Strategy Development Process

Group-3: Anita Archit Bharathi Jyotis Abhishek

The Mission Strategy

The Vision
Goal/Purpose
Objective
Strategy
 Two types of Analysis
 Environmental analysis  Industry Level Analysis

A
A
P
N
P
A
R
L
To determine A To determine the To determine and
environmental Threats I environmental understand the Market
Y
to the company’s Opportunities to Competitive structure S
present strategy and S company for achieving and making decisions I
objectives A its objectives to anticipate it
S
L
Steps of Analyzing the environment
 Types of Environment
 External Environment (Macro)
 Political Environment
 Economic Environment
 Social Environment  Internal Environment
 Supplier Environment (Strategic Advantage Profile)
 Technological Environment  Production Function
 Finance Function
 Marketing Function
 Operation Function
 Personnel Management
External Environment
 Political Environment
 Change in government policies affect
company business
 Influences Supplier, Consumer &
Competitor function
 Company face production constraint due
to antitrust laws, fair trade decisions, tax
rate, pollution & pricing policies
 Allocation of Product Research Grant to
companies
External Environment
 Economic Environment
 Every market is unique and has elastic
consumption pattern
 Microeconomics trends like Prime interest
rate, Inflation rate, GNP, Disposal income,
Propensity to spend etc.
 Changes in Wealth distribution or Wealth
management pattern in the society
External Environment
 Social Environment
 Change in values, beliefs, lifestyle, attitude, opinion creates
potential for an organization. (Eg.- Women in the work force)
 Demographic change has implication on several business
External Environment
 Supplier Environment
 Change in availability of Raw Materials
and Sub-assemblies
 Change in price of Raw Materials
 Entry of new suppliers & exit of
existing Big supplier
 Technological breakthrough in Raw
Materials affecting company’s
Manufacturing process
External Environment
 Technological Environment
 Cost of Technology is very important
 Rate of change of technology influences
the strategy formation
 Receptivity of New Technology by the
public affects organizational strategy
 Internal Factors Analysis
 Also termed as Strategic Advantage Plan
 Comprises of the Internal departments of the
organization
 Organizational strategies based on the functions
and objectives of individual departments
Internal Environment
Small Industry Big Industry
 Production Function
 Main objective to produce
output that has a value
which exceeds the
combined cost of inputs and Strategies Strategies
• Low initial • Production group
the Transformation process Investment continuous
• Superior Quality interact with other
 Should meet the Forecasted products departments
demand • Customization • Helps to produce
• Low Investment in Value added
Variable cost products for
customers
Internal Environment
 Finance Function
 Tells the efficiency and the investing ability of the company
 Evaluation of company’s performance can be done between
present year and last year
 Estimates Cost of Capital and formulate strategies to reduce the
cost of capital
 Define the amount of Working Capital
Internal Environment
 Marketing Function
 Involves study of product market
 Brings together the Organization &
the External environment
 Efficiency in bringing closer the
various departments of the
organization
 Tells about the Market share,
strength in supermarkets, product
quality, pricing etc.
Internal Environment
 Operation Function
 Concerned with production of goods
and services
 Managing the Process that’s converts
the Input into output
 Maintains the level of Inventory
 Maintains long term relationship with
the suppliers
Internal Environment
 Personnel Management
 Managing the most important
Assets of the organization, the
Employees
 Recruiting & training, providing fair
compensation plans to the
employees
 Maintain Fair terms and conditions
to the employees
 Track recording of achieving
Objectives
Industry Level Analysis
 Study Porters Five Forces Model
 To find out the number of firms
in the industry & their respective
market shares
 Major new products in the
market
 Shifts in Pricing structure of
products
 Shifts in consumer Preference
 Change in PLC for the industry
 Porters Five Forces Model

Threat of new
Potential
Entrants entrants

Bargaining power Industry Bargaining power

Suppliers Buyers of Buyers
of Suppliers Competitors

Threat of
Substitutes
Substituted products
 Game Theory
 Game Theory proposed by John von
Neumann and Oskar Morgenstern
by their book Theory of Games and
Economic Behavior in 1944
 Consist game elements like players,
set of rules, actions, information,
outcomes, payoffs & equilibrium
 Helps organization to overcome
competition
 Organization can understand rivals
behavior
 Helps to understand Business better
 Game Theory
Techniques which improve company’s
competitive instinct.
o Fish bowl
o Everybody brings his or her own views
o Advocates of certain stay in the center of
the Fish bowl
o Advocates debate on their data and facts
o Decision makers evaluate quality of facts,
expose weak positions and analyze
strategic options
 Game Theory
Techniques which improve company’s
competitive instinct.
o Red team/ Blue team
o Managers are put in charge of teams
representing major competitors
o Plan the strategies they would be use
beat the organization
o Increases organizational Competitive
Intelligence
o Quickens organizational reflexes by
building competitive awareness
 Game Theory
Techniques which improve company’s
competitive instinct.
o Future Mapping
o Way of looking at different scenario for
Future
o Looking at several alternative Futures or
‘End States’
o Assign profanity to each states to identify Future is here
the forces to determine whether that
scenario actually unfold
o Identify actions with Biggest return and
least Risk or both
 Strategic Systems Planning (SSP) is used to study an organization’s
information needs, identify strategic opportunities and develop a
plan to address those information needs
 Strategic systems planning is always performed with an organization’s
senior management and is not undertaken as an end in itself. The
objective is to create action by implementing the Strategic Systems
Implementation Plan
 The “system” shows you how to develop a set of strategies and
action plans – and to arrange them in such a way that vastly increases
your chances of having a sustainable, profitable long term business
 Strategic Leadership provides the
vision and direction for the growth
and success of an organization. To
successfully deal with change, all
executives need the skills and tools
for both strategy formulation and
implementation. Managing change
and ambiguity requires strategic
leaders who not only provide a
sense of direction, but who can also
build ownership and alignment
within their workgroups to
implement change.
 Is a term coined by James Brain Quinn in 1980
 Constantly integrating the simultaneous
incremental process of strategy formulation and
implementation is the central art of effective
strategic management
 Implementing in large organization
is complex and time consuming
General Concern
Broadcasting of an general idea
Formal development of a change plan
Use of a Crisis or Opportunity
Adaptation
According to Peter Senge (1993)
Learning Organization are:
…organizations where people continually expand
their capacity to create the results they truly
desire, where new and expansive patterns of
thinking are nurtured, where collective aspiration
is set free, and where people are continually
learning to see the whole together.
STAGE 1: PREPERATION
STAGE 2: PLANNING
STAGE 3: RESOURCE DEVELOPMENT
STAGE 4: IMPLEMENTAION
 Before any process can begin, basic preparation
must be made. This includes making a commitment to
planning, enlisting appropriate personnel, gathering
data, getting necessary commitments, setting aside
appropriate calendar time, and determining the process
to be used.
 During the planning phase, or the actual
development phase, the strategy is formulated.
Various meetings are held that lead church members
to process the data and make decisions concerning
strategic objectives, goals, and action plans. The
direction for the church is set with specific actions
that lead to fulfilling the desired intent.
 Once the plan has been completed, necessary resources
for implementation must be identified. This phase includes
identifying both existing resources and new resources that
must be secured, as well as determining how these resources
are to be allocated. All of the resources will not be available
at the beginning of implementation. These resources will
include:
 The allocation of personnel to staff ministries, programs,
activities or events planned
 The development of a budget that resources the objectives,
goals and action plans
 The development of a calendar reflects the objectives, goals
and action plans
 The final phase of strategy development is implementing
the vision, taking action, and making it happen. One of the
most frustrating experiences in life is getting to the goal
line, yet failing to score. History reveals that the most
common point of breakdown of strategy development is at
the point of implementation. Horror stories are legendary,
both within the corporate world, as well as among
associations and churches, of organizations that started the
process but never completed it.
 A systematic way to examine all activities a company
performs and how they interact among themselves to
identify sources of competitive advantage
 Every company’s value chain is composed of nine
categories of activities (value addition steps) which can
be classified under two major headings:
 Primary activities- Connected with the physical creation of
the firm’s product or services, its marketing, delivery &
post sales service
 Support activities: which provide inputs for infrastructure
for primary activities
 Helps to analyze strategic relevant internal activities in
the competitive advantage
 Primary Activities  Support Activities
 Inbound Logistics  Firm Infrastructure
Operations Human resource
Outbound Logistics Management
Marketing & Sales Technology
Service Development
Procurement
 Organisations response to the changing environment is often within the parameters
of the organisations culture, which over time becomes more and more apparent. In
this respect, culture is traditionally seen as a preventative to change, which stifles
strategy innovation and results in a momentum of that can lead to strategic drift.
 This view therefore supports the assumption that strategic change must always be
accompanied by an appropriate cultural change.
 Eventually transformational change is required Changing Environment Condition

if the demise of the organisation has to be avoided.

Strategic Gap leading to crisis

Unchanging organizational Culture and Activity