MG600

Strategic Management &

Decision Simulation

RAJESH VERMA
 Strategy is the practice of being humble enough
to admit that someone else is better at something
and wise enough to try and learn how to match
and even surpass them at it.

Five Minute
Presentation
Competitive Dynamics:

The strategic decisions and actions of firms in response to

the strategic decisions and actions of other firms

Firm B’s Possible Responses

Firm A No Response
(strategy decisions
Change Tactics
lead to competitive
advantage) Change Strategy
COMPETITIVE DYNAMICS

Imitation will seldom lead to competitive advantage

Firms should use resources and capabilities to fill unique
competitive space

Price
Focal Firm
Offering
Competitor
Offerings

Customer
Needs
Quality
 Competitive Dynamics

Similar strategies may lead to competitive advantage

Some firms can achieve competitive advantage even if
they are second movers

Price
Focal Firm
Offering
» higher quality/ Competitor
lower cost Offerings
offering may
lead to advantage Customer
Needs
Quality
THE VRIO FRAMEWORK
The Modified Resource-Based View

Two Classes
Of Resources Firm Output Returns

Output Above
Catalytic
Normal
Resources
V,R,I,O = SCA

V,R = TCA
Normal
Output
Productive Exchanged V
Resources in Market
Not Below
Valuable Normal
STRATEGY-FORMULATION ANALYTICAL
FRAMEWORK

Internal Factor Evaluation

Matrix (IFE)

Stage 1: External Factor Evaluation

The Input Stage Matrix (EFE)

Competitive Profile Matrix

(CPM)
STRATEGY-FORMULATION ANALYTICAL
FRAMEWORK

SWOT Matrix

SPACE Matrix

BCG Matrix

IE Matrix

Match between organization’s internal

resources & skills and the opportunities & Grand Strategy Matrix
risks created by its external factors

9
STRATEGY-FORMULATION ANALYTICAL
FRAMEWORK

10
COMPONENTS OF THE
GENERAL ENVIRONMENT
Economic

Demographic
Sociocultural

Industry
Environment

Competitive
Environment

Political/
Global
Legal

Technological
THE EXTERNAL ENVIRONMENT
OF THE ORGANIZATION

Macro Environment
Political, Economic, Sociocultural,
Technological, Environmental, Legal

Industry Environment

Strategic Group

The Organization
FORMS OF COMETITION

Generic Competition

Form Competition

Industry Competition

Brand Competition

14
15 of 58
 16 of 58

GOSH-ABOUT THE HOSPITAL

 Child Care
 Founded in 1852 (Era of high infant mortality & Malnutrition)
 First children’s hospital in English Speaking world
 Largest pediatric epilepsy surgery centre in UK & second largest in Europe
 Excellent Rating (6/157)
 Infrastructure & Facilities
• 335 Bed hospital
• 315 Doctors
• 900 registered nurses
• 135 Healthcare professionals
• Largest unit treating children’s brain tumors
• Largest pediatric ICU in UK (48 bed)
SITUATION

 Mid 1990s High morality for surgery

 Contentious Public Inquiry

 Study-Journey from operating room to the intensive care unit was-HIGH

RISK

 Staff related factors

 Patient Related factors

How the hospital can control

the situation?
 18 of 58

BENCHMARK

Allan Goldman
Martin Elliot
PIT STOP HANDOVER
WHAT WAS LEARNED?

• Key to Successful Pit Stop

» The routine in the pit stop is taken seriously

» What happens in pits top is predictable so problems can be

anticipated and procedures can be standardized

» Crews practice those procedures until perfection

» Everyone know their job

• Way of addressing possible failure

• Everyone’s idea was given equal weight

• Failure Modes and Effect Analysis

• Process mapping & Description

• Describe people’s task

20
IMPLEMENTATAION

Videotape
handover

RORMULA1
TEAM

 Filming & Rehearsals 12 PAGE

 Dance Choreographer HANDOVER PROTOCOL
 Lollipop
WHAT WASN’T TRANSFERABLE
• Engineer out parts & get new equipment's

• Multiple Rehearsals not possible

• Too many permutations of what could go wrong

• Machine Vs. Human Life

25
RESULT
• Team performance, leadership and teamwork, task management work space and
equipment, and situational awareness were all observed and analyzed by psychologists.
The mean number of technical errors was reduced from 5.42 (95% CI ±1.24) to 3.15
(95% CI ±0.71)

• The mean number of information handover omissions was reduced from 2.09 (95% CI
±1.14) to 1.07 (95% CI ±0.55)

• Duration of handover was reduced from 10.8 min (95% CI ±1.6) to 9.4 min (95% CI
±1.29).

• Nine out of twenty-three (39%) precondition patients had more than one error in both
technical and information handover prior to the new protocol, compared with three out
of twenty-seven (11.5%) with the new handover.

• Regression analysis showed that the number of technical errors were significantly
reduced with the new handover (t = −3.63,P < 0.001)
BENCHMARKING CONCEPT

What is our What are others'

performance level? performance levels?
How do we do it? How did they get there?

Creative
Adaptation

Breakthrough
Performance
 28 of 58

WHY
 29 of 58

SOME OTHER EXAMPLES

PROBLEM COMPARED WITH

Long admittance times in hospitals Hotel receptions

Too lengthy setup of machines Formula 1 pit crews

Planning the delivery of fresh concrete Hot pizza delivery

Unstructured maintenance of power turbines Maintenance of

aircraft engines

Difficult to manufacture shell cases with the Manufacturing of smooth

surface lipstick tubes right
cylindrical shape
Benchmarking Approach

Collect
Data
Identify
Map the Process Good or
Identify Best
Partners & Data Practise
Sources
Identify
Problem or
Area for review

30
Benchmarking Approach
ORIGIN

The term 'benchmarking' was first adapted to

business practices by Xerox in 1979.

Xerox’s aim was to evaluate itself, to identify its

strengths and weaknesses and adapt to constantly
changing market conditions.
 33 of 58

DEFINITION

Xerox Corporation is credited with originating the practice of

benchmarking among American companies. Xerox’s chief
executive, David Kerns, defined benchmarking as “the
continuous process of measuring products, services, and
practices against the toughest competitors or those
recognized as industry leaders.”

Robert Camp, the logistics engineer who initiated Xerox’s

benchmarking program and who is generally regarded as the
guru of the benchmarking movement, offered an even
simpler definition. “Benchmarking is the search for industry
best practices that lead to superior performance”
Xerox

Benchmarking against Japanese competitors, Xerox found out that it took

twice as long as its Japanese competitors to bring a product to market, five
times the number of engineers, four times the number of design changes, and
three times the design costs.

The company also found that the Japanese could produce, ship, and sell
units for about the same amount that it cost Xerox just to manufacture them.

In addition, Xerox's products had over 30,000 defective parts per million -
about 30 times more than its competitors.

Benchmarking also revealed that Xerox would need an 18% annual

productivity growth rate for five consecutive years to catch up with the
34
Japanese.
SPIDER WEB
BENCHMARKING

Xerox initiated functional benchmarking with the study of the warehousing and
inventory management system of L.L. Bean (Bean), a mail-order supplier of
sporting goods and outdoor clothing.

Bean had developed a computer program that made order filling very efficient.
The program arranged orders in a specific sequence that allowed stock pickers
to travel the shortest possible distance in collecting goods at the warehouse.

Xerox zeroed in on various other best practice companies to benchmark its other
processes. These included:
• American Express (for billing and collection),
• Cummins Engines and Ford (for factory floor layout),
• Florida Power and Light (for quality improvement),
• Honda (for supplier development),
• Toyota (for quality management),
• Hewlett-Packard (for research and product development),
• Saturn (a division of General Motors)
• Fuji Xerox (for manufacturing operations) and
• DuPont (for manufacturing safety).
RESULTS
Overall customer satisfaction was rated at more than 90% in 1991. Some of the
other benefits Xerox derived were:

• Number of defects reduced by 78 per 100 machines.

• Service response time reduced by 27%.
• Inspection of incoming components reduced to below 5%.
• Inventory costs reduced by two-thirds.
• Marketing productivity increased by one-third.
• Distribution productivity increased by 8-10 %.
• Increased product reliability (40% reduction in unscheduled maintenance).
• Notable decrease in labour costs.
• Errors in billing reduced from 8.3 % to 3.5% percent.
• Became the leader in the high-volume copier-duplicator market segment.
• Country units improved sales from 152% to 328%.
RESULTS

The benchmarking process resulted in:

• Quality problems cut by two-thirds,
• manufacturing costs cut in half,
• development task cut by two-thirds,
• Direct labor cut by 50% and
• corporate staff cut by 35% while increase in volume.
TYPES OF BENCHMARKING

1. Strategic Benchmarking: Aimed at improving a company's overall

performance by studying the long-term strategies and approaches that
helped the 'best practice‘ companies to succeed. It involves examining the
core competencies, product/service development and innovation strategies
of such companies.

2. Competitive benchmarking or Performance Benchmarking: Used by

companies to compare their positions with respect to the performance
characteristics of their key products and services. Competitive benchmarking
involves companies from the same sector.

3. Process Benchmarking: Used by companies to improve specific key and

operations with the help of best practice organizations involved in performing
similar work or offering similar services.

4. Functional Benchmarking or Generic Benchmarking: Used by companies

to improve their processes or activities by benchmarking with other
companies from different business sectors or areas of activity but involved in
similar functions or work processes.
THANK YOU

RAJESH VERMA