Professional Documents
Culture Documents
STRATEGIC
focusing on one or two businesses? Are these the right questions? Where do we want to be 3 years from now? How do we bridge the gap between our resources and our goals? Who are our competitors today? What is the competitive framework in which we operate? What are the strategies being adopted by our competitors? The answers form the basis of strategyformulation
Marketing
HR
Finance
Functional Heads
Operations
companies Strategy Formulation : Mundane Activity Old Perspective : Reactive, follow the competitor Move New Perspective : Base strategy on your core competencies instead of the environment and the industry
competitive edge, You may not be able to emulate your competitors simply because you do not have the expertise to do whatever they are doing Do what you do well; the rest will just fall into place
Shifting the Focus of Strategy Analysis: From the External to the Internal Environment
THE FIRM Goals and Values Resources and Capabilities Structure and Systems
STRATEGY
Competitors Customers Suppliers
COMPETITIVE ADVANTAGE
STRATEGY
ORGANIZATIONAL CAPABILITIES
RESOURCES
TANGIBLE Financial Physical INTANGIBLE Technology Reputation Culture HUMAN Skills/know-how Capacity for communication & collaboration Motivation
In traditional approach companies tend to adopt similar strategy While core competency based approach implements a strategy that exploit a firms unique strength
Core Competency
There are two marketdriven tests to identify a core competence, and Jagmohan has ignored both: Should provide potential access to a wide variety of markets Should make significant contribution to the perceived benefits delivered by the product to the customer
Finance Structure
Marketing
Finance, for instance, is not really its strength. The company could increase its revenues by offering a more flexible credit-schedule to its customers. Its modular payment-schedule, while increasing the efficiency of its working capital utilisation, could well turn away potential customers, who wish to pay for a project only after it has been completed-or even 30 days later--and not in stages Most of the strengths listed by the senior management team are not core
Human Resource
competencies; they are merely positive attributes. Only those that result
in adding value from the customer's perspective, not the company's are core competencies. Understanding them should be the basis of strategy-development at Coolex
Traditional Approach
ORGANIZATIO N STRUCTURE
INDUSTRY STRUCTURE
STRATEGIC POSITION
TOOLS
Game Theory
STRATEGY
COMPETITIVE ADVANTAGE
Appraise competitive advantage Identify the firms capabilities Identify and classify firms resources
CAPABILITIES
RESOURCES
Roadmap
LONG TERM STRATEGY FOR SUSTAINABLE COMPETITIVE ADVANTAGE
STEP 1. Identify the firms resources and capabilities. STEP 2. Explore the linkages between resources and capabilities. STEP 3. Appraise the firm resources and capabilities in terms of (i) strategic importance (ii) relative strength
1 Relative Strength 10
Superfluous Strengths C1 R4 C6
Key Strengths C3 R3 R1 C2 C5 C2 R2 C4
Zone of Irrelevance 1
Key Weaknesses 10
Strategic Importance
Roadmap
LONG TERM STRATEGY FOR SUSTAINABLE COMPETITIVE ADVANTAGE
STEP 4. Develop strategy implications: (a) In relation to strengths How can these be exploited more effective and fully. (b) In relation to weakness _ Identify opportunities to outsource or acquire resources and capabilities to remove weakness.
SHORT TERM STRATEGY
Develop Strategy to Solve Problem, In this case better synergy between R&D and Marketing unit required
Develop Actionable Plan with varying cycle for evaluation of Implementation for long term and Short term Strategy
STRATEGY FORMULATION
Superfluous Strengths Logistic support for trading Distribution & Marketing for other companies products. Key Strengths Low cost working capital Project Management Relationship Management Organizational structure Talent Puller PROBABLE SOURCES OF COMPETITIVE ADVANTAGE
Strategic Importance
10
Durability
Transferability
Replicability
STRATEGY FORMULATION
Key Strength Low cost Capital Sustainable Advantage or not ? Replicable by Central-AC Manufacturer. Derived from superior engineering , procurement and routine Big Players can build up big networks Decision making can be imitated by having flat organization, Talent can get transferred.
Relationship Management
STRATEGY FORMULATION
SUPERFLOUS STRENGTH Logistic support for trading Distribution & Marketing for other companies products. OTHER KEY STRENGTHS Low cost working capital, Attracting Talent, Relationship Management No increase in Investment and possible Disinvestment.
How can they be exploited more and fully ? Can any other organization do it better (Outsource) ?