Lecture 1/9

Learnings from Patton

Strategy
an introduction

Ajit Prasad
Dean, IIM Raipur
Dec 2012

strategy is about leadership strategy is about winning strategy is about not loosing sight of the end objective the need to look at things differently
This is where strategic thinking comes in
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What is the difference ?

HLL decides to continue with Wheel despite the fact that the division is making losses HLL decides to close down wheel on the basis of division profitability and cash flows

Porter: What is Strategy?, 1996

Operational Effectiveness is a necessary but not a sufficient condition for sustained competitive advantage For SCA, a company has to strategize !
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The Captain of the S Africa team deliberately looses to Zimbabwe in 1999 World Cup Despite sustained losses, Kellogg's Chairman says he will not exit, has a long term perspective for India

The Captain of the SA team decides to win all matches that he plays Kellogg's decides to close down Indian operations after making losses in the 3rd year

purpose of strategy
strategy is about control strategy is about changing the rule of the game strategy is about creating fundamentally new competitive space

Strategy and the value proposition

Strategy allows us to
create a different overall value proposition to the customer Exploit discontinuities in the competitors value proposition

apple vs ibm in personal computers enron vs shell in financial instruments akai vs rest of the industry in ctv

why is control, important ?

Control is required for survival !

Ultimately, strategy is about positioning

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Positioning needs to be flexible

McDonalds
India : No beef Germany : serve beer Japan : shrimp burgers Hong Kong : rice patties Chile : no ketchup, but avocado paste Greece : pita bread
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Strategy History: The 1960s

The context
Post WWII boom, new industries like chemicals & electronics, increased trade and globalization

The response
Fit between opportunity and risk matching with organizational capabilities

The Proponent
Kenneth A Andrews

The Framework
SWOT
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Strategy History : The 1970s

The context
Excess capacity creation, oil shocks, differing profitability levels, sine wave cycles of industries

Strategy History : The 1980s

The context
Increased competition both domestically and from Japs. Disappointing effects of M&A, diverse and often unwieldy portfolios

The response
Have a balanced portfolio based on asynchronous curves and growth in emerging areas.

The response
Achieve and sustain competitiveness in business, constrain into generic strategies.

The Proponents
Bruce Henderson & others

The Proponent
Michael E Porter

The Framework
BCG and other portfolio matrices
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The Framework
Competitive analysis
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Strategy History : The 1990s

The context
Continued threat from competition, falling margins, low and often negative contribution

Strategy History : The new century- 2001

The context
Market consolidation and falling margins.

The response
Find a way to rationalize business portfolio

The response
Reorganize business by reducing transaction costs and spread risks, unbundling of businesses.

The Proponent
C K Prahalad & Gary Hamel

The Proponents
Hagel, Porter & others

The Framework
Core Competency
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The Framework
Web, clusters etc
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the strategy vocabulary

mission : the reason for existence

the strategy vocabulary

vision : the personal dream of the CEO

do we remember ?, is it short ? does it motivate ? does it influence decision making ?

CEO led vs Organic Vision Statements

good mission statements must do all the above Mission statements serve a very important purpose.

objective :: quantified dream which has to be achieved goal : short term concrete specification question : is the vision

consistent with the mission ? does it result in consistent objectives and goals ?

they are also the basis for a SWOT analysis

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the strategy vocabulary

strategy : response to uncertainty

the strategy vocabulary

policy : broad general guidelines

if an event is dead certain, you don't need a strategy

formal vs. informal focus on tactics or strategies

three types of strategies

tactics : short term strategies

corporate business functional

plan : locus of movement along a path specified by strategy

which is the responsibility at what level ?

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every plan has an underlying strategy

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swot , vision & strategy

swot
what am i ?

Some essential Strategy readings

Books
Henry Mintzberg, Strategy Safari Michael Porter, Competitive Strategy K Ohame, The Mind of a Strategist A Grove, Only the Paranoid Survive C K Prahalad, Competing for the Future P Ghemawat, Strategy & the Competitive Landscape

vision
where do i want to go ?

strategy
how to get there ? [choice]

Text Books
Parnell, Strategic Management, Biztantra Johnson & Scholes, Exploring Corporate Strategy, Prentice Hall Fitzroy, Strategic Management, Wiley

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