Wednesday, April 27, 2011

Management lesson from Mahabharata

Management Lessons from how the Mahabharata war was won

Second Longest Epic of the World
 Narrated thrice:
- By Vyasa to Ganesha as “Jaya”,
- By Vaishampayan to Janamejaya as “Bharata”,
- By Suta/Sauti to the Rishis at Naimisharanya as “Mahabharata”.
 Has “mind-boggling” revelations:
- Astronomy: Existence of Uranus (Shweta) and Neptune (Ksharaka),
- Geography: Lands as far as Cambodia (Kamboja), Kazakhstan and/or Scandinavia (Uttarakuru),
- Mathematics: Numbers to the range of 10 raised to powers of 16 and -16,
- Descriptions of weapons resembling modern day weaponry including Nuclear and/or Chemical weapons,
- Complex Military Formations and Strategies,
- Philosophy, Psychology, Sociology, Spirituality, Religion, Politics,
- And, even Modern Management Lessons.

- Kauravas: 11 Akshouhini’s
- Pandavas: 7 Akshouhini’s
[1 Akshouhini = 21,870 chariots, 21,870 elephants, 65,610 horses and 109,350 foot-soldiers (in a ratio of 1:1:3:5)]
• Generals 
  - Kauravas:
•  Bhishmacharya
•  Dronaacharya
•  Karna
•  Shalya
•  Kripacharya
•  Ashwatthama
•  Duryodhana
- Pandavas: 
•  Arjuna
•  Bhima
•  Dhrshtadyumna
•  Abhimanyu
•  Ghatotkach
•  Shikhandi
•  Satyaki
• Kauravas:
In power for 13 years. Duryodhana has been a benevolent king. There was no guarantee that the subjects really
miss the Pandavas. Not only do they have the wealth and power of Hastinapur, but also that of Indraprastha, the
kingdom that the Pandavas had taken such labors to build and which had surpassed the Hastina of old in all
degrees. Karna had gone on a nation-wide conquering quest on behalf of Duryodhana. They are the national
• Pandavas:
Exiled for 13 years. Have no kingdom. Their main strength both in terms of political and financial power depends
on their friends and relatives: the Panchalas, the Yadavas, the Magadhas and the Chedis. 
Kauravas: “Without war, will not concede even a needle-prick’s size of the earth.” - Duryodhana
  Duryodhana was completely focused on the War. It was his moment of truth. He had usurped a kingdom, and he
meant to keep it. He had resorted to any means, foul or fair to get the kingdom, which he believed to be rightfully
his, and he was in no mood to give it up.
• Pandavas: “We fight over a Kingdom, as dogs over a piece of meat.”- Yudhisthira
The Pandavas had been humiliated, their wife insulted, their kingdom taken. But still they wanted to avoid the
War. The three elder Pandavas were against the War. They even went as far as making an offer that they will stop
the War in exchange of 5 villages.
• War Lasted 18 Days: 10 Days (Bhisma), 3 Days (Drona), 1½  Days (Karna), ½ Day (no generals), 1 Day (Shalya),
1 Night (Ashwatthama)
• 18th Night of the War: Ashwatthama slaughtered the Pandava camp while they were sleeping.
• Prior to that:
  - Kaurava deaths: Bhishma, Drona, Karna and his sons, Shalya, Bhagadutta, Bhurisrava, Susharma, Jayadrath,
Duhsasana and all of Duryodhana’s brothers, Shakuni and Ulooka.

  - Pandava deaths: Drupad, Virat and his sons, Abhimanyu, Ghatotkacha.
  How did the Pandavas Win?

• Karna went on a country-wide military mission, subdued the different kingdoms and acquired wealth. But it
meant a loss in terms of both men and money, and creation of new enemies. 
  Pandavas: Though in exile they turned their attention to improving over their weakness   • Arjuna set out on a mission to acquire the Divyastras. 
• Bhima met his brother Hanuman and got a blessing of enhanced strength.
• Yudhisthira acquired teachings from the various wise Rishis, and also learnt the Game of Dice from Gandharava
Chtrasena, lest he was challenged to yet another dice game. It’s said that he had become undefeatable in Dice.
Management Lesson: Turn your Weakness into your Strength
Kauravas: Centralized power system. The greatest empire of the time. But not many powerful allies, except from old
relations from far off places like Gandhara (Shakuni), Sindhu (Jayadrath) and Kambodia (Camboja -
  Pandavas: No wealth. No power of their own. But powerful alllies all over India.
• Panchala through Marriage with Darupadi.
• Dwarka throgh marriage with Arjuna and Subhadra.
• Magadh through marriage of Shadeva and Vijaya.
• Chedi through marriage of Nakula and Karenmayi.
• Kasi throgh marriage of Bhima and Balandhara.
• Kekaya throgh marriage of Yudhisthira and Devika.
• Matsya throgh marriage of Abhimanyu and Uttara.
• The Rakshasas through marriage of Bhima and Hidimba.
• The Nagas through marriage of Arjuna and Uloopi.
Management Lesson: Make Powerful Allies

Kauravas: Centralized leadership. One Head of Army at a time, who has supreme authority of 11 Akshouhini’s of the
army. Bhishma, Drona, Karna, Shalya and Ashwatthama, in order of succession.
Pandavas: Distributed leadership. Seven commanders for the seven divisons (1 man commands an Akshouhini each). 
  • Virat (King of Matsya)
• Drupad (King of Pancala)
• Sahadeva(King of Magadha)
• Dhrshtaketu (King of Chedi)
• Satyaki (Only warrior from Dwarka)
• Shikhandi (Prince of Panchala)
Dhrshtadyumna – Commander in Chief
Arjuna –Supreme Commander
And, Lord Sri Krishna – Arjuna’s Charioteer and Counselor.
Management Lesson: Share your responsibilities
Team Spirit 
Kauravas: No team spirit. They all fought their individual wars. 

• Bhishma: For his Vow to protect the throne Hastinapur.
• Drona and Kripa: They owed allegiance to the throne.
• Shalya: Simply cheated by Duryodhana to be there. Was originally a Pandava ally.
• Karna: To prove his mantle against Arjuna. Friendship for Duryodhana. 
  They didn’t get on well with each other.
• Bhishma and Karna.
• Bhisma and Shakuni.
• Karna and Shakuni.
• Karna and Shalya.
• Shalya and Bhishma. 

It was like bees, hornets and mosquitoes put together in a jar. 
Pandavas: One Team, One Goal. As men, they all had huge respect for Krishna and Yudhisthira. While as warriors
they were in complete awe of Bhima and Arjuna. Most of them were close relatives – cousins, brother-in-
laws, father-in-laws. More than that, they all were part of the decision-making process. It was their
“common” war.
Management Lesson: Teamwork succeeds where Individual effort fails.
Individual Motives 
Kauravas: Except for Duryodhana nobody wanted the War. All the four main generals had strong ties with the
• Bhishma (grandchildren) – Would kill a thousand soldiers each day but won’t kill the Pandavas.
• Drona (students) – Won’t kill the Pandavas. Would only capture them.
• Shalya (Nakula-Shadeva’s maternal uncle): Loved the Pandavas and covertly helped them by humiliating
• Karna (brother to the Pandavas): Promised not to kill any of the other Pandavas except for Arjuna. 
A Team of Traitors.
Pandavas: Common goal. But the individuals had their individual targets. They had their own agenda, which
happened to become one with the teams’ agenda.
• Dhratsadyumna: Drona.
• Shikhandi: Bhisma.
• Satayaki – Bhuris ravas.
• Arjuna – Karna.
• Bhima – Duryodhana and his brothers.
• Sahadeva – Shakuni and his sons.
• Nakula –Karna’s sons.
Management Lesson: The right team is made by selecting the right individuals. Get the right person
for the right job.

Kauravas: As already said, the ‘Big 4’ had a big emotional attachment with the 5 Pandavas. Looking further on their
  • Bhisma himself gave away the secret of how to kill him to the Pandavas. He prolonged the War by killing only
inconsequensual soldiers. He did not fight a warrior like Shikhandi because of his personal bias.
• Drona too indirectly gave away his secret, by saying he was invulnerable as long as he held a weapon.
Moreover he abandoned weapons as soon as he knew his son had died.
• Karna did not kill Yudhisthira and Bhima when he got the chance. He gave away his Kavach and Kundala
prior to his War. Karna fled innumerous times from the War when he was hurt. He didn’t save Duhsasana 
when Bhima was killing him.
• Shalya kept on insulting Karna while in Battle.
Pandavas: Let’s look at their commitment:

• Abhimanyu, just 16 years old. Ventured beyond enemy lines alone. This was clearly a suicide mission but he
still went in and took a great part of the Kaurava army down with him. It took the combined effort of 7
Maharathis to take him down.
• Ghatotkach, even in death took with him almost half the Kaurava army.
• Yudhisthira, he knew he couldn’t face Karna in War, but still went in to set an example. Yudhisthira didn’t
hesitate to tell a lie or a twisted truth when faced with the decision of whether to stick to his personal
integrity or welfare of the team.
• Krishna took up arms twice and almost entered the War, in spite of his promise, only to be stopped by
Management Lessons: The interests of the Individual should never exceed the Team interest.
The best person for a Job is not the one with the best capabilities but one
with the greatest commitment.

Right Managers 
Krishna: The Greatest Crisis Manager the world has seen.
Yudhisthira: Low-key strategist. 
  • On the first day of the War, he played a Master game. He went over to the Enemy side to seek blessings from
Elders. In reality he made a covert deal with them, wherein all of them agreed to help him and unfolded the
secrets of defeating them.
• While coming back, he took a calculated risk. He made an offer to all the assembled people to change sides if
they wanted to. He knew well of the lack of cohesiveness among the Kauravas. Yuyutsu, son of Dhrtarashtra
crossed over to the Pandavas. This exposed the Kauravas’ weakness for all to see.

Management Lessons: Know your enemies weaknesses and exploit them.
Take Calculated risks.
Inspire, invigorate, counsel your own team in moments of need.

The Roots 
Kauravas: Princes brought up in the comfort of the Royal Palace, matured on romanticized ideals of Power, Fame,
Courage and Valour. No experience of ground reality.
• Spent the greater part of their lives in Poverty. Childhood in the Himalayan foothills among Rishis. Spent one
year of their exile among the poor people of Kuru-Panchala. 12 years of Vanvas and 1 year of Agyatvas.
• Experienced with the ground reality. Contact with people from various strata of the society. Sannyasis
(celibate monks), Acharyas (Householders, teachers), poor Brahmins, lower-class Potters.
• Different races of people. Rakshasas, Gandharavas, Apsaras, Nagas. People from different regions Uttarkuru,
Bengal etc.
• Sense of Sharing. A Sense of Brotherhood.
Management Lessons: Know ground realities. Know different ideologies. Share.   Empowerment of Women 
Kauravas: Patriarchal structure. Bhishma, Drona, Kripa, Dhratarashtra, Vidur, Shakuni, Duryodhana, Karna,
Duhsasana. No women in the decision-making process. Gandhari retreated to the Inner Chambers.
Nobody listened to her.
Pandavas : Matriarchal Structure.
• Kunti was the authority supreme for the Pandavas.
“Whatever my mother says is Dharma to me” - Yudhisthira.
• Draupadi was a companion in whatever the Pandavas did. She had a big role in all the decision-making.
Without her the Pandavas would have most probably retired to the forests.
• Even the younger Pandavas, Ghatotkach, Abhimanyu and Iravan were brought up by their mothers. So the
female influence was huge.
Management Lesson: Women = Better Half. Any team which doesn’t have women is unbalanced. 
The Masculine traits of Aggression and Dominance should be balanced by the Feminine traits of
Harmony and Sustenance.

  Management Recap        
• Turn your weaknesses into strengths.
• Turn enemies into allies.
• Share your responsibilities.
• Teamwork scores over Individual Effort.
• Right Team = Right set of Individuals. Assign the right person for the right job.
• Commitment scores over Competence.
• Team interests over Individual interests.
• Know your enemy/challenges. Exploit its weaknesses. Take calculated risks.
• The Right Managers: To inspire, invigorate, and counsel in crisis.
• Know Ground realities. Accept different ideologies. Foster sharing and co-operation.
• Empower Women. Gender Balance is required for stability and administration.

Tuesday, April 26, 2011

Gita-Famous quotes from Gita

yada yada hi dharmasya
glanir bhavati bharata
abhyutthanam adharmasya
tadatmanam srjamy aham" (Bhagwat Gita: Chapter Four verse 7)

"Sri Krishna said: Whenever and wherever there is a decline in virtue/religious practice, O Arjuna, and a predominant rise of irreligion—at that time I descend Myself, i.e. I manifest Myself as an embodied being."
"paritranaya sadhunam
vinasaya cha duskritam
sambhavami yuge yuge" (Bhagwat Gita: Chapter Four verse 8)

"Sri Krishna said: To deliver the pious and to annihilate the miscreants, as well as to reestablish the principles of religion, I Myself appear, millennium after millennium."
"karmany evadhikaras te
ma phalesu kadachana
ma karma-phala-hetur bhur
ma te sango ’stv akarmani" (Bhagwat Gita: Chapter Two verse 47)

"Sri Krishna said: You have a right to perform your prescribed duty, but you are not entitled to the fruits of action. Never consider yourself the cause of the results of your activities, and never be attached to not doing your duty."

"na jayate mriyate va kadacin
nayam bhutva bhavita va na bhuyah
ajo nityah sasvato ’yam purano
na hanyate hanyamane sarire" (Bhagwat Gita: Chapter Two verse 20) 

"Sri Krishna said: The soul is never born nor dies at any time. Soul has not come into being, does not come into being, and will not come into being. Soul is unborn, eternal, ever-existing and primeval. Soul is not slain when the body is slain." 

"vasamsi jirnani yatha vihaya
navani grhnati naro ’parani
tatha sarirani vihaya jirnany
anyani samyati navani dehi" (Bhagwat Gita: Chapter Two verse 22)

"Sri Krishna said: As a human being puts on new garments, giving up old ones, the soul similarly accepts new material bodies, giving up the old and useless ones."

"nainam chindanti shastrani
nainam dahati pavakah
na chainam kledayanty apo
na sosayati marutah" (Bhagwat Gita: Chapter Two verse 23) 

"Sri Krishna said: The soul can never be cut to pieces by any weapon, nor burned by fire, nor moistened by water, nor withered by the wind."

Monday, April 25, 2011

HINDU- Why I am Hindu...

i found this on net and i was impressed with the argument..I am sure that you will also find it interesting to know why "Hindism " has lasted so long despite repeated attack...

The following mail comes into my mailbox from a  friend, Rameshu. I am heartily thankful to him for sending such a mail. This blog post has nothing to do with religion but to explain why Hinduism existed for so long. Read and think… Be proud of being what you are!
Four years ago, I was flying from JFK NY Airport to SFO to attend a meeting at Monterey , CA An American girl was sitting on the right side, near window seat. It indeed was a long journey – it would take nearly seven hours.
I was surprised to see the young girl reading a Bible unusual of young Americans. After some time she smiled and we had few acquaintances talk.I told her that I am from India
Then suddenly the girl asked: ‘What’s your faith?’ ‘What?’ I didn’t understand the question.
‘I mean, what’s your religion? Are you a Christian? Or a Muslim?’
‘No!’ I replied, ‘I am neither Christian nor Muslim’.
Apparently she appeared shocked to listen to that. ‘Then who are you?’ ‘I am a Hindu’, I said.
She looked at me as if she was seeing a caged animal. She could not understand what I was talking about.
A common man in Europe or US knows about Christianity and Islam, as they are the leading religions of the world today. But a Hindu, what?
I explained to her – I am born to a Hindu father and Hindu mother. Therefore, I am a Hindu by birth.
‘Who is your prophet?’ she asked.
‘We don’t have a prophet,’ I replied.
‘What’s your Holy Book?’
‘We don’t have a single Holy Book, but we have hundreds and thousands of philosophical and sacred scriptures,’ I replied.
‘Oh, come on at least tell me who is your God?’
‘What do you mean by that?’
‘Like we have Jesus and Muslims have Allah – don’t you have a God?’
I thought for a moment. Muslims and Christians believe one God (Male God) who created the world and takes an interest in the humans who inhabit it. Her mind is conditioned with that kind of belief.
According to her (or anybody who doesn’t know about Hinduism), a religion needs to have one Prophet, one Holy book and one God. The mind is so conditioned and rigidly narrowed down to such a notion that anything else is not acceptable. I understood her perception and concept about faith. You can’t compare Hinduism with any of the present leading religions where you have to believe in one concept of god.
I tried to explain to her: ‘You can believe in one god and he can be a Hindu. You may believe in multiple deities and still you can be a Hindu. What’s more – you may not believe in god at all, still you can be a Hindu. An atheist can also be a Hindu.’
This sounded very crazy to her. She couldn’t imagine a religion so unorganized, still surviving for thousands of years, even after onslaught from foreign forces.
‘I don’t understand but it seems very interesting. Are you religious?’
What can I tell to this American girl?
I said: ‘I do not go to temple regularly. I do not make any regular rituals. I have learned some of the rituals in my younger days. I still enjoy doing it sometimes..’
‘Enjoy? Are you not afraid of God?’
‘God is a friend. No- I am not afraid of God. Nobody has made any compulsions on me to perform these rituals regularly.’
She thought for a while and then asked: ‘Have you ever thought of converting to any other religion?’
‘Why should I? Even if I challenge some of the rituals and faith in Hinduism, nobody can convert me from Hinduism. Because, being a Hindu allows me to think independently and objectively, without conditioning. I remain as a Hindu never by force, but choice.’ I told her that Hinduism is not a religion, but a set of beliefs and practices. It is not a religion like Christianity or Islam because it is not founded by any one person or does not have an organized controlling body like the Church or the Order, I added. There is no institution or authority..
‘So, you don’t believe in God?’ she wanted everything in black and white.
‘I didn’t say that. I do not discard the divine reality. Our scripture, or Sruthis or Smrithis – Vedas and Upanishads or the Gita – say God might be there or he might not be there. But we pray to that supreme abstract authority (Para Brahma) that is the creator of this universe.’
‘Why can’t you believe in one personal God?’
‘We have a concept – abstract – not a personal god. The concept or notion of a personal God, hiding behind the clouds of secrecy, telling us irrational stories through few men whom he sends as messengers, demanding us to worship him or punish us, does not make sense. I don’t think that God is as silly as an autocratic emperor who wants others to respect him or fear him.’ I told her that such notions are just fancies of less educated human imagination and fallacies, adding that generally ethnic religious practitioners in Hinduism believe in personal gods. The entry level Hinduism has over-whelming superstitions too. The philosophical side of Hinduism negates all superstitions.
‘Good that you agree God might exist. You told that you pray. What is your prayer then?’
‘Loka Samastha Sukino Bhavantu. Om Shanti, Shanti, Shanti,’
‘Funny,’ she laughed, ‘What does it mean?’
‘May all the beings in all the worlds be happy. Om Peace, Peace, Peace.’
‘Hmm ..very interesting. I want to learn more about this religion. It is so democratic, broad-minded and free’ she exclaimed.
‘The fact is Hinduism is a religion of the individual, for the individual and by the individual with its roots in the Vedas and the Bhagavad-Gita. It is all about an individual approaching a personal God in an individual way according to his temperament and inner evolution – it is as simple as that.’
‘How does anybody convert to Hinduism?’
‘Nobody can convert you to Hinduism, because it is not a religion, but a set of beliefs and practices. Everything is acceptable in Hinduism because there is no single authority or organization either to accept it or to reject it or to oppose it on behalf of Hinduism.’
I told her – if you look for meaning in life, don’t look for it in religions; don’t go from one cult to another or from one guru to the next.
For a real seeker, I told her, the Bible itself gives guidelines when it says ‘ Kingdom of God is within you.’ I reminded her of Christ’s teaching about the love that we have for each other. That is where you can find the meaning of life.
Loving each and every creation of the God is absolute and real. ‘Isavasyam idam sarvam’ Isam (the God) is present (inhabits) here everywhere – nothing exists separate from the God, because God is present everywhere. Respect every living being and non-living things as God. That’s what Hinduism teaches you.
Hinduism is referred to as Sanathana Dharma, the eternal faith. It is based on the practice of Dharma, the code of life. The most important aspect of Hinduism is being truthful to oneself. Hinduism has no monopoly on ideas.- It is open to all. Hindus believe in one God (not a personal one) expressed in different forms. For them, God is timeless and formless entity.
Ancestors of today’s Hindus believe in eternal truths and cosmic laws and these truths are opened to anyone who seeks them. But there is a section of Hindus who are either superstitious or turned fanatic to make this an organized religion like others. The "british coin "the word ‘Hindu’ and considered it as a religion.
I said: ‘Religions have become an MLM (multi-level- marketing) industry that has been trying to expand the market share by conversion. The biggest business in today’s world is Spirituality. Hinduism is no exception’
I am a Hindu primarily because it professes Non-violence – ‘Ahimsa Paramo Dharma’ – Non violence is the highest duty. I am a Hindu because it doesn’t conditions my mind with any faith system.
A man/ woman who change ‘s his/her birth religion to another religion is a fake and does not value his/her morals, culture and values in life. Hinduism was the first religion originated. Be proud of your religion and be proud of who you are.
Om Namo shiva……………

Strategic Management In short

                            Strategic Management in 10 minutes 

Mission: Defines the fundamental purpose of an organization or an enterprise, succinctly describing why it exists and what it does to achieve its Vision.It is sometimes used to set out a 'picture' of the organization in the future. A mission statement provides details of what is done and answers the question: "What do we do?" For example, the charity might provide "job training for the homeless and unemployed"

Developing a Mission Statement

1. Basically, the mission statement describes the overall purpose of the organization.
2. If the organization elects to develop a vision statement before developing the mission statement, ask “Why does the image, the vision exist -- what is it’s purpose?” This purpose is often the same as the mission.
3. Developing a mission statement can be quick culture-specific, i.e., participants may use methods ranging from highly analytical and rational to highly creative and divergent, e.g., focused discussions, divergent experiences around daydreams, sharing stories, etc. Therefore, visit with the participants how they might like to arrive at description of their organizational mission.
4. When wording the mission statement, consider the organization's products, services, markets, values, and concern for public image, and maybe priorities of activities for survival.
5. Consider any changes that may be needed in wording of the mission statement because of any new suggested strategies during a recent strategic planning process.
6. Ensure that wording of the mission is to the extent that management and employees can infer some order of priorities in how products and services are delivered.
7. When refining the mission, a useful exercise is to add or delete a word from the mission to realize the change in scope of the mission statement and assess how concise is its wording.
8. Does the mission statement include sufficient description that the statement clearly separates the mission of the organization from other organizations?

Vision Defines the desired or intended future state of an organization or enterprise in terms of its fundamental objective and/or strategic direction. Vision is a long term view, sometimes describing how the organization would like the world in which it operates to be. For example a charity working with the poor might have a vision statement which read "A world without poverty"

Developing a Vision Statement

1. The vision statement includes vivid description of the organization as it effectively carries out its operations.
2. Developing a vision statement can be quick culture-specific, i.e., participants may use methods ranging from highly analytical and rational to highly creative and divergent, e.g., focused discussions, divergent experiences around daydreams, sharing stories, etc. Therefore, visit with the participants how they might like to arrive at description of their organizational vision.
3. Developing the vision can be the most enjoyable part of planning, but the part where time easily gets away from you.
4. Note that originally, the vision was a compelling description of the state and function of the organization once it had implemented the strategic plan, i.e., a very attractive image toward which the organization was attracted and guided by the strategic plan. Recently, the vision has become more of a motivational tool, too often including highly idealistic phrasing and activities which the organization cannot realistically aspire.

Values:  Beliefs that are shared among the stakeholders of an organization. Values drive an organization's culture and priorities and provide a framework in which decisions are made. For example, "Knowledge and skills are the keys to success" or "give a man bread and feed him for a day, but teach him to farm and feed him for life". These example values may set the priorities of self sufficiency over shelter.

Developing a Values Statement

1. Values represent the core priorities in the organization’s culture, including what drives members’ priorities and how they truly act in the organization, etc. Values are increasingly important in strategic planning. They often drive the intent and direction for “organic” planners.
2. Developing a values statement can be quick culture-specific, i.e., participants may use methods ranging from highly analytical and rational to highly creative and divergent, e.g., focused discussions, divergent experiences around daydreams, sharing stories, etc. Therefore, visit with the participants how they might like to arrive at description of their organizational values.
3. Establish four to six core values from which the organization would like to operate. Consider values of customers, shareholders, employees and the community.
4. Notice any differences between the organization’s preferred values and its true values (the values actually reflected by members’ behaviors in the organization). Record each preferred value on a flash card, then have each member “rank” the values with 1, 2, or 3 in terms of the priority needed by the organization with 3 indicating the value is very important to the organization and 1 is least important. T

Environmental scanning

Environmental scanning is one of four activities comprising external analysis.External analysis is the broader activity of understanding the changing external environment that may impact the organization.Merged with internal analysis of the organization's vision, mission, strengths, and weaknesses, external analysis assists decisionmakers in formulating strategic directions and strategic plans.
The goal of environmental scanning is to alert decisionmakers to potentially significant external changes before they crystallize so that decisionmakers have sufficient lead time to react to the change. Consequently, the scope of environmental scanning is broad.

PEST Analysis

A scan of the external macro-environment in which the firm operates can be expressed in terms of the following factors:
•        Political
•        Economic
•        Social
•        Technological
The acronym PEST (or sometimes rearranged as "STEP") is used to describe a framework for the analysis of these macroenvironmental factors. A PEST analysis fits into an overall environmental scan as shown in the following diagram:

Environmental Scan
/           \
External Analysis     Internal Analysis
/                       \
Macroenvironment        Microenvironment

Political Factors
Political factors include government regulations and legal issues and define both formal and informal rules under which the firm must operate. Some examples include:
•        tax policy
•        employment laws
•        environmental regulations
•        trade restrictions and tariffs
•        political stability

Economic Factors
Economic factors affect the purchasing power of potential customers and the firm's cost of capital. The following are examples of factors in the macroeconomy:
•        economic growth
•        interest rates
•        exchange rates
•        inflation rate

Social Factors
Social factors include the demographic and cultural aspects of the external macroenvironment. These factors affect customer needs and the size of potential markets. Some social factors include:
•        health consciousness
•        population growth rate
•        age distribution
•        career attitudes
•        emphasis on safety

Technological Factors
Technological factors can lower barriers to entry, reduce minimum efficient production levels, and influence outsourcing decisions. Some technological factors include:
•        R&D activity
•        automation
•        technology incentives
•        rate of technological change

External Opportunities and Threats
The PEST factors combined with external microenvironmental factors can be classified as opportunities and threats in a SWOT analysis..

Porter's Generic Strategies

If the primary determinant of a firm's profitability is the attractiveness of the industry in which it operates, an important secondary determinant is its position within that industry. Even though an industry may have below-average profitability, a firm that is optimally positioned can generate superior returns.
A firm positions itself by leveraging its strengths. Michael Porter has argued that a firm's strengths ultimately fall into one of two headings: cost advantage and differentiation. By applying these strengths in either a broad or narrow scope, three generic strategies result: cost leadership, differentiation, and focus. These strategies are applied at the business unit level. They are called generic strategies because they are not firm or industry dependent. The following table illustrates Porter's generic strategies:

Target Scope
Low Cost
Product Uniqueness

(Industry Wide)
Cost Leadership

(Market Segment)

(low cost)


Cost Leadership Strategy

This generic strategy calls for being the low cost producer in an industry for a given level of quality. The firm sells its products either at average industry prices to earn a profit higher than that of rivals, or below the average industry prices to gain market share. In the event of a price war, the firm can maintain some profitability while the competition suffers losses. Even without a price war, as the industry matures and prices decline, the firms that can produce more cheaply will remain profitable for a longer period of time. The cost leadership strategy usually targets a broad market.
Firms that succeed in cost leadership often have the following internal strengths:
•        Access to the capital required to make a significant investment in production assets; this investment represents a barrier to entry that many firms may not overcome.
•        Skill in designing products for efficient manufacturing, for example, having a small component count to shorten the assembly process.
•        High level of expertise in manufacturing process engineering.

Differentiation Strategy

A differentiation strategy calls for the development of a product or service that offers unique attributes that are valued by customers and that customers perceive to be better than or different from the products of the competition. The value added by the uniqueness of the product may allow the firm to charge a premium price for it. The firm hopes that the higher price will more than cover the extra costs incurred in offering the unique product. Because of the product's unique attributes, if suppliers increase their prices the firm may be able to pass along the costs to its customers who cannot find substitute products easily.
Firms that succeed in a differentiation strategy often have the following internal strengths:
•        Access to leading scientific research.
•        Highly skilled and creative product development team.
•        Strong sales team with the ability to successfully communicate the perceived strengths of the product.
•        Corporate reputation for quality and innovation.
The risks associated with a differentiation strategy include imitation by competitors and changes in customer tastes. Additionally, various firms pursuing focus strategies may be able to achieve even greater differentiation in their market segments.

Focus Strategy

The focus strategy concentrates on a narrow segment and within that segment attempts to achieve either a cost advantage or differentiation. The premise is that the needs of the group can be better serviced by focusing entirely on it. A firm using a focus strategy often enjoys a high degree of customer loyalty, and this entrenched loyalty discourages other firms from competing directly.
Because of their narrow market focus, firms pursuing a focus strategy have lower volumes and therefore less bargaining power with their suppliers. However, firms pursuing a differentiation-focused strategy may be able to pass higher costs on to customers since close substitute products do not exist.
Firms that succeed in a focus strategy are able to tailor a broad range of product development strengths to a relatively narrow market segment that they know very well.
Some risks of focus strategies include imitation and changes in the target segments. Furthermore, it may be fairly easy for a broad-market cost leader to adapt its product in order to compete directly. Finally, other focusers may be able to carve out sub-segments that they can serve even better.

A Combination of Generic Strategies
- Stuck in the Middle?
These generic strategies are not necessarily compatible with one another. If a firm attempts to achieve an advantage on all fronts, in this attempt it may achieve no advantage at all. For example, if a firm differentiates itself by supplying very high quality products, it risks undermining that quality if it seeks to become a cost leader. Even if the quality did not suffer, the firm would risk projecting a confusing image. For this reason, Michael Porter argued that to be successful over the long-term, a firm must select only one of these three generic strategies. Otherwise, with more than one single generic strategy the firm will be "stuck in the middle" and will not achieve a competitive advantage.
Porter argued that firms that are able to succeed at multiple strategies often do so by creating separate business units for each strategy. By separating the strategies into different units having different policies and even different cultures, a corporation is less likely to become "stuck in the middle."
However, there exists a viewpoint that a single generic strategy is not always best because within the same product customers often seek multi-dimensional satisfactions such as a combination of quality, style, convenience, and price. There have been cases in which high quality producers faithfully followed a single strategy and then suffered greatly when another firm entered the market with a lower-quality product that better met the overall needs of the customers.

Corporate Strategy

will ask you to answer fundamental questions such as "Why are you in business?" and "Why are you in this particular business?". This may appear to be a strange starting point but unless you can answer these type of questions you cannot produce vision statements and mission statements that have any real meaning. Corporate coaching may produce a business plan as a summary document but that is almost incidental.
You have made a variety of choices during your life and have arrived at where you are now.
•        Are you content with where you are?
•        Do you know where you are?
•        Do you know where to go next?
•        Do you know why you want to go there?
•        Do you know how to get there?
Strategic thinking is not easy with most people reverting to tactical thinking instead. Adopting a micro-management approach will not answer the challenges you face. You will need to take a step back and look at the big picture, notice where you are performing well, notice what your competitors are doing.
Most attempts at strategic planning fail because the strategic planning models used have been developed by academics and are based on what other businesses have done in the past. The strategies adopted by a manufacturing company twenty years previously are of marginal use to a service provider operating in an era of improved technology and communications.
Unfortunately most corporate executives look on corporate strategy as just another task that must be repeated periodically. The result is either an unprofessional strategy or a strategy that is bound to fail because it does not take account of reality. In the end a lot of strategic planning fails because of incompetence or indifference on the part of those responsible for the strategic plan.

Functional strategy
It is important that an organization periodically (at least annually, usually as part of the medium-term planning process) review all functional strategies to assure that they are:

    Consistent with the business strategy
    Supportive of the business strategy
    Consistent with other functional strategies
    Supportive of other functional strategies
    Best utilize the organizations strengths
    Lead to the level of efficiency and effectiveness desired
    Create or maintain functional competitive advantages, if desired
    Are within the organization's resource constraints

Each organization may contain a variety of functional areas, however, the following represent what are usually the most significant functional areas of concern regarding strategy.

      Finance and Accounting: Functional Strategies
    Human Resources: Functional Strategies
    Information Systems: Functional Strategies
    Marketing: Functional Strategies
    Production/Operations: Functional Strategies
    Research & Development: Functional Strategies