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Strategy. Strategy. Current set of plans,decisions & objectives that have been adopted to achieve the organizational goals. Organizational Purpose. Organizations are created for a purpose called the overall goal or mission. Mission. Called official goal

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strategy1
Strategy
  • Current set of plans,decisions & objectives that have been adopted to achieve the organizational goals
organizational purpose
Organizational Purpose
  • Organizations are created for a purpose called the overall goal or mission
mission
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
vision
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."
values
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".
some vision statements
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
operative goals
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
operative goals contd
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
operative goals contd1
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
goal type their purpose importance
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

thinking strategically
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
strategy2
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)
three levels of strategy in organizations types of strategy

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)
chandler
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
limitations of chandler s work
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
porter s competitive strategy
Porter’s Competitive Strategy
  • Use one of the three which gives you competitive advantage
  • Cost
  • Differentiation
  • Focus
porter s competitive strategy cost
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
porter s competitive strategy differentiation
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
porter s competitive strategy focus
Porter’s Competitive Strategy: Focus
  • This approach aims at a competitive advantage in a narrow segment
structural implications of porter s model
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.
miles and snow s strategy typology
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)
miles and snow s strategy typology cont d
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
organization design outcomes of strategy
Organization Design outcomes of strategy
  • Strategy:Differentiation
  • Org. design:Learning Orientation, flexibility, strong horizontal coordination,emphasis on R&D,customer intimacy, risk taking
organization design outcomes of strategy1
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
miller
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
strategy structure relationship
Strategy-Structure Relationship
  • Structure follows strategy as changing structure is a slow process