BUSINESS POLICY AND

STRATEGY
PREPARED AND PRESENTED BY :
Dr. Gurpreet Kaur Chhabra
Associate Professor
UNIT-I
“Strategy is…. The framework which guides those choices that
determine the nature and direction of an organization”
Kepner-Tregoe
 Concept of strategy
As per Clausewitz, “Strategy is the art of the
employment of battles as a means to gain the object
of war.”

- It’s the art of the general.

- Key decisions made to meet the objectives

- relationship between strategy and tactic

 What we need to know before formulating a
strategy?
What business are we in?
What products and services will we offer?
To whom?
At what prices?
On what terms?
Against which competitors?
On what basis will we compete?
 LEVELS OF STRATEGY
Corporate
level

SBU 1 SBU 2 SBU 3

Marketing HR Finance
THE STRATEGIC MANAGEMENT PROCESS
Develop a strategic planning model:
a) Environmental scanning
b) Evaluation of issues
c) Forecasting
d) Goal setting
e) Implementation
f) Monitoring
CONCEPT OF STRATEGIC MANAGEMENT
• Who am I?

• What do I Do?

• Where am I headed?

• Who all are involved in the strategic decision making proces?

 VISION
Keeps the organization moving forward.
‘Meeting the everyday needs of people everywhere’ -Vision
statement of HUL.
~A vision statement is the first step in the strategic planning
process.
~ It fits the strengths of the organization with the market
demands and makes the organization highly competitive with
growth and profits as the rewards.
 AIM OF VISION STATEMENT
• BUILDING MOTIVATION
• REFLECT CORE VALUES
• REALISTIC, EASILY UNDERSTOOD AND RESPONSIVE TO
CHANGE
• ENCOURAGE INITIATIVE AND ENTHUSIASM AT ALL LEVELS IN
THE ORGANIZATION
• BE ALERT FROM VISION KILLERS
 MISSION

~ It is the founders’ intentions at the outset of the organization-

what they wanted to achieve.
~ In the dynamic environment of today, it must be re-examined
and refreshed periodically.
~ Even the most exciting vision will remain only a dream unless it
is followed up with striving, building and improving ‘mission
statement’.
 AIM OF MIISION STATEMENT
~ It is a statement of purpose and function
~ It sets the organization apart from others.
~ They give meaning to the reason for being, value-add, and
define the business of the organization.
~ A well crafted mission statement must be narrow enough to
specify the real area of interest.
 COMPONENTS OF MISSION STATEMENT
• THE KEY MARKET
• CONTRIBUTION
• DISTINCTION

Ranbaxy “ Our mission is to become a research-based

international pharmaceutical company”
“ To offer the fast food customer food prepared in the same high
quality worldwide, tasty and reasonably priced, delivered in a
consistent low key décor and friendly manner.”
HOW TO PREPARE VISION AND MISSION
STATEMENTS
Through Brain stroming and blue sky days.

These statements give a common sense and purpose across the

organization. it provides an explicit depiction of values to guide the
organization in chossing among competing priorities, thereby setting
the organization apart from others.
GOALS & OBJECTIVES
GOALS OBJECTIVES

Denote what an organization hopes to Are the ends that state specifically how
accomplish in a future period of time the goals shall be achieved.

They represent the future state or

ourcome of effort and are generalized They are concrete and specific

A broad category of financial and non- They are measurable and comparable and
financial issues are addressed by the goals make the goals operational. Often
that a firm sets. Often qualitative in nature quantitative in nature.
ORGANIZATIONAL OBJECTIVES
• Strategic/Corporate objectives(no fixed time
horizon)- Long term market position but no sure shot
short term gains
• Business Process Objectives(4-5 years)- short term
objectives, developed at allthe levels. Measurable,
time bound. Categories to be considered: Marketing,
products, operations, HR, community etc.
• Operational objectives/KRAs(1-2 years)- Areas where
performance is essential for the ongoing success of
the organization. Revised regularly.
Issues to be kept in mindwhile setting objectives
• Balance your objectives-all functional areas to be
involved.
• Multiplicity of objectives- short list
• Theme for objectives- single theme
• Use result oriented instead of activity oriented
objectives
• Quantify your objectives
• Network objectives, link them together
• Make them challenging but attainable
• SMART formula
EXTERNAL ENVIRONMENT ANALYSIS
(SWOT)
Positive considerations Negative considerations

Internal
STRENGTHS (build) WEAKNESSES(reverse)
aspects

OPPORTUNITIES(maximise
External THREATS(overcome)
response)
aspects
PESTLE

POLITICAL ECONOMIC SOCIAL

TECHNOLOGICAL LEGAL ENVIRONMENTAL

ETOP ANALYSIS
ENVIRONMENTAL THREAT AND OPPORTUNITY PROFILE
(+) For an opportunity
(-) For a threat
ANALYZING COMPANIES RESOURCES IN COMPETITIVE
POSITION

THREATS OPPORTUNITY

WEAKNESS STRENGTH
COMPARATIVE TABLES
Key success Our
Rival 1 Rival 2 Rival 3 Rival 4
Factors Company

Quality/product 8 5 10 1 6
performance

Reputation /
8 7 10 1 6
image in market

Technological 10 1 7 7 8
skills

Distribution
9 4 10 5 1
strength

Rating scale:1=V.weak;10=V.strong
MINTZBERG'S 5 Ps OF STRATEGY
Formulated Implemented
strategy strategy

Intended
Intended Deliberate strategy Realised
strategy
strategy strategy

Unrealised
Emergent strategy
strategy
UNIT-2
Porter's five forces model
• Central competitive force(Industry competitors)
• Threat of new entrants
• Threat of substitutes
• Bargaining power of buyers
• Bargaining power of suppliers
What is value chain analysis?

• The value chain, also known as value chain analysis,

is a concept from business management that was first
described and popularized by Michael Porter.
• A value chain is a chain of activities for a firm
operating in a specific industry.
• Reveals opportunities to add value by improving cost,
responsiveness to customers, efficiency, quality,
reliability and integrity.
What is value chain analysis?
• Used to identify sources of competitive advantage
• Specifically:
• Opportunities to secure cost advantages
• Opportunities to create product/service differentiation
• Includes the value-creating activities of all industry
participants
Activities
• Value activities: the physically and technologically
distinct activities a firm performs.
• The primary activities include: inbound logistics,
operations (production), outbound logistics,
marketing and sales (demand), and services
(maintenance).
• The support activities include: administrative
infrastructure management, human resource
management, technology (R&D), and procurement.
The costs and value drivers are identified for each
value activity.
Value Chain framework
ENVIRONMENTAL FACTORS
• Need & Characteristics

Environmental factors can be explained as identifiable elements within

the cultural, economic, demographic, physical, technological
or ,political environment that effects growth, operations and survival of
an organization. Environmental factors can be both internal as well
external for the business. External factors can include economic and
technological factors whereas; internal factors may include value
system, objectives or internal relationships of a business.
 CATEGORIZATION OF
ENVIRONMENTAL FACTORS
• Environmental policies- are considered the major external factor.
Environmental policy impacts businesses because the law implies organizations
to change their operational procedures and equipment so as to meet those
standards which can cost businesses some good amount of money.
• Climate Change- Climate change became an insidious threat to businesses as
its pace can be recognized only when it is taken into consideration on the basis
of decade-after-decade.
• Green Agenda. Business-related activities impact the environment; however,
the environment also has an effect on businesses and the market environment.
Now enterprises have realized that in order to achieve business goals, there is
a need to draft environmental-friendly policies. 
• Pollution. Pollution can also have an impact over business strategies. Pollution
may cause some major environmental events which can result in the disruption
of supply chains or an increase in the cost of raw material. 
• Availability of natural resources. Amongst external environment factors, this
factor refers to the physical environment of a business. Natural resources are
very important for most businesses and many corporations have natural
resources as their major raw material.
• Recycling. Recycling is another aspect of a greener environment. The cost of
dumping waste in landfills is increasing and is resulting in not only shortage of
wastages but, it also provides harm to the environment. 
• Waste Disposal. Although, there has been a positive trend towards recycling of
waste materials, still there is several businesses which dump wastage in
landfills.  This not only increases their cost of dumping waste but, is also
harmful to the environment in which the business operates
ENVIRONMENTAL ANALYSIS TOOLS
• SWOT

• TOWS

• ETOP

• PESTEL

• COMPETITIVE COMPARATIVE TABLES

RESOURCE AUDIT & STRATEGIC
ADVANTAGE ANALYSIS
Functional area profile and resource deployment matrix