By Group 8 Apar Bansal D011 Shivani Bhatia D014 Jitendra Jidewar D030 Ankur Khosla D033 Arpit Mahendru

D035 Rahul Panigrahi D045 Chhavi Saluja D048 Gaurav Singh D058

TABLE OF CONTENTS
1. Introduction
2. Directions of Strategy Development 3. Tows Matrix 4. Methods of strategy development 5. Strategic Alliances 6. Tesco Case

What’s my motive? Environment Based • Fitting new strategies to a changing business environment Capability Based Expectations Based • Stretching and exploiting resources and competences of an organization • Meeting expectations created by the cultural and political context .

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Strategy Development Existing Products New Existing Protect/Build Product Development Ansoff’s Matrix Markets New Market Development Diversification .

Roseville Enterprises  Workshop for the blind funded by the Leeds city council. The contract was to expire in 2008  To ensure employability of the staff the range of activities were broadened:  Computer refurbishing center  Pine furniture  Laundry hire and cleaning services  Alternative of encouraging some workers to enter the mainstream(commercial window fabricators) also considered . UK  80% work came from the council for renewing windows and doors.

Protect and build CONSOLIDATION:  Organizations protect and strengthening current markets with current products  May require reshaping by downsizing or withdrawal from some activities: .

Reasons for downsizing  Changing value of a company’s assets: astute acquisition and disposal of these products is important  Competitive Disadvantage .

their government implemented restrictions on the entry of foreign firms by limiting direct investments and imposing tariffs and quotas on imports.Competitive Disadvantage for Kodak  In 1889. which forced Kodak to stop supplying wholesalers directly. In order to protect the domestic firms of Japan. in 1960 the Japanese government specifically told Kodak that they would have operate through a single importer. operating through a Japanese distribution system. until foreign firms ran into trouble around the end of the Second World War. Kodak moved into Japan.  This initial entry developed substantial business and was fairly successful.  Lagged behind Fujifilm till the 90’s in which it sought aid from WTO Source: The Kodak-Fujifilm Trade Dispute. Stanford University .  Moreover. Graduate school of business.

Reasons for downsizing  Changing value of a company’s assets: astute acquisition and disposal of these products is important  Competitive Disadvantage  Prioritization .

Sony Financial Reports . and terminated LCD rear-projection television operations  Total restructuring charges of 37.  Sony also ceased production at two overseas manufacturing sites. and utilizing the services of third-party original equipment and design manufacturers.635 million yen and 61.Prioritization at Sony Restructuring efforts at SONY:  Headcount reduction programs  Initiatives to advance rationalization of manufacturing operations  Shifting and aggregating manufacturing to low-cost areas.08 and 09 Source: Wikinvest. which manufactures tape and other recording media. including Sony Dax Technology Center in France. 45.421 million yen.913 million yen in 2007.

Consolidation for higher market share Increased spending in R&D Ability to invest in improved service quality Ability to incur higher marketing expenses .

Google cars. desktop products.3 billion in R&D in the 1st fiscal quarter in 2012  Boosted development of web based products. operating system.The Google Advantage  Spending close to $1. hardware and services  Increase of 62% market spend in 2012  Google goggles. Google Me!. Super broadband .

Market Penetration .

Impact of Growth Rate Corus – An Example  Corus formed through merger of companies British Steel and      Koninklijke Hoogovens in 1999 Global provider of aluminum and steel solutions Corus Colors is an international business with strip products division manufacturing pre-finished steel CES . a key market including hospitals and fodd processing industry Introduction of brand Assure which provided laminate having anti-bacterial additive Adoption of premium pricing policy by differentiating into a niche market .

An Example  Launched in 1995 as an online retail bookstore by Jeff Bezos  Became Web’s largest and best online book store in less than a year  State of the art recommendation centre and online promotion  Profits started to come only in 2002  Currently holds 75% of the market share in online e-book market .Impact of Resource Issues Amazon.

Complacency of market leader Smart phones.An Example  Blackberries were the early smart     phones that dominated the market Viewed as technologically superior Launch of Iphone in 2007 by Apple eroded their market share Apple grew from a niche market to a larger demography Launch of Android OS completely changed the game .

Product Development  Delivering modified or new products to existing markets  Can be achieved in 2 ways Using Existing Capabilities Developing New Capabilities  Changing with the needs of Customers • eg. Diet Sodas with increasing health issues with sugar  When Product life cycles are short • Apple comes out with new product every year  Exploiting findings in market analysis • Cheap and powerful data mining tools .

Product Development  Delivering modified or new products to existing markets  Can be achieved in 2 ways Using Existing Capabilities Developing New Capabilities  Response to Change of Emphasis • Customer experienced at knowing value for money • Apple changing the way consumers used touch screen phones – no stylus  Critical Success Factors (CSF) • Focus on delivering new CSFs • Old CSFs becoming ‘Must Be’ attributes of a Product • Touch Screen phones without stylus are standard now .

Risky and Potentially Unprofitable  High R&D spendings  High market share companies may benefit  Weak market share companies cant afford such investment  What if no new products are developed ?  Might not be accepted in market  Degradation of performance in market  Target for acquizitions  Eg: Motorola    Lacked innovation over last few years Lost market share Acquired by Google for $12 bn .Dilemmas of Product Development  Expensive .

Market Development
 Existing products are offered in new markets  When ? – no further opportunities in current market  Considerations :  Exploiting other market segments

Existence of similar CSFs

 New Uses of current products  Eg. Camera Phones  Increasing Geographical Spread  Expanding nationally and internationally

 Difficulties  Credibility  Expectations

Diversification
 Diversification is defined as a strategy that takes an

organization away from both its current markets and products.

Proctor & Gamble Virgin

• Haircare Pantene, Head & Shoulders, • Laundry Daz, Ariel, Fairy, Bounce • Beauty Oil of Olay, Max Factor • Virgin Travel (& Virgin Holidays), Mobile phones • Virgin Retail (Music & Entertainment) • Virgin Investments, Virgin Communications

Walt Disney

• Theme Parks, vacation properties • Movie Production, Videos • Toys, TV Broadcasting

 Difference between TOWS and SWOT is that TOWS emphasizes the external environment whilst SWOT emphasizes the internal environment .Introduction-TOWS matrix  TOWS analysis is basically putting SWOT analysis into action.  A complementary way of generating options from knowledge of the organization position. and B) Internal weaknesses with external opportunities and threats to develop a strategy.  TOWS Analysis is an effective way of combining A) Internal strengths with external opportunities and threats.

. W-T "Maxi-Mini" Strategy Strategies that use strengths to minimize threats. 3. 3. 2. 2. 3. 2. "Mini-Mini” Strategy Strategies that minimize weaknesses and avoid threats. Internal Weaknesses (W) 1.TOWS Matrix Internal Strengths(S) 1. 3. S-T "Mini-Maxi” Strategy Strategies that minimize weaknesses by taking advantage of opportunities. W-O S-O "Maxi-Maxi" Strategy Strategies that use strengths to maximize opportunities. External Threats (T) 1. External Opportunities (O) 1. 2.

Strong R & D and Engineering 2.S. W-O Develop Compatible Models for Different Price Levels (Ranging from Rabbit to Audi Line) (O1W1) To Cope with Rising Costs in Germany.S. Withdraw From U. No Experience With U.S.e. Reduce Effect of Exchange Rate by Building a Plant in the U. Hiring U. Rabbit.. Managers with Experience in Dealing with U. Rabbit (T2T3S1S2) Improve Fuel Consumption Through Fuel Injection and Develop Fuel EfficientDiesel Engines (T3S1) 1. Growing Affluent Market DemandsMore Luxurious Cars 2. Fuel Shortage and Price S-T 1. Engage in Joint Operation . Attractive Offers to Build an Assembly Plant in U. Strong Sales and Service Network 3. W-T Reduce Threat of Competition by Developing Flexible Product Line (T2W1) 2. Exchange Rate: Devaluation of Dollar 2. Build Plant in U.S. (T1T2S1S3) Meet Competition with Advanced Design Technology . Efficient Production/Automation Capabilities External Opportunities: 1. in Different Prices (Dasher. Engineering. External Threats: 1. Rising Costs in Germany 3. Competition from Japanese and US automakers 3. Internal Weaknesses: 1. and Production /Automation Experience (O2S1S3) 1. Audi Line) (O1S1S2) Build Assembly Plant Using R & D.S. Labor Unions S-O 1.g. Labor Unions (O2W2W3) 2.S.TOWS Matrix for VW Internal Strengths: 1. Scirocco. 3. Develop & Produce Multiproduct Line with Many Options.S. Market 2. 2. Options not exercised by VW 1. Heavy Reliance on One Product 2.

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Methods of Strategy Development Internal Development Mergers and Acquisitions Alliances .

Internal /Organic Development Internal Development is where strategies are developed by building on and developing an organization’s own capabilities .

Why Organic Growth? Products that are Highly Technical in Design Development of New Markets by direct involvement Lower Spread of Cost over time No choice about how new Ventures are developed Finding Suitable target can be formidable .

Pillars of Organic Development Revenue Headcount PR Quality .

AT Kearney – The Inside Story on Organic Growth  Supreme Innovations. 3M – enhance customer value. Centrica – dynamic product portfolio management  T-Mobile. recapture lost customers  Cisco. Major Investments not necessary  American Express.value-based and bundled pricing Capture Shortterm growth opportunities Eliminate barriers to growth Sales and marketing excellence .

Mergers And Acquisitions Acquisition is where strategies are developed by taking over the ownership of another organization Merger is a combination of two or more distinct entities into one .

Segment Wise Breakup of M & A Deals(2010-2011) .

MOTIVES FOR MERGERS AND ACQUISITIONs Speed with which it allows the company to enter into new product or market areas Eg: Airtel Acquisition of Zain Africa Competitive Situation Deregulation Cost Efficiency Exploitation of organization's core competencies Eg: Duracell .

because they didn't want to give up the fast pace of Wall Street.html .Why Mergers & Acquistion Fail  Bank of America acquistion of Merrill Lynch: Dozens of senior Merrill bankers. Not Equals Chinese Company Huiyuan Juice.forbes. which in turn pave way for PepsiCo’s Topicana to gain the market share in chinese market Source: http://www. Young III. have left since the merger to join competitors like Lazard Ltd.com/2009/06/16/mergers-acquisitions-advice-leadership-ceonetwork-recession. where money is king.  Coca-Cola's recent bid to take control of Unalike Company Culture Lost Time Never Found Again Merge Unequals. like George H. to work in a commercial banking culture with Southern characteristics.

strong presence in the fast growing business of non-proprietary pharmaceuticals Global Reach .Successful Mergers & Acquisitions: Daichii Sankyo control over Ranbaxy in 2008  The deal valued at $4.6 billion created combined company worth about $30 billion  Cost competitiveness by optimizing usage of R&D and Major supplier of low-priced generics in Japan manufacturing facilities of both companies. especially in India  Alliance with the goal to be a “Global Pharma Innovator Complementary Business Combination and providing the opportunity to complement strong presence in innovation with a new.

a medical instruments business  William Castell to be appointed the CEO  An annual increase by $25 bn to match the Market Enlargement and Regulatory Convergence annual sales of USA Ambitious Senior Management .7 bn euros  GE had half the market share in Europe Aggressive growth in Europe than it did in USA  Acquisition of Finland’s Instrumentarium.General Electric -Europe  Small where we should be big  Acquisition of Amersham for 5.

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Strategic Alliances  Two or more organizations share resources and activities to pursue a strategy  Alliances vary in complexity – from simple two-partner alliances co-producing a product to multiple partners providing complex products and solutions Two-partner alliance co-producing a product Variation between alliances Multiple partners providing complex products/solutions .

Motives for Alliances .

Motives for Alliances  The need for critical mass: can be achieved by forming partnerships with either competitors or providers of complimentary products  Co-specialization: Allowing each partner to concentrate on activities that best match their capabilities  Learning from partners: developing competencies that may be more widely exploited elsewhere .

UK anti-drug strategy  In mid 2000’s Britain was facing Drug misuse problem  Government wanted to protect the communities from drug- related antisocial problems  Youth education on drug misuse was needed  Treatment for people with drug abuse had a growing importance .

UK anti-drug strategy  Different agencies were involved in different activities  Collaborative alliances were setup among the different     agencies to tackle the problem At the central government level a cabinet sub-committee was established At local levels too Drug Action Teams were established These teams had people from all agencies working together to tackle the problem This is one example of a strategic alliance formation to achieve a common objective .

Types of Alliance FORM OF RELATIONSHIP Loose (Market) Contractual • • INFLUENCING FACTORS Networks Opportunistic Alliances Fast change Managed separately by each partner Draws on parents’ assets • • • Licensing Franchising Subcontracting Ownership • • Consortia Joint Ventures The Market • Speed of Market Change Slow change Resources • • • Asset Management Partner’s Assets Risk of losing assets to partner Managed together Dedicated assets for alliance High Risk Low Risk Expectations • Spreading Financial Risk • Political Climate Maintains Risk Unfavorable Climate Dilutes Risk Favorable Climate .

T. companies Dell Computers .Types of Alliance Joint Venture Networks Opportunistic Alliance Franchising Subcontracting Co-production TATA Motors & FIAT “Oneworld”. “DLNA” Renault – Nissan Alliance Coca-Cola and McDonalds Giving contracts to I.

Factors influencing types of Alliance .

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Problems faced by TESCO in 1992  TESCO –MARKET CONDITIONS IN 1992  Tesco faced following difficult market conditions in 1992  Low population growth  Low food price inflation  Well developed and relatively saturated supermarket market in the UK  Three strong competitors (Sainsbury.7%) behind Sainsbury (19.0%)  The arrival of two new store formats: warehouse clubs (Costco) and limited assortment stores (Aldi. Lidl. Asda& Safeway)  Number two market position (16. Netto) .

5 billion in sales over the period 1991-2004 . adding £24.9% per year for the past fourteen years.TESCO sales growth  Tesco turned on a dramatic growth at a compound rate of 12.

TESCO strategy diagrams  Bringing prices down model .

TESCO strategy diagrams  Steering wheel model .

Growth strategy overview .

TESCO private labels examples .

TESCO private labels examples .

TESCO private labels examples .

Four store formats of TESCO .

000+ sqftTesco Extra hypermarket format makes a strong one-stop-shop offer .TESCO EXTRA  The 70.

TESCO METRO .

TESCO EXPRESS .

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