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This document outlines general business policies, including their origins, types, and functions. It also discusses the importance of rules and procedures in business operations.
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CHAPTER 1: GENERAL POLICIES 1980-2000 usiness policy has become an integral part of...
CHAPTER 1: GENERAL POLICIES 1980-2000 usiness policy has become an integral part of B ORIGIN OF POLICIES Management Curriculum. Policie(late 14c -old french) ○ s tudy or practice of government; good TYPES OF BUSINESS POLICIES government. According To Nature Of Origin ○ political organization, civil O ○ riginated Policy administration ○ Imposed Policy Politia(late latin) ○ Appealed Policy ○ the state, civil administration According To Organizational Structure Politeia(g reek) Internal Policy ○ ○ s tate, administration , government, ○ External Policy citizenship According To The Mode Of Expression W ○ ritten Policy POLICY ○ Oral Policy a deliberate system of principlesto guide ○ Implied Policy decisions and achieve rational outcomes According To Importance George R. Terry B ○ asic Policy ○ “ policy is averbal written or impliedoverall ○ Major Policy guide setting up boundaries." ○ Minor Policy JS Chandan According To Level Of Management ○ “ Policy is a statement and apredetermined T ○ op Management Policies guideline that provides directionfor ○ Upper Middle Management Policies decision-making and action.'' ○ Middle Management Policies Ralph Devis ○ “ Policy is a statement of a principle or According To Situation group of principles, with their supporting N ○ ormal Policy rules of action thatconditions and governs ○ Contingent Policy the achievement of certain objectivesto According To Functions which a business is directed.” ○ dministrative Policy A a n internal law which guides the administrative ○ Composite Policy actions in the organization. ○ Supplementary Policy indicates the intention of the management. ○ Departmental Policy an aspect of planning, a guide for making administrative decisions and it indicates the RULES way of doing the things. uidelines or laws that drive processes and g procedures. BUSINESS POLICY a set of rules that guide the decisions and PROCEDURES the conduct of business in pursuit of profit efines the specific instructions necessary to perform a d and other objectives of the business task or part of a process. organization. may be informal or in writing coming in the POLICIES form of an operational manual, personnel guidelines under which procedures are developed. handbook, and memoranda. BUSINESS RULES BUSINESS POLICY AS A DISCIPLINE a criterion to guide the day-to day business 1911 activity, shape operational judgement, or make arvard Business School Introduced Course H operational business decisions. in Management under business jurisdiction. 1959 Introduction of Business Policy in Academics. BUSINESS PROCEDURES 1969 a guide to action that is detailed and indicates he American Assembly of Collegiate T steps of carrying out and activity or event. Schools of Business, a regulatory body for rigid in nature and lays down sequences business schools, made the course of deveoped by line managers Business Policy mandatory for recognition. Steps of Business Procedure PROCESS OF POLICY FORMULATION 1. Needs Analysis 1. Record Present Policy 2. Consultation And Drafting a. Clarity-clearly define the goals and 3. Authorization v alues that top management wants to 4. Communication And Implementation uphold. 5. Maintenance . Social responsibility-the concept b 6. Review upon which the goals and values should be rooted in. BUSINESS POLICIES 2. Identify Policy Problems r elates to how the rules are going to be a. Reappraise Current Policy- to implemented. ssess if the current policies are still a entities design their policies on the basis of effective and relevant in today’s rules applied by regulatory authorities and business environment. their business objectives. . Identify Policy Problems-which are b significant issues that could have a negative impact on the overall health and success of the business. 3. Diagnose The Cause a. Inadequate Strategy-which often leads to inefficiencies or failure. This may be internal or external b. Inappropriate implemental approaches- such as a rigid or utdated structure and poorly o POLICY FORMULATION designed or inefficient processes. the development of long-range plans for the c. Ineffective management-such as effective management of environmental weak or ineffective leadership, and opportunities and threats, in light of corporate inadequately skilled managers in strengths and weaknesses. specific departments. Mission 4. Formulate Alternative Policies ○ p urpose, what the company offers, a. Consider all Options unique identity, scope, philosophy, b. Be Thorough future goals. 5. Evaluate Alternative Objectives a. Identifyrelevant alternativesand ○ goals that are smart and contributes to consider relevant factors. the company’s overall mission b. Analyze and Compare the Strategies strengths and weaknessesof each ○ forms a comprehensive master plan alternative, how well each of them stating how the corporation will meets the requirements of each achieve its mission and objectives. factor, and how they contribute to ○ Types: corporate goals C ORPORATE- overall 6. Choose A New Policy direction of the company which focuses on growth and a. Choosing the Best Policy- the managing different evaluation helps us pic the best option businesses. . Reviewing the Policy-once we b BUSINESS- specific plan for choose a policy, we should check on it a product or business unit regularly which focuses on competing 7. Trial Run Of A Policy in a market. a. Test the policy FUNCTIONAL- plan for a b. Evaluate Results specific department which c. Get Feedback focuses on maximizing d. Make Adjustments resource productivity. e. Start Over 8. Implementing Policy INTEGRATING OBJECTIVES, STRATEGIES, a. Implement AND POLICIES b. Explain c. Communicate Clearly PROCESS OF POLICY IMPLEMENTATION . P 1 lan Implementation. 2. Distribute policy document. 3. Create a training plan:do not expect employees to read and remember. Compliance comes through thorough understanding. 4. Provide training from top to bottom on an 1. Defining Clear Objectives organization a. O bjectives should be aligned with the 5. Establish a review cycle.Plan for reviews. company’s mission and vision. Consider that regulations and laws and b. Clear objectives guide the practices are constantly changing, although development of strategies and policies some more frequently than others. 2. Objectives Drive Strategies 6. Train regularly as part of continous a. O bjectives define what an organization improvement aims to achieve. 7. Have employees sign and date policies to b. Strategies are then developed as prove that they agree to adhere to them or risk broad plans or approaches to achieve concequences. these objective 3. Strategies Inform Policies OBJECTIVES a. S trategies provide the roadmap for s pecific actions or steps businesses need to achieving objectives, and policies are take to reach their goal created to ensure that actions taken provide a clear direction and focus for the within these strategies are consistent organization or project. and aligned with organizational goals serve as benchmarks against which progress 4. P olicies Support Objective and success can be measured Achievement a. P olicies create a framework for STRATEGIES consistent decision making and p lan of actions taken by managers to achieve behavior within the organization, which company’s overall goal and other subsidiary helps ensure that the strategies are goals. effectively implemented that the often determines the success of a company. objectives are and met. provide a roadmap that guides decision 5. Feedback Loop making and resource allocation. a. As objectives are pursued and ensure resources money, that (time, s trategies are implemented, personnel) are used efficiently and effectively organizations may find that they need to achieve the desired objectives to adjust policies to better support the strategies, or they may need to refine POLICIES strategies based on policy outcomes. the guiding principle that helps the 6. Alignment And Consistency organization to take logical decisions. a. A ll three elements must be aligned organization’s general way of understanding, and consistent with the organization’s interpreting implementing strategies overall mission and vision. provide guidelines and rules for how strategies b. Objectives set the direction, strategies should be implemented and how daily outline the path, and policies ensure operations should be conducted that every step taken along that path is establish accountability defining by roles, consistent with the overall goals. responsibilities, expectations HAPTER 2: STRATEGIC MANAGEMENT: AN C EFINING THE ORGANIZATION’S PURPOSE, D OVERVIEW MISSION AND OBJECTIVES Purpose STRATEGIC MANAGEMENT ○ the fundamental reason for an The art of science of formulating, organization’s existence beyond implementing, and evaluating making profits. cross-functional decisions that enable an Vision organization to achieve its objective. ○ d efines what the organization wants to become Involves the assessment of available ○ first step in strategic planning resources, industry analysis, and internal Mission operations assessment. ○ d efines the organization’s business, its Importance objectives, and its approach to reach k eeps departments on the same page. ○ those objectives. ○ helps organization find new ○ declaration of an organization’s reason opportunities and anticipate new of being challenges. ○ defines the scope of operations ○ allows for more efficient organizational Goals performance. ○ w hat the organization wants to achieve STAGES OF STRATEGIC MANAGEMENT ○ directed towards organization’s 1. Strategy Formulation mission . a eveloping a vision and mission d ○ based on identifiable needs b. identifying organization’s SWOT Objectives c. establishing long-term objectives ○ specific, measurable goals that an d. generating alternative strategies rganization aims to achieve in the o e. choosing particular strategies to short to medium term. pursue. contributes to the achievement of a ○ 2. Strategy Implementation goal a. d eveloping a strategy-supportive culture SELECTING A STRATEGY b. creating an effective organizational 1. Assess your situation structure c. redirecting marketing efforts, 2. Generate alternatives d. preparing budgets 3. Evaluate alternatives e. developing and utilizing information 4. Choose the best option systems 5. Communicate and Implement f. linking employee compensation to organizational performance. STRATEGIC MANAGEMENT MODEL g. includes the deployment of an a cyclical process organization’s resources to meet provides a framework for organizations to desired objective develop and implement effective 3. Strategy Evaluation strategies that enable them to achieve a. r eviewing external and internal factors their long-term goals. that are bases for current strategies b. measuring performance c. taking corrective actions. STRATEGIC MANAGEMENT PROCESS . 1 oal Setting G 2. Environmental Scanning and Analysis 3. Strategy Formulation 4. Strategy Implementation 5. Strategy Evaluation trategic Planning S Legal and Regulatory Environment approach used in forming an organization's ○ can influence various aspects of a direction (e.g., its vision, mission and priorities). usiness, including operational costs, b market opportunities, and risk factors trategic Management S Technological Advances overall process of achieving that direction, from ○ can lead to improved efficiency and planning to executing c ost savings, but they can also render certain jobs or products obsolete. URPOSE OF STRATEGIC MANAGEMENT P AND PLANNING UNDERSTANDING AND MANAGING RISK Set Clear and Overall Direction to Achieve Risk ○ the potential for events or conditions to Objectives occur that could negatively impact an Achieve Competitive Advantage organization’s ability to achieve its Adapt to Change strategic goal Allocate Resources Efficiently Risk management Enhance Organizational Performance ○ involves integrating risk assessment Ensure Long-term Sustainability and mitigation into the strategic planning process to anticipate and ETHODS OF STRATEGIC MANAGEMENT M address potential challenges that AND PLANNING could affect the organization’s SWOT ANALYSIS long-term objectives ○ E valuates the organization's internal Steps strengths and weaknesses, and 1. Risk Identification external opportunities and threats. 2. Risk Assessment PESTLE ANALYSIS 3. Risk Mitigation ○ A ssesses the impact of external 4. Implementation of Mitigation factors— Political, Economic, Social, Strategies Technological, Legal, and 5. Monitoring and Review Environmental—on the organization PORTER’S FIVE FORCES LEVELS OF STRATEGY ○ A nalyzes the competitive forces in an Corporate Strategy industry, including the bargaining ○ Big picture goals power of buyers and suppliers, the threat of new entrants, the threat of ○ Overall corporate strategy substitutes, and industry rivalry. ○ Strategic management varies based THE BALANCED SCORECARD n size. o ○ P rovides a comprehensive approach ○ Defines organization’s main purpose to managing the business strategy by Direct downstream decision making ○ considering quantitative and and aligns lower level objectives qualitative performance measures Business Strategy “ Competitive strategy” ○ FFECT OF THE EXTERNAL ENVIRONMENT E ○ Usage of internal and external analysis frameworks ON PLANNING ○ Focus on individual areas of the Economic Conditions business ○ In times of economic recession, ○ Differentiate from Competitors usinesses may have to revise their b ○ Create supporting objectives and plans and forecasts downwards to Initiatives accommodate reduced consumer Functional Strategy spending ○ “ Operational Strategy” Market Trends ○ Day-to-day strategy ○ can indicate shifts in consumer ○ Most important strategy references, emergence of new p ○ Focus on department specific actions technologies, and changes in to support corporate initiatives. competitive landscapes. ORECASTING FOR THE FUTURE FOR F FORECASTING ORGANIZATIONS/BUSINESS NATION, INDUSTRIES, ORGANIZATIONS AND Business forecasting THE WORKFORCE FOR CHANGES, ○ p rocess of predicting future market DEVELOPMENTS conditions by using business intelligence tools and forecasting FORECASTING methods to analyze historical data estimation or prediction of a future ○ Q uantitative Forecasting & happening or condition Qualitative Forecasting provides a basis for planning Importance of Business Forecasting . 1 ivotal role in an organization P Importance 2. Development of a business ○ Planning for future opportunities 3. Coordination ○ nticipating & managing risks A 4. Effective control ○ Enhancing decision making 5. Key to success ○ Developing effective strategy 6. Implementation of project ○ Driving innovation 7. Primacy to planning Elements of Business Forecasting FORECASTING NATION ○ Develop the basis Economic Forecasting ○ Estimating future business ○ used as a process of attempting to operations redict the future condition of the p ○ Regulating forecast economy of a country. ○ Reviewing forecasting process Predicting ○ quarterly or annual GDP growth rates top level macro number ○ ○ Technological Advancements And Digital Infrastructure FORECASTING INDUSTRIES Industry analysis ○ as a form of market assessment ○ crucial because it helps a business understand market conditions. Predicting ○ D emand, supply, financial returns, sustainability and green economy FORECASTING WORKFORCE Workforce forecasting ○ h elps you predict your company’s workload so you can ensure you have the correct amount of staff, at the necessary time(s) to handle the amount of work, whether that be for day-to-day operations or unusual situations. Remote Work And Workforce Flexibility ○ Reshaping organizational culture, anagement practices, and employee m expectations. Diversity, Equity, And Inclusion (DEI) ○ Stronger emphasis on DEI within rganizations, driven by social o movements, regulatory requirements, and the business case for diverse teams. HAPTER 3: STRATEGY FORMULATION C FRAMEWORKS IN INDUSTRY ANALYSIS The process of developing and implementing Porter's Five Forces Analysis plans to achieve an organization's long-term ○ a strategic framework used to assess goals the competitive intensity and attractiveness of an industry. EXTERNAL ENVIRONMENT ○ Key forcesthat shape an industry's structure. Composed of all the outside factors or ○ Threats of New Entrants influences that impact the operation of Factors that make it difficult for business. ew competitors to enter the n Types:MicroandMacroEnvironment market. Economies of scale, Product differentiation, Capital EXTERNAL ENVIRONMENT ANALYSIS requirements, Switching costs, Identifies potential opportunities for growth Government policies and expansion. ○ Bargaining power of buyers Helps mitigate risks and avoid threats. The ability of customers to Opportunity egotiate favorable terms with n ○ A condition in the general environment suppliers. that, if exploits, helps a company The bargaining power of buyers decreases if there is a high achieve strategic competitiveness. demand for seller’s product. ○ Help discover untapped markets, and Number of buyers, Buyer new products or technologies, or concentration, Product identify potential avenues for differentiation, Switching costs diversification. ○ Bargaining power of supplier Threat he ability of suppliers to demand T ○ A condition in the general environment higher prices or impose that may hinder a company's efforts to unfavorable terms. achieve strategic competitiveness. The bargaining power of suppliers ○ Help identify unfavorable market shifts decreases if they are more dependent on buyers, and vice or changes in technology, and create a versa. defensive posture aimed at preserving Number of suppliers, Supplier competitive position. concentration, Product A s the external environment changes, differentiation, Switching costs firms must have: ○ Threat of substitute products C ○ ontinuous Monitoring he availability of alternative T ○ Adaptive Strategies products or services that can ○ Risk Management satisfy customer needs. Key factors influencing competition include cost and customer satisfaction (quality). INDUSTRY AND COMPETITIVE ANALYSIS Price performance ratio, Buyer Identifes the factors that influence the switching cost level of competition and profitability in an ○ Intensity of rivalry among existing industry. competitors This process involves examining the he level of competition among T existing firms in an industry. overall market environment, assessing the ○Number of competitors, Industry competitive landscape, and understanding growth, Product differentiation, the forces that shape industry dynamics Switching costs Conduct industry analysis after examining the external environment to predict future PESTEL Analysis trends. ○ a strategic framework used to assess the external factors that can impact an organization's operations. ○ evaluates external macro environmental factors. ○ Political COMPETITIVE ANALYSIS overnment policies and G involves a deep dive into the strategies, regulations strengths, weaknesses, and market ○ Economic positions of key competitors. Interest rates and monetary olicy p Understanding competitors' actions, goals, ○ Social, Cultural and capabilities allows an organization to ultural values, beliefs, and C anticipate market shifts and react attitudes proactively ○ Technological Key Components Research and development ○ Identifying Competitors ○ Environmental ○ Assessing Strengths & Weaknesses Climate change and sustainability ○ Evaluating Competitive Strategy ○ Legal ○ Market Position and Share Analysis Laws and regulations ONSUMER BEHAVIOR C SWOT Analysis A process that covers individuals or groups to ○ Identifies internal and external select, use, or dispose products, services, ideas characteristics to understand an organization’s strategic position or experiences (exchange) to satisfy needs and ○ The process by which firms choose, desires. maintain or redirect their strategic position within ever-changing external environment ○ Strengths r ecognizing the organization’s internal capabilities that provide an advantage over competitors ○ Weaknesses nderstanding internal factors u that may hinder the organization’s ability to compete effectively ○ Opportunities nalyzing external factors that the a organization could exploit to its advantage INDUSTRIAL BUYING BEHAVIOR ○ Threats the decision-making process by which formal identifying external challenges that could pose risks organizations establish the need for purchase products and services and identify, evaluate, and Competitor Profiling choose among alternative brands and suppliers ○ Creates detailed profiles of key c ompetitors to understand their TYPES OF INDUSTRIAL CUSTOMERS strengths, weaknesses, and market Commercial Enterprises strategies. ○ T hese are private sector, profit Benchmarking seeking organizations consisting of ○ C ompares an organization’s Industrial Distributors and Dealers, performance and practices against Original Equipment Manufacturers leading competitors or industry best (OEM„s) and Users practices to identify improvement Industrial Distributors And Dealers areas ○ H ere one takes product from industry Scenario Planning and resale as it is to other industry. ○ A nalyzes different future scenarios O riginal Equipment Manufacturers based on varying assumptions to (Oem’s): prepare for potential changes in the ○ T hese industrial customers purchase industry environment. industrial goods to incorporate them in the products that they produce. Users Porter’s corporate strategies ○ W hen a commercial enterprise ○ Cost leadership purchases industrial products or Incurrence of the lowest cost services to support its manufacturing among market players process or to facilitate business ○ Differentiation operations it is classified as a User. ffer unique products that O Institutional Customers: customers buy for an additional premium ○ Public and private institutions such ○ Focus as Hospitals, Schools, Colleges, pecific demographic or category S Universities and Prisons are segments classified as Institutional A resource perspective Customers ○ Resource heterogeneity Cooperative Societies ifferent resources and D ○ It can be manufacturing units like capabilities Cooperative sugar mills or ○ Acquisition Price of Assets Acquired at a price below NPV non-manufacturing organizations like Cooperative banks or ○ Difficult or Impossible to Imitate chieved thru tacit knowledge, A Cooperative housing societies. relationships, and org. culture ○ Resource Specificity IMPLICATIONS FOR STRATEGY Specific and not easily traded FORMULATION P orter’s Strategic Positions for Developing Competitive Advantage Competitive Advantage ○ Understanding industry dynamics ○ Variety-Based Positioning and competitor strategies helps ffering a subset of services that O organizations create unique value are used by a broad range of segments propositions through innovation, ○ Needs-Based Positioning improved customer experiences, or eeting all the needs of a M efficient supply chains. particular segment Adapting to Industry Changes ○ Access-Based Positioning ○ Regular analysis of industry trends ocuses on specific customer F and competitors helps segments that are accessible in different ways organizations adjust strategies to stay ahead of technological C ompetitive Advantage InNational advancements, regulatory Markets changes, and shifting consumer ○ Resource Availability ccess to natural resources, A preferences. skilled labor, and technology can Risk Management significantly influence a ○ Identifying threats from new company's ability to compete. entrants, substitutes, or supplier ○ Regulatory Environment: changes enables organizations to ational laws and regulations can N create advantages for certain manage risks by diversifying industries. suppliers, investing in R&D, or ○ Cultural Factors exploring new markets Understanding it can lead to tailored marketing strategies, COMPETITIVE ADVANTAGE enhancing customer loyalty and strategic advantage a business entity has brand strength over its rivals within its competitive C ompetitive AdvantageInInternational industry. Markets A firm is able to achieve advantage ○ Global Supply Chains fficient management of supply E through product differentiation or cost chains across borders leads to leadership (Porter). lower costs and faster delivery times. (manufacturing and retail) ○ Innovation and Technology: INTERNAL ENVIRONMENT ANALYSIS Investing this can create unique Human Resources products or services that stand ○ People who work for a company out in the global market. Financial Resources ○ Market Entry Strategies he ability to enter and establish T ○ Money and assets that a company a presence in foreign markets can has available to fund its operations enhance market position ○ Determines what the company can Industry Specific Considerations realistically achieved ○ Technology Sector Technological Resources ○ Consumer Goods ○ Tools, systems, and technology ○ Service Industries that a company uses to operate effectively INTEGRATING BUSINESS FUNCTIONS Operational Resources Cross-Functional Collaboration ○ How effectively a company uses its ○ e ncourages different departments to resources work together, leveraging their unique ○ Maximizes output and minimizes strengths and addressing weaknesses waste collectively. Aligned Objectives ESTABLISH LONG-RANGE OBJECTIVES ○ e nsures that all business functions are Vision and Mission Alignment aligned with the organization’s overall strategy ○ Vision Long-term aspiration or dream Resource Allocation Guiding star ○ h elps in identifying areas where investment is needed to strengthen M ○ ission ompany’s purpose C weaknesses or capitalize on Explains core activities and opportunities values Identifying the organization’s position in Measurable Targets relation to the outside environment ○ akaObjectives M ○ arket Positioning s pecific , quantifiable goals set to ○ Environmental Scanning track progress ○ Strategic Alignment Startegic Focus ○ C oncentrated effort a company makes INTERNAL ENVIRONMENT to prioritize specific goals and composed of various elements present long-term objectives inside the organization ○ Keeps company grounded in what involves identifying the strengths and matters most weaknesses of a business, including: ○ esources R STRATEGIC ALTERNATIVES ○ Capabilities epresent the diverse paths an organzation can take R ○ Culture to achieve its goals ○ Structure Swot Analysis Systems and processes ○ A ○ lsoenvironmental scanning ○ Foundation tool for identifying strategic alternatives Scenario Planning ○ C reating plausible future scenarios based on different assumptions and trends ○ Help anticipate potential changes and adopt strategies Porter’s Five Forces Blue Ocean Strategy LOBAL STRATEGY G ○ U ntapped market spaces where the plan of action that organizations adopt to competition is minimal or non-existent. compete effectively in international markets and ○ Orgs can create new value by its purpose is toincrease salesacross the world exploring these uncharted waters Market Entry Strategies Resource-Based View (Rbv) ○ C ommon strategies include exporting, ○ E mphasizes company’s unique franchising, joint ventures, and resources and capabilities as wholly-owned subsidiaries. foundation for competitive advantage. Standardization vs. Localization Incremental Vs Disruptive Alternatives ○ Choose between standardizing or ○ H elp pursueincremental localizing products to meet the specific improvements(s mall-scale changes) needs and preferences of local ordisruptive innovations(r adical consumers. shifts) This decision impacts branding, ○ pricing, and product features. IDENTIFYING STRATEGIC ALTERNATIVES Competitive Advantage 1. Environmental Scanning ○ R equires leveraging unique resources a. O rganizations must continuously or capabilities. monitor both the external and internal ○ This might involve innovation, cost environments to identify potential leadership, or differentiation strategies opportunities and threats. tailored to specific regions. 2. Brainstorming Sessions Cultural Considerations a. T his collaborative approach helps in ○ Organizations must adapt their generating a wide range of options pproaches to align with local a that may not be evident to a single customs, values, and consumer decision-maker. behavior. 3. Evaluation Of Alternatives a. A lternatives are evaluated based on Regulatory and Economic Factors criteria such as feasibility, cost, ○ Includes understanding trade policies, alignment with organizational goals, tariffs, and local laws that can affect and potential for competitive operations. advantage Risk Management 4. Prioritization ○ R isks, such as political instability, a. A fter evaluating the alternatives, currency fluctuations, and economic organizations should prioritize them downturns should be mitigated to based on their strategic fit and ensure business continuity. potential impact. Performance Measurement 5. Feedback Mechanisms ○ Includes assessing market share, a. a llows organizations to reassess their profitability, and customer satisfaction alternatives as market conditions in international markets change. 6. Decision-Making Importance a. b ased on a comprehensive analysis of C ○ reating economics of scale the evaluated options and their ○ Diversifying risks alignment with the organization's ○ Increasing operational flexibility mission and vision Types ○ Standardization eveloped to expand operations D to global markets Sell the same products ○ International Importing and exporting products internationally while keeping physical premises within home country ○ Multinational ater products to each individual C market or locations HAPTER 4: STRATEGY EVALUATION AND C HANGING OR ADDING NEW C SELECTION STRATEGIES A process to determine the effectiveness of given D eveloping a new strategy or strategy in achieving the organizational objectives incorporating additional strategies to and selecting the appropriate alternatives if address new challenges or opportunities Developing New Strategies current strategy falls. ○ C reating fresh approaches, new markets, or business models PERFORMANCE GAPS Diversification difference between the current and ○ E ntering new markets or offering new products desired performance of an individual Transformation a key indicator for strategic ○ Major shifts in strategic direction decision-making and organizational Digital Transformation improvement. ○ L everaging technology to drive growth Causes of Performance Gap and efficiency Sustainability & CSR ○ c urrent strategy may not be ○ Focus on ethical practices and appropriate in view ofchanges in sustainability. environmental factors ○ current strategy may not be IMPLEMENTING CHANGING OR ADDING appropriate due tointernal issues NEW STRATEGIES within the firm 1. Identify the Need for Change ○ implementation of the current strategy ○ External and internal analysis is beingwrongly undertaken 2. Develop New Strategy Proposals ○ Common causes ○ Strategic Options oor Leadership and Processes P xplore new markets, products, E or business models Not Setting Reasonable ○ Strategic Planning Expectations Develop detailed plans for General Lack of Motivation and each new strategy Disengagement. 3. Evaluate and Select New Strategies Skill and Talent Gaps ○ Strategic Fit Align with mission, vision, values GAP ANALYSIS R ○ isk Assessment A process that helps organizations determine ○ Feasibility how to achieve their business goals. ssess practicality and resource A It compares the current state with an ideal needs state, which highlights shortcomings and 4. Develop Implementation Plans ○ Action Plan opportunities for improvement Outline steps for new strategies Steps R ○ esource Allocation . 1 nalyze current state A ○ Timeline: 2. Identify the ideal future state stablish milestones and E deadlines 3. Find the gap and evaluate solutions 5. Communicate and Engage 4. Create and implement a plan to bridge S ○ takeholder communication the gap ○ Training and support of employees 6. Implement New Strategies ADJUSTING THE CURRENT STRATEGY E ○ xecution ○ Monitoring M odifying the existing strategy to better 7. Review and Adjust meet goals and adapt to performance P ○ erformance Evaluation feedback ○ Feedback Collection Tuning(Incremental Adjustments:) ○ Iterative Refinement djust strategies based on A ○ Smal adjustments to improve performance and feedback efficiency 8. Conclusion Realignment(R adical Strategy Shift) ○ S hifting focus within the existing strategy Enhancement(New Strategic Initiatives) ○ Adding new tactics to support the current strategy QUALITATIVE FACTORS Stakeholder Impact elp assess the broader implications and h ○ u nderstanding stakeholder potential effectiveness of a strategy beyond interests can reveal potential traditional metrics like financial performance. support or opposition Customer Satisfaction Strategic Coherence and Alignment ○ p rovide insights into a company’s ○ e valuate how different components product quality, customer service, of the strategy work together to and overall brand image create synergies and enhance Employee Morale overall effectiveness. ○ influence productivity, creativity, C hange Management and and turnover rates. Adaptability ○ high employee morale tend to ○ e valuate the strategy’s flexibility to have a more positive and adapt to new information or productive work environment changing circumstances Corporate Culture Communication Effectiveness ○ e ncompasses the values, beliefs, ○ c rucial for gaining buy-in and and attitudes that shape a ensuring everyone understands company’s identity and behavior their role in executing the strategy. ○ strong corporate culture can ○ enhance employee engagement, TRATEGY EVALUATION S productivity, and overall company process in which a business determines its performance effectiveness and ability to reach its goals. Brand Image and Reputation Importantas it allows businesses to ○ r eflect its overall market perception ○ d etermine its strengths and and can significantly impact weaknesses customer loyalty, sales, and ○ check the validity of its strengths and profitability decisions L eadership and Management ○ develop inputs for new strategic planning. Assessment Process ○ a ssess their experience, . 1 ixing benchmark of performance F decision-making skills, and ability 2. Measurement of performance to inspire and align the 3. Analyzing variance organization with the strategy. 4. Taking corrective action O rganizational Culture and Employee Engagement ○ a nalyze whether the strategy METHODS OF STRATEGY EVALUATION aligns with the organization’s culture and values. BCG Growth-Share Matrix Customer and Market Perceptions u sed to evaluate the strategic position of a ○ u nderstanding market dynamics firm’s brand portfolio to help a business helps evaluate the strategy’s consider growth opportunities relevance and potential success. aids the company in deciding how to Innovation and Creativity prioritize their various business activities ○ a ssess the role of creativity in where to invest, to discontinue, or develop developing and executing the products strategy. Low Growth, High Share: Competitive Dynamics ○ s hould milk these“cash cows” for ○ e valuating the strategy’s potential cash to reinvest. impact on competitive advantage High Growth, High Share: and market share. ○ s hould significantly invest in these “s tars” as they have high future Risk Management and Resilience potential. ○ a ssessing risk tolerance and the High Growth, Low Share strategy’s ability to mitigate or ○ should invest in or discard these respond to risks. “ q uestion marks,” depending on their Implementation Feasibility chances of becoming stars. ○ E valuate how well the strategy Low Share, Low Growth integrates with existing operational ○ s hould liquidate, divest, or reposition processes and systems, and these “petsordogs” identify any operational challenges Grow/Invest ○ U nits have high market share and promise high returns in the future so should be invested in. Hold/Protect(selectivity/earnings) ○ U nits can be ambiguous and should only be invested in if there is money left over after investing in the profitable units Harvet/Digest ○ P oor performing units in an unattractive industry ○ should only be invested in if they can make more money than is put into them. Otherwise they should be liquidated. Life Cycle Approach length of time from when a product is Planning Grid introduced into the market until it is d eveloped byGeneral Electric taken off shelves maps the external industry vs. the internal helps inform marketing and sales firm's forces using multiple factors to decisions, from pricing and promotion determine grid placement to expansion or cost cutting helps multi business corporationsmanage Three Stages Of The Strategy portfolios and prioritize investments Lifecycle (PAA) across products and strategic business units (SBU) 1. Produce Industry Attractiveness 2. Adopt ○ Market size 3. Adapt ○ Market growth ○ Pestel factors
