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Objectivity Stability & Flexibility Relationship to other objectives Being known accepted and understood Ethical standards Consistent with Public Policy Comprehensiveness
Ascertaining the problem Policy formulation Dissemination of the policy Acceptance of the policy Policy implementation Policy control
Relationship to Organization Objectives Simple and easy understandable Written policy Supplementary to Overall Corporate Policies Planned Development
Solving Business problems Policies provide stability Policies help manager to improve his managerial powers Optimum utilization of scarce resources Ensure consistency Policies determine specific routes
Inadequate coverage Limited area Policies are static Consistency in policies Policies provides set rules
Policies based on Nature of origin Policies based on expression Policies based on functions Policies based on scope of organization Policies based on levels of management Policies based on situation & contingency Major or Administrative Minor or Departmental
Policies based on Nature of origin Originated policy Appealed policy Imposed policy Policies based on functions Personnel policies Marketing Finance Production policies
Policies based on expression Oral policy Stated or Written policy Policies based on scope of organization Basic policies General policies Specific policies
Policies based on levels of management Top management Middle management Operating Management
Identification of the situation Development of Policy Dissemination of the Policy Explanation of the Policy Acceptance of the Policy Feed Back
Strategic Management
That set of managerial decisions and actions that determines the long-run performance of a corporation. It includes 1. Environmental Scanning 2. Strategy formulation 3. Strategy Implementation 4. Evaluation and Control
1. Basic Financial Planning 2. Forecast-Based Planning 3. Externally-Oriented Planning (Strategic Planning) 4. Strategic Management
Clearer sense of strategic vision Sharper focus on what is strategically important Improved understanding of rapidly changing environment
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European Union (EU) North American Free Trade Agreement (NAFTA) Association of South East Asian Nations (ASEAN)
Internet forcing companies to transform themselves New channels are changing market access and branding The balance of power is shifting The pace of business is increasing Knowledge is becoming the key assets
Environmental Scanning
Strategy Formulation
Strategy Implementation
Strategy Formulation
Mission
Reason for existence
Strategy Implementation
Objectives
What results to accomplish by when
Strategies
Plan to achieve the mission & objectives
Policies
Broad guidelines for decision making
Internal
Structure Chain of Command Culture Beliefs, Expectations, Values Resources Assets, Skills Competencies, Knowledge
Programs
Activities needed to accomplish a plan
Budgets
Cost of the programs
Procedures
Sequence of steps needed to do the job
Performance
Feedback/Learning
Societal Environment
Environment
Task
Economic Forces
(Industry)
Suppliers
Competitors
Composed of
Groups in environment that directly affect or are affected by the organizations operations (Often called industry)
Collection of beliefs, expectations, and values learned and shared by members and transmitted from one generation of employees to another
Strategy
A comprehensive master plan stating HOW the corporation will achieve its mission and objectives
Corporate Strategy
Business
(Division Level)
Strategy
Functional Strategy
Strategy Formulation
The process of developing long-range plans to deal effectively with environmental opportunities and threats in light of corporate strengths and weaknesses
Composed of
Mission
The purpose or reason for the corporations existence. It may be narrow or broad in scope.
Narrow Broad
Railroad Insurance
Objectives
The end results of planned activity. They state WHAT is to be accomplished by WHEN. They should be quantified, if possible.
Profitability Efficiency Growth Shareholder wealth Utilization of resources Reputation Contributions to employees Contributions to society Market leadership Technological leadership Survival Personal needs of management
Policies
Strategy Implementation
The process of putting strategies and policies into action through the development of Programs Budgets Procedures
Program
Budget
Procedures
A system of sequential steps or techniques that describe in detail how to perform a particular task or job
The process of monitoring corporate activities and performance results so that actual performance can be compared with desired performance
1(a)
1(b) Examine and Evaluate the Current: Mission O bjectives Strategies Policies
4(a)
Scan and Assess Internal Environment: Structure C ulture R esources
4(b)
Analyze Internal Factors: Strengths Weaknesses
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Strategy Formulation
Mission
Broad: To serve the best interests of shareowners, customers, and employees Narrow: To become a full-line globally-oriented major home appliance manufacturer and marketer
Objectives
Increased profitability Number one in customer satisfaction Number three in North American unit sales
Strategies
To grow horizontally where the corporation is not yet well represented through external acquisition or joint ventures To grow horizontally internally by improving efficiency and quality of acquired companies and by using one business units expertise in one acquired are to introduce quality products from a business unit in another area
Policies
No cost reduction proposal will be approved if it reduces product quality in any way Every product, from the least expensive to the highest priced, should be superior to the competition in overall quality and performance The corporation must not emphasize market share at the expense of profitability Business units must be managed for synergies, while simultaneously the specialized expertise among those units must be allowed to flourish
Programs
Work with Bosch-Siemens to develop joint marketing and supplier agreements for Hoover appliances Analyze and develop Asian markets through current distributors and licensees and through joint ventures Develop new appliances for continental Europe Develop TV advertising for Jenn-Air and Magic Chef Consolidate production of washers and dryers in dedicated plants
Budgets
Procedures
Develop procedures for joint purchasing and joint marketing of Bosch-Siemens with Hoover Coordinate marketing, manufacturing, and purchasing activities of business units through committees Research and development takes place in unit housing each product line Consolidate all advertising under one agency, but establish internal advertising for each brand category
An organizations grow larger and more complex with more uncertain environments, decisions become increasingly complicated and difficult to make.
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According to Henry Mintzberg, the three most typical approaches, or modes of strategic decision makings are:
Entrepreneurial modes Adoptive modes Planning modes
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