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Inter_P6B_SM_Chapter_3_Strategic_Analysis_Internal_Environment.pdf | SM | Study_Material | N/A | [Concept: Theory]
## Activity
Identify and group the below stakeholders in the 4 groups as suggested by Mendelow for an Ecommerce startup.
Ms. Suhasini (CEO), Mango Partners and TRIK Group (Investors), MSME Ministry, Customers from NorthEast India, Sellers from Rajasthan, Jandhan Bank (Lender), and Kumar S and Sharma... | [
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Inter_P6B_SM_Chapter_3_Strategic_Analysis_Internal_Environment.pdf | SM | Study_Material | N/A | [Concept: Theory]
## 3.3 STRATEGIC DRIVERS
An important aspect of internal analysis is assessing the current performance of the business. And in assessing current performance, the strategic drivers consider what differentiates an organisation from its competitors.
It involves analysis of the key markets in which the ... | [
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Inter_P6B_SM_Chapter_3_Strategic_Analysis_Internal_Environment.pdf | SM | Study_Material | N/A | [Concept: Theory]
## 3.3.1 Industry and Markets
In terms of the internal environment, it is very important for an organisation to understand it's relative position in the industry and in the market in which it operates. There are many ways to do this but require analysis and understanding of the environm... | [
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Inter_P6B_SM_Chapter_3_Strategic_Analysis_Internal_Environment.pdf | SM | Study_Material | N/A | [Concept: Theory]
## Is market the same for all businesses?
Market refers to all the buyers and sellers of a particular product/service and so it would be incorrect to say that market is the same for all businesses. Each business has its own set of customers i.e. market and more so, each product within a... | [
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Inter_P6B_SM_Chapter_3_Strategic_Analysis_Internal_Environment.pdf | SM | Study_Material | N/A | [Concept: Theory]
## 3.3.1.1 Analysing Industry and Markets
Industry and market analysis is extremely important to identify one's position as compared to the competitors, who can be of equal size and value, or bigger in size and value or even smaller and newer. A tool used for this is called Strategic Group Mapping.
... | [
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Inter_P6B_SM_Chapter_3_Strategic_Analysis_Internal_Environment.pdf | SM | Study_Material | N/A | [Concept: Theory]
## Strategic Group Mapping
Explanation of Diagram (Strategic Group Mapping)
<!-- image -->
ABC, DEF, GHI, XYZ AND PQR are companies operating in the same industry. Let us assume these all are companies selling Laptops.
Now on the Y-Axis (vertical) is the reputation of the company and on the X-Axis... | [
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Inter_P6B_SM_Chapter_3_Strategic_Analysis_Internal_Environment.pdf | SM | Study_Material | N/A | [Concept: Theory]
## 3.3.2 Customers
Understanding the different types of customers to whom the organisation's products/services are sold or provided, is not only important but also the first step in deciding the product/service. Different customers may have different needs and require different sales models... | [
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Inter_P6B_SM_Chapter_3_Strategic_Analysis_Internal_Environment.pdf | SM | Study_Material | N/A | [Concept: Theory]
## Customer versus Consumer
A simple bifurcation yet extremely important for strategy build up. Consumers are the ones who finally use a product/service, while customers are the buyers of that product. A customer can be a consumer and vice versa. But for strategy teams especially marketi... | [
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Inter_P6B_SM_Chapter_3_Strategic_Analysis_Internal_Environment.pdf | SM | Study_Material | N/A | [Concept: Theory]
## 3.3.3 Product/Services
Products and services are closely linked and interrelated with the markets that the organisation wants to serve. In this component of the strategic drivers' analysis, business identifies the key products/ services that the organisation offers and how those products/services... | [
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Inter_P6B_SM_Chapter_3_Strategic_Analysis_Internal_Environment.pdf | SM | Study_Material | N/A | [Concept: Theory]
## STRATEGIC MANAGEMENT
For a new product, pricing strategies for entering a market need to be designed and for that matter at least three objectives must be kept in mind:
- ♦ Have a customer-centric approach while making a product.
- ♦ Produce sufficient returns through a reasonable margin over cos... | [
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Inter_P6B_SM_Chapter_3_Strategic_Analysis_Internal_Environment.pdf | SM | Study_Material | N/A | [Concept: Theory]
## 3.3.4 Channels
Channels are the distribution system by which an organisation distributes its product or provides its service. To understand the concept of channels let us see some examples of how the following companies distribute their products and services:
- ♦ Lakme - sells... | [
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Inter_P6B_SM_Chapter_3_Strategic_Analysis_Internal_Environment.pdf | SM | Study_Material | N/A | [Concept: Theory]
## ROLE OF RESOURCES AND CAPABILITIES: BUILDING CORE COMPETENCY
An organization may be viewed as an entity endowed with resources and capabilities. These resources and capabilities may be so synergized as to impart distinct competencies that the organization may leverage to its... | [
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Inter_P6B_SM_Chapter_3_Strategic_Analysis_Internal_Environment.pdf | SM | Study_Material | N/A | [Concept: Theory]
## 3.4.1 Criteria for building a Core Competencies (CC)?
Four specific criteria of sustainable competitive advantage that firms can use to determine those capabilities that are core competencies. Capabilities that are valuable, rare, costly to imitate, and non-substitutable are core competen... | [
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Inter_P6B_SM_Chapter_3_Strategic_Analysis_Internal_Environment.pdf | SM | Study_Material | N/A | [Concept: Theory]
## 3.5 COMBINING EXTERNAL AND INTERNAL ANALYSIS (SWOT ANALYSIS)
SWOT analysis is the analysis of a business's strengths, weaknesses, opportunities and threats. The primary objective of a SWOT analysis is to help organizations develop a full awareness of all the factors (external as wel... | [
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Inter_P6B_SM_Chapter_3_Strategic_Analysis_Internal_Environment.pdf | SM | Study_Material | N/A | [Concept: Theory]
## SWOT Analysis Example
Let us understand with an example of a law firm - what could its SWOT analysis help understand about its business.
| STRENGTH ... | [
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Inter_P6B_SM_Chapter_3_Strategic_Analysis_Internal_Environment.pdf | SM | Study_Material | N/A | [Concept: Theory]
## SWOT Analysis for Internal or External Environment?
SWOT stands for Strengths, Weaknesses, Opportunities and Threats. Internal analysis is more focused on understanding the existing structure and competencies of the business, thus highlighting the Strengths and Weaknesses, while External ... | [
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Inter_P6B_SM_Chapter_3_Strategic_Analysis_Internal_Environment.pdf | SM | Study_Material | N/A | [Concept: Theory]
## COMPETITIVE ADVANTAGE: USING MICHAEL PORTER'S GENERIC STRATEGIES
Why do some companies succeed while others fail?
Why did Hindustan Motors do so well for several decades?
How did Apple return from near obsolescence in the late 1990s and become the world leader and a dominant technology company o... | [
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Inter_P6B_SM_Chapter_3_Strategic_Analysis_Internal_Environment.pdf | SM | Study_Material | N/A | [Concept: Theory]
## 3.6.1 Sustainability of Competitive Advantage
The sustainability of competitive advantage and a firm's ability to earn profits from its competitive advantage depends upon four major characteristics of resources and capabilities:
- i. Durability: The period over which a competitive adva... | [
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Inter_P6B_SM_Chapter_3_Strategic_Analysis_Internal_Environment.pdf | SM | Study_Material | N/A | [Concept: Theory]
## 3.6.2 Michael Porter's Generic Strategies
According to Porter, strategies allow organizations to gain competitive advantage from three different bases: cost leadership, differentiation, and focus. Porter called these base generic strategies. These strategies have been termed generic, because they ... | [
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Inter_P6B_SM_Chapter_3_Strategic_Analysis_Internal_Environment.pdf | SM | Study_Material | N/A | [Concept: Theory]
## 3.6.2.1 Cost Leadership Strategy
It is a low-cost competitive strategy that aims at broad mass market. It requires vigorous pursuit of cost reduction in the areas of procurement, production, storage and distribution of product or service and also economies in overhead costs. Because ... | [
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Inter_P6B_SM_Chapter_3_Strategic_Analysis_Internal_Environment.pdf | SM | Study_Material | N/A | [Concept: Theory]
## Achieving Cost Leadership Strategy
To achieve cost leadership, following actions could be taken:
1. Prompt forecasting of demand of a product or service.
2. Optimum utilization of the resources to achieve cost advantages.
3. Achieving economies of scale; thus, lower per unit cost of product/servi... | [
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Inter_P6B_SM_Chapter_3_Strategic_Analysis_Internal_Environment.pdf | SM | Study_Material | N/A | [Concept: Theory]
## Advantages of Cost Leadership Strategy
A cost leadership strategy may help to remain profitable even with rivalry, new entrants, suppliers' power, substitute products, and buyers' power.
1. Rivalry - Competitors are likely to avoid a price war, since the low-cost firm will continue to ... | [
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Inter_P6B_SM_Chapter_3_Strategic_Analysis_Internal_Environment.pdf | SM | Study_Material | N/A | [Concept: Theory]
## Disadvantages of Cost Leadership Strategy
1. Cost advantage may not last long as competitors may imitate cost reduction techniques.
2. Cost leadership can succeed only if the firm can achieve higher sales volume.
3. Cost leaders tend to keep their costs low by minimizing cost of advertising, marke... | [
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Inter_P6B_SM_Chapter_3_Strategic_Analysis_Internal_Environment.pdf | SM | Study_Material | N/A | [Concept: Theory]
## 3.6.2.2 Differentiation Strategy
This strategy is aimed at broad mass market and involves the creation of a product or service that is perceived by the customers as unique. The uniqueness can be associated with product design, brand image, features, technology, dealer network or customer service. ... | [
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Inter_P6B_SM_Chapter_3_Strategic_Analysis_Internal_Environment.pdf | SM | Study_Material | N/A | [Concept: Theory]
## Basis of Differentiation
There are several bases of differentiation, major being: Product, Pricing and Organization.
- ♦ Product: Innovative products that meet customer needs can be an area where a company has an advantage over competitors. However, the pursuit of a new product... | [
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Inter_P6B_SM_Chapter_3_Strategic_Analysis_Internal_Environment.pdf | SM | Study_Material | N/A | [Concept: Theory]
## Achieving Differentiation Strategy
To achieve differentiation, following strategies could be adopted by an organisation:
1. Offer utility to the customers and match products with their tastes and preferences.
2. Elevate/Improve performance of the product.
3. Offer the high-quality prod... | [
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Inter_P6B_SM_Chapter_3_Strategic_Analysis_Internal_Environment.pdf | SM | Study_Material | N/A | [Concept: Theory]
## Advantages of Differentiation Strategy
A differentiation strategy may help an organisation to remain profitable even with rivalry, new entrants, suppliers' power, substitute products, and buyers' power.
1. Rivalry - Brand loyalty acts as a safeguard against competitors. It means that customers wi... | [
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Inter_P6B_SM_Chapter_3_Strategic_Analysis_Internal_Environment.pdf | SM | Study_Material | N/A | [Concept: Theory]
## Disadvantages of Differentiation Strategy
1. In the long term, uniqueness is difficult to sustain.
2. Charging too high a price for differentiated features may cause the customer to switch-off to another alternative. As we see a shift of iPhone users to other android flagship smart phones.
3. Diff... | [
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Inter_P6B_SM_Chapter_3_Strategic_Analysis_Internal_Environment.pdf | SM | Study_Material | N/A | [Concept: Theory]
## 3.6.2.3 Focus Strategies
A successful focus strategy depends on an industry segment that is of sufficient size, has good growth potential, and is not crucial to the success of other major competitors. Strategies such as market penetration (new product for existing customers) and market ... | [
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-0.013... |
Inter_P6B_SM_Chapter_3_Strategic_Analysis_Internal_Environment.pdf | SM | Study_Material | N/A | [Concept: Theory]
## Achieving Focused Strategy
To achieve focused cost leadership/differentiation, following strategies could be adopted by an organization:
1. Selecting specific niches which are not covered by cost leaders and differentiators.
2. Creating superior skills for catering such niche markets.
3. Gene... | [
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Inter_P6B_SM_Chapter_3_Strategic_Analysis_Internal_Environment.pdf | SM | Study_Material | N/A | [Concept: Theory]
## Advantages of Focused Strategy
1. Premium prices can be charged by the organisations for their focused product/services.
2. Due to the tremendous expertise in the goods and services that the organisations following focus strategy offer, rivals and new entrants may find it diff... | [
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... |
Inter_P6B_SM_Chapter_3_Strategic_Analysis_Internal_Environment.pdf | SM | Study_Material | N/A | [Concept: Theory]
## Disadvantages of Focused Strategy
1. The firms lacking in distinctive competencies may not be able to pursue focus strategy.
2. Due to the limited demand of product/services, costs are high, which can cause problems.
3. In the long run, the niche could disappear or be taken over by larger competit... | [
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-0.003005648264661431... |
Inter_P6B_SM_Chapter_3_Strategic_Analysis_Internal_Environment.pdf | SM | Study_Material | N/A | [Concept: Theory]
## 3.6.2.4 Best-Cost Provider Strategy
The new model of best cost provider strategy is a further development of above three generic strategies. It is directed towards giving customers more value for the money by emphasizing on both, low cost and upscale differences. The objective is to keep costs and... | [
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Inter_P6B_SM_Chapter_3_Strategic_Analysis_Internal_Environment.pdf | SM | Study_Material | N/A | [Concept: Theory]
## Activity for Michael Porter's Generic Strategies
Use the blank space against each business idea to identify which generic strategy is being used;
| Business Idea | Michael Port... | [
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Inter_P6B_SM_Chapter_3_Strategic_Analysis_Internal_Environment.pdf | SM | Study_Material | N/A | [Concept: Theory]
## SUMMARY
The understanding of internal environment becomes more important in current times, as dynamics change, and consumers take lead. For a business, strategising continuously becomes more so important for which it needs tools and access to decision-oriented analysis. Once analysed, ... | [
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Inter_P6B_SM_Chapter_4_Strategic_Choices.pdf | SM | Study_Material | N/A | [Concept: Theory]
## After studying this chapter, you will be able to:
- ♦ Describe and discriminate between strategic choices such as strategic intensification, strategic diversification and strategic exits.
- ♦ Formulate strategic options.
- ♦ Explain the reasons for- relative costs & risks and benefits of ... | [
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Inter_P6B_SM_Chapter_4_Strategic_Choices.pdf | SM | Study_Material | N/A | [Concept: Theory]
## 4.1 INTRODUCTION
Strategies are formulated at different levels of an organization. Strategy formulation involves well thought of decision making and cover actions dealing with the objective of the firm, shareholders and allocation of resources and coordination of strategies of various b... | [
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Inter_P6B_SM_Chapter_4_Strategic_Choices.pdf | SM | Study_Material | N/A | [Concept: Theory]
## 4.2 STRATEGIC CHOICES
Businesses follow different types of strategies to enter the market, to stay relevant and grow in the market. A large number of strategies with different nomenclatures have been employed by different businesses and also suggested by different authors on strategy. Fo... | [
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Inter_P6B_SM_Chapter_4_Strategic_Choices.pdf | SM | Study_Material | N/A | [Concept: Theory]
## 4.2.1. Stability Strategy
One of the important goals of a business enterprise is stability strategy is to stabilise- it may be opted to safeguard its existing interests and strengths, to pursue well established and tested objectives, to continue in the chosen business path... | [
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Inter_P6B_SM_Chapter_4_Strategic_Choices.pdf | SM | Study_Material | N/A | [Concept: Theory]
## 4.2.1.1. Characteristics of Stability Strategy
- ♦ A firm opting for stability strategy stays with the same business, same product-market posture and functions, maintaining same level of effort as at present.
- ♦ The endeavour is to enhance functional efficiencies in an incremental way,... | [
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Inter_P6B_SM_Chapter_4_Strategic_Choices.pdf | SM | Study_Material | N/A | [Concept: Theory]
## 4.2.1.2 Major Reasons for Stability Strategy
- ♦ A product has reached the maturity stage of the product life cycle.
- ♦ The staff feels comfortable with the status quo as it involves less changes and less risks.
- ♦ It is opted when the environment in which an organisation is operating... | [
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Inter_P6B_SM_Chapter_4_Strategic_Choices.pdf | SM | Study_Material | N/A | [Concept: Theory]
## Why don't Startups aim for stability?
A startup is an entrepreneurial venture in the early stages of ideation and development, generally created for solving real-life problems through technology. For it, the most important factors are speed and agility, because of it being in a nas... | [
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... |
Inter_P6B_SM_Chapter_4_Strategic_Choices.pdf | SM | Study_Material | N/A | [Concept: Theory]
## 4.2.2. Growth/Expansion Strategy
Growth/Expansion strategy is implemented by redefining the business by enlarging the scope of business and substantially increasing investment in the business. It is a strategy that can be equated with dynamism, vigour, promise and success. It is often characteri... | [
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Inter_P6B_SM_Chapter_4_Strategic_Choices.pdf | SM | Study_Material | N/A | [Concept: Theory]
## 4.2.2.1 Characteristics of Growth/Expansion Strategy
- ♦ Expansion strategy involves a redefinition of the business of the corporation.
- ♦ Expansion strategy is the opposite of stability strategy. While in stability strategy, rewards are limited, in expansion strategy they are very high... | [
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Inter_P6B_SM_Chapter_4_Strategic_Choices.pdf | SM | Study_Material | N/A | [Concept: Theory]
## 4.2.2.2 Major Reasons for Growth/Expansion Strategy
- ♦ It may become imperative when environment demands increase in pace of activity.
- ♦ Strategists may feel more satisfied with the prospects of growth from expansion; chief executives may take pride in presiding over organizations pe... | [
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Inter_P6B_SM_Chapter_4_Strategic_Choices.pdf | SM | Study_Material | N/A | [Concept: Theory]
## I Expansion or growth through Intensification
Expansion or growth through intensification means that the organisation tries to grow internally by intensifying its operations either by market penetration or market development or by product development. It tries to cash on its internal ca... | [
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Inter_P6B_SM_Chapter_4_Strategic_Choices.pdf | SM | Study_Material | N/A | [Concept: Theory]
## II Expansion or Growth through Diversification
When a firm tries to grow and expand by diversifying into various products or fields, it is called growth by diversification. This is also an internal growth strategy. Innovative and creative firms always look for opportunities and challen... | [
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Inter_P6B_SM_Chapter_4_Strategic_Choices.pdf | SM | Study_Material | N/A | [Concept: Theory]
## STRATEGIC MANAGEMENT
no affinity with its present product line and which is meant for a new class of customers different from the firm's existing customer groups, the process is known as conglomerate diversification. Both the technology of the product and the market are different fr... | [
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Inter_P6B_SM_Chapter_4_Strategic_Choices.pdf | SM | Study_Material | N/A | [Concept: Theory]
## STRATEGIC CHOICE
Concentric diversification is generally understood in two directions, vertical and horizontal integration;
- (a) Vertically Integrated Diversification: In vertically integrated diversification, firms opt to engage in businesses that are related to the existing business of the fir... | [
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Inter_P6B_SM_Chapter_4_Strategic_Choices.pdf | SM | Study_Material | N/A | [Concept: Theory]
## STRATEGIC MANAGEMENT
chain. They can also integrate with the firms producing complementary products or by-products or by taking over competitors' products. The following figure explains the horizontal diversification, wherein, textile mill 1 acquires textile mill 2 and 3 as well.
<!-- image -->
... | [
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Inter_P6B_SM_Chapter_4_Strategic_Choices.pdf | SM | Study_Material | N/A | [Concept: Theory]
## Is it really worth expanding so much to diversify a business into unrelated products?
Despite of its complexity, conglomerate diversification (diversification into unrelated business) financially makes a lot of sense. It creates access a new pool of customers, thereby expanding its custo... | [
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Inter_P6B_SM_Chapter_4_Strategic_Choices.pdf | SM | Study_Material | N/A | [Concept: Theory]
## STRATEGIC CHOICE
circumvents the time, risks and skills involved in screening internal growth opportunities, seizing them and building up the necessary resource base required to materialise growth. Organizations consider merger and acquisition proposals in a systematic manner, so that th... | [
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Inter_P6B_SM_Chapter_4_Strategic_Choices.pdf | SM | Study_Material | N/A | [Concept: Theory]
## (a) Horizontal Merger
Horizontal merger is a combination of firms engaged in the same industry. It is a merger with a direct competitor. The principal objective behind this type of merger is to achieve economies of scale in the production process by shedding duplication of installations and functi... | [
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Inter_P6B_SM_Chapter_4_Strategic_Choices.pdf | SM | Study_Material | N/A | [Concept: Theory]
## (b) Vertical Merger
It is a merger of two organizations that are operating in the same industry but at different stages of production or distribution system. This often leads to increased synergies with the merging firms. If an organization takes over its supplier/producers of raw material, then i... | [
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Inter_P6B_SM_Chapter_4_Strategic_Choices.pdf | SM | Study_Material | N/A | [Concept: Theory]
## (c) Co-generic Merger
In Co-generic merger two or more merging organizations are associated in some way or the other related to the production processes, business markets, or basic required technologies. Such merger includes the extension of the product line or acquiring components that are re... | [
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Inter_P6B_SM_Chapter_4_Strategic_Choices.pdf | SM | Study_Material | N/A | [Concept: Theory]
## (d) Conglomerate Merger
Conglomerate mergers are the combination of organizations that are unrelated to each other. There are no linkages with respect to customer groups, customer functions and technologies being used. There are no important common factors between the organizations in ... | [
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Inter_P6B_SM_Chapter_4_Strategic_Choices.pdf | SM | Study_Material | N/A | [Concept: Theory]
## II. Expansion through Strategic Alliance
A strategic alliance is a relationship between two or more businesses that enables each to achieve certain strategic objectives which neither would be able to achieve on its own. The strategic partners maintain their status as independent and sep... | [
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Inter_P6B_SM_Chapter_4_Strategic_Choices.pdf | SM | Study_Material | N/A | [Concept: Theory]
## Advantages of Strategic Alliance
Strategic alliance usually is only formed if they provide an advantage to all the parties in the alliance. These advantages can be broadly categorised as follows:
1. Organizational: Strategic alliance helps to learn necessary skills and obtain certain... | [
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Inter_P6B_SM_Chapter_4_Strategic_Choices.pdf | SM | Study_Material | N/A | [Concept: Theory]
## Disadvantages of Strategic Alliance
Strategic alliances do come with some disadvantages and risks. The major disadvantage is sharing. Strategic alliances require sharing of resources and profits, and also sharing knowledge and skills that otherwise organisations may not like to sh... | [
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Inter_P6B_SM_Chapter_4_Strategic_Choices.pdf | SM | Study_Material | N/A | [Concept: Theory]
## 4.3 STRATEGIC EXITS
Strategic Exits are followed when an organization substantially reduces the scope of its activity. This is done through an attempt to find out the problem areas and diagnose the causes of the problems. Next, steps are taken to solve the problems. These steps result in different... | [
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Inter_P6B_SM_Chapter_4_Strategic_Choices.pdf | SM | Study_Material | N/A | [Concept: Theory]
## I. Turnaround Strategy
Retrenchment may be done either internally or externally. For internal retrenchment to take place, emphasis is laid on improving internal efficiency, known as turnaround strategy.
There are certain conditions or indicators which point out that a turnaro... | [
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Inter_P6B_SM_Chapter_4_Strategic_Choices.pdf | SM | Study_Material | N/A | [Concept: Theory]
## Action Plan for Turnaround
For turnaround strategies to be successful, it is imperative to focus on the short and long-term financing needs as well as on strategic issues. A workable action plan for turnaround would involve the following stages:
- ♦ Stage One - Assessment of current problems : Th... | [
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Inter_P6B_SM_Chapter_4_Strategic_Choices.pdf | SM | Study_Material | N/A | [Concept: Theory]
## STRATEGIC CHOICE
The important elements of turnaround strate gy are as follows:
- ⮚ Changes in the top management
- ⮚ Initial credibility-building actions
- ⮚ Neutralising external pressures
- ⮚ Identifying quick payoff activities
- ⮚ Quick cost reductions
- ⮚ Revenue generation
- ⮚ Asset liquida... | [
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-0.0104... |
Inter_P6B_SM_Chapter_4_Strategic_Choices.pdf | SM | Study_Material | N/A | [Concept: Theory]
## II. Divestment Strategy
Divestment strategy involves the sale or liquidation of a portion of business, or a major division, profit centre or SBU. Divestment is usually a part of rehabilitation or restructuring plan and is adopted when a turnaround has been attempted but has proved to be unsuccessf... | [
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Inter_P6B_SM_Chapter_4_Strategic_Choices.pdf | SM | Study_Material | N/A | [Concept: Theory]
## Characteristics of Divestment Strategy
- ♦ This strategy involves divestment of some of the activities in a given business of the firm or sell-out of some of the businesses as such.
- ♦ Divestment is to be viewed as an integral part of corporate strategy without any stigma attached. | [
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Inter_P6B_SM_Chapter_4_Strategic_Choices.pdf | SM | Study_Material | N/A | [Concept: Theory]
## Major Reasons for Retrenchment/Turnaround Strategy
- ♦ The management no longer wishes to remain in business either partly or wholly due to continuous losses and unviability.
- ♦ The management feels that business could be made viable by divesting some of the activities or liquidation of... | [
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Inter_P6B_SM_Chapter_4_Strategic_Choices.pdf | SM | Study_Material | N/A | [Concept: Theory]
## Is Turnaround strategy only relevant to loss making businesses?
Interestingly, turnaround strategy is relevant when a company is experiencing a period of poor performance. Poor performance does not always mean losses, it may also mean lower than expected growth, no future clarity, or ev... | [
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Inter_P6B_SM_Chapter_4_Strategic_Choices.pdf | SM | Study_Material | N/A | [Concept: Theory]
## 4.4 STRATEGIC OPTIONS
Strategic options need to be carved out from existing products and innovations that are happening in the industry. There are a set of models that help strategists in taking strategic decisions with regard to individual products or businesses in a firm's portfolio. Primarily... | [
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Inter_P6B_SM_Chapter_4_Strategic_Choices.pdf | SM | Study_Material | N/A | [Concept: Theory]
## 4.4.1 Ansoff's Product Market Growth Matrix
The Ansoff's product market growth matrix (proposed by Igor Ansoff) is a useful tool that helps businesses decide their product and market growth strategy. With the use of this matrix a business can get a fair idea about how its growth depends upon it m... | [
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Inter_P6B_SM_Chapter_4_Strategic_Choices.pdf | SM | Study_Material | N/A | [Concept: Theory]
## STRATEGIC CHOICE
business to develop modified products which can appeal to existing markets. For example, Gucci, a luxury clothing brand, selling casual clothing in European markets, is product development.
Diversification: Diversification refers to a growth strategy where a business mark... | [
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0.012859... |
Inter_P6B_SM_Chapter_4_Strategic_Choices.pdf | SM | Study_Material | N/A | [Concept: Theory]
## 4.4.2 ADL Matrix
The ADL matrix (derived its name from Arthur D. Little) is a portfolio analysis technique that is based on product life cycle. The approach forms a twodimensional matrix based on stage of industry maturity and the firms competitive position, environmental... | [
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-0.02... |
Inter_P6B_SM_Chapter_4_Strategic_Choices.pdf | SM | Study_Material | N/A | [Concept: Theory]
## It is four by five matrix as follows:
| Stage of industry maturity - Arthur D. Little (ADL) Matrix | Stage of industry maturity - Arthur D. Little (ADL) Matrix | Stage of industry maturity - Arthur D. Little (ADL) Matrix | Stage of industry maturity - Arthur D. Little (AD... | [
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-0... |
Inter_P6B_SM_Chapter_4_Strategic_Choices.pdf | SM | Study_Material | N/A | [Concept: Theory]
## STRATEGIC CHOICE
The competitive position of a firm is based on an assessment of the following criteria:
Dominant: This is a comparatively rare position and in many cases is attributable either to a monopoly or a strong and protected technological leadership.
Strong: By virtue of th... | [
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0.0130... |
Inter_P6B_SM_Chapter_4_Strategic_Choices.pdf | SM | Study_Material | N/A | [Concept: Theory]
## 4.4.3 Boston Consulting Group (BCG) Growth-Share Matrix
The BCG growth-share matrix is the simplest way to portray a corporation's portfolio of investments. Growth share matrix also known for its cow and dog metaphors is popularly used for resource allocation in a diversifie... | [
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-0.01... |
Inter_P6B_SM_Chapter_4_Strategic_Choices.pdf | SM | Study_Material | N/A | [Concept: Theory]
## STRATEGIC CHOICE
- ♦ Dogs are low-growth, low-share businesses and products. They may generate enough cash to maintain themselves, but do not have much future. Sometimes they may need cash to survive. Dogs should be minimised by means of divestment or liquidation. | [
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0.055378954857587814,
-0.017422067001461983,
0.0503... |
Inter_P6B_SM_Chapter_4_Strategic_Choices.pdf | SM | Study_Material | N/A | [Concept: Theory]
## 4.4.3.1 BCG Matrix: Post Identification Strategies
After a firm, has classified its products or SBUs, it must determine what role each will play in the future. The four strategies that can be pursued are:
1. Build: Here the objective is to increase market share, even by forgoing shortterm earning... | [
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0.00... |
Inter_P6B_SM_Chapter_4_Strategic_Choices.pdf | SM | Study_Material | N/A | [Concept: Theory]
## Is BCG Matrix really helpful?
The growth-share matrix has done much to help strategic planning; however, there are some problems and limitations with the technique. BCG matrix can be difficult, time-consuming, and costly to implement. Management may find it difficult to define SBUs and m... | [
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Inter_P6B_SM_Chapter_4_Strategic_Choices.pdf | SM | Study_Material | N/A | [Concept: Theory]
## Identify if the following is a Star or a Cash Cow?
SO Pharma Ltd. developed a new age medicine which cures cough in 3 hours with an investment of INR 80 crores in R&D. They named it 'COUFIX'. Coufix needs a lot of marketing spend to create awareness amongst the public and also needs funds to g... | [
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Inter_P6B_SM_Chapter_4_Strategic_Choices.pdf | SM | Study_Material | N/A | [Concept: Theory]
## It is a Star.
Stars are products or SBUs that are growing rapidly. They also need heavy investment to maintain their position and finance their rapid growth potential. They represent best opportunities for expansion.
Just one parameter of market share cannot define the status of an SB... | [
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Inter_P6B_SM_Chapter_4_Strategic_Choices.pdf | SM | Study_Material | N/A | [Concept: Theory]
## 4.4.4General Electric Matrix ['Stop-Light' Strategy Model]
This model has been used by General Electric Company (developed by GE with the assistance of the consulting firm McKinsey and Company). This model is also known as Business Planning Matrix, GE Nine-Cell Matrix and GE Model. The ... | [
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Inter_P6B_SM_Chapter_4_Strategic_Choices.pdf | SM | Study_Material | N/A | [Concept: Theory]
## Understanding the GE Matrix
The vertical axis indicates market attractiveness, and the horizontal axis shows the business strength in the industry . The market attractiveness is measured by a number of factors like:
- ♦ Size of the market.
- ♦ Market growth rate.
- ♦ Industry profitability.
- ♦ C... | [
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Inter_P6B_SM_Chapter_4_Strategic_Choices.pdf | SM | Study_Material | N/A | [Concept: Theory]
## STRATEGIC MANAGEMENT
If a product falls in the green section, the business is at advantageous position. To reap the benefits, the strategic decision can be to expand, to invest and grow. If a product is in the amber or yellow zone, it needs caution and managerial discretion is called for making... | [
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Inter_P6B_SM_Chapter_4_Strategic_Choices.pdf | SM | Study_Material | N/A | [Concept: Theory]
## SUMMARY
Businesses are born out of ideas to solve existing problems with an aim to survive forces of competition and charter a path of constant growth. For a business, having multiple strategic choices for any and every situation is imperative and strategy teams should regularly analyse the possib... | [
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Inter_P6B_SM_Chapter_5_Strategy_Implementation_and_Evaluation.pdf | SM | Study_Material | N/A | [Concept: Theory]
## After studying this chapter, you will be able to:
- ♦ Describe the process of Strategy Management: From Formulation to Implementation
- ♦ Evaluate the salience of strategy implementation.
- ♦ Explain Strategic Change through Digital Transformation
- ♦ Differentiate between Organisation Structure (... | [
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Inter_P6B_SM_Chapter_5_Strategy_Implementation_and_Evaluation.pdf | SM | Study_Material | N/A | [Concept: Theory]
## 5.1 INTRODUCTION
Strategy implementation and evaluation are critical phases of the process of strategic management in an organization. Implementation involves putting the plans and initiatives developed as part of the strategy into action, while evaluation refers to the process ... | [
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Inter_P6B_SM_Chapter_5_Strategy_Implementation_and_Evaluation.pdf | SM | Study_Material | N/A | [Concept: Theory]
## 5.2 STRATEGIC MANAGEMENT PROCESS
The process of developing an organisation's strategy is quite methodical. The organisation first develops a clear vision, mission, values and goals. They then must then discuss and analyse a number of themes to determine which options are most promising.... | [
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Inter_P6B_SM_Chapter_5_Strategy_Implementation_and_Evaluation.pdf | SM | Study_Material | N/A | [Concept: Theory]
## 5.2.1 Stages in Strategic Management
Crafting and executing strategy are the heart and soul of managing a business enterprise. But exactly what is involved in developing a strategy and executing it proficiently? And who besides top management has strategy - formulation execut... | [
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Inter_P6B_SM_Chapter_5_Strategy_Implementation_and_Evaluation.pdf | SM | Study_Material | N/A | [Concept: Theory]
## Stage 1: Strategic Vision, Mission and Objectives
First a company must determine what directional path the company should take and what changes in the company's product - market - customer - technology focus would improve its current market position and its future prospect. Deciding to commit the ... | [
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Inter_P6B_SM_Chapter_5_Strategy_Implementation_and_Evaluation.pdf | SM | Study_Material | N/A | [Concept: Theory]
## Stage 2: Environmental and Organisational Analysis
This stage is the diagnostic phase of strategic analysis. It entails two types of analysis:
1. Environmental scanning
2. Organisational analysis
The external environment of a firm consists of economic, social, technologica... | [
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Inter_P6B_SM_Chapter_5_Strategy_Implementation_and_Evaluation.pdf | SM | Study_Material | N/A | [Concept: Theory]
## Stage 3: Formulating Strategy
The first step in strategy formulation is developing strategic alternatives in the light of organisation strengths and weaknesses, and opportunities and threats in the environment. The second step is the deep analysis of various strategic alternatives for th... | [
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Inter_P6B_SM_Chapter_5_Strategy_Implementation_and_Evaluation.pdf | SM | Study_Material | N/A | [Concept: Theory]
## Stage 4: Implementation of Strategy
Implementation and execution are an operations-oriented activity aimed at shaping the performance of core business activities in a strategy-supportive manner. It is the most demanding and time-consuming part of the strategymanagement ... | [
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... |
Inter_P6B_SM_Chapter_5_Strategy_Implementation_and_Evaluation.pdf | SM | Study_Material | N/A | [Concept: Theory]
## Stage 5: Strategic Evaluation and Control
The final stage of strategic management process - evaluating the company's progress, assessing the impact of new external developments, and making corrective adjustments - is the trigger point for deciding whether to continue or change ... | [
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Inter_P6B_SM_Chapter_5_Strategy_Implementation_and_Evaluation.pdf | SM | Study_Material | N/A | [Concept: Theory]
## Corporate Strategy
Planning entails choosing what has to be done in the future (today, next week, next month, next year, over the next couple of years, etc.) and creating action plans. An essential element of effective management is adequate planning. Choosing a path of action to achieve defined g... | [
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Inter_P6B_SM_Chapter_5_Strategy_Implementation_and_Evaluation.pdf | SM | Study_Material | N/A | [Concept: Theory]
## STRATEGY IMPLEMENTATION AND EVALUATION
- ♦ Strategic planning involves a fact of interactive and overlapping decisions leading to the development of an effective strategy for the firm.
- ♦ Strategic planning determines where an organisation is going over the next year or more and the ways... | [
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... |
Inter_P6B_SM_Chapter_5_Strategy_Implementation_and_Evaluation.pdf | SM | Study_Material | N/A | [Concept: Theory]
## Strategic uncertainty and how to deal with it?
Strategic uncertainty refers to the unpredictability and unpredictability of future events and circumstances that can impact an organization's strategy and goals. It can be driven by factors such as changes in the market, technology, competition, regu... | [
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Inter_P6B_SM_Chapter_5_Strategy_Implementation_and_Evaluation.pdf | SM | Study_Material | N/A | [Concept: Theory]
## 5.2.3 Strategy Implementation
Strategy implementation concerns the managerial exercise of putting a freshly chosen strategy into action. It deals with the managerial exercise of supervising the ongoing pursuit of strategy, making it work, improving the competence with which it is executed... | [
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... |
Inter_P6B_SM_Chapter_5_Strategy_Implementation_and_Evaluation.pdf | SM | Study_Material | N/A | [Concept: Theory]
## Relationship with strategy formulation
Many managers fail to distinguish between strategy formulation and strategy implementation. Yet, it is crucial to realize the difference between the two because they both require very different skills. Also, a company will be successful only when the... | [
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... |
Inter_P6B_SM_Chapter_5_Strategy_Implementation_and_Evaluation.pdf | SM | Study_Material | N/A | [Concept: Theory]
## STRATEGIC MANAGEMENT
It needs to be emphasized that 'strategy' is not synonymous with 'long-term plan' but rather consists of an enterprise's attempts to reach some preferred future state by adapting its competitive position as circumstances change. While a series of strategic moves may be plann... | [
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... |
Inter_P6B_SM_Chapter_5_Strategy_Implementation_and_Evaluation.pdf | SM | Study_Material | N/A | [Concept: Theory]
## Strategic Formulation
Figure: Principal combinations of efficiency and effectiveness
| | Effective | Ineffective |
|-------------|-------------|---------------|
| Efficient | 1 | 2 |
| Inefficient | Thrive | Die |
| | Slowly ... | [
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Inter_P6B_SM_Chapter_5_Strategy_Implementation_and_Evaluation.pdf | SM | Study_Material | N/A | [Concept: Theory]
## Strategy Formulation Vs. Strategy Implementation
| Strategy Formulation | Strategy Implementation |
|---------------------------... | [
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... |
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