1.

Vision, Mission, and Values

• Vision: Describes what the firm wants to achieve in the long term. It is aspirational and
forward-looking.

Example: Tesla – 'To create the most compelling car company of the 21st century by driving
the world’s transition to electric vehicles.'

• Mission: Describes the firm's purpose—what it does, whom it serves, and how.

Example: Google – 'To organize the world’s information and make it universally accessible
and useful.'

• Values: Core beliefs that guide behavior, decision-making, and culture.

Framework: Star Alignment (Strategy, Structure, People, Processes, Rewards)

2. Strategic Fit and Levels of Strategy

• Strategic Fit: Ensuring all activities (marketing, operations, etc.) reinforce one another to
deliver value.

• Levels of Strategy:

- Corporate-Level: Which industries/businesses should we be in?

- Business-Level: How do we compete in this business (cost, differentiation, focus)?

- Functional-Level: How do departments support the business strategy?

3. Business-Level vs. Corporate-Level Strategy

• Business-Level Strategy: Competing in a single market. Focus on achieving competitive
advantage.

Example: Apple iPhone strategy – Innovation and premium pricing.

• Corporate-Level Strategy: Managing a portfolio of businesses across industries.

Example: Alphabet (Google) – Search, YouTube, Waymo, Verily, etc.

4. Resource-Based View (RBV)

• RBV argues that internal resources and capabilities are the main source of competitive
advantage.

• Types of Resources:

- Tangible: Machinery, cash, infrastructure

- Intangible: Brand, IP, reputation, culture

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• Capabilities: Firm's ability to deploy resources effectively.

Example: Toyota’s lean manufacturing system.

5. VRIO Framework
A tool to evaluate a firm’s resources/capabilities for competitive advantage.

• Valuable: Helps exploit opportunities or neutralize threats.

• Rare: Not possessed by many competitors.

• Inimitable: Difficult or costly to imitate.

• Organized: Firm must be structured to exploit the resource.

Example – Netflix:

• Recommendation Engine – Valuable (retains users), Rare (few have it), Inimitable (built
over years), Organized (used to guide user experience) → Sustained Competitive Advantage

6. Value Chain Analysis

• Developed by Michael Porter, it dissects the firm into strategically relevant activities to
understand cost behavior and sources of differentiation.

• Divided into Primary and Support Activities.

Primary Activities:

- Inbound Logistics: Receiving, storing, and managing raw materials. E.g., Walmart's
efficient warehousing.

- Operations: Transforming inputs into final product. E.g., Toyota's lean production.

- Outbound Logistics: Delivery to customers. E.g., Amazon Prime logistics.

- Marketing and Sales: Creating awareness and demand. E.g., Apple's product launches.

- Services: After-sales support. E.g., Dell’s tech support.

Support Activities:

- Procurement: Purchasing raw materials. E.g., Coca-Cola’s supplier network.

- Technology Development: Product and process innovation. E.g., Intel’s chip R&D.

- Human Resource Management: Hiring and training. E.g., Google’s people-first policies.

- Firm Infrastructure: Planning, finance, quality management. E.g., Tata Group's governance
system.

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7. Business-Level Strategies
These are strategies firms use to gain competitive advantage in a specific market.

• Cost Leadership Strategy:

- Goal: Achieve lowest production and distribution costs so that the firm can price lower
than competitors and win market share.

- Requires: Economies of scale, tight cost control, efficient logistics.

- Example: Walmart – EDLP (Every Day Low Prices) strategy, backed by scale and supply
chain mastery.

- Risks: Technology may obsolete cost advantage; competitors imitate; too much cost focus
may harm quality.

• Differentiation Strategy:

- Goal: Offer unique product features that are valuable to customers and allow price
premiums.

- Dimensions: Design, quality, brand, customer service.

- Example: Apple – superior design, OS, integration (ecosystem). Emirates – luxury

customer experience.

- Risks: Price too high for value; imitation reduces uniqueness.

• Focus Strategy (Cost or Differentiation):

- Goal: Target a narrow market segment better than broad competitors.

- Example: Rolls-Royce (niche luxury), Patanjali (ayurvedic segment).

• Hybrid Strategy:

- Seeks to combine efficiency with differentiation.

- Example: IKEA – low cost due to self-service model, but also stylish product
differentiation.

8. Blue Ocean Strategy

• Coined by Kim & Mauborgne. Instead of competing in crowded markets (red oceans),
create uncontested market space (blue oceans).

• Blue Ocean ≠ technology innovation; it’s about value innovation – creating greater value at
lower cost.

Frameworks:

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• Four Actions Framework (ERRC Grid):

- Eliminate: Which factors industry takes for granted should be removed?

- Reduce: Which factors should be reduced below industry standards?

- Raise: Which should be raised above industry standards?

- Create: What has never been offered before?

• Strategy Canvas:

- Visualizes key competing factors in an industry and how players fare. Helps identify
whitespace opportunities.

Real-World Examples:

- Cirque du Soleil: Eliminated animals (costly), reduced tent use, raised aesthetics, created
theatre-circus fusion.

- Yellow Tail Wine: Removed wine complexity, made it simple like beer; created a fun
brand.

- BYJU'S: Reconstructed ed-tech industry by mixing gamified and personalized digital

content.

• Benefits: Opens new demand, avoids direct competition, drives both cost savings and
differentiation.

• Risk: Copycats may emerge; must keep innovating to protect the blue ocean.

9. Corporate Strategy
• Corporate strategy focuses on the selection and management of a mix of businesses in
different industries.

• Its goal is to create and capture value across the portfolio of businesses.

• It answers: What businesses should the firm compete in? How should these businesses be
managed collectively?

Example: Tata Group – manages autos (Tata Motors), steel (Tata Steel), IT (TCS), hospitality
(Taj), each with distinct competitive advantages.

10. Diversification Strategy

• Diversification means entering into new industries or markets to reduce dependency on
one business and leverage firm-wide resources.

• Types of Diversification:

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 - Related Diversification: Businesses share technological, distribution, or market linkages.
(e.g., Disney in movies, TV, theme parks)

- Unrelated Diversification: No common links (e.g., ITC in FMCG, Hotels, Paper)

• Five-Step Diversification Process:

1. Finding Synergies

2. Identifying Resource Gaps

3. Identifying Candidates

4. Evaluating Ally vs Acquire

5. Evaluating Organic vs Inorganic Growth

• Synergy Operators:

- Consolidation: Merge departments to reduce costs.

- Combination: Pool similar resources (e.g., procurement) to gain scale.

- Customization: Tailor different resources for better fit.

- Connection: Cross-sell products to new customer bases.

Case: Yildiz Holding – From biscuits to 164 companies with acquisitions like Godiva and
United Biscuits.

11. Competitive Dynamics and Rivalry

• Competitive Rivalry: Direct competition between firms in the same market.

• Competitive Dynamics: Broader market-level interactions among multiple firms.

• AMC Framework:

- Awareness: Recognition of mutual interdependence.

- Motivation: Willingness to respond.

- Capability: Resources available to respond effectively.

• Strategic Actions: Long-term moves involving high resources (e.g., M&As, new market
entry).

• Tactical Actions: Short-term, reversible moves (e.g., price cuts, ad campaigns).

• First Mover Advantage:

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 - Gains loyalty, brand recognition, and market share.

- Example: Apple with iPhone.

• Second Mover: Learns from first mover's mistakes; reduces risk. (e.g., Xiaomi)

• Late Mover: Responds much later with reduced returns.

• Multimarket Competition: Firms compete in multiple markets (e.g., Apple vs Samsung –

phones, tablets, wearables).

• Resource Similarity + Market Commonality = Higher competitive threat.

12. Mergers and Acquisitions (M&A) – Strategic Management Context

What is M&A?

 Merger: When two companies combine to form a new entity.Example: Vodafone and Idea
merged to become Vodafone Idea Ltd.

 Acquisition: When one company buys controlling stake in another.

o Example: Facebook acquiring Instagram in 2012.

Why Do Firms Pursue M&A?

1. Achieve Synergies

Cost Synergy: Eliminate duplication (shared logistics, HR, manufacturing)

Revenue Synergy: Cross-sell products, expand markets

2. Gain Market Power

Increased market share

Less competition
Example: Disney acquiring 21st Century Fox

3. Acquire Resources & Capabilities

Brand equity, patents, technology, talent pool

Example: Google buying Android to enter mobile OS

4. Diversification

Entering new industries or geographies to reduce risk

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Example: Tata acquiring Tetley to expand globally

5. Speed to Market

Buying is faster than building from scratch

Example: Byju’s acquiring WhiteHat Jr to expand into coding

6. Defensive Moves

Prevent competitors from acquiring strategic assets

Types of M&A

Type Description Example

Between companies in the same Zomato acquiring Uber Eats

Horizontal
industry India

With suppliers or distributors (value Reliance acquiring logistics

Vertical
chain control) startups

Conglomerate Between unrelated businesses ITC in FMCG, Paper, Hospitality

Market-
Same products, new markets Walmart acquiring Flipkart
extension

Product- HUL acquiring GSK Consumer

Related but distinct products
extension (Horlicks)

Process of M&A (Simplified)

1. Strategy Fit Evaluation - Does the target align with our goals?

2. Due Diligence - Legal, financial, operational audit

3. Valuation - What’s the right price? (DCF, Comparable, SOTP)

4. Negotiation & Deal Structuring - Payment type (cash, stock, combo), control
clauses

5. Post-Merger Integration (most critical!) - Aligning cultures, systems, goals [Many

M&As fail here (e.g., Daimler-Chrysler)]

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Risks in M&A

 Overpayment

 Cultural clash

 Redundant operations

 Customer attrition

 Integration failures

Strategic Framework: M&A vs Alliance vs Organic

Criteria M&A Strategic Alliance Organic Growth

Speed Fast Moderate Slow

Control High Shared Full

Cost High Moderate Varies

Risk High Shared Lower (internally controlled)

Example Microsoft-LinkedIn Starbucks-Tata JV Apple developing its own chipsets

Residual Points –

1. Strategic Costing & Target Costing (From Blue Ocean Strategy)

 Target Costing: Strategic approach where you set the strategic price first, subtract
the desired profit, and arrive at a target cost.

 Reverse from Cost-Plus Pricing.

 Example: Swatch set $40 price first, then engineered cost reductions (reduced
parts, used plastic, ultrasonic welding).

2. Price Corridor of the Mass (Blue Ocean Strategy)

 Identifies price range where customers are willing to pay for the new offering.

 Ensures strategic pricing supports mass adoption while fending off copycats.

 Used when network effects or high fixed costs are present (e.g., Netflix, Swatch,
Uber).

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3. Strategic Canvas (Visual tool in Blue Ocean)

 One-page visual showing how your value curve compares with competitors across
key factors.

 Used for strategic positioning and identifying whitespace.

 Example: Yellow Tail Wine simplified wine experience vs premium French wines.

4. Buyer Utility Map (Blue Ocean)

 Framework to assess where and how value is delivered to customers across the
buyer’s experience cycle.

 Helps identify untapped value innovation areas (e.g., Netflix improved convenience
+ productivity).

5. Value-Based Strategy (WTP - MC)

 Willingness to Pay (WTP) and Minimum Compensation (MC) used to assess how
to increase perceived value or reduce cost pressure.

 Example: Apple increases WTP through branding and integration; Ryanair reduces
MC through no-frills model.

6. Icarus Paradox

 A strength that becomes a weakness when overused.

 Example: Nokia overconfidence in feature phones → missed smartphone shift.

7. Growth Strategy Classifications (Ansoff Matrix implied, not directly given)

 Market Penetration

 Market Development

 Product Development

 Diversification

8. Sum-of-the-Parts Valuation (SOTP)

 Used to value conglomerates by separately valuing each business unit.

 Useful in spin-offs, breakups, or restructuring decisions.

9. Corporate Strategy Failures

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  Causes: Misalignment of core values, excessive diversification, poor M&A
integration, etc.

 Cases mentioned: Monsanto, Ferrari World, Kodak, Fresh & Easy.

10. Pioneers, Migrators, Settlers Classification

 Pioneers: Create blue oceans

 Migrators: Improve value in red oceans

 Settlers: Compete on cost in red oceans

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PY Paper

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Q1: Elucidate how Blue Ocean is different from Red Ocean and apply ERRC
Framework to Cirque du Soleil.

Red Ocean vs Blue Ocean

Feature Red Ocean Blue Ocean

Market Focus Existing industries Uncontested new market space

Competition Beat the competition Make the competition irrelevant

Demand Exploit existing demand Create and capture new demand

Strategic Value innovation (increase value +

Value-cost trade-off
Approach reduce cost)

Traditional circuses competing on Cirque du Soleil blending circus with

Example
star acts theater

Cirque du Soleil as a Blue Ocean Strategy

Cirque du Soleil did not compete with traditional circuses on typical factors like clowns,
animals, and star performers. Instead, it redefined the circus industry by combining
elements of theater, dance, and intellectual storytelling, thus appealing to adult and
corporate clients willing to pay a premium.

ERRC Framework: How Cirque Created a Blue Ocean

Action Application in Cirque du Soleil

Eliminate Animal acts, star performers, multiple rings, traditional tent setup

Reduce Costly concessions, high number of acts, star salaries, logistics

Raise Aesthetic and intellectual content, venue quality, price point

A new artistic experience combining theater and circus; storyline and musical
Create
shows

Cirque eliminated costly and ethically challenged animal acts (which were being rejected
by society), and reduced elements like three-ring formats and celebrity performers. It

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raised the sophistication, set design, and ticket prices, while creating a new experience
that was neither circus nor theater but a fusion of both.

This allowed Cirque to escape the saturated, declining circus industry (red ocean) and
open a new market for adult audiences, thereby achieving both differentiation and low
cost — the core of a successful Blue Ocean Strategy.

Conclusion

Cirque du Soleil exemplifies how a company can shift from competing in a crowded space to
creating uncontested market space. By using the ERRC framework, it delivered
unprecedented value to customers while strategically lowering costs, showcasing how
Blue Ocean Strategy can transform even a declining industry into a profitable and
innovative enterprise.

Q2: RoboTech’s Declining Sales – What would you recommend in 2008–2009

regarding diversification into spinal surgery robotics?

(Word Limit: 600)

Context

In 2008–2009, RoboTech faced declining profits due to increasing commoditization and

price competition in its core segment. The proposal is to invest $45M in diversification into
spinal surgery robotics.

Strategic Evaluation Framework

1. SWOT Analysis

Strengths:

 Strong engineering and robotic capabilities

 Existing relationships with hospitals

Weaknesses:

 Weak presence in high-margin specialized markets

 Heavy reliance on one commoditized product segment

Opportunities:

 Spinal surgery robotics is a high-growth, high-margin market

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  Increasing demand for minimally invasive procedures

Threats:

 2008 financial crisis may affect capital investments and hospital budgets

 Incumbents may have a head start (e.g., Intuitive Surgical)

2. Resource-Based View (RBV)

RoboTech possesses strong capabilities in hardware design and surgical applications —

these can be leveraged (valuable, rare, partially inimitable) in spinal robotics if the
organization is structured for it (VRIO test passes partially).

3. Diversification Strategy Assessment

 Related diversification – new product line but within the same domain (robotics +
healthcare)

 Offers a chance to shift into premium, differentiated product space

 Would mitigate revenue pressure from low-end commoditized products

4. Strategic Recommendation

 Approve the $45M investment in spinal robotics but phase it in milestones tied to
R&D and regulatory approvals

 Create cross-functional teams from existing surgical product divisions

 Initiate pilot collaborations with hospitals for early product testing and feedback

 Seek strategic alliances (e.g., with spine specialists or universities) to share risk
and improve market access

5. Risks & Mitigation

 Market penetration will be slow — mitigate via leasing or subscription model

 High R&D failure risk — manage through agile development and modular design

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  Economic downturn — secure long-term capital commitment with contingency
buffers

Conclusion

Despite macroeconomic concerns, the strategic logic of diversification is sound. RoboTech

must invest cautiously but decisively, aiming to position itself in the next-gen surgical
robotics space to achieve sustainable competitive advantage.

Q3: Evaluate RoboTech’s first three years in the U.S. medical device market. What
has worked, what hasn't?

(Word Limit: 600)

What Worked Well

1. Technical Product Strength:

RoboTech’s product quality, precision, and safety standards matched or exceeded
U.S. norms, gaining early credibility.

2. Regulatory Compliance:
Navigating FDA approval processes efficiently positioned RoboTech as a reliable
device provider.

3. Strong Engineering & R&D:

Core competencies in robotics enabled the company to produce functionally
competitive products quickly.

4. Entry Timing:
The U.S. healthcare market was moving towards robotic and minimally invasive
solutions — RoboTech entered at the right time.

Where It Fell Short

1. Weak Branding & Market Positioning:

RoboTech failed to establish itself as a differentiated brand in a market dominated
by players like Intuitive Surgical.

2. Inadequate Channel Relationships:

Lack of strong hospital partnerships and slow adoption by surgeons limited early
traction.

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 3. Pricing Strategy:
The product may have been technically sound but not competitively priced or
bundled in ways appealing to U.S. institutions.

4. Sales & Service Infrastructure:

Underdeveloped local support teams and limited training programs restricted
deeper market penetration.

5. Lack of Physician Engagement:

Physician champions play a key role in adoption — this was not actively cultivated.

Conclusion

RoboTech succeeded technically but underperformed commercially. Going forward, it must

focus on:

 Differentiation through brand and outcome-driven marketing

 Relationship building with top-tier hospitals

 Offering strong service models and physician training

Q4: What should the company do moving forward into 2017 and beyond? Should
it invest in proposed capital projects?

(Word Limit: 400)

Strategic Recommendations:

1. Continue Diversification into Spinal Robotics

o Reinforce earlier decision with stronger commercialization efforts

o Focus on long-term growth in high-margin healthcare subsegments

2. Invest in U.S. Market Depth, Not Just Breadth

o Deepen relationships with top 10 hospital networks

o Build physician loyalty programs and case support teams

o Introduce clinical outcome tracking for credibility

3. Adopt Tiered Pricing and Financing Models

o Offer flexible purchase plans (leasing, per-use pricing)

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 o Improve accessibility for mid-sized hospitals

4. Develop Digital Capabilities

o Integrate AI-based diagnostics and post-op monitoring tools

o Position RoboTech as an innovator, not just an equipment maker

5. Human Capital Investment

o Upskill field support, sales reps, and clinical engineers

o Expand U.S. hiring with local market knowledge

Capital Investment Decision

RoboTech should:

 Approve capital investment selectively, with clear ROI metrics

 Prioritize spinal robotics, digital platform development, and clinical support

infrastructure

 Delay large-scale manufacturing expansion until sales signals strengthen

Final Note

RoboTech must transition from a technically excellent company to a strategically

positioned market leader by integrating commercialization excellence, physician
engagement, and a clear innovation roadmap.

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