BPSM Notes
BPSM Notes
BPSM Notes
strategy
Strategy means putting things in place carefully, and with a great deal of thought. It is the opposite of just waiting for things to happen. In a changing environment one of the most difficult things in business is to know when to stick to your strategy and when to change it.
Art & science of formulating, implementing, and evaluating, cross-functional decisions that enable an organization to achieve its objectives.
Another definition
The process which deals with the fundamental organizational renewal and growth with the development of strategies, structures, and systems necessary to achieve such renewal and growth, and with the organizational systems needed to effectively manage the strategy formulation and implementation processes
Strategy Formulation
Vision & Mission External Opportunities & Threats Internal Strengths & Weaknesses Long-Term Objectives Alternative Strategies Strategy Selection
Strategy Implementation
Strategy Evaluation
Mission
Mission is a statement which defines the role that an organization plays in a society.
Environmental Appraisal
The environment of any organization is the sum of all conditions, events and influences that surround and affect it It is therefore crucial for any organization to understand the environmental influences on its business.
Characteristics of Environment.
It is complex. It is dynamic. It is multi-faceted. It has a far-reaching impact.
Components contd..
2) Technological Environment: Sources of technology. Technological development, R&D, cost of technology. Effects of technology on environment, human beings.
Components contd..
3) Supplier environment: Cost, availability, and continuity of supply of raw material, components, parts. Infrastructural support and availability of the different factors of production.
Components contd..
4) Economic environment: The economic stage at which the country exists at a given point of time. The economic structure adopted, capitalistic, socialistic or mixed. Economic policies Per capita income, balance of payments (export-import balance)etc.
Components contd..
6) Political environment: The political system and its features Political stability. Political funding of elections. Governments role in business.
Components contd..
7) Socio-cultural environment: Demographics like population, its density and distribution, age composition, inter state migration, income distribution etc. Socio-cultural concerns like environmental pollution, consumerism, corruption etc. Family structure changes.
Components contd..
8) International environment: Globalization process. Global economic forces. Global trade and commerce. Global financial system. Global markets and competitiveness. Global communication Global technology and quality systems.
Organizational Appraisal
It deals with the internal environment of the organization. Internal environment constitutes of behavior, strengths, weaknesses, synergy and competencies, all these put together determine the Organizational capability
Organizational appraisal
Organizational Resources. Tangible and intangible resources: All assets, capabilities, organizational processes, information, knowledge. Physical resources: Technology, plant, equipment, location, access to raw material etc.
Organizational behavior
It is the process of various forces and influences operating in the internal environment of an organization that create the ability for usage of resources. It leads to the development of a special identity and character of an organization.
Competencies
Competencies are special qualities possessed by an organization that make them withstand pressures of competition in the market place. When a specific ability is possessed by a particular organization exclusively or in a large measure it is called as distinctive competence.
Organizational capability
It is the inherent capacity or potential of an organization to use its strengths and overcome its weaknesses in order to exploit opportunities and face threats in an external environment.
Strategic advantage
These are the outcome of organizational capabilities. They are the result of organizational activities leading to rewards in terms of financial parameters.
Functional capabilities.
Strengths supporting Financial capability. Access to financial resources. Good relationship with financial institutions. High level of credit- worthiness. Low cost of capital compared to rivals. High level of share holders confidence.
Marketing capabilities
Wide variety of products. Better quality of products. Sharply-focused positioning. Effective distribution system. Effective sales promotion. Effective MIS.
Operations capabilities
High level of capacity utilization. Favorable plant location. Reliable sources of supply. Effective control of operational costs. Good inventory control system. High caliber R&D people. Technical collaborations.
SWOT Analysis.
S: Strengths. W: Weaknesses. O: Opportunities. T: Threats
Strength
It is an inherent capacity which an organization can use to gain strategic advantage. E.g. superior r&d skills which can be used for new product development.
Weakness
It is an inherent limitation or constraint which creates strategic disadvantage. E.g. over dependence on a single product line, which could be risky in crisis.
Opportunity
It is a favorable condition in the organizations environment which helps it to consolidate and strengthen its position. E.g. growing demand for the products or services that a company provides.
Threats
It is unfavorable situation in the organizations environment which creates risk for, or causes damage to, the organization. E.g. emergence of strong new competitors who are offering stiff competition.
Stability strategy
Is adopted by on organization when it attempts at an improvement of its functional performance by marginally changing one or more of its business. E.g. A copier machine company provides better after sales service to improve its image and product image too.
Expansion strategy
This strategy is followed when a company aims at high growth by increasing the scope of one or more of its businesses in terms of their respective customer groups, functions and technology.
Retrenchment strategy
This is followed when a company aims at contraction of its activities through substantial reduction or elimination of its business. E.g. A pharmaceutical company may withdraw from its retail operations so that it can focus on institutional/bulk sales.
Combination strategy
This is followed when a company adopts a mixture of all the strategies either at the same time in its different businesses, or at different times in the same business with the aim of improving its performance.
Functional Strategies.
Financial plans and policies: It means, 1) Sources of funds( borrowings, reserves & surplus) 2) Usage of funds( capital investment, loans, dividend decisions) 3) Management of funds (system of finance, accounting, budgeting)