TECHNIQUES AND ANALYTICAL METHODS AND STRATEGIC ANALYSIS PLANS1. Econometric model2. Trend Analysis3. Regression Analysis4. The Delphi Technique5. Bench Marking6. Spying7. Expert Opinion Method8. Sales Force Composite Method9. Extrapolation

10. Moving Averages11. Exponential Smoothing12. Simulation13. Morphological Analysis14. Game Theory15. Monte Carlo Method16. Fuzzy Logic17. Genetic Algorithms18. Quest

Strategic marketing plans:1. Product related factors: Variety Differentiation

Product positioning Packaging

2. Price related factors: Pricing policies Pricing methods

Government policies

3. Place related factors: Logistics Distribution

Market intermediaries

4. Promotion related factors: Promotion budget Advertising

Public relations Sales promotion

5. System related factors: Market intelligence Market information system

Customer relationship management

Typical strengths that build marketing capability: Wide variety of goods Good quality products Focused positioning Price protection Low prices Differentiated products

High profile advertisement Brand building efforts Effective distribution system Strong R&D for new product

development

Techniques for analyzing the strength and weakness in marketing: Market share analysis Marketing audit Brand monitoring surveys

Dealer and consumer panels Analysis of profit volume

relationshipsStrategic Advantage Analysis:1. Marketing and DistributionCompetitive position and market share:

Product line Product life-cycle

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Pricing Strategy Nature of the market Channels of Distribution Brand Image

Market Research Packaging Marketing Policy

Finance and Accounting: Financial resources and strength Capital structure and cost of

capital Relations with owners Financial planning and

budgeting

Accounting System and audit procedure

Tax planning and tax advantages

Strategic Financial Plans:1. Factors related to sources of fund:

Capital structure Reserves and surplus Relation ship with bankers

Working capital availability Financing pattern

2. Factors relating to usage of funds: Fixed assets Currents asset Loans and advances

Rapport with share holders Dividend distribution

3. Factors related to the management of funds: Tax planning measures Cost reduction measures Financial accounting

Risk/return management Budgeting system

Typical strengths that develop financial capability: Access to financial resource High rate of credit worthiness Availability of low cost capital

compared to competitors Favorable tax provisions given

by government

High level of shareholders confidence

Cordial relationship with bankers

Techniques adopted for analyzing the strength and weakness in finance area:

Liquidity ratio Profitability ratio Leverage ratio Cash flow analysis

Payback and IRR analysis Breakeven analysis Earning to sales and Earning per share

Production and operations management: Cost of operations Capacity utilization Production facilities

Cost and availability of materials and components

Plant location

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Purchasing and inventory control

Strategic operations issues:1. Factors related to production system:

Location Layout Work system

Capacity Extent of automation Vertical integration

2. Factors related to operations and control systems: Aggregated production planning Material supply Capacity utilization

Quality control Maintenance systems

3. Factors related to R&D systems: Patents Technology collaboration Technology transfer

Technology agreements Facilities

Techniques used for assessing strengths and weakness of operations management:

Capacity utilization analysis Inventory analysis Cost of production analysis Analysis of patents generated

New products commercialization record

Comparison of investments made in new product launch

Typical strengths that build operations capability: High capacity utilization Suitable plant location Good inventory control system

like JIT

High profile scientist Technical collaboration with

world-class R&D firms

Human Resources and Organizational Factors: Organization Climate Employee performance record Personnel policies and practices

Managerial (leadership) style Union-Management relations Corporate Image

Strategic human resource issues:1. Factors related to personnel systems:

Manpower planning system Selection and development

system

Compensation and Appraisal system

2. Factors related to employee characteristics: Quality and skill of management Image of organization as

employer

Working conditions leadership

3. Factors related to industrial relations: Union-management relationship

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Health, welfare, safety, stress,discipline

Collective bargaining

Typical strengths that support human resource and capabilities: Efficient personnel systems Be a model employer High level of morale Satisfied workforce Statutory working conditions

Need based training programs Absenteeism Cordial work environment Motivated workforce

HOSHIN PLANNING PROCESS: The Hoshin Planning Process is a systematic planning methodology for:

1) defining the long-range key objectives of the organization or company; and 2) ensuring the implementation of 'business fundamentals' required to successfully

run the business on a daily basis.  Hoshin planning, therefore, is a two-prong planning approach that covers the

organization's strategy to achieve breakthrough results through its long-term objectives and ensure continual improvement through its short-term business fundamentals.          

Like many modern business concepts today, hoshin planning was developed in Japan.The Japanese words 'hoshin kanri' can be translated into 'direction setting'.  And like many Japanese management concepts, hoshin planning also promotes the involvement of all employees in the process, on the basic premise that desired results can only be attained if everybody in the organization fully understands the goals of the company and is somehow involved in the 'chain' of plans defined to achieve them.The plan generated by the Hoshin process is hierarchical in nature, with the corporate objectives determining the corporate strategies which, in turn, are supported by lower-level strategies that cascade down the organization.  In effect, the goals of every individual should support the goals of the next person up in the hierarchy. Every strategy further consists of tactics or actions that need to be undertaken to accomplish the strategy.

The hoshin planning process basically consists of the following steps: 1) Identification of critical business issues that the organization faces; 2) establishment of business objectives to address these issues;3) definition of the company's over-all goals; 4) development of strategies that support the over-all goals; 5) Definition of sub-goals or tactics that support each strategy; 6) Establishment of metrics or indicators for measuring process performance; and 7)

establishment of business fundamental measures. 

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7) The first 3 steps of this process are handled by top management, with the defined over-all goals supported by the rest of the organization through steps 4-7.

An important aspect of the Hoshin process is the regular review of the defined plans. It is not enough to have a documented plan - it needs to be checked against actual performance.  Hoshin plans must undergo a major review at least once a year. During review, Hoshin plans are usually presented using Hoshin review tables, each of which shows a single objective and its supporting strategies. A group or individual responsible for several objectives therefore needs to generate several review tables in order to cover all objectives.

The following details must be shown for each strategy in the review table: 1) The strategy owner(s); 2) The timeframe; 3) The performance metrics; 4) The target(s) for each strategy as defined during the Hoshin planning process; and 5) The actual results at the time of the review.  Any discrepancy between the target and actual results, whether positive or negative, must be noted along with the impact of the discrepancy on next year's plans. As mentioned earlier, hoshin plans are hierarchical in nature, cascading from the top levels to the lower ones, so review tables must likewise cascade upwards.STRATEGY - THE STRATEGIC AUDIT:

In our introduction to business strategy, we emphasized the role of the "business environment" in shaping strategic thinking and decision-making.The external environment in which a business operates can create opportunities which a business can exploit, as well as threats which could damage a business. However, to be in a position to exploit opportunities or respond to threats, a business needs to have the right resources and capabilities in place.

An important part of business strategy is concerned with ensuring that these resources and competencies are understood and evaluated - a process that is often known as a "Strategic Audit".The process of conducting a strategic audit can be summarized into the following stages: (1) Resource Audit:

The resource audit identifies the resources available to a business. Some of these can be owned (e.g. plant and machinery, trademarks, retail outlets) whereas other resources can be obtained through partnerships, joint ventures or simply supplier arrangements with other businesses. (2) Value Chain Analysis:

Value Chain Analysis describes the activities that take place in a business and relates them to an analysis of the competitive strength of the business. Influential work

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by Michael Porter suggested that the activities of a business could be grouped under two headings: (a) Primary Activities - those that are directly concerned with creating and delivering a product (e.g. component assembly); and (b) Support Activities, which whilst they are not directly involved in production, may increase effectiveness or efficiency (e.g. human resource management). It is rare for a business to undertake all primary and support activities. Value Chain Analysis is one way of identifying which activities are best undertaken by a business and which are best provided by others ("outsourced"). 

(3) Core Competence Analysis: Core competencies are those capabilities that are critical to a business achieving

competitive advantage. The starting point for analyzing core competencies is recognizing that competition between businesses is as much a race for competence mastery as it is for market position and market power. Senior management cannot focus on all activities of a business and the competencies required to undertake them. So the goal is for management to focus attention on competencies that really affect competitive advantage. (4) Performance Analysis:

The resource audit, value chain analysis and core competence analysis help to define the strategic capabilities of a business. After completing such analysis, questions that can be asked that evaluate the overall performance of the business. These questions include: - How have the resources deployed in the business changed over time; this is "historical analysis"- How do the resources and capabilities of the business compare with others in the industry -"industry norm analysis"- How do the resources and capabilities of the business compare with "best-in-class" - wherever that is to be found- "benchmarking"- How has the financial performance of the business changed over time and how does it compare with key competitors and the industry as a whole? - "ratio analysis" (5) Portfolio Analysis:

Portfolio Analysis analyses the overall balance of the strategic business units of a business. Most large businesses have operations in more than one market segment, and often in different geographical markets. Larger, diversified groups often have several divisions (each containing many business units) operating in quite distinct industries.An important objective of a strategic audit is to ensure that the business portfolio is strong and that business units requiring investment and management attention are highlighted. This is important - a business should always consider which

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markets are most attractive and which business units have the potential to achieve advantage in the most attractive markets.

Traditionally, two analytical models have been widely used to undertake portfolio analysis:

- The Boston Consulting Group Portfolio Matrix (the "Boston Box"); - The McKinsey/General Electric Growth Share Matrix

(6) SWOT Analysis: SWOT is an abbreviation for Strengths, Weaknesses, Opportunities and Threats. SWOT analysis is an important tool for auditing the overall strategic position of a business and its environment

FIVE FORCES MODEL:

Strategy - analyzing competitive industry structure:Defining an industry:

An industry is a group of firms that market products which are close substitutes for each other (e.g.the construction industry, the car industry, the travel industry).Some industries are more profitable than others. Why? The answer lies in understanding the dynamics of competitive structure in an industry.

The most influential analytical model for assessing the nature of competition in an industry is Michael Porter's Five Forces Model, which is described below:

Porter explains that there are five forces that determine industry attractiveness and long-run industry profitability. These five "competitive forces" are- The threat of entry of new competitors (new entrants)- The threat of substitutes- The bargaining power of buyers

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- The bargaining power of suppliers- The degree of rivalry between existing competitors

Threat of New Entrants:New entrants to an industry can raise the level of competition, thereby reducing its attractiveness. The threat of new entrants largely depends on the barriers to entry. High entry barriers exist in some industries (e.g. shipbuilding) whereas other industries are very easy to enter (e.g. estate agency, restaurants). Key barriers to entry include- Economies of scale- Capital / investment requirements- Customer switching costs- Access to industry distribution channels- The likelihood of retaliation from existing industry players.

Threat of Substitutes:The presence of substitute products can lower industry attractiveness and profitability because they limit price levels. The threat of substitute products depends on:- Buyers' willingness to substitute- The relative price and performance of substitutes- The costs of switching to substitutes

Bargaining Power of Suppliers:Suppliers are the businesses that supply materials & other products into the industry.The cost of items bought from suppliers (e.g. raw materials, components) can have a significant impact on a company's profitability. If suppliers have high bargaining power over a company, then in theory the company's industry is less attractive. The bargaining power of suppliers will be high when:- There are many buyers and few dominant suppliers- There are undifferentiated, highly valued products- Suppliers threaten to integrate forward into the industry (e.g. brand manufacturers threatening to set up their own retail outlets)- Buyers do not threaten to integrate backwards into supply- The industry is not a key customer group to the suppliers

Bargaining Power of Buyers Buyers are the people / organizations who create demand in an industryThe bargaining power of buyers is greater when- There are few dominant buyers and many sellers in the industry- Products are standardized

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- Buyers threaten to integrate backward into the industry- Suppliers do not threaten to integrate forward into the buyer's industry - The industry is not a key supplying group for buyers

Intensity of Rivalry The intensity of rivalry between competitors in an industry will depend on: - The structure of competition - for example, rivalry is more intense where there are many small or equally sized competitors; rivalry is less when an industry has a clear market leader - The structure of industry costs - for example, industries with high fixed costs encourage competitors to fill unused capacity by price cutting- Degree of differentiation - industries where products are commodities (e.g. steel, coal) have greater rivalry; industries where competitors can differentiate their products have less rivalry - Switching costs - rivalry is reduced where buyers have high switching costs - i.e. there is a significant cost associated with the decision to buy a product from an alternative supplier - Strategic objectives - when competitors are pursuing aggressive growth strategies, rivalry is more intense. Where competitors are "milking" profits in a mature industry, the degree of rivalry is less- Exit barriers - when barriers to leaving an industry are high (e.g. the cost of closing down factories) - then competitors tend to exhibit greater rivalry. 

STRATEGY - PORTFOLIO ANALYSIS – GE-MATRIX:The business portfolio is the collection of businesses and products that make up the company. The best business portfolio is one that fits the company's strengths and helps exploit the most attractive opportunities.

The company must:(1) Analyze its current business portfolio and decide which businesses should receive more or less investment, and(2) Develop growth strategies for adding new products and businesses to the portfolio, whilst at the same time deciding when products and businesses should no longer be retained.

The two best-known portfolio planning methods are the Boston Consulting Group Portfolio Matrix and the McKinsey / General Electric Matrix . In both methods, the first step is to identify the various Strategic Business Units ("SBU's") in a company portfolio. An SBU is a unit of the company that has a separate mission and objectives and that can be planned independently from the other businesses. An SBU can be a company division, a product line or even individual brands - it all depends on how the company is organized.

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The McKinsey / General Electric Matrix The McKinsey/GE Matrix overcomes a number of the disadvantages of the BCG Box. Firstly, market attractiveness replaces market growth as the dimension of industry attractiveness, and includes a broader range of factors other than just the market growth rate. Secondly, competitive strength replaces market share as the dimension by which the competitive position of each SBU is assessed. The diagram below illustrates some of the possible elements that determine market attractiveness and competitive strength by applying the McKinsey/GE Matrix to the UK retailing market:

Factors that Affect Market Attractiveness Whilst any assessment of market attractiveness is necessarily subjective, there are several factors which can help determine attractiveness. These are listed below:

- Market Size- Market growth - Market profitability - Pricing trends - Competitive intensity / rivalry - Overall risk of returns in the

industry - Opportunity to differentiate products and services - Segmentation - Distribution structure (e.g. retail, direct, wholesale

Factors that Affect Competitive Strength Factors to consider include:- Strength of assets and competencies- Relative brand strength- Market share- Customer loyalty- Relative cost position (cost structure compared with

competitors)- Distribution strength- Record of technological or other innovation- Access to financial and other investment resources

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PRODUCT PORTFOLIO STRATEGY - INTRODUCTION TO THE BOSTON CONSULTING BOXIntroduction

The business portfolio is the collection of businesses and products that make up the company. The best business portfolio is one that fits the company's strengths and helps exploit the most attractive opportunities.

The company must:(1) Analyze its current business portfolio and decide which businesses should receive more or less investment, and(2) Develop growth strategies for adding new products and businesses to the portfolio, whilst at the same time deciding when products and businesses should no longer be retained.

Methods of Portfolio Planning The two best-known portfolio planning methods are from the Boston Consulting Group (the subject of this revision note) and by General Electric/Shell. In each method, the first step is to identify the various Strategic Business Units ("SBU's") in a company portfolio. An SBU is a unit of the company that has a separate mission and objectives and that can be planned independently from the other businesses. An SBU can be a company division, a product line or even individual brands - it all depends on how the company is organized.

The Boston Consulting Group Box ("BCG Box")

Using the BCG Box (an example is illustrated above) a company classifies all its SBU's according to two dimensions:

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On the horizontal axis: relative market share - this serves as a measure of SBU strength in the market On the vertical axis: market growth rate - this provides a measure of market attractiveness

By dividing the matrix into four areas, four types of SBU can be distinguished: Stars - Stars are high growth businesses or products competing in markets where they are relatively strong compared with the competition. Often they need heavy investment to sustain their growth. Eventually their growth will slow and, assuming they maintain their relative market share, will become cash cows. Cash Cows - Cash cows are low-growth businesses or products with a relatively high market share. These are mature, successful businesses with relatively little need for investment. They need to be managed for continued profit - so that they continue to generate the strong cash flows that the company needs for its Stars.Question marks - Question marks are businesses or products with low market share but which operate in higher growth markets. This suggests that they have potential, but may require substantial investment in order to grow market share at the expense of more powerful competitors. Management have to think hard about "question marks" - which ones should they invest in? Which ones should they allow to fail or shrink? Dogs - Unsurprisingly, the term "dogs" refers to businesses or products that have low relative share in unattractive, low-growth markets. Dogs may generate enough cash to break-even, but they are rarely, if ever, worth investing in.

Using the BCG Box to determine strategy:Once a company has classified its SBU's, it must decide what to do with them. In the diagram above, the company has one large cash cow (the size of the circle is proportional to the SBU's sales), a large dog and two, smaller stars and question marks.

Conventional strategic thinking suggests there are four possible strategies for each SBU:

(1) Build Share: here the company can invest to increase market share (for example turning a "question mark" into a star) (2) Hold: here the company invests just enough to keep the SBU in its present position(3) Harvest: here the company reduces the amount of investment in order to maximise the short-term cash flows and profits from the SBU. This may have the effect of turning Stars into Cash Cows. (4) Divest: the company can divest the SBU by phasing it out or selling it - in order to use the resources elsewhere (e.g. investing in the more promising "question marks").

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SPACE MATRIX STRATEGIC MANAGEMENT METHOD:The SPACE matrix is a management tool used to analyze a company. It is used to determine what type of a strategy a company should undertake. The Strategic Position & Action Evaluation matrix or short a SPACE matrix is a strategic management tool that focuses on strategy formulation especially as related to the competitive position of an organization.The SPACE matrix can be used as a basis for other analyses, such as the SWOT analysis, BCG matrix model, industry analysis, or assessing strategic alternatives (IE matrix).

What is the SPACE matrix strategic management method? To explain how the SPACE matrix works, it is best to reverse-engineer it. First, let's take a look at what the outcome of a SPACE matrix analysis can be, take a look at the picture below. The SPACE matrix is broken down to four quadrants where each quadrant suggests a different type or a nature of a strategy:AggressiveConservative

DefensiveCompetitive

This is what a completed SPACE matrix looks like:

This particular SPACE matrix tells us that our company should pursue an aggressive strategy. Our company has a strong competitive position it the market with rapid growth. It needs to use its internal strengths to develop a market penetration and market development strategy. This can include product development, integration with other companies, acquisition of competitors, and so on. Now, how do we get to the possible outcomes shown in the SPACE matrix? The SPACE Matrix analysis functions upon two internal and two external strategic dimensions

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in order to determine the organization's strategic posture in the industry. The SPACE matrix is based on four areas of analysis.Internal strategic dimensions:

Financial strength (FS)Competitive advantage (CA)

External strategic dimensions:Environmental stability (ES)Industry strength (IS)

There are many SPACE matrix factors under the internal strategic dimension. These factors analyze a business internal strategic position. The financial strength factors often come from company accounting. These SPACE matrix factors can include for example return on investment, leverage, turnover, liquidity, working capital, cash flow, and others. Competitive advantage factors include for example the speed of innovation by the company, market niche position, customer loyalty, product quality, market share, product life cycle, and others. Every business is also affected by the environment in which it operates. SPACE matrix factors related to business external strategic dimension are for example overall economic condition, GDP growth, inflation, price elasticity, technology, barriers to entry, competitive pressures, industry growth potential, and others. These factors can be well analyzed using the Michael Porter's Five Forces model. The SPACE matrix calculates the importance of each of these dimensions and places them on a Cartesian graph with X and Y coordinates.The following are a few model technical assumptions:

- By definition, the CA and IS values in the SPACE matrix are plotted on the X axis.- CA values can range from -1 to -6.- IS values can take +1 to +6.- The FS and ES dimensions of the model are plotted on the Y axis.- ES values can be between -1 and -6.- FS values range from +1 to +6.

How to construct a SPACE matrix? The SPACE matrix is constructed by plotting calculated values for the competitive advantage (CA) and industry strength (IS) dimensions on the X axis. The Y axis is based on the environmental stability (ES) and financial strength (FS) dimensions. The SPACE matrix can be created using the following seven stepsStep 1: Choose a set of variables to be used to gauge the competitive advantage (CA), industry strength (IS), environmental stability (ES), and financial strength (FS).Step 2: Rate individual factors using rating system specific to each dimension. Rate competitive advantage (CA) and environmental stability (ES) using rating scale from -6 (worst) to -1 (best). Rate industry strength (IS) and financial strength (FS) using rating scale from +1 (worst) to +6 (best).Step 3: Find the average scores for competitive advantage (CA), industry strength (IS), environmental stability (ES), and financial strength (FS).Step 4: Plot values from step 3 for each dimension on the SPACE matrix on the appropriate axis.

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Step 5: Add the average score for the competitive advantage (CA) and industry strength (IS) dimensions. This will be your final point on axis X on the SPACE matrix.Step 6: Add the average score for the SPACE matrix environmental stability (ES) and financial strength (FS) dimensions to find your final point on the axis Y.Step 7: Find intersection of your X and Y points. Draw a line from the center of the SPACE matrix to your point. This line reveals the type of strategy the company should pursue.SPACE matrix example The following table shows what values were used to create the SPACE matrix displayed below

Each factor within each strategic dimension is rated using appropriate rating scale. Then averages are calculated. Adding individual strategic dimension averages provides values that are plotted on the axis X and Y. The SPACE matrix can help to find a strategy. But, what if we have 2-3 strategies and need to decide which one is the best one? The Quantitative Strategic Planning Matrix (QSPM) model can help to answer this question.

MARKETING STRATEGY:Marketing Strategy deals with Pricing, Selling and distributing a product

It can capture a large share of an existing market for current products through market penetration and market saturation

It can develop new markets for current productsProduct Development Strategy: New products for existing markets Develop new products for new marketsAdvertising and Promotion: Push Strategy involves spending a large amount of money on trade promotion

such as discounts, advertising allowances, instore special offers etc.15

Pull strategy involves spending more money on advertising to build brand awareness so that shoppers will ask for the products. Research studies have pointed out that a high level of advertising is most beneficial to leading brands in a market

Distribution: The firm can use distribution and dealers/agents to sell products It can sell directly to the consumersPricing: Skim pricing means high pricewhen the product is novel and competitors are few Penetration pricing is aimed at gaining high market share with a low price Penetration pricing is considered to be good for the firm in the long term

Strategic Financial Issues:Factors related to sources of funds: -Capital structure -Reserves and surpluses

-Relationship with bankers -Working capital availability

-Financing patternFactors related to usage of funds:-Fixed asset -Current asset -Loans and advances

-Rapport with shareholders -Dividend distribution

Factors related to the management of funds: -Tax planning measures -Cost reduction measures -Financial accounting

-Risk/return management -Budgeting system

Techniques used for analyzing the strengths and weakness in finance area: -Liquidity ratio -Profitability ratio -Leverage ratio -Cash flow analysis

-Payback and IRR analysis -Breakeven analysis -Earning to sales and -Earning per share

Strategic Operations Issues:Issues in R&D -Choosing among alternative new technologies -Developing methods of embodying the new technology in new products and process -Investing in development of technological competenceFactors related to production system:-Location -Layout -Work system

-Capacity -Extent of automation -Vertical Integration

Factors related to operations and control systems: -Aggregated production planning -Material supply

-Inventory -Capacity utilization

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-QC and maintenance systems

Factors related to R&D systems: -Patents -Technology collaboration -Technology transfer

-Technology agreements -Facilities

Techniques used for assessing strengths and weaknesses:-Capacity utilization analysis -Inventory analysis -Cost of production analysis

-Analysis of patents generated -New products commercialization record

Strategic Human Resource Issues:Factors related to personnel systems:-Manpower planning system -Selection and development system

-Compensation - Appraisal system

Factors related to employee characteristics: -Quality and skill of management -Image of organisation as employer

-Working conditions -Leadeship

Factors related to industrial relations:-Union-Management Relationship -Health,welfare,safety,stress,discipline

-Collective bargaining

Techniques used for assesing the strengths and weaknesses: -HRD Audit -Personnel turnover ratio

-Employee morale surveys

Strategic Marketing Issues:Product related factors: -Variety -Differentiation -Product positioning -PackagingPrice related factors: -Pricing policies -Pricing methods -Govt. policiesPlace related factors: -Logistics

-Distribution -Market IntermediariesPromotion related factors: -Promotion budget -Advertising -Public relations -Sales promotionSystem related factors: -Market intelligence -Market information system -Customer relationship management

Techniques used for analyzing the strengths and weakness in Marketing: -Market share analysis -Marketing audit

-Brand monitoring surveys -Dealer and consumer panels

Strategic Information Management Issues:Factors related to acquisition and retention of information:

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-Source -Quantity -Quality

-Retention -Security of information

Factors related to processing and synthesis of information:-Database management -Software development

-Developing suitable system

Factors related to retrieval and usage of information:-Appropriation of formats -Capacity to assimilate informationFactors related to dissemination and transmission: -Speed -Scope -Depth

-Width -Coverage of info.

Integrative, systematic and supportive factors:-Availability of personnel -I T infrastructure

-Compatibility to organizational needs -Top management support

Typical strengths that support information management capability: -Availability of state of art equipment -Presence of foolproof information security system-Internet for marketing,IT support for Top,Positive mindset for sharing/dissemination

STRATEGY DEPLOYMENT:Why Focus on Strategy Deployment?

The feeling of many good but unaligned goals The need for a consistent top-to-bottom message The importance of management effectively communicating directives in a way that

all can engage with and implement. The importance of knowing what activities align with goals. It’s a Criteria for Performance Excellence (Baldrige)

Strategic Planning and Business Results are two key criteria for performance excellence

The transition away from command and control, and the frustrating that may accompany it.

Bottom line, it’s a necessary part of realizing success.

Definitions: Strategy –

Is a plan of action designed to achieve a particular goal. The word strategy has a strong military connotation.

Strategy is different from tactics. Deployment –

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To arrange in a position of readiness, or to move strategically or appropriately.

Again, deployment has a strong military connotation In business, it stands for a methodical procedure of introducing an

activity, process, program, or system to all applicable areas of an organization

Strategic Management – Developing, evaluating and making decisions that will enable an organization

to achieve its long-term objectivesWhat is Strategy Deployment? The nervous system of a business system Guides planning and action across an organization’s total value stream Provides a closed circuit between an organization’s business needs and day-to-day

activities.Pre-requisites to Deployment: Company Philosophy and Quality Policy Basic Strategic Planning

Vision and Mission Values Statement SWOT Analysis

Strengths, Weaknesses, Opportunities, and ThreatsAny others?Discussion Points Questions we should be asking as strategic planners.

How widely understood is our company’s mission and/or vision and the company’s top strategy among our employees?

Are certain industries better at this than others? If so, why? Does your company have a published set of values or beliefs?

How widely known are they? Do they make a difference? The answers to these simple questions will serve as indicators of the

company’s ability to effectively deploy a strategy. A commander can’t effectively deploy troops without each of them clearly

understanding the mission. Methods of Deployment: Management by Objectives

Cascading Objectives and Goals SMART Goals

Specific Measurable Achievable

Relevant Time bound

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Hoshin Kanri Catchball, A3-X, and A3-T

Balanced Score CardManagement By Objective (MBO) The Principles of Management by Objective

Cascading of organizational goals and objectives Mission Critical Objectives at the CEO Level Mission Critical Objectives at the Plant Level

Specific objectives for each member Cascaded Goals through Success Factors

Performance evaluation and provide feedback Performance Evaluation System

Management By Objective Important features and advantages of MBO are:

Motivation – Involving employees in the whole process of goal setting and

increasing employee empowerment increases employee job satisfaction and commitment.

Better communication and Coordination – Frequent reviews and interactions between superiors and subordinates

helps to maintain relationships within the enterprise and also solve many problems faced during the period.

Clarity of goals – The concept of SMART goals

Limitations and Arguments Against: Over-emphasizes setting of goals, as opposed to the working of a plan Could lead companies to evaluate employees by comparing them to the “ideal

employee” “What gets measured gets done” W. Edwards Deming

argued that a lack of understanding of systems commonly results in the misapplication of objectives

Discussion Points When done properly MBO ideally:

improves motivation and communication involves employees in goals setting provides frequent feedback on performance

Is this typically what would be found if a company’s MBO process were reviewed? Does MBO provide an opportunity for all employees to provide their input and

understand their importance?

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Any other challenges or short comings experienced by those who have utilized or been a part of MBO?

Definitions: Hoshin = direction, a course, a policy, a plan, an aim Kanri = management, administration, or control Hoshin Kanri – A method of implementing strategy to get the right thing done. Often referred to as:

Policy deployment, Strategic Initiatives, Management By Policy, Hoshin Planning, Policy Management, Managing for Results, Strategic Deployment and Goal Deployment.

Hoshin Kanri Purpose and Usage–

Long term strategic planning for systems Developing shared strategic goals (compare Balanced Score Card) Continuous organizational improvement Cascading or deploying top management policies and targets down the

management hierarchy Steps and Skills Required

Planning and Communication Get Involvement Set the course X-Chart

Project Initiation and Execution Two Deployment Styles or Target – Top-down and Bottom-up

“Catch Ball” Target Deployment Project Charter Standard Process for follow through

Reflection Review of what worked and what didn’t work

Hoshin Kanri can be thought of as the application of Deming's Plan-Do-Check-Act (PDCA) cycle to the management process.

The PDCA cycle represents a generic approach to continual improvement of activities and processes.

PLAN = a plan of action is developed to address a problem. DO = the plan is implemented. CHECK = information is collected on the control parameters. ACT = the results are analyzed. Corrective action is identified. Three key elements

Catchball Project Charter (A3-T) X-Charts (A3-X)

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Catchball A participative approach to decision-making. Used in policy deployment to communicate across management levels when

setting annual business objectives. The analogy to tossing a ball back and forth emphasizes the interactive nature of

policy deployment. Used when establishing the terms of the organizational contracts or project

charters. Provides employees with an opportunity to review the plan and objective and to

respond with their thoughts and ideas.Project Charter (A3-T) Boil things down to one page Clarifies that no one person can accomplish a strategy Very reminiscent of PDCA and DMAIC

X-Charts (A3-X) A bundle of contracts called team charters A visual tool for planning Can appear complex at first Becomes simple quickly The key is the Linkage of high and low level action with people and

results Mostly an aid to communication

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Hoshin Kanri Strengths

Focuses organization on the vital few Communication of a shared vision Creates alignment through participation Encourages cross functional cooperation Planning is systematic

Limitations A rigid implementation is necessary Requires a long term commitment Relatively Static – the breakthrough objective must be stable during a 5 year

periodBalanced Score Card A Strategic planning and management system

May mean different things to different people (the BSC spectrum) From a Performance Measurement Framework = Dashboard To a Robust Organization-wide Strategic Planning, Mgmt, and

Communication System Originated by Drs. Robert Kaplan and David Norton as a performance

measurement framework Added strategic non-financial performance measures to traditional financial

metrics to give managers a “balanced” view of performance. The “new” balanced scorecard transforms an organization’s strategic plan from a

document into “marching orders.” View the organization from four perspectives Develop Metrics Collect Data Analyze Data to each perspective PDCA

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Why Implement a Balanced Scorecard? Increase focus on strategy and results Improve organizational performance by measuring what matters Align organization strategy with the work people do on a day-to-day basis Focus on the drivers of future performance Improve communication of the organization’s Vision and Strategy Prioritize Projects / Initiatives

Scorecards simply for organizing measures aren’t justified. Start with the end in mind, focus on the desired results Stephen Covey – “People and their managers are working so hard to be sure things

are done right , that they hardly have time to decide if they are doing the right things.”

Developing a balanced scorecard system is like putting a puzzle together The pieces are strategic components They have to be checked for fit

The major system components: Engaged Leadership Interactive Communications

and Change Management Vision and Mission Core Values Organization Weaknesses

and Strengths Customers and Stakeholders

Customer Value Proposition Strategy, Strategic

Objectives, and Initiatives Performance Measures Performance Information

Reporting Rewards and Recognition Evaluation

Quality Measurement Systems that Support Strategy Deployment:Baldrige Criteria1. Leadership 2. Strategic Planning

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3. Customer and Market Focus4. Measurement, Analysis, and Knowledge Management

5. Human Resources6. Process Management7. Results

2.2 Strategy Deployment: How do you deploy your strategy? Describe how your organization converts its strategic objectives into action plans. Summarize your organization’s action plans, how are they deployed, and KEY action plan performance measures or indicators. Project your organization’s future performance relative to KEY comparisons on these performance measures or indicators.ISO Standards1. Customer Focus

2. Leadership3. Involvement of People4. Process Approach

5. Systems Approach to Management

6. Fact Based Decision Making7. Mutually Beneficial Supplier Relationship

With ISO-The concentration is on the quality systemsTakes an adoption of process approach

With Baldrige-Performance excellence for entire organizationFocus upon business results

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