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Strategic Management

The Un-Corporational way

Romana Nargus
Defining Strategies:

 The term strategy is derived


from the Greek word strategos
which means generalship- the
actual direction of military force.
 It also means planning which
are long term in terms of
achieving predetermined
business objectives.
Need for Strategies:

 Threats:
 Emergence of competitors

 Opportunities:
 New opportunities that are
available or emerge in the
environment.
Importance of strategy:

 It is one of the most significant


concept to emerge in the subject
of management studies.
 Critical input to organizational
success.
 It helps reduce ambiguity and
provide a solid foundation as a
theory to conduct business.
Different Level of Strategies:

 Corporate Level (Corporate


Office)

 Business Level (SBUs)

 Functional Level ( finance,


marketing, operations,
personnel, information etc)
Strategic Decision Making:

 It means making a choice


regarding the course of action to
adopt.
 Fundamental strategic Decision
relates to the choice of a
mission of the organization.
Issues in Strategic Decision
Making:
 Criterion for decision making.
 Rationality in decision making.
 Creativity in decision making.
 Variability in decision making.
 Person related factors in
decision making.
 Individual versus group decision
making.
Phases in Strategic
Management:
 Establishing the hierarchy of
Strategic Intent.
 Creating & Communication of
Vision.
 Designing a Mission statement.

 Defining the Business( CG, CF &


AT).
 Setting Objectives.
Contd…

 Formulation of Strategies:
 Performing environmental appraisals.
 Doing Organizational appraisals
 Considering corporate level strategies
 Considering business level strategies
 Undertaking strategic analysis
 Exercising strategic choice
 Formulating strategies.
 Preparing Strategic Plan.
Contd…

 Implementation of strategies:
 Activating Strategies
 Designing structures & systems

 Managing Behavior
Implementation
 Managing Functional
Implementation
 Operationalizing Strategies.
Contd…

 Performing Strategy Evaluation


& Control:
 Performing Strategic Evaluation.
 Exercising Strategic Control

 Reformulating Strategies.
Comprehensive Model Of
S.M:
S
 Establishing strategic Intent
t
 Vision, Mission, Business Definition &
r
Objectives. a
 Formulation of Strategies t
Environmental appraisals/Organizational e
Appraisals g
i
SWOT Analysis
c
Corporate Level Strategies
Business Level Strategies
Strategic choice C
Strategic Plan o
n
 Strategic Implementation: Project, Procedural,
t
Resource Allocation, Structural, Behavioral, r
Functional & Operational o
 Strategic Evaluation. l
Strategic Intent:

 Vision
 Mission
 Business Definition keeping in
mind customer function,
Customer Groups & Alternative
Technologies.
Environmental Appraisals:

 Environment means the


surroundings, external objects,
influences or circumstances
under which someone or
something exists.
 Types of Environment:
 Internal Environment.
 External Environment.
Characteristics of
Environment:
 Environment is Complex
 Environment is Dynamic
 Environment is Multifaceted
 Environment has a far reaching
impact.
 Environment is difficult to
control.
Different Environmental
Sectors:
 Market Environment
 Technological Environment
 Supplier Environment
 Economic Environment
 Regulatory Environment
 Political Environment
 Socio-Cultural Environment
 International Environment
Grand Strategies:

 It helps in making decisions


related to allocating resources
among the different businesses
of a firm, transferring resources
from one set of Business to
others and managing and
nurturing a portfolio of Business
in such a way that the overall
corporate objectives are
achieved.
4 types of Grand strategies:

 Stability strategies:
 It is adopted when there is an
attempt at an incremental
improvement of its functional
performance by marginally
changing the one or more of its
business in terms of their
respective customer group,
customer function and alternative
technologies.
Contd…

 Expansion strategies:

 It is followed when an organization


aims at high growth by substantially
broadening the scope of one or
more of its businesses in terms of
their customer groups, customer
functions and alternative
technology.
Contd…

 Retrenchment Strategies:
 It is followed when an organization
aims at a contraction of its activities
through substantial reduction or
elimination of the scope of one or
more of its businesses in terms of
their respective customer group,
customer function and alternative
technologies.
Contd…

 Combination Strategies:
 It is followed when an organization
adopts a mixture of stability,
expansion and retrenchment
either at the same time in different
businesses or at different times in
the same businesses with the aim
of improving its performance.
Stability Strategies:

 No Change Strategies.

 Profit Strategy.

 Pause/Proceed with caution


Strategy
Expansion Strategies:

 Expansion Through :

 Concentration.

 Integration.

 Diversification.

 Cooperation.

 Internationalization.
Retrenchment strategies:

 It is followed when an
organization substantially
reduces the scope of its
activities.
 They are:
 Turnaround Strategies
 Divestment Strategies

 Liquidation Strategies
Strategic Evaluation &
Control:
 Nature of Strategy Evaluation:
 To evaluate the effectiveness of strategy
in achieving organizational objectives.
 S.E & C can be defined as a process
of determining the effectiveness of a
given strategy in achieving the
organizational objectives and taking
corrective actions whenever
required.
 Through the process of S.E & C the
strategists attempt to answer two
sets of following questions:
S.E & C:
1. Are the premises made during strategy
formulation proving to be correct? Is the
strategy guiding the organization towards
its intended objectives? Are the
organization & Managers doing things
which ought to be done? Is there a need
to change and reformulate the strategy.
2. How is the organization performing? Are
the time schedules being adhered to?
Are the resources being utilized
properly? What needs to be done to
ensure that resources are utilized
properly and objectives met?
Importance of Strategic
Evaluation:
 It helps in segregation of key
managerial tasks which leads to a
situation where individual managers
are required to perform a small
portion each of the overall tasks
required to implement a strategy.
 The importance of S.E lies in its
capacity to coordinate the tasks
performed by individual managers
and also groups, divisions or SBUs
through the control of Performance.
Contd…

 It provides feedback and thus also


helps in appraisals of the employees
at different levels.
 It also helps to keep a check on the
validity of a strategic choice.
 It provides a considerable amount of
information & experience to
strategist that can be useful in new
strategic planning.
Participants in S.E:

 The Board of Directors.


 Chief Executives.
 SBU Heads.
 Financial Controllers.
 Audit & Executive Committees.
 Middle level Managers.
Barriers in Strategy
Evaluation:
 Limits in Control.
 Difficulties in Measurement.
 Resistance to evaluation.
 Short-termism.
 Relying on efficiency rather than
effectiveness.
Requirements for effective
control:
 Control should involve only the minimum
amount of information.
 It should control only managerial activities
and results.
 It should be timely.
 Both long term and short term controls
should be used.
 Controls should aim at pinpointing
exceptions as nitpicking does not result in
effective evaluation.
 Rewards for meeting or exceeding
standards should be emphasized.
Strategic Control:
 Premise Control:
 Every strategy is based on certain
assumptions about the environmental
and organizational factors.
 It is necessary to identify the key
assumptions and keep track of any
change in them so as to assess their
impact on strategy and its
implementation.
 It serves the purpose of continually
testing the assumptions to find out
whether they are still valid or not.
Contd…

 The responsibility for premise


control can be assigned to the
corporate planning staff who can
identify key assumptions and
keep a regular check on their
validity.
Implementation Control:
 It aims at evaluating whether the plans,
programmes and projects are actually guiding
the organization towards its predetermined
objectives or not.
 Implementation control may lead to strategic
Rethinking.
 It may be put into practice through the
identification and monitoring of strategic
thrust such as an assessment of the
marketing success of a new product after
pre-testing or checking the feasibility of a
diversification programmes after making
initial attempts at seeking technological
collaborations.
Strategic Surveillance:
 It aims at more generalized and
overarching control.
 It is designed to monitor a broad range of
events inside and outside the company that
are likely to threaten the course of a firms
strategy.
 It can be done through a broad based,
general monitoring on the basis of selected
information sources to uncover events that
are likely to affect the strategy of the
organization.
Special Alert Control:
 It is based on a trigger mechanism for rapid
responses and immediate reassessment of
strategy in the light of sudden and
unexpected events.
 It can be exercised through the formulation
of contingency strategies & assigning the
responsibility of handling unforeseen
events to crisis management terms.
 Examples of such events can be the
sudden fall of a government at central or
state level, instant change in competitors
posture, an unfortunate industrial disaster
or a natural catastrophe.
Techniques of S.E & C :

 The two most common and best


suited techniques used for S.E
& C are:

 Strategic Momentum Control.

 Strategic Leap Control.


Strategic Momentum Control:
 Aims at ensuring that the
assumptions on whose basis
strategies were formulated are still
valid and finding out what needs to
be done in order to allow
organization to maintain its existing
strategic momentum.
 The three techniques which could be
used to achieve these aims are:
 Responsibility control centers
 The underlying success factors
 The generic strategies.
Contd…

 Responsibility control Centers


form the core of management
control system and are of four
types – revenue, expense, profit
and investment centers.
 Each of these centre is
designed on the basis of the
measurement of inputs and
outputs.
Contd…
 The underlying success factors
enables organization to focus on
CSFs in order to examines the
factors that contribute to the success
of strategies.
 By managing on the basis of CSFs ,
the strategists can continually
evaluate the strategies to assess
whether or not these are helping the
organization to achieve its
objectives.
Contd…

 The generic strategies is based on


the assumption that the strategies
adopted by a firm similar to another
firm are comparable.
 Based on such a comparison a firm
can study why and how other firms
are implementing strategies and
assess whether or not its own
strategy is following a similar path or
not.
Strategic Leap Control:
 Where the environment is relatively
unstable, organizations are required
to make strategic leaps in order to
make significant changes.
 There are four techniques of
evaluation used to exercise Strategic
Leap control:
 Strategic Issue Management.
 Strategic Field Analysis.
 Systems Modeling.
 Scenarios.
Strategic Issue Management:
 It is aimed at identifying one or more
strategic issues and assessing their impact
on the organization.
 A strategic issue is a forthcoming
development, either inside or outside of the
organization which is likely to have an
important impact on the ability of the
enterprise to meet its objectives.
 By managing strategic issues one can
overcome the environmental changes and
design contingency plans to shift strategies
whenever required.
Strategic Field analysis:

 It is a way of examining the


nature and extent of synergies
that exists or are lacking
between the components of an
organization.
 Whenever synergies exists the
strategists can assess the ability
of the firm to take advantage of
those.
Systems Modeling:

 It is a computer based model that


simulate the essential features of the
organization and its environment.
 By this organization may exercise
pre-action control by assessing the
impact of environment on
organization because of the adoption
of a particular strategy.
Scenarios:

 These are perceptions about the


likely environment a firm would
face in the future.
Different types of systems in
Evaluation:
 Information Systems.
 Control Systems.
 Appraisal Systems.
 Motivation Systems.
 Development Systems.
 Planning Sysytems.
Business Unit Strategies:

These are the course of action


adopted by a firm for each of its
business separately to serve identified
customer groups and provide value to
the customer by satisfaction of their
needs.
These are classified in 3 types:
a) Cost Leadership.
b) Differentiation.
c) Focus.
Cost Leadership:

 When the competitive advantage of


a firm lies in a lower cost of the
products or services relative to what
the competitors have to offer it is
termed as cost leadership.
 Cost leadership offers a flexibility to
the firm to lower the price if the
competition becomes stiff & yet earn
more or less the same level of profit.
How to achieve
Cost leadership???
 Accurate demand forecasting & high capacity
utilization is essential to realize cost advantages.
 Attaining economies of scale leads to lower per unit
cost of product/service.
 High level of standardization of products and offering
uniform service packages using mass production
techniques yields lower unit costs.
 Aiming at the average customer makes it possible to
offer a generalized set of utilities in a product/service
to cover greater number of customers.
 Investments in cost saving technologies can help a
firm to squeeze every extra paisa out of the cost,
making the product/service more competitive in the
market.
Benefits of Cost Leadership:
 It is best insurance against industry
competition.
 Powerful suppliers possess a higher
bargaining power to negotiate price
increase for inputs.
 Powerful buyers possess a higher
bargaining power to effective price
reduction.
 The threat of cheaper substitutes can be
offset to some extent by lowering prices.
 Cost advantage acts as an effective entry
barrier for potential entrants who cannot
offer the product/services at a lower price.
Risks in Cost Leadership:
 It is ephemeral.
 It is not a market friendly approach.
 Sometimes less efficient producers
may not choose to remain in the
market owing to the competitive
dominance of the cost leader.
 Technological shifts are a great
threat to a cost leader as these may
change the ground rules on which an
industry operates.
Differentiation Business
Strategies:
 When the competitive advantage of
a firm lies in special features
incorporated into the
product/service, which are
demanded by the customers who
are willing to pay for those, then the
strategy adopted is the
differentiation Business Strategies.
How to achieve Differentiation:
 A firm can incorporate features that offer utility for the
customer and match their tastes & preferences.
 A firm can incorporate features that lower the overall
costs for the buyer in using the product/services.
 A firm can incorporate features that raise the performance
of the product.
 A firm can incorporate features that increase the buyer
satisfaction in tangible or non-tangible ways.
 A firm can incorporate features that can offer the promise
of a high quality of product/service.
 A firm can incorporate features that enable the customers
to claim distinctiveness from other customers and
enhance their status and prestige among the buyer
community.
 A firm can offer the full range of products or services that
customer require for their need satisfaction.
Benefits:
 Distinguishing factor.
 Powerful suppliers can negotiate price
increase that the firm can absorb to some
extent as it has brand loyal customers
typically less sensitive to price increase.
 Powerful buyers do not usually negotiate
price decrease as they have fewer options.
 It is an expensive proposition.
 In case of new entrants, substitute
product/service suppliers too pose a
negligible threat to established
differentiator firms.
Risks:
 In growing market product tends to become
commodities.
 In case of several differentiators adopting
similar differentiation strategies the basis of
differentiations is gradually lessened and
ultimately lost.
 It fails to work if its basis is something that
is not valued by the customer.
 Price premiums too have a limit.
 Failure on the part of the firm to
communicate the benefit arising out of
differentiation adequately.
Focus Business Strategy:

 It rely on either cost leadership or


differentiation but cater to a narrow
segment of the total market.
 In terms of the market, therefore
focus strategies are niche strategies.
 For the identified market segment a
focused firm uses either the lower
cost or differentiation strategy.
Benefits:
 A focused firm is protected from competition to the
extent that the other firms which have a broader
target do not possess the competitive ability to cater
to the niche markets.
 Focused firm buys in small quantities, so powerful
suppliers may not evince much interest.
 Powerful buyers are less likely to shift loyalties as
they might not find others willing to cater to the
niche markets as the focused firms do.
 The specialization that focused firms are able to
achieve in serving a niche market acts as a
powerful barrier to substitute products/services that
might be available in the market.
 The competence of the focused firms acts as an
effective entry barrier to potential entrants into the
niche market.
Risks:

 Being focused means commitment to


a narrow market segment.
 A major risk for the focused firms lies
in the cost configuration.
 Niches are often transient.
 Rivals in the market may sometimes
out focus the focused firms by
devising ways to serve the niche
markets in a better manner.
Tactics for Business
Strategies:
 Tactic is a sub strategy.
 It is a specific operating plan
detailing how a strategy is to be
implemented in terms of when
and where it is to be put into
action.
 There are two tactics:
 Timing Tactics.
 Market location Tactics.
Strategy Implementation:
 Interrelationship between formulation
and implementation:
 The formulation and implementation
processes are intertwined.
 Two types of linkages exist between
these two phases of SM.
 The forward linkages deal with the
impact of the formulation on
implementation.
 The backward linkages are concerned
with the impact in the opposite direction.
Pyramid of Strategic
Implementation:
 Strategies ->
 Plans ->
 Programmes ->
 Projects <-
 Budgets.
Project Implementation:

 Conception Phase.
 Definition Phase.
 Planning & Organizing Phase.
 Implementation Phase.
 Clean Up Phase.
Resource Allocation:
 It deals with the procurement and
commitment of financial, physical
and human resource to strategic
tasks for the achievement of
organizational objectives.
 It is both a one time and continuous
process.
 When a new project is implemented
it requires resource allocation.
 An ongoing concern would also
require a continual infusion of
resources.
Factors affecting Resource
Allocation:
 Objectives of the organization.
 Preference of dominant
strategists.
 Internal Politics.
 External influences.
Difficulties in Resource
Allocation:
 Scarcity of Resources.
 Restrictions on generating
Resources.
 Overstatement of needs.
Structural Implementation:

 Structure: It is the way in which the


tasks and subtasks required to
implement a strategy are arranged.
 The diagrammatical representation
of structure could be an
organization chart but the chart
shows only skeleton.
What is Structural Mechanism:
 Defining the major task required to implement a
strategy.
 Grouping tasks on the basis of common skill
requirements.
 Subdivision of responsibility & delegation of
authority to perform tasks.
 Coordination of divided responsibility.
 Design and administration of the information
system.
 Design and administration of the appraisal system.
 Design and administration of the motivation system.
 Design and administration of the development
systems.
 Design and administration of the planning system.
Structures for Strategies:
 Entrepreneurial Structure.
 Functional Structure.
 Divisional Structure.
 Matrix Structure.
 Network Structure.
 Product based Structure.
 Customer based Structure.
 Geographic Structure.
 Intrapreneurial Structure.
Organization Systems:
 Another way of looking at organizational
structure is to view it as a means of
subdividing the total authority and
responsibility among different
organizational units and positions.
 Since the organization has to perform a set
of tasks designed to achieve its objectives,
a need arises to evolve systems that would
bind the different units and positions, so
that the performance of activities takes
place in a coordinated manner.
 these systems could be collectively
referred to as organization systems.
Six organizational systems
are:
 Information System.
 Control System.
 Appraisal System.
 Motivation System.
 Development System.
 Planning System.
Behavioral Implementation:

 The five major issues involved in


Behavior Implementation are:
 Leadership.
 Corporate Culture.

 Corporate policies & use of power.

 Personal Values & Ethics.

 Social Responsibility.
Leadership Implementation:

 The role of appropriate leadership in


strategic success is highly
significant.
 Leadership plays a critical role in the
success and failure of enterprise.
 It is considered as one of the most
important elements affecting
organizational performance.
Theory of leadership states:
A leader must:
 Develop new qualities to perform
effectively.
 Be a visionary.
 Exemplify the values, goals and
culture of the organization.
 Pay attention to strategic thinking
and intellectual activities.
 Lead by empowering others.
 Create leadership at lower levels.
 Delegate authority and place
emphasis on motivation.
Styles of Leadership:

 Risk Taking: Willing to take risks.


 Technology: Use of planning,
qualified personnel and techniques.
 Organicity: Extent of organizational
structural flexibility.
 Participation: Involvement of
managers.
 Coercion: Domination by Top
Management.
Corporate Culture:

 The phenomenon that often


distinguishes good organization from
bad organization is termed as
Corporate Culture.
 The well managed organizations
apparently have distinct cultures that
are in some way responsible for
their ability to successfully implement
strategies.
Composition of Corporate
Culture:
 It is the set of important assumptions- often
unstated – that members of an organization share
in common.
 There are two major assumptions in common:
 Beliefs.
 Values.
 Beliefs are assumptions about reality & are derived
and reinforced by experience.
 Values are assumptions about ideals that are
desirable and worth striving for.
 When beliefs and values are shared in an
organization, they create a corporate culture.
Corporate politics and use of
power:
 All corporate cultures include a
political component and
therefore all organizations are
political in nature.
 Organizational members bring
with them their likes, dislikes,
views, opinions, prejudices and
inclinations when they enter
organization.
Understanding Power &
Politics:
 Power is defined as the ability to
influence others and corporate
politics is the carrying out of the
activities not prescribed by the
policies for the purpose of
influencing the distribution of
advantages within the organization.
 Politics is related to the use of Power
but it is not simillar.
Functional & Operational
Implementation:
 Functional strategies deal with a relatively
restricted plan which provides the
objectives for a specific function, for the
allocation of resources among different
operations within the functional area and
for enabling a coordination between them
for an optimal contribution to the
achievement of the business and corporate
level objectives.
 Functional strategies are derived from
business and corporate strategies and are
implemented through functional and
operational implementation.
Vertical fit:
 It leads us to define functional
strategies in terms of their capability
to contribute to the creation of a
strategic advantage for the
organization.
 Types of Functional Strategies:
 Strategic marketing management.
 Strategic financial management.
 Strategic operations management.
 Strategic human resource management.
 Strategic information management.
Horizontal fit:

 It means that there has to be an


integration of the operational
activities undertaken to provide
a product or service to a
customer.
 These have to take place in the
course of operational
implementation.
Organizational Appraisals
 The appraisal of the external environment of a firm
helps it to think what it might choose to do.

 The appraisal of the internal environment enables a


firm to decide about what it can do.

 Internally an organization has to deal with resource


– related behavior, weaknesses and strengths,
synergy, competency etc.
Strategic Advantage

Organisational Capability

Competencies

Synergistic Effects

Strength and Weaknesses

Organisational Resources + Organisational Behaviour


Method and Technique in
Organisational Appraisal

1. Internal Analysis

2. Comparative Analysis

3. Comprehensive Analysis

• Application of these methods results in highlighting


strengths and weaknesses that exist in different
functional areas.

• The internal environment provides an organisation


with capability to capitalise on opportunities and protect
itself from the threats that are present in external
environment.
Organisational Appraisal
 The balancing factor of external and internal
environment is key to success of business strategy.

 An organisation uses different types of resources


and exhibits a certain type of behaviour:

WHAT ARE ORGANISATIONAL RESOURCES


Thetheory
The theoryof
ofstrategy
strategyisisdeveloped
developedby byBARNEY
BARNEY(1991):
(1991):
‘Afirm
‘A firmisisaabundle
bundleof
ofresources’
resources’

1.Tangible.
2. Intangible.

This include all assets, capabilities, organisational processes,


information and knowledge.
Organisational Appraisal

Resources:

1. Physical Resources: Technology, plant & equipment


geographic location, access to raw materials etc.

2. Human Resources: Education, experience, skills,


intelligence, judgment, relationship etc.

3. Organisational Resources: Structure, formal systems


and procedures, informal relations among groups.

Possessingthe
Possessing theresources
resourcesbut
butnot
notutilising
utilisingdoes
doesnot
notmake
make
anysense.
any sense.The
Theusage
usagedepends
dependson onorganisational
organisational
behaviour.
behaviour.
Organisational Appraisal

• Barney said ‘ These resources can lead to strategic


advantage if following four characteristics are present:

1. Valuable
2. Rare
3. Costly to imitate
4. Non-Substitutable

• Most organisation have to acquire these resources in hard


way. The cost and availability of resources are important
factors on which success of an organisation depends.
Organisational Appraisal

Organisational Behaviour: It is affected by


internal forces and influences.
i. Quality of Leadership.
ii. Management Policy.
iii. Shared Values & Culture.
iv. Work Environment.
v. Organisational Climate.
vi. Organisational Politics.
vii. Use of Power.

Strength
Strength&&Weakness
Weaknessof ofan
anorganisation
organisationdepends
dependsuponupon
tackling
tacklingabove
abovefactors.
factors.S&W
S&Wdo donot
notexist
existininisolation
isolationbut
but
combine
combinewithin
withinfunctional
functionalarea
areaand
andalso
alsoacross
acrossdifferent
different
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functionalarea
areatotocreate
createsynergistic
synergisticeffect.
effect.
Organisational Appraisal

Synergistic Effects:

Two strong points in a particular functional area


add up to some thing more than two or more than
double the strength. Likewise, two weaknesses in
tandem result in more than double damage –

Two + Two = Five


Or
one + one = Zero

Synergy is
Synergy is the
the idea
idea that
that the
the whole
whole is is
greater or
greater or lesser
lesser than
than the
the sum
sum of of its
its parts.
parts.
Organisational Appraisal

Competencies:

Competencies are special qualities possessed by an


organisation that make it with stand pressures of
competition in market place. It is also known as core-
capabilities, invisible assets or embedded knowledge.

When a specific ability is possessed by a particular


organisation exclusively, or relatively large measures, it is
called Distinctive Competence.

Manyorganisations
Many organisationsachieve
achievestrategic
strategicsuccess
success
buildingDistinctive
building DistinctiveCompetence
Competencearound
around Core
Core
StrategicFunctions.
Strategic Functions.
Organisational Appraisal

Organisational Capability:

• Organisational Capability means the capacity or


potential of an organisation to utilise its resources to
manage & use its strengths and over-come its
weaknesses in order to exploit opportunities and face
threats in its external environment.

• As an attribute, it is sum total of resources and


behaviour, strength and weakness, synergistic effects
occurring in and the competence of an organisation.

• Capability is out-come of an organization's


knowledge base, i.e. the skills and knowledge of its
employees. This develop the concept of “LEARNING
ORGANISATION”.
ORGANISATIONAL STRATEGIC ADVANTAGE

1. It aims at improvement in organisational


capability. That in turn improves functioning of the
organisation and results into generation of higher
revenue and profit.

2. It has to be positive in nature. The strategic


advantage is measurable feature for realistic
assessment.

3. OSA is applied in all the functional areas of the


organisation for better results.

4. Financial, Marketing, Production, Procurement &


Logistics, Personnel Management and General
Management
ORGANISATIONAL STRATEGIC ADVANTAGE

Financial Capability:
It is availability, usage and management of funds. Following
factors are for consideration:
1. Factors related to source of funds.
2. Factors related to usage of funds.
3. Factors related to management of funds.

Marketing Capability:
It rests on and relate to product, its promotion &
distribution and pricing etc.
1. Product related factors.
2. Price related factors.
3. Place related factors.
4. Promotion related factors.
5. Integrative & System factors.
Method and Technique used for
Organisational Appraisal
1. Internal Analysis
i. Value Chain Analyses.
ii. Quantitative Analysis
a. Financial Analysis
b. Non-Financial Analysis.
iii. Qualitative Analysis.

2. Comparative Analysis
i. Historical Analysis
ii. Industry Norms
iii. Benchmarking

3. Comprehensive Analysis
i. Balance Scorecard
ii. Key factor rating
ORGANISATIONAL STRATEGIC ADVANTAGE

VALUE CHAIN ANALYSIS:


Porter (1985) is credited with the introduction of the
frame work called VALUE CHAIN. A value chain is a
set of interlinked value-creating activities performed
by an organisation.

Porter divided the value chain of a manufacturing


organisation into PRIMARY and SUPPORT activities.

Primary activities are directory related to the flow of


the product to the customer.
COMPREHANSIVE ANALYSIS

Balance Scorecard: Robert S Kaplan and David P Norton

Balance scorecard identifies four key performance


measures
1. Customer perspective – How do customer see
us?
2. Internal Business Perspective – What must
we excel at?
3. Innovation and Learning Perspective – Can
we continue to improve and create value?
4. Financial Perspective – How do we look at
share holders?
Key Factor Rating: It is an analysis of organisational
key area functions in association with financial analysis.
It determines the capability of organisation in performing
in some area with financial gain or loss.

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