Business Policy Presentation by Hammad - AIOU - Spring - 2010

Department of Admin Sciences,
Allama Iqbal Open University, Islamabad

www.aiou.edu.pk
“STRATEGY FORMULATION”
Presented By: M. Hammad Manzoor

MBA HRM IIl
Roll No. 508195394
Supervised By: Prof. Safdar Ahmed Khan
(November, 2010)
Email: explorationist@gmail.com M. HAMMAD MANZOOR, MBA HRM - III

Cell: 0321 – 584 2326 Roll No. 508195394, Karachi Campus
www.aiou.edu.pk
WELCOME
TO THE PARTICIPANTS

Agenda Items for Presentation www.aiou.edu.pk
• Introduction about Author and Project

• Acknowledgement
• Abstract
• Introduction to the Issue
• Practical Study – Petroleum Exploration Pvt. Limited (PEL)
• Data Collection Method / Analysis
• SWOT analysis
• Conclusions
• Recommendations
• Q & A Session

Introduction about Presenter and Project
www.aiou.edu.pk
• Introduction about Presenter “My Self”
• Introduction about Project

“ Strategy Formulation ”
Philosophy of the project is,

“How to understand the problem and find out a patent
solution”

Acknowledgement www.aiou.edu.pk
• To Almighty ALLAH
• To Honorable Faculty AIOU, Prof. Safdar Ahmed Khan
• To Mr. Mansoor , AIOU, Karachi Campus
• To Mr. Tariq Ali G.M. Human Resoureces
(Petroleum Exploration Pvt. Limited), Islamabad)
• To my Class fellows of MBA – III (Waleem, Javed, Sohail &
Zehra etc)
• To my students at Islamabad (Bahria University, Islamabad)
• To my family members

Abstract www.aiou.edu.pk
• Introduction to project
Objective:
1) What is Strategy?
2) What is Formulation?
3) Relationship of Strategy & Formulation
3) What are the main implication of Strategy Formulation?
4) How they could be effective in regard of Organizational
• Understanding the Problem
• Methodology Used
• Comparison of Different strategies
• Merits & Demerits Analysis
• Opportunities & Threats
• Conclusions
• Recommendations

www.aiou.edu.pk
INTRODUCTION

INTRODUCTION www.aiou.edu.pk
Introduction
Strategy V/s
Strategy Formulation Formulation Organization
Relationship

Strategy Formulation as a part of Strategic Management
www.aiou.edu.pk
Strategic management is an ongoing process to develop and revise future-oriented strategies

that allow an organization to achieve its objectives, considering its capabilities, constraints, and
the environment in which it operates.
Strategy Formulation as a part of Strategic

Management
Diagnosis Formulation Implementation

Strategic Management Process Allama Iqbal Open University, Islamabad
www.aiou.edu.pk
Analysis of
internal
strengths and
weaknesses
Establishment
SWOT analysis
of mission, Strategy Strategic
and strategy
vision, and implementation control
formulation
goals
Analysis of
external
opportunities
and threats

www.aiou.edu.pk
• Step 1: establishment of mission, vision, and goals

– mission - basic purpose and values of the organization
• defines the scope of operations
• states the organization’s reason to exist
• written in terms of the general clients served by the
organization
– strategic vision - provides a perspective on where the
company is headed and what the organization can become
• moves beyond the mission statement
– strategic goals - evolve from the mission and vision of the
organization
• need to be communicated to everyone who has contact
with the organization

www.aiou.edu.pk
• Step 2: analysis of external opportunities and threats

– successful strategic management depends on an accurate and
thorough evaluation of the environment
– stakeholders - groups and individuals who affect and are
affected by the achievement of the organization’s mission,
goals, and strategies
– forecasting future trends is critical
– must develop a clear sense of market opportunities
• identify potential threats as well
• difference between an opportunity and threat may depend
on how a company positions itself strategically

Strategic Management Process – Environmental Analysis
www.aiou.edu.pk
Industry and
market analysis
Technological Competitor
analysis analysis
Environmental
Macroeconomic Analysis Political and
analysis regulatory analysis
Human resources Social

analysis analysis

Resources & Core Competence www.aiou.edu.pk
Resources
are rare
Resources
Resources Core are
are competencies organized
inimitable
Resources
are
valuable

www.aiou.edu.pk
• Step 3: analysis of internal strengths and weaknesses

– Resources - inputs to production that can be accumulated over
time to enhance the performance of the firm
• may be tangible or intangible assets
• provide a competitive advantage if:
– the resource is instrumental in creating customer value
– the resource is rare and not equally available from
other sources
– resource is difficult to imitate
– resource is well organized
– Core competence - something a company does especially well
relative to its competitors
• usually a set of skills or expertise in some activity

Internal Resources Analysis www.aiou.edu.pk
Financial
analysis
Other internal Human resource

resource analysis Internal assessment
Resource
Analysis
Operations
Marketing audit
analysis

www.aiou.edu.pk
• Step 3: internal strengths and weaknesses (cont.)

– Benchmarking - process of assessing how well one company’s
basic functions and skills compare to those of other companies
• goal is to thoroughly understand the “best practices” of
other firms
• only permits imitating rather than surpassing competitors
• Step 4: SWOT analysis and strategy formulation
– SWOT analysis - comparison of strengths, weaknesses,
opportunities, and threats
• helps summarize the major facts and forecasts derived from
external and internal analyses
• used as the basis for identifying primary and secondary
strategic issues confronting the organization

Level of Strategies – Strategy Formation
www.aiou.edu.pk
Level of Strategies
Competitive Strategy
Functional Level
Corporate Strategy (Business Level
Strategy
Strategy)

www.aiou.edu.pk
– Corporate strategy - identifies the set of businesses, markets,

or industries in which the organization competes and the
distribution of resources among those businesses
• concentration strategy - focuses on a single business
competing in a single industry
• vertical integration - expands the domain of the
organization into supply channels or to distributors
• concentric diversification - moving into businesses that are
related to the company’s original core business
• conglomerate diversification - expands into unrelated
businesses

www.aiou.edu.pk
Concentration
Vertical
Integration
Corporate
Strategy
Unrelated
Diversification
Related
Diversification

www.aiou.edu.pk
• Allows a firm to master one business

– In-depth knowledge
– Easier to achieve competitive advantage
• Organizational resources under less strain
• Lack of ambiguity concerning strategic direction
– Consensus
• Sometimes found more profitable than other strategies
(dependent on industry, of course)

www.aiou.edu.pk
• Risky in unstable environments

• Product obsolescence and industry maturity
• Cash flow problems

www.aiou.edu.pk
The Vertical Supply Chain
Raw Primary Final

Product Whole-
Materials Manufac- Retailing
Manufac- saling
Extraction turing
turing
Vertical Integration: The extent to which an organization is involved in

multiple stages of the industry supply chain

When to Vertically Integrate www.aiou.edu.pk
• When it costs less to do so

– Stated cost of product or service
– Time and resources devoted to contract creation and
enforcement (transaction costs)
• Transaction costs are high (market failure) when:
– Highly uncertain future
– One or small number of suppliers
– Knowledge differences
– Asset specificity

www.aiou.edu.pk
Unrelated Diversification
• Antitrust laws and financial theories made it

popular
• Not a particularly high performing strategy for

most firms (with a few notable exceptions)

Related Diversification www.aiou.edu.pk
• Based on tangible and intangible relatedness
• In theory, can lead to synergy (but synergy is often

illusive)
• Often a higher performing strategy than unrelated

diversification (lower risk and higher profitability)
• Can lead to corporate-level distinctive competencies

Mergers and Acquisitions Allama Iqbal Open University, Islamabad
www.aiou.edu.pk
• High Premiums
• Increased Interest
Costs
• High Advisory Fees
• Poison Pills
• High Turnover
• Managerial
Distraction
• Less Innovation
• Lack of Fit
• Increased Risk

PRACTICAL STUDY – PETROLEUM EXPLORATIONAllama Iqbal Open University, Islamabad
Pvt. LIMITED (PEL) www.aiou.edu.pk
PETROLEUM EXPLORATION Pvt. LIMITED (PEL)

• Incorporated in June 1994 under the Companies Act,
Petroleum Exploration (Private) Limited (PEL) is based at Islamabad,
Pakistan.
• PEL charter fulfills Government of Pakistan strategic policy

objectives of creating indigenous corporate entities in the private sector
for exploration and production of hydrocarbon deposits.
• Under the dynamic leadership of Mr. Zaheeruddin, Chairman

and Chief Executive, PEL has embarked upon a very aggressive exploration
program to rapidly search new deposits of hydrocarbons and undertake its
development of new discoveries on fast track basis.
• PEL has a highly experienced team of petroleum professionals

including geologists, geophysicists, petroleum and process engineers, and
financial experts. It is adequately equipped with logistics and support
services. PEL has recently engaged an industry renowned Stanford
alumnus Dr. Gulfaraz Ahmed as the Chief Operating Officer. He is
committed to developing PEL into a well resourced integrated team of
cutting-edge expertise.
• PEL believes in optimally exploiting knowledge/technology by

outsourcing to the leaders in service industry.
• PEL has concluded an agreement with D&S International

Consulting Limited, Calgary Alberta, Canada, for the provision of technical
services.
www.aiou.edu.pk
PETROLEUM EXPLORATION Pvt. LIMITED (PEL)

PRACTICAL STUDY – PETROLEUM EXPLORATIONAllama Iqbal Open University, Islamabad
Pvt. LIMITED (PEL) www.aiou.edu.pk

Strengths / Merits www.aiou.edu.pk
• The company is wholly Pakistani owned and has the bright future in the energy
sector of Pakistan.
• Senior and superior professionals have been engaged with for the exploration and
production of hidden energy natural assets of Oil and Gas.
• The company has very aggressive future plans for drilling and production of Oil and
Gas.
• The company is fully equipped with modern day equipment for the facilitation of
employees to enhance their performance effectively.
• Highly Self esteemed professionals, shown in the Organogram, been used for
creating more progressive for running the plant.
• Under the proctorship of Mr. Zaheeruddin the company is developing by leaps and
bounds and spreading its business throughout Pakistan and abroad.
• Have Joint Venture with almost 70% E&P companies operating in Pakistan.
• Mr. Zaheeruddin was awarded the best business man for the year 2007 by the Prime
Minister of Pakistan.
• The departments like Exploration, Production and Process are working cordially and
proving to be the back bone of each other.
• Mr. Zaheeruddin and Co. does have very good relations with Govt. which is very
important especially in the matter of acreage allocation.
• The company is on the verge of developing several ongoing projects which would
prove a real epic in the disastrous power and energy shortage situation of the
country.
• Equal opportunity Employer.

Weakness / De-Merits www.aiou.edu.pk
• PEL holds low strategy management.

• Risk taking persons are lying in the low cadre
area, which is leaning behind in their personal
progress.
• Administrations department does not have
enough strength to cop with day to day affairs.
• Generally proceed with offensive strategy.
• It does not have proper opportunities for policy
maker professionals.

Conclusions www.aiou.edu.pk
• Block – 22 contains most of the professional

good policy and thinker
• Professionals generally hold less market
strategy
• Future entrepreneur of in Pakistan energy sector.
• HR department can be strengthened by hiring
management professionals who can add the value to its
business.
• Coporate strategy can be improved by making
the high management staff more trained and more
motivate
Recommendations • Administration department needs to address for of
hiring experienced professionals of the relevant trade.
• The emphasis of the company emphasized is work
progress, nor on the strategic management of
project, which could be helpful for company
operation smooth conduction and helping out for
better prospectivity in the form of his personal
growth, strategy management and motivation to
company.

www.aiou.edu.pk
Thanks for your patience

☺,,,,,,
Q & A Session


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Department of Admin Sciences,

Allama Iqbal Open University, Islamabad

Presented By: M. Hammad Manzoor

Supervised By: Prof. Safdar Ahmed Khan

Email: explorationist@gmail.com M. HAMMAD MANZOOR, MBA HRM - III

Email: explorationist@gmail.com M. HAMMAD MANZOOR, MBA HRM - III

• Introduction about Author and Project

Email: explorationist@gmail.com M. HAMMAD MANZOOR, MBA HRM - III

• Introduction about Presenter “My Self”

• Introduction about Project

Philosophy of the project is,

Email: explorationist@gmail.com M. HAMMAD MANZOOR, MBA HRM - III

Email: explorationist@gmail.com M. HAMMAD MANZOOR, MBA HRM - III

Email: explorationist@gmail.com M. HAMMAD MANZOOR, MBA HRM - III

Email: explorationist@gmail.com M. HAMMAD MANZOOR, MBA HRM - III

Email: explorationist@gmail.com M. HAMMAD MANZOOR, MBA HRM - III

Strategic management is an ongoing process to develop and revise future-oriented strategies

Strategy Formulation as a part of Strategic

Diagnosis Formulation Implementation

Email: explorationist@gmail.com M. HAMMAD MANZOOR, MBA HRM - III

Email: explorationist@gmail.com M. HAMMAD MANZOOR, MBA HRM - III

• Step 1: establishment of mission, vision, and goals

Email: explorationist@gmail.com M. HAMMAD MANZOOR, MBA HRM - III

• Step 2: analysis of external opportunities and threats

Email: explorationist@gmail.com M. HAMMAD MANZOOR, MBA HRM - III

Human resources Social

Email: explorationist@gmail.com M. HAMMAD MANZOOR, MBA HRM - III

Email: explorationist@gmail.com M. HAMMAD MANZOOR, MBA HRM - III

• Step 3: analysis of internal strengths and weaknesses

Email: explorationist@gmail.com M. HAMMAD MANZOOR, MBA HRM - III

Other internal Human resource

Email: explorationist@gmail.com M. HAMMAD MANZOOR, MBA HRM - III

• Step 3: internal strengths and weaknesses (cont.)

Email: explorationist@gmail.com M. HAMMAD MANZOOR, MBA HRM - III

Email: explorationist@gmail.com M. HAMMAD MANZOOR, MBA HRM - III

– Corporate strategy - identifies the set of businesses, markets,

Email: explorationist@gmail.com M. HAMMAD MANZOOR, MBA HRM - III

Email: explorationist@gmail.com M. HAMMAD MANZOOR, MBA HRM - III

• Allows a firm to master one business

Email: explorationist@gmail.com M. HAMMAD MANZOOR, MBA HRM - III

• Risky in unstable environments

Email: explorationist@gmail.com M. HAMMAD MANZOOR, MBA HRM - III

The Vertical Supply Chain

Raw Primary Final

Vertical Integration: The extent to which an organization is involved in

Email: explorationist@gmail.com M. HAMMAD MANZOOR, MBA HRM - III

• When it costs less to do so

Email: explorationist@gmail.com M. HAMMAD MANZOOR, MBA HRM - III

• Antitrust laws and financial theories made it

• Not a particularly high performing strategy for

Email: explorationist@gmail.com M. HAMMAD MANZOOR, MBA HRM - III

• Based on tangible and intangible relatedness

• In theory, can lead to synergy (but synergy is often

• Often a higher performing strategy than unrelated

• Can lead to corporate-level distinctive competencies

Email: explorationist@gmail.com M. HAMMAD MANZOOR, MBA HRM - III

Email: explorationist@gmail.com M. HAMMAD MANZOOR, MBA HRM - III

PETROLEUM EXPLORATION Pvt. LIMITED (PEL)

• PEL charter fulfills Government of Pakistan strategic policy

• Under the dynamic leadership of Mr. Zaheeruddin, Chairman

• PEL has a highly experienced team of petroleum professionals

• PEL believes in optimally exploiting knowledge/technology by