Professional Documents
Culture Documents
&
MANAGEMENT
Definition:
The on-going process of formulating,
implementing and controlling broad plans guide
the organization in achieving the strategic
goods given its internal and external
environment.
STRATEGIC
MANAGEMENT
Globalization: The survival for
business
E-Commerce: A business tool
Earth environment has become
a major strategic issue
Internal Analysis
Functional Level Strategies
Business Level Strategies
Strategy Implementation
Structure
Controls
INTERPRETATION
STAGES OF SM
The strategic management process
consists of three stages:
Strategy Formulation (strategy planning)
Strategy Implementations
Strategy Evaluation
Globalization
Strategy
Treats world as a
single global market
Standardizes global
products/advertising
strategies
Export
Strategy
Domestically focused
Exports a few
domestically
produced products to
selected countries
Low
Low
8
Transnational
Strategy
Seeks to balance global
efficiencies and local
responsiveness
Combines
standardization and
customization for
product/advertising
strategies
Multi-domestic Strategy
Handles markets
independently for each
country
Adapts
product/advertising to
local tastes and needs
High
Global Strategy
Strategy
Leadership
Persuasion
Motivation
Culture/values
Structural Design
Organization Chart
Teams
Centralization
Decentralization,
Facilities, task design
Human Resources
Recruitment/selection
Transfers/promotions
Training
Layoffs/recalls
11
Performance
Portfolio Strategy
Mix of business
units and
product lines
that fit together
in a logical way
to provide
synergy and
competitive
advantage
12
BCG Matrix
Exhibit 8.5
Strategic Management
Process
Scan External
Environment
National,
Global
Evaluate
Current Mission,
Goals,
Strategies
Scan Internal
Environment Core
Competence,
Synergy, Value
Creation
13
Identify Strategic
Factors
Opportunities,
Threats
SWOT
Define new
Mission
Goals, Grand
Strategy
Identify Strategic
Factors
Strengths,
Weaknesses
Formulate
Strategy
Corporate,
Business,
Functional
Implement
Strategy via
Changes in:
Leadership
culture,
Structure, HR,
Information &
control
systems
conclusion
In order to formulate Business functions
strategy is to be formulated as well as
implemented with the right approach
Management is basically managing the
strategies and making them function.
Strategic management of an
organization leads to the benefits as well
as growth of the organization.
14
Strategic Planning:
Strategic planning is concerned with the growth and
future of a business enterprise.
It consists of a stream of decisions and actions that lead
to effective strategies and which, in turn, help the firm
achieve its growth objectives.
The process involves a thorough self-appraisal by the
corporation, including an appraisal of the business it is
engaged in and the environment in which it operates.
Marketing environment keeps changing fast. Practically
everything outside the four walls of the firm is changing
fast, resulting in a discontinuity with the past.
Strategic planning provides the road map and ensures
that the enterprise keeps moving in the right direction.
e)
f)
g)
h)
STRATEGIC
MANAGEMENT
28
COMPARISON
STRATEGIC
TACTICAL
OPERATIONAL
Long range
Intermediate
Short range
3 or more yrs
2-3 yrs
One yr
Top mgt
Middle
Lower
Broad objectives
Integration of departments
On co-ordination
On control
Roadmap to firms
Utilization of resources
Respond to environmental changes
Minimizes chances of mistakes
Creates framework of internal
communication.
Elements of a Strategy
Goals
Scope
Competitive Advantage
Logic
PROGRAMME STRATEGIES
SUB-STRATEGIES
TACTICS
BUSINESS POLICY
Business policy provides a basic framework
defining fundamental issues of a company, its
purpose, mission and broad business objectives
and a set of guideline governing the company's
conduct of business within its total perspective.
Overall Guide
Types of Policies
MAJOR POLICIES:
Lines of business
Code of ethics
SECONDARY POLICIES:
Major products
Types of Policies
FUNCTIONAL POLICIES:
Production
Marketing
Finance
Personnel
Research
RULES:
Salary & wage Adm.
Discipline& discharge
Welfare Adm
Safety & health
Types of Policies
PROCEDURES & STANDARD OP. PLANS:
Handling & processing of orders
Shipments of foreign locations
Servicing customer complaints
Strategy Vs Policy
STRATEGY
POLICY
Strategic decisions
Guidelines
STRATEGIC MANAGEMENT
PROCESS
(SMP)
1. Vision formulation which leads to the
statement of the Mission.
2. The mission is then converted into
performance Objectives
3. To achieve objectives you develop
Strategies
4. Strategy Implementation
5. Evaluation of performance
Diagram
(Strategic mgt by VSP Rao and V Hari
Krishna)
Purpose of SMP
CORE COMPETENCE
SYNERGY
VALUE Creation
CORE COMPETENCE:
An orgs core competence is something it
does exceptionally well in comparison to
its competitors. It reflects a distinct
competitive advantage like superior
research, development etc..
SYNERGY:
Two or more sub systems working together
to produce more than the total of what
might they produce working alone.
1+1=3
VALUE CREATION:
Exploiting core competencies and
achieving synergy help organizations
create value for customers. Value is the
sum total of benefits received and cost
paid by the customer.
Steps in SMP
Vision,Mission,Objectives
External Analysis
Internal analysis
STRATEGY FORMULATION
CORPORATE LEVEL STRATEGIES:
Growth/Expansion Strategy
Stability Strategy
Retrenchment Strategy
Combination Strategy
Motivational Techniques To
Implement Strategy
MBO
Incentives
Performance appraisal
Salary Administration
Recruiting & termination
Security
Power & Influence
STRATEGIC INTENT:
Vision,Mission,Objectives
Strategic intent is
about clarity, focus
and inspiration.
VISION
MISSION
OBJECTIVES
GOALS
PLANS
VISION
Corporate vision is a short and inspiring
statement of what the organization intends to
become and to achieve at some point in the
future, often stated in competitive terms. Vision
refers to the category of intentions that are
broad, all-inclusive and forward-thinking. It is
the image that a business must have of its goals
before it sets out to reach them. It describes
aspirations for the future, without specifying the
means that will be used to achieve those desired
ends .
Mission
Mission Statement describes what business youre in
and who your customer is. As such, it captures the very
essence of your enterprise - its relationship with its
customer.
Developing mission statement is the step which moves
your strategic planning process from the present to the
future. It depicts the mission statement connects today
with the future. Your mission statement must work not
only today but for the intended life of your strategic plan
of which your mission statement is a part. If youre
developing a five year strategic plan, for example, you
develop a mission statement which you believe will
work for the next five years.
Values
For any statement, whether mission or vision, to
be embraced and acted upon, it must reflect the
values of your organization.
Values describe what your management team
really cares about. What it holds dear. What
makes em tick. How would your managers
respond to a trade-off between product quality
and profit? Thats really a question of value.
1.
2.
3.
4.
5.
Role of Objectives:
Legitimacy
Direction
Coordination
Benchmarks for success
motivation
Characteristics of obj;
ENVIRONMENTAL ANALYSIS
Macro Environment-uncontrollable
1.
Economic Environment
Eco. Conditions- business cycle, growth of economy, size of
domestic Market & its dynamic effect
Eco. Policies- budgets, industrial regulations, eco planning,
import & export regulations, business laws, , industrial policy,
control on price & wages, trade & transport policy, size of
national income, demand & supply of various goods
Economic Systemof a country
free enterprise i.e. capitalist
socialist
communist
mixed
Executive -implementation
Environmental AnalysisScanning general supervision of all env. Factors & their interaction in order
1.
to identify early signals of change,
2.
Detect env. Changes underway
Monitoring -- tracking the env. Trends sequences of events or stream of
activities. Study of Indicators, assemble data to discern emerging
patterns. Three outcomes emerges in monitoring
1.
A specific description of env. trends
2.
Identification of trends
3.
Identification of areas of further scans
Forecasting -scanning & monitoring provide a picture of what is
happening strategic decision Making requires future orientation.
Forecasting is developing future projections of changes
Assessment - outputs of above 3 steps are assessed to determine
implementation. Assessment involves identifying & evaluate how & why
current & projected env. Changes affect strategic Mgt. Of the
organization
Techniques of Environment
Analysis
Techniques
Industry Analysis
QUEST
Competitor
Analysis
SWOT
(Strength-Weakness-Opportunity-Threat)
What is PEST?
1.
2.
3.
4.
5.
INTERNAL ANALYSIS
SWOT analysis
Value chain Analysis
Financial Analysis
Key factor rating
Functional area profile
Strategic advantage profile
Internal Analysis
Resource-Based View
Internal Analysis
Resources
Tangible
Intangible
Brand Equity
Capabilities
Core
Competencies
Competitive
Advantage
Above-Average
Returns
Internal Analysis
Resources and Capabilities:
Resources
Types:
Tangible
Intangible
Brand Equity
Internal Analysis
Tangible Resources Assets that can be seen, touched or quantified.
-
Intangible Resources
- Human resources (experience, training)
- Resources for innovation (technical employees, facilities)
- Reputation
Brand Equity
- Brand name
- maintaining brand equity (Mercedes example value/performance
and Japanese automakers)
Inbound
Logist
ics
Outbound
Logistics
Operations
>
>
Marketing &
Sales
>
Service
>
>
N
Firm Infrastructure
HR Management
Technology Development
Procurement
Operations Technologies
Process
Materials
Machine tools
Material handling
Packaging
Operations Technologies
Maintenance
Testing
Building design & operation
Information systems
Outbound Logistics
Technologies
Transportation
Material handling
Packaging
Communications
Information systems
Media
Audio/video
Communications
Information systems
Service Technologies
Testing
Communications
Information systems
Financial Analysis
Assessment of the firms past, present and
future financial conditions
Done to find firms financial strengths and
weaknesses
Primary Tools:
Financial Statements
Comparison of financial ratios to past,
industry, sector and all firms
Types of Ratios
Financial Ratios:
Liquidity Ratios
Assess ability to cover current obligations
Leverage Ratios
Assess ability to cover long term debt obligations
Operational Ratios:
Activity (Turnover) Ratios
Assess amount of activity relative to amount of
resources used
Profitability Ratios
Assess profits relative to amount of resources
used
Valuation Ratios:
LIQUIDITY RATIO:
LEVERAGE RATIO
Debt-Equity Ratio: Total long term debt/Shareholders
funds
Activity Ratio
Asset Turnover = Sales turnover / assets employed
Stock turnover = Cost of goods sold / stock expressed as
times per year
Working Capital ratio = Sales (net)/W.C.
Fixed Assets TO ratio = Sales (Net)/Net fixed Assets
Profitability ratio
G.P.ratio=GP/Net Sales
N.P.ratio=NP/Net sales
Operating ratio = Op. Cost/Net sales
Total Assets
Total Assets
Total Assets
Contingency Planning
Contingency planning approach
identify what if something wrong
happens
Planning strategies cope up
contingency events
Objective make to think possible
contingencies and its responses
BALANCED SCORECARD
FRAMEWORK
BALANCED SCORECARD
FRAMEWORK
Financial
perspective
Customers
Vision &
Perspective
Strategy
Learning &
growth
Internal
Business
process
Customer Perspective
To achieve my vision, how must
we look to our customers?
Internal Perspective
To satisfy my customer, at
which processes must I excel?
Organization Learning
To achieve my vision, how must my
organization learn and improve?
60% of
organizations
dont link
strategy &
budgets
STRATEGY
85% of management
teams spend less
Strategic
than
Learning Loop one hour per month
on strategy issues
BALANCED
SCORECARD
Strategy
Balanced
Scorecard
Financial perspective
Indicate whether companys strategy implementation and
execution are contributing to bottom-line improvement
Profitability
Operating income,
Financial perspective
Increase EVA to +2%
New Products
Productivity Strategy
Cost
Productivity
Customer Perspective
Customer & Market segment in which the unit is
competing
Customer Perspective
Win-win Relations with
Channel partners
Differentiators
On time
delivery
Relation
ship
Basic Requirement
Clean
Quality
Variability within
specified limits
Technical
support
Survey
Assistance
Satisfy shareholders
expectations
Internal Process
Identify entirely new process at which organization must
excel to meet customer & financial objectives
Achieve Operational
excellence
Competencies
Skill Mix
Systems (Technology)
Climate for
action
ESI
Competencies
IT Technology
Customer
Loyalty
On-line
delivery
Process
Cycle Time
Process
Quality
Employee
Competency
Suppliers perspective
Community
Involvement
Athlete Outreach /
Program Expansion
# of new programs / #
athletes
Volunteer retention /
recruitment
New donors
Donor feedback
# athletes in outreach program
Objectives
Customer / Athlete
Positive Image
Measures
Internal
Operations
Objectives
Objectives
Measures
Measures
Internal
Operations
Financial Donor
Knowledge of MSO
Management
Database Management
Recognition
Measures
Volunteers trained in MSO and
sports
Registration forms in one time
Program guide distribution
Volunteers in database
Advanced coaches training/
coaches/ meetings
To provide patients, families and primary care physicians with the best,
most compassionate care possible and to excel at communications
Customer
Patient
% Satisfied
% would Recommend
% Parents Could
Articulate Care Plan
Discharge Timeliness
Financial
Primary Care
Physician
% Satisfied with
Communication
% Parents Could
Identify DCH Physician
Operating Margin
Cost per Case
Internal Processes
Wait Time
Quality
Productivity
Admissions
Discharge
Infection Rates
Blood Culture
Contaminate Rate
Use of Clinical
Pathways (Top 10)
Length of Stay
Readmission Rate
Daily Staffing vs.
Occupancy
Strategic Database
- Availability
- Use
Revenue from
Neonatal Care
Strategic Objectives
F1 Return on Capital
Employed
Financial
F2 Existing Asset
Utilization
F3 Profitablity
F4 Industry Cost Leader
F5 Profitable Growth
Customer
Strategic Measures
Win-Win Dealer
Relationship
C1 Continually Delight
the Targeted
Consumer
C2 Build Win-Win
Relations with Dealer
ROCE
Cash Flow
Net Margin Rank (vs.
Competition)
Full Cost per Gallon
Delivered (Vs.
Competition)
Volume Growth Rate vs.
Industry
Premium Ratio
Non-Gasoline Revenue
and Margin
Share of Segment in
Selected Key Markets
Mystery Shopper Rating
Dealer Gross Profit
Growth
Dealer Survey
Internal
I1
Innovative products
and services
I2 Best-in-class Franchise
Teams
I3
Refinery Performance
Operational Excellence
I4
Inventory
Management
Good Neighbor
I5
I6
On Spec-On Time
I7
Improve EHS
CORP
Top-Down Bridging
Process To Share the
Strategy & Align the
Workforce
SBU
EDUCATION
PERSONAL GOAL
ALIGNMENT
BALANCED PAYCHECKS
Bottom-Up Process
to Internalize &
Execute the Strategy
Translate the
Strategy to
Operational Terms
Mobilization
Governance Processes
Strategic Management
Strategy Mape
Balanced Scorecards
STRATEGY
4
3
Align the
Organization to
the Strategy
Corporate Role
Business Unit Synergic
Support Unit Synergic
Make Strategy
a Continual
process
Make Strategy
Everyones Job
Strategic Awareness
Personal Scorecard
Balanced Paychecks
Why we exist
VALUES
What we believe In
VISION
What we want to be
STRATEGY
What we need to do
PERSONAL OBJECTIVES
What I need to do
STRATEGIC OUTCOMES
Satisfied
SHAREHOLDERS
Delighted
CUSTOMERS
Satisfied
PROCESSES
Executive Involvement
Strategic decision makers must validate the
strategy and related measures
#2
Cause-and-Effect Relationships
Every objective selected should be part of a
chain of cause and effect that represents the
strategy
#3
Performance Drivers
A balance of outcome measures and leading
measures facilitates anticipatory management
#4
Linked to Budget/Financials
Every measure selected can ultimately be
supported/enabled by Budgetary Funds
#5
Change Initiatives
Aligned Strategic Initiatives that change the
behavior of the organization
CORPORATE LEVEL
STRATEGIES
Types of CLS
Growth/expansion
Stability
Retrenchment
combination
Growth/Expansion
A) INTENSIFICATION
Market penetration
Market development
Product development
Innovation
B) DIVERSIFICATION
Concentric
Conglomerate
Forward
Backward
Concentric Diversification(RELATED)
When an org diversifies into a related but
distinct business. With concentric
diversification, new businesses can be
related to existing businesses through
products, markets or technology. Example:
Philips into Cellular phones,etc
CONGLOMERATE(UNRELATED)
An org diversifies into an area that are
unrelated to its business. The decision is
taken due to technological change.
STABILITY STRATEGY
When firms are satisfied with their current rate of growth
and profits, they may decide to use a stability strategy.
This strategy is essentially a continuation of existing
strategies. Such strategies are typically found in
industries having relatively stable environments. The firm
is often making a comfortable income operating a
business that they know, and see no need to make the
psychological and financial investment that would be
required to undertake a growth strategy.
RETRENCHMENT STRATEGIES
Retrenchment strategies involve a
reduction in the scope of a corporation's
activities, which also generally
necessitates a reduction in number of
employees, sale of assets associated with
discontinued product or service lines,
possible restructuring of debt through
bankruptcy proceedings, and in the most
extreme cases, liquidation of the firm.
DIVESTMENT STRATEGY
A divestment decision occurs when a firm
elects to sell one or more of the
businesses in its corporate portfolio.
Typically, a poorly performing unit is sold
to another company and the money is
reinvested in another business within the
portfolio that has greater potential.
BUSINESS-LEVEL STRATEGIES
ANALYSIS OF BUSINESS-LEVEL
STRATEGIES
PORTER'S GENERIC STRATEGIES.:
Cost leadership Strategy
Differentiation Strategy
Focus Strategy
COST LEADERSHIP
Cost-leadership strategies require firms to
develop policies aimed at becoming and
remaining the lowest cost producer and/or
distributor in the industry. Note here that the
focus is on cost leadership, not price leadership.
This may at first appear to be only a semantic
difference, but consider how this fine-grained
definition places emphases on controlling costs
while giving firms alternatives when it comes to
pricing (thus ultimately influencing total
revenues).
DIFFERENTIATION STRATEGY
Differentiation strategies require a firm to create something
about its product that is perceived as unique within its market.
Whether the features are real, or just in the mind of the
customer, customers must perceive the product as having
desirable features not commonly found in competing products.
The customers also must be relatively price-insensitive.
Adding product features means that the production or
distribution costs of a differentiated product will be somewhat
higher than the price of a generic, non-differentiated product.
Customers must be willing to pay more than the marginal cost
of adding the differentiating feature if a differentiation strategy
is to succeed.
FOCUS STRATEGY
Focus, the third generic strategy, involves concentrating on a
particular customer, product line, geographical area, channel
of distribution, stage in the production process, or market
niche. The underlying premise of the focus strategy is that the
firm is better able to serve its limited segment than competitors
serving a broader range of customers. Firms using a focus
strategy simply apply a cost-leader or differentiation strategy
to a segment of the larger market. Firms may thus be able to
differentiate themselves based on meeting customer needs
through differentiation or through low costs and competitive
pricing for specialty goods.
COMPETITIVE ADVANTAGE
Competitive advantage occurs when a organization
acquires or develops an attribute or combination of
attributes that allows it to outperform its competitors.
These attributes can include access to natural
resources, such as high grade ores or inexpensive
power, or access to highly trained and skilled personnel
human resources. New technologies such as robotics
and information technology either to be included as a
part of the product, or to assist making it. The term
competitive advantage is the ability gained through
attributes and resources to perform at a higher level than
others in the same industry or market
Innovation
Integration
Alliances/mergers/acquisitions
R&D
Entry Barriers
Benchmarking
Value chain approach
STRATEGY CHOICE
How effective has the existing strategy
been?
How effective will that strategy be in the
future?
What will be the effectiveness of selected
strategies?
STRATEGY CHOICE
Strategists collect and evaluate information to assess strengths and
weaknesses of the internal environment and opportunities and
threats of the external environment. Such an assessment presents a
list of possible strategic alternatives.From among those alternatives,
choices are made.
It determines the characteristics and forms of an organization's
strategic direction.
the decision to select among the grand strategies
considered, the strategy which will best meet the
enterprises objectives.
GAP Analysis
Gap analysis is a tool that helps a company to compare
its actual performance with its potential performance.
It simply answer two questions - where are we now?
and where do we want to be? .
The difference between the two is the GAP - this is how
you are going to get there.
BCG Portfolio
GE Multifactor Portfolio Matrix
Hofers Product-Market Evolution Matrix
Shell Direction Policy
Industrys level policy
Porters five forces model
Portfolio Analysis
And
BCG Matrix
High
Stars
Question
marks
Cash cows
Dogs
Low
High
Low
Source: Perspectives, No. 66, The Product Portfolio, Adapted by permission from The Boston Consulting Group, Inc., 1970.
BCG Matrix
Problem Child
Stars
?
$
Cash Cows
Dogs
BCG Matrix
Problem Child
Stars
Revenue ++++
Expenses _ _ _
Net
+
Revenue + + + + +
Expenses _
Net
++++
Revenue +
Expenses _ _ _ _
Net
___
Revenue + +
Expenses _ _ _ _
Net
___
Cash Cows
Dogs
BCG Matrix
Dogs are businesses that have a very small
share of a market that is not expected to grow.
Cash cows are businesses that have a large
share of a market that is not expected to grow
substantially.
Question marks are businesses that have only a
small share of a quickly growing market.
Stars are businesses that have the largest share
of a rapidly growing market.
Stars
are high-growth, high-share businesses or
products. They often need heavy
investment to finance their rapid growth.
Therefore, they may not be producing a
positive cash flow. The business strategy
will generally be for growth fueled by
externally acquired capital. Eventually,
their growth will slow, and they will turn into
cash cows.
Cash cows
are low-growth, high-share businesses or
products. These established and successful
SBUs need less investment to keep their
market share. They produce a lot of cash to
be used for other business units of the
company. They are either milked for
investment in stars or question marks or
harvested if there is little optimism for a
stable future.
Question marks
sometimes called problem children, are lowshare business units in high-growth markets.
They need a lot of cash to keep and increase
their share; they can not generate enough
cash themselves. Management must decide
which question mark it should build into stars
and which should phase out.
Dogs
are low-growth, low-share businesses and
products. They often have poor
profitability. Therefore, the business
strategy for a dog is most often to divest,
but occasionally to hold for possible
strategic repositioning as a question mark
or cash cow.
Portfolio Strategies
BUILD
Does the SBU have the potential to be a star?
HOLD
Can you maintain and preserve market share?
Four
Portfolio
Strategies
HARVEST
.
Increase the short-term return without
impacting long-run prospects.
DIVEST
Is it appropriate to dump SBUs
with low-growth potential?
2.
3.
4.
5.
GE / McKinsey Matrix
In consulting engagements with General Electric
in the 1970's, McKinsey & Company developed
a nine-cell portfolio matrix as a tool for screening
GE's large portfolio of strategic business units
(SBU). This business screen became known as
the GE/McKinsey Matrix and is shown below:
The GE matrix has nine cells vs. four cells in
the BCG matrix.
Industry Attractiveness
The vertical axis of the GE / McKinsey matrix is
industry attractiveness, which is determined by
factors such as the following:
Market growth rate
Market size
Demand variability
Industry profitability
Industry rivalry
Global opportunities
Macroenvironmental factors (PEST)
Business
Unit Strength
The
share
Growth
in market share
Brand
equity
Distribution
Production
Profit
The
channel access
capacity
GE MATRIX contd..
Industry
attractiveness
Market
circle.
chart.
The
The
Strategic Implications
Resource allocation recommendations can be made to
grow, hold, or harvest a strategic business unit based on
its position on the matrix as follows:
There
LIMITATION GE
While the GE business screen represents an
improvement over the more simple BCG growthshare matrix, it still presents a somewhat limited
view by not considering interactions among the
business units and by neglecting to address the
core competencies leading to value creation.
Rather than serving as the primary tool for
resource allocation, portfolio matrices are better
suited to displaying a quick synopsis of the
strategic business units.
GE Mckinsey Matrix
Bus Str STR
AVERA
- ONG GE
Ind at
High
GROW
AVERAGE
Low
WEAK
HOLD
HOLD
HARVEST
Leader Top position; major resources are focused upon the SBU.
Custodial Average position in both the cases bear with the situation with
little help from other product divisions.
Industry analysis
Strategic Group analysis
Competitor analysis
Life cycle analysis
SWOT Analysis
STRATEGIC
IMPLEMENTATION
RESOURCE ALLOCATION
While implementing strategies, the scarce
resources (financial,physical,human,etc)
resources need to be allocated carefully. In this
regard, one can follow, top-down and bottom-up
approach.
In top -down approach resources are
allocated through a process of segregation
down to operating levels.
In the bottom-up approach resources are
distributed after a process of aggregation
from the operating level
.
Strategic Budget
Capital budget
Performance budget
ZBB
Decision package
Ranking
Resource allocation
Structural Issues
FUNCTIONAL STRUCTURE:A company
organized with a functional structure
groups people together into functional
departments such as purchasing,
accounts, production, sales, marketing.
These departments would normally have
functional heads who may be called
managers or directors depending on
whether the function is represented at
board level.
Advantages
Clarity
Economies of scale
Specialization
Coordination
In-depth skill development
Suitability
Limitations
Effort Focus
Poor decision-making
Sub-unit conflicts
Managerial vacuum
PRODUCT DEPARTMENTATION
The purpose of product departmentation is that every product is
handled by separate management team and the problems faced in
the development of a product are carried out by single group of
employees working in that unit.
PRODUCT DEPARTMENTATION
GEOGRAPHIC DEPARTMENTATION
MATRIX ORGNAISATION
STRUCTURE
A Matrix structure organisation contains
teams of people created from various
sections of the business. These teams will
be created for the purposes of variety of
projects rather than a specific project and
will be led by a project manager. Often the
team will only exist for the duration of the
projects and matrix structures are usually
deployed to develop new products and
services .
PROJECT MANAGEMENT
Project management is a carefully planned and
organized effort to accomplish a specific (and usually)
one-time objective.
for example, construct a building or implement a major
new computer system.
Project management includes developing a project plan,
which includes defining and confirming the project goals
and objectives, identifying tasks and how goals will be
achieved, quantifying the resources needed, and
determining budgets and timelines for completion..
BUSINESS ETHICS
AND
SOCIAL RESPONSILBILTY
VALUES
Values are those things that really matter to
each of us ... the ideas and beliefs we hold
as special. Caring for others, for example,
is a value; so is the freedom to express
our opinions.
CULTURE
The totality of socially transmitted behavior
patterns, arts, beliefs, institutions, and all other
products of human work and thought.
These patterns, traits, and products considered
as the expression of a particular period, class,
community, or population:
These patterns, traits, and products considered
with respect to a particular category, such as a
field, subject, or mode of expression:
ETHICS
a system of moral principles
the rules of conduct recognized in respect to a
particular class of human actions or a particular
group, culture, etc.:
.(usually used with a singular verb ) that
branch of philosophy dealing with values relating
to human conduct, with respect to the rightness
and wrongness of certain actions and to the
goodness and badness of the motives and ends
of such actions.
BUSINESS ETHICS
Business ethics (also known as Corporate
ethics) is a form of applied ethics that examines
ethical principles and moral or ethical problems
that arise in a business environment. It applies
to all aspects of business conduct and is
relevant to the conduct of individuals and
business organizations as a whole. Applied
ethics is a field of ethics that deals with ethical
questions in many fields such as medical,
technical, legal and business ethics.
SOCIAL RESPONSIBILITY
Social responsibility is an ethical or
ideological theory that an entity whether it
is a government, corporation, organization
or individual has a responsibility to society
at large. This responsibility can be
"negative", meaning there is exemption
from blame or liability, or it can be
"positive," meaning there is a responsibility
to act beneficently.
BENEFITS OF CSR
A good reputation makes it easier to recruit
employees.
Employees may stay longer, reducing the costs and
disruption of recruitment and retraining.
Employees are better motivated and more
productive.
CSR helps ensure you comply with regulatory
requirements.
Activities such as involvement with the local
community are ideal opportunities to generate
positive press coverage.
LEADERSHIP
&
Its STYLE
Leadership
Principles of Leadership
Know yourself and seek self-improvement - In order to know
yourself, you have to understand your be, know, and do, attributes.
Seeking self-improvement means continually strengthening your
attributes. This can be accomplished through self-study, formal
classes, reflection, and interacting with others.
Be technically proficient - As a leader, you must know your job
and have a solid familiarity with your employees' tasks
.
Seek responsibility and take responsibility for your actions Search for ways to guide your organization to new heights. And
when things go wrong, they always do sooner or later -- do not
blame others. Analyze the situation, take corrective action, and
move on to the next challenge
Principles of Leadership
Make sound and timely decisions - Use good problem
solving, decision making, and planning tools.
Set the example - Be a good role model for your
employees. They must not only hear what they are
expected to do, but also see. We must become the
change we want to see - Mahatma Gandhi
Know your people and look out for their well-being Know human nature and the importance of sincerely
caring for your workers.
Keep your workers informed - Know how to
communicate with not only them, but also seniors and
other key people.
Principles of Leadership
Develop a sense of responsibility in your workers -.
Ensure that tasks are understood, supervised, and
accomplished - Communication is the key to this
responsibility.
Train as a team - Although many so called leaders call
their organization, department, section, etc. a team; they
are not really teams...they are just a group of people
doing their jobs.
Use the full capabilities of your organization - By
developing a team spirit, you will be able to employ your
organization, department, section, etc. to its fullest
capabilities
Factors of leadership
Factors of leadership
Follower
Leader
Situation
communication
types of leaders
Authoritarian
Team Leader
Country Club
Impoverished
Managers Vs Leaders
Manager Characteristics
Administers
A copy
Maintains
Focuses on systems and structures
Relies on control
Short range view
Asks how and when
Eye on bottom line
Imitates
Accepts the status quo
Classic good soldiers
Does things right
Leader Characteristics
Innovates
An original
Develops
Focuses on people
Inspires trust
Long range perspective
Asks what and why
Eye on horizon
Originates
Challenges the status quo
Own person
Does the right thing
Charismatic Leadership
Key Characteristics of Charismatic leaders
1.
Self Confidence- They have complete confidence in their judgment and ability.
2.
A vision- This is an idealized goal that proposes a future better than the status quo. The greater the disparity
between idealized goal and the status quo, the more likely that followers will attribute extraordinary vision to the
leader.
3.
Ability to articulate the vision- They are able to clarify and state the vision in terms that are understandable
to others. This articulation demonstrates an understanding of the followers needs and, hence acts as a
motivating force.
4.
Strong convictions about vision- Charismatic leaders are perceived as being strongly committed, and willing
to take on high personal risk, incur high costs, and engage in self-sacrifice to achieve their vision.
5.
Behavior that is out of the ordinary- Those with charisma engage in behavior that is perceived as being
novel, unconventional, and counter to norms. When successful , these behaviors evoke surprise and admiration
in followers.
6.
Perceived as being a change agent- Charismatic leaders are perceived as agents of radical change rather
than as caretakers of the status quo.
7.
Environmental sensitivity- These leaders are able to make realistic assessments of the environmental
constraints and resources needed to bring about change.
Contingent Reward: Contracts exchange of rewards for effort, promises rewards for good
performance, recognizes accomplishment
Management by exception (active): Watches and searches for deviations from rules and
standards, takes corrective action.
Management by exception (passive): Intervenes only if standards are not met
Laissez faire: Abdicates responsibilities, avoids making decisions
Transformational Leaders
Charisma : Provides vision and sense of mission, instills pride, gains respect trust.
Inspiration: Communicates high expectations, uses symbols to focus efforts, expresses important
purposes in simple ways.
Intellectual Stimulations: Promotes intelligence, rationality, and careful problem solving.
Individualized consideration: Gives personal attention, treats each employee individually,
coaches, advises.
Description categories
Derived from free Observation
Exchange Information
Routine Communication
Handling paperwork
Planning
Traditional Management
Networking
Decision Making
Controlling
Interacting with outsiders
Socializing /Politicking
Motivating/Reinforcing
Disciplining/Punishing
Managing conflict
staffing
Training/Developing
Personal Skills
2.Managing
stress
1.Developing
Self-awareness
Determining values
and priorities
Identifying cognitive style
Assessing attitude toward change
3. Solving
Problems
creatively
Using the rational approach
Using the creative approach
Fostering innovation in others
Interpersonal Skills
Coaching
Counseling
Listening
5. Gaining power
and influences
4. Communication
supportively
Gaining power
Exercise influence
Empowering others
6. Motivating others
7. Management
conflict
Identifying causes
Selecting appropriate strategies
Resolving confrontations
STRATEGIC LEADERSHIP
Strategic leaders are generally responsible for
large organizations and may influence several
thousand to hundreds of thousands of people.
They establish organizational structure, allocate
resources, and communicate strategic vision.
Strategic leaders work in an uncertain
environment on highly complex problems that
affect and are affected by events and
organizations outside their own.
Strategic vision
Managing change
Governance and management
Culture
Structure and policies
Communications & network
Barriers in Evaluation
Limits of Controls
Difficulties in measurement
Resistance to evaluation
Short-termism
Relying on efficiency versus effectiveness
Quantitative Factors
Companys performance over a period of time,
Companys performance with the competitors
Companys performance to industry averages.
Qualitative Factors
Consistency
Feasibility
Advantage
Strategic Control
Premise Control
Premises control is necessary to identify the
key assumptions and its implementation.
Premises control serves the purpose of
continually testing the assumptions to find out
whether they are still valid or not. This
enables the strategists to take corrective
action at the right time rather than continuing
with a strategy which is based on erroneous
assumptions.
Implementation Control
Strategic Surveillance
Operational Control
Aimed at the allocation and use of
organisational resources
Concerned with action or performance
Strategic Control
Operational Control
1. Basic question
2. Aim
Proactive, continuous
questioning of the basic
direction of strategy
3. Main Concern
Steering the
organizations future
Action control
direction
4. Focus
External environment
5. Time Horizon
Long- term
6. Main Techniques
Environmental scanning,
information gathering,
questioning and review
Internal organization
Short- term
Budgets, schedules, and
MBO
Process of Evaluation
Setting standards of performance
Measurement of performance
Analyzing variances
Taking corrective action
Setting of Standards
Quantitative Criteria
Qualitative Criteria
There has to be a special set of qualitative criteria for a
subjective assessment of the factors like capabilities,
core competencies, risk- bearing capacity, strategic
clarity, flexibility, and workability
Measurement of Performance
The evaluation process operates at the
performance level as action takes place.
Standards of performance act as the
benchmark against which the actual
performance is to be compared. It is
important, however, to understand how the
measurement of performance can take
place.
Analyzing Variances
The measurement of actual performance and its
comparison with standard or budgeted
performance leads to an analysis of variances.
Broadly, the following three situations may arise:
The actual performance matches the budgeted
performance
The actual performance deviates positively over
the budget performance
The actual performance deviates negatively
from the budgeted
Techniques of Strategic
Evaluation and Control
Evaluation Techniques for Strategic Control
Evaluation Techniques for Operational Control
Strategic Control:
Requires more than re-acting on past
performance
Keeps the organization on track
Anticipating events that might occur in
future
Allows the organization to respond to new
opportunities that may present itself
:
Managers must create an environment in
which people feel free to experiment and
take risks
Managers are challenged to build control
systems that encourage risk taking
Measures cost reduction, process
improvement and improved quality
measures.
STRATEGIC CONTROL
Strategic Control Systems
are the formal target setting ,
measurement and feedback systems that
allow strategic managers to evaluate
whether the company is achieving on the
four building blocks of a competitive
advantage..
STRATEGIC CONTROL
Financial controls
Growth
Profitability
ROCE
Share prices( Private sector)
Is a favorite control because it is objective
STRATEGIC CONTROL
Types of Control systems
Output controls: It is a system of control in which
managers estimate or forecast appropriate performance
goals for each division, department and employee and
measure achievement against these goals
Divisional Goals
Functional Goals
Individual Goals
STRATEGIC CONTROL
Types of Control systems
Divisional Goal
Goal: To be the number 1 or 2 in the
industry in terms of market share
STRATEGIC CONTROL
Types of Control systems
Behavior controls: happens through the
establishment of a comprehensive systems of
rules and procedures to direct the actions of
divisions, functions and individuals
Operating budgets
HR rules & regulations
Standardization
STRATEGIC CONTROL
Strategic Control Systems
Characteristics
Be flexible to allow managers to respond as
necessary to unexpected events;
Should provide accurate information, giving a
true picture of organizational performance;
Should provide information in a timely manner
3.
4.
STRATEGIC CONTROL
Kinds of measures