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‡Currency inflation and exchange rates
‡ Political parties and alignments at local, national or ‡Unemployment
regional trading block level. ‡Energy costs, transport costs, communications costs,
‡Legislation, e.g. on taxation and employment law raw materials costs
‡Relations between government and the organization 
 



(possibly influencing the preceding terms in a major ‡Government and investment policy
way and forming a part of future corporate strategy) ‡Identified new research initiatives
‡Government ownership of industry and attitude to ‡New patents and products
monopolies and competition
‡Speed of change and adoption of new technology


 |

‡Level of expenditure on R&D by organization¶s
‡Shifts in values and culture rivals
‡Change in lifestyle ‡Development in nominally unrelated industries that
‡Attitudes to work and leisure might be applicable
‡Education and health 



‡Demographic changes ‡µGreen¶ issues that affect the environment
‡Distribution of income ‡Level and type of energy consumed-renewable



energy?
‡Total GDP and economic condition ‡Rubbish, waste and its disposal
‡Inflation 


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‡Employment and safety law
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- willingness to reject unfamiliar
as well as negative information
1. Identify a number of likely trends emerging in
the societal and task environments. These are
strategic environmental issues- those important
trends that, if they occur, determine what the
industry will look like in near future.
2. Assess the probability of these trends actually
occurring from low to high.
3. Attempt to ascertain the likely impact (from low
to high) of each of these trends on the
corporation being examined.




 

 


 



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.1
.0 .60 Consolidation in decorative segment

Y1 Boom in construction industry
.0
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.18 End user awareness
Y2 Demographics favor mass customization
.10 3.0 .30 Low APL presence in Asia
Y3 Economic development of Asia and India
.0
2.
.13 Exterior and economy segments
Y Growth in rural Indian market.
.1
3.0 .
Alliances required
Y
Promising auto and white goods industry

 


.0
2.
.13 Well positioned

T1 Liberal Government policies
.1
.0 .60 Well positioned
T2 Strong Chinese competition
.1
3.0 .
APL weak comparatively
T3 ICI and Berger strong globally
.0
2.
.13 Questionable
T New product advances
.10 3.0 .30 Non- tariff barriers
T
Strict environmental laws world over

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S1 Experienced top management 0.0
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S2 Vertical Integration 0.0
2.0 .10 In- house manufacturing of key raw material
S3 Current assets management 0.1
.0 .60 Good automated inventory control system
S Distribution network 0.10 3.
.3
Strong distribution capabilities
S
International orientation 0.1
3.
.
2 Steady international expansion

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W1 Global positioning .1
3.
.
3 Name of µAsian¶ in outside Asia market
W2 Product portfolio .1
.0 .60 Concentration on decorative segment
W3 Employee relations .0
2.
.13 Nature of job and hygienically unsafe
industry
W Manufacturing facilities .10 2.0 .20 Low investment in other than decorative
segment
W
Process oriented R&D .0
2.0 .10 Slow in new products
|


 ‡Interest rates
‡Currency inflation and exchange rates
‡Cyclicality




‡Unemployment
‡ Political parties and alignments at local, national and
‡Energy costs, transport costs, communications costs,
European or regional trading block level.
raw materials costs
‡Legislation, e.g. on taxation and employment law
‡Relations between government and the organization

 



(possibly influencing the preceding terms in a major
way and forming a part of future corporate strategy) ‡Government and EU investment policy
‡Government ownership of industry and attitude to ‡Identified new research initiatives
monopolies and competition ‡New patents and products
‡Speed of change and adoption of new technology


 |

‡Shifts in values and culture
‡Change in lifestyle
‡Attitudes to work and leisure
‡µGreen¶ environmental issues
‡Level of expenditure on R&D by organization¶s rivals
‡Development in nominally unrelated industries that
might be applicable




‡Education and health ‡µGreen¶ issues that affect the environment
‡Demographic changes ‡Level and type of energy consumed-renewable energy?
‡Distribution of income ‡Rubbish, waste and its disposal







‡Total GDP and GDP per head ‡Competition law and government policy
‡Inflation ‡Employment and safety law
‡Consumer expenditure and disposable income ‡Product safety issues
 



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Complexity National National Regional Global

Technological Economic
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Familiarity of events Familiar Extrapolable
Discontinuous
Novel
Rapidity of Change Slower than Comparable to Faster than
response response response

# Visibility of future Recurring Predictable Partially Unpredictable
predictable surprises






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‡Where will emphasis be placed in the future?
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‡How are we currently competing?
‡Does this strategy support changes
in the competitive strategy? ‡Where do we hold an
advantage over our competitors?
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‡Are we operating under a status quo? relationship with competitors?
‡What assumptions do our competitors
hold about the industry and ourselves?

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‡How do we rate compared to our competitors?

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Is the R/C Is the costly to organisable Competitive Performance
valuable? R/C rare? imitate? ? Consequences Implications
Competitive
No No No No Disadvantage
Below AIR

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Yes No No Yes/No Parity
AIR

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Yes Yes No Yes/No Advantage AIR
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Yes Yes Yes Yes Competitive Above AIR
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Form

Foam

Freshness

Flavor

Dental/ Yral Health

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Cosmetic Segment Fluoride Segment

Paste/ Powder
Different Packaging Material

Different Base Material

Different Flavoring Material

Different additives

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Competitive Strategic Ypportunity

Strategy Architecture Horizon (Blue-
Ycean Strategy)

ÔIndustry Analysis ÔResources (Technology, ÔVision of Future

ÔStrategic Segmentation Brands etc.) Markets
and Positioning ÔCompetencies ÔCorporate Ambition
ÔCost and Differentiation ÔSkills ÔSense of Purpose
Drivers
&;V"%
Corporate Strategies- Grand Strategies

1. Stability Strategies

2. Expansion Strategies

3. Retrenchment Strategies
V

 



> Less risky, involves fewer changes and people

feel comfortable.
> Relatively stable environment.
> Expansion is perceived as a threat.
> Consolidation is sought through after rapid
expansion.
m

 



> Due to environmental demand.

> Psychologically strategists feel more satisfied
with growth prospects, have pride.
> Increasing size may lead to more control over
the market vis- a- vis competitors.
> Advantages from the experience curve and
scale of operations may help.
„




 



> Due to continuous losses and inviability.

> Threatening environment.

> Stability can be ensured by reallocation of

resources from unprofitable to profitable
business.
u


 
 



1. Internal/ External Dimension

2. Related/ Unrelated Dimension

3. Horizontal/ Vertical Dimension

. Active/ Passive Dimension

'/$.

> No- change strategy

> Profit Strategy

> Pause/ Proceed- with- caution strategy

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‡Pause/ Proceed with
‡Vertical Growth ‡Captive Company
caution
‡Horizontal Growth ‡Sell- out/ Divestment
‡No Change
‡Profit ‡Bankruptcy/ Liquidation
u

‡Concentric
‡Conglomerate
0 *!*$.
Five types:
a) Expansion through concentration
b) Expansion through integration
i) vertical ii) horizontal
c) Expansion through diversification
d) Expansion through cooperation
e) Expansion through internationalization
i) concentric diversification
ii) conglomerate diversification
Expansion through concentration
 Expansion through integration-Vertical ,horizontal

Typical Value Chain for a Manufactured Product

 

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(general management, accounting, finance, strategic planning)
Ò$






 (recruiting, training, development)

 
 




(R&D, product and process improvement)





(purchasing of raw materials, machines, supplies) 




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 (machining, 
 
 (installation,
(raw materials assembling, (warehousing and (advertising, repair, parts)
handling testing) distribution of promotion,
and finished pricing,
warehouses) product) channel
relations)



|


-
| 

 


1

1. Examine each product line¶s value chain in terms

of the activities involved in producing that
product or service.

2. Examine the ³linkages´ within each product line¶s

value chain.

3. Examine the potential synergies among the value

chains of different product lines or business units.
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Internally Vertically
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Buy on Ypen Market Term contracts
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>Activities that should not be outsourced

>Wrong vendor selection
>Writing poor contract
>Yverlooking personnel issues
>Hidden costs of outsourcing
>Failing to plan exit strategy
" 
 
 
 


i) concentric diversification

ii) conglomerate diversification

 Expansion through Co- operation
Four- Links Model
Government- links Informal co- operative links
and networks and networks

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Complementors Formal Co- operative links

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ï It may help in the achievement of sustainable
competitive advantage.

ï Ypen up new markets and increase business

opportunities.

ï Produce lower costs.

ï Deliver more sustainable relationship with

those outside the organization.
 Co-operative strategies could be of the
following types:
i) Mergers
Horizontal Mergers
Vertical Mergers
Concentric Mergers
Conglomerate Mergers
ii) Takeovers
iii) Joint Ventures
iv) Strategic Alliances
Reasons for Mergers

1. To increase the value of the organization¶s stock.

2. To increase the growth rate and make a good
investment.
3. To improve the stability of earning and sales.
. To balance, compete, or diversify product line.

. To reduce competition.
6. To acquire needed resources quickly.
7. To avail tax concessions and benefits.
8. To take advantage of synergy.
Why the seller wishes to merge:

1. To increase the value of the owner¶s stock

and investment.
2. To increase the growth rate.
3. To acquire resources to stabilize operations.
. To benefit from tax legislation.

. To deal with top management succession
problem.
]






> Strategic

> Financial

> Legal

> Managerial
e) Expansion through Internationalization

i



]

 




Global Strategy Transnational Strategy

|




Multi- Domestic
International Strategy Strategy






!



 
Entry Modes:

1. Export Entry Modes

2. Contractual Entry Modes

3. Investment Entry Modes




 
 (

‡Does not require a high resource ‡Hard to control operations
commitment in the targeted country. abroad.
‡Inexpensive way to gain experiential ‡Provides very small experiential
„ 

knowledge in foreign markets. knowledge in foreign markets.
‡Low- cost strategy to expand sales in
Yrder to achieve economies of scale.
‡Speedy entry to foreign market. ‡Hard to monitor partners in
‡Does not require a high resource foreign markets.
commitment in the targeted country. ‡High potential for opportunism.

 
‡Can be used as a step towards a ‡Hard to enforce agreements.
more committed mode of entry. ‡Provides a small experiential
‡Low- cost strategy to expand sales knowledge in the foreign market.
in order to achieve economies of scale.
‡High monitoring costs.
‡Speedy entry to foreign market.
‡High potential for opportunism.
‡Requires a moderate resource
‡Could damage the firm¶s
]

 commitment in the targeted country.
reputation and image.

  ‡Moderate cost strategy to expand
‡Does not provides experiential
sales in order to achieve economies
knowledge in the foreign market.
of scale



 
 (

‡Low risks of technology appropriation ‡Could not rely on pre-
ý
‡Able to control operations abroad. existing relationships with



‡Provides high experiential customers, suppliers, and




 

 knowledge in foreign markets. government officials.
‡Low level of conflict between the ‡Adds extra capacity to the
subsidiary and the parent firm. existing market.
‡Managers of foreign subsidiary ‡The firm is seen as a foreign
have a strong attachment to the firm by local stakeholders.
parent firm.
‡Low risks of technology appropriation. ‡Problem of integrating foreign
‡Able to control operations abroad. subsidiaries into the parent¶s
‡Provides high experiential system.
knowledge in foreign markets. ‡Managers of acquired foreign




 ‡Could rely on pre- subsidiaries may have a weak
V$  existing relationships with attachment to the parent firm.
customers, suppliers, and
government officials.
‡Does not add extra capacity to
the market.
RETRENCHMENT STRATEGIES

>Turnaround
>Captive Company Strategy
>Selling out/Divestment
>Bankruptcy
>Liquidation
TURNARYUND STRATEGIES:

!  



 
1. Persistent negative cash flow.
2. Declining market share.
3. Deterioration in physical facilities.
. High turnover of employees, low morale.

. Uncompetitive products or services.
6. Mismanagement
„

 

  



1. Changes in the top management

2. Initial credibility- building actions
3. Neutralizing external pressures
. Initial control

. Identifying quick pay off activities
6. Quick cost reduction
7. Revenue generation
8. Asset liquidation for generating cash
9. Better internal coordination
DIVESTMENT STRATEGIES




1. An acquired business proves to be a mismatch and

cannot be integrated with the company.
2. Negative cash flows leading to financial problems.
3. Severity of competition and firm¶s inability to cope.
. Technological up gradation required, lack of
investment.

. Survival is based on cash generated by selling off a
part.
6. Better alternative available for investment.
7. Divestment by one firm may be a part of merger
plan- mutual strategic interest.
8. Not to attract the provisions of MRTP Act or owing
to oversize and the resultant inability to manage a
large business.
LIQUIDATIYN STRATEGIES

ï Closing down a firm and selling its assets.

ï Last resort, most extreme and unattractive.

Why liquidation undesirable?

ï Management hesitate due to fear of failure.
ï Govt. does not allow liquidation due to political
risk involved.
ï Trade unions resist the loss of employment of
workers.
ï Creditors and supplies desire the fulfillment of
contractual obligations.
ï Selling assets is difficult as buyers are not
found easily.
!

"


!#

ï Under the Companies Act, 19
6,

liquidation is termed as Ö

ï Winding- up is the process whereby its

life is ended and its property administered
for the benefits of its creditors and
members.
"
 




# Ö

> Takes control of the company.

> Collects its assets.

> Pays its debts.

> Distributessurplus among the members

according to the rights.
!#








1. Compulsory winding- up under an order of

court.

2. Voluntary winding-up.

3. Voluntary winding- up under the supervision

of the court.
Competitive strategies-Tactics For Business
Strategies

> Timing Tactics

> When

> Where



1

1. Market leaders

2. Market Challengers

3. Market Followers

. Market Nichers
!


 
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> Corporate Portfolio Analysis

A set of techniques that help strategists in

taking strategic decisions with regard to
individual products or businesses in a firm¶s
portfolio.

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Strategic Plan
ï A clear statement of strategies intent covering vision, mission, business
definition, goals, and objectives.
ï Results of environmental appraisal, major opportunities and threats and
critical success factors.
ï Results of organization appraisal, major strengths, and weaknesses and core
competencies.
ï Strategies chosen and the assumption under which the strategies would be
relevant contingent strategies under different conditions.
ï Strategies budget for the purpose of resource allocation.
ï Proposed organizational structure and major organizational systems for
strategic implementation.
ï Functional strategies and the mode of their implementation.
ï Measures to be used to evaluate performance and assess the success of
strategy implementation.
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 Nature of strategy and organizational structure
ï Nature of strategy ï Likely organizational structure
ï Single business-one major set of ï Functional
strategies for business
ï Range of products extending across a ï Functional but monitor each
single business- several strategies for range of products using
each product area but business still separate profit and loss
runs as one entity accounts
ï Separate businesses within groups ï Divisional
with limited links
ï Separate businesses within group with ï Matrix
strong link needed across parts of the
group
ï Unrelated businesses-series of ï Holding company
businesses each with its own strategic
issues
ï Ideas factory-strategy needs to be ï Innovative structure
strongly experimental
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ï Factors related to the production system: Capacity, product, or
service design, work systems, extent of vertical integration.

ï Factors related to the operations control system: Aggregate

production planning, procurement, and sourcing, material
supply, inventory, cost and quality control, maintenance
systems and procedures, etc

ï Factors related to the R & D system: Technology, Technical

collaboration and support, patent rights, etc
Strategic Questions
ï What types of production processes to adopt?

ï What should be the plant and facility design?

ï Where should the plant be located?

ï How to procure resources?

ï What type of technology to be used?

Production Strategies vis-à-vis Grand
Strategies
ï Expansion: Technology innovation, investment in facility and
plant, heavy R&D spends, capacity enhancement, optimization
of plant use, continuous production, plant upgradation, vertical
integration, outsourcing, contracting and joint venture.

ï Stability: Technology diffusion, operations smoothing,

economies of scale, recouping of costs, process improvement,
product modifications, production efficiencies.

ï Retrenchment: Technology transfer, cut in volume and size,

capacity reduction, sale of facility and asset, depletion of
inventories and stocks, resources cuts
HR Strategies
ï Factors related to the personnel system: system for manpower
planning, selection, training, development, compensation,
communication, appraisal, position of the personnel
department within the organization, procedures, policies,
standards etc.
ï Factors related to organizational and employees
characteristics: corporate image, quality of personnel, skills
and knowledge base, HR values and culture, perception about
the organization as an employer, etc
ï Factors related to industrial relations: Labor-management
relationship, collective conditions, employees satisfaction,
commitment, motivation and morale etc.
Strategic Questions
ï What type of personal systems and processes
to adopt?
ï What should be the HR values and systems?
ï What type of skills to look for and build?
ï How to maintain harmonious industrial
relations?
ï How to motivate and satisfy?
HR Strategies vis-à-vis Grand
Strategies
ï Expansion: Yrganizational manning and staffing, external
hiring, heavy investment in training and development, shift
working and productivity improvements, relocations and
transfers, increasing work load with commensurate rewards,
increase in compensations budget, outsourcing.

ï Stability: Internal promotions, post ±induction training,

retraining, growth and improvement in employability, skills
consolidation, performance management, employee retention.

ï Retrenchment: Lean staffing, redeployment and relocation,

curtailment of outsourcing and contracting, removal of causal
and temporary workers, voluntary retrenchment.
Marketing Strategies
ï Product related factors: Quality, size, smell, look, features,
models, variants, packaging etc.

ï Price- related factors: Market price, mark-up price, discount,

mode of payment, credit terms, allowances etc.

ï Place- related factors: distribution, transportation, logistics,

channels, coverage, intermediaries, storage, inventory,
warehousing etc.

ï Promotion related factors: Advertising, sales promotion,

personal selling, public relations, etc.

ï Integrative and systematic factors: Marketing mix,

Strategic Questions
ï 3$$"&%4
ï 3$%(%"4
ï 3%"(&%(&"4
ï 3%$!(&"4
Marketing Strategies vis-à-vis
Grand Strategies
ï Expansion: aggressive promotion, sales promos, heavy ad
spends, push marketing, incentives, market and product
development, rapid market penetration, brand extension, price
differentiation , multiple channel and wide coverage ,
extensive distribution and networking
ï Stability: slow market moves, brand building , market
consolidation, gradual market skimming
ï Retrenchment: demarketing , receding promotions, ad spend
cuts, price increases , distribution cuts.
Finance Strategies
ï To provide the organization with funds and a capital structure
to suit the strategic requirements
1. Sources of funds(capital mix decisions)
Internal vs external and
2. Usage of funds
Linking allocation to strategies
Prioritizing projects and activities
Capital expenditure vs. working capital
3. Management of funds
Dividend mgt., accounts and audit, capital structure
management, compensation
Strategic Questions

ï What balance between internal and external

funds? Permissible risks? Priorities for
allocation?
ï Cash flow needs?
ï Credit policies?
Finance Strategies vis-à-vis Grand
Strategies
ï Stability: daily operations, cash mgt., working
capital needs, current assets
ï Expansion: capital budgeting, fixed assets,
long term investments, decentralised
expenditure
ï Retrenchment: rescue operations, centralised
expenditure,reallocation of funds, pruning and
cuts
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Results
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³Tactical´
Is the planned strategy compatible
With the current culture?
Yes
Tie changes into the culture
Yes
Introduce minor culture-
changing activities
No
Can the culture be modified
to make it more compatible
with the new strategy?
No
Is management willing and able
to make major organizational changes
and accept probable delays and
a likely increase in costs? No
Yes
Manage around the culture by Is management still
establishing a new structural committed to implementing
unit to implement strategy. the strategy
Yes No
Find a joint- venture partner or
Formulate a
Contract with another company
Different strategy
to carry out the strategy




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Integration Assimilation

Perception of the
Attractiveness of the
Acquirer

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Separation Deculturation

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Did the existing strategies
produce
the desired results?
Yes
Tie changes into the culture
Yes
Introduce minor culture-
changing activities
Were strategies
poorly executed?
No
Can the culture be modified
to make it more compatible
with the new strategy?
No
Is management willing and able
to make major organizational changes
and accept probable delays and
a likely increase in costs? No
Yes
Manage around the culture by Is management still
establishing a new structural committed to implementing
unit to implement strategy. the strategy
Yes No
Find a joint- venture partner or
Formulate a
Contract with another company
Different strategy
to carry out the strategy
 CYNCLUSIYNS
ISSUE Were strategies and their
= requirements %
% communicated effectively?
Did the Were strategies Poor Communication
existing poorly executed? =
Did management % Weak commitment
strategies
% commit to & follow of operating
produce Were the underlying
the desired
through the strategies? management
Assumptions valid? =
results?
Were results monitored % Failure to establish
=
% And strategies Proper feedback
= Were alternate
Scenarios defined Revised as needed? mechanism
And assessed? Was strategy Invalid planning bases:
= Incorrect strategy
= formulation
Were the current adversely affected? formulation
%
situations and % Inconsistent
%
important trends Were supporting functional functional plans
properly diagnosed? Strategies consistent with
Incorrect assessment
= the business unit strategies?
= of resource
% requirements
Were resource
allocation consistent
with the strategy?
Successful strategy
and results
-&