The Company Analyses the Following Database And apply The Problem Solving / Deci

sion Making Approach / Finalizes The Plan.

1. External Assessment
Areas for opportunities and threats
* Markets [ what is the market situation, which is forcing the change require
ments
*Customers [ how can service the customer -internal / external -better .
* Industry [ is the industry trend ]
* Competition [ is it the competitive situation
*Factors of business [ causing the change]
* Technology [ is it technology change ]
2. Internal Assessment
Areas for strengths, weaknesses, and barriers to success
ORGANIZATION DIMENSIONS
*Culture [ is the working culture change ]
* Organization [ is the organization demanding change ]
* Systems [ is it the systems change ]
* Management practices [ change in managemement process]

OTHER KEY DIMENSIONS

*Cost-efficiency[ is it for cost efficiency ]
* Financial performance [ is it for financial performance improvement ]
* Quality [ is it for quality performance improvement
*Service [ is it for service performance improvement
*Technology[ is it for technology performance improvement
* Market segments [ is it for sales performance improvement
* Innovation[ is it for performance improvement
*new products[ is it for new product performance improvement
*Asset condition[ is it for financial performance improvement
*productivity[ is it for financial performance improvement
3. Source Strategic objectives and programs
The critical issues that must be addressed if the organization
Is to succeed
Strengths
Weaknesses
Opportunities
Threat
PRIORITY ISSUES
FROM THE ABOVE , DETERMINE THE CORE ISSUES WHICH NEEDS TO Â SOLVED WITH
YOUR INVESTMENT.
STRATEGIC PROGRAMS
FROM THE ABOVE CORE ISSUES, DETERMINE YOURSTRATEGIC PROGRAMS.
 MISSION STATEMENT
VISION STATEMENT
Your CORE PURPOSE
Your CORE OBJECTIVES
Your Core markets;
Your CORE strategic thrusts.
NOW THE QUESTION IS -BASED ON THE ABOVE WHAT ARE THE STRATEGIES NEEDED.

1. Basic question: How is organizational direction determined? Every organizat

ion takes on some direction, in terms of what customers/clients it serves and wh
at functions it performs for these customers. This direction is often called its
purpose, Mission or realized strategy. An organization's mission is a set of st
atements that define the exchange relationship between the organization and its
stakeholders or claimants. More specifically a mission defines the population se
rved and the function it fulfills or the need it satisfies for that claimant. Th
is direction, or mission, may be the result of a deliberate planning process or
it may emerge as the result of a set of incremental decisions.
THIS ORGANIZATION Realized Strategies are the result of a combinations of Pur
ely Deliberate and Purely Emergent Strategies.
1. THIS ORGANIZATIONâ S Deliberate Strategy-
This process starts with an analysis of a company's current mission and strategi
es. The most popular tool used in this process is the SWOT (Strengths, weaknesse
s, opportunities, threats) model. The external environment in terms of opportuni
ties and threats, is analyzed by examining threats to the company's current posi
tion and new opportunities (new customers, new applications, unfulfilled custome
rs needs, etc.). The analysis proceeds by examining the company's internal envir
onment in terms of its strengths and weakness. A mission and competitive strateg
y is formulated that matches opportunities with strengths and plans are made to
strengthen areas of weakness.
The next step is to develop functional strategies that support the overall busin
ess level competitive strategy. Marketing, Human Resource, Financial, Operations
, Information Systems, and R & D strategies are developed that support the busin
ess unit strategy. Finally, a control system (organizational structure) is desig
ned to insure that operational decisions are made consistent with the business a
nd functional strategies.
2. THIS ORGANIZATION'S Emergent Strategy

- Emergent Strategies are the result of incremental decision making that achieve
some degree of consistency over time and launch the organization into a directi
on. When decisions are made or problems are solved, they have potential strategi
c impact.
Levels of Strategy
1. Mission/Domain- Before identification of strategy can occur, one must clearly
identify the mission or domain of the organization. The domain of an organizat
ion consists of the population it serves and the functions it performs (satisfie
s) for that population. Sometimes the domain is defined in terms of products or
 services offered (rather than functions performed), but this tends to be more l
imiting because it defines the mission more in terms of means rather than ends.
2. Corporate Level Strategy.
1. Vertical Integration STRATEGY

Forward Integration- Gaining ownership or control over distr

ibutors.
[TAKE OVER DISTRIBUTORS IN ''UNREPRESENTED AREAS'' .
2. Horizontal Integration STRATETGY

- Seeking ownership or control over competitors

[BOUGHT OVER ONE SMALL /BUT DYNAMIC COMPETITORS ]
3. Market Penetration STRATEGY

- Seeking increased market share for present products through greater marketing
efforts
4. Market Development STRATEGY

- Introducing present products in new markets

5. Product Development STRATEGY

- Seeking increased sales by improving present products

6. Diversification STRATEGY

1. Concentric- Adding new or related product lines

2. Conglomerate- Adding new, but unrelated product lines

3. Competitive or Business Level Strategy

- How should we compete in our chosen business(es)? Competitive strategies invol

ve determining the basis of costumer or client decision making. Generally, they
are based on some combination of quality, service, cost, time, and quality of t
he experience.
1. Cost Leadership Strategies

- With this strategy you are competing on price. Your various functional strateg
ies all emphasize cost reduction. This is an effective strategy when the market
is comprised of many price sensitive buyers, when there are few ways to achieve
product differentiation, when buyers do not care much about differences from bra
nd to brand , or when there are a large number of buyers with significant bargai
ning power.
 2. Differentiation Strategies

- Differentiation strategies rely on some basis of product differentiation such

as flexibility, specific features, service, time and availability, low maintenan
ce, etc. as the basis for competition. Product development and market research a
re generally necessary components of a differentiation strategy. Generally, a su
ccessful differentiation strategy allows a firm to charge a higher price for its
product. Organizations generally need strong R & D departments with strong coor
dination between R & D and marketing departments. Human Resource strategies must
place emphasis maintaining a competitive skill base and motivating employees to
ward the basis for differentiation.
3. Focus or Niche Strategies

- A successful focus strategy depends upon an industry segment that is of suffic

ient size, has good growth potential, and it not crucial to the success of other
major competitors. Focus strategies are pursued in limited markets in conjuncti
on with cost leadership and/or differentiation strategies. Focus strategies are
the most effective when consumers have distinctive preferences or requirements a
nd when rival firs are not attempting to specialize in the same target segment.

4. Functional Strategies

- How do organizational functional units contribute to the business level strate

gies? How can functional strategies be integrated to achieve competitive advanta
ge?
1. Marketing Strategies- How do we communicate our strengths to th
e customer? How do we identify customer requirements and changes in customer req
uirements?

2. Human Resource Strategies- How do we recruit, train, develop, m

otivate, compensate, and place employees so that behavior is directed toward the
competitive strategy and works to build competitive advantage?

3. Financial Strategies- How do we secure financial resources nece

ssary to carry our competitive strategy?

4. Operations Strategies- How do we design our processes to produc

e products and/or service that meet customer requirements as specified in our st
rategy?

5. Information System Strategies- How do we provide decision maker

s, at all levels, with information necessary to make decisions consistent with s
trategy?

6. Technological (R & D) Strategies- How do we develop products co

nsistent with customer requirements as specified in strategy?
Â
2. Explain how strategic control links the internal business environment and the
external environment. Give example in support of your of answer.
Three fundamental perspectives-strategic control, continuous improvement, and th
e balanced scoreboard-provide the basis for designing strategy control systems.
Strategic controls are intended to steer the company toward its long-term strate
gic goals.

- Premise controls,
-implementation controls,
-strategic surveillance, and
-special alert controls are types of strategic control.

All four types are designed to meet top management's needs to track the strategy
as it is being implemented, to detect underlying problems, and to make necessar
y adjustments. These strategic controls are linked to the environmental assumpti
ons and the key operating requirements necessary for successful strategy impleme
ntation. Ever-present forces of change fuel the need for and focus of strategic
control.
Operational control systems require systematic evaluation of performance against
predetermined standards or targets. A critical concern here is identification a
nd evaluation of performance deviations, with careful attention paid to determin
ing the underlying reasons for and strategic implications of observed deviations
before management reacts. Some firms use trigger points and contingency plans i
n this process.
The "quality imperative" of the last 20 years has redefined global competitivene
ss to include reshaping the way many businesses approach strategic and operation
al control. What has emerged is a commitment to continuous improvement in which
personnel across all levels in an organization define customer value, identify w
ays every process within the business influences customer value, and seek contin
uously to enhance the quality, efficiency, and responsiveness with which the pro
cesses, products, and services are created and supplied. This includes attending
to internal as well as external customers. The "balanced scorecard" is a contro
l system that integrates strategic goals, operating outcomes, customer satisfact
ion, and continuous improvement into an ongoing strategic management system.
THE FOLLOWING CONTROLS

- Premise controls,
-implementation controls,
TO TRACK /MONITOR/ ACTION PLANNING BUSINESS INTERNALS.

HOW THE COMPANY MAXIMIZES THE STRENGTHS AS PART OF BUSINESS STRATEGY

Criteria examples
Advantages of proposition?
Capabilities?
Competitive advantages?
USP's (unique selling points)?
Resources, Assets, People?
Experience, knowledge, data?
Financial reserves, likely returns?
Marketing - reach, distribution, awareness?
Innovative aspects?
Location and geographical?
Price, value, quality?
Accreditations, qualifications, certifications?
Processes, systems, IT, communications?
Cultural, attitudinal, behavioural?
Management cover, succession?
Philosophy and values?

HOW THE COMPANY OVERCOMES THE WEAKNESSES AS PART OF BUSINESS STRATEGY

Criteria examples
Disadvantages of proposition?
Gaps in capabilities?
Lack of competitive strength?
Reputation, presence and reach?
Financials?
Own known vulnerabilities?
Timescales, deadlines and pressures?
Cashflow, start-up cash-drain?
Continuity, supply chain robustness?
Effects on core activities, distraction?
Reliability of data, plan predictability?
Morale, commitment, leadership?
Accreditations, etc?
Processes and systems, etc?
Management cover, succession
HOW THE COMPANY TAKES ADVANTAGE OF THE OPPORTUNITIES
AS PART OF BUSINESS STRATEGY

Criteria examples
Market developments?
Competitors' vulnerabilities?
Industry or lifestyle trends?
Technology development and innovation?
Global influences?
New markets, vertical, horizontal?
Niche target markets?
Geographical, export, import?
New USP's?
Tactics: eg, surprise, major contracts?
Business and product development?
Information and research?
Partnerships, agencies, distribution?
Volumes, production, economies?
Seasonal, weather, fashion influences?
HOW THE COMPANY MANAGES THE THREATS AS PART OF BUSINESS STRATEGY

Criteria examples
Political effects?
Legislative effects?
Environmental effects?
IT developments?
Competitor intentions - various?
Market demand?
New technologies, services, ideas?
Vital contracts and partners?
Sustaining internal capabilities?
Obstacles faced?
Insurmountable weaknesses?
Loss of key staff?
Sustainable financial backing?
Economy - home, abroad?
Seasonality, weather effects?

THE FOLLOWING CONTROLS

-strategic surveillance, and
-special alert controls

TO TRACK /MONITOR/ ACTION PLANNING BUSINESS EXTERNALS

Political (incl. Legal)
-Environmental regulations and protection
[what are the government regualtions/ protection laws that must be observe
d ]
-Tax policies
what tax hinder the business and what taxes incentives are available]
-International trade regulations and restrictions
[ does the government encourage exports / with high tariffs on imports]
-Contract enforcement law/Consumer protection
[does the government enforce on consumer protection ]
-Employment laws]
[ is the government encouraging skilled immigrants with temp. permits]
-Government organization / attitude
[ does the government have a very positive attitude towards this ind
ustry]
-Competition regulation
[ are there regulation for limiting competition]
-Political Stability
[ politically , does the government have a very stable government ]
-Safety regulations
[ has the government adopted some of the modern safety regulations]

Economic
-Economic growth
[ what is the economic growth rate / what are the reasons ]
-Interest rates & monetary policies
[ are the interest rates under control / is there a sound monetary p
olicies]
-Government spending
[is government spending is significant and is it under control ]
-Unemployment policy
[what is the employment / unemployment policies of the government ]
-Taxation
[ has the taxation encouraged the industry ]
-Exchange rates
[ is there well managed exchange controls and is it helping the indu
stry]
-Inflation rates
[ is the inflation well under control ]
-Stage of the business cycle
[ is your industry is on the growth pattern]
-Consumer confidence
[ is the consumer confidence is high/ strong and if not, why ]

Social
-Income distribution
[is there balanced income distribution policy ]
-Demographics, Population growth rates, Age distribution
[ what is population growth and why ]
-Labor / social mobility
[ what are the labor policies and is there labor mobility]
-Lifestyle changes
[ are there significant lifestyle changes taking place--more moderniz
ation/ why ]
-Work/career and leisure attitudes
[ are the population career minded and are seeking better lifestyle
]
-Education
[ what are the education policies / is it successful ]
-Fashion, hypes
[are the people becoming fashion conscious ]
-Health consciousness & welfare, feelings on safety
[ are the people becoming health consciousness]
-Living conditions
[ is the living conditions improving fast and spreading rapidly]

Technological
Government research spending
[is the government spending on research and development]
Industry focus on technological effort
[are the industries focused on using improved technology]
New inventions and development
[ are new inventions being encouraged for developments]
Rate of technology transfer
[ is the rate of technology transfer is speeding up ]
(Changes in) Information Technology
[ is the information technology rapidly moving and is there governme
nt support]
(Changes in) Internet
[ is the internet usage rapidly increasing and why]
(Changes in) Mobile Technology
[is the Mobile technology rapidly developing and is there government
support]

THE CONTROLS FOR ANY ORGANIZATION ARE THE FOLLOWING

-EFFECTIVE ORGANIZATION STRUCTURE
-MANAGEMENT CONTROLS AT ALL LEVELS
*MARKETING MANAGEMENT
*SALES MANAGEMENT
*SUPPLY MANAGEMENT
*DISTRIBUTION MANAGEMENT
ETC ETC
-BUDGETORY CONTROLS
-AUTHORIZATIONS CONTROLS
-INVENTORY CONTROLS--RAW MATERIALS
-INVENTORY CONTROLS --FINISHED PRODUCTS
-QUALITY CONTROLS
-PROCUREMENT CONTROLS
-DEBT CONTROLS
-SALES/ MARKETING EXPENSES CONTROL
-PERSONNEL CONTROL
-MONTHLY PERFORMANCE REVIEW AGAINST BUDGET
-HALF YEARLY BUSINESS AUDITING

IN ORGANIZATION , THEY HAVE INTEGRATED THE CONTROL

SYSTEMS INTO PLANNING, SO THAT IT HELPS

-TO MEASURE THE DEVIATIONS

-TO STUDY THE VARIANCES
-TO TAKE APPROPRIATE ACTIONS.
Management planning and control process"

P .PLANNING-----------------C.CONTROL [ c1.establish standards]

p1.establishing objectives.
p2.determine detailed activities.
p3.delegation
p4.schedule tasks
p5.allocate resources
p6.communication and coordination
p7.provide incentives
c2.measure and compare.
c3.evaluate results.
c4.feedback and coach
c5.take corrective action.
The above schematic shows the important interrelationships between planning and
control. As you can see, the control process does not begin after the entire pla
nning process ends, as most managers believe.
After objectives are set in the first step of the planning process, appropriate
standards should be developed for them. Standards are units of measurement estab
lished to serve as a reference base and are useful in determining time lines, se
quences of activities, scheduling, and allocation of resources.
For example, if objectives are set and work is planned for 18 people on an assem
bly line, standards or reasonable expectations of performance from each person t
hen need to be clearly established.
The second significant interaction between planning and control occurs with the
final step of the control process-taking corrective action. This can take severa
l forms, but two of the most effective are to change the objectives or alter the
plan.
Managers dislike doing either; but if a positive motivational climate is to be e
stablished, these ought to be the first two corrective actions attempted. Object
ives and standards are based on assumptions, but if these assumptions prove inac
curate, then objectives and standards require alteration. Thus sales quotas assi
gned on the premise of a booming economy can certainly be altered if, as is ofte
n the case, the economy turns sour.
Likewise, if the assumptions are accurate and objectives and standards have not
been met, then it is possible that the plan developed was inadequate and needs t
o be changed.
Controls are to be an integral part of any organization's financial and business
policies and procedures. Controls consists of all the measures taken by the or
ganization for the purpose of; (1) protecting its resources against waste, fraud
, and inefficiency; (2) ensuring accuracy and reliability in accounting and oper
ating data; (3) securing compliance with the policies of the organization; and (
4) evaluating the level of performance in all organizational units of the organi
zation. Controls are simply good business practices.

1.Responsibility

Everyone within the COMPANY has some role in controls. The roles vary depending
upon the level of responsibility and the nature of involvement by the individua
l. The Board of President and senior executives establish the presence of inte
grity, ethics, competence and a positive control environment. The department he
ads have oversight responsibility for controls within their units. Managers and
supervisory personnel are responsible for executing control policies and proced
ures at the detail level within their specific unit. Each individual within a un
it is to be cognizant of proper internal control procedures associated with thei
r specific job responsibilities.
The Internal Audit role is to examine the adequacy and effectiveness of the comp
any internal controls and make recommendations where control improvements are n
eeded. Since Internal Auditing is to remain independent and objective, the Inter
nal Audit Office does not have the primary responsibility for establishing or ma
intaining internal controls. However, the effectiveness of the internal controls
are enhanced through the reviews performed and recommendations made by Internal
Auditing.

2.Elements of Internal Control

Internal control systems operate at different levels of effectiveness. Determini

ng whether a particular internal control system is effective is a judgement resu
lting from an assessment of whether the five components - Control Environment, R
isk Assessment, Control Activities, Information and Communication, and Monitorin
g - are present and functioning. Effective controls provide reasonable assurance
regarding the accomplishment of established objectives.
A. Control Environment

The control environment, as established by the organization's administration, se

ts the tone of THE COMPANY and influences the control consciousness of its peop
le. MANAGERS of each department, area or activity establish a local control env
ironment. This is the foundation for all other components of internal control, p
roviding discipline and structure. Control environment factors include:

Integrity and ethical values;

The commitment to competence;
Leadership philosophy and operating style;
The way management assigns authority and responsibility, and organizes and devel
ops its people;
Policies and procedures.

B. Risk Assessment

Every entity faces a variety of risks from external and internal sources that mu
st be assessed. A precondition to risk assessment is establishment of objectives
, linked at different levels and internally consistent. Risk assessment is the i
dentification and analysis of relevant risks to achievement of the objectives, f
orming a basis for determining how the risks should be managed. Because economic
s, regulatory and operating conditions will continue to change, mechanisms are n
eeded to identify and deal with the special risks associated with change.
Objectives must be established before MANAGERS can identify and take necessary s
teps to manage risks. Operations objectives relate to effectiveness and efficien
cy of the operations, including performance and financial goals and safeguarding
resources against loss. Financial reporting objectives pertain to the preparati
on of reliable published financial statements, including prevention of fraudulen
t financial reporting. Compliance objectives pertain to laws and regulations whi
ch establish minimum standards of behavior.
The process of identifying and analyzing risk is an ongoing process and is a cri
tical component of an effective internal control system. Attention must be focus
ed on risks at all levels and necessary actions must be taken to manage. Risks c
an pertain to internal and external factors. After risks have been identified th
ey must be evaluated.
Managing change requires a constant assessment of risk and the impact on interna
l controls. Economic, industry and regulatory environments change and entities'
activities evolve. Mechanisms are needed to identify and react to changing condi
tions.

C. Control Activities

Control activities are the policies and procedures that help ensure management d
irectives are carried out. They help ensure that necessary actions are taken to
address risks to achievement of the entity's objectives. Control activities occu
r throughout the organization, at all levels, and in all functions. They include
a range of activities as diverse as approvals, authorizations, verifications, r
econciliations, reviews of operating performance, security of assets and segrega
tion of duties.
Control activities usually involve two elements: a policy establishing what shou
ld be done and procedures to effect the policy. All policies must be implemented
thoughtfully, conscientiously and consistently.
D.Information and Communication

Pertinent information must be identified, captured and communicated in a form an

d time frame that enables people to carry out their responsibilities. Effective
communication must occur in a broad sense, flowing down, across and up the organ
ization. All personnel must receive a clear message from top management that con
trol responsibilities must be taken seriously. They must understand their own ro
le in the internal control system, as well as how individual activities relate t
o the work of others. They must have a means of communicating significant inform
ation upstream.

E.Monitoring

Control systems need to be monitored - a process that assesses the quality of th

e system's performance over time. Ongoing monitoring occurs in the ordinary cour
se of operations, and includes regular management and supervisory activities, an
d other actions personnel take in performing their duties that assess the qualit
y of internal control system performance.

The scope and frequency of separate evaluations depend primarily on an assessmen

t of risks and the effectiveness of ongoing monitoring procedures. Internal cont
rol deficiencies should be reported upstream, with serious matters reported imme
diately to top administration and governing boards.

Control systems change over time. The way controls are applied may evolve. Once
effective procedures can become less effective due to the arrival of new personn
el, varying effectiveness of training and supervision, time and resources constr
aints, or additional pressures. Furthermore, circumstances for which the interna
l control system was originally designed also may change. Because of changing co
nditions, management needs to determine whether the internal control system cont
inues to be relevant and able to address new risks.

Components of the Control Activity

1.Internal controls rely on the principle of checks and balances in the workplac
e. The following components focus on the control activity:

2.Personnel need to be competent and trustworthy, with clearly established lines

of authority and responsibility documented in written job descriptions and proc
edures manuals. Organizational charts provide a visual presentation of lines of
authority and periodic updates of job descriptions ensures that employees are aw
are of the duties they are expected to perform.

3.Authorization Procedures need to include a thorough review of supporting infor

mation to verify the propriety and validity of transactions. Approval authority
is to be commensurate with the nature and significance of the transactions and i
n compliance with COMPANY policy.

4.Segregation of Duties reduce the likelihood of errors and irregularities. An i

ndividual is not to have responsibility for more than one of the three transacti
on components: authorization, custody, and record keeping. When the work of one
employee is checked by another, and when the responsibility for custody for asse
ts is separate from the responsibility for maintaining the records relating to t
hose assets, there is appropriate segregation of duties. This helps detect error
s in a timely manner and deter improper activities; and at the same time, it sho
uld be devised to prompt operational efficiency and allow for effective communic
ations.

5.Physical Restrictions are the most important type of protective measures for s
afeguarding COMPANY assets, processes and data.

6.Documentation and Record Retention is to provide reasonable assurance that all

information and transactions of value are accurately recorded and retained. Rec
ords are to be maintained and controlled in accordance with the established rete
ntion period and properly disposed of in accordance with established procedures.

7.Monitoring Operations is essential to verify that controls are operating prope

rly. Reconciliations, confirmations, and exception reports can provide this type
of information.

3. Recently a very popular strategic alliance took place. Take the case of that
alliance and analyze it looking at the benefits of strategic alliances.
COMPANIES look for like-minded companies that understand
the complementary value and content solutions can bring to their customers.
By combining each companyâ s products and services, turn-key solutions
can be developed to efficiently address market needs and tap into new technologi
es.
Ultimately the Strategic Alliance Program really means one thing:
by participating in the alliance program your company has the potential to incre
ase its revenue and grow its sales and business opportunities.
The Strategic Alliance Program offers excellent opportunities -- regardless of
company type and size â by enabling companies to:
Expand the market opportunity for your business in the fast-growing collaboratio
n market space
Increase your company's knowledge base through access to collaboration experts
Partner with a proven, x-year leader in the content space.
ALLIANCE goal is to ensure the success of our combined efforts to grow our busi
nesses together by identifying and acting on ways to increase mutual revenue opp
ortunities, including:

Introductions to new customers and new markets

Issuance of joint press releases
Development of joint marketing collateral
Joint participation in tradeshows
Speaking opportunities at PUBLIC symposia
Preparation of joint proposals
Logo placement on corporate web site

Strategic alliances are common to any industry. Their presence is felt quite sig
nificantly in the
airline industry.
1.JETAIRWAYS ---KLM

The guiding factors will be several that include formation of

blocs, resource scarcity, limits on foreign ownership and limitations imposed by
bilateral agreements. They further forwarded the argument that to be a part of a
n
alliance will become a necessity for an airline to survive in the future.
2.TOYOTA --- GM

-share auto technology.

-share the design facilities
-share the 6 cyl / 8 cyl alloy engine manufacturing
-share common parts supply
-share distribution points.
3.NIIT ---MICROSOFT
-NIIT IS THE CERTIFICATION / TRAINING
AGENT FOR MICROSOFT IN INDIA.

WHAT DO YOU UNDERSTAND BY DIFFERENTIATION STRATEGY? DISCUSS BY FORMULATING A DIF

FERENTIATION STRATEGY FOR A COMPANY, WHICH IS INTO FMCG SECTOR.

Differentiation Strategy Defined

Your differentiation strategy is an integrated set of action designed to produce

or deliver goods or services that customers perceive as being different in ways
that are important to them. It call for you to sell nonstandardized products to
customers with unique needs.

Why Differentiate?

The concept of being unique or different is far more important today than it was
ten years ago. The key to successful marketing and competing is differentiation
.

Hypercompetition is a key feature of the new economy. What used to be national m

arkets with local companies competing for business has become a global market wi
th everyone competing for everyone's business everywhere. With the enormous comp
etition markets today are driven by choice - your targeted customers have too ma
ny choices, all of which can be fulfilled instantly. Choosing among multiple opt
ions is always based on differences, implicit or explicit, so you ought to diffe
rentiate in order to give the customer a reason to chose your product or service
. Thus, "differentiation is one of the most important strategic and tactical act
ivities in which companies must constantly engage. It is not discretionary".
Differentiation should be aimed at the broad market that involves
-the creation of a product or services that is perceived throughout its industry
as unique.
*The company or business unit may then charge a premium for its product.
*This specialty can be associated with design, brand image, technology, features
, dealers, network, or customers service.

Differentiation is a viable strategy for earning above average returns in a spec

ific business because the resulting brand loyalty lowers customers' sensitivity
to price. Increased costs can usually be passed on to the buyers. Buyers loyalty
can also serve as an entry barrier-new firms must develop their own distinctive
competence to differentiate their products in some way in order to compete succ
essfully.

A differentiation strategy is more likely to generate higher profits than is a l

ow cost strategy because differentiation creates a better entry barrier.

-Positioning and differentiating the business.

-Positioning and differentiating the products against rivals
-USING the Business-level cross-functional process management
-Anticipating changes in technology and customer perceptions and adjusting the s
trategy to accommodate them.
-Influencing the nature of competition through strategic actions such as virtual
integration and through political actions
-Building strategic partnerships and co-innovating with other business units, pa
rtners, and customers.
PROVIDING CUSTOMERS WITH MORE VALUE-ADDED [MVA]
"MVA means that you give the customer more, perhaps far more, than you ever have
before. It goes beyond simplifying your customers' interactions with you to del
ivering solutions to your customers' problems, of which your products and servic
es in their native forms are but small pieces... You can visualize the principle
of MVA as a ladder with your product at the bottom and the solution to your cus
tomer's problems at the top. The more help you provide your customers to fill th
at gap, the more value you add to them, which, of course, differentiates you fro
m your competitors who are still scrambling around at the bottom of the ladder.
Also, it is to your advantage to control as much of the ladder as you can â customer
s will be less likely to abandon you in favor of someone else, lower down the la
dder, who offers less value. At the same time, your opportunity for margin and p
rofit increase."

KEY ELEMENTS OF DIFFERENTIATING STRATEGY

reflect the spirit of the Business

be symbolic and intuitive
be distinctive
catch eye
stay in memory
connect to different cultures
be adaptable..
ETC ETC
AN ORGANIZATION CAN DEVELOP A SERIES OF DIFFERENTIATION STRATEGIES DEPEND
ING ON ITS PRODUCT/ MARKET SITUATIONS AND
THE ORGANIZATION RESOURCES.

*CHANGING PRICES STRATEGY

-develop a pricing strategy which will allow the organization to lower
prices
to gain market monoploy and / or prevent competition from entering.
*IMPROVING PRODUCT DIFFERENTIATION STRATEGY
-improve the product features/ benefits to gain significant advantage in th
e market.
-develop and implement innovations in the manufacturing process to gain
advantage for the product cost/ distribution.
-develop a brand consciousness in the market to reduce substitution fro
m
entering the market.
*CREATIVELY USING CHANNELS OF DISTRIBUTION STRATEGY
-using vertical integration, to acquire a channel and dominate.
-developing a new / unique distribution channel which is a novel
to the industry.
*EXPLOITING RELATIONSHIP WITH SUPPLIERS STRATEGY
-developing / setting E-COMMERCE with suppliers.
-developing/ extending TQM [total quality management] and JIT [just in time]
with suppliers to meet the demands of product specifications / price.
*COST LEADERSHIP

-develop the manufacturing to achieve a gross margin, which

could be used to cut price to gain market share, if/when required.
-develop the product sourcing from anywhere, to achieve a gross marg
in, which
could be used to cut price to gain market share, if/when required.
-develop a trade rebate system for large quantity buyers
which could block competitors entry.
*PRODUCT DIFFERENTIATION STRATEGY
-develop unique patented or proprietary product know-how
which is hard to copy/ compete.
-develop an unique customer loyalty program
which will make brand switching difficult.
-develop a incentive strategy for major buyers, so that
they would always use your brand.
*FOCUS STRATEGY
-within your organization, develop your core competences
which are unique for your product / market.
-develop a strategy to lift the profile/ image of
your organization.