1. Scenario Based MCQs (New Pattern)
2. Cases Discussions (New Pattern)
3. MTPs and RTPs Discussions
SM[STRATEGIC MANAGEMENT]
Prof. Om TrivediIIM-C Alumnus, Visiting Faculty at NIRC & WIRC of ICAI, External Subject Expert at the BOS of ICAI and Plus Educator at Unacademy.
MARATHON REVISION CHARTS
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Strategic Management
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“Victorious warriors win first
and then go to war, while
defeated warriors
go to war first and
then seek to win”
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Model Question
Gennex is a company, headquartered in Bangalore, India, that designs, manufactures and sells computer hardware and software. It is considered one of the Big Five Technology Companies, alongside Apple, Amazon, Google, and Microsoft. Gennex is well known for its innovative products that has helped the company to have advantage over its competitors. It is well known for its size and revenues. The company also has a high level of brand loyalty and is ranked as one of the world's most valuable brands. It also spends on research and development and concerned with innovative software. Often the unique features of their product, that are not available with their competitors helps them to gain competitive advantage. Because of the product’s unique attributes, it increases its prices and is also able to pass the costs to its customers who cannot find substitute products easily. Gennex using the strategy is consistently gaining its position in the industry over its competitors.
Required: Identify and explain that which one of the three base generic strategies, Gennex has opted to gain competitive advantage over its rivals.
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EIS-SM
“Small Milate Jao Large Banate Jao”
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Answer to Question No. 6(a)Synopsis: Gennex is gaining competitive advantage over the Big Technology
Companies Apple, Amazon, Google and Microsoft through its well known innovative hardware and software products. Its size and revenues is based upon high level of brand loyalty, value creation with research and development in innovative software. The unique features of Gennex product helps it to increases its prices and its ability to pass the costs to its customers is consistently gaining its position in the industry over its competitors.
In the light of the above scenario, I state that Gennex has opted “Differentiation” strategy from one of the three base generic strategies: Cost Leadership, Differentiation and Focus, as suggested by Michael Porter to gain competitive advantage over its rivals.
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Copyright © 2020 Om Trivedi, All rights reserved.
CH. NO. SM – CHAPTERS (NEW) MARKS
WEIGHTAGE
1. An Introduction to Strategic Management 6-8
2. Dynamics of Competitive Strategy 12
3. Strategic Management Process 6
4. Corporate Level Strategies 8
5. Business Level Strategies 6-8
6. Functional Level Strategies 6-8
7. Organization and Strategic Leadership 8-10
8. Strategy Implementation and Control 8-10Copyright © 2020 Om Trivedi, All rights reserved.
CH. NO. SM – CHAPTERS (OLD) MARKS
WEIGHTAGE
1. Business Environment 6
2. BP, SM, SM Process and Strategic Intent 10
3. Strategic Analysis 10
4. Strategic Planning 8
5. Functional Level Strategies 8
6. Strategy Implementation and Control 10
7. Reaching Strategic Edge 8
9 10
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SM Examination Paper - Trend Analysis
Question Numbers MCQs/SBQs – 15 Marks
6 (a) & (b)- Marks- 3+2 = 5
7 (a) & (b)- Marks- 2*5 = 10
8 (a) & (b)- Marks- 5*2 = 10
9 (a) & (b)- Marks- 5*2 = 10
10 (a) & (b)- Marks- 7+3 = 10
Question TypesCompulsory Questions
Compulsory Questions
Descriptive or Case Based
Descriptive or Case Based
Descriptive or Case Based
Descriptive and Short Notes
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An Introduction
to Strategic
Management
CHAPTER – 1
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Learning OutcomeWhat is Business Policy?
What is Strategy?
Types of Strategy
Strategic Management
Objectives of SM
Advantages and
Limitations of SM
Management
Levels of Management
Strategic Levels in
Organization
Levels of Strategy
Corporate Strategy
Business Strategy
Functional Strategy
Strategy in NPOsCopyright © 2020 Om Trivedi, All rights reserved.
What is Business Policy?
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What is Business Policy?
Study of the functions and responsibilities of the top
management.
Determines the Future course of action.
Moulding the character and identity of an
organization.
Helps in Mobilization of resources to achieve goals.
SFM-2
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Hyundai Motor Unveils 'Strategy 2025’
Hyundai announces a set of strategies to achieve steady growth: • Boost profitability
• Enhanced customer value and cost structure
• Sell 670,000 EVs annually
• Become top three EV manufacturer by 2025
• Offer most new models with EV drivetrain by 2030 in
major markets, 2035 in emerging markets
• Invest KRW 61.1 trillion into R&D and future technologies
through 2025
• Target operating margin of 8% in automotive business
• 5% market share by 2025Copyright © 2020 Om Trivedi, All rights reserved.
Strategy
The concept of strategy has been borrowed from the military and adapted for use in business.
Military Strategy
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StrategyStrategy refers to the
ideas,
plans,
action and
support
that firms employ to compete successfully
against their rivals.
It helps firms achieve competitive advantage.Copyright © 2020 Om Trivedi, All rights reserved.
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Cost (Ind. Avg.)= Rs. 5,000
Value Created= Rs. 10,000
Price Offered = Rs. 8,000
CM= Rs. 2,000
FM= Rs. 3,000
Pro
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2019 Model 10 Features 10 Hr. Playtime No Waterproof 1 Year Warranty Copyright © 2020 Om Trivedi, All rights reserved.
Cost = Rs. 4,000
Value Created= Rs. 12,000
Price Offered = Rs. 8,000
CM= Rs. 4,000
FM= Rs. 4,000
Pro
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2020 Model 12 Features 12 Hr. Playtime IPX7 Waterproof 2 Year Warranty
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Value CreationProviding products and services to the
customers with more worth.
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Competitive Advantages
It allows a firm to gain an edge over
rivals when competing.
The set of unique features of a company
and its products that are perceived by the
target market as significant and superior
to the competition.For PD/GD/Online Lectures – Student’s Help Desk: 9953922272 or Visit www.eissmpendrive.in
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A long range blueprint of an organization’s desired:
• Image: What it wants to be?
• Direction: What it wants to do?
• Destination: Where it wants to go?
Strategy
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Strategy is partly proactive and partly reactive
Proactive StrategyIt is an approach where organization takes the initiative or acts as first mover.
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Strategy is partly proactive and partly reactive
Reactive StrategyIt is an approach where organizations react to their competitor’s actions.
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Strategy is partly proactive and partly reactive
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Strategy is partly proactive and partly reactive
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Intended or Planned Strategy
Plan at the beginning.
The strategy that an organization
hopes to execute.
Business Plan of Honda Automobiles for Indian
market to increase its market share through direct
marketing, advertising, sales promotions etc. with
the help of dealers and showrooms.
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Emergent Strategy
Plan that develops over time.
An unplanned strategy that arises in response
to unexpected environmental changes.
Honda Automobiles started the use of digital
marketing and emergence of social media,
dashboards and social websites to enhance a
marketing plan. Copyright © 2020 Om Trivedi, All rights reserved.
Realized Strategy
How the plan worked at the end.
The strategy that is in fact followed by an
organization.
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Reliance Industries - Future
Group deal
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Kishore Biyani, Group CEO, Future Group.
“As a result of this reorganisation and transaction,
Future Group will achieve a holistic solution to the
challenges that have been caused by COVID and
the macro-economic environment.
This transaction takes into account the interest of all
its stakeholders including lenders, shareholders,
creditors, suppliers and employees giving continuity
to all its businesses,”
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Isha Ambani, Director, Reliance Retail Ventures • "With this transaction, we are pleased to provide a home to the
renowned formats and brands of Future Group as well as
preserve its business ecosystem, which have played an
important role in the evolution of modern retail in India.
• We hope to continue the growth momentum of the retail industry
with our unique model of active collaboration with small
merchants and kiranas as well as large consumer brands. We are
committed to continue providing value to our consumers across
the country."Copyright © 2020 Om Trivedi, All rights reserved.
Future Retail’s Business
Stores: 1,700
Cities: 414
Income: Rs 20,185.37
crore in FY19-Rs
15,717.09 crore in FY20
Valued at ₹43,000 crore
Employees: Over 45,000
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MANUFACTURER
DISTRIBUTORS
Distribution Centre
Distribution Network
Retail Store Fulfilment Centre
CUSTOMERS
Delivery Network
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Reliance Retail’s
Stores: 11,806
Towns: 7,000
Space: 28.7 M Sq.
ft.
Turnover: 1,40,000+ Crores
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What’s there in the Deal?
Retail & Wholesale Undertaking is being transferred to
Reliance Retail and Fashion Lifestyle Limited (RRFLL),
a wholly-owned subsidiary of Reliance Retail Ventures
(RRVL).
The Logistics & Warehousing Undertaking is being
transferred to RRVL.
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What’s there in the Deal? Future Group will first merge certain companies carrying on the
aforesaid businesses into Future Enterprises Limited (FEL).
Future Group lenders have been saved from a $2.2 billion hit on
their exposure to the conglomerate after the company
announced its sale of all its businesses to Reliance Industries
(RIL) for ₹24,713 crore.
Reliance Retail Ventures (RRVL) will hold 13.14% stake in
Kishore Biyani's Future Enterprises Ltd and will take over debt
of ₹12,500 crore.
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Why this Deal, now? Future Group had a consolidated debt of ₹12,778 crore as of Sep.
2019.
Future Retail had a gross debt of ₹2,657 crore as of March 2019.
The retail giant had been in financial difficulty since the nationwide
lockdown started hurting its businesses.
Future Retail’s net profits declined to ₹164.56 crore on a
consolidated basis in Q3FY20 from ₹197.60 crore in the year-ago
period.
Revenue from operations decreased to ₹5,193.19 crore in Q3FY20
compared to ₹5,368.46 crore in Q3FY19.
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Why this Deal, now? RRVL reported a consolidated turnover of Rs 162,936 crore
and net profit of Rs 5,447.96 crore for the year ended March
31, 2020.
The deal with Future Group also makes Reliance Retail more
attractive for potential global partners and suitors.
“RIL has received strong interest from strategic and financial
investors in Reliance Retail.” - RIL's 43rd AGM, Mukesh
Ambani
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Case Study: Facebook In 2003, Mark Zuckerberg after being dumped by his girlfriend,
created a website called “FaceMash” where the attractiveness
of young women could be voted on. This evolved first into an
online social network called ‘Thefacebook’ that was for Harvard
students only. When the network became extremely popular, it
then morphed into Facebook, a website open to everyone.
Facebook is so pervasive today that it has changed the way we
speak, such as the word friend being used as a verb. Ironically,
Facebook’s emphasis on connecting with existing and new
friends is about as different as it could be from Mark
Zuckerberg’s original concept.
In fact, Mark Zuckerberg’s emergent and realized strategies
turned out to be far nobler than the intended strategy.
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Strategic Management
Strategic management is an ongoing process that
Evaluates and controls the business and the
industries
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Strategic Management
Strategic management is an ongoing process that
Assesses its competitors and sets goals and
strategies to meet all existing and potential
competitors.
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Strategic Management
Strategic management is an ongoing process that
Reassesses each strategy to determine how it has
been implemented.
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Strategic Management
Strategic management is an ongoing process that
Evaluates and controls the business and the industries
Assesses its competitors and sets goals and strategies
to meet all existing and potential competitors; and
Reassesses each strategy to determine how it has
been implemented.
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Objective of Strategic Management
To create competitive advantage.
To guide the company successfully
through all changes in the environment.
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Advantages of SM Proactive: Helps to become more proactive.
Decision-making: Provides decision-making framework.
Direction-setting for the company.
Avoid costly mistakes.
Competitive Advantages and Core competencies
Threat Identification:
Reputation: Building of the organizations.
Longivity: Helps to enhance the longevity of the business.
Future Oriented: Prepare the corporation to face the future.
PD 2Avoid
and
CTRLFuture
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Limitations of SM
Complex and turbulent environment.
Costly process.
Time-consuming process.
Competition analysis is a challenging task.
ComplexCTC
Analysis
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Management
Management is both art and
science.
It is the art of making people
more effective than they
would have been without you.
The science is in how you do it.
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Levels of Management
Board of directors, chief executive or managing director.
Branch managers anddepartmental managers
Supervisors, foreman, section officers and superintendent.
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Finance HR IS Production R & D S & Mkt.
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Strategic Levels in OrganizationsRoles
and Functions
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Levels of Strategy
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Corporate Strategy
Corporate strategy is the growth design of the
firm as it spells out the growth objective
the direction,
extent,
pace and
timing
of the firm’s growth.
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Corporate Strategy
Corporate level strategy is concerned with:
Competitive Contact
Reach
Managing Activities and Business Interrelationships
Management Practices
CRM-2
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Business Strategy
Plans and actions that firms devise to compete in a
given product/market scope or setting.
Addresses the question- “How do we compete
within an industry?”
Strategic Business Unit (SBU) (A profit centre)
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SBUsSBU is an autonomous division in the organization which deals
with specific business concerns.
It has its own set of competitors and a manager, who has
responsibility for strategic planning and implementation, and
who has control over the resources and profit-influencing
factors.Manufacturing
Showroom
Service Centre
SBU 1
SBU 2
SBU 3
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Finance HR IS Production R & D S & Mkt.
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Finance HR IS Production R & D S & Mkt.
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Functional strategy
Strategy related to a single functional operation.
Tactical in Nature.
Marketing Strategy
Promotion Strategy Sales Strategy Pricing
Strategy
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Scenario Based Question
Ramesh Sharma has fifteen stores selling consumer durables in Delhi Region. Four of these stores were opened in last three years. He believes in managing strategically and enjoyed significant sales of refrigerator, televisions, washing machines, air conditioners and like till four years back. With shift to the purchases to online strores, the sales of his stores came down to about seventy per cent in last four years. Required: Analyse the position of Ramesh Sharma in light of limitations of strategic management. For PD/GD/Online Lectures – Student’s Help Desk: 9953922272 or Visit www.eissmpendrive.in
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Scenario Based Question
“Fitness Mantra” is a charitable organisation promoting healthy lifestyle amongst all the sections of the society. It organises programmes to encourage and guide people on matters related to fitness, stress relief, yoga, exercises, healthy diet, weight management, work-life balance and so on. Many business organisations and resident welfare associations take services of “Fitness Mantra”. Its daily yoga sessions are very popular in some of the big companies across the country. The “Fitness Mantra” has no commercial interest and does not charge any fees for its services. However, the organisation is able to get good charities and has sufficient funds to meet its routine expenses.
Required: Do you think the concepts of strategic management are relevant for “Fitness Mantra”? Discuss.For PD/GD/Online Lectures – Student’s Help Desk: 9953922272 or Visit www.eissmpendrive.in Copyright © 2020 Om Trivedi, All rights reserved.
Scenario Based Question
‘Kidz Care’ is a not-for-profit organization based in northern India working towards childcare. ‘Kidz Care’ educates people towards immunization, sanitation and works in coordination with local hospitals or medical centers. Recently, a new team has taken over the management of its activities. Required: Explain whether tools of strategic Management are relevant for ‘Kidz Care’.
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CHAPTER 2
DYNAMICS OF
COMPETITIVE STRATEGY
By: OM TRIVEDICopyright © 2020 Om Trivedi, All rights reserved.
CompetitionCompetition is a
contest between
Organisms,
Animals,
Individuals,
Groups, etc.
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Competitors A company in the same industry or a similar
industry which offers a similar product or
service.
Example:
Coca-Cola and Pepsi
Wal-Mart and Target
McDonald’s and Burger KingCopyright © 2020 Om Trivedi, All rights reserved.
How to Deal with Competition?
Who are the competitors?
What are their product and services?
What are their market shares?
What are their financial positions?
What gives them cost and price advantage?
What are they likely to do next?
How strong is their distribution network?
What are their manpower strengths?
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Competitive Landscape
A business analysis which identifies
competitors.
Permits the comparison of their
mission, vision, core values, niche
market, strengths and weaknesses.
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Steps to UnderstandCompetitive Landscape
I. Identify the competition
II. Understand the competition
III. Determine the Strengths of the
competition
IV. Determine the Weaknesses of the
competition
V. Put all the Things Together
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Competitive Strategy
Competitive strategy is designed to help firms
achieve Competitive Advantage.
A competitive strategy consists of moves to
• Attract customers
• Face Competition
• Beat Competition
• Strengthen an organization’s market positionCopyright © 2020 Om Trivedi, All rights reserved.
Value Creation
Providing products and services to the customers with more worth.
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Competitive Advantages
It allows a firm to gain an edge over rivals when competing.
The set of unique features of a company and its products that are perceived by the target market as significant and superior to the competition.
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Tangible Resources?
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Intangible Resources?
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Role of Resources, Capabilities and Value Creation is Achieving Competitive
Advantages
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Characteristics of Resources that Provide Sustainable Competitive
Advantages
I. Imitability
II. Durability
III. Transferability
IV. AppropriabilityCopyright © 2020 Om Trivedi, All rights reserved.
What is Core Competencies?
Core Competencies are created by superior integration of technological, physical and human resources.
They represent distinctive skills as well as intangible, invisible, intellectual assets and cultural capabilities.
It also refers to the strengths of an organization that provide competitive advantage and value to it.
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What is Core Competencies?
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C K Prahlad and Gary Hamel’s View on Core Competence
Three competencies that can be termed CC:
A.Competitor differentiation or CA
B.Customer value or Value creation
C.Application of competencies
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Tools to identify and build CC
Four criteria of sustainable competitive advantage (Capabilities that are Core Competencies)
Value Chain Analysis
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Capabilities that are Core Competencies
Valuable
Non-substitutable
Costly to Imitate
Rare
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Capabilities that are Core Competencies
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Capabilities that are Core Competencies
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Company Valuation Ratio
Colgate-Palmolive 20.8
Glaxo 13.4
eBay 11.2
Yahoo 10.7
Dell 10.0
P&G 8.4
Unilever 8.1
Company Brand Value
Coca-Cola 66.7
IBM 59.0
Microsoft 59.0
GE 53.1
Toyota 34.1
Intel 31.3
McDonald’s 31.0
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VRIO Analysis
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Value Chain Analysis
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Cost
Value Created
Price Offered
CM
FM
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Value Chain Analysis
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Value Chain Analysis Value Analysis
It is an accounting analysis to understand the ‘value added’ of separate activities in a complex manufacturing process, in order to determine where cost improvement could be made and/or value creation improved.
Value AddedCreation of a competitive advantage by bundling, combining, or packaging features and benefits that result in greater customer acceptance.
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Value Chain Framework of Porter (1990)
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Managing Linkages
Internal Linkages
• Between Primary Activities
• Primary and Support Activities
• Between Support Activities
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Managing Linkages
External Linkages
1. Vertical Linkages
• Involving suppliers while finalizing
specifications for raw-material.
• Involving distributors at the design
stage of a product.
2. Horizontal Linkages Copyright © 2020 Om Trivedi, All rights reserved.
CC to Competitive Advantages, How is it possible?
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Strategic
Analysis
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What is Strategic Analysis?
Strategic analysis seeks to determine • alternative course of action
that could best enable the firm -
• to achieve its mission and objectives.
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Strategic Analysis
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Why Strategic Analysis?
Strategic analysis tries to find out:
i. How effective has the present
strategy been?
ii. How effective will that strategy be in
the future?
iii. How effective will the selected
alternative strategy be in the future?
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Issues to be Considered for Strategic Analysis
Strategy evolves over a period of
time (Result of a series of small Decisions)
Balance (Balance between the internal and external
factors)
Strategic Risk (Analyzing risk involved and
consequences thereon)
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Strategy evolves over a period of time
Strategy is the result of a series of small decisions taken over an extended period of time.
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Balance Resources
Capabilities
Competencies
Strengths
Weaknesses
Events
Trends
Influences
Constraints
Opportunities
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What is Risk?
Certainty UncertaintyRisk
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Strategic Risks
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Situational Analysis
A systematic approach for
identifying and analyzing
macro-environmental factors
external to the organization and
matching them with the firm’s
capabilities.
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Important Factors Considered while doing a Situation Analysis
Product Situation
Market Situation
Competitive Situation
Distribution Situation
Environmental Factors
Opportunity and Threat analysisCopyright © 2020 Om Trivedi, All rights reserved.
Strategic AnalysisFramework
Strategic Analysis
Internal AnalysisExternal Analysis
Customer Analysis Competitor AnalysisMarket AnalysisMacro-Environment Analysis
Performance AnalysisDeterminates Analysis
Opportunities, threats, trends, and strategic uncertainties
Strengths, Weaknesses, trends, and strategic uncertainties
Strategy Identification and Selectioni. Identify Strategic Alternativesii. Select Strategyiii. Implement the Operating Planiv. Review Strategies
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Industry and Competitive Analysis
Industries differ widely in their -• Economic characteristics,
• Technological situation,
• Competitive situations, and
• Future profit prospects.
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Methods of Industry and Competitive Analysis
D ominant Economic Features of Industry
I ntensity of Competition
D rivers of Change
I dentifying Companies in Strongest and Weakest Position
S trategic or Competitive Moves of Rivals
E xamine Key Factors for Competitive Success
E valuate Financial Attractiveness of Industry
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Dominant Economic Features of the Industry
Market size
Competitors and competition
Industry Size and Growth
Capital Requirement
Rate of Return
Customer Segments
Pace of Technological Change
Distribution Channels
EOS, LC and EC
Entry and Exit Barriers
Product Differentiation
Vertical IntegrationsCopyright © 2020 Om Trivedi, All rights reserved.
Intensity of Competition
Copyright © 2020 Om Trivedi, All rights reserved.
Drivers of Change Decreasing cost or price
Globalization
Number of players
Innovations
Entry of firms
Exit of firms
Availability of funds
Internet and E-commerce Copyright © 2020 Om Trivedi, All rights reserved.
Identifying Companies in Strongest and Weakest Position
Strategic Groups
Strategic Group Mapping
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Strategic Groups Product Line Breadth
USP, Services offered and Quality Range
Price Range
Technological Approach
Segment Targeted
Distribution Channel
Geographical Coverage
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Examine Key Factors for Competitive Success
Key Success Factors (KSFs)KSFs are the Elements that affect the ability of the
firms in an Industry to prosper.
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Evaluate Financial Attractiveness of Industry
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Portfolio Analysis
Business Portfolio: A business portfolio is a collection of businesses and products that make up the company.
Portfolio Analysis: A set of techniques that help strategists in taking strategic decisions with regard to individual products or businesses in a firm’s portfolio.
http://www.ril.com/ https://www.itcportal.com/
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Strategic Business Unit (SBU)
SBU is an autonomous division in the
organization which deals with specific
business concerns.
It has its own set of competitors and a
manager, who has responsibility for strategic
planning and implementation, and who has
control over the resources and profit-
influencing factors.Copyright © 2020 Om Trivedi, All rights reserved.
Experience Curve
Experience curve shows the relationship between production cost and cumulative production quantity.
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EOSAdam Smith (1776)
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Learning Curve Herman Ebbinghaus (1885)
A German Psychologist
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Experience Curve
Experience curve shows the relationship between production cost and cumulative production quantity.
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Cumulative Production
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Product Life Cycle (PLC)
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Boston Consulting Group Growth-Share Matrix (BCG Matrix)
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Question Mark
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Boston Consulting Group Growth-Share Matrix (BCG Matrix)
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Star
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Boston Consulting Group Growth-Share Matrix (BCG Matrix)
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Cash Cow
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Boston Consulting Group Growth-Share Matrix (BCG Matrix)
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Dog
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Four strategies Based on BCG Matrix
Build
Hold/Protect
Harvest
DivestCopyright © 2020 Om Trivedi, All rights reserved.
Grand Strategies/Directional Strategies
Copyright © 2020 Om Trivedi, All rights reserved.
Ansoff’s Product Market Growth Matrix
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Expansion through Intensification
Intensification refers to growth by working with its current businesses more strongly.
Intensification include:• Market penetration
• Market Development
• Product Development
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Market Penetration Enter markets with their
existing products.
Take partly or all of a
competitor’s market share.
Find new customers.
Get current customers to use
more of your products.
Low Risk
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Product Development
New products into Existing
markets.
Even if the new products
need not be new to the
market, they remain new to
the business.
Mod. Risk
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Market Development Existing products into new markets.
Current product can be changed, improved
and marketed.
Target another segment.
New geographical markets, new product
dimensions or packaging, new distribution
channels or different pricing policies.
Mod. Risk
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Expansion through Diversification
New products into new
markets.
Starting up or acquiring
businesses outside the
company’s current products
and markets.
High Risk
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ADL Matrix(Arthur D Little)
The ADL Matrix is a two dimensional 4*5
matrix
Based on the Product Life Cycle (PLC) and
Competitive positioning.
Matrix Positioning Base
• Industry Maturity
• Competitive PositionCopyright © 2020 Om Trivedi, All rights reserved.
Industry Maturity
Embryonic
Growth
Mature
Aging
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Competitive Position
Dominant
Strong
Favourable
Tenable
Weak Copyright © 2020 Om Trivedi, All rights reserved.
ADL Matrix
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The General Electric Model
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Factors that Affect Market Attractiveness
Market Size
Market growth
Market profitability
Pricing trends
Competitive intensity
Overall risk of returns in the industry
Opportunity to differentiate products
Segmentation
Distribution structure
Copyright © 2020 Om Trivedi, All rights reserved.
Factors that Affect Competitive Strength
Strength of assets and competencies
Relative brand strength
Market share
Customer loyalty
Structure the cost as compared with the competitors (Relative cost position)
Distribution strength
Record of technological or other innovation
Access to financial and other investment resources
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The General Electric Model
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SWOT Analysis
©South-Western College Publishing
S
W
O
T
Things the company does well.
Things the company does not do well.
Conditions in the external environment that favor strengths.
Conditions in the external environment that do not relate to existing strengths or favor areas of current weakness.
Internal
External
Copyright © 2020 Om Trivedi, All rights reserved.
SWOT Analysis
Strengths •Financial resources•Broad product line•No debt•Committed employees•Technology
Weaknesses•Huge debts •High employee turnover•Wastage of raw materials•Obsolete Machinery
Strengths and
WeaknessesINTERNAL
Copyright © 2020 Om Trivedi, All rights reserved.
SWOT Analysis
OpportunitiesAnd
ThreatsEXTERNAL
Opportunities • Emerging markets• Population changes• Government policies• FDI in retail• Changes in Interest Rates
Threats• Changing technology• Price wars • Reduction in industry profits• Recession
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Significance of SWOT Analysis
Provides a Logical Framework
• Presents a Comparative Analysis
• Guides strategist in Strategy Identification
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SWOT Analysis Framework
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TOWS Matrix(Heinz Weihrich)
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GLOBAL ENVIRONMENT
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Global Environment Factors
I. Positive and negative impact of significant
international events
II. Emerging global markets
III. Changing global markets
IV. Cultural attributes of individual global
markets.
V. Institutional attributes of individual global
markets. Copyright © 2020 Om Trivedi, All rights reserved.
Factors that influence globalization
Sports Meets
Terrorist Attacks
Natural Disasters
Emerging new market
The culture and attributes towards
change
Copyright © 2020 Om Trivedi, All rights reserved.
Globalization
Globalization refers to the linkage between markets that exist across national borders.
These linkages may be economic, financial, social or political.
Copyright © 2020 Om Trivedi, All rights reserved.
The Indicators of Globalization
International trade in goods and
services.
The transfer of money capital from one
country to another.
The movement of people across
national borders.
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Types ofGlobal Companies
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Characteristics of a Global Company
Common ownership
Common pool of resources
Common strategy
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Reasons why Companies go Global
Domestic markets are no longer enough to absorb whatever is produced
Foreign markets have grown enough to justify foreign investment
Availability of cheaper and reliable resources in other countries
Reduction in transportation cost for export to remote countries
Rapid shrinking of time and distance across the globe
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Importance of Globalization
Proper use of Resources
Multiple choices
Foreign Exchange
Government incentives
Creates Employment
Technology
Spreading of Risk of Loss
Benefit to the consumers
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Chapter 3Strategic Management Process
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Motivational Quote
“Vision is the art of seeing
things invisible.”
- Jonathan Swift
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VISION
Health for all
Peace on earth
Being human
Education for all
Everyday low prices
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Vision
Vision represents an IDEA, IMAGINATION,
DREAM and DNA about:
• What an organization is today?
• What it wants to be tomorrow?
• What kind of company it wants to create?
It is a macro-view of an organization’s
philosophy.
Organization’s roadmap to future.
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Strategic Vision
Strategic Vision is a road map of a company’s future – providing specifics about ........
• technology and customer focus,
• the geographic and product markets to be
pursued,
• the capabilities it plans to develop, and
• the kind of company that management is
trying to create.Copyright © 2020 Om Trivedi, All rights reserved.
Elements of a strategic vision
Who we are and Where we are now?
Where we are going?
Clear communication of vision in
the organization.
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Copyright © 2020 Om Trivedi, All rights reserved.
How to Develop a Strategic Vision?
Creativity
Intelligence
Direction Change
Shared Vision
Direction SettingCopyright © 2020 Om Trivedi, All rights reserved.
www.amazon.com
“Our [Amazon’s] vision is to be
earth’s most customer centric
company; to build a place where
people can come to find and
discover anything they might want
to buy online.”
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Hair Salon
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Hair Salon
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Hair Salon
“Our salon will change the way you
think about a haircut. Full service
comfort, friendly staff, a relaxing
atmosphere, and the best prices in town
give you an experience that will leave
you glowing both inside and out.”
Copyright © 2020 Om Trivedi, All rights reserved.
Mission
“Purpose” of being there.
• Why the firm exists?
• What it does?
• How it does?
• For whom it does?
It is an action mode to achieve vision.
It helps in deciding priorities.
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Mission
A company’s Mission statement is typically focused
on its present business scope – “who we are and
what we do”
Mission statements broadly describe an
organizations present capabilities, customer focus,
activities, and business makeup.
Drucker (1995)A mission statement is the same as asking the question:
What business are we in?Copyright © 2020 Om Trivedi, All rights reserved.
Components of a Mission Statement
Customers
Products or Services
Technology
Self-concept
Markets
Image of Firm
Philosophy
Concern for employees
Concern for survival, growth and profitability
Copyright © 2020 Om Trivedi, All rights reserved.
Useful points while writing the mission of a company
Give the organization its own special identity,
business emphasis and path for development.
Customer groups it is targeting,
Technologies and competencies, it uses.
Activities it performs to satisfy own needs.
Indicate the boundaries on business operation.
Highly personalized and unique to the
organization. Copyright © 2020 Om Trivedi, All rights reserved.
Dell Mission Statement
Dell’s mission is to be the most successfulcomputer company in the world at delivering thebest customer experience in markets we serve. Indoing so, Dell will meet customer expectations of:
• Highest quality
• Leading technology
• Competitive pricing
• Individual and company accountability
• Best-in-class service and support
• Flexible customization capability
• Superior corporate citizenship
• Financial stability
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Pantaloons
Vision
To Deliver everything, everywhere, every time for every Indian consumer in the most profitable manner.
Mission
It will be trendsetter in delivery formals, creating retail realities, making consumption affordable for all.
It will infuse Indian brands with confidence.
It will be efficient, cost conscious and committed to quality.
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Tata Sky
Vision
To be at every television home.
Empowering every television viewer and revolutionizing home entertainment.
Mission
Revolutionizing Home entertainment by offering:
• Super Digital Versatile Disk
• HD Quality Pictures and Sounds
Copyright © 2020 Om Trivedi, All rights reserved.
ICICI Bank
Vision
To be a leading provider of Financial Services in India and a major Global Bank.
Mission Customer’s First Choice by:
• Delivery of high quality, world
class products and services.
• Expand the frontiers of business
globally.
• Maintain healthy financial profile.
• Diversify earnings across
businesses and geographies.
• Create value for our stakeholders
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Goal: 20% Revenue Growth
Ob
j. 3
: In
trod
uce
Wee
kday
s O
ffer
s
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Difference between objectives and goals.
The goals are broad while objectives are
specific.
The goals are set for a relatively longer period
of time.
Goals are more influenced by external
environment.
Goals are not quantified while objectives are
quantified.
Copyright © 2020 Om Trivedi, All rights reserved.
Characteristics of Objectives
Define the organization’s relationship with its environment.
Facilitative towards achievement of mission.
Provide the basis for strategic decision-making.
Provide standards for performance appraisal.
Understandable.
Concrete and specific.
Related to a time frame.
Measurable and controllable.
Challenging.
Correlate with other objectivesCopyright © 2020 Om Trivedi, All rights reserved.
Business Definition
Explain the business undertaken by
the firm, with respect to the customer
needs, target audience, and
alternative technologies.
Corporate restructuring also depends
upon the business definition.
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Business Model
A strategic choice for the effective
operation of the business, ascertaining
sources of income, desired customer
base, and financing details.
Different firms adopt different
business models.
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Strategic Planning
Strategic Planning is a process which deals with one or more of these key questions:
• Why do we exist?
• What are we doing?
• What are the major goals?
• For whom do we do it?
• How to improve and excel?
• What resources do we need?
• Who will be our customers?
Copyright © 2020 Om Trivedi, All rights reserved.
Approaches for Strategic Planning
TOP
DOWN
UP
BOTTOM
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Strategic Uncertainty
The strategic uncertainty is
represented by a future trend or event
that has inherent unpredictability.
It can be judged by Scenario Analysis.
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Ways to deal with strategic uncertainty
Strategic Grouping of Uncertainty
Scenario Analysis
Strategic Flexibility in Organization.
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CHAPTER 4Corporate Level Strategy
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Strategic Alternatives
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Glueck and Jauch Generic Strategic Alternative
Stability Strategy
Expansion Strategy
Retrenchment Strategy
Combinations StrategyCopyright © 2020 Om Trivedi, All rights reserved.
Grand Strategies/Directional Strategies
Copyright © 2020 Om Trivedi, All rights reserved.
Stability Strategy
Frequency
Resources
Investment
Definition
Growth
Efficiency
RiskCopyright © 2020 Om Trivedi, All rights reserved.
Why Stability Strategy?
Stable Environment
Less Risky
Less Threatening
Consolidation
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Expansion Strategy
Frequency
Resources
Investment
Definition
Growth
Efficiency
RiskCopyright © 2020 Om Trivedi, All rights reserved.
Why Expansion Strategy?
Growth
Advantage over Competition
Market Share and Position
Environmental Demand
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Expansion Strategy
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Expansion through Intensification
Intensification refers to growth by working with its current businesses more strongly.
Intensification include:• Market penetration
• Market Development
• Product Development
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Ansoff’s Product Market Growth Matrix
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Ansoff’s Product Market Growth Matrix
Copyright © 2020 Om Trivedi, All rights reserved.
Market Penetration Enter markets with their
existing products.
Take partly or all of a
competitor’s market share.
Find new customers.
Get current customers to use
more of your products.
Low Risk
Copyright © 2020 Om Trivedi, All rights reserved.
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Product Development
New products into Existing
markets.
Even if the new products
need not be new to the
market, they remain new to
the business.
Mod. Risk
Copyright © 2020 Om Trivedi, All rights reserved.
Copyright © 2020 Om Trivedi, All rights reserved. Copyright © 2020 Om Trivedi, All rights reserved.
Market Development Existing products into new markets.
Current product can be changed, improved
and marketed.
Target another segment.
New geographical markets, new product
dimensions or packaging, new distribution
channels or different pricing policies.
Mod. Risk
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Expansion through Diversification
New products into new
markets.
Starting up or acquiring
businesses outside the
company’s current products
and markets.
High Risk
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Technological Innovation
Capacity Utilisation
Synergy
Reasons for Diversification
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Related and Unrelated Diversification
Related Diversification: It is when a business adds or expands its existing product lines or markets.
Vodafone Purchasing Hutch
Unrelated Diversification: It is when a business adds
new,
or unrelated product lines
or markets.Copyright © 2020 Om Trivedi, All rights reserved.
Types of Related and Unrelated Diversification
Vertical Integration (Related)
Horizontal Integration (Related)
Concentric Diversification (Related)
Conglomerate Diversification (Unrelated)
Copyright © 2020 Om Trivedi, All rights reserved.
Reasons for Related Diversification
To share competencies by exploiting
brand name, marketing-skills, sales and
distribution capacity, manufacturing
skills, R & D and new product capacity.
To achieve economies of scale.
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Vertical Integration
Firm engages in businesses that are
related to its existing business.
It remains vertically within the same
product-process chain.
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Vertical Integration
Paper Manufactures
Publisher
Book Distributor
Paper Manufactures
Publisher
Book Distributor
Backward Integration
Forward Integration
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Horizontal Integration Diversification
This involves addition or acquisition of one or
more similar businesses at the same stage of
the production marketing chain through:
• Entering into Repairs and servicing of products
• Taking over Competitors’ products
• Production of Complementary products
• Sale of By-products
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Horizontal Integration Diversification
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Horizontal Integration Diversification
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Concentric Diversification
Extends the firm’s distinctive
competence to the other lines of
business that are similar to the firm’s
initial base through:
• Process
• Technology
• Marketing.
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Concentric Diversification
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Conglomerate Diversification
It is a strategy that expands the firm’s
operation into industries and markets that
are not similar or related to the firm’s
initial base.
It does not involve sharing the firm’s
distinctive competence across different
lines of business.
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Reasons for Unrelated Diversification
To manage and allocate cash flow.
To obtain high ROI.
To obtain a bargain price.
To reduce risk by operating in multiple product
markets.
To obtain tax benefits.
To obtain liquid assets.
To achieve vertical integration. Copyright © 2020 Om Trivedi, All rights reserved.
Conglomerate Diversification
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Expansion through Strategic Alliance
A strategic alliance is an agreement
between
Two or more companies
To share:
Knowledge or resources
To their mutual benefit.
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Types of Strategic Alliance
Intra-industry
Inter-industry
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Why Strategic Alliance?
To create Synergy
To Avoid barriers to entry
To gain Access to new markets
To Reduce/share risk
To gain Access raw materials
To Undertake development projects that are
too big for a single company to fund.
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Advantages ofStrategic Alliance?
Political
Organizational
Strategic
Economical
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Disadvantages ofStrategic Alliance?
Sharing
Trade Secrets
Competition
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Retrenchment Strategy
Frequency
Resources
Investment
Definition
Growth
Efficiency
Risk
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Ways ofRetrenchment Strategy
Cutting back on capital and revenue expenditure.
Reduction in operation.
Withdrawal of some products and offices.
Disposal of plant and product divisions.
Retirement from production/marketing stage.
Offering itself for takeover.
Seeking liquidation or winding up.
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Types ofRetrenchment Strategy
InternalInternal
Turnaround
ExternalExternal
Divestment
Liquidation
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Why Retrenchment Strategy?
Obsolescence of product/process.
High competition
Industry overcapacity
Management non-willingness continue
Continuous losses
Unavailability of resources
Unmanageable threats
Reallocation of resources to profitable businesses
Situation of strategic failure. Copyright © 2020 Om Trivedi, All rights reserved.
Turnaround
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Why Turnaround Strategy?
Mismanagement.
Negative cash flow and profits
Declining market value
Deterioration in physical facilities
Over manning
High turnover of employees and low morale
Uncompetitive products or servicesCopyright © 2020 Om Trivedi, All rights reserved.
Turnaround Action Plan
Stage 1• Assessment of Current Problem
Stage 2 • Analyze the Situation and Develop a Strategic Plan
Stage 3 • Implement an Emergency Action Plan
Stage 4 • Restructure the Business
Stage 5• Return to Normal
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Divestment Strategy
Divestment Strategy involves the sale or
liquidation of a portion of business, or a
major division, profit centre or SBU.
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Liquidation Strategy
A liquidation strategy involves closing down a firm and selling off all its assets and paying off its liabilities.
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Combination Strategy
We adopt different strategies for different units or products of an organization.
Combination = Stability + Expansion + Retrenchment
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Expansion through Mergers and Acquisitions
To meet the basic business urge to grow.
To achieve synergy between the parent and the acquired enterprises.
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Merger
A combination where two or more than two
companies combine into one company.
It is also defined as Amalgamation,
especially in Indian law.
Merger or Amalgamation may take two
forms:
• Merger through Absorption and
• Merger through Consolidation.
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Absorption and Consolidation
Absorption• Absorption is a combination of two or more than two companies
into an existing company.
Consolidation• The fusion of two or more than two company into a new company
in which all the existing companies are legally dissolved and a new entity or company is created.
A Limited
C Limited New Company
B Limited
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Merger Process
A Limited B Limited
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Amalgamation
The merger of one or more companies with another
company
Or,
The merger of two or more companies to form a new
company
In such a way that all assets and liabilities of the
amalgamated company become assets and liabilities of
the amalgamating company and shareholders holding
not less than nine-tenths in the value of the shares in
the amalgamating company or companies become
shareholders of the amalgamated company.
Copyright © 2020 Om Trivedi, All rights reserved.
Acquisitions
The acquisition of assets by
one company from another
company.
Both companies may continue
to exist in acquisitions.
An acquisition is also known
as a takeover.
It may be friendly or hostile.
Copyright © 2020 Om Trivedi, All rights reserved.
Types of Mergers and Acquisitions
Horizontal
• A merger of two competing firms which are engaged in
the production of similar products or services.
• It helps to obtain economies of scale in production by
• Eliminating duplication of facilities,
• Widening the product line, reduction in investment,
• Elimination of competition in product market,
• Increase market share,
• Reduction in advertising costs etc.
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Types of Mergers and Acquisitions
Vertical
When two or more companies involved in
different stages of activities like production or
distribution combine with each other the
combination is called Vertical merger.
Two types of vertical combinations
• Forward Integration
• Backward IntegrationCopyright © 2020 Om Trivedi, All rights reserved.
Types of Mergers and Acquisitions
Circular Combination
Companies engaged in the production of different products
seek combination to share common distribution and
research facilities in order to obtain economies by
elimination of duplication of cost.
Examples :
• STANDARD EQUITY FUND merged with DR. REDDY'S LABORATORIES.
• KARNATAKA SCOOTERS merges with BROOKE BOND (INDIA) LTD.
Copyright © 2020 Om Trivedi, All rights reserved.
Types of Mergers and Acquisitions
Conglomerate
• It is the combination of companies engaged in
unrelated businesses.
• Such a combination helps in
• Lowering of cost of capital,
• Optimum utilization of financial resources
• Enlarging debt capacity.
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“
”Thanx
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BUSINESS
LEVEL
STRATEGIES
CHAPTER – 5NEW
By: OM TRIVEDICopyright © 2020 Om Trivedi, All rights reserved.
Overall competitiveenvironment
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Competitive Environment
The competitive environment is the dynamic
system in which the business competes.
Competitive Environmental Variables-
• New Entrants
• Suppliers
• Buyers
• Direct Competitors
• Indirect Competitors/Potential substitutesCopyright © 2020 Om Trivedi, All rights reserved.
Porter’s Five Forces Model -Competitive Analysis
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New Entrants
+
Firm’s Value Creation Grid
Threat from New Entrants
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Capital Requirements
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Capital Requirements
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Economies of Scale, EC and LC
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Economies of Scale, EC and LC
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Economies of Scale, EC and LC
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Product Differentiation
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Product Differentiation
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Product Differentiation
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Product Differentiation
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Brand Identity
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Brand Identity
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Brand Identity
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Brand Identity
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Brand Identity
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Brand Identity
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Switching Costs
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Distribution Channels
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Aggressive Retaliation
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Substitutes
=
Firm’s Value Creation Grid
Threat from Indirect Competitors
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Threat from Indirect Competitors
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Threat from Indirect Competitors
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Threat from Indirect Competitors
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Suppliers
+
Firm’s Value Creation Grid
Bargaining Power of Suppliers
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Factors that Influence Supplier’s Bargaining Power
Purchase Size
Product Function
Supplier’s Concentration
Product Differentiation
Vertical Integration
Switching Cost
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Buyers
+
Firm’s Value Creation Grid
Bargaining Power of Buyers
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Factors that Influence Buyer’s Bargaining Power
Buyer’s Knowledge
Purchase Size
Product Function
Buyer’s Concentration
Product Differentiation
Vertical Integration
Switching CostCopyright © 2020 Om Trivedi, All rights reserved.
Direct Competitors
+
Firm’s Value Creation Grid
+
Threat from Direct Competitors
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Factors that Influence Barriers to Entry
Industry Leader
Number of Competitors
Type of Competition
Entry Barrier and Exit Barrier
Fixed Cost
Product Differentiation
Industry Growth RateCopyright © 2020 Om Trivedi, All rights reserved.
Michael Porter’s Generic Strategies
Cost Leadership
Differentiation
Focus
• Focussed Low Cost
• Focussed Differentiation
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Economies of Scale, EC and LC
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Product Differentiation
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Brand Identity
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Best-Cost Provider Strategy
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CHAPTER 6Functional Level Strategy
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Functional
Strategy
UNIT- I
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Learning Outcome
What is Functional Strategy?
Marketing Strategy Formulation
What is Marketing?
Marketing Strategy
Marketing Process
Marketing Mix
Marketing Analysis
Marketing Strategy Techniques
Copyright © 2020 Om Trivedi, All rights reserved.
Functional Strategies
Known as tactical strategies.
Functional strategies operate below business-
level strategies.
Functional strategies are made within the
higher level strategies.
There might be several sub-functional areas.
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What is Functional Strategy?
Functional Strategy
Finance
Marketing
Production
Logistics
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Marketing Strategy
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What is Marketing?
Kotler
Marketing is an organizational function
A set of processes for creating, communicating, and delivering value to customers
For managing customer relationships in ways that benefit the organization and its stakeholders.
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Concept of Exchange
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Value Delivery Network
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Delivering Value to Customers
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Delivering Value to Customers
a. Offer product and service benefits to the customers.
b. Evaluate its impact on them.
c. What is their interpretation of value of that product and services.
d. Does your value delivery match their expectations.
e. Have you delivered your promises in past and ready for future.
Copyright © 2020 Om Trivedi, All rights reserved.
Marketing Strategy
DevelopingProducts
PricingProducts
DistributingProducts
Promoting Products
Customer
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Marketing Strategy Issues
Customers
Distribution network
Warranty
Remuneration and incentives
Advertising
Pricing
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The Marketing Process
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Segmentation
The breaking down or
building up of
potential buyers into
groups called
Market Segments
Organization
Market
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Targeting
Organization
Market
Evaluate the
segments identified
in the
segmentation
process; select
target market(s).
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Major Steps in Segmentation & Targeting
1.Break
market down
2.Group into
segments
TARGET MARKET
3.Choosetarget market
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Positioning
Designing strategies for
profitably serving chosen
segments better than the
competition is called as
Market Positioning.
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Marketing Mix
The Marketing mix is a set of four decisions which need to be taken before launching any new product.
Product (Customer Solution)
Price (Customer Cost)
Place (Convenience)
Promotion (Communication)
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Marketing Analysis
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Marketing Planning
Marketing planning starts with the
analysis of the marketing environment.
It involves decisions on marketing
strategies that will help the company
attain its overall strategic objectives.
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Marketing Strategy Techniques
Social Marketing
Augmented Marketing
Direct Marketing
Relationship Marketing ATMTelecom
Pizza HutFree Home Delivery
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Marketing Strategy Techniques
Service Marketing
Person Marketing
Organization Marketing
Place Marketing
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Marketing Strategy Techniques
Differential Marketing
Concentrated Marketing
Synchro Marketing
De-marketing
Enlightened Marketing
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Other
Functional
Strategy
UNIT- II
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Learning Outcome
Financial Strategy
Evaluating the Worth of a Business
Production Strategy Formulation
Logistics Strategy
Research and Development Strategy
Human Resource Strategy Formulation
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Financial Strategy
The strategies related to several financial
aspects of a business like acquiring
capital, sources of fund, developing
projected financial statements/budgets,
management and usage of funds and
evaluating the worth of a business etc. are
called financial strategies.
Copyright © 2020 Om Trivedi, All rights reserved.
IMPORTANT FINANCIAL STRATEGYDECISIONS
To raise capital.
To lease or buy fixed assets.
To determine an appropriate dividend
payout ratio.
To define the credit policy.
To define the discount policy.
To determine the amount of cash in hand.
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Financial Strategy Formulation andImplementation Areas
Acquiring funds from different sources
Preparing budgets and Projected financial statements
Management and usage of funds
Evaluating the Worth of a Business
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Evaluating the Worth of a Business
Net Worth Method
Capitalisation of Earnings
Market Price Method
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Production Strategy Formulation
The strategies related to various aspects of production system, operational planning and control are called Production strategy.
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Logistics Strategy
Ensures that the right materials are available – at the right place,
– at the right time,
– of the right quality, and
– at the right cost.
Motor Rail
Air
Pipeline
Water
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Importance of Logistics Strategy
Cost savings
Reduced inventory levels
Reduced inventory wastages
Improved delivery time
Customer satisfaction
Competitive advantageCopyright © 2020 Om Trivedi, All rights reserved.
Logistics Management Vs. Supply Chain Management
Logistics
Component parts & Raw material In-process inventory Finished goods
Supply Chain
Finished Goods In-process inventory Warehouse/Distributors
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Research and Development Strategy
There are only TWO important functions in business :
Marketing
Innovation
The rest is cost and details
Peter Drucker
Ignore
Ridicule
Attack
Copy
Steal
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Research and Development (R&D) Strategies
Research and development (R&D) strategies are the strategies related to development of new products and processes and improvement of the old ones.
Copyright © 2020 Om Trivedi, All rights reserved.
Decision to Develop R&D Expertise
Technical Progress
Market Growth
R&DDecision
Slow Moderate Develop in-house
Slow Quick Outsource
Quick Quick Buy
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Three Major R&D Approaches
Market New Technological Products
Imitate others
Cost Leadership
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Human Resource Management
Assessing the Staffing
Needs
Recruitment
Selection
Training
Employees’ Healthcare
Compensation
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Human Resource Strategy Formulation
Human Resource
Management
Strategic Goals and
Objectives
Strategic Human
Resource Management
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HR Areas of Strategic Focus
Pre-selection practices
Selection practices
Post-selection practices
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Areas where the HR Manager can playStrategic Role in Managing HR
Providing purposeful direction
Creating competitive atmosphere
Facilitation of change
Diversity of workforce
Empowerment of human resources
Building core competency
Development of work ethics and culture
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“
”Thanx
Copyright © 2020 Om Trivedi, All rights reserved.
CHAPTER 7 and 8
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Strategy
Formulation
and Implementation
UNIT- I
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Basic Model of Strategic Management Process
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A Summary Model of the Elements of Strategic Management
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Strategy Formulation
Strategy formulation refers to-• the process of choosing the most
appropriate course of action
• for the realization of organizational goals and objectives and
• thereby achieving the organizational vision.
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Strategy Implementation
Strategy implementation is-
• the translation of chosen strategy
into organizational action so as
• to achieve strategic goals and
objectives.
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Strategy Formulation Vs. Strategy Implementation
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Strategy Formulation and Implementation Matrix
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Results of Strategy Formulation and Implementation Matrix
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Efficiency Vs Effectiveness
Efficiency Operational in nature
To do the things right
Defines relationship between inputs and outputs
Links with internal environment
Responsibility for efficiency lies with operational managers
Implementation viewpoint
Effectiveness Strategic in nature
To do the right things
Concerned with the attainment of goals
Links with external environment
Responsibility for effectiveness lies with top managers
Formulation viewpoint
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Principal Combinations of Efficiency and Effectiveness
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Results of Principal Combinations of Efficiency and Effectiveness
Operational Management/ Strategy Implementation
Strategic Management/ Strategy Formulation
Cell Efficiency Effectiveness Results
1 Efficient Effective Thrive
2 Efficient Ineffective Die Slowly
3 Inefficient Effective Survive
4 Inefficient Ineffective Die Quickly
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Forward Linkages Vs Backward Linkages
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Organizational Structure
and
Strategy Implementation
UNIT- II
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Organization Structure
Organizational structure is typically hierarchical arrangement of
• Lines of authority
• Communications
• Rights and duties of an organization.
Organizational Structure
DecentralizedCentralized
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More Facts about Organizational Structure
Small Firms
Medium Firms
Large Firms
Functional Structure (Centralized)
Divisional Structure(Decentralized)
SBU and Matrix Structure
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Chandler’s Strategy-Structure Relationship
Changes in strategy
Leads to Changes in Structure
Structures follow the growth strategies
Growth strategies follow certain patterns
Patterns that lead the organizations to achieve Goals
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Chandler’s Strategy-Structure Relationship
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Types of Organizational Structure
Organizational
Structure
Functional Divisional SBU Matrix Network
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Functional Structure
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Divisional Structure
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Strategic Business Unit Structure(SBU)
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Matrix Structure
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Network Structure
Core Company
(Hub)
Design Company (Australia)
Accounts Processing
(India)
Distribution
Company (Europe)
Manufacturing
Company (China)
Transportation
Company (Korea)
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Hourglass Structure
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Strategic Leadership,
Change
and
Control
UNIT- III
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Strategic Leadership
Strategic leaders are those at the top of
the company, the CEO, the members of
the board of directors, the top
management team, and division general
managers.
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Responsibilities of Strategic Leader
Managing human capital
Strategic Management
Sustaining high performance over time.
Willing to make courageous decisions.
Seeking feedback through face-to-face
communications.Copyright © 2020 Om Trivedi, All rights reserved.
Leadership Roles of Managers
Monitoring Execution Progress
Promoting High Performance culture
Change Management
Focus on CC and CA
Corporate Ethics
Corrective actions to ensure Strategic
Success
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Leadership Style
TransformationalUses charisma and enthusiasm to inspire people to exert them for the good of the organization.
TransactionalFocuses more on designing systems and controlling the organization’s activities and are more likely to be associated with improving the current situation.
Leadership Style
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Strategic Change
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Strategic Change
Steps to Initiate Strategic Change
Step-I - Recognize the need for change.
Step-II - Create a shared vision to manage change
Step-III - Institutionalize the change
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Kurt Lewin’s Phases of Strategic Change
PHASE I: Unfreezing the Situation
PHASE I: Changing to new Situation
PHASE I: Refreezing
• Compliance
• Identification
• Internalization
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Strategic Control
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Strategic Control
The control function involves
• monitoring the activity
• measuring results against pre-
established standards,
• analyzing and correcting deviations as
necessary and
• maintaining/adapting the system.
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Types of Control
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Strategic Control
Management efforts to
• Track a strategy as it is being
implemented,
• Detect problems or changes in its
underlying premises, and
• Make necessary adjustments.
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Types of Strategic Control
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What is Corporate Culture?
Corporate culture refers to a • company’s values,
• beliefs,
• business principles,
• traditions,
• ways of operating, and
• internal work environment.
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Strategy Audit
“A strategic audit is an examination
and evaluation of areas affected by
the operation of a strategic
management process within an
organization”.Copyright © 2020 Om Trivedi, All rights reserved.
Strategy Audit
How well is the current strategy working?
How well will the current strategy be
working in future?
How can this be evaluated in present and
future?
How urgent is there a need to change the
strategy?
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Richard Rumelt’s Criteria for Strategy Audit
Consistency
Consonance
Feasibility
Advantages
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Motivational Quote
The new source of power is not
money in the hands of a few, but
information in the hands of many.
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Modern Strategies
to Gain
Competitive Advantages
UNIT- I
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Learning Outcome
Business Process Reengineering
Benchmarking
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Business Process
A set of processes or activities
That you and the people providing services perform
To complete the transaction.
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Reengineering
The complete rethinking, reinventing
and redesigning of how a business or
set of activities operate.
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Copyright © 2020 Om Trivedi, All rights reserved.
Why BPR?
For operational excellence
To be a customer-focussed organization
To manage processes
For continuous improvement as per industry standards
For Dramatic improvement in performance
To answer- How to compete?
Copyright © 2020 Om Trivedi, All rights reserved.
What is (BPR)?
“Fundamental revision and radical
redesign of processes to reach
spectacular improvements in critical and
contemporary measurements of
efficiency, such as costs, quality,
service and quickness.”
Copyright © 2020 Om Trivedi, All rights reserved.
Business processes of a firm that need redesigning
Development and delivery of product(s) and/or services
Interaction(s) with customers
Management activities
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Steps Involved in Implementing BPR
Step 1: Determining objectives and framework
Step 2: Identify customers and determine needs.
Step 3: Develop a flowchart
Step 4: Simplify the process
Step 5: Evaluate each activity and finalize automation requirements
Step 6: Redesign a structure
Step 7: Implement the redesign.
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The Role of Information Technology in BPR
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Customer Time Cycle
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Benchmarking
Benchmark: A standard or a point of reference against which things may be compared and by which something can be measured and judged.
Benchmarking: The continuous activity of identifying, understanding and adapting best practice and processes that will lead to superior performance.
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Summary of Benchmarking Concept (Us Vs. Them)
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The Benchmarking Process
Evaluation
Preparing a report and Implementing the steps necessary to close the performance gap
Comparing own processes and performance with others
Identifying best processes
Understanding existing business processes
Identifying the need for benchmarking and planning
Copyright © 2020 Om Trivedi, All rights reserved.
“
”Thanx
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