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BUSINESS STRATEGY
INTRODUCTION ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Top Management Perspective ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Two Approaches to Strategic Thinking WAYS OF THINKING Application or creativity, intuition or imagination (lateral thinking) Application of reason (vertical thinking) NATURE OF THE PROBLEM Divergent with many solutions Convergent with one solution AREA OF RELEVANCE Creating the vision: establishing strategic objectives Realizing the vision:achieving operational effectiveness
Analysing Business Environment ,[object Object],[object Object],[object Object],[object Object]
LONG TERM OBJECTIVES AND GRAND STRATEGIES ,[object Object],[object Object],[object Object],[object Object]
LONG TERM OBJECTIVES ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
QUALITIES OF LONG TERM OBJECTIVES ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
GENERIC STRATEGIES ,[object Object],[object Object],[object Object],[object Object]
GRAND STRATEGIES ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],STABILITY GROWTH RETRENCHMENT COMBINATION
Grand Strategy Selection Matrix Overcome weakness Maximise Strength Internal Redirected Sources  Within the firm External (Acquisition or Merger for Resource capability  Turnaround Divestiture Liquidation Vertical integration Conglomerate Diversification Concentrated Growth Market Development Product Development Innovation Horizontal integration Concentric Diversification Joint Venture
Model Grand Strategy Clusters Rapid Market Growth Slow Market Growth Strong Competitive Position Concentrated Growth Vertical integration Concentric Diversification Reformulation of concentrated  growth Horizontal integration Divestiture Liquidation Concentric Diversification  Conglomerate Diversification Joint Venture Turn around or Retrenchment Concentric Diversification Conglomerate Diversification Divestiture Liquidation Weak Competitive Position
PORTFOLIO ANALYSIS for Strategy choice ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Advantages of Portfolio Matrix Approaches ,[object Object],[object Object],[object Object],[object Object]
Limitations of Portfolio Matrix Approach ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Limitations of Portfolio Matrix Approach ,[object Object],[object Object]
Competitive Strategy ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Competitive Strategy (contd) ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Stuck in the Middle Market Share   Return on Investment   This graph may not hold good in every industry
Generic Strategies – Common Risks ,[object Object],[object Object]
Generic Strategies – Risks – Low-Cost Strategy ,[object Object],[object Object],[object Object],[object Object],[object Object]
Generic Strategy – Risks -- Differentiation ,[object Object],[object Object],[object Object]
Generic Strategies – Risks -- Focus ,[object Object],[object Object],[object Object]
Industry Evolution ,[object Object],[object Object],[object Object]
Industry Evolution Introduction Growth Maturity Decline Time Industry Sales
Industry Evolution ,[object Object],[object Object],[object Object],[object Object],[object Object]
Industry Evolution (contd..) ,[object Object],[object Object],[object Object],[object Object],[object Object]
Industry Evolution (contd..) ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Industry Evolution (contd..) ,[object Object],[object Object],[object Object],[object Object]
Industry Evolution (contd..) ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Industry Evolution (contd..) ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Industry Evolution (contd..) ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Types of Industries ,[object Object],[object Object],[object Object],[object Object]
Overall Cost Leadership ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Overall Cost Leadership – Defence Against the 5 Forces ,[object Object],[object Object],[object Object],[object Object],[object Object]
Overall Cost Leadership – Characteristics ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Generic Strategy – Cost Leadership -- Requirements Generic Strategy Commonly Required Skills and Resources Common Organisational Requirements Overall Cost Leader ship Sustained capital investment and access to capital Tight cost control   Process Engineering Skills Frequent, detailed control reports   Intense supervision of labour Structured organisation and responsibilities   Products designed for ease in manufacture Incentives based on meeting stict quantitative targets   Low-cost distribution system  
Generic Strategy -- Differentiation ,[object Object],[object Object],[object Object]
Differentiation – Defence Against 5 Forces ,[object Object],[object Object],[object Object],[object Object],[object Object]
Generic Strategies – Differentiation -- Requirements   Generic Strategy Commonly Required Skills and Resources Common Organisational Requirements DIFFEENTIATION   Strong Maketing abilities Strong co-ordination among function in R&D, product development, and marketing   Product Engineering  Subjective measurement and incentives instead of quantitative measures   Creative flair Amenities to attract highly skilled labour, scientists, or creative people   Strong capability in basic research     Corporate reputation for quality or technological leadership     Long tradition in the industry or unique combination of skills drawn from other business     Strong co-operation from channels  
Differentiation -- Characteristics ,[object Object],[object Object],[object Object],[object Object]
Generic Strategy -- Focus ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Generic Strategy -- Focus Strategic Target
Generic Strategy – Focus -- Requirements Generic Strategy Commonly Required Skills and Resources Common Organisational Requirements Focus Combination of the policies for the other two generic strategies, directed at the particular strategic target Combination of the policies for the other two generic strategies, directed at the particular strategic target
BCG ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
BCG Stars Question marks Cash cows Dogs A select few (net users of resources) (net suppliers of resources) Remainder divested Market Growth Rate Low Low High High Relative Market Share ( Cash Generation) Cash use
BCG -- Disadvantages ,[object Object],[object Object],[object Object]
GE-McKINSEY-SHELL High Medium Low High Medium Low Divest Invest Selectively Invest Business Unit Position Industry Attractiveness Size Growth Share Position Profitability Margins Tech Pos Stren/Weak Image Pollution People Size Market Growth Pricing Market Diversity Competitive Structure Industry Profitability Technical Role Social Environmental Legal Human 1.Identify Industry attractiveness factors 2.Assign weight to each factor 3.Obtain weighted composite score 4.Classify the score into ratings H/M/L 5.Classify business units into different categories
Arthur D Little – Life Cycle Approach Out Natural Development  Strategies are appropriate when the SBU is in a mature industry and is competitive.  The SBU deserves strong support Selective Development  refers to strategies that concentrate on industries that are attractive or on SBUs that have competitive competencies Prove Viability  is transitional strategy that cannot be sustained.  The situation has to be changed Out  is a strategy for withdrawal Life Cycle Stage Competitive Position Natural Development Selective Development Prove Viability
Arthur D Little – Life Cycle Approach ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
BCG’s Strategic Environment Matrix Sources of Advantage Size of Advatage Small Small Big Big Fragmented Apparel, house-building, jewelry retailing, sawmills  Specialisation Pharmaceuticals, luxury cars, chocolate confectionary Stalemate Basic chemicals, volume-grade paper, ship owning (VLCCs),  Volume Jet engines, supermarkets, motorcycles, standard microprocessors
Analysing Business Environment --  Macro External Environment Analysis   ,[object Object]
Some Possible Trends in the environment ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Analysing Business Environment— External Environment Analysis ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Analysing Business Environment – Firm Level Internal Analysis ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Political Environment ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],Supplier Function Customer Function Competitor Function ,[object Object],[object Object]
Economic Environment ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Social Envionment ,[object Object],[object Object],[object Object],[object Object],[object Object],Examples -- Books and periodicals Consumer Durables Fashion Garments Restaurants Fast Food Joints Entertainment – TV serials
Technological Environment ,[object Object],[object Object],[object Object],Computer Hardware  Steel Industry Automobile Industry
Political Environment  ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Examples of effect of Economic Environment ,[object Object],[object Object],[object Object]
External Environment Analysis ,[object Object],[object Object]
Firm Level Internal Analysis ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Production/operation/technical ,[object Object],[object Object],[object Object],[object Object]
Strategies for small businesses ,[object Object],[object Object],[object Object],[object Object],[object Object]
Strategies for large businesses ,[object Object],[object Object],[object Object]
Finance Accounting ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Use of Ratios ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Marketing ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
R & D ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Vulnerability Analysis ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Steps involved in Vulnerability Analysis ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Vulnerability Matrix Defenceless Endangered Vulnerable Prepared Company’s ability to react Low High Impact Of threat Low High
Porter’s Five Forces Model ,[object Object],[object Object],[object Object],[object Object],[object Object]
5 forces model Rivalry among Industry competitors Suppliers Substitutes New Entrants Buyers
Concept of Complementarity ,[object Object],[object Object],[object Object],[object Object]
The value Net company competitors complementors customers suppliers
Game Theory ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Threat of New Entrants – Six Barriers ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Economies of Scale ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Product Differentiation ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Capital Requirement ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Cost disadvantage of independent size ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Access to distribution channels ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Govt Policies ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Rivalry among existing firms ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Bargaining power of Buyers ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Bargaining power of Suppliers ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Threat of substitutes ,[object Object],[object Object]
GRAND STRATEGIES  -- Concentrated Growth ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
GRAND STRATEGIES  -- Concentrated Growth ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
GRAND STRATEGIES  -- Concentrated Growth ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
GRAND STRATEGIES  -- Concentrated Growth ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
GRAND STRATEGIES  --  Market Development ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
GRAND STRATEGIES  --  Market Development ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
GRAND STRATEGIES  --  Product Development ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
GRAND STRATEGIES  --  Product Development ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
GRAND STRATEGIES  --  Innovation ,[object Object],[object Object],[object Object],[object Object],NOTE THE DIFFERENCE BETWEEN THIS STRATEGIC APPROACH AND THE APPROACH OF EXTENDING AN EXISTING PRODUCT’S LIFE CYCLE BY PRODUCT EXTENSION
GRAND STRATEGIES  --  Innovation ,[object Object],[object Object],[object Object]
GRAND STRATEGIES  --  Innovation ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
GRAND STRATEGIES  --  Horizontal Integration ,[object Object],[object Object],[object Object],[object Object]
GRAND STRATEGIES  --  Vertical Integration ,[object Object],[object Object],[object Object],[object Object],[object Object]
GRAND STRATEGIES  --  Vertical Integration ,[object Object],Textile producer Shirt manufacturer Shirt manufacturer Clothing Store Clothing Store Vertical Integration Horizontal Integration
GRAND STRATEGIES  --  Comparison of Horizontal  & Vertical Integration ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
GRAND STRATEGIES  --  Comparison of Horizontal  & Vertical Integration ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Tapered Integration ,[object Object],[object Object],[object Object],[object Object]
Tapered Integration -- Examples ,[object Object],[object Object],[object Object]
Tapered Integration -- Advantages ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Tapered Integration -- Disadvantages ,[object Object],[object Object],[object Object]
Quasi Integration  ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Quasi Integration -- Advantages ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
GRAND STRATEGIES  --  Concentric Diversification ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
GRAND STRATEGIES  --  Concentric Diversification ,[object Object],[object Object],[object Object],[object Object]
GRAND STRATEGIES  --  Conglomerate Diversification ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Motivations for Acquisition ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
GRAND STRATEGIES  --  Conglomerate Diversification – seven sins of strategy acquisition ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
GRAND STRATEGIES  --  Turnaround ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
GRAND STRATEGIES  --  Turnaround ,[object Object],[object Object],External factors Stability Turnaround situation   Turnaround Response  Cause  Severity  Retrenchment phase  Recovery phase  (operating) (strategic) Declining  sales or margins Low High Imminent  bankruptcy Cost Reduction Asset Reduction Efficiency Maintenance Entreprenuerial Reconfiguration
GRAND STRATEGIES  --  Divestiture ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
GRAND STRATEGIES  --  Liquidation ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
GRAND STRATEGIES  --  Bankruptcy ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
GRAND STRATEGIES  --  Bankruptcy in US ,[object Object],[object Object],[object Object],[object Object]
GRAND STRATEGIES  --  Joint Ventures ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
GRAND STRATEGIES  --  Strategic Alliances ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
GRAND STRATEGIES  --  Consortia, Keiretsus, Chaebols ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Fragmented Industries –  Reasons for Fragmentation ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Fragmented Industries –  Reasons for Fragmentation  ( Contd) ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Fragmented Industries –  Common Approaches to Consolidation ,[object Object],[object Object],[object Object],[object Object],[object Object]
Fragmented Industries –  Industries that are STUCK ,[object Object],[object Object],[object Object]
Fragmented Industries –  Coping with Fragmentation ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Fragmented Industries –  Potential Strategic Traps ,[object Object],[object Object],[object Object],[object Object],[object Object]
Fragmented Industries-  Formulating Strategies ,[object Object],[object Object],[object Object],[object Object],[object Object]
Emerging Industries – Structural Environment Common Structural Characteristics ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Emerging Industries – Structural Environment Early Mobility Barriers ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Emerging Industries – Structural Environment Problems Constraining Industry Development ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Emerging Industries – Structural Environment Early and Late Markets ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Emerging Industries – Strategic Choices ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Emerging Industries – Structural Environment  Early or Late Markets ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Emerging Industries – Structural Environment  Nature of the benefit ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Emerging Industries – Structural Environment Nature of the benefit ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Emerging Industries – Strategic Choices ,[object Object],[object Object],[object Object],[object Object]
Emerging Industries – Strategic Choices (Contd) ,[object Object],[object Object],[object Object]
Emerging Industries – Strategic Choices Timing the Entry (Contd) ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Emerging Industries – Strategic Choices Techniques for forecasting ,[object Object],[object Object],[object Object],Product/ Technology Markets Competition Scenario A Scenario B
Emerging Industries – Strategic Choices Which Emerging Industry to Enter ,[object Object],[object Object],[object Object]
Industries in Transition to Maturity – Industry Changes During Transition ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Industries in Transition to Maturity – Strategic Implications ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Industries in Transition to Maturity – Strategic Pitfalls ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Industries in Transition to Maturity – Organisational Implications ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Industries in Transition to Maturity – Organisational Implications (contd) ,[object Object],[object Object],[object Object],[object Object],[object Object]
Industries in Transition to Maturity – Transition and the General Manager ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Declining Industries – Structural Determinants of Competition in Decline ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Declining Industries – Strategic Alternatives ,[object Object],[object Object],[object Object],[object Object]
Declining Industries – Choosing a Strategy ,[object Object],[object Object],[object Object],[object Object],[object Object]
Declining Industries – Strategies for Decline Leadership Or Niche Harvest Or Divest Quickly Niche Or Harvest Divest Quickly Relative Strength in  Remaining Pockets of demand High Low  Unfavourable Favourable    For decline
Declining Industries – Pitfalls ,[object Object],[object Object],[object Object]
Declining Industries – Preparations for Decline ,[object Object],[object Object],[object Object]
How Did We Get Here? ,[object Object],[object Object]
Fragmented Industries –  Reasons for Fragmentation  ( Contd) ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]
Available Options ,[object Object],[object Object],[object Object]
Recommendation ,[object Object],[object Object],[object Object],[object Object]
Emerging Industries – Strategic Choices Timing the Entry (Contd) ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

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Business strategy

  • 2.
  • 3.
  • 4. Two Approaches to Strategic Thinking WAYS OF THINKING Application or creativity, intuition or imagination (lateral thinking) Application of reason (vertical thinking) NATURE OF THE PROBLEM Divergent with many solutions Convergent with one solution AREA OF RELEVANCE Creating the vision: establishing strategic objectives Realizing the vision:achieving operational effectiveness
  • 5.
  • 6.
  • 7.
  • 8.
  • 9.
  • 10.
  • 11. Grand Strategy Selection Matrix Overcome weakness Maximise Strength Internal Redirected Sources Within the firm External (Acquisition or Merger for Resource capability Turnaround Divestiture Liquidation Vertical integration Conglomerate Diversification Concentrated Growth Market Development Product Development Innovation Horizontal integration Concentric Diversification Joint Venture
  • 12. Model Grand Strategy Clusters Rapid Market Growth Slow Market Growth Strong Competitive Position Concentrated Growth Vertical integration Concentric Diversification Reformulation of concentrated growth Horizontal integration Divestiture Liquidation Concentric Diversification Conglomerate Diversification Joint Venture Turn around or Retrenchment Concentric Diversification Conglomerate Diversification Divestiture Liquidation Weak Competitive Position
  • 13.
  • 14.
  • 15.
  • 16.
  • 17.
  • 18.
  • 19. Stuck in the Middle Market Share  Return on Investment  This graph may not hold good in every industry
  • 20.
  • 21.
  • 22.
  • 23.
  • 24.
  • 25. Industry Evolution Introduction Growth Maturity Decline Time Industry Sales
  • 26.
  • 27.
  • 28.
  • 29.
  • 30.
  • 31.
  • 32.
  • 33.
  • 34.
  • 35.
  • 36.
  • 37. Generic Strategy – Cost Leadership -- Requirements Generic Strategy Commonly Required Skills and Resources Common Organisational Requirements Overall Cost Leader ship Sustained capital investment and access to capital Tight cost control   Process Engineering Skills Frequent, detailed control reports   Intense supervision of labour Structured organisation and responsibilities   Products designed for ease in manufacture Incentives based on meeting stict quantitative targets   Low-cost distribution system  
  • 38.
  • 39.
  • 40. Generic Strategies – Differentiation -- Requirements   Generic Strategy Commonly Required Skills and Resources Common Organisational Requirements DIFFEENTIATION   Strong Maketing abilities Strong co-ordination among function in R&D, product development, and marketing   Product Engineering Subjective measurement and incentives instead of quantitative measures   Creative flair Amenities to attract highly skilled labour, scientists, or creative people   Strong capability in basic research     Corporate reputation for quality or technological leadership     Long tradition in the industry or unique combination of skills drawn from other business     Strong co-operation from channels  
  • 41.
  • 42.
  • 43. Generic Strategy -- Focus Strategic Target
  • 44. Generic Strategy – Focus -- Requirements Generic Strategy Commonly Required Skills and Resources Common Organisational Requirements Focus Combination of the policies for the other two generic strategies, directed at the particular strategic target Combination of the policies for the other two generic strategies, directed at the particular strategic target
  • 45.
  • 46. BCG Stars Question marks Cash cows Dogs A select few (net users of resources) (net suppliers of resources) Remainder divested Market Growth Rate Low Low High High Relative Market Share ( Cash Generation) Cash use
  • 47.
  • 48. GE-McKINSEY-SHELL High Medium Low High Medium Low Divest Invest Selectively Invest Business Unit Position Industry Attractiveness Size Growth Share Position Profitability Margins Tech Pos Stren/Weak Image Pollution People Size Market Growth Pricing Market Diversity Competitive Structure Industry Profitability Technical Role Social Environmental Legal Human 1.Identify Industry attractiveness factors 2.Assign weight to each factor 3.Obtain weighted composite score 4.Classify the score into ratings H/M/L 5.Classify business units into different categories
  • 49. Arthur D Little – Life Cycle Approach Out Natural Development Strategies are appropriate when the SBU is in a mature industry and is competitive. The SBU deserves strong support Selective Development refers to strategies that concentrate on industries that are attractive or on SBUs that have competitive competencies Prove Viability is transitional strategy that cannot be sustained. The situation has to be changed Out is a strategy for withdrawal Life Cycle Stage Competitive Position Natural Development Selective Development Prove Viability
  • 50.
  • 51. BCG’s Strategic Environment Matrix Sources of Advantage Size of Advatage Small Small Big Big Fragmented Apparel, house-building, jewelry retailing, sawmills Specialisation Pharmaceuticals, luxury cars, chocolate confectionary Stalemate Basic chemicals, volume-grade paper, ship owning (VLCCs), Volume Jet engines, supermarkets, motorcycles, standard microprocessors
  • 52.
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  • 72.
  • 73.
  • 74. Vulnerability Matrix Defenceless Endangered Vulnerable Prepared Company’s ability to react Low High Impact Of threat Low High
  • 75.
  • 76. 5 forces model Rivalry among Industry competitors Suppliers Substitutes New Entrants Buyers
  • 77.
  • 78. The value Net company competitors complementors customers suppliers
  • 79.
  • 80.
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  • 153.
  • 154.
  • 155.
  • 156. Declining Industries – Strategies for Decline Leadership Or Niche Harvest Or Divest Quickly Niche Or Harvest Divest Quickly Relative Strength in Remaining Pockets of demand High Low  Unfavourable Favourable  For decline
  • 157.
  • 158.
  • 159.
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  • 162.
  • 163.

Editor's Notes

  1. Strategy comprises thinking about action in two different ways: vertical (rational) thinking and lateral (intuitive) thinking. It deals with convergent problems, that is with one solution, and divergent problems, that is, those with a number of possible solutions. Strategy demands from strategists both creativity ( lateral thinking), often applied to divergent problems, and rationality (vertical thinking) often applied to convergent problems. This means that, in the area of business, strategy combines a vision and managerial effectiveness in realising that vision, referred to as operational effectiveness, and therefore both the harnessing of intuition and the application of reason. In the business world, strategy is about successful entrepreneurship and good management. There is therefore an inherent contradiction in strategic thinking, which makes its full meaning hard to grasp {Strategic Management -- Colin White – ISBN 1-4039-0400-6 (pbk) -- ICFAI ACCN no 13008
  2. Page 231 – 232; STRATEGIC MANAGEMENT – formulation, implementation and control; Pearce and Robinson; 8th Edn 2003