STRATEGY

• A Unified, comprehensive and integrated plan designed to assure

that the basic objectives of the enterprise are achieved.
• The common thread among the organizations activities and product
markets that define the essential nature of business that the
organization has or planned to be in future.
• It is consciously considered and flexibly designed scheme of
CORPORATE INTENT & ACTIONS to mobilize resources, to direct
human behavior & efforts, to handle events and problems, to
perceive and utilize opportunities, and to met challenges and
threats for corporate survival and success.
• Strategy is meant to fill in the need of organizations for a sense of
dynamic direction, focus and cohesiveness. It provides integrated
framework for the top management to search for, evaluate and
exploit beneficial opportunities to perceive and meet potential
threats and crises.
 STRATEGY
• In large organizations, strategies are formulated at the corporate,
divisional and functional levels.
• At the corporate level strategies include the determination of the
pans for expansion and growth, vertical & horizontal integration,
diversification, takeover and mergers etc.
• The corporate wide strategies need to be operationalized by
divisional and functional strategies regarding product lines,
production volumes, quality ranges, prices, product promotion,
market penetration etc.
 STRATEGY
• STRATEGY IS PARTLY PROACTIVE AND PARTLY REACTIVE
• Proactive strategy is planned strategy whereas reactive strategy is
adaptive reaction to changing circumstances.
 STRATEGIC MANAGEMENT
• It refers to managerial process of developing a strategic vision,
setting objectives, crafting a strategy, implementing and evaluating
the strategy and initiating corrective adjustments where deemed
appropriate.
• It emphasizes the monitoring and evaluation of external
opportunities and threats in light of a company strength and
weaknesses and designing strategies for the survival and growth of
the company.
• It gives a direction to the company to move ahead, it helps to define
realistic objectives and goals which are in line with the vision of
the company.
• It helps to be proactive instead of reactive in shaping the future.
• It serves as a corporate defense mechanism against mistakes and
pitfalls to avoid costly mistakes in product market choices or
investments.
 STRATEGIC MANAGEMENT
• It helps to enhance the longevity of the business. With the state of
competition and dynamic environment.
• To develop certain core competencies and competitive advantage
that would facilitate assist in its fight for survival & growth.
• It is the process of determining the objectives of the firm, resources
required to attain these objectives and formulation of policies to
govern the acquisition, use and disposition of resources.
STRATEGIC MANAGEMENT MODEL
 STRATEGIC MANAGEMENT PROCESS

1. Developing a strategic vision and formulation

of statement of mission, goals and objectives.
2. Environmental & organizational analysis.
3. Formulation of strategy.
4. Implementation of strategy
5. Strategic evaluation and control.
Developing a strategic vision and formulation of statement of mission,
goals and objectives.
• Company must determine what directional path the company
should take and what changes in the PRODUCT – MARKET –
CUSTOMER – TECHNOLOGY focus would improve its current market
position and its future prospect.
• Concern over here is overall strategic direction.
• Corporate goals & objectives flow from mission – it represents the
quantum of growth the firm seeks to achieve in given time frame.
• Goal is to convert the strategic vision into specific performance
targets.
• Objectives need to be broken down into performance targets for
each separate business, product line, functional department,
individual work unit.
 Environmental & organizational analysis.

• External environment consist of economic, social, technological,

market and other forces which affects its functioning. Its dynamic
and uncertain.
• Organisational analysis involves a review of financial resources,
technological resources, productive capacity, marketing and
distribution effectiveness, R&D, HR skills etc.
 Strategy formulation

• Strategy formulation is developing strategic alternatives in the light

of organisation SWOT in the environment.
A company may be confronted with several alternatives:-
• Should the company continue in the same business carrying on the
same volume of activities?
• It should grow by expanding the existing units or by establishing
new units or by acquiring other units in the industry.
• Should it diversify into related or unrelated areas.
• Should it get out of an existing business fully or partially?
 STRATEGY IMPLEMENATION

• Implementation & Execution is operations-oriented activity aimed

at shaping the performance of core business activities in a strategy-
supportive manner.
• Developing budgets,
• staffing with needed skills and expertise, building competencies and
capabilities
• Creating a company culture and work climate conducive to
successful strategy.
• Good strategy execution involves creating strong FIT between
strategy and organisational capabilities, between strategy and
reward system, between strategy and internal operating systems,
between strategy and the organisations work climate and culture.
 STRATEGY EVALUATION & CONTROL

• Evaluating company's progress, assessing the impact of new

external developments, making corrective adjustments
Strategic Intent:- it refers to purposes of what they want to do and
why they want to do. It gives an idea of what the organization
desires to attain in future.
It indicates the long term position which the organization desires.
 STRATEGIC INTENT
• VISION:- It implies the blue print of the company future position. It
describes where the organization wants to land. It depicts the aspirations
and provides a glimpse of what the organization would like to become in
future. Every sub system of the organization is required to follow its
vision.
• MISSION:- A company's mission statement is typically focused on its
present business scope- “who we are and what we do”. It broadly
describe an organizations present capabilities, customer focus, activities
and business makeup.
• Business definition:- it seeks to explain the business undertaken by the
firm, with respect to the customer needs, target markets, alternate
technologies.
• Business Model:- Strategy for the effective operation of the business,
ascertaining sources of income. Desired customer base, financial details.
Rival firms, operating in the same industry rely on different business
models.
• Goals and objectives:- these are the base of measurement. Goals are
the end result, that an organization attempts to achieve. Objectives are
time-based measureable targets, which help in accomplishment of goals.
 Environmental Scanning
• Environmental scanning can be defined as the process by which
organizations monitor their relevant environment to identify opportunities
and threat affecting their business for the purpose of taking strategic
decisions.
• It is the process of GATHERING information regarding company's
environment, ANALYSING it and FORECASTING the impact of all predictable
environmental changes.

• Macro environment:- it is largely external to the enterprise and thus

beyond the direct influence and control of the organization, but which
exerts powerful influence over its functioning.
• Micro environment:- also known as task environment, which affects the
business in the daily operating level. Organizations have to closely monitor
the elements in order to stay competitive.
 Environmental Analysis

INTERNAL EXTERNAL

MACRO MICRO
•Organizational structure •Demographic
•Policies, procedures, rules •Consumers
•Economic •Competitors
•Corporate culture
•Government •Organization
•Financial resources
•Quality of Human resources
•Legal •Market
•Plant and machinery •Political •Suppliers
•Labour management •Cultural •Intermediaries
relationship •Technological
•Global
 SWOT ANALYSIS
• STRENGTH: - It is an inherent capacity which an organization can use to
gain strategic advantage. (superior R&D skills new product development)

• WEAKNESS:- It is an inherent limitation or constraint which creates

strategic disadvantage. (Overdependence on a single product line)

• OPPORTUNITY :- It is a favorable condition in the organizations

environment which enables it to consolidate and strengthen its position.

• THREATS:- It is an unfavorable condition in the organizations environment

which creates a risk for or causes damage to the organization.
 Strength Weakness
• Strong financial condition • No clear strategic direction
• Strong brand image, company • Obsolete facilities
reputation
• A weak balance sheet, burdened with
• Widely recognized market leader and debt
an attractive customer base
• Plagued with internal operating
• Ability to take advantage of economies problems
of scale
• Underutilized plant capacity.
• Proprietary technology / superior
• Deficiency of intellectual capital
technological skills/ important patents.
• Low technological know how
• Cost advantage
• Strong advertising and promotion
• Product innovation skills
• Superior supply chain management
• Wide geographic coverage
 Opportunity Threats
• Shift in buyers needs and preferences.
• Expanding the product line to meet • Likely entry of potent new
broader range of customer needs. competitors.
• Integrating forward or backward • Mounting competition.
• Acquisition of rival firms or companies • Slowdowns in market growth.
with attractive technological expertise • Growing bargaining power of
• Utilizing existing company skills or customers or suppliers
technical know - how to entre new • Technological changes.
product lines or new business.
• Alliances or joint ventures that expand
the firms market coverage or boost its
competitive capability.
INDUSTRY ANALYSIS
RESOURCE BASED VIEW
 Resources – competence - capabilities

• Resources:- The stocks of tangible and intangible

assets that are available to the organization.

• Tangible resources:-
Intangible Resources
Examples of Firm’s Capabilities
Conditions Affecting Managerial Decisions about Resources,
Capabilities, and Core Competencies
Components of Internal Analysis Leading to Competitive
Advantage and Value Creation
 Benchmarking
• It is strategy tool used to compare the
performance of the business processes and
products with the best performance of other
companies inside and outside the industry.
• It is the search for industry best practices that
lead to superior performances.
• Strategic benchmarking.  To identify the best
way to compete in the market. During the
process, the companies identify the winning
strategies (usually outside their own industry)
that successful companies use and apply them
to their own strategic process.
 Benchmarking
• Performance benchmarking. It is concerned
with comparing your company’s products and
services. The tool mainly focuses on product and
service quality, features, price, speed, reliability,
design and customer satisfaction, but it can
measure anything that has the measurable
metrics, including processes.
• Performance benchmarking determines how
strong our products and services are compared
to our competition.
 Benchmarking
• Process benchmarking:- It requires to look at
other companies that engage in similar activities
and to identify the best practices that can be
applied to your own processes in order to
improve them
• It usually derives from performance
benchmarking because companies first identify
the weak competing points of their products or
services and then focus on the key processes to
eliminate those weaknesses.
 Value Chain Analysis

• Value chain analysis is a strategy tool used to analyse internal firm activities. 
• Its goal is to recognize, which activities are the most valuable
• By looking into internal activities, the analysis reveals where a firm’s
competitive advantages or disadvantages are.
• A tool that helps in identifying strength and weakness towards the
competitors.
• How to deliver satisfaction to customers as quickly.
• Divided in two parts Primary Activities and Secondary Activities.
• VC is formed of primary activities that add value to the final product directly
and support activities that add value indirectly.
Primary Activities
(Task that firm performs to deliver the product to customer)

• Inbound Logistics : Activities like material handling, warehousing and inventory

control that disseminate a product of raw material.
• Operations: Activities like Machining, packaging, assembling and maintenance.
• Outbound Logistics: Activities like collecting, storing, physical distribution of final
products to customers.
• Marketing and Sales: Activities to attract customer to buy the product like
advertising and promotional campaigns, distribution channel and select develop
the sales force.
• Service: Activities designed to maintain product’s value. Service related activities
like installation, repair, training and adjustments.
 Supportive activities
• Firm Infrastructure: Activities such as general management, planning, finance,
accounting, legal support that are required to support work of the entire value
chain.
• Human Resource Management: Activities such as recruiting, hiring, training,
development and compensating all personnel.
• Technological Development: Activities to improve the firm’s product and
method to manufacture it like basic research, product design and service
procedure.
• Procurement: Activities which are needed to produce firm product. Purchased
Input which are consumed at the time of manufacturing like raw material and
supplies. Fixed Assets like machinery, office equipment and building.
 Competitive advantage types
Cost advantage Differentiation advantage
This approach is used when The firms that strive to create superior
organizations try to compete on costs products or services use differentiation
and want to understand the sources of advantage approach. (good
their cost advantage or disadvantage examples: Apple, Google, Samsung
and what factors drive those costs. Electronics, Starbucks
(good examples: Amazon, Wal-
Mart, McDonald's, Ford, Toyota

•Step 1. Identify the firm’s primary and •Step 1. Identify the customers’ value-
support activities. creating activities.
•Step 2. Establish the relative •Step 2. Evaluate the differentiation strategies
importance of each activity in the total for improving customer value.
cost of the product. •Step 3. Identify the best sustainable
•Step 3. Identify cost drivers for each differentiation.
activity.
•Step 4. Identify links between
activities.
•Step 5. Identify opportunities for
reducing costs.
STRATEGIC ANALYSIS & CHOICE
BCG GROWTH – SHARE matrix is the simplest way to portray a firms
portfolio of investments.
•The vertical axis represents market growth rate and provides a
measure of market attractiveness.
•The horizontal axis represents relative market share and serves as a
measure of company strength in the market.
• Stars – are products that are growing rapidly. They also need heavy
investment to maintain their position and finance their rapid growth
potential.
• They are closely to the growth stage of PLC.
• They represent best opportunities for expansion.
• E.g.. Electronics, telecommunication, fast foods.

• Cash cows :- are low growth, high market share businesses or products.
• Which generate large amount of cash but their rate of growth
is slow.
• They are established, successful, and needs less investment to maintain
their market share.
• In long run when the growth rate slows down, stars become cash cow
• In term of PLC, these are generally mature businesses which
are reaping the benefits of experience curve.
• The business can adopt mainly stability strategies.
• The cash generated by cash cows is reinvested in
stars and question marks.
• As they loose their attractiveness and tends
towards a decline, a phased retrenchment may
be feasible.
Question marks:- called problem child or wildcats,
are low market share business in high-growth
markets.
• They require a lot of cash to hold their share.
Requires Heavy Investment with low potential to
generate cash.
• They may become stars if enough investment is
made, or may become dog if ignored.
• Dogs:- Low Growth, Low Share business. Do not
have much future in market. They might need
cash for future to survive.
• They neither generate nor require large amount
of cash.
• In PLC dogs are usually products in late maturity
or a declining stage.
 BCG MATRIX – SAMSUNG

1. CASH COWS: Samsung Home appliances which

include Samsung AC’s, Refrigerators, Washing
Machines and Cooking Appliances are the Cash
Cows for the company.
• Over the years, Samsung Home Appliances have
become a household name and stand for quality
and trust. Samsung has been able to attain a
good market share across different industry
segments and still holds a good potential to
grow in the coming future.
2. STARS: The products or business units that have a
high market share in high growth industry are the stars
of the organization.  Mobile phones, Tab, and
TV business fall in the Star Category of the BCG Matrix
of Samsung.
• Mobile phones: Samsung Galaxy and Note Series are
quite a hit among customers and have their own base
of loyal customers. In order to maintain its market
share and ward off the competition, Samsung launches
new smartphones with new features and design.
• Samsung TV:  LED and OLED TV from Samsung are
gaining good traction from the global market and can
be considered as the Stars of the company. The
company is experimenting with new technologies and
it coming up with new TV’s with technologically
advanced features to gain customers.
3. QUESTION MARK:- There are products that
formulate a part of the industry that is still in the
phase of development, yet the organization has not
been able to create a significant position in that
industry. The small market share obtained by the
organization makes the future outlook for the
product uncertain, therefore investing in such
domains is seen as a high-risk decision.
• Considering the performance of all the products
that Samsung to offer, Samsung Printer is one such
product which can be placed in the Question Mark
quadrant of the BCG Matrix of Samsung.
• High competition and small market share of the
product in the industry is what makes it place in
this quadrant.
4. DOGS:
• Dogs are those products that were perceived to have the
potential to grow but however failed to create magic due to the
slow market growth.
• Failure to deliver the expected results makes the product a
source of loss for the organization, propelling the management
to withdraw future investment in the venture. Since the product
is not expected to bring in any significant capital, future
investment is seen as a wastage of company resources, which
could be invested in a Question mark or Star category instead.
• With an aim to cater to the growing need of the digital world,
Samsung launched it’s Samsung Smartwatch but the product
failed to achieve the success that it was expected to achieve.
• Samsung Smartwatch: Tough competition from competitors like
Apple watch led to the downfall of the product.
• Hence Samsung Smartwatch can easily be placed in the Dog
quadrant of the BCG Matrix.
GE NINE CELL MATRIX
• It is a strategy tool that offers a systematic
approach for the multi business corporation to
prioritize its investments among its business
units.
• In the business world, much like anywhere else,
the problem of resource scarcity is affecting the
decisions the companies make. 
• With limited resources, but many opportunities
of using them, the businesses need to choose how
to use their cash best.
• The fight for investments takes place in every level
of the company: between teams, functional
departments, divisions or business units.
 Industry Attractiveness
• Industry attractiveness indicates how hard or
easy it will be for a company to compete in the
market and earn profits.
• The more profitable the industry is the more
attractive it becomes.
• When evaluating the industry attractiveness,
analysts should look how an industry will change
in the long run rather than in the near future,
because the investments needed for the product
usually require long lasting commitment.
• Industry attractiveness consists of many factors
that collectively determine the competition level
in it.
• Long run growth rate
• Industry size
• Industry profitability: entry barriers, exit barriers,
supplier power, buyer power, threat of substitutes and
available complements
• Industry structure
• Product life cycle changes
• Changes in demand
• Trend of prices
• Macro environment factors
• Seasonality
• Availability of labor
• Market segmentation
 Competitive strength of a business unit or a product

• Along the X axis, the matrix measures how strong, in terms of

competition, a particular business unit is against its rivals.
• Try to determine whether a business unit has a sustainable
competitive advantage or not.
• The following factors determine the competitive strength of a
business unit:
• Total market share
• Market share growth compared to rivals
• Brand strength
• Profitability of the company
• Customer loyalty
• Your business unit strength in meeting industry’s critical success
factors Level of product differentiation
• Production flexibility
Invest/Grow box. 
• Companies should invest into the business units that fall into these boxes
as they promise the highest returns in the future.
• These business units will require a lot of cash because they’ll be operating
in growing industries and will have to maintain or grow their market
share.
• It is essential to provide as much resources as possible for BUs so there
would be no constraints for them to grow. The investments should be
provided for R&D, advertising, acquisitions and to increase the
production capacity to meet the demand in the future.

Selectivity/Earnings box. 
• Should invest into these BUs only if you have the money leftover the
investments in invest/grow business units group and if you believe that
BUs will generate cash in the future.
• These business units are often considered last as there’s a lot of
uncertainty with them.
• The general rule should be to invest in business units which operate in
huge markets and there are not many dominant players in the market, so
the investments would help to easily win larger market share.
• Harvest/Divest box. The business units that are
operating in unattractive industries, don’t have
sustainable competitive advantages or are
incapable of achieving it and are performing
relatively poorly fall into harvest/divest boxes.
• Step 1. Determine industry attractiveness of each business
unit
Make a list of factors
• Assign weights - Weights indicate how important a factor is to
industry’s attractiveness. A number from 0.01 (not important)
to 1.0 (very important)
• Rate the factors. The next thing you need to do is to rate each
factor for each of your product or business unit. Choose the
values between ‘1-5’ or ‘1-10’, where ‘1’ indicates the low
industry attractiveness and ‘5’ or ‘10’ high industry
attractiveness.
• Calculate the total scores. Total score is the sum of all
weighted scores for each business unit. Weighted scores are
calculated by multiplying weights and ratings. Total scores
allow comparing industry attractiveness for each business unit
• Step 2. Determine the competitive strength of each business
unit
 Industry Attractiveness

Business Unit 1 Business Unit 2

Factor Weight Rating Weighted Score Rating Weighted Score

Industry growth rate 0.25 3 0.75 4 1

Industry size 0.22 3 0.66 3 0.66

Industry profitability 0.18 5 0.90 1 0.18

Industry structure 0.17 4 0.68 4 0.68

Trend of prices 0.09 3 0.27 3 0.27

Market segmentation 0.09 1 0.09 3 0.27

Total score 1.00 - 3.35 - 3.06