Strategic Management

Dr Divakar Kamath
Gaining “Sustainable Competitive Advantage-AAR”
TOTAL MARKET
vs
TAM
 –
Strategic Management:
Fundamental Questions

Customer Groups
Customer Needs
Distinctive Competitiveness

Who

3 Key Qs What

How ?
 Sell To
vs
Sell Through
Vs
Sell With
What is Strategy ?
Strategy is about making choices

q Who will you target as customers and who will

you not?
q What will you offer these customers and what
will you not offer them?
q How will you do all this? – What activities will
you perform; which will you not?
 Class Activity 1 :

“Strategy and Technology” in companies from

various industries”
Business Level Strategy

&

Corporate Level Strategy

Strategy : Leadership Challenges

1. How do we differentiate in the market place?

2. How do we grow ?

3. How do we grow profitably ?

4. How do we gain sustainable competitive advantages?

5. How do we track and manage new trends and new changes in

the business environment?
 SWOT ( TOWS) Framework

Strengths – S Weaknesses – W

List Strengths List Weaknesses

Opportunities – O SO Strategies WO Strategies

List Opportunities Use strengths to take Overcoming

advantage of weaknesses by taking
opportunities advantage of
opportunities

Threats – T ST Strategies WT Strategies

List Threats Use strengths to Minimize weaknesses

avoid threats and avoid threats
 Strategic Analysis

1. Know yourself !

2. What is it that you do best ?

3. What is it that you do better than others ?

4. Are there activities that you perform poorly ? worse than others ?)

5. Know your –environment, Demographics ,The economy,

Laws/regulations , Stakeholders And The competition
Porter’s 5 Generic Competitive Strategies
Igor Ansoff’s Product/Market Expansion Grid
 BCG Matrix
for
Portfolio Management
 Portfolio Analysis: BCG Matrix

¡ How much of our time and money should we spend on our best products to ensure
that they continue to be successful?

¡ How much of our time and money should we spend developing new costly
products, most of which may or may not be successful?
Portfolio Analysis: BCG Matrix
 GE Matrix for Portfolio Analysis

The GE Business Screen is an improvement over the BCG

Matrix:

1. ‘Industry attractiveness’ is assessed more completely (than

just ‘growth rate’ in BCG): Market growth rate, Industry
profitability, Size, Pricing practices, Possible Opportunities
(& Threats)

2. ‘Business Strength/Competitive Position’ is determined by:

Market Share, distribution strengths, engineering
capabilities and other factors giving competitive edge.

But suffers from lacking ‘hard’ measures – many judgemental

elements for assessing the major parameters.
 GE Model

• Market Attractiveness:

1. Overall Market size

2. Annual Market growth rate
3. Historical profit margin
4. Competitive intensity
5. Technological requirements
6. Energy requirements
7. Inflationary vulnerability
8. Social/ political / legal
 GE Model

Business Strength

1. Market share
2. Share growth
3. Product quality
4. Brand reputation
5. Distribution network
6. Promotional effectiveness
7. Productive capacity
8. Productive efficiency
9. Unit costs
10. R & D performance
11. Managerial personnel
 M
GE MODEL Business Strength
A
Protect Position Invest to build Build Selectively
Specialize around R
limited strengths K
Invest to grow Challenge for Seeks ways to
E
Concentrate leadership overcome weakness
effort on Build selectively Withdraw if T
High indications of sustain
maintaining Reinforce growth is lacking A
strength vulnerable areas T
Build Selectively Selectivity/Manage for Limited Expansion or T
earnings
Invest heavily in most Protect existing program Harvest R
Medium attractive segments Concentrate investments in Look for ways to
A
Build up ability to counter segments where expand without high
competition profitability is good and risk ,Otherwise C
Emphasize profitability by risks are relatively low minimize investment
raising productivity T
and rationalize
operations I
Low Protect and Refocus Manage for earnings Divest V

Sell at time that will E

Manage for current Protect position in
earnings most profitable maximize value N
Concentrate on segments Cut fixed costs and
avoid investment E
attractive segments Upgrade product line
Defend strengths Minimize investment meanwhile S
S
Strong Medium Weak
 Integration Strategy

1. Vertical Integration

Ø Forward Integration

Ø Backward Integration

2. Horizontal Integration
Corporate Strategy :Strategic Alliances

Obtain technology

Access to markets

Strategic
Alliance Reduce financial risk

Reduce political risk

Achieve competitive
advantage
 Corporate Level Strategies

Three Key Issues:

What route?

1. Firm’s directional strategy

What ‘lines of
2. Firm’s portfolio strategy Business’?

3. Firm’s parenting strategy

What to ‘synergize’?
 Corporate Level Strategies

1. Corporate Strategy ( at overall organization level covering all

lines of business of the company as a whole)

Ø which business to hold,

Ø which one to divest

Ø where to enter

v Diversification, acquisition, JV, strategic alliance etc

 Joint Venture Strategies

Two or more companies form a partnership for a specified purpose.

Conditions for JV

1. When an activity is uneconomical for a company to do alone.

2. When the distinctive competence of two or more organizations can be

brought together.

3. When the risk of business has to be shared.

Types of JV

• Between two firms in one industry

• Between two firms across different industries

 GLOBAL EXPANSION STRATEGY

CULTURAL DISTANCE ADMINISTRATIVE

DISTANCE

C A
G E
GEOGRAPHIC DISTANCE

ECONOMIC DISTANCE
 Value Innovations:
Strategic Perspectives
Gaining Sustainable Competitive
Advantage :
Barney’s VRIO Framework
 Blue Ocean Strategy

Promoted by W. Chan Kim & Renee

Mauborgne
 Red Oceans

• Growth attracts new players

• Supply overtakes demand

• Commoditization of products/ services

• Price wars

• Shrunk profitability
 Blue Ocean Strategy

• Understand the rules of the industry and then break/ re-invent/modify

them

• Look for other industries to make modifications in the rules

• Concentrate on “Value Innovation”

Blue Ocean vs Red Ocean Strategy
ERRC GRID : FOUR ACTIONS FRAMEWORK
VALUE INNOVATION
 Strategy
&
Innovations
Innovator’s/ Leader’s Dilemma
3 Horizon Framework of McKinsey
Business Model Innovation
&

Business Model Canvas

 Business Model Canvas ( MBC)

• The business model canvas has helped organizations sketch out and transform their
business models since the late 2000s.

• It consists of nine key elements that each business usually relies on.

Ø At the heart is the value proposition, usually understood as a combination of pains

addressed and gains delivered from a customer’s perspective.

Ø An understanding of who a business’s customers are leads to the capturing of customer

segments.

Ø Between these two, customer relationships and channels sketch out how to relate to
customers, stay open to their input, and deliver the value to them.

Ø Key Activities & Key Resources :Businesses are encouraged to think about the key
activities and key resources needed to create that value. This side of the canvas also
takes a look at key partners, such as through strategic alliances or complementary
offerings, that help create value or further add to it.

Ø The canvas is then underpinned by an understanding of a business’s cost structure and

insights into its anticipated revenue streams.
Ø
 Business Model Canvas for your assigned organization

Key Partners Key Activities Value Propositions Customer Relationship Customer Segments

Key Resources Channels

Cost Structure Revenue Stream

 Hub economy & Platforms
&
Managing Digitalized business models
Platform & Ecosystem
Strategic Plus-Integrating Sustainability
 Corporate Strategy :
Doing well by Doing Good
ESG
CSR
“Doing well by Doing Good”
ESG
Business Responsibility and Sustainability
Report (BRSR)
SCOPE 1, SCOPE 2 & SCOPE 3
From Strategy Formulation to Execution
 Strategic Management Process: 5 steps

1. Establishing Strategic Intent- Vision (direction), Mission ( purpose of

existence) and core values (for guiding conduct, behaviour & beliefs)

2. Setting Objectives as yardstick for measuring company's performance

and progress ( both financial objectives and strategic objectives)

3. Crafting strategy to achieve objectives including evaluating

alternatives/options ( macro environment assessment , industry
assessment / Competition assessment and organization assessment)

4. Implementation /execution of strategies

5. Strategic Evaluation and control : Monitoring development, evaluating

performance and initiate corrective adjustments in light of actual
experience, changing conditions, new ideas and new opportunities.
• Intended strategy vs Emergent strategy vs Realized Strategy
 3 stages of Strategic Management

1. Strategy formulation

2. Strategy Implementation/Execution

3. Strategy evaluation and Control

Moving from Strategy Formulation to
Strategy Implementation
 Strategy Implementation

v Focus on Strategy Execution and Performance Management

v Study of critical elements needed for successful execution
1. Strategic speed
2. Identifying and managing Strategic Risks
3. Significance of Leadership and decision makings in strategy execution
4. Org Structure
5. Skill / talent levers of strategy implementation
6. Levers of controls and Policy to implement strategy
7. Culture and Importance of shared vision and organizational values in
strategy implementation
8. Cross functional Collaboration and Integration
9. Linking of “performance and pay” to strategy execution
10. Managing resistance to change
Culture eats Strategy
for Breakfast ?
 Organizational Culture

Ø Culture is to organizations what personality is to individuals

Ø The dominant values, beliefs and norms which develop over

time and become relatively enduring features of organization
life
Strategy Evaluation & Control
Balanced Scorecard
&
Strategy Map
 THE BALANCED SCORECARD

v The Balanced Scorecard approach to strategy evaluation aims

1. to balance long-term with short-term concerns

2. to balance financial with nonfinancial concerns

3. to balance internal with external concerns.

 The Balanced Scorecard : 4 Linked Perspectives

•BSC encourages managers to look at four different perspectives on company

performance.

• Four different but linked perspectives are derived from the organization’s strategy

1. Financial: How is success measured by shareholders?

2. Customer: How do we create value for customers?

3. Internal: At what internal processes must we excel to satisfy customers

and shareholders?

4. Learning & Growth: What employee capabilities, information systems, and

organizational climate do we need in order to continually improve internal
processes and customer relationships?
Balanced Scoreboard & Strategy Map
GENERAL STRATEGY MAP TEMPLATE
Final Project
 Assignment of Industries & Companies
Student Groups

Group Number Industry Name of the company

1 Fin-Tech PhonePe

2 Fin-Tech Zerodha

3 Retail Nykaa

4 Fin-Tech Groww

5 Gaming Dreams 11

6 Gaming Games 24X7

7 E-Commerce Swiggy

8 Quick Commerce Zepto

9 FinTech PolicyBazaar

10 E-commerce Zomato
 Final Group Project ( 20 marks)
• Project submission is in MS-PowerPoint consisting of max. 10 slides.

• Each group is assigned with the company and the industry/sector.

• Groups are expected to present the following:

1. Company profile: inception to present status -Discussion on strategies adopted by the company -Current status of
the company – performance/KPIs, Key strategic considerations
2. Business Model Canvas at present

3. Strategy maps and Balance Score Card

4. Future growth opportunities-Recommendations with rationale

• Timeslot: 10 minutes for presentation + 3 to 5 minutes for Questions and Answers/Viva Voce to any Group
member

• Students will be evaluated on the following

1. capacity to think strategically about the company, its present business position, its long-term direction, its
resources and competitive capabilities, its various strategies for gaining sustainable competitive advantage
globally.
2. Students need to demonstrate their ability to apply the strategy frameworks wherever applicable.
Org Structure
&
Strategy
 McKinsey’s 7 S Framework

STRUCTURE

STRATEGY SYSTEMS

SHARED
VALUES

SKILLS STYLE

STAFF

Effective organizations achieve a harmony between these seven elements; if one element changes,
then this will affect all the others
Learning Organizations
 Learning Organization

Defined:
An organization skilled at creating, acquiring, and transferring
knowledge and at modifying its behavior to reflect new
knowledge and insights.

Four Main Activities:

1.Solving problems systematically

2.Experimenting with new approaches
3.Learning from their own experiences and that of others
4.Transferring knowledge quickly and efficiently throughout the
organization
 Learning Organizations

1. Learning organizations are organizations in which people continually expand their capacity to
create, where innovation and cooperation are nurtured

2. Knowledge is transferred throughout the organization.

3. Such an organization learns and creates faster than others

4. This ability becomes a major factor in its survival and success.

5. Learning organizations do not simply manage change; their goal is to become a place where
creativity, flexibility, adaptation, and learning are integral parts of the culture and everyday
processes
Benchmarking
 Benchmarking

• “The practice of being humble enough to admit that someone

else is better at something and being wise enough to learn
how to match and even surpass them at it”

2 types:

1. Competitive Benchmarking: direct comparison of one’s own

performance against the best competitors.

2. Generic Benchmarking: comparison of one’s own processes

against the best practices anywhere in any type of
organization.
Strategy Evaluation & Control
 Strategy Evaluation

Three basic activities:

1. Examine the underlying basis of a firm’s strategy.

2. Compare expected results with actual results.

3. Take corrective actions to ensure that performance conforms

to plans.
 Measuring Organizational Performance

Strategists use common quantitative criteria to make three critical

comparisons:

1. Comparing the firm’s performance over different time periods

2. Comparing the firm’s performance to competitors

3. Comparing the firm’s performance to industry averages