SUMMARY OF MANAGERIAL POLICY

Managerial Policy is taught to educate the students in apprising them about:

1. The current situation of a company
2. The vision to take it to another level say in 5 years time
3. Various options available (different strategies)
4. Selecting one option, then
5. Various roads available to reach that option
6. Selecting the most optimum road and then
7. Finally implementing the action plan for that road
8. Evaluating the result and taking corrective action
Assignment One - Personal Example:
We discussed that one can understand it better if one reflects it to his own life.
The individual is having the present situation and he visualizes his future say 20 years from
now with a different set of parameters.
He then talks about the mid term i.e. 5 years and then immediate i.e. One year and he takes
actions to make it happen against his strengths and constraints.
HISTORY:
The word strategy comes from strategos, the Greek word for a military general.
As we know that for an army leader the first thing is the situation analysis of the terrain,
weather, resources, assessment of the enemy, objectives, various options and then action
plan.
From the word "strategos" from the olden times, in the recent history, in English the word
Strategy was coined meaning the art of fighting and slowly it become a science and art of
running business and organizations.
Now this word strategy is used in nearly all aspects of life with regards to long term plans
and how to achieve them.
Strategy in organizations means long term plans for the corporation.
DEFINITION:
Managerial Policy is therefore the science and art of understanding the:
1.
EFAS = PLEST Global + Pakistan + Competition (Porter 5 types) - CPM = Competitors
Profile Matrix - CIP = Competitors Intelligence Plan i.e. cooperation with the competitors
2.

IFAS = Orchestra = Profit Equation = P=Q(SP-Integral Cost Price)

3.

Vision

4.
Mission = Customer Product Market Technology Philosophy Public Image
Self Concept Survival Growth Profitability

5.
Core Competencies - Four Utilities - Cost Differentiation Focus POLC MBO
SMART SCDA - 4 Ps - Synergy of Strengths - Inhouse versus Outsourcing - Feature versus
Benefit Communication - Selling Price - 6M (Man, machine, material, method,
measurement and mother nature i.e. environment) McKinseys 7S (Structure, systems,
shared values, style, staff, skills) - PORTER'S 5 FORCES (Direct Competition, Suppliers,
Customers, New Entrants, Replacements)
6.
Various options called strategies (16 strategies Backward Forward Horizontal
Related Unrelated Product Share Market Share Market Size Porter Cost 1 Cost 2
Differentiation Focus 1 Focus 2 Retrenchment Divestiture Liquidation)
7.

Selecting one: Strategy Comparison = SWOT SPACE BCG GRAND I&E QSPM

8.
plan

All this resulting into a designed Profit Equation with a Long term plan and immediate

9.

Implementing it, addressing the issues of implementation and then

10.

Evaluating the results: Financial Ratios:

a.

Growth = Sales Net Income EPS Dividend Per Share

b.

Profit = GM OM NP ROA ROE Price Earnings Ratio

c.
Activity = Inventory Turnover Fixed Assets Turnover Total Assets Turnover
Accounts Receivable Turnover Average Collection Period
d.
Leverage = Debt / Asset - Debt/Equity Longterm Debt/Equity Times Interest
Earned Coverage Ratio
e.

Liquidity = Current and Quick

11.

If the results are not as per the plan then adjusting the strategy

and the journey goes on..

SITUATIONAL ANALYSIS:
From the above it is therefore obvious that the first step is therefore to have situational
analysis.
Here the assessment has to be done for both, external factors and internal factor.
The external factors come out from the PLEST Global influencing the PLEST countries i.e.
Pakistan and once you give weight-age to each component of PLEST relevant to the industry
that you are talking about then you have a matrix of components, its weight-age in the
industry, the rating given by you and then the final rating as applicable to your plan.
This is called EFE (External Factor Evaluation) or EFAS (External Factor Analysis Summary)
Similarly the internal evaluation can be called IFE i.e. Internal Factor Evaluation or IFAS i.e.
Internal Factor Analysis Summary and all the internal functions of the company are
evaluated like marketing, finance, accounts, etc and again weight-age is given.
Once then EFE, EFAS and IFE IFAS is made then we are ready with I&E Strategy i.e. Internal
and External Tabulated Matrix.
STRATEGY FORMULATION

Now we start the corporate strategy preparation.

The first step is vision, that means where we want to be in 20 years called long term, and
medium term i.e. 5 years and short term i.e. Immediate plan.
Business Plan: coming out from the market research, opportunity identification, detailed
market research of product, need want demand of consumers, sourcing options, process
options, distribution options and dynamics of conventional behaviour
1.
This should also include the competition of the day and future with projected financial
statements and capital requirements.
2.
Sourcing: a structure to be put in place to continuous study make or buy decisions
and if make then self or vendorisation or partial outsourcing and it buy then local buy or
import or blend of the two and innovative import. The sensitivity of the supply sources for
various currencies and other fluctuations.
3.
The process: What it takes to convert the input into a final product/service. Here use
of IT comes in and the whole business has to be planned. Company formation, choice of
structure, place of incorporation, management structure, partners, their profiling, future
trends, financial needs and options, scalability of the business versus scalability of the
organization. TQM Tools if applicable like BBSC, 6Sigma, ISO 9000, What value they add
against cost, training of organization to keep updated with the times
4.
Distribution and Sales with Consumer Pull Marketing: consumption patterns and how
the product is reaching them. Current patterns and future trends, mix of various channels,
behaviour, profitability, strengths and blackmailing, company's decision on choice of channel
and developing the organisation to cater for it. Continuous promotional plans to inform the
consumers and the trade about differential product offer.
5.
Accounts, Finance, Corporate Governance, Risk Coverage, Continuity of Management,
Classis Management Hazards, product obsilicience, country risk, diversification, growth,
future of the organization.
The factors against which we have to measure our today and our annual, midterm and long
term targets are: Turnover, Gross margins, Market share, Employee satisfaction, Customer
satisfaction, CSR, OPEX, Net Income, Interest, Dividend, Earning per share, Various financial
ratios, Brand index, Market reach and coverage and Now with modern tools of BBSC ie.
Business Balanced Score Card and with the application of ERP and dash board of the top
management, the four components of Financial ratios, Customer aspect analysis (CRM),
Employee organization culture analysis and finally all the process with various TQM tools like
6Sigma, Kaizan, ISO 9000 etc.
Vision has to be realistic based on today's situation analysis, competitive pressures and
projection of competition, EFAS, IFAS and the leadership required and available.
Once we know what to achieve (vision) we come to the 2nd aspect i.e. How to achieve it.
This is called Mission and the books of strategy have specified 10 components i.e. Customer
Product Market Technology Philosophy Public Image Self Concept Survival
Growth Profitability
After Vision and Mission we come to the core strengths which have to be converted into core
competitive advantages and we have to select the strategy which will finally result in to
sustainable competitive differential advantage.
The first two words are the essence of the whole science and art of corporate strategy.

Any strategy which can be sustained of the time against the various pressures is the answer.
And any strategy which remains competitive against the other players is the name of the
game.
Differential advantage is therefore not a static phenomenon.
To make it sustainable and keep it competitive, one has to be constantly aware of his EFAS
IFAS for his industry and create change in his organization through his leadership so that his
parameters not only remain required today but will also come out successful in mid term
and long term.
The study of various companies is important and we will study the 7 CEO stories of 7 big
corporations
For all the above we classified the corporate strategy into the following 6 components:
PLEST Global, PLEST Pakistan, Study of competition through 5 forces of Porter, Various
strategy tools (SWOT, BCG, I&E, SPACE, GRAND, QSPM), Implementation of strategy and the
issues of general nature and functional nature needing an orchestra to be played and the
Leadership to implement change and constantly drive results.
Through the book David, Fred and the 10 HBR articles, we will understand the same above 6
functions into following 11 chapters:
Chapter 1: What is Strategy (HBR Article What is Strategy)
Chapter 2: What is Vision, Mission and Long Term Targets (HBR Article What is Vision)
Chapter 3: EFAS (HBR Article Michael Porter 5 forces - Competition)
Chapter 4: IFAS
Chapter 5: Strategic Tools (HBR Article: BBSC)
Chapter 6: Selection of Strategy (HBR Articles: Blue Ocean and Reinventing the business
model)
Chapter 7: Issues of implementation general (HBR Article Great Strategy Great
Performance - 7 steps - Venetian Blind)
Chapter 8: Issues of functional nature i.e. Marketing, finance, etc (HBR Article: Strategy
Implementation)
Chapter 9: Evaluation and corrective action (HBR Article: Decision Making and Corner Office)
Chapter 10: CSR and Ethics
Chapter 11: International Issues
Now once we will understand the 11 concepts through Fred David + HBR Articles and the
leadership through 7 CEO book, then we will have class discussions where we will tabulate
the following notes: The traits of leadership, TQM Japanese Model, TQM American Model,
and Business Architecture
Finally we will convert all the learning into a term report with the following 7 chapters:
Introduction of the product or service into the world, Intro in Pakistan, PLEST Global, PLEST
Local, Study of three players in the industry with application of: Application of tool: GRAND

and SPACE, Critical Analysis of the Industry based on the three players and SWOT, and a new
company in the same industry with blue ocean or reinventing the business model