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  2. 2. STRATEGIC PLANNING  It’s a long-term perspective of management.  Strategic management can be used to determine mission, vision, values, goals, objectives, roles and responsibilities, timelines, etc. Strategies  The decisions and actions that determine the long-run performance of an organization
  3. 3. Standard definitions of strategy  Thompson & Strickland “A company’s strategy consists of the combination of competitive moves and business approaches that managers employ to please customers and compete successfully and achieve organizational objectives.”  Pearce II & Robinson Jr. “Strategy reflects a Company’s awareness of law, where and when it should compete; against whom it should compete and for what purpose it should compete.”  Bryson “A pattern of purposes, policies, programs, actions, decisions, or resource allocations that define what an organization is, what it does, and why it does it.”
  4. 4. Standard definitions of strategy(contd…)  Mintzberg “A mediating force between the organization and environment: consistent patterns in streams of organizational decisions to deal with the environment.”  Andrews “Pattern of objectives, purposes, or goals stated in such a way so as to define what business the company is in or is to be in and the kind of company it is or to be”  Chandler “Strategy is the determination of the basic long term goals of an enterprise and the adoption of courses of action and the allocation of resources necessary for carrying out these goals.”
  5. 5. EVOLUTION OF THE CONCEPT “STRATEGY”  Derived from Greek word “strategia” the art or science of being a general.  Effective generals had to determine the right lines of supply, decide when to fight and when not to fight, and manage army's relation with citizens  Strategy= planning component+ decision making + action component
  6. 6. FATHER OF STRATEGIC MANAGEMENT  Russian American, applied mathematician and busines s manager  Professionally, Ansoff is known worldwide for his research in three specific areas:   H. Igor Ansoff (December 12, 1918 – July 14, 2002)  The concept of environmental turbulence; The contingent strategic success paradigm, a concept that has been validated by numerous doctoral dissertations; Real-time strategic management
  7. 7. STRATEGY Vs PLAN strategy  Normally focused on objectives and long term goals and vision. plan  Includes detailed course of action and tactics to be used.
  9. 9. Characteristics of strategic management  Strategic decisions are complex in nature.  Strategic decisions are at the top most level, are uncertain as     they deal with the future, and involve a lot of risk. Strategic decisions have major resource propositions for an organization. These decisions may be concerned with possessing new resources, organizing others or reallocating others. Strategic decisions deal with harmonizing organizational resource capabilities with the threats and opportunities. Strategic decisions deal with the range of organizational activities. It is all about what they want the organization to be like and to be about. Strategic decisions involve a change of major kind since an organization operates in ever-changing environment.
  10. 10. Levels of strategy CORPORATE STRATEGY BUSINESS STRATEGY CORPORATE HEAD OFFICE Division A Division B R&D FUNCTIONAL STRATEGIES R&D Personnel Personnel Finance Finance Production Production Marketing/Sales Marketing/Sales
  11. 11. Levels of strategy  Corporate strategy... defines the scope of the business in terms of the industries and markets in which it competes.  includes decisions about diversification, acquisitions, new ventures, investments, allocation of scarce resources between business units. Example: 1.Dell acquires apple Dell and apple both make PC- horizontal integration Dell makes PC. Apple makes operating systems for PC.diversification
  12. 12. Levels of strategy  Business strategy...  Is concerned with how the firm competes within a particular industry or market...  To win a business unit must adopt a strategy that establishes a competitive advantage over its rivals.  Eg: advertisements  Functional strategy...  The detailed deployment of resources at the operational level.  Eg: strategy adopted to buy goods will not be same when the firm is selling its goods.
  13. 13. Strategic business unit  It becomes very cumbersome for an organization having multi-products and multi-businesses, to have separate planning treatment of each of its products/businesses.  To have better strategic planning, business products can be grouped into strategically-related business units known as SBU, so that they are manageable.
  14. 14. The concept of strategic business unit (SBU):  A scientific grouping of the businesses of a multi- business corporation which helps the firm in strategic planning.  Products/businesses within an SBU receive same strategic planning treatment and priorities.  The task consists of analyzing and segregating the assortment of business aspects and regrouping them into a few, well-defined, distinct, scientifically demarcated business units.  Grouping the businesses on SBU lines facilitates correct relative priorities and resources to the various businesses.
  15. 15. Strategic Management Framework Analyze internal environment Analyze external environment Vision/Mission Strategic Goals Feedback Formulate Strategy Feedback Implement Strategy Evaluate Strategy Strategic Competitiveness and Above-Average Returns 15
  16. 16. The Strategic Management Process 1. Internal and external analysis is done 2. The strategic management actually process begins with the strategist’s vision 3. Next, long-term or corporate goals define specific outcomes that an organization seeks to achieve in order to realize its mission 4. Strategy formulation specifies the strategies for achieving an organization’s objectives 16
  17. 17. Strategic management process (contd…) 5. Strategy implementation takes place through the basic organizational architecture that makes things happen 6. The final phase, strategy evaluation, involves comparing expected outcomes with actual results after the implementation phase 17
  18. 18. Strategic management process (contd…)  Analyzing the environment  Involves being able to identify and interpret emerging trends before they become evident to everyone else  It is essential to learn and understand: – The concerns of customers – The availability and bargaining power of suppliers and customers – The actions of competitors – Market trends – Economic conditions – Government policies – Technological advances 18
  19. 19. Strategic management process (contd…)  Analyzing the environment (cont.)  Knowing what competitors are doing and how to respond is clearly important to a firm’s survival  Analyzing the internal environment focuses on assessing an organization’s: – – – – – – Market strength Financial position Capabilities Core competencies Culture Structure 19
  20. 20. Strategic management process (contd…)  Analyzing the environment (cont.)  The combined analysis of the external environment and internal environment is commonly referred to as SWOT (Strengths, Weaknesses, Opportunities, and Threats),  Accurate interpretation of both types of environments requires considerable analytical and cognitive skills, and plays a large part in the future actions and the continuing effectiveness of an organization 20
  21. 21. Strategic management process (contd…)  Vision statement  Is an ambitious view of the future that everyone in the organization can believe in and that is not readily attainable, yet offers a future that is better in important ways than what now exists  A clear and inspiring vision serves a number of important functions: – – – – – – Facilitates decision making Inspires followers Links the present to the past Gives meaning to work, not just what, but why Establishes a standard of excellence Lays the foundation for the development of a mission statement 21
  22. 22.  Vision statement of the National Thermal Power Corporation (NTPC), India: “To be one of the world’s largest and best power utilities, powering India’s growth”  Vision statement of TATA Power “To be the most admired and responsible Integrated Power Company with international footprint, delivering sustainable value to all stakeholders.”
  23. 23. Strategic management process (contd…)  Mission statement  Is an unique statement of purpose that distinguishes one organization from other similar enterprises  Is the organization’s core purpose and reasons for existence  Features two components: – Core values – Core purpose 23
  24. 24. Strategic management process (contd…)  Mission statement (cont.)  Should be both broad and specific  Can provide many benefits to an organization: – – – – Providing direction and focus Forming the basis for objectives and strategies Inspiring positive emotions about the organization Helping resolve divergent views among employees 24
  25. 25. DIFFERENCE BETWEEN VISION AND MISSION MISSION VISION  A Mission statement talks about  A HOW you will get to where you want to be. Defines the purpose and primary objectives related to your customer needs and team values.  What do we do today? For whom do we do it? What is the benefit? In other words, Why we do what we do? What, For Whom and Why? Vision statement outlines WHERE you want to be. Communicates both the purpose and values of your business.  Where do we want to be going forward? When do we want to reach that stage? How do we want to do it?
  26. 26. Strategic management process (contd…)  Corporate-level goals  Are the desired long-term outcomes that an organization seeks to achieve  Include both financial and strategic goals  Are essential because they help focus everyone in the same direction  Are the targets against which actual performance is compared for strategy evaluation  Create synergy 27
  27. 27. Strategic management process (contd…)  Corporate-level goals (cont.)  Are the means by which organizations reveal their priorities  Are the basis for effective planning, organizing, leading, and controlling activities  Organizations must take time to establish “SMART” goals – – – – – Specific Measurable Achievable Results-Based Time-Specific 28
  28. 28. Strategic management process (contd…)  Strategy formulation  A strategy is an integrated plan of how an organization will achieve its objectives  A good strategy focuses on exploiting opportunities in the organization’s external environment that match the organization’s strengths.  A good strategy must also reflect the core mission and objectives of the organization 29
  29. 29. Strategic management process (contd…)  Strategy formulation (cont.)  To maintain a competitive edge over rivals, develop strategies that: – Enhance value to the customers  Value is the ratio of benefits received to the cost incurred by the customer – Create synergistic opportunities – Build on the company’s core competence  A core competence is a capability that allows an organization to perform extremely well in comparison to competitors 30
  30. 30. Strategic management process (contd…)  Strategy formulation (cont.)  Core competencies are a source of competitive advantage when they: – – – – Are rare Are hard to imitate Are not easily substitutable Create value for the firm  A knowledge-based competitive advantage is hard to imitate or copy by rivals because it resides in people, not physical assets 31
  31. 31. Strategic management process (contd…)  Strategy implementation  Effective strategy implementation means that objectives have a greater chance of being met and thus results in better firm performance  Requires galvanizing the organization’s employees and managers at all levels to turn formulated strategies into action  Obstacles to effective strategy implementation – Lack of resources – Time 32
  32. 32. Strategic management process (contd…)  Strategy implementation (cont.)  Is considered the most difficult stage of the strategic management process – Involves dealing with people who come with varying levels of motivation, commitment, and dedication  Without appropriate implementation, the best of strategies can fail – Must be integrated into all organizational systems including structure, culture, pay and reward systems, budget allocation, and organizational rules, policies, and procedures 33
  33. 33. Strategic management process (contd…)  Strategy evaluation  Is the primary means of determining the effectiveness of the strategic management process  Has three fundamental activities: – Review internal and external factors – Measure performance against objectives – Corrective action  A popular tool used to measure the effectiveness of the strategic management process is the balance scorecard. 34
  34. 34. SWOT Analysis SYBMS,Strategic Management 2012-13 35
  35. 35. What is SWOT Analysis? 11/3/2013 SYBMS,Strategic Management 2012-13 36 36
  36. 36. what is the aim of SWOT analysis 11/3/2013 SYBMS,Strategic Management 2012-13 37 37
  37. 37. SWOT ANALYSIS? 11/3/2013 SYBMS,Strategic Management 2012-13 38 38
  38. 38. SWOT ANALYSIS? 11/3/2013 SYBMS,Strategic Management 2012-13 39
  39. 39. SWOT ANALYSIS? 11/3/2013 SYBMS,Strategic Management 2012-13 40 40
  40. 40. SWOT ANALYSIS? 11/3/2013 SYBMS,Strategic Management 2012-13 41 41
  41. 41. How to conduct swot analysis..?? 11/3/2013 SYBMS,Strategic Management 2012-13 42 42
  43. 43. INTRODUCTION  BOSTON CONSULTING GROUP (BCG) MATRIX is developed by BRUCE HENDERSON of the BOSTON CONSULTING GROUP IN THE EARLY 1970’s.  According to this technique, businesses or products are classified as low or high performers depending upon their market growth rate and relative market share.
  44. 44. MARKET SHARE AND RELATIVE MARKET SHARE • Market share is the percentage of the total market that is being serviced by your company, measured either in revenue terms or unit volume terms. • Relative Market Share = Business unit sales this year Leading rival sales this year • The higher your market share, the higher proportion of the market you control.
  45. 45. MARKET GROWTH RATE  Market growth is used as a measure of a market’s attractiveness.  MGR = Individual sales - individual sales this year last year Individual sales last year Markets experiencing high growth are ones where the total market share available is expanding, and there’s plenty of opportunity for everyone to make money.
  46. 46. WHY BCG MATRIX ? To assess :  Profiles of products/businesses  The cash demands of products  The development cycles of products  Resource allocation and divestment decisions
  47. 47. THE BCG GROWTH-SHARE MATRIX  It is a portfolio planning model which is based on the observation that a company’s business units can be classified in to four categories:  Stars  Question marks  Cash cows  Dogs  It is based on the combination of market growth and market share relative to the next best competitor.
  48. 48. STARS -High growth, High market share  Stars are leaders in business.  They also require heavy investment, to maintain its large market share.  It leads to large amount of cash consumption and cash generation.  Attempts should be made to hold the market share otherwise the star will become a CASH COW.
  49. 49. CASH COWS -Low growth , High market share  They are foundation of the company and often the stars of yesterday.  They generate more cash than required.  They extract the profits by investing as little cash as possible  They are located in an industry that is mature, not growing or declining.
  50. 50. DOGS Low growth, Low market share  Dogs are the cash traps.  Dogs do not have potential to bring in much cash.  Number of dogs in the company should be minimized.  Business is situated at a declining stage.
  51. 51. QUESTION MARKSHigh growth , Low market share  Most businesses start of as question marks.  They will absorb great amounts of cash if the market share remains unchanged, (low).  Why question marks?  Question marks have potential to become star and eventually cash cow but can also become a dog.  Investments should be high for question marks.
  52. 52. MAIN STEPS OF BCG MATRIX 1. Identifying and dividing a company into SBU. 2. Assessing and comparing the prospects of each SBU according to two criteria :  1. SBU’S relative market share.  2. Growth rate OF SBU’S industry. 3. Classifying the SBU’S on the basis of BCG matrix. 4. Developing strategic objectives for each SBU.
  53. 53. BCG matrix for ITC ltd.  ITC is formally known as Indian Tobacco company.  Company is in to diverse business portfolio like Hotels, Greetings, Cigarettes, Agarbatti, Specialty papers, Agricultural business, Cloths, Sports wear and InfoTech business.
  54. 54. BCG matrix for ITC ltd. High Relative Market Share Cash Generation High Market Growth Rate Cash Usage Low STAR Hotels, papers, Agri business ??? Agarbatti, Cloths Cash Cow Dogs Cigarettes, FMCG InfoTech Low
  55. 55. BCG matrix for MARUTI SUZUKI Models available: Swift, Zen estillo, Swift Desire, sx4, grand vitara, A STAR, ALTO, 800, Wagon R, Versa, Baleno, Omni
  56. 56. High Relative Market Share Low Cash Generation High Market Growth Rate Cash Usage Low ??? STAR SWIFT, ZEN ESTILO, DESIRE SX4, GRAND VITARA, A STAR Cash Cow 800, ALTO, WAGON R Dogs BALENO, VERSA, OMNI
  57. 57. BENEFITS  BCG MATRIX is simple and easy to understand.  It helps you to quickly and simply screen the opportunities open to you, and helps you think about how you can make the most of them.  It is used to identify how corporate cash resources can best be used to maximize a company’s future growth and profitability.
  58. 58. LIMITATIONS  BCG MATRIX uses only two dimensions, Relative market share and market growth rate.  Problems of getting data on market share and market growth.
  59. 59. THANK YOU