Key Slides - MBA Core - 3rd Jan 24

Strategic Management
by
Dr Divakar Kamath
TOTAL MARKET
vs
TAM
Sell To
vs
Sell Through
Vs
Sell With
COCO
vs
CODO
Vs
DODO
Michael Porter
Strategy is about
making choices and
trade offs: its about
deliberately
choosing to be
different
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?
Strategy
Definition of Strategy
Strategy is the direction and scope of an organization over
the long term, which achieves advantage in a changing
environment through its configuration of resources and
competences with the aim of fulfilling stakeholder
expectations.
3 stages of Strategic Management
1. Strategy formulation
2. Strategy Implementation/Execution
3. Strategy evaluation and Control

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
Vision Core Value
s
Mis s io n
Obje c tiv e s
Policy
Guiding
Culture Principles
Setting Objectives
• Objectives denote what an organization hopes to accomplish in a future

period of time.
1. Financial Objectives
2. Strategic Objectives
• Characteristics of objectives
1 ) Should be understandable
2) should be quantifiable
3) should be time bound
4) should be measurable
5) should be challenging
Strategy- 5 Ps
Mintzberg (1987):
1. Plan:
2. Ploy:
3. Pattern:
4. Position:
5. Perspective:
Layers of Business Environment
Macro-environment – PESTEL
External Environment Analysis
• 4 components of Environmental Analysis
– Scanning
– Monitoring
– Forecasting
– Assessing
Porter’s Five Competitive Forces Framework
Attractive Industry
vs
Unattractive Industry
“Intensity of industry competition
and
industry’s profit potential
is a function of 5 forces
Strategy can be viewed as
“building defenses against competitive forces”
OR
“ Finding a position in the industry where the forces are
weakest”
Industry Transformation
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
Organization Assessment
for
Gaining Competitive Advantages
Michael Porter’s
Value Chain Framework
The Basic Value Chain
Michael Porter’s Value chain
• Each activity should be examined relative to competitors’ abilities.
• Accordingly, firms rate each activity as superior, equivalent, or

inferior.
• 2 Major avenues for achieving Competitive advantages:
1. Do a better job than rivals of performing value chain activities

more effectively
2. Revamp the firm’s overall value chain to eliminate or bypass

some cost –producing activities.
Types of Strategies
• strategy for an entire

(often larger)corporation
• Includes M&A, Portfolio

mgmt., Diversification
Corporate Strategy
• Strategy for a business unit,

Business division or smaller company
• Target market, value
(Division Level) proposition, positioning,
Strategy revenue model and capabilities
• Departmental strategy such as

Functional & Marketing, Sourcing,
Production, IT , HR etc
Operational • How do we support the Growth
Strategy & Profit objectives?
• How to create efficiency, add
value to the business and
corporation
Business-Level Strategies
Who will be
served?
Key Issues
in What needs will
Business-level be satisfied?
Strategy
How will those

needs be satisfied?
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?
Choice vs Trade Offs?
TAM?
3 Cs: Strategic Triangle
Company/
Management
Customers Competition
SWOT Analysis
Strengths – S Weaknesses – W
List Strengths List Weaknesses
Opportunities – O SO Strategies WO Strategies
Use strengths to take Overcoming

List Opportunities
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
Porter’s 5 Generic Competitive Strategies
Ansoff’s Product/Market Expansion Grid
BCG Matrix
Hi Cash Source Lo
Hi
Hi STAR ???
“Hold” “Build”
Market Growth rate
Cash Use
Cash Cow DOGS
“Harvest” “Divest”
Lo Lo
Hi Lo
Relative Market Share
GE Model
Business Strategy: 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
G E 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
GE MODEL Business Strength M
A
Protect Position Invest to build Build Selectively
R
Specialize around
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
Build up ability to counter segments where expand without high A
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
attractive segments Upgrade product line avoid investment E
Defend strengths Minimize investment meanwhile S
S
Strong Medium Weak
Corporate Strategy
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

Corporate Strategy 1: M&A
Corporate Strategy 2: Diversification
Corporate Strategy 3:
Growth through Integration

Growth by Cooperation Strategy
Global / International Entry Strategy
Restructuring ,
Divestment,
De-merger/Spin offs
Turn Around & Change Management
Doing well by Doing Good
ESG
CSR

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Strategic Management

q Who will you target as customers

3. Strategy evaluation and Control

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

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

3. Crafting strategy to achieve objectives including evaluating

4. Implementation /execution of strategies

5. Strategic Evaluation and control : Monitoring development, evaluating

• Objectives denote what an organization hopes to accomplish in a future

3) should be time bound

• 4 components of Environmental Analysis

2. What is it that you do best ?

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

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

• Each activity should be examined relative to competitors’ abilities.

• Accordingly, firms rate each activity as superior, equivalent, or

• 2 Major avenues for achieving Competitive advantages:

1. Do a better job than rivals of performing value chain activities

2. Revamp the firm’s overall value chain to eliminate or bypass

• strategy for an entire

• Includes M&A, Portfolio

• Strategy for a business unit,

• Departmental strategy such as

How will those

q Who will you target as customers

List Strengths List Weaknesses

Opportunities – O SO Strategies WO Strategies

Use strengths to take Overcoming

Threats – T ST Strategies WT Strategies

List Threats Use strengths to Minimize weaknesses

The GE Business Screen is an improvement over the BCG

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

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

But suffers from lacking ‘hard’ measures – many judgemental

1. Overall Market size

Sell at time that will E

1. Corporate Strategy ( at overall organization level covering all

v Diversification, acquisition, JV, strategic alliance etc

Growth through Integration

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