402.

Strategic mgmt
Unit 1

1.define nature & scope of strategic mgmt

2.strategic mgmt process & components of strategic mgmt models

Unit 2

1.define strategy formulation & company mission

2.how competitive forces shape strategy

3.industry analysis & internal analysis of the firm

Unit 3

1.grand strategies & generic strategies

2.mc.kinseys 7s frame work

3 BCG matrix & GE analysis

Unit 4

1.define strategy implementation

2.define leadership and culture

Unit 5

1.define strategy control

2.corporate governance & corporate social responsibility

Scanned by CamScanner
 UNIT- 1 Strategic Management

Strategic Management:

Strategic management is the formulation and implementation of the major goals and
initiatives taken by a company's top management on behalf of owners, based on consideration of
resources and an assessment of the internal and external environments in which the organization
competes.

Strategic management provides overall direction to the enterprise and involves specifying
the organization's objectives, developing policies and plans designed to achieve these objectives,
and then allocating resources to implement the plans. Academics and practicing managers have
developed numerous models and frameworks to assist in strategic decision making in the context
of complex environments and competitive dynamics. Strategic management is not static in
nature; the models often include a feedback loop to monitor execution and inform the next round
of planning.

Michael Porter identifies three principles underlying strategy: creating a "unique and
valuable [market] position", making trade-offs by choosing "what not to do", and creating "fit"
by aligning company activities with one another to support the chosen strategy.

The Scope of Strategic Management

* Management process. Management process as relate to how strategies are created and
changed.

* Management decisions. The decisions must relate clearly to a solution of perceived problems
(how to avoid a threat; how to capitalize on an opportunity).

* Time scales. The strategic time horizon is long. However, it for company in real trouble can be
very short.
* Structure of the organization. An organization is managed by people within a structure. The
decisions which result from the way that managers work together within the structure can result
in strategic change.

* Activities of the organization. This is a potentially limitless area of study and we normally
shall centre upon all activities which affect the organization.

The Importance And Value Of Strategic Management

Financial Benefits

The question "Why should an organization engage in strategic management?" must be answered
by looking at the relationship between strategic management and performance.

Nonfinancial Benefits

Regardless of the profitability of strategic management, several behavioral effects can be

expected to improve the welfare of the firm. Yoo and Digman emphasize that strategic
management is needed to cope with and manage uncertainty in decision making. They present
several benefits of strategic management:

1. It provides a way to anticipate future problems and opportunities.

2. It provides employees with clear objectives and directions for the future of the
organization.
3. It results in more effective and better performance compared to non-strategic
management organizations.
4. It increases employee satisfaction and motivation.
5. It results in faster and better decision making and
6. It results on cost savings.

The Strategic Management Process

The five stages of the process are goal-setting, analysis, strategy formation, strategy
implementation and strategy monitoring.
Step 1: Goal-Setting

The purpose of goal-setting is to clarify the vision for your business. This stage consists
of identifying three key facets: First, define both short- and long-term objectives. Second,
identify the process of how to accomplish your objective. Finally, customize the process for your
staff; give each person a task with which he can succeed. Keep in mind during this process your
goals to be detailed, realistic and match the values of your vision. Typically, the final step in this
stage is to write a mission statement that succinctly communicates your goals to both your
shareholders and your staff.

Step 2: Analysis

Analysis is a key stage because the information gained in this stage will shape the next
two stages. In this stage, gather as much information and data relevant to accomplishing your
vision. The focus of the analysis should be on understanding the needs of the business as a
sustainable entity, its strategic direction and identifying initiatives that will help your business
grow. Examine any external or internal issues that can affect your goals and objectives. Make
sure to identify both the strengths and weaknesses of your organization as well as any threats and
opportunities that may arise along the path.

Step 3: Strategy Formulation

The first step in forming a strategy is to review the information gleaned from completing
the analysis. Determine what resources the business currently has that can help reach the defined
goals and objectives. Identify any areas of which the business must seek external resources. The
issues facing the company should be prioritized by their importance to your success. Once
prioritized, begin formulating the strategy. Because business and economic situations are fluid, it
is critical in this stage to develop alternative approaches that target each step of the plan.
Step 4: Strategy Implementation

Successful strategy implementation is critical to the success of the business venture. This
is the action stage of the strategic management process. If the overall strategy does not work with
the business' current structure, a new structure should be installed at the beginning of this stage.
Everyone within the organization must be made clear of their responsibilities and duties, and
how that fits in with the overall goal. Additionally, any resources or funding for the venture must
be secured at this point. Once the funding is in place and the employees are ready, execute the
plan.

Step 5: Evaluation and Control

Strategy evaluation and control actions include performance measurements, consistent

review of internal and external issues and making corrective actions when necessary. Any
successful evaluation of the strategy begins with defining the parameters to be measured. These
parameters should mirror the goals set in Stage 1. Determine your progress by measuring the
actual results versus the plan. Monitoring internal and external issues will also enable you to
react to any substantial change in your business environment. If you determine that the strategy
is not moving the company toward its goal, take corrective actions. If those actions are not
successful, then repeat the strategic management process. Because internal and external issues
are constantly evolving, any data gained in this stage should be retained to help with any future
strategies.

Components of Strategic Management Model:

1. Create an actionable plan or strategy.

Set realistic goals at the level of individual departments and divisions. Write a company-wide
mission statement. The first component of strategic management can be defined as the strategic
planning portion of the overall process of creating and implementing a strategy. This is otherwise
known as a general plan of action.

2. Perform a SWOT analysis to prepare for implementation of the strategy.

 The acronym SWOT stands for strengths, weaknesses, opportunities and threats. SWOT
analysis takes various internal and external factors into account when considering potential
challenges to a company's implementation of strategy.

3. Design and implement the strategy.

Outline actionable steps which will lead to desired outcomes of the strategy. For example, a
company that includes assurance of job security and employee job satisfaction as part of its
strategy might allocate resources to undersign a more comprehensive health insurance policy.
The inclusion of implementation as a major component of strategic management differentiates
this administrative model from strategic planning, which focuses almost exclusively on outlining
an organization's mission and goals.

4. Track the progress of the implementation.

Develop and execute a strategic review or audit of individual departments. Conduct

employee surveys to determine the effectiveness of desired goals. This component of strategic
management is not only important in the implementation process itself, but also for the
refinement of overall company strategy. Effective feedback will aid leaders in shifting priorities,
as they polish the organization's strategic vision.
 UNIT- 2 Strategy Formulation

Strategy formulation is the process by which an organization chooses the most.

appropriate courses of action to achieve its defined goals. This process is. essential to an
organization's success.

Strategy formulation refers to the process of choosing the most appropriate course of action for
the realization of organizational goals and objectives and thereby achieving the organizational
vision.

The process of strategy formulation basically involves six main steps.

Step 1: Setting Organizations’ objectives

The key component of any strategy statement is to set the long-term objectives of the
organization. It is known that strategy is generally a medium for realization of organizational
objectives. Objectives stress the state of being there whereas Strategy stresses upon the process
of reaching there. Strategy includes both the fixation of objectives as well the medium to be used
to realize those objectives. Thus, strategy is a wider term which believes in the manner of
deployment of resources so as to achieve the objectives.

While fixing the organizational objectives, it is essential that the factors which influence the
selection of objectives must be analyzed before the selection of objectives. Once the objectives
and the factors influencing strategic decisions have been determined, it is easy to take strategic
decisions.

Step 2: Evaluating the Organizational Environment

The next step is to evaluate the general economic and industrial environment in which the
organization operates. This includes a review of the organizations competitive position. It is
essential to conduct a qualitative and quantitative review of an organizations existing product
line. The purpose of such a review is to make sure that the factors important for competitive
success in the market can be discovered so that the management can identify their own strengths
and weaknesses as well as their competitors’ strengths and weaknesses.

After identifying its strengths and weaknesses, an organization must keep a track of competitors’
moves and actions so as to discover probable opportunities of threats to its market or supply
sources.

Step 3: Setting Quantitative Target

In this step, an organization must practically fix the quantitative target values for some of
the organizational objectives. The idea behind this is to compare with long term customers, so as
to evaluate the contribution that might be made by various product zones or operating
departments.

Step 4: Aiming in context with the divisional plans

In this step, the contributions made by each department or division or product category
within the organization are identified and accordingly strategic planning is done for each sub-
unit. This requires a careful analysis of macroeconomic trends.

Step 5: Performance Analysis

Performance analysis includes discovering and analyzing the gap between the planned or
desired performance. A critical evaluation of the organizations past performance, present
condition and the desired future conditions must be done by the organization. This critical
evaluation identifies the degree of gap that persists between the actual reality and the long-term
aspirations of the organization. An attempt is made by the organization to estimate its probable
future condition if the current trends persist.

Step 6: Choice of Strategy

 This is the ultimate step in Strategy Formulation. The best course of action is actually
chosen after considering organizational goals, organizational strengths, potential and limitations
as well as the external opportunities.

Defining the Company Mission:

A mission statement defines what an organization is, why it exists, its reason for being.
At a minimum, your mission statement should define who your primary customers are, identify
the products and services you produce, and describe the geographical location in which you
operate.

If you don't have a mission statement, create one by writing down in one sentence what
the purpose of your business is. Ask two or three of the key people in your company to do the
same thing. Then discuss the statements and come up with one sentence everyone agrees with.
Once you have finalized your mission statement, communicate it to everyone in the company.

It's more important to communicate the mission statement to employees than to

customers. Your mission statement doesn't have to be clever or catchy--just accurate.

If you already have a mission statement, you will need to periodically review and
possibly revise it to make sure it accurately reflects your goals as your company and the business
and economic climates evolve. To do this, simply ask yourself if the statement still correctly
describes what you're doing.

If your review results in a revision of the statement be sure everyone in the company is
aware of the change. Make a big deal out of it. After all, a change in your mission probably
means your company is growing-and that's a big deal.

The mission statement reflects every facet of your business: the range and nature of the
products you offer, pricing, quality, service, marketplace position, growth potential, use of
technology, and your relationships with your customers, employees, suppliers, competitors and
the community.
Steps in Strategy Formulation:

1. Start with a market-defining story

You don’t have to actually write the story—it’s definitely not included in the mission statement
—but do think it through:

Imagine a real person making the actual decision to buy what you sell. Use your imagination to
see why she wants it, how she finds you, and what buying from you does for her. The more
concrete the story, the better. And keep that in mind for the actual mission statement wording:
“The more concrete, the better.”

2. Define what your business does for its customers

Start your mission statement with the good you do. Use your market-defining story to
suss out whatever it is that makes your business special for your target customer.

3. Define what your business does for its employees

Good businesses are good for their employees too or they don’t last. Keeping employees
is better for the bottom line than turnover. Company culture matters. Rewarding and motivating
people matters. A mission statement can define what your business offers its employee.

4. Add what the business does for its owners

In business school they taught us that the mission of management is to enhance the value
of the stock. And shares of stock are ownership. Some would say that it goes without saying that
a business exists to enhance the financial position of its owners, and maybe it does. However,
only a small subset of all businesses is about the business buzzwords of “share value” and
“return on investment.”

5. Discuss, digest, cut, polish, review, revise

Whatever you wrote for points two through four above, go back and cut down the
wordiness. Good mission statements serve multiple functions, define objectives, and live for a
long time. So, edit. This step is worth it.

Assessing the External Environment:

The external environment of an organization is those factors outside the company that
affect the company's ability to function. Some external elements can be manipulated by company
marketing, while others require the organization to make adjustments. Monitor the basic
components of your company's external environment, and keep a close watch at all times.

Five Components of an Organization's External Environment:

1. Customers

Your customers are among the external elements you can attempt to influence, via
marketing and strategic release of corporate information. But ultimately, your relationship with
your clients is based on finding ways to influence them to purchase your products. Market
research is used to determine the effectiveness of your marketing messages, and to decide what
changes can be made to future marketing programs to improve sales.

2. Government

Government regulations in product development, packaging and shipping play a

significant role in the cost of doing business and your ability to expand into new markets. If the
government places new regulations on how you must package your product for shipment, that
can increase your unit costs and affect your profit margins. International laws create processes
that your company must follow to get your product into foreign markets.

3. Economy

As with the majority of the elements of your organization's external environment, your
company must be efficient at monitoring the economy and learning how to react to it, rather than
trying to manipulate it. Economic factors affect how you market products, how much money you
can spend on business growth, and the kind of target markets you will pursue.

4. Competition

Your competition has a significant effect on how you do business and how you address
your target market. You can choose to find markets that the competition is not active in, or you
can decide to take on the competition directly in the same target market. The success and failure
of your various competitors also determines a portion of your marketing planning, as well. For
example, if a long-time competitor in a particular market suddenly decides to drop out due to
financial losses, then you will need to adjust your planning to take advantage of the situation.

5. Public Opinion

Any kind of company scandal can be damaging to your organization's image. The public
perception of your organization can hurt sales it's negative, or it can boost sales with positive
company news. Your firm can influence public opinion by using public relations professionals to
release strategic information, but it is also important to monitor public opinion to try and defuse
potential issues before they begin to spread.

Remote & Industry Environment:

“Remote environment.” The primary elements found in a discussion of the remote environment
include: Economic Factors, Social Factors, Political Factors and Technological Factors.

Economic Factors – These are probably things that we are all more familiar with that we were
six months ago. They include things like prime interest rates, inflation rate, the unemployment
rate, the rate of economic growth, etc. These are big things, important things; they are outside of
our control, directly affecting our business.

Social Factors – These are bit harder to define precisely, but that is probably true of anything
with human beings at its core. Here we are referring to beliefs, values, attitudes, opinions,
lifestyle choices, etc. that are held in society.

Political Factors – With a recent change in administrations in Washington, these are things that
we are also paying a lot of attention to. Make no mistake about it; we are not referring here to
personalities, to whom you like or don’t like, but rather to specific policies, programs and laws
and directly to how those affect your business. How are things that the IRS, FDA, FTC, INS,
USDA and others are doing going to affect your customers, your suppliers, your competitors,
your neighbors, and you?

Technological Factors – What tools and advances are in the marketplace that help (or hinder)
you from serving your customers? What is on the horizon that can help you communicate,
predict, or respond better? With our stores being in a more specialty, consumer-focused part of
the marketplace, one thing to look at in regards to retail-technology, is that we aren’t so focused
on the use of technology that we lose touch with customer service and human interaction. These
are tools that should help us serve our customers, not remove us from waiting on them,
answering their questions and helping them make good decisions.

Industry Environments:

An industrial environment is a term used to describe working conditions that may be outside of
optimal. Industrial environments are usually more harsh than normal work environments, such as
an office. In an industrial environment, people and equipment are exposed to more extreme
conditions. Depending on the job, these conditions can be very severe.

Cultural and Social Factors

Cultural and social factors influence the type of customers you target, the range of products you
can offer, and the way you communicate with the market. Cultural and social influences shape a
customer’s preferences and ways of doing business, so it is important to understand and respond
to the factors. Certain colors, for example, have positive or negative significance for different
cultural groups, so your products and packaging must reflect those preferences.

Political and Regulatory Environment

Your marketing strategy must take account of the domestic political and regulatory environment.
Politicians and regulators may wish to impose restrictions on certain industries to protect
consumers, for example. They may take action to increase competition, potentially opening up
your existing market to new competitors. Your products must comply with any health, safety and
other type of legislation that relates to your industry.

Economic Conditions

Prevailing economic conditions in the country have a direct impact on your marketing program.
During a recession, for example, consumers and businesses have less to spend, reducing demand
for many types of products and services. Products that offer high value for the price will have a
greater appeal during difficult economic conditions. Economic prosperity provides a better
environment for marketing luxury goods or higher-priced versions of your product range.

Competition

The level of competition in your marketplace influences your marketing strategy and tactics. If
you face strong competition in one sector, you can try to increase your share by improving the
price or performance of your products. Alternatively, you may find it easier to withdraw from a
highly-competitive sector and focus on other sectors where you have a stronger competitive
advantage.

Media

The media infrastructure in the domestic market determines your options for communicating
with customers and prospects. Depending on your product and your target audience, you will
benefit from a wide choice of magazines, newspapers, and television and radio stations, enabling
you to select the media that reach the greatest number of prospects at the lowest cost.

Logistics

To reach your domestic customers, you need a well-developed logistics infrastructure. A strong
network of retailers or distributors is important if you market your products through indirect
channels. If you market your products throughout the country, a national logistics infrastructure
of warehouses, distributors, and transport operators will help you to access your market easily.

Technology

The technology infrastructure influences the domestic marketing environment in a number of

ways. It can provide an important communication channel, enabling you to market your products
through a website or via email. If you supply digital products or services, you can use the
Internet to distribute them.

Industry Analysis:

Industry analysis is a tool that facilitates a company's understanding of its position relative to
other companies that produce similar products or services. Understanding the forces at work in
the overall industry is an important component of effective strategic planning. Industry analysis
enables small business owners to identify the threats and opportunities facing their businesses,
and to focus their resources on developing unique capabilities that could lead to a competitive
advantage.

An industry analysis consists of three major elements: the underlying forces at work in the
industry; the overall attractiveness of the industry; and the critical factors that determine a
company's success within the industry.

INDUSTRY FORCES

The first step in performing an industry analysis is to assess the impact of Porter's five forces.
"The collective strength of these forces determines the ultimate profit potential in the industry,
where profit potential is measured in terms of long term return on invested capital," Porter stated.
"The goal of competitive strategy for a business unit in an industry is to find a position in the
industry where the company can best defend itself against these competitive forces or can
influence them in its favor." Understanding the underlying forces determining the structure of the
industry can highlight the strengths and weaknesses of a small business, show where strategic
changes can make the greatest difference, and illuminate areas where industry trends may turn
into opportunities or threats.

1. Ease of Entry

Ease of entry refers to how easy or difficult it is for a new firm to begin competing in the
industry. The ease of entry into an industry is important because it determines the likelihood that
a company will face new competitors. In industries that are easy to enter, sources of competitive
advantage tend to wane quickly. On the other hand, in industries that are difficult to enter,
sources of competitive advantage last longer, and firms also tend to benefit from having a
constant set of competitors.

The ease of entry into an industry depends upon two factors: the reaction of existing
competitors to new entrants; and the barriers to market entry that prevail in the industry. Existing
competitors are most likely to react strongly against new entrants when there is a history of such
behavior, when the competitors have invested substantial resources in the industry, and when the
industry is characterized by slow growth. Some of the major barriers to market entry include
economies of scale, high capital requirements, and switching costs for the customer, limited
access to the channels of distribution, a high degree of product differentiation, and restrictive
government policies.

2. Power of Suppliers

Suppliers can gain bargaining power within an industry through a number of different
situations. For example, suppliers gain power when an industry relies on just a few suppliers,
when there are no substitutes available for the suppliers' product, when there are switching costs
associated with changing suppliers, when each purchaser accounts for just a small portion of the
suppliers' business, and when suppliers have the resources to move forward in the chain of
distribution and take on the role of their customers. Supplier power can affect the relationship
between a small business and its customers by influencing the quality and price of the final
product. "All of these factors combined will affect your ability to compete," Cook noted. "They
will impact your ability to use your supplier relationship to establish competitive advantages
with your customers."

3. Power of Buyers

The reverse situation occurs when bargaining power rests in the hands of buyers. Powerful
buyers can exert pressure on small businesses by demanding lower prices, higher quality, or
additional services, or by playing competitors off one another. The power of buyers tends to
increase when single customers account for large volumes of the business's product, when
substitutes are available for the product, when the costs associated with switching suppliers are
low, and when buyers possess the resources to move backward in the chain of distribution.

4. Availability of Substitutes

"All firms in an industry are competing, in a broad sense, with industries producing substitute
products. Substitutes limit the potential returns of an industry by placing a ceiling on the prices
firms in the industry can profitably charge," Porter explained. Product substitution occurs when a
small business's customer comes to believe that a similar product can perform the same function
at a better price. Substitution can be subtle—for example, insurance agents have gradually
moved into the investment field formerly controlled by financial planners—or sudden—for
example, compact disc technology has taken the place of vinyl record albums. The main defense
available against substitution is product differentiation. By forming a deep understanding of the
customer, some companies are able to create demand specifically for their products.

5. Competitors

"The battle you wage against competitors is one of the strongest industry forces with which
you contend," according to Cook. Competitive battles can take the form of price wars,
advertising campaigns, new product introductions, or expanded service offerings—all of which
can reduce the profitability of firms within an industry. The intensity of competition tends to
increase when an industry is characterized by a number of well-balanced competitors, a slow rate
of industry growth, high fixed costs, or a lack of differentiation between products. Another factor
increasing the intensity of competition is high exit barriers—including specialized assets,
emotional ties, government or social restrictions, strategic interrelationships with other business
units, labor agreements, or other fixed costs—which make competitors stay and fight even when
they find the industry unprofitable.

Competitive Forces Shape Strategy:

The seriousness of the threat of entry depends on the barriers present and on the reaction
from existing competitors that entrants can expect. If barriers to entry are high and newcomers
can expect sharp retaliation from the entrenched competitors, obviously the newcomers will not
pose a serious threat of entering.

1. Economies of scale

These economies deter entry by forcing the aspirant either to come in on a large scale or
to accept a cost disadvantage. Scale economies in production, research, marketing, and service
are probably the key barriers to entry in the mainframe computer industry, as Xerox and GE
sadly discovered. Economies of scale can also act as hurdles in distribution, utilization of the
sales force, financing, and nearly any other part of a business.

2. Product differentiation

Brand identification creates a barrier by forcing entrants to spend heavily to overcome

customer loyalty. Advertising, customer service, being first in the industry, and product
differences are among the factors fostering brand identification. It is perhaps the most important
entry barrier in soft drinks, over-the-counter drugs, cosmetics, investment banking, and public
accounting. To create high fences around their businesses, brewers couple brand identification
with economies of scale in production, distribution, and marketing.
3. Capital requirements

The need to invest large financial resources in order to compete creates a barrier to entry,
particularly if the capital is required for unrecoverable expenditures in up-front advertising or
R&D. Capital is necessary not only for fixed facilities but also for customer credit, inventories,
and absorbing start-up losses. While major corporations have the financial resources to invade
almost any industry, the huge capital requirements in certain fields, such as computer
manufacturing and mineral extraction, limit the pool of likely entrants.

4. Cost disadvantages independent of size

Entrenched companies may have cost advantages not available to potential rivals, no
matter what their size and attainable economies of scale. These advantages can stem from the
effects of the learning curve (and of its first cousin, the experience curve), proprietary
technology, access to the best raw materials sources, assets purchased at preinflation prices,
government subsidies, or favorable locations. Sometimes cost advantages are legally
enforceable, as they are through patents. (For an analysis of the much-discussed experience
curve as a barrier to entry,

5. Access to distribution channels

The newcomer on the block must, of course, secure distribution of its product or service.
A new food product, for example, must displace others from the supermarket shelf via price
breaks, promotions, intense selling efforts, or some other means. The more limited the wholesale
or retail channels are and the more that existing competitors have these tied up, obviously the
tougher that entry into the industry will be. Sometimes this barrier is so high that, to surmount it,
a new contestant must create its own distribution channels, as Timex did in the watch industry in
the 1950s.

6. Government policy

The government can limit or even foreclose entry to industries with such controls as
license requirements and limits on access to raw materials. Regulated industries like trucking,
liquor retailing, and freight forwarding are noticeable examples; more subtle government
restrictions operate in fields like ski-area development and coal mining. The government also can
play a major indirect role by affecting entry barriers through controls such as air and water
pollution standards and safety regulations.

The Company Profile: Internal Analysis of the Firm:

An internal analysis is an exploration of your organization’s competency, cost position

and competitive viability in the marketplace. Conducting an internal analysis often incorporates
measures that provide useful information about your organization’s strengths, weakness,
opportunities and threats -- a SWOT analysis. The data generated by an internal analysis is
important because you can use it to develop strategic planning objectives to sustain and grow
your business.

1. Strength and Competency

An important measure in an internal analysis is to determine your organization’s level of

strength and competency. A strong organization uses updated technology systems and equipment
to accomplish its work. Its financial goals are being met and strategic planning objectives are
being accomplished. An organization with strong competency also has a solid brand identity
built upon expertise, capabilities and resources within the organization.

2. Organizational Weaknesses

A weak organization is one that uses outdated technology, is lacking in expertise or

working with deficient assets. A well-orchestrated internal analysis should bring to light any
such organizational weaknesses that exist -- areas in need of improvement and objectives that are
not being realized. Once your analysis has revealed your deficiencies, you can revise your
strategic plan to address and overcome failed objectives and improve or eliminate weaknesses.
 3. Cost Position and Opportunity

An internal analysis should determine the cost position of your organization in your
industry market and your potential to attract and engage new business opportunities. Cost
position involves your business’s ability to acquire and manage resources and deliver exceptional
value to your customers in a way that is unmatched by rival businesses. Opportunities for
business growth can include venture capital partnerships, relationship prospects in foreign
markets and acquisition of competing businesses. An internal analysis can reveal your
preparedness to take advantage of business growth opportunities.

4. Looming Threats

Striving to position your business at the top of your industry is an ongoing task. New
companies are always entering the marketplace with novel innovations and potential to surpass
you. It’s important to remain aware of changes in your market, the economy, technology and
activities of rival companies that can threaten your viability in the marketplace. Internal analysis
provides important information that can help you build on your strengths, prepare for threats and
keep your business growing.

5. Competitive Viability

Internal analysis can help you determine how competitive you are in your industry. A
competitively viable business challenges its rivals to match the service or product it offers,
especially if it's using cutting edge proprietary technology, and has strongly enforced quality
control standards. A competitive business has high intellect human capital -- the best and
brightest employees contributing their expertise and innovations to daily operations. The most
viable companies have consistently climbing sales revenues and use efficient supply chains. An
internal analysis will examine the effectiveness of your supplier network, customer loyalty and
sales, providing important metrics you can use to amend your business strategies and become a
stronger competitor in your industry.
 UNIT- 3 Formulating Long Term Objectives

Before we learn how strategic decisions are made, it is important to understand the two
principal components of any strategic choice; namely, long-term objectives and the grand
strategy. The purpose of this chapter was to convey that understanding.

Long-term objectives were defined as the results a firm seeks to achieve over a specified
period, typically five years. Seven common long-term objectives were discussed: profitability,
productivity, competitive position, employee development, employee relations, technological
leadership, and public responsibility. These, or any other long-term objectives, should be
acceptable, flexible, and measurable over time, motivating, suitable, understandable, and
achievable.

Grand strategies were defined as comprehensive approaches guiding the major actions
designed to achieve long-term objectives. Fifteen grand strategy options were discussed:
concentrated growth, market development, product development, innovation, horizontal
integration, vertical integration, concentric diversification, conglomerate diversification,
turnaround, divestiture, liquidation, bankruptcy, joint ventures, strategic alliances, and consortia.

Long Term Objectives:

Performance goals of an organization, intended to be achieved over a period of five years

or more. Long-term objectives usually include specific improvements in the organization's
competitive position, technology leadership, profitability, return on investment, employee
relations and productivity, and corporate image.
 Long-term goals can be a great motivator for self-improvement. They give us objectives
that we can strive to achieve. Some examples of long-term goals include owning a home, getting
out of debt, or making it to NBA. Everyone should have at least one long-term goal in place that
they wish to achieve. These goals can give people a general idea of what direction they want
their life to go in.

Grand Strategies:
Comprehensive, long-term plan of essential actions by which a firm plans to achieve its
major objectives. Key factors of this strategy may include market, product, and/or organizational
development through acquisition, divestiture, diversification, joint ventures, or strategic
alliances.

The role of grand strategy – higher strategy – is to co-ordinate and directs all the
resources of a nation, or band of nations, towards the attainment of the political object of the war
– the goal defined by fundamental policy.

Grand strategy should both calculate and develop the economic resources and man-power
of nations in order to sustain the fighting services.

Grand strategy expands on the traditional idea of strategy in two ways:

1. examining internal in addition to external forces – taking into account both the various
instruments of power and the internal policies necessary for their implementation
(conscription, for example)
2. including consideration of periods of peacetime in addition to wartime

The Grand Strategies are the corporate level strategies designed to identify the firm’s
choice with respect to the direction it follows to accomplish its set objectives. Simply, it involves
the decision of choosing the long term plans from the set of available alternatives. The Grand
Strategies are also called as Master Strategies or Corporate Strategies.
There are four grand strategic alternatives that can be followed by the organization to realize its
long-term objectives:

1. Stability Strategy
2. Expansion Strategy
3. Retrenchment Strategy
4. Combination Strategy

1. Stability Strategy:

A stability strategy refers to a strategy by a company where the company stops the
expenditure on expansion, in other words it refers to situation where company do not venture
into new markets or introduce new products.

2. Expansion Strategy:

The Expansion Strategy is adopted by an organization when it attempts to achieve a high

growth as compared to its past achievements. In other words, when a firm aims to grow
considerably by broadening the scope of one of its business operations in the perspective of
customer groups, customer functions and technology alternatives, either individually or jointly,
then it follows the Expansion Strategy.

3. Retrenchment Strategy:

A strategy used by corporations to reduce the diversity or the overall size of the operations of the
company. This strategy is often used in order to cut expenses with the goal of becoming a more
financial stable business. Typically the strategy involves withdrawing from certain markets or
the discontinuation of selling certain products or service in order to make a beneficial
turnaround.

4. Combination Strategy:

The Combination Strategy means making the use of other grand strategies (stability,
expansion or retrenchment) simultaneously. Simply, the combination of any grand strategy used
by an organization in different businesses at the same time or in the same business at different
times with an aim to improve its efficiency is called as a combination strategy.

Strategic Analysis and Choice:

The process of developing strategy for a business by researching the business and the
environment in which it operates.

A strategic analysis for a business is one of the most basic and useful tools for strategic business
planning. Often, a strategic analysis will be referred to as a SWOT analysis; this is an acronym
for the major divisions of the analysis: Strengths, Weaknesses, Opportunities, and Threats.
Within these four areas, you will define your organization’s position relative to the competition
and operational environments. While many believe it is best used at the organizational level,
when properly implemented, a SWOT analysis will often return targeted, productive results at
division or departmental levels of business.

1. Define your problem or goal that necessitates the analysis. Some examples might include:
how can we gain competitive market share; how can we build our company image, or how can
we refine our logistic, production, or operational systems. A clear definition of what issue the
strategic analysis should answer will help guide your effort toward success. Don’t forget to
identify what portions of the business entity will be instrumental in the analysis. Often, business
leaders will attempt to analyze the whole company; focusing on the specific departments that
will impact or be impacted most by the issue will result in solutions that are more targeted and
relevant.

2. Gather the information needed to assess the strengths and weaknesses of your firm
Regarding the issue or problem at hand. You can conduct observational studies or one-on-one
interviews, and/or assemble qualified teams to brainstorm and report on these areas. Some
strength could be: staff, skills, property or location, financial resources, or processes (quality
control, for example). Weaknesses might include: lack of any relevant strengths or capacities to
obtain them

3. Define what the potential opportunities and threats. May be within the scope of the
problem you are trying to solve. It is usually best to assemble a team composed of individuals
within the firm with relevant knowledge regarding the departments and competitive
environments that will be key to managing the issue and implementing the solution. This team
would then identify the opportunities and threats to the firm’s efforts that exist within the firm as
well as in the external, competitive environment. Some examples of opportunities could include:
changes in government regulations, shifts in public opinion, or price reductions on (or the finding
of alternative sources) of raw materials. Examples of potential threats could include the same
items just listed if the effect is a negative one in relation to the company (that is, if public opinion
turns against your industry, product, or company).

4. Review the results of your analysis. It might be helpful to chart your findings with a section
each on the company's strengths, weaknesses, opportunities, and threats. Use the information
derived from the analysis to define how to best use your strengths, remedy your weaknesses,
optimize any predicted opportunities, and counter any perceived threats.

Strategic Choice Theory describes the role that leaders or leading groups play in
influencing an organization through making choices in a dynamic political process.

The Strategic Choice Approach:

1. Focuses on decisions to be made in a particular planning situation, whatever their timescale and
whatever their substance.
2. Highlights the subtle judgments involved in agreeing how to handle the uncertainties which
surround the decision to be addressed - whether these be technical, political or procedural.
3. The approach is an incremental one, rather than one which looks towards an end product of a
comprehensive strategy at some future point in time. This principle is expressed through a
framework known as a `commitment package'. In this, an explicit balance is agreed between
decisions to be made now and those to be left open until specified time horizons in the future.
 4. The approach is interactive, in the sense that it is designed not for use by experts in a backroom
setting, but as a framework for communication and collaboration between people with different
backgrounds and skills.

Boston Consulting Group BCG Matrix

Boston Consulting Group (BCG) Matrix is a four celled matrix (a 2 * 2 matrix)

developed by BCG, USA. It is the most renowned corporate portfolio analysis tool. It provides a
graphic representation for an organization to examine different businesses in its portfolio on the
basis of their related market share and industry growth rates. It is a two dimensional analysis on
management of SBU’s (Strategic Business Units). In other words, it is a comparative analysis of
business potential and the evaluation of environment.

According to this matrix, business could be classified as high or low according to their
industry growth rate and relative market share.

Relative Market Share = SBU Sales this year leading competitors sales this year.

Market Growth Rate = Industry sales this year - Industry Sales last year.

The analysis requires that both measures be calculated for each SBU. The dimension of
business strength, relative market share, will measure comparative advantage indicated by
market dominance. The key theory underlying this is existence of an experience curve and that
market share is achieved due to overall cost leadership.

BCG matrix has four cells, with the horizontal axis representing relative market share and
the vertical axis denoting market growth rate. The mid-point of relative market share is set at 1.0.
If all the SBU’s are in same industry, the average growth rate of the industry is used. While, if all
the SBU’s are located in different industries, then the mid-point is set at the growth rate for the
economy.

Resources are allocated to the business units according to their situation on the grid. The
four cells of this matrix have been called as stars, cash cows, question marks and dogs. Each of
these cells represents a particular type of business.

 Stars- Stars represent business units having large market share in a fast growing industry.
They may generate cash but because of fast growing market, stars require huge investments to
maintain their lead. Net cash flow is usually modest. SBU’s located in this cell are attractive as
they are located in a robust industry and these business units are highly competitive in the
industry. If successful, a star will become a cash cow when the industry matures.

 Cash Cows- Cash Cows represents business units having a large market share in a mature,
slow growing industry. Cash cows require little investment and generate cash that can be utilized
for investment in other business units. These SBU’s are the corporation’s key source of cash, and
are specifically the core business. They are the base of an organization. These businesses usually
follow stability strategies. When cash cows lose their appeal and move towards deterioration,
then a retrenchment policy may be pursued.

 Question Marks- Question marks represent business units having low relative market share
and located in a high growth industry. They require huge amount of cash to maintain or gain
market share. They require attention to determine if the venture can be viable. Question marks
are generally new goods and services which have a good commercial prospective. There is no
specific strategy which can be adopted. If the firm thinks it has dominant market share, then it
can adopt expansion strategy, else retrenchment strategy can be adopted. Most businesses start as
question marks as the company tries to enter a high growth market in which there is already a
market-share. If ignored, then question marks may become dogs, while if huge investment is
made, and then they have potential of becoming stars.

 Dogs- Dogs represent businesses having weak market shares in low-growth markets. They
neither generate cash nor require huge amount of cash. Due to low market share, these business
units face cost disadvantages. Generally retrenchment strategies are adopted because these firms
can gain market share only at the expense of competitor’s/rival firms. These business firms have
weak market share because of high costs, poor quality, ineffective marketing, etc. Unless a dog
has some other strategic aim, it should be liquidated if there is fewer prospects for it to gain
market share. Number of dogs should be avoided and minimized in an organization.

Limitations of BCG Matrix

The BCG Matrix produces a framework for allocating resources among different business
units and makes it possible to compare many business units at a glance. But BCG Matrix is not
free from limitations, such as-

1. BCG matrix classifies businesses as low and high, but generally businesses can be medium also.
Thus, the true nature of business may not be reflected.
2. Market is not clearly defined in this model.
3. High market share does not always leads to high profits. There are high costs also involved with
high market share.
4. Growth rate and relative market share are not the only indicators of profitability. This model
ignores and overlooks other indicators of profitability.
5. At times, dogs may help other businesses in gaining competitive advantage. They can earn even
more than cash cows sometimes.
6. This four-celled approach is considered as to be too simplistic.

General Electric GE Approach:

 GE multifactoral analysis is a technique used in brand marketing and product
management to help a company decide what product(s) to add to its product portfolio and
which opportunities in the market they should continue to invest in. It is conceptually similar
to BCG analysis, but somewhat more complicated. Like in BCG analysis, a two-dimensional
portfolio matrix is created. However, with the GE model the dimensions are multi factoral.
One dimension comprises nine industry attractiveness measures; the other comprises twelve
internal business strength measures. The GE matrix helps a strategic business unit evaluate
its overall strength.

Each product, brand, service, or potential product is mapped in this industry

attractiveness/business strength space. The GE multi factoral was first developed by
McKinsey for General Electric in the 1970s.

Aims of the GE model

This model aims to evaluate the existing portfolios of strategic business units and to
develop strategies to achieve growth by addition of new products and businesses to this portfolio
and further, to analyze which business units to invest in and which ones to sell off.Construction
of the GE matrix

The GE matrix is constructed in a 3x3 grid with Market Attractiveness plotted on the Y-axis
and business strength on the X-axis, both being measured on a high, medium, or low score. Five
steps must be considered in order to formulate the matrix;

• The range of products produced by the SBU must be listed

• Factors which make the particular market attractive must be identified
• Evaluating where the SBU stands in this market
• Processes through which calculations about business strength and market attractiveness
can be made
• Determining which category an SBU lies in; high, medium, or low.
 SWOT Analysis
SWOT analysis (or SWOT matrix) is an acronym for strengths,
weaknesses, opportunities, and threats and is a structured planning method that evaluates those
four elements of an organization, project or business venture. A SWOT analysis can be carried
out for a company, product, place, industry, or person. It involves specifying the objectives of the
business venture or project and identifying the internal and external factors that are favorable and
unfavorable to achieve that objective.
 • Strengths: characteristics of the business or project that give it an advantage over
others
• Weaknesses: characteristics of the business that place the business or project at a
disadvantage relative to others
• Opportunities: elements in the environment that the business or project could
exploit to its advantage
• Threats: elements in the environment that could cause trouble for the business or
project

Identification of SWOTs is important because they can inform later steps in planning to
achieve the objective. First, decision-makers should consider whether the objective is attainable,
given the SWOTs. If the objective is not attainable, they must select a different objective and
repeat the process.

Users of SWOT analysis must ask and answer questions that generate meaningful
information for each category (strengths, weaknesses, opportunities, and threats) to make the
analysis useful and find their competitive advantage.

SWOT analysis aims to identify the key internal and external factors seen as important to
achieving an objective. SWOT analysis groups key pieces of information into two main
categories:

1. Internal factors – the strengths and weaknesses internal to the organization

2. External factors – the opportunities and threats presented by the environment
external to the organization

Analysis may view the internal factors as strengths or as weaknesses depending upon
their effect on the organization's objectives. What may represent strengths with respect to one
objective may be weaknesses (distractions, competition) for another objective.

The usefulness of SWOT analysis is not limited to profit-seeking organizations. SWOT

analysis may be used in any decision-making situation when a desired end-state (objective) is
defined.
 MC Kinsey’s 7s Framework

McKinsey 7-S framework. Developed in the early 1980s by Tom Peters

and Robert Waterman, two consultants working at the McKinsey & Company consulting firm,
the basic premise of the model is that there are seven internal aspects of an organization that
need to be aligned if it is to be successful.

The 7-S 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..

The McKinsey 7-S model can be applied to elements of a team or a project as well. The
alignment issues apply, regardless of how you decide to define the scope of the areas you study.

The Seven Elements

Hard Elements Soft Elements

Strategy Shared Values

Structure Skills
Hard Elements Soft Elements

Style
Systems
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.

"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.

Let's look at each of the elements specifically:

• 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.
• 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.

7-S Checklist Questions

Here are some of the questions that you'll need to explore to help you understand your
situation in terms of the 7-S framework. Use them to analyze your current situation first, and
then repeat the exercise for your proposed situation.

Strategy:

• What is our strategy?

• How do we intend to achieve our objectives?
• How do we deal with competitive pressure?
• How are changes in customer demands dealt with?
• How is strategy adjusted for environmental issues?

Structure:

• How is the company/team divided?

• What is the hierarchy?
• How do the various departments coordinate activities?
• How do the team members organize and align themselves?
• Is decision making and controlling centralized or decentralized? Is this as it should be,
given what we're doing?
• Where are the lines of communication? Explicit and implicit?
Systems:

• What are the main systems that run the organization? Consider financial and HR systems
as well as communications and document storage.
• Where are the controls and how are they monitored and evaluated?
• What internal rules and processes does the team use to keep on track?

Shared Values:

• What are the core values?

• What is the corporate/team culture?
• How strong are the values?
• What are the fundamental values that the company/team was built on?

Style:

• How participative is the management/leadership style?

• How effective is that leadership?
• Do employees/team members tend to be competitive or cooperative?
• Are there real teams functioning within the organization or are they just nominal groups?

Staff:

• What positions or specializations are represented within the team?

• What positions need to be filled?
• Are there gaps in required competencies?

Skills:

• What are the strongest skills represented within the company/team?

• Are there any skills gaps?
• What is the company/team known for doing well?
• Do the current employees/team members have the ability to do the job?
• How are skills monitored and assessed?
 UNIT- 4 Strategy Implementation

Strategic implementation put simply is the process that puts plans and strategies into
action to reach goals. A strategic plan is a written document that lays out the plans of the
business to reach goals, but will sit forgotten without strategic implementation. The
implementation makes the company’s plans happen.

Facts

Strategic implementation is critical to a company’s success, addressing the who, where,

when, and how of reaching the desired goals and objectives. It focuses on the entire organization.
Implementation occurs after environmental scans, SWOT analyses, and identifying strategic
issues and goals. Implementation involves assigning individuals to tasks and timelines that will
help an organization reach its goals.

Features

A successful implementation plan will have a very visible leader, such as the CEO, as he
communicates the vision, excitement and behaviors necessary for achievement. Everyone in the
organization should be engaged in the plan. Performance measurement tools are helpful to
provide motivation and allow for follow-up. Implementation often includes a strategic map,
which identifies and maps the key ingredients that will direct performance. Such ingredients
include finances, market, work environment, operations, people and partners.

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 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.

Following are the main steps in implementing a strategy:

Developing an organization having potential of carrying out strategy successfully.

 Disbursement of abundant resources to strategy-essential activities.
Creating strategy-encouraging policies.
Employing best policies and programs for constant improvement.
Linking reward structure to accomplishment of results.
Making use of strategic leadership.

Excellently formulated strategies will fail if they are not properly implemented. Also, it is
essential to note that strategy implementation is not possible unless there is stability between
strategy and each organizational dimension such as organizational structure, reward structure,
resource-allocation process, etc.

Strategy implementation poses a threat to many managers and employees in an

organization. New power relationships are predicted and achieved. New groups (formal as well
as informal) are formed whose values, attitudes, beliefs and concerns may not be known. With
the change in power and status roles, the managers and employees may employ confrontation
behaviour.

Here are 6 steps you can take to improve strategic execution in your organization.

1. Translate the strategy into specific strategic objectives (for each unit and/or department)
2. Create specific clarity around your organization’s leading goals. For instance, within
your “Customer Objectives” the goal may be to “grow sales”
o Management consensus – management must know how it will grow sales before
your people will know how to achieve this goal
o Identify measures that indicate how to track progress
o Identify targets that quantify the measure
o Establish deadlines for achieving incremental target goals
3. Communicate the goal, educate and inform your people about this goal
4. Work with your people to define and regularly measure and refine the activity required to
achieve deadline driven goals and targets
5. Identify resources, people and processes that need to be linked, developed or refined to
support goal achievement
6. Provide consistent, regular reviews, feedback and learning
 Strategy Formulation and Strategy Implementation

Strategy Formulation Strategy Implementation

Strategy Formulation includes planning and Strategy Implementation involves all those
decision-making involved in developing means related to executing the strategic plans.
organization’s strategic goals and plans.
In short, Strategy Formulation is placing the In short, Strategy Implementation is managing
Forces before the action. forces during the action.
Strategy Formulation is an Entrepreneurial Strategic Implementation is mainly an
Activity based on strategic decision-making. Administrative Task based on strategic and
operational decisions.
Strategy Formulation emphasizes on Strategy Implementation emphasizes on
effectiveness. efficiency.
Strategy Formulation is a rational process. Strategy Implementation is basically an
operational process.
Strategy Formulation requires co-ordination Strategy Implementation requires co-
among few individuals. ordination among many individuals.
Strategy Formulation requires a great deal of Strategy Implementation requires specific
initiative and logical skills. motivational and leadership traits.
Strategic Formulation precedes Strategy Strategy Implementation follows Strategy
Implementation. Formulation.

Operationalisisng the Strategy through short term Objectives:

Implementing Strategy through Short-Term Objectives, Functional Tactics, Reward System, and
Employee Empowerment

The first concern in the implementation of business strategy is to translate that strategy into
action throughout the organization. This chapter discussed four important tools for
accomplishing this.

Short-term objectives are derived from long-term objectives, which are then translated into
current actions and targets. They differ from long-term objectives in time frame, specificity, and
measurement. To be effective in strategy implementation, they must be integrated and
coordinated. They also must be consistent, measurable, and prioritized.

Functional tactics are derived from the business strategy. They identify the specific, immediate
actions that must be taken in key functional areas to implement the business strategy.

Employee empowerment through policies provides another means for guiding behavior,
decisions, and actions at the firm's operating levels in a manner consistent with its business and
functional strategies. Policies empower operating personnel to make decisions and take action
quickly.

Compensation rewards action and results. Once the firm has identified strategic objectives that
will best serve stockholder interests, there are five bonus compensation plans that can be
structured to provide the executive with an incentive to work toward achieving those goals.

Objectives, functional tactics, policies, and compensation represent only the start of the strategy
implementation. The strategy must be institutionalized—it must permeate the firm. The next
chapter examines this phase of strategy implementation.

Strategic management requires the business owner and management team to collaborate. Your
management team should share information to make decisions in the best interest of the
company. It's not enough to give managers enough authority to make decisions in their
operational areas. They will need to consider the overall needs of the company -- or the strategic
goals -- before they make decisions, or their actions could hurt areas of operation beyond their
scope of authority.

Long-Term Objectives

Before you set out to write short-term objectives for your business, look at your market
position. Decide where you want to be -- the company's vision -- in a few years. Write long-term
goals that will help you realize this vision. These goals will help you continue fulfilling the
purpose of the company and attain a specific market position within a defined period of time.
Employees should give input before long-term goal setting commences and have access to a list
of the final goals. Their managers will help them understand how goals are to be realized.

Short-Term Objectives

Linked to long-term objectives, short-term objectives are timed, measurable and specific.
They describe how you will implement long-term goals. Managers take care of the details of
assigning specific short-term goals, or parts of those goals, to individuals. As the business owner,
follow up and see if goals are being measured and attained by departments and individuals. If
business conditions change, work with the management team to adjust short-term objectives. If
strategic short-term goals are not being met, shift employees to different roles to get better results
the second time.

Functional tactics

Functional tactics are the key, routine activities that must be undertaken in each
functional area-marketing, finance, production, R&D, and human resource management to
provide the business products and services. Detailed statements of the”means” or activities that
will be used by a company to achieve short-term objectives and establish competitive advantage.

Institutionalising the Strategy

 Process which translates an organization's code of conduct, mission, policies, vision, and
strategic plans into action guidelines applicable to the daily activities of its officers and other
employees. It aims at integrating fundamental values and objectives into the organization's
culture and structure.

Why Strategies Fail

There are three reasons strategy fails to execute. They are:

• Company initiatives don’t aligned with strategy

• Company processes don’t align with strategy
• Employees and stakeholder fail to engage

• Below are the 5 steps to successful strategy implementation.

1. Align your initiatives

A key road to failed implementation is when we create a new strategy but then continue
to do the same things of old. A new strategy means new priorities and new activities across the
organization.

2. Align budgets & performance

Ideally your capital budgets are decentralized, so each division can both allocate and
manage the budgets to deliver the division’s strategic initiatives.

3. Structure follows strategy

A transformational strategy may require a transformation to structure. Does the structure

of your organization allow strategy to cascade across and down the organization in a way that
meaningfully and efficiently delivers the strategy?
4. Engaging Staff

The key reason strategy execution fails is because the organization doesn’t get behind it.
If you’re staff and critical stakeholders don’t understand the strategy and fail to engage, then the
strategy has failed.

5. Monitor and Adapt

A strategy must be a living, breathing document. As we all know: if there’s one constant
in business these days it’s change. So our strategies must be adaptable and flexible so they can
respond to changes in both our internal and external environments.

Structure in Strategy Management

Business strategy is a practical plan for achieving an organization's mission and

objectives. Organizational structure is the formal layout of a company's hierarchy. Both strategy
and structure are crucial elements of doing business, and even companies that do not have formal
strategies and structures likely still have both in one form or another.

The Facts

Business strategy is generally created at the upper levels of an organization. Grand

corporate strategies can be broken down into objectives and tactics to ensure that the strategy is
relevant all the way down the organizational hierarchy. Organizational structure is put into place
relatively early in the life of a business, but it can be changed over time as the company evolves.
Business strategy and organizational structure may seem like very different concepts at first
glance, but there are a number of important correlations between the two.

Process

Business owners generate strategies using a number of managerial tools. Qualitative

tools, such as SWOT analysis -- a tool that identifies internal strengths and weaknesses, as well
as external opportunities and threats -- can help managers to identify strategic opportunities.
Quantitative tools, such as the reports generated by a Total Quality Management software
package, can help to provide insight into a company's strengths and uncover hidden issues using
statistical models.

Leadership in Strategic Management

Strategic leadership refers to a manager's potential to express a strategic vision for the
organization, or a part of the organization, and to motivate and persuade others to acquire that
vision. Strategic leadership can also be defined as utilizing strategy in the management of
employees.

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 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.

Culture in Strategic Management

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.

Flexibility and Adaptability

Organizations that remain flexible are more likely to embrace change and create an
environment that remains open to production and communication. This provides a model that
welcomes cultural diversity and helps clarify strategy implementation. Culture within an
organization can serve many purposes, including to unify members within an organization and
help create a set of common norms or rules within an organization that employees follow.

Characteristics of Stability

A stable culture, one that will systematically support strategy implementation, is one that
fosters a culture of partnership, unity, teamwork and cooperation among employees. This type of
corporate culture will enhance commitment among employees and focus on productivity within
the organization rather than resistance to rules and regulations or external factors that prohibit
success.
Cultural Alignment

When culture aligns with strategy implementation, an organization is able to more

efficiently operate in the global marketplace. Culture allows organizational leaders to work both
individually and as teams to develop strategic initiatives within the organization. These may
include building new partnerships and re-establishing old ones to continue delivering the best
possible products and services to a global market.

UNIT- 5 Strategic Control

Strategic control is a term used to describe the process used by organizations to control
the formation and execution of strategic plans; it is a specialized form of management control,
and differs from other forms of management control in respects of its need to handle uncertainty
and ambiguity at various points in the control process.

Strategic control is also focused on the achievement of future goals, rather than the evaluation of
past performance.
 Strategic control involves tracking a strategy as its being implemented. It's also
concerned with detecting problems or changes in the strategy and making necessary adjustments.
As a manager, you tend to ask yourself questions, such as whether the company is moving in the
right direction, or whether your assumptions about major trends and changes in the company's
environment are correct.

Four Types of Strategic Control?

1. Premise Control

Every strategy is based on certain planning premises or predictions. Premise control is

designed to check methodically and constantly whether the premises on which a strategy is
grounded on are still valid. If you discover that an important premise is no longer valid, the
strategy may have to be changed. The sooner you recognize and reject an invalid premise, the
better. This is because the strategy can be adjusted to reflect the reality.

2. Special Alert Control

A special alert control is the rigorous and rapid reassessment of an organization's strategy
because of the occurrence of an immediate, unforeseen event. An example of such event is the
acquisition of your competitor by an outsider. Such an event will trigger an immediate and
intense reassessment of the firm's strategy. Form crisis teams to handle your company's initial
response to the unforeseen events.

3. Implementation Control

Implementing a strategy takes place as a series of steps, activities, investments and acts
that occur over a lengthy period. As a manager, you'll mobilize resources, carry out special
projects and employ or reassign staff. Implementation control is the type of strategic control that
must be carried out as events unfold. There are two types of implementation controls: strategic
thrusts or projects, and milestone reviews. Strategic thrusts provide you with information that
helps you determine whether the overall strategy is shaping up as planned. With milestone
reviews, you monitor the progress of the strategy at various intervals or milestones.
 4. Strategic Surveillance

Strategic surveillance is designed to observe a wide range of events within and outside
your organization that are likely to affect the track of your organization's strategy. It's based on
the idea that you can uncover important yet unanticipated information by monitoring multiple
information sources. Such sources include trade magazines, journals such as The Wall Street
Journal, trade conferences, conversations and observations.

Guiding & Evaluating the Strategy

Strategic management is the process of developing an organization's mission and goals,

and then outlining the steps and processes necessary to reach the company goals. Techniques for
evaluating the effectiveness of a company's strategy include evaluating internal and external
forces that influence strategy execution, measuring company performance and determining
appropriate corrective measures.

Internal Forces

Strategy evaluation should begin with an examination of the internal forces that will
influence you company's ability to follow the strategic plan. Your evaluation should consider the
value of company resources such as financial assets, proprietary information and the people who
are available to guide the company to meet its goals. This evaluation will help you understand
how these assets can be developed to expand the company's capabilities. All of these internal
forces combined are what set your company apart from your competitors.

External Forces

The next technique for strategy evaluation is to consider the external forces that will
influence your company's ability to complete its mission. The primary external forces your
company must face are you customers. Customers purchasing the products and services your
company produces will determine the success of your company. Is your company meeting the
expectations of your customer base? Along with the consideration of your customers, you must
evaluate the strengths and weaknesses of your competitors. Do your competitors have
differentiating capabilities that will pull your customers away?

Measuring Performance

The Evaluation process will help you determine if the strategy you have developed is
leading the company to meet its mission and goals. Begin this evaluation technique by evaluating
if the results that have been realized through company operations have been successful. Evaluate
if the sales force has been successful in meeting all of the sales goals. If you have a
manufacturing facility, are production targets being met?

Correcting Performance

After your evaluation has considered all of the company's historical performance data, the
next step is determines what corrective measures should be taken to insure company operations
are correctly aligned with the strategic plan. Many times making corrections to strategic
operations will force changes that will cause objections, yet change is an essential element of the
controlling process. You must ensure the company will be able to meet all of its short and long
term strategic goals. Adjusting strategic operations is an essential technique of strategy
evaluation.

Corporate Governance in Strategic Management

Corporate governance is the system of rules, practices and processes by which a company
is directed and controlled. Corporate governance essentially involves balancing the interests of a
company's many stakeholders, such as shareholders, management, customers, suppliers,
financiers, government and the community.

Purpose
 The purpose of corporate governance is to facilitate effective, entrepreneurial and prudent
management that can deliver the long-term success of the company. Corporate governance is the
system by which companies are directed and controlled. Boards of directors are responsible for
the governance of their companies.

Corporate Governance Policy

Corporate governance is the mechanisms, processes and relations by which corporations

are controlled and directed......Governance mechanisms include monitoring the actions, policies,
practices, and decisions of corporations, their agents, and affected stakeholders.

Concept and Objectives

Corporate Governance may be defined as a set of systems, processes and principles which ensure
that a company is governed in the best interest of all stakeholders. It is the system by which
companies are directed and controlled. It is about promoting corporate fairness, transparency and
accountability. In other words, 'good corporate governance' is simply 'good business'. It ensures:

▪ Adequate disclosures and effective decision making to achieve corporate objectives;

▪ Transparency in business transactions;
▪ Statutory and legal compliances;
▪ Protection of shareholder interests;
▪ Commitment to values and ethical conduct of business.

Benefits of Corporate Governance

1. Good corporate governance ensures corporate success and economic growth.

2. Strong corporate governance maintains investors’ confidence, as a result of which,
company can raise capital efficiently and effectively.
3. It lowers the capital cost.
4. There is a positive impact on the share price.
5. It provides proper inducement to the owners as well as managers to achieve objectives
that are in interests of the shareholders and the organization.
 6. Good corporate governance also minimizes wastages, corruption, risks and
mismanagement.
7. It helps in brand formation and development.
8. It ensures organization in managed in a manner that fits the best interests of all.

Principles of Corporate Governance

• Rights and equitable treatment of shareholders:

Organizations should respect the rights of shareholders and help shareholders to exercise
those rights. They can help shareholders exercise their rights by openly and effectively
communicating information and by encouraging shareholders to participate in general
meetings.

• Interests of other stakeholders:

Organizations should recognize that they have legal, contractual, social, and market driven
obligations to non-shareholder stakeholders, including employees, investors, creditors,
suppliers, local communities, customers, and policy makers.

• Role and responsibilities of the board:

The board needs sufficient relevant skills and understanding to review and challenge
management performance. It also needs adequate size and appropriate levels of independence
and commitment.

• Integrity and ethical behavior:

Integrity should be a fundamental requirement in choosing corporate officers and board

members. Organizations should develop a code of conduct for their directors and executives
that promotes ethical and responsible decision making.

• Disclosure and transparency:

 Organizations should clarify and make publicly known the roles and responsibilities of board
and management to provide stakeholders with a level of accountability. They should also
implement procedures to independently verify and safeguard the integrity of the company's
financial reporting. Disclosure of material matters concerning the organization should be
timely and balanced to ensure that all investors have access to clear, factual information.

Seven Characteristics of Corporate Governance

1. Discipline

Corporate discipline is a commitment by a company’s senior management to adhere to behavior

that is universally recognized and accepted to be correct and proper. This encompasses a
company’s awareness of, and commitment to, the underlying principles of good governance,
particularly at senior management level.

2. Transparency

Transparency is the ease with which an outsider is able to make meaningful analysis of a
company’s actions, its economic fundamentals and the non-financial aspects pertinent to that
business. This is a measure of how good management is at making necessary information
available in a candid, accurate and timely manner – not only the audit data but also general
reports and press releases. It reflects whether or not investors obtain a true picture of what is
happening inside the company.

3. Independence

Independence is the extent to which mechanisms have been put in place to minimize or avoid
potential conflicts of interest that may exist, such as dominance by a strong chief executive or
large share owner. These mechanisms range from the composition of the board, to appointments
to committees of the board, and external parties such as the auditors. The decisions made, and
internal processes established, should be objective and not allow for undue influences.

4. Accountability

Individuals or groups in a company, who make decisions and take actions on specific issues,
need to be accountable for their decisions and actions. Mechanisms must exist and be effective to
allow for accountability. These provide investors with the means to query and assess the actions
of the board and its committees.

5. Responsibility

With regard to management, responsibility pertains to behavior that allows for corrective action
and for penalizing mismanagement. Responsible management would, when necessary, put in
place what it would take to set the company on the right path. While the board is accountable to
the company, it must act responsively to and with responsibility towards all stakeholders of the
company.

6. Fairness

The systems that exist within the company must be balanced in taking into account all those that
have an interest in the company and its future. The rights of various groups have to be
acknowledged and respected.

7. Social responsibility

A well-managed company will be aware of, and respond to, social issues, placing a high priority
on ethical standards. A good corporate citizen is increasingly seen as one that is non-
discriminatory, non-exploitative, and responsible with regard to environmental and human rights
issues. A company is likely to experience indirect economic benefits such as improved
productivity and corporate reputation by taking those factors into consideration.

Advantages of Corporate Governance

Corporate Governance

Corporate governance is often associated with public companies, but small businesses can also
benefit from this practice. Corporate governance consists of rules that direct the roles and actions
of key people rather than processes. Unlike simple policies and procedures, such as a dress code
or expense reimbursement procedure, corporate governance rules focus on creating better
management and fewer ethical or legal problems. Examples of corporate governance include
setting rules for using business funds for personal use; serving on a board of directors; hiring
family members; conflicts of interest; notifying owners, investors and partners of key meetings
and decisions; and disbursing profits.

Improved Reputation

A corporate governance program can boost your company's reputation. If you publicize your
corporate governance policies and detail how they work, more stakeholders will be willing to
work with you. This can include lenders who see you have strong fiscal policies and internal
controls, charities you might partner with to promote your business, government agencies,
employees, the media, vendors and suppliers. The practice of sharing internal information with
key stakeholders is known as transparency, which allows people to feel more confident you have
little or nothing to hide.

Decreased Conflicts and Fraud

Corporate governance limits the potential for bad behavior of employees by instituting rules to
reduce potential fraud and conflict of interest.

Disadvantages of Corporate Governance

Corporations Governed by Statutes

Corporations are governed by federal and state statutes. One major reason business owners form
corporations is to limit the owners' liability to the amount of their investments. Another reason
founders form corporations is because corporations are permitted to raise capital by selling stock
to investors and have a long legal and case history to support this. With this corporate structure
comes certain requirements.

Increased Costs

Corporations have higher administrative costs because of greater administrative requirements

than those required of LLCs and limited partnerships. Corporate boards must either meet or
create resolutions to enter into financial arrangements or contractual arrangements. Corporations
must maintain corporate documentation, including stock purchases and sales, legal compliance
and annual registration.

Maintenance of Separation

Corporations, shareholders and board directors and officers must follow all the corporate
formalities, including keeping annual meeting minutes for both shareholders’ meeting and board
of directors’ meetings, documenting major decisions as board-approved. Even corporations
owned and governed by one shareholder in multiple director roles must adhere to all formalities.
Shareholder-owners must sign all documents as their position.

Corporate Social Responsibility

CSR policy functions as a self-regulatory mechanism whereby a business monitors and

ensures its active compliance with the spirit of the law, ethical standards and national or
international Norms.

Corporate social responsibility, often abbreviated "CSR," is a corporation's initiatives to

assess and take responsibility for the company's effects on environmental and social wellbeing.
The term generally applies to efforts that go beyond what may be required by regulators or
environmental protection groups.
Ways to practice CSR

1. Environmental efforts: One primary focus of corporate social responsibility is the

environment. Businesses regardless of size have a large carbon footprint. Any steps they can take
to reduce those footprints are considered both good for the company and society as a whole.

2. Philanthropy: Businesses can also practice social responsibility by donating money, products
or services to social causes. Larger companies tend to have a lot of resources that can benefit
charities and local community programs.

3. Ethical labor practices: By treating employees fairly and ethically, companies can also
demonstrate their corporate social responsibility. This is especially true of businesses that
operate in international locations with labor laws that differ from those in the United States.

4. Volunteering: Attending volunteer events says a lot about a company's sincerity. By doing
good deeds without expecting anything in return, companies are able to express their concern for
specific issues and support for certain organizations.

The potential benefits of CSR to companies include:

• Better brand recognition

• Positive business reputation
• Increased sales and customer loyalty
• Operational costs savings
• Better financial performance
• Greater ability to attract talent and retain staff
• Organizational growth
• Easier access to capital

1. Responsible business reputation

Corporate social investment can help you to build a reputation as a responsible business,
which can in turn lead to competitive advantage. Companies often favor suppliers who have
responsible policies, since this can reflect on how their customers see them. Some customers
don't just prefer to deal with responsible companies - they insist on it.

2. Costs savings

By reducing resource use, waste and emissions, you can help the environment and save
money too. With a few simple steps, you may be able to lower your utility bills and achieve
savings for your business. See how to reduce your business waste to save money.

3. Finding and keeping talented staff

Being a responsible, sustainable business may make it easier to recruit new employees or
retain existing ones. Employees may be motivated to stay longer, thus reducing the costs and
disruption of recruitment and retraining.

Other benefits of CSR to companies

By acting in a sustainable, responsible way, you may also find it easier to:

• Access finance - investors are more likely to back a reputable business

• Attract positive media attention - eg when taking part in community activities
• Reduce regulatory burden - good relationships with local authorities can often make
doing business easier
• Identify new business opportunities - eg for development of new products or services

Need For Corporate Social Responsibility

1. Better Public Image:

Each firm must enhance its public image to secure more customers, better employees and higher
profit. Acceptance of social responsibility goals lead to improve public image.

2. Conversion of Resistances into Resources:

If the innovative ability of business is turned to social problems, many resistances can be
transformed into resources and the functional capacity of resources can be increased many times.
3. Long Term Business Interest:

A better society would produce a better environment in which the business may gain long term
maximization of profit. A firm which is sensitive to community needs would in its own self
interest like to have a better community to conduct its business. To achieve this it would
implement social programmes for social welfare.

4. Avoiding Government Intervention:

Regulation and control are costly to business both in terms of money and energy and restrict its
flexibility of decision making. Failure of businessmen to assume social responsibilities invites
government to intervene and regulate or control their activities. The prudent course for business
is to understand the limit of its power and how to use that power carefully and responsibly
thereby avoiding government intervention.

Importance of Social Corporate Responsibility

· It aims at consumer protection.
· It aims at protection of local and global environment.
· It ensures respect for human rights.
· It results in avoiding bribery and corruption.
· It promotes adherence to labor standards by companies and their business partners.

Benefits of Corporate Social Responsibility

· Productivity and Quality: Improved working conditions, reduced environmental impacts or

increased employee involvement in decision making which leads to – increased productivity and
defective rate in a company.

• Improved Financial Performance: Socially responsible business is linked to positive

financial performances. Improved financial results are attributed to stable socio political legal
environment, enhanced competitive advantage through better corporate reputation and brand
image, and improved employee recruitment, retention and motivation and a more secure
environment to operate in.
• Brand Image And Reputation:
A company considered socially responsible can benefit both from its enhanced reputation with
the public as well as its reputation within the business community, increasing the company’s
ability to attract trading partners.

• Access to Capital: The growth of socially responsible investing concept means companies
with strong CSR performance have increased access to capital that might not otherwise have
been available.

Advantages of CSR

• Increased Attraction and Retention of Employees

Companies having solid CSR commitments find it easier to recruit and retain employees. People
want to work for companies that care about the well-being of their employees and provide good
working conditions. Compassionate attitude towards employees is highly desired by both new
recruits and old employees alike. Appraisals, financial assistance in times of need, and attention
given to personal achievements and special days (like birthdays) make employees want to remain
with the company.

This is a huge advantage when there is a tight labor market situation. This will reduce the cost of
training new recruits and free up incentives for existing employees. Incentives induce efficient
work out from employees. In short, if the company’s workforce is happy, the company gets more
profits due to increased efficiency in production.

• Regulatory Authorities become less hostile

A corporation with strong CSR programs will not be scrutinized by regulatory authorities as
much as companies without CSR programs. The authorities will be lenient in their regulation
because they feel that the company must be complying with all regulations as it is supported by
firms and people alike for its welfare work. A company with strong CSR programs will always
work within regulations to get benefits (other than profits) from these CSR programs.

The authorities will give fast-track preference to this company. It may also forego cumbersome
paperwork that is required to set up projects if it thinks that this project is going to help the
community to improve.

• Attracts more Capital Inflow from Various Sources

A company’s image plays a huge role in attracting investors. If the company is engaged in CSR
programs, its image gets a massive boost, and so, people invest in its operations heavily. This
company will attract capital even from abroad in the form of FII, thus, helping the country to get
valuable foreign exchange. It will also attract investment from other firms and industries, and it
will become a name that can be trusted easily.

• Generation of Clean and Renewable Energy from Environmental CSR

If the company has invested in an environmental CSR program, it will make sure that its
operations do not harm the environment in any way. Inventing machines and techniques to
reduce the harmful effects of its operational activities will give the community a clean
environment. It will also give the company a chance to explore the usage of renewable energy
for its operations.

This will reduce the cost of acquiring fossil fuels and can reduce the cost of production by a one-
time investment in renewable energy production.

• Positive Publicity

A popular business principle is that any publicity is good publicity. You should be known to the
people to sell your product. A good CSR program will always give good publicity and even act
as an advertisement for the company.
It also sets the company apart from its competitors. They may be selling a similar product at
lower rates, but you are keeping the interests of your environment and community intact, and so
the people do not mind a little extra charge for this thoughtfulness.

Disadvantages of CSR

• Shift from the Profit-Making Objective

Milton Friedman, an economist, is the biggest critic of CSR. He says that CSR shifts the focus of
the company from the objective that made it a financial entity in the first place – profit-making.
The company forgets about its obligations towards its shareholders that they have to make profits
for them. Instead of focusing on making profits, they engage in CSR programs and use up funds
for community welfare.

• Company Reputation takes a hit

According to CSR policies, companies have to disclose shortcomings of even their own products
if they are found to violate the CSR program. For example, car manufacturing companies calling
back their vehicles in large numbers when they find glitches in the model after having sold them
wallops their reputation.

• Customer Conviction

Initially, customers like to see the companies that they trust are engaged in social welfare
programs. They like the fact that these programs are for a good cause. Later, they grow wary of
it. If they don’t see instant results from these programs, they think that these are nothing but PR
stunts. So it becomes difficult to convince customers that the results will take some time in
coming and that they should continue believing in the good intentions of the company.

• Increase in Cost of Production

More often than not, CSR programs increase the expenditure of the company. This increased
expenditure is reflected in the increased prices of the product for which, ultimately, the
customers have to pay.
 Management of Change:

Change management is a systematic approach to dealing with the transition or

transformation of an organization's goals, processes or technologies. The purpose of change
management is to implement strategies for effecting change, controlling change and helping
people to adapt to change. Such strategies include having a structured procedure for requesting a
change, as well as mechanisms for responding to requests and following them up.

Levels of Change Management

1. Organizational Change Management

Manages change at the organizational level with a focus on culture. It's often referred to as the
people side of change management.

Organizational Change Management is the practice of managing enterprise changes such as

mergers & acquisitions, restructuring, process changes and culture transitions. It's often focused
on the people side of change — socializing change to reduce resistance and gain acceptance.

2. Program Change Management

Program change management tackles change at the program level.

Program change management controls changes to an ongoing portfolio of projects to ensure that
overall program goals are met.

Programs have little control over the culture of an organization — they simply want to deliver to
their mandate. Program change is usually managed by a program manager together with a
change control board. The goal is to balance the need for change with program objectives and
budget. The impacts of change such as cost, risk and schedule consequences are evaluated and
changes are prioritized.
3.Project Change Management

Change control is an integral part of every project management methodology. Projects are
transitional initiatives that deliver a set of objectives. Projects often face constant change.

Project change management is the controlled integration of change into every phase of a project.
Changes are evaluated for cost, quality, risks and benefits. The impact to scope and schedules is
assessed. Changes are either rejected or incorporated into the project.

4.Departmental & Team Change Management

Departments and teams that are faced with an environment of constant change often develop
their own change management practices.

The focus of departmental change management may be to improve the success rate of changes
and prioritize change to match available budget and resource constraints.

Popular models for managing change:

1.ADKAR:

The ADKAR model, created by Prosci founder Jeff Hiatt, consists of five sequential steps:

• Awareness of the need for change;

• Desire to participate in and support the change;
• Knowledge about how to change;
• Ability to implement change and behaviors; and
• Reinforcement to sustain the change.

2.IT Infrastructure Library (ITIL):

The U.K. Cabinet Office and Capita plc oversee a framework that includes detailed guidance for
managing change in IT operations and infrastructure.

3.Kotter's 8-Step Process for Leading Change:

Harvard University professor John Kotter's model has eight steps:

• Increasing the urgency for change;

• Creating a powerful coalition for change;
• Creating a vision for change, communicating the vision;
• Removing obstacles;
• Creating short-term wins;
• Building on them; and
• Anchoring the change in corporate culture.

4.Lewin's Change Management Model:

Psychologist Kurt Lewin created a three-step framework that is also referred to as the Unfreeze-
Change-Freeze (or Refreeze) model.

5.McKinsey 7S:

Business consultants Robert H. Waterman Jr. and Tom Peters designed this model to holistically
look at seven factors that affect change:

• Shared values;
• Strategy;
• Structure;
• Systems;
• Style;
• Staff; and
• Skills.
Eight-Step Change Management Process

Step 1: Urgency Creation

A change is only successful if the whole company really wants it. If you are planning to make a
change, then you need to make others want it. You can create urgency around what you want to
change and create hype.

This will make your idea well received when you start your initiative. Use statistics and visual
presentations to convey why the change should take place and how the company and employees
can be at advantage.

Step 2: Build a Team

If your convincing is strong, you will win a lot of people in favor of change. You can now build
a team to carry out the change from the people, who support you. Since changing is your idea,
make sure you lead the team.

Organize your team structure and assign responsibilities to the team members. Make them feel
that they are important within the team.

Step 3: Create a Vision

When a change takes place, having a vision is a must. The vision makes everything clear to
everyone. When you have a clear vision, your team members know why they are working on the
change initiative and rest of the staff know why your team is doing the change.

Step 4: Communication of Vision

Deriving the vision is not just enough for you to implement the change. You need to
communicate your vision across the company.

This communication should take place frequently and at important forums. Get the influential
people in the company to endorse your effort. Use every chance to communicate your vision; this
could be a board meeting or just talking over the lunch.
Step 5: Removing Obstacles

No change takes place without obstacles. Once you communicate your vision, you will only be
able to get the support of a fraction of the staff. Always, there are people, who resist the change.

Sometimes, there are processes and procedures that resist the change too! Always watch out for
obstacles and remove them as soon as they appear. This will increase the morale of your team as
well the rest of the staff.

Step 6: Go for Quick Wins

Quick wins are the best way to keep the momentum going. By quick wins, your team will have a
great satisfaction and the company will immediately see the advantages of your change initiative.

Every now and then, produce a quick win for different stakeholders, who get affected by the
change process. But always remember to keep the eye on the long-term goals as well.

Step 7: Let the Change Mature

Many change initiatives fail due to early declaration of victory. If you haven't implemented the
change 100% by the time you declare the victory, people will be dissatisfied when they see the
gaps.

THE END