MBA (Aviation Management)

Fourth SEMESTER
Paper – VI
Aviation Strategic Planning
UNIT1 .Overview of strategic management, Strategic management, Strategy
formulation, defining the company mission, the external environment, the global
environment.
UNIT2. Strategic consideration for multinational firms, Environmental forecasting,
Internal analysis, Formulating long-term objectives and grand strategies.
UNIT 3. Strategic analysis and choice in or dominant product businesses, Building
substantial competitive advantages, Strategic analysis and choice in the multi-business
company.
UNIT 4.Rationalizing diversification and building shareholder, Strategic
implementation, Implementing strategy through action plans, Functional tactics and
employee empowerment, Implementing strategy through restructuring and re-
engineering the company's structure.
UNIT 5.Leadership, culture and rewards, Strategic control and continuous
improvement.
 REFERENCE BOOKS & READING MATERIAL

1. BUSINESS POLICY AND STRATEGIC MANAGEMENT

By AZHAR KAZMI.

2. STRATEGIC MANAGEMENT TEXT AND CASES.

By VSP RAO & V HARIKRISHNA,

3. STRATEGIC MANAGEMENT By FRED R. DAVID

4. ECONOMIC TIMES

5. BUSINESS REVIEW
 UNIT1. Overview of strategic management,
Strategic management, Strategy formulation,
defining the company mission, the external
environment, the global environment.
 UNIT ONE
1. Business is all about meeting the demands of customers.

2. This demand is for good , services, customer care and customer

delight.

3. Business is to tackle the market challenges and having edge

over competition.

4. Strategy is forward looking and to remain a step ahead of

competition in the areas of product, product cost, delivery, price
and ultimate value for money for the customer.

5. Strategy is thus in all the areas of business i.e. 1. SUPPLIER, 2.

MANUFACTURING, 3 LOGISTICS, 4. INVENTORY MANAGEMENT
Warehouse & Inventory
AND 5. CUSTOMER.
ed Supplier
Customer i sh

MRO & OTHERS

Fin ods
Work in Progress

Manufacturing
Demographic
Many & Few

Finished goods
institutional

go
Raw Materials

Materials

Services
Raw
 UNIT ONE
WHAT IS REVENUE ?
 REVENUE IS WHAT THE COMPANY GETS AFTER SALE
OF PRODUCT & SERVICES. IN OTHER WORDS IT IS THE
SUM TOTAL OF SELLING PRICE.

HOW REVENUE IS CALCULATED ?

 PRODUCTION COST + PROFIT =

REVENUE

WHAT IS PROFIT ?

REVENUE - PRODUCTION COST = PROFIT

 UNIT ONE

i. PROFIT IS LARGELY DETERMINED BY THE STATE OF MARKET.

ii. A COMPANY CAN NOT CHARGE AN ARBITORY PRICE FROM THE

CUSTOMERS. THEREFORE COST-CUTTING TECHNIQUES ARE
ADOPTED AS A BUSINESS STRATEGY.

iii. VALUE FOR MONEY CONCEPT HAS THEREFORE IS THE PRESENT

DAY CONCEPT.
COST OF RESOURCESS

RAW & OTHER VALUE

MATERIALS PROFITS

PRICE
 UNIT ONE

Strategy is derived from Greek word ‘ STRATEGOS’ ; meaning ‘GENERALSHIP’

in the warfare.

Strategy is important for the success of any organisation.

It is a matter of dealing with business uncertainties in areas of product design,

business layout, selection of input resources, business processes and customer
selection and customer care.

A study of Strategy management thus covers following fields of managerial

activities:
1. Planning, Programming and Scheduling.
2. Procurement system.
3. Transportation, Warehousing and Inventory Management.
4. Manufacturing system.
5. Marketing system – Market analysis, Market strategies, Product
Launching, product life cycle, Pricing and Focus on customer.
6. Development of sound Information system – MIS.
 Strategic Management

• Strategic management is the study of why

some firms outperform others
– How to compete in order to create competitive
advantages in the marketplace
– How to create competitive advantages in the
market place
• Unique and valuable
• Difficult for competitors to copy or substitute
 Strategic Management Concepts

Definition: Strategic management consists of the analysis,

decisions, and actions an organization undertakes in order to
create and sustain competitive advantages.
Key attributes of strategic management
– Directs the organization toward overall goals and objectives.
– Includes multiple stakeholders in decision making
– Needs to incorporate short-term and long-term perspectives
– Recognizes trade-offs between efficiency and effectiveness
 UNIT ONE
PLANNING:- DESIGNING STRATEGY
1. Business planning is for the mobilising all the resources in such a
manner so as to develop a set of activities that is essential for the
success and for keeping the competition under control.

2. It is more like a defeating a rival.

3. Planning is at three levels: 1. Long Term, 2. Medium Term & 3. Short

Term.

STRATEGIC TACTICAL OPERATIONAL

LONG TERM MED. TERM SHORT TERM

LONG RANGE PLAN INTERMEDIATE PLAN DAY TO DAY

TIME- OVER 3YRS 2 TO 3 Yrs ONE YEAR

TOP MANAGEMENT MIDDLE MANAGEMENT LOWER MANAGEMENT

BROAD OBJECTIVES INTEGRATION DAY TO DAY WORK

FOCUS ON PLANNING FOCUS ON FOCUS ON CONTROL
& FORECASTING COORDINATION
 UNIT ONE

 Strategic Management is based on the situation existing at a particular time in

the market.

 Its base is market competition and policies of rival firms.

 Objectively, the strategies are developed for a) to sustain the business, b) to

develop programmes for development and growth and c) to ensure retention of
customers and look for new customers.

DEFINITIONS:-
Alfred Chandler:
Chandler “ It is determination of the long-term goals and
objectives of an enterprise and adoption of the courses of action and
the allocation of resources necessary for carrying out these goals”.

William Glueck: “ A unified, comprehensive and integrated plan

designed to assure that the objectives of the enterprise are achieved”.
 UNIT ONE
 The Strategic Management is followed by different organisations at three distinct
levels:

1. CORPORATE LEVEL
2. BUSINESS LEVEL &
3. FUNCTIONAL LEVEL

Different firms having similar business perform differently due to their policies,
views towards market, product quality, product cost and approach towards the
customers.

Some firms perform better than their rival firms. This is the result of their adopting
a particular strategy.

Over period of time different firms have adopted different methods of business
and adapted themselves to change situations and circumstances. Based on these
changes, management gurus have developed approaches to strategic decision
making and these are being followed world over depending upon the needs of a
particular firm.
 UNIT ONE

STRATEGIC BUSINESS AREA (SBA)

•This is related to the distinctive segment of environment in which the
business operates or wish to operate.

•It covers all those areas of a environment that is effecting working of

the enterprise.

•Each of SBUs have several functional areas, performing specific job.

These jobs are independent, dependent and inter-dependent.

•Corporate level strategies basically deals with resource allocation.

Some times Corporate strategies may take up some common functional
strategies.

•SBU level strategies normally deal with allocation of resources to

functional areas and coordinate between them.

•Functional strategy deals with a relatively restircted plan providing

objectives for functional areas.
13
 UNIT ONE
Approaches to Strategic Decision Making:-

Design Approach:
Approach Alfred Chandler described that strategy determines tasks
performed by an organisation & these tasks are influenced by technology &.
people. The structure of a firm is established based on a specific environment
within which the firms chooses to function.

Analytical Approach: Igor Ansoff stated that ”strategic decisions are primarily
concerned with external rather than internal problems of the firm and
specifically with selection of the product – mix that the firm will produce and the
market to which it will sell.”

The Positioning Approach:

Approach Michael Porter stated that the goal of a
competitive strategy for a firm should be to find a position in the industry from
which it can best defend itself against competitive forces or can influence them
to its advantage. Porter has proposed that the firm’s profitability is dependent
on five forces – a) Supplier Power, b) Buyer Power, c) Threat from new
entrants d) Threat from substitutes and e) intensity of rivalry with in industry.

Porter suggested strategies for competitive advantage 1) Overall Cost

Leadership, 2) Differentiation, 3) Focus and 4) Resource Based Review.
 UNIT ONE
 A strategy will have four important elements:-

1. GOALS
2. SCOPE
3. COMPETITIVE ADVANTAGE
4. LOGIC

 To incorporate the above elements in firm’s programme for strategy

development, the firm should have:

1. VISION
2. MISSION
3. GOALS
4. MANGEMENT BY OBJECTIVE

 A vision is a vivid description what the company wants in future, it consist of

two components i) core ideology ii) envisioned future.

 Mission is the essence of vision. It is forward looking view of what firm’s wishes
to become. Mission is road map to achieve the vision.
 UNIT ONE
ISSUES FOR STUDENTS CONSIDERATION !

I.WHAT IS THE PRESENT STATUS OF AVIATION INDUSTRY IN INDIA?

II.HOW MANY COMMERCIAL AIRLINES IN OPERATION IN INDIA AT

PRESENT?

III.HOW MANY CIVIL AIRPORTS AVAILABLE IN THE COUNTRY?

IV.WHAT IS THE PASSENGER TRAFFIC HANDLED BY AIRLINES IN THE YEAR

2007-08?

V.WHAT IS THE GROWTH/DECLINE % OVER 2006-07.

VI.WHO MANAGES DIFFERENT AIRPORTS IN THE COUNTRY?

VII.HOW MANY INTERNATIONAL AIRPORTS IN THE COUNTRY AT THE END

OF 2007-08?

VIII.WHO ARE THE CONTROLING AND REGULATORY AUTHORTIES FOR

CIVIL AVIATION IN THE COUNTRY?
 UNIT2. Strategic consideration for multinational
firms, Environmental forecasting, Internal analysis,
Formulating long-term objectives and grand
strategies.
 UNIT TWO

STRATEGIC CONSIDERAATION FOR MULTI-NATIONAL FIRMS

I. INTERNATIONAL COMPETITIVE CONSIDERATION

II. GROWTH AND EXPANSION CONSIDERATION

III. INVESTMENT CONSIDERATION

IV. INFRA-STRUCTURE CONSIDERATION

V. TECHNOLOGICAL CONSIDERATION

VI. PRODUCT AND PRODUCT-MIX CONSIDERATION

VII. MARKET PENETRATION CONSIDERATION

VIII. HUMAN RESOURCE CONSIDERATION

IX. SOCIAL AND CULTURAL CONSIDERATION

 UNIT TWO
A firm has to study and analyse the internal and external environment in the light
of different consideration to step into the role of multi-national character.

STRATEGIC ADVANTAGE

ORGANISATIONAL CAPABILITY

COMPETENCE

SYNERGISTIC EFFECTS

STRENGTH AND WEAKNESSES

ORGANISATIONAL ORGANISATIONAL
RESOURCES BEHAVIOUR
 UNIT TWO
 FOR THE MULTI-NATIONAL THE BUSINESS ATTITUDE IS MAJOR ELEMENT
FOR TAKING BUSINESS STRATEGY DECISION.

 A FIRM HAS INTENTION TO ENTER A TOTALLY STRANGE AND UNKNOWN

AREA OF BUSINESS FROM THE POINT OF MARKET CONSIDERATION,
CUSTOMER CHOICE AND THE CUSTOMER CHOICES AND PAYING POWER.

 THE DECISIONS ARE TO BE TAKEN ON THE BASIS OF FOLLOWING

CONSIDERATIONS:
CUSTOMER FUNCTIONS

CUSTOMER GROUPS

ALTERNATIVE
TECHNOLOGIES
 GRAND STRATEGIES

Strategies are about the choice of direction that a firm wishes to adopt to
accomplish objectives on time horizon.

Strategic alternatives revolve around the question of weather to continue or change

the business the firm is currently operating. It is aim at improving working
efficiency.

The objective is to remain in business on the short term, grow on mid term and
expand and diversify on the long term.

Thus Glucek has recommended for following four Grand Strategies to follow for
achieving firm’s objectives:

1. STABILITY STRATEGY
2. EXPANSION STRATEGY
3. RETRENCHMENT STRATEGY
4. COMBINATION STRATEGY
 Corporate Portfolio Analysis

BCG PORTFOLIO MATRIX

HIGH

STAR QUESTION
Market Growth Rate

MARKS

CASH DOGS
COW

LOW

HIGH LOW
Relative Market Share
22
 UNIT TWO
ENVIRONMENTAL FORECASTING
1. A simple method is to attempt the gap analysis for different environment
factors.
high
Present
Performan Desired Performance
ce
Performance Gap

low Time
T-1 T-2

2. This is performed for all the products under the range of a firm.

3. This is done on a time frame as per firm’s future policy of stability, and
growth.

4. The BCG matrix is handy tool to take strategic decision for remaining in the
market for a product.
23
ENVIRONMENT
Political/Govt. Legal
Macro level envoi. General/remote

Financers Micro level envoi. Task/operating

Internal envoi.
Customers
Promoters/stake holder’s value
Suppliers

Global Environment
Vision Company image
Demographic

Mission Human Resource

Business
Objectives Financial Capability
Structure decision Technological capability
Internal power Marketing capability
relationship
Physical assets &
facilities Competitors

Public Marketing intermediates

Social/Cultural Technological/Natural 24
 ORGANISATIONAL APPRAISAL
• The resources possessed by an organisation are physical, human and
organisational resources.

• Organisational behaviour is the manifestation of the various forces and

influences operating in the internal environment of an organisation that
create the ability of or place constraints in the usage of resources.

• Strength is the inherent capability which an organisation can use to gain

strategic advantage.

• Weaknesses on the other hand is inherent limitation or constraint which

creates a strategic disadvantage for an organisation.

• Strength and weakness combine to produce synergistic effects creating

competencies which are special qualities that make organisations withstand
pressures of competition in the market place.

• Ultimate goal of an organisation is to secure strategic advantage compared

to competition in the market.

25
A systematic approach is adopted as a proactive measure to appraise the organisation
and is used when the strategist opt for formal strategic planning systems.

An ad hoc approach is generally used as a reactive measures in response to a crisis. In

this approach occasional organisational studies may be undertaken, whenever required to
determine capability.

The strategists need to tap different types of information sources for organisational
appraisal.

METHODS AND TECHNIQUES

FOR ORG. APPRAISAL

INTERNAL ANALYSIS
A) VALUE CHAIN ANALYSIS
B) QUNTITAIVE ANALYSIS
1] financial analysis
2] non-financial analysis

C) QUALITATIVE ANALYSIS
HISTORICAL ANALYSIS
INDUSTRY NORMS
COMPARATIVE ANALYSIS BENCH MARKING

BALANCED SCORECARD
COMPREHANSIVE ANALYSIS KEY FACTOR RATING 26
APPROACHES TO ENVIRONMENT SCANNING:

There are three distinct approaches:

1. SYSTEMATIC APPROACH.
2. Ad Hoc APPROACH.
3. PROCESSED – FORM APPROACH.

SOURCES OF INFORMATION FOR INVORNMENT SCANNING:

1. Documentary or secondary sources.

2. Mass Media.
3. Internal Sources.
4. External Agencies.
5. Formal Studies.
6. Spying and Surveillance.

27
 A PROJECT DEVELOPMENT BY STUDENTS

HOW MANY DIVISIONS CAN BE FORMED IN THE AVIATION

INDUSTRY?

SUPPOSE ONE HAS TO START A PARTICULAR DIVISION OF

AVIATION INDUSTRY, WHAT STEPS WILL BE TAKEN?

GRAPHICALLY ILLUTSRATE THE PROCESS, PROVIDING LOGICAL

EXPLANATION.

WHAT STEPS WOULD ONE TAKE TO KEEP STABILITY IN THE

EXISTING BUSINESS? WHAT WOULD BE THE RECOMMENDATIONS
FOR EXPANSION OF EXISTING BUSINESS?
UNIT 3. Strategic analysis and choice in or
dominant product businesses, Building
substantial competitive advantages, Strategic
analysis and choice in the multi-business
company.
 UNIT 3

WHAT IS PRODUCT?
PRODUCT

WHAT IS PRODUCT STRATEGY?

WHAT IS PRODUCT SEGMENTATION?

SEGMENTATION

WHAT IS PRODUCT POSITIONING?

WHAT IS PRODUCT LIFE CYCLE?

WHAT IS MARKET STRATEGY?

WHAT IS MARKET SEGMENTATION?

SEGMENTATION
 Strategic Analysis and Choice
 Strategies are made to remain in business, to counteract the competition and
to grow and develop on a long-term basis.

 The factors effecting strategic analysis and choice are, a) SUBJECTIVE &
b) OBJECTIVE.

 The considerations are where a firm exists today and where it desires to be in
future.

 Resource mobilisation is main issue involved.

 Decision making consists of setting objectives, generating alternatives,

choosing one or more alternatives that will help the organisation achieve its
goal in the best possible manner and finally, implementing the chosen
alternative.

 Strategic analysis and choice should have fulfillment of objectives and should
be result orientation. It is based on collection of data, specific analysis and a
process of making decisions.
 Strategic Analysis and Choice

Strategic choice could be defined as “ the decision to select from

among the grand strategies considered, the strategy which will best
meet the enterprise’s objectives. The decision involves focusing on
a few alternatives, considering the selection factors, evaluating
against these criteria, and making the actual choice.”

• Focusing on Alternatives

• Gap Analysis

32
 UNIT THREE
 FOR THE MULTI-NATIONAL THE BUSINESS ATTITUDE IS MAJOR ELEMENT
FOR TAKING BUSINESS STRATEGY DECISION.

 A FIRM HAS INTENTION TO ENTER A TOTALLY STRANGE AND UNKNOWN

AREA OF BUSINESS FROM THE POINT OF MARKET CONSIDERATION,
CUSTOMER CHOICE AND THE CUSTOMER CHOICES AND PAYING POWER.

 THE DECISIONS ARE TO BE TAKEN ON THE BASIS OF FOLLOWING

CONSIDERATIONS:
CUSTOMER FUNCTIONS

CUSTOMER GROUPS

ALTERNATIVE
TECHNOLOGIES
 Strategic Analysis and Choice
Gap Analysis

Desired
Performance

Performance
Present Performance
performance Gap

t1 t2
Time Frame

34
 Product Life Cycle

Break
Market even
Maturity
Share

Growth
Decline

Introduction
Time Span
Objectives FOR Building substantial competitive
advantages BEFORE A MULTI-NATIONAL

PRESTIGE
& GROWTH
RECOGNITION
PROFIT

SURVIVAL
 SURVIVAL
1. Attaining a desired liquidity position.

2. Reduction of Borrowed Funds.

3. Reducing Costs.

4. Holding a given Market Status.

5. Meeting Competition.

6. Providing for continuing Leadership.

7. Protection against adverse Legislation.

8. Maintenance of Reserve Strength.

9. Maintaining Social Role & Image.

10.Minimising Risks.
 GROWTH
i. Expansion of Return on Investment

ii. Making Plant Addition and Improvement.

iii. Increasing Output.

iv. Gaining Larger Share in the Market.

v. Increase in Manpower.

vi. Increase in Expenditure in R&D.

vii. Expansion in Equity or Borrowed Funds.

viii.Improving the Product Mix.

ix. Continuous cost Reduction & Improvement in Service.

x. Gaining Special Regulatory Treatment.

 PRESTIGE & RECOGNITION

I. Achieving Outstanding Position in Industry.

II. High Quality of Manpower & Personnel.

III. Addition of New & Appealing Products.

IV. Aiming at Stable Growth Rate.

V. Paying Dividends Regularly.

VI. Special Provision for ‘Fringe Benefits’.

VII. Heavy Participation in Social & Public Affairs.

VIII. Improving Quality, Reducing Costs & Prices.

IX. Establishing Special Grants and Awards.

X. Emphasis on “SERVICE” Role.

 Strategic analysis and choice in the multi-
business company.
WHAT IS MULTI-BUSINESS COMPANY?
WHAT ARE CORPORATE STRATEGIES?

WHAT IS MANAGEMENT PLANNING?

HOW THE PLANNING PROCESS IS PERFORMED?

STEPS BY STEP
i. WHAT IS TO BE DONE?
ii. WHERE IS ACTION TO TAKE PLACE?
iii. WHEN IS THE ACTION TO TAKE PLACE?
iv. WHO WILL CARRY OUT PLAN INTO EFFECT?
v. HOW WILL THE ACTION BE CARRIED OUT?
vi. WHAT WILL BE THE COST?
 PLANS

I. Planning by business managers, military commanders, or the directors of

other organisations forces careful advance consideration of the operations or
actions that lies ahead.

II. Planning process fundamenally relates to allocation of resources both tangible

& intangible.

III. Plans always focus on OBJECTIVES of the firm.

IV. Plans are primary or basic or supporting depending upon the situation and
requirement.

V. There are single use & standing plans.

VI. Plans may be divided or subdivided to make these operational and to develop
a road-map or a blue print.

VII. Plans are always reviewed and suitably controlled for efficiency &
effectiveness.
 PLANNING PROCESS & CONTROL

1. Controls are closely related to plans.

2. If plans indicate reasonable hopes, review and control process indicate the
extent to which such hopes have been realised.

3. Major steps in control process include:

a) The establishment of standards,
b) Appraisal of performance in the light of such standards.
c) Making corrections & adjustments for required level of performance.
UNIT 4.Rationalizing diversification and building
shareholder, Strategic implementation, Implementing
strategy through action plans, Functional tactics and
employee empowerment, Implementing strategy
through restructuring and re-engineering the
company's structure.
 What is strategic
management?

•• AA continuous,
continuous, interactive
interactive process
process
aimed at
aimed at keeping
keeping anan organization
organization
as aa whole
as whole appropriately
appropriately matched
matched
to its
to its environment
environment (Certo
(Certo and
and
Peter)
Peter)
•• Keeping
Keeping thethe business
business in
in tune
tune with
with
management and
management and marketing
marketing forces
forces
both outside
both outside and
and inside
inside the
the firm
firm
 Functional Tactics and Employee Empowerment
INFLUENCING FACTORS

EXTERNAL FACTORS

Economic Competitive Firm’s

Social, Political Conditions & Opportunities
Regulatory Industry Attract ness & Threats

THE MIX OF CONSIDERATION THAT DETERMINES

FIRM’S STRATEGIC SITUATION & FUNCTIONAL TACTICS

Firm’s Personal Shared Values

Strength, Weakness Ambitions & &
Competence & Business Philosophy Firm’s Culture
Capabilities Of key Executives

EXTERNAL FACTORS
 Functional Tactics and Employee Empowerment

A firm’s policies, practices, traditions, philosophical beliefs and ways of doing

things combine to create a distinctive culture.

The stronger the company’s culture, the more that culture is likely to shape
the company’s strategic actions, sometimes even dominating the choice of
strategic moves.
 Strategic implementation
 FOR THE MULTI-NATIONAL THE BUSINESS ATTITUDE IS MAJOR ELEMENT
FOR TAKING BUSINESS STRATEGY DECISION.

 A FIRM HAS INTENTION TO ENTER A TOTALLY STRANGE AND UNKNOWN

AREA OF BUSINESS FROM THE POINT OF MARKET CONSIDERATION,
CUSTOMER CHOICE AND THE CUSTOMER CHOICES AND PAYING POWER.

 THE DECISIONS ARE TO BE TAKEN ON THE BASIS OF FOLLOWING

CONSIDERATIONS:
CUSTOMER FUNCTIONS

CUSTOMER GROUPS

ALTERNATIVE
TECHNOLOGIES
 Strategic implementation
WHAT AND WHERE IS THE CHOICE FOR STRATEGIC IMPLEMENTAION?

Analysing
Strategically about
Industry &
Competitive conditions

What strategic
options What is
Does the firm The Best
realistically have Strategy

Analysing
Strategically about
Firm’s own
situations
 Rationalizing diversification and building shareholder
A FIRM’S STRATEGY AIMS AT MANAGEMENT AWARENESS TO SUCH
FUNDAMANTAL BUSINESS QUESTIONS:-

1. To concentrate on a single business or build a diversified group of

business?

2. To cater to broad range of customers or focus on particular market

niche?

3. Do develop a wide or narrow product lines?

4. How to represent to changing preferences of buyers?

5. How big a geographic market to cover?

6. How to react to newly emerging market and competitive conditions?

7. How to safeguard the interest of different stake-holders, particularly

the shareholders?
 Implementing strategy through action plans

Strategy Implementation concerns the managerial exercise of putting a

freshly chosen strategy into place.

Strategy Execution deals with the managerial exercise of supervising the on

going pursuit of strategy measurable progress in achieving the targeted
results.

It is management duty to stay on top of the company’s market place,

deciding whether things are going well internally and monitoring outside
development closely.

Marginal performance or too little progress, as well as, important new

external circumstances, will require corrective actions and adjustments.
 Implementing strategy
Through Restructuring and Re-engineering the Company's Structure

CORPORATE
STRATEGY

BUSINESS Strategic
STRATEGY Hierarchy
For a
Diversified Company
FUNCTIONAL
STRATEGY

OPERATIONAL
STRATGIES
REGIONS, PLANTS DEPARTMENTS
ETC
UNIT 5.Leadership, culture and rewards,
Strategic control and continuous
improvement.
 UNIT FIVE

“Socially as well as individually organisation is to growth: beyond a certain

certain point there cannot be further growth without further organisation.”
- Herbert Spencer

LEADERSHIP
There are two aspects of leadership – a) Corporate Leadership & b) Individual
leadership.

Corporate Leadership depends upon: 1) Division of work, 2) Structuring of

authority and decision making & c) Developing sound working relationship
among the people involved, d) Inside & outside Relationship.

The effectiveness of an organisation is measured by the degree to which it

achieves the objectives that are set up for it.

Individual Leadership depends upon the vision of the person. It is reflected

into field of a) Direction & coordination, b) Influencing the behaviour of others,
c) Communication skills, d) Clarity of thought and decision making ability for
critical problems, e) Motivation, f) Risk-taking ability, g) Adaptation to change &
h) Personality & Charisma.
 STRATEGIC CONTROL
LOOK TO VALUE CHAIN

Flow of Activity

Basic Resources INVENTORY

& Materials

Manpower
Manufacturing & WHOLESELLER
Capital & Processing
Capital Goods
RETAILER
Energy, Time
Ideas,
FINAL
Know - How
CUSTOMER

Quality Cost Time Process delivery Obligations

Innovative Drive

Customer needs &

Expectations

Supplier’s Demand
Offerings Conditions
Innovative
Dynamics
Social Substitutes
of the company
Forces

Competitive Government
Dynamics Policies

Innovation by
Research Org.
 KAIZEN – a Japanese term that basically means:
KAI = CHANGE
ZEN = BETTER
In other words ‘KAIZEN’ is continuous change
for better.

2. It is a management concept where willing incremental changes take place

in the organisation for the better, involving every body in the company.
3. Kaizen has a very clear objective of more and more production with value
activities with less and less wastes i.e. attaining higher efficiency, better work
environment and developing stable processes by standardisation.
4. Kaizen therefore, is a suitable management tool where decisions are based
on collective culture.
5. Human resource is an asset.
6. It is a continuous improvement process and not one time project for
improvement
7. It must be statistically & quantitatively measurable.
 KAIZEN

The emphasis is always on following factors:

i. Starting from top person in the organisation to
total employee involvement.
ii. People empowerment.
iii. Employee are provided with protected freedom.
iv. Communication free and frank in all the four
direction.
v. Aimed at no investment improvement.
vi. Focus on training and continuous appraisal.
 5 S IN KAIZEN

SEIRI = SORT

SEITON = SYSTEMATIZE

SEISO = CLEAN

SEIKETSU = STANDARDISE

SHITSUKE = COMMITMENT OR DICIPLINE.

 HOW TO TAKE UP KAIZEN?
a) The top management should understand the need and
advantages of Kaizen.
b) Generation of awareness amongst employees and specific
training.
c) Forming Kaizen teams and selection of team coordinator.
d) Brain Storming and application of Cause and effect
theory and then prioritize.
e) Develop a pilot project for improvement with no cost
involvement.
f) Review the progress and evaluate the improvement in
savings in cost, time, quality and work place
environment.
g) Praise the individuals and teams for the changes for
betterment. If possible reward the teams.
 Where Kaizen can be applied?

ALL MOST AT ANY PLACE. BE IT IN PRODUCTION

PROCESS, SYSTEMS AND PROCEDURES, WASTE
MANAGEMENT ETC.

IT CAN BE APPLIED IN MATERIALS DEPARTMENT IN

1] TIME SAVING IN PROCUREMENT CYCLE, 2]
REDUCING NON-VALUE SYSTEMS, 3] LOGISTICS, 4]
WARE HOUSING AND RECEIPT AND ISSUE
PROCEDURES, 5] INVENTORY MANAGEMENT AND 6]
INNOVATIVE METHODS FOR JUST – IN – TIME SYSTEM.
 KAIZEN
•Kaizen signifies small improvements made in status-quo as a result of on
–going efforts.

•Kaizen can be done, by anyone and anywhere, involving everyone.

•Kaizen is staying together for collective progress & growing together for
collective success. It is the underlying principle.

•Kaizen does not start with very high expectation otherwise you are bound
to fall.

•Kaizen starts with self in the beginning and followers will follow.
Perfection comes from dedication within.

•Kaizen best operates on system of CA – PDCA ( Current Situation

Assessment – Plan – Do – Check – Act).
 Kaizen
Conclusion:

1. Kaizen should be a corporate strategy.

2. Kaizen should be part of functional role.
3. Kaizen should aim at improved communication and
develop higher morale.
4. Kaizen should revolve around systems, procedures and
structure of the organisation.
5. Top management should provide Personal Quality
Initiative (PQI).
6. Kaizen teaches workplace discipline.
7. Kaizen aims at waste elimination in Value Chain.