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Corporate planning and strategy

in construction

Darshan M S 221092
Vivek chander M 221099
Girish N 221106
Arunkumar N M 221107
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CORPORATE PLANNING:

It is the continuous process of making present risk taking decisions


systematically and with the greatest knowledge of their futurity; organizing
systematically the efforts needed to carry out these decisions and
measuring the results of these decisions against the expectations through
organized system feedback – Peter drucker

corporate planning is the process of managing the future of


organization.
Corporate planning is a systematic approach to strategic
decision making.
Long range planning and corporate planning
Long range planning in most cases assumes that the
current environment in relation to the organisation will
continue as in the past.
Long range planning is simply a forward projection of
existing operations.

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STRATEGIC MANAGEMENT

It is the process of specifying an organization's objectives,


developing policies, and plans to achieve these objectives and allocating
resources, so as to implement the plans.

It is the highest level of managerial activity, usually performed by the


company’s CEO and executive team.

One objective of an overall corporate strategy is to put the


organization into a position to carry out it’s mission effectively and
efficiently.
THREE TYPES OF STRATEGIES FOLLOWED BY
BUSINESS FIRMS:
CORPORATE STRATEGY: It provides the overall direction of the
organization in terms of it’s general attitude towards growth and
management of business.

BUSINESS STRATEGY: It is the strategy followed at the business unit or


product level. It normally aims at improving the compititative position in
the market served by that business unit.

FUNCTIONAL STRATEGY: It is the approach in a functional area to


achieve corporate and business unit objectives
FACTORS AFFECTING STRATEGY OF A FIRM

EXTERNAL FACTORS:
 Political- legal

 Economic

1.Gross domestic product

2. Inflation rates

3. Interest and exchange rates


 Social

 Technological
INTERNAL FACTORS:
 The organization’s mission, goals, and objectives

 Global influences on mission

 Goals and stake holders

 Influence on goals

 Agency problems

 Takeovers
Characteristics of strategic decisions
Concerned with the scope of the organization's activities and
the interface with the environment.
Seek to match the strengths and weaknesses of the firm to
the opportunities and threats in the market place
Seek to match the firm's activities to the capabilities of of
the organization and its resources.
Commit the organization to changes in the use of its
existing resources or to obtaining additional resources
Affect operational and administrative decisions
Complex as there is always a high degree of uncertainty
about environmental forces and outcomes.
Affect the long term direction of the firm.
Why?
A rapidly changing environment requires greater corporate
awareness of changes and their implications for the
organization.
There is need for companies to have stability as far as
possible and avoid the crises brought about by strategic
surprises.
The systematic appraisal of the strengths and weaknesses
of the organization and matching these to the opportunities
and threats in the environment is crucial for survival in a
competitive market.
Why?
The larger the organization the more difficult is to change
quickly - hence the need to anticipate change that much
earlier in order to develop an appropriate response.
Corporate harmony is enhanced if the organization is seen
to have a clear strategy. People then know where the
organization is going and can tailor their contribution
accordingly.
Consistent financial performance is likely if the
organization's activities are systematically thought through
with realistic forecasting of the results.

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Failure of corporate planning
Strategic plan usually introduced by CEO who might have
had exposure to it in a management development
programme(MDP).He hands over the task to a planner and
does not get involved
Some companies prepare a strategic plan and circulate it
among senior managers and externals consultants for their
comments. This approach fails since most of the time
senior managers neither have time nor the skills to look at
the future. Most of the time, they are found to be good at
budgeting but are unable to make an assessment of
external environment.
Many organisations emphasise on hard data. In a strategic
planning exercise, it is difficult to provide hard data in
every situation. This results in doubts being raised by
senior management in the organisation
Failure of corporate planning
Top management becomes so engrossed in current
problems that it does not spend enough time on strategic
planning process and the process gets discredited among
the other managers and staff.
Failure to modify the strategic planning system as
conditions within the company change.
Failure to create an appropriate climate for the success of
strategic planning.
Chief executive may spend too little time on planning.
Corporate planner tries to do all planning by himself or he
may be of a low calibre
Company tries to move into an advanced management area
before it is ready
Issues in strategy formulation
Social responsibilities and ethics
Managerial ethics
Organizational culture and strategy
Shaping the culture

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Why corporate planning and strategic management required in
construction industry?

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In construction industry
Rise in interest rates hits realty sector
The uncertainity in property market is giving jitters to
property funds.
Property funds have increased their IRR expectations from
(20-22)% to (27-30)%
EU and US investors were happy with (5-6)% yields, now
they want (8-9)%
DLF,Unitech announce US $4 billion fundrising through PE
in this FY
Parsvnath to venture into retail, plans to open 10 stores in
this FY ,21 commercial projects of area 4.77 million sq ft,
appoints new director and concessional pacts with DMRC to
develop properties
Unitech to open 15 malls in the coming years with Rs
20,000 crore of investment
Purvankara to setup fully owned subsidiary Provident
housing and infrastucture Ltd,for affordable housing
segment with investment of about Rs 8,000 crore,also to
invest Rs 1,000 crore for hospitality.
Puvankara arm goes PE route to raise Rs 750 Crore to
aquire land for its affordable housing project
GMR acquired 50% in the Netherlands based Intergen
GMR energy has earmarked Rs 13 K Crore for generating
3300 MW of power, plans to raise Rs 2.6 K Crores from
private placement of the equity
Ansal API to raise Rs 2,500 crore through PE investors to
develop SEZ and IT parks.
Raheja plans Rs 4,500 crore SEZ
World`s largest cement maker Lafarge have brought L&T`s
RMC business as a part of its expansion plans
JK Lakshmi cement to put in Rs 1,000 Crore for 5 RMC
plants through internal accruals
PremjiInvest,PE fund to pick up the stake in construction
companies
‘Swiss challenge’ ruled out in airport PPP projects
Property firms fast-track projects to beat slowdown (30%
in last six months)
References:
- Newcomb, R, Langford D and fellows, R Construction
Management, volume I
- Fellows R etal, Construction management in practice
-Harold kerzner, Second edition, Project management- A
system approach, CBS Publishers
-R Srinivasan, Second edition, Strategic management-The
Indian context, Princeton hall
-Ramaswamy and Namakumari, Strategic planning
formation of corporate strategy,Texts and cases, Indian
context, Macmillan.
-John parell, Strategic management, Theory and Practice,
Biztantra
-Thomas & David, Ninth edition, Strategic management and
business policy, Pearson education
http://ascelibrary.aip.org/journals/doc/ASCERL-home/proc/20

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