Strategic Management

Week-3 but its week 2

Continuation from the previous week

Toyota’s strategy is always taken as an example when it comes to Japanese

management

Superior performer over its competitors for many decades

There are many lean production system followed at Toyota which is highly di cult
for US automakers to imitate

A long list of mutually reinforcing practice constitutes Toyota’s production

Redesigning the links in product development

Japanese ppl call it as sashimi method

Overlapped, concurrent tasks

Design- (link1)- prototyping- (link2)- Manufacturing

prototyping Starts before designing is over

Similarly manufacturing will start before the completion of prototype

Engineers feel stressed of this sashimi method

Bene t of prototyping earlier, helps to analyze or understand the downstream

disadvantages or defects which can be recti ed in design

Same way in manufacturing process

If the product development has nothing vertically new, then having a team leader
from downstream I.e., from prototype can be the leader

But it depends on the situation (always think from situation oriented because
sometimes having the leader in upstream works better)

Asembler supplier link in ford

The assembler says thier requirement and provides the detailed drawing

The supplier then bids his cost

The ow of information stops with one step

Assembler supplier link in toyota

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 The assemble(Toyota) say what he wants- termed as black box

The supplier has to come up with how they’re going to manufacture, design and
the detailed drawing, prototype

Toyota then jointly work with thier supplier to further cost cutting which is
bene cial to both assembler and supplier

This is called value engineering

In a survey with suppliers on trust relationship with the assemblers

The trust of supplier on ford is really minimum that they feel that they will be taken
advantage if the manufacturing process is disclosed with the assembler whereas it
is quite opposite with Toyota

Suppliers trust Toyota

The takeaway- ford cannot beat Toyota because of this trust and value
engineering/relationship with the supplier

It is important to create values/network with transparency, honesty, also being

fairly inside and outside your organisation- this cannot be imitated by others

External environment

The position is referred with landmarks in general

MACRO MICRO interplay

It is important to understand where your company stands when there is a

uncertaining or change in Technology or evolution

Factors a ecting industry (suppliers, customers, competitors)

Below are the 6 landmarks from which you have to understand where you stand as
an organisation

National/international economy- Exchange conversion rates

Science and technology- Internet, E commerce, AI

Government/politics- Eg Ukraine and Russia war, the sanctions, taxes

The natural environment- Carbon free, sustainable

Demography- the aging population

Social and cultural setting- change/ ppl focussing on health in uence in the
reduction/ quitting of smoke

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Creating shared value is important in the organisation both for the economy and to
societal bene ts

This integral to pro t maximization

For eg., nestle india dairy farm (refer the slide)

PORTER’S FIVE FORCE OF COMPETITION

1.Threat of entry/ sources of barrier to entry

Capital requirement- when there is low requirement of capital, the threat of new
entry is high and vice versa

Economy of scale is important. If it is high, the threat of entry is low

Absolute cost advantage

Customer switching costs- if switching cost is high, it creates a barrier for new
entry

Eg. SAP(ERP) with a new entry

Refer the slide for further

2.Threat of substitutes

Substitute shall not be only related to product competition

Eg airlines- if a passenger has to travel for business, now a days he can do it with
zoom or online conferencing

3.The power of suppliers

If the suppliers are less in large industry, the power of negotiation for the supplier is
likely high

4.Power of buyers

Buyers (retailers) can threaten to integrate backward

5.Rivalry among existing competitors

If the diversity of players are many, then the competition is intense

This 5 force reshape the industry structure

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Case study

Cola wars

CP’s strategic position is they’re the scale provider for bottlers

The CP’s created the industry structure.