CORPORATE STRATEGY

Presentation Notes
Date: 6 Sep 2021
Lecture No: 3

Topic: Chapter 3: Evaluating a company’s external

environment

Key Message: 1. Business Model

2. Charting a Company’s Direction
3. Internal & External Audit
4. The Fall & Rise of Strategic Planning (Case Discussion)
5. Leadership Styles
6. Economic Measures of Competitive Advantage

Specific Points Covered

Clarification on 1. 17 points related to strategy should be reviewed

CS Pointers and 2. 3 questions business faces- who we are? Where we are? &
an overall Where do we want to go?
snapshot since 3. Is firm strategy a blend? yes
4. 3 elements for customer value proposition- value sensing
first class
(listening via all senses), Value delivery, Value capturing. These
are part of the business model.
5. What is vision? -Long term goal you want to achieve
6. What is an ideal mission and how to reach from vision &
mission?- What is the company’s purpose, what the company
values, what product and product category it is offering, who
are the customers?
7. Does the objective comes before mission or after, explain? It
comes after as the mission clarifies the purpose which helps in
identifying the objectives.
8. Objectives should fulfill certain criteria or characteristics, what
is the criteria? Objectives should be “SMART”
9. What do we call external and internal environment in acronym?
SW- external(Also include industry analysis and PESTEL), OT-
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internal Analysis
10. What does Strategic Choices means? Because we explore
multiple strategic choices and from them we choose 1 choice
to proceed with.
11. The chosen strategic choice is connected with value chain
hence strategy is connected with value chain in which you
define overall operations including: policies, processes,
procedures, SOPS, supply chain etc.
12. This leads to a sustainable competitive advantage (SCA)? What
distinguishes you with the customer in long term.
13. SCA helps in hitting the bottom line to increase profits.
14. There are 2 measures of bottom line -accountable profits and
economic profits
15. External auditors help in communicating to stake holders and
internal auditors reports functionally to the board which may
also have multiple committees i.e., auditing committee, they
may communicate to CEO
16. Auditing Committee is the recommending committee and
board is the executing committees
17. Internal audit makes a plan for the year and audit committee
vets the plan and auditor make the further recommendation on
it.
18. Generally in quarterly meetings board is informed by the audit
committee about the observations (areas of improvement)
19. CEO and CFO are on call. Internal audit also audit C-suite
executives

The Fall & Rise of Strategic Thinking: Personal experiences and other people views
Strategic helps in synthesizing strategy. For strategic thinking you need to think
Planning a lot.
(Case Discussion) Idea generation comes from strategic Thinkers eg. of poloroid camera
from the case.

Strategic Thinking helps in Strategy making

Strategic Planning: Strategic Planning requires analytical decisions. it

leads to building a strategy. Deliberate strategies are made by
planners

Strategy must have generic scope which should have scope to fine
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tune. Strategies must be left as broad visions so that there is enough

scope for managers to further work on it

Left & Right hand planner- left are more logical thinkers and right are
more emotionally derived. A person is not single sided but some
aspects may be stronger.

Strategic Define if you are Task Oriented or Relationship Oriented.

Leadership Style Least Preferred Co Worker Score:

High score means Relationship Oriented

Low Score means Task Oriented

Style is contingent upon the situation. There is no right or wrong

answer. It just helps you in identifying what your approach should be.

Economic Accounting Returns- Explicit Cost

Measures of Economic Returns- Implicit Cost+ Explicit Cost
Competitive
Advantage To guage Economic Returns we calculate weighted Average Cost of
Capital (WACC). WACC is a Pre-calculation which helps in measuring
company’s performance and health.

WACC is calculated via Debt and equity considering their weightages

and costs and after deduction of taxes.

Calculation of debt is pretty straight forward via balance sheet

however in order to calculate cost of equity this must be done through
Dividend per share/ Earning per share. The Cost of Equity also
depends on risk (beta) of the business unit. Beta is the slope of Risk
Free Return(I.e government specified fixed return) and Market Return.

Higher WACC means good performance, lower WACC means poor

performance

According to WACC results, ranking is done which helps in identifying

who is the market leader and where your company is ranking.

Announcement Next Class is on campus and will have a quiz

for Next Class
CORPORATE STRATEGY