Notes 1 4
- 1. Important Note Please note that all material discussed in the class is in your book so please refer it accordingly . Only those material is in the notes forms which is referred from other text book Chap-1-4
- 2. Management by Objective MBO (Peter Drucker 1954) • A comprehensive managerial system that integrates many key managerial activities in a systematic manner and is consiciously directed toward the effective and efficient achievement of individual objective
- 3. • It is a control tool • It is motivational tool • It is used to appraise people • It is the tool of EMPOWERMENT • Link between top management strategic thinking and strategy implementation Management by Objective MBO (Peter Drucker 1954)
- 4. 6 Elements of Management by Objective 1. Commitment to the program 2. Top level goal setting 3. Individual goals 4. Participation 5. Autonomy in implementation of plans 6. Performance review. • Reward system (subsystem)
- 5. Management by Objective ADVANTAGES • Improvement of managing through result oriented planning • Greater commitment and satisfaction on the part of subordinates. • Enforced planning and prioritizing of future activities on the part of superiors and subordinates • More rationale method of performance evaluation based on contribution to organizational objectives • Individual outshine others by self controlling,personnel development,and creativity
- 6. Management by Objective • WEAKNESS: • The time and paper work involved • Failure to teach the philosophy of MBO • Difficulty in setting verifiable goal with flexibility • Emphasis on short run goals at the expense of long term • Overuse of quantitative goals • Non-ethical ways adopt to achieve objectives
- 7. Where to use MBO • Used in Private,public and non profit- sector and armed forces. • Knowledge based enterprises where staff is competent • Company’s like intel
- 8. Strategy Determination of the mission and the basic long term objective of an enterprise followed by adoption of courses of action and allocation of resources necessary to achieve them Types of plan
- 9. STRATEGIC : Look ahead several years or even decades (time horizons) Wide range of organizational activities (scope) Look simplistic and generic (Degree of detail) Deals with the relationship between people at an organization and people acting at other organization OPERATIONAL : A Year is often relevant (time horizons) Narrow and limited scope (scope) More detail (Degree of detail) Deals with people within organization Strategic Plans vs Operational Plan
- 10. Hierarchy of Organization Plan • Mission Statement • Strategic Plans • Operational Plan
- 11. Main elements of Strategic Planning Process 1. Inputs to the organization 2. Industry Analysis (Porter 5 forces) 3. Enterprise Profile, 4. Present and Future External Environment (threats and opportunity) 5. Internal Environment 6. Development of Alternative Strategies 7. Evaluation and Choice of Strategies 8. Consistency testing 9. Contingency plans
- 12. Inputs to the organization(claimants) People,capital,managerial,technical skills,In addition Employees wanted higher pay,more benefits,job security Consumers demands safe and reliable products at reasonable price Suppliers wants variance that their products are purchased. Stockholders want only high return on their investment but as security of the money. Federal and local governments depends on tax paid by enterprise Community demands that enterprise be good citizen providing jobs and emit a minimum of pollutants. Financial institution/labor union,even competitors have a legitimate for fair play It is managerial job to integrate legitimate objective of the claimants 1
- 13. 2 Searching for other products tat can perform the same function as the product of the industry.Differentiation 1 2 3 45 Govt policy,Retaliation by the companies Supply is dominated by a few suppliers tyre manufacturer/medicines Brand identity
- 14. Overall cost Leadership Strategy Differentiation Strategy Focused Strategy Generic competitive strategy7
- 15. Enterprise Profile,) Mission (Purpose), Major Objectives, and strategic intent (obsession) External environment :Threats/opportunities Economic factors,social,political technology competition demographic factors Internal environment :Weakness/Strength Management,and organization,operations(R&D,productivity,distribution customer services) 3 4 5
- 16. TOWS Matrix:RATIONALE • Mostly companies identify their strength weaknesses,opportunities and the threats by using SWOT analysis. • But what overlooked is that combining these factors may require distinct strategic choices.To systematize these choices TOWS matrix was proposed
- 17. TOWS Matrix: It is a modern tool to analyze the situation of the company and to develop strategies, tactics and action for the effective and efficient attainment of the organizational objectives and mission, TOWS Matrix has been proposed, where T stands for threats, O stands for opportunities, W stands for weaknesses, and S for strengths. 6
- 18. S W O SO WO T ST WT S W O SO WO T ST WT S W O SO WO T ST WT DYNAMICS OF THE TOWS MATRIX PRESENT PAST PRESENT+ TI…. TIME
- 19. Four Alternative Strategies 1. The WT strategy aims to minimize both weaknesses and threats(mini-mini). (try to avoid) 2. The WO strategy attempts to minimize the weaknesses and maximize the opportunities. (mini-maxi) 3. The ST strategy is based on using the organization’s strengths to deal with threats in the environment. (maxi-mini) 4. The SO strategy, which capitalizes on a company’s strengths to take advantage of opportunities (maxi-maxi). ((is the most desirable.) 7
- 20. Value of Forecasting • To compel thinking ahead • Disclose areas where control is lacking • Helps coordinates plan
- 21. Premising and Forecasting Planning premises The anticipated environment in which plans are expected to operate. (Sales volume,political environment) Prerequisite of planning Fore casting with the Delphi technique Forecast that are translated into future expectancies (cost and revenue) Result of planning
- 22. STAR high growth, high market share QUESTION MARK high growth, low market share CASH COW low growth, high market share DOG low growth, low market share HIGH HIGH LOW LOW Relative market share Market Growth £ $$ PORTFOLIO (BCG)MATRIX Boston consulting group
- 23. Three level of strategy CORPORATE STRATEGY FUNCTIONAL LEVEL STRATEGY BUSINESS UNIT STRATEGY OPERATING PLANS What kind of businesses,goals/expectations/resources Marketing/Production Sales of a particular businesses Day to day activities
- 24. Value of Forecasting • To compel thinking ahead • Disclose areas where control is lacking • Helps coordinates plan
- 25. Premising and Forecasting Planning premises The anticipated environment in which plans are expected to operate. (Sales volume,political environment) Prerequisite of planning Fore casting with the Delphi technique Forecast that are translated into future expectancies (cost and revenue) Result of planning