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Business strategy session 1
The document provides an overview of strategic management processes, emphasizing the importance of building strategies that lead to superior performance and sustained profitability. It discusses key concepts such as competitive advantage, SWOT analysis, strategic leadership, and the formulation and implementation of strategies. Additionally, it includes practical examples, such as Jet Airways' business and marketing strategies, and highlights the role of external and internal analysis in strategic planning.
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Business strategy session 1
- 1. Introduction to StrategicManagement & Strategic Management as a Process
- 2. 2 Building Strategy &Driving Superior Performance Profitability (ROIC) Profit Growth Effectiveness of Strategies Shareholder’s Value Strategy Strategic Leadership Strategy Formulation Strategy Implementation © Anik Saha
- 3. 3 Competitive Advantage &Business Model SUSTAINED COMPETITIVE ADVANTAGE (SCA) BUSINESS MODEL Identify Customer Define Offerings Create Value Understand & Create Value Services Produce Goods& Services in Ecosystem Organize Activities in Ecosystem Deliver Solutions Lower Costs & Build Resources Acquire & Nurture Customers Profitability Achieve & Sustain Profitability over time Grow Business over time Profitability & Profit Growth > Avg. Profitability & Profit Growth of Competition addressing similar segment Maintain Above-avg growth performance over longer period © Anik Saha
- 4. 4 ROI Across Industries:Per Forbes http://www.forbes.com/sites/sageworks/2015/02/01/the-10-highest-return-industries-by-roe/#6b5a42d7d7c8 © Anik Saha
- 5. 5 ROI Across Industries:Per Forbes Corporate Layer Business Layer Functional Layer • Translate corporate directions to business strategies • Set Business Directions & strategies for specific BU • Build strategy specific to BU business goals • Overall Corporate Vision/Mission • Connect with Shareholders & Protect interest • Build strategies to grow overall Profitability • Communicate overall Strategy across BUs • Execute specific strategies • Overview operations of function • Ensure alignment to strategy devised © Anik Saha
- 6. 6 Strategic Management AsA Process Market Sensing Set Corporate Mission & Goals Analyse Competition, Externalities, Strength/ Weakness Build Strategies Implement Strategies Review Performance © Anik Saha
- 7. 7 Mission / Vision/Values Mission Vision Values • Define what Organization does • Customer centric mission rather than product-centric • Captures customer need • Helps anticipating demand shift and redefine business model • Depicts futuristic state • What organization wants to achieve • Conduct / Culture of Org. • Values/Norms/Standards/Control systems etc. • Type of Org to be built • Approach towards business © Anik Saha
- 8. 8 BUSINESS GOALS Measurable Challenging/ Realistic Importantor Crucial Time bound • Compare performance against benchmark • Revise Goals • Motivate to achieve • Unrealistic goals will deter from attempting • Deadlines create urgency • Comparable against market • Chose parameters that matter • Indicators that assesses performance Short Term Goals: Qtr Revenue/GP, Cost cutting Caution: Lack of Innovation/Planning Long Term Goals: Shareholders’ Return, Sustained GP, CSAT Caution: Market Presence © Anik Saha
- 9. 9 External & InternalAnalysis External: To Identify Strategic Opportunities & Threats, Customers, Market Shift, Competition Internal: To Identify strength and weakness of organization Local or National Environment Socio/ Macro Economic Conditions (GDP/ IIP, Inflations, Consumer behaviors etc.) Market & Competitive Study, e.g Potential, Competition, Positioning Resources Capabilities Competencies © Anik Saha
- 10. 10 SWOT Analysis &Business Model S W O T • Strength to be leveraged • Understand & Create Value around Strength • Fix or Improve Gaps • Build contingency plan • Build counter strategy • Market Opportunities Growing • Externalities supporting strength • Market shift supporting weakness/ gap/ competition • Identify shift and complement Leverage SWOT to Identify Strategies to create SCA Functional Strategy • Operational effectiveness • Improve Manufacturing, Marketing, Operations, customer Services Business Strategy • Positioning against competition • Revenue/GP growth • Cost Leadership, differentiation, segments • Geographic Expansion • Leverage competitive advantage globally Corporate Strategy • Generate Shareholders’ return • Grow profitability in long run Global Strategy © Anik Saha
- 11. 11 Intended & EmergentStrategies • Recognize the process to identify potentially good emergent strategies • Evaluate emergent strategies with Org’s goals, SWOT • Synergy with org’s capabilities and needs (customer’s/org’s) • Encouraging Corporate culture to emerging strategies • Combination of both results successful strategies & execution • Emerges without prior planning • In response to unforeseen situations • Grows wherever capacity to learn and resources to support Emergent Strategies Identify & Leverage Emergent Strategies https://opentextbc.ca/strategicmanagement/chapter/intended-emergent-and-realized-strategies/ © Anik Saha
- 12. 12 Planning by Scenariosand Decentralized Decision Planning by Situations Decentralized Planning • Flexibility to change per situation • Factor what-if situations • Build contingency plans, investments against other possible situations • Involve resources closure to execution in decision making • Synergy with field executions important for success • Leadership from external resources impacts trust • Grow decision makers within Org © Anik Saha
- 13. 13 Decision Making Errors PriorHypothesis Bias Cognitive Bias Escalating Commitment Reasoning by Analogy Representativeness The Illusion of Control Stick to beliefs despite strong counter evidences Continue investment in spite of negative feedback Usage of simple but inappropriate analogy for complex problem Generalize hypothesis based on success of small sample Overconfidence on self ability leads to poor acquisitions The Availability Error Assume probability of an outcome based on easiness of imagination © Anik Saha
- 14. 14 Strategic Leadership Important Qualitiesof Good Strategic Leader Vision, Eloquence, Consistency Articulation of Biz Model Commitment Be well informed Delegation & Empowerment Astute use of Power Emotional Intelligence © Anik Saha
- 15. 15 Jet Airways Example:Corporate Goals Source: www.jetairways.com © Anik Saha
- 16. 16 Source: http://wap.business-standard.com/article/companies/jet-airways-trying-new-strategies-yet-to-deliver-114100100393_1.html Jet AirwaysExample: Business Strategy © Anik Saha
- 17. Jet Airways Example:Marketing Strategy 1. Positioning As Hospitality with a class/aristocracy or Privileged 2. Corporate Tie ups, Branding as International carrier with flights to US/Europe etc. 3. Skimmed Pricing Strategy to not getting classified as 'Low Cost' Airlines; Attempt to come out of the clutter of other airlines 4. Special Hospitality Care with 'Jet Privileged' members like Premier Lounge, Free Snacks, Priority Check-in counters etc. 5. Business Class segment focus and hence the team on field also has professional looks/outfits © Anik Saha
- 18. 18 Acknowledgement Strategic Management byCharles W. L. Hill/ Gareth R. Jones, Published by CENGAGE Learning © Anik Saha