Professional Documents
Culture Documents
2
STRATEGY - DEFINITION
Economic
al
Fit Strategic Fit
Technological
Management
Finance
Fit
Operatio
Strategic
Political
HR
PoliticalIntent
Strategic
Fit
Political
Marketin
n
g
Fit Manageme Fit
nt
Social & 6
Cultural
STRATEGIC MANAGEMENT - FEATURES
It involves short-cuts.
It is about forecasting.
It is about a definite formula.
It attempts to minimize risk.
It brings instant success.
It about mere data and facts.
It involves nitty-gritty's.
It a bundle of techniques or even tricks.
It involves only the top management.
It is fool-proof in nature.
It is rocket science. 8
STRATEGIC MANAGEMENT -
IMPERATIVES
To be continuously alert.
To assimilate change faster.
To be future oriented.
To tap markets across boundaries.
To be insulated against environmental threats.
To leverage size, scale and scope.
To generate large resource pool.
To gain expertise in technologies.
To innovate, again and again …….
To be proactive, rather than reactive.
To develop core–competencies. 9
STRATEGY - ORIGIN
The word strategy has its origin from the Greek word
strategia meaning Military Commander. In the ancient days
battles were fought over land. In contrast, today's battles
are fought over markets.
In the ancient days battles were won not by virtue of size of
the army or armory; but by virtue of their courage,
obsession, and more importantly - strategies.
Even in today’s markets, battles fought on the market front
are won by companies by virtue of their obsession &
strategies, whose origin can be traced to some of the
greatest battles fought in the ancient days.
It is an old wine in a new bottle; but with a lot a rigour and
robustness.
10
SOME PARALLELS
13
ENVIRONMENTAL CHANGE
Prior to
3 1990 1950
onwards
Phase III: Range of Scenarios Phase II: Discrete Scenarios
1 2
1A
1
3 1B
2A
2 2B 1950 to
1970 to 1970
14
1990
APPROACHES TO STRATEGY
15
APPROACHES TO STRATEGY
17
APPROACHES TO STRATEGY
18
STRATEGIC MANAGEMENT -
PROCESS
Strategic Intent
Strategic Planning
Strategic Gap
– Environmental Scanning
– Internal Appraisal of the Firm
Strategy Formulation
– Corporate Strategy
– Business Strategy Strategic Choices
– Functional Strategy
Strategy Implementation
Strategy Performance
Strategy Evaluation & Control 19
TOP MANAGEMENT PERSPECTIVE
20
STRATEGIC INTENT
21
STRATEGIC INTENT - HIERARCHY
Visio
Integrativ n Single
e Mission
Dominant
Objective
Do
s
m
g ic
in
Goal Man
an
Specifi
Lo
s y
t
c
Plans
22
DOMINANT LOGIC
23
VISION
24
VISION - CHARACTERISTICS
27
MISSION – SOME IDEAS
28
GOALS & OBJECTIVES
29
PLANS
30
STRATEGIC DRIFT
31
STRATEGIC DRIFT FRAMEWORK
Environmental Change
Radical Change
Strategic Change
Degree of change
Incremental Change
Stage of Atrophy
Time 32
ORGANIZATIONAL POLITICS
35
IMPLEMENTING INCREMENTALISM
38
ENVIRONMENTAL CONDITIONS
Dynamic
Scenario Learning
Planning Organization
Static
Forecasting Decentralization
Simple Complex 39
ANALYZING
BUSINESS ENVIRONMENT
40
PLANNING & STRATEGIC PLANNING
43
PESTEL FRAMEWORK
44
PESTEL FRAMEWORK
46
DISCONTINUITY
Hyper Competition
– MNC’s - Globalization
– Cheap Imports & Dumping
– Push to Pull Marketing
Buyers exacting demands
– Shortage to surplus – Price competition
– Life-style changes
– Stress on quality, Consumerism
Challenges on the technology front
– Competencies become technology based
– Investment in R&D become inescapable
48
DISCONTINUITY
Bargainin
Bargainin Competition gBargainin
power
g power from Existing ofg power
of Players of
Suppliers
Suppliers Customer
s
Threat of Substitutes
50
FIVE FORCES MODEL -
ASSUMPTIONS
52
PORTERS FIVE FORCES ANALYSIS
53
FIRM ENVIRONMENT
54
EXPERIENCE CURVE
55
EXPERIENCE CURVE
Cost per unit of output
Decreases at an increasing
rate
Point of inflexion
Production / Volume 56
EXPERIENCE CURVE - TRADITIONAL
VIEW
Efficiency = Lower Costs
2
1 3
Experience = Efficiency Lower Costs = Higher Sales
Experience = Inertia 3
1 Limited Growth = Diversification
Opportunities
Nullify weaknesses which
prevents you from Leverage strengths to make
exploiting opportunities use of opportunities
61
SOURCES OF WEAKNESSES
62
SOURCES OF OPPORTUNITIES
63
SOURCES OF THREATS
selectively.
PIMS - LIMITATIONS
69
CORPORATE - GRAND STRATEGY
Corporate Strategy
Stability
Stability Growth
Growth Combination Divestment
Intensification Diversification
Related Unrelated
Vertical Horizontal 71
STABILITY
Market Market
Penetration Development
(+) (++)
Product Diversificatio
Development n (+++)
(++)
involved.
MARKET PENETRATION
74
MARKET DEVELOPMENT
75
PRODUCT DEVELOPMENT
76
DIVERSIFICATION
77
HOW DIVERSIFICATION REDUCES
RISK?
78
DIVERSIFICATION STRATEGY
80
HORIZONTAL INTEGRATION
Reliance Capital
Reliance
Reliance Industries Reliance Ports
Infrastructure
Reliance Power
81
VERTICAL INTEGRATION
82
VERTICAL INTEGRATION
Naptha-cracking
Acetic Acid
Paraxylene (PX)
(PTA) (MEG)
Purified tetra-pthalic Mono-ethylene glycol
acid
Polyester Filament Polyester Staple Fibre
Yarn (PFY) (PSF)
Textiles 83
DIVERSIFICATION SUCCESS ?
84
QUASI & TAPERED INTEGRATION
85
A CASE OF TAPERED INTEGRATION
Zero Ownership
Component Component
s s
Components
Full Ownership
Partial
Ordinary
Ownershi
p
Transmission
89
DIVESTMENT - ROUTES
90
COMBINATION STRATEGY
92
STRATEGIC CHOICE
93
SELECTIVITY IS THE KEY
94
BUSINESS GROUP - DEFINITION
Parent Company
Firm 1 Firm 5
Firm 3
Firm 2 Firm 4 96
STRATEGIC CHOICE – MACRO TIMING
Recession
(Stability)
Prosperity
(Diversificatio
n)
Depression
(Divestmen
t)
Recovery
(Intensification
)
97
STRATEGIC CHOICE – MICRO TIMING
Re-
Engineering
Maturity -
Growth (%)
Stability
Decline - Divestment
Growth -
Diversification
Duration (Yrs)
Inception -
Intensification 98
PORTFOLIO ANALYSIS
High Low
High
?
Industry Growth
101
BUSINESS ANALYSIS – TATA GROUP
102
BCG - LIMITATIONS
103
GE - MATRIX
Distinctive Capabilities
Strong Medium Weak
High
Competitive Position
Strong Improve
Tenable Niche
Market Generate
Strong Growth
Leadership Cash
Try Phased
Custodial
Average Harder Withdrawal
Double
Phased
Or Expand Divest
Withdrawal
Weak Quit
106
TERMINOLOGIES
107
BUSINESS STRATEGY
&
COMPETITION
108
COMPETITIVE STRATEGY
110
PORTERS – COST LEADERSHIP
113
COMPETITIVE POSITIONS
Competitive Advantage
Cost Differentiation Product Differentiation
Competitive Scope
Broad
Product
Cost Leadership
Differentiation
(Toyota)
(General Motors)
Narrow
Differentiation
Cost Focus
Focus
(Hyundai)
(Mercedes)
114
HYBRID STRATEGY
115
STUCK IN THE MIDDLE
116
EMERGING INDUSTRY
117
GROWTH / FRAGMENTED INDUSTRY
118
MATURED INDUSTRY
120
COMPETITIVE STRATEGIES
121
RESOURCE BASED VIEW
122
CAPABILITIES & COPMPETENCIES
124
COMPETITIVE ADVANTAGE
127
THE VALUE CHAIN
Infrastructure
Support
M
Human Resource Management
ar
gi
Technology Development
n
Procurement
Out Logistics
Service
Operations
In Logistics
Primary
n
gi
ar
M
128
STRATEGIC FIT – THE PORTER WAY
Use Radio +2 +7
Use Newspaper +6 -4
Use Radio +3 +7
Use Newspaper +1 -2
134
Firm X’s Pay-Off Matrix
TYPES OF GAMES
135
CHANGING THE RULES OF THE GAME
137
THE THREE STRATEGIC POSITIONS
System Lock-In
System Economics
Market Dominance
Complementary Share
Enabled through
effective use
of technology
141
STRATEGY IMPLEMENTATION
142
IMPORTANCE OF STRATEGIC FIT
144
ROLE OF TOP MANAGEMENT
145
RESOURCE ALLOCATION
146
CAPABILITIES & COMPETENCIES
147
STRATEGY & STRUCTURE
148
TYPES OF STRUCTURES
149
FACTORS INFLUENCING STRUCTURE
150
INERTIA
STRATEGY CONTROL
156
BACKGROUND & ORIGIN
157
THE 7’S
158
STRATEGIC FIT
Strategy
Structure Systems
Shared Values
Skills Style
Strategic Alliance
Joint Venture
167
WHY MANAGEMENT TOOLS?
168
BENCHMARKING
169
SOME BEST PRACTICES
170
TYPES OF BENCHMARKING
Phase 1: Planning
– What to benchmark? Whom to benchmark?
– Identify key performance indicators & Data source.
Phase 2: Analysis
– Assessment of performance gaps.
– Predict future performance levels.
Phase 3: Integration
– Communicate findings and gain acceptance.
– Establish functional goals and its implementation.
Phase 4: Action
– Implement and monitor progress.
– Measure results against stakeholder wants and needs.
– Recalibrate or outperform benchmarks.
172
WHOM TO BENCHMARK?
Micro Vs Macro
Focus
Business Processes Vs Organisational Processes
Innovative Vs Traditional
Performance
Customer centric Vs Organisational centric
177
REENGINEERING - LEVELS
178
REVERSE ENGINEERING
179
STAGES IN REVERSE ENGINEERING
186
BSC – KAPLAN & NORTON (1992)
GOALS MEASURES
GOALS MEASURES
GOALS MEASURES
GOALS MEASURES
192
BSC - IMPLEMENTATION
1
2
Mobilize change through
Translate strategy into effective leadership
operational terms
3 4
Align the organization Make strategy
to the strategy everyone’s job
193
BSC - ADVANTAGES
Ineffective Effective
Inefficient
Goes out of
Business Survives
quickly
Efficient
Dies
Thrives
Slowly
195
EFFECTIVENESS + STRATEGY
196
CORPORATE
RESTRUCTURING
197
CORPORATE RESTRUCTURING
198
RESTRUCTURING – BASIC TENETS
200
MOVING CLOSER TO THE CUSTOMER
202
HIVE OFF
203
DIVESTITURE
204
CAPITAL RESTRUCTURING
205
BUSINESS RESTRUCTURING – TATAS
Divestments Diversifications
Lakme – Rs. 256 cr Tata Motors – Rs. 1700 cr
ACC – Rs. 950 cr Trent – Rs. 120 cr
Merind - Rs. 42 cr Tata AIG – Rs. 250 cr
Tata Timken – Rs 120 cr Tata Telecom – Rs. 1170 cr
Voltas - Rs. 230 cr Tata Tetley – Rs. 1890 cr
Goodlass Nerolac – Rs. 99 cr Tata Power – Rs. 1860 cr
CMC – Rs. 150 cr
VSNL – Rs. 1439 cr
206
ORGANIZATIONAL RESTRUCTURING
207
STRATEGIC CHANGE
208
FORCES AGAINST STRATEGIC
CHANGE
210
FORCE-FIELD ANALYSIS
211
RESTRUCTURING - OUTCOMES
Emphasis on Higher
strategic control performance
Business
High debt Higher
costs risk 212
NUMERATOR & DENOMINATOR MGT
214
WHY TURN AROUND MANAGEMENT?
Success
Equilibrium Line
Failure
Nadir
Indeterminate
Time
219
DECLINE
221
RESPONSE DICHOTOMY
222
TRANSITION
223
OUTCOME
225
COOPERATIVE STRATEGIES
226
FRANCHISING
228
CONSORTIA
229
SUPPLY CHAIN PARTNERSHIP
234
MANAGING ALLIANCES
Alliances are more than just a deal; instead of focusing controlling the
relationship, partners should nurture it.
Selection & Courtship – It involves self analyzing, understanding the
chemistry, degree of compatibility.
Getting Engaged – It should incorporate a specific joint activity; vows
to include commitment to expand the relationship; incorporating clear
signs of continuing independence for all partners.
Setting up the housekeeping, the value chain.
Learning to collaborate – strategic, operational & cultural integration.
Changing within; differences not anticipated earlier.
235
JOINT VENTURE
237
OTHER MOTIVES
238
RISKS INVOLVED
239
PRE-REQUISITES FOR SUCCESS
240
MERGERS
&
ACQUISITION
241
MERGERS & ACQUISITION
244
TYPES OF MERGERS
245
MERGERS & ACQUISITION - MOTIVES
246
MERGERS & ACQUISITIONS -
PITFALLS
247
MERGER TYPE & PLC
248
INTERNATIONAL M&A - FRAMEWORK
252
VALUING FINANCIAL SYNERGY
Co-Insurance Effect – If the cash flows of the two firms are less than
perfectly correlated, the cash flow the merged firm will be less variable
than the individual firms. This will induce higher debt capacity, higher
leverage, hence better performance.
The likelihood of default decreases when two firms' assets and
liabilities are combined through a M&A compared to the likelihood of
default in the individual companies. It relates to the concept of
diversification, as risky debt is spread across the new firm's operations.
– Default risk comes down and credit rating improves.
– Coupon rates may also be negotiated at lower rates.
254
VALUING CORPORATE CONTROL
255
LEVERAGE BUYOUT (LBO)
257
RATIONALE FOR HIGH LEVERAGE
258
EFFECT OF HIGH LEVERAGE
259
REVERSE MERGER
260
EFFECT OF TAKE-OVER
ANNOUNCEMENT
261
EFFECT OF TAKE-OVER
ANNOUNCEMENT
264
COMPETING FOR
THE
FUTURE
265
GETTING OFF THE TREADMILL
266
THE PAST OF COMPETITION
268
THE FUTURE OF COMPETITION
269
ABOUT THE DREAM
A company must get to the future not only first but also
for less. What does it take to get to the future first?
Understanding how competition for the future is
different.
A process for finding and gaining insight into tomorrows
opportunities (Eg. Toshiba – LCD; South West Airlines –
LCC, Apple – iphone). It requires a lot of common sense
and a little bit of out of the box thinking.
An ability to energize the company.
Get to the future first, without taking undue risk.
Companies need to strategize (think ahead of times).
Apply the 40 – 30 – 20 principle.
273
HOW DOES THE FUTURE LOOK LIKE?
There is no rule which says that for every leader there will be a
follower. As there is no one future; but hundreds.
We are in the midst of a 3600 vacuum; each point in space
represents a unique business opportunity. The farther one can see
in this endless space, the farther it will be away from competition.
Companies of the future will be not based so much on the
strength of their resources, as on their aspirations.
What distinguishes a leader from a laggard; greatness from
mediocrity, is the ability to imagine in a different way what the
future could be.
274
THE EMERGING STRATEGY
PARADIGM
Unlearning
Curve
P2: Unlearning in previous period does not
necessarily ensure learning in the current period.
Learning
Curve
t1 t2 t3 t4 t5
277
Time
CORE COMPETENCE
278
MORE ABOUT CORE COMPETENCE
279
ROOTS OF COMPETITIVENESS
End 1 2 3 4 5 6 7 8 9 10
Products
Core Product 2
Core
Products
Core Product 1
Core
Competence Competence Competence Competence
Competencies
1 2 3 4 280
RESOURCE STRETCH & LEVERAGE
282
ACCUMULATING RESOURCES
283
COMPLEMENTING RESOURCES
284
CONSERVING RESOURCES
285
RECOVERING RESOURCES
286
INTERNATIONAL
BUSINESS ENVIRONMENT
287
EMERGING MARKETS
288
DIVERSITY - PERFORMANCE (I)
Strategic Fit
Risk diversification,
conglomerate power
291
GLOBAL BUSINESS ENVIRONMENT
292
GLOBAL BUSINESS ENVIRONMENT
293
GLOBAL BUSINESS ENVIRONMENT
303
INNOVATION
304
TYPES OF INNOVATION
305
BUSINESS MODEL
306
NINE BUILDING BLOCKS
307
BUSINESS MODEL FRAMEWORK
308
REVENUE MODEL
309
HOW TO MAKE INNOVATIVE CO’S
310
HOW TO PROTECT INNOVATION?
311
311
CORPORATE GOVERNANCE
312
312
AGENCY THEORY
313
ORIGIN & CONTEXT
316
316
GOVERNANCE STRATEGIES
318
SHAREHODER – STAKE HOLDER
THEORY
319
CORPORATE SOCIAL
RESPONSIBILITY
320
GROWING CONCERN FOR CSR
321
CSR STRATEGIES
322
BOTTOM OF THE PYRAMID
323
BLUE OCEAN
STRATEGY
324
MARKETSPACE - TWO WORLDS
325
WHAT IS RED OCEAN?
Make the value-cost trade off Break the value-cost trade off
BLUE OCEAN - IMPLEMENTATION
Reduce
Which factors
to be reduced
below the industry
standard
Eliminate Create
Which of the industry
factors that the industry VI Which factors should be
created that the
takes for granted industry has not
should be eliminated offered
Raise
Which of the factors
should be raised above
the industry’s standard 331
IMPLEMENTATION SEQUENCE
334