Post on 05-Apr-2018
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Strategies, Policies, and
Planning Premises
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Definition of Strategy and Policies
Strategy is the determination of the mission (or thefundamental purpose) and the basic long-term objectives
of an enterprise, and the adoption of courses of action
and allocation of resources necessary to achieve these
aims.
Policies are general statements or understandings thatguide managers' thinking in decision making.
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The Strategic Planning Process
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The Strategic Planning Process
Inputs to the organization
Industry analysis
Enterprise profile
Orientation, values, and vision
Mission (purpose), major objectives, and strategic intent
Present and future external environment
Internal environment
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The Strategic Planning Process
cont.
Development of alternative strategies
Evaluation and choice of strategies
Medium- and short-range planning
Implementation through reengineering, staffing, leadership,
and control Consistency testing and contingency planning
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Mission, Objectives, and
Strategic Intent
Mission relates to the kind of business.
Objectives are the end points for activities.
Strategic intent is the commitment to win in the
competitive environment.
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Definition of the TOWS Matrix
The TOWS Matrix is a conceptual framework for a systematicanalysis that facilitates matching the external threats andopportunities with the internal weaknesses and strengths ofthe organization.
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TOWS Matrix for Strategy
Formulation
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TOWS Matrix: 4 Alternative
Strategies
SO strategy: MaxiMaxi
WO strategy: MiniMaxi
ST strategy: MaxiMini
WT strategy: MiniMini
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Dynamics of the TOWS Matrix
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Application of the TOWS Matrix for
Mergers, Acquisitions, Joint Ventures, and
Alliances
Develop a TOWS Matrix for both companies before themerger, etc.
Develop a TOWS Matrix of the joint company after the
merger, etc.
See Illustration of DaimlerChrysler merger in the closingsection of Part 2
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Blue Ocean Strategy by Kim & Mauborgne
and TOWS Matrix by Weihrich
Explore opportunities in uncontested markets (Opportunitiesin the TOWS Matrix) Example: Southwest Airline
Be aware of competition in red ocean markets (bloodycompetition). Example, todays personal computers
Value innovation: total company commitment to create valuefor the customer
Blue ocean strategy and the TOWS Matrix (SO or WOstrategies in uncontested markets)
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Business Portfolio Matrix
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Two dimensions
Relative competitive position (market share)
Business growth rate
Four positions
Question marks
Stars
Cash cows
Dogs
Business Portfolio Matrix
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Major Kinds of Strategies and
Policies Products or Services
What is our business?
Who are our customers?
What do our customers want?
How much will our customers buy and at what price?
Do we wish to be a product leader?
What is our competitive advantage?
Do we wish to develop our new products?
What advantages do we have in serving customer needs?
How should we respond to existing & potential competition?
How far can we go in serving customer needs?
What profits can we expect?
What basic form should our strategy take?
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Major Kinds of Strategies and
Policies (contd..) Marketing
Where are our customers & why do they buy?
How do our customers buy?
How is it best for us to sell?
Do we have something to offer that competitors do not?
Do we wish to take legal steps to discourage competition?
Do we need, and can we supply, supporting services?
What are the best pricing strategy & policy for our operation?
How can we best serve our customers?
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Hierarchy of Company Strategies
The corporate-level strategy. Executives craft the overallstrategy for a diversified company.
Business strategies are developed usually by the generalmanager of a business unit.
Functional strategies. The aim is to support the business andcorporate strategies.
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Five Forces in Industry Analysis
(Michael Porter)
Competitiverivalry
Potentialentrants
Buyers
Substitutes
Suppliers
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Five Forces in Industry Analysis
(Michael Porter) contd..
The competition among companies
The threat of new companies entering the market
The possibility of using substitute products or services
The bargaining power of suppliers The bargaining power of the buyers or customers
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Porters Generic Strategies
Overall Cost Leadership Strategy
Differentiation Strategy
Focused Strategy (low cost or differentiation)
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Premising and Forecasting
Planning premises are the anticipated environments in whichplans are expected to operate.
Environmental Forecasting
Values and areas of forecasting
Forecasting with the Delphi technique
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Forecasting with Delphi Technique
A panel of experts on a particular area are selected from both within &outside the organization.
The experts are asked to make a forecast (anonymously).
Answers are compiled & composite results fed back to the panel members.
Further estimates of future are made with this result. Process may be repeated several times.
When convergence of opinion begins to evolve, the results are then used
as an acceptable forecast.