Functional level strategies-Plan and Policies

Plans and Policies

Functional Strategies Deals with a relatively restricted plan

designed to achieve objectives in a specific functional area, allocation of resources among different operations within that functional area and coordination among different functional areas for optimal contribution to the achievement of the business and corporate level objectives.

Vertical Fit Horizontal FitCongruence and coordination among strategies at different level.

Congruence and coordination among different strategies at same level.

Corporate Level strategies

Business Level Strategies

Functional-Level Strategies

Marketing Plan &

PoliciesFinancial

Plan &Policies

OperationalPlan &

PoliciesHRM

Plan &Policies

InformationManagement

Plan &Policies

Functional Plans and Policies Functional strategies defined in terms

of functional plans and policies-plans or tactics to implement business strategies- are made within the guidelines set at the higher levels.

PLANS are made to select a course of action while POLICIES are required to act as guidelines to action

Need for Functional Plans and PoliciesTo implement strategic decisions by all parts of

an organization;To control activities in different functional areas

of business;To reduce time spent by functional managers in

decision makingTo handle similar situations occurring in

different functional areas in a consistent manner;

Coordination across the different functions takes place

Financial Plans and Policies1. Sources of Funds: Capital Mix Decisions: Capital

structure, procurement of capital and working capital borrowings, reserves and surplus, relationship with lenders, banks and financial institutions.

2. Usage of Funds: Investment or asset-mix decisions: Capital investment, fixed asset acquisition, current assets, loan and advances , dividend decisions etc.

3. Management of Funds: The system of finance, accounting and budgeting, cash, credit and risk management, cost control and reduction etc.

Marketing Plans and Policies1. Product: quality, features, choice of

models , brand names, packaging etc.2. Pricing: Discount, mode of payment,

allowances, payment period, credit terms etc.

3. Place: Channels to be used, transportation, logistics and inventory storage management and coverage of markets etc.

4. Promotion: Advertising, personal selling, sales promotion and publicity.

Operations Plans and Policies

Production system - capacity, location, layout, product or service design, work systems, degree of automation, extent of vertical integration.

Operations Planning and control – aggregate production planning; materials supply; inventory, cost and quality management; and maintenance of plant and equipment.

Research and development- product development, personnel and facilities, level of technology used, technology transfer and absorption, technological collaboration and support.

Personnel Plans and Policies Personnel System - manpower planning, selection,

development, compensation, communication and appraisal.

Organizational and employee characteristics – corporate image, quality of managers, staff and workers, perception about and image of the organization as an employer, availability of development opportunities for employees, working conditions.

Industrial Relations – union-management relationship, collective bargaining, safety, welfare and security, employee satisfaction and morale.

Information Management Plans and Policies

Acquisition and retention of information- sources, quantity, quality and timeliness of information, retention capacity and security of information.

Processing and synthesis of information – database management, computer systems, software capability and the ability to synthesize information.

Integrative, Systemic and supportive factors – Availability of IT infrastructure, its relevance and compatibility to organizational needs, upgradation of facilities, willingness to invest in state-of-the-art systems, availability of computer professionals and top management support.

Plans and Policies of Public sector banksThe public sector banks (the State Bank group and

the nationalized banks) had to face a tough challenge when the new private sector banks made their entry in early nineties.

The new banks had the benefit of starting on a clean slate and had started with state-of-the-art technology which in turn helped them save on man power costs and provide better services.

The older banks had not kept up-to-date with technology and were facing competition of this kind for the first time.

Introduction of new products and services: new products include debit cards, credit cards, international cards, special deposits, demat accounts and any-where-banking. Some of the new services include round-the-clock phone-banking, Automated Teller Machines (ATMs), inter-city, inter-branch banking, net-banking and bill payment services.

Computerisation and networking of branches: Many of these branches were also networked so that their customers could be offered ‘any-time, any-where’ banking services.

Risk Management and Capital Adequacy: Many public sector banks were saddled with large non-performing assets (NPAs) and suffered from low capital adequacy. Banks have since put in place stringent Risk Management Systems to address not only credit risk, but also market risk and other operational risks.

Referenceshttp://www.etstrategicmarketing.com/

Smmarch-april04/art1-1-2.htmlhttp://www.financialexpress.com/news/sbi-

plans-marketing-division-global-consultant-to-formulate-strategy/57636/

http://www.thehindubusinessline.com/2007/09/07/stories/2007090752290600.htm

Strategic Management and Business Policy by Azhar Kazmi