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Strategic Management
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A central objective of strategic management is to learn why this happens. An action a company takes to attain superior performance. In this context it means allocations of resources. Resources may be same but if they are combined in different ways some get superior performance; some get ordinary performance. Strategic Management studies the ways to make superior performance. The process by which managers choose a set of strategies for the enterprise to pursue its vision.
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What's the use of running if you are not on the right road- German proverb If you do not know where you come from, you do not know where you stand, if you do not know where you stand, you do not know where you go- Chinese Proverb To run in a right road to reach your destination is strategy.
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However beautiful the strategy, you should occasionally look at the results -Sir Winston Churchill 1874-1965, English statesman Do not repeat the tactics which have gained you one victory, but let your methods be regulated by the infinite variety of circumstances -Sun Tzu c. 490 BC, Chinese
military strategist
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Sam Walton started it in the year 1962. For the fiscal year ending January 31, 2011, WalMart reported a net income of $15.4 billion on $422 billion of revenue with a 24.7% gross profit margin) Net profit margin3.78% Operating margin6.05% EBITD margin-7.87% Return on average assets-9.09%R Return on average Equity22.09% Employees2,100,000
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Location Information systems Logistics Human Resources Practices; Empolyee stock options at a discounted price to that of market price Bar code technology and checkout scanners Shifting unsold stock EDLP Low Prices from Suppliers- Information to Suppliers
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Walmart (WMT)
Target (TGT)
Costco (COST)
Revenue Growth Avg. Gross Margin Operating Margins Net Margin Dividend Growth EPS Growth FCF Growth Payout Ratio Cash Payout Ratio Share BuyBacks Current Ratio Book Value Total Debt / Equity Avg. Return on Equity Avg. Cash Return on Capital 5 Year Avg. Low p/e Current p/e (ttm) Current p/e (forward)
8.57% 23.83% 5.83% 3.4% 18.11% 11.28% 29.4% 29% 30.05% -3.57% 0.87 $18.81 0.52 20.77% 6.25% 14.01 14.8 13.29
6.51% 32.58% 7.51% 4.27% 13.03% 10.07% N/A 20% 12.18% -4.65% 1.63 $20.33 0.75 18.89% 1.36% 12.39 16.68 14.04
9.28% 12.44% 2.72% 1.75% N/A 9.4% N/A 26% 19.86% -1.67% 1.16 $24.56 0.20 12.51% 6.31% 17.05 24.20 Strategic Management 21.22 8/10/2011
8.76% 33.87% 6.74% 4.25% 10.6% 10.02% 69.90% 23% 21.62% -5.7% 1.57 $10.41 0.18 19.62% 14.86% 11.79 16.38 13.76 110
http://www.youtube.com/watch?v=dp0O9jxLS64
You can see here the movie that projects the negative image about Wal Mart.
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Rated as the 50 fastest growing business to be observed in the world Started by IIT IIM graduate and Professionally managed. Ajim Premji Invested in the organization rama bijapurkar was in the board Ultimately left with lost of court cases and operations are closed across India.
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Do you know the from where the CEO of Big Bazar got his idea? It is from Saravan Stores in Chennai; Saravana Stores operates on EDLP Mode and everyone goes there for low prices with high quality. It has on thousand shops across India in 70 cities. Its formats are Its formats include; 1.Pantaloons 2.Big Bazaar-Indian hypermarket chain 3. Food Bazaar- which is a supermarket chain 4.Central, which is a chain of destination malls. 5.Brand Factory 6. Blue Sky 7. aLL 8.Star 9.Sitara. Read his book It happened in India.
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Dr.Devdutt Patnaik is an Atheist turned mythologist. He is the Chief Belief Officer at Future Group. He uses mythology to bring to life different aspects of corporate life. Future group looks for Duryodhanas in organization Definition of Duryodhana- Duryodhanas are employees who play by the rules but whose intentions and integrity are questionable.
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You need to be familiar with Geetha. Its focus is Do you work or Dharma and do not expect results! It is something quiet opposite to the market economics. How does it work in India with Globalization? It works! It worked wonders for Future group. The Concept of Dharma does have its roots in caste system; for time being we should suspend its painful impact on Indian society. However, the concept of Dharma has many good aspects and it has been accepted in Future group.
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Some of them are internalized in the Indian psyche. Athidi Devobhava- Guest is the God. Anna data sukibhava The person who gives food should always be great. (Comments are by me) Think on these lines and give your ideas.
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Retail is our religion. Customers are our gods. The stores are our temples. In every temple, there are rituals, there are customs. We have to enshrine customers as our gods in our minds. Devdutt will dip into Indian mythology and help us create these rituals, symbols and vocabulary, says Biyani, who, in his own words, is a borderline atheist who has neither prayed since his early teens nor visited a temple. But that does not stop him from understanding or harvesting the power of mythology in a country where there is an auspicious time, method and place for doing everythingwaking up, bathing, marrying and even dying.
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Take the Kartha ceremony the group has put in place. Kartha in Sanskrit means creator or the head of a family. Every time somebody is hired to head a Future Group store, he or she is anointed as a Kartha. That does not just translate to a fancy designation on a rectangular visiting card. Its much more. We seat the Kartha on a chair and all the employees stand around him. His family memberswife, siblings and parentsare invited to the ceremony. His boss reads him out his duties as a Kartha, which is to ensure the welfare and happiness of employees and customers, - Sanjoy Jog, Chief People Officer, Future Group.
It just aligns the mind of the person who has all these aspects ingrained in him. Question: Do we have neurological basis for this? Read the book Habit: the 95% of Behavior Marketers Ignore
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They demacdonandized the retailing in India. Example: No women in north India likes a person to put saree on her shoulder to see herself in the mirror. However, it will be a cutomer delight in Tamilnadu for a women to see the saree being put on her shoulder. Same country two strategies to meet customer needs. Can you imagine single largest retails stores in the world to have highest trunover? It is Nalli Silks. ( We will study Nalli case study soon)
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Biyani has great intuition about the intuitive sense of India. What I have is a vocabulary. We clicked because our understanding of Indian-ness matched, says Pattanaik, who believes that Indian businesses are aping the west by putting too much emphasis on processes over intuition and culture. You cannot standardise a smile. We cannot and should not have standard operating proceedures for something which should be natural.
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Subhisha had the same access towards resources as future group. However, Future Group used it differently. It brings out the difference between resources and resourcefulness. Coke formula was sold by Pemberton for 2300$ and died as a papuer in Atlanta; Presently its brand value is 150 billions!
( Please read http://www.slideshare.net/kprabhakar975/differencebetween-2300116billion-entrepreneurship )
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655 VS552 VS 347 Air Craft South West Airline Model (Low cost Model) Revenue Management Model ( British Airways later poineered by American Airlines ) Indian Airlines
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Strategy is a set of related actions that managers take to increase organizations performance. If it results in superior performance to that of its rivals it is said to have competitive advantage. Example: Wal Mart, American Airlines, Airtel
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What is a strategy? How to create strategies that lead to superior performance? How to implement? How you have to relate to the environment? Why strategy?
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Unless a variety of opinions are laid before us, we have no opportunity of selection, but are bound of necessity to adopt the particular view which may have been brought forward
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SMP is the process by which managers select and then implement a set of strategies that aim to achieve a cometitive advantage. Strategy formulation is selection of strategies Strategy implementation is the task of putting strategies in to action; it includes designing; delivering; and supporting products; improving efficienty and effectiveness of organiztions; desinging organizational structure; Control systems and culture.
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Strategy
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Mission
Sets out why the organization exists and what it should be doing from point of view of customer.
Major goals
Specify what the organization hopes to fulfill in the medium to long term.
Objectives
Are objectives to be attained that lead to superior performance.
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Perception is strong and sight is weak. In strategy it is important to see distant things as if they were close and to take a distanced view of close things.Miyamoto Musashi 1584-
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Identify strengths
Quality and quantity of resources available Distinctive competencies
Identify weaknesses
Inadequate resources Managerial and organizational deficiencies
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Cost leadership
Attaining, then using the lowest total cost basis as a competitive advantage; Example of Intel
Differentiation
Using product features or services to distinguish the firms offerings from its competitors;Apple Computers
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Vertical integration Diversification Strategic alliances Acquisitions New ventures Business portfolio restructuring
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In real life, strategy is actually very straightforward. You pick a general direction and implement like hell-Jack Welch in Winning, 2005
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The only constant is change. Success requires adapting strategy and structure to a changing world.
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General managers
Responsible for the overall (strategic) performance and health of the total organization.
Operations managers
Responsible for specific business functions or operations.
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Vision, eloquence, and consistency Commitment to the vision Being well informed Willingness to delegate and empower Astute use of power Emotional intelligence
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Accidental discoveries and happenstances can have dramatic effects on strategic direction.
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FIGUR 1.3
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FIGURE 1.4
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Recognition of the static nature of the strategic fit model Strategic intent in focusing the organization on winning by achieving stretch goals
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Cognitive biases systematically influence the rationality of decision makers;Psychologists have articulted more than fifty cognitive biases.
FIGURE 1.5 ( Adopted from Strategic Mangement by Hill and Jones, 2009 e )
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I claim not to have controlled events, but confess plainly that events have controlled me- Abraham Lincoln 1809-1865, sixteenth
American president
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Pitfalls of groupthink
Failing to question underlying assumptions. Coalescing around a single person or policy. Filtering out conflicting information. Developing after-the-fact rationalizations. Having an emotional (nonobjective) commitment to an action.
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FIGURE 1.6
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How to create strategic alternatives How to select alternative that is most suitable for organization Implement the strategies that will help the stakeholders to maximise their wealth.
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