STRATEGIES AND POLICIES

Policies vs Strategies

Strategy concerns the direction in which human and material resources will be applied in order to increase the chance of achieving selected objectives.

Policy sets the framework and guide out thinking in

decision making, while strategies imply that an enterprise has made the decision to commit resources in a given direction.
People say there is policy-level of management and

administrative level, not fully true, occasionally lower management makes policies.

Direction to Plans
Strategies and policies help managers plan by guiding

operating decisions and often premaking them.

The more carefully developed and clearly understood

strategies and policies are, the more consistent and effective the ensuing plans will be.
Strategies and policies affect planning,they also greatly

affect organization structure.

Requirements for Effective strategies

Assessment of the present and future environment. Corporate self-appraisal. An organization structure that ensures planning. Consistency among strategy. Development of contingency strategies.

External and Internal Environment

Since strategies are intended to operate in future we must

make best possible assessment of future environment.

Making corporate self-appraisal essentially involves

asking these questions: What is our business? what kind of business are we in? What business we should be in?
Assessing internal strengths and weaknesses are

important to build effective strategy.

Structure and consistency

Planning staff helps top management for forecasting

establishing premises and developing various kinds of analysis.

Top management with this information should be given

the responsibility for making approved premises and strategies known and for operating people to understand them.
The strategies should be consistent and all strategies

should have contingency strategies which can be easily put in place.

Kinds of strategies
New or changed products and services:

A business exists to furnish products or services. In very real sense, profits are merely a measure-although an important one of how well a company serves its customers.
Marketing: strategies are designed to guide managers

in getting products or services to customers and encouraging customers to buy it .

Kinds of strategies
Growth: strategies give answers to such questions as how

much growth should occur, how fast and where it should occur.
Finance: Every business should have clear strategy to

finance itself .There are various ways of doing this and usually many serious limitations.
Organizational: Organizational structures furnish the

system of roles and role relationships that help accomplish tasks.

Kinds of Strategies
Personnel: There can be many strategies in the area of

human resources and relationships. Union relations compensation, selection ,hiring ,training and appraisal. as well as with special areas such as job enrichment. To develop strategies in any area we need to ask right questions? New Products and services questions What is our business? Who are our customers ? What do our customers want? What is our customer demand at different prices? How far can we go in serving customers needs?

Kinds of Strategies
Marketing Questions Where are our customers and why do they buy? How do our customers buy? How is it best for us to sell? Do we have something to offer that competitors do not? What is best pricing strategy and policy for our

operation?

Strategic Planning Process

Top- Mgmt Oriented Inputs People Capital Mgrl Skills Techni cal Skill
Present and future external environment

Enterprise Profile

Developm ent of alternative strategies

Eva luati on and stra tegi c choi ce

MEDIUM RENGE PLANNI NG

S ho r ra ng e

Imple mentat ion

Purpose and obj of the enterprise

Internal Environment Weakness and strengths

Consistency Testing

Strategic Planning process

Framework for strategic planning. Inputs: The various organizational inputs, including the goal inputs of the claimants. The Enterprise profile: is usually the starting point for determining where the company is and where it should go. Top managers determine the basic purpose of an enterprise. Orientation of Top Mangers: The enterprise profile is shaped by people, especially top managers and their orientation is an important influence on strategy.

Strategic Planning Process

Purpose and objectives: The purpose and basic

objectives are the end points toward which the activities are directed.
The External Environment: The present and future

external environment is assessed in terms of threat and opportunities.

The internal Environment: Firm should be evaluated for

its weakness and strengths in research and development ,production, operations, procurements marketing , products and services.

Strategic planning process

Alternative strategies: Strategic alternative are developed

on the basis of analysis of external and internal environment. Many companies may specialize or concentrate, Diversify, to go international, joint ventures liquidation strategy, retrenchment strategy may be appropriate.
Evaluation of strategies: Various strategies are evaluated before the choice is made. Strategic choice must be considered in light of the risks involved. Other Important aspects are timing of implementing, consistency.

Effective Implementation of Strategies

Communicate strategies: After formulating meaningful

strategies it should be communicated to all those managers who are in position to make decisions. Nothing is communicated unless its clear to the receiver .
Managers must develop premises critical to plans and

decisions ,explain them to all those in decision-making chain and give instructions to develop programs and make decisions in line with them.

Effective implementation of Strategies

Action plans are tactical or operational programs and

decisions, major and minor, that take place in various parts of an organization. If they do not reflect desired objectives and strategies , the result will be vague hopes or useless intentions.
Regular review of strategies is necessary because they

may cease to suitable when condition changes.

Effective implementation of strategies

Development of contingency strategies:

Where considerable change in competitive factors or other elements in the environment may occur , strategies for such contingencies should be formulated. No one can wait to make plan when future is certain.
Making organization structure fit:

The organization structure with its system of delegations should be designed to help managers accomplish goals and make the decisions necessary to put plans into effect.

Effective implementation of Strategies

Continuing to stress on planning and implementation:

Even where we may have workable system of objectives and strategies and their implementation, it can easily fail unless responsible managers continue to stress the nature and importance of these elements.
Creating a company climate: People tend to allow

problems and crisis that arise today to interfere with effective planning for tomorrow. The only way to ensure that planning of all kinds will be done is to develop strategies carefully and to take pains to implement them.