1. BUSINESS STRATEGY - I Course Code: 602 Prof. Subir Sen – Faculty Member ICFAI E-Mail: subir@ibsindia.org / 9830697368 Ref: 1) Strategic Management – Thompson & Strickland 2) Strategic Management – Pearce & Robinson 3) Strategic Management – Lomash 4) Strategic Management – Fred. R. David 5) Strategic Management – Johnson & Scholes
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5. STRATEGIC MANAGEMENT - FRAMEWORK Fit Fit Fit Political Political Strategic Intent Strategic Management Finance Marketing Economical Social & Cultural Fit Fit Fit Fit Political Technological HR Production Strategic Management
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11. ENVIRONMENTAL CHANGE Phase I : Extrapolation of the past Phase II : Discrete Scenarios Phase III : Range of Scenarios Phase IV : Horizon of Scenarios 1 2 1B 1A 2A 2B 1 3 2 1 Prior to 1950 1950 to 1970 1970 to 1990 1990 onwards 3 2 1
12. STRATEGIC MANAGEMENT - IMPORTANCE Industry Effects – 45% Strategy Effects – 35% Time Effects – 20% Source: Schmalensee, (1985)
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23. STRATEGIC INTENT - HIERARCHY Dominant Vision Mission Objectives Goals Plans Integrative Specific Single Many Dominant Logic
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35. STRATEGIC DRIFT FRAMEWORK Degree of change Time Continuity Incremental Change State of Flux Radical Change Stage of Atrophy Environmental Change Strategic Change Strategic Drift Stage of Transformation
56. FIVE FORCES MODEL - PORTER Threat of New Entrants Threat of Substitutes Bargaining power of Suppliers Bargaining power of Suppliers Bargaining power of Customers Competition from Existing Players
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77. EL - CURVE Production / Volume Cost per unit of output Decreases at an increasing rate Decreases at a constant rate Decreases at a decreasing rate Point of inflexion
82. GRAND STRATEGIES Corporate Strategy Growth Stability Divestment Combination Intensification Diversification Vertical Market Penetration Horizontal Conglomerate / Unrelated Market Development Product Development Concentric / Related
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84. GROWTH - ANSOFF’S MODEL Existing Market New Market Existing Product New Product Market Penetration (+) Market Development (++) Product Development (++) Diversification (+++) Note: (+) indicates type of growth and risk involved .
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93. HORIZONTAL DIVERSIFICATION - RELIANCE Reliance Industries Reliance Capital Reliance Power Reliance Infrastructure Reliance Ports
97. A CASE OF TAPERED INTEGRATION Very Critical Components Full Ownership Critical Components Partial Ownership Ordinary Components Zero Ownership Engine Transmission Design Steering Electricals Windscreen Seats & Carpets
133. VALUE-CHAIN ANALYSIS Support Primary Human Resource Management Infrastructure Technology Development Procurement In Logistics Operations Out Logistics Mktg & Sales Service Competitive Advantage
144. RED OCEAN Vs BLUE OCEAN Compete in existing markets Beat the competition Exploit existing demand Make the value cost tradeoff Supply is the defining variable Compete in uncontested markets Make the competition irrelevant Create and capture demand Break the value cost tradeoff Demand is the defining variable
145. RECONSTRUCT MARKET BOUNDARIES Issues Structures Reactive Time/Trends Improving Value Orientation Forecast Scope Serving Buyer Group Short - Medium Competitiveness Within Industry Proactive Shifting Value Dream Redefining Long Beyond
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148. THE CORE PRINCIPLES Reconstruct market boundaries … overcome beliefs . Reach beyond existing demand … go for uncontested space. Get the strategic sequence right … value (innovation) first . VI COST VALUE
149. VALUE INNOVATION – GREENER PASTURES A new value curve Reduce Eliminate Create Raise Which factors to be reduced below the industry standard Which of the industry factors that the industry takes for granted should be eliminated Which of the factors should be raised above the industry’s standard Which factors should be created that the industry has not offered
151. RISK IN BLUE OCEAN Search Risk Planning Risk Scale Risk Business Model Risk Organizational Risk Management Risk Formulation Risks Execution Risks Reconstruct market boundaries Focus on the big picture Reach beyond existing demand Get the strategy sequence right Formulation Principles Execution Principles Overcome key hurdles Motivation
152. BLUE OCEAN STRATEGY SEQUENCE Buyer Utility Is there exceptional buyer utility in your business idea? Price Is your price easily accessible to the mass of buyers? Cost Can you attain your cost target to profit at your strategic price? Adoption What are the adoption hurdles in actualizing your business idea? Are you addressing them up front? A Commercially Viable Blue Ocean Strategy
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155. STRATEGY IMPLEMENTATION - ROUTES Organic Growth Mergers & Acquisition Take Overs Joint Venture Strategic Alliance Strategic Fit - High Strategic Fit - Low
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166. MC KINSEY 7-S FRAMEWORK: TOM PETERS 1 st Order Fit 2 nd Order Fit 3 rd Order Fit Shared Values Skills Structure Strategy Systems Staff Style
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171. STRATEGIC CHANGE Market Imperfection Industry & Group Characteristics Dominant Logic Strategy A major shift in the company’s course of action. Prior to 1990 Post 1990
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187. REENGINEERING – KEY TENETS Ambition Focus Attitude Enabler Performance Large scale improvement by questioning basic assumptions about how work is done Micro Vs Macro Business Processes Vs Organisational Processes Starting right from the scratch Not historical More IT driven, than people driven Innovative Vs Traditional Customer centric Vs Organisational centric
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199. CUSTOMER PERSPECTIVE GOALS Products Supply Preference Relationship MEASURES Relative market share (%) % of sales from new Vs proprietary products Timely deliveries and service Customer credit analysis (i.e. ageing schedule) % of key customer transactions Ranking of key customer accounts No. of visits or calls made % of bad debts
200. BUSINESS PERSPECTIVE GOALS Skills Excellence Exposure Introduction MEASURES New capabilities and competencies Implementation & gestation period Bank and supplier credit limits Unit Costs / Conversion Ratio / Defect Ratio No. of times covered in media No. of new product launches Vs competition Product pricing Vs competition
201. LEARNING PERSPECTIVE GOALS Technology Manufacturing Focus Timing MEASURES No. of new patents registered Time to develop next generation products Average and spread in cycle time % of products that equal 2/3 sales No. of product innovations
202. FINANCIAL PERSPECTIVE GOALS Survival Success Prosper Valuation MEASURES Cash flows Growth in sales and profits Return on Investment Market capitalisation / PE ratio
203. BSC - IMPLEMENTATION STRATEGY Mobilise change through effective leadership Translate strategy into operational terms Align the organisation to the strategy Make strategy everyone’s job Make strategy a continual process 1 2 3 4 5 BALANCED SCORE CARD
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205. EFFICIENCY Vs EFFECTIVENESS Ineffective Goes out of Business quickly Survives Dies Slowly Thrives Inefficient Efficient Effective
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