THE BCG
MATRIX GRAND
STRATEGIES
Babasab Patil09/12/13
Babasabpatilfreepptmba.com 1
Grand Strategies
 Grand strategies provide basic direction for
strategic actions.
 They are the basis for coordinated an...
The fifteen grand principles are:
1. Concentrated growth e.g. e-bay in online auction
2. Market development e.g. J&J cater...
Innovation
 Innovation is needed since both consumer and
industrial markets expect periodic changes and
improvements in t...
Innovation
 The underlining rationale is to create a new product
life cycle and thereby make similar existing products
ob...
Turnaround
 Sometimes the profit of a company decline due to
various reasons like economic recession, production
ineffici...
Turnaround typically is begun with one or both of the
following forms of retrenchment being employed
either singly or in c...
2. Asset reduction
 This includes sale of land, buildings and equipment
not essential to the basic activity of the firm.
...
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Turnaround situation
 The model begins with the depiction of external and
internal factors as causes of a firm's performa...
Turnaround situation
 A turnaround situation represents absolute and
relative to the industry declining performance of a
...
Situation severity
 The urgency of the resulting threat to company
survival posed by the turnaround situation is known
as...
Situation severity
 When severity is high cost reduction must be
supplemented with more drastic asset reduction
measures....
Turnaround response
 Turnaround response among successful firms
typically include two strategic activities:
 Retrenchmen...
Retrenchment phase
 It consists of cost-cutting and asset-reducing
activities.
 The primary objective of this process is...
Recovery phase
 The primary causes of the turnaround situation will
be associated with the recovery phase.
 For firms th...
Turnaround Strategy
Changing the
Leadership
The MainThe Main
Steps of TurnaroundSteps of Turnaround
09/12/13Babasabpatilfr...
Turnaround Strategy
Redefining the Strategic
Focus
The MainThe Main
Steps of TurnaroundSteps of Turnaround
09/12/13Babasab...
Turnaround Strategy
Asset Sales and
Closures
The MainThe Main
Steps of TurnaroundSteps of Turnaround
09/12/13Babasabpatilf...
Turnaround Strategy
Improving
Profitability
The MainThe Main
Steps of TurnaroundSteps of Turnaround
09/12/13Babasabpatilfr...
Turnaround Strategy
Acquisitions
The MainThe Main
Steps of TurnaroundSteps of Turnaround
09/12/13Babasabpatilfreepptmba.co...
BCG MATRIX
&
GE NINE CELL
PLANNING GRID
09/12/13
Babasabpatilfreepptmba.com 22
BCG MATRIX
 A concept developed by the Boston
Consulting Group that evaluates SBUs with
respect to the dimension of busin...
Reviewing the Corporate
Portfolio
 Portfolio Planning
 Identifying SBUs
 Assessing and Comparing SBUs
 Relative Market...
Formulating Business-Level
Strategy
 It is a strategy formulation within the strategic
business unit in which the concern...
Portfolio Strategy
26
BCG
Matrix
09/12/13Babasabpatilfreepptmba.com
The BCG Matrix
High
High
Low
Low
IndustryGrowthRateIndustryGrowthRate
Relative Market ShareRelative Market Share09/12/13Ba...
High
High
Low
Low
IndustryGrowthRateIndustryGrowthRate
Relative Market ShareRelative Market Share
Stars
09/12/13Babasabpat...
1. Stars
(=High growth, high market share)
 The business has high market share compared to
competitors and it is doing bu...
High
High
Low
Low
IndustryGrowthRateIndustryGrowthRate
Relative Market ShareRelative Market Share
The BCG Matrix
Cash Cows...
2.Cash Cows
(=low growth, high market share) The market is not very attractive – low market growth rate,
however the busi...
High
High
Low
Low
IndustryGrowthRateIndustryGrowthRate
Relative Market ShareRelative Market Share
The BCG Matrix
Dogs
09/1...
3. Dogs
(=low growth, low market share)
 This business has low market share and operates in low-
growth market.
 Avoid a...
High
High
Low
Low
IndustryGrowthRateIndustryGrowthRate
Relative Market ShareRelative Market Share
The BCG Matrix
???? ????...
Question Marks
(= high growth, low market share)
 The business unit has low market share
compared to competitors, however...
High
High
Low
Low
IndustryGrowthRateIndustryGrowthRate
Relative Market ShareRelative Market Share
The BCG Matrix
???? ????...
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Analysis of Your Enterprise Position
Stars Cash
Cows
Question
Marks
Dogs
High growth
High share
Low growth
High share
High...
Reviewing the Corporate Portfolio
Strategic Implications
 Cash Surplus from Cash Cows Used to
Support Question Marks and ...
Limitations of BC G Model:
 Defining a market, measuring share and growth rate
difficult.
 In the matrix average growth ...
G E nine cell planning grid
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Introduction
 GE came up with the multifactor portfolio matrix in the
1970’s for the assessment of their SBU’s.
 It is s...
G E Nine cell planning grid
 The General Electrical company is highly admired for
the sophistication, maturity& quality o...
B
U
S
I
N
E
S
S
S
T
R
E
N
G
T
H
weak
averag
e
stron
g
Industry Attractiveness
High Medium Low
General Electric’s Nine-cell...
G E Nine cell planning grid
 This matrix calls for evaluating the business of a firm in
terms of two key uses:
 Business...
G E’s Nine-cell Planning Grid:
 Business Strength: Industry Attractiveness:
 Re lative m arke t share Marke t Siz e and ...
G E Nine cell planning grid
 The commitment of resources to various business is
guided by how they are rated in terms of ...
G E Nine cell planning grid
 More advanced than BCG matrix in three ways:
 Market growth is replaced be market attractiv...
Attractiveness include
 Broader range of factors other than market growth
rate.
 Depending on the product characteristic...
Market attractiveness factors
 MARKET SIZE
 MARKET GROWTH
 MARKET PROFITABILITY
 PRICING TRENDS
 COMPETITIVE INTENSIT...
Factors that affect competitive strength
 STRENGTH OF ASSETS AND COMPETENCIES
 RELATIVE BRAND STRENGTH
 MARKET SHARE
 ...
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Plotting the Information:
1. Select factors to rate the industry for each product
line or business unit. Determine the val...
2. Select the key factors needed for success in each of
the product line or business unit. Determine the
value of each key...
3. Plot each product line's or business unit's current
position on a matrix.
4. The individual product lines or business u...
Strategic Implications
• Resource allocation recommendations can be
made to grow, hold, or harvest a strategic business
un...
1. Hold average business units in:
– average industries
– strong businesses in weak industries
– weak business in attracti...
The McKinsey Matrix
Competitive PositionCompetitive Position
IndustryAttractivenessIndustryAttractiveness Good Medium Poor...
 There are strategy variations within these three
groups. For example, within the harvest group the
firm would be incline...
 Limitations
 It presents a somewhat limited view by not
considering interactions among the business units
 It neglects...
Protect position
Invest at maximum
Digestible rate
Concentrate effort on
maintaining strength
Invest to build
Build ...
Strategies for SBU at different
quadrants
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PRESENTATION
ON
COMPANY GOALS &
COMPANY PHILOSOPHY
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• Goals describe future expected outcomes or states. They provide
programmatic direction. They focus on ends rather than m...
Company goals effectively state what a company does; it is
the main objective value that a company should be gauged
agains...
Key Characteristics of Goals
 Goals must be realistic
 Goals must include everyone
 Goals need to be communicated
 Goa...
SMART illustrates the 5 characteristics of an efficient
objective; it stands for Specific - Measurable
- Attainable -Relev...
Contd…
2. Be measurable!
3. Be attainable!
4. Be relevant!
5. Be timely!
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The Importance of Setting
goals
 It gives a target to aim to, therefore all actions and efforts will be
focused on attain...
Financial Goal Examples
 To be earning Rs 6,00,000 a month by 24th December 2010.
 To have paid off Rs 1,00,000 mortgage...
Business Goal Examples
 To have grown business by 50% by 30th November 2011.
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EX: B. Braun Corporate
Video
 Growth as a family enterprise - Growth from our own resources.
 One true company - Strengt...
Company philosophy
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Tips for Developing a
Company Philosophy
 Establishing a solid business philosophy on sets an ethical
precedent within a ...
Ex : VOLVO CAR PHILOSOPHY
 Volvo Cars' company philosophy, Our
Tomorrow, describes the values that guide
the company and ...
Brand
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Work culture
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Strategic management proceSS
Vision
and
Mission
Vision
and
Mission
External
Audit
External
Audit
Internal
Audit
Internal
A...
Strategy Implementation
 So far we have studied strategy formulation, analysis of
alternative strategies, and then making...
Implementing Strategy:
Strategy
Implementer’s
Action Agenda
Strategy
Implementer’s
Action Agenda
Building a
Capable
Organi...
Factors Influencing Managers in Leading Implementation
Process
 Experience and knowledge of business
 New to job or seas...
Strategy choice & implementation – the ‘Nestle’ story.
 Nestle has a presence in India over a century !!
 For a long tim...
Nestle Story – the current market scenario:
 Milk Products & Baby food: Amul has focussed on Milk
Products and Babyfood- ...
Strategy Implementation
Operationalizing strategy
 This phase is the translation of the agreed upon long term
objectives,...
2. Initiate specific functional strategies
 They translate business strategy into daily activities.
 Functional managers...
Annual or short term objectives
 They provide a guidance to the people in the organization as
to what needs to be done cu...
Annual or short term objectives
 Discussion and agreement on short-term strategies help raise
issues and potential confli...
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Short-term objectives are accompanied by action
plans, which help short-term objectives in three
ways:
1. These action pla...
Qualities of effective short-term objectives
1. Measurable
 Short-term objectives are more consistent when they clearly
s...
2. Priorities
 Some annual objectives would require higher priority either
because of the timing considerations or becaus...
3. Linked to long-term objectives
 Short-term objectives can add specificity in identifying
what must be accomplished to ...
Characteristics of Industry Maturity
 Slowing demand breeds stiffer competition
 More sophisticated buyers demand bargai...
Strategy Options for Competing in a Mature Industry
 Prunemarginal products and models
 Emphasize innovationin the value...
Strategic Pitfalls in a Maturing Industry
 Employing a ho-hum strategy with no distinctive features
 thus leaving firm “...
Stagnant or Declining Industries: The Standout Features
 Demand grows more
 slowly than economy
 as whole (or even decl...
Strategy Options for Competing in a Stagnant or Declining
Industry
 Pursue focus strategyaimed at fastest growing market
...
Competing in a Stagnant Industry :The Strategic
Mistakes
 Getting embroiled in a profitless battle for market
 share wit...
Competitive Features of Fragmented Industries

Absence of market leaders with large market shares
 Buyer demand is so di...
Examples of Fragmented Industries
 Book publishing
 Landscaping and plant nurseries
 Auto repair
 Restaurant industry
...
Competing in a Fragmented Industry: The
Strategy Options
 Construct and operate “formula”facilities
 • Become a low-cost...
Strategies for Sustaining Rapid Growth
 Companies desirous of growing revenues and earnings
 rapidly year-after-year hav...
Three Strategy Horizons for Sustaining Rapid Growth
Portfolio of
Strategy Initiatives
Short-jump”
initiatives to
fortify
a...
Risks of Pursuing Multiple Strategy Horizons
 Firm should not pursue all options to avoid
 stretching itself too thin
 ...
Characteristics of Industry Leaders
 Stronger-than-average to powerful position
 Well-known reputation
 Proven strategi...
 Strategy Options: Industry Leaders
1. Stay-on-the-offensive strategy
2. Fortify-and-defend strategy
3. Muscle-flexing st...
 Fortify-and-Defend Strategy: Objectives
 Make it harder for new firms to enter and for
 challengers to gain ground
 •...
 Muscle-Flexing Strategy: Objectives
Play competitive hardball with smaller rivals that
threaten leader’s position
• Sign...
Obstacles Runner-Up Firms Must Overcome
 When bigsizeis a competitiveasset, firms
 with low market shareface obstacles
...
Growth-via-Acquisition Strategies for Runner-Up Firms
 Frequentlyusedstrategyof ambitious runner-up
 firms
 To succeed,...
 Distinctive Image Strategy for Runner-Up Firms
Strategy concentrated on ways to stand out
from rivals
• Approaches
– Rep...
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The BCG Matrix Grand Strategies in Steatergic Management Studies mba 4 sem

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The bcg matrix grand strategies in steatergic managenet mba 4 sem BEC BAGALKOT MBA BY BABASAB PATIL BEC DOMS, Grand Strategies , The BCG Matrix , Steatergic Management Studies

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  • The BCG Matrix Grand Strategies in Steatergic Management Studies mba 4 sem

    1. 1. THE BCG MATRIX GRAND STRATEGIES Babasab Patil09/12/13 Babasabpatilfreepptmba.com 1
    2. 2. Grand Strategies  Grand strategies provide basic direction for strategic actions.  They are the basis for coordinated and sustained efforts directed towards achieving long-term business objectives.  They indicate a time period over which long-term objectives are to be achieved.  Firms involved with multiple industries, businesses, product lines or customer groups usually combine several grand strategies. 09/12/13Babasabpatilfreepptmba.com2
    3. 3. The fifteen grand principles are: 1. Concentrated growth e.g. e-bay in online auction 2. Market development e.g. J&J catering to the adults, using sachets for market penetration 3. Product development e.g. personal care products from HUL, newer version of books, 4. Innovation 5. Horizontal integration 6. Vertical integration 7. Concentric diversification 8. Conglomerate diversification 9. Turnaround 10. Divestiture e.g. Sale of TOMCO by Tata, selling of cement division by L&T 11. Liquidation 12. Bankruptcy 13. Joint ventures 14. Strategic alliances 15. Consortia e.g. Mitsubishi, LG 09/12/13Babasabpatilfreepptmba.com3
    4. 4. Innovation  Innovation is needed since both consumer and industrial markets expect periodic changes and improvements in the products offered.  Firms seeking to making innovation as their grand strategy seek to reap the initially high profits associated with customer acceptance of a new or greatly improved product.  As the products enters the maturity stage these companies start looking for a new innovation. 09/12/13Babasabpatilfreepptmba.com4
    5. 5. Innovation  The underlining rationale is to create a new product life cycle and thereby make similar existing products obsolete.  This strategy is different from the product development strategy in which the product life cycle of an existing product is extended.  e.g. Polaroid which heavily promotes each of its new cameras until competitors are able to match its technological innovation; by this time Polaroid normally is prepared to introduce a dramatically new or improved product.  Intel, 3M 09/12/13Babasabpatilfreepptmba.com5
    6. 6. Turnaround  Sometimes the profit of a company decline due to various reasons like economic recession, production inefficiencies and innovative breakthrough by competitors.  In many cases the management believes that such a firm can survive and eventually recover if a concerted effort is made over a period of a few years to fortify its distinctive competences.  This is known as turnaround strategy. 09/12/13Babasabpatilfreepptmba.com6
    7. 7. Turnaround typically is begun with one or both of the following forms of retrenchment being employed either singly or in combination. 1. Cost reduction  It is done by decreasing the workforce through employee attrition, leasing rather than purchasing equipment, extending the life of machinery, eliminating promotional activities, laying off employees, dropping items from a production line and discontinuing low-margin customers. 09/12/13Babasabpatilfreepptmba.com7
    8. 8. 2. Asset reduction  This includes sale of land, buildings and equipment not essential to the basic activity of the firm.  Research have showed that turnaround almost always was associated with changes in top management.  New managers are believed to introduce new perspectives, raise employee morale and facilitate drastic actions like deep budgetary cuts in established programs. 09/12/13Babasabpatilfreepptmba.com8
    9. 9. 09/12/13Babasabpatilfreepptmba.com 9
    10. 10. Turnaround situation  The model begins with the depiction of external and internal factors as causes of a firm's performance downturn.  When these factors continue to detrimentally impact the firm, its financial health is threatened.  Unchecked decline places the firm in a turnaround situation.  A turnaround situation represents absolute and relative to the industry declining performance of a sufficient magnitude to warrant explicit turnaround actions. 09/12/13Babasabpatilfreepptmba.com10
    11. 11. Turnaround situation  A turnaround situation represents absolute and relative to the industry declining performance of a sufficient magnitude to warrant explicit turnaround actions.  Turnaround situations may be a result of years of gradual slowdown or months of sharp decline.  For a declining firm, stabilizing operations and restoring profitability almost always entail strict cost reduction followed by shrinking back to those segments of the business that have been the best prospects of attractive profit margins. 09/12/13Babasabpatilfreepptmba.com11
    12. 12. Situation severity  The urgency of the resulting threat to company survival posed by the turnaround situation is known as situation severity.  Severity is the governing factor in estimating the speed with which the retrenchment response will be formulated and activated.  When severity is low stability can be achieved through cost reduction alone. 09/12/13Babasabpatilfreepptmba.com12
    13. 13. Situation severity  When severity is high cost reduction must be supplemented with more drastic asset reduction measures.  Assets targeted for divestiture are those determined to be underproductive.  More productive resources are protected and will become the core business in the future plan of the company.  E.g . strategy adopted by Citibank 09/12/13Babasabpatilfreepptmba.com13
    14. 14. Turnaround response  Turnaround response among successful firms typically include two strategic activities:  Retrenchment phase  Recovery phase 09/12/13Babasabpatilfreepptmba.com14
    15. 15. Retrenchment phase  It consists of cost-cutting and asset-reducing activities.  The primary objective of this process is to stabilize the firm's financial condition.  Firms in danger of bankruptcy or failure attempt to halt decline through cost and asset reductions.  It is very important to control the retrenchment process in a effective and efficient manner for any turnaround to be successful.  After the stability has been attained through retrenchment, the next step of recovery phase begins. 09/12/13Babasabpatilfreepptmba.com15
    16. 16. Recovery phase  The primary causes of the turnaround situation will be associated with the recovery phase.  For firms that declined as a result of external problems, turnaround most often has been achieved through creative new entrepreneurial strategies.  For firms that declined as a result of internal problem, turnaround has been mostly achieved through efficiency strategies.  Recovery is achieved when economic measures indicate that the firm has regained its predownturn levels of performance. 09/12/13Babasabpatilfreepptmba.com16
    17. 17. Turnaround Strategy Changing the Leadership The MainThe Main Steps of TurnaroundSteps of Turnaround 09/12/13Babasabpatilfreepptmba.com 17
    18. 18. Turnaround Strategy Redefining the Strategic Focus The MainThe Main Steps of TurnaroundSteps of Turnaround 09/12/13Babasabpatilfreepptmba.com 18
    19. 19. Turnaround Strategy Asset Sales and Closures The MainThe Main Steps of TurnaroundSteps of Turnaround 09/12/13Babasabpatilfreepptmba.com 19
    20. 20. Turnaround Strategy Improving Profitability The MainThe Main Steps of TurnaroundSteps of Turnaround 09/12/13Babasabpatilfreepptmba.com 20
    21. 21. Turnaround Strategy Acquisitions The MainThe Main Steps of TurnaroundSteps of Turnaround 09/12/13Babasabpatilfreepptmba.com 21
    22. 22. BCG MATRIX & GE NINE CELL PLANNING GRID 09/12/13 Babasabpatilfreepptmba.com 22
    23. 23. BCG MATRIX  A concept developed by the Boston Consulting Group that evaluates SBUs with respect to the dimension of business growth rate and market share.  Mix of business units and product lines that fit together in a logical way to provide synergy and competitive advantage  ALSO CALLED AS PORTFOLIO STRATEGY 09/12/13Babasabpatilfreepptmba.com 23
    24. 24. Reviewing the Corporate Portfolio  Portfolio Planning  Identifying SBUs  Assessing and Comparing SBUs  Relative Market Share  Relative Growth Rate 09/12/13Babasabpatilfreepptmba.com 24
    25. 25. Formulating Business-Level Strategy  It is a strategy formulation within the strategic business unit in which the concern is how to compete.  The same three GRAND strategies (growth, stability, and retrenchment) apply at the business level, but they are accomplished through competitive actions rather than the acquisition or divestment of business divisions. 09/12/13Babasabpatilfreepptmba.com 25
    26. 26. Portfolio Strategy 26 BCG Matrix 09/12/13Babasabpatilfreepptmba.com
    27. 27. The BCG Matrix High High Low Low IndustryGrowthRateIndustryGrowthRate Relative Market ShareRelative Market Share09/12/13Babasabpatilfreepptmba.com 27
    28. 28. High High Low Low IndustryGrowthRateIndustryGrowthRate Relative Market ShareRelative Market Share Stars 09/12/13Babasabpatilfreepptmba.com 28
    29. 29. 1. Stars (=High growth, high market share)  The business has high market share compared to competitors and it is doing business in high-growth market  Use large amounts of cash and are leaders in the business so they should also generate large amounts of cash.  Frequently roughly in balance on net cash flow. However if needed any attempt should be made to hold share, because the rewards will be a cash cow if market share is kept. 09/12/13Babasabpatilfreepptmba.com 29
    30. 30. High High Low Low IndustryGrowthRateIndustryGrowthRate Relative Market ShareRelative Market Share The BCG Matrix Cash Cows 09/12/13Babasabpatilfreepptmba.com 30
    31. 31. 2.Cash Cows (=low growth, high market share) The market is not very attractive – low market growth rate, however the business has high market share compared to competitors.  Profits and cash generation should be high , and because of the low growth, investments needed should be low. Keep profits high  Foundation of a company 09/12/13Babasabpatilfreepptmba.com 31
    32. 32. High High Low Low IndustryGrowthRateIndustryGrowthRate Relative Market ShareRelative Market Share The BCG Matrix Dogs 09/12/13Babasabpatilfreepptmba.com 32
    33. 33. 3. Dogs (=low growth, low market share)  This business has low market share and operates in low- growth market.  Avoid and minimize the number of dogs in a company.  Beware of expensive ‘turn around plans’.  Deliver cash, otherwise liquidate 09/12/13Babasabpatilfreepptmba.com 33
    34. 34. High High Low Low IndustryGrowthRateIndustryGrowthRate Relative Market ShareRelative Market Share The BCG Matrix ???? ???? Question Marks 09/12/13Babasabpatilfreepptmba.com 34
    35. 35. Question Marks (= high growth, low market share)  The business unit has low market share compared to competitors, however it is doing business in high-growth market.  Have the worst cash characteristics of all, because high demands and low returns due to low market share  If nothing is done to change the market share, question marks will simply absorb great amounts of cash and later, as the growth stops, a dog.  Either invest heavily or sell off or invest nothing and generate Whatever cash it can. Increase market share or deliver cash. 09/12/13Babasabpatilfreepptmba.com 35
    36. 36. High High Low Low IndustryGrowthRateIndustryGrowthRate Relative Market ShareRelative Market Share The BCG Matrix ???? ???? Question Marks Cash Cows Dogs Stars 09/12/13Babasabpatilfreepptmba.com 36
    37. 37. 09/12/13Babasabpatilfreepptmba.com37
    38. 38. Analysis of Your Enterprise Position Stars Cash Cows Question Marks Dogs High growth High share Low growth High share High growth Low share Low growth Low share Business is likely to generate enough cash to be self sustaining. Business can be used to support other business units. • defend & maintain Business requires a lot of cash to maintain market share. • invest more cash • or, divest Business is a cash trap. • focus on short term • avoid risky project • limited future 09/12/13Babasabpatilfreepptmba.com38
    39. 39. Reviewing the Corporate Portfolio Strategic Implications  Cash Surplus from Cash Cows Used to Support Question Marks and Stars  Question Marks Divested  Exit Industry Where SBU is a Dog  Firm with Insufficient Cash Cows, Stars, or Question Marks Should Consider Acquisitions and Divestments 09/12/13Babasabpatilfreepptmba.com 39
    40. 40. Limitations of BC G Model:  Defining a market, measuring share and growth rate difficult.  In the matrix average growth rate & average market share not recognized.  The relationship between market share and profitability underlying the BCG matrix – the experience curve effect -varies across industries and market segments.  The BCG matrix is not particularly helpful in comparing relative investment opportunities across different business units in the corporate portfolio.  Strategic evaluation of a set of business requires examination of more than relative market shares and market growth.  It oversimplifies the four classifications. 09/12/13Babasabpatilfreepptmba.com 40
    41. 41. G E nine cell planning grid 09/12/13Babasabpatilfreepptmba.com 41
    42. 42. Introduction  GE came up with the multifactor portfolio matrix in the 1970’s for the assessment of their SBU’s.  It is similar to BCG matrix  Vertical axis represents industry attractiveness and the horizontal axis represents the company’s strength in the industry or business position 09/12/13Babasabpatilfreepptmba.com 42
    43. 43. G E Nine cell planning grid  The General Electrical company is highly admired for the sophistication, maturity& quality of its planning system.  It uses a 3×3 matrix called the General Electric’s Stoplight matrix to guide the allocation of resources. 09/12/13Babasabpatilfreepptmba.com 43
    44. 44. B U S I N E S S S T R E N G T H weak averag e stron g Industry Attractiveness High Medium Low General Electric’s Nine-cell (multi-factor) Port- folio Matrix 0 100 0 Invest/grow Selectivi ty/earni ng Harvest/divest legend 09/12/13Babasabpatilfreepptmba.com 44
    45. 45. G E Nine cell planning grid  This matrix calls for evaluating the business of a firm in terms of two key uses:  Business Strength : How strong is the firm vis-à-vis its competitors ?  Industry strength : What is the attractiveness or potential of the industry ? 09/12/13Babasabpatilfreepptmba.com 45
    46. 46. G E’s Nine-cell Planning Grid:  Business Strength: Industry Attractiveness:  Re lative m arke t share Marke t Siz e and g ro wth rate  Pro fit m arg ins Industry Pro fit m arg ins  Ability to co m pe te o n Co m pe titive inte nsity price and q uality Se aso nality  Kno wle dg e o f custo m e r Cyclical and m arke t Eco no m ie s o f scale  Co m pe titive stre ng th and Te chno lo g y we akne sse s So cial, e nviro nm e ntal, le g al,  Te chno lo g icalcapabilitie s and hum an im pacts09/12/13Babasabpatilfreepptmba.com 46
    47. 47. G E Nine cell planning grid  The commitment of resources to various business is guided by how they are rated in terms of above two dimensions.  Business which are favorably placed justify substantial commitment of funds.  Business which are unfavorably placed call for divestment.  And business which are placed in between quality for modest investment. 09/12/13Babasabpatilfreepptmba.com 47
    48. 48. G E Nine cell planning grid  More advanced than BCG matrix in three ways:  Market growth is replaced be market attractiveness  Market share is replaced by competitive strength  GE uses 6 step approach (BCG-2*2, GE -3*3) 09/12/13Babasabpatilfreepptmba.com 48
    49. 49. Attractiveness include  Broader range of factors other than market growth rate.  Depending on the product characteristics, different parameters can select to measure market attractiveness. 09/12/13Babasabpatilfreepptmba.com 49
    50. 50. Market attractiveness factors  MARKET SIZE  MARKET GROWTH  MARKET PROFITABILITY  PRICING TRENDS  COMPETITIVE INTENSITY  OPPORTUNITY TO DIFFERENTIATE PRODUCTS AND SERVICES  DISTRIBUTOIN STRUCTURE (EG: RETAIL, DIRECT, WHOLESALE) 09/12/13Babasabpatilfreepptmba.com 50
    51. 51. Factors that affect competitive strength  STRENGTH OF ASSETS AND COMPETENCIES  RELATIVE BRAND STRENGTH  MARKET SHARE  CUSTOMER LOYALTY  RELATIVE COST POSITION  DISTRIBUTION STRENGTH  RECORD OF TECHNOLOGICAL AND OTHER INNOVATION  ACCESS TO FINANCIAL AND OTHER INVESTMENT RESOURCES 09/12/13Babasabpatilfreepptmba.com 51
    52. 52. 09/12/13Babasabpatilfreepptmba.com52
    53. 53. Plotting the Information: 1. Select factors to rate the industry for each product line or business unit. Determine the value of each factor on a scale of 1 (very unattractive) to 5 (very attractive), and multiplying that value by a weighting factor. Industry attractiveness = factor value1 x factor weighting1 + factor value2 x factor weighting2 . . . + factor valueN x factor weighting N 09/12/13Babasabpatilfreepptmba.com53
    54. 54. 2. Select the key factors needed for success in each of the product line or business unit. Determine the value of each key factor in the criteria on a scale of 1 (very unattractive) to 5 (very attractive), and multiplying that value by a weighting factor. Business strengths/competitive position = key factor value1 x factor weighting1 + key factor value2 x factor weighting2 . . . + key factor value N x factor weighting N 09/12/13Babasabpatilfreepptmba.com54
    55. 55. 3. Plot each product line's or business unit's current position on a matrix. 4. The individual product lines or business units is identified by a letter and plotted as circles on the GE Business Screen. 5. The area of each circle is in proportion to the size of the industry in terms of sales. The pie slice within the circles depict the market share of each product line or business unit. 6. Plot the firm's future portfolio assuming that present corporate and business strategies remain unchanged. This is shown as an arrow which starts from the circle representing the current position and the tip of the arrow will be the tentative center of the future circle. 09/12/13Babasabpatilfreepptmba.com55
    56. 56. Strategic Implications • Resource allocation recommendations can be made to grow, hold, or harvest a strategic business unit based on its position on the matrix as follows: 1. Grow strong business units in: – attractive industries – average business units in attractive industries – strong business units in average industries. 09/12/13Babasabpatilfreepptmba.com56
    57. 57. 1. Hold average business units in: – average industries – strong businesses in weak industries – weak business in attractive industries. 1. Harvest weakbusiness units in: – unattractive industries – average business units in unattractive industries – weak business units in average industries. 09/12/13Babasabpatilfreepptmba.com57
    58. 58. The McKinsey Matrix Competitive PositionCompetitive Position IndustryAttractivenessIndustryAttractiveness Good Medium Poor High Medium Low Winner Winner Winner Profit Producer Average Business Question Mark Loser LoserLoser 09/12/13Babasabpatilfreepptmba.com 58
    59. 59.  There are strategy variations within these three groups. For example, within the harvest group the firm would be inclined to quickly divest itself of a weak business in an unattractive industry, whereas it might perform a phased harvest of an average business unit in the same industry.  GE business screen represents an improvement over the more simple BCG growth-share matrix. 09/12/13Babasabpatilfreepptmba.com59
    60. 60.  Limitations  It presents a somewhat limited view by not considering interactions among the business units  It neglects to address the core competencies leading to value creation  Rather than serving as the primary tool for resource allocation, portfolio matrices are better suited to displaying a quick synopsis of the strategic business units. 09/12/13Babasabpatilfreepptmba.com60
    61. 61. Protect position Invest at maximum Digestible rate Concentrate effort on maintaining strength Invest to build Build selectively on strengths Reinforce vulnerable areas Challenge for leadership Build selectively Seek ways to overcome weaknesses Specialize around limited strengths Build selectively Invest heavily in most attractive segments Emphasize profitability by raising productivity Manage for earnings Protect existing business Concentrate investments in segments with good profits, low risk Limited expansion Rationalize operations Protect and refocus Manage for current earnings Defend strength Manage for earnings - Protect position in most profitable segments Divest Sell at time that will maximize cash value  cut fixed cost  Avoid investment I n d u st r y a tt r a ct iv e n e ss h ig h m e d i u m l o w strong Average weak competitive strength 09/12/13Babasabpatilfreepptmba.com61
    62. 62. Strategies for SBU at different quadrants 09/12/13Babasabpatilfreepptmba.com 62
    63. 63. PRESENTATION ON COMPANY GOALS & COMPANY PHILOSOPHY 09/12/13Babasabpatilfreepptmba.com 63
    64. 64. • Goals describe future expected outcomes or states. They provide programmatic direction. They focus on ends rather than means. • Example 1: provide high quality information services that satisfy user needs. • Example 2: acquire or make available, in a timely manner, all externally produced information resources needed by the organization 09/12/13Babasabpatilfreepptmba.com 64
    65. 65. Company goals effectively state what a company does; it is the main objective value that a company should be gauged against. It gives the public a window on how they operate and what that certain institution means to achieve. The development of metrics should be gauged on this aspect of the company.. 09/12/13Babasabpatilfreepptmba.com 65
    66. 66. Key Characteristics of Goals  Goals must be realistic  Goals must include everyone  Goals need to be communicated  Goals should have different ranges Have first your long-term goals. This may range from one to two years, to even five years. Yearly goals should be next, then quarterly goals, monthly goals, weekly goals, and ultimately daily goals. 09/12/13Babasabpatilfreepptmba.com 66
    67. 67. SMART illustrates the 5 characteristics of an efficient objective; it stands for Specific - Measurable - Attainable -Relevant - Timely. 1. Be SPECIFIC! When it comes of business planning, "specific" illustrates a situation that is easily identified and understood. In this case, being "specific" means being "precise". 09/12/13Babasabpatilfreepptmba.com 67
    68. 68. Contd… 2. Be measurable! 3. Be attainable! 4. Be relevant! 5. Be timely! 09/12/13Babasabpatilfreepptmba.com 68
    69. 69. The Importance of Setting goals  It gives a target to aim to, therefore all actions and efforts will be focused on attaining the objective instead of being inefficiently used;  It gives participants a sense of direction, a glimpse of where they're going to;  It motivates the leaders and their teams, since it is quite the custom of establishing some sort of reward once the team successfully completed a project;  It offers the support in evaluating the success of an action or project. 09/12/13Babasabpatilfreepptmba.com 69
    70. 70. Financial Goal Examples  To be earning Rs 6,00,000 a month by 24th December 2010.  To have paid off Rs 1,00,000 mortgage by 30th June 2011. 09/12/13Babasabpatilfreepptmba.com 70
    71. 71. Business Goal Examples  To have grown business by 50% by 30th November 2011. 09/12/13Babasabpatilfreepptmba.com 71
    72. 72. EX: B. Braun Corporate Video  Growth as a family enterprise - Growth from our own resources.  One true company - Strength in unity worldwide.  Worldwide engagement - Improving market position.  The divisions' fields of competency - Oriented to customer needs.  Modern products - Enhanced by service.  Improved supply chain management - Release of working capital.  Qualified employees - A prerequisite for success.  Benchmarking - Learning from the best  Innovation as motivation - In all fields 09/12/13Babasabpatilfreepptmba.com 72
    73. 73. Company philosophy 09/12/13Babasabpatilfreepptmba.com 73
    74. 74. Tips for Developing a Company Philosophy  Establishing a solid business philosophy on sets an ethical precedent within a company, but also enables an organization to improve relations with employees, partners and customers.  it is essential to avoid becoming overly elaborate. A philosophy should be clear and memorable, according to experts, 09/12/13Babasabpatilfreepptmba.com 74
    75. 75. Ex : VOLVO CAR PHILOSOPHY  Volvo Cars' company philosophy, Our Tomorrow, describes the values that guide the company and relates them to profitability and customer's demands.  What makes Volvo Cars unique in the automotive world is its focus on human values in life. Caring about customers and others; the safety concept encompasses not only the passengers of the car, but also passengers in other cars. Environmental care goes beyond legislation. 09/12/13Babasabpatilfreepptmba.com 75
    76. 76. Brand 09/12/13Babasabpatilfreepptmba.com 76
    77. 77. Work culture 09/12/13Babasabpatilfreepptmba.com 77
    78. 78. Strategic management proceSS Vision and Mission Vision and Mission External Audit External Audit Internal Audit Internal Audit Long- term objectives Long- term objectives Generates evaluates select strategy Generates evaluates select strategy Implement strategy mgt issues Implement strategy mgt issues Implement strategies marketing, Finance/A/c R&D &CIS Implement strategies marketing, Finance/A/c R&D &CIS Measure& evaluate performance Measure& evaluate performance 09/12/13Babasabpatilfreepptmba.com 78
    79. 79. Strategy Implementation  So far we have studied strategy formulation, analysis of alternative strategies, and then making a strategic choice. What Next ?  The strategy must be translated into concrete action, and  That action must be carefully implemented. Implementation is initiated in three stages: 1. Identification of annual objectives 2. Development of specific functional strategies 3. Development and communication of concise policies to guide decisions. 09/12/13Babasabpatilfreepptmba.com 79
    80. 80. Implementing Strategy: Strategy Implementer’s Action Agenda Strategy Implementer’s Action Agenda Building a Capable Organization Allocating Resources Establishing Strategy- Supportive Policies Instituting Best Practices for Continuous Improvement Installing Support Systems to Carry out Strategic RolesTying Rewards to Achievement of Key Strategic Targets Exercising Strategic Leadership Shaping Corporate Culture to Fit Strategy 09/12/13Babasabpatilfreepptmba.com 80
    81. 81. Factors Influencing Managers in Leading Implementation Process  Experience and knowledge of business  New to job or seasoned  Network of personal relationships  Diagnostic, administrative, interpersonal, and problem-solving skills  Authority given manager  Leadership style most comfortable with  View of role to get things done  Context of organization’s situation 09/12/13Babasabpatilfreepptmba.com 81
    82. 82. Strategy choice & implementation – the ‘Nestle’ story.  Nestle has a presence in India over a century !!  For a long time it imported condensed milk (milk maid) & infant food items.  Lately, it woke up to the food- market potentials in India and set long-term objectives:  Launch variety of dairy products – Milk, Butter, curd  Increase food products – instant coffee (nescafe), Maggie, KitKat, Cerelac, Nestrum, Munch etc.  Penetrate vast rural, middle-class segments  Maintain competitive edge (HLL. Cadburry, Heinz & locals) The Strategy  Nurture the best selling brand, Price cuts, economy packs at different price points, strengthen distribution network, expand product base to include daily consumable items, build volumes09/12/13Babasabpatilfreepptmba.com 82
    83. 83. Nestle Story – the current market scenario:  Milk Products & Baby food: Amul has focussed on Milk Products and Babyfood- giving tough competition. Local coops. Entering the market, Britania JV with Fonterra is a big challenge.  Beverages: HLL’s Bru favoured in South India, the coffee belt, Barista-Tata coffee poses threat, Bisleri & Kinley price war  Processed Food: HLL making strong bid, locals like MTR in the fray.  Chocolate & Confectionery: Cadbury adopting Nestle’s strategy, ITC, Amul, HLL in the fray using their distribution network to their advantage. 09/12/13Babasabpatilfreepptmba.com 83
    84. 84. Strategy Implementation Operationalizing strategy  This phase is the translation of the agreed upon long term objectives, the strategic plan, into organizational action.  Here the focus shifts from strategy formulation to strategy implementation.  There are four important things to be done well to make this transition: 1. Identify short term objectives  They translate long term objectives into annual targets for action.  They provide clarity and can be very powerful motivator09/12/13Babasabpatilfreepptmba.com84
    85. 85. 2. Initiate specific functional strategies  They translate business strategy into daily activities.  Functional managers are involved in developing these tactics and their participation helps in clarifying what needs to be done to implement the strategy. 3. Communicate policies that empower people in the organization  Policies are empowerment tools that simplify decision making by empowering operational managers and their subordinates.  They empower the people involved in execution by reducing the time required to decide and act. 4. Design effective rewards  It is aimed at rewarding the desired actions and results.09/12/13Babasabpatilfreepptmba.com85
    86. 86. Annual or short term objectives  They provide a guidance to the people in the organization as to what needs to be done currently to make the long term objectives become reality.  They provide specific guidelines about the things to be done.  They "operationalize" long -term objectives. e.g. if the long term, say five year plan is to gain forty percent market share from the current twenty percent, then what needs to be done in this year to increase the current market share by "X" percent 09/12/13Babasabpatilfreepptmba.com86
    87. 87. Annual or short term objectives  Discussion and agreement on short-term strategies help raise issues and potential conflicts that requires coordination to avoid serious consequences.  It identifies measurable outcomes of action plans or functional activities, which can be used to make feedback, correction, and evaluation more relevant and acceptable. 09/12/13Babasabpatilfreepptmba.com87
    88. 88. 09/12/13Babasabpatilfreepptmba.com88
    89. 89. Short-term objectives are accompanied by action plans, which help short-term objectives in three ways: 1. These action plans identify functional tactics and activities that will be undertaken in the next week, month or quarter to build competitive advantage. They specify what exactly needs to be done. 2. They provide a time frame for completion - a schedule with starting and ending dates. 3. It identifies who is responsible for each action in the plan. 09/12/13Babasabpatilfreepptmba.com89
    90. 90. Qualities of effective short-term objectives 1. Measurable  Short-term objectives are more consistent when they clearly state  what is to be accomplished  when it will be accomplished  how its accomplishment will be measured  This helps in effectively monitoring each activity and the progress across several interrelated activities.  Measurable objectives make misunderstanding less likely among interdependent managers who must act on the plans.  It is easier to quantify objectives of line units (e.g. production) than staff areas (e.g. personal).  Difficulties in quantifying objectives often can be overcome by initially focusing on measurable activity and then09/12/13Babasabpatilfreepptmba.com90
    91. 91. 2. Priorities  Some annual objectives would require higher priority either because of the timing considerations or because of their effect on a strategy's success. E.g. new product development may be more important than promotional activities  Not prioritizing will lead to conflicting assumptions which may inhibit progress towards strategic effectiveness.  The various ways on which priorities can be established are: 1. Ranking method 2. Terms such as primary, top and secondary can be used. 3. Objectives can be given weights (e.g. 0 to 100 percent)09/12/13Babasabpatilfreepptmba.com91
    92. 92. 3. Linked to long-term objectives  Short-term objectives can add specificity in identifying what must be accomplished to achieve long-term objective.  e.g. Adobe systems has an long-term objective of achieving five percent of its total revenue to come from India in the next 5 years. To achieve this it can have a series of short- term objectives like focusing on particular products.  The link between the short-term and long-term objectives should resemble cascades through the firm, from basic long- term objectives to specific short-term objectives in key operational areas.  The cascading effect provides a clear reference for communications and negotiation, which may be necessary 09/12/13Babasabpatilfreepptmba.com92
    93. 93. Characteristics of Industry Maturity  Slowing demand breeds stiffer competition  More sophisticated buyers demand bargains  Greater emphasis on cost and service  “Topping out” problem in adding  production capacity  Product innovation and new end uses  harder to come by  International competition increases  Industry profitability falls  Mergers and acquisitions reduce the  number of industry rivals 09/12/13Babasabpatilfreepptmba.com 93
    94. 94. Strategy Options for Competing in a Mature Industry  Prunemarginal products and models  Emphasize innovationin the valuechain  Strong focus on cost reduction  Increasesales to present customers  Purchaserivals at bargain  prices  Expand internationally  Build new, more flexible  competitivecapabilities 09/12/13Babasabpatilfreepptmba.com 94
    95. 95. Strategic Pitfalls in a Maturing Industry  Employing a ho-hum strategy with no distinctive features  thus leaving firm “stuckinthemiddle”  • Concentratingon short-termprofits rather than  strengthening long-term competitiveness  • Beingslow to adapt competencies to  changing customer expectations  • Beingslow to respond to price-cutting  • Havingtoo much excess capacity  • Overspendingon marketing  • Failingto pursue cost reductions aggressively 09/12/13Babasabpatilfreepptmba.com 95
    96. 96. Stagnant or Declining Industries: The Standout Features  Demand grows more  slowly than economy  as whole (or even declines)  • Competitive pressures  intensify--rivals battle for  market share  • To grow and prosper, firm must take market share from  rivals  • Industry consolidates to a smaller number of key players  via mergers and acquisitions 09/12/13Babasabpatilfreepptmba.com 96
    97. 97. Strategy Options for Competing in a Stagnant or Declining Industry  Pursue focus strategyaimed at fastest growing market  segments  Stress differentiationbased on quality improvement or  product innovation  Work diligently to drivecosts down – Cut marginal activities from value chain – Use outsourcing – Redesign internal processes to exploit e-commerce – Consolidate under-utilized production facilities – Add more distribution channels – Close low-volume, high-cost distribution outlets – Prune marginal products 09/12/13Babasabpatilfreepptmba.com 97
    98. 98. Competing in a Stagnant Industry :The Strategic Mistakes  Getting embroiled in a profitless battle for market  share with stubborn rivals  -Diverting resources out of the  business too quickly  -Being overly optimistic about  industry’s future (believing things will get better) 09/12/13Babasabpatilfreepptmba.com 98
    99. 99. Competitive Features of Fragmented Industries  Absence of market leaders with large market shares  Buyer demand is so diverse and geographically scattered that many  firms are required to satisfy buyer needs  Low entry barriers  Absence of scale economies  Buyers require small amounts of customized or  made-to-order products  Market for industry’s product/service may be globalizing, thus putting  many companies across the world in same market arena  Exploding technologies force firms to specialize just to keep up in their  area of expertise  Industry is young and crowded with aspiring contenders, with no firm  having yet developed recognition to command a large market share 09/12/13Babasabpatilfreepptmba.com 99
    100. 100. Examples of Fragmented Industries  Book publishing  Landscaping and plant nurseries  Auto repair  Restaurant industry  Public accounting  Women’s dresses  Meat packing  Paperboard boxes  Hotels and motels  Furniture 09/12/13Babasabpatilfreepptmba.com 100
    101. 101. Competing in a Fragmented Industry: The Strategy Options  Construct and operate “formula”facilities  • Become a low-cost operator  • Specializeby product type  • Specializeby customertype  • Focus on limitedgeographic area 09/12/13Babasabpatilfreepptmba.com 101
    102. 102. Strategies for Sustaining Rapid Growth  Companies desirous of growing revenues and earnings  rapidly year-after-year have to have a portfolio of strategies  – Horizon 1: Strategic initiatives to fortify and extend their position in  existing businesses  – Horizon 2: Strategic initiatives to leverage existing resources and  capabilities by entering new businesses with promising growth  potential  – Horizon 3: Strategic initiatives to plant new seeds for venturing into  businesses that are just emerging or do not even exist yet 09/12/13Babasabpatilfreepptmba.com 102
    103. 103. Three Strategy Horizons for Sustaining Rapid Growth Portfolio of Strategy Initiatives Short-jump” initiatives to fortify and extend current businesses • Immediate gains in revenues and profits Medium-jump” initiatives to leverage existing resources and capabilities to pursue growth in new businesses • Moderate revenue and profit gains now, but foundation laid for sizable gains over next 2-5 “Long-jump” initiatives to sow the seeds for growth in businesses of the future • Minimal revenue gains now and likely losses, but potential for significant contributions to revenues and profits in 5-10 years Time 09/12/13Babasabpatilfreepptmba.com 103
    104. 104. Risks of Pursuing Multiple Strategy Horizons  Firm should not pursue all options to avoid  stretching itself too thin  Pursuit of medium- and long-jump initiatives may  cause firm to stray too far from its core competencies  Competitive advantage may be difficult to achieve in  medium- and long-jump businesses that do not mesh  well with firm’s present resource strengths  Payoffs of long-jump initiatives may prove elusive 09/12/13Babasabpatilfreepptmba.com 104
    105. 105. Characteristics of Industry Leaders  Stronger-than-average to powerful position  Well-known reputation  Proven strategies  Strategic concern -- How to sustaindominant  leadershipposition 09/12/13Babasabpatilfreepptmba.com 105
    106. 106.  Strategy Options: Industry Leaders 1. Stay-on-the-offensive strategy 2. Fortify-and-defend strategy 3. Muscle-flexing strategy Stay-on-the-Offensive Strategies Be a first-mover, leading industry change Best defense is a good offense Relentlessly pursue continuous improvement and innovation • Force rivals to scramble to keep up • Launch initiatives to keep rivals off balance • Grow faster than industry, taking market from rivals 09/12/13Babasabpatilfreepptmba.com 106
    107. 107.  Fortify-and-Defend Strategy: Objectives  Make it harder for new firms to enter and for  challengers to gain ground  •Hold onto present market  share  Strengthen current market position  Protect competitive advantage Fortify-and-Defend: Strategic Options Increase advertising and R&D • Provide higher levels of customer service • Introduce more brands to match attributes of rivals • Add personalized services to boost buyer loyalty • Keep prices reasonable and quality attractive • Build new capacity ahead of market demand • Invest enough to remain cost competitive • Patent feasible alternative technologies • Sign exclusive contracts with best suppliers and distributors 09/12/13Babasabpatilfreepptmba.com 107
    108. 108.  Muscle-Flexing Strategy: Objectives Play competitive hardball with smaller rivals that threaten leader’s position • Signal smaller rivals that moves to cut into leader’s business will be hard fought • Convince rivals they are better off playing “follow-the-leader” or else attacking each other rather then industry leader Muscle-Flexing: Strategic Options • Be quick to meet price cuts of rivals • Counter with large-scale promotional campaigns if rivals boost advertising • Offer better deals to rivals’ major customers • Dissuade distributors from carrying rivals’ products • Provide salespersons with documentation about weaknesses of competing products • Make attractive offers to key executives of rivals • Use arm-twisting tactics to pressure present customers not to use rivals’ products 09/12/13Babasabpatilfreepptmba.com 108
    109. 109. Obstacles Runner-Up Firms Must Overcome  When bigsizeis a competitiveasset, firms  with low market shareface obstacles  – Less access to economies of scale  – Difficulty in gaining customer recognition  – Inability to afford mass media advertising  – Difficulty in funding capital requirements Competitive Strategies for Runner-Up Firms: Building Market Share Strategic options for building market share to overcome cost advantage of larger rivals – Use lower prices to win customers from weak, higher-cost rivals – Merge or acquire rivals to achieve size needed to capture greater scale economies – Invest in new cost-saving facilities and equipment, perhaps 09/12/13Babasabpatilfreepptmba.com 109
    110. 110. Growth-via-Acquisition Strategies for Runner-Up Firms  Frequentlyusedstrategyof ambitious runner-up  firms  To succeed, top managers must have skills to – Assimilate operations of acquired firms, eliminating  duplication and overlap, – Generate efficiencies and cost savings  Specialist Strategy for Runner-Up Firms-Strategyconcentrated on being a leader based – Specific technology – Product uniqueness – Expertise in  Special-purpose products  Specialized know-how  Delivering distinctive customer services 09/12/13Babasabpatilfreepptmba.com 110
    111. 111.  Distinctive Image Strategy for Runner-Up Firms Strategy concentrated on ways to stand out from rivals • Approaches – Reputation for charging lowest price – Prestige quality at a good price – Superior customer service – Unique product attributes – New product introductions – Unusually creative advertising Superior Product Strategy for Runner-Up Firms Differentiation-based focused strategy based on – Superior product quality or – Unique product attributes • Approaches – Fine craft man ship – Prestige quality – Frequent product innovation – Close contact with customers to gain input for better quality product 09/12/13Babasabpatilfreepptmba.com 111

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