Strategic Management Process

STRATEGIC MANAGEMENT
Subject Code: 16MBA25 IA Marks: 20

No. of Lecture Hours / Week: 04 Exam Hours: 03
Total Number of Lecture Hours: 56 Exam Marks: 80
Practical Component: 01 Hour / Week
Objectives:
• To explain core concepts in strategic management and provide examples of their relevance and use by actual
companies
• To focus on what every student needs to know about formulating, implementing and executing business
strategies in today’s market environments
• To teach the subject using value-adding cases that features interesting products and companies, illustrate the
important kinds of strategic challenges managers face, embrace valuable teaching points and spark student’s
interest.
Unit 1
Meaning and Nature of Strategic Management, its importance and relevance. Characteristics of Strategic
Management. The Strategic Management Process. Relationship between a Companies’s Strategy and its Business
Model.
Unit 2
The Strategically relevant components of a Company’s External Environment – Industry Analysis – Industry
Analysis – Porter’s dominant Economic features – Competitive Environment Analysis – Porter’s Five Forces
model – Industry diving forces – Key Success Factors – concept and implementation.
Unit 3
Describe Strategic Vision, Mission, Goals, Long Term Objectives, Short-Term Objectives and Discuss Their
Value to the Strategic Management Process, Resources, Capabilities, Competencies, Resource Based View of the
firm (RBV), Balanced Score Card, SWOC Analysis, Value Chain Analysis, Benchmarking.
Unit 4
Business Strategies –Porter’s Generic Strategies: Low Cost, Differentiation, Best Cost, Focused Low Cost and
Focused Differentiation, Corporate Strategies – Growth Strategies (Internal Growth, External Growth,
Integration, Diversification, Mergers, Strategic Alliances), Ansoff’s Matrix, Stability Strategies (No-Change,
Profit and Proceed With Caution), Retrenchment Strategies (Turnaround, Divestment and Liquation),
International Business Level Strategies.
Unit 5
RK, Dept. of MBA / SJBIT Page 1
Strategy Implementation -Organisational Structure, Strategic Leadership and Organisational Culture Strategy and
Innovation - Introduction to Innovation: Process, Product and Platform; Creative Destruction and Disruptive
Technologies; Designing Organisations for Innovation; Innovation Environments: Institutional Innovation and
Environments, The Co-creation of Value, Open Innovation and Open Strategy, National Innovation Systems,
Learning Networks and Clusters, Social Innovation.
Unit 6
Strategic Control: Focus of Strategic Control, Establishing Strategic Controls (Premise Control, Strategic
Surveillance, Special Alert Control, Implementation Control), Exerting Strategic Control (through Competitive
Benchmarking, Performance and Formal and Informal Organisations). Case Study on Strategic Control.
RECOMMENDED BOOKS:
• Crafting and Executing Strategy, Arthur A. Thompson Jr., AJ Strickland III, John E
Gamble, 18/e, Tata McGraw Hill, 2012.
• Strategic Management, Alex Miller, Irwin McGraw Hill
• Strategic Management - Analysis, Implementation, Control, Nag A, 1/e, Vikas, 2011.
• Strategic Management - An Integrated Approach, Charles W. L. Hill, Gareth R. Jones, Cengage Learning.
• Business Policy and Strategic Management, Subba Rao P, HPH.
• Strategic Management, Kachru U, Excel BOOKS, 2009.
REFERENCE BOOKS:
• Strategic Management: Concepts and Cases, David R, 14/e, PHI.
• Strategic Management: Building and Sustaining Competitive Advantage, Robert A. Pitts & David Lei, 4/e,
Cengage Learning.
• Competitive Advantage, Michael E Porter, Free Press NY
• Essentials of Strategic Management, Hunger, J. David, 5/e, Pearson.
• Strategic Management, Saroj Datta, jaico Publishing House, 2011.
• Business Environment for Strategic Management, Ashwathappa, HPH.
• Contemporary Strategic Management, Grant, 7/e, Wiley India, 2012
• Strategic Management-The Indian Context, R. Srinivasan, 4 th edition, PHI

CONTENTS
Unit No. Particulars Page No.

1 Introduction to strategic Management
2 The Strategy Formulation
3 Analyzing a Company’s External
Environment
4 Analyzing a company’s resources & Generic Competitive Strategies
5 Business Planning in different environments
6 Strategy Implementation

UNIT – I
MEANING AND NATURE OF STRATEGIC MANAGEMENT
“Without a strategy, an organization is like a ship without a rudder, going around in circles. It’s like a tramp;
it has no place to go.”
Meaning and Nature of Strategic Management
According to Wheelen and Hungers
Strategic management is a set of managerial decisions and actions that determines the long-term performance of
a corporation. It involves environmental scanning (both external and internal), strategy formulation (strategic or
long range planning), strategy implementation, and evaluation and control.
Strategic management is a process that combines three major interrelated activities: strategic analysis, strategy
formulation and strategy implementation.
In other words, strategy is about:

How:
➢ How to outcompete rivals.
➢ How to respond to economic and market conditions and growth opportunities.
➢ How to manage functional pieces of the business.
➢ How to improve the firm’s financial and market performance.
Characteristics of SM
1. uncertain: SM deals with future oriented ,non routine situation. They create uncertainly. Managers are
unaware about consequences of their decision.
2. Long term issue: It deals with long term issue that may or may not have an immediate effect
3. Complex: Uncertainty brings complexity for SM.managers face environment which is difficult to
comprehend. External and internal environment is analyzed
4. Fundamental: SM is fundamental for improving the long term performance of the organization
5. Long term implication: SM is not concerned with day to day operation. It has long term implications. It
deals with vision, mission and objective. It ensures that strategic is put into action.
6. Organisation wide: SM had wide implication. It is not operation specific. It is system approach .It involves
strategic choice

7. Competitive Advantage: It helps manager find new sources of sustainable competitive advantage.
Executives apply the principles of SM in their work continuously try to deliver products or service.
8. Effect of operation :always has a sizable effect on operational issues.
Nature of Strategic Management
Strategic management is an ongoing and continuous process

➢ Strategic management is a process which determines whether an organization excels, survives, or dies.
➢ All organizations engage in the strategic management process either formally or informally. Strategic
management is equally applicable to public, private, not-for-profit, and religious organizations.
➢ Strategic management focuses on integrating management, marketing, finance/accounting,
production/operations, research and development, and computer information systems to achieve
organizational success
➢ Strategic management aids to exploit and create new and different opportunities for tomorrow; long-range
planning, in contrast, tries to optimize for tomorrow the trends of today.
Strategic management is both an Art and science

Strategic management is both an Art and science of formulating, implementing, and evaluating, cross-functional
decisions that facilitate an organization to accomplish its objectives. The purpose of strategic management is to use
and create new and different opportunities for future. The nature of Strategic Management is dissimilar form other
facets of management as it demands awareness to the "big picture" and a rational assessment of the future options.
It offers a strategic direction endorsed by the team and stakeholders, a clear business strategy and vision for the
future, a method for accountability, and a structure for governance at the different levels, a logical framework to
handle risk in order to guarantee business continuity, the capability to exploit opportunities and react to external
change by taking ongoing strategic decisions.
Importance Of Strategic Mgt
➢ Analyzing stakeholder views
➢ Formulating a strategy
➢ Implementing the strategy
➢ Set up monitoring and reporting
➢ Setting detailed goals
➢ Analyzing all our internal and external resources

➢ Analyzing our external environment - the marketplace
Benefits and Relevance of Strategic Management
Financial Benefits-profits, sales, and return on assets
Non financial Benefits
1. It provides a way to anticipate future problems and opportunities.
2. It provides employees with clear objectives and directions for the future of the organization.
3. It results in more effective and better performance compared to non-strategic management organizations.
4. It increases employee satisfaction and motivation.
5. It results in faster and better decision making and
6. It results on cost savings.
Intended Strategy: The original strategy, the top management plans and intends to implement
Realized Strategy: The strategy that top management actually implements.
Hence, the original strategy may be realized with desirable or undesirable results, or it may be modified as
changes in the firm or environment become known.
Formal Planning
Systematic & Regular Planning department/cells manned by people with knowledge and experience in “different
aspects and dimensions of planning” at organizational level.
Informal Planning:
Is common with small enterprises, and sometime with one man dominated not so small enterprises, is often done
in a casual way.
Policy:
Is a broad, general guide to action which compels or directs goal attainment. Policies do not normally dictate
what action should be taken, but they do provide the boundaries within the objectives must be pursued. Thus,
policies serve to channel and guide the implementation of strategies. Actions should be in line with the policy and
not vice-versa.
STRATEGY AND TATICS:
Strategy:

Defined as a game plan, which can help organization to achieve its mission and objectives.
Long-range details, unstructured in nature
Tactical Planning
Refers to short-range planning that is oriented towards operations and is concerned with specific and short-range
details
Short-range details, structured in nature
BASIS FOR TACTICS STRATEGY

COMPARISON
Meaning A carefully planned A long range blue print of an organization's

action made to achieve expected image and destination is known as
a specific objective is Strategy.
Tactics.
Concept Determining how the An organized set of activities that can lead
strategy be executed. the company to differentiation.
Nature Preventive Competitive
What is it? Action Action plan
Focus on Task Purpose
Formulated at Middle level Top level
Risk involved Low High
Approach Reactive Proactive
Flexibility High Comparatively less
Orientation Towards the present Future oriented

conditions

The Strategic management Process
Environmental Scanning- Environmental scanning refers to a process of collecting, scrutinizing and providing
information for strategic purposes. It helps in analyzing the internal and external factors influencing an organization.
After executing the environmental analysis process, management should evaluate it on a continuous basis and strive
to improve it.
Strategy Formulation- Strategy formulation is the process of deciding best course of action for accomplishing
organizational objectives and hence achieving organizational purpose. After conducting environment scanning,
managers formulate corporate, business and functional strategies
Strategy Implementation- Strategy implementation implies making the strategy work as intended or putting the
organization’s chosen strategy into action. Strategy implementation includes designing the organization’s structure,
distributing resources, developing decision making process, and managing human resources.
Strategy Evaluation- Strategy evaluation is the final step of strategy management process. The key strategy
evaluation activities are: appraising internal and external factors that are the root of present strategies, measuring
performance, and taking remedial / corrective actions. Evaluation makes sure that the organizational strategy as
well as it’s implementation meets the organizational objectives
DEVELOPING A STRATEGIC VISION: PHASE 1
A strategic vision describes the route a company intends to take in developing and strengthening its business. It
lays out the company’s strategic course in preparing for the future
A clearly articulated strategic vision communicates management’s aspirations to stakeholders and helps steer the
energies of company personnel in a common direction.
A strategic vision proclaiming management’s quest “to be the market leader” or “to be the first choice of
customers” or “to be the most innovative” or “to be recognized as the best company in the industry”
Strategic vision to function as a valuable managerial tool, it must
(1) Provide understanding of what management wants its business to look like
(2)Provide managers with a reference point to
• Make strategic decisions
• Translate the vision into hard-edged objectives and strategies
• Prepare the company for the future
Key Elements of a Strategic Vision
Delineate management’s aspirations for the business.
Provides a panoramic view of “where we are going”.
Charts a strategic path .
Is distinctive and specific to a particular organization.
Avoids use of generic language that is dull and boring and that could apply to most any company.
Captures the emotions of employees and steers them in a common direction.
Are challenging and a bit beyond a company’s immediate reach.
Purpose of setting objectives
◼ Converts vision into specific performance targets
◼ Creates yardsticks to track performance
Understanding the Payoffs of a Clear Vision Statement In sum, a well conceived ,forcefully communicated
strategic vision pays off in several respects:
(1) it crystallizes senior executives’ own views about the firm’s long-term direction
(2) it reduces the risk of rudderless decision making
(3) it is a tool for winning the support of organizational members for internal changes that will help make the vision
a reality

(4) it provides a beacon for lower-level managers in forming departmental missions, setting departmental
objectives, and crafting functional and departmental strategies that are in sync with the company’s overall strategy
(5) it helps an organization prepare for the future
Characteristics of an Effectively Worded Strategic Vision
Graphic: Paints a picture of the kind of company that management is trying to create and the market position(s)
the company is striving to stake out.
Directional: Is forward-looking; describes the strategic course that management has charted and the kinds of
product/market/customer/technology changes that will help the company prepare for the future.
Focused: Is specific enough to provide managers with guidance in making decisions and allocating resources.
Flexible: Is not a once-and-for-all-time statement—the directional course that management has charted may have
to be adjusted as product/market/ customer/technology circumstances change.
Feasible: Is within the realm of what the company can reasonably expect to achieve in due time.
Desirable: Indicates why the chosen path makes good business sense and is in the long-term interests of
stakeholders (especially share owners, employees, and customers).
Easy to communicate: Is explainable in 5–10 minutes and, ideally, can be reduced to a simple, memorable slogan
(like Henry Ford’s famous vision of “a car in every garage”).
SETTING OBJECTIVES: PHASE 2

The managerial purpose of setting objectives is to convert the strategic vision into specific Performance targets—
results and outcomes the company’s management wants to achieve.
Well-stated objectives are
1. Quantifiable
2. Measurable: measurable objectives are managerially valuable because they serve as yardsticks for tracking a
company’s performance and progress .
3. contain a deadline for achievement
Spell-out how much of what kind of performance by when
Importance of Setting Stretch Objectives
Objectives should be set at levels that stretch an organization to
◼ Perform at its full potential, delivering the best possible results
◼ Push firm to be more inventive
◼ Exhibit more urgency to improve its business position
◼ Be intentional and focused in its actions
Both Short-Term and Long-Term Objectives Are Needed
Short-term objectives
◼ Targets to be achieved soon
◼ Milestones or stair steps for reaching long-range performance targets
Long-term objectives
◼ Targets to be achieved within 3 to 5 years
◼ Calls for actions now that will permit reaching targeted long-range performance later
Objectives Are Needed at All Levels
The objective-setting process is more top-down than bottom up
1. First, set organization-wide objectives and performance targets
2. Next, set business and product line objectives
3. Then, establish functional and departmental objectives
4. Individual objectives are established last.
CRAFTING A STRATEGY: PHASE 3

The task of crafting a strategy entails answering a series of how’s
How to grow the business
How to please customers
How to outcompete rivals
How to respond to changing market conditions,
How to manage each functional piece of the business and develop needed competencies and capabilities.
How to achieve strategic and financial objectives.
Strategy-making involves astute entrepreneurship
◼ Actively searching for opportunities to do new things
or
◼ Actively searching for opportunities to do existing things in new or better ways
Strategizing involves
◼ Developing timely responses to happenings in the external environment
and
◼ Steering company activities in new directions dictated by shifting market conditions
Crafting a Good Strategy Requires Good Business Entrepreneurship
Developing a winning strategy involves
◼ Diagnosing the direction and force of the market changes underway and making timely strategic
adjustments
◼ Spotting new or better ways to satisfy customer needs
◼ Figuring out how to outwit and out maneuver competitors
◼ Pursuing ways to strengthen the firm’s competitive capabilities
◼ Proactively trying to out-innovate rivals
Who Is Involved in Strategy Making
CEO (chief executive officer)
◼ Has ultimate responsibility for leading the strategy-making process
◼ Functions as strategic visionary and chief architect of strategy
Senior executives
◼ Typically have influential roles in fashioning those strategy components involving their areas of
responsibility
Managers of subsidiaries, divisions, geographic regions, plants, and other important operating units (and,
often, key employees with specialized expertise)
IMPLEMENTING AND EXECUTING STRATEGY: PHASE 4

Managing the implementation and execution of strategy is an operations-oriented, make-things-happen activity
aimed at performing core business activities in a strategy supportive manner.
It is easily the most demanding and time-consuming part of the strategy.
Converting strategic plans into actions and results tests a manager’s ability to direct organizational change,
motivate people, build and strengthen company competencies and competitive capabilities, create and nurture a
strategy-supportive work climate, and meet or beat performance targets.
Each company manager has to think through the answer to
• What has to be done in my area to execute my piece of the strategic plan
• What actions should I take to get the process under way?”
• How much internal change is needed depends on how much of the strategy is new,
• How far internal practices and competencies deviate from what the strategy requires
• how well the present work climate/culture supports good strategy
Execution process includes the following principal aspects:
Building a capable organization

Allocating resources to strategy-critical activities
Establishing strategy-supportive policies
Instituting best practices and programs for continuous improvement
Installing information, communication and operating systems
Motivating people to pursue the target objectives
Tying rewards to achievement of results
Creating a strategy-supportive corporate culture
Exerting the leadership necessary to drive the process forward and keep improving.
EVALUATING PERFORMANCE AND MAKING CORRECTIVE ADJUSTMENTS :PHASE 5
The fifth phase of the strategy management process—monitoring new external developments, evaluating the
company’s progress, and making corrective adjustments—is the trigger point for deciding whether to continue or
change the company’s vision, objectives, strategy, or strategy execution methods. So long as the company’s
direction and strategy seem well matched to industry
And competitive conditions, and performance targets are being met, company executives may well decide to stay
the course.
If a company experiences a downturn in its market position or persistent short falls in performance, then company
managers are obligated to ferret out the causes—do they relate to poor strategy, poor strategy execution, or both?—
and take timely corrective action.
LEVELS OF STRATEGY
Corporate strategy: Consists of the kinds of initiatives the company uses to establish business positions in
different industries, the approaches corporate executives pursue to boost the combined performance of the set of
businesses the company has diversified into, and the means of capturing cross-business synergies and turning them
into competitive advantage Senior corporate executives normally have lead responsibility for devising corporate
strategy. Major strategic decisions are usually reviewed and approved by the company’s board of directors.
Business strategy: concerns the actions and the approaches crafted to produce successful performance in one
specific line of business.
The key focus is crafting responses to changing market circumstances and initiating actions to strengthen
market position, build competitive advantage, and develop strong competitive Capabilities.
The business head has at least two other strategy-related roles:
(a) Seeing that lower-level strategies are well conceived, consistent, and adequately matched to the overall
business strategy,
(b) Getting major business-level strategic moves approved by corporate-level officers (and sometimes the
board of directors) and keeping them informed of emerging strategic issues.
3. Functional-area strategies: concern the actions, approaches, and practices to be employed in managing
particular functions or business processes or key activities within a business.
A company’s marketing strategy, for example, represents the managerial game plan for running the sales
and marketing part of the business.
. Functional strategies add specifics to the hows of business level strategy; they aim at establishing or
strengthening a business unit’s competencies and capabilities in performing strategy-critical activities so as
to enhance the business’s market position and standing with customers.
The primary role of a functional strategy is to support the company’s overall business strategy and
competitive approach.
Strategic Plan: A Strategic Vision + Objectives + Strategy
Strategic planning is a process in which organizational leaders determine their vision for the future as well
as identify their goals and objectives for the organization.
A strategic plan lays out the company’s future direction, performance ,targets, and strategy.
WHAT IS A BUSINESS MODEL?

A business model addresses “How do we make money in this business?”
◼ Is the strategy capable of delivering good bottom-line results?
Do the revenue-cost-profit economics of the strategy make good business sense?
◼ Look at revenue streams the strategy is expected to produce
◼ Look at associated cost structure and potential profit margins
◼ Do resulting earnings streams and ROI indicate the strategy makes sense and the company has a
viable business model for making money?
Examples of Business Model
Magazine and news paper employ a business model based on generating sufficient subscription and
advertising to cover the cost of delivering their product to readers.
Wall-mart has perfected the business model for big-box discounts.
Gillette’s business model in razor blades involves selling the razors at low price
Example: Business Model for Dominos Pizza
– Infrastructure (larger presence, fast delivery)
– Offerings (Pizza at Rs. 99/-)
– Customers (Lower and middle income group, franchisees, good services)
– Finances (Reduction in Cost through innovative practices, Economies of Scale
COMPANY’S STRATEGY:
Relates broadly to its competitive initiatives and action plan for running the business (but it may or may not lead
to profitability)
• How to grow the business
• How to please customers
• How to outcompete rivals
• How to respond to changing market condition
• How to achieve targeted levels of performance
RELATIONSHIP BETWEEN STRATEGY AND BUSINESS MODEL

A company’s business model is management’s story line for how the strategy will be a moneymaker. The story
line sets forth the key components of the enterprise’s business approach, indicates how revenues will be generated
and makes a case for why the strategy can deliver value to customers in a profitable manner.
A company’s business model thus explains why its business approach and strategy will generate ample revenues
to cover costs and capture a profit.
Deals with a company’s competitive initiatives and business approaches.
Business Model . . . Concerns whether revenues and costs flowing from the strategy demonstrate a business can
be profitable and viable

UNIT II
Strategically Relevant Components of a Company’s External Environment:
An external analysis focuses on identifying and evaluating trends and events beyond the control of a single firm,
such as increased foreign competition, population shifts to the Sunbelt, an aging society, information technology,
and the computer revolution. An external analysis reveals key opportunities and threats confronting an organization
so that managers can formulate strategies to take advantage of the opportunities and avoid or reduce the impact of
threats.
 The Strategically Relevant Components of a Company’s External Environment
 Thinking Strategically About a Company’s Industry and Competitive Environment
◦ Question 1: What Are the Industry’s Dominant Economic Features?
◦ Question 2: How Strong Are Competitive Forces?
◦ Question 3: What Forces Are Driving Industry Change and What Impacts Will They Have?
◦ Question 4: What Market Positions Do Rivals Occupy—Who Is Strongly Positioned and Who Is
Not?
◦ Question 5: What Strategic Moves Are Rivals Likely to Make Next?
◦ Question 6: What Are the Key Factors for Future Competitive Success?
◦ Question 7: Does the Outlook for the Industry Offer the Company a Good Opportunity to Earn
Attractive Profits?
A Company’s Business Environment

 Diagnosing a company’s situation has two facets(environment)
EXTERNAL OR MACRO-ENVIRONMENT
 Industry and competitive conditions
 Forces acting to reshape this environment
INTERNAL OR MICRO-ENVIRONMENT.
 The immediate environment with which organization interacts for its day to day operations is known as
Micro Environment
➢ Market position and competitiveness
 Competencies, capabilities ,resource ,strengths and weaknesses, and
 competitiveness
Elements of Micro Environment:

The elements/components of Micro Environment are:
 Customers/Consumers: Customers are the most important components for organization without which no
organization can survive. Customers are buyers while consumers of users. Customers buy the product of
organization and pay money which help organization to achieve growth and profitability.
 Consumers are actual users of goods of organization and these may be different from customers.
Organization should continuously monitor the use and acceptance of goods and consider feedback by
consumers to sustain competition.
 Suppliers: Suppliers provide the raw material for production of goods. Suppliers also form an important
part of competition. Nowadays even the manpower supplier is in light and most sought avenue and services
as Human resources are the most sought, sensitive and rare resources among all.
 Organization: The organizations are formed with many individuals and these individual influences the
workings of organization in direction with the long term goals and objectives of organizations.
 Organization's individuals are normally divided into Governing Body (Board of Directors), Working group
(Employees) and Controlling/Owning group (Owners/Entrepreneurs).
 Competitors: Competitors are other business entities who compete for same resources and market.
 Competition forces and provides the correct shape to business. Competition can be direct or indirect.
 Competition between two Accounts or two Tax teachers is direct competition and competition between
Accounts and Audit or Strategic Management teacher is indirect competition.

 Market: Market is an extended form of customers and consumers. Market provides a structure to
organization and an opportunity to their growth. The important elements of market are: Cost structure, Price
sensitivity, Distribution system, Technological structure, Market stability.
 Intermediaries: The intermediaries such as distributors, dealers and retailers play an important role in
establishing distribution system of goods and services to end users or consumers of goods.
Following are some important components of Macro Environment:
1. Economic Environment:
Economic environment in itself is a very broad component. It covers the region and nation in which firm operates.
It broadly describes the conditions of money market, manpower markets, buying power of consumers, supply and
demand for goods, etc. It represents the size of market, income distributions, taste and preferences of consumers
etc. There are many economic indicators or factors to be considered for
strategic planning such as;
(a) GDP size and growth rate
(b) Unemployment, Interest, Taxation and Inflation Rates
(c) Liquidity position and Monetary and Fiscal policies (SLR, CRR, etc)
(d) Income Distribution
(e) Consumption pattern and regional disparity
(f) Foreign exchange reserve, rates and policies
(g) Stock market conditions, etc.
2. Demographic Environment:
Demography means characteristics of population. It includes factors such as race, age, income, education level,
employment status and location. Businesses often analyze the demographic data and trend to understand what
factors determines Opportunities and Threats and what determines/creates Different types of companies have
different types of demographic interest and the major factors in demographic environment are:
a) Population Size
b) Income Distribution
c) Education level
d) Ethnic Mix
e) Geographic profile in terms of urban and rural distribution
3. Global Environment
Globalization refers to integration of world into one huge market as organization can’t think to be performing at
regional or national level. The globalization is also a part of organization planning and growth. The global
organizations are known as MNC (Multi National Corporation) or TNC (Trans National Corporation), e.g.
Simplified IPCC Unilever, Nestle, Nokia and Microsoft, etc. These organization setup manufacturing facilities at
one place, R&D centers at other place and raise the capital and other resources at third place wherever from these
can be raised in cheapest mode.
Reasons of globalization / Why do companies go global?
There are many reasons for companies to go global, such as;
i) The shrinking time, distance and low cost communication.
ii) Domestic markets are no longer adequate.
iii) International demand for the product forces companies to setup the facilities in the other part of world.
iv) Cheap labor and Government incentives/ subsidy or relief.
v) Consolidation of business and resources to achieve economy of scale
vi) Environmental restrictions also forces organizations to go global.
Benefits of Globalization: There are many effects of globalization such as
a) Global Location of Different Operations: Companies can locate their operation anywhere in the world depending
upon the economy of operation, availability of raw material and low cost labor, etc.
b) Infrastructure Development: Globalization has helped in providing better infrastructure in the form of
better roads, ports, airport and telecom network, etc
c) Improvised Entrepreneurship: Globalization has given great opportunities to professionals by way of
entrepreneurship to setup their own enterprise by way of providing cheap capital.
4. Technological Environment:
Technology and business are inter-related and inter-dependent. Newer and advanced technology makes the way for
business innovations and advancement. Use of technologies influences business operations which and present many
opportunities for business and also makes many existing operation obsolete.
Therefore, it is very important to analyze the impact of technology environment carefully on business functioning.
Followings are some of the factors that business should consider for technologies impact on business:
• Impact of technology on business operation, e.g. banks, auditor, software, etc. technology dependent
organisations. These organizations should make use of latest technology as an integral part of their business
operation.
• Opportunities arising out of technological innovations or advancement
• Risks and uncertainties from technological changes
Issues for consideration in selection of technology
a) Type of technologies used by business
b) Technologies are developed in-house or procured externally.
c) If procured externally will these be always available or there is a risks of discontinuity
d) Technologies used are latest and ahead of used by competitors
e) Technologies which are must and which require to be curtailed, etc
5. Legal- Political Environment:
There are three important elements organization should analyze to understand the legal political impact:
The Government, The Laws and Regulations, and The Political environment.
The government has great influences on businesses. It guides the business environment in country.
Degree of political impact on business and economic activity.
Political stability
Law and order situation
Legal framework of country and implications of various laws under which business need to functions
Effectiveness of implemented laws
Government policies such as labor, fiscal, EXIM, FDI (foreign investment) and industrial development
6. Social- Cultural Environment:
Organizations are an entity only still it responses to environment similar to human entity and this response can be
in three forms:
(a) Conservative/Slow-moving: Such enterprises are passive in their operation and these enterprises react only when
external environment force them to do so e.g. Nationalized banks, PSU, etc. These entity moves slowly to change
themselves in response to environment.
(b) Cautious/Adaptive: These organizations take intelligent approach to response to environment. These
organizations adapt themselves to changing environment quickly but take a cautious approach before taking actions,
e.g. TATA.
(c) Confident/Aggressive: These organizations work aggressively and some time converts threats into
opportunities. These are highly dynamics organizations and known as trend setter or mover and shaker of market.
Their feedback system is highly dynamic, e.g. Reliance.
PEST ANALYSIS
An acronym referring to the analysis of the four macro environmental forces are
Political, Economic, Social and Technology.
1. Political-legal – include such factors as the outcomes of elections, legislation and judicial court decisions, as
well as decisions rendered by various commission and agencies in the Govt. Trade restrictions will always exist to
some of the optically sensitive areas like trade sanctions.
2. Economic- significantly influence business operations including growth deadline in Gross Domestic Product
and increases or decreases in inflation rate, and exchange rate.
3. Social - such as social values, trends, traditions, religion, culture , societal trends
4. Technology – include scientific improvement and innovations and productivity..
Industry analysis:
An industry analysis is a business function completed by business owners and other individuals to assess the
current business environment. A market assessment tool designed to provide a business with an idea of the
complexity of a particular industry. Industry analysis involves reviewing the economic, political and market factors
that influence the way the industry develops. Major factors can include the power wielded by suppliers and buyers,
the condition of competitors, and the likelihood of new market entrants.
Porter’s dominant economic features –Competitive Environment Analysis – Porter’s Five Forces model:
Far and away the most powerful and widely used tool for systematically diagnosing the principal competitive
pressures in a market and assessing the strength and importance of each is the five forces model of competition.
The model ,holds that the state of competition in an industry is a composite of competitive pressures operating in
five areas of the overall market:
The way one uses the five forces model to determine the nature and strength of competitive Pressures in a given
industry are to build the picture of competition in three steps:
• Step 1: Identify the specific competitive pressures associated with each of the five forces.
• Step 2: Evaluate how strong the pressures comprising each of the five forces are (fierce, strong, moderate to
normal, or weak).
• Step 3: Determine whether the collective strength of the five competitive forces is conducive to learning attractive
profits.
Competitive Environment Analysis
Usually competition analysis is done along with the industry analysis. This is so because competition and
competitive forces are a part and parcel of industry structure. As a part of strategy formulation the firm must analyze
and size up all the forces that shape competition in the industry. Most of the firms suffered from what was referred
to as ‘strategic myopia’. It was Michael Porter who gave a new thrust to the ideas associated with the competition.
Four Steps of CA
• Identify the strategy
• Identify the objectives
• Identify the assumptions
• Identity the capabilities

Competitor's Objectives
In competitor analysis there are two key factors to note in building knowledge of a competitor's objectives.
The first factor is to know the actual objectives of a competitor. This could range from building market share in a
specific market or overall business, entering a new market or even just maintaining profitability. This should also
look at not only current competitors but also potential competitors
The second factor is to know if the competitor is actually achieving their stated (or sometimes unstated but implied)
objectives. Looking at these two factors will provide a firm with an opinion on a competitor's potential actions to
changes in the sector. As part of a comprehensive competitor analysis piece, firms should identify their key
competitors and be able to define the objectives of each competitor and their likelihood of achieving their
objectives.
Key components of competitor analysis
• Competitor's Assumptions
Another key aspect in competitor analysis is an understanding of competitors’ assumptions about the overall market
(trends in the market, products, and consumers). For example, competitors could define their actions based on what
their assumptions are on the growth of the market.
Federal Express is a good example to highlight. When FedEx considered overnight delivery, they assumed that
demand would reach high levels and that it would change the mail-and-package delivery industry. FedEx turned
out to be correct and this changed the industry with other competitors following suit to offer the same service. In
this example, FedEx made a strong assumption on the industry behaviour and was able to establish a presence in
overnight delivery quickly.
Competitor's Strategy

A third aspect in competitor analysis is the understanding of a competitor's strategy. In most cases, this strategy
will be defined and stated, particularly for public firms. In other cases, it may not be openly stated what competitors'
strategies are but these can be understood by utilising a number of sources available to firms from analysing a
competitor's behaviour in certain situations to discussing with industry experts to get their viewpoints.
Competitor's Resources and Capabilities

Finally, a competitor analysis should also include an understanding of a competitor's resources and capabilities as
these would give a firm an idea of how a competitor can achieve its strategy and objectives, and also give a firm a
timeline for when it would expect competitors to pursue certain activities. For this aspect, a large part of information
can be gleaned from press articles and news. An example is the increase in orders of the Airbus A380, the largest
commercial aircraft in the world; by Dubai-based Emirates Airlines from the current 55 to double the number .This
indicates several thoughts: (1) Emirates Airlines has large funding capability, and (2) Emirates Airlines will be
expanding its international business and presence once these aircraft are received.
Strategic Groups
A set of business units or firms that pursue similar strategies with similar resources.
Strategic Types
• Category of firms based on a common strategic orientation and a combination of structure, culture, and
processes consistent with that strategy.
• Strategic Types Categorized by one of four general strategic orientations:
• Defenders
Companies with a limited product line; focus on improving efficiency of current operations
• Prospectors:
Companies with fairly broad product lines; focus on product innovation and market opportunities.
• Analyzers:
Corporations that operate in at least two different product-market areas – one stable and one variable.
• Reactors:
Corporations that lack a consistent strategy-structure-culture relationship.
Strategic group mapping

➢ A strategic group consists of those rivals with similar competitive approaches in an industry

➢ Strategic group is a set of firms or units that “pursue similar strategies with similar resources”
➢ This categorization helps to understand competitive environment
➢ STEPS:
➢ Identify characteristics that differentiate firms in the industry
➢ Identify and group firms with similar competitive approaches
➢ Plot firms on a two variable map using pairs of these differentiating characteristics
➢ Draw circles around each group proportionate to size of groups’ respective share of total industry sales
revenue
Porter’s Five Forces model:
• Industry rivalry (degree of competition among existing firms)—intense competition leads to reduced profit
potential for companies in the same industry
• Threat of substitutes (products or services)—availability of substitute products will limit the ability to raise
prices
• Bargaining power of buyers—powerful buyers have a significant impact on prices
• Bargaining power of suppliers—powerful suppliers can demand premium prices and limit the profit
• Barriers to entry (threat of new entrants)—act as a deterrent against new competitors

1. The Intensity of Rivalry among incumbent firms.- Concentration of competitors, High Fixed or Storage Costs,
Slow, Lack of Differentiation or Low Switching costs, Capacity Augmented in Large Increments, Diversity of
Competitors, High strategic Stakes, High Exit Barriers.
Barrier Notes
Investment cost High cost will deter entry High capital
requirements might mean that only large
businesses can compete
Economies of scale available to existing firms Lower unit costs make it difficult for smaller
newcomers to break into the market and
compete effectively
Regulatory and legal restrictions Each restriction can act as a barrier to entry
E.g. patents provide the patent holder with
protection, at least in the short run
Product differentiation (including branding) Existing products with strong USPs and/or
brand increase customer loyalty and make it
difficult for newcomers to gain market share
Access to suppliers and distribution channels A lack of access will make it difficult for
newcomers to enter the market
Retaliation by established products E.g. the threat of price war will act to
discourage new entrants But note that
competition law outlaws actions like predatory
pricing
1. Bargaining power of suppliers
If a firm’s suppliers have bargaining power they will:

• Exercise that power
• Sell their products at a higher price
• Squeeze industry profits
If the supplier forces up the price paid for inputs, profits will be reduced. It follows that the more powerful the
customer (buyer), the lower the price that can be achieved by buying from them. Suppliers find themselves in a
powerful position when:
• There are only a few large suppliers
• The resource they supply is scarce
• The cost of switching to an alternative supplier is high
• The product is easy to distinguish and loyal customers are reluctant to switch
• The supplier can threaten to integrate vertically
• The customer is small and unimportant
• There are no or few substitute resources available
Just how much power the supplier has is determined by factors such as:
Factor
Note
Uniqueness of the input supplied If the resource is essential to the buying firm and no close
substitutes are available, suppliers are in a powerful position
Number and size of firms supplying the A few large suppliers can exert more power over market
resources prices that many smaller suppliers each with a small market
share
Competition for the input from other industries If there is great competition, the supplier will be in a
stronger position
Cost of switching to alternative sources A business may be “locked in” to using inputs from
particular suppliers – e.g. if certain components or raw
materials are designed into their production processes. To
change the supplier may mean changing a significant part of
production
3.Bargaining power of customers
Powerful customers are able to exert pressure to drive down prices, or increase the required quality for the same
price, and therefore reduce profits in an industry.
A great example in the UK currently is the dominant grocery supermarkets which are able exert great power over
supply firms.
Several factors determine the bargaining power of customers, including
Factor Note
Number of customers The smaller the number of customers, the
greater their power
Their size of their orders The larger the volume, the greater the
bargaining power of customers
Number of firms supplying the product The smaller the number of alternative
suppliers, the less opportunity customers have
for shopping around
The threat of integrating backwards If customers pose a threat of integrating
backwards they will enjoy increased power
The cost of switching Customers that are tied into using a supplier’s
products (e.g. key components) are less likely
to switch because there would be costs
involved
Customers tend to enjoy strong bargaining power when:

• There are only a few of them
• The customer purchases a significant proportion of output of an industry
• They possess a credible backward integration threat – that is they threaten to buy the producing firm or its
rivals
• They can choose from a wide range of supply firms
• They find it easy and inexpensive to switch to alternative suppliers
4.Threat of substitute products
. Rising of a Substitute Products that satisfy similar consumer needs.

Potential factors:
• Buyer propensity to substitute
• Relative price performance of substitute
• Buyer switching costs
• Perceived level of product differentiation
• Number of substitute products available in the market
• Ease of substitution
• Substandard product
• Quality depreciation
• Availability of close substitute
Industry’s Driving Forces
1.Emerging new Internet capabilities and applications
Internet service and Voice over Internet Protocol (VoIP) technology, and an ever-growing series of Internet
applications and capabilities have been major drivers of change in industry after industry. Companies are
increasingly using online technology
(1) to collaborate closely with suppliers and streamline their supply chains and
(2) to revamp internal operations and squeeze out cost savings.
Manufacturers can use their Web sites to access customers directly rather than distribute exclusively through
traditional wholesale and retail channels. Businesses of all types can use Web stores to extend their geographic
reach and vie for sales in areas where they formerly did not have a presence. The Internet of the future will feature
faster speeds, dazzling applications, and over a billion connected gadgets performing an array of functions, thus
driving further industry and competitive changes. But Internet-related impacts vary from industry to industry. The
challenges here are to assess precisely how emerging Internet developments are altering a particular industry’s
landscape and to factor these impacts into the strategy-making equation.
2.Increasing globalization
The forces of globalization are sometimes such a strong driver that companies find it highly advantageous, if not
necessary, to spread their operating reach into more and more country markets. Globalization is very much a driver
of industry change in such industries as credit cards, cell phones, digital cameras, golf ,motor vehicles, steel,
petroleum, personal computers, video games, public accounting, and textbook publishing.
Competition begin to shift from regional & national focus to an international or global focus Industry members
begin seeking out customers in foreign market. Production activities begin to migrate to countries where costs are
lowest. Global competition really starts when one or more ambitious Companies precipitate a race for worldwide
market leadership.
Globalization happens:-

• Blossoming of customer and demand in more and more countries
• Action of govt to reduce the trade barrier .
• Significant difference in labor cost
3.Changes in an industry’s long-term growth rate
Shifts in industry growth up or down are a driving force for industry change, affecting the balance between industry
supply and buyer demand, entry and exit, and the character and strength of competition.
Increase in buyers demand triggers a race among established firms and new comers to capture the new sales
opportunities, in turn will launch offensive strategies to broaden customer base and grow significantly Decrease or
slow down in rate at which demand is growing firms fight for their market share .If industry sales suddenly turns
flat competition itencify, consolidation takes shapes by mergers and acquisitions, Stagnating sales forces both weak
and strong firms to sell their biz to those who elect to stick- forces to close inefficient plants and retrench to small
prod base…
4.Changes in who buys the product and how they use it
Shifts in buyer demographics and new ways of using the product can alter the state of competition by opening the
way to market an industry’s product through a different mix of dealers and retail outlets; prompting producers to
broaden or narrow their product lines; bringing different sales and promotion approaches into play; and forcing
adjustments in customer service offerings
Ex . The mushrooming popularity of downloading music from the Internet
5. Product innovation
Competition in an industry is always affected by rivals racing to be first to introduce one new product or product
enhancement after another. An ongoing stream of product innovations tends to alter the pattern of Competition in
an industry by attracting more first-time buyers, rejuvenating industry growth, and/or creating wider or narrower
product differentiation among rival sellers. Successful new product introductions strengthen the market positions
of the innovating companies, usually at the expense of companies that stick with their old products or are slow to
follow with their own versions of the new product. Product innovation has been a key driving force in such
industries as digital cameras, golf clubs, video games, toys, and prescription drugs.
6. Technological change and manufacturing process innovation
Advances in technology can dramatically alter an industry’s landscape, making it possible to produce new and
better products at lower cost and opening up whole new industry frontiers.
For instance, Voice over Internet Protocol (VoIP) technology has spawned low-cost, Internet-based phone networks
that are stealing large numbers of customers away from traditional telephone companies worldwide
• Flat screen technology are killing CRT monitors

• LCD and Plasma screen tech are driving CRT tech further
7) Marketing Innovation :
Successful in introducing new ways to MARKET their products:
• Spark a burst in buyer interest
• Widen industry demand
• Increase product differentiation
• Lower unit cost
Any or all of which can alter the competitive position of rival firm Eg.On line marketing of Electronics goods,
Music artist marketing their own website V/s contract with recording Studios….
8) Entry or Exit of Major Firms

Entry of one or more foreign co. into a geographic market once dominated by domestic firms shakes up the
competitive scenario. Pushes the competition to new direction, Bring in new rules of competition
Exit:- Reduces the no of mkt leaders, dominance of existing players and rush to capture existing firm’s customers.
9) Diffusion of Technical Know how across more companies and more countries.
As the knowledge spreads, the competitive advantage of existing firm originally possessing it erodes.
It happens thru Scientific Journals, Trade Publications, On site Plant tours, Word of mouth, Employees Migration,
and internet sources Technology knowledge license / Royaltee fees
Cross border technology transfer has made the once domestic industries of automobile, tires, consumer electronics,
telecommunication and computers truly global
10) Change in cost and efficiency
Widening or shrinking differences in the costs among key competitors tend to dramatically alter the state of
competition
Low cost fax and e mail put mounting pressure on the inefficient and high cost operation of Postal Dept.
11) Reduction in uncertainty and Business Risk.

An emerging industry is typically characterized by much uncertainty and risk in terms of time and efforts required
to cover-up with the investments. Emerging industries tend to attract only risk-taking entrepreneurial companies.
over time however, if the business model of industry pioneers proves profitable and market demand for the product
appears durable, more conservative firms are usually enticed to enter the market. Often the later entrants are large
& financially strong looking to invest into attractive growth industry.

Low biz risk and less industry uncertainty also affect competition in international market. In the early stage the co.
enters foreign market with a conservative approach with less risky strategies like exporting, licensing, joint
marketing agreement and JV with local companies.
As time goes and the co accumulates experience, it starts moving boldly and independently making acquisitions,
constructing their own plants, putting their own sales and marketing capabilities to build strong competitive
position...
13) Regulatory Influence and government Policy Changes.
Govt regulatory actions can often forces significant changes in industry practices and strategic Govt regulatory
actions can often forces significant changes in industry practices and strategic approaches .Deregulation has proved
to be a potent pro competitive force in the airline, banking, natural gas, telecommunications, and electric utility
industries .Govt efforts to reform MEDICARE and HEALT Insurance have become potent driving forces in the
health care industry. In international markets, host governments can drive competitive changes by opening their
domestic markets
to foreign participation or closing them to protect domestic companies
14. Changing societal concerns, attitudes, and lifestyles
Emerging social issues and changing attitudes and lifestyles can be powerful instigators of industry
change. Growing antismoking sentiment has emerged as a major driver of change in the tobacco industry; concerns
about terrorism are having a big impact on the travel industry.
Assessing the Impact of the Driving Forces
An important part of driving forces analysis is to determine whether the collective impact of the driving forces will
be to increase or decrease market demand, make competition more or less intense, and lead to higher or lower
industry profitability.
1. Are the driving forces collectively acting to cause demand for the industry’s product to increase or decrease?
2. Are the driving forces acting to make competition more or less intense?
3. Will the combined impacts of the driving forces lead to higher or lower industry profitability?
Key Success Factors :
Key success factors (KSFs) are those competitive factors that most affect industry members’ ability to prosper in
the marketplace—the particular strategy elements, product attributes, resources, competencies, competitive
capabilities, and market achievements that spell the difference between being a strong competitor and a weak
competitor—and sometimes between profit and loss.
Key success factors are the product attributes competencies, competitive capabilities, and market achievements
with the greatest impact on future competitive success in the marketplace
Common Types of Industry Key Success Factors
1. Technology-related KSFs • Expertise in a particular technology or in scientific research
• Proven ability to improve production processes
2. Manufacturing-related KSFs
• Ability to achieve scale economies and/or capture learning/experience curve effects
• Quality control know-how
• High utilization of fixed assets (
• Access to attractive supplies of skilled labor
• High labor productivity (important for items with high labor content)
• Low-cost product design and engineering (reduces manufacturing costs)
• Ability to manufacture or assemble products that are customized to buyer specifications
3. Distribution-related KSFs • A strong network of wholesale distributors/dealers
• Strong direct sales capabilities via the Internet and/or having company-owned retail outlets
• Ability to secure favorable display space on retailer shelves
4. Marketing-related KSFs
• Breadth of product line and product selection
• A well-known and well-respected brand name
• Fast, accurate technical assistance
• Courteous, personalized customer service
• Accurate filling of buyer orders (few back orders or mistakes)
• Customer guarantees and warranties (important in mail-order and online retailing, big-ticket purchases, new
product Introductions)
• Clever advertising
5. Skills and capability related KSFs
• A talented workforce (important in professional services like accounting and investment banking)
• National or global distribution capabilities
• Product innovation capabilities
• Design expertise (important in fashion and apparel industries)
• Short delivery time capability
• Supply chain management capabilities
• Strong e-commerce capabilities—a user-friendly Web site and/or skills in using Internet technology applications
to streamline internal operations
6. Other types of KSFs
• Overall low costs (not just in manufacturing) so as to be able to meet customer expectations of low price
• Convenient locations (important in many retailing businesses)
• Ability to provide fast, convenient after-the-sale repairs and service
• A strong balance sheet and access to financial capital (important in newly emerging industries with high degrees
of business risk and in capital-intensive industries)
• Patent protection
Implementation:
Ensuring a good understanding of the environment, the industry and the company -KSFs have five primary
sources, and it is important to have a good understanding of the environment, the industry and the company in order
to be able to write them well. These factors are customized for companies and individuals and the customization
results from the peculiarity of the organization. This peculiarity stems from an organization’s strategy, current
position, and resources and capabilities.
Building knowledge of competitors in the industry – While this principle can be encompassed in the previous
one, it is worth highlighting separately as it is critical to have a good understanding of competitors as well in
identifying an organization’s CSFs. Knowing where competitors are positioned, what their resources and
capabilities are, and what strategies they will pursue can have an impact on an organization’s strategy and also
resulting CSFs.
Developing CSFs which result in observable differences – A key impetus for the development of CSFs was
the notion that factors which get measured are more likely to be achieved versus factors which are not measured.
Thus, it is important to write CSFs which are observable or possibly measurable in certain respects such that it
would be easier to focus on these factors. These don't have to be factors that are measured quantitatively as this
would mimic key performance indicators; however, writing CSFs in observable terms would be helpful.
Developing CSFs that have a large impact on an organization’s performance – By definition, CSFs are the
"most critical" factors for organizations or individuals. However, due care should be exercised in identifying them
due to the largely qualitative approach to identification, leaving many possible options for the factors and potentially
results in discussions and debate. In order to truly have the impact as envisioned when CSFs were developed, it is
important to thus identify the actual CSFs, i.e. the ones which would have the largest impact on an organization’s
(or individual's) performance

Strategic Management Process

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STRATEGIC MANAGEMENT

Subject Code: 16MBA25 IA Marks: 20

RK, Dept. of MBA / SJBIT Page 2

Unit No. Particulars Page No.

RK, Dept. of MBA / SJBIT Page 3

In other words, strategy is about:

RK, Dept. of MBA / SJBIT Page 4

Nature of Strategic Management

Strategic management is an ongoing and continuous process

Strategic management is both an Art and science

RK, Dept. of MBA / SJBIT Page 5

Benefits and Relevance of Strategic Management

Financial Benefits-profits, sales, and return on assets

Non financial Benefits

1. It provides a way to anticipate future problems and opportunities.

4. It increases employee satisfaction and motivation.

5. It results in faster and better decision making and

6. It results on cost savings.

RK, Dept. of MBA / SJBIT Page 6

BASIS FOR TACTICS STRATEGY

Meaning A carefully planned A long range blue print of an organization's

Nature Preventive Competitive

What is it? Action Action plan

Focus on Task Purpose

Formulated at Middle level Top level

Risk involved Low High

Approach Reactive Proactive

Flexibility High Comparatively less

Orientation Towards the present Future oriented

RK, Dept. of MBA / SJBIT Page 7

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Characteristics of an Effectively Worded Strategic Vision

SETTING OBJECTIVES: PHASE 2

CRAFTING A STRATEGY: PHASE 3

IMPLEMENTING AND EXECUTING STRATEGY: PHASE 4

Building a capable organization

RK, Dept. of MBA / SJBIT Page 12

EVALUATING PERFORMANCE AND MAKING CORRECTIVE ADJUSTMENTS :PHASE 5

WHAT IS A BUSINESS MODEL?

RELATIONSHIP BETWEEN STRATEGY AND BUSINESS MODEL

RK, Dept. of MBA / SJBIT Page 15

 The Strategically Relevant Components of a Company’s External Environment

 Thinking Strategically About a Company’s Industry and Competitive Environment

◦ Question 1: What Are the Industry’s Dominant Economic Features?

◦ Question 2: How Strong Are Competitive Forces?

◦ Question 5: What Strategic Moves Are Rivals Likely to Make Next?

RK, Dept. of MBA / SJBIT Page 16

 Industry and competitive conditions

 Forces acting to reshape this environment

 Competencies, capabilities ,resource ,strengths and weaknesses, and

Elements of Micro Environment:

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Key components of competitor analysis

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Competitor's Resources and Capabilities

Strategic group mapping

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1. Bargaining power of suppliers

If a firm’s suppliers have bargaining power they will:

3.Bargaining power of customers