Adopting and sustaining global business Strategic Management

Transcription

1 Adopting and sustaining global business Strategic Management Adopting and sustaining global business strategies is the key element for all the multinational companies because in present scenario, if the organizations was not adopted the sustaining policies according to the changes in the environment ie. Boom in the market and slow down in market then they are not able to make the cross border transactions. So the strategic management is necessary. Michael Porter defines strategy as follows:- Strategy is the creation of a unique and valuable position, involving a different set of activities. For the strategic formulation planning plays an important role and for this businesses were follow the three basic philosophies to sustain in the global market these are Satisfying philosophy, optimizing planning philosophy, adaptivizing planning philosophy. These philosophy for planning are used in different hierarchy levels. Different business used different types of models for strategic management which lead them to sustain in the global market. Genie in a Lamp A man was walking along a road when he found a lamp. Upon rubbing the lamp a genie appeared who stated "I am the most powerful genie in the world. Because I am so powerful, I can grant you any wish you want, but only one wish."

2 The man pulled out a map of Asia and said "I'd like there to be peace among the people." The genie responded, " I don't know. Those people have been fighting since the beginning of time. They are always going to be fighting. I can do just about anything, but this is beyond my limits." The man then said, "Well, we are starting a Management Programme. I wonder if you could teach the students this MBA thing." Genie: "Oh, let me see that map again." Strategy is a framework which guides those choices that determine the nature and direction of an organization. -Benjamin B. Tregoe & John W. Zimmerman Top Management Strategy In terms of the three key players (competitors, customers, company) strategy is defined as the way in which a corporation endeavors to differentiate itself positively from its competitors, using its relative corporate strengths to better satisfy customer needs. -Kenichi Ohmae The Mind of the Strategist As we have observed that for the formulation of strategy the planning is required for this in the business world, Henri Fayol, the French industrialist, is credited with the first successful attempts at formal planning. Growth is an accepted expectation of a firm; however, growth does not happen by itself. Growth must be carefully planned: questions such as how much, when, in which areas, where to grow, and who will be responsible for different tasks must be answered. Unplanned growth will be haphazard and may fail to provide desired levels of profit. Planning is required in making a choice among the many equally attractive alternative investment opportunities a firm may have. Thus, the introduction of the concept of risk & uncertainty. Planning for future action has been called by many different names: long-range planning, corporate planning, comprehensive planning, and formal planning. Planning is essentially a process directed toward making today s decisions with tomorrow in mind and a means of preparing for future decisions so that they may be made rapidly, economically, and with as little disruption to the business as possible. For a good planning it requires some of the philosophies

3 so for this there are three different philosophies of planning - Satisfying, Optimizing, and Adaptivizing. 1- Planning on the basis of the satisfying philosophy aims at easily achievable goals and molds planning efforts accordingly. This type of planning requires setting objectives and goals that are high enough but not as high as possible. For example, the present government. 2- The philosophy of optimizing planning has its foundation in operations research. The optimizing planner seeks to model various aspects of the organization and define them as objective functions. For example, an objective may be to obtain the highest feasible market share; planning then amounts to searching for different variables that affect market share: price elasticity, plant capacity, competitive behavior, the product s stage in the life cycle, and so on. The effect of each variable is reduced to constraints on the market share. Then an analysis is undertaken to find out the optimum market share to target. 3- The philosophy of Adaptivizing planning is an innovative approach. To understand the nature of this type of planning, let us compare it to optimizing planning. In optimization, the significant variables and their effects are taken for granted. Given these, an effort is made to achieve the optimal result. Example, acceptance of mobiles. Strategic Planning Strategic planning is a systematic, analytical approach that reviews the business as a whole in relation to its environment, with the objective of: Developing an integrated, coordinated and consistent view of the route the company wishes to follow, Facilitating the adaptation of the organisation to environmental change. The aim of strategic planning is to create a viable link between the organization s objectives and resources and its environmental opportunities. Strategic management planning produces both the primary goals for operational plans and the framework in

4 which they can be realized. The main intended outcome of strategy is the successful positioning of the company in the market place. For the organizations every plan should have: Objectives, Strategies, Programmes, Controls and the evolution is essential for Strategic Management. In the present scenario following Levels of Strategy; Hierarchy of Strategies are used to compete in the market. Unfortunately, these sets of processes are not carried out as discrete actions and do not follow nicely in a linear manner Corporate level: Purpose and scope, Long Term Survival Business Level: Competition Operations Level: Action plans and implementation for human resources, financing, manufacturing, R&D, etc. Short term 0 to 12 months. Medium term 12 to 36 months. Long term over three years. The concern of strategy is effectiveness (doing the right things). The concerns of operations are efficiency (doing things right). Strategic Planning Process

5 The Strategic Planning:- Major corporate planning exercises normally take place every three to six years Operational planning exercises may take place every year or half year. Benefits to be gained from planning include: Risk Reduction, Reduction of Uncertainty, Setting Targets and Standards, Guidance, Commitment, Improves Decision Making. Non Strategic Planning:- Non strategic planning includes:- Poor Reward Structures, Fire-fighting, Waste of Time, Too Expensive, Laziness, Content with Success, Fear of Failure, Overconfidence, Prior Bad Experience, Self-Interest, Fear of the Unknown, Honest Difference of Opinion. For the Strategic Planning model are used to formulate an strategy The Linear Static Model of Strategy Strategic thinking can be divided into two segments : strategy formulation and strategy implementation. Strategy formulation involves: Doing a situation analysis: both internal and external; both micro-environmental and macro-environmental (where you are now). Concurrent with this assessment, objectives are set. This involves crafting vision statements (long term), mission statements (medium term), overall corporate objectives

6 (both financial and strategic), strategic business unit objectives (both financial and strategic), and tactical objectives (where you want to go). These objectives should, in the light of the situation analysis, suggest a strategic plan. The plan provides the details of how to obtain these goals. (how to get there) The next phase, is the implementation of the strategy. This involves: Allocation of sufficient resources, Establishing a chain of command or some alternative structure, Assigning responsibility of specific tasks or processes to specific individuals or groups, Involves managing the process - this includes monitoring results, comparing to benchmarks and best practices, evaluating the efficacy and efficiency of the process, controlling for variances, and making adjustments to the process as necessary. The Dynamic Model of Strategy Charles Lindblom (1959) claimed that strategy is a fragmented process of serial and incremental decisions. James Brian Quinn (1980) developed an approach that he called "logical incrementalism "Constantly integrating the simultaneous incremental process of strategy formulation and implementation is the central art of effective strategic management." Constantinos Markides (1999) describes strategy formation and implementation as an ongoing, never-ending, integrated process requiring continuous reassessment and reformation. In this model, strategy is both planned and emergent, dynamic, and interactive.

7 The alignment of action with strategic intent (the top line in the diagram), is the blending of strategic intent, emergent strategies, and strategies in action, to produce strategic outcomes. The continuous monitoring of these strategic outcomes produces strategic learning (the bottom line in the diagram). This learning is comprised of feedback into internal processes, the environment, and strategic intentions.

8 Strategic Management Model

9 Strategic Management Questions in present scenario:- 1. Why has strategic management become so important to today s organizations? 2. How does strategic management typically evolve in an organization? 3. In what ways could a typical organization s strategic management process be improved? 4. How are strategic decisions different from other kinds of decisions? 5. When is the planning mode of strategic decision making superior to the entrepreneurial and adaptive modes? 6. What are common differences between functional and strategic actions and decisions?

10 Bibliography:- Books & Manuals 1. Perspectives on Strategy from The Boston Consulting Group (1998). Carl W. Stern and George Stalk, Jr. (Eds). John Wiley & Sons. 2. The Balanced Scorecard: Translating Strategy into Action (1996). Robert S. Kaplan and David P. Norton. Harvard Business School Press. 3. The Strategy Concept and Process, 2nd Edition (1996). Arnoldo C. Hax and Nicolas S. Majluf. Prentice-Hall. 4. The New Strategists (1995). Stephen J. Wall and Shannon Rye Wall. Free Press. Articles 1. What s Wrong with Strategy (Nov-Dec 1997). Andrew Campbell and Marcus Alexander. Harvard Business Review, pp What Is Strategy? (Nov-Dec 1996). Michael E. Porter. Harvard Business Review, pp Strategy as Revolution (Jul-Aug 1996). Gary Hamel. Harvard Business Review, pp