Post on 04-Apr-2018
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Function Level Strategies
Presented By :
11MBA020
11MBA022
11MBA028
11MBA034
Financial Strategies
&
Human Resource Strategies
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Most of the time, Strategies should not be
Formulating strategies at all; they should
be getting on with IMPLEMENTINGStrategies they already have
- Henry Mintzberg
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Financial Strategies
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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
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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 Debtmust 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.
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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 oranother may follow policy of Internal Financing.
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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 penetrationStrategy
3. Sell common Stock to raise capital for Diversification.
Company today are being much more attentive in projectedFinancial Statements to Reasonably rather than too
optimistically project future expenses and earnings.
Developing projected Financial budget/statements
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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 Divisionalbudgets
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.
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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
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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 beenparticularly successful in maintaining low cost for power, which is
a major input in cement manufacturing.
The priorities of management may often conflict with those ofshareholders. It is the responsibility of the strategies to minimize
the conflict of interest between management & Shareholders.
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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.
Evaluating the worth of Business
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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
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Human Resource Strategies
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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 strategicresponsibility 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
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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 includetransferring 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.
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In a growing number of organizations, Human
resources are now viewed as a source ofcompetitive advantage. There is a greater
reorganization that distinctive competencies
are obtain through highly developedEmployee Skill, Culture and management
process and System.
- Charles Greer
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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
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Strategic Role of Human Resource Management
The prominent areas where the human resource manager can playstrategic role area as follow :
1. Providing Purposeful direction :
Goals of an organization states the very purpose and justify itsexistence.
2. Creating Competitive Atmosphere :
Cost leadership and Competitive Strategy are two important way toachieve 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. Notonly money but Non Financial incentives will play major role inmotivation of work force.
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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.
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It's not necessarily size that matters,
it's how fast you move that
implement.- Bryan Clay