Group no-07

Sayali wani and guneet chadda

Q2.Explain the process of strategy formulation & strategy implementation

with the help of its framework diagram?

Definition: Strategy Formulation is an analytical process of selection of the

best suitable course of action to meet the organizational objectives and
vision. It is one of the steps of the strategic management process. The strategic
plan allows an organization to examine its resources, provides a financial plan
and establishes the most appropriate action plan for increasing profits.

It is examined through SWOT analysis. SWOT is an acronym for strength,

weakness, opportunity and threat. The strategic plan should be informed to all
the employees so that they know the company’s objectives, mission and vision. It
provides direction and focus to the employees.

Steps of Strategy Formulation

The steps of strategy formulation include the following:
1. Establishing Organizational Objectives: This involves establishing long-term
goals of an organization. Strategic decisions can be taken once the
organizational objectives are determined.
2. Analysis of Organizational Environment: This involves SWOT analysis,
meaning identifying the company’s strengths and weaknesses and keeping
vigilance over competitors’ actions to understand opportunities and threats.

Strengths and weaknesses are internal factors which the company has control
over. Opportunities and threats, on the other hand, are external factors over
which the company has no control. A successful organization builds on its
strengths, overcomes its weakness, identifies new opportunities and protects
against external threats.

3. Forming quantitative goals: Defining targets so as to meet the company’s

short-term and long-term objectives. Example, 30% increase in revenue this year
of a company.
4. Objectives in context with divisional plans: This involves setting up targets for
every department so that they work in coherence with the organization as a
whole.
5. Performance Analysis: This is done to estimate the degree of variation between
the actual and the standard performance of an organization.
6. Selection of Strategy: This is the final step of strategy formulation. It involves
evaluation of the alternatives and selection of the best strategy amongst them to
be the strategy of the organization.

Strategy formulation process is an integral part of strategic management, as it

helps in framing effective strategies for the organization, to survive and grow in
the dynamic business environment.

Strategy Implementation
Definition: Strategy Implementation refers to the execution of the plans and strategies, so as to
accomplish the long-term goals of the organization. It converts the opted strategy into the moves
and actions of the organisation to achieve the objectives.

Simply put, strategy implementation is the technique through which the firm
develops, utilises and integrates its structure, culture, resources, people and
control system to follow the strategies to have the edge over other competitors in
the market.
 Process of Strategy Implementation
1. Building an organization, that possess the capability to put the strategies into
action successfully.
2. Supplying resources, in sufficient quantity, to strategy-essential activities.
3. Developing policies which encourage strategy.
4. Such policies and programs are employed which helps in continuous
improvement.
5. Combining the reward structure, for achieving the results.
6. Using strategic leadership.

The process of strategy implementation has an important role to play in the

company’s success. The process takes places after environmental scanning,
SWOT analyses and ascertaining the strategic issues.
Q15.what is the difference between concentric and conglomerate
diversification? Analyze with the help of industry example.

Meaning
Concentric diversification refers to that diversification in which the company goes into a
new business which is closely related to the current business or in simple words
company develops products or services which are closely related with current core
products or services of the company.

conglomerate diversification refers to that diversification in which company goes into

new business which is completely unrelated to current business of the company or in
simple words company develops products or services which have no relation with
current core products or services of the company.

Example
A pizza outlet owner selling only pizzas decides to open ice cream outlet in different
corner of the city is an example of concentric diversification because the pizza outlet
owner is not moving away from food business.

rather he or she is expanding into other areas of food business but if same pizza outlet
owner decides to open a car showroom or decides to build residential houses than this
is an example of conglomerate diversification as pizza outlet owner is moving to a
completely different business from his or her current food business.

Knowledge
In the case of concentric diversification company has knowledge about the market as
well as the product in which the company is expanding which in turn can be of great
help to the company for running the new business successfully.

But when it comes to conglomerate diversification company has very little knowledge
about the market as well as product in which company is expanding resulting in
company facing many difficulties at the start of the business.

Risk Factor
In case of concentric diversification since company has diversified into same product
line or business the risk of company failing is less due to company being aware of the
market as well experience of the company in same product line

whereas in case of conglomerate diversification since company has diversified into

different product line as well as different business the risk of company failing is high in
this type of diversification.
Degree of Diversification
In case of concentric diversification the degree of diversification is less because
company has diversified into the same product line or business and any problem in that
product or business will lead to fall in the sales of both business

whereas in case of conglomerate diversification due to company diversifying into other

products or business the degree of diversification is high because if one product or
business is sluggish than losses from it can be compensated by other business.

As one can see from the above that there are many differences between concentric
diversification and conglomerate diversification and that is the reason why any company
thinking of either of diversification should carefully read above differences and then
decide which diversification is best suited for the company in long term.

The Advantages of Conglomerate and Concentric

Diversity
The primary advantage of conglomerate diversity is that it helps insulate business owners against a
downturn in one industry. When a business owner has multiple companies in different industries,
struggles in one industry are offset by the successes of another company in another industry that
isn’t experiencing a downturn.

The main advantage of concentric diversity is that it helps business owners achieve synergy
because they can use the experience from selling one product or service to help launch the new
product or service. Concentric diversity also helps increase market share by enabling businesses to
cross-sell to their existing customers. Cross-selling is the process of selling a similar or related
product to a customer. Amazon is famous for doing this with its “Customers that bought this item
also bought…” message that appears after you make a purchase.

The Disadvantages of Conglomerate and Concentric

Diversity
The main disadvantage of conglomerate diversity is that the lack of focus on one type of business
can spread owners thin, and the lack of expertise in one industry can cause that business to fail.

The primary disadvantage of concentric diversity is that businesses can water down their core
product or service if the new related products or services aren’t as well made. For example, a store
that sells computers might not hire qualified technicians to make the kind of repairs that customers
find satisfactory, which can dent the overall impression that customers have about the company.
Examples of conglomerate
The Walt Disney Company One of the world's best known brands, the Walt Disney Company
operates a wide variety of businesses that focus on keeping consumers well-entertained. This
conglomerate company is active in movies, music, television production, live theater productions,
toys and clothing, among their many operations. Disney theme parks such as Disney World in
Orlando entertain millions of visitors from across the globe. With a presence in more than 40
countries around the world, it is no Mickey Mouse operation, but is a true multinational conglomerate
corporation.

Google: Not Just a Search Company Google used to just be Google. As of 2015, however, the
parent company became Alphabet and Google is only one of several subsidiary companies under
the Alphabet umbrella. In addition to its popular search engine and internet services like email, photo
storage, Google Maps and document management, Alphabet operates in many other technology-
related areas. These include life sciences projects, driverless cars, start-up investing, fiber optics,
and home devices like Nest thermostats and Google Home voice-activated services.

Samsung: It's Everywhere It's not just US companies that have embraced the conglomerate
business model. Numerous overseas giants have done the same. You may know Samsung, a South
Korean multinational, primarily as a manufacturer of smartphones, but their businesses are actually
startlingly diverse. In addition to phones and other electronics, Samsung builds ships, undertakes
major construction projects, and is involved in businesses that include food processing, textile
manufacture, insurance, financial products and consumer retail. They operate a theme-park and a
large advertising agency in South Korea, as well.

Examples of concentric
Usha international has diversified into home appliances like juicer mixer, geyser, vacuum cleaners,
washing machine and exhaust fans and tries to explode its distribution of network of over 3500
dealers to sell its new product.

Philips-Strong in lightining and electronic company which entered into communication system,
telecommunication equipment, cable television and multimedia