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1. AA
PRESENTATIONPRESENTATION
ONON
STRATEGIES ANDSTRATEGIES AND
POLICIESPOLICIES
By-By-
Dr. Alok MittalDr. Alok Mittal
Director (Management)Director (Management)
MediCaps Institute of Technology & ManagementMediCaps Institute of Technology & Management
Rau, Indore (M.P.) – 453 331Rau, Indore (M.P.) – 453 331

2. CONCEPT OF STRATEGY-CONCEPT OF STRATEGY-
• The term “strategy” is derived from Greek wordThe term “strategy” is derived from Greek word
“strategos” meaning “General” which has been“strategos” meaning “General” which has been
used in different ways.used in different ways.
• Strategy refers to determination of the purposeStrategy refers to determination of the purpose
or mission and the basic long – term objectivesor mission and the basic long – term objectives
of an enterprise, and the adoption of courses ofof an enterprise, and the adoption of courses of
action and allocation of resources necessary toaction and allocation of resources necessary to
achieve these aims.achieve these aims.
• A strategy is a fundamental pattern of presentA strategy is a fundamental pattern of present
and planned objectives, resource deployments,and planned objectives, resource deployments,
and interactions of an organization withand interactions of an organization with
markets, competitors and other environmentalmarkets, competitors and other environmental
factors.factors.

3. REQUIREMENTS OF GOODREQUIREMENTS OF GOOD
STRATEGY-STRATEGY-
• A good strategy should specifyA good strategy should specify whatwhat is to beis to be
accomplished.accomplished.
• A good strategy should specifyA good strategy should specify wherewhere (on(on
which industries / products / markets) it willwhich industries / products / markets) it will
focus.focus.
• A good strategy should specifyA good strategy should specify HowHow resourcesresources
and activities will be allocated to productand activities will be allocated to product
market to meet environmental opportunitiesmarket to meet environmental opportunities
and threats.and threats.

4. COMPONENTS OFCOMPONENTS OF
STRATEGY-STRATEGY-
• SCOPESCOPE - It refers to breadth of strategic- It refers to breadth of strategic
domain, the number and type of industries,domain, the number and type of industries,
product lines and market segments it competesproduct lines and market segments it competes
or plans to enter (Present Business Future)or plans to enter (Present Business Future)
• GOALS & OBJECTIVESGOALS & OBJECTIVES - Strategies should- Strategies should
also specify desired levels or accomplishmentalso specify desired levels or accomplishment
on one / more dimension of performance -on one / more dimension of performance -
Volume Growth, Profit Contribution, ROI, etc.Volume Growth, Profit Contribution, ROI, etc.
• RESOURCE DEPLOYMENTRESOURCE DEPLOYMENT - Every- Every
organization has limited resources. Strategyorganization has limited resources. Strategy
should specify procurement and allocation ofshould specify procurement and allocation of
resources.resources.

5. COMPONENTS OFCOMPONENTS OF
STRATEGY-STRATEGY-
• IDENTIFICATION OF SUSTAINABLEIDENTIFICATION OF SUSTAINABLE
COMPETITIVE ADVANTAGE -COMPETITIVE ADVANTAGE - StrategiesStrategies
should specify how organization will compete inshould specify how organization will compete in
each business and product market within itseach business and product market within its
domain. It should also develop differentiateddomain. It should also develop differentiated
advantage over competitorsadvantage over competitors
• SYNERGY -SYNERGY - It exists when firm’s businesses,It exists when firm’s businesses,
product markets, resources and competenciesproduct markets, resources and competencies
complement and reinforce each other.complement and reinforce each other.

6. LEVELS OF STRAGIES-LEVELS OF STRAGIES-
• CORPORATE STRATEGY -CORPORATE STRATEGY - This level ofThis level of
strategy provides direction on the company’sstrategy provides direction on the company’s
mission, the kinds of businesses it should be in,mission, the kinds of businesses it should be in,
and its growth policies.and its growth policies.
• BUSINESS LEVEL STRATEGY -BUSINESS LEVEL STRATEGY - ThisThis
level of strategy primarily addresses the way alevel of strategy primarily addresses the way a
business will compete within industry. It isbusiness will compete within industry. It is
concerned with differentiating a company’sconcerned with differentiating a company’s
offering from competitors products.offering from competitors products.
• FUNCTIONAL STRATEGIES -FUNCTIONAL STRATEGIES - EachEach
functional strategy provides a plan for pursuingfunctional strategy provides a plan for pursuing
the company’s objectives within a specificthe company’s objectives within a specific
functional area.functional area.

7. FORMULATION OFFORMULATION OF
STRATEGY-STRATEGY-
The broad steps involved in strategic planningThe broad steps involved in strategic planning
are as follows -are as follows -
• Determination of Mission or PurposeDetermination of Mission or Purpose
• Environmental ScanningEnvironmental Scanning
• Organizational AnalysisOrganizational Analysis
• Developing Strategic AlternativesDeveloping Strategic Alternatives
• Evaluation of Strategic AlternativesEvaluation of Strategic Alternatives
• Formulation of StrategyFormulation of Strategy
• Execution of Strategic PlanExecution of Strategic Plan

8. STRATEGY FORMULATIONSTRATEGY FORMULATION
PROCESS-PROCESS-
Determination of
Mission or Purpose
Execution of
Strategic Plan
Formulation of
Strategy or
Strategic Plan
Evaluation of Strategic
Alternatives
Developing Strategic
Alternatives
Organizational Analysis:
Strengths & Weaknesses
Environmental Scanning:
Opportunities and Threats

9. LIMITATIONS OF STRATEGICLIMITATIONS OF STRATEGIC
PLANNING-PLANNING-
• Strategic Planning requires a considerableStrategic Planning requires a considerable
investment in time, money and humaninvestment in time, money and human
resources.resources.
• Small sized organizations cannot afford theSmall sized organizations cannot afford the
costs of carrying out formal strategic planning.costs of carrying out formal strategic planning.
• Strategic Planning requires trained persons toStrategic Planning requires trained persons to
make use of opportunities. If the organization ismake use of opportunities. If the organization is
lacking in internal personal capabilities,lacking in internal personal capabilities,
strategic planning would not be that effective.strategic planning would not be that effective.
• Strategic Planning may sometimes restrict theStrategic Planning may sometimes restrict the
organization to comparatively risk-free options.organization to comparatively risk-free options.

10. THE TOWS MATRIX -THE TOWS MATRIX -
• The TOWS Matrix is a conceptual framework for aThe TOWS Matrix is a conceptual framework for a
systematic analysis that facilitates in the matching ofsystematic analysis that facilitates in the matching of
External Threats and Opportunities with the InternalExternal Threats and Opportunities with the Internal
Weaknesses and Strengths of the organization.Weaknesses and Strengths of the organization.
• For combining External Threats and Opportunities withFor combining External Threats and Opportunities with
the Internal Weaknesses and Strengths of thethe Internal Weaknesses and Strengths of the
organization it requires distinct strategic choices fororganization it requires distinct strategic choices for
which TOWS matrix has been proposed wherewhich TOWS matrix has been proposed where
T stands for Threats, O stands for Opportunities,T stands for Threats, O stands for Opportunities,
W stands for Weaknesses and S stands forW stands for Weaknesses and S stands for
Strengths.Strengths.
• The TOWS matrix starts with Threat because inThe TOWS matrix starts with Threat because in
certain organizations strategic planning is undertakencertain organizations strategic planning is undertaken
to avoid perceived crisis, problem or a threat.to avoid perceived crisis, problem or a threat.

11. FOUR ALTERNATIVE STRATEGIES-FOUR ALTERNATIVE STRATEGIES-
Internal FactorsInternal Factors
External FactorsExternal Factors
Internal Strengths (S)Internal Strengths (S)
e.g. Strength ine.g. Strength in
Management, Engg,Management, Engg,
Operations, R&D,Operations, R&D,
Finance, etc.Finance, etc.
Internal WeaknessesInternal Weaknesses
(W)(W)
e.g. weaknesses in arease.g. weaknesses in areas
shown in box ofshown in box of
‘Strengths’‘Strengths’
External OpportunitiesExternal Opportunities
(O)(O)
e.g. current and futuree.g. current and future
economic conditions,economic conditions,
political changes, newpolitical changes, new
products, services andproducts, services and
technologytechnology
SO Strategy:SO Strategy:
Maxi-MaxiMaxi-Maxi
Potentially the mostPotentially the most
successful strategy,successful strategy,
utilizing the organizationalutilizing the organizational
strengths to takestrengths to take
advantage of opportunitiesadvantage of opportunities
WO Strategy:WO Strategy:
Mini-MaxiMini-Maxi
e.g., Developmentale.g., Developmental
strategy to overcomestrategy to overcome
weaknesses in order toweaknesses in order to
take advantage oftake advantage of
opportunitiesopportunities
External Threats (T)External Threats (T)
e.g., Lack of energy,e.g., Lack of energy,
competition, and areascompetition, and areas
similar to those shown insimilar to those shown in
the opportunities boxthe opportunities box
aboveabove
ST Strategy:ST Strategy:
Maxi-MiniMaxi-Mini
e.g., Use of strengths toe.g., Use of strengths to
cope with threats or tocope with threats or to
avoid threatsavoid threats
WT Strategy:WT Strategy:
Mini-MiniMini-Mini
e.g., Retrenchment,e.g., Retrenchment,
liquidation, or joint ventureliquidation, or joint venture
to minimize bothto minimize both
weaknesses and threatsweaknesses and threats

12. B.C.G. PRODUCT PORTFOLIOB.C.G. PRODUCT PORTFOLIO
MATRIX-MATRIX-
• B.C.G. involves S.B.U. being positioned in a matrixB.C.G. involves S.B.U. being positioned in a matrix
on the basis of market growth rate and their marketon the basis of market growth rate and their market
share relative to that of the largest competitor.share relative to that of the largest competitor.
• The competitive position is measured on aThe competitive position is measured on a
logarithmic scale against the share of the firm’slogarithmic scale against the share of the firm’s
largest competitor.largest competitor.
• Market growth rate provides an indicator of theMarket growth rate provides an indicator of the
relative attractiveness of the market served byrelative attractiveness of the market served by
each of the businesses in the company’s portfolio.each of the businesses in the company’s portfolio.
• Relative market share is calculated as an S.B.U’sRelative market share is calculated as an S.B.U’s
market share divided by the market share of themarket share divided by the market share of the
largest competitor in the same S.B.U.largest competitor in the same S.B.U.

13. B.C.G. MATRIX -B.C.G. MATRIX -
• The Relative Market Share is plotted on X-axis.The Relative Market Share is plotted on X-axis.
It ranges from 0.1 to 10. e.g. a relative marketIt ranges from 0.1 to 10. e.g. a relative market
share of 0.15 means that the company’s salesshare of 0.15 means that the company’s sales
volume is only 15% of leaders sales volume. Avolume is only 15% of leaders sales volume. A
relative share 5 means that company’s S.B.U.relative share 5 means that company’s S.B.U.
is leader and has 5 times sales of nextis leader and has 5 times sales of next
strongest competitor in that market.strongest competitor in that market.
• Market Growth Rate is plotted on Y-axis. ItMarket Growth Rate is plotted on Y-axis. It
indicates the annual growth rate of the marketindicates the annual growth rate of the market
in which the business operates. It ranges fromin which the business operates. It ranges from
0 to 20%. It can be separated into ‘High’ and0 to 20%. It can be separated into ‘High’ and
‘Low’ areas.‘Low’ areas.

14. B.C.G. MATRIX -B.C.G. MATRIX -
STARS ***STARS ***
Large PositiveLarge Positive
Cash FlowCash Flow
QUESTION MARKSQUESTION MARKS
??????
(Problem Children)(Problem Children)
Large -ve Cash FlowLarge -ve Cash Flow
CASH COWSCASH COWS
PositivePositive
Cash FlowCash Flow
DOGSDOGS
Modest Positive orModest Positive or
Negative Cash FlowNegative Cash Flow
10 X 1 X 0.1 X
RELATIVE MARKET SHAREHIGH LOW
LOW 0
HIGH 20
MARKETGROWTH
RATE
10

15. B.C.G. STRATEGIES -B.C.G. STRATEGIES -
S.B.U.S.B.U.
ClassificationClassification
S.B.U.S.B.U.
CharacteristicsCharacteristics
StrategyStrategy RemarksRemarks
DogsDogs
(Low Share, Low(Low Share, Low
Growth)Growth)
Generates lowGenerates low
profits or lossesprofits or losses
DivestDivest Sell / LiquidateSell / Liquidate
business to utilizebusiness to utilize
resourcesresources
elsewhereelsewhere
Question MarksQuestion Marks
(Low Share, High(Low Share, High
Growth)Growth)
Requires a lot ofRequires a lot of
cash for fastcash for fast
growthgrowth
Build / HarvestBuild / Harvest Increase shortIncrease short
term cash flowterm cash flow
and reduce R&Dand reduce R&D
expensesexpenses
StarsStars
(High Share, High(High Share, High
Growth)Growth)
Generates largeGenerates large
amount of cashamount of cash
Build / HarvestBuild / Harvest Increase S.B.U.’sIncrease S.B.U.’s
Market ShareMarket Share
Cash CowsCash Cows
(High Share,(High Share,
Low Growth)Low Growth)
GeneratesGenerates
considerableconsiderable
sums of cashsums of cash
Hold / HarvestHold / Harvest Preserve S.B.U.’sPreserve S.B.U.’s
Market Share andMarket Share and
reduce R&Dreduce R&D
expensesexpenses

16. PORTER’s GENERIC COMPETITIVEPORTER’s GENERIC COMPETITIVE
STRATEGIES-STRATEGIES-
• Overall Cost Leadership Strategy -Overall Cost Leadership Strategy - ThisThis
strategy aims at reduction in cost. Thestrategy aims at reduction in cost. The
emphasis is to keep the cost of R&D, sales andemphasis is to keep the cost of R&D, sales and
service at bare minimum. The objective is toservice at bare minimum. The objective is to
have low cost structure compared tohave low cost structure compared to
competitors. Strategy requires large relativecompetitors. Strategy requires large relative
market share and cost efficient facilities (e.g.market share and cost efficient facilities (e.g.
AMUL Products)AMUL Products)
• Differentiated Strategy -Differentiated Strategy - This strategyThis strategy
attempts to offer something unique in theattempts to offer something unique in the
industry with respect to products or services.industry with respect to products or services.
(BMW for racing cars, Caterpillar for services,(BMW for racing cars, Caterpillar for services,
etc.)etc.)

17. PORTER’s GENERIC COMPETITIVEPORTER’s GENERIC COMPETITIVE
STRATEGIES-STRATEGIES-
• Focused Strategy –Focused Strategy – This strategyThis strategy
concentrates on special groups of customers, aconcentrates on special groups of customers, a
particular product line, a specific geographicparticular product line, a specific geographic
region, or other aspects that become the focalregion, or other aspects that become the focal
point of the firm’s efforts. Rather than servingpoint of the firm’s efforts. Rather than serving
the total market with its products or services, anthe total market with its products or services, an
enterprise may emphasize a specific segmententerprise may emphasize a specific segment
of the market. (Foreign banks like HSBC,of the market. (Foreign banks like HSBC,
Citibank, etc offer banking services in selectCitibank, etc offer banking services in select
cities to select category of consumers)cities to select category of consumers)

18. POLICIES, RULES ANDPOLICIES, RULES AND
PROCEDURES-PROCEDURES-
• POLICIESPOLICIES-Policies are guide to decision-Policies are guide to decision
making. They establish broad framework withinmaking. They establish broad framework within
which managers operating at various levels andwhich managers operating at various levels and
engaged in various functions, make decisionsengaged in various functions, make decisions
of a recurrent nature e.g. a company’sof a recurrent nature e.g. a company’s
promotion policy may state that “all promotionspromotion policy may state that “all promotions
will be made from within provided that suitablewill be made from within provided that suitable
personnel are available”.personnel are available”.
• RULESRULES – A rule states that what should or– A rule states that what should or
should not be done. “No smoking” is a rule. Itshould not be done. “No smoking” is a rule. It
does not provide any exception. It requires nodoes not provide any exception. It requires no
decisions, but only enforcement. Rules are alsodecisions, but only enforcement. Rules are also
associated with penalties for violation.associated with penalties for violation.

19. PROCEDURE-PROCEDURE-
• Procedures are steps involved in transaction ofProcedures are steps involved in transaction of
the company’s business e.g. the procedure forthe company’s business e.g. the procedure for
hiring new personnel may involve creation ofhiring new personnel may involve creation of
the post by the competent authority,the post by the competent authority,
preparation of job description, advertisement ofpreparation of job description, advertisement of
the post, scrutiny of applications, administrationthe post, scrutiny of applications, administration
of selection tests, medical testing, hiringof selection tests, medical testing, hiring
decision, issuance of appointment order, etc.decision, issuance of appointment order, etc.
Each of these steps must be completed inEach of these steps must be completed in
sequential order.sequential order.

20. FORMULATION OF POLICIES-FORMULATION OF POLICIES-
• Policies are formulated by executives at variousPolicies are formulated by executives at various
levels in the organization.levels in the organization.
• Top management policies relate to major areasTop management policies relate to major areas
of strategic importance like diversification,of strategic importance like diversification,
product line, capital investment, dividend, issueproduct line, capital investment, dividend, issue
of stocks / debentures, etc.of stocks / debentures, etc.
• Middle level managers formulate policiesMiddle level managers formulate policies
related to advertising, sales promotion, trainingrelated to advertising, sales promotion, training
programs, etc.programs, etc.
• At lower level the managers frame policiesAt lower level the managers frame policies
related to performance like incentives, etc.related to performance like incentives, etc.

21. TYPES OF POLICIES-TYPES OF POLICIES-
• Originated Policies-Originated Policies- Originated policies areOriginated policies are
those policies which are created or formulatedthose policies which are created or formulated
by top management of company. Depending onby top management of company. Depending on
need the policy can get originated at any level.need the policy can get originated at any level.
• Implied / Traditional Policies-Implied / Traditional Policies- ImpliedImplied
policies are those policies which have not beenpolicies are those policies which have not been
formulated by a competent authority and haveformulated by a competent authority and have
no formal sanction behind them, yet continue tono formal sanction behind them, yet continue to
guide decisions and later become tradition.guide decisions and later become tradition.
• Policy by Fiat-Policy by Fiat- Policy by Fiat is a policyPolicy by Fiat is a policy
announced by top manager or owner in anannounced by top manager or owner in an
arbitrary manner, and is changed by him asarbitrary manner, and is changed by him as
often as he likes.often as he likes.

22. TYPES OF POLICIES-TYPES OF POLICIES-
• Appealed Policies –Appealed Policies – When an executiveWhen an executive
faces a problem which he does not know howfaces a problem which he does not know how
to handle either because of the absence orto handle either because of the absence or
inadequacy of existing policies, he refers theinadequacy of existing policies, he refers the
matter or appeals to superior for a decision.matter or appeals to superior for a decision.
• Externally Imposed Policies –Externally Imposed Policies – AnAn
organization often finds that some policies areorganization often finds that some policies are
imposed on it by government, trade unions,imposed on it by government, trade unions,
community, society, chambers of commerce,community, society, chambers of commerce,
etc.etc.

23. PRINCIPLES FOR FORMULATION OFPRINCIPLES FOR FORMULATION OF
POLICIES-POLICIES-
• Policies should aim at contributing forPolicies should aim at contributing for
achievement of organizational objectives.achievement of organizational objectives.
• Policies should be definite and in writing.Policies should be definite and in writing.
• Policies should be stable and flexible.Policies should be stable and flexible.
• Lower level policies should be derived fromLower level policies should be derived from
higher level policies.higher level policies.
• Policies of all functions and departments shouldPolicies of all functions and departments should
be complementary.be complementary.
• Policies should be just, fair and equitable.Policies should be just, fair and equitable.
• Policies should be periodically reviewed andPolicies should be periodically reviewed and
modified, if necessary.modified, if necessary.

24. USES AND LIMITATIONS OFUSES AND LIMITATIONS OF
POLICIES-POLICIES-
• Policies canalize decisions, activities andPolicies canalize decisions, activities and
resources for achievement of organizational goals.resources for achievement of organizational goals.
• Policies provide a framework and guide forPolicies provide a framework and guide for
decision making.decision making.
• Policies facilitate predictability of organizationalPolicies facilitate predictability of organizational
decisions.decisions.
• Policies provide freedom to decision makers andPolicies provide freedom to decision makers and
provide criteria for evaluating decisions.provide criteria for evaluating decisions.
• Over a period of time policies become traditionalOver a period of time policies become traditional
way of doing the things.way of doing the things.
• The tendency of policies to gain sanctity byThe tendency of policies to gain sanctity by
tradition lends them rigidity.tradition lends them rigidity.

25. USES AND LIMITATIONS OFUSES AND LIMITATIONS OF
PROCEDURES-PROCEDURES-
• The greatest advantage of StandardThe greatest advantage of Standard
Operating Procedure (SOP) is that theOperating Procedure (SOP) is that the
process of their establishment forcesprocess of their establishment forces
thinking on each activity and operationthinking on each activity and operation
involved in the performance of enterpriseinvolved in the performance of enterprise
function which helps in identifying gaps andfunction which helps in identifying gaps and
avoid duplication of work.avoid duplication of work.
• Perfect coordination of activities acrossPerfect coordination of activities across
various departments.various departments.
• Procedures at times result in red tapism andProcedures at times result in red tapism and
bureaucratic delays.bureaucratic delays.

26. • METHODS-METHODS- Methods are standardized ways ofMethods are standardized ways of
performing tasks involved in operations. It is theperforming tasks involved in operations. It is the
prescribed manner of performing each taskprescribed manner of performing each task
considering nature of task, expenditure of time,considering nature of task, expenditure of time,
effort and resources involved in its performanceeffort and resources involved in its performance
• STANDARDS-STANDARDS- Standards are units for measuringStandards are units for measuring
one or more aspects of performance. In all kinds ofone or more aspects of performance. In all kinds of
organizations, standards are established to measureorganizations, standards are established to measure
the time, quantity, quality and cost of work.the time, quantity, quality and cost of work.
• PROGRAMS-PROGRAMS- Programs refer to those activitiesPrograms refer to those activities
which have distinctive mission and time schedulewhich have distinctive mission and time schedule
like Plant expansion, promotion of new product, etc.like Plant expansion, promotion of new product, etc.
• PROJECTS-PROJECTS- Projects consist of large number ofProjects consist of large number of
activities with definite start and definite end.activities with definite start and definite end.

27. THEORIES OF DECISIONTHEORIES OF DECISION
MAKING-MAKING-
• Classical Theory-Classical Theory- According to this theoryAccording to this theory
decisions are made rationally and are directeddecisions are made rationally and are directed
towards a single and stable goal. It istowards a single and stable goal. It is
essentially a theory under conditions ofessentially a theory under conditions of
certainty in which decision maker is incertainty in which decision maker is in
possession of full information relating to thepossession of full information relating to the
problem.problem.
• Behavioral Theory-Behavioral Theory- According to this theoryAccording to this theory
“choice is always exercised with respect to a“choice is always exercised with respect to a
limited, approximate, simplified ‘model’ of thelimited, approximate, simplified ‘model’ of the
real situation”.real situation”.

28. DECISION MAKINGDECISION MAKING
PROCESS-PROCESS-
• Identification of Problem.Identification of Problem.
• Analyzing the Problem.Analyzing the Problem.
• Developing Alternate Solutions.Developing Alternate Solutions.
• Evaluating Alternative Solutions.Evaluating Alternative Solutions.
• Choosing the Best Solution.Choosing the Best Solution.
• Implementing and Verifying Decision.Implementing and Verifying Decision.

29. THANK YOUTHANK YOU