Strategic managemnet

1. UNIT 5 STRATEGIC CONTROL

15. DEFINITION
 Strategic control involves tracking a strategy as it's being implemented.
 It's also concerned with detecting problems or changes in the strategy and making necessary
adjustments.
 As a manager, you tend to ask yourself questions, such as whether the company is moving in the
right direction, or whether your assumptions about major trends and changes in the company's
environment are correct.
 Such questions necessitate the establishment of strategic controls.

16. TYPES OF STRATEGIC CONTROL
1. PREMISE CONTOL
 Every strategy is based on certain planning premises or predictions. Premise control is designed to
check methodically and constantly whether the premises on which a strategy is grounded on are
still valid.
 If you discover that an important premise is no longer valid, the strategy may have to be changed.
The sooner you recognize and reject an invalid premise, the better. This is because the strategy can
be adjusted to reflect the reality.

17. 2. SPECIAL ALERT CONTROL
 A special alert control is the rigorous and rapid reassessment of an organization's strategy because
of the occurrence of an immediate, unforeseen event.
 An example of such event is the acquisition of your competitor by an outsider.
 Such an event will trigger an immediate and intense reassessment of the firm's strategy. Form crisis
teams to handle your company's initial response to the unforeseen events.

18. 3. IMPLEMENTATION CONTROL
 Implementing a strategy takes place as a series of steps, activities, investments and acts that occur
over a lengthy period.
 As a manager, you'll mobilize resources, carry out special projects and employ or reassign staff.
 Implementation control is the type of strategic control that must be carried out as events unfold.
There are two types of implementation controls: strategic thrusts or projects, and milestone reviews.
 Strategic thrusts provide you with information that helps you determine whether the overall
strategy is shaping up as planned.
 With milestone reviews, you monitor the progress of the strategy at various intervals or milestones.

19. 4. STRATEGIC SURVEILLANCE
 Strategic surveillance is designed to observe a wide range of events within and outside your
organization that are likely to affect the track of your organization's strategy.
 It's based on the idea that you can uncover important yet unanticipated information by monitoring
multiple information sources.
 Such sources include trade magazines, journals such as The Wall Street Journal, trade conferences,
conversations and observations.

20. STRATEGIC AUDIT
 A strategic audit is a review of a company's business plan and strategies to identify
weaknesses and shortcomings and enable a successful development of the company.
 The strategy audit secures that all necessary information for the development of the
company are included in the business plan and that the management supports it.
 The Strategy Audit identifies a company’s need to adjust the existing business plan as
well as its business.
 It ensures that the present business plan is complete and includes all relevant information
for the development of the company.

21. HOW TO PERFORM STRATEGIC AUDIT

44. CONTINGENCY PLANNING
 Basic premise of good strategic management-firm will plan out a way to
deal with unfavourable as well as favourable events before they actually
occur.
 Many organizations plan for just unfavourable events
 Regardless how carefully strategies are formulated, some events are very
hard to predict like strikes, boycotts, lockouts, natural disasters, arrival of a
new and fierce competitor etc.
 To minimize the impact of such events, companies usually prepare a
contingency plan.

45. CONTINGENGY PLAN
It can be defined as an alternate plan of action that can be put
into place if certain key events do not occur as expected. Only
high priority areas need a contingency plan. other areas can be
covered as and when the problem occurs.

46. CONTINGENGY PLAN
If a major competitor withdraws from a particular segment as
intelligence reports suggests, what action will a firm take?
If the sales objectives are not met despite aggressive
promotion, what can be done to avoid making loss?
If a major sector in which the company operates shows a
slowdown, what other sectors are available for the company to
focus.

47. CONTINGENGY PLAN
If demand of the company’s new product exceeds expectations,
what action should the company take to make the product
available in the required quantities.
What to do if certain disaster like hurricane, tsunami,
earthquake and fire occurs?
If a new technological advancement makes a product obsolete,
what will be the plan of action?

48. STRATEGIC CONTROL OF SHRI MAHILA
GRIHA UDHYOG LIZZAT PAPAD

55. HOW THEY APPLY STRATEGIC AND
OPERATIONAL CONTROL
ONLY CASH SALES
EVEN EXPORTS ARE ON STRICT CASH BASIS
DAILY CASH DISTRIBUTION TO ‘BENS’
NO USE OF MACHINE AT THE PRODUCTION LEVEL
VERY LITTLE EXPENDITURE AT PROMOTION AND
ADVERTISEMENT
EMPLOYING ONLY ILLETRATE OR SEMI LITERRATE WOMEN

56. PORTER’S FIVE FORCES MODEL
 Tool was created by Harvard Business School professor Michael Porter, to analyze
an industry's attractiveness and likely profitability
 Simple but powerful tool for understanding the competitiveness of your business
environment, and for identifying your strategy's potential profitability.
 This is useful, because, when we understand the forces in our environment or
industry that can affect our profitability, we will be able to adjust your strategy
accordingly.

59. PORTER’S FIVE FORCES MODEL
1. Competitive Rivalry: This looks at the number and strength of the competitors.
How many rivals do you have?
Who are they, and
How does the quality of their products and services compare with yours?
 Where rivalry is intense, companies can attract customers with aggressive price cuts
and high-impact marketing campaigns.
 On the other hand, where competitive rivalry is minimal, and no one else is doing
what you do, then you'll likely have tremendous strength and healthy profits.

60. PORTER’S FIVE FORCES MODEL
2. Supplier Power: This is determined by how easy it is for your suppliers to increase
their prices.
How many potential suppliers do you have?
 How unique is the product or service that they provide, and
How expensive would it be to switch from one supplier to another?
The more you have to choose from, the easier it will be to switch to a cheaper
alternative.
But the fewer suppliers there are, and the more you need their help, the
stronger their position and their ability to charge you more

61. PORTER’S FIVE FORCES MODEL
3. Buyer Power: How easy it is for buyers to drive your prices down.
How many buyers are there?
how big are their orders?
How much would it cost them to switch from your products and services to those of a rival?
Are your buyers strong enough to dictate terms to you?
When you deal with only a few savvy customers, they have more power, but your power
increases if you have many customers

62. PORTER’S FIVE FORCES MODEL
4. Threat of Substitution: This refers to the likelihood of your customers finding a
different way of doing what you do.
 If you supply a unique software product that automates an important process,
people may substitute it by doing the process manually or by outsourcing it.
 A substitution that is easy and cheap to make can weaken your position and
threaten your profitability.

63. PORTER’S FIVE FORCES MODEL
5. Threat of New Entry. Your position can be affected by people's ability to enter your
market.
 How easy is it to get a foothold in your industry or market?
 How much would it cost, and how tightly is your sector regulated?
 If it takes little money and effort to enter into market and compete effectively, or if
there is little protection for your key technologies, then rivals can quickly enter your
market and weaken your position.
 If you have strong and durable barriers to entry, then you can preserve a favorable
position and take fair advantage of it

65. PARTICIPATIVE CASE:
 Mr. Sushil is a General Manager (Accounts) in XYZ Ltd. He has always had an
entrepreneurial bent of mind and wanted to do something of his own. After much
deliberations, he has decided that he will buy a farm and start an organic farming
business of his own.
 He has hired you as his intern and as your first task, you have been asked to prepare
an industry attractiveness analysis for his business.
 You are required to prepare a list of all the five forces for farming industry.
 For reference, various factors to be considered are listed out in next slide

67. IDEAL SOLUTION:

69. STRATEGIC BUDGET
 Strategic budgeting is the process of creating a long-range budget that spans a period of more than one year.
 The intent behind this type of budgeting is to develop a plan that supports a long-range vision for the future
position of an entity.
 This may, for example, involve the development of new geographic markets, the research and development needed
to introduce a new product line, converting to a new technology platform, and the restructuring of the
organization.
 In these examples, it is not possible to complete the required activities within the period spanned by a single
annual budget.
 Also, if only annual budgets are used, it is possible that the funding needed for a multi-year initiative will not be
continued for the necessary full duration of the initiative, so that the project is never completed.
 Thus, only by engaging in strategic budgeting can an organization hope to achieve long-term improvements in its
strategic position.