certain boundaries
 SIMILARITIES:
 They give direction
 They are frame work for plans
 They are the basis of operational plans
 They affect all areas of managing
 MAJOR DIFFERENCE:
 The essence of policy is discretion
 Strategy concerns the discretion, in which human and material resources will be applied in
order to increase the chance of achieving selected objectives
 Tactics: the action plans through which strategies are executed.

6. THE STRATEGIC PLANNING PROCESS
Inputs:
People, Capital,
Managerial skills,
Technical Skills,
Others
Goals of Stake
holders:
Employees
Consumers
Suppliers
Stock holders
Govt
Community
Others
Industry
Analysis
Enterprise
Profile
Executive
orientation
values
vision
•Mission
•Major
Objectives
•Strategic
Intent
Development of
alternative
strategies
Present &
Future
External
Threats &
Opportunities
•Internal
weaknesses &
Strengths
Evaluation &
strategic choice Implementation
Medium &
Short Range
planning
•Reengineering
Organization
structure Staffing
Leadership
Control
Consistency
Testing
Contingency
Planning

8. THE STRATEGIC PLANNING PROCESS
1. Inputs to the organization
2. INDUSTRY ANALYSIS
 The competition and its kinds available
 Possibility of new firms entering
 Availability of substitute products or services
 Bargaining position of the suppliers and buyers
1. ENTERPRISE PROFILE
 Mission
 Geographic orientation (would it operate in home
country or in different countries
 Competitive position of the company itself
4. Orientation, vision and values of executives

9. THE STRATEGIC PLANNING PROCESS
4. Mission (purpose), major objectives, and strategic intent
 MISSION: “what is our business”
 OBJECTIVE: “the end points towards which the activities
of the enterprise are directed”
 STRATEGIC INTENT: “the commitment to win in the
competitive market”
6. Present and future external environment:
7. Internal environment:
8. Development of alternative strategies:
 To concentrate
 To diversify
 International expansion
 Joint ventures
 Strategic alliances
 Liquidation
 Retrenchment

10. THE STRATEGIC PLANNING PROCESS
9. Evaluation and choice of strategies:
10. Consistency testing and contingency planning
11. Medium and short range planning,
implementation through organizing, staffing,
leading and controlling

11. QUIZ
What is meant byTOWS
How is the tows matrix helpful for an enterprise?

12. The TOWS MATRIX:
T:
O:
W:
S:

13. Strengths in internal
departments like
management, R&D, Finance,
marketing, OD etc
Eg weaknesses in internal
departments
Current and Future conditions in
respect of economy, politics,
financial regulations, new products,
services and technology
The most successful strategy,
utilizing the org’s strengths to
take adv of opportunities
Developmental strategy: to
overcome internal
weaknesses to take adv of
opportunities
Energy shortages, competition
and other areas like conditions
mentioned above
Use of strengths to cope up
with threats or to avoid
threats
Retrenchment, liquidation,
joint ventures etc to minimize
weaknesses & threats
FOUR ALTERNATIVE STRATEGIES

14. APPLICATION OF THE TOWS MERGER
MATRIX FOR MERGERS, ACQUISITIONS,
JOINT VENTURES AND ALLIANCES
TIME DIMENSION AND THE TOWS
MATRIX

15. BLUE OCEAN STRATEGY

16. BLUE OCEAN STRATEGY
THE FOUR ACTIONS FRAMEWORK
 Identify and eliminate those factors that may be
unimportant to the buyer
 If elimination is not an option, consider
reducing those factors
 Raise or strengthen those factors that are
unique
 Create new and unique factors that are wanted
by the buyers but are ignored by the
competition
Companies may adopt both the SO and SW
alternative strategies

17. THE PORTFOLIO MATRIX: A TOOL
FOR ALLOCATING RESOURCES

18. This tool was developed by Boston consulting group in 1970s.
This is a relationship between Market Growth and Market share of
a company/ its business unit or a product
This was developed for large corporations with several divisions,
called as Strategic Business Units (SBUs) for the allocation of
resources in the right place
 By dividing the matrix into four areas, four types of SBU can
be distinguished:
 Stars - Stars are high growth businesses or products
competing in markets where they are relatively strong
compared with the competition. Often they need heavy
investment to sustain their growth. Eventually their growth
will slow down and, assuming they maintain their relative
market share, will become cash cows.
 Cash Cows - Cash cows are low-growth businesses or
products with a relatively high market share. These are
mature, successful businesses with relatively little need for
investment. They need to be managed for continued profit - so
that they continue to generate the strong cash flows that the
company needs for its Stars.
THE PORTFOLIO MATRIX: A TOOL
FOR ALLOCATING RESOURCES

19. Question marks - Question marks are businesses or
products with low market share but which operate in
higher growth markets. This suggests that they have
potential, but may require substantial investment in order
to grow market share at the expense of more powerful
competitors.
Management have to think hard about "question marks" -
which ones should they invest in? Which ones should they
allow to fail or shrink?
Dogs - the term "dogs" refers to businesses or products
that have low relative share in unattractive, low-growth
markets. Dogs may generate enough cash to break-even,
but they are rarely, if ever, worth investing in.
Criticism:
Its too simplistic
The growth rate criterion is insufficient for the evaluation of
an industry’s attractiveness
The market share is also insufficient for estimating the
competitiveness
THE PORTFOLIO MATRIX: A TOOL
FOR ALLOCATING RESOURCES

20. GROWTH
FINANCE
ORNANIZATION
PERSONNEL
PUBLIC RELATIONS
PRODUCTS OR SERVICES
MARKETING
MAJOR KINDS OF STRATEGIES AND
POLICIES

21. Planning premising:
The anticipated environment in which plans are
expected to operate
Environmental Forecasting
Human and material resources and their opportunities
and threats
Values and areas of Forecasting
The making of forecasts and their review by managers
compel thinking ahead, looking to the future, and
providing for it
Preparation of forecast may disclose areas where
necessary control is lacking
Forecasting, especially when there is participation
throughout the organization, helps unify and coordinate
plans. By focusing attention to the future, it assists in
bringing a singleness of purpose to planning
The areas of forecasting; usually are economic, social,
political/ legal, and technological environments
PREMISING AND FORECASTING

22. Forecasting with Delphi Technique:
This technique was developed by Olaf Helmer ad
his colleagues at the RAND corporation for
technological forecasting
The process is as follows:
A panel of experts on a particualr problem area is selected,
usually from both inside and outside the organization
The experts are asked to make a forecast (anonymously) in
terms of discoveries and developments
The answers are compiled and fed back to the audience
Further estimates of future are made collectively
Repetitions take place if required for further additions
When a convergence of opinion begins to evolve, the results
are then used as an acceptable forecast
PREMISING AND FORECASTING