1. Strategies, Policies and Planning Premises

2. Strategy
A company’s strategy consists of the competitive moves, internal operating approaches, and action plans devised by management to produce successful performance.
Strategy is management’s “game plan” for running the business.
Managers need strategies to guide HOW the organization’s business will be conducted and HOW performance targets will be achieved.

3. Levels of Strategy

4. Levels of Strategy Corporate-level Strategy 2. Business-level Strategy
The set of strategic alternatives that an organization chooses from as it manages its operations simultaneously across several industries and several markets.
2. Business-level Strategy
How the organization conducts business in a particular industry.
Functional-level Strategy
Strategy developed for specific functional areas
such as marketing, finance, and so forth.

5. Levels of Strategy-Making
Corporate
Strategy
Business
Strategies
Functional
Strategies

6. ? BCG Matrix* High Question Marks Stars Market Growth Rate Cash Cows
Dogs
Cash Cows
Low
Relative Market Share
High
Low

7. BCG Market Share/Market Growth Matrix

8. What is Strategic Planning?
Strategic planning is a systematic process through which an organization agrees on and builds commitment among key stakeholders to priorities that are essential to its mission and are responsive to the environment.
Strategic Planning guides the acquisition and allocation of resources to achieve these priorities.

9. Strategic Planning vs. Operational Planning
formulation
What, where
ends
vision
effectiveness
risk
Operational Planning
implementation
how
means
plans
efficiency
control

10. Three Big Strategic Questions
Where Are We Now?
Where Do we Want to Go?
How Will We Get There?

11. Strategic Planning Process
Developing a Vision and a Mission
Assessment
Setting Objectives
Crafting a Strategy
Implementing and Executing Strategy
Evaluating Performance, Reviewing the Situation and Initiating Corrective Action

12. Strategic Planning First Stage of Strategic Planning may involve:
Futures Thinking
Thinking about what the business might need to do 10–20 years ahead
Strategic Intents
Thinking about key strategic themes that will inform decision making

13. Strategic Planning The Vision Aims and Objectives:
Communicating to all staff where the organisation is going and where it intends to be in the future
Aims and Objectives:
Aims – long term target
Objectives – the way in which you are going to achieve the aim

14. Strategic Analysis Constantly evaluate their position
Strategic analysis includes different methods of assessing the current position of the business in the market place
Two basic methods:
Internal
External

15. Internal Audits Productivity Efficiency Costs Other Internal Data
Labour turnover, absenteeism
Customer satisfaction surveys
Quality procedures
Cash flow statements
Sales trends
Skills audit
Strengths and weaknesses analysis
Core competencies

16. External Audits PEST factors Political – e.g. change of government
General business environment – Inflation, competitiveness, unemployment/employment, growth, consumer spending
Competitors
PEST factors
Political – e.g. change of government
Economic – Trends in economic growth, inflation, etc.
Social-changed outlook, age structure of population, etc.
Technological

17. SWOT Analysis Strengths Weaknesses Opportunities Threats
Vision & Mission
SWOT Analysis
An organization’s fundamental purpose
SWOT Analysis
To formulate strategies that support the mission
Strengths
Weaknesses
Opportunities
Threats
Internal Analysis
External Analysis
Strengths
Opportunities
(distinctive
competencies)
Weaknesses
Threats
Good Strategies
Those that support the mission and:
exploit opportunities and strengths
neutralize threats
avoid weaknesses

18. Strength’s Strength’s – Those things that you do well, the
high value or performance points
Strengths can be tangible: Loyal customers,
efficient distribution channels, very high quality
products, excellent financial condition
Strengths can be intangible: Good leadership,
strategic insights, customer intelligence, solid
reputation, high skilled workforce

19. Weaknesses
Weaknesses – Those things that prevent you from doing what you really need to do
Since weaknesses are internal, they are within
your control
Weaknesses include: Bad leadership, unskilled
workforce, insufficient resources, poor product
quality, slow distribution and delivery channels,
outdated technologies, lack of planning, . . .

20. Opportunities Opportunities – Potential areas for growth and
higher performance
External in nature – marketplace, unhappy
customers with competitor’s, better economic
conditions, more open trading policies, . .
Timing may be important for capitalizing on
opportunities

21. Threats
Threats – Challenges confronting the organization, external in nature
Threats can take a wide range – bad press
coverage, shifts in consumer behavior, substitute
products, new regulations, . . .
The more accurate you are in identifying threats,
the better position you are for dealing with the
“sudden ripples” of change

22. Suppliers of Key Inputs
Five Forces Model of Competition
Substitute Products
(of firms in
other industries)
Suppliers of Key Inputs
Rivalry
Among
Competing
Sellers
Buyers
Potential
New
Entrants

23. Porter’s Five Competitive Forces
Threat of new entrants
Competitive rivalry
Threat of substitute products
Power of buyers
Power of suppliers

24. Gap = Basis for Long-Term Strategic Plan
Gap Analysis
Vision
Assessment
Gap = Basis for Long-Term Strategic Plan

25. Setting Objectives
The purpose is to convert the mission into Specific Performance Targets
Yardsticks for tracking company progress and performance.
Should be set at levels that require stretch and disciplined effort.

26. Crafting a Strategy

27. Generic Strategies Porter’s Generic Strategies
Differentiation strategy
An organization seeks to distinguish itself from competitors through the quality of its products or services. Developing an image perceived as unique
Overall cost leadership strategy
An organization attempts to gain competitive advantage by reducing its costs below the costs of competing firms.
Focus strategy
An organization concentrates on a specific regional market, product line, or group of buyers.

28. Types of Strategy Market Dominance Achieved through: Internal growth
Acquisitions – mergers and takeovers
New product development: to keep ahead of rivals and set the pace
Contraction/Expansion – focus on what you are good at (core competencies) or seek to expand into a range of markets?
Global – seeking to expand Global operations

29. Strategy Implementation
Technology
Human Resource
Reward System
Decision Process

30. Characteristic of the Good Strategy Implementation
An ongoing exercise
Proper Communication
Contingency Plan
Emphasis on Organisation Culture
Regular Review
Importance of Planning

31. DECISION-MAKING

32. What is Decision-Making?
The process of choosing a course of action for dealing with a problem or opportunity.

33. Types of Decisions Programmed decisions. Nonprogrammed decisions.
Involve routine problems that arise regularly and can be addressed through standard responses.
Nonprogrammed decisions.
Involve nonroutine problems that require solutions specifically tailored to the situation at hand

34. Decision environments
Certain environments.
Risk environments.
Uncertain environments.

35. Certain environments.
Exist when information is sufficient to predict the results of each alternative in advance of implementation.
Certainty is the ideal problem solving and decision making environment.

36. Risk environments
Exist when decision makers lack complete certainty regarding the outcomes of various courses of action, but they can assign probabilities of occurrence.
Probabilities can be assigned through objective statistical procedures or personal intuition.

37. Uncertain environments.
Exist when managers have so little information that they cannot even assign probabilities .
Uncertainty forces decision makers to rely on individual and group creativity to succeed in problem solving.
Also characterized by rapidly changing:
External conditions.
Information technology requirements.

38. Classical Vs. Behavioral Decision Theory
Classical decision theory.
Views the decision maker as acting in a world of complete certainty.
Behavioral decision theory.
Accepts a world with bounded rationality and views the decision maker as acting only in terms of what he/she perceives about a given situation.

39. Classical decision theory
The classical decision maker:
Faces a clearly defined problem.
Knows all possible action alternatives and their consequences.
Chooses the optimum alternative.
Is often used as a model of how managers should make decisions.

40. Rationality Problem is clear and unambiguous. Single goal.
All alternatives are known.
Clear and constant preferences.
Maximum payoff.
The decision is in the best interest of the organization—not the manager.

41. Behavioral decision theory
Recognizes that human beings operate with:
Cognitive limitations.
Bounded rationality.
The behavioral decision maker:
Faces a problem that is not clearly defined.
Has limited knowledge of possible action alternatives and their consequences.
Chooses a satisfactory alternative.

42. Bounded Rationality
Behavior that is rational within the parameters of a simplified model that captures the essential features of the problem.
Making a decision that is “good enough.” (Satisficing Model)

43. Bounded Rationality Inadequate Information and Control Limited Search
Satisficing
Decisions

44. Other decision making models
The garbage can model
A model of decision making that views problems, solutions, participants, and choice situations as mixed together in the “garbage can” of the organization.
Incremental Model

45. Intuitive Decision Making
An unconscious process of making decisions on the basis of experience and accumulated judgment.
Making decisions on the basis of gut feeling
It does play an important role in managerial decision making.

46. Range of decision making
Too Slow
Too Quick
Procrastination
Indecision
“Analysis paralysis”
“Ready, fire, aim”
Impulsive, compulsive
Arbitrary

47. Cultural and Social Influences
Ethnicity, Race, and Religion
Household and ref. groups
Psychographics: Lifestyle, Person.
Socio-Econ: income,educ.
Demographic:Gender, Age
Perception
MOTI VATION
AFFECT
Basic Psychological Processes
Learning and Memory
Attitudes
Decision-Making Process
Problem Recognition
Search
Evaluation
Choice
Outcomes

48. Group Decision-Making

49. Forms of Group Decision Making
Interacting groups
Delphi Methods
Nominal groups

50. Decision-Making Techniques
Marginal Analysis
Financial Analysis
Break-Even Analysis
Ratio Analysis
OR Technique
Linear Programming
Queuing Method
Game Theory
Simulation
Decision Tree