Harsh J. Parekh MBA (HR) Self-reading material for Examination (Brief Content) Email Id- [email protected]UNIT - 1 1.1 What Do We Mean By “Strategy” Strategy consists of competitive moves and business approaches that managers are employing to Grow the business Attract and please customers Compete successfully Conduct operations Achieve target levels of organizational performance 1.2 What makes a strategy winner, Importance of Crafting & Executing strategy 1. Tests of a Winning Strategy 1. GOODNESS OF FIT TEST How well does strategy fit the firm’s situation? 2. COMPETITIVE ADVANTAGE TEST Does strategy lead to sustainable competitive advantage? 3. PERFORMANCE TEST Does strategy boost firm performance? Why Crafting and Executing strategy are important tasks? - It provides A prescription for doing business. - A road map to competitive advantage. - A game plan for pleasing customers. - A formula for attaining long-term standout marketplace performance. Good Strategy + Good Strategy Execution = Good Management 1.3 Managerial process of Crafting & Executing strategy The Strategy-Making, Strategy-Executing Process Who Is Involved in Strategy Making? - CEO, Senior Executive, Managers of subsidiaries, Division.
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Harsh J. Parekh MBA (HR)
Self-reading material for Examination (Brief Content)
Cooperative Strategy. A large number of firms today engage in co-operative strategies. A
cooperative strategy is an attempt by a firm to realize its objectives through cooperation with other
firms, in strategic alliances and partnerships (typically joint ventures), rather than through
competition with them.
Following cooperative strategies
1. Mergers - A merger is a combination of two or more organizations in which one acquires the assets and liabilities of the other in exchange for shares or cash, or both the organizations are dissolved, and the assets and liabilities are combined and new stock is issued.
2. Takeovers (or Acquisitions) - The attempt of one firm to acquire ownership or control over another firm against the wishes of the latter’s management. It may be hostile takeover (which are against the wishes of the acquired firm), friendly takeover (mutual consent)
3. Joint ventures - It is a special case of consolidation where ‘two or more companies from a temporary for a specified purpose.
4. Strategic Alliances - “A strategic alliance is a formal agreement between two or more separate companies in which they agree upon to work cooperatively towards some common objective”
FACTORS THAT MAKE AN ALLIANCE “STRATEGIC”
1. It facilitates achievement of an important business objective. 2. It helps build, sustain, or enhance a core competence or competitive advantage.
3. It helps block a competitive threat. 4. It helps remedy an important resource deficiency or competitive weakness.
5. It increases the bargaining power of alliance members over suppliers or buyers. 6. It helps open up important new market opportunities. 7. It mitigates a significant risk to a firm’s business.
4.2 Stability Strategy
Definition: The Stability Strategy is adopted when the organization attempts to maintain its current
position and focuses only on the incremental improvement by merely changing one or more of its
business operations in the perspective of customer groups, customer functions and technology
alternatives, either individually or collectively.
1.No-Change Strategy No-Change Strategy, as the name itself suggests, is the stability
strategy followed when an organization aims at maintaining the present
business definition. Simply, the decision of not doing anything new
and continuing with the existing business operations and the practices
referred to as a no-change strategy.
2. Profit Strategy The Profit Strategy is followed when an organization aims to
Maintain the profit by whatever means possible. Due to lower
profitability, the firm may cut costs, reduce investments, raise prices,
increase productivity or adopt any methods to overcome the temporary
3. shrinking market shares, 4. increasing debt, etc.
Examples: 1. Typewriters, Wooden toys, Normal mobile, landline telephone, Compact Disk (CD), floppy, etc.
Turnaround Strategies
It is done either internally or externally
“Turnaround strategy means backing out, withdrawing or retreating from a decision wrongly taken earlier in order to reverse the process of decline.” Managing Turnaround
● The existing chief executive and management team handle the entire turnaround strategy with the advisory support of a specialist external consultant.
● The existing team withdraws temporarily and an executive consultant or turnaround specialist is employed to do the job.
Approached to turnaround
1. Surgical-tough attitude about the pattern of action followed is roughly the same everywhere. 2. Human- understanding problem, eliciting opinions, adopting a conciliatory attitude and coming to
negotiated settlements. UNIT-5
5.1 Customer Relationship with BLS
A number of firms are becoming skilled in managing its customer's relationship. For Example : Amazon.com
Reach (For Ex. Amazon.com, Facebook)
Richness (Information based exchange with customers)
Affiliation (Facilitating useful interactions with customers)
Striving to achieve lower overall costs than rivals on products that attract a broad
spectrum of buyers.
Broad
Differentiation
Differentiating the firm’s product offering from rivals’ with attributes that appeal
to a broad spectrum of buyers
Focused Low-
Cost
Concentrating on a narrow price-sensitive buyer segment and on costs to offer a
lower-priced product.
Focused
Differentiation
Concentrating on a narrow buyer segment by meeting specific tastes and
requirements of niche members
Best-Cost
Provider
Giving customers more value for the money by offering upscale product attributes
at a lower cost than rivals
5.3. Offensive strategies and Defensive strategies
CHOOSING WHICH RIVALS TO ATTACK
Best Targets for Offensive Attacks
BLUE-OCEAN STRATEGY—A SPECIAL KIND OF OFFENSIVE
A ―blue ocean‖ market space, where the industry has not yet taken shape, with no rivals and wide-
open long-term growth and profit potential for a firm that can create demand for new types of
products.
DEFENSIVE STRATEGIES—PROTECTING MARKET POSITION AND COMPETITIVE
Purposes of Defensive Strategies
1. Lower the firm’s risk of being attacked
2. Weaken the impact of an attack that does occur
3. Influence challengers to aim their efforts at other rivals
5.4. Timing a Company’s Offensive and Defensive Moves, Outsourcing Strategies
TIMING A FIRM’S OFFENSIVE AND DEFENSIVE STRATEGIC MOVES
CONDITIONS THAT LEAD TO FIRST-MOVER ADVANTAGES
THE POTENTIAL FOR LATE-MOVER ADVANTAGES OR FIRST-MOVER
DISADVANTAGES
TO BE A FIRST MOVER OR NOT
OUTSOURCING STRATEGIES: NARROWING THE SCOPE OF OPERATIONS
5.5. Porter’s Diamond of National Competitive Advantages and Strategy option
for entering into foreign market
WHY COMPETING ACROSS NATIONAL BORDERS MAKES STRATEGY-MAKING
MORE COMPLEX
1 Different countries have different home-country advantages in different industries
2 Location-based value chain advantages for certain countries
3 Differences in government policies, tax rates, and economic conditions
4 Currency exchange rate risks
5 Differences in buyer tastes and preferences for products and services
STRATEGIC OPTIONS FOR ENTERING AND COMPETING IN INTERNATIONAL
MARKETS
1. Maintain a national (one-country) production base and export goods to foreign markets.
2. License foreign firms to produce and distribute the firm’s products abroad.
3. Employ an overseas franchising strategy.
4. Establish a wholly-owned subsidiary by either acquiring a foreign company or through a
Greenfield venture.
5. Rely on strategic alliances or joint ventures with foreign companies. EXPORT STRATEGIES
LICENSING AND FRANCHISING STRATEGIES
FOREIGN SUBSIDIARY STRATEGIES
Greenfield Venture
A Greenfield venture is a subsidiary business that is established by setting up the entire
operation from the ground up.
BENEFITS OF ALLIANCE AND JOINT VENTURE STRATEGIES
THE RISKS OF STRATEGIC ALLIANCES WITH FOREIGN PARTNERS
UNIT-6
6.1 Corporate Portfolio analysis
CPA is defined as a set of techniques that help the strategists in taking strategic decisions with regard to individual products or businesses in a firm’s portfolio.
BCG Matrix
1. Stars: Products in high growth markets with high market share.
2. Question marks or Problem Child: Products in high growth markets with low market share.
3. Cash cows: Products in low growth markets with high market share
4. Dogs: These are products with low growth or market share.
GE Nine Cell Matrix - GE nine-box matrix is a strategy tool that offers a systematic approach for
the multi business enterprises to prioritize their investments among the various business units. It is a
framework that evaluates business portfolio and provides further strategic implications.
The green zone suggests you to ‘go ahead’, to grow and build, pushing you through expansion
strategies. Businesses in the green zone attract major investment.
Yellow cautions you to ‘wait and see’ indicating hold and maintain type of strategies aimed at
stability.
Red indicates that you have to adopt turnover strategies of divestment and liquidation or rebuilding