STRATEGY BASICS
MANAGEMENT
• IS THE PROCESS OF DESIGNING AND MAINTAINING AN
ENVIRONMENT IN WHICH INDIVIDUALS , WORKING
TOGETHER IN GROUPS , EFFICIENTLY ACCOMPLISH SELECTED
AIMS
• FUNCTIONS OF MANAGEMENT :
• )PLANNING
• )ORGANIZING
• )STAFFING
• )LEADING
• )CONTROLLING
Definitions Of Management
• )Mary Follett :-- “The art of getting things done through
people.”
• )Peter Drucker :--- Managers give direction to their
organizations, provide leadership and decide how to use
organizational resources to accomplish goals
• )Richard daft :;;-- Management is the attainment of
organizational goals in an effective and efficient manner
through planning, organizing , leading and controlling
organizational resources.
• )Griffin : Management is a set of functions directed at the
efficient and effective utilization of resources in the pursuit of
organizational goals.
Key Points in Management
• Efficient : using resources wisely and in a cost effective manner.
• Effective : making the right decisions and successfully implementing them.
• Planning:The management function concerned with defining goals for
future organizational performance and deciding on the tasks and use of
resources needed to attain them.
• Organizing : The management function concerned with assigning tasks ,
grouping tasks into departments and allocating resources to departments.
• Leading : The management function that involves the use of influence to
motivate employees to achieve organizational goals.
• Controlling : the management function concerned with monitoring
employees’ activities , keeping the organization on track toward its goals
and making corrections if needed.
• Old Paradigm New Paradigm
•
• Vertical Organization Learning
Organization
• Forces on Organization
• Markets Local, Domestic Global
• Workforce Homogeneous Diverse
• Technology Mechanical Electronic (Digital)
• Values Stability, Efficiency Change, Chaos
»
• Old Paradigm New Paradigm
• Management Competencies
•
Focus Profits Customers,
Employees
• Leadership Autocratic Dispersed,
empowering
• Doing work By individuals By Teams
• Relationships
Conflict, Competition
Collaboration
Strategies
· comes from the Greek word “ Strategos” – meaning “ Art of
the general”
· Military used the word “ strategy” to mean grand plans made
in the light of what it is believed an adversary might or might
not do.
· Defn of strategy :
· 1) General program of action and deployment of resources to
attain comprehensive objectives
· Alfred Chandler :
“ Determination of the basic long –term
objectives of an enterprise and the adoption of course of
action and allocation of resources necessary to achieve these
goals”.
WHERE U ARE STRATEGY
AT PRESENT WHERE U WANT TO REACH
AS A COMPANY
(PRESENT STATUS) FUTURE STATUS (GOALS)
EXAMPLE- APPLE
IN 2020 EXAMPLE= APPLE IN 2022
Strategy bridges the gap between present AND FURUE STATUS
• KENICHE OHMAE-
• THE MIND OF THE STRATEGIST
• The 3C model of Kenichi Ohmae, a renowned Japanese
strategy guru, is a business model which focuses on three
key success factors for success.
• Kenichi Ohmae states that these three factors must be in
balance in the form of a strategic triangle. These three key
factors for success are:
• The Corporation
• The Customer
• The Competition
• This balance within the 3C model can lead to a sustainable
competitive advantage.
• Change in market segment
• For companies, it’s important to monitor the
changes in their market segment.
• The cause could be a change in demographics,
distribution channels, technology, customer size,
etc; influencing the market segment as a whole.
• Such changes require a shift of, for instance,
company resources. In order to gain insight and
possibly adjust the strategy, the 3C model can help.
• The corporation
• The Corporation needs to focus on the maximization of its
strengths.
• As a result, the corporation can influence the functional
areas of the competition that are critical to achieve success
within a certain industry.
• Focusing on a key functional area may create a decisive
improvement in other functions of the competition. (for
example quality improvement).
• By functional areas is meant for example culture, image,
products, services, technology, etc.
• It is also important for a corporation to make
informed decisions about subcontracting
(capacity, cost structure, significant strategic
advantages) and how effectively this can be
realized with respect to cost reduction
• (selective purchasing, stock management,
choice of commodities, use of automation).
• It’s certainly not necessary for a company to
excel in one specific function.
• If there’s a clear advantage in one important
function, the company can then also reinforce
and improve other functions from that
strength.
• If labour costs are rising, it can be an attractive option for
companies to outsource part of the work.
• They then do need to consider the competition; if their
production is outsourced to subcontractors, it can influence
the cost price.
• To counter this, a company can improve the cost effectiveness.
• Firstly, by trying to lower the basic costs compared to their
competitors.
• And secondly, by lowering the functional costs, including those
for transport. A third option would be to combine certain key
functions with other businesses, sharing overhead costs.
Examples could be transport, warehousing or call centres.
• 2. The customer
• The customers are the basis for any corporation
according to Kenichi Ohmae. Without a doubt, a
corporation’s foremost objective ought to be the
interests of its customers rather than those of its
stock holders or other parties.
• What is important are elements like needs,
requirements, demands, problem areas, buying
motives, value components, decision-makers, etc.
• Segmentation of objectives (use of products)
and customers (geography, age, social
interests ) and the market (potential
customers, competitors) are important for
constructing and adopting a strategy.
• Using (digital) questionnaires, reviews and
platforms, a company can find out what
customers are thinking and seriously include
this information in strategic decisions.
• 3. The competition
• According to Kenichi Ohmae these strategies can be constructed
by looking at possible differentiation in functions such as
purchasing, design, engineering, sales and maintenance.
• One of the most important factors is image and this can provide
the necessary power.
• Both Sony and Honda for example, sell more than their
competitors because they invest more in public relations and
advertising.
• Smaller corporations and organizations can use franchise
concepts or low margins and make the necessary investments in
service.
• Something that’s sometimes overlooked, is using
the difference in profit source.
• Where does the company get most of its profits?
With selling existing products, selling new products,
selling services, etc.
• Related to this is the difference in the ratio between
fixed and variable costs, which can be particularly
important to low-turnover companies.
• Fixed costs can for instance lower prices in a slow
market and help gain market share.
• Hito Kane Mono
• The Japanese business world is all about ‘hito-kane-
mono’, which stands for people, money and resources.
In the Netherlands, the standard trinity ‘nature, labour,
capital’ can be compared to the Japanese concept.
• Streamlined company management is only possible if
there’s a balance between these three factors, and if
there’s no waste.
• This also plays a role in the 3C model; capable people
within the organisation must take responsibility and
involve their colleagues in decision making.
• They’re expected to use all available means responsibly
and not waste any money.
• The resources can be translated as machines and
equipment, but also technology and process knowledge.
• Even the use of raw materials and using them economically
fall under this category. When the people (hito), have
developed creative and feasible ideas, the company will be
able to earn more money (kane).
• This does require them to properly use and apply the
resources (mono). That enables a company to attract new
customers and keep the competition at bay.
