Objectives

Nature and purpose of strategies and policies

Strategic planning process TOWS Matrix and Business portfolio matrix

Hierarchy of strategies
Porters generic strategies Nature of premises and forecast

Assumption and Forecast

Planning is done in an uncertain environment both

internal and external Therefore we need to make forecasts and assumptions while planning in the premises( anticipated environment in which plans are expected to operate) One of the technique used is DELPHI Technique Example The GNP is a forecast It becomes an assumption for setting the sales target. This in turn forms the basis for production

Why do we need to know strategy development and role of policies in planning? What is its importance?

Need for strategy

Strategy refers to the determination ( make or

establish precisely) of the mission/ purpose and the basic long term objective of an enterprise, followed by the adoption of courses of action and allocation of resources necessary to achieve these aims.

Difference between Vision and Mission

A mission statement concerns what an organization is all about. A vision statement is what the organization wants to become. A mission statement answers three key questions: What do we do? For whom do we do it? What is the benefit? A vision statement, on the other hand, describes how the future will look if the organization achieves its mission. A mission statement gives the overall purpose of an organization, while a vision statement describes a picture of the "preferred future. Examples: Centres for Disease Control Mission To promote health and quality of life by preventing and controlling disease, injury, and disability Vision Healthy People in a Healthy World

Vision of Reliance communication

By 2015, be amongst the top 3 most valued

Indian companies, providing Information, Communication & Entertainment services, and being the industry benchmark in Customer Experience, Employee Centricity and Innovation

Mission of Reliance Communication

We will create world-class benchmarks by: Meeting and exceeding Customer expectations with a segmented

approach Establishing, re-engineering and automating Processes to make them customer centric, efficient and effective Incessant offering of Products and Services that are value for money and excite customers Providing a Network experience that is best in the industry Building Reliance into an iconic Brand which is benchmarked by others and leads industry in Intention to Purchase and Loyalty Developing a professional Leadership team that inspires, nurtures talent and propagates RCOM Values by personal example

Strategies of Reliance communication

To achieve this mission on daily basis the company will need to

draw strategies in marketing , human resource branding and Pricing. Example of product launch strategy. - GSM launch strategy The necessary actions taken were campaigns, Go Colour Campaign and Bus baton dabao campaign Cheap life time validity offers Resource allocation- Additional towers across the country, Human resource, cabling. While strategies give direction for decision making, Policies give discretion or guidance for decision making

The Strategic Planning process

a. b.

A. B.

Inputs to the organization- Consider the people , capital, Managerial skills and technical skills and goals of consumer, employees and share holders Industry Analysis- Study the industry, the growth, new opportunities, competitors, present market share, threats. Enterprise profile- Where does the company want to be? This is determined by the below two variables Executive orientation values and mission eg. The top management values of a trading company is that they do not allow insider trading Mission and strategic intent of the company . To be a pioneer, to beat Competitor Development of alternate strategies- An organization may pursue many different kinds of strategies. It may concentrate only on high end market segment clients. It may provide only a limited product range, or it may diversify into many products, liquidation strategy or retrenchment strategy . These strategies are established to direct its mission and objective Alternate strategies are developed on the basis of External and internal environment Evaluation and choice of strategy- Two main criteria for evaluating a strategy choice are Risk: A strategy may be profitable but the risk involved may turn the company bankrupt Timing: Launch of the best product may be a failure if launched at the inappropriate time. Also the time when a firm needs to change or implement a new strategy depends on the external factors like competition. Consistency testing and contingency planning: The future cannot be certain of our assumptions that a certain consistency will be maintained. Therefore a contingency plan needs to ne in place . Example- the demand for print media may decline due to faster literacy of computers and internet usage and reach The following steps like organizing staffing leading and controlling will follow the process

Techniques for strategy analysis and implementation

TOWS MATRIX
It is a conceptual framework for a systematic analysis

that facilitates matching of the external threats and opportunities with the internal strengths and weaknesses. This matrix addresses the limitations of SWOT analysis. It combines these factors ( SWOT) with distinct strategic choices It begins with T ( Threats ) cause in most situations a company undertakes strategic planning as a result of perceived crises and problems

Internal Factors

External Factors TOWS Matrix for Strategy Formulation External Opportunities (o): New products, markets, technology, economic growth, infrastructure growth SO Strategy: Most successful strategy using the organizations strengths to take advantage of its opportunities Eg: The company has a location to open a new food outlet and the area is getting developed with schools and residential colonies ST Strategy

Internal Strengths (S) Strengths in Human resource, location, marketing finance,

Internal Weakness ( W) Weakness in areas shown as strengths

WO Strategy: To overcome weaknesses to take advantage of the opportunity. The firm needs to develop in areas in order to develop needed competencies Eg: Skilled people, up gradation in technology. Placing procedures in place I

External Threats (T)

WT Strategy minimize threats and weaknesses through joint venture or liquidation or retrenchment.

The Portfolio matrix or BCG Matrix

This is called the Portfolio framework, advocated by

the Boston Consulting group. It focuses on 3 aspects of a business unit: Sales, growth of its market and whether it produces cash in its operations It aims at developing a balance among business units that use up cash and those that supply cash.

Star Modest cash flow ( High growth rate and high market share ) Cash flows are moderate This category would require more investment to keep pace with the rapid market growth and will consume more cash than earned.

Question Mark ( High growth rate and low market share) Cash flows are negative The market is in rapid growth and requires high investments , however the firm is not using the right strategy to take advantage of this growth rate. If a proper business strategy and funds are implemented than an exciting opportunity can be captured Dog (Low growth rate and low market share ) Cash flow are moderate The dog category has low investment since the market has a low growth rate. Therefore the cash that is generated will not be utilized at a rapid rate . The excess cash of successful dogs can be used to enable Question marks to Stars.

Cash Cow (Low growth rate and High market share ) Cash flows are huge The slow growth of the industry does not require huge investment to maintain its high market share .

Porters Industry Analysis or Porters Framework

According to Michael Porter there are 5 environmental

forces that determine an organizations ability to compete in in a given market Porter states that strategy formulation requires an analysis of the attractiveness of an industry and the companys position within the industry. This analysis becomes the basis for generic strategy formulation

Threat of new entrants

Bargaining power of suppliers

The Industry ( positioning among current competition

Bargaining power of customers

Threat of substitutes products or services

Generic strategies strategies which can be used at broad level for different kinds of organizations
Overall cost leadership strategy- low cast compared to competitors . The organization needs experience and huge market share
Differentiation strategy- To offer something unique Focused strategy concentrates on special groups of customers specially product line, specific geographical region. It can be low cast focused strategy or differentiated focused strategy

Test your self Note the premises for Grand Hyatt Goa to operate in the next 5 years in Goa. Why are contingency plans required in strategy panning Using the TOWS Matrix implement a strategy alternative for the No.1 event company in Goa and a company that is already existing but does not have contemporary designs and concepts