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STRATEGY – An

Apr 06, 2016

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ramikaur

  • STRATEGY An IntroductionSandeep Choudhary

  • Book name - Strategic Planning Formulation Of Corporate Strategy

    Authors - Ramaswamy & Namakumari

    Publisher - Macmillan India Limited

    (Available in MBA Library)

  • STRATEGYTo fight and conquer in all your battles is not supreme excellence; supreme excellence consists in breaking the enemys resistance without fighting.SUN TZU

  • Why do only some organizations survive?MurphyPolson ButterRadio CeylonJ K TelevisionDelhi Cloth Mills (DCM)Presidency Banks

  • MNCs surviving in IndiaGOODYEAR 1822STANCHART 1858SIEMENS 1867HUL 1888GE 1902CASTROL 1910NESTLE 1912PHILIPS 1930BATA - 1931

  • Porter: What is Strategy?, 1996Operational Effectiveness is a necessary but not a sufficient condition for sustained competitive advantage

    OE means performing similar activities better than rivals perform them.

    Any no. of practices that allow a company to better utilize its inputs by reducing defects in products or developing better products faster.For SCA, company has to strategize!

  • Effectiveness vs. EfficiencyEffectiveness indicators measure how much your targets were reached. They relate actual to expected values.

    Typical examples are:actual to expected salessaving on budgetproject cost

    Effectiveness indicators require a plan: you can't measure effectiveness unless you have a target.

  • Effectiveness vs. EfficiencyEfficiency indicators, measure how "well" your resources (like people, machines and money) were to produced output (like products, services and profit).

    Efficiency indicators include traditional financial ratios (profitability, turnover ...), but non-monetary efficiency measures are today recognized as a key factor to track cause-effect of business decisions.

    Examples of such measures are:work hours per unit producedprospect close ratecalls per prospectvisits per prospectincidents per work-month.

  • Output vs OutcomeOutputs relate to "what we do." What pops out of the end of a process is an output. Eg. Meal

    Outcomes refer to "what difference is there."An OUTCOME is a level of performance, or achievement. Eg. too hot, or too cold (Temperature)too much to eat (Quantity)tasty, or disgusting (Customer Perception)

  • STRATEGIC MANAGEMENT - DefinedArt & science of formulating, implementing, and evaluating, cross functional decisions that enable an organization to achieve its objectives.

    In essence, the strategic plan is a companys game plan

    Three big strategic Questions: -Where are we now?Where do we want to go? Business(es) to be in and market positions to stake outBuyer needs and groups to serve3. How will we get there?

  • What Business are you in: Coca Colasoft drinks? Competition is Pepsibeverages? Competition is tea, coffee, softdrinksthirst -quenching?Competition is water & all liquids!

  • TWO RETAILERS AT A GLANCESears Wal-MartYear founded18911962Stores 1980Stores 20048642026

    6005289Revenues 1980Revenues 2004$25,194 million$36,100 million

    $1,643 million$285,222 millionNet profits 1980Net profits 2004$606 M$507 M$55 M$10,267 M Market capitalization 1980Market capitalization 2004USD 4.8 billionUSD 12.2 billionUSD 1 billionUSD 200.2 billion

  • *FEATURES OF STRATEGY Strategy is all about winning Strategy offers broad guidelines Strategy is forward looking Strategy life span is limited Strategy is generally a product of top management thinking Strategy is a dynamic and flexible program of action Strategy is an inherently creative process.

  • STRATEGYStrategy should specify:

    What objectives to accomplished

    Where industries & product-market to focus

    How resources to allocate to meet opportunities & threats

  • Competitive AdvantageWhat are you BEST AT ?

    Why do your customers buy from you ?

    Core/Essence of the CorporationAchieve a sustainable competitive advantage

    A CA exists when a firm is able to deliver the same benefits as competitors at a lower cost or deliver benefits that exceeds those of competing products. Thus CA enables the firm to create superior value for its customers & superior profits for itself.

  • VOLVO Safety, HUL Distribution channels, HONDA Engines & Powertrain, CANON - optics, imaging, microprocessor controls, WALT DISNEY Animation, storytelling & efficient use of theme parks, MICROSOFT IT software, INTEL micro-processors,

  • Three types of StrategiesCorporate Mission, Goals & objectives

    Business SBU objectives, Competitive strategy, Deployment of resources

    Functional Marketing, R&D, Operational, Human resources

  • The Strategy VocabularyMission : the reason for existence, fundamental idea on which the business is builtdo we remember ?, is it short ?does it motivate/inspire?does it influence decision making ?

    Good mission statements are like a unique signature

    Characteristics Short, memorable, Market focused, inspiring

    Mission statements serve a very important purpose.they are also the basis for a SWOT analysis

  • *Mission What does mission do? How does it help the firm?

    Lends direction to corporate planning, it directs the formulation of the growth plan and guides the nature and pace of growth.

    Helps the firm to clarify what its aspirations are and where exactly it would like to reach and what it would like itself to be.

    Or we can direct entire planning and formulation of all objectives.

    It prevents subsequent steps going topsy-turvy.

  • SAMPLE MISSION STATEMENTMcDonalds To offer the fast food customer prepared in the same high-quality manner world-wide, tasty and reasonably priced, delivered in a consistent, low-key decor and friendly atmosphere.

    A MISSION STATEMENT should Set firm apart from others Arouse strong sense of organizational identity & business purpose

  • Eicher Consultancy: To make India an economic power in the lifetime, about 10 to 15 years, of its founding senior managers.

    Marico Industries: The three Ps of Marico: People, Products, and Profits

    Ranbaxy Laboratories: To become a research based international pharmaceutical company.

    Unit Trust of India: To keep the common man in sharper focus; to encourage an investment habits among them . . .

  • Mission statementsGOOGLE: To organize the worlds information and make it universally accessible and useful.

    FACEBOOK:To give people the power to share and make the world more open and connected.

    MICROSOFT:To help people and businesses throughout the world realize their full potential.

  • The Strategy VocabularyVision : what company aspires to become & achieve, it could be personal dream of the CEO CEO led Vision Statements

    Characteristics: Future casting 5 years ahead, clear & visible, audacious (bold) Think Big, descriptive

    Disneyland: To be the happiest place on earth.

    Question : is the visionconsistent with the mission ?does it result in consistent objectives and goals ?

  • The Sail StoryVision statements

    ...to be the 3rd largest producer of iron and steel in the world...V Krishnamurthy, 1987

    ...to be the technical leader in the steel industry... Dr S R Jain, 1990

    ...focus on customer satisfaction...M R R Nair, 1993

  • OBJECTIVES & GOALSGoals signifies a general statement of direction in line with the mission. It may be qualitative in nature.

    Objectives are the ends that state specifically how the goals shall be achieved. They are concrete and specific to goals which are generalized. In this manner objectives make the goals operational.

  • ExampleGOALLive healthier and lower my cholesterol.

    STRATEGYBetter food, less beer and more exercise.

    SMART OBJECTIVES1) Participate in a challenge organized by one of my work colleagues to lose 10 pounds in 10 weeks starting today, which means having a maximum weight of 192.4 pounds on March 18.2) Drink no beer from Sunday to Thursday until Easter.3) Do exercise at least 3 times per week for a minimum of 30 minutes each time until June 30.4) Train for and run the 10K on May 25 during the Ottawa Race Weekend.5) Set other (3 to 5) objectives related to my goal by June 30 for the last 6 months of the year.

  • TACTICSTactics to help achieve Objective 1:- Plan weekly meals each Sunday to minimize the chances of cooking last minute unhealthy food or ordering restaurant food.- Bring homemade lunches at work (prepare them the night before).- No snacking after supper.- Do a lot of exercise.

    Tactics to help achieve Objective 2:- Avoid having cold beers in the fridge from Sunday to Thursday, that way it will be less tempting to have a cold one after work.

    Tactics to help achieve Objective 3 and 4:- Use and take advantage of our brand new Octane Fitness Q35c elliptical machine.- Vary the exercise to not get bored and make it fun.- Create a playlist of music to listen to during training.

  • The Strategy VocabularyPolicy : broad general guidelines/statements

    Plans and policies are guides to action. They indicate how resources are to be allocated and how tasks assigned to the organization might be accomplished so that functional level mangers execute the strategy properly.

    Ex. Employee conduct policy, Equal Opportunity, Attendance & time off, safety policy, Performance review etc.

    Tactics : short term strategies

  • Tactics using everydayExample 1: Planning a Trip

    We use strategy and tactics in very simple ways every day without realizing it. For example, if youre planning a trip from Delhi to Dubai to London, you

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