Strategy

1. Strategy

2. Strategy • Current set of plans,decisions & objectives that have been adopted to achieve the organizational goals

3. Organizational Purpose • Organizations are created for a purpose called the overall goal or mission

4. Mission • Called official goal • Mission is organization’s reason for existence • Describes organization’s vision, values & beliefs • It communicates current & prospective stakeholders what the organization stands for & what it is trying to achieve • It gives legitimacy to organizational purpose

5. Vision • Vision is that igniting spark that can inspire and energise people to do better. • The latest trend in many organisations is to apply the "VIP" approach i.e. "Vision Integrated Performance."

6. Values • There are fundamental beliefs that are inculcated and practiced in the organisation • the Johnson and Johnson credo says, "We believe our primary responsibility is to the doctors, nurses and patients, mothers and all others who use our products and services". • It must be remembered that unless these values are internalised by one and all in the organisation, they become fancy advertisements matter or beautiful wall hangings. • British Airways' "putting people first" • JET AIRWAYS "the joy of flying “ • BPL's "believe in the best".

7. Some Vision Statements • SIEMENS: Where technology touches lives DU PONT: Better things for better living through Chemistry HYUNDAI: Building a better world through innovative technology NOKIA: Connecting people XEROX: The document company IBM: Solutions for a small planetPHILIPS: Let's make things better BPL: Believe in the best

8. Operative Goals • Describe the ends sought through actual operating procedures • Describe specific measurable outcomes • Are often concerned with short term result • Operative vs. official goals represent actual vs. stated goals • Operative goals are directions for day to day decisions and activities within departments

9. Operative Goals (contd..) • Operative goals are concerned with • Overall performance or profitability reflected as ROI, earnings per share • Resources pertain to acquisition of men, material, technology from the env. • Market refers to market standing desired by the organization, e.g. No. 1 automobile giant in the world

10. Operative Goals (contd..) • Employee development e.g. T&D, MDP, employee safety and stress mgt. • Innovation & change development of flexibility to adapt to the new env. • Productivity amt. Of output achieved from available resources. E.g. units produced per employee

11. Goal Type, Their Purpose & Importance Type of Goals Purpose of Goals Official Goals, mission: Legitimacy Operative goals: Employee direction and motivation Decision guidelines Standard of performance

12. Thinking Strategically • To help managers answer questions such as: • Where is the organization now? • Where does the organization want to be? • What changes are happening among competitors? • What courses of action will help us achieve our goals? • Answers define an overall direction for the organization's grand strategy

13. Strategy • Can be premeditated i.e explicit set of guidelines developed in advance (planning mode). • Or it can just emerge i.e not necessarily well thought out (evolutionary mode)

14. Corporate-Level Strategy: What business are we in? Corporation Business-Level Strategy: How do we compete in each of our businesses? Textiles Unit Chemicals Unit Auto Parts Unit Functional-Level Strategy: How do we support the business-level strategy? Finance Manufacturing Marketing R&D Three Levels of Strategy in Organizations (Types of Strategy)

15. Chandler • Studied American firms from 1909-1959 • Concluded • Changes in the strategy preceded changes in structure • All organizations began as centralized structures and later adopted different structures (simple, functional, divisional) • Concept of forward and backward integration strategic

16. Limitations of Chandler’s Work • Studied only very large and powerful organizations • Small, medium organizations and public sector were ignored • He was more concerned about growth than profitability (strategy-structure fit leading to growth ) • Wrigley used the same paradigm and differentiated organizations in to the following • Single business (no diversification) • Dominant business (70-90% of sales coming from one business or vertically integrated chain) • Related business (diversified in related areas with no one business accounting for more than 70% of sales) • Unrelated business (diversified in unrelated areas with no one business accounting for more than 70% of sales) • Acc to Wrigley related and unrelated business strategies were associated with multi divisional structures, and single business strategies related to functional structures. • No single structure was found consistently in the dominant business category • Thus strategy does influence structure

17. Porter’s Competitive Strategy • Use one of the three which gives you competitive advantage • Cost • Differentiation • Focus

18. Porter’s Competitive Strategy: Cost • Requires the organization to be the cost leader and not merely one of the contenders for the position • It includes efficiency of operations • Economies of scale • Technological innovation • Low cost labor • Preferential access to raw material

19. Porter’s Competitive Strategy: Differentiation • Emphasizes high quality • Extraordinary service • Innovative design • Technological capability • Unusual and positive brand image • The key is that the attribute chosen must be different from those offered by rivals and significant enough to justify a price premium that exceeds the cost of differentiation

20. Porter’s Competitive Strategy: Focus • This approach aims at a competitive advantage in a narrow segment

21. Porter’s Competitive Strategies

22. Structural Implications of Porter’s Model • Cost Leadership • Structure high in complexity (specialization, departmentalization, tall structure), high formalization and centralization • Differentiation Strategy • Structure low in complexity, low formalization, decentralized decision making.

23. Miles and Snow’sStrategy Typology • Prospector • Values creativity, risk-taking, and innovation • Learning orientation; flexible, fluid, decentralized structure • Strong capability in research • IT sector E.g. Microsoft, Google • Defender • Emphasis on production efficiency, low overhead • Efficiency orientation; centralized authority and tight cost control • Close supervision; little employee empowerment • A manufacturing/assembling plant (Chinese industries)

24. Miles and Snow’sStrategy Typology (cont’d) • Analyzer • Balances efficiency and learning; tight cost control with flexibility and adaptability • Efficient production for stable product lines; emphasis on creativity, research, risk-taking for innovation • FMCG sector • Reactor • No clear organizational approach; design characteristics may shift abruptly depending on current needs • A temporary approach Eg. Xerox in 1970-80s

25. Organization Design outcomes of strategy • Strategy:Differentiation • Org. design:Learning Orientation, flexibility, strong horizontal coordination,emphasis on R&D,customer intimacy, risk taking

26. Organization Design outcomes of strategy • Strategy: Low Cost leadership • Org. Design:efficiency orientation, strong central authority,tight cost control, standard operating procedures,efficient procurement & distribution systems,routine tasks and limited employee empowerment

27. Miller • Innovation: • Market differentiation: Miles& Snow’s prospector strategy • Breadth: product diversification of Chandler • Cost control: Porter’s cost leadership • According to Miller Porter’s differentiation can be seen as market differentiation and product differentiation as innovation • Breadth can be achieved by doing more innovation or by moving in to stable markets

28. Strategy-Structure Relationship • Structure follows strategy as changing structure is a slow process