STRATEGIC

MANAGEMENT
 UNIT - 5
■ Planning defined

■ Nature of planning

■ Types of plans

■ Steps in planning

■ Resource allocation

■ Methods of resource allocation

■ Resource allocation process

■ Problems in resource allocation

 Planning -
Meaning
■ Strategic planning is a
process in which
organizational leaders
determine their vision for
the future as well as
identify their goals and
objectives for the
organization. The process
also includes establishing
the sequence in which
those goals should fall so
that the organization is
enabled to reach its
stated vision.
Nature of Planning
■ There are seven major aspects here:
– Planning Focuses on Achieving Objectives
– Planning is Primary Function of Management
– Planning is Pervasive
– Planning is Continuous
– Planning is Futuristic
– Planning Involves Decision Makin
– Planning is a Mental Exercise
Types of Plans
Strategies
■ Strategy may be defined as follows. “Strategy is the determination of basic long
term objectives of an enterprise and the adoption of courses of action and
allocation of resources necessary to achieve these goals”.
■ Strategies are of two types:
– Generic strategies
– Grand strategies
Strategies - Generic
strategies

■ The generic strategies

include –
1. Overall cost
leadership
2. Differentiation
3. Focus
Strategies -
Grand
strategies
Policies
■ Policies are plans or general statements or understandings that guide or channel
thinking in decision making
■ Policies exist at all levels in an organization
■ Policies are necessary at different hierarchical levels:
Procedures
■ Procedures are plans that establish a required method of handling future
activities
■ Procedure is thus a prescribed series of steps to be taken under certain recurring
circumstances
 ■ Programmes involve
different departments
or units of organization
composed of several
different projects which
may take about one
Programmes year to complete
■ “A programme is a
comprehensive plan
that coordinates a
complex set of activities
related to a major non
recurring goal”.
STEPS IN
PLANNING
Steps in Planning
■ Perception of opportunities –
– Every planner should scan the external environment for
opportunities and threats.
■ Establishing Objectives –
– Planner has to identify the objectives for the enterprise or unit.
– They should be specific and measurable
■ Planning Premises –
– Planner has to go about understanding the current and future
environment in which the goals can be accomplished
– Clear assumptions about the environment are outcome of this
step.
Steps in Planning
■ Identify Alternatives –
– Planner has to develop a large number of alternative courses of
action for examination
■ Evaluation of Alternatives–
– Evaluation can be done only when a planner has clear guidelines
for determining and comparing worth of each alternative course of
action
■ Choice of plan–
– On evaluation the planner will use his or her judgment to decide
upon one course of action, which is appropriate or right for the
company
Steps in Planning
■ Formulating derivatives –
– To support basic plan it will be necessary to develop a series of
minor plans
■ Sequence/ Numbering –
– For each department budget allocations will be necessary to
facilitate the implementation of the plans.
– Planner has to make the resource allocation as such properly.
Resource Allocation
■ Resources are broadly of four categories.
1. Money
2. Facilities and equipment's
3. Materials, supplies and services
4. Personnel
Resource Allocation - Methods
■ Based on Percentages - Usually, companies have been following
system of allocation of resources by percentages. But this has not
been accepted by modern day companies
■ Based on Modern Methods - Other methods include -Portfolio models,
product life-cycle charts, balance sheets, profit and loss statements
income statements
Problems in Resource Allocation
■ Scarcity of resources - Financial, physical, and human resources are
hard to find.
■ Overstatement of needs - Over statement of needs is another
frequent problem in a bottomup approach to resource allocation
 STRATEGIC
MANAGEMENT
ORGANIZATION STRUCTURE AND
CULTURE
Key Elements of Organizational Structure and
Design
The key elements in organization structure and design are:
■ Departmentation
■ Chain of command
■ Span of control
■ Centralization and decentralization
■ Formalization
Departmentation
The activities are divided based on work specialization common tasks
are to be grouped together. This is called departmentalization. There are
five bases for departmentation.
1. Functions
2. Geographical areas
3. Product
4. Process
5. Customers
Functional Departmentalization
Geographical Departmentalization
Product & Process Departmentalization
Chain of Command
The chain of command in a
company refers to the different
levels of command within the
organization. It starts with the
top position such as CEO or the
business owner, all the way
down to the front-line workers.
Companies create a chain of
command in order to flow
instructions downward and
accountability upward by
providing each level of workers
with a supervisor.
Span of Control
The number of subordinates
that a manager or supervisor
can directly control. This
number varies with the type of
work: complex, variable work
reduces it to six, whereas
routine, fixed work increases it
to twenty or more.
Centralization and decentralization
Centralization of authority means the power of planning and decision
making are exclusively in the hands of top management. It alludes to the
concentration of all the powers at the apex level.

On the other hand, Decentralization refers to the dissemination of powers

by the top management to the middle or low-level management. It is the
delegation of authority, at all the levels of management.
The Cultural web

The Cultural Web is a tool

used to map the culture
of an organization and is a.
way of seeing and
understating the different
influences that affect
organizational.
MANAGING CHANGE
Levels of Change
Change occurs at three levels
1. Individual level
2. Group level and
3. Organization level
Systems Model of Change
Systems Model of Change
■ People: This variable involves the individuals who work in an
organization. This would take into consideration the individual
differences in the form of personalities, goals, perceptions,
attitudes, attributions and their needs/motives.
■ Task: The task is related to the nature of work which an
individual handles in an organization. The nature of the job
may be simple or complex, repetitive or novel, unique or
standardized.
■ Design: This variable refers to the organizational structure
itself and also the system of communication, authority and
control, the delegation of responsibilities and accountabilities.
Systems Model of Change
■ Strategy: The organizational strategy is the road map of action for
realizing the future goals both short term and long term in nature.
Strategic Planning involves identification of existing resources, a
careful assessment of internal strengths and weaknesses, identifying
the opportunities in the environment and threats as well for a
competitive advantage.
■ Technology: It takes into consideration the advancements in the
technology in the field of IT, automation, new methods and techniques
for enhancing productivity, the introduction of new processes and best
practices for remaining ahead in the competition.
■ Culture: It takes into consideration the shared beliefs, practices,
values, norms and expectations of the members of the organization.
Forces for Change
Approaches to Managing Change
■ The three most popular approaches to manage change
are:
i. Lewin’s three step model
ii. Action research and
iii. Organizational development
Lewin’s three step model
Lewin’s three step model

If you have a large cube of

ice but realize that what you
want is a cone of ice, what do
you do? First you must melt the
ice to make it amenable to
change (unfreeze). Then you
must mold the iced water into
the shape you want (change).
Finally, you must solidify the
new shape (refreeze).
Action Research
Action Research is a useful method for facilitating organizational
change by collaborating and involving the client in the entire process of
diagnostic, problem identification, experiential learning, and problem-
solving process.
Action Research
Organizational Development
Organizational development (OD) encompasses a collection of
planned-change interventions built on humanistic-democratic
values that seek to improve organizational effectiveness and
employee wellbeing. The following briefly identifies the
underlying values in most OD efforts:

Respect for people

Trust and support
Power equalization
Conformation Problems
Participation
Power, Politics And Leadership
Power is the capacity to influence the behavior of others.
There are different sources of power. They are broadly divided
into
(i) interpersonal sources and (ii) structural sources
Interpersonal
sources
Structural sources of power
are related to the division of
labor and
position in different teams Structural
and departments work sources
assignments, locations and
roles.
Politics
Politics is the art of acquiring and enhancing power. Employees
have a certain role to play. Therefore, their exercise of power is limited to a large
extent by the role obligations. Political behavior is of two types:
Legitimate - It includes normal every day’s politics. It includes:
• Complaining to one’s superiors,
• By passing the chain of command,
• Forming coalitions,
• Obstructing organizational policies through excessive adherence to rules and
• Developing contacts outside through professional activities.

Illegitimate - Groups of employees cumulatively calling in sick

Factors Causing Political Behavior
Strategy Implementation - Significance
Process of Implementation
Process of Implementation
Resource allocation
Methods of resource allocation include use of:
• Percentage of sales or profits
• BCG matrix
• Budgeting system

Organization structure design

Organization design involves changes like:
• Job design- Making the jobs more challenging by job analysis and role redefinition
• Reengineering – Break old rules

Planning frame work

The managers involved in implementation should plan and develop programmes,
budgets and procedures.
Process of Implementation
Leadership and staffing
Implementation involves leading people to utilize their abilities and skill efficiently
and effectively to meet organizational goals

Change and communication

Rationale for strategic changes should be communicated to workers through news
letters and speeches and even in training programmes.

Evaluation
Evaluation - Process

Setting Measurement Taking

Analyzing
standards of of corrective
variances
performance performance action