Se ha denunciado esta presentación.
Utilizamos tu perfil de LinkedIn y tus datos de actividad para personalizar los anuncios y mostrarte publicidad más relevante. Puedes cambiar tus preferencias de publicidad en cualquier momento.
8. STRATEGY
FORMULATION:
FUNCTIONAL STRATEGY
AND
STRATEGIC CHOICE
Presented by : Tayyab Hameed
Learning Objectives
 Identify a variety of functional strategies.
 Understand Outsourcing & Off-shoring.
 Recognize str...
8.0 - What is Strategy?
 A strategy is a comprehensive master plan stating HOW
the organization will achieve its mission ...
8.0 - Hierarchy of Strategy
8.0 - Strategic Management
Model
8.0 - Strategy Formulation
 Development of long-range plans for the effective
management with the help of SWOT analysis.
...
8.1 - Functional Strategy
 Function – the intended role or purpose of person or thing.
 Strategy – Generalship
 Functio...
8.1 – Objectives of Functional
Strategy
 Market share- Gain and sustain share of a product
market.
 Human talent- Recrui...
8.1 – Types of Functional
Strategy
 Marketing Strategy
 Financial Strategy
 R&D Strategy
 Operations Strategy
 Purcha...
8.1.1 – Marketing Strategy
 Marketing Strategy deals with Pricing, Selling and
Distributing a product.
 There are severa...
8.1.1.1 – Types of Marketing
Strategy
8.1.1.1 Market & Product
Development
8.1.1.2 – Push and Pull
Strategy
8.1.1.2 – Types of Marketing
Strategy
8.1.1.3 – Distribution
System
 Should a company use distributors and dealers to sell
its products, or should it sell dire...
8.1.1.4 –
Pricing
8.1.1.4 – Types of Marketing
Strategy
8.1.1 – Marketing Strategy
8.1.1 – 4Ps of
Marketing
8.1.2 – Financial Strategy
 It focuses on the alignment of financial management
within an organization with its business ...
8.1.2.1 - Types of Financial
Strategy
 Strong Balance Sheet
 Strong credit rating.
 Greater discipline and flexibility ...
8.1.2.1 - Types of Financial
Strategy
 Dividends and Stock Price Management
 Some company’s often don’t declare dividend...
8.1.3 – Research & Development (R&D)
Development
 New products and improvement of existing products
that allow for effect...
8.1.3.1 – Research & Development (R&D) Development
 R & D also deals with the questions like
 How new technology should ...
8.1.3.2 – Research & Development (R&D)
Development
8.1.3.2 – R & D Strategy and Competitive
Advantage
8.1.4 – Operations Strategy
 Operations serves as a firm’s distinctive competence in
executing similar strategies better ...
8.1.4.1 - Types of Operations
Strategy
 Vertical Integration is where the supply chain of a
company is owned by that comp...
8.1.4.1 - Types of Operations
Strategy
Vertical Integration
8.1.4.1 - Types of Operations
Strategy
 CAD/CAM Principles
 Continuous Improvement Strategy
 Product Life Cycle
8.1.4.1 – Product Life
Cycle
8.1.4.1 - Types of Operations
Strategy
8.1.5 - Purchasing Strategy
 Companies implement Purchasing strategies in order to
make cost effective purchasing decisio...
8.1.5.1 - Types of Purchasing
Strategy
 Purchasing Cycle
 Regular Vendors
 Outsourced Procurement
 Multiple Sourcing
...
8.1.5.1 - Types of Purchasing
Strategy
 Just in Time – II
 Vendors have desks in purchasing company’s factory
floor.
 T...
8.1.6.1 - Logistics Strategy
 Logistics strategy deals with the flow of products into
and out of the manufacturing proces...
8.1.7 - HUMAN RESOURCE MANAGEMENT (HRM)
STRATEGY
 The strategic & coherent approach to the most valued asset :
The People...
8.1.8 – Information Technology
Strategy
 If focuses on the alignment of information management
system within an organizat...
8.2 - The Sourcing Decision: Location of
Functions
 Outsourcing is the contracting out of a business
process to a third-p...
8.2.1 - The Sourcing Decision: Outsourced
Activity
78% 77%
66%
63%
56%
51%
18%
0%
20%
40%
60%
80%
100%
General and
Adminis...
8.2.2 - The Sourcing Decision: Off-Shoring
 Off-shoring is the outsourcing of an activity or a
function to a wholly owned...
8.2.3 - The Sourcing Decision: Why Off-
Shoring?
 Low Cost Qualified Labor
 Educated Workforce
 Lower Regulatory Costs
...
8.2.4 - The Sourcing Decision:
Errors
 Core Activities
 Wrong Vendor
 Poor Contract
 Personnel Issues
 Loosing Contro...
8.2.4 - The Sourcing Decision:
How?
 Identify the company’s or business unit’s core competencies.
 Ensure that the compe...
8.2.5 - The Sourcing Decision: Proposed Outsourcing
Matrix
8.3 – Strategies to Avoid
 Follow the Leader.
 Hit another home run.
 Arms race.
 Do everything.
 Losing hand.
8.4 – Strategic Choice?
Analysis
Objective
Options
8.4.1 – Strategic Choice: Selecting the Best
Strategy
 Use industry scenarios.
 Develop common-size financial statements...
8.4.1 – Strategic Choice: Selecting the Best
Strategy
8.4.1 – Strategic Choice: Selecting the Best
Strategy
 Construct detailed pro forma financial statements.
 List the actu...
8.4.2 - PROCESS OF STRATEGIC
CHOICE
 Strategies fails due to
 Actions of Decision Maker
 Desire for speedy action
 App...
8.4.2 - PROCESS OF STRATEGIC
CHOICE
 Two techniques to avoid CONSENSUS trap:
 Devil’s advocate
 Dialectical inquiry
 C...
8.5 – Developing Policies
 Policies define the broad guidelines for implementation,
decisions making and actions to be ta...
Questions?
Conclusion!
 Functional Strategy : Should be built on a distinctive
competency residing within that functional area.
 Th...
Strategy formulation : functional strategy & Strategy Choice
Próxima SlideShare
Cargando en…5
×

Strategy formulation : functional strategy & Strategy Choice

14.281 visualizaciones

Publicado el

Publicado en: Empresariales
  • Sé el primero en comentar

Strategy formulation : functional strategy & Strategy Choice

  1. 1. 8. STRATEGY FORMULATION: FUNCTIONAL STRATEGY AND STRATEGIC CHOICE Presented by : Tayyab Hameed
  2. 2. Learning Objectives  Identify a variety of functional strategies.  Understand Outsourcing & Off-shoring.  Recognize strategies to avoid.  Construct corporate scenarios to evaluate strategic options.  Develop policies to implement strategies.
  3. 3. 8.0 - What is Strategy?  A strategy is a comprehensive master plan stating HOW the organization will achieve its mission and objectives.
  4. 4. 8.0 - Hierarchy of Strategy
  5. 5. 8.0 - Strategic Management Model
  6. 6. 8.0 - Strategy Formulation  Development of long-range plans for the effective management with the help of SWOT analysis.  It is composed of  Mission.  Objectives.  Strategies.  Policy.
  7. 7. 8.1 - Functional Strategy  Function – the intended role or purpose of person or thing.  Strategy – Generalship  Functional Strategy is an approach, a functional area takes to achieve corporate and business unit objectives and strategies by maximizing resource productivity.  The orientation of a functional strategy is dictated by its parent business unit’s strategy.  Functional Strategy may need to vary from region to region.  Suzuki Pickup, Pakistan  Mr. Donut, Japan
  8. 8. 8.1 – Objectives of Functional Strategy  Market share- Gain and sustain share of a product market.  Human talent- Recruit high- quality workforce.  Cost efficiency- Use resources well to operate at low cost.  Product quality- Produce high-quality goods or services.  Innovation- Develop new products and /or processes.  Profitability- Earn net profit in business.
  9. 9. 8.1 – Types of Functional Strategy  Marketing Strategy  Financial Strategy  R&D Strategy  Operations Strategy  Purchasing Strategy  Logistics Strategy  HRM Strategy  Information Management Strategy
  10. 10. 8.1.1 – Marketing Strategy  Marketing Strategy deals with Pricing, Selling and Distributing a product.  There are several types of Marketing Strategy:  Market & Product Development  Push and Pull Strategy  Distribution System  Pricing
  11. 11. 8.1.1.1 – Types of Marketing Strategy 8.1.1.1 Market & Product Development
  12. 12. 8.1.1.2 – Push and Pull Strategy 8.1.1.2 – Types of Marketing Strategy
  13. 13. 8.1.1.3 – Distribution System  Should a company use distributors and dealers to sell its products, or should it sell directly to mass merchandisers? Or  Should a company use the direct marketing model by selling straight to the consumers via the Internet? 8.1.1.3 – Types of Marketing Strategy
  14. 14. 8.1.1.4 – Pricing 8.1.1.4 – Types of Marketing Strategy
  15. 15. 8.1.1 – Marketing Strategy 8.1.1 – 4Ps of Marketing
  16. 16. 8.1.2 – Financial Strategy  It focuses on the alignment of financial management within an organization with its business and corporate strategies to gain strategic advantages.  Forecasting, Planning and Budgeting  Credit & Liquidity Strategies  Capital Investment Methods/Systems  Financial Mix  Capital Budget & Working Capital  Stock / Dividend  Cash Flow, Loans or Leases
  17. 17. 8.1.2.1 - Types of Financial Strategy  Strong Balance Sheet  Strong credit rating.  Greater discipline and flexibility in Investment approach.  Help to build a robust business.  Healthier Economic Cycle.  Leveraged buyout (LBO) Strategy  Financial buyers or sponsors  Focus on ROE rather than ROA.
  18. 18. 8.1.2.1 - Types of Financial Strategy  Dividends and Stock Price Management  Some company’s often don’t declare dividend.  Several support the value of their stock by offering dividends.  Selling of Company’s Patent  For products a company no longer wish to commercialize or are not a part of its core business.
  19. 19. 8.1.3 – Research & Development (R&D) Development  New products and improvement of existing products that allow for effective strategy implementation.  R&D strategy deals with  Product Innovation  Process Improvement  Open Innovation (Hybrid)
  20. 20. 8.1.3.1 – Research & Development (R&D) Development  R & D also deals with the questions like  How new technology should be accessed?  Internal Development  External Acquisitions  Either to be a Technological Leader.  Or to be a Technological Follower.
  21. 21. 8.1.3.2 – Research & Development (R&D) Development 8.1.3.2 – R & D Strategy and Competitive Advantage
  22. 22. 8.1.4 – Operations Strategy  Operations serves as a firm’s distinctive competence in executing similar strategies better than competitors.  Its provides support for a differentiated strategy  Operations strategy is to ensure all tasks performed are the right tasks.  It is a plan for the design and management of operations functions
  23. 23. 8.1.4.1 - Types of Operations Strategy  Vertical Integration is where the supply chain of a company is owned by that company.  Strategic Decisions  How much work should be done outside the firm?  On what basis should particular items be made in- house?  When should items be outsourced?  How should suppliers be selected?
  24. 24. 8.1.4.1 - Types of Operations Strategy Vertical Integration
  25. 25. 8.1.4.1 - Types of Operations Strategy  CAD/CAM Principles  Continuous Improvement Strategy  Product Life Cycle
  26. 26. 8.1.4.1 – Product Life Cycle 8.1.4.1 - Types of Operations Strategy
  27. 27. 8.1.5 - Purchasing Strategy  Companies implement Purchasing strategies in order to make cost effective purchasing decisions from a group of efficient vendors who will deliver quality goods on time and at mutually agreeable terms.
  28. 28. 8.1.5.1 - Types of Purchasing Strategy  Purchasing Cycle  Regular Vendors  Outsourced Procurement  Multiple Sourcing  Force suppliers to compete for the business.  Reduce purchasing costs.  Sole Sourcing  Reduce cost and time spent on product design.  Improves quality.  Just in Time
  29. 29. 8.1.5.1 - Types of Purchasing Strategy  Just in Time – II  Vendors have desks in purchasing company’s factory floor.  They attend production status meetings, visit the R&D labs.  Reduce cost and time.  Improves quality.  Lesser paper work.  All time availability of Vendor at place.
  30. 30. 8.1.6.1 - Logistics Strategy  Logistics strategy deals with the flow of products into and out of the manufacturing process.  Types of Logistics  Centralized Logistics  Outsourcing Logistics
  31. 31. 8.1.7 - HUMAN RESOURCE MANAGEMENT (HRM) STRATEGY  The strategic & coherent approach to the most valued asset : The People  Deals with  Right Employee for the Right Job  Headcount  Salary Structure  Hiring / Separation  360-degree appraisal  Employee Development  Diversified Workforce
  32. 32. 8.1.8 – Information Technology Strategy  If focuses on the alignment of information management system within an organization with its business and corporate strategies to gain strategic advantage.
  33. 33. 8.2 - The Sourcing Decision: Location of Functions  Outsourcing is the contracting out of a business process to a third-party.  Outsourcing is  Cost effective when used properly.  Budget flexibility and control.
  34. 34. 8.2.1 - The Sourcing Decision: Outsourced Activity 78% 77% 66% 63% 56% 51% 18% 0% 20% 40% 60% 80% 100% General and Administration Human Resource Transportation & Distribution Information System Manufacturing Marketing Finance & Accounting Outsourced Departments as per AMA
  35. 35. 8.2.2 - The Sourcing Decision: Off-Shoring  Off-shoring is the outsourcing of an activity or a function to a wholly owned company or an independent provider in another country.  Major off-shored industries are:  Customer Services  Information Technologies
  36. 36. 8.2.3 - The Sourcing Decision: Why Off- Shoring?  Low Cost Qualified Labor  Educated Workforce  Lower Regulatory Costs  Tax Benefits  Ability to Downsize at Will  Improved Performance  Freeing up Resources For Core Activities  Quicker Turnaround Time
  37. 37. 8.2.4 - The Sourcing Decision: Errors  Core Activities  Wrong Vendor  Poor Contract  Personnel Issues  Loosing Control  Hidden Cost  Exit Strategy
  38. 38. 8.2.4 - The Sourcing Decision: How?  Identify the company’s or business unit’s core competencies.  Ensure that the competencies are continually being strengthened.  Manage the competencies in such a way that best preserves the competitive advantage, they create.
  39. 39. 8.2.5 - The Sourcing Decision: Proposed Outsourcing Matrix
  40. 40. 8.3 – Strategies to Avoid  Follow the Leader.  Hit another home run.  Arms race.  Do everything.  Losing hand.
  41. 41. 8.4 – Strategic Choice? Analysis Objective Options
  42. 42. 8.4.1 – Strategic Choice: Selecting the Best Strategy  Use industry scenarios.  Develop common-size financial statements  Historical common-size percentages  Develop alternative set of Optimistic(O), Pessimistic(P), and Most Likely(ML) assumptions.  Five year Sales and COGS forecast.  Analyze historical data and make adjustments.
  43. 43. 8.4.1 – Strategic Choice: Selecting the Best Strategy
  44. 44. 8.4.1 – Strategic Choice: Selecting the Best Strategy  Construct detailed pro forma financial statements.  List the actual figures  List optimistic figures  List the pessimistic figures for the next five years.  Develop a similar set of optimistic (O), pessimistic (P), and most likely (ML) pro-forma statements for the second strategic alternative.  Calculate FR and IS and create balance sheets.  Compare assumptions with the FS and ratios to determine feasibility.
  45. 45. 8.4.2 - PROCESS OF STRATEGIC CHOICE  Strategies fails due to  Actions of Decision Maker  Desire for speedy action  Apply failure-prone decision  Poor use of resources  Only 4% of the managers selected the right strategy.
  46. 46. 8.4.2 - PROCESS OF STRATEGIC CHOICE  Two techniques to avoid CONSENSUS trap:  Devil’s advocate  Dialectical inquiry  Criteria to evaluate the strategy ability:  Mutual Exclusivity  Success  Completeness  Internal Consistency
  47. 47. 8.5 – Developing Policies  Policies define the broad guidelines for implementation, decisions making and actions to be taken.  It forces trade-offs between competing resource demands.  It tests the strategic soundness of a particular action.  It sets clear boundaries within which employees must operate while granting them freedom to experiment within those constraints.  Restrict top management’s strategic options in the future.
  48. 48. Questions?
  49. 49. Conclusion!  Functional Strategy : Should be built on a distinctive competency residing within that functional area.  The Sourcing Decision  Strategies to Avoid  Strategic Choice  Developing Policies

×