2. Strategy: Introduction
A strategy consists of a combination of competitive
moves and business approaches that managers employ
to please customers, compete successfully and achieve
organisational objectives.
3. Strategic planning process
There are at least eleven questions that need to be answered accurately to
formulate strategies. These are:
(I) What should be our business.
(II) What is our business
(III) How should the business be developed
(IV) How should the customers be satisfied
(V) How should competition be dealt with
(VI) What should be the response to everchanging market conditions
(VII) How should strategic and financial results be achieved
(VIII) How should the functional units in the organization be managed and
coordinated
(IX) How should the relationship with customer suppliers and other influencers
be managed
(X) How can stakeholders be satisfied
(XI) What is value to customer
4. Steps in strategic planning process
(I) Business mission
(II) SWOT analysis
(III) Strategy formulation
(IV) Strategy implementation
(V) Strategy evaluation and control
5. Business mission
It is a value statement around which the entire corporate strategy
revolves. Peter F. Drucker said that defining the purpose and
mission of business is difficult, painful and risky. But this alone
enables a business to set objectives, develop
strategies, concentrate its resources and go to work. A mission
statement:
(I) Should define What the organization is and what it aspires to
be
(II) Should be limited to exclude some ventures and broad enough
to allow for creative growth
(III) Should distinguish a given organization from all others
(IV) Should serve as framework for evaluating both current and
prospective activities
(V) Should be stated in terms sufficiently clear to be widely
understood throughout the future.
6. SWOT ANALYSIS
Under SWOT analysis strengths are matched with
opportunities and weaknesses are matched with
threats and then measures are taken to overcome
those threats.
7. Strategy formulation
In formulation of strategy it is necessary to take into
consideration the full set of commitments, decisions
and actions required for a firm to achieve strategic
competitiveness. The SWOT analysis provides
necessary strategic inputs for effective strategy
formulation and implementation.
In the words of Michael porter, competitive strategy is
about being different. Porter suggested five distinct
competitive strategies which will benefit service
organisations.
8. (I) Low cost provider strategy
(II) Differentiation strategy
(III) Best cost provider strategy
(IV) Focused strategy (niche market) based on lower cost
(V) Focused strategy (niche market) based on
differentiation
9. Market oriented service strategy
In designing strategy, service firms need to
differentiate themselves from manufacturing
organisations. They have to take market sensitivities in
relation to service characteristic into consideration in
deciding the strategic approach to achieve
organisational goals. The conventional market
thinking provides three thumb rules for strengthening
the competitive edge of a firm. These three rules are
(I) Decrease in cost of production
(II) Enhancement of promotional budget
(III) Development of new products.
10. Strategic management trap
Financial
problems or
increasing
competition
Decision
Deteriorating
concerning
corporate
internal
image
efficiency
Deteriorati
Unsatisfied
customer ng service
quality
More
traditional Unsatisfied
marketing customer
efforts
Deteriorating
Deteriorating
internal
service quality
atmosphere
11. Let us assume that service organization is facing either
financial problem or increased competition. The first
option for management is to achieve internal
efficiency to reduce cost. The decision on internal
efficiency often results in reduction of
personnel, introduction of self service, increase in the
work load of employees, automation and so on. In the
manufacturing sector such decision may improve
productive efficiency but in service organisations
chances of such happening is rare.
12. When a service organisation chooses the second
strategy of spending heavily on promotion with an
intention to attract the market, it may succeed in
increasing the demand for services. However, the
reduced internal efficiency dissatisfies the customers.
As a result of all these activities, the corporate image of
organisation weakens and the problems of company
multiply. When the image of company is low, even the
introduction of new product does not save the
organisation. A vicious circle gets formed when once
the organisation gets into the strategic management
trap and it leads to multiple problems.
13. Service oriented approach
Service organisations should develop a service-
oriented strategic approach to tackle problems in
marketing. The result of a service oriented strategic
approach to handle the same problem will be different.
15. The service triangle
company(top management)
Internal marketing external marketing
Employees interactive marketing customers
16. One of the most popular strategic models for service
marketing was developed by Christian Gronross. The
model is called service triangle. He has identified three
different groups that play important role in successfully
accomplishing organisational goals. They are
company, employees and customers.
The model calls for a special marketing program between
the company and its employees which is termed as internal
marketing.
The second marketing program is between the company
and its customers and is termed external marketing.
The third marketing program is between employees and
customers and is termed interactive marketing.
17. Three dimensions of service
strategy
As culture
A basic set of values and belief about the central
importance of customer guides the firm to formulate its
corporate philosophy
As strategy
Concerned with market
segmentation, targeting, positioning
As tactics
Design and implementation
of marketing
18. The basic set of values and beliefs of the customer
should guide and organisation to formulate its
corporate philosophy. An analysis of customer need
must be the basic input material for designing market
attractiveness strategies. The culture thus evolved from
the market feedback should reflect the overall value
proposition of the company.
21. Strategy formulation and
implementation
Strategy formulation requires good
conceptual, integrative and analytical skills but
strategy implementation requires special skills in
motivating and managing others.
Strategy formulation occurs at the corporate level of
organisation, while strategy implementation
permeates all hierarchical levels.
Strategy formulation requires coordination among few
individuals but strategy implementation require
coordination among many.
22. Strategy evaluation and control
To have an effective control following things has to be
designed:
(I) Establishment of evaluation criteria and standards
(II) Measuring and comparing performance
(III) Identification and analysis of performance gaps
(IV) Initiating corrective measures
