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REACHING STRATEGIC EDGE
Business Process Reengineering (BPR) A process is a set of
logically related tasks or activities oriented towards achieving a
specified outcome
A process is a collection of activities which creates an output
of value to the customer and often
transcends departmental or functional boundaries, and also
includes all other related activities in
between.
It also includes developing a new product or service, launching
a new product in the market, procuring
goods from suppliers, preparing the organizations budget,
processing and paying insurance- claims
and so on.
A business process comprises a combination of number of such
independent or interdependent
processes as:
1. Developing a new product
2. Customer order processing
3. Bill payment system
This process involves a number of steps performed by different
people in different departments. It is
desired to achieve higher levels of efficiency and
effectiveness, economy and speed, and quality and
output in the processes.
A business is a set of interconnected processes. The redesigning
of process may provide powerful basis
for improving the performance of a business enterprise.
Some processes turn out to be extremely critical for the success
and survival of the enterprise. BPR
focuses on critical business processes out of the many processes
which take place.
All processes may not be crucial; only some processes are
crucial to the company.
A core business process creates value by the capabilities it
provides to the competitiveness.
Core business processes play an important role to satisfy the
needs of the customers. They are vital for
success and are crucial for generating competitive
advantage.
While some core business processes are easily identifiable, some
core business processes may not
always be immediately apparent.
The core processes of a company may change over a period of time
according to the shifting
requirements of its competitiveness and internal and external
environment. Hence the company has
to focus on those processes which need to be focused on
achieving the excellence.
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BPR is a fundamental rethinking of the business activities
making changes in all the functional areas
and non- functional areas in order to make optimum utilization
of the available resources.
The organization should re structure the process keeping in mind
the overall organization goal rather
the department goal.
Nowadays with available technology, the organization can
incorporate the required changes to
improve the business.
Business process reengineering means staring all over, starting
from the scratch. Reengineering, in
other words, means pulling aside much of the age- old practices
and procedures of doing a thing by
forgetting how work has been done so far, and deciding how it
can be best done now.
Reengineering begins with fundamental re- thinking. The
organizations try to find out answers to such
questions like why do we do what we do? and why do we do it the
way we do?
Reengineering does not begin with anything given or with any
assumptions. The thinking process in
reengineering begins with a totally free state of mind without
having any preconceived notion.
Reengineering first determines what a company must do. And then
it decides on how to do it.
Reengineering ignores what the existing process is and
concentrates on what it should be.
Another key element in the reengineering involves radical
redesigning of process.
Radical redesigning means going to the root of the problem
areas, not merely attempting to make any
superficial changes. Radical redesign involves completely
discarding all existing structures and
procedures and evolving completely new ways of doing the
work.
Reengineering is about business reinvention- not business
improvement, business enhancement or
business modification.
The steps of BPR are:-
1. Determining objectives and framework- It helps in building
comprehensive foundation for the
reengineering process. This will provide the required focus,
direction, motivation, etc for the redesign
process.
2. Identify customers and determine their needs- The designers
have to understand the customers
needs and wants, their profits, their steps in acquiring, using
and disposing a product and the purpose
is to provide added value to the customer.
3. Study the existing process- This will provide an important
base for the redesigners. The purpose of this
is to understand the what and why of the targeted process.
4. Formulate and redesign a process plan- The information gained
through the earlier steps is translated
into an ideal redesign process. In this step, alternative
processes are considered and the best is
selected.
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90 SREERAM ACADEMY (FORMERLY SREERAM COACHING POINT)
5. Implement the redesign- It is easy to formulate new process
but to implement them is hard.
Implementation of the redesign process and application of other
knowledge gained from the previous
step is to achieve dramatic improvement.
Problems in BPR
1. Only a few companies are able to go for a major and radical
improvement in the business process.
2. This restructuring may impose new challenges
3. It disturbs established hierarchies and functional structures
and involves resistance among the work-
force.
4. Reengineering takes time and expenditure
5. Even there can be loss in revenue during the transition
period.
6. Setting of targets is complicated and difficult.
7. If the targets are not properly set, or the whole
transformation not properly carried out, reengineering
efforts may turn out as a failure.
Total Quality Management (TQM)
TQM is seen as the most comprehensive approach to quality
thinkable for an enterprise.
The pillars of TQM are:-
T stands for Total- It is the integration of staff, suppliers,
customers and other stakeholders. It is away from
party- specific thinking to a more holistic approach.
Q stands for Quality- it is the quality if the work and the
process of the enterprise leading to quality of
products.
M stands for Management- It stresses on the leadership task
quality and quality of leadership form a
scientific point of view TQM can be a seen as a leadership.
Success of an organization is greatly influenced by and depends
on the quality of its products marketed and
services offered. In addition, the reputation of the
organization is determined by the behavioral disposition of
the people. The quality of products and services depends on the
methodology and technology adopted, as well
as on the work culture of the organization. Quality is the
essential requirement for survival and growth. The
importance of quality has commanded the strategic apex of the
company to concentrate on quality and this
led to the development of the new aspect of management. The
philosophy of TQM means that the
organizations culture is defined by and supports the constant
attainment of satisfaction through an integrated
system of tools, techniques and training. This involves the
continuous improvement of processes, resulting in
high quality products and services. As popularized by Deming and
Later Juran, TQMs premises center on
intrinsic quality control, removal of adversarial relationships,
constancy of purpose, continual in- service
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91 SREERAM ACADEMY (FORMERLY SREERAM COACHING POINT)
training, and attention to customer preferences. It holds that
changes is inevitable, desirable and welcome and
that it must be planned for with participation by the greatest
number of constituencies.
Benchmarking
Benchmarking is basically a process of determining who the best,
which sets the standard is and what that
standard is.
It is an exercise of identifying the best practices in the
industry and to emulate them.
The practice of benchmarking enables an organization to
accelerate an organizations rate of
improvement.
Benchmarking promotes a thorough understanding of companys own
processes. Thus, the companys
own profile is well understood.
The thorough study leads to identification of non- value adding
activities
Benchmarking, thus, is a part of larger profit effort usually a
process of reengineering or quality
improvement initiative.
Types of Benchmarking: Benchmarking is essentially looking
around and learning from others. Based
on the objects to be benchmarked, four categories of bench
marking are in practice, which are:
1. Product Benchmarking - Customer satisfaction benchmarking or
customer value Benchmarking
are the alternatives names of product benchmarking. Engineering
and qualitative comparison of
products and services comes within the purview of this
benchmarking.
2. Performance Benchmarking One organization benchmarks the
performance measures of other
organizations. Performance measures may include return on
assets, cycle time, percentage of on
time delivery ,percentage of damaged goods, fraction defectives,
mean time between failures
(MTBF), time spent on administrative activities and the like.
Thus, this is a process of intercompany
comparison done through a set financial ratio, performance
indicators where scope for
improvement is high enough. National productivity council has
recently prompted.
3. Process Benchmarking- In process benchmarking, the phrases
like know where, know how,
know why, are found of paramount importance. In addition to
knowing where a company is, we
are also able to know, how and why it has reached that stage.
Process benchmarking helps us
to open our eyes and provides us with a more effective and
efficient process to be implemented.
This type of benchmarking contains all the elements of ideal
benchmarking process. E.g. analysis,
comparison and synthesis. National productivity council proposed
a model process benchmarking
methodology to be carried out by a team of process experts.
The following are the steps:
1. Identify the object or process to be redesigned
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2. Map and measure the existing process in its entirety in terms
of relevant critical dimensions.
3. Identify the partner where the same process is known to be
better performed.
4. Analyze the partners process and find out the differences.
This often requires collection of
checklist/ questionnaire and / or physical visit to the partners
side.
5. Redesign the process and put up the proposal for management
approval.
6. Implement the redesigned process
7. Monitor the performance of the redesigned process
8. Recalibrate the process.
4. Strategic Benchmarking - This benchmarking refers to the
ability to see where one company wants
to go. In case of strategic benchmarking, strategy is both
forward looking (proactive PDCA), as
well as side looking (Interactive). Indian firms started
pursuing strategic benchmarking since 1990s.
Based on the organization being benchmarked, there can be as
many as five methodologies.
1. Internal benchmarking: organization can benchmark within
itself. One department can
benchmark some other department. If there is collaboration, then
benchmarking can be
among organization collaborated.
2. Industry benchmarking: Performances of other organizations,
within the industry, producing
the products or services of same nature are compared.
3. Competitive benchmarking: Performances of competitors are
directly compared.
4. Best in class benchmarking: Implies comparison of best
practices prevalent in an organization
irrespective of products and services.
5. Relationship benchmarking: Simply benchmarking an
organization with another organization,
already having relationship like customer supplier relationship,
or joint venture
management.
Six- Sigma
Sigma is a statistical term that measures how far a given
process deviates from perfection. Six sigma stands for
Six Standard Deviations (Sigma is the Greek letter used to
represent standard deviation in statistics) from
mean. Six sigma methodologies provide the techniques and tools
to improve the capability and reduce the
defects in any process. Six sigma is the methodology that
improves the capability and reduces the defects in
any continuous improvement and radical design. It is a
statistical tool used for problem solving which reduces
the defects by streamlining processes.
Six Sigma was started in Motorola, in its manufacturing
division, where millions of parts are made using the
same proceeds repeatedly. Eventually, Six Sigma evolved and
applied to other non- manufacturing processes.
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93 SREERAM ACADEMY (FORMERLY SREERAM COACHING POINT)
Today, Six Sigma is applied to many fields such as Services,
Medical and Insurance Procedures, call centers, etc.
following Motorola, General Electrics, allied Signal, Honey
Well, Ford, Etc also followed suit and realized
powerful bottom line results in their organization.
Higher the Sigma level, better the capability of the process to
produce defect free work and vice versa.
The process model for Six Sigma
To achieve better results through involvement of all the people
in continuous improvement of their processes,
it is required to apply process model to a business. In six
sigma, targets for improvement are set for a process
and not for a function.
Six Sigma methodology
Six sigma methodology improves any existing business process by
constantly reviewing and re-tuning the
process. To achieve, this six sigma uses a methodology known as
DMAIC (Define opportunities, Measure
performance, analyze opportunity, Improve performance, Control
performance)
Define opportunity Define the goals and objectives of
improvement project, which is derived from critical to
quality characteristics, based on voice of customer, project
charter, problem statement, milestones, scope of
project and a high- level map of the process are developed in
this phase.
Measure Measure the process to find the current level of
performance and to gauge improvement later.
Calculate the sigma level as a measure against customer
requirements and for comparison with other
processes.
Analyze Analyze the data connected in the measurement phase to
identify problems in the process and to
find the root causes of the variation. It is applied used of
experience, data and a process review to find viable
causes. It is repeated for refinement or rejection of possible
causes, until the root cause is found and verified
with data.
Improve- Improve the system by finding ways to do things better,
safer, cheaper or faster but most of all to
satisfy your customers. In this phase test, refine and implement
a solution to the root cause. Implement the
new approach and validate the improvement.
Control Control the improvement implemented on continuous basis.
Institutionalize it by altering policies,
procedures, budgets, instructions and other management systems,
if necessary. Sell the project to your
customer and internally, secure management support, and give
final ownership to those working with it on day
to day basis.
SIX SIGMA PROJECT RETAIL DISPLAY.
Define: Marketing has designed a "fancy" display unit that they
think will outperform the "standard" display unit and they want to
put one in every store. "Fancy" display is 10X cost of a "standard"
display and all stores already have "standard" units. Should the
new displays be purchased. Measures: Have data for each store on
sales of this product for every day.
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94 SREERAM ACADEMY (FORMERLY SREERAM COACHING POINT)
Analyze: The stores identified at least three other factors
besides display type that could impact sales. Range for each factor
was identified. Design of Experiments was conducted. Improve:
"Fancy" display had no significant impact on sales. The "fancy"
displays were not ordered for any more stores, with considerable
cost savings.
Control: Future changes will be tested and evaluated using
statistical techniques.
Tools of Six Sigma
At each phase of Six Sigma specific tools are used:
S.NO Phase Tools used at the stage
1 Define Team charter, Knowing Voice of customer
2 Measure SIPOC- Supplier Input- Process- Output
Customer, Data collection
Rejection trends, Rejection cost
Defect Matrix, MSA
3 Analyze Process stratification, Pareto analysis
Root cause analysis, Why- why analysis
4 Improve Action plan
5 Control Training of the workforce, P Charts
The steps to Six Sigma: Six sigma begins with shrinking the
inherent variation in a process to half the
specification range (Cpk= 2.0). At the same point of time the
mean is to shift at most 1.5 sigma from the
specification midpoint (the target quality)
Motorola prescribes six steps to achieve the six sigma
1. Identify the product or service you provide
2. Identify the customers for your product or service and
determine what they consider important.
3. Identify your needs to provide the product or service that
satisfy the customer.
4. Define the process for doing the work.
5. Mistake- proofs the process and eliminates waste effort.
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95 SREERAM ACADEMY (FORMERLY SREERAM COACHING POINT)
6. Ensure continuous improvement by measuring, analyzing and
controlling the improved process.
Many companies are frequently adopting Measure- Analyze Improve-
Control (MAIC) cycle to use six
sigma. They adopt certain steps:
1. Select critical to quality characteristics.
2. Define performance standard (the targets to be achieved)
3. Validate measurement systems (to ensure that data are
reliable)
4. Establish product reliability (how good are your products
now)
5. Define performance objectives
6. Identify sources of variation (use 7 QC tools)
7. Screen potential causes (apply correlation studies etc
8. Ascertain relationship between variables (Causes of factors,
fan and the output)
9. Establish operating tolerances for input factors and output
variables.
10. Validate the measurement system (without validation you cant
be sure)
11. Determine the process capability (Cpk)
12. Implement process controls
Contemporary Strategic Issues
If any organization wants to stay competitive, it needs to be in
e- commerce. The strategy should be to
integrate the Internet into all of the core business.
The impact of the Internet and the rapidly emerging e- commerce
environment is very much in the growth of
the business. The real- time data processing and e-commerce
applications make a lot of difference to the
business growth. The coming of e-commerce has changed the
character of the market, created new driving
forces and key success factors and created new strategic
groups.
E- Commerce applications have enormous potential for the growth
of the company. The internet economy
provides opportunities and also poses threats that demand
strategic response and that require managers to
craft bold new strategies.
What is Internet Technology?
The Internet is an integrated network of banks of servers and
high- speed computers, digital switches and
routers, telecommunications equipment and lines, and individual
users computers. The backbone of the
Internet consist of telecommunications lines criss- crossing
countries, continents, and the world that allow
computers to transfer data in digital form at very high
speed.
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The bandwidth of the line determines the capacity or speed of
the data transfer. These lines are connected to
computer- like digital switches that move traffic along the
backbone lines; many of these switches act as
routers, deciding which way to direct the traffic and how to
handle the requests of users computers to send or
obtain data based on the destinations and line congestion.
Users gain access to the network via a LAN server or an ISPs
computerized switch that has the capability to
route traffic to and from end users directly connected to it.
Many different types of specialized software are
required to make the Internet function and infuse it with
attractive e- commerce capabilities.
Characteristics of the e-commerce environment
1. The internet makes it feasible for companies everywhere to
compete in global markets. Internet opens up
a much bigger geographical market.
2. Competition in an industry is greatly intensified by new
e-commerce strategic initiatives of existing rivals
and by the entry of new, enterprising e-commerce rivals.
3. Entry barriers into e-commerce are relatively low.
4. The information is available to the customers throughout the
day.
5. The internet results in a much faster diffusion of new
technology and new ideas across the world.
6. Saves cost and time.
COMPREHENSIVE LIST OF STATE WHETHER THE FOLLOWING ARE CORRECT OR
INCORRECT
Business environment:
The basic objective of a business enterprise is to monitor the
environment
Incorrect: Monitoring environment is not the basic objective.
The primary objective is to create and retain
customers. Organizational objectives include: survival,
stability, growth, profitability etc. Organizations monitor
the changes in the environment, analyze their impact on their
own goals and activities and convert their
analysis in terms of specific strategies for survival, stability
and growth.
The first step of strategy formulation in strategic management
model is to undertake internal analysis.
Incorrect: Identifying an organizations existing vision,
mission, objectives and strategies is the starting point
for any strategic management process. This is because n
organizations existing situation and condition may
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97 SREERAM ACADEMY (FORMERLY SREERAM COACHING POINT)
include certain strategies and may even dictate a particular
course of action. Determining vision and mission
provides long term direction, and infuse the organization with a
sense of purposeful action.
Environmental constituents exist in isolation and do not
interact with each other.
Incorrect: Business environment consists of a no: of factors,
events, influences etc. Which arise from different
sources and interact with each other continuously to create new
sets of complex influences.
Profit may not be a universal objective but business efficiency
is definitely an objective common to all
business.
Correct: The primary objective of business is to earn adequate
profit but not maximum profit. Profit serves as a
yardstick to measure the success of a business. To facilitate
and sustain profit earning, certain other objectives
are also pursued by business and efficiency is one of them.
Business policy and strategic management:
Retrenchment implies downsizing of business.
Incorrect: In the context of strategic management, retrenchment
implies giving up certain products and
reducing the level of business as a compulsive measure to cope
up with certain adverse developments on
which the firm has little control. Downsizing is planned
elimination of positions or jobs. Retrenchment
does not imply downsizing however the latter is often used to
implement a retrenchment strategy.
Efficiency and effectiveness mean the same in strategic
management.
Incorrect: Efficiency is the relationship between inputs and
outputs but only for a short time. Effectiveness
on the other hand highlights the link between the organization
and its environment.
Strategy is a substitute for sound, alert, responsible
management
Incorrect: its no substitute for sound, alert, responsible
management. Strategy can never be perfect,
flawless and optimal. It is in the very nature of strategy that
it is flexible and pragmatic. It is art of the
possible and does not preclude second best choices, tradeoffs,
sudden emergencies, pervasive pressures,
failures and frustrations. However in a sound strategy,
allowances are made for possible miscalculations
and unanticipated events.
Strategic management is not needed in non profit
organisations.
Incorrect: Strategic management refers to the managerial process
of forming a strategic vision, setting
objectives, crafting strategy implementing and executing the
strategy and then overtimes initiating
whatever corrective adjustments in the vision, objectives,
strategy and execution are deemed appropriate
and therefore, the steps required in all types of organization
whether profit oriented or not as profit is not
the sole motive of strategic management.
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All strategies emerge from corporate vision.
True: All strategies emerge from corporate vision as a strategy
is meant to fill in the need of organizations
for a sense of dynamic, direction, focus and cohesiveness.
Strategies are made to evaluate and exploit
beneficial opportunities, to perceive and meet potential threats
and crisis, to make full use of resources
and strengths, to offset corporate weaknesses and to make major
decisions in general.
Strategic analysis:
Industry is a grouping of dissimilar firms.
False: Industry is a group of firms whose products have same and
similar attributes such that they compete
for the same buyers.
Strategic planning:
Acquisition is a strategy.
True: Acquisition is a cooperative expansion strategy. It
provides a rapid means of gaining an established
product or market.
A companys strategy has always to be proactive in nature.
False: Strategy is partly proactive and partly reactive. A
companys strategy is typically a blend of proactive
actions on the part of managers to improve the companys market
position and financial performance and
as needed reactions to unanticipated developments and fresh
market conditions. Hence portion of a
companys strategy is always developed on the fly, coming as a
reasoned response to unforeseen
developments- fresh strategic manoeuvre on the part of rival
firms, shifting customer requirement and
expectations, new technologies in the market opportunities, a
changing political or economic climate in
the surrounding environment.
Formulation of functional strategy:
Teleshopping is an instance of direct marketing.
True: Direct marketing is the process of marketing through
various media which interact directly with the
customers and customers also make a direct response. I
teleshopping customers make a direct response.
Thus teleshopping is an instance of direct marketing.
Strategy implementation and control:
Functional level constitutes the lowest hierarchical level of
strategic management.
True: Functional level managers and strategies operate at the
lowest hierarchical level of strategic
management. Functional level is responsible for specific
business functions or operations like human
resources, purchasing, product development, and customer service
and so on. It constitutes a company or
one of its divisions. Although they are not responsible for the
overall performance of the organization,
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99 SREERAM ACADEMY (FORMERLY SREERAM COACHING POINT)
functional managers nevertheless have a major strategic role to
develop functional strategies in their area
that help to fulfil the strategic objectives set by business and
corporate level managers.
A core competence is a unique opportunity of an organisation not
shared by the others.
True: Core competencies represent distinctive skills which help
a firm gain competitive advantage over the
others. It is thus not shared by others and if the competitors
imitate or develop similar core competencies,
the firm has to continuously gain more and more competencies to
stand aside.
Strategy follows structure.
True: Strategy does follow the structure as it is impossible to
formulate or implement strategy without
structure. Structure defines the framework within which the
activities are to occur.
Resistance to change is an impediment in building of strategic
supportive corporate culture:
True: It is strategy implementers work, once the strategy is
chosen, to change whatever factors of the
corporate culture whatever factors of the corporate culture
hinders effective execution. This is because,
once a culture is executed, it is difficult to change.
Changes of any type are always disquieting, sometimes they may
be threatening:
Incorrect: The toughest management task is to talk about change.
This is because of heavy anchor of
deeply held values and habits people cling emotionally to the
old and familiar. However favorable
changes either in the external environment on internal
environment are not threatening or disquieting.
An organisations culture is always an obstacle to successful
strategy implementation.
Incorrect: Culture is not always an obstacle. Strong culture
promotes good strategy execution. It does the
following positives to the organization:
Provides a system of informal rules and peer pressure regarding
how to conduct a business internally
and how to go about doing ones job.
Shape the mood, temperament, and motivate the workforce,
positively affecting organisational
energy, work habits and operating practices, the degree to which
organisational units cooperate, and
how customers are treated.
Nurtures and motivates people to do their jobs in ways conducive
to effective strategy execution.
It provides structure, standards, and a value system in which to
operate and it promotes strong
employee identification with the companys vision, performance
targets and strategy.
This makes the employees feel genuinely better about their jobs
and work environment and the merits
of what the company is trying to accomplish.
Reaching strategic edge:
The main focus of six sigma is o the shareholders.
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100 SREERAM ACADEMY (FORMERLY SREERAM COACHING POINT)
Incorrect: Although any business action may result directly or
indirectly i creation/erosion o shareholders
wealth, the main focus of six sigma is on delivering value to
customers. Six sigma aims in improving
customer satisfaction. Primarily, six sigma means maintenance of
the desired quality in processes and end
products. It also means taking systematic and integrated efforts
toward improving quality and reducing
cost.
Rest of the questions from may09-nov10:
Non profit organisations are not required to have a
strategy.
Incorrect: Similar to commercial organizations non profit
organizations must also have a strategy.
It is required to give it direction, focus and efficient
utilization of resources. In many not for profit
organizations surpluses are important for their survival and
growth.
Control system run parallel with strategic levels.
Correct: There are three strategic levels- corporate, business,
and functional. Control systems are
required at all the 3 levels. At the top level, strategic
controls are built to check whether the
strategy is being implemented as planned and the results
produced by the strategy are those
intended. Down the hierarchy management controls and operational
controls are built in the
systems. Operational controls are required for day to day
management of business.
Globalisation means different things to different people.
Correct: Globalization refers to the process of integration of
the world into one huge market. Such
unification calls for removal of all trade barriers among
countries. Globalization is an opportunity
for organizations to expand their markets and reach out to
different customers. Globalization can
also have other meanings. For some it is a new paradigm- a set
of fresh beliefs, working methods,
and economic, political and socio-cultural realities in which
the previous assumptions are no
longer valid. For developing countries, it means integration
with the world economy.
Production strategy implements, support, and drive higher
strategies.
Correct: For effective implementation of higher level
strategies, strategists need to provide
direction to functional managers including production, regarding
the plans and policies to be
adopted. Production strategy provides a path for transmitting
corporate and business level
strategy to the production systems and makes it operational. It
may relate to production
planning, operational system, control and research and
development.
Benchmarking and BPR are one and the same.
Incorrect: Benchmarking relates to setting goals and measuring
productivity based on best
industry practices. The idea is to learn from competitors and
others to improve their own
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101 SREERAM ACADEMY (FORMERLY SREERAM COACHING POINT)
performance. On the other hand BPR relates to analysis and
redesign of workflows and processes
both within and between the organizations.
Strategic management is a bundle of tricks and magic.
Incorrect: Strategic management in not a bundle of tricks and
magic. It involves systematic and
analytical thinking and action. Although, the success or failure
of a strategy is dependent on
several extraneous factors, it cannot be stated that a strategy
is a trick or magic. Formation of
strategy requires careful planning and requires strong
conceptual, analytical, and visionary skills.
The purpose of SWOT analysis is to rank organisations.
Incorrect: SWOT analysis stands for the analysis of strengths,
weaknesses, opportunities and
threats. It is not used for ranking of organizations. It is a
tool for organizational and environmental
appraisal necessary to formulate effective strategies.
SBU concepts facilitate multi-business operations.
Correct: Organizing business along SBU lines and creating
strategic business units has become a
common practice for multi product/ service and global
organizations. It is a convenient and
intelligent grouping of activities along distinct businesses and
has replaced the conventional
groupings. SBU facilitates strategic planning, gaining product
related /market related
specialization, gaining cost-economies and more rational
organizational structure.
PLC is an S-shaped curve.
Correct: PLC(product life cycle) which is a graphical depiction
of sales overtime is an S-shaped
curve with four strategies- introduction, growth, maturity and
decline. The pattern is shared by all
product group and families though the duration for each phase is
different in each case.
Identification of PLC stages for a product/service offers useful
insights for marketing
management.
The rate and magnitude of changes that can affect organisations
are decreasing dramatically.
Incorrect: No, the reality is just the other way round. Business
environment especially after
globalization and liberalization is witnessing change that is
fast paced and has far reaching
implications for business. This is true for economic, political,
technological, legal, and socio-
cultural factors. This has created strong pressures on
organization for proactive adaptation to
environmental changes for survival growth and competitive
edge.