Strategies and Policies

Definition

A method or plan chosen to bring about a desired

future, such as achievement of a goal or solution to
a problem.

According to Koontz O’ Donnel “Strategies must

often denote a general programme of action and
deployment of various resources to attain
comprehensive objectives.
Strategies
The set of managerial decisions and actions that
determines the long-run performance of a
corporation.
It focuses on integrating management, marketing,
finance/accounting, production/operations,
research and development, and computer
information systems to achieve organizational
success.
Thus strategies are:
It is the right combination of different factors
It relates the business organization to the
environment.
It is an action to meet an particular challenge, to
solve particular problems or to attain desired
objectives.
Strategies is a means to an end, not an end itself.
It is formulated at top management level.
Types of Corporate Strategies
Retrenchment Strategy
 Turnaround Strategy
 Divestment Strategy
 Liquidation Strategy
Expansion Strategy (Diversification/Integration/
Cooperation/Internationalization)
Stability Strategy
 No Change
 Profit Strategy
 Pause/proceed with caution
Combination Strategy
Types of Strategies
Moore distinguishes between three types of strategies:
1) External Economic Strategies: Deals with broad
approaches to meet the competition, adaptation of
technological changes, responding to conditions of
supplies of raw material, equipments etc.
2) External Social Strategies: Concerned with the
company, way of dealing with government, social and
public welfare organizations, political parties
3) Internal Organizational Strategies: Concerned with
company’s approach to the most effective utilization of
its existing resources.
Strategy Planning Process
Mission and Objectives

Environmental Scanning

Strategy Formulation

Strategy Implementation

Evaluation and Control

Strategy Formulation/ Strategic Planning
It is the process of developing the strategy and the
process by which an organization chooses the most
appropriate courses of action to achieve defined goals.
Also K/n as Strategic Planning.
A strategic plan enables an organization to evaluate its
resources, allocate budgets and determining the most
effective plans for maximizing the ROI.
After analyzing the internal and external environment
strategic alternatives are developed.
 Strategic Planning Process
Mission and Objectives
Mission involves “Ask What do we do? , How do we do it?, and for whom
do we do it?”
Objectives may include market position relative to competitors, desired
market Share, Production of goods and services, improve customer services,
increased sales, corporation expansion etc

Environmental Scanning:
 Analysis of external macro environment through PEST (Political, Economic,
Social and Technological) Analysis to identify the competitive situation of the
enterprise
 Internal environment of the firm is audited and evaluated in terms of its
resources, its weaknesses and strengths in terms of R&D, production,
operations, marketing, HR, Finance, company image, structure, culture,
relations with customers etc(Task Environment/ SWOT /Porters Five Forces
etc).
 Environmental Scanning helps to define the competitive strategy.
Alternative Strategies
After the scanning of the internal and external
environment strategic alternatives are developed.
A organization may pursue different kinds of
strategies. It may be specialize and concentrate,
diversify, go international, joint ventures, liquidation,
retrenchment etc.
In practice companies specially large ones, pursue a
combination of strategies.
Evaluation and Choice of Strategies
Various strategy is to be carefully evaluated before the
choice is made.
Strategic choices must be considered in light of the
risks involved in a particular decision
Some profitable opportunity may not be pursued
because failure in a risky venture could results in
bankruptcy of the firm.
Another element in choosing a strategy is timing. Even
a best product may fail if it is introduced in a market
at an inappropriate time.
Strategy Implementation
The strategy developed is of no use if
not implemented properly
The selected strategy may be
implemented by means of programs,
budgets and procedures
It involves organisation of firms
resources and its motivation of staff to
achieve objectives.