Strat Man

STRATEGIC MANAGEMENT 101
Sandeep Bhattacharya
INTRODUCTION TO STRATEGY
Derived from Greek ‘strategia’ – Art of a General

Definitions
Wiki
▪ Strategic management involves the formulation
and implementation of the major goals and
initiatives taken by a company's top management
▪ on behalf of owners,
▪ based on consideration of resources
▪ and an assessment of the internal and external
environments in which the organization competes
▪ Creating uniqueness and value
Definitions
▪ A scientific method of creating and executing
management decisions that help to achieve the
organization’s objectives.
▪ Sometimes used synonymously with Strategic

Planning
▪ An effective strategy results in sustainable
competitive advantage
Porter…
Michael Porter identifies three principles
underlying strategy:
▪ creating a "unique and valuable [market]
position",
▪ making trade-offs by choosing "what not to do",
▪ and creating "fit" by aligning company activities
with one another to support the chosen strategy
In Summary…
▪ Kipling
▪ Definitions
▪ Porter says
Strategy is impacted by
▪ Globalization
▪ Digital Business
▪ Environmental Factors
▪ Other factors
Examples of Strategy in Action
▪ Larsen and Toubro

▪ Tata Motors
▪ Indigo Airlines/Southwest Airlines
▪ Airtel
▪ Amazon India/International
▪ Big Basket
Stages
▪ Creation/Formulation
 eg Start ups
▪ Execution
 eg L & T/ Tata Motors
▪ Critique and Fine tuning
 eg Nestle
 Unilever
 Coca-Cola
Strategy Creation/Formulation
▪ Vision/Mission
▪ External opportunities/threats (Porters 5 forces)
▪ Internal Strengths/Weaknesses
▪ Crystallize long term objectives
▪ Evaluate and decide on strategy after
 Long list/Short List
 Recommended alternative
 Best Choice
Strategy Execution
Includes…
▪ Establish annual objectives
▪ Create systems, processes & policies
▪ Create comp & ben structures
▪ Hire, train, motivate employees
▪ Allocate resources
▪ Create a supportive culture
▪ Create appropriate org structure
▪ Prepare budgets
▪ Carry out sales and marketing
▪ Develop MIS
▪ Etc….
Strategy Critique and Fine tuning
▪ If a strategy is not working then we quickly

need to change it after due evaluation
▪ Reviewing internal external factors

▪ Measure
▪ Correct
Types of Strategy
People, Process, Technology
▪ Business
▪ Operational
▪ Transformational
Business Strategy
▪ Which markets/geos/regions
▪ Customer segments
▪ Which products/services
▪ Positioning
▪ USPs
▪ Eg Ola Cabs
Operational Strategy
▪ Capabilities
▪ Technologies
▪ Processes
▪ People
▪ Eg. Automotive Industry

Transformational Strategy
▪ Disruptive
 People eg Jobs
 Process eg Telco
 Technologies eg Mahindra Reva
 Culture eg Google
 Others
 Eg. BS VI, Electric Vehicles

People involved
Usually…
▪ Chairman
▪ CEO/MD
▪ Board of Directors
▪ CXO/GM/VP
▪ Consultants/Advisors
▪ Task Force
▪ HQ
First things First
First things First
First things First
SANDEEP BHATTACHARYA
EXTERNAL ENVIRONMENT
SCANNING
Agenda
▪ PESTEL
▪ Porters 5 forces
▪ Blue Ocean Strategy
▪ The 6th Force
▪ The Economic Moat
Developing Strategy
▪ Understanding the key factors which will lead

to success in the marketplace e.g. TCS
▪ Scanning the environment for cues, clues,
opportunities e.g. Reverse logistics for E-Comm
▪ Modifying/Mapping the company’s resources
and strengths e.g. Amazon
▪ Good strategies should turn into competitive
advantage eg Telco/Tata Motors
Environment Scanning
▪ PESTEL
 Political
 Competitive eg Vistara vs Jet 5/20
 Tax eg Vodafone
 Public Sector vs Private Sector
 Eg Banks
 Eg Insurance
 Govt Eg Rafale deal
 Economic
 GDP, Exchange Rate egYuan, Per capita
 Interest Rates eg Housing Loans
 Incomes eg FMCG sales
▪ PESTEL
 Sociocultural
 Culture and Attitude of people Eg AIR, Gaana.com
 Lifestyles eg Eating out, E-Comm
 Population age/growth, eg Call centre/IT
 Trends – DINKS Eg Tiffin Services
 Technological
 R & D Eg ISRO
 Disruptive Innovations Eg Timeshare, Drones, Ola cabs
 Digital Business wave Eg Groceries, Festival Shopping
▪ PEST EL
 Environment
 Legislation Eg BSR
 CSR
 Go Green/Eco friendly Eg PUC
 Legal
 IP Protection Eg Nokia, Apple vs Samsung
 Legal Framework
 Trade Practices Eg Chinese goods
Porter’s 5 forces..
De-tails
Intensity of Competitive Rivalry
▪ Sustainable competitive advantage through

innovation
▪ Competition between online and offline
companies
▪ Level of advertising expense
▪ Powerful competitive strategy
▪ Sustainability over time
▪ Eg JD vs X, Toyota vs GM, Coke vs Pepsi
Porters 5 Forces
▪ Rivalry among existing firms
 Balanced competitors – fierce rivalry
 Eg Telecom/Automotive/E-Comm
 Unbalanced competitors
 Eg Aircraft manufacturing
▪ Threat of New entrants
 Need for barriers to entry
 Economies of Scale eg Cement
 Product/Services Differentiation eg ICICI Bank
 Capex eg Power
 Policy eg Airlines
Porters 5 Forces
▪ Bargaining Power of Customers

 High when many suppliers
 Eg Retail/E-Comm
 Low when less suppliers
 Eg Power sector
▪ Bargaining Power of Suppliers
 High when many buyers eg B-school students
 Low when few buyers eg Univ graduate students
Porters 5 Forces
▪ Threat of Substitutes
 Company is very strong if product/service is not
easily substitutable
 Eg Rolls Royce
 Eg Vestas/Suzlon
 Continuous innovations can manage substitution
 Eg PMA parts vs OEM parts
 High degree of differentiation can help
Threat of Substitute Products
▪ Poor quality Products

▪ Availability of close substitute
▪ Ease of substitution
▪ Buyer propensity to substitute
▪ Relative price performance of substitute
▪ Buyer switching costs
▪ Perceived product differentiation
▪ Number of substitute products available in the market
▪ Quality depreciation
BLUE OCEAN STRATEGY
Class Discussion
▪ Examples of Blue Ocean
▪ Examples of Red Ocean

Red Ocean vs Blue
Ocean
Red Ocean Blue Ocean
▪ E-Comm ▪ E-Comm
 Snapdeal, Amazon,  Urban Ladder, Pepperfry,
Flipkart Printo
▪ Taxi Services ▪ Taxi Services
▪ FMCG Beverages ▪ Paper Boat
▪ Fast Food ▪ Cloud Kitchens
▪ FMCG Snack ▪ FMCG – Protein Bars
▪ Google ?
▪ Blockchain
The 6th Force
▪ “Complementors” coined by
 Yale School of Management
 Brandenburger and Nalebuff
▪ Who are they ?

Channel as competitive
strategy
▪ Distribution Channel as a competitive strategy
eg Video rentals, Publishing, Automotive
▪ Multiple distribution channels
▪ eg Restaurants
▪ Aggregators
▪ Crowd sourcing
▪ Distribution channel design – is your existing
channel able to fulfill ALL your channel
requirements ?
The Economic Moat
▪ Tata Group
▪ Indigo Airlines
▪ Larsen and Toubro
▪ Technical Expertise, R & D spend

▪ Brand Impression
 Advertising
▪ Quality of Dealer Network
▪ Pricing Power
▪ Investment grade financing
▪ Market Share
VISION, MISSION, GOALS &
OBJECTIVES
Vision Statement
▪ Your organizations dream
▪ A short phrase or sentences that conveys your

organization’s hopes and beliefs
▪ A one-sentence statement describing the clear

and inspirational long-term desired change
resulting from an organization or program’s work
Characteristics of a Vision Statement
▪ Understood and shared by members of the organization as

well as larger community
▪ Broad enough to include a diverse variety of perspectives
▪ Inspiring and uplifting
▪ Easy to communicate, clear and simple (most aren’t)

▪ Avoid elaborate language
▪ Not be confused with a mission statement
Examples
▪ Most admired by our customers, employees,

business partners and shareholders for the
experience and value they enjoy from being
with us
▪ We aspire to be the global steel industry

benchmark for Value Creation and Corporate
Citizenship
In the world around you…
▪ The best visions are inspirational, clear,
memorable, and concise.
▪ Amazon: “Our vision is to be earth’s most
customer centric company; to build a place where
people can come to find and discover anything
they might want to buy online.”
▪ GM’s vision is to be the world leader in
transportation products and related services. We
will earn our customers’ enthusiasm through
continuous improvement driven by the integrity,
teamwork, and innovation of GM people.
More Examples…
▪ Toyota
▪ To sustain profitable growth by providing the best customer
experience and dealer support.
▪ BMW (Bremen Motoren Werken)

▪ To become most successful premium manufacturer in the car
industry.
▪ McDonald’s
▪ McDonald's vision is to be the world's best quick service
restaurant experience. Being the best means providing
outstanding quality, service, cleanliness, and value, so that we
make every customer in every restaurant smile.
Questions to ask
▪ What are the major challenges?
▪ Why should issues be addressed?
▪ What are their costs to the involved parties?
▪ What are the strengths and assets?
▪ What is your preferred end-state?
▪ What would success look like for this company ?
Mission Statement
▪ Normally has three components

 Who are your customers?
 The product or service that you provide them
 Your USPs
 Dimensions : Customers, Employees, Owners
 a written declaration of an organization's core

purpose and focus that normally remains unchanged
over time.
Questions to answer…
▪ Why are you in business?
▪ Who are your customers?
▪ What image of your business do you want to convey?
▪ What is the nature of your products and services?
▪ What level of service do you provide?
▪ What roles do you and your employees play?
▪ What kind of relationships will you maintain with suppliers?
▪ How do you differ from your competitors?
▪ How will you use technology, capital, processes, products
and services to reach your goals?
▪ What underlying philosophies or values guided your
responses to the previous questions?
Examples
▪ TED: Spreading Ideas.
▪ The Rotary Foundation: To enable Rotarians to

advance world understanding, goodwill, and peace
through the improvement of health, the support of
education, and the alleviation of poverty.
ITC Vision & Mission
▪ Sustain ITC's position as one of India's most

valuable corporations through world class
performance, creating growing value for the
Indian economy and the Company's
stakeholders
▪ To enhance the wealth generating capability of
the enterprise in a globalising environment,
delivering superior and sustainable stakeholder
value
Tata Power Mission
▪ To earn affection of customers by delivering superior experience and
value, thereby making them our ambassadors
▪ Driving competitiveness by operating our businesses at benchmark levels
▪ Executing projects safely with predictable benchmark quality, cost and time
▪ Growing profitably across the power value chain and allied areas, in focus
geographies
▪ Being the lead adopter of technology with a spirit of pioneering and
calculated risk taking
▪ Practicing ‘Leadership with Care’ by pursuing best practices on Care for our
Environment, Community, Customers, Shareholders, People and creating a
culture that will reinforce our values
▪ Enable employees and associates to achieve and unleash their full potential
to deliver outcomes in a sustainable way
Goals and Objectives
▪ What does your organization want to

 Do
 Achieve
Business Goals
Survival
1.Profitability
2. Productivity
3. Competitive Position
4. Employee Development
5. Employee Relations
6. Technological Leadership
7. Public Responsibility
SMART Business Objectives
▪ S – Specific
▪ M - Measurable
▪ A - Agreed
▪ R - Realistic
▪ T- Time specific
Benefits of IT to achieve
org goals
▪ Simplify complex tasks (no experts, consultants needed)
▪ Make tasks quicker to perform (efficiency gain)
▪ Fewer errors so quality improves (effectiveness)
▪ Time needed to fix errors is reduced (efficiency).
▪ Output is better quality
▪ Improve communication and collaboration with email, chat etc
▪ Better decision making with management support tools
▪ Frees people from tedious jobs - do better things
▪ Allow the use of virtual teams
Portfolio
▪ The collection of different items a company sells.
▪ Within the product portfolio, each item typically

makes different contributions to the company’s
bottom line.
▪ Some products cost more to produce, some are
increasing their market share (or losing market
share) at a faster rate, some bring in more revenue
and some have greater marketing expenses
Portfolio
▪ A collection of businesses or products owned by

a business
▪ Can be applied to a collection of products

produced by a firm or a collection of businesses
owned by a firm
BCG Product Portfolio Matrix
▪ Do you have a balanced

portfolio ?
▪ Do you have a few

products/businesses in
each category
▪ Developed by BCG as a
portfolio analysis tool
Product Life Cycle and BCG Matrix
BCG Matrix vs Product Life Cycle
▪ BCG Matrix
 Cash flow orientated
 Product Portfolio orientated
▪ PLC
 Sales orientated
 Individual Product Orientated
The BCG Detail – Question
Mark
▪ Low market share
▪ The market is growing rapidly
▪ The cash flow is usually
negative
▪ There is potential
▪ The future is uncertain
▪ Can turn into a Star or Dog
▪ Eg Paper Boat, Samsung Edge, Nimbuz

What is the strategy for ???
▪ Invest
 Market Share
 Growth to beat competitors
▪ Marketing & Advertising spend
▪ Other investments
▪ Build selectively
The BCG Detail – Stars
▪ High market share
▪ The market is growing rapidly
▪ High mktg spends
▪ The cash flow is usually
neutral or minimally +
▪ Leadership position
▪ Product/business is strong
▪ Should turn into a Cash Cow in time
▪ Eg Iphone , Hyundai Creta, Honda City

What is the strategy for
Stars
▪ Build sales and market share
▪ Invest for growth
▪ Increase or maintain leadership
positions
▪ Fight off competitors
The BCG Detail – Cash Cow
▪ High and + cash flow
▪ High /dominant market share
▪ Low growth rate
▪ Mature product in the PLC
▪ Successful product
▪ Low potential for growth
▪ Eg Iphone 5S, Coca Cola, Parle G

What is the strategy for cash
cows
▪ Reduce investment to maximize
▪ Cash flow
▪ Profits
▪ Low or no investment need
▪ Harvest
▪ Defend market share
▪ Invest profits from cash cows
to develop new products
The BCG Detail - Dog
▪ Low market share

▪ Low market growth
▪ No real potential
▪ Dogs are products
 That have failed OR
 Are in the decline phase of PLC
▪ Iphone 5C, Blackberry, Renault Lodgy

What is the strategy for Dogs ?
▪ Not worth investing in

▪ You may decide to ‘milk’ the Dog !
▪ Divest or Phase out
or focus on a niche that can be defended
▪ May need reinvestment of any profits
▪ May need more than justifiable/significant
management time or resources
Inferences from the BCG Matrix
▪ Cash cows produce cash surpluses that can be

used to support other products (which ones ?)
▪ Stars need funding. Inadequate funding may
make them question marks instead of cash cows
▪ Usually stars become cash cows
▪ Question marks have to be dealt with.
 Fund or drop
▪ Dogs can be milked for cash but will eventually
need to be dropped
BCG Characteristics
BCG weaknesses
▪ Snapshot view
▪ No environment measures
▪ No predictive value
▪ Assumptions – may not always work
▪ Market share can be gained by more marketing
▪ Higher market share will give cash surplus
▪ Market attractiveness cannot be only measured by
growth
▪ Cash surplus is not guaranteed by higher market share
▪ Video
BCG Summary
EXTERNAL ENVIRONMENT ANALYSIS
GE/Mckinsey 9 cell Portfolio
Matrix
Matrix
Industry Attractiveness
▪ Market
 Size
 Growth Rate
 Forecast and current
 Rivals
▪ Profitability
▪ Nature of Demand
▪ Global or local
▪ Macro /PESTLE
Business Unit Strength
▪ Market Share
▪ Image
 Corp
 Brand
▪ Prod Capacity
▪ Channel Strength
▪ Relative profitability
▪ IP and R & D
▪ Marketing
Matrix
BCG vs GE/Mckinsey Matrix
Criteria BCG GE/Mckinsey
Analysis 4 cell 9 cell
Market Growth Attractiveness
Business Unit Relative Market Share SBU Strength
Classification High/Low High/Medium/Low
Dimensions Single Multiple
BUSINESS LEVEL/SBU STRATEGY
COMPETITIVE ADVANTAGE
Competitive Advantage
▪ Michael Porter – 1985

▪ Organization
 Benefit
 Target Market
 Competition
To be successful, if you are better than

competition then you need to tell your target
market so !
▪ Competitive advantage is a set of unique

features of a company and its products that are
perceived by the target market as significant
and superior to the competition.
▪ Usually they are
 Cost
 Differentiation in Product/Services
 Niche strategies
Analysing Customers
▪ Demographic Analysis/Profile
▪ Behavioral analysis
▪ Who buys
▪ What do they buy
▪ Why do they buy
 Price/Quality/Convenience/Value
 Reliability/Service/Payment Terms/Delivery
 How do they choose
Questions..
▪ What steps are involved in the decision-making process?
What sources of information are sought?
What is a timeline for a purchase (e.g., impulse vs. extended decision-making)?
Will the customer consult others in their organization/family before making a
decision?
Who has the authority to make the final decision?
Will the customer seek multiple bids?
Will the product/service require significant changes?
▪ Reason/occasion for purchase?

Number of times they'll purchase?
Timetable of purchase, every week, month, quarter, etc.?
Amount of product/service purchased?
How long to make a decision to purchase?
Where does the customer purchase and/or use the product/service?
Analysing Competitors
▪ What are they saying

▪ Annual reports/Analyst interviews/Statements by
managers/Press releases/News Articles
▪ What are they doing

▪ Hiring/R & D projects/Capex/Ads/Alliances/M & A
Competitive Advantage - Cost
▪ A company is able to utilize its skilled workforce,

inexpensive raw materials, controlled costs, and
efficient operations to create maximum value to
consumers
▪ Eg LCC – Ryanair, Indigo
▪ Walmart, Ikea, Many China manufactured products
▪ Strategies can include..
 Product Design
 Reengineering of business process
 Better delivery methods
Competitive Advantage – Product
Service/Differentiation
▪ If a company's product or service has a valuable,
unique offering for its consumers, then loyalty and
product/service differentiation can occur.
▪ Amazon – Pantry, Delivery messaging
▪ DBS Bank – Digi banking
▪ Mont Blanc Do you use
Business
▪ Ola – Onboard Wifi & Tab Analytics ?
▪ Indigo – OTP, TAT, Aircraft Utilization
▪ Apple
Competitive Advantage – Niche
Strategies
▪ Niche products tend to target a smaller market segment and
frequently offer features that are not found in a mass market
product. They tend to be higher priced, sold in more limited
distribution, and branded.
▪ Shabri/Shreyas/Mahesh Lunch Home
▪ Beanbags
▪ Blackberry
▪ Last minute.com
▪ Tatkal
▪ On Demand TV
▪ Microfinance companies
Channel as competitive
strategy
Distribution Channel as a competitive strategy eg
Video rentals, Publishing
Multiple distribution channels eg restaurants
Distribution channel design – is your existing

channel able to fulfill ALL your channel
requirements ?
STRATEGIC MANAGEMENT
101
CASELETS
COST
Cost – Walmart
(International)
▪ Every Day Low Prices
▪ Low cost medium quality products
▪ Pleasing visual ‘in-store’ merchandising …shopping is a pleasure
▪ A typical shoppers cart at Walmart will be 10-12 % less expensive
than competition
▪ Bulk procurement, direct transport to stores, own transport fleet
etc
▪ Very efficient supply chain with long term, high volume contracts
& significant ‘performance pressure’ on suppliers
▪ Walmart operates a variety of customer loyalty schemes such as
discount coupons for repeat shoppers to reduce COCA
▪ Extremely well merchandised ‘one stop’ outlets
▪ Significant POS and backend automation
DIFFERENTIATION
Differentiation – Coca Cola
▪ Anchor product Coca Cola

▪ Iconic logo and bottle, color
▪ Brand and Brand recall
▪ Product portfolio – Coke, Diet
Coke/Coke Zero, Thums Up, Sprite,
Fanta, Powerade, Minutemaid,
Dasani, Vitaminwater
▪ Brand ambassador
▪ Sales and Distribution
▪ Robust M & A strategy - Thums Up,
COST+DIFFERENTIATION
Cost + Differentiation -
Indigo Airlines
Cost Differentiation
▪ Bulk purchase, Volume discounts
▪ OTP
▪ Aggressive fleet retirement
▪ Very young fleet ▪ TAT, Row wise boarding
▪ Single aircraft type ▪ Highest asset utilization rate
▪ Highest asset utilization rate
▪ Highly efficient operations
▪ Equipment innovation
▪ Lower Labor costs ▪ Before time departures
▪ Combine lease vs owned ▪ Pre and Post flight customer
▪ Lower cost of finance post IPO contact
▪ Higher ancillary revenue
▪ Price premium
Cost+Differentiation - IKEA
Cost Differentiation
▪ DIY – you are the labor ▪ Showroom layout is like a real home
▪ Bulk manufacturing/ scale ▪ Strategic alliances
▪ Minimalist design ▪ Consulting
▪ Easier to manufacture ▪ Knowledgeable salespeople
▪ Flat packed ▪ Customer Experience/will not miss
▪ Showroom + Warehouse in the ▪ Food !!!!! (13 %)
same location ▪ Large showroom/time discount
▪ Interchangeable parts ▪ Swedish Design
▪ Lower Cost, ▪ Employee centric
▪ Minimal staff ▪ Unique room based Pop up advertising
NICHE
Niche - Harley Davidson
▪ Significant differentiation
▪ HNI segmentation and personality
identification
▪ Premium Pricing
▪ Iconic and long standing product
with IP creation
▪ Styling
▪ Sound
▪ Etc
▪ Clever ‘cult’ marketing & branding
POPULAR BUSINESS MODELS
Razor and Blade Model
▪ The initial product is sold at or below cost or

given free to drive demand for complementary
and necessary goods.
▪ The company makes its money on the
replacement parts required
▪ Eg Gillette, HP
Subscription
▪ Users pay for access to a product or service

regardless of whether they actually use it or not
during the payment term
▪ E.g. Newspapers, Cable TV, Telecom, ISPs

Pay as you use
▪ Aka pay as you go

▪ Users pay only for the products/services
consumed
▪ Eg Utilities like water or electricity, Uber/Ola,
Cloud computing/SaaS
Freemium
▪ This model provides basic features free but

levies a hefty charge on a version with
advanced features
▪ Eg anti-virus software
Wholesale-Retail
▪ Wholesaler sells to a retailer at a discounted

‘wholesale’ price and the retailer sells at MRP.
▪ Retailer earns further through schemes
▪ Price is sometimes controlled by the manufacturer,
sometimes the retailer has discretion
▪ Eg FMCG, Automotive
Agency
▪ Producer relies on an agent to sell the

product/service based on an agreed
commission
▪ Eg real estate
Bundling
▪ The producer sells a combination of products

and/or services at a price that reflects a
discount to the sum total
▪ Eg Microsoft Office, Cinema ticket with

refreshments
Dynamic Nature of models
▪ Combination
▪ Razor and Blade with subscription
▪ Eg Verizon, AT & T
▪ Evolution Razor & Blade->Freemium

INTERNAL ENVIRONMENT ANALYSIS
Agenda
▪ Internal Environment Analysis

 Analyzing Strategic Capabilities
 Resources
 Core Competence
 VRIO framework
Internal Environment Analysis
▪ What do we do best?
▪ What are our company resources – assets,
intellectual property, and people?
▪ What are our company capabilities (functions)?
▪ What are we best in the world for ?

▪ What drives our economic engine ?
▪ What are we passionate about ?
Why Internal Analysis
▪ Only way to identify Strengths & Weaknesses
▪ Needed to make good strategic decisions

▪ Vision/Mission/Objectives/Strategies
▪ Resources:
 Product quality
 Brand associations, existing overall brand,
 Relative cost of this new product,
 Employee capabilities
 Product portfolio analysis
 Assets, IP etc
▪ Capabilities
 Goal : To identify
 Internal strategic strengths
 Leadership
 Management
 People
 Weaknesses, problems, constraints and uncertainties
 Sales/Profitability
Internal Analysis Methods
▪ Benchmarking helps you learn from other companies or organisations.
▪ SWOT deals with strengths and weaknesses of your company as well as with
opportunities and threats posed by the external environment and it analyses the
internal processes of company as well as external factors.
▪ The Balanced Scorecard allows managers to have a wider overview of an
organization since it contains financial and non-financial measurements in a
single report.
▪ The cost-benefit analysis considers and quantifies future benefits that are not
only of a monetary character. It is a rather strong method which can deduce the
value of investment alternatives.
▪ A break-even analysis is a mathematical method to determine the quantity of
production and sale that is necessary to gain profits. All of these methods have
their advantages and are described briefly.
▪ Benchmarking
There are numerous definitions for benchmarking.
▪ One of the most popular definitions, established by the pioneer
in benchmarking, Robert C. Camp, describes benchmarking as
"the search for the best industry practices which will lead to
exceptional performance through the implementation of these
best practices"
▪ Camp considers benchmarking as a good tool for organizations
aiming to improve their processes.
▪ Cost-benefit analysis
▪ Cost-benefit analysis helps you to evaluate potential
investments.
▪ Costs incurred can be calculated easily and precisely, but
there are not many good methods available to assess future
effects.
▪ In addition, these effects are subject to high levels of risk.
▪ Cost-benefit analysis closes the gap between the current
costs and future benefits of a project or an investment.
▪ Break-even analysis
Break-even analysis on the other hand is an
instrument used to calculate the amount of
products, which you have to sell in order to gain
profits.
▪ With the aid of the break-even analysis you can find
the break-even point which is determined as the
point that separates profit from losses
▪ SWOT analysis
The SWOT analysis displays important external and
internal influence factors.
▪ It helps you to identify a multitude of strategic options.
▪ A SWOT analysis contains a strengths-weaknesses (S-
W) analysis as well as an opportunities-threat (O-T)
analysis.
▪ Summarizes the main results of research into internal
processes as well as research into influencing factors
of the environment.
▪ Balanced Scorecard
Robert Kaplan and David Norton proposed the concept of a
balanced scorecard (BSC) as a methodology for measuring an
organizations performance beyond profit margins and dividend
yields
▪ The balanced scorecard transforms an organization’s strategic
plan from an attractive but passive document into the
"marching orders" for the organization on a daily basis
▪ The balanced scorecard measures four dimensions of an
organization-financial, internal business, innovation and learning,
and customer.
▪ For each of these dimensions the scorecard demands managers
to develop metrics, performance targets and at the end of each
period collect and analyze the data gathered
BSC framework
The VRIO Framework
▪ VRIO is an abbreviation for the four question

framework you ask about a resource or
capability to determine its competitive potential
▪ The question of Value, the question of Rarity,
the question of Imitability (Ease/Difficulty to
Imitate), and the question of Organization
(ability to exploit the resource or capability).
VRIO Framework questions
▪ The Question of Value: "Is the firm able to exploit an
opportunity or neutralize an external threat with the
resource/capability?"
▪ The Question of Rarity: "Is control of the resource/capability
in the hands of a relative few?"
▪ The Question of Imitability: "Is it difficult to imitate, and will
there be significant cost disadvantage to a firm trying to
obtain, develop, or duplicate the resource/capability?"
▪ The Question of Organization: "Is the firm organized, ready,
and able to exploit the resource/capability?" "Is the firm
organized to capture value?"[
A real-life VRIO framework
case study is Google.
▪ There’s no doubt that Google is one of the most powerful companies in the world,
and its success arguably stems from a sustained competitive advantage in human
capital management.
▪ Value: Use human capital management data to hire and retain innovative,
productive employees. These employees consistently create some of the most
popular consumer products and services in the world.
▪ Rarity: No other companies are using data-based employee management so
extensively.
▪ Imitability: Data-based human capital management is both costly and difficult to
imitate, at least for the near future. Companies have to build the software and
invest in training their HR staff on the new technology and strategy.
▪ Organization: Google is organized to capture value from this capability. The IT
department has the skills to collect and maintain the data, while HR and team
leaders are trained on how to use the data to hire, promote, manage, and
improve performance of employees.
STRATEGIC MANAGEMENT
101
Strategic Decisions, Benefits,
Pitfalls
GLOBALIZATION
Strategic Decisions
▪ The Six Questions !
▪ Global deals ?
▪ Byjus
▪ Reliance, Aramco
▪ Tata Corus, JLR
▪ GCPL, Africa
▪ Motherson Sumi
▪ Amazon
▪ Etc
Benefits
▪ Diversification and risk hedging of economic

cycles and demand across countries and
markets
▪ Access to Finance
▪ Expertise availability
▪ Labor and Cost Arbitrage
▪ Access to precious Raw materials
▪ Inter country sales
▪ Others…
Pitfalls
▪ Over reliance on any specific market

▪ High wage cost in developed countries
▪ High Entry or Withdrawal barriers
▪ High cost of Compliance and Corporate
Governance
▪ Country specific financial regulations
▪ Forex risks
Case Study-Call Centres in
In 2002, the Hong Kong and Shanghai Banking Corporation (HSBC) announced it
was migrating 4,500 UK jobs to India and Malaysia, and Prudential Assurance
Scotland
stated that it was opening a call centre in Mumbai and closing its UK centre.
Other organisations soon followed including Aviva, Lloyds-TSB, Barclays,
British
Telecom (BT), National Rail Enquiries Service (NRES) and Reality (Bain and
Taylor 2008). Phil Taylor and Peter Bain's report `Call Centres in Scotland
and Outsourced Competition from India' was published in November 2003.
The authors present a comprehensive analysis of the Scottish and Indian call
centre industries and the factors which facilitate or inhibit the transfer of
Scottish jobs. In their report they suggest Call Centres are vitally important
to Scotland's economy. At the time there were around 300 call centres in
Scotland employing approximately 60,000 people, one in 43 (2.3%) of the
working population. The main factor driving offshoring was the prospect of
overall cost savings of 40–60 per cent realised through India's country
advantages, principally its low-cost, English-speaking, graduate workforce.
Indian call centre employment grew rapidly and by June 2003 was estimated at
75,000–115,000 with around 20,000 facing the UK.
However, offshoring has not proved universally unproblematic and research has
identified that companies have experienced, to varying degrees, difficulties
in respect of service quality, linguistic capability and cultural empathy
Case Study – Call Center –
Cont’d
Despite the benefits there have been reported difficulties in
converting the English
speaking resource into an actual ability to interact with
customers for whom
English is their mother tongue. Problems have also been
reported with
Infrastructure - Power cuts are common. Furthermore, the backup
supplies,
though apparently successful, have considerably increased
infrastructure costs.
Transporting employees to work presents huge logistical
challenges for
employers. Other companies have been charged with failing to
treat Indian
workers equitably. Data protection is problematic due to the
laws in India.
VALUE CHAIN ANALYSIS
Definitions
Value chain
represents the internal activities a firm engages in
when transforming inputs into outputs
Value chain analysis (VCA)

is a process where a firm identifies its primary and
support activities that add value to its final
product and then analyze these activities to
reduce costs or increase differentiation.
The VCA Tool
▪ VCA is a strategy tool used to analyze internal
activities.
▪ Goal
to recognize, which activities are the most
valuable (i.e. are the source of cost or
differentiation advantage) & which can be
improved to give competitive advantage
▪ Compete via
Higher differentiation
Lower Cost
Niche Strategy
Porter’s Value Chain
▪ Porter introduced the generic value chain

model in 1985.
▪ Value chain represents all the internal activities
a firm engages in to produce goods and
services.
▪ VC is formed of
 primary activities that add value to the final product
directly
 support activities that add value indirectly.
Primary vs Support Activities
Primary vs Support Activities..
▪ Although, primary activities add value directly to the production

process, they are not necessarily more important than support
activities.
▪ On the other hand, primary activities are usually the source of cost
advantage, where costs can be easily identified for each activity
and properly managed
▪ Nowadays, competitive advantage could mainly come from
technological improvements or innovations in business models or
processes.
▪ Therefore, such support activities as ‘information systems’, ‘R&D’
or ‘general management’ are usually the most important source of
differentiation advantage.
Value
Chain
VCA – The Tool
▪ There are two different approaches on how to

perform the analysis, which depend on what type
of competitive advantage a company wants to
create i.e. cost or differentiation advantage
▪ This approach is used when organizations try to
compete on costs and want to understand the
sources of their cost advantage or disadvantage
and what factors drive those costs.
 Step 1. Identify the firm’s primary and support

activities.
 Step 2. Establish the relative importance of each
activity in the total cost of the product.
 Step 3. Identify cost drivers for each activity.
 Step 4. Identify links between activities.
 Step 5. Identify opportunities for reducing costs.
▪ Step 1. Identify the firm’s primary and support
activities.
▪ All the activities (from receiving and storing materials to
marketing, selling and after sales support) that are
undertaken to produce goods or services have to be
clearly identified and separated from each other.
▪ This requires an adequate knowledge of company’s
operations because value chain activities are not
organized in the same way as the company itself.
▪ The managers who identify value chain activities have
to look into how work is done to deliver customer value.
▪ Step 2. Establish the relative importance of each
activity in the total cost of the product.
▪ The total costs of producing a product or service
must be broken down and assigned to each activity.
▪ Activity based costing is used to calculate costs for
each process.
▪ Activities that are the major sources of cost or done
inefficiently (when benchmarked against competitors)
must be addressed first.
▪ Step 3. Identify cost drivers for each activity.
▪ Only by understanding what factors drive the costs,
managers can focus on improving them.
▪ Costs for labor-intensive activities will be driven
by work hours, work speed, wage rate, etc.
▪ Different activities will have different cost drivers.
▪ Step 4. Identify links between activities.
▪ Reduction of costs in one activity may lead to further
cost reductions in subsequent activities.
▪ For example, fewer components in the product design
may lead to less faulty parts and lower service costs.
▪ Therefore identifying the links between activities will
lead to better understanding how cost improvements
would affect he whole value chain. Sometimes, cost
reductions in one activity lead to higher costs for
other activities.
▪ Step 5. Identify opportunities for reducing

costs.
▪ When the company knows its inefficient activities
and cost drivers, it can plan on how to improve
them.
▪ Too high wage rates can be dealt with by
increasing production speed, outsourcing jobs to
low wage countries or installing more automated
processes or lowering wages
Competitive Advantage -
Differentiation
▪ VCA is done differently when a firm competes on
differentiation rather than costs. This is because the
source of differentiation advantage comes from
creating superior products, adding more features and
satisfying varying customer needs, which usually
results in higher cost structure
▪ Step 1. Identify the customers’ value-creating activities.
▪ Step 2. Evaluate the differentiation strategies for
improving customer value.
▪ Step 3. Identify the best sustainable differentiation.
Differentiation
▪ Step 1. Identify the customers’ value-creating
activities.
▪ After identifying all value chain activities,
managers have to focus on those activities that
contribute the most to creating customer value.
▪ For example, Apple products’ success mainly
comes not only from great product features (other
companies have high-quality offerings too) but
from successful marketing activities.
Differentiation
▪ Step 2. Evaluate the differentiation strategies
for improving customer value.
▪ Managers can use the following strategies to
increase product differentiation and customer
value:
 Add more product features;
 Focus on customer service and responsiveness;
 Increase customization;
 Offer complementary products.
Differentiation
▪ Step 3. Identify the best sustainable
differentiation.
▪ Usually, superior differentiation and customer
value will be the result of many interrelated
activities and strategies used.
▪ The best combination of them should be used to
pursue sustainable differentiation advantage.
Implementation steps
▪ Step-1: Depending on the business model, we have to find the
organizational value chain activities.
▪ Step-2: The defined value chain activities have to be assigned into
proper value added business function.
▪ Step-3: Define an proper organizational structure such that each
business units can generate the effective maximum value by
performing all needed value added activities.
▪ Step-4: We have to define proper synchronization mechanism for
the efficient synchronization of business functional activities to
achieve common business goal.
▪ Step-5: Effective communication mechanisms have to be defined
among the business functional units
STRATEGY AND STRUCTURE
Agenda
▪ Strategy and Structure

▪ Culture
▪ Business processes to support strategy
execution
▪ Ethics and governance
The “Structuralist” approach
▪ Roots are in the structure-conduct-performance
paradigm of industrial organization economics, which
has dominated the practice of strategy for the past 30
years.
▪ A firm’s performance depends on its conduct, which in
turn depends on basic structural factors such as number
of suppliers and buyers and barriers to entry.
▪ Eg Most IT Companies like TCS, Wipro etc

In contrast…
▪ However, there are plenty of cases in which firms’
strategies shaped industry structure, from Ford’s
Model T to Nintendo’s Wii.
▪ The Blue ocean strategy, reflects the fact that a
company’s performance is not necessarily
determined by an industry’s competitive
environment.
▪ The Blue ocean strategy framework can help
companies systematically reconstruct their industries
and reverse the structure-strategy sequence in their
favor.
The “Reconstructionist” approach
▪ The Blue ocean strategy

 The central paradigm is that the ideas and actions of
individual players (organizations) can shape the economic
and industrial landscape.
▪ In other words, strategy can shape structure
▪ Eg New age companies
Execution
▪ While the structuralist approach is valuable and relevant,
the reconstructionist approach is more appropriate in
certain economic and industry settings.
▪ Indeed, today’s economic difficulties have heightened the
need for a reconstructionist approach.
▪ The first task of an organization’s leadership, therefore,
is to choose the appropriate strategic approach in light
of the challenges the organization faces.
▪ After choosing the right approach, executives need to
make sure that their organizations are aligned behind it to
produce sustainable performance.
Execution…
▪ There are three factors that determine the right
approach:
 the structural conditions in which an organization
operates,
 its resources and capabilities,
 its strategic mind-set.
Source : HBR
Execution…
▪ But when conditions are unfavorable and they are
going to work against you whatever your resources
and capabilities might be, a structuralist approach is
not a smart option.
▪ This often happens in industries characterized by
excess supply, cutthroat competition, and low profit
margins.
▪ In these situations, an organization should adopt a
reconstructionist approach and build a strategy that
will reshape industry boundaries
▪ Eg. Tesla , Amazon
Strategy Propositions
▪ A strategy’s success is based on the development

and alignment of three propositions:
 (1) a value proposition that attracts buyers
 (2) a profit proposition that enables the company to make
money out of the value proposition
 (3) a people proposition that motivates those working for
or with the company to execute the strategy
Structural Failures
▪ Unless a company creates a complete set of consistent
propositions, it is unlikely to produce a high-performing
and sustainable strategy.
 If, for instance, the value and profit propositions are strong, but
the people proposition doesn’t motivate employees or other
constituencies, the organization may experience temporary but
unsustainable success. This is execution failure.
 Likewise, an organization that offers a motivating people

proposition but lacks a strong value or profit proposition will find
itself mired in poor performance. This is formulation failure
Execution..
▪ Each proposition may need to address more than one
group of stakeholders, as when successful strategy
execution rests on the buy-in of not only an
organization’s employees but also groups outside it,
such as supply chain partners.
 Eg E-Commerce Industry sellers, Logistics partners etc
▪ Similarly, a company in a business-to-business industry
may have to formulate two value propositions: one for
the customer and another for the customer’s customers.
 Eg Aircraft Industry, Automotive Fleet Industry
Source : HBR
The Leadership Challenge
▪ With an increasing number of businesses, governments, and
nonprofits facing unattractive environmental and structural
conditions, leaders can no longer afford to follow the common
practice of letting structure drive strategy in all situations.
▪ The economic challenges organizations face today only underscore

the importance of understanding how strategy can shape structure.
▪ Take any company with multiple businesses. Different business units

face different structural conditions with different resources and
capabilities and have different strategic mind-sets; a structuralist
approach will be a better fit for some units, while a reconstructionist
approach will be more appropriate for others.
The Leadership Challenge..
▪ The two strategy schools’ assumptions and theories are

distinct, and neither is sufficient to deal with the diverse and
changing structural and business conditions that organizations
face today and in the future.
▪ The challenge for leaders, therefore, is to ensure that a robust

debate takes place on what the right strategic approach for
each business should be and then to enter into the spirit of the
framework to develop the right strategy for that unit—be it a
structuralist competitive strategy model or a reconstructionist
blue ocean strategy model.
Definition
▪ Organizational Culture
 D.N.A. of the company
 Atmosphere/traditions/unwritten rules/this is how
we do it
 Wiki
 Organizational culture is the behavior of humans within
an organization and the meaning that people attach to
those behaviors.
 Culture includes the organization's vision, values,
norms, systems, symbols, language, assumptions,
beliefs, and habits
Culture vs Strategy
Culture eats Strategy for Lunch

- Peter Drucker
Organizational Culture
▪ Atmosphere/DNA/Culture
 Openness
 Trust •Protocol centric
hierarchical organizations
 Confrontation •Authoritarian, Command &
Control
 Authenticity
 Pro-activity Vs
 Autonomy Free wheeling, ‘formless’

organizations, consensus
 Collaboration type
 Risk taking
 Experimentation
 Tolerance of failure
Inculcating a culture of
Innovation…
Components of innovative work environments
▪ Encouragement
▪ Organizational
▪ Supervisory Creative
▪ Work Group Work
Environments
▪ Freedom
▪ Challenging work
▪ Lack of impediments HR
▪ Good Project Managers M
▪ Sufficient Resources
Culture Matters because
▪ Assumptions & beliefs of employees drive

behavior
▪ Collective behavior of employees determines
results
▪ Results measure performance and achievement
of objectives
Assumptions Behavior Results

The Elements of Organizational
Culture
▪ Core beliefs
 State of the mind
 Combine to create the org’s success formula
▪ Values
 Sense of right and wrong, what ‘ought’ to be
 Positive results that flow from core beliefs
▪ Behaviour norms
 Normative behavior and reactions
▪ Fears
 Negativity arising from ignoring core beliefs and violating values
▪ Infrastructure
 People, processes, structures, departments, teams, task-forces, rules
Business processes to support
strategy execution
▪ Strategic Planning
▪ Execution and Ops
▪ Good Hiring
▪ People Engagement and Enhancement
▪ Financial Control
▪ Business Analytics
▪ Regulatory Compliance
Business Ethics and Governance
▪ The study of proper business policies and practices

regarding potentially controversial issues, such as
corporate governance, insider trading, bribery,
discrimination, corporate social responsibility and
fiduciary responsibilities
▪ And Ethical (correct) business behaviors
▪ Compliance with the laws of the land and the world at
large
The Four questions..
1. What is Ethics ?
▪ Ethics is concerned with distinguishing

▪ between good and evil in the world,
▪ between right and wrong human actions,
▪ between virtuous and non-virtuous characteristics of
people.
2. What does it mean to be Ethically responsible ?
 To adopt the morally correct path

3. What are the Ethical responsibilities of

businesses?
 Businesses are accountable for fulfilling their moral

duties;
 the actions of a business must be morally correct and
must benefit the whole of society.
 In this way, there must be a balance between economic
growth and the welfare of society and the environment
4. What are the social responsibilities of business ?
▪ Social responsibility is an ethical theory that a

business entity, has an obligation to act to benefit
society at large.
 Includes facets such as CSR, Ecological sensitivity etc
CHANGE IS THE ONLY CONSTANT
The Fickle nature of Change
▪ Unpredictable
 Natural disasters – Chennai Flood
▪ Uncontrollable
 GFC, Covid
▪ Inevitable
 Inflation
▪ Continuous
 Rising expectations of customers
The world changeth…
▪ Globalization
▪ Competition
▪ Profit Margins Costs
▪ Differentiation
▪ Loyalty
▪ Attitudes
▪ Knowledge
▪ Skills
▪ Opportunities
Change can impact any
function…
▪ Sales
▪ Marketing
▪ Finance
▪ HR
▪ Operations
Changes in Sales
▪ Revenues
▪ Margins
▪ Eg Apps, Anti-virus Free vs Chargeable
▪ Volumes
▪ Business models eg E-Commerce, Aggregators
▪ Process eg Cold calling is a dying art
▪ Sales cycles
 Long vs Short
▪ Knowledge quotient
Changes in Marketing
▪ Overload in advertising
 Amount
 Frequency
▪ Messaging types
 Evocative eg Paper Boat
 Emotional eg Life Insurance/Pension
▪ Channels used
 Print vs TV vs Social Media
▪ Sponsorship eg Cricket
▪ Costs of Marketing
Changes in Finance
▪ Costs eg Raw Materials
▪ Interest Rates
▪ Forex Rates
▪ Receivables eg Days Outstanding
▪ Instruments
 Factoring
 Loans/Trade Finance
▪ Access to Funding
 VC/White Knight/Angel Investor/PE/HNI
Changes in HR
▪ Business Orientation
▪ Demographics
▪ Employee Life Cycles
 Retention vs Attrition
▪ Automation
▪ PMS
 Bell curve is dying
▪ Formal vs Informal Culture
At the workplace…
▪ Notice Periods – Reduced or Increased
▪ Use of MultiSkilling
▪ Workers are often expected to fulfil more than one role
▪ Use “annualised” hours
▪ Covers jobs that have “quiet” periods, e.g. teaching!
▪ More parttime and temporary workers
▪ This makes it easy to get staff when they are needed
▪ Use of “ZeroHours” Contracts
▪ Where staff are not promised any working hours, but are
expected to be available at shortnotice if required
▪ Increased Use of Contractors
▪ Often cheaper than paying your own staff, e.g. cleaning
Reduces overheads
Changes in Operations
▪ Org Structure
 Eg Infy Zero Distance
▪ Supply Chain
 Eg Mumbai dabbawalas
▪ Quality improvement programs
▪ Reporting
 Periodic vs Continuous
▪ Productivity
 One vs X
▪ Duty Travel
Org Structures are changing
▪ Hierarchical to flat
▪ 6-9 layers to 2-3 layers
▪ Pyramid to start up
▪ Do-ers as opposed to managers
Change as Part of Strategy
▪ Incorporate change into business strategy

 Eg Amazon lowers the price of its cloud storage
service every year
 Eg Peak hour surcharge by Ola
 Eg Omni-channel retail strategy
Proactive Change Management
The art of being proactive is practiced by some experienced
managers to plan ahead for anticipated changes
Change Anticipate By: Possible

Strategies
Falling Sales Sales Forecasting & Develop new
Market Research schemes or
products eg Apple
Legal Change Government Adapt to new
announcements legislation eg Net
Neutrality
Labour Shortage Employment data MTP, Recruit from
and difficulty filling wider area and train
posts own staff
Resistance to Change
▪ Comfort Zone
▪ Inertia
▪ Employees may feel that there job may be under threat
▪ Older workers will feel unable to cope with new
technology
▪ Employees may resent the need to retrain
 Eg the skills they have now are no longer required, so why bother learning
new ones
▪ Organisational structure changes can lead to demotivation
▪ M & A/Changes in ownership can lead to different working
conditions and working practices
Unanticipated Changes
▪ Natural Disasters
 Eg Japan Earthquake’s impact on business
▪ Disaster Management
 Eg Tsunami Early Warning Systems
 Eg 9/11
▪ Stock Market Crash
Kaizen Principles
▪ Incremental change is better than catastrophic change.
▪ Originating in Japan, where “Kai” = change and “zen” =

good
▪ Kaizen relies upon employee involvement and employee

suggestions who meet regularly to suggest improvements to
the way work is carried out.
▪ It is a cost effective method of developing new ideas and

techniques that can have a massive impact upon the
business eg Delta Airlines - olive
Kaizen Limitations
▪ Disruptive Changes - Some changes cannot be introduced
gradually
▪ Management must embrace empowerment
▪ My way or the highway - authoritarian managers would find

Kaizen difficult to accept
▪ Short- term increase in costs eg staff training, downtime
▪ Kaizen tends to produce the best changes quickly, but

after this period it may become less useful
Black Swan Planning
▪ Some change cannot be introduced gradually but can still be
planned for
▪ A contingency plan will try to prepare firms for opportunities

and threats that may occur in the future eg HSE planning
▪ They prepare staff for crisis situations, and give them a clear
role eg QF 32 case
▪ Damage limitation can be minimized if employees know how

to react
Innovation and Change
Management
▪ Business Models
 Apps, Anti-virusFree vs Chargeable
▪ Social Entrepreneurship
▪ R&D
 Fundamental
 Eg Penicillin
 Applied
 3D Printing
▪ Broadcasting
 Free-to-air vs Cable TV
Mckinsey 7S Model
▪ The McKinsey 7S Model was created to be a

recognizable and easily remembered model in
business.
▪ The authors terms the seven variables, as

“levers” - they all begin with the letter “S”.
7 S.. TM delayering, job titles
Kotter says..
7 S – The Theory
▪ For an organization to perform well, these seven elements need
to be aligned and mutually reinforcing.
▪ The model can be used to help identify what needs to be
realigned to improve performance
▪ Maintain alignment (and performance) during other types of
change.
▪ Whatever the type of change – restructuring, new processes,
organizational merger, new systems, change of leadership, and
so on – the model can be used to understand how the
organizational elements are interrelated and ensure that the
wider impact of changes made in one area is taken into
consideration
7-S model
▪ Analyze the current situation (Point A),

▪ A proposed future situation (Point B)
▪ To identify gaps and inconsistencies between
them.
▪ Adjust and tune the elements of the 7-S model
 to ensure that your organization works effectively
once you reach the desired endpoint
Strategy
▪ What is our strategy?

▪ How do we intend to achieve our objectives?
▪ How do we deal with competitive pressure?
▪ How are changes in customer demands dealt
with?
▪ How is strategy adjusted for environmental
issues?
Structure
▪ How is the company/team divided?
▪ What is the hierarchy?
▪ How do the various departments coordinate
activities?
▪ How do the team members organize and align
themselves?
▪ Is decision making and controlling centralized
or decentralized? Is this as it should be, given
what we're doing?
▪ Where are the lines of communication? Explicit
and implicit?
Systems
▪ What are the main systems that run the

organization? Consider financial and HR systems as
well as communications and document storage.
▪ Where are the controls and how are they monitored
and evaluated?
▪ What internal rules and processes does the team use
to keep on track?
Shared Values
▪ What are the core values?

▪ What is the corporate/team culture?
▪ How strong are the values?
▪ What are the fundamental values that the
company/team was built on?
Style
▪ How participative is the

management/leadership style?
▪ How effective is that leadership?
▪ Do employees/team members tend to be
competitive or cooperative?
▪ Are there real teams functioning within the
organization or are they just nominal groups?
Staff
▪ What positions or specializations are

represented within the team?
▪ What positions need to be filled?
▪ Are there gaps in required competencies?
Skills
▪ What are the strongest skills represented

within the company/team?
▪ Are there any skills gaps?
▪ What is the company/team known for doing
well?
▪ Do the current employees/team members have
the ability to do the job?
▪ How are skills monitored and assessed?
COMPETITIVE ADVANTAGE &
STRATEGIC LEADERSHIP
THE
CONCEPT
OF
ECONOMI
C VALUE
SUSTAINABLE COMPETITIVE
ADVANTAGE CAN BE CREATED BY
DRIVING DOWN COSTS OR
INCREASING DIFFERENTIATION
A miniscule number of organizations succeed in doing both
A niche strategy is a subset of differentiation
SUSTAINABLE COMPETITIVE
ADVANTAGE VIA LOWER
COSTS
Sustainable Competitive Advantage
via higher differentiation
NICHE STRATEGY
CAN ANY ORGANIZATION
SUCCESSFULLY EXECUTE
BOTH STRATEGIES
TOGETHER ?
LEADERSHIP
Definitions - Leadership
▪ Influencing employees to voluntarily pursue

organizational goals
▪ the action of leading a group of people or an
organization,
▪ or the ability to do this.
ONE OF THE MOST IMPORTANT
QUALITIES OF A LEADER IS…
THE ESSENCE OF LEADERSHIP
IS …
Leadership Theories
▪ Trait :
 “Who will make a good leader?”
▪ Behavior :
 “What do good leaders do?”
▪ Leader-Member exchange and transformational:

 “How does the interaction between subordinate and supervisor affect the
subordinate’s behavior?”
▪ Contingency and Path-Goal Approach:

 “Under a given condition, who will be a good leader and what behavior is
likely to be effective?”
Activity
What are your leadership

strengths ?
Review AB
Leadership Traits and Skills
Traits Skills
▪ Adaptable to situations ▪ Clever (intelligent)
▪ Alert to social environment ▪ Conceptually skilled
▪ Ambitious and achievement orientated ▪ Creative
▪ Assertive ▪ Diplomatic and tactful
▪ Cooperative ▪ Tremendous communicator
▪ Knowledgeable about group
▪ Decisive task
▪ Dependable ▪ Organised (administrative
▪ Dominant (desire to influence others) ability)
▪ Energetic (high activity level) ▪ Persuasive
▪ Persistent ▪ Socially skilled
▪ Self-confident Integrity, Honesty, Compassion, Humility
▪ Tolerant of stress
▪ Willing to assume responsibility
WOMEN LEADERSHIP
ACTIVITY - DEBATE
ARE LEADERS BORN OR ARE

THEY MADE ?
Leadership behaviors
▪ Leaders build consensus on and communicate clear,

institutionally-aligned and challenging direction.
▪ Leaders recruit, develop, mentor and engage teams

of collaborative, talented people.
▪ Leaders include and respect all individuals and

groups.
▪ Leaders encourage thoughtful experiments in

everyday work to foster innovative and creative
initiatives.
▪ Leaders go see to gain first-hand knowledge of their

organization’s processes and problems.
▪ Leaders ask ‘why’ to learn more about causes of

▪ Leaders understand that the health and safety of

our employees are important in the line of our
work.
▪ Leaders demonstrate the highest level of integrity

and ethics in all they do and say.
LINKING THE DOTS…
COMPETITIVE ADVANTAGE &

STRATEGIC LEADERSHIP
LEADERSHIP IS AN
AMAZING DISEASE
WHO ROWS YOUR BOAT ?
DID JOBS DO
A GOOD JOB
?
DREAM, DARE, SOAR, REMOVE FEAR
& MAY THE FORCE BE WITH YOU
USE OF INNOVATION TO GAIN

COMPETITIVE ADVANTAGE –
PART 1
INNOVATION
(IN TODAY’S ECONOMY,
INNOVATION IS THE NEW
CURRENCY)
Definitions
▪ Innovation is
 The process and result of creating something new
 That delivers value
 Is better than the past
 Harnessing the capability to change
▪ An end-to-end process from Concept to EOL
▪ The management of all activities involved in the process of idea
generation, technology development, manufacturing, marketing,
and maintenance of a new (or improved) product/service or process
▪ The transformation of knowledge into money
Definitions
▪ Innovation* is about finding a better way of doing
something. Innovation can be viewed as the application of better
solutions that meet new requirements, new or existing market
needs.
▪ This is accomplished through more
effective products, processes, services, technologies, or ideas that
are readily available to markets, governments and society.
*Wikipedia
(Innovation begins by disrupting old ways of doing things. At first
the disruption may be too small to be noticed by the established
players. However, as the disruptor continues to improve
processes and develop more complex products or services, larger
companies must take notice and/or risk becoming obsolete).
Definitions
A process by which a company

- build customer insights and identifies needs
- identifies unique market opportunities and prepares a
plan to take advantage of them
- develops winning products to address customers and
opportunities
In a unique manner different from other competitors
“..the ability to look where everyone else is looking
and see what no-one else can see.” - Richard J
Duggan
Stages of Innovation
▪ Opportunity identification
▪ Conceptualizing
▪ Design
▪ Prototyping
▪ Final Product
▪ Manufacture
▪ Marketing/Sales
▪ Lifecycle Maintenance
▪ End-of-Life
An Organizational Innovation Framework
Ref : Microsoft Innovation Framework

Innovation Process
Source : creativejeffery.com
Innovation Process
Innovation –
Diffusion
▪ Innovative companies will typically be working on new

innovations that will eventually replace older ones.
▪ Successive s-curves will come along to replace older ones and

continue to drive growth upwards.
▪ The second shows an emerging technology that currently offers

lower growth but will eventually overtake current technology and
lead to even greater levels of growth.
Open Innovation
▪ Open innovation is a paradigm that assumes that firms can and

should use external ideas as well as internal ideas, and internal and
external paths to market, as the firms look to advance their
technology”.
▪ Boundaries between a firm and its environment have become more

permeable; innovations can easily transfer inward & outward.
Open Innovation
Idea Generation Selection Execution Commercialization

Ideas and
innovations
from inside the
organisation
Select Prototypes Product

Develop
Successful and brought
New ideas
Ideas Production to market
Technology
Licensing
Spin-offs
Technology
OUT
Licensing
Licensing
IP
patents and
IN
IN
IP
innovations
from outside the
organisation
Examples of innovation
▪ Products
 Bio-fuel
 Music Player
▪ Services
 BPO/KPO
▪ Processes
 AI in Recruitment
Conceptual Framework
Creation of Knowledge
Leads to
Technological Development
Which in turn can lead to

Superior Products and Services
in tune with Market Needs to create

Theories and Models
▪ One of the most well known theories is the concept of
creative destruction propounded by renowned
economist Joseph Schumpeter.
▪ He argued that innovative thinkers develop new products and

technologies that over time make obsolete a product or process
that had once dominated its market.
▪ The innovation often starts at the low end of the market (for
example, with lower priced goods or components of higher end
products) and slowly works up to the higher end, taking market
share from the big players as processes and products improve.
Kondratieff Waves of innovation
Waves of Innovation
Innovation over the years…
▪ Glass (3500 BC) ▪ Video Games (1947)
▪ Abacus (2700 BC) ▪ Video Tape Recorder (1951)
▪ Windmills (200 BC) ▪ Laser (1957)
▪ Paper (105 AD – Europe 10th century – Germany ▪ Electronic calculator (1961)
1400)
▪ Spreadsheet software (1962)
▪ Printing Press (1450)
▪ Personal and laptop computers (1965)
▪ Steam Powered Vehicle (1672)
▪ Microprocessor chips (1968)
▪ Mechanical Vehicle (1769)
▪ Word processing software (Late 1960's)
▪ Camera Photography (1820)
▪ Mobile phones (1973)
▪ Telegraph (1837)
▪ Global Positioning Systems (1973)
▪ Modern Public Library (1850-1945 depending on
country) ▪ Digital cameras (1975)
▪ Vacuum Cleaner (1860) ▪ World Wide Web / Internet (1989)
▪ Telephone (1876) ▪ Email (1993)
▪ Modern Automobile (1878) ▪ Social networking (1994)
▪ Solar Cell (1883) ▪ Google search (1997)
▪ Wind Turbine (1887) ▪ WiFi (1999 but hte technology originates from approx
1985)
▪ Commercial Radio (1920)
▪ Wikipedia (2001)
▪ Electronic Television (1926)
▪ iPod and iTunes (2001)
▪ Disposable baby diapers (1930's)
Managing innovation &
knowledge for comp adv
▪ Evangelization
▪ Communication
▪ Participation
▪ Negotiation
▪ CXO support
▪ Directives
▪ Implementation assistance/Line support
People & Management of Innovation
▪ People
 Individual/Startup vs large scale organized R & D
▪ Creating a corporate structure where innovation is the
top priority.
▪ Developing a company strategy that encourages
realistic innovations that will prove successful in the
market.
▪ Figuring out where to find innovative ideas and how to
implement them once they are found.
▪ Pursuing innovative ideas with full company support
and resources.
Competitive Advantage from
innovation
▪ Market leadership
▪ Market growth
▪ Premium pricing
▪ First mover advantages
▪ Increased revenue and/or profitability
▪ Brand equity
▪ Mind share
▪ Improved business models
Innovation Challenges/Barriers
▪ Lack of Thought Leadership
▪ Mindset/Resistance to Change
▪ Traditions
▪ Generational differences/Age
▪ Reverse Pressures
 Financial/Govt/Compliance/Environment
▪ Lack of Resources
▪ Access to suitable markets
▪ Lack of appropriate tools and technologies
▪ Parties with malafide intent
▪ Size of organization
▪ Inability to implement/commercialise
Essentials for Innovation
▪ Ideas : ways to generate creative ideas, which address
customer requirements
▪ Prioritization : selecting the best ideas to make the best
use of available resources
▪ Implementation : quickly and efficiently developing
new products, using cross-functional
teams, prototyping and testing
▪ Innovation strategy : top management is responsible for
developing the strategy to drive innovation
▪ People and organization : creating a ‘culture of
innovation’.
Drivers for innovation
▪ Rising expectations from customers

▪ Shorter product life cycles
▪ Increased globalization
▪ Demographic changes
▪ Financial/Market/Economic/Environmental pressures
▪ Increasing competition and lower barriers to entry
▪ Access to improving technology
▪ Increasing compliance
▪ Sustainable development needs
Requisites for Innovation &
Knowledge Management
▪ R & D budgets
▪ Creative Thinkers
▪ Universities/Pvt Sector/Govt
▪ VCs and Incubators
▪ Entrepreneurs/SMEs
▪ Culture/environment
▪ Change Agents
How do Companies innovate
successfully
▪ Systematic collection of all impulses that could lead to
innovation
▪ Creativity of employees
▪ Ability to evaluate the possibility of the innovation
idea
▪ Good team work
▪ Project-based approach and ability to manage
projects
How do Companies innovate
successfully
▪ Employees’ motivation (the employees are willing to
improve the product and the operation of the whole
company)
▪ Continued upskilling/upgradation/L & D of employees
▪ Risk-taking rate and propensity
▪ Cooperation with external experts (universities,
research laboratories…)
▪ Funding
Why Innovation Matters
Increased Globalization
Class discussion
Key point : What are the pressures from Globalization

that cause (force) an organization to innovate
To gain Competitive Advantage
Class discussion
How Apple Corp continuously innovates to gain
competitive advantage
To meet rising service and quality expectations
Class discussion
Indigo Airlines
How has Indigo innovated to meet higher service
and quality expectations
Product Life Cycles are shortening
Class Discussion
Samsung
Why do shorter product life cycles drive them to
innovate
To match demographic changes in the

marketplace
Class discussion
Dell
How does Dell innovate to match changing
demographics
To keep pace with rising compliance

requirements
Class discussion
A large Bank
How does a bank innovate to meet increased
compliance
To differentiate product/service offering in

specific markets
Class discussion
Mcdonalds
How does Mcdonalds differentiate its
products/services in markets like India
To cope with
Financial/Market/Economic/Environmental
pressures
Class discussion
Tata Motors
How does Tata Motors innovate to cope and
overcome Financial/ Market/ Economic/
Environmental pressures
To tackle increasing competition and lower

barriers to entry
Class discussion
How have banks in India innovated to cope with
increasing competition
To create new business models
Class discussion
Amazon
How does Amazon innovate to create new
business models
To survive !!
To provide and sustain attractive returns to

shareholders of the organization
To build new revenue streams
Class discussion
How has the Indian Film industry innovated to
build new revenue streams
USE OF INNOVATION TO GAIN

COMPETITIVE ADVANTAGE –
PART 2
Types of Innovation
▪ Breakthrough
▪ Sustaining
▪ New Market
▪ Disruptive
Breakthrough
▪ A large, significant, measureable change in

performance, technology and value
Challenges to Breakthrough
Innovation
▪ Lack of resources – startups especially struggle with this
▪ Lack of laser-like focus necessary to achieve a breakthrough –
large companies can often struggle to maintain an intense focus
on perfecting a new idea
▪ Lack of a detailed understanding of the end user – without a
sufficient understanding of users needs, new product ideas can
become a grueling exercise in trial and error.
▪ Lack of required technical competencies – even with vast
resources, intense focus and an understanding of end users, some
projects will fail due to a lack of the core competencies needed in
order to execute the project
Sustaining
Sustaining
▪ Feature fixes/additions – most next generation products will

come with a handful of fixes and/or new features that address
previous gripes with the first generation products.
▪ Cost reductions – as sales volumes grow for a product, the cost of
purchasing raw materials for that product decline in addition to
design enhancements that simplify the product or enable it to
use less expensive materials.
▪ Product line expansions (proliferation) – at launch most new
products don’t have a full suite of products to meet each end-
user segment’s needs and as a fix for that companies will fill out
their product line by offering additional sizes, colors, etc.
New Market
▪ New market disruptions provide a simplifying

technology that a whole new set of customers can
use (personal computer made it affordable and
simple).
▪ They are competing against non-consumption
▪ Eg Sony – Walkman
▪ Eg. PC
▪ Eg iPad
Disruptive
▪ A disruptive innovation is an innovation that creates
a new market and value network and eventually
disrupts an existing market and value network,
displacing established market leaders and alliances.
▪ Eg Car ownership vs Ola/Uber
▪ Eg Retail business vs E-Commerce
▪ Eg Touch screen vs Feature Phones
▪ Eg Email vs Fax vs Telex
Disruptive Innovation Examples
Source : businesstheory.com
Combination of 4 types
Disruptive Innovation
Radical vs
incremental
innovation
 What is the usual
nature of innovation
in HR
 Why ?
 How to change the
status quo
 Benefits of such a
change
Source : Larry Putterman

What makes an innovation
disruptive?
Performance Push - an overwhelmingly superior
technology/process
(Penicillin, lithium batteries, Wi-fi)
Customer Pull - new customers care about different

measures of performance
(smart phones, tablets)
Organizational Competencies - incumbents cannot do what

the innovators can
(Indigo, Dell , Southwest Air)
Why do firms collaborate for
technological innovation
▪ Business
 Increased Scale/Scope eg Tata JLR
 Regulatory Compliance eg MPEG, JPEG
 Time-to-market Google-Motorola
 Shared cost and risk eg Pharma
 Increased ability to deal with complexity
▪ Technology
 Ideas/Prototypes eg Reva
 IP/Patents eg Nokia
 Technology Transfer eg HAL
Innovation Strategy
▪ A plan made by an organization to encourage
advancements in technology or services, usually by
investing in research and development activities.
▪ For example, an innovation strategy developed by a high

technology business might entail the use of new
management or production procedures and the invention
of technology not previously used by competitors. Eg
Apple, Google
Innovation Strategies
▪ Does top management spend sufficient time supporting all
stages of innovation?
▪ What is the role of technology in innovation?
▪ Are innovation goals / measures defined - for new products,
services and processes?
▪ Has innovation been introduced as a fundamental part of your
company philosophy and values?
▪ Are competitors’ innovation rates known/monitored?
▪ Is there a good balance of truly innovative projects as well as
product improvements?
…Innovation Strategies
▪ Is there sufficient funding?

▪ Is there a culture of innovation?
▪ Is it ok to fail ?
▪ Is there specific time allocated to innovation
activity?
▪ Are there defined processes to move from
Ideation to commercial production ?
Innovation Models
▪ Linear models
 Technology push
 Market pull
▪ Simultaneous coupling model
▪ Interactive model
Linear Model
Technology push model

Research and
Manufacturing Marketing
Development
Market pull model

Research and
Marketing Development
Manufacturing
Source : Dr Vesselin Blagoev

Simultaneous Coupling Model
Manufacturing
Research and
Marketing
Development
Source : Dr Vesselin Blagoev

Interactive Model
Latest sciences and technology

Advances in society Technology
push
Commercial
Idea R&D Manufacturing Marketing
product
Market Place
Market
Needs
pull Source : Dr Vesselin Blagoev
Innovation Strategy Practices..
▪ Find the next demand curve
▪ The time to innovate—the innovation window—is when the

first growth curve hits an inflection point. How do you know
when you’re hitting the inflection point? You never know.
▪ So the best companies are
forever paranoid and make
innovation a continuous
process
▪ Live with your customers
 Successful growth companies have a deep

understanding of their customers’ problems
 During the turnaround of IBM, Lou Gerstner
launched Operation Bear Hug to get the company
back in touch with its customers.
 IBM’s top 50 executives had to visit five customers
per week and deliver a write-up to Gerstner !
▪ Design Thinking
▪ Design thinking requires a different set of tools.
 Growth company strategists have abandoned
Porter’s Five Forces Analysis because it assumes
that markets have well-defined boundaries and
competitors must fight for market share.
 Instead they search for uncontested market
space and make competition irrelevant using
Blue Ocean Strategy.
▪ Leadership
▪ Unless the CEO makes innovation a priority, it won’t happen. Innovation requires
a level of risk-taking and failure that’s impossible without executive air cover.
▪ The best growth companies create a culture of innovation:
 Howard Schultz decided Starbucks had lost its way. He flew in every store
manager from around the world to help redesign its café experience.
 Google encourages employees to spend a day per week on new ideas.
 P&G tracks the percentage of revenues from new products and services.
 Gray Advertising gives a Heroic Failure Award to the riskiest ideas ... that fail!
▪ More important are innovative leaders as role models.
 Amazon founder Jeff Bezos has told both employees and shareholders that
he cares less about profitability and more about planting seeds that are
likely to pay off in five to seven years.
Innovations – Examples
Eco Innovation
▪ Helpus green
▪ Karma Tips
▪ Plastic Eating Enzyme
▪ Bio Diesel
Last thoughts
Innovation can be used to create competitive advantage

if it….
▪ Solves a core human or business need
▪ Is sustainable on an ongoing basis
▪ Adds value by providing outcomes that are much
greater than the inputs
▪ Gets accepted by the population at large
▪ Is supported by an Ecosystem consisting of Suppliers,
Competitors, Distributors, Users
By the book
Last thoughts
The race to excellence does not have a finish line
Thank you !
Sun Tzu
CAVEAT
A FUNDAMENTAL DIFFERENCE BETWEEN
MILITARY AND BUSINESS STRATEGY
IS THAT BUSINESS STRATEGY IS
FORMULATED, IMPLEMENTED AND
EVALUATED WITH AN ASSUMPTION OF
COMPETITION, WHEREAS MILITARY
STRATEGY IS BASED ON AN
ASSUMPTION OF CONFLICT
Laying Plans
▪ The art of war, then, is governed by five

constant factors, to be taken into account in
one's deliberations, when seeking to determine
the conditions obtaining in the field.
These are: (1) The Moral Law; (2) Heaven; (3)

Earth; (4) The Commander; (5) Method and
discipline.
Waging War
▪ In war, then, let your great object be victory,

not lengthy campaigns.
Attack by Stratagem
▪ Thus the highest form of generalship is to balk

the enemy's plans;
▪ the next best is to prevent the junction of the
enemy's forces;
▪ the next in order is to attack the enemy's army
in the field;
▪ and the worst policy of all is to besiege walled
cities
Tactical Dispositions
▪ The good fighters of old first put themselves

beyond the possibility of defeat,
▪ and then waited for an opportunity of defeating
the enemy.
Tactical Dispositions
▪ In respect of military method, we have,
 Firstly, Measurement;
 Secondly, Estimation of quantity;
 Thirdly, Calculation;
 Fourthly, Balancing of chances;
 Fifthly, Victory.
▪ Measurement owes its existence to Earth;
Estimation of quantity to Measurement; Calculation
to Estimation of quantity; Balancing of chances to
Calculation; and Victory to Balancing of chances.
Energy
▪ Fighting with a large army under your command

is nowise different from fighting with a small
one: it is merely a question of instituting signs
and signals.
▪ There are not more than five musical notes, yet
the combinations of these five give rise to more
melodies than can ever be heard.
▪ Energy may be likened to the bending of a
crossbow; decision, to the releasing of a trigger.
Weak Points and Strong
▪ Sun Tzu said: Whoever is first in the field and

awaits the coming of the enemy, will be fresh
for the fight; whoever is second in the field and
has to hasten to battle will arrive exhausted

Strat Man

Uploaded by

Copyright:

Available Formats

You might also like

Strat Man

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Strat Man

Uploaded by

Copyright:

Available Formats

STRATEGIC MANAGEMENT 101

Derived from Greek ‘strategia’ – Art of a General

▪ Sometimes used synonymously with Strategic

▪ Larsen and Toubro

▪ If a strategy is not working then we quickly

▪ Reviewing internal external factors

People, Process, Technology

▪ Eg. Automotive Industry

 Eg. BS VI, Electric Vehicles

▪ Understanding the key factors which will lead

▪ Sustainable competitive advantage through

▪ Bargaining Power of Customers

▪ Poor quality Products

▪ Examples of Blue Ocean

▪ Examples of Red Ocean

▪ Who are they ?

▪ Technical Expertise, R & D spend

▪ Your organizations dream

▪ A short phrase or sentences that conveys your

▪ A one-sentence statement describing the clear

▪ Understood and shared by members of the organization as

▪ Broad enough to include a diverse variety of perspectives

▪ Inspiring and uplifting

▪ Easy to communicate, clear and simple (most aren’t)

▪ Most admired by our customers, employees,

▪ We aspire to be the global steel industry

▪ BMW (Bremen Motoren Werken)

▪ Normally has three components

 Dimensions : Customers, Employees, Owners

 a written declaration of an organization's core

▪ The Rotary Foundation: To enable Rotarians to

▪ Sustain ITC's position as one of India's most

▪ What does your organization want to

▪ Within the product portfolio, each item typically

▪ A collection of businesses or products owned by

▪ Can be applied to a collection of products

▪ Do you have a balanced

▪ Do you have a few

▪ Eg Paper Boat, Samsung Edge, Nimbuz

▪ Eg Iphone , Hyundai Creta, Honda City

▪ Eg Iphone 5S, Coca Cola, Parle G

▪ Low market share

▪ Iphone 5C, Blackberry, Renault Lodgy

▪ Not worth investing in

▪ Cash cows produce cash surpluses that can be

▪ Michael Porter – 1985

To be successful, if you are better than

▪ Competitive advantage is a set of unique

▪ Reason/occasion for purchase?

▪ What are they saying

▪ What are they doing

▪ A company is able to utilize its skilled workforce,

Multiple distribution channels eg restaurants

Distribution channel design – is your existing

▪ Anchor product Coca Cola

▪ The initial product is sold at or below cost or

▪ Users pay for access to a product or service

▪ E.g. Newspapers, Cable TV, Telecom, ISPs