A strategic plan for fluid dynamics Pvt. Ltd.

Abstract

The Indian economy was a closed economy up to 1991. With the advent of liberalization, privatization and globalization in 1991, the reforms have set a competitive, evolving, rapidly changing market place. Today's situation in business is not "as usual". The concepts, ideas that were considered fundamental truths a deca4e ago are now inadequate for meeting today's business challenges. The changes in the economic policies had led to an unprecedented growth from 94 to 97. The year 97-98 has seen the recession and demand stagnation, the marketplace changing from seller's market to buyer's market. Only those companies will succeed which are capable of providing value to customer by matching the internal resources to the external requirements. We are in the age of transformation with uncertainty and complexity. Strategic management will help the organizations position themselves in the industry and compete to survive and grow. FDPL, a diversified organization into 3 areas having a turnover of 5 crores (1996-97),today is placed in this competitive and dynamic economy. A stage has already reached for rethinking of our businesses and markets we operate in. Long term planning, policies and action plans are required to compete in the industry. Strategy planning will give a frame work of markets to be served, functions to be performed and major policies needed for the organization to develop competitive advantage to achieve the objectives of the organization. Methodology for Strategic planning is divided into 3 broad parts:1. Strategic Analysis : Analysis of firm's strategic position. Opportunities and threats present in the external environment is analysed through Michael Porter's framework of industry structure. Internal strengths and weakness of the organisation is analysed using value chain framework and four perspective balanced Scoreboard view namely finance, customer, operations and organisational issues.2. Strategic intent and Gap analysis: With a SWOT analysis in the background, a hierarchy of strategic intent comprising of vision, mission, goal and objectives are formed for a timeframe of four years 1998-2001. A study of gap between the intent and internal, external situation of the organisation is brought about in the gap analysis.3. Strategy formulation: The strategy formulation is done in the following steps providing solutions to the gaps of organisation. a. Portfolio strategic management for the three divisions of FDPL. b. Generic business level strategy to develop a competitive advantage. c. Operational level strategies for core processes like demand management, product development and order fulfillment. From the strategic planning the conclusions are1. FDPL will be a 20 crore company by the year 2002 with RONW of 30%.2. Cost leadership and quick response are the competitive advantage FDPL should develop to circumvent competition and position itself in the industry.3. Hydraulics division has to horizontally diversify into hydraulic equipments supplying mainly to automobile and earth moving equipment manufacturers.4. Customer base to be increased and new products to be developed.5. Target segments for FDPL are manufacturer's of automobiles, diesel engines and earth moving equipments.6. Cost control and reduction through working capital management, and manpower reduction.