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BUSINESS POLICY AND STRATEGIC

MANAGEMENT
CONTENT:
STRATEGIC CHOICE: Traditional approach, Strategic alternatives,
various models- BCG,GE nine cell matrix , Hofers Model,
Stricklands Grand strategy Selection Matrix, SWOT analysis and
its impact.
Basis of choice: Strategic choice- Michael Porters approach:
Model, Generic competitive strategies, Cost advantage,
Differentiation, Technology and Competitive advantage.
Strategic Choice: Coevolving, Patching, Strategy as simple rules.

Process of strategic choice:


Strategic choice is the evaluation of the alternative strategies and the
selection of the best alternative.
How we can arrive at the best alternative?
The dynamic environment of the business activities does not allow any
type of consensus where everyone agrees on one alternative.
The strategy selected should rigorously evaluated in terms of its ability
to meet the mentioned criteria:
1. Mutual exclusivity
2. success
3. Completeness

4. Internal consistency.

There are strategies which should be avoided:


Traditional approaches.

Follow the leader


Hit another home run.
Arms race.
Do everything.
Losing Hand.
Intuition.

The traditional approach was based on the size of the


firm and functional departments.

Strategic Alternatives

Defensive approach.
Creative approach.
Outsourcing.
Entrepreneurial approach.
Inside out planning.
Integrated approach.
Key-factor approach.

BOSTON CONSULTING GROUP.


EVALUATING STRATEGIC
ALTERNAIVES
BCG MATRIX:
On X axis- relative market share
On Y axisMarket growth rate.
STARS

QUSTION MARK
???

CASH COW

DOG

GE NINE CELL MATRIX:


Supported by Mckinsey & co.
X-axis=Business strength and competitive position.
Y-axis-Industry effectiveness.

GE model offers immediate classification of strong, medium and


average ratings. Powerful tool to channel corporate resources to
business.
PROTECT POITION

INVEST TO BUILD

BUILD
SELECTIVELY

BUILD
SELECTIVELY

SELECTIVELY
MANAGE

HARVEST

PROTECT AND
REFOCUS

MANAGE FOR
EARNINGS

DIVEST

SWOT ANALYSIS
Strengths: attributes of the organization
that are helpful to achieving the objective.
Weaknesses: attributes of the organization
that are harmful to achieving the objective.
Opportunities: external conditions that are
helpful to achieving the objective.
Threats: external conditions which could
do damage to the business's performance

CONTINUING-SWOT

HOFERS MODEL
Strategic management model, incorporating both planning and
control functions.
Their model consists of several basic steps:
(1) goal formulation,
(2) environmental analysis,
(3) strategy formulation,
(4) strategy evaluation,
(5) strategy implementation, and
(6) strategic control.
According to Hofer, the formulation portion of strategic management
consists of at least three sub processes:
- environmental analysis,
- resources analysis,
- and value analysis

BASIC of Choice:
STRATEGIC CHOICE
Michael Porters Model.
PORTERS FIVE FORCES MODEL:

Competitive Environment
Threat of Substitutes
Bargaining Power of Suppliers
Bargaining Power of Buyers
Threat of New Entrants

Threat of Substitutes
Competitive threat of substitutes is
stronger when they are:
Readily available
Attractively priced
Believed to have comparable or better
performance features
Customer switching costs are low

Threat of New Entrants


Seriousness of threat depends on Barriers
to entry and Expected retaliation
Barriers exist when Newcomers confront
obstacles Economic factors put potential
entrant at disadvantage relative to
incumbent firms

Bargaining Power of Suppliers

Suppliers are a stronger force the


more they can exercise power over:
Prices charged
Quality and performance of items
supplied
Reliability of deliveries

Bargaining Power of Buyers


Buyers are a stronger competitive force
the more they have leverage to bargain
over:
Price
Quality
Service
Other terms and conditions of sale

Competitor Analysis

Gathering data
Analyzing data
Competitor array
Relative cost Competitor profiling
Value chain analysis
Benchmarking and Value chain reconfiguration
Competitive behavior analysis

Environmental Analysis

External Environment
General - PEST
Competitive Porters 5 Forces
Internal Environment
Strength and Weakness Analysis
Value Chain Analysis

Generic competitive strategies:


It is a part of business strategy.
Question arises:
Should we compete on the basis of low cost.
Should we compete head to head with the market leader.
MICHAEL PORTER proposes two generic strategies:
LOWER COST
DIFFERENTIATION OF PROUCT. The dimensions of quality are:
Performance, features, reliability, conformance, durability,
serviceability, aesthetics, perceived quality.

There are risks involved with every strategy.

TECHNOLOGY AND COMPETITIVE


ADVANTAGE
Competitive advantage
Above average returns
Returns in excess of what an investor expects to earn
from other investments With a similar amount of risk
In the long run, an inability to earn at least average
returns results in failure
Sustainable competitive advantage
A firm implementing a value-creating
Strategy which other companies find it too
Costly to imitate

Technology

Product innovations,
Process innovations,
R&D.
Production systems.

Case of TOYOTA production system w.r.t


technology and STRATEGIC
management.

TOYOTA VISION
The force behind the emergence of Toyota Motor's rise is TOYOTA
PRODUCTION SYSTEM(TPS). Toyota implemented the paint and
body shops. The commercial sustainability sometimes expressed
doubts about these changes these systems for the future
perspectives and long term vision. Toyota is a Japanese car
manufacturer which provides these systems for the future
perspectives and long term vision. Toyota is a Japanese car
manufacturer which provides TPS, which further adopted by various
United states and UK companies. The main reason for the
implication of changes to retain workers in the assembly and final
assembly lines because most of the work was done manually like
the press, the paint and body shops. The commercial sustainability
sometimes expressed doubts about these changes

Coevolving
Combining strategic management, innovation management and
organizational ecology theories, we try to review and explain the
development of product innovation or process innovation
through/among two or more firms.
The two factors such as:
INTRA ORGANIZATION
INTER ORGANIZATION
plays an important role in the coevolving factor.

Its a mixture of Strategic Management,


innovation management, our ecological
theories and various disciplines o
management.

Patching: STRATEGIC INTENT.


People, Process, Technology
Effective Attributes of Effective Patch Management
Well

documented
Clear guidance
Repeatable
Proactive
Integrated
Reduce risk

Reduce

operating costs
Increase productivity
Increase security
Increase quality

People
Security

Awareness
Enablers / Contributors
Compliance

Strategy as a simple rule:


Strate + gy
Zeal
Dividing in to smaller portions.

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