strategic planning for upcoming mid level managers of EPIPL

1. Strategic Management for
upcoming Corporate
Managers of EPIPL

2. What is all about
Let us start from young you, Say you decide to date with a girl of your dream
You groom well, Dress attractively, Go in a nice bike
You pump your purse full of money
Impress her, Take her outing
Convince her and finally steal her heart or get beaten !!??
When you do so many actions well planned to date with your girl DID
YOU EVER THOUGHT how carefully and precisely have to plan your
business / professional activities where several million rupees are invested
trusting that you will handle and execute it properly to reach the
organisation’s goals ??
This is where strategic planning comes into action. However like a coin
strategic planning cannot succeed and cannot be properly executed without
equal participation of top + senior management and YOU mid level
managers along with your downstream workforce.

3. What is Strategic Management
Art and science of formulating, implementing, and
evaluating cross-functional decisions that enable an
organization to achieve its objectives.

4. Strategic Management Vs Strategic Planning
Strategic management
•Strategy Formulation
•Execution
•Evaluation ( evaluation of execution )
Strategic Planning
•Strategy Formulation

5. Prelude to Strategic Planning
Why startegeic Planning is required
 Forms the blueprint of an organisations character
 Provides cohesive platform for all stake holders to
understand organisations goals
 Shows the organisation the proper direction to grow
o Sets Goals
o Highlight what we do now
o Predicts Future Scenarios
o Determines best responses to future threats
o Prioritises resources

6. Basics of Strategic Planning
• Strive to understand the future
• Builds a shared vision among all key stake
holders
• Participatory process
• Sensitive to external environment
• Based on data
• Openness to questioning the status quo
• Key part of effective management system

7. Planning Vs Strategic Planning
• Planning – an Analytical process which involves an
assessment of the future, the determination of
desired objectives in the context of that future, the
development of alternative courses of action to
achieve such objectives, and the selection of a
course(s).
• Strategic Planning - Strategic planning differs from
other forms of planning in that it deliberately
attempts to concentrate the organisation’s resources
in those areas that can make a substantial
difference in future performance and capability

8. Strategy Formulation
• Define Vision & Mission
• Impart right work culture among work force
• Assess Opportunities and Threats
– Tools : SWOT, PEST, RBV
• Assess Strength and Weakness of existing or
future Product(s) / Service(s)
– Tools : BCG Matrix, COPE/POSE Analysis
• Define Long term Objectives
• Analyse Alternative Strategies
• Select the Right Strategy

9. Strategy Execution
It is the discipline of getting things done as per the formulated
corporate Vision Mission & Goals
Execution must be an core element of an organisations culture –
should be injected to genes of workforce of entire organisation.
The Right execution system has two characters – Long term static
character in line with Visison and Goals and short term
Dynamic character in line with Mission
Execution is discussed in detail in a separate presentation

10. Confused with Static and Dynamic
Execution Character ??
Let me explain in a easy way in the lighter side
You plan to date a girl – achieving this target is the long
term Goal and Vision and this is the static character
of your plan
While you try to date you manipulate so many facts
points and figures to achieve your vision without
toppling the goal, this the dynamic character of your
plan (or tactical planning )

11. Static and Dynamic Characters
in Real Situation
Most managements plan precisely their strategic requirements but
end up in confusing with Static and Dynamic goals
Managements should understand that their dynamic decisions does
not alters the course in reaching the set out Vision otherwise it
sends wrong signals to mid level managers who get confused and
end up achieving nothing
Should management feels there is a paradigm shift in vision due to
various external factors, all downstream stake holders should be
called for a brainstorming session to explain the situation and to
find a solution to re-chart the vision and goals, without this there
will be drift
Management should also allow a decent time frame to test / re-call a
strategy. A decent time frame would be 6 to 12 months
depending on the nature of industry

12. Strategy Evaluation
Similar to PDCA cycle a separate
monitoring group shall watch whether
the corporate / business / functional /
operating strategies are being executed
in the designated course and advise top
management for corrective actions to
achieve the set out goals

13. Principles of Strategic Management
Contents
1. Five Tasks of Strategic Planning
2. Factors Shaping the Choice of Strategy
3. Three Tests of Best Strategy
4. Analyzing Industry Environment and Crafting
competitive Strategy
5. Strategy Implementation and Execution

14. Five Tasks of
Strategic Planning

15. Five Tasks of Strategic Planning
Crafting a
Forming a strategy to
Setting
strategic vision achieve the
objectives
desired
outcomes
Evaluating
Implementing performance,
and executing monitoring new
developments, and
the chosen
initiating corrective
strategy adjustments

16. Forming a Strategic Vision
• Very early in the strategy-making process,
company managers need to pose a set of
Forming a
questions:
strategic vision
• "What is our vision for the company —
where should the company be headed,
what should its future technology-
product-customer focus be, what kind
of enterprise do we want to become,
what industry standing do we want to
achieve in five years?"

17. Setting Objectives
• The purpose of setting objectives is to convert
managerial statements of strategic vision and
Setting business mission into specific performance
objectives targets — results and outcomes the organization
wants to achieve.
• Setting objectives and then measuring whether
they are achieved or not help managers track an
organization's progress.

18. Strategic Objectives in Four Perspectives
Enhance Long-term Shareholder
Financial Value
Improve Cost Efficiency Increase Revenue Growth
Customer
Build High Performance Expand Enhance
Products Market Share Brand Image
Internal Process
Manage Dramatic &
Achieve Operational Drive Demand Sustained Growth Implement Good
Excellence through best CRM policies through Innovation Environmental Policy
Learning & Growth
Develop Strategic Build Learning Expand Capabilities with
Competencies Culture Technology

19. Crafting Strategy
Crafting a • A company's strategy represents management's
strategy to answers to such fundamental business questions
achieve the as :
desired • whether to concentrate on a single business or build a
outcomes diversified group of businesses
• whether to cater to a broad range of customers or focus
on a particular market niche
• whether to develop a wide or narrow product line
• how to respond to changing buyer preferences
• how big a geographic market to try to cover
• how to react to newly emerging market and competitive
conditions
• how to grow the enterprise over the long term.

20. What Does a Company's Strategy Consist of
Crafting a • Company strategies concern how:
strategy to • how to grow the business
achieve the • how to satisfy customers
desired • how to outcompete rivals
outcomes
• how to respond to changing market
conditions
• how to manage each functional piece of the
business and develop needed organizational
capabilities
• how to achieve strategic and financial
objectives

21. Strategy Implementation and Execution
• Strategy implementation concerns the
Implementing managerial exercise of putting a freshly chosen
and executing
strategy into place
the chosen
• Strategy execution deals with the managerial
strategy
exercise of supervising the ongoing pursuit of
strategy, making it work, and showing
measurable progress in achieving the targeted
results.

22. Strategy Evaluation and Monitoring
• It is management's duty to stay on top of the
Evaluating company's situation, deciding whether things are going
performance, well internally, and monitoring outside developments
monitoring new
closely.
developments, and
initiating corrective • Marginal performance or too little progress, as well as
adjustments important new external circumstances, will require
corrective actions and adjustments.

23. Strategy Hierarchy
Corporate
Strategy
Segment Business Strategies –
Frozen / Puree / Commodities....
Functional Strategies (NPD,
Marketing, Manufacturing, HR,
Finance....
Operating Strategies (regions,
plants, departments within
functional areas)

24. Strategy Hierarchy
Corporate Corporate Corporate
Strategic Vision Strategic Objectives Strategic Strategy
Business-Level Strategic Business-Level Strategic Business-Level Strategy
Vision Objectives
Functional Functional Functional
Areas Visions Areas Objectives Areas Strategies
Operating Unit Visions Operating Unit Objectives Operating Unit Strategies

25. Factors Shaping
the Choice of Strategy

26. Factors Shaping the Choice of Strategy
a simple view based on RBV tool
Capability : Financial,
Human resource,
technical....
Competitive
Advantage :
Innovative products,
superior technology,
best cost benefit....

27. Factors Shaping the Choice of Strategy
an extensive view
External Factors
Economic, societal, Competitive
conditions and Company
political, and
industry opportunity and
government
attractiveness threat
regulations
The mix of considerations that determines
a company’s strategic situation
Company strengths and
Personal ambitions and Shared values and
weaknesses,
business philosophies company culture
competencies and
of key executives
capabilities
Internal Factors

28. Factors Shaping the Choice of Strategy
• What an enterprise can and cannot do
Economic, societal, strategy wise is always constrained by what
political, and
is legal, by what complies with government
government
regulations policies and regulatory requirements, by
what is considered ethical, and by what is
in accord with societal expectations and
the standards of good social and
community citizenship.

29. Factors Shaping the Choice of Strategy
• An industry's competitive conditions and
Competitive overall attractiveness are big strategy-
conditions and
determining factors.
industry
attractiveness • A company's strategy has to be tailored to
the nature and mix of competitive factors
in play—price, product quality,
performance features, service, warranties,
and so on.

30. Factors Shaping the Choice of Strategy
• A company's strategy needs to be
deliberately aimed at capturing its best
Company opportunity
growth opportunities, especially the ones
and threat
that hold the most promise for building
sustainable competitive advantage and
enhancing profitability.
• Strategy should also provide a defense
against external threats to the company's
well-being and fu­ture performance.

31. Factors Shaping the Choice of Strategy
• One of the most pivotal strategy-shaping
Company strengths internal considerations is whether a company
and weaknesses,
has or can acquire the resources,
competencies and
capabilities competencies, and capabilities needed to
execute a strategy proficiently.
• The best path to competitive advantage is
found where a firm has competitively valuable
resources and competencies, where rivals
can't develop comparable capabilities except
at high cost or over an extended period of
time.

32. Factors Shaping the Choice of Strategy
• Managers do not dispassionately assess what
Personal ambitions strategic course to steer.
and business
• Their choices are typically influenced by their
philosophies of key
executives own vision of how to compete and how to
position the enterprise and by what image and
standing they want the company to have.

33. Factors Shaping the Choice of Strategy
• An organization's policies, practices, traditions,
philosophical beliefs, and ways of doing things
Shared values and
combine to create a distinctive culture.
company culture
• The stronger a company's culture, the more
that culture is likely to shape the company's
strategic actions, sometimes even dominating
the choice of strategic moves.

34. Strategic Analysis and Strategic Choices
Analyzing
strategically about
industry and
competitive
conditions What strategic
options does the
What is the best
company
strategy?
Analyzing realistically have?
strategically about
a company’s own
situation

35. Strategic Analysis and Strategic Choices
The Key Questions
• What are the industry’s dominant economic features?
• What is causing the industry’s competitive structure
Analyzing and business environment to change?
strategically about • Which companies are in the strongest/weakest
industry and positions?
competitive • What strategic moves are rivals likely to make next?
conditions
• What are the key factors for competitive success?
• Is the industry attractive and what are the prospects
for above-average profitability?

36. Strategic Analysis and Strategic Choices
The Key Questions
• How well is the company’s present strategy
working?
Analyzing
• What are the company’s strengths,
strategically about
weaknesses, opportunities, and threats?
a company’s own
• Are the company’s prices and costs
situation
competitive?
• How strong is the company’s competitive
position?
• What strategic issues does the company face?

37. Three Tests of Best Strategy

38. Three Tests of Best Strategy
The Goodness of
Fit Test
The Best
The Competitive
Strategy Advantage Test
The Performance
Test

39. Three Tests of Best Strategy
The Goodness of
• A good strategy has to be well matched to
Fit Test
industry and competitive conditions,
market opportunities and threats, and
other aspects of the enterprise's external
environment.
• At the same time, it has to be tailored to
the company's resource strengths and
weaknesses, competencies, and
competitive capabilities.

40. Three Tests of Best Strategy
The Competitive
• A good strategy leads to sustainable Advantage Test
competi­tive advantage.
• The bigger the competitive edge that a strategy
helps build, the more powerful and effective it
is.

41. Three Tests of Best Strategy
The Performance
• A good strategy boosts company performance. Test
• Two kinds of performance improvements are the
most telling of a strategy's caliber: gains in
profitability and gains in the company's
competitive strength and long-term mar­ket
position.

42. Analyzing Industry Environment
and Designing Competitive Strategy

43. Porter’s Five Forces
Barriers to Buyer
Entry Power
Rivalry
Threats of Supplier
Substitutes Power

44. The Intensity of Rivalry
1. A larger number of firms
2. Slow market growth
The intensity of rivalry is
3. High fixed cost
influenced by the
following industry 4. High storages costs or highly
characteristics: perishable products
5. Low switching cost
6. Low level of product differentiation
7. Strategic stakes are high
8. High exit barriers
9. A diversity of rivals
10. Industry shakeout

45. Barriers to Entry
1. Absolute cost advantages
2. Proprietary learning curve
3. Access to inputs
Entry barriers are
4. Government policy
influenced by the
5. Economies of scale
following factors :
6. Capital requirements
7. Brand identity
8. Switching costs
9. Access to distribution
10. Expected retaliation
11. Proprietary products

46. Threats of Substitutes
1. Switching costs
Threats of 2. Buyer inclination to substitute
substitutes 3. Price-performance trade-off of
are influenced by substitutes
the following
factors :

47. Buyer Power
1. Bargaining leverage
2. Buyer volume
Buyer power 3. Buyer information
is influenced by the 4. Brand identity
following factors :
5. Price sensitivity
6. Threat of backward integration
7. Product differentiation
8. Buyer concentration vs. industry
9. Substitutes available
10. Buyers' incentives

48. Supplier Power
1. Supplier concentration
2. Importance of volume to supplier
3. Differentiation of inputs
Supplier power
is influenced by the 4. Impact of inputs on cost or
following factors : differentiation
5. Switching costs of firms in the
industry
6. Presence of substitute inputs
7. Threat of forward integration
8. Cost relative to total purchases in
industry

49. Sample Format for an Industry Competitive Analysis Summary
Dominant Economic Characteristics of the Industry Environment (market size and growth rate,
geographic scope, number and sizes of buyers and sellers, pace of technological change and
innovation, scale economies, experience curve effects, capital requirements, and so on)
Competitive Analysis
• Rivalry among competing sellers
• Threat of potential entry
• Competition from substitutes
• Power of suppliers
• Power of consumers
Competitive Position of Major Companies/ Strategic Groups.
• Those that are favorably positioned and why
• Those that are unfavorably positioned and why
Competitor Analysis
• Strategic approaches/predicated moves of key competitors
• Whom to watch, and why
Industry Key Success Factors
Industry Prospects and Overall Attractiveness
• Factors making the industry attractive
• Factors making the industry unattractive
• Special industry issues/problems
• Profit outlook (favorable/unfavorable)

50. Five Generic Competitive Strategies
Low Cost Differentiation
Overall Low Cost Differentiation Strategy
Broad Market
Leadership Strategy
Segment
Best Cost
Strategy
Narrow Market
Focused Low Cost Focused Differentiation
Segment
Strategy Strategy

51. Five Generic Competitive Strategies
Overall Low Cost Appealing to a broad spectrum of customers
Leadership Strategy based on being the overall low-cost provider of
product and service
Broad Differentiation A differentiation strategy calls for the
Strategy development of a product or service that offers
unique attributes that are valued by customers
and that customers perceive to be better than or
different from the products of the competition

52. Five Generic Competitive Strategies
• Giving customers more value for the money
Best Cost Strategy by incorporating good-to-excellent product
attributes at a lower cost than rivals
• The target is to have the lowest (best) costs
and prices compared to rivals offering
products with comparable upscale attributes

53. Generic Strategies and Industry Forces
Industry Generic Strategies
Force Cost Leadership Differentiation Focus
Ability to cut price in Focusing develops core
Entry Customer loyalty can
Barriers
retaliation deters potential competencies that can act as
discourage potential entrants.
entrants. an entry barrier.
Large buyers have less power Large buyers have less power
Buyer Ability to offer lower price to
Power
to negotiate because of few to negotiate because of few
powerful buyers.
close alternatives. alternatives.
Suppliers have power because
of low volumes, but a
Supplier Better insulated from Better able to pass on supplier
Power
differentiation-focused firm is
powerful suppliers. price increases to customers.
better able to pass on supplier
price increases.
Customer's become attached Specialized products & core
Threat of Can use low price to defend
Substitutes
to differentiating attributes, competency protect against
against substitutes.
reducing threat of substitutes. substitutes.
Rivals cannot meet
Better able to compete on Brand loyalty to keep
Rivalry differentiation-focused
price. customers from rivals.
customer needs.

54. BCG Matrix / COPE / POSE / VOCI Analysis....
• In the evolution of management tools numerous methods have evolved to
measure the performance Vs market conditions. The primary and oldest being
SWOT
• Later Porter’s Five forces analysis, apostle model created a new wave
succeeding SWOT
• However most of the analysis are abstract in assuming market conditions and
environment and other performance variables and left to mercy of the
analyser, BCG matrix is an exception where a few numerical calculations were
performed.
• Latest budding development in management tools series is the evolution of
COPE (Condition X Performance), POSE (Position X Strength) and VOCI
(adVOcates X CrItics). While First two measures about product’s condition and
performance in market and positioning strength, the later analyses the brand
loyalty and customer satisfaction. All the three tools use extensive numerical
methods and proves to reflect reality.

55. Best Strategy Best strategy shall be the outcome of the
organisation head’s comprehensive understanding
of the nature of business backed with a rich
experience of handling difficult situations
combined with the forces of right management
tools + inputs of brainstorming sessions with the
mid level managers + feedback of downstream
work force and at last hearing to the realistic
Selecting the Best
market competitive analysis.
Strategy
The new management paradigm – TOC or Theory
of Constraints based on the common idiom “A
Chain is no stronger than its weakest Link” insists
that no strategy can be well planned without
identifying the underlying constraints and
finding solutions to overcome them.
Be realistic while selecting the strategy never be
over confident based on abstract assumptions.

56. Strategy Implementation and
Execution

57. Strategy Implementation
Building a capable organization Linking budget to strategy
Designing strategy-supportive Establishing strategy-supportive
reward system policies and procedures
Effective
Creating a strategy-supportive Strategy Instituting best practices and
corporate culture Execution commitment to continuous
improvement
Exerting strategic leadership Installing information system to
support strategy execution
HR & Organization System Factor
Development Factor

58. Building a Capable Organization
Staffing the organization
• Putting together a strong management team
• Recruiting and retaining talented employees
Building Core Competencies and Capabilities
Building a • Developing competence/capability portfolio suited
capable to current strategy
organization • Updating and reshaping the portfolio as external
conditions and strategy change
Structuring the Organization and Work Effort
• Organizing business function and processes, value
chain activities, and decision making

59. Strategy - Supportive Reward System
Designing • Strategy - supportive motivational practices
and reward systems are powerful
strategy -
management tools for gaining employee buy-
supportive
in and commitment.
reward system
• The key to creating a reward system that
promotes good strategy execution is to make
strategically relevant measures of
performance the dominating basis for
designing incentives, evaluating individual and
group efforts, and handing out rewards.

60. Strategy - Supportive Corporate Culture
• Building a strategy - supportive culture is
Creating a
important to successful strategy execution
strategy-
because it produces a work climate and
supportive
organizational esprit de corps that thrive on
corporate meeting performance targets and being part
culture of a winning effort.

61. Strategic Leadership
• Strategic leaders encourage people to be
Exerting
innovative in order to keep the organization
strategic
responsive to changing conditions, alert to
leadership
new opportunities, and anxious to pursue
fresh initiatives.
• Strategic leaders also actively push corrective
actions to improve strategy execution and
overall strategic performance.

62. Linking Budget to Strategy
• Reworking the budget to make it more
Linking budget
strategy-supportive is a crucial part of the
to strategy
implementation process because every
organization unit needs to have the people,
equipment, facilities, and other resources to
carry out its part of the strategic plan.

63. Strategy - Supportive Policy – Changes in QMS
• Prescribing new or freshly revised policies and
Establishing
operating procedures in QMS aids the task of
strategy -
implementation (1) by promoting consistency
supportive
in how particular strategy-critical activities are
policies and performed in geographically scattered
procedures operating units and (2) by helping to create a
strategy-supportive work climate and
corporate culture.

64. Continuous Improvement
• Competent strategy execution entails visible,
Instituting
unyielding managerial commitment to best
best practices
practices and continuous improvement.
and
• Benchmarking, the discovery and adoption of
commitment to
best practices, and six sigma initiatives all aim
continuous
at improved efficiency, better product, and
improvement
greater customer satisfaction.

65. Information Support System
• Company strategies can’t be implemented
Installing
well without a number of support system to
information
carry on business operations.
system to
• Well-conceived, state-of-the-art support
support strategy
system not only facilitate better strategy
execution
execution but can also strengthen
organizational capabilities enough to provide
a competitive edge over rivals.

66. References used in this presentation
Strategic Management : Concepts & Cases, Fred R David – Prentice Hall
Strategic Management : In the Innovation Economy, T.H.Davenport,
M.Liebold, S.Voelpel
Blue Ocean Strategy : Kim & Rene, Havard Business School Press
Works of my in-flight friend Mr Rudd de Keijzer, the Netrherlands
Any Questions ?? Shoot a mail to me Raghavan VP
cgm.products@eicsgroup.com

67. End of Presentation
Thank you all for watching this presentation
If I have created a spark in your mind then I have succeeded and wish to
see that you all contribute for betterment of EPIPL