UNIT -1 OVERVIEW OF STRATEGIC MANAGEMENT

Strategic management is the process of planning, executing, and monitoring an organization's

strategies and initiatives to achieve its long-term goals and objectives. Strategic management is a
crucial function for businesses, non-profit organizations, and even government entities, as it helps
them adapt to changing environments, allocate resources effectively, and remain competitive in their
respective industries.

Key elements and concepts associated with strategic management include:

a. Mission and Vision: Organizations begin by defining their mission (the fundamental purpose
of the organization) and vision (the desired future state). These statements provide a clear sense of
purpose and direction.
b. Environmental Analysis: Strategic management involves assessing the external environment
(opportunities and threats) and the internal environment (strengths and weaknesses) to identify factors
that can impact the organization's strategy.
c. Strategy Formulation: Based on the analysis, organizations develop strategies. This involves
setting specific goals, identifying target markets, choosing competitive advantages, and determining
the overall approach to achieving the mission and vision.
d. Strategy Implementation: Once strategies are formulated, they need to be put into action. This
involves resource allocation, designing organizational structures, processes, and systems, and aligning
day-to-day operations with the strategic plan.
e. Monitoring and Control: Continuous monitoring of progress is essential. This includes
measuring performance against goals, making necessary adjustments, and ensuring that the
organization stays on course toward its strategic objectives.
f. Adaptation and Flexibility: Strategic management recognizes the need for adaptability.
Organizations must be prepared to adjust their strategies in response to changing internal and external
conditions.
g. Competitive Advantage: One of the central goals of strategic management is to create and
sustain a competitive advantage. This can be achieved through unique products or services, cost
leadership, innovation, or other means.
h. Long-term Perspective: Strategic management is not concerned with short-term gains but
rather focuses on achieving sustainable success over an extended period, often spanning several years.

Nature of strategic management

1. Long-term Perspective: Strategic management focuses on the long-term direction and

sustainability of an organization. It involves setting long-range goals and developing plans to
achieve them, typically spanning several years or even decades.
2. Holistic Approach: It takes a holistic approach to managing an organization, considering all
aspects of the business, including its internal and external environments. This includes factors
such as organizational culture, resources, capabilities, industry dynamics, and competitive
forces.
3. Goal-Oriented: Strategic management is driven by specific goals and objectives. These goals
are often related to financial performance, market share, growth, innovation, or other critical
success factors that align with the organization's mission and vision.
4. Adaptability: Effective strategic management requires adaptability and the ability to respond
to changing business environment. Organizations must be flexible in adjusting their strategies
when circumstances change or new opportunities arise.
5. Continuous Process: Strategic management is not a one-time event but an ongoing process. It
involves a cycle of planning, implementation, and evaluation, with periodic adjustments to
ensure that the organization remains on track to achieve its strategic objectives.
 6. Decision-Making Framework: It provides a structured framework for decision-making.
Strategic decisions are typically made by top management, and they have a significant impact
on the organization's future. These decisions are often complex and require careful analysis.
7. Competitive Advantage: A key objective of strategic management is to gain and sustain a
competitive advantage. This involves finding ways to differentiate the organization from its
competitors and create value for customers that competitors cannot easily replicate.
8. Resource Allocation: Strategic management involves making choices about how to allocate
an organization's resources, including financial, human, and technological resources, to
support the achievement of strategic goals.

SCOPE OF STRATEGIC MANAGEMENT

• Environmental Analysis:
• Industry Analysis: Assessing the competitive dynamics, market trends, and forces
that affect the industry in which the organization operates.
o PESTEL Analysis: Examining the political, economic, social, technological,
environmental, and legal factors that influence the business environment.
• Internal Analysis:
o SWOT/Resource Assessment: Evaluating an organization's internal strengths and
weaknesses, including financial resources, human capital, technology, and
infrastructure.
o Capabilities Analysis: Identifying the unique capabilities and core competencies that
give the organization a competitive advantage.
• Strategy Formulation:
o Setting Objectives: Establishing clear and specific long-term goals and objectives that
align with the organization's mission and vision.
o Strategic Planning: Developing strategies and action plans to achieve the defined
objectives. This includes identifying target markets, product development, cost
leadership, and differentiation strategies.
• Strategy Implementation:
o Organizational Structure: Designing an organizational structure that supports the
chosen strategies and ensures efficient coordination.
o Resource Allocation: Allocating financial, human, and other resources to strategic
initiatives.
o Process Alignment: Aligning operational processes and systems with the strategic
plan.
• Strategic Control and Evaluation:
o Performance Measurement: Developing key performance indicators (KPIs) to track
progress toward strategic goals.
o Feedback and Adjustment: Continuously monitoring performance and making
necessary adjustments to stay on course.
• Risk Management:
o Risk Assessment: Identifying and assessing potential risks associated with strategic
choices.
o Risk Mitigation: Developing strategies to mitigate and manage identified risks.
• Innovation and Technology Management:
o Innovation Strategy: Integrating innovation into the strategic plan to foster creativity
and adaptability.
o Technology Adoption: Identifying and adopting relevant technologies to enhance
competitiveness.

• Example: Airbnb
1. Long-Term Orientation: Airbnb's strategic management involves long-term planning and decision-
making to establish and maintain its position as a leading global hospitality platform.

2. Environmental Analysis: Airbnb constantly assesses the external environment, including factors
such as changing travel trends, regulatory developments, and global economic conditions. This
analysis helps them adapt their strategies.

3. Internal Analysis: Airbnb evaluates its internal strengths, including its technology platform and user
base, and weaknesses, such as regulatory challenges in some markets. They capitalize on their core
competency of connecting hosts and guests.

4. Strategy Formulation: Airbnb's strategy involves offering unique accommodations and experiences,
expanding into new markets, and enhancing user experiences through technology innovations. They
set clear objectives aligned with their mission of "Belong Anywhere."

5. Strategy Implementation: Airbnb allocates resources to marketing, customer support, and

technology development to support its strategies. They design organizational structures to facilitate
global operations and maintain brand consistency.

Characteristics of Strategic Management

1. Long-Term Focus: Strategic management is concerned with the organization's long-term

success and sustainability, typically spanning three to five years or more. It involves setting
long-term goals and strategies to achieve them.
2. Top-Down Approach: It is typically a top-down process, with senior leadership and
executives responsible for setting the strategic direction of the organization. However, input
and feedback from various levels within the organization are often considered during the
strategic planning process.
3. Continuous Process: Strategic management is not a one-time event but a continuous,
iterative process. It involves regular reviews, adjustments, and adaptations to ensure the
organization remains relevant and competitive in changing environments.
4. Comprehensive Analysis: It requires a thorough analysis of the organization's internal
strengths and weaknesses, as well as external opportunities and threats (SWOT analysis). This
analysis forms the basis for strategic decision-making.
5. Goal Alignment: Strategic management ensures that all levels of the organization are aligned
towards the achievement of the overall strategic goals and objectives. This alignment helps in
optimizing resources and efforts.
6. Risk Assessment: Assessing and managing risks is a crucial part of strategic management.
Organizations need to anticipate and mitigate potential risks that may hinder the attainment of
their strategic goals.
7. Resource Allocation: Strategic management involves allocating resources such as finances,
human capital, and technology to support the execution of strategic initiatives. Resource
allocation is typically based on the priorities set in the strategic plan.
8. Innovation and Adaptation: Successful strategic management encourages innovation and
the ability to adapt to changing market conditions, technological advancements, and
competitive landscapes.
9. Competitive Advantage: A key objective of strategic management is to establish and
maintain a competitive advantage. This can be achieved through unique products or services,
cost leadership, differentiation, or other strategic approaches.

Apple Inc.

Strengths:
 • Strong Brand: Apple has a powerful and globally recognized brand.
• Innovative Product Design: The company is known for its innovative and aesthetically
pleasing product designs.

Weaknesses:

• High Prices: Apple products are typically more expensive than those of its competitors, which
can limit market share in certain segments.
• Dependency on iPhone: A significant portion of Apple's revenue comes from iPhone sales,
making it vulnerable to fluctuations in iPhone demand.

Opportunities:

• Expanding Services: Apple can capitalize on the growing demand for digital services like
Apple Music, Apple TV+, and Apple Arcade.
• Emerging Markets: There is potential for growth in emerging markets like China and India.

Threats:

• Intense Competition: Apple faces fierce competition from companies like Samsung, Google,
and Huawei.
• Regulatory Challenges: Increasing scrutiny from regulators regarding antitrust and privacy
issues can pose a threat.

Importance of Strategic Management

1. Long-term Vision: Strategic management allows organizations to define a clear and

compelling long-term vision. This vision serves as a guiding light, helping leaders and
employees understand where the organization is heading and why.
2. Adapting to Change: In today's rapidly changing business landscape, strategic management
enables organizations to proactively adapt to external changes such as technological
advancements, market shifts, and regulatory developments.
3. Resource Allocation: It helps organizations allocate their resources – financial, human, and
technological – efficiently and effectively. This ensures that resources are directed toward
initiatives that align with the organization's strategic objectives.
4. Competitive Advantage: Strategic management enables organizations to identify and
leverage their unique strengths and capabilities, creating a sustainable competitive advantage.
It allows them to differentiate themselves from competitors.
5. Innovation: A strategic approach encourages innovation and creativity within the
organization. It fosters a culture of continuous improvement and ensures that new ideas are
aligned with the overarching strategy.
6. Risk Management: Strategic management involves risk assessment and mitigation.
Organizations can anticipate potential risks and develop strategies to mitigate or respond to
them, minimizing the impact of unforeseen events.
7. Performance Measurement: It establishes key performance indicators (KPIs) and metrics to
measure progress toward strategic goals. Regular performance evaluations help organizations
track their success and make necessary adjustments.
8. Goal Alignment: Strategic management ensures that all levels of the organization are aligned
towards the achievement of the overall strategic goals and objectives. This alignment
optimizes resources and efforts.
Defining management strategy

A management strategy refers to a comprehensive and well-thought-out plan of action designed to

achieve specific goals and objectives within an organization or business. It involves the coordination
and utilization of available resources, including human capital, financial assets, technology, and other
factors, to make informed decisions that drive the organization towards success.

ELEMENTS OF STRATEGIC MANAGEMENT PROCESS

1. Environmental Scanning:
• Internal Analysis: This involves evaluating the organization's strengths and
weaknesses. It often includes an assessment of resources, capabilities, and the overall
internal environment.
• External Analysis: Organizations examine external factors such as industry trends,
market conditions, competitive forces, and regulatory changes through tools like
PESTEL (Political, Economic, Social, Technological, Environmental, Legal)
analysis.
2. Strategy Formulation:
• Setting Objectives: Organizations establish specific, measurable, achievable,
relevant, and time-bound (SMART) objectives that align with their long-term vision.
• Strategic Planning: This step involves generating and evaluating various strategic
options and selecting the best-suited strategy to achieve the objectives. It may include
identifying target markets, competitive positioning, and resource allocation.
3. Strategy Implementation:
• Resource Allocation: Allocate the necessary resources (human, financial,
technological) to execute the chosen strategy effectively.
• Structural Changes: Organizational structures, systems, and processes may need to
be adjusted to support the strategy.
• Communication: Ensure that the strategy is communicated clearly to all levels of the
organization to align employees with the strategic objectives.
• Action Plans: Develop detailed action plans that outline specific tasks,
responsibilities, timelines, and performance measures.
4. Strategy Execution:
• This phase involves putting the strategy into action by implementing the action plans,
monitoring progress, and making necessary adjustments along the way.
• Effective leadership, communication, and coordination are essential for successful
execution.
5. Performance Measurement and Monitoring:
• Organizations track key performance indicators (KPIs) and metrics to assess progress
toward strategic objectives.
• Regular monitoring allows for early identification of deviations from the plan and
facilitates timely corrective actions.
6. Strategic Review and Evaluation:
• Periodic reviews and evaluations are conducted to assess the effectiveness of the
strategy and its alignment with changing internal and external factors.
• Feedback from the evaluation informs strategic adjustments or refinements.
7. Strategic Control:
• This element involves establishing control mechanisms to ensure that the strategy is
being executed as planned.
• Control systems may include financial controls, quality controls, and performance
reviews.
Example: Amazon.com, Inc. Amazon, one of the world's largest e-commerce and technology
companies, is an excellent example of effective strategic management. The company's strategic focus
on customer-centricity, continuous innovation, and expansion into various business segments (e.g.,
cloud computing, streaming services, and logistics) has allowed it to maintain its position as a market
leader in online retail and beyond. Amazon's strategic management process involves continuous
adaptation to changing consumer preferences, technological advancements, and global market
dynamics.

APPROACHES TO STRATEGIC DECISON MAKING

1. Rational Approach: The rational approach to decision-making is a systematic, logical, and

analytical process. It involves gathering data, evaluating options, and selecting the best alternative
based on a cost-benefit analysis and predefined criteria.

Example: Apple Inc. provides a good example of the rational approach. When Apple decided to enter
the smartphone market with the iPhone, it conducted extensive market research, assessed potential
risks, and considered the technical feasibility. The decision was based on a thorough analysis of
market demand and the potential for innovation in the mobile phone industry.

2. Incremental Approach: The incremental approach involves making strategic decisions through
small, gradual adjustments over time rather than making major, radical changes. This approach allows
organizations to test and learn from their decisions before committing to larger-scale changes.

Example: McDonald's is known for its incremental approach to menu innovation. Instead of
introducing an entirely new menu, they continuously add or remove items based on customer
preferences and market trends. For instance, the introduction of the McFlurry or the McCafé line of
beverages represented incremental changes to their core offering.

3. Intuitive Approach: The intuitive approach relies on the intuition and experience of decision-
makers. It involves making strategic decisions based on gut feelings, past experiences, and a deep
understanding of the industry and market.

Example: Elon Musk's decision to invest heavily in electric vehicles and launch Tesla is a prime
example of the intuitive approach. While he considered data and analysis, his intuition and belief in
the future of sustainable transportation played a significant role in the decision. Musk's intuition was
influenced by his vision of a sustainable energy future and his prior success with companies like
PayPal and SpaceX.

4. Political Approach: The political approach acknowledges the influence of organizational politics
and power dynamics on decision-making. It recognizes that decisions may be driven by the interests
and agendas of various stakeholders within the organization.

Example: Boeing's Decision to Launch the 737 MAX Boeing's decision to develop the 737 MAX
series faced internal political pressures. The company wanted to compete with Airbus's A320neo,
which was gaining market share. However, the decision to modify an existing aircraft rather than
create an entirely new one was influenced by political considerations within Boeing, including cost
and timeline pressures. This decision ultimately led to challenges and controversies related to the
aircraft's safety.

Strategic planning tools and techniques:

1) SWOT Analysis:
SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. It is a framework that helps
organizations evaluate their internal and external factors:

1. Strengths: These are internal factors that give an organization an advantage over others. They
are characteristics, resources, or capabilities that the organization excels at. Identifying
strengths helps organizations leverage them for competitive advantage.
2. Weaknesses: These are internal factors that put an organization at a disadvantage compared to
others. Weaknesses represent areas where the organization may need improvement or where it
is vulnerable.
3. Opportunities: These are external factors in the broader environment that can be favourable
for the organization. Identifying opportunities allows organizations to align their strengths to
exploit them effectively.
4. Threats: These are external factors that pose potential risks or challenges to the organization.
Identifying threats helps organizations proactively plan to mitigate or respond to them.

SWOT Analysis for Apple Inc.:

Strengths:

1. Strong Brand: Apple has a globally recognized and trusted brand, known for its quality and
innovation.
2. Product Differentiation: The company offers a range of highly differentiated products,
including the iPhone, Mac, iPad, and Apple Watch.
3. Ecosystem: Apple has built a cohesive ecosystem of products and services that enhances
customer loyalty and lock-in.

Weaknesses:

1. High Prices: Apple products are typically more expensive than competitors' offerings,
limiting market share in certain segments.
2. Dependency on iPhone: A significant portion of Apple's revenue comes from iPhone sales,
making it vulnerable to fluctuations in iPhone demand.
3. Market Saturation: In some markets, particularly smartphones and tablets, Apple faces
saturation and intense competition.

Opportunities:

1. Services Growth: Apple can capitalize on the growing demand for digital services like Apple
Music, Apple TV+, and Apple Arcade.
2. Emerging Markets: There is potential for growth in emerging markets like China and India.
3. Healthcare and Wearables: Apple can expand its presence in the healthcare and wearables
markets with products like the Apple Watch and HealthKit.

Threats:

1. Intense Competition: Apple faces fierce competition from companies like Samsung, Google,
and Huawei in various product categories.
2. Supply Chain Disruptions: Events like the COVID-19 pandemic can disrupt Apple's global
supply chain.
3. Regulatory Challenges: Increasing scrutiny from regulators regarding antitrust and privacy
issues can pose a threat.
 2) PESTEL Analysis:

PESTEL stands for Political, Economic, Social, Technological, Environmental, and Legal. It is a
comprehensive framework for analyzing the macro-environmental factors that can impact an
organization:

1. Political: This factor includes government policies, regulations, political stability, and
international relations. Organizations need to understand how political decisions can affect
their operations and markets.
2. Economic: Economic factors encompass the overall economic conditions, such as inflation,
interest rates, economic growth, and exchange rates. These factors affect consumer spending,
production costs, and market demand.
3. Social: Social factors relate to societal trends, demographics, cultural norms, and consumer
behaviour. Understanding social factors is crucial for aligning products and marketing
strategies with the preferences and values of target audiences.
4. Technological: This factor addresses technological advancements and innovations that can
impact the industry and organization. Staying abreast of technological changes is essential for
remaining competitive.
5. Environmental: Environmental factors concern sustainability, climate change, and
environmental regulations. Organizations must consider their environmental impact and adapt
to evolving environmental standards.
6. Legal: Legal factors encompass laws, regulations, and legal frameworks that affect the
industry and organization. Compliance with these regulations is vital to avoid legal issues and
penalties.

PESTEL Analysis for Apple Inc.:

Political:

1. Taxation Policies: Apple has faced political scrutiny over its tax practices, especially in
Ireland, where it had been accused of receiving preferential treatment.
2. Trade Relations: Trade tensions between the U.S. and China have the potential to impact
Apple's global supply chain and sales in China, a key market.

Economic:

1. Economic Conditions: Global economic conditions, including recessions or downturns, can

affect consumer spending on Apple products.
2. Currency Exchange Rates: Fluctuations in exchange rates can impact Apple's pricing and
profitability in international markets.

Social:

1. Consumer Preferences: Changing consumer preferences, such as a shift toward eco-friendly

products, can impact Apple's product development and marketing strategies.
2. Cultural Diversity: Apple operates in diverse global markets, requiring it to adapt its products
and marketing to different cultural contexts.

Technological:
 1. Technological Advancements: Rapid advancements in technology can create opportunities for
Apple to innovate, but it also poses a challenge to stay ahead of competitors.
2. Intellectual Property: Apple's strong emphasis on intellectual property protection is crucial in
the tech industry to safeguard its innovations.

Environmental:

1. Sustainability Initiatives: Apple has made commitments to environmental sustainability,

including using renewable energy and reducing its carbon footprint.
2. E-waste Concerns: As electronics become obsolete, there are environmental concerns related
to e-waste disposal, which can impact Apple's image.

Legal:

1. Antitrust and Regulatory Issues: Apple faces legal challenges related to antitrust allegations
and privacy concerns, which can lead to regulatory action.
2. Intellectual Property Disputes: Apple has been involved in numerous patent and intellectual
property disputes with competitors.

3) Value Chain Analysis is a strategic management framework developed by Michael Porter

that helps organizations break down their operations into a series of activities. These activities
can be categorized into two types: primary activities and support activities. The primary goal
of value chain analysis is to identify areas where a company can create value for its customers
and where it can gain a competitive advantage by optimizing these activities.

a) Primary Activities: These are directly involved in the creation and delivery of a product or
service to customers. There are five primary activities in the value chain:
• Inbound Logistics: Activities related to receiving, storing, and managing inputs or
raw materials needed for production.
• Operations: The actual production or service creation process.
• Outbound Logistics: Activities associated with storing and distributing the finished
product or service.
• Marketing and Sales: Strategies and activities to promote the product or service and
secure customers.
• Service: Providing post-purchase support and services to enhance customer
satisfaction.

b) Support Activities: These are activities that support and enable the primary activities to take place
efficiently. There are four support activities in the value chain:
• Procurement: Acquiring the necessary inputs, materials, and resources for the
organization.
• Technology Development: Research and development, technology infrastructure, and
process improvement to enhance operational efficiency.
• Human Resource Management: Activities related to hiring, training, and retaining
employees.
• Infrastructure: General organizational support functions such as finance, planning,
and quality management.

Example: Walmart
 1. Inbound Logistics: Walmart has highly efficient inbound logistics. They have established
strong relationships with suppliers, utilize advanced inventory management systems, and
leverage their size to negotiate lower prices for the products they purchase.
2. Operations: Walmart's operations are optimized for efficiency. They use advanced technology
in their warehouses and stores to minimize costs and maximize productivity.
3. Outbound Logistics: Walmart's supply chain is designed for rapid distribution. They use
advanced logistics systems and a vast network of distribution centers to get products to stores
quickly.
4. Marketing and Sales: Walmart focuses on low prices and customer convenience as their
marketing strategy. They invest heavily in advertising and promotions to attract price-
conscious consumers.
5. Service: Walmart provides a range of services, such as financial services, product warranties,
and in-store assistance. Their customer service initiatives aim to enhance the overall shopping
experience.

In the support activities:

• Procurement: Walmart's procurement team negotiates directly with suppliers to secure the
best prices and terms. They also use technology to optimize procurement processes.
• Technology Development: Walmart continually invests in technology to improve its
operations, including inventory management systems, data analytics, and e-commerce
platforms.
• Human Resource Management: Walmart places a strong emphasis on employee training and
development to ensure a skilled and motivated workforce. This contributes to their
operational efficiency.
• Infrastructure: Walmart's financial and administrative functions are well-organized to support
its extensive retail operations.

4) Balanced Scorecard - A balanced scorecard is a strategic planning framework that

companies use to assign priority to their products, projects, and services; communicate about
their targets or goals; and plan their routine activities. The scorecard enables companies to
monitor and measure the success of their strategies to determine how well they have
performed.

4 perspectives:

a. Financial Perspective: This perspective focuses on financial objectives that indicate whether the
company's strategy is contributing to its financial success and sustainability. Financial KPIs may
include metrics such as revenue growth, profit margins, return on investment (ROI), and cash flow.

b. Customer Perspective: This perspective emphasizes customer satisfaction and the creation of value
for customers. Customer KPIs may include customer satisfaction scores, customer retention rates,
market share, and customer lifetime value.

c. Internal Processes Perspective: This perspective examines the efficiency and effectiveness of the
organization's internal processes and operations. Internal process KPIs may include metrics related to
process cycle times, quality control, cost reduction, and innovation.

d. Learning and Growth Perspective: This perspective focuses on the organization's ability to learn,
adapt, and innovate to support its long-term success. Learning and growth KPIs may include
employee training and development metrics, employee satisfaction, and the ability to attract and retain
talent.
Example: FedEx Corporation

Financial Perspective:

• KPI: Revenue Growth

• Explanation: FedEx may track its year-over-year revenue growth to assess the financial health
of the company. If revenue is increasing, it suggests that the company's strategy is
contributing to its financial success.

Customer Perspective:

• KPI: On-Time Delivery Rate

• Explanation: FedEx values on-time deliveries to satisfy its customers. They track the
percentage of packages delivered on time as a measure of customer satisfaction.

Internal Processes Perspective:

• KPI: Process Efficiency

• Explanation: FedEx may monitor the cost per package delivered to ensure efficient internal
processes. Lower costs per package indicate better operational efficiency.

Learning and Growth Perspective:

• KPI: Employee Training Hours

• Explanation: FedEx invests in employee training to improve service quality and innovation.
They track the number of training hours per employee to gauge their commitment to learning
and growth.

5) Blue Ocean Strategy – Blue Ocean Strategy is referred to a market for a product where there is
no competition or very less competition. This strategy revolves around searching for a business in
which very few firms operate and where there is no pricing pressure. It is the simultaneous pursuit
of differentiation and low cost to open up a new market space and create new demand. It is about
creating and capturing uncontested market space, thereby making the competition irrelevant.

Blue Ocean (IndiGo Airlines):

• IndiGo Airlines entered the market with a clear Blue Ocean Strategy in mind.
• They focused on providing a hassle-free and on-time travel experience to passengers,
differentiating themselves from existing airlines.
• IndiGo simplified the booking process, avoided complex fare structures, and emphasized
punctuality.
• Their no-frills approach helped them maintain cost-efficiency, which they passed on to
customers in the form of lower ticket prices.
• They also maintained a young fleet of aircraft, reducing maintenance costs and enhancing
reliability.
• By targeting both budget-conscious travelers and business passengers, IndiGo attracted a
wider customer base.

6) Ansoff Matrix: also known as the Product-Market Expansion Grid, is a strategic framework
developed by Igor Ansoff that helps businesses plan their growth strategies by considering
 two key factors: products (what they offer) and markets (where they sell). The matrix consists
of four growth strategies:
a) Market Penetration: This strategy involves selling existing products to existing markets. It
aims to increase market share, revenue, and profitability within the same customer base.
b) Market Development: Market development involves selling existing products to new markets
or customer segments. Companies explore new geographic regions or customer groups to
expand their reach.
c) Product Development: This strategy focuses on creating new products or modifying existing
ones and introducing them to existing markets. It aims to cater to evolving customer needs
and preferences.
d) Diversification: Diversification is the riskiest strategy, as it involves entering entirely new
markets with new products. Companies diversify to spread risk and explore opportunities
outside their core business areas.

Market Penetration- Company: Coca-Cola

• Coca-Cola regularly uses market penetration strategies by launching marketing campaigns,

offering promotional deals, and introducing variations of their existing beverages to boost
sales within their current market. For instance, they might launch limited-edition Flavors of
Coca-Cola to attract more customers within their existing consumer base.

Market Development-Company: Starbucks

• Starbucks is an example of a company that effectively employs market development

strategies. They have expanded into new geographic markets around the world, opening
stores in countries where they hadn't previously operated. This strategy helps them tap into
new customer segments and regions.

Product Development-Company: Apple

• Apple is known for its product development strategy. They regularly introduce new versions
of their existing products (e.g., iPhone, iPad) with enhanced features and functionalities to
cater to the evolving needs and desires of their existing customer base.

Diversification-Company: Amazon

• Amazon is an example of a company that has diversified into various unrelated businesses.
While their core business is e-commerce, they've expanded into cloud computing (Amazon
Web Services), content streaming (Amazon Prime Video), and even physical retail (Amazon
 Go stores). These diversifications allowed Amazon to enter new markets with new products
or services.

7) Porter's Five Forces Model, developed by Michael E. Porter, is a framework for analyzing
the competitive forces within an industry. It helps organizations assess the attractiveness and
profitability of an industry by examining five key forces:

1. Industry competition

This factor considers the number of competitors in the market and how strong they are. It also
compares the quality of each competitor's products and services.Competition is high when an
industry has many companies of similar size and power. Customers can change from one
company to another at little cost. Therefore, in a competitive market, businesses are more
likely to launch aggressive advertising and marketing campaigns and lower their prices to
attract customers. These strategies can reduce a company's profits.

Competition in an industry is low if few companies are offering the same products. They
have more opportunities to grow and be profitable.

2. The threat of new entrants

This factor considers how easily competitors can enter the market. As more companies join
an industry, existing businesses risk losing some of their customers and profits. The threat of
new entrants is high if companies can enter the market easily and at little cost or if your
company's idea or technology is not patented or protected.

3. The threat of substitute products

This factor considers how easily customers can switch between similar products or services.
If many products fill customers' same needs, those products become interchangeable.
Companies lose a share of the market's profits when customers use products interchangeably.
Profits also decrease if companies begin lowering their prices to try to compete with
substitute products. If a product or service is so easy to make that many substitute products
exist, companies also risk customers doing it themselves.

4. Bargaining power of buyers

This factor considers how price changes affect customers' buying decisions and their ability
to lower market prices. Buyers have greater bargaining power when their numbers are small
but the amount of substitute products is high. As a result, they can cause prices to lower
and company profits to shrink. Buyers have less bargaining power when they buy in small
amounts and have few alternative product options.

5. Bargaining power of suppliers

This factor considers the number of suppliers a company has access to and how easily
suppliers can increase their prices or reduce their product quality. The more suppliers a
company has to choose from, the easier it is to switch to one that costs less or produces a
higher-quality product. If few suppliers offer the products a company needs, they have more
power and can charge more for their services. The company's profits can decline as a result.
Example: The Walt Disney Company

a. Threat of New Entrants: The entertainment industry, including theme parks, film
production, and media networks, has high entry barriers due to the need for
substantial capital, intellectual property, and brand recognition.
b. Bargaining Power of Suppliers: Disney has strong relationships with content creators
and suppliers. However, in some cases, suppliers like film actors, writers, and
directors may have significant bargaining power.
c. Bargaining Power of Buyers: Disney has a diverse customer base, including families,
children, and adults. While some customers have alternatives, Disney's strong brand
and unique content (e.g., Disney+, Marvel, Star Wars) give it some control over
pricing and offerings.
d. Threat of Substitute Products or Services: In the entertainment industry, there are
various substitutes, including other streaming services, traditional cable TV, and
competing theme parks. However, Disney's content library and strong franchises
differentiate its offerings.
e. Intensity of Competitive Rivalry: Disney faces intense competition within each
segment of its business, including entertainment, streaming, theme parks, and
merchandise. Competitors like Universal Studios, Netflix, and Warner Bros.
challenge Disney's market share.

3 Levels of Strategy with examples

1. Corporate Strategy:

• Corporate strategy focuses on the overall direction and scope of the entire organization. It
involves decisions about which businesses or industries to enter or exit, resource allocation,
mergers and acquisitions, and long-term objectives. Corporate strategy answers questions like
"What businesses should we be in?" and "How can we create value across our portfolio of
businesses?" Example: The Coca-Cola Company
• Coca-Cola's corporate strategy extends beyond its flagship carbonated beverage. The
company has diversified its product portfolio to include various beverages like bottled water,
juices, sports drinks, and teas. Through acquisitions like Honest Tea and Vitamin water,
Coca-Cola has entered new markets and expanded its presence in the non-alcoholic beverage
industry.

2. Business-Level Strategy:

• Business-level strategy focuses on how a specific business unit or division within the
organization competes within its chosen industry or market segment. It deals with issues like
competitive advantage, differentiation, cost leadership, target customers, and market
positioning. Business-level strategy answers questions like "How do we compete effectively
in our chosen market?" Example: Toyota (Automobile Industry)
• Toyota pursues a business-level strategy of cost leadership and quality differentiation in the
automobile industry. The company is known for its efficient production processes (e.g.,
Toyota Production System) and high-quality vehicles. Toyota's hybrid technology,
exemplified by the m Prius, differentiates it from competitors and appeals to environmentally
conscious customers.

3. Functional-Level Strategy:
 • Functional-level strategy focuses on specific functions or departments within the
organization, such as marketing, operations, finance, or human resources. It outlines how each
function supports the broader business and corporate-level strategies. Functional-level
strategies align with overall business objectives and address issues like resource allocation
and process optimization. Example: Google (Marketing and Innovation)
• Google's functional-level strategy for marketing and innovation is to continually develop new
products and services while maintaining a strong online presence. Google invests heavily in
research and development, resulting in products like Google Search, Gmail, Android, and
Google Maps. Their marketing strategy emphasizes simplicity and user-centric design,
aligning with their corporate mission of making information accessible to all.

BCG MATRIX

The BCG Matrix, also known as the Boston Consulting Group Matrix, is a strategic planning tool
that helps businesses analyse their product or service portfolios based on two key factors: market
growth rate and market share. It was developed by the Boston Consulting Group in the early 1970s.
The matrix categorizes products or services into four quadrants: Stars, Question Marks (or Problem
Children), Cash Cows, and Dogs. Each quadrant represents a different strategic approach. Here's a
detailed explanation of the BCG Matrix with examples:

1. Stars (High Market Growth, High Market Share):

• Description: Stars are products or services with a high market share in rapidly growing
markets. They typically require significant investments to maintain and grow their market
position.
• Strategy: Organizations should invest heavily in Stars to maintain or strengthen their market
share, even though they may generate low or negative short-term cash flows.

2. Question Marks (High Market Growth, Low Market Share):

• Description: Question Marks, also known as Problem Children, are products or services with
low market share in high-growth markets. They have the potential to become Stars but require
careful consideration.
• Strategy: Organizations need to decide whether to invest to turn Question Marks into Stars or
discontinue them. Investing in those with high growth potential may lead to significant
returns, but there's also a risk of failure.

3. Cash Cows (Low Market Growth, High Market Share):

• Description: Cash Cows are products or services with a high market share in mature or low-
growth markets. They typically generate more cash than they consume and are considered
stable profit generators.
• Strategy: Organizations should focus on maximizing cash flow from Cash Cows by
minimizing costs and optimizing pricing. Cash generated can be reinvested in Stars or
Question Marks.

4. Dogs (Low Market Growth, Low Market Share):

• Description: Dogs are products or services with low market share in slow or no-growth
markets. They often do not generate substantial profits and may not have significant growth
potential.
 • Strategy: Organizations should consider divesting or discontinuing Dogs to free up resources
for more promising products or services. Continuing to invest in Dogs can be a drain on
resources.
Example:

Company: Apple Inc.

• Stars: Apple's iPhone and iPad product lines can be considered Stars. They have a high
market share in a high-growth market (smartphones and tablets). These products continue to
drive significant revenue and growth for the company.
• Cash Cows: Apple's Mac computers and accessories could be categorized as Cash Cows.
While the personal computer market is not as high-growth as smartphones, Apple's Macs still
maintain a strong market share and generate a consistent stream of revenue and profit.
• Question Marks: Apple's wearables and services, such as the Apple Watch and Apple TV+,
may be categorized as Question Marks. These products are in growing markets but have
relatively lower market share compared to the company's flagship products. Apple is
investing in these segments to capture more market share.
• Dogs: Apple rarely has products that fit the "Dogs" category because it typically discontinues
or refreshes underperforming products. However, historically, some of their accessories or
software services that didn't gain significant traction could be considered Dogs.
 Unit 2-Strategy Formulation
Strategy Formulation
Strategy formulation is the process of developing a long-term plan for achieving specific
goals and objectives within an organization. It is a critical part of the overall strategic
management process, which includes strategy formulation, implementation, and evaluation.
Here are the key steps involved in strategy formulation:

1. Mission and Vision Statement: Begin by clarifying the organization's mission and
vision. The mission statement outlines the organization's purpose, while the vision
statement describes its long-term aspirations.
2. Environmental Analysis:
• SWOT Analysis: Analyze the organization's strengths, weaknesses,
opportunities, and threats. This analysis helps identify internal and external
factors that can impact the strategy.
• PESTEL Analysis: Evaluate the macro-environmental factors (Political,
Economic, Social, Technological, Environmental, and Legal) that can affect
the organization.
3. Setting Objectives: Define specific, measurable, achievable, relevant, and time-bound
(SMART) objectives. These objectives should align with the organization's mission
and vision.
4. Strategic Alternatives:
• Business-Level Strategies: Decide on the type of competitive advantage the
organization wants to pursue, such as cost leadership, differentiation, or focus.
• Corporate-Level Strategies: Determine how the organization will allocate
resources among different business units or product lines. This can include
diversification, expansion, or retrenchment.
• Innovation and Growth Strategies: Explore opportunities for innovation, new
product development, and market growth.
5. Strategy Selection:
• Evaluate the various strategic alternatives based on their feasibility, alignment
with objectives, and potential for success.
• Consider the organization's core competencies and competitive advantage.
6. Strategy Formulation:
• Develop a detailed plan that outlines how the chosen strategy will be
implemented.
• Allocate resources and responsibilities.
• Consider potential risks and mitigation strategies.

Corporate level Strategy

Corporate-level strategy, also known as corporate strategy, is a top-level strategic plan that
defines the scope and direction of an entire organization. It focuses on how the organization
as a whole will achieve its mission and objectives by allocating resources, making key
decisions about its portfolio of businesses, and creating synergy among its various business
units. Corporate-level strategy is typically set by the senior management or board of directors
and influences the entire organization.
characteristics of corporate-level strategy

1. Diversification

An organization adapts the diversification strategy when there is a modification in its

intended market. Entering new markets enables us to build new business opportunities with
clients. Diversification will help the organization develop durable relationships with the new
client base by offering high-quality services or products. We can consider rebranding since
we modify our service or product provisioning to the new intent audiences if we have
sufficient capital.

2. Horizontal Integration

Horizontal Integration happens when the business combines with another in a similar vertical.
When a merger happens, the company can develop its operational capacity for handling the
merger. Following the merger, the organization can train its employees to help them adapt to
the modified business activities.

3. Forward or Backward Integration Opportunities

Forward Integration happens when an enterprise takes up the role of another company
satisfied in its supply chain. For instance, the organization can be the distributor where it was
formerly dependent on another company.

Backward Integration happens when our organization modifies its business model from the
supply chain business to supply the services and goods. As a result of that, businesses may
need more resources for producing these services and goods. Backward and Forward
integration modified business operations and needs further resources for managing the new
business activities.

4. Turnaround

Turnaround intends to raise the efficiency of the organization’s products by selling more
products. For achieving this, the organization may enhance its quality assurance and testing
processes standards. The organization’s profitability will rise as it raises its sales, which can
lead to a turnaround in terms of profitability.

5. Profit

A profit strategy enables the organization to develop capital to spend for its expenses. For
achieving this, the organization can search for the ways to minimize its costs. Sell
investments in stocks and bonds, raise the prices of goods and services, and reduce the prices
of non-essential items. The lesser the organization’s costs can become, the higher its capital
and profits become.

6. Liquidation

It is the final option an organization can take. Generally, organizations consider liquidation
after they have drained all other options for increasing their profitability. Liquidation includes
selling the organization to another business, selling the parts of the business, or designating
someone for winding down the business activities for repaying the business’s creditors.

7. Divestment

The divestment strategy is the retrenchment strategy intended to diminish resolving its
problems and improve its results. This strategy may need the organization to sell the highest-
performing stock or the portion of its business for paying off the debts or raising the money.
In the divestment strategy, the company can sell, spin off, or close the strategic product line,
business division, or unit.

8. Concentration

An organization will utilize the concentration strategy for competing successfully within one
industry. This strategy's three commonly used methods are market development, market
penetration, and product development. This strategy is the high-reward strategy if there is a
substantial demand in the business’s specific industry.

Corporate vision
A vision is one key tool available to executives to inspire the people in an organization . An
organization’s vision describes what the organization hopes to become in the future. Well-
constructed visions clearly articulate an organization’s aspirations.
Example: The Google Vision statement is “to provide access to the world's information in one
click.
A vision statement is a long-term description of what the company wants to achieve. It should
be aspirational and inspiring, and it should give employees and stakeholders a sense of
purpose. A good vision statement should be clear, concise, and memorable..
Example: Christ (Deemed to be university) vision is "Excellence and service".
McDonald's vision is “to move with velocity to drive profitable growth and become an even
better McDonald's, serving more customers delicious food each day around the world.”
A well-crafted corporate vision statement typically includes the following elements:

1. Future Orientation: A corporate vision statement focuses on the future and

articulates the organization's long-term aspirations and goals. It conveys where the
organization aims to be in the coming years or decades.
2. Inspiration and Aspiration: A strong corporate vision is inspiring and motivational.
It should inspire employees, stakeholders, and customers, creating a sense of purpose
and commitment.
3. Clarity: The vision statement should be clear and concise, avoiding jargon or overly
complex language. It should be easy for everyone within and outside the organization
to understand.
4. Alignment with Values: The corporate vision should align with the organization's
core values and principles. It reflects what the organization stands for and its
commitment to ethical and moral standards.
 5. Long-Term Perspective: Unlike mission statements, which focus on the present,
vision statements have a long-term perspective, often looking 5, 10, or even 20 years
into the future.
6. Challenging and Ambitious: A corporate vision should be ambitious but achievable.
It should set high standards and challenge the organization to strive for excellence.
7. Customer-Centric (Optional): Some organizations choose to include a customer-
centric element in their vision, emphasizing their commitment to meeting customer
needs and providing exceptional value.
8. Broad Scope: While a vision statement doesn't provide specific details or tactics, it
should have a broad scope, encompassing the overall purpose and direction of the
organization.

Corporate Mission
A mission statement is a statement of the company's purpose and what it does. It should
answer
the question,"Why does our company exist?" A good mission statement should be clear,
concise, and specific. It should also be aligned with the company's vision statement.
Well-written mission statements effectively capture an organization’s identity and provide
answers to the fundamental question “Who are we?” While a vision looks to the future, a
mission captures the key elements of the organization’s past and present.
Example: Google's mission statement is "to organize the world's information and make it
universally accessible and useful.
Example: Christ (Deemed to be university)'s mission statement is "CHRIST is a nuturing
ground for an individual's holistic development to make effective contribution to the society
in a dynamic environment.
McDonald's mission statement is “to be our customers' favorite place and way to eat and
drink.”
Tata Motors's mission statement is "We innovate, with passion, mobility solutions to enhance
quality of life."
A well-crafted mission statement typically includes the following elements:

1. Purpose: The mission statement should clearly state the core reason for the
organization's existence. It answers the question: "Why does this organization exist?"
2. Scope: It defines the scope of the organization's activities and the areas in which it
operates. This can include the products or services it provides and the markets or
customer segments it serves.
3. Values and Principles: Many mission statements include a reference to the values,
principles, or ethical standards that the organization upholds. These values guide
decision-making and behavior within the organization.
 4. Customers or Stakeholders: The mission statement may mention the primary
beneficiaries of the organization's activities, such as customers, clients, shareholders,
employees, or the community.
5. Commitment: It often includes a statement of commitment or dedication to fulfilling
the organization's purpose. This conveys the organization's resolve to pursue its
mission.
6. Inspiration: A well-crafted mission statement can be inspiring and motivational. It
should resonate with employees and stakeholders, creating a sense of purpose and
unity.
7. Conciseness: Mission statements should be concise and to the point. They should
communicate the essence of the organization's mission in a few sentences or a short
paragraph.

CORPORATE OBJECTIVES
A corporate objective is a specific, measurable, achievable, relevant, and time-bound
(SMART) goal that a company sets for itself. Corporate objectives are typically set by the
company's top management and are used to guide the company's decision-making and
resource allocation.
Here are some common types of corporate objectives with examples:

1. Financial Objectives:
• Profit Maximization: Increase annual profits by 10%.
• Revenue Growth: Achieve a 15% increase in sales revenue over the next fiscal
year.
• Cost Reduction: Reduce operating expenses by 20% through process
optimization.
• Return on Investment (ROI): Attain an ROI of 15% on capital investments
within the next three years.
2. Market Share Objectives:
• Market Expansion: Capture a 25% share of the market in a specific geographic
region within two years.
• Market Leadership: Become the market leader in a particular product category
within five years.
• Market Penetration: Increase market share by 5% by launching new marketing
campaigns.
3. Customer-Centric Objectives:
• Customer Satisfaction: Achieve a customer satisfaction score of 90% or higher
in annual surveys.
• Customer Retention: Reduce customer churn rate by 15% through improved
customer service and loyalty programs.
• Market Positioning: Become the preferred brand among a specific target
demographic.
4. Innovation and Product Development Objectives:
• New Product Launch: Introduce a minimum of three new product lines within
the next fiscal year.
• Research and Development Investment: Allocate 10% of the budget to
research and development for product innovation.
 • Patent Portfolio: Increase the number of granted patents by 20% in the next
two years.
5. Operational Excellence Objectives:
• Supply Chain Efficiency: Achieve a 98% on-time delivery rate to customers.
• Inventory Management: Reduce excess inventory by 15% through improved
inventory management practices.
• Quality Improvement: Attain a 99% defect-free production rate.
6. Sustainability and Social Responsibility Objectives:
• Carbon Footprint Reduction: Decrease carbon emissions by 25% over the next
five years.
• Community Engagement: Contribute 1% of annual profits to local community
development projects.

Guidlines to build effective business strategies

1. Understand Your Mission and Vision:
• Start by clarifying your organization's mission and vision. Your strategy
should align with and support these overarching principles.
2. Conduct a SWOT Analysis:
• Analyze your organization's Strengths, Weaknesses, Opportunities, and
Threats (SWOT). This assessment provides insights into your internal
capabilities and external market conditions.
3. Set Clear Objectives:
• Define specific, measurable, achievable, relevant, and time-bound (SMART)
objectives. These objectives should be aligned with your mission and vision.
4. Segment Your Market:
• Understand your target market and segment it into distinct groups with similar
needs and characteristics. This helps tailor your strategies to specific customer
segments.
5. Competitor Analysis:
• Analyze your competitors to identify their strengths and weaknesses. This
enables you to differentiate your offerings and find competitive advantages.
6. Value Proposition:
• Define a clear and compelling value proposition. Explain why customers
should choose your products or services over alternatives.
7. Core Competencies:
• Identify your organization's core competencies—those unique strengths or
capabilities that give you a competitive edge. Leverage these in your
strategies.
8. Innovation and Adaptation:
• Foster a culture of innovation and adaptability. Be open to new ideas and
willing to adapt to changing market conditions.

3 LEVELS OF STRATEGY
1. Corporate-Level Strategy:
Scope: Corporate-level strategy focuses on the organization as a whole and defines the
broad scope and direction of the entire company. It answers questions about the industries or
markets the organization should operate in, the portfolio of businesses it should maintain, and
the allocation of resources among these businesses.
types of corporate strategy:-

1. Growth Strategies
Growth strategies aim to achieve considerable business growth in the areas of revenue,
market share, penetration, etc. This can be achieved either through concentration where the
company is still focusing on its core business and builds it out or through diversification
where a company decides to diversify based on the number of approaches

2. Stability Strategies
Stability strategies do not have growth and new business development in their focus but
rather are geared towards getting “more” out of the existing business (i.e. profitability-driven-
strategy) or “stay-as-it-is” (i.e. Status-quo strategy) because the current situation already
works well for the organization

3. Retrenchment Strategies
This set of strategies is almost the opposite of status-quo or growth strategies. It is a
defensive strategy where the main objective is to change the negative trajectory and improve
the company’s position either through aggressive changes or “cutting off” the parts that pull it
down.

4. Re-Invention Strategies
Re-invention strategies often include taking the existing industries/businesses which have not
changed for decades and re-inventing them, often with the support of new technologies. Here
one can distinguish between evolutionary strategies and revolutionary strategies.
Examples:
General Electric (GE) historically operated in various industries like aviation, healthcare,
energy, and more, defining its corporate-level strategy as a diversified conglomerate.
Unilever operates in multiple consumer goods categories, including food, beverages,
personal care, and home care, pursuing a corporate-level strategy of diversification.

2. Business-Level Strategy:

Scope: Business-level strategy zooms in on how a specific business unit or division within
the organization competes in its chosen market or industry. It defines the approach a
company takes to gain a competitive advantage and deliver value to its customers in a
particular market segment.

Types:

1. Cost Leadership
Such Strategies Focus On Reducing Costs And Producing Products For The Masses (General
Population). There Is Cost Reduction In Different Areas Such As Production, Packaging And
Storage, Among Others. Ways In Which Businesses Reduce Costs Are:
•
• Establishing Strict Cost Control
• Using High-Quality Facilities To Produce Goods At Low Cost
For Such Business-Level Strategies To Be Effective, You Need To Standardize Your Product
Or Service.

2. Differentiation
This Aims At Developing A Unique Product For The Mass Market. There Is Uniqueness In
Specifications, Customer Service And Brand Image. While It May Not Lead To A Necessary
Competitive Advantage, There Is A Greater Chance Of Customer Satisfaction. Multiple
Ways To Ensure Differentiation Include:
•
• Creative Design
• Superior Quality
• Good Customer Service
Differentiation Has Multiple Benefits As It Brings You Brand Loyalty And Powerful Buyers.

3. Focused Cost Leadership

Such Businesses Compete On The Basis Of Costs But They’re Also Unique As They Serve A
Niche Market. Some Common Mechanisms Include:
•
• Serving A Small Customer Base
• Understanding Demands Of The Target Market And Reducing Costs
Accordingly

4. Focused Differentiation
Similar To Differentiation Business-Level Strategies, Focused Differentiation Helps
Organizations Focus On A Narrow Segment Of The Market. Businesses Offer Unique
Products To A Smaller Segment. They Are Able To Do So By:
•
• Selecting A Profitable Subset Of The Market
• Focusing On Areas Where Competition Is Weak
• Focus On Areas Where Product Substitution Is Hard

5. Integrated Cost Leadership And Differentiation

As The Name Suggests, This Type Of Business-Level Strategy Meaning Is Rooted In Low-
Cost Product Offerings With Differentiated Features. These Are Core Drivers Of Competitive
Advantage. Often Called A Hybrid Strategy, This May Get Risky But Can Be Highly
Appealing To Consumers.
Examples:
Apple's business-level strategy for its iPhone product line focuses on differentiation by
delivering high-quality, innovative, and user-friendly smartphones.
Southwest Airlines adopts a cost leadership business-level strategy by offering low-cost air
travel with a no-frills, point-to-point service model.

3. Functional-Level Strategy:
Scope: Functional-level strategy is the most specific and deals with the individual functions
or departments within the organization, such as marketing, operations, human resources, and
finance. It outlines how each functional area supports the broader business and corporate
strategies.
Types:

a)Financial Strategy
The financial strategy of an organization involves the gathering and utilization of funds for
the organization. It mainly focuses on the management of financial resources, the effective
allocation of funds, and long-term financial sustainability.
b)Marketing Strategy
The marketing strategy focuses on promoting the products or services of the
organization, understanding their customer needs, and creating a competitive advantage in
the market. These strategies are developed for taking decisions regarding the 4 Ps, that is,
product distribution, place, pricing, and promotion.
c)HR Strategy
The human resource strategy involves attracting and retaining talented employees while also
aligning the workforce with the goals and objectives of the organization.
d)Production Strategy
The production strategy involves the decisions regarding the procurement of raw materials,
supplies, etc. This strategy mainly focuses on the optimization of the production process. The
main areas of concern for production strategy are capacity planning, production methods,
technology adoption, quality control, and inventory management.
e)Research and Development Strategy
The research and development strategy includes investment in research and innovation to
formulate new products, technologies, etc. When an organization is planning to launch a new
product, it must be well-researched.
Examples:
Marketing: Nike employs a marketing functional-level strategy that emphasizes branding,
celebrity endorsements, and innovative product launches to reinforce its business-level
strategy of differentiation.
Operations: Toyota focuses on operational excellence in its manufacturing and supply chain
functions to support its business-level strategy of offering reliable, high-quality vehicles.

Types of strategies

1. Structuralist

Organizations that use a structuralists strategy begin by researching current market trends and
economic conditions related to their business. These organizations then determine procedures
and tactics that can help distinguish their company within the industry.

Netflix uses a structuralist strategy by extensively researching viewer preferences and trends.
They create and promote original content tailored to specific audience segments to
differentiate themselves in the highly competitive streaming market.

2. Differentiation

Businesses that pursue a differentiation strategy offer products or services with special
elements. Many companies with a differentiation strategy charge more for their services or
goods than businesses with similar offerings. An organization with a differentiation strategy
can succeed with these higher price points typically because they specialize in products or
services with unique features, customizable options or of exceptional quality.

Apple is known for its differentiation strategy, offering products with unique features and
high-quality design. Apple's premium pricing reflects its commitment to delivering
exceptional user experiences and cutting-edge technology.

3. Price-skimming

Companies launching a brand new product or service sometimes use a price-skimming

strategy. When using this strategy, businesses charge a high price for their services or goods
when they're first released and then lower those prices over time. A price-skimming strategy
can help companies receive more revenue from markets where their products or services are
in high demand. Price-skimming may also assist organizations in quickly paying for the
product's or service's initial production or marketing costs.

When Apple releases a new iPhone, it typically uses a price-skimming strategy by initially
charging a premium price for the latest model. Over time, as demand stabilizes and
production costs decrease, Apple lowers the price to reach a broader market.

4. Acquisition

Acquisition refers to when a business purchases another company. A company might also
take part in acquisition if they purchase the rights of only a few of another organization's
product lines or services. An acquisition strategy can help an organization broaden its
consumer base or market reach with reduced starting costs.

Facebook has employed an acquisition strategy by purchasing several companies, including

Instagram and WhatsApp. These acquisitions have allowed Facebook to expand its user base
and diversify its social media offerings.

5. Growth

Businesses adopt a growth strategy when they want to expand the scope of their company. An
organization might benefit from using a growth strategy for many reasons, such as if they
want to offer more products or services, increase their market share, add new operations or
departments or build new worksite or retail premises. The exact goals and processes of your
growth strategy depend on factors like your industry and business mission.

Amazon exemplifies a growth strategy by continuously expanding its product and service
offerings. It started as an online bookstore and has since grown to offer e-commerce, cloud
computing, streaming services, and more.

6. Focus

Companies use a focus strategy when they want to target a niche market. A niche market
might be a very specific type of consumers, such as vegetarians or pet owners, or a certain
geographical location. Focus strategies include processes and tactics for creating, marketing
and selling products or services to this niche market.
7. Cross-selling

Cross-selling refers to the process of encouraging your existing customers to purchase more
products or services. Some businesses may focus on cross-selling additional products or
services that enhance the products or services your customers have already purchased.

Amazon employs cross-selling by recommending related products to customers based on

their purchase history. This encourages customers to buy complementary items and increase
their overall spending.

8. Operational

Operational strategies emphasize optimizing your company's internal protocols and

procedures. Businesses that adopt an operational strategy may strive to accomplish one or
more of the following:

• Acquiring new technology systems or optimizing the speed, reliability or security of

existing systems
• Making processes or workflows more efficient

Toyota is renowned for its operational strategy, particularly in lean manufacturing and
process optimization. They continuously improve production efficiency, reduce waste,
and enhance quality control to maintain a competitive edge in the automotive industry.

9. Sustainability

A sustainability strategy can help businesses find ways to make their products, services or
internal processes more environmentally friendly. Some businesses, for example, may want
to reduce their carbon emissions produced during manufacturing procedures. Other
companies might strive to develop products created from materials that use renewable
sources.

IKEA has a sustainability strategy aimed at reducing its environmental impact. They use
sustainable materials, promote energy efficiency, and even sell solar panels and other eco-
friendly products.

10. Diversification

Diversification refers to a business strategy where companies increase their number of

potentially profitable activities. A business may want to pursue a diversification strategy to
reduce its vulnerability in the market or expand its product or service offerings. For example,
a technology company that manufactures mobile devices may adopt a diversification strategy
to develop laptops and desktop computers.

General Electric (GE) has pursued a diversification strategy by operating in various

industries, including aviation, healthcare, and energy. GE's diverse portfolio reduces its
reliance on a single market and enhances its resilience.
STRATEGIC MANAGEMENT PROCESS
1. Environmental Analysis:
• Internal Analysis: This step involves assessing the organization's internal
strengths and weaknesses. It includes examining factors like financial
resources, human capital, core competencies, and existing processes.
• External Analysis: Organizations analyze the external environment to
identify opportunities and threats. This includes evaluating market trends,
industry dynamics, competition, regulatory changes, and economic conditions.
2. Setting Objectives and Goals:
• Organizations define specific, measurable, achievable, relevant, and time-
bound (SMART) objectives and goals. These objectives should align with the
organization's mission and vision and address the opportunities and threats
identified in the environmental analysis.
3. Strategy Formulation:
• In this phase, organizations develop strategies to achieve their objectives. This
involves:
• Selecting a Strategic Approach: Choosing between strategies such as
cost leadership, differentiation, growth, or diversification.
• SWOT Analysis: Integrating the findings from the environmental
analysis to create strategies that leverage strengths, mitigate
weaknesses, exploit opportunities, and counter threats.
• Resource Allocation: Deciding how to allocate resources, including
budget, personnel, and technology, to support the chosen strategies.
• Scenario Planning: Anticipating various scenarios and developing
contingency plans for different possible futures.
4. Strategy Implementation:
• This stage involves putting the formulated strategies into action. Key elements
include:
• Organizational Structure: Aligning the organizational structure with
the chosen strategies to facilitate implementation.
• Resource Allocation: Allocating resources and ensuring that they are
used effectively to support the strategies.
• Communication: Clearly communicating the strategies and objectives
to employees, stakeholders, and relevant parties.
• Execution: Executing the strategies by implementing specific action
plans, projects, and initiatives.
• Change Management: Managing the necessary organizational
changes that come with strategy implementation.

STEPS INVOLVED STRATEGY FORMULATION

1. Establishing Organizational Objectives:
• The first step in the formulation process is to establish clear and specific
organizational objectives. These objectives should be in line with the
organization's mission and vision. Objectives should answer questions like,
"What does the organization want to achieve?" and "What are the desired
outcomes or results?"
2. Analysis of Organizational Environment:
 • Before formulating strategies, it's crucial to conduct a comprehensive analysis
of the organizational environment. This analysis involves assessing both the
internal and external factors that can impact the organization's ability to
achieve its objectives.
• Internal Analysis: Evaluate the organization's internal strengths,
weaknesses, resources, and capabilities. This includes an examination
of factors such as financial health, human resources, technology, and
organizational culture.
• External Analysis: Examine the external environment, including
market conditions, industry trends, competition, regulatory changes,
economic factors, and emerging opportunities and threats. Tools like
PESTEL analysis and Porter's Five Forces can be helpful in this
context.
3. Forming Quantitative Goals:
• Once objectives are established, it's important to quantify these goals as much
as possible. Quantitative goals provide clarity and make it easier to track
progress. For example, instead of setting a vague goal like "increase market
share," a quantitative goal could be "achieve a 10% increase in market share
within the next two years."
4. Objectives in Context with Divisional Plans:
• Organizations often consist of multiple divisions or business units. In this step,
you align the organizational objectives with the specific goals and plans of
each division or department. Each division's plans should contribute to the
achievement of the overall organizational objectives.
5. Performance Analysis:
• Before selecting specific strategies, it's essential to assess the organization's
current performance and its performance relative to competitors. Performance
analysis can involve a variety of metrics and key performance indicators
(KPIs) that measure aspects like financial performance, customer satisfaction,
operational efficiency, and more.
6. Selection of Strategy:
• Once you have a clear understanding of the organizational objectives, the
internal and external environment, and the current performance, you can
proceed to select appropriate strategies. These strategies are the high-level
approaches and actions the organization will take to achieve its objectives.
Common strategic options include cost leadership, differentiation, growth,
diversification, and more.

Strategy formulation Tools

1. PESTEL Analysis: Evaluates the Political, Economic, Social, Technological,
Environmental, and Legal factors that impact an organization's external environment.
2. Porter's Five Forces Analysis: Analyzes the competitive forces within an industry,
including the threat of new entrants, the bargaining power of suppliers and buyers, the
threat of substitutes, and competitive rivalry.
3. SWOT Analysis: Helps identify internal strengths and weaknesses as well as external
opportunities and threats.
 4. BCG Matrix: Evaluates a company's product portfolio based on market growth rate
and market share, categorizing products as Stars, Cash Cows, Question Marks, or
Dogs.
5. Ansoff Matrix: Assists in identifying growth strategies by evaluating options such as
market penetration, market development, product development, and diversification.
6. Scenario Planning: Considers multiple possible future scenarios and develops
strategies to address each one.
7. Value Chain Analysis: Examines an organization's internal activities to identify
opportunities for cost reduction or value creation.
8. Benchmarking: Compares an organization's performance and processes to industry
best practices and competitors.

Unit 3- Environment of Strategic Management

Environment of Strategic Management- Environmental Analysis

Strategic management is the process of planning, executing, and monitoring an organization's

strategies and initiatives to achieve its long-term goals and objectives. Strategic management is a
crucial function for businesses, non-profit organizations, and even government entities, as it helps
them adapt to changing environments, allocate resources effectively, and remain competitive in their
respective industries.

An environmental analysis can be defined as the process by which the factors of the internal and
external environment are monitored to find out the likely impact on the company’s performance. The
factors usually have both positive and negative impacts on the firm’s performance.

Here are the main components of the environment of strategic management:

1. External Environment: External factors which has impact on company’s performance.

a. Political and Legal Environment: Laws, regulations, and government policies can have a
significant impact on an organization's strategic decisions.
b. Economic Environment: Factors such as inflation rates, economic growth, and exchange rates
can influence an organization's financial strategies.
c. Social and Cultural Environment: Demographic trends, cultural shifts, and societal values
can affect consumer behavior and market demand.
d. Technological Environment: Advances in technology can create new opportunities and
threats, affecting an organization's competitive advantage.
e. Competitive Environment: The competitive landscape, including the actions of competitors,
market structure, and industry rivalry, plays a crucial role in strategic planning.
f. Natural Environment: Concerns about sustainability, climate change, and resource scarcity
can impact an organization's operations and reputation.

2. Internal Environment:
a. Organizational Culture: The values, norms, and beliefs within an organization can influence
decision-making and strategy implementation.
b. Resources and Capabilities: An organization's assets, such as human resources, technology,
and financial resources, are vital in shaping its strategic options.
c. leadership and Management: The effectiveness of leadership and management teams can
significantly impact an organization's strategic direction.
d. Organizational Structure: The way an organization is structured can affect its ability to adapt
to changing circumstances and execute its strategies.
Environmental analysis process

a)Scanning -The first step in the environment analysis is scanning the environment. Environmental
scanning is about gathering information from the environment to assess its nature. Environmental
scanning helps to identify early signals of potential changes in the environment. Many firms also use
special software and the internet for such scanning.

b)Monitoring -Monitoring is auditing the environment. It involves the observation of environmental

changes to see the trend. It detects meaning in different environmental events and trends. It helps to
identify the effects of the environment in terms of threat and opportunity.

c)Forecasting -The third step, forecasting is about assessing what is likely to happen in the future.
Scanning and monitoring are concerned with events and trends in the general environment at a point
in time. And, forecasting involves developing feasible projections of what might happen and how
quickly. It is done on the basis of trends and changes.

d)Assessing -Assessing determines the timing and significance of the effects of environmental
changes and trends that have been identified. Assessing connects the data and information with
competitive relevance. Equally important is interpreting the data and information to determine the
trend as an opportunity or threat for the organization.

Importance of Environmental analysis

1. Identification of Opportunities: Environmental analysis helps organizations identify
emerging trends, market opportunities, and customer needs. By staying attuned to changes in
the external environment, organizations can proactively seize new growth prospects and stay
ahead of competitors.
2. Risk Mitigation: Assessing the external environment allows organizations to identify
potential threats and risks, such as regulatory changes, economic downturns, or shifts in
consumer preferences. With this information, they can develop strategies to mitigate these
risks and reduce their negative impact.
3. Strategic Planning: Environmental analysis is a foundational step in the strategic planning
process. It provides the necessary data and insights for organizations to make informed
decisions about their long-term goals and objectives.
4. Competitive Advantage: By analyzing the competitive landscape, organizations can identify
their competitors' strengths and weaknesses. This knowledge enables organizations to
position themselves strategically, differentiate their offerings, and gain a competitive edge.
5. Innovation and Adaptation: Monitoring technological advancements and market trends
allows organizations to innovate and adapt to changing circumstances. This is especially
critical in industries where technology evolves rapidly.
6. Resource Allocation: Environmental analysis helps organizations allocate resources more
effectively. It guides decisions about where to invest resources, whether in research and
development, marketing, or expansion into new markets, based on a clear understanding of
external factors.
7. Compliance and Legal Requirements: Understanding the regulatory and legal environment
is essential for compliance. Failure to adhere to legal requirements can result in fines,
lawsuits, and damage to an organization's reputation.

Advantages of Environmental analysis

1. Informed Decision-Making: Environmental analysis provides data and insights that enable
organizations to make well-informed decisions. It reduces the reliance on guesswork and intuition in
strategic planning.

2. Strategic Planning: It is a fundamental step in the strategic planning process. By understanding

the external environment, organizations can develop strategies that are better aligned with market
conditions and emerging trends.

3. Risk Management: Environmental analysis helps organizations identify potential risks and threats
early on. This allows for the development of risk mitigation strategies, reducing the impact of adverse
events.

4. Opportunity Identification: Organizations can identify new opportunities, market gaps, and
unmet customer needs through environmental analysis. This can lead to the creation of innovative
products, services, and business models.

5. Competitive Advantage: Understanding the competitive landscape and the strengths and
weaknesses of competitors enables organizations to position themselves strategically, giving them a
competitive advantage.

6. Resource Allocation: It guides the allocation of resources, such as budget, manpower, and time,
by highlighting areas where investments are most likely to yield positive returns.

7. Regulatory Compliance: Organizations can stay compliant with relevant laws and regulations by
monitoring the legal and regulatory environment, avoiding costly penalties and legal issues.

8. Market Adaptation: Environmental analysis helps organizations adapt to changing market

conditions, consumer preferences, and technological advancements, ensuring they remain relevant and
responsive.

9. Customer Satisfaction: By understanding customer needs, preferences, and behavior,

organizations can tailor their products and services to meet customer expectations, enhancing
customer satisfaction and loyalty.

10. Long-Term Viability: It contributes to the long-term viability and sustainability of organizations
by helping them anticipate and prepare for future challenges and opportunities.

Environmental analysis techniques

SWOT Analysis:

SWOT analysis focuses on assessing an organization's internal strengths and weaknesses and its
external opportunities and threats. It is a valuable tool for understanding the current state of the
organization and formulating strategies. Here's how to use SWOT analysis:

1. Strengths: These are internal factors that give an organization an advantage over others. They
are characteristics, resources, or capabilities that the organization excels at. Identifying
strengths helps organizations leverage them for competitive advantage.
2. Weaknesses: These are internal factors that put an organization at a disadvantage compared to
others. Weaknesses represent areas where the organization may need improvement or where it
is vulnerable.
 3. Opportunities: These are external factors in the broader environment that can be favourable
for the organization. Identifying opportunities allows organizations to align their strengths to
exploit them effectively.
4. Threats: These are external factors that pose potential risks or challenges to the organization.
Identifying threats helps organizations proactively plan to mitigate or respond to them.

SWOT Analysis for Apple Inc.:

Strengths:

Strong Brand: Apple has a globally recognized and trusted brand, known for its quality and
innovation.
Product Differentiation: The company offers a range of highly differentiated products, including the
iPhone, Mac, iPad, and Apple Watch.
Ecosystem: Apple has built a cohesive ecosystem of products and services that enhances customer
loyalty and lock-in.

Weaknesses:

High Prices: Apple products are typically more expensive than competitors' offerings, limiting market
share in certain segments.
Dependency on iPhone: A significant portion of Apple's revenue comes from iPhone sales, making it
vulnerable to fluctuations in iPhone demand.
Market Saturation: In some markets, particularly smartphones and tablets, Apple faces saturation and
intense competition.

Opportunities:

Services Growth: Apple can capitalize on the growing demand for digital services like Apple Music,
Apple TV+, and Apple Arcade.
Emerging Markets: There is potential for growth in emerging markets like China and India.
Healthcare and Wearables: Apple can expand its presence in the healthcare and wearables markets
with products like the Apple Watch and HealthKit.

Threats:

Intense Competition: Apple faces fierce competition from companies like Samsung, Google, and
Huawei in various product categories.
Supply Chain Disruptions: Events like the COVID-19 pandemic can disrupt Apple's global supply
chain.

PESTEL Analysis:

PESTEL stands for Political, Economic, Social, Technological, Environmental, and Legal. It is a
comprehensive framework for analyzing the macro-environmental factors that can impact an
organization:

Political: This factor includes government policies, regulations, political stability, and international
relations. Organizations need to understand how political decisions can affect their operations and
markets.
Economic: Economic factors encompass the overall economic conditions, such as inflation, interest
rates, economic growth, and exchange rates. These factors affect consumer spending, production
costs, and market demand.
Social: Social factors relate to societal trends, demographics, cultural norms, and consumer
behaviour. Understanding social factors is crucial for aligning products and marketing strategies with
the preferences and values of target audiences.
Technological: This factor addresses technological advancements and innovations that can impact the
industry and organization. Staying abreast of technological changes is essential for remaining
competitive.
Environmental: Environmental factors concern sustainability, climate change, and environmental
regulations. Organizations must consider their environmental impact and adapt to evolving
environmental standards.
Legal: Legal factors encompass laws, regulations, and legal frameworks that affect the industry and
organization. Compliance with these regulations is vital to avoid legal issues and penalties.

PESTEL Analysis for Apple Inc.:

Political:

Taxation Policies: Apple has faced political scrutiny over its tax practices, especially in Ireland,
where it had been accused of receiving preferential treatment.
Trade Relations: Trade tensions between the U.S. and China have the potential to impact Apple's
global supply chain and sales in China, a key market.

Economic:

Economic Conditions: Global economic conditions, including recessions or downturns, can affect
consumer spending on Apple products.
Currency Exchange Rates: Fluctuations in exchange rates can impact Apple's pricing and profitability
in international markets.

Social:

Consumer Preferences: Changing consumer preferences, such as a shift toward eco-friendly products,
can impact Apple's product development and marketing strategies.
Cultural Diversity: Apple operates in diverse global markets, requiring it to adapt its products and
marketing to different cultural contexts.

Technological:

Technological Advancements: Rapid advancements in technology can create opportunities for Apple
to innovate, but it also poses a challenge to stay ahead of competitors.
Intellectual Property: Apple's strong emphasis on intellectual property protection is crucial in the tech
industry to safeguard its innovations.

Environmental:

Sustainability Initiatives: Apple has made commitments to environmental sustainability, including

using renewable energy and reducing its carbon footprint.
E-waste Concerns: As electronics become obsolete, there are environmental concerns related to e-
waste disposal, which can impact Apple's image.
Legal:

Regulatory Issues: Apple faces legal challenges related to antitrust allegations and privacy concerns,
which can lead to regulatory action.
Intellectual Property Disputes: Apple has been involved in numerous patent and intellectual property
disputes with competitors.

Resource-Based Strategy
Resource-Based Strategy, also known as the Resource-Based View (RBV) of strategy, is a
management framework that emphasizes the internal capabilities and resources of an organization as
the primary drivers of its competitive advantage and long-term success. This approach to strategy
suggests that sustainable competitive advantage arises from a firm's unique and valuable resources,
rather than external market factors alone.

Here are the key components and principles of the Resource-Based Strategy:

1. Resources: Resources refer to all the tangible and intangible assets, capabilities, and competencies
that an organization possesses. These resources can include physical assets (e.g., facilities,
equipment), intellectual property (e.g., patents, trademarks), human capital (e.g., skilled employees),
organizational culture, and more.

2. Capabilities: Capabilities are the organization's ability to deploy its resources effectively to
perform specific tasks or activities. These can be technical skills, managerial expertise, or
organizational routines and processes. Capabilities are critical for leveraging resources to create value.

3. Core Competencies: Core competencies are specific sets of capabilities and resources that are
unique to an organization and provide a significant competitive advantage. These competencies are
difficult for competitors to replicate or imitate. Core competencies are at the heart of a firm's
competitive advantage.

4. Value Creation: The RBV focuses on the ability of an organization to create value for customers
through the strategic deployment of its resources and capabilities. A firm's resources should contribute
to creating products or services that customers perceive as superior.

5. Sustainable Competitive Advantage: Sustainable competitive advantage is achieved when an

organization's resources and capabilities are valuable, rare, difficult to imitate, and non-substitutable.
This ensures that competitors cannot easily replicate the advantages gained from these resources.

6. Resource Heterogeneity: According to the RBV, organizations differ in the types and
combinations of resources they possess. Resource heterogeneity implies that firms have unique
strengths and weaknesses based on their resource portfolios.

7. Resource Immobility: Resource immobility suggests that resources and capabilities are not easily
transferable between organizations. This means that even if competitors recognize the value of a
firm's resources, they may not be able to acquire or replicate them effectively.

8. Dynamic Capabilities: Dynamic capabilities refer to an organization's ability to adapt and change
its resource base over time in response to changing market conditions and opportunities. This involves
not only acquiring new resources but also reconfiguring existing ones.

Approaches to Internal Analysis

 1) SWOT Analysis

SWOT analysis focuses on assessing an organization's internal strengths and weaknesses and its
external opportunities and threats. It is a valuable tool for understanding the current state of the
organization and formulating strategies. Here's how to use SWOT analysis:

1. Strengths: These are internal factors that give an organization an advantage over others. They
are characteristics, resources, or capabilities that the organization excels at. Identifying
strengths helps organizations leverage them for competitive advantage.
2. Weaknesses: These are internal factors that put an organization at a disadvantage compared to
others. Weaknesses represent areas where the organization may need improvement or where it
is vulnerable.
3. Opportunities: These are external factors in the broader environment that can be favourable
for the organization. Identifying opportunities allows organizations to align their strengths to
exploit them effectively.
4. Threats: These are external factors that pose potential risks or challenges to the organization.
Identifying threats helps organizations proactively plan to mitigate or respond to them.
Example: Flipkart

1. Strengths:
• Strong Market Presence: Flipkart has a dominant position in the Indian e-commerce
market, which gives it a significant advantage in terms of brand recognition and
customer trust.
• Wide Product Range: The company offers a diverse range of products, including
electronics, fashion, groceries, and more, attracting a broad customer base.
• Technology and Innovation: Flipkart has developed innovative features and apps to
enhance the shopping experience, such as Flipkart Plus, which offers rewards to loyal
customers.
2. Weaknesses:
• Heavy Competition: The e-commerce industry in India is highly competitive, with
rivals like Amazon and local players. This intense competition can put pressure on
pricing and profit margins.
• Dependence on Discounts: Flipkart often relies on discounts and promotions to
attract customers. This strategy can impact profitability and brand perception in the
long term.
3. Opportunities:
• E-commerce Growth: The e-commerce industry in India is still growing, and
Flipkart can benefit from this trend by increasing its market share.
• Diversification: Flipkart can diversify its offerings into new segments, such as
healthcare or financial services, to capture a larger share of the consumer wallet.
• Global Expansion: The company can explore opportunities to expand its operations
beyond India, tapping into international markets.
4. Threats:
• Regulatory Challenges: Changes in government regulations and policies can affect
e-commerce operations in India, potentially impacting Flipkart's business.
• Intense Competition: Competitors like Amazon and emerging players can
continuously erode market share and force price wars.
• Supply Chain Disruptions: Events like natural disasters, labor strikes, or disruptions
in the supply chain can affect product availability and delivery schedules.

2) GAP Analysis
GAP Analysis, often referred to as a "needs analysis" or "needs assessment," is a strategic planning
and evaluation tool used by organizations to assess the current performance or status of a particular
aspect of their operations and compare it to their desired or ideal state. The goal is to identify the gaps
or discrepancies between the current situation and the desired state.

The process of GAP Analysis typically involves the following steps:

1. Identification of Objectives or Goals: Define the specific goals or outcomes that the
organization aims to achieve. These objectives should be clear, measurable, and aligned with
the organization's overall mission and strategy.
2. Assessment of the Current State: Collect data and information related to the current state or
performance in the area being analyzed. This can involve surveys, interviews, data analysis,
and performance metrics, depending on the nature of the analysis.
3. Definition of the Desired State: Clearly articulate what the organization considers the ideal
or target state for the specific area under review. This sets the benchmark against which the
current state will be compared.
4. Analysis of the Gap: Compare the current state with the desired state. Identify and quantify
the gaps or differences between the two. These gaps can represent deficiencies, opportunities
for improvement, or areas where the organization needs to make changes to align with its
goals.
5. Recommendations and Action Plans: Based on the identified gaps, develop
recommendations and action plans to bridge those gaps. These could include changes in
processes, investments in training, acquisition of new technology, or any other strategies to
move from the current state to the desired state.
6. Implementation and Monitoring: Put the action plans into practice and closely monitor
progress. Regularly assess whether the actions taken are effectively reducing the gaps and
bringing the organization closer to its desired state.

Example: Swiggy

1. Identification of Objectives/Goals: Swiggy's objective is to provide exceptional customer

service to maintain and improve its market position and customer satisfaction.
2. Assessment of the Current State: Swiggy's customer service team gathers data on various
customer service metrics, such as response times, issue resolution rates, and customer
feedback. They find that while their customer service is generally good, there are areas for
improvement. Response times are sometimes longer than desired.
3. Definition of the Desired State: Swiggy defines the desired state as providing near-instant
responses to customer inquiries, improving order accuracy to near perfection, and consistently
delivering orders within the estimated time.
4. Analysis of the Gap: After comparing the current state with the desired state, Swiggy
identifies several gaps:
• Longer response times compared to the desired near-instant response.
• Order accuracy and delivery time issues that need to be resolved.
• Customer feedback indicating areas for improvement in service quality.
5. Recommendations and Action Plans: Swiggy develops action plans to bridge these gaps,
such as:
• Implementing chatbots and automation to speed up response times.
• Enhancing training for delivery partners to improve order accuracy.
• Conducting regular customer surveys to gather feedback and make necessary
improvements.
6. Implementation and Monitoring: Swiggy puts these action plans into practice, continuously
monitoring and adjusting its customer service operations. They track metrics to ensure that
response times decrease, order accuracy improves, and delivery times meet customer
expectations.
 3) VRIO Framework
The VRIO Framework is a strategic analytical tool used to evaluate a firm's internal resources and
capabilities to determine whether they provide a sustainable competitive advantage. The framework
assesses whether a company's resources and capabilities are valuable, rare, inimitable, and organized,
as these attributes are considered crucial for achieving and maintaining a competitive edge. The
acronym "VRIO" stands for:

1. Value: Resources and capabilities must add value to the company. They should enable the
firm to exploit opportunities or mitigate threats in the market. If a resource or capability
doesn't add value, it may not contribute to a competitive advantage.
2. Rarity: For a competitive advantage to be sustainable, the resources and capabilities must be
rare or unique in the industry. If many other firms possess the same resources or can easily
acquire them, the advantage may be short-lived.
3. Inimitability (or Imitability): The resources and capabilities should be difficult for
competitors to imitate or replicate. This can be due to factors such as intellectual property
protection, complex processes, unique culture, or exclusive access to certain resources.
4. Organization (or Organized): Finally, the firm must be organized and capable of leveraging
its valuable, rare, and inimitable resources and capabilities effectively. This involves having
the right processes, structures, and management systems in place to harness these advantages.

Here's a brief overview of how the VRIO Framework works:

• VRIO Analysis: When conducting a VRIO analysis, a company evaluates its various
resources and capabilities to determine whether they meet the criteria of being valuable, rare,
inimitable, and organized. Each resource or capability is assessed based on these four
attributes.
• Competitive Implications:
• VRIO Resources: Resources that meet all four criteria (value, rarity, inimitability,
and organization) can provide a sustainable competitive advantage.
• VRIO Capabilities: Capabilities that meet all four criteria can contribute
significantly to a firm's competitive advantage by enabling it to leverage its resources
effectively.
• Strategic Decision-Making: The VRIO Framework helps organizations make strategic
decisions about how to allocate resources, invest in capabilities, and prioritize initiatives. It
also assists in identifying areas where they may need to improve or develop their resources
and capabilities.
example :apple company

1. Value:
• Design and Innovation: Apple is renowned for its innovative and user-friendly
product designs. Its products, such as the iPhone and MacBook, are perceived as
highly valuable by consumers. Apple's design and innovation capabilities add
significant value to the company.
• Brand and Customer Loyalty: Apple has a strong brand image and a loyal customer
base. Its brand is associated with quality, reliability, and a premium experience. This
brand equity adds substantial value to the company.
2. Rarity:
• Exclusive Hardware and Software Integration: Apple's ability to tightly integrate
hardware and software is relatively rare in the tech industry. This integration allows
for better performance, security, and user experience, making it a rare capability.
 • Retail Store Network: Apple's extensive network of retail stores is unique and not
easily replicable. This rarity enhances its customer service and brand experience.
3. Inimitability (Imitability):
• Design and User Experience: While competitors can try to imitate Apple's designs
and user experience, replicating them to the same level of quality and consistency is
challenging. Apple's design and user-centric approach are difficult to imitate.
• Supply Chain Management: Apple's supply chain management, which allows it to
efficiently produce and distribute products on a global scale, is considered a best
practice. It involves complex relationships and meticulous planning, making it hard
for competitors to duplicate.
4. Organization (Organized):
• Strong Leadership: Apple has a history of strong leadership, particularly under the
guidance of figures like Steve Jobs and Tim Cook. This leadership has played a
significant role in organizing the company's efforts and maintaining its focus on
innovation and quality.
• Ecosystem Integration: Apple has successfully organized its ecosystem, with
products like the iPhone, iPad, Mac, Apple Watch, and services like iCloud and the
App Store seamlessly working together. This organizational aspect enhances
customer value and loyalty.
4) Blue ocean strategy
The Blue Ocean Strategy framework encourages businesses to create new, uncontested market spaces
(blue oceans) by focusing on innovation and value creation. It provides a systematic approach through
four key actions: Eliminate, Raise, Reduce, and Create (ERRC). These actions help organizations
identify ways to differentiate themselves and break free from competition in existing, crowded
markets (red oceans).

Here's what each of these actions means in the context of Blue Ocean Strategy:

1. Eliminate:
In this step, organizations identify factors or features that are traditionally considered essential
within their industry but may not add significant value to customers. These are elements that
can be safely removed or eliminated to reduce costs and simplify the offering. By eliminating
non-essential elements, businesses can streamline their operations and create a more efficient
value proposition.
2. Raise:
Raising refers to identifying aspects or factors that are or underperformed in the industry but
are of significant value to customers. By elevating these factors and offering superior
performance or quality in those areas, companies can differentiate themselves and capture
customer attention. Raising certain attributes above industry standards can lead to a unique
value proposition.
3. Reduce:
Reducing involves identifying elements or costs within the industry that can be reduced
without compromising the overall value delivered to customers. This action helps in
achieving cost efficiencies and making the offering more affordable while still meeting
customer needs. Reducing costs can be a critical component of creating a blue ocean, as it
allows for competitive pricing or higher profit margins.
4. Create:
Creating involves innovating and introducing entirely new features, services, or aspects that
the industry has never offered before. These innovations are designed to deliver exceptional
value and set the organization apart from competitors. By creating new value elements,
businesses can attract new customers and stimulate demand in the blue ocean.
Netflix is a prime example

1. Eliminate:

• Netflix eliminated the need for physical video rentals and late fees, which were
common in the traditional video rental industry. By removing these pain points,
Netflix made the movie rental process more convenient for customers.
2. Raise:
• Netflix raised the level of convenience and accessibility by offering a subscription-
based, on-demand streaming service. This allowed customers to watch movies and
TV shows on various devices, anytime and anywhere, raising the bar for accessibility
compared to traditional rental stores and cable TV.
3. Reduce:
• Netflix reduced costs associated with physical rental stores, such as overhead,
inventory, and staffing. By operating primarily online, they achieved cost efficiencies
and could offer more competitive pricing.
4. Create:
• Netflix created a new market space by pioneering the concept of subscription-based
streaming for movies and TV shows. This was a disruptive innovation that had not
been offered on such a scale before.
5) QUEST
The QUEST Analysis, or “Quick environmental scanning Technique,” describes a procedure that
allows for the estimation of diverse environmental variables and evaluates their impact on an
organization. It attempts to analyze the forces of nature by analyzing the impact of developments and
patterns that are occurring in the market.
4steps involved:

1. Define the Problem -Begin by clearly defining the problem or challenge you are facing.
Formulate a specific and concise question that encapsulates the essence of the issue. Make
sure you have a deep understanding of what needs to be addressed.
2. Gather Information -Once the problem is defined, gather relevant information and data
related to the issue. This may involve research, data collection, interviews, and analysis. The
goal is to gain a comprehensive understanding of the problem's context, causes, and potential
impacts.
3. Generate Solutions: In this step, brainstorm and explore various solutions or approaches to
address the problem. Encourage creative thinking and consider multiple perspectives. Aim to
generate a range of potential solutions without evaluating them at this stage.
4. Evaluate and Implement: Evaluate the potential solutions generated in the previous step.
Assess each solution based on criteria such as feasibility, effectiveness, cost, and potential
risks. Select the most suitable solution and develop an action plan for implementation.
Monitor progress and make adjustments as necessary.
Example: Zomato
1. Define the Problem or Challenge :
"How can Zomato maintain its competitive edge in the highly competitive food
delivery and restaurant discovery industry?"
2. Gather Information and Understand the Context :
• Zomato's business model, which involves connecting users with restaurants for food
delivery and dining.
• The competitive landscape, including key rivals such as Swiggy and Uber Eats.
• User feedback and reviews on the Zomato platform.
• Market trends and changes in consumer preferences.
 • The impact of the COVID-19 pandemic on the food delivery industry.
3. Generate Solutions and Explore Options :
• Expansion of service offerings, such as grocery delivery or alcohol delivery, to
diversify revenue streams.
• Partnerships with restaurants for exclusive deals and promotions.
• Investments in technology to optimize delivery routes and reduce delivery times.
• Efforts to address sustainability concerns, such as packaging and food waste
reduction.
4. Evaluate and Implement Solutions:
• The company partners with popular restaurants to offer exclusive discounts to
Zomato Gold members.
• Zomato continues to invest in technology and data analytics to optimize
delivery operations.
• Sustainability initiatives are implemented, including eco-friendly packaging
options and reducing single-use plastics.

Advantages of QUEST Analysis:

1. Structured Approach: QUEST provides a structured framework for approaching complex

problems or challenges, ensuring that each step in the analysis process is systematic and well-
defined.
2. Clarity and Focus: By beginning with a clear and specific question, QUEST helps teams
maintain focus and avoid drifting into unrelated issues.
3. Comprehensive Understanding: The "Understand" phase encourages thorough research and
data collection, leading to a comprehensive understanding of the problem and its context.
4. Creativity and Innovation: The "Explore" phase promotes creative thinking and
brainstorming, fostering the generation of diverse ideas and potential solutions.
5. Informed Decision-Making: The final "Solve" phase involves evaluating and selecting the
most appropriate solution based on established criteria, leading to informed decision-making.
6. Applicability: QUEST can be applied in various contexts, from personal problem-solving to
business strategy development.

Disadvantages of QUEST Analysis:

1. Rigidity: The structured nature of QUEST may be perceived as rigid by some individuals,
limiting flexibility in problem-solving approaches.
2. Complexity: QUEST requires careful planning and execution of each phase, which can be
time-consuming, especially for complex problems.
3. Subjectivity: The evaluation of potential solutions in the "Solve" phase may involve
subjective judgments, which can introduce bias into the decision-making process.
4. Resistance to Change: In some cases, teams or individuals may resist change, even when
data supports the need for it, making implementation of solutions challenging.
5. Overemphasis on Process: Overly focusing on the process of QUEST may detract from
creativity and innovation if participants become too methodical.
6. Lack of Quick Results: QUEST may not be suitable for situations requiring immediate
decisions or rapid responses.

6) Porter's Five Forces Model

Porter's Five Forces Model, developed by Michael E. Porter, is a framework for analyzing the
competitive forces within an industry. It helps organizations assess the attractiveness and profitability
of an industry by examining five key forces:
1. Industry competition/competition rivalry

This factor considers the number of competitors in the market and how strong they are. It also
compares the quality of each competitor's products and services. Competition is high when an
industry has many companies of similar size and power. Customers can change from one company to
another at little cost. Therefore, in a competitive market, businesses are more likely to launch
aggressive advertising and marketing campaigns and lower their prices to attract customers. These
strategies can reduce a company's profits. in an industry is low if few companies are offering the
same products. They have more opportunities to grow and be profitable.

2. The threat of new entrants

This factor considers how easily competitors can enter the market. As more companies join an
industry, existing businesses risk losing some of their customers and profits. The threat of new
entrants is high if companies can enter the market easily and at little cost or if your company's idea or
technology is not patented or protected.

3. The threat of substitute

This factor considers how easily customers can switch between similar products or services. If many
products fill customers' same needs, those products become interchangeable. Companies lose a share
of the market's profits when customers use products interchangeably. Profits also decrease if
companies begin lowering their prices to try to compete with substitute products. If a product or
service is so easy to make that many substitute products exist, companies also risk customers doing it
themselves.

4. Bargaining power of buyers

This factor considers how price changes affect customers' buying decisions and their ability to lower
market prices. Buyers have greater bargaining power when their numbers are small but the amount of
substitute products is high. As a result, they can cause prices to lower and company profits to shrink.
Buyers have less bargaining power when they buy in small amounts and have few alternative product
options.

5. Bargaining power of suppliers

This factor considers the number of suppliers a company has access to and how easily suppliers can
increase their prices or reduce their product quality. The more suppliers a company has to choose
from, the easier it is to switch to one that costs less or produces a higher-quality product. If few
suppliers offer the products a company needs, they have more power and can charge more for their
services. The company's profits can decline as a result.

Example: The Walt Disney Company

Threat of New Entrants: The entertainment industry, including theme parks, film production, and
media networks, has high entry barriers due to the need for substantial capital, intellectual property,
and brand recognition.

Bargaining Power of Suppliers: Disney has strong relationships with content creators and suppliers.
However, in some cases, suppliers like film actors, writers, and directors may have significant
bargaining power.
Bargaining Power of Buyers: Disney has a diverse customer base, including families, children, and
adults. While some customers have alternatives, Disney's strong brand and unique content (e.g.,
Disney+, Marvel, Star Wars) give it some control over pricing and offerings.

Threat of Substitute: In the entertainment industry, there are various substitutes, including other
streaming services, traditional cable TV, and competing theme parks. However, Disney's content
library and strong franchises differentiate its offerings.

Industry Competitive : Disney faces intense competition within each segment of its business,
including entertainment, streaming, theme parks, and merchandise. Competitors like Universal
Studios, Netflix, and Warner Bros challenge Disney's market share.

Competitive Advantage
Competitive advantage refers to the unique attributes, resources, capabilities, or strategies that enable
a business or organization to outperform its competitors in a market or industry. It represents the edge
a company has over its rivals, allowing it to achieve superior performance, attract customers, and
sustain profitability. Competitive advantage can be achieved through various means and is a central
concept in business strategy. Here are some key elements and types of competitive advantage:

1. Cost Leadership:
• Cost leadership involves becoming the lowest-cost producer or provider in the
industry while maintaining acceptable levels of quality. This strategy aims to offer
products or services at competitive prices, often targeting a broad market.
• Key Elements:
• Efficient production processes.
• Economies of scale.
• Tight cost control.
• Aggressive pricing strategies.
• Example: Walmart is known for its cost leadership strategy, offering a wide range of
products at low prices due to its efficient supply chain and purchasing power.
2. Differentiation:
• Differentiation strategy focuses on creating unique and distinct products or services
that are valued by customers. This allows a company to charge premium prices and
build strong brand loyalty.
• Key Elements:
• Product innovation.
• Quality and craftsmanship.
• Branding and marketing.
• Customer experience.
 • Example: Apple differentiates itself by designing sleek and innovative products that
appeal to a premium customer base.
3. Cost Focus :
• Cost focus, also known as cost leadership within a narrow or focused market
segment, targets a specific niche or customer segment with a cost-effective approach.
This strategy requires understanding and meeting the unique needs of the chosen
market while keeping costs low.
• Key Elements:
• Specialized product or service offerings.
• Efficient operations tailored to the niche.
• Cost minimization for the specific market.
• Example: Southwest Airlines focuses on cost leadership within the budget airline
niche by offering low-cost, point-to-point flights with simplified operations.
4. Differentiation Focus (Differentiation Focus):
• Differentiation focus, similar to differentiation but within a narrow market segment,
involves delivering unique and high-quality products or services to a specific niche.
This strategy allows for premium pricing and a strong competitive position within the
chosen market.
• Key Elements:
• Specialized product features.
• Tailored marketing and branding.
• A deep understanding of niche customer preferences.
• Example: Rolex uses differentiation focus by producing high-end, luxury watches for
a niche market of affluent consumers who value craftsmanship and prestige.

key approaches for competitive advantage

1. Cost Leadership:
• Strive to become the lowest-cost producer or provider in your industry.
• Benefit from economies of scale, efficient operations, and cost-effective supply
chains.
• Offer competitive prices to attract price-sensitive customers.
2. Product Differentiation:
• Create unique and distinctive products or services that stand out in the market.
• Focus on quality, innovation, design, and features to set your offerings apart.
• Charge premium prices for your differentiated products.
3. Innovation and Technology:
• Invest in research, development, and technology to stay ahead of competitors.
• Continuously improve products, processes, and customer experiences.
• Lead in technological advancements within your industry.
4. Focus or Niche Strategy:
• Concentrate efforts on serving a specific market segment or niche.
• Develop deep expertise in the chosen segment and cater to its unique needs.
• Become the top choice in your specialized market.
5. Customer-Centric Approach:
• Prioritize understanding and satisfying customer needs and preferences.
• Offer exceptional customer service and support.
• Cultivate loyal customers who return for repeat business.
6. Sustainability and Corporate Responsibility:
• Embrace sustainable practices and corporate social responsibility.
• Build a positive brand image among environmentally and socially conscious
consumers.
• Reduce environmental impact and operational costs through sustainability efforts.
 7. Market Expansion:
• Expand into new markets or geographical regions.
• Diversify your customer base to reduce dependency on a single market.
8. Brand and Reputation Building:
• Invest in marketing, branding, and public relations to build a strong and recognizable
brand.
• Develop a positive reputation for quality, trustworthiness, and reliability.
Benefits of competitive advantage

1. Increased Market Share:

• Competitive advantage can lead to a larger market share as customers are drawn to a
business that offers unique or superior products, services, or experiences. This can
translate into higher sales and revenue.
2. Higher Profit Margins:
• Businesses with a competitive advantage can often command premium prices for
their products or services, resulting in higher profit margins. This allows for increased
profitability and potential reinvestment in the business.
3. Customer Loyalty:
• Providing a better or more unique value proposition can lead to customer loyalty and
repeat business. Satisfied customers are more likely to continue doing business with a
company that consistently meets their needs and expectations.
4. Reduced Price Sensitivity:
• When a business has a strong competitive advantage, customers are less price-
sensitive. They are willing to pay higher prices for the perceived value and benefits
offered by the business.
5. Brand Recognition and Trust:
• Competitive advantage can enhance a company's brand reputation and
trustworthiness. Customers are more likely to trust and choose a brand that
consistently delivers quality and value.
6. Sustainability:
• A well-established competitive advantage can provide long-term sustainability,
making it difficult for competitors to challenge or replicate the business's success.
This stability allows for continued growth and resilience in the face of market
fluctuations.
7. Innovation and Adaptation:
• Competitive advantage often requires continuous innovation and adaptation to
maintain the edge. This culture of innovation can lead to the development of new
products, services, and processes, keeping the business relevant and competitive.
8. Market Expansion Opportunities:
• Having a competitive advantage can facilitate expansion into new markets or the
introduction of new products or services. This diversification can lead to increased
revenue streams.
Google example of competitive advantage
Search Engine Technology: Google's search engine is one of the most advanced and widely used
globally. Its PageRank algorithm, which ranks web pages based on relevance and authority, has been
a significant competitive advantage. Google's search technology consistently delivers relevant search
results, making it the preferred search engine for users.
 Chapter 4 : Strategic Business Units

What is a strategic business unit?

A strategic business unit is a fully independent functional unit that has its own vision and direction.
The strategic business units have their own independence on their day to day operations but report
to the parent company /headquarters for important decisions relating to finances and operations.
They focus on a particular market. These kinds of business units are mainly observed in business
conglomerates
Examples of SBU’s
General Electric (Johnston, 2022)
It is a multinational high tech company that has operations in many sectors like Aviation, healthcare,
renewable energy and power.
Aviation : GE’s Aviation business over many decades has contributed to advances in engine
architectures, aerodynamics, and materials and the use of sustainable aviation fuels. They also
manufacture engines for commercial and military air frames.
Healthcare : GE’s Healthcare business is working to help support the future of healthcare that will
merge clinical medicine and data science by applying advanced analytics and artificial intelligence
across the patient journey. They are involved in pharmaceutical diagnostics, developing products
and solutions for imaging and diagnostics.
Renewable energy: Delivers technology and services for the onshore wind power industry by
providing a large range of turbines with smart controls. Has equipped more than 25 percent of the
global hydro installed base and provides a portfolio of solution
Power : They are involved in gas power, steam power, nuclear technology for water boiling reactors,
etc.
LG (LG Electronic SBUS, 2017)
LG has various SBU 'is categorized as 4 main SBU’S
1)LG Electronics
2)LG Chemicals
3)LG Communication services
4)Holding company
Coco Cola (Desk, 2020)
Coco cola was historically divided into 17 business unit that sat under 4 geographical segments
that are North America, Africa, Asia, Europe, Eurasia and Middle East ,Latin America and the
global venture and bottling investments. But after 2020 it has redefined its SBU’s to five main
consumer opportunities such as
1. Coco Cola (Fanta, sprite, coco cola)
2. Sparkling flavors (soda, sparkling water )
3. Hydration, sports coffee and tea (monster,costa, dogadan)
4. Nutrition, juice, milk and plant (Minute mails, simply, innocent)
5. Emerging categories (Keto friendly smoothies, cold brew coffee, ciders,jack daniels)

ADVANTAGES AND DISADVANTAGES OF STRATEGIC BUSINESS

UNIT(SBU)

ADVANTAGES:

1. Effective management -Having an SBU helps the main entity to effectively organise their
resources and perform more efficiently. It reduces the burden of the main entity helping it to
improve the quality of the product or service produced.

2. Encourages competition among SBU’s -When there are SBU’s in an organisation, a healthy
competition arises between them which motivates each division to perform better. This leads to
overall efficiency and increase in sales.

3. Improves organisational efficiency -When each division is carefully analysed and fully
motivated, the quality of the work increases. When there are no provisions for mistakes, the
efficiency of the organisation as a whole increases

4. Customer satisfaction -When quality products are produced, the customers are the ones who get
the most benefit. As a result of competition among SBU’s, quality products are produced at a lower
cost. This helps the customers to get the best deal

5. Employee satisfaction -As the organization receives profit, the employees of the organisation
will also receive some benefits. When the employees are motivated, they perform better which leads
to quality products and services.
6. Enhanced corporate image -Satisfied employees and customers create an enhanced brand image
for the company. This helps the company to achieve their desired goals and objectives

DISADVANTAGES:

1. Complex process

An SBU is a very useful strategy for a company to excel in its industry but starting an SBU is a very
complex process. It requires a lot of planning to start an SBU, proper allocation of resources is
another factor that adds on to the complexity. This is one of the reasons why most organizations
refrain from adopting the SBU method.

2. Costly process

Starting an SBU involves investing a lot of money, electricity, additional resources, office space,
added human capital are all an additional expense for the company. SBU is a great strategy which
will result in profits, but the initial investment is very high.

3. Internal competition

It is not necessary that an SBU will always have a healthy competition, if the competition is fierce
then it will lead to a decline in sales. For example, one SBU can eat up the customers of the other
SBU. Hence this factor acts as a disadvantage for the organisation that is adopting the SBU culture

TYPES OF Strategy
FUNCTIONAL STRATEGY:

The first decision an organization makes is whether it is going to sell a product or a service. Once
this is decided, the next step is to go ahead and decide the resources which are required for running
the business. Then the business proceeds to analyse its competition in the market after which they
set their functional strategies .Functional strategies are the game plans that an organisation sets to
help it achieve the goals it has set. For eg. If the long term objective of an organisation is to increase
its sales within 4 years, then they will set their annual objective accordingly eg. Increase sales to 80
Lakhs from 50 Lakhs. Based on the annual objective of the organisation, the divisions of the
organisation will set their objectives.Functional strategies are those which include the functional
areas of the organisation. Some of the functional areas of an organisation include,
 • Operations

• Technology

• Marketing

• Human Resources

• Finance

1. OPERATIONAL STRATEGY:

An operational strategy is used by an organisation to ensure the sure success of an organisation.

This strategy involves planning the day-to-day operations of the organisation which helps it to
remain competitive. Strategies for several processes such as production, packaging, design,
marketing etc. are handled under operational strategy. It helps an organisation to set clear steps
which will have to be followed from the top level to the lower-level management. Operational
strategies are the business strategies which help an organisation to remain competitive in the
business world. (Rahim Ramezanian et al., 2019)

An example of operational strategy is Mc Donalds. Mc Donalds includes strategies such as quick

service time, using stock control data base system, providing avariety of products at cheap prices,
using quality items to produce goods and the use of efficient machinery and so on. With the use of
these strategies Mc Donalds was able to capture huge chunk of audience in the industry.

2. FINANCIAL STRATEGY:

Financial strategy of an organisation is the support which helps the organisation to accomplish their
goals. Through long term financial support and strategic orientation, the financial strategies of an
organisation enable efficiency. This strategy involves identifying the sources and application of
funds. Deciding and identifying the sources from which the funds for the organisation will arrive is
an important step in the process. After receiving the money, the next step is to see whether the
organisation has the capacity to utilise the resources efficiently. The example for financial strategy
can be Apple, where apple uses different strategies to plan their investments and acquisitions. They
are cautious in their capital allocation and they also provide timely returns for their shareholders
which has kept them in the top of the industry for more than a decade .
3. HUMAN RESOURCES STRATEGY:

In any organisation, the employees or so to say, the people of the organisation are the most important
and they have the most influence on the company. If the human capital is not managed properly,
then the goals of the organisation may not be achieved properly. Aligning the skills and objectives
of the employees with that of the organisation is one of the most important tasks of the managers.
Understanding the skillset of employees and their behaviours or approach towards the organisation
is another important factor which will help in achieving the objectives of the organisation. Managers
have to ensure that there is no surplus or deficiency in allocating the human capital of the
organisation. For example, Google is an organisation which gives utmost importance to its
employees. They hire innovative people, and provide them with all the required resources to create
unique and useful products. The infrastructure and the freedom that they provide to their employees,
make the employees more motivated .

4. MARKETING STRATEGY:

Having useful products is not enough, if people are not aware about the products of a company,
then there is no use in producing them. Marketing strategy deals with creating a position for the
company’s product amongst the customers. The main idea is to convert the potential customers into
clients. The objective of the company is to increase the sales and create visibility for their products.
Example of marketing strategy is Asian Paints, which is known for its innovative advertisement
ideas. Myntra is another example which is known for its customer loyalty programmes .

OPERATIONAL STRATEGY TO SBU

Operational Strategy
Operational Strategy as the name suggests refers to the strategies used for operating in the
organization. It is practiced inorder to achieve the goals that are stated in the mission statement.
Operational strategy includes all the measures that an organization would want to achieve as a goal
stated by the top management. It helps to bridge between the rules,initiatives and the employees
which helps each other in achieving the common organizational goals.
Core Operational Strategy Areas
1. Corporate
2. Customer Driven
3. Core Competencies
4. Competitive Priorities
5. Product or service development
1. Corporate:
Corporate strategies are basically those strategies that the company brings forward to support the
entire organization. Each organization is considered as a system of interconnected parts. And in
order for an organization to function effectively each individual department needs to function
towards achieving their goal. Therefore the additional strategy that the company puts forward to
support the organization and departments is called corporate strategy
2. Customer Driven
Customer driven strategies are those which are designed to meet the target audience. The company
should make sure that they follow the trend in order to sustain in the market. The environment is
changing and if the organization does not bring out strategies to outstand them then they will lose
their customers or target audience. Therefore it is necessary that the organizations evaluate the trend
and bring out strategies that will help them to sustain in the market.
3. Core Competencies
Core competencies are basically the internal strengths and resources of the organization. This
includes well trained staff, good working conditions, good geographical location, and advanced
marketing and finance experts etc. If the organization tries to focus on these core competencies then
they will be able to sustain with good performance.
4. Competitive Priorities
Creating various strategies, analysis on the market, preparing the core values,customization etc
comes under the competitive priorities. The organization tries to look into operational costs that are
involved in delivering the target audience satisfaction. Therefore competitive analysis will help
organizations to develop strategies in a way which would help the organizations to provide good
quality services and products to target customers at fair price.
5. Product or service development
Strategies regarding product and development should include new innovations and designs that
match the new trends emerging in the market. In the process of introducing new products the
organization should make sure that they compare with competitors and the emerging trends so that
they can capture the market with innovative products. The organization should make sure they take
into consideration the needs and wants of the customers so that they are able to follow the trends
and build a strong base in the market.
Process of Operational Strategy
In order to design the long term strategy for an organization it is important to keep in mind a few
steps that will help in designing a better strategy which will help in achieving the organizational
goals and objectives. The following are the process of operational strategy.
1. Operation Strategy Formulation
2. Operation Strategy Implementation
3. Operation Strategy Monitoring
4. Operation Strategy Control
1. Operation Strategy Formulation
This is the first step in the process of operation strategy where all the strategies are formulated. The
various objectives and decisions which will help in the formulation of strategy is put forward in this
step.
2. Operation Strategy Implementation
After formulation of the strategy the next step is to implement the formulated strategy into the
organization. This step will make sure that the right strategy is implemented for the various
departments in the organization to follow. Implementation of strategy is a crucial stage because any
mistake in this step will lead to pushing out the organization from the market.
3. Operation Strategy Monitoring
After successful implementation of the strategy the next step is to monitor. Strategy development
can be considered as a continuous process as they have to be continuously changed and developed
according to the changing trends in the market. Therefore the strategy implemented has to be
continuously updated and monitored so that the organization functions smoothly and efficiently.
4. Operation Strategy Control

Monitoring of the strategy is just not enough. The overall performance of the organization after the
implementation of the strategy has to be controlled so that each department functions effectively
and efficiently. Controlling will ensure that the strategy is properly implemented without any
unnecessary disruptions in the functioning of the organization.
Operation Strategy Matrix
1. Process Focused
2. Standardization
3. Product Service Customization
4. Mass Customization
1. Process Focused
Process focused is where the organization focuses on Low customization and Low volume. In this
quadrant the companies try to prioritize the optimization of the process and develop efficiency.
They use innovative technology to provide the customers with whatever they need. This quadrant
mainly focuses on small scale batch manufacturing etc.
2. Standardization
Standardization mainly focuses on low customization and high volume. In this quadrant the
company focuses on producing high volumes of standard products. They mainly include reducing
costs and achieving economies of scale. Companies that include mass production in manufacturing.
3. Product Service Customization
Product Service Customization focuses on High customization and low volume. In this quadrant the
company mainly focuses on high customization according to the needs and the wants of the
customers. So they don't produce products in a larger volume,but instead they produce on the basis
of customization. Boutiques and furniture shops can be a great example for this quadrant because
they produce according to the needs of the customer.
4. Mass Customization
Mass Customization focuses on high customization and high volume. In this quadrant the company
mainly focuses on producing products in high volume using innovative technology. They use
flexible production methods so that the company sustains in the market. Automobile industry is one
such example which follows this type of strategy for it to sustain and set up its base in the market
and capture the target audience
FINANCIAL STRATEGY
A financial strategy is the result of fusing strategic and financial planning. (Calandro & Flynn, 2007)
demonstrates that the integration of strategy and finance has the potential to revolutionise both fields
and company practises overall.

To efficiently finance important initiatives, a finance strategy controls trade-off considerations,

establishes priorities, and reduces change costs. The result is a workable plan that evaluates
available resources, expenses, and budget and matches them with the mission and objectives of the
business. It establishes a strategy to support enterprise objectives for innovation and growth in the
face of fluctuating and frequently erratic market conditions.
Why financial strategies are important?

Financial techniques assist you in determining whether your objectives are doable, overcoming
unforeseen obstacles, and tracking your spending. In addition to this, financial strategies also
support the following key business strategy aspects:

• Current financial situation

• Determining any threats to the present financial state of your business.
• Determining whether funding is required for operations or expansions.
• Determining and establishing short-term financial objectives.
• Finding the right places to seek for ways to make more money.
• Emphasizing the necessity of forming new alliances or partnerships in order to meet financial
goals.
• Determining whether specific abilities must be hired in order to meet the established financial
goals.
• Determine the ideal ratio of expenditure to savings.

Benefits

SBUs can profit from financial tactics in a number of ways, such as:

• Higher profitability: By lowering expenses, raising prices, or distinguishing their goods and
services, financial strategies can assist SBUs in raising their profitability.

• Better cash flow: By increasing income, cutting costs, or providing payment terms to clients,
financial measures can assist SBUs in improving their cash flow.

• Enhanced shareholder value: By raising earnings, boosting cash flow, or lowering risk, financial
methods can assist SBUs in enhancing shareholder value.

Challenges

For SBUs, financial methods can present a variety of difficulties, such as:

• The possibility of failure: Using financial methods carries some risk and is not guaranteed to work
every time. A financial strategy's failure could harm the SBU's cash flow and profitability.
• The requirement for flexibility: Financial plans must be adaptable enough to take into account
shifts in the external market environment. A financial plan may not be able to adapt to shifts in costs,
competition, or demand if it is very rigid.

• Coordination is necessary: Financial strategies must be in line with the company's overarching
financial plan. SBUs may make decisions that are incompatible with one another and negatively
impact the overall financial performance of the firm if they are not coordinated.

TYPES OF FINANCIAL STRATEGY

A company's SBUs employ a range of financial strategic techniques to accomplish its objectives.
These tactics consist of

1) Cost Leadership: Concentrate on being the industry's lowest-cost producer to provide

goods and services at rates that are competitive. Walmart's financial policies and business style
focus on cost leadership, which has allowed them to set the lowest price range and dominate the US
retail industry. Walmart's primary goal is to sell its range of items at the lowest possible price. To
that end, it has been focusing entirely on three crucial factors: customer convenience, the availability
of the goods at lower and more competitive costs, and the highest possible attention to quality. (Roy,
2019)

2) Differentiation Strategy: Provide distinctive goods or services that demand high prices
and stand distinct in the marketplace. Businesses that follow a strategy of product differentiation
may see challenges from competitors who striving for creativity their products and are pursuing a
low-cost leadership approach. Consequently, it is now essential that the strategic managers of the
businesses who are following the low-cost leadership strategy change their businesses to focus on
product differentiation. (Gehani, 2013) These businesses must raise significant obstacles to entry
for their competitors in order to maintain their market share. They must do this by moving beyond
incremental improvements and becoming radically innovative businesses with exclusive
distribution channels or protected proprietary intellectual property. Eastman Kodak's low-cost
leadership strategy of photographic film has not been easily abandoned in favour of a more creative
digital imaging-based product-differentiation approach by a succession of strategic executives.

3) Market Expansion Strategy: To boost sales, find and target new markets or clients. A
business that seeks to grow the customer base for a particular type of product faces competition
from other product categories that meet the same needs. Multiple client needs may compete for the
customer's resources at any given time. (Bang & Joshi, 2010) states that a corporation must use
more effort to contend with competition that exists beyond the product category level in order to
grow its market share.

4) Working Capital Optimization: To increase cash flow, handle working capital

components (inventory, payables, and receivables) effectively. As an illustration, an SBU in the
consumer goods sector may work with suppliers to extend payment terms while streamlining
inventory levels to lower holding costs. Additionally, they can put policies in place to expedite
client collections, which can enhance cash conversion cycles.

5) Financial Restructuring Strategy: To solve financial issues and boost stability, make revisions
to the financial structure. As a financial strategy, corporate restructuring will impact the total cost
of capital or work to reduce it to the lowest possible level so that organisational changes can address
changes to the organization's different operational and functional activities.

The financial plan selected will rely on the goals of the SBU, the level of competition, and the
resources at hand. Furthermore, a well-rounded financial strategy frequently combines various
methods in order to get a stable and balanced financial result

HUMAN RESOURCE STRATEGY IN STRATEGIC BUSINESS UNITS

Human resource refers to the human capital of an organisation. In a broader sense, human resources
is also used to refer to the department within the organization that manages the employees within
the organization. Therefore, it is very pertinent for strategic business units to carry out human
resource practices with a strategic approach. A human resource strategy refers to all the methods
adopted by an organization to improve its performance and achieve the vision, mission, and goals
of the organization (Gartner, n.d.).

There is a need to develop strategic plans to carry out all the different activities within the human
resource function of an organization. These include recruitment strategies, training and
development strategies, performance appraisal strategies, and promotion and employment
retrenchment strategies (Gandhi, 2021).

RECRUITMENT STRATEGIES

Recruitment is identifying and defining a job position, advertising it and choosing the best candidate
appropriate for the job.
A firm to strategically carry out their recruitment strategies can adopt various ways:

1. Organisations can adopt a pipeline approach and be on the lookout for candidates even before
a vacancy is created within the organization. By this, they can already form a pool of potential
candidates and recruit from this whenever a vacancy opens up.

2. To attract the best talents to the organization, they must invest in employment branding.
Employment branding is making efforts to advertise the organisation's culture as a desirable place
for employees to work. This makes people desire to work with the organization.

3. Organisations can also make efforts to attract top players in the industry to switch to working
in their organization.

4. All recruitment decisions should be driven by data. Data-driven decisions help mitigate biases
in decision-making.

TRAINING AND DEVELOPMENT STRATEGIES

Training and development is concerned with enhancing the performance of the employees to make
them capable of carrying out their work (Indeed, 2023).

1. Organisations can incorporate technology into their training and development practices. They
can create a culture of learning by utilizing technology through e-learning platforms, e-certification
courses, etc.

2. Organisations can develop a system of assigning mentors to new employees in the organization.

3. Organisations can utilize external resources such as resource people from outside to train and
upskill employees in the organization.

4. Organisations can identify the potential future leaders in the organisation and train them along
with the existing leaders of the organization.

PERFORMANCE APPRAISAL STRATEGY

Performance appraisal refers to all the practices adopted by an organisation to evaluate the
performance, behaviour and potential of the employees (Karak & KrishnenduSen, 2019).

1. Graphic Rating Scale Method:

This method involves rating the employees based on their individual characteristics. Each individual
employee in the organization is ranked on a fixed scale based on different criteria.

2. Ranking Method:

This method involves the human resource department ranking each individual employee based on
a list. The employees are ranked from top to lowest performers.

3. Checklist Method:

In this method, a checklist is prepared consisting of different factors. The employees are evaluated
based on these criteria. The employer ranks each employee by answering yes or no against each
criterion.

4. Management by Objectives Method(MBO):

This is a more systematic method of performance appraisal where each employee is assigned an
objective that has to be achieved. At the end of the year, employees are evaluated based on the
extent to which they achieved the objectives assigned.

5. 360-degree Feedback Appraisal:

This is a group performance appraisal method. Employers review employee behaviour from
colleagues or close subordinates. This enables us to get a better picture of the behaviour and
performance levels of the employees and close subordinates would know better compared to
superiors.

These include some of the ways to appraise the performance of employees in a strategic business
unit(Azmi, 2023).

PROMOTION STRATEGY

Promotion refers to the advancement of an employee into a higher level with higher
responsibility,status etc.

1. Organisations need to reform their promotion practices and make promotion decisions based
on employee performance. Traditionally, the seniority of employees is the biggest factor while
making promotion decisions. However, organizations need to adopt a better strategy where
employee performance is given utmost importance.

2. Another strategy that could be adopted is cross-departmental promotions. Traditionally,

promotions occur vertically where employees are promoted to a higher level with higher
responsibilities and status. However, organizations should also carry out horizontal or cross-
departmental promotions. In this case, employees get exposed to work of different departments and
become more efficient

3. Organisations should also ensure that a promotion decision is not limited to just the top
management. Managers must involve the potential job candidates in the process as well. Managers
should also guide the candidates who failed to achieve promotion to help them improve their
performance.

These are some practices to develop a strategic promotion strategy in a strategic business unit
(Leapsome, 2023).

EMPLOYEE RETENTION STRATEGY

Employee retention is the ability of the firm to make the quality employees in the organisation retain.

1. Investing in employees' careers is the best way to keep them with the company. Organizations
need to work to foster a culture of ongoing education. Employees should be given the chance to
enhance their careers and be given resources to help them do so.

2. Organizations need to put up the necessary effort to acknowledge employee accomplishments.

Employee morale is raised by recognition, which inspires them to work hard for the organization.

3. Organizations must recognize the significance of work-life balance. Many businesses are
transitioning to hybrid work modes in the present environment. However, working from home
typically entails longer workdays. Therefore, managers need to make sure that no one is overworked.

These are some practices that could be adopted to retain employees in the SBU and reduce employee
turnover (A. Kumar, 2023)

IMPORTANCE OF TECHNOLOGY IN THE STRATEGIC BUSINESS UNITS

1. Technology improves efficiency, it allows companies to do their job quickly and precisely. This
allows companies to use their resources efficiently helping the company to reduce the cost.
2. Technology enables a faster and efficient mode of communication. Technology like zoom,
Gmeet allow companies to connect with the world easily.
3. In this digital era, there is a continuous threat of cyber crime, which requires security to protect
the data. A good technology can bring good data protection to the company
4. Technology allows the company to engage with their employee, throughout the organization
BALANCED SCORECARD
Introduction
A management tool called the balanced scorecard gives stakeholders a thorough evaluation of how
well a firm is doing in terms of achieving its strategic objectives
PERSPECTIVES OF SBU
• Financial perspective:
This perspective focuses on the financial aspect of SBU. It includes metrics like revenue, profit,
cost control, and return on investment. The objective is to ensure that the SBU is financially stable
and sustainable and contributes to the organization's overall development
• Customer perspective:
This perspective evaluates the performance from customer point of view. It includes customer
satisfaction, loyalty, and retention. The goal is to understand and meet customer need and
expectations to drive business growth.
• Internal Processes perspective:
This perspective explains about the effectiveness and efficiency of the SBU's internal processes.
Key metrics might include cycle times, quality, and productivity. The aim is to optimize operations
and deliver value to customers while minimizing waste and inefficiency.

Learning and Growth perspective:

This perspective focusses on development and improvement of the SBU's human and intellectual
capital. Metrics can include employee training, innovation, and knowledge management. The goal
is to foster a culture of continuous learning and innovation, which in turn supports the other
perspectives

STEPS TO IMPLEMENT BALANCED SCORECARD FOR SBU

1. Identify the SBU’s Strategic Goals:
The first step is to define and clarify the high-level strategic goals of the SBU. The goals should
align with the vision, mission and objectives of the organization.
2. Translate those Goals into Objectives:
Once the strategic goals are established, they need to be broken down into specific, actionable
objectives. The goals should be specific in terms, measurable in numbers, achievable in nature,
relevant to it's business, and time-bound (SMART).
3. Measure under 4 Perspectives:
As you mentioned earlier, the Balanced Scorecard approach is often used. This step involves
selecting key performance indicators (KPIs) for each of the four perspectives - Financial, Customer,
Internal Processes, and Learning and Growth. These KPIs are the metrics used to assess progress.
4. Set Targets for Each of the Objectives and Measures:
For each objective and KPI, specific targets or benchmarks should be set. This defines what success
looks like and provides a clear direction for the SBU.
5. Identify Initiatives:
Initiatives are the actions or projects that will help achieve the objectives and reach the defined
targets. These could include process improvements, marketing campaigns, employee training, or
any other relevant actions.
6.Track Progress Against the Objectives and Measures:
Regular monitoring and reporting are essential. Data is collected and analyzed to measure progress
against the objectives and KPIs. This helps identify areas that are on track and those that need
attention.
7. Make Adjustments:
Based on the progress and performance data, adjustments may be required. If certain objectives are
not being met, corrective actions can be taken. Initiatives might need to be adapted or changed to
improve outcomes and keep the SBU on track to achieve its goals.
RETRENCHMENT STRATEGIES
A Retrenchment Strategy is implemented by companies seeking to reduce costs and enhance their
financial standing by downsizing one or more of their business operations. In simple words, a
retrenchment strategy involves discontinuing certain business activities through required reductions.
Typically, organizations establish an annual budget at the start of each fiscal year. To adhere to this
budget, they may need to adjust their workforce by either increasing or decreasing the number of
employees.
In pursuit of financial stability, the retrenchment strategy involves the elimination of unprofitable
goods and services from a company's portfolio. Additionally, it may entail exiting markets in which
the company can no longer compete effectively. This often results in actions such as selling off
assets like product lines and the termination of personnel.
Different Approaches to Retrenchment Strategies:
1. The turnaround Strategy: A retrenchment method used to mitigate factors that negatively
impact a company's performance. Its purpose is to rejuvenate struggling companies by reversing
adverse trends such as declining market share, increasing material costs, reduced sales, widening
debt-to-equity ratio, diminished profitability, working capital challenges, negative cash flows, and
other difficulties.
For example, in 2006, Dell Technologies tried a cost-cutting strategy by selling products directly to
customers, which failed, resulting in significant financial losses In 2007, Dell's the transition from
a direct sales strategy worked well, now the world’s second largest computer vendor. Another
notable example of transformation is the return of Steve Jobs to Apple in 1997, which transformed
the company from underperformers in the market to the largest technology company in the world
2. Divestiture process: A large company, with different assets, resources and divisions, explores
the benefits of these segments. If expectations are not met, they may sell their investments.
Essentially, a sales strategy involves dividing your company by divisions, assets, or divisions.
Typically, companies turn to the waiver program after failed turnaround plans.
Diversification is an approach used by businesses and agencies for a variety of purposes, including
integration strategies, resources, managing different budgets, technological advancements, ongoing
challenges , mismatched assets, misappropriation of funds, use of funds It should be noted that the
sale of funds differs from liquidation, as it involves the sale of informal businesses to raise funds
for investment, and not completely shutting down a unit
3. Liquidation Strategy: The most unhealthy practice for an organization is liquidation strategy,
where if assets are sold and all business activities are stopped, this process is considered as a last
resort of taking rights, damaged market reputation. etc. Liquidation might turn out to be difficult
due to the scarcity of buyers and the companies may not get the required compensation for their
assets.
A liquidation arrangement represents the ultimate end of the layoff process, where a company
permanently closes its doors and disposes of all assets It is generally considered a last resort for
companies facing major issues due to possible negative consequences. Smaller companies can
choose this option, but larger companies often seek other options, working with creditors, suppliers,
financial institutions, trade unions and government agencies to avoid closing out altogether
4. Captive Company Strategy: Captive company strategy is used when a business depends on
another company for its existence. Where industry prospects do not suggest that the effort required
for change management is not warranted, a firm with weaker competition may adopt a different
approach This business still needs to address declining sales and profitability, therefore it's looking
for a strategic partner, often one of its biggest customers. In doing so, the client becomes a trustee
of the business and receives a consistent and guaranteed source of services. This process can also
reduce costs in some areas such as marketing. In exchange, the subsidiary benefits from a
guaranteed income but may sacrifice some autonomy.
For example, Simpson Motors decided to become a captive subsidiary of General Motors, giving
80% of its production to the automaker under contract agreements This arrangement benefits the
subsidiary, although it comes with some autonomy will cost and generate steady income.
Reasons for using layoff procedures:

1. Addressing Poor Performance: When a company experiences subpar performance and sustains
losses, it is logical to discontinue unproductive business lines or centers that do not contribute value
and act as hindrances to overall productivity.
2. Responding to Survival Threats: In situations where unexpected market conditions hinder a
company's success, corporations often choose to shut down specific operations. This decision may
also be influenced by the company's shareholders.
3. Reallocating Resources: When new and promising investment opportunities emerge, a company
may find it necessary to downsize its existing operations and reallocate the resources released to
more productive areas.
4. Reduce scarcity: In some cases, the company may need additional financing to maintain its
current market position. Without the necessary funds, the company may be forced to divest less
profitable parts of its operations to obtain resources for redeployment
5. Improved productivity and efficiency: Companies can sometimes overextend themselves through
excessive diversification, resulting in loss of control and reduced productivity. Using a layoff plan
allows a company to streamline its production processes and reduce its size to a manageable level.

MARKETING STRATEGY
In the contemporary business environment to reach and engage a diverse online audience, a
successful marketing strategy must prioritize digital channels, concentrating on social media, email,
and content marketing. Customizing messages and offers requires data-driven decision-making and
personalization, while sustainability and CSR initiatives can improve company reputation and
customer loyalty. Due to the quick changes in market conditions, flexibility and agility are crucial.
WHAT IS MARKETING?
Any effort a company takes to entice people to buy its products or services through persuasive
messaging is referred to as marketing. Marketing aims to offer prospects and customers stand-alone
value through content in order to illustrate the value of the product, foster brand loyalty, and
ultimately increase sales.
WHAT IS MARKETING STRATEGY?
A marketing strategy is an ongoing plans or methods for achieving business goals by understanding
customer wants and creating a measurable, sustainable competitive advantage. It covers everything,
from identifying your target audience to choosing the communication channels you'll employ with
them.
COMPONENTS OF MARKETING STRATEGIES
1. MARKETING MIX
The major elements of marketing a good or service are the four Ps: product, price, place, and
promotion. These components are regarded as a part of the "marketing mix," a group of variables
under the company's control that is used to develop a marketing strategy.
· Product
The product is the good or service that is being advertised to the target market.Successful products
typically meet a demand-generating missed opportunity in the market or offer a fresh client
experience.It is crucial to keep your target audience in mind as you work on your product and their
specific requirements. While developing a product, some questions to think about are:
What is your product?
What does your product accomplish?
Who is the intended market for your product?
How does your product vary from similar ones on the market?
· Price
The price that you charge is the value you place on your good or service. It's an important factor
that can have a big impact on a customer's buying choice. Take into account elements like
competition, client demand, and production expenses while deciding the pricing. It's critical to strike
a balance between maintaining profitability and being competitive. This frequently entails studying
your target market's price sensitivity, examining the pricing methods of competitors, and taking into
account your own financial goals. Pricing can be utilized strategically in other ways as well, such
as using discounts to draw in a bigger consumer base or premium pricing to portray the product as
high-end.
· Place
The channels and distribution plan you employ to make your product or service available to your
clients are referred to as "place." Making your offering accessible and being present where your
clients are is key. Determining whether to sell physical goods online, in brick-and-mortar locations,
or both may be involved in this. It could require selecting between direct delivery and middlemen
for services. The ideal location maximizes comfort for your target market. To find out where your
customers purchase or get information, conduct market research. An e-commerce website or social
media presence, for instance, may be essential if the majority of your target audience is online.
• Promotion
It's important to let your target audience know how valuable your product or service is through
promotion. To generate awareness and interest, it includes a range of marketing strategies, from
public relations to advertising. Take into account the tastes and routines of your intended audience.
Digital marketing techniques like social media advertising and influencer partnerships could work
well for a younger, tech-savvy audience. Print and television advertisements, particularly for older
groups, still have a place in marketing strategies. It's crucial to create the best message, use the best
distribution methods, and time your marketing campaigns properly. Examine the reception to your
promotions and alter your strategy as necessary to increase their impact.
2. MARKETING GOALS
Marketing goals are defined objectives that a company or organisation wants to accomplish through
its marketing activities. The success of marketing plans and campaigns must be guided by and
evaluated against these objectives. Generally speaking, marketing goals are in line with the bigger
corporate goals and objectives. They assist in defining the tasks the marketing team must complete
in order to contribute to the overall success of the business.
3. MARKET SPENDING
The marketing strategy must include a well-organized marketing budget. It offers the financial
foundation required to successfully carry out your marketing strategy. To meet your marketing goals
and generate a significant return on investment (ROI), you must allocate funds for people, software,
advertising, and content generation. Starting with a targeted budget that may be allocated to
particular initiatives enables you to test and improve your methods before scaling them up once
their efficacy has been established. Strategic marketing initiatives have the potential to significantly
increase brand recognition, consumer engagement, and income
4. MARKETING ADVANTAGE
When developing a marketing strategy, it's important to understand your rivals. Even if you already
know who your competitors are, it's still important to sit down and identify them. You can discover
a surprise rival battling for the involvement and attention of your target customer.
5.MARKET POSITIONING, TARGETING & SEGMENTATION
Delivering highly relevant and individualized communications to certain target audiences is the goal
of segmentation, targeting, and positioning (STP), a strategic marketing method. STP is a
methodical procedure to engage with your ideal clients instead of aimlessly developing content.
There are three steps in the procedure:
Determine who your target market is: This goes beyond merely talking to your current clients. To
identify your target clients, you must perform market research and develop thorough buyer profiles.
Choose a subset of your target market to target: It is more successful to concentrate on a particular,
clearly defined set of highly qualified consumers within your bigger target market rather than
presenting your message to a broad audience.
Position your brand: This phase entails determining the distinctive value of your brand and where
it stands in respect to rivals. Determine what makes your brand unique and why buyers should select
your good or service over rivals.
TYPES OF MARKETING STRATEGIES

1. Product differentiation is the practise of identifying the distinctive characteristics or attributes

that distinguish your product from rivals. It seeks to highlight the advantages of picking your
product over competing ones on the market.
2. Cause marketing: Aligning your brand with a philanthropic cause or social responsibility effort
is known as "cause marketing." You can draw clients who appreciate social responsibility as much
as you do by showing that you are dedicated to a certain cause.
3.Experiential Marketing: To engage and connect with customers on a personal level, experiential
marketing develops live, interactive brand experiences, such as events, demos, or immersive
activations.
4.Relationship Marketing: To encourage repeat business and brand loyalty, relationship marketing
focuses on establishing and maintaining long-term connections with customers by providing loyalty
programmes, individualised rewards, and top-notch customer care..
Content marketing: To engage and educate your target audience, content marketing entails
producing and disseminating useful, educational, or amusing information, such as blog posts,
articles, videos, and infographics. The objective is to position your brand as a reliable source of
knowledge and solutions, which will ultimately increase client engagement and loyalty.
5. Social media marketing is the use of online communities like Facebook, Twitter, Instagram,
and LinkedIn to engage with customers, raise brand awareness, and promote dialogue. To increase
your reach and impact, it also entails producing and distributing content, interacting with users, and
using paid advertising.
6.Influencer marketing: Influencer marketing uses the authority and following of bloggers,
celebrities, and other social media influencers to market your goods or services. These celebrities
have devoted fans, and their recommendations can have a big impact on consumer choices in their
market.
7.Email marketing: To nurture leads, increase conversions, and foster customer loyalty, targeted
emails are sent to a list of subscribers. Personalised recommendations based on user choices and
behaviour are also included, along with newsletters and promotional mailings.
8.Search engine optimisation (SEO) is the process of improving the content, organisation, and
technological components of your website in order to increase its exposure in search engine results.
The objective is to gain more organic (unpaid) traffic by dominating the search results for pertinent
keywords.
9.Pay-Per-Click advertising enables you to build and display advertisements on search engines
and other platforms. It is a cost-effective strategy to increase traffic to your website and produce
leads or sales because you only pay when consumers click on your advertisement.
 Chapter 5 : Strategic Implementation

Meaning

Strategy implementation is putting a given strategic action plan into practice or force within or
outside the organization. It is the process of implementing the Strategic Plan to achieve a given
set of objectives or goals of a tangible or intangible nature, which may lead to an increase in
productivity, higher resource efficiency, and overall growth of the organization.

5Ps of Strategy Implementation

Plan

Ploy

Pattern

Position

Perspective

i. Plan:

This is the first step or often considered the prior step to strategy implementation, where
organizations create a detailed plan of their strategy and its defined objectives and the Plan of
action while identifying resources and setting a timeline.

ii. Ploy:

These are the fundamental tactics or tricks an organization uses to gain a competitive advantage
in its core competency to implement its action plan; this includes the various strategies used,
like marketing, pricing, etc. The Ploy is often a short-term action.

iii. Pattern:

The pattern emerges over time as an organization implements its strategy. This is nothing but
the underlying pattern that is unknowingly created after implementing multiple strategies over
time by an organization. This helps to identify how well an organization is implementing its
strategy.

iv. Position:
Positioning is the competitive position that the organization has in the market and how it differs
from its competitors and distinguishes itself in the market. It is about finding a unique and
sustainable place in the market that aligns with the Strategic Plan.

V Perspective:

Perspective focuses on a more holistic or broader view of strategy implementation. It guides

organizations to not only view and consider their internal stakeholders, operations, and factors
but also their external stakeholders, factors, and interests of the society at large.

Strategy Implementation Process

The strategy implementation process is a six-step process that is interlinked and follows a step
waterfall pattern, which requires individuals and organizations to take one step, complete it,
and then move to the next.

i. Communicate Goals

Communication is vital to a successful strategy implementation process. Organizational leaders

and key-level management should communicate the strategy and its goals and objectives to its
managers or employees so that a clear-cut vision is created regarding what has to be done and
what has to be achieved by the organization.

ii. Coordinate

For a strategy to be implemented, it should be coordinated between all the organization's

departments or critical resource areas. Effective coordination and support will only lead to a
successful implementation.

iii. Execute Your Plan

After effective communication and coordination, the organization should put its action plan
into force and set a definite timeline for the accomplishment of the set objectives decided by
the organization.

iv. Stay Dynamic

Once the strategic Plan has been implemented, an organization must stay dynamic with its Plan
and objectives, as situations may change due to several external factors. By making the initial
Plan ineffective, the organizations should remain dynamic toward its Plan.
v. Review And Feedback

The strategy implemented should continually be reviewed for improvements and changes. The
feedback should be taken on all levels of management and the ground force, which is on the
front line for strategy implementation to check the strategy performance.

vi. Correction And Monitor

Correction and monitoring are followed by proper review and effective feedback on the
implemented strategy. Suppose the strategy has faults or constraints or changes to be made due
to changes in the external factors of the organization. In that case, this is done by effectively
correcting the strategy with current market requirements, after which continuous monitoring is
carried out until the goals are achieved.

1. Issues in Implementation of Strategy

Strategy implementation is sometimes a complex and challenging process as there will arise
number of issues during the process of execution (Easy Management Notes, 2022). Some of
the common issues in implementing strategies are as follows:

a. Ineffective Communication

When strategic goals and objectives are not clearly defined, there are chances that it can lead
to confusion within the organization. Employees may not understand the direction and it leads
to inefficiency.

b. Resistance to Change

Stakeholders such as employees, customers may resist the changes that comes with the new
strategy. This resistance may be due to inability to shift towards change. When iPhone was
initially launched in 2007, there was a lot of resistance from customers who felt the interface
was not friendly to use (BusinessWeek, 2009). Although it was a good strategy from apple,
there was resistance from its stakeholders.

c. Resource Constraints

When there are no sufficient resources such as land, labour or capital even a good strategy
cannot be implemented. Netflix become a major competitor to Blockbuster because
Blockbuster did not have sufficient fund to upgrade to its digital streaming technology, which
was supposedly its strategy.
d. Inadequate Leadership and Management

Effective leadership is important for successful strategy implementation. If leaders are not
motivating enough, changes and strategies will not be effective. It is believed that Nokia’s
inability to upgrade to smartphones was slightly due to its leaders. Nokia’s CEOs were not
motivating enough or creative enough to convince the product development team for an
upgrade.

e. External Factors

Some external factors such as change in consumer behaviour, political parties, competitors’
strategy can also be an issue for implementing a strategy. Many airline companies such as Air
Deccan faced significant issue because of these external factors although they had good
strategies.

f. Scope Creep

Scope creep comes into picture when organizations expand their product line vertically or
horizontally. When a new product is introduced, a lot of resource from the organization needs
to be allocated to these products which will lead of shortage of resources for the existing
products.

Google’s expansion into self-driving cars is an example of scope creep. If resources of google
is shifted to new product, its main business of search engine business may be affected.

To overcome these issues, organizations must carefully plan and monitor in the strategy
implementation process. They should also ensure that these strategies are effectively
communicated throughout organization and has support from stakeholders.

2. Project implementation

Project implementation in strategic management refers to the process of executing projects or

initiatives which is a part of strategy of an organization. Project implementation involves four
steps such as:

a. Project Objective: At this stage companies should decide what their objective is and what
they want to achieve in the short run. Example: To increase the market share or to increase the
profit by 20%.
b.Project Planning: At planning stage, companies should allocate funds and deligate tasks
based on expertise.

c. Execution: Execution stage is when strategy comes into action. We bring into reality all
the plans made and make sure the objective is attained.

d. Monitoring and Control: Mere implementing strategies is not sufficient. Regularly these
strategies must be monitored and ensure it is serving the purpose. Whenever there is a
deviation, it must be reported and controls must be implemented.

4. Procedural Implementation
Meaning
Procedural implementation is simply the process of executing a strategy or plan or in other
words we can say converting the plans into actions. This process ensures that all plans are being
executed effectively and efficiently to achieve a certain goal. It may include steps like splitting
the plan into smaller segments of plan, determining the various sources required to carry out
each step, and allocating tasks to people or teams.

Procedural Implementation Process:

The essential steps taken while executing plans are as follows:

• Establish the main objective of the plan or strategy.

• Split the plan into manageable chunks.
• Identify the materials required to carry out the plan.
• Assign tasks to individuals or groups.
• Design an outline for implementation.
• Monitor and Evaluation
• Modification

Few examples:

Let’s take a hospital for example, a hospital also may include procedures and steps for admitting
a patient, it can be as simple as providing care and then discharging them, the procedures may
look like this:

Following Step-by-step protocols for admitting.

• Registration.
 • Collecting medical history.
• Provide medical care.
• Another example can be of the process for Hiring new employees, a company might
have steps that are pre outlined for HR managers to follow in such a situation. Let’s see
some of the steps
• Posting of job openings
• Reviewing of resumes
• Screening of potential candidates
• Conducting interviews and Tests
• Selection

Why is procedural implementation important for an organization?

• It helps in enhancing internal communication and cooperation.

• It helps to mitigate organizational risks.
• It adds to increased productivity and efficiency.
• It aids in improving the standard of the company.

Strategic implementation VS Procedural Implementation

5. Resource allocation

Meaning:
Resource allocation is the process of allocating available resources or assets to various projects
or activities effectively and efficiently.

Resource Allocation Process

• Identification: In this process it is imperative to identify available resources or assets such

as financial resources, Human resource and physical resources.
• Resource management: In this step the identified resources are to be matched with the
priorities of the organization.
• Allocation of Resources: After matching the priorities of the organization accordingly the
resources are to be allocated to projects and activities.
• Evaluation and Monitor: The last step is to monitor and evaluate whether or not the
allocation of resources is optimal by using different tools such as resource tracking
spreadsheet, management software etc. and if any changes are to be made depending on the
priorities since these priorities may fluctuate depending on some external factors.

Advantages of Resource Allocation

• Increase Efficiency and Productivity: By adopting effective resource allocation it increases

productivity of the firm’s activities hence leading to increase in efficiency.
• Lower risk: By allocating resources effectively and meeting the needs of the organization
can lead to decrease in risk.
• Employee Satisfaction: When resources such as human resources are used effectively and
efficiently, they have a sense of satisfaction that their talents and skills are being used
effectively and efficiently which leads to increase of productivity.

Limitations of resource allocation

• Limited resources, including time, finances, and personnel, can pose challenges when it
comes to distributing these resources among the various tasks and projects that require
attention within organizations.
• Due to the inherent unpredictability of the future, accurately forecasting the resources
needed to achieve strategic goals can be challenging. This uncertainty may lead to the
misallocation of resources.
• Complexity is often a feature of strategic implementations, making it challenging to
comprehensively identify all the required resources for success. This complexity can
contribute to the misallocation of resources.
• Human involvement in resource allocation is vulnerable to errors, as humans are prone to
mistakes. Consequently, resources may be inadvertently allocated to the wrong tasks or
projects.

5. Budget

Meaning

According to strategic implementation, creating a budget is an important step to make sure the
strategic goals of the organization are achieved and are in agreement with the resources of the
organization. It helps in creating a precise and thorough budget plan for the organizations to
use its resources efficiently and accomplish their strategic goals.

Types of Budgeting

i. Incremental budgeting:

It is a type of budgeting which is based on the prior year’s actual figures providing minor
adjustments to the current year's budget. It is a common and a simple approach which is easy
to understand. It focuses more on making small adjustments on the current budget rather than
to match every expense to the planned target. It also has its drawbacks, as inefficiencies may
occur as the managers may prefer expansion of budget over cost-cutting. Furthermore,
incremental budgeting assumes a constant percentage increase in expenses and does not take
into account variables like inflation.

ii. Activity based budgeting:

Activity-based budgeting (ABB) is a top-down budgeting approach which begin by setting up

corporate objectives or outputs. It identifies the necessary activities to reach the targets and
objectives, by also finding ways of potential efficiencies and cost reduction opportunities. This
leads to reducing the activity levels and removing the unnecessary task eventually leading to
cost efficiency and overall growth of the business.

iii. Value proposition budgeting:

Value proposition budgeting is a type of budget which involves evaluating each budget item
by posing important questions. These factors include the item's function within the budget, its
capacity to provide value for clients, employees, or stakeholders, and if the value justifies the
price. The primary objective is to ensure that every budgeted item positively impacts the
company. While it may not achieve the precision of cost reduction seen in zero-based
budgeting, it's focus is on enhancing value creation and eliminating unnecessary expenses.

iv. Zero-based budgeting:

Zero-based budgeting is a commonly used approach and in this it assumes that all department
budgets start from zero and require full justification for every expense. It focuses close
oversight to get rid of unnecessary costs by not automatically approving any expenditures. The
bottom-up approach is effective in situations demanding swift cost reductions, like financial
restructuring or economic downturns. It is better suited for discretionary spending rather than
essential operational costs. However, due to its potential time-consuming nature, many
businesses employ it sporadically.

Advantages of Budget

• Enhanced alignment with strategic goals: A strategic budget plays a important role in
ensuring that resources align with the company's strategic objectives, certainly leading to
improved effectiveness and efficiency.
• Improved decision-making: A strategic budget gives a structured approach for resource
allocation, which helps in taking well-informed decisions that can ensure productivity and
profitability.
• Greater adaptability: A strategic budget can be modified to assist unanticipated happenings,
allowing the business to remain competitive and attain its long-term goals.

Disadvantages of budget

• Time-Intensive Process: Creating a strategic budget can be time-consuming, especially for

large, complex organizations, due to the need for extensive data gathering, analysis, and
coordination among multiple teams and stakeholders.
• Uncertain Revenue and Expense Projections: Forecasting future revenues and expenses is
inherently challenging due to the unpredictability of economic and market conditions,
making it difficult to create a precise strategic budget.
• Lack of Employee Involvement: Lack of employee involvement in the strategic budgeting
process can lead to insufficient support and hinder successful implementation. Active
engagement fosters a sense of ownership, alignment with organizational realities, and
increased commitment.
6. Organization Structure

An organizational structure is the fundamental framework that directs how a business or other
entity is set up, run, and managed. It outlines how roles, duties, and reporting lines are set up
inside the organization. It describes each employee's tasks and responsibilities so that work and
information are shared easily, enabling an organization's efficient operation. There are different
variations of this arrangement, and each has special qualities and consequences. Decision-
making authority flows from the top down to lower levels in hierarchical institutions, which
follow a distinct line of command and resemble a pyramid. As a result, there is a feeling of
organization, responsibility, and effectiveness, with clear roles at each level..

Forms of Organization Structure

• Centralized Structure - A hierarchical framework that places the majority of the

organization's power and influence at the top is indicative of a centralized organizational
structure. A small group of people or a single top-tier management team, frequently the
CEOs or a board of directors, make important decisions and plans. Within the organization,
lower levels often follow instructions from the centralized authority and have a limited
amount of autonomy. This organizational structure makes it easier to implement decisions
consistently and keeps the organization moving in the same direction. However, because of
the centralized control and decision bottleneck at the top, it can occasionally make it more
difficult to adjust and respond to local or specific market conditions.
• Decentralized Structured - A decentralized organizational structure is one in which
decision-making power is distributed among multiple organizational levels. In contrast to
a centralized organization, decision-making authority is distributed among various
divisions, teams, or departments. These groups can make decisions that are pertinent to
their particular roles or sectors since they have some autonomy. This strategy encourages
adaptability, agility, and prompt answers to local market circumstances. It promotes
employee involvement and empowerment, which opens up different levels of innovation
and creativity. However, because there is a chance for diverse agendas and decision-
making, it can be difficult to coordinate and align activities across the organization.
Decentralized decision-making can only be successfully implemented with good
communication and a clear overall vision.
Types of Organization Structure

• Hierarchical Structure

An organizational structure that is hierarchical is one in which workers and duties are arranged
in a pyramidal pattern, with each level denoting a different level of authority and responsibility.
The highest-ranking executives and leaders make up the top management, which is in charge
of making important decisions and setting the company's strategic course. The intermediate
layers are made up of different managerial levels, including middle managers and supervisors
who are in charge of particular teams or departments. The staff that do daily tasks are located
at the base.

• Flat Structure

A flat organizational structure has fewer levels of hierarchy and a wider range of authority,
which leads to a more horizontal and decentralized management style. There are fewer layers
in this structure between the senior leadership and the front-line staff. There may only be a few
tiers of management, or possibly only one, with managers in charge of a bigger workforce.
Direct and informal communication frequently fosters a sense of openness and accessibility.
Decentralized decision-making allows employees to have discretion within their areas of
responsibility. This organizational structure promotes teamwork, prompt decision-making, and
a higher level of employee ownership and involvement.

• Flatarchy Structure

The term flatarachy refers to a contemporary method of structuring an organization that aims
to strike a balance between the advantages of self-management and the advantages of flat
structures The goal of this hybrid organizational structure is to reduce the typical hierarchical
restraints while fostering an environment that fosters creativity, cooperation, and successful
teaming. It's crucial to remember that each organization has different demands and goals, thus
how a flatarchy structure is implemented and how it is configured will vary.

• Functional Structure

Employees are divided up into departments or divisions according to certain functions, such as
finance, marketing, operations, and human resources, under an organizational structure known
as functional. A manager who has experience in that particular job leads each department and
is in charge of all tasks and activities that fall under that department. This organizational
structure encourages specialization, enabling individuals to concentrate on their specific areas
of competence and carry out their tasks more successfully. As resources like personnel,
technology, and money are concentrated within each functional area to maximize production
and output, it promotes efficient resource allocation. To guarantee that the organization
functions cohesively in the direction of its goals, strong coordination and cooperation
procedures are needed because communication and collaboration between functions can
occasionally be a challenge under this structure.

• Divisional Structure

A firm is organized using a divisional organizational structure, sometimes referred to as a

divisional structure, based on various goods, services, clientele, or geographical regions. Each
division functions as a separate unit or a mini-organization within the main organization in this
structure. Each division has unique duties that are related to the product line or service it
represents, such as marketing, finance, operations, and human resources. Larger companies
with a variety of product lines or those operating in many regions are more likely to have
divisional structures.

• Matrix Structure

A hybrid organizational structure called a matrix includes aspects of divisional and functional
systems. Employees that work in a matrix organization have two reporting responsibilities;
they answer to a functional manager and a project or product manager. This makes it possible
to strike a balance between functional knowledge and project-specific demands. In project-
based organizations, R&D companies, or businesses where quick responses to shifting market
conditions and new techniques are essential, matrix structures are frequently observed. A well-
designed matrix structure, which makes use of the advantages of both functional and divisional
approaches, can make an organization quicker and more adaptable, even though it can be
challenging to administer.

Example

Amazon Company follows Hierarchical structure focusing on customer satisfaction. By

following this structure, it helps in efficient coordination and decision making are done wisely.
It is an added advantage for the company on following this structure as there would be a sense
of clarity on the tasks that needs to be done by all the employees. On the other hand, following
this type of structure may slow down the functioning as it may not involve wider opinions and
there are high chances of rigidity in their operations

Fitting/Matching a structure for organization strategy

Importance of financial policies in success of an organization

Fitting or matching a structure for organizational strategy is a critical aspect of ensuring that
an organization's structure aligns with its strategic goals and objectives. The organizational
structure should support and enable the successful implementation of the chosen strategy.
Here are some key steps and considerations:

• Define Your Strategy:

• Start by clearly defining your organization's strategy. This should include your
mission, vision, goals, and objectives. Understand the long-term and short-term
strategic priorities.
• Assess Your Current Structure:
• Examine your existing organizational structure. This includes looking at how
departments, teams, and reporting relationships are currently organized.
• Alignment with Strategy:
• Evaluate how well your current structure aligns with your strategic objectives. Does it
support the goals and priorities of your strategy, or does it hinder them? Identify any
gaps or misalignments.
• Organizational Design Principles:
• Choose appropriate organizational design principles that match your strategy.
Common principles include functional, divisional, matrix, or network structures, as
well as hybrid models.
• Core Capabilities:
• Identify the core capabilities and competencies required to execute your strategy.
Ensure that your structure is designed to foster these capabilities and allocate
resources accordingly.
• Roles and Responsibilities:
• Clearly define roles and responsibilities within the organization to ensure that
individuals or teams are accountable for executing specific parts of the strategy.
• Communication and Collaboration:
• Consider how your organizational structure supports effective communication and
collaboration across different parts of the organization, especially when the strategy
involves cross-functional initiatives.
• Flexibility:
• Assess the adaptability of your structure. Is it flexible enough to accommodate
changes in the strategic direction or in response to external market forces?
• Technology and Information Systems:
• Evaluate how technology and information systems can facilitate the execution of your
strategy. Ensure that your IT infrastructure is aligned with your strategic goals.
• Leadership and Culture:
• The leadership style and organizational culture should also align with the strategy.
Consider how your leaders' behaviors and decisions reflect the strategic direction.
Financial policies are crucial for the success of an organization for several reasons:

• Financial Stability: Financial policies help an organization maintain financial stability

by establishing guidelines for budgeting, spending, and resource allocation. This
stability is essential for long-term sustainability and growth.
• Risk Management: Financial policies outline risk management strategies, including
contingency plans and risk mitigation measures. This helps protect the organization
from financial uncertainties and unexpected events.
• Resource Allocation: They provide a framework for allocating resources, ensuring
that funds are directed towards the most critical and strategic areas of the business.
This efficient allocation helps in achieving the organization's goals.
• Transparency and Accountability: Financial policies promote transparency in
financial operations. They define roles, responsibilities, and reporting mechanisms,
ensuring accountability among employees and stakeholders.
• Compliance: Financial policies help the organization comply with legal and
regulatory requirements. This reduces the risk of legal issues and penalties that could
negatively impact the organization's success.
• Investor and Creditor Confidence: Having well-defined financial policies can instill
confidence in investors, creditors, and stakeholders. They are more likely to invest in
or support an organization that demonstrates a commitment to sound financial
management.
• Strategic Decision-Making: Financial policies support strategic decision-making by
providing a clear financial framework. They enable management to make informed
choices about investments, cost management, and growth strategies.
• Cost Control: Effective financial policies can help control costs by setting limits and
guidelines for spending. This ensures that resources are used efficiently and wastage
is minimized.
• Performance Measurement: Financial policies often include key performance
indicators (KPIs) and metrics that allow the organization to measure its financial
performance and make adjustments as necessary.
• Adaptation to Change: Financial policies can be adjusted or refined to adapt to
changing economic conditions, industry trends, or internal circumstances, allowing
the organization to remain agile and competitive.

7. Leadership

In an organization, leadership is the process of persuading and guiding others to reach a

common objective. It is essential to the success of any business since it entails creating a vision,
inspiring and motivating team members, and making tactical choices that advance the mission.

Effective leaders are able to lead with authority and authenticity thanks to a combination of
qualities, abilities, and behaviours. They must be able to effectively communicate, promote a
positive work atmosphere, and adjust to the organization's ever-changing demands and
difficulties. Depending on the situation and the culture of the business, leadership can take
many different shapes, from hierarchical and authoritarian to collaborative and
transformational.
Importance of leadership

• Setting Direction and Vision: Effective leaders give the organization a distinct sense of
purpose and direction. They develop and convey a compelling vision that energizes and
inspires workers. The organization is guided by its vision as it works toward its long-term
objectives.
• Making decisions: Decisions that a leader makes strategically have the potential to have a
big impact on the organization. They do information analysis, risk assessment, and choice-
making that is in line with the goals of the firm, assuring its competitiveness and
adaptability.
• Employee Engagement and Motivation: Leaders are essential in energizing and enthusing
workers. They promote a sense of teamwork and dedication among team members, develop
a healthy work atmosphere, and acknowledge and reward accomplishments. Higher
morale, productivity, and retention are the outcomes of this.
• Resolution of Conflicts: Disagreements and conflicts will inevitably arise in every
organization. Leaders are in charge of finding creative solutions to these problems,
encouraging teamwork, and sustaining a positive workplace culture.
• Strategic Planning: Creating and carrying out strategic plans require strong leadership.
Effective resource allocation, opportunity and threat identification, and organization-wide
adaptation to changes in the external business environment are all attributes of good
leaders.
• Innovation and adaptability are two traits that effective executives foster inside their
organizations. They cultivate a culture that emphasizes innovation, constant development,
and taking lessons from mistakes, all of which are necessary for being competitive in a
world that is changing quickly.
• Resource Allocation: It is the responsibility of leaders to effectively and efficiently allocate
resources, including as money, people, and time, to achieve the goals of the organization.
• Accountability: Within the organization, leaders create a system of accountability.
Expectations are defined, progress is tracked, and accountability for team members' and
individuals' actions and outcomes is ensured.
• Risk management: Executives identify hazards and create plans to reduce them. They are
in charge of managing any dangers to ensure the organization's long-term viability.
• Crisis management: Effective leadership is essential in times of crisis or uncertainty.
Effective leaders maintain consistency, take on difficult decisions, and guide their teams
through difficult circumstances.

Leadership styles

The distinctive tactics and techniques that people in positions of leadership use to influence,
direct, and communicate with their teams or organizations are referred to as their leadership
styles. There is no one-size-fits-all approach to leadership; instead, it depends on the
personality of the leader, the culture of the business, and the particular scenario or setting.
These approaches can have a big impact on how a team works and how well a company does
in general.

Different leadership philosophies exist, each with unique traits, benefits, and downsides. These
leadership philosophies can range from autocratic and directive—where leaders make
decisions on their own—to democratic and participative—where leaders consult with their
team before reaching a decision. Additionally, while some leaders adopt a transactional style,
stressing business as usual, others adopt a transformational approach, inspiring and motivating
followers to accomplish beyond their initial capacities.

Understanding leadership styles is important for both leaders and organizations because it
enables them to choose the best strategy for diverse teams and scenarios. To produce the best
results, the leadership style chosen should be in accordance with the organization's objectives
and guiding principles as well as the requirements and preferences of the team. In the end,
leadership approaches are crucial in determining the company culture, encouraging innovation,
and promoting success.

Different types of leadership styles

• Transformational Leadership:
• Description: Transformational leaders are visionaries who inspire and motivate their
teams to achieve exceptional results. They set a compelling vision, communicate it
effectively, and encourage creativity and innovation. They often lead by example and
demonstrate a deep commitment to the organization's mission and values.
Transformational leaders empower their team members to take ownership of their
work and drive change within the organization.
• Example: Steve Jobs, co-founder of Apple Inc., is a classic example of a
transformational leader. He had a clear vision for Apple's products and was known for
his relentless pursuit of innovation. His ability to inspire his teams led to the creation
of groundbreaking products like the iPhone and iPad.
• Autocratic Leadership:
• Description: Autocratic leaders make decisions independently and have a high degree
of control over their teams. They often expect strict adherence to their directives and
closely monitor their team's work. Autocratic leadership can be effective in situations
where quick decisions are needed or during crises.
• Example: Elon Musk, CEO of Tesla and SpaceX, is known for his autocratic
leadership style. He is deeply involved in decision-making processes and has a strong
influence on the direction of his companies. His hands-on approach is evident in his
close management of SpaceX's ambitious space projects.
• Laissez-Faire Leadership:
• Description: Laissez-Faire leaders take a hands-off approach and allow their team
members to make decisions independently. They provide support and resources but
give their employees a high degree of autonomy to manage their work. This style is
effective when team members are experienced and capable of self-management.
• Example: Warren Buffett, the chairman and CEO of Berkshire Hathaway, is often
cited as a laissez-faire leader. He trusts his subsidiary managers to run their businesses
independently and only intervenes when necessary. His leadership style allows his
subsidiary companies to maintain their autonomy.
• Transactional Leadership:
• Description: Transactional leaders focus on structured interactions with their team
members. They set clear performance expectations, establish rewards and
consequences, and manage through a system of incentives and penalties. This style is
effective in organizations that require consistency and accountability.
• Example: Jack Welch, the former CEO of General Electric (GE), is a well-known
transactional leader. He implemented a rigorous system of performance evaluation
and differentiated rewards for employees, fostering a culture of accountability and
continuous improvement at GE during his tenure.
• Democratic Style

Democratic leadership, often referred to as participatory leadership, is a type of

leadership in which the leader actively incorporates team members or subordinates in
 decision-making processes. It promotes open communication, teamwork, and shared
decision-making, which gives team members a sense of empowerment and ownership.
This strategy promotes a more inventive and inclusive workplace culture and
values various points of view. Democratic leaders solicit suggestions and
feedback from their team, pay attention to other points of view, and make
choices together, which can result in higher levels of group involvement,
motivation, and problem-solving. This leadership approach works especially well
in circumstances where finding creative ideas, achieving consensus, and
employee empowerment are crucial.

Microsoft CEO Satya Nadella is an example of democratic leadership in the business

world since he actively involves staff in decision-making and promotes an open-
minded, creative culture. He supports open communication, values the different
viewpoints in the workplace, and gives workers the freedom to own their work.
Relationship between leadership style and organizational structure.

An organization is shaped and influenced by the relationship between leadership style and
organizational structure. Organisation’s structure is said to be determined by its leadership style
as both are inextricably linked. The finest results are attained when both are in alignment and
a strong relationship is established.

Two critical aspects that might impact an organization's performance are leadership style and
organizational structure. Leadership style influences decision-making, motivation and impacts
the overall organizational culture. Whether the leadership style is autocratic or democratic
style, it impacts how workers interact with their job responsibilities and fellow colleagues. In
contrast, organizational structure creates a foundation within which tasks are assigned to
employees, flow of communication and responsibility is formed. An organization's structure,
whether hierarchical, flat, or matrix, affects its operational efficiency and adaptability to the
VUCA world. When an effective leadership style is in alignment with the right organizational
structure then the synergy between them creates employee satisfaction, innovation and
ultimately achieve organizational goals and growth.

Alignment of Leadership style and organizational structure can help an organization

flourish:

• Clarity in work: When in alignment, there is greater clarity in work, roles and responsibility.
This clarity reduces chances of confusion regarding what is expected out of each individual
employee and promotes overall organization’s coherence.
• Communication: Communication flow is enhanced as both the leadership style and
structure facilitates effective communication channels for everyone. Leaders are able to
 convey their visions and missions clearly, while employees feel a sense of comfort which
helps them to share their concerns and ideas.
• Employees satisfaction: A harmonious alignment leads to create a sense of belongingness
and gives employees a purpose to contribute to their organization’s goals and missions.
When they see their leaders practicing what they preach and that fits the organizational
structure, they are more likely to feel motivated and engaged.
• Decision-Making: Leaders may make informed judgements that are consistent with the
organization's goals, and workers at all levels can engage in making decisions, resulting in
overall better decision making.
• Efficiency and Effectiveness: An organization that matches its leadership style with its
structure is believed to operate more efficiently that can result in improved productivity
and effectiveness.
• Strategic Implementation: The smooth implementation of a strategy plan is made possible
by alignment. Because the organization's structure supports and encourages strategic
implementation, leaders can successfully lead their teams towards accomplishing the goals
of the organization.

Leadership style and organizational structure are two indispensable parts of any organization
as both are said to be intertwined with each other. For an organization to flourish in the long
run it is crucial to maintain a right balance between them.

8. Organizational culture

The set of common values, beliefs, attitudes, and behaviours that shapes how employees
interact with one another, their clients and customers is known as organizational culture. It can
be referred to as an organization’s personality which determines how things are to be done.

Organizational culture greatly affects employee engagement, satisfaction, productivity, and

retention. If appropriate culture is recognised and established then top talents can be attracted
and retained, morale can be raised in the workplace, and customer service may be enhanced.
On the other hand, a bad culture can result in poor productivity, high staff turnover rate and
displeased customers.

It takes dedication, careful planning, implementation, constant efforts from all levels of the
organization to create a positive organizational culture.:
• Define clear mission and vision

To develop a clear set of values that are able to justify what the organization is all about is
always the first step towards creating a healthy culture. These written values should then be in
alignment with the organization’s mission and vision with proper communication.

• Lead by example

Leaders play an important role in creating the culture. Leaders should be able to lead by
examples which should reflect their behaviours, attitude and values they expect their employees
to possess. While demonstrating transparency, accountability and integrity in their actions and
decision-making processes.

• Empowerment of employees

Allowing employees, the freedom and authority to decide within the parameters of their jobs
will seed a sense of accountability and ownership. Leaders can facilitate employees with the
information, tools, and training they need to complete their tasks successfully while
encouraging an openness to continuous learning and growth of employees.

• Recognize and reward

An organization should create a system for recognizing and rewarding exceptional performance
by employees. This can involve monetary rewards, promotions or appreciation letters.
Recognizing and acknowledging not only individual but also team efforts can increase
motivation and pride.

• Creating a healthy work environment

Creating a healthy and collaborative environment can provide employees with a platform to
voice their concerns and innovative ideas and encourage open communication and feedback.
Healthy work environment can lead to a healthy work-pace and work life balance to show their
employees that the organization is concerned with their overall health and wellbeing.

• Consistency and Patience

It takes time to lay a strong foundation similarly a healthy organizational culture must be built
consistently and patiently, which takes time. Creating alignment with the organization’s values
and objectives requires ongoing monitoring and perseverance not only by the leader but also
by each and every employee of the organization.

However, cultivating a healthy organizational culture is an ongoing endeavor that requires

commitment and adaptation.

10. Ethics

The moral principles and ideals that direct people and organizations in the business world when
acting and making decisions are referred to as business ethics. It entails deciding what is
morally correct and immoral as well as what is acceptable working behaviour. Honesty,
integrity, fairness, respect, and social responsibility.

Importance of Business Ethics in Corporate Governance

• Reputation and Trust Building: Trust is a virtue that must be maintained among all parties
that are involved, including shareholders, employees, clients, and the general public.
Integrity improves the business's image and authority, which can encourage investor
confidence, consumer loyalty, and a positive perception of the brand.
• Risk Management: Recognizing and mitigating possible risks is made easier with the use
of ethical decision-making and responsible governance practices. Companies can steer
clear of unethical behaviour that could result in dangers to their reputation, finances, or
legal standing by giving ethical consideration to business decisions.
• Employee Morale and Engagement: Employee engagement, loyalty, and morale are all
enhanced by an organization's strong ethical culture. Employees are more likely to be
motivated, productive, and dedicated to the organization's goals when they believe that their
workplace works with integrity and ethical ideals.
• Long-Term Sustainability: Instead of concentrating on immediate advantages, ethical
corporate governance prioritizes long-term sustainability. Businesses may help create a
more sustainable future and long-term value for all stakeholders by taking into account the
social, environmental, and economic effects of corporate actions.
• Engagement of Stakeholders and Accountability: The interests of all parties, including
shareholders, employees, clients, suppliers, and the community, are taken into account
when practicing ethical corporate governance. Companies may develop good connections,
address issues, and make choices that are advantageous to all parties by putting stakeholder
engagement and accountability first.
Ethical leader

• Setting a Clear Vision and Values.

• Promoting ethical decision-making
• Leading by example.
• Encouraging transparency and accountability.
• Empowering and engaging employees
• Building relationships and collaboration.

9. Social responsibility

Social responsibility is the ethical duty of people and organizations to act in ways that are good
for society as a whole. It entails taking into account how one's actions will affect different
stakeholders, such as coworkers, clients, communities, and the environment. Beyond simply
following the law, socially responsible behaviour aims to improve society

Benefits of Social Responsibility

• Gaining more customers

• Recruiting from a wider candidate group
• Getting an advantage over similar businesses
• Creating a positive work culture
• Long term business sustainability

Chapter 6 : Strategic Evaluation And Control

STRATEGIC EVALUATION
Strategic evaluation refers to analyzing the effectiveness and efficiency of the strategic plan.
This involved analyzing the company's strategy to make sure the plans are on track and are
aligned with the mission and vision of the organization.
The process of strategic control involves the following steps:
Setting objectives: The objective must be defined in alignment with SMART, that is Specific,
Measurable, Achievable, Relevant, and Time Bound. The objective must be specific and
achievable.
Key performance indicators: To measure the effectiveness of the strategy we will have to
define key performance indicators, which also help to reflect the critical success factors.
Collecting data: Quantitative data and qualitative data are collected based on the defined key
performance indicators such as customer retention data, sales figures, customer satisfaction,
etc.
Analysing and interpretation:
Based on the collected data we try to understand and analyse whether the strategy is working
as expected. It mainly involves comparing the actuals and expected results. Based on the
analysis, interpret whether or not the set objective is achieved. If not, what is the reason for not
achieving it?
Action: Based on the interpreted data, necessary changes must be made.
Reporting and Reviewing: After making necessary changes the same evaluated results must
be reported to the decision-maker, to maintain transparency. Regular review must be conducted
to maintain the effectiveness and efficiency of the strategy.
STRATEGIC CONTROL
Strategic control is a critical process in the management process. Strategic control simply refers
to identifying multiple ways of strategic implementation by making necessary adjustments to
the changes in internal and external factors to achieve the strategic objective and goals.
The important questions to be answered during the process of strategic control are:
Whether the plan is in place as planned?
Comparing the actuals and expected results and identifying any changes that need to be made?
Therefore it is a crucial process of bridging the gaps and making necessary changes by
comparing the actuals and expected results.
The process of strategic control involves the following steps:
Identify what factors to be controlled: It is important to identify the right evaluation
elements that hold a direct relationship with the mission and vision of your organisation's goals.
Defining standards: The qualitative and quantitative standards control standards such as
return on investment, return on equity, customer satisfaction, etc. The managers must evaluate
past, present, and future actions, this helps to understand the progress and evaluate the goals.
Analysing the performance: It is important to analyse and measure the performance regularly
to ensure that the set standards are met.
Comparing and analysing the performance deviation: At this stage, the managers will
compare the actual performance and the expected performance, to identify the performance. If
there is a deviation then will have to analyse the reason for not meeting the expected
performance standards.
Action: Based on the identified performance deviation we will have to take necessary
corrective actions based on internal or external factors. If it is caused due to internal factors
then managers can take necessary action and sort out the problem. If external factors cause it
the manager will have to take action cautiously and not make the situation worse.
The importance of having strategic control in the organisation is as follows:
• It is important to have strategic control in the organization to measure the performance
now and then to ensure that the strategic plan is going into corrective action.
• It enables the organisation to learn from past mistakes and implement them in future
actions.
Role of Organisation system in Strategic Evaluation:
Organization system plays an important role in the Evaluation process in Strategic
Management. It provides the framework for collecting,analyzing and interpreting the data to
assess the effectiveness of strategic plans and implementation. The following systems are
important:
1. Information System
2. Control System
3. Appraisal System
4. Motivation System
1. Information system: Actual performance is compared to the criteria for evaluation.
Performance is measured using reports that are provided by the Information System. In
financial analysis, managers would heavily rely on using information systems to give managers
relevant and timely data to analyze performance and strategy and take remedial actions.
Eg: Walmart is the world’s largest retailer, in about 27 countries. It uses a variety of
information systems to support the strategic evaluation process.
One of the key information that it uses is its Enterprise Resource planning(ERP)which
includes all the data regarding sales, inventory, supply chain management and customer
relationship management. This data is again used to track progress towards strategic goals and
identify the areas of improvement. Another system that Walmart uses is its Business
Intelligence(BI) system. This allows the company to analyze the data drawn from ERPsystem
and other to identify the trends and patterns. This helps in making informed decisions about
pricing,product selection and store operation. It also uses a Customer relationship
management(CRM) system that tracks the customer preferences and interactions. This
information is used to improve the customer experience and target marketing campaigns.
Walmart uses a Supply chain Management system to track the movement of goods through its
supply chain. This helps to optimize the supply chain and reduce the costs.
2. Control System
The control system is the core of any assessment process and is used to set the standards,
measure the performance, analyze the deviations and take corrective actions.
Eg: Amazon is the world’s largest online retailer. The company is known for its wide selection
of products,low prices and fast delivery. It uses a variety of control systems to support its
control systems to support strategic evaluation processes.
One of the key control systems that Amazon uses is its Operational metrics system. This
includes tracking of sales, customer satisfaction,employee productivity and product quality.
Another key control system that it uses is a financial reporting system to track revenue,expense
and profit. This is to ensure that it is on the right track to achieve its financial goals and to
identify the areas of improvement where cost can be reduced without compromising on the
quality of the product. Amazon uses a risk management system to identify and mitigate the
risks to the business. Amazon also uses Compliance system to ensure that the company is
complying with the laws and regulations.
3. Appraisal System
The appraisal system examines the performance. When managers' performance is evaluated,
their contribution towards organizational goals is also quantified.
Eg: Google is one of the world’s most successful technology companies. It is known for its
innovative products like android operating system,Search engine and Gmail email service. It
uses a variety of appraisal systems to support its strategic evaluation process.
One of the key appraisal systems that Google uses is its performance management system. This
evaluated employees based on their performance against their clear and measurable
goals.Employees are given regular feedback on their performance and are encouraged to
develop and grow. Another key appraisal system that google uses is its 360 degree feedback
from their managers,peers and direct reports. This helps in evaluating employee performance
and identify the areas of improvement. This helps in reducing bias and ensures that employees
are fairly evaluated.
It uses a peer review system to evaluate the performance of its software engineers. Google also
uses a self assessment system to evaluate their own performance. And identify areas of
Improvement.
4. Motivation System
The motivation system is the primary goal to motivate managers and employees to strive
towards organizational goals by inducing strategically desired behavior.
Eg: Netflix is a global leader in streaming entertainment.. It is known for its wide selection of
movies and TV shows,its personalized recommendations and affordable pricing. It uses a
variety of motivation systems to support its strategic evaluation process.
One of the key motivation systems that netflix uses is its performance-based compensation
system. Under this system, employees are compensated based on their individual performance
and the company’s overall performance. This incentivizes employees to achieve the company’s
performance. Netflix employees are given stock option benefits to its employees and the value
of it is tied to the performance of Netflix’s stock. This motivates employees to focus on
achieving goals. Netflix offers employees a variety of perks and benefits such as unlimited
vacation and flexible work arrangements.
ESTABLISHING STRATEGIC CONTROLS -
OPERATIONS CONTROL AND STRATEGIC CONTROL
Setting up strategic controls is a core organizational management and economic technique
which acts as a compass pointing the direction of the organization's long-term objectives and
ensuring that it can adapt to a changing environment. Strategic controls act as the road map
which establishes precise goals and creates a plan to reach them. It involves keeping an eye out
for possibilities and risks in the outside environment to make sure the organization is on the
correct route, it also includes frequently assessing the organization's development and checking
its progress. There are two distinct levels of control in management: operational control and
strategic control.
OPERATIONS CONTROL
Operations control focuses on ensuring that daily operations inside an organization are effective
and efficient. It's like checking the business's nuts and bolts every day to make sure everything
is operating as it should. It also guarantees that every component of the business is operating
successfully and efficiently. Operations control helps in keeping track of all the funds that have
been allocated by the company for items like salaries, supplies, and equipment.
This control helps in eliminating overspending or financial emergencies by preventing
bottlenecks and maintaining efficiency by making sure that the product's supply is not
excessively high or low.
STRATEGIC CONTROL :
 Strategic control is concerned with an organization's long-term objectives, overall direction,
and wider picture. It ensures that the organization is on the proper track and can respond to all
the changes in its environment. Strategic control is similar to choosing your destination and
marking it on a map by identifying the organization's long-term goals and what it hopes to
accomplish through analysis that identifies dangers and possibilities in the business sector
ensuring that the organization's finances are in line with its long-term aims. It guarantees the
organization's adaptability to unforeseen changes in the business environment by frequently
assessing the organization's development and checking its progress.

KEY DIFFERENCES BETWEEN OPERATIONAL CONTROL AND

STRATEGIC CONTROL

Parameters For Measuring Performance Qualitative and Quantitative In

Strategic Evaluation And Control
The process of measuring performance in strategic evaluation and control entails evaluating
the efficacy and efficiency of plans and programs that an organization has put in place.
Performance measurement can be carried out using both quantitative and qualitative parameters.
Quantitative parameters measure numerical data, such as market share or financial metrics,
while qualitative parameters evaluate aspects that are difficult to quantify, like employee
morale, customer satisfaction, or brand reputation.
Qualitative Parameters:

1. Customer Satisfaction: Consumers' degree of satisfaction and fulfillment with a business's

goods or services.
 Example: Collecting feedback from customers through surveys and evaluating it to find areas
that need improvement. An online retailer, for example, can ask for comments about how
simple it is to use and how the whole buying experience is on their website.

2. Brand Reputation: The general impression of a brand in the marketplace, taking into account
elements including public opinion, credibility, and brand image.

Example: Keeping an eye on mentions and reviews on social media to learn how stakeholders
and consumers view the brand. One way to gauge how well a tech company's products are
being received would be to monitor online reviews.

3. Employee Morale and Engagement: The degree of contentment, drive, and dedication that staff
members have for their jobs and the company.

Example: Identifying elements influencing morale and obtaining information on employee

satisfaction through the use of exit interviews and employee engagement surveys. To gauge
employee involvement and determine ways to raise workplace satisfaction, for instance, the
HR department might administer questionnaires.

4. Stakeholder Relationships: The caliber and durability of connections with partners, investors,
and members of the community, among other stakeholders.

Example: surveying or interviewing stakeholders on a regular basis to find out how they feel
about the organization's procedures and communications. For example, a non-profit
organization may interact with its volunteers and funders to find out how satisfied and involved
they are.

Quantitative Parameters:

1. Financial Metrics: Revenue, profit margins, return on investment (ROI), and cash flow are
important financial metrics that show the state of the company's finances.

Example: Examining quarterly financial reports to monitor the increase of revenue,

evaluate profitability, and contrast the financial performance of various time periods. To
assess the effectiveness of cost-cutting measures, a manufacturing company could monitor
its profit margins.
2. Market Share: The portion of the market share or income that a business has for a certain good
or service.

Example: Comparing the company's market share to that of its rivals by analyzing market
research data. To evaluate its market share in the mobile phone industry, for instance, a
telecom company would examine market data.

3. Customer Retention Rate: The proportion of clients that an organization keeps over a given
length of time.

Example: Finding the customer retention rate involves calculating and comparing the number
of customers at the beginning and conclusion of a given time. A software provider that tracks
the number of users who renew their subscriptions annually.

4. Operational Efficiency Metrics: Metrics that indicate how efficiently a company operates, like
delivery time, production cycle time, and inventory turnover.

Example: Examining the duration required to complete consumer orders from the point of order
to delivery. After a consumer place an order, a logistics provider may monitor the time it takes

A balanced strategy that takes into account both qualitative and quantitative factors is necessary
for effective strategic evaluation and control. To get a thorough grasp of performance and make
well-informed strategic decisions, it is critical to choose the most pertinent and significant
indicators based on the goals of the company and the sector.

Diversification
It is the strategy used by the businesses to enter into new markets or adding new products or
services to the existing business portfolio. The main aim of this strategy is to spread out the
risk by depending on a single product, service or market for generating revenue. This allows
the company to expand and explore new opportunities while potentially achieving more stable
and sustainable growth.
For instance: Imagine a company that is into manufacturing only one product that is mobile
phones. If the demand for the mobile phones decline due to changes in customer preferences
or due to market saturation, whole profitability of the company will be severely affected.
Therefore, the company might choose to opt for diversification and enter into a new market or
bring in a new into exi stence. Say they started manufacturing smartwatches, so that if one
market segment that is mobile phones faces challenges then that could be compensated by the
stable income generated by smartwatches.
This strategy helps in eliminating the risks associated with the reliance on a single market or
product. In addition, it is also important to conduct in depth market research and evaluate the
viability of the new business.
Levels of Diversification
Diversification involves various levels and can occur in different types as follows:
Corporate Level Diversification
This is the highest level of diversification and involves the diversification of the entire portfolio
of the organization by entering into new industries, markets or product lines. It aims to enhance
the company’s overall performance and reduce the risk by not depending solely on one product
or business. It refers to expanding into new business sectors or businesses that are different
from the existing business segments.
For instance, General Electric which is a well-known conglomerate that operates in various
industries such as healthcare, Transportation, aviation, and energy. General Electric’s
diversification strategy helped them to increase their profitability and mitigate the risks.
In 2010, when the GE’s energy industry was facing difficulties, their healthcare business was
able to offset some of the company’s losses.
Business- Level Diversification
This diversification refers to expanding within a particular market segment or industry
involving targeting distinct market segments, launching new products, or entering new
distribution channels. The main goal is to expand the customer base within the industry the
company already operates in or increase the company’s market share. In addition, it refers to
entering new geographic markets, offering a broader range of products or services, or serving
different customer segments.
For instance, Amazon, which initially started as an online bookstore, expanded into a giant of
global e-commerce such as they currently offer a wide range of products that is from electronics
to groceries which allowed the company to attract a wide base of customers.
Product/Service-Level Diversification
Product/Service level diversification refers to the expansion of products or services offered
within a particular market or industry. In other words, it involves expanding within a product
line. It includes introducing updates, providing modified products, or improving
complementary products which cater the same target market. The primary aim is to increase
the sales from the same product by providing a wide range of choices to the customers.

For instance, Apple is into product/service level diversification that is introducing

revolutionary products such as iPad, iPhone, iPod, and iTunes. Furthermore, they developed
macOS and iOS as operating systems which diversified their service offerings. Their
diversification is revolving around enhancing customer loyalty, attracting a huge base of
customers and innovation.
Market-Level Diversification
It refers to targeting new customer segments and markets for the existing products or services
which includes expanding into different demographics, regions and customer types. The main
goal is to tap into additional market opportunities and expand its customer reach.
For instance, Airbnb started as a platform for people to list, discover and book accommodations.
After diversifying their market by introducing “Experiences” where travelers can book a
variety of events or activities hosted by the locals. This expanded their offerings within the
hospitality and travel industry and their customer base.
Geographic-Level Diversification
It is about entering new geographic markets, whether locally, nationally, internationally. It
involves diversifying operations and targeting customers in different locations. The primary
aim is to reduce the reliance on the single market and capitalize on the potential of untapped
markets.
For instance, McDonald’s, initially started its business in USA, they diversified their operations
to various countries across the world, through geographic diversification. Furthermore, they
also adapted their menu according to the different cultural preferences while maintaining their
core brand.
Types of Diversification
Related Diversification
It refers to expanding into new products or services that are identical or complementary to the
existing one in a company. It is very advantageous for companies to leverage their existing
skills, knowledge and resources to increase their revenue line by entering new markets.
Unrelated Diversification
It involves entering an industry or business that is not related to the existing business. It helps
to spread the risk across different industries and markets.

Horizontal Diversification
This diversification occurs when a company expands its offerings (product or services) into
new segments that are not related to the existing offerings but still within the same industry.
Vertical diversification
It refers to diversifying into different stages of the same industry’s value chain. Different stages
refers to moving closer to raw materials which constitutes backward integration or moving
closer to end consumers or retail which constitutes forward integration.
Symptoms of Malfunctioning Strategy
In the business world, a malfunctioning strategy is when a company's approach or plan for
strategy is not accomplishing its goals as intended and could have unfavourable effects.
Tropicana Packaging Redesign, for instance
Tropicana updated their packaging in 2009. They unveiled a brand-new, sleek, and
contemporary orange juice package. The old packaging, which the clients were accustomed to,
was completely different from the new one. Customers found it extremely difficult to identify
the product on the store shelf as a result, and they thought the new packaging was cliched and
unoriginal. The sales began to decline sharply. Tropicana returned it to its original packaging
after realising the effect it was having on sales and brand perception.
Symptoms:
1. Declining market share
Among the most significant signs of the malfunctioning strategy is this one. A declining market
share suggests that rivals are becoming more competitive. For example, Yahoo led the market
in online search and online advertising in the early stages of 2000. After that, they were unable
to redevelop their search engine, and as a result, Yahoo started to lose market share to Google.
Yahoo's market share decreased as a result of Google's user-friendly search engine and focused
advertising tactics drawing customers and advertisers away from Yahoo.
2. Financial Issues
Continuous financial losses, declining profits, or cash flow problems can be indicative of a
malfunctioning strategy. Example: BlackBerry BlackBerry, once a market leader in
smartphones, ran into financial troubles as its share of the market shrank. The company lost its
competitive edge as a result of its inability to adjust to the development of touchscreen
cellphones. Reduced profits and sales were clear indications of a failed strategy which was
unable to adapt to shifting consumer demands.
3. Lack of customer satisfaction:
Customer complaints, decreasing customer loyalty, or negative feedback can indicate that a
strategy is not fulfilling the needs of the customer. For instance, Customer Service Issues at
United Airlines A series of incidents involving mistreatment of customers and poor service
resulted in significant opposition and a public relations crisis for the airline. The unfavourable
sentiments of the public and widespread dissatisfaction were unmistakable indicators of a
broken strategy regarding the quality of the customer experience and service. The airline was
forced to implement significant changes to resolve these problems and win back the trust of its
customers.
4. Ineffective Resource Allocation:
A misallocated approach might result in inefficiency and financial difficulties. An example of
this would be investing excessively in areas that don't contribute to success. For example
Blockbuster, During the time when digital streaming and online rentals were becoming more
popular, Blockbuster made significant investments to maintain its network of physical rental
stores. The company's inefficiency in adjusting to shifting customer tastes and its financial
difficulties were made worse by this misallocation of resources.
5. Missed Opportunities:
A strategy that is not progressive may fail to take advantage of new chances or adjust to
developing trends. For example, Kodak.
Despite of having early photography patents and technology, Kodak was reluctant to adopt
digital photography. As digital cameras and smartphone photography gained popularity, the
company's failure to adopt digital photography and create a competitive digital environment
eventually led to its downfall.

Critical factors of strategic evaluation and control:

1. Key Performance Indicators (KPIs): Key Performance Indicators (KPIs) are pivotal
metrics that organizations use to evaluate their progress towards strategic objectives.
These should be specific, measurable, achievable, relevant, and time-bound (SMART).
Sources for understanding KPIs include management literature such as "Performance
 Management: Measuring, Managing, and Improving Performance" by Herman Aguinis
and relevant academic journals in management and performance measurement.
2. Performance Monitoring: Performance monitoring involves continuous assessment
to track progress in real-time. Utilizing real-time data offers advantages in timely
decision-making. Reputable sources can be found in articles and journals related to
performance monitoring in business, operations management, or industry-specific
literature.
3. Data Collection and Analysis: Gathering relevant data from various sources and
analyzing it for actionable insights is critical. Understanding data analysis and statistics,
data science, or research methodology in business is essential. Books and articles
covering these topics are valuable sources.
4. Comparative Analysis: Comparative analysis helps organizations compare actual
performance with planned objectives, identifying deviations and variances. Literature
on strategic analysis, competitive strategy, or strategic management provides insights
into this aspect. Access to academic papers and publications related to strategic analysis
is essential.
5. Feedback and Learning Loops: Establishing feedback mechanisms is vital to gather
input from stakeholders, enabling improvements. Sources like management and
leadership books discussing feedback mechanisms, organizational learning, and
employee engagement offer valuable insights.
6. Strategic Reviews and Audits: Conducting regular strategic reviews and audits allows
organizations to evaluate effectiveness and efficiency. Literature on auditing, strategic
management, and academic papers are relevant sources for understanding this aspect.
7. Corrective Actions and Adjustments: Implementing corrective actions based on
evaluations is crucial for aligning strategies with changing circumstances. Change
management books and literature on adaptive strategies provide insights into making
necessary adjustments.
8. Alignment with Organizational Culture: Aligning evaluation with the organizational
culture and fostering accountability is essential. Understanding organizational culture
through relevant literature and leadership articles is beneficial.
9. Communication and Transparency: Open and transparent communication is vital for
stakeholder engagement. Books on communication and leadership, along with
academic papers on organizational communication, are valuable sources.
 10. Resource Allocation Optimization: Efficiently utilizing resources and aligning them
with strategic priorities is key. Books on resource management, financial management,
and articles in relevant journals can provide insights.
11. Risk Assessment and Management: Evaluating and managing risks effectively is
crucial for strategic success. Accessing risk management literature, academic papers on
risk assessment, and publications from reputable risk management organizations
provide valuable information.
12. Technology Utilization: Leveraging technology for efficiency and strategic advantage
is crucial. Books on technology and innovation management, academic papers on
technology utilization, and industry-specific technology journals are important sources.
13. Adherence to Legal and Ethical Standards: Ensuring compliance with legal and
ethical standards is imperative for organizational credibility. Understanding legal and
ethical guidelines through relevant literature, books on business ethics, and legal
journals is essential.
14. Leadership and Accountability: Assigning responsibility and fostering accountability
are crucial aspects of strategic evaluation. Books on leadership, accountability in
organizations, and academic papers in leadership and management journals offer
valuable insights.
15. Long-Term Perspective: Considering the long-term implications of strategies is vital.
Understanding strategy formulation through relevant literature, books on future
planning, and publications focused on strategic foresight are valuable sources.

Barriers to Strategic Evaluation and Control:

Barriers are obstacles or challenges that any organization might encounter when assessing the
effectiveness of its strategies. These barriers should be identified and addressed for effective
strategic management.There are two main factors which contribute to these barriers. They are:
1. Motivational problems
2. Operational problems

1)Motivational problems:

This is psychological. The manager or top executives might seek the motivation to review the
strategies rigorously after the available results.
 Motivational problems are subdivided into two:
1. Psychological barrier

I. Psychological barriers:

• Top management which is responsible for formulating and implementing strategies

might display reluctance to evaluate the strategy due to the psychological barrier of
accepting their mistakes. They might fear negative consequences or damage to their
reputation.
• Even if something goes wrong in the strategy formulation, the management blames the
operating management and tries to find the mistakes in the stage of strategy
implementation. This is generally because of their over-consciousness about their sense
of achievement.
• This over-consciousness might prevent the top management from assessing whether the
correct strategy has been chosen or implemented. This could lead to a delay in taking
correct alternative decisions and ensuring the success of the organization.
• This takes place more in the case of retrenchment strategy.
• For example- A manager who has invested a significant amount in a particular
advertising campaign might hesitate to acknowledge the mistake of failing the strategy
due to the negative perception of damage to their pride.

II. Lack of a direct link between rewards and performance:

• The lack of a direct link between performance and rewards is another problem for top
management in motivation to review the strategy. Motivation is a huge source for managers
to review the strategies, but this cannot always be achieved. In such situations, it can lead
to a lack of motivation to evaluate the strategy.
• For example- This is more apparent in the case of family-owned businesses where the top
positions may be reserved for the family members irrespective of their performance.
Professional managers have been seen as outsiders and are not rewarded suitably to
evaluate the correctness of the strategy.
• The family members in those organizations are prone to the psychological barrier of not
admitting their mistakes.
 2)Operational problems:
· Though the managers are willing to assess the strategy, the problem of strategic evaluation and
control is not yet over. The evaluation of strategy is nebulous which means that many factors
are not clear. These are involved in the area of determining the criteria, performance
measurement, and determining corrective actions. All these factors have a crucial role in
strategic evaluation and control.

I. Nebulous nature of strategic evaluation:

• The strategy evaluation process is vague, it leads to difficulty for managers in analyzing
where to start and how to proceed.
• For example- choosing the suitable criteria for strategy evaluation might be complex as
it involves determining the appropriate metrics and gathering real-time data.

II. Performance management:

· It might be difficult to gauge how well a strategy is working. It involves collecting and analyzing
real-time data which makes the strategy evaluation process more challenging.

• For example: An automobile company might find it difficult to assess the performance
of its new subsidiary company as it involves determining the key measurement to
evaluate the strategy that is sales, customer satisfaction or ethical concerns.

III. Determining the right criteria:

• Selecting the right criteria to evaluate the strategy is substantially important. As it
involves careful assessment of the factors. The final decisions taken are based on the
evaluation criteria.

IV. Taking corrective actions:

• Identifying the error is only part of the strategy evaluation process and taking corrective
actions to address those strategies is crucial for effective strategy evaluation and control.
• For example- A FMCG company realizes that it is lacking quality in its products. In
such a case it has to determine whether to modify or discontinue the manufacturing
formula. Making the right decision is crucial and can be challenging.
 Chapter 7 : Organizational Development and Change

Turnaround Strategy

A business turnaround is like giving a struggling company a fresh start. It involves making
changes to shift the business from losing money to making a profit and from a declining path
to a path of progress. These changes include taking positive actions in various areas such as
managing finances, marketing, and increasing profitability. The strategies developed by
management to improve the company's declining performance are known as a "Turnaround
Strategy." This strategy is designed to enhance the company's efficiency and productivity,
ultimately aiming to increase its overall profitability. The primary goal of a turnaround is to
improve the company's performance. It means changing the company's direction from going
downhill to moving upwards, from being unprofitable to becoming a profitable enterprise.

INTEGRATION
Meaning
Integration occurs when these business units collaborate to achieve specific, well-defined goals
or objectives. Such integration can occur between firms operating within the same industry or
across different industries.
Types of Integration

1. Horizontal Integration

Under this method, business firms from the same type of business or producing same
product come together to form a group .It is an integration of two or more units engaged in
the same activity. Adani's acquisition of Ambuja and its subsidiary ACC Ltd, both major
players in the Indian cement industry, exemplifies horizontal integration as it enables Adani
to expand its presence and control over the sector by combining multiple companies with
similar production capabilities under its ownership. The main objectives underlying
horizontal integration are

a) to reduce the degree of competition and to improve the position in the market

b) to follow common policies relating to production, distribution and pricing so as to control

market

c) to secure benefits of large scale production and reduce cost of production

d) to acquire control over market and thereby, make higher profits

e) to adjust supply according to demand in the market by adjusting or regulating production

of goods

2. Vertical Integration

This is also called as process or industry integration. Under this method business units from
the same industry but carrying on different processes or product come together to form a
group to acquire control over all stages of production and distribution of goods. It is a type
of integration in which a firm combines with another firm that supplies raw materials to it
or some components of its finished products. Vertical integration may be backward or
forward

a. Backward Integration

Backward integration is a business strategy where a company moves upstream in its supply chain
by acquiring or merging with its suppliers. This allows the company to gain more control over its
supply chain, reduce costs, and improve quality. Tesla is an electric vehicle manufacturer that has
been investing heavily in backward integration in recent years. In 2021, Tesla acquired Maxwell
Technologies, a company that develops and manufactures dry electrode coating technology for
batteries. This acquisition gave Tesla more control over the production of its batteries, which are a
key component of its electric vehicles.
 b. Forward Integration

Forward integration is a business strategy where a company moves downstream in its supply
chain by acquiring or merging with its distributors or retailers. This allows the company to gain
more control over its distribution channels and get its products closer to the end customer.
Walmart is a retail giant that has been using forward integration to gain a competitive
advantage. Walmart has its own logistics network, which allows it to transport goods from its
suppliers to its stores efficiently and cost-effectively. Walmart also has its own distribution
centers, which allow it to store goods close to its stores and to get them to customers quickly.
Diversification strategy
Diversification means venturing into new streams. As the name suggests, diversification
strategy is all about planning and implementing strategies that relate to diversifying an
organization's business operations.
An organization may use this strategy to mitigate risk, especially from a specific industry. For
example, suppose an organization has diversified its business into the pharmaceutical and
airline industries. In that case, the rising oil price can lead to negative returns for the airline
business, but the company can compensate it with returns from the pharmaceutical business.

A Diversification Strategy is also suitable if an organization wants to expand its business into
new markets, increase its profits, or gain a competitive advantage.

Diversification Strategies can be of four types:

Conglomerate Diversification

Under Conglomerate Diversification, an organization diversifies into an unrelated product or

industry with no direct relationship with its current business.

Example: General Electrics has diversified itself into different sectors like finance, healthcare,
energy, and aviation, to list a few. These sectors are unrelated to each other.

Horizontal Diversification

Under Horizontal Diversification, an organization produces products that are not similar to its
current products but can be categorized under the same industry. The products would be
synergetic. They usually try to cater to the same customer base.
Example: Samsung's core business is manufacturing smartphones; however, it has diversified
itself into the segment of smart home appliances. Although smartphones and smart home
appliances are not directly related to each other, they can be put under the same industry.

Concentric Diversification

Under Concentric Diversification, an organization produces products similar to its existing

products and uses the same technology and expertise that it already possesses to manufacture
the new product. Organizations usually go for this strategy to develop new products that suit
the changing needs and requirements of the customers.

Example: Coca-Cola not only sells soda, but it also sells bottled water, energy drinks, and
juices. These products are similar and do not require a different technology or expertise for
manufacturing.

Vertical Diversification

In this type of diversification strategy, the company diversifies into different stages of the value
chain of that industry. This can be beneficial for streamlining the supply chain and reducing
the cost.

Example: Zara, a fashion retailer, has its own manufacturing units and distribution system. It
helps Zara have more control over responding to the changing trends in fashion and enhancing
their supply chain.

Joint Venture
A business partnership among two or more two parties to jointly work on a specific project and
to have a share in the loss and gain on that project is known as a Joint Venture. They decide to
share their resources to accomplish a common objective.
A Joint Venture can be a helpful strategy if the organization wants to tap into a new market or
develop a new product, as they can share their resources, technology, and risk with the other
party. Usually, organizations opt for a joint venture strategy when they believe that
collaboration with other organizations would help them achieve their goals more effectively
than doing it individually. A Joint Venture also allows the parties involved to leverage the
strengths of each other for mutual benefit without the need for a complete merger.

While going for a joint venture, it is essential to confirm the objective for which it is being set
up. Other important information that needs to be investigated while setting up a joint venture
includes the contributions from each party involved in the joint venture and how the profit and
loss will be distributed.

The most common forms of joint venture are as follows:

1. Joint Ventures Based on Projects: In this type of joint venture, the parties come together
to carry out a specific project, after which the joint venture is dismantled.
2. Functional-Based Joint Venture: This type of Joint Venture is undertaken to leverage
the functional strengths of the parties involved for mutual benefit.
3. Horizontal Joint Venture: This is a joint venture where businesses of the same industry
or exact nature join for mutual purposes.
4. Vertical Joint Venture: This joint venture is where businesses that come under the same
value chain join for a mutual purpose.
5. Contract-Based Joint Venture: In this type of joint venture, a contract is signed, which
consists of all the terms and conditions on which the parties involved in the joint venture
will work.
6. Equity-Based Joint Venture: This type of joint venture in which the businesses join to
form a new company.
Advantages and Challenges of Entering Into a Joint Venture

Advantages:

• Access to new markets and distribution networks. A joint venture can give a
company access to new markets and distribution networks that it would not be able to
reach on its own. This can be especially beneficial for companies that are expanding
into new international markets.

• Increased capacity. A joint venture can help a company to increase its capacity by
combining the resources and expertise of both partners. This can be especially
beneficial for companies that are growing rapidly or that are launching new products
or services.
• Shared risks and costs. A joint venture can help to reduce the risks and costs
associated with new ventures. This is because the partners are sharing the risks and
costs involved.
• Access to new knowledge and expertise. A joint venture can give a company access
to new knowledge and expertise that it would not have on its own. This can help the
company to develop new products and services, improve its operations, and become
more competitive.
• Improved brand awareness. A joint venture can help to improve the brand
awareness of both partners. This is because the two brands will be associated with
each other.

Challenges
Joint venture can be a complex and challenging process. Some of the challenges that
companies may face include:

• Finding the right partner. It is important to find a partner who has complementary
strengths and weaknesses, and who shares the same vision and goals for the joint
venture.
• Negotiating the joint venture agreement. The joint venture agreement should clearly
define the roles and responsibilities of each partner, as well as the financial terms and
exit strategy.
• Managing the joint venture. It is important to develop effective communication and
decision-making processes, and to resolve any conflicts that may arise between the
partners.
• Integrating the businesses. This may involve combining cultures, systems, and
processes.
• Measuring success. It is important to develop clear and measurable goals for the joint
venture, and to track progress towards those goals on a regular basis.
Amazon's joint venture with Whole Foods is a good example of how companies can use joint
ventures to achieve their strategic goals. Amazon was looking to expand into the grocery
market, while Whole Foods was looking to improve its operations and compete with other
grocery chains.The joint venture has benefited both companies. Amazon has gained access to
Whole Foods' physical stores, which has helped it to expand its grocery business. Amazon
has also been able to use its expertise in logistics and technology to improve Whole Foods'
operations and reduce costs.Whole Foods has benefited from Amazon's investments in
technology and logistics. Amazon has also helped Whole Foods to lower prices and offer a
wider selection of products.

Strategic Alliance
An agreement between two or more independent parties to collaborate to realize a common
objective is known as a strategic alliance. A commercial connection enables businesses to pool
their resources, knowledge, and skills to achieve a competitive edge. Companies in the same
industry or from separate sectors might develop strategic partnerships.
Although there are many various kinds of strategic partnerships, some of the more popular ones
are as follows:

● Joint ventures are independent legal entities with at least two other corporations as co-
owners.
● Technology transfer agreements: These agreements enable businesses to exchange
technology and knowledge.
● Marketing and sales alliances enable businesses to pool their sales and marketing efforts
to reach a larger audience.
 ● Research and development alliances: Through these collaborations, businesses may
collaborate on R&D initiatives to launch innovative goods and services more swiftly.

The following advantages of strategic alliance for the firms involved:

● Access to new clients and markets: Companies that could not develop into new areas
and attract new consumers on their own might benefit from strategic alliances.
● New products and services: Companies may create new goods and services more
rapidly and effectively with strategic partnerships than they could.
● Cost savings: By utilizing one another's resources and experience, strategic partnerships
may help businesses save money.
● Increased competitive advantage: Through strategic partnerships, businesses may use
their partners' benefits and achieve a competitive edge.
However, strategic alliances also come with some challenges. Some of the most common
challenges include:

● Cultural differences: Strategic alliances between businesses from various nations can
be difficult due to cultural differences. For instance, companies from other countries
may have multiple communication methods, business procedures, and work cultures.
● Misaligned goals: When forming a strategic partnership, organizations must have
compatible aims. The association is more likely to collapse if the firms involved have
divergent objectives.
● Lack of trust: Any effective connection, especially strategic partnerships, must be built
on trust. The association has a higher chance of failing if the corporations do not trust
one another.
● Communication challenges: Throughout the partnership, businesses must interact with
one another efficiently. Conflict and misunderstandings can result from communication
problems.
Here are examples of companies that have done strategic alliances

● Google and Apple: To create and market apps for the iPhone and iPad, Google and
Apple have formed a strategic partnership. The effectiveness of this partnership has
allowed both businesses to hold onto their top spots in the mobile industry.
● IBM and Microsoft: To create and market cloud computing services, IBM and
Microsoft have formed a strategic partnership. Both businesses have benefited from
this cooperation in their prominence in the cloud computing industry.
 ● MasterCard and Apple Pay: A strategic partnership between MasterCard and Apple Pay
enables MasterCard users to utilize Apple Pay to make mobile payments. Both
businesses have benefited from this alliance's ability to access new markets and
simplify the purchasing process for consumers

Brand Strategy

A crucial fact of strategic management is brand strategy. It's a long-term plan that outlines how
a company will build and maintain a powerful brand identity that resonates with its target
market and helps it accomplish its broader business goals.
Brand strategy is significant from a strategic management standpoint since it may assist
businesses in achieving their long-term goals and objectives. For instance, if a company wishes
to enter a new market, it must create a brand strategy that would appeal to the market's target
consumers.

6 Steps in brand strategy with a real-life example of Chanel:

1. Specify the goal of your brand.
What is the purpose of your brand? What do you hope to accomplish? What kind of world
effect are you hoping to make?

The mission of the Chanel brand is to "provide timeless luxury experiences and products that
empower women."

2. Determine who your target market is.

Who are you trying to connect with through your brand? What are the requirements and wants
of the populace? What values do they uphold?

Affluent ladies seeking high-end luxury items and experiences are Chanel's target market.

3. Create the positioning for your brand.

What impression do you want the public to have of your brand? What distinguishes you from
your rivals?

Chanel is marketed as a high-end brand representing sophistication, elegance, and power.

4. Make a brand identity.

This comprises your company's name, symbol, slogan, visual identity, and voice. Your
company's brand identity should be consistent throughout its marketing materials and
consumer interactions.

The famous double C emblem, black and white, and the dedication to excellence define the
Chanel brand identity.

5. Create a brand message plan.

What point do you wish to make to your intended audience? What feelings do you hope to
arouse?

The core message of Chanel's brand strategy is that its experiences and goods can empower
women to realize their most significant potential.

6. Implement your brand plan and track its success.

After creating your brand strategy, you must implement it and evaluate the outcomes. This
involves monitoring customer satisfaction, brand perception, and brand awareness.

Chanel uses marketing campaigns, product design, and customer service to carry out its brand
strategy. Surveys and social media analytics are other ways that Chanel evaluates the
performance of its brands.

Importance of brand strategy:

● Develop a competitive advantage: A strong brand may help a business stand out from its
rivals and attract more clients.
● Increase brand equity: A brand's value is its brand equity. Customers are prepared to pay
extra for a strong brand's goods and services because of its high brand equity.
● Build customer loyalty: Customers are more inclined to stick with a brand if they appreciate
and trust it. A firm may promote repeat business and customer loyalty by building a solid
brand.
● Increase brand awareness: The degree to which consumers are familiar with a brand is
known as brand awareness. A powerful brand has a high level of recognition and brand
awareness.
● Expand into new markets: A corporation may grow into new areas and attract new clients
with a good brand.

Here are some instances of how these businesses have successfully implemented brand strategy:
● Apple: The three pillars of Apple's brand strategy are innovation, design, and simplicity. As
a result, the business has become among the most prosperous technological enterprises in
the world. Apple is renowned for producing high-end goods like the iPhone, iPad, and Mac
computer. Additionally, the business enjoys a sizable consumer following devoted to the
brand.
● Nike: Performance and athleticism are critical components of Nike's brand strategy. This
has aided the business in becoming the premier sporting clothes and gear provider. Nike is
renowned for its cutting-edge goods, like the Air Jordan shoes and Dri-FIT clothes. The
company also has an effective marketing strategy that uses some of the best athletes in the
world.
ORGANISATIONAL CHANGE

Change is a constant and unavoidable process that affects everything. Organizations must
anticipate and embrace change to avoid negative impacts on outcomes or performance. They
should conduct an environmental analysis considering internal and external factors and decide
whether to react to changes or proactively initiate changes. Organizational change management
involves modifying major aspects of the organization, such as culture, technologies,
infrastructure, or internal processes. It usually consists of three main stages: preparation,
implementation, and follow-through. Managers or business owners initiate organizational
change when they see opportunities for improvement or when problems arise within the
organization.

NEED FOR CHANGE

To identify the need for change for organizational change there are three questions to be

addressed:

1. What to Change? 2. When to Change? 3. How to Change?

1. What to change ?

To solve this problem, managers can either consult with experts or collaborate with their staff.
A consulting firm can provide opinions from professionals who have relevant experience and
a deep knowledge of the environment. If the organization has the necessary resources,
employees and managers can also find the solution by identifying the factors that cause change.

2. When to change?
After finding out what to change, the managers should implement the changes as quickly as
possible, but only after verifying that they are suitable, feasible, and effective.

3. How to Change?

This is a vital step because it involves preparing the organization for change, assessing the pros
and cons, and finding the motivation to move ahead. Since change is not a one-time event, but
a process, this stage marks the shift from the current state to the one that will emerge after the
changes are implemented. This is where the action plan is executed and the organization’s
employees are persuaded to accept the change. The change should be consolidated and
sustained when it has been completed and established, in order to achieve the expected
outcomes and monitor the progress.

TYPES OF CHANGES

1. People Centric Change -Some types of organizational change focus on people, such as
introducing new parental leave policies or hiring new staff. When leading a people-oriented
change, the leadership should remember that employees tend to resist change. A people-
focused change needs openness, communication, effective leadership, and a compassionate
approach.

Example 1 - Starbucks has a loyal fan base, thanks to its mobile ordering and personalized
rewards program that lets customers order precisely what they want and get it quickly.
Starbucks has the most popular app among major restaurants. In 2020, Starbucks cared for its
employees with extra pay during the pandemic and the choice to stay home with pay, even if
their store was open. Starbucks also expanded its mental health benefits to cover 20 therapy
sessions per year for employees and their families. As a pioneer in eco-friendly dining,
Starbucks also announced new ambitious sustainability goals, including cutting carbon
emissions by half by 2030.

2. Structural Change - Structural changes are changes that affect the organization’s structure
and how it operates. They can result from internal or external factors and involve major
changes in the management hierarchy, team organization, the roles and responsibilities of
different departments, the reporting lines, job structure, and administrative procedures.
Some situations that trigger structural change are mergers and acquisitions, job duplication,
market changes, and process or policy changes. These changes often affect most or all
employees and are related to people-centric changes.
Example 1 - MICROSOFT - Satya Nadella’s reorganization of Microsoft aimed to end internal
rivalry and unite the company’s employees around a shared vision. When he became the CEO
in 2014, Nadella introduced a new organizational structure that focused on creating new
productivity and business solutions, developing a smart cloud platform, and enhancing
personal computing. The creation of the AI and Research Group by combining several teams
was a key step in this reorganization. This step brought many engineers and computer scientists
together to work on artificial innovation for all Microsoft products.

3. Technological Change - As the market and technology keep changing, organizations need
to adopt new software or systems to improve their business processes. However, many
technology projects have unclear and poorly communicated goals, which make the
employees feel confused and frustrated, and they may resist the change. Technology change
management is the process of identifying and implementing new technology and
developing a digital strategy to enhance productivity and profitability.

Example 1 - Netflix began as a DVD rental service that delivered movies to customers’ homes.
In 2010, it had 20 million subscribers who enjoyed its DVD-by-mail service. Netflix also
started to offer online streaming as an option, but some subscribers did not like the higher price.
However, Netflix attracted more subscribers with its original and acclaimed shows, such as
House of Cards and Orange is the New Black. Netflix has been growing in revenue and
subscribers in the last few years. Netflix’s success shows that innovation can mean keeping the
old and adding the new. By keeping its DVD-by-mail service while expanding its online
streaming service, Netflix has kept its loyal customers and reached new audiences.

4. Strategic Change :Strategic change is when a business makes changes to its policies,
structure, or processes to achieve its goals, gain an edge over its competitors, or adapt
to market opportunities or threats. The top management and the CEO are usually in
charge of strategic change.

Example 1 - IBM was originally a hardware company, making devices like mainframes and
personal computers. But IBM changed its strategy when it faced competition and new
technologies. IBM became an IT service provider and later a big player in cloud computing.
Strategic Change Management

Strategic Change Management is about planning for the future and aligning with the overall
business plan in the organization. Management should create a plan, practices and functions
that can make a difference and support the global strategies and goals of the organization.

Types of Strategic Change Management

1. Transformational Change - This is a big and basic change in how an organization

works, often involving a new way of doing business, strategy, or culture. It might
happen because of big changes outside the organization in the market or industry. For
example, digital transformation is a type of transformational change where a business
changes its activities to use digital technologies.

For example -Adidas has used digital transformation and technology to stay ahead of the
competition. The retail brand has used technology to create better experiences and products
faster. The company has grown faster by understanding its customers and the market better.

2. Revolutionary Change -When a major event disrupts an organization and reveals

the need for a radical transformation, the culture changes rapidly and profoundly, as the
business will never be the same after the event.

For Example- Amazon :In 2006, Amazon introduced the FBA program, a revolutionary
change in its cost management strategy.Under FBA, sellers can choose to send their products
to Amazon's fulfillment centers. Amazon then takes over the storage, packing, and shipping
processes on behalf of the sellers.This shift allowed Amazon to centralize its fulfillment
operations, achieve economies of scale, and leverage advanced technologies for efficient
order processing.

3. Incremental Change - Incremental change is a series of small improvements that an

organization makes over time to its strategy, processes, or structures. Instead of a big
change that can be hard to manage and cause disruption, incremental change prefers a
gradual approach that can be easier to handle and adapt to. Incremental change is a
series of small improvements that an organization makes over time to its strategy,
processes, or structures. Instead of a big change that can be hard to manage and cause
 disruption, incremental change prefers a gradual approach that can be easier to handle
and adapt to.

For Example – Cadbury has used line extensions as a way of innovating, similar to Coca-Cola.
The brand has not only developed new flavours, but also new formats. For example, Wispa,
the popular chocolate bar, can now be enjoyed as a hot chocolate or a snacking bag. Cadbury
has opened up more revenue streams by using a gradual approach to innovation.

5. Evolutionary Changes - Evolutionary changes in strategic cost

management refer to the gradual, incremental adjustments and improvements made
to cost management practices over time. Evolutionary changes in strategic cost
management involve gradual adaptations and improvements to existing practices
over time. These changes are typically incremental, building on the existing
framework to enhance efficiency, accuracy, and overall effectiveness.
For Example - Coca-Cola is a global brand that has changed over time to adapt to the
market and consumers. It started in 1886 as a drink with cocaine that was sold at
fountains. It sold its U.S. bottling rights for $1 in 1899 and began selling bottles. Frank
M. Robinson made the script logo in 1886 and the contour bottle came out in 1915 to
stand out from other drinks. Coca-Cola used different ways to advertise, such as
coupons, calendars, billboards, radio, magazines, and TV. It also used celebrities to
promote its drink. In 1931, Coca-Cola made its first Christmas campaign with Santa
Claus drinking Coca-Cola. Coca-Cola made new products over the years, such as Fanta,
Sprite, Tab, Fresca, and Diet Coke. It also made Coca-Cola Zero in 2005 and Coca-
Cola Life in 2013 to meet consumer demand for less sugar and more natural ingredients.
In 2016, Coca-Cola used a “One Brand” strategy, putting its four products under the
same icon to increase sales of lower-calorie options and make consumer choice easier.
Coca-Cola also bought or worked with other drink companies to make its portfolio
bigger and offer more choices to consumers. In 2020, Coca-Cola was the sixth most
valuable brand in the world according to Forbes.

Barriers to Change

1. Lack of Clarity - You need a clear vision to make change easier. You need to know where
your organization is now and where you want it to be in the future. You need to share the
vision with the people who will drive and implement the change. Otherwise, the change
 initiative will fail. You need to come with a clear project scope and a strong story to make
the transition smoother. You need to answer some questions first, such as:

· What is the reason for the change?· How will it impact our current state? What is your
plan to get there?

2. Ineffective Communication- Communication is very important when you are training

employees on new technology or standardizing processes in your organization. If you do
not communicate well with everyone involved, your change initiatives will not work. You
cannot just send memos and announcements about the changes and expect people to
understand and accept them. You need to talk to them about the reasons and the effects of
the changes on their work and lives. Otherwise, you will face resistance and confusion in
your organization. Communication about change is not consistent across different levels of
the organization..

3. Resistance to change - Employees tend to resist change when they are used to the current
process in the organization, especially if it has been there for a long time. They feel
comfortable with the way things are and do not want to disrupt their routine. They may also
fear the unknown and the possibility of losing their jobs because of the change. To
overcome this, organizational leaders should help each employee to transition to the new
process, use digital tools to support HR functions, and create a positive environment that
encourages employees to embrace change.

4. Lack of Resources - Lack of funds or staff can make change implementation difficult and
slow. It is important to make sure that enough resources are available before starting any
change process.

5. Lack of Support from Management - To make your change initiative a success, you need
the full support of the top-level management. They are the ones who can give credibility
and authority to the change initiative. They need to do more than just endorse the initiative,
they need to own it and show it through their actions. But you also need the buy-in of the
mid-level and entry-level employees. They are the ones who will execute the change on the
ground. They need to be involved in the planning and implementation of the change, and
follow the example of their leaders. As the saying goes, “change starts at the top but
happens at the bottom.”
6. Lack of Governance –Change is costly, and this can be a hurdle for your organization. You
need to have a clear and effective governance system to oversee the change from both a
detailed and a big-picture perspective. To manage the whole program in a disciplined way,
you can use the accelerated implementation methodology. This methodology can adapt to
projects of any size and complexity, from operational changes to transformational changes.

Process of Change

Step 1 - Prepare the Organization for Change - To make change happen successfully, the
organization needs to be ready both practically and culturally. Before getting into the practical
aspects, the cultural readiness is crucial for the best business outcome. In this stage, the
manager helps the employees to see and understand why change is needed. They make them
aware of the various issues or difficulties that the organization is facing that require change and
create dissatisfaction with the current situation.

Step 2- Craft a Vision and Plan for Change - When the organization is ready for change,
managers need to create a clear, realistic, and strategic plan for making it happen. The plan
should include:

· Strategic goals: How does this change support the organization’s vision?

· Key performance indicators: How will the outcomes be evaluated? What measures need
to be improved? What is the current situation?

· Project stakeholders and team: Who will lead and manage the change process? Who
needs to approve each critical stage? Who will implement the change?

· Project scope: What specific steps and actions are involved in the project? What is not
part of the project?

The plan should be structured yet adaptable to potential challenges and obstacles during
implementation, requiring flexibility and agility to overcome obstacles.

Step 3 - Implement the Changes - The next step is to execute the plan and make the change
happen. The change could affect different aspects of the company, such as structure, strategy,
systems, processes, or employee behaviours, depending on the initiative. Change managers
should empower their employees to execute the initiative's goals, celebrate any progress, and
enable them to take necessary actions. They should also try to foresee and avoid any problems
or deal with them quickly once they arise. The organization's vision must be communicated
consistently throughout the execution process to maintain motivation and focus on the
importance of change.

Step 4 - Embed Changes Within Company Culture and Practices - After implementing a
change initiative, change managers must ensure that the old state or status quo does not return,
particularly for organizational changes affecting business processes like workflows, culture,
and strategy making. A well-planned plan can prevent employees from returning to the old way,
and making changes part of the company's culture and practices can help make change last.
Additional benefits can be obtained by implementing new organizational structures, controls,
and reward systems.

Step 5 - Review Progress and Analyze Results - A successful change initiative doesn't equate
to its effectiveness. A post mortem analysis helps business leaders assess the success or failure
of an initiative, providing valuable insights for future change efforts.

Resistance to change

Resistance to change: It basically refers to the opposition displayed by the individual and the
group when they are confronted with the new process, strategies and the structural adjustments
This resistance can take many different forms, such as passive-aggressive behaviour, and it can
make organizational changes more difficult to execute successfully.

For example: Let’s consider a manufacturing company that has been using a traditional
production method for many years but now the management of this company has decided to
implement a new, more automated production method to increase efficiency and reduce the
cost. So, the employee may resist this change due to various reasons such as past experiences,
fear of job loss, loss of control, and so on.

Factors:

External Factors:

1. Market and Industry dynamics: Market and Industry dynamics can be a significant
factor contributing to resistance. When external factors like competition, economic
conditions, and regulatory changes create uncertainty, the employee may resist these
changes in response.
 2. Regulatory changes: These refer to the new laws or the rules affecting the organization.
So, when the changes occur the employee may resist the necessary organizational
development or the modification needed for compliance.
3. Technological changes: Technological changes refer to the introduction of new tools,
processes, or software. Resistance can occur when the employee is unfamiliar with or
is uncomfortable while using these technologies.
4. Globalization which involves expanding operations across borders can lead to
resistance to change. Employees may resist change like working with international
teams or adjusting to diverse cultural norms.
5. Supplier and customer demands: It can lead to resistance to change when they require
changes in how a company operates. Under this resistance may arise if the employee
may perceive these changes as challenging.
Internal Factors:

1. Organizational culture: The prevailing culture within an organization can be a

significant internal factor contributing to resistance. If an existing culture values
stability, predictability, and status quo, employees may resist these changes in response.
2. Lack of involvement: It means when the employee or other stakeholders are not
involved in the planning and decision-making process that is related to changes and do
not discuss the change that affects the organization.
3. Lack of communication: As we all know poor communication within an organization
can lead to miscommunication, and misinterpretation so this is one of the major factors
that lead to resistance.
4. Job insecurity: If the employee perceives that this change will lead to layoff or job
displacement then they are more likely to resist as they might think that it will affect
their employment stability.
5. Past experience: The employee may have some negative experiences with past changes.
So, they hesitate to support the new ones.
How to Overcome Resistance to Change

At Individual level

1. Proper communication and education: There must be proper communication with the
employee about the reason for the change, emphasizing the benefit for both the
 individual as well as organization. Also, providing the proper resources and training
helps the individual to understand the new process.
2. Involvement and participation: By involving the employee in the planning and
decision-making process that is related to change and also seeking their input and
feedback to make them feel like an integral part of an organization.
3. Support and resources: Offering a support system to the individual such as mentors or
coaches who can guide and assist the individual in adopting the changes and also ensure
that the individual has the necessary tools or the resources to navigate the changes
successfully.
4. Address concerns and feedback: It means encouraging the employee to open and honest
communication and also creating a channel for the individual to express their opinion,
ask questions, and provide feedback. Also, after listening to all this, the organization
must address their concerns and make necessary adjustments based on their inputs.
At Group Level

1. Create a shared vision: It means getting everyone in the organization on the same page
about why the changes are needed and where it is taking the organization. It also helps
the people to understand the purpose behind the changes and how it will benefit them
as well as the organization. It also helps to reduce the resistance because everyone is
working towards the common goals and understands the why behind the change.
2. Offering Incentives and rewards: It means giving employee something positive like
bonus or promotion in exchange for their support or adopting changes. This can
motivate the employee and also help to reduce resistance by showing people that their
efforts are valued and rewarded.
3. Leadership alignment: It ensures that all the leaders in the organization are on the same
page and they are in support of changes. When the leaders are united in their
commitment to the changes, it helps to reduce resistance because it provides a
consistence and clear message to employees.
ORGANIZATIONAL ADAPTATION
Organizational adaptation is a critical component of any firm. It aids in the organization's
evolution. It is surrounded by an integration of new technology, varied strategies, and various
practices. Organizational adaptation is the acceptance of new technologies, methods, and
strategies in order to develop, launch, and evolve in the market. It is a strategy approach that
allows firms or organizations to remain competitive, efficient, and aligned with the changing
market trends.

Consider Apple Inc.'s adoption, which contributed to the development of the Augmented
Reality Kit (ARKit) for iPhones. It essentially means that customers can see the product right
in front of them without having to go to a store. It appeared to be physically present even
without receiving the product. This advancement altered client experiences and improved
Apple's market presence.

PROCESS

Organizational adaptation is not a one-time event, but rather a continual process and a
systematic trip, similar to a roadmap. It will last as long as the company survives. It refers to a
series of processes that will assist and guide the organization in the integration of change.

Amazon, for example, increasingly implemented robots in its distribution operations. These
robots were given the name Kiva Systems. These robots mostly assisted in product packaging
and delivery. It was a life-changing experience for the organization. They had to go through a
number of procedures. They devised this method to increase supply chain productivity.

The process includes:

1. Awareness - Organizations should be informed of what is going on in the business. They

should realize the importance of change.
2. Interest - Organizations should be interested in adapting to changes. They should
demonstrate some curiosity and openness to new ideas.
3. Evaluate - They must thoroughly analyze and evaluate new ideas or techniques.
4. Trial - They should thoroughly test the new alterations that have been implemented.
5. Adoption - Once all of these concepts have been documented, they should be prepared
to adapt to the new modifications. They should be willing to adapt to these
developments.
6. Implementation - They should endeavor to put all of the new and explored
modifications into practice.
7. Integration - They must thoroughly integrate and incorporate the changes into the
organization's regular operations.
OBJECTIVES

Organizational Adoption is not a reckless endeavor. It is guided by certain goals. These

objectives serve as a driving force, influencing and inspiring organizations to develop and
modify their methods in order to remain aligned with the company goals.
For example, Tesla's transition to electric vehicles is a great accomplishment. The primary goal
of this change or shift was to safeguard the environment. In some ways, they wished to limit
pollution and conserve resources. They profited and gained a big number of eco-conscious
clients by switching to electric vehicles.

The Objectives included:

1. Enhancing Efficiency
2. Improving Competitiveness
3. Meeting Regulatory Requirements
4. Enhancing Customer Experience

IMPACT
The true measure of a fortunate and successful organizational adoption is the influence it has
on each stage of the organization. Productivity, Profitability, Employee Satisfaction, and
Customer Satisfaction all have an impact on an organization's ability and potential to complete
all changes.
As an example, take Netflix. Netflix's transition from DVD rentals to home streaming services
had a significant impact on the corporation. This transition enhanced their revenue and brought
them a big number of subscribers.

1. Productivity - It essentially refers to how well and how much work an organization can
complete in less time. They should strive to complete more or more productive work in
less time for the benefit of the firm.
2. Profitability - It refers to how much money the organization makes in the time given.
They can boost their revenues if they tend to do better and make good modifications.
3. Employee Satisfaction - This refers to how satisfied and happy the organization's
employees are. When a business implements changes that benefit employees, they are
more likely to be satisfied with their jobs.
4. Customer Satisfaction - This refers to how satisfied the consumer is with the products
and services provided by the firm.
Organizational Development
Meaning:
Organizational Development (OD) is a structured and planned effort to improve an
organization's effectiveness and overall health. It involves a systematic approach to change
within an organization, aimed at enhancing its performance and the well-being of its employees.
Organizational Development (OD) is a deliberate and structured process aimed at improving
an organization's effectiveness and well-being. It involves planned changes to enhance
productivity, teamwork, and adaptability. OD relies on data, emphasizes the human element,
and fosters a culture of continuous improvement. It's not a one-time event but an ongoing
strategy for organizational growth and success.
Process of Organizational Development:

1. Problem Identification:

The first stage of Organizational Development involves identifying issues or challenges within
the organization that require attention. This often starts with recognizing symptoms of a
problem, such as decreased productivity, high turnover, or interdepartmental conflicts. It's
essential to involve key stakeholders, such as employees and managers, in this phase to gain a
comprehensive understanding of the organization's challenges.

2. Data Collection:

Once problems are identified, the next step is to gather relevant data and information. This can
include surveys, interviews, and analysis of performance metrics. The objective is to obtain a
clear picture of the underlying causes of the issues. Data collection is a critical stage, as it
provides the foundation for making informed decisions in the later phases of OD.

3. Diagnosis:

In the diagnosis stage, the collected data is analyzed and interpreted to identify the root causes
of the problems. The "diagnosis" stage refers to the critical phase in which the collected data
and information about an organization's issues are carefully analyzed and interpreted. The
primary purpose of this stage is to identify and understand the root causes of the problems or
challenges that have been identified in the earlier stages of the OD process.

4. Planning and Implementation:

With a thorough understanding of the problems and their underlying causes, the organization
can develop a plan for change. This plan includes specific strategies and actions to address the
identified issues. It's important to involve employees and leaders in the planning process to
ensure buy-in and commitment. Implementation of the plan involves executing the proposed
changes, which may include restructuring, training, communication improvements, or other
interventions.

5. Evaluation and Feedback:

The final stage of Organizational Development is ongoing evaluation and feedback. This
entails monitoring the implemented changes and assessing their impact on the organization.
Feedback from employees and other stakeholders is invaluable in gauging the effectiveness of
the interventions. Adjustments may be necessary based on this feedback, and the organization
should continue to evaluate its performance to ensure that the desired outcomes are achieved.

These five stages, when executed effectively, form a continuous cycle of improvement within
an organization. Organizational Development is not a one-time event but a dynamic process
that allows an organization to adapt, evolve, and thrive in a changing environment.

Importance of organizational development:

• Adaptability and Flexibility:In a rapidly changing business environment,

organizations need to be adaptable and flexible. OD helps organizations anticipate and
respond to changes effectively, ensuring they remain competitive and resilient.
• Enhanced Organizational Performance: OD interventions are designed to enhance
overall organizational performance by identifying and addressing inefficiencies,
improving processes, and optimizing resource utilization.
• Employee Engagement and Satisfaction: OD focuses on creating a positive and
engaging work environment. Satisfied and engaged employees are more likely to be
productive, creative, and committed to the organization's success.
• Talent Development and Retention: OD initiatives often include strategies for talent
development, which contributes to employee growth and retention. Organizations that
invest in the development of their workforce are more likely to attract and retain top
talent.
• Cultural Alignment: OD helps align organizational culture with strategic objectives.
A positive and aligned culture fosters collaboration, innovation, and a shared
commitment to the organization's values and goals.
• Leadership Development: Effective leadership is critical for organizational success.
OD programs focus on developing leadership capabilities at all levels, ensuring that
leaders are equipped to guide the organization through change and challenges.
• Innovation and Creativity: Organizations need to foster a culture of innovation to
stay competitive. OD encourages creative thinking, experimentation, and continuous
improvement, contributing to the development of innovative solutions and products.
 • Conflict Resolution: Conflicts can arise in any organization. OD provides tools and
processes for resolving conflicts constructively, promoting a harmonious work
environment and minimizing disruptions.

Objectives of Organization Development (OD):

• Enhanced Performance: Improve overall organizational performance and

effectiveness through strategic interventions and targeted initiatives.
• Adaptability and Flexibility: Enhance the organization's ability to adapt to changes
in the external environment, such as market dynamics, technology, and regulatory
requirements.
• Employee Satisfaction and Engagement: Foster a positive work environment that
promotes employee satisfaction, engagement, and commitment.
• Leadership Development: Develop and enhance leadership capabilities at all levels
to ensure effective and adaptive leadership within the organization.
• Cultural Transformation: Facilitate cultural change to align with organizational
goals, values, and desired behaviors.
• Increased Innovation: Foster a culture that encourages innovation, creativity, and
continuous improvement.
• Team Effectiveness: Improve collaboration, communication, and teamwork across
various departments and teams within the organization.
• Employee Development: Support the continuous learning and development of
employees, aligning individual growth with organizational objectives.
• Conflict Resolution: Address and resolve conflicts within the organization to create a
more harmonious and collaborative workplace.
• Strategic Alignment: Ensure that organizational structures, systems, and processes
align with the strategic goals and objectives of the company.

Challenges of Organization Development:

• Resistance to Change: Overcoming resistance from employees and stakeholders who

may be uncomfortable with the changes proposed by the organization development
initiatives.
• Resource Constraint: Limited resources, both in terms of budget and manpower, can
be a significant challenge for organizations aiming to implement comprehensive OD
programs.
• Cultural Barriers: Addressing deep-rooted cultural norms and values that may
hinder the adoption of new behaviors or practices.
• Complexity of Large Organizations: Managing and implementing OD initiatives in
large and complex organizations can be challenging due to the scale and diversity of
operations.
• Measurement and Evaluation: Establishing clear metrics and methods for
evaluating the success of OD interventions and their impact on organizational
performance.
• Leadership Alignment: Ensuring that organizational leaders are aligned with and
actively support the OD initiatives, as their commitment is crucial for success.
• Globalization and Diversity: Navigating the complexities of organizational
development in the context of diverse cultures, global operations, and virtual work
environments.
 • Limited Time Frame: Balancing the need for timely results with the understanding
that meaningful organizational change often takes time to embed.
• Lack of Clarity in Objectives: Clearly defining and communicating the objectives of
OD initiatives to ensure that all stakeholders understand the intended outcomes.
• External Environmental Factors: Adapting to external factors, such as economic
changes, technological advancements, or regulatory shifts, which may influence the
success of OD initiatives

Here are some common challenges faced by employees during organization development:

• Uncertainty and Ambiguity:

• Employees may feel uncertain about the changes introduced during organization
development, especially when details about the new processes or structures are
unclear.
• Resistance to Change:
• Resistance is a common challenge as employees may be attached to existing routines
and methods. Fear of the unknown or concern about job security can contribute to
resistance.
• Fear of Job Insecurity:
• Organizational changes may raise concerns among employees about the security of
their jobs. This fear can impact morale and engagement.
• Skill Gaps and Training Needs:
• New processes or technologies introduced during organization development may
require employees to acquire new skills. The lack of training or support can be a
challenge.
• Increased Workload:
• Implementing change often requires extra effort and time from employees. Increased
workloads can lead to stress and burnout if not managed effectively.
• Communication Gaps:
• Inadequate or unclear communication about the reasons behind the changes, the
expected outcomes, and the impact on employees can create confusion and anxiety.
• Cultural Misalignment:
• If the organizational changes are not aligned with the existing organizational culture,
employees may struggle to adapt and feel a sense of cultural misfit.
• Lack of Involvement in Decision-Making:
• Employees may feel disengaged if they perceive that decisions affecting them are
made without their input. Involving employees in the decision-making process can
mitigate this challenge
 Chapter 8 : Emerging Issues in Strategic Management

CORPORATE SOCIAL RESPONSIBILITY (CSR)

Corporate Social Responsibility involves companies contributing towards the causes of social
welfare apart from carrying out the business activities alone. It involves going one step ahead
of the purpose for which the business exists..
Companies can be aware about the impact they create on the society around them and can
contribute to enhance their welfare by engaging in CSR activities. In recent times there is
increasing focus by the customers, employees, investors and all the other stakeholders on
whether the company is socially responsible. Therefore it becomes important for companies to
consider CSR as an important aspect to be taken care of.
Benefits of Corporate Social Responsibility:

1) Brand Recognition – CSR activities is undoubtedly the best way to gain brand name or
reputation in the market and improve the customers’ perception of your brand. This will
help the company to attract and retain loyal customers. For example, Tentree is a clothing
company in Canada that has integrated CSR into their very business model. They plant ten
trees for each item they sell and also undertake other developmental activities in the areas
in which they plant trees. This model they adopted have helped them create a good brand
image amongst the customers.
2) Employee Engagement – If the company undertakes CSR activities, it creates a good
impact among their employees that the company cares about more than just profit, and this
helps boost their morale. Also engaging the employees in directly performing CSR
activities creates a sense of pride in them. As per Deloitte’s 2021 Millennial and Gen Z
Survey, 44% of the millennials and 49% of the Gen Z population consider this aspect of
the companies as an important factor when they choose the companies they would join in.
3) Increase your appeal to investors – Undertaking CSR activities help create confidence
about the company in the present as well prospective investors. Investors can feel confident
that the company would sustain and perform well in the long run.
4) Ripple Effect of Positivity – Companies, being large organisations can bring about a large-
scale betterment in the society than what individuals could do on their own. Also companies
tend to inspire others in the same industry to undertake CSR activities to maintain their
competititve edge. For example, when Apple began to use recycled materials, it also forced
other companies in the industry to follow their footsteps.
Types of Corporate Social Responsibility:

1) Environmental Responsibility – This focuses on the preservation of natural resources,

reduction of pollution, wastage, reducing carbon footprint, greenhouse gas emissions, avoiding
single-use plastics, reduce reuse recycle and other such sustainable practices. For example,
Walt Disney runs their resort trains on biodiesel generated using recycled cooking oil from
hotels and restaurants. They also contribute highly to preservation of wildlife through the
Disney Conservation Fund.

2) Ethical Responsibility – This includes being ethical towards all stakeholder, be it customers,
employees or investors. Avoiding any kind of discrimination on the basis of gender, race, caste
and so on and eliminating all unethical practices. For example, Starbucks is known for taking
good care of its employees through educational, medical and other family benefits. In the US,
Starbucks decided to diversify its workforce and employ at least 25000 US military veterans
and spouses by 2025 and as of now they are way ahead of their target employing 5000 each
year.

3) Philanthropic Responsibility – This implies that the company gives charity or donates for
other social causes that may not be related directly to their business. This shows what values
the company believes in and stands for. They can also raise funds or sponsor for events or other
social causes. For example, General Motors donated $60 million to more than 400 non-profit
organisations focusing on social issues and the company also targets to use 100% renewable
electricity in its US sites by 2025.

4) Economic Responsibility – This is also known as financial responsibility and involves the
funding of the above-mentioned noble causes. The company must spend to find ways to
promote sustainability, recruit diverse employees, and also ensure timely and accurate financial
reporting. For example, Microsoft is well-known for their CSR spending and it has partnered
with schools or non-profit organisations to provide computer science or technology related
education in the backward areas. Microsoft, being a technology-related company, uses its
technology to give access to jobs for people with disabilities and also invested in making life
better for the Black people in the US.
Mistakes to Avoid on CSR Efforts:

• Short term planning is a mistake to be avoided, since CSR efforts requires to ensure
sustainability over the long run. Do not put up a CSR deed as a one-time show or as a
marketing scheme.
• Greenwashing – This refers to the false claims made by companies that they employ only
sustainable practices, when in reality they do not follow. For example, Volkswagen was
caught for greenwashing their carbon emissions by installing a defect device in their test
vehicles alone that would show lesser emissions during the test drive, when in reality the
vehicles would release lot more carbon dioxide.
• Pinkwashing – This is similar to greenwashing, wherein companies make false claims of
being quite inclusive of the LGBTQ community.
• Inconsistent reporting about the CSR activities, or not consulting with all the stakeholders
before deciding the plan of action could be a huge mistake.
• Do not wait for the industry to catch up or laws to be made in order to act in a socially
responsible way, rather voluntarily take up such CSR activities and be a role model to other
companies since it not only benefits your business but also creates a positive impact in the
world.

SOCIAL AUDIT
A social audit is a systematic and independent assessment of an organization's social
performance. This means that it looks at how the organization is performing in terms of its
social and environmental impact, as well as its relationships with its stakeholders. Social audits
can be conducted by a variety of stakeholders, including internal auditors, external auditors,
community members, and non-governmental organizations.
A social audit is a multifaceted and systematic procеss, dеsignеd to assеss thе social, еthical,
and еnvironmеntal impacts of an organization or program. It sеrvеs as a vital tool for
organizations to еvaluatе thеir lеvеl of commitmеnt to social rеsponsibility whilе
simultanеously maintaining profitability. Within thе rеalm of businеss, thе challеngе liеs in
striking a balancе bеtwееn financial objеctivеs and thе broadеr sociеtal and еnvironmеntal
rеsponsibilitiеs. Social audits offеr a structurеd approach to ascеrtain thе еxtеnt to which a
company is еffеctivеly mееting its social and еthical obligations. Onе of the kеy fеaturеs of a
social audit is its capacity to assist organizations in еvaluating thеir pеrformancе against social
rеsponsibility objеctivеs, bеnchmarks, and mеasurablе targеts. Companiеs еstablish thеsе goals
as a mеans to guidе thеir actions in thе rеalm of social rеsponsibility. This includеs initiativеs
rеlatеd to labor practicеs, еnvironmеntal sustainability, community еngagеmеnt, and еthical
businеss conduct. Through thе procеss of a social audit, an organization can discеrn whеthеr it
is on coursе to mееt thеsе prеdеfinеd objеctivеs or whеthеr adjustmеnts arе nееdеd to align
thеir actions with thеir statеd goals. A fundamеntal purposе of a social audit is to еnablе
companiеs to gain insights into thе public's pеrcеption of thеir actions and initiativеs. This
fееdback, whеthеr positivе or nеgativе, can significantly impact thе ovеrall public imagе and
rеputation of thе company
Financial Reporting:

• Role in CSR: Financial reporting provides a transparent account of a company's

economic performance, including revenue, expenses, and profits. It plays a role in
CSR by showcasing how financial resources are allocated and used to support social
and environmental initiatives.
• Example: If a company allocates a percentage of its profits to community
development projects or environmental conservation efforts, financial reports can
highlight these contributions.
• Sustainability Reporting:
• Role in CSR: Sustainability reporting goes beyond financial metrics to provide
information on a company's environmental, social, and governance (ESG)
performance. It allows companies to communicate their CSR initiatives, goals, and
progress to stakeholders.
• Example: A sustainability report might detail a company's efforts to reduce its carbon
footprint, promote diversity and inclusion, or ensure ethical sourcing of materials.
• Stakeholder Engagement:
• Role in CSR: Engaging with stakeholders is vital in shaping CSR strategies.
Companies identify and understand the expectations, concerns, and needs of various
stakeholders, including employees, customers, communities, and investors, to ensure
that CSR initiatives align with their interests.
• Example: Through stakeholder engagement, a company may discover that the local
community desires job creation and education initiatives. Subsequently, the CSR
strategy could focus on these priorities.

CORPORATE TRANSPARENCY
Corporate transparency is the disclosure of information about a company's ownership, financial
performance, and operations to the public. There are a number of ways to improve corporate
transparency. One is to require companies to disclose more information about their ownership
and financial performance. This can be done through mandatory reporting requirements or by
making it easier for investors to access information about companies. Another way to improve
corporate transparency is to strengthen the role of corporate governance. This can involve
giving shareholders more power to hold company management accountable or by requiring
companies to have independent directors on their boards. It assists in guaranteeing that
businesses are run fairly and responsibly. The key components of corporate transparency are:
Information disclosure: This includes the timely and accurate disclosure of information about
a company's ownership, financial performance, operations, and risks.

Clarity: Information should be presented in a way that is easy for stakeholders to grasp and is
clear and concise.

Accuracy: Information should be accurate and complete.

Accountability: Companies should be accountable for the information they disclose. This
means that they should be willing to answer questions from stakeholders and explain any
discrepancies in their disclosures.

Accessibility: Information should be accessible to all stakeholders, including

investors, employees, customers, and the public.

Types of Corporate Transparency:

Depending on the areas of a company's activities and information disclosure, corporate

transparency can be divided into distinct types. Some typical forms of business transparency
are as follows:

1. Financial Transparency: This kind of transparency pertains to the information that is

disclosed about finances, such as cash flow, balance, and income statements. It enables
stakeholders to understand the condition and financial performance of an organization.
2. Operational Transparency: This type of transparency is giving customers access to a
company's daily workflow, internal procedures, and supply chain. It might provide
information about the production, logistics, and manufacturing processes.
3. Governance Transparency: The term "governance transparency" describes how
transparent a company's corporate governance procedures and structure are. It entails
sharing details regarding the organization's decision-making procedures, executive
compensation, and board of directors.
4. Regulatory Transparency: This refers to following industry-specific laws and
regulations and providing information as government organizations request. This
guarantees that businesses adhere to legal obligations.
 5. Data Privacy and Security Transparency: Companies must maintain privacy and
security procedures by being open and honest about handling employee and consumer
data. This is especially crucial in the modern era of privacy issues and data breaches.

Why corporate transparency is so necessary?

• Builds Trust and Credibility:

• Transparent communication about a company's operations, financial performance, and
decision-making processes builds trust among stakeholders. Trust is a fundamental
element of successful business relationships, and transparency contributes to
credibility.
• Enhances Stakeholder Confidence:
• When stakeholders have access to accurate and timely information, they can make
informed decisions. Transparency in financial reporting, sustainability practices, and
governance enhances stakeholder confidence in a company's ability to manage its
affairs responsibly.
• Mitigates Risks:
• Transparent disclosure of information helps identify and address potential risks early.
Companies that openly communicate about challenges and uncertainties are better
positioned to manage and mitigate risks, preventing them from escalating into crises.
• Fosters Accountability:
• Corporate transparency fosters a culture of accountability within an organization.
When companies openly share their goals, performance metrics, and outcomes, they
are more likely to be held accountable by stakeholders, including investors,
employees, and regulatory bodies.
• Attracts and Retains Talent:
• Transparency in areas such as company culture, employee policies, and career
development opportunities can attract and retain top talent. Job seekers often seek
information about a company's values, mission, and practices before deciding to join,
and existing employees value open communication from leadership.
• Meets Regulatory Requirements:
• Many regulatory bodies require companies to disclose specific information to ensure
fair and transparent markets. Compliance with these regulations is not only a legal
requirement but also contributes to the stability and integrity of financial markets.
• Addresses Environmental and Social Concerns:
• As environmental and social issues gain prominence, stakeholders are increasingly
interested in how companies address these concerns. Transparency in sustainability
reporting helps demonstrate a company's commitment to ethical and responsible
business practices.

CORPORATE GOVERNANCE

Corporate governance is the system of rules, practices, and processes by which a company is
directed and controlled. It is essentially a set of tools that enables management and the board
to run an organization more efficiently and effectively, while also protecting the interests of
shareholders and other stakeholders.
The key principles of corporate governance include:
 • Accountability: Management and the board are accountable to shareholders and other
stakeholders for the company's performance. This means that they must be transparent
about their decision-making process and answer to shareholders and other
stakeholders for their actions.
• Transparency: The company should be transparent about its financial
performance, business operations, and governance arrangements. This means that
shareholders and other stakeholders should have access to the information they need
to make informed decisions about their investment in the company.
• Fairness: The company should treat all shareholders fairly and equitably. This means
that all shareholders should have the same rights and opportunities, regardless of the
size of their shareholding.
• Responsibility: The company should act responsibly toward
employees, customers, suppliers, and the community. This means that the company
should consider the impact of its decisions on all of its stakeholders, not just its
shareholders.
• Risk management: The company should have effective risk management systems in
place to identify, assess, and manage risks to the business. This includes risks to the
company's financial performance, its reputation, and its operations.

Example of Effective Corporate Governance: Johnson & Johnson

• Crisis Management: Demonstrated ethical governance during the 1982 Tylenol

crisis, prioritizing public safety over financial considerations.
• Independent Board: Maintains a diverse and independent board of directors for
impartial decision-making and effective oversight.
• Code of Conduct: Upholds a robust Code of Business Conduct, emphasizing
integrity, transparency, and ethical behavior.
• Shareholder Engagement: Actively engages with shareholders, conducts regular
meetings, and addresses investor concerns.
• Risk Management: Implements effective risk management practices to identify,
assess, and mitigate risks.

Corporate Governance Issues:

• Conflict of interest: In 2016, Wells Fargo was fined $185 million for opening millions of
fraudulent accounts without customers' consent. This scandal was caused by a conflict of
interest. Wells Fargo employees were encouraged to open new accounts, even if it meant
committing fraud.

• Excessive executive compensation: In 2021, Tesla CEO Elon Musk was paid $23.1 billion,
making him the highest-paid CEO in history. This was while Tesla's stock price fell by 65% in
2021.

• Lack of transparency: In 2015, Volkswagen admitted to cheating on diesel emissions tests.

This scandal caused the company's stock price to fall sharply and its reputation to be damaged.
Key Trends in Corporate Governance:

• Greater focus on ESG: ESG issues are becoming increasingly important to investors and
shareholders. Companies should focus on effectively managing these issues to attract and retain
capital.

• Increasing use of technology: Technology is playing an increasingly important role in

corporate governance. For example, companies use technology to improve the efficiency of
board meetings, increase transparency, and reduce the risk of fraud.

• Improve board diversity: Companies increasingly understand the importance of board

diversity. A diverse board can better understand the needs of different stakeholders and make
informed decisions.

• Expansion of shareholder participation: shareholder activists are becoming increasingly

powerful and influential. Companies must engage with shareholders more effectively to avoid
proxy fights and other disruptions.

• Increased focus on sustainability: Businesses increasingly understand the importance of

sustainability. This has led to a greater emphasis on corporate governance issues such as long-
term value creation and stakeholder engagement.

Challenges in Corporate Governance:

• Increasing complexity: The global business environment is becoming increasingly complex

and new technologies and regulatory changes are constantly emerging. This makes it difficult
for companies to follow modern governance best practices.

• Rising Stakeholder Expectations: Stakeholders are increasingly demanding that companies

be transparent, accountable and sustainable. This puts pressure on companies to improve their
governance practices.

• Growth of shareholder activists: shareholder activists are becoming more vocal in demanding
corporate governance reform. This can lead to costly and confusing proxy wars.

• Cyber security risks: Cyber security risks are a major threat to corporate governance. Strong
cyber security measures in place for businesses to protect their data and systems from attacks.
• ESG concerns: Investors and stakeholders are increasingly focusing on ESG issues such as
climate change, labor practices, and diversity and inclusion. Companies must manage these
issues effectively to avoid financial and credit risks.

Companies can improve their corporate governance practices by the following ways:

• Adopt a code of conduct that clearly defines conflicts of interest and outlines
expectations for ethical behaviour.
• Establishing an independent board of directors with the necessary skills and expertise
to oversee the company's operations.
• Introduce compensation structures commensurate with company performance and
reward management to create long-term value.
• We will provide important information to shareholders and society in a timely and
accurate manner.
• Investing in risk management and cyber security programs.
• Engage with stakeholders on ESG issues.