Module 3

Strategy Implementation and

Control
Syllabus
Leadership in Strategic Management;
Portfolio Analysis- BCG Matrix, GEC Model, etc,
Control Process Analysis and Follow-up Action for
Control,
Evaluation Strategy.
Strategy Implementation
Who ?
BOD
Top Management
Division manager
Low level mangers
Consideration /problems/conflicts
Strategy formulation
(Does the strategy fit to organization recourse and environment)


Implementation
(How well the strategy
has been executed)




Strong Weak
Strong
Weak
Strategic Implementation plans
Budgets
Programmes
Procedure
Synergy
Synergy achieved

Shared Knowledge
Shared resources
Pooled negotiation power
Economies of scale
Creative involvement

Strategy Implementation
7S Model by Mc Kinsey&co

1. Strategy Set of actions - start with and must maintain
2. Structure - Organisation Chart
3. Systems - All the processes and information flows that
link the organisation together
(budgeting systems ,Information systems, productions )
4. Style culture values belief
5. Staff How you develop managers (current and future)
6. Super ordinate Goals Longer-term vision, Shared
objectives
7. Skills capabilities that exist in the organisation

7S Model by Mc Kinsey&co
Bill plan for effective implementation
1. Action Planning
2. Organization Structure
3. Human Resources
4. The Annual Business Plan
5. Monitoring and Control
6. Linkage.
Leadership and strategy
What is meant by Leadership?
What is meant by strategic leadership?
Ability to anticipate events,
Envisage possibilities
Maintain flexibility
Empowers others to make strategic change

Stories of
Ratan Tata
N R Naramoorthy -1981
Karsanbhai Patel -1976
Azim Pemji
Kochaoseph Chittalppally
Beena Kannan
Leaders Functions
Developers team work
Representative of sub ordinates
Appropriate counselor
uses power properly
Manages time well
Strives for effectiveness

Transactional and transformational leaders
Who is strategic leader?
A manager who primarily responsible for creating and
implementing strategic change
Responsibility ----Ensures that
Long term objective are converted to strategic plan of
actions understood and supported by people working
at various levels
Plans implemented through Organization structure
Communication two set up

7 point responsibility

Managing change

Strategic Vision, Pragmatism
(Make things happen thing &positive results )


Communication network Structure and policies


Culture Governance and Management

Leadership as competitive advantage
Strategic
leadership
BCG matrix
Portfolio Analysis

15
BCG growth-share matrix
BCG (Boston Consuting Group ) is a simple way to
anayse a firms portfolio of investments , products
, or business units.

The classification is most attractive, potentially
attractive, moderately attractive, and least
attractive based on growth rates and market
share.

STRATEGY FORMULATION
Boston Consulting Group (BCG)
BCG Matrix
Analyzes business opportunities according to growth rate
and market share


SETTING STRATEGIC DIRECTIONS
Growth Strategies: Where Do We Want to Go?
Business Portfolio Analysis (BCG Matrix)
Relative Market Share-horizontal axis
Market Growth Rate-vertical axis
Cash Cows
(LH)
Stars
(HH)
Dogs
(LL)
Question Marks or Problem Children
(HL)
18
BCG matrix ( cont. )
Stars and question marks are businesses that operate in
high growth industries.
Cash cows and dogs are businesses that operate in low
growth industries.
Stars are net users of resources but hold potential for
future.question marks are also net users of resources but
are in high risk categories.
A cash cow brings lot of cash to the company. Dogs are
weak in market share and also in low growth market.they
are a drag on company resources.
Boston Consulting Group portfolio analysis for
Kodak sbus in 2003
Kodak self-
service kiosk
Kodak film sales: US,
Canada, & W. Europe
Kodak digital
photo printer
Kodak digital
camera
The GE/ McKinsey Matrix
Classification of SBUs/products into nine cell
matrix based on
Market Attractiveness
Multiple Indicators

Business Strength
Multiple Indicators

How does it differ from the Boston Matrix?
There are similarities:
Two dimensions are used to create a matrix
Each cell suggests an appropriate strategy
In both cases we are concerned with the future strategy for a particular area
(eg a division) within the firm

There are major differences
The GE matrix involves a wider analysis of the firms operations
The dimensions of the GE matrix are industry attractiveness and business
strength (rather than market share and market growth)
There are nine cells and a wider choice of strategies
The Boston Matrix focuses on products within the firms product range The GE
matrix can be extended to look at strategic business units
Steps In Developing GE Matrix
1. Select Factors & Indicators.
2. Assign each indicator a weight (total = 1)
based on its importance.
3. Rate the industry on industry indicators and
company on business indicators on scale of
1(weak) 5 (strong).
4. Multiply weight times rating and total for
summary measures.

Criteria which makes a market attractive
Market size
Growth rate
Overall returns in the
industry
Industry profitability
Intensity of competition
Profit margins
Differentiation
Industry fluctuations
Customer/supplier relations



Variability of demand
Rate of technological
change
Volatility
Availability of market
intelligence
Availability of work force
Global opportunities
PEST factors
Entry and exit barrier
Government regulation
Assessing internal strengths
Production capacity
Production flexibility
Unit costs
R and D capabilities
Quality
Reliability
Company image
Product uniqueness
Cost and profitability
Profit margins relative to
competitors
Manufacturing capability
Organisational skills

Market share
Growth in market share
Marketing capabilities
Management competence
Skills of workforce
Distribution network
Size and quality of sales force
Service quality
Customer loyalty
Brand recognition


GE Portfolio Analysis
Sample Industry/Market Indicators
Market Factors
Size
Growth Rate
Cyclicality
Seasonality
Competition
Type of competitors
Degree of Concentration
Financial & Economic
Contribution Margins
Barriers to Entry or Exit

GE Portfolio Analysis
Industry/Market Indicators
Technological
Patents & copyrights
Will it become obsolete
Sociopolitical
Social attitudes & trends
Laws & government regulations
GE Portfolio Analysis
Business Strength Indicators
Market
Companys Market Share
Companys Sales or Share Growth Rate
Competition
Strength of product, promotion, price, distribution,
financial resources, management relative to
competition
Financial & Economic
Companys Margins
Economies of scale
GE Portfolio Analysis
Business Strength Indicators
Technological
Companys ability to cope with change
Technological skills
Patent Protection
Sociopolitical
Companys responsiveness & flexibility
GE Portfolio Example
.68
2.66
2 .34 Distribution Net
1.65 5 .33 Product Quality
.33 1 .33 Market Share
Business
.68
3.32
2 .34 Profit Margins
.99 3 .33 Growth
1.65 5 .33 Size
Value Rating (1- 5) Weight Market Factor
GE Portfolio Analysis




Market
Low
Medium
High
Low Medium High
Business
GE Portfolio Analysis




Market
Low
Medium
High
Low Medium High
Business
Business / Competitive Position





Market


Market
Attractive-
ness
High Medium Low


High
Maintain Leadership
Invest to Grow
Concentrate on
Maintaining Strength

Challenge Leader
Invest to Build Selectively
Reinforce Strengths

Overcome Weakness, Find
Niche or Quit
Build Selectively



Medium
Challenge Leader/Build
Selectively
In most attractive markets
Or counter competition
Emphasize profitability by
raising productivity

Manage for Earnings
Protect existing programs
Concentrate on profitable,
less risky segments

Harvest (Gradual
Withdrawal) or Limited
Expansion
Look ways to expand
without high risk
Or Minimize investment



Low
Generate Cash
Manage for current
earnings
Concentrate on attractive
Segments
Defend Strengths

Harvest
Minimize Investment
Protect positions in most
profitable segments

Divest
Sell at time that will
maximize cash value
Cut fixed costs and avoid
investment

36
GE multifactor portfolio planning
matrix
Different businesses or products are rated based on the following
two parameters,
Industry attractiveness &
Companies business strength.
How attractive is the industry and how strong is the firm in the
industry.
If both are very strong such businesses needs more investment
and allowed to grow. Invest and develop such SUBs.
If they are medium the stategy should be selective.
If they are low the policy should be harvest / divest
Evaluation and controll
'Evaluation and control' is a process in which
firm activities and performance results are
monitored
so that actual performance is compared
with desired performance
Steps
Evaluation aspects
Performance
bench marking
Why performance are measured?
How performance evaluated
Financial measures
ROI, EPS,ROE
Stakeholders based
Shareholders
Customer based
Supplier based
Employee based
Value based
EVA,MVA
Functional based >>functions , responsibility centre
based




responsibility centre based

Concerns of performance measurement
1. bench mark
2. Sufficient period
3. Goal displacement


Control
Input Control
Output control
Behavior control (sales call, work .