assignment no # 1 to 11

8/8/2019 Assignment No # 1 to 11

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INSITITUTE OF BUSINESS AND

TECHNOLOGY

BIZTEK

By:

Asad Mazhar


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A SSIGNMENT NO. 1

a) Discuss briefly following terms:

Strategy Tactics

Operations

Vision

Mission

Goal

VISSION:-

A vision statement is sometimes called a picture of your company in the future but its so muchmore than that. Your vision statement is your inspiration, the framework for all your strategicplanning.

A vision statement may apply to an entire company or to a single division of that company.Whether for all or part of an organization, the vision statement answers the question, Where dowe want to go?

What you are doing when creating a vision statement is articulating your dreams and hopes foryour business. It reminds you of what you are trying to build.

MISSION:-

A mission statement is a brief description of a company's fundamental purpose. A missionstatement answers the question, "Why do we exist?"

The mission statement articulates the company's purpose both for those in the organization andfor the public.

The difference between a mission statement and a vision statement is that a mission statementfocuses on a companys present state while a vision statement focuses on a companys future.

STRATEGY:-Strategy is a framework which guides those choices that determine the nature and direction ofan organization

Alternative chosen to make happen a desired future, such as achievement of a goal or solution

to a problem.


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Art and science of planning and marshalling resources for their most efficient and effective use.

The term is derived from the Greek word for generalship or leading an army

GOAL:-

Objective ortarget, usually driven by specific future financial needs. Some common financialgoals for an individual are: saving for a comfortable retirement, saving to send children tocollege, managing finances to enable a home purchase, minimizing taxes, maximizing return oninvestments given a certain risk tolerance, and estate ortrust planning. Given a person's goals,he/she decides on a pattern ofexpenses and suitable investments that will enable those goalsto be achieved. Institutions also have financial goals, for example making certain pensioncontributions at specific times, or retiring a certain amount ofdebt by a certain date. Often, bothpeople and institutions find it useful to employ a professional to help them in setting up afinancial plan that will enable their goals to be met.

TACTICS:-Tactics are the specific actions, sequences of actions, and schedules you use to

fulfill your strategy. If you have more than one strategy you will have different tactics for each.

OPERATIONS:-A business, unit orfunction within a company.

b) WHAT DO YOU UNDERSTAND BY STRATEGIC MANAGEMENT?

Strategic management can be defined as the art and science of formulating, implementing, and

evaluating cross-functional decisions that enable an organization to achieve its objectives.

The termstrategic managementis used synonymously with strategic planning.
http://www.investorwords.com/3372/objective.htmlhttp://www.investorwords.com/4874/target.htmlhttp://www.investorwords.com/5572/financial.htmlhttp://www.businessdictionary.com/definition/need.htmlhttp://www.businessdictionary.com/definition/individual.htmlhttp://www.investorwords.com/4387/saving.htmlhttp://www.investorwords.com/4240/retirement.htmlhttp://www.businessdictionary.com/definition/child.htmlhttp://www.investorwords.com/1940/finance.htmlhttp://www.investorwords.com/3952/purchase.htmlhttp://www.investorwords.com/5972/taxes.htmlhttp://www.investorwords.com/4250/Return_on_Investment.htmlhttp://www.investorwords.com/4250/Return_on_Investment.htmlhttp://www.investorwords.com/4310/risk_tolerance.htmlhttp://www.investorwords.com/1751/estate.htmlhttp://www.investorwords.com/5084/trust.htmlhttp://www.investorwords.com/3710/planning.htmlhttp://www.businessdictionary.com/definition/person.htmlhttp://www.investorwords.com/3624/pattern.htmlhttp://www.investorwords.com/1842/expense.htmlhttp://www.investorwords.com/2599/investment.htmlhttp://www.investorwords.com/2501/institution.htmlhttp://www.investorwords.com/5938/pension.htmlhttp://www.investorwords.com/1091/contribution.htmlhttp://www.businessdictionary.com/definition/time.htmlhttp://www.investorwords.com/205/amount.htmlhttp://www.investorwords.com/1313/debt.htmlhttp://www.businessdictionary.com/definition/professional.htmlhttp://www.businessdictionary.com/definition/plan.htmlhttp://www.investorwords.com/623/business.htmlhttp://www.investorwords.com/5159/unit.htmlhttp://www.businessdictionary.com/definition/function.htmlhttp://www.investorwords.com/992/company.htmlhttp://www.investorwords.com/3372/objective.htmlhttp://www.investorwords.com/4874/target.htmlhttp://www.investorwords.com/5572/financial.htmlhttp://www.businessdictionary.com/definition/need.htmlhttp://www.businessdictionary.com/definition/individual.htmlhttp://www.investorwords.com/4387/saving.htmlhttp://www.investorwords.com/4240/retirement.htmlhttp://www.businessdictionary.com/definition/child.htmlhttp://www.investorwords.com/1940/finance.htmlhttp://www.investorwords.com/3952/purchase.htmlhttp://www.investorwords.com/5972/taxes.htmlhttp://www.investorwords.com/4250/Return_on_Investment.htmlhttp://www.investorwords.com/4250/Return_on_Investment.htmlhttp://www.investorwords.com/4310/risk_tolerance.htmlhttp://www.investorwords.com/1751/estate.htmlhttp://www.investorwords.com/5084/trust.htmlhttp://www.investorwords.com/3710/planning.htmlhttp://www.businessdictionary.com/definition/person.htmlhttp://www.investorwords.com/3624/pattern.htmlhttp://www.investorwords.com/1842/expense.htmlhttp://www.investorwords.com/2599/investment.htmlhttp://www.investorwords.com/2501/institution.htmlhttp://www.investorwords.com/5938/pension.htmlhttp://www.investorwords.com/1091/contribution.htmlhttp://www.businessdictionary.com/definition/time.htmlhttp://www.investorwords.com/205/amount.htmlhttp://www.investorwords.com/1313/debt.htmlhttp://www.businessdictionary.com/definition/professional.htmlhttp://www.businessdictionary.com/definition/plan.htmlhttp://www.investorwords.com/623/business.htmlhttp://www.investorwords.com/5159/unit.htmlhttp://www.businessdictionary.com/definition/function.htmlhttp://www.investorwords.com/992/company.html


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Stages of Strategic Management

The strategic-management process consists of three stages.

a. Strategy formulation includes developing a vision and mission, identifying

an organizations external opportunities and threats, determining internalstrengths and weaknesses, establishing long-term objectives, generating

alternative strategies, and choosing particular strategies to pursue.

b. Strategy implementation requires a firm to establish annual objectives,

devise policies, motivate employees, and allocate resources so that formulated

strategies can be executed; strategy implementation includes developing a

strategy-supportive culture, creating an effective organizational structure,redirecting marketing efforts, preparing budgets, developing and utilizing

information systems, and linking employee compensation to organizational

performance.

c. Strategy evaluation is the final stage in strategic management. Managers

desperately need to know when particular strategies are not working well;strategy evaluation is the primary means for obtaining this information.


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ASSIGNMENT # 02

Q) Draw a line showing a comprehensive strategic managementmodel?

A COMPREHENSIVE STRATEGIC-MANAGEMENT MODEL


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ASSIGNMENT NO. 3

a) Discuss briefly any ten benefits of strategic management.

BENEFITS OF STRATEGIC MANAGEMENT

Identification of Opportunities:-It allows for identification of prioritization andexploitation of opportunities.

Identification of Problems:-It provides an objectives view of management

problems-

Framework for Improving:-It represents a framework for improved coordination

and control of activities.

Challenges & Coordination:-It minimizes the effect of adverse conditions &

changes.

Framework for Communications:-It creates a framework for internalcommunication among personal.

Integrated Efforts:-

It helps integrated the behavior of individual into a totalefforts.

Forward Thinking:-It encourages forward thinking.

Positive Attitude:-It encourages a favorable attitude towards change.

Team Work:-It allows more effective allocation time and resources to identicalopportunities.

Dynamic Leadership:-


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It gives a degree of discipline and formality to themanagement of business.

b) Discuss briefly any ten pitfalls in strategic planning?

PITFALLS IN STRATEGIC PLANNINGThe pitfalls of strategic management are as follows:

1. Over Control of Resources :-Using strategic planning to gain control ourdecision and resources.

2. Poor Control of Resources:-Strategic planning only to satisfy accreditationor regulatory requirements.

3. Too Hasty Decision:-Too hastily moving from mission development to

strategy formulation.

4. Lack of Involvement of Employees:-Failing to communicate the plan to

employees, who continue working in thedark.

5. View Strategic Management as Unnecessary:-Viewing planning as unnecessary

or un important.

6. No Standard Set for Performance:-Failing to use plans as standard for

measuring performances.

7. Random Planning:-Becoming so engrossed in current problems that insufficient or no planning.

8. Intuitive Decisions:-

Top managers making many intuitive decisions thatconflicts with the formal plan.

9. Poor Work Environment:-Failing to create a collaborative climatesupportive of change.

Rigid Planning:-


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Being so formal in planning that flexibility and creativityare briefed.

c) Discuss briefly any ten reasons why some do not strategicplanning?

FIRMS NO STRATEGIC PLANNING

Some firms do not engage in strategic planning and sometime dostrategic planning but receive no support from managers andemployees. Some reasons for poor or no strategic planning are as

follows:

1. Poor Motivation:-Some organization do not consider employees asthere most important assets, therefore less and poormotivates has carry the employees in organization.

2. Poor Reward Structure:-When a organization assumes success it often

fails to reward success. When failure occursthen the firms may punish. In this situation it isbetter for an individual to do nothing then torisk trying to achieve something fails and bepunished.

3. Wastefulness:-Some firms see planning as a waste of time becauseno marketable product is produced. Time spent onplanning is an investment.

4. Laziness:-People may not want to put the effort needed to formulatea plan.

5. Over Confidence:-As individual a most expensive, they may rely less onformalized planning. Rarely, however is this


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appropriate. Being over confidence and oversmarting experience can bring demise. Forethoughtis rarely work and is often the mark of professionalism.

6. Under Confidence:-People may have had a previous bad experience

with planning that is case in which have been long,cumbersome, impractical or inflexible- planning likeanything else can be done badly.

7. Poor Timing:-People may sincerely believe the plan is wrong. They

may view the situation from a different view point or theymay have aspirations for themselves or the organization

that are different from the plan. Different people indifferent jobs have different perceptions of a situation.

8. Self Interest:-When some people has achieved status, privilege orself-esteem through effectively using an old system heor she often sees a new plan as a threat.

9. Fear of Failure:-By not taking action, there is a little risk of failure

unless a problem is urgent and pressing wheneversomething worthwhile is attempted there is somerisk of failure.

10. Fear of Unknown:-People may be uncertain of their abilities to learnnew skills of their aptitude with new systems or oftheir ability to take on new roles.


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ASSIGNMENT NO. 4

a) Define the following terms in four line.

VISION:-

Defines the desired or intended future state of an organization or enterprise in

terms of its fundamental objective and/or strategic direction. Vision is a long termview, sometimes describing how the organization would like the world in which it

operates to be. For example a charity working with the poor might have a vision

statement which read "A world without poverty".

MISSION:-

A mission statement is a formal, short, written statement of the purpose of acompany or organization. The mission statement should guide the action of the

organization, spell out it overall goal, provide a sense of direction and guide

decision making. It provides the framework or context within which thecompanys strategy is formulated.

OBJECTIVES:-Mission, purpose or standard that can be reasonable achieved within the

expected time frame and with the available resources objectives contribute to

the fulfillment of specified goal.


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b) What are the mission statement component.

COMPONENTS OF MISSION STATEMENT

No one can deny the importance of a mission statement in motivating a business. Mission

statement not only helps the business to remain its track but also help determining thevery purpose of its existence. Finding a project mission statement is never possible. There

are ten elements which involves in making a mission statement. Each good mission

statement incorporates all of these elements in it. These elements are:

a. Philosophy:-

Philosophy of a company is a much wider term to over. By definingphilosophy, the company defines its way of working its culture its beliefs

and how it sees work to be carried out. It is also an analytical way of

defining the norms on which it runs.

b. Self Concept:-

By defining the self concept the business is telling its heart out to theworld. In this the company shows the outside world, its core strength

and the place it sees itself in the future.

c. Public Image:-

Public image is a much wider term and can include not only the

corporate social responsibility but the overall impact of the action taken by


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the company on its image. This may include from minor issues like

installing manufacturing recycling plant by a company for pollution

reduction to improve its packaging to enhance a better brand image forone of its top line brand.

d. Customer Focus:-

In this element, the organization mentions who are its customer or

potential customers. What will it do to serve them and how will itscustomers find this organization different from the other

organization providing similar products or services in the market.

e. Product or Services:-

In mission statement a business has to mention the producer or

service or both they are providing. By defining products or service

the company distinguishes its offered product or services fromcompetitive products or services of similar nature provided by

other competitors in the market.

f. Markets:-

By defining markets, the company is declaring which type of customerwill be targeted or who will be the intended audience for which it will

produce products or services. For example a luxury car maker like Royal

Royce has a potential market of only the richest of the rich in the world.

g. Technology:-By defining technology, the company tells its current technology use in

making of its products. It also tells about unique way in which its products

or services are technologically more advance then their alternatives.

h. Profitability:-

In this element the mission statement business defines, means it seeks tosurvive in the longer run. It is not merely list them out but also defines

the logic behind them and how will the company strive to achieve them.

i. Employee Focus:-

This is also including the way in which the company will treat itsemployees and how will it look towards this relationship in a

longer period of time.

j. Ethical Base:-


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c) Discuss briefly any ten characteristics of mission statement.

CHARACTERISTICS OF MISSION STATEMENT

Broad Scope:-The firms reason for existence and its purpose be wide and have

broader scope.

More than 250 Workers in the Organization:-

Organization having 250 or moreworkers is medium sized

organization. Mission statement

reflects this particular characteristic.

Inspiring:-

Firm should reflect inspiring and interesting products/services as well as

environment.

Utility/Usefulness of Firms Product:-

Identify the utility of a firms product.

Firms Friendly Environment:-Reveal the firm is environmentally responsible and

friendly the work place is controllable employees

behavior and strategies adopt are good.


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Environment Ending:-

Reveal that firm is socially responsible.

Encompassing 10 Components of Mission Statement:-

Include components such as

customer, product or services, market,

technologies, profitability,

employees focus, ethical base, philosophy, self

concept and public image.

ASSIGNMENT NO. 5

Q) Discuss briefly the external environment factors.

EXTERNAL ENVIRONMENT FACTORS

Competitors:-Any person or entity which is a rival against another. In business

a company is the same industry or a similar industry which offers a similarproduct or service. Competition also requires becoming more efficient inorder to reduce cost.

Suppliers:-Suppliers are individual or business that provide goods or services

to vendor in return for the agreed upon compensation. As such suppliers donot generally intact with consumers directly, learning that task to vendor orshop owners.

Distributors:-Entity that buys non-competing products or product-lines,

warehouses them, and resells them to retailers or direct to the end users orcustomers. Most distributors provide strong manpower and cashsupport to

the supplier or manufacturer's promotional efforts. They usually also providea range of services (such as product information, estimates, technicalsupport, after-sales services, credit) to their customers.

Creditors:-An entity (person or institution) that extends credit by giving another

entity permission to borrow money if it is paid back at a later date. Creditorscan be classified as either "personal" or "real". Those people who loan
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money to friends or family are personal creditors. Real creditors (i.e. a bankor finance company) have legal contracts with the borrower granting thelender the right to claim any of the debtor's real assets (e.g. real estateor car) if he or she fails to pay back the loan.

Customers:-A customer (also known as a client, buyer, or purchaser) is usually

used to refer to a current or potential buyer or user of the products of anindividual or organization, called the supplier, seller, or vendor. This istypically through purchasing or rentinggoods or services

Employees:-An employee contributes labor and expertise to an endeavor.

Employees perform the discrete activity of economic production. Of the threefactors of production, employees usually provide the labor.

Specifically, an employee is any person hired by an employer to do aspecific "job". In most modern economies, the term employee refers to aspecific defined relationship between an individual and a corporation, whichdiffers from those ofcustomer, or client.

Managers:-An individual who is in charge of a certain group oftasks, or a certain

subset of a company. A manager often has a staffof people who report tohim or her. As an example, a restaurant will often have a front-of-housemanager who helps the patrons, and supervises the hosts. In addition, a

specific office project can have a manager, known simply as the projectmanager. Certain departments within a company designate their managersto be line managers, while others are known as staff managers, dependingupon the functionality of the department.

Stockholders:-One who owns shares of stocks in a corporation or mutual fund.

For corporation along with the ownership come a right to declared dividendand the right to vote on certain company matters including the board ofdirectors also called shareholders.

Labor Union:-Labor union (American English) is an organization of workers that

have banded together to achieve common goals such as better workingconditions. The trade union, through its leadership, bargains with theemployer on behalf of union members (rank and file members) andnegotiates labour contracts (collective bargaining) with employers. This mayinclude the negotiation of wages, work rules, complaint procedures, rules
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governing hiring, firing and promotion of workers, benefits, workplace safetyand policies.

Trade Association:-An industry trade group also known as a trade association or

sector association. On industry trade association participates in publicrelations activities such as advertising, education, political donations,lobbying but main focus is collaborations between companies.

Special Interest Group:-A Special Interest Group (SIG) is a community with an

interest in advancing a specific area of knowledge, learning or technologywhere members cooperate to effect or to produce solutions within theirparticular field, and may communicate, meet, and organize conferences.

Government:-A government is the organization, or agency through which a

political unit exercises its authority, controls and administers public policy,and directs and controls the actions of its members or subjects.Community:-

A community is a group of interacting species sharing a populatedenvironment. In human communities, intent, belief, resources, preferences,needs, risks, and a number of other conditions may be present and common,affecting the identity of the participants and their degree of cohesiveness.

Products/ Services Market:-A market used to exchange a final goods or service

product markets exchange consumer goods purchased by the businesssector and goods purchased by government and foreign sector same as inthe case of service market.

Natural Environment:-The natural environment, encompasses all living and non-

living things occurring naturally on Earth or some region thereof. It is anenvironment that encompasses the interaction of all living species.

P E S T Culture

P Political Factor:-Political factors are how and to what degree a government intervenes in theeconomy. Specifically political factor include areas such as tax policy, tariffsand political stability. Furthermore government make infrastructure of anation.
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E Economic Factor:-In the economic factor, the organizational analysis should centre on thoseaspects of the economic system that directly impact the type of projectbeing considered. For example, inflation, labour laws, and opportunity costs

for researchers in public institutions directly impact organizational activities.Clearly, a country under a structural adjustment regime or one that isexpecting to undergo restructuring presents an investment. Countries withforeign currency restrictions represent different environments for institutionsthan countries without them, for such restrictions have ramifications forresearch, e.g. for equipment procurement and maintenance.

S Social and Cultural Factor:-Social and cultural forces at local, national, and often regional levels haveprofound influence on the way organizations conduct their work and on whatthey value in terms of outcomes and effects. For example, the mores of an

indigenous culture have a bearing on the work ethic and on the way in whichpeople relate to one another. Undoubtedly, the most profound culturaldimension is language. The extent to which organizational members canparticipate in the discourse of the major scientific language will determinethe extent to which research efforts focus inwardly or contribute to regionaland global research agendas. Understanding the national/regional/localvalues toward learning and research provides insight into the type andnature of research that is valued.

T Technology Factor:-Both the types and the level of technology in the society give insight into

understanding an institution. Institutions dealing with Western paradigms aredependent on the state of national infrastructure, e.g. power, water,transport; those which concentrate on indigenous research paradigms mayhave totally different dependencies. Thus, it is important to understand thelevel of relevant technology in the institutional context and whether suchtechnology is defined by computer literacy or by highly developedindigenous methods of verbal and nonverbal communication. It might also behelpful for an assessment to include a consideration of the process by whichnew technology comes into use, both to understand how difficult it is toacquire needed research technologies and to develop an appreciation for thesociety's willingness to embrace both new knowledge and change.


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ASSIGNMENT NO. 6

Q) Discuss briefly key internal forces /factors.

Marketing:-Marketing is the process by which companies create customer

interest in goods or services. It generates the strategy that underlies salestechniques, business communication, and business developments.[1] It is anintegrated process through which companies build strong customer

relationships and create questionable value for their customers and forthemselves. These are the major parts of the marketing Customer, Supplier,Contributors and product/ Services.

Finance Probability:-Finance is the science of funds management. The general

areas of finance are business finance, personal finance, and public finance.Finance includes saving money and often includes lending money. The fieldof finance deals with the concepts of time, money, risk and how they areinterrelated. It also deals with how money is spent and budgeted.One facet of finance is through individuals and business organizations, which

deposit money in a bank. The bank then lends the money out to otherindividuals or corporations for consumption or investment and chargesinterest on the loans.

Accounting:-Accountancy is the process of communicating financial information

about a business entity to users such as shareholders and managers. Thecommunication is generally in the form of financial statements that show in
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money terms the economic resources under the control of management; theart lies in selecting the information that is relevant to the user and is reliable.In accounting analyze the supplier cost, distribution cost, market cost,consumer service cost and management cost.

Management:-Management in all business areas and organizational activitiesare the acts of getting people together to accomplish desired goals andobjectives efficiently and effectively. Management comprises planning,organizing, staffing, leading or directing, and controlling an organization (agroup of one or more people or entities) or effort for the purpose ofaccomplishing a goal. Resourcing encompasses the deployment andmanipulation of human resources, financial resources, technologicalresources, and natural resources.

Management Information System (MIS):-A management information system (MIS)

is a system or process that provides information needed to manageorganizations effectively. Management information systems are regarded tobe a subset of the overall internal controls procedures in a business, whichcover the application of people, documents, technologies, and proceduresused by management accountants to solve business problems such ascosting a product, service or a business-wide strategy. Management

information systems are distinct from regular information systems in thatthey are used to analyze other information systems applied in operationalactivities in the organization.

Production Operation:-A firm focusing on a production orientation specializes in

producing as much as possible of a given product or service. Thus, thissignifies a firm exploiting economies of scale, until the minimum efficientscale is reached. A production orientation may be deployed when a highdemand for a product or service exists, coupled with a good certainty thatconsumer tastes do not rapidly alter (similar to the sales orientation).

Research & Development:- The phrase research and development (R&D),

according to the Organization for Economic Co-operation and Development,refers to "creative work undertaken on a systematic basis in order toincrease the stock of knowledge, including knowledge of man, culture andsociety, and the use of this stock of knowledge to devise new applications".
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Organizational Culture:-Organizational culture is an idea in the field of

organizational studies and management which describes the psychology,attitudes, experiences, beliefs and values (personal and cultural values) ofan organization. It has been defined as "the specific collection of values and

norms that are shared by people and groups in an organization and thatcontrol the way they interact with each other and with stakeholders outsidethe organization."

Organizational Ethics:-Organizational Ethics is the ethics of an organization, and it

is how an organization ethically responds to an internal or external stimulus.Organizational ethics is interdependent with the organizational culture.Organizational ethics express the values of an organization to its employeesand/or other entities irrespective of governmental and/or regulatory laws

Organizational Social Responsibilities:-Social responsibility is the principle that

companies should contribute to the welfare of society and not be solelydevoted to maximizing profits. This responsibility can be "negative",meaning there is exemption from blame or liability, or it can be "positive,"meaning there is a responsibility to act beneficently (proactive stance).Corporate social responsibility (CSR), also known as corporate responsibility,corporate citizenship, responsible business, sustainable responsible (SRB), orcorporate social performance is a form of corporate self-regulation

integrated into a business model.
http://en.wikipedia.org/wiki/Organizational_studieshttp://en.wikipedia.org/wiki/Managementhttp://en.wikipedia.org/wiki/Stakeholder_(corporate)http://en.wikipedia.org/wiki/Ethicshttp://en.wikipedia.org/wiki/Organizationhttp://en.wikipedia.org/wiki/Organizational_culturehttp://en.wikipedia.org/wiki/Lawshttp://en.wikipedia.org/wiki/Corporate_social_responsibilityhttp://en.wikipedia.org/wiki/Organizational_studieshttp://en.wikipedia.org/wiki/Managementhttp://en.wikipedia.org/wiki/Stakeholder_(corporate)http://en.wikipedia.org/wiki/Ethicshttp://en.wikipedia.org/wiki/Organizationhttp://en.wikipedia.org/wiki/Organizational_culturehttp://en.wikipedia.org/wiki/Lawshttp://en.wikipedia.org/wiki/Corporate_social_responsibility


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ASSIGNMENT # 07

a) Draw a line diagram showing level of strategies with person responsible for large

corporation and small companies?

Levels of Strategies Large Company


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Strategic leaders manage the strategic management process that is designed to help theorganization achieve its objectives.

Among the strategic leaders, we have managers operating at different levels of an organization:

corporate-level, business-level, functional-level and operational-level.

Corporate-level managers Corporate-level managers include the chiefexecutive officer (CEO), senior executives

and the corporate staff. The corporate-level managers manage the strategic

management process for the whole organization. These managers may carry

designations such as CEO, managing director, executive director orpresident.


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Division Level Division President-OR Executive Vice

President Business-level managers are the strategic leaders at the business, division or SBU levels.

These managers manage the strategicmanagement process at the business-level. These

may carry designations such as general manager or vice-president.

Functional-level managers Functional-level managers are the strategic leaders of specific functions such as

marketing or operations. They are called marketing managers or operations managers.

The functional managers manage the strategic management process at the functional

level.

Operational-level

At the operational-level, there are managers who are responsible for the implementation

of strategies within their assigned functional areas. They occupy positions such as deputymanager of marketing or assistant manager of operations.

The Tasks of Strategic LeadersDetermining Strategic Direction One of the more crucial tasks of a strategic leader is to provide a senseof direction to the organization. The strategic direction is concerned with the future shape of theorganization.

Effectively Managing the OrganizationalResources Portfolio Strategic leaders are called upon tomanage effectively, the portfolio of organizational resources. Such a portfolio includes financial capital,human capital, social capital and organizational capital.

Sustaining an Effective Organizational CultureStrategic leaders try to build and sustain an effectiveorganizational culture.

Emphasizing Ethical Practices Strategic leaders emphasize on ethical practices in word and deedwhen the strategies are being implemented.

Establishing Balanced Organizational Controls Strategic leaders use a combination of financial andnon-financial controls to help the organization achieve its objectives.

The Roles of Strategic Leaders


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Role of Chief Executive Officer: The role of the ceo is evident through all thephases of the process of strategic management. A ceo performs the strategic tasks: actions which arenecessary to provide a direction to the organization so that it achieves its purpose. He plays a pivotal rolein setting the mission of the organizations, deciding the objectives and goals, formulating andimplementing the strategy and, in general, seeing to it that the organization does not deviate from its pre-determined path, designed to move it from the position it is in to where it wants to be.

Role of Senior Managers: The senior (or top) management consists of managers at thehighest level of the managerial hierarchy. Senior managers perform a variety of roles by assigning theboard and the chief executive in the formulation, implementation and evaluation of strategy.Organizationally, they come together in the form of different types of committees, task forces, workgroups, think tanks, management teams and the like, to play a very important role in strategicmanagement.

Role of Business-Level Executives: The rationale for organizing structureaccording to the strategic business units (SBUs) is to manage a diversified company as a portfolio ofbusinesses each business having a clearly defined product-market segment and a unique strategy. The

business-level executives, also known as either profit center or divisional heads are considered as chiefexecutives of a special business unit. The business-level strategy formulation and implementation are theprimary responsibilities of the business-level executives.

Role of Functional and Operational Managers: The major role offunctional and operational managers, also called the middle-level managers to relate to functional andoperational matters and therefore they rarely play an active role in higher-level strategic management.They may, at best, be involved as sounding boards for departmental and operational plans, asimplementers of the decision taken by the corporate- and business-level managers, followers of policyguidelines and passive receivers of communication of functional strategic plans.

Levels of Strategies Small Company


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In small firms, the person primarily responsible for having effective strategies at

the various level include the business owner or president at the company level and

then the same range of persons at the lower tow level as with a large firm.

It is important to note that all persons responsible for strategic planning at the

various levels ideally participate and understand the strategies at the other

organizational levels to help ensure coordination, facilitation and commitment while

avoiding inconsistency.


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b) Draw a table showing the alternative strategie

s & the following areas.

Forward Integration

Definition: Gaining ownership or increased control over distributors or retailers.

Example: Southwest Airlines just began selling tickets through Galileo.

Backward Integration

Definition: Seeking ownership or increased control of a firms suppliers.

Example: Hilton Hotels could acquire a large furniture manufacturer.

Horizontal Integration

Definition: Seeking ownership or increased control over competitors.

Example: Huntington Bancshares and Sky Financial Group in Ohio merged.

Market Penetration

Definition: Seeking increase market share for present products or services in

present market through greater marketing efforts.

Example: McDonalds is spending millions on its Shrek the Third promotions aimed

at convincing consumers it offers healthy items.

Market Development

Definition: Introducing present products or service into new geographic areas.

Example: Burger king opened its first restaurant in Japan.

Product Development

Definition: Seeking increased sales by improving present products or services or

developing new ones.

Example: Google introduced Google Presents to compete with Microsofts

PowerPoint.

Related Diversification

Definition: Adding new but related products and services.

Example: MGM Mirage is opening its first non casino luxury hotel.

Unrelated Diversification


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Definition: Adding new, unrelated products and services.

Example: Ford Motor Company entered the industrial bank business.

Retrenchment

Definition: Regrouping through cost and asset reduction to reverse declining salesand profit.

Example: Discovery Channel closed its 103 mall-based and stand-alone stores to

focus on the internet and laid off 25% of its workforce.

Divestiture

Definition: Selling a division or part of an organization.

Example: Whirlpool sold its struggling Hoover floor-care business to Techtronic

Industries.

Liquidation

Definition: Selling all of a companys assets, in parts, for their tangible worth.

Example: Follow Me Charters sold all of its assets and ceased doing business.

ASSIGNMENT # 08


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Q) Draw a line diagram showing strategy formulation analytical frame

work discuss briefly?

THE STRATEGY FORMULATION ANALYTICAL FRAMEWORK

STAGE 1: THE INPUT STAGE

EXTERNAL FACTOR COMPPETITIVE INTERNAL

EVALUATION (EFE) PROFILE EVALUATION

MATRIX MATRIX (CPM) (IFE) MATRIX

STAGE 2: THE MATCHING STAGE

STRENGTHS STRATEGIC BOSTON INTERNAL GRANDWEAKNESSES POSITION & CONSULTING EXTERNAL STRAT-

OPPORTUNITIES ACTION GROUP (IE) EGY

THREATS EVALUATION (BCG) MATRIX MATR-

(SWOT) MATRIX (SPACE) MATRIX IXMATRIX

STAGE 3: THE DECISION STAGE

QUANTATIVE STRATEGIC PLANNING MATRIX (QSPM)

A Comprehensive Strategy-Formulation Framework:

STAGE ONE:

THE INPUT STAGEA. The Input Stage includes the External Factor Evaluation (EFE) Matrix, the Competitive

Profile Matrix (CPM), and the Internal Factor Evaluation (IFE) Matrix.

B. Procedures for developing an EFE Matrix, an IFE Matrix, and a CPM were presented in

earlier documents.


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C. The input tools require strategists to quantify subjectively during early stages of the

strategy-formulation process. Making small decisions in the input matrices regarding the

relative importance of external and internal factors allows strategists to generate andevaluate alternative strategies more effectively.

STAGE TWO:THE MATCHING STAGE

A. The Matching Stage

1. The Matching Stage includes the Threats-Opportunities-Weaknesses-Strengths

(TOWS) Matrix, the Strategic Position and Action Evaluation (SPACE) Matrix, the

Boston Consulting Group (BCG) Matrix, the Internal-External (IE) Matrix, and theGrand Strategy Matrix.

2. Any organization, whether military, product-oriented, service-oriented, governmental,or even athletic must develop and execute good strategies to win.

B. The TOWS Matrix

1. The TOWS Matrix is an important matching tool that helps managers develop fourtypes of strategies:

a. SO strategiesuse a firms internal strengths to take advantage of externalopportunities.

b. WO strategiesare aimed at improving internal weaknesses by taking advantage

of external opportunities.c. ST strategiesuse a firms strengths to avoid or reduce the impact of external

threats.

d. WT strategiesare defensive tactics directed at reducing internal weaknesses andavoiding external threats.

2. A schematic representation of the TOWS Matrix is provided in the other planning

documents.

3. There are eight steps to construct a TOWS Matrix:

a. List the firms key external opportunities.b. List the firms key external threats.

c. List the firms key internal strengths.

d. List the firms key internal weaknesses.

e. Match internal strengths with external opportunities and record the resulting SOstrategies in the appropriate cell.

f. Match internal weaknesses with external opportunities and record the resulting

WO strategies.g. Match internal strengths with external threats and record the resultant ST

strategies.

h. Match internal weaknesses with external threats and record the resulting WTstrategies.


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C. The SPACE Matrix

1. The SPACE Matrix, another important Stage 2 matching tool. Its four-quadrant

framework indicates whether aggressive, conservative, defensive, or competitive

strategies are more appropriate for a given organization.

2. Depending on the type of organization, numerous variables could make up each of the

dimensions represented on the axes of the SPACE Matrix.

3. The steps to develop a SPACE Matrix:

a. Select a set of variables to define financial strength (FS), competitive advantage(CA), environmental stability (ES), and industry strength (IS).

b. Assign a numerical value ranging from 1 (worst) to 6 (best) for the variables that

make up the FS and IS dimensions. Assign a number between 1 (best) to 6(worst) for variables that make up the ES and CA dimensions.

c. Compute an average score for FS, CA, IS, and ES by summing the values given to

the variables and dividing by the number of variables included in each dimension.d. Plot the average scores for FS, IS, ES, and CA on the appropriate axis in the

SPACE Matrix.

e. Add the two scores on the x-axis and plot the resultant point on X. Add the two

scores on the y-axis and plot the resultant point on Y. Plot the intersection of thenew xy point.

f. Draw a directional vector from the origin of the SPACE matrix through the new

intersection point. This vector reveals the type of strategies recommended for theorganization.

1. Aggressive2. Competitive

3. Defensive

4. Conservative

D. The BCG Matrix

1. The BCG Matrix graphically portrays differences among divisions (of a firm) in termsof relative market share position and industry growth rate.

2. The BCG Matrix: Divisions in the respective circles in the BCG Matrix are called

question marks, stars, cash cows, and dogs.

3. The four quadrants represent the following:


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a. Question MarksDivisions in Quadrant I have a low relative market share

position, yet compete in a high-growth industry. Generally these firms cash needs

are high and their cash generation is low.

b. StarsQuadrant II businesses represent the organizations best long-run

opportunities for growth and profitability. These businesses have a high relative

market share and compete in high growth rate industries.

c. Cash CowsDivisions positioned in Quadrant III have a high relative market

position, but compete in a low-growth industry. Called cash cows because they

generate cash in excess of their needs.

d. DogsQuadrant IV divisions of the organization have a low relative market share

position and compete in a slowed or no-growth industry; they are Dogs in a firmsportfolio.

E. The IE Matrix.

1. The IE Matrix positions an organizations various divisions in a nine-cell display.

2. The IE Matrix is similar to the BCG Matrix in that both tools involve plottingorganization divisions in a schematic diagram; this is why they are called portfoliomatrices.

3. Differences between the IE Matrix and the BCG Matrix

a. Axes are differentb. IE Matrix requires more information about divisions than BCG

c. Strategic implications of each matrix are different

F. The Grand Strategy Matrix

1. In addition to the TOWS Matrix, SPACE Matrix, BCG Matrix, and IE Matrix, the

Grand Strategy Matrix has become a popular tool for formulating alternativestrategies. All organizations can be positioned in one of the Grand Strategy Matrixs

four strategy quadrants.

2. The Grand Strategy Matrix is pictured in the other planning documents.

3. It is based on two evaluative dimensions: competitive position and market growth.

STAGE THREE:

THE DECISION STAGEA. The Quantitative Strategic Planning Matrix (QSPM)

1. Other than ranking strategies to achieve the prioritized list, there is only one analyticaltechnique in the literature designed to determine the relative attractiveness of feasible

alternative actions.


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2. This technique is the QSPM, which comprises Stage 3 of the strategy-formulation

analytical framework. This technique objectively indicates which alternative strategies

are best.

Six steps to developing a QSPM:

a. Make a list of the firms key external opportunities/threats and internal

strengths/weaknesses in the left column of the QSPM.

b. Assign weights to each key external and internal factor.c. Examine the Stage 2 matrices and identify alternative strategies that the

organization should consider implementing.

d. Determine the Attractiveness Scores (AS).

e. Compute the total AS.f. Compute the sum Total AS.

B. Positive Features and Limitations of the QSPM

1. A positive feature of the QSPM is that sets of strategies can be examined sequentially

or simultaneously. Another positive feature of the QSPM is that it requires strategists

to integrate pertinent external and internal factors into the decision process.Developing a QSPM makes it less likely that key factors will be overlooked or

weighted inappropriately.

2. The QSPM is not without some limitations. First, it always requires intuitive judgment. Second, it can only be as good as the prerequisite information and

matching analyses upon which it is based.


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ASSIGNMENT # 09a) Discuss the factors involved in strategy formulation andimplementation?

The Strategy Formulation and Implementation

The strategy-implementation stage of strategic management is revealed. Successful strategyformulation does not guarantee successful strategy implementation. It is always more difficult to

do something (Strategy implementation) than to say you are going to do it (strategy formulation)!

Although inextricably linked, strategy implementation is fundamentally different from strategyformulation. Strategy formulation and implementation can be contrasted in the following ways

Ways of Strategy Formulation and Implementation

1) Strategy formulation is positioning forces before the action.

2) Strategy implementation is managing forces during the action.

3) Strategy formulation focuses on effectiveness.

4) Strategy implementation focuses on efficiency.

5) Strategy formulation is primarily an intellectual process.

6) Strategy implementation is primarily an operational process.

7) Strategy formulation requires good intuitive and analytical skills.

8) Strategy implementation requires special motivation and leadership skills.

9) Strategy formulation requires coordination among a few individuals.

10) Strategy implementation requires coordination among many individuals.

Strategy-formulation concepts and tools do not differ greatly for small, large, for profit, or

nonprofit organizations. However, strategy implementation varies substantially among differenttypes and sizes of organizations. Implementing strategies requires such actions as altering salesterritories, adding new departments, closing facilities, hiring new employees, changing an

organization's pricing strategy, developing financial budgets, developing new employee benefits,

establishing cost-control procedures, changing advertising strategies, building new facilities,training new employees, transferring managers among divisions, and building a better computer

information system. These types of activities obviously differ greatly between manufacturing,

service, and governmental organizations.
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Strategy Implementation in Management Perspectives

In all but the smallest organizations, the transition from strategy formulation to strategy

implementation requires a shift in responsibility from strategists to divisional and functional

managers. Implementation problems can arise because of this shift in responsibility, especially if

strategy-formulation decisions come as surprise to middle- and lower-level managers. Managersand employees are motivated more by perceived self-interests than by organizational interests,

unless the two coincide. Therefore, it is essential that divisional and functional managers beinvolved as much as possible in strategy-formulation activities. Of equal importance, strategists

should be involved as much as possible in strategy-implementation activities.

ASSIGNMENT # 09b) Draw a line diagram showing relationship between the strategy and

structure discuss briefly?

Chandlers Strategy-Structure Relationship

New Strategy is

formulatedNew Administrative

Problems emergeOrganizational

Performance Declines

Organizational

Performance ImprovesNew Organizational

Structure is established


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EXPLANATION:

Chandler is a historian of business and strategy and structure is framed around four historical case studiesand additional context that are designed to argue for a model of organizational structure following

organizational strategy. The book focuses on the examples of du Pont, General Motors, Standard Oil of

New Jersey, and Sears.

Chandler's core argument is that a large number of companies adopted a multi-divisional form (M-Form)as the form of organizations independently of each other and without coordination because they had

become to adopt a business strategy that required that organizational form.

Chandler defines strategy as the determination of the basic long term goals and objectives and the

adoption of courses of action and the allocation of resources necessary for carrying out goals. He defines

structure as the design of the organization through which the business is administered including the lines

of authority and communication and the data that flows through these lines.

Chandler argues that every group in his study had, often driven by pressures of others, followed through a

set of steps independently of each other:

Gathered resources from employees and resources through growth or acquisition.

Established new structures in order to increase efficiency.

Adopted a growth strategy that involved diversification into new markets with new products in

order to overcome limits in the initial market.

Created the (at that point new) form to management that was the M-Form in order to manage the

new large diversified companies in a manner that was more efficient than a simple holding

company.

The results were set of a structure which was different in details but fundamentally similar as well.

Chandler suggested that these changes and the needs for this process (and the similar outcome) was

driven by a series of technological and market changes that included the growth of transportation and

communication networks that made increased coordination possible (and profitable) and necessary to

compete.

In a way of supporting his basicstructure follows strategy argument, he argued that the forms themselves

were a product of a particular strategic context of management.

Theoretical and practical relevance:

Consulting and management scholars have made frequent use of Chandler. They argue that firms should

choose a basic design for an organization and modify the design to fit changing strategic situations.


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ASSIGNMENT NO # 10

Q) Discuss the various factors affecting the implementationstrategies?

a) Strategic Areas: Finance

Accounting

Human Resources

Finance:The Finance and Strategic Management concentration gives you state of the artanalytical techniques and approaches to assist in financial and strategic decisions.

The concentration provides the necessary insight and skills to determine, whetherthese decisions are appropriate in an overall strategic context.

Accounting:Strategic Management Accounting has been defined as "a form of managementaccounting in which emphasis is placed on information which relates to factorsexternal to the firm, as well as non-financial information and internally generatedinformation."

Human Resources:

Strategic human resource management is designed to help companies best meetthe needs of their employees while promoting company goals. Human resourcemanagement deals with any aspects of a business that affects employees, such ashiring and firing, pay, benefits, training, and administration. Human resources mayalso provide work incentives, safety procedure information, and sick or vacationdays.

Strategic human resource management is the proactive management of people. Itrequires thinking ahead, and planning ways for a company to better meet the needsof its employees, and for the employees to better meet the needs of the company.

This can affect the way things are done at a business site, improving everythingfrom hiring practices and employee training programs to assessment techniquesand discipline.

b) Competitors Analysis: Production

Marketing

R &D

Production:


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Planning, implementation, and control of industrial production processes toensure smooth and efficient operation. Production management techniquesare used in both manufacturing and service industries. Productionmanagement responsibilities include the traditional five M's: men andwomen, machines, methods, materials, and money. Managers are expectedto maintain an efficient production process with a workforce that can readily

adapt to new equipment and schedules.

Marketing:In the present competitive business environment, organizations that develop andimplement effective marketing strategies can create more value for theircustomers. An effective marketing strategy provides direction, improves the brandimage, helps in developing the right goals and enhances the overall performance of

an organization. For developing effective marketing strategies, the organization hasto first decide the customer segments it wants to serve, the customer needs itwants to fulfill and establish the price that the customers are willing to pay for itsproducts and services. Strategic marketing management is all about helping theorganization develop a unique identity in the market, grow its businessesgeographically and serve the customers better than the competitors. Strategicmarketing is a continuous process of developing marketing strategies taking intoconsideration the constantly evolving trends in the business environment and bygiving utmost importance to customer satisfaction.

R &D:

Strategic R&D Management programmed you will look at how organizationsmake product innovation happen, and examine how senior managers engage in andsupport product innovation in a way that supports rather than dissipates thethrust of their business strategy. Strategic R&D Management programmed hasbeen constantly evolving, consistently remaining at the forefront of productdevelopment business concern.

C) Contemporary: MIS

Customer Relation

M.I.S:MIS is an integrated information system, which is used to providemanagement with needed information on a regular basis.

The term system in MIS implies ORDER, ARRANGEMENT, andPURPOSE.

The information can be used for various purposes,-strategic planning


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-delivering increased productivity-reducing service cycles-reducing product development cycles-reducing marketing life cycles-increasing the understanding of customers' needs-facilitating business and process re-engineering.

MIS can also be used across the organization as an informationutility to-support policy making-meet regulatory and legislative requirements-support research and development-support consistent and rapid decision making-enable effective and efficient utilization of resources-provide evidence of business transactions-identify and manage risks-evaluate and document quality, performance and achievements.

Customer Relation:Customer relationship management (CRM) is a widely-implemented strategyfor managing a companys interactions with customers, clients and sales prospects.Customer relationship management describes a company-wide business strategyincluding customer-interface departments as well as other departments. The overallgoals are to find, attract, and win new clients, nurture and retain those the companyalready has, entice former clients back into the fold, and reduce the costs of

marketing and client service.


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ASSIGNMENT # 11

b) Define the following terms:

Strategy Review

Strategy Evaluation

Strategy Control

Strategy Review:

As owner-manager of your business or as a member of its managementteam, you should stand back once in a while and review your business'performance. The areas you need to look at are:

Your market performance and direction - how well you areperforming through your sales results, which markets to aim for nextand how to improve your performance.

Your products and services - how long your existing products willmeet your customers' needs and any plans for renewal.

Operational matters - your premises, your methods, andtechnologies used your processes, IT and quality. Are there anyinternal issues that are holding your business back?

Financial matters - how your business is financed, levels of retained

profit, the sales income generated and your cashflow. Your organisation and your people - your structures, people

planning issues, training and development.

Strategy Evaluation:Strategy evaluations concerned primarily with traditional controls processeswhich involves the review and feedback of performance to determine ifplans, strategies, and objectives are being achieved, with the resultinginformation being used to solve problems or take corrective actions.

Strategy Control:

"Strategic control focuses on the dual questions of whether (1) the strategy is being implemented

as planned; and (2) the results produced by the strategy are those intended."

This definition refers to the traditional review and feedback stages which constitutes the last step

in the strategic management process. Normative models of the strategic management process


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have depicted it as including there primary stages: strategy formulation, strategy implementation,

and strategy evaluation (control).

b) Draw a line diagram showing the strategy evaluation framework?

Strategy-Evaluation Framework

Significant Differences in

Targets Sets & AchievedYes

Take Corrective

Action Control

Measures Organization/Performance

& RewardDeficient

Review

Internal Environment

External Environment

No


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REVIEWING BASES OF STRATEGYReviewing the underlying bases of an organization's strategycould be

approached by developing a revised EFEMatrix and IFE Matrix. A revised IFE Matrixshould focus on changes in theorganization's management,marketing, finance/accounting, production/operations, R&D, and computerinformation systems strengths and weaknesses. A revised EFE Matrixshouldindicate how effective a firm's strategies have been in response to keyopportunities and threats. This analysis could also address such questions asthe following:1. How have competitors reacted to our strategies?2. How have competitors' strategies changed?3. Have major competitors' strengths and weaknesses changed?

4. Why are competitors making certain strategic changes?5. Why are some competitors' strategies more successful than others?6. How satisfied are our competitors with their present market positions andprofitability?7. How far can our major competitors be pushed before retaliating?8. How could we more effectively cooperate with our competitors?Numerous external and internal factors can prohibit firms from achievinglong-term and annual objectives. Externally, actions by competitors, changesin demand, changes in technology, economic changes, demographic shifts,and governmental actions may prohibit objectives from being accomplished.Internally, ineffective strategies may have been chosen or implementation

activities may have been poor.Objectives may have been too optimistic. Thus, failure to achieve objectivesmay not be the result of unsatisfactory work by managers and employees.All organizational members need to know this to encourage their support forstrategy-evaluation activities. Organizations desperately need to know assoon as possible when their strategies are not effective. Sometimesmanagers and employees on the front line discover this well beforestrategists.

External opportunities and threats and internal strengths and weaknessesthat represent the bases of current strategies should continually bemonitored for change. It is not really a question of whether these factors willchange, but rather when they will change and in what ways. Some keyquestions to address in evaluating strategies are given here.1. Are our internal strengths still strengths?2. Have we added other internal strengths? If so, what are they?3. Are our internal weaknesses still weaknesses?4. Do we now have other internal weaknesses? If so, what are they?


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5. Are our external opportunities still opportunities?6. Are there now other external opportunities? If so, what are they?7. Are our external threats still threats?8. Are there now other external threats? If so, what are they?9. Are we vulnerable to a hostile takeover?

Measuring Organizational PerformanceAnother important strategy-evaluation activity is measuring organizationalperformance.This activity includes comparing expected results to actualresults, investigating deviations from plans, evaluating individualperformance, and examining progress being made toward meeting statedobjectives. Both long-term andannual objectives are commonly used in this process. Criteria for evaluatingstrategies should be measurable and easily verifiable. Criteria that predictresults may be more important than those that reveal what already hashappened. For example, rather than simply being informed that sales lastquarter were 20percent under what was expected, strategists need to know that sales nextquarter may be 20 percent below standard unless some action is taken tocounter the trend. Really effective control requires accurate forecasting.Failure to make satisfactory progress toward accomplishing long-term orannual objectives signals a need for corrective actions. Many factors, such asunreasonable policies, unexpected turns in the economy, unreliable suppliersor distributors, or ineffective strategies, can result in unsatisfactory progresstoward meeting objectives. Problems can result from ineffectiveness (notdoing the right things) or inefficiency

(doing the right things poorly). 151Determining which objectives are most important in the evaluation ofstrategies can be difficult. Strategy evaluation is based on both quantitativeand qualitative criteria. Selecting the exact set of criteria for evaluatingstrategies depends on a particular organization's size, industry, strategies,and management philosophy. An organization pursuing a retrenchmentstrategy, for example, could have an entirelydifferent set of evaluative criteria from an organization pursuing a market-development strategy. Quantitative criteria commonly used to evaluatestrategies are financial ratios, which strategists use to make three criticalcomparisons: (1) comparing the firm's performance over different time

periods, (2)comparing the firm's performance to competitors', and (3) comparing thefirm's performance to industry averages. Some key financial ratios that areparticularly useful as criteria for strategy evaluation are asfollows:1. Return on investment2. Return on equity3. Profit margin


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4. Market share5. Debt to equity6. Earnings per share7. Sales growth8. Asset growth

But there are some potential problems associated with using quantitativecriteria for evaluating strategies.First, most quantitative criteria are geared to annual objectives rather thanlong-term objectives. Also, different accounting methods can providedifferent results on many quantitative criteria. Third, intuitive judgments arealmost always involved in deriving quantitative criteria. For these and otherreasons, qualitative criteria are also important in evaluating strategies.Human factors such as high absenteeism andturnover rates, poor production quality and quantity rates, or low employeesatisfaction can be underlying causes of declining performance. Marketing,finance/accounting, R&D, or computer information systems factors can also

cause financial problems.

Taking Corrective ActionsThe final strategy-evaluation activity, taking corrective actions, requires making changes toreposition a firm competitively for the future. Examples of changes that may be needed are

altering an organization's structure, replacing one or more key individuals, selling a division, or

revising a business mission. Other changes could include establishing or revising objectives,

devising new policies, issuing stock to raise capital, adding additional salespersons, allocatingresources differently, or developing new performance

incentives. Taking corrective actions does not necessarily mean that existing strategies will be

abandoned or even that new strategies must be formulated.The probabilities and possibilities for incorrect or inappropriate actions increase geometrically

with an arithmetic increase in personnel. Any person directing an overall undertaking must check

on the actions of the participants as well as the results that they have achieved. If either theactions or results do not comply with preconceived or planned achievements, then corrective

actions are needed. No organization can survive as an island; no organization can escape change.

Taking corrective actions is necessary to keep an organization on track toward achieving stated

objectives. Corrective actions should place an organization in a better position to capitalize uponinternal strengths; to take advantage of key external opportunities; to avoid, reduce, or mitigate

external threats; and to improve internal weaknesses. Corrective actions should have a proper

time horizon and an appropriate amount of risk. They should be internally consistent and sociallyresponsible. Perhaps most importantly, corrective actions strengthen an organization's

competitive position in its basic industry.


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