Strategic Management

Process

Wal-Mart Story

Grown from a discount store in 1962 to become worlds largest Retailer.

How did it happen?

Constant focus on Customer Service

Extensive use of technology Management Structure that welcome change Extensive effort to Grow business Globally Sales from $44 billion in 1992 to $425 billion in 2012

5 Ps of HR Strategy

Philosophy Policies Programmes Practices Process

the wall mart story

Now, I want you to raise your right hand I want you to repeat after me:

from this day forward I solemnly promise and declare

that every time a customer comes within 10 feet of me I will smile, Look towards the customer and greet

I am Sam May I help You

the wall mart story

Success

Mission
a firm must define clearly its Mission & what it means by Success in its mission Statement

Strategy

Then it must develop a road map to accomplish the mission which we call

strategy

Mission Statement of Wal-Mart

Wal-Mart
"To give ordinary folk the chance to buy the same thing as rich people. Always Low Prices

Save Money Live Better

What is a Strategy & Strategic Management ?

A strategy is a set of goals and specific Action plans that, if achieved, provide the desired competitive advantage

SM involves identifying and implementing these goals and action plans

Strategy

&

Strategic Management

Goals 2013

Objectives

Mission

2018

2036

Paramjit Sharma

3/2/2013

Strategy

&

Strategic Management

Mission

Goals 2014

Objectives

2019

2037

Paramjit Sharma

10

3/2/2013

Strategy

&

Strategic Management

Goals 2015

Objectives

Mission

2020

2038

Paramjit Sharma

11

3/2/2013

What is Strategic Management?

Application of the basic planning process at the highest levels of the company

Strategic Management Process

Environment Scanning Formulation

Implementation

Evaluation

Basic Concepts
Environment Scanning External Societal
Environmental

Strategy Formulation

Strategy Implementation

Evaluation & Control

Mission
Reason for Existence Objectives
What to accomplish By whom

Programmes
Activities needed to accomplish a plan
Performance

Industry Analysis
Internal

Strategies
Plan to achieve mission & Objectives

Budgets Cost of the Programmes Procedures Sequence of Steps needed to do the job

Actual Results

Structure Resources Assets Skills Competence Knowledge

Policies Guidelines for Decision Making

Strategic Management Process

15

Companys SWOT Analysis to shape the strategies

SWOT Analysis

Process that allows companies to evaluate overall health Internal (SW) and external (OT)

SWOT Analysis

Weaknesses

Threats

External

Strengths

Opportunities

Internal

Strategy information Matrix Strategy/Tactics

Appropriate inappropriate
Possible short term success but ultimately Failure

Marketing Information

Excellent

Success

Poor

Trouble or Failure

Failure

Formulating Strategy

To understand the current position of the company

Identify mission, identify past and present strategies, Diagnose the companys past and present performance, Set goals & objectives for the companys operation

Formulating Strategy

Identify the mission statement

Outlines why the company exists
Describes the companys basic products and/or services

Designed to accomplish goals and Objectives

Mission Statement of Wal-Mart

Wal-Mart
"To give ordinary folk the chance to buy the same thing as rich people. Always Low Prices

Save Money Live Better ,

Mission Statement

Saraswat Cooperative Bank

Business Turnover of Rs 25000cr by 2011

Mission Statement

Ford Motor (ford. com)

Provide personal mobility for people around the world

Mission Statement

United Parcel (ups. com)

To move at the speed of business

Mission Statement

Walt Disney (Disney. com)

To make people Happy

Identifying Past and Present Strategies

Companies need to understand and appreciate their corporate history

Identifying Past and Present Strategies

Strategic managers should ask

Has past strategy been developed? If not, can past history of the company be analyzed to identify the strategy that has evolved? If yes, has the strategy been recorded in writing?

Diagnosing Past and Present Performance

A corporate planner must decide if past strategies worked and if strategic changes are needed by asking:

How is the company currently performing?

How has it performed during the past few years?

Is the performance trend moving up or down?

Kizashi

Setting Goals

Concise statements that provide direction

Setting standards for achievement

Goals must be re-evaluated as the environment and opportunities change

Objectives
SMART Specific Measurable Achievable Realistic Timely

Goals which are measurable

Top line Bottom line Efficiency Growth Technology Leadership Shareholders Wealth Brand Equity Corporate Social Responsibility Market Share Employees Package Cost

Policies

Policies are broad general guidelines to action that establish boundaries within which employees must operate
answering all written customer complaints in writing within 10 days Our organization wont give any Bribe

Policies

No cost Reduction at the cost of the Quality

Policies

GE Must be number one or two wherever it competes

Policies

No question Asked when customer return merchandise

Implementing Strategy

Implementing Strategy

It is the Process by which strategies are put into action through development of programmes, budgets and procedures

Amazon invented the retailing business model that all other dot - coms are struggling to copy

Amazon.com list of items

Books Movies ,Music & Games Electronics & Computers Home & Gardens Grocery Toys ,Kids, Baby Care Apparel, Shoes & Jewelry Health& Beauty Sports & Outdoors

Strategy Implementation

Programmes Budget Procedures

Strategy Implementation
FedEx

A programme is a statement of the activities or steps needed to accomplish a plan . It makes a strategy action oriented . It may involve restructuring the Firm, changing the internal culture or beginning a new research effort
1-43

Strategy Implementation

Nano

A Budget is a statement of Firms programmes in monetary value.

It has detailed cost of each programme.

Strategy Implementation
Delta Airlines

Procedures , are a system of sequential steps or techniques that describe in detail how a particular task or job is to be done

1-45

Strategies

Corporate Strategy

Business Strategy
Functional Strategy

3 Types

It describes a companys overall direction in terms of general attitude towards Growth and Management of the Organization

Corporate Strategy

It deals with 3 main categories of Stability, Growth and Retrenchment

Corporate Strategy

Maytag followed the strategy of acquiring other appliance companies

It usually occur at the business unit & it emphasizes improvement of the competitive position of a corporations product or services in the specific industry or segment

Business Strategy

Generic & Grand Strategies

Core idea of how best a firm can Compete in the market place is called Generic Strategy

Comprehensive General Plan of major actions through which objectives are to be achieved is called Grand Strategy

Generic Strategies

Cost Leadership Differentiation Focus

developing a competitive strategy

Cost Leadership

developing a competitive strategy

Cost Leadership is a competitive Strategy in which a firm succeeds in producing or selling products or services at the lowest costs in the industry

Cost Leadership

NIRMA

AMUL

BIG BAZAAR

CAVIN CARE

Required Skills & Resources

Strategy Cost Leadership

Capital Investments Process Reengineering Labour Supervision Product Designing

Product Service Personnel Coverage Image

Required Skills & Resources

Strategy Differentiation

Strong Mkt Abilities Product Engineering Corporate Reputation Uniqueness Competent & Trained manpower

Grand Strategies

Concentration Market Development Product Development Innovation Horizontal Integration Vertical Integration Joint Venture Strategic Alliance Concentric Diversification Conglomerate Diversification Turnaround Divestiture Liquidation

Followed to maximize resource productivity Concerned with developing and nurturing distinctive competence to provide a business unit with a competitive advantage.

Functional Strategy

Technology Leadership----TCS P& GHuge Advertising Budget

MARKETING STRATEGY

FINANCIAL STRATEGY
RESEARCH & DEVELOPMENT STRATEGY OPERATIONS STRATEGY PURCHASING STRATEGY LOGISTICS STRATEGY HUMAN RESOURCES STRATEGY INFORMATION TECHNOLOGY STRATEGY

Functional Strategies

Market Penetration STRATEGY

MARKET DEVELOPMENT STRATEGY

Marketing Strategies

PRODUCT DEVELOPMENT STRATEGY

DIVERSIFICATION STRATEGY

Product Strategy Price Strategy Marketing Mix Issues

Place Strategy
Promotion

Strategy

Capital Acquisition Strategies

Financial Management Strategies

Resource Allocation Strategies

Level of Innovation Leader or Copy Cat

R& D Strategies
Acquisition of Technology Internally Developed or acquired

Internal or Out sourced

Domestic Or International

Manufacturing Location

Operation Strategies

System Layout

Outsourcing (our firm buys everything)

Buying on the Open Market Long-Term Contracts with Multiple Suppliers Sole Sourcing (only one supplier) improves quality Parallel Sourcing (two suppliers) provides protection

Purchasing Strategies

 TALENT ACQUISITION
Recruit from Outside v. Internal Development Require experienced, highly-skilled workers v. we will train you Offer top dollar wages & benefits v. mentoring and a career

WORK ARRANGEMENTS

Human Resource Strategies

Individual Jobs v. Team Positions Narrowly-defined jobs v. Positions with discretion and autonomy On-premises Work v. Telecommuting Options

MOTIVATION & APPRAISAL

Assessment for development v. assessment for rewards

Incentives for ideas & originality v. incentives for conformity?

Red Oceans are all the industries in

existence today the known market space, industry boundaries are defined and accepted, and the competitive rules of the game are known. Here companies try to outperform their rivals to grab a greater share of product or service demand. As the market space gets crowded, prospects for profits and growth are reduced. There is cutthroat competition which turns the ocean

Red Ocean Strategy

bloody.
Hence, the term red oceans.

Blue oceans, in contrast,

denote all the industries not in existence today the unknown market space, untainted by competition ,demand is created rather than fought over. There is ample opportunity for growth that is both profitable and rapid. Blue ocean is an analogy to describe the wider, deeper potential of market space that is not yet explored

Blue Ocean Strategy

Directional strategy
is the game plan a company decides on and implements to grow business, increase profits, and accomplish goals and objectives. Small businesses to large corporations can create their own types of directional strategies that work for the focus and scope of each individual business. For example, certain companies may find that a directional portfolio strategy works best, while other businesses may choose to follow a parenting directional strategy.

Directional Strategy

Corporate parenting refers to the levels of management above that of the business units, and without direct interaction with buyers and competitors

Corporate Parenting

.There are basically three

styles of corporate parenting; financial control, strategic planning and strategic control.

Corporate Parenting

Strategic Evaluation

Evaluating and Controlling the Strategic Plan

Process of continuously monitoring the companys progress toward its long-range goals and mission

Evaluating and Controlling the Strategic Plan

Basic evaluation strategies:

Measure performance Reviewing Performance Take corrective action

Evaluation & Control Process

Determine what to Measure

Establish Standards

Measure Measure Performance Performance

Matching Performance With Standards

Corrective Action

Dimensions of Strategic Decisions

Involvement of Top Management Require Large Resources Affect Long Term Prosperity Future Oriented Multifunctional Consequences Considering External Environment

Components of SMP

Company Mission Internal & External Analysis Long & Short Term Objectives Generic & Grand Strategies Action Plans Functional Tactics Policies that Empower Tactics Restructuring, Reengineering Org Strategic Control & Continuous Improvement

STRATEGIC HRM

STRATEGIC HRM

Strategic HRM is about how the employment relationships for all employees can be managed in such a way as to contribute optimally to the organizations goal achievement.

STRATEGIC HRM

Managerial Process requiring HR Policies & Practices to be linked with the Strategic Objectives of the Company

HR Systems & Organizational structure is managed in a way that is congruent with organizational strategy

Matching Model

Linking HR Policies & Practices with SMP Internalization of HR function Commitment of Workforce to strategic Goals

HR PRACTICES LINKED WITH Competitive Strategy

Recruitment Training Career Path Promotions Socialization Openness

HR Strategy Models

Control Based Model Resource Based Model Integrative Model

HR Strategy Models
Control Based Model--Management Monitor and control employees performance

Resource Based Modelinteractive and behaviour improvement is tried

Integrative Model
Integration of both Models

Competitive HR Strategies

Commitment HR Strategy

Collaborative Strategy

Paternalistic HR Strategy

Traditional HR Strategy

Competitive HR Strategies

Commitment HR Strategy

Internal Development of Employees Competencies and keeping Control over them

Competitive HR Strategies

Paternalistic HR Strategy

Giving Learning Opportunities to Employees, Internal Promotions for their compliance with process based control Mechanism

Competitive HR Strategies

Collaborative Strategy

Sub Contracting work to external independent experts. Evaluation in terms of End Results

Competitive HR Strategies

Traditional HR Strategy

External Recruitment of Competencies & Behavioural based Control

Competitive HR Strategies

Internal

External

Outcome

Commitment HR Strategy

Collaborative Strategy

Process

Paternalistic HR Strategy

Traditional HR Strategy

Summary