Raj Aphale Strategy Presentation

Business Strategy
Webinar
CMA Rajendra D Aphale
B. Tech., MMS, ACMA, LL.B.
Cost Accountant

Rajendra.Aphale@gmail.com,
+91-77385 91521
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Introduction
Raj is a practicing cost accountant, consultant and
trainer and helps his clients in-
-Strategy planning and implementation,
balanced score cards, business analytics
-Interim Management
-Lean management, kaizen etc
-Human resource management- OD,
compensation, competency, performance
management
-Costing systems, cost management, cost audit,
compliances, performance management
Raj has done work in 16 countries other than India,
including US, UK, Germany, Singapore

+91-77385 91521
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Introduction
Raj is a practicing cost accountant, consultant and
trainer and helps his clients in-
-Strategy planning and implementation,
balanced score cards, business analytics
-Interim Management
-Lean management, kaizen etc
-Human resource management- OD,
compensation, competency, performance
management
-Costing systems, cost management, cost audit,
compliances, performance management
Raj has done work in 16 countries other than India,
including US, UK, Germany, Singapore

+91-77385 91521
4/58
Agenda

What is Strategy?

Why Strategy?

Mission

Values

Vision

Competitive advantage

Core competency

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Agenda

Levels of Strategy

Forms of Strategy

Defining your business

Stages in Strategy Management

Focus

Strategy tools – environment scanning SWOT,
PESTEL, Porter's 5 forces

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Agenda...

Strategy tools – others

Strategy execution

Organising for strategy

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What is Strategy
Many experts have defined strategy in many
ways-
* Plan of action to achieve goals
* Plan of action with some patterns
* Path to reach milestones
* Pattern or common thread related to
organisation's activity
* Optimum allocation or resources
*....

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What is Strategy....
Michael Porter defines it as
“Strategy is the creation of a unique and valuable
position, involving a different set of activities”

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Why Strategy?

Strategy is expected to provide direction to an
organisation

Strategy creates predictability

Strategy helps aligning different functions in an
organisation

Strategy helps achieve vision

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Why Strategy?

Strategy involves creating a fit among different
activities of a business

Strategy helps achieving better return on
investment than industry average consistently

“A company can outperform its rivals only if it
can establish a difference it can preserve” -
Michael Porter

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Mission

Purpose of existence of an organisation

What is your company's mission?

What is your mission?

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Mission...

Mission should indicate -
– Who our customers are
– What needs of our customers are we serving
– What are the unique ways we are serving the
needs

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Values

What the organisations live by

Created by leaders' behaviour, Demonstrated
by employees' behaviour

Will decide how a company will do business,
what businesses it may or may not do; whether
it will focus long term or short term

May limit an organisation's growth

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Vision

How do we see our future? (Where do you see
yourself in 5 years?)

Word picture of what the organisation will be in
the next few years

Vision needs to be SMARTS

What is your company's vision?

What is your vision?

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Competitive Advantage

What an organisation can do better than its
competitors, based on KSFs for the industry

Quantify, as far as you can

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Core Competency

A harmonised combination of multiple
resources and and skills that distinguish a firm
in the marketplace

Core competencies must -
– Provide potential access to several markets
– Should make significant contributions to
perceived customer benefits of the end product
– Should be difficult to copy

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Levels of Strategy

Corporate level - business portfolio
management, allocation of corporate
resources, broad policies

Business unit level (SPU level) – Business
growth, product / service portfolio, competitive
advantage

Functional level – how different functions will
support business strategy

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Forms of Strategy

Emergent strategy – Mintzberg

Deliberate strategy – Porter

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Mintzberg

Forms of strategy-

Entrepreneurial

Adoptive

Planned

(unconnected, imposed, consensus, confused!)

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Mintzberg

5Ps of strategy

Plan

Plot

Pattern

Position

Perspective

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Porter

Deliberate strategy

Generic strategies

Cost leadership

Differentiation

Choice of the market

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Defining your business

What business are you in?

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Focus

“Strategy is defining what to do and what not to
do” - Michael Porter

What has your business decided to do?

What has your business decided not to do?

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Stages in Strategy Management

Strategic analysis

Strategic choices

Strategy execution

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Thank you
+91-77385 91521
rajendra.aphale@gmail.com

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Strategy Management
Part II

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Strategy tools
Environment scanning tools

PESTEL

SWOT

Michael Porter's Industry Analysis

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PESTEL

P-political factor e.g. changes in international
trade, taxation policy

E-economic factor e.g. interest rates,
exchange rates, national income, inflation,
unemployment, Stock Market

S-social factor e.g. ageing population,
attitudes to work, income distribution

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PESTEL

T-technological factor e.g. innovation, new
product development, rate of technological
obsolescence

E-environment factor e.g. global warming,
environmental issues

L-legal factor e.g. competition law, health and
safety, employment law

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SWOT

Internal and external scan

Strengths is what we can do better than
competition, based on KSFs

Quantify all four elements

Take opinions out, facts only please

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Industry Analysis

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Industry Analysis
5 forces in any industry-

Internal Rivalry

Entry barriers

Substitutes

Buyers

Sellers

(Collaborators or complementors)

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Degree of Rivalry
Exit barriers
Industry concentration
Fixed costs
Industry growth
Intermittent overcapacity
Switching costs
Brand identity
Diversity of rivals
Corporate stakes
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New Entrants and Entry Barriers
Absolute cost advantages
Access to inputs
Government policy
Economies of scale
Capital requirements
Brand identity
Switching costs
Access to distribution
Proprietary products
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Substitutes
Switching costs
Buyer inclination to substitute
Variety of substitutes
Price-performance tradeoff of substitutes
Necessity for product or service
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Buyer Power
Buyer volume and information
Brand identity
Price sensitivity
Threat of backward integration
Product differentiation
Substitutes
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Supplier Power
Supplier concentration
Differentiation of inputs
Switching costs
Threat of forward integration
Cost relative to total purchases in industry
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Role of Complementors
Number of complements
Relative value added
Difficulty of engaging complements
Buyer perception of complements
Complement exclusivity
Tend to increase profits by increasing demand
for an industry’s products
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Strategy tools
Portfolio analysis

BCG Matrix

GE McKinsey matrix

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BCG Matrix

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GE McKinsey Matrix

Industry attractiveness v/s firm
competitiveness

3x3 matrix

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GE McKinsey Matrix

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Strategy tools
Other tools

Value Discipline

Ansoff Matrix

McKinsey 7S framework (organisational
effectiveness)

Game Theory

Ohme framework

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Value Discipline
3 possible value disciplines
Product Leadership
Customer Intimacy
Operational Excellence

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Value Discipline

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Ansoff Matrix

Product Market matrix

Penetration

Market Development

Product Development

Diversification

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Ansoff Matrix

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McKinsey 7-S Framework (org
effectiveness)
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Game Theory

Anticipate competitors' response to your
strategic actions, and its impact on overall
industry and your business

Anticipate competitors' actions and possible
impact on your business

Tackle uncertainty situations

Appropriate and needed in today's uncertain
world as we know solutions for future which is
vaguely predictable

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Ohme framework

Integrate 3Cs to create competitive advantage

Corporation – Selective and sequencing, trade
off of make buy

Competition – people, money, and things
(assets)- allocation; cost structure

Customers – segmentation by objectives,
market coverage trade off, further
segmentation

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Ohme framework

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Strategy and Culture

Why is culture important?

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Strategy Execution

Isn't it obviously easy after the hard work in
creating the plan

Over 90% of well crafted plans fail in execution

Need proper organisation and focus

Need alignment of business objectives to
strategy, of different departments to each other
and of different employees to each other

Balanced scorecard as a tool

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Balanced scorecard

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Organising for Strategy

Strategy office

Top Management driven

Cross functional

Rotating team

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Role of CMAs

Understand business

Unbiased assessment of business, not to
please the management

Continuous exercise

Forecasting, reassessing assumptions

Evaluating alternatives

Sensitivity analysis

Shareholders' perspective, customer
perspective

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Why managers don't think strategy

Short term vs long term thinking

Fear of failure

Overconfidence

Prior bad experience

Self-interest

Fear of the unknown

Honest difference of opinion

Suspicion

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Thank you
+91-77385 91521
rajendra.aphale@gmail.com

Raj Aphale Strategy Presentation

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