STRATEGIC MANAGEMENT

BASIC CONCEPT OF STRATEGY

The word strategy has entered in the field of management from the military services
where it refers to apply the forces against an enemy to win a war. The word strategy
came from the two Greek words i.e. Stratus (Army) and Agein (to lead). The Greeks
felt that the strategy making is one of the responsibilities of the Army General. This
concept today adopted even in the business. Even around the same time, the Chinese
General Sun Dzu who wrote about strategy also suggested that the strategy making is
one of the responsibilities so the leader. One of the earliest definitions of Strategy is
traced to the ancient Greek writer Xenophon who said Strategy knows the business
you proposed to carry out. This definition implies that the knowledge of the business
as strategy.

The dictionary meaning of strategy is the art of so moving or disposing the

instrument of warfare as to impose upon enemy, the place time and conditions for
fighting by one self

In management, the concept of strategy is taken in more broader terms. In simple

terms, strategy means looking at the long-term future to determine what the company
wants to become, and putting in place a plan, how to get there.

Strategy is that which top management does that is of great importance to the
organization.
Strategy refers to basic directional decisions, that is, to purposes and missions.
Strategy consists of the important actions necessary to realize these directions.
Strategy answers the question: What should the organization be doing?
Strategy answers the question: What are the ends we seek and how should we
achieve them?

ORGANIZATION STRATEGY

organizations strategy starts with a summary of the organizations vision, mission,

and values, aiming to capture the desired future state and aspiration of the
organization, articulating the overall purpose and goal of the organization, as well as
pointing out what is considered as the underlying principles and standards for the
organization to reach its goals

An organizational strategy is the sum of the actions a company intends to take to achieve
long-term goals. Together, these actions make up a companys strategic plan

.An organizational strategy is the sum of the actions a company intends to take to achieve
long-term goals. Together, these actions make up a companys strategic plan. Strategic plans
take at least a year to complete, requiring involvement from all company levels. Top
management creates the larger organizational strategy, while middle and lower management
adopt goals and plans to fulfill the overall strategy step by step. This unified effort to can be
likened to a journey

LEVEL OF STRATEGY

Strategy may operate at different levels of an organization -corporate level, business

level, and functional level. The strategy changes based on the levels of strategy.

Corporate Level Strategy

Corporate level strategy occupies the highest level of strategic decision-making and
covers actions dealing with the objective of the firm, acquisition and allocation of
 resources and coordination of strategies of various SBUs for optimal performance.
Top management of the organization makes such decisions. The nature of strategic
decisions tends to be value-oriented, conceptual and less concrete than decisions at
the business or functional level.

Business-Level Strategy. Business-level strategy is applicable in those

organizations, which have different businesses-and each business is treated as
strategic business unit (SBU). The fundamental concept in SBU is to identify the
discrete independent product/market segments served by an organization. Since each
product/market segment has a distinct environment, a SBU is created for each such
segment. For example, Reliance Industries Limited operates in textile fabrics, yarns,
fibers, and a variety of petrochemical products. For each product group, the nature of
market in terms of customers, competition, and marketing channel differs.

There-fore, it requires different strategies for its different product groups. Thus, where
SBU concept is applied, each SBU sets its own strategies to make the best use of its
resources (its strategic advantages) given the environment it faces. At such a level,
strategy is a comprehensive plan providing objectives for SBUs, allocation of re-
sources among functional areas and coordination between them for making optimal
contribution to the achievement of corporate-level objectives. Such strategies operate
within the overall strategies of the organization. The corporate strategy sets the long-
term objectives of the firm and the broad constraints and policies within which a SBU
operates. The corporate level will help the SBU define its scope of operations and
also limit or enhance the SBUs operations by the resources the corporate level assigns
to it. There is a difference between corporate-level and business-level strategies.

For example, Andrews says that in an organization of any size or diversity, corporate
strategy usually applies to the whole enterprise, while business strategy, less
comprehensive, defines the choice of product or service and market of individual
business within the firm. In other words, business strategy relates to the how and
corporate strategy to the what. Corporate strategy defines the business in which a
company will compete preferably in a way that focuses resources to convert
distinctive competence into competitive advantage.

Corporate strategy is not the sum total of business strategies of the corporation but it
deals with different subject matter. While the corporation is concerned with and has
impact on business strategy, the former is concerned with the shape and balancing of
growth and renewal rather than in market execution.

Functional-Level Strategy.

Functional strategy, as is suggested by the title, relates to a single functional operation

and the activities involved therein. Decisions at this level within the organization are
often described as tactical. Such decisions are guided and constrained by some overall
strategic considerations. Functional strategy deals with relatively restricted plan
providing objectives for specific function, allocation of resources among different
operations within that functional area and coordi-nation between them for optimal
contribution to the achievement of the SBU and corporate-level objectives. Below the
functional-level strategy, there may be operations level strategies as each function
may be dividend into several sub functions. For example, marketing strategy, a
functional strategy, can be subdivided into promotion, sales, distribution, pricing
strategies with each sub function strategy contributing to functional strategy

STRATEGIC MANAGEMENT PROCESS.

Strategic Management Process is defined as the way an organization

defines its strategy. It is a continuous process in which the organization
decides to implement a selected few strategies, details the implementation
plan and keeps on appraising the progress & success of implementation
through regular assessment.
 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.
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.
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.
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.
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.

ENVIROMENT ANALYSING

Environmental business analysis is a catchall term given to the systematic process by

which environmental factors in a business are identified, their impact is assessed and a
strategy is developed to mitigate and/or take advantage of them.

Environmental business analysis is a catchall term given to the systematic process by which
environmental factors in a business are identified, their impact is assessed and a strategy is
developed to mitigate and/or take advantage of them. While frameworks do exist to aid in
environmental analysis, it is important to understand that they are simply frameworks to orient
the user toward a more precise understanding of the business environment; they are by no
means necessary. Rather, it is important to understand the business environment, the universal
processes used in analysis and how analysis is converted into strategy.

Analysis Process
Any business manager should be able to analyze the environment in which the company does
business. The general process used to analyze the business environment has four basic steps.
First, the environment is scanned for environmental factors. Next, the relevant factors are
culled and monitored. Then, those factors are analyzed for impact. Lastly, scenarios are
forecast based upon the environmental factors identified and strategies developed accordingly.
Further, as strategies are implemented, the business environment is monitored so that any
unforeseen changes can be accounted for.
Identifying Environmental Factors

Identifying environmental factors is most commonly done by brainstorming. All

environmental factors are not always obvious to everyone and the more people included,
especially in this initial brainstorming, the more accurate the environmental profile developed
will be. Common environmental factors include new tax laws, tariff limits, export laws,
consumer trends, developing technology, new replacement products (i.e., the iPod to the CD
player), laws concerning emissions, or a new competitor.
Environmental Frameworks

Several popular frameworks exist to aid in identifying environmental factors. They are
frequently used together. The first is PEST or PESTEL analysis, which looks at the political,
economic, social and technological factors affecting a business; sometimes environmental and
legal are included. Secondly, SWOT analysis is used. This is a framework that looks at the
strengths, weaknesses, opportunities and threats affecting a business, both internally and
externally. Lastly, the Five Forces are considered: internal forces, external forces, competitors,
new entrants and producers of complementary products/services.
Selecting Relevant Factors

Only the most relevant environmental factors identified should be given further analysis. All
factors are not equally relevant; for example, certain tax laws will affect the business but really
require little additional analysis compared to the threat posed by a competitor. Further, it is
important to try to quantify the effect of the environmental factors identified. Quantification
will allow the true impact to be assessed and compared historically and in the future.
Strategic Position

After carefully identifying and quantifying those environmental factors most relevant to the
future success of a company, assumptions are made regarding the future development of those
factors and a strategy formed. Methods to accomplish this will vary, but all good plans will
have the common feature of a monitoring/feedback mechanism and a system to update the
strategy accordingly, such as a monthly review

MACRO ENVIROMENT

It is also known as external part of the business organisation so the enviroment and factor of
the environment plays a vital role for any business organisation .

Macro environment

External environment is the uncontrollable factors, forces, situations, and events outside the
organization that affect its performance and strategies. As shown in below figure, the
examples of macro environment of an organisation is include factors such as social cultural,
political and legal, globalisation, economy, demographical and also technology. Detailed
definition of macro environment factors mentioned and the description showed as below.

macro environment could include competitors, changes in interest rates, changes in

cultural tastes, or government regulations. An organization's macroenvironment consists
of nonspecific aspects in the organization's surroundings that have the potential to affect
the organization's strategies. When compared to a firm's task environment, the impact of
macroenvironmental variables is less direct and the organization has a more limited
impact on these elements of the environment. Macroenvironmental variables include
sociocultural, technological, political-legal, economic, and international variables. A firm
considers these variables as part of its environmental scanning to better understand the
threats and opportunities created by the variables and how strategic plans need to be
adjusted so the firm can obtain and retain competitive advantage. The macroenvironment
consists of forces that originate outside of an organization and generally cannot be altered
by actions of the organization. In other words, a firm may be influenced by changes
within this element of its environment, but cannot itself influence the environment. The
curved lines in Figure 1 indicate the indirect influence of the environment on
the organization. SOCIOCULTURAL FACTORS The sociocultural dimensions of the...

Component of external environment

Definition of factors of the macro environment of an organisation:

Social cultural
The sociocultural component is concerned with societal and cultural factors such as values,
attitudes, trends, traditions, lifestyles, beliefs, tastes, and patterns of behaviour.
In accordance of the current situation faced by Parkway Nursing Care, one of the social
cultural factors is the childcare commitment that the staffs (mostly those licenced practical
nurse and orderlies) needed since a lot of them are single parents or the primary care giver of
their children. Its been a common sense for American parents to prioritize the education and
close monitor of their children.

The incapability and restriction of taking time off and lack of manpower contingency plan
during the needs for childcare will only raise the stress and demoralize them. As further
impact, this situation will reduce the nursing quality performed by the affected personnel.

Political/Legal

The basic understanding of the political legal environment is when the government
implement's laws and or regulations which affect the way a business operate.
The political/legal component mainly looks at federal, state, and local laws, as well as other
countries laws and global laws. It also includes a countrys political conditions and stability.
One of the critical government factors that may directly give the impact to the profitability of
Parkway Nursing Care is the attempt of the federal government to trim Medicare expense;
this may lead to reduction in funding.

Another government regulation that affect the daily operation procedure for Parkway Nursing
Home is the healthcare reporting system which is required to be made in a form that cannot
be altered after the fact, to prevent covering abuse, so specialized software system must be
used for electronic documentation which could be antipathy by the older caregivers.

Global

The global component encompasses issues associated with globalization and a world
economy.
Globalisation consist of aspect and issue in global business organisation, global economic,
global sociocultural and the global workforce.
Globalization, then, describes a trend towards the increasing interconnectedness of social
relations across the globe. As a worldwide process it embraces both the structural economic
linkages associated with rising levels of trade, finance, and investment, the political and
cultural influences of transnational actors and international institutions, and the impact of
their ideas on domestic policy.

Nursing care nowadays had become global concern and attending patients from different
cultural background had become one of the challenges for the nursing staff. The society also
tends to compare the nursing quality and price word wide, this is also causing more challenge
in nursing industry as more and more county can provide high quality of nursing services with
cheaper investment.

One way that Parkway Nursing Care can choose to lower the operation cost is to employ
workforce from foreign country which is cheaper and more willing to work long hours.
Another option is to outsource the training programme for the workforce to country that can
provide low operational cost.
Economic

A market boom, recession, or growing inflation problem can all change the way an
organization plans for the future and operates in the present. Economic factors are often
difficult to assess, since economic forecasts and analyses vary widely between
experts. Unemployment levels, comparative foreign exchange rates, and the state of the global
economy can all help or hurt a business' ability to get needed components and maintain a
stable profit.

Technological

Technological macro environment factors can influence how an organization does business. A
new type of machinery, computer chip, or product created through research and development
can help a company stay modernized and ahead of the market curve. Owners must be able to
accurately identify which new developments will be truly useful, and which are just fads.

Environmental

Environmental concerns are important to businesses both in the short and long term. In the
short-term, things like natural disasters can disrupt production and supply operations, or even
destroy company assets. Programs such as environmental risk assessment can help companies
prepare to handle many of the most likely short-term crises. In the long view, however,
businesses may have an interest in ensuring that their supply chains are not destroyed by
unsustainable practices.

PESTLE framework

is a useful tool for understanding the big pictureof the environment, in which you
are operating, and the opportunities andthreats that lie within it. By understanding the
environment in which youoperate (external to your company or department), you can
take advantageof the opportunities and minimize the threats

PESTLE Analysis is often used as a generic 'orientation' tool, findingout where an organization
or product is in the context of what is happeningout side that will at some point effect what is
happening inside anorganization.A PESTLE analysis is a business measurement tool, looking
at factorsexternal to the organization. It is often used within a strategic SWOTanalysis
(Strengths, Weaknesses, Opportunities and

PEST analysis (political, economic, social and technological) describes a framework of

macro-environmental factors used in the environmental scanning component of strategic
management. It is part of an external analysis when conducting a strategic analysis or
doing market research, and gives an overview of the different macro-environmental factors to
be taken into consideration. It is a strategic tool for understanding market growth or decline,
business position, potential and direction for operation

PESTLE FRAM WORK INCLUDE

Political,economical, social , technological, legal factor of business organisation or we

can these are the external parts of busiess organisation and we have explan it

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.
Researching a market? Our free online course Introduction to Market Sizing offers a
practical 30-minute primer on market research and calculating market size.

Industry analysisalso known as Porters Five Forces Analysisis a very useful tool for
business strategists. It is based on the observation that profit margins vary between industries,
which can be explained by the structure of an industry.

The Five Forces primary purpose is to determine the attractiveness of an industry. However,
the analysis also provides a starting point for formulating strategy and understanding the
competitive landscape in which a company operates.

Porters Five Forces Analysis

The framework for the Five Forces Analysis consists of these competitive forces:

Industry rivalry (degree of competition among existing firms)intense

competition leads to reduced profit potential for companies in the same industry
Threat of substitutes (products or services)availability of substitute products
will limit your ability to raise prices
Bargaining power of buyerspowerful buyers have a significant impact on prices
Bargaining power of supplierspowerful suppliers can demand premium prices
and limit your profit
Barriers to entry(threat of new entrants)act as a deterrent against new
competitors

Industry analysis and competition

Competition within an industry is grounded in its underlying economic structure. It goes
beyond the behaviour of current competitors.
The state of competition in an industry depends upon five basic competitive forces. The
collective strength of these forces determines profit potential in the industry. Profit potential is
measured in terms of long-term return on invested capital. Different industries have different
profit potentialjust as the collective strength of the five forces differs between industries.

Industry analysis as a tool to develop competitive strategy

Industry analysis enables a company to develop a competitive strategy that best defends
against the competitive forces or influences them in its favour. The key to developing a
competitive strategy is to understand the sources of the competitive forces. By developing an
understanding of these competitive forces, the company can:

Highlight the companys critical strengths and weaknesses (SWOT analysis)

Animate its position in the industry
Clarify areas where strategic changes will result in the greatest payoffs
Emphasize areas where industry trends indicate the greatest significance as either
opportunities or threats

Industry analysis and structure

The five competitive forces reveal that competition extends beyond current competitors.
Customers, suppliers, substitutes and potential entrantscollectively referred to as an
extended rivalryare competitors to companies within an industry.

The five competitive forces jointly determine the strength of industry competition and
profitability. The strongest force (or forces) rules and should be the focal point of any industry
analysis and resulting competitive strategy.

Short-term factors that affect competition and profitability should be distinguished from the
competitive forces that form the underlying structure of an industry. Although these short-term
factors may have some tactical significance, analysis should focus on the industrys underlying
characteristics.

MARKET ANALYSIS
A market analysis studies the attractiveness and the dynamics of a
special market within a special industry. It is part of the industry analysis and thus in
turn of the global environmental analysis. Through all of these analyses, the strengths,
weaknesses, opportunities and threats (SWOT) of a company can be identified.
 Finally, with the help of a SWOT analysis, adequate business strategies of a company
will be defined.[1] The market analysis is also known as a documented investigation of
a market that is used to inform a firm's planning activities, particularly around
decisions of inventory, purchase, work force expansion/contraction, facility
expansion, purchases of capital equipment, promotional activities, and many other
aspects of a company.

Market analysis. ... Through all of these analyses, the strengths, weaknesses,
opportunities and threats (SWOT) of a company can be identified. Finally, with the
help of a SWOT analysis, adequate business strategies of a company will be defined.

STRATEGIC GAP
'Strategic Gap Analysis' The evaluation of the difference between a desired
outcome and an actual outcome. This difference is called a gap. ... After
conducting this analysis, the company should develop an implementation
plan to eliminate the gaps.

The evaluation of the difference between a desired outcome and an actual

outcome. This difference is called a gap. Strategic gap analysis attempts to
determine what a company should do differently to achieve a particular goal
by looking at the time frame, management, budget and other factors to
determine where shortcomings lie. After conducting this analysis, the
company should develop an implementation plan to eliminate the gaps

Gap analysis refers to the process through which a company compares its
actual performance to its expected performance to determine whether it is
meeting expectations and using its resources effectively. Gap analysis seeks
to define the current state of a company or organization and the target state
of the same company or organization. By defining and analyzing these gaps,
a business management team can create an action plan to move the
organization forward and fill the gaps in performance.

The Four Steps of Gap Analysis

The first step is to accurately outline and define the organizational goals. All goals
need to be specific, measurable, attainable, realistic and timely. The second step is to
use historical data to measure the current performance of the organization as it relates
to its outlined goals. The third step is to analyze the data that was collected, which
seeks to understand why the measured performance is below the desired levels. The
fourth and final step is to compile a report based on the quantitative data collected, the
qualitative reasons why the data is below the benchmark, and to identify action items
needed to achieve the organization's goals.
influencing demand, which may include:
influencing the internal or external business drivers through policy reform
changing the way in which your organisation functions (for example, management
practices, information technology systems, business process redesign).
influencing supply, which may include:
establishing and maintaining partnerships with other agencies or departments, or
educational institutions to increase external talent pools and the talent pipeline
establishing and maintaining cadet or graduate programs
improving the availability of the current workforce
attracting and recruiting external people to fill the gap
training existing staff in line with new skill requirements.
influencing workforce productivity, which may include:

using your employees differently to fill existing or emerging gaps (for example, job
redesign, restructure, redeployment)
shifting relevant tasks to another part of the agency or department that has the skills
and capabilities necessary to undertake them.
Strategies and initiatives need to be tangible and SMART. The best strategies address the root
cause of the issue and can only be developed if the root cause is fully understood.

These are different point in which you can define the GAP

Workforce capacity

How much the workforce can do. Refers to the availability of the workforce to do work, for
instance the absolute numbers of staff available with the necessary skill sets (including their
level of the skills) and other elements such as levels of absenteeism (or presenteeism).

When used to describe the absolute numbers of staff, the element of employment type (for
example, ongoing, non-ongoing, full-time, part-time) also needs to be considered.

The dimension of workforce capacity can be used to describe what is in existence, what may
be required in the future and any gap between the two.

The other component of workforce capacity is the workforces performance, which includes
elements such as staff engagement, motivation and discretionary effort.

Workforce demand

The workforce an organisation needs to perform its functions and achieve its business
objectives, now and into the future.

Workforce demand is defined in terms of workforce capability, workforce capacity and the
alignment of the workforce to the functional business delivery of the organisation (structure).

Workforce management plan (immediate issues)

Deals with immediate and specific workforce issues (such as restructure, conclusion of a
significant project or a recruitment campaign for specific skills) and identifies actionable
strategies for managing the workforce issues.

An organisation may have a number of workforce management plans if its dispersed across a
number of geographic locations or business areas.

Workforce plan

Document you produce to capture the key factors youve considered in developing the
strategies and initiatives to mitigate your workforce risks. Throughout this guide, the term is
used broadly to describe either a single workforce plan or multiple workforce plansstrategic
workforce plan(s), operational workforce plan(s) and/or workforce management plan(s)
depending on the needs of your organisation.

Workforce plan, operational (12-18 months)

Usually covers the next 12 to 18 months and identifies actionable strategies to address a
specific workforce gap in the short to medium term.

Workforce plan, strategic (three-plus years)

Usually covers a three to five-year time horizon, with many organisations focusing on a four-
year time horizon aligned to Portfolio Budget Statements. However, if the lead time to fill
critical job roles is longer than three to four years, the forecast period may need to extend
beyond this.
Seeks to address high-level trends and developments that will affect the availability of the
workforce required to deliver organisational outcomes. A suite of actionable strategies will be
articulated to mitigate the workforce risks identified.

Workforce planning

A continuous business planning process of shaping and structuring the workforce to ensure
there is sufficient and sustainable capability and capacity to deliver organisational objectives,
now and in the future.

To be effective, workforce planning needs to be integrated into an agency or departments

strategic planning framework and incorporate strong governance mechanisms so it can be used
to clearly identify the human resource (HR) strategies required to continuously deliver the
right peoplethat is, those with the skills and capabilities necessary for the required workin
the right numbers, in the right place, at the right time.

Workforce segment

A specific job family, job function or job role within your organisation.

Workforce structure

Workforce structure refers to how the workforce is organised within programs/functions to

deliver expected business outcomes.

Workforce supply, external

Anyone who does not work for your organisation but could do so, now or in the future.

External workforce supply is used to reconcile demand and supply if internal workforce supply
is not sufficient and/or cannot be developed to meet demand.

Supply is defined in terms of skills, capabilities and numbers.

Workforce supply, internal

Everyone in the current workforce. It should also consider future movements in and out of the
workforce. This includes full-time, part-time, casual and contracted employees who are
working for or supplying services to the agency or department.

Gap analysis step

Current state: A gap analysis template starts off with a column that might be labeled "Current
State," which lists the processes and characteristics an organization seeks to improve, using
factual and specific terms. Areas of focus can be broad, targeting the entire business; the focus
instead may be narrow, concentrating on a specific business process, depending on the
company's outlined target objectives. The analysis of these focus areas can be either
quantitative, such as looking at the number of customer calls answered within a certain time
period; or qualitative, such as examining the state of diversity in the workplace.

Future state: The gap analysis report should also include a column labeled "Future State,"

which outlines the target condition the company wants to achieve. Like the current state, this

section can be drafted in concrete, quantifiable terms, such as aiming to increase the number of
fielded customer calls by a certain percentage within a specific time period; or in general

terms, such as working toward a more inclusive office culture.

Describing the gap

Gap description: This column should first identify whether a gap exists between a company's

current and future state. If so, the gap description should then outline what constitutes the gap

and the factors that contribute to it. This column lists those reasons in objective, clear and

specific terms. Like the state descriptions, these components can either be quantifiable, such as

a lack of workplace diversity programs; or qualitative, such as the difference between the

number of currently fielded calls and the target number of fielded calls.

Bridging the gap

Next steps and proposals: This final column of a gap analysis report should list all the

possible solutions that can be implemented to fill the gap between the current and future states.

These objectives must be specific, directly speak to the factors listed in the gap description

above, and be put in active and compelling terms. Some examples of next steps include hiring

a certain number of additional employees to field customer calls; instituting a call volume

reporting system to guarantee that there are enough employees to field calls; and launching

specific office diversity programs and resources.

SWOT ANALYSIS

SWOT analysis (alternatively 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

Strengths

What advantages does your organization have?

What do you do better than anyone else?

What unique or lowest-cost resources can you draw upon that others can't?

What do people in your market see as your strengths?

What factors mean that you "get the sale"?

What is your organization's Unique Selling Proposition

Consider your strengths from both an internal perspective, and from the point of view of your
customers and people in your market.
Weaknesses

What could you improve?

What should you avoid?

What are people in your market likely to see as weaknesses?

What factors lose you sales?

Again, consider this from an internal and external perspective: Do other people seem to
perceive weaknesses that you don't see? Are your competitors doing any better than you?

It's best to be realistic now, and face any unpleasant truths as soon as possible.

Opportunities

What good opportunities can you spot?

What interesting trends are you aware of?

Useful opportunities can come from such things as:

Changes in technology and markets on both a broad and narrow scale.

Changes in government policy related to your field.

Changes in social patterns, population profiles, lifestyle changes, and so on.

Local events.

Threats

What obstacles do you face?

What are your competitors doing?

Are quality standards or specifications for your job, products or services changing?

Is changing technology threatening your position?

Do you have bad debt or cash-flow problems?

Could any of your weaknesses seriously threaten your business?

SWOT Analysis is a simple but useful framework for analyzing your organization's
strengths and weaknesses, and the opportunities and threats that you face. It helps you
focus on your strengths, minimize threats, and take the greatest possible advantage of
opportunities available to you.
 VALU CHAIN ANALYSIS

Value chain analysis is a strategy tool used to analyze internal firm activities. Its
goal is to recognize, which activities are the most valuable (i.e. are the source of cost
or differentiation advantage) to the firm and which ones could be improved to provide
competitive advantage

Value chain is crucial strategic tool which is widely used in strategic cost
management which is again an important part of the management accounting. In
todays competitive world almost all the organizations use value chain for efficient
and effective business process. This paper explains how the retail giant Wal-Mart use
value chain for smooth running of their business and this value chain is influenced by
the introduction of information system in the cost management process. The value
chain, also known as value chain analysis, is a concept from business management
that was first described and popularized by Michael Porter in his 1985 best-seller,
Competitive Advantage: Creating and Sustaining Superior Performance. It is an
approach for breaking down the sequence (chain) of business functions into the
strategically relevant activities through which value is added by the business. The
objective is to identify the behaviour of costs and the areas for differentiation

The value chain, also known as value chain analysis, is a concept from business
management that was first described and popularized by Michael Porter in his 1985
best-seller, Competitive Advantage: Creating and Sustaining Superior Performance. It
is an approach for breaking down the sequence (chain) of business functions into the
strategically relevant activities through which value is added by the business. The
objective is to identify the behaviour of costs and the areas for differentiation

It takes place as a three stage process:

Activity Analysis - where you identify the activities that contribute to the delivery of
your product or service.

Value Analysis - where you identify the things that your customers value in the way
you conduct each activity, and then work out the changes that are needed.

Evaluation and Planning -where you decide what changes to make and plan how
you will make them. By using Value Chain Analysis and by following it through to
action, you can achieve excellence in the things that really matter to your customers

Objectives

1. To determine private costs and profitability of different stages in the value chain.

2. To understand cost composition:

3. To measure trade competitiveness

Uses of Value Chain Analysis

 1. The sources of the competitive advantage of the firm can be seen from its discrete activities
,and how they interact with one one another.

2. The value chain is a tool of systemetically examining the activities of a firm and how they
interact with one another and affect each others cost and performance.

3. A firm gains a competitive a advantage by performing these activities better or at lower cost
than competitors.

4. Helps you to stay out of the No profit zone.

5. Present opportunities for integration.

6. Aligns spending with value procecces.

7. The importance of value chain analysis is that it can help you assess costs in your chain that
might be reduced or impacted by a change in one of the chain's processes. By comparing your
value chain to your competitors, you can often find the areas or links of the chain where they
might be more efficient than you; that points the direction for you to improve

THRESHOLD RESOURCE

Threshold resource include basic knowledge, skills, traits, motives, self-image and
social role and are essential for performing a job. Without these, some areas of
performance will be substandard. To move beyond minimal performance, additional
competencies are required

What are resources and competences

Strategists and strategy consultants often talk and write about resources and competencies
when discussing strategy, strategic management and strategic capability. But what do these
two words actually mean? This post should provide some illumination on the matter. Strategic
capability is the adequacy and suitability of the resources and competences of an organisation
for it to survive and prosper.

Resources can be both tangible (i.e. the physical assets of an organisation such as plant, labour
and finance) and intangible (non-physical assets such as information, reputation and
knowledge). They can be considered under the following four broad categories:

1. Physical resources number of machines, buildings or the production capacity of the

organisation. The nature of these resources, such as the age, condition, capacity and
location of each resource will determine the usefulness of such resources;
2. Financial resources such as capital, cash, debtors and creditors, and suppliers of
money.
3. Human resources including the number and mix of people in an organisation. The
intangible resource of their skills and knowledge is likely to be important.
4. Intellectual capital including patents, brands, business systems and customer
databases.

Resources can be either threshold resources those which are needed to meet customers
minimum requirements and therefore to continue to exist and unique resources, which are
those that underpin competitive advantage and are difficult for competitors to imitate or obtain.
Such resources are important, but what it does with the resources matters at least as what
resources it has.
The term competences is used to mean the activities and processes through which an
organisation deploys its resources effectively. Competences can be split as follows:

Threshold competences activities and processes needed to meet customers

minimum requirements and therefore to continue to exist;
 Core competences activities that underpin competitive advantage and are difficult
for competitors to imitate or obtain.

The first two basic questions to ask are:

1. What are the threshold resources needed to support particular strategies? If an

organisation does not have them, it will be unable to meet its customers needs.
2. Similarly, what are the threshold competences needed to meet customers needs?

Threshold levels of capability will change over time, and it is, therefore, critical to
continuously assess and review just to stay in business. It is also very important to understand
that there will be a need for trade-offs. Accordingly, the organisation will have to make some
difficult decisions to meet customer needs. Older organisations have another potential
problem. Over time, the business might build up redundant capabilities, those which are no
longer needed to stay in business. The company will need to consider the best way of
disposing of such resources, freeing up capital for investment in worthwhile ones.
Identifying threshold resources and competences is therefore important. If organisations do not
pay attention to them they cannot even expect to be in the game. They do not have the
capability to be competitive. However, competitive advantage is likely to arise with the
identification and utilisation of the unique resources and core competences. These tend to be
distinctive, and are difficult, or impossible, for others to imitate or obtain. Core competences
will be the subject of a subsequent post.

WHAT IS STRATEGIC RESOURCE CAPABILITIES

strategic capabil-ity
can be defined as the resources and competences of an organisation needed
for it to survive and prosper.
.
Typically, an organisations resources can be considered under the
following four broad categories:

Physical resources
such as the machines, buildings or the production ca-
pacity of the organisation. The nature of these resources, such as the age, con-
dition, capacity and location of each resource, will determine the usefulness of
such resources.

Financial resources
such as capital, cash, debtors and creditors, and sup-
pliers of money (shareholders, bankers, etc.).

Human resources
including the mix (for example, demographic profile), skills
and knowledge of employees and other people in an organisations networks.

Intellectual capital
as an intangible resource includes patents, brands, business systems and customer databases. An
indication of the value of these is that when businesses are sold, part of the value is goodwill. In a
knowledge-based economy intellectual capital is likely to be a major asset of many organisations. Such
resources are certainly important, but what an organisation does how it employs and deploys these
resources matters at least as much as what resources it has. There would be no point in having state-of-
the-art equipment or valuable knowledge or a valuable brand if they were not used effectively. The
efficiency and effectiveness of physical or financial resources, or the people in an organisation, depends
on not just theirexistence but how they are managed, the cooperation between people, their adaptability,
their innovatory capacity, the
relationship with customers and suppliers, and the experience and learning about what works well and
what does not. The term
competences is used tomean the skills and abilities by which resources are deployed effectively through
an organisations activities and processes.Within these broad definitions, other terms are commonly used.
As the expla-
nation proceeds, it might be useful to refer to the two examples provided

Threshold capabilities are those needed for an organisation to meet the necessary requirements to
compete in a given market. These could be threshold resources required to meet minimum customer
requirements: for example, the increasing demands by modern mul-tiple retailers of their suppliers mean
that those suppliers have to possess a quite sophisticated IT infrastructure simply to stand a chance of
meeting retailer requirements. Or they could be the threshold competences
required to deploy resources so as to meet customers requirements and support particu- lar strategies.
Retailers do not simply expect suppliers to have the required IT infrastructure, but to be able to use it
effectively so as to guarantee the required level of service. Identifying and managing threshold
capabilities raises at least two significant
challenges:

Threshold levels of capability will change as critical success factors change (see section 2.4.4) or
through the activities of competitors and new entrants. To continue the example, suppliers to major
retailers did not require the same level of IT and logistics support a decade ago. But the retailers drive to
reduce costs, improve efficiency and ensure availability of merchandise to their customers means that
their expectations of their suppliers have increased markedly in that time and continue to do so. So there
is a need for those suppliers continuously to review and improve their logistics resource and competence
base just to stay in business.

Trade-offsmay need to be made to achieve the threshold capability required for different sorts of
customers. For example, businesses have found it difficult to compete in market segments that require
large quantities of standard pro- duct as well as market segments that require added value specialist
products. Typically, the first requires high-capacity, fast-throughput plant, standardised highly efficient
systems and a low-cost labour force; the second a skilled labour force, flexible plant and a more
innovative capacity. The danger is that an organisation fails to achieve the threshold capabilities required
for either
segment.

CORPORATE LEVEL STRATEGIES

Corporate strategy is a firms overall approach to gaining a competitive advantage by operating in

several businesses simultaneously. Gaining a competitive advantage requires setting a clear purpose
for the entire organi- sation and identifying plans and actions to achieve that purpose. At the
corporate and headquarters level, H&T organisations need to constantly ask themselves what
business they are in, what business they should be in, what their basic directions are for the future,
and what their attitude toward international markets is.
Corporate strategy has two main elements: corporate-level strategy and
business-level strategy.
Organizations that operate in a highly competitive international marketface two types of pressure:
pressure to reduce costs and pressure to be locally responsive to the markets in which they operate.
These lead to the development of different corporate strategies: global, international, transnational,
and multidomestic.
There are different approaches to corporate strategy development: the portfolio and the competence
approach.
Portfolio analysis puts corporate and headquarters into the role of an internal auditor. In portfolio
analysis, top management views its product lines and business units as a series of investments that
will have return.

Why Corporate Strategy?

Strategic management is basically needed for every organization and it offers several benefits.
1.Universal
Strategy refers to a complex web of thoughts, ideas, insights, experiences, goals, expertise,
memories, perceptions, and expectations that provides general guidance for specific actions in
pursuit of particular ends. Nations have, in the management of their national policies, found it
necessary to evolve strategies that adjust and correlate political, economic, technological, and
psychological factors, along with military elements. Be it management of national polices,
international relation, or even of a game on the playfield, it provides us with the preferred path
that we should take for the journey that we actually make

. Keeping pace with changing environment

The present day environment is so dynamic and fast changing thus making it very difficult for
any modern business enterprise to operate. Because of uncertainties, threats and constraints,
the business corporation are under great pressure and are trying to find out the ways and means
for
their healthy survival. Under such circumstances, the only last resort is to make the best use of
strategic management which can help the corporate management to explore the possible
opportunities and at the same time to achieve an optimum level of efficiency by minimizing
the expected threats
.
.
Minimizes competitive disadvantage

It minimizes competitive disadvantage and adds up to competitive advantage.For example, a

company like Hindustan Lever Ltd., realized that merely by merging with companies like
Lakme, Milk food, Ponds, Brookebond, Lipton etc which make fast moving consumer goods
alone will not make it market leader but venturing into retailing will help it reap heavy profits.
Then emerged its retail giant Margin Free which is the market leader in states like Kerala.
Similarly, the R.P. Goenka Group and the Muruguppa group realized that .

. Clear sense of strategic vision and sharper focus on goals and objectives
Every firm competing in an industry has a strategy, because strategy refers to how agiven
objective will be achieved. Strategy defines what it is we want to achieve and charts our
course in the market place; it is the basis for the establishment of a business firm; and it is a
basic requirement for a firm to survive and to sustain itself in todays changing environment by
providing vision and encouraging to define mission.
5.Motivating employees

One should note that the labor efficiency and loyalty towards management can be expected
only in an organization that operates under strategic management. very guidance as to what to
do, when and how to do and by whom etc, is given to every employee. This makes them more
confident and free to perform their tasks without any hesitation. Labor efficiency and their
loyalty which results into industrial peace and good returns are the results of broadbased
policies adopted by the strategic management
6
.
StrengtheningDecisionMaking

Under strategic management, the first step to be taken is to identify the objectives of the
business concern. Hence a corporation organized under the basic principles of strategic
management will find a smooth sailing due to effective decisionmaking. This points out the
need for strategic management.

A corporate parent is an organisation or person in power who has special

responsibilities to care experienced and looked after children and young people, a
group that includes: those in residential care.

CORPORATE PORTFOLIO

A corporate portfolio analysis takes a close look at a companys services and

products. Each segment of a companys product line is evaluated including sales,
market share, cost of production and potential market strength. The analysis
categorizes the companys products and looks at the competition. The goal is to
identify business opportunities, strategize for the future and direct business
resources towards that growth potential.

Analysis
Portfolio analysis can be performed by an outside firm or by company
management. There are various tools used for a portfolio analysis with some
that look at market share and others that evaluate a companys product line
against the competition. While the process typically points the way for
spending for future growth, it can also be used to identify products or services
which short-term may become obsolete, suggesting that part of the portfolio be
retired and the funds used for areas with more promising growth potential.

Purpose:
The key elements of Corporate Portfolio Analysis include the construction and
interpreta;on of several matrices relative to each other. This framework provides fact-based
questioning and analysis across four principle dimensions:

Market trends and opportunity

Competative strength

Financial history and forecasts

Cash flow balance

MERITS

Risk and Return Advantages

Step

Markowitz' Modern Portfolio Theory and views on portfolio analysis, which would eventually
earn him in 1990 the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred
Nobel, are focused on evaluating and managing the risks and returns of a portfolio of
investments. Through analysis, under-performing assets as well as assets with excess risk
relative to their returns can be identified and replaced. This is highly advantageous as the
resulting "optimized" portfolio will have either the same expected return with less risk than
before or a higher expected return with the same level of risk.

Tax Advantages

Step

In addition to maximizing returns for a given level of risk, portfolio analysis also is
advantageous in minimizing the tax impact on portfolio returns. Depending on such variables
as the type of account, security type and tax bracket of the investor, taxation can eat into
returns and make otherwise attractive investments mediocre at best. A portfolio analysis with a
focus on tax efficiency may prove advantageous in identifying ways to structure investments to
minimize the impact of taxes and increase the net return to the investor.

Limitations

Step

Even with the most careful planning and portfolio construction, past performance is never a
guarantee for future results. Even the most thought out investment strategies can fail given the
proper circumstances. Additionally, investment objectives can change over time. For example,
from long-term growth during the early stages of a career to preservation of capital during
retirement, a portfolio analysis will need to be done periodically to make sure your investments
are in line with your objectives.

CORPORATE DIVERSITY

The worlds increasing globalization requires more interact tion among people from
diverse backgrounds. People no longer live and work in an insular environment; they are
now part of a worldwide economy competing within a global framework. For this reason,
profit and non-profit organizations need to become more diversified to remain
competitive. Maximizing and capitalizing on workplace diversity is an important issue for
management.
 Diversity can be defined as acknowledging, understanding, accepting, and
valuing differences among people with respect to age, class, race, ethnicity,
gender, disabilities, etc.

Benefits of Diversity in the

Workplace
Diversity is beneficial to both associates and employers. Although associates are
interdependent in the workplace, respecting individual differences can increase productivity.
Diversity in the workplace can reduce lawsuits and increase
marketing opportunities, recruitment, creativity, and business image (Esty et al. 1995). In an
era when flexibility and creativity are keys to competitiveness, diversity is critical for
an organizations success. Also, the consequences (loss of time and money) should not be
overlooked

Challenges of Diversity in the

Workplace
There are challenges to managing a diverse work population. Managing diversity is more than
simply acknowledgeing differences in people. It involves recognizing the value of differences,
combating discrimination, and promoting inclusiveness. Managers may also be challenged
with losses in personnel and work productivity due to prejudice and
discrimination, as well as complaints and legal actions against the organization (Devoe
1999).Negative attitudes and behaviors can be barriers to organizational diversity because they
can harm working relationships and damage morale and work productivity (Negative attitudes
and behaviors in the workplace include prejudice, stereotyping, and discrimination, which
should never be used by management for hiring, retention, and termination practices (could
lead to costly litigation

Required Tools for Managing

Diversity
Effective managers are aware that certain skills are necessary for creating a successful, diverse
workforce. First, managers must understand discrimination and its consequences. Second,
managers must recognize their own cultural biases and prejudices (Koonce 2001). Diversity is
not about differences among groups, but rather about differences among individuals. Each
individual is unique and does not represent or speak for a particular group. Finally, managers
must be willing to change the organization if
necessary (Koonce 2001). Organizations need to learn how to manage diversity in the
workplace to be successful in the future (Flagg 2002).Unfortunately, there is no single recipe
for success. It mainly depends on the managers ability to understand what is best for the
organization based on teamwork and he dynamics of the workplace. According to Roosevelt
managing diversity is a comprehensive process for creating a workenvironment that includes
everyone. When creating a successful diverse workforce, an effectivemanager should focus on
personal awareness. Both managers and associates need to be aware of their personal
biaseTherefore, organizations need to develop, implement, and maintain ongoing training
because a one-day session of training will not change peoples behaviors (Koonce 2001).
Managers must also understand that fairness is not necessarily equality. There are always
exceptions to the rule.Managing diversity is about more than equal employment opportunity
and affirmative action (Losyk 1996). Managers
should expect change to be slow, while at the same time encouraging change (Koonce
2001).Another vital requirement when dealing with diversity is promoting a safe place for
associates to communicate (Koonce 2001). Social gatherings and business meetings,
where every member must listen and have the chance to speak, are good ways to create
dialogues. Managers should implement policies such as mentoring programs to provide
associates access to information and opportunities. Also, associates should never be
denied necessary, constructive, critical feedback for learning about mistakes and successes
(Flagg 2002).
GENERIC STRATEGIES
Definition: Michael Porter developed three generic strategies, that a company could use to
gain competitive advantage, back in 1980. These three are: cost leadership, differentiation and
focus.

Description: The cost leadership strategy advocates gaining competitive advantage due to the
lowest cost of production of a product or service. Lowest cost need not mean lowest price.
Costs are removed from every link of the value chain- including production, marketing, and
wastages and so on. The product could still be priced at competitive parity (same prices as
others), but because of the lower cost of production, the company would be able to sustain
itself even through lean times and invest more into the business all throughout.

Examples are the TPS system developed by the Toyota Motor Company. The TPS system aims
to cut costs throughout the company, but Toyota cars are still priced at almost the same levels
as American or other Japanese cars.

The 'differentiation' strategy involves creation of differentiated products for different segments.
A variety of products, each branded and promoted differently with levels of function, allows a
company to 'desensitize' prices, and on the basis of being different, charge premium or higher
prices. This strategy also provides a hedge against different markets and product life cycles,
allowing cash flow to come in even if a few products decline, while others grow or mature.

A prime example of this strategy is Hindustan Lever, which, while focused on FMCG, has a
range of products even within the soaps category for different segments. Such a strategy needs
strong segmentation, marketing and branding skills.

The 'focus' strategy involves focusing on a narrow, defined segment of the market, also called
a 'niche' segment. For example, Porche markets to the particular segment that likes fast and
expensive cars and can afford it. A company in a niche market has customers who understand,
appreciate and can pay a premium for their indulgence. Competitive advantage - either by cost
or differentiation- is created specially for the niche. But the risks are that the niche may not
grow, or it may disappear with time and change
.
Porter's generic strategies describe how a company pursues competitive advantage
across its chosen market scope. There are three/four generic strategies, either lower
cost, differentiated or focus. A company chooses to pursue one of two types of
competitive advantage, either via lower costs than its competition or by differentiating
itself along dimensions valued by customers to command a higher price. A company
also chooses one of two types of scope, either focus (offering its products to selected
segments of the market) or industry-wide, offering its product across many market
segments. The generic strategy reflects the choices made regarding both the type of
competitive advantage and the scope. The concept was described by Michael Porter in
1980

Porter described an industry as having multiple segments that can be

targeted by a firm. The breadth of its targeting refers to the competitive
scope of the business. Porter defined two types of competitive
advantage: lower cost or differentiation relative to its rivals. Achieving
competitive advantage results from a firm's ability to cope with the five
forces better than its rivals. Porter wrote: "[A]chieving competitive
advantage requires a firm to make a choice...about the type of
competitive advantage it seeks to attain and the scope within which it
will attain it." He also wrote: "The two basic types of competitive
advantage [differentiation and lower cost] combined with the scope of
activities for which a firm seeks to achieve them lead to three generic
strategies for achieving above average performance in an industry: cost
leadership, differentiation and focus. The focus strategy has two
variants, cost focus and differentiation focus." In general:
If a firm is targeting customers in most or all segments of an industry based on
offering the lowest price, it is following a cost leadership strategy;
 If it targets customers in most or all segments based on attributes other than price
(e.g., via higher product quality or service) to command a higher price, it is pursuing a
differentiation strategy. It is attempting to differentiate itself along these dimensions
favorably relative to its competition. It seeks to minimize costs in areas that do not
differentiate it, to remain cost competitive; or
If it is focusing on one or a few segments, it is following a focus strategy. A firm may
be attempting to offer a lower cost in that scope (cost focus) or differentiate itself in
that scope (differentiation focus).
Differentiation Strategy

A differentiation strategy is appropriate where the target customer segment is not

price-sensitive, the market is competitive or saturated, customers have very specific
needs which are possibly under-served, and the firm has unique resources and
capabilities which enable it to satisfy these needs in ways that are difficult to copy.
These could include patents or other Intellectual Property (IP), unique technical
expertise (e.g. Apple's design skills or Pixar's animation prowess), talented personnel
(e.g. a sports team's star players or a brokerage firm's star traders), or innovative
processes. Successful differentiation is displayed when a company accomplishes
either a premium price for the product or service, increased revenue per unit, or the
consumers' loyalty to purchase the company's product or service (brand loyalty).
Differentiation drives profitability when the added price of the product outweighs the
added expense to acquire the product or service but is ineffective when its uniqueness
is easily replicated by its competitors.[6] Successful brand management also results in
perceived uniqueness even when the physical product is the same as competitors. This
way, Chiquita was able to brand bananas, Starbucks could brand coffee, and Nike
could brand sneakers. Fashion brands rely heavily on this form of image
differentiation.

Cost Leadership Strategy

This strategy also involves the firm winning market share by appealing to cost-conscious or
price-sensitive customers. This is achieved by having the lowest prices in the target market
segment, or at least the lowest price to value ratio (price compared to what customers receive).
To succeed at offering the lowest price while still achieving profitability and a high return on
investment, the firm must be able to operate at a lower cost than its rivals. There are three main
ways to achieve this.

The first approach is achieving a high asset utilization. In service industries, this may mean for
example a restaurant that turns tables around very quickly, or an airline that turns around
flights very fast. In manufacturing, it will involve production of high volumes of output. These
approaches mean fixed costs are spread over a larger number of units of the product or service,
resulting in a lower unit cost, i.e. the firm hopes to take advantage of economies of scale and
experience curve effects. For industrial firms, mass production becomes both a strategy and an
end in itself. Higher levels of output both require and result in high market share, and create an
entry barrier to potential competitors, who may be unable to achieve the scale necessary to
match the firms low costs and prices.

The second dimension is achieving low direct and indirect operating costs. This is achieved by
offering high volumes of standardized products offering basic no-frills products and limiting
customization and personalization of service. Production costs are kept low by using fewer
components, using standard components, and limiting the number of models produced to
ensure larger production runs. Overheads are kept low by paying low wages, locating premises
in low rent areas, establishing a cost-conscious culture, etc. Maintaining this strategy requires a
continuous search for cost reductions in all aspects of the business. This will include
outsourcing, controlling production costs, increasing asset capacity utilization, and minimizing
other costs including distribution, R&D and advertising. The associated distribution strategy is
to obtain the most extensive distribution possible. Promotional strategy often involves trying to
make a virtue out of low cost product features

Focus strategies
This dimension is not a separate strategy for big companies due to small market conditions.
Big companies which chose applying differentiation strategies may also choose to apply in
conjunction with focus strategies (either cost or differentiation). On the other hand, this is
definitely an appropriate strategy for small companies especially for those wanting to avoid
competition with big one.

In adopting a narrow focus, the company ideally focuses on a few target markets (also called a
segmentation strategy or niche strategy). These should be distinct groups with specialised
needs. The choice of offering low prices or differentiated products/services should depend on
the needs of the selected segment and the resources and capabilities of the firm. It is hoped that
by focusing your marketing efforts on one or two narrow market segments and tailoring your
marketing mix to these specialized markets, you can better meet the needs of that target
market. The firm typically looks to gain a competitive advantage through product innovation
and/or brand marketing rather than efficiency. A focused strategy should target market
segments that are less vulnerable to substitutes or where a competition is weakest to earn
above-average return on investment.

Examples of firm using a focus strategy include Southwest Airlines, which provides short-haul
point-to-point flights in contrast to the hub-and-spoke model of mainstream carriers, United,
and American Airlin

BUSINESS LEVEL STRATEGY

BUSINESS LEVEL STRATEGY

Business-level strategy is an ideal that promotes providing excellent and proactive

customer service in order to generate better financial returns. This method of operation
focuses on monetary needs and creating superior returns on investment. Maximizing employee
performances and reducing waste create the most profitable corporate landscape.

Promoting a business-level strategy is an open-ended methodology that allows for furthering

the overall goals of an organization. These outcomes are as varied as the approaches that
corporations implement in the spirit of business-level strategies. Such operational decisions
encourage more customer-facing interactions and provide enhanced service options.

Business-level strategy puts the consumer first and makes shoppers the centerpiece of all
corporate endeavors. This is done so as to enhance client relationships and entice consumers to
maintain long-term associations with specific businesses. By luring clients back time and
again, firms are able to count on this dedicated slice of the market and enhance operational
stability based on the reliability of funding from long-standing customers.

These strategies also entail employee training and investment that support such endeavors.
Generating a more positive and proactive workforce that is dedicated to shopper satisfaction is
important. Offering educational opportunities that promote this method of thinking and acting
helps support business-level strategy.
Five Types of Business-Level Strategies

Coordinate Unit Activities

A common business-level strategy is the coordination of all individual unit activities found in a
business. Unit activities may be broken down by department, sections of the department and
individual job positions. The coordination of these groups or individuals usually falls on a
manager or supervisor. The manager is responsible for getting employees on the same page
and focusing these individuals on accomplishing goals or objectives. Managers or supervisors
may also be responsible for allocating resources among several different activities.
Utilize Human Resources

Companies must be able to utilize the available human resources in their company and the
overall economy. Almost all companies need some form of human labor to accomplish
business goals and objectives. Companies develop a business-level strategy to ensure the
organization has enough employees to produce a specific output of goods or services. This
business-level strategy is also responsible for ensuring the right type of human labor is
acquired for business operations. This often includes an analysis to determine if skilled or
unskilled labor is needed to complete business functions.

Develop Distinctive Advantages

Developing distinctive core competencies or competitive advantages is essential for creating a

successful company. Core competencies and competitive advantages represent singular
activities or abilities one company uses to produce products better than another company.
Examples of this business-level strategy may include acquiring economic sources at lower
costs than other companies, highly efficient and effective production resources, unique goods
or services that are not duplicated by other companies and a cost-effective supply chain for
getting products into consumers' hands quickly.

Identify Market Niches

Identifying a market niche usually involves conducting an economic analysis and discovering a
specific consumer demand is unmet or not enough supply is available to fill current customer
demand. While these are common market niches found in a business-level strategy, other
niches may include modifying an existing product, targeting a specific demographic group or
other similar strategies. Filling a specific market niche may allow companies to charge higher
consumer prices since substitute goods may not exist in the economic marketplace.

Monitor Product Strategies

Businesses must find ways to review the business-level strategies implemented in their
operation. This process often results in its own strategy. Companies may review the acquisition
process for economic resources, equipment used to produce goods or services, business
facilities and other administrative costs to ensure that all capital spent on business operations is
earning a strong rate of return. Reviewing business-level strategies may also give companies
an opportunity to remain flexible in business and make changes for meeting new consumer
demand.

Growth Strategy

A growth strategy entails introducing new products or adding new features to existing
products. Sometimes, a small company may be forced to modify or increase its product line to
keep up with competitors. Otherwise, customers may start using the new technology of a
competitive company. For example, cell phone companies are constantly adding new features
or discovering new technology. Cell phone companies that do not keep up with consumer
demand will not stay in business very long. A small company may also adopt a growth strategy
by finding a new market for its products. Sometimes, companies find new markets for their
products by accident. For example, a small consumer soap manufacturer may discover through
marketing research that industrial workers like its products. Hence, in addition to selling soap
in retail stores, the company could package the soap in larger containers for factory and plant
workers.

Product Differentiation Strategy

Small companies will often use a product differentiation strategy when they have a competitive
advantage, such as superior quality or service. For example, a small manufacturer or air
purifiers may set themselves apart from competitors with their superior engineering design.
Obviously, companies use a product differentiation strategy to set themselves apart from key
competitors. However, a product differentiation strategy can also help a company build brand
loyalty, according to the article "Porter's Generic Strategies" at QuickMBA.com.

Price-Skimming Strategy

A price-skimming strategy involves charging high prices for a product, particularly during the
introductory phase. A small company will use a price-skimming strategy to quickly recover its
production and advertising costs. However, there must be something special about the product
for consumers to pay the exorbitant price. An example would be the introduction of a new
technology. A small company may be the first to introduce a new type of solar panel. Because
the company is the only one selling the product, customers that really want the solar panels
may pay the higher price. One disadvantage of a price-skimming is that it tends to attract
competition relatively quickly, according to the Small Business Administration. Enterprising
individuals may see the profits the company is reaping and produce their own products,
provided they have the technological know-how.

Acquisition Strategy

A small company with extra capital may use an acquisition strategy to gain a competitive
advantage. An acquisition strategy entails purchasing another company, or one or more
product lines of that company. For example, a small grocery retailer on the east coast may
purchase a comparable grocery chain in the Midwest to expand its operations.

Competitive advantage

Competitive advantage is the favorable position an organization seeks in order to be more

profitable than its competitors.

Competitive advantage involves communicating a greater perceived value to a target market

than its competitors can provide. This can be achieved through many avenues including
offering a better-quality product or service, lowering prices and increasing marketing efforts.
Sustainable competitive advantage refers to maintaining a favorable position over the long
term, which can help boost a company's image in the marketplace, its valuation
and its future earning potential.
 Corporate Culture

Corporate culture refers to the shared values, attitudes, standards, and beliefs that
characterize members of an organization and define its nature. Corporate culture is
rooted in an organization's goals, strategies, structure, and approaches to labor,
customers, investors, and the greater community.

Basic component of organaisational culture

Vision: A great culture starts with a vision or mission statement. These

simple turns of phrase guide a companys values and provide it with purpose
That purpose, in turn, orients every decision employees make. When they are
deeply authentic and prominently displayed, good vision statements can even
help orient customers, suppliers, and other stakeholders. Nonprofits often
excel at having compelling, simple vision statements. The Alzheimers
Association, for example, is dedicated to a world without Alzheimers.
And Oxfam envisions a just world without poverty. A vision statement is a
simple but foundational element of culture.

2. Values: A companys values are the core of its culture. While a vision
articulates a companys purpose, values offer a set of guidelines on the
behaviors and mindsets needed to achieve that vision. McKinsey &
Company, for example, has a clearly articulated set of values that are
prominently communicated to all employees and involve the way that firm
vows to serve clients, treat colleagues, and uphold professional standards.
Googles values might be best articulated by their famous phrase, Dont be
evil. But they are also enshrined in their ten things we know to be true.
And while many companies find their values revolve around a few simple
topics (employees, clients, professionalism, etc.), the originality of those
values is less important than their authenticity.
3. Practices: Of course, values are of little importance unless they are
enshrined in a companys practices. If an organization professes, people are
our greatest asset, it should also be ready to invest in people in visible ways.
Wegmans, for example, heralds values like caring and respect,
promising prospects a job [theyll] love And it follows through in its
company practices, ranked by Fortune as the fifth best company to work for
Similarly, if an organization values flat hierarchy, it must encourage more
junior team members to dissent in discussions without fear or negative
repercussions. And whatever an organizations values, they must be
reinforced in review criteria and promotion policies, and baked into the
operating principles of daily life in the firm.
4. People: No company can build a coherent culture without people who
either share its core values or possess the willingness and ability to embrace
those values. Thats why the greatest firms in the world also have some of
the most stringent recruiting policies. According to Charles Ellis, as noted
recent review of his book What it Takes: Seven Secrets of Success from the
Worlds Greatest Professional Firms, the best firms are fanatical about
recruiting new employees who are not just the most talented but also the best
suited to a particular corporate culture. Ellis highlights that those firms
often have 8-20 people interview each candidate. And as an added benefit,
Steven Hunt notes at Monster.com that one study found applicants who were
a cultural fit would accept a 7% lower salary, and departments with cultural
alignment had 30% less turnover. People stick with cultures they like, and
bringing on the right culture carriers reinforces the culture an organization
already has.
5. Narrative:

Marshall Ganz was once a key part of Caesar Chavezs United Farm
Workers movement and helped structure the organizing platform for Barack
Obamas 2008 presidential campaign. Now a professor at Harvard one of
Ganzs core areas of research and teaching is the power of narrative. Any
organization has a unique history a unique story. And the ability to
 unearth that history and craft it into a narrative is a core element of culture
creation. The elements of that narrative can be formal like Coca-Cola,
which dedicated an enormous resource to celebrating its heritage and even
has a World of Coke museumin Atlanta or informal, like those stories
about how Steve Jobs early fascination with calligraphy shaped the
aesthetically oriented culture at Apple. But they are more powerful when
identified, shaped, and retold as a part of a firms ongoing culture.

6. Place:

Why does Pixar have a huge open atrium engineering an environment where
firm members run into each other throughout the day and interact in
informal, unplanned ways? Why does Mayor Michael Bloomberg prefer his
staff sit in a bullpen environment, rather than one of separate offices with
soundproof doors? And why do tech firms cluster in Silicon Valley and
financial firms cluster in London and New York? There are obviously
numerous answers to each of these questions, but one clear answer is that
place shapes culture. Open architecture is more conducive to certain office
behaviors, like collaboration. Certain cities and countries have local cultures
that may reinforce or contradict the culture a firm is trying to create. Place
whether geography, architecture, or aesthetic design impacts the values
and behaviors of people in a workplace.

There are other factors that influence culture. But these six components can
provide a firm foundation for shaping a new organizations culture. And
identifying and understanding them more fully in an existing organization
can be the first step to revitalizing or reshaping culture in a company looking
for change.

TYPES OF CORPORATE CULTURE

Team-first Corporate Cultur

Employees are friends with people in other departments

Your team regularly socializes outside of work
You receive thoughtful feedback from employees in surveys
People take pride in their workstations

Elite Corporate Culture

Employees arent afraid to question things that could be improved

Employees make work their top priority, often working long hours
Your top talent moves up the ranks quickly
You have many highly qualified job applicants to choose from

Horizontal Corporate Culture

Teammates discuss new product ideas in the break room

Everybody does a little bit of everything
The CEO makes his or her own coffee
You still have to prove your products worth to critics

Conventional Corporate Culture

There are strict guidelines for most departments and roles

 People in different departments generally dont interact
Major decisions are left up to the CEO
Your company corners the market

Progressive Corporate Culture

Employees talk openly about the competition and possible buyouts

Your company has a high turnover rate
Most of your funds come from advertisers, grants or donations
Changes in the market are impacting your revenue

BENEFIT OF CORPORATE CULTURE

1. Leadership is critical in codifying and maintaining an organizational purpose, values,

and vision. Leaders must set the example by living the elements of culture: values,
behaviors, measures, and actions. Values are meaningless without the other elements.

2. Like anything worthwhile, culture is something in which you invest. An

organization's norms and values aren't formed through speeches but through actions
and team learning. Strong cultures have teeth. They are much more than slogans and
empty promises. Some organizations choose to part ways with those who do not
manage according to the values and behaviors that other employees embrace. Others
accomplish the same objective more positively. At Baptist Health Care, for example,
managers constantly reinforce the culture by recognizing those whose actions
exemplify its values, its behaviors, and its standards. Team successes are cause for
frequent celebrations. In addition, BHC rewards individual accomplishments through
such things as "WOW (Workers becoming Owners and Winners) Super Service
Certificates," appreciation cards for 90-day employees that list their contributions to
their team, one-year appreciation awards, multiyear service awards, employee of the
month awards, and recognition of workers as "Champions" or "Legends" for
extraordinary achievements or service. Managers at all levels offer frequent informal
recognition and send handwritten thank-you notes (which stand out in the age of e-
mail). Those who aren't living up to BHC's values soon get the point.

3. Employees at all levels in an organization notice and validate the elements of culture.
As owners, they judge every management decision to hire, reward, promote, and fire
colleagues. Their reactions often come through in comments about subjects such as
the "fairness of my boss." The underlying theme in such conversations, though, is the
strength and appropriateness of the organization's culture.

4. Organizations with clearly codified cultures enjoy labor cost advantages for the
following reasons:

-- They often become better places to work.

-- They become well known among prospective employees.
-- The level of ownershipreferral rates and ideas for improving the business of
existing employeesis often high.
-- The screening process is simplified, because employees tend to refer acquaintances
who behave like them.
-- The pool of prospective employees grows.
-- The cost of selecting among many applicants is offset by cost savings as
 prospective employees sort themselves into and out of consideration for jobs.
-- This self-selection process reduces the number of mismatches among new hires.

5. Organizations with clearly codified and enforced cultures enjoy great employee and
customer loyalty, in large part because they are effective in either altering ineffective
behaviors or disengaging from values-challenged employees in a timely manner.

6. An operating strategy based on a strong, effective culture is selective of prospective

customers. It also requires the periodic "firing" of customers, as pointed out in our
examples of companies like ING Direct, where thousands are fired every month. This
strategy is especially important when customers "abuse" employees or make
unreasonable demands on them.

7. The result of all this is "the best serving the best," or as Ritz-Carlton's mission states,
"Ladies and gentlemen serving ladies and gentlemen."

8. This self-reinforcing source of operating leverage must be managed carefully to make

sure that it does not result in the development of dogmatic cults with little capacity for
change. High-performing organizations periodically revisit and reaffirm their core
values and associated behaviors. Further, they often subscribe to some kind of
initiative that requires constant benchmarking and searching for best practices both
inside and outside the organization. For example, at Baptist Health Care, all
employees are expected and encouraged "to search until they find 'the best of the best'
in their area of expertise and benchmark against them (and possibly emulate them)."

9. Organizations with strong and adaptive cultures foster effective succession in the
leadership ranks. In large part, the culture both prepares successors and eases the
transition.

10. Cultures can sour. Among the reasons for this are success itself, the loss of curiosity
and interest in change, the triumph of culture over performance, the failure of leaders
to reinforce desired behaviors, the breakdown of consistent communication, and
leaders who are overcome by their own sense of importance.

We have learned repeatedly that there is a pattern in the actions and activities
involved in developing strong and adaptive ownership cultures. When an
organization consistently builds and reinforces such a culture, it creates a
competitive edge that is hard to replicate.

Excerpted with the permission of Harvard Business Press from The Ownership
Quotient: Putting the Service Profit Chain to Work for Unbeatable
Competitive Advantage. Copyright 2008 Harvard Business Publishing
Corporation. All rights reserved.

LEADERSHIP
 Leadership means different things to different people around the world, and
different things in different situations. For example, it could relate to
community leadership, religious leadership, political leadership, and
leadership of campaigning groups.

According to the idea of transformational leadership , an effective leader is

a person who does the following:

1. Creates an inspiring vision of the future.

2. Motivates and inspires people to engage with that vision.
3. Manages delivery of the vision.
4. Coaches and builds a team, so that it is more effective at achieving the vision

Leadership is both a research area and a practical skill encompassing the ability
of an individual or organization to "lead" or guide other individuals, teams or
entire organizations.

leadership as "a process of social influence in which a person can enlist the aid
and support of others in the accomplishment of a common task"

THE QUALITY FOR A LEADER

Creating an Inspiring Vision of the Future

In business, a vision is a realistic, convincing and attractive depiction of where

you want to be in the future. Vision provides direction, sets priorities, and
provides a marker, so that you can tell that you've achieved what you wanted
to achieve.

To create a vision, leaders focus on an organization's strengths by using tools

such as Porter's Five Forces , PEST Analysis , USP Analysis , Core
Competence Analysis and SWOT Analysis to analyze their current
situation. They think about how their industry is likely to evolve, and how their
competitors are likely to behave. They look at how they can innovate
successfully , and shape their businesses and their strategies to succeed in
future marketplaces. And they test their visions with appropriate market
research, and by assessing key risks using techniques such as Scenario
Analysis .

Therefore, leadership is proactive problem solving, looking ahead, and not

being satisfied with things as they are.

Once they have developed their visions, leaders must make them compelling
and convincing. A compelling vision is one that people can see, feel,
understand, and embrace. Effective leaders provide a rich picture of what the
future will look like when their visions have been realized. They tell inspiring
stories , and explain their visions in ways that everyone can relate to.

2. Motivating and Inspiring People

A compelling vision provides the foundation for leadership. But it's leaders'
ability to motivate and inspire people that helps them deliver that vision.
For example, when you start a new project, you will probably have lots of
enthusiasm for it, so it's often easy to win support for it at the beginning.
However, it can be difficult to find ways to keep your vision inspiring after the
initial enthusiasm fades, especially if the team or organization needs to make
significant changes in the way that it does things. Leaders recognize this, and
they work hard throughout the project to connect their vision with people's
individual needs, goals and aspirations.

One of the key ways they do this is through Expectancy Theory . Effective
leaders link together two different expectations:

1. The expectation that hard work leads to good results.

2. The expectation that good results lead to attractive rewards or incentives.

This motivates people to work hard to achieve success, because they expect to
enjoy rewards both intrinsic and extrinsic as a result.

. Managing Delivery of the Vision

This is the area of leadership that relates to management .

Leaders must ensure that the work needed to deliver the vision is properly
managed either by themselves, or by a dedicated manager or team of
managers to whom the leader delegates this responsibility and they need to
ensure that their vision is delivered successfully.

To do this, team members need performance goals that are linked to the team's
overall vision. Our article on Performance Management and KPIs (Key
Performance Indicators) explains one way of doing this, and our Project
Management section explains another. And, for day-to-day management of
delivering the vision, the Management By Wandering Around (MBWA)
approach helps to ensure that what should happen, really happens.

Leaders also need to make sure they manage change effectively. This helps
to ensure that the changes needed to deliver the vision are implemented
smoothly and thoroughly, with the support and backing of the people affected.

Coaching and Building a Team to Achieve the Vision

Individual and team development are important activities carried out by

transformational leaders. To develop a team, leaders must first understand
team dynamics. Several well-established and popular models describe this,
such as Belbin's Team Roles approach, and Bruce Tuckman's
FormingStorming, Norming, and Performing theory .

A leader will then ensure that team members have the necessary skills and
abilities to do their job and achieve the vision. They do this by giving and
receiving feedback regularly, and by training and coaching people to
improve individual and team performance.

Leadership also includes looking for leadership potential in others. By

developing leadership skills within your team, you create an environment
where you can continue success in the long term. And that's a true measure of
great leadership

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 specialised form of
management control and differs from other forms of management control (in
particular from operational contro) 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. Vis:

The purpose of control at the strategic level is not to answer the question:' 'Have we made the
right strategic choices at some time in the past?" but rather "How well are we doing now and
how well will we be doing in the immediate future for which reliable information is
available?" The point is not to bring to light past errors but to identify needed corrections to
steer the corporation in the desired direction. And this determination must be made with
respect to currently desirable long-range goals and not against the goals or plans that were
established at some time in the past.

The strategic management process is more than just a set of rules to follow. It is a
philosophical approach to business. Upper management must think strategically first, then
apply that thought to a process. The strategic management process is best implemented when
everyone within the business understands the strategy. The five stages of the process are goal-
setting, analysis, strategy formation, strategy implementation and strategy monitoring .

STRATEGIC CONTROL PROCESS

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.

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.

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.

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.

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.