7/23/2019 Module 3 Revised Part-II

http://slidepdf.com/reader/full/module-3-revised-part-ii 1/32

Amity School of Business

1

Business Policy andStrategic Management

Kareena BhatiaKareena Bhatia

Module 3Module 3

Semester VISemester VI

7/23/2019 Module 3 Revised Part-II

http://slidepdf.com/reader/full/module-3-revised-part-ii 2/32

Amity School of Business

2

Strategic Advantage

Profle

7/23/2019 Module 3 Revised Part-II

http://slidepdf.com/reader/full/module-3-revised-part-ii 3/32

Amity School of Business

3

Organizational Capability Factors

Financial Capability Factors related to sources o unds: Capitalstructure Procurement o capital Financing pattern!or"ing capital availability #eserves and surplusetc and #elations$ip %it$ lenders ban"s andfnancial institutions&

Factors related to usage o unds: Capitalinvestment Fi'ed Assets ac(uisition CurrentAssets )oans and advances *ividend distributionand #elations$ip %it$ s$are$olders&

Factors related to management o unds: FinancialAccounting and budgeting systems Managementcontrol systems #eturn and ris" management Costreduction and control +a' planning and advantages&

7/23/2019 Module 3 Revised Part-II

http://slidepdf.com/reader/full/module-3-revised-part-ii 4/32

Amity School of Business

 4

Organizational Capability Factors

 +ypical strengt$s t$at support fnancialcapability Access to fnancial resources Amicable relations$ip %it$ fnancial institutions

,ig$ level o credit %ort$iness -.cient capital budgeting system )o% cost o capital as compared to competitors ,ig$ level o s$are$older/s confdence

-0ective management control system  +a' benefts resulting rom government policies

-'amples: Ma$indra 1 Ma$indra #eliance2ndustries 3u4arat Ambu4a

7/23/2019 Module 3 Revised Part-II

http://slidepdf.com/reader/full/module-3-revised-part-ii 5/32

Amity School of Business

5

Ma$indra 1 Ma$indra $as ollo%ed a policyo being a lo% asset companyaccumulating a $ig$ surplus& 2t alsomaintains a lo% debt5e(uity ratio raisingits borro%ing capacity substantially&

#eliance 2ndustries $as superior ability toraise fnances easy access to fnancialresources and an e.cient capital budgetingsystem&

3u4arat Ambu4a accumulated $ig$ savings

rom $ig$er cement prices and salesvolume gro%t$ over t$e past e% years&Ater ,olcim too" over e(uity in t$ecompany t$e company/s fnancial strengt$to raise fnances increased considerably&

7/23/2019 Module 3 Revised Part-II

http://slidepdf.com/reader/full/module-3-revised-part-ii 6/32

Amity School of Business

6

Organizational Capability Factors

Marketing Capability Product5related actors: variety di0erentiation

positioning pac"aging etc&

Price5related actors: pricing ob4ectives policiesc$anges etc&

Place5related actors: distribution transportation 1logistics mar"eting c$annels mar"etingintermediaries etc&

Promotion5related actors: promotional tools plansetc&

2ntegrative and systemic actors: mar"eting mi'mar"et standing company image mar"etingorganization mar"eting system mar"etinginormation system etc&

7/23/2019 Module 3 Revised Part-II

http://slidepdf.com/reader/full/module-3-revised-part-ii 7/32

Amity School of Business

7

Organizational Capability Factors

 +ypical strengt$s t$at support mar"etingcapability !ide variety and better (uality o products

S$arply5ocused positioning

)o% prices as compared to competitors

-0ective distribution system

-0ective sales promotion

,ig$5profle advertising

Favorable company and product image

-0ective mar"eting organization

-'amples: Parle )3 2ndia Pfzer 2ndia #eal

6alue

7/23/2019 Module 3 Revised Part-II

http://slidepdf.com/reader/full/module-3-revised-part-ii 8/32

Amity School of Business

8

Parle is a company %ell recognizedor its strong imagery and appeal&Several o its biscuits andconectionery brands are leaders int$e industry&

)3 2ndia can ta"e 4ustifed pride in itse'tensive distribution net%or"&

Pfzer 2ndia $as t$e distinction o$aving brands t$at $ave ac$ievedtop ran" in t$e p$armaceuticals

industry li"e Becosules and Core'& #eal 6alue/s e0ective mar"eting

communications $as turned t$eproduct concept o fre e'tinguis$errom being perceived as an industriale(uipment to a $ouse$old necessity&

7/23/2019 Module 3 Revised Part-II

http://slidepdf.com/reader/full/module-3-revised-part-ii 9/32

Amity School of Business

9

Organizational Capability Factors

Operations Capability Factors related to production system: capacitylocation layout product or service design%or" system degree o automation etc&

Factors related to operations and controlsystem: aggregate production planningmaterial supply inventory cost and (ualitycontrol maintenance systems and proceduresetc&

Factors related to t$e #1* system: productdevelopment patent rig$ts level otec$nology used tec$nical collaboration andsupport etc&

7/23/2019 Module 3 Revised Part-II

http://slidepdf.com/reader/full/module-3-revised-part-ii 10/32

Amity School of Business

10

Organizational Capability Factors

 +ypical strengt$s t$at support operationalcapability ,ig$ level o capacity utilization

Favorable plant location

,ig$ degree o vertical integration

#eliable sources o supply -0ective control o operational costs

-'istence o good inventory control system

Availability o $ig$ caliber5 #1* personnel

 +ec$nical collaboration %it$ reputed frms-'amples: 78 +yres Mumbai +i.n Bo'

Suppliers Association )a"s$mi Mac$ine !or"s

7/23/2019 Module 3 Revised Part-II

http://slidepdf.com/reader/full/module-3-revised-part-ii 11/32

Amity School of Business

11

 78 +yres pioneered radial tyres in 2ndiabut $as not been able to capitalize onit tec$nologically competitors suc$ asBridgestone $as proved better&

Mumbai +i.n Bo' Suppliers

association is a 9;5year oldorganization %ell streamlined %or"ingt$roug$ meticulous team%or" andtiming&

 +$e capability to absorb tec$nology isa great strengt$ as seen in t$e case o

)a'mi Mac$ine !or"s one o t$e topfve companies o t$e %orld to ma"et$e entire range o te'tile spinningmac$inery in collaboration %it$ #ieterMac$ine !or"s o S%itzerland&

7/23/2019 Module 3 Revised Part-II

http://slidepdf.com/reader/full/module-3-revised-part-ii 12/32

Amity School of Business

12

Organizational Capability Factors

Personnel Capability Factors related to t$e personnel system: systems

o manpo%er planning selection developmentcompensation communication and appraisal etc&

Factors related to organizational and employeec$aracteristics: (uality o managers sta0 and%or"ers/ perception about organizationavailability o developmental opportunities oremployees %or"ing conditions etc&

Factors related to industrial relations: union5management relations$ip collective bargainingsaety %elare and security employeesatisaction and morale etc&

7/23/2019 Module 3 Revised Part-II

http://slidepdf.com/reader/full/module-3-revised-part-ii 13/32

Amity School of Business

13

Organizational Capability Factors

 +ypical strengt$s t$at support personnel capability 3enuine concern or ,# management and development

-.cient and e0ective personnel systems

-'cellent training opportunities and acilities

Congenial %or"ing environment

Satisfed and motivated %or"orce

,ig$ level o organizational loyalty

)o% level o absenteeism

-'amples: Covansys Metal Bo' 2ndia )td *#Sgroup

7/23/2019 Module 3 Revised Part-II

http://slidepdf.com/reader/full/module-3-revised-part-ii 14/32

Amity School of Business

14

Covansys attempts to build a $umanresource5riendly company environmentin order to retain s"illed employees byproviding culture or gro%t$ ensuringemployee empo%erment&

*#S group a t$ird5party logisticscompany realized t$e value o $umanresources in t$e ast gro%ing organizedretail industry in 2ndia& +o develop itsprospective employees it $as set up aninstitute to train t$em in a variety o 4obs&

Metal Bo' 2ndia )td& Faced t$e problemo a large and militant %or"orce %$ic$$ampered t$e personnel capability ot$e company and ultimately causeds$ut do%n o its several plants acrosst$e country&

7/23/2019 Module 3 Revised Part-II

http://slidepdf.com/reader/full/module-3-revised-part-ii 15/32

Amity School of Business

15

Organizational Capability Factors

Inormation Management Capability Factors related to ac(uisition and retention o

inormation

Factors related to processing and synt$esis o

inormation Factors related to retrieval and usage o

inormation

Factors related to transmission and dissemination

2ntegrative systemic and supportive actors:availability o 2+ inrastructure its relevance andcompatibility to organizational needsupgradation o acilities

7/23/2019 Module 3 Revised Part-II

http://slidepdf.com/reader/full/module-3-revised-part-ii 16/32

Amity School of Business

16

Organizational Capability Factors

 +ypical strengt$s t$at support inormationmanagement capability -ase and convenience o access to inormation

resources

!idespread use o computerized inormation system Availability and operability o $ig$5tec$ e(uipment !ide coverage and net%or"ing o computer systems Presence o oolproo inormation security systems Presence o buyers and suppliers conversant %it$ 2+

applications  +op management understanding o and support to2+ and its application %it$in organization

-'amples: SB2 <22+ !eb&com

7/23/2019 Module 3 Revised Part-II

http://slidepdf.com/reader/full/module-3-revised-part-ii 17/32

Amity School of Business

17

SBI has a good network of branches allacross the country which are allcomputerized and integrated , increasing theinformation capability of the company.

 NIIT, a major player in the IT industry has been able to create a significant informationcapability for itself by networking itswidelydispersed offices in se!eralcountries around the world.

"eb.com is a reputed software de!elopmentcompany whose high information capabilityis based on its #I#S system $projectimplementation planning study% that ismade by focusing on clientre&uirements.

7/23/2019 Module 3 Revised Part-II

http://slidepdf.com/reader/full/module-3-revised-part-ii 18/32

Amity School of Business

18

Organizational Capability Factors

!eneral Management Capability Factors related to general management system:

strategic planning process managementinormation system

Factors related to general managers: orientationris"5propensity values goals capacity or %or"unctional e'perience etc&

Factors related to e'ternal relations$ips: in=uenceand rapport %it$ t$e government regulatoryagencies and fnancial institutions P# social

responsibility public image etc& Factors related to organizational climate:

organizational culture and processes balance ovested interests nature o organizational structureand controls etc&

7/23/2019 Module 3 Revised Part-II

http://slidepdf.com/reader/full/module-3-revised-part-ii 19/32

Amity School of Business

19

Organizational Capability Factors

 +ypical strengt$s t$at support generalmanagement capability -0ective system or corporate planning

-ntrepreneurial orientation and $ig$ propensity orris"5ta"ing

3ood rapport %it$ government and bureaucracy

Favorable corporate image

*evelopment5oriented organizational culture

-0ective management o organizational c$ange

-'amples: 2nosys >es Ban" MalayalamManorama

A i S h l f B i

7/23/2019 Module 3 Revised Part-II

http://slidepdf.com/reader/full/module-3-revised-part-ii 20/32

Amity School of Business

20

Infosys is not the biggest IT company, nor is itha!ing the widest market segment co!erage, yetit e!okes awe and respect owing to the middleclass success story of its legendary founders andtheir wealth sharing philosophy.

'es bank le!eraged its entry into the bankingindustry on the basis of the record of its topmanagement. The bank was able to target nichesegments and using high technology was able tokeep fi(ed costs under control thus enabling it to become operationally profitable in a !ery short

time. )alayalam )anorama is India*s largest selling

newspaper. Behind the success of the company isthe unified, decisi!e and unchallenged leadershipof the family whose members ha!e hadsignificant political and social life in +erala.

A it S h l f B i

7/23/2019 Module 3 Revised Part-II

http://slidepdf.com/reader/full/module-3-revised-part-ii 21/32

Amity School of Business

21

Preparing t$e OrganizationalCapability Profle ?OCP@

Capability Factors "eakness

#$

%ormal

&

Strength

'$

Financial Capability

Factors

Marketing CapabilityFactors

Operations Capability

FactorsPersonnel CapabilityFactors

Inormation ManagementCapability Factors

!eneral Management

A it S h l f B i

7/23/2019 Module 3 Revised Part-II

http://slidepdf.com/reader/full/module-3-revised-part-ii 22/32

Amity School of Business

22

Strategic Advantage Profle ?SAP@Capability

Factors

%ature o

Impact

Competiti(e Strengths or

"eaknesses

FinancialCapability

Marketing

CapabilityOperationsCapability

PersonnelCapability

InormationManagement

!eneralManagement

Capability

Up arrows indicate strength; down arrows indicate weakness; while horizontal

arrows indicate a neutral position.

A it S h l f B i

7/23/2019 Module 3 Revised Part-II

http://slidepdf.com/reader/full/module-3-revised-part-ii 23/32

Amity School of Business

23

Strategic AdvantageProfle ?SAP@ o 

CapabilityFactors %ature oImpact Competiti(e Strengths or"eaknesses

FinancialCapability

2mproved cas$ =o% andresource utilization&

ero billing day environment&

Stable mar"et s$are prices&

Strong e(uity support

MarketingCapability

*iversifed portolio oproducts and services&

Caters to every segment&Competitive pricing o0ering

best value&

-very ad ocused atcustomer value c$ain

A it S h l f B i

7/23/2019 Module 3 Revised Part-II

http://slidepdf.com/reader/full/module-3-revised-part-ii 24/32

Amity School of Business

OperationsCapability

3 services&

Consolidation o telecombusiness under one entity

$as broug$t variousoperational level

advantages&

PersonnelCapability Airtel decided to go in or avery young team& Averageage is 4ust years&

D2nvite criticism romemployeesE concept $as

c$anged t$e loo" o t$ebusiness&

InormationManagement

Substantial amount oleverage %it$ Britis$

 +elecom&

Massive net%or"ing 24

Amity School of Business

7/23/2019 Module 3 Revised Part-II

http://slidepdf.com/reader/full/module-3-revised-part-ii 25/32

Amity School of Business

!eneralManagementCapability

2mplemented industry bestpractices: via on 4ob trainingand an e0ective "no%ledge

transer program&

25

Amity School of Business

7/23/2019 Module 3 Revised Part-II

http://slidepdf.com/reader/full/module-3-revised-part-ii 26/32

Amity School of Business

26

S!O+ Analysis

Amity School of Business

7/23/2019 Module 3 Revised Part-II

http://slidepdf.com/reader/full/module-3-revised-part-ii 27/32

Amity School of Business

27

S!O+ Analysis

S!O+ analysis is a structured approac$ to

evaluate t$e strategic position o a business

by identiying its strengt$s %ea"nessesopportunities and t$reats&

Strengt$s and !ea"nesses are 2nternal to t$e

Organization %$ere as Opportunities and

 +$reats are e'ternal to t$e Organization&

Amity School of Business

7/23/2019 Module 3 Revised Part-II

http://slidepdf.com/reader/full/module-3-revised-part-ii 28/32

Amity School of Business

28

 +$e ollo%ing diagram s$o%s $o% aS!O+ analysis fts into a strategicsituation analysis&

Amity School of Business

7/23/2019 Module 3 Revised Part-II

http://slidepdf.com/reader/full/module-3-revised-part-ii 29/32

Amity School of Business

29

S"T -nalysis

STRENGTHS

WEAKNESSES

OPPORTUNITIES

THREATS

LEVERAGE

PROBLES

!ONSTRAINTSVULNERABILIT"

Amity School of Business

7/23/2019 Module 3 Revised Part-II

http://slidepdf.com/reader/full/module-3-revised-part-ii 30/32

Amity School of Business

30

S!O+ Matri'S)*+%!),S "+-K%+SS+S

OPPO*).%I)I+

S

SO strategies

.se strengthsto take

ad(antage oopportunities 

"O strategies

O(ercome/eaknesses by

takingad(antage oopportunities 

),*+-)S S) strategies

.se strengthsto a(oid threats 

") strategies

Minimi0e/eaknesses and

a(oid threats 

Amity School of Business

7/23/2019 Module 3 Revised Part-II

http://slidepdf.com/reader/full/module-3-revised-part-ii 31/32

Amity School of Business

31

Strengths Inrastructure

+mployees

Marketing )eam

1atest Product Inno(ation

International 2ualityStandards

Closeness to the market

"eaknesses Incompetent Management

.nattained employees

.ntrained sales orce

Poor marketing strategies

1o/ uality product

1ack o 4nancial capabilities

Opportunities• New potential market 

• Collaborative advantages

• Latent arket 

 !n" s#$% a$tivit" in t%eenvironment t%at %elps t%eorgani&ation to grow' is anopport#nit" (or it)

)hreats• New Competitor 

• *ri$e red#$tion in$ompetitors prod#$t 

• New prod#$t in t%e market 

• *oor marketing strategies

• Low +#alit" prod#$t 

•

La$k o( ,nan$ial$apabilities

Amity School of Business

7/23/2019 Module 3 Revised Part-II

http://slidepdf.com/reader/full/module-3-revised-part-ii 32/32

Amity School of Business

 +$an" >ou

32