Plans and Policies

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Plans and Policies



Functional Strategies-Meaning

• Relatively restricted plan designed to achieve

the following:-

– Objectives in a specific functional area,

– Allocation of resources among different

operations within that functional area and

–Coordination among different functional areas

For achievement of the business and corporate level

objectives.



Functional Strategies-Fit

Vertical Fit Horizontal Fit

•Congruence and coordination

among strategies at different

level.

•Lower Level Functional

Strategy aligned with Higher

Level Business Strategy.

•Leads to Functional Strategies

& their implementation.

•Congruence and coordination

among different strategies at

same level.

•Alignment among the various

activities performed in

different functional areas.

•Horizontal Fit leads to

Operational Implementation.



Corporate Level strategies

Business Level Strategies

Functional-Level Strategies

Marketing

Plan &

Policies

Financial

Plan &

PoliciesOperational

Plan &

PoliciesHRM

Plan &

PoliciesInformation

Management

Plan &

Policies



Functional Plans and Policies

Functional strategies defined in terms of

functional plans and policies-plans or tactics

to implement business strategies- are made

within the guidelines set at the higher levels.

PLANS are made to select a course of action

while POLICIES are required to act as

guidelines to action.



NEED

• Implement strategic decisions by all

parts of an organization;

• Control activities in different

functional areas of business;

• Reduce time spent by functional

managers in decision making

• Handle similar situations occurring

in different functional areas in a

consistent manner;

• Coordination across the different

functions takes place where

necessary.

OBJECTIVE

• PROFITABILITY

• MARKET SHARE

• HUMAN TALENT

• FINANCIAL HEALTH

• COST EFFICIENCY

• PRODUCT QUALITY

• INNOVATION

• SOCIAL RESPONSIBILITY



Financial Plans and PoliciesRelated to availability, usage & management of funds.

1. Sources of Funds:

1. Capital Mix Decisions: Capital structure, procurement of capital

and working capital borrowings, reserves and surplus,

relationship with lenders, banks and financial institutions.

2. Important since they determine how financial resources will be

made available for the implementation of strategies.

2. Usage of Funds:

1. Investment or asset-mix decisions: Capital investment, fixed

asset acquisition, current assets, loan and advances , dividend

decisions etc.

2. Important since it relates to efficiency & effectiveness of

resource utilization.



Financial Plans and Policies

3. Management of Funds:

1. The system of finance, accounting and budgeting, cash,

credit and risk management, cost control and reduction

etc.

2. Important as it aims at the conservation & optimum

utilisation of funds.



Marketing Plans and Policies

These have to be formulated and implemented on the

basis of 4 Ps of Marketing Mix.

1. Product: Characteristics like quality, features, choice of

models , brand names, packaging etc.2. Pricing: Discount, mode of payment, allowances, payment

period, credit terms etc.

3. Place: Channels to be used, transportation, logistics and

inventory storage management and coverage of markets etc.4. Promotion: Advertising, personal selling, sales promotion

and publicity.



Operations Plans and Policies

Related to the production system, operational planning& control and R&D.

Production system - capacity, location, layout,product or service design, work systems, degree of

automation, extent of vertical integration. Operations Planning and control – aggregate

production planning; materials supply; inventory,cost and quality management; and maintenance of plant and equipment.

Research and development- product development,personnel and facilities, level of technology used,technology transfer and absorption, technologicalcollaboration and support.



Personnel Plans and Policies

Personnel System - manpower planning, selection,

development, compensation, communication andappraisal.

Organizational and employee characteristics –

corporate image, quality of managers, staff andworkers, perception about and image of theorganization as an employer, availability of development opportunities for employees, working

conditions.

Industrial Relations – union-managementrelationship, collective bargaining, safety, welfare

and security, employee satisfaction and morale.



Personnel Plans and Policies



Information Management Plans and

Policies

Acquisition and retention of information- sources, quantity,quality and timeliness of information, retention capacity and

security of information.For eg. CRM & SCM.

Processing and synthesis of information – database

management, computer systems, software capability and theability to synthesize information. For eg. RLI capital

investment on IT.

Retrieval & Usage of Information – Availability &

Appropriateness of Information formats & capacity to

assimilate & use information. For eg Reduction in paper work

by banks & other financial institutions.

Transmission & Dissemination of Information – Speed,

Scope, Width & Depth of coverage of Information &

willingness to accept information.For eg Work from home

INTEGRATION OF FUNCTIONAL PLANS



INTEGRATION OF FUNCTIONAL PLANS

& POLICIES- 5 Considerations – Need for Internal Consistency

• Ensures different functional areas operating in consonance.

– Relevance to development of organizational capability

• OC in terms of strategic or competitive advantage.

– Making trade off decisions• Integration ensures minimum aberration due to trade-off

decisions.

– Determination of Intensity of linkages

• Important to determine the level of coordination that should

exist between various functional areas.

– Timing of Implementation of plans & policies

•Implemented at appropriate time.



Example-Plans and Policies of Public Sector

banks

The public sector banks (the State Bank group and thenationalized banks) had to face a tough challenge whenthe new private sector banks made their entry in earlynineties.

The new banks had the benefit of starting on a cleanslate and had started with state-of-the-art technologywhich in turn helped them save on man power costsand provide better services.

The older banks had not kept up-to-date withtechnology and were facing competition of this kind forthe first time.

M k ti St t I t d ti f d t d



• Marketing Strategy--Introduction of new products and

services: new products include debit cards, credit cards,

international cards, special deposits, demat accounts and any-

where-banking. Some of the new services include round-the-

clock phone-banking, Automated Teller Machines (ATMs), inter-

city, inter-branch banking, net-banking and bill payment

services.

•

Information Technology Strategy--Computerisation andnetworking of branches: Many of these branches were also

networked so that their customers could be offered ‘any-time,

any-where’ banking services.

•

Financial Strategy--Risk Management and Capital Adequacy:Many public sector banks were saddled with large non-

performing assets (NPAs) and suffered from low capital

adequacy. Banks have since put in place stringent Risk

Management Systems to address not only credit risk, but alsok t i k d th ti l i k

Plans and Policies

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