Business Policy and Strategic Management.pptx

Business policy and strategy management

1. Business Policy and Strategic Management Unit-1

2. Business policies are the guidelines developed by an organization to govern its actions. They define the limits within which decisions must be made. Business policy also deals with acquisition of resources with which organizational goals can be achieved. Business policy is the study of the roles and responsibilities of top level management, the significant issues affecting organizational success and the decisions affecting organization in the long-run. Business Policy defines the scope or spheres within which decisions can be taken by the subordinates in an organization. It permits the lower level management to deal with the problems and issues without consulting top level management every time for decisions.

3. Business Policy deals with decisions regarding the furture of an ongoing enterprise. Such policy decisions are taken at the top level after carefully evaluating the organisational strengths and weaknesses(in terms of product, price, quality, leadership position, resources, etc.) in relation to its environment. The policy decisions shape the future of the company, channel the available resources along desired lines and direct the energies of people working at various levels towards predetermined goals.

4. As and when circumstances change in a major way, the firm is forced to shift gears, rethink and reorient its policies. Policies are basically formulated by the two - management or the general management for guiding, directing and facilitating the thinking and acting process of the various functional executives, to ensure the best contribution towards the corporate objectives and goals. Policy can either is formal or informal, which can be applied, implied or imposed.

5. It originates from the top management for the express purpose of guiding themselves and their sub­ordinates to make use of their operational tools as effectively as possible. It also enables to set objectives for the whole organization in general and for the various functional areas in particular. It is the corporate policy that creates a sense of mission and purpose in the executive value judgment, and in their managerial operations, because a direct and purposeful preparation to face the challenges, opportunities and threats of the day-to-day business activities, is provided by the business policy from time to time

6. Shaping high-level, long-range corporate objectives and strategic that will be matched, to both company capacities and to external realities in a world marked by rapid technological, economical, social and political change. Casting up an effective well-matched set of general policies for the pursuit of that strategy. Guiding the organization in accordance with that strategy. According to Edmund, the associates’ business policy is concerned with the top management function of:

7. Perception of industry and economic trends that affect the prospects of the economy. Clearly understanding the needs, opportunities, threats, strengths, weakness and problems. Selecting the best opportunity or opportunities from an array of them, this can cope with the capacity of the company. Formulating of a strategy taking into account the opportunity and availability of resources. Development of operating plans for the pursuit of the chosen strategy and policies. Creation of organizational relationships, organizational climate, and an atmosphere for the proper implementation of policy. Evaluating the performance and the progress, and Periodic re-evaluation of positions in the light of developments within the organization and its environment. The mission of the top management is influenced by the policy at various levels and phases. They are:

8. Business policies cover such a wide variety of subjects and are so broad-based that every possible matter that affects the interests of any one in the organization, the community and the government are included in them. In fact, business policies cover all the functional areas of business- production, marketing, personnel and finance. These functional areas are generally covered by the term as “major policies” and “minor policies”.

9. Features of Business Policy An effective business policy must have following features- Specific-  Policy should be specific/definite. If it is uncertain, then the implementation will become difficult. Clear-  Policy must be unambiguous. It should avoid use of jargons and connotations. There should be no misunderstandings in following the policy. Reliable/Uniform-  Policy must be uniform enough so that it can be efficiently followed by the subordinates. Appropriate-  Policy should be appropriate to the present organizational goal. Simple-  A policy should be simple and easily understood by all in the organization. Inclusive/Comprehensive-  In order to have a wide scope, a policy must be comprehensive. Flexible-  Policy should be flexible in operation/application. This does not imply that a policy should be altered always, but it should be wide in scope so as to ensure that the line managers use them in repetitive/routine scenarios. Stable-  Policy should be stable else it will lead to indecisiveness and uncertainty in minds of those who look into it for guidance.

10. It should cover all the aspects of business. It includes the functions and responsibility of senior employees. Deal with determination of future course of action. Involves a choice of purpose and defining the needs. Include the resources by the help of which organization can achieve its goal. Scopes of Business Policy:

11. Difference between Policy and Strategy The term “policy” should not be considered as synonymous to the term “strategy”. The  difference between policy and strategy  can be summarized as follows- Policy is a blueprint of the organizational activities which are repetitive/routine in nature. While strategy is concerned with those organizational decisions which have not been dealt/faced before in same form. Policy formulation is responsibility of top level management. While strategy formulation is basically done by middle level management. Policy deals with routine/daily activities essential for effective and efficient running of an organization. While strategy deals with strategic decisions. Policy is concerned with both thought and actions. While strategy is concerned mostly with action. A policy is what is, or what is not done. While a strategy is the methodology used to achieve a target as prescribed by a policy.

12. Planning is the process of deciding in advance what should be accomplished and how to achieve them. Strategic planning unlike short-term planning involves an extended time-frame, the deployment of a large percentage of the resources of an organisation , a wide spectrum of activities and a major eventual impact. Planning is carried out at the macro and micro level. Managers need to create broad objectives and mission statements as well as take care of the day-to-day running of the company. Planning in Management: Strategic, Tactical and Operational Plans

13. A strategic plan is a high-level overview of the entire business, its vision, objectives and values. This plan is the fundamental basis of the organization and will dictate long-term decisions. The managers of each level will be based on the strategic plan to guide their decisions. It will also influence the culture within the organization and how to interact with customers and the media. Therefore, the strategic plan for business must look forward, be robust but flexible, and be focused on accommodating future growth. The key components of a strategic plan are: 1. Vision How do you want to influence the world? These are some of the questions you should ask yourself when shaping the vision of your organization. It’s fine if this vision is great and idealistic. If there is a place to add some romanticism to a plan, it is here. Clinging to ambitions such as “leaving a mark on the Universe” (Apple / Steve Jobs) is acceptable, as is the more realistic version of creating “the most customer-focused company on Earth” (Amazon). The Strategic Plan

14. 2. Mission The mission statement is a more realistic view of the purpose and ambitions of the company. Why does the company exist? What are you trying to achieve during your existence? A clothing company may want to “bring high urban fashion to the masses,” while a nonprofit company may want to “eradicate polio.” 3. Values “Inspire. Get higher and further. Innovate. Ooze passion Stay humble Have fun. “These are not fragments of a motivational speech, but the values ​​of Fab.com. As Fab , each organization has its own values. These values ​​will guide the managers and influence the type of employees they hire. There is no template to lean on when you list your values. You can write a 1000 page essay, or something as simple as Google’s “Do not Be Evil” – it’s all up to you.

15. The tactical plan describes the tactics that the organization plans to use to achieve the ambitions described in the strategic plan. It is a short-term document ( ie with a scope of less than one year), low level that breaks down the broad mission statements into smaller and executable pieces. The creation of tactical plans is usually carried out by middle level managers. The tactical plan is a very flexible document; It can contain anything and everything necessary to achieve the goals of the organization. 1. Specific Goals with Deadlines Suppose the purpose of your organization is to become the largest shoe distributor in the city. The tactical plan will start this great ambition in smaller and processable goals. The goals should be very specific and set deadlines to encourage action – expand to two stores within three months, grow to 25% per quarter, or increase revenues to $ 1mn within six months, and so on. 2. Budgets The tactical plan must list the budget requirements to achieve the goals specified in the strategic plan. This must include the budget to hire personnel, marketing, supplies, manufacturing, and execute day-to-day operations of the company. Listing the output and input flows is also a recommended practice. The Tactical Plan

16. 3. Resources The tactical plan should list all the resources available to achieve the objectives of the organization. It must include human resources, IP, cash resources, etc. Again, it is advised to be highly specific. 4. Marketing, Financing, etc. Finally, the tactical plan should list the immediate strategy of marketing, supplies, financing, manufacturing, distribution, and PR. Its scope must be aligned with the goals described above.

17. The operating plan describes the day-to-day running of the company. The operational plan draws a roadmap to achieve tactical objectives within a realistic time frame. This plan is very detailed and emphasizes short-term objectives. Creating the operational plan is the responsibility of the low level managers and supervisors. The operational plans can be single-use, or continuous use, as described below: 1. Single Use Plans These plans are created for events / activities that will only happen once. This can be a sales program, a marketing campaign, a selection process, etc. unique and exceptional. Single Use plans are usually very specific. 2. Permanent Plans These plans can be used in multiple configurations permanently. The permanent plans can be of several types, namely: Policies:  A policy is a general document that dictates how managers should address a problem. It influences decision-making at the micro level. Specific plans on hiring workers, finalizing the  relationship with suppliers , etc. they are examples of policies. The Operational Plan

18. Rules:  The rules are specific regulations according to which the company works. The rules have a rigid character and must be strictly complied with. “Do not smoke inside the facilities” or “Employees must show up at 9 am” are two examples of rules. Procedures:  A procedure describes a step-by-step process to achieve a certain objective. For example: most organizations have detailed guidelines for hiring or training workers, or for the supply of raw materials. These guidelines can be called procedures. Permanent plans are created with an ad-hoc character but can be repeated and changed as necessary. The operational plans align the strategic plan of the company with the day to day of the company. This is where the macro meets the micro.

19. It refers to the steps by management converts a firm’s mission, objectives and goals into a workable strategy. It has two parts- Information Process – It involves collecting and analysing information about the external and internal environments Decision process – It covers four steps – Development of alternatives Choice Implementation Assessment Strategic Management Process

20. Strategic Analysis Strategic Choice Strategy implementation Strategy Evaluation Elements of Strategic Management

21. Environmental Scanning-  Environmental scanning refers to a process of collecting, scrutinizing and providing information for strategic purposes. It helps in analyzing the internal and external factors influencing an organization. After executing the environmental analysis process, management should evaluate it on a continuous basis and strive to improve it. Strategy Formulation-  Strategy formulation is the process of deciding best course of action for accomplishing organizational objectives and hence achieving organizational purpose. After conducting environment scanning, managers formulate corporate, business and functional strategies. Strategy Implementation-  Strategy implementation implies making the strategy work as intended or putting the organization’s chosen strategy into action. Strategy implementation includes designing the organization’s structure, distributing resources, developing decision making process, and managing human resources. Strategy Evaluation-  Strategy evaluation is the final step of strategy management process. The key strategy evaluation activities are: appraising internal and external factors that are the root of present strategies, measuring performance, and taking remedial / corrective actions. Evaluation makes sure that the organizational strategy as well as it’s implementation meets the organizational objectives.

22. Core Competence – It is something that an organization does exceptionally well in comparison to its competitors. E.g - superior research and development, mastery of a technology etc. Synergy – When organisational parts interact to produce a joint effort that is greater than the sum of the parts acting alone, synergy occurs. Managers need as much market, cost, technology and management synergy as possible when arriving at strategic decisions. Value Creation – Value if the sum total of benefits received and costs paid by the customer in a given situation Purposes of Strategic Management Process

23. Step I- Strategic Analysis External Analysis Internal Analysis Step II – Strategic Intent Vision Mission Objectives Goals Steps in the Strategic Management Process

24. Corporate Level Strategy Formulation Growth /Expansion Strategy Stability Strategy Retrenchment Strategy Combination Strategy Strategy Formulation

25. Business Level Strategy Formulation Functional Level Strategy Formulation Research and Development Strategy Operations Strategy Marketing Strategy Human Resource Strategy

26. Strategic Intent- It is the leveraging of a firm’s internal resources, capabilities and core competencies to accomplish the firm’s vision, mission and objectives in a competitive environment. The hierarchy of Strategic Intent : A broad vision of what the organization should be The organization's mission The strategic objectives and specific goals to be pursued relentlessly The plans that are developed to accomplish the intentions of management in a concrete way Strategic Intent- Vision, Mission and Objectives

27. An inspirational picture of a future that can be created , offering clarity amidst confusion, hope against despair, and unity of purpose amidst diversity of personal causes. Vision

28. Clarity Reachable and achievable Brevity Building a vision Creating a shared vision Strategic gains of a definitive vision Basic elements of a vision statement

29. Harley Davidson Their vision is “To fulfil dreams through the experiences of motorcycling.” Toyota Their vision is “Toyota will lead the way to the future of mobility, enriching lives around the world with the safest and most responsible ways of moving people.” Disney Their vision is “To make people happy.” Netflix Their vision is “Helping content creators around the world to find a global audience.” Nestle Their vision is “To bring consumers safe, high quality foods that provide optimal nutrition.” Examples

30. Facebook Their vision is “To give people the power to share and make the world more open and connected.” Google Their vision is “To organize the world‘s information and make it universally accessible and useful.” Trip Advisor Their vision is “Help people to have the best possible trip.” Philips Their vision is “Improving people’s lives through meaningful innovation.”

31. “The mission reflects the essential purpose of the organisation , concerning particularly why it is in existence, the nature of the business( es ) it is in, and the customers it seeks to serve and satisfy” Mission

32. Clarity Broad and enduring Identity and image Realistic Specific Values, beliefs and philosophy Vision Dynamic Features

33. Reference Point Educative Value Motivating Force Productive use of resources How does Mission help the firm?

34. Components of a mission statement

35. Objectives and Goals

36. Critical Success Factors , also known as Key Results Areas, are the areas of your business or project that are vital to its  success . Identifying and communicating CSFs within your organization helps to ensure that your business or project is focused on its aims and objectives.