Crafting strategy, strategy framework, growth share matrix, Porters value chain analysis, Competitive advantages of a firm, strategy formulation at corporate, business and functional levels, strategy analysis and choice, strategy implementation, strategy formulation vs strategy implementation

1. Unit 4
Crafting Strategic
Megharaja E N

2. Strategy framework for analysing competition
What is a competitor analysis framework?
 A competitor analysis framework, market analysis framework or
competitor analysis model, as they’re sometimes known, is a structure
that business professionals use to research and evaluate their competitors.
 In other words, the art of knowing your enemy. Competitive frameworks
gather vital information, such as a competitor’s business strategies,
products, offerings, marketing efforts, sales, etc., into an organized visual
model

3. Types of competitor analysis framework
• SWOT Analysis
• Porter’s five force model
1. Intensity of competitive rivalry
2. Threat of new entrants
3. Bargaining power of new buyers
4. Bargaining power of suppliers
5. Threat of substitutes
• Strategic group mapping
• Perceptual mapping

4. Types of competitor analysis framework
• Growth-share matrix
The growth-share matrix classifies your company’s products against the competitive
landscape. This is an example of a competitor analysis that’s especially useful for big
organizations with a large portfolio of products or offerings. A growth-share matrix is
a chart divided up into four quadrants to classify products or business units into:
Stars: products with high growth and high market share. Invest more in these.
Question marks: products (usually new ones) with high growth, but low market
share. Decide whether to invest more (if convinced it will become a star) or give up on
it.
Cash cows: products with low growth but high market share that are usually used to
fund investment in stars.
Pets: products with low growth and low market share. Decide whether to reposition or
give up on it.
Using this market analysis framework can help determine what’s worth giving priority
to, what to reposition, and what to ditch.

6. Benefits of using a competitor analysis framework
Identify market shifts
Locate gaps you didn’t even know you had
Target the most effective marketing strategies
Avoid mistakes
Create measurable (and achievable) goals
Make data more digestible

7. Porter’s Value Chain Analysis

8. Competitive Advantages of a Firm

9. • Strategy formulation is the process of using available knowledge to
document the intended direction of a business and the actionable steps
to reach its goals.
• This process is used for resource allocation, prioritization,
organization-wide alignment, and validation of business goals.
• Formulating an effective strategy can allow your organization to share
one clear vision, catch biases by examining the reasoning behind
goals, and track performance with measurable key performance
indicators (KPIs).
Strategy Formulation

11. Formulation of strategy at Corporate Levels
 At the corporate level strategy however, management must not only consider how to
gain a competitive advantage in each of the line of businesses the firm is operating in,
but also which businesses they should be in in the first place. It is about selecting an
optimal set of businesses and determining how they should be integrated into a
corporate whole: a portfolio.
 Typically, major investment and divestment decisions are made at this level by top
management. Mergers and Acquisitions (M&A) is also an important part of corporate
strategy. This level of strategy is only necessary when the company operates in two or
more business areas through different business units with different business-level
strategies that need to be aligned to form an internally consistent corporate-level
strategy.
 That is why corporate strategy is often not seen in small-medium enterprises (SME’s),
but in multinational enterprises (MNE’s) or conglomerates.

12. Formulation of strategy at Business Levels
 The Business-level strategy is what most people are familiar with and is about the
question “How do we compete?”, “How do we gain (a sustainable) competitive
advantage over rivals?”.
 In order to answer these questions it is important to first have a good understanding of
a business and its external environment. At this level, we can use internal analysis
frameworks like the Value Chain Analysis and the VRIO Model and external analysis
frameworks like Porter’s Five Forces and PESTEL Analysis.
 When good strategic analysis has been done, top management can move on to strategy
formulation by using frameworks as the Value Disciplines, Generic Strategies etc..
 In the end, the business-level strategy is aimed at gaining a competitive advantage by
offering true value for customers while being a unique and hard-to-imitate player
within the competitive landscape.

13. Formulation of strategy at Functional Levels
 Functional-level strategy is concerned with the question “How do we support the
business-level strategy within functional departments, such as Marketing, HR,
Production and R&D?”.
 These strategies are often aimed at improving the effectiveness of a company’s
operations within departments. Within these department, workers often refer to their
‘Marketing Strategy’, ‘Human Resource Strategy’ or ‘R&D Strategy’. The goal is to
align these strategies as much as possible with the greater business strategy
 If the business strategy is for example aimed at offering products to students and
young adults, the marketing department should target these people as accurately as
possible through their marketing campaigns by choosing the right (social) media
channels. Technically, these decisions are very operational in nature and are therefore
NOT part of strategy. As a consequence, it is better to call them tactics instead of
strategies.

15. Strategic analysis and Choice
 Strategic choices is the mental process of selecting the best or most
appropriate strategy from the stock of alternatives that serves the
enterprise objectives
 According to Mr. William F. Glueck, the Strategic choices are made
in the background of four selective Forces namely
1. Managerial perception of External dependence
2. Management attitude towards risk
3. Managerial awareness of past enterprise strategies
4. Managerial power relationships and Organizational structure

16. Factors influencing Strategic analysis and Choice
Environmental constraints – Shareholders, suppliers, competitors,
customers, lenders, government and community.
Managerial power relations- centralized or decentralized company
Value system in decision making
Managerial attitude towards risk
Influence of past strategy
Time dimensions of strategic choice
Competitors
Availability of relevant information or resources

17. Strategy
Alternative
STABILITY Divestment
EXPANSION Combination
Inter business
development
Diversification
Market
Differentiation
Market
development
Product
development
Backward
Forward
Vertical
integration
Concentric
Diversification
Conglomerate

18. Why to follow stability strategy
 Status quo orientation
 Incremental improvement
 No redefinition of the business
 Fairly a quite modest strategy
Features of stable growth strategy
• Level of managerial satisfaction
• Managerial reading of future
• Retention of core competencies
• The degree of resistance to change
• Fear of loss of control
• Lack of resource
• Threats of External factors

19. Variants of stable strategy
Incremental growth strategy
Market concentration strategy
Pause strategy
Sustainable growth strategy

20. Expansion or growth strategy
Features of expansion strategy
• It is the mark of exponential growth
• It involves redefinition of the business
• It is highly versatile strategy
Why expansion strategy
• For company survival.
• Growth of managerial motivation
• Effective utilisation of resource
• Moving from loss to profit wedge

21. Variants of growth strategy
Market development strategy
Product development strategy
Innovative strategy
Integration strategy
• Horizontal
• Vertical: Backward Integration, Forward Integration

22. Diversification strategy
 Reasons for diversification
• It spreads the risk
• Better utilisation of resource
• Developing competitive edge
• Diversification makes firm dominant in markets

23. Retrenchment strategy
 Reasons for retrenchment strategy
• Poor performance
• Threats to survival
• Close less profitable unit
• Insufficiency of resource

24. Variants of retrenchment strategy
Turnaround strategy
Liquidation strategy
Harvest strategy- asset reductions
Divestment strategy- selling off or Liquidation of
part of SBU’s by the corporate office

25. Strategy Implementation
Strategy implementation is the translation of chosen Strategy into
organizational action so as to achieve strategic goals and
objectives.
Strategic implementation is also defined as the manner in which an
organization should develop, utilize and amalgamate
organizational structure, control system and culture to follow
strategies that lead to competitive advantage and better
performance

26. Strategy formulation requires as a defined set of six steps
for effective implementation
Define the organization
Define the strategic mission
Define strategic objectives
Define the competitive strategy
Implement strategy
Evaluate progress

27. Step-1: Define the organization
Defining an organization is to identify the company’s customer. Without
A strong customer base whose needs are being filled, an organization
will not be successful. A company must Identify the factors that are
valued by its customers. Is the value based on a superior product or
service relative to the competition?

28. Some of the ways in which companies can define
themselves
1. End Benefits
Organizations must remember that people are buying benefits
2. Target Market
Companies can become successful by identifying themselves with a particular
target group. This focus should be demographic segmentation, socio-cultural
segmentation, psychographic, Behavioural segmentation etc.
3. Technology and innovation
Research and development, New product and services, inventions
4. Identify changing business environment etc.

29. Step-2 Define strategic Mission
An organization’s strategic mission offer a long range perspective of
what the organization strives for going forward. A clearly stated
mission will provide the organization with a guide for carrying out its
plans. Elements of a strong strategic mission statement should include
the values that the organization holds the nature of the business special
abilities or position the organization holds in the market place, and the
organization’s vision for where it wants to be in the future.

30. How to write strategic mission?
• What do we do?, How do we do it?, and For whom do we do it?
• Create a draft mission statement describing how the company
uniquely Answer these questions. Touch on the organization’s current
Operations and the industry it is in.
• Look the competitors in the industry and use their mission statement
for research. Ask yourself what works and what does not work.
Revise your mission statement as needed
• Get feedback from other members of the organisation once the
statement is drafted.

31. Step-3 : Define the strategic objectives
• The third step in the strategic formulation process requires an
organization to identify the performance targets needed to reach
clearly stated objectives
• These objectives may include:
• Market position relative to the competition
• Production of goods and services
• Desired market share, improved customer services
• Corporation expansion, advances in technology and sales increases.

32. • Strategic objectives must be communicated with all employees and
stakeholders in order to ensure success.
• All members of the organisation must be made aware of their role in
the process and how their efforts contribute to meeting the
organisation’s objectives. Additionally members of the organisation
should have their own set of objectives and performance targets for
their individual roles

33. Step-4 : Define the competitive strategy
• Its requires an organization to determine where it fits into the
marketplace. This applies not only to the organization as a whole, but
to each individual unit and department throughout the enterprise.
Each area must be aware of its role within the company and how those
roles enable the organization to maintain its competitive position

34. Three Factors must be considered when determining the overall
competitive strategy: the industry and market place, the company’s
position relative to the competition and company internal strengths and
weaknesses
• The industry
• Competition
• Strengths and weaknesses

35. The industry
When evaluating the overall industry, factors to be looked at include:
 Size of the market
 Past and potential market growth
 Competitive profitability
 New market entries
 Industry threats etc.

36. The Competition
An organization can not be successful unless it has a full understanding
of the other players in marketplace. A company must be able to identify
the strengths and weaknesses of the competition and analyse the ways
in which the products and services meet the needs of its customer base.

37. Strengths and weaknesses
SWOT is an acronym for strength, Weakness, Opportunities and
Threats.

38. Step 5: Implementation of strategy
Developing a strategy is only effective if it is put into place. An
organization may take all the necessary steps to understand the market
place, Define itself and identify the competition. Without
implementing the strategy the organization’s work will be of little to
no value

39. Step 6: Evaluate progress
As in any plan regular evaluation of processes and results is vital
to ongoing success. An organization must keep track of the
progress it is making as defined by its strategic plan

40. Inter-relationship between strategy Formulation and Implementation
In order to achieve it’s objectives, an organization must not
only formulate But also implement its strategies effectively.
Organisation successes or failures are depends on how the
strategies are formulated and Implementation of those
strategies

41. Inter-relationship between strategy Formulation and Implementation
• Strategy formulation is largely an intellectual process, whereas
strategy implementation is more operational in character.
• There are two types of linkages between strategy formulation and
implementation namely;
1. Forward
2. Backward

42. Strategy Formulation vs Strategy Implementation
Strategy Formulation Strategy Implementation
Strategy formulation consists of making plans and decision
making concerned with growing an organisation’s strategic
goals and plans.
Strategy implementation includes everything associated
with executing the strategic plans.
Strategy formulation is concerned with setting the forces
earlier than the action.
Strategy implementation is coping with forces at some stage
in the action.
Strategy formulation is an entrepreneurial activity, primarily
based on strategic decision-making.
Strategic implementation is an administrative task, based on
strategic and operational decisions.
Strategy formulation emphasises effectiveness. Strategy implementation emphasises efficiency.

43. Strategy Formulation Strategy Implementation
Strategy formulation is an analytical process. Strategy implementation is essentially an
operational process.
Strategy formulation calls for coordination amongst
some individuals.
Strategy implementation calls for coordination
among many individuals.
Strategy formulation demands several initiatives
and logical skills.
Strategy implementation calls for particular
motivational and management traits.
The strategic formulation is performed ahead of
strategy implementation.
Strategy implementation is performed once
strategy formulation is completed.