EXISTING STRATEGY

MISSION

The first step in strategy formation is the definition of organizational

purpose or listens – A long term view of what the organization is striving to become in

future indicating the basic thrust of the firm including its products, business and markets.

This involves choice from among alternative features on the basics of scenarios related

with societal changes, competitive reactions, regulatory changes and so on. The

identification of mission is the basis of awareness of sense of purpose, the competitive

environment, and the degree to which the firm’s mission fits its capabilities and the

opportunities which the environment offers. The choice of the mission is the broadest

choice that an organization is required to make about its basic purpose.

The mission may be described as the scope of operation in terms of products and

markets or of service and client. An organization’s mission statement tells what it is, why

it is exist and the unique contribution it can make. The mission of business may be

defined as the fundamental, unique purpose that sets it apart from other firms of its type.

It indicates the nature and the scope of business operations in terms of product, market

and technologies.

MISSION STRATEGY AT TVS SUNDARAM FASTNERS

The TVS Sundaram fastners have a clear mission about their organizational long

term view. Their mission statement is as follows

“The company mission is driven by quality and technology initiatives which is

becoming a vibrant, dynamic, customer oriented global company. The major initiatives of

growth will be through strategy of acquisition and diversification into new product areas

which will help the company in placing itself in a position of strength in various parts of

the world in delivering value to its customers”.

It’s clearly says their scope of operation in terms of products and markets or of

service and client and also it describes their unique contribution in the existing market.

EVALUATION OF INTERNAL CAPABILITIES

Identification of key factors in the functional areas and the key activities in the

value chain constitute the first step in resource analyses and diagnosis. Another important

step relates to the evaluation of key factors and value activities against attainable

standards or on the basis of appropriate perspectives, so as to determine which factors or

the activities are potential strength and which are potential weakness. A factor is

considered a strength if it is a distinct competency or competitive advantage, that is

something the firm does or has the capacity to do particularly well relative to the abilities

of rivals. Correspondingly, a factor is considered a weakness if it is something that the

firm does poorly and does not have the capacity to do as well as the rivals can do.

The potential capabilities of firm may be assessed as follows:

A) PAST PERFORMANCE AND CAPABILITIES

A retrospective view of what the company’s capabilities as reflected in its past

performance may provide a framework for evaluating whether certain internal factors can

be regarded as strategic advantages or disadvantages. However adoption of past records

of performance and the historical experience of management as the basis of evaluation is

risky and likely to be inaccurate due to bias inherent in what is known as tunnel vision.

B) EVOLUTION OF PRODUCT / MARKET

Stages in product market evolution or products life cycle may be another basis of

evaluating key internal factors. The stages usually consists of

Introductory stage or initial development stage characterized by

operating losses and minimal growth.

Growth stage when the sales increase at a faster pace along with

profitability.

Maturity stage when the growth rate slows down and there is

increased market competition

Saturation and declining stage characterized by negative growth.

Competencies in specific functional areas and activities may be evaluated in terms

of the requirements for success during the evolving stages in the product/market

conditions. Thus, for example availability of adequate financial resources and marketing

skills may be strengths during the early development or introductory stage. Success in the

growth stage may require strengths in such areas as product differentiation, resources to

support heavy marketing expenses and cash flows to counter the effect of price

competition.

At the maturity stage, efficiency in production management may constitute the

key factor for success, while competencies at the declining stage have to be assessed with

respect to customer and supplier relationship and cost of operation.

This strategy at TVS Sundaram Fastners –

Evaluation of Internal Capabilities

The TVS Sundaram fastners evaluate their internal capabilities like

functional and business level activities with the help of the past year performance records

and their product / market level. They reframe their strategies with help of the past year

strategy and also they analyze the availability of adequate financial resources, marketing

skills, production differentiation, marketing expenses and cash flow resources.

This strategy helps to identify the key factors in the functional areas and key

activities in the resources.

ALTERNATIVE STRATEGIES

Broadly speaking the major options in strategy formation may be divided

into the following categories:

Stability strategy

Incremental strategy

Profit sub strategy

Growth strategy

These alternatives are sometimes called “grand strategy alternatives “.

STABILITY STRATEGY

It arises out of a basic recognition by management that the firm should

concentrate on utilizing its present resources so as to develop its competitive strength

within a restricted product market configuration. In other words stability strategy implies,

that the company will continue in the same or a similar business as it now pursues and

with the same or similar objectives.

The focus is on maintaining and developing competitive advantages consistent

with the present resources requirements. The policy thrust aimed at not only the

maintenance of the present level of performance but also ensure that the rate of

improvement continuing past is sustained.

INCREMENTAL STRATEGY

To start with a strategic move, many firms preferred to adopt incremental

growth as a strategy, concentrating on one product line at a time and growing slowly but

surely with a strong base to move on. The objective may be for instance to enter new

markets segment gradually. Nothing is attempted by way of big leap forward. New

moves are carefully tested in all respects. Such an incremental growth strategy may

succeed through effective market segmentation, reducing cost of operation and use of R

& D in spite of adopting low product posture in the industry as whole.

PROFIT SUB-STRATEGY

Profit oriented stability strategy is adopted in large companies for specific

business units well generating cash flow is of prime concern for ensuring durable stability

of the organization.

EVALUATION STRATEGY AT TVS SUNDARAM FASTNERS

The TVS Sundaram fastners uses some stability strategies for the stable growth in

the market. These strategies concentrating on one product line at a time growing slowly

but surely strong base to move on.

It also adopts nature of expansion and sales and maximizing the returns from the

investment. Very large companies prefer these kinds of strategies for the stability in the

market. The TVS Sundaram fastners deeply extended the product line fastners with

various types like Special type of fastners, standard fastners to increase projects. Their

product line as follows:

STANDARD FASTNERS

Hexagon screws

Cross Recessed Screws

Flange Screws

Carriage Screws

Plow Bolts

Socket Shoulder Screws

Socket Set screws

Socket Button head Cap Screws

Socket Flat head Screws

Hexagon Nuts

Square Nuts

Slotted & Castle Nuts

Nylon Inserted Nuts

Weld Nuts

Flange Nuts

T Handle Keys

SPECIAL FASTNERS

Connecting Rod Bolts / Nuts

Main Bearing Cap Bolts

Cylinder Head Screws

Fly Wheel Bolts

Hub / Wheel Bolts

Wheel Studs

Hub Nuts

Two piece Wheel Nuts

Suspension Bolts

Propeller Shaft Bolts / Nuts

Center Bolts

Track Shoe Bolts / Nuts

Rivets Two wheeler Spindles

Bi-Hex Nuts

All Metallic Prevailing Torque Nuts

Flange Weld Nuts

GROWTH STRATEGY

It signifies something different from stable growth strategy or stability

strategy. When a firm increases the level of objective higher than what it has achieved in

the immediate past in terms of market share, sales revenue, strategic decision centre

round increased functional performance in major respects, we have typical cases of

growth strategy. Another kind of growth strategy is typically found when new products

are added to the existing line.

DIVERSIFICATION STRATEGY

At some point of time in the process of intensive growth, it is no longer possible

for a firm to expand in the basic product market. It is not able to grow any more through

market penetration. Then it must consider adding new products or markets to its existing

business line. This approach toward growth is known as Diversification. Diversification

strategy is thus defined as a “Strategy in which the growth objective is sought to be

achieved by adding new products and services to the existing the product and service

line.

HORIZONTAL DIVERSIFICATION

This is a broad category in which are included strategies involving addition of

parallel new products or services to the existing product and service line.

VERTICAL DIVERSIFICATION

It’s commonly described, as a vertical integration which is a type of growth

strategy where in new products or services are added which are complementary to the

existing product or service line. It is characterized by the extension of the firms business

definition in two possible directions from the present backward or forward line. In other

words, vertical integration is a growth strategy that involves the expansion of business by

moving backward or forward from the present products or services establishing linkages

of products, processes, distribution system.

BACKWARD INTEGRATION

It also known as upstream development, backward integration strategy involves

addition of activities to ensure the supply of a firm’s present input. It is aimed at moving

lower on the production process scale so that the firm is able to supply its own raw

materials or basic components.

FORWARD INTEGRATION

Forward integration is a type of diversification strategy, which involves the entry

of firm into the business of finishing, distributing and selling of some of its present

output. It is sometimes described as downstream expansion and refers to moving higher

up in the production distribution process towards the end consumer.

GROWTH STRATEGY AT TVS SUNDARAM FASTNERS

The TVS Sundaram fastners follow some internal growth strategies .It helps to

make frequent changes in technology and other external conditions, growth opportunities.

They concentrate in horizontal Diversification. They are manufacturing addition of

parallel new products and exports like radiator caps, gear blanks and power transmission

shafts to their existing automotive and original equipment manufacturers (OEM).

This diversification strategy helps them to achieve their objective by adding that

type of new products ad services to the existing products and service line.

INFLUENCING STRATEGIES

External Constraints

The survival and prosperity of a firm depend largely on his interaction with the

elements or units in the environment. It’s like shareholders, customers, suppliers,

government and community. These elements constitute the external constraints and

flexibility in the choice of strategy is often governed by the extend and degree of the

firms dependents on the elements. Well-established large companies in different

industries are more powerful with their environment and therefore have greater flexibility

in the strategic choice than the counter parts in the respective fields.

INFLUENCING STRATEGY AT TVS SUNDARAM FASTNERS

The TVS Sundaram fastners have strong interaction with the elements as follows:

Shareholders

Customers

Suppliers

Governments and

Community

They are regularly conducting the annual meeting within their shareholders and

customers and suppliers. This meets increasing powerful environment and add more

flexibility within the customers and suppliers.

FUNCTIONAL STRATEGIES

Implementation of strategy involves wide range of policy decision to be made

including those relating to the functional areas. The purpose of policy as a guide to

decision making is to spell out and clarify strategy, to provide a basis for interpreting

strategy which is usually stated in general terms. “A carefully selected policy sharpens

the meaning of the strategy and guides specific decision in a direction that supports the

strategy”.

MARKETING STRATEGY

As a critical functional area, marketing has received increasingly greater attention

in the competitive business world since the yearly modern era. The old concept of

marketing has been replaced by new concept. The new concept in contrast, focuses on the

firm’s existing and potential customer and seeks to earn profit through customer

satisfaction with as integrated marketing program.

MARKETING POLICIES

In a marketing policy decision, each firm is naturally expected to use the set of

decision variable best suited to its own strategy. But there are certain basic issues which

are common concern to most firms, and it is useful to consider the e implication of those

issues while formulating policies. The more important issues in marketing for which

guidelines need to be provided, are

Product line

Customer to be served and channels of distribution

Pricing of products

Sales promotion

Marketing mix

PRODUCT LINE

The product line refers to a group of products that are closely related either

because they satisfy a class of need or used together and sold to the same customer

groups, are marketed through the same type of outlets, are fall within given price ranges.

Product mix on the other hand, refers to the related and unrelated, composite products

offered for sale by the firm.

VARIETY OF PRODUCTS

Offering a large variety of products – If the differential cost of additional items is

low it may be desirable to offer a large variety of products in the same line. With some

differentiation of quality, price and packaging. Such a policy gives widest choice to

customers and may welcome the potential appeal of different varieties to a particular

customer group leading to increased sale.

PRODUCT MARKET POSITIONING

Product positioning refers to offering of differentiated products in a manner such

that consumers perceive them to be distinct from competing products.

Analysis of brands current positioning as perceived by the consumer may reveal

that the brand is well positioned relating to its competitors and the consumer ideal or that

repositioning is necessary, or that introduction of new products is called for. Among the

techniques which may be used for such analysis. The more practicable are

multidimensional scaling and clustering and conjoint analysis. The multidimensional and

clustering techniques graphically portray consumer evaluation of the brands. This

involves preparing geometric representation on the basis of consumer perception and

preference so that the brands which are similar psychologically are plotted near each

other in the geometric space.

MARKET SEGMENTATION

The key strategic decision related to the need for product differentiation is the

selection of market segments at the corporate. Segmentation can be done on the basis of

such variable as socio economic characteristics of buyer groups or industrial category or

buyer behavior (Motive, Personality, Brand loyalty, Usage rate). The foremost benefit of

market segmentation is that the firm is alert to the needs of different buyer groups and

hence, is in a better position to spot and compare marketing opportunities. Another

benefit is that marketing efforts can be directed and marketing budgets allocated on the

basis of knowledge of response differences to marketing tools among market segments.

Adjustment can also be made in the product and marketing appeals on the basis of

segment wise analysis of customer response.

CUSTOMER AND CHANNEL STRATEGIES

The basic premise of the new marketing concept is customer satisfaction. The

most important benefit that flows from this approach to marketing is that merchandising

is more effective. To satisfy the customer needs, it is necessary that management must

identify the customer groups that are intended to be served.

Industrial products which are destined to be sold primarily for use in producing

other goods or rendering services. These include such items as equipments and

accessories ,components,replacement parts,raw materials ,fabricating materials. But the

distinction between the consumer and the industrial goods does not hold good for

certain types of products which may have both consumption and industrial uses.

CHANNELS OF DISTRIBUTION

Whether the firm will sell it’s product or service directly to the consumers or

make use of intermediaries for the purpose constitute a major policy issues. For certain

service orgainsation, direct sales to consumer is invariably called for, like for instance,

civil airways, banks, consultancy firms, passenger and freight transport services. But for

most manufacture of goods, selection of the channel of distribution involves a choice of

rate significance. For one thing on channel decision depends the firm pricing decision,

advertising decision and sales force decision. The firms pricing decision depend upon

whether it chooses whole seller or retailers for the distribution of its products. The firms

advertising decision depends upon the degree of cooperation from the agencies in the

channel of distribution.

PRICING STRATEGY

Products in respect of which quality standards can be precisely measured or

readily determined or for products which are normally graded with standard specification,

a producer does not have much scope for pricing its products differently from the

established market price. Thus, for highly standardized products like chemicals, mineral

ore, metals, etc., The going market prices are so fixed on the basis of standard

classification that no producer can avoid competitive reaction if any attempt is made to

deviate from the established prices. But for most consumer goods, producer goods,

quality may be differentiated in various ways. The factors that should be taken into

account while formatting pricing policy of products.

Prices of competing products

Cost of production and distribution

Implication of discriminated prices for different customer

goods

Price of different items in the product line

Scope of changing prices

ADVERTISING POLICY : - PERSONAL SOLICITATION

Personal selling refers to some form of oral presentation in a conversation with

one or more prospective buyers for the purpose of making sales. A variety of purposes

may be served by using personal solicitation. Eg., creating product awareness, developing

product preference, arousing interest ,negotiating terms of sales under price, procuring

orders, providing post transactional reinforcement by follow up interactions. The most

commonly used form of personal selling is that of employing field sales force for direct

contact with consumers.

PRODUCTION STRATEGY

Essentially speaking the decision variables with respect to production of goods

and provision of services are virtually the same. The manufacturing as well as service

organizations alike have to decide on polices bearing on capacity, technology, purchasing

and so on.

THE KEY ISSUES ON PRODUCTION STRATEGY

The major issues in production policy may be set to include the following:

Involvement of the firm in production process

Choice of the production processes.

Estimation of production capacity

Maintenance and replacement of existing production

facility.

FACTORS GOVERNING INTEGRATION OF PRODUCTION STRATEGIES

CO-ORDINATION OF ACTIVITIES

The manufacturer of raw materials and component for the products to be sold

ensures supplies in accordance with their required quality, quantity and timely

availability. It also provides for flexibility and adjustment to changes in needs.

SAVING IN COST

The selling cost of the supplier of material and components are saved if the user

company produces rather than buying the items.

SAFEGUARD AGAINST UNCERTAINTY

If a company has to depend on few suppliers with limited capacity or there is

uncertainty of ready availability of supplies, it is always felt desirable that the company

should have a captive source of supply of vital raw materials and ingredients. This may

not be practicable in the case of patented items. In that case the company has to go in for

buying patents.

LIMITED FLEXIBILITY

With integrator production activity, it may be difficult to introduce changes in

product design. Once heavy investments are made in developing manufacturing facilities

or acquiring sources of supply, introducing new products of changing product design

with consequential shifts in the plan facility are likely to be too costly to bear. A

company procuring its materials from outside sources can shift from one source to

another to suit its requirements besides adjusting the quantity required as and when

necessary.

OPTIMUM SCALE AND ECONOMY OF PRODUCTION

The production to be commercial must be so planned as to confirm to the volume

required for deriving the economy of scale. If the requirement of any component is too

small, it may be uneconomical to setup plant with large capacity and make full use of the

same. If the requirement is irregular, the plant may be idle at intervals. On the other hand,

the large capacity may be installed and the balance of outputs in excess of internal

requirements sold to other user firms.

CHOICE OF PRODUCTION PROCESSES

Along with the strategic decision on production activities, strategies need to be

formulated also on production processes. There are different aspects of the choice.

Technology to be used

Division of labour

Mechanization of operation

Size and location of plants

CHOICE OF TECHNOLOGY

The technology to be used is uniquely given in the case of certain products. On

the choice of technology depends on the decision regarding equipment, personnel,

methods of operation and organization. In the service organizations, too, the process to be

used may require a choice to be made out of different alternatives. For instance a firm

may choose to use standard method of inventory control, budgeting and planning for

different clients, or to design the control system according to the specific requirements of

particular client.

DIVISION OF LABOURS

The volume of production and the extent of standardization of products determine

whether and how far line operation could be subdivided and en-trusted to different

operatives. Division of labour has been the characteristics feature of large scale

manufacturing works since the industrial revolution.

MECHANIZATION AND AUTOMATION

Technological advances over the last century have enlarged the scope of

mechanization and automation in many industries. The management is often inclined to

fall in line with mechanized automated work. They have also to face trade union

resistance and government concern for the impact of labour – saving devices on the

employment situation.

SIZE AND LOCATION OF PRODUCTION UNIT

Consideration in favour of decentralized small size plants may be set to arise from

technological, administrative and operational advantages. The optimum size plant is just

large enough to support specialized service divisions such as accounting, personnel and

maintenance. The production technology may be economical in spite of relatively smaller

scale of operation.

FUNCTIONAL STRATEGY AT TVS SUNDARAM FASTNERS

The TVS Sundaram fastners is one of the leading automotive components

manufacturers. They export more than 60% of production to many international

countries. They follow strong Functional strategy like in

Production management

Technology Managemen

Financial management

Marketing Management

HRM Policies

PRODUCION MANAGEMENT

In the production management, they essentially speak in the decision variables

with respect to production of components and provision of the services. They follow

efficient and effective operation procedures in the form of production design, scheduling,

output and quality.

The firm has some innovative approaches with a new production process. That is

one of the advantages for TVS Sundaram fastners. They also follow an efficient

inventory planning and control system that brings down the cost of production by

reducing the cost of materials and hence improve profitability of the firm.

The Sundaram Fastenrs had lot of quality awards from the original equipment

manufacturers (OEM). It’s give distinct advantages to the firm. Some of the quality

certification and awards are.

ISO / TS 16949

ISO 14001

QS 9000

Total productive Maintenance Award (TPM) by Japan,Institute of

Plant Maintenance

General Motors – Satum Quality Award

TECHNOLOGY

With growing internationalization of business and increasing worldwide

competition it has become the strategic concern for any multi National Corporation to

employ latest technology to gain competitive edge in international arena. Thus

developing, exploiting and maintaining technological advantages have received

concentrated attention of multi National Corporations.

SOURCES OF TECHNOLOGY

Technology is a perishable source comprising knowledge, skills, and means for

using and controlling factors of production for the purpose of producing, delivering to

users and maintaining goods and services for which there is economic and social demand.

There are three sources of technology.

Produce the technological capability at home

Import it from abroad

Import goods containing the desired technology

For firms of most less developed countries, home production of technologies is

often uneconomic. Since much of what they are seeking already exists in the industrially

advanced countries, they can satisfy their needs by importation, which is designated as

transfer of technologies. International firms are responsible for predominant share of

technology transfer in relatively less developed nations.

TECHNOLOGY TRANSFER

There are three stages of technology development, viz., invention, innovation,

diffusion. Invention is the first stage technological development where in new knowledge

is created that may be applied to business or industry. When the knowledge so created is

introduced into the market place, it is known as innovation. When the knowledge is

spread throughout the market place, it is known as Diffusion. Technology transfer refers

to the third stage of technology development.

Technology transfer is the process by which knowledge is diffused through

learning from its place of origin and introduction to other world markets. Thus it is the

transfer of systematic knowledge for the manufacture of a product, for the application

process. Basic steps for technology transfer as consists

Need for technology transfer

Forms of technology transfer

Importing technology transfer

Choosing technology transfer Strategy

Considerations influencing choice of technology transfer

TECHNOLOGY STRATEGY AT TVS SUNDARAM FASTNERS

The TVS Sundaram fastners is the pioneer in the fastners manufacturing in India.

At the time of establishment the sundaram fastners faced some crisis in the technology

and production process. That time, they have transferred lot of technologies on

production management techniques from other foreign countries. Especially, they have

acquired coordinate measuring machine (CMM) .It is to measure the pitch level between

the grooves of the screws with accurately. They also imported various production

machines like

Mechanical Crank Presses with capacity of 1300 tones, 1600 tones

Fischer scope to check coating thickness

Profile projectors

Contour graph

Torque – Tension Testing Machine

Salt spray testing chambers

Metallurgical micro scope with photography attachment

Magnetic Particle Testing Machine

FINANCIAL STRATEGY

The financial functions, like the production and marketing functions, involve

decision-making and actions, for which managers must be provided guidelines or polices

to ensure consistency and uniformity of approach to problems and issues, essentially, the

financial policy issues relate to the procurement of funds and utilization of funds. “The

total volume of finance will be influenced by the kind of investment opportunities

available as well as by conditions affecting the sources from which finance is derived.

We shall consider the following policy issues:

Sources of finance and capital capital structure decisions.

Investment decisions

Financial decisions and dividend policy.

SOURCE OF FINANCE

For successful implementation of the chosen strategy, availability of fund is a

major precondition to be taken care of by management. Broadly speaking, finance may

be available from two sources i) external ii) internal. The external sources of the finance

may consist of ownership capital and/or borrowed capital. In the case of companies,

ownership capital may be raised by issue of a) equity shares and b) preference shares.

Borrowed capital, on the other hand, may be raised by issue of debentures, through public

deposit, and as direct loans and credits. Internal funds are generated by the way of

retention of profits and provision of depreciation of fixed assets.

OTHER SOURCES OF SHORT TERM FINANCE

Short term capital is generally used for financing the current assets of a business.

The more commonly used sources of short term finance are i) trade credit ii) bill

discounting iii) bank loans iv) over draft and cash credits. Trade credit as a source of

finance spontaneous in the sense that it arises in the ordinary course of business. It

doesn’t require any formal negotiation with lenders. In so far as it varies in proposition to

the volume of operation, this is also a flexible source of short term finance.

CAPITAL STRUCTURE PLANNING

The planning of capital structure actually centres round decision with regard to

the desirable mix of dept and equity capital. There are several consideration which must

be weighed in arriving at the optimum mix of dept and equity capital. One important

consideration is the norm of debt-equity ratio which is required to be maintained while

raising additional capital. The norms are intended to minimize the risks of excessive

borrowing.

INVESTMENT AND CAPITAL ALLOCATION POLICY

While formulating policies relating to the sources of finance and financial

leverage, it is also necessary to keep in you the uses of capital for different activities

including creation of additional facilities, acquisition of planned and equipment, sales

promotion and the like. For implementation of a strategy involves estimating the funds

requirements and deciding on the appropriate mix of debt and equity capital as well as

setting limits on the allocation of capital for specific purposes

INVESTMENT APPRAISAL AND CAPITAL BUDGETING

Keeping in view the availability of funds and the possibility of multiple proposals

emanating from functional departments and divisional managers. Top managements have

to select the proposal that can be judiciously financed. The process of selection is carried

out through the steps in capital budgeting. The basic principle involved in capital

budgeting for strategy implementation is that it must be consistent with the general

investment policy as well as marketing. Production, Purchasing and personal policies

Broadly speaking, the investment proposal originating in different business

segments of a firm and at different levels of management may be divided into following

categories:

Proposal to add new products

Proposal to increase capacity

Proposal intended to reduce costs and increase the efficiency of operation

The steps involved in the capital budgeting process are generally as follows

Project generation

Project evolution

Project selection

Project implementation

FINANCIAL STRATEGY AT TVS SUNDARAM FASTNERS

The TVS sundaram fastners have well designed capital structure plans. It helps

them to minimize the overall cost of capital and financial risk and maximize the stock

holder’s interest. They follow strong investment policies for a profitable way to the

organization. They consider following factors while going to investments

High turnover of cash

receivable

inventories

efficient allocation of funds

They clearly plan their acquisition and utilization of funds, expenditure controls,

financial and accounting information that involves

financial resources and strengths

capital structure

relation with share holders

financial planning and budgeting

accounting and auditing procedures

tax planning and tax advantages

PERSONNEL STRATEGY

The significance of personal policy in strategy implementation hardly needs any

elaboration. Both physical and human resources are crucial to the achievement of

strategic goals. The basic objective of personal policy in an organization is to ensure

consistency of action and equity in its relations with employers. These policies constitute

the basis for sound personal practices. They provide the yardstick by which

implementation of strategic plans and programs can be appraised. Besides, personnel

policies are an integral part of the whole policies structure of an enterprise. Any

weakness in personnel policy may thus weaken the effectives of others functional

policies.

The close inter-relation between the quality of personnel and strategic

management requires the top executives to be concerned with the following major policy

issues bearing on personnel.

Recruitment , promotion and transfer

Training and development

Compensation and supplementary benefits

Relation with employee unions

Collective bargaining

RECRUITMENT POLICY

The appropriate match between the strategic goals to be achieved and the kind of

people employed require two different but related aspects of staffing to be examined.

There is the necessity of recruiting and maintaining the required number of work

people. It is necessary to ensure that the quality of people employed in terms of skills and

competence are suited to the specific requirements of these strategies. The requirement

policy is concerned with the quantity and qualification of manpower.

The relevant public policy on hiring and employment relationships

Provision of employment security to individual employees

Provision for and encouragement to each employee in the continuing development of his talents and skills

Assurance to employees of a fair deal in all employment relationships including promotion and transferred.

Assurance to each employee that the organization is just in his          personal goals and employment objectives.

TRAINING AND DEVELOPMENT

“Training is a short-term process utilizing a systematic and organized procedure

by which non-managerial personnel learn technical knowledge and skill for a definite

purpose ….. Development is a long term educational process utilizing a systematic and

organized procedure by which managerial personnel learn conceptual and theoretical

knowledge for general purpose”.

In the context of strategy implementation the need for training may arise for

different reasons Eg., to enable existing employees and new recruits to undertake

operations involving new technology or adopt the existing methods and techniques to

changing needs, or improving efficiency of work performance by employees, to achieve

higher productivity, reduce supervision time, minimize spoilage and wastage of material,

develop the potential abilities of workman. The basic purpose of training is to help meet

company objectives by providing opportunities for employees at organizational level to

acquire the requisite knowledge, skills and attitude.

COMPENSATION AND SUPPLEMENTARY BENEFITS

Policies with regard to age and salary administration and policy on supplementary

benefits or vital components of personnel policy because it is mainly on the basis of

satisfactory compensation schemes that a company is able to attract and retain capable

personnel. In the absence of a sound policy with respect to the compensation structure,

wages, and salaries or likely to be based on personalized arbitrary decision and thus fall

short of the essential elements of adequacy and equity in compensation plans. A

satisfactory policy frame is in variably conducive to high morale and minimum friction

among individuals and groups of employees. The basic issues to be resolved while

formulating the compensation policy are those relating to

The level of pay and its adequacy

The internal structure of compensation

Recognition of relative efficiency of performance

Incentive pay

INDUSTRIAL RELATION POLICY

The personnel policies and practices of a firm are in many ways influenced by the

state of union management relations. To what extend the basic philosophy of top

management vis-à-vis their human resources is subordinated to the bargaining power of

employee union depends upon the company policy and regard to

The nature of relation with the union

Recognition and support of the union organization

The scope of collective bargaining

Settlement of industrial dispute

Ideally, harmonious relations between management and employee union should

develop on the basis of mutual cooperation. But company executives are often inclined to

adopt a policy of belligerency toward union activities. This approach is born out of a

strong dislike and mistrust of the union by the executives, who refuse to recognize the

union as a bargaining agent, or when forced to negotiate, do it grudgingly with a horse

trading approach. With an inevitably vitiated by mutual suspicion, and there is increasing

militancy on the part of union leaders.

Short of perfect understanding with the union, it may be desirable for

management to adopt a policy of straight business relationship with the union leaders. A

stable union organization and the maturity of outlook on the part of executives as well as

union leaders can generate mutual confidence and trust, so that the demand pressed by

the union. Even if resisted by the company executives, do not lead to strong emotional

reaction but are taken in the stride of business like dealing.

PERSONNEL STRATEGY AT TVS SUNDARAM FASTNERS

The TVS sundaram fastners have a quality of managerial and technical and

employees, organizational climate, personal policies and practices. They also follow

employee’s performance record and appraisals, incentives and other compensation

benefits to their employees.

The firm spends for the employee’s education and their welfare activities. The

firm runs the schools and hospitals for their employees. The concern also provides

conveyance, and housing facilities and other financial loans for their employees.

ORGANIZATIONAL STRUCTURE

There are different organizational structures for doing international business. The

structure is determined by factors such as the extend of commitments of the organization

to the international business and the nature of its international orientation, the size of

international business and expansion plans, the number and consistency of product lines,

characteristics of the foreign markets. The nature of the organizational structure is also

influenced by relative sizes of the domestic and foreign markets or their relative

important.

ORGANIZATIONAL STRUCTURES OF TVS SUNDARAM FASTNERS

The TVS Sundaram fastners follows the “built-in export organizational

“structure .It is the simplest form of export organization and therefore easiest to establish.

Under this arrangement as the name indicates the export organization is built into the

regular domestic system. The function of the special department is usually confined to the

actual selling or directing and all such different functions connected with export

transactions such as advertising, credit, shipping and accounting are handled by the

appropriate domestic departments.

BUILT IN EXPORT ORGANIZATIONAL STRUCTURE

ENTRY STRATEGY

EXPORTING

Exports

Marketing FinanceR & DProduction Personnel

President

Exporting is the traditional mode of entering the international market. This

method is adopted generally by domestic firms intending to enter into off-shore market

without substantial risks particularly when the domestic market is too small to justify

large scale production or an elastic demand curve that prevents raising prices sufficiently

to cover the cost. Basically the firm employs existing domestic capacity for production,

distribution and administration and earmarks. Some portion of its own home production

to market abroad. The firm may enter into export market casually with the placement of

an order from a overseas customer. At other times, it may decide to export its domestic to

produce exploit opportunities in some countries.

ENTRY STRATEGY AT TVS SUNDARAM FASTNERS

The TVS Sundaram fastners is one of the leading automotive components and

accessories. Exporter in the world with turnover US$175 million.

There are various modes of entry level strategy but the sundaram fastners selected

“exports mode” in the entry level. They found out what the customers want around the

world and how to satisfy their needs with the help of this export strategy. The exporting

products meet stringent international standards under trusted the world over by major

original equipment manufacturing in the automobile and industrial sectors.

CONTROLLING STRATEGIES

Strategic control is not just about monitoring how well an organization and its

members are performing currently or about how well the firm is using its existing

resources. It also about how to create the incentives to keep employees motivated and

focused on the important problems that may confront an organization in the future so that

they work together to find solution that can help an organization perform better overtime.

To understand the vital important of strategic control, consider how it help managers to

obtain superior efficiency, quality, innovation, responsiveness to customer.

CONTROL STRATEGY AT TVS SUNDARAM FASTNERS

The TVS Sundram fastners clearly follow the strategic control systems and

personnel control systems for monitoring their organizational performance.

STRATEGIC CONTROL SYSTEMS

The strategic control system are the formal target settings, measurement, and feed

back systems that allow strategic managers to evaluate whether a company is achieving

superior efficiency,quality,innovation,customer responsiveness and implementing its

strategies successfully. The following design shows their effective strategic control

system

Established Standards and

Targets

Create measuring and monitoring

systems

Compare actual performance

against standard

Evaluate result and taken action if

necessary

Stage – 1 : Establish the standard and targets against which performance is to be

evaluated . General performance standards often drive from the goal of achieving

superior efficiency, quality, innovation, or customer responsiveness. Specific

performance targets are derived from the strategy pursued by the company.

Stage – 2 : Create the measuring and monitoring system that indicates whether the

standard and targets are being reached. A company establishes procedures assessing

whether work goals at all levels in the organization are being achieved. In some cases

measuring performance is fairly straight forward.

Stage – 3 : Compare actual performance against the established targets. Managers

evaluate whether and to what external performances deviate from the standards and

targets developed in stage – 1. If performance is higher, management may decide that it

has set the standard too low and may raise them for the next time period. If performance

is too low, the manager must decide whether to take remedial action. This decision is

easy when the reason for poor performance can be identified.

Stage – 4 : Initiate corrective action when it is decided that the standards and targets are

not being achieved. Corrective action may mean changing any aspects of strategy or

structure.

PERSONAL CONTROL SYSTEMS

It is the desire to shape and influence the behavior of a person in a face to face

interaction in the pursuit of the company’s goals. The most obvious kind of personal

control is direct supervision from a manager further up in the hierarchy. This personal

approach is useful because managers can question and probe subordinates about

problems or new issued they are facing to get a better understanding of the situation, as

well as to ensure that subordinate are performing their work effectively and not hiding

any information that could cause problem down the line.

The personal control also comes from a group peers when people work in teams.

Once again, personal control at the group level means that there is more possibility for

learning to occur and competencies to develop, as well as greater opportunity to prevent

free riding or shrinking.

Corporate level managers

Divisional level managers

Functional level managers

First level managers

Board of directors

ACHIEVEMENT FOCUS

This competence focuses on the ability to pay attention to and deliver

recognizable outcomes. People who score high on this competence tend to set high goals

and achieve them. They focus on the completion of tasks, rather than immersion in a task

for its own sake.

It is very important, not only to set goals and strategies, but to turn them into

reality.

The ability to set goals and targets (to know where the goalposts are)

To move from thinking to doing

To stick with it despite setbacks.

Track record – achievements are usually publicly acknowledged.

Ambition

Vision – can articulate future achievements

Determination

Taking control

Favoura action

Sets high goals

Decisiveness

ACHIEVEMENT FOCUS STRATEGY AT TVS SUNDARAM FASTNERS

The TVS Sundaram fastners clearly focus on the achievement after goal setting.

Each and every department in Sundaram fastners set their goals like target for every year

and also achieves the targets (Production, Sales, Profit, and Exports). They continuously

got the National export – achievement award from Government of India and also got the

“Best of Best supplier” award from major OEM like GM, CATER PILLAR, VOLVO,

and KOMATSU.

NEGOTIATION SKILLS

In the world of work, we rarely get our own way in everything. Business life is

about balancing the interests of all the parties who have vested interests. Obviously,

these interests can compete or even conflict. So, whether we are representing our own

interests, those of our department or function, or those of the organisation itself, we need

to be able to negotiate. Negotiation involves discussion and agreement to maximise the

benefit to all interested parties. Notice that this is different to just getting your own way

at the expense of the other party. In business life, we talk of ‘win-win’.

PEOPLE WHO ARE GOOD NEGOTIATORS CAN

Represent the interests of own unit / organization.

Understand and articulate own needs – ‘must haves’ and ‘like to haves’.

Listen and respond to other parties.

Generate options and joint solutions that maximize mutual benefit.

Reach agreement.

NEGOTIATION STRATEGY AT TVS SUNDARAM FASTNERS

Negotiation is the powerful tool especially for international marketing

department. In every business deal the top level managers and middle level managers are

sitting together and make the negotiation process with the foreign buyers. In that

negotiation consist the quality and quantity and price level and production process and

type of products.