Strategic Management

Kartikay Malhotra
Samsung Electronics
kartikay2511@gmail.com
+91-9818887726

Copyright: Kartikay Malhotra

Strategy Pyramid Corporate
Company with
(time dimension missing) Samsung single SBU/ Firm

SEC SDS Samsung Techwin

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However basis a time dimension…

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 Porter’s Generic Strategies

Cost Leadership Strategy

• Increasing profits by reducing costs, while charging
industry-average prices Creating uniquely
No frills desirable products
• Increasing market share by charging lower prices, & services
while still making a reasonable profit
Offering specialized service in a niche
market
How?
• Access to the capital needed to invest in technology Cost-
that will bring costs down, e.g. Reliance minimization Differentiation
within focused within focused
• Very efficient logistics, e.g. Amazon market market

• A low-cost base (labour, materials, facilities), and a way

of sustainably cutting costs below those of other
competitors, e.g., Chinese companies 
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Differentiation Strategy
• Good research, development and innovation
• The ability to deliver high-quality products or services
• Effective sales and marketing, so that the market understands the benefits offered by the
differentiated offerings

How?
• Involve features, functionality, durability, support, and brand image that your customers value

Focus Strategy
• Serve customers in their market uniquely well, thereby build strong brand loyalty
- Particular market segment less attractive to competitors
• Whether Cost Focus or Differentiation Focus, success achieved by addition of something extra as a
result of serving only that market niche

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Choosing the Right Generic Strategy

Step 1:
For each generic strategy, carry out a SWOT Analysis of your strengths and weaknesses, and the
opportunities and threats you would face, if you adopted that strategy

Step 2:
Use Five Forces Analysis to understand the nature of the industry you are in

Step 3:
Compare the SWOT Analyses of the viable strategic options with the results of your Five Forces
analysis. For each strategic option, ask yourself how you could use that strategy to:
– Reduce or manage supplier power
– Reduce or manage buyer/customer power
– Come out on top of the competitive rivalry
– Reduce or eliminate the threat of substitution
– Reduce or eliminate the threat of new entry
Select the generic strategy that gives you the strongest set of options.
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Bowman’s Some Product
Starbucks, Automobile Companies

Differentiation
Strategic
IKEA, Coca Cola
Clock Louis Vuitton, Chanel,
BMW, Audi

Fine tune your

strategies to
achieve Retailer brands like
Gym Memberships –
ASDA, Morrison’s
Sustainable Tesco (UK) Gold’s Gym
Big Bazaar, Reliance
Competitive Retail (India)
Advantage
Bargain
basement
strategy Royal Mail, IOC, Power Grid
Shoe Laces, Corporation, DeBeers (surviving
Rubber Bands on Branding & lack of
Central Bank of India, Organic competition), Banks tie-up with
Products that aren’t brands builders
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 Organizational Design - Divide the tasks and resources to make
Formal, tangible, measurable everything work properly

What should we do to achieve success by taking • How is the customer treated?

into account competitors & limited resources? • How does the marketing work?
• How does the delivery operate?

Less formal and difficult to measure DNA – Desire, Need, Ability

Dominating attributes or capabilities

Leadership style and the company’s culture
New skill can appear only when the old skill is revised
/removed/modified together with its supporting structure and
systems • Formal training programs, appraisal systems
• Engagement and motivation aspects

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 Practical
Example:
“Operational
Level Planning
for
Functional
Strategy”
But it could also
be
“Strategic
planning for a
SBU or
Corporate
Strategy”

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 Growth-share matrix
• BCG Matrix/ portfolio diagram, created by Bruce D. Henderson for the Boston Consulting
Group in 1970 to help corporations to analyze their (not industries) Strategic Business
Units (product lines) I. Low Growth, High Share. Milk these “cash cows” for cash to
Products move around this matrix reinvest (for Stars & Dogs) e.g. Colgate Toothpaste, Amul Milk,
during their lifetime Samsung Washing Machines, E-mail marketing, Google ads
• Cash absorbing • Cash intensive /neutral II. High Growth, High Share. Significantly invest in these “stars” as
• Build (product maturity & they have high future potential. E.g. Samsung Mobile Phones, Nescafe
competition)
III • Hold II Coffee, Instagram & FB ads, Kinley Bottled Water
III. High Growth, Low Share. Invest in or discard these “question
marks,” depending on their chances of becoming stars, e.g. Samsung
• Cash neutral Gear, PR (all corporations), LinkedIn ads, Outdoor ads
• Cash generating
• Diversify • Milk
IV I IV. Low Share, Low Growth. Companies should liquidate (harvest),
divest, or reposition these “pets”, e.g. Minute Maid, Diet Coke,
Milkybar, Samsung e-Dairies, Twitter ads, Radio ads
Pets are unnecessary; they are evidence of failure to either obtain a
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leadership Malhotra
position or to get out and cut the losses
 Critique of BCG matrix
• Theoretically useful, and widely used
• Does Growth–share matrix actually helps businesses succeed?
– Slater and Zwirlein, 1992 looked at 129 firms found that those who follow portfolio planning
models like the BCG matrix had lower shareholder returns
• Application of the names (problem children/ question marks, stars, cash cows and
dogs/pets) tend to overshadow all else
– Apparent implication that there should be balance of products or services across all four
quadrants
• Market data & cash flows of competitors along with self-owned multiple product lines/ SKUs
to paint the correct picture
– Although it is necessary to recognize a 'dog' when it appears (at least before it bites you) it
would be foolish in the extreme to create one in order to balance up the picture

How is this to be used?

• Graphically illustrating a portfolio composition as a function of the balance between
cash flows
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GE McKinsey Matrix
High

• McKinsey in the 1970s to help

General Electric (GE) determine
how to best invest (money, time,
talent, and energy) in their
business units

Wider terms than

Market Growth rate &
Relative market share in Low
BCG

High Low

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 How to proceed?
Plotting two business units, Business Unit A and B, on the GE Matrix

Step 1. Determine the industry attractiveness of each business unit

• List the factors: Industry growth rate, market size, industry profitability, low competition, and
PEST factors
• Decide weights: Assuming 4 factors –
• Industry Growth Rate (30%)
• Market Size (10%)
• Low Competition (20%)
• Industry Profitability (40%)
• Rate the factors & calculate Weighted score:
Industry Attractiveness of
Industry or Weighted Score
Assumed Weightage of Factors Business Units (out of 10)
segment A B A B
within Industry Growth Rate (30%) 6 8 1.8 2.4
Industries Market Size (10%) 7 8 0.7 0.8
Low Competition (20%) 4 5 0.8 1
Industry Profitability (40%) 9 6 3.6 2.4
Copyright: Kartikay Malhotra 6.9 6.6
Step 2. Determine the competitive strength of each business unit
• List the factors: Market share, growth rate, profitability, brand reputation, and customer
service
• Decide weights:
• Market Share (20%)
• Growth Rate (10%) (SBU A - 15%, SBU B - 19% y-o-y)
• Brand Reputation (20%)
• Profitability (20%) (~30% profitability, ~35% ideal)
• Customer Service (20%)
• Rate the factors & calculate Weighted score:
Competitive Strength of
Weighted Score
Assumed Weightage of Factors Business Units (out of 10)
A B A B
Market Share (20%) 2 1.5 0.40 0.30
Relative Growth Rate (10%)
7 9 0.70 0.90
(A- 15% / B - 20% y-o-y)
Brand Reputation (20%) 8 8 1.60 1.60
Profitability (20%) 8.5 8.5 2.55 2.55
Customer Service (20%) 9 7 1.80 1.40
7.05 5.35
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 10 1
10

SBU A
Market
Share
19%
SBU B
15%
Industry

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1
 Critique of GE McKinsey matrix
• Only provides the current picture of industry attractiveness and the competitive
strength of a business unit; doesn’t consider how they may change in the future
• More refined than the BCG Matrix
– Replaces a single factor, “market growth,” with many factors under “market attractiveness”
– Business Unit (Competitive) strength of a business unit in the GE Matrix includes many
more factors than just market share

• BCG helps companies deploy resources among various business units, McKinsey helps
prioritize investment among various business units
• Like BCG Matrix, GE Matrix also fails to consider interdependencies (synergies)
between business units under one corporation and their core competencies
• Preparing it is a complicated exercise that probably demands the expertise of a
consultant
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 Ansoff Matrix & Z-diagram
• Is a strategic planning tool that provides a
framework to help executives, senior
managers, and marketers devise strategies
for future growth

II

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 ADL Matrix (or Strategic Condition Matrix)

• Arthur D. Little

• Manage your portfolio

by making judgements
around the overall
market lifecycle & your
own placement within
that market

• Product Strategy or
Company Strategy

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 Competitive Positions
Dominant
Market leader & have a strong position, there’s little competition that can reach you at the moment.
All out “Push for share” in embryonic industry, whereas hold position in an ageing one…

Strong
Good market share, perhaps you’re leader or number 2, and you have a number of trends in your
favour (e.g. customer loyalty). Competition may be present but is not a huge concern

Favourable
Some market share but there may be many competitors with equal or similar shares, it’s much
harder to be unique or you’re struggling to establish your position, but the industry can sustain you

Tenable (Defensible)
You’re in a niche or small market, perhaps geographical or defined by the product and service itself

Weak
Things aren’t going well – it’s not profitable, you’re losing market share, or you’re struggling to
operate within the market
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 How to use it?
It is required to have knowledge of:
• Your existing products/services
• Their financial performance and contribution
• Awareness of the markets you operate in and the latest trends

It’ll help if you also have information on:

• Current client relationships
• Example good case studies of sales and service
• Example bad case studies of sales and service
• Latest news in your sector
• Any competitive activity your aware of
• Employee feedback on products/services
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 Critique of ADL Matrix
• Detailed enough to be quite specific
• Conveys a lot of information in one easy diagram
• Conclusions are easy to draw from it
• Provides a nice way to map your entire portfolio in one image
• Easy to use
• Discussions generated are often of high value
• Aspects of the model are subjective, such as the industry lifecycle…
• Competitive movements can impact the analysis
• It can be time consuming
• Model can be out of date relatively quickly

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Grand Strategy Matrix Rapid Market Growth
You as a
business…
(SBU)

Strong Competitive Position

Weak Competitive Position

Relatively weak competitive Strong competitive position & rapid market growth
Lot of opportunity , if ready to struggle High opportunity

Have the funds to innovate in numerous areas

Tricky position - already not doing well & no huge before market decline becomes unsustainable
opportunity like Q2 Caution: Cheaper competitors attack the leader
Cost reduction, differentiation or diversification
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Slow Market Growth
 Critique of Grand Strategy Matrix
Corporate or SBU strategies & not functional strategies – answer questions which
begin with “Why?” & “When?”
Advantage:
• Simple to use & understand
• Comprehensive list of strategic options
• Can stimulate discussion and help frame decisions
• Can be applied to any industry or marketplace

Limitations:
• Provides options rather than success criteria around them
• You need to use it with other tools
• Matrix is simplistic so loses some nuance
• Business may operate in multiple quadrants if you have many products or services

Whenever a company is assessing their strategic options, Grand Strategy Matrix can be used to generate
discussion and options
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Strategy Chessboard by A.T. Kearney

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Copyright: Kartikay Malhotra
• Trick is to determine early during the strategy development processes
whether your industry will undergo evolutionary or revolutionary change
in the coming years

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Copyright: Kartikay Malhotra
 Blue Ocean Strategy
Strategic moves that create a leap in value for the company, its buyers, and its
employees while unlocking new demand and making the competition irrelevant

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 Differences explained…
Focus on current customers vs. focus on noncustomers
Most industries – little effort to attract new buyers to the industry (focus on existing buyers)
Blue Ocean – focus on increasing size of industry by attracting people who have never purchased

Compete in existing markets vs. Create uncontested markets to serve

Red ocean is a zero-sum game – someone gains at the cost of other losing
Blue Ocean – uncontested markets, there is only a winner, you. Competitors don’t know “What” or
“How”

Beat the competition vs. Make the competition irrelevant

Outsiders cannot duplicate the ideas in a way that is a commercial success
Whole idea of Blue Ocean Strategy is to have high value at low cost

Exploit existing demand vs. create and capture new demand

Nintendo’s Wii appeals to families and seniors; Southwest Airlines (& Indigo) appealed to auto travellers
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Make the value-cost trade-off vs. break the value cost trade-off
• Value (Differentiation) or low cost is the hallmark of Porter’s model
• Kim and Mauborgne have broken that concept – high value and low cost;
otherwise competitors will easily duplicate what you are doing & the
ocean will once again be very red
• Anything that doesn’t create or contribute to value, gets eliminated or
reduced (pro-actively in Blue Ocean)

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 Blue Ocean Companies

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 Products (or
Apple Samsung
Services) to Oppo Vivo Xiaomi Huawei Industry
iPhone Galaxy
Compare →
People's
#
perception of
Attributes or (1-10) (1-10) (1-10) (1-10) (1-10) (1-10) (1-10)
Competition
Factors ↓
Speed
1 (Processor, RAM, 10 9 7 7 8 6 7.8
Cache, etc.)
2 Screen Size 7 9 7 7 8 6 7.3
3 Thinness 6 8 9 9 8 7 7.8
4 Front Camera 7 6 8 8 6 5 6.7
5 Back Camera 9 8 7 7 7 7 7.5
6 Battery Life 8 7 6 6 6 6 6.5
External Memory
7 0 1 1 1 1 1 1.0
Card
8 Software features 8 6 6 6 6 6 6.3
9 Openness of OS 3 8 8 8 8 8 7.2
Integration with
10 8 9 7 7 7 7 7.5
Telco
Value for Money/
11 5 7 9 9 9 8 7.8
Affordability
12 Brand Value 9 8 7 7 7 5 7.2
13 Speed of Service 8 9 5 5 5 5 6.2
14 Customer Support 9 7 4 4 4 4 5.3
Availability (Online
15 10 10
Copyright: 10 Malhotra
Kartikay 10 5 7 7.7
+ Offline)
 Blue Ocean Strategy Canvas
12

10

Scoring 6
Apple iPhone
Samsung Galaxy
4 Oppo
Vivo
2 Xiaomi
Huawei
0 Industry

Factors of Competition
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Price Value
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 Like any other tool, the Strategy Canvas also suffers
from risks…
1. Ignoring relevant competition
Many inexperienced entrepreneurs – particularly those of technology-based
companies, who have risen through technological merit and innovativeness – tend to
think themselves as unique
– assume they have no competitors, best product/technology in the world & that there is
an ocean of impatient customers waiting for their product
– Mitigation: think of competition in a Red Ocean (Direct, Indirect & Replacement)

2. Swimming too far

It may stimulate companies to go into markets, forgetting their history, strengths, their
own path dependent competences and Critical Success Factors

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3. Reinventing the wheel
Companies may falsely belief they are entering a non-existent market, can start
developing products or services that are already being offered by other companies.
Thorough market research is very critical

4. Strategy Canvas may take you to an Ocean with no fish

Oceans can be dead, empty, and impossible for most species to survive in. Along the
same line ‘markets’ may be uncontested for a very good reason: because there is no
market. E.g., internet bubble where the wildest blue oceans have been imagined

5. Same scale for all attributes

All attributes of the Strategy Canvas are assigned the same scale, which may or may
not be true; if managers do not realize the impact, companies may drifting too far
from their core competencies

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Group No. Assignments 
1 At least 10 products of Unilever over Bowman’s Strategy Clock & reason
2 At least 10 products of P&G over Bowman’s Strategy Clock & reason
You desire to build expertise within your company by taking examination of staff.
3 Use 7S framework to determine how different facets of your company would be effected and chalk out
a strategy for successful outcome

4 List at least 10 products of Samsung (Conglomerate) and construct BCG matrix

5 List at least 10 products of Google (Alphabet) & construct GE-McKinsey matrix
You are a start-up in EdTech. Using Ansoff & Z-diagram, show how to target different geographies (Asia,
6 Africa, Europe & Americas)
You are a company like ALDO Group (shoes & accessories); hit hard by COVID; using Grand Strategy
7 matrix, show how can you circumvent bankruptcy

Amazon Prime, AWS, Consumer Electronics, Echo, Studios, Game Studios, Delivery, etc.
8 Place where the products fit in ADL matrix & comment upon their success
Place four (known) companies in each quadrant of Umbrella Strategies (Strategic Chessboard). Why are
9 they where they are? How can they change…
10 Design a game console through Value
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Kartikay Malhotra Blue Ocean Strategy