WELCOME TO THE STRATEGIC MANAGEMENT PROGRAMME

1. WELCOME TO THE STRATEGIC MANAGEMENTPROGRAMME

2. Nalanda Small Scale Industries Development Corporation was established in the year 1962, to help development of the small scale industries (SSIs) in the state of Nalanda. The company was enjoying good profitability and sales upto the early seventies. All of a sudden, the company's sales started falling, going down from Rs. 18 crores in 1974 to Rs. 13 Crores in 1975 and it was expected to touch a low of Rs. 5 crores in 1976. The company also started making losses. The reason? The corporation could not see the changes taking place in it's environment. The situation of glut appeared as the government decontrolled iron and steel industry. The corporation, which was engaged primarily in trading of iron and steel, lost the market overnight. It did not know where to look for. It was a late realisation to the management that the corporation did not have any strengths to fall back upon. Worse still, in the process of making profit the soft way (by trading in a regulated item), it lost sight of it's mission itself, the SSI were no longer the focus of the organisation.

3. Hindustan Tractors Limited, a manufacturer of 35 and 50 h.p. tractors, was doing pretty well till 1967, when all of a sudden it faced the crisis of survival, wrought by government regulating the price of tractor, even though it had been given the margin that was somewhat higher than the others. Reason? The owner manager did not realise what all was required to manufacture tractors with local content; whether it was the development and retention of skilled manpower, institution of appropriate costing and control system, the design of suitable organization structure or the timing of expansion of capacity/ massive indigenisation programme.

4. Olivetti Company, another world leader, in the field of office equipment, faced rough weather in the early sixties, after over 50 years of successful operations. It was on the verge of collapse. Reason? Too ambitious, unplanned growth aimed to be achieved not only through internal expansion but also through acquisitions, and unrelated diversifications, all leading to huge cash requirement that the company could not bear.

5. International manufacturing company after 100 years of undisputed leadership in the sewing machine business world over with operations spread over more than 125 countries , all of a sudden started losing share both in the domestic and international markets accompanied by heavy erosion of profitability. Reason, a single product highly vertically integrated company, coupled with high cost of operations and conservative top management could not withstand the onslaught of competition from low cost machines from Japan, until a new, young Chief Executive takes over the reigns of the company

6. All the above cases have one thing in common. They could not maintain a good fit with the changing environment of their company. They did not notice the changes in time and make necessary changes in the design of organization to adjust with the changed environment

7. In the mid fifties, Hindustan Lever Ltd., forecasted an acute shortage of edible oil in India during the next twenty years. The forecast came true with pin point accuracy. However, the company was able to avert a collapse by undertaking diversification in a big way, taking up many new products, over a period of ten to fifteen years. The conscious analysis of the company's environment, keeping the long term perspective in mind enabled the company to make painless transition. The company had realized the importance of a crucial management function, that of strategic management, that of shaping the future of organization, which the other companies cited above had not.

8. THE STAKEHOLDERS OWNERS FIN. INST CUSTOMER SUPPLIER EMPLOYEES PLANT & M/C THE PROBLE OF LOW STAKES OF THE STAKEHOLDERS

9. DIVIDEND OWNERS FIN. INST CUSTOMER INTEREST/ REPAYENTS PRODUCT SUPPLIER EMPLOYEES PAYMENT SALARY/WAGES PLANT & M/C DEPRECIATION

10. PROCESS INPUT OUTPUT

11. STRATEGIC DECISIONS ADMINISTRATIVE DECISIONS OPERATING DECISIONS TYPES LEVELS OF ORGANISATIONAL DECISIONS

12. Strategic Management can be defined as management function which concerns with task of coping with this challenge of environmental change. The concept originates with the word strategy. When used in the context of organisation as a whole, strategy describes the way the organisation will pursue its goals Strategic management may thus be called as a process by which the top management determines the long term direction and performance of organisation, by ensuring that careful formulation, proper implementation and continuous evaluation of strategy takes place

13. Strategic management can also be defined as a process which deals with fundamental organizational renewal and growth with the development of the strategies, structure, systems necessary to achieve such renewals and growth and with the organizational systems needed to effectively manage the strategy formulation and implementation

14. Corporate strategy can be defined as "a statement of organization mission, objectives, strategy, policies and major plans and programs of actions, described in a way that conveys what business we are in and why are we in this business" . This definition given brings out the need for organization clarity to integrate or unify the organizational efforts. Corporate strategy may, thus, be understood as the outcome of strategic formulation process, including the thinking part (but excluding the action part) of strategy implementation.

15. It also encompasses the unstructured, non-formal cases of strategic management process. Andrews maintains that every organization has a strategy. This could be implicit, rather than explicit, informal rather than formal, inadequate rather than proper. The imperative of strategic management is strategic thinking rather than the formal way of doing it.

16. CORPORATE OFFICE CORPORATE FUNTIONS CORPORATE FUNTIONS PROD. DIV. I PROD. DIV.II PROD. DIV. III PROD. DIV. IV PROD. DIV. V STRATEGIC BUSINESS UNITS THE MEAS -ENDS RELATIONSHIP

17. DISTINGUISH BETWEEN • THE CORPORATE STRATEGY AND • THE SBU STRATEGY STRATEGIC MANAGEMENT REQUIRES: • DIFFERENT PERSPECTIVE • LOWER TO HIGHER • MULTIFUNCTIONAL • DIFFERENT SKILLS • QUANTITATIVE TO QUALITATIVE • ABILITIES TO DEAL WITH UNCERTAINITIES • DYNAMIC MATCHINGS • CREATIVE THINKING • DIFFERENT ORIENTATION • SHORT TERM TO LONG TERM

18. ADVANTAGES OF STRATEGIC MANAGEMEBNT 1. IT HELPS TOP EXECUTIVES IN FACING THE EXTERNAL WORLD BOLDLY 2. HELPS IN AVERTING ENVIRONMENTAL SHOCKS 3. HELPS MANAGEMENT IN HAVING CLARITY OF ORGANISATION’S BLUEPRINT FOR FUTURE/ GROWTH 4. HELPS IN INTEGRATING ORGANISATIONAL EFFORTS 5. HELPS THE ORGANISATION IN UNDERSTANDING ITS STRENGTHS 6. HELPS MANAGEMENT IN HAVING AN AUDIT OF CHANGING COMPETITIVE STRENGTHS

19. 7. PUSHES THE MANAGEMENT TO TAKE STOCK OF ITS ORGANISATIONAL 8. HELPS THE MANAGEMENT IN MOBILISING AND DEVELOPING RESOURCES 9. HELPS IN CONTINUING THE LINE OF ACTION 10. HELPS MANAGEMENT IN MAKING PROMISES AND REJECTING APPEALS OF UNIONS 11. HELPS IN MANAGING CONFIDENTLY

21. THE NEED GAP DESIRED PERFORANCE NEEDGAP TO BE BRIDGED SEARCH FOR OPPORTUNITY CURRENT STRATEGY THREAT EXPECTED PERFORANCE OF CURRENT STRATEGY

22. THREATS COME FROM THE CUSTOMERS THE COMPETITORS

23. PROCESS OF SEARCH FOR OPPORTUNITY INSIDE -OUT APPROACH OUTSIDE -IN APPORACH

24. ENVIRONENTAL ANALYSIS-1 ECONOMIC SOCIAL POLITICAL TECHNOLOGICAL REGULATORY COMPETITOR

25. ENVIRONENTAL ANALYSIS-2 CONSIDER ALL THE CONSTITUENT MEMBERS DIFFERENT ANALYTICAL TOOL REQD. FOR EACH COMPONENT EACH TOOL DIFFERS FROM OTHERS IN TERMS OF PRECISION

26. ENVIRONENTAL ANALYSIS-3 SOME APRIORY DEFINITION OF MARKET IS ALWAYS REQUIRED FOR ANALYSIS ENVIRONENTAL ANALYSIS IS UNIQUE TO THE STRATEGIST PROPER DESCRIPTION OF STRENGTH / WEAKNESS IS EXTREMELY CRUCIAL

27. STRATEGIC ADVANTAGE PROFILE • Marketing + Product line is extensive, and service is excellent • - Channels of distribution are weak in the southwest. • R&D - No R&D performed. • Operations + Excellent sourcing for raw materials. • - Facilities are old and becoming outdated. • Corporate o Company size is about average for the industry. • o Profits have been consistent but average. • - Union employees complain frequently. • Finance + Balance sheet shows ability to obtain needed capital; low working capital • position & debt-equity ratio,high and favorable stock price. • Note: + indicates strength; o indicates neutral; • - indicates weakness.

28. PHYSICAL INFRASTRUCTURE HOW WELL DO THEY MEET THE REQT. OF BUSINESS? FINANCIAL RESOURCES HUMAN RESOURCES ORGANISATIONAL RESOURCES VERY WELL STRENGTH NOT VERY WELL WEAKNESS HOW DO THEY COMMPARE WITH COMPETITOR CAN STRENGTHS BE TRANSFERRED TO ANOTHER BUSI BETTER AS GOOD INFERIOR KEY VULNERABILITY COPETITIVE ADVANTAGE DISTINCTIVE COPETENCE MEETING BUSI REQUIREENTS

30. Personality Traits Required for the Strategist 1. Perspective - Corporate, Perspective, - Neutrality towards functional areas 2. Orientation - Long term orientation - Integrative ability to mobilise support 3. Competencies - Ability to see opportunities - Ability to see strengths (No resource myopia) - Ability to generate alternative solutions - Ability to elaborate (see through the issue tree) - Ability to develop coherent Plan for Implementation - Ability to' create vision--excite the key executive - Develop supporters for implementation - Ability to empower the subordinates 4. Style - Participative (genuine, not due to fear of subordinates) ~ - Concern for subordinates development as key for the organisation growth - Operate through systems/policies rather than adhocism 5. Makeup - Stick to his guns, fearless - High stress threshold - Commitment to ideals and moral values - Desire to learn, update

31. HRD Interventions for Grooming the Strategists Exposure - external training, seminars, conferences related to strategic management, - rotate in multifunctional tasks, if he succeeds Assignment - variety, complex, unclear Freedom - to experiment, sanctioned pilferage of resources, permit violations of rules Evaluation - examine decision making process: the issues tree considered, functional biases if any, - innovation brought, integrated thinking - evaluate for end result -the effectiveness, - make efficiency as an integral part of evaluation - evaluate on creative problem solving skills - evaluate on and make change agentry an integral part of evaluation Reward - explicit, public Protection - give protection from superiors, peer group members for change and innovation effected Subordinate - has he been able and devotes to the empowering development in the subordinates Vision - organise and encourage vision creation exercise Competition

32. Financial Performance • Economic value Added • Profitability • Growth • Financial Risks • Competitive Advantage • Differentiation • Low Cost • Quick Response • Structural Position • Rivalry Customers • Entrants Supplies • Substitutes • Process Execution • Product Development • Demand Management • Order Fulfillment • Enterprise Synergies • Core Competencies • Market Power • Shared Infrastructure • Balanced Cash Flows • Transnational Advantages • Organisational Capacity • Leadership • Learning • Leverages