SM Notes

·
Congratulations O -> %
SM-30
· Need
No to Fear
.
Most Practical
20/18
>
~ 35 Marks -
Practical 25-Marks
->
-
Direc
10 -
Marks -
Indirect
S
(
~ IS Marks -
M(Q -> 10
Strategic Intent
Vision
Essentials of a strategic vision
Mission
· Present Business Scope

~ What Business are we in and what we do
.
"who we are
"
·
Present-capability
customer focus
Business Makeup
eneric. Gurial tor strategic planning

4
Why should an organisation have a mission?
Essentials of a good mission statement - Points to be considered while writing a mission statement
-
① ④ ⑤
Good Mission statement precise, clear, feasible, distinctive and motivating
9 -
A mission statement must define an organization's unique identity, business focus,
and developmental path, distinguishing it from similar companies
-
· was it is
trying to Satisfy
,
customer it's
trying to serve
- competences .
used
technology 2
-
⑳
W
Good mission statements are – unique to the organisation for which they are developed.
For example, if an Indian healthcare startup has a mission to 'reach healthcare services to
-
every citizen of India through innovative and affordable healthcare solutions,' this mission
-
reflects their unique focus - healthcare innovation and affordability - which sets them
apart from other healthcare companies. It also represents their specific goals, target
audience, and their cultural values.
Characteristics of Objectives
They should be concrete and specific.
They should be measurable and controllable.
Objectives should be set within the constraints of organisational

resources and external environment.
Different objectives should correlate with each other.
They should be related to a time frame.
They should provide the basis for strategic decision-making.
They should provide standards for performance appraisal.
They should be facilitative towards achievement of mission and

purpose.
They should be challenging.

A need for both short-term and long-term objectives
financial and strategic objectives

Clearly established objectives have several benefits:
Direction
Synergy
Evaluation
Priorities
Uncertainty Reduction
Conflict Minimization
Stimulate Exertion
Resource Allocation
Job Design
that in some way
refers to all external
affect business
factors, influences,
decisions, plans, and
or situations
operations.
Dynamic and
Business
Continuously
environment (BE)
Evolving
determined by its
business
Success of an
environment, and
organisation
even more from its
relationship with it
Determine
opportunities and
threats
Strategy and close and
Business continuous Give direction for
Environment interaction between growth
organisation and BE
Continuous Learning
helps in following
way Meeting Competition
Image Building
be aware of, assess,

and respond to the present in its
many opportunities environment
and threats
be able to handle
To flourish business must and adapt to them
continuously
evaluate its
environment and
modify its
operations in order
to thrive and expand.
Small Area
Related to
Immediate Periphery
Regulary
Influence
DIrectly
Suppliers
Consumers
Micro Environment Consist of
Competitors The factors in the
micro environment
Marketing often relate an
For example a trend
Intermediaries organization to the
of eco friendly
macro issues
products
influencing the way a
firm reacts in the
marketplace.
Specific to the business
Employees
Customer base
Ways of raising
finance
Issues to be
addressed
Suppliers and link
with them
Local community
Direct competition
Demographic
Environment
-
Socio-Cultural
-
Economic
Elements of Macro -
Environment
Political - Legal
-
Technological
-
Age
Gender
The knowledge of
Income
Characteristics of a these factors are of
population great importance for
education
the organisation
Job Position
Region
businesses.
Important to both
economists.
Demographic Young Population
India Because of this

many multinationals
Huge Population size
are interested in
India
Effecting market size

Demorgaphic trends
Represent
opportunities and
Issues for business
threat
organisations
Identifying changing
trends is a challenge
Social Traditions
Values
Beliefs The knowledge of

Complex group of these factors are of
factors Ethical Standards great importance for
the organisation
State of Society
extent of social
stratification
Example - Family
Values, Respect for
elders
Socio-Cultural
Environment
difficult for a
business to change
core beliefs of a these core values
behaviour and the
Different from particular society
belief system of
Demographics tend to be businesses have to
that population.
persistent. adjust to social
norms and beliefs to
operate successfully
Mission
Objectives
Affects in the area of
Products
Decisions related to Markets Menu Adaptation
Strategies Marketing strategies

McDonald Example
Store design
Advertising
Strategies: In India, CSR Activities
advertisements that
focus on family-
oriented and cultural
values resonate
more, therefore
companies need
Around Business
Regional
Include Conditions at National Level

Overall Economic
Meaning
Situation
Global
Demand
Conditions in Market For Resources Supply
Cost
Size
Determines of market
Strength
Economic
Envrionment GDP
Per Capita Income
Indicators Inflation
Purchasing Power
Interest Rates
over the business

strategies.
Higher interest rates

Direct bearing harm businesses
A business needs to with high debt and
find out the effect may impact business
of economic factors like real estate by
on business limiting loan access.
Type of government
Powerful influence
and Legal
on Business
Envrionment
1. Political Development
Degree of politicisation of
2.
business and economic issues
3. Political Morality
4. State of Law and order
5. Political Stability
Elements 6. ideology and practice
Effective regulatory bodies

ensure fair competition and
Effectiveness and purposefulness of
7. protect consumer rights,
governmental agencies
creating a healthy business
Political-Legal environment.
Environment
Example: High government
Govenment intervention in economy intervention might mean more
8.
and industry regulations and controls for
businesses.
Example: Nationwide tax policies

Partly General and affect all businesses, but a specific
Partly Specific legal ruling might only impact one
particular industry
changes in
regulations and the
Must consider Impact of On their Operations
impact of taxes and
duties
country where there

Operate in is a sound legal
system.
Businesses
Protecting
consumers
Competition
Need to Understand Laws Intellectual Property
Company law
Labor Laws
Communication
Do things
Changed the way People
The rise of e-commerce
platforms has changed how
Ways of doing
retail businesses operate,
Business
allowing them to reach a
global market.
reduce paperwork
With the use of technology schedule payments
Organisations are able to more efficiently
conduct businesses more Examples
effectively and efficiently coordinate
Technology inventories
efficiently and
effectively
Reduce the cost
Has helped to Shrink time and distance
Create competitive
advantage
Example: The rise of social media has led

requires significant alterations in businesses to integrate digital marketing
operational and marketing strategies. strategies into their traditional marketing
Technological plans.
Environment
Interlinked Technology Drives Business Innovation -
Technology and
Business Needs Influence Technological
Business Inter-dependent Development:
Smartphones have created a market for apps and

mobile services, while reducing the demand for
Leading to many new business opportunities traditional mobile phones and cameras.
as well as making obsolete the existing
business products and services. Online streaming services have challenged the
traditional cable TV industry.
AI
New technological
tools businesses are Machine learning They are also acting
adopting threat to exisiting
robotic process businesses
automation
P Political
E Economics
S Socio-Cultural
framework for T Technological

analysis of macro
L Legal
environmental
factors Tourism
affect industries Such as Farming
Insurance
E Environmental
how companies it is both creating
Climate change operate new markets and
awareness is growing diminishing or
and affecting the products they destroying existing
offer ones.
Past PEST
PESTLE
P Political
E Economics
S Socio-Cultural
Indentify Influence of On an organisation
T Technological
L Legal
E Environmental
of scanning the
environmental
PESTLE providing a way
influences that have
affected organisation
Simple to understand
Quick to implement
encourages For Proactive and

in its decision
management structured thinking making.
dominant
commercial trend
greater earnings
less expensive
resources.
enables a business to enter new markets
to achieve greater
economies of scale
Internationalization
of Business extend the lifespan
of its products
strategic- complex due to

management process extra variables.
International
strategy planning
Requires
Scanning the
external
environment
Example: A multinational corporation
like Unilever, which owns and operates
conglomerate of all linked by common
numerous brands and subsidiaries across
multiple units ownership.
different continents, all under one
umbrella of ownership.
Example: A global tech company might

such as money,
use its patents and technological
credit, information,
draw on a common know-how across different countries,
3 characteristics patents, trade
pool of resources thereby spreading the R&D costs and
names and control
maximizing the benefits from its
systems.
innovations.
Despite operating in
different regions, all Example - A global automobile
respond to some
units of a global manufacturer may have a strategy
common strategy
business respond to focused on sustainability,
a unified strategy
Expensive and
Challenging
Thorough and
Approach
structured
Developing
internationally Opportunities
in the light of
Evaluate Global
Threats internal capabilities
Scope of Firm's
Describe
global operations
Steps
global business
Create
objectives.
Gloabl business
Corporate
Develop
strategies for
Whole organisation
Internationalisation
is simple because of
technology
Technological
development Easier to implement
global strategy
Worldwide
communication Linking corporate
HQs with their
global operations
Base of the Answer People
Material
Improved
Improved mobility
Transportation
Finished item
Money
Political Views
Why do businesses
go global? Need to grow
Rapid shrinking of Fast communication, speedier

time and distance transportation, easy flow of funds
Domestic markets are no longer adequate
Competition in domestic markets
Other reasons Reliable or cheap source of raw material
To Reduce transportation cost
Rise of service sector
Collapse of Inetrnational Trade barriers
Economic
Form strategic
Countering
alliances Technological
threats
Indentifying
significant
Anticipating components of the
global environment
Monitoring on a large scale
Multinational
environmental Understanding
analysis
Free
Governments
Interventionist
Evaluate present
and future impact
critical factors in a
in-depth evaluation specific geographical
International area.
Environment - Regional
Assessment environmental
Goods
analysis
discovering market
For Services
opportunities
Innovation
deeper look at the

important
environmental
Country factors.
environmental
analysis Legal
Dimensions for
Study of Political planning to
successful
Cultural
Tool for understanding the
competitive environment
Helps in focusing on rather than bulk of

important things information
Threat from New entrant
Bargaining power of Customer

Introduction state of competition in an
Basic structure industry is a composite of Bargaining power of Supplier
competitive pressures
Rivalry among Current players
Threat from Substitute
Diagnosing the
competitive pressures
Helps in
Porter’s Five Forces
Assessing the strength and
Model
importance of each pressure
specific competitive associated with each

Identify
pressures of the five forces
Fierce
Strength of Pressure Strong

How to use it ? Evaluate (how strong the
pressures are) Moderate
Weak
whether the
collective strength Conducive to earn
Determine
of the five attractive profits.
competitive forces
other firms are
Profitability tends blocked from
to be higher entering the
industry.
Increase supply
New productaion
capacity
New entrants can Lower Price
New entrants and
reduce industry
Profitability
profitability Reduce the market
share of the existing
firm
Existing firms can

try raise barriers to
entry
Threat of New
Entrants
Economic forces
that slow down or
meaning
impede entry by
other firms
Capital requirements
Barriers to entry Economies of scale
Product
differentiation
Can be as follows Switching cost
Brand identity
Access to
distribution channel
Possibility of
Aggresive retaliation
other firms are
Profitability tends blocked from
to be higher entering the
industry.
Increase supply
New productaion
capacity
New entrants can Lower Price
New entrants and
reduce industry
Profitability
profitability Reduce the market
share of the existing
firm
Existing firms can

try raise barriers to
entry
Threat of New
Entrants
Economic forces
that slow down or
meaning
impede entry by
other firms
Capital requirements
Barriers to entry Economies of scale
Product
differentiation
Can be as follows Switching cost
Brand identity
Access to
distribution channel
Possibility of
Aggresive retaliation
Business sell
products
Understanding A product can either

Product and Industry a good or service Tangible, Intangible
- Product
Market
Quality
Price is determined
by
Marketing
Has a price Targeted group
Business are working

Have Certain
on reducing cost as Because of competition
Characteristics
per market price
Cumulative an important
Features that deliver
experience from component of
satisfaction
purchase to end is product feature
Around which all

Center of the
strategic activities
business
revolve
Pivotal for business Production
Driving force behind Quality

all business Enables
activities Marketing
Logistics
Important for
strategic choice
Sales
Relationship between for a product
Time
"S" shaped curve
lack of awareness on
Slow sales growth the part of
customers
Competition is
Introduction
negligible
Price is high
Market is limited
demand expands diagnose a portfolio in order to establish

rapidly, of products (or the stage at which
businesses) each of them exists.
Product Life Cycle prices fall,
Rapid market expansion may be a
Growth
acceptance. competition Business in feasible alternative
increases, Advantage of PLC Introductory and for businesses in the
growth phases introductory and
and market expands growth stages In this way, a
balanced portfolio
A product passes Depending on the
slowdown in the Mature businesses may be used of businesses may
Stages of Product through 4 successive diagnosis,
growth rate as sources of cash for be built up by
stages appropriate Mature Business
investment in other businesses exercising a
strategic choice can
competition gets which need resources. strategic choice
be made.
tough based on the PLC
combination of strategies concept.
Maturity Market - Stabilises like selective harvesting,
Declining Business retrenchment, etc. may be
due to stiff adopted for declining
Profits - down
Competition businesses
organizations have
to work to maintain
stability.
New Product
Sales and Profit Fall down sharply
replaces the existing
Decline
Diversification
Strategies
Retrenchment
Same stage wise

Product Life cycle analysis can be used
for businesses
which explains the
efficiency increase
akin to a learning
gained by workers
curve
through repetitive
productive work.
as a firm
accumulates
experience in terms
of a cumulative
Based on
unit costs decline volume of production
Phenomenon
we learn as we grow
larger firms in an industry About the charts and

thereby gaining a
would tend to have lower unit More Resources for Audit
Implication competitive cost
costs as compared to those
advantage.
for smaller companies,
For CA Inter BY Powered by Mock test Papers
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Economies of Scale
Experience Curve
results from variety of factors
Product redesign
Technological
improvements Neeraj Arora
Business
They gain experience
organisation grow
Advantage over
Experience provide
competition
Features
Experience is key
barrier to entry
Stronger experience
Large Organisation Possess
effects
considered a barrier for new firms

contemplating entry in an industry
Relevant for
different areas of SM
used to build market share and discourage
competition
D
Understanding Product/Industry
Product +
E
-
o
-
o
Product lit cyce
-
-- VCA
T
O
·
Industry/Environment Analysis
3
moo
·
Porter 5 Forms
·
Attractions of Industry
Curu -
·
Experience
· Value Creation - &
⑧ MARKET & Customer
· Market
·
Customer
· Customer Benamou
COMPETITIVE STRATERY
·
Competition Landscape
· Key factors
Vue Cain Aarysis
Activities in Value Chain in Order

-
Examining
to identity Areas of improvements
>
-
Valu chain- . Chain of Activities
(All te steps involved
· That a Business undertake
from creating
a
product to
Customer Satisfaction
- value chain Analysis >

-
Improve the Sequence
of operation
>
-
enhancing
te effimency
Competitive
- Great
Advantage
Activates
- 2 Basic Steps >
-
Identifying Separate
>
-
Assessing the value added from each

inities (support)
Primary Secondary
(5) (4)
)
·
Primary
· Inbound
Logistics Receiving Distributing
· -
, storing ,
Inputs
· - Material
Handling ,
stock
Contros , warkouung transportation

,
Product
operations >
Transforming Input into final
-
Machining Assembly ,
Packaging
-
Testing
Collecting (warhousing)
Logistics
Outbound -
·
· Distribution
·
Marria Handling
·
Transportation
Bringing
to the Servic
Service : -
Customer
Marketing/sals
Means for Customers Aware About
making
>
-
Product -
>
-
Include-Sales Administration
-
Promotion-pidalising
->
-
selling
>
-
For Public Services - More Focus on
Communication
.
network
(Public information capaign

Community outreach C
Service >
-
Activities which enhances or Maintains
value
of Product/service -
· Intallation
·
Repair
Training
·
·
SPARC Park
ities
Support
Procurement refers to the activities involved in acquiring the
Procurement
- - resources an organization needs.
It refers to how the resources and raw materials for a product or service are
sourced and how suppliers are found.
is not about the actual resources or materials themselves, but rather about the
processes and activities involved in procuring these resources
It is closely related to inbound logistics and operations
Technology Development
Technology development refers to all the software, equipment, hardware,

procedures, and technical expertise that are used in the transformation of raw
materials into finished products or services.
Related to
May be
·
Product
· Process
· Particular Resource
Human Resource
Managemen
·
Important Area
· Transcends all Primary Activites
Includes Recreating training

Managers
·
, ,
- - -
Develop 19 , Rewarding
- -
-
the Human Resourc
Infrastructe
O Planning
· Activities Relatid to o Finance
regal
·
Accounting
·
·
Quarry Assurance
Information Mgt
.
·
·
Gucial Support to Primary Actimnes
·
Infrastructure also includes culture
of organisation
usefulness
Vale Nation
-
"World"
Process added to
·
by which value is
Product Service Overall Business

, ,
(CA)
Gives Competitive
Advantage
·
· (A >
-
Superior Profitabilm
·
How profitable a Company becomes depends
On
Product
-value customer places on
↳ . Reflects utility ,
satisfaction
Happiness
Function of
Price Altributes al
②
Product
· -
Performance
③ cost -
·
Design
·
-
Quarry
- - sals expe
· -Atl sals
E &
Value creation is the process by which a business enhances the perceived worth of its product
Xor service, making it more desirable to consumers. This perceived worth often exceeds the
-
price that the business charges. As a result, consumers may perceive the product or service
as offering greater benefits or satisfaction compared to what they actually pay for it
-
&
.
·
- O
Fef
~For
e
⑭ -
= NOT °
-
-
Fa
⑳
R
S
-
-@
E
w -
-
\
+
Market & Custome
- -
·
Marketing
·
Customer
-
Customer Anausis
- Customer Behaviou
Competitive strange
Introduction
Competitive landscape
steps to Understand Competitive
landscape
-
key factors for competitive Success
Market
-
· Place where
Goods/services can be
exchanged
for a price
maybe-Phusie
e
·
Context stock
exchange
>
other
-
·
>
- Group of Individuals
(potential
Buyers)
>
-
Define Business or industry
(Global oil Market)

Research
Marketing
-
-
Designing
of operation
Range
wide
↑
& entierion
-
Transportation ,
Distribution
inities
*Proan e
langorisation
-
-
Promotion
Helps in
Identifying Customer NEEDS

°
/
and
tultiling mes
DEMANDS
--
GOALS
- -
·
Delivering Best Customer Experience
Customer
· Who buys Product or Service
· Provide Revenue - essential for existence
Marketing
· Business Comple for customers <
Pricing
· Customer & Consumer - Practically
Synonymous
used
interchangeably
-
·
Thin Distinction
Consumers are the end-users of the product or service.
Customer: A customer is an individual or entity that purchases the product or service. This does not necessarily
mean they are the end-user. For instance, a parent who buys a toy is the customer, but the child who plays
with the toy is the consumer.
· Business-Routinely Research
characristics Consumer
-
of thur
- to FINETUNE their Marketing
strange
Rus
Adjust Inventory
-
like
Demographics
Frequently langorised
·
-
on
income ete to duclob

age ,
Profile .
a perfectCustome
⑭Musi -- -
&
Essential marketing component of strategic business plan
&
E
Identifying target customers, determining their wants and defining how product will meet
those wants 2:
① ·
--
-
-
Customer analysis includes &
O the administration of customer surveys,

- - -
the study of consumer data,

- -
·
the evaluation of market positioning strategies, &
development of customer profiles, and > &
E: =
-
- - - O
the selection of the best market segmentation techniques. -

-
-
creditors. - °
-
--
Understanding consumer needs involves information from various parties like buyers, sellers, and
& I
coching
oFiison
·
·
Quarty of teaching
·
Test
Content
·
coverage
&
Runson
G
Teaching styl
&
colorful Book
Momen
Genuine ,
↑
( Demo
·
examomentation
&
Senior
·
Doubt So lind
Compive strategy
&
Attribute
Competition -
Fundamental
Economic systems and Business

of
-
Business Compete for same
Set of Resources/Customers
-
Enhance the
Quality of Service
and Goods
Competitive creating
a
Sustaining
Strategy
-
↓ Competitive
Advantage
↓
How to Analyse ?
More Profitable in
Long-Run
Creation Protection
of of
Comp Adv Comp Adv.
⑭
Compive Landscape
Identifying
2 Understanding >
-
competitors
Understanding Competitive >

-
an application of
Landscape “competitive
- -
Requires intelligence”
- >
-
Helps in
Assessing
Competitor's
and
strength
weakness
choosing the
strange
Adv
Building Comp
·
.
·
Understand
Steps to Competitive Landscape
Issues to be considered
STRATEGIC
for strategic analysis
ANALYSIS
Consideration to Strategy evolves

Meaning Why?
be kept in Mind over a period of Balance Risk
time.
Industry &
Strategy
competitive Matching Internal
analysis of a Formulation.
conditions Identification of
firm's external Series of Decisions Potential with
Potential
environment Over Time External
Imbalances
and its internal Opportunities
resources and Company’s own
Otherwise competitive
capabilities (Without capabilities,
Strategic resources, Influenced by Workable Match Assess their
Analysis), Wrong internal Experience Over Perfection consequences
Strategy
strengths &
weaknesses &
market position
Managers Potential imbalances
No Competitive Needs constant responsible for are created because
Advantage review and revision strategic decisions of internal and
must balance external factors.
opportunities,
influences &
constraints.
Risk
Strategy Identification
& Selection
External risks- Internal risks-
After Undertaking the

occur because of above mentioned
occur due to forces within the
inconsistencies analysis, following
firm or are directly steps are taken
between strategies interacting with org.
& forces in the
environment
Short Time - Long - Time - Identify strategic Implement the
Organizational Inconsistencies with Select strategy Review strategies
alternatives operating plan
capacity is unable to the strategy are
Short-Time - Errors Long-Time - Changes
cope up with developed on
in interpreting the in the environment
strategic demands. account of changes
environment cause lead to obsolescence
strategic failure of strategy. in internal capacities
and preferences.
www.edu91.org
SM Charts by Neeraj Arora
Chapter 3: Strategic Analysis :
Internal Environment Internal environment
Includes
Introduction Understanding Role of Combining Competitive Michael Porter’s
Assessing the
to Internal Key Resources External and Advantage : Generic Strategies
current Using
Environment Stakeholders performance and Internal
Capabilities : Analysis Michael
of the
Building Core (SWOT Porter’s Cost
Who are business- people, stakeholders, defining an specific to each
Mendelow’s Strategic Competency Analysis) Generic leadership
Stakeholders Matrix Strategies processes, organization's identity. organisation.
Drivers
and how do infrastructure,
we identify Differentiatio administrative
them? Developing a n Strategy structure, and
Industry and
Grid of Customers Product/Services Channels organizational culture,
Markets
Stakeholders
Focus
Marketing
Stakeholders Analysing
strategies To
can move Industry and reach out to
between Markets customers. Best-Cost
quadrants Provider
Strategy
Understanding Key
Stakeholders Mendelow’s Matrix
Who are Stakeholders and how do Analyse

we identify them? Different power
Known as stakeholder For example,
groups and Interest
Stake and employees, Power to Clash of some

Influence level Interest Level also known as the
Success shareholders, influence objectives Mendelow a big competitor
Stakeholder stakeholders will a big shareholder
investors, suggests that one hold more Power would have high
suppliers, Analysis matrix should analyse
and the Power- than others power to impact
individuals and customers, power to Exerts a a clash of stakeholder strategy, but
entities that regulators and have differing Interest matrix
influence the different level of objectives may groups based on potentially less
have a stake in so on. influence levels of interest have some is likely to have
strategy or in the Interest in success
success of an performance of unfavourable stakeholders will high power and of rival
org organisation. have more high interest in
that consequences is a simple Power organisation.
organisation. for the Interest Interest than the organisation,
framework to
organisation. help manage key others
and can impact
stakeholders.
it as well.
(the ability to
influence (how interested
organisation they are in the
strategy or organisation
resources) and succeeding).
Categorisation of
stakeholders into four
groups by Mendelow
KEEP SATISFIED KEY PLAYERS LOW PRIORITY KEEP INFORMED

Stakeholders: Stakeholders Stakeholders Stakeholders
High power, less High power, highly Low power, less Low power, highly
interested people interested people interested people interested people
Put in enough work fully engage this group only monitor them adequately inform this
with these people to of stakeholders, with no actions to group of people and
keep them satisfied making the greatest satisfy their communicate with
with their intended efforts to satisfy them, expectations. them to ensure that no
information on a major issues arise.
regular basis.
take their advice, build minimal efforts, keep
actions and keep them an eye to check if their
levels of interest or This audiences can also
For example, banks, informed with all
information on a power change. help with real time
government, feedbacks and areas of
customers, etc. regular basis. improvement for an
organisation.
Assessing the current For example, business
performance of the For example, magazines, media
Stakeholders can move between quadrants business- Strategic Shareholders, CEO, houses, etc. For example,
Drivers Board of Directors, etc. employees, vendors,
suppliers, legal
experts, etc.
environment is highly dynamic and can cause important
stakeholders to suddenly move between The key strategic
aspect of
quadrants. internal drivers of an
analysis organisation
include:
For example, Regulatory breaches, like GST
non-compliance, shift stakeholder positions
For this we need to industry and
consider the strategic markets
Changes in the environment necessitate re- drivers that
analyzing Mendelow's grid to adapt stakeholder differentiates an
management and communication strategies organisation from its
competitors. customers
products/services
channels
Industry and
Markets
Industry Market
Similar companies A market is defined as the sum

are grouped total of all the buyers and sellers
together into in the area.
industries.
grouping is based may further be it would be Each business has

may be a its own set of
on the primary local or global incorrect to say
product that a customers i.e.
company makes market
or sells. that the market is
physical or may be virtual the same for all
businesses. each product
For example, within a business
Maruti, Mahindra, has its own
Tata Motors are like e-commerce market.
all selling websites and
automotives as applications.
their primary
product and thus Analysing
categorised into Industry and
the Automotive Markets
Industry.
What is Strategic Group Procedure

What is a Strategic Group
Mapping
The procedure (I-PAD) for

A tool used for Analysing Industry A strategic group
constructing a strategic group map
and Markets is called - Strategic consists of those and deciding which firms belong in
Group Mapping. rival firms with which strategic group is
straightforward:
Identifying Revealing Comparing similar
Industry &
strongest/weakest competitive market Position competitive
Competitive
analysis positions positions approaches and
Identify Plot Assign Draw
Technique
One technique for It is a useful
revealing the analytical tool for Positions in the
Helps in Identifying market. circles around
companies that are in competitive comparing the firms that fall in
Strategic group positions of market positions the competitive the firms on a each strategic
strongest/weakest two-variable map the same strategy group making the
mapping is a positions industry of each firm characteristics
They resemble that differentiate using pairs of space to the same circles
technique used participants is separately strategic group.
for industry & strategic group each other in firms in the these proportional to
Competitive mapping. several ways. industry typical differentiating the size of the
analysis or group wise (product , price variables are characteristics. group's respective
when an industry etc) price/quality share of total
has so many range (high, industry sales
competitors that medium, low); revenues.
it is not practical
to examine each
one in depth. www.edu91.org
How To Build Core
Competencies
4 criteria of sustainable
competitive advantage Combining External and
use to determine those Internal Analysis (SWOT
capabilities that are core Analysis)
competencies.
recommendatio
primary assess current identifies the
Analysis should precede ns and critique
objective strategies operations complex issues
Valuable Rare Costly to imitate Non-Substitutable
primary Helps to assess it identifies the critique of
the analysis of a
objective help should precede use to discover current complex issues for SWOT analysis
business’s recommendatio general lack of
strengths, organizations all company operations and an organisation
develop a full actions, ns and identify both and puts them evaluation in a
competing firms are Capabilities that do weaknesses, strategies,
should create value very rare capabilities awareness of all including strengths and into a simple competitive
unable to develop not have strategic opportunities context for
for customers. and. and threats. the factors exploring new areas needing framework.
easily. equivalents (external as well improvement. strengths,
initiatives,.
as weaknesses,
internal)involve opportunities,
Allow to exploit For example: Intel - d in making a and threats.
Capabilities
opportunities in its rare fast R&D cycle business
possessed by many decision.
external rivals are unlikely to time capability -
environment. be sources of brought
competitive microprocessors to
For example human advantage. market well ahead of
the competitor.
capital is important in
creating value for
customers.
product could be
imitated, difficult to
imitate the R&D cycle
time capability.
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Sustainability of Durability
Transferability
competitive advantage (More durable the resources and capabilities, more
the sustainable competitive advantage)
The sustainability of competitive

advantage - four major depends on the capabilities which Durability can be Easier it is to transfer
If rate of product consumer brand
characteristics of resources and rate at which a are result of the eroded by resources and
innovation is fast, names have a How?
capabilities firm’s resources management competition from capabilities between
highly durable
and capabilities expertise of the rivals. companies,
appeal.
deteriorate. CEO are also
Durability Transferability Imitability Appropriability product patents vulnerable
are quite likely to gaining access to the the less sustainable
become obsolete. to his or her necessary resources will be the
retirement or and capabilities. competitive
departure. advantage.
Imitability Appropriability
True test of imitability. ability of the firm’s Examples

owners to appropriate It's not just about having
the returns on its valuable resources,
resource base.
How easily and quickly In financial services, Where capabilities
require networks of A company's patented
can the competitors innovations lack legal
organisational routines, groundbreaking
build the resources and protection and are easily
whose effectiveness technology ensures high
capabilities on which a copied. but also about the firm’s
depends on the appropriability, barring
firm’s competitive ability to benefit
corporate culture, competitors' access.
advantage is based? financially from them.
imitation is difficult.
The complexity of many
organisational
-
capabilities can provide a A firm relying on skilled

degree of competitive workforce for
defence. competitive edge has
lower appropriability;
expertise loss risks if
employees leave.
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Question: What best exempli es a differentiation strategy in strategic management?
A. A company reducing prices to become the cheapest option in the market.
B. A mobile phone brand launching a phone with a unique, user-friendly interface and
advanced AI features not seen in other brands.
C. A retail chain expanding its number of stores across the country to increase market
penetration.
D. A manufacturing rm streamlining its production process to minimize production
costs. fi
fi
Correct Answer: B. A mobile phone brand launching a phone with a unique, user-
friendly interface and advanced AI features not seen in other brands.
Explanation of Answers:
● A: Reducing prices to be the cheapest option is indicative of a cost leadership
strategy.
● B (Correct Answer): Launching a phone with unique features like an advanced AI
and user-friendly interface that competitors don't offer aligns with a differentiation
strategy. It focuses on making the product stand out through unique attributes.
● C: While expanding store presence can help in market reach, it doesn’t inherently
signify a differentiation strategy unless accompanied by unique store experiences
or product offerings.
● D: Streamlining production to reduce costs is more characteristic of a cost
leadership strategy, not differentiation.
MCQ on Risks of Differentiation Strategy
Question: What is a major risk associated with pursuing a differentiation strategy?
A. The unique features of the product may not be suf ciently valued by customers to
justify a higher price.
B. The company might overinvest in technology, leading to complex products that are
dif cult to use.
C. The differentiation strategy might lead to an excessive focus on a niche market,
ignoring the broader market.
D. The strategy might result in decreased operational ef ciency due to the diversity of
products.
fi
Correct Answer: A. The unique features of the product may not be suf ciently valued
by customers to justify a higher price.
● A (Correct Answer): One of the primary risks of a differentiation strategy is that
the unique aspects of the product may not be perceived as valuable enough by the
customers, which can result in the failure to justify the premium pricing of the
product.
● B: While overinvestment in technology can be a concern, it is not a direct risk of
the differentiation strategy. Differentiation focuses on uniqueness, not necessarily
on the complexity or technological advancement.
● C: Focusing on a niche market can be a part of a differentiation strategy, but it is
not inherently a risk; in fact, it can often be a strength.
● D: Decreased operational ef ciency is more typically a concern with broad product
lines and not directly associated with a differentiation strategy, which focuses on
unique features rather than product diversity.
fi
MCQ on Bases of Differentiation
Question: Which of the following best represents a form of product differentiation?
A. A company offering the cheapest prices for its smartphones in the market.
B. A smartphone company introducing a model with a revolutionary new AI technology.
C. A company expanding its retail outlets in prime locations across the country.
D. A smartphone brand establishing a strong emotional connection with its customers
through aggressive marketing.
Question: Which scenario best illustrates organizational-based differentiation?

A. A smartphone company introducing cutting-edge camera technology in its new
model.
B. A coffee chain expanding its operations in international markets.
C. A clothing brand known for its eco-friendly practices and sustainable fashion.
D. An online retailer providing the lowest prices for all its products.
Correct Answer: B. A smartphone company introducing a model with a revolutionary
new AI technology.
● A: Offering the cheapest prices is more indicative of a cost leadership strategy
rather than product differentiation.
● B (Correct Answer): Introducing a smartphone with unique and innovative AI
technology is a classic example of product differentiation, focusing on unique
product features that set it apart in the market.
● C: Expanding retail outlets is related to organizational differentiation, focusing on
location advantage.
● D: Establishing a strong emotional connection with customers is part of
organizational differentiation, particularly related to brand strength and loyalty.
Correct Answer: C. A clothing brand known for its eco-friendly practices and
sustainable fashion.
● A: Introducing cutting-edge technology is a form of product differentiation.
● B: Expanding internationally is a growth strategy but does not speci cally indicate
organizational-based differentiation.
● C (Correct Answer): A clothing brand differentiating itself through eco-friendly
practices and sustainable fashion capitalizes on organizational values and
reputation, which is a form of organizational-based differentiation. ↑
● D: Providing the lowest prices aligns with a cost leadership strategy, not
organizational-based differentiation.
Question: Which of the following scenarios is an example of price-based differentiation
where the strategy is to offer the lowest price?
A. A tech company introducing a new model of smartphone with superior AI capabilities
at a premium price.
B. A budget airline offering the most affordable air travel options compared to its
competitors.
C. A luxury car brand maintaining its image through exclusive and high-priced models.
D. A retail clothing store launching an exclusive designer collection at higher prices
than its usual range.
Correct Answer: B. A budget airline offering the most affordable air travel options
compared to its competitors.
● A: Introducing a new model with advanced features at a premium price aligns with
product differentiation, not price-based differentiation focusing on the lowest price.
● B (Correct Answer): A budget airline offering the most affordable options directly
represents price-based differentiation with a focus on being the lowest-priced
choice in the market, appealing to cost-conscious consumers.
● C: Maintaining an exclusive, high-priced image is a form of differentiation based on
premium pricing, not on offering the lowest price.
● D: Launching a designer collection at higher prices is a strategy of premium
pricing, which is different from competing on the basis of the lowest price.
To achieve differentiation, following are the measures that could be adopted by an
organization to incorporate:
● Offer utility for the customers and match the products with their ______ and
________.
● Elevate the performance of the ______.
● Offer the promise of high quality ——————— for buyer satisfaction.
● Rapid product _________.
● Taking steps for enhancing _______ and its brand _______.
● Fixing product prices based on the unique ________ of the product and buying
_______ of the customer.
Achieving
Differentiation
Strategy
Preference (Utility ,
Taste and Performance Quality and Image and Brand
Satisfaction Innovation value Pricing
Preference)
Elevate the Offer the promise Fixing product prices

Offer utility for the Taking steps for based on the unique
customers and match performance of the of high quality Rapid product
product/service for enhancing image features of the product
the products with their product. innovation. and its brand value.
buyer satisfaction. and buying capacity of
tastes and preferences. the customer.
Advantages of Disadvantages of
Differentiatio Differentiation
n Strategy Strategy
Rivalry Buyers Suppliers Entrants Substitutes

Uniqueness Switch- off to
Difficult alternative Not Valued
No negotiation Innovation is
Premium price
Brand loyalty – Special Fewer Options costly Brand value
Features – Absorb cost
Charging too high a
In the long term, price for Differentiation
They do not Innovative Substitute uniqueness is differentiated fails to work if its
Brand loyalty Because features are an products can’t difficult to sustain. basis is something
acts as a negotiate for also they have differentiators features may cause
price as they fewer options expensive replace the customer to that is not valued
safeguard charge a offer. So, new differentiated by the customers.
against get special in the market. premium price, switch-off to
features and entrants products which another
competitors. they can afford generally avoid have high brand
to absorb these features alternative.
value and enjoy
higher costs of because it is customer
supplies and tough for them loyalty.
It means that customers are to provide the
customers will be less willing to pay same product
sensitive to price extra too. with special
increases, as long as features at a
the firm can satisfy comparable
the needs of its price.
customers.
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Focus
Focused cost Focused

Meaning leadership differentiation
Market Risk – Copy, competing Others target

Depends on In conjunction based on price does not offering Some firms For example, Rolls-
penetration Distinctive Consumer necessarily charge particular
with to target a unique concentrate demographic Royce sells a
and market preferences Preference the lowest prices
differentiation Drift narrow features that their efforts groups. limited number of
development market. in the industry. on a particular high-end, custom-
fulfill the
A successful demands of a sales channel, built cars.
focus strategy Focus strategies Risks of pursuing a focus narrow
Strategies Midsize and large Instead, it market.
depends on an such as firms can are most effective strategy include the
industry segment charges low such as
market effectively pursue when consumers possibility that numerous prices relative
that is penetration focus based have distinctive competitors will recognize selling over
to other firms the
and market strategies only in preferences or the successful focus that compete
developmen conjunction with requirements. strategy and copy it, or that internet
within the only.
t offer differentiation or consumer preferences will target market.
of substantial cost leadership- drift toward the product
sufficient focusing based strategies. attributes desired by the
size, advantages. market as a whole.
Other Points in
has good Focus
growth
potential, Achieving Focused Advantages of Focused Disadvantages of Focused
Strategy Strategy Strategy
and is not crucial
to the success of Selecting Superior High Efficiencies Premium Difficult
other major Niches Skills Innovative prices lacking in
to distinctive Costs may Long run
competitors. compete be high
competencies
Selecting specific Creating Generating high Developin Premium prices
niches which are not superior efficiencies for g can be charged by
covered by cost skills for serving such innovative the organisations rivals and niche could
leaders and catering to niche markets. ways in for their focused new The firms Due to the disappear or be
differentiators. such niche managing product/ services. entrants lacking in limited taken over by
markets. the value may find distinctive demand of larger
chain. it difficult competencies product/ser competitors by
to may not be vices, costs acquiring the
compete. able to pursue are high same distinctive
focus which can competencies.
Best-Cost Provider Strategy strategy. cause
problems.
Meaning It can be done

through
Further Giving customers The objective is to Low price

development of more value for the keep costs and Same price, Higher Example, android
comparable quality flagship phones
three generic money by prices lower than Quality
strategies. emphasizing both those of other from OnePlus,
low cost and sellers of Xiaomi, Oppo, Vivo,
upscale comparable etc, are all rooting
differences. products. through offering for giving better
products at lower quality at lowest
price than what is charging similar prices to the
being offered by prices as by the customers. They
rivals for products rivals for products are following the
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with comparable with much higher best-cost provider
quality and quality and better strategy to
features or features. penetrate market.
Different types of Strategies followed by Business
strategies on the conglomerates
basis of their
classification
Level of the Stages of Business

Competition oriented
organization Life Cycle
having multiple products and
businesses formulate strategies In this chapter we will study
at different levels, viz., corporate, Corporate Level Strategy
business unit and functional.
Competitive
Entry/Introduction
Strategies - Cost
Corporate Level Stage - Market Leadership,
Penetration Strategy Differentiation, Focus
Collaboration
Growth Stage - Strategies - Joint
Business Level Growth/Expansion Venture, Merger & CORPORATE BUSINESS FUNCTIONAL
Strategy Acquisition, Strategic
Alliance
Maturity Stage -
Functional Level
Stability Strategy For implementation of the
corporate and business strategies,
Business level strategies are functional strategies are
Corporate level strategies are
formulated for each formulated in business areas like
meant to provide ‘direction’ to product/process division known as
the company. production/operations,
strategic business unit. marketing, finance, human
Decline Stage -
resources etc.
Retrenchment/
Turnaround Strategy
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Basic Features of
grand strategies and meant for Corporate
providing direction to the company. Strategies
Sometimes they are also called

Also known as
“directional” strategies.
Stability Expansion Retrenchment Combination
Generic
Strategies
Stays with its seeks significant The firm
growth- The firm
current retrenches some combines the
These strategies were initially discussed by businesses and above strategic
William F Glueck and Lawrence R Jauch. of the activities
product markets; in some business alternatives in
maintains the (es), or) or drops some
Discussed by existing level of permutation/com
maybe within the the business as
They are also known with name effort; and is current such through sell- bination so as to
of - Glueck and Jauch satisfied with businesses; suit the specific
Strategies out or liquidation.
incremental requirements of
growth. NOT a do the firm.
Corporate level nothing strategy.
strategies It ensures the correct alignment
of the firm with its maybe by
Introduction correct entering new
environment. It also serves as
alignment the design for filling the business that are
strategic planning gap. related to
existing
businesses;
Helps the managers to handle
Help to environmental uncertainties and
managers complexities. or by entering
new businesses
that are
Competitive It helps build the relevant competitive unrelated to
Corporate strategy advantages advantages for the firm. existing
ensures the growth of businesses.
the firm because of
the following It is to harness the opportunities available
arguments: Harness the in the environment, countering the threats
opportunities embedded therein.
Stability
Expansion
Basic Corporate
Strategies
Retrenchment
-Combinan
Horizontal
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A firm opting for stability
strategy stays with the same
Stability Strategy business, same product
SAME market posture and functions,
maintaining same level of
effort as at present.
Stability strategy is
Meaning & Concept not a ‘do nothing’ The endeavour is to enhance
strategy. functional efficiencies in an
INCREMENTAL WAY incremental way, through
better deployment and
utilization of resources.
One of the important
goals of a business keeping track of new
enterprise is stability developments For Whom? Small Orgs.
– Stability strategy does not
NO REDFINITION involve a redefinition of the
business of the corporation.
to safeguard its continues to serve in Small organizations

It involves keeping the same or similar may also follow a
existing interests and track of new It is basically a safety-
strengths, markets and deals in stability strategy to SAFETY ORIENTED – STATU oriented, status quo oriented
developments to same or similar consolidate their QUO
ensure that the strategy.
products and market position and
strategy continues to services. prepare for the
make sense. launch of growth
strategies. Characteristics of Stability
to continue in the It does not warrant much of
chosen business path, Strategy FRESH INVESTMENT fresh investments.
for those firms whose
products have
reached the maturity
stage of the product
life cycle. It involves minor improvements
to consolidate the MINOR IMPROVEMENT in the product and its
commanding position packaging.
already reached, and
RISK The risk is also less.

to optimise returns
on the resources
committed in the
business. Major Reasons for
Stability Strategy With the stability strategy,
the firm has the benefit of
concentrating its resources
BENEFIT and attention on the existing
businesses/products and
markets.
LESS RISK, LESS EXPANSION IS

MATURITY STAGE CHANGES THREATENING CONSOLIDATION STABLE ENVIRONMENT
The growth objective of firms
GROWTH OBJECTIVE employing this strategy is
quite modest.
It is less risky as it Consolidation is sought

A product has reached involves less changes and Expansion may be
the maturity stage of the
product life cycle.
the staff feels
comfortable with things
as they are.
perceived as being
threatening.
through stabilizing after
a period of rapid
expansion.
The environment faced is
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Expansion strategy is the
OPPOSITE opposite of stability strategy.
It may become imperative when

Expansion strategy involves a Demand of Environment environment demands increase in
REDEFINITION redefinition of the business of pace of activity.
the corporation.
While in stability strategy, Strategists may feel more

rewards are limited, in satisfied with the prospects of
REWARDS expansion strategy they are growth from expansion; chief
very high. Satisfaction executives may take pride in
presiding over organizations
perceived to be growth-oriented.
Major Reasons for
In the matter of risks, too, the Growth/Expansion Strategy
RISK two are the opposites of each
other.
Expansion may lead to greater
Greater control control over the market vis-a-vis
A firm with a mammoth competitors.
growth ambition can meet its
GROWTH OBJECTIVE objective only through the
expansion strategy.
Advantages from the experience
EXPANSION - Characteristics Experience curve
curve and scale of operations may
of Growth/Expansion Strategy benefits accrue.
Fresh investment is required
FRESH INVESTMENT for expansion strategy.
Expansion strategy is a highly

versatile strategy; it offers
VERSATILE several permutations and
combinations for growth.
can generate many

alternatives within the
strategy by
MANY ALTERNATIVES
altering its propositions
regarding products, markets
and functions and pick the
one that suits it most.
Expansion strategy holds

within its fold two major
strategy routes:
Intensification Diversification.
TWO MAJOR ROUTES
Both of them are growth
strategies; the difference lies
in the way in which the firm
actually pursues the growth. www.edu91.org
Type of growth
or expansion
Internal Growth
Strategy External
Mergers and Strategic

Intensification Diversification
Acquisition Alliance
Market Concentric Conglomerate Horizontal

Penetration Diversification Diversification Innovation Merger Meaning
Vertically Horizontal
Market Integrated Integrated
Development Vertical Merger Advantage
Diversification Diversification
Forward and
Product Backward Co-generic
Development Merger Disadvanatge
Integration
Conglomerate
Merger
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Expansion or growth
through Intensification and
Igor Ansoff Product –
market Expansion grid
Diversification
Intensification involving new
products and
new markets
Market Product Market

Penetration Development Development Related /
Unrelated.
Commonly
followed Focus Approach Other points Focus Methods Other points Focus: Methods
Markets
Utilizes Increase Targets
Concentrates company Involves Add product existing Includes using
market share. current features, products to
on growing resources to significant customers different
existing enhance the changes to product new customer distribution
using refinement. groups or
products in the profitability existing established channels, modifying
current products or regions. advertising content,
and market Increase distribution
market. share of creating new, channels. or changing
product usage. promotional media.
current related items.
Develop a new-
offerings. generation
Increase the product.
frequency
used. Expand
Develop new geographically
product for Target new
the same segments.
Increase the market.
quantity used.
Find new
application for
current users.
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Growth by Diversification
Strategy Overview
Nature of Reasons for

Definition Characteristics Focus Diversification Diversification: Major Types
Effective Utilizing
Entering new utilization of resources like Synergistic
Innovative, Greater growth products, Concentric
Expansion into entrepreneurial, and profitability excess capacity manufacturing advantages
various products services, or or capabilities.
seeking new prospects facilities, funds,
or fields, using markets with marketing
internal opportunities compared to different skills,
and challenges. intensification. channels,
resources. technology, and prestige, and
knowledge. Improving sales
manpower. Conglomerate
and profits by
adding related or
new products,
leveraging
technology or
market linkages. Expansion though
Innovation
Expansion or
Growth through
Diversification -
overview
Concentric Conglomerate
Diversification Diversification Innovation
(Related) (Unrelated)
Vertically Horizontal Helps to solve

Integrated Integrated complex
Diversification Diversification problems
Forward and
Backward Increases
Productivity
Integration
Gives
Competitive
Advantage:
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Concentric
Diversification
Understood in
Related Linked Spin off Benefits two directions,
In concentric
diversification, The new Vertical
the new product is a there are integration
amounts to spin-off from benefits of
related business is
linked to the the existing synergy with
diversification. facilities and the current
existing
businesses products/proc operations. Horizontal
through esses. integration
process,
technology or
marketing.
Vertically
Integrated
Diversification
SAME DOES NOT

RELATED TYPES
PROCESS JUMP
The
engage in remains characteristic Forward
Backward Integration Integration
businesses vertically feature of
that are within the vertical
related to the same process integrated
existing sequence and diversification
business of moves forward is that the Purpose For example Definition Application Example
the firm. or backward in Strategy
firm does not
the value chain jump outside
the vertically
linked product To create an A large Moving
process chain. supermarket Includes A coffee bean
effective Enhance profits and forward in the entering into
supply chain chain considers manufacturer
control over product value chain to distribution
by becoming production through to purchase a enter merging with
number of channels or or establishing
an input establishment of businesses related retail
provider. businesses that farms that that utilize a coffee café
would provide it sectors. chain.
improve supply existing
capability or reduce a significant
products.
production costs. amount of fresh
produce.
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Forward Integration
Strategy
Definition Application Example
Moving forward in the A coffee bean

value chain to enter Includes entering into manufacturer merging
businesses that utilize distribution channels or with or establishing a
related retail sectors. Conglomerate
existing products. coffee café chain.
Diversification Strategy
Overview
Nature Characteristics Distinctiveness Example
No linkages in product, The new ventures are A cement manufacturer

Diversification into market, or technology entirely separate in terms diversifying into steel and
completely unrelated between the new and of process, technology, or rubber product
businesses or products. existing businesses. function. manufacturing.
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Acquisitions and mergers (two
or more companies combines).
Innovation
Instant Means Attractive & Synergy Synergy? Definition and

Tempting Differences
Meaning Advantages The positive

of achieving it circumvents Another main
Synergy from effects of the Merger Acquisition
the expansion. (reduces) objective. merged
the time, risks Synergy may One company

Innovation is the resources are A union of two (usually
Problem-Solving and skills result from or more
process of creating Enhancing Competitive greater than stronger
Through involved such bases companies to
and implementing Innovation: Productivity: Advantage: the financially)
new ideas, methods, form a new
takes over
or products that entity, another,
lead to significant in screening as Physical
positive change internal facilities, effects of the
Addresses complex Innovations simplify individual often in
societal issues with and automate tasks, Innovation distances growth
a company from its opportunities, resources usually on situations like
customer-centric boosting before merger friendly terms, economic
competitors. Technical and
solutions. productivity. or acquisition. with shared recession or
Innovation improves Managerial profits and declining
product lines or skills, goals. profits.
processes, enhancing seizing them
market share, Example: Example: MS Excel Innovative products
revenues, Environmental automates financial naturally attract Can be
tasks, leading to Distribution
profitability, and challenges tackled customers, reducing unfriendly,
increased efficiency. the need for channels, General
customer by renewable energy administration, with the
satisfaction. innovations. extensive dominant
marketing. company
absorbing the
Research and weaker one.
development
Initial high costs are Helps in retaining and so on.
offset by long-term existing customers
economic and and attracting new
environmental ones.
sustainability.
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Expansion Through
Different Types of Strategic Alliances
Mergers
Definition of Strategic Advantages of Strategic Disadvantages of

Horizontal Merger Vertical Merger: Co-generic Merger: Conglomerate Merger: Alliance: Alliances: Strategic Alliances:
Definition - Union of Definition: Merger of Definition: Combination Sharing Risks:

Definition - Merger of Organizational: Learning Requirement of sharing
companies at different companies related in of companies that are A collaboration between
companies in the same two or more businesses to new skills, enhancing resources, profits,
stages of production or some aspects of completely unrelated in capacity, extending supply
industry, often direct distribution in the same production, market, or terms of customer achieve strategic knowledge, and skills,
competitors. chains, and adding which can include
industry. technology. groups, functions, or objectives. legitimacy to new
technologies. sensitive trade secrets.
ventures through
respected partners.
Objective - Achieve Purpose: Extend product
economies of scale, Backward Integration - lines or acquire needed Entities remain
Company acquires its Characteristics: No Legal and Compliance
reduce duplication, components, based on significant independent but share
suppliers or raw material benefits, control, and Economic: Cost and risk Risks: Potential issues
expand product lines, shared resources or commonalities in reduction, achieving with enforcing agreements
reduce competition. producers. strategic requirements. contributions to the
production, marketing, economies of scale, and to protect trade secrets.
R&D, or technology, alliance.
co-specialization (e.g.,
though some overlap may bundling products from
exist. different companies).
Example - Merger of Forward Integration - Example: A refrigerator
Lipton India and Brook Company acquires its manufacturer merging Future Competition: Risk
Common in global
Bond to form Brook Bond distribution channels or with a kitchen appliance of an ally turning into a
marketplaces between Strategic: Collaboration competitor if the alliance
Lipton India Ltd. buyers. company. Implication: These companies from different with rivals, vertical dissolves or objectives
mergers are more diverse regions. integration in supply change.
and may not have chains, pooling resources
immediate synergies or for competitive
Benefits - Increases related business advantage, accessing new
synergies, creates an functions. technologies, and joint
advantageous market R&D efforts.
position by controlling
supplies or distribution.
Political: Gaining entry
into foreign markets
through local partners,
Example - A company overcoming legal barriers,
integrating backward and improving political
into raw material influence.
production and forward
into distribution.
www.edu91.org
Strategic Exits –
Retrenchment Focuses on internal
Strategies retrenchment.
Nature of Turnaround
Strategy:
Aims to enhance
Types of internal efficiency of
Main focus Retrenchment the organization.
Strategies:
Persistent negative
cash flow from
Identifies problem business
areas and diagnoses Divestment (or
Turnaround Divestiture) Liquidation Turnaround Strategy
causes of business Strategy: Strategy:
issues. Strategy: Uncompetitive
products or services
Focuses on Involves shedding

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to address these and improving divisions, or strategies fail to Declining market share
problems. performance. Strategic Business rectify problems. Indicators
Units (SBUs). Necessitating a
Turnaround Strategy:
Deterioration in
Involves Results in total physical facilities
restructuring Includes curtailing abandonment or
business practices product lines or closure of business
and operations. reducing functions. activities. Over-staffing, high
turnover of employees,
and low morale
LIQUIDATION
Mismanagement
Definition of Consequences of Frequency and Challenges in Appropriateness Planned

Liquidation: Liquidation: Reluctance: Asset Sales: of Liquidation: Liquidation:
The process of When liquidation is

closing down a firm Loss of when a "dead evident,
employment for More common in Difficulty in finding
and selling its small-scale, buyers. business is worth abandonment plan
assets. workers and staff. more than alive", it is desirable.
proprietorship, and
partnership firms. is a good
proposition.
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most extreme and
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strategy. opportunities. Rare in medium and at a value much maximize benefits
lower than their For instance, the
large-sized real estate owned for shareholders
companies in India worth, sometimes during the
only as scrap. by a firm may
due to reluctance fetch it more liquidation
Associated stigma from management, money than the process.
of failure. government, actual returns of
banks, trade doing business
unions, suppliers,
creditors, and
www.edu91.org
other
stakeholders.

persistent -ve cash flow se business ke market share mei decline aaya,
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mismanagement ke chalte overstaffing, high turnover and low morale of
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Corporate strategy
● game plan that really directs the company towards success is called "corporate
strategy
● The formation of corporate strategy is the result of a process known as strategic
planning.
● It's about the long-term vision and goals of the company and how to achieve
them.
Strategic planning,
● Is the process through which an organization de nes its strategy or direction.
● Senior management develops strategic plans for the entire organisation after
evaluating the organization's strengths and weaknesses in light of potential
possibilities and dangers in the outside world.
● It involves gathering and allocating resources in order to achieve organisational
goals.
● Strategic planning determines where an organisation is going over the next year
or more and the ways for going there.
● The process is organisation-wide or focused on a major function such as a
division or other major function.
Operational planning
● Conducted at middle and lower management levels, it deals with the speci cs of
resource utilization to achieve goals
● They provide speci cs on how the resources are to be used effectively to achieve
the goals.
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Strategic planning and operational planning are two distinct yet interconnected
aspects of organizational planning. While strategic planning is both organization-wide
and functional, operational planning plays a speci c role in translating strategic plans
into actionable, day-to-day tasks.
Functional Strategic Planning:

● Focuses on speci c departments or functions within the organization, such as
marketing, nance, HR, or IT.
● Tailors strategies to meet the speci c needs and goals of each function, while
aligning with the broader organizational strategy.
● Involves setting objectives, tactics, and resource allocation for each department
to effectively execute their part of the overall strategy.
● Usually led by heads of departments or functional managers who have expertise
in their speci c areas.
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Strategic uncertainty
● Strategic uncertainty arises from the unpredictability of future events affecting

organizational strategy and goals.
● In uenced by market changes, technological advancements, competition, and
regulatory shifts.
● Effective management requires exibility, resilience, and agility to adapt quickly to
environmental changes.
● Group uncertainties into logical clusters or themes for better management.
● Prioritize clusters for focused information gathering and analysis.
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Impact of Strategic Uncertainty on Business
● Strategic uncertainty can affect current, proposed, and potential business
activities.
● Impact varies based on each Strategic Business Unit's (SBU) signi cance to the
rm.
● Importance often measured by sales, pro ts, or costs, but potential growth should
also be considered for a comprehensive understanding of value.
Strategies for dealing with strategic uncertainty

• Flexibility: Building adaptable strategies.
● Diversi cation: Diversifying products, markets, and customer bases.
● Monitoring and Scenario Planning: Regularly monitoring key changes and
planning for various scenarios.
● Building Resilience: Strengthening operational processes and risk
management.
● Collaboration and Partnerships: Working with other entities to share risks and
resources.
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A company with a strong research and development capability might be more inclined
to pursue innovative product development strategies because it aligns with its
existing strengths and resources.
Effectiveness:
● De nition: Effectiveness refers to the degree to which something is successful in
producing a desired result; it focuses on achieving objectives and actual
outcomes.
● In Business: Being effective means that a company successfully meets its goals
and objectives. It’s about doing the right things to ensure the company's survival
and success.
● Example: A business that sets a goal to expand its market share and
successfully achieves this through targeted marketing and product innovation is
effective.
Ef ciency:
● De nition: Ef ciency refers to doing things in an optimal way, with the least
waste of time and resources. It’s about how well something is done, not
necessarily what is achieved.
● In Business: An ef cient business uses its resources (time, money, labor) wisely
and operates with minimal waste, but this doesn’t automatically ensure its
success or survival.
● Example: A company might be ef cient in producing goods using minimal
resources, but if these products don’t meet market needs or are not well-
marketed, the company might not be effective.
Effectiveness is about achieving desired outcomes and is crucial for the survival and
success of a business. Ef ciency, while important, is about the optimal use of
resources and, on its own, may not guarantee a business’s survival. The key for any
business is to strive for both effectiveness in meeting goals and ef ciency in resource
utilization.
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Strategy Implementation.
● Strategy Activation: Convert strategies into actionable steps.
● Plans Development: Evolve strategies into detailed plans with clear milestones.
● Programmes Creation: Formulate programmes outlining speci c goals and
procedures.
● Projects Formulation: Develop time-bound projects with allocated budgets for
operational infrastructure.
● Organizational Structure: Design an effective structure, establish systems, and
set functional policies.
● Implementation Steps: Include project, procedural, resource, structural,
functional, and behavioral aspects.
● Inclusive Participation: Involve managers in strategy formulation and strategists
in implementation.
● Strategic-Operational Integration: Blend strategic goals with practical
operational execution for success.
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○ Purpose: Analyzes organizational design to enhance effectiveness.
○ Depict: how effectiveness can be achieved in an organization through the
interactions of hard and soft elements.
● Hard Elements (Management-Controlled)
○ Strategy: Direction and blueprint to build on a core competency and achieve
competitive advantage Of
○ Structure: Organization’s layout based on resource availability and

management preference of centralisation or decentralization..
○ Systems: Daily operations and task execution framework to make org
effective and ef cient.
● Soft Elements (Culture-Governed):
○ Shared Values: Core values in uencing culture and ethics.
○ Style: Leadership approach and its impact on strategy and motivation.
○ Staff: Organization's talent pool.
○ Skills: Key employee competencies crucial for success.
● Limitations:
○ Excludes external environmental impact.
○ Does not clearly explain organizational effectiveness.
○ Considered static and in exible for dynamic decision-making.
○ Overlooks gaps between strategy conceptualization and execution.
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What is Organisational Structure?
Organisational structure is how a company arranges its people and jobs so that its
work can be performed and its goals can be met ef ciently. It's like a blueprint
showing how all the parts of the company t together.
Example: A Local Bakery

Imagine a small local bakery. Its structure might be simple:
● The owner decides on the types of bread and pastries to sell, manages nances,
and interacts with suppliers.
● A head baker oversees the baking, ensuring quality and consistency.
● Sales staff work at the counter, serving customers and handling transactions.
In this bakery, the structure helps everyone know their responsibilities: the owner
leads, the head baker manages the kitchen, and the sales staff take care of
customers. This organisation allows the bakery to operate smoothly and meet its goal
of selling delicious baked goods.
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Organization Structure Basics
● Purpose: De nes how tasks allocation, coordination, and supervision are aimed
at organizational goals.
● Strategy-Structure Match: Creates competitive advantage.
● Strategic Leadership: Develops superior structure and controls compared to
competitors.
Structure and Strategy Relationship

● Changes in Strategy: Often necessitate organisational structural adjustments.
(For instance, entering new markets, launching new product lines, or
adopting new business models can necessitate structural changes to
support these strategic shifts.)
○ Reasons:
◆ Objective and Policy Formation: Structure in uences how these are
established.( For example, a geographic structure may set objectives
based on regional performance, while a customer-focused structure
emphasizes customer segments.)
◆ Resource Allocation: Dictated by the organizational structure. (Zara
operates with a customer-focused structure, directing resources
towards fast fashion and trends popular among its distinct customer
segments, achieving quick turnaround times and high customer
satisfaction.)
Examples:
● Geographic Structure: Objectives and policies are set based on location.
● Customer-focused Structure: Resources allocated according to customer groups.
● Functional Structure: Resources are divided by functional areas.
Strategic Implications:
● Structure Follows Strategy: Designed to support strategic goals.
● Adapting Structure: Essential for new activities, resource allocation, training, and
system development.
● Strategy In uence: Structure can also shape strategy.
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Strategy In uence: Structure Can Also Shape Strategy
Sometimes, the way a company is organised (its structure) can affect the decisions it
makes for the future. If a part of the organisation is particularly strong or works really
well, the company might decide to use this to its advantage when making plans.
Example: A Local Coffee Shop Chain

● Imagine a coffee shop chain with several locations in a city, each managed
independently by local managers who really understand their neighbourhood's
preferences and have the freedom to adjust their menu and decor accordingly.
● Impact on Strategy: Seeing that this local approach works well, the company
decides its future growth strategy will focus on opening more neighbourhood-
speci c coffee shops in new cities, rather than trying a one-size- ts-all approach.
● This example shows how the company's regional structure, which gives
autonomy to local managers, directly in uences its decision to pursue a growth
strategy that leverages this local expertise and independence. Instead of the
strategy dictating the structure, the existing structure and its success guide the
strategy
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● Context: advancements in information technology and communications have
changed the functioning of organisations.
● Impact on Middle Management: Diminishing role as technology replaces many
of their tasks.
Structure Features:
● Three Layers: Top, narrow middle, and bottom.
● Constricted Middle Layer: Limited middle-management level.
● Technology Integration: Links top and bottom layers, bypassing traditional
middle management tasks.
Management Characteristics:
● Generalists Over Specialists: Middle managers handle a broader range of
tasks, including cross-functional issues from marketing, nance, and production.
Bene ts:
O
● Cost Reduction: Fewer middle management layers lead to lower overhead.
● Enhanced Responsiveness: Simpli es decision-making and places authority
closer to information sources for quicker actions.
Challenges:
● Limited Promotion Opportunities: Reduction in middle management limits
advancement paths for lower-level employees.
● Motivation and Monotony: Maintaining motivation becomes challenging with
less upward mobility.
Solutions:
● Task Variation: Assigning challenging tasks to keep engagement high.
● Lateral Moves: Facilitating cross-departmental transfers to broaden skills.
● Reward Systems: having a system of proper rewards for performance.
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● Relevance: for multi-product, multi-business enterprises.
● De nition: SBU groups related businesses on strategic basis.
● Objective: Aims for effective strategic planning for each product/business.
Characteristics of an SBU:
● Independence: Can operate as a standalone entity within the organization.
● Competition: Possesses its own set of market competitors.
● Management: Led by a manager responsible for strategic planning and pro t
performance, with control over pro t-in uencing factors.
Structure:
● Three Levels:
○ Top: Corporate headquarters.
○ Middle: SBU groups.
○ Bottom: Divisions within SBUs based on relatedness.
Applicability:
● Large Organizations: Especially with varied products or geographically
dispersed operations.
● Diversity Management: SBU structure is essential for managing increased
diversity in products and operations.
Importance of SBU / Advantages of SBU Structure

● Establishing coordination between divisions having common strategic interests.
● Facilitates strategic management and control on large and diverse
organizations.
● Fixes accountabilities at the level of distinct business units.
● Helps allocate corporate resources to areas with greatest growth opportunities.
● Makes the task of strategic review by top executives more objective and more
effective.
Allows strategic planning to be done at the most relevant level within the total
enterprise.
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Alignment is
Southwest Airlines: Known for its unique corporate culture centered around employee
happiness and exceptional customer service, Southwest Airlines has consistently
aligned its strategic decisions with these cultural values. When the airline industry
faced downturns, instead of cutting employee bene ts or customer services (which
would con ict with its culture), Southwest opted to nd innovative operational
ef ciencies and new revenue streams that allowed it to maintain its commitment to
employees and customers.
fi
fl
fi
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I
--
Performance Measures
Stranges -Issless I
>
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used for evamanna
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taking
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e
s
Market Share Growth Rate (MSG Rate)

A retail company aims to grow its clothing market share. "Market Share Growth Rate
(MSG Rate)" measures the percentage increase in market share over time, illustrating
the cause-and-effect relationship between strategies and growth. While it motivates
employees to expand the market presence, careful attention should be paid to avoid
overanalyzing minor uctuations, ensuring a focus on the core objective of achieving
greater market share.
fl
Types of Strategic Performance Measures
●
O
Financial Measures: Assess nancial health through metrics like revenue growth,
ROI, and pro t margins.
● Customer Satisfaction Measures: Gauge customer contentment and loyalty with
↑
measures like satisfaction scores, retention rates, and loyalty indices.

● ↑ Market Measures: Track competitiveness and market position using market share,
customer acquisition rates, and referral numbers.
● &
Employee Measures: Evaluate workplace environment and staff morale with
indicators like satisfaction levels, turnover rates, and engagement scores.
&
● Innovation Measures: Measure innovation capability through R&D investment,

patent lings, and the introduction of new products.
● & Environmental Measures: Assess environmental responsibility and sustainability
efforts by monitoring energy use, waste management, and carbon footprint.
E
SPM o I - Indicator
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gun °
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FM
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fi
fi
fi
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O O ② 25Y you
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-mu
The importance of strategic performance measures
● Goal Alignment: Align strategies with goals and objectives to ensure on-track
- - - -
- we --- - -
progress towards desired outcomes. &
● Resource Allocation: Use performance data for informed resource allocation,

- O
prioritizing efforts in high-impact areas.

● Continuous
- Improvement: Employ performance measures to track progress and
make adjustments for ongoing improvement.
1
● External Accountability: Demonstrate accountability to stakeholders
(shareholders, customers, regulators) with clear, transparent performance
- -
reporting.
&
⑭
--
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>
-
Goal
- >
- Allge
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= c
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E
Holistic Approaches to Strategic Performance Measurement
● Triple Bottom Line (TBL): Expands traditional nancial metrics to include:
- >
-
-
○ Economic Prosperity: Financial health indicators like revenue growth and

-
-
-
ROI.
O
○ People: Social measures assessing impact on employees, customers, and
communities.
--
Oimpact.
○ Planet: Environmental metrics evaluating sustainability efforts and ecological
● Quadruple Bottom Line: Further extends TBL by incorporating:

- -
○ Purpose: Adds a spiritual or ethical dimension, focusing on the organization's

-
-
O ②
mission and values beyond pro tability.
--
These frameworks guide organizations towards a comprehensive evaluation of their
O
- -
strategic performance, emphasizing the importance of balancing nancial success

-
with social, environmental, and ethical considerations.
- - -
·
fi
fi
Baro
Soron-riented
3 -
Onenti
Phon
Managing the political aspects of implementing a strategy
● Strategy implementation faces two key forces:
○ Rational Forces: Emphasize openness, communication, and self-analysis.
○ Political Forces: Focus on preserving power structures and promoting internal
competition, leading to knowledge retention and selective communication.
● Outcome of Con icts:
○ The clash between these forces can result in the of cial strategy incorporating
politically acceptable aspects, while sensitive elements might result to an
unspoken, implicit strategy.
Understanding and balancing these dynamics are essential for effectively

implementing a strategy that accommodates both the ideal objectives and the practical
political landscape within an organization.
During strategy meetings, the marketing team's proposal for a digital- rst approach is
met with resistance from some senior managers. While the bene ts of social media
advertising are acknowledged (rational forces), concerns about changing long-
established methods and reallocating budgets (political forces) lead to a compromise
fl

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·

· Present Business Scope

eneric. Gurial tor strategic planning

They should be concrete and specific.

They should be measurable and controllable.

Objectives should be set within the constraints of organisational

Different objectives should correlate with each other.

They should be related to a time frame.

They should provide the basis for strategic decision-making.

They should provide standards for performance appraisal.

They should be facilitative towards achievement of mission and

They should be challenging.

financial and strategic objectives

be aware of, assess,

Demographic Young Population

India Because of this

Effecting market size

Beliefs The knowledge of

Decisions related to Markets Menu Adaptation

Strategies Marketing strategies

Include Conditions at National Level

Conditions in Market For Resources Supply

Per Capita Income

over the business

Higher interest rates

4. State of Law and order

Elements 6. ideology and practice

Effective regulatory bodies

Example: Nationwide tax policies

country where there

Need to Understand Laws Intellectual Property

Reduce the cost

Has helped to Shrink time and distance

Example: The rise of social media has led

Smartphones have created a market for apps and

framework for T Technological

affect industries Such as Farming

encourages For Proactive and

strategic- complex due to

Example: A global tech company might

Base of the Answer People

Rapid shrinking of Fast communication, speedier

Domestic markets are no longer adequate

Competition in domestic markets

Other reasons Reliable or cheap source of raw material

To Reduce transportation cost

Rise of service sector

Collapse of Inetrnational Trade barriers

deeper look at the

Helps in focusing on rather than bulk of

Threat from New entrant

Bargaining power of Customer

Threat from Substitute

specific competitive associated with each

Strength of Pressure Strong

Existing firms can

Barriers to entry Economies of scale

Can be as follows Switching cost

Existing firms can

Barriers to entry Economies of scale

Can be as follows Switching cost

Understanding A product can either

Has a price Targeted group

Business are working