b Strtagy Ppt

8/8/2019 b Strtagy Ppt

1/40

Business-Level Strategy

Business-level strategyBusiness-level strategy: an integrated and: an integrated and

coordinated set of commitments and actions thecoordinated set of commitments and actions the

firm uses to gain a competitive advantage byfirm uses to gain a competitive advantage byexploiting core competencies in specific productexploiting core competencies in specific product

marketsmarkets


2/40

The Central Role of Customers

In selecting a business-level strategy,In selecting a business-level strategy,

the firm determinesthe firm determines

1.1. whowho it will serveit will serve

2.2. whatwhatneeds those target customersneeds those target customers

have that it will satisfyhave that it will satisfy

3.3. howhowthose needs will be satisfiedthose needs will be satisfied


3/40


4/40

Cost Leadership Strategy

An integrated set of actions designed toAn integrated set of actions designed to

produce or deliver goods or services at theproduce or deliver goods or services at the

lowest costlowest cost,, relative to competitorsrelative to competitors with featureswith featuresthat are acceptable to customersthat are acceptable to customers

relatively standardized productsrelatively standardized products

features acceptable to many customersfeatures acceptable to many customers

lowest competitive pricelowest competitive price


5/40

Cost Leadership Strategy

Cost saving actions required by this strategy:Cost saving actions required by this strategy:

building efficient scale facilities

tightly controlling production costs andoverhead

minimizing costs of sales, R&D and service

building efficient manufacturing facilities

monitoring costs of activities provided byoutsiders

simplifying production processes


6/40

Differentiation Strategy

An integrated set of actions designed by a firmAn integrated set of actions designed by a firmto produce or deliver goods or services (at anto produce or deliver goods or services (at anacceptable cost) that customers perceive asacceptable cost) that customers perceive asbeing different in ways that are important tobeing different in ways that are important tothemthem

price for product can exceed what the firms targetprice for product can exceed what the firms targetcustomers are willing to paycustomers are willing to pay

nonstandardized productsnonstandardized products

customers value differentiated features more thancustomers value differentiated features more thanthey value low costthey value low cost


7/40


Value provided byValue provided by unique features and valueunique features and value

characteristicscharacteristics

Command premium priceCommand premium price High customer serviceHigh customer service

Superior qualitySuperior quality

Prestige or exclusivityPrestige or exclusivity Rapid innovationRapid innovation


8/40


Differentiation actions required by thisDifferentiation actions required by this

strategy:strategy:

developing new systems and processesdeveloping new systems and processes shaping perceptions through advertisingshaping perceptions through advertising

quality focusquality focus

capability in R&Dcapability in R&D maximize human resource contributionsmaximize human resource contributions

through low turnover and high motivationthrough low turnover and high motivation


9/40

Focused Business-Level

StrategiesA focus strategy must exploit a narrowA focus strategy must exploit a narrowtargets differences from the balance of thetargets differences from the balance of theindustry by:industry by:

isolating a particular buyer groupisolating a particular buyer group

isolating a unique segment of a productisolating a unique segment of a productlineline

concentrating on a particular geographicconcentrating on a particular geographicmarketmarket

finding their nichefinding their niche


10/40

Advantages of Integrated Strategy

A firm that successfully uses an integratedA firm that successfully uses an integrated

cost leadership/differentiation strategy shouldcost leadership/differentiation strategy should

be in a better position to:be in a better position to: adapt quickly to environmental changesadapt quickly to environmental changes

learn new skills and technologies morelearn new skills and technologies more

quicklyquickly

effectively leverage its core competencieseffectively leverage its core competencies

while competing against its rivalswhile competing against its rivals


11/40

Benefits of Integrated Strategy

Successful firms using this strategy haveSuccessful firms using this strategy have

above-average returnsabove-average returns

Firm offers two types of values to customersFirm offers two types of values to customers some differentiated features (but less thansome differentiated features (but less than

a true differentiated firm)a true differentiated firm)

relatively low cost (but not as low as therelatively low cost (but not as low as thecost leaders price)cost leaders price)


12/40

Corporate-Level Strategy

What is Corporate Level Strategy?

Definition: Action taken to gain a

competitive advantage through the

selection and management of a mix of

businesses competing in several

industries or product markets.


13/40

1. What businesses should the corporation1. What businesses should the corporation

be in?be in?

2. How should the corporate office manage2. How should the corporate office managethe array of business units?the array of business units?

Corporate StrategyCorporate Strategy is what makes the corporate wholeis what makes the corporate whole

add up to more than the sum of its business unit partsadd up to more than the sum of its business unit parts

Key Questions of Corporate StrategyKey Questions of Corporate Strategy


14/40

Levels and Types of DiversificationLevels and Types of Diversification

Low Levels of DiversificationLow Levels of Diversification

Moderate to High Levels of DiversificationModerate to High Levels of Diversification

Very High Levels of DiversificationVery High Levels of Diversification

Related linked (mixed)Related linked (mixed) < 70% of revenues from dominant< 70% of revenues from dominantbusiness, and only limited links existbusiness, and only limited links exist

AAAA

BBBB CCCC

Single businessSingle business > 95% of revenues from a single> 95% of revenues from a singlebusiness unitbusiness unit

AAAA

Dominant businessDominant business Between 70% and 95% ofBetween 70% and 95% ofrevenues from a single businessrevenues from a single businessunitunit

BBBB

AAAA

Unrelated-DiversifiedUnrelated-Diversified Business units not closely relatedBusiness units not closely related

AAAA

BBBB CCCC

< 70% of revenues from dominant< 70% of revenues from dominantbusiness; all businesses share product,business; all businesses share product,technological and distribution linkagestechnological and distribution linkages

Related constrainedRelated constrainedAAAA

BBBB CCCC


15/40

Strategic Leadership involves:Strategic Leadership involves:

Strategic LeadershipStrategic Leadership

The ability to anticipate, envision, maintain flexibilityThe ability to anticipate, envision, maintain flexibilityand empower others to create strategic changeand empower others to create strategic change

Multi-functional work that involves workingMulti-functional work that involves workingthrough othersthrough others

Consideration of the entire enterprise rather thanConsideration of the entire enterprise rather thanjust a sub-unitjust a sub-unit

A managerial frame of referenceA managerial frame of reference


16/40

Strategic CompetitivenessStrategic Competitiveness

Above-Average ReturnsAbove-Average Returns

Strategic CompetitivenessStrategic Competitiveness

Above-Average ReturnsAbove-Average Returns

EffectiveEffectiveStrategic LeadershipStrategic Leadership

EffectiveEffectiveStrategic LeadershipStrategic Leadership

influenceinfluence

shapes the formulation of

andandStrategic IntentStrategic IntentStrategic IntentStrategic Intent Strategic MissionStrategic MissionStrategic MissionStrategic Mission

SuccessfulSuccessfulStrategic ActionsStrategic Actions

SuccessfulSuccessfulStrategic ActionsStrategic Actions

FormulationFormulationof Strategiesof StrategiesFormulationFormulationof Strategiesof Strategies ImplementationImplementationof Strategiesof StrategiesImplementationImplementationof Strategiesof Strategies

Strategic LeadershipStrategic Leadershipand the Strategicand the StrategicManagement ProcessManagement Process


17/40

Managerial DiscretionManagerial DiscretionManagerial DiscretionManagerial Discretion

External EnvironmentExternal Environment

Industry StructureIndustry StructureRate of market growthRate of market growth

# and type of competitors# and type of competitors

Political/Legal constraintsPolitical/Legal constraints

Product differentiationProduct differentiation

Factors Affecting Managerial DiscretionFactors Affecting Managerial Discretion

Interpersonal skillsInterpersonal skills

Tolerance for ambiguityTolerance for ambiguityCommitment to the firmCommitment to the firm

Aspiration levelAspiration levelSelf-confidenceSelf-confidence

Characteristics of the ManagerCharacteristics of the Manager

Employee interactionEmployee interaction

OrganizationalOrganizational

CharacteristicsCharacteristics

Resource availabilityResource availability

Size and ageSize and ageCultureCulture


18/40

Exercise of Effective Strategic

LeadershipEstablishingEstablishing

balancedbalanced

organizationalorganizationalcontrolscontrols

EmphasizingEmphasizingethicalethical

practicepractice

DevelopingDevelopinghumanhuman

capitalcapital

Exploiting andExploiting and

maintainingmaintaining

corecorecompetenciescompetencies

SustainingSustaining

an effectivean effective

organizationalorganizational

cultureculture

DeterminingDetermining

strategicstrategic

directiondirection

Effective StrategicEffective Strategic

LeadershipLeadership


19/40

Determining Strategic Direction

Strategic direction means the development ofStrategic direction means the development of

a long-term vision of a firms strategic intenta long-term vision of a firms strategic intent

A charismatic leader can help achieveA charismatic leader can help achieve

strategic intentstrategic intent

It is important not to lose sight of the strengthsIt is important not to lose sight of the strengths

of the organization when making changesof the organization when making changes

required by a new strategic directionrequired by a new strategic direction Executives must structure the firm effectivelyExecutives must structure the firm effectively

to help achieve the visionto help achieve the vision


20/40

Exploiting and Maintaining Core

Competencies Core competencies are resources andCore competencies are resources and

capabilities that serve as a source ofcapabilities that serve as a source ofcompetitive advantage for a firm over its rivalscompetitive advantage for a firm over its rivals

Strategic leaders must verify that the firmsStrategic leaders must verify that the firmscompetencies are emphasized in strategycompetencies are emphasized in strategyimplementation effortsimplementation efforts


21/40

Exploiting and Maintaining Core

Competencies In many large firms, and certainly in related-In many large firms, and certainly in related-

diversified ones, core competencies arediversified ones, core competencies areexploited effectively when they are developedexploited effectively when they are developedand applied across different organizationaland applied across different organizationalunitsunits

Core competencies cannot be developed orCore competencies cannot be developed orexploited effectively without developing theexploited effectively without developing thecapabilities of human capitalcapabilities of human capital


22/40

Developing Human Capital

Human capital refers to the knowledge and skills ofHuman capital refers to the knowledge and skills ofthe firms entire workforcethe firms entire workforce

Employees are viewed as a capital resource thatEmployees are viewed as a capital resource thatrequires investmentrequires investment

No strategy can be effective unless the firm is able toNo strategy can be effective unless the firm is able todevelop and retain good people to carry it outdevelop and retain good people to carry it out

The effective development and management of theThe effective development and management of thefirms human capital may be the primary determinantfirms human capital may be the primary determinant

of a firms ability to formulate and implementof a firms ability to formulate and implementstrategies successfullystrategies successfully


23/40

Sustaining an Effective

Organizational Culture An organizational culture consists of aAn organizational culture consists of a

complex set of ideologies, symbols, and corecomplex set of ideologies, symbols, and corevalues that is shared throughout the firm andvalues that is shared throughout the firm andinfluences the way it conducts businessinfluences the way it conducts business

Shaping the firms culture is a central task ofShaping the firms culture is a central task ofeffective strategic leadershipeffective strategic leadership


24/40

Sustaining an Effective

Organizational Culture An appropriate organizational cultureAn appropriate organizational culture

encourages the development of anencourages the development of anentrepreneurial orientation among employeesentrepreneurial orientation among employeesand an ability to change the culture asand an ability to change the culture asnecessarynecessary

Reengineering can facilitate this processReengineering can facilitate this process


25/40

The benefits ofThe benefits ofbusiness reengineeringbusiness reengineeringareare

maximized when employees believe that:maximized when employees believe that:

Changing Culture and ReengineeringChanging Culture and Reengineering

Every job in the company is essential andimportant

All employees must create value through theirwork

Constant learning is a vital part of every personsjob

Teamwork is essential to implementationsuccess

Problems are solved only when teams acceptthe responsibility for the solution.


26/40

Emphasizing Ethical Practices

Ethical practices increase the effectiveness ofEthical practices increase the effectiveness ofstrategy implementation processesstrategy implementation processes

Ethical companies encourage and enableEthical companies encourage and enablepeople at all organizational levels to exercisepeople at all organizational levels to exerciseethical judgmentethical judgment


27/40

Emphasizing Ethical Practices

To properly influence employee judgment andTo properly influence employee judgment andbehavior, ethical practices must shape thebehavior, ethical practices must shape thefirms decision-making process and be anfirms decision-making process and be anintegral part of an organizations cultureintegral part of an organizations culture

Leaders set the tone for creating anLeaders set the tone for creating anenvironment of mutual respect, honesty andenvironment of mutual respect, honesty andethical practices among employeesethical practices among employees


28/40

Establishing Balanced

Organizational Controls Organizational controls provide theOrganizational controls provide the

parameters within which strategies are to beparameters within which strategies are to be

implemented and corrective actions takenimplemented and corrective actions taken Financial controls are often emphasized inFinancial controls are often emphasized in

large corporations and focus on short-termlarge corporations and focus on short-term

financial outcomesfinancial outcomes

Strategic control focuses on the content ofStrategic control focuses on the content of

strategic actions, rather than their outcomesstrategic actions, rather than their outcomes


29/40

Establishing Balanced

Organizational Controls Successful strategic leaders balance strategicSuccessful strategic leaders balance strategic

control and financial control (they do notcontrol and financial control (they do noteliminate financial control) with the intent ofeliminate financial control) with the intent ofachieving more positive long-term returnsachieving more positive long-term returns


30/40

Why do a situation analysis?

Situation analysis concentrates on

generating solid answers to a well-

defined set of strategic questions and

using these answers to:

Appraise the companys strategic situation

and business position

Craft a suitable strategy


31/40

Situation analysis focuses on:

EXTERNAL FACTORS the firms

MACRO-environment (industry and

competitive conditions)

INTERNAL FACTORS the firms

immediate MICRO-environment (itsown internal situation and

competitive position)


32/40

The Key Questions in

Company Situation Analysis1. How well is the companys present strategy

working?

2. What are the companys strengths,weaknesses, opportunities, and threats?

3. Are the companys prices and costscompetitive?

4. How strong is the companys competitiveposition?

5. What strategic issues does the company face?


33/40

SWOT Analysis

SWOT represents the first letter inStrengths, Weaknesses, Opportunities,and Threats.

SWOT analysis Involves sizing-up a companys INTERNAL

strengths and weaknesses and itsEXTERNAL opportunities and threats

Is an easy to use tool for getting a quickoverview of a companys strategic situation


34/40

Why SWOT Analysis is Important

It is the basis for matching strategy to the

companys situation

To its internal strengths and weaknesses

To its external threats and opportunities

A winning strategy must always fit the

companys situation.


35/40

Strengths

What is a company Strength?

Something a company is good at doing or

a characteristic that gives it an importantcapability.


36/40

Weaknesses

What are company weaknesses?

Something a company lacks or does poorly

(in comparison to others) or a conditionthat puts it at a disadvantage.


37/40

Opportunities

What are company opportunities?

Those that offer important avenues for

profitable growth, those where a companyhas the most potential for competitive

advantage, and those which the company

has the financial resources to pursue.


38/40

Threats

What are company Threats?

Certain factors in a companys external

environment that pose a threat to its well-being.


39/40

Some questions to consider once the

SWOT listings have been compiled are: Does the company have internal strengths or

core competencies an attractive strategy can

be built around? Do company weaknesses make a company

vulnerable and does it disqualify a company

from pursuing industry opportunities?

Which weaknesses does a company need to

correct?


40/40

Which opportunities does the company have

the skills and resources to pursue with a real

chance for success? Which opportunities arethe best from the companys standpoint?

(Remember: Opportunity without the means

to capture is only an illusion.)

What external threats should management be

worried most about and what strategic moves

need to be made to craft a good defense?

Some questions to consider once the

SWOT listings have been compiled are:

Date post:	10-Apr-2018
Category:	Documents
Upload:	palvi-chawla
View:	219 times
Download:	0 times

b Strtagy Ppt

Documents