Mr.A.

Madeswaran
Asst.Prof.
Department of MBA
 Module-1
MEANING AND NATURE
“ Strategy refers to the ideas , plans , and
support the firms employ to compete
successfully against their rivals. Strategy is
designed to help firms achieve competitive
advantage”.
“ Strategic Management is defined as the set of
decisions and actions resulting in formation and
implementation of strategies designed to achieve
the objectives of an organization”.
-Prof. John A Pearce
 Dimensions of Strategic Decisions
 Formality in Strategic Management
 Benefits of Strategic Management
 Risks of Strategic Management
 The Strategic Management Process
 Components of the Strategic Management Model
 Strategic Management as a Process
 Corporate-level
 Functional-level
 Business-level
 Enhances the firm’s ability to prevent problems
 Emphasizes group-based strategic decisions likely to
be based on best available alternatives
 Improves employees’ understanding of the
productivity-reward relationship
 Reduces gaps/overlaps in activities among employees
as their participation clarifies differences in roles
Resistance to change is reduced
 Helps the firm in being goal oriented.
 Helps in the people in the organization to understand
what the organization stands for and what is expected of
them.
 Helps the SBUs and functional departments to know
what they are looking for.
 Facilitates better delegation, coordination, monitoring,
performance evaluation and control.
 Module-2
STRATEGY FORMULATION
STRATEGY FORMULATION
VISION
leads to
SYSTEMIC STRUCTURE
leads to
PATTERNS OF BEHAVIOUR
leads to
EVENTS
 VISION and MISSION
VISION:
What organization will look like in the
future

MISSION :
Why organizations exists
VISION STATEMENT
 The vision statement describes the future we
intend to create , the results we will be
achieving ,and characteristics the organization
will need to possess in order to achieve those
results . The vision statement provides direction
and inspiration for organizational goal-setting and
conveys a sense of “future direction”.
 “I HAVE A DREAM”- Martin Luther King, Jr
 “By the end of the decade, we will put a man on
the moon”- John F. Kennedy
 Need for Vision

 A vision is “ more important as a guide to

implementing strategy than it is to formulating
it” – John Bryson
 A vision statement answers:
* Why does our organization exists ?
* What business are we in ?
* What values will guide us ?
* What will success look like ?
These motivates the people to work together
towards a common goal.
 MISSION STATEMENT

The mission statement is a broad

description of what organization does,
with and for whom the organization does,
and why the organization exists . Mission
conveys a sense of “fundamental
purpose”
Characteristics of mission statement
 Enduring statement of firm’s intent
 Embodies business philosophy of firm’s strategic
decision makers
 Implies image firm seeks to project
 Reflects firm’s self concept
 Indicates firm’s
* Principal products and services
* Primary customer needs it will attempt to satisfy
Relevant utility statements in developing
mission statement
Do not offer me things ! ………..
Do not offer me clothes!... Offer me attractive
looks.
Do not offer me shoes !... Offer me comfort my
feet and pleasure of walking .
Do not offer me a house!.. Offer me security
comfort, place with clean and happy.
Do not offer me books!... Offer me hours of me
pleasure and benefit of knowledge.
Do not offer me things!... Offer me ideas,
emotions, ambience, feelings…
Please don’t offer me things !....
Components of mission statement:
 Customers – The firm’s customers
 Products or services – Firm’s major products and services
 Markets – Geographically competence
 Technology – Is the firm technologically current.
 Concern for survival , growth & profitability
 Philosophy – Beliefs , values , aspirations , ethical
priorities
 Concern for public image – Responsive to social ,
community & environmental concern
 Concern for employee – Are employees a valuable asset of
the firm
Development of Mission Statement

Inside Stakeholders Outside Stakeholders

Executive officers Customers

Board of directors Suppliers
Company Creditors
Stockholders
Mission Governments
Employees
Unions
Competitors
General public

19
Mission statement should include:

Purpose – one sentence that describes

the end result of an organization seeks
to accomplish ( and for whom)
Business – a description of the
primary means ( programs, actions ,
services etc.) used to accomplish the
purpose .
 Some Examples Of Vision Statement:
World wide:
“ empower people through great software anytime , any place and on
any device.”
- Microsoft
 “Be the global leader in customer value.”
- caterpillar
 “ Seize the opportunities of tomorrow and create a future that will make
it a positive company”
-
Tata Steel -2007

To provide extraordinary customer satisfaction –JCB(India)

Strategic management objectives:
Strategic management objectives can
be defined “as specific results that an
organization seeks to achieve pursuing
its basic mission”.
Objectives should be challenging ,
measurable, consistant , reasonable and
clear
Needs of strategic objectives :
objectives are essential for organization because
* organization state direction
* Aid in evaluation
* Create synergy
*Reveal priorities
* Focus coordination
* Provide a basis for effective planning ,
organizing, motivating and controlling activities
Classification of strategic objectives :
1. Long term objectives
2. Short term objectives
3. Annual objectives

Types of setting objectives:

1. Strategic performance objectives
2. Financial performance objectives
Setting objectives
To light of vision and mission each organization
deliberate creation for achieving goals and objectives

Originally setting objectives are subject to

amendments as forced by the organizational change.
Factors of influencing the setting
objectives:
Vision and value system of Top Management
Updating and modifying the past objectives
External environment and the power relations
Internal resources and power relations
Influencing quality and expanding range of markets
Financial objectives
Increasing in annual revenues
Increasing annual dividend
Increasing the percentage profit margin
Increasing share holders value
Internal cash flow and new capital investment
Stable earnings during the recession period
The Balanced Scorecard

Financial
‘To succeed
financially, how should
we appear to our
shareholders?” Internal
Customer Business
“To achieve Vision Process
our vision, “To satisfy our
and
how should shareholders
Strategy and
we appear
to our customers,
customers? Learningand
Learning andGrowth
Growth what business
” ‘Toachieve
‘To achieveourourvision,
vision, processes
howwill
how willwe
wesustain
sustainour
our must we excel
abilitytotochange
ability changeand
and at?”
improve?”
improve?”

28
 Strategic intent
 Organization’s strong desire to win and to sustain
over a long spell of time is known as strategic intent
 Strategic intent is really an energizing dream which
provides the emotional feature
Definition:
 SI is an obsession with having ambitions that may
even be out of proportion to their resources and
capabilities. This obsession is to win at all levels of
organization while sustaining the obsession in the
quest of global leadership.
- C.K.Prahalad & G.Hamel
Hierarchy of strategic intent
 Strategic intent begins with ,
* Vision and Mission

* Goals and Objectives

* Functional level strategies

* Corporate level strategies

* Business level strategies

• The business environment is an aggregate of all
conditions, events and influences that surround and
affect it
- Keith Davis
• Economic Environment consists of all external and
internal factors that influence the complex interaction of
the market , production and finance .
- J.A.King & C.J.Duggan
• External Environment represents a set of conditions,
circumstances and influences that surround and affect
the functioning of a organization.
- Randall B.Duham & John L Pierce
Firm
 Market Size and Growth Rate
 Scope of competitive rivalry
 Number of Rivals
 Buyer needs and Requirements
 Production capacity
 Pace of Technological change
 Vertical Integration
 Product Innovation
 Degree of Product Differentiation
 Economies of Scale
 Learning and Experience Curve Effect
Industry driving forces are those that have the
biggest influence on what kinds of changes
will takes place in the industry is structure and
competitive environment.
Driving forces analysis is made up of two steps
such as
a. Identifying what the driving forces are,
b. Assessing the impact that they will
have on the industry.
• Technology Related KSF’s
• Manufacturing Related KSF’s
• Distribution Related KSF’s
• Marketing Related KSF’s
• Skills and Capability Related KSF’s
 Value Chain Analysis
Concept of value chain:
Value chain is identifying the separate
activities , functions and business process of
the organization that are performed in
designing , producing , marketing , delivering
and supporting a product and services.
Value chain of the organization creates the
value for the product and services.
 Value Creation Functions
• General Administration
• Operations
• Material Management
• Research and Development
• Human Resource
• Infrastructures
• Procurement
• Marketing
Value Creation Process
 Primary Activities
• Purchased supplies and in-bound logistics
• Operations
• Distributions and out-bound logistics
• Sales and Marketing
• Services
 Supporting Activities
• Research , Technology and systems
development
• Human Resource Management
• General Administration
• Efficiency
• Quality
• Innovation
• Customer Reponsiveness
Company Value Chain
• SWOT Analysis is a tool for auditing an
organization and its environment.
• It is the first stage of planning and helps
marketers to focus on key issues.
• SWOT Analysis is an exercise that identifies
and analysis both internal and external
environment.
• Specialist marketing expertise
• New innovative product or services
• Location of business
• Quality process and procedures
• Value for the product or services

• Lack of expertise
• Undifferentiated products and services
• Location of business
• Poor quality of goods or services
• Damaged
• Developing market through internet
• Mergers , Joint ventures or Strategic alliances
• New market segment
• New international market

• New competitor in home market

• Price war with competitors
• Competitor’s new innovative products or services
• Competitor’s channels of distribution
• Introduced taxation on product or services
 BENCHMARKING
“Best – in – class”

• BENCHMARKING is a systematic method by

which organizations can measure themselves
against the best industry practices that will
lead to superior performance
 Definition
• Benchmarking defined as, “measuring our
performance against that of best-in-class
companies , determining how the best-in-
class achieve those performance levels and
using the information as a bases for our own
company’s targets , strategies and
implementation
• Performance benchmarking

• Process benchmarking

• Strategic benchmarking
Getting Preparing to Conducting
Benchmark Research
started

Analysing , Collecting Selecting

Adapting & and sharing whom to
Improving information Benchmark
 Advantages of Benchmarking
• Understanding of company’s strength and
weakness .
• Identifying non value added activities
• Performance measures on administrative
functions
• Benchmarking allows organizations to set
new performance targets
• Benchmarking provides a basis for training to
human resources
 Limitations
• Best-in-class is not a static but a moving target

• Benchmarking is not a panacea

• Benchmarking is not a instant pudding

 Generic Strategies

Low-cost Leadership

Differentiation Focus

58
 Generic Strategies
• A long-term or grand strategy must be based on a core
idea about how the firm can best compete in the
marketplace. The popular term for this core idea is
generic strategy.
• 3 Generic Strategies:
1. Striving for overall low-cost leadership in the industry.
2. Striving to create and market unique products for varied
customer groups through differentiation.
3. Striving to have special appeal to one or more groups of
consumers or industrial buyers, focusing on their cost or
differentiation concerns.
 Low-Cost Leadership
• Low-cost producers usually excel at cost
reductions and efficiencies
• They maximize economies of scale,
implement cost-cutting technologies, stress
reductions in overhead and in administrative
expenses, and use volume sales techniques
to propel themselves up the earning curve
• A low-cost leader is able to use its cost advantage
to charge lower prices or to enjoy higher profit
margins
 Differentiation
• Strategies dependent on differentiation are designed to
appeal to customers with a special sensitivity for a
particular product attribute
• By stressing the attribute above other product qualities, the
firm attempts to build customer loyalty
• Often such loyalty translates into a firm’s ability to charge a
premium price for its product
• The product attribute also can be the marketing channels
through which it is delivered, its image for excellence, the
features it includes, and its service network
 Focus
• A focus strategy, whether anchored in a low-cost base or
a differentiation base, attempts to attend to the needs of
a particular market segment
• A firm pursuing a focus strategy is willing to service
isolated geographic areas; to satisfy the needs of
customers with special financing, inventory, or servicing
problems; or to tailor the product to the somewhat
unique demands of the small- to medium-sized customer
• The focusing firms profit from their willingness to serve
otherwise ignored or underappreciated customer
segments
 Grand Strategies
• Grand strategies, often called master or business
strategies, provide basic direction for strategic actions
• Indicate the time period over which long-rang
objectives are to be achieved
• Any one of these strategies could serve as the basis
for achieving the major long-term objectives of a
single firm
• Firms involved with multiple industries, businesses,
product lines, or customer groups usually combine
several grand strategies
Strategic alliance
 Strategic alliance or collaborative are the partnership where two
or more companies join forces to achieve mutually beneficial
strategic outcomes .
1. To have entry into the critical markets and global market
presence
2. To gain inside knowledge about unfamiliar markets and cultures
3. To have access to valuable skills and competencies that are
concentrated
4.To shape a strong position in technology
5.To improve supply chain efficiency
6.To gain economies of scale
7.To overcome technical
and manufacturing problems
1.They are not stable
2.Lack of pulling for long term
3.Kills the sprit and achievement of
self development.
4.Acquisition or merging is a better
solutions.
A.MADESWARAN
Company or organizations long term objectives

Productivity

Profitability

Competitive position

Employee relationships

Employees development

Public responsibility

Technological leadership
 Qualities of Long-Term Objectives

Achievable Acceptable

Long term Flexible

Understandable
objectives

Suitable Measurable
Motivating
 Types of Grand Strategies
Tailoring strategy
Market development Conglomerate
Tailoring strategy to fit specific company and industry situations
Diversification
are ,
Product development
Companies competing in emergingindustries
Turnaround of the future
Companies
Innovationcompeting in turbulent , high-velocity markets
Companies competing in nature , slow – growth industries
Divestiture
Companies
Horizontalcompeting
integrationin stagnant or declining industries
Companies competing in fragmented Liquidation
industries
Concentrated
Companies pursuinggrowth
rapid growth
Bankruptcy
Companies in industry leadership positions
Vertical in
Companies integration
runner-up positions
Joint ventures
Companies in competitively weak positions or played by crisis
Concentric diversification
conditions Strategic alliances
Consortia
 Innovation Strategy
Involves creating a new product life
cycle, thereby making similar existing
products obsolete

73
 Horizontal and Vertical Integration
Strategies
Horizontal Integration
• Based on growth via acquisition of one or
more similar firms operating at the same
stage of the production-marketing chain
Vertical Integration
• Involves acquiring firms
• That supply acquiring firm with inputs
(backward integration) or
• Are customers for firm’s outputs
(forward integration)

74
 Ex. 6-7: Vertical and Horizontal
Integrations

Textile producer Textile producer

Shirt manufacturer Shirt manufacturer

Clothing store Clothing store

Acquisitions or mergers of suppliers or customer businesses are vertical

integration
Acquisitions or mergers of competing businesses are horizontal integrations
75
 Ex. 8-9: Six Critical Questions for
Diversification Success
• What can our company do better than any of
its competitors in its current market(s)?
• What core competencies do we need in
order to succeed in the new market?
• Can we catch up to or leapfrog competitors
at their own game?
• Will diversification break up our core
competencies that need to be kept together?
• Will we be simply a player in the new market
or will we emerge a winner?
• What can our company learn by diversifying,
and are we sufficiently organized to learn it?

76
 Ex. 8-6: BCG’s Strategic Environments
Matrix

Fragmented Specialization
apparel, house pharmaceuticals, luxury
Many building, jewelry cars, chocolate
retailing, sawmills confectionery
Sources of
Advantage

Stalemate Volume
basic chemicals, volume- jet engines,
Few supermarkets,
grade paper, ship owning,
wholesale banking motorcycles, standard
microprocessors
Small Big
Size of Advantage

77
 78

Ex. 8-3 (contd.)

Financial Strength Human Assets Public Approval

•Solvency •Turnover •Goodwill
•Liquidity •Skill level •Reputation
•Break-even point •Relative wage/salary •Image
•Cash flows •Morale
•Profitability •Managerial
•Growth in revenues commitment
•Unionization
 Ex. 8-4: The Industry Attractiveness-
Business Strength Matrix
Industry Attractiveness
High Medium Low
Description of
Selectiv Grow or Dimensions
High Inves e Let Go Industry Attractiveness:
t Growth Subjective assessment
based on broadest
possible range of
external opportunities
Selectiv Grow Harvest and threats beyond the
Business
Strength

Medium e or strict control of

Growth Let Go management
Business Strength:
Subjective assessment
Low Grow Harve Divest of how strong a
or st competitive advantage
is created by a broad
Let Go range of the firm’s
internal strengths and
weaknesses
79
 Ex. 8-5: The Market Life Cycle-
Competitive Strength Matrix
Stage of Market Life Cycle

Description of
Dimensions
y
h: ivel Stage of Market
High s s
Pu ggre Life Cycle: See p.
tA 146
v es Competitive
Competitive

In
Strength: Overall
n: vely
Strength

i o
a ut lecti subjective rating,
C Se based on a wide
e st range of factors
Inv :
er t regarding the
Low g
n s
Da arve likelihood of
H gaining and
maintaining a
competitive
Introduction Growth Maturity Decline advantage
80
 Ex. 8-1: The BCG Growth-Share Matrix
Cash Generation (Market
Description of Dimensions
Share)
High Low Market share: sales
relative to those of other
Star Problem competitors in the market
Cash Use (Growth

High Child (dividing point is usually

selected to have only the
two-three largest
Cash Cow Dog competitors in any
Low
Rate)

market fall into the high

market share region)

Description of Dimensions
Growth Rate: Industry growth rate in constant dollars
(diving point is usually the GNP’s growth rate)
81
 Innovation Strategy
Involves creating a new product life
cycle, thereby making similar existing
products obsolete

82
Horizontal and Vertical Integration
Strategies
Horizontal Integration
Two competing units come together or joining hands for their
betterment .
Vertical Integration
Vertical integration takes place that start converting raw
materials handing over of the end products to the class of
consumers .
In vertical integration company offer numerous products and
service for satisfying customers
vertical integration further classified into two broad categories
* Forward integration
* Backward integration
83
 Ex. 6-7: Vertical and Horizontal
Integrations

Textile producer Textile producer

Shirt manufacturer Shirt manufacturer

Clothing store Clothing store

Acquisitions or mergers of suppliers or customer businesses are vertical integration

Acquisitions or mergers of competing businesses are horizontal integrations
84
 Diversification
Diversification refers to company diverting the business focus
from the existing traditional areas to new promising areas .
Types of Diversification:
1. Related Diversification 6. Vertical diversification

2.Unrelated diversification 7.Active diversification

3.Internal diversification 8.Passive diversification

4.External diversification 9.Concentric diversification

5.Horizontal diversification
 Diversification Strategies
• Concentric diversification

– Involves acquisition of businesses related to acquiring

firm in terms of technology, markets, or products

• Conglomerate diversification
– Involves acquisition of a business because it represents
a promising investment opportunity
– Primary motivation is profit pattern of venture

86
 Restructuring and Turnaround
Strategy
Restructuring:

Restructuring in the company means to find the core

business strategy from the existing strategy to attack new
competition with high efficiency.

Turnaround Strategy:

Turnaround strategy involves those strategic actions which an

organization takes to compete in the same business in
turnaround situations.
Turnaround situation may be improvement in organizational
lower performance caused by downward trend.
87
 Turnaround Strategy

A turnaround strategy is
done through

Cost reduction Increasing Revenue

88
 Retrenchment Strategy
• “Retrenchment strategy is strategic option which
entrails reduction of any existing product or service
line along with the level of objectives set below the
past achievement.”
- Prof. Donald F. Harvey
 Objectives of Retrenchment
Strategy

 Functional improvement- reduction in costs.

 Becoming a captive company.
 Philosophy of “Slow down and catch your
breath.”
 Needs of Retrenchment Strategy
Poor performance
Threat to survival
Redeployment of resources
Insufficiency of resources
Getting improved managerial efficiency
 The BCG Growth-Share Matrix
Cash Generation (Market Share)

High Low
Cash Use (Growth Rate)

Problem
Star
Child

Cash Cow Dog

Low

92
 Main process of BCG approach
Dividing a company into Strategic Business Units (SBU), &
Assessing the long term prospects of each.

Comparing strategic business units

Strategic complications
 Limitations of BCG Matrix
• Difficult task as measuring share and growth rate

• Dividing the matrix into four cells is based on high/low

classification scheme . It does not recognise the markets with
average growth or the business with average market share.

• The BCG matrix is not a particularly helpful in comparing

relative investments opportunities across different business
units in the corporate portfolio
 Ex. 8-6: BCG’s Strategic Environments
Matrix

Fragmented Specialization
apparel, house pharmaceuticals, luxury
Many cars, chocolate
building, jewelry
retailing, sawmills confectionery
Sources of
Advantage

Stalemate Volume
basic chemicals, volume- jet engines,
Few supermarkets,
grade paper, ship owning,
wholesale banking motorcycles, standard
microprocessors
Small Big
Size of Advantage

95
 96

Ex. 8-3 (contd.)

Financial Strength Human Assets Public Approval

•Solvency •Turnover •Goodwill
•Liquidity •Skill level •Reputation
•Break-even point •Relative wage/salary •Image
•Cash flows •Morale
•Profitability •Managerial
•Growth in revenues commitment
•Unionization
 Ex. 8-4: The Industry Attractiveness-
Business Strength Matrix
Industry Attractiveness
High Medium Low
Description of
Selectiv Grow or Dimensions
High Inves e Let Go Industry Attractiveness:
t Growth Subjective assessment
based on broadest
possible range of
external opportunities
Selectiv Grow Harvest and threats beyond the
Business
Strength

Medium e or strict control of

Growth Let Go management
Business Strength:
Subjective assessment
Low Grow Harve Divest of how strong a
or st competitive advantage
is created by a broad
Let Go range of the firm’s
internal strengths and
weaknesses
97
 Ex. 8-5: The Market Life Cycle-
Competitive Strength Matrix
Stage of Market Life Cycle

Description of
Dimensions
y
h: ivel Stage of Market
High s s
Pu ggre Life Cycle: See p.
tA 146
v es Competitive
Competitive

In
Strength: Overall
n: vely
Strength

i o
a ut lecti subjective rating,
C Se based on a wide
e st range of factors
Inv :
er t regarding the
Low g
n s
Da arve likelihood of
H gaining and
maintaining a
competitive
Introduction Growth Maturity Decline advantage
98
z

A.MADESWARAN
 DEFINITION
“Strategy implementation is the way in which company
creates the organisational arrangements that allow it to
put its strategic plan into operation most efficiently and
to achieve its objectives”.
R.Jones
“Strategy implementation may be said to consist of
securing resources , organising these resources, and
directing the use of these resources within and outside
the organisation”.
Joseph R.Curran.
 ANNUAL OBJECTIVES
Annual Objectives , stated in terms of profitability, growth,
and market share by business segment, geographic area,
customer groups, and product are common in organisations.

Importance of Annual Objectives

 Represent the basis for allocating resources.
 Primary mechanism for evaluating managers.
 Monitoring progress towards achieving long-
term objectives.
 Establish organisational, divisional and
departmental priorities.
 HIERARCHY OF ANNUAL
OBJECTIVES
LONG-TERM COMPANY OBJECTIVES

ANNUAL OBJECTIVES

R&D Production Marketing Finance Personnel

Annual Annual Annual Annual Annual
Objectives Objectives Objectives Objectives Objectives
 Qualities of Effective Short-Term
Objectives

Measurable

Linked to
Priorities long-term
objectives

103
 Value-Added Benefits of Short-Term
Objectives
Give operating personnel
a better understanding of
their role in a firm’s
mission

Provide basis for Provide basis for

accomplishing strategic control
conflicting concerns

Motivation – clarify
personnel and group roles
in a firm’s strategies

104
 What are Functional strategy?

Key, routine activities that must be undertaken in

each functional area to provide the business’s
products and services

Translate grand strategies into action designed to

accomplish specific short-term objectives

105
 Business Strategies and Functional
strategy

… are different in three ways

Time horizon

Participants
Specificity who develop
them

106
 107

Differences Between Business

Strategies and Functional Tactics
Time Horizon Specificity Participants
•Shorter time horizon of •Greater specificity of
functional tactics functional tactics contributes to •General managers
contributes to successful successful implementation by establish long-term
implementation by Ensuring functional managers objectives and overall
Focusing attention on focus on accomplishments business strategies
what needs to be done •Operating managers
Clarifying for top managers
now establish short-term
how functional managers
Allowing functional objectives and
intend to accomplish business
functional tactics
managers to adjust to strategy
leading to business
changing current Facilitating coordination level success
conditions among operating units
 What Are Policies?

Policies are directives

designed to guide the
thinking, decisions, and
actions of managers and
their subordinates in
implementing a firm’s
strategy

108
 Advantages of Formal Written
Policies
• Require managers to think through policy’s meaning, content,
and intended use
• Reduce misunderstanding
• Make equitable and consistent treatment of problems more
likely
• Ensure unalterable transmission of policies
• Communicate authorization or sanction of policies more clearly
• Supply a convenient and authoritative reference
• Systematically enhance indirect control and organization-wide
coordination of the key purpose of policies

109
 Product-Team Structure
Chief Executive Officer

Research and Engineering Operations Finance Sales and

Development Marketing

Product or
process teams

110
 111

Functional Organizational
Structure

C EO

E n g in e e rin g P ro d u c tio n P e rso n n e l F in a n c e M a rk e tin g

and
A c c o u n tin g
 112

Process-Oriented Functional
Structure

CEO

P u rc h a s in g R e c e iv in g O rd e r e n try W h o le s a le R e ta il A c c o u n tin g C u s to m e r
and s a le s s a le s and s e rv ic e
In v e n to ry b illin g
 113

Geographic Organizational
Structure
C h ie f E x e c u tiv e

C o r p o r a te S ta ff
F in a n c e & A c c o u n tin g
P e rso n n e l
M a r k e tin g , e tc .

G e n e ra l M a n a g e r, G e n e ra l M a n a g e r, G e n e ra l M a n a g e r, G e n e ra l M a n a g e r, G e n e ra l M a n a g e r,
W e s te rn D is tric t S o u th e rn D is tric t C e n tra l D is tric t N o rth e rn D is tric t E a s te rn D is tric t

D is tr ic t S ta ff
P e rso n n e l
A c c o u n tin g a n d
C o n tro l

E n g in e e rin g P ro d u c tio n M a rk e tin g

 Divisional or Strategic Business
Unit Structure
Chief Executive Officer
VP-Admn Services VP-Operating Support

GM GM GM
Division/SBU A Division/SBU B Division/SBU C
Manager, HR Personne Personnel
l
Manager, Acctg/Finance
Acctg/Control Acctg/Control
Manager, R&D
Division Planning Division Planning

Manager Marketing Marketing

Marketing/Sales

Manager
Prod/Operation Prod/Operation
Prod/Operation

114
 Matrix Organizational Structure
Chief Executive
Officer

Vice President, Vice President, Vice President, Vice President,

Engineering Production Purchasing Administration

Project
Engineering Production Purchasing Administration
Manager
Staff Staff Agent Coordinator
A
Project
Engineering Production Purchasing Administration
Manager
Staff Staff Agent Coordinator
B

Project
Manager Engineering Production Purchasing Administration
C Staff Staff Agent Coordinator

115
 Corporate culture
• Corporate culture is the set of important
assumptions . It is similar to an individuals
personality , principles , concepts and ethical
opinion actions with in the company or
organization.
 Concept of corporate culture:
1.Company’s value
2.Beliefs
3.Traditions
4.Internal environment
5.Rules and regulations
6.Policies and procedures
Basic elements of corporate culture:

• Basic assumptions and beliefs

• Cultural artifacts
• Values
• Norms
Specific features of corporate culture:
• Strong-culture companies
• Weak-culture companies
• Unhealthy culture
• Adaptive culture
• Thickness culture
• Extent of sharing culture
• Clarity of ordering culture
 Building ethics into culture :
• Employee training and educational programmes
• Recruiting and hiring to screen–out applications
• Employee explaining compliance procedures
• Management involvement
• Strong endorsement by the CEO
Corporate Leadership
Key Considerations of Organizational
Leadership
Organizational leadership involves action
on two fronts

Providing the
Guiding the management skill to
organization to deal cope with the
with constant change ramifications of constant
change

122
 Strategic Leadership: Embracing
Change
Clarifying strategic intent

Activities
involved in
galvanizing
commitment to Building an organization
change

Shaping organizational culture

123
 CORPORATE LEADERSHIP

Strategic leadership involves showing a way to,

guiding the behaviour of people , and leading
strategically is referred as strategic leadership.
 SIGNIFICANCE OF STRATEGIC LEADERSHIP

 Nature of the environment.

 Nature of the people.
 Nature of the resources.
QUALITY OF GOOD LEADER
 Vision creation.
 Empower the employees.
 Creating a learning organisation.
 Management by values than rules.
 ROLE OF STRATEGIC LEADERSHIP

1. Visionary.
2. Chief administrator and strategy implementor.
3. Culture builder.
4. Resource acquirer.
5. Motivator.
6. Policy maker.
7. Policy enforcer.
 MODELS OF STRATEGIC LEADERSHIP

1. Strategic action model.

2. Strategic foundation model.
3. Strategic contingency model.
4. Strategic entrepreneurship model.
BUSINESS ETHICS AND CORPORATE SOCIAL
RESPONSIBILITY
BUSINESS ETHICS
Business ethics focus on unethical process as,
 Corruption.
 Cooking books to deceive all share holders and investors.
 Having parallel books and operating in the black market.
 Damaging the environment.
 Treating employees badly.
 Distributing unsafe products to customers.
 CORPORATE SOCIAL RESPONSIBILITY

CSR defined as “actions that appear to further

some social good , beyond the interests of the
firm , and that which required by law”
CSR requires firms to ,
• Adopting progressive human resource policies.
• Reducing pollution.
• Serving needy customers.
 MODULE - 8

STRATEGIC REVIEW AND AUDIT

 STRATEGIC CONTROL
STRATEGIC CONTROL is a system framework for
tracking , evaluating , rewarding and
reorienting the functions of business units as
well as emerging markets.
STRATEGIC CONTROL providing a warning signal
to prevention of corruptions , accounting
irregularities and monitoring , evaluating of
plans and activities.
 TYPES OF STRATEGIC CONTROL

1. Premise control.
2. Implementation control.
3. Strategic surveillance control.
4. Special alert control.
 SPECIALIST INVOLVED IN STRATEGIC
EVALUATION AND CONTROL

I. Board of Directors.
II. Chief Executives.
III. Financial Controllers , Company Secretaries
and Auditors.
IV. Executive Committee.
V. Strategic Business Unit.
VI. Middle Level and other Managers.
PROCESS OF STRATEGIC CONTROL/EVALUATION
Objectives of
strategic plan

Setting
performance

Actual
performance

Variance
performance

Corrective action
 STRTEGIC EVALUATION

STRATEGY EVALUATION is the strategic choice is

properly implemented and is meeting the
objectives of the enterprise.
STRATEGY EVALUATION known the extent to
which a strategy is able to achieve
organisation objectives.
 STRATEGIC CONTROL AND EVALUATION
TECHNIQUE
STRATEGIC MOMENTUM CONTROL
a. Responsibility control centers.
b. Underlying success factors.
c. Generic strategic approach.
STRATEGIC LEAP CONTROL
a. Strategic issue management.
b. Strategic field analysis.
c. Systems modelling.
d. Writing of scenarios.
 OPERATIONAL CONTROL TECHNIQUE

 Budgetary control
 Financial analysis
 Management By Objectives
The determination of the basic long term goals and objectives in an
Enterprise and the adoption of courses of action and the allocation of
resources necessary for carrying out this goals”.

“Strategy refers to either the plans made or the actions taken in

the effort to help an organization fulfill its indented purposes” .