Pages

August 28, 2024

Modern Business and Industrial Management - Taylor's Shop Management and Scientific Management Enriched by Many More Theories


Evolution of Modern Management through Taylorism: An Adjustment of Scientific Management Comprising Behavioral Science

December 2015 Procedia Computer Science 62:578-584

62:578-584

DOI:10.1016/j.procs.2015.08.537


From traditional approach to scientific approach and then Scientific Management to Modern phase; methodology, principles and approaches have reached its current stage. Taylor, the originator of scientific management brought a revolution in the twentieth century by introducing scientific aspects of formulating patterns and disciplines within project management. Scientific management emphasizes on profit maximization by utilizing the workers through planned work, training, monetary incentives under managers. It has been criticized for lack of sufficient focus behavioral aspects and an attempt to study  them  emerged and social factors have been included to address the challenges which Taylor’s theory lacked.  This paper through an extensive literature review showed that, the advancement of technology and globalization stimulated the modern management approach to adjust and complement the scientific management by supplementing the human factor and their contributions within an organization rather than substituting the traditional approach. Therefore together with well planned productive activities and completion of defined tasks, a successful modern day project management model highly values employee contribution and feedbacks at all level.


References 

1. Alchon, G. and Nelson, D. 1992, ‘Mary Van Kleeck and Scientific Management’, A Mental revolution: scientific management since Taylor, 

Ohio State University Press, Columbus, pp. 102-129 

2. Burgess, C. and Nelson, D. 1992, ‘Organized Production and Unorganized Labor: Management Strategy and Labor Activism at the Link-Belt 

Company’, A Mental revolution: scientific management since Taylor, Ohio State University Press, Columbus, pp. 175-204 


August 23, 2024

Strategic Management - 18PDH102T- Management Principles for Engineers - SRM Institute of Science and Technology

 


SRM Institute of Science and Technology

https://www.srmist.edu.in/


18PDH102T- Management Principles for Engineers



UNIT IV

Strategic management - Sustainable strategic competitiveness - Strategic management goals - The

strategic management process - Strategies used by organisations - Strategy formulation - Strategy

implementation.


TEXT BOOKS:

● Schermerhorn, J.R., Introduction to Management, 13th Edition. Wiley; 2017

● Harold Koontz and Heinz Weihrich, Essentials of management: An International &

Leadership Perspective, 10th edition, Tata McGraw -Hill Education, 2015.

REFERENCES:

● Stephen Robbins and Mary Coulter, Fundamentals of Management , 9th edition , Pearson

Education India; 2016

● Samuel C. Certo and Tervis Certo, Modern management: concepts and skills, Pearson

education, 12th edition, 2012.

● Charles W. L. Hill and Steven Mcshane, Principles of Management McGraw Hill Education;

Special Indian Edition, 2017


Strategy formulation is an important part of all senior managers’ work.


Strategic management,  includes  being aware of how environmental trends interact with each other to provide new opportunities for the business. Not every company who is aware of these trends can turn the opportunity into profit. The company must be able to harness its own resources and in some cases change itself to turn opportunity into profit. This is the essence of strategic management, and this unit will explore how each manager can be an effective part of the strategic management process.


Sustainable strategic competitiveness

LEARNING OBJECTIVE 1 

What are the foundations of strategic competitiveness?


Competitive advantage allows a firm to stay in business with a loyal or committed customer base that buys goods and services year after year. 

Competitive advantage arises when an organisation acquires or develops an attribute or combination of attributes that allows it to outperform its competitors in its target market segment. 

Sustainable competitive advantage is the hallmark of successful companies such as Facebook, Sony and IKEA. In all these companies, technological and design leadership has been central to the strategy of sustainable competitive advantage and has been driven by senior management with almost crusading zeal and passion. 

Achieving and sustaining competitive advantage is a challenging task for even the largest organisations, all of which are very aware that new technologies, changes in the global economy or world geopolitics, and sudden shifts in consumer demand could lead to their demise. 

What is organisational strategy?

Canadian management researcher Henry Mintzberg describes organisational strategy as ‘a pattern in a stream of decisions’. This decision‐based concept of strategy has two important implications. First, strategy is not  just one decision. It must be viewed in the context of several decisions and the consistency among the decisions. Second, the organisation must be aware of alternatives in all of its decisions. A deliberate strategy can be contained in a formal document that identifies long‐term goals and outlines resource use to accomplish them. These are useful in focusing attention on the competitive environment and indicating how corporate objectives can be secured even as conditions alter. 


Strategic management

Devising strategy can be described in simple terms. Find out what customers want, then develop or use the appropriate production or product technologies to deliver it to them at an affordable price and with the best service. In practice this task is made much more complex because of the uncertainties and unpredictability of global markets. Every strategist must remember that  competitors are also always attempting to gain competitive advantage,. 

Strategic management is the process of formulating and implementing strategies to accomplish long‐term goals and sustain competitive advantage. The essence of strategic management is looking ahead, understanding the environment and the organisation, and effectively positioning the organisation for competitive advantage in changing times. Chief executives must think strategically as they try to position their organisations for contemporary markets. They must think strategically in deciding how to use new technologies to maximum advantage. They have to  analyse  the conditions in the global economy, and the business cycle, the economic downturns and upturns. And they must think strategically where it really counts — in respect of what customers and clients really want.


Strategic management goals

Michael Porter, a strategy academic and consultant, says that ‘sound strategy starts with having the right goal’. He argues that the ultimate goal for any business should be superior profitability. This creates value for investors in the form of above‐average returns, returns that exceed what an investor could earn by investing in alternative opportunities of equivalent risk.

An understanding of the organisation’s markets is crucial for setting strategic management goals. Good economic analysis is therefore essential. Indeed, the business strategist Michael Porter has long recognised that the roots of the structural and market analysis within strategic management lie within economics.

The strategic management process

LEARNING OBJECTIVE 2 

What is strategic management?

Strategic management is successful when organisations, even those operating in environments of hypercompetition, achieve sustainable competitive advantage and earn above‐average returns. Successful strategies are crafted from insightful understandings of the competitive environment as well as intimate knowledge of the organisation. And they are implemented with commitment and resolution.

The first strategic management responsibility is strategy formulation, the process of creating strategy. This involves assessing existing strategies, the organisation and your environment to develop new strategies and strategic plans capable of delivering future competitive advantage. Peter Drucker associates this process with a set of five strategic questions: What is our business mission? Who are our customers? What do our customers consider value? What have been our results? What is our plan?

The second strategic management responsibility is strategy implementation, the process of allocating resources and putting strategies into action. Once strategies are created, they must be successfully acted on to achieve the desired results. As Drucker says: ‘The future will not just happen if one wishes hard enough. It requires decision and action — now. It demands allocation of resources, and above all, of human resources — now. It requires work — now.’ This is the responsibility for putting strategies and strategic plans into action. Every organisational and management system must be mobilised to support and reinforce the accomplishment of strategies. Scarce resources must be used for maximum impact on performance. Resource productivity, or the maximum output possible from each resource and or a combination of resources is evaluated and improved by industrial engineers for engineering systems. 


Analysis of mission, values and objectives

The strategic management process begins with a careful assessment and clarification of the organisational mission, values and objectives. A clear sense of mission and objectives sets the stage for assessing the organisation’s resources and capabilities as well as competitive opportunities and threats in the external environment.

Mission

The mission or purpose of an organisation may be described as its reason for existence in society. Strategy consultant Michael Hammer believes that a mission should represent what the strategy or underlying business model is trying to accomplish. He suggests asking: ‘What are we moving to? What is our dream? What kind of a difference do we want to make in the world?’

A good mission statement identifies the domain in which the organisation intends to operate — including the customers it intends to serve, the products and/or services it intends to provide, and the location in which it intends to operate. The mission statement should also communicate the underlyingphilosophy that will guide employees in these operations. Consider the mission statement for Merck, one of the world’s leading pharmaceutical companies: ‘To discover, develop and provide innovative products and services that save and improve lives around the world’.


Core values

Behaviour in and by organisations will always be affected in part by values, which are broad beliefs about what is or is not appropriate. Organisational culture is  defined  as the predominant value system of the organisation as a whole. Through organisational cultures, the values of managers and other members are shaped and pointed in common directions. In strategic management, the presence of strong core values for an organisation helps build institutional identity. It gives character to an organisation in the eyes of its employees and external stakeholders, and it backs up the mission statement. Shared values also help guide the behaviour of organisation members in meaningful and consistent ways. 


Objectives

Whereas a mission statement sets forth an official purpose for the organisation and the core values describe appropriate standards of behaviour for its accomplishment, operating objectives direct activities towards specific performance results. These objectives are longer and shorter term targets against which actual performance results can be measured as indicators of progress and continuous improvement. Any and all operating objectives should have clear means–ends links to the mission and purpose. Any and all strategies should, in turn, offer clear and demonstrable opportunities to accomplish operating objectives.

According to Peter Drucker, the operating objectives of a business might include:

1. profitability — producing at a profit in business

2. market share — gaining and holding a specific market share

3. human talent — recruiting and maintaining a high‐quality workforce

4. financial health — acquiring capital; earning positive returns

5. cost efficiency — using resources well to operate at low cost

6. product quality — producing high‐quality goods or services

7. innovation — developing new products and/or processes

8. social responsibility — making a positive contribution to society.


Analysis of organisational resources and capabilities

Two important steps in the strategic management process are analysis of the organisation and analysis of its environment. They may be approached by a technique known as SWOT analysis — the internal analysis of organisational Strengths and Weaknesses as well as the external analysis of environmental Opportunities and Threats.


3 Strategies used by organisations

LEARNING OBJECTIVE 3 

What types of strategies are used by organisations?


The strategic management process encompasses the three levels of strategy. Strategies are formulated and implemented at the organisational or corporate level, business level and functional level. All should be integrated to accomplish objectives and create sustainable competitive advantage.


Levels of strategy

The level of corporate strategy directs the organisation as a whole towards sustainable competitive

advantage. For a business it describes the scope of operations by answering the following question: In what industries (basically  products) and markets should we compete? The purpose of corporate strategy is to set direction and guide resource allocations for the entire enterprise. In large, complex organisations like General Electric (GE), corporate strategy identifies the different areas of business in which a company intends to compete. The organisation presently pursues business interests in aviation, home and businesses solutions, financial (capital) services, healthcare, energy and transportation, for example. 

Typical strategic decisions at the corporate level relate to the allocation of resources for acquisitions, new business development, divestitures and so on across the business portfolio. Increasingly, corporate strategies for many businesses include an important role for global operations such as international joint ventures and strategic alliances.

Business strategy

Business strategy is the strategy for a single business unit or product line. It describes intent to compete within a specific industry or market. Large conglomerates such as GE are composed of many businesses, with many differences among them in product lines and even industries. The term strategic business unit (SBU) is often used to describe a single business or a component that operates with a separate mission within a larger enterprise. The selection of strategy at the business level involves answering the question: How are we going to compete for customers in

this industry and market? Typical business strategy decisions include choices about product/service mix, target markets, the location of facilities and new technologies. In single‐business enterprises, business strategy is the corporate strategy.

Functional strategy

Functional strategy guides the use of organisational resources to implement business strategy.

This level of strategy focuses on activities within a specific functional area of operations. For the standard business functions of marketing, manufacturing, human resources, and research and development, this level of strategy has to be developed. The question to be answered in selecting functional strategies becomes: How can we best use resources to implement our business strategy? Answers to this question typically involve the choice of progressive management and organisational practices that improve operating efficiency, product or service quality, customer service or innovativeness.

4 Strategy formulation

LEARNING OBJECTIVE 4 

How are strategies formulated?

With a good strategy in place, the resources of the entire organisation can be focused on the overall goal — superior profitability or above‐average returns. Whether one is talking about building e‐business strategies for the new economy or crafting strategies for more traditional operations, it is always important to remember this goal and the need for sustainable competitive advantage. The major opportunities for competitive advantage are found in the following areas, which should always be

considered in the strategy formulation process:

1. cost and quality — where strategy drives an emphasis on operating efficiency and/or product or service quality

2. knowledge and speed — where strategy drives an emphasis on innovation and speed of delivery to market for new ideas

3. barriers to entry — where strategy drives an emphasis on creating a market stronghold that is protected from entry by others

4. financial resources — where strategy drives an emphasis on investments and/or loss sustainment that competitors can’t match.

Importantly, any advantage gained in today’s global and information‐age economy of intense competition must always be considered temporary, at best. Things change too fast. Any advantage of the moment will sooner or later be eroded as new market demands, copycat strategies and innovations by rivals take their competitive toll over time. The challenge of achieving sustainable competitive advantage is thus a dynamic one. Strategies must be continually revisited, modified and changed if the organisation is to keep pace with changing circumstances. Formulating strategy to provide overall direction for the organisation thus becomes an on‐going leadership responsibility.

Fortunately, a number of strategic planning models or approaches are available to help executives in the strategy formulation process. At the business level, one should understand Porter’s generic strategies model and product lifecycle planning. At the corporate level, it is helpful to understand portfolio planning, adaptive strategies and incrementalism and emergent strategies


The following models and tools are useful in strategy formulation

Porter’s generic strategies

1. differentiation — where the organisation’s resources and attention are directed towards distinguishingits products from those of the competition (e.g. BMW, Volvo)

2. cost leadership — where the organisation’s resources and attention are directed towards minimisingcosts to operate more efficiently than the competition (e.g. Hyundai, KIA)

3. focused differentiation — where the organisation concentrates on one special market segment and tries to offer customers in that segment a unique product (e.g. Land Rover, Subaru)

4. focused cost leadership — where the organisation concentrates on one special market segment and tries in that segment to be the provider with lowest costs (e.g. Suzuki).


Product life cycle planning

Another way to consider the dynamic nature of business strategy formulation is in terms of product life cycle. This is a series of stages a product or service goes through in the ‘life’ of its marketability. In terms of planning, different business strategies are needed to support products in the lifecycle stages of new product development, introduction, growth, maturity and decline.



Portfolio planning

In a single‐product or single‐business organisation the strategic context is one industry. Corporate strategy and business strategy are the same, and resources are allocated on that basis. When organisations move into different industries, resulting in multiple product or service offerings, they become internally more

complex and often larger in size. This makes resource allocation a more challenging strategic management task, since the mix of businesses must be well managed. The strategy problem is similar to that faced by an individual with limited money who must choose between alternative shares, bonds and real estate in a personal investment portfolio. In multi‐business situations, strategy formulation also involves portfolio planning to allocate scarce resources among competing uses.



BCG matrix

Boston Consulting Group developed  the BCG matrix. This framework ties strategy formulation to an analysis of business opportunities according to industry or market growth rate and market share.67 This comparison results in the following four possible business conditions, with each being associated with a strategic implication: stars —high market share, high‐growth businesses; cash cows — high market share, low‐growth businesses; question marks — low market share, high‐growth businesses; and dogs — low market share, low‐growth businesses


General Electric (GE) Business Screen

The appeal of portfolio planning is its ability to help managers focus attention on the comparative strengths and weaknesses of multiple businesses and/or products. Although the BCG matrix is easy to understand and use, it is criticised for limiting attention to only market share and business growth. Business situations are more complex than that. At GE, for example, corporate strategy must achieve the best allocation of resources among the mix of some 150‐plus businesses owned by the conglomerate at any point in time. The businesses operate in very different environments, use different business models, and have different competitive advantages. What is known as the GE Business Screen,  was developed as an alternative portfolio planning framework. In fact, GE became famous under the leadership of former CEO Jack Welch for following a rigorous decision rule in strategic planning — either a business is or has the potential to be number 1 or number 2 in its industry, or it is removed from the GE portfolio.


Adaptive Strategies

The Miles and Snow adaptive model of strategy formulation suggests that organisations should pursue product/market strategies congruent with their external environments.


Incrementalism and Emergent Strategy

Not all strategies are clearly formulated at one point in time and then implemented step by step. Not all strategies are created in systematic and deliberate fashion and then implemented as dramatic changes in direction. Instead, strategies sometimes take shape, change and develop over time as modest adjustments to past patterns. James Brian Quinn calls this a process of incrementalism, whereby modest and incremental changes in strategy occur as managers learn from experience and make adjustments.70


5 Strategy Implementation

LEARNING OBJECTIVE 5 

What are current issues in strategy implementation?

No strategy, no matter how well formulated, can achieve longer term success if it is not properly implemented. This includes the willingness to exercise control and make modifications as required to meet the needs of changing conditions. More specifically, current issues in strategy implementation include re‐emphasis on excellence in all management systems  and practices, the responsibilities of corporate governance, and the importance of strategic leadership.


Management practices and systems

The rest of Management is all about strategy implementation. In order to successfully put strategies into action the entire organisation and all its resources must be mobilised in support of them. This, in effect, involves the complete management process from planning and controlling through organising and leading. No matter how well or elegantly selected, a strategy requires supporting structures, the right technology, a good allocation of tasks and workflow designs, and the right people to staff all aspects of operations. The strategy needs to be enthusiastically supported by leaders who are capable of motivating everyone, building individual performance commitments, and using teams and teamwork to best advantage. And the strategy needs to be well and continually communicated to all relevant persons and parties. Only with such total systems support can strategies succeed in today’s environments of change and innovation.


Strategic leadership

Strategic management is a leadership responsibility. Effective strategy implementation and control depends on the full commitment of all managers to supporting and leading strategic initiatives within their areas of supervisory responsibility. To successfully put strategies into action, the entire organisation

and all its resources must be mobilised in support of them. In our dynamic and often uncertain environment, the premium is on strategic leadership — the capability to enthuse people to successfully engage in a process of continuous change, performance enhancement and implementation of organisational strategies.


SUMMARY

1 What are the foundations of strategic competitiveness?

• Competitive advantage is achieved by operating in ways that are difficult for competitors to imitate.

• A strategy is a comprehensive plan that sets long‐term direction and guides resource allocation to

achieve sustainable competitive advantage.

• The strategic goals of a business should include superior profitability and the generation of above‐

average returns for investors.

• Strategic thinking requires the ability to understand the different challenges of monopoly, oligopoly

and hypercompetition environments.


2 What is strategic management?

• Strategic management is the process of formulating and implementing strategies that achieve

organisational goals in a competitive environment.

• The strategic management process begins with analysis of mission, clarification of core values and

identification of objectives.

• A SWOT analysis systematically assesses organisational resources and capabilities and industry/

environmental opportunities and threats.

• Porter’s five forces model analyses industry attractiveness in terms of competitors, new entrants,

substitute products and the bargaining power of suppliers and buyers.


3 What types of strategies are used by organisations?

• Corporate strategy sets direction for an entire organisation; business strategy sets direction for a

business division or product/service line; functional strategy sets direction for the operational support

of business and corporate strategies.

• The grand or master strategies used by organisations include growth — pursuing expansion;

retrenchment — pursuing ways to scale back operations; stability — pursuing ways to maintain the

status quo; and combination — pursuing the strategies in combination.


4 How are strategies formulated?

• The three options in Porter’s model of competitive strategy are: differentiation — distinguishing your

products from the competition; cost leadership — minimising costs relative to the competition; and

focus — concentrating on a special market segment.

• The product lifecycle model focuses on different strategic needs at the introduction, growth, maturity

and decline stages of a product’s life.

• The BCG matrix is a portfolio planning approach that classifies businesses or product lines as ‘stars’,

‘cash cows’, ‘question marks’ or ‘dogs’.

• The adaptive model focuses on the congruence of prospector, defender, analyser or reactor strategies

with demands of the external environment.

• The incremental or emergent model recognises that many strategies are formulated and implemented

incrementally over time.


5 What are current issues in strategy implementation?

• Management practices and systems — including the functions of planning, organising, resourcing,  leading and controlling — must be mobilised to support strategy implementation.

• Among the pitfalls that inhibit strategy implementation are failures of substance, such as poor analysis

of the environment, and failures of process, such as lack of participation in the planning process.

• Corporate governance, involving the role of boards of directors in the performance monitoring of

organisations, is an important element in strategic management today.

• Strategic leadership involves the ability to manage trade‐offs in resource allocations, maintain a sense

of urgency in strategy implementation, and effectively communicate the strategy to key constituencies.

• Increasingly, organisations use top management teams to energise and direct the strategic management

process.



To know more detail about each topic.


PART ONE Concepts and Techniques for Crafting and Executing Strategy

Section A: Introduction and Overview


Chapter 1: What Is Strategy and Why Is It Important? Key Points of the Chapter
               
The Strategic Management Process - Review Notes             

Chapter 2: Charting a Company’s Direction: Vision and Mission, Objectives, and Strategy - Key Points of the Chapter
               

Section B: Core Concepts and Analytical Tools


Chapter 3: Evaluating a Company’s External Environment - Key Points of the Chapter
               

Chapter 4: Evaluating a Company’s Resources, Capabilities, and Competitiveness - Key Points of the Chapter
               

Section C: Crafting a Strategy


Chapter 5: The Five Generic Competitive Strategies: Which One to Employ? - Key Points of the Chapter
 

Chapter 7:Tailoring Strategy to Fit Specific Company - Industry Situation - Review Notes:              

Chapter 8: Strategies for Competing in International Markets - Key Points of the Chapter
               
Chapter 9: Corporate Strategy: Diversification and the Multibusiness Company - Key Points of the Chapter
               

Chapter 10: Ethics, Corporate Social Responsibility, Environmental Sustainability, and Strategy - Key Points of the Chapter
               

Section D: Executing the Strategy


Chapter 11: Building an Organization Capable of Good Strategy Execution: People, Capabilities, and Structure - Key Points of the Chapter
               

Chapter 12: Managing Internal Operations: Actions That Promote Good Strategy Execution - Key Points of the Chapter
                 

Chapter 13: Corporate Culture and Leadership: Keys to Good Strategy Execution - Key Points of the Chapter
     










Management Science - JNTUK - Kakinada - Syllabus and Notes

 


Syllabus MANAGEMENT SCIENCE R13 Regulation B.tech JNTUK-kakinada Syllabus 


MANAGEMENT SCIENCE Syllabus 

Unit - I

Introduction to Management: Concept – Nature and Importance of Management, Functions-Evaluation of Management, Motivation Theories – Leadership Styles – Decision Making Process-designing Organization Structure – Principles and types of Organization.




Unit - II

Operations and Project Management: Work-Study-Statistical Quality Control Through Control Charts-Inventory Control-EOQ & ABC Analysis (Simple Problems) Project Management-PERT/CPM-Project Crashing (Simple Problem).


Unit - III

Functional Management: Concept and Functions of Finance, HR, Production, Marketing Management and Services – Job Evolution and Merit Rating – Product Life Cycles – Channels of Distribution – Types/Methods of Production.


Unit - IV

Strategic Management: Vision, Mission, Goals, Strategy – Corporate Planning Process – Environmental Scanning – SWOT analysis – Different Steps in Strategy Formulation, Implementation and Evaluation.


Unit - V

Business Ethics & Communications: Ethics in Business and Management – Ethics in HRM, Finance & Marketing Management – Business Ethics & Law


Unit - VI

Contemporary Management Practices: Basic concepts of MIS, MRP, Just- In-Time (JIT)System, Total Quality Management (TQM), Six Sigma and Capability Maturity Models (CMM) Levies, Supply Chain Management, Enterprise Resource Planning (ERP), Performance Management, Business Process Outsourcing (BPO), Business Process Re-Engineering and Bench Marking, Balance Score Card.


Text Books


Kumar/Rao/Chhalill ‘Introduction to Management Science’ Cengage, Delhi, 2012.

Dr. A. R. Aryasri, Management Science’ TMH 2011



Reference Books

Koontz & Weihrich: ‘Essentials of Management’ TMH 2011

Seth & Rastogi: Global Management Systems, Cengage Learning, Delhi, 2011.

Robbins: Organizational Behaviors, Pearson Publications, 2011

Kanishka Bedi: Production & Operational Management, Oxford Publications, 2011.

Manjunath: Management Science, Pearson Publications, 2013.

Biswajit Patnaik: Human Resource Management, PHI, 2011.

Hitt and Vijaya Kumar: Strategic Management, Cengage Learning.

Dr. PG. Ramanujam, BVR Naidu, PV Rama Sastry : Management Science Himalaya Publishing House, 2013.

Syllabus MANAGEMENT SCIENCE R13 Regulation B.tech JNTUK-kakinada Syllabus 


MANAGEMENT SCIENCE Syllabus 

Unit - I

Introduction to Management: Concept – Nature and Importance of Management, Functions-Evaluation of Management, Motivation Theories – Leadership Styles – Decision Making Process-designing Organization Structure – Principles and types of Organization.


Unit - II

Operations and Project Management: Work-Study-Statistical Quality Control Through Control Charts-Inventory Control-EOQ & ABC Analysis (Simple Problems) Project Management-PERT/CPM-Project Crashing (Simple Problem).


Unit - III

Functional Management: Concept and Functions of Finance, HR, Production, Marketing Management and Services – Job Evolution and Merit Rating – Product Life Cycles – Channels of Distribution – Types/Methods of Production.


Unit - IV

Strategic Management: Vision, Mission, Goals, Strategy – Corporate Planning Process – Environmental Scanning – SWOT analysis – Different Steps in Strategy Formulation, Implementation and Evaluation.


Unit - V

Business Ethics & Communications: Ethics in Business and Management – Ethics in HRM, Finance & Marketing Management – Business Ethics & Law


Unit - VI

Contemporary Management Practices: Basic concepts of MIS, MRP, Just- In-Time (JIT)System, Total Quality Management (TQM), Six Sigma and Capability Maturity Models (CMM) Levies, Supply Chain Management, Enterprise Resource Planning (ERP), Performance Management, Business Process Outsourcing (BPO), Business Process Re-Engineering and Bench Marking, Balance Score Card.



https://www.manaresults.co.in/syllabus-jntuk.php?subcode=RT22043



JNTUK R16 4-2 Management Science


OBJECTIVES:


To familiarize with the process of management and to provide basic insight into select contemporary management practices

To provide conceptual knowledge on functional management and strategic management.

UNIT-1


Introduction to Management: Concept –nature and importance of Management –Generic Functions of Management – Evaluation of Management thought- Theories of Motivation – Decision making process-Designing organization structure- Principles of organization – Organizational typology- International Management: Global Leadership and Organizational behavior Effectiveness(GLOBE) structure


UNIT-2


Operations Management: Principles and Types of Management – Work study- Statistical Quality Control- Control charts (P-chart, R-chart, and C-chart) Simple problems- Material Management: Need for Inventory control- EOQ, ABC analysis (simple problems) and Types of ABC analysis (HML, SDE, VED, and FSN analysis).


UNIT-3


Functional Management: Concept of HRM, HRD and PMIR- Functions of HR ManagerWage payment plans(Simple Problems) – Job Evaluation and Merit Rating – Marketing Management- Functions of Marketing – Marketing strategies based on product Life Cycle, Channels of distributions. Operationlizing change through performance management.


UNIT-4


Project Management: (PERT/CPM): Development of Network – Difference between PERT and CPM Identifying Critical Path- Probability- Project Crashing (Simple Problems)


UNIT-5


Strategic Management: Vision, Mission, Goals, Strategy – Elements of Corporate Planning Process – Environmental Scanning – SWOT analysis- Steps in Strategy Formulation and Implementation, Generic Strategy Alternatives. Global strategies, theories of Multinational Companies.


UNIT-6


Contemporary Management Practice: Basic concepts of MIS, MRP, Justin- Time(JIT) system, Total Quality Management(TQM), Six sigma and Capability Maturity Model(CMM) Levies, Supply Chain Management , Enterprise Resource Planning (ERP), Business Process outsourcing (BPO), Business process Re-engineering and Bench Marking, Balanced Score Card


TEXT BOOKS:


Dr. P. Vijaya Kumar & Dr. N. Appa Rao, ‘Management Science’ Cengage, Delhi, 2012.

Dr. A. R. Aryasri, Management Science’ TMH 2011.

REFERENCE BOOKS:


Koontz & Weihrich: ‘Essentials of management’ TMH 2011

Seth & Rastogi: Global Management Systems, Cengage learning , Delhi, 2011

Robbins: Organizational Behaviour, Pearson publications, 2011

Kanishka Bedi: Production & Operations Management, Oxford Publications, 2011

Philip Kotler & Armstrong: Principles of Marketing, Pearson publications

Biswajit Patnaik: Human Resource Management, PHI, 2011

Hitt and Vijaya Kumar: Starategic Management, Cengage learning

Prem Chadha: Performance Management, Trinity Press(An imprint of Laxmi Publications Pvt. Ltd.) Delhi 2015.

Anil Bhat& Arya Kumar : Principles of Management, Oxford University Press, New Delhi, 2015.

OUTCOMES:


After completion of the Course the student will acquire the knowledge on management functions, global leadership and organizational behavior.

Will familiarize with the concepts of functional management project management and strategic management.



https://www.jntufastupdates.com/jntuk-r16-4-2-management-science-material/  

August 16, 2024

18PDH102T- Management Principles for Engineers - SRM Institute of Science and Technology

 

SRM Institute of Science and Technology

https://www.srmist.edu.in/


18PDH102T- Management Principles for Engineers

UNIT I

Course Introduction- Organization- Management- Role of managers- Evolution of management

thought - Organization and the environmental factors.

UNIT II

Information and decision making - Information technology and the new workplace - Information

and decision making - The decision‐making process - Planning - Importance of planning - The

planning process - Types of plans used by - Planning tools, techniques and processes

UNIT III

Organisational control - Types of controls - Motivation theories of motivation - Leading Traits of an

ethical leader - The nature of leadership - Leadership traits and behaviours - Issues in leadership

development – Organising - Organising as a management function - Traditional organisation

structures - Essentials of organisational design - Contingencies in organisational design.

UNIT IV

Strategic management - Sustainable strategic competitiveness - Strategic management goals - The

strategic management process - Strategies used by organisations - Strategy formulation - Strategy

implementation.

UNIT V

People Management - Diversity and the importance of people - Attracting a quality workforce - The

recruiting process - Developing a quality workforce - Environment and diversity - Environment and

competitive advantage - Internal environment and organisational culture - Leadership and

organisational culture . Ethics - Cultural issues in ethical behaviour - Ethics in the workplace - Ethical

dilemma

TEXT BOOKS:

● Schermerhorn, J.R., Introduction to Management, 13th Edition. Wiley; 2017

● Harold Koontz and Heinz Weihrich, Essentials of management: An International &

Leadership Perspective, 10th edition, Tata McGraw -Hill Education, 2015.

REFERENCES:

● Stephen Robbins and Mary Coulter, Fundamentals of Management , 9th edition , Pearson

Education India; 2016

● Samuel C. Certo and Tervis Certo, Modern management: concepts and skills, Pearson

education, 12th edition, 2012.

● Charles W. L. Hill and Steven Mcshane, Principles of Management McGraw Hill Education;

Special Indian Edition, 2017




August 3, 2024

Market Sizing - McKinsey

 


McKinsey Quarterly

Beating the odds in market entry

November 1, 2005 | Article

https://www.mckinsey.com/capabilities/strategy-and-corporate-finance/our-insights/beating-the-odds-in-market-entry



Potential market size has to be estimated.


How big is the market?

Estimating a market's potential size typically involves categorizing customers into a number of segments and then using pricing and elasticity assumptions to estimate the percentage of buyers in each category the company might capture. 


The biase of  “anchoring and adjustment”: the failure to adjust estimates sufficiently from an initial value, regardless of its origin. An optimistic anchor that often infects market estimates is an industry's current growth rate, which rarely endures for long. Another anchor is the initial “gut” forecast number an analyst plugs into a spreadsheet with the intention of making adjustments as more information arrives.


How influential are such anchors? In one recent study, experienced real-estate brokers, who had contended that the listing price  of a house wouldn't affect their evaluation of its “true” value, were asked to assess a property. Each broker received a ten-page booklet on the house and on the prices and characteristics of houses in the area. Each then visited it, plus others in the neighborhood. The agents didn't know that the listing prices they had been given for the house in question were all different and had been randomly manipulated within a range of plus or minus 11 percent of the actual listing price. Those spurious listing prices significantly affected the evaluations of the agents. Yet even when they were told about the results, they maintained that the listing-price anchor had had no effect on them.


Life cycle stage of the industry - Important to estimate

To avoid anchoring estimates on a target market's current growth rate, companies should always try to determine the life cycle stage of the business they wish to enter. At some point, most industries experience shakeouts, which can be particularly severe in fast-growing sectors. Although it is difficult to predict the exact timing, efforts to think through the possibility of a shakeout—and how many companies are likely to survive it—often highlight the unsustainability of current growth rates.


A second useful way of improving estimates of market size is to use the reference class of other entrants as a benchmark. Consider the fate of the Segway, a new type of two-wheeled vehicle unveiled in December 2001.  Dean Kamen,  thought 10,000 a week could be sold after a year:  A typical approach for arriving at such a figure would have involved combining an analysis of the number of consumers who could both afford the Segway and realistically use it for commuting or recreation . Use of penetration rates in this demographic for similar products, such as scooters and bicycles, is also an input. 


But the Segway's usefulness depended on changes to infrastructure. How many cities would allow people to drive the vehicle on sidewalks? If roads were the only alternative, how many potential purchasers would be willing to use it? Since the answer to both questions was “not many,” just 6,000 Segways were sold in the first 21 months. A broader reference class that included conventional automobiles, fuel cell cars, hydrogen cars, and infrastructure-dependent technologies such as high-definition television and telephones might have shown that securing the right to ride the Segway in cities was of paramount importance. After all, it took years to create the roads, power grids, standards, and networks necessary for cars, electric lighting, HDTV, and telephone service to become ubiquitous.







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Strategic Management - Literature Review

1. General Strategy

2. Company Strategy

3. Strategy Creation

4. Formulation of Strategies

5. Evaluation of Strategies



The  word strategy originated in the military field and comes from the word “strategos” meaning general in Greek. It is being applied to other activities and, in particular, to business strategies. One of the main problems for the business strategists is the understanding of the competitive environment and the interpretation of the effects of the competition in a business.


Strategy is the definition of the long-term goals and objectives of a company, the adoptions of actions, and the allocation of necessary resources for the achievement of the objectives. -  Chandler [5]


The strategy is the model of the objectives, policies, purposes, goals, and plans to achieve them addressed in such a way that they define in which business the company is or will be. - Andrews [6]


The strategy is to select the set of activities in which a company stands out to establish a sustainable difference in the market; the differentiation arises of the activities chosen and how they are the carried out. - Porter [7],


Farjoun [8]  makes a contribution from a dynamic and organic view. The new ideas of natural and social sciences state that the strategic processes are not only rationalist models of unitary actors but also give importance to the complexity of the soft variables and take into account the messy side of reality. It maintains that while the mechanistic perspective for the formulation of strategies is discrete, directional, and differentiated, the organic perspective is dynamic, uncertain, interactive, and integrating.

Contemporaneously, a new wave of research studies was born that approach to the study of the theory of behavior and organization [10–16], and these authors point out that the strategy is a coalignment or an adaptive coordination of various states and trajectories.

Chiavenato [17] -  There are four fundamental elements in the strategy which together make a whole. The mission is the answer to the question what is the organization for. The business to which the organization is dedicated is defined, the needs that are covered with its products and services, the market in which the company is developed, as well as the public image of the company or organization. The vision is the answer to the question what do we want the organization to be in the next years. The future situation that the company wants to have is defined and described. The purpose of the vision is to guide, control, and encourage the organization as a whole in order to achieve the desirable state of the organization. The values define the set of principles, beliefs, and rules that regulate the management of the organization. Global objectives indicate the results that are wanted to be achieved in a specific period of time. These elements constitute the institutional philosophy and the support of the organizational culture [18]. The basic objective of the definition of corporate values is to have a reference framework that inspires and regulates the life of the organization.

[This research covered the review of  69 books, 7 conference articles, and 140 journals that made major contributions. - Guillermo Fuertes et al. ]


1. General Strategy

It is responsible for conceiving the global direction of the organization. The classic approach of the strategic formulation is based on the rational methods of planning, resource allocation, and profitability. For Chandler [5], the structure follows the strategy. If the strategic plan is defined, the appropriate structure can be determined and created.  

According to Ansoff [26], this approach places great confidence in the hierarchy or scorecard and trusts in the intelligence and ability of the leaders to adopt strategies that maximize long-term benefits; the control and knowledge are competence of the executive director. This approach requires a transformational leadership, considered as the most effective way of leadership in all the array of models; this comprises four types of behaviors: intellectual stimulation, motivation, commitment, and effort, that culminate in better performance [27]. 

Porter [28] indicates that the process of a competitive strategy is the development of the wide formula of how a company is going to compete, which must be their objectives (mission or objective) and which policies will be needed to carry out those goals. 

According to Sloan [29], for the classic approach, the progress and stability of the business depends largely on the development or creation of strategies. The importance of each specialization of the strategy is recognized. 

The evolutionary approach raises the inability to generate strategies from inside; according to [30, 31], this approach proposes that the organizations are drifting of the changes of the external environment and depends on the magnitude of it, that is the market which defines the strategy, being this in charge of guaranteeing the minimal or maximum benefits. 

According to Freeman and Hannan [32], the organizational selection processes favor them and the organizations that can change the strategy and the structure as their environment change. The successful strategies only emerge as the process of natural selection offering its judgment. In this approach, the role of the top management is null and nevertheless are fundamental in the identification of the threats.

Following this approach, Peters and Waterman [33] state that the keys of excellence have to do with focusing on people, clients, and action. The eight principles for the excellence, proposed by these authors, allow any manager to make a diagnosis and evaluate its performance. These state that the application of these principles give the necessary clues for managers to convert their companies in organizations of excellence both in operation as in results. In the same way, supported on the evolutionary approach, Williamson [34] states that the strategy in the classic sense of rational planning oriented to the future is often irrelevant; this assertion is supported by Gotcheva et al. [35] who states that the organizations that better adapt to the environment are the ones that survive, even though in reality it seems to be that environment has adapted to them.

The systemic approach gives the capacity to the organizations of planning and acting effectively in their environments, it is relativistic. According to Granovetter [36] following the approach about the social incorporation of the economic activity, the systemic vision proposes the objectives of the strategy to be designed depending on the context of the social system in which it is developed, understanding that the strategies must be sensitive to the sociologic environment of the organizations which guides the strategy are particularities of a concrete sociological environment. According to Granovetter [37], a central principle of the systemic theory is to observe the decision makers as complex individuals, whose decisions are not based exclusively on economical conceptions, and understand the interrelation of the multiple variables of the society and its effect with the environment. Following the systemic approach, Whitley [38] states that a central principle of the economic sociology is that culture and the regulatory institutions help to constitute the nature of the economic actors and guide their actions, thus affecting the economic results.

According to Clegg et al. [39], the processualist approach shows the same skepticism as evolutionists regarding strategic rationality; they rely less on the capacity of the market to guarantee obtaining maximum benefits. Cyert and March [40] visualize the organizations as a system of rational adaptation that responses to a variety of external and internal restrictions when reaching decisions. Theorists of the strategies based on the resources as [41] state that the managers owe their strategies to competitive advantages of the organizations and the market processes, insisting on the informal learning and the personal vision [42]. The members of the organizations negotiate among them to arrive to define a set of objectives more or less acceptable of all, that is, the strategy is the product of a political commitment [43] and not of a calculation to obtain the maximum benefits [44]. There is a multiple interest in formation of coalitions to take care of the interests of the organizations. Following with this approach, Hamel and Prahalad [45] defend that the best competitive advantage of a company is its vision of the future; they claim that organizations must search and strengthen the most developed competitive advantages that are difficult to emulate by the competitors. At the same time, Weick [46] sees the organizations as a system that selects wrong information of its environment, stating that in the future the organizations evolve when they obtain knowledge outside themselves and their surroundings.


2. Company Strategy

It is the complement of the general strategy. Its application corresponds to the leader or director. The roles of senior management and the management of organizational projects are an essential part in the effective implementation of the company’s strategy [47]. At directive level, this strategy is used as a mean to perform various functions, serving as support in decision making and carry out coordination processes and communication of goals or the strategic purpose. According to Galbreath [48], any business strategy must incorporate in an effective way the concept of corporate social responsibility (CSR). According to Bento et al. [49], CSR is necessary if developing competitive advantages is wanted in the current environment. Lee et al., Lindgreen and Swaen and Maon et al., [50–52] define CSR as a way of directing organizations based on the management of the impacts that its activity generates on its clients, employees, shareholders, local communities, environment, and society in general.


SM implies the formulation and implementation of the main objectives and initiatives adopted by the senior managers of a company, in relation to owners, based on the consideration of the resources, and an evaluation of the external and internal environment in which the organization competes [53]. Thus, it should have at least five attributes to be a business strategy [54]: (1) be measurable, (2) clarity in the objectives, (3) resource consumption, (4) assignment of responsible, and (5) that it can be checked. Companies now focus more on exploitation of external resources such as customers, rather than internal efficiency, to gain new competitive advantages. People’s ideas are fed by brands, and this exercise provides the opportunity to cocreate products in collaboration with customers [55, 56].


The adequacy of the strategies can be defined from various approaches, each of which reflects different indicators; these indicators are based on the profit impact of market strategy (PIMS) structure in order to define the strategic potential.



3. Strategy Creation

According to Peppard and Ward [57], any organizational strategy must define where the company wants to be in the future and evaluate objectively where it is now to decide how to get there; taking into account the options, alternatives, available resources, and the needed changes. A company achieves a superior profitability in its industry when achieving higher prices or lower costs than its competitors; this is achieved through the operative effectiveness or the strategic positioning [58]. For Rumelt [59], a good strategy is a coherent set of analysis, concepts, policies, arguments, and actions that give responses to a high-risk challenge. The strategies based on the costs have been considered among the generic forms of strategic positioning [60, 61].


According to Reitzig and Maciejovsky [62], the creation of a strategy is not only a task for the executives; on the contrary, the definition of the business approaches and new measures to initiate, involve all the hierarchy levels of the organization (head of business unit, heads of products, heads of functional areas within a business or division, administrators, and supervisors). The academics and professionals are more and more interested in the concept of sustainability (integrated measure of the economic, social, and environmental performance) [63]. For Iazzolino and Laise [64], the strategies must be socially sustainable, creating value not only for the shareholder but also for the other interested, for the employees. According to Radomska [65], the sustainability issues in the strategies are becoming a natural element of the business policies, and their actions are important for the business of the company and for the financial result, as to cost reduction, cleaner production, gas reduction, and so on [66]. For supply change management, the sustainability is an important issue, creating a new age of business thinking and a source of competitive advantage [67, 68].


In general, to create strategies, authors such as Král and Králová [69] suggest that all starts from the analysis of the environment surrounding the company, pretending with it the proposition of action plans, aimed at improving competitiveness. According to Nikulin and Becker [70], in order to analyze the situation in which a company is found, the most commonly used is the SWOT analysis, which allows to determine strengths and opportunities of the company as well as the weaknesses and threats that the market offers in the scope of its business. According to Hill et al. [71], in order for a strategy to be successful, it must be designed in the following way: (1) simple, coherent, and long-term goals; (2) deep knowledge of the competitive environment; (3) objective evaluation of the resources; and (4) effective implantation.


For Hussein et al. [72], another concept to be kept in mind when generating strategies, considered a key factor in the organization performance, is the organizational learning capacity. According to Mallén et al. [73], the application of this concept allows to analyze the relation between the degree of organization structure, performance of the organization, and the learning capacity of the organization. For Norashikin and Ishak [74], an organization with organizational learning culture improves significantly the competitive advantages, allowing to survive in a competitive world [75]; in the same way it provides improvements in the performance of the companies supported by the concept of transactional organizational learning, and this mechanism allows the organizations to keep the knowledge and transmit it to specialists for the generation or rethink of new rules [76]. J. Power and D. Waddell and D. Coghlan[77, 78] analyzed the relation between self-managed work and the organizational learning capacity as indicators of performance in the improvement of the innovative capacities of the companies.


The organizations change through the transformation and restructuring of the resources and capacities [79]. One of these transformations implies to decide what kind of organizational structure is the most propitious to achieve a competitive advantage [80].


3.1. Organizational Structures

Good organizational structures act as moderators for improving the influence that leaders have about the behavior, performance, and work of their subordinates, in search of the satisfaction of the client [81]. Different authors have defined the concept of organizational structure. For Mintzberg [82], all are the patterns of design to organize a company, taking into account all the forms in which work is divided and the subsequent coordination of the same, searching to meet the proposed goals and to achieve the objectives set. For Strategor and Anastassopoulos [83], an organizational structure is the set of responsibilities and relations that formally determine the functions that each unit must accomplish and the way of communication between each work team. Chin [84] made an evaluation of how the leadership of men and women influence in the organizational structures, this author states that skills of men and women gain similar legitimacy, but when an organization fails, the perception of competence of women leaders, the status, and the interpersonal skills fall more than those of men.


The following are the requirements for the implementation of an organizational structure: (1) hierarchy of power and authority for the establishment of responsibilities and goals, which must be verifiable, accurate, and achievable [85], for them to be precise they must be quantitative and for being verifiable they must be qualitative. (2) There must be a clear definition of the duties, rights, and activities of each person. The area of authority of each person must be set, that everyone must do to achieve the goals [86]. (3) To know how and where to get the necessary information for each activity, each person must know where to get the information and it must be provided [87].


Some elements that must be considered within an organizational structure are: (1) geography: it refers to the location of the company, the nearby companies necessaries, and the geographic distribution of the areas of the organization with an effective communication network [88]; (2) number of employees: in order for the organization to work efficiently, it must have clearly defined the number of employees that are required [89]; (3) evolution of the product: the organization must evolve to the extent its product does, being able to start as a small line and then diversify as needed; (4) distribution of the authority: it must be established if the organization works in a centralized or decentralized way [85]; (5) control: it refers to the requirements and regulations that must be implemented in function of the type of product that the organization offers, with the purpose of complying with them and offering a competitive product; and (6) market: the organizational structure of the institution must rotate around the suppliers and the consumers, and it must have a marketing team and adequate selling force. The organizations created the structures to coordinate the activities of work factors and control the member performance [90, 91]. Based on these two authors, Table 5 describes the advantages and disadvantages of each type of organizational structure proposed in this study.



3.2. Corporative Strategy

The objective of this strategy is to add value to the business portfolio of the companies reaching to overcome its competitors [92]. If an organization is in more than one line of business, a strategy at a corporative level will be needed (diversify company). The corporative strategy can be understood as the possibilities that an organization has to define its future positioning [93]. The way to announce this positioning can go from simple motivation messages until reaching to strict objectives and deeply detailed of the business, relating the indicators and the variables of business, with a rigid methodological approach [94]. Examples of that are the competitive priorities, which are translated from the operative decisions derived from the corporative strategies and the client requirements [95].


According to Mazzei and Noble [96], the corporative strategy is in charge of determining which data must be collected and analyzed, becoming a key factor for the correct decision making. For Dolphin and Fan [97], when formulating corporative strategies and the public relations have become in a function more and more important in the business organizations. Corporative communication managers are in charge of examining the impact and formulating the strategy [98]. For diversifying organizations, each division will have its own strategy that defines the products or services provided, the clients they want to reach, and so on.


3.3. Business Strategy



The strategy at business level generally is the same that the corporative strategy of the organization. Action plan for the small organization with only one line of business or the big organization has not diversified in different products or markets. The business strategies have potential to make an impact of first order about the risk of financial accident, a direct economic consequence for the owners, and investors of the companies [99]. These strategies are approaches and measurements created by the administration with the aim of producing a successful performance in a specific business line. The main importance of the business strategy consists on how to create and reinforce the competitive position of the company on a long term in the market. According to Bentley et al. [100], different authors provide typologies that describe how companies compete in their respective market environments. Porter [28] describes the business strategies in terms of leadership in costs and differentiation of products; March [101] in terms of exploration and exploitation; Treacy and Wiersema [102] in terms of operational excellence, leadership of product and trust with the client; Miles and Snow [103] and Dekoulou and Trivellas [104] in terms of innovation to identify and explore of new products and market opportunities; and Quezada et al. [105] they describe a methodology to formulate business strategies in small and medium manufacturing companies. These authors evaluate and generate action plans to improve the competitiveness, taking into account the owner preferences.


When an organization is in different business, the planning can be facilitated by creating a strategic business unit (SBU). SBU represents a unique business or a group of business related, for which is possible to formulate a common strategy. Each SBU will have its own distinctive mission and different competitors; this allows it to have an independent strategy from the other business of the organization.


3.4. Functional Strategy

For Dubey and Ali [106], this strategy is close to the definition of processes and actions, that is, it responds to how things must be done or how must be used and applied to the resources. The functional strategy depends and must be well defined and aligned with the corporative and the business strategies. According to Sharma and Fisher [107], the main types of functional strategies are: production strategies [108], I + D strategies [109], marketing strategies [110], human resources strategies [111, 112], technological strategies [113], organizational strategies [114], and financial strategies [115]. It is considered that the production strategy has been the most effective in the past and will continue to receive the maximum priority in the next years. In general, continuing with the order of importance are the technological strategy and the human resources strategy. The I + D strategy is the second highest in importance in the last few years.


3.5. Operation Strategy

Within the two functions is the configuration of a reference framework for the planning, the control of the production and fixation of guidelines to evaluate the contribution of the operation management to the general objectives of the company. The operation strategy starts from an analysis of the environment, the market and the competitors, as well as a study of the available internal resources, to fix objectives and plans of route. The corporative values serve as guide when planning the operation strategy. The final objective of the operation strategy is to find competitive advantages that clearly difference the company from its competitors [116]. It is that the value added to the product or service offered justifies a higher price in the final product that the customer is not only willing to pay, but satisfied to do it. This advantage must be sustainable overtime and difficult to imitate, among other qualities. The main responsibility of this strategy is delegated to the director of the operations area, subject to revision and approval for administrators of higher rank (general director or directive board). According to Wheelwright [117], it is necessary to design and implement operation strategies coherent with the business mission, always supporting the corporative objectives [118]. This strategy must provide the objectives of production to achieve competitive advantages, focusing in a uniform decision making model within the category of the key resources of production [119]. Moreover, to announce the way in which the business units develops or deploys the production resources [120].


Platts and Gregory [121] emphasize in the realization of manufacturing strategies, following three aspects of the process that include: design, development, and implementation of the production strategy. Platts [122] suggests an approach based on the audit to develop the production strategy. This author describes three stages for the formulation of this strategy: creation of the process, tests, and adjustments [123]. Table 6 classifies the fifty-two studies categorized in Table 1 (strategic creation and organizational structures), taking into account the phase of the strategic analysis to which the research belongs to.



4. Formulation of Strategies (FSP)

The main thing is to detect if there is or not a strategic problem or also called strategic GAP. There is a strategic GAP when the objectives set forth in the future cannot be achieved with the current strategy. According to Chang and Huang [124], the SM process consists of three stages: formulation of strategies, implementation of the strategy, and evaluation of the strategy.


In order to generate strategies, a previous analysis of the organizations that evaluate the definition of goals, the analysis of the situation and the planning must be carried out. Any company, regardless of the size, kind of industry, business segment, or country where its activities are developed, must have a process that allows the disposition of a methodology to formulate strategies. According to Sadler [125], this methodology initiates with the formulation of the strategic planning (FSP), defined as the way to diagnose and analyze the current competitive position and strategic problems that are affecting the company. FSP must be the guide to visualize what is wanted to be achieved and how the companies will achieve it. A correct FSP must start by identifying the current competitive position and market of the company, which allows guiding in a better way the destiny of the company. According to Masoud [126], through the FSP, it is possible to identify the areas that require improvements in its strategies and, at the same time, align them with the functional competences and compare them with the initial strategy, if it exists.


On the contrary, Mintzberg et al. [15] state that strategies based on planning, ignore the fact that these can come from the interior of an organization with no formal plan.


For Van der Kolk and Schokker [127], the control of management are all the guarantees that directors must give to ensure that the behavior of the employees is consistent with the objectives and strategies of the organization; this definition is built based on what is said in [128, 129]. 


In FSP, the different manager hierarchy and the management control system (MCS) have a considerable influence. In the first stage of the discussion, the strategy is formulated by the senior managers on behalf of the owners, based on the consideration of the resources and an evaluation of the internal and external environment in which the organization competes [47]; the middle and lower managers are restricted to the implementation of the strategy. The function of MCS is to support the implementation of the strategy proposed by the middle and lower managers. On the contrary, [130] states that the strategies must not necessarily be formulated by the senior managers but initiated by the lower levels of the organizations; this type of strategy is known as emergent. Mintzberg [131] states a form to classify strategies, which identifies planning

(i) Strategy as a plan: marks the direction or course of action in the future. Those are guides to address a specific situation. These strategies have two essential characteristics: they are elaborated before the actions in which they will be applied. They are developed consciously and with a specific purpose.


These can be general or specific.

(i) Strategy as an action guideline: type of maneuver to beat rivals in competitive situations or negotiations. The real strategy that is taken as a plan is the threat not the expansion [132].

(ii) Strategy as a pattern: it marks a constant behavior on time. The strategy is a model, especially a pattern in a flow of actions. It allows to know how to establish the specific directions of the organization; a definition that covers the behavior we want to produce is required.

(iii) Strategy as a position: it is a means to place the organization in a competitive environment. It looks towards the outside looking for placing the organization in an external environment in concrete positions placing determined products or services in particular markets.

(iv) Strategy as perspective: it is particularly inherent way of industrial organizations in their way of perceiving the world; it looks towards the interior looking for ways in which things are carried out in a company. Just as the personality type defines the behavior of the individuals, the type of strategy defines the behavior of the organization.


The strategic formulation process continues with the implantation, evaluation, and control. Even the best strategies could not reach success, if the administration fails, either when implanting them or when evaluating their results. 


For David [133], SA is a clear and practical approach for formulation, implementation, and evaluation strategies, which in turn are subdivided in different stages and activities, all pointing to the attainment of the organizational objectives, by means of the obtaining of competitive advantages. Thompson and Strickland [134] state that the SA model has a fundamental purpose to convert the administrative guidelines of the strategic vision and the mission of the business in indicators of specific performance, in results and consequences that the organization wants to achieve. The administrators can have a follow-up of the progress of the company through the establishment of the objectives and the measurement of its success or fail at achieving them. Hill et al. [71] propose a model focused in medium and big companies that compete in a diversified industry or of one business. These authors expose that the strategy is the result of a formal process of planning and the most important role in this corresponds to the senior manager. The strategic managers are in charge of identifying the strategies, as well as to create them starting from a set of elements that are obtained as steps of this model. In Figure 1, the fundamental steps for the strategic formulation are described.




For the so-called implementation of the strategy, the capacity of the organization must be assessed; the strategy is linked to the operations and people who are going to put the strategy into operation, synchronize the people and their various disciplines linking the rewards to the results.


4.1. Methods for the Strategic Formulation

The techniques for formulating strategies can be integrated into a three-stage framework for decision making. These techniques can be applied to organizations of all types and sizes and can help strategists to intensify, evaluate, and choose strategies.


4.1.1. Stage One or Stage of Inputs

Summarizes the basic information that must be taken to evaluate all strategic factors, in order to detect and prioritize according to the levels of importance and significance [135]; according to Azarnivand and Banihabib [136], the techniques of this stage include:


(1) Internal Factors Evaluation (IFE) Matrix. Tool of strategic analysis that summarizes the internal audit of an organization [137] and evaluate the weaknesses and strengths of the organizational units. IFE offers a diagnosis of all the companies in its different functions [138]. Setiawati and Wahyono [139] propose the design of strategies for the positioning of a pharmaceutical product where IFE is developed starting from the functional aspects of the organization.


(2) External Factors Evaluation (EFE) Matrix. It allows to summarize and evaluate external factors (opportunities and threats) that impact the company in a negative or positive way [140]. EFE facilitates the strategists to summarize and evaluate economic, social, cultural, demographic, governmental, legal, technological, and competitive information that could benefit or damage in a significant way an organization in the future [141]. Pratiwi et al. [142] propose EFE with the objective of evaluating the spin-off of a company that dedicates to the biotechnological products in Malaysia, obtaining as result that the company has more strengths than weaknesses (EFE >2.5).


(3) Competitive Profile Matrix (CPM). This matrix can identify the main rivals of a company. The identification of critical factors of success is the most important process for the construction of CPM [143]. Pelaez [144] proposes the use of CPM to explore the competitive environment in three institutes of higher education in Philippines, evaluating strengths and weaknesses of competitors.


4.1.2. Stage Two or Stage of Adequation

It focuses on generating viable alternative strategies, aligning internal and external key factors. The techniques of this stage include:


(1) SWOT Matrix. This matrix allows to evaluate the problems inside and outside the company. It is composed of an evaluation of the internal competences as strengths and weaknesses and the externals competences as opportunities and threats [145, 146]. According to von Kodolitsch et al. [147], the strategists considering the factors contained in the SWOT matrix propose the design of four strategies:

(i) Strategy strength-opportunity (SO). This strategy maximizes both internal strengths and external opportunities (“maxi-maxi” strategy); the strategy can be chosen when you have abundant strengths and favorable external opportunities.

(ii) Strategy weakness-opportunity (WO). This opportunity-focused strategy minimizes weaknesses and maximizes opportunities (“mini-maxi” strategy); the strategy can be chosen in a precarious situation in which strengths are scarce and threads are increasing.

(iii) Strategy strength-threat (ST). This strength-focused strategy maximizes own strengths and minimizes threats (“maxi-mini” strategy); the strategy can be chosen in rescue situations where maximizing the own strengths can be the only way to overcome substantial threats.

(iv) Strategy weakness-threat (WT). This strategy minimizes both weaknesses and threats (“mini-mini” strategy); the strategy can be chosen in a complicate situation in which strengths are scarce and threats are increasing.


For Lee [148], the main weakness of SWOT is a general dependence of qualitative analysis that simply classified the importance of individual factors without measuring them qualitatively. Shakerian et al. [149] implement a hybrid model SWOT - Fuzzy TOPSIS, with the aim of evaluating and classifying the internal-external environment and the commercial strategies in industrial organizations. This model achieves a high performance due to the different combined methods. Anguibi et al. [150] propose a quantified SWOT frame that integrates the realization of preferable diffuse linguistic to evaluate the competitive position of the container terminal of Abiyan in Western Africa.


(2) Strategic Position and Action Evaluation (SPACE, PEYEA) Matrix. This matrix was designed by Rowe et al. [151] with the purpose of determining which are the most suitable strategies for an organization in the competitive field, once the external and internal strategic positions are defined. Its structure of four quadrants allows to find out if fan organization is using the aggressive, conservative, defensive, or competitive strategies [152].


The axes of the matrix and the strategic action represent two internal dimensions (financial strength and competitive advantage) and two external dimensions (validation of the environment and industrial power) [153]. Jamali et al. [154] use SPACE to evaluate an Iranian cement company through the four dimensions: industry attractiveness, environmental stability, competitive advantage, and financial strengths. The results showed that this industry can follow an aggressive strategy since it takes advantages of its strengths in the opportunities.


(3) Boston Consulting Group (BCG) Matrix. Henderson [155] aims at helping the companies to position their products or business units in the market, this tool consists on making a strategic analysis of the portfolio of the company based on two factors: growth rate and market share [156]. The matrix is composed essentially of four quadrants, which in turn possess different strategies to develop. Each of the quadrants is symbolized by a caricature. Chang et al. [157] used BCG to analyze the market position and future strategy to improve the potential opportunities of self-connectivity in Asian airports.


(4) Internal-External (IE) Matrix. According to Allen [158], this matrix represents a tool to evaluate an organization, taking into account their internal factors (strengths and weaknesses) and their external factors (opportunities and threats); the IE matrix is similar to BCG matrix since both tools register the divisions of a company in a schematic diagram; this is the reason for which both are known as portfolio matrices [159]. IE is based on information generated by other matrices (IFE-EFE) capturing more information, quantifying them in an index that can be graphed, and locating in one of the nine quadrants of such matrix. Tahernejad et al. [160] propose IE to investigate the strategic factors that have led to the loss of market of a mining company that produces rocks located in Iran.


(5) Great Strategy Matrix (GSM). This matrix made the matrices SWOT, SPACE, BCG, and the IE matrix; GSM becomes an instrument to formulate strategies of an alternative character, placing the company in one of the four strategic quadrants of the matrix [161]. According to Christensen et al. [162], GSM is a tool that is used to evaluate and fine tune the proper choice of strategies for the company or organization. It consists of a Cartesian plane in two dimensions: the competitive position and the market growth; any kind of organization can be placed within the dimensions previously mentioned, according to its conditions. Lee and Lin [163] develop a hybrid method AHP-SWOT, based on the GSM model, to evaluate the competitive position of the containers port in the east of Asia.


4.1.3. Stage Three or Stage of Decision

This stage includes a single matrix.


(1) Quantitative Strategic Planning Matrix (QSPM). According to David [164], QSPM uses the obtained information at stage one to evaluate, in an objective way, the available alternative strategies identified in stage two. QSPM constituted by EFI and EFE is used to determine the strategic position giving a quantitative strategic matrix [165]. David et al. [166] use QSPM two strategies of alternative commercialization. The main contribution of this document was to reveal how and why QSPM can be useful, both theoretical and practical for the design of effective marketing strategies.


Table 7 classifies the thirty-two studies categorized in Table 1 (strategic formulation), taking into account the organizational characteristics and the different typology of strategies.



5. Evaluation of Strategies

According to Uhl and Gollenia [168], the strategic evaluation consists of measuring the impact that has had the strategic planning, opening the possibility of taking the necessary corrective actions. This process serves the organizations for knowing and analyzing if the proposed actions are really directing the company in the right direction. The processes of strategic evaluation are made through the analysis of quantitative and qualitative data [169]. The quantitative approach allows understanding the results in light of the investment and the growth forecasts; the numerical part of the results is measured starting from the key performance indicators (KPI). The qualitative approach allows to understand causes and consequences and interpretation of situations beyond numbers; this type of analysis will serve to know the effectiveness of the strategy and the departments of the organization that need corrective actions.


For the strategic evaluation, according to Cokins [170], all those factors coming from the environment, being threats or opportunities, that directly affect the operation of the strategy and that require an effective response must be considered. To identify these factors, it must be analyzed that the objectives set are the right ones that the observable results are consistent with the initial states, and the analysis of the plans and politics implemented are the right ones [171].


According to [172, 173], the processes to evaluate strategies are specifying the processes and the most important results to supervise and evaluate for measuring them in an objective way; establishing performance standards that make the difference between what is acceptable and what it is not; and compare the real performance with the expected one and apply the pertinent corrective actions [174].


For Rumelt [175], there are four criteria to evaluate a strategy:


(1) Coherence, the strategy must not present goals and politics mutually inconsistent; 

(2) concordances, the strategy must represent an adaptive response to the environment and the critical changes produced inside; 

(3) advantage, the strategy must anticipate the creation and/or the maintenance of a competitive advantage in the chosen area of activity; and 

(4) viability, the strategy must not overload the available resources or create subproblems that do not have solution. 

The coherence and the advantage are based on the external evaluation of an organization, while concordance and viability are mainly based on the internal evaluation Balanced Scorecard.


According to Hansen and Schaltegger [176], in the year 1992, BSC was presented in the Harvard Business Review, and the creators of this concept are Robert Kaplan and David Norton [177]. Initially, BSC focused on indicators of individual and group performance to measure and manage the implementation of the strategic objectives [178]. Different authors have given definitions of BSC; for Srivastava et al. [179], it is a method to measure the activities of a company in terms of its vision and strategy, providing the administrators a global view of the business performance. For Kaplan and Norton [180], BSC is a system of manager management that directs attention points in the organization. Its purpose is to translate the strategy in measures that only communicate their vision to the organization.


According to Cooper et al. [181], 75% of the companies that have a formal process of measurement of performance (46% of all the companies surveyed) use BSC as main method of strategic evaluation. Approximately, 60% of the big North American companies and 53% of the companies in the whole world use BSC [182].


The construction of BSC is made in seven steps: analysis of the vision and mission, internal and external analysis of the organization, key factors of the success, relation of the diagram of causes and effects between the factors, definition of the strategic objectives, election of the KPI, and elaboration of the BSC [183].


According to [184, 185], each strategic objective is assigned to one of the four performance perspectives developed for BSC:

(1) Financial: measurements of create value for the shareholder, (“how do we look to the shareholders?”), risk management, and product profitability [186].

(2) Customers: measurements that reflect the impact of the strategy on customers (“how do clients see us?”), market segmentation, customer profitability, customer acquisition, and customer satisfaction [187].

(3) Internal processes: measures of the critical organizational processes for the strategy, (“what should we stand out?”), profitability, distribution, and control of processes [188].

(4) Innovation and learning: measures for training the organization’s personnel with the necessary skills (“can we continue improving and creating value?”), technology, human resources, and training [189].


In [190, 191], each strategic objective is measured with key indicators of performance. Table 8 classifies the thirty-seven studies categorized in Table 1 (strategic evaluation), taking into account the perspectives and indicators developed for BSC.



For the development of the BSC model, Kaplan and Norton [212] pose it can be resorted to four phases with their respective products:


(1) Strategic concept—defines the strategic orientation of the organization; (2) objectives—policies and strategic measurements: consolidation of the executive team and the support of managers for the development of the strategic objectives and the key indicators; (3) policies, goals, and initiatives—BSC design finalization, establishment of all the preliminary parameters to be used in the organization; and (4) communication and implantation—integration of the management control and the strategic manager in the managerial agenda of the organization [213] (Table 9).



Finally, BSC transformations focused on the description of the function of the strategic maps, using chains cause-effect among the strategic objectives and how organizations use their leader staff to align the processes and key systems of management with the strategy [192]. Due to the complexity and speed of the changes in the external environment of the industrial organizations, Korableva and Kalimullina [167] propose to use a hybrid model BSC-SWOT for the optimization of the organizations taking into account the basic approaches and the commercial goals of the business.


It is becoming mandatory to consider the sustainability within the strategic decision making [199]. Maintain that the economic development, considering the environmental and social factors, is the new concept of sustainability balanced scorecard (SBSC) [200].


Even though BSC has been widely used for the strategic evaluation, it has some deficiencies in the implementation. For Abran and Buglione [205], obtaining a global BSC performance rating is poor, due to the lack of methods to combine the indicator scores; therefore, different authors propose the use of tools to overcome these deficiencies: Ravi et al. [201] use the analytic network process (ANP) with BSC in the problems of the reverse logistic in the industry of hardware of computers; Leung et al. [206] suggest the use of analytic hierarchy process (AHP) to overcome the deficiencies of BSC; finally, Lee et al. [207] present a combined model fuzzy (FAHP) and BSC to face these problems.


A subject that acquires a lot of criticism in the system of measurement of the performance is its static nature. As a consequence, an increasing current of authors consider that the surroundings of static measurement are not suitable for this time. According to the state by [194–196], the classic BSC, stated by Kaplan and Norton, have deficiencies in organizations where its business has dynamic systems, where the interested parties define the performance in different ways (chains of commercial supply, humanitarian logistics). Norreklit [208] states that BSC has a linear vision of the cause-effect relations among the indicators in the strategic map; moreover, for Brignall [197], the relations cause-effect in BSC are an excessive simplification of the reality since this set of relations is recursive and dynamic. For Linard and Dvorsky [198], BSC presents a lack of clear formalization of the delay in time between the main indicators and the straggled; for Barnabè [202], BSC presents limited support as rigorous mechanism of validation and analysis of scenarios of the relations between the performance indicators, that is, the relations between the KPI in the strategic map do not express the dynamic relations.


This limitation compromises the accuracy of the system of managerial control BSC, making the alignment among the strategic objectives difficult [209]. In this way, the possibility of considering measurement systems of dynamic performances arises, as an attempt of being able to make a better adjustment of the business to the environment reality. [203, 204] propose dynamic BSC models that are supported in the dynamic of systems, as an improvement of the classic BSC model. The dynamic of system is a computer-assisted method that helps to understand the behavior of complex systems, and these techniques use tools such as diagrams of causal cycles, time delays, and stocks [214].


Kaplan and Norton [193] pose that BSC is not only a measurement system of strategic control, able to manage the problem of the implementation of the strategy. However, Simons [215] argues that BSC is a hierarchic falling model that is not rooted in the organization or the environment, so it is questionable as a tool of strategic control and points out that there exists a barrier between the strategy expressed in the plan proposed by the manager and the strategy expressed in the really started actions. Van Veen-Dirks and Wijn [210] affirm that BSC gives an inadequate feedback about the strategy content and does not give enough information about the external surroundings.


The defenders of BSC declare that each business unit must develop and use not only common but also unique measures [193]. However, Lipe and Salterio [211] have found that not all the measures in the BSC are treated equal during the performance evaluation process.



SM offers companies to add value, create, find, reinforce, and overcome its competitive position, indicating what actions must be adopted to achieve this position. The formulation of strategies allows companies to stand out the addresses or course of action in the future, indicating the action guidelines, marking a behavior in time, defining the internal management of the company with the objective of placing the organization in the best competitive environment to achieve the success.


Business success demands a continuous adaptation of the company to its environment. The competitiveness becomes the economic criteria by excellence to orient and evaluate the performance inside and out of the company. The business success depends in great measure on the kind of strategy adopted by the company; the companies are required to define strategies that allow the access to the actual competitive world, and if these strategies are not accompanied of the management tools that guarantee their materialization, the efforts are useless. There are several strategies and many tools that support each of them, however, the strategist must know and define, based on internal and external diagnostics which are the most indicated strategies that allow to arrive to a competitive advantage over the competitors of the same branch. This paper proposes a guide through a systematic literature review, which allows administrators and researchers to know general concepts and steps that must be followed when doing SM within their industrial organizations, allowing to know their position in the market and from there, to define where they want to go in the future.


Even though it is not a guarantee of success, SA allows organizations to make efficient decisions in the long term, take them to practice efficiently, and start corrective actions as needed. A key for the effective strategic evaluation is an integration of the intuition and the analysis.






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Copyright © 2020 Guillermo Fuertes et al. This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.

Guillermo Fuertes, Miguel Alfaro, Manuel Vargas, Sebastian Gutierrez, Rodrigo Ternero, Jorge Sabattin, "Conceptual Framework for the Strategic Management: A Literature Review—Descriptive", Journal of Engineering, vol. 2020, Article ID 6253013, 21 pages, 2020. https://doi.org/10.1155/2020/6253013


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