This document provides an overview of various strategic management tools and frameworks including the BCG matrix, GE nine cell matrix, Porter's five forces, strategic groups, SWOT analysis, and value chain analysis. It explains how each tool is used, key aspects to analyze, and how insights can be gained to inform strategic decision making. The BCG matrix classifies products/businesses into four categories based on market growth rate and relative market share. Porter's five forces analyzes competitive rivalry and industry attractiveness. SWOT evaluates internal strengths and weaknesses and external opportunities and threats. Value chain analysis examines activities to create and deliver value.

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2. strategic
tactical
operational
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3.  Long term focus
 Sustainable Competitive Advantage
 Relevant, accurate, timely market
information is the key
 Analysis of Self, Customers, Competitors,
other interest groups
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4.  Product Portfolio Analysis
 BCG Matrix
 GE 9 Cell Matrix
 External Environment Analysis
 Porter’s Five Forces
 Strategic Mapping
 Industry Spectrum
 Internal Analysis of Company
 SWOT
 Value Chain Analysis

5.  BOSTON CONSULTING GROUP (BCG)
MATRIX
 Developed by BRUCE HENDERSON in the
early 1970’s.
 According to this technique, businesses or
products are classified as low or high
performers depending upon their
 market growth rate (cash usages)
 relative market share (cash generation)
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6.  Market share is the percentage of the total
market that is being serviced by your
company, measured either in revenue terms
or unit volume terms.
 RELATIVE MARKET SHARE (RMS)
 RMS = Business unit sales this year
Leading rival sales this year
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7.  Market growth rate is used as a measure of
a market’s attractiveness.
 MGR = Individual sales - individual sales
this year last year
Individual sales last year
 Markets experiencing high growth are ones
where the total market share available is
expanding, and there’s plenty of
opportunity for everyone to make money.
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8. BCG matrix is a product portfolio planning tool
in which a company’s business units/ products
can be classified in to four categories:
 Stars
 Question marks
 Cash cows
 Dogs
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10.  Stars are leaders in business.
 It leads to large amount of cash
generation.
 They also require heavy investment, to
maintain its large market share.
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11. CASH COWS
Low growth
High market share
 They are foundation of the company
and the stars of yesterday.
 They generate more cash than
required.
 They extract the profits by investing
as little cash as possible
 They are located in an industry that is
mature, not growing or declining.
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12. DOGS
Low growth, Low market share
 Dogs are the cash traps.
 Dogs do not have potential to bring in
much cash.
 Number of dogs in the company should be
minimized.
 Business is situated at a declining stage.
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13. QUESTION MARKS
High growth , Low market share
 Most businesses start of as question marks.
 They will absorb great amounts of cash if the
market share remains unchanged, (ie. low).
 Why question marks?
Question marks have potential to become
star and eventually cash cow but can also
become a dog.
 Investments should be high for question
marks.
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14. To assess :
 The CASH FLOW
 The development cycles of products
 Resource allocation and
divestment decisions
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16. ?
Dogs
?
Stars
?
Cows
?
Question Marks
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17. Stars
•Hotels
•Packaging.
•FMCG- Sunfeast
•Agri business.
?
•FMCG- Others
Cows
•FMCG-Cigarettes
Dogs
•Maybe ITC Infotech.
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18.  BCG MATRIX uses only two
dimensions, Relative market share
and market growth rate.
 High market share does not mean
profits all the time. Business with
low market share can be profitable
too.
 Problems of getting data on
market share and market growth.
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19.  Developed by GE, USA
 Overcomes key limitation of BCG matrix
 Also called Industry Attractiveness-
Competitive Strength Matrix
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20. Competititve strength: market share, brand value, profit
margins, cost structure, loyal customer base
Inc attractiveness: growth rate, nature of competition,
entry barrier, market size, substitution, govt regulations
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21. Industry Attractiveness-Competitive Strength Matrix
Low
High
Medium
AverageStrong Weak
6.7
3.3
10.0
1.0
1.03.36.7
High priority for investment Medium priority for investment
Low priority for investment
Competitive Strength
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22.  Internal cash flows are inadequate to fully fund
needs for working capital and new capital investment
 Parent company has to continually pump in capital to
“feed the hog”
 Strategic options
 Aggressively invest in attractive cash hogs
 Divest cash hogs lacking long-term potential
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23.  Generate cash surpluses over and above
what is needed to sustain present market
position
 Such businesses are valuable because
surplus cash can be used to
 Pay corporate dividends
 Finance new acquisitions
 Invest in promising cash hogs
 Strategic objectives
 Fortify and defend present market position
 Keep the business healthy
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25.  Given by – Michael Porter
 Understand how industry structure drives
competition and level of industry profitability
 Evaluate industry attractiveness
 Identify opportunities to change industry
structure
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26. Porter’s Five Forces Model
Suppliers
Substitutes
Buyers
Potential
Entrants
Firm
Rivalry
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27. Threat of Entry & Entry Barriers
 Economies of Scale
 Product Differentiation
 Cost Advantage Independent of Scale
 Contrived Deterrence
 Government Regulation
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28. Economies of Scale
Cost-volume relationship
Ex. Steel
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29. Product Differentiation
 Brand identification
 Customer loyalty
 Trade off between Cost of
differentiation & potential return
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30. Cost Advantages Independent of Scale
 Proprietary Technology
 Know-how & competence
 Favourable access to RM
 Favourable geo. locations
 Learning or Exp. curve
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31. Contrived Deterrence
Investments by the incumbents
with the sole objective to deter
entry
Sending signals
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32. Government Policy
 Regulation - FERA, MRTP, Licensing
 Direct & Indirect Policy Interventions
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33. Other Barriers to Entry
Capital requirements
Size of investment & risks
Switching cost of buyers
Access to existing distribution
channels
Entrant’s expectation abt. retaliation
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34. Exit Barriers
Economic
 Specialised assets - high transfer cost
 Fixed costs of exit
Strategic inter-relationships &
importance - commitment
Emotional barriers
Government and/or social restrictions
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35. Threat of Substitute
 Products that can serve the same utility - satisfy
same customer needs
 Substitutes can replace an industry’s products
 Potentially dangerous substitutes are those that are:
 improving price-performance trade off
 produced by more profitable industries
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36. Bargaining Power of Suppliers
A supplier group is more powerful if -
 Dominated by a few firms & more concentrated
than the industry it sells to
 Highly differentiated products
 No threat of substitute supplies
 Industry is not an important customer
 Buying firms face major switching costs
 It poses a credible threat of forward integration
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37. Bargaining Power of Buyers
 Relative volume purchased by a given buyer
 Cost of purchases as a fraction of tot. purchases
 Importance of the product to buyer
 Availability of substitutes
 Whether product is standard & undifferentiated or
not
 Switching costs faced by both buyers and sellers
 Whether buyer poses a credible threat of backward
integration
 Information available to buyer
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38. Intensity of Rivalry
 Many equally balanced firms
 Slow industry growth
 High fixed costs, high storage cost
 Low product differentiation
 Productive capacity added in large increments
 High strategic stake for some firms
 High exit barriers
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39. Strategic Implications of the
Five Competitive Forces
 Competitive environment is unattractive from
the standpoint of earning good profits when:
 Rivalry is strong
 Entry barriers are low
and entry is likely
 Competition from
substitutes is strong
 Suppliers and customers have considerable
bargaining power
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40.  Main Issue: How key structural features determine rel.
strength of diff. comp. Forces
 Inter-industry variations in rel. strength of five forces
 Short-run factors affecting competition & profitability
 Diff. betn. established competitors & sub., betn.
Existing firms & potential entrants - extended rivalry
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41. Concentration Many firms A few firms Two firms One firm
Entry and Exit
Barriers
Product
Differentiation
Information
No barriers Significant barriers High barriers
Homogeneous
Product
Potential for product differentiation
Perfect
Information flow
Imperfect availability of information
Perfect
Competition
Oligopoly Duopoly Monopoly

42. Basic Industry Economics
Industry structure
Concentration ratio
 Degree to which industry sales are
dispersed over the leading firms
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43.  One technique for revealing the different competitive
positions of industry rivals.
 Which Companies are in Strongest / Weakest
Positions?
 A strategic group consists of those rivals with
similar competitive approaches in an industry
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44.  Firms in same strategic group have two or
more competitive characteristics in common
 Sell in same price/quality range
 Cover same geographic areas
 Be vertically integrated to same degree
 Have comparable product line breadth
 Emphasize same types of distribution channels
 Offer buyers similar services
 Use identical technological approaches
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45. Procedure for Constructing a
Strategic Group Map
STEP 1: Identify competitive characteristics that
differentiate firms in an industry from one
another
STEP 2: Plot firms on a two-variable map using pairs
of these differentiating characteristics
STEP 3: Assign firms that fall in about the same
strategy space to same strategic group
STEP 4: Draw circles around each group, making
circles proportional to size of group’s
respective share of total industry sales
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46. Guidelines: Strategic Group Maps
 Variables selected as axes should not be highly
correlated
 Variables chosen as axes should expose big
differences in how rivals compete
 Variables do not have to be either quantitative or
continuous
 Drawing sizes of circles proportional to combined
sales of firms in each strategic group allows map to
reflect relative sizes of each strategic group
 If more than two good competitive variables can be
used, several maps can be drawn
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47. Interpreting Strategic Group
Maps
 Driving forces and competitive pressures often
favor some strategic groups and hurt others
 Profit potential of different strategic groups
varies due to strengths and weaknesses in each
group’s market position
 The closer strategic groups are on map, the
stronger the competitive rivalry among
member firms tends to be
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48. Strategic Groups And Rivalry Among Firms
 The presence of several strategic groups will
generally increase rivalry
 Firms will have differing preferences about risk
taking, time horizon, price levels, quality levels,
and so on and will thus increase the likelihood of
repeated outbreaks of warfare.
 The industry with a complicated map of strategic
groups will tend to be more competitive as a whole
than one with few groups.
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50.  SWOT Analysis
 Resource Based View
 Value Chain Analysis
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51.  Strength
 Weakness
 Opportunities
 Threats
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52. What to look for in SWOT
Strengths –
- A powerful Strategy
- Core competencies in….
- Strong Financial Condition
- product innovation capabilities
- strong advertising and promotion
- wide geographic coverage
- superior intellectual capital
and many more….
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53. SWOT cont…
Weaknesses –
- No clear strategic direction
- resources that are not well matched with
industry
- too narrow product line
- weak balance sheet
- lack of innovation – product or process
- In the wrong strategic group
- underutilization of capacities
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54. SWOT cont…
Opportunities
- openings to win market share
- sharp rising buyer demand
- Entering into alliances, JV’s
- Integration- forward and backward
- Emerging technologies
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55. SWOT Cont…
Threats –
- Increasing intensity of rivalry
- slowdown in market growth
- new potential entrant
- shift in buyer needs
- restrictive trade practices
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56.  Systematic approach to examining the
development of competitive advantage.
 M. E. Porter in his book, Competitive Advantage
(1980).
 A series of activities that create and build value.
They culminate in the total value delivered by an
organization.
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57. Value chain
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58. Primary Activities
Support Activities
•Inbound Logistics
•Operations
•Outbound Logistics
•Mktg and Sales
•Service
•Procurement
•Technology
Development
•Human Resource
Management (HRM)
•Firm Infrastructure
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59. Value Chain of Firm
•The combined costs of all the various activities in a
company’s Value Chain define company’s internal cost
structure
•The objective of value chain analysis is to develop data
for comparing a company’s cost activity by activity
against cost’s of key rival’s
•Identify and remove the sources of cost disadvantage and
explore the sources of cost advantage
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60. Value Chain of Rivals differs
 Difference in strategy
 Difference in evolution and expertise
 Difference in process or technology
 Difference in level of integration
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61. Value chain for industry
Activities,
Costs
& margins
of suppliers
Supplier
Related Value
Chains
Internally
performed
activities,
costs and
margins
Activities,
costs and
Margins
Of forward
channels
A company’s
own Value
chain
Buyer or
end user
value chain
Forward Channel's value chain
A company’s cost competitiveness depends not only on internally
performed activities, costs and margins but also on costs in the
value chains of its suppliers and forward channel allies.
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62. Reliance Model
Petro
chemical
Polyester Fabric Readymade
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63. So, What next?
Translating performance of VC activities into
Competitive Advantage
Company
Performs
activities in its
Value chain
Competencies
& Capabilities
Gradually
Emerge in
Certain
important
VC activities
Company
Proficiency in
Performing 1 or
2 VC activities
Rises to level
of core
competence
Company
proficiency in
Performing a
Core
Competence
Continues to
Build
& evolves
Company
Gains a basis
For
‘Sustainable
Competitive
Advantage’
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