Dr Rajiv, Dept. of Hosp. Admn., PGI, Chandigarh

Dr Rajiv KumarCMO

29-Sept-2011

1. Strategic Planning Process2. SWOT Analysis/TOWS Matrix

3. Business Portfolio Matrix 4. Premising and Forecasting

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Definition of StrategyDefinition of Strategy

The determination of the mission or purpose and basic long-term objectives of an enterprise, followed by adoption of course of action and allocation of resources necessary to achieve those objectives.

Long term objectives

Course of action

Allocation of resources

Determination of Determination of

Dr Rajiv, Dept. of Hosp. Admn., PGI, Chandigarh

Definition of PoliciesDefinition of Policies• General statements that guide managers’

thinking in decision making• Discretion may be used while applying policies– (while applying ‘rules’, no discretion can be used)

Definition of Tactics Definition of Tactics

Action plans through which strategies are executed

Dr Rajiv, Dept. of Hosp. Admn., PGI, Chandigarh

3 levels of strategy3 levels of strategy• 1) Corporate level

– overall strategy– In which areas company is to compete

• Formulated by chief/head of the organization

• 2) Business strategies– To gain competitive advantage in a particular area

• Formulated by General manager/Head of deptt

• 3) Functional strategies– To support business and corporate strategies

• Formulated by heads of sub-units

Dr Rajiv, Dept. of Hosp. Admn., PGI, Chandigarh

1) Outline of a ‘Strategic Planning Process’1) Outline of a ‘Strategic Planning Process’

Industry analysis

Input •People•Capital•Management skills•Technical skills

Goals of stakeholders

Enterprise profile

values and vision

Mission and objectives

Development of alternative strategies

Present and future external threats and opportunities

Internal weaknesses and strengths

Evaluation and strategic choice

Implementation and control

Consistency testing and contingency planning at each stage

Specialization Diversification

Joint ventures Strategic alliances

Liquidation Bankruptcy

Retrenchment

Evaluation of attractiveness of industry

How well the product produced will be received in the market

Formulation of strategic process is a dynamic process. As the external and internal environment change, tactics will have to be accordingly modified.Formulation of strategic process is a dynamic process. As the external and internal environment change, tactics will have to be accordingly modified.

Dr Rajiv, Dept. of Hosp. Admn., PGI, Chandigarh

• Specialization: to focus on one product

• Diversification: extending operation into new markets

• Joint ventures: partnership, 2 firms form a new entity

• Strategic alliances: partnership, 2 firms remain distinct

• Liquidation: winding up of a firm by selling its free assets

• Bankruptcy: legal procedure for liquidation of a business

• Retrenchment: forced lay-off of employees to cut down pay-roll

Meaning of some termsMeaning of some terms

Dr Rajiv, Dept. of Hosp. Admn., PGI, Chandigarh

2) TOWS Matrix2) TOWS Matrix• TOWS matrix is a tool for analysis of the situation (so that strategic

alternatives (tactics) could be formulated in a better manner).

• It facilitates in matching of external threats and opportunities with the internal weaknesses and strengths of the organization

• Using TOWS matrix, 4 distinct types of alternatives are formulated.

(T = threats, O = opportunities, W = weaknesses, S = strengths)

Strengths are to be used, weaknesses are to be overcome, threats are to be coped with and opportunities are to be taken advantage of.

Dr Rajiv, Dept. of Hosp. Admn., PGI, Chandigarh

4 alternative strategies based on TOWS Matrix

SO Strategy : Maxi-MaxiStrengths of organization are used to take advantage of opportunities

WT Strategy : Mini-MiniTo minimize both weaknesses and threats

ST Strategy : Maxi-MiniUse of strengths to cope with or avoid threats

WO Strategy : Mini-MaxiDevelopmental strategy to overcome weaknesses in order to take advantage of opportunities

Blue ocean strategy

Blue ocean strategy

Red Ocean Strategy (Bloody

confrontation)

S W

T

O

Retrenchment, Liquidation, Joint

venture

outsourcing

To avoid

To prefer

Dr Rajiv, Dept. of Hosp. Admn., PGI, Chandigarh

• TOWS matrix especially useful for planning mergers, acquisitions, joint ventures and alliances

• Complementary strengths and weaknesses of 2 companies will result in useful alliance

• Overlap of strengths and weaknesses will result in no advantage of alliance

Uses of TOWS MatrixUses of TOWS Matrix

Dr Rajiv, Dept. of Hosp. Admn., PGI, Chandigarh

3) Business Portfolio Matrix3) Business Portfolio Matrix

• Developed by Boston Consultancy Group

• It was developed for large corporations with several divisions so that they could allocate their portfolio in a profitable manner

• Growth rate of the business and relative competitive position of organization (identified by market share) are inter-linked

Dr Rajiv, Dept. of Hosp. Admn., PGI, Chandigarh

Business Portfolio Matrix

Business Portfolio Matrix

Stars

Cash cows

Question marks

Dogs

Busi

ness

gro

wth

rate

Relative competitive position

High

Weak Strong

Low

High growth opportunityStrong competitive position

High growth opportunityWeak competitive position

Preferred positionPreferred position Requires cash investmentRequires cash investment

Low growth opportunityStrong competitive position

Surplus cashSurplus cash

Low growth opportunityLow competitive position

Dispose offDispose off

Dr Rajiv, Dept. of Hosp. Admn., PGI, Chandigarh

4) Premising and Forecasting4) Premising and Forecasting• Planning premises

– The anticipated environment in which plans are expected to operate

• Forecasting– Calculation of future events or performance base on past and present conditions

– For planning premises, forecasting is used– Forecasting commonly used for :

• Economic• Social• Political• Technological environments

Dr Rajiv, Dept. of Hosp. Admn., PGI, Chandigarh

Delphi technique

Delphi technique

Commonly used for forecasting

Steps for Delphi technique

Entire process is anonymous so that opinion is not prejudiced

Purpose is to arrive at informed consensus among experts

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Dr Rajiv, Dept. of Hosp. Admn., PGI, Chandigarh

Next time

• Decision making• Creativity and Innovation• Brainstorming

On 04-Oct-2011 at 3.00 PM (Tuesday) Dr Rajiv, Dept. of Hosp. Admn., PGI,

Chandigarh

Thank you

Dr Rajiv, Dept. of Hosp. Admn., PGI, Chandigarh

Visit me: www.drrajivpgichandigarh.com

Questions/discussion?Mail me:rajiv7000in@gmail.com