Professional Documents
Culture Documents
Concept of
Concepts of Strategy and Planning
by
Monica Belcourt & Mc.Bey
Introduction
Air Canada, with 40,000 employees, was facing
Introduction
Strategic decisions:
Acquire its competition, Canadian Airlines. And
attempted to divest some of its assets, by selling 35%
of Aero-plan to Onex Corporation, an investment firm
Create multiple brands such as Tango and Zip in an
attempt to compete with the low-cost carriers.
Try to increase its market share of international
business travel because the domestic market was
stagnant.
Downsize by laying of 10% of its employees in an
attempt to reduce its $3billon annual labor expense.
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situation.
Purpose: a consistent stream of actions that sometimes
are the result of a deliberate plan or emergent action
based on reactions to environment.
Ploy: a specific man-oeuvre at the tactical level with a
short time horizon.
Position: the location of an organization relative to its
competitors and other environmental factors.
Perspective: the gestalt or personality of the
organization.
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implementation:
formulated strategy.
implementation
of
Execution of Strategy
Define vision, purpose, mission, and a clear
direction.
Convert the vision into measurable objectives.
Determine the plan to achieve the strategy.
Implement the plan in effective and efficient ways.
Measure the result against goals, revise plans in light
Strategic Plan
Some argue that future is unpredictable and a long-
beginning of a strategy.
The realized strategy is what actually happened.
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Strategic Plan
Thus, a good strategy recognizes the complexities of
Strategic Types
Strategy can be unique to different organizations, but
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Strategic Types
Strategy
Corporate Strategy
Restructuring
Turnaround
Divestiture
Liquidation
Bankruptcies
Business Strategy
Maintenance
Growth
Incrementally
Internationally
Mergers
acquisitions
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Strategic Types
1. Corporate Strategies: Overall strategy for the company
and its businesses or interests.
These are usually focus on long-term and include major
decisions such as a decision to compete or operate
internationally or acquire another company.
Three options of corporate strategies:
a. Restructuring,
b. Growth, and
c. Maintenance.
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Strategic Types
Restructuring: When an organization is not achieving its
goal such as making profit or achieving its goals, options
are: turnaround, divestiture, liquidation and bankruptcy.
i. Turnaround
Managers try to restore a losing business to profitability
or a government agency from nonperformance to
viability.
Methods are to get rid of unprofitable products,
layoffs,
improving efficiency, or
adding a new product.
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Strategic Types
[Box 1.2]
Example (Turnaround):
McDonalds revive its success in 2003 when its profits were
down by 11%, sales by 5% from $40 billion of 2002.
Introduced Paul Newmans Own healthy salad dressings
Strategic Types
ii. Divestiture : It refers to making a business (subsidiary)
financially and managerially independent or selling it
outright. sometimes, fit is the problem, not finance.
Example:
Air Canada attempted to divest its Aeroplan business and
then put its maintenance division and its low-cost
carrier Jazz on the market.
A pharmaceutical company divested in cosmetic business
though the scientists had no respect for the frivolous
cosmetic and making pretty faces.
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Strategic Types
iii. Liquidation:
Plants are closed,
employees are released and
goods are auctioned off.
Little return (salvaged) to share holders.
iv. Bankruptcy: It occurs when the company cannot pay its
creditors. Company ceases to exist and assets are divided
among creditors.
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Strategic Types
Restructuring has profound effect on HRM.
Managed turnover,
Selective layoffs,
Transfers,
Increased demand on remaining employees,
Renegotiated labor contract.
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Strategic Types
b. Growth Strategies:
Many companies make the growth strategy as its
target.
This means growth in revenue, sales, market share,
customers, orders, etc.
It has implications for HRM.
Job creation,
aggressive recruitment and selection,
rising wages,
training and development budgets.
Several ways: Incrementally, internationally, and
mergers and acquisitions.
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Strategic Types
i. Incremental Growth:
It can be done by- expanding client base, increasing
products or services, changing distribution networks, or
using technology.
Example: Proctor & Gamble
expanded the client base (introduced skin care and hair
conditioner for babies),
added a product, Pringle potato chips to its cleaning and
health care products,
changed distribution networks, added drugstores to
grocery stores, and
used technology to manage just-in-time customer
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purchasing.
Strategic Types
ii. International growth: It is expanding business to
other countries. It has a great HR implications.
iii. Mergers and acquisitions
Acquisition is acquiring a new company.
Merger is putting together two or more companies for
economy of scale.
It has HRM implications: Eliminate duplication, meld
(blend, combine) benefits and labor relations and
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create a common culture.
Strategic Types
[Box 1.4] Merger Misery
Minacs Worldwide Inc,. (call centers in Canada)
Strategic Types
c. Maintenance strategies
It is maintaining status quo.
Satisfied with market share. No need to grow. HRM
practices remain constant. Try to get as much profit as
possible. It is harvest strategy.
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Industry
Growth
Rate
Low
(below 1.0)
High
Stars
Question
Marks
Low
Cash
Cows
Dogs
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ii. Prospector
It operates in a dynamic environment.
Innovation and adaptation are critical for success.
Example. Telecom needs heavy investment in R &
D for innovation and adaptation and decentralized
structures for rapid and intelligent responses to
environment.
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