1. Dr. T.K. Vijay Kumar Dr. T.K. Vijay Kumar

2. © Dr. T.K. Vijay Kumar  Strategic planning has taken on new importance in today’s world of :-  Globalization,  Deregulation,  Advancing Technology,  Changing Demographics, and Lifestyles.

3. © Dr. T.K. Vijay Kumar Copyright ©2013 Pearson Education

4. © Dr. T.K. Vijay Kumar Copyright ©2013 Pearson Education

5. © Dr. T.K. Vijay Kumar 5 Differentiation Low-cost leadership Focus Which hat is unique? Which hat is Unique?

6. © Dr. T.K. Vijay Kumar Generic Competitive Strategies -- –Lower Cost strategy Greater efficiencies than competitors –Differentiation strategy Unique/superior value, quality, features, service

7. © Dr. T.K. Vijay Kumar

8.  General plan of major action to achieve long- term goals  Falls into three general categories 1. Growth 2. Stability 3. Retrenchment A separate grand strategy can be defined for Global Operations

9. © Dr. T.K. Vijay Kumar  Growth can be promoted internally by investing in expansion or externally by acquiring additional business divisions - Internal growth = can include development of new or changed products - External growth = typically involves diversification – businesses related to current product lines or into new areas

10. © Dr. T.K. Vijay Kumar  Stability, sometimes called Pause strategy,  means that the organization wants ◦ to remain the same size or ◦ to grow slowly and in a controlled fashion

11. © Dr. T.K. Vijay Kumar  Pause  Proceed-with-caution  No change  Profit

12. © Dr. T.K. Vijay Kumar  Diversification is a form of corporate strategy for a company. It seeks to increase profitability through greater sales volume obtained from new products and new markets. Diversification can occur either at the business unit level or at the corporate level. At the business unit level, it is most likely to expand into a new segment of an industry that the business is already in. At the corporate level, it is generally via investing in a promising business outside of the scope of the existing business unit.  Diversification is part of the four main growth strategies defined by the Product/Market Ansoff matrix

13. © Dr. T.K. Vijay Kumar Strategies in Declining Industries Intensity of Competition in Declining Industry Few strengths Many strengths High Low Divest Quickly Niche or Harvest Harvest or Divest Leadership or Niche Leadership: Seek a leadership position in terms of market share. Niche: Create or defend a strong position in a particular segment. Harvest: Manage a controlled disinvestment, taking advantage of strengths. Divest Quickly: Liquidate the investment as early in the decline as possible. * Value-Add Info.

14. © Dr. T.K. Vijay Kumar The organization goes through a period of forced decline by either shrinking current business units or selling off or liquidating entire businesses  Retrenchment Reduction of expenditures in order to become financially stable. ~ Cutting down or back; reduction, ~ Curtailment of expenses. i.e., Downsizing and Curtailment  Liquidation Selling off a business nit for the cash value of the assets, thus terminating its existence  Divestiture Selling off of businesses that no longer seem central to the corporation * Value-Add Info.

15. © Dr. T.K. Vijay Kumar  Turnaround  Captive  Divestment  Bankruptcy  Liquidation

16. © Dr. T.K. Vijay Kumar

17. Independent Product-Market unit with: 1. Unique mission 2. Identifiable competitors 3. External market focus 4. Control of its business functions 4.8Strategic Business Unitp. 89

18. © Dr. T.K. Vijay Kumar The plan of action that prescribes resource allocation and other activities for dealing with the environment, achieving a competitive advantage, that help the organization attain its goals Strategies focus on: ● Core competencies ● Developing synergy ● Creating value for customers * Value-Add Info.

19. © Dr. T.K. Vijay Kumar Competitive advantage is what allows a firm to gain an edge over its Rivals in attracting Customers and Defending against Competitive forces. Key challenges of competitive advantage: 1. Build Advantage 2. Extend Advantage 3. Organize for Advantage 4. Sustain and Renew Advantage

20. © Dr. T.K. Vijay Kumar NPD Quality Superior customer service Achieving lower costs Better geographic location Technical expertise Supply chain management Brand image / reputation * Value-Add Info.

21. © Dr. T.K. Vijay Kumar Market Target Type of Advantage Sought Overall Low-Cost Provider Strategy Broad Differentiation Strategy Focused Low-Cost Strategy Focused Differentiation Strategy Best-Cost Provider Strategy Lower CostDifferentiation Broad Range of Buyers Narrow Buyer Segment or Niche * Repeat Info.

22. © Dr. T.K. Vijay Kumar Methods of Analysis to find and select strategies:  Cluster Analysis  TOWS Matrix  SPACE matrix (Strategic Position and Action Evaluation Matrix)  Portfolio Analysis  Boston Consulting Group  IE (Internal and External) Matrix-- For class use the General Electric Business Screen (an IE-type matrix)

23. © Dr. T.K. Vijay Kumar  Cluster Analysis is the bringing together of the most important Strengths, Weaknesses, Opportunities and Threats to identify problems. (Core and Distinctive Competencies and Critical Success Factors are likely to be in your Cluster Analysis.) Cluster Analysis or clustering is the task of grouping a set of objects in such a way that objects in the same group {Ref: Positioning Grid}  When you make a matrix out of SWOT items it is called a TOWS matrix which identifies potential strategic alternative types--SO, WO, ST, WT ( strategies). * Refer Mod-1

24. © Dr. T.K. Vijay Kumar  TOWS MATRIX is not used to pick alternatives but to give an idea of potential problems, and opportunities and the strategies to overcome or exploit those Opportunities and Threats.

25. © Dr. T.K. Vijay Kumar 25 The TOWS Matrix List strengthsList weaknesses STRENGTHS - SWEAKNESSES - W OPPORTUNITIES - OSO STRATEGIESWO STRATEGIES THREATS - TST STRATEGIES WT STRATEGIES List opportunities Use strengths to take advantage of opportunities Overcome weaknesses by taking advantage of opportunities List threats Use strengths to avoid threats Minimize weaknesses and avoid threats * Repeat Info.

26. © Dr. T.K. Vijay Kumar Treats product lines or SBU’s as potential investments.  Portfolio Analysis methods include: Boston Consulting Group (BCG)-Growth Share Matrix—This company is one of largest strategic consulting companies in U.S. GE Matrix (Similar to IE Matrix–value of the GE Matrix over IE Matrix is that once you plot your company on the Matrix, locations on matrix are associated with best strategies to pick, and types of strategic leadership to initiate strategy.) Product/Market Evolution Matrix (Not in text)

27. © Dr. T.K. Vijay Kumar The BCG Matrix Relative Market Share Position in the Industry Industry Sales Growth Rate (Percent) High +20 Medium 0 Low - 20 High Medium Low 1.0.50 0.0 Question Marks (I) Dogs (IV) Stars (II) Cash Cows (III) ?

28. © Dr. T.K. Vijay Kumar  Quadrant-I --Question Marks ?  Low Market share, Hi Growth  use intensive strategies such as market penetration, market development, product development  Quadrant II, Stars  High Industry Growth Rate  Use backward and forward integration, horizontal integration, market penetration, market development, product development and joint ventures  Quadrant III, Cash Cows –  High Market Share, Low Industry Growth Rate  Use Product Development or Diversification  Quadrant IV, Dogs  Low industry Growth Rate, and Low Market Share  Use retrenchment, liquidation, divestment * Value-Add Info.

29. © Dr. T.K. Vijay Kumar  Uses industry attractiveness and business competitive strength on axes  Circles represent industry sales, wedge represents companies share of market  Product or SBU position on graph indicates type of strategy likely to be best choice.  We can use IFE weighted score and EFE weighted scores for axes * Value-Add Info.

30. © Dr. T.K. Vijay Kumar A Winners B C Question Marks D F Average Businesses E Winners Losers G H Profit Producers StrongAverageWeak Low Medium High Business Strength/Competitive Position Industry Attractiveness Source: Adapted from Strategic Management in GE, Corporate Planning and Development, General Electric Corporation. Used by permission of General Electric Company.

31. © Dr. T.K. Vijay Kumar * Value-Add Info.

32. © Dr. T.K. Vijay Kumar Internal Factors Weight Rating Weighted Score Comments 12345 1.00 Strengths Weaknesses Total Weighted Score * Value-Add Info.

33. © Dr. T.K. Vijay Kumar Organizational Combination Strategic Alliances Preferred Supplier Arrangements Strategic Business Partnering Mergers Acquisitions Low High Joint Ventures Degree of Collaboration * Value-Add Info.

34. © Dr. T.K. Vijay Kumar  Turnaround is the process of corporate renewal and involves planning and analytical tools to save troubled companies and return them to solvent position  To identify the reasons of financial distress  Characteristics of a successful Turnaround plan  Employment of Business Consultant, Turnaround specialist, Interim CEO/Turnaround CEO, Accounting firm, Legal firm and Public Relations Firm  Predicting financial distress through ratio analysis  Considering financial and non-financial aspects of the business  Expert turnaround team- business knowledge, expertise and experience  Turnaround Strategies  Revenue Enhancement- Improvement of systems, processes and technology  Cost Reduction  Asset Reduction- Portfolio disinvestment through selling off assets is used as mechanism to raise cash for the turnaround * Value-Add Info.

35. © Dr. T.K. Vijay Kumar  Leadership  Structural design  Information and control systems  Human resources * Value-Add Info.

36. © Dr. T.K. Vijay Kumar