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BUSINESS POLICY & STRATEGIC

MANAGEMENT

LO1: POLICY & BUSINESS POLICYPolicy: A principle or rule to guide the decisions & achieve stated objectivesBusiness Policy: Study of• Responsibilityofseniormanagement• Crucialproblemthataffectsuccessintheenterprise• Decisionsthatdeterminethedirectionsoforganisation

LO9: STRATEGIC LEVELS IN ORGANISATIONCorporate Level: Controlledbytoplevelmanagement- Setsvisions,mission,goalsandobjectives- AllocatetheresourcesamongdifferentbusinessBusiness Level:Businesslevelmanagersareresponsiblefortheprofitof

self-contained division- Help the organization achieve its corporate division- DevelopdistinctivecompetenciesandcompetitiveadvantageineachunitFunctional level: Functionallevelmanagersareresponsibleforspecificbusinessfunctions[HR,purchases,etc.]

- Integrating the activities within functional area- AssuringFLSmeshwithBLS&CLS

LO8: VISION, MISSION, GOALS & OBJECTIVESVISION: Desirablefutureoftheorganization(wherewewantto go?)ElementsofStrategicVision:- MissionStatement- LT course of action- Communicationofvision

MISSION:Currentscopeofoperations(whoweare?)Describes–PUVCAB8

5AreasincludedinmissionStatement–McPEB9

GOALS & OBJECTIVES: Desiredendtowards which efforts are directed

- They should be challenging- TheyshouldbeSMART

LO7: STRATEGIC MANAGEMENT MODELStrategy formulation: Settingvision,mission- PerformingExternal,Internalaudit- Establishlong-termobjectives

Strategy Implementation: Generate & Select strategies- ImplementtheStrategicmanagementissues- ImplementtheStrategies

Evaluation:Measureandevaluateperformance

LO6: DECISION MAKINGDimensions in Strategic Issues – PFMET7

LO5: STRATEGIC MANAGEMENTDef: Managerial process of forming VOICE3

Tasks: BEMEC4

Importance: DUPDCM5

Develops: MPGP6

LO2: MANAGEMENTSDef: Getting the things done effectively & efficiently through&withpeople(or)Mobilisationandutilisationoftheresources[physical,humanandneeded]inajudiciousmanner• Efficiency–Doingthingsrightly• Effectively–Doingrightthings

LO3: STRATEGYDef: Aunified,comprehensive&integratedplandesignedtoassurethatthebasicobjectiveofthebusinessareachieved.Strategy is partly proactive and partly reactiveProactive–ItisframedfromthepastexperienceofbusinessReactive–ItismodifiedorchangedwiththechangestakesplaceintheenvironmentDesignation–BIOPSY1

Importance–BM/UC/OT/DM2

S – Specific M – MeasurableA – AttainableR – RealisticT – Time bound

LO4: DYNAMIC OF COMPETITIVE STRATEGY

Strengths & Weakness

Impementing Factors

Opportunities & Threats

Competitive

Strategy

CompetitiveStrategyisnotonlydependentontheirownstrategybutalsoonthestrategy’sofcompetitors.

Broader Societal Expectation

Internal Factors

ExternalFactors

B–BusinessdirectionO–OrganisationalAuditP–Process,product,peopleIC–IntenseCompetitiveadvantageY–Yfactor:ExaminingexternalfactorsS–Stakeholdersinterest

BM–Beginning&MeansUC–HandleUncertainityOT–Opportunities&ThreatsDM–DecisionMaking

V–VisionsettingO–ObjectivesettingI–ImplementingStrategyC–CraftingastrategyE–Error

B–BeginningE–EndsM–MeansE–EvaluationC–Control

M–MissionP–BusinessPortfolioG–Goals,objectiveP–FuncationalPlans

P–LongtermProsperityF–FutureorientedM–MultifunctionalconsequencesE–ExternalEnvironmentT–Topmanagementdecision

D–DecisionmakingU–UncertainityinEnvironmentP–ProactiveD–DefencemechanismC–CompetitiveadvantagecreationM–Measurementofprogress

P–PresentcapabilitiesU–UniquecompeenciesV–ValuesC–CompetitiveadvantageA–ActivitiesB–BusinessSCOPE

M–MarketsC–CustomersP–Products&ServiesE–EmployeesB–Businessphilosophy

1 3

2 4 5 6 7 8 9

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REACHING STRATEGIC EDGE

LO1: BUSINESS PROCESS RE-ENGINEERINGProcessmeansasetofactivitieswithclearlydefinedinputsandoutputs.BusinessProcessissetoflogicallyrelatedtasksinordertoachieveoutcomeofvalueforcustomer.Thekeysindefinition• Fundamental[whatarethey&theirwork]• Radical,[rootcauseofproblem&changethat]• Dramatic,[incrementalgrowthtoachievequantum• Processes,[relook&replacewithnew]• Tasks.[tasksareimportant,butmainlycompletion]

Reasons for BPR:• Toobtainquantum,simplyandstreamlineprocesses• SpeedupworkfolowbyIT.

Steps in Implementation of BPR:1. Determiningobjectivesandframework2. Identifycustomersanddetermineneeds3. Studytheexistingprocess4. Formulatearedesignprocessplan5. Implementtheredesign6. Improveprocesscontinuously7. IT in a big way

Common Problems:1. Complacency;2.Resistancetochange3. Time&Cost4.Assumptions

LO3: TOTAL QUALITY MANAGEMENTQualityisabilityofaproductorserviceconsistenlymeetorexceedexpectations

Why:• Delightthecustomer• Fiercifulcompetition• Hightechnology&complicatedproducts

Determinants of Quality:• Design,plannedquality,• Conformancetodesign,• Ease of use,• Serviceafterdelivery.

Principles:1. Commitmenttoquality2. CustomerFocus3. Preventingdefects4. Continuousimprovement5. EmployeeEmpowerment6. ProcessManagement7. Managing Supplier Quality8. Correctiveaction9. Inventory reduction10.Training

LO4: SIX SIGMAAmanagementdriven,scientificmethodologyforproduct andprocess.

LO5: CONTEMPORARY STRATEGIC ISSUES

LO2: BENCH MARKING

Six Steps in Benchmarking:

1. Identifyyourproblemarea

2. Identifyindustrieswithsimilararea

3. Surveycompaniesformeasures&Practices

4. Visitthebestpractice

5. Implementnewbusinesspractice

6. Evaluation

WHY: 6s• Money• CustomerSatisfaction• Quality• Impactonemployees• Growth• CompetitiveAdvantage• Communication• Benchmarking

THEMES

• Genuinecustomerfocus

• DataDriven

• Processmanagemnet

• Boundarless collaboration

• Driveforperfection

Principles1.Twotypesofcauses:• Chances[Can’tbeidentified,cannotbeeliminated]• Assignable[Identified&immediatelyeliminated]

2.Defectsarerandomlydistributed,applymean&S.D.

Methodology: TWO

Define.Measure.Analyse

Improve,ControlDesign,Verify

DMADV DMAIC

E-commerce

Competition

Buyers Bargaining power

Power of information

Entry to e-commerce

Helps to identify best supplier

Globalisation thrust

Foster diffusion of ideas

Swift movement by company

Advertisement

At internet Speed.

SM in Non-profit organisation

• Educational Institutions

•Medical organisations

• Governmentagencies & Department

Comparingonebusinessperformancewithbest

Intrafirm InterfirmAcrossindustry

Costs:• Visitcost[travel,boarding]• Timecost[researchingproblems]• Databasecost[create&maintainabestpractices]

What to Benchmark:• Process• Financial• Performance• Functional• Product• Strategy• Best in class

C A R T

D e C E a S e

DISF

I I IT

P D S A

(KAIZEN)

PLAN

STUDY

DO

ACT

has

to

and

for

in

to

and

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FORMULATION OF FUNCTIONAL STRATEGY

LO1: POLICY & BUSINESS POLICYMNC SBU’s Departments Own Strategies

LO3: FINANCIAL STRATEGY1. Financing Decision2. Capital Expenditure Decision3. Dividend Decision4. Working Capital Decision

Evaluating the worth of Business1.DetermineNetworth2.Presentvalueoffuturecashflows3.Letmarketdecideitsbusinessworth.Usemarketcapitalizationpluspremium.

LO4: PRODUCTION STRATEGYIssue 1: Affects

• Natureofproducts• Marketsserved• Mannerinwhichmarketsserved.

Issue 2: Production system is concerned with • Capacity,Location,Layout(Design)• Product,worksystems

Issue 3: Strategies related to Operational control• Aggregateproductionplanning• MaterialSupply,Inventorycost

LO5: LOGISTICS STRATEGYLogistics is a process which integrates all supplies by ensuring 1. Right quantity 2. Place 3. Time & 4. Cost

Componentsa.Transportationb.Outsourcingc.LogisticsSystemsd.Competitorse.Informationf. StrategyReview

LO6: RESEARCH & DEVELOPMENT STRATEGYIncludes:• Developmentofnewproducts• Improvementofoldproducts• Transferofcomplextechnology

7 Issues:1. ProductorProcessimprovements2. BasicorApplied[Fromstartingormiddle]3. LeadersorFollowersinR&D4. RoboticsorManualProcesses5. R&Dspending[High,Medium&Low]6. ProductorProcessR&D[ImprovementsorInnovation]7. In-houseorOutsource[OwnpractiseandbyRenting]

LO7: HUMAN RESOURCE STRATEGY – Role is “SM”

1. Haveanappropriaterewardsystem2. Createcompetitiveatmosphere3. Facilitate change by focussing on • Substanceoverform• Accomplishment

4. Diversityofworkforce[YoungvsNotsoyoung]5. Helpbuildcorecompetency6. Developappropriateworkethics7. EmpowermentofHumanresources8. Providepurposefuldirection9. Buildingcorecompetency

Supply Chain ManagementItisapartoflogistics.Itreferstolinkageamongst•Supplier•Manufacturers•Customers

Implementation of SCM1. Productdevelopment2. Procurement3. Manufacturing4. Physicaldistribution5. Customerservices6. Performancemeasurement

LO2: MARKETING STRATEGY FORMULATIONiswhatyoudotoreachpeople,asyouareacompanyforrenderingservicesforthem.

Main aim: withlimitedsourcesincreasesaleswithsustainablecompetitiveadvantage.

Techniques:Social,Augmented,Direct,Relationship,Person,Differential,De-marketing,Place,Services,Organisation

Marketing Process:• Segmenting• Targeting • Positioning

Mix: 7 P’s1. Product Decision: Howwedesignandpackage2. Price Decision:Purchasingpowerofcustomer3. Place:Gettingcustomersatrightplace4. Promotion: Communicatetheproducttotargetgroup5. People Decision: Influence the buyers6. Physical Evidence: Venuewhereserviceisexecuted7. Process: FlowofactivitiestheCompanywillfollowinexecutionofservice

Goals:1.Businessfeasibleatfunctionallevel2.Betterperformance3.Competitiveadvantage

Marketing Production

FUNCTIONS

R & D

Financial Logistics

HR

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STRATEGIC ANALYSISMEANING:Analysing=Scanningwhichmeansto“lookourquicklyandsystematically”i.e.tobedonefor

• External Environment • Internal Environment

Opp.Threats StrengthsWeakness

LO1: STRATEGIC ANALYSISTwo crucial factors –whiledrawinggoodstrategy

Industryand Company’sexternal Competitiveconditions capabilities&Limitations

LO2: SITUATIONAL ANALYSIS

LO3: INDUSTRY & COMPETITIVE ANALYSISCompetition:TwoormoreentitiesfightforsamethingSevenIssues:1.Natureandstrengthofcompetition2.Overall industrial attractiveness3.Triggers of change4.DominantEconomicfeature5.Assessingcompetitiveposition(SGA)6.Key Success Factor7.Likelymovesofcompetitors

LO4: SWOT Analysis LO5: TOWS Analysis– Henz Weihrich

LO7: BOSTON CONSULTANT GROWTH MATRIX [BCG]Stars: Everyone love this position,as high growth rate,highRMSQuestion Mark: High Growth, but doesn’t generatemuchcostsCash cows: generate cashin.Excessofcashneeded.NoneedofinvestmentsDogs: Besttosellthis(dogs)business,investinanother.

LO8: ANSOFF PRODUCT GROWTH MATRIX

LO9: ARTHUR D LITTLE MATRIX

LO10: GENERAL ELECTRIC BUSINESS SCREEN (GEBS)

Issues:

External Internal

1. TIME

Strategy evolves overtime.

Smalldecisionsturnedovernight.

<1yr.(ST)Wrong

interpretation*Strategic Failure

<1yr.(ST)Org.isunableto cope with stgdemand.*

(LT)>1yr.DbyEnviron.Obscelenceof

strategy

(LT)>1yr.D by internal

capacities and preferences*

2. BALANCE

Based on our strength we have totake/capitalize

opportunities

3. RISK

Complexitiesintheenvironmentresultinorg’s/Co’sinability

A. External Analysis1.CustomerAnalysis

Seg Mot UnN

2.CompetitorAnalysis(SWOT)

Identify Image& Action Performance Plan

3.MarketAnalysis(Porter’s5force)

Keytriage EntryExistBarriers

4.EnvironmentAnalysis(doPEST)

B. Internal Analysis1.PerformanceAnalysis

Financial Non-Financial

2.DeterminantsAnalysis• Decidesyourabilityandmeasuresbothstrengths,weakness.

C. Strategy Identification and selection

CurrentPerformance

SWOT StgOptions Evaluable [Req/Res/Risk]

Env.stg

Ind stg

Co.Stg.

Strengths (IF)Like:Innovation,Quality, Technology

Weakness (IF)Like:Inability,Unskilled,Damagedreputation

Opportunities (EF)Like:Internet, D in techNewmarkets

Threats (EF)Like:Newcompetitor,PriceCow,Highincidences of Tax,etc.

SO-stg (maxi-maxi)

maximizebothstrength & Opportunitiesuse S O

W-O-stg (mani-maxi)

by grabbing opportunity to overcomeweakness.useO W

S-T-stg (maxi-maxi)

Capitalisethestrength & Opportunities.use S O

W-O-stg (mani-maxi)

by grabbing opportunity to overcomeweakness.useO W

LO6: PORTFOLIO ANALYSIS Business Portfolio (BP)

Aim: 1) Analyse Current BP. 2) Develop Growth Stg. by new B. 3) Decide which is no longer retained

C1: Strategic Business Unit (SBU) Itcouldbeadivision,product,oracompany

C2: Experience Curve effects Whenorggetsmoreexperiene,

less cost of production

C3: Product Life Cycle:

W I G D M 4 1 2 5 3

E cop

ProductMarket

Present New

Present MarketPenetration

ProductDevelopment

New MarketDevelopment Diversification

B. Industry maturityEmbryonic Growth Mature Ageing

ü ü ü üü ü ü –

ü ü – ûü – û û– û û û

A. Competitive Position

1. Dominant–Likemonopoly

2. Strong –marketshareis strong

3. Favourable–Nosingleplayer controls

4. Tenable–mayfaceerosion by stronger ones

5. Weak–continuouslossofmarketshare

HIGH Investor Grow

MEDIUM Earn Selectively

LOW Harvest or divest

Strong Medium Low

COMPETITIVE POSITION

MAR

KET

AT

TRAC

TIVE

NESS

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BUSINESS ENVIRONMENT

COMPETITIVE ENVIRONMENTMichael Porters Five Force Model

ENVIRONMENTAL INFLUENCES ON BUSINESS– Complex (which include many factors)

– Dynamic (changes repidly)

– Uncertainity (which is difficult to predict)

– Impact

RELATIONSHIP BETWEEN BUSINESS AND ENVIRONMENT

They exchange

i) Information

ii) Resources

iii) Influence & Power

MACRO ENVIRONMENT (GD PEST)G – Global – Integratingwithworldmarket SixReasons–MRFTTP3

EightManifestations–REPTILCS4

D – Demographic Populationfeatures–Age,Sex,Education,etc.

P – Political

E – Economic Demand&SupplyForces,availabilityof4M’s &Cost–Revenue

S – Social –beliefs,norms,relationships,values,etc.

T – Technological changes

MICRO ENVIRONMENT (CIMCOS)C – Consumer (theirneedsandbuyingpatterns)

I – Intermediaries (bridgethegapbetweenproducersandconsumers)

M – Market (KnowledgeofCPTMD2 is necessary)

C – Competitors (theirstrategiesandpricestructure)

O – Organisation Owners – Profits BOD – InstitutionandBuilding Employees – CareerandJobguarantee

S – Suppliers (Affectthecoststructure)

A – AssetsIncreaseS – SalesVolumeincreaseE – AcquisitionofNewEnterpriseT – TechnologicaladoptionS – ShareinMarket

C – CostStructureP – PricesensitivityT – TechnologicalchangesM– MaturityofMarketD – Distributionpattern

M– CheapMaterialR – NoRichnessF – ForeignInvestmentT – TimeandspaceislowT – ReductioninTransportationcostsP – PrivateEnterprises

R – RegionalblocksE – EfficiencyinMarketsideP – Privatisation

T – Trade BarriersI – InfrastructureatInternationalprices

1 2 3 4

Solution: Kierstsu(Example)–Smallgroupsformationtocarry on business through coordination

OBJECTIVES OF BUSINESS1. Survival – Initial stages of Business

2. Stability – Conservationobjective LeaseExpensive

3. Growth – Popularobjective IttakesplacethroughASETS

4. Efficiency – Operationalobjective ToolforReductionincost

5. Profit Making – Ultimate,Primaryobjective [Thefirstfourobjectivesaremeantforprofitmaking]

“ P E G S S ”

Govt[Underwhichbusinessisheld]

Legal[Compliancewithlaws]

Political[Sustaining unions]

L – LinkedEconomiesC – ConfigureanywhereS – Skilledresources

PRIME A

CADEMY

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STRATEGY IMPLEMENTATION AND CONTROL (1)

LO1: STRATEGY FORMULATION AND IMPLENTATIONFormulationisa“Planningfucntion”.Itrefersto“Coursesofaction.”Implentationisa“DoingFunction”.Itrefersto“translatingthoughtintoaction”.

Basic Elements:1. Strategic Analysis (understanding and Identify)2. Strategic choice (selectingstrategicoption)3. Strategic Implementation (convertintoaction)

Efficiency-Effectiveness (EE) matrix

1.Itachievesitsrightgoalswithanefficientoutput/inputratio

2.Companywillslowlydieoutbecause it is not focusing on right things

3.Isbetteroffthanthatin2.

4.Willdiealmostinstantly.

Link between formulation and implementation:

LO3: ORGANISATION & STRATEGY IMPLEMENTATION

Need Structure, Resources, MIS & HR

Chandler’s Strategy – Structure Relationship

4. SBU Structure (Strategic Business Unit)Segmentofacompanyanalysedtodeveloporganisedstrategyaimedatfuturebusiness.

SBU Structure

LO2: ISSUE IN STRATEGY IMPLEMENTATIONIssue 1: From Intent to Resulta.ProjectImplementation(Projectcreatesfacilities)b.ProceduralImplementation(Basedonrules&Regulation)c.Resourceallocation(AllocatedtovariousSBU’s)d.StructuralImplementation(SimpleandFlexible

Structures)e.FunctionalImplementation(Guidelinestooperate)

Issue 2: Why do implementation problems arise (Shiftinresponsibility)

LO4: VALUE CHAIN-ANALYSIS

1Thrive

3Survive

2Die

Slowly

4DieQuickly

EFFECTIVEINEFFECTIVE

Strategy ManagementINEFFICIENTEFFICIENT

Oper

atio

nal M

anag

emen

t

STRATEGYFORMULATION(THOUGHT)

STRATEGYIMPLEMENTATION

(ACTION)

Two-way Linkage

Forward[FormulationprovidedirectionImplemenation]

Backward[FormulationgetsaffectedbyImplementation]

Organizationalperformanceimproves

A new organizational structure is established

Newstrategyisformulated

Newadministrativeproblemsemerge

Organizationalperformancedeclines

Types of Organization Structure:

1. Flat

2. Functional

3. Divisional

OWNER

EMPLOYEESEMPLOYEES EMPLOYEESEMPLOYEES

CHIEF EXECUTIVE OFFICER

Marketing Production HumanResourcesFinance Sales &

Marketing

PRESIDENT

Director of Sales Vice President for Sales

PRESIDENT

INDIA

Retails Accounts

SalesDirectorWest

WholesaleAccounts

SalesDirectorEast

GovernmentAccounts

SalesDirectorNorth

CARS BIKESU.S. U.K.

Marketing MFG MFGMarketing MarketingHR Plans PlansHR HR

Geography Divisional Structure

Geography Divisional Structure

Product Divisional Structure

Process Divisional Structure

Corporate R&D

SBUA

Division Division

Strategic Planning

SBUB

Division Division

CorporateHR

SBUD

CorporateFinance

Division Division

CorporateMarketing

SBUC

CHIEF EXECUTIVE OFFICER

5. Matrix Structure• Ideas to be cross fertized• Abilitiestoprocessinfomustimproved• Resourcearescarce

Phase 1: Cross-functioned task forces[newproduct]Phase 2: Product/brand management [morepermanent]Phase 3: Mature matrix [Both functional and product

structuresarepermanent]

6. Network StructureEachfunctionhandledbydifferententity.Productionbyone,marketingbyone,Financeofone,retainsoverallstrategyandcontrolfunction.

Inbo

und

Lo

gist

ics

Operations

Outbound

Logi

stic

s

Marketing

an

d Sa

les

Serv

ice

Infrastructure

HumanResourceManagement

TechnologyDevelopment

Procurement

PRIMARY ACTIVITIES

SUPP

ORT

ACTI

VITI

ES

MA

RG

INM

AR

GIN

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STRATEGY IMPLEMENTATION AND CONTROL (2)

LO5: IDENTIFYING CORE COMPETENCIESMaybeinDesign,Process,Quality,etc.,

• Itisnoteasyforcompetitorstoimitate.

• Itcanbeleveragedwidelytomanyproducts

LO6: MANAGING LINKAGESCorecompetancybasedonmanaginglinkages

Key points: 1.Important,2.Easytomiss,

3.Maybasedoncore-competency

4.Activitiesandalsosupportactivities

LO9: STRATEGIC CONTROLAprocesstoassureactualperformance

Involves: Establishingstandards,computeactual&variance

LO10: BUILDING A STRATEGY – SUPPORTIVE CORPORATE CULTURECulture refers to a company

Values, Beliefs, Business Principle, Traditions, Ways of operating, Internal work Environment

in as are in

LO8: STRATEGIC CHANGEStep 1: Recognize the need for change

[Notaftergettingintotroubles,BettertodoSWOT]

Step 2: Creat a shared vision to manage change

[Lackofvisioncancloudefforts]

Step 3: Institutionalize the change.

[Implement,Moniter,feeback]

LO7: LEADERSHIP AND STRATEGIC IMPLEMENTATIONForgoodstrategy,Stayingontop,Promotingculture,Responsible,EthicalandCorrectiveactions.

Transactional Leadership

A: Motivatedbycarrot&Stick(Rewards&Punishment)

Style: Workonprincipleand alsoexceptions

Limitation: Largelymotivated bymoney&simplereward

Transitional Leadership

A: Peoplewillfollowwho inspiresthem

Style: S/Hehadavisionand alsomission

Limitation: Traps of this leadership is that passion

and confidence can by easily mistakenfortruth

Need: Achieving Excellence.

Controlconcernedwith Individual and

group

Need: Resourcesobtained.

Controlincludes.Returnof

investment–Cost–Product–quality

Need: VariousStrategies.Adoptedare.

Helping inExternal

Opportunities and Threats

ORGANIZATIONAL CONTROL

OperationalControl

ManagementControl

Strategic Control

Strategy-culture conflict:

Cultureisoutofsyncwithstrategy,culturehastobechanged.

Aprolongedstrategycultureconflictweakens,effortsofmanagerialbecomesstrong.

Changing in Problem culture:

Step 1: Identify facts of present culture

Step 2: Specify new actions

Step 3: Talkopenlyaboutproblems

Step 4: Followwithvisibleforceableactions.

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STRATEGIC PLANNINGLO1: IMPORTANCEStrategic planning involves planning for organisation as whole

LO3: LEVELS OF STRATEGY

LO4: GENERIC STRATEGIC ALTERNATIVES1. How to achive cost leadership

a.Havehighassetturnover

b.Achievelowoperatingcosts

c.Controlourprocurementchain

d.Useoftechnology

By a company:

a.Lowlevelsofbureaucracy,

b.Adequatecapital,

c.Process–re-engineeringskills,

d.Costconsciousness

Disadvantages:

1.Customer’sshifttolowerpriced ones

2.Areputationoflowquality

3.Otherscancopyanddislodge

2. Differentiation:

• Leads to higher costs for manufacturer

• Impactsperformancethrough reducing directness

•Mayfailsometimes

• Sometimesappropriate

3. Focus on Niche Strategy:

Based on cost leadership on differentiation

Thecompanyshouldcompete

• Focus on few target groups

• Needsofmassmarket

LO2: CORPORATE STRATEGYLaysroadmapforachievinggrowthconcernedwitha)Business,b)Productsandc)Markets.Issue1: Pro-activevsRe-aciveIssue2: StrategicuncertaintyIssue3: Scenarioanalysis[getreadyforanyscenario]Issue4: Stagesofcorporatestrategy

Helps in providing DirectionandFocus

What to do How to do

PLANNING

Strategic Planning

When to do Who is to do it

decides

Top-down

Centralisedone.TopmanagementdecidesOperationalmanagement

implements

Bottom up

De-centralisedone.OperationalmanagerstakepartindecidingwithTopmanagement

Stage 1: Developing a Strategic visioni) ShorttermvsLongTermGrowthii) FocusvsDiversificationiii) Global vs Localiv) QualityvsPricev)MassvsNiche

Stage 2: Setting Strategic ObjectivesIssue1:ObjectivemustbeSMARTIssue2:LongTermObjectivesIssue3:BalanceScoreCard

Stage 3: Creating a Strategy

Stage 4: Implementation1.Staffing2.Budgeting3.Operating

Stage 5: Monitoring

Specific

Measurable

Attainable

Realistic, but challenging

Timescale B. Focus on Niche Strategy:Dealswith• Identifying niches• Co-ordinatingSBUactivities• MonitoringMarkets• Developingdistinctivecompentencies

A. Corporate-level strategy isresponsibleformarketdefinition,addressentireenterprise.Characteristics:

1.Flexibleanddynamic2.Emergingfromtomanagementlevel3.Multi-prongedandintegrated4.ActionOriented

GRAND STRATEGIES - STRATEGY ALTERNATIVES

C. Functional Level Strategies:Dealswith• Efficiency utilizing specialists• Integrating activities• Assuring that Functional vs Strategy

with Business vs Strategy

5.Longrangeinnature6.EnsuresCompetitiveandComplexsetting

7.DeploymentofLimitedsources

F E M A L E ‘ D ’

Stability

FocusonIncremental,notondramaticimprovement

Retrenchment

Involves in reduction of scope

Diversification

Undertakeanewbusinesses

Growth

Increase in profits, salesormarketshare

Intensification

Increase in efficiency oftheexistingfirm

MarketPenetration

Gainingmoremarketsharewithcurrent products

ProductDevelopment

Developmentof new products

ConglomerateDiversification

Enters into new business, that having

no relationship

Forward

Cloth shirt

MarketDevelopment

Introducing present products into new

geographies

VerticallyIntegrated

Undertakebusinessof suppliers

ConcentricDiversification

Newproductswithtechnological

synergies

Backward

Cloth Yarn

Combination

Simultaneouspursuitof different strategies

PRIME A

CADEMY