MR.

DEVENDRA KUMAR GUPTA

KMBN 301
Strategic Management
Unit-4
Strategic Analysis and Choice
Nature -Strategy analysis and choice focuses on generating and evaluating alternative strategies, as
well as on selecting strategies to pursue. Strategy analysis and choice seeks to determine alternative
courses of action that could best enable the firm to achieve its mission and objectives.

The firm’s present strategies, objectives, and mission together with the external and internal audit
information, provide a basis for generating and evaluating feasible alternative strategies. The alternative
strategies represent incremental steps that move the firm from its current position to a desired future
state.

Alternative strategies are derived from the firm’s vision, mission, objectives, external audit, and
internal audit and are consistent with past strategies that have worked well. The strategic analysis
discusses the analytical techniques in two stages i.e. techniques applicable at corporate level and then
techniques used for business-level strategies.

Strategic Analysis Process:-

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1. Perform an environmental analysis of current strategies

Starting from the beginning, a company needs to complete an environmental analysis of its current
strategies. Internal environment considerations include issues such as operational inefficiencies,
employee morale, and constraints from financial issues. External environment considerations include
political trends, economic shifts, and changes in consumer tastes.

2. Determine the effectiveness of existing strategies

A key purpose of a strategic analysis is to determine the effectiveness of the current strategy amid the
prevailing business environment. Strategists must ask themselves questions such as: Is our strategy
failing or succeeding? Will we meet our stated goals? Does our strategy align with our vision, mission,
and values?

3. Formulate Plans

If the answer to the questions posed in the assessment stage is “No” or “Unsure,” we undergo a
planning stage where the company proposes strategic alternatives. Strategists may propose ways to
keep costs low and operations leaner. Potential strategic alternatives include changes in capital
structure, changes in supply chain management, or any other alternative to a business process.

4. Recommend and implement the most viable strategy

Lastly, after assessing strategies and proposing alternatives, we reach the recommendation. After
assessing all possible strategic alternatives, we choose to implement the most viable and quantitatively
profitable strategy. After producing a recommendation, we iteratively repeat the entire process.
Strategies must be implemented, assessed, and re-assessed. They must change because business
environments are not static.

Strategic Choice Process

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(I) Focusing on strategic alternatives: It involves identification of all alternatives. The strategist
examines what the organization wants to achieve (desired performance) and what it has really achieved
(actual performance). The gap between the two positions constitutes the background for various
alternatives and diagnosis. This is gap analysis. The gap between what is desired and what is achieved
widens as the time passes if no strategy is adopted

(II) Evaluating strategic alternatives: The next step is to assess the pros and cons of various
alternatives and their suitability. The tools which may be used are portfolio analysis, GE business
screen and corporate Parenting.

(iii) Considering decision factors:

(a) Objective factors:-

 Environmental factor

 Volatility of environment

 Input supply from environment

 Powerful stakeholders

 Organizational factors

 Organization’s mission

 Strategic intent

 Business definition

 Strengths and weaknesses

(b) Subjective factors:-

 Strategies adopted in the previous period

 Personal preferences of decision- makers

 Management’s attitude toward risk

 Pressure from stakeholder

 Pressure from corporate culture

 Needs and desires of key managers.

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Tools & Techniques of strategic Analysis:

1. BCG Matrix,
2. Ansoff Grid,
3. GE Nine Cell Planning Grid,
4. McKinsey’s 7’S framework.

BCG MATRIX

BCG matrix is a framework created by Boston Consulting Group to evaluate the strategic
position of the business brand portfolio and its potential. It classifies business portfolio into four
categories based on industry attractiveness (growth rate of that industry) and competitive
position (relative market share). These two dimensions reveal likely profitability of the business
portfolio in terms of cash needed to support that unit and cash generated by it.

Relative market share. One of the dimensions used to evaluate business portfolio is relative market
share. Higher corporate’s market share results in higher cash returns. This is because a firm that
produces more, benefits from higher economies of scale and experience curve, which results in higher
profits.
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Market growth rate. High market growth rate means higher earnings and sometimes profits but it also
consumes lots of cash, which is used as investment to stimulate further growth. Therefore, business
units that operate in rapid growth industries are cash users and are worth investing in only when they
are expected to grow or maintain market share in the future.

1. Dogs: These are products with low growth or market share.

2. Question marks or Problem Child: Products in high growth markets with low market share.

3. Stars: Products in high growth markets with high market share.

4. Cash cows: Products in low growth markets with high market share

Details of BCG matrix

Dogs. Dogs hold low market share compared to competitors and operate in a slowly growing market. In
general, they are not worth investing in because they generate low or negative cash returns.

Strategic choices: Retrenchment, divestiture, liquidation

Cash cows. Cash cows are the most profitable brands and should be “milked” to provide as much cash
as possible. The cash gained from “cows” should be invested into stars to support their further growth.
According to growth-share matrix, corporates should not invest into cash cows to induce growth but
only to support them so they can maintain their current market share.

Strategic choices: Product development, diversification, divestiture, retrenchment

Stars. Stars operate in high growth industries and maintain high market share. Stars are both cash
generators and cash users. They are the primary units in which the company should invest its money,
because stars are expected to become cash cows and generate positive cash flows.

Strategic choices: Vertical integration, horizontal integration, market penetration, market development,
product development

Question marks. Question marks are the brands that require much closer consideration. They hold low
market share in fast growing markets consuming large amount of cash and incurring losses. It has
potential to gain market share and become a star, which would later become cash cow.

Strategic choices: Market penetration, market development, product development, divestiture.

ANSOFF GRID/ MATRIX

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The Ansoff matrix is a strategic planning tool that provides a framework to help executives, senior
managers, and marketers devise strategies for future growth. It is named after Russian American Igor
Ansoff, an applied mathematician and business manager, who created the concept.

The Ansoff Grid, also called the Product/Market Expansion Grid, is a tool used by firms to analyze and
plan their strategies for growth. The matrix shows four strategies that can be used to help a firm grow
and also analyzes the risk associated with each strategy.

The four strategies of the Ansoff Grid are:

1. Market Penetration: It focuses on increasing sales of existing products to an existing market.

2. Product Development: It focuses on introducing new products to an existing market.

3. Market Development: Its strategy focuses on entering a new market using existing products.

4. Diversification: It focuses on entering a new market with the introduction of new products.

Market Penetration-Market penetration is the name given to a growth strategy where the business
focuses on selling existing products into existing markets.

Market penetration seeks to achieve four main objectives:

1. Maintain or increase the market share of current products – this can be achieved by a
combination of competitive pricing strategies, advertising, sales promotion and perhaps more
resources dedicated to personal selling
2. Secure dominance of growth markets
3. Restructure a mature market by driving out competitors; this would require a much more
aggressive promotional campaign, supported by a pricing strategy designed to make the market
unattractive for competitors
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4. Increase usage by existing customers – for example by introducing loyalty schemes

Market Development- Market development is the name given to a growth strategy where the business
seeks to sell its existing products into new markets.

There are many possible ways of approaching this strategy, including:

 New geographical markets; for example exporting the product to a new country
 New product dimensions or packaging: for example

 New distribution channels (e.g. moving from selling via retail to selling using e-commerce and
mail order)
 Different pricing policies to attract different customers or create new market segments
Product Development- Product development is the name given to a growth strategy where a business
aims to introduce new products into existing markets. This strategy may require the development of
new competencies and requires the business to develop modified products which can appeal to existing
markets.

A strategy of product development is particularly suitable for a business where the product needs to be
differentiated in order to remain competitive. A successful product development strategy places the
marketing emphasis on:

 Research & development and innovation

 Detailed insights into customer needs (and how they change)
 Being first to market

Diversification

Diversification is the name given to the growth strategy where a business markets new products in new
markets.

This is an inherently more risk strategy because the business is moving into markets in which it has
little or no experience.

For a business to adopt a diversification strategy, therefore, it must have a clear idea about what it
expects to gain from the strategy and an honest assessment of the risks. However, for the right balance
between risk and reward, a marketing strategy of diversification can be highly rewarding.

GE NINE CELL PLANNING GRID

The GE McKinsey Matrix, also know as the McKinsey Nine Box Matrix is a strategic tool used for
business portfolio planning.
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A business portfolio is a group of businesses that collectively make up a company. These individual
businesses are often referred to as strategic business units (SBUs).

The GE McKinsey Matrix allows a business to analyze their portfolio of SBUs to determine:

 Which SBUs should receive more or less investment.

 What new products or SBUs are needed in the business portfolio.

 Which products or SBUs should be divested.

The GE McKinsey Matrix came about in the 1970s when GE hired McKinsey & Company to develop a
business portfolio analysis tool. They wanted this tool to enable them to better analyze their SBUs so
they could make better investment decisions.

In the GE McKinsey Matrix, the attractiveness of a market is represented on the y-axis. Whereas the
competitive strength of the business unit (SBU) is shown on the x-axis.

Industry attractiveness

Factors to determine industry attractiveness include:

 Market size

 Historical and expected market growth rate

 Price development

 Threats and opportunities (component of SWOT Analysis)

 Technological developments

 Degree of competitive advantage

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 Macro environmental factors

Business Unit Strength:

Factors to determine how strong a unit is compared to others in its industry include:

 Market share

 Growth in market share

 Brand equity

 Profit margins compared to competition

 Distribution channel process – the strength of

There are 3 main strategies in the GE McKinsey matrix which are grow, hold and harvest.

Grow – If the business unit is strong against a strong attractiveness, you grow the business. This
means, that you are ready to invest a higher percentage of your resources in these businesses. These
business units have high market attractiveness and high business unit strength. They are most likely to
be successful if backed up with more resources. The quadrants marked in green are the places where
you can grow your business.

Hold – If the business unit strength or attractiveness is average, than you hold the business as it is. It
might be that the market is dropping in value, or that there is much high competition which the business
unit will be hard put to catch up. In both the cases, the business unit might not give optimum returns
even if resources are invested. Thus, in this case, you wait and hold the business unit to see if the
market environment changes or if the business unit gains importance in the market as compared to
other players.

Harvest – If the business unit or market has become unattractive, than you either sell or liquidate the
business or you can hold it for any residual value that it has. This strategy is used in the GE McKinsey
matrix when the business unit strength is weak and the market has lost its attractiveness. The best
measure in this case is to harvest the weak businesses and reinvest the money earned into business units
which are in growth.

MC KINSEY’S 7S FRAMEWORK
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The McKinsey 7S Framework is a management model developed by well-known business consultants

Robert H. Waterman, Julien Philips and Tom Peters in 1980s. This was a strategic vision for groups, to
include businesses, business units, and teams. The 7S are structure, strategy, systems, skills, style, staff
and shared values. The 7S model can be used in a wide variety of situations where an alignment
perspective is useful, for example to help you:

 Improve the performance of a company.

 Examine the likely effects of future changes within a company.

 Align departments and processes during a merger or acquisition.

 Determine how best to implement a proposed strategy.

Objective of Mckinsey 7S Model:

 The model is most often used as a tool to assess and monitor changes in the internal situation of
an organization.

 To analyze how well an organization is positioned to achieve its intended objective Usage

The Seven Elements: The McKinsey 7S model involves seven interdependent factors which are
categorized as either "hard" or "soft" elements
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Hard Elements Soft Elements

Strategy Shared Values( originated goal )

Structure Skills

Systems Style

Staff

"Hard" elements are easier to define or identify and management can directly influence them: These
are strategy statements; organization charts and reporting lines; and formal processes and IT systems.

 Strategy: the plan devised to maintain and build competitive advantage over the competition.

 Structure: the way the organization is structured and who reports to whom.

 Systems: the daily activities and procedures that staff members engage in to get the job done.

"Soft" elements, on the other hand, can be more difficult to describe, and are less tangible and more
influenced by culture. However, these soft elements are as important as the hard elements if the
organization is going to be successful.

 Shared Values: called "super ordinate goals" when the model was first developed, these are the
core values of the company that are evidenced in the corporate culture and the general work
ethic.

 Style: the style of leadership adopted.

 Staff: the employees and their general capabilities.

 Skills: the actual skills and competencies of the employees working for the company.

Strategy Implementation
Strategy implementation is the translation of chosen strategy into organizational action so as to achieve
strategic goals and objectives. Strategy implementation is also defined as the manner in which an organization
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should develop, utilize, and amalgamate organizational structure, control systems, and culture to follow strategies
that lead to competitive advantage and a better performance. Organizational structure allocates special value
developing tasks and roles to the employees and states how these tasks and roles can be correlated so as maximize
efficiency, quality, and customer satisfaction-the pillars of competitive advantage. But, organizational structure
is not sufficient in itself to motivate the employees.

An organizational control system is also required. This control system equips managers with motivational
incentives for employees as well as feedback on employees and organizational performance. Organizational
culture refers to the specialized collection of values, attitudes, norms and beliefs shared by organizational
members and groups.

The implementation process

To turn general strategies into specific implementation plans involves four basic elements:

 Identification of general strategic objectives – specifying the general results expected from the
strategy initiatives

 Formulation of specific plans – taking the general objectives and turning them into specific
tasks and deadlines

 Resource allocation and budgeting – indicating how the plans are to be paid for

 Monitoring and control procedures – ensuring that the objectives are being met and that only
the agreed resources are spent and that budgets are adhered to.
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Resource allocation

Resource allocation is the process of assigning and managing assets in a manner that supports an organization's
strategic goals.

Resource allocation includes managing tangible assets such as hardware to make the best use of softer assets
such as human capital. Resource allocation involves balancing competing needs and priorities and determining
the most effective course of action in order to maximize the effective use of limited resources and gain the best
return on investment.

In practicing resource allocation, organizations must first establish their desired end goal, such as increased
revenue, improved productivity or better brand recognition.

1. Coordinate project and operational effectively by establishing a comprehensive program management

strategy. Evaluate project proposals on a monthly or quarterly basis to decide which ones gets
sponsorship. Consolidate multiple similar efforts under one program leader; this tends to enable the use of
key resources more effectively and allow you to make critical deadlines.

2. Employ software tools, such project management software such as Microsoft Project, dotProject.net
or Base camp, to identify project tasks, allocate resources effectively, avoid over allocation and prevent
employee burnout. Approve budgets, finish dates and the amount of flexibility in the deadlines if you are
a company executive to help project managers make decisions aligned with the company's strategic goals.

3. Delay tasks until staff have time available to work on them or split up tasks and hire additional
workers to prevent staff from working more than 40 hours in a typical week and becoming burned out.

4. Outsource routine tasks to companies that specialize in a particular function, such as payroll
processing, customer service or technical support.

5. Train employees so they have the required skills and job tasks get completed on time to ensure timely
delivery of products and services. Train less experienced workers to complete job tasks if you experience
unexpected demand or attrition. Obtain specialized training from authorized providers to ensure that your
company runs a safe workplace that complies with local, state and federal regulations.

6. Manage suppliers by analyzing work flow of resource materials from one process to the next. Gather
input from experts before considering alternative solutions to backlogs. Take prompt action to rectify
problems if a supplier provides poor quality materials or delivers them late. Require that the supplier
improves the quality of raw materials and provides them on time.

BUDGET FOR STRATEGY IMPLIMENTATION

A budget is a financial plan for a defined period, often one year. It may also include planned sales volumes
and revenues, resource quantities, costs and expenses, assets, liabilities and cash flows. Companies,
governments, families, and other organizations use it to express strategic plans of activities or events in
measurable terms.
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Needs for budgets in strategy implementation: Budget is needed for the effective and efficient
implementation of strategy: Hoverer, the budget is needed for the following reasons:

 A budget for collecting modem technology;

 A budget for the skilled human resource;

 A budget for facing the competitors;

 A budget for changing strategy;

Procedures for Implementation

Procedural Implementation deals with the different aspects of the regulatory framework that Indian companies
have to consider. Any organisation which is planning to implement strategies must be aware of the regulatory
framework within which the plans, programmes , and projects have to be approved by the government (central
and state).

Following the procedures laid down for implementation constitutes an important component of strategy
implementation in the Indian context:

1. Licensing Procedure

2. Foreign Collaboration Procedure

3. MRTP Requirements

4. Capital Issue Control Requirements

5. Import and Export Requirements

6. Incentives and Facilities Benefits

Licensing Procedure :

Licensing Procedure The system of planning rests on three policy documents Section 30 of the IDR Act, 1951
deals with the Registration & Licensing of industrial undertaking rules. Under this Act, a license is necessary for
establishing a new unit, manufacturing a ‘new article’, substantial expansion of capacity in existing business, and
changing location.

Foreign Collaboration Procedure:

Foreign Collaboration Procedure The govt. policy, in general, allows foreign investment & collaboration on a
selective basis in priority areas, export oriented or high technology industries, and permitting existing foreign
investment in non-priority areas up to 40% of the equity holding. This limit has been raised to 51%in 34 high-
priority industries. All proposals to set up projects with foreign collaboration require prior government approval.
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The regulatory framework deals with the need for foreign technology, royalty payments, terms & conditions for
collaborative agreement & foreign investment.

MRTP Requirements:

MRTP Requirements The Monopolies & Restrictive Trade Practices (MRTP) Act,1969 seeks to prevent
monopolistic & restrictive trade practices, & the concentration of economic power. The MRTP Act requires that
any substantial expansion which increases the assets or productive capacity or supply for distribution not less
than 25%, requires the approval of the central govt.

Capital Issue Control Requirements:

Capital Issue Control Requirements The issue of capital by companies is regulated through the Capital Issues
Control Act, 1956 & the Securities Contracts Regulation Act, 1956 for the purpose of ensuring that investments
are made in priority areas, & for the promotion of capital markets & protection of shareholders. For the purpose
of strategy implementation, these acts are relevant so far as the provision of financial resources is concerned.
Apart from this, these acts also affect mergers & amalgamations as they regulate the capital reorganization plans
for mergers.

Import & Export Requirements: Import & Export Requirements The legal framework for imports & exports in
India is provided by the Import & Export (Control) Act, 1947. The Import Trade Control Policy Book (popularly
called the Red Book) is an annual govt. publication which outlines the import licensing policy for individual
industries & for different categories of importers (established, actual users & registered). Through the Import &
Export Control Order, the govt. has delegated the power to issue licenses & to administer the act to the Chief
Controller of Imports & Exports.

Benefits from Incentives & Facilities :

Benefits from Incentives & Facilities Project Implementation for putting a strategy into action requires a
consideration of various incentives, subsidies, & facilities which can benefit an organisation. In providing
incentives, etc. the govt. does not play a regulatory or controlling role but a promotional role, which is
manifested in various forms.

Strategy Implementation
Stages of corporate development
1. •Simple Structure
2. •Functional Structure
3. •Divisional Structure
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4. •Beyond SBU’s.

1. Simple Structure:–Stage I:

•Entrepreneur –Decision making tightly controlled

 –Little formal structure

 –Planning short range/reactive
 –Flexible and dynamic

2.Functional Structure:–Stage II:

 •Management team
 •Functional specialization
 •Delegation decision making
 •Concentration/specialization in industry

3.Divisional Structure:–Stage III:

 •Diverse product lines

 •Decentralized decision making
 •SBU’s
 •Almost unlimited resources

4.Beyond SBU’s:–Stage IV

 :•Increasing environmental uncertainty

 •Technological advances
 •Size & scope of worldwide businesses
 •Multi-industry competitive strategy
 •Better educated personnel

ORGANIZATION LIFE CYCLE

Organizational life cycle is the life cycle of an organization from birth level to the termination. The
organizational life cycle describe how organizations grow, develop, and eventually decline. The
organizational life cycle (OLC) is a model which proposes that over the course of time, business firms
move through a fairly predictable sequence of developmental stages. This model, which has been a subject
of considerable study over the years, is linked to the study of organizational growth and development. It is
based on a biological metaphor—that business firms resemble living organisms because they demonstrate a
regular pattern of developmental process.
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There are five level/stages in any organization.

1. Birth

2. Growth

3. Maturity

4. Decline

5. Death

Stage 1 Stage 2 Stage 3 Stage 4 Stage 5

Domina Birth Growth Maturity Decline Death

nt issue

Popular Concentric Horizontal Concentric Profit Liquidation

strategi in a niche and and strategy or bankruptcy
es vertical conglomerate followed
growth diversificatio by
n retrenchm
ent

Likely Entreprene Functional Decentralizati Structural Dismemberm

structur ur managem on into profit surgery ent of
e dominated ent or investment structure
emphasize centre
d
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Birth stage (Infant Stage)- This stage begins with a dream, vision and opportunity. Almost every
church starts with a person, or group of persons, who has a vision. In their mind and spirit they see
the potential, visualize plans, and the church is birthed. During the infant stage action is more
important than opinions.

Growing Stage- In this stage members tend to share a strong sense of mission and purpose. There
is a high level of goal ownership by both leaders and members. The early phase of the growing
stage is marked by excitement.

Maturity stage (Prime Stage)- The prime stage is still on the upside of the life cycle. It knows
what it is doing, where it is going and how to get there. It makes plans and then follows up on those
plans. Members are enthusiastic and willing to get involved. New members are exceed and quickly
find a place to become involved. The vision of the organization is becoming a reality as the
organizational structure and functional systems are working to maximum efficiency. A strong
results orientation increases the satisfaction of the members and newcomers.

Decline stage (Aging Stage)- This aging stage is characterized by a decline in the members . In the
aging stage expectations for growth are lowered. There is little interest in development of new
ministries or new methods.

Death stage (Dying Stage)- This fifth stage is characterized by the total loss of purpose and hope.
The mission is not understood. As questioning and polarization increase, the emphasis shifts to who
caused the problem, rather than what to do about it. There is the assumption that finding the is
solving the what. Conflict, back stabbing, and infighting abound.

ORGANIZATIONAL STRUCTURE
Matrix organization- The matrix organization structure is a combination of two or more types of
organizational structures, such as the projectized organization structure and the functional
organization structure.

The authority of a functional manager flows vertically downwards, and the influence of the project
manager flows sideways. Since these authorities flow downward and sideways, this structure is
called a matrix organization structure.
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NETWORK ORGANIZATIONAL STRUCTURE

The NETWORK ORGANIZATIONAL STRUCTURE (also called virtual network structure) is a
temporary or permanent arrangement of otherwise independent organizations or associates, forming an
alliance to produce a product or service by sharing costs and core competencies.

The network-based organizational structure is built around alliances between organizations within the
network. Each associate or organization of the network focuses on its core competency and performs
some portion of the activities necessary to deliver the products and services of the network as a whole.

Modular/Cellular Organizational Structure

Modular Organizational Structure:

Modular organizational structure is also referred to as cellular organization structure. This type of
organizational structure divides an organization into small business units that focus on specific
organizational processes or activities.

A modular organizational structure refers to a business that can be separated and recombined to work
more efficiently. Automotive, computer and appliance manufacturers have been on the cutting edge of
modular study, but the principle can be applied to any business, large or small. The key lies in the
ability to remove emotion from the equation as you determine which modules, or departments, of your
business are effective and which can be outsourced to create a tighter organization.
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Larger System

The first basic tenet of the modular organization structure is that each part of your business is part of
the business as a whole. No matter what that module consists of, from accounting to manufacturing, it
fits together with all of the other modules to create the whole of your business. Like modular furniture,
each piece has a place and distinct purpose.

Independence

For any particular module, or department, to be effective it must stand strong its own. If you were to
pull it apart from all the other modules in your company, you would want to know that it does its job as
well as can possibly be done. Once each department is as strong as it can be, it can better support the
business as a whole.

Fit

The theory of the modular organization structure is that properly executed, the modules work together
seamlessly. Each department completes its own tasks, but all departments work toward the same
outcome.

Releasing Loose Parts

One important piece of the modular organization structure is the belief that there is nothing sacred
about holding onto tasks that can be better completed externally. To remain flexible and streamlined, a
business must know when it is time to remove a module and allow the job to be done outside the
company. For example, a small bicycle shop may recognize that its manufacturing, repair and customer
service modules are at peak form and working well together, but that its accounting services are
slowing it down. The shop may externalize that module and send the work to an outside business.

Weighing the Benefits

Before externalizing any module, your business must assess what it will gain by doing so. You'll have
to weigh whether letting someone else perform accounting duties, for example, will free the business
up to focus on what it does best and to provide the consumer with a leaner, more efficient business to
deal with.
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REENGINEERING AND STRATEGY IMPLEMENTATION

Reengineering is the radical redesign of business processes to achieve major gains in cost, service, or
time. It is not in itself a type of structure, but it is an effective program to implement a turnaround
strategy.

Business process reengineering strives to break away from the old rules and procedures that develop
and become ingrained in every organization over the years.

They may be a combination of policies, rules, and procedures that have never been seriously questioned
because they were established years earlier. These may range from “Credit decisions are made by the
credit department” to “Local inventory is needed for good customer service.” These rules of
organization and work design may have been based on assumptions about technology, people, and
organizational goals that may no longer be relevant. Rather than attempting to fix existing problems
through minor adjustments and fine-tuning of existing processes, the key to reengineering is asking “If
this were anew company, how would we run this place?”

Michael Hammer, who popularized the concept of reengineering, suggests the following principles for
reengineering: Organize around outcomes, not tasks: Design a person’s or a department’s job around an
objective or outcome instead of a single task or series of tasks.

STRATEGIC LEADERSHIP
Strategic leadership can also be defined as utilizing strategy in the management of employees. It is the
potential to influence organizational members and to execute organizational change. Strategic leaders
create organizational structure, allocate resources and express strategic vision. Strategic leaders work in
an ambiguous environment on very difficult issues that influence and are influenced by occasions and
organizations external to their own.

Role of leadership in strategy implementation

1)Leaders are responsible for formulating and communicating the strategy - but responsibility
doesn't stop there. They must also manage the alignment of people for strategy implementation. They
need to ensure that the people in the organisation understand the strategy, buy into it, and align their
decisions and actions accordingly. And this alignment needs to be measured and monitored.

2)Aligning your people for strategy implementation

In the most basic terms, a strategy is nothing more than a definition of what you will sell, to whom you
will sell it, how you will sell it and where you will sell it. Taken together, these also define your
customer value proposition.

3)Have a clear strategy and understand its implications throughout your company
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The four dominant types of strategies - Price, Product, Product+ (premium / high end) and Customer
Specific Solutions - should all be based on a clear customer value proposition. Different strategies
require different organisational behaviours - and therefore different leadership skills.

4)Communicate the strategy and get buy-in

Effective leadership means communicating the strategy in a language that the people in an organisation
understand. Effective leaders check to ensure people know what the strategy means for them and their
job, that they buy in to the strategy, and then support it.

5)Align the organisation to implement the strategy

The attitudes and behaviours of the people in any organisation are driven by six dimensions of people
processes: customer proposition, strategy commitment, processes & structure, behaviour of leaders,
performance metrics and culture. Leaders lead and manage strategy implementation by aligning people
using these levers.

6)Measure and monitor the alignment of people to the strategy

Effective leaders check their assumptions by ensuring people alignment is measured and monitored.
Effective measurements are in line with the strategic objectives, and actions taken in one or more areas
must be supported by actions in the other areas to get the right result.

The way to achieve strategy implementation is not just by telling people what to do. It's by
communicating the strategy in a way that everyone can understand and buy into, and see how they can
contribute.

7)Monitoring

Strategic implementation within a company is not an exact process. It is a dynamic procedure that
needs to be monitored by management and altered to meet implementation goals. It is the responsibility
of leadership to put a monitoring system in place, analyze the data that is being generated during the
implementation and make any necessary changes to make the implementation more efficient.

A few main traits / characteristics / features / qualities of effective strategic leaders that do lead to
superior performance are as follows:

Loyalty- Powerful and effective leaders demonstrate their loyalty to their vision by their words and
actions.

Keeping them updated- Efficient and effective leaders keep themselves updated about what is
happening within their organization. They have various formal and informal sources of information
 MR. DEVENDRA KUMAR GUPTA

in the organization.

Judicious use of power- Strategic leaders makes a very wise use of their power. They must play
the power game skillfully and try to develop consent for their ideas rather than forcing their ideas
upon others. They must push their ideas gradually.

Have wider perspective/outlook- Strategic leaders just don’t have skills in their narrow specialty
but they have a little knowledge about a lot of things.

Motivation- Strategic leaders must have a zeal for work that goes beyond money and power and
also they should have an inclination to achieve goals with energy and determination.

Compassion- Strategic leaders must understand the views and feelings of their subordinates, and
make decisions after considering them.

Self-control- Strategic leaders must have the potential to control distracting/disturbing moods and
desires, i.e., they must think before acting.

Social skills- Strategic leaders must be friendly and social.

Self-awareness- Strategic leaders must have the potential to understand their own moods and
emotions, as well as their impact on others.

Readiness to delegate and authorize- Effective leaders are proficient at delegation. They are well
aware of the fact that delegation will avoid overloading of responsibilities on the leaders. They also
recognize the fact that authorizing the subordinates to make decisions will motivate them a lot.

Articulacy- Strong leaders are articulate enough to communicate the vision(vision of where the
organization should head) to the organizational members in terms that boost those members.

Constancy/ Reliability- Strategic leaders constantly convey their vision until it becomes a
component of organizational culture.

Why is the Leader Important?

1. Establishes vision
2. Develops and implements strategies
3. Allocates and controls resources
4. Chooses key employees
5. Shapes culture
6. Affects organizational performance
7. Projects image to the public.
 MR. DEVENDRA KUMAR GUPTA

CORPORATE CULTURE

Corporate culture is the collection of values, beliefs, ethics and attitudes that characterize an
organization and guide its practices.

To some extent, an organization's culture can be articulated in its mission statement or vision statement.
Elements of corporate culture include the organization's physical environment, human resource
management practices and staff work habits. Corporate culture is also reflected in the degree of
emphasis placed on various defining elements such as hierarchy, process, innovation, collaboration,
competition, community involvement and social engagement.

A corporate culture that reflects the broader culture is usually more successful than one that is at odds
with it. For example, in the current global culture, which values transparency, equality and
communication, a secretive company with a strictly hierarchical structure is likely to have trouble
recruiting and retaining workers and appealing to customers and partners.

However, some organizations create unique cultures that break from certain norms and expected best
practices, a move that can define the organizations as trailblazers and help them succeed in the
marketplace.

All organizations, whether they are for-profit companies or nonprofit entities or even government
agencies, have a sense of self that can be called corporate culture.

ORGANISATIONAL CULTURE

Organizational culture includes the shared beliefs, norms and values within an organization. It sets the
foundation for strategy. For a strategy within an organization to develop and be implemented
successfully, it must fully align with the organizational culture. Thus, initiatives and goals must be
established within an organization to support and establish an organizational culture that embraces the
organization’s strategy over time.

Organizational Culture

A strong organizational culture provides stability to an organization. But for some organizations, it can
also be a major barrier to change. Every organization has a culture that, depending on its strength, can
have a significant influence on the attitudes and behaviors of organization members.

(i) Innovation and risk taking: To what extent employees are encouraged to be innovative and take
risks.
(ii) Attention to detail: The degree to which employees are expected to exhibit precision and attention
to detail.
 MR. DEVENDRA KUMAR GUPTA

(iii) Outcome orientation: The extent to which management focuses on outcomes/results rather than
on techniques/processes used to achieve them.
(iv) People orientation: The extent to which management decisions take into consideration the effect
of outcomes on people within organization.
(v) Team orientation: The degree to which work activities are organized around teams rather than
individuals.
(vi) Aggressiveness: The degree to which people are aggressive and competitive rather than easygoing.
(vii) Stability: Whether organizational activities emphasize maintaining the status quo in contrast to
growth.

ORGANIZATIONAL VALUES

Values- Values are our fundamental beliefs. They are the principles we use to define that which is
right, good and just. Values provide guidance as we determine the right versus the wrong, the good
versus the bad. They are our standards.

Organizational Values- Organizational values define the acceptable standards which govern the
behaviour of individuals within the organization.

Organizational Values are a set of beliefs that specify universal expectations and preferred modes of
behaviour in a company. They point the way to purposeful action and approved behaviour.

There are three categories from which an organizations values base is created:

• Physical Values- Maximum utilization of resources, orderliness, cleanliness, reliability, quality,

safety etc.

• Organizational Values- communication, cooperation, standardization, coordination.

• Psychological Values- Creativity, innovation, loyalty, integrity, customer’s delight, respect for
individual, service to society etc.

Importance of organizational values

1. Formation of mission and vision statement

2. Formation of organizational objectives

3. Formation of policies and procedures

4. Fulfilling customers needs

5. Competitive advantage
 MR. DEVENDRA KUMAR GUPTA

BUSINESS ETHICS

Ethics means the set of rules or principles that the organization should follow. While in business ethics
refers to a code of conduct that businesses are expected to follow while doing business.

Through ethics, a standard is set for the organization to regulate their behavior. This helps them in
distinguishing between the wrong and the right part of the businesses.

Ethics

Ethics in business and management (including strategic management) deals with moral issues (beliefs,
norms, values, etc.) arising from activities performed by managers and employees of the corporation.

Business ethics is a term with quite a multifaceted meaning. Most of them however, boil down to the
general and the basic conclusion that economics should serve man, not vice versa. So, managers should
not be guided in their actions solely by profit or personal gain.

Business ethics is both part of the prescriptive (normative) ethics establishing standards of conduct,
recommending certain behaviours, as well as descriptive ethics, describing the moral attitudes and
behaviours of entrepreneurs.

Ethical issues in Business

Business ethics is both part of the prescriptive (normative) ethics establishing standards of conduct,
recommending certain behaviours, as well as descriptive ethics, describing the moral attitudes and
behaviours of entrepreneurs. In principle, the practical goal of business ethics is to solve ethics
problems in business.

Ethical factor in area of business communication

 Proper marketing techniques, telling truth about products and services,

 Informing customers, employees and partners about company’s mission statement and goals,

 Respecting religious and social values of employees, customers and partners,

 Negligence in informing shareholders about company’s situation, managerial ethics

 Insider trading, hiding information about mergers, acquisitions, investments, etc.

Ethical factors concerning production processes

 Eliminating unsafe working conditions,

 Avoiding processes and technologies that jeopardize the safety of the employees and public,
 Producing product safe for customers,
 Waste product utilization and recycling,
 Profiting from products bad for health (drugs, cigarettes, alcohol) and people (gambling).