Business Strategy : Introduction

Agenda 1. 2. 3. 4. 5.

Quotable Business Quotes Identifying Customer needs Importance of Strategic Mgmt. Changing Business Scenarios SM Process : 9 Critical Steps

Case Studies : Mahabharat War Tata Group HUL

Kotlar Quotes

It is not imp what I can produce or What I can sell ? It is important What customer wants !

It is no longer enough to satisfy customers, you must delight them !

Kotlar Quotes

Customer is demanding more & more for less & less.

The most important thing is - to forecast where the customers are moving - and to be in front of them.

Kotlar Quotes

Most of today, marketplace is moving to cyberspace.

Low performing company says we have good designers High performing company says we have good project managers.

Kotlar Quotes

The business scenario is changing, has already changed a lot. Only I have not noticed - What is this change ?

The successful sales person cares - first for the customer, - second for the product.

AMBANISPEAK:
THE BEST OF DHIRUBHAI

My success is my worst enemy In conditions where too many try and too few succeed, the success of someone like me is bound to cause envy.

Entitlements and licenses were available for everyone to take advantage of. If they were not quick enough off the mark, is it my fault?.

AMBANISPEAK:
THE BEST OF DHIRUBHAI

If there is profit to be made, I am not going to wait for a written invitation. I had the courage to defy the system, even face persecution. You have to sell your ideas to the government. Selling the idea is the most important thing, and for that Id meet anybody in the govt. I am willing to salaam anyone.

How to creat a business . ?? find the Customer Needs.

No customer told Sony . . That I want Walkman No Customer told .. .. Apple . that I want I-Pod .Bank that I want ATM . Chauhan, that I want Bottled water

Its the businessmans vision to seek business opportunity to create new products & services

Importance of Strategic Management

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1.

Mahabharat War : 3000 Yrs. Ago : 30 Yrs. ago

2. Software War

Case 1 :
Kauravas
2.41 Mn. Soldiers Commanders Bhishma Dronacharya Karna Finally, who won the war?

Mahabharat War
Pandavas
1.53 Mn Soldiers

Non-Playing CaptainKrishna

And how ?

Case 2 :

Software war

Critics acknowledge that

Apples Macintosh is far superior than Microsofts Window Who won this war ? How ?

Business Transformation

Till 1900 - Individually Owned Family Managed

1940s

2 Economies

1980s

www economy

Changes of 1990s
1990s saw winds of change across the world
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Breakdown of erstwhile USSR, emergence of uni-polar world, WTO (1995)led to decline of trade & non-trade barriers. 1990s also saw the IT & Telecom revolution

Results : The world is becoming a small global village.

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Increased globalization is forcing companies/firms to upgrade technology so as to fight global competition.

21st Century International Business Scenario

As a part of WTO compliance, nations are enacting and strengthening patent regimes. This enables MNCs to execute technology transfer / licensing agreements, with ease by maintaining control over their technological assets and without risking loss of their technological superiority. IT, Internet, mobile phones, Cable TV etc. have further increased the pace of globalization.

High information flow available across the world leading to - more awareness and generating demand for new or improved technology and new or improved products, services or processes.

- Lead-time from invention to market has fallen sharply

PLC becoming shorter due to rapid technological change. Thus, urgency for companies to tap maximum benefits from the existing technology and its related products by simultaneous offering in many markets/countries.

As a result Technology is getting globalized at a fast rate. This is clearly noticeable in the following developments : Share of hi-tech products in the international trade is rising and low-tech products is falling

Technology transfer agreements are on an increase Manual operations are being automated, mechanized and computerized Infusion of technology has transformed many industries Standards of living are improving across the world.

Today's World

Fast moving marketplace Highly competitive (Size and no. of competing firms) More Uncertainty ( both, inside & outside) International trade (No Boundary) Government ( as a Buyer, Seller, Regulator, Competitor) Internet ( from Marketplace to Cyberspace)

Why do you need

Strategic Planning
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To make the things happen To survive in competition & surge ahead

Aim of strategy
To shape companys business , products & services so that they achieve targeted profit & growth.

Evolution of Strategy Function

Originally from a Greek word : STRATEGIA ( meaning a General or Military Commander )

War & Strategy are inseparable Business is also a war - Warriors ? Battlefield Weapons ? ?

Strategy Gurus Their contributions

Igor Ansoff Gap Analysis, Synergy, Ansoffs Matrix Minzberg Crafting of Strategy Peter Drucker MBO Michael Porter 5 Forces Analysis, Value Chain, Generic Strategies C K Prahlad Core Competency, BoP Gary Hammel BPR Sumantra Ghoshal 3Ps: Purpose, Process and People,
Trans-National firms, Individualized Corp.

Kenichi Ohamae

3Cs model : Strategist must focus on Corporation, Customer & Competition.

Strategy Function

Most large company consists 3 - 4 Org. Levels Corporate Divisional / Business Unit Product Level / Functional Corp. H/Q undertake 4 planning activities Defining the corporate Missions Establishing SBUs Planning new businesses, downsizing or terminating older businesses Assigning resources to each SBU

Concept of Strategic Management

Strategy Evaluating various alternatives and selecting the best.

Strategic Management Setting Objective Framing Polices & providing Resources Implementation

Mission and Goals

Whats possible? SWOT -Strategic Choice

External Analysis Opp. & Threat

Internal Analysis Strength & Weaknesses

Corp. Level Strategy Global Strategy Business Level Strategy Functional Strategy

Designing Organizational structure

Strategy

Implementati on Matching strategy structure

and controls Managing strategic change

Designing control system

feedback

Strategic Management Model

Difference between Goal and Strategy

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Destination and Paths

How important Environment Scanning ?

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A Blind and a Lame passing thru a jungle

Weaknesses . along with Strengths Overcoming threats and Not loosing the Opportunities

What Strategy means for whom?

Manager
Strategy means their future oriented plans for interaction

with the competitive environment to achieve co. objective.

Company
Strategy means a Game plan.

Corporate world
Strategy reflects a company's awareness of - how, when &

where it should complete? And against whom & for what purpose?

Level

Designation

Decision Characteristic
More value oriented long range plans, Guiding principles

Examples
Choice of Business, Sourcing of L/T Finance, Company Image, Financial Performance & Social Responsibility Plant relocation, Market Segmentation & Geographic coverage , Distribution Channels Production Scheduling, Plant & Machinery, HR selection, training Generic v/s Brand Mktg. High v/s Low Inventory

Corporate

CEO / MD Exc. Director

Business

SBU Heads / VP

More concrete in the decision

Functional

Operating Managers, Front Line Manager

Action -oriented Opnl. Issues, Relative Short Range Plan with low Risk, Concrete & Quantifiable Decisions Immediate Implementation

Diff. between the Strategic Mgmt. and various other management functions

S/M integrates various other function. S/M Achieves organization wide goals. S/M considers range of Stake-Holders Concerned with Efficiency and Effectiveness 1. Efficiency Doing Things Right 2. Effectiveness Doing the Right Things (Balanced Emphasis on the both)

Strategic Management 9 Critical Tasks

1. 2. 3. 4. 5. 6.

Formulating Companys Mission , Purpose, Philosophy, Goals.

Developing Co.Profile (reflecting Int. Conditions & Capabilities) Assessing External Environment.

Analyzing Options (by matching resources with the Ext. Envmt) Identifying Most Desirable Options ( to meet Co. Mission) From L/T Objectives & Grand Strategies, select the most desirable option.

7. 8.

Developing Annual Objectives & Sh. Term Strategies. Implementation - Matching of Tasks, Resource Allocation, ,

People, Org. Structure, Technologies, Reward Systems. 9. Evaluation ( of Success) for future Decision Making.

Strategic Decisions of Tata Sons for Tata Group

( 2002 Study Report of Merryl Linch) Earlier Tata Group position
85 Cos. (with 300+ Subsidiaries) spread into 45 Businesses

However, star performers are

11 Cos. contributing 85 of T/O and 90 % of Profit

Merryl Linch recommendation

To bring down from 85 Cos. to 40 -45 Cos. To get leadership position in 7 Businesses

Strategic Decisions of Tata Sons for Tata Group

( 2002 Study Report of Merryl Linch)

Strategy Formulated & Implemented

Consolidation into Engineering, Materials, Power, Chemicals, IT, Telecom, Services Cos. hived off Tomco, Lacme, ACC, Goodlac Nerolac, TRF, Tata Ceramics, Tata Yodogavwa

Strategic Decisions at HLL

Corporate Level Strategy Core Business Focus on Power Brands Hive off Low-Margin Business Actions Taken 30 Power Brands developed Rs. 400 Crs. spent on Quality up gradation Got out of Rs. 2000 Cr. worth low business of Animal Feed, Specialty chem. Oil & Fat, Shrimp Export etc.