CONCEPT OF STRATEGY

• Strategy is defined as,” The general

direction in which an organization plans
to move to attain its goals”.
• Every organization has two or more
strategies depending on the SWOT
analysis.
• A firm develops its strategies by matching
its core competencies with the industry
opportunity.
• Classification of strategy: Can be classified as
below:

STRATEGY

Corporate Level Business unit level

 BUSINESS UNIT LEVEL STRATEGY:
• Key strategic issues:
1. What should be the mission of business unit?
2. How should the business unit compete to realize
its mission?
• Generic strategic options:
1. Build, hold, harvest, divest
2. Low cost differentiation.
• Business unit level strategy are formulated by
business units in consultation with Corporate Office.
 What is Business Unit Strategies ?
• Business Unit Strategies deal with how to
create and maintain competitive advantage in
each of the industries in which the company
has chosen to operate.
• The strategy of a business unit depends on two
factors:
1. Its mission- its overall objectives and
2. Its competitive advantage- how to compete in
its industry to accomplish its mission.
• There are two planning models, which are
widely used to develop the most appropriate
missions for the various business units.
• Both the models have the same set of missions
to choose namely-
Build, Hold, Harvest and Divest.
• The models are:
1. Boston Consulting Group’s two-by-two growth-
share matrix and
2. General Electrical Company’s three-by-three
industry attractiveness-business strength
matrix.
 BCG MATRIX-BACKGROUND
• BCG(Boston Consultancy
Group),developed by Bruce Henderson in
1970.
• BCG is also referred to as “The Growth-Share
Matrix”.
• It is mainly used for multi-product companies.
• It is used as a portfolio planning and analysis
tool for strategy development.
BCG MATRIX
 BCG Matrix : EXAMPLE– McDonalds

• Founded by: Richard and Maurice McDonald

• Industry: Fast food Restaurant
• Operating in 119 countries and serving 68 Million
Customers Daily.
 BENEFITS
1. Simplifies management

2. Popular matrix

3. Better decision making

 LIMITATIONS
• The true nature of business may not be
reflected.
• Market is not clearly defined in this model.
• High market share does not always leads
to high profits.
• This four-celled approach is considered as
to be too simplistic.
 GE MATRIX - FOUNDATION

•Developed by Mckinsey in 1970

•Also Popular as “Directional Policy Matrix”
•Consists of 9 cell matrix
•Same as BCG Matrix – Just Better
 G.E.Matrix : example - GOOGLE

• Founded by: Larry Page & Sergey Brin

• Founded in: Sept 4, 1998; Menlo Park,
California
• Industry: Internet Services
• Operating Worldwide
• Green Zone – Search engine
• - Primary Google Product
• - 70% of Market Share
• - Similar Items: AdWords, Apps & YouTube.
• Ratings: 5/5
• Yellow Zone – Chromecast
• - New Product in the Market
• - Innovative product sold at affordable price
• Cost: $35 in USA
• Ratings: 4/5
• According to Wall Street Journal and Current
Users
• Red Zone – Google Books
• - Highly Competitive Market
• - Competing against Amazon, which was
primary
• developed for book store.
• - Similar items: Google TV & Groups
• Ratings: 3/5
 STRENGHTS
•It used 9 cells instead of 4 cells of BCG
•It considers many variables and does not lead to
simplistic conclusions.
•High/medium/low and strong/average/low
classification enables a finer distinction among
business portfolio
•It uses multiple factors to assess industry
attractiveness and business strength, which
allow users to select criteria appropriate to their
situation
 WEAKNESSES
• The approach requires extensive data gathering.
• The GE/McKinsey Matrix offers a broad strategy
and does not indicate how best to implement it.
• Assessment of business in terms of two factors is
not fair
• It can get quite complicated and cumbersome with
the increase in businesses.
• Though industry attractiveness and business
strength appear to be objective, they are in reality
subjective judgements that may vary from one
person to another