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III SEMESTER
BA9210 - STRATEGIC MANAGEMENT
REGULATION 2009
SYLLABUS
BA9210

STRATEGIC MANAGEMENT

LT P C
3003

UNIT- I
STRATEGY AND PROCESS
9
Conceptual framework for strategic management, the Concept of Strategy and the Strategy
Formation Process – Stakeholders in business – Vision, Mission and Purpose – Business definition,
Objectives and Goals - Corporate Governance and Social responsibility-case study
...

UNIT - III
STRATEGIES
10
The generic strategic alternatives – Stability, Expansion, Retrenchment and Combination strategies
- Business level strategy- Strategy in the Global Environment-Corporate Strategy-Vertical
Integration-Diversification and Strategic Alliances- Building and Restructuring the corporationStrategic analysis and choice - Environmental Threat and Opportunity Profile (ETOP) Organizational Capability Profile - Strategic Advantage Profile - Corporate Portfolio Analysis SWOT Analysis - GAP Analysis - Mc Kinsey's 7s Framework - GE 9 Cell Model - Distinctive
competitiveness - Selection of matrix - Balance Score Card-case study
...

UNIT – V
OTHER STRATEGIC ISSUES
8
Managing Technology and Innovation- Strategic issues for Non Profit organizations
...

2
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Thomas L
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David Hunger and Krish Rangarajan, Strategic Management and
Business policy, Pearson Education
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L
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Jones, Strategic Management Theory, An Integrated approach,
Biztantra, Wiley India, 2007
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REFERENCES
1
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R
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2
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3
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4
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Hax and Nicholas S
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5
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6
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7
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Hrebiniak, Making strategy work, Pearson, 2005
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Gupta, Gollakota and Srinivasan, Business Policy and Strategic Management – Concepts and
Application, Prentice Hall of India, 2005
...


Concept of strategy:
The term strategy is derived from Greek word strategies which mean generalship
...

Strategy word derives from the greek word stratçgos, which derives from two words: stratos (army)
and ago (ancient greek for leading)
...

Conceptual framework for strategic management:
Decision relating to the future of an organization is also referred to as strategy
...
Strategy is now used in all fields where
the horizon is long term, there is a competition for the use of resources, and the objective is to realize
some goals
...

According to learned, “strategy is the pattern of objectives, purposes or goals and major policies or
plans for achieving these goals
...

Definition for strategic management:
Strategic Management is defined as the dynamic process of formulation, implementation, evaluation
and control of strategies to realize the organizations strategic intent
...

In other words, strategy is about:
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* Where is the business trying to get to in the long-term (direction)
* Which markets should a business compete in and what kind of activities is involved in such
markets? (markets; scope)
* How can the business perform better than the competition in those markets?
(Advantage)?
* What resources (skills, assets, finance, relationships, technical competence, and
facilities) are required in order to be able to compete? (Resources)?
* What external, environmental factors affect the businesses’ ability to compete? (Environment)?
* What are the values and expectations of those who have power in and around the
business? (Stakeholders)
THE CONCEPT OF STRATEGIC MANAGEMENT:
Strategic management is the art and science of formulating, implementing and evaluating crossfunctional decisions that will enable an organization to achieve its objectives
...

Strategic management, therefore, combines the activities of the various functional areas of a business
to achieve organizational objectives
...

Strategic management provides overall direction to the enterprise and is closely related to the field of
organization Studies
...
e
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, or a new social, financial, or political environment
...

Meaning for Objectives:
Objectives are the ends that state specifically how the goals shall be achieved
...

Role of Objectives:
 Objectives define the organizations relationship with its environment
...

 Objectives provide the basis for strategic decision making
...

Characteristics of Objectives
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Objectives should be understandable
...
Due to change
2
...
Research and development
4
...
Systemized decision
6
...
Allocation of resource
8
...
Helps the managers to have holistic approach
Importance of Strategic Management:1
...
Effective strategic idea
3
...
Its decentralized the Management
5
...
To Makes discipline
A central aim of strategic management is to help organizations adapt and respond to environment
changes
...

Strategy Formulation:
Given the information from the environmental scan, the firm should match its strengths to the
opportunities that it has identified, while addressing its weaknesses and external threats
...
A
competitive advantage can be based on cost or differentiation
...

Strategy Implementation
The selected strategy is implemented by means of programs, budgets, and procedures
...

The way in which the strategy is implemented can have a significant impact on whether it will be
successful
...
For this reason, care must be taken to communicate the strategy and
the reasoning behind it
...

Evaluation and control consists of the following steps:
1
...
Define target values for those parameters
3
...
Compare measured results to the pre-defined standard
5
...

The Strategic Management Process:

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Strategic management as a process that includes the various aspects of strategy formulation,
implementation and evaluation and control
...
As was stated earlier, strategic management is a
Comprehensive approach to management aimed at helping organizations achieve strategic
objectives
...


Strategic planning has become exceptionally important in management circles today, it includes
those activities that involve defining the organization's mission, setting its objectives, analyzing the
external and internal environment of the organization, and developing and selecting strategies to
enable it to operate successfully in its environment
...
Secondly, organizational objectives must be established so that everyone knows what
management wants to accomplish
...
This steps entails examining the organization's strengths and
weaknesses, forecasting the future environment, and so on
...


Meaning of vision:
A vision statement is sometimes called a picture of your company in the future
...

Meaning for mission:
A mission statement is a brief description of a company’s fundamental purpose
...

Mission
...

An organizational mission defines the fundamental, unique purpose that sets a company apart from
other companies of its type and identifies the scope of the company's operations in terms of products
(including services) offered and markets served In other words, mission statement describes an
organization's purpose, its customers, its products (often in functional terms, that say what need or
needs are being met), and its technology (that is, how it delivers its products or services)
...

Mission statements should be sufficiently narrow to help the company determine it’s proper
market niche
...
Because of the
different characteristics of customers and geographic areas, and varying product preferences, a
company attempting to satisfy a large group of diverse customers is forced to make compromise
decisions in virtually every aspect of its pricing, product features, and service policies
...

Other competitors are likely to move into the industry and develop plans that focus on narrow
market niches
...

Drucker stated that "only a clear definition of the mission and the purpose of the organization make
possible clear and realistic business objectives"
...
Objectives are the end
results, goals, or targets that all organizational activities seek to attain
...

Although objectives can vary widely from organization to organization, normally they can be
categorized as follow: profitability, service to customers, employee needs and well-being, social
responsibility, and others
...

Generally, long-term objectives need to be established for every area of the organization where
performance and results directly influence the survival and prosperity of the organization
...

They should be clear, concise, and quantified whenever possible and should be detailed enough so
that the organization's personnel can clearly understand what the organization intends to achieve
...

Objectives for different areas of the organization can serve as checks on each other, but should be
reasonably consistent with each other
...

They then become measurable points which indicate how the organization is making definite
progress towards its mission
...

Rather, they are highly interdependent and inseparable
...

Similarly, a strategy cannot be determined without first knowing the objectives that are to be pursued
and the policies that are to be followed
...
The figure which shows the entire strategic management process as a
series of sequential steps should be considered merely as a method for analyzing the entire process
and not as a step-by-step process that should be sequentially followed
...
An internal organizational analysis is designed to answer in part the question "Where
are we now?" It is an evaluation of all relevant factors within the organization
...

A typical checklist might include the following factors: financial position, organizational structure,
quantity and quality of personnel, product line, competitive position, condition of facilities and
equipment, marketing capability, research and development capability, past objectives and strategies
...

The external environmental analysis is also part of the process of answering the question
"Where are we now"? It includes those factors that may influence the success of the
Organization but are external to and not under the total control of the organization
...
An organization exists within an industry environment, the
industry environment and the individual organization within the industry are influenced by
political, economic, ecological, social, and technological forces
...

The firm also must know its own capabilities and limitations in order to select the opportunities that
it can pursue with a higher probability of success
...
The external environment has two aspects:
the macro-environment that affects all firms and a micro-environment that affects only the firms in a
particular industry
...
An industry profile answers questions about key areas of a particular industry
...
The industry environment is also
influenced by forces outside the industry itself
...
The formulation of these
strategies follows the decision-making process
...

In choosing a strategy, an organization has a wide variety of options; therefore, evaluation of
alternative strategies considers an important step in strategy formulation
...

In evaluating alternatives, it is also important to focus on a particular product or service and on
those competitors who are direct rivals in offering it
...

Strategy selection and strategy implementation:
In choosing among the available possibilities, successful managers will select the strategies that are
best suited to the organization's capabilities and give their organization the more favorable
competitive advantage; then they will try to sustain that advantage over time
...

There must be a translation of strategic thought into strategic action
...

Strategy implementation involves those activities necessary in carrying out the chosen strategy
...

Implementing strategy affects an organization
...

Strategy describes a framework for charting a course of action
...

g) Pitts and lie
...

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k) Current position to future desired state
...

m) Art of the general
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Elements of strategy:
 Goals- indicate long term towards which all efforts are directed
...

 Competitive advantage – it arises when a firm is able to perform an activity that is
distinct or different from that of its rivals
...

The logic of the complete strategy:

Different levels of Management:
1
...
The plan deals with the objectives of the company ,allocation of
resources and coordination of the BSUs for optimum performance
...
Business Level: Business level strategy is comprehensive plan providing objectives
for SBUs, allocation of resources among functional areas and coordination between
then for making optimal contribution to the achievement of the corporate level
objectives
...
Functional Level: it deals with a relatively restricted plan, providing objectives for a
specific function ,allocation of resources among different operations operations
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within that functional areas and coordination between them for optimal contribution
to the achievement of the SBU and corporate level objectives
...
Who is being satisfied (what customer groups)
2
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How customer needs are being satisfied (by what skills, knowledge or distinctive competencies)
Stake holders in Business:
Stake holders are the individuals and groups who can affect by the strategic outcomes achieved and
who have enforceable claims on a firm‟s performance
...


Stakeholders in business
Definition:
Stakeholder is a person, group, or organization that has direct or indirect stake in an organization
because it can affect or be affected by the organization’s actions, objectives and polices
...


Stake holder’s relationship management
Stake holders can be divided into:
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1
...
External Stakeholders

Mass Media
Stake holder’s Analysis:
Identify the stake holders
...


Key aspects of Good Corporate Governance
arency of corporate structures and operations
local communities
where the corporation operates
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(For eg: Stockholders, customers, suppliers, ceditors, and employees)
External Stakeholders- non-market (or secondary) Stakeholders are those who=although they do not
engage in direct economic exchange with the business- are affected by or can affect its actions(For
example: the general public,communities
...
)
In management the word “stakeholder” has become more commonly used to mean a person or
organization that has a legitimate interest in a project or entity
...
Mission Statements concentrate on the present and are a reflection of an
organization's core competencies – the basic skills or products provided
...
It states what you want the organization to be
...
A Vision Statement represents a realistic dream
for an organization and forces it to take a stand for a preferred future
...
A Mission Statement
identifies a starting point or current state of business, but a Vision Statement is necessary for an
organization to determine the direction that should be pursued
...

In addition to their importance in strategic planning, effective Mission and Vision Statements have
other visible benefits
...


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This is key to ensuring that the vision stays alive and works
...

The often time hesitation by an organization's leadership is understandable
...
However, rather than fear it, management must embrace the concept
...
Therefore the focus should be on ensuring that an organization's mission(s) and
vision(s) are properly aligned and used so that their benefits can be realized
...


The Business Vision and Company Mission Statement
While a business must continually adapt to its competitive environment, there are certain core ideals
that remain relatively steady and provide guidance in the process of strategic decision-making
...

The mission statement communicates the firm's core ideology and visionary goals, generally
consisting of the following three components:
1
...
Core purpose of the firm
3
...

The firm's core values and purpose constitute its core ideology and remain relatively constant
...
The core ideology is not created in a
mission statement; rather, the mission statement is simply an expression of what already exists
...

The three components of the business vision can be portrayed as follows:
Core Values
The core values are a few values (no more than five or so) that are central to the firm
...
One way to determine whether a value is a core value to ask
whether it would continue to be supported if circumstances changed and caused it to be seen as a
liability
...
Another way to determine which
values are core is to imagine the firm moving into a totally different industry
...
Core values will not change
even if the industry in which the company operates changes
...
For example, if innovation is a core value but then 10 years down the road
innovation is no longer valued by the current customers, rather than change its values the firm
should seek new markets where innovation is advantageous
...
This core purpose is expressed in a carefully
formulated mission statement
...
This purpose sets the firm apart from other firms
in its industry and sets the direction in which the firm will proceed
...
While firms exist to earn a profit, the profit motive should not be highlighted in the
mission statement since it provides little direction to the firm's employees
...
Initial attempts at stating a
core purpose often result in too specific of a statement that focuses on a product or service
...
For example, if a market research firm initially states that its purpose is to provide
market research data to its customers, asking "why" leads to the fact that the data is to help
customers better understand their markets
...
The core purpose and values of the firm are not selected - they are
discovered
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Any attempt to state a value that is not already held by the firm’s employees is
likely to not be taken seriously
...
This
vision describes some milestone that the firm will reach in the future and may require a decade or
more to achieve
...

These visionary goals are longer term and more challenging than strategic or tactical goals
...
"
• Common enemy - centered on overtaking a specific firm such as the 1950'sgoal of Philip-Morris to
displace RJR
...
For example, a cycling
accessories firm might strive to become "the Nike of the cycling industry
...
For example, GE set
the goal of becoming number one or number two in every market it serves
...
Once such a goal is reached, it needs to be replaced; otherwise, it is unlikely that the
organization will continue to be successful
...

Relating corporate Governance to strategic management:
intent

Corporate Governance:
Corporate Governance involves a set of relationships amongst the company’s management its board
of directors, shareholders and other stakeholders
...

Social Responsibility of Business:
Meaning:
Social Responsibility of business refers to all such duties and obligations of business
directed towards the welfare of society
...

Why should business be socially responsible?

Social Responsibility towards different Interest groups:
1
...
They contribute capital and bear the business
...
Responsibility towards Investors:
Investors are those who provide finance by way of investment in shares, bonds, etc
...

 Ensuring safety of their investment
 Regular payment of interest
...
Responsibility towards employees:
Business needs employees or workers to work for it
...

 Timely and regular payment of wages and salaries
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 Proper working conditions
 Timely training and development
 Better living conditions like housing, transport, canteen and crèches
...
Responsibility towards customers:
 No business can survive without the support of customers
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 There must be regularity in supply of goods and services
...
Responsibility towards competitors:
 Competitors are the other businessmen or organization involved in a similar type of business
...

 Not to defame competitors through false advertisements

6
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 Giving regular orders for purchase of goods
 Availing reasonable credit period
 Timely payment of dues
...
Responsibility towards Government:
o Business activities are governed by the rules and regulations framed by the
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government
...
Responsibility towards society:
A society consists of individuals, groups, organizations, families etc
...

 To help the weaker and backward sections of the society
...

 To protect the environment
 To provide assistance in the field of research on education, medical science, technology etc
...


Concept of Environment:
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Environment literally means the surroundings, external objects, influences or circumstances under
which someone or something exists
...

Characteristics of Environment:
 Environment is Complex:
 Environment is Dynamic
 Environment is Multi-faceted
 Environment has a far- reaching impact
Macro Environmental Factors:
 Demographic Environment
 Technological Environment
 Socio-cultural Environment
 Economic Environment
 Political Environment
 Regulatory Environment
 International Environment
 Supplier Environment
 Task Environment
Environmental Scanning:
Environmental scanning plays a key role in strategy formulation by analyzing the strengths
and weaknesses and opportunities and threats in the environment
...

Porter’s five forces model:
 Risk of entry by potential competitors
 Bargaining power of suppliers
 Bargaining power of buyers
 Intensity of Rivalry among established firms
 Threat of substitutes

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THE FIVE FORCES
INDUSTRY COMPETITORS:
Rivalries naturally develop between companies competing in the same market
...

To Porter, the intensity of this rivalry is the result of factors like equally balanced companies, slow
growth within an industry, high fixed costs, lack of product differentiation, overcapacity and price22

cutting, diverse competitors, high-stakes investment, and the high risk of industry exit
...

PRESSURE FROM SUBSTITUTE PRODUCTS:
Substitute products are the natural result of industry competition, but they place a limit on
profitability within the industry
...
Porter uses the example of security
brokers, who increasingly face substitutes in the form of real estate, money-market funds, and
insurance
...

BARGAINING POWER OF SUPPLIERS:
Suppliers have a great deal of influence over an industry as they affect price increases and product
quality
...
Labor supply can also influence the position of the suppliers
...

BARGAINING POWER OF BUYERS:
The buyer's power is significant in that buyers can force prices down, demand higher quality
products or services, and, in essence, play competitors against one another, all resulting in potential
loss of industry profits
...
The bargaining position of buyers
changes with time and a companies (and industry's) competitive strategy
...
Porter identifies six
major barriers to entry:

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Economies of scale, or decline in unit costs of the product, which force the entrant to enter on
a large scale and risk a strong reaction from firms already in the industry, or accepting a
disadvantage of costs if entering on a small scale
...

Capital requirements for entry; the investment of large capital, after all, presents a significant
risk
...

Access to distribution channels
...

Cost disadvantages independent of scale, whereby established companies already have
product technology, access to raw materials, favorable sites, advantages in the form of
government subsidies, and experience
...
New firms can expect retaliation from existing companies and also face
changing barriers related to technology, strategic planning within the industry, and manpower and
expertise problems
...

In summary, Porter's five-forces models concentrates on five structural industry features that
comprise the competitive environment, and hence profitability, of an industry
...
For Porter, Competitive Strategy is not
a book for academics but a blueprint for practitioners-a tool for managers to analyze competition in
an industry in order to anticipate and prepare for changes in the industry, new competitors and
market shifts, and to enhance their firm's overall industry standing
...
Since those examples are now over twenty years old, changes in technology
and other industrial shifts and trends have made them somewhat obsolete
...
Porter's model does not, for example, consider nonmarket changes, such as
events in the political arena that impact an industry
...


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buyer propensity to substitute
relative price performance of substitutes
buyer switching costs
perceived level of product differentiation

The threat of the entry of new competitors
Profitable markets that yield high returns will draw firms
...
Unless the entry of new firms can be blocked by incumbents,
the profit rate will fall towards a competitive level (perfect competition)
...
)
economies of product differences
brand equity
switching costs or sunk costs
capital requirements
access to distribution
absolute cost advantages
learning curve advantages
expected retaliation by incumbents
government policies

The intensity of competitive rivalry
For most industries, this is the major determinant of the competitiveness of the industry
...

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number of competitors
rate of industry growth
intermittent industry overcapacity
exit barriers
diversity of competitors
informational complexity and asymmetry
fixed cost allocation per value added
level of advertising expense

The bargaining power of customers
Also described as the market of outputs
...

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buyer concentration to firm concentration ratio
bargaining leverage
buyer volume
buyer switching costs relative to firm switching costs
buyer information availability
ability to backward integrate
availability of existing substitute products
buyer price sensitivity
price of total purchase
RFM Analysis

The bargaining power of suppliers
Also described as market of inputs
...
Suppliers may refuse to work with the
firm, or e
...
charge excessively high prices for unique resources
...
The other elements are
the value chain and the generic strategies
...
As a result of these differences,
within most industries it is possible to observe groups of companies in which each company follows
a business model that is similar to that pursued by other companies in the group
...

Proprietary group:
The companies in this proprietary strategic group are pursuing a high risk high return strategy
...
The risks are high because
the failure rate in new drug development is very high
...
They are pursuing a low risk, low return
strategy
...
It is low return because
they cannot charge high prices
...

A company’s closest competitor its rivals are those that serve the same basic customer needs
...

A sector is a group of closely related industries
...

Industry life cycle Analysis:
The task facing managers is to anticipate how the strength of competitive forces will change as the
industry environment evolves and to formulate strategies that take advantage of opportunities arise
and that counter emerging threats
...
With globalization, markets are moving towards a huge
global market place
...

Products like coco-cola, Pepsi, Sony walkman and McDonald hamburgers are globally accepted
...

With hyper competition, the rate of innovation has increased significantly
...

Previously protected national markets face the threat of new entrants and intense rivalry
...
The banking
sector reforms also contributed to changes in the economic conditions of India
...
Ultimately intense
competition is felt in the industrial scene
...

National Context and Competitive advantage:
In spite of globalization of markets and production successful companies in certain industries are
found in specific countries
 Japan has most successful consumer electronics companies in the world
 Germany has many successful chemical and engineering companies in the world
 United states has many of the world’s successful companies in computer and biotechnology
 It shows that national context has an important bearing on the competitive position of the
Companies in the global market
Economists consider the cost and quality of factors of production as the major reason for the
competitive advantage of some countries with respect to certain industries
...
S enjoys in bio-technology due to technological know-how, low
venture capital to fund risky start-ups in industries
...

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

Prospectors:
These firms with broad product items focus on product innovation and market
opportunities
...

 Analyzers:
Analyzers are firms which operate in both stable and variable markets
...

 Reactors:
The firms, which do not have a consistent strategy to pursue, are called reactors
...
Their strategic moves are not
integrated but piecemeal approach to environmental change makes them ineffective
...

They must be able to identify how the strengths of the enterprise boost its profitability and how any
weaknesses lead to lower profitability
Competencies, Resources and Competitive advantage:
Meaning of Competitive advantage:
A company has a competitive advantage over its rivals when its profitability is greater than the
average profitability of all companies in its industry
...

Distinctive Competencies:
Distinctive competencies are firm specific strengths that allow a company to differentiate its
product and achieve substantially lower costs than its rivals and thus gain a competitive advantage
...

29

Capabilities:
Capabilities refer to a company’s skills at co-coordinating its resources and putting them to
productive use
A critical distinction between Resources and capabilities:
The distinction between resources and capabilities is critical to understanding what generates a
distinctive competency
...

For Example:
The steel mini-mill operator Nucor is widely acknowledged to be the most cost efficient steel maker
in the United States
...
Nucor has the same resources as many other mini-mill
operators
...

Strategy, Resources, Capabilities and competencies:
The relationship of a company’s strategies distinctive competencies and competitive advantage
...
However, it is also very important to realize that the strategies a
company adopts can build new resources and capabilities or strengthen the existing resources and
capabilities thereby enhancing the distinctive competencies of the enterprise
...

Competitive advantage of a company becomes depends on three factors:
 The value customers place on the company’s products
 The price that a company charges for its products
 The costs of creating those products
...

Without this superiority, the competitors simply could replicate what the firm was doing and
any advantage quickly would disappear
...
The following are some examples
of such resources:
• Patents and trademarks
• Proprietary know-how
• Installed customer base
• Reputation of the firm
• Brand equity
Capabilities refer to the firm's ability to utilize its resources effectively
...

Such capabilities are embedded in the routines of the organization and are not easily
documented as procedures and thus are difficult for competitors to replicate
...

These competencies enable innovation, efficiency, quality, and customer responsiveness, all
of which can be leveraged to create a cost advantage or a differentiation advantage
...
A firm positions itself in its industry
through its choice of low cost or differentiation
...
Another important decision is how broad or narrow a
market segment to target
...

Value Creation:
The firm creates value by performing a series of activities that Porter identified as the
value chain
...
To achieve a competitive advantage, the firm must perform one or
more value creating activities in a way that creates more overall value than do
competitors
...

Core Competencies:
31

In their 1990 article entitled, The Core Competence of the Corporation, C
...
Prahalad and
Gary Hamel coined the term core competencies, or the collective learning and
coordination skills behind the firm's product lines
...

According to Prahalad and Hamel, core competencies lead to the development of core
products
...
For example, motors are a core product that can be
used in wide array of end products
...

The intersection of market opportunities with core competencies forms the basis
for launching new businesses
...
Without core competencies, a large corporation is just a collection of discrete
businesses
...

Developing Core Competencies
According to Prahalad and Hamel, core competencies arise from the integration
of multiple technologies and the coordination of diverse production skills
...

There are three tests useful for identifying a core competence
...
Provide access to a wide variety of markets, and
2
...
be difficult
for competitors to imitate
...
While a company may be able to hire a team of brilliant
scientists in a particular technology, in doing so it does not automatically gain a core
competence in that technology
...
It is
not necessarily an expensive undertaking to develop core competencies
...
In many cases an organizational design that facilitates sharing of
32

competencies can result in much more effective utilization of those competencies for
little or no additional cost
...

For example, decentralization makes it more difficult to build core competencies
because autonomous groups rely on outsourcing of critical tasks, and this outsourcing
prevents the firm from developing core competencies in those tasks since it no longer
consolidates the know-how that is spread throughout the company
...

For example, in the 1970's many U
...
manufacturers divested themselves of
their television manufacturing businesses, reasoning that the industry was mature and
that high quality, low cost models were available from Far East manufacturers
...

Similarly, Motorola divested itself of its semiconductor DRAM business at
256Kblevel, and then was unable to enter the 1Mb market on its own
...

Core Products
Core competencies manifest themselves in core products that serve as a link
between the competencies and end products
...
Examples of firms and some of their core products include:
•
•
•
•
•
•

3M - substrates, coatings, and adhesives
Black & Decker - small electric motors
Canon - laser printer subsystems
Matsushita - VCR subsystems, compressors
NEC - semiconductors
Honda - gasoline powered engines

The core products are used to launch a variety of end products
...
Because firms may sell their core products to other firms
that use them as the basis for end user products, traditional measures of brand
market share are insufficient for evaluating the success of core competencies
...
While a company may have a low brand share, it may
have high core product share and it is this share that is important from a core
competency stand point
...


34

35

Strategic Management Concepts:
Although the term “strategic management” is bantered around a lot in the
businesses world, it is not understood very well by most people
...

A strategic management analogy is taking a trip during your vacation
...
Then you develop a strategy of how to get there – take an airplane
(which flights), drive your car (which highways), etc
This will be influenced by the amount of money, time and other resources you have
available
...
Below are concepts to help expand your understand of strategic management
for a business
...

1) Strategic management involves deciding what is important for the long-range
success of your business and focusing on it
...
The goal of much of business strategy is to
achieve a sustainable competitive advantage
...
Thus, a competitive advantage enables the
firm to create superior value for its customers and superior profits for itself
...
Superior Efficiency:
A business is simply a device for transforming inputs into outputs
...

Outputs are the goods and services that the business produces
...
That is efficiency outputs/Inputs
...
Superior quality:
A product can be thought of as a bundle of attributes
...

3
...
Product innovation
is the development of products that are new to the world or have superior attributes to existing
products
...

Superior customer Responsiveness:
To achieve superior responsiveness to customers a company must be able to
do a better job than competitors of identifying and satisfying its customer needs
...

Core competencies:
Core competence is a fundamental enduring strength which is a key to competitive
advantage
...
One core competence gives rise to several
products
...

The durability of competitive advantage:

39

Barriers to Imitation




Capability of competitors
General dynamism of the Industry environment

Avoiding failures and sustaining competitive advantage
When a company loses its competitive advantage, its profitability falls
...


A failing company is one whose profitability is new substantially lower than the average profitability
of its competitors, it has lost the ability to attract and generate resources so that its profit margins and
invested capital is shrinking rapidly
...

The following questions are asked to assess the nature of resources
...

Without this superiority, the competitors simply could replicate what the firm was doing
and any advantage quickly would disappear
...

The following are some examples of such resources:






Patents and trademarks
Proprietary know-how

Capabilities refer to the firm’s ability to utilize its resources effectively
...
Such capabilities are embedded in
the routines of the organization and are not easily documented as procedures and thus are difficult
for competitors to replicate
...

These competencies enable innovation, efficiency, quality, and customer responsiveness, all of
which can be leveraged to create a cost advantage or a differentiation advantage
...
A firm positions itself in its industry through its choice of low
cost or differentiation
...

Another important decision is how broad or narrow a market segment to target
...

Value Creation:
The firm creates value by performing a series of activities that Porter identified as the value chain
...

To achieve a competitive advantage, the firm must perform one or more value creating activities in a
way that creates more overall value than do competitors
...

In Competitive Advantage, Michael Porter analyzes the basis of competitive advantage and presents
the value chain as a framework for diagnosing and enhancing it
...
What is Evaluation and control?
Evaluation and control is the process by which corporate activities and performance results are
monitored so that actual performances can be companied with desired performance
...

2
...
That fours on improving the officered of their
existing operations they won’t try to innovate in new areas
...
What are prospectors?
Prospectors are companies with fairly broad product line that four on product innovation and market
opportunities
...
They tend to emphasis
inactivity over efficiency
...
What are analyzers?
Analyzers are companies that operate in at least different product market areas, one stable and one
variable
...
In the variable area innovation is emphasized
...
What are reactors?
Reactors are companies that lack a consistent strategy-structure-culture relationship
...

6
...
Identify and classify the firm’s resources in terms of strengths and weaknesses
...
Combine the firm’s strengths into specific capabilities-these are core competitive
3
...
Competitive advantaged the ability to harvest the profits resulting from the use of these
resources and capabilities
...
Select the strategy that best exploits the firms resources and competencies relative to external
opportunities
...
Identify resource gaps and invest in upgrade weaknesses

43

Unit-III
Strategies
Generic Strategic Alternatives

The generic strategic alternatives – Stability, Expansion, Retrenchment and Combination strategies - Business
level strategy- Strategy in the Global Environment-Corporate Strategy-Vertical Integration-Diversification
and Strategic Alliances- Building and Restructuring the corporation- Strategic analysis and choice Environmental Threat and Opportunity Profile (ETOP) - Organizational Capability Profile - Strategic
Advantage Profile - Corporate Portfolio Analysis - SWOT Analysis - GAP Analysis - Mc Kinsey's 7s
Framework - GE 9 Cell Model - Distinctive competitiveness - Selection of matrix - Balance Score Card-case
study
...
There could
be a small business firm involved in a single business or a large, complex and diversified
conglomerate with several different businesses
...

According to Gluek, there are four strategic alternatives:
o Expansion strategies
o Stability strategies
o Retrenchment Strategies
o Combination strategies
1
...

2
...

3
...

4
...
Growth strategy:
Growth strategy is a corporate level strategy, designed to achieve increase in sales, assets
and profits
...
Vertical growth results in vertical
integration
1
...

2
...
Vertical integration occurs when a company produces its own inputs or
disposes of its own outputs
...
Backward Integration:
Backward integration refers to performing a function previously provided by a supplier
...
Forward integration:
Forward integration means performing a function previously provided by a retailer
...
Firms choose
diversification when the growth objectives are very high and it could not be achieved
within the existing product/market scope
...

Unrelated diversification:

In unrelated diversification, the firm enters into new business area that has no obvious
connection with any of the existing business
...

•

Concentric diversification is similar to related diversification as there are benefits of
synergy when the new business is related to existing business through process,
technology and marketing
...

This is the “big picture” view of the organization and includes deciding in which product
or service markets to compete and in which geographic regions to operate
...

In addition, because market definition is the domain of corporate-level strategists, the
responsibility for diversification, or the addition of new products or services to the
existing product/service line-up, also falls within the realm of corporate-level strategy
...

Strategic Alliance:
Meaning:
A strategic alliance is a formal relationship between two or more parties to pursue a set of
agreed upon goals or to meet a critical business need while remaining independent organizations
...

 Adequacy a suitability of the resources competencies of an organization for it to survive
Disadvantages of strategic Alliance:
 Alliances are costly
 Alliances can create indirect costs by blocking the possibility of cooperating with competing
companies, thus possibly even denying the company various financing options
...

McKinsey’s 7S Model:
This was created by the consulting company McKinsey and company in the early 1980s
...

The Paper explains each of the seven components of the model and the links between them
...
At the end, some sources for further information on the model and case studies available
...
All of the authors worked as consultants at
McKinsey and company, in the 1980s, they used the model to analyze over 70 large organizations
...
The seven variables, which the authors terms “levers”, all begin with the letter “S”
...

Structure: Business needs to be organized in a specific form of shape that is generally referred to as
organizational structure
...

Systems: Every organization has some systems or internal processes to support and implement the
strategy and run day-to-day affairs
...

Style/culture: All organizations have their own distinct culture and management style
...

Staff: Organizations are made up of humans and it the people who make the real difference to the
success of the organization in the increasingly knowledge-based society
...

Shared Values/super ordinate Goals: All members of the organization share some common
fundamental ideas or guiding concepts around which the business is built
...

The seven components described above are normally categorized as soft and hard components:
 Hard components
 Soft components
Hard components are:
 Strategy
 Structure
 Systems
Soft components are:
 Shared values
 Style
 Staff
 Skills
Distinctive Competitiveness:
Meaning:
Distinctive Competence is a set of unique capabilities that certain firms possess allowing them
to make inroads into desired markets and to gain advantage over the competition; generally, it is an
activity that a firm performs better than its competition
...

48

When management finds an internal strength and both meets market needs and gives the firm a
comparative advantage in the market place, that strength is the firm distinctive competence
...

1
...

2
...

Balanced Scorecard:
The balanced scorecard is a strategic performance management tool- a semi- standard
structured report supported by proven design methods and automation tools that can be used by
managers to keep track of the execution of activities by staff within their control and monitor the
consequences arising from these actions
...

The financial box represents the financial perspective and answers the question “To succeed
financially, hoe should we appear to our shareholders
...
To achieve our vision how will we sustain our ability to change and improve
...
Financial: Encourages the identification of a few relevant high-level financial measures
...
Customer: Encourages the identification of measures that answer the question “How do
customers see us?”
3
...
Learning and Growth: encourages the identification of measures that answer the
question “Can we continue to improve and create value?”
Business level strategy:

This chapter examines how a company selects and pursues a business model that will allow it to
Complete effectively in an industry and grows its profits and profitability
...

In this chapter we examine that competitive decisions involved in creating a business model that
will attract and retain customers and continue to do so over time so that a company enjoys growing
profits and profitability
...
Formulate business- level strategies that will allow a company to attract customers away from
other companies in the industry
...
Implement those business level strategies which also involve the use of functional level strategies
to increase responsiveness to customers, efficiency, innovation and quality
...
To create a successful business model, managers must choose a set of business-level strategies
that work together to give a company competitive advantage over its rivals
2
...
Customer needs or what is to be satisfied
b
...
Distinctive competencies or how customer needs are to be satisfied
...

Formulating the Business model: Customer needs and product Differentiation:
1
...

For Example: A persons craving for something sweet can be satisfied by chocolates, ice-cream,
spoonful of sugar
...


Product differentiation: It is the process of designing products to satisfy customer’s needs
...
If managers devise strategies to differentiate a
50

product by innovation, excellent quality, or responsiveness to customers they are creating a business
model based on offering customers differentiated products
...
Customer groups: The second main choice involved in formulating a successful business model
is to decide which kind of products to offer to which customer groups
...
Because a particular product usually
satisfies several different kinds of desires and needs, many different customer groups normally exist
in a market
...
Some want for luxury purpose
...
Identifying customer groups and market segments: In the athletic shoe market the two
main customer groups are those people who use them for sporting purposes those who like to wear
them because they are casual and comfort
...
Inside the group of people
who buy athletic shoes for sporting purposes, for example are subgroups of people who buy shoes
suited to a specific kind of activity, such as running, aerobics, walking and tennis
...
Once a group of customers who share similar or specific need for a product has
been identified, this group is treated as a market segment
...
In this case customer
responsiveness is at a minimum and the focus is on price, not differentiation
...
In this case customer responsiveness is high and products are being customized to meet
the specific needs of customers in each group so the emphasis is on differentiation not price
...
In this case, it may be highly responsive to
the needs of customers in only these segments, or it may offer a bare-bones product to undercut the
prices charged by companies who do focus on differentiation
...
In essence a company seeks to achieve competitive advantage and above
average profitability by developing a cost leadership business model that positions it on the value
creation frontier as close as possible to the lower costs/lower prices axis
...
Sometimes a company can target one or a few market segments and successfully
pursue cost leadership by developing the right strategies to serve those segments
...

Focused Differentiation: In the case of the focused cost leader, a company that pursues a business
model based on focused differentiation chooses to specialize in serving the needs of one or two
market segments of niches
...
A focused company position itself
using differentiation
Gap Analysis:
Gap analysis is generic tools to compare the difference between two similar quantities
...
Gap Analysis is a tool that is often used compares actual performance with potential
performance which a strategist aspires to attain
...

Gap analysis flows from bench marking company’s current level of performance against industry
performance
...
The market potential is the number of consumers
available for the product
...
One can obtain the estimate of existing usage by gathering and cumulating
market share of all competing companies in the industry
...

From the above two quantities the market gap can be calculated as
Market Gap = Market potential – Existing usage
Meaning: In gap Analysis, the strategist examines what the organization wants to achieve (desired
52

performance) and what it has really achieved (actual performance)
...

Corporate portfolio Analysis
Meaning:
Corporate portfolio analysis could be defined as a set of techniques that help strategists in
taking strategic decisions with regard to individual products or business in a firms portfolio
...
They may also be used in less diversified firms, if these consist of a main business and other
minor complementary interests
...

Environment Threat and Opportunity Profile (ETOP):
Meaning of Environmental Scanning:
Environmental scanning can be defined as the process by which organizations monitor their
relevant environment to identify opportunities and threats affecting their business for the purpose of
taking strategic decisions
...
It is necessary to appraise the environment
...

Structuring Environmental Appraisal:
The identification of environmental issues is helpful in structuring the environmental appraisal so
that the strategists have a good idea of where the environmental opportunities and threats lie
...

The preparation of an ETOP involves dividing the environment into different sectors and then
analyzing the impact of each sector on the organization
...
NO

53

Environmental sectors

1

Economic

Nature of
Impact
Up Arrow

2

Market

Horizontal Arrow

Impact of each
sector
Growing affluence among urban consumers
rising disposable incomes and living standards
Organized
Sector a virtual oligopoly with four major

manufacturers, buyers critical and better
informed overall industry growth rate not
encouraging unsaturated demand traditional
distribution systems

3

International

Down Arrow

Global Imports growing but India’s share
Shrinking major importers are the US and
EU but India exports mainly to Africa

The preparation of an ETOP provides a clear picture to the strategists about which sectors and the
different factors in each sector have a favorable impact on the organization
...
Obviously, such an
understanding can be of a great help to an organization in formulating appropriate strategies to take
advantage of the opportunities and counter
the threats in its environment
...
This is necessary since the strengths
and weaknesses have to be matched with the environmental opportunities and threats for strategy
formulation to take place
...
An SAP provides a picture of the more critical areas which can have
a relationship with the strategic picture of the firm in the future
...
The strategists are
required to systematically assess the various functional areas and subjectively assign values to
the different functional capability factors and sub factors along a scale ranging from values of -5
to +5
Strategy in Global Environment:
Introduction:
In international business operations business enterprises pursue global expansion to support generic
business level strategies such as cost leadership and differentiation
...
They perform the following activities
54

towards this end
...

Global Strategies:
International Strategy
Multi-domestic strategy
Global Strategy
Transnational Strategy
Entry Mode:
Global companies have five options to enter into a foreign market
o Exporting
o Licensing
o Franchising
o Subsidiary
o Joint venture
o Wholly owned subsidiaries
Global Strategic Alliance:
A strategic alliance is a cooperative agreement between companies who are competitors from
different companies
...

To gain access to foreign market

GE Nine-cell Matrix:
This corporate portfolio analysis technique is based on the pioneering efforts of the General Electric
Company of the United States, supported by the consulting firm of McKinsey& company
...

These factors are: market size and growth rate, Industry profit margin, competitive intensity,
seasonality, cyclicality, economies of scale, technology and social, environmental, legal and human
impacts
...

55

These factors are: relative market share, profit margins, ability to compete on price and quality,
knowledge of customer and market, competitive strengths and weaknesses, technological capability
and caliber of management
...

Definition:
It has defined strategic choice as the process of selecting the best strategy out of all available strategies
...

Organizational factors: It includes organizations mission, the strategic intent, its business definition and its
strengths and weaknesses
...
Three techniques are used in the process of selection of a strategy
...
Devils Advocate in strategic decision making is responsible for identifying potential pitfalls and problems in
a proposed strategic alternative by making a formal presentation
...
Dialectical inquiry involves making two proposals with contrasting assumptions for each strategic alternative
...
Finally one
alternative will emerge viable for implementation
...
A strategic shadow committee consists of members drawn below executive level
...
They inspect all materials and attend all meetings of executive strategy
...
Their report is submitted to Board of Directors
...


Describe Functional Level Strategies
Functional level strategies are concerned with coordinating functional areas of the organization
...
The aim of functional level
strategies is to uphold and contribute to individual business level strategies and overall corporate level
strategy
...
They are mainly
concerned with
1
...

2
...
They therefore are action oriented
...

3
...
Since time horizon of functional level strategies is short
immediate results are available and corrective actions must be quick
...
People involved in developing Functional Level Strategies: Functional level strategies are
managed by lower level functional managers as against business and corporate strategies which
are managed by top managers
...
Achieving Superior Innovation: Superior innovation leads better differentiation
...

a
...
Poor Commercialization
c
...
Technological myopia
e
...
Achieving Superior Efficiency: Companies pursuing cost leadership strategies must scale their
efficiency in comparison to the competition
...
A strong learning culture is also an
important aspect for achieving superior efficiency
...
Achieving Customer Responsiveness: Customer responsiveness is an important for companies
pursuing differentiation or focus strategies
...

4
...
It also leads better customer satisfaction
...


57

Even though these aspects are discussed under functional level strategies it is important to note that all
the above should not be isolated within functions but cross functional boundaries and be developed as
organization wide capability, core and distinctive competencies
...


Describe Business Level Strategies
Business level strategies are similar to corporate level strategies except that they focus on single business
line rather than a portfolio of businesses
...
Strategic Business Unit (SBU) represents a business division dealing
with a product line entirely within an industry segment
...
One essential element of SBU
concept is that the SBU independently develops its own strategies, programs, budgets and procedures
...
Therefore a corporate strategy called corporate
parenting is required to manage various business units under it for new product introduction and
movement of funds and cash flows between the business units
...

2
...

4
...

Developing distinctive competencies and competitive advantage in each unit
...

Continuously monitor the markets and align the strategies on an on-going basis so that their
currency is ensured
...

Business level strategies are generally the adaptation of Porter’s generic strategies
...
Overall Cost Leadership
2
...
Focus in niche leading to
a
...
Differentiation Focus
Cost leadership allows a firm to manipulate the price to gain higher profits or higher market share
...

2
...

4
...

6
...

58

Construction of efficient scale facilities
Tight cost and overhead control
Avoiding marginal customer accounts
Minimizing operating expenses
Reduction of input costs
Reduction of labor costs
Lowering distribution costs

A cost leader does not attempt to build a brand and his products are more akin to commodity goods
...
The customer for a differentiated product must be less sensitive to
price
...
If this strategy has to succeed
the customer must be willing to pay more
...

2
...

4
...
Competitors continuously try to close the differentiation gaps at
lower costs and therefore as the product enters maturity it sells like a commodity
...

Focus the third generic strategy involves concentrating on a specific customer segment or geographic
area or channel of distribution
...
Within this limited segment a cost
leadership or differentiation strategy is applied
...
Many entrepreneurial ventures start
as a focus player before growing into a broad market organization
...


What are competitive tactics?
A tactic is a specific operating plan that details how a strategy is to be implemented in terms of when and
where it is to put into action
...
They are
more like policies that link strategy formulation to strategy implementation
...
Timing tactic which deals with when a company should implement the strategy
...
A first mover has
the advantage of establishing a reputation, move on the learning curve early on and assume a
position of cost leadership
...
A first mover also sets a sort of standard which can lock
in the customer providing an entry barrier to the other movers
...
The late mover benefits from the initial
research, product and market development activities done by the first mover
...
Second mover
advantage occurs when a firm who follows the lead of the first-mover is actually able to
capture greater market share, despite having entered late
...
A second-mover firm can learn from the experiences of the first mover
firm and may not face such high research and development costs if they are able create their
own similar product using existing technology
...
As a result, the second-mover can use its resources to focus on making a
superior product or out-marketing the first mover
...
Market Location tactic deals with the question of where a company should implement its
strategy
...
An offensive tactic is adopted in a competitor’s market territory to gain a
market share and a defensive tactic is pursued in the company’s home turf to thwart any
possible attack from the competition
...

Frontal attack which is a matching every move of the competition with a matching
reaction of the same nature from price to promotion to distribution
...
This is a very risky and
expensive tactic which can diminish the profitability of the whole industry
...

Flanking maneuver which is avoiding a frontal attack but choosing a part of the market
where the competitor is weak
...

iii
...
A good example of Apple’s IPOD which replaced Microsoft’s handheld
PC or palm pilot
...

Guerilla Warfare is when a company instead of adopting a resource expensive attack,
chooses to attack a small segment which does not seriously threaten the market leader
...

Defensive tactics aim to lower the probability or intensity of an offensive attack
...
Three types of defensive tactics exist
...
Raise the structural barriers is to block the challenger’s possible avenues of attack
...

ii
...
This tactic will scare away the challenger
...
Lower the inducement for attack is a defensive tactic that reduces the challenger’s
expectations of future profits in the industry
...

60

4
...
There
are two types of cooperative strategies namely Collusion and Strategic Alliances
Collusion: Collusion refers to active cooperation amongst competing firms to overcome normal
economic law of competition
...

Explicit collusions are illegal and prohibited by enacting appropriate laws to prevent the practice
...

However sometimes firms indulge in collusive tactics in an indirect way by tacitly agreeing for price or
supply cuts without any direct communication
...
Tacit collusions are most likely to succeed if






There few competitors
Costs are highly similar
One firm tends to act as price leader
An industry culture that accepts cooperation
Industry has high entry barriers for new competition

Strategic Alliance: A strategic alliance is a long term cooperative arrangement between two or more
independent firms that engage in business activities for mutual economic gain
...
The duration of an alliance can be short or long depending on
cultural cohesion and strategy alignment of the cooperating companies
...
The reasons for which companies form strategic alliances are
1
...

A strategic alliance is one of the preferred ways of developing capabilities based on tacit
knowledge
...
To obtain access to specific markets: Companies form value chain alliances with local suppliers when
operating in geographical territories where they have inadequate resources
...
A major reason for strategic alliance is the need to gain fast and low cost entry into new
territories
...
To reduce financial risk: When an alliance is formed it takes much less financial expenses than setting
up own facility
...
Using
alliances is a popular way when building in-house capability does not provide economy of scale,
usage of the capability is intermittent or the activity is very expensive for the company
...
To reduce political risk: Forming alliances with local partners is a good way to overcome risks
associated with unknown and less understood environments with different political systems and
cultures
...

Government Attributes: Stability, investment profile, democratic accountability, law and
order, military in politics, religion in politics, and quality of bureaucracy
...

Social attributes: Cultural diversity, corruption, ethnic tensions, socio-economic conditions
61

iii
...


Strategic Alliances fall on a continuum based on the duration of relationship from strong and close to
weak and distant
...

Mutual Service Consortia: This is a partnership of similar companies in similar industries that pool their
resources to gain a benefit that is too expensive to develop alone
...
The mutual service consortia is a fairly weak relationship
and participating companies do not share core competencies; nor do they have much interaction and
communication amongst the partners
...
This creates an independent business entity and the ownership,
operational responsibilities and financial risks and rewards to each member
...
The relationship between the partnering companies is neither too
distant nor too close
...
JVs are
very popular in international undertakings without incurring political-legal risks
...

Licensing Arrangements: A licensing arrangement is an arrangement in which a company (licensor)
grants rights to another company in another country (licensee) to produce and or market its product
...
Licensing is a useful strategy if
the product has significant brand name
...
KFC, McDonalds Pizza Hut are some popular firms who successfully used this strategy
...

Value-Chain partnership: This is a strong and close alliance in which one company forms a long term
arrangement with a key supplier or distributor for mutual advantage
...
Just-in-time is an example of supplier partnership to
eliminate inventory costs and improve response times
...

Disadvantages of Strategic Alliances: All forms of strategic alliances have some downside
...
Alliance partners may become competitors in future
...
Company may create some uncertainty in cost or performance
3
...


62

What are the strategies for marketing function?

Marketing strategy is a form of functional strategy
...
Marketing Strategies may be divided into Market development strategy and
product development strategy
...
They may also address strategies for improving the market share
...
Colgate and P& G are very popular in this regard
...
Using a successful brand name market other products is
called line extension which exploits the company’s current customer base
...
Two widely used promotional strategies are push and pull strategies
...
Push strategies on the other hand
involve trade promotion to gin shelf space and faster inventory turnovers
...
A company may also opt for multiple distribution channels
...
A company can follow one of
the two pricing strategies
...
In skim pricing the
company with a new product positions the product on the high of the demand curve and achieves better
margins
...

6
...
The financial strategy involves decisions regarding
 Raising and utilization of funds
...

 Judicial employment of capital
...
Companies that manage their inventory, creditors
and debtors better gain a competitive advantage by reducing cost of funds
...

With a better return on investment the company’s reputation will go up and along with it, its market
capitalization
...


63

Financial strategies revolve around strategic investment decisions, risk management, allocation of funds
(budgeting) and ensuring that funds are utilized properly and continuous monitoring of use of financial
resources
...
In a LBO a company is acquired largely by debt
obtained from a third party
...

Companies are also concerned about dividend strategies to keep the investor community happy and
maintain its market capitalization
...

Some companies when in difficulty use profit strategy to ensure that its reputation is not diluted
...
Describe various Operations Strategies
Operations strategy deals with the question of manufacturing products and locating the facilities there for
...
These days it is common to locate manufacturing facilities overseas
to exploit cost advantage the developing countries have to offer
...
Some of the avenues for absorbing technology are
1
...

3
...

5
...
Increasing competition intensity is
forcing companies to abandon traditional mass production assembly lines to flexible continuous
improvement strategy
...

Capacity planning deals with question of using machine and labor resources efficiently with minimum
idle time
...

Process & technology decision deal with appropriateness of technology to leverage cost effective
manufacture
...

64

Scheduling & Inventory is the planning exercise to match production to demand and complete elimination
of inventory towards just-in-time
...

8
...

R & D strategy deals with product and process innovation and improvement and also with appropriate
mix of basic, product and process research
...

One of the basic choices a firm has to make early in its life is whether it should be a technology leader or
a technology follower
...

Companies like Nike spend most of their time in R&D to bring differentiated products to the market and
sustain this unique position where as cost leaders like WalMart wait for product to stabilize and come
out with cost effective production methods to produce the same product at a lower cost and capture
sizable market
...
In
some industries R&D is essential for survival
...
Firms in this
industry invest significantly to innovate products and services to sustain the competitive advantage
...


Explain strategies associated with Human Resource Function
...
These
strategies relate to
1
...

3
...

5
...

7
...

Ensuring that staffing follows strategy
Making critical sizing decisions during growth and retrenchment

HR plays a critical role in implementing corporate and division strategies relating to growth and
retrenchment
...
During retrenchment decisions
may be taken regarding retrenching people whose skills are no longer needed and retraining people to
fill-in the gaps created by exiting people
...

Companies are regularly faced with the choice of hiring low skilled people at lower costs
...
But quality suffers because of low skills
...
Therefore HR strategies must strike a balance between these
choices
...
As
work increases in complexity, these teams become and more effective and the productivity increases
...

10
...
Managers with poor vision, analysis or lacking in creativity may be trapped into
considering the following strategies which are best avoided
...
Follow the leader: Blindly imitating the leading competitor may appear to be a good idea but it
ignores a firm’s particular strengths and weaknesses
...
When
Fujitsu blindly followed IBM it had to close the shutters when mainframe business failed
...
Hit another Home Run: A company who has pioneered an extremely successful product gambles
vainly for another such product and in this pursuit it may lose sight of risks
...

3
...
Ultimately the firm stands to lose
...
Do everything: When faced with several opportunities, management may tend to grab all of them
...

5
...
Thus management may throw good money after bad
and finally wind up even its successful ventures
...
What is strategic intent?
The traditional process of strategic formulation tries to match a company’s current strengths against the
current opportunities available in its environment
...
So some companies having a passion to be number 1 in its industry in spite of its low
current position have to develop a passion, resources and capabilities beyond those required by current
opportunities
...
Firms
pursing strategic intent must have the following characteristics:
1
...

3
...


Focusing on essence of winning
Motivating people by communication this value proposition
Using strategic intent for resource allocation
Encouraging individual and team contribution towards the intended goal
...
What are strategic options?
An option is a several possible courses of action a firm may pursue to realize a strategy
...
Some examples of options are product
options (which products to develop?) or market options (which markets to attack?)
...
Some option may be feasible
and some may not
...

A strategic option is a set of related options combined to form a comprehensive end-to-end strategy
...
A strategy to enter new
market in a new country with an existing or new product will involve options for methods of assembly,
packaging, distribution, promotion, service delivery etc
...
What is strategic choice?
When several strategic options are available from which the firm has to choose one, these alternative
options are called strategic alternatives
...
The process of setting up criteria for selection and
assessing the alternative choices is called strategic assessment
...


Apart from objective selection criteria, the strategic choice may also be influenced by the following
subjective factors


67

Management attitude towards risk
Pressures from Stakeholders




Pressure from corporate culture
Needs of Top/Key managers

The following diagram depicts the evolution of feasible options given the intent, options, and
assessment
...
Describe the process of making strategic choice
...

1
...
Brain storming and SWOT may be the appropriate tools for this purpose
...

2
...

3
...

4
...

The following diagram shows the process of strategic choice
...
What is GAP analysis?
Gap analysis is generic tools to compare the difference between two similar quantities
...

Gap Analysis is a tool that is often used compares actual performance with potential performance which
a strategist aspires to attain
...

Gap analysis flows from bench marking company’s current level of performance against industry
performance
...
The market potential is the number of consumers available for the
product
...
One
can obtain the estimate of existing usage by gathering and cumulating market share of all competing
companies in the industry
...

From the above two quantities the market gap can be calculated as
Market Gap = Market potential – Existing usage
16
...
It should be based on logic and rational thinking such that a proper strategy improves an
organization’s business strength and opportunities and at the same time reduces the weaknesses and
threats
...
Opportunities and threats are the
external factors and forces in the business environment which are also changing day by day with the
change of government policy, industrial policy, monetary policy, political situation at national and
international levels, formation of various trade blocks and trade barriers including the changes in legal
and social environment in the business world
...
A strength is a distinct technical superiority with best technical know-how, financial
resources and skill of the people in the organization, goodwill and image in the market for the product
and services, company’s access to best distribution network, the discipline, morale, attitude and
mannerisms of the employees at all levels with a sense of belonging
...
It refers to constraints or obstacles,
which check movement in a certain direction and may also inhibit an organization in gaining a distinct
competitive advantage
...
An opportunity is a major favorable advantage
to a company
...

Threats: Environmental threat is the challenge posed by the unavoidable trend or development that
would lead, in the absence of purposeful action to the erosion of the company’s position
...

17
...
They could be:
Documentary or secondary sources: Companies collect information on environmental factors through
bulletins of Government, Banks and their competitors
...

70

Internal sources: Companies could use internal sources like employees to collect the information
about the public and the competitor
...
It could also use its own sales force to collect the
information
...

Spying and surveillance: Companies could use their own employees, sales agents, and retired
employee etc to collect the information
...
Explain ETOP and how it can be used for developing an opportunity threat profile?
Environmental scanning can be defined as the process by which organizations monitor their relevant
environment to identify opportunities and threats affecting their business for the purpose of taking
strategic decisions
...
It is necessary to appraise the environment
...

Identifying external environmental factors: A feasible approach in identifying environmental factors is to
study the impact and the probability of impact of such factors on the business organization
...

Impact on Business

Probability of
Impact

High

High
Critical

Medium

High priority

Low

To be watched

Medium
High
priority
High
priority
Low priority

Low
Low priority
Low priority
Low priority

Identifying High Priority Environmental Issues: The importance of the factors that were identified by the
environmental scanning could be judged by the intensity of their impact and their relative probability of
impact on the organization
...
The issues that are having high probability of impact and high intensity of impact are
critical which the company has to give more attention, while high priority should be given to issues
having medium impact with medium probability
...
Thus, the strategists get a clear picture of the environmental factors
and their impact and could narrow down the factors that need special attention
...
The strategist should use personal experience
and judgment to place the various factors under each type of environment so that a clear picture of threat
and environment can be obtained
...

The preparation of ETOP involves dividing the environment into different sectors and then analyzing the
impact of each sector on the organization
...
An example of the ETOP prepared for a two wheeler manufacturer
is given below:
Environmental
Sectors

Impact of each sector

Social

Customer prefers 2 wheeler to public Transport

Political

No Significant change

Economic

Growing affluence of urban consumer
...

The preparation of an ETOP provides a clear picture to the organization to know where it
stands with respect to the environment
...
The preparation of an ETOP provides a clear picture to the organization to know where it
stands with respect to the environment
...
A company after identifying various threats can use its judgments to place the threats in any
of the four cells in the following matrix:
72

Attractiveness

High
Low

Major Threat
Moderate Threat
Moderate Threat
Minor Threat
High
Low
Probability of Occurrence

The Opportunity Matrix
Similar to the threat matrix we have an opportunity matrix that the opportunities are placed according
to their attractiveness as given below:
Attractiveness

High
Low

Very Attractive
Moderate
Moderate
Less Attractive
High
Low
Probability of Occurrence

The Impact matrix
The impact of the trend on various strategies could be visualized using an impact matrix
...
The matrix enables us to have a consolidated view
of the impact on different strategies, which a firm may be following
...
To assess the degree and quality of impact of each trend on different strategies a
five-point impact scale could be used
...

19
...
A firm’s strategy
determines the path that it takes towards its goals and objectives
...
Hence, generating strategic alternatives and making a
strategic choice form the crux of the strategic planning process
...
It forces strategic mangers to create growth as well as
retrenchment strategies
...

In the Opportunities (O) block, list the external opportunities available in the company’s or business
unit’s current and future environment
...
In the Strengths (S) block, list the specific areas of current and
future strengths for the company or the unit
...

Generate a series of possible strategies for the company or the business unit under consideration based on
particular combinations of the four sets of strategic factors
...

ST Strategies consider company’s or unit’s strengths as a way to avoid threats
...

WT Strategies are basically defensive and primarily act to minimize weaknesses
...

20
...
It was originated by Drs
...

The balanced scorecard is a full strategic planning and management system
...
It provides a
framework that not only provides performance measurements, but helps planners identify what should be
done and measured
...

The balanced scorecard uses traditional financial measures like ratios, ROI etc to measure performance
...

The components of Balance Score Card are graphically shown below:

The balanced scorecard views the organization from four perspectives, and to develop metrics, collect
data and analyze it relative to each of these perspectives
...
In a knowledge-worker organization,
people are the main resource
...
Companies often find themselves
unable to hire new technical workers, and at the same time there is a decline in training of existing
employees
...

The Business Process Perspective: This perspective refers to internal business processes
...
These metrics have to be
carefully designed by those who know these processes
...
Mission oriented processes are the special functions of the corporation, and many unique
problems are encountered in these processes
...

The Customer Perspective: Recent management trend has shown an increasing realization of the
importance of customer focus and customer satisfaction in any business
...
Poor
performance from this perspective is thus a leading indicator of future decline, even though the current
financial picture may look good
...

The Financial Perspective: the balance score card does not disregard the traditional need for financial
data
...
With the implementation of a corporate database more of the processing can be
centralized and automated
...
There is a need to include additional financial-related data, such as risk
assessment and cost-benefit data, in the finance category
...
It is developed on the lines of
some key concepts of Total Quality Management (TQM), including customer-defined quality,
continuous improvement, employee empowerment, measurement-based management and feedback
...
This
creates a “double-loop feedback” process in the balanced scorecard
...
So metrics must be developed based on the
priorities of the strategic plan, which provides the key business drivers and criteria for metrics that
managers most desire to watch
...
Decision makers examine the
outcomes of various measured processes and strategies and track the results to guide the company and
provide feedback
...
Focus limited organizational resources
to chosen market segments
...


3

Determine performance gaps (external
perspective)

By asking customers how we are meeting their needs we
can identify our performance gaps
...
High importance and low
performance is the basis
...


6

Establish process improvement (PI)
priorities (internal perspective)

Identify internal processes that drive the most important
customer needs to set PI priorities

7

Establish metrics and goals for the
process improvement priorities - the
BSC

Define process output metrics and relate them to internal
performance metrics
...


9

Reassess strategy

Check the results and take corrective actions on
continual basis
...
Explain the concept of technological myopia
...
The creation, development and application of technology are
major forces, which make organizations successful
...
Therefore technology and its absorption are
important sources of competitive advantage
...
This inability of the strategic manager is
called technological myopia
...
In both cases their strategic managers did not
see the emerging technological as well as the business discontinuities and changes associated with them
...
In both cases the strategic managers
were asked to resign
...
The external variables are: technological progress, technology life cycle, product life cycle
and competitive dynamics
...

The interpretation and assessment of the external and internal variables help strategic management
choose the firm’s technology strategy by:
• forecasting the future technological direction
• diagnosing the organization’s present technological aggressiveness,
• determining the organization’s future technology gap
• designing actions and priorities for future technology development
Strategic managers need to seek advice especially from outside the firm in order to:
• examine the existence of technological myopia of the firm’s technologists, and
• understand and get an unbiased view of the future technology developments in the firm’s industry
There are three major areas that strategic managers focus on while addressing issues in managing firms’
technology:
• Identification of future technologies and their impact on their organization’s environment;
• Assessment of the firm’s internal technology capability
• Integration of technology in the organization’s strategy
One of the tools that strategic managers can use to determine an organization’s future technologies is a
technology surveillance system
...
This is accomplished by
identifying and assessing trends, opportunities, discontinuities and threats of the organization’s future
environment
...
This system helps determine the intensity of technology
innovation and its relative importance to the organization and the organization’s future technology
environment
...

Strategic managers could identify the strength of the firm’s technological capability by assessing the
existence of a gap between the future technology turbulence and the organization’s technological
capability
...


********************************************************************************

79

Unit-4

Strategy Implementation and Evaluation
The implementation process, Resource allocation, Designing organisational structure-Designing
Strategic Control Systems- Matching structure and control to strategy-Implementing Strategic
Change-Politics-Power and Conflict-Techniques of strategic evaluation & control-case study
...
This chapter examines how managers can best implement their strategies through
their organization‟s structure and culture to achieve a competitive advantage and superior
performance
...

Strategy Implementation through Organizational design:
The implementation of strategy involves three steps:

Basics of designing organization structure:
The following basic aspects which require a strategist‟s attention while designing structure

Span of control:
Span of control means the number of subordinate‟s manager controls
effectively
...


on

Integration and Integrating Mechanisms:
Much coordination takes place among people, functions
and divisions through the hierarchy of authority, often however as a structure becomes complex,
this is not enough and top managers need to use various integrating mechanisms to increase
communication and coordination among functions and divisions
...

Three kinds of integrating mechanisms:

Designing Strategic Control Systems:
Introduction:
Strategic control systems provide managers with required information to find out
Whether strategy and structure move in the same direction
...

Steps in Strategic Control process:
 Establish standards and Targets
 Create Measuring and monitoring systems
 Compare Actual with targets
 Evaluate and take corrective actions
Levels of control:
 Corporate level managers
 Divisional level managers
 Functional level managers
 First level managers
Types of control system:
 Personal control

81



Behavior control

Organizational power and Politics:
Organizational power:
The organizational power is the ability to influence people or things
usually obtained through the control of important resources
...

Sources of power
 Ability to cope with uncertainty
 Centrality
 Control over information
 Non-substitutability

 Control over resources
Organizational Conflict:
Conflict may be defined as a situation when the goal directed behavior of
one group blocks the goal directed behavior of another
...
The time gap between
strategy formulation and implementation is the major reason for these assumptions turned out
to be invalid
...
New
Business Models and strategies for Internet Economy-case study

Strategic Issues in Managing Technology and Innovation
The strategic issues in managing technology and innovation and their influence on
environmentalscanning, Strategy formulation, Strategy implementation, Strategy evaluation
and control are worth studying from the perspective of strategists in modern organization
...

Environmental scanning:
External scanning
Impact of stakeholders on innovation
Lead users
Market Research
New product Experimentation
Internal scanning
Resource allocation issues
Time to Market Issues:
The new product development period is again a crucial issue
...
Shorter the period, more beneficial for the company
...

84

Strategy Formulation:
The following crucial questions are raised in strategy formulation
Is the firm a leader or follower in respect of R&D strategy?
Should we develop our own technology?
Or should we go for technology outsourcing?
What should be the mix of basic and applied research?
Technology sourcing:
There are two methods for acquiring technology
...
In-house R&D capability is one method and tapping the R&D capabilities of
competitors, suppliers and other organizations through contracts is another choice available for
companies
...

Minority investments in innovative firms
...
Outsourcing of
technology will be suitable under the following conditions
...

Strategy Implementation:
To develop innovative organizations deployment of sufficient resources
and development of appropriate culture are crucial at all stages of new product development
...
“Diffusion of Innovation” observes that an
innovative organization has the following characteristics
...

According to Gifford Pinchot an intrapreneur is a person who focuses on innovation and
creativity and who transforms and dreams of an idea into a profitable venture by operating within
the organizational environment
...

Evaluation and control:
The purpose of research is to gain more productivity at a speedy rate
...

Improving R&D:
The following best practices can be considered as benchmark for a company‟s R&D
activities
...

Investments are made in order to develop multinational R&D capabilities to tap ideas
throughout the world
...

New Business models and strategies for the Internet Economy
INTERNET ECONOMY:
The internet economy is an economy is based on electronic goods and
services produced by the electronic business and traded through electronic commerce
...
An internet economy differs
86

from a traditional economy in a number of ways, including communication, market
segmentation, distribution costs and price
...
Impact on external industry environment
2
...
Creates new driving forces and key success factors
4
...
Impact on internal company environment
6
...
toward valuable resource strengths or threatening weaknesses
8
...

Characteristics of Internet Market Structure:
Internet is composed of
1
...
Banks of servers and high speed computers
3
...
Telecommunications equipment and lines
Strategy-shaping characteristics of the E-Commerce Environment
Internet makes it feasible for companies everywhere to compete in global markets
...
Strategic initiatives
of existing rivals and by entry of new, enterprising e-commerce rivals
...
Makers of specialized communications components and equipment
2
...
Suppliers of computer components and hardware
4
...
E-Commerce enterprises
Overview of E-Commerce Business Models and Strategies:
Business Models: Suppliers of communications Equipment:
1
...

87

2
...
Produce a good return on investment
4
...
Several competing technologies for various components of the internet infrastructure exist
6
...
Invest aggressively in R&D to win the technological race against rivals
2
...
Acquire other companies with complementary technological expertise
4
...
Business models based on profitably selling selling services for a fee-based on a flat rate per
month or volume of use
2
...

3
...
Provide high speed internet connections using new digital line technology
2
...
Bundle local telephone service, long distance service, cable TV service and Internet access
into a single package for a single monthly fee
Business Models: suppliers of Computer Components and Hardware:
Traditional business model is used-Make money by selling products at prices above costs
Strategic approaches
Stay on cutting edge of technology
Invest in R&D
Move quickly to imitate technological advances and product innovations of rivals
Key to success- Stay with or ahead of rivals in introducing next-generation products
Competitive advantage will most likely be based on strategies key to low cost
Business Models: Developers of Specialized E-Commerce Software
Business model involves
Investments in designing and developing specialized software
88

Marketing and selling software to other firms
Profitability hinges on volume
Strategic approaches: Sell software at a set price per copy
Collect a fee for every transaction provided by the software
...

Business Models: E-Commerce Retailers:
Sell products at or below cost and make money by selling
advertising to other merchandisers
Use traditional model of purchasing goods from
manufacturers and distributors, marketing items at a web
store
Filling orders from inventory at a warehouse
Operate website to market and sell product/ service and
outsource manufacturing, distribution and delivery activities
to specialists
...

Be a first-mover or at worst on early mover
Pay consideration attention to website attractiveness to
89

generate “buzz” about the site among surfers
Keep the web site innovative, fresh, and entertaining
Key Success Factors: Competing in the E-Commerce Environment:
Employ an innovative business model
Develop capability to quickly adjust business model and
strategy to respond to changing conditions
Focus on a limited number of competencies and perform a
relatively specialized number of value chain activities
Stay on the cutting edge of technology
Use innovative marketing techniques that are efficient in
reaching the targeted audience and effective in stimulating
purchases
Engineer an electronic value chain that enables
differentiation or lower costs or better value for the money
...

Sources of Revenue:
Profit making organization (Sales of goods or services)
Not for profit organization (Sponsor or donations)
Constraints in Not-for-profit organization:
Service is intangible in nature
...

The sponsor mainly donate the fund for not for profit organization
the professional people is going to join
Restraints on the use of rewards and punishments
...

They don’t know how to frame strategy
...

Problems in Strategy implementation:
The problem in decentralization
Links in internal external
Rewards and punishment
...
Define Strategy:
Strategy is an action that managers take to attain one or more of the organization’s goals
...
Strategy results from the detailed strategic planning process”
...

Strategy can also be defined as knowledge of the goals, the uncertainty of events and the need to
take into consideration the likely or actual behavior of others
...

2
...


91

A mission statement is a statement of the purpose of a company or organization
...
It provides "the framework or context within which the company's strategies are formulated
...
Mention the five forces in Michael E Porter Model
...


4
...
Achieving competitive advantage strengthens and positions a business
better within the business environment
...
There can be many types of competitive
advantages including the firm's cost structure, product offerings, distribution network and customer
support
...
What is Stability strategy?
A firm is said to be following a stability strategy if it is satisfied with the same consumer
groups and maintaining the same market share, satisfied with incremental improvements of
functional performance and the management does not want to take any risks that might be associated
with expansion or growth
...
Mention the 7s in Mckinsey framework
...
What is power and conflict?
Definition: Power is the time rate at which work is done or energy is transferred
...
The SI unit of power is the watt (W) or
joule per second (J/s)
...

Conflict: A battle, contest of opposing forces, discord, antagonism existing between primitive
desires and instincts and moral, religious, or ethical ideals
...
Conflict is
almost always accompanied by feelings of anger, frustration, hurt, anxiety, or fear
...
Conflict management requires such skills as effective communicating, problem
solving, and negotiating with a focus on interests
...
What is organizational Structure?
Explicit and implicit institutional rules and policies designed to provide a structure where
various work roles and responsibilities are delegated, controlled and coordinated
...
In a
centralized structure, decisions flow from the top down
...

An organizational structure is the pattern or arrangement of jobs and groups of jobs within an organization
...

9
...


It is a particular generation of an organization's overall objective(s), principles and tactics relating
to the technologies that the organization uses
...
The strategy can
be implied from the organization's behaviors towards technology decisions, and may be written
down in a document
...

10
...


93

3
...
How will you develop a sustainable competitive advantage
for the company? Give example
...

Distinctive competence can lie in different area such as technology, marketing activities, or
management capability
...

It must be remembered that what distinctive competence of a firm may change with time as
other companies develop new capabilities and with change in market requirements
...

The concept of distinctive competence was first put forward by Philip Sleznick in 1957
...

The concept of distinctive competence is quite similar to the concept of core competence
...
K
...
One, it must be difficult to
copy or replicate by competitors
...


Distinctive competence is a set of unique capabilities that certain firms possess allowing
them to make inroads into desired markets and to gain advantage over the competition;
generally, it is an activity that a firm performs better than its competition
...
When management finds an internal strength that both
meets market needs and gives the firm a comparative advantage in the marketplace, that
strength is the firm's distinctive competence
...
Firms can possess distinctive
competence in a wide variety of areas, including technology, marketing, and management
...
In 1976, Howard H
...
He found that top managers had a wide
variation in perception of their own organization's strengths and weaknesses, and not
surprisingly, in their distinctive competencies as well
...
Unless a firm produces only one type of merchandise or service, it
must devise strategies at both the corporate and business levels
...
At the business level, strategy outlines the ways that a business will
compete in a given market
...

To devise corporate strategy, firm managers must consider a host of influences in their
surrounding environment that can affect the firm's ongoing operations as well as the internal
strengths and weaknesses that characterize the firm
...

The assessment must include an evaluation of current and projected market needs and an
evaluation of any existing comparative advantage over competitors
...
A firm's internal strengths and weaknesses make it better suited to
pursue some strategic paths than others
...
Further, it is important for managers to account for potential problems involved in
carrying out a strategy before they embark upon it
...
Once this assessment is complete, management must decide which
opportunities in the business environment to pursue and which ones to pass up
...

Obviously, many successful business strategies are built around a determined distinctive
competence
...
Logically, strengthening a competitive position is
made a great deal easier for a firm with one or more distinctive competencies
...
If
95

other firms in the marketplace do not have a similar or countervailing competence, they will
have a very difficult time remaining competitive
...

First, they identify the strengths and weaknesses of their firm
...
Then, they
analyze specific market needs and look for comparative advantages that they have over the
competition
...

Distinctive competence can be built in a number of ways
...

There are numerous areas in which a firm can have a distinctive competence
...

Other firms excel in technological innovation, research and development, or new product
introduction
...
For example, McDonald's distinctive competence is its system of
controls for operating its fast-food restaurant franchises, which gives the company an
unusually high profit margin
...
As defined earlier, distinctive
competencies are distinctive skills and capabilities firms can use to achieve an unusual
market position or to gain an advantage over the competition
...

It follows that if the environment changes such that numerous rivals have obtained
competencies identical to those characterizing a particular firm, the firm is in a very poor
position and would do well to reconsider its strategy
...

Thus, firms must continuously assess their surrounding environments
...

96

They should also look to new markets and evaluate the potential use of their distinctive
competencies in those markets
...

Through strategic planning and leadership, management will be able to determine how the
basis for competition may be changing and whether the firm's distinctive competencies need
to be realigned
...
Success in these changing conditions can only come from taking advantage of
opportunities highlighted by close scrutiny of a firm's internal and external environment
...


4
...


5
...


6
...

Strategic evaluation and control constitute the final step in strategic management process
...

Strategic Control:

97

Strategy formulation is based on assumptions about environmental and organizational factors which
are nebulous and dynamic in nature
...

The strategic controls serve as early warning system which facilitates continuous evaluation
...


Premise Control:
The purpose of premises control is to monitor regularly whether the assumption underlying a
strategy generated during the time of formulation is valid during implementation also
...
If these
assumptions are not valid, there is a need to change the strategy to make it effective
...


Strategic Surveillance
Premise Control
Special Alert Control
Implementation Control
Strategy Implementation
Strategy Formulation

Environmental Factors:
The business enterprise I usually influenced by economic, political, social, demographic,
technological, legal and cultural environment
...

Industry Factors: Every firm makes assumptions about industry structure and nature of
competition in it
...

98

The following steps are taken for effective premise control:
1
...
These key
premises are identified at the level of strategy formulation and may change during
implementation stage
...
Responsibility are assigned to employees for collecting required information with respect
to the key premises
...

3
...
For instance, when the
competitor assumes offensive strategy with respect to the firm’s new product launch, it is
preferable not to go for head-on competition but for indirect competition by changing
product positioning
...
Critically evaluate the match between strategy and structure
...


8
...


99



---