Chapter [2] Business Policy And Strategic Management Created By Manish Mathur

According to Christensen ~ Business policy is the study of – Functions and responsibilities of top management. Crucial problems that affect success in totality. Decision that determines the direction of the org. Business Policy Created By Manish Mathur

Meaning and Nature of Management Group of Professionals Create Vision Define Mission Set objectives Develop plan Identification and Acquisition Resources Control resource use Performance appraisal etc.. Group of Functions Planning Organizing Staffing Directing Controlling Decision making Etc.. Created By Manish Mathur

According to Peter Drucker ~ Management is a function carry out by managers, a discipline practice by managers and task discharge by manager. According to McFarland ~ Management is the process by which managers create, direct, maintain and operate organization through systematic, co-ordinated and co-operative efforts. Created By Manish Mathur

Strategic Management According to W. F. Glueck ~ Day-to-day planninglong range planning Strategic MgmtStrategic planning Strategy is a unified, comprehensive and integrated plan to give organization competitive advantages. Created By Manish Mathur

Characteristics of Strategy Long range in nature. Multidisciplinary. Plan to fight back the adverse Env. Condition. Formulated at Corporate, Divisional and Functional level. Blend of Proactive and Reactive actions and decisions Perceive opportunity and threats. Unified criteria for decision making. Strategy is never perfect nor optimal, it is no substitute for sound, alert, and responsible management Created By Manish Mathur

Strategic Management According to Glueck – SM is a stream of decisions and actions which leads to the development of an effective strategy to help achieve corporate goals. Objective Outperform the competitors. Guide organization through changes in the environment. Created By Manish Mathur

Importance Provides framework for decision making. Work as pathfinder to opportunities. Work as defense mechanism to threats. Provides core competencies. Projects a good future for the organization. Influences the environmental forces. Provides flexibility and adoptability to support Survival of fittest. Created By Manish Mathur

Framework SWOT Analysis Establishing Objectives Identify Strategic Alternatives Evaluation of Alternatives & Selecting the best Implementation and Control FEEDBACKFEEDBACK Where are we now ? Where we want to be ? How can we get there ? Which way is best ? How can we ensure arrival ? Created By Manish Mathur

Strategic Decision SDM is done by top management SDM requires large amount of resources SDM significantly impact on the long term SDM are future oriented SDM have multifunctional consequences SDM considers external factors. Created By Manish Mathur

Develop Vision and Mission Establish long- Term objective Generate, evaluate & select strategy Implement Strategy Measure & evaluate Performance Feed Back Strategic Management Model Created By Manish Mathur

The Vision The directional path which organization take on in future. The road map of a company to future. Organizations P-C-M-T focus in future. Guidelines ~ – Define what business the company is presently in. – Define long term course choice. – Think creatively – Exercise intelligent entrepreneurship. – State in terms that creates enthusiasm in employee. – Communicate in clear, exciting terms that arouse company wide commitment. Created By Manish Mathur

The Mission Peter Drucker says – The first step in the business planning process is to clarify the corporate mission. In contrast to Vision mission focuses on companys present business scope. Present P-C-M-T focus of the organization. It is the growth ambition of the firm. It is future visualization of the firm. It is colorful sketch of firm to look in future. It is firms justification for the existence. Created By Manish Mathur

Why ~ To ensure unanimity of purpose within organization. To provide a base for motivating members. To develop basis for resource allocation. To serve as a focal point for employee and shareholders. To provide the cost, time and parameter for performance evaluation. Created By Manish Mathur

Objectives Objectives are organizations performance target which it wants to achieve. Characteristics ~ – Objective should define the organizations relationship with environment. – It should help organization achieve its mission. – Should provide basis for SDM. – Should provide standard for SDM. – Should be understandable. – Should be concrete and specific. – Should be related to time frame. – Should be measurable and controllable. – Should be challenging. – Should be correlate with other. – Should be set within constraints. Created By Manish Mathur

VISIONMISSIONOBJECTIVE Definition Road map, Directional path TargetMilestones TargetLife timeLong termShort term Created By Manish Mathur

Strategic Levels in organization Corporate Level Business Level Functional Level CMD, Chairmen, CEO, Board of Director Divisional Heads, SBU Head Departmental managers Created By Manish Mathur

CharacteristicsCorporate levelBusiness LevelFunctional level Type of decision StrategicTacticalOperational MeasurabilityIntangibleSemi-tangibleTangible FrequencyVery lessLessHigh Relation to present activities InnovativeMixedSupplementary RiskHighModerateLow Profit PotentialHighModerateLow Time HorizonLong rangeMedium rangeShort range FlexibilityHighMediumLow Cooperation Required SignificantModerateLittle ProcedureNo set procedure Partially setFull automation Created By Manish Mathur