3 LEVELS IN ORGANISATION Corporate Level — It includes CEO , BOD, Other Senior Executives & Corporate Staff They make strategies define mission & goals , which Business we should start & allocate resources in which area Business Level — It includes Divisional Level Managers & Staff They make strategies of their Business Units , these are Business Level Heads who make strategies specific to their particular Business Funtional Level — It includes Functional Managers They are responsible for specific Business Functions or operations STRATEGIC MANAGEMENT IN MEDICAL ORGANISATION Modern Hospitals are creating new strategies for treatment of Chronic Diseases Pathological Laboratories have started collecting door to door samples Chronic care will require day treatment _ user friendly ambulance services, electronic monitoring at home etc Backward Integration Strategies include acquiring ambulance services , waste disposal services & diagnostics services Today medical services are provided over Internet STRATEGIC MANAGEMENT IN EDUCATIONAL INSTITUTES They are using management techniques for attracting best students There is significant change in competitive climate The education system has gone considerable change with introduction of computer & internet technologies They have joined hands with Industries to make graduates more employable Lectures can be accessed anytime anywhere STRATEGIC MANAGEMENT IN GOVERNMENTAL AGENCIES & DEPARTMENTS All departments are using Strategy of How to use taxpayers money in most cost effective way to provide services & programs But they are not have complete autonomy like Private companies They are using techniques to develop & substantiate formal requests for additional fundingCHAPTER 1 INTRODUCTION TO STRATEGIC MANAGEMENT Importance of Strategic Management Proactive LCD STRATEGY Strategy is between What we are & What we want to be It helps us in being Pro-active instead of being reactive It is framed to achieve goals It helps to enhance longevity of It seeks to relate goals of organization to J Business by analysing environment means to achieve them It serves as Corporate Defence It is Long Range Blue Print of the jj Mechanism against mistakes organization It helps to develop Core Competencies & Competitive Corporate Strategies are formulated by Advantage Top Level It gives framework for all major Strategy is partly Pro-Active & partly decision of orgsnization Reactive It gives Direction to the Company Strategy is no substitute for sound , alert & J to move ahead responsible management It can never be perfect , flawless & optimal So always allowances are made for possible miscalculations & unanticipated events Limitations of Strategic Management (4C’S) Environment is Highly Complex , it is difficult to understand the whole environment & then make strategy SM is time-consuming process , because it takes lot of time to prepare strategy It is Costly Process , since it involves Top Level in making decisions In Competitive Scenario , it is difficult to estimate Competitive responses to ourCOMPETITIVE LANDSCAPE STEPS TO UNDERSTAND COMPETITIVE LANDSCAPE Identify the Competitor Understand the Competitor Determine the Strengths of Competitor Determine the Weakness of Competitor Put all the Information together METHODS OF INDUSTRY & COMPETITIVE ANALYSIS Dominant Economic Features of the Industry Nature & Strength of Competition Triggers of Change Identify Strongest & Weakest Companies Likely Strategic move of rivals Key Factors for Competitive Success Prospects & Financial Attractiveness of Industry CORE COMPETENCE Core Competency is combination of skills and techniques rather than individual skill or technique that serve as competitive advantage It is sum of 5-15 areas of developed expertise and it cannot be single skill or technique CORE Competency can be identified in 3 areas: Competitor Differentiation Customer Value Application of Competence 4 CRITERIA TO DETERMINE CORE COMPETENCIES: (N-CRV) Non-Substitutable Costly to Imitate Rare Valuable GLOBALISATION CHARACTERISTICS OF GLOBAL COMPANY It is conglomerate of multiple units but linked by common ownership They have common pool of resources such as money , credit information , patents , trade names & control systems They have some common strategy. Besides its managers and shareholders are also in different nation WHY COMPANIES GO GLOBAL ? Need to Grow in other parts of the globe Rapid shrinkage of time and distance due to faster communication , transportation etc Domestic markets are no longer adequate and rich Reliable or cheaper source of raw material , cheap labour etc Set up overseas plants to reduce high transportation cost Overseas manufacturing plants and sales. branches to generate higher sales To form strategic alliances & leverage competitive advantagesThis model is known as Business Planning Matrix, GE Nine-Cell Matrix & GE Model Itis used for resource allocation in a diversified company. In this organisation can classify their products in 4 types : Ituses 2 things Business Strength & Market Attractiveness whereas BCG considers Relative Market Share & Market Growth STARS are products that are growing rapidly and need heavy investment to maintain their position and finance their growth potential. Strategy for them is HOLD & maintain market share In Green Business must expand , to invest and grow If Amber or Yellow it needs caution and managerial Cash Cows are low growth , high market share discretion is called for strategic decision products . They generate cash and have low costs. Strategy is HARVEST, increase Short term cash flow Ifin Red Zone, it will ead to losses , soit be retrenchment , divestment or liquidation Question Marks are problem child, low market share , high growth market. They require lot of cash to hold their share , and need heavy investment with low potential to generate cash. Strategy is BUILD & increase market share 7 “ It is portfolio analysis technique based on product life cycle. It measures the business strength of product or SBU’s based on one of the S competitive positions such as Dogs are low growth , low share business and products. They generate cash to maintain themselves , but do not have much future. Strategy is Divest , that is sell or liquidate business Dominant - It is rare position and is due to either a monopoly or strong and protected technological leadership Strong ~ Firm has considerable power to choose it’s ‘own strategies without it’s market position threatened by it’s competitors Introduction — In this competition is negligible, prices are high , markets are limited. Growth in sales is at lower rate because of lack of customer knowledge Favourable ~ in this no competitors stand out , but this we have reasonable degree of freedom due to market leaders Tenable - Although firms in this category are doing good , there are generally vulnerable because of strong competitors Growth — In this stage demand expands rapidly , prices fall, competition increases and market expands. Customer has knowledge of product and shows interest in purchasing. Maturity ~ Competition gets tough and markets are stabilised. Profit comes down because of stiff competition , organisation works for maintaining stability Weak - Performance is not satisfactory , although opportunities for improvement do exist Decline — Sales & Profit falls down sharply as new product replaces old , so either we can do diversification or retrenchment It is used for applying portfolio approach It is similar to learning curve which explain efficiency gained by workers through repetitive productive work It is based on concept that cost will decline as we increase volume of praduction due to experience It is due to various reasons like economies of scale , product redesign & technological improvements in productionANSOFF PRODUCT MARKET GROWTH MATRIX SWOT ANALYSIS MARKET PENETRATION - It refers to growth strategy where we focus on existing products and existing markets. We can do this by greater spending on advertising , aggressive promotion , new product dimensions , pricing strategy so new entrants don’t come Logical Framework of Analysis — Based on SWOT , we can generate various alternative strategies and choose the strategy based on environmental opportunities & threats MARKET DEVELOPMENT — Refers to Growth Strategy where we will expand existing products in new markets. This can be achieved by new markets , new product dimensions or packaging , new distribution channels or different pricing policy to create new market segments PRODUCT DEVELOPMENT ~ Refers to Growth Strategy where business aims to expand new products in existing markets. It requires development of new ‘competencies and requires business to develop modified products which can appeal existing markets Presents a Comparative Account — By matching Internal Strength and Weakness with external Opportunity & Threat, we can get certain pattern of relationships which will help in making strategy Guides Strategy in Strategy Identification — After seeing all the patterns , SWOT guides strategist to think of over all position of organisation that helps to identify major purpose of strategy under Diversification — It is Growth Strategy where we will focus market New Products in New Markets. It can be by starting or acquiring business outside the company . It is risky because we have no position of that product in ‘the market STRATEGIC BUSINESS UNITS SBU is a unit of company that has separate mission and objectives which can be run independent from other company business SBU can be company division , product line in a division , single product or brand It is common in organization that are in multiple countries TOWS Matrix 4 Kinds of Strategic choices are there : SO — It is benefit that firm tries to achieve. Strength is used to capitalize or build upon opportunity. ST Position in which firm strives to minimize threats through using its strengths It has 3 characteristics (MCC) Manager who is responsible for planning & profit It has it’s own set of competitors It has single business or collection of related business that can be planned separately WO- Position firm needs to overcome Weaknesses and make attempt to exploit the opportunities to maximum WT - Position firm will try to avoid. They have to struggle for survival , In this we should overcome weakness and cope with threatsSTRATEGIC DECISION MAKING According to Jaunch & Glueck “ Strategic decisions cover the definition of business , products to be handled , markets to be served , funtions to be performed & major policies needed for organization to achieve Strategic Objectives” Major Dimensions of Strategic Decisions are : It requires Top Management involvement It involves Commitment of Organizational Resources We need to Consider Firm’s External Environment They have Significant impact on Long Term Prosperity of Firm They are Future Oriented They have Major Multifunctional or Multi-Business Consequences It is set for Future It tell us “ WHERE WE WANT TO BE “ It will define Directional Path company should take in product , market , customer or technology It will communicate management aspirations to the stakeholders It is road map of Company's Future 3 Elements of strategic vision are: WE ARE & WHERE ARE WE NOW” * Using Mission for deciding long term choices about “WHERE WE ARE GOING” that would arouse Organization wide Commitment Essentials of strategic vision It helps to think creatively about How to Prepare a Company for future It is exercise in intelligent Entrepreneurship it gives Direction in which Organisation is headed + Coming up with a Mission that conveys ” WHO + Communicating Vision in clear , exciting terms Creates Enthusiasm among members of organization It refers to purpose of the organization what organization wants to achieve through strategies Senior Managers must define “ what they want to do “ & “why they want to do“ It is statement which helps organization achieve Vision It defines long term marketing position which organization desires to create or occupy It is in the form of Vision & Mission at Corporate Level Why we should have mission ? To ensure Common Purpose within organisation To establish General tone of organisation To develop a basis for allocating resources To provide a basis for motivating use of organisational resources Serve as “FOCAL POINT” for organisational Purpose & Direction It gives Work Structure for achievement of Objectives & Goals It specifies Organisational Purpose & translation of these purpose into Goals that can be assessed in terms of Cost , Time & Performance parameters THINGS TO BE KEPT IN MIND WHILE WRITING MISSION It should give special identity to Organisation & path for development They are Unique for the organization Itis defined by what needs it is trying to achieve, Customer groups it is targeting , Technology & Competencies it uses & Activities it PerformsObjectives are precise & expressed in specific Purpose to which our efforts terms are directed They are framed to achieve Goals They are Generic They are organization's performance targets They are long term They help in allocation of resources They serve as Benchmark for Organisational activity To achieve Long Term Prosperity we establish Long CHARACTERISTICS OF OBJECTIVES Term Objectives in 7 Areas: They are Concrete & Specific They should be Measurable & Controllable CEPT They should be within constrains of Competitive Position Organisation resources & External Employee Development Environment Employee Relations They should relate to time frame Profitability They should be Challenging Productivity They should provide standards for Public Responsibility Performance appraisal Technological Leadership They should help in achievement of mission & purpose They provide basis for Strategic decision making STRATEGIC MANAGEMENT MODEL STRATEGIC MODEL INVOLVES FOLLOWING STEPS : Develop a Strategic Vision & Formulate Mission , Goals & Objectives Environmental & Organizational Analysis Formulation of Strategy Implementation of Strategy Strategic Evaluation & Control tsEXPANSION STRATEGIES 4 TYPES INTENSIFICATION DIVERSIFICATION MERGER ALLIANCE MERGER Vertical - It is merger of 2 or more organisation that are operating in same industry but at different stages of production or distribution system . This leads to increased synergies with merging firms Horizontal - It is merger of 2 or more organisation in same industry , can be merger with direct competitor , to achieve economies of scale , reducing duplication of work , avoiding competition , reduction in fixed cost & working capital ete Congeneric — In merger of 2 or more organisation that are associated in some way either through production process or business market or basic required technologies. Conglomerate - It is combination of organization that are unrelated to each other. There is no linkage with respect to customer groups , functions or technologies used . INTENSIFICATION Market Penetration ~ in this we will direct our resource towards Profitable Growth of existing products in existing market . Market Development — In this we will market existing products to New Markets by changing content of advertising or Promotional media Product Development — It involves substantial modification of existing products that can be marketed to current customers through established channels ALLIANCE Alliance is 2 or more Business that enables each other to achieve strategic objectives which neither would have achieved on it's own In this both partners maintain their status as independent & separate entities , share benefits & control & continue to make contribution till alliance is terminated Advantages (ESOP) Economic Strategic Operational Political Disadvantages Sharing — In this we need to share resources , knowledge , skills . It can create competitiors when they decide to break the alliance DIVERSIFICATION Vertically Integrated Diversification — In this firms opt to engage in Business that are related to existing Business HORIZONTAL ~ Acquisition of one or more similar Business operating at same stage of production ~ marketing chain that is offering similar product or taking over competitor's products CONCENTRIC ~ in this New Business is linked through existing Business through process , technology or marketing . New Product is spin-off from existing product through products / processes. CONGLOMERATE ~ In this there is no linkage , new products are totally different from existing products in every way, it is UNRELATED DIVERSIFICATION.CORPORATE / GRAND / DIRECTIONAL STRATEGIES STABILITY They are of 4 types : STABILITY EXPANSION RETRENCHEMENT COMBINATION Stability Strategy is done when companies continue in same markets & deals in same products It focus on Incremental Improvement It does not involve redefinition of business Safety oriented , status-quo strategy Less risky & Less Investment Involves minor improvement & not drastic changes EXPANSION TURNAROUND When Organisation substantially reduces it’s It involves Redefining the Business by Wf cone of activity it follows this enlarging scope of Business It involves Dynamism , Vigour , Promise & Success It involves new products , markets & technology , innovation decisions etc It is risky & highly versatile strategy It involves Diversifying , Acquiring & Merging Business It involves Fresh Investments & New Businesses/ Products / Markets When organisation focus on ways and means to reverse the process of decline , it adopts TURNAROUND STRATEGY If it cuts-off loss making units , divisions or SBU’s curtails its product line or reduces funtions performed , it follows DIVESTMENT STRATEGY If both don’t work , and it choose to close its business then comes LIQUIDATION STRATEGY COMBINATION In this we will adopt mix of Strategies for different Business of ONE Company . Eg — Stability in some areas , Expansion in some & Retrenchment in some. ACTION PLAN FOR TURNAROUND. Assessment of Current Problems Analyse the Situation & Develop a Strategic Plan Implementing an Emergency Action Plan Restructuring the Business Returning to Normal Organisation is large & faces Complex Environment Organisation has Several Business , each of which is Different industry requiring Different responseTHREAT OF NEW ENTRANTS AFirm Profits are higher than other firm when other firms are blocked from entering Industry New entrants can reduce profit because they can sell at lower process COMMON BARRIERS TO ENTRY IN NEW ENTRANTS ARE: CAPITAL REQUIREMENTS ECONOMIES OF SCALE PRODUCT DIFFERENTIATION SWITCHING COSTS BRAND IDENTITY ACCESS TO DISRIBUTION CHANNELS POSSIBILITY OF AGGRESSIVE RETALIATION BY EXISTING PLAYERS NATURE OF RIVALRY IN THE INDUSTRY Rivalry is more and Industry Profits are low when : Industry has no leader Huge Competitors in Industry Competitors operate with Fixed Cost They face High Exit Barriers Little opportunity to differentiate their offerings Industry faces slow or diminished growth FOR MORE DETAILS, PLEASE VI! BARGAINING POWER OF |) BARGAINING POWER OF BUYER SUPPLIERS Buyers can sometimes exert lot of pressure on existing firms to lower prices, this happens when : Suppliers can Influence Profit in number of ways : Their products are crucial and substitutes are not Buyers have full knowledge ff available of products & their substitutes They can erect high switching costs They are big buyers They are more Product is not critical to concentrated than their buyers and it is available Buyers elsewhere and there are substitutes available also THREAT OF SUBSTITUTES Substitutes are those which perform the same function or nearly the same as that of existing Products Threat of Substitutes is high in high ‘tech industries More Substitutes of the Product available , less Attractive & Profits Industry will earn3 GENERIC STRATEGIES COST LEADERSHIP DIFFERENTIATION FOCUS. FOCUS STRATEGY These are effective when consumers have different requirements & when rival firms are not attempting to specialise in same market In this we focus on particular group / market / product line segments that serve smaller market better than competitor who serve COST LEADERSHIP Itis low cost competitive Strategy that aims at broad mass market It requires huge cost reduction in procurement , production , distribution of production or service and also economies in overhead cost Because of lower cost , they can charge lower price and still make profits It should be used with Differentiation It is good when markets price- sensitive DIFFERENTIATION Itis aimed at mass market & creation of product / service that is perceived by customer as UNIQUE Unique can be in terms of Brand image , feature , technology , network or service Because of these we can charge premium price Risk is it can be copied by competitors Differentiation can be greater product , lower costs, improved service , more features , lesser maintenance etc broader market BASIS OF DIFFERENTIATION BEST COST PROVIDER STRATEGY PRODUCT Last Strategy is by combining all 3 PRICING Generic Strategies that aim at giving Seen more value to customer by — Low Cost & Upscale Differences ADVANTAGES OF COST & Objective is to keep cost lower than DIFFERENTIATION STRATEGY those of competitor Buyer It can be done by: . Supplier Offering Products / Services at Lower Price than those offered by Rivarly rivals Entrants Charging same price as of | Substitutes competitors with Much Higher Quality & Better FeaturesFINANCIAL STRATEGY It includes acquiring capital , developing projected financial statements / budgets , management / usage of funds & evaluation net worth of business. Some examples that require financial and accounting policies are : Raise capital with short or long term debt or equity Lease or Buy Assets Determine appropriate Dividend pay out ratio Extend the time of accounts receivable Establish discount on payment within specified time Determine amount of cash to be keptin hand EVALUATING NETWORTH OF BUSINESS - 3 APPROACHES First approach is stockholders equity . It is common stock , paid-in capital & retained earnings. After calculating net worth , add or subtract goodwill and overvalue or undervalued assets Second approach is 5 times of firm’s current annual profit. A S year average profit level can also be used or current year profits In third approach there are 3 methods : First selling price of similar company or SV Ce DEVELOPMENT STRATEGY R & D Strategy can play integral part in strategy implementation Guidelines which help in deciding R & D should be Internal or Outside If rate of technical progress is SLOW , Market growth is MODERATE , then Inhouse R&D is. solution , because it will create product monopoly which company can use If rate of technical progress is RAPIDLY , and market is growing SLOWLY , then effort in R&D is risky , because we might develop product for which there is NO MARKET If rate of technical progess is SLOW and market is ‘growing QUICKLY , then we should do ‘outsourcing R&D If both Technical Progress is FAST & market growth rate is FAST, then R&D should be obtained through acquisition of well established firm in industry 3 R & D APPROACHES FOR IMPLEMENTING ‘STRATEGIES First Approach is to be First firm to market technological products , it is great strategy but dangerous one ‘Second Approach is be Innovative Imitator of ‘successful products , thus minimizing risk and cost of start up. This strategy requires excellent R&D Staff and an excellent marketing department Third Approach is be Low Cost Producer by mass producing similar items , but less expensive than others . This requires huge investment in plant and equipment , but fewer expenditure in R&D "Second multiply average net income for last 5 "years with P/E ratio or Third multiply no of shares with market price per share and add premiumFUNCTIONAL LEVEL STRATEGY MARKETING STRATEGY. It is an activity performed by Business organisation In marketing it is more important to do what is strategically right rather than what is immediately profitable Some of the marketing decisions are as follows : Amount & Extent of Marketing Kind of distribution network to be used Price leader or follower Complete or limited warranty Limit or enhance the share of business to single or few customers Reward people based on fixed salary or variable commission or mix of both OBJECTIVES OF MARKETING Delivering Value to Customer - Main activity is to give value to customer , but it is combined efforts of all the departments and not only marketing Connecting with Customers — Companies today should be customer centred. They should choose the best market segment which they can serve better than competitors MARKETING MIX It consists of everything that firm can do to influence the demand for it’s product Product — Product means thing offered to target market . Decisions are made on managing existing product , add new ‘ones & drop failed ones. Product can be differentiated based on size , shape , colour , packaging , brand name , after sales services and so on, Price ~ Price is amount of money customers have to pay. We should keep in mind following things while setting price : Make product acceptable to customer Producing reasonable margin over cost Catering to market that helps in developing market share For new product we can either do Price Skimming or Price Penetration Place ~ It means place where product is available. One of the basic decision is to choose right marketing channel. Distribution policy adopted by company is also major factor. Strategies for intermediaries like wholesaler and retailer should be designed Promotion - 4 Methods of Promotion are : Personal Selling ~ In this there is face to face interaction with customer and high degree of personal attention to them. Not a cost effective way of reaching large number of customers Advertising — This includes brochures , newspapers , magazines , hoarding , display boards , radio , television and internet. Publicity ~ In this no payment are made to media for advertising. It includes press releases, conferences , reports, stories and internet releases Sales Promotion ~ Activities done for promotion other than above 3. It includes discount , contests , money refunds , instalments , kiosks , exhibition and fair that constitute sales promotion. Expanded marketing mix — Due to Services New P’S Are Added: People ~ All human actors play very important role in buyer's perception , namely the firm's personnel & customer Process ~ Actual procedures , mechanisms & flow of activities by which product or service are delivered Physical Evidence ~ Environment in which market offering is delivered and customer interact with firm FOR MORE DETAILS, PLEASE VISIT WWW.MRUGESHMADLANIHR helps in achieveing competitive advantage , if we keep in mind following things : Recruitment & Selection — Workforce will be more competent , if we can identify , attract and select most competent applicants Training - Training will help employees to perform their jobs properly Appraisal of Performance — We should evaluate performance to identify any deficiencies , so they can be solved through counselling , coaching or training Compensation —We can increase competency of workforce by offering pay and benefit packages that are more attractive than those of competitors STRATEGIC ROLE OF HR MANAGER Providing Purposeful Direction Building Core Competency Creating Competitive Advantage Facilitation of change Managing workforce diversity Empowerment of Human resources Development of works ethic and culture LOGISTICS MANAGEMENT- It ensures right materials are available at right place at right time of right quality and at right cost.SCM management helps in logistics and enables company to have constant contact with distribution team which consists of trucks , trains or any other mode of transportation. How can logistics help business Cost Savings,Reduced Inventory,|mproved Delivery Time,Customer Satisfaction,Competitive Advantage FOR MORE DETAILS, PLEASE VISIT \\ It is related to production system , Operational planning and control and logistics management. Production system is concerned with capacity , location , layout , product or service design , work systems , degree of automation , extent of vertical integration and such factors. Here the aim of strategy implementation is to see how efficiently resources are utilized and in what manner day to day operations can be managed to achieve long term objectives. It involves linkages between supplier, manufacturers and customers SCM is process of planning , implementing and controlling operations of supply chain operations It covers entire movement of RM , WIP & FG from point of origin to point of consumption IMPLEMENTING & SUCCESSFULLY RUNNING ‘SCM INVOLVES Product Development Procurement Manufacturing Physical Distribution Outsourcing Customer Service Performance Measurement W.MRUGESHMA DLStrategic Leadership sets direction by developing & communication vision of future , formulate strategies according to environment A Leader has to play various roles like Entrepreneur , Strategist , Culture builder , visionary , spokesperson , negotiator , motivator , arbitrator , policy maker , policy enforcer , listener and decision maker. Responsibilities of strategic leader Making Strategic decisions Formulating policies and plans to implement decisions Effective communication in organisation Managing change in the organisation Managing Human capital Creating & Sustaining strong corporate culture Maintaining high performance over time STRATEGY SUPPORTIVE CULTURE Corporate culture refers to company’s value , belief , business principles , traditions , ways of operating & internal work environment When the culture of company is in line with strategy it become valuable in strategy implementation & execution , when in conflict , strategy may fail Strategy-Culture conflict weakens and may even defeat managerial efforts to make strategy work We should make the strategy in line with culture Changing a Company's culture is very difficult because itis carried since years In large companies changing corporate culture can take 2-5 years TRANSFORMATIONAL - Uses Charisma & enthusiasm to inspire people to do good for organisation Good for new organisation or poorly performing organisation They offer excitement vision & personal satisfaction They inspire to achieve dream , vision They motivate followers to do more than expectation by increasing their self confidence TRANSACTIONAL - It focuses on design system and controlling organisation activity Try to build on existing culture Useful in matured organisation Uses authority of office to exchange reward and punishment Setting clear goals with rewards or penalities for achievement or non- achievement ENTREPRENEUR & INTRAPRENEUR. ENTREPRENEUR Initiates & innovates a new concept Recognises & utilises opportunity Arranges & coordinates resources Faces risks & uncertainity Establishes new company Adds value to product / service INTRAPRENEUR A person who starts the company is Entrepreneur, but Intrapreneur is employee who promotes innovation within limits of organisation He is employee of large organisation , who is given authority to initiate creativity , innovation in company’s product , services & projects, redesign process & systems He believes in change and does not fear failure They discover new ideas , look for opportunity , take risksDIFFERENT TYPES OF ORGANISATION STRUCTURES FUNCTIONAL STRUCTURE SIMPLE STRUCTURE NETWORK STRUCTURE It promotes specialisation of labour , encourages efficiency , minimised need for an elaborate control system and allows rapid decision making itis virtual elimination of inhouse Business Functions Itis good for those who follow single business strategy and offer line of products in single market In this owner takes all the decisions and monitors all the activities of staff Many activities are outsources , so it is also called as VIRTUAL Organisation In this there is CEO , supported by corporate staff with functional line managers such as Production , Finance , Marketing etc Little specialisation , few rules, little formalisation , direct involvement of owners in all activities It is useful when environment is unstable Problems are there can be communication & coordination problems across all Business functions Communication is fast and new products tend to be introduced very quickly In this there are less salaried employees , and majority are contract workers for But when company grows and it ae specific project or time wishes to do specialisation , there will be pressure on owner or All managers may develop a narrow perspective , losing sight of over-all company’s vision and mission NETWORK STRUCTURE DIVISIONAL STRUCTURE It is virtual elimination of inhouse Business Functions Asa firm grows and has different MATRIX STRUCTURE product & services in different markets , we have to bring Divisional Structure which can be in one of the 4 ways : By Geographic ara , By Product or Service , By Customer or By Process When Organisation feels neither Functional or Division forms are appropriate for them , then comes Matrix Many activities are outsources , so it is also called as VIRTUAL Organisation Itis useful when environment is unstable Itis combination of Functional & In this accountability is clear , divisional : Divisional Structure managers are held responsible for sales and profit Employees have 2 superiors — Project M Functional Mana It creates career development innger S&Fdne a opportunities For managers Inthis there are less salaried employees , and majority are contract workers for specific project or time Itis most complex because it depends upon both vertical and horizontal flow But It is very costly , each division on of authority requires functional specialist who are to be paid Ithas dual line of reward and punishment , shared authority , dual reporting channel and need for extensive communication , visible results of work ete Organisation functions are scattered in different geographical areas There is duplication of staff services , facilities ete Some divisions receive more priority than another , difficult to maintain een It is very useful when external environment is very complexSTRATEGY AUDIT FOR MORE DETAILS , PLEASE VISIT WWW.MRUGESHMADLANI.COMSTRATEGIC CHANGE Due to changes in the environment , business has to make changes in strategy & bring new Strategies ‘Changes can be made in form of new markets , products , services or new ways of doing Business There are 3 Steps to make change Recognise the Need for Change — After analysing Internal & External Environment through SWOT , we will determine where there is defect & scope for change Create a Shared Vision to Manage Change —Senior Managers & Employees should have shared vision , Senior Managers have to convince that Change is really needed, and it should be serious towards new strategic alternatives & associated changes Institutionalise the Change — Here we will implement changed Strategy . We will also monitor change regularly, if any discrepancy , it should be brought to notice of concerned person , so they can take corrective actions STRATEGIC CONTROL Controlling is monitoring the Strategy and measure results against those expected to make corrections . There are 3 Types of Control (OSM) ‘Operational Control — The main focus of ‘Operational control is on individual tasks or ‘transaction as against total or more aggregative function. Management Control = It is more inclusive & aggregative in sense it covers integrated activities of complete department , division or entire organisation. Strategic Control — It focus on whether strategy is implemented as planned and whether it produces correct as expected or not KURT LEWIN’S MODEL OF CHANGE Unfreezing the Situation — In this we will make people prepare for change. In this we will break down old attitudes , behaviour , customs & traditions , so we can start with clean slate. This can be by making announcement , meetings , promotion new ideas ete Change to New Situation — Here we will bring the change . In order to make the change there are 3 methods ~ Compliance , Identification & Internalization Refreezing - In this we will finalise the Change and make it permenant, after it has been completely accepted by everyone . This is continous process , as organisations keep on changing (CHANGING TO NEW SITUATION CAN BE IN 3 WAYS COMPLIANCE: Strict by Reward & Punishment IDENTIFICATION- Role Models & follow them INTERNALISATION- Freedom to learn & adopt new behaviour TYPES OF STRATEGIC CONTROL Premise Control — A Strategy is based on certain assumption or premises , about environment , which may change over time Strategic Surveillance - It involves general monitoring of various sources of information which have bearing on organisation strategy Special Alert Control ~ At times unexpected events happen like earthquake , major disaster , merger/acquisition by competitor , such events may require immediate review of strategy Implementation Control — Managers implement strategy by converting major plans into concrete , sequential actions that form small steps. Here we will check small steps to see whether changes are needed in strategy or not.BPR is Rethinking , Redesign , Reinvestment of Current Business Practices to achieve Dramatic Improvement in terms of quality, cost, speed & service Dramatic improvement means not 5-10 % , but 80-90% improvement It means starting everything from scratch and forgetting all the age old practices It does not look marginal improvement, it wants. dramatic improvement Benchmarking is a process of continuous improvement in search for competitive advantage It measures company’s product , services & practices against those of competitors or industry leaders in their field Efforts are made to learn, improve & evolve them to suit our requirement It means identifying gaps , finding out novel methods to improve situation , and fulfil the gaps 3 elements of BPR are : It begins with FUNDAMENTAL RETHINKING. Itinvolves RADICAL REDESIGN OF PROCESS It aims at achieving DRAMATIC IMPROVEMENT IN PERFORMANCE STEPS TO ACHIEVE BPR ARE : Determine Objectives Identify Customers & determine their needs Study the Existing Processes Formulate a redesign process plan Implement the redesigned process Steps in Benchmarking Process Identify the need for Benchmarking Clearly Understand the Existing Process Identify the Best Process Compare our processes with that of others Prepare a report & Implement Steps to fill Performance Gap Problems in BPR : HIT It disturbs established hierarchies & functional structures and creates serious impact and involves resistance among work force It involved time & expenditure in short run and there can be loss in revenue during transition period Setting of targets can be tricky , because we are doing first time STRATEGY FORMULATION V/S STRATEGY STRATEGY IMPLEMENTATION IMPLEMENTATION ‘STRATEGY FORMULATION It fe ffi hit hth It focuses on effectiveness (Doing right thing) pfocusts efheency (Dane Sie ais) Itis Intellectual Process feis an operational proass It requires conceptual intuitive & analytical skills Itrequires motivation & leadership skills It requires coordination among executives It formulates coordination among executives of of middle & lower levels Top Level