Strategies, Policies, Planning
Premises
DR. D. H. SUKHWAL
Nature and purpose: Strategies &
policies
Strategy is determining the mission & basic long term
objective of organization, adopting course of action,
allocation of resources to achieve aim – with
direction.
Policy is general statement guiding managers’
thinking/commitment in decision making within
certain boundaries. Discretion is its essence
Strategies & policies are closely related
Direction, framework for plan, basis of operational
plans, affect all areas of management
Nature and purpose: Strategies &
policies (Contd…)
To be effective, strategies and policies must
be put in to practice by means of plans
Tactics are action plans through which
strategies are executed; and strategies should
be supported by effective tactics
Strategic planning process
Inputs to the organization
INDUSTRY ANALYSIS:
Strategic formulation requires variable specific steps
and it can be built around key elements
Focus is on kind of competition within healthcare
industry, possibility of new hospitals entering market,
availability of substitute services, bargaining position
of suppliers and consumers
Profile of Enterprise
Starting point where we are and where we should go; top
managers determine mission, clarify geographic location, assess
competitive position of hospital: e.g.
Sony’s mission has included it into world’s top 100 best managed
companies: open mindedness, environment with great deal of
freedom encouraging innovation/application of advanced
technologies – cooperation from universities/research institutes
who have cutting edge knowledge which is included for
developing products.
Emphasis is on adaptation, innovation, risk taking in six business
segments – electronics, electronic games, music, motion
pictures, insurance
Profile of Enterprise (contd…)
Going global in a big, big way (Komatsu)
Embracing the potential of a digital future (Ricoh)
Giving the customer a voice in product design
(Konica)
Made in America, sold around the world (Amway)
Working both with partners and competitors (Canon)
Orientation, values and vision of
executives
Profile of hospital is given shape by top executives’
orientation and values
They set organizational climate, determine direction
of organization through their vision “what do we
want to become?” so our value, preferences, attitude
towards risk taking have definite impact on strategy
e.g., selling alcohol/gutkha/tobacco etc. in hospital
premises could be profitable but management will
not favor such practices
Mission, major objectives, strategic
intent
Mission/purpose is answer to “what is our business?”
All activities of hospital point/end at major objectives
Strategic intent is commitment to win in competitive
environment
Global leaders have obsession with winning at top
level as well as throughout the organization
This obsession is called strategic intent e.g. “encircle
Caterpillar” (Komatsu), “beat Xerox” (Canon), “be a
second Ford” (Honda)
Strategic intent is stable over time, requires personal
effort and commitment, focuses on winning
External environment: present &
future
Present & future External environment are
assessed in terms of threats and
opportunities
Focus on competitive situation, economic,
social, political, legal, demographic and
geographic factors, technological
developments, products and services
available in market
Internal environment
Internal environment is evaluated and audited with
reference to hospital’s resources, weakness and
threats in research and development, production,
operation, procurement, marketing, products,
services
“Hospital’s image, organizational structure and
climate, planning and control system, relation with
customers” – these are also important factors to
formulate the strategy
Development of alternative strategies
Strategic alternatives are developed based upon
analysis of external and internal environments
Organization can have different kinds of strategies:
we may specialize or concentrate
Organization may diversify: extend our operation into
new areas/profitable markets
Joint ventures/strategic alliances
Liquidation strategy – terminating unprofitable
product line or dissolution of company
Companies may adopt combination of strategies
Evaluation and choice of strategies
Careful evaluation of all strategies before they are
chosen
View risks involved in a specific decision
Some decision can be profitable but can lead to
bankruptcy
Reaction of competitors must be considered
Appropriate Timing
Reaction of competitors
PRESENT&&
PRESENT
FUTURE MEDIUM &
FUTURE SHORT
EXTERNAL
EXTERNAL
INPUTS:
INPUTS: RANGE
THREATS&&
THREATS
PEOPLE, OPPORTUNI PLANNING
PEOPLE, OPPORTUNI
CAPITAL
CAPITAL TIES
TIES
MANAGEMENT
MANAGEMENT EXECUTIVE’
EXECUTIVE’
SKILLS,
SKILLS, ORIENTATION
ORIENTATION
TECHNICAL
TECHNICAL VALUES,
VALUES,
SKILLS,
SKILLS, VISION
VISION DEVELOPMENT
DEVELOPMENT EVALUATION
GOALS OF EVALUATION
GOALSINPUTS
INPUTS OF
OF ALTERNATIVE
ALTERNATIVE &&
OF STRATEGIES STRATEGIC
CLAIMANTS/ST STRATEGIES STRATEGIC
CLAIMANTS/ST CHOICE
AKWHOLDERS: CHOICE
AKWHOLDERS:
EMPLOYEES, INDUSTRY
INDUSTRY ENTERPRISE
EMPLOYEES, ANALYSIS
CONSUMERS,
CONSUMERS, ANALYSIS PROFILE
SUPPLIERS,
SUPPLIERS,
STOCKHOLDERS
STOCKHOLDERS INTERNAL
INTERNAL
, ,GOVERNMENT,
GOVERNMENT, STERNGTHS&&
STERNGTHS
COMMUNITY
COMMUNITY MISSION,
MISSION, WEAKNESS
WEAKNESS
ETC.
ETC. MAJOR
MAJOR
OBJECTIVES
OBJECTIVES
STRATEGIC
STRATEGIC
INTENT
INTENT CONSISTENCY
CONSISTENCY
TESTING
TESTING
CONTINGENCY
CONTINGENCY
PLANNING
PLANNING
MEDIUM &
SHORT
RANGE
PLANNING
EVALUATION
EVALUATION
&&STRATEGIC
STRATEGIC •LEADERSHIP
CHOICE
CHOICE
IMPLEMENTATION
•CONTROL
•REENGINEERING
•ORGANIZATION
STRUCTURE
•STAFFING
CONSISTENCY
CONSISTENCY
TESTING
TESTING
CONTINGENCY
CONTINGENCY
PLANNING
PLANNING
Medium & Short Range Planning,
Implementation through Reengineering,
Staffing, Leadership, and Control
Medium & Short Range Planning, Implementation of
plans are considered during all phases of process
Implementation of strategy requires reengineering of
the organization, staffing and leadership
Control is a must for monitoring performance against
plans
Feedback is very important
Consistency Testing and Contingency
Planning
This is last key aspect of strategic planning
process
Since future cannot be predicted with a high
degree of certainty, contingency planning is
needed
The TOWS matrix
Modern tool for analysis of situation
SWOT is static and does not lead to development of
distinct alternative strategies based on it.
TOWS matrix has been introduced to analyze
competitive situation of company/nation leading to
development of 4 distinct sets of strategic
alternatives
Wider scope, conceptual framework for systematic
analysis to facilitate matching of external Threats &
opportunities with internal weakness and strengths
The TOWS matrix (Contd…)
Internal factors Internal strengths (S) Internal Weakness (W)
e.g. in management, e.g. in management,
operations, finance, operations, finance,
marketing, research, marketing, research,
development, development, engineering
External factors i.e. areas shown in (S)
engineering
External Opportunities SO strategy: Maxi-Maxi WO strategy: Mini-Maxi
(O) [consider risk too] e.g. Potentially most successful e.g. development strategy
current & future economic strategy, utilizing to overcome weakness in
conditions; political & organization’s strength to order to take advantage of
social changes; new take advantage of opportunities
products, services, opportunities
technology
External Threats (T) ST strategy: Maxi-Mini WT strategy: Mini-Mini
e.g. energy shortage, Use of strengths to cope e.g. retrenchment,
competition, current & future with threats or to avoid liquidation, or joint venture
economic conditions; political threats to minimize weakness and
& social changes; new
threats
products, services, technology
i.e. areas shown in (O)
Time dimension & the TOWS matrix
S W
S W O SO WO
O SO WO T ST WT
S W T ST WT PRESENT PLUS T2 ETC.
O SO WO PRESENT PLUS T1
T ST WT
S W PRESENT
TIME
O SO WO
T ST WT
PAST
BUSINESS PORTFOLIO MATRIX
QUESTION
HIGH
STARS
BUSI MARKS
NESS
GRO
WTH
RATE
LOW
CASH COWS DOGS
STRONG WEAK
RELATIVE COMPETITIVE POSITION
Major kinds of strategies and policies
Growth: How much growth required? How fast?
Where? How?
Finance: Every business/non-business organization
must have clear strategy for financing its operations;
they have various ways and limitations
Organization: type of organizational pattern i.e. how
much centralized/decentralized should be the
decision making authority; what kinds of
departmental patterns; design of staff pattern –
system of roles/role relationship help the people to
accomplish their objectives
Major kinds of strategies and
policies...
Personnel: Union relations, compensation, hiring,
training, appraisal, job enrichment
Public relationship: these strategies must support
major strategies and efforts, designed in light of
company's business/its closeness to public/its
susceptibility to government regulations. There are
no set of formulated strategies that fits for all
organizations. But some key questions can be
formulated which could be framed by anyone e.g ...
Questions for products or services...
What is our business? Single specialty or multi…
Who are our customers? Poor or affluent class…
What do our customers want? 5 star facility or economic...
How much our customers usually buy & at what price?
Do we wish to be a product leader in our own subject?
Do we wish to develop our own products/brand image?
What advantages do we have in serving patients’ needs?
How should we respond in existing & potential competition?
How far can we go in serving patients’ needs?
What profits can we expect?
What should be the basic form of our strategy?
Marketing strategies...
Designed to guide managers in getting products or services to
customers & encouraging them to buy
Marketing strategies are closely related to product strategies –
interrelated, mutually supportive
For survival of business – innovation and marketing are two basic
functions
Key questions to establish marketing strategy can be;
1. Where are our customers/patients & why do they come/buy?
2. How do our customers buy?
3. How is it best for us to sell our services?
4. Do we have something to offer that competitors do not?
5. Do we need to take legal steps to discourage competition?
6. Do we need/can we supply support services?
7. What are the best pricing strategy & policy for our operation?
Generic competitive strategies
by Prof. Michael Porter
Generic because they are suitable on a broad level
for different kinds of organizations; any organization
can use more than one strategy.
Overall cost leadership strategy – requires large
market share and cost-efficient facilities
Differentiation strategy- offering something unique
(product or service) in industry
Focused strategy- concentrating on a specific group
of customers, a particular product line, , specific
geographic region becoming focal point of our efforts
Effective implementation of
strategies
Effective strategic planning goes beyond allocation of
resources to achieve objectives of organization
It is accompanied by strategic thinking i.e. designing
appropriate organizational structure, effective MIS,
budgeting system to facilitate strategic objectives,
reward system supporting the strategy
Strategic planning failures
1. Managers are not adequately prepared
2. Information for preparing plans is not sufficient for
action planning
3. Goals of organization too vague to be of any value
4. Business units are not clearly identified
5. Reviews of strategic plans of business units are not
done effectively
6. Link between Strategic planning and control is not
sufficient
Strategic planning ...
Strategic planning is manager’s job assisted by staff
planners. Line managers are also taught this to be
more effective.
Overall strategic plans need to be supported by
specific action plans and it requires contributions
from line managers from different functional
departments like R & D, engineering, marketing,
production, finance, personnel
Integration of these functional groups is difficult. So
we have to set task force of middle managers to cut
functional barriers
Strategic planning ...
When organization becomes too large, it is broken
down in to SBUs- Strategic Business Units. They are
expected to work as relatively independent business
units. Their boundaries must be correctly laid down!!
Otherwise conflicts are bound to occur
Plans are basis of control. Often strategic plans and
budgets are in conflict e.g budgets are based upon
last year’s budgets rather than strategic plan.
Very often strategic plans fail due to compensation
system rewarding short term results at the expense
of long term health of organization
Strategic planning ...
So, we need to integrate strategic planning with total
managerial process viz. organization structure,
appraisal, reward, motivation system, controls used
to measure performance against objectives.
So, effective management requires a system
approach which recognizes interdependence of
managerial activities
Successful implementation of
strategies
Developing meaningful, clear strategies is important
but..To implement strategies effectively is of great
importance
So, recommendations have been given step wise to
be considered by managers who wish to put their
strategies effectively to work ...
Eight recommendations
1. Communicating strategies to all key decision-making
managers
2. Developing and communicating planning premises
3. Ensuring that action plans contribute to and reflect major
objectives and strategies
4. Reviewing strategies regularly
5. Developing contingency strategies and programs
6. Making the organization structure fit in to planning needs
7. Continuing to emphasize planning and implementing strategy
8. Creating company climate that forces planning
Premising and forecasting
This is often overlooked step. It is,”anticipated
environment in which plans are expected to operate.
These also include assumptions or forecasts of future
and known conditions that will affect operation of
plans.”
Established and agreed by managers and planners to
utilize, consistent assumptions critical to plans under
consideration
