8/4/2019 Intro, Kotler Ambani

1/31

Business Strategy :Introduction

8/4/2019 Intro, Kotler Ambani

2/31

Agenda -

1. Quotable Business Quotes

2. Identifying Customer needs

3. Importance of Strategic Mgmt.

4. Changing Business Scenarios

5. SM Process : 9 Critical Steps

Case Studies : Mahabharat War

Tata Group

HUL

8/4/2019 Intro, Kotler Ambani

3/31

Kotlar Quotes

It is not imp what I can produce

or What I can sell ?

It is important What customer wants !

It is no longer enough to satisfy customers,

you must delight them !

8/4/2019 Intro, Kotler Ambani

4/31

Kotlar Quotes

Customer is demanding more & more

for less & less.

The most important thing is

- to forecast where the customers are moving

- and to be in front of them.

8/4/2019 Intro, Kotler Ambani

5/31

Kotlar Quotes

Most of today,

marketplace is moving to cyberspace.

Low performing company says

we have good designers

High performing company says

we have good project managers.

8/4/2019 Intro, Kotler Ambani

6/31

Kotlar Quotes

The business scenario is changing,

has already changed a lot.

Only I have not noticed - What is this change ?

The successful sales person cares

- first for the customer,- second for the product.

8/4/2019 Intro, Kotler Ambani

7/31

AMBANISPEAK:THE BEST OF DHIRUBHAI

My success is my worst enemy

In conditions where too many try and too fewsucceed, the success of someone like me is

bound to cause envy.

Entitlements and licenses were available for

everyone to take advantage of. If they werenot quick enough off the mark, is it my fault?.

8/4/2019 Intro, Kotler Ambani

8/31

AMBANISPEAK:THE BEST OF DHIRUBHAI

If there is profit to be made, I am not goingto wait for a written invitation.

I had the courage to defy the system, evenface persecution.

You have to sell your ideas to the

government. Selling the idea is the mostimportant thing, and for that Id meetanybody in the govt.

I am willing to salaam anyone.

8/4/2019 Intro, Kotler Ambani

9/31

How to creat a business . ?? find the Customer Needs.

No customer told Sony .. That I want Walkman

No Customer told .... Apple . that I want I-Pod

.Bank that I want ATM

. Chauhan, that I want Bottled water

Its the businessmans visionto seek business opportunity

to create new products & services

8/4/2019 Intro, Kotler Ambani

10/31

Click to edit Master subtitle style

Importance ofStrategic Management

1. Mahabharat War : 3000 Yrs. Ago

2. Software War : 30 Yrs. ago

8/4/2019 Intro, Kotler Ambani

11/31

Case 1 : Mahabharat War

Kauravas

2.41 Mn. Soldiers

Commanders

Bhishma

Dronacharya

Karna

Finally,

who won the war?

Pandavas1.53 Mn Soldiers

Non-Playing Captain-

Krishna

And how ?

http://en.wikipedia.org/wiki/Bhishmahttp://en.wikipedia.org/wiki/Dronahttp://en.wikipedia.org/wiki/Karnahttp://en.wikipedia.org/wiki/Karnahttp://en.wikipedia.org/wiki/Dronahttp://en.wikipedia.org/wiki/Bhishma

8/4/2019 Intro, Kotler Ambani

12/31

Case 2 : Software war

Critics acknowledge that

Apples Macintosh is far superior than

Microsofts Window

Who won this war ?

How ?

8/4/2019 Intro, Kotler Ambani

13/31

Business Transformation

Till 1900 - Individually Owned /Family Managed

1940s - 2 Economies

1980s - www economy

8/4/2019 Intro, Kotler Ambani

14/31

Changes of 1990s

1990s saw winds of change across the world

l Breakdown of erstwhile USSR,

l emergence of uni-polar world,

l WTO (1995)led to decline of trade & non-trade barriers.

l 1990s also saw the IT & Telecom revolution

Results : The world is becoming a small global village.

l Increased globalization is forcing companies/firms to

upgrade technology so as to fight global competition.

8/4/2019 Intro, Kotler Ambani

15/31

21st Century International Business Scenario-

As a part of WTO compliance, nations are enacting andstrengthening patent regimes. This enables MNCs to executetechnology transfer / licensing agreements, with ease bymaintaining control over their technological assets and withoutrisking loss of their technological superiority.

IT, Internet, mobile phones, Cable TV etc. have further increasedthe pace of globalization.

High information flow available across the world leading to

- more awareness and generating demand for new or improvedtechnology and new or improved products, services or processes.

- Lead-time from invention to market has fallen sharply

PLC becoming shorter due to rapid technological change. Thus,urgency for companies to tap maximum benefits from theexisting technology and its related products by simultaneousoffering in many markets/countries.

8/4/2019 Intro, Kotler Ambani

16/31

As a result -

Technology is getting globalized at a fast rate.

This is clearly noticeable in the following developments :

Share of hi-tech products in the international trade is

rising and low-tech products is falling

Technology transfer agreements are on an increase

Manual operations are being automated, mechanized and

computerized

Infusion of technology has transformed many industries

Standards of living are improving across the world.

8/4/2019 Intro, Kotler Ambani

17/31

Today's World

Fast moving marketplace

Highly competitive

(Size and no. of competing firms)

More Uncertainty ( both, inside & outside) International trade (No Boundary)

Government ( as a Buyer, Seller,

Regulator, Competitor)

Internet

( from Marketplace to Cyberspace)

8/4/2019 Intro, Kotler Ambani

18/31

Why do you need

Strategic Planning

l To make the things happen

l To survive in competition& surge ahead

Aim of strategyTo shape companys business , products &services so that theyachieve targeted profit &

growth.

8/4/2019 Intro, Kotler Ambani

19/31

Evolution of Strategy Function

Originally from a Greek word : STRATEGIA

( meaning a General or MilitaryCommander )

War & Strategy are inseparable

Business is also a war

- Warriors ?

- Battlefield ?

- Weapons ?

8/4/2019 Intro, Kotler Ambani

20/31

Strategy Gurus

Igor Ansoff

Minzberg

Peter Drucker

Michael Porter

C K Prahlad

Gary Hammel

Sumantra Ghoshal

Kenichi Ohamae

Their contributions

Gap Analysis, Synergy, Ansoffs Matrix

Crafting of Strategy

MBO

5 Forces Analysis, Value Chain,Generic Strategies

Core Competency, BoP

BPR

3Ps: Purpose, Process and People,Trans-National firms, Individualized Corp.

3Cs model : Strategist must focus onCorporation, Customer & Competition.

8/4/2019 Intro, Kotler Ambani

21/31

Strategy Function

Most large company consists 3 - 4 Org. Levels

Corporate

Divisional / Business Unit

Product Level / Functional

Corp. H/Q undertake 4 planning activities

Defining the corporate Missions

Establishing SBUsPlanning new businesses, downsizingor terminating older businesses

Assigning resources to each SBU

8/4/2019 Intro, Kotler Ambani

22/31

Concept ofStrategic Management

Strategy

Evaluating various alternativesand selecting the best.

Strategic Management Setting Objective Framing Polices & providing Resources Implementation

8/4/2019 Intro, Kotler Ambani

23/31

Mission and Goals

External Analysis

Opp. & ThreatSWOT-Strategic

Choice

Internal Analysis

Strength & Weaknesses

Corp. Level Strategy

Global Strategy

Business Level Strategy

Functional Strategy

Strategy Implementati

onDesigning

Organizational

structure

Matching strategy structureand controls

Designing controlsystem

Managing strategic

change

feedback

Strategic Management Model

Whatspossible?

8/4/2019 Intro, Kotler Ambani

24/31

Difference between Goal and Strategy

l Destination and Paths

How important Environment Scanning ?

l A Blind and a Lamepassing thru a jungle

Weaknesses . along with Strengths

Overcoming threats and

Not loosing the Opportunities

8/4/2019 Intro, Kotler Ambani

25/31

What Strategy means for whom?

Manager

Strategy means their future oriented plans for interaction

with the competitive environment to achieve co. objective.

Company

Strategy means a Game plan.

Corporate world

Strategy reflects a company's awareness of - how, when &

where it should complete? And against whom & for what

purpose?

8/4/2019 Intro, Kotler Ambani

26/31

Level DesignationDecision

CharacteristicExamples

CorporateCEO / MD

Exc. Director

More value orientedlong range plans,

Guiding principles

Choice of Business,Sourcing of L/T Finance,Company Image, FinancialPerformance & SocialResponsibility

BusinessSBU Heads /

VPMore concrete in the decision

Plant relocation,Market Segmentation &

Geographic coverage ,Distribution Channels

FunctionalOperatingManagers,Front Line

Manager

Action -oriented Opnl. Issues,

Relative Short Range Planwith low Risk, Concrete &Quantifiable Decisions

Immediate Implementation

Production Scheduling,

Plant & Machinery,HR selection, training Generic

v/s Brand Mktg.High v/s Low Inventory

8/4/2019 Intro, Kotler Ambani

27/31

Diff. between the Strategic Mgmt.and various other management functions

S/M integrates various other function.

S/M Achieves organization wide goals.

S/M considers range of Stake-Holders

Concerned with Efficiency and Effectiveness1. Efficiency Doing Things Right

2. Effectiveness Doing the Right Things(Balanced Emphasis on the both)

8/4/2019 Intro, Kotler Ambani

28/31

Strategic Management 9 Critical Tasks

1. Formulating Companys Mission , Purpose, Philosophy, Goals.

2. Developing Co.Profile (reflecting Int. Conditions & Capabilities)

3. Assessing External Environment.

4. Analyzing Options (by matching resources with the Ext. Envmt)

5. Identifying Most Desirable Options ( to meet Co. Mission)

6. From L/T Objectives & Grand Strategies, select the most

desirable option.

7. Developing Annual Objectives & Sh. Term Strategies.

8. Implementation - Matching of Tasks, Resource Allocation, ,

People, Org. Structure, Technologies, Reward Systems.

9. Evaluation of Success for future Decision Makin .

St t i D i i f

8/4/2019 Intro, Kotler Ambani

29/31

Strategic Decisions ofTata Sons forTata Group

( 2002 Study Report of Merryl Linch)

Earlier Tata Group position

85 Cos. (with 300+ Subsidiaries) spread into 45

Businesses

However, starperformers are

11 Cos. contributing 85 of T/O and 90 % of Profit

Merryl Linch recommendation

To bring down from 85 Cos. to 40 -45 Cos.

To get leadership position in 7 Businesses

8/4/2019 Intro, Kotler Ambani

30/31

Strategic Decisions ofTata Sons forTata Group( 2002 Study Report of Merryl Linch)

Strategy Formulated & Implemented

Consolidation into Engineering, Materials,Power, Chemicals, IT, Telecom, Services

Cos. hived offTomco, Lacme, ACC,

Goodlac Nerolac, TRF,Tata Ceramics, Tata Yodogavwa

8/4/2019 Intro, Kotler Ambani

31/31

Strategic Decisions at HLL

Corporate Level StrategyCore BusinessFocus on Power BrandsHive off Low-Margin Business

Actions Taken 30 Power Brands developedRs. 400 Crs. spent on Quality up gradation

Got out of Rs. 2000 Cr. worth low business ofAnimal Feed, Specialty chem. Oil & Fat,Shrimp Export etc.