3) strategy topics 2 2
TRANSCRIPT
Dr Rajiv, Dept. of Hosp. Admn., PGI, Chandigarh
Dr Rajiv KumarCMO
29-Sept-2011
1. Strategic Planning Process2. SWOT Analysis/TOWS Matrix
3. Business Portfolio Matrix 4. Premising and Forecasting
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Definition of StrategyDefinition of Strategy
The determination of the mission or purpose and basic long-term objectives of an enterprise, followed by adoption of course of action and allocation of resources necessary to achieve those objectives.
Long term objectives
Course of action
Allocation of resources
Determination of Determination of
Dr Rajiv, Dept. of Hosp. Admn., PGI, Chandigarh
Definition of PoliciesDefinition of Policies• General statements that guide managers’
thinking in decision making• Discretion may be used while applying policies– (while applying ‘rules’, no discretion can be used)
Definition of Tactics Definition of Tactics
Action plans through which strategies are executed
Dr Rajiv, Dept. of Hosp. Admn., PGI, Chandigarh
3 levels of strategy3 levels of strategy• 1) Corporate level
– overall strategy– In which areas company is to compete
• Formulated by chief/head of the organization
• 2) Business strategies– To gain competitive advantage in a particular area
• Formulated by General manager/Head of deptt
• 3) Functional strategies– To support business and corporate strategies
• Formulated by heads of sub-units
Dr Rajiv, Dept. of Hosp. Admn., PGI, Chandigarh
1) Outline of a ‘Strategic Planning Process’1) Outline of a ‘Strategic Planning Process’
Industry analysis
Input •People•Capital•Management skills•Technical skills
Goals of stakeholders
Enterprise profile
values and vision
Mission and objectives
Development of alternative strategies
Present and future external threats and opportunities
Internal weaknesses and strengths
Evaluation and strategic choice
Implementation and control
Consistency testing and contingency planning at each stage
Specialization Diversification
Joint ventures Strategic alliances
Liquidation Bankruptcy
Retrenchment
Evaluation of attractiveness of industry
How well the product produced will be received in the market
Formulation of strategic process is a dynamic process. As the external and internal environment change, tactics will have to be accordingly modified.Formulation of strategic process is a dynamic process. As the external and internal environment change, tactics will have to be accordingly modified.
Dr Rajiv, Dept. of Hosp. Admn., PGI, Chandigarh
• Specialization: to focus on one product
• Diversification: extending operation into new markets
• Joint ventures: partnership, 2 firms form a new entity
• Strategic alliances: partnership, 2 firms remain distinct
• Liquidation: winding up of a firm by selling its free assets
• Bankruptcy: legal procedure for liquidation of a business
• Retrenchment: forced lay-off of employees to cut down pay-roll
Meaning of some termsMeaning of some terms
Dr Rajiv, Dept. of Hosp. Admn., PGI, Chandigarh
2) TOWS Matrix2) TOWS Matrix• TOWS matrix is a tool for analysis of the situation (so that strategic
alternatives (tactics) could be formulated in a better manner).
• It facilitates in matching of external threats and opportunities with the internal weaknesses and strengths of the organization
• Using TOWS matrix, 4 distinct types of alternatives are formulated.
(T = threats, O = opportunities, W = weaknesses, S = strengths)
Strengths are to be used, weaknesses are to be overcome, threats are to be coped with and opportunities are to be taken advantage of.
Dr Rajiv, Dept. of Hosp. Admn., PGI, Chandigarh
4 alternative strategies based on TOWS Matrix
SO Strategy : Maxi-MaxiStrengths of organization are used to take advantage of opportunities
WT Strategy : Mini-MiniTo minimize both weaknesses and threats
ST Strategy : Maxi-MiniUse of strengths to cope with or avoid threats
WO Strategy : Mini-MaxiDevelopmental strategy to overcome weaknesses in order to take advantage of opportunities
Blue ocean strategy
Blue ocean strategy
Red Ocean Strategy (Bloody
confrontation)
S W
T
O
Retrenchment, Liquidation, Joint
venture
outsourcing
To avoid
To prefer
Dr Rajiv, Dept. of Hosp. Admn., PGI, Chandigarh
• TOWS matrix especially useful for planning mergers, acquisitions, joint ventures and alliances
• Complementary strengths and weaknesses of 2 companies will result in useful alliance
• Overlap of strengths and weaknesses will result in no advantage of alliance
Uses of TOWS MatrixUses of TOWS Matrix
Dr Rajiv, Dept. of Hosp. Admn., PGI, Chandigarh
3) Business Portfolio Matrix3) Business Portfolio Matrix
• Developed by Boston Consultancy Group
• It was developed for large corporations with several divisions so that they could allocate their portfolio in a profitable manner
• Growth rate of the business and relative competitive position of organization (identified by market share) are inter-linked
Dr Rajiv, Dept. of Hosp. Admn., PGI, Chandigarh
Business Portfolio Matrix
Business Portfolio Matrix
Stars
Cash cows
Question marks
Dogs
Busi
ness
gro
wth
rate
Relative competitive position
High
Weak Strong
Low
High growth opportunityStrong competitive position
High growth opportunityWeak competitive position
Preferred positionPreferred position Requires cash investmentRequires cash investment
Low growth opportunityStrong competitive position
Surplus cashSurplus cash
Low growth opportunityLow competitive position
Dispose offDispose off
Dr Rajiv, Dept. of Hosp. Admn., PGI, Chandigarh
4) Premising and Forecasting4) Premising and Forecasting• Planning premises
– The anticipated environment in which plans are expected to operate
• Forecasting– Calculation of future events or performance base on past and present conditions
– For planning premises, forecasting is used– Forecasting commonly used for :
• Economic• Social• Political• Technological environments
Dr Rajiv, Dept. of Hosp. Admn., PGI, Chandigarh
Delphi technique
Delphi technique
Commonly used for forecasting
Steps for Delphi technique
Entire process is anonymous so that opinion is not prejudiced
Purpose is to arrive at informed consensus among experts
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Dr Rajiv, Dept. of Hosp. Admn., PGI, Chandigarh
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On 04-Oct-2011 at 3.00 PM (Tuesday) Dr Rajiv, Dept. of Hosp. Admn., PGI,
Chandigarh
Thank you
Dr Rajiv, Dept. of Hosp. Admn., PGI, Chandigarh
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