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What is Strategy..???

Why Strategy..???
Strategy is a set of key decisions made to meet
objectives. It refers to a complex web of
thoughts , ideas, insights, experiences, goals,
expertise, memories, perception s and
expectations that provide general guidance for
specific actions in pursuit of particular ends.

Every firm competing in an industry has a


strategy, because strategy refers to how a
given objective will be achieved.
Strategy defines what it is we want to
achieve and charts our course in the
market place.
It is basis for the establishment of a
business firm. It is a basic requirement
for a firm to survive and sustain itself
in todays changing environment.
What business we are in ? What products and
services will we offer?
To whom?
At what price? On what terms?
Who are the competitors?
On what basis will we compete?
..Then there is strategy
in place.
Definition of Strategy

As per Glueck,
Strategy is unified, comprehensive and integrated plan
relating the strategic advantages of the firm to the
challenges of the environment. It is designed to ensure
that the basic objectives of the enterprise are achieved.

As per Alfred D. Chandler,


Strategy is The determination of basic long-term goals
and objectives of an enterprise and the adoption of the
courses of action and the allocation of resources
necessary for carrying out these goals.
Characteristics of strategy
The decision is concerned with
or effects the long term
direction of an organization.
Strategic decisions are normally
about trying to achieve some
advantage for the organization.
Decision is likely to be
concerned about the scope
of an organisations activities.
Decisionscan be seen as
matching of the activities of an
organization to the
environment in which it
operates.
Characteristics of strategy
Decision have
s majo
financial implications.
resource r
Decision will or have a
major impact othe
outside
r
the organization.
Strategi decisions
likely
c to affect ar
operations
e
decisions.
Decisions entail
5 Ps of strategy
Professor Henry Mintzberg
of McGill University in
Montreal, Canada,
articulated what he labeled
as the 5 Ps of strategy.
According to Mintzberg,
understanding how strategy
can be viewed as a plan, as
a ploy, as a position, as
a pattern, and as
a perspective is important.
It tells about 5Ps for strategy- These are:-
oPlan consciously intended course of action. (Strategy is developed in
advance and with purpose)
oPloy A way to outsmart the competitor.
(e.g.:- buy patents so that competitor cannot launch a rival product.)
oPattern consistency in behavior. (what was successful in past can lead
to
successful in the future)
oPosition location in environment. (how the organisation relates to its
competitive environment and what it can do to make its product unique
in the marketplace.)
oPerspective way of perceiving the world. (environment is dynamic)
As per Fred R. David, strategic management
is an art and science of formulating,
implementing and evaluating cross
functional decisions that enable an
organization to achieve its objectives.

As per Channon, strategic management is


defined as that set of decisions and actions
that result in formulating of strategy an its
implementation to achieve the objectives of
the corporation.
It is pervasive, integrated and coordinated management
process.
It is basically a top management function.

It is mostly related to external environment.

It is long term in nature.

It provides overall frame work for guiding enterprise


thinking and action.
It is complex process.

It is a continuous process.

It involves both conceptual and analytical thought process.


Difference between Planning & Strategy

What is Planning: Action Steps, as answers to


What, How, Who, When, Where .
While Strategy is
An answer to Why
Strategy is bigger than planning Strategy Comes
before Planning Strategy decides and shapes up
Planning
Tactics are ways or process of implementing
plans
Difference between Planning & Strategy

Examples:
Vision: Winning of Battle / War and takeover enemy
Strategy: Winning a battle, in less than a week,
without much loss to human life by December end.
Planning: Planning where to send the troops to win
the war.
Tactics: How soldiers should run in a zig-zag pattern
to decrease the chance of being shot.
Why Strategy??
The ultimate goal of the organizations
is to be successful SUCCESS is:
Survival (long-term success)
Achievement of Goals
Above average returns/Profitability (probably
most important, because it determines the
ability to achieve the above two)
To provide ROI to the investors.
To create a favorable environment for capital
raise
Need of Strategy..!!
Market has become Global
Market has become Dynamic
Ever Changing Technology
Growing Competition in domestic as well as in
global market
Information based Market
Customer dominated markets
Origin of Strategy..!!!
Strategy comes from the Greek word STRATEGOS, which
is formed from stratos, meaning army, and ag, meaning
to lead
Strategy Dfinition
Strategies- Systematically planned course of actions
for achievement of organizational Objectives or
Goals Glueck: An Unified, Comprehensive &
integrated plan,
designed to assure that the basic objectives of the
enterprise are achieved
HOW STRATEGY IS MADE
Emergent strategy
Emergent strategy is the process of identifying
unforeseen outcomes from the execution of
strategy and then learning to incorporate those
unexpected outcomes into future corporate plans.
Intended & Deliberate
Planned strategies start with intentions, mostly
from the chief strategists of the firm. In this
regard intentions define the purpose in
performing strategic actions. Planning, however,
also involves deliberation, which would mean
analyzing the purpose for action and evaluating
systematically different courses of action. In this
sense, intention and deliberation is not the same.
To put it simple: intention is purpose, deliberation
stands for conscious analysis.
Deliberate strategy is a top down approach to strategic
planning that emphasize intention. This is built based on
the vision and mission of the organization and is focused
on achieving the purpose of doing business

Deliberate strategy attempts to minimize outside


influence acting on business operations
Forms of Strategy

Intended strategy
Decisions are determined only by analysis
Realized strategy
Decisions are determined by both analysis and
unforeseen environmental developments,
unanticipated resource constraints, and/or
changes in managerial preferences
The Three Big Strategic Analysis
Questions
1. Where are we now? What is our situation?
2. Where do we want to go?
Business(es) we want to be in and market positions
we want to obtain.
Buyer needs and groups we want to serve
Outcomes we want to achieve
3. How will we get there?
Let us understand some terms
Visions- What Company wants to achieve in future
Mission- The reason for companys existence
Goals- What Company wanted to achieve in general
in constraint to VISION
Objectives- are specific goals to be achieved in future
Vision - big picture idea of what you want to achieve.
Mission - general statement of how you will achieve
your vision
The Strategy Concept
Levels of Analysis
Corporate
Where to Compete? Strategy Grand Strategies

Business
How to Compete? Strategy
Generic Strategies

Functional
How to Contribute? Strategy Functional Strategies
(Mktg. Mix,
Choice of Products Choice Operational, Financial
of Markets Choice of etc.)
Competitors

Dr. Prashant Kalaskar


Levels of Analysis..!!
Decisions and actions where organizations

Analyze current situation


Develop appropriate strategies
Put strategies into action
Evaluate, modify, or change strategies
Strategic Management Levels I ..!!

Greater risk,cost, and


profit potential

Corporate-level Greater need for


decisions flexibility

Longer time horizons


Corporate-level Strategy

At this level, strategic decisions relate to organization-


wide policies and are taken care by top-level
management (BOD) with a vision of determining
Where the company
wants to be?
It has two main aspects- Formulation of Strategy
(strategic planning) and Strategy Implementation
The nature of strategy at this level tend to be value-
oriented, conceptual and than other levels.
There is also greater risk, cost and profit potential as
well as greater need of flexibility associated with this
level.
Major financial policy decisions involving acquisition,
diversification and structural redesigning belong to
this level.
Strategic Management Levels II..!!

Bridge decisions at
corporate and functional
levels

Are less costly, risky, and


Business-level potentially profitable than
decisions corporate-level decisions

Are more costly, risky,


and potentially profitable
than functional-level
decisions
Business-Level Strategy

Business-level strategy is more likely related to a unit


within the whole. It is concerned with competition in a
market.
The concerns are about what products or services
should be developed and offered to which markets in
order to meet customer needs and organizational
objectives.
At this level, multifunctional strategies developed at
corporate level are formulated and implemented for
specific product market in which the business operates.
Thus, managers at this level translate general directions
and intent into concrete functional objectives.
Decisions at this level include policies involving new
product development, marketing mix, research &
development, personnel, etc.
Strategic Management Levels III..!!

Implement overall strategy

Involve action-oriented
Functional- operational issues
level
Are relatively short range
decisions
and low risk
Incur only modest costs
Functional/Operational-Level
Strategy
Functional strategy involves decision-making with respect
to specific functional areas- production, marketing,
personnel, finance etc.
While corporate and business level strategies are
concerned with Doing the right things, functional
strategies stress on Doing things right.
Operating level strategy is concerned with strategic
approaches for managing frontline operating units(like
plants, sales, etc) and for handling day to day tasks of
strategic significance(like advertising campaign,
purchasing materials, inventory control, maintenance,
etc.). Thus, it focuses on how the different functions of
the enterprise contribute to the other levels of strategy.
Thus, functional level strategic management is the
management of relatively narrow areas of activity, which
are of vital, pervasive or continuing importance to the
total organization.
Strategy is how an organization
intends to create value for its
Private Sector Organizations
stakeholders.
The Strategy

Financial Perspective

"If we succeed, how will


we look to our Introducing
shareholders? Strategy Maps

Customer Perspective
"To achieve our vision,
how must we look to A simple model of
our customers? the value
Internal Perspective "To
creation process
satisfy our customers, at
which processes we
must
excel?
Learning & Growth "To
achieve our vision, how
must our organization
learn and improve
Strategic Management Process

There are two dimensions of every action


substantive and procedural.
Substantive dimension involves
determination of what to do (Strategy) and
Procedural dimension is concerned with
determination of how to do (Strategic
Management Process).
Strategic Management Process
The Term Strategic Management refers to the
set of managerial process of forming-
- a strategic vision,
- setting objectives,
- crafting strategy (Strategy Formulation),
- implementing & executing the strategy,
& then overtimes initiating whatever corrective
adjustments in the vision, objectives, strategies,
& executions are deemed to be appropriate
Strategic Management Process

The process of Strategic Management


involves 4 steps:
Strategic Intent
Environmental Analysis & Strategy
Formulation
Strategy Implementation
Strategy Evaluation and Control
Strategic Management Process

Strategic Intent Strategy Formulation Strategy


Vision, Mission, Internal & External Implem-

Strategic Evaluation
Business Appraisal entation
Definition, SWOT Analysis Corporate Project &
Objectives & Business Level Strategies Procedural
Strategic Analysis & choice Implemen
tation

Control

Dr. Prashant Kalaskar


Strategic Management
Process
Defining Vision, Mission & Business Objectives
Environmental Organizational
Analysis Analysis

Setting Objectives &


Goals Choice of Strategy

Identifying Alternative
Strategies
Reformulate if
Required
Choice of Strategy

Strategy Re-implement if
Implementation Required

Evaluation & Control

Feedback
Dr. Prashant Kalaskar
Strategic Management
Strategic Management is the field that deals with
major intended & emergent initiatives, taken up by
the Top Managers on behalf of company.
It involves utilization of resources to enhance
performance of the firm, in their external competitive
environment.
It involves organizations Vision, Mission & Objectives
& then,
Developing Plans (Strategies) & Policies, so as to
achieve set objectives, then,
Allocation of resources
Dr. Prashant Kalaskar
Strategic Management
Strategic Management provides overall directions to
the organization.
Strategic Management involves not only the Top
Management Team but can also includes Board of
Directors, Stakeholders, depending upon
organizational Structure [size].
Strategic Management is an ongoing process that
evaluates & controls the business.
It allows companies to assess their competitors &
helps to set goals & plan strategies to outwit
existing
& potential competitors.
Dr. Prashant Kalaskar
Strategic Management
Strategic Management also allows reassessing of
implemented strategies on quarterly, half yearly or
annually basis.
This helps to understand, whether implemented
strategies are succeeded according to the plans or
needs the strategies to be modified or replaced.
If needed, new strategies can be implemented so as
to meet the changed circumstances, new
competitors, new PEST factors etc.

Dr. Prashant Kalaskar


Strategic Intent
Strategic Intent is the leveraging a firms internal
resources, capabilities and core competencies to
accomplish the firms vision, mission and objectives in
a competitive environment. (Reason behind
formulation of strategy)

It is all about winning competitive battles and gaining


leadership position by putting organizational
resources to best use.

Dr. Prashant Kalaskar


Strategic Intent
When established effectively- a strategic intent can
cause people turn out excellent performance.

Strategic intent tries to establish the parameters


that shapes the-
Values, Motives and Actions of people throughout
their organization.

Dr. Prashant Kalaskar


The Hierarchy of strategic Intent
1) A broad Vision of what
the organizations should be.
Vision
2)The organizations Mission. 1
3)The strategic Objectives
Mission
and specific Goals to be 2

pursued relentlessly Goals & Objectives


3
4)The Plans that are
developed to accomplish the
intentions of management in
a concrete way.
Dr. Prashant Kalaskar
Vision

What will success look like?

description of something in the future

mental perception of the kind of environment an


individual, or an organization, aspires to
create within a broad time horizon and the
underlying conditions for the actualization of this
perception
A Vision provides strong foundation for
developing a comprehensive mission
statement .
Strategic vision addresses the where are we
going questions and explains the course
and direction chartered by management.
A strategic vision should provide a clear
understanding of what the business should
look like and provide help to take strategic
decisions.
Vision
Top Management should decide the directional path,
on which the company can walk &
To know what changes in the companys-
- Product - Market
- Customer - Technology
- Focus
would improve its current market position & future
prospect.
Thus Strategic Vision provides a particular direction
to the organization
Dr. Prashant Kalaskar
Vision
A Clearly articulated Strategic Vision, that
communicates managements aspirations to
stakeholders & helps steer the energies of
company personnel in common directions.

Ex.- Henry Fords Vision of a car in every garage had a


power because it captured the imagination of others,
aided internal efforts to mobilize the Ford Motor
Companys resources & served as a reference point of
guaging the merits of Companys Strategic Actions

Dr. Prashant Kalaskar


Characteristics

1. Its a print of the kind of


blue the management business is
organization the market trying to
create and positio it would
2. occupy.
It should be forward n looking
a
strategiccourse the management willprovide
adopt
to help the company prepare the future
3.Specific andprovide guidelines
to managers for making
decisions and allocating resources
4.Flexible to changing environment
5.Within realm of companies hope to achieve
6. Appeal to emotions and motivate employees
7. Narrow vision, can focus effort and excite
people
8. May not fit to present circumstance, but
contributes to future. Shows picture of future.
9. Should be easy to explain to all stake holders
and preferably short
Benefits of having a vision
Good visions are inspiring and exhilarating.
Help the organization to prepare for the future.
Clarifies and crystallizes the senior
executives views
about the companies long term direction.
Good vision reduces risk-taking and experimentation.
Good vision help to motivate and morale
boosting of
employees.
Good visions are competitive, original and unique.
Good visions represent integrity, they are truly genuine
Limitations of a vision statement
Vague and
incomplete
Not forward looking
Too broad
Uninspiring
Not distinctive
Examples of Vision Statements
There will be a personal computer on every desk running
:Microsoft software.
Our vision is every book ever printed in any language all
available in 60 seconds: Amazon Kindle
GM: to be the world leader in transportation products and
related services. We will earn our customers, enthusiasm
through continuous improvement driven by the integrity,
teamwork, and innovation of GM people.
To be the number one athletic company in the world:
Nike

Dr. Prashant Kalaskar


Examples
1. BSNL Vision Statement: To become the
largest telecom service provider in Asia.

2. Walt Disney vision Statement : Make


people
happy

3. Stokes Eye Clinic, Florence, South Carolina :

Our vision is to take care of your vision.


Example vision
statement
Infosys

Vision To be a globally
respected
corporation that provides best-
of- breed business solutions,
leveraging technology, delivered
by best-in- class people."
VISION
Our Vision is to be the worlds
mobile
communicatio leader enriching
n helping
individuals,
customers businesses communitie
and inlives,
be more connected a mobile s
world.
Mission
Mission is the Statement, typically focused on
its present business scope, Who We Are & What
We Do.
Mission is nothing but the purpose or
reason behind existance of the business
Thus Mission statements broadly describes an
Organizations present capabilities, customer
focused, activities & business makeup
(Undertaken).

Dr. Prashant Kalaskar


Mission
Mission is a statement which defines the role that an
organization plays in society.
Ex.- Cadburry India- To attain leadership position in the
confectionary market & achieve a strong presence in the food
& drinks sector
To organize the worlds information and make it universally
accessible and useful Google
To give ordinary folk the chance to buy the same thing as rich
people do Wal-Mart
To contribute to society through the pursuit of education,
learning, and research at the highest international levels of
excellence. - University of Cambridge
Dr. Prashant Kalaskar
Components of Mission Statement
Customers: Who are the firms customers
Product/Services: What are firms major pdts./Services.
Markets: Geographically, where does firm competes
Technology: Which technology firm is using
Concern for Growth/Survival: Is the firm committed to
growth & Financial soundness
Self Concept: Firms major competitive advantage
Concern for Public Image: Is the firm responsive to Env.,
Society etc.
Concern for Employees : We value our Customers

Dr. Prashant Kalaskar


Mission
Organizations should have mission:-
a)To ensure unanimity of purpose within the
organization.
b)Provides basis for motivating the use of the
organizations resources.
c)To develop a basis or standard for allocating
organizational resources
d)To facilitate translation of objective & goals into a
work structure involving the assignment of tasks to
responsible elements within the organization.

Dr. Prashant Kalaskar


Characteristics of Good Mission Statement
1. It should be feasible: It should be realistic & achievable on
the basis of available resources
2. It should be precise: Neither too large or too short
3. It should be clear: It should be clear enough to lead &
understand
4. It should be motivating: Motivating to its employees
5. It should be distinctive: Distinctive to its competitor
6. It should indicate major components of strategy: A growth
or combination strategy adopted by company.
7. It should indicate how objectives are to be
accomplished: provide clues regarding the manner in which the
objectives are to be accomplished
Dr. Prashant Kalaskar
Formulating mission
. What is the basic purpose of your organization?
1

2.What is unique about your organization?


3.What is in your company that will make it stand
out in a crowd?
4.Who are, and who should be,
your principal
customers?
5.What are the basic beliefs, values
and philosophical priorities of your firm?
Example Mission Statements

1.Wal-Mart "To give ordinary folk the chance to


buy the same thing as rich people."
2.Mary Kay Cosmetics "To give unlimited
opportunity to women."

3.3M "To solve unsolved problems innovatively"


4.Google's mission is to organize
the world's information and make it
universally accessible

and useful.
Diffrence b/w vision and mission
Mission Statement Vision Statement
A Mission statement talks about HOW you A Vision statement outlines WHERE you want to be.
will get to where you want to be. Defines the Communicates both the purpose and values of your
About purpose and primary objectives related to business.
your customer needs and team values.

It answers the question, What do we do? It answers the question, Where do we aim to be?
What makes us different?
Answer

A mission statement talks about the A vision statement talks about your future.
Time present leading to its future.

It lists the broad goals for which the It lists where you see yourself some years from now. It
organization is formed. Its prime function inspires you to give your best. It shapes your
is internal; to define the key measure or understanding of why you are working here.
Function measures of the organization's success
and its prime audience is the leadership,
team and stockholders.

Your mission statement may change, but it As your organization evolves, you might feel tempted to
should still tie back to your core values, change your vision. However, mission or vision
Change customer needs and vision. statements explain your organization's foundation, so
change should be kept to a minimum.
Objectives & Goals
Organizations Translate their Vision & Mission in to
Objectives
Objectives & Goals are Synonymous to each other.
Objectives are Open ended attributes that denotes
future states & outcomes. (Specific)
Goals are Closed ended attributes which are precise
& expressed in specific terms (Generic)

Dr. Prashant Kalaskar


Goals vs objectives
Goa
l
Objectiv
e
The purpose toward which an endeavor Something that
is one's efforts or
directed. actions are intended
Meanin to attain or
g accomplish;
purpose; target.

I want to achieve success in the field of I want to complete


genetic research and do what no one has this thesis on genetic
ever done. research by the end
Exampl
of this month.
e

Generic action, or better still, an outcome Specific action -


towards the objective
Actio which we strive. supports
n attainment of the
associated goal.
Goals may not be strictly measurable or Must be measurable
Measur tangible. and tangible.
e
Time frame Longer Mid to short
term term
San Antonio Multi-Service Market
Mission: Maximize Utilization of the Direct Care System in the San
Antonio Multi-Service Market Area
Vision: A World-Class, Multi-Service, Unified Health System Serving San
Antonio and Referred Beneficiary Market
Goals:
Optimize efficiency between direct and private sector care markets
Eliminate duplicate services
Increase synergy and cooperation among San Antonio MTFs
Ensure patient satisfaction with access and quality service
Strengthen Readiness by allocating appropriate mix of resources
Collaborate support functions across the market
Objectives:
Establish the Consult and Appointing Management Office
Increase RWPs / RVUs in the direct care system per the business plan
Consolidate logistical and contracting functions
Realign staff resources to meet patient demand
Establish enrollment sites to meet changing patient demographics
Enroll eligible beneficiaries up to capacity
Example of VMOSA
Agriculture Business Development Company
Vision: A vibrant rural economy driven by value-added
agriculture.
Mission: To create and facilitate the development of value-
added agricultural businesses.
Goal: Recruit local farmers interested/experienced in
business development.
Objective: Create a membership of twenty farmers by
February 1.
Strategy: Use local farmer leaders with business
development skills to develop the businesses.
Action Plan: Form a membership committee to recruit local
farmer leaders. Identify forty farm leaders in the area. List
their qualifications. Contact them individually with the
expectation
Dr. Prashant Kalaskar that half of them will join.
CSF with Goals & Mission
Critical Success Factors
Mission: -Create Successful Relationships
To become with Suppliers
number One - Attract & Satisfy new Customers
Produce store - Secure Financing for Expansion
in main street

Goals:
-Gaining a Market Share Locally by 20%
-Fresh Food from Farm to Consumers in 24 hrs for 75% Products
-- Sustain a 98% of Customer Satisfaction
-- Expand product range to attract new customers
-- Extend Store space to accommodate new Products & Customers

Dr. Prashant Kalaskar


Strategic Management
Formulation of Strategy:
It involves 3 main processes..
- Performing situation analysis, self evaluation &
competitors analysis (Internal & External Analysis)
- Simultaneously, the objectives are set, some
objectives are short term & some are long term.
- These objectives set (must be in the light of situation
analysis) suggest strategic plans. The plan provides
the details of how to achieve those objectives

Dr. Prashant Kalaskar


Strategic Management
Strategy Evaluation:
Johnson, Schulez & Whittington presented a model
to evaluate strategic decisions-
- Suitability (will it work)
- Feasibility (can it be made to work)
- Acceptability (will they (employees) work on it)

Dr. Prashant Kalaskar


Strategic Management
Suitability of Strategy:
Suitability deals with the overall rationale of Strategy
- Would it be suitable in terms of environment &
Organizational capabilities
Feasibility of Strategy:
It is concerned with whether the resources required
to implement the strategy are available, or can be
developed or obtained.
- Does it make economic sense
- Would the organization obtain economies of scale
Resources can be people, funds, time, information,
machines etc.
Dr. Prashant Kalaskar
Strategic Management
Acceptability of Strategy:
To know, whether the stakeholders will accept the strategies with
its expected performance output, which can include:
- Return: Benefits expected by Stakeholders (financial or non financial)
Ex: Shareholders would expect increase in their wealth
Employees would expect improvement in their careers
Customers would expect good value to their money
- Risk: It deals with the probability & consequences of failure of
strategy
- Stakeholders Reaction: Deals with likely reactions like-
Shareholders can oppose from new investment
Employees can oppose outsourcing for fear of loosing their
jobs
quality & Support
Customers could have concern over a M&A with regard to
Dr. Prashant Kalaskar
Importance of Strategic Management
Strategic Management is must for all those
organizations, who dreams to grow.
Survival of Fittest, does not mean a Strong or
Large company will survive.
Business has to follow war rule- Win or Lose
Companies need to have Competitive Advantage
These all characteristics of a successful business
organizations is possible to have if it follows-
Strategic Management- Strategic Analysis, Strategy
Formulation & Strategy Implementation.
Dr. Prashant Kalaskar
Importance of Strategic Management
Strategic Management has following benefits-
a) It helps organization to be proactive than being
reactive (ex: Apple, Sony)
b)Strategic Management provides a framework for all
different decisions of business like- Product, Markets,
Manufacturing, resources & investment
c) Strategic Management performs a role of Path Finder
by making organizations able to identify opportunities
in the market & process how to reach them.
d)Strategic Management serves as a corporate defense
mechanism against mistakes & pitfalls
e) Strategic Management helps to develop core
competency & competitive advantage for survival &
Growth
Dr. Prashant Kalaskar
Referred books

Strategic Management- A book on business policy / Corporate


planning
Francis Cherunilam Strategic Management
J. David Hunger & Thomas L Wheelen

Strategic Management
Garth Salonee , Andrea Shepard & Joel Podolny

Article

Vision, Mission and Objectives of Business - Shanmuga Rao.


Pandala
Dr. N. V.S. Suryanarayana

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