SM Draft 2

8/6/2019 SM Draft 2

http://slidepdf.com/reader/full/sm-draft-2 1/99

Strategic ManagementPresented by:

Abhishek

Dishant Hans

Mayank Jain

Nikhil Reddy

Ravi Pratap Singh

8/6/2019 SM Draft 2


Alice : Would you tell me please, which way I

ought to go from here?

Cheshire Cat: That depends a good deal on

where you want to get to

- Lewis Carroll(Alice in Wonderland)

8/6/2019 SM Draft 2


Market Capitalization

Company 1991 2010

Tata 14,000 3,46,000

AB Birla 3,100 1,35,000

Ambanis 2,300 2,60,000

Mahindra 1,030 56,000Godrej 1,000 14,800

Figures in Rs Crores.

Source Business World (11 july 2011 edition)

8/6/2019 SM Draft 2


Airbus 380 vs. Boeing 787

Airbus developed 380, a jumbo jet offering

550 seats, only capable of flying from 35

airports, costing more than $14b.

Boeing developed long range, 250

passenger 787 dream liner capable

of flying from large number of

airports, costing only $8b.Boeing 787

Airbus 380

8/6/2019 SM Draft 2


8/6/2019 SM Draft 2


What do we mean by Strategy?

� Consists of competitive moves and business approaches used bymanagers to run the company

� Integrated and coordinated set of commitments and actions designedto exploit core competencies and gain a competitive advantage.

� Managements action plan to

± Grow the business

± Attract and please customers

± Compete successfully

± Conduct operations

± Achieve target levels of organizational performance

8/6/2019 SM Draft 2


Thinking Strategically:The Three Big Strategic Questions

1. Whats the companys present situation?

2. Where does the company need to go from here?

±

Business(es) to be in and market positions to stake out ± Buyer needs and groups to serve

± Direction to head

3. How should it get there? ± A companys answer to how

will we get there? is its strategy

8/6/2019 SM Draft 2


Porter on Strategy

8/6/2019 SM Draft 2


What is Strategic Management?

� The strategic management process is

± full set of commitments, decisions and actions

± required to achieve strategic competitiveness

± and earn above average returns.

8/6/2019 SM Draft 2


� Risk ± An investors uncertainty about

the economic gains or losses thatwill result from a particularinvestment

� Average Returns ± Returns equal to those an

investor expects to earn fromother investments with a similaramount of risk

� Above-average Returns ± Returns in excess of what an investor expects to earn from other

investments with a similar amount of risk

Definitions

8/6/2019 SM Draft 2


� Strategic Competitiveness

± When a firm successfully formulates

and implements a value-creating

strategy

� Sustainable Competitive

Advantage

± When competitors are unable to

duplicate a companys value-creating

strategy

Definitions (contd)

8/6/2019 SM Draft 2


Characteristics of all Firm decisions

Nature Strategic Administrative Operational

Scope Firm wide Departmental

Level Highest Lower

Time Span Many Years Short Run

Assets Used Fixed Somewhere Current

Reversibility Difficult In Reversibility

Riskiness High Between Low

Visionary Yes No

Frequency Rare Frequent

Uniqueness Yes Repetitive

8/6/2019 SM Draft 2


Recent Strategic Decisions

Scope - Whole Firm: Tata Sons

Level Highest Level: The iPhone

Time Span Long Run: Tata Sons

Assets Used Large and Fixed: Airbus 380

Reversibility Difficult: Airbus 380

Riskiness Bet the Firm: Boeing

Visionary Apple computing through music

Frequency Rare Takeover: Oracle and Sun

Uniqueness Yes: Toyota Lexus

8/6/2019 SM Draft 2


Characteristics of Strategy

� Partly Proactive partly reactive.

� Makes organization purposeful and Gives the organization a sense of direction

� Strategy is continual and dynamic process

� Top Down exercise

�

Provide managers with a reference point to� Make strategic decisions

� Translate the vision into hard-edged objectivesand strategies

� Prepare the company for the future

8/6/2019 SM Draft 2


Micromax's Strategy

� Innovating to meet local needs ± Dual sim/ Aspirational QWERTY keypad

handsets

� Go To Market Strategy

± Concentrated on rural markets with USP 30 days battery standby time

� Distribution Strategy

± Managed to make dealers pay in

advance by offering higher margins

� Product Strategy

± Products were towards lower end of

pricing spectrum

8/6/2019 SM Draft 2


The Competitive Landscape

� Relentless and accelerating pace of thecompetition.

� Blurring boundaries between theindustries. ± E.g. Interactive computer networks,

music, media and telecommunications.

� E conomies of scale and hugeadvertising budgets not effective anymore.

� F lexibility, speed, innovation, integration, and constant change are the

mantras.

� Huge global scale investments and severe consequences of failure.

� Dynamic strategy prime element of success in this environment.

8/6/2019 SM Draft 2


Hyper Competition

� The term for the current competitivelandscape

� Results from the dynamics of strategic maneuvering among globaland innovative combatants.

� Signifies inherent instability andchange.

� A condition of rapidly escalatingcompetition.

8/6/2019 SM Draft 2


Primary drivers of Hyper Competition

The Global Economy

Is the one in which goods, services, skills,

people, and ideas move freely across

geographic borders. It generally refers to the

economy, which is based on economies of allof the world's countries.

Technology &Technological

ChangesTechnology is the making, usage and

knowledge of tools, techniques, crafts,

systems or methods of organization in order

to solve a problem or serve some purpose.

8/6/2019 SM Draft 2


The Global Economy

� Highly complicates a firms competitiveenvironment.

� Comes with both opportunities and

challenges.

± Europe is worlds single largest market with 700

million potential customers.

± China and India are heading towards impressive

development on roads paved by globalization.

± Though headquartered in USA, GE expects its

60% revenue from emerging economies like India

and China.

8/6/2019 SM Draft 2


The march of Globalization

�

Led to increase in the interdependence among countries andtheir organizations.

National Market 1

Financial

capital

National Market 4Production

National Market 3Manufacturing

equipment

National Market 2

Raw Material

Global

Organization

8/6/2019 SM Draft 2


The march of Globalization (Contd.)

�

C omplexities rise in understanding culture, design, production,distribution and servicing of goods and services.

± E.g. Milk distribution in USA versus India

� Results in higher quality goods and services.

� H igh performance standards in competitive dimensions like quality, cost,

productivity, product introduction time and operational efficiency .

� Propels domestic firms to produce superior goods.

8/6/2019 SM Draft 2


The march of Globalization (Contd.)

� In global world the best people will come from anywhere.

� Need above average returns? Then meet global standards!

� Thinking of global markets? H uge risk is on the way!

� Firms may struggle if they over diversify , and may stay put if they dont

diversify .

�

Not even giants like Toyota and GE can enter into global markets without proper strategic management process.

� Cant be globally competitive if focus on local markets is lost.

8/6/2019 SM Draft 2


Technology and Technological changes

� Technology is significantly altering the nature of competition

and is contributing to unstable competitive environments.

� Trends and conditions of technology can be categorized as

T echnology diffusion and disruptive technologies

Information Age

Increasing knowledge intensity.

8/6/2019 SM Draft 2


Technology Diffusion

�

Rate of Technology diffusion ( speed at which new technologies becomeavailable and are used) is shifting to higher gears.

± To get into 25% of all homes in US ,

� Telephone took 35 years

� Television took 26 years

� Radio took 22 years

� Personal computers took 16 years

� Internet took 7 years

� 12 to 18 months to gather information about competitors R&D and

product decisions.

� Patents may be an effective way of protecting proprietary technology.

± However, electronics industry doesnt apply for patents to prevent competitors

gaining access to technological knowledge.

8/6/2019 SM Draft 2


Disruptive Technology

� Destroys the value of an existing technology . ± iPod, PDA, Wi-Fi, Internet

� Very frequent in todays markets.

� Can create a new market (competitors followthe disrupter in this case) or harm industry

incumbents. ± For instance, Samsung followed Apple with itsGalaxy tablet to compete against iPad.

� Apple has been seeking to create disruptivetrends in the industry through its new

product strategy . It introduced to the world ±

The first personal computer, ± Computers with color monitors,

± GUI ( graphical user interface);

± Uni-body product designs with aluminum, steel and glass;

± The first tablet device

± Super sensitive touch and gesture enabled products

8/6/2019 SM Draft 2


The Information Age

� Drastic changes in Information T echnology

lately.

� Advent of personal computers, cellular

phones, artificial intelligence, virtual reality

and massive databases.

� Ability to effectively and efficiently store,

access and use information for strategic

decisions a competitive advantage.

� Internet the most evolutionary technological

phenomenon ever

8/6/2019 SM Draft 2


Increasing Knowledge Intensity

�

K nowledge amalgamation of information, intelligence, and expertise

� That firm which realizes that importance of the ability to captureintelligence, transform it into usable knowledge, and diffuse it rapidlythroughout the company, will have strategic competitiveness.

�

Knowledge can be ± Developed through training programs

± Acquired through hiring educated and experienced employees

± Integrated into organization to create capabilities

± Applied to gain competitive advantage

� Strategic flexibility is a set of capabilities used to respond to variousdemands and opportunities existing in a dynamic and uncertaincompetitive environment. ± Involves coping with uncertainty and accompanying risks

± Firms should develop this in all the areas of operations

± Focus on past core competency may slow change

± To be strategically flexible learn and apply what is learned on a continuous basis

8/6/2019 SM Draft 2


The Korean Conquest:

How LG and Samsung won over the Indian market

� LG and Samsung's success is a function of what these twocompanies did, and also what their competitors didn't do.

� The super-premium price and positioning of technologicallysuperior Japanese brands like Sony and Panasonic made theminaccessible to most of the Indian market.

� Lower-priced Indian brands offered old-generation products andthey did not invest sufficiently in R&D.

� Product innovation and after-sales are key factors.

� LG's entry strategy was to establish its presence across thecountry, offering a range of affordable but feature-rich products.

� Samsung focused on creating a premium brand image byemphasizing the design and technology aspects.

8/6/2019 SM Draft 2


Where is Videocon going wrong?

� All the TVs more or less have similar technologies.

� Why is Videocon not able to capitalize on its stronginfrastructure and human resource capabilities?

�

They are focusing on pushing the sales.

� The after sales customer care is not up to the mark. This iswhere the trust and reliability trembles in the market.

� Also, product innovation and product leadership was never part

of their core objectives.

� 360 degree approach has to be employed to keep the customerhappy.

8/6/2019 SM Draft 2


Barco vs. Sony

� Till 1980s, Barco was perceived as leader in projection system products.

� In 1989, Sony introduced a better graphics projector.

� Barco used to follow market skimming strategy.

� Barco was investing on R&D for video projector, but it was perceived that itwould be of lower quality than Sonys.

� So, Barco stopped working on that projector, even after spending a goodamount of R&D.

� Barco introduced a new projector, which outperformed Sonys.

� Learnings: ± Competitors have certain strengths and limitations. To succeed, a firm must leverage its own

unique abilities.

± A firm should have a defense strategy before potential threat arrives. ± If competition surprises a firm with introduction of a superior product, the firm should resist

the temptation to proceed with its mediocre product.

± The competitions probable response to a firms actions

should be considered.

8/6/2019 SM Draft 2


I/O Model of Above-Average Returns

� The industry in which a firm competes has a strongerinfluence on the firms performance than do thechoices managers make inside their organizations

� Industry properties include

� economies of scale

� barriers to market entry

�

diversification� product differentiation

� degree of concentration of firms in the industry

8/6/2019 SM Draft 2


F r ss ti s f the I/ el

External environment imposes pressures and constraints that determine strategies leading to above-average returns1

2

Most f irms competing in an industry control similar

strategically relevant resources and pursue similar strategies

Resources used to implement strategies are highly

mobile across f irms3

4

Organizational decision makers are assumed to be rational

and committed to acting in the f irms best interests (prof it-

maximizing)

8/6/2019 SM Draft 2


I/O Model of Above-Average Returns

1.1. Strategy dictated by theStrategy dictated by the

external environment of external environment of

the firm (whatthe firm (what

opportunities exist in theseopportunities exist in these

environments?)environments?)

2.2. Firm develops internal skillsFirm develops internal skills

required by externalrequired by external

environment (what can theenvironment (what can the

firm do about thefirm do about the

opportunities?)opportunities?)

External Environments

General

Environment

8/6/2019 SM Draft 2


The I/O Model of

Above-Average ReturnsThe External

Environment

1.1. Study the external environment, Study the external environment, especially the industryespecially the industryenvironmentenvironment

The general environment The general environment The industry environment The industry environment The competitor environment The competitor environment

8/6/2019 SM Draft 2


An Attractive Industry 2.2. Locate an attractive Locate an attractive industry with a high industry with a high potential for abovepotential for above--

average returnsaverage returns

An industry whose An industry whose structural characteristics structural characteristics

suggest above suggest above- -average average returns returns

The External

Environment

The I/O Model of

Above-Average Returns

8/6/2019 SM Draft 2


The I/O Model of


3.3. Identify the strategy called for byIdentify the strategy called for by

the attractive industry to earnthe attractive industry to earn

aboveabove--average returnsaverage returns

Selection of a strategy Selection of a strategy linked with above linked with above- - average returns in a average returns in a

particular industry particular industry

The External

Environment

An Attractive Industry

Strategy Formulation

8/6/2019 SM Draft 2


Assets and Skills

The I/O Model of


4.4. Develop or acquire assets and Develop or acquire assets and skills needed to implement the skills needed to implement the strategystrategy

Assets and skills Assets and skills required to implement a required to implement a chosen strategy chosen strategy

The External

Environment



8/6/2019 SM Draft 2


Strategy

Implementation

The I/O Model of


5. Use the f irms strengths (its 5. Use the f irms strengths (its developed or acquired assets developed or acquired assets and skills) to implement the and skills) to implement the

strategystrategy

Selection of strategic Selection of strategic actions linked with actions linked with

effective implementation effective implementation of the chosen strategy of the chosen strategy

The External

Environment



Assets and Skills

8/6/2019 SM Draft 2


Superior Returns

The I/O Model of

Above-Average ReturnsThe External

Environment



Assets and Skills

Strategy

Implementation

Superior returns: earning Superior returns: earning

of above of above- -average returns average returns

8/6/2019 SM Draft 2


First Mover Advantage

� Proctor & Gamble: Used technologyleadership to propel its product (disposablediapers) in the US market.

� eBay: The first company to take the auctionprocess online, kicking off operationsin 1995.

�

Coca-Cola: The first cola producer, andbegan selling its product to the publicin 1886; it has been a perennial powerhousein the industry ever since.

8/6/2019 SM Draft 2


Resource-Based Model of Above-Average Returns

� Each organization is a collection of unique resources and

capabilities that provides the basis for its strategy and that is

the primary source of its returns

� Capabilities evolve and must be managed dynamically

� Differences in firms performances are due primarily to their

unique resources and capabilities rather than structural

characteristics of the industry

� Firms acquire different resources and develop unique

capabilities

8/6/2019 SM Draft 2


Resource-Based Model of Above-Average Returns(contd)

1.1. Strategy dictated by theStrategy dictated by the

firms unique resources andfirms unique resources and

capabilitiescapabilities

2.2. Find an environment inFind an environment in

which to exploit these assetswhich to exploit these assets

(where are the best(where are the best

opportunities?)opportunities?)

Firms Re source sFirms Re source s

8/6/2019 SM Draft 2


Res rces a a a ilities

� Res rces

± I ts i t a firms

r cti r cess

� Capital equipment

� Skills of individual

employees

� Patents

� Finances

� Talented managers

� Capabilities ± Capacity of a set of

resources to perform inan integrative manner

± A capability should not be

� So simple that it is highly imitable

� So complex that it def ies internalsteering and control

8/6/2019 SM Draft 2


The Resource-Based Model of Above-

Average Returns

Resources

1.1. Identify the f irms resources.Identify the f irms resources.Study its strengths and Study its strengths and weaknesses compared with those weaknesses compared with those

of competitorsof competitors

Inputs into a firms Inputs into a firms production process production process

8/6/2019 SM Draft 2



Average Returns

Capability 2.2. Determine the f irms capabilities.Determine the f irms capabilities.What do the capabilities allow the What do the capabilities allow the f irm to do better than its f irm to do better than its

competitors.competitors.

Capacity of an integrated Capacity of an integrated set of resources to set of resources to integratively perform a integratively perform a

task or activity task or activity

Resources

8/6/2019 SM Draft 2



Average Returns

3.3. Determine the potential of the Determine the potential of the

f irms resources and capabilities f irms resources and capabilities

in terms of a competitive in terms of a competitive

advantage.advantage.

Ability of a firm to Ability of a firm to outperform its rivals outperform its rivals

Competitive Advantage

Capability

Resources

8/6/2019 SM Draft 2



Average Returns


4.4. Locate an attractive industry.Locate an attractive industry.

An industry with An industry with opportunities that can opportunities that can be exploited by the be exploited by the firms resources and firms resources and

capabilities capabilities


Capability

Resources

8/6/2019 SM Draft 2



Average Returns

StrategyImplementation

5. Select a strategy that best allow5. Select a strategy that best allowthe f irm to utilize its resources the f irm to utilize its resources and capabilities relative toand capabilities relative to

opportunities in the externalopportunities in the externalenvironment.environment.

Strategic actions taken to Strategic actions taken to earn above earn above- -average average

returns returns



Capability

Resources

8/6/2019 SM Draft 2



Average Returns

Superior Returns

Superior returns: earning Superior returns: earning

of above of above- -average returns average returns StrategyImplementation



Capability

Resources

8/6/2019 SM Draft 2


How Resources and Capabilities Provide CompetitiveAdvantage

The f irm is organized appropriat ely to ob tain The f irm is organized appropriat ely to ob tain t he f ull be nef its of t he re source s in orde r to t he full be ne fits of t he re source s in orde r to re alize a compe titive advantage re alize a compe titive advantage

Valuable Valuable A llow t he firm to ex ploit opportunitie s or A llow t he firm to ex ploit opportunitie s or ne utralize t hre ats in its ex t e rnal e nvironme nt ne utralize t hre ats in its ex t e rnal e nvironme nt

RareRare Posse sse d by f e w, if any, curre nt and Posse sse d b y f e w, if any, curre nt and pot e ntial compe titorspot e ntial compe titors

Costly to imitateCostly to imitate Whe n ot he r firms cannot ob tain t he m or Whe n ot he r firms cannot ob tain t he m or must ob tain t he m at a much highe r cost must ob tain t he m at a much highe r cost

NonsubstitutableNonsubstitutable

8/6/2019 SM Draft 2


Resources and Capabilities, Core Competencies, andOutcomes

CoreCoreCompetenciesCompetencies

CompetitiveCompetitive Advantage Advantage

Value Creation Value Creation

Above Average Above AverageReturnsReturns

Valuable Valuable

RareRare

Costly to ImitateCostly to Imitate

NonsubstitutableNonsubstitutable

8/6/2019 SM Draft 2


Stakehol ers

� In ivi uals an groups who can aff ect, an are

aff ected by, the strategic outcomes achieved

and who have enf orceable claims on a firms

perf ormance

� Claims are enf orced by the stakeholders

ability to withhold essential participation

8/6/2019 SM Draft 2


The Three

Stakeholder

Groups

8/6/2019 SM Draft 2


Ca ital arket Stakeholders

� Shareholders and lenders ex ect the firm to

reserve and enhance the wealth they have

entrusted to it

� Returns should be commensurate with the

degree of risk to the shareholder

8/6/2019 SM Draft 2


Product Market Stakeholders

�

Customers ± Demand reliable products at low prices

� Suppliers

± Seek loyal customers willing to pay highest

sustainable prices for goods and services� Host communities

± Want companies willing to be long-term employersand providers of tax revenues while minimizingdemands on public support services

� Union officials

± Want secure jobs and desirable working conditions

8/6/2019 SM Draft 2


Orga izational Stakeholders

� Employees

± Expect a dynamic, stimulating and rewarding work

environment

± Are satisfied by a company that is growing and

actively developing their skills

8/6/2019 SM Draft 2


Stakeholder Involvement

� Two issues affect the extent of stakeholderinvolvement in the firm

± ± How to divide returnsHow to divide returnsto keep stakeholdersto keep stakeholders

involved?involved?CapitalMarketCapitalMarket

ProductMarketProductMarket

OrganizationalOrganizational

How to increase How to increase

returns so everyone returns so everyone has more to share?has more to share?

8/6/2019 SM Draft 2


The Competitive LandscapeStrategic

Management

Process

8/6/2019 SM Draft 2


The Strategy Management Process

8/6/2019 SM Draft 2


Vision

8/6/2019 SM Draft 2


Phase 1 : Developing a Strategic Vision

� A big picture of what the firm wantsto be.

� Points the direction of where it wouldeventually like to be in the years to

come.

� Reflects firms values and aspirations.

� Requires Top-managementcommitment.

� Tied to the conditions of firmsexternal and internal environment.

� McDonalds : Our Vision is to be theworlds best quick service restaurant.

8/6/2019 SM Draft 2


Payoffs of a Clear Strategic Vision

� C rystallizes an organizations long-term direction

� Reduces risk of rudderless decision-making

�

Creates a committed enterprise whereorganizational members enthusiastically pursueefforts to make the vision a reality

� Provides a beacon to keep strategy-related

actions of all managers on common path� Helps an organization prepare for the future

8/6/2019 SM Draft 2


Mission

� The vision is the f oundation f or the firms mission.

� Specifies the business in which firm intends to compete

and the customers it intends to serve.

� More concrete than vision.

� Should be inspiring and relevant to all stakeholders.

8/6/2019 SM Draft 2


Mission (Contd.)

� Deals directly with product markets and customers, and

the middle-level managers and the markets.

� Above-average returns are the fruits of the firms eff ortsto achieve its vision andmission.

� McDonalds : Be the best employer f or our people in each

community around the world and deliver operationalexcellence to our customers in each of our restaurants.

8/6/2019 SM Draft 2


Inf osys

� Vision ± We will be a globally respected corporation.

� Mission ± To achieve our objectives in an environment of fairness,

honesty, and courtesy towards our clients, employees,

vendors and society at large.

8/6/2019 SM Draft 2


Patni Computer Systems s. Inf osys

� Inf osys was f ounded by 7 Patni employees.

� Inf osys leadership is committed to their vision to be globally

respected company.

� Leadership at Patni had internal conflict and lost f ocus on

their vision to be trusted partner, powered by passionate

minds, creating innovative options to excel.

8/6/2019 SM Draft 2


Phase 2 :Setting objective

� P urpose of setting objectives

± Converts vision into specific performance targets

± Creates yardsticks to track performance

� W ell-stated objectives are

± Quantifiable

± Measurable

± Contain a deadline for achievement� Spell-out how much of what kind

of performance by when

8/6/2019 SM Draft 2


Types of Objectives Required

Outcomes focused

on improving financial

performance

Outcomes focused on

improving competitive vitality

and future business position

Financial Objectives Strategic Objectives

$

8/6/2019 SM Draft 2


Examples : Financial Objective

� X % increase in annual revenues

� X % increase annually in after-tax profits

� X % increase annually in earnings per share

� Annual dividend increases of X %

� Profit margins of X %� X % return on capital employed (ROCE)

� Increased shareholder value

� Strong bond and credit ratings

�

Sufficient internal cash flows to fund 100%

of new capitalinvestment

� Stable earnings during periods of recession

8/6/2019 SM Draft 2


� Winning an X % market share

� Achieving lower overall costs than rivals

� Overtaking key competitors on product performance or quality orcustomer service

�

Deriving X % of revenues from sale of new products introduced inpast 5 years

� Achieving technological leadership

� Having better product selection than rivals

� Strengthening companys brand name appeal

�

Having stronger national or global sales and distribution capabilitiesthan rivals

� Consistently getting new or improved products to market ahead of rivals

Examples : Strategic Objective

8/6/2019 SM Draft 2


Strategic Intent

Relentlessly pursues an ambitious strategic objective

� Involves establishing a stretch performance target out of

proportion to immediate capabilities and market position

� Devoting a firms full resources and energies to achieving the

target

� Achieve quantum gains in competing against key rivals and to

establishing itself as a winner in the marketplace

� Signals relentless commitment to achieving a particular market

position and competitive standing

8/6/2019 SM Draft 2


Male vs Female

8/6/2019 SM Draft 2


Phase 3: Crafting the Strategy

� Objectives at All Management Levels

± Corporate Strategy

± Business Strategy

± Functional Strategy

± Operating Strategy

� Uniting the Strategy Making Effort

� Top-down Process

8/6/2019 SM Draft 2


What Strategy Consists of?

OW

GrowBusiness

Please

customer

Outcompete rivals

Respond to Change

Achieve

target

Manage

Business

8/6/2019 SM Draft 2


Levels of Strategy-Making

Corporate

Strategy

Business Strategies

Functional Strategies

Operating Strategies

Two-Way Influence

Two-Way Influence

Two-Way Influence

Corporate-Level

Managers

Business-Level

Managers

Functional

Managers

Operating

Managers

8/6/2019 SM Draft 2


Bharti roup of Companies

8/6/2019 SM Draft 2


Crafting strategy : pproach

� The Chief rchitect pproach

� The Delegation pproach

� The Collaborative pproach

� The corporate Intrapreneur pproach

8/6/2019 SM Draft 2


Phase 4 : Implementing and Executing Strategy

� O perations-oriented activity aimed atperforming core business activities in astrategy-supportive manner

� T ougher and more time-consumingthan crafting strategy

� K ey tasks include

± Improving efficiency of strategy being executed

± Showing measurable progress in achieving targetedresults

8/6/2019 SM Draft 2


� Creating a strategy-supportive corporate culture

� Allocating resources to strategy-critical activities

� Establishing strategy-supportive policies

�

Motivating people to pursue the target objectives

� T ying rewards to achievement of results

Strategy Implementation Involves

8/6/2019 SM Draft 2


� Installing information, communication,

and operating systems

�

Exerting the leadership necessary to drive theprocess forward and keep improving

� Instituting best practices and programs for

continuous improvement

Strategy Implementation Involves

8/6/2019 SM Draft 2


T asks of crafting and implementing the strategy are

not a one-time exercise

± Customer needs and competitive conditions change

± New opportunities appear; technologyadvances; any number of other

outside developments occur

± One or more aspects of executing the

strategy may not be going well ± New managers with different ideas take over

± Organizational learning occurs

Phase 5 : Evaluating Performance

8/6/2019 SM Draft 2


� T aking actions to adjust to the march of eventstends to result in one or more of the following

± Altering long-term direction and/or

redefining the mission/vision

± Raising, lowering, or changingperformance objectives

± Modifying the strategy

± Improving strategy execution

Monitoring, Evaluating and Adjusting

8/6/2019 SM Draft 2


Factors that influence strategy

� Beliefs and Ambitions of Managers

� Company Culture

�

SWOT� Competitive consideration and Industry

Attractiveness

� Societal and Political Influences

� Regulatory and Legislative Actions

8/6/2019 SM Draft 2


Case Study: Wal-Mart and Bharti

8/6/2019 SM Draft 2


Trends in Retail

Growing at healthy CAGR of 5%

Contributing 14% to GDP and providing jobs to 7% of

workforce.

Organized retail constitutes 2% whereas Unorganizedretail constitutes 98% of Indian total trade.

Change in Indian consumer mentality from save and buy to buy and repay to shop til you drop

Increased brand consciousness and demand forquality characterized Indian consumers.

0

100

200

00

400500

600

700

2006 2010 2015

Indian RetailMarket in USD

8/6/2019 SM Draft 2


Evolution of Indian Retail

8/6/2019 SM Draft 2


Biggest Public Corporation in the World with Revenues of US$ 351.1 billion(2007).

Corporate strategy of strengthening relations with employees, suppliers and customers.

Shifting of powers towards retailers and away from manufacturers

Wholly owned transportation capabilities.

Cost effective and 4 times faster to replenish its merchandise.

Always low Prices and elevated sales volume.

Effective users of Technology for managing supply chain.

Global Strategy, Local Focus

8/6/2019 SM Draft 2


Providing mobile, telemedia and enterprise services.

Among Indias 10 biggest Companies

Market capitalization of US$ 25 million+

Employing 30,000 people.

Deep Knowledge of Indias Fast growing consumer Market

8/6/2019 SM Draft 2


Joint Venture

Indian Government allows a FDI of 51% inMultibrand Retail.

Two separate Agreements

First, to manage establishment of 50-50 venture for back-endsupply chain management and wholesale cash and carry

operations. Second, Bharti managing the retail store operations and

Walmart focusing on logistics capabilities and building supplychain.

8/6/2019 SM Draft 2


External and Internal Environment

8/6/2019 SM Draft 2


Competitors

8/6/2019 SM Draft 2


Not an

Small Players feel they would be driven out

Stiff Opposition from Political Parties

Problems in adjusting to local cultures

Ruin Livelihood of more than 40 million people dependant onretail

Predatory Pricing Policy

Squeezing Suppliers for low cost manufacturing withoutensuring quality & safety

8/6/2019 SM Draft 2


Supply Chain Management Challenges

Underdeveloped Physical Infrastructure

Quality of Roadway Infrastructure Quality of trucking

Adoption of Modern Technology

Prominence of Middleman in Retail andWholesale

8/6/2019 SM Draft 2


Vision and Mission

� Saving people money to help them live better.

� Offers the best quality merchandise at the

lowest prices in all their stores, from school

supplies, to household items and top quality

groceries.

Five forces of Competition Model

8/6/2019 SM Draft 2


Five forces of Competition Model

Suppliers

Buyers

Competitiverivalry amongfirms currentlyin the industry

Productsubstitutes

Potentialentrants to the

industry

8/6/2019 SM Draft 2


Strategy Choice

� US Strategy

± Shopping Mall on the highway

± Complete Retail Store Management

�

Indian Strategy Convenience Store

� 117 Easy Day stores, largely in North India and mostlysmall,neighbourhood stores

Manages Wholesale and Back-End Processes

� Walmart is looking to pick up stake in Big Bazaars back-end ops & expand it to f ront-end biz as and when FDI rules are relaxed-The Economic Times Mumbai;Date: Mar 29, 2011

Strategy of Wal mart

8/6/2019 SM Draft 2


Strategy of Wal-mart

� Same goods for less( charges 2-5%lower price) &still earns profit.

� Very good operational efficiency

�Use of IT in all verticals of business

� Effective use of logistics management

� Networked to HQ via private satellite.

� Bargaining power over suppliers

� Data used to profile each market

� Predicts demand, optimizes stock

8/6/2019 SM Draft 2


Operations Strategy

� IT systems to manage its warehouses and

stores

� Choose locations without direct competitions

from large chains(rural areas)

� Created a culture of supporting

values, skills, technologies, supplier customer

relationship, HR and approaches to motivationthat could not be easily copied by other firms

8/6/2019 SM Draft 2


Thank You

Date post:	07-Apr-2018
Category:	Documents
Upload:	mayank-jain
View:	223 times
Download:	0 times

SM Draft 2

Documents