CORPORATE STRATEGY

By: Dr. Ayesha Farooq Assistant Professor DBA,AMU,Aligarh

Environmental and Organizational Appraisal  Corporate strategies  Competitive strategies  Strategic alternatives and choices  Strategy implementation  Strategy evaluation and control 

Checklist for a PESTEL Analysis
Political Future ‡ Political parties and alignments at local, national or regional trading block level. ‡Legislation, e.g. on taxation and employment law ‡Relations between government and the organization (possibly influencing the preceding terms in a major way and forming a part of future corporate strategy) ‡Government ownership of industry and attitude to monopolies and competition Socio- Cultural Future ‡Shifts in values and culture ‡Change in lifestyle ‡Attitudes to work and leisure ‡Education and health ‡Demographic changes ‡Distribution of income Economic Future ‡Total GDP and economic condition ‡Inflation ‡Consumer expenditure and disposable income

‡Interest rates ‡Currency inflation and exchange rates ‡Unemployment ‡Energy costs, transport costs, communications costs, raw materials costs Technological Future ‡Government and investment policy ‡Identified new research initiatives ‡New patents and products ‡Speed of change and adoption of new technology ‡Level of expenditure on R&D by organization¶s rivals ‡Development in nominally unrelated industries that might be applicable Environmental Future ‡µGreen¶ issues that affect the environment ‡Level and type of energy consumed-renewable energy? ‡Rubbish, waste and its disposal Legal Future ‡Competition law and government policy ‡Employment and safety law ‡Product safety issues

Issue priority matrix Probable Impact on Corporation High Medium Low High High Priority High Priority Medium Priority Probability of Occurrence Medium High Priority Medium Priority Low Priority Low Medium Priority Low Priority Low Priority .

determine what the industry will look like in near future. . if they occur. Identify a number of likely trends emerging in the societal and task environments. These are strategic environmental issues. Attempt to ascertain the likely impact (from low to high) of each of these trends on the corporation being examined.willingness to reject unfamiliar as well as negative information 1. 3.Identifying external strategic factors Strategic Myopia. 2. Assess the probability of these trends actually occurring from low to high.those important trends that.

0 3 .60 .30 .5 3.13 .60 .45 4 5 Consolidation in decorative segment End user awareness Low APL presence in Asia Exterior and economy segments Alliances required Threats T1 Liberal Government policies T2 Strong Chinese competition T3 ICI and Berger strong globally T4 New product advances T5 Strict environmental laws world over .5 3.13 .18 .10 .0 .05 .15 2 4.5 4. .0 3.0 2.05 .0 2. O5 Promising auto and white goods industry .05 .13 .05 .10 2.15 .15 .0 3.30 Well positioned Well positioned APL weak comparatively Questionable Non.45 .tariff barriers * The most important external factors are identified in the EFAS table as shown here.External Factor Analysis Summary (EFAS): Asian Paints Limited (APL) as Example (Selection of Strategic Factors)* External Factors Weight Rating Weighted Score Comments 1 Opportunities O1 Boom in construction industry O2 Demographics favor mass customization O3 Economic development of Asia and India O4 Growth in rural Indian market.15 .5 3.

5 3 .60 .5 2.15 .20 .05 0.13 .house manufacturing of key raw material Good automated inventory control system Strong distribution capabilities Steady international expansion .0 4.15 .15 2 2.Internal Factor Analysis Summary (IFAS Table): Asian Paints Limited (APL) as Example (Selection of Strategic Factors) Internal Factors Weight Rating Weighted Score Comments 1 Strengths S1 Experienced top management S2 Vertical Integration S3 Current assets management S4 Distribution network S5 International orientation Weaknesses W1 Global positioning W2 Product portfolio W3 Employee relations W4 Manufacturing facilities W5 Process oriented R&D 0.13 .5 2.52 4 5 Know the paint industry In.15 0.0 2.0 2.05 .5 3.05 3.0 3.10 .10 .53 .05 0.10 Name of µAsian¶ in outside Asia market Concentration on decorative segment Nature of job and hygienically unsafe industry Low investment in other than decorative segment Slow in new products .5 4.10 0.35 .0 .60 .

e. ‡Legislation. communications costs.Cultural Future ‡Shifts in values and culture ‡Change in lifestyle ‡Attitudes to work and leisure ‡µGreen¶ environmental issues ‡Education and health ‡Demographic changes ‡Distribution of income Economic Future ‡Total GDP and GDP per head ‡Inflation ‡Consumer expenditure and disposable income ‡Interest rates ‡Currency inflation and exchange rates ‡Cyclicality ‡Unemployment ‡Energy costs. national and European or regional trading block level. raw materials costs Technological Future ‡Government and EU investment policy ‡Identified new research initiatives ‡New patents and products ‡Speed of change and adoption of new technology ‡Level of expenditure on R&D by organization¶s rivals ‡Development in nominally unrelated industries that might be applicable Environmental Future ‡µGreen¶ issues that affect the environment ‡Level and type of energy consumed-renewable energy? ‡Rubbish.Checklist for a PESTEL Analysis Political Future ‡ Political parties and alignments at local. on taxation and employment law ‡Relations between government and the organization (possibly influencing the preceding terms in a major way and forming a part of future corporate strategy) ‡Government ownership of industry and attitude to monopolies and competition Socio. waste and its disposal Legal Future ‡Competition law and government policy ‡Employment and safety law ‡Product safety issues .g. transport costs.

Environmental Turbulence Repetitive Expanding Changing Surprising Complexity National Familiar National Extrapolable Changeability Familiarity of events Regional Technological Global Economic Discontinuous Novel Rapidity of Change Predictability Visibility of future Slower than response Recurring Comparable to response Predictable Partially predictable Faster than response Unpredictable surprises Turbulence level 1 Low 2 3 4 High Assessing the dynamics of the environment .

Five-Forces Analysis The five forces are industry forces that impact on a company¶s ability to compete in a given market.  .  The purpose of five-forces analysis is to diagnose the principal competitive pressures in a market and assess how strong and important each one is.

Porter¶s Five Forces Model of Competition Threat of Threat of New New Entrants Entrants Bargaining Power of Suppliers Rivalry Among Competing Firms in Industry Bargaining Power of Buyers Threat of Substitute Products .

Threat of New Entrants Economies of Scale Barriers to Entry Product Differentiation Capital Requirements Switching Costs Access to Distribution Channels Cost Disadvantages Independent of Scale Government Policy Expected Retaliation .

Bargaining Power of Suppliers Suppliers are likely to be powerful if: Supplier industry is dominated by a few firms Suppliers exert power in the industry by: * Threatening to raise prices or to reduce quality Powerful suppliers can squeeze industry profitability if firms are unable to recover cost increases Suppliers¶ products have few substitutes Buyer is not an important customer to supplier Suppliers¶ product is an important input to buyers¶ product Suppliers¶ products are differentiated Suppliers¶ products have high switching costs Supplier poses credible threat of forward integration .

Bargaining Power of Buyers Buyer groups are likely to be powerful if: Buyers are concentrated or purchases are large relative to seller¶s sales Purchase accounts for a significant fraction of supplier¶s sales Products are undifferentiated Buyers face few switching costs Buyers¶ industry earns low profits Buyer presents a credible threat of backward integration Product unimportant to quality Buyer has full information Buyers compete with the supplying industry by: * Bargaining down prices * Forcing higher quality * Playing firms off each of other .

Threat of Substitute Products Products with similar function limit the prices firms can charge Keys to evaluate substitute products: Products with improving price/performance tradeoffs relative to present industry products .

Rivalry Among Existing Competitors Cutthroat competition is more likely to occur when: Numerous or equally balanced competitors Slow growth industry High fixed costs High storage costs Lack of differentiation or switching costs Capacity added in large increments Diverse competitors High strategic stakes High exit barriers .

STRATEGIC GROUP ANALYSIS Mapping Strategic Groups in the Indian Food Retail Industry High Restaurants in star Hotels like Oberoi Pizza Hut Kentucky Fried Chicken Barista Price Haldiram¶s Saravana Bhawans Domino¶s Burger King Mc Donald¶s Nirula¶s Dhabas and Local small food outlets Low Limited Menu Product.Line Breadth Full Menu .

Prospectors .Analyzers .Strategic Types-Miles and Snow .Defenders .Reactors .

Competitor Analysis FUTURE OBJECTIVES ‡How do our goals compare to competitors¶? ‡Where will emphasis be placed in the future? ‡What is the attitude toward risk? RESPONSE CURRENT STRATEGY ‡How are we currently competing? ‡Does this strategy support changes in the competitive strategy? ‡What will our competitors do in future? ‡Where do we hold an advantage over our competitors? ‡How will this change our relationship with competitors? ASSUMPTIONS ‡Do we assume the future will be volatile? ‡Are we operating under a status quo? ‡What assumptions do our competitors hold about the industry and ourselves? CAPABILITIES ‡What are our strategies and weaknesses? ‡How do we rate compared to our competitors? .

operation: the Four links Model Informal co-operative links and networks Government links and networks THE ORGANIZATION Complementors Formal co.Analyzing co.operative links .

Dynamics of Internal Environment (Resource Based View ) Strategic Competitiveness/Advantage Competitive Advantage Organisational Capability Competencies Synergistic Effects Strenghts and Weaknesses Organisational Organisational Resources Behaviour .

.. Capabilities and Core Competencies to create VALUE for customers? And.Key Questions for Managers in Internal Analysis How do we assemble bundles of Resources. Will environmental changes make our core competencies obsolete? Are substitutes available for our core competencies? Are our core competencies easily imitated? .

Resources  An asset is anything the firm owns or controls. Although tangible resources may be essential to a firm¶s strategy. They include real estate. . due to their standard nature. of course. production facilities. notable exceptions. and often are the only resources that appear on a firm¶s balance sheet. ³Asset´ is to Accounting as ³Resource´ is to Management. and raw materials. they rarely are a source of competitive advantage. There are. among others. Loosely.O. Tangible assets are the easiest to value.

brand names. and firm value. patents and trademarks. These assets often lay an important role in competitive advantage (or disadvantage). cultures. The list of organizational capabilities includes a set of abilities describing efficiency and effectiveness: low cost structure. and accumulated learning and experience. they are complex combinations of assets people. technological knowledge. and processes that organizations use to transform inputs into outputs. fast product development. Organizational capabilities are not factor inputs like tangible and intangible assets. Intangible  assets include such things as companyreputations. ³lean´ manufacturing. . high quality production.

you can identify gaps in performance.Strengths and Weakness form a basis for INTERNAL analysis By examining strengths. vulnerabilities. and erroneous assumptions about existing strategies. you can discover untapped potential or identify distinct competencies that helped you succeed in the past.  .  By examining weaknesses.

competitiveness. and profitability. A core competency is a well-performed internal capability that is central. A distinctive competence is a competitively valuable capability that a company performs better than its rivals.   .Competencies  A competency is an internal capability that a company performs better than other internal capabilities. not peripheral. to a company¶s strategy.

Nonsubstitutable/ Organisable . if any.Core Competencies Core Competencies must be: Valuable Resources that either help a firm to exploit opportunities to create value for customers or to neutralize threats in the environment resources that are possessed by few. causal ambiguity or social complexity Resources that do not have strategic equivalents. such as firm-specific knowledge or trust-based relationships and which can be organised by the firm. usually due to unique historical conditions. current or potential competitors Rare Costly to Imitate Resources that other firms cannot develop easily.

VRIO Framework.Barney Is the R/C valuable? Is the R/C difficult or Is the costly to R/C rare? imitate? Is the R/C organisable Competitive ? Consequences Performance Implications No Yes Yes Yes No No Yes Yes No No No Yes No Yes/No Yes/No Yes Competitive Disadvantage Competitive Parity Temporary Advantage Sustainable Competitive Advantage Below AIR AIR AIR to Above AIR Above AIR Resource = R Capability = C AIR = Average Industry Returns .

Core Competencies--Cautions and Reminders Never take for granted that core competencies will continue to provide a source of competitive advantage All core competencies have the potential to become Core Rigidities Core Rigidities are former core competencies that sow the seeds of organizational inertia and prevent the firm from responding appropriately to changes in the external environment Strategic myopia and inflexibility can strangle the firm¶s ability to grow and adapt to environmental change or competitive threats .

new product launch in production. etc. However. For example. .   All firms have capabilities. pilot testing.g.Capabilities  A capability is usually considered a ³bundle´ of assets or resources to perform a business process (which is composed of individual activities) E. process debugging. a firm pursuing a differentiation strategy would focus on new product development. product design. a firm will usually focus on certain capabilities consistent with its strategy. Capabilities represent the firm¶s capacity or ability to integrate individual firm resources to achieve a desired objective. A firm focusing on a low cost strategy would focus on improving manufacturing process efficiency. The product development process involves conceptualization.

transmission and exchange or sharing of information and knowledge as carried out by the firm's employees.Capabilities develop over time as a result of complex interactions that take advantage of the interrelationships between a firm¶s tangible and intangible resources that are based on the development. . advantage. Capabilities become important when they are combined in unique combinations which create core competencies which have strategic value and can lead to competitive advantage.

Organisational Capability Factors Strategic strenghts existing in different functional areas Functional Capability 1. Price related factors 3. Factors related to the management of funds Marketing Capability 1. Factors related to sources of funds 2. Product related factors 2. Place related factors 4. Promotion related factors . Factors related to usage of funds 3.

Factors related to the HR system 2. Factors related to industrial relations .Factors related to production system 2. Factors related to organisational and employees characteristics 3. Factors related to the R&D system HR Capability 1. Factors related to the operations and control system 3.Operations Capability 1.

2.Information management capability 1. Factors related to external relationships 4. 4. Factors related to organisational climate . 3. Factors related to general managers 3. Factors related to general management system 2. Factors related to acquisition and retention of employees Factors related to processing and synthesis of information Factors related to retrieval and usage of information Factors related to transmission and dissemination General management capability 1.

2.doc .Figure 7.

Possible Business Definition of an Oral Care Company CUSTOMER FUNCTIONS Form Foam Freshness Flavor Dental/ Oral Health CUSTOMERGROUPS Cosmetic Segment Paste/ Powder Different Packaging Material Different Base Material Different Flavoring Material Different additives Fluoride Segment CUSTOMER TECHNOLOGY .

Brands etc.) yCompetencies ySkills .Three Stages of Strategy & Competition Competition for Existing Market Competition for Resources Competencies Competition for Dreams Competitive Strategy Strategic Architecture Opportunity Horizon (BlueOcean Strategy) yVision of Future Markets yCorporate Ambition ySense of Purpose yIndustry Analysis yStrategic Segmentation and Positioning yCost and Differentiation Drivers yResources (Technology.

1.doc .figure 7.

Expansion Strategies 3.Grand Strategies 1. Retrenchment Strategies . Stability Strategies 2.Corporate Strategies.

.  Relatively stable environment. Stability Strategies  Less risky.  Consolidation is sought through after rapid expansion.1.  Expansion is perceived as a threat. involves fewer changes and people feel comfortable.

have pride. .2.  Increasing size may lead to more control over the market vis. Expansion Strategies  Due to environmental demand.a.  Psychologically strategists feel more satisfied with growth prospects.vis competitors.  Advantages from the experience curve and scale of operations may help.

environment. .  Threatening  Stability can be ensured by reallocation of resources from unprofitable to profitable business. Retrenchment Strategies  Due to continuous losses and inviability.3.

Dimensions of Grand Strategies:
1.

Internal/ External Dimension Related/ Unrelated Dimension Horizontal/ Vertical Dimension Active/ Passive Dimension

2.

3.

4.

STABILITY STRATEGIES 
No-

change strategy Strategy Proceed- with- caution strategy 

Profit 

Pause/

GROWTH

STABILITY

RETRENCHMENT
‡Turnaround ‡Captive Company ‡Sell- out/ Divestment ‡Bankruptcy/ Liquidation

Concentration ‡Vertical Growth ‡Horizontal Growth Diversification ‡Concentric ‡Conglomerate

‡Pause/ Proceed with caution ‡No Change ‡Profit

EXPANSION STRATEGIES Five types: a) Expansion through concentration b) Expansion through integration i) vertical c) d) e) ii) horizontal Expansion through diversification Expansion through cooperation Expansion through internationalization i) concentric diversification ii) conglomerate diversification .

Expansion through concentration .

Expansion through integration-Vertical .horizontal Typical Value Chain for a Manufactured Product Raw Materials Primary Manufacturing Fabrication Product Producer Distributor Retailer .

Logistics (raw materials assembling. (warehousing and distribution of testing) handling finished and product) warehouses) Service Marketing and Sales (installation. accounting.Firm Infrastructure (general management. strategic planning) Human Resource Management (recruiting. channel relations) Primary Activities . repair. supplies) Profit Margin Support Activities Outbound Operations Inbound Logistics (machining. (advertising. machines. development) Technology Management (R&D. training. parts) promotion. finance. product and process improvement) Procurement (purchasing of raw materials. pricing.

Examine each product line¶s value chain in terms of the activities involved in producing that product or service. .Corporate Value Chain involves three steps: 1. 2. Examine the potential synergies among the value chains of different product lines or business units. 3. Examine the ³linkages´ within each product line¶s value chain.

Added to Firm¶s Products and Services LOW HIGH Taper Vertical Integration: HIGH Full Vertical Integration: Produce all Vertically Produce some Internally Activity¶s Potential for Competitive Advantage LOW Outsource Completely: Outsource Completely: Purchase with LongBuy on Open Market Term contracts .PROPOSED OUTSOURCING MATRIX Activity¶s total Value.

Outsourcing errors Activities that should not be outsourced Wrong vendor selection Writing poor contract Overlooking personnel issues Hidden costs of outsourcing Failing to plan exit strategy .

Expansion through diversification i) concentric diversification ii) conglomerate diversification .

Links Model Government.links and networks Informal co.operative links and networks THE ORGANIZATION Complementors Formal Co.operative links .Expansion through Co.operation Four.

.Complementors are those companies whose products add more value to the products of base organization than they would derive from their own products..

Open up new markets and increase business opportunities.Analyzing the co. Deliver more sustainable relationship with those outside the organization. Produce lower costs.    .operative environment  It may help in the achievement of sustainable competitive advantage.

Co-operative strategies could be of the following types: i) Mergers Horizontal Mergers Vertical Mergers Concentric Mergers Conglomerate Mergers ii) Takeovers iii) Joint Ventures iv) Strategic Alliances .

To take advantage of synergy. . 2. To balance. To acquire needed resources quickly. or diversify product line. To improve the stability of earning and sales. 8. To reduce competition. To increase the growth rate and make a good investment. 3. compete. To avail tax concessions and benefits. 7. 6. To increase the value of the organization¶s stock.Reasons for Mergers 1. 5. 4.

3. To increase the growth rate. To increase the value of the owner¶s stock and investment. To benefit from tax legislation. 4. 2.Why the seller wishes to merge: 1. . To deal with top management succession problem. To acquire resources to stabilize operations. 5.

Issues in Mergers:  Strategic  Financial  Legal  Managerial .

Domestic Strategy Pressure for Local Responsiveness High .e) Expansion through Internationalization Four Types of International Strategies Low Global Strategy Cost Pressures International Strategy High Low Transnational Strategy Multi.

Export Entry Modes Contractual Entry Modes Investment Entry Modes 2. 3. .Entry Modes: 1.

cost strategy to expand sales in Order to achieve economies of scale. ‡Does not require a high resource commitment in the targeted country.cost strategy to expand sales in order to achieve economies of scale. ‡Low. ‡Moderate cost strategy to expand sales in order to achieve economies of scale Disadvantages ‡Hard to control operations abroad. ‡High potential for opportunism. ‡Could damage the firm¶s reputation and image. ‡Does not provides experiential knowledge in the foreign market. ‡Low. ‡Requires a moderate resource commitment in the targeted country. ‡Provides very small experiential knowledge in foreign markets. International franchising . ‡Provides a small experiential knowledge in the foreign market. ‡High monitoring costs.Modes of Entry Export Advantages ‡Does not require a high resource commitment in the targeted country. ‡Speedy entry to foreign market. ‡Can be used as a step towards a more committed mode of entry. ‡Hard to enforce agreements. ‡Inexpensive way to gain experiential knowledge in foreign markets. Licensing ‡Hard to monitor partners in foreign markets. ‡High potential for opportunism. ‡Speedy entry to foreign market.

suppliers. knowledge in foreign markets. subsidiaries into the parent¶s ‡Provides high experiential system. ‡Low level of conflict between the ‡Adds extra capacity to the subsidiary and the parent firm. government officials. and government officials. parent firm. suppliers. ‡Low risks of technology appropriation. . ‡Managers of acquired foreign ‡Could rely on preMergers and subsidiaries may have a weak existing relationships with Acquisitions attachment to the parent firm. customers. ‡Does not add extra capacity to the market. ‡Problem of integrating foreign ‡Able to control operations abroad. and Greenfield Strategy knowledge in foreign markets.Mode of Entry Advantages Disadvantages ‡Low risks of technology appropriation ‡Could not rely on pre‡Able to control operations abroad. existing market. ‡Managers of foreign subsidiary ‡The firm is seen as a foreign have a strong attachment to the firm by local stakeholders. Wholly owned existing relationships with ‡Provides high experiential Ventures customers.

RETRENCHMENT STRATEGIES Turnaround Captive Company Strategy Selling out/Divestment Bankruptcy Liquidation .

Persistent negative cash flow. 3. Uncompetitive products or services. Declining market share. 6.TURNAROUND STRATEGIES: Conditions for turnaround: 1. 5. 4. High turnover of employees. Mismanagement . 2. low morale. Deterioration in physical facilities.

Elements in a turnaround strategy: 1. 3. Changes in the top management Initial credibility. 7. 9.building actions Neutralizing external pressures Initial control Identifying quick pay off activities Quick cost reduction Revenue generation Asset liquidation for generating cash Better internal coordination . 5. 8. 6. 4. 2.

4. 2. Survival is based on cash generated by selling off a part. 5. lack of investment. Severity of competition and firm¶s inability to cope. An acquired business proves to be a mismatch and cannot be integrated with the company. .DIVESTMENT STRATEGIES Reasons: 1. Technological up gradation required. Negative cash flows leading to financial problems. 3.

7.mutual strategic interest. 8.6. Not to attract the provisions of MRTP Act or owing to oversize and the resultant inability to manage a large business. Divestment by one firm may be a part of merger plan. Better alternative available for investment. .

most extreme and unattractive.  Why liquidation undesirable?  Management hesitate due to fear of failure. does not allow liquidation due to political risk involved.LIQUIDATION STRATEGIES Closing down a firm and selling its assets.  Trade unions resist the loss of employment of workers.  Last resort.  Govt. .

 Selling assets is difficult as buyers are not found easily.Creditors and supplies desire the fulfillment of contractual obligations.  .

liquidation is termed as winding-up. 1956.Legal Aspects of Liquidation:  Under the Companies Act.  Winding. .up is the process whereby its life is ended and its property administered for the benefits of its creditors and members.

 Collects  Pays its debts. its assets.  Distributes surplus among the members according to the rights. .Act provides for the liquidator Takes control of the company.

Compulsory winding.Liquidation is done in three ways: 1. Voluntary winding.up under an order of court. . 2.up under the supervision of the court. 3. Voluntary winding-up.

Competitive strategies-Tactics For Business Strategies  Timing Tactics When Where   .

4. Market leaders Market Challengers Market Followers Market Nichers 2. . 3.Market Location Tactics: 1.

Level Strategic Analysis  Corporate Portfolio Analysis A set of techniques that help strategists in taking strategic decisions with regard to individual products or businesses in a firm¶s portfolio. .Corporate.

BCG Matrix .

 GE NINE.CELL MATRIX ZONE STRATEGIC SIGNAL I N D U S T R Y A T T R A C T I V E N E S S HIGH GREEN INVEST/ EXPAND MEDIUM YELLOW SELECT/ EARN LOW RED HARVEST/ DIVEST STRONG AVERAGE WEAK BUSINESS STRENGTH/ COMPETITIVE POSITON .

ofheartland Alien Territory High Low Value.Trap High FIT BETWEEN PARENTING OPPORTUNITIES AND PARENTING CHARACTERISTICS . CORPORATE PARENTING ANALYSIS Low Heartland MISFIT BETWEEN CRITICAL SUCCESS FACTORS AND PARENTING CHARACTERISTICS Ballast Edge.

Functional strategies and the mode of their implementation. major opportunities and threats and critical success factors. Strategies chosen and the assumption under which the strategies would be relevant contingent strategies under different conditions. business definition. . major strengths. and objectives. and weaknesses and core competencies. Measures to be used to evaluate performance and assess the success of strategy implementation. mission. goals. Results of environmental appraisal.Strategic Plan         A clear statement of strategies intent covering vision. Results of organization appraisal. Proposed organizational structure and major organizational systems for strategic implementation. Strategies budget for the purpose of resource allocation.

Strategy implementation Project  Procedural  Resource  Structural  Functional  Behavioral  .

Project Implementation      Conception Phase Definition Phase Planning and Organizing Phase Implementation Phase Clean-up Phase .

Procedural Implementation            Formation of a company Licensing procedures Securities and Exchange Board of India requirements Foreign collaboration procedures Foreign Exchange Management Act requirements Import and export requirements Patenting and trademarks requirements Labour legislation requirements Environmental protection and pollution control requirements Consumer protection requirements Incentives and facilities benefits .

several strategies for each product area but business still runs as one entity Separate businesses within groups with limited links Separate businesses within group with strong link needed across parts of the group Unrelated businesses-series of businesses each with its own strategic issues Ideas factory-strategy needs to be strongly experimental Functional Functional but monitor each range of products using separate profit and loss accounts Divisional Matrix Holding company      Innovative structure .Nature of strategy and organizational structure    Nature of strategy  Likely organizational structure      Single business-one major set of strategies for business Range of products extending across a single business.

Structure follows strategy ± ±New strategy is created ±New administrative problems emerge ±Economic performance declines ±New appropriate structure is invented ±Profit returns to previous level .

patent rights. cost and quality control. etc Factors related to the R & D system: Technology. material supply. product. and sourcing. or service design. maintenance systems and procedures. Factors related to the operations control system: Aggregate production planning. work systems. etc   . Technical collaboration and support. inventory. procurement.Functional Implementation Production Strategies  Factors related to the production system: Capacity. extent of vertical integration.

Strategic Questions      What types of production processes to adopt? What should be the plant and facility design? Where should the plant be located? How to procure resources? What type of technology to be used? .

continuous production. capacity reduction. process improvement. resources cuts   . recouping of costs. depletion of inventories and stocks. product modifications. vertical integration. operations smoothing. Stability: Technology diffusion. Retrenchment: Technology transfer.Production Strategies vis-à-vis Grand Strategies  Expansion: Technology innovation. production efficiencies. investment in facility and plant. contracting and joint venture. capacity enhancement. optimization of plant use. economies of scale. plant upgradation. cut in volume and size. outsourcing. sale of facility and asset. heavy R&D spends.

standards etc. HR values and culture. selection. Factors related to organizational and employees characteristics: corporate image. communication. commitment. . training. appraisal. quality of personnel.HR Strategies    Factors related to the personnel system: system for manpower planning. policies. perception about the organization as an employer. collective conditions. skills and knowledge base. procedures. compensation. development. etc Factors related to industrial relations: Labor-management relationship. position of the personnel department within the organization. employees satisfaction. motivation and morale etc.

Strategic Questions What type of personal systems and processes to adopt?  What should be the HR values and systems?  What type of skills to look for and build?  How to maintain harmonious industrial relations?  How to motivate and satisfy?  .

outsourcing. external hiring. Retrenchment: Lean staffing. growth and improvement in employability. removal of causal and temporary workers. heavy investment in training and development. voluntary retrenchment. Stability: Internal promotions. relocations and transfers. employee retention. increase in compensations budget. skills consolidation. performance management. redeployment and relocation. retraining. post ±induction training.HR Strategies vis-à-vis Grand Strategies  Expansion: Organizational manning and staffing. increasing work load with commensurate rewards. shift working and productivity improvements. curtailment of outsourcing and contracting.   .

    .Marketing Strategies  Product related factors: Quality. models. intermediaries. variants. sales promotion. discount. size. features. etc. storage. smell. channels. mode of payment. Promotion related factors: Advertising. Price. mark-up price. coverage. transportation. logistics. look. packaging etc.related factors: Market price.related factors: distribution. credit terms. Integrative and systematic factors: Marketing mix. Place. personal selling. public relations. allowances etc. inventory. warehousing etc.

Strategic Questions
What types of products to offer?  What price to be charged?  Which distribution channel to be used?  Which promotional tools to be used? 

Marketing Strategies vis-à-vis Grand Strategies  



Expansion: aggressive promotion, sales promos, heavy ad spends, push marketing, incentives, market and product development, rapid market penetration, brand extension, price differentiation , multiple channel and wide coverage , extensive distribution and networking Stability: slow market moves, brand building , market consolidation, gradual market skimming Retrenchment: demarketing , receding promotions, ad spend cuts, price increases , distribution cuts.

Finance Strategies
To provide the organization with funds and a capital structure to suit the strategic requirements 1. Sources of funds(capital mix decisions) Internal vs external and 2. Usage of funds Linking allocation to strategies Prioritizing projects and activities Capital expenditure vs. working capital 3. Management of funds Dividend mgt., accounts and audit, capital structure management, compensation 

Strategic Questions What balance between internal and external funds? Permissible risks? Priorities for allocation?  Cash flow needs?  Credit policies?  .

decentralised expenditure  Retrenchment: rescue operations. current assets  Expansion: capital budgeting. centralised expenditure.reallocation of funds. pruning and cuts  . working capital needs. cash mgt. long term investments.Finance Strategies vis-à-vis Grand Strategies Stability: daily operations.. fixed assets.

Behavioral Implementation Leadership implementation  Strategy-Corporate Culture Fit  Corporate Power and Politics  Values and Ethics  .

Influence People Teams Culture Organizational Environment Monitor* Refine Establish Energize* Attune Mission Align Business Ideas Connect* Unify Focus Vision ³Strategic´ What? How? Strategy Decision Empower* Engage Enable Goal What? Task Why? Results ³Tactical´ *Representative Leadership ³Linking Pin´Actions .

Is the planned strategy compatible With the current culture? Yes No Tie changes into the culture Can the culture be modified to make it more compatible with the new strategy? No Yes Introduce minor culturechanging activities Is management willing and able to make major organizational changes and accept probable delays and a likely increase in costs? Yes No Manage around the culture by establishing a new structural unit to implement strategy. Yes Is management still committed to implementing the strategy No Find a joint.venture partner or Contract with another company to carry out the strategy Formulate a Different strategy .

Methods of Managing the Culture of an Acquired Firm Very Much Not at All Very Attractive Integration Assimilation Perception of the Attractiveness of the Acquirer Not at All Attractive Separation Deculturation .

Gap Analysis Desired Performance Present Performance Performance Gap Performance Time t1 t2 .

venture partner or Contract with another company to carry out the strategy Formulate a Different strategy .Did the existing strategies produce the desired results? Yes Were strategies poorly executed? No Tie changes into the culture Can the culture be modified to make it more compatible with the new strategy? No Yes Introduce minor culturechanging activities Is management willing and able to make major organizational changes and accept probable delays and a likely increase in costs? Yes No Manage around the culture by establishing a new structural unit to implement strategy. Yes Is management still committed to implementing the strategy No Find a joint.

ISSUE Y N Did the existing strategies produce the desired results? Were strategies poorly executed? Were the underlying Assumptions valid? Were strategies and their requirements N communicated effectively? CONCLUSIONS N Y Y Were alternate Scenarios defined And assessed? N Y Did management N commit to & follow through the strategies? Y Were results monitored N And strategies Revised as needed? Poor Communication Weak commitment of operating management Y Were the current N situations and important trends properly diagnosed? Y Was strategy formulation adversely affected? N Inconsistent N Were supporting functional functional plans Strategies consistent with Incorrect assessment the business unit strategies? of resource Y N requirements Were resource allocation consistent with the strategy? Failure to establish Proper feedback mechanism Invalid planning bases: Y Incorrect strategy formulation Successful strategy and results .

Thank you .

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