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PPTS
WELL OUTLINE OF PPTS HELP YOU TO HAVE A BIRD’S EYE VIEW OF THE
SUBJECT FOR FINAL REVIEW ONLY .
Strategic Leaders
Strategic leaders are people located in different parts of the firm using the
strategic management process to help the firm using the strategic management process to
help the firm reach its vision and mission .
Their location in organisational structure is not that important .
Organisational Culture
Refers to the complex set of ideologies , symbols , and core values that are shared
through out the firm and that influences how the firm conducts business . It is social
energy that drives – or fails to drive – the organisation . For example , highly successful
Southwest Airlines is known for having a unique and valuable culture . Its culture
encourages employees to work hard and have fun too . The firm also pays importance by
its commitment to provide POS ( Positively Outrageous Service ) .
Average returns
Above average returns are returns in excess of what an investor expects to earn
from other investments with a similar amounts of risk .
Risk is an investor’s uncertainty about the economic gain or losses that will
result from a particular investment .
Average returns are returns equal to those an investor expects to earn from other
investments with similar amount of risk .
The I / O Model of Above Average Returns
Industrial Organisation ( I/O ) model of above average returns explains the
external environment’s dominant influence on a firm’s strategic actions .
The model specifies that the industry in which a company chooses to compete
has stronger influence on performance than do the choices managers make inside their
organisations .
The performance is believed to be determined by primarily by a range of
industry properties :a) economies of scale , b) barriers to market entry , diversification ,
and the degree of concentration of firms in the industry .
Assumptions of I / O Model
1. External environment is assumed to impose pressures and constraints that
determine the strategies that result in above- average returns .
2.Most firms competing within an industry or within a segment of industry are
assumed to control similar strategically relevant resources and to pursue similar
strategies in light of those resources .
3.Resources used to implement strategies are assumed to be highly mobile across
firms , so any resource differences that might develop between firms will be short lived .
4.Organisational decision makers are assumed to be rational and committed to
acting in the firm’s best interests
Business Model
According Thompson and Strickland , a business model deals with the
revenue-cost-profit economics of its strategy - the actual and projected revenue
streams generated by the company’s product offerings and competitive
approaches , the associated cost structure and profit margins and the resulting
earnings stream and return on investment .“
Strategy vs Business Model
According Thompson and Strickland , strategy relates to a company’s
competitive initiatives and business approaches ( irrespective of the financial and
competitive initiatives and business approaches while the term business deals with
whether revenues and costs flowing from the strategy demonstrate business viability
.“
Strategy vs Business Model
According Thompson and Strickland , “ Companies that have been in
business for a while and are making acceptable profits have a proven business
model - there is a clear evidence of that their strategy is capable of profitability and
that they have viable enterprise . “
Striking Business Models
Microsoft
Linux
Highly secretive code
In house R &D
Highly paid Employees with SOPS
Highly Priced Software
Open code
Open R &D
External Experts
Free software
Striking Business Models
HLL
Nirma
Super Quality
Highly focussed R &D
Superior Technology
Targeting high income groups
Compatible Quality
Indigenous R &D
Manual Process
Targeting low income groups
Sources :
1.Strategic Management by Ireland , Hoskisson , Hitt
2.Crafting and Executing Strategy by Thompson , Strickland , Gamble and Jain
3.Exploring Corporate Strategy : Text and Cases by Gerry Johnson , Kevan
Scholes ,Whittington
PESTEL framework
Suppliers ( Purchasing ) : The price of crude oil rose to near $140 per
barrel . During last 4 months , crude prices collapsed to below $ 40 per barrel .
OPEC and suppliers are have cut down their production levels .
Poter’s Fundamental Determinants of a Firm’s Profitability
Five competitive forces :
The entry of new competitors
The threat of new substitutes
The bargaining power of buyers
The bargaining power of suppliers
The rivalry among existing competitors
New Products
A new product design that undercuts entry barriers or increases volatility of
rivalry , for example , may undermine the long run profitability an industry – though
imitator may enjoy higher profits temporarily .
In the Tobacco industry , generic cigarettes are a potentially a serious threat to
industry structure . Generics may enhance the price sensitivity of buyers , trigger
competition , and erode the high advertising barriers that have kept out new entrants .
Structural Drivers of Change
Primary Activities
Outbound Logistics : Activities associated with collecting , storing and physically
distributing the product to buyers , such as finished goods warehousing , material
handling , delivery vehicle operations , order processing , and scheduling .
Marketing and Sales : Activities associated with providing a means by which
buyers can purchase the product and inducing them to do so , such as advertising ,
channel selection , channel relations and pricing .
Service : Activities associated with providing service to enhance or maintain the
value of the product adjustment .
Supportive Activities
Procurement
Technology Development
Human Resource Management
Firm Infrastracture
Activity Types
Within category of primary and support activities , there are three activity types
that play a different role in competitive advantage :
1.Direct : Activities directly involved in creating value for the buyer , such as
assembly , parts machining , sales force operation , advertising , product design ,
recruiting , etc.
Indirect : Activities that make it possible to perform direct activities on a
continuing basis such as maintenance , vendor record keeping , etc.
Quality Assurance : Activities that ensure the quality of other activities such as
monitoring , inspecting , testing , reviewing , checking , adjusting , and reworking .
Vertical Linkages
Linkages exist not only within a firm’s value chain but between a firm’s chain
and the value chains of suppliers and channels .
The linkages between suppliers’ value chain and a firm’s value chain provide
opportunities for the firm to enhance its competitive advantage .
Channel linkages are similar to supplier linkages .
1. Brand 2. Innovation
Success : 1.Good Service 2.Reliable delivery:
1.Solving buyers’ problems – 1. Good personal relaions with buyers :
Accepting returned goods :3.Fast turnaround of orders .
Using sub contractors for transport
24 hour dispatch
What is meant by Competitive Strategy ?
A Strategy that gives advantage to compete successfully with competitors
could be under stood as Competitive Strategy .
Various functional areas in a Company
Corporate Planning
Purchases
Stores and Inventory Control
Production
Finance
Accounting and MIS
Marketing
Advertisement and Sales Promotion
Personnel and Administration
HR and Training
Oberoi
Hotel Industry
Indian Express /Times of India
Media Print
Media ) Electronic
CDS
Business India Group
Print Medias - Business India
Electronic Media - Aaz Thak
MARG which merged with PRG became ORG MARG
Nirma Ltd
Washung Powder
Detergent Cake
Toilet Soaps
Caustic Soda
Plans to get in to Tea etc., using distribution network .
Shri Kumaram Birla of A V Birla group emphasing
Concentrate on Commodities like
Cement
Fertlisers
Textiles
Keeping that Grasim took shares of L & T
Want to get out of BATATA
Why companies diversify in to industries where they lack core competence
1. To spread risk over different industrial segments . rather than
concentrate on only one industry .
2. When a company has huge reserves and surpluses , promoters’ decide
to expand their industrial empire and they diversify in to new areas for the
following reasons :
a) Current industrial segment has reached saturation and has huge
capacities .
b) Find new sun rising industries where the growth
potentials are excellent .
When promoters are very big industrial houses . The industrial houses diversify in to new
areas
Promoters place themselves more as entrepreneurs leaving all managerial
functions to top class Professionals in the world . The best examples in the world
are
1. GE
2. 3 M
3. Lever
When promoters are very big industrial houses . The industrial houses diversify in to new
areas
In India , it is Government of India where industries spread over highly
capital intensive Oil and Petroleum to TVs ,
Many State Governments role of Promoter very effectively .
Tata Group
Birlas
Hindustan Lever
Industrialists also realised core competency does not ensure success always :Examples
are
Binny group which was wedded to only textiles .
Kirloskars by concentrating in Engineering and Electrical industries
• Annapuna
• Tata Salt
Five broad approaches of Competitive Strategy
• 4. A focussed (or market niche ) strategy based on lower cost relying on
narrower buyer segment and out competing rivals by serving niche members at a
lower cost than rivals .
• 5. A focussed ( market niche ) strategy based on differentiation :
Concentrating on a narrow buyer segment and out competing rivals by offering
niche members customised attributes that meet their tastes and requirements better
than rivals’ products .
A best-cost provider strategy
upscale attributes
• HDFC Bank and iCICI Bank .
• Bata
• TVS , Bajaj
• Agro Industry
• Annapuna
• Tata Salt
.A low cost provider strategy
• Nirma
• Akai
• Parle
• Link
• Zenith
• SBI Loans
• Lifebuoy soap of HLL
• Annapuna
• Tata Salt
.A low cost provider strategy
• Nirma
• Akai
• Parle
• Link
• Zenith
• SBI Loans
• Lifebuoy soap of HLL
• Horlics
• Safety : Less Weight and Durability
Five broad approaches of Competitive Strategy
• 4. A focussed (or market niche ) strategy based on lower cost relying on
narrower buyer segment and out competing rivals by serving niche members at a
lower cost than rivals .
• 5. A focussed ( market niche ) strategy based on differentiation :
Concentrating on a narrow buyer segment and out competing rivals by offering
niche members customised attributes that meet their tastes and requirements better
than rivals’ products .
A best-cost provider strategy
upscale attributes
• HDFC Bank and iCICI Bank .
• Bata
• TVS , Bajaj
• Agro Industry
• Annapuna
• Tata Salt
.A low cost provider strategy
• Nirma
• Akai
• Parle
• Link
• Zenith
• SBI Loans
• Lifebuoy soap of HLL
• Horlics
• Safety : Less Weight and Durability
Five broad approaches of Competitive Strategy
• 4. A focussed (or market niche ) strategy based on lower cost relying on
narrower buyer segment and out competing rivals by serving niche members at a
lower cost than rivals .
• 5. A focussed ( market niche ) strategy based on differentiation :
Concentrating on a narrow buyer segment and out competing rivals by offering
niche members customised attributes that meet their tastes and requirements better
than rivals’ products .
A focussed (or market niche ) lower cost than rivals
• Citi Bank
• British Airways
• Sterling Resorts
Transport , Food ,
A best-cost provider strategy
upscale attributes
• HDFC Bank and iCICI Bank .
• Bata
• TVS , Bajaj
• Agro Industry
• Annapuna
• Tata Salt
.A low cost provider strategy
• Nirma
• Akai
• Parle
• Link
• Zenith
• SBI Loans
• Lifebuoy soap of HLL
• Horlics
• Safety : Less Weight and Durability
Five broad approaches of Competitive Strategy
• 4. A focussed (or market niche ) strategy based on lower cost relying on
narrower buyer segment and out competing rivals by serving niche members at a
lower cost than rivals .
• 5. A focussed ( market niche ) strategy based on differentiation :
Concentrating on a narrow buyer segment and out competing rivals by offering
niche members customised attributes that meet their tastes and requirements better
than rivals’ products .
A focussed (or market niche ) lower cost than rivals
• Citi Bank
• British Airways
• Sterling Resorts
Transport , Food ,
Concentrating on a narrow buyer segment and out competing rivals by offering
niche members customised attributes
• Apollo Hospitals
• SOTC
• Annapuna
• Tata Salt
.A low cost provider strategy
• Nirma
• Akai
• Parle
• Link
• Zenith
• SBI Loans
• Lifebuoy soap of HLL
A broad differentiation strategy :.
• Tooth paste
• Tooth Powder
• Face cream
• Horlics
• Safety : Less Weight and Durability
Five broad approaches of Competitive Strategy
• 4. A focussed (or market niche ) strategy based on lower cost relying on
narrower buyer segment and out competing rivals by serving niche members at a
lower cost than rivals .
• 5. A focussed ( market niche ) strategy based on differentiation :
Concentrating on a narrow buyer segment and out competing rivals by offering
niche members customised attributes that meet their tastes and requirements better
than rivals’ products .
A focussed (or market niche ) lower cost than rivals
• Citi Bank
• British Airways
• Sterling Resorts
Transport , Food ,
Concentrating on a narrow buyer segment and out competing rivals by offering
niche members customised attributes
• Apollo Hospitals
• SOTC
Reasons of Diversification
B. Value Neutral Diversification
i. Anti Trust Legislation
2. Tax Laws
3.Low performance
4..Uncertain future cash flows
5. Risk reduction for firm
6. Tangible resources
7.Intangible resources
C. Value – Reducing Diversification
1. Diversifying managerial employment risk
2.Increasing managerial compensation
AXIS Bank – Banking on Technology and Market Segments for Competitive Space
By P G K M
Date : Oct 30 , 2010
Vision 2015 and Core Values
• VISION 2015:
• To be the preferred financial solutions provider excelling in customer delivery
through insight, empowered employees and smart use of technology
• Core Values
• Customer Centricity
• Ethics
• Transparency
• Teamwork
• Ownership
Performance in 2008
• 1. Expansion of Branch Network – 143 new branches during year (total to 651 )
• 2.Significant Presence in Semi Urban and Rural Areas .( 158 branches – about
25% )
• 3.Geographical Reach extends to 29 States and 3 Union Territories covering 405
Centre (as per Annual Report 2008) and
Shift in Strategy
• Initial Business Model :
• Corporate assets being the main focus area .
• Corporate advances witnessed a high growth rate and accounted for 80 % funds
lent till 2002
• Strategic Inflection Point :
• In 1999 , the Bank’s net NPAs to advances ratio jumped to 6.3% in FY 1999 from
3.7% in FY 97.
• Reflected from a marginal in 17% growth in Bank’s Total Advances in FY 02
from a CAGR of 44% .
• NPAs,.
• Financial super market chain, making available all types of credit and non-fund
facilities under one roof.
• Potentially dramatic changes that include, among others, a sliding dollar, rising
interest rates, introduction of Basel II accord and international accounting standards, and
the possible flattening of consumer lending boom.