3. What is strategy?
STRATEGY is a set of analytical techniques for understanding and influencing company's
position in the market place.
Strategy is concerned with the match between the companies internal capabilities and its
external environment.
Strategy is an action of the organization takes to pursue its business objectives.
Business strategy is depends on different view on which aspects are of its actions.
A basic distinction based on content of business strategy, business process and
environmental context.
4. STRATEGY QUESTIONS.
There are six total “strategy” questions all good
leaders must answer.
Why do we exist?
How will we behave?
Where are we going?
How will we succeed?
What is most important right “now”?
6. IMPORTANCE OF STRATEGY.
A strategy encourages the entrepreneur to assess and articulate their vision.
A strategy ensures auditing of the organization and its environment.
A strategy illuminates new possibilities and latitudes
A strategy provides organizational focus.
A strategy guides the structuring of the organisation
A strategy provides a starting point for the setting point of objectives.
A strategy acts as a common language for stakeholders.
7. AND ITS COMSTREGIC PLANNING PONENTS.
STRATEGIC PLANNING.
Strategic planning is the
process of developing and
maintaining a strategic fit
between the organization's
goals and capabilities and its
changing marketing
opportunities
8. FEATURES OF STRATEGIC PLANS
The following are some of the most important
characteristics of strategic plans:
They are long-term in nature and place an organization within its
external environment.
They are comprehensive and cover a wide range of organizational
activities.
They integrate guide and control organizational activities for the
immediate and long-range future.
• They set the boundaries for managerial decision making.
9. ORGANIZATIONAL STRATEGY.
An organizational strategy is the sum of the actions a company intends to take
to achieve long-term goals.
Together, these actions make up a company's strategic plan. Strategic plans
take at least a year to complete, requiring involvement from all company
levels.
A marketing strategy refers to a business's overall game plan for reaching
prospective consumers and turning them into customers of the products or
services the business provides.
11. Why Business Need An Organizational Strategy?
Sets Direction And Priorities
Aligns Teams And Departments In A
Common Goal
Clarifies And Simplifies Decision Making
Allows Your Business To Adapt
12. Key Features Of An Organizational Strategy
REALISTIC
• Your organizational strategy should, first and foremost, be realistic. If your annual profit is
consistently $100,000, then setting the goal to make $1,000,000 in profit next year might be a
bit unrealistic.
MEASUREABLE
• All organizational strategies should be measurable. Saying that you want to get better (a
qualitative goal) is fine, but you need to come up with some way to measure how you’re getting
better.
LIMITED
• When setting your organizational strategy, make it as specific as possible. Instead of saying, “We
want to be the best in the industry,” say, “We want to hold 51-percent market share amongst all
our direct competitors.” That’s a specific, measurable goal you can work toward.
Specific
• Your organizational strategy shouldn’t be open-ended. It needs a deadline. Most businesses
give themselves three to five years (again, be specific) to reach their organizational goals. This
deadline dictates what you do and how quickly you do it.
13. Levels Of Organizational Strategies
CORPORATE
LEVEL
STRATEGY
BUSINESS
LEVEL
STRATEGY
FUNCTIONAL
LEVEL
STRATEGY
14. Levels Of Organizational Strategies
The three levels of strategy are:
• Corporate level strategy:
This level answers the foundational
question of what you want to achieve.
• Business level strategy:
This level focuses on how you're going
to compete.
• Functional level strategy:
This strategy level focuses on how
you're going to grow.
15.
16. Corporate Level Strategy
Corporate strategy defines the markets and businesses in which a company will operate.
Corporate strategy is formulated at the top level by the top management of a diversified company
.
Such a strategy describes the company’s overall direction in terms of its various businesses and
product lines.
Corporate strategy defines the long-term objectives and generally affects all the business-units
under its umbrella.
Corporate strategy addresses the issues of a multibusiness enterprise as a whole.
Also addresses issues relating to the intent, scope, and nature of the enterprise and in particular
has to provide answers to the following questions...a
17. Corporate Level Strategies
Corporate level strategies are basically about the choice of direction that a firm adopts in
order to achieve its objectives.
Corporate strategy is essentially a blueprint for the growth of the firm.
The corporate strategy sets the overall direction for the organization to follow.
It also spells out the extent, pace and timing of the firm's growth.
Corporate strategy is mainly concerned with the choice of businesses, products and
markets.
The competitive and functional strategies of the firm are formulated to synchronize with
the corporate strategy to enable it to reach its desired objectives.•
18. Questions To Be Answered
What should be the nature and values of the enterprise in the broadest sense?
What are the aims in terms of creating value for stakeholders?
What kind of businesses should we be in? What should be the scope of activity in the future so
what should we divest and what should we seek to add?
What structure, systems and processes will be necessary to link the various businesses to each and
to the corporate centre?
How can the corporate centre add value to make the whole worth more than the sum of the parts?
19.
20. Components of Corporate Strategy
The main tasks of
corporate strategy
are:
Allocation of resources
Organizational design
Portfolio management
Strategic tradeoffs
21. Types Of Corporate Level Strategy
Corporate strategy can be classified into following different groups
• Stability Strategy
• Expansion/Growth Strategy
• Retrenchment Strategy
• Combination Strategy
• Re-Invention strategy
Each type of corporate strategy has a number of sub-types.
22. Stability Strategy
Stability strategy is a strategy in which the
organization retain its present strategy at
the corporate level and continues focusing
on its present products and markets.
Make no change to the company's current
activities .
The firm stays with its current business
and product markets; maintains the
existing level of efforts; and is satisfied
with incremental growth.
23. Stability Strategy Examples.
The publication house offers special services to the
educational institutions apart from its consumer sale
through the market intermediaries, with the
intention to facilitate a bulk buying.
The electronics company provides better after-sales
services to its customers to make the customer
happy and improve its product image.
The biscuit manufacturing company improves its
existing technology to have the efficient productivity.
25. Advantages and disadvantages
Following are its advantages:
Adopting this strategy does not disrupt the routine work.
This strategy is less-risky unless a company faces terrible conditions.
It allows the company to rethink its long-term strategies.
Following are its disadvantages:
Such a strategy is not effective in the long-run. In the long-run, it
could make the company irrelevant or outdated.
There remains no incentive for any innovation.
26. Growth/Expansion Strategy.
A growth strategy is a plan of action to increase a business's market share. If your company is looking to
expand, a market growth strategy will enable you to chart your path to expansion, taking into account
your industry, your target market, and your finances.
Expansion strategy allows companies to expand their business.
Growth can be achieved by practices like adding new locations, investing in customer acquisition,
or expanding a product line.
A company's industry and target market influences which growth strategies it will choose.
27. Ansoff Matrix
The Ansoff Matrix summarizes four high-level
business growth strategies employed by
companies.
In the Ansoff Matrix, a market penetration
strategy involves increasing market share in
an existing market. Common methods include
lowering prices or using techniques like direct
marketing to create customer awareness of
your offerings.
28. How To Develop Growth Strategy
Define your goals
Keep timelines short
Perform market research
Create a forecasting model
Create a forecasting model
29. Types Of Expansion Strategy
Concentration
Diversification
Integration
Co-operation
Internationalization
30. Examples Of Successful Growth Strategies
Facebook
Facebook used a market penetration growth strategy.
Amazon
Amazon used diversification growth strategy
Dollar Shave Club
It employed a market development growth strategy
Google
It used a product development growth strategy
31. Reasons To Adopt Growth/Expansion strategy.
Many executives may feel more satisfied with the prospects of growth expansion.
Chief Executive Officer may feel pride in presiding over organizations perceived to be growth-
oriented.
Some executives believe at expansion is in the benefit of the society.
Expansion provides more financial and other rewards.
Expansion enables to reap advantages from the experience curve and scale of operations
32. Retrenchment Strategy
When organization aims at concentration of its activities through substantial reduction of
the scope of one/more of its businesses
This is done through an attempt to find out the problem areas and diagnose the causes of
the problems.
Next steps are taken to solve the problems
Basically retrenchment strategies are a response to decline in industries and markets
It is the process of aggressively cutting costs in ways that have impact to your operations
and revenue.
This is usually done in the context of a turnaround whereby management take drastic steps
to prevent an organization from failing.
37. Combination Strategy
When Organization adopts a mixture of stability, expansion, and retrenchment
either at same time in its different businesses or at different times in same
business with the aim of improving its business.
It means making the use of other grand strategies (stability, expansion or
retrenchment) simultaneously.
Simply, the combination of any grand strategy used by an organization in
different businesses at the same time or in the same business at different
times with an aim to improve its efficiency is called as a combination strategy.
38. CombinationStrategy
It also know as Mixed or Hybrid Strategy.
Thus the possible combinations of strategies may be:
Stability in some businesses and growth in other businesses
Stability in some businesses and retrenchment in other businesses
Growth in some businesses and retrenchment in other businesses
Stability, growth and retrenchment in different businesses.
40. Reasons for following Combination Strategy.
Different products in different product life cycle .
When different products of the organization are at different product
life-cycle stages, they require different types of investment.
Business Cycle – Business cycle may affect the prospect of various
businesses differently.
Number of businesses – When the number of businesses in an
organization has gone beyond the optimum number, they are
required to be reduced because some business may not be that
attractive from long term point of view.
41. BENEFITS
Developing competitive advantage and
achieving large market share.
The firm is comparatively more protected
from the impact of downward trend in the
industry.
The firm can bear the pressures put by
suppliers in the form of increasing prices of
their supplies as well as customers in the
form of bargaining for lower product price.
DRAWBACKS
It can be sustained only if barriers
exist that prevent competitors
from achieving the same low cost.
Severe cost reduction may dilute
customer focus and customer
interests may be ignored,
Customers requiring extra features
and ready to pay higher price are
lost.
42. Re-invention strategies .
Re-invention strategies often include taking the existing industries/businesses which have not changed for decades
and re-inventing them, often with the support of new technologies.
TYPES.
Evolutionary
Evolutionary strategies typically do not change the business model but strongly evolve the way service is delivered;
they can significantly change a company’s product/service because they unlock a new dimension of value for
customers.
An example of such a business would be Netflix where the movies are delivered not as physical rentals (i.e.
Blockbuster) but through a digital subscription.
43. Revolutionary
Revolutionary strategies often change the entire business model unlocking value for existing
and new stakeholders. That often leads to significant shifts in market dynamics.
Some technologies such as blockchain, and artificial intelligence are seen as enablers that will
fuel many reinventions.
Uber can serve as an example of such a business where it fully re-invented the way people
provide and use rental car services impacting both drivers (i.e. new drivers, existing taxi
drivers) and passengers.
45. Business-level strategy
Business-level strategy is an integrated and coordinated set of
commitments and actions the firm uses to gain a competitive
advantage by exploiting core competencies in specific product
markets.
Business strategy defines the basis on which firm wilt compete.
It is a business-unit level strategy, formulated by the senior managers of the unit. This
strategy emphasizes the strengthening of a company’s competitive position of
products or services.
Business strategies are composed of competitive and cooperative strategies.
The business strategy encompasses all the actions and approaches for competing
against the competitors and the ways management addresses various strategic issues.
46. Types of Business Level Strategy
Cost leadership strategy
Focused Cost leadership
Differentiation strategy
Focused Differentiation strategy
Integrated strategy
47. Cost leadership strategy
The cost leadership strategy is structured around consumer habits to find the best
deal for a product.
Cost leadership strategy forces a business to look at the costs that are related to the
manufacturing process, shipping and delivery of a product to a customer that will
affect the price point at which they can sell their product to still return a profit.
The goal of this strategy is to find the most cost-effective way to market and sell a
product to customers, undercutting competitors with higher price points.
48. EXAMPLE
MC. DONALDS
Provides basic fast foods meals at the lowest price
throgh division of labour they are able to provide
low price of the product
49. DIFFERENTIATION STRATEGY.
Goal is to provide value to customers through unique features and characteristics of a firm’s
products.
Differentiation focus on product innovation and developing product features that customers value.
Products generally cost more.
The differentiation strategy uses product quality rather than price, to improve a company's
prospects when weighed against competitors.
For companies that want consumers to buy their products due to quality instead of price point, they
should be implementing standards to improve the value and functionality of their products.
51. FOCUS STRATEGY
The focus strategy concentrates on a narrow segment and within that
segment attempts to achieve either a cost advantage or differentiation.
The premise is that the needs of the group can be better serviced by
focusing entirely on it.
TYPES.
Focused Cost Leadership strategies
Requirements for usage similar to low-cost strategies.
Defense against the five forces similar to differentiation strategies.
Examples: Rally’s, Martin Brower White Castle Rally’s (no frills service,
limited menu, no dine-in). Martin Brower- 3rd largest food supplier,
serves fast food chains.
52. Focused differentiation Strategy
Requirements for usage similar to differentiation strategies.
Defense against the five forces similar to differentiation strategies.
Examples:
Rolls Royce, Fort Howard Paper. - Rolls Royce (prestige, quality,
engineering design).
53. Integrated Cost Leadership/ Differentiation Strategy
The integrated strategy uses the principle components of low cost and
differentiation strategies to create a product that is mid-level quality.
A company would use this strategy to attract customers who want the
next best level of quality for a lower price than high-quality items.
A firm that successfully uses an integrated strategy should be in a
better position to:
Adapt quickly to environmental changes.
Learn new skills and technologies more quickly
54. Risks of Integrated Strategies.
Harder to implement than other strategies.
Must simultaneously reduce costs while increasing
differentiation .
Can get ‘stuck in the middle’ resulting in no advantages
and poor performance.
55. How to implement a business level strategy
Identify target market and consumers
Find out what their needs are
Discuss how to cater to their needs
Make comparisons to competitor strategies
Set common goals to be met by company as a whole
Set unique department goals
Complete routine checks at each company level
56. Functional Level strategy
Functional strategy is the approach that a functional area takes to achieve
corporate and business unit objectives and strategies by maximizing resource
productivity.
These are the actions and goals assigned to various departments that support
your business level strategy and corporate level strategy.
These strategies specify the outcomes you want to see achieved from the daily
operations of specific departments (or functions) of your business.
58. Types of Functional level strategy
Marketing Strategy
Financial Strategy
Human Resource Strategy
Production Strategy
Research and Development Strategy
59. Marketing Strategy
Marketing involves all the activities concerned with the identification of customer
needs and making efforts to satisfy those needs with the product and services
they require, in return for consideration.
The most important part of a marketing strategy is the marketing mix, which
covers all the steps a firm can take to increase the demand for its product. It
includes product, price, place, promotion, people, process and physical evidence.
It has three main elements, i.e. planning, implementation and control.
60. Financial Strategy.
All the areas of financial management, i.e. planning, acquiring,
utilizing and controlling the financial resources of the company
are covered under a financial strategy.
This includes raising capital, creating budgets, sources and
application of funds, investments to be made, assets to be
acquired, working capital management, dividend payment,
calculating the net worth of the business and so forth.
61. Human Resource Strategy.
Human resource strategy covers how an organization works for the
development of employees and provides them with the opportunities and
working conditions so that they will contribute to the organization as well.
This also means to select the best employee for performing a particular task or
job.
It strategizes all the HR activities like recruitment, development, motivation,
retention of employees, and industrial relations.
62. Production Strategy.
A firm’s production strategy focuses on the overall
manufacturing system, operational planning and
control, logistics and supply chain management.
The primary objective of the production strategy is
to enhance the quality, increase the quantity and
reduce the overall cost of production.
63. Research and Development Strategy:
The research and development strategy
focuses on innovating and developing new
products and improving the old one, so as to
implement an effective strategy and lead the
market.
For implementing strategies, there are three
Research and Development approaches:
To be the first company to market a
new technological product.
To be an innovative follower of a
successful product.
To be a low-cost producer of products.
65. Reasons Why Organizational Strategies Fail:
Lack of understanding of individual, team, and organization capabilities
Insufficient resources and assets to actually execute the strategy
Inadequate time allocation to the tasks involved
Poor financing decisions (failure to appreciate cash-flow needs or under-budgeting)
Insufficient control and project planning