Paper 9 New Icmai SM

Study Note - 8
strategic management introduction
This Study Note includes

8.1 Vission, Mission and Objective
8.1 Vission, mission and objective
Strategy:
Strategy is all about integrating organizational activities and utilizing and allocating the scarce resources within
the organizational environment so as to meet the present objectives. While planning a strategy it is essential to
consider that decisions are not taken in a vacuum and that any act taken by a firm is likely to be met by a reaction
from those affected, competitors, customers, employees or suppliers.
Strategy can also be defined as knowledge of the goals, the uncertainty of events and the need to take into
consideration the likely or actual behavior of others. Strategy is the outline of decisions in an organization that
shows its objectives and goals, reduces the key policies, and plans for achieving these goals, and defines the
business the company is to carry on, the type of economic and human organization it wants to be, and the
contribution it plans to make to its shareholders, customers and society at large.
Features of Strategy:
(i) Strategy is important to foresight, the uncertain events of firms/industries .
(ii) Strategy deals with long term developments rather than routine operations. For example innovations or new
products, new methods of productions, or new markets to be developed in future.
(iii) Strategy is created to deal behavior of customers and competitors.
(iv) Strategy is a well defined roadmap of an organization. It defines the overall mission, vision and direction of
an organization. The objective of a strategy is to maximize an organization’s strengths and to minimize the
strengths of the competitors.
Strategic management:
Strategic management is defined by William F. Glueck as “a stream of decisions and actions which leads to the
development of an effective strategy or strategies to help achieve objectives.”
Strategic management according to Alfred D. Chandler is “determination of the basic long-term goals and
objectives of an enterprise and adoption of course of action and allocation of resources necessary to carry out
these goals.”
Recently Harrison & St. John define Strategic Management as the process through which organisations analyse
and learn from their internal and external environments, establish strategic direction, create strategies that are
intended to help achieve established goals, and execute these strategies, all in an effort to satisfy key organisational
stakeholders.
So Strategic Management is considered as either decision making and planning or a set of activities related to the
formulation and implementation of strategies to achieve organisational objectives.
The Advantages of Strategic Management

• Discharges Board Responsibility
The first reason that most organizations state for having a strategic management process is that it discharges
the responsibility of the Board of Directors.
operations managment & strategic management 209

Strategic Management Introduction
• Forces an Objective Assessment

Strategic management provides a discipline that enables the board and senior management to actually
take a step back from the day-to-day business to think about the future of the organization. Without this
discipline, the organization can become solely consumed with working through the next issue or problem
without consideration of the larger picture.
• Provides a Framework for Decision-Making
Strategy provides a framework within which all staff can make day-to-day operational decisions and
understand that those decisions are all moving the organization in a single direction. It is not possible (nor
realistic or appropriate) for the board to know all the decisions the executive director will have to make, nor
is it possible (nor realistic or practical) for the executive director to know all the decisions the staff will make.
Strategy provides a vision of the future, confirms the purpose and values of an organization, sets objectives,
clarifies threats and opportunities, determines methods to leverage strengths, and mitigate weaknesses (at
a minimum). As such, it sets a framework and clear boundaries within which decisions can be made. The
cumulative effect of these decisions (which can add up to thousands over the year) can have a significant
impact on the success of the organization. Providing a framework within which the executive director and
staff can make these decisions helps them better focus their efforts on those things that will best support the
organization’s success.
• Supports Understanding & Buy-In
Allowing the board and staff participation in the strategic discussion enables them to better understand the
direction, why that direction was chosen, and the associated benefits. For some people simply knowing is
enough; for many people, to gain their full support requires them to understand.
• Enables Measurement of Progress
A strategic management process forces an organization to set objectives and measures of success. The setting
of measures of success requires that the organization first determine what is critical to its ongoing success and
then forces the establishment of objectives and keeps these critical measures in front of the board and senior
management.
• Provides an Organizational Perspective
Addressing operational issues rarely looks at the whole organization and the interrelatedness of its varying
components. Strategic management takes an organizational perspective and looks at all the components
and the interrelationship between those components in order to develop a strategy that is optimal for the
whole organization and not a single component.
The Disadvantages of Strategic Management

• The Future Doesn’t Unfold as Anticipated
One of the major criticisms of strategic management is that it requires the organization to anticipate the future
environment in order to develop plans, and as we all know, predicting the future is not an easy undertaking. The
belief being that if the future does not unfold as anticipated then it may invalidate the strategy taken. Recent
research conducted in the private sector has demonstrated that organizations that use planning process
achieve better performance than those organizations who don’t plan - regardless of whether they actually
achieved their intended objective. In addition, there are a variety of approaches to strategic planning that
are not as dependent upon the prediction of the future.
• It Can be Expensive
There is no doubt that in the not-for-profit sector there are many organizations that cannot afford to hire an
external consultant to help them develop their strategy. Today there are many volunteers that can help smaller
organizations and also funding agencies that will support the cost of hiring external consultants in developing
a strategy. Regardless, it is important to ensure that the implementation of a strategic management process
is consistent with the needs of the organization, and that appropriate controls are implemented to allow the
cost/benefit discussion to be undertaken, prior to the implementation of a strategic management process.
210 operations managment & strategic management

• Long Term Benefit vs. Immediate Results
Strategic management processes are designed to provide an organization with long-term benefits. If you are
looking at the strategic management process to address an immediate crisis within your organization, it won’t.
It always makes sense to address the immediate crises prior to allocating resources (time, money, people,
opportunity, cost) to the strategic management process.
• Impedes Flexibility
When you undertake a strategic management process, it will result in the organization saying “no” to some
of the opportunities that may be available. This inability to choose all of the opportunities presented to an
organization is sometimes frustrating. In addition, some organizations develop a strategic management process
that become excessively formal. Processes that become this “established” lack innovation and creativity
and can stifle the ability of the organization to develop creative strategies. In this scenario, the strategic
management process has become the very tool that now inhibits the organization’s ability to change and
adapt.
Strategic Management Framework:

The basic framework of strategic management involves five stages:
Stage 1: In this stage, organisation analyse about their present situation in terms of their Strengths, Weaknesses,
Opportunities and Threats.
Stage 2: In this stage, organisations setup their missions, goals and objectives by analysing where they want to go
in future.
Stage 3: In this stage organisation analyses various strategic alternatives to achieve their goals and objectives. The
alternatives are analysed in terms of what business portfolio/product mix to adopt, expansion, merger, acquisition
and divestment options etc are analysed to achieve the goals.
Stage 4: In this organisations select the best suitable alternatives in line with their SWOT analysis
Stage 5: This is implementation stage in which organisation implement and execute the selected alternatives to
achieve their strategic goals and objectives.
Stage 1: Where are we now? Analysis of present situation
Stage 2: Where we want to go? Setting goals and objectives

for future
Stage 3: Analyses of various alternatives to achieve the goals

and objectives
Stage 4: Selecting best alternatives in line with strengths of

organisation
Stage 5: Implementing and executing the selected

alternatives and monitoring of the same overtimes
Strategic Management Framework
Importance of Strategic Management:

(i) Discover organisation strengths and weaknesses
(ii) Identify the available opportunities and possible threats

(iii) Discover the objectives and goals in line with organisations strengths and available opportunities
(iv) Implement changes to overcome weaknesses and manage the threats.
(v) Provide vision/mission or direction to future of organisations
(vi) Build a dynamic and strong organisation
(v) Help to achieve growing and stable organisation.
Strategic Management Process:

1. Introduction
Strategic management is a process or series of steps.
The basic steps of the strategic management process are (presented in figure)
(a) identifying or defining business mission, purpose and objectives,
(b) environmental (including global) analysis to identity present and future opportunities and threats,
(c) organisational analysis to assess the strengths and weaknesses of the firm,
(d) developing alternative strategies and choosing the best strategy,
(e) strategy implementation, and
(f) strategic evaluation and control.
Step 1 Step 2 Step 3 Step 4 Step 5 Step 6

Identifying/ Environ- Revise Alternative Strategy Strategic
Defining mental Organisa- Strategic Implemen- Evaluation &
Business Analysis tional Choice tation Control
Mission Direction
Purpose &
Objectives
Major Steps in Strategic Management Process
Steps of Strategic Management Process:

Step 1: Identifying Defining Business Mission, Purpose and Objectives: Identifying or defining an organisation’s
existing mission, purpose and objectives is the logical starting point as they lay foundation for strategic management.
Every organisation has a mission, purpose and objectives, even if these elements are not consciously designed,
written & communicated. These elements relate the organisation with the society and states that it has to achieve
for itself and to the society.
Step 2: Environmental Analysis: Environmental factors — both internal environment and external environment —
are analysed to:
(i) identify changes in the environment,
(ii) identify present and future threats and opportunities, and
(iii) assess critically it’s own strengths and weaknesses.
Organisational environment encompasses all factors both inside and outside the organisation that can influence
the organisation positively and negatively. Environmental factors may help in building a sustainable competitive
advantage.
Step 3: Revise Organisational Direction: A thorough analysis of organisation’s environment pinpoints it’s strengths,
weaknesses, opportunities and threats (SWOT). This can often help management to reaffirm or revise it’s
organisational direction.

Step 4: Strategic Alternatives and Choice: Many alternative strategies are formulated based on possible options
and in the light of organisational analysis and environmental appraisal. Alternative strategies will be ranked based
on the SWOT analysis. The best strategy out of the alternatives will be chosen.
The steps from identification of business mission, purpose and objectives of alternative strategies and choice can
be grouped into the broad step of strategy formulation.
Step 5: Strategy Implementation: The fifth step of strategic management process is the implementation of strategy.
The logically developed strategy is to be put into action. The organisation can not reap the benefits of strategic
management, unless the strategy is effectively implemented.
The managers should have clear vision and idea about the competitor’s strategy, organisation’s culture,
handling change, skills of the managers-in-charge of implementation and the like. The progress from the stage
of identification of business mission, purpose and objectives to the stage of achieving desired performance must
overcome many obstacles.
Step 6: Strategic Evaluation and Control: The final step of strategic management process is strategic evaluation
and control. It focuses on monitoring and evaluating the strategic management process in order to improve it and
ensure that it functions properly. The managers must understand the process of strategic control and the role of
strategic audit to perform the task of control successfully.
Strategic management process is presented as a series of discrete steps for the purpose of simplicity in the learning
process. But, managers find that an organisation’s strategic management effort requires that they perform several
steps simultaneously and/or perform them in different order as presented in Figure below:
Feed forward
Strategy Strategy Strategy

Formulation Implementation Formulation
Control
• Project
• Organisational
• Evaluation
Appraisal • Procedural
Revised (if Strategic • Control of
• Structural
Business necessary) Alternatives strategy
Mission, Business and • Behavioural
Objectives Mission, Choice • Functional
Objectives
• Implementation
Environmental
Appraisal
Feedback
Strategic Management Process Model

Vision
Vision is a statement of the future. It articulates the basic characteristic that shape organisations strategy. It
indicates where the organisation is headed and what it intends to be.
Vision, Mission and Objectives in Business:
‘Strategy Formulation’ i.e. developing vision, mission, objectives and goals is the most important step of strategic
management model. This step is considered as a path forming step, and provides the direction to organisation for
movement in future.
Vision: There is a quote that ‘great visionary can foresee the future in advance and take steps accordingly to be
at forefront’.

So, we can conclude that;

1. Vision provide a road map to Company’s future
2. Vision indicates the kind of company management is trying to create for future.
3. Vision specifies about company intention and capabilities to adapt to new technologies
4. Vision also specifies management policies towards customers and societies.
Strategic vision specifies primarily three elements:

1. Forming a mission statement that defines what business the company presently is in? And “who we are and
where we are now?”
2. Using this mission statement as base to define long term path by indicating choices about “Where we are
going?”
3. Finally, communicating above strategic vision in clear and committed term.
Strategic Vision has important purposes, such as:

1. Clearly provide the direction that company wants to follow
2. Identify the need of changing from existing direction or products, if stated in vision statement
3. Create passionate environment in the organisation to steer the company with great excitement in selected
direction.
4. Create creativity in every member of company to prepare company for future
5. Promote entrepreneurship
Meaning and Use of Mission:

The term ‘mission’ implies the fundamental and enduring objectives of an organisation that set it apart from
other organisations of similar nature. The mission is a general enduring statement of instruction of an organisation.
The corporate mission is the purpose or reason for it’s existence. It refers the philosophy of business to the static
decision maker to build the image of the company. The corporate mission highlights the organisation self-concept
and indicates the nature of product or service to be offered or rendered for fulfillment of the requirements of the
customers as also for the community and society as a whole.
The mission may, as such, be described as the scope of operations in terms of product, market or the service as
well as customers and clients. An organisation may define it’s mission highlighting the philosophy and purpose. The
philosophy establishes the values, beliefs and guidelines for the business plan and business operation.
The mission of a firm defines it’s reasons for existence.
Mission includes:
• A definition of products and services the organisation provides.
• Technology used to provide these products and services.
• Types of markets.
• Customer need or requirement.
• Distinctive Competencies.
Organisational Mission and Objectives: In one way, objective setting is the starting point of strategy formulation.
Organisations, being deliberate and purposive creations, have some objectives. The ends for which they strive
are referred to as ‘mission,’ ‘purpose,’ ‘objective’, ‘goal’, or ‘target’. Though there are differences in these terms,
often the differences are not emphasised and these terms are used interchangeably in practice to denote the
end results for which organisations strive. However, the end results of organisations, or their parts, can be defined in
various ways. For example, these can be defined in quantitative terms to be achieved in specific time or may be

defined in some general terms without reference to any time period. In these two cases, the end results have been
expressed, however, the emphasis is different. Thus some distinction can be made in these terms.
Purpose and Mission: An organisation’s purpose and mission consist of a long-term vision of what it seeks to do
and the reasons why it exists. Purpose is management’s concept of the organisation and it’s service mission to
society. An organisation’s purpose, when expressed in managerially meaningful terms, indicates exactly what
activities the organisation intends to engage in now and in future. It suggests something specific about what kind
of organisation it is and is to become. It depicts the organisation’s business character and does so in ways that
tend to distinguish the organisation from other organisations. Thus purpose and mission can be defined as follows:
The purpose and mission of an organisation is a general enduring statement of the organisation the intent of which
embodies the decision maker’s business philosophy; it implies the image which the organisation seeks to project.
In this sense, purpose sets forth principles and conceptual foundation upon which the organisation rests and the
nature of the business in which it plans to participate. Organisational mission, defined properly, offers guidance to
managers in developing sharply focused, result-oriented objectives, strategies, and policies. Therefore, a detailed
understanding of organisational mission is the starting point for rational managerial action and for the design of
organisation structure, processes, and procedures. Managerial effectiveness tends to begin with clarity of mission
with an accurate, carefully delineated concept of just what the organisation is trying to do and why.
A key feature of organisation’s purpose is that it’s focus must be external rather than internal. For example, Drucker
has the following suggestion: ‘To know what a business we have to start with is it’s purpose. It’s purpose must lie
outside the business itself. In fact, it must lie in society since business enterprise is an organ of society. There is only
one valid definition of business purpose to create a customer.
Defining the Company Mission

What is a Company Mission?
The mission is a broadly framed but enduring statement of company intent. It embodies the business philosophy
of strategic decision makers; implies the image the company seeks to project; reflects the firm’s self-concept;
indicates the principal product or service areas and primary customer needs the company will attempt to satisfy.
In short, the mission describes the product, market, and technological areas of emphasis for the business. And it
does so in a way that reflects the values and priorities of strategic decision makers.
The mission of a business is the fundamental, unique purpose that sets it apart from other firms of it’s type and
identifies the scope of it’s operations in product and market terms. The mission is a general, enduring statement of
company intent. It embodies the business philosophy of strategic decision makers, implies the image the company
seeks to project, reflects the firm’s self-concept, and indicates the principal product or service areas and primary
customer heeds the company will attempt to satisfy. In short, the mission describes the product, market, and
technological areas of emphasis for the business in a way that reflects the values and priorities of the strategic
decision makers.
The Need for an Explicit Mission:
Defining the company mission is time consuming, tedious, and not required by any external body. The mission
contains few specific directives, only broadly outlined or implied objectives and strategies. Characteristically, it is
a statement of attitude, outlook, and orientation rather than of details and measurable targets.
What then is a company mission designed to accomplish?
1. To ensure unanimity of purpose within the organisation.
2. To provide a basis for motivating the use of the organisation’s resources.
3. To develop a basis, or standard, for allocating organisational resources.
4. To establish a general tone or organisational climate, for example, to suggest a businesslike operation.
5. To serve as a focal point for those who can identify with the organisation’s purpose and direction, and to
deter those who cannot from participating further in the organisation’s activities.

6. To facilitate the translation of objectives and goals into a work structure involving the assignment of tasks to
responsible elements within the organisation.
7. To specify organisational purposes and the translation of these purposes into goals in such a way that cost,
time, and performance parameters can be assessed and controlled.
Formulation of Organisational Mission:
Organisation can not declare the mission just on some great whim and fancy, it should be based on organisations’
existing capabilities and achievable milestones. Here are some guidelines for formulation of “mission” statement
• It should be based on existing business capabilities “Who we are and what we do?”
• It should follow the long term strategy principles
• Profit making should not be the only mission of organisation
• It should be logical extension of business existing capabilities
• It should clearly and precisely present the future orientation of business
• It should includes achievable missions
• It should be stated in a form that it becomes the motivating force to every member of organisation
• Mission statement once formed shall be communicated to every member of organisations
• It should include interest of customers and society
Organisational mission encompasses the broad aims of the organisation; it defines what for the organisation strives.
Therefore, the process of defining the mission for any specific organisation can be best understood by thinking
about it at it’s inception. An organisation begins with the beliefs, desires, and assumptions of single entrepreneur.
These beliefs, desires and assumptions may be of the following nature:
1. The product and service offered by the organisation can provide benefits at least equal to it’s price.
2. The product or service can satisfy the needs of the customers not adequately served by others presently.
3. Technology used in producing product or service will be cost and quality competitive,
4. The organisation can grow and be profitable than just survive in the long run with the support of various
constituents.
5. The organisation will create favourable public image which will result in contributions from the environment.
6. Entrepreneur’s self-concept of the business can be communicated and adopted by employees and
stakeholders.
7. The organisation will be able to satisfy the entrepreneur’s needs and aspirations which he seeks to satisfy
through the organisation.
At the initial stage, the above elements go into mission formulation. As the organisation grows or is forced by
competitive forces to alter it’s product, market, and technology, there may be need for redefinition of the mission.
However, the revised mission will reflect the same set of elements as the original—like type of product to be
offered, type of customer to be served, type of technology to be employed, growth of organisation, favourable
public image, self-concept of entrepreneur, and needs and aspirations of entrepreneur, though in modified form.
Objectives, Goals and Targets:
We frequently use the term organisation’s “objectives and goals”, the term “objective and goals” set target of any
particular aspect like profit and revenue growth, etc.
Here are some common definitions of Objectives;
• Objectives are performance targets which organisations wants as result or outcomes in the specified periods
• Objectives achievements are used as benchmark of organisation performance and success
• Objectives are formed from visions and mission statement of organisations

• Objectives are interchangeably used with goals but goals are defined as more precise and specific with
closed ended attribute (in precise quantity form) whereas objectives are open ended for future states or
outcome not as precise as goals. Objectives are for long term whereas goals are for short term
Characteristics of Objectives: Objectives characterise business long-term prospective, such as:
• Facilitate to achieve mission and goals
• Set the basis for strategic decision making
• Clear the relationship of organisation with environment
• Should be understandable by each member of organisation
• Should be measurable and controllable
• Should be related to time frame
• Should be challenging
• Should be concrete and specific
• Should be formed within the constraints
• Should motivate people.
Formal strategies contain three elements:

1. Goals to be achieved.
2. Policies that guide or limit action.
3. Action sequences or programs that accomplish goal.
Effective strategic revolve around the key concepts or thrust area such as customer satisfaction or customer focus.
Concept of Strategic Intent:

Here intent refers to intension. A company exhibits strategic intent when it relentlessly (aggressively) pursues an
ambitious strategic objective and concentrates it’s full resources and competitive actions on achieving that
objective.
A company’s strategic intent can helps in many ways to the company, like:
• in becoming the dominant company in the industry;
• unseating the existing industry leader;
• delivering the best customer service in the industry (or the world);
• turning new technology into products which capable of changing the way people work and live.
Innovations that make their production systems unexpectedly obsolete (technological).
Objectives and Goals: The literature of management is filled with references to objectives and goals. These terms
are used in a Varity of ways, many of them conflicting. First, these terms are used interchangeably meaning one
and the same thing. Therefore, there is no difference between the two. To make distinction between long-term
and short-term orientations, these prefixes are used either with objectives or goals. Second, some authors use goals
as the long-term results which an organisation seeks to achieve and objectives as the short-term results. Third, some
writers reverse the usage referring to objectives as the desired long-term results and goals as the desired short-term
results. This latter view is, however, more prevalent. From this point of view, Ackoff has defined both the terms as
follows:
‘Desired states or outcomes are objectives. Goals are objectives that are scheduled for attainment during planned
period’. Thus objectives and goals defined in this way convey two different concepts.
The distinction between these two concepts is important because strategic management needs both. The
difference between objectives and goals may be drawn in terms of the following four dimensions.

1. Time Frame. Objectives are timeless, enduring, and unending; goals are temporal, time-phased, and
intended to be superseded by subsequent goals. Because objectives relate to’ the ongoing activities of an
organisation, their achievement tends to be open-ended in the sense of not being bounded by time. For
example, the survival objective of a business organisation is never completely attained since failure is always
a future possibility.
2. Specificity. Objectives are stated in broad, general terms, dealing with matters of image, style, and self-
perception. These are aspirations to be worked in the future. Goals are much more specific, stated in terms of
a particular result that will be accomplished by a specific date. In the above example, survival as an objective
is not very specific because it leads to different interpretation of the stale of survival. On the other hand, goals
can be expressed in terms of say achievement of 10 per cent growth in the net sales in the next year. This is
more specific and time bound.
3. Focus. Objectives are usually stated in terms of some relevant environment which is external to the organisation;
goals are more internally focused and carry important implications about how resources of the organisation
are utilised or will be utilised in future. Therefore, objectives are more generalised statements like maintaining
market leadership, striving con tinuously for technological superiority, etc. A goal may imply a resource
commitment requiring the organisation to use those resources in order to achieve the desired outcomes.
4. Measurement. Both objectives and goals can be stated in terms which are quantitatively measured but
the character of measurement is different. Generally, quantitative objectives are set in relative terms. For
example, Reliance Textiles has put it’s objectives like this: to acquire top position among the Indian companies.
This objective may net be achieved in any one year, but it is timeless and externally focused, providing a
continuing challenge for the company. Quantitative goals are expressed in absolute terms. For example, a
company has stated it’s goal to achieve 10 per cent growth in it’s sales in the next year. The achievement of
this goal can be measured irrespective of environmental conditions and competitors’ actions.
Thus objectives are more specific as compared to the purpose or mission of the organisation. However, these
are expressed in such terms which can be followed continuously. For example, a private sector company has
declared as follows:
The main objective of the company is to manufacture and distribute both consumer and industrial products of
high quality to our customers in India and abroad at a minimum price which will return a reasonable profit to the
company. This company will expand and diversify it’s activity as necessary to meet the needs of the customers to
render better service/to obtain better quality, or to effect economies in operation.
Company Goals: Survival, Growth, Profitability
Three economic goals guide the strategic direction of almost every viable business organisation. Whether or not
they are explicitly stated, a company mission statement reflects the firm’s intention to secure it’s survival through
sustained growths and profitability.
Unless a firm is able to survive, it will be incapable of satisfying any of it’s stakeholders’ aims. Unfortunately, like
growth and profitability, survival is such an assumed goal that it is often neglected as a principal criterion in
strategic decision making. When this happens, the firm often focuses on short-term aims at the expense of the
long run.
Profitability is the mainstay goal of a business organisation. No matter how it is measured or denned, profit over
the, long term is the clearest indication of a firm’s ability to satisfy the principal claims and desires of employees
and stockholders. The key phrase in the sentence is “over the long term”. Obviously, basing decisions on a short-
term concern for profitability would lead to a strategic myopia. A firm might overlook the enduring concerns of
customers, suppliers, creditors, ecologists, and regulatory agents. In the short term the results may produce profit,
but over time the financial consequences are likely to be detrimental.
The following excerpt from the Hewlett-Packard Company’s statement of corporate objectives (i.e., mission) ably
expresses the importance of an orientation toward long-term profit:

To achieve sufficient profit to finance our company growth and to provide the resources we need to achieve our
other corporate objectives.
In our economic system, the profit we generate from our operations is the ultimate source of the funds we need
to prosper and grow. It is the one absolutely essential measure of our corporate performance over the long term.
Only if we continue to meet our profit objective can we achieve our other corporate objectives.
A firm’s growth is inextricably tied to it’s survival and profitability. In this context, the meaning of growth must be
broadly defined. While growth in market share has been shown by the product impact market studies (PIMS) to
be correlated with firm profitability, other important forms of growth do exist. For example, growth in the number
of markets served, in the variety of products offered, and in the technologies used to provide goods or services
frequently leads to improvements in the company’s competitive ability. Growth means change, and proactive
change is a necessity in a dynamic business environment. Hewlett-Packard’s mission statement provides an
excellent example of corporate regard for growth:
To let our growth be limited only by our profits and our ability to develop and produce technical products that
satisfy real customer needs.
We do not believe that large size is important for it’s own sake; however, for at least two basic reasons continuous
growth is essential for us to achieve our other objectives.
In the first place, we serve a rapidly growing and expanding segment of our technological society. To remain static
would be to lose ground. We cannot maintain a position of strength and leadership in our field without growth.
In the second place, growth is important in order to attract and hold high-caliber people. These individuals will align
their future only with a company that offers them considerable opportunity for personal progress. Opportunities
are greater and more challenging in a growing company.
The issue of growth raises a concern about the definition of a company mission. How can a business specify
product, market, and technology sufficiently to provide direction without delimiting unanticipated strategic
options? How can a company define it’s mission so opportunistic diversification can be considered while at the
same time maintaining parameters that guide growth, decisions? Perhaps such questions are best addressed
when firm outlines-Objectives it’s mission conditions under which it might depart from ongoing operations. The
growth philosophy of Dayton-Hudson shows this approach:
The stability and quality of the corporation’s financial performance will be developed through the profitable
execution of our existing businesses, as well as through the acquisition or development of new businesses. Our
growth priorities, in order, are as follows:
(i) Development of the profitable market preeminence of existing companies in existing markets through new
store development or new strategies within existing stores;
(ii) Expansion of our companies to feasible new markets;
(iii) Acquisition of other retailing companies that are strategically and financially compatible with Dayton-Hudson;
(iv) Internal development of new retailing strategies.
Capital allocations to fund the expansion of existing operating companies will be based on each company’s
return on investment, in relationship to it’s return-on-investment (ROD objective and it’s consistency in earnings
growth, and on it’s management capability to perform up to forecasts contained in capital requests.
Expansion via acquisition or new venture will occur when the opportunity promises an acceptable rate of long-term
growth and profitability, acceptable degree of risk, and compatibility with the corporation’s long-term strategy.
Mission and Strategy:
Mission sets the direction for the strategic development of the organisation. As Drucker remarks in his Managing for
the Future, the mission “focuses the organisation on action. It defines the specific strategies needed to attain the

crucial goals. It creates a disciplined organisation. It alone can prevent the most common degenerative disease
of organisations, especially large ones, splintering their always limited resources on things that are ‘interesting’
or look ‘profitable’ rather than concentrating them on a very small number of productive efforts”. There are
several examples of organisations which substantially developed their business or improved their performance by
refocusing their business. “Corporate mission statements are the operational, ethical and financial guiding lights
of companies. They are not simply mottoes or slogans; they articulate the goals, dreams, behaviour, culture, and
strategies of companies”.
One great advantage of formulation of the mission is that it also results in a clear definition of the business of a
company. Mission statement and definition of the business are indeed two sides of the same coin.
Derect Abell has suggested defining business along three dimensions, viz, customer groups (i.e., who is being
satisfied) customer functions (i.e., what need of the customer is being satisfied) and alternative technologies (i.e.,
how the need is being satisfied). Such a three dimensional definition of the business would clearly delineate the
boundaries and nature of the business. However, not many mission statements are so clear and comprehensive.
As Drucker suggests three fundamental questions would help to clearly define / redefine the business and
formulate/reformulate the mission. These questions are:
• What is our business?
• What will our business be?
• What should our business be?
The question ‘what is our business’? May lead to wonderful revelations and spectacular results. Drucker points out
that most managers ask their question when the company is in trouble - then it must of course, be asked; but the
most important time to ask this seriously is when a company has been successful and not to have done so is the
reason for the crisis of many organisations.
It is, thus, evident that as the business environment is very dynamic, sooner or later even the most successful
answer to the question what is our business, becomes obsolete. Therefore, it is not sufficient that a company
determines what it’s business is but at the same time it should also ponder over what will it be? ‘What changes
in the environment are already discernible those are likely to have high impact on the characteristics, mission,
and purpose of our business? And how do we now build these anticipations into our theory of business, into it’s
objectives, strategies and work assignments?”
It is not adequate that a company identifies what will it’s business be? Because this aims at adaptation to
anticipated changes - modifying, extending, and developing the existing ongoing business. It does not explore
the right firm - environment fit for the future. The future may have new or better opportunities outside the current
business of the company, or it may not be wise to continue in all or some of the current businesses. There is,
therefore, a need to ask ‘what should our business be?’ This question is the central point of corporate strategy.
As Drucker aptly remarks, the ultimate objective of strategic planning is “to identify the new and different businesses,
technologies, and markets which the company should try to create long range. Indeed, it starts with the question
which of our present businesses should we abandon? Which should we play down? Which should we push and
supply new resources to
Mission is meaningless unless it is adequately supported by other essential inputs. It is very apt to record here
Amban’s statement about what made the Reliance one of Asia’s most competitive enterprises: “It has been a
combination of vision, entrepreneurship and professionalism”.
In sum, as Drucker remarks, “without an effective mission statement there will be no performance. The mission
statement has to express the contribution the enterprise plans to make to society, to economy, to the customer. It
has to express the fact that the business enterprise is an institution of society, and serves to produce social benefits”.

Strategic Levels in Organisation
There are primarily three levels of strategies in the organisation.
1. Corporate Level
2. Business Level
3. Functional Level
1. Corporate Level:
The corporate level of management consists of the chief executive officer (CEO), other senior executives,
the board of directors, and corporate staff. These individuals occupy the top-committee of decision making
within the organisation. The CEO is the principal general manager. In consultation with other senior executives,
the role of corporate-level managers is to oversee the development of strategies for the whole organisation.
This role includes defining the mission and goals of the organisation, determining what businesses it should
be in, allocating resources among the different businesses, formulating and implementing strategies that
span individual businesses, and providing leadership for the organisation. For example, strategies formed for
Unilever Limited would be at corporate level.
2. Business Level:
A business unit is a self-contained division (with it’s own functions-for example, finance, purchasing, production,
and marketing departments) that provides a product or service for a particular market. The principal general
manager at the business level, or the business-level manager, is the head of the division. The strategic role of
these managers is to translate the general statements of direction and intent that come from the corporate
level into concrete strategies for individual businesses. Thus, whereas corporate-level general managers are
concerned with strategies that span individual businesses, business-level general managers are concerned
with strategies that are specific to a particular business. At GE, a major corporate goal is to be first or second
in every business in which the corporation competes. Then the general managers in each division work out for
their business the details of a strategy that is consistent with this objective. For example, strategies formed for
Kwality Walls, a subsidiary of Unilever Limited would be at business level.
3. Functional Level:
Functional-level managers are responsible for the specific business functions or operations (human resources,
purchasing, product development, customer service, and so on) that constitute a company or one of it’s
divisions. Thus, a functional manager’s sphere of responsibility is generally confined to one organisational
activity, whereas general managers oversee the operation of a whole company or division. Although they
are not responsible for the overall performance of the organisation, functional managers nevertheless have a
major strategic role: to develop functional strategies in their area that help fulfill the strategic objectives set by
business & corporate-level general managers. Moreover, functional managers provide most of the information
that makes it possible for business & corporate-level general managers to, formulate realistic and attainable
strategies. Indeed, because they are closer to the customer than the typical general manager is, functional
managers themselves may generate important ideas that subsequently may become major strategies for the
company. Thus, it is important for general managers to listen closely to the ideas of their functional managers.
An equally great responsibility for managers at the operational level is strategy implementation: the execution
of corporate and business-level plans. For example, strategies formed for employee retention by HR manager
at Kwality Walls would be at functional level.

Self Learning Questions:
1. What do you mean by Strategy? State its features.

2. What do you mean by Strategy Management? Discuss the framework of Strategic Management.
3. State the importance of Strategic management?
4. Discuss in brief the strategic Management process.
5. What is the guideline in formulation of Mission Statement?
6. Discuss the various Strategic Level in an Organisation.
7. What are the difference between vision and mission?
8. Discuss in brief the formulation of Organisational Mission.
9. Distinguish between Objectives and Goals of business.
10. Developing annual objectives & short term objective strategies that are compatible with the selected set of
long term objective are one of the major tasks of strategic Management. Critically comment.

Study Note - 9
strategic analysis and Strategic planning

9.1 Situational Analysis
9.2 SWOT Analysis
9.3 Portfolio Analysis
9.4 BCG Matrices
9.5 Stages in Strategic Planning
9.6 Alternative in Strategic Planning
9.1 Situational Analysis
Introduction
The strategic management process, after deciding the vision, mission, goals and objectives of the organization,
turns its focus to scanning of both external environment and internal environment.
Situational Analysis:
A company’s macro environment consists of all related dimensions and influences outside the company’s
boundaries; by relevant factors like direction, objectives, strategy, and business model. But influences coming
from the outer globe of the macro environment have a small impact on a company’s business situation.They only
shape the limits of the company’s direction and strategy. There are sufficient amount of strategically relevant
trends and developments in the macro environment. As company managers scrutinize the external environment,
they must examine for potentially important environmental forces, assess their impact and influence, and adapt
the company’s direction and strategy as needed.
Enterprises and businesses worldwide carry out analyses to assess conditions and environment for strategic
planning. Every company consists of certain frameworks that permit them to understand the market and analyze
their products. Companies carry out market research by conducting surveys to evaluate market requirements and
trends. SWOT & PEST analyses are two methods through which companies plan ahead by conducting research.
PEST analysis refers to Political, Economical, Social, and Technological factors which manipulate the business
environment. SWOT analysis refers to Strengths, Weaknesses, Opportunity and Threats. These factors are prime
determinants of strategic planning. Without SWOT and PEST analysis companies might fail to achieve desired goals.
PEST Analysis looks at external factors and is primarily used for market research. It is used as an alternative to SWOT
analysis:
(i) Political – These are the external factors that influence the business environment. Government decisions and
policies affect a firm’s position and structure, Tax laws, monetary and fiscal policies as well as reforms of labor
and workforce, all influence companies in future. These factors are importantand need to be managed in
order to overcome uncertainty.
(ii) Economical – Economical factors are the most important since it impacts business in the long run. Inflation,
interest rates, economic growth and demand/supply trends are to be considered and analyzed effectively
before planning and implementing. Economic factors affect both consumers and enterprises.
(iii) Social – Social factors involve the trends of population, domestic markets, cultural trends and demographics.
These factors help businesses assess the market and improve their products/service accordingly.

Strategic Analysis and Strategic Planning
(iv) Technological – This analyses the technology trends and advancements in business environment, innovations
and advancements lowers barriers to entry plus decreased production levels as it results in unemployment. This
includes research and development activity, automation and incentives.
(i) It presents a business’ standing and position, i.e. whether it is weak or strong
(ii) It informs about both internal and external factors that affect a firm’s success and/or failure
(iii) It helps firms assess the report and take counter measures for improvement and analyzing threats
(iv) It forecasts the future and sheds light on the current situation
(v) Evaluates business environment and allows firms to make strategic decisions
(vi) Prevents future failure and creates a system of continuous success
(vii) Provides companies with a reality check on their performance and shortcoming
(viii) Enables firms to understand the economy and market and expand
(ix) Provides a mechanism to identify threats and opportunities
(x) Enables companies to learn about markets and enter new markets nationally or globally.
Advantages & Disadvantages of PEST & SWOT Analysis

Both SWOT & PEST analyses are simple and easy to list but hard to implement fully. It takes time and research to
completely analyze the situation. SWOT analysis might not be able to provide results for each factor plus for the
analysis to be successful, it requires expertise which would analyze all possible threats and weaknesses and turn
them into strength and opportunity. It requires resources and capital to perform and a positive outcome cannot
be guaranteed.
PEST analysis is to be used if the SWOT analysis of a company fails and they need to study markets. It focuses on
external factors and not on the firm’s internal factors which can cause conflict. PEST analysis works on a macro
scale as it includes economic factors. These factors are uncertain and change constantly depending on the
state of the country. SWOT analysis is considered the bestbecause it focuses on internal and external factors both
while PEST only focuses on external factors. Some top companies like Ford, Microsoft and Sony prefer monthly
SWOT analysis as their markets are expanding and growing every month and they consider internal factors of the
company important.
Example of situational analysis
Increased government allocations to social sector programs in line with its commitment to inclusive growth, a
progressive policy environment, and a slew of social protection schemes, decentralized planning and governance
have all impacton the improving lives of India’s children and women. But with nearly half a billion children in this
country, a lot more remains to be done to make sure the survival, growth and development of India’s greatest
asset: its children. persistently high malnutrition rates, poor sanitation and persistent disparities between states,
social groups and the rich and the poor are just some of the obstacles that India come across in ensuring that
every child is reached. The report provides snapshots of the situation of children and women from 18 states of the
country. In addition to demographic information of children and women in 18 states, the report details progress
agaist MDGs and child protection indicators. Equity status of key indicators on children and women are also
presented for each state.
9.2 swot analysis
Swot Analysis:
Gathering data about the general, operating, and internal environments provides the raw material from which to
develop a picture of the organisational environment.
SWOT analysis refines this body of information by applying a general framework for understanding and managing
the environment in which an organisation operates. (The acronym SWOT stands for Strengths, Weaknesses,

Opportunities, and Threats.) In many respects, the sophisticated analytical techniques discussed throughout the
text are further refinements of basic SWOT analysis. In addition, students have repeatedly told us that SWOT is an
excellent way to begin a case analysis. SWOT analysis attempts to assess the internal strengths and weaknesses of
an organisation and the opportunities and threats that it’s external environment presents. SWOT seeks to isolate
the major issues facing an organisation through careful analysis of each of these four elements. Managers can
then formulate strategies to address key issues.
The appraisal should give particular attention to the following.
(a) A study of past accounts and the use of ratios. By looking at trends, or by comparing ratios (if possible) with
those of other firms in a similar industry, it might be possible to identify strengths and weaknesses in major areas
of the business. The assistance of a management accountant should be of great value in this work.
(b) Product position and product-market mix. This very important area is dealt with later.
(c) Cash and financial structure. If a company intends to expand or diversify, it will need cash or sufficient financial
standing in order to acquire subsidiaries by issuing shares.
(d) Cost structure. If a company operates with high fixed costs and relatively low variable costs, it might be in a
relatively weak position with regards to production capacity. High volumes of production and sale might be
required to break even. In contrast, a company with low fixed costs might be more flexible and adaptable so
that it should be able to operate at a lower breakeven point.
(e) Managerial ability. There may be a problem in attempting to assess this and objective measurements should
be sought. The danger is that a poor management might overestimate their own ability and incorrectly
analyse their weakness as strength.
The purpose of the analysis is to express, qualitatively or quantitatively, which areas of the business have strengths
to exploit, and which areas have weaknesses which must be improved. Although every area of the business
should be investigated, only the areas of significant strength or weakness should warrant further attention.
While finalising the corporate plan together with corporate objectives, growth strategies, it would be necessary
to make a review of the corporate strengths and weaknesses in connection with it’s mission and objectives. This is
an important managerial task linked with corporate planning process. Corporate strengths and weaknesses can
be broadly enumerated as under:
Corporate Strengths:
Highly professionalised managerial group including directors and the chief executive an environment prevailing
for commitments to jobs and responsibility with team spirit by the work force
(i) Financially very sound
(ii) Good products and product-mix with high demand including future prospects
(iii) Full capacity utilisation, locational advantages
(iv) Good infrastructures
(v) Good industrial relations
(vi) No political interference
(vii) Good performance in production and services with consistent records
(viii) Good raw materials base
(ix) Incentives from State Government
(x) Good relation with Government departments
(xi) Technologically rich and with expertise
These are the corporate strengths within and outside the organisation.

Corporate Weaknesses:
Similar to Corporate strengths, there may be corporate weaknesses too. These may be enumerated as under:
(i) Under-utilisation of capacity due to economic slump
(ii) High debt burden in the capital structure
(iii) Poor product-mix
(iv) Lack of managerial strengths
(v) Industrial unrest
(vi) Technology gap
(vii) Demand gap
(viii) Poor infrastructures
(ix) Raw materials source at a distance
(x) Lack of latest information technology
(xi) Competition war
(xii) Global threats
Both corporate strength and corporate weaknesses are examined and reviewed together in connection with
corporate mission and objectives. A balanced and appropriate mix from both strengths and weaknesses is made
in order to formulate a good corporate plan, which can be achieved and fulfilled during it’s entire plan period.
During these exercises on the corporate plan, all aspects related to the company including it’s strengths and
weaknesses are examined. This exercise includes SWOT analysis.
Now we outline the ‘opportunities’ and ‘threats’.
Opportunities:
The following may be termed as ‘Opportunities’ which should be timely utilised and availed of by the organisation
gainfully:
(i) Seasonal/climatical demand of products
(ii) Global markets for the company’s products/services (Export opportunities)
(iii) Rural markets to explore and to penetrate
(iv) To explore the markets in the undeveloped/under-developed/developing states/places
(v) To avail of the incentives/concessions declared by Central and State Governments
(vi) Diversifications opportunities
(vii) Mergers/acquisition opportunities
(viii) Good home market available due to boost in the economy
(ix) Liberalised policies of the Government both at Centre as well as State level for the individual production and
industrial developments.
Similar to opportunities, there may be threats too prevailing from time to time, which must be examined and
necessary action taken to be free from these or to solve these prudently so that loss to the organisation may be
minimum. The probable threats, which may arise or be faced by the organisation, are listed out as under:
Threats:
(i) Globalisation
(ii) Competition
(iii) Price cutting war

(iv) Free imports
(v) Industrial unrest
(vi) Political instability
(vii) Quality thrusts
(viii) High and adverse debt equity ratio
(ix) Increase in financing cost
(x) Economic slow down due to international recession impact
In the above Para, details of:
(i) Strengths
(ii) Weaknesses
(iii) Opportunities
(iv) Threats
Each and every factor of the SWOT would be analysed critically to find out a best alternative out of various
alternatives available.
9.3 portfolio analysis
Portfolio analysis is a term used in describing methods of analysing a product -market portfolio with the following
aims.
(i) To identify the current strengths and weaknesses of an organisation’s products in its markets, and the state of
growth or decline in each of these markets.
(ii) To identify what strategy is needed to maintain a strong position or improve a weak one.
Several matrices have been developed over the years to analyse market share, market growth and market
position.
Factors influencing Portfolio Strategy:
There are number of factors - historical, personal, strategic, environmental etc. which influence portfolio strategy.
Important such factors are given below:
1. Mission/Vision: The mission of the company is one of the most important factors which influence, the portfolio
strategy because the mission defines the scope and purpose of the company. Formulation of clear vision
about the future has let to restricting the portfolio companies like Glaxo.
2. Value system: A factor very much complimentary to the mission that influences the portfolio strategy is the
value system of the promoters or major stock holders. After the Murugappa group took over the EID Parry,
the liquor business of the EID Parry group was sold off as the Murugappa group management felt that it was
unethical to be in the liquor business.
3. Future of Current Business: The future prospects of the current business are a very important factor influencing
the portfolio strategy. If a current business, particularly the most important one, has a bleak future a
company would be tempted to divest or diversify into growing business. Having felt that the future of the
tobacco business would be very bleak, the ITC diversified into speciality paper, packaging and printing,
hotels, agribusiness, financial services and international business etc. and today the non-tobacco businesses
contribute a considerable share of the total turnover of ITC. (Some of these diversifications, however, have
not been successful, and the company has, therefore, decided to concentrate more on its core business-
tobacco).

4. Position on the Portfolio Matrix/PLC: The position of different business on the product portfolio life cycle
also may influence the portfolio strategy of a company. Products in the declining stage may be dropped.
Similarly some of the dogs or question marks could also be eligible candidates for divestment. Several Indian
companies, like the Ceat, have decided to drop businesses which are peripheral or which are not important
in terms of business volume or are not otherwise satisfactory in terms of performance and which do not hold
out promises for the future of the company. They have adopted the strategy of focusing on the core business
(es).
5. Government Policy: Government policy sometimes is an important determinant of portfolio strategy. The pre-
1991 regulatory regime did not permit many companies, particularly large ones and foreign firms, to pursue
the type of growth and diversification strategies they would have followed in an environment of business
freedom, resulting in distorted portfolios. The liberalisation has very significantly transformed the environment.
The grant of more autonomy to the Navarathnas has provided them with considerable leeway for charting
out their future growth.
6. Competitive Environment: The competitive environment too has its influence on the portfolio strategy of many
companies. When competition is absent or limited, as in a protected market, even firms which are inefficient
may be able to thrive. The protection itself may prompt firms to enter such business.
However, as the market becomes competitive, as has been happening in India because of the liberalisation,
things may undergo drastic changes. Many firms which survived or flourished in the protected regime would
not be able to survive the competition. Further, for various reasons mentioned under the Case for Focusing, it
would become necessary to focus on the core business.
7. Company Resources: The resources and strengths of the company, undoubtedly, are important factors
influencing the ‘portfolio strategy’.
8. Supply/Demand Conditions: Problems with input supplies may encourage backward integration. Similarly,
problems with marketing the output, or advantages of value addition, may encourage forward integration.
When products or services can be obtained cheaply/ more efficiently from outside, it may encourage the
dropping of such business and dependence on outside sources.
9. Competitive Moves: Some firms have a tendency to imitate the growth pattern of the established popular
firms. There are firms which follow almost the same portfolio strategies of competitors. Sometimes firm A enters
an important business of firm B, the latter may retaliate by entering the business of the former. There are also
cases of firms refraining from certain business for fear of such retaliations.
10. Portfolio Strategy of Parent: The portfolio strategy of subsidiaries may be influenced by the portfolio strategy of
the parent as has been the case with companies like Glaxo India, ICI and Hindustan Lever.
11. Business Environment: The business environment, in general, is an influencer of the portfolio strategy and, quite
obviously, significant changes in business environment have important implications for portfolio strategy.
9.4 BCG Mtrices
Boston Matrix:
The Boston Consulting Group (BCG)’s matrix analyses ‘products and businesses by market share and market
growth.’
High
Star Question
mark
Market
growth
Cash Cow Dog
Low
Low
High
Market Share

This growth/share matrix for the classification of products into cash cows, dogs, rising stars and question marks is
known as the Boston classification for product-market strategy.
(i) Stars are products with a high share of a high growth market. In the short term, these require capital
expenditure, in excess of the cash they generate, in order to maintain their market position, but promise high
returns in the future.
(ii) In due course, however, stars will become cash cows, with a high share of a low-growth market. Cash cows
need very little capital expenditure and generate high levels of cash income. The important strategic feature
of cash cows is that they are already generating high cash returns, which can be used to finance the stars.
(iii) Question marks are products in a high-growth market, but where they have a low market share. A decision
needs to be taken about whether the products justify considerable capital expenditure in the hope of
increasing their market share, or whether they should be allowed to ‘die’ quietly as they are squeezed out
of the expanding market by rival products. Because considerable expenditure would be needed to turn a
question mark into a star by building up market share, question marks will usually be poor cash generators
and show a negative cash flow.
(iv) Dogs are products with a low share of a low growth market. They may be ex-cash cows that have now fallen
on hard times. Dogs should be allowed to die, or should be killed off. Although they will show only a modest
net cash outflow, or even a modest net cash inflow, they are ‘cash traps’ which tie up funds and provide a
poor return, on investment, and not enough to achieve the organisation’s target rate of return.
There are also infants (i.e. products in an early stage of development) and warhorses (i.e. products that have
been cash cows in the past, and are still making good sales and earning good profits even now). The car industry
provides interesting examples to fit the BCG matrix. Ford, with the Fiesta, Escort and to a lesser extent, the Sierra
has had a range of stars, which cost a substantial amount to develop and launch, but which soon became cash
cows. Vauxhall invested heavily in the Cavalier, with great success, and here we see an example of a question
mark turning into a star and then a cash cow, and the Cavalier has been at the forefront of Vauxhall’s return to
marketing success.
Limitations of the BCG Model:
The BCG model analyses products in the light of two variables: the growth in the market as a whole, and the
growth of the product’s share of the market in relation to other products. It suggests that there is a relationship
between these variables and the product’s propensity to generate cash or consume it. It rests on the assumption
that the firm with the highest market share can be the lowest cost producer. The model suggests that cash cows
should be used to fund stars. There are a number of limitations to the model (and remember that it is only a model,
and any model necessarily simplifies the real world which it tries to depict).
(i) How do you define your market? Segmentation strategies can provide a niche. A niche is inevitably a low or
restricted share of the market, yet it is the heart of a focus strategy. Firms can profit servicing small low-growth
niches.
(ii) Market growth and market share are assumed to be reliable pointers for cash flow. This is often not true. High
market share does not necessarily mean high profits, especially if a firm has high costs, or has bought market
share by low pricing.
(iii) Relative market share amongst competitors is not necessarily an indication of their competitive strengths at
any particular time. After all, market leaders are vulnerable.
(iv) The BCG model might become a self-fulfilling prophecy: Dogs which could be made profitable might simply
be left to the rather than be resuscitated.
(v) It does not suggest any response to declining markets other than withdrawal: many firms can make money
in ‘sunset industries’.
(vi) It ignores the extent to which a firm which serves a number of markets can exploit production synergies.
(vii) It ignores the threat of substitute products.
The product life cycle concept can be added to a market share/market growth classification of products, as in
Fig. below:

Introduction Growth Maturity Decline
Stars Warhorses
Cash Cows High share,
High share,
High share, negative
High growth
low growth, growth, positive
Still needing
large positive cash
Cash for
cash flow flow
Further
investment
Sales
Dogs
Low share, low
growth,
Question modest positive or
Marks negative cash flow
Infants Dodos
Low share,
Negative Low share,
High growth,
Negative
cash flow large
growth,
negative
negative cash
cash flow
flow
Time
Product Life Cycle with market share/market growth classification

These matrices straightaway focus attention on the strategies most logical for investments in the four quadrants.
Thus for stars, the logical strategy both from a long-term perspective as also for immediate business reasons, should
be preferably to increase market share or at least to hold on to existing market share. For cash cows, in view of
market growth, any attempt to increase market share, particularly, if it requires very substantial investment and
cash outgo, is hardly a logical strategy. Over the years, these investments do not have very substantial growth
prospects. The logical strategy, is therefore, to hold on to the market share and harvest as much cash as possible
in the form of retained profit. For dogs, four strategies are feasible: invest to increase the market share and get into
the question mark category; harvest; divest; invest to get into the cash cow category. For a question mark, two
possible strategies exist: elevate itself into the star category; disinvest. It will thus be seen that the logical progression
of an investment should be anticlockwise, as shown in next Fig. Any progression in the opposite direction would be
indicative of bad strategic management.
Question
Stars
Marks
Cash cow Dog
Fig.: Logical Progression of Investment

In order to dominate a market, a company must normally gain that dominance when the market is in the growth
stage of the product life cycle. In a state of maturity, a market is likely to be stable with customer loyalties fairly
fixed. It is therefore, more difficult to gain share. But if all companies in the growth stage attempt to gain market
share, competition will be very fierce, therefore only those companies prepared to invest in order to gain share
will achieve dominance. This may well suggest that a company following the principles suggested by the BCG will
need to price low and spend high amounts on advertising and selling in order to dominate such a strategy is one
of high risk unless such low margin activity is financed by higher profit earning products. This leads to the idea of a
product wise balanced BCG model for the growth share matrix as a tool for product portfolio analysis.
The matrix combines market growth rate and market share and thus directly related to the experience curve. Thus
for a star, the high volume is likely to yield the benefits of the experience curve and a reduction in cost. This benefit
would not be available in case of question mark. In the case of cash cow again, the high volume would lead to
the benefits of the experience curve yielding higher potential profit. Dogs are the worst of all combinations. They
are often a cash drain and use up a disproportionate share of management time and resources. The implications
for the analysis and evaluation of strategy are thus easy to see.
ANSOFF’S MODEL
The Ansoff Matrix:
Ansoff (1965) demonstrates the choices of strategic direction open to a firm in the form of a matrix (Figure).
Figure: The Ansoff product-market scope matrix (adapted from Ansoff, 1965)
Market Penetration Strategy:
Products
Existing New
Existing
Market Product
penetration development
Markets
Market Diversification
New
development � Related
� unrelated
Firm increases its sales in its present line of business. This can be accomplished by:
(i) price reductions;
(ii) increases in promotional and distribution support;
(iii) acquisition of a rival in the same market;
(iv) modest product refinements.
These strategies involve increasing the firm’s investment in a product/market and so are generally only used in
markets which are growing, and hence the investment may be recouped. In this respect the strategy is similar to
invest to build and holding strategy as described by the Boston Consulting Group.

Product Development Strategy:

This involves extending the product range available to the firm’s existing markets. These products may be obtained
by:
(i) investment in the research and development of additional products;
(ii) acquisition of rights to produce someone else’s product;
(iii) buying-in the product and ‘badging’ it;
(iv) joint development with owners of another product who need access to the firm’s distribution channels or
brands.
The critical factor to the success of this strategy is the profitability of the customer group for which the products
are being developed. Also the firm’s present competitive advantages in serving the market must confer on to the
new good. These can include:
(i) customer information that allows accurate targeting;
(ii) established distribution channels;
(iii) a brand which can be credibly applied to the new product.
Market Development Strategies:

Here the firm develops through finding another group of buyers for its products.
Examples include:
(i) different customer segments - for example, introducing younger people to goods previously purchased
mainly by adults;
(ii) industrial buyers for a good that was previously sold only to households;
(iii) new areas or regions of the country;
(iv) foreign markets.
This strategy is more likely to be successful where:
(i) the firm has a unique product technology it can leverage in the new market;
(ii) it benefits from economies of scale if it increases output;
(iii) the new market is not too different from the one it has experience of;
(iv) the buyers in the market are intrinsically profitable.
Diversification Strategies:
Here the firm is becoming involved in an entirely new industry, or a different stage in the value chain of its present
industry. Ansoff distinguishes several forms of diversification:
1. Related Diversification:
Here there is some relationship, and therefore potential synergy, between the firms exists business and the
new product/market space:
(a) Concentric diversification means that there is a technological similarity between the industries which
means that the firm is able to leverage its technical know-how to gain some advantage.
(b) Vertical integration means that the firm is moving along the value system of its existing industry towards
its customers (forward vertical integration) or towards its suppliers (backward vertical integration). The
benefits of this are assumed to be:
• taking over the profit margin presently enjoyed by suppliers or distributors;
• securing a demand for the product or a supply of key inputs;

• better synchronisation of the value system;
• reduction in buyer or supplier power.
However, it also means increasing the firm’s investment in the industry and hence it’s fixed cost base.
2. Unrelated Diversification:
This is otherwise termed conglomerate growth because the resulting corporation is a conglomerate, i.e. a
collection of businesses without any relationship to one another. The strategic justifications advanced for this
strategy are to:
• take advantage of poorly managed companies which can then be turned around and either run at a
gain to the shareholders or sold-on at a profit;
• spread the risks of the firm across a wide range of industries;
• escape a mature or declining industry by using the positive cash flows from it to develop into new and
more profitable areas of business.
ARTHUR D. LITTLE PORTFOLIO MATRIX

The ADL portfolio matrix suggested by Arthur D. Little (ADL) consists of 20 cells, identified by competitive position
and its stage of industry maturity. In this matrix, the stage of industry maturity is identified in four stages viz.,
embryonic, growth, maturity and ageing. The competitive position is categorized into five classes viz., dominant,
strong, favourable, tenable and weak. The purpose of the matrix is to establish the appropriateness of a
particular strategy in relation to these two dimensions.
The position within the life cycle and of the company is determined in relation to eight external factors (or
disciplines) of the evolutionary stage of the industry. These are:
(a) market growth rate
(b) growth potential
(c) breadth of product line
(d) number of competitors
(e) spread of market share among the competitors
(f) customer loyalty
(g) entry barriers
(h) technology
It is the balance of these factors which determines the life cycle. The competitiveness of the organization can
be established by looking at the characteristics of each category. The weights must be defined to calculate
the matrix position of a particular business. The matrix location of each unit can be used to formulate a natural
strategy to accomplish the business goals of the firm.
Competitive Stage of Industry Maturity

position
Embryonic Growth Mature Ageing
Dominant - Startup - Fast growth - Defend position - Defend position
- Fast growth - Attain cost leadership - Attain cost leadership - Cost focus
- Build barriers - Renew - Renew - Renew
- Defend position - Fast growth - Harvest or divest
- Act offensive - Act offensive

Strong - Start up - Fast growth - Attain cost leadership - Find niche

- Differentiate - Renew - Renew - Hold niche
- Fast growth - Differentiate - Differentiate - Hang on
- Cost focus - Grow with industry - Grow with industry
- Act offensive - Harvest
Favourable - Start up - Differentiate - Harvest - Harvest
- Differentiate - Cost focus - Find niche - Divest
- Fast growth - Catch up - Hold niche
- Grow with industry - Hang on
- Renew
- Turnaround
- Cost focus
- Differentiation focus
- Grow with industry
Tenable - Start up - Hold niche - Harvest - Divest
- Grow with - Find niche - Turnaround - Retrench
industry
- Hang on - Find niche
- Cost focus
- Harvest - Retrench
- Differentiation
focus - Catch up - Hold niche
- Turnaround
- Cost focus
- Differentiation focus
- Grow with industry
Weak - Find niche - Turnaround - Withdraw - Withdraw
- Catch up - Retrench - Divest
- Grow with - Withdraw
industry
The competitive position of a company’s SBU or product line can be classified as:
Dominant - It is comparatively a rare situation where the SBU enjoys monopoly position or very strong market ability
of its products. This may be due to high level of entry barriers or protected technology leadership.
Strong - When an SBU enjoys strong competitive position, it can afford to chalk out its own strategies without too
much concern for the competitors.
Favourable - In this competitive position, no firm will enjoy dominant market share and the competition will be
intense. The strategy formulation much depends on the competitors moves. The market leader will have a
reasonable degree of freedom. Analysis of their product portfolio and learning from them would help others while
framing their own strategies.
Tenable - The tenable competitive position implies that a firm can survive through specialization and focus. These
firms are vulnerable to stiff competition in the market. They can withstand with cost focus and differentiation focus
strategies.
Weak - The weak firms will generally show poor performance. They can withstand with niche strategy and can
become strong players in their area. The consistent weak performance may need to divest or withdraw from the
product line.

9.5 Stages in strategic planning
The stages in strategic planning are given below:

Stage I: Strategic Option Generations
At this stage, a variety of alternatives are considered, relating to the firm’s product and markets, its competitors
and so forth. Examples of strategies might be:
(a) increase market share
(b) penetration into international market
(c) concentration on core competencies
(d) acquisition or expansion etc.
Stage II - Strategic Options Evaluation
Each option is then examined on its merits.
(a) does it increase existing strengths ?
(b) does it alleviate existing weaknesses ?
(c) is it suitable for the firm’s existing position ?
(d) is it acceptable to stakeholders ?
Stage III - Strategic Selection
It involves choosing between the alternative strategies. This process is strongly influenced by the values of the
managers in selecting the strategies.
Steps in Strategic Planning

A systematic approach to formalizing strategic plans consists of the following steps:
(i) An internal analysis that encompasses assessing company strengths and weaknesses, financial
performance, people, operational limitations, corporate culture, current positioning in the market(s), the
overall characterization of the condition of the company and critical issues facing by the organization.
(ii) An external analysis that focuses on analyzing competitors, assessing market opportunities and threats,
evaluating changing technology that could impact the organization, analyzing regulatory or legislative
concerns, changes and trends in the market(s) the company operates in and other potential outside
influences on the organization.
(iii) Summarizing the current situation based on the information gathered and evaluated in steps one and two.
This step is important to the process because it brings together relevant and critical data and information
and allows members of the planning team to more easily get a feel for what opportunities and obstacles lie
ahead.
(iv) Development of a mission, vision or purpose statement. It really does not matter what it is called, but this
step is important perhaps more because of the process that the team will go through to develop it than
the words that eventually end up on paper. In this step, the team is starting the process of focusing the
organization and its people on what the organization is all about and what is important to the organization.
(v) Goal setting. Every organization needs goals. Again, focus is a critical element in the success of any
business. This step may be the most important of all of the strategic planning steps because it establishes
the framework and basis for the development of the other key elements of the plan.
(vi) Defining objectives that support the goals. Objectives are more specific in nature and are supportive of the
goal. They bring into even greater focus to the goals of the organization.
(vii) Development of strategies. Strategies begin defining how the goals and objectives are going to be
achieved.

(viii) While not all strategic plans include tactics, a good strategic plan will include at least the key tactics
thought to be important to supporting the strategies developed in step 7. Generally tactics are more fully
developed and added to the plan as time goes on. Tactics are the specific tasks associated with carrying
out strategies.
Approaches in Strategic Planning
It is important to operate a planning process which will not only produce realistic and potentially rewarding plans
but will also secure the support of all those involved in implementing them. There are three approaches that can
be adopted to strategic planning:
(i) A top-down process, in which managers are given targets to achieve which they pass on down the line.
(ii) A bottom-up process, in which functional and line managers in conjunction with their staff submit plans,
targets and budgets for approval by higher authority.
(iii) An iterative process, which involves both the top-down and bottom-up setting of targets. There is a to-
and-from movement between different levels until agreement is reached. However, this agreement will
have to be consistent with the overall mission, objectives and priorities and will have to be made within the
context of the financial resources available to the organization. The iterative approach, which involves the
maximum number of people, is the one most likely to deliver worthwhile and acceptable strategic plans.
Strategic Management and Strategic Planning : Distinction
The basic difference between Strategic management and Strategic planning are as follows:
Strategic Management Strategic Planning

1. It is focused on producing strategic results; new 1. It is focused on making optimal strategic decisions.
markets; new products; new technologies etc.
2. It is management by results. 2. It is management by plans.
3. It is an organizational action process. 3. It is an analytical process.
4. It broadens focus to include psychological, sociological 4. It is focused on business, economic and
and political variables. technological variables.
5. It is about choosing things to do and also about the 5. It is about choosing things to do.
people who will do them.
Corporate Planning and Long-range Planning

Corporate Planning - It is concerned with determination of objectives treating the company as a whole.
It develops means to achieve the company’s overall objectives. The corporate plans may relate to achieve
corporate objectives for short-run and/or long-run. It is an integrated systems approach considering different
functions, divisions and units of the organization. Such corporate plans are framed at the corporate level by the
top management.
Long-range Planning - It is a systematic and formalized process concerned with directing and controlling future
operations of an enterprise towards desired objectives for periods spreading generally over 5 or more years. It
provides an opportunity to management to anticipate future problems and have got more flexibility in framing
the long-range plans.
Corporate planning is not synonymous with long range planning. Corporate planning is concerned with both
short periods as well as long periods. The time span depends on how far ahead a company wants to forecast,
depends on nature of business and depends on commitment of resources required for it. Corporate planning in
an engineering firm will involve long-term considerations but it will have short-term consideration in case of textile
firm. Long range planning necessarily connotes planning with a long time horizon, generally five years or more.
Corporate planning is associated with long range planning in labour intensive industries. Corporate planning is
concerned with the existing products in existing markets as well as new products and new markets. Long-range
planning takes care of only the existing products in existing markets.

Strategic Planning and Long-range Planning
The basic divergence between strategic planning and long-range planning lies in the difference in the assumption
regarding the future environment of an organisation. In case of long-range planning current knowledge about
future conditions is known with certainty that can be relied upon by executives. Accordingly, the course of action
for achievement of organisational goals is drawn on the basis of this knowledge. In long range planning the future
is forecasted through extrapolation of the historical growth.
On the contrary, strategic planning assumes that an organisation must be ready to respond to a dynamic
environment and future environmental conditions are not known with perfect certainty. Thus, there is a need
to emphasise and understand how the environment assumed is charging. Accordingly, the issue of developing
courses of action in response to these changes will have to be taken up. Here, a number of alternatives are
generated for several situations for the future. In case of strategic planning, the firm tries to identify opportunities,
threats and trends based on which the future prospects are analysed.
This difference between long-range planning and strategic planning has been shown in the figure below :
Long range planning
Forecast based on extrapolation
Budgets Programmes Profits Plan
Implementation
Operation control
Strategic Planning
Prospects Objectives
Strategy
Operating Strategic
Performance goals
Operating programmes Strategic programmes/

/budgets budgets
Implement by units Implement by projects
Operating control Strategic control
As shown in the figure above, in case of long-range planning, objectives forecasted through extrapolation are
translated into budgets, programmes and profit plans. These are finally implemented. An operating control system
is established and the feedback is provided which suggests a change in objectives, if required. The strategic
planning leads to the setting-up of two sets of goals – operating performance goals and strategic goals. The
operating performance goals are translated into operating budgets and strategic goals are translated into strategic
budgets. Accordingly two types of control namely, operating control and strategic control are established.

9.6 Alternatives in Strategic planning
A basic premise of good strategic management is that firms plan ways to deal with unfavorable and favorable
events before they occur. Too many organizations prepare contingency plans just for unfavorable events; this is
a mistake, because both minimizing threats and capitalizing on opportunities can improve a firm’s competitive
position.
Regardless of how carefully strategies are formulated, implemented, and evaluated, unforeseen events, such as
strikes, boycotts, natural disasters, arrival of foreign competitors, and government actions, can make a strategy
obsolete. To minimize the impact of potential threats, organizations should develop contingency plans as part of
their strategy-evaluation process. Contingency plans can be defined as alternative plans that can be put into
effect if certain key events do not occur as expected. Only high-priority areas require the insurance of contingency
plans. Strategists cannot and should not try to cover all bases by planning for all possible contingencies. But in any
case, contingency plans should be as simple as possible.
Some contingency plans commonly established by firms include the following:
1. If a major competitor withdraws from particular markets as intelligence reports indicate, what actions should
our firm take?
2. If our sales objectives are not reached, what actions should our firm take to avoid profit losses?
3. If demand for our new product exceeds plans, what actions should our firm take to meet the higher demand?
4. If certain disasters occur—such as loss of computer capabilities; a hostile takeover attempt; loss of patent
protection; or destruction of manufacturing facilities because of earthquakes, tornadoes, or hurricanes —
what actions should our firm take?
5. If a new technological advancement makes our new product obsolete sooner than expected, what actions
should our firm take?
Too many organizations discard alternative strategies not selected for implementation although the work
devoted to analyzing these options would render valuable information. Alternative strategies not selected for
implementation can serve as contingency plans in case the strategy or strategies selected do not work. U.S.
companies and governments are increasingly considering nuclear-generated electricity as the most efficient
means of power generation. Many contingency plans certainly call for nuclear power rather than for coal- and
gas-derived electricity.
When strategy-evaluation activities reveal the need for a major change quickly, an appropriate contingency
plan can be executed in a timely way. Contingency plans can promote a strategist’s ability to respond quickly
to key changes in the internal and external bases of an organization’s current strategy. For example, if underlying
assumptions about the economy turn out to be wrong and contingency plans are ready, then managers can
make appropriate changes promptly.
In some cases, external or internal conditions present unexpected opportunities. When such opportunities occur,
contingency plans could allow an organization to quickly capitalize on them. Linneman and Chandran reported
that contingency planning gave users, such as DuPont, Dow Chemical, Consolidated Foods, and Emerson Electric,
three major benefits:
(i) It permitted quick response to change,
(ii) It prevented panic in crisis situations, and
(iii) it made managers more adaptable by encouraging them to appreciate just how variable the future can be.

Steps in Contingency Planning
Robert Linnemam and Rajan Chandran have suggested that a seven step process as follows:
Step 1 - Identify the beneficial and unfavourable events that could possibly derail the strategy or strategies.
Step 2 - Specify trigger points. Calculate about when contingent events are likely to occur.
Step 3 - Assess the impact of each contingent event. Estimate the potential benefit or harm of each contingent
event.
Step 4 - Develop contingency plans. Be sure that contingency plans are compatible with current strategy and are
economically feasible.
Step 5 - Assess the counter impact of each contingency plan. That is, estimate how much each contingency plan
will capitalize on or cancel out its associated contingent event. Doing this will quantify the potential value of each
contingency plan.
Step 6 - Determine early warning signals for key contingency event. Monitor the early warning signals.
Step 7 - For contingent event with reliable early warning signals, develop advance action plans to take advantage
of the available lead time.
Benefits of Contingency Planning
(i) It will make the future through their proactive planning and advanced preparation.
(ii) It will introduce original action by removing present difficulties.
(iii) It enables to anticipate future problems.
(iv) It will change the goals to suit internal and external changes.
(v) It experiments with creative ideas and take initiative.
(vi) It will attempt to shape the future and create a more desirable environment.
(vii) It permits quick response to change,
(viii) It prevents panic in crisis situations.
(ix) It makes managers more adaptable to unforeseen changes.
1. What is the purpose of SWOT analysis? Why it s necessary to do SWOT analysis before selecting a particular
strategy for a business organisation.
2. Explain the objective of SWOT analysis and its advantages and criticism.
3. SWOT analysis merely examines the internal environment of an organisation. Comment.
4. What do you mean by Portfolio Analysis and do list down its objective.
5. What are the important concepts in the context of Portfolio Analysis?
6. Explain about the BCG Matrix.
7. Hassan is one of the Indian’s leading detergent manufacturing companies. The firm has more than twenty five
products type. These have been developed over a period of its ten year existence. Some products are very
successful while others have not performed well. The challenges for the board have been the formulation of
strategy policy in the way the company manages the portfolio of products.

As a newly recruited qualified Cost Accountant, your advice is being sought to address the following questions
the Products managers has prepared as input into his paper to the Board.
(a) Describe the BCG growth sector matrix.

(b) Explain what strategic options are available to Hassan in accordance to the BCG Matrix.
(c) Outline what limitations the model poses to the Product Managers as he prepares his paper to the
Board.
8. Explain the growth strategies under Ansoff Product Market Growth Matrix.
9. Explain the ADL Matrix.
10. Discuss the various stages in Strategic Planning.
11. Discuss Contingency Planning and its seven steps process.

Study Note - 10
formulation and Implementation of strategy

10.1 Stragegy Formulation Function-wise (Production Strategy, Marketing Strategy, Manpower Strategy)
10.2 Structuring of Organisation for Implementation of Strategy
10.3 Strategic Business Unit
10.4 Business Process Re-engineering
10.1 strategy formulation function-Wise
Formulation of strategy
(i) Develop and evaluate strategic alternatives
(ii) Select appropriate strategies for all levels in the organisation that provide relative advantage over competitors
(iii) Match organizational strengths to environmental opportunities
(iv) Correct weaknesses and guard against threats
Implimentation of strategy
(i) effectively fitting organizational structure and activities to the environment
(ii) The environment dictates the chosen strategy; effective strategy implementation requires an organisational
structure matched to its requirements. Evaluating results
(iii) How effective have strategies been?
(iv) What adjustments, if any, are necessary
Strategy formulation function wise
Strategy often require changes in the way an organization is structured for two major reasons:
1. Structure largely dictates how objectives and policies will be established;
2. Structures dictates how resources will be allocated.
The choice of structure appears contingent on the strategy of the firm in terms of size, diversity of the products /
services offered, and marked served.
Whether this is due to inertia, organizational politics, or a realistic assessment of the relative costs of immediate
structural change, historical evidence suggests that the existing structure will be maintained and not radically
redesigned until a strategy’s profitability is increasingly disproportionate with increasing sales.
Production Strategy
Need for a Production Strategy:
The key to successful survival of an enterprise as an independent unit is how efficiently production activity is
managed. The two major factors that contribute to business failures are obsolescence of the product line and
excessive production costs. These factors themselves have been the outcome of ineffective production planning.
Production strategy plays crucial role in shaping the ultimate success of a firm. Being based on objective analysis
of external environmental forces and corporate strengths and weaknesses, it enables an organisation to make
optimal decisions regarding product, production capacity, and plant location, choice of machine and equipment

Formulation and Implementation of Strategy
and maintenance of existing facilities. Constant review of manufacturing plan aids in maintaining proper balance
of capital investment in plant, equipment and inventory, personnel commitment, efficient operation of the
production system by bringing in flexibility and versatility in response to schedule fluctuations, product mix and
variations in raw material and quality control, and ensures effective material handling and planning of facilities.
Within the corporate structure, production strategy helps in maintaining full co-ordination with marketing and
engineering functions to formulate plans to improve products and services. It calls upon management to keep
in constant touch with finance and personnel to achieve the optimal use of assets, cost control, recruitment of
suitable production personnel and management of labour disputes and negotiations.
Formulating Production Strategy:
The following steps are involved in the formulation of production strategy
(i) Study the overall corporate plan and define the objectives.
(ii) Analyse the present production operations and the present and future environment.
(iii) Review sales- forecast and marketing.
(iv) Make strategic decisions for production.
1. Study of Corporate Plan and Statement of Objectives: As in other operating areas, production planning begins
with corporate objectives and planning premises. Examination of overall corporate planning not only provides
overall directions for manufacturing but also answers questions about overall economic, industrial, market
and company factors which will limit and otherwise affect the production planning. Within the framework of
these overall planning factors, the planner establishes production objectives and definitions of the general
product and process areas in which production operations should concentrate.
2. Analysis of the Present Production Operations and the Environmental Forces: The production manager should
analyse the current manufacturing operations arid the present and future environmental trends to determine
the company’s manufacturing strengths and weaknesses and to isolate environmental factors such as the
manpower supply and new process and equipment developments, which significantly affect manufacturing
operations. During this phase of manufacturing planning, the planner examines the premises or factors that
affect the manufacturing operations specifically.
A study of plant location should be made to assess the effectiveness of present location with respect to key
supplies and channels of distribution, and analyse the economies of plant location in terms of labour costs
and reservoir of labour skills, both short-term and long-term. Percentage of plant capacity being currently
used effectively should also be studied.
The existing condition of the machinery should be studied and its quality and efficiency should be compared
with others in the same field including overseas competitors. It must also be ascertained as to how many new
equipment developments within the industry have been used by the company such as vise of computers
for scheduling, automated warehouses, miniaturisation, programmed equipment, etc. Current schedule for
replacement of machinery and cost of such replacement also need examination.
Regarding maintenance, production manager should check availability of replacement parts. He should also
see if the company has work standards to measure productivity.
In production scheduling, information regarding down time on machinery, accuracy of scheduling, history
of production delays and reasons for the delays, method changes over the past few years and future trends,
etc. should be gathered and analysed.
Regarding materials aspect of production it is very necessary to analyse the purchasing requirements, rate
of inventory turnover, production delays due to out of stock materials, condition of the material handling
equipment, adequacy of existing facilities of the material handling equipment, adequacy of existing facilities
for storing and warehousing materials and other similar matters.
3. Review of Sales Forecast and Marketing Mix: Since planning in other areas affects manufacturing plans, the
planner should examine the plans in these areas. Sales goals are the basis upon which specific operating

plans for manufacturing are built. Hopefully, the manufacturing manager will have participated in the
development of these goals so that the sales goals can be reconciled with operations limitations. Once
settled manufacturing plans can be developed to meet sales goals. The impact of marketing mix, research
and development and new product administration on manufacturing are also examined.
4. Making Strategic Decisions: Keeping in mind the overall corporate business mix, present production operations,
environmental forces, sales forecast and marketing mix, the production manager has to decide about the
extent of manufacturing activity, choice of manufacturing process, capacity machines and equipment to be
used, and physical facilities.
(a) Extent of Production Activity: The first vital decision which a production manager has to make, particularly
in consultation with marketing and finance managers, is regarding the extent of manufacturing activity
the firm will carry out. There is usually a great deal of choice in the extent of commitment to production, i.e.,
of vertical integration. At one end of the spectrum are all the items used in production including standard
parts, small special components and major components that can be manufactured and completely
assembled. At the other end are the finished products that can be bought and the company’s name
attached. Nature of the manufacturing operation dictates, to a certain extent, the area where the
optimum is likely to be. Even then, there is often a considerable range of variation.
A number of factors influence managerial decision regarding extent of manufacturing activity. A firm
will be tempted to manufacture raw materials and components for the products to be sold along with
assembling parts, if it finds that this will ensure supplies in accordance with their required quality, quantity
and timely availability.
This temptation will be further strengthened when costs of producing raw materials and components are
found to be less than the price at which suppliers will supply these materials. Uncertainty regarding ready
availability of supplies further suggests that the firm should have a captive source of supply of vital raw
materials and ingredients.
Size of investment involved in developing production facilities also influences the extent of the firm’s
production activity. Where the investment involved is large, introducing new products or changing the
product design with consequential charges in the plant facilities are likely to be too costly to bear. In
such situations it will be desirable for the firm to procure its materials from outside sources because that
provides greater flexibility and adjustment to changes in needs.
Financial strength of the firm plays a significant role in deciding the extent of the production activity of
the firm. Thus, a firm with a strong financial position is better placed in integrating manufacturing and
processing of components and products than the one whose financial position is weak.
Similarly, availability of managerial expertise in the firm decides the range of manufacturing activity.
Where a firm has executives with specialised skill and competence in a particular line of activity, it must
recruit new executives with equal efficiency. It will, therefore, be prudent on the part of the production
manager to consult the top management if the firm can afford the cost of new executives. The finance
manager may also be involved in working out the cost-benefit implications of the decision.
(b) Choice of Manufacturing Process: Selection of a suitable process in advance of the actual production
of goods is another strategic decision that considerably influences the success of an industrial enterprise.
The design of the manufacturing process is not restricted to new concerns or new products. Existing
enterprises have also to review their operations in the light of the competition in order to increase
production at lower costs.
Production process refers to the design of a series of operations to transform inputs into desired outputs.
Process planning involves the following steps:
1. A-careful review of the product design and specifications to make sure that economic manufacture is
feasible.
2. Determination of the methods of manufacture that will result in the optimum manufacturing cost.

3. Selection or development and procurement of all machines, tools, and other equipment required for the
manufacture of the product at the required quality and rate of production.
4. Layout of the production area and auxiliary spaces and installation of the manufacturing facilities.
5. Planning for and establishing the necessary control of materials, machines and manpower to ensure the
effective utilisation of the manufacturing facilities for economical production of the product.
Thus, the process design activity comprises all such activities as are necessary to arrange for the
manufacture of the product by the most economical means and in compliance with all safety regulations.
(c) Capacity Decisions: While considering a new plant design or the redesign or expansion of an existing
system, a high level decision regarding the production capacity is called for. In order to determine
future capacity of the plant adequate consideration should be given to certain factors such as sales
forecasts of physical volume, policy decisions on what will be purchased instead of made, engineering
estimates of machine productivity and production plans on how equipment will be used. Upon this must
be super imposed central management policies regarding desired capacity including policies regarding
provisions for peak versus normal requirements, backward taper of capacity provision for growth and
balance of facilities.
One of the most vital decisions which have to be made regarding production capacity is whether the
company should build so much capacity to satisfy all demands during peak periods or whether it should
maintain a smaller capacity and hope that failure to render service during requirements will not have
unbearable consequences. Generally, companies providing utilities have a policy of building capacity
to cope with peak demands (during hot summer days). But the investment made for peak demands is
tremendous.
In view of burgeoning amount of investment the moot question that arises is whether capacity installed
in order to meet the maximum expected demand should be maintained at all times. It may not be
disadvantageous to maintain the excess capacity throughout the year if one is confident that excess
capacity can be utilised by expanding exports or by accumulating stocks if the duration of the surplus
capacity is expected to be limited.
There are some organisations who prefer to build smaller capacity to take care of normal requirements
and meet peak demands by way of imports or subcontracting — some organisations employ measures
such as off-peak discounts, mail early campaign, etc. to induce customers to avoid peak periods.
Another way of meeting high peak demands is to switch over to two shifts from the single shift. Before
making a final decision in this direction, cost-benefits analysis must be undertaken. With doubling of shifts,
investment costs are not halved because increments of capacity are not equally expensive. Many other
costs are also involved. Wage premiums say 10 to 15 per cent, are generally given for second shifts.
Multiple shifts also increase supervision costs. An analysis of building and equipment costs resulting from
doubled shifts is necessary to determine the total additional cost. Additional cost should be matched
with additional benefits. Where benefit exceeds costs it will be in the interest of the organisations to run
double shifts to cope with peak demands.
Adequate provision for coping with growth requirements of the organisation must be mace while
determining production capacity. For this, it is necessary for the top management to decide how much
growth is expected and the extent to which investment will be made in anticipation of growth. This
decision will have to be taken very carefully otherwise it may result in too much or too little capacity in
serious consequences.
(d) Choosing Machines and Equipment: Another strategic decision to be made by a production manager
is what type of equipments the organisation will require for production purposes, how much it will cost,
what will be its operating cost and what services it will render to the organisation and for how long.
Choice of equipment for making a particular product essentially depends on the basic manufacturing
process. The decision maker must, therefore, familiarise himself with the production process to be
adopted.
Another consideration in the choice of new equipment for a plant is the type and degree of operating
skill required and presently available skills within the organisation. Other factors worth consideration are
the ease with which the equipment, can be operated and the safety features of the equipment.

While deciding about the number of each type of machines needed to produce a product, producing
engineer must take into account the quality of product to be made within any given period of time,
number of working hours in the plant during this period, the various production rates on the operations to
be performed, set-up time for each operation, number of set-ups per machine for the time period, the
operating efficiency of the plant and finally the scrap loss during each operation. To find the requirements
for any particular piece of equipment in a process, the total number of hours per month (or other time
period) that the equipment is required to produce the desired quantity is dividend by the total number
of hours per month that the equipment is available, taking plant efficiency into consideration. Then the
total requirements for all operations to be performed on each unit of equipment are considered in terms
of the number of set-ups involved and the time required for each set-up.
In a product-line layout of equipment, where each machine is set up to perform only one operation, the
set-up time can be neglected, but the problem of line balancing becomes important. In the process-
type layout, where machines are commonly used on several different parts and/or operations, set up
and scheduling time losses must be carefully considered. Balancing is not a serious problem in such case.
For balancing the capacities of various machines in a product-line layout, it may be desirable to buy
more than enough machines if the equipment is not very expensive and if this will avoid possible shut-
down or restriction of the entire manufacturing line. Where the equipment is quite costly, it may be
necessary to provide only the minimum number of machines and rely upon overtime or extra-shifts to
meet production requirements when breakdowns occur.
(e) Equipment Investment: Acquisition of equipment involves capital expenditure which will have long-
term effects on the financial position of the company. Hence, before taking a final decision regarding
investment in a machine, detailed analysis of such investment in terms of cost-benefits must be made
and its desirability and worthwhile ness should be evaluated with the help of internal rate of return or
present value method.
The decision to replace the existing machine is equally important to the enterprise. In this regard the
management has to decide when the replacement should be made and what is the best replacement
policy which must be considered while making comparisons between an existing unit of equipment
and its possible replacement. In order to make a sound economic comparison, all the factors must be
converted into cost considerations. Then, cost savings resulting from the proposed equipment must be
related to incremental capital expenditure reducing the former in present value. The rate of return so
obtained is compared with the cut-off rate to ascertain whether the replacement is economically viable.
Thus, clear-cut policy guidelines regarding methodology or computation of net investment outlay,
incremental operating expenditure and income depreciation, obsolescence, salvage value etc. will
help management in taking decisions regarding acquisition and/or replacement of machines.
(f) Physical Facilities Decisions: Facilities strategy covers plans for location analysis and selection, design and
specifications including layouts of equipment, plant, warehouses and related services specifying and
providing for maintenance. Facilities planning deals with the separate but interrelated costs of material,
supplies, manpower services and facilities. Its mission is to find ways to minimise the aggregate of such
costs in making and distributing the products at the proper time.
Plant Location: Plant location is essentially an investment decision having long-term significance and implied
economic effects. A good decision plays off; a bad decision can cause grim financial difficulties. Once a plant is
acquired, it is a permanent site that cannot readily be sold. The management may also contemplate relocation
of the plant when business expansion and advanced technology require additional facilities to serve new
market areas, to produce new products, or simply to replace the old, obsolete plants to increase the company’s
production capacity.
Before a location for a plant is sought, long range forecasts should be made anticipating the future needs of the
company. These should be based on the company’s expansion policy, the anticipated diversification of products,
the trends in market demand, geographical distribution, material and labour supply, and any other foreseeable
influences. Thus, plant location decisions require intensive study of economic and socio-political circumstances.

The accuracy of forecasting is essential regarding rising demand and anticipated sales increases. Miscalculation
in this respect may post serious problems before the company can occupy the new facilities once built and
expand the new facilities subsequently due to land and environmental constraints.
The selection of an appropriate plant site calls for location study of the region in which the factory is to be situated,
the community in which it should be placed and finally, the exact site in the city or countryside.
Plant Building: Once the company has chosen the plant site, due consideration must be given to providing physical
facilities. A company requiring extensive space will always construct new buildings.
Oil planning a building for the manufacturing facilities, a number of factors will have to be kept in mind such as
nature of the manufacturing process, plant layout and space requirements, lighting, heading, ventilating, air-
conditioning, service facilities and future expansion.
Plant Layout: Plant layout involves the arrangement and location of production machinery, work centres and
auxiliary facilities and activities (inspection, handling of material storage and shipping) for the purpose of achieving
efficiency in manufacturing products or supplying consumer services. Plant layout should co-ordinate use of
material, men and machines and achieve the following objectives:
• Facilitate the manufacturing process,
• Minimise materials handling,
• Maintain flexibility of arrangement and operation,
• Maintain high turnover of work-in-process,
• Hold down investment in equipment,
• Make economical vise of building cube,
• Promote effective utilisation of manpower,
• Promote for employee convenience, safety and comfort in doing the work.
In designing plant layout a number of factors such as nature of product, volume of production, quality, equipment,
type of manufacture, building plant site personnel and materials handling plan should be kept in view.
Maintenance of Equipment: Maintenance of equipment is an important facility of planning consideration. It is
intimately linked with replacement policies. Every manufacturing enterprise follows some maintenance routine in
order to avoid unexpected breakdowns and thus minimise costs associated with machine breakdowns such as
machine down time and possible loss of potential sales, idle direct and indirect labour, delays in other processes
that may depend for material supply on the machine that is down, increased scrap, customer dissatisfaction from
possible delays in deliveries and the actual cost of repairing the machine.
A number of strategies can be adopted for maintenance of machines and equipment. Two most important ones
are carrying excess capacity and preventive maintenance.
In carrying excess capacity method an organisation carries stand-by capacity which is thrown into the breach
if trouble occurs. This excess capacity can be whole machines or it can be major parts or components which
ordinarily take time to obtain. Carrying excess capacity involves cost which mast be compared with costs arising
out of a slow-down or a shut-down of a whole series of dependent operations. Therefore, the decision in this
regard is cost trade-offs.
The question that now arises is how much excess capacity should be carried by an organisation. This should be
decided keeping in mind a fundamental principle that as the number of stand-bys increases, lost production costs
decrease while holding costs for the stand-bys rise. The alternative providing the minimum total cost is preferred.
Preventive Maintenance: Preventive maintenance is based on the premise that good maintenance prevents
breakdowns. Preventive maintenance means preventing break downs by replacing worn-out machines or their
parts before their breakdown. It anticipates likely difficulties and does the expected needed repairs at a convenient
time before the repairs are actually needed. Preventive maintenance depends upon the past knowledge that
certain wearing parts will need replacement after a normal interval of vise.

Another and quite different kind of preventive maintenance can better be called maintenance prevention. It is
concerned with designing machines which will be both trouble-free and easily repaired.
The most strategic decision which a production manager has to make in this regard is to determine whether
preventive maintenance is more expensive than repairing on call. This requires comparison of total costs involved
in preventive maintenance with those in repairing. There are more elaborate models for special maintenance
problems such as an inspection policy for equipment that can be restored to an operating condition and
replacement and policy for equipment renewed after a certain length of service. However, such sophisticated
analyses are appropriate when the investment involved is large or service reliability is critical.
A typical preventive maintenance strategy is more mundane than mathematical modelling. The guiding principle
is that the time spent on preventive maintenance should be less than the time required for repairs, and the value
imported to machines by preventive maintenance should exceed the programme cost.
Marketing strategy
Market:
Market is an arrangement that provides an opportunity of exchange of goods and services, for money or money’s
worth. It is the means to settle the terms of exchange.
Marketing:
Some important definitions of marketing are:
“Marketing is the performance of business activities that direct the flow of goods and services from producer to
consumer or user.”
Another definition of marketing “is getting the right goods and services to the right people at the right place, at
the right time, at the right price, with right communication and promotion.”
Marketing is “a social process by which individuals and groups obtain what they need and what through creating
and exchanging products and value with others.”
Marketing is, “the management function which organises and directs all those business activities involved in
assessing and converting customer purchasing power into effective demand for a specific product or service and
in moving the product or service to the final consumer or user so as to achieve the profit target or other objectives
set by company.
Marketing is the process of exchange involving two distinct aspects namely, mental and physical. In a macro
sense, it is a system that directs an economy’s flow of goods and services to consumers and accomplished
society’s objectives. In a micro sense, it is the process of finding out what people need; helping to develop need
satisfiers, informing and persuading, moving properly priced products and services to consumers and keeping the
consumers satisfied.
Role of Marketing:
The first and foremost role is that is stimulates potential aggregate demand and thus enlarges the size of the
market. You might ask how it helps in the economic growth of a country. The answer is that through stimulation of
demand people are motivated to work harder and earn additional money to buy the various ideas, goods and
services being marketed. An additional advantage which accrues in the above context that it accelerates the
process. (In India, it is believed that about one-fourth of GNP and more than one-third of agricultural output are
still non-monetised).
Another important role which marketing plays is that it helps in the discovery of entrepreneurial talent. Peter
Drucker, a celebrated writer in the field of management, makes this point very succinctly when he observes that
marketing is a multiplier of managers and entrepreneurs.
Still another important contribution which marketing makes is that it helps in sustaining and improving the existing
levels of employment.

Marketing Functions:
Marketing involves eight important functions: Buying, Selling, Storage, Transportation, Financing, Standardisation,
Grading and Risk-Taking.
Marketing Environment:
It is the sum-total of external factors within which the enterprise operates. It is the compendium of forces external
in nature like social, economic, ethical, political, physical and technological. These are uncontrollable external
forces that provide opportunities and challenges to the firm.
Universal Functions of Marketing:
Universal functions of marketing consist of buying, selling, transporting, storing, standardisation and grading,
financing, risk-taking and market information.
Marketing Objectives:
(i) Creating awareness and appreciation of the crucial role of consumer in shaping decisions, and of the profit
as a basic foundation of corporate existence, stability and growth.
(ii) Awareness that consumers can only be helped to solve their problems through corporate efforts.
(iii) Awareness and concern with trans-departmental implications of an individual department’s decisions and
actions and their effect on the firm’s equilibrium with its external environment— consumers, competitors,
government, etc.
(iv) Concern with, and interest in, the innovation of products and services so as to solve select consumer problems.
(v) Concern with the effect of new product and service introduction on firm’s present and potential profit
position.
(vi) Sensing and monitoring information as regards market potential to serve as a base for goal and target
setting.
(vii) Focus in coordinating company effort and in establishing corporate and departmental objectives consistent
with the enhancement of the firm’s profit position.
(viii) Awareness and appreciation of the role of formal, periodic, short and long-range planning of company’s
goals, strategies and tactics resulting in an integrated system of marketing actions.
(ix) Desire and preparedness for the creation, expansion, contraction, termination, or in any way, restructuring of
any corporate function in order to mobilize, utilize and control corporate effort.
Marketing Plan:
Marketing plan is a written document that specifies in detail the firms marketing objectives and how marketing
management will use the controllable marketing tools such as product design, channels, promotion and pricing
to achieve these objectives.
Marketing strategy means finding attractive opportunities and developing profitable ways to capture the market.
A marketing strategy specifies a target market and a related marketing mix. It is a big picture of what a firm will
do in some market. The job of planning strategies to guide a whole company is called strategic planning. It is the
managerial process of developing and maintaining a match between an organisation’s resources and its market
opportunities.
The Marketing Concept and the Selling Concept:
The marketing concept is a business philosophy that challenges previous concepts. The marketing concept holds
that the key to achieve organisational goals consists in determining the needs and wants of target markets and
delivering the desired satisfactions more effectively and efficiently than competitors. The marketing concept has
been expressed in many colourful ways:
(i) meeting needs profitably

(ii) find wants and fill them
(iii) love the customer, not the product
(iv) have it your way
(v) you’re the boss
(vi) to do all in our power to pack the customer’s rupee full of value, quality and satisfaction.
The marketing concept rests on four main pillars, namely target market, customer needs, coordinated marketing
and profitability. These are shown in the figure below, where they are constructed with a selling orientation. The
selling concept takes an inside-out perspective.
Starting Focus Means Ends

point
Factory Products Selling and Profits through

Promoting Sales volume
The Selling Concept
Target Customer Co-ordinated Profit through

Market needs Marketing customer
satisfaction
The Market Concept
The selling and marketing concepts contrasted
It starts with the factory, focuses on the company’s existing products, and calls for heavy selling and promoting
to produce profitable sales. The marketing concept takes an outside-in perspective. It starts with a well-defined
market, focuses on customer needs, co-ordinates all the activities that will affect customers and produces profit
through customer satisfaction.
Most companies do not really grasp or embrace the marketing concept until driven to it by circumstances. Any of
the following developments might produce them:
(i) sales decline
(ii) slow growth
(iii) changing buying patterns
(iv) increasing competition
(v) increasing marketing expenditure.
In the course of converting to a market oriented company, a company will face three hurdles-organised resistance,
slow learning and fast forgetting. But, since the marketing concept is concerned with how the business conduct
itself, the application of the marketing concept to management decisions should begin at the strategic planning
stage, and continue through product development and testing to its eventual sale in the market, and after sales
services, in other words, throughout the value chain.
Social Markeing:
Societal marketing concept calls for a customer orientation backed by integrated marketing aimed at generating
customer satisfaction and long-run consumer welfare as the key to attaining long-run profitable volume.

The impotance of developing a market orientation in Strategic Planning:

The marketing concept is the most practical philosophy for achieving any commercial organisation’s objective
such as growth in profits.
(i) By applying the marketing concept to product design etc. the company might hope to make more attractive
products, hence to achieve sustained sales growth and so make higher profits.
(ii) The importance, to some firms, of building up a long-term relationship with customers. Profits do not only come
from individual transactions with customers, but also from the customer’s propensity to deal with the firm rather
than its competitors.
The importance of developing a market orientation to strategic planning is implicit in the marketing concept.
(i) With the product concept and selling concept, an organisation produces a good or service, and then expects
to sell it. The nature of the organisation’s business is determined by what it has chosen to produce, and there
will be a reluctance to change over to producing something different.
(ii) With the marketing concept, an organisation commits itself to supplying what customers need. As those needs
change, so too must the goods or services which are produced. In other words, marketing orientation enables
a firm to adapt to the environment.
Strategic planning involves making decisions about the choice of product-market strategies- developing new
products and new markets that will fill the profit gap. A marketing orientation should help planners to identify
more successfully what products or markets, by meeting perceived customer needs, would earn good profits for
the organisation. Having decided on a competitive strategy and a product-market strategy portfolio and a sales
growth plan, a firm must then decide on the following:
(i) Which markets offer the opportunity for successful investment? In other words, if the strategy is diversification,
which new markets should be looked at?
(ii) From these, which target markets should be selected for development.
(iii) How the firm should offer its product or service in comparison with the offerings of competitors.
(iv) How to establish a marketing system and organisation for the firm.
(v) How to develop a marketing plan and then implement and control it.
Strategic marketing is concerned with the development and implementation of marketing plans, for both the
long term and short term, which should enable a firm to achieve its objectives and goals. A firm can apply this as
follows:
(i) Environmental opportunities exist anywhere in the environment, e.g. in the field of what type of goods and
services. Not all environmental opportunities are appropriate to the objectives of a single firm.
(ii) Any company is likely to have distinctive competence in one or more areas of activity which makes it more
likely than other companies to be able to take advantage of a certain environmental opportunity.
Marketing Management:
Marketing management is the crucial and creative task of delivering consumer satisfaction and thereby earning,
profits through consumer demand.
Marketing Strategies:
Marketing strategy is a process that can allow an organisation to concentrate its limited resources on the greatest
opportunities to increase sales and achieve a sustainable competitive advantage. A marketing strategy should
be centered around the key concept that customer satisfaction is the main goal.
Markets can be described and defined by their nature of competition. Basically, the company’s overall marketing
strategy is its competitive posture in the marketplace. The marketer’s first task is to select a promising market arid
identify its needs and buying patterns, after which he formulates strategies for each controllable factor (product,
distribution, promotion and pricing).

Management’s mission is to manipulate the controllable in terms of the uncontrollable in ways that both meet the
target market needs and facilitate achievement of the company’s overall goals. To accomplish this, management
unifies the product market, distribution, promotion and pricing strategies into an overall marketing strategy (i.e.,
into a deliberately planned competitive posture).
In marketing, many decisions are made—each seemingly independent, all, in fact, interrelated. Thus, if a marketer
changes the product’s price by a substantial amount, other parts of the company’s overall marketing strategy
need re-evaluation. Ultimately, marketing success depends on skill in maintaining an optimum combination of
strategies, which is in keeping overall marketing strategy in balance.
In formulating and implementing overall marketing strategy, management concerns itself with identifying
opportunities to serve target markets profitably and serving them so effectively that it is difficult for competitors to
take business away on a profitable basis.
Competitive postures are either aggressive or defensive. When a market’s products are already established in the
market, there is a strong temptation to adopt a defensive posture, i.e., to maintain a holding action. The danger
in defending the status-quo is that this means yielding the initiative to competitors. If the competitors develop
important product innovations, they may succeed in breaking established customer loyalty and buying patterns.
The importance of formalized overall marketing strategies (i.e., deliberately planned competitive postures) varies
with the competitive setting. There are four types of competitive settings.
1. No direct competition
2. Pure competition
3. Monopolistic competition
4. Oligopolistic competition
Formulating Overall Marketing Strategy:

A marketing strategy should be used as a working paper that guides the store’s operations for the next 1-2 years.
The format of a marketing strategy has three sections:
Basic assumptions -- based on survey results and past planning processes;
Strategic goals -- goals for growth and fiscal health of the co.
Achieving goals -- operational ideas for changes that will alter the perception of the storefront by the public to
conform to the strategic goals.
Formulation of overall marketing strategy requires integration of all dimensions of marketing effort. Ideally, the
marketer should have some concrete system for determining whether the combination of inputs going into the
overall marketing strategy is optimal, and therefore, whether the resulting profit (and other desired outputs, in terms
of the company’s goals) is also optimal. The systematic approach is one requiring evaluation of possible inputs in
overall marketing strategy in terms of the likely outputs. Selections are then made from the various inputs so that
the combination (i.e., the overall marketing strategy) has the best chance for achieving the desired outputs.
In order to be consistently and profitably customer oriented in a continuously changing market, what is needed is
a proper marketing strategy concerning target markets, marketing mix and marketing expenditure levels. Thus, a
viable fit is achieved among corporate objectives, available resources, skills and opportunities.
The strategic planning process is carried out at corporate, business and product levels. Strategic planning involves
repeated cycles of analysis, planning, implementation and control. The horizons of strategic plans are usually
larger—usually 1-5 years. Corporate strategic planning involves four planning activities:
(a) Developing a clear mission for the company in terms of its industry, product &competence.
(b) Identifying the company’s Strategic Business Units (SBUs) which can benefit from separate planning and be
managed as separate profit centres.

(c) Allocating resources to SBUs based on their market attractiveness and business strength, or market growth
rate and Relative Market Share matrix. The two most important portfolio models are Boston Consulting Group
(BCG) model and General Electric (GE) model. Careful use of the portfolio models helps in isolating SBUs to
be built, maintained, harvested or divested.
(d) Expanding present business and developing new ones to fill the strategic planning gap: The company
can identify opportunities by considering intensive growth (market penetration, market development and
product development), integrative growth (backward, forward and horizontal integration) and diversification
(concentric, horizontal and conglomerate diversification).
SBUs determine their own business, product and services strategies considering the business mission, external and
internal environment. Marketing strategy provides the context for marketing planning with a much smaller horizon,
usually up to 1 year.
Manpower Strategy:
The concept of Human Resource Development (HRD) has evolved over time with the recognition of people
employed in organisations as a resource. In a comprehensive sense, HRD is defined as a process by which
employees are encouraged and helped in a continuous and planned way to (a) acquire and sharpen capabilities
to perform functions relating to their present or future positions, (b) develop their general abilities as individuals, (c)
identify and make use of their own inner potentials for their own and/or organisational purposes and (d) develop
an organisational culture whereby superior-subordinate relations, team work and collaboration among sub-units
may lead to strengthening healthy work ethos, motivation and pride of employees.
Strategic management of human resources includes assessing staffing needs in the light of strategies formulated
and developing a staffing plan for implementation of strategy. The compensation and incentive payments
necessary to motivate technically skilled employees and managers also need to be kept in view in connection
with the staffing plan. The basic policy in that respect is to be that of linking corporate earnings with individual
benefits.
Implementation of strategy often requires changes to be initiated in the organisation structure which may lead to
changes in power-relations and scope of social interactions among members. The managers and employees are
subjected to changes in their roles, prerogatives and power. New values and priorities as well as the newly formed
work groups and informal groups may lead to behavioural resistance to desired improvements. Hence there is
necessity of guidelines being provided to facilitate strategy implementation and improve human relations.
There are ways and means to ensure that managerial attitudes and roles match the required strategy
implementation efforts. Managers may be transferred to new positions offering scope of career development,
promotions, job enlargement and enrichment. Besides workshops may be held aimed at leadership development.
Indeed it is considered important that managerial values, skills and abilities required for implementing strategy
should be kept in view at the strategy formulation stage itself. The statements issued by Executives should also
reflect their personal commitment to strategy implementation as well as convey their support and rewards for
achieving the strategic goals.
The style of management and supervision may require stress on subordinates’ involvement in decision-making as
much as possible with suitable rewards for valuable suggestions. Basically, the effectiveness of human resource
management in the implementation of strategy is achievable through human resource planning, recruitment and
selection of staff, training, appraisal of performance and compensation policy.
The purpose of HRM strategy is to reflect and facilitate the achievement of corporate-level strategy by linking
the functions of HRM with the strategic goals and objectives—securing competitive advantage either as a cost
or price leader or through the unique and differentiated nature of its product, at the same time fostering the
development of an appropriate organisational culture.
The following aspects of human resource strategy are required to be focused for the purpose:
- Job analysis and human resource planning before selection and recruitment of manpower,

- Recruitment and selection of staff with required skill and abilities with the process being consistent with the
objectives,
- Human resource development by way of training and development programmes, performance appraisal,
appropriate compensation package and incentive schemes to secure motivation.
The more important features which human resource strategy may bring to bear on the organisation are as follows:
(i) Orientation of the members. HRM strategy has to ensure that individuals employed in the organisation have
necessary orientation so that the mission and objectives of the organisation are internalised by the members
and they have a sense of identification with the values and culture of the organisation.
(ii) Facilitation of organisational changes as and when called for. The practices and procedures are required
to be in conformity with the changing internal and external conditions. This is a vital role of HR strategy
management.
(iii) Coping with diversity of workforce. Modern organisations with highly complex nature of jobs and processes
generally have a highly diversified workforce differentiated in terms of age, sex, religion, professional and
technical skills and educational background. To maintain a balanced workforce with harmonious relations
and providing equitable incentives and rewards are aspects of HRM functions which can sustain an effective
workforce. This is a responsibility of HR strategy managers.
(iv) Maintaining competent and committed workforce in a competitive environment. The intensity of market
competition for enterprises has been growing fast with globalisation and liberaliation of economic policies.
There are competitive strategies of low cost production and differentiation of products which may enable
companies to secure a competitive edge. HRM has the responsibility of managing workforce so as to make
it competent in ability as well as committed to organisational success.
(v) Development of core competency. An enterprise succeeds in achieving its strategic objectives mainly on
the basis of capabilities in the technical, marketing or human skills in areas of crucial importance. These
are known as core competencies of the organisation which are unique internal strengths not possessed by
competitors. HRM is required to undertake building up of core competency by the organisation as to secure
dynamic leadership in the product market.
(vi) Empowered workforce as an active resource. HR strategy is best managed when the members of an
organisation are individually in control of their work and are able to realise their potentials with empowerment
to take relevant decisions on their own. This is likely to secure enduring performance based achievements.
(vii) Appropriate work culture and ethical norms. No organisation can get the best contribution from its members
unless individuals develop a liking for challenging jobs and follow the ethical norms of the organisation
functionally. This may require redesigning of jobs and work processes as well as developing trust and
confidence among individuals and work groups, as also emphasising intrinsic motivation for improving
performance. HRM encompasses creation of an appropriate work culture on the above lines.
Human resource strategic management is concerned with the people dimension of management. Since enterprise
is a system of people who interact, it has to depend upon the people. Organisational success and survival,
therefore, largely depend on how the people in the organisation will perform, i.e. on how human resources are
managed. How does an organisation identify the types of people it needs and then convince them to join? What
does it take to train them, to evaluate their performance, and to encourage them to stay with the organisations
and contribution to its objectives? All these tasks fall within the realm of human resource strategic management.
The overall objective of human resource strategic management is to strike best match between people and
organisation in order to contribute to the successful survival and growth of the organisation and help the people
in achieving satisfaction of their economic and other needs. So as to accomplish this objective human resource
manager has to perform four strategic functions, viz., acquisition, development, motivation and maintenance.
Effective performance of these functions is inevitable in order to cope with bewildering complexity and paroxysm
of business activity, technological advancement, increasing ferocity of competition, problem of low productivity
and high cost and cataclysmic changes in socio-cultural environment leading to change in profile of workers,

their style of functioning, attitude towards management, towards work and themselves. This is possible only if
fruitful alliance between corporate strategy and human resource management is made uniting the organisation’s
direction with that of its employees. Human resource manager has to strategise human resource function so that
its various components are harmonised firmly with corporate strategy towards improving productivity, quality and
customer satisfaction.
While designing strategy to motivate employees, the management must bear in mind the following cardinal
principles:
(a) All reasonably healthy adults have a considerable reservoir of potential energy. Differences in the total
amount of potential energy are important determinants of motivation.
(b) All adults have a number of basic motives which can be thought of as values or outlet that channel and
regulate the flow of potential energy from this reservoir.
(c) Most adults within a given socio-cultural system may have the same set of motives or energy outlets that
channel and regulate the flow of potential energy from this reservoir.
(d) Actualisation of motive depends on specific situation in which a person finds himself.
(e) Certain characteristics of a situation arouse or trigger different motives, opening different values or outlets.
Each motive or energy outlet is responsive to a different set of situational characteristics.
(f) Each motive leads to a different pattern of behaviour.
(g) By changing the nature of the situational characteristics or stimuli, different motives are aroused or actualised
resulting in the emerging of distinct different patterns of behaviour.
There are several strategies for motivating organisation members. Each strategy is aimed at satisfying people’s
needs through appropriate organisational behaviour. Some of these strategies are discussed below:
1. Managerial Communication: The most important and basic strategy for a manager is simply to communicate
well with the organisational people. This satisfies such basic human needs as recognition, a sense of belonging,
and security. For example, such a simple action as a manager’s attempting to become better acquainted
with subordinates can contribute substantially to the satisfaction of each of these three needs. As another
example, a message from a manager to a subordinate that praises the subordinate for a job well done can
help satisfy the subordinate’s recognition and security needs.
2. Theory X and Theory Y: Another motivation strategy involves manager’s assumptions about the nature of
people. Douglas McGregor identified two sets of assumptions. According to him, Theory X involves negative
assumptions that managers often use as the basis for dealing with people. Theory Y represents positive
assumptions which managers strive to use. The basic rationale for using Theory Y rather than Theory X in most
situations is that managerial activities reflect Theory X assumptions. As such, the activities based on Theory Y
assumptions generally are more successful in motivating organisation people than those based on Theory X
assumptions.
3. Job Design: A third strategy managers can use to motivate organisation members involves the design of jobs
that organisation members perform. Earliest attempt to overcome job boredom was job rotation in which
individuals are moved from job to job and thus they are not required to perform a particular job for over the
long-term. Subsequently, job enlargement is another strategy developed to overcome the boredom of more
simple and specialised jobs. Job enlargement involves increasing the number of operations an individual
performs and thereby increasing the individual’s satisfaction in work. Job enlargement programme have
been found more successful in increasing job satisfaction than have job rotation programmes. In recent years,
two other job design strategies, viz., Job Enrichment and Flexitime, have been evolved. Job enrichment is the
process of incorporating motivators into a job situation. The job content can be enriched in terms of providing
higher responsibility, opportunity for achievement, opportunity for recognition, advancement and learning
opportunities. Another more recent job design strategy for motivating organisation members is based on
a concept called flexitime or flexible working hour’s programmes. The major thrust of this strategy is that it
permits workers to choose own working hours within hours within certain limitations. The choices of starting

and finishing times can be as flexible as the organisation allows, to ensure that flexibility does not become
counter-productive within the organisation, many flexitime programmes include a core period during which
all employees must be on the job. Flexitime strategy has been found resulting in greater job satisfaction which
typically results in greater productivity. It can also result in higher motivation levels of workers. This may enable
the management in recruiting and attracting qualified employees.
4. Behaviour Modification: Behaviour modification is another strategy which can be used to motivate members
of an organisation. Behaviour modification focuses on encouraging appropriate behaviour as a result of the
consequences of that behaviour. According to the law of effect, behaviour that is rewarded tends to be
repeated and behaviour that punished tends to be eliminated. Behaviour modification strategy emphasises
on ensuring that appropriate consequences occur as a result of that behaviour. Positive reinforcement is
a desirable cosequence of behaviour, and negative reinforcement is the elimination of an undesirable
consequence of behaviour. If a worker’s arriving on time is positively reinforced, or rewarded, the probability
increases that the workers will arrive on time more often. In addition, if the worker experiences some
undesirable outcome on arriving late for work, each as a verbal reprimand the worker is negatively reinforced
when this outcome is eliminated by on-time arrival. Both positive reinforcement and negative reinforcement
are both rewards that increase the likelihood that behaviour will continue. Punishment is the presentation
of an undesirable behaviour consequence or the removal of a desirable behavioural consequence that
decreases the likelihood of the behaviour continuing. Managers, for example, could punish employees for
coming late for work by exposing them to some undesirable consequence. Such as verbal experiment, or
by removing a desirable consequence, such as their wages for the amount of time they are late. Although
this punishment probably would quickly cause workers to come to work on time, it might be accompanied
by undesirable side effects, such as high levels of absenteeism and turnover, if it were emphasised over the
long-term. In order to make behaviour modification programmes successful, it is necessary to give different
levels of rewards to different workers depending on the quality of their performance, telling workers what
they are doing wrong, punishing workers privately so as to avoid any embarrassment to them and always
give rewards and punishments when earned to emphasise that management is serious about behaviour
modification efforts.
5. Participative Management: Another strategic approach to employee’s motivation is to adopt the system of
involving employees in decision making. This will elicit employee’s commitment in executing decisions. Further,
the successful process of making a decision, executing it and then seeing the positive consequences can
help satisfy one’s need for achievement, provides recognition and responsibility and enhance self esteem.
Maintenance aspect of human resources is concerned with creation and maintenance of such working
conditions in the organisation as are necessary to attract the most talented people, retain them and motivate
them to give their best.
For this purpose, existing system of grade salary structure, fixed annual increments and automatic adjustments
to inflation has to be replaced by performance linked reward system. Under the new system, employee’s
reward will be linked to the corporate objectives by pegging it to the employees’ contribution towards
achieving them. Time has come to develop a comprehensive reward system that splits employees’
compensation between company standards, individual merit and team performance. Individual reward
system based on attainment of functional specific targets bearing no relationship to corporate performance
should give way to team based reward system which peggs rewards of entire manpower of the business
division to the achievement of its goals.
10.2 structuring of organization for implementation of strategy
Introduction
Strategy implementation is a critical issue. Strategies remain useless unless they are effectively implemented.
Strategy implementation requires a suitable organizational structure to translate the strategies into concrete
action plans.

WHAT IS STRATEGIC IMPLEMENTATION?

• Sreiner, Miner and Gray: “Implementation of strategies is concerned with the design and management of
systems to achive the best integration of people, structures, processes, and resources in reaching organisational
purposes.
• Glueck: “Strategic implementation is the assignment or reassignment of corporate and SBU leaders to match
the strategy. The leaders will communicate the strategy to the employees. Implementation also involves the
development of functional policies about the organisation structure and climate to support the strategy and
help achieve organisational objectives.
• Harvey: “Implementation.............. involves actually executing the strategic gameplan. This includes setting
policies, designing the organisation structure, and developing a corporate culture to enable the attainment
of organisational objectives.”
Strategic Implementation
Strategy is dependent on many variables – Internal as well as external. All factors are interrelated.
McKinsey’s 7-S Framework

The Mckinsey Company, a well known management consultancy firm in the United States, towards the end of
1970s was asked to find a solution to this knotty issue. The researchers Peters and Waterman found after examining
America’s best run companies that the problem in strategy lay in its implementation and structure was only one
lever in the hands of management. The other levers were systems, staff, style, skills and superordinate goals. A
strategy is usually successful when the other S’s in the 7-S framework fit into or support the strategy.
• Strategy: A set of decisions and actions aimed at gaining a sustainable competitive advantage.
• Structure: The organisation chart and associated information that shows who reports to whom and how tasks
are both divided and integrated.
• Systems: The flow of activities involved in the daily operation of a business, including its core processes and its
support systems.
• Style: How managers collectively spend their time and attention and how they use symbolic behaviour. How
management acts is more important than what management says.
• Staff: How companies develop employees and shape basic values.
• Shared Values: Commonly held beliefs, mindsets and assumptions that shape how an organisation behaves—
its corporate culture.
• Skills: An organisation’s dominant capabilities and competencies.

Organizational Structure
The successful implementation of Strategy requires an effective organization structure. Organizational structure
means the framework in which the organization defines how tasks are divided, resources are deployed and
departments are co-ordinated.
There are several types of organizational structure:
(1) Functional Structure
(2) Geographic Structure
(3) Matrix Structure
(4) Hybrid Structure
Functional structure:
The functional structure is characterized by the simultaneous combination of similar activities and the separation of
dissimilar activities on the basis of function. All Cost Accountants are located in the Cost Accounting Department,
and the HOD of Cost Accounting is responsible for all cost related activities. The same is true in marketing, research
and development, and manufacturing.
The functional organization form is one of the most common organizational structures found in firms pursuing
strategy of concentration or very high relatedness. A functional structure is most appropriate when the organization
is small to medium size and relatively stable.
Geographic structure:
Another basic form structural grouping is geographic structure, in which activities and personnel are grouped
by specific geographic locations. Each geographic unit includes all functions required to produce and market
products in that region.
Organization according to geographic areas or territories is rather common structural form for large-scale enterprise
whose strategies need to be tailored to fit the particular needs and features of different.
Matrix structure:
Another way to achieve focus on multiple outcomes is with the matrix structure. The matrix structure creates a dual
chain of command; two lines of budget authority and two sources of performance and reward. The key feature
of the matrix is that product (or business) and functional lines of authority are overlaid to form a matrix or grid,
between the product manager and functional manager.
Hybrid Organization And supplemental Methods:
A single type of structural design is not always sufficient to meet the requirements of strategy. When this occurs,
one opinion is to mix and blend the basic organizations forms, matching structure to strategy, requirement by
requirement, and unit by unit, Hybrid structure is a form of departmentalization that adopts parts of both functional
and divisional structures at the same level of management.
The major potential advantage of the hybrid structures is that the combination may allow the firm to gain the
advantages offered by the primary structure while at least diminishing the impact of the disadvantages.
Organizational Structure and Strategy Implementation:
The choice of structure appears contingent on the strategy of the firm. No single structure is appropriate for
implementing strategies. The principal task of the organization to choose a suitable structure so that the various
elements of an organization fit together and make logical sense.
Strategy Implementation: Views of Experts
• Steiner and Miner: “The implementation of policies and strategies is concerned with the design and
management of systems to achieve the best integration of people, structures, processes and resources in
reaching organisational purposes.”

• Glueck: “Strategic implementation is the assignment or reassignment of corporate and SBU leaders to match
the strategy. The leaders will communicate the strategy to the employees. Implementation also involves the
development of functional policies about the organisation structure and climate to support the strategy and
help achieve organisational objectives”.
• Harvey: “Implementation involves actually executing the strategic gameplan. This includes sotting policies,
designing the organisation structure, and developing a corporate culture to enable the attainment of
organisational objectives.”
10.3 strategy Business Unit (SBU)
SBU groups similar divisions into “Strategic Business Units” and then delegate’s authority and responsibility of each
unit to a senior executive who is normally identified as CEO or MD of that SBU. It is an extension of Divisional
structure.
SBU Structure
SBU Structure
Big organisation like Unilever, etc have many SBUs for their different categories of products like Cosmetics, Food
products and Beverages, etc, and each is managed through separate unit head.
Advantages:
(i) Promotes accountability since units’ heads are responsible for individual SBU profitability
(ii) Career development opportunities are further higher in this structure
(iii) Allow better control of categories of products manufacturing, marketing and distributions
(iv) Helps to expand in different related and unrelated businesses
Disadvantages:
(i) May provide inconsistent approach to tackle customers, etc, because each unit may work in it’s own way to
handle situations
(ii) High cost approach
Matrix Organisation Structure:
The above structures (Functional, Divisional and SBU) consist of flow of authority from top to bottom i.e. vertical flow
whereas Matrix structure contains both vertical and horizontal flow of communications or authority. This type of
structure is frequently used in IT organisation for managing different projects. Each individual project is managed
by a project manager and projects manager will have his team arranged under him.

Advantages:
(i) Useful for some specific industries like Information Technology, Healthcare etc.
(ii) Employee can see visible results of their efforts
(iii) Remove barrier to communications
(iv) Managing projects are easy
(v) Effective structures when environment is very dynamic
Disadvantages:
(i) Complex structure as this contains both vertical and horizontal flow of information
(ii) High cost approach due to more management positions
(iii) Dual lines of authority
(iv) Conflicts arises in the allocation of resources
Strategic Business Units (SBU) & Core Competence:
• SBU is a grouping of related businesses, which is open to complex planning treatment.
• Multi-business enterprise groups it’s various businesses into a few distinct business units in a scientific way known
as SBUs.
• The purpose is to provide effective strategic planning treatment to each one of it’s products /businesses.
• SBU concept is relevant to a multi-product, multi-business enterprises like Unilever Limited
• In other words, the SBU concept helps a multi-business corporation in scientifically grouping it’s businesses into
a few distinct business units. Such a grouping would in it’s turn, help the corporation to carry out it’s strategic
management practices in better manner.
Some of major reasons of using SBU approach are as follow:

• A scientific method of grouping the businesses of a multi-business corporation which helps the firm in strategic
planning.
• An improvement over the geographical grouping of businesses and strategic planning based on locational
units.
• An SBU is a grouping of related businesses that can be taken up for strategic planning distinct from the rest of
the businesses.
• Grouping the businesses on SBU lines helps the firm in strategic planning by removing the ambiguity and
confusion generally seen in grouping businesses.
• Each SBU is a separate business from the strategic planning standpoint. In the basic factors, viz., mission,
objectives, competition and strategy-one SBU will be distinct from another.
• Each SBU will have it’s own distinct set of competitors and it’s own distinct strategy.
• Each SBU will have a CEO. He will be responsible for strategic planning for the SBU and it’s profit performance;
he will also have control over most of the factors affecting the profit of the SBU.
The three most important Characteristics of SBU are:

• It is a single business or a collection of related businesses which offer scope for independent planning and
which might feasibly stand alone from the rest of the organisation.
• Has it’s own set of competitors.
• Has a manager who has responsibility for strategic planning and profit performance, and who has control of
profit-influencing factors.

10.4 Business Process re-engineering
Business process re-engineering (BPR) is a business management strategy, originally pioneered in the early
1990s, focusing on the analysis and design of workflows and processes within an organization. BPR aimed to help
organizations fundamentally rethink how they do their work in order to dramatically improve customer service,
cut operational costs, and become world-class competitors. In the mid-1990s, as many as 60% of the Fortune 500
companies claimed to either have initiated reengineering efforts, or to have plans to do so.
BPR seeks to help companies radically restructure their organizations by focusing on the ground-up design of their
business processes. According to Davenport (1990) a business process is a set of logically related tasks performed
to achieve a defined business outcome. Re-engineering emphasized a holistic focus on business objectives and
how processes related to them, encouraging full-scale recreation of processes rather than iterative optimization
of subprocesses.
Business process re-engineering is also known as business process redesign, business transformation, or business
process change management.
The globalization of the economy and the liberalization of the trade markets have formulated new conditions in
the market place which are characterized by instability and intensive competition in the business environment.
Competition is continuously increasing with respect to price, quality and selection, service and promptness of
delivery. Removal of barriers, international cooperation, technological innovations cause competition to intensify.
All these changes impose the need for organizational transformation, where the entire processes, organization
climate and organization structure are changed. Hammer and Champy provide the following definitions:
Reengineering is the fundamental rethinking and radical redesign of business processes to achieve dramatic
improvements in critical contemporary measures of performance such as cost, quality, service and speed.
Process is a structured, measured set of activities designed to produce a specified output for a particular customer
or market. It implies a strong emphasis on how work is done within an organization. “ (Davenport 1993).
Each process is composed of related steps or activities that use people, information, and other resources to create
value for customers as it is illustrated in the following example.
Principle of BPR
BPR is achieving dramatic performance improvements through radical change in organizational processes,
rearchitecting of business and management processes. It involves the redrawing of organizational boundaries,
the reconsideration of jobs, tasks, and skills. This occurs with the creation and the use of models. Whether those be
physical models, mathematical, computer or structural models, engineers build and analyze models to predict the
performance of designs or to understand the behavior of devices. More specifically, BPR is defined as the use of

scientific methods, models and tools to bring about the radical restructuring of an enterprise that result in significant
improvements in performance.
Redesign, retooling and reorchestrating form the key components of BPR that are essential for an organization to
focus on the outcome that it needs to achieve. The outcome pursued should be an ambitious outcome (as for
instance, are a 24 hour delivery to any customer anywhere in the world, approval of mortgage loans within 60
minutes of application, or ability to have on-line access to a patient’s medical records no matter where they are in
any major city in the world). These types of visionary goals require rethinking the way most organizations do business,
careful redesign. They will additionally need very sophisticated supporting information systems and a transformation
from a traditional organizational structure to a network type organization.
In resuming, the whole process of BPR in order to achieve the above mentioned expected results is based on key
steps-principles which include redesign, retool, and reorchestrate. Each step-principle embodies the actions and
resources as presented in the table below.
redesign retool recorchestrate

• Simplify • Networks • synchronize
• Standardize • intranets n process
• Empowering • extranets n IT
• Employeeship • Work Flow n human resources
• Groupware
• Measurements
The 3 Rs of re-engineering
Creating the new enterprise involves considerable change in virtually everything to do with people’s working
lives. Rather than fixing the old, we set out to create the new. There is a fundamental transformation occurring in
business - in terms of its structure, processes, people, and technology. The table following presents the changes in
that occur in the business under BPR.
Changes in the World of Work
From Conventional To BPR
Functional departments Process Teams

Simple tasks (division of labor) Empowered employees
Controlled people (by management) Multidimensional work
Training of employees Education of employees
Compensation for skill and time spent Compensation for results
Pay raises based on promotions and seniority Low pay plus high performance-related bonuses
Advancement based on ability Advancement based on performance
Protective organizational culture Productive organizational structure
Managers supervise and control Managers coach and advise
Hierarchical organizational structure Horizontal (flat) structure
Executives as scorekeepers Executives as leaders
Separation of duties and functions Cross-functional teams
Linear and sequential processes Parallel process
Mass production Mass customization
Source: Based on Hammer and Champy, 1993.

In resuming, the whole process of BPR in order to achieve the above mentioned expected result is based on key
step-principles which include redesigning, retooling and reorchestrating.

Methodology of a BPR project implementation / alternative techniques

BPR is world-wide applicable technique of business restructuring focusing on business processes, providing vast
improvements in a short period of time. The technique implements organizational change based on the close
coordination of a methodology for rapid change, employee empowerment and training and support by information
technology. In order to implement BPR to an enterprise the followings key actions need to take place:
• Selection of the strategic (added-value) processes for redesign.
• Simplify new processes - minimize steps - optimize efficiency -(modeling).
• Organize a team of employees for each process and assign a role for process coordinator.
• Organize the workflow - document transfer and control.
• Assign responsibilities and roles for each process.
• Automate processes using IT(Intranets, Extranets, Workflow Management)
• Train the process team to efficiently manage and operate the new process
• Introduce the redesigned process into the business organizational structure
Most reengineering methodologies share common elements, but simple differences can have a significant impact
on the success or failure of a project. After a project area has been identified, the methodologies for reengineering
business processes may be used. In order for a company, aiming to apply BPR, to select the best methodology,
sequence processes and implement the appropriate BPR plan, it has to create effective and actionable visions.
Referring to ‘vision’ we mean the complete articulation of the future state (the values, the processes, structure,
technology, job roles and environment)
For creating an effective vision, basic steps are mentioned below.
• the right combination of individuals come together to form an optimistic and energized team
• clear objectives exist and the scope for the project is well defined and understood
• the team can stand in the future and look back, rather than stand in the present and look forward
• the vision is rooted in a set of guiding principles.
All methodologies could be divided in general ‘model’ stages:
The Envision stage: the company reviews the existing strategy and business processes and based on that review
business processes for improvement are targeted and IT opportunities are identified.
The Initiation stage: project teams are assigned, performance goals, project planning and employee notification
are set.
The Diagnosis stage: documentation of processes and sub-processes takes place in terms of process attributes
(activities, resources, communication, roles, IT and costs).
The Redesign stage: new process design is developed by devising process design alternatives and through
brainstorming and creativity techniques.
The Reconstruction stage: management technique changes occur to ensure smooth migration to the new process
responsibilities and human resource roles.
The Evaluation stage: the new process is monitored to determine if goals are met and examine total quality programs.
Expected Results / Benefits
The expected results for a company that implements business process reengineering are the following:
• Reallocation of jobs and processes so as to be combined into fewer, to be executed in natural order,
simultaneously and by the least possible number of employees.
• Reorganization of the company’s structure (downsizing) and employee empowerment.

• Jobs and processes become flexible so as to be executed according to the needs of each case, company’s
and customer’s need’s (hybrid centralized/decentralized operations)
The above changes will bring reductions of costs in the company, better quality (as far as price, promptness of
delivery and offerings of related services) in the products and services provided to the customers. BPR shows
that there is ‘more than one way to skin a cat’ and enables a fresh view without ingrained prejudice affecting
judgement. It can produce huge initial savings where a business is struggling and often has the affect of turning
around an unprofitable operation. Also, it leaves the business with a fully documented model of the operation,
which is invaluable if embarking on a quality programme.
The expected outcome from a successful BPR process should the desired one for the favor of the business concerned.
The dramatic changes that are caused involve people’s jobs and working relationships as it is very often that jobs
are eliminated and the entire process is not as beneficial for all.
Types of firms / organizations that BPR can be applied
BPR could by implemented to all firms (manufacturing firms, retailers, services, etc.) and public organizations that
satisfy the following criteria:
• Minimum Number of employees: 20 (at least 4 in management positions).
• Strong management commitment to new ways of working and innovation.
• Well formed IT infrastructure.
Business Process Reengineering could be applied to companies that confront problems such as the following:
• High operational costs
• Low quality offered to customers
• High level of ‘’bottleneck” processes at pick seasons
• Poor performance of middle level managers
• Inappropriate distribution of resources and jobs in order to achieve maximum performance, etc.
1. Critically comment on “Augmented Marketing is provision of traditional customer services and benefits.”
2. Critically comment on “Manpower strategy aids in Strategic Management.”
3. Discuss McKinsey’s 7-S framework.
4. Discuss in brief Structuring of organisation for implementation of strategy.
5. List down various types of organisational structure.
6. What are the areas to keep in mind while framing Production Strategy?
7. Write a short notes on
A. Strategic Business Unit
B. Business Process Re-engineering
8. List down the steps required in implementation of Strategy.
9. Bring out the features and advantages of SBU.
10. Write short notes on Marketing Mix.

Strtegic Managment – Objective Questions and Answers
objective type questions & answers
Choosing of Correct Answers:

1. A corporate strategy can be defined as :
(a) A list of actions about operational planning and statement of organisation structure and control system;
(b) A statement of how to compete, direction of growth and method of assessing environment;
(c) Abatement of organisation’s activities and allocation of resources;
(d) A course of action or choice of alternatives, specifying the resources required to achieve certain stated
objectives;
(e) A statement of where and how the company will prefer to operate.
Answer:
(d) A corporate strategy can be defined as: a course of action or choice of alternatives, specifying the resources
required to achieve certain stated objectives.
2. Strategic analysis is concerned with stating the position of the organisation in terms of:
(a) Mission, choice of market segments, product selection, financial targets, external appraisal;
(b) Mission, goals, corporate appraisal, position audit and gap analysis;
(c) Mission goals, identification of key competitors, SWOT and environmental appraisal;
(d) Mission, targeted ROI, manpower planning, position audit;
(e) Mission, SWOT, competitive strategies, stakeholders position and institutional goal.
Answer:
(b) Strategic analysis is concerned with stating the position of the organization in terms of: mission, goals, corporate
appraisal, position audit and gap analysis.
3. Strategic choice makes a statement about the corporate strategy as well as business strategy:
(a) They are one and the same;
(b) One is an external planning and another resource planning statement;
(c) Corporate strategy is a general statement and business strategy defines how a SBU shall operate;
(d) Both states certain course of action - one for the total unit and another for a particular businesaajnit;
(e) One refers to the whole business and another helps in the formulation of marketing decisions.
Answer:
(a) Strategic choice makes a statement about the corporate strategy as well as business strategy : the former
refers to the whole business while the latter helps in the formulation of marketing and other decisions.
4. Board of directors has certain basic taks as follows:

(a) To define the corporate mission and stop irregular practice;
(b) To design the course of strategic options and appointment of top management;
(c) To set the ROI and other business performance targets;
(d) To monitor plan and keep abreast of external threats;
(e) To evaluate and monitor courses of actions.

Answer:
(a) & (b) Board of directors has certain basic tasks as follows:
• to define the corporate mission and stop irregular practices; and
• to design the course of strategic options and appointment of top management.
5. Degree of involvement of Board of Directors may vary from passive to active level. It may participate in one
or more of the following activities (state which ones are more appropriate as a judicious mix) :
(a) It constantly oversees the company’s mission, objectives and policies;
(b) It approves issues like R&D, foreign collaborations, linkages with financial institutions;
(c) Capital budgeting, new product launch and competitive strategy building;
(d) It tries to ensure that the company remains aligned with changing social,political and economic milieu;
(e) Oversees only the financial performance of the company.
Answer:
(a) & (b) Degree of involvement of board of directors may vary from passive to active level. It may participate in
one or more activities. As a judicious mix, the more appropriate ones are :-
• it constantly oversees the company’s mission, objectives and policies; and
• it approves issues like R&D, foreign collaborations, linkages with financial institutions.
6. A strategic business unit (SUB) is defined as a division of an organisation :
(a) That help in the marketing operation;
(b) That enable managers to have better control over the resources;
(c) That help in the choice of technology;
(d) That help in the allocation of scarce resources;
(e) That help in identifying talents and potentials of people.
Answer:
(b) A strategic business unit (SBU) is defined as a division of an organization: that enable managers to have better
control over the resources.
7. The essential ingredients of Business Process Re-engineering are:

(a) Continuous improvements of products, processes and technologies.
(b) Advanced planning in the areas of technologies, processes and strategic partnerships etc.
(c) Fundamental rethinking and radical redesign of business process to achieve dramatic results.
(d) Generation, comparison and evolution of many ideas to find out one worthy of development.
(e) Identification and selection of layouts most suited for products and processes.
Answer:
The essential ingredients of Business Process Re-engineering are:
(c) Fundamental rethinking and radical redesign of business process to achieve dramatic results.

8. Mckinsey’s 7-s framework consists of:

(a) Structure, strategy, software, skills, styles, staff and supervision
(b) Structure, strategy, systems, skills, styles, syndication and shared values.
(c) Structure, strategy, systems, skills, steering power, styles and shared values.
(d) Structure, strategy, staff, skills, systems, shared values, super ordinate goal.
(e) None of the above.
Answer:
Mckinsey’s 7-s framework consists of:
(d) Structure, strategy, staff, skills, systems, shared values, super ordinate goal.
9. Offensive strategy is a strategy:

(a) For small companies that consider offensive attacks in the market.
(b) For those companies that search for new inventory opportunities to create competitive advantage.
(c) For the market leader who should attack the competitor by introducing new products that make
existing ones obsolete.
(d) For those companies who are strong in the market but not leaders and might capture a market share
from the leader.
(e) None of the above.
Answer:
Offensive strategy is a strategy:
(d) For those companies who are strong in the market but not leaders and might capture a market share from the
leader.
10. Benchmarking is:

(a) The analytical too! to identify high cost activities based on the ‘Pareto Analysis’.
(b) The search for industries best practices that lead to superior performance;
(c) The simulation of cost reduction schemes that help to build commitment and improvement of actions;
(d) The process of marketing and redesigning the way a typical company works;
(e) The framework that earmarks a linkage with suppliers and customers;
Answer:
M Benchmarking is:
(b) The search for industries best practices that lead to superior performance;
11. SAIL’s famous advertising campaign of “there is a bit of steel in everyone’s life was meant to:
(a) gain buyers awareness about its versatile product range;
(b) create an image of superior performance:
(c) inform new buyers about its special producis;
(d) enhance product quality perception:
(e) achieve its mission.

Answer:
SAIL’s famous advertising campaign of “there is a bit of steel in everyone’s life” was meant to:
(e) achieve its mission. Or (a) gain buyers awareness about its versatile product range.
12. Marketing Research studies are undertaken :

(a) to measure brand loyalty of a class of consumers
(b) to predict market potential of a product on a future date
(c) to understand product-price relationships
(d) to make out a case for revision of an existing strategy
(e) all of the above
Answer:
(e) all of the above
13. Successful differentiation strategy allows the company to :

(a) gain buyer loyalty to its brands
(b) charge too high a price premium
(c) depend only on intrinsic product attributes
(d) have product quality that exceeds buyers’ needs
(e) segment a market into distinct group of buyers
Answer:
(a) gain buyer loyalty to its brands
14. Organization culture is :

(a) appreciation for the arts in the organization
(b) ability of the organization to act in a responsible manner to its employees
(c) combination of (a) and (b) above
(d) deeper level of basic assumptions and beliefs that are shared by the members of the firm
(e) none of the above
Answer:
(d) deeper level of basic assumptions and beliefts that are shared by the members of the firm.
15. Innovation strategy is :
(a) defensive strategy
(b) offensive strategy
(c) responding to or anticipating customer and market demands
(d) guerrilla strategy
(e) harvesting strategy
Answer:
(c) responding to or anticipating customer and market demands

16. Intensity of competition is —

—— in low return industries.
(a) low;
(b) non-existent;
(c) high;
(d) not important:
(e) dependant on industry nature.
Answer:
(c) high
17. What are enduring statements of purpose that distinguish one business from other similar Firms?
(a) Policies;
(b) Mission statements;
(c) Objectives;
(d) Rules;
(e) Nature of ownership.
Answer:
(b) Mission statements
18. Ansoff proposed that for filling the corporate planning gap, one follows four strategies namely.
(a) market penetration, product differentiation, market identification and diversification;
(a) market penetration, product development, marketing research and diversification;
(b) market penetration, product development, market development and diversification;
(c) market identification, product development, positioning and diversification;
(d) differentiation, product innovation, market opportunity and diversification.
Answer:
(c) market identification, product development, positioning and diversification
19. The essential ingredients of Business Process Re-engineering (BPR) are

(a) continuous improvements of products, processes and technologies;
(b) planning for the technologies, processes and strategic partnerships etc.;
(c) fundamental re-thinking and radical redesign of business process to achieve dramatic results;
(d) generation, comparison and evolution of many ideas to find one worthy of development;
(e) identification and selection of lay-outs most suited for products and processes.
Answer:
(c) fundamental re-thinking and radical redesign of business process to achieve dramatic results

20. Directional Policy Matrix is the same as
(a) the BCG model;
(b) the 9-cell GE matrix;
(c) the Life cycle portfolio analysis;
(d) the PIMS matrix;
(e) the 3 X 3 competitive positioning matrix.
Answer:
(b) the 9-cell GE matrix
21. For an actress in Bollywood, her pretty face would be a/an

(a) Asset
(b) Strategic asset
(c) Core competency
(d) Capability
(e) All of the above
Answer:
(b) Strategic asset
22. For an entrepreneur

(a) Vision is before the mission
(b) Mission is before the vision
(c) Both are developed simultaneously
(d) Vision or mission are un-important issue
(e) Profitability is most crucial.
Answer:
(a) Vision is before the mission
23. Which of the following market structures would be commonly identified with FMCG products7
(a) Monopoly
(b) Monopolistic competition
(c) Oligopoly
(d) Perfect competition
(e) None of the above
Answer:
(b) Monopolistic competition

24. The Product Market matrix comprising of Strategies of Penetration, Market Development Product Development
and Diversification was first formulated by
(a) Ansoff
(b) Drucker
(c) Porter
(d) Andrews
(e) Prahlad
Answer:
(a) Ansoff
25. Indian Airlines decreasing the airfare on the Delhi-Mumbai sector following the introduction of the no frills
airlines would be an example of
(a) Cost Leadership
(b) Price Leadership
(c) Product Differentiation
(d) Focus
(e) Market Retention
Answer:
(b) Price Leadership
26. A Product line is a group of products that

(1) are closely related
(2) are marketed through the same channel
(3) Perform a similar function for being sold to the same customers
(4) All of the above
Answer:
(4) A product line is a group of products that are closely related are marketed through the same channel and
perform a similar function for being sold to the same customers
27. The BCG growth matrix is based on the two dimensions:
(1) Market Size and Market Share
(2) Market Size and Profit Margins
(3) Market Size and Competitive Intensity
(4) None of the above
Answer:
(4) None of the above.
BCG Growth Matrix is based on two dimensions - Market Growth Rate and Relative Market Share.

28. Outsourcing is the
(1) Spinning off of a value-creating activity to create a new firm
(2) Selling of a value-creating activity to other firms
(3) Purchase of a value-creating activity from an external supplier
(4) Use of computers to obtain value-creating data from the Internet
Answer:
(3) Outsourcing is the purchase of a value-creating activity from external supplier.
29. New entrants to an industry are more likely when.

(1) It is difficult to gain access to distribution channels
(2) Economies of scale in the industry are high
(3) Product differentiation in the industry is low
(4) Capital requirement in the industry are high
Answer:
(3) New Entrants to an industry are more likely when product differentiation in the industry is low.
30. The existence of price-wars in the airline industry in India indicates that
(1) Customers are relatively weak because of the high switching costs created by frequent flyer progmms .
(2) The industry is moving towards differentiation of services
(3) The competitive rivalry in the industry is severe
(4) The economic segment of the external environment has shifted, bat the airline strategies have not
changed
Answer:
(3) The existence of price -Wars in the airline industry in India indicates that the competitive rivalrv in the industrv
is severe.
31. The managerial task of implementing strategy primarily falls upon the shoulders of:
(A) The Chief Executive Officer (CEO);
(B) First line supervisors, who have day-to-day responsibility for seeing that key activities are done properly;
(C) All managers, each attending to what needs to be done in their respective areas of authority and
responsibility;
(D) All of the above.
Answer:
(C) All managers, each attending to what needs to be done in their respective areas of authority and responsibility.
32. Marketing Research Studies are undertaken:

(A) to measure brand loyalty of a class of consumers;
(B) to predict market potential of a product on a future date;
(C) to understand product-price relationships;
(D) all of the above.
Answer:

33. Price fixation for the first time takes place when:
(A) a company develops or acquires a new product;
(B) introducing existing product into a new geographic area or a new distribution channel;
(C) a service, the company bids for a new contract work;
Answer:
(D) all of the above
34. Which of the following market structures would be commonly identified with FMCG products ?
A. Monopoly B. Monopolistic competition C. Oligopoly D. Perfect competition
Answer:
(i) B-Monopolistic Competition
35. The product-market matrix comprising of strategies of Penetration, Market development. Product
development and Diversification was first formulated by
A. Ansoff B. Drucker C.Porter D. Prahlad
Answer:
(A) Ansoff
36. Typically Profits are highest in which stage of the industry life-cycle ?
A. Introduction
B. Growth
C. Maturity
D. Decline
Answer:
(B) Growth
37. The strategy which concentrates around a production market is:

A. Vertical Integration
B. Niche
C. Horizontal Expansion
D. Diversification
Answer:
(B) Niche
38. ‘Corporation vision’ is the same as

(A) Corporate dream (B) Corporate mission (C) Corporate goal (D) Corporate strategy
Answer:
(A) Corporate dream

39. ‘Niche’ is similar to the
(A) Growth strategy (B) Milking strategy (C) Flanking strategy (D) Survival strategy
Answer:
(C) Flanking strategy
40. Successful ‘differential strategy’ allows a company to

(A) Gain buyer loyalty to its brands
(B) Charge too high a price premium
(C) Have product quality that exceeds buyers’ needs
(D) Depend only on intrinsic product attributes.
Answer:
(A) Gain buyer loyalty to its brands
41. For an actor in Bollywood, his outstanding performance would be a/an

(A) Asset (B) Strategic asset (C) Core competency (D) Capability
Answer:
(C) Core competency
42. Intensity of competition is in lower-return industries

(A) lowest (B) non-existent (C) highest (D) not important
Answer:
(C) Highest
43. A supplier group is powerful if

(A) It is not concentrated
(B) Offers unique products
(C) Its customers can backward integrate
(D) There are no switching costs
Answer:
(B) Offers unique products
44. A company’s actual strategy is

(A) mostly hidden to outside view and is known only to top-level managers
(B) typically planned well in advance and usually deviates little from the planned set of actions and business
approaches because of the risks of making on-the-spot changes
(C) partly proactive and partly reactive to changing circumstances
(D) mostly a function of the strategies being used by rival companies(particularly those companies that are
industry leaders)
Answer:
(C) Partly proactive and partly reactive to changing circumstances

45. The reason for failure of Strategic Management may be ascribed to

A. Over-estimation of resource competence
B. Failure to obtain senior management commitment
C. Failure to obtain employee commitment
D. All of the above
Answer:
(D) All of the above
46. Blue Ocean Strategy is concerned with
A. moving into new market with new products
B. creating a new market places where there is no competition
C. developments of products and markets in order to ensure survival
D. making the product unique in terms of attributes
Answer:
(B) creating a new market places where there is no competition.
47. For an actor in Bollywood, his outstanding performance would be a /an

A. Asset
B. Strategic Asset
C. Core competency
D. Capability
Answer:
(C) Core competency
48. A Question Mark in BCG Matrix is an investment, which

A. Yields low current income but has bright growth prospects.
B. Yields high current income and has bright growth prospects.
C. Yields high current income and has bleak growth prospects.
D. Yields low current income and has bleak growth prospects.
Answer:
(A) Yields low current income but has bright growth prospects.
49. The strategy of the TATAgroup in India could be viewed as a good example of
A. Conglomerate diversification
B. Market development
C. Cost Leadership
D. Concentric diversification.

Answer:
(A) Conglomerate diversification.
50. Risk Management Strategies are

A. Avoid Risk, Reduce Risk, Retain Risk, Combine Risk
B. Transfer Risk, Share Risk and Hedge Risk
C. Both (A) and (B)
D. None of the above.
Answer:
(C) Both (A) and (B)
51. Business Process Re-engineering is

A. Eliminating loss-making process;
B. Redesigning operational processes;
C. Redesigning the product and services;
D. Recruiting the process engineers.
Answer:
(B) Redesigning operational processes.
52. The best test of a successful strategy implementation is

A. Whether the structure is well matched to strategy;
B. Whether the strategies and procedures are observed in a strategy supportive fashion;
C. Whether actual organizational performance matches or exceeds the targets spelt out in the strategic
plan;
D. Whether it is made after the strategy is formulated, so that it is supportive to the strategy.
Answer:
(C) Whether actual organizational performance matches or exceeds the targets spelt out in the strategic plan.
53. Offensive strategy is a strategy

A. For small companies that consider offensive attacks in the market;
B. For those companies that search for new inventory opportunities to create competitive advantage.
C. For the market leader who should attack the competitor by introducing new products that makes
existing ones obsolete;
D. For those companies who are strong in the market but not leaders and might capture a market share
from the leader.
Answer:
(D) For those companies who are strong in the market but not leaders and might capture a market share from the
leader.

State whether the following statement is True or False:
1. “Dogs” are the products in a high-growth market but where they have a low market share.
2. ‘Dogs’ are products with a low share, negative growth and negative cash flow.
3. Penetration Pricising is the use of price to drive a competitor out of business.
4. “Strategic Management” is concerned with the formulation of possible courses of actions, their evaluation
and the choice between them.
5. ‘cash cows’ are products in a high-growth market but where they have a low market share.
6. ‘Divestment’ is pulling out from certain product market areas.
7. Business Process Re-engineering is an important ingredient of Reverse Engineering.
8. Synergy signifies a condition where the whole is greater than the sum of its parts.
9. Brand equity is the added value to the shares held by the equity share-holders of a company.
10. “Beanchmarking” is the simulation of cost reduction schemes that help to build commitment and improvement
of actions.
11. “Balanced Strategy” is about translating the version, communicating and linking, business planning, target
setting, etc.
Answer:
1. False — As per BCG Matrix, “Dogs” are units with low market share in a mature, slow-growing industry.
2. False — The correct statement is: ‘Dodos’ are products with a low share, negative growth and negatige cash
flow.
3. False — The correct statement is: Predatory Pricing is the use of price to drive a competitor out of business.
4. False — The appropriate term is ‘Strategic choice’, instead of ‘Strategic management’. Strategic management
concersn itself with corporate values, managerial capabilities and organizational responsibilities and systems
in a way that links strategic and operational decision making leading to an effective strategy or strategies.
But the given staement is indicative of choice of startegy.
5. False — The appropriate term is ‘question Marks’ instead of ‘Cash Cows’. Cash cows have high market share
in low growth market. Hence the given statement in false.
6. True
7. False
8. True
9. False
10. False — Benchmearking is the search for industries best practices that leads to superior performance.
11. False — “Balanced Score Card” is about translating the vision, communcating and linking, business planning,
target setting, etc.

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Study Note - 8

strategic management introduction

This Study Note includes

8.1 Vission, mission and objective

The Advantages of Strategic Management

operations managment & strategic management 209

• Forces an Objective Assessment

The Disadvantages of Strategic Management

210 operations managment & strategic management

Strategic Management Framework:

Stage 1: Where are we now? Analysis of present situation

Stage 2: Where we want to go? Setting goals and objectives

Stage 3: Analyses of various alternatives to achieve the goals

Stage 4: Selecting best alternatives in line with strengths of

Stage 5: Implementing and executing the selected

Importance of Strategic Management:

operations managment & strategic management 211

Strategic Management Process:

Step 1 Step 2 Step 3 Step 4 Step 5 Step 6

Major Steps in Strategic Management Process

Steps of Strategic Management Process:

212 operations managment & strategic management

Strategy Strategy Strategy

Strategic Management Process Model

operations managment & strategic management 213

So, we can conclude that;

Strategic vision specifies primarily three elements:

Strategic Vision has important purposes, such as:

Meaning and Use of Mission:

214 operations managment & strategic management

Defining the Company Mission

operations managment & strategic management 215

216 operations managment & strategic management

Formal strategies contain three elements:

Concept of Strategic Intent:

operations managment & strategic management 217

Company Goals: Survival, Growth, Profitability

218 operations managment & strategic management

(ii) Expansion of our companies to feasible new markets;

(iv) Internal development of new retailing strategies.

Mission and Strategy:

operations managment & strategic management 219

• What is our business?

• What will our business be?

• What should our business be?

220 operations managment & strategic management

There are primarily three levels of strategies in the organisation.

operations managment & strategic management 221

Self Learning Questions:

1. What do you mean by Strategy? State its features.

222 operations managment & strategic management

This Study Note includes

9.1 Situational Analysis

operations managment & strategic management 223

Advantages & Disadvantages of PEST & SWOT Analysis

9.2 swot analysis

224 operations managment & strategic management

operations managment & strategic management 225