Function Level Strategies

Financial Strategies & Human Resource Strategies Presented By : 11MBA020 11MBA022 11MBA028 11MBA034

Most of the time, Strategies should not be Formulating strategies at all; they should be getting on with IMPLEMENTING Strategies they already have - Henry Mintzberg

Financial Strategies

 Financial Strategies are related to several Financing Concepts like Acquiring needed Capital/Source of Fund Developing projected Financial budget/statements Management/Usage of Funds Evaluating the worth of Business

 Acquiring needed Capital/Source of Fund

Successful Strategy implementation often requires additional Capital. Basic Sources of capital for an Organization are Debt & Equity. Proper Ratio of Debt must maintain by organization in short earning period or in long period Too much debt in Capital Structure resulted in Stockholder return & Company Survival . Special Stock is issued to finance strategy implementation , ownership and control of the enterprise to avoid of hostile takeovers , mergers and acquisitions.

Major Factor for Strategies Formulation : Capital Structure Procurement of Capital & Working Capital Borrowings Reserve & Surplus as Source of Funds Relation ships with lenders, Banks and Financial Institution
Most of the company may rely on External borrowings or another may follow policy of Internal Financing.

 Developing projected Financial budget/statements

It allows an organization to examine the expected result of various action and approach. E.g. 1. To increase promotion expenses by 50 % to support a market development strategy 2. To increase salary by 25% to support a market penetration Strategy 3. Sell common Stock to raise capital for Diversification. Company today are being much more attentive in projected Financial Statements to Reasonably rather than too optimistically project future expenses and earnings.

There are almost as many different types of Financial budget as depends on Organization. Cash budget s, Operating budgets, Sales budgets, Profit budgets, fixed budgets, flexible budgets , Variable budget s and Divisional budgets Limitation with Budgets: 1. Over budgeting and Under budgeting cause problems. 2. Financial budget can become a substitute for Objectives. 3. Budget can hide inefficiencies 4. Budget are sometimes used as instrument of domination that result in frustration and other negative impact.

 Management/Usage of Funds
The important factors regarding which plans and policies are to be made are:
Capital investment Fixed asset acquisition Current asset Loans and advances Dividend decisions Relationship with shareholders

Management Funds have to made are :

System of Finance Accounting and Budgeting Management control system; Cash, Credit and Risk management Cost control and reduction and Tax Planning

 E.g. Gujarat Ambuja Cement , Currently a highly profitable cement in the Country , has achieved tremendous financial success primarily on the basis of its policies of cost control. This Company has been particularly successful in maintaining low cost for power, which is a major input in cement manufacturing.
The priorities of management may often conflict with those of shareholders. It is the responsibility of the strategies to minimize the conflict of interest between management & Shareholders.

 Evaluating the worth of Business

It is Central to Strategy implementation because integrative , intensive, and diversification Strategies are often implemented by acquiring other firm. The various methods for determining a businesss worth can be grouped into three main approaches: 1. Determine Net worth/Stock holders equity . After calculating net worth, add or subtract an appropriate amount of goodwill and over valued or undervalued assets. 2. Measuring the Value of Firm. A five year average profit level could also be used.

3. Letting the market determine a businesss worth, involves three methods. a. Base the firms worth on the selling price of a similar Company. b. Price earning ratio method. c. Outstanding Methods

Human Resource Strategies

 Strategies responsibilities of the human resource manager include assessing the staffing needs and cost for alternative strategies proposed. Linking Company and personal benefits is a major new strategic responsibility of Human Resource managers . Other new responsibilities for human resource managers may include Establishing and administering an Employee Stock Ownership Plan (ESOP) Human Resource Problems that arise when business implement strategies can usually be traced to one of three causes : 1. Disruption of Social and political structures , 2. Failure to match individuals aptitude with implementation task 3. Inadequate top management support for implentation activities

 Managers and employee may become engaged in resistance behavior as their roles , right , and power in the firm changes. Matching the strategies is difficult task , Commonly used that matched exact with the situations are to be implemented include transferring managers , developing leadership workshops, offering career development activities , promotions, job enlargement and job enrichment . Best methods for preventing and overcoming human resource problems in Strategic management is to actively involved many managers and employees as possible in the process. Although its time consuming ,this approach builds understanding, trust, commitment and ownership and reduce resentment and hostility.

In a growing number of organizations, Human resources are now viewed as a source of competitive advantage. There is a greater reorganization that distinctive competencies are obtain through highly developed Employee Skill, Culture and management process and System. - Charles Greer

 An organizations recruitment ,selection, training , performance appraisal and compensation practices can have a strong influence on employee Competencies . Recruitment and Selection Training Appraisal of Performance Compensation

 Strategic Role of Human Resource Management

The prominent areas where the human resource manager can play strategic role area as follow : 1. Providing Purposeful direction : Goals of an organization states the very purpose and justify its existence. 2. Creating Competitive Atmosphere : Cost leadership and Competitive Strategy are two important way to achieve it . 3. Facilitation of Change :. HRM will have to dedicate more time to promote changes rather than to maintain the status quo. 4. Diversion of Workforce : Its observed as Male- Female, young old, skilled unskilled. Not only money but Non Financial incentives will play major role in motivation of work force.

5. Empowerment of Human resources: It involves giving more power to those who , at present , have little control what they do . 6. Building core competency : if the business is organized on the basis of core competency , it likely to generate competitive advantage. It need creative, courageous and dynamic leadership having faith in organization's human resources. 7. Development of works ethics and culture : As changing work ethics requires increasing emphasis on individuals and Groups. A vibrant work Culture will have to be developed in organization s to create an atmosphere of trust among people and to encourage creative idea by the People.

It's not necessarily size that matters, it's how fast you move that implement. - Bryan Clay