1. When is product development a good strategy?

Product development is a good strategy if you have a good understanding of your market, another way to leverage your knowledge is to develop new products and services to meet this markets needs. Executing a product development strategy can happen by adding more value to your existing product through features, upselling or cross-selling. The best thing about this strategy is you have already established yourself in your current markets and you know what your customers want. You have the distribution channels and you know how to reach them. 2. What are the strategic avenues for firms in declining industries? Where demand is barely growing, flat, or even declining. Although harvesting the business to obtain the greatest cash flow, selling out, or preparing for close down are obvious end game strategies for uncommitted competitors with dim long term prospects, strong competitors may be able to achieve good performance in a stagnant market environment. Cash flow and return on investment criteria are more appropriate than growth oriented performance measures, but sales and market share growth are by no means ruled out. Strong competitors may be able to take sales from weaker rivals, and the acquisition or exit of weaker firms creates opportunities for the remaining companies to capture greater market share. In general, companies that succeed in stagnant industries employ one of three strategic themes: 1. Pursue a focused strategy by identifying, creating, and exploiting the growth segments within the industry. 2. Stress differentiation based on quality improvement and product innovation 3. Work diligently and persi3 4. stently to drive costs down These three strategic themes are not mutually exclusive. The most attractive declining industries are those in which sales are eroding only slowly, these is large built in demand, and some profitable niches remain. The most common strategic mistakes companies make in stagnating or declining markets are: 5. Getting trapped in a profitless war of attrition 6. Diverting too much cash out of the business too quickly Being overly optimistic about the industrys future and spending too much on improvements in anticipation that things will get better 3. Explain GE nine-cell planning grid as a Grand strategy at Business level? General Electric with the assistance of McKinsey and Company developed this matrix. This multi-factor port-folio planning matrix (MPPM) is known by alternative names such as Stop-light Strategy Model, GE Model or Business Planning Matrix This matrix includes 9 cells based on long-term industry attractiveness (on Yaxis) and business strength/competitive position (on X-axis). The industry attractiveness includes Market size, Market growth rate, Market profitability, Pricing trends, Competitive intensity / rivalry, Overall risk of returns in the

industry, Entry barriers, Opportunity to differentiate products and services, Demand variability, Segmentation, Distribution structure, Technology development Business strength and competitive position includes Strength of assets and competencies, Relative brand strength (marketing), Market share, Market share growth, Customer loyalty, Relative cost position (cost structure compared with competitors), Relative profit margins (compared to competitors), Distribution strength and production capacity, Record of technological or other innovation, Quality, Access to financial and other investment resources, Management strength

Plotting the Information: 1. Select factors to rate the industry for each product line or business unit. Determine the value of each factor on a scale of 1 (very unattractive) to 5 (very attractive), and multiplying that value by a weighting factor. Industry attractiveness + + = factor value1 x factor weighting1

factor value2 x factor weighting2 factor valueN x factor weighting

2. Select the key factors needed for success in each of the product line or business unit. Determine the value of each key factor in the criteria on a scale of 1 (very unattractive) to 5 (very attractive), and multiplying that value by a weighting factor. Business strengths/competitive position = key factor value1 x factor weighting1 + + key factor value2 x factor weighting2 Key factor valueN x factor weighting

3. Plot each product line's or business unit's current position on a matrix.

4. The individual product lines or business units is identified by a letter and plotted as circles on the GE Business Screen. 5. The area of each circle is in proportion to the size of the industry in terms of sales. The pie slice within the circles depict the market share of each product line or business unit. 6. Plot the firm's future portfolio assuming that present corporate and business strategies remain unchanged. This is shown as an arrow which starts from the circle representing the current position and the tip of the arrow will be the tentative centre of the future circle. Strategic Implications Resource allocation recommendations can be made to grow, hold, or harvest a strategic business unit based on its position on the matrix as follows: Grow strong business units in: Attractive industries Average business units in attractive industries Strong business units in average industries.

Hold average business units in: Average industries Strong businesses in weak industries Weak business in attractive industies.

Harvest weak business units in: Unattractive industries Average business units in unattractive industries Weak business units in average industries.

There are strategy variations within these three groups. For example, within the harvest group the firm would be inclined to quickly divest itself of a weak business in an unattractive industry, whereas it might perform a phased harvest of an average business unit in the same industry. GE business screen represents an improvement over the more simple BCG growth-share matrix.