MANAGEMENT
A Global and Entrepreneurial Perspective
PRINCIPLES OF MANAGEMENT
Sr. No. Chapter No. Chapter Heading
1 1 Management: Science, Theory and Practice (27th September 2010)
2 4 Essentials of Planning and Managing by Objectives (4th Oct)
3 5 Strategies, Policies and Planning Premises (11th Oct) Planning
4 6 Decision Making
The Nature of Organizing, Entrepreneuring,
5 7 and Reengineering
6 8 Organization Structure: Departmentation Organizing
7 9 Line/ Staff Authority, Empowerment and Decentralization
8 10 Effective Organizing and Organization Culture
9 14 Human Factors and Motivation
10 15 Leadership Leading
11 16 Committees, Teams and Group Decision Making
12 18 The System and Process of Controlling Controlling
Sessional Evaluation External Evaluation
15 15 20 50 50
Quiz per Class Assignment & Presentation Mid-term Total Sessional External Exam
Strategies, Policies and Planning Premises
Chapter 3
TABLE OF CONTENTS
1. The nature and purpose of strategies and policies
2. The strategic planning process
3. The tows matrix: a modern tool for analysis of the situation
4. Blue ocean strategy: in pursuit of opportunities in an
uncontested market
5. The portfolio matrix: a tool for allocating resources
6. Major kinds of strategies and policies
7. X:Hierarchy of company strategies
8. X:Porter’s industry analysis and generic competitive strategies
9. Premising and forecasting
THE NATURE AND PURPOSE OF STRATEGIES AND
POLICIES
1. STRATEGY:
The determination of the mission or purpose and the basic long-term objectives of
an enterprise, followed by the adoption of courses of action and allocation of
resources necessary to achieve these aims.
2. POLICIES:
General statements or understandings that guide managers’ thinking in decision
making
They ensure that the decisions fall within certain boundaries
SIMILARITIES:
They give direction
They are frame work for plans
They are the basis of operational plans
They affect all areas of managing
MAJOR DIFFERENCE:
The essence of policy is discretion
Strategy concerns the discretion, in which human and material resources will be
applied in order to increase the chance of achieving selected objectives
Tactics: the action plans through which strategies are executed.
THE STRATEGIC PLANNING PROCESS
Present &
Executive Medium &
Future
orientation External
Short Range
Inputs: planning
values Threats &
People, Capital,
vision Opportunities
Opportunities
Managerial skills,
Technical Skills,
Others
Industry Enterprise Development Evaluation &
Goals of Stake Analysis Leadership
Profile of alternative strategic Implementation
holders: Control
strategies choice
Employees
Consumers
Suppliers
Stock holders
Govt • Mission
Community • Internal
• Major • Reengineering
Others weaknesses &
Objectives Organization
• Strategic Strengths
structure Staffing
Intent
Consistency
Testing
Contingency
Planning
THE STRATEGIC PLANNING PROCESS
1. Inputs to the organization
2. INDUSTRY ANALYSIS
The competition and its kinds available
Possibility of new firms entering
Availability of substitute products or services
Bargaining position of the suppliers and buyers
3. ENTERPRISE PROFILE
Mission
Geographic orientation (would it operate in home
country or in different countries
Competitive position of the company itself
4. Orientation, vision and values of executives
THE STRATEGIC PLANNING PROCESS
4. Mission (purpose), major objectives, and strategic intent
MISSION: “what is our business”
OBJECTIVE: “the end points towards which the activities of the
enterprise are directed”
STRATEGIC INTENT: “the commitment to win in the competitive
market”
6. Present and future external environment:
7. Internal environment:
8. Development of alternative strategies:
To concentrate
To diversify
International expansion
Joint ventures
Strategic alliances
Liquidation
Retrenchment
THE STRATEGIC PLANNING PROCESS
9. Evaluation and choice of strategies:
10. Consistency testing and contingency planning
11. Medium and short range planning,
implementation through organizing, staffing,
leading and controlling
QUIZ
What is meant by TOWS
How is the tows matrix helpful for an enterprise?
The TOWS MATRIX:
T:
O:
W:
S:
FOUR ALTERNATIVE STRATEGIES
Strengths in internal Eg weaknesses in internal
departments like departments
management, R&D,
Finance, marketing, OD
etc
Current and Future conditions in The most successful Developmental strategy: to
respect of economy, politics, overcome internal
financial regulations, new
strategy, utilizing the org’s
strengths to take adv of weaknesses to take adv of
products, services and
technology opportunities opportunities
Energy shortages, Use of strengths to cope Retrenchment, liquidation,
competition and other areas up with threats or to avoid joint ventures etc to
like conditions mentioned threats minimize weaknesses &
above threats
TIME DIMENSION AND THE TOWS
MATRIX
APPLICATION OF THE TOWS MERGER
MATRIX FOR MERGERS, ACQUISITIONS,
JOINT VENTURES AND ALLIANCES
BLUE OCEAN STRATEGY
BLUE OCEAN STRATEGY
THE FOUR ACTIONS FRAMEWORK
Identify and eliminate those factors that may be
unimportant to the buyer
If elimination is not an option, consider
reducing those factors
Raise or strengthen those factors that are
unique
Create new and unique factors that are wanted
by the buyers but are ignored by the
competition
Companies may adopt both the SO and SW
alternative strategies
THE PORTFOLIO MATRIX: A TOOL
FOR ALLOCATING RESOURCES
THE PORTFOLIO MATRIX: A TOOL FOR
ALLOCATING RESOURCES
This tool was developed by Boston consulting group in 1970s.
This is a relationship between Market Growth and Market share of a
company/ its business unit or a product
This was developed for large corporations with several divisions, called
as Strategic Business Units (SBUs) for the allocation of resources in
the right place
By dividing the matrix into four areas, four types of SBU can be
distinguished:
Stars - Stars are high growth businesses or products competing in
markets where they are relatively strong compared with the
competition. Often they need heavy investment to sustain their
growth. Eventually their growth will slow down and, assuming they
maintain their relative market share, will become cash cows.
Cash Cows - Cash cows are low-growth businesses or products with a
relatively high market share. These are mature, successful businesses
with relatively little need for investment. They need to be managed for
continued profit - so that they continue to generate the strong cash
flows that the company needs for its Stars.
THE PORTFOLIO MATRIX: A TOOL FOR
ALLOCATING RESOURCES
Question marks - Question marks are businesses or products with
low market share but which operate in higher growth markets. This
suggests that they have potential, but may require substantial
investment in order to grow market share at the expense of more
powerful competitors.
Management have to think hard about "question marks" - which
ones should they invest in? Which ones should they allow to fail or
shrink?
Dogs - the term "dogs" refers to businesses or products that have
low relative share in unattractive, low-growth markets. Dogs may
generate enough cash to break-even, but they are rarely, if ever,
worth investing in.
Criticism:
Its too simplistic
The growth rate criterion is insufficient for the evaluation of an
industry’s attractiveness
The market share is also insufficient for estimating the competitiveness
MAJOR KINDS OF STRATEGIES AND
POLICIES
GROWTH
FINANCE
ORNANIZATION
PERSONNEL
PUBLIC RELATIONS
PRODUCTS OR SERVICES
MARKETING
PREMISING AND FORECASTING
Planning premising:
The anticipated environment in which plans are expected to
operate
Environmental Forecasting
Human and material resources and their opportunities and
threats
Values and areas of Forecasting
The making of forecasts and their review by managers compel
thinking ahead, looking to the future, and providing for it
Preparation of forecast may disclose areas where necessary
control is lacking
Forecasting, especially when there is participation throughout the
organization, helps unify and coordinate plans. By focusing
attention to the future, it assists in bringing a singleness of
purpose to planning
The areas of forecasting; usually are economic, social, political/
legal, and technological environments
PREMISING AND FORECASTING
Forecasting with Delphi Technique:
This technique was developed by Olaf Helmer ad
his colleagues at the RAND corporation for
technological forecasting
The process is as follows:
A panel of experts on a particualr problem area is selected,
usually from both inside and outside the organization
The experts are asked to make a forecast (anonymously) in
terms of discoveries and developments
The answers are compiled and fed back to the audience
Further estimates of future are made collectively
Repetitions take place if required for further additions
When a convergence of opinion begins to evolve, the results
are then used as an acceptable forecast