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Strategy: Introduction
 A strategy consists of a combination of competitive
 moves and business approaches that managers employ
 to please customers, compete successfully and achieve
 organisational objectives.
Strategic planning process
 There are at least eleven questions that need to be answered accurately to
    formulate strategies. These are:
(I)    What should be our business.
(II) What is our business
(III) How should the business be developed
(IV) How should the customers be satisfied
(V) How should competition be dealt with
(VI) What should be the response to everchanging market conditions
(VII) How should strategic and financial results be achieved
(VIII) How should the functional units in the organization be managed and
       coordinated
(IX) How should the relationship with customer suppliers and other influencers
       be managed
(X) How can stakeholders be satisfied
(XI) What is value to customer
Steps in strategic planning process
(I) Business mission
(II) SWOT analysis
(III) Strategy formulation
(IV) Strategy implementation
(V) Strategy evaluation and control
Business mission
 It is a value statement around which the entire corporate strategy
   revolves. Peter F. Drucker said that defining the purpose and
   mission of business is difficult, painful and risky. But this alone
   enables a business to set objectives, develop
   strategies, concentrate its resources and go to work. A mission
   statement:
(I) Should define What the organization is and what it aspires to
      be
(II) Should be limited to exclude some ventures and broad enough
      to allow for creative growth
(III) Should distinguish a given organization from all others
(IV) Should serve as framework for evaluating both current and
      prospective activities
(V) Should be stated in terms sufficiently clear to be widely
      understood throughout the future.
SWOT ANALYSIS
 Under SWOT analysis strengths are matched with
 opportunities and weaknesses are matched with
 threats and then measures are taken to overcome
 those threats.
Strategy formulation
 In formulation of strategy it is necessary to take into
  consideration the full set of commitments, decisions
  and actions required for a firm to achieve strategic
  competitiveness. The SWOT analysis provides
  necessary strategic inputs for effective strategy
  formulation and implementation.
 In the words of Michael porter, competitive strategy is
  about being different. Porter suggested five distinct
  competitive strategies which will benefit service
  organisations.
(I) Low cost provider strategy
(II) Differentiation strategy
(III) Best cost provider strategy
(IV) Focused strategy (niche market) based on lower cost
(V) Focused strategy (niche market) based on
    differentiation
Market oriented service strategy
 In designing strategy, service firms need to
  differentiate themselves from manufacturing
  organisations. They have to take market sensitivities in
  relation to service characteristic into consideration in
  deciding the strategic approach to achieve
  organisational goals. The conventional market
  thinking provides three thumb rules for strengthening
  the competitive edge of a firm. These three rules are
(I) Decrease in cost of production
(II) Enhancement of promotional budget
(III) Development of new products.
Strategic management trap
                                                    Financial
                                                  problems or
                                                   increasing
                                                  competition
                                                                                 Decision
                    Deteriorating
                                                                                concerning
                     corporate
                                                                                  internal
                       image
                                                                                 efficiency




                                                                                              Deteriorati
      Unsatisfied
       customer                                                                               ng service
                                                                                               quality




              More
           traditional                                                                   Unsatisfied
           marketing                                                                      customer
             efforts




                                                                Deteriorating
                                Deteriorating
                                                                   internal
                                service quality
                                                                 atmosphere
 Let us assume that service organization is facing either
 financial problem or increased competition. The first
 option for management is to achieve internal
 efficiency to reduce cost. The decision on internal
 efficiency often results in reduction of
 personnel, introduction of self service, increase in the
 work load of employees, automation and so on. In the
 manufacturing sector such decision may improve
 productive efficiency but in service organisations
 chances of such happening is rare.
 When a service organisation chooses the second
 strategy of spending heavily on promotion with an
 intention to attract the market, it may succeed in
 increasing the demand for services. However, the
 reduced internal efficiency dissatisfies the customers.
 As a result of all these activities, the corporate image of
 organisation weakens and the problems of company
 multiply. When the image of company is low, even the
 introduction of new product does not save the
 organisation. A vicious circle gets formed when once
 the organisation gets into the strategic management
 trap and it leads to multiple problems.
Service oriented approach
 Service organisations should develop a service-
 oriented strategic approach to tackle problems in
 marketing. The result of a service oriented strategic
 approach to handle the same problem will be different.
Financial problem
                                      2.Improved
                     1. Improving
                                       perceived
                      buyer seller
                                         service
                      interaction
                                         quality




      6.Increasing                                   3.More
      sales volume                                  satisfied
                                                   customer




                     5.improving     4.Improving
                      corporate        internal
                        image        atmosphere
The service triangle
               company(top management)




        Internal marketing         external marketing




        Employees      interactive marketing   customers
 One of the most popular strategic models for service
  marketing was developed by Christian Gronross. The
  model is called service triangle. He has identified three
  different groups that play important role in successfully
  accomplishing organisational goals. They are
  company, employees and customers.
 The model calls for a special marketing program between
  the company and its employees which is termed as internal
  marketing.
 The second marketing program is between the company
  and its customers and is termed external marketing.
 The third marketing program is between employees and
  customers and is termed interactive marketing.
Three dimensions of service
strategy
                            As culture
         A basic set of values and belief about the central
      importance of customer guides the firm to formulate its
                        corporate philosophy


                            As strategy
                    Concerned with market
               segmentation, targeting, positioning


                            As tactics
                   Design and implementation
                          of marketing
 The basic set of values and beliefs of the customer
 should guide and organisation to formulate its
 corporate philosophy. An analysis of customer need
 must be the basic input material for designing market
 attractiveness strategies. The culture thus evolved from
 the market feedback should reflect the overall value
 proposition of the company.
Service oriented organisation
structure: OLD
               Top
            management

              Middle
            management

            Bottom line
Service oriented organisation
structure: NEW
             Front line

              Support
             personnel

               Top
            management
Strategy formulation and
implementation
 Strategy formulation requires good
  conceptual, integrative and analytical skills but
  strategy implementation requires special skills in
  motivating and managing others.
 Strategy formulation occurs at the corporate level of
  organisation, while strategy implementation
  permeates all hierarchical levels.
 Strategy formulation requires coordination among few
  individuals but strategy implementation require
  coordination among many.
Strategy evaluation and control
 To have an effective control following things has to be
  designed:
(I) Establishment of evaluation criteria and standards
(II) Measuring and comparing performance
(III) Identification and analysis of performance gaps
(IV) Initiating corrective measures

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6. service strategy

  • 1.
  • 2. Strategy: Introduction  A strategy consists of a combination of competitive moves and business approaches that managers employ to please customers, compete successfully and achieve organisational objectives.
  • 3. Strategic planning process  There are at least eleven questions that need to be answered accurately to formulate strategies. These are: (I) What should be our business. (II) What is our business (III) How should the business be developed (IV) How should the customers be satisfied (V) How should competition be dealt with (VI) What should be the response to everchanging market conditions (VII) How should strategic and financial results be achieved (VIII) How should the functional units in the organization be managed and coordinated (IX) How should the relationship with customer suppliers and other influencers be managed (X) How can stakeholders be satisfied (XI) What is value to customer
  • 4. Steps in strategic planning process (I) Business mission (II) SWOT analysis (III) Strategy formulation (IV) Strategy implementation (V) Strategy evaluation and control
  • 5. Business mission  It is a value statement around which the entire corporate strategy revolves. Peter F. Drucker said that defining the purpose and mission of business is difficult, painful and risky. But this alone enables a business to set objectives, develop strategies, concentrate its resources and go to work. A mission statement: (I) Should define What the organization is and what it aspires to be (II) Should be limited to exclude some ventures and broad enough to allow for creative growth (III) Should distinguish a given organization from all others (IV) Should serve as framework for evaluating both current and prospective activities (V) Should be stated in terms sufficiently clear to be widely understood throughout the future.
  • 6. SWOT ANALYSIS  Under SWOT analysis strengths are matched with opportunities and weaknesses are matched with threats and then measures are taken to overcome those threats.
  • 7. Strategy formulation  In formulation of strategy it is necessary to take into consideration the full set of commitments, decisions and actions required for a firm to achieve strategic competitiveness. The SWOT analysis provides necessary strategic inputs for effective strategy formulation and implementation.  In the words of Michael porter, competitive strategy is about being different. Porter suggested five distinct competitive strategies which will benefit service organisations.
  • 8. (I) Low cost provider strategy (II) Differentiation strategy (III) Best cost provider strategy (IV) Focused strategy (niche market) based on lower cost (V) Focused strategy (niche market) based on differentiation
  • 9. Market oriented service strategy  In designing strategy, service firms need to differentiate themselves from manufacturing organisations. They have to take market sensitivities in relation to service characteristic into consideration in deciding the strategic approach to achieve organisational goals. The conventional market thinking provides three thumb rules for strengthening the competitive edge of a firm. These three rules are (I) Decrease in cost of production (II) Enhancement of promotional budget (III) Development of new products.
  • 10. Strategic management trap Financial problems or increasing competition Decision Deteriorating concerning corporate internal image efficiency Deteriorati Unsatisfied customer ng service quality More traditional Unsatisfied marketing customer efforts Deteriorating Deteriorating internal service quality atmosphere
  • 11.  Let us assume that service organization is facing either financial problem or increased competition. The first option for management is to achieve internal efficiency to reduce cost. The decision on internal efficiency often results in reduction of personnel, introduction of self service, increase in the work load of employees, automation and so on. In the manufacturing sector such decision may improve productive efficiency but in service organisations chances of such happening is rare.
  • 12.  When a service organisation chooses the second strategy of spending heavily on promotion with an intention to attract the market, it may succeed in increasing the demand for services. However, the reduced internal efficiency dissatisfies the customers. As a result of all these activities, the corporate image of organisation weakens and the problems of company multiply. When the image of company is low, even the introduction of new product does not save the organisation. A vicious circle gets formed when once the organisation gets into the strategic management trap and it leads to multiple problems.
  • 13. Service oriented approach  Service organisations should develop a service- oriented strategic approach to tackle problems in marketing. The result of a service oriented strategic approach to handle the same problem will be different.
  • 14. Financial problem 2.Improved 1. Improving perceived buyer seller service interaction quality 6.Increasing 3.More sales volume satisfied customer 5.improving 4.Improving corporate internal image atmosphere
  • 15. The service triangle company(top management) Internal marketing external marketing Employees interactive marketing customers
  • 16.  One of the most popular strategic models for service marketing was developed by Christian Gronross. The model is called service triangle. He has identified three different groups that play important role in successfully accomplishing organisational goals. They are company, employees and customers.  The model calls for a special marketing program between the company and its employees which is termed as internal marketing.  The second marketing program is between the company and its customers and is termed external marketing.  The third marketing program is between employees and customers and is termed interactive marketing.
  • 17. Three dimensions of service strategy As culture A basic set of values and belief about the central importance of customer guides the firm to formulate its corporate philosophy As strategy Concerned with market segmentation, targeting, positioning As tactics Design and implementation of marketing
  • 18.  The basic set of values and beliefs of the customer should guide and organisation to formulate its corporate philosophy. An analysis of customer need must be the basic input material for designing market attractiveness strategies. The culture thus evolved from the market feedback should reflect the overall value proposition of the company.
  • 19. Service oriented organisation structure: OLD Top management Middle management Bottom line
  • 20. Service oriented organisation structure: NEW Front line Support personnel Top management
  • 21. Strategy formulation and implementation  Strategy formulation requires good conceptual, integrative and analytical skills but strategy implementation requires special skills in motivating and managing others.  Strategy formulation occurs at the corporate level of organisation, while strategy implementation permeates all hierarchical levels.  Strategy formulation requires coordination among few individuals but strategy implementation require coordination among many.
  • 22. Strategy evaluation and control  To have an effective control following things has to be designed: (I) Establishment of evaluation criteria and standards (II) Measuring and comparing performance (III) Identification and analysis of performance gaps (IV) Initiating corrective measures