Strategic Management Ibs

Introduction To…
STRATEGIC MANAGEMENT
WHAT STRATEGY MAKES YOU
ACHIEVE…?
NATURE OF STRATEGIC MANAGEMENT
1. Managing activities internal to the firm is part of the responsibilities.

2. Now, the organization must respond to challenges posed by:
IMMEDIATE EXTERNAL ENVIRONMENT
 Competitors
 Suppliers
 Increasingly scare resources
 Government agencies and numerous regulations
 Shifting consumer preferences
REMOTE EXTERNAL ENVIRONMENT
 Economic & Social Conditions

 Political priorities
 Technological Developments
IMMEDIATE EXTERNAL ENVIRONMENT

STAKEHOLDERS
- Owners
- Top Managers
- Employees
- Communities
REMOTE EXTERNAL ENVIRONMENT - Customers
To deal effectively, with everything that affects growth and profitability, Executives
employ robust management processes that will position the company optimally in its
competitive environment.
1. For profits, firms need to perfect processes that respond to:

 increase in the size and number of competing firms.
 To the expanding role of Government as a buyer, seller, regulator and
competitor.
2. The most significant improvement in the management process came with “Long-range
planning”, “Planning, programming, Budgeting” and “Business Policy”
Strategic Management is defined as the set of decisions and actions that result in the
formulation and implementations of the plan designed to achieve a Company’s
objectives.
CRITICAL TASKS OF STRATEGIC MANAGEMENT
1.Formulate company’s Vision, Mission, Purpose, Philosophy & Goals (Strategic Intent).
2. Analyze company’s internal conditions and capabilities.
3. Assess the external environment carefully.
4. Match company’s resources with External Environment.
5. Identify desirable option(s) vis-à-vis Vision & Mission.
6.Select a set of Long-term objectives & strategies that will achieve the desirable option(s) .
7.Develop short-term strategies that are compatible to the selected set of long-term strategies.
8.Implement strategic choices by budgeted resource allocation.
9.Evaluate the success of the strategic process.

CRITICAL TASKS OF STRATEGIC MANAGEMENT
The 4 important tasks indicate STRATEGIC MANAGEMENT involves:

1. PLANNING
2. DIRECTING
3. ORGANISING
4. CONTROLLING……..of a company’s strategic-related decisions & actions.
By Strategy, managers mean their large-scale, future oriented plans for interacting
with the competitive environment to achieve the objective.
A strategy reflects a company’s awareness of how, when and where it should

compete against whom and for what purpose…
EVOLUTION OF STRATEGIC MANAGEMENT
1. The word “Strategy” comes from the greek word Strategia which means a general
or a Military commander.
2. War & Strategy are not new concepts but the increased emphasis of strategy is
rapidly evolving in business organization.
STRATEGIC THINKING -
VIEWS OF EMINENT THINKERS
ANSOFF’S STRATEGIC SUCCESS PARADIGM
 The systematic study of Strategic Management was pioneered by Igor Ansoff.
 He conducted extensive research on American companies between 1948 – 1968.
 The key elements of his paradigm are :
 No universal success formula for all firms.
 Level of environmental turbulence determines strategy for success.
 The management’s capabilities has to be aligned with the environment.
STRATEGIC THINKING -
VIEWS OF EMINENT THINKERS
MINTZBERG: STRATEGY AS A CRAFT
 Henry Mintzberg added a new dimension to Strategic Management.
 In his first book “the Nature of Managerial Work (1973)” he advocated a more
humane approach to strategy formulation and implementation.
 For him strategy formulation is delicate, deliberate and a dangerous process.
APPLE INC…STRATEGY OF BMI
Apple identified the important Apple introduced iPhone with a tie-up

stakeholders as a mobile device with AT&T and had 10% of the monthly
manufacturer to deliver superior service fee as a commission from the
value… service provider.
It earned from content sales through

It sells its iPhones through its own
iTunes which connects the
distribution channels such as iStores
subscriber with the content provider
and selected online retail platforms.
within the same ecosystem.
The company innovated a business model that was far sustainable and
profitable and delivered value that exceeded the competitors.
APPLE INC…STRATEGY OF BMI
STRATEGIC THINKING
 In strategic management process, strategic thinking involves the generation and

application of unique business insights and opportunities intended to create
competitive advantage for a firm or organization.
 It can be done individually, as well as collaboratively among key people who can
positively alter an organization's future.
STRATEGIC VS OPERATIONAL
MANAGEMENT
STRATEGIC MANAGEMENT OPERATIONAL MANAGEMENT
Holistic. Functional, Routinized.
Conceptualization of issues. Techniques, processess, actions.
Creating new directions. Managing existing resources.
Developing New resources Optimizing existing resources
Ambiguos/Uncertain Functionally & Operationally specific
Long term perspective Day-to-Day issues

LEVELS AT WHICH STRATEGY
OPERATES
LEVELS AT WHICH STRATEGY
OPERATES
For many companies, a single strategy is not only inadequate but also inappropriate.
The need is : multiple strategies at different levels.
In order to segregate different units or segments, each performing a common set of
activities, many companies organize on the basis of organizing divisions , which are
also called, Profit Centres or Strategic Business Units (SBU).
SBU is defined as “any part of a Business organization which is treated separately
for strategic management purpose”
SBU and SBA
SBU’S are involved in a single line of Business.

It is a distinctive segment of the environment in which the firm does business.
Strategic Business Area It is defined as a distinct market segment in which the
company makes (or want to) their business. A SBU can act on one or more SBA.
TELECOM & REAL HOSPITALITY & MOBILE

INSURANCE TRAINING
INFRASTRUCTURE ESTATE FOOD INTERNET
SBA
SBU
THE VOCABULARY OF STRATEGY
MODES OF STRATEGIC DECISION
MAKING
According to Henry Mintzberg, the three most typical approaches, or mode of
strategic decision making are entrepreneurial, adaptive and planning.
ENTREPRENEURIAL
ADAPTIVE MODE PLANNING MODE
MODE
MAKING
ENTREPRENEURIAL MODE
Strategy is made by one powerful person.
Strategy is guided by the founder’s own vision of direction and is exemplified
by large, bold decisions.
Dominant goal is growth of organization.
MAKING
ADAPTIVE MODE
It is characterized by reactive solution to existing problems, rather than
proactive search for new opportunities.
Strategy is fragmented and it is developed to move the organizational
incrementally.
Examples: Colleges, Hospitals, Government Agencies.
MAKING
PLANNING MODE
This mode involves systematic gathering of information for situational

analysis, the generation of feasible alternatives strategies and the rational
selection of the most appropriate strategy.
It includes both proactive search for new opportunities and the reactive
solution to existing problems.
STRATEGIC INTENT
It refers to purpose for what organization strives for.

Organization must define “WHAT THEY WANT TO DO” , “WHY THEY WANT
TO DO”.
This “why they want to do” underlines the end result and in management
terms it is known as strategic intent
Strategic Intent has a hierarchy:
VISION
MISSION
GOALS
OBJECTIVES
PLANS
WHY STRATEGIC INTENT…?
HIERARCHY OF STRATEGIC INTENT
MORE INTERACTIVE FEW IN NUMBER
VISION
MISSION
GOALS
OBJECTIVES
PLANS
GREATEST IN
MORE SPECIFIC NUMBER
VISION
Burt Nanus a well known expert of organizational vision has defined vision as “a
realistic, credible and attractive future for an organization”.
REALISTIC: Vision must be based on reality to be meaningful for an organization; It

should not be a merely day dreaming but a dream to be converted into reality.
CREDIBLE: Vision must be believable to be relevant to the members of organization.
ATTRACTIVE: Vision must be attractive as to inspire and motivate the organization
members. People must want to be a part of future of organization.
FUTURE: Vision is always for future.
Kotler (1990) defines it as a "description of something (an

organization, a corporate culture, a business, a technology,
an activity) in the future"
FEATURES OF A GOOD VISION
It should be realistic

Good vision clarifies the direction
Good vision encourages the org. members commitment from them
Good vision reflects uniqueness of org. ,its distinct competence, what it
stands for and what it is able to achieve.
Good vision is consistent with org values and culture
Good vision is easily understood by those who are responsible to convert it
into reality.
EXAMPLES OF VISION
To be globally respected company that provides best of breed software

solutions by best-in-class people.
Tata tea- to be India’s foremost tea based beverage company.

MISION
Is defined a fundamental unique purpose that sets a business apart from
other firms of its type
identifies its scope of its operations in product and market terms.
Its is a statement which defines the role that organization plays in society.
DIFFERENCE B/W VISION AND MISSION

Vision is forward looking and mission states what org. is and why it exists
Vision emphasis on long term concept with very high level of achievement
and mission deals with products, services offers, way these are offered.
KEY ELEMENTS OF A MISSION
STATEMENT
VIEW OF FUTURE
- GST Implementation FUNDAMENTAL
Anticipated Regulatory,
- BS IV Implementation INTENTION
competitive & economic
environment - Increase in raw materials A Statement of the role that
the Company will adopt.
A description of what the
company will accomplish.
COMPETITIVE ARENAS - 3 & 2 Wheeler Business
Business, Geographies, - DTSI Technology
Product & Services offerings. - QUTE Car
- Focus on value based

SOURCE OF COMPETITIVE manufacturing.
- Training - Fostering Team-work
ADVANTAGE
-R&D and enhancing capabilities
Develop Skills, Leverage Skills
- Innovation of the Team.
to achieve a Vision
MISION STATEMENT
Following points should be kept in mind while formulating mission statement:

It should be feasible
It should be precise
It should be clear
It should be motivating
It should be distinctive
It should include major components of strategy
It should indicate how objectives are to be accomplished
MISION STATEMENT
To achieve our objectives in a environment of fairness, honesty and

courtesy towards our clients, employee's, vendors and society at large.
1. Achieve market and thought leadership for branded tea in India

2. Drive long term profitable growth
3. Co create enhanced value for stakeholders
4. Make Tata tea a great place for work
The Organize the World’s information and make it universally

accessible and useful.
MISION STATEMENT
GOALS AND OBJECTIVES
Goals : What an organization hopes to accomplish in a future period of time.
Objectives : They state specifically how the goals shall be achieved.
They are concrete and specific in contrast to goals that are generalized.
Goals and objectives are the end results which an organization strives for.
The end result can be: market leadership, a certain percentage increase in
sales in particular year.
GOALS AND OBJECTIVES
TERMS GOALS OBJECTIVES

Something that one's efforts or actions
The purpose toward which an endeavor are
Meaning
is directed. intended to attain or accomplish;
purpose; target.
I want to achieve success in the field of I want to complete this thesis on
Example genetic research and do what no one has genetic research
ever done. by the end of this month.
Generic action, or an outcome towards Specific action - the objective supports
Action
which we strive. attainment of the associated goal.
Goals may not be strictly measurable or
Measure Must be measurable and tangible.
tangible.
Time
Longer term Mid to short term.
frame
ROLES OF OBJECTIVES
Directions for decision making

Objectives work as motivating force
Performance standards
Defines relationship with environment
CHARACTERISTICS OF OBJECTIVES
Objectives should be understandable

Objectives should be concrete and specific
Objectives should be related to a timeframe
Objectives should be measurable and controllable
Objectives should be challenging
Objectives should be set within constraints
STRATEGIC MANAGEMENT PROCESS
ENVIRONMENTAL STRATEGY
SCANNING FORMULATION
EVALUATION
STRATEGY &
IMPLEMENTATION CONTROL
ENVIRONMENTAL SCANNING
It involves monitoring, evaluating and disseminating information obtained from internal & external
environment.
 The aim of ES is to identify the strategic factors to determine the future of the firm.
 It helps in gaining of:
 Development of a Common perception.
 Identification of Strengths & Weakness.
 Customer preferences & trends.
 Optimum utilization of Internal/external utilization.
 SWOT Analysis is a commonly used tool for ES.
LOCATION
FAST FOOD
POPULATION
RESTAURANT
SOCIAL & ECONOMIC CONDITION
STRATEGY FORMULATION
It refers to the development of long term plans for managing opportunities & threats.
Utilizing the strengths & overcoming the weakness within the organization.
Strategy formulation helps the Organization to:
 Capitalise on available opportunities'.
 Address challenges faced by Organization
 Provide Leadership that understand and masters change.
STRATEGY IMPLEMENTATION
It the process by which strategies are put into action.
Programs, budgets and procedures are developed for this purpose.
It may call for changes in Overall Culture, Organisational Structure and management
system.
It is typically handled by Middle & Lower level Managers.
Although it is reviewed by Top management periodically.
 Requirements for Strategy Implementation are:
 Structure
 Budget
STRATEGY EVALUATION & CONTROL

It refers to the process of comparing performance results vis-à-vis the desired
performance.
The information is vital to take corrective actions and resolve problems.
It also pinpoints the weakness of strategic plans implemented earlier.
It provides valuable opportunity for Organizational Learning.
Management must obtain clear, prompt & an unbiased information.
BENEFITS
Provide Direction to the organization.
They provide Guidance to the Employees.
They inspire Confidence (Ex: Performance Appraisal)
The rise of SAREGAMA with Carvaan.
Five years ago, it was struggling to sell CDs and was

forced to shut its chain of stores, including the biggest one
on Park Street in Kolkata…
After 16 years, it was shut in the summer of 2013 as the
business of music retailing could not cope with digital
delivery channels and piracy…
But Saregama (HMV), still had a huge repository of

recordings.
Managers came and went, all acknowledging the

intellectual wealth of the company, but no one knew how
to cash it to revive the enterprise.
Not surprisingly, investors almost wrote Saregama off—its shares were trading at a little over Rs
200 each a year ago…
The leadership team hit upon the idea of Carvaan, an affordable speaker with pre-recorded music
from the company’s own library to be sold to people living in digital darkness.
The rise of SAREGAMA with Carvaan.
The idea appealed to Sanjiv Goenka, But little did he know that
Carvaan was going to be a game-changer.
“It’s Disruptive,” – The sales of the jukebox priced at Rs 5,990-

6,390 is set to hit one million in the current financial year.
Sales are topping 50,000 a month and soon we will be selling
100,000 a month,” says Goenka.
Saregama has finally found a way to sell its repository of

300,000 songs.
Positioned as a gift for “Your first love, Your mother”, Carvaan is now being sold with a variety of
content, and is even taking on the radio.
In the March quarter for instance, it clocked Rs105.37 crore in sales compared with Rs57.7 crore a
year earlier—a jump of 83% led largely by sales of music.
The market has taken note. Saregama’s shares are now trading at around Rs840 each, up from
Rs600 a year ago….!!!
INTEGRATING ORGANISATIONAL
INFLUENCE FOR SUCCESS
ORIGINAL CONCEPTION
OF THE BUSINESS
REFINED THROUGH
EXPERIENCES
BUILDING PROVIDING SATISFYING

COMPETENCIES INVESTMENTS STAKEHOLDERS
WHICH SATISFIES TAKE ADVANTAGE OF YIELDING PROVIDING NEW

CUSTOMERS ENVIRONMENTAL FORCES PROFITS OPPURTUNITIES
WHICH
ACHIEVECOMPETITIVE
ADVANTAGE
BUSINESS ENVIRONMENT
Managers need to make sense of an uncertain world around the organization:

Business Environment.
 It is difficult as it encapsulates many different influences.
Making sense of the Diversity & the Complexity is difficult as the issues of the
Business Environment are interconnected.
Understanding this connection is vital to have a Strategic picture of the Organization.

LAYERS OF BUSINESS ENVIRONMENT
 Consist of broad Environmental factors.

 Political, Economic, Social, Technological,
Environmental & Legal (PESTEL).
 Differ from Sector to Sector & Country to Country.
 Group of organization producing the same Product or

Services.
 Five Forces Framework/Cycles of Competition will
help understand the competitive dynamics.
 Within industries can be many different companies.

 They compete on different bases.
 Concept of Strategic Groups helps identify direct &
indirect competitor.
PESTEL FRAMEWORK
POLITICAL
 Government Stability
 Taxation Policy (GST)
LEGAL  Foreign Trade Regulations ECONOMIC FACTORS
 Competition Law  Social Welfare Policies  GDP
 Employment Law  Interest rates
 Health & Safety  Inflation
 Product Safety  Unemployment
 Disposable Income
THE
ORGANISATION
SOCIO CULTURAL FACTORS
ENVIRONMENTAL
 Population Demographics
 Environmental Protection
 Income Distribution
Laws
 Social Mobility
 Waste Disposal
 Lifestyle changes
 Energy Consumption TECHNICAL  Consumerism
 Government Spending on Research  Education
 Industry focus on Technological efforts.
 New discoveries/developments
 Speed of Technology Transfer.
 Rate of Obsolescence.
M&M: PESTEL FRAMEWORK
SWOT ANALYSIS
HELPFUL in achieving HARMFUL in achieving

the Objective the Objective
SWhat are your Strength? W
What are your Weakness?
What do you do better than What competitors do better
others? than You?
What unique capabilities you What can you improves
have? given the current situation?
What others perceive you as What do others perceive as
your Strength? your weakness?
O What Trends or TWhat trends or conditions

conditions positively may negatively impact you?
What competitors do that
impact you?
might impact you?
What opportunities are Larger impact of threats over
available to you? the Company.
OYO - SWOT ANALYSIS
• Standardization: S W
• Ever growing network: • A strategy of co-branding
• Spirit of Innovation: • Poor service quality
• Subsidising Hotel Stays: • Tight margins
• Young and highly spirited
leader:
O T
• Focus on budget
accommodation: • Competition:
• A surge in the number of • Growing concerns about safety:
business travelers in emerging
economies:
PORTER’S INDUSTRY ANALYSIS:
THE FIVE FORCES MODEL
Porter’s Five Forces Model is an analysis tool that uses five industry forces to
determine:
 The intensity of competition in an industry
 And its profitability level.
 Five forces model was created by Michael E Porter in 1979 to understand how
five key competitive forces are affecting an industry.
 The five forces identified are:
 Threat of New Entrants
 Bargaining Power of Buyers
 Threat of Substitutes
 Bargaining power of Suppliers
 Industry Competitors (Industry Rivalry)
POTENTIAL
ENTRANTS
SUPPLIERS
BUYERS
SUBSTITUTES
POERTER’S INDUSTRY ANALYSIS:
THREAT OF NEW ENTRANTS
 It determines how easy it is to enter a particular industry.
 If an industry is profitable and there are few barriers to enter, rivalry soon
intensifies.
 Organizations compete for the same market share, profits start to fall.
 Threat of new entrants is high when:
 Low amount of capital is required to enter a market;
 Existing companies can do little to retaliate;
 Existing firms do not possess patents, trademarks or do not have established brand reputation;
 There is no government regulation;
 Customer switching costs are low
 There is low customer loyalty;
 Products are nearly identical;
 Economies of scale can be easily achieved.
It is essential for existing organizations to create high barriers to enter to deter

new entrants.
Entry Fee of 1600 Crores
First-cum-first serve basis
122 licenses to 9 telecom

companies were provided.
Later SC cancelled the Licenses

POERTER’S INDUSTRY ANALYSIS:
BARGAINING POWER OF BUYERS
 Distributors & Retailers buy products from the firms.
 But they are not the final users of the product.
 The direct buyers of FMCG products are Distributors & Retailers.
 Bulk buyers (Big Bazaar, Reliance Fresh, D Mart, SPENCERS) have greater bargaining
power.
 They ask for lower prices from suppliers (HUL, P&G) in comparison to small retailers.
 If Buyers are weak, the Supplier hikes prices & make profits.
 FOOD BAZAAR
 RELIANCE FRESH
 SPENCERS
 VISHAL MEGAMART
 SPENCERS
 BIG BAZAAR
BARGAINING POWER OF SUPPLIERS
 It determines the company’s profitability when suppliers force the price that the buyer
would pay.
 Suppliers are powerful under the following circumstances:
 Product that that they sell has fewer Substitute
 When no single Industry is a major customer for the supplier
 When products in the industry are differentiated and are not easily substitutable.
 To raise prices, suppliers can threaten forward integration & compete with Buyer directly.
HP, TOSHIBA, NOKIA, MI,

DELL, ACER VIVO, OPPO
THREAT OF SUBSTITUTE PRODUCTS
 Substitute Products can also match the need of the Customer.
 Coffee, Tea & Soft drinks all serve Consumers need for refreshment.
 Due to substitutes such as Tea & Soft Drinks, the prices charged by Coffee
manufacturers are restricted.
 A close substitute is a potential threat to company’s product as it limits the price of the
product.
RIVALRY AMONG EXISTING FIRMS
 Rivalry occurs when one or more firms fight to increase market share.
 It Leads to :
 PRICE WARS
 ADVERTISING BATTLES
 NEW PRODUCT LAUNCH
 INCREASED CSAT & SERVICES.
 Rivalry is intense when there are many competitors of similar size

STRATEGIC GAP ANALYSIS

 It is an evaluation of the difference between desired outcome and actual outcome,
 and what must be done to achieve a desired goal.
 It helps to determine what a company should do differently to achieve a particular goal
by looking at the :
 Current Situation,
 management,
 budget to determine where shortcomings lie.
 Next the company should develop an implementation plan (also known as an
operational plan) to eliminate the gaps.
STRATEGIC GAP ANALYSIS…HOW
DOES IT HELP
 It allows a company or organization to determine whether it is getting the best return
out of its resources and abilities.
 It identifies the gap between the application of resources and the best possible result
from that application of those resources.
 Strategic gap analysis can point to potential areas for improvement and what resources
are required to achieve an organization's strategic goals.
WHAT COMPANY IS WHAT COMPANY

STRATEGIC GAP
DOING MUST DO
STRATEGIC GAP ANALYSIS…HOW
DOES IT HELP
BENCHMARKING FOR STRATEGIC GAP
ANALYSIS
BENCHMARKING
 It requires to look at other companies that engage in similar activities and to identify the
best practices that can be applied to your own processes.
Where are we now?

Where do we wish we were?
How are we going to close the gap?
BENCHMARKING FOR STRATEGIC GAP
ANALYSIS
BENCHMARKING
1.IDENTIFY CURRENT STATE
2.IDENTIFY WHERE YOU WANT TO BE
3.IDENTIFY THE GAPS
4.DEVISE IMPROVEMENTS
INTERNATIONALISATION OF BUSINESS
1.Owing to globalisation, even smaller companies have been able to cross national borders
and do business abroad.
2.Consequently, many terms have been given to companies operating in multiple countries:
multinationals, global businesses, transnational companies.
TYPES OF INTERNATIONAL STRATEGIES

There are three main international strategies available:
 MULTIDOMESTIC
 GLOBAL
 TRANSNATIONAL
MULTI - DOMESTIC STRATEGY
A firm using this strategy sacrifices efficiency in favor of emphasizing responsiveness to
local requirements within each of its markets.
MTV customizes the programming that is shown on its channels within dozens of countries, including
New Zealand, Portugal, Pakistan, and India.
Heinz adapts its products to match local preferences. Because some Indians will not eat garlic and
onion, it offers them a version of its signature ketchup that does not include these two ingredients.
GLOBAL STRATEGY
 A firm using a global strategy sacrifices responsiveness to local requirements within each
of its markets in favor of emphasizing efficiency.
 This strategy is the complete opposite of a multidomestic strategy.
 Some minor modifications to products and services may be made in various markets.
 A global strategy stresses the need to gain economies of scale by offering essentially the
same products or services in each market.
MS offers the same software programs around the world but

adjusts the programs to match local languages.
Procter & Gamble attempts to gain efficiency by creating global

brands whenever possible.
TRANSNATIONAL STRATEGY
 Here a firm seeks a middle ground between a multidomestic strategy and a global
strategy.
 Such a firm tries to balance the desire for efficiency with the need to adjust to local
preferences within various countries.
 Large fast-food chains such as McDonald’s and KFC rely on the same brand names and
the same core menu items around the world.
 These firms make some concessions to local tastes too.
STRATEGIC CAPABILITY
 Successful strategies depend on internal strategic capability.

 Strategy development is driven by opportunities provided by changing environment.
 It is also referred to as “Strategic Fit” which implies the change of internal strategic
capabilities to better fit opportunities.
IT COMPANIES
AUTOMOBILE COMPANIES
COMPETITIVE ADVANTAGE+DISTINCT CAPABILITIES = RESOURCE BASED VIEW OF STRATEGY

FOUNDATIONS OF STRATEGIC CAPABILITY
RESOURCES & COMPETENCIES

 Tangible Resources are physical assets such as : Plant, Labor & Machineries.
 Intangible Resources are non-physical resources : information, reputation &
knowledge.
 Resources are under the four main categories:
 Physical Resources
 Financial Resources
 Human Resources
 Intellectual Capital
Threshold Resources: Resources needed to

meet Customers Minimum requirements.
Unique Resources: Resources needed to

attain Competitive Advantage.
STRATEGIC CAPABILITY - TERMINOLOGY
BUILDING DISTINCTIVE COMPETENCES
BRAND AWARENESS
BRAND POWER
PROVIDE VALUE &

ENDORSEMENT BY TOP BENEFIT DIFFICULT TO
CLASS ATHELETES IMITATE
PRODUCT DESIGN
PRODUCT DEVELOPMENT
COMFORT & PERFORMANCE
ACHIEVE COMPETITIVE
ADVANTAGE
RESOURCE BASED VIEW
 According to Resource based View (RBV), an analysis of internal resource is key to

firms success.
 If these resources exhibit VRIO attributes, they enable the firm to achieve sustainable
competitive advantage.
 The Model argues that organizations should look inside the company to find the sources
of competitive advantage instead of looking at competitive environment for it.
RESOURCE BASED VIEW
RESOURCE BASED VIEW
That relies on resources
TANGIBLE INTANGIBLE
That must be
HETEROGENOUS IMMOBILE
& have VRIO attributes
VRIO resources
That provides
COMPETITIVE ADVANTAGE
RESOURCE BASED VIEW
 Tangible assets are physical things.

 Land, buildings, machinery, equipment and capital – all these assets are tangible.
 Physical resources can easily be bought in the market & have little advantage to the
companies in the long run because rivals can soon acquire the identical assets.
 Intangible assets are everything else that has no physical presence but can still be
owned by the company.
 Brand reputation, trademarks, intellectual property are all intangible assets.
 Unlike physical resources, brand reputation is built over a long time and is something
that other companies cannot buy from the market.
 Intangible resources usually stay within a company and are the main source of
sustainable competitive advantage.
BACK
RESOURCE BASED VIEW
 Heterogeneous.
 The first assumption is that skills, capabilities and other resources that organizations
possess differ from one company to another.
 companies achieve competitive advantage by using their different bundles of resources.
 Resources are not mobile and do not move from company to company, at least in
short-run.
 Due to this immobility, companies cannot replicate rivals’ resources and implement the
same strategies.
BACK
RESOURCE BASED VIEW
BACK
VALUE CHAIN ANALYSIS & VALUE
CREATION
The firm creates value by performing a series of activities that Porter identified
as a value chain.
To achieve a competitive advantage, the firm must create a link in the value
chain that again creates more overall value against the competitors.
Superior value is created through lower costs or superior benefits to the

consumer (differentiation).
CHARTING VALUE CHAIN ANALYSIS
To better understand the Value Chain Analysis, it is useful to separate the
business system into a series of value-generating activities referred to as the
value chain.
In his 1985 book “Competitive Advantage”, Michael Porter introduced a

generic value chain model that comprises a sequence of activities found to be
common to a wide range of firms.
Porter identified primary and support activities as shown in the following

diagram:
HOFSTEDE'S CULTURAL DIMENSIONS
 Technology has brought everyone much closer together.

 People of different cultures find themselves working together and communicating more
and more.
 This is exciting, but it can also be frustrating and fraught with uncertainty.
 How do you relate to someone of another culture?
 What do you say, or not say, to start a conversation ?
 Are there cultural taboos that you need to be aware of?
AUSTRALIA
USA STUDY OF
SWITZERLAND CULTURAL
UK DIMENSIONS
 Psychologist Dr Geert Hofstede asked himself this question in the 1970s.
 What emerged after a decade of research and thousands of interviews is a model of

cultural dimensions that has become an internationally recognized standard.
 With access to people working for the same organization in over 40 countries of the
world, Hofstede collected cultural data and analyzed his findings.
 He initially identified four distinct cultural dimensions that served to distinguish one
culture from another.
 Later he added a fifth & sixth dimension, to the model.

0 < - - - - - - - - -HOFSTEDE’S CULTURAL DIMENSIONS - - - - - -- - - - - - > 100
LOW POWER DISTANCE PDI HIGH POWER DISTANCE
COLLECTIVISM INV INDIVIDUALISM
FEMININE MAS MASCULINE
LOW UNCERTAINTY AVOIDANCE UAI HIGH UNCERTAINTY AVOIDANCE
SHORT TERM ORIENTATION LTO LONG TERM ORIENTATION
RESTRAINT IND INDULGENCE

ORGANISATIONAL PURPOSE
 The starting point for any strategy is the purposes of an organization.

 Being clear about organizational purposes is not a trivial exercise.
 The very phrase ‘organizational purposes’ is potentially misleading, when mapped to
different stakeholders.
 Common Purpose include:
 Profitability
 Growth
 Shareholder Value
 Customer Satisfaction
 Innovation (Lately)
STAKEHOLDERS
 Organizations need to serve the interests of multiple stakeholders simultaneously.

 Ignoring one stakeholder will prevent them from serving the needs of the others.
 For example, failure to serve the needs of customers will damage a firm's ability to serve
the financial needs of shareholders.
EMPLOYEES
SUPPLIERS MANAGERS
CUSTOMERS LOCAL COMMUNITY
ORGANISATION
COMPETITORS GOVERNMENT
COLLBORATORS LENDERS
SHAREHOLDERS
STAKEHOLDER MAPPING
 Stakeholder mapping is a collaborative process of research, debate, and discussion to

determine a key list of stakeholders.
 Mapping can be broken down into four phases:
STAKEHOLDER MAPPING
IDENTIFYING ANALYSING MAPPING PRIORITISING
visualizing ranking
listing relevant understanding
relationships stakeholder
groups, stakeholder
to objectives relevance and
organizations, perspectives
and other identifying
and people and interests
stakeholders issues
STAKEHOLDER MAPPING
IDENTIFYING STAKEHOLDERS
BACK
STAKEHOLDER MAPPING
ANALYSING STAKEHOLDERS
 Once you have identified a list of stakeholders, it is useful to do further analysis to better
understand their:
 relevance
 the perspective they offer,
 and to prioritize based on their relative usefulness for this engagement.
BACK
STAKEHOLDER MAPPING
MAPPING STAKEHOLDERS
 Mapping stakeholders is a visual exercise and analysis tool that you can use to further
determine which stakeholders are most useful to engage with.
 Mapping allows you to see where stakeholders stand when evaluated by the same key
criteria.
BACK
STAKEHOLDER MAPPING
High power, highly

High power, less
interested SH :
interested SH : You must fully engage and
Put enough work to keep make the greatest efforts to
them satisfied. satisfy them.
Low power, less interested Low power, highly

SH: Monitor but don’t bore interested SH:
them with excessive
communication.
Inform and talk to them
to ensure that no major
issues are arising. SH’s
in this category can often
be very helpful with the
detail of your project.
STAKEHOLDER MAPPING – TELECOM
COMPANY
FINANCE COO
NETWORK CEO
SECURITY PROJECT MANAGERS
LEGAL DEVELOPERS
CALL CENTER TRAINING MANAGER

STAFF
CUSOTMERS CC MANAGER
STRATEGIC PLANNING SYSTEM
 Strategic Planning is an organization's process of defining its strategy, or direction.

 It is about making decisions on allocating the resources to pursue the strategy.
 Strategy includes processes of formulation and implementation.
 Strategic planning helps coordinate both.
 However, strategic planning is analytical in nature (i.e., it involves "finding the dots");
 Strategy formation itself involves synthesis (i.e., "connecting the dots") via strategic
thinking.
INBOUND OUTBOUND MARKETING &

OPERATIONS SERVICE
LOGISTICS LOGISTICS SALES
INPUTS ACTIVITIES OUTPUTS OUTCOMES

INPUTS
 Data is gathered from a variety of sources, such as :
 interviews with key executives,
 review of publicly available documents on the competition or market,
 primary research (e.g., visiting or observing competitor places of business or
comparing prices),
 industry studies, etc.
 Inputs are gathered to help support an understanding of the competitive environment
and its opportunities and risks.
 These values may be captured in an organization's Vision and Mission statements.
BACK
ACTIVITIES
 Strategic planning activities include meetings and other communication among the
organization's leaders and personnel.
 This is to develop a common understanding regarding the competitive environment and
what the organization's response to that environment (its strategy) should be.
 A variety of strategic planning tools may be completed as part of strategic planning
activities.
 PESTEL
 PORTERS 5 FORCES
 SWOT
 BSC
 STRATEGY MAPS
BACK
OUTPUTS
 The output of strategic planning includes documentation and communication
describing the organization's strategy and how it should be implemented.
 The strategy may include:
 a diagnosis of the competitive situation,
 a guiding policy for achieving the organization's goals,
 and specific action plans to be implemented.
BACK
OUTCOMES
 The strategy implementation or execution of the strategic plan produces Outcomes.
 These outcomes will invariably differ from the strategic goals.
 How close they are to the Strategic goals and Vision will determine the success or
failure of the strategic plan.
 There will also arise unintended Outcomes, which need to be attended to and
understood for strategy development and execution to be a true learning process.
BACK
LOGICAL INCREMENTALISM
 A management philosophy which states that “strategies do not come into existence
based on a one time decision but rather, it exists through making small decisions
that is evaluated periodically.”
 These small decisions are not made randomly but logically through
experimentation and learning.
 This mode appears to be useful when :
The environmental changing rapidly
important to build consensus
Resources needed to developed before committing the entire corporation to a
specific strategy.
Logical incrementalism is about achieving an
organization’s goals by making smaller decisions and
taking smaller steps, as opposed to the complex
approach and bigger leaps of long-term strategic
planning.
LOGICAL INCREMENTALISM
IKEA has been using logical incrementalism since its very first store
opened for business.
IKEA’s founder, Ingvar Kamprad, had a strong but very general vision.
From that, IKEA’s strategy gradually took shape as Kamprad both

proactively took action and reactively adapted to the situation as it
unfolded.
Even the decision to sell furniture was an adaptation to the market, not
a deliberate strategy.
LEARNING ORGANISATION
 In business management, a learning organization is a company that facilitates the

learning of its members and continuously transforms itself.
Peter Senge stated in an interview that “a learning organization is a group of
people working together collectively to enhance their capacities to create
results they really care about.”
 He has proposed 5 characteristics :
SYSTEMS THINKING
PERSONAL MASTERY
MENTAL MODELS
SHARED VISION
TEAM LEARNING
SYSTEMS THINKING
 A learning organization facilitates the learning of its members and continuously
transforms itself.
 The idea is developed from a body of work called systems thinking.
 It is a conceptual framework that allows people to study businesses as bounded objects.
SYSTEMS THINKING
 Learning organizations use this method of thinking when :
1. assessing their company
2. have information systems that measure the performance of the organization as a
whole and of its various components.
Its learning center drives continuous learning by managers and other

leaders, as they return to learn and teach at critical transitions in their
careers.
Its learning center provides essential learning to a large segment of its

managerial population on an ongoing basis.
Infosys, one of the renowned IT company, has built the world's biggest
corporate training facility in Mysore.
PERSONAL MASTERY
 The commitment by an individual to the process of learning is known as personal
mastery.
 There is a competitive advantage for an organization whose workforce can learn more
quickly than the workforce of other organizations.
 Individual learning is acquired through staff training, development and continuous self-
improvement.
MENTAL MODELS
 Assumptions held by individuals and organizations are called mental models.
 To become a learning organization, these models must be challenged.
 Managers tend to adopt theories, which they intend to follow, and propound
“theories-in-use.”
 Similarly, organizations tend to have 'memories' which preserve certain behaviors,
norms and values.
In creating a learning
environment it is important
to replace confrontational
attitudes with an open
culture that promotes
inquiry and trust.
SHARED VISION
 The development of a shared vision is important in motivating the staff to learn.
 It creates a common identity that provides focus and energy for learning.
 The most successful visions build on the individual visions of the employees at all levels
of the organization.
 The creation of a shared vision can be hindered by traditional structures where the
company vision is imposed from above.
 Therefore, learning organizations tend to have flat, decentralized organizational
structures.
SHARED VISION
SHARED VISION
TEAM LEARNING
 The accumulation of individual learning constitutes team learning.
 The benefit of shared learning is that the problem solving capacity of the organization is
improved through better access to knowledge and expertise.
 Learning organizations have structures that facilitate team learning with features such
as boundary crossing and openness.
 Team learning requires individuals to engage in dialogue and discussion;
WHAT IS COMMON TO THEM…?
When strategy is no longer relevant to the external environment….!!!

WHY DOES STRATEGIC DRIFT HAPPEN?
Strategic drift usually arises from a combination of factors, including:
 Business failing to adapt to a changing external environment (for example social or

technological change)
 A discovery that what worked before (in terms of competitiveness) doesn’t work
anymore.
 Complacency : often built on previous success which management assume will
continue.
 Senior management deny there is a problem, even when faced with the evidence.
STRATEGIC DRIFT
 Strategic drift happens when the strategy of a business is no longer relevant to the
external environment facing it.
TRANSFORMATIO
INCREMENTAL STRATEGIC NAL CHANGE
FLUX OR
CHANGE DRIFT
DEATH
STRATEGIC DRIFT
INCREMENTAL CHANGE
 In this phase there is little significant change in the external environment.
 A series of small, incremental changes to strategy enable the business to remain in touch
with the external environment.
BACK
STRATEGIC DRIFT
STRATEGIC DRIFT
 Now things are starting to drift apart.
 The rate of change in the external environment is accelerating and small, incremental
changes in strategy are not enough on their own to remain in touch.
 The business will be losing its competitive advantage.
BACK
STRATEGIC DRIFT
FLUX
 This phase is characterized by management indecision.
 There is now a significant gap between what the market expects and what a business
is delivering.
 Management may have recognized this gap and begun to alter strategy, however there
is no decisive improvement.
 There may be disagreement between the senior management team about how to
address what is now significant strategic drift.
BACK
STRATEGIC DRIFT
TRANSFORMATIONAL CHANGE OR DEATH

 The moment of truth.
 Either management recognize the need for a transformational change in strategic

direction, or the business fails.
 It often takes new, external leadership for this recognition to be made and the relevant
strategic change programme implemented.
 For some businesses, this phase comes too late.
BACK
STRATEGIC DRIFT
STRATEGIC MANAGEMENT TYPES
 In a stable and predictable environment, strategic planning can enable an

organization to achieve, manage and maintain success.
 But in real-world situations, only a few organizations and their executives experience a
perfectly stable and predictable situation.
 That is why it is important to understand the concepts of intended, emergent, and
realized strategies.
 Similarly, deliberate and non-realized strategies are important as well.
INTENDED STRATEGY
EMERGENT STRATEGY
REALISED STRATEGY
NON - REALISED STRATEGY

INTENDED STRATEGY
 It deals with the intentions of the organization.
 It is the strategy that an organization hopes to execute.
 Therefore, intended strategies are often described in detail in the organization’s strategic
plan.
 A strategic plan made for a new firm is known as a business plan. This plan is a rough
strategy that intends to keep the organization on track.
 It is, therefore, an intended strategy.
As an undergraduate student at Yale in 1965, had

the task to prepare a business plan for a company
as an assignment.
Smith liked the idea so much that he started
Federal Express (FedEx) that followed the business
plan he had prepared as a project.
EMERGENT STRATEGY
 An emergent strategy is the one that emerges with time.
 It is an unplanned strategy that is created by an organization while acting in response
to the various unexpected threats, opportunities and challenges.
 Emergent strategies are also dynamic in nature.
 Emergent strategies may result in both success and failure depending on the
effectiveness of the strategy.
REALISED STRATEGY
 A realized strategy is a real and practical strategy.
 Realized strategies are often a by-product of an organization’s: intended strategy (i.e.,
the firm’s plans),
 In most other cases, however, firms’ original intended strategies are lost during its
journey.
 The abandoned sections of the original and intended strategy are known as non-
realized strategy.
NON - REALISED STRATEGY
David McConnell was an aspiring and struggling

author looking to sell his books. He decided to
offer complimentary perfume with his books.
McConnell’s books never tasted success, but his
perfumes became popular. The California
Perfume Company was born, which is now
known as Avon.
For McConnell, a non-realized strategy to
become a successful writer never took shape, but
through Avon, a very successful realized strategy
evolved.
It is the strategy that an The parts of the intended
organization hopes to strategy that the firm
execute. continues to pursue over
time.
A realized strategy is the
strategy that an
organization actually
follows.
It is an unplanned strategy
that arises in response to
unexpected opportunities
and challenges.
STRATEGIC CHOICES:
CORPORATE LEVEL STRATEGY
 As many organizations comprise of many units and & operate across markets, it is a
tough task for Managers.
 As a corporate entity, there are two central concerns:
 Strategic decisions about the “Scope of the Organization”
 Scope decisions about the “Diversity of Products”
 Manage International or Geographic Diversity.
CORPORATE LEVEL ISSUES
SCOPE DECISIONS
PRODUCT INTERNATIONAL
DIVERSITY DIVERSITY
CORPORATE MANAGING THE

PARENTING PORTFOLIO
ROLES
VALUE CREATION
THE MULTI-BUSINESS ORGANISATION
CORPORATE PARENT
CENTRE
DIVISIONS
BUSINESSES
A corporate centre or the divisions within a corporation that look after several
Business Units act in a Corporate parenting Role…
CORPORATE LEVEL ISSUES
The Ansoff matrix provides a simple way of generating four alternative for
corporate strategy development…
CORPORATE PARENTING ROLES
 Corporate parents do not generally have direct contact with customers or suppliers but
instead their main function is to manage the business units within the organization.
 The issue for corporate parents is whether they:
 add value to the organization and give business units advantages that they would
not otherwise have.
 add cost and so destroy the value that the business units have created.
The Indian Subcontinent:

Airtel India, in India
Airtel Sri Lanka, in Sri Lanka
Airtel Africa, which operates in 17 African countries:
Burkina Faso, Chad, Democratic Republic of the
Congo, Republic of the
Congo, Gabon, Ghana, Kenya, Madagascar, Mala
wi, Niger, Nigeria, Rwanda, Seychelles, Sierra
Leone, Tanzania, Uganda and Zambia.
WAYS OF ADDING VALUE

There are a number of ways in which the corporate parent can add value.
 By providing resources which the business units would not otherwise have access to,
such as investment and expertise in different markets.
 By providing access to central services such as information technology and human
resources that can be made available more cheaply.
 By providing access to markets, suppliers and sources of finance that would not be
available to individual units.
 By improving performance through monitoring performance against targets and
taking corrective action.
 Sharing expertise, knowledge and training across business units.
 Facilitating co-operation and collaboration between business units.
 Providing strategic direction to the business and clarity of purpose to business
units and external stakeholders such as shareholders.
DESTROYING VALUE
It is not uncommon for corporate parents to be criticized for destroying value such that
business units would fare better on their own.
There are a number of ways in which this can happen.
 The high administrative cost of the centre may exceed the benefits provided to
business units.
 The added bureaucracy resulting from the organizational structure may slow decision
making
 and limit the organization's flexibility and speed of response to customers and
environmental changes.
 If organizations become very complex, this can prevent clarity and make it difficult for
managers within the organization and external stakeholders to understand the strategic
direction.
RATIONAL FOR ADDING VALUE

 A well-managed corporate parent should be able to add value.
 In their book, Exploring Corporate Strategy, Johnson, Scholes and Whittington identify
three corporate rationales or roles adopted by parents in order to do this:
 Portfolio Managers
 Synergy Managers
 Parental Developers.
THE PORTFOLIO MANAGER

Portfolio managers:
 are corporate parents effectively acting as agents for financial markets and
shareholders to enhance the value from individual businesses more effectively.
 identify and acquire under-valued businesses and improve them, either by divesting or
improving the performance of others.
 allowing business units autonomy while using targets and incentives to encourage high
performance.
THE SYNERGY MANAGER

Synergy managers:
 enhance value by sharing resources and activity, such as distribution systems,
offices or brand names.
 bring substantial costs as managing integration across businesses can be expensive.
 may have difficulty in bringing synergy as cultures and systems in different business
units may not be compatible.
 may need to be very hands-on and intervene at the business unit level to ensure that
synergy is actually achieved.
THE SYNERGY MANAGER

THE PARENTAL DEVELOPER
 use their own central competences to add value to the businesses by applying
specific skills required by business units for a particular purpose, such as financial
management or research and development.
 need to have a clear understanding of the value-adding capabilities of the parent

and the needs of the business units in order to identify how these can be used to add
value to business units.
 need to ensure that they are able to add value to all businesses or be prepared to
divest those to which they can offer no advantages
PRODUCT/MARKET DIVERSIFICATION
 Diversification is defined a strategy which takes the organization into new markets
products or services & increases the diversity that a corporate parent might oversee.
 RELATED DIVERSIFICATION
 UNRELATED DIVERSIFICATION
TYPES OF DIVERSIFICATION STRATEGY
CONCENTRIC DIVERSIFICATION
STRATEGY
This means that there is a technological similarity between the industries.
The firm is able to leverage its technical know-how to gain some advantage.
For example, a company that manufactures industrial adhesives might decide to

diversify into adhesives to be sold via retailers.
The technology would be the same but the marketing effort would need to change.
CONCENTRIC DIVERSIFICATION
STRATEGY
At Proctor and Gamble a paper towels business and a baby diapers business both use
paper products as a primary input to the manufacturing process. Having a joint paper
manufacturing plant that produces inputs for both units is an example of operational
relatedness.
Honda has developed and transferred its expertise in small and now larger engines for
a number of vehicles from motor cycles and lawn mowers to its range of automotive
products.
Motorola’s remarkable long term success in semi-conductors and wireless

telecommunication products ( modems, networks, broadband, radio)
HORIZONTAL DIVERSIFICATION
The company adds new products or services that are often technologically or
commercially unrelated to current products but that may appeal to current customers.
This strategy tends to increase the firm's dependence on certain market segments.
For example, a company that was making notebooks earlier may also enter the pen
market with its new product.
CONGLOMERATE DIVERSIFICATION
A conglomerate is a corporation that is made up of a number of different, seemingly

unrelated businesses.
In a conglomerate, one company owns a controlling stake in a number of smaller

companies, which conduct business separately.
Each of a conglomerate's subsidiary businesses runs independently of the other

business divisions, but the subsidiaries' management reports to senior management at
the parent company.
RISK OF DIVERSIFICATION
Diversification has the highest level of risk and requires the most careful investigation.
Unknown market with an unfamiliar product offering means a lack of experience in the
new skills and techniques required.
Diversification necessitate significant expanding of human and financial resources,

which may detract focus, commitment,and sustained investments in the core industries.
A firm should choose this option only when the current product or current market
orientation does not offer further opportunities for growth.
In order to measure the chances of success, different tests can be done:
1. The attractiveness test: the industry that has been chosen has to be either
attractive or capable of being made attractive.
2. The cost-of-entry test: the cost of entry must not capitalize all future profits
3. The better-off test: the new unit must either gain competitive advantage from its link
with the corporation or vice versa.
Because of the high risks, many companies attempting to diversify have led to failure.
However, there are a few good examples of successful diversification:
Apple moved from PCs to mobile devices.

Virgin Group moved from music production to travel and mobile phones.
Walt Disney moved from producing animated movies to theme parks and vacation
properties.
Canon diversified from a camera-making company into producing an entirely new
range of office equipment.
One example of failed diversification is National Semiconductor Corporation.

In the 1970s, the company tried to make electronic consumer products in addition to
the semi-conductors that went inside them.
But the company wasn't suited for retail manufacturing, and was crushed by
companies that were.
By the time digital watches became popular in America, National had been driven from
the marketplace, suffering losses that overshadowed its success in semiconductors.
VERTICAL INTEGRATION
It is a competitive strategy by which a company takes complete control over one or
more stages in the production or distribution of a product.
A company opts for vertical integration to ensure full control over the supply of the raw
materials to manufacture its products.
It may also employ vertical integration to take over the responsibility of distribution of
its products.
VERTICAL INTEGRATION
A classic example is that of the Carnegie The iPhone and iPad have hardware and
Steel Company, which not only bought software designed by Apple, which also
iron mines to ensure the supply of the raw designed its own processors for the
material but also took over railroads to devices. This integration has allowed
strengthen the distribution of the final Apple to set the pace for mobile
product. computing.
The strategy helped Carnegie Despite the benefits of specialization, it

produce cheaper steel, and can make sense to have everything
empowered it in the marketplace. under one roof
TYPES OF VERTICAL INTEGRATION
INTERNATIONAL DIVERSITY &
INTERNATIONAL STRATEGY
REASON FOR INTERNATIONAL STRATEGY
 A realized strategy is a real and practical strategy.
 Realized strategies are often a by-product of an organization’s:
 intended strategy (i.e., the firm’s plans),
 the firm’s deliberate strategy (i.e., the portions of the intended strategy that an
organization continues to pursue over time), and
 its emergent strategy (i.e., what the firm does in response to unexpected
opportunities and challenges).
 In most other cases, however, firms’ original intended strategies are lost during its
journey.
 The abandoned sections of the original and intended strategy are known as non-realized
strategy.
TAKE
MARKET BASED ADVANTAGE OF ECONOMIC
REASONS STRATEGIC BENEFITS
CAPABILITIES
Globalization of Markets
Firms acting as Suppliers Broaden size of Market
Reap Economies of Scale
Bypass limitations in home Internationalization of
Stabilization of earnings
markets Value-adding capabilities.
across markets
Exploit difference between Enhance Knowledge
countries
MARKET BASED REASONS
 The Globalization of Markets & Competition can be seen as both the cause &
consequence of the internationalization of organization.
 There is evidence of homogenization in some markets such as:
 Apart from homogenization, Globalizations also relates to “adoption of global

strategies” in which activities are tightly integrated & coordinated on a cross-national
basis.
 Here the entire world is seen as a potential area of operation.
INTERNATIONAL DIVERSITY & INTERNATIONAL
STRATEGY
We want to weave Boeing into the fabric of

local economy and culture while benefitting
from deep customer knowledge and the Value
of the market’s intellectual resources.
FDI
UK:
University of Sheffield : New Materials RUSSIA:
Cranfield University: Blended Wing & Boeing Design Centre : Key parts &
Aircraft body. structures of Commercial planes.
Cambridge University: Information FDI
Technology COLLABORATION
ITALY :
Finmeccanica: Satellite end navigation
UK: system, electronics, missile defense
AUSTRALIA:
QinetiQ: MoU on Aviation Security & Air systems
Communication & Electronic Systems
Traffic Management
FDI COLLABORATION
SPAIN:
Boeing Research & Technology Centre.
COLLABORATION
 Firms acting as suppliers to industrial companies may follow their customers when
these internationalize their companies.
 EXAMPLE: When BMW set up a manufacturing site at South Carolina, USA, it
continued purchasing transmission systems from established German suppliers.
 By expanding its market internationally, a firms can bypass limitations in its home
markets.
 EXAMPLE: French Bank BNP Paribas accelerated the search for possible acquisition in
USA after consolidation of banking sector in France.
 There may be opportunities to exploit differences between countries &
geographical regions
 The Exploitation of Difference in Culture
 EXAMPLE: The success of US based fast-food chains across the world.
 Administrative differences allow firm to take advantage of tax differentials.

 EXAMPLE: The News Corporation has many of its acquisition as “Holding
Companies” gaining in Cayman Islands, gaining Tax Benefits in USA.
 Its not always the case that a “Global Reach” helps.
 Exploiting “Geographically specific differences” can also help.
 EXAMPLE: Telephone company “Cable & Wireless” has read the regional differences
carefully and has exploited the situation in Panama, Caribbean & Seychelles.
 The exploitation of “Specific Economic Factors” can be one more reason. This could
include labour or Cost of Capital
 EXAMPLE: The success of Embraer (The Brazilian producer of regional jets) has been
due to its labour cost, which is half of its major Canadian competitor Bombardier.
TAKE ADVANTAGE OF STRATEGIC CAPABILITIES
 By internationalizing companies are able to broaden the size of the market so as to
exploit strategic capabilities.
 EXAMPLE: Amazon.com & Starbucks rapidly gained competitive positions by leveraging
existing strategic capabilities.
 The internationalization of Value-adding activities allows an organization to access
& develop resources & capabilities which is not possible in “home” country & thereby
enhancing the competitive advantage.
To improve cost-efficiency, GE employs almost 11,000

workforce, in India to conduct back-office work.
PwC also employs workforce in India to analyze credit
risk & insurance for customers in other countries.
ECONOMIC BENEFITS
 International diversification helps firm to reap “economies of scale” by expanding the
market they serve.
 The opportunity will be highest in the market characterized by cross-nationally
homogenous consumer tastes & needs.
 Stabilization of earning across markets.
In the automobile industry, the presence of Toyota, in all

three major arenas : North America, Europe & Asia
Pacific, allows it to manage reduced sales in other region.
MARKET ENTRY & SELECTION
 The process of “Market Entry” requires an organization to select attractive &

profitable international markets & to identify a suitable mode of market entry.
 The selection of international markets depends on :
 Considerations at MACRO Level
 Competitions & Market conditions.
 Some particular factors to discuss are:
 Macro economic conditions: reflected in indicators such as GDP and/or Disposable income
which help in knowing the potential size of the market.
 The Political Environment: may facilitate opportunities to MNC ‘s.
 The Infrastructure of National Markets is also important.
Manufacturing base in India.

MARKET ENTRY MODES
 Market entry modes: Advantages & Disadvantages

1. EXPORTING
2. JOINT VENTURES & ALLIANCES
3. LICENSING
4. FDI
MARKET ENTRY & SELECTION
After opening experience centre in Hyderabad, this is what IKEA plans

for India
https://yourstory.com/2017/11/opening-experience-centre-
hyderabad-ikea-plans-india/
https://www.youtube.com/watch?v=ZBrpofQfP-g
CASE DISCUSSION
BALANCED SCORE CARD
The balanced scorecard is a strategic planning and management system that is used
in business and industry to :
align business activities to the vision and strategy of the organization,
improve internal and external communications,
and monitor organization performance against strategic goals.

THE ORIGIN OF BSC
It was introduced by Dr. Robert Kaplan (Harvard Business School) and David Norton as a
performance measurement framework.
 It added strategic non-financial performance measures to traditional financial

metrics to give managers and executives a more 'balanced' view of organizational
performance.
THE ORIGIN OF BSC
It has evolved from its early use as a simple performance measurement framework to a
full strategic planning and management system.
The balanced scorecard transforms an organization’s strategic plan from an

attractive but passive document into the "marching orders" for the organization on a
daily basis.
It provides feedback both to the internal business processes and external outcomes
in order to continuously improve strategic performance and results.
When fully deployed, the balanced scorecard transforms strategic planning from an
academic exercise into the nerve center of an enterprise.
THE BALANCED SCORE CARD
PERSPECTIVES OF BSC
THE LEARNING & GROWTH PERSPECTIVE
This perspective includes employee training and corporate cultural attitudes related
to both individual and corporate self-improvement.
In a knowledge-worker organization, people are the main resource.
It is becoming necessary for knowledge workers to be in a continuous learning mode.
Metrics can be put into place to guide managers in focusing training funds where they
can help the most.
PERSPECTIVES OF BSC
THE BUSINESS PROCESS PERSPECTIVE
This perspective refers to internal business processes.
Metrics allow the managers to know how well their business is running.
Metrics allow the managers to know whether its products and services conform to
customer requirements (the mission).
PERSPECTIVES OF BSC
THE CUSTOMER PERSPECTIVE
Recent trends has shown an increasing realization of the importance of customer

focus and customer satisfaction in any business.
These are leading indicators: if customers are not satisfied, they will eventually find other
suppliers that will meet their needs.
Poor performance from this perspective is thus a leading indicator of future decline,
even though the current financial picture may look good.
While designing metrics for satisfaction, customers should be analyzed in terms of kinds
of customers and the kinds of processes for which we are providing a product or service
to those customer groups.
PERSPECTIVES OF BSC
THE FINANCIAL PERSPECTIVE
Kaplan and Norton do not disregard the traditional need for financial data.
Timely and accurate funding data will always be a priority, and managers will do whatever
necessary to provide it.
http://stmarysrespite.org/business-scorecard-template/balanced-
scorecard-examples-and-templates-restaurant-balanced-
scorecard-example-excel-balanced-scorecard-example-for-
small-business/
SUCCESS WITH BSC
The commercial vehicles business unit (CVBU) of Tata Motors was among the first
Asian organisations to be inducted into the prestigious BSC Hall of Fame, in recognition
of its exemplary success with the model.
The company is one of the world’s top 10 truck manufacturers and the CVBU began
deployment of Balanced Scorecard in 2000, in an attempt to cure years of poor financial
performance.
The focus was on achieving a turnaround, and then progressing to sustainable growth.
Within 2 years of implementation, the company began to show tangible improvement
in performance including a 40% growth in revenue.
STRATEGIC CHOICES:
BUSINESS LEVEL STRATEGY
BASES OF COMPETITIVE ADVANTAGE:
THE “STRATEGY CLOCK”
STRATEGY FOR COMPETITIVE ADVANTAGE

COMPETITIVE ADVANTAGE: An advantage over competitors gained by offering
consumers greater value, either by means of lower prices or by providing greater
benefits/services that justifies the prices.
Bowman’s Strategic clock is a model that explores the options for Strategic positioning
i.e. How a product should be positioned to give it the most competitive position in the
market.
TWO DIMENSIONS DETERMINE THE STRATEGIC OPTIONS AREOUND THE

CLOCK FACE:
PRICE
PERCIEVED
VALUE
DIFFERENTIATION
FOCUSSED
HYBRID
DIFFERENTIATION
LOW INCREASED
PRICE PRICE/STANDA
RD VALUE
INCREASED
NO FRILLS PRICE/LOW
VALUE
LOW VALUE/STANDARD
PRICE
NO FRILLS
 This is not a very competitive position for a business.
 The product is not differentiated and the customer perceives very little value, despite
a low price.
 The product & Services are “commodity- like”.
 Customers do not perceive any value differences in the offering of different
suppliers.
 There may be price sensitive customers, who cannot afford to buy better quality goods.
LOW PRICE
 Firms positioning themselves here look to be the low-cost leaders in a market.
 They provide some additional value to the products.
 To be successful, a strategy of cost minimization is required, often associated with
economies of scale.
 Profit margins on each product are low, but the high volume of output can still
generate high overall profits.
 Competition amongst businesses with a low price position is usually intense – often
involving price wars.
HYBRID
 A hybrid position involves some element of low price (relative to the competition), but
also some product differentiation.
 The aim is to persuade consumers that there is added value through the combination
of a reasonable price and acceptable product differentiation.
 This can be a very effective positioning strategy, particularly if the added value
involved is offered consistently.
DIFFERENTIATION
 The aim is to offer customers the highest level of perceived added value.
 Branding plays a key role in this strategy, as does product quality.
 A high quality product with strong brand awareness and loyalty is perhaps best-placed
to achieve the relatively prices and added-value that a differentiation strategy requires.
FOCUSSED DIFFERENTIATION
 This strategy aims to position a product at the highest price levels, where customers buy
the product because of the high perceived value.
 This the positioning strategy adopted by luxury brands, who aim to achieve premium
prices by highly targeted segmentation, promotion and distribution.
 Done successfully, this strategy can lead to very high profit margins, but only the very
best products and brands can sustain the strategy in the long-term.
RISKY HIGH MARGINS

 This is a high risk positioning strategy that you might argue is doomed to failure –
eventually.
 With this strategy, the business sets high prices without offering anything extra in terms
of perceived value.
 If customers continue to buy at these high prices, the profits can be high.
 But, eventually customers will find a better-positioned product that offers more
perceived value for the same or lower price.
 Other than in the short-term, Risky High Margins is an uncompetitive strategy.
 Being able to sell for a price premium without justification is tough in any normal
competitive market.
MONOPOLY PRICING
 Where there is a monopoly in a market, there is only one business offering the product.
 The monopolist doesn’t need to be too concerned about what value the customer
perceives in the product – the only choice they have is to buy or not.
 There are no alternatives.
 In theory the monopolist can set whatever price they wish.
 Monopolies are tightly regulated to prevent them from setting prices as they wish.
LOSS OF MARKET SHARE

 This position will lead to disaster in any competitive market.
 Setting a middle-range or standard price for a product with low perceived value is
unlikely to win over many consumers who will have much better options (e.g. higher
value for the same price from other competitors).
Some time ago, believed to be

neither providing low prices
nor perceived value…
OVERVIEW
 Three of the positions (6, 7 & 8) are

uncompetitive.
 Here the price is greater than the
“perceived value”.
 In a competitive market, there will always
be competitors offering:
1. Higher perceived value at the same
price.
2. Same perceived value at lower price.
DIRECTIONS FOR STRATEGY
DEVELOPMENT
The identification of possible “development directions” helps in understanding a
firms “strategic position”.
Directions for Strategy development takes the help of Ansoff’s product/market

matrix for identifying directions for strategic development.
DEVELOPMENT
DEVELOPMENT
PROTECT & BUILD ON CURRENT POSITION
Within this broad category the options are:

CONSOLIDATION
MARKET PENETRATION
DEVELOPMENT
CONSOLIDATION
It is a process through which organizations protect & strengthen their position in their
current markets & current products.
In a changing market scenario (improved competitor performance/new entrants)
consolidation does not mean standing still but being “proactive”.
It requires attention to how an organizations “resources & competence” should be
adapted & developed to maintain competitive advantage.
Consolidation requires downsizing or withdrawal from some activities. Such as:
Decision based on PLC (Knowing when to withdraw from market is crucial)
In some markets, the value of company’s assets changes over time. (TATA
Tetley)
A firm has competitive disadvantage. (Top Ramen factory in Khurdha)
Prioritization of activities is necessary.
DEVELOPMENT
MARKET PENETRATION
Within the scope of protecting & building an organizations position, there are
opportunities for “Market Penetration”.
“Market Penetration” helps in gaining market share.
Firm competences that sustain & improve quality & innovation can help in “market
penetration” .
Market Penetration depends on:
Market Growth Rate (favorable growth rate helps in market penetration &
incumbent companies fail to meet unmet demands).
There may be Resource Issues preventing market penetration (Maxo Detergent).
Complacency of Market leaders help low share companies to aim for a wider
market. (Reliance Telecom, Air Deccan)
DEVELOPMENT
MARKET PENETRATION
 Promotional Campaigns (Meri Wali Maggi)

 Positioning Strategy: Quick Snack, easy to serve &
satisfy hunger of kids.
 New product Introduction according to the need of the
Consumer:
• Atta Noodles
• Masale Dumdaar
• Dal Atta Noodles
• Cup-o-Mania
 Availability in different packages:
 50 gms
 100 gms
 200 gms
 400 gms (Family Pack)
DEVELOPMENT
PRODUCT DEVELOPMENT
Changes in Business Environment may create demands for new products/services at

the expense of established provision.
Product development is where organizations deliver modified or new products to
existing customers.
DEVELOPMENT
PRODUCT DEVELOPMENT
Product development can happen with existing capabilities:

Firms satisfy changing need of their customers by introducing new products.
When Product Life Cycle are short: product development becomes crucial. Ex:
Software or Consumer Electronics.
An organization may have developed a core competence in market analysis that it
may try to exploit. Ex: iBall & INTEX in music speakers.
DEVELOPMENT
PRODUCT DEVELOPMENT
When organizations are selective in their market coverage, it leads to situation where
there are no opportunities at all.
Here the firm adopts “Market Development” strategy i.e providing existing
products in new markets.
Both “capability” and “market considerations” drive the firms for “Market
Development”.
Whether products can be exploited in other market segments? (Excel Liquid)
Development of new uses of existing products. (New applications of stainless
steel, aluminum)
Decision on Geographical spread. (Either Nationally Or Internationally)
It is not unusual for organization with small home markets to be the leaders for
Globalization. (Ex: Heineken – Netherlands, Carlsberg – Denmark)
DEVELOPMENT
DIVERSIFICATION
It is defined as a strategy that takes the organization away from both its current
markets & products.
Diversification will increase diversity.
It can be in the form of related & unrelated diversification.
DEVELOPMENT
TOWS MATRIX
INTERNAL FACTORS
STRENGHTS (S) WEAKNESSES (W)

SO : STRATEGIC OPTIONS WO : STRATEGIC OPTIONS
Generate options that use Generate options that take
OPPURTUNITES (O)
EXTERNAL
strengths to take advantage of advantage of opportunities,

FACTORS
opportunities. by overcoming weaknesses.
ST : STRATEGIC OPTIONS WT : STRATEGIC OPTIONS

Generate options here that Generate options here that
THREATS (T) use strengths to avoid minimize weakness& avoid
threats. threats.
PORTER’S GENERIC STRATEGIES
Which do you prefer when you fly: a cheap, no-frills airline, or a more
expensive operator with fantastic service levels and maximum comfort?
And would you ever consider a small company with just a few routes?
COST
DIFFERENTIATION
LEADERSHIP
FOCUS
COST FOCUS DIFFERENTIATION

FOCUS
Cost Focus means emphasizing cost-minimization within a focused market.

Differentiation Focus means pursuing strategic differentiation within a focused market.
Porter's generic strategies describe how a company pursues competitive

advantage across its chosen market scope.
 They were first set out by Michael Porter in 1985 in his book, "Competitive
Advantage: Creating and Sustaining Superior Performance.“
Porter called the generic strategies :

"Cost Leadership" (no frills),
"Differentiation" (creating uniquely desirable products and services)
 "Focus" (offering a specialized service in a niche market).
 He then subdivided the Focus strategy into two parts:
 "Cost Focus"
 "Differentiation Focus."
THE COST LEADERSHIP STRATEGY

Porter's generic strategies are ways of gaining competitive advantage.
There are two main ways of achieving this within a Cost Leadership strategy:
Increasing profits by reducing costs, while charging industry-average prices.
Increasing market share through charging lower prices, while still making a
reasonable profit on each sale because you've reduced costs.
Wal-Mart is famous for squeezing its suppliers to

ensure low prices for its goods.
Dell Computer initially achieved market share by
keeping inventories low and only building
computers to order.
THE COST LEADERSHIP STRATEGY

Maintaining this strategy requires a continuous search for cost reductions in all
aspects of the business, such as:
Outsourcing
Controlling production costs
Increasing asset capacity utilization,
Minimizing other costs including distribution, R&D and advertising.
control over the supply/procurement chain to ensure low costs.
Bulk buying to enjoy quantity discounts.
Squeezing suppliers on price.
TATA Steel owns raw material assets such as coal and limestone mines
through joint ventures or completely, with the assets spread across
countries such as Australia, Oman and Mozambique.
Tata Steel has largely been able to withstand raw material price fluctuations
due to captive iron ore mines.
DIFFERENTIATION
 Differentiation involves making your products or services different from and
more attractive than those of your competitors.
 How you do this depends on the nature of your industry and the products and
services themselves.
 It will typically involve features, functionality, durability, support, and also
brand image that your customers value.
DIFFERENTIATION
To make a success of a Differentiation strategy, organizations need:
Good research, development and innovation.
The ability to deliver high-quality products or services.
Effective sales and marketing, so that the market understands the benefits offered by the
differentiated offerings.
Large organizations pursuing a differentiation strategy need to stay agile with their new
product development processes.
Otherwise, they risk attack on several fronts by competitors pursuing Focus
Differentiation strategies in different market segments.
THE FOCUS STRATEGY

Companies that use Focus strategies concentrate on particular niche markets.
By understanding the dynamics of that market and the unique needs of customers, they
develop uniquely low-cost or well-specified products for the market.
Because they serve customers in their market uniquely well, they tend to build strong
brand loyalty amongst their customers.
This makes their particular market segment less attractive to competitors.
Further, it is still essential to decide whether you will pursue :
 Cost Leadership or
 Differentiation once you have selected a Focus strategy as your main approach.
Manufactured heavy duty vehicles almost exclusively in

India constituted a niche market segment and product
group for the company
MCKINSEY 7S MODEL
INTRODUCTION
 The Mckinsey 7S Model helps in analyzing how well the Organization is positioned to
achieve its intended objective.
 Developed in the early 1980s by Tom Peters and Robert Waterman, two consultants
working at the McKinsey & Company consulting firm.
 The 7-S model can be used in a wide variety of situations for example, to help firms:
 Improve the performance of a company.
 Examine the likely effects of future changes within a company.
 Align departments and processes during a merger or acquisition.
 Determine how best to implement a proposed strategy.
MCKINSEY 7S MODEL
INTRODUCTION
 The basic premise of the model is that there are 7 internal aspects of an organization
that need to be aligned if it is to be successful.
"Hard" elements are easier to define or

identify and management can directly
influence them: "Soft" elements, can be more difficult
These are strategy statements; to describe, and are less tangible and
organization charts and reporting more influenced by culture. They are
lines; and formal processes and IT as important as the hard elements.
systems.
MCKINSEY 7S MODEL
The way the organization is

structured and who reports to
whom.
The plan devised to maintain and The daily activities and

build competitive advantage over procedures that staff members
the competition. engage in to get the job done.
The actual skills and

competencies of the employees The style of leadership adopted
working for the company.
The core values of the company

that are evidenced in the corporate
culture and the general work ethic.
The employees and their general (Revenue, Quality)
capabilities.
MCKINSEY 7S MODEL
COCA COLA
STRATEGIC LEADERSHIP
Strategic leadership is a practice in which leaders, using different

styles of management, develop a vision for their organization that
enables it to adapt to or remain competitive in a changing
economic and technological climate.
Strategic leaders are able to use this vision to motivate employees

and departments, fostering among them a sense of unity and
direction in order to implement change within their organization.
STRATEGIC LEADERSHIP SURVEY
 A 2015 PwC study of 6,000 senior executives found that there is a shortage of
strategic leaders across industries.
 Respondents were asked a series of questions designed to reveal their leadership
preferences, and their answers were then analyzed to determine their
leadership style.
 Only 8% of the respondents turned out to be strategic leaders effective
at leading transformations.
 The study also suggests that strategic leaders are more likely to be women,
and that the amount of strategic leaders increases with age - particularly age 45
and up.
OBJECTIVE
 The main objectives of strategic leadership are to :
 streamline processes,
 boost strategic productivity,
 promote innovation
 cultivate an environment that encourages employees to be productive,
independent and to push forward their own ideas.
 Strategic leaders make use of reward or incentive programs to encourage employees
and help them reach their goals.
TRAITS OF STRATEGIC LEADERS

OPEN MINDED
 Be curious & hungry for new ideas.
 Willingness to hear “uncomfortable” questions from stakeholders.
 Being strategic means: reflect on ideas that conflict with your current beliefs.
 It doesn’t mean you accept each piece of Information.
 It means you consider and explore new & non-conforming ideas & investigate
interesting possibilities.

COURAGEOUS
 A major role of a strategic leader is to be courageous and take the steps necessary when
needed.
 Anything and everything has the potential to become irrelevant to customers and
stakeholders.
 Strategic leaders know that current success can lead to complacency so they inspire
innovation and challenge people to experiment and take risks.
 They see failure as part of this process.

DISCIPLINED
 Discipline is the ability to focus on longer-term priorities and forces that will affect
future results.
 It is the ability to make strategic thinking and actions a regular part of your daily routine.
 Depending on the nature of the position or industry, disciplined leaders invest 10% to
30% of their time and energy on strategic activities.

ENDURANCE
 Strategic leaders have the drive and stamina needed when change becomes difficult.
 If strategy were easy, everyone would be adaptable, innovative, and prepared for the
future.
 Strategic leaders have developed the mental and physical muscle to produce results
when others might give up prematurely on a plan.

INSPIRING
• Strategic leaders enroll others in the journey.
• The famous strategic leaders that we look up to have inspirational leadership quality.
• Strategic leaders are able to sell new ideas, help others see the value and influence the
team’s direction.
• They celebrate progress, ease the tension and inject fun into the process.

ACCOUNTABLE
 Strategic leaders are willing to hold themselves and others accountable for
commitments.
 They are not harsh, but they make expectations explicit.

INSIGHTFUL
 Strategic leaders scan the environment for clues about the forces and events that could
reveal opportunities or pose threats to their team’s success.
 Good leaders are aware and have their sources for intelligence related to their profession
and industry, technological game changers, and social events that will shape the future.
 They know that they live in a “VUCA” world (volatile, uncertain, complex, and
ambiguous) and they look for ways to exploit both head winds and tail winds.
Very few people command respect the
way Ratan Tata does. Since his retirement
in 2012, Tata has been a keen observer of
the Indian startup ecosystem. For a lucky
few, he became an investor too, with his
personal wealth.

COLLABORATIVE
 Strategic leaders need a team of people who are forward looking and willing to shape
the future within their sphere of control.
 Great strategic leaders create a mosaic of strategic plans that fit together and that are
lead by many members of the team.

PERSPECTIVE
 Great leaders know how to adapt by maintaining clarity of purpose.
 They have a vision for the future and passion to drive them there.
 They make difficult choices and know when to say “no” to ideas that just don’t make
sense right now or won’t add enough value to the strategy.
 The ability to make trade-offs and choosing what not to do is just as important as
knowing what to do.
CASE READING:
THE STRATEGIC LEADERSHIP

IMPERATIVE
THE EXPERIENCE CURVE
Developed by Boston Consulting Group (BCG)

in the mid-1960s.
Working with a leading manufacturer of

semiconductors, BCG noticed that the unit
cost of manufacturing fell by 25% for each
doubling of the volume that it produced.
They called this relationship “The

Experience Curve”
The more experience a firm has in producing

a particular product, the lower are its costs.
BCG concluded that:

“…the more experience a firm has in producing a particular
product, the lower are its costs”
The logic behind the Experience Curve is:

As businesses grow, they gain experience...
That experience may provide an advantage over the competition...
The “Experience Effect” of lower unit costs is likely to be particularly
strong for large, successful businesses (Market Leaders).
If the Experience Curve concept is valid, then it has some significant

implications for growth strategy:
Business with the most experience should have a significant cost

advantage.
Business with the highest market share likely to have the most / best
experience
Therefore:
Experience is a key barrier to entry.
Firms should try to maximize market share.
External growth (e.g. takeovers) might be the best way to do this if a
business can acquire firms with strong experience.
STRATEGY IMPLICATIONS OF
EXPERIENCE CURVE
If a firm is able to gain market share over its competitors, it can
develop a cost advantage.
Strategies like penetration pricing, significant investment in

advertisement, sales personnel, production capacity can be justified
to enhance market share.
On strategies based on experience curve, it is necessary to gauge

the competitor reaction as well.
PITFALLS OF EXPERIENCE CURVE
If all firms equally pursue the strategy, none will increase market
share, & will suffer losses due to:
1. Overcapacity
2. Low prices
 The more competitors pursue the strategy, higher the cost of gaining a
market share.
 Competing firms may be able to discover the leading firms proprietary

methods & replicate the cost-reduction methods.
CRITICISM OF EXPERIENCE CURVE
1. Market leaders often become complacent – perhaps because of their

“experience”
2. Experience may cause resistance to change and innovation
3. The Experience Curve concept is a relatively old theory that is less relevant in
a competitive environment that changes so rapidly
LESSONS FROM EXPERIENCE CURVE
FORD’S BLIND PROGRESS DOWN THE MODEL T EXPERIENCE CURVE.

Between 1910 and 1921, Ford cut Model T costs by :
modernizing plants,
integrating vertically to reduce the cost of purchased inputs,
increasing the division of labor,
and eliminating model changes.
Market share soared from 10% to 55%, and Ford was enormously profitable.
But by its single-minded focus on cost reduction, Ford had sown the seeds of
its own downfall.
The Model T came only in black because black paint dried the
quickest, which helped speed up the car’s assembly.
FORD’S BLIND PROGRESS DOWN THE MODEL T EXPERIENCE CURVE.

As consumer demand shifted to a heavier, closed body and to a greater
emphasis on comfort and styling, Ford responded by augmenting features to the
Model T rather than changing models, as General Motors did.
Worried about its massive investment, Ford continued to build the car until
1927.
But customer preferences forced it to close down its plants for nearly a year
while it retooled the Model A.
In the process Ford lost $200 million and suffered an irreversible decline in
market share.
Some companies have built strategies successfully on the experience curve.

Since 1980, for example, Bausch & Lomb has consolidated its position in soft
contact lenses by automating, using computerized lens design, and continuing to
expand its plant.
As a result, its market share climbed from 55% in 1980 to 65% in 1983 and it now
earns gross margins 20 to 30% higher than its competitors.
Lincoln Electric’s continued cost leadership in electric arc welding supplies derives in
large part from personnel policies designed to encourage experience-based cost
reductions.
British Motorcycle Manufacturers did not realize that

achieving and maintaining a viable cost position for one product
might require retaining market positions (and experience bases)
in others.
When threatened by Japanese competition in small bikes, the
British withdrew from that market.
This boosted short-run profits but in the long run
destroyed most of their remaining motorcycle business.
The Japanese used the cost advantage from their dominance
in small bikes to push the British out of larger bikes, and left
them with a small niche in superbikes.
The British share of their own home market plunged from
34% in 1968 to 3% in 1974.
What distinguishes the winners from the losers in the experience curve
game is their grasp of both the logic of the experience curve and the
characteristics of the competitive arena that determine its suitability as a
strategic weapon.
CRITICAL SUCCESS FACTORS
CSFs, also known as Key Results Areas (KRAs), are the essential areas of
activity that must be performed well to achieve the mission, objectives or goals
for the firm.
By identifying Critical Success Factors, you can create a common point of
reference to help direct and measure the success of the firm.
As a common point of reference, CSFs help everyone in the team to know
exactly what's most important.
It helps people perform their work in the right context & engage towards the
same overall aims.
BEGINNING OF CSF’S
The idea of CSFs was first presented by Ronald Daniel in the 1960s.
It was then built on and popularized a decade later by John F. Rockart, of
MIT's Sloan School of Management, and has since been used extensively to help
businesses implement their strategies and projects.
DEFINITIONS
"The limited number of areas in which results, if they are satisfactory, will
ensure successful competitive performance for the organization. They are
the few key areas where things must go right for the business to flourish”
CSFs are "areas of activity that should receive constant and careful
attention from management."
USING THE TOOL
CSF EXERCISE – FARM FRESH PRODUCE

USING THE TOOL
SUMMARY OF CSF – FARM FRESH PRODUCE

CO-CREATION STRATEGY
The strategy of Co-creation was developed by C. K. Prahalad and Venkat

Ramaswamy.
 Co-creation is a management initiative, or form of economic strategy, that brings
different parties together (for instance, a company and a group of customers), in
order to jointly produce a mutually valued outcome.
 Co-creation brings a blend of ideas from direct customers or viewers (who are
not the direct users of the product) which in turn creates new ideas for the
organization.
WHY CO-CREATE…?
1. Consumers are gaining the upper hand (demanding).

2. They are demanding CVAL & CSAT.
3. Firms now are giving consumers the opportunity to influence part of the
production process and involve them by listening to their ideas.
4. The supplier/ producer listens to the customer and takes on their ideas and
creative involvement.
5. The consumer plays an active role in the final product by doing so.
6. This productive cooperation leads to a rise in value.
COOPERATION FOR CO-CREATION
1. Co-Creation adds extra economic value to businesses, especially young

consumers have evolved new habits and want more involvement towards the final
product.
2. Continuous contact and dialogue between consumer and product is important.
3. An element commonly found in co-creation is consumer dialogue, for example
through social media.
4. In order for Co-Creation to be fruitful, there must be equivalence, reciprocity,
openness and trust in the relationship between producer and consumer.
5. Co-Creation is also very useful in solving complex issues and realizing change.
PROCESS OF CO-CREATION
The process of co-creation essentially involves 2 core steps:
 Contribution: Submission of contributions by the Customers to the firm.
 Selection: Selection of the most promising and appealing

contributions/submissions.
TYPES OF CO-CREATION
Customer exercises control over the contribution activity while the firm exercises
TINKERING control over the selection activity.
SUBMITTING Firm exercises complete control over both the activities.
Firm exercises control over the contribution activity while the public exercises control
CO-DESIGNING
over the selection activity.
COLLABORATING Public exercises complete control over both the activities

TINKERING
Tinkering is a customer co-creation model that involves

1. procurement of contributions from the customer by the firm,
2. a comprehensive and scrupulous examination of the contributions,
3. selection of the most promising and enterprising contributions by the firm
4. and finally implementation of the contributions.
It allows the gamers to create their own levels in the

game. The created levels can then be shared with other
gamers or submitted to Sony. Owing to this "Create and
Share" feature, this game has the tagline 'Play, Create,
Share'.
SUBMITTING
 In the case of submitting, the firm exercises control over the contribution activity.
 It does so, by placing constraints on the basic design, contribution size etc. and also the
selection activity by selecting the winning contributions.
Example: by means of a contest, consumers can send their ideas/ designs to producers.
The winning concept is then usually developed and taken to production.
Examples include fashion chains that allow consumers to design their favourite cocktail
dress.
CO-DESIGNING
 Co-designing involves placement of constraints by the firm on the contribution activity

and selection of the winning contributions by the contributors themselves.
 For example, Local Motors employs the co-designing model of customer co-creation to
develop its vehicles.
 In 2010, Local Motors developed a car named Rally Fighter in a record 18 months,
which is about 5 times faster than what a conventional car manufacturing process
takes.
 By empowering a community of over 2000 designers to submit their designs while
still placing some constraints on the basic design, color schemes etc., Local Motors
effectively utilized the co-designing model of customer co-creation.
 The winning design (By Sangho Kim) was chosen as the winning design by the designer
community through voting.
COLLABORATING
 Also known as open sourcing, collaborating involves releasing the source code of the
product and making it accessible to the general public.
 The released source code is then open to modification as per the requirement of the
users.
 Examples like Mozilla Firefox, Apache and Linux are all based on collaborating.
BLUE OCEAN STRATEGY
BLUE OCEAN STRATEGY
Blue Ocean Strategy is referred to a market for a product

where there is no competition or very less competition.
This strategy revolves around searching for a business in

which very few firms operate and where there is no pricing
pressure.
BLUE OCEAN STRATEGY
 Blue Ocean Strategy (BOS) put forward a new approach which talks about an
environment with absolutely zero competition.
 Rather than competing in an existing market with your product, create a space
where you enjoy hundred percent monopoly.
 Chan Kim and Renee Mauborgne derived the term “Blue Ocean Strategy” to explain
this new business model.
 Companies traditionally work in a “Red Ocean” environment where businesses compete
each other to grab a bigger piece of the pie.
 Conversely, in “Blue Ocean”, the aim is not to win over the competitors, instead to make
the competition irrelevant.
BLUE OCEAN STRATEGY
 Blue Ocean Strategy (BOS) can be applied across sectors or businesses.
 It is not limited to just one business.
 Today, firms operate under intense competition and do everything to gain market
share.
 When the product/service comes under pricing pressure there is always a possibility
that a firm’s operations could well come under threat.
 This situation usually comes when the business is operating in a saturated market, also
known as 'Red Ocean'.
BLUE OCEAN STRATEGY
 When there is limited room to grow, businesses try and look for opportunities of
finding new business where they can enjoy uncontested market share or 'Blue
Ocean'.
 A blue ocean exists when there is potential for higher profits, as there is no or
irrelevant competition.
 The strategy aims to capture new demand, and to make competition irrelevant by
introducing a product with superior features.
 It helps the company in make huge profits as the product can be priced a little steep
because of its unique features.
BLUE OCEAN STRATEGY
BLUE OCEAN STRATEGY
Apple ventured into digital music in 2003 with its

product iTunes.
Apple users can download legal and high quality

music at a reasonable price from iTunes.
They made traditional sources of distribution of

music irrelevant.
Apple was successful in capturing the growing

demand of music for users on the go.
Apple captured uncontested market space.

BLUE OCEAN STRATEGY
https://economictimes.indiatimes.com/definition/blue-ocean-strategy
FRAME WORK OF BLUE OCEAN
STRATEGY
 The authors suggested a “Four Actions Framework” for businesses to discover an

obscure blue ocean.
Which factors should Which factors should
be raised well above be created that the
the industry’s industry has never
standard? offered?
Which factors should

Which factors that the
be reduced well below
industry has long
the industry’s
competed on should be
standard?
eliminated ?
FRAME WORK OF BLUE OCEAN
STRATEGY
OYO CASELET
CORPORATE RESTRUCTURING
A process by which Organizations make internal changes in

order to efficiently utilize managerial synergy & meet the
needs of the Market.
Irrespective of sectoral affiliation, CORE is always an item on the agenda.
This is necessitated due to the impact of both internal & external factors.
It is more out of a “Compulsion” than an “Option”.
All sorts of organizations – Manufacturing companies, Service providers, Public

Sector Units & even the Government have restructured themselves.
THE ISSUE
At the end of the “Cold War”, with the shift to “Market Economy”, the
organizations started re-orienting themselves to the needs of the market.
With this, direct links to the market was established & firms started becoming
more sensitive towards customer requirement.
Even after orienting themselves to the market needs, firms face competition &
hence factors such as product, price, quality gain importance.
With the Organisation being the same, with the same

People & process...How can it re-gear itself to optimize the
efforts & be profitable…?
THE CONCEPT
According to CORE, the need to change can be:

Portfolio changes,
Financial changes
Technological changes
 Organizational changes
The “pre” & “post” period of restructuring, can bring about a “Shrinkage” or
“Expansion” depending on the overall objective of the company.
Shrinkage in Manpower
PSU’S
Expansion in production capacity
THE CONCEPT
So, the process of restructuring, does not pre-suppose any unidirectional

shrinkages or expansion.
The changes would be in the line of the “Needs” of the firm.
It is also the strategy of restructuring that plays a vital role.
Strategies depend on the “dimensions” of the restructuring exercise.
The “extent” to which restructuring is made, also plays a vital role.
Restructuring is basically a process of change & is the

function of the “needs” of an organization at a particular
time.
CORPORATE RESTRUCTURING – “The
Need – Strategy Link”
The “Needs”, “Dimensions” & the “Extent” are linked & they combine
together in order to give the volume of restructuring & Strategy.
DIMENSIONS OF CORE
While the conceptual aspects of CORE gives us the overall game plan for any
restructuring exercise, various dimensions also have to be understood.
BUSINESS/PORTFOLIO RESTRUCTURING
TECHNICAL RESTRUCTURING
FINANCIAL RESTRUCTURING
ORGANISATIONAL RESTRUCTURING
DIMENSIONS OF CORE
DIMENSIONS OF CORE
It refers to the changes in the set of business to create more effective
configuration of business.”
Organisation has to take “stock” of the current activities & look at

“continuation” or “severance” vis-à-vis the current market situation.
This dimension of restructuring focuses on the lines of business directly &

various options available basis the SWOT Analysis.
DIMENSIONS OF CORE
We reduced the number of brands

from 170 to 65 and the number of
categories from 16 to 10, building
shareholder value every step of the
way.
We now have a portfolio that plays to

our strengths, where products solve
problems and performance drives
purchase.
DIMENSIONS OF CORE
DIMENSIONS OF CORE
DISCRETE PORTFOLIO RESTRUCTURING

Here the firm, totally changes the Business line.
There could be a major shift in its business activities or it could diversify.

DIMENSIONS OF CORE
INCREMENTAL PORTFOLIO RESTRUCTURING

It is not as dynamic as Discrete Portfolio Restructuring
It is generally in terms of backward/forward integration that the company

does.
NIRMA was basically a detergent making unit but

slowly they shifted to detergent bars & cosmetic
soap.
DIMENSIONS OF CORE
TECHNICAL RESTRUCTURING
It refers to “the process by which there are conscious shifts by the company
for adapting to technical improvements or altering its production facilities
in-order to optimize production capacities.”
All aspects of TR depends on the market preference & demands.
In India most of the successful companies have been adapting themselves
systematically to Technology.
Incase of firms not making conscious effort for TR, their products tend to
be come obsolete, up gradation becomes costly & becomes irrelevant.
DIMENSIONS OF CORE
FINANCIAL RESTRUCTURING
The most common of all types of restructuring.

It focuses on “making productive alterations to the balance sheet of the
company”.
Here the company re-thinks what it “owns” & “owes”.
FR is necessary on a periodic basis, since over a period of time, the value of
assets & liabilities shown in the balance sheet does not reflect the fair view of
the organization.
Capital Restructuring – capital enhancement, settlement of liabilities,
infusion of new loans.
Asset Restructuring – re-evaluation of assets, disposal or scrapping of
assets.
DIMENSIONS OF CORE
It refers to that aspect of restructuring dealing with the alterations in the
structural or management aspects of a firm.
Thus, Employee or Manpower restructuring resulting in the changed

structure of organization implies OR.
DIMENSIONS OF CORE
Structural Restructuring – Refers to the changes made to the structure of

the Organisation. It is done to improve the productivity, accountability &
focus of the Organisation.
Management Restructuring – Here, the management or the owners of the

company changes. The incumbent may be a new or experienced group.
CORE @ TATA
https://www.livemint.com/Companies/VP55qjOFY3Zxd49US5aZGK/Congl
omerates-Then-and-Now--How-Tatas-changed-since-1947.html
https://www.livemint.com/Companies/pyvGulDojoA5dw1MihD0oK/How
-Tata-groups-changing-under-N-Chandrasekaran.html
THE RESTRUCTURING PROCESS
Determining what areas need to be restructured
Identifying weaknesses
Create detailed short- and long-term plans to correct

weaknesses.
Implementing short-term corrective action
Calculating and securing funding
Restructuring
Evaluating results
OUTCOME OF RESTRUCTURING
PROCESS
ADVANTAGES
 If a business downsizes during restructuring, its operational costs may decrease.
 For example, payroll expenses will be lower if the business dismissed some of its
employees. When a firm eliminates layers of management during its restructuring,
communication and decision making often improve.
 Restructuring to introduce new technologies may enjoy increased operational
efficiency.
 For instance, records become more accurate and easier to access if a business
implements a computerized filing system.
OUTCOME OF RESTRUCTURING
PROCESS
DISADVANTAGES
 It may lose highly skilled workers.
 Reassigning the duties of these workers to remaining employees often involves added
training expenses.
 Workers remaining after a downsizing often feel insecure about their jobs, which may
lead to low worker morale and poor customer service.
 If restructuring involves new technology or changes in employee responsibilities,

productivity may suffer while employees learn their new roles.
COMPETITIVE INNOVATION
 Competition is important as it initiates positive change.
 If businesses are competing against each other, it means that they are aiming
to produce the latest innovation to hit the market.
 In competitive markets, firms are driven to adopt more efficient production

processes, and to offer new and improved products and services to
customers,”
“Competition is a key driver of innovation”.

 In Mobile Industry, competition is tough, and technology is rapidly evolving.
 Industry frontrunners (Apple, SAMSUNG) are battling it out to offer

consumers new features that they claim are the first of its kind.
 However, Customers are disgruntled by some companies and their

perceived lack of innovation.
THE NEED FOR COMPETITIVE
INNOVATION
 Even the best technologies cannot deliver success without a clear vision of
where the company is going via long-term goals.
 There are ways on how to initiate competition and promote innovation.
Like below:
1. Find an untapped need that others are missing.

2. Implement new ideas and celebrate change.
3. Listen to customers’ suggestions.
4. Include unusual services that aren’t traditionally offered in the industry.
5. Initiate ideas and pursue it aggressively.
A survey by PwC said that 80% of CEOs

believed innovation drives efficiencies and
leads to a competitive advantage.
An innovation competition is a method or process of

the industrial process, product or business development.
It is a form of social engineering, which focuses to the creation

and elaboration of the best and sustainable ideas, coming from
the best innovators.
COMPETITIVE INNOVATION RESEARCH
 There are few major works, like Terwiesch and Ulrich, who exclusively focus
on innovation competitions.
 They argue, that while innovation is seen as a largely creative endeavor, it

can also be rigorously managed by viewing and structuring the innovation
process as a collection of “opportunities”.
 Profitable innovation comes not from increasing investments in R&D, but

from systematically identifying more exceptional opportunities.
COMPETITIVE INNOVATION RESEARCH
Encourage users to participate in an open innovation process, to

inspire their creativity, and to increase the quality of the
submissions.
Generate innovations, process and product ideas for SAP

Research through an IT-supported ideas competition among the
SAP Community.
Held an idea competition to help bridge the innovation gap that

exists between the different R&D departments and the
operational units
BOTTOM OF THE PYRAMID
NUMERATOR & DENOMINATOR
MANAGEMENT
A fraction represents the quotient of two numbers:
the numerator
the denominator.
1. The former being the part of the fraction above the line,
2. The latter being the part of the fraction below the line.
Organizations have above the line and below the line agendas :
a NUMERATOR that stresses the external effectiveness of

NUMERATOR
its relationship with its customers.
a DENOMINATOR that represents the internal below the

DENOMINATOR
line efficiency of the organization.
MANAGEMENT
NUMERATOR EFFECTIVENESS
DENOMINATOR EFFICIENCY
1. Organizations with a denominator only (bottom-line) orientation emphasize
efficiency while ignoring effectiveness.
2. This internal focus overlooks the reality that an organization is not a profit center
but a cost center because all activity of the organization involves costs.
3. Profit opportunity exists outside the organization and resides in the hands of
customers or potential customers willing to exchange their money for the
products and services the organization has to offer.
MANAGEMENT
In an effort to satisfy investor requirements, ROI is usually the goal.
There are 2 components to this calculation
a numerator (net income)
 a denominator (investment, net assets, or capital employed)
This leads to 2 options for top management - numerator management and denominator
management.
MANAGEMENT
1. Customers expect firms to operate efficiently and thereby provide competitive
pricing.
2. Operational efficiency is the cost of entry and enables firms to compete for the
customer’s business.
3. Effectiveness is the way you acquire the business. The more effective you are, the
more business you are going to generate.
4. Increased efficiency helps drive cost down enabling you to sell for less.
5. At some point, you reach the point of diminishing returns and come face-to-face
again with the effectiveness issue.
MANAGEMENT
FOCUS ON EFFECTIVENESS
1. Find out what your customer expects of you, without considering what you are
currently offering. You define customer effectiveness from the customer’s point of
view, not yours.
2. Customer effectiveness is defined by profitable sales and is a measure of how well
you please your customer.
3. Only efficient, well-oiled organizations have the opportunity to become truly
effective.
The challenge is to remember that efficiency is mastering internal

processes. Effectiveness is maximizing customer satisfaction.
Profit is the reward for knowing the difference..
MANAGEMENT
DENOMINATOR MANAGEMENT
1. Hamel & Prahalad (1980) introduced what they called as “40/30/20” rules.
2. This indicated that, Managers, on average spend less than 30% of the time building
strategy for the future.
3. It also indicates that, Management is mainly concerned about “today” and not
“tomorrow”.
4. Denominator Management may be summarized as a short cut to Asset
Productivity, without creating values.
5. It is mainly to achieve lower costs in order to match or beat the competition.
MANAGEMENT
NUMERATOR MANAGEMENT
To grow the numerator (net income), top management must have:
 a point of view about where new opportunities lie
 must be able to anticipate changing customer needs
 must have invested preemptively in building new core competencies
 must provide clear and consistent leadership
The 3M Company, formerly known as the Minnesota Mining

and Manufacturing Company, is an American multinational
conglomerate corporation operating in the fields of industry,
health care, and consumer goods.
MANAGEMENT
NUMERATOR MANAGEMENT
1. Firm using Numerator Management would raise net income by creating new wealth
through innovation.
2. Such strategy makes the competition irrelevant.
Ideally, the choice is not between Numerator or Denominator

Management…but rather an acceptance that both type of management
need to be incorporated into the organization.
MANAGEMENT
CASE READING
FORCE FIELD ANALYSIS
Lewin's Force Field Model is an important contribution to the

theory of change management - the part of strategic
management that tries to ensure that a business responds to
the environment in which it operates.
Force Field Analysis provides an overview of the balance

between forces driving change in a business and the forces
resisting change.
ACCEPTING CHANGE
Change is the result of dissatisfaction with present strategies
(performance, failure to meet objectives etc).
Change doesn't happen by itself - it is essential to develop a vision for

a better alternative.
Management have to develop strategies to implement change.
There will be resistance to change - it is inevitable, but not impossible

to overcome.
ACCEPTING CHANGE
Argued that successful businesses tend to be

constantly adapting to their environment and
changing, rather than being inflexible.
THE MODEL
Balance between forces of change & forces

resisting change.
THE MODEL
9 7
Here, the forces of change are greater than the forces resisting
change. Hence change is possible.
EXPLAINING FORCE FIELD ANALYSIS
There are forces driving change & restraining it.
Where there is an equilibrium between the two sets of forces, there

will be no change.
In order for a change to occur, the driving force must exceed the
restraining forces.
Forces for change include:
Internal forces for change (from within the business or organization)
A general sense that the business could "do better"

Desire to increase profitability and other performance measures
The need to reorganize to increase efficiency and competitiveness
Natural ageing and decline in a business (e.g. machinery, products)
Conflict between departments.
The need for greater flexibility in organizational structures.
External forces for change (outside the control of the business /

organisation)
Increased demands for higher quality and levels of customer service
Uncertain economic conditions
Greater competition
Legislation & Taxes
Political Interests
Ethics & social values
Technological change
Globalization
Scarcity of natural resources
EXAMPLE OF FFA MODEL
CHANGE AT ROYAL MAIL
Royal Mail is
the UK's most
trusted letters
and parcels
delivery
company.
UNLEARNING CURVE
It’s important to Unlearn & Re-learn…

UNLEARNING CURVE
UNLEARNING CURVE
WHAT IS UNLEARNING ?
 Unlearning is the process of realising that something which we learnt
earlier is incorrect, ineffective, or obsolete.
 It is the process of exploring what we have stored in our system and
deleting all the unnecessary data.
 It is the process of saying bye to an old, obsolete, and outdated
paradigm, and embracing a new paradigm and willingly undergoing a
paradigm shift.
Unfortunately, firms are controlled by myths which do not allow them

to open their eyes to reality.
UNLEARNING CURVE
In spite of the growing popularity of the terms “Organizational
Learning” and “Learning Organization” since the late 1980s, the
concept of Organizational Unlearning has generally been neglected.
In general terms, Organizational Unlearning is discarding of old

routines to make way for new ones.
UNLEARNING CURVE
UNLEARNING CURVE
SUPERFICIAL
UNDERSTANDING
LEARNING
DEEP LEARNING
UN LEARNING
TIME/EFFORT
UNLEARNING CURVE
Sir Alex Ferguson, former manager of ManU, was always careful

to bring on new talent before the top players passed their peak,
even though that meant occasionally loosing stars who still had
some playing time in them. Sir Alex followed this strategy for his
27 years with ManU, and met with a lot of success.
By the time that the Macintosh computer was a proven success,

Steve Jobs & his team was already planning to enter the music
business with the iPod. When that product began to dominate the
market he had already begun to design the iPhone, a new product
for a very different business that was followed, once successful,
by the iPad.
UNLEARNING CURVE
DEFINITIONS
“a process through which learners discard knowledge,”
“the aim of unlearning is to make way for new responses and mental
maps”
“acquiring information that leads to subtracting something (an obsolete

strategy, for example) from an organization’s existing store of
knowledge.”
UNLEARNING CURVE
THOUGHTS
Argues that when an organization faces crises, it has to

unlearn its obsolete management practices and a quick,
effective way to do so is to remove the top management
team.
 The rationale is that top managers often cling to their

beliefs and perceptions adamantly.
 If managers join an ongoing group for the purpose of

injecting new ideas, the newcomers will likely be
socialized into the group and will adopt the prevailing
structure.
UNLEARNING CURVE
THE UNLEARNING MODELS
Extinction Model The removal of undesirable knowledge from an individual/firm.
Replacement
The dissemination of new knowledge to an Individual/Team.
Model
Removal of inappropriately-behaving individuals from an

Exorcism Model
organization.
Replacement of inappropriately-behaving individuals by a

Salvation Model
mythical manager savior.
UNLEARNING CURVE
UNLEARNING AT BOEING
https://www.youtube.com/watch?v=mHHktDO9Um4
UNLEARNING CURVE
UNLEARNING FRAMEWORK BY JACK ULDRICH
UNLEARNING CURVE
IS IT DIFFICULT TO UNLEARN &

RELEARN ?
http://ajjuliani.com/the-unlearning-cycle-why-we-learn-and-how-its-
changing/
STRATEGY AS STRETCH & LEVERAGE
Google beat
Apple beat Microsoft Microsoft is search CNN beat CBS in
in mobile apps and categorization news and current
market of networked affairs presentation
information
Global competition is not just product versus product or company versus

company.
It is mind-set versus mind-set.
Driven to understand the dynamics of competition, we have learned a lot

about what makes one company more successful than another.
But to find the root of competitiveness : to understand why some companies

create new forms of competitive advantage while others watch and follow, we
must look at strategic mind-sets.
For many managers, "Being Strategic" means pursuing

opportunities that fit the company's resources.
STRATEGIC DECISIONS
Strategic decisions are concerned with the scope of an organization’s
activities.
Strategic decisions try to achieve some advantage for the organization over
competition.
Strategy is a search for fit with the business environment.
Strategy can be seen as creating opportunities by building on an

organization’s resources and competences.
Strategy is affected by the values and expectations of those who have power
in and around the organization.
STRATEGIC FIT
Strategic Fit is the degree to which an organization is matching its resources
and competences with the needs of the external environment.
It is an attempt to identify the opportunities in the environment in which the

organization works.
And then tailoring the strategy of the organization to capitalize on these

opportunities.
However, the strategic intent (or vision) of the organization may not be
limited to the extent of the external environment or the available opportunities.
A small organization shall always remain small if it only tries

to match its resources to the available external environment.
ISSUE WITH STRATEGIC FIT
Slow and Steady wins the race.
Fast and Steady shall always beat the

slow and steady.
A tortoise shall always remain beaten

by a hare if the hare takes the race
seriously, then how did it challenge the
hare to a race and won it?
ANALYSING STRATEGIC INTENT
Strategic intent is used to define and to communicate a sense of direction about the
longer-term strategic position that the firm wishes to achieve through its processes of
objective setting and strategy formulation.
Strategic intent comprises:

a sense of direction – that is, a consistent, and unifying sense of purpose and
pattern that is to be maintained over time.
a sense of discovering – that will provide opportunities to meet new
challenges and explore the unfamiliar.
a sense of destiny – that will create inspiration, and commitment on the part
of managers, employees, and stakeholders.
ANALYSING STRATEGIC INTENT
Strategic intent may imply the use of resource stretch.

This means that :
(i) the present management and use of resources, and
(ii) the current operating capabilities of the enterprise may both be deemed
inadequate to meet the requirements of strategic intent.
(iii) Both will need “stretching” in order to meet the needs specified by that
strategic intent.
VISION MISSION
RESOURCE
GOALS OBJECTIVES STRETCH
PLANS
STRATEGY AS STRETCH
Stretch is the gap between:
1. the knowledge, resources, willpower, capability, and competence currently

available to the enterprise; and
2. enterprise aspirations, and the degree to which its leadership desires to be

more productive, more inventive, or more creative in the way in which the
organization carries out its activities.
DEGREE OF STRETCH REQUIRED…
The degree of stretch that is deemed to be required by the organization is

defined by:
the strategic intent (“excellence”, “world class”, “best value”, or the

ambition to be “number one” in the sector, etc)
the nature of the challenges (PESTEL) to the enterprise that are likely to
face the organization in achieving that strategic intent.
STRATEGY AS LEVERAGE
Hamel and Prahalad suggest that enterprise management “must find a way to
close the gap between resources and aspirations that (the) strategic intent
opens up”.
This is achieved ‘by leveraging resources, by travelling the maximum distance

down the road to leadership, using the least possible amount of fuel.
The goal is to challenge managers to become more ingenious both in

multiplying the impact of the firm’s resource base and enlarging it’
RESOURCES ASPIRATIONS
STRATEGIC INTENT
STRATEGY AS LEVERAGE
An enterprise that instead has a excess of ambition and a dearth of resources

will quickly discover that it cannot imitate the advantages of more affluent
competitors.
Such an enterprise may have:
to challenge the “orthodoxy” of the organization, to eliminate inflexible

thinking, and to change established ways of doing things;
creatively to get the most from the limited resources it has;
to proactively create new forms of competitive advantage for itself.
LEVERAGING RESOURCES
Resources can be leveraged, both financial and non-financial, in five basic

ways:
Concentrating them strategically
Accumulating them efficiently
Complementing one resource with another
Conserving them
Recovering them from the market place in the shortest possible time
CONCENTRATING THEM STRATEGICALLY
Komatsu's encircling of Caterpillar.
CNN quest to be the first place people tune in

for Breaking News
Leverage requires a strategic focal point which has been called strategic intent.
In all these cases there was a convergence of the company's managerial and
financial resources and capabilities.
Komatsu focused almost entirely on quality.
ACCUMULATING RESOURCES
Mazda has the ability to develop new products at a fraction

of the time and cost of other car companies.
Sony was one of the first companies to commercialize the

transistor pioneered by AT&T.
As experience comes at a cost, the ability to maximize insights is a critical component
in resource leverage.
It also requires a corporate culture that is willing to challenge long term practices.
Borrowing resources from other companies is another way to accumulate and

leverage resources.
COMPLEMENTING ONE RESOURCE WITH THE OTHER
The Ipad tablet is a larger version of the iPhone.
Sony combines its miniaturized earphone technology and

audio playback to create the Walkman
Blending requires technology, systems thinking and the capacity to optimize complex
technological innovation.
A company must be above to develop, produce and deliver its products.

CONSERVING RESOURCES
Sharp was able to recycle its capabilities in liquid display

calculators for its Flat Screen TV's.
HONDA uses engine technology for motor boat engines
A common saying in Japan is

No technology is abandoned its just reserved for the
future.
TURNAROUND STRATEGY
TURNAROUND STRATEGY
Turnaround is of considerable importance to Strategic Management.

 It is the process of “how firms move away from deterioration in
performance to enduring success”.
A Turnaround occurs when “a firms perseveres through an existence-

threatening performance decline & ends the threat with a combination of :
1. Strategies
2. Systems
3. Skills & Capabilities
…and achieves sustainable performance recovery.
ELEMENTS OF TURNAROUND
STRATEGY
CRISIS STABILISATION
MANAGEMENT CHANGES
GAINING STAKEHOLDER SUPPORT
CLARIFYING TARGET MARKETS
RE-FOCUSSING
ANALYSIS BASED RESTRUCTURING
 PRIORITISATION OF CRITICAL IMPROVEMENT AREAS
STRATEGY
CRISIS STABILISATION
1. The aim is to regain control.
2. Short term focus on Cost Reduction and/or Revenue Increase.
3. Important is the speed at which they are carried out.
MANAGEMENT CHANGES
1. Change in Management required at the TOP level.
2. Includes a new Chairman, Board Members, CEO for Marketing, Sales &
Finance departments.
3. Required because problems started with the old team & the shareholders
held them responsible.
4. New Team brings in different approaches.
STRATEGY
GAINING STAKEHOLDER SUPPORT
1. Due to decline, there is a lack of information flow to stakeholders.
2. In a turnaround situation, key stakeholders should be clearly informed.
3. Clear assessment of stakeholders also help. (Stakeholder Mapping)
CLARIFYING TARGET MARKETS

1. Ensure clarity on Market segments that generate cash & profits. (BCG
Matrix).
2. Reconceptualise & reorient itself to the market.
STRATEGY
REFOCUSSING
1. Clarifying target markets gives an opportunity to discontinue
products/services that are either not target to the markets & eat up
management time.
ANALYSIS BASED RESTRUCTURING

1. Option of Restructuring the business.
2. Financial, Organizational or Portfolio restructuring.
TURNAROUND SUCCESSES
The Case: Revenues and profits had stagnated in the early 2000s
The Strategy: Restructured Thermax into six core businesses.
Brought in professional top management.
The Case: Competition from new Asian rivals had pushed
Whirlpool into the red.
The Strategy: Boosted employee morale.
Focused on strengths such as people and product innovation.
The Case: Idea faced pressure from stiff competition and a tough
regulatory environment
The Strategy: Built Network capacity, expanded nationwide,
improved customer service.
The Case: HUL faced pricing pressure in 2008 and had to make its
brands competitive.
The Strategy: Focused on consumers. Invested in processes and
technology. Controlled costs.
TURNAROUND PROCESS
RESPONSE OUTCOME
DECLINE TRANSITION
INITIATION
SUCCESS
FAILURE
NADIR INDETERMINATE
TURNAROUND PROCESS
First – Declining performance is the trigger for Turnaround.
Second – Turnaround involves a series of activities.
Third – A Turnaround is undertaken with a definite purpose.
Fourth – Turnaround activities continue for a number of years.

STAGES OF A TURNAROUND
PROCESS
TURNAROUND PROCESS
DECLINE
RESPONSE INITIATION
TRANSITION
OUTCOME
PROCESS
DECLINE
There are two theoretical perspective that reason for the decline of the firm:
Suggests that Macro or External factors are responsible for
K-EXTINCTION decline.
According to this perspective, as the firm is part of an industry,
decline in industry will cause firm’s decline.
The decline in firm is due to reduction of resources within the

R-EXTINCTION firm, irrespective of external environment.
However, both internal & external factors will contribute to the
deterioration of financial performance of the firm.
PROCESS
DECLINE
The magnitude of decline depends on whether it externally or internally
induced.
Necessary to identify the various factors that contribute to each type of
decline.
Also necessary to identify the sources of intervention that trigger action.
Usually more than one source of intervention can be identified in a
turnaround situation.
PROCESS
RESPONSE INITIATION
Turnaround response can be categorized into: Strategic & Operating
responses.
 Strategic response include changing or adjusting the businesses the

firm is currently involved in.
Some of the changes include : Diversification or Vertical Integration
Operating response focus on the way the firm conduct its businesses.
These include short-run tactics aimed at cost cutting & revenue
generation.
PROCESS
TRANSITION
According to strategists “a substantial amount of time has to pass before
the results of the turnaround strategists show”.
It took FORD four years to introduce its

successful Taurus line in response to its
declining market share.
According to some significant researchers, on an average, performance

improvement takes place after around 7 years.
PROCESS
OUTCOME
This stage involves determining whether a turnaround has been
accomplished or not.
A cut off point of performance measure can be used to determine the stage.
TURNAROUND SUCCESS
TURNAROUND SUCCESS
Chrysler Corporation’s decline started in yearly 1970’s.

It’s market share in US came down from 16% in 1970 to 9% in 1979.
In 1978, GM & Ford sold 5.4 million & 2.6 million cars, but Chrysler could only sell about 1.2
million cars.
It recorded a loss of $ 1 Billion in 1979, the biggest in US corporate history.
INTERNAL FACTORS EXTERNAL FACTORS
Inefficiency of The Top Management
Lacked understanding of Strategic direction.

Excessive Government regulation.
Poorly conceived overseas expansion. Recession.
Participation in used-car business.

35 VP’s
TURNAROUND SUCCESS
In Response Initiation Stage, Chrysler made changes at both strategic & operational
level.
It divested its Tank Operation to raise cash.
 Closed down two of its plants in Michigan.
It sold all the dealership real estate it owned.
To reduce fixed cost, it lowered the salary of it’s Top Executives.
TURNAROUND SUCCESS
The key events in the Transition Stage are:

Declared to re-pay the government-backed loan amounting to $ 1.5 billion by 1983.
Over a period of next 3 years, removed 33 Vice Presidents.
There were massive lay-off in other levels also.
In 1979 – 80, 15000 employees were laid off saving Chrysler $ 500 million in annual
costs.
This stage was also marked by cooperation & communication among employees.
Employees were made to convince on pay cuts.
Lee Iacocca visited every single plant & interacted with supervisors.
By taking prompt & decisive steps, Chrysler gained new

commitments from its key stakeholders. (Suppliers, Dealers)
TURNAROUND SUCCESS
The Outcome of the transition was seen in improved performance

measure.
By 1982, signs of a healthy Chrysler could be seen.
At the end of 1982, the firm generated a modest profit.
By 1983, made an operating profit of $ 925 million.
By 1983 stock price had increased from $16 to $ 35.
The company paid of its entire loan i.e $ 1.5 billion in 1983
Chrysler’s success shows they have achieved a

Turnaround Success.
NEED FOR TURNAROUND
Most large organizations are implementing turnaround plan to face

the current business downturn.
In an economy that is unpredictable & constantly contracting, CEO
have two alternatives to maintain profitability levels:
DENOMINATOR NUMERATOR
FOCUSSED FOCUSSED
 Reduce head count & Increase profitability
Investment. by improving
 Sell Assets. productivity.
 More of a “Belt-
Tightening” Program.
TURNAROUND : REVENUE
GENERATION & COST REDUCTION
STRATEGIC LEADERSHIP DURING
TURNAROUND
BUISNESS PROCESS
RE-ENGINEERING
BUSINESS PROCESS RE-ENGINEERING
CHALLENGES FOR A FIRM

 Business involves so many obstacles.
 Firm’s need a superb product.
 Firm’s must market it to potential customers.
 Firm’s need to meet the demands of the evolving society and growing
customers.
Firm’s must rethink how business works in order to

improve customer service, cut operational costs, and become
a world-class competitor.
BUISNESS PROCESS RE-ENGINEERING
WHAT IS BPR…?
“BPR is the fundamental rethinking & radical redesign of business
processes to achieve improvements in critical measures of
performance, such as cost, quality, service, and speed.”
“The concept of BPR is to rethink and break down existing

business processes & allows a company to reduce costs & improve
productivity through newer, more efficient processes”
“The analysis and redesign of workflows within a enterprise in

order to optimize end-to-end processes and automate non-value-
added tasks”
BUISNESS PROCESS RE-ENGINEERING
IMPACT OF BPR
PILLARS OF BPR
RETHINK
REDESIGN
REDUCE COSTS
IMPROVE PRODUCTIVITY
OPTIMISE
AUTOMATE
HOW BPR WAS FORMED?
Michael Hammer (1990), a former Professor of Computer Science

at MIT, published the article “Reengineering Work: Don’t
Automate, Obliterate” in the Harvard Business Review.
HOW BPR WAS FORMED?
 Most of the work being done by businesses do not add any value
for customers.
 And this work should be removed, not accelerated through
automation.
 He proposed that companies should reconsider their inability to
satisfy customer needs and reengineer their processes.
Hammer affirms that with BPR, businesses:

1. Will add more value to customers
2. Accelerate their processes
3. Focus only on what matters
OBJECTIVE OF BPR
HOW HAS BPR FARED…?
 Within three years of Hammer’s proposal, BPR gained wide

acceptance, and about 60% of the Fortune 500 companies have either
reengineered their process or were about to do so.
 Today, many companies have adopted it and seen higher productivity,
more competitiveness, and a larger customer base.
PRINCIPLES OF BPR
The principles of BPR as suggested by Hammer are:
1.Organize around outcomes, not tasks.
2.Identify critical processes in an organization.
3.Prioritize processes in a redesign urgency order.
4.Integrate information processing. (Interdepartmental coordination)
5.Link activities that are parallel in the workflow, instead of just
integrating their results. (Quality insights during Training)
6.Make performance the ultimate decision point and build control into
the process.
7.Get information once and at the source.
WHEN TO APPLY BPR…?
A Customer ordered goods from a particular company, but after some

time, he still hasn’t received his order.
He begins worrying and calls the company to ask WHY…?
WHEN TO APPLY BPR…?
RESPONSE WITHOUT A BPR RESPONSE WITH A BPR
FREQUENT CALL TRANSFER
ACCOUNTS DEPARTMENT
LOGISTICS DEPARTMENT
PRODUCTION DEPARTMENT
Our Relationship Manager will
CUSTOMER SERVICES get in touch and we will resolve
DEPARTMENT the issue within 24 Hrs…
ADVANTAGES OF BPR
CUSTOMER
FOCUS
Provide your customers a better service.
The speed at which your business operates quadruples. Impacts higher

SPEED
average cycle time.
COMPRESSION Cut major tasks of cost and capital throughout the value chain
The company can develop a mechanism that makes it aware, able to spot the
FLEXIBILITY
weak points, and adapt to new market requirements.
QUALITY Processes, not necessarily just individuals, affect quality levels.
INNOVATION The company innovates new processes.
PRODUCTIVITY BPR drastically improves your effectiveness and efficiency.

PRE & POST BPR STAGES
FROM CONVENTIONAL TO BPR
FUNCTIONAL DEPARTMENTS PROCESS TEAMS
SIMPLE TASKS (DIVISION OF LABOUR) EMPOWERED EMPLOYEES
CONTROLLED PEOPLE (BY MANAGEMENT) MULTIDIMENSIONAL WORK
TRAINING OF EMPLOYEES EDUCATION OF EMPLOYEES
COMPENSATION FOR SKILL & TIME SPENT COMPENSATION FOR RESULTS
INCREMENT BASED ON PROMOTION & SENIORITY LOW PAY + PERFORMANCE BONUS
ADVANACMENT BASED ON ABILITY ADVANACEMENT BASED ON PERFORMANCE
PROTECTIVE ORGANISATIONAL CULTURE PRODUCTIVE ORGANISATIONAL STRUCTURE
MANAGERS SUPERVISE & CONTROL MANAGERS COACH & ADVICE
HIERARCHICAL ORG STRUCTURE FLAT STRUCTURE
EXECUTIVES AS SCOREKEEPERS EXECUTIVES AS RESPONSIBLE LEADERS
SEPARATION OF DUTIES & FUNCTIONS CROSS-FUCNTIONAL TEAMS
LINEAR & SEQUENTIAL PROCESSESS PARALLEL PROCESSES
MASS PRODUCTION MASS CUSTOMISATION
INITIATING PROCESS RE-ENGINEERING
INITIATING PROCESS RE-ENGINEERING
SUCCESS WITH BPR
In 1994, a major restructuring exercise was initiated as part of a

BPR program.
M&M introduced a new organizational model, in which various
divisions and companies were regrouped into six distinct clusters
of related businesses, each headed by a president.
Maruti Suzuki decided to find out what the non-value adding

processes were and how to boost efficiency, it, along with Ernst &
Young, came up with an online tool called "Controls Manage" as
part of BPR. It provided cost savings and improved turnaround
time.
SUCCESS WITH BPR
When the Godrej Group realized it could gain from

synergies in its three FMCG companies, it set up a
separate FMCG Portfolio Cell , as part of the BPR.
At Spencer, it was a clear case of a massive ramp-up in
operations. Going from an area of 2.5 lakh square feet
to 15 lakh sq ft (from 52 to 400 stores) meant that the
older systems were no longer adequate. As part of
BPR, the company introduced an automatic
replenishment system, which prevented stock-outs at
stores.
GOOD TO KNOW…!!!
Russian arms maker

Kalashnikov, the brand best
known for the AK-47
machine gun, on Thursday
presented its new electric car
inspired by a rare 1970s
model, saying the new
technology will rival Elon
Musk's Tesla.
Kalashnikov’s Concern has

long been trying to expand its
brand, recently launching
lines of clothing and other
civilian merchandise ranging
from umbrellas to mobile
phone covers.
GOOD TO KNOW…!!!
REVERSE ENGINEERING
CONCEPT
Engineering is the profession involved in designing, manufacturing,
constructing, and maintaining of products, systems, and structures.
Forward Engineering is the traditional process of moving from high-level

abstractions and logical designs to the physical implementation of a system.
In some situations, there may be a physical part without any technical details,
such as drawings, or without engineering data, such as thermal and electrical
properties.
Reverse Engineering is the process of duplicating an existing component,

subassembly, or product, without the aid of drawings, documentation, or
computer model.
REVERSE ENGINEERING
CONCEPT
Reverse Engineering (RE) is the process of taking something apart and
analyzing its workings in detail.
The study can be for a :
a device
a software program
or a process
The intention is to construct a new device or program/process that

does the same thing without actually copying anything from the
original.
REVERSE ENGINEERING
CONCEPT
Reverse engineering can be viewed as the process of analyzing a system to:
Identify the system's/process components and their interrelationships.

Create representations of the system in another form or a higher level of
abstraction.
Create the physical representation of that system
REVERSE ENGINEERING
REVERSE ENGINEERING IN PRACTICE
Reverse engineering is very common in such diverse fields as:
1. software engineering,
2. entertainment,
3. automotive,
4. consumer products,
5. microchips,
6. chemicals,
7. electronics,
8. mechanical designs.
REVERSE ENGINEERING
When a new machine comes to market, competing manufacturers may buy
one machine and disassemble it to learn how it was built and how it works.
A chemical company may use reverse engineering to defeat a patent on a

competitor's manufacturing process.
In civil engineering, bridge and building designs are copied from past
successes so there will be less chance of failure.
In software engineering, good source code is often a variation of other good
source code.
REVERSE ENGINEERING
Another reason for reverse engineering is to compress product development
time.
In the intensely competitive global market, manufacturers are constantly

seeking new ways to shorten lead-times to market a new product.
Rapid Product Development (RPD) refers to recently developed

technologies and techniques that assist manufacturers and designers in meeting
the demands of reduced product development time.
REVERSE ENGINEERING
ADVANTAGE
The knowledge gained through the reverse-engineering process can
then be applied to the design of similar products.
Capitalizing on successes and learning from the shortcomings of

existing designs is the objective of reverse engineering.
Reverse Engineering (R&D) is a specific problem-solving

approach that is used as a Business Strategy to prepare devices/process
systems for the marketplace.
REVERSE ENGINEERING
REASONS FOR REVERSE ENGINEERING
1. The original manufacturer of a product no longer produces a product.

2. There is inadequate documentation of the original design.
3. The original manufacturer no longer exists, but a customer needs the product.
4. The original design documentation has been lost or never existed.
5. Some unnecessary features of a product need to be designed out.
6. To strengthen the good features of a product based on long-term usage of the
product
7. To analyze the good and bad features of competitors' product
8. To explore new avenues to improve product performance and features
9. To gain competitive benchmarking methods to understand competitor's
products and develop better products.
REVERSE ENGINEERING
EXAMPLE
REVERSE ENGINEERING
REVERSE ENGINEERING PROCESS

PREDICTION
OBSERVATION
DISASSEMBLE
ANNALYSE
TEST
DOCUMENT
REVERSE ENGINEERING
PREDICTION
1. What is the purpose of this product?

2. How does it work?
3. What market was it designed to appeal to?
4. List some of the design objectives for the product.
5. List some of the constraints that may have influenced the design.
BACK
REVERSE ENGINEERING
OBSERVATION
1. How do you think it works?

2. How does it meet design objectives (overall)?
3. Why is it designed the way it is?
BACK
REVERSE ENGINEERING
DISASSEMBLE
1. How does it work?

2. How is it made? On a lighter
3. How many parts? note…through…!!!
4. How many moving parts?
5. Any surprises?
BACK
REVERSE ENGINEERING
ANNALYSE
1. Carefully examine and analyze subsystems (i.e. structural, mechanical, and

electrical).
2. Develop sketches that include measurements and notes on components, system
design, safety, and controls.
BACK
REVERSE ENGINEERING
TEST
1. Carefully reassemble the product.

2. Operate the device and record observations about its performance in terms of
functionality (operational and ergonomic) and projected durability.
BACK
REVERSE ENGINEERING
DOCUMENTATION
1. Inferred design goals.

2. Inferred constraints.
3. Design (functionality, form (geometry), and materials)
4. Schematic diagrams
5. Lists (materials, components, critical components, flaws, successes, etc.)
6. Identify any refinements that might enhance the product’s usefulness.
7. Upgrades and changes
BACK
BENCHMARKING
DEFINITION
Benchmarking is a strategy tool used to compare the performance of the

business processes and products with the best performances of other
companies inside and outside the industry.
Benchmarking is the search for industry best

practices that lead to superior performance.
BENCHMARKING
HISTORY OF BENCHMARKING
 During 1800’s, comparisons were used by the companies.
 It was restricted to Product Quality & Feature comparison.
 Such comparisons were scarcely used & was not considered to be a
valuable Management Tool.
 Then in 1980 – 1990, Xerox introduced the process benchmarking
technique.
 This type of comparison proved very beneficial and Xerox.
 AT&T and other companies began comparing the performance of
their processes to the best standards in the industry.
BENCHMARKING
HISTORY OF BENCHMARKING
Improving company’s performance is the most important goal of

benchmarking.
BENCHMARKING
USE OF BENCHMARKING TOOL
1. TO REVEAL SUCCESSFUL BUSINESS PROCESSES.

By observing and scrutinizing benchmarking companies you can identify the
processes, skills or competences that contribute to organization’s success and then
apply the same practices to your own company.
2. TO FACILITATE KNOWLEDGE SHARING.

The knowledge acquired about other businesses can be easily transferred to your own
organization.
3. TO GAIN COMPETITIVE ADVANTAGE.

The company can gain a competitive advantage if it applies the best practices from
other industries to its own industry.
BENCHMARKING
POPULARITY OF BENCHMARKING TOOL
Although, the satisfaction of the tool is high, the usage of it has declined
since the heights in 1999. Still, benchmarking remained the 4th top
used tool by businesses in the world in 2013
BENCHMARKING
BENCHMARKING VS COMPETITOR RESEARCH
BENCHMARKING COMPETITOR RESEARCH

Focus on Best Practices Focus on Performance Measures.
Strives for continuous improvement Bandage or quick fix
Partnering to share information Considered corporate spying by some
Needed to maintain a competitive edge Simply a “nice to have”
Adapting based on customer needs after Attempting to mirror another
examination of the best company/process
BENCHMARKING
BENCHMARKING
TYPES OF BENCHMARKING
STRATEGIC BENCHMARKING.
 Used to identify the best way to compete in the market.
 Here, the firm identifies the winning strategies (usually outside their
own industry) that successful companies use and apply them to their
own strategic process.
 It is also common to compare the strategic goals in order to spot new
strategic choices.
BENCHMARKING
PERFORMANCE BENCHMARKING.
It is concerned with comparing your company’s products and services.
It mainly focuses on : It can measure anything that has
1. product and service quality, the measurable metrics, including
2. features, processes.
3. price, Performance benchmarking
4. speed, determines how strong the
5. reliability, products and services are compared
6. design and customer satisfaction. to your competition.
BENCHMARKING
PROCESS BENCHMARKING.
 It requires to look at other companies that engage in similar activities and
to identify the best practices that can be applied to your own processes in
order to improve them.
 Process benchmarking is a separate type of benchmarking, but it usually
derives from performance benchmarking.
 This is because companies first identify the weak competing points of their
products or services and then focus on the key processes to eliminate those
weaknesses.
BENCHMARKING
Financial
Inclusion
Food Safety &

Packaging
90% of the
Customer Calls
to be answered.
BENCHMARKING
APPROACHES TO BENCHMARKING
INTERNAL BENCHMARKING.
Related to large organizations, which operate in different geographic
locations or manage many products and services.
Here, same functions and processes are usually performed by different
teams, business units or divisions. (SBU’s)
This often results in processes performed very well in one division but
poorly in another.
It is used to compare the work of separate teams, units or divisions to

identify the ones that are performing better and share the knowledge
throughout the company to other teams to achieve higher performance.
BENCHMARKING
EXTERNAL OR COMPETITIVE BENCHMARKING.
Competitive benchmarking refers to a process when a company compares
itself with the competitors inside its industry.
Whereas external benchmarking looks both inside and outside the industry
to find the best practices, including competitive benchmarking.
BENCHMARKING
FUNCTIONAL BENCHMARKING.
Managers of functional departments find it useful to analyze how well their
functional area performs compared to functional areas of other companies.
It is quite easy to identify the best marketing, finance, human resource or
operations departments, in other companies, that excel in what they do and to
apply their practices to your own functional area.
The companies can look at a wide range of unrelated organizations and can
improve the whole functional area.
BENCHMARKING
FUNCTIONAL BENCHMARKING.
Managers of functional departments find it useful to analyze how well their
functional area performs compared to functional areas of other companies.
It is quite easy to identify the best marketing, finance, human resource or
operations departments, in other companies, that excel in what they do and to
apply their practices to your own functional area.
The companies can look at a wide range of unrelated organizations and can
improve the whole functional area.
BENCHMARKING
ADVANTAGES
Easy to understand and use.
If done properly, it’s a low cost activity that offers huge gains.
Brings innovative ideas to the company.
Provides you with insight of how other companies organize their operations
and processes.
Increases the awareness of your costs and level of performance compared to
your rivals.
Facilitates cooperation between teams, units and divisions.
BENCHMARKING
DIS-ADVANTAGES
You need to find a benchmarking partner.
It is sometimes impossible to assign a metric to measure a process.
You might need to hire a consultant.
If your organization is not experienced at it, the initial costs could be huge.
Managers often resist the changes that are required to improve the
performance.
Some of best practices won’t be applicable to your whole organization.
BENCHMARKING
BENCHMARKING WHEEL
Plan. Assemble a team. Clearly define what you want

to compare and assign metrics to it.
Find. Identify benchmarking partners or sources of

information, where you’ll be able to collect the
information.
Collect. Choose the methods to collect the information

and gather the data for the metrics you defined.
Analyze. Compare the metrics and identify the gap in

performance between your company and the
organization observed.
Improve. Implement the changes to your products,

services, processes or strategy.
COMPETING FOR THE FUTURE
BEYOND RESTRUCTURING & RE-ENGINEERING
Will your company survive the changes that

may strike your industry in the next five to
ten years?
The answer depends on whose view of the

future is driving your agenda:
yours or your competitors.
Are you a LEADER or a FOLLOWER…?
1. Which customers does your company serve today - and which will it
serve in the future?
2. Who are your competitors today - and who will they be in the
future?
3. Which capabilities make your firm unique today - and which will
make it unique in the future?
If firms don’t have detailed answers to the “future” part of

these questions,
or
if your “future” and “today” answers are similar, your
company can’t expect to remain a market leader.
POINTS TO PONDER
Ask yourself:
1. Do senior managers in my company have a clear and shared understanding
of how the industry may be different ten years from now?
2. Is my company’s point of view about the future unique among competitors?
These are not rhetorical questions.

Start scoring your company….
BEYOND RESTRUCTURING
The painful experience in many companies in recent years reflect the failure of
one-time industry leaders to keep up with the accelerating pace of industry
change.
These companies were run by managers, not leaders, or by maintenance

engineers, not architects.
Restructuring and Reengineering is occupying the mind-space of Senior

Managers and not the Future.
Although both are important & legitimate, they will not help in building
tomorrow’s industries.
Any company that is a bystander (Managing Denominator) on the road to

the future will become progressively less attuned to industry realities.
Such a discrepancy between the pace of industrial change and the pace of
company change gives rise to the need for organizational transformation.
When a competitiveness problem can no longer be ignored, most executives

pick up a knife and begin the painful work of restructuring.
The goal is to carve away layers of corporate fat and amputate

underperforming businesses.
Not surprisingly, shareholders give companies marching orders: “Make this

company lean and mean” “Make the assets sweat” “Get back to basics.”
Managers know that raising net income is likely to be harder than cutting
assets and head count.
To increase the numerator :

1. top management must have a sense of where new opportunities lie,
2. must be able to anticipate changing customer needs,
3. must have invested in building new competencies.
 So under intense pressure for a quick ROI improvement, executives reach

for the lever that will bring the fastest, surest result: the denominator.
But, time and again it has been proved that:
Restructuring seldom results in fundamental business improvements.

At best, it buys time.
One study of 16 large U.S. companies with at least three years of

restructuring experience found that while restructuring usually did
raise a company’s share price, such improvement was almost always
temporary.
BEYOND RE-ENGINEERING
 Restructuring is correcting the mistakes of the past, and not

creating the markets for the future.
 Recognizing that restructuring is a dead end, smart companies move
on to re-engineering.
 The difference between restructuring and reengineering is that the
latter offers at least the hope of getting better as well as getting
leaner.
 For many companies reengineering is more about catching up with
relevant insights followed by the competitor.
FOR EXAMPLE:
US & German automakers are catching up with Japanese rivals on
quality and cost.
 Supplier networks have been reconstituted
 Product-development processes redesigned
 Manufacturing processes reengineered.
 Almost, top managers agenda is dominated by :

1. quality,
2. time-to-market, (From design to launch of the product)
3. customer responsiveness.
 While such agenda’s are prerequisites for survival, they are hardly a
testimony to management foresight.
 Authors argue that, these are competitor imitation camouflaged as
“adaptiveness” & are preemptive strategies to delay saturation.
 During 1980s, Xerox lost market share to Canon and Sharp.

 Xerox benchmarked its competitors and reengineered its processes.
 By the early 1990s, the company became a successful example of how to reduce
costs, improve quality, and satisfy customers.
But amid all the talk of the new “American Samurai,” two issues were overlooked.
1. First, although Xerox halted the erosion of its market share, it has not fully
recaptured share lost to its Japanese competitors : Canon remains one of the
largest copier manufacturers in the world.
2. Second, despite pioneering research in laser printing, networking, and the Laptop
Computer, Xerox has not created any substantial new businesses outside its
copier core.
BASIS OF MARKET LEADERSHIP : TODAY & TOMORROW
“Many managers describe their companies as “market leaders.”

But market leadership today certainly doesn’t equal market
leadership tomorrow…”
CREATING THE FUTURE
Organizational transformation must be driven by a point of view about

the future of the industry:
How do we want this industry to be shaped in five or ten years?
What must we do to ensure that the industry evolves in a way
that is maximally advantageous for us?
What skills and capabilities must we begin building now if we are
to occupy the industry high ground in the future?
How should we organize for opportunities within the current
business units and divisions?
CREATING THE FUTURE
Developing a point of view about the future should be

an ongoing project sustained by continuous debate
within a company, not a massive one-time effort.
STRATEGIC ALLIANCES
CONCEPT
The Strategic Alliance is a cooperative agreement between two

companies that agree to share resources to pursue the common set of
goals but remain independent after the formation of the alliance.
STRATEGIC ALLIANCES
GENERIC MOTIVES FOR STRATEGIC ALLIANCES
 Enables firms to design new products, minimize cost, enter new markets and
generate revenue.
 It enables the transfer of technology and further organizational learning.
 Companies that wish to expand their geographic reach take the Strategic
Alliance route.
BENEFITS
 Strategic Alliance can be a great source of strength in these changing times.

 They open avenues to new market opportunities.
 They improve a firm’s strategic position in the market significantly.
STRATEGIC ALLIANCES
STRATEGIC ALLIANCE TYPES
The strategists Yoshino and Rangan have classified the strategic alliance
based on two dimensions:
Extent of organizational interaction.
Conflict potential among the alliance partners.
Through this classification, the strategists try to explain two things to the
alliance partners:
1. The extent to which the partners must interact to have the alliance work
effectively.
2. Understand the potential of conflict that may arise out of being
competitors in the market.
STRATEGIC ALLIANCES
STRATEGIC ALLIANCES
PROCOMPETITIVE ALLIANCES:
1. It is characterized by low interaction and low conflict.
2. Such alliances offer the benefits of vertical integration, i.e. a relationship

between the manufacturer and its suppliers or distributors.
3. Both parties gain advantage without the firms actually investing the
resources in the manufacturing firm or distributing the semi-finished or
finished goods.
General Motors' and Hitachi's

working together to develop an electronic car.
STRATEGIC ALLIANCES
NONCOMPETITIVE ALLIANCES:
Such alliances are characterized by high interaction and low conflict.
The noncompetitive alliances are formed between the companies that operate
in the same industry but do not consider each other as rivals.
Their business operations do not coincide and are quite distinctive due to
which the feeling of competitiveness does not emerge.
Often, the companies that have expanded geographically within the industry
adopt the noncompetitive alliance.
STRATEGIC ALLIANCES
NONCOMPETITIVE ALLIANCES:
Are jointly developing a

small car that both will sell.
Tata-Fiat dealer network to sell both Tata and

Fiat branded cars, along with service and
sales of spare parts, in 11 cities across India..
STRATEGIC ALLIANCES
COMPETITIVE ALLIANCES:
These alliances are characterized by high interaction and high conflict.
Here, two competing firms that perceive each other as rivals come together
to form an alliance.
Intense interaction between the two is necessary.
Often, the foreign companies operating in India forms a competitive alliance
with the local rival companies for specific purposes.
Motorola and Toshiba, which

jointly plan to manufacture
microprocessors in Japan.
STRATEGIC ALLIANCES
PRE-COMPETITIVE ALLIANCES:
It is characterized by low interaction and high conflict.
Such partnership brings two firms from different, most often unrelated
industries to work towards a specific activity.
Activities such as:
1. such as new product development,
2. new technology development,
3. creating awareness among the potential customers about the use of
new product or idea.
The joint R&D activities and advertising campaigns are the examples of a
precompetitive alliance.
STRATEGIC ALLIANCES
GoPro and Red Bull are joining forces on a

multi-year, global partnership that includes
content production, distribution, cross-
promotion and product innovation. GoPro
will become Red Bull’s exclusive provider of
point-of-view imaging technology for
capturing immersive footage of Red Bull’s
media productions and events.
https://blog.hubspot.com/marketing/best-
cobranding-partnerships
STRATEGIC ALLIANCES
MAKING ALLIANCE WORK
PARTNER SELECTION
A strategic partner helps the firm achieve its strategic goals such as:
1. Access to Market
2. Sharing costs & risks of NPD
3. Gaining access to core competency
 A good partner shares the vision of the firm for the purpose of the alliance.
 EXAMPLE : Fallout between GM & Daewoo Motors.
 An ideal partner will not exploit the alliance for selfish ends.
STRATEGIC ALLIANCES
MAKING ALLIANCE WORK
ALLIANCE STRUCTURE
Percentage of Ownership.
Technology & Machinery to be contributed by each partner.
Division & sharing of activity
Staffing, location & control.
The alliance should be structured in such a way that, the firm’s risk of giving too
much away to the partner is reduced to an acceptable level.
The alliance should be designed in such a way that it is difficult to transfer

technology that is not meant to be transferred.
STRATEGIC ALLIANCES
ADVANTAGES
Facilitate Entry into Foreign Market.

To share costs & risks associated with NPD.
Companies can combine skills & assets that neither can create.
Indus Towers Limited has been promoted under a joint

venture between Bharti Infratel Limited, Vodafone India and
Aditya Birla Telecom (rendering telecom services under the
brand name Idea), to render passive infrastructure services to
telecom service providers.
JOINT VENTURE
DEFINTION
“A commercial enterprise undertaken jointly by two or more parties

which otherwise retain their distinct identities”
“A joint venture (JV) is a business entity created by two or more

parties, generally characterized by shared ownership, shared returns and
risks, and shared governance”
JOINT VENTURE
ELEMENTS OF JV
1. The number of parties.

2. The geographic, product, technology and value-chain scope within
which the JV will operate.
3. The contributions of the parties.
4. The economic arrangements, post-deal (sharing of profits)
5. Governance and control.
6. Talent/HR Model : will the JV have its own staff on own payroll vs.
seconded staff from the parent companies.
7. Contractual arrangements with the parent companies for inputs,
outputs or services.
8. Exit provisions.
JOINT VENTURE
REASON FOR A JV
 To access new market.

 To gain scale of efficiencies by combining assets and operations
 To share risk for major investments and projects.
 They help in more direct investment, training, management assistance
and technology transfer.
 Joint ventures can be equity and non-equity based.
 EJV : are contractual arrangements with equal partners.
 NEJV : are ones where one partner has a greater stake.
 In come countries, a JV is the only way for a foreign company to set
up operations. Motorola and Toshiba, which
jointly plan to manufacture
microprocessors in Japan.
JOINT VENTURE
RATIONAL FOR A JV
 To augment financial & technical ability to enter a particular line of

business.
 To share technological knowledge and management skills.
 To diversify the risk involved in the project.
 To obtain distribution channels or raw materials supply.
 To gain economy of scale.
 To extend business by sharing investments.
JOINT VENTURE
EXAMPLE
JOINT VENTURE
EXAMPLE
 Both sides will explore further strengthening of partnership in high-

speed railways.
 BHEL plans to piggyback on India’s urban challenge, with 600
million Indians expected to live in cities and towns by 2030.
 BHEL has already started work on becoming end-to-end solutions
provider and has a technology collaboration agreement with KHI
for the manufacture of stainless steel coaches and bogies for metros.
 BHEL has an MoU which will have to be translated to a technology
collaboration agreement.
 A bullet train requires specialized aluminum coaches which the state-
run firm plans to manufacture at its Jhansi (Uttar Pradesh) or Bhopal
facility (Madhya Pradesh).
JOINT VENTURE
JV FAILURES
According to independent studies conducted by

McKinsey & Company, 70% of the Joint Ventures
are either disbanded or fall short of expectations.
JOINT VENTURE
REASONS FOR JV FAILURES
 The contract may be too inflexible to operate in future.

 The above reason can impact for further adjustments in future.
 Lack of commitment and time in implementing the project.
 Inability or failure to develop the desired technology.
 Lack of adequate pre-planning for the joint ventures.
 Failure reach on agreement on alternative approaches to achieve
objectives.
 Refusal by managers of a company to share knowledge with others.
JOINT VENTURE
EXAMPLE OF JV FAILURE
 M&M and Renault dissolved their JV in 2010 - poor response to

the no-frills LOGAN, failed to enthuse the market, saw the two
partners blame each other for the dismal performance.
 M&M renamed the 'LOGAN' sedan as 'VERITO', thus
completely dropping the French automaker Renault's badge from
the entry level sedan.
JOINT VENTURE
INTERNATIONAL JOINT VENTURE
 The need to reduce the risk of expansion in a foreign country acts in

favour of a JV.
 The main reason for international JV are :
1. Learning a partner company’s skill.
2. Upgrading and improving skill.
JOINT VENTURE
JOINT VENTURE LIFE CYCLE
1. Market Penetration
2. Leverage Resource
3. Risk Analysis
4. Cost Analysis
5. Analysis of Strategic drivers for future.
JOINT VENTURE
JOINT VENTURE LIFE CYCLE
JOINT VENTURE
LICENSING & FRANCHISING
1. Licensing and Franchising are two options for Business growth.

2. Franchising allows people to replicate the business in another
location.
3. Licensing permits people to distribute a firms products for a fee.
4. They provide different ways to expand a firm’s business.
5. Both also come with downfalls that should be considered before
entering into an agreement.
Both expose a firms products or services to a wider market and have

the potential of providing more revenue for the master firm.
JOINT VENTURE
LICENSING & FRANCHISING
JOINT VENTURE
CONCEPT
Licensing and Franchising can be done both as a business owner and as

someone looking to enter a specific market.
You may want to license the use Franchising allows you to

of your brand to another expand your business in places
business in order to gain more that you may not otherwise be
exposure for your company and able to reach.
earn revenue on the side.
JOINT VENTURE
LICENSING
1. Licensing a product allow someone else to use your intellectual

property, logo or design in exchange for fees.
2. These fees can include a lump sum, ongoing royalties or a

percentage of the licensee’s sales.
3. You are still associated with the product and have some control
over how it is used.
JOINT VENTURE
LICENSING TYPES
NON-EXCLUSIVE EXCLUSIVE
A non-exclusive license An exclusive license gives
allows you to enter into the licensee sole use of your
licensing agreements with brand or product, or the right
multiple parties, even if they to exclusive use in a defined
are competitors. market.
You will be paid more by
the licensee for an exclusive
licensing agreement.
JOINT VENTURE
LICENSING - DEFINITION
A licensing agreement is a legal contract between two parties, known as the

licensor and the licensee.
In a typical licensing agreement, the licensor grants the licensee the right to
produce and sell goods, apply a brand name or trademark, or use patented
technology owned by the licensor.
JOINT VENTURE
LICENSING
1. For example, you may license a T-shirt manufacturer to use your logo
and branding only for their summer line during certain months of the
year.
2. The T-shirt manufacturer licenses your name and logo and agrees to
your terms to help them sell their own products.
JOINT VENTURE
LICENSING
1. Companies strive to create brands, characters and celebrities they

can license to other businesses.
2. Licensing helps them :
 increase their market share,
 drives consumer preference and loyalty for their artists
 Brands, maximizes exposure and increases sales revenue.
3. Licensing provides the channel to do so without getting into
businesses that are outside of their core operations.
JOINT VENTURE
LICENSING
 For example, Hannah Montana is a character/entertainer, not a

greeting card publisher or clothing retailer.
 But companies such as Walmart are, and consequently entering into
licensing deals to sell items with that character on them.
JOINT VENTURE
LICENSING
 When a business enters into a licensing agreement to use a celebrity,

well-known characters or property, they become a licensee.
 A licensing agreement is structured to stipulate the terms and fees
allowing the use of names and images on products.
 Using the images of TV characters, such as Hannah Montana or
Chota Bheem, to sell products requires a license.
 A computer manufacturer can obtain a license from Microsoft to
include the company's software with their products, thus becoming a
licensee.
JOINT VENTURE
FRANCHISING
The franchisor owns the company, trademarks, and products, but gives
the right to the franchisee to run the franchise location, in return for an
agreed-upon fee.
Jubilant FoodWorks Limited (the Company) &

its subsidiary operates Domino’s Pizza brand
with the exclusive rights for India, Nepal,
Bangladesh and Sri Lanka.
As on June 30, 2018, Domino’s Pizza India
operates 1,144 Restaurants covering 268 cities
across the Country.
JOINT VENTURE
FRANCHISING
 Franchising is a type of licensing that goes beyond use of a specific

product or branding and encompasses your business model.
 Franchising allows another business to replicate your entire

company and business model in exchange for fees.
JOINT VENTURE
FRANCHISING
 The fees generally include a flat amount to join the franchise, along
with ongoing royalties and other fees, including those for marketing
or purchasing supplies and products through the franchisor.
 Generally, franchising is done by existing businesses with successful

business models that want to expand their markets.
 Some examples of successful businesses that regularly expand using

franchising include KFC, Subway and McDonalds.
JOINT VENTURE
FRANCHISING ADVANTAGES
 By opening a franchise, a business owner gains:

 instant brand and name recognition,
 employee training
 advertising and marketing support.
 As a result, franchisees often stand a better chance of becoming

profitable, increasing the odds for business survival.
JOINT VENTURE
FRANCHISING ADVANTAGES
 Big businesses are often both a franchisor and a licensee.
 For example, McDonald’s is a franchisor, selling franchise rights to

qualified individuals to open McDonald's restaurants.
 McDonald’s is often a licensee to gain usage rights to images and

characters from hit movies or television shows, such as Spiderman
and Chota Bheem.
JOINT VENTURE
LICENSING & FRANCHISING BENEFITS
LICENSING FRANCHISING
BRAND STRENGTH.
License to other reputable businesses that align RISK ALLOCATION.
with your brand, you strengthen your brand The franchisee assumes the risks associated with
message and position. It also increases opening and operating a store instead of the
awareness of your brand, growing its value. burden being on you.
NEW CUSTOMERS. OWNER INCENTIVE.
Partnering with businesses in other industries While an employee of your company may burn
can mean a lot of new, long-term customers for out or be unmotivated, a franchisee who
you. purchases and operates his own business wants
These are people who may have never been to see it succeed. A successful franchise means
exposed to your product before. more revenue and brand loyalty for you.
VARIETY OF MARKETS. VOLUME DISCOUNTS.
With licensing, you can explore a variety of When you buy items in bulk, you generally get
markets that you may not have considered. them for a better price. With a franchised
It’s a good way to do customer research to see business, you’ll need the same items for all of
what works and to get creative with the type of them to create uniformity, so suppliers may
companies who want to license your brand. offer volume discounts or rebates.
JOINT VENTURE
LICENSING & FRANCHISING AGREEMENTS
 Franchising agreements are generally exclusive to avoid competition

with another.
 That doesn’t prevent two franchises from opening in the same city,
necessarily, but the distance has to be great enough to support two
of the same stores.
 Because a franchisee is responsible for bringing in revenue and

paying royalties to the franchisor, it wants to ensure he has enough
market share to make his investment worthwhile.
JOINT VENTURE
LICENSING & FRANCHISING - DISADVANTAGES
 Firms can’t control how the business they grant the license to
operates.
 Firms give up control of daily decisions.
 If the franchisee makes poor business decisions or has inefficient
staff, it can negatively impact the reputation of your entire business.
 Firms earn only a percentage of what they could make if they
opened their own store.
 Since your brand is at stake, make sure that you license only to
reputable and reliable companies.
GOOD TO KNOW…!
BUSINESS 4.0
 Industry 4.0 is a name given to the current trend of automation and

data exchange in manufacturing technologies.
 It includes
1. cyber-physical systems,
2. Internet of Things,
3. Cloud Computing
4. Cognitive Computing.
 Industry 4.0 fosters what has been called a "smart factory".
GOOD TO KNOW…!
BUSINESS 4.0
GOOD TO KNOW…!
EVOLUTION OF INDUSTRIAL REVOLUTION
https://www.youtube.com/watch?v=3TpqyP7L94k
https://www.youtube.com/watch?v=J9ba557fXcI
GOOD TO KNOW…!
DESIGN PRINCIPLE OF BUSINESS 4.0
Interoperability:
The ability of machines, devices, sensors, and people to connect and
communicate with each other via the Internet of Things (IoT).
Information Transparency:
The ability of information systems to create a virtual copy of the
physical world by enriching digital plant models with sensor data.
This requires the aggregation of raw sensor data to higher-value

contextual information. (Sentiment Analysis).
GOOD TO KNOW…!
Technical Assistance:
First, the ability of assistance systems to support humans by
aggregating and visualizing information comprehensively for making
informed decisions and solving urgent problems on short notice.
Second, the ability of cyber physical systems to physically support

humans by conducting a range of tasks that are unpleasant, too
exhausting, or unsafe for their human co-workers.
GOOD TO KNOW…!
Decentralized decisions:
The ability of cyber physical systems to make decisions on their own
and to perform their tasks as autonomously as possible.
Only in the case of exceptions, interferences, or conflicting goals, are

tasks delegated to a higher level.
MERGER & ACQUSITIONS
THE CONCEPT
Mergers and acquisitions (M&A) are defined as consolidation of

companies.
Mergers is the combination of two companies to form one.
Acquisitions is one company taken over by the other.
With M&A, two separate companies together create more

value compared to being on an individual stand.
MERGER
In a merger, a new company is formed by two companies.

Post-merger, these separately owned firms become a single entity and
are jointly owned.
During the process of merger, the stocks of these companies are
surrendered and the new company’s stocks are issued.
Generally, companies of similar sizes undergo the process of merger.
In Merger, A + B = C
ACQUSITION
In acquisition, one company is taken over by another company and in

the process, a single owner is established.
Generally, a stronger and a bigger company takes over a smaller and
a less powerful one.
The bigger company runs the whole establishment with its identity
and the smaller company has to lose its existence.
In contrast to the merger, shares of the acquired company are not
surrendered at all.
These shares continue to be traded by the general public in the stock
market.
In Acquisition, A + B = A
ACQUSITION
When Tata Steel paid out a hefty $13.1 billion to acquire Corus in
2007, Chairman Ratan Tata described it as a defining moment for the
company.
It made Tata Steel’s capacity grow three times, put the company on the
global map, and spread the risks of the business of making steel
MECHANISM
Mergers & Acquisitions can take place:

1. by purchasing assets
2. by purchasing common shares
3. by exchange of shares for assets
4. by exchanging shares for shares
MECHANISM
Mergers & Acquisitions can take place:

1. by purchasing assets
2. by purchasing common shares
3. by exchange of shares for assets
4. by exchanging shares for shares
MECHANISM
Mergers can also be classified into three types from an economic

perspective depending on the business combinations, whether in the
same industry or not, into :
1. Horizontal ( two firms are in the same industry)

2. Vertical (at different production stages or value chain)
3. Conglomerate (unrelated industries).
REASONS
Financial synergy for lower cost of capital

Improving company’s performance and accelerate growth
Economies of scale
Diversification for higher growth products or markets
To increase market share and positioning giving broader market access
Strategic realignment and technological change
Diversification of risk
IMPORTANT CONSIDERATIONS TO BE MADE
The company must be willing to take the risk and vigilantly make
investments to benefit fully from the merger as the competitors and the
industry take heed quickly.
To reduce and diversify risk, multiple bets must be made, in order to
narrow down to the one that will prove fruitful.
The management of the acquiring firm must learn to be resilient,
patient and be able to adopt to the change owing to ever-changing
business dynamics in the industry.
IMPORTANT CONSIDERATIONS TO BE MADE
The company must be willing to take the risk and vigilantly make
investments to benefit fully from the merger as the competitors and the
industry take heed quickly.
To reduce and diversify risk, multiple bets must be made, in order to
narrow down to the one that will prove fruitful.
The management of the acquiring firm must learn to be resilient,
patient and be able to adopt to the change owing to ever-changing
business dynamics in the industry.
STAGES INVOLVED IN M&A
Phase 1: Pre-acquisition review
Phase 2: Search and screen targets
Phase 3: Investigate and valuation of the target
Phase 4: Acquire the target through negotiations
Phase 5:Post merger integration

Phase 1: Pre-acquisition review
The phase includes self assessment of the acquiring company with

regards to the need for M&A, ascertain the valuation and chalk out the
growth plan through the target.
Phase 2: Search and screen targets
This includes searching for the possible apt takeover candidates.

This process is mainly to scan for a good strategic fit for the acquiring
company.
Phase 3: Investigate and valuation of the target
Once the appropriate company is shortlisted through primary

screening, detailed analysis of the target company has to be done.
This is also referred to as due diligence.
Phase 4: Acquire the target through negotiations
Once the target company is selected, the next step is to start

negotiations to come to consensus for a negotiated merger.
This brings both the companies to agree mutually to the deal for the
long term working of the M&A.
Phase 5:Post merger integration
If all the above steps fall in place, there is a formal announcement of
the agreement of merger by both the participating companies.
REASONS FOR FAILURE OF M&A
1. Poor Strategic Fit: Wide difference in objectives and strategies of

the company
2. Poorly Managed Integration: Integration is often poorly managed
without planning and design. This leads to failure of implementation
3. Incomplete Due Diligence: Inadequate due diligence can lead to
failure of M&A as it is the crux of the entire strategy
4. Overly Optimistic: Too optimistic projections about the target
company leads to bad decisions and failure of the M&A.
Breakdown in merger discussions between IBM and

Sun Microsystems happened due to disagreement over
price and other terms.
M&A IN INDIA
M&A CASE DISCUSSION
CONCLUSION
M&A’s are considered as important change agents and are a critical

component of any business strategy.
With businesses evolving, only the most innovative and nimble can
survive.
It is an important strategic call for a business to opt for any
arrangements of M&A.
On a lighter note M&A is like an arranged marriage, partners will

take time to understand, mingle, but will end up giving positive
results most of the times…!!!
That’s it….Folks…!!!
No “Can we move forward to the next slide…!!!
Thank You…

Strategic Management Ibs

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Introduction To…

1. Managing activities internal to the firm is part of the responsibilities.

 Economic & Social Conditions

IMMEDIATE EXTERNAL ENVIRONMENT

1. For profits, firms need to perfect processes that respond to:

2. Analyze company’s internal conditions and capabilities.

3. Assess the external environment carefully.

4. Match company’s resources with External Environment.

5. Identify desirable option(s) vis-à-vis Vision & Mission.

8.Implement strategic choices by budgeted resource allocation.

9.Evaluate the success of the strategic process.

The 4 important tasks indicate STRATEGIC MANAGEMENT involves:

A strategy reflects a company’s awareness of how, when and where it should

Apple identified the important Apple introduced iPhone with a tie-up

It earned from content sales through

 In strategic management process, strategic thinking involves the generation and

STRATEGIC MANAGEMENT OPERATIONAL MANAGEMENT

Holistic. Functional, Routinized.

Conceptualization of issues. Techniques, processess, actions.

Creating new directions. Managing existing resources.

Developing New resources Optimizing existing resources

Ambiguos/Uncertain Functionally & Operationally specific

Long term perspective Day-to-Day issues

SBU’S are involved in a single line of Business.

TELECOM & REAL HOSPITALITY & MOBILE

This mode involves systematic gathering of information for situational

It refers to purpose for what organization strives for.

MORE INTERACTIVE FEW IN NUMBER

REALISTIC: Vision must be based on reality to be meaningful for an organization; It

Kotler (1990) defines it as a "description of something (an

It should be realistic

To be globally respected company that provides best of breed software

Tata tea- to be India’s foremost tea based beverage company.

DIFFERENCE B/W VISION AND MISSION

- Focus on value based

Following points should be kept in mind while formulating mission statement:

To achieve our objectives in a environment of fairness, honesty and

1. Achieve market and thought leadership for branded tea in India

The Organize the World’s information and make it universally

Goals : What an organization hopes to accomplish in a future period of time.

Objectives : They state specifically how the goals shall be achieved.

TERMS GOALS OBJECTIVES

Directions for decision making

Objectives should be understandable

STRATEGIC MANAGEMENT PROCESS

STRATEGY EVALUATION & CONTROL

Five years ago, it was struggling to sell CDs and was

But Saregama (HMV), still had a huge repository of

Managers came and went, all acknowledging the

“It’s Disruptive,” – The sales of the jukebox priced at Rs 5,990-

Saregama has finally found a way to sell its repository of

BUILDING PROVIDING SATISFYING

WHICH SATISFIES TAKE ADVANTAGE OF YIELDING PROVIDING NEW

Managers need to make sense of an uncertain world around the organization:

 It is difficult as it encapsulates many different influences.

Understanding this connection is vital to have a Strategic picture of the Organization.

 Consist of broad Environmental factors.

 Group of organization producing the same Product or