Professional Documents
Culture Documents
STRATEGIC MANAGEMENT
MODULE 1
1
CONCEPT OF STRATEGY
&
STRATEGIC MANAGEMENT
PYRAMID OF BUSINESS POLICY
MAJOR POLICY
Lines of business
( Code of ethics )
SECONDRY POLICIES
( Selection of geographical area,
major customers, major products )
FUNCTIONAL POLICIES
( Marketing, Production, Research, Finance
Material & Quality management etc. )
FORMULATION of
Conducting SWOT, Formulating CORPORATE &
STATEGIES BUSINESS LEVEL Strategies, Strategic Analysis
Strategic Choice, Strategic Plan.
IMPLEMENTATION
Activating Strategies, Designing Structure, Systems&
OFSTRATEGIES
Processes, Behavioral & Functional implementation
And Operationalising strategies
REVIEW,EVALUATION
CONTROL Performing Strategic Evaluation, Exercising Strategic
Control and Reformulating Strategies
STRATEGIC MANAGEMENT
ENVIRONMENT STRATEGY STRATEGY EVALUATION
SCANNING FORMATION IMPLEMENTATION & CONTROL
MISSION
(Reason for existence)
EXTERNAL
SOCIETAL OBJECTIVES
(What results to
TASK
accomplish & by
ENVIRONMETAL when )
STRATEGIES
INTERNAL (Plan to achieve
Mission&Objectives)
STRENGTS
POLICIES PROGRMS
WEAKNESSES Activities needed
(Broad guidelines
• structure for decision To accomplish plans
FEEDBACK / LEARNING
3
NATURE OF
INTERNATIONAL STRATEGIC MANAGEMENT
SINGLE COUNTRY, EXPORT & INTERNATIONAL
STRATEGY
FIRM A
OPERATES
FIRM A OPERATES IN COUNTRY X Y
IN COUNTRY X
EXPORT TO COUNTRY Y
SINGLE COUNTRY STRATEGY EXPORT STRATEGY
SUBSIDIARY SUBSIDIARY
S1 S3
THE CENTRE
SUBSIDIARY
SUBSIDIARY
S2
S4
INTERNATIONAL STRATEGY
GLOBAL STRATEGY
SUBSIDIARY SUBSIDIARY
S1 S2
SUBSIDIARY SUBSIDIARY
S6 THE CENTRE
S3
SUBSIDIARY
SUBSIDIARY
S4
S5
4
LEVELS OF STRATEGY
&
EVOLUTION
OF
STRATEGIC MANAGEMENT
HIERARCHY OF STRATEGY
CORPORATE STRATEGY
BUSINESS STRATEGY
FUNCTIONAL
STRATEGY
STRATEGY AT DIFFERENT LEVELS
CORPORATE STRATEGY COMPETITIVE STRATEGY OPERATIONAL
. PHASE II : FORECAST BASED PLANNING : Seeking more effective planning for growth
by trying to predict the future beyond next year.
IV REWORK AS
EXT. ENV. NEEDED
ANALYSIS IX
. OPP. MONITORING
. THREATS
MODULE 2
6
TYPICAL VALUE CHAIN
OF A MANUFACTURED PRODUCT
FIRM INFRASTRUCTURE
( Gen.Mgmt,Accounting,Finance, Plg)
PROCUREMENT
( Purchasing of Raw Materials, Machines,Supplies)
ending
with distributor getting the final goods into the hands of
ultimate customer
• Focus of value chain: To examine corporation in the context of overall chain of value creating activities of which
firm may only be a small part.
INDUSTRY VALUE CHAIN ANALYSIS: 2 segments
i) Upstream Activities: Petroleum Industry- Oil exploration, drilling and moving crude oil to refinery.
ii) Downstream activities: Refining the oil, Transporting and marketing of Gasoline and Refined Oil to
distributors and gas station retailers
• Ex: British Petroleum: Dominant in upstream activities like exploration. AMCO: Great expertise in downstream
activities like marketing and retailing. Merger combined their core competencies
• In analyzing value chain a firm operates up and down the entire chain but usually has area of prime expertise
called – centre of gravity
• Differences among competitor’s value chain are key sources of competitive
advantage
Backward & Forward integration
• One of the strategic moves: Moving forward or backwards along the value chain in order to reduce costs,
guarantee access to key raw materials ( Backward Int.) or to guarantee cost effective and proper distribution
( Forward Int. )
CORPORATE VALUE CHAIN
• Framework for identifying competitive advantage
• Differences among competitor’s value chain are key source of competitive advantage
• Each corporation has internal value chain of activities. Activities
performed by any firm can be grouped under 9 areas
PRIMARY ACTIVITIES
1. INBOUND LOGISTICS: Raw mat. Handling and warehousing
2. OPERATIONS: Product manufacturing ( Machining, Assembly & Testing)
3. OUTBOUND LOGISTICS: Warehousing & Distribution
4. MARKETING & SALES: Advertising, Promotion etc..
5. SERVICE: Installation, Repairs & After sale service
SUPPORT ACTIVITIES
6 FIRM’S INFRASTRUCTURE
7 HUMAN RESOURCE DEVELOPMENT
8 TECHNOLOGY DEVELOPMENT: R&D , Product & Process development
9 PROCUREMENT: MP&IC, Purchasing, Outsourcing and Material Handling & Storage
EXTERNAL ENVIRONMENT
COMPANY AND ENVIRONMENT
ENVIRONMENT
ACTIVITIES
MEN OPERATIONS GOODS
MACHINE PLANNING SERVICES
MATERIAL MANUFACTURING SALES
METHODS INSPECTION PROFITS
MONEY PACKING
OBJECTIVES
GOALS
CORRECTIVE TARGETS FEEDBACK
ACTION
ENVIRONMENT
PEST FACTORS
POLITICAL TECHNOLOGICAL
ECONOMIC SOCIAL
PESTLE MATRIX
POLITICAL
ECONOMIC
CURRENT/FUTURE LEGISLATION
ECONOMY SITUATION & TRENDS
REGULATORY BODIES
TAXATION
GOVT. POLICIES
INTEREST & EXCHANGE RATES
GOVT. TERM & CHANGE
MARKET & TRADE CYCLE
SOCIAL TECHNOLOGICAL
LIFESTYLE TRENDS TECHNOLOGY ACCESS,LICENSING,PATENTS
DEMOGAPHICS MATURITY OF TECHNOLOGY
COMPANY ATTITUDES & OPINIONS REPLACEMENT TECHNOLOGY / SOLUTIONS
BRAND,COMPANY ,TECHNOLOGYIMAGE INNOVATION POTENTIAL
CONSUMER BUYING PATTERNS MANUFACTURING MATURITY & CAPACITY
ETHNIC/RELIGIOUS FACTORS
LEGAL ENVIRONMENTAL
INTERNATIONAL LAW ENVIRONMENTAL IMPACT
EMPLOYMENT LAW ENVIRONMENTAL LEGISLATION
COMPETITIOM LAW ENERGY CONSUMPTION
HEALTH & SAFETY LAW WASTE DISPOSAL
REGIONAL LEGISLATION
CONSTITUENTS OF MICRO ENVIRONMENT
MARKETS
MARKETING TYPES & COMPETITION
INTERMEDIARIES DEMANDS
E- COMMERCE
SUPPLIERS
MICROENVIRONMENT
SKILL LEVEL
FINANCIAL OF WORKFORCE
INSTITUTIONS
REGULATORY
IR CLIMATE
PROVISIONS
ENVIRONMENTAL CHANGES
WHICH FORCE THE FIRMS TO ADOPT STRATEGIC PERSPECTIVE
• CHANGES IN TECHNOLOGY
• PROLIFERATION OF NEW PRODUCTS
• FASTER COMMERCIALISATION OF NEW IDEAS
• EMERGENCE OF GLOBAL FIRMS, MARKETS & BRANDS
• CHANGING TASTES & PREFERENCES OF CUSTOMERS
• THE NEW AFFLUENCE OF CONSUMER
• SOCIO-CULTURAL & POLITICO-LEGAL CHANGES
• BUSINESS BOUNDRIES GETTING BLURRED
( DUE TO OVERARCHING TECNOLOGIES : FASTER COMMUNICATION,
INTERNET, E-GOVERNANCE & E-COMMERCE etc )
NEW DEMANDS FIRMS HAD TO FACE
( CONSEQUENT TO ENVIRONMENTAL CHANGES )
• TO BE STRATEGICALLY ALERT
• TO BE FUTURE - ORIENTED
• TO BE ABLE TO TAKE RISKS IN TAPPING OPPORTUNITIES
• TO BE INSULATED ENOUGH AGAINST ENVIRONMENTAL
THREATS
• TO DEVELOP COMPETENCE FOR ASSIMILATING CHANGES
FASTER
• TO RESPOND EFFECTIVELY AND MORE ECONOMICALLY
( It helps avoid haphazard response to environment.
Provides best possible fit between the firm & Ext. Env.
Helps build sustainable competitive advantage.
Prepares the firm to not only face future but even shape
the future in its favor. )
9
INTERNAL ENVIRONMENT
A SWOT CHECKLIST
INTERNAL STRENGTHS: INTERNAL WEAKNESSES:
MANY PRODUCT LINES? NARROW PRODUCT LINES?
BROAD MARKET COVERAGE? RISING MANUFACTURING COST?
MANUFACTURING COMPETENCE?
GOOD MARKETING SKILLS? POOR MARKETING PLAN?
GOOD INVENTORY MANAGEMENT? POOR MATERIAL MANAGEMENT?
R&D? INADEQUATE HUMAN RESOURCES
INFORMATION SYSTEM?
GOOD HUMAN RESOURCES?
LOSS OF BRAND NAME?LACK OF
BRAND EQUITY? CORPORATE DIRECTION?
COST ADVANTAGE? LACK OF CORPORATE CONTROL
APPROPRIATE ORG. STRUCTURE? POOR FINANCIAL MANAGEMENT
APPROPRIATE CONTROL SYSTEMS? INAPPROPRIATE ORG. STRUCTURE
ABILITY TO MANAGE STRAT. CHANGE
& CONTROL SYSTEMS
Etc
HIGH CONFLICTS, POLITICS? Etc
SWOT CHECKLIST
POTENTIAL ENV. OPPORTUNITIES POTENTIAL ENV. THREATS
. . ATTACK ON CORE BUSINESSES?
. NEW MARKETA/BUSINESSES? . INCREASE IN DOMESTIC/
. COST OF DIFFERENTIATION ADV? FOREIGN COMPETITION?
. PROFITABLE NEW ACQUISITIONS? . CHANGE IN CUSTOMER
TASTE
. BRAND NAME CAPITAL IN NEW
. BARRIERS TO ENTRY
AREAS . NEW OR SUBSTITUTE
. R&D SKILLS IN NEW AREAS PRODUCTS
. VERTICAL INTEGRATION- . INDUSTRY COMPETITION
( FORWARD/BACKWARD) . SLOWDOWN IN ECONOMY
. DIVERSIFICATION . TAKEOVERS
. OTHERS? . LOWER MARKET GROWTH
RATE
. OTHERS?
MACKENZIE’S 7S MODEL
STRUCTURE
STRATEGY SYSTEMS
SHARED
VISION
SKILLS STYLE
STAFF
MODULE 3
VISION,MISSION
&
BUSINESS DEFINITION
12
STRATEGIC INTENTS
VISION OF IOC
Indian Oil aims to achieve international standards of excellence
in all aspects of energy and diversified business with focus on
Customer delight through quality products & services
•
MISSION
It is purpose / reason behind existence of any organization
• Derived from VISION and reflects the corporation’s philosophy , identity,
character and image which helps to achieve the vision.
• When defined explicitly, provides enlightenment to insiders and outsiders
on what the organization stands for.
• Many strategists/consultants contribute to the building up of mission statements.
CHARACTERISTICS OF A MISSION SATEMENTS
FEASIBLE
PRECISE
CLEAR
MOTIVATING
DISTINCTIVE
INDICATES MAJOR COMPONENTS OF STRATEGY
INDICATES HOW OBJECTIVES ARE TO BE ACHIEVED
HOW MISSION STATEMENTS ARE FRMULATED
Derived from particular set of tasks and priorities and reflects corporate philosophy
• Executive committee is setup to formally discuss
• Help of consultants also taken for an in-depth analysis of an organization and to suggest an appropriate
Mission statement
• A Mission statement once formulated should serve an organization for many years
• As the organization grows with time and goes on adding new products, services, technologies
and markets, there may even be a need for revising its Mission statements as
FEW MISSION STATEMENTS
• BHEL
To be a leading engineering enterprise providing quality
systems goods and services in the field of Energy,
Transportation , Industry, Infrastructure and other
potential areas
• RANBAXY
To become research based International pharma
company
• UTI
To keep the common man in sharper focus to encourage
savings and investment habits among them.
BUSINESS DEFINITION
• Defined along 3 parameters
CUSTOMER GROUPS: WHO is being satisfied
CUSTOMER FUNCTIONS: WHAT is being satisfied
ALTERNATIVE TECHNOLOGIES: HOW the need is being satisfied
• Provides powerful insights into understanding and defining business
• Helpful in Strat. Mgmt in many ways Indicates choice of objectives
and helps exercising best choice.
• A single business firm has simple Business Definition. Company
with several businesses has separate BD for each of its business.
• 3 dimensions provide scope for further activities and facilitates
understanding of company’s performance areas
• At corporate level ,BD concerns itself with a wider meaning of 3 dimensions.
• Each division of highly diversified co.can have more accurate BD at SBUlevel
• BD offers unique insights to companies operating in a competitive market.
where customer is an important stakeholder of the firm.
EXAMPLES
EX: Time Keeping Business:
Customer Groups: ‘Individual customers” & Industrial Customers”
Customer Functions: Finding time, Recording time, Using watches as
fashionable accessories and gift items.
Alternative Technologies: Mechanical. Quartz digital, Quartz Analog
OBJECTIVES:
• Ends that tell how goals shall be achieved
• Define org’s relationship with Environment;
• Help org to achieve VISION & MISSION;
• Provide basis for Strategic Decision making;
• Provides standards for performance appraisals,
• OBJECTIVES: GOALS
- Concrete & specific Generalized
Make goals operational
2. INTERNATIONALISE
THE STRATEGY
C C C C C
O O O O O
U U U U U
N N N N N
3. GLOBALISE THE T T T T T
STRATEGY R R R R R
Y Y Y Y Y
A B C D E
INTERNATIONAL STRATEGIES
GLOBAL TRANSNATIONAL
PRESSURES STRATEGY STRATEGY
FOR
COST REDUCTION ( OFFERING STANDARDISED (LOCATED IN A
PRODUCTS / SERVICES) DEVELOPED COUNTRY)
INTERNATIONAL MULTIDOMESTIC
STRATEGY STRATEGY
INDUSTRY
COST GLOBALISATION
GOVERNMENT
DRIVERS POTENTIAL
DRIVERS
COMPETITIVE DRIVERS
THE GLOBALISATION TRIANGLE
GLOBAL STRATEGY LEVERS
INDUSTRY GLOBAL
GLOBALISATION ORGANISATION
DRIVERS DRIVERS
A FRAMEWORK OF GLOBAL STRATEGY
INDUSTRY
GLOBALISATION
DRIVERS
I
MARKET
COST
GOVT
GLOBAL STRATEGY LEVERS
COMPETITIVE BENEFITS /
GLOBAL MARKET PARTICIPATION
GLOBAL PRODUCTS COSTS
GLOBAL LOCATION OF
GLOBAL MARKETING GLOBAL
GLOBAL COMPETITIVE MOVES STRATEGY
GLOBAL
ORGANISATION
DRIVERS
ABILITY TO DEVELOP
MANAGEMENT AND IMPLEMENT CULTURE
PROCESSES GLOBAL STRATEGY ( VALUES & RULES
( PLG,BUDGETING & THAT
INFORMATION SYSTEMS ) GUIDE BEHAVIOUR )
. GLOBAL IDENTITY
. COMMITMENT TO WORLDWIDE
( VS DOMESTIC ) EMPLOYMENT
. INTERDEPENDENCE VS
.USE OF FOREIGN NATIONALS
AUTONOMY OF BUSINESSES
.MULTICOUNTRY CAREERS
.FREQUENT TRVEL
PEOPLE
( HUMAN RESOURCES OF
.STATEMENTS & ACTIONS OF
WORLDWIDE BUSINESS )
LEADERS
MARKET
GLOBALISATION DRIVERS
• COMMON CUSTOMER NEED –PER CAPITA INCOME
CONVERGING AMONG INDUSTRIALISED NATIONS & CONVERGENCE OF
LIFE STYLES & TASTES
• GLOBAL CUSTOMERS
INCREASED TRAVEL CREATING
• GROWTH OF GLOBAL & REGIONAL CHANNELS
• TRANSFERABLE MARKETING – PUSH TO DEVELOP GLOBAL
ADVERTISING & ESTABLISHMENT OF WORLD BRANDS
• LEAD COUNTRIES
COST
GLOBALISATION DRIVERS
• MARKETING
( EXTENT TO WHICH WORLDWIDE BUSINESS USES SAME BRAND NAMES,ADVERTISING,AND
OTHER MARKETING ELEMENTS IN DIFFERENT COUNTRIES )
• COMPETITIVE MOVES
( EXTENT OF COMPETITIVE MOVES IN DIFFERENT COUNTRIES )
I
N
C
TYPE OF CUSTOMERS
R
E
A
S
I
N
G BUY IN
FOREIGN FOREIGN
I MARKRTS
N FROM
CUSTOMER
T FOREIGN
E SUPPLIER
R GLOBAL CUSTOMER
N BUY IN
A DOMESTIC
INTERNATIO
T MARKET NAL
I FROM CUSTOMER
O FOREIGN
N SUPPLIER
A
L BUY IN
I FREE CONTROLL
DOMESTIC ED
S MARKETS LOCAL
A CUSTOMER LOCAL
FROM
T DOMESTIC CUSTOMER
I SUPPLIER
O HQ DOES THE
N NO HQ HQ RECOMMENDS HQ MANDATES
INVOLVEME STANDARDS? STANDARDS/ PURCHASING
NT PRODUCTS PRODUCTS
INCREASIBG GLOBALISATION OF
PURCHASING
BUSINESS GROWTH / COMPETITIVE SRENGTH
MATRIX
STAR
HI WILDCAT
COUNTRIES
GROWTH
COUNTRIES
POTENTIAL
OF
BUSINESS
IN
COUNTRY
LO
DOG CASH COW
COUNTRIES COUNTRIES
LO HI
COMPETITIVE STRENGTH OF BUSINESS IN COUNTRY
MODES OF ENTRY
HIGH EXPORTING
( Firm produces in home country & markets in overseas markets )
LICENSING
( International co. transfers knowledge, technology
Patent for a limited period of time to an overseas co,
PERCEIVED in return for some form of payment)
RISK FRANCHISING
(Right to use a business format,
usually Brand Name- exchange
programme )
INTERNATIONAL JOINT
VENTURE
WHOLLY
OWNED
LOW
HIGH
LOW
CONTROL
PROBLEMS IN
GLOBAL STRATEGIC PLANNING
• Global plg- an extension of Domestic Plg is more complex; as it has to
handle more complicated, uncertain & volatile environments.
• Entirely based on future, if future events don’t occur as expected;
it fails.
• Greater problems in formulating corporate plans
• Frequent fluctuations in value of currencies
• Turbulent political developments
• Uncertainties in supply of materials
• Non availability of adequate information for developing International
standards
• Encounter typical problems like : subsidiary in Japan may require
careful assessment of Finance, HR, Operations, MM & Marketing plans
• Operating modes of multinational firm abroad has to be dynamic
to cope up with changing situations.
PROBLEMS IN
GLOBAL STRATEGIC PLANNING
• Issues of little significance in domestic planning assume
a greater importance abroad. Eg reliable supplies of high
quality components may not be a problem in domestic
market but simple decision to buy instead of naking it
may not be true abroad.
• Logistics problem in countries lacking infrastructural support
• Inventory supplies have to be kept at higher levels than
home due to uncertainties involved.
• Pressures due to prejudices of local authorities, Govts,
TU’s, Consumer groups, impose restrictions on International
trade.
• Non availability or less reliability of the information about
various aspects of environment of potential host countries.
GLOBALISATION
• Concerned with degree of standardization of products and practices
plus high level of co-ordination and integration of activities in the company’s
value chain.
• Offers extensive opportunities for worldwide development and getting
integrated to global economy.
• For developing countries, it offers prospects of integration with
rest of developed economy.
• In economic terms , It’s the process of integration of world into one huge
market.
• It is a process not an event. It has no beginning or end.
• It is fast becoming imperative for modern businessdue to:
1) crumbling trade barriers 2) global flow of capital & technology
3)Information explosion 4) Intensity of global market competition
5) Changing life styles and demand for innovative products etc…
• It offers free flow of information, goods, capital & people across political and
economic boundaries and is a process by which enterprises become
interdependent and interlinked globally.
GLOBALISATION
BENEFITS:
• Cost benefits: Economies of scale due to standardization & Logistics
management
• Timing benefits: Coordinated approach in product launching and
implementation strategies
• Learning benefits: Coordinated transfer of information, best practices and
people across subsidiaries.
• Arbitrage benefits: using resources in one country for the benefit
of another country.
SOCIAL BENEFITS
• Creates overall wealth for all nations as specialization increases trade.
• Reduces inflation due to cost efficiencies
• Benefits customers: quality products at competitive price.
• Better allocation of financial ,material and Human resources
• Reduces corruption due to free market trade.
OTHER BENEFITS:
• Leads to economic integration and globalized economy.
• Transition from multinational to global competitiveness
MODULE 5
PORTER’S MODEL
• BARGAINING POTENTIAL ENTRANTS
•Economies of scale OTHER
•Absolute cost STAKEHOLDERS
• POWER advantage (RELATIVE POWER OF
•Switching cost UNIONS, GOVT)
•Access to distribution
•Govt. policy
THREAT OF NEW ENTRANTS
MARKET
TECHNOLOGICAL
SUPPLIER
ECONOMIC
REGULATORY
POLITICO – LEGA
SOCIO – CULTURAL
INTERNATIONAL
SAP
( STRATEGIC ADVANTAGE PROFILE )
CAPABILITY NATURE IMPACT OF EACH FACTOR
FACTOR OF
IMPACT
1 FINANCE
2 MARKETING
3 0PERATIONSP
4 PERSONNEL
5 INFORMATION
6 GENERAL
MANAGEMENT
CONSOLIDATED SWOT PROFILE
ENVIRONMENTAL NATURE OF STRATEGIC NATURE OF
FACTOR IMPACT ADVANTAGE FACTOR IMPACT
MARKET
TECHNOLOGICAL FINANCE
SUPPLIAR MARKETING
ECONOMIC OPERATIONS
REGULATORY PERSONNEL
INTERNATIONAL
SWOT MATRIX and STRATEGIES
OPPRTUNITIES
QUADRANT 2 QUADERANT 1
TURNAROUND AGGRESSIVE
STRATEGY STRATEGY
QUADERANT 4 QUADERANT 3
DEFENSIVE DIVERSIFICATION
STRATEGY STRATEGY
THREATS
WEAKNESSES STREGTHS
OPPORTUNITY MATRIX
HIGH MODERATE
HIGH
ATTRACTIONS ATTRACTIONS
Impact
of
Opportunities
MODERATE LOW
LOW ATTRACTIONS ATTRACTIONS
HIGH LOW
Occurrence
THREAT MATRIX
MAJOR MODERATE
THREATS THREATS
HIGH
IMPACT
OF
THREATS
MODERATE MINOR
LOW
THREATS THREATS
HIGH LOW
OCCURENCE
TOW’s MATRIX
SAP 1 W 1 S
2 2
ETOP 3 3
4 4
O OW OS
1
Turnaround Strategies
2 Take advantage of Aggressive Strategies
3 (Opportunities by overcoming (Use strengths to take
4 Weaknesses) advantage Of opportunities)
T TW
1 Defensive Strategies
TS
2 Diversification strategies
3 ( To minimize weaknesses (Consider corporations
4 & avoid Threats ) strengths
To avoid threats)
BCG GROWTH SHARE MATRIX
HIGH 20
18
16
Market STARS QUESTION MARKS
Growth 14
rate
12
10
8
6
CASH COWS DOGS
4
0 1.5 1 0.1
10 8 6 4 2 0.8 0.5
LOW Relative market share
GE 9 CELL MATRIX
G G
QUESTION
INDUSTRY ATTRACTIVENESS
HIGH MARKS
G Y R
AVERAGE
MEDIUM
BUSINESS
PROFIT R R
PRODUCER
LOW
ZONE
GREEN G INVEST/EXPAND STRONG AVERAGE WEAK
YELLOW Y SELECT/EARN BUSINESS STREGTH / COMPETITIVE
RED R HARVEST/DIVEST POSITION
HOFER’S MODEL
STRICKLAND’S GRAND STRATEGY
SELECTION MATRIX
MODULE 6
GENERIC STRATEGIES
• Below Corporate Level Strategies, the strategies to be used by
individual businesses
HOW GENERIC STRATEGIES EMERGE
• As humans function with their limbs; corporations operate through
their business strategies .At business level most competitive interaction occurs; where competitive
advantage is either won or lost.
• Corporate strategies lay down the framework in which business strategies operate.
COST LEADERSHIP
• Vigorous cost reduction programmers and make all possible attempts to achieve the lowest cost.
• Achieve efficiency at all levels for lowering costs.
• Cumulative cost across the value chain is lower than competitor
• Analyze cost drivers and optimization of costs
• Commanding high price by introducing innovative product and by building
brand loyalty.
• Other initiatives: Accurate Demand Forecasting, Capacity utilization
Economies of scale, Cost saving technologies.
BENEFITS
Threat of cheaper substitutes offset to some extent by lowering price, Effective entry
barrier for potential entrants, Leas at affected by bargaining power of supplier a firm can adopt
price increase to some extent though operational effectiveness.
RISKS
Competitors imitate cost reduction quickly, Not a market friendly approach if customers interest is
ignored Low cost leadership doesn’t always work;
FOCUS BUSINESS STRATEGY
INTEGATION STRATEGIES
• Combining activities relating to present activities of firm
• Widening scope of business
Vertical Integration : Going up & down the value chain Going for
forward or backward integration or both at a time.
Horizontal integration : Same type of products
INTERNATIONAL STRATEGIC
•
ALLIANCES
Grown exponentially in the last few years.
• Very popular instrument to cope up with fastly changing global
competition and found in wide range of sectors: Airlines, Pharma,
Manufacturing , Computers, Electronic equipment etc.
• Reasons: rapidly changing technology, fierce competition, Shorter
PLC etc’
• If managed properly, can help multinational firms to transform their
operations, gain access to new technology, get insights that would
be extremely difficult for the multinational firms to learn and act on
their own.
CONCEPT
A strategic cooperative agreement or agreements between two or
more firms from at least 2 countries, which involves exchange,
sharing or co- development for achieving strategically significant
objectives that are mutually beneficial and beyond what a single firm
may reach alone.