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Strategic Management Process

Index
Topic Name
Introduction

Pg no
2

Strategy
Strategic Planning
Strategic Management process
Models Of Strategic Management
Strategic leadership/role of strategy manager
Globalization impact on Strategic Management
Strategic Management process of e-business
Strategic Management process of Hindustan Unilever ltd
Case study
Conclusion
Bibliography

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Chapter 1
Introduction
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Strategic Management - An Introduction
Strategic Management is all about identification and description of the strategies that
managers can carry so as to achieve better performance and a competitive advantage for
their organization. An organization is said to have competitive advantage if its
profitability is higher than the average profitability for all companies in its industry.
Strategic management can also be defined as a bundle of decisions and acts which a
manager undertakes and which decides the result of the firms performance. The manager
must have a thorough knowledge and analysis of the general and competitive
organizational environment so as to take right decisions. They should conduct a SWOT
Analysis (Strengths, Weaknesses, Opportunities, and Threats), i.e., they should make best
possible utilization of strengths, minimize the organizational weaknesses, make use of
arising opportunities from the business environment and shouldnt ignore the threats.
Strategic management is nothing but planning for both predictable as well as unfeasible
contingencies. It is applicable to both small as well as large organizations as even the
smallest organization face competition and, by formulating and implementing appropriate
strategies, they can attain sustainable competitive advantage.
Strategic Management is a way in which strategists set the objectives and proceed about
attaining them. It deals with making and implementing decisions about future direction of
an organization. It helps us to identify the direction in which an organization is moving.
Strategic management is a continuous process that evaluates and controls the business and
the industries in which an organization is involved; evaluates its competitors and sets
goals and strategies to meet all existing and potential competitors; and then reevaluates
strategies on a regular basis to determine how it has been implemented and whether it was
successful or does it needs replacement.
Strategic Management gives a broader perspective to the employees of an organization
and they can better understand how their job fits into the entire organizational plan and
how it is co-related to other organizational members. It is nothing but the art of managing
employees in a manner which maximizes the ability of achieving business objectives. The
employees become more trustworthy, more committed and more satisfied as they can corelate themselves very well with each organizational task. They can understand the
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reaction of environmental changes on the organization and the probable response of the
organization with the help of strategic management. Thus the employees can judge the
impact of such changes on their own job and can effectively face the changes. The
managers and employees must do appropriate things in appropriate manner. They need to
be both effective as well as efficient.
One of the major role of strategic management is to incorporate various functional areas
of the organization completely, as well as, to ensure these functional areas harmonize and
get together well. Another role of strategic management is to keep a continuous eye on the
goals and objectives of the organization.

Chapter 2
What is strategy?

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The word strategy is derived from the Greek word stratgos; stratus (meaning army) and
ago (meaning leading/moving).
Strategy is an action that managers take to attain one or more of the organizations goals.
Strategy can also be defined as A general direction set for the company and its various
components to achieve a desired state in the future. Strategy results from the detailed
strategic planning process.
A strategy is all about integrating organizational activities and utilizing and allocating the
scarce resources within the organizational environment so as to meet the present objectives.
While planning a strategy it is essential to consider that decisions are not taken in a vacuum
and that any act taken by a firm is likely to be met by a reaction from those affected,
competitors, customers, employees or suppliers.
Strategy can also be defined as knowledge of the goals, the uncertainty of events
And the need to take into consideration the likely or actual behavior of others. Strategy is the
blueprint of decisions in an organization that shows its objectives and goals, reduces the key
policies, and plans for achieving these goals, and defines the business the company is to carry
on, the type of economic and human organization it wants to be, and the contribution it plans
to make to its shareholders, customers and society at large.
Elements of Strategic Management
Strategic management, as minimum, includes strategic planning and strategic control.
Strategic planning describes the periodic activities undertaken by organizations to cope with
changes in their external environments (Lester A. Digman) it involves formulating and
evaluating alternative strategies, selecting a strategy, and developing detailed plans for
putting the strategy into practice. Strategic planning consists of formulating strategies from
which overall plans for implementing the strategy are developed. Strategic control consists of
ensuring that the chosen strategy is being implemented properly and that it is producing the
desired results.
Based on Robert Anthony's framework, three types of planning and control are required by
organizations:
* Strategic Planning and Control - the process of deciding on changes in organizational
objectives, in the resources to be used in attaining these objectives, in policies governing the
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acquisition and use of these resources, and in the means (strategies) of attaining the
objectives. Strategic planning and control involve actions that change the character or
direction of the organization.
* Management Planning and Control - the process of ensuring that resources are obtained and
used efficiently in the accomplishment of the organization's objectives. Management planning
and control is carried on within the framework established by strategic planning and is
analogous to operating control.
* Technical Planning and Control - the process of ensuring efficient acquisition and use of
resources, with respect to those activities for which the optimum relationship between outputs
and resources can be accurately estimated (e.g., financial, accounting, and quality controls).
Another important term in the study of strategic management is long-range planning. Longrange planning, planning for events beyond the current year, is not synonymous with strategic
management (or strategic planning). Not all long-range planning is strategic. Scope of
Strategic Management
J. Constable has defined the area addressed by strategic management as "the management
processes and decisions which determine the long-term structure and activities of the
organization".
* Management process. Management process as relate to how strategies are created and
changed.
* Management decisions. The decisions must relate clearly to a solution of perceived
problems
* Time scales. The strategic time horizon is long. However, it for company in real trouble can
be very short
* Structure of the organization. An organization is managed by people within a structure.
The decisions which result from the way that managers work together within the structure can
result in strategic change
* Activities of the organization. This is a potentially limitless area of study and we normally
shall centre upon all activities which affect the organization. These all five themes are
fundamental to a study of the strategic management field and are discussed further in this
chapter and other part of this thesis.

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Chapter 3
Strategic planning
Strategic planning

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Strategic planning is a management tool, period. As with any management tool, it is used for
one purpose only: to help an organization do a better job - to focus its energy, to ensure that
members of the organization are working toward the same goals, to assess and adjust the
organization's direction in response to a changing environment. In short, strategic planning is
a disciplined effort to produce fundamental decisions and actions that shape and guide what
an organization is, what it does, and why it does it, with a focus on the future.
A word by word dissection of this definition provides the key elements that underlie the
meaning and success of a strategic planning process: The process is strategic because it
involves preparing the best way to respond to the circumstances of the organization's
environment, whether or not its circumstances are known in advance; nonprofits often must
respond to dynamic and even hostile environments. Being strategic, then, means being clear
bout the organization's objectives, being aware of the organization's resources, and
incorporating both into being consciously responsive to a dynamic environment.
The process is about planning because it involves intentionally setting goals (i.e., choosing a
desired future) and developing an approach to achieving those goals. The process is
disciplined in that it calls for a certain order and pattern to keep it focused and productive.
The process raises a sequence of questions that helps planners examine experience, test
assumptions, gather and incorporate information about the present, and anticipate the
environment in which the organization will be working in the future.
Finally, the process is about fundamental decisions and actions because choices must be made
in order to answer the sequence of questions mentioned above. The plan is ultimately no
more, and no less, than a set of decisions about what to do, why to do it, and how to do it.
Because it is impossible to do everything that needs to be done in this world, strategic
planning implies that some organizational decisions and actions are more important than
others - and that much of the strategy lies in making the tough decisions about what is most
important to achieving organizational success.
The strategic planning can be complex, challenging, and even messy, but it is always defined
by the basic ideas outlined above - and you can always return to these basics for insight into
your own strategic planning process
Swot Analysis and strategic planning
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SWOT analysis is an examination of an organizations internal strengths and weaknesses, its
opportunities for growth and improvement, and the threats the external environment presents
to its survival. Originally designed for use in other industries, it is gaining increased use in
healthcare.
Steps in Swot Analysis
The primary aim of strategic planning is to bring an organization into balance with the
external environment and to maintain that balance over time. Organizations accomplish this
balance by evaluating new programs and services with the intent of maximizing
organizational performance. SWOT analysis is a preliminary decision-making tool that sets
the stage for this work.
Step 1 of SWOT analysis involves the collection and evaluation of key data. Depending on
the organization, these data might include population demographics, community health status,
sources of healthcare funding, and/or the current status of medical technology. Once the data
have been collected and analyzed, the organizations capabilities in these areas are assessed.
In Step 2 of SWOT analysis,
In step 2 data on the organization are collected and sorted into four categories: strengths,
weaknesses, opportunities, and threats. Strengths and weaknesses generally stem from factors
within the organization, whereas opportunities and threats usually arise from external factors.
Organizational surveys are an effective means of gathering some of this information, such as
data on an organizations finances, operations, and processes.
Step 3
It involves the development of a SWOT matrix for each business alternative under
consideration. For example, say a hospital is evaluating the development of an ambulatory
surgery center (ASC). They are looking at two options; the first is a wholly owned ASC, and
the second is a joint venture with local physicians. The hospitals expert panel would
complete a separate SWOT matrix for each alternative.
Step 4

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It involves incorporating the SWOT analysis into the decision-making process to determine
which business alternative best meets the organizations overall strategic plan.
Strengths
Traditional SWOT analysis views strengths as current factors that have prompted outstanding
organizational performance. Some examples include the use of state-of-the-art medical
Equipment, investments in healthcare informatics, and a focus on community healthcare
improvement projects. Other strengths might include highly competent personnel, a clear
understanding among employees of the organizations goals, and a focus on quality
improvement.
Weaknesses
Weaknesses are organizational factors that will increase healthcare costs or reduce healthcare
quality. Examples include aging healthcare facilities and a lack of continuity in clinical
processes, which can lead to duplication of efforts. Weaknesses can be broken down further
to identify underlying causes. For example, disruption in the continuity of care often results
from poor communication. Weaknesses also breed other weaknesses. Poor communication
disrupts the continuity of care, and then this fragmentation leads to inefficiencies in the entire
system. Inefficiencies, in turn, deplete financial and other resources. Other common
weaknesses include poor use of healthcare informatics, insufficient management training, a
lack of financial resources, and an organizational structure that limits collaboration with other
healthcare organizations. A payer mix that includes large numbers of uninsured patients or
Medicaid patients can also negatively affect an organizations financial performance, and a
lack of relevant and timely patient data can increase costs and lower the quality of patient
care.
Opportunities
Traditional SWOT analysis views opportunities as significant new business initiatives
available to a healthcare organization. Examples include collaboration among healthcare
organizations through the development of healthcare delivery networks, increased funding for
healthcare informatics, community partnering to develop new healthcare programs, and the
introduction of clinical protocols to improve quality and efficiency. Integrated healthcare
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delivery networks have an opportunity to influence healthcare policy at the local, state, and
national levels. They also have an opportunity to improve patient satisfaction by increasing
public involvement and ensuring patient representation on boards and committees.
Organizations that are successful at using data to improve clinical processes have lower costs
and higher-quality patient care. For example, healthcare organizations with CMS Hospital
Compare quality scores above the 90th national percentile are eligible for CMS pay-for
performance incentives. The greater the number of organizations achieving such scores, the
greater patients access to quality healthcare. Such scores also enhance an organizations
Reputation in the Community.
Threats
Threats are factors that could negatively affect organizational performance. Examples include
political or economic instability; increasing demand by patients and physicians for expensive
medical technology that is not cost-effective; increasing state and federal budget deficits; a
growing uninsured population; and increasing pressure to reduce health cost.
Components of Strategy Statements

The strategy statement of a firm sets the firms long-term strategic direction and broad
policy directions. It gives the firm a clear sense of direction and a blueprint for the firms
activities for the upcoming years. The main constituents of a strategic statement are as
follows:
1. Strategic Intent
An organizations strategic intent is the purpose that it exists and why it will continue
to exist, providing it maintains a competitive advantage. Strategic intent gives a
picture about what an organization must get into immediately in order to achieve the
companys vision. It motivates the people. It clarifies the vision of the vision of the
company. Strategic intent helps management to emphasize and concentrate on the
priorities. Strategic intent is, nothing but, the influencing of an organizations
resource potential and core competencies to achieve what at first may seem to be
unachievable goals in the competitive environment. A well expressed strategic intent
should guide/steer the development of strategic intent or the setting of goals and
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objectives that require that all of organizations competencies be controlled to
maximum value.
Strategic intent includes directing organizations attention on the need of winning;
inspiring people by telling them that the targets are valuable; encouraging individual
and team participation as well as contribution; and utilizing intent to direct allocation
of resources. Strategic intent differs from strategic fit in a way that while strategic fit
deals with harmonizing available resources and potentials to the external
environment, strategic intent emphasizes on building new resources and potentials so
as to create and exploit future opportunities.
2. Mission Statement
Mission statement is the statement of the role by which an organization intends to
serve its stakeholders. It describes why an organization is operating and thus provides
a framework within which strategies are formulated. It describes what the
organization does (i.e., present capabilities), who all it serves (i.e., stakeholders) and
what makes an organization unique (i.e., reason for existence). A mission statement
differentiates an organization from others by explaining its broad scope of activities,
its products, and technologies it uses to achieve its goals and objectives. It talks about
an organizations present (i.e., about where we are). For instance, Microsofts
mission is to help people and businesses throughout the world to realize their full
potential. Wal-Marts mission is To give ordinary folk the chance to buy the same
thing as rich people. Mission statements always exist at top level of an organization,
but may also be made for various organizational levels. Chief executive plays a
significant role in formulation of mission statement. Once the mission statement is
formulated, it serves the organization in long run, but it may become ambiguous with
organizational growth and innovations. In todays dynamic and competitive
environment, mission may need to be redefined. However, care must be taken that the
redefined mission statement should have original fundamentals/components. Mission
statement has three main components-a statement of mission or vision of the
company, a statement of the core values that shape the acts and behavior of the
employees, and a statement of the goals and objectives.
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Features of a Mission
a. Mission must be feasible and attainable. It should be possible to achieve it.
b. Mission should be clear enough so that any action can be taken.
c. It should be inspiring for the management, staff and society at large.
d. It should be precise enough, i.e., it should be neither too broad nor too narrow.
e. It should be unique and distinctive to leave an impact in everyones mind.
f. It should be analytical, i.e., it should analyze the key components of the
strategy.
g. It should be credible, i.e., all stakeholders should be able to believe it.
3. Vision
A vision statement identifies where the organization wants or intends to be in future or
where it should be to best meet the needs of the stakeholders. It describes dreams and
aspirations for future. For instance, Microsofts vision is to empower people through
great software, any time, any place, or any device. Wal-Marts vision is to become
worldwide leader in retailing. A vision is the potential to view things ahead of
themselves. It answers the question where we want to be. It gives us a reminder
about what we attempt to develop. A vision statement is for the organization and its
members, unlike the mission statement which is for the customers/clients. It
contributes in effective decision making as well as effective business planning. It
incorporates a shared understanding about the nature and aim of the organization and
utilizes this understanding to direct and guide the organization towards a better
purpose. It describes that on achieving the mission, how the organizational future
would appear to be.
An effective vision statement must have following featuresa. It must be unambiguous.

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b. It must be clear.
c. It must harmonize with organizations culture and values.
d. The dreams and aspirations must be rational/realistic.
e. Vision statements should be shorter so that they are easier to memorize. In
order to realize the vision, it must be deeply instilled in the organization, being
owned and shared by everyone involved in the organization.
4. Goals and Objectives
A goal is a desired future state or objective that an organization tries to achieve. Goals
specify in particular what must be done if an organization is to attain mission or
vision. Goals make mission more prominent and concrete. They co-ordinate and
integrate various functional and departmental areas in an organization. Well made
goals have following featuresa. These are precise and measurable.
b. These look after critical and significant issues.
c. These are realistic and challenging.
d. These must be achieved within a specific time frame.
e. These include both financial as well as non-financial components.
Objectives are defined as goals that organization wants to achieve over a period of
time. These are the foundation of planning. Policies are developed in an organization
so as to achieve these objectives. Formulation of objectives is the task of top level
management. Effective objectives have following featuresf. These are not single for an organization, but multiple.
g. Objectives should be both short-term as well as long-term.

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h. Objectives must respond and react to changes in environment, i.e., they must
be flexible.
i. These must be feasible, realistic and operational.

Chapter 4
Strategic Management Process
Strategic management process means defining the organizations strategy. It is also defined as
the process by which managers make a choice of a set of strategies for the organization that
will enable it to achieve better performance. Strategic management is a continuous process
that appraises the business and industries in which the organization is involved; appraises its
competitors; and fixes goals to meet the entire present and future competitors and then
reassesses each strategy. There probably is general acceptance of the idea that strategic
management is concerned with the strategic processes that produce desired responses to an
organization's changing environment. The strategic management process is concerned with a
long-run perspective. The time horizon involved often is at least 3 years and normally may be
5 or 10 years into the future. However, in certain extremely dynamic industries, the strategic
management process could be concerned with much shorter time frames. Strategic
management is the management of change. This involves the system of corporate values, the
corporate culture, and all managerial process of change, such as leadership, planning, control,
and human resources management.
There are four steps in Strategic Management Process:
i.

Environmental Scanning Internal and External analysis of Environment)

Organizational environment consists of both external and internal factors. Environment must
be scanned so as to determine development and forecasts of factors that will influence
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organizational success. Environmental scanning refers to possession and utilization of
information about occasions, patterns, trends, and relationships within an organizations
internal and external environment. It helps the managers to decide the future path of the
organization. Scanning must identify the threats and opportunities existing in the
environment. While strategy formulation, an organization must take advantage of the
opportunities and minimize the threats. A threat for one organization may be an opportunity
for another.
Internal analysis of the environment is the first step of environment scanning. Organizations
should observe the internal organizational environment. This includes employee interaction
with other employees, employee interaction with management, manager interaction with
other managers, and management interaction with shareholders, access to natural resources,
brand awareness, organizational structure, main staff, operational potential, etc.
A business becomes more competitive, and there are rapid changes in the external
environment, information from external environment adds crucial elements to the
effectiveness of long-term plans. As environment is dynamic, it becomes essential to identify
competitors moves and actions. Organizations have also to update the core competencies and
internal environment as per external environment. Environmental factors are infinite, hence,
organization should be agile and vigil to accept and adjust to the environmental changes. For
instance - Monitoring might indicate that an original forecast of the prices of the raw
materials that are involved in the product are no more credible, which could imply the
requirement for more focused scanning, forecasting and analysis to create a more trustworthy
prediction about the input costs. In a similar manner, there can be changes in factors such as
competitors activities, technology, market tastes and preferences
While in external analysis, three correlated environment should be studied and analyzed

immediate / industry environment

national environment

broader socio-economic environment

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ii.

Strategy Formulation
Strategy formulation refers to the process of choosing the most appropriate course of
action for the realization of organizational goals and objectives and thereby achieving
the organizational vision. The process of strategy formulation basically involves
six main steps. Though these steps do not follow a rigid chronological order, however
they are very rational and can be easily followed in this order.

a) Setting Organizations objectives - The key component of any strategy


statement is to set the long-term objectives of the organization. It is known
that strategy is generally a medium for realization of organizational
objectives. Objectives stress the state of being there whereas Strategy stresses
upon the process of reaching there. Strategy includes both the fixation of
objectives as well the medium to be used to realize those objectives. Thus,
strategy is a wider term which believes in the manner of deployment of
resources so as to achieve the objectives.
While fixing the organizational objectives, it is essential that the factors
which influence the selection of objectives must be analyzed before the
selection of objectives. Once the objectives and the factors influencing
strategic decisions have been determined, it is easy to take strategic decisions.
b) Evaluating the Organizational Environment - The next step is to evaluate the
general economic and industrial environment in which the organization
operates. This includes a review of the organizations competitive position. It
is essential to conduct a qualitative and quantitative review of an
organizations existing product line. The purpose of such a review is to make
sure that the factors important for competitive success in the market can be
discovered so that the management can identify their own strengths and
weaknesses as well as their competitors strengths and weaknesses. After
identifying its strengths and weaknesses, an organization must keep a track of
competitors moves and actions so as to discover probable opportunities of
threats to its market or supply sources.
c) Setting Quantitative Targets - In this step, an organization must practically fix
the quantitative target values for some of the organizational objectives. The
idea behind this is to compare with long term customers, so as to evaluate the
contribution that might be made by various product zones or operating
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departments.
d) Aiming in context with the divisional plans - In this step, the contributions
made by each department or division or product category within the
organization is identified and accordingly strategic planning is done for each
sub-unit. This requires a careful analysis of macroeconomic trends.
e) Performance Analysis - Performance analysis includes discovering and
analyzing the gap between the planned or desired performance. A critical
evaluation of the organizations past performance, present condition and the
desired future conditions must be done by the organization. This critical
evaluation identifies the degree of gap that persists between the actual degree
of gap that persists between the actual reality and the long-term aspirations of
the organization. An attempt is made by the organization to estimate its
probable future condition if the current trends persist.
f) Choice of Strategy - This is the ultimate step in Strategy Formulation. The
best course of action is actually chosen after considering organizational goals,
organizational strengths, potential and limitations as well as the external
opportunities
Strategy Implementation
Strategy implementation is also defined as is also defined as the manner in which an

iii.

organization should develop, utilize, and amalgamate organizational structure,


control systems, and culture to follow strategies that lead to competitive advantage
and a better performance. Organizational structure allocates special value developing
tasks and roles to the employees and states how these tasks and roles can be
correlated so as maximize efficiency, quality, and customer satisfaction-the pillars of
competitive advantage. But, organizational structure is not sufficient in itself to
motivate the employees. An organizational control system is also required. This
control system equips managers with motivational incentives for employees as well
as feedback on employees and organizational performance. Organizational culture
refers to the specialized collection of values, attitudes, norms and beliefs shared by
organizational members and group.
These are the main steps in implementing a strategy:

Developing an organization having potential of carrying out strategy successfully.


Disbursement of abundant resources to strategy-essential activities.
Creating strategy-encouraging policies.

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Employing best policies and programs for constant improvement.


Linking reward structure to accomplishment of results.

Excellently formulated strategies will fail if they are not properly implemented. Also, it is
essential to note that strategy implementation is not possible unless there is stability between
strategy and each organizational dimension such as organizational structure, reward
structure, resource-allocation process, etc.
Strategy implementation poses a threat to many managers and employees in an organization.
New power relationships are predicted and achieved. New groups (formal as well as
informal) are formed whose values, attitudes, beliefs and concerns may not be known. With
the change in power and status roles, the managers and employees may employ
confrontation behavior
Following are the main differences between Strategy Formulation and Strategy
ImplementationStrategy Formulation

Strategy Implementation

Strategy Formulation includes planning and Strategy Implementation involves all those
decision-making involved in developing means related to executing the strategic
organizations strategic goals and plans.

plans.

In short, Strategy Formulation is placing the In


Forces before the action.

short,

Strategy

Implementation

is

managing forces during the action.

Strategy Formulation is an Entrepreneurial Strategic Implementation is mainly an


Activity based on strategic decision-making. Administrative Task based on strategic and
operational decisions.
Strategy

Formulation

emphasizes

on Strategy Implementation emphasizes on

effectiveness.

efficiency.

Strategy Formulation is a rational process.

Strategy Implementation is basically an


operational process.

Strategy Formulation requires co-ordination Strategy


among few individuals.

Implementation

requires

co-

ordination among many individuals.

Strategy Formulation requires a great deal of Strategy Implementation requires specific

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initiative and logical skills.
iv.

motivational and leadership traits.

Strategy Evaluation

Strategy Evaluation is as significant as strategy formulation because it throws light on the


efficiency and effectiveness of the comprehensive plans in achieving the desired results. The
managers can also assess the appropriateness of the current strategy in todays dynamic
world with socio-economic, political and technological innovations. Strategic Evaluation is
the final phase of strategic management.
The significance of strategy evaluation lies in its capacity to co-ordinate the task performed
by managers, groups, departments etc, through control of performance. Strategic Evaluation
is significant because of various factors such as - developing inputs for new strategic
planning, the urge for feedback, appraisal and reward, development of the strategic
management process, judging the validity of strategic choice etc.
The steps in Strategic Evaluation are as follows

Fixing benchmark of performance - While fixing the benchmark, strategists


encounter questions such as - what benchmarks to set, how to set them and how to
express them. In order to determine the benchmark performance to be set, it is
essential to discover the special requirements for performing the main task. The
performance indicator that best identify and express the special requirements might
then be determined to be used for evaluation. The organization can use both
quantitative and qualitative criteria for comprehensive assessment of performance.
Quantitative criteria include determination of net profit, ROI, earning per share, cost
of production, rate of employee turnover etc. Among the Qualitative factors are
subjective evaluation of factors such as - skills and competencies, risk taking

potential, flexibility etc.


Measurement of performance - The standard performance is a bench mark with
which the actual performance is to be compared. The reporting and communication
system help in measuring the performance. If appropriate means are available for
measuring the performance and if the standards are set in the right manner, strategy
evaluation becomes easier. But various factors such as managers contribution are
difficult to measure. Similarly divisional performance is sometimes difficult to
measure as compared to individual performance. Thus, variable objectives must be

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created against which measurement of performance can be done. The measurement
must be done at right time else evaluation will not meet its purpose. For measuring
the performance, financial statements like - balance sheet, profit and loss account

must be prepared on an annual basis.


Analyzing Variance - While measuring the actual performance and comparing it with
standard performance there may be variances which must be analyzed. The
strategists must mention the degree of tolerance limits between which the variance
between actual and standard performance may be accepted. The positive deviation
indicates a better performance but it is quite unusual exceeding the target always.
The negative deviation is an issue of concern because it indicates a shortfall in
performance. Thus in this case the strategists must discover the causes of deviation

and must take corrective action to overcome it.


Taking Corrective Action - Once the deviation in performance is identified, it is
essential to plan for a corrective action. If the performance is consistently less than
the desired performance, the strategists must carry a detailed analysis of the factors
responsible for such performance. If the strategists discover that the organizational
potential does not match with the performance requirements, then the standards must
be lowered. Another rare and drastic corrective action is reformulating the strategy
which requires going back to the process of strategic management, reframing of
plans according to new resource allocation trend and consequent means going to the
beginning point of strategic management process.

Strategic management is an ongoing process


Because each one of the five tasks of strategic management requires, constant evaluation
and a decision with things as they are or to, make changes - the process of managing
strategy is ongoing. Nothing is final as all prior actions are subject to modification as
conditions in the surrounding environment change and ways for improvement emerge.
Strategic management is a process filled with constant motion. Changes in the organization's
situation, either from inside or outside or both, constantly drive strategic adjustments. The
task of evaluating performance and initiating corrective adjustments are found in both the
end and the beginning of strategic management cycle. The match of external and internal
events guarantees revision in the four previous components as this will be imperative sooner
or later. It is always incumbent on management to push for better performance to find ways

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to improve the existing strategy and how it is being executed.
Changing external conditions add further impetus to the need for periodic revisions in a
companys mission, performance objectives, strategy and approaches to strategy execution.
Adjustments usually involve fine turning, but occasions for a major strategic reorientation
do arise-sometimes prompted by significant external developments and sometimes by
sharply sliding financial performance. Strategy managers must stay close enough to the
situation to detect when changing conditions require a strategic response and when they do
not. It is their job to read the minds of change reorganize significant changes early and
capitalize on events as they unfold.
Strategic decisions
Strategic decisions are the decisions that are concerned with whole environment in which
the firm operates the entire resources and the people who form the company and the
interface between the two.
Characteristics/Features of Strategic Decisions
a. Strategic decisions have major resource propositions for an organization. These
decisions may be concerned with possessing new resources, organizing others or
reallocating others.
b. Strategic decisions deal with harmonizing organizational resource capabilities with
the threats and opportunities.
c. Strategic decisions deal with the range of organizational activities. It is all about
what they want the organization to be like and to be about.
d. Strategic decisions involve a change of major kind since an organization operates in
ever-changing environment. Strategic decisions are complex in nature
Strategic Management benefits/advantages

There are many benefits of strategic management and they include identification, prioritization, and explorat

of opportunities. For instance, newer products, newer markets, and newer forays into business lines are o

possible if firms indulge in strategic planning. Next, strategic management allows firms to take an objective v
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of the activities being done by it and do a cost benefit analysis as to whether the firm is profitable.
Just to differentiate, by this, we do not mean the financial benefits alone (which would be discussed below)

also the assessment of profitability that has to do with evaluating whether the business is strategically aligned
its goals and priorities.
The key point to be noted here is that strategic management allows a firm to orient itself to its market
consumers and ensure that it is actualizing the right strategy.

Financial Benefits
It has been shown in many studies that firms that engage in strategic management are more
profitable and successful than those that do not have the benefit of strategic planning and
strategic management. When firms engage in forward looking planning and careful
evaluation of their priorities, they have control over the future, which is necessary in the fast
changing business landscape of the 21st century. It has been estimated that more than
100,000 businesses fail in the US every year and most of these failures are to do with a lack
of strategic focus and strategic direction. Further, high performing firms tend to make more
informed decisions because they have considered both the short term and long-term
consequences and hence, have oriented their strategies accordingly. In contrast, firms that do
not engage themselves in meaningful strategic planning are often bogged down by internal
problems and lack of focus that leads to failure.
Non-Financial Benefits
The section above discussed some of the tangible benefits of strategic management. Apart
from these benefits, firms that engage in strategic management are more aware of the
external threats, an improved understanding of competitor strengths and weaknesses and
increased employee productivity. They also have lesser resistance to change and a clear
understanding of the link between performance and rewards. The key aspect of strategic
management is that the problem solving and problem preventing capabilities of the firms are
enhanced through strategic management. Strategic management is essential as it helps firms
to rationalize change and actualize change and communicate the need to change better to its
employees. Finally, strategic management helps in bringing order and discipline to the
activities of the firm in its both internal processes and external activities.
Closing Thoughts
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In recent years, virtually all firms have realized the importance of strategic management.
However, the key difference between those who succeed and those who fail is that the way
in which strategic management is done and strategic planning is carried out makes the
difference between success and failure..

Chapter 5
Models Of strategic Management
1. BCG Matrix

Boston Consulting Group (BCG) Matrix is a four celled matrix (a 2 * 2 matrix)


developed by BCG, USA. It is the most renowned corporate portfolio analysis tool. It
provides a graphic representation for an organization to examine different businesses in
it portfolio on the basis of their related market share and industry growth rates. It is a
two dimensional analysis on management of SBUs (Strategic Business Units). In other
words, it is a comparative analysis of business potential and the evaluation of
environment.
According to this matrix, business could be classified as high or low according to their
industry growth rate and relative market share.
Relative Market Share = SBU Sales this year leading competitors sales this year.
Market Growth Rate = Industry sales this year - Industry Sales last year.
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The analysis requires that both measures be calculated for each SBU. The dimension of
business strength, relative market share, will measure comparative advantage indicated
by market dominance. The key theory underlying this is existence of an experience
curve and that market share is achieved due to overall cost leadership.
BCG matrix has four cells, with the horizontal axis representing relative market share
and the vertical axis denoting market growth rate. The mid-point of relative market share
is set at 1.0. If all the SBUs are in same industry, the average growth rate of the industry
is used. While, if all the SBUs are located in different industries, then the mid-point is
set at the growth rate for the economy.
Resources are allocated to the business units according to their situation on the grid. The
four cells of this matrix have been called as stars, cash cows, question marks and dogs.
Each of these cells represents a particular type of business.
2. Michael Porter Model
Michael Porter (Harvard Business School Management Researcher) designed various vital
frameworks for developing an organizations strategy. One of the most renowned among
managers making strategic decisions is the five competitive forces model that determines
industry structure. According to Porter, the nature of competition in any industry is
personified in the following five forces

Rivalry among current competitors


Threat of new potential entrants
Threat of substitute product/services
Bargaining power of suppliers
Bargaining power of buyers

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FIGURE: Porters Five Forces model

The five forces mentioned above are very significant from point of view of strategy
formulation. The potential of these forces differs from industry to industry. These forces
jointly determine the profitability of industry because they shape the prices which can be
charged, the costs which can be borne, and the investment required to compete in the
industry. Before making strategic decisions, the managers should use the five forces
framework to determine the competitive structure of industry.
The five factors of Porters model in detail:
Risk of entry by potential competitors: Potential competitors refer to the firms which
are not currently competing in the industry but have the potential to do so if given a
choice. Entry of new players increases the industry capacity, begins a competition for
market share and lowers the current costs. The threat of entry by potential competitors is
partially a function of extent of barriers to entry. The various barriers to entry are

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Economies of scale
Brand loyalty
Government Regulation
Customer Switching Costs
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Ease in distribution
Strong Capital base

Rivalry among current competitors: Rivalry refers to the competitive struggle for
market share between firms in an industry. Extreme rivalry among established firms
poses a strong threat to profitability. The strength of rivalry among established firms
within an industry is a function of following factors:

Extent of exit barriers


Amount of fixed cost
Competitive structure of industry
Presence of global customers
Absence of switching costs
Growth Rate of industry
Demand conditions

Bargaining Power of Buyers: Buyers refer to the customers who finally consume the
product or the firms who distribute the industrys product to the final consumers.
Bargaining power of buyers refer to the potential of buyers to bargain down the prices
charged by the firms in the industry or to increase the firms cost in the industry by
demanding better quality and service of product. Strong buyers can extract profits out of
an industry by lowering the prices and increasing the costs. They purchase in large
quantities. They have full information about the product and the market. They emphasize
upon quality products. They pose credible threat of backward integration. In this way,
they are regarded as a threat.
Bargaining Power of Suppliers: Suppliers refer to the firms that provide inputs to the
industry. Bargaining power of the suppliers refer to the potential of the suppliers to
increase the prices of inputs( labour, raw materials, services, etc) or the costs of industry
in other ways. Strong suppliers can extract profits out of an industry by increasing costs
of firms in the industry. Suppliers products have a few substitutes. Strong suppliers
products are unique. They have high switching cost. Their product is an important input
to buyers product. They pose credible threat of forward integration. Buyers are not
significant to strong suppliers. In this way, they are regarded as a threat.
Threat of Substitute products: Substitute products refer to the products having ability
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of satisfying customers needs effectively. Substitutes pose a ceiling (upper limit) on the
potential returns of an industry by putting a setting a limit on the price that firms can
charge for their product in an industry. Lesser the number of close substitutes a product
has, greater is the opportunity for the firms in industry to raise their product prices and
earn greater profits (other things being equal).
The power of Porters five forces varies from industry to industry. Whatever be the
industry, these five forces influence the profitability as they affect the prices, the costs,
and the capital investment essential for survival and competition in industry. This five
forces model also help in making strategic decisions as it is used by the managers to
determine industrys competitive structure.
Porter ignored, however, a sixth significant factor- complementary. This term refers to
the reliance that develops between the companies whose products work is in
combination with each other. Strong complementary might have a strong positive effect
on the industry. Also, the five forces model overlooks the role of innovation as well as
the significance of individual firm differences. It presents a stagnant view of competiti

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Chapter 6
Strategic Leadership/Role of leader and strategy managers
Strategic leadership refers to a managers potential to express a strategic vision for the
organization, or a part of the organization, and to motivate and persuade others to acquire
that vision
A few main traits / characteristics / features / qualities of effective strategic leaders that
do lead to superior performance are as follows:
Loyalty- Powerful and effective leaders demonstrate their loyalty to their vision by their
words and actions.
Keeping them updated- Efficient and effective leaders keep themselves updated about
what is happening within their organization. They have various formal and informal
sources of information in the organization.
Judicious use of power- Strategic leaders makes a very wise use of their power. They
must play the power game skillfully and try to develop consent for their ideas rather than
forcing their ideas upon others. They must push their ideas gradually.
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Have wider perspective/outlook- Strategic leaders just dont have skills in their narrow
specialty but they have a little knowledge about a lot of things.
Motivation- Strategic leaders must have a zeal for work that goes beyond money and
power and also they should have an inclination to achieve goals with energy and
determination.
Compassion- Strategic leaders must understand the views and feelings of their
subordinates, and make decisions after considering them.
Self-control- Strategic leaders must have the potential to control distracting/disturbing
moods and desires, i.e., they must think before acting.
Social skills- Strategic leaders must be friendly and social.
Role of Managers/board of directors in Strategy development
An organization's Chief Executive Officer is the most invisible and important strategy
manager. The CEO, as captain of the ship, has full responsibility for leading the tasks of
formulating and implementing the strategic plans of the whole organization, even though
many other managers have a hand in the process. The CEO functions as chief direction
setter, chief objective setter, and chief strategy - maker and chief strategy - implementer for
the total enterprise. What the CEO views as important usually moves to the top of every
managers priority list and the CEO has the final word on big decisions. Vice President (V.P)
for production, marketing, finance etc and other functional departments have strategy
making and strategy implementation responsibilities as well. Normally, the production V.P.
oversees production strategy; marketing VP heads up the marketing strategy effort and so
on. Managerial positions with strategy making and strategy-implementation responsibility
are by no means restricted to these few senior executives. Every manager is a strategymaker and strategy-implementer for the areas. He/she has authority over and supervises.
Every part of the company - business unit, division, operating department, plant or district
office has a role to carry out (Thompson and Strickland, 1992). The manager in charge of
unit, with guidance from superiors, usually ends up doing some or most of the strategymaking for the unit and implement whatever strategic choices are made. However, managers
further down in the managerial levels have a narrower, more specific strategy
making/strategy-implementing role than managers close to the top. Another reason lowerechelon managers

are strategy-makers

and strategy-implementers

is

that more

geographically scattered and diversified an organizations operations are, the more


impossible it becomes for a few senior executives to handle all the strategic planning that
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needs to be done. Managers in the corporate office do not know all the situational details in
all geographical areas and operating units to be able to prescribe appropriate strategies.
Usually, they delegate some of the strategy-making responsibility to lower level managers
who head the organizational sub-units where specific strategic results must be achieved.
Delegating strategy-making role to those managers who will be deeply involved in carrying
out roles in their areas, fixes accountability for strategic success or failure. When the
managers who implement the strategy are also its architects, it is hard for them to shift the
blame or make excuses if they do not achieved the targeted results.
In diversified or large companies where the strategies of several different businesses have to
be managed, there are usually four distinct levels of strategy managers:

The CEO and other senior corporation-level executives who have primary
responsibility and personal authority for big strategic decisions affecting the total
enterprise and the collection of individual businesses the enterprise has diversified

into
Managers who have profit-and-loss responsibility for some specific business unit
and who are delegated a major leadership role in formulating and implementing the

strategy for that unit.


Functional area managers within a given business unit have direct authority over a
major piece of the business and whose role it is to support units overall strategy

with strategic actions in their own areas.


Managers of major operating departments and geographic field units who have
frontline responsibility for developing the details of strategic efforts in their areas
and for implementing and executing the overall strategic plan at grass roots level.

Managerial jobs involve strategy formulation and implementation. For example, a


multicampus state university has four strategy-managing levels:
1. The Vice Chancellor is a strategy manager with broad direction-setting responsibility
and strategic-decision-making authority over all the campuses;
2.

Pro Vice Chancellor for each campus customarily has strategy-making/strategy

implementation authority over all academic matters plus budgetary control for that campus,
3.

The academic deans have responsibility for charting future direction at the

faculty/college level;
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4.

Departmental heads are strategy-managers with first-line strategy-making/strategy

implementation responsibility and other activities relating to the departments mission


objectives and future direction. The job of crafting and implementing strategy touches
virtually every managerial job in one way or another at one time or another.
Strategic role of the Board of Directors
Board Of Directors
Since the responsibility of crafting and implementing strategy falls on key managers, the
chief, strategic role of an organization's board of directors is to see that the overall task of
managing strategy is adequately done. Boards of directors normally review important
strategic moves and officially approve the strategic plans that have been submitted by senior
management a procedure that makes the board ultimately responsible for the strategic
actions undertaken
However, directors rarely play a direct role in formulating strategy. The immediate task of
the directors in ratifying strategy and new direction - setting moves is to ensure that all
proposals have been adequately analyzed and considered and that the proposed strategic
actions are superior to available alternatives.
Flamed proposals are customarily withdrawn for revision by management. The longer range
task of directors is to evaluate the caliber of senior executives strategy making and strategy
- implementing skills. The board must determine whether the current CEO is doing a good
job of strategic management, (as a basis for awarding salary increases and bonuses and
deciding on retention or removal) and evaluate executives in line to succeed the current
CEO
Benefits of Strategic Approach to Managing
Todays managers have to think strategically about their companys position and about the
impact of changing conditions. They have to:
Monitor the external situation closely enough to know when to institute strategic change;
Know the business well enough to know what kind of strategic change to initiate.
The fundamentals of strategic management need

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Impact of Strategic Management on organization
Strategic Management is an intrinsic part of any organization. Strategic management
comprises of environmental scanning, strategy formulation, implementation and evaluation
and control. Through this process, an organization plans its activities which shall be
profitable for the firm. On the other hand, organizational effectiveness is a tool for making
best use of available talents, skills and helping employees to achieve their personal goals
along with organizational goals and mission. Organizational effectiveness is the degree to
which an organization realizes its goals. Effectiveness implicitly takes into consideration a
range of variables at both the organizational and departmental levels. The presented study is
an attempt to correlate strategic management and organizational effectiveness through a
study in banks. The conclusion of the study supports that strategic management has quite an
impact on organizational effectiveness in terms of planning, formulation, implementation
and evaluation in relation to innovation, feedback, roles and communication within an
organization. The impact is:
Competitive Advantage

Competitive advantage is the set of factors that differentiates an organization from its
competitors. In developing, implementing and managing global and national
strategies, an organization sets itself apart. In terms of performance, this means that
the organization becomes more efficient in its operations, such as manpower
planning or manufacturing and in reaching its customers. Strategic management also
enables an organization to identify ways of penetrating new markets, globally and
nationally.

Culture

Organizational culture significantly influences an organization's performance.


Additionally, strategic management helps in creating the organizational culture
through developing the mission, vision and values. Proper strategic management
facilitates the formation of a culture of integrity, competitive work ethic, embracing
technology, value creation for customers and shareholders.

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Chapter 7
Globalization impact on strategic Management
The globalization of business has become so rapid that a new field called "Global Strategic
Management" has now emerged. This new field is a blend of strategic management and
international business that develops worldwide strategies for global corporations. Whereas
most studies in this field focus on ordinary business conditions, the revolutionary events of
the past few years make it clear that the present is not ordinary. Such epoch-shattering
events as the collapse of communism, the unification of Europe, the information revolution,
the arrival of an environmental ethic, and other remarkable new developments signal that a
new era is emerging in global affairs. This article describes a broader approach to global
strategic management that encompasses these revolutionary changes.
The viewpoint presented here was developed in a project sponsored by the World Future
Society called "WORLD 2000." WORLD 2000 focuses on conducting a global strategic
management process among business, government, education, and other sectors of society to
define the emerging global system and help institutions adapt to changes. It represents a
fresh examination of the forces that are integrating the earth into a coherent global order as
well as those that are creating the disorder that tends to characterize our time: the unification
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of markets and communications, as well as the vast differences in cultures, local problems,
and values erupting around the globe. By gaining new insights into the emerging world
system, social institutions may better understand how they can adapt to these changes.
This seems to be an opportune time for such an examination. The transition to a new global
system is likely to be made during the next decade; the year 2000 offers a highly symbolic
turning point at which the emerging global order can be shaped and molded.
Following is a global strategic plan, developed by synthesizing the literature and then
reviewing the plan with groups of executives. It follows the logic of a typical strategic plan
but carried to a global level. First, we summarize nine super trends that describe a long-term
trajectory toward an advanced stage of "global maturity." Second, we note five principal
obstacles that must be overcome to clear the way ahead. Third, we argue that these issues
can be resolved by a newly emerging perspective that recognizes the essential unity of a
global community.
The Trajectory To Global Maturity
The following trends represent the principal driving forces that are now moving the world in
new directions. They could be called "super trends." Little attempt is made to offer
justifications, and many other trends that capture finer details are not covered. This
summarizes the major features that characterize the emerging shape of the globe as it moves
along a long-term trajectory toward a new stage of global maturity.
Trend 1: A Stable Population of 10-14 Billion
The earth, which already is teeming with 5.5 billion people, is expected to double its
population to reach a stable level somewhere between 10-14 billion humans by the mid-21st
century. About 95 percent of this growth will occur in the less developed countries (LDCs).
Trend 2: Industrial Output Will Increase by a Factor of 5-10
The aggregate level of material consumption, or industrial output, should increase by a
factor of 5-10 over the next few decades as most remaining parts of the world industrialize
to reach the equivalent standard of living enjoyed by Americans, Europeans, and Japanese.
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Industrial throughout, however, is likely to grow less as more efficient means are found to
insure a sustainable form of development.
Trend 3: The Wiring of the Globe
Information technology (IT) is a revolutionary force that will continue to overthrow
governments, restructure corporations, and unify the world. This revolution will wire the
earth into a single communication network, a central nervous system for a planetary society.
However, the gap between information haves and have-nots is apt to persist.
Trend 4: The High-Tech Revolution
The IT revolution is accelerating technical advances to create breakthroughs in all fields: the
mapping of DNA, genetic therapy, robotics, materials research, sustainable "green
technology," automated transportation, and even a "technology of consciousness."
Trend 5: Global Integration
The globe is becoming integrated into a single community connected by a common
communication system, a global economy, and a shared international culture. In time, this
process may unify today's growing economic blocs and political federations into a universal
system of open trade, a global banking system and common currency, and some form of
world governance.
Trend 6: Diversity and Complexity
It is a great paradox that global integration will be accompanied by disintegration into a
highly diverse system. Ethnic enclaves, such as those in the former republics of the USSR,
will continue to seek autonomy; various groups within nations will form pockets of selfgoverning subcultures; and modern societies generally will splinter into a far more complex,
differentiated social order.
rend 7: A Universal Standard of Freedom
Freedom and the recognition of human rights should continue spreading around the globe,
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though this movement may ebb and flow at times. A majority of nations now have political
democracy and free market systems, and the number should grow to the extent that freedom
becomes the accepted norm, with authoritarian systems being the exception.
Trend 8: Continued Crime, Terrorism, and War
Traumatic upheaval is likely to produce disgruntled individuals, groups, and nations
resorting to a variety of crimes, terrorism, and limited wars. However, global wars and the
old fear of nuclear holocaust now seem unlikely.
Trend 9: Transcendent Values
As this transformation unfolds, most people in advanced nations should strive for quality of
life, community, self-fulfillment, art, spirituality, and other higher-order values that
transcend material needs. Many are cynical about such claims, but as the philosopher Andre
Malraux predicted, the twenty-first century will be the century of religion.
CRITICAL ISSUES BLOCKING THE PASSAGE AHEAD
Although this evolutionary trajectory is likely to stabilize into a mature, coherent global
order in the mid-twenty-first century, business and government must resolve the following
five issues, which pose barriers to this forward movement. Once again, this represents a
quick survey--not a detailed summary--to highlight key issues that now present major
obstacles to progress.
Issue 1: Making the Leap to a Global Order
Most of the problems the world struggles with result from the fragmented economic and
political systems that continue unchanged from the industrial past. Trade barriers,
fluctuating currency exchange rates, and difficulties in communicating are "old" problems
that should not exist in a "new" global order managed as a coherent system; they do not
exist in the United States, Germany, China, or other societies governed as coherent systems.
The transition to some type of world order is monumental because it requires sophisticated
global systems that integrate the world into a single whole, permitting a quantum leap to a

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global level of governance heretofore unknown.
Issue 2: Reconciling Economic Interests
Communism may have yielded to markets, but markets do not exist only in capitalism. The
strength of Japan, for instance, hinges on a market system that is based on collaborative
working relations: a "Human Enterprise System" (Ozaki 1991). In contrast, the capitalism
practiced in Western nations, such as the United States, is in trouble because it exacerbates
conflicts between labor and management, rich and poor, business and government, domestic
and foreign trade, private and public sectors, and other basic incompatibilities. A sound
global economy for the future, therefore, awaits the creation of a new economic paradigm
based on some form of free enterprise that can reconcile these diverse interests into a
productive and harmonious community.
Issue 3: Achieving Sustainable Development
The present conflict between economic growth and environmental protection will be
resolved either rationally or through some form of decline. The anticipated five- or ten-fold
increase in industrial output is incompatible with any reasonable forecast under existing
conditions. Many solutions are being proposed to achieve sustainable development, but the
task of implementation remains formidable. Ecological systems are suffering unsustainable
stress even under today's far more modest load. Developed countries (DCs) show little
inclination to alter their profligate lifestyles, and LDCs seem to be striving for Western
affluence.
Issue 4: Managing Complexity
One of the most striking trends of the emerging future is the explosion of complexity that is
almost impossible to contain within today's cumbersome institutions. Much of what passes
for unsolvable disorder reflects an inability to respond effectively to the diversity of
individual and community challenges. This problem, which toppled communism, is
becoming severe in the West. Top-down corporations are struggling to diversify so they can
serve myriad market niches; governments have not yet begun to grapple with the intricacies
of education, poverty, crime, and other chronic social problems. Dramatically different
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institutions are needed to manage this complex new world, which may require an upheaval
similar to the one now plaguing the former communist bloc.
Issue 5: Alleviating the North-South Gap
The enormous disparity between the wealth of LDCs in the South and the DCs of the North
shows little sign of improvement, fanning an explosive antagonism between these two
halves of the globe. Average income in the South is now about six percent of that in the
North; little progress is being made in alleviating the misery of these people, who make up
three-quarters of all humanity. Unless serious efforts are made to close this gap by bringing
LDCs into the modem world, the Southern hemisphere will seethe with the same potential
for violent confrontation that was released in the Los Angeles riots of 1992.
These five dilemmas are exacerbated by one of the most pervasive problems of our time: a
collapse of faith in the familiar old ideology that guided humans through the past epoch with
good success. It could be thought of as a "meta-issue." With the USSR now defunct and the
United States in crisis, the lack of superpower leadership has left a vacuum of power. Ideas
and moral guidelines at a time when the world is facing Herculean new challenges. The
result is political gridlock, economic stagnation, destructive personal stress, social disorders,
and many other symptoms of breakdown. From all this apparent chaos, a new paradigm,
model, or belief system must somehow be formed that allows people to make sense of
today's different global realities.
A strategy based on global perspective
An enormous variety of policies and remedial programs are being proposed to resolve all
these problems, but their sheer number and diversity scatter attention into confusing,
uncoordinated, and ineffectual directions. This section synthesizes these proposals into a
"master strategy" based on a different perspective now gaining increasing attention, one that
recognizes the essential unity of the emerging global system.
The key to understanding the emerging world view is to see that unprecedented new
imperatives have arisen--especially the revolutionary force of IT--that are unleashing
powerful new forces to integrate the globe. As communication systems encircle the earth to
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form a central nervous system for the planet, the fragmented parts of today's failing global
order are being joined together into an interconnected, coherent system. The most recent
report of the Club of Rome (King and Schneider 1991) notes that current dramatic changes
represent the first global revolution because the entire earth is experiencing these events
together at the same time. This perspective then leads to the following elements of a master
strategy required to overcome the issues defined before:
Strategy 1: Disseminate Advanced Technology to Unify the Globe
Although many people fear its effects, the relentless advance of modern technology-especially information technology--is the primary force driving the globe through its present
transition. It was the ubiquitous presence of television, radio, facsimile, and video, for
instance, that armed citizens of the former USSR and the Eastern Bloc with the knowledge
required to overthrow their governments.
Information technologies should be diffused, therefore, by corporations selling sophisticated
products abroad, governments fostering joint research and development projects, individuals
sharing technical knowledge, and any other reasonable methods. There is a particular need
to find ways of introducing these technologies into LDCs to advance their modernization
and unite them with the world. All technology can be misused, so care is needed to ensure
that it is applied appropriately. The emerging global order is being constructed on a
technological foundation; the sooner that foundation is in place, the sooner this system can
behave as a coherent global community.
Strategy 2: Integrate Economics and Society
The conflict between economic life and social life is being reconciled, as evidenced by
breakthroughs that would have been unthinkable a few years ago. Japan has shown the
world that a union of economic and social interests is more productive, spurring others to
emulate this "human-centered" form of enterprise. Even General Motors, long regarded as
the antithesis of this idea, has formed GM-Saturn as a prototype of socially responsive
business, managed by a coalition of workers, customers, suppliers, distributors, and local
citizens. Saturn production lines cannot keep up with demand because Saturn cars are now

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the best in their class, proving that social goals are compatible with economic goals.
Intense global competition should, in time, drive most economies in this direction because it
is efficient. Decisions ranging from the shop floor to national macroeconomic policy may
then be made collectively by all affected parties, including workers, labor, consumer
advocates, governments, and citizens. If this can be done, the leaders of business and other
social institutions may then act as stewards rather than managers, creating the badly needed
trust, quality, mutual service, and collaborative economic relationships that can instill the
essential sense of community that vitalizes society.
Strategy 3: Create a Symbiotic Society-Environment Interface
A harmonious economic-societal relationship will mean little if it is not supported by a
viable ecosystem. Civilization must be carefully redesigned to form a symbiotic societyenvironment interface. Business firms are now competing to prove their environmental
consciousness because of public pressure. Stephen Schmidheiny, Chairman of the Business
Council for Sustainable Development, described the advantages (1992): "Progress toward
sustainable development makes good business sense because it can create competitive
advantage and new opportunities."
A wide range of difficult adjustments are under way to integrate ecological realities into
economic and social life. Sustainable technologies and practices are being developed to
increase economic efficiency, advance more modest but wholesome lifestyles, develop
renewable energy, reforest denuded lands, convert to organic agriculture, recycle waste, and
improve pollution controls. To evaluate this complex situation realistically, social indicators
must be incorporated into such financial measures as GNP; social costs, such as pollution,
should be internalized in the form of taxes and credits to guide balanced economic choices.
Strategy 4: Decentralize Institutions to Empower Individuals
Almost all analysts agree that social institutions need to be restructured for a knowledgebased global order, but confusion reigns over what is needed. The most useful guide can be
found in a dominant imperative now sweeping through modern nations: institutions are
being decentralized into networks of small, autonomous units to master complexity. This
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imperative is the entrepreneurial half of the new role emerging for institutions; the move
toward collaborative, democratic policymaking described in Strategy 3 constitutes the other
half that unifies this diversity into a harmonious whole.
For instance, large corporations are being disaggregated into small "internal enterprises" that
form the equivalent of market economies inside organizations--"internal markets" (Halal et
al. 1993). Under the pressure of limited budgets and public demands, governments are also
allowing the public to choose among competing agencies. A good example is the way U.S.
education is introducing market competition among schools, which are also governed
democratically by teachers, parents, local citizens, and administrators.
The result of all these changes is to restructure authority relationships. Markets and
democracies share the common feature of placing control in the hands of ordinary people to
harness the growing diversity of thought and values into creative forces of change, with
institutions providing the overarching systems that support and guide change. The
decentralization of authority, then, empowers a person to care for themselves more
effectively, which provides a self-organizing system for managing a complex world.
Strategy 5: Foster Collaborative International Alliances
A knowledge-based society fosters pockets of collaborative problem solving in which all
partners benefit, while competition drives collaborating parties together. This is why
business managers and politicians are creating a flurry of strategic alliances with their
competitors. Cooperation has now become the most powerful force in world affairs.
This new ethic of strategic collaboration is also being extended to forge productive alliances
between business and government, economists and ecologists, and competing nations,
knitting together a global community of diverse groups. Note that an ethic of cooperation
implies not altruism but a reciprocity of interests that benefits all partners. It is enlightened
self-interest.
The conflict between North and South, for example, could yield cooperative ventures, such
as the North American Free Trade Agreement, between DCs and LDCs based on mutual
advantages for both parties. LDCs gaining capital, jobs, and know-how, while DCs gain
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access to markets and less costly labor.
Obviously there is no assurance that the world will pursue a path of this type. And it is
certainly true that difficult choices at dangerous junctures could deflect the trajectory toward
maturity into other directions. However, historic breakthroughs have occurred in the past
few years--the collapse of communism, a greatly reduced threat of nuclear holocaust, and
worldwide concern over the environmental crisis--largely through the natural evolution of
the global order. Barring unforeseen disasters, it seems reasonable to expect that the other
remaining obstacles noted above could also be resolved from this same natural process,
though we cannot now anticipate how or when.
This does not mean that individuals and institutions are passive observers of an immutable
process of natural development: change is the sum of countless small human actions that
collectively produce social transformation. A coherent new world order will emerge only if
global corporations, national governments, and educational institutions are able to adopt
major strategies such as those outlined above. Developing and disseminating advanced
technologies, especially information technology, will be essential in forming the foundation
for a mature global society. A collective model of enterprise must be defined that reconciles
the interests of capital with mounting social concerns, particularly environmental
sustainability. Large firms must be decentralized to empower individuals if we hope to
manage a complex and diverse world. Strategic alliances must be encouraged on a global
scale to avoid the conflicts that now divide the world.
Accomplishing these ambitious tasks will test us all because our individual perspectives will
have to yield to a broader perspective. In our work conducting the WORLD 2000 global
strategic management process for corporations, government agencies, and other
management groups, we find a common theme running through all these changes: the
emerging global order can be integrated into a workable whole only by accepting the
legitimacy of other views, even those we feel are antithetical to our own.
The primary skill required to survive this critical transformation, therefore, is an attentive
ability to reconcile the conflicting, endlessly changing, overwhelming complexity posed by
today's diverse world. A crucial paradox lies at the heart of this challenge. What is involved,
fundamentally, is cultivating a more transcendent mode of thought that can permit all of us
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to regain command over our affairs by relinquishing the illusion of self-control in favor of
shared control.
Impact of Internet on Strategic Management
Few innovations in history provide as many benefits to the strategic management of a
corporation as does electronic commerce via the internet. The global nature of technology
low cost opportunity to reach millions of people interactive nature and variety of
possibilities result in many benefits to strategic management .Ecommerce provides certain
benefits to the strategic management of corporations.

Expands the market place to national and international markets .All any one now

needs is a computer to connect buyers and sellers.


Decrease the cost of creating, processing, distributing storing and retrieving

information. The cost of electronic is quite reasonable.


Enables people to create highly specialized business ventures. Very narrow market

can now be reached via internet and internet search engines.


Allow small inventories, just in time manufacturing, and less overhead expenses by

facilating pull type supply chain management.


Enables the communication of products and services to better suit customer needs.
Customers are encouraged to select alternative and styles from the auto of their

choice on the BMW Web site.


Increase flexibility, compress cycle, and delivery time, and provides easy access t
information on customers and suppliers

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Chapter 8
Strategic management process of e-business
The e-business strategic management process illustrated is based on the traditional model of
strategic management. It is a systematic process consisting of four interrelated steps: (1)
Analyze the external and internal environments, (2) Select the e-business strategy, (3)
Implement the e-business strategy, and (4) Evaluate the success of the e-business strategy.
Step 1: Analyze The Companys External And Internal Environments
In the traditional strategic planning model, managers identify their companys strengths and
weaknesses, as well as the obstacles and opportunities in their business environment. They
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are then ready to make strategic decisions that seek to balance their companys
competencies with the business opportunities around them. This step is equally crucial for ebusiness planning.
The main barriers to e-business adoption
A wait-and-see attitude and skepticism on the part of clients and partners can put up barriers
that discourage e-business solutions. In other cases, the nature of the companys product can
make it more difficult to introduce e-business. Consider the example of Moules Industrials,
a Sherbrook, Que., firm that manufactures rubber and plastic moulds-a customized product
that is generally unsuitable for Web-based sales because transactions cannot occur without
prior personal contact. Moules Industrials can, however, use the Web to foster initial client
contact, and when an agreement is reached with a client, the Internet can make further
contact easier during the prototype development phase.
For SMEs located outside major urban centers, it is sometimes hard to find simple,
economic solutions for distributing the products they sell on-line. La Ferme Martinette, a
maple-product business in Quebecs Eastern Townships that markets its merchandise online, must rely on Canada Post to deliver goods to its customers. La Fermee Martinette
operates at a disadvantage because merchandise pickup is not an option for many customers,
and because it does not have personal contact with customers at the time of sale or product
receipt. The Web makes it possible for SMEs like La Ferme Martinette to increase their
customer base, but it cannot solve all the logistical difficulties related to the sale.
However, our study found that by far the most important obstacle to e-business adoption
among small- and medium-sized enterprises was lack of financial resources. The size of the
investment and the long and sometimes uncertain payback period frequently cause SMEs to
postpone investing in e-business. For example, 20 per cent of Polar Plastics customers
wanted the Montreal-based plastic-ware manufacturer to adopt an electronic data
interchange (EDI) system, which was too costly, given the companys small client base.
Polar Plastic knew that it would be very difficult to pay off the $30,000 cost of the system
over the short term. Instead, the company opted for EDI Gateway, a technological solution
offered by an external supplier that processes customer orders and lets Polar Plastic transmit
information to its clients EDI systems. Through this intermediary company, Polar could
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receive and transmit information by fax to clients like McDonalds Restaurants. Until
recently, the cost of contracting this particular EDI solution through an intermediary was a
few hundred dollars per month.
What conditions enable e-business adoption?
When developing their e-business strategic plan, managers must take into account the
number and nature of external factors that are compatible with the adoption of e-business.
Depending on the industry, government financing may be an incentive for adopting ebusiness. Other proven incentives are the time spent with SMEs to understand their needs
and the investments in technological infrastructure made by the leaders of sector-based
associations like the QICG (Quebec Institute of Graphic Communications) and the funding
and technological expertise of partners such as government agencies and large corporations.
Many companies know how to identify and take advantage of such arrangements. In our
study, the triggering factor was usually the initiative of managers who realized the potential
advantages of e-business. For example, the vision and technological know-how of managers
at Auberge de La Fontaine, a small hotel in Montreal, and Colibri Tours, a travel agency, led
these companies to develop a Web site. After many years of negative growth, Revue
Gestion, a magazine for business practitioners and academics, also sought to boost
readership by going on-line.
Step 2: Select An E-Business Strategy
The selection of an e-business strategy requires solid knowledge of how e-business can
create economic value for the firm. Successful SMEs know how to identify the scope of
their activities and determine which products, clients and geographic markets they should
target. They also know how to set clear and measurable goals.
How can e-business create economic value?
The ultimate goal of any strategic decision is to create value. Amit and Zotto identified four
opportunities to create value with the help of e-business: efficiency, complementarities,
novelty and lock-in. Efficiency is mainly derived from lower costs due to faster transactions,
increased automation of the companys operations, and the ease with which clients can
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research relevant information. Novelty refers to the design and adoption of new operational
methods in a given sector that link up new or existing participants, or introduces new
products and services. By locking in to a particular, reliable technological solution, a
company gains approval and trust among its client base.
Complementarities are mainly concerned with the bundling of resources and technological
capabilities, as well as the bundling of products and services, of various partners in one
electronic network. In our study, the principal value driver was efficiency for the firm and
the customer. Using e-business allowed SMEs to reduce costs and find new clients, as was
the case with Montreals Auberge de La Fontaine, whose Web presence boosted the inns
revenues by 30 per cent. The inn was also able to save on advertising costs by reducing the
number of promotional flyers it printed. Its trilingual site (French, English and Spanish)
allows customers to view available rooms and obtain information on Montreals tourist and
cultural offerings, adding value for its patrons and streamlining the booking process.
Value can also be created through complementarities and lock-in. Caractra-Neomdia, a
Quebec-based printing and new-media company, retains clients by providing them with
comprehensive content-management services and alternative publishing methods.
How can the SME position itself in the industry?
To create value, companies seek to improve their positioning vis--vis their competitors. The
SMEs in this study were seeking primarily to improve their client offerings by making their
products or services more attractive. Revue Gestion, for instance, established an on-line
database for individual and corporate clients. The search engine on its Web site allows
readers to conduct speedy, targeted searches through its collection of 1,000 articles
published within the past 28 years. By offering an electronic database of articles as well as a
print version, Revue Gestion is adding value in ways that will strengthen its customer base.
Colibri Tours chose to develop a Web site in order to reach clients directly rather than
through intermediaries. The travel agency was able to improve the speed and quality of its
services, reduce its promotional costs and lock in customers. RECF, a French-Canadian
group of editors, inexpensively expanded its product range, enhanced its exposure and
increased sales by making its plays and poetry publications available on-line. Some of the
less profitable cultural products that RECF was unable to include in a printed catalogue are
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now offered on-line at lower cost.
Thanks to e-business, SMEs are consolidating and expanding their geographic market. For
example, GLP Hi-Tech, a plastics processor in St. Jean-sur-Richelieu, Que., created a Web
site to attract international clients to its GLP Power division. The company now sells its
products in over 20 countries to clients who would have been expensive to reach without the
Internet. La Ferme Martinette draws customers from the Montreal area by advertising its
sugar-shack activities on-line, and is also hoping to reach a more international market for its
maple-sugar products. Auberge de La Fontaine focuses on the North American market, but
is also attempting to attract international clients through its Web site.
Step 3: Implement The E-Business Strategy
After defining the targeted client base and geographic markets for new or traditional
products, SME managers should plan the implementation of their e-business and decide
what type of technological solution and supply chain to adopt.
What are the most suitable technological solutions?
Companies have a wide range of technological options from which to choose (see Table 1).
Our study shows that SMEs usually develop Web sites and e-shops that complement their
products and services, and fulfill their need for identity and independence. SMEs in plastics
and printing often are reluctant to embrace technological solutions that impose
standardization on the entire industry. In fact, portal solutions, virtual communities and emalls are usually not attractive to SMEs because they do not support the SMEs need for
identity and independence.
Thanks to its Web site, Maison Laprise, a manufacturer of factory-built homes, is able to
provide customers with a complete catalogue of its products, along with the relevant
technical specifications for each home. The sites search engine allows clients to input the
features they want in a home and quickly access an appropriate model. About 60 per cent of
buyers said they visited the Web site before heading to the companys showroom. The
companys on-line presence has bolstered its sales volume.
Some businesses prefer to involve other retailers or partners in their technological solutions,
and to devise a technical format that is tailored to the specific operations of their association
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or sector. RECF, for example, runs an e-mall where editor partners can advertise their
products.
Step 4: Evaluate the success of the e-business strategy
After acquiring a sound understanding of how to create economic value with e-business and
determining the firms desired positioning, managers must finalize objectives relating to
sales growth, cost reduction and profitability. They must also select the indicators that will
enable them to assess the success of the e-business solution-scorecards showing financial,
client, internal process and learning and growth indicators can be vital tools.
Indicators for evaluating e-business success
Overall, the businesses in this study used a small number of unsophisticated indicators. They
placed importance on the profitability of transactions, and measured performance by
analyzing additional sales volume and the savings realized by using e-business. In our study,
only Revue Gestion established a set of indicators to assess the performance of its e-business
project prior to implementing e-business. Many of these indicators are automatically
captured on Revue Gestions Web site
Revue Gestions on-line presence has increased the companys revenues by over 25 per
cent. This improvement is largely due to the introduction of corporate on-line subscriptions
for businesses and associations, which increased subscription rates from 2,500 to more than
30,000 in one year. At the same time, handling, marketing and printing costs declined,
saving the journal an estimated $194,000. Auberge de la Fontaines Web site expanded the
companys client base by 15 per cent. In 2003, 24 per cent of the companys clients
discovered the hotel through the Internet-49 per cent were American, 42 per cent Canadian,
and 3 per cent French. Moreover, 52 per cent of the hotels clients entered the site directly
through its e-mail address, aubergedelafontaine.com; nine per cent through the
bonjourquebec.com reservation portal; and the remainder through approximately 50 out of
the 300 sites on which the hotel is registered. The Auberge was able to recover its
investment in e-business within six to eight months.
Impression Paragraph, a printing company in Ville St-Laurent, Que., introduced Intraprint
software that enabled customers to order their business cards online. This decreased
turnaround on orders from 12 days to less than 48 hours, and reduced the number of errors.
Previously, clients had faxed their handwritten orders, and these were not always easy to
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read.
This article illustrates the strategic management process involved in adopting e-business,
based on the experiences of 11 Canadian small- and medium-sized enterprises. Although the
SMEs in this study had limited financial and human resources, they were still able to
develop technological solutions that allowed them to reduce operating costs, increase
capacity, diversify product and service offerings, increase exposure with clients and expand
their market share

Chapter 9
Strategic management of HUL
Introduction:
Soon after followed Lifebuoy in 1895 and other famous brands like Pears, Lux and Vim.
Vanaspati was launched in 1918 and the famous Dalda brand came to the market in 1937.
In 1931, Unilever set up its first Indian subsidiary, Hindustan Vanaspatii Manufacturing
Company, followed by Lever Brothers India Limited (1933) and United Traders Limited
(1935). These three companies merged to form HUL in November 1956; HUL offered 10%
of its equity to the Indian public, being the first among the foreign subsidiaries to do so.
Unilever now holds 67.25% equity in the company. The rest of the shareholding is
distributed among about three lakh individual shareholders and financial institutions.
The erstwhile Brooke Bond's presence in India dates back to 1900. By 1903, the company
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had launched Red Label tea in the country. In 1912, Brooke Bond & Co. India Limited was
formed. Brooke Bond joined the Unilever fold in 1984 through an international acquisition.
The erstwhile Lipton's links with India were forged in 1898. Unilever acquired Lipton in
1972 and in 1977 Lipton Tea (India) Limited was incorporated.
Pond's (India) Limited had been present in India since 1947. It joined the Unilever fold
through an international acquisition of Chesebrough Pond's USA in 1986.
Since the very early years, HUL has vigorously responded to the stimulus of economic
growth. The growth process has been accompanied by judicious diversification, always in
line with Indian opinions and aspirations.
The liberalization of the Indian economy, started in 1991, clearly marked an inflexion in
HUL's and the Group's growth curve. Removal of the regulatory framework allowed the
company to explore every single product and opportunity segment, without any constraints
on production capacity.
Simultaneously, deregulation permitted alliances, acquisitions and mergers. In one of the
most visible and talked about events of India's corporate history, the erstwhile Tata Oil Mills
Company (TOMCO) merged with HUL, effective from April 1, 1993. In 1996, HUL and yet
another Tata company, Lakme Limited, formed a 50:50 joint venture, Lakme Unilever
Limited, to market Lakme's market-leading cosmetics and other appropriate products of
both the companies. Subsequently in 1998, Lakme Limited sold its brands to HUL and
divested its 50% stake in the joint venture to the company.
HUL formed a 50:50 joint venture with the US-based Kimberly Clark Corporation in 1994,
Kimberly-Clark Lever Ltd, which markets Huggies Diapers and Kotex Sanitary Pads. HUL
has also set up a subsidiary in Nepal, Unilever Nepal Limited (UNL), and its factory
represents the largest manufacturing investment in the Himalayan kingdom. The UNL
factory manufactures HUL's products like Soaps, Detergents and Personal Products both for
the domestic market and exports to India.
The 1990s also witnessed a string of crucial mergers, acquisitions and alliances on the Foods
and Beverages front. In 1992, the erstwhile Brooke Bond acquired Kothari General Foods,
with significant interests in Instant Coffee. In 1993, it acquired the Kissan business from the
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UB Group and the Dollops Ice cream business from Cadbury India.
As a measure of backward integration, Tea Estates and Doom Dooma, two plantation
companies of Unilever, were merged with Brooke Bond. Then in 1994, Brooke Bond India
and Lipton India merged to form Brooke Bond Lipton India Limited (BBLIL), enabling
greater focus and ensuring synergy in the traditional Beverages business. 1994 witnessed
BBLIL launching the Wall's range of Frozen Desserts. By the end of the year, the company
entered into a strategic alliance with the Kwality Ice-cream Group families and in 1995 the
Milk food 100% Ice-cream marketing and distribution rights too were acquired.
Finally, BBLIL merged with HUL, with effect from January 1, 1996. The internal
restructuring culminated in the merger of Pond's (India) Limited (PIL) with HUL in 1998.
The two companies had significant overlaps in Personal Products, Specialty Chemicals and
Exports businesses, besides a common distribution system since 1993 for Personal Products.
The two also had a common management pool and a technology base. The amalgamation
was done to ensure for the Group, benefits from scale economies both in domestic and
export markets and enable it to fund investments required for aggressively building new
categories.
In January 2000, in a historic step, the government decided to award 74 per cent equity in
Modern Foods to HUL, thereby beginning the divestment of government equity in public
sector undertakings (PSU) to private sector partners. HUL's entry into Bread is a strategic
extension of the company's wheat business. In 2002, HUL acquired the government's
remaining stake in Modern Foods.
In 2003, HUL acquired the Cooked Shrimp and Pasteurized Crabmeat business of the
Amalgam Group of Companies, a leader in value added Marine Products exports.
HUL launched a slew of new business initiatives in the early part of 2000s. Project Shakti
was started in 2001. It is a rural initiative that targets small villages populated by less than
5000 individuals. It is a unique win-win initiative that catalyses rural affluence even as it
benefits business. Currently, there are over 45,000 Shakti entrepreneurs covering over
100,000 villages across 15 states and reaching to over 3 million homes.
In 2002, HUL made its foray into Ayurvedic health & beauty centre category with the Ayush
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product range and Ayush Therapy Centres. Hindustan Unilever Network, Direct to home
business was launched in 2003 and this was followed by the launch of Pureit water purifier
in 2004.
In 2007, the Company name was formally changed to Hindustan Unilever Limited after
receiving the approval of share holders during the 74th AGM on 18 May 2007. Brooke
Bond and Surf Excel breached the Rs 1,000 crore sales mark the same year followed by
Wheel which crossed the Rs.2000 crore sales milestone in 2008.On 17th October 2008 HUL
completed 75 years of corporate existence in India. In January 2010, the HUL head office
shifted from the landmark Lever House, at Back bay Reclamation, Mumbai to the new
campus in Andheri (E), Mumbai. On 15th November, 2010, the Unilever Sustainable Living
Plan was officially launched in India at New Delhi. In March, 2012 HULs state of the art
Learning Centre was inaugurated at the Hindustan Unilever campus at Andheri, Mumbai. In
April, 2012, the Customer Insight & Innovation Centre (CiiC) was inaugurated at the
Hindustan Unilever campus at Andheri; Mumbai HUL completes 80 years of corporate
existence in India on October 17th, 2013.
Strategic thinking of HUL
Vision Of Hul
HUL's vision is to continuously innovate technologies to further reduce water consumption
and further increase conservation in its operations. Simultaneously, HUL sites will
progressively help communities, wherever required, to develop watersheds.
Mission Statement
Unilever's mission is to add Vitality to life. We meet everyday needs for nutrition, hygiene,
and personal care with brands that help people feel good, look good and get more out of life.
Corporate purpose
Unilever's mission is to add Vitality to life. We meet everyday needs for nutrition; hygiene
and personal care with brands that help people feel good, look good and get more out of life.
Our deep roots in local cultures and markets around the world give us our
strong relationship w i t h c o n s u m e r s a n d a r e t h e f o u n d a t i o n f o r o u r f u t u r e
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g r o w t h . We w i l l b r i n g o u r w e a l t h o f k n o w l e d g e

and international

expertise to the service of local consumers - a truly multi-local multinational. Our


long-term success requires a total commitment to exceptional standards of performance
and productivity, to working together effectively, and to a willingness to embrace new ideas
and learn continuously.
To succeed also requires, we believe, the highest standards of corporate
behavior toward severe one we work with, the communities we touch, and the
environment on which we have an impact. This is our road to sustainable, profitable
growth, creating long-term value for our shareholders, our people, and our business partners.
Values at Hul- Unilever has earned a reputation for conducting its business with integrity
and with respect for the interests of those our activities can affect. This reputation is an
asset, just as real as our people and brands .Our first priority is to be a successful business
and that means investing for growth and balancing short term and long term interests. It also
means caring about our consumers, employees and shareholders, our business partners and
the world in which we live. To succeed requires the highest standards of behavior from all of
us. The general principles contained in this Code set out those standards. More detailed
guidance tailored to the needs of different countries and companies will build on these
principles as appropriate, but will not include any standards less rigorous than those
contained in this Code. We want this Code to be more than a collection of high sounding
statements. It must have practical value in our day to day business and each one of us must
follow these principles in the spirit as well as the letter.
Standard of Conduct
We conduct our operations with honesty, integrity and openness, and with respect for the
human rights and interests of our employees. We shall similarly respect the legitimate
interests of those with whom we have relationships.
Obeying the Law
Unilever companies and our employees are required to comply with the laws and
regulations of the countries in which we operate.
Employees
Unilever is committed to diversity in a working environment where there is mutual trust and
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respect and where everyone feels responsible for the performance and reputation of our
Company. We will recruit, employ and promote employees on the sole basis of the
qualifications and abilities needed for the work to be performed. We are committed to safe
and healthy working conditions for all employees. We will not use any form of forced,
compulsory or child labor .We are committed to working with employees to develop and
enhance each individual's skills and capabilities. We respect the dignity of the individual and
the right of employees to freedom of association. We will maintain good communications
with employees through company based information and consultation procedures.
Community Involvement
Unilever strives to be a trusted corporate citizen and, as an integral part of society, to fulfill
our responsibilities to the societies and communities in which we operate Company. We
will recruit, employ and promote employees on the sole basis of the qualifications and
abilities needed for the work to be performed We are committed to safe and healthy working
conditions for all employees. We will not use any form of forced, compulsory or child
labor .We are committed to working with employees to develop and enhance each
individual's skills and capabilities. We respect the dignity of the individual and the right of
employees to freedom of association. We will maintain good communications with
employees through company based information and consultation procedure
Consumers
Unilever is committed to providing branded products and services which consistently offer
value in terms of price and quality, and which are safe for their intended use. Products and
services will be accurately and properly labeled, advertised and communicated.
Shareholders
Unilever will conduct its operations in accordance with internationally accepted principles
of good corporate governance. We will provide timely, regular and reliable information on
our activities, structure, financial situation and performance to all shareholders.
Business Partners
Unilever is committed to establishing mutually beneficial relations with our suppliers,
customers and business partners .In our business dealings we expect our business partners to
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adhere to business principles consistent with our own
Public Activities
Unilever companies are encouraged to promote and defend their legitimate business
interests.Unilever will co-operate with governments and other organizations, both directly
and through bodies such as trade associations, in the development of proposed legislation
and other regulations which may affect legitimate business interests. Unilever neither
supports political parties nor contributes to the funds of groups whose activities are
calculated to promote party interests.
The Environment
Unilever is committed to making continuous improvements in the management of
our environmental impact and to the longer-term goal of developing a sustainable business.
Unilever will work in partnership with others to promote environmental care, increase
understanding of environmental issues and disseminate good practice.
Innovation
In our scientific innovation to meet consumer needs we will respect the concerns of
our consumers and of society. We will work on the basis of sound science applying rigorous
Standards of product safety.
Competition
Unilever believes in vigorous yet fair competition and supports the development of
appropriate competition laws. Unilever companies and employees will conduct their
operations In accordance with the principles of fair competition and all applicable
regulations.
Conflicts of Interests
All Unilever employees are expected to avoid personal activities and financial interests
which could conflict with their responsibilities to the company. Unilever employees must
not seek gain for themselves or others through misuse of their positions.
Compliance Monitoring Reporting

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Compliance with these principles is an essential element in our business success. The
Unilever Board is responsible for ensuring these principles are applied throughout Unilever.
The Group Chief Executive is responsible for implementing these principles and is
supported in this by the Corporate Code Committee comprising the General Counsel, the
Joint Secretaries, the Chief Auditor, the SVP HR, the SVP Communications and the
Corporate Code Officer, who presents quarterly reports to the Unilever Executive. Day to
day responsibility is delegated to all senior management of the regions, categories, functions
and operating companies. They are responsible for implementing these principles,
if necessary through more detailed guidance tailored to local needs, and are supported in this
by Regional Code Committees comprising the Regional General Counsel together with
representatives from all relevant functions and categories .Assurance of compliance is given
and monitored each year. Compliance with the Code is subject to review by the Board
supported by the Corporate Responsibility and Reputation Committee and for financial and
accounting issues the Audit Committee. Any breaches of the Code must be reported in
accordance with the procedures specified by the General Counsel. The Board of Unilever
will not criticise management for any loss of business resulting from adherence to these
principles and other mandatory policies and instructions .The Board of Unilever
expects employees to bring to their attention, or to that of senior management, any breach or
suspected breach of these principles. Provision has been made for employees to be able to
report in confidence and no employee will suffer as a consequence of doing so.
Strategic Planning by HUL
Strategy adopted by HUL
HUL (Hindustan Uni Lever Ltd) formerly HLL and see how the complex task of brand
management is actually handled. This company is taken for this article as HUL is considered
as one of the most successful in Brand Management.HLL has a large brand portfolio
consisting of nearly 110 bands. In every product line, it has built a number of brands over a
period of time. Quite a few brands have come to its fold from the parent company. It has
also acquired several ongoing brands from the market. HLL also vigorously pursues
brand extension strategy. And concurrently, HLL undertakes line pruning and brand
restructuring and consolidation, based on marketing compulsions. HLL is also playing there
juvenation and re-launch game. With great benefit the corporate-level endeavors at business
expansion and diversification are also throwing new challenges on the brand strategy front.
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HLL lends itself for a proper understanding of the complexity of the brand management
task. We shall examine how HLL handles the complex demands in brand management. Such
an array of brands is the outcome of a conscious corporate strategy by HLL. As corporate,
HLL wants to be a leader in every one of its businesses and the strategy is to fight on the
strength of the competitive advantage arising from the possession of strong brands. It is this
strategy that is getting reflected in the development of a multitude of strong brands. If we
take the business of bathing soaps, as an example, HLL has the objective of being a national
player (not a niche or a regional marketer) and the leader therein. HLL also wants about 30
per cent of the corporate income to come from this line. So, HLL opted for the strategy of
developing quite a few strong brands in this line, and among them they cover different
market segments and price points. Dove, Lux, Liril, Rexona, Pears and Lifebuoy are the
outcome of such a well planned brand strategy
Action plan by HUL:
The Chairman of Hindustan Lever Limited (HLL), Mr. M.S. Banga, addressing
the companys Annual General Meeting, presented an action-plan for a Food Revolution to
sustainably accelerate agricultural growth which, in turn, will regenerate and
sustain demand across the economy. With over 70% of the population being
dependent on it, agricultural growth has a multiplier effect driving demand across all
sectors of the economy and overall GDP growth. He announced that HLLs modeling
had shown that a 3% incremental growth in agriculture will lead to a 2.6% growth in the
manufacturing sector, taking overall GDP growth closer to the 8% mark.
Food Revolution:
Mr. Banga outlined a strategy which will lead to a significant reduction in prices of food,
making food more affordable and thereby increasing consumption. The growth in food
consumption in turn will increase farmers incomes, the slowdown of which is a key reason
for downturn in Indian industry. We as a country have responded to crises through
concerted action born out of national consensus. The success of the Green Revolution
and the White Revolution are proof of this. Now, we need a Food Revolution to foster a
virtuous cycle of regenerative, broad-based growth, he said. Calling it the paradox of
Indian agriculture, Mr. Banga pointed out that while godowns were overflowing, about 42%
of the rural population and 49% of the urban population received less than the accepted

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daily calorie intake norm. This is because these consumers cannot afford food at the current
prices. Since food consumption has hit a plateau, farmers incomes have stagnated, despite
rising procurement prices.Mr. Banga said that the policy framework has so far sought to
increase agricultural income by increasing minimum support prices or subsidies. But with
food going out of the reach of large sections even at current prices, the only way to increase
farmers income is to increase consumption of food. HLLs modeling has demonstrated that
if, for example, the price of wheat can be reduced by Rs.2 per kg, and consumption will
increase by 25% (about 41 million tons) among the lower income groups.
Challenge Cost:
To reduce costs, Mr. Banga said that agricultural pricing could be guided byHLLs
philosophy of Challenge Cost, instead of the prevalent cost-plus model. The company first
determines what the consumer is willing to pay for the benefits a product offers. It then
determines an appropriate margin. The target consumer price less the target margin gives the
Challenge Cost that HLL achieves through its expertise in R&D, manufacturing and
supply chain.
Mr. Banga proposed a three-pronged strategy encompassing a) Precision Farming to
improve farm productivity within the current land-holding pattern; b) creating a structure to
facilitate growth of a vibrant food processing industry and c) identifying various enablers
for the model to work. Precision Farming: Under Precision Farming, a farmer adjusts farm
practices to match the variation of soil and terrain across time and the area of his plot rather
than following the current practice of a one size fits all approach which manages crops at
the lowest common denominator. Farmer Service Centre: A close linkage between agriculture
and industry should be forged through the establishment of Farmer Service Ceners. These
would be partnership webs between the farmer and agri-input companies, banks, insurance
companies, grain handling and storage companies, and food processors. To be run as a
private enterprise, Farmer Service Centers would have an appropriate radius of
operation. Enablers for the model: The model can be implemented with reorientation of
Government policies towards promoting efficiencies and value addition; amendments in the
legal framework; rationalization of fiscal levies; and progressively making packaging of
food products mandatory.
Common Indian Market:

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Movement and storage of food grains must be freed, creating a Common Indian Market. A
Futures Market should be created for more demand-driven crop planning. The role of
agencies like the FCI should be changed to administer the Futures Market and the Common
Indian Market, and coordinate exports For free movement of agriculture produce and to
enable the food processor to directly purchase the farmers output, the Market Committee
legislation of various States need to be dropped. Forward contracts, backed by assured
enforceability, should be permitted so that the processor can enter into a contract even
before sowing.
Harmonized laws, single Ministry:
Equally essential would be harmonizing the various food laws, which often have
contradictory requirements, and housing them under a single Ministry. Indias food laws,
which restrict innovation, should be brought in line with the widely followed international
Codex. It would encourage innovation, without diluting consumer protection in anyway, Mr.
Banga said.
Rationalization of fiscal levies:
The various taxes and levies imposed on commodities at various stages have a cascading
effect on prices, and also hinder free flow of output from the farm to the factory. Mr. Banga
suggested that they be replaced with a uniform additional excise duty. Summing up, Mr.
Banga said, The model I have outlined would increase agricultural productivity, which
would in turn increase farm incomes and make food more affordable. Increased farm
incomes would drive demand for the rest of the industry and services sectors, leading to a
sustainable growth cycle. The creation of a vibrant food processing industry would add
further value, generating employment and prosperity.

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Chapter 10
Case Study on Strategic Management
Case 1
DD is the Indias premier public service broadcaster with more than 1,000 transmitters
covering 90% of the countrys population across on estimated 70 million homes. It has more
than 20,000 employees managing its metro and regional channels. Recent years have seen
growing competition from many private channels numbering more than 65, and the cable
and satellite operators (C & S). The C & S network reaches nearly 30million homes and is
growing at a very fast rate.
DDs business model is based on selling half hour slots of commercial time to the
programme producers and
Charging them a minimum guarantee. For instance, the present tariff for the first 20 episodes
of a programmeRs.30 lakh plus the cost of production of the programme. In exchange the
procedures get 780 seconds of commercial time that he can sell to advertisers and can
generate revenue. Break-even point for procedures, at
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The present rates, thus is Rs.75, 000 for a 10 second advertising spot. Beyond 20 episodes,
the minimum guarantee is Rs.65 lakh for which the procedures has to charge Rs.1, 15,000
for a 10 second spot in order to
Break-even. It is at this point the advertisers face a problem the competitive rates for a 10
second spot isRs.50,000. Procedures are possessive about buying commercial time on DD.
As a result the DDs projected growth of revenue is only commercial time on DD. As a
result the DDs projected growth of revenue is only 610% as against 50-60% for the private sector channels. Software suppliers, advertisers and
audiences are deserting DD owing to its unrealistic pricing policy. DD has options before it.
First, it should privates, second it
Should remain purely public service broadcaster and third, a middle path. The challenge
seems to be exploiting DDs immense potential and emerge as a formidable player in the
mass media.
What is the best option, in your view, for DD?
. Analyze the SWOT factors the DD has?
Why do you think that the proposed alternative is the best?

Answers
1) For several years Doordarshan was the only broadcaster of television programmes in
India. After the opening of the sector to the private entrepreneur (cable and satellite
channels), the market has witnessed major changes. The number of channels has increased
and also the quality of programmes, backed by technology, has improved. In terms of
quality of programmers, opportunity to advertise, outreach activities, the broadcasting has
become a popular business. Broadcasters too have realized the great business potential in the
market. But for this, policies need to be rationalized and be opened to the scope of
innovativeness not only in term of quality of programmes. This would not come by simply
going to more areas or by allowing bureaucratic set up to continue in the organization.
Strategically the DD needs to undergo a policy overhaul. DD, out of three options, namely
privatization, public service broadcaster or a middle path, can choose the third one, i.e. a
combination of both. The whole privatization is not possible under the diversified political
scenario. Nor it would be desirable to hand over the broadcasting emotively in the private
hand as it proves to be a great means of communication many socially oriented public
programmers. The government could also think in term of creating corporation (as it did by
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creating Prasar Bharti) and provide reasonable autonomy to DD. So far as its advertisement
tariff is concerned that can be made fairly competitive. However, at the same time cost of
advertising is to be compared with the reach enjoyed by the doordarshan. The number of
viewers may be far more to justify higher tariffs. of advertising is to be compared with the
reach enjoyed by the doordarshan. The number of viewers may be far more to justify higher
tariffs.
2) The SWOT analyses involve study of strengths, weaknesses, opportunities and threats of
an organization.
SWOT factors that are evidently available to the Door Darshan are as follows:
S Strength
More than 1000 transmitters.
Covering 90% of population across 70 million homes against only 30 million home
by C & S.
More than 20,000 employees.
W Weakness
Rigid pricing strategy.
Low credibility with certain sections of society.
Quality of programs is not as good as compared to C & S network
O-Opportunities

Infrastructure can be leased out to cable and satellite channel.


Digital terrestrial transmission.
Regional focused channels
.

T Threats
Desertion of advertisers and producers may result in loss of revenues.
Due to quality of program the reach of C & S network is continuously expanding.
As the C& S network need the trained staff, some employees of DD may switchover
and take new jobs
3) It is suggested that the DD should adopt a middle path. It should have a mix of both the
options. It should
Economized on its operational aspects and ensure more productivity in term of revenue
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generation and
Optimization of use of its infrastructure. Wherever, the capacities are underutilized, these
may be leased out to the private operations. At the same time quality and viewership of
programmes should be improved. Bureaucracy may reduce new strategic initiatives or make
the organization less transparent. Complete
privatization can fetch a good sum and may solve many of the managerial and operational
problems. However, complete public monopoly is not advisable because that denies the
government to fully exploit the avenue for social and public use. The government will also
lose out as it will not be able to take advantage of rising
Potential of the market.
Case study 2
In 2006-07 PTC Food division decided to enter the fast growing (20-30% annually) snacks
segment, an
Altogether new to it. It had only one national competitor-Trepsico's Trito. After a year its
wafer snack brand-Ringo, fetched 20% market share across the country. Ringo's
introduction was coincided with the cricket world cup. The wafer snacks market is estimated
to be around Rs. 250 crores.
The company could take the advantage of its existing distribution network and also source
potatoes from farmers easily. Before the PTC could enter the market a cross-functional team
made a customer survey through a marketing research group in 14 cities of the country to
know about the snacks of eating habits of people. The result showed that the customers
within the age-group of 15-24 years were the most promising for the product as they were
quite enthusiastic about experimenting new snack taste. The company reported to its chefs
and the chefs came out with 16 flavors with varying tastes suiting to the targeted age-group.
The company decided to target the youngsters as primary target on the assumption that once
they are lured in, it was easier to reach the whole family.
Advertising in this category was extremely crowded. Every week two-three local products
in new names were launched, sometimes with similar names. To break through this clutter
the company decided to bank upon hum our appeal. The Industry sources reveal that PTC
spent about Rs. 50crores on advertisement and used all possible media print and electronic,
both including the creation of its own website, Ringoringoyoungo.com with offers of online
games, contests etc. Mobile phone tone downloading was also planned which proved very
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effective among teenagers. The site was advertised on all dotcom networks. , Shine TV, Bee
TV and other important channels were also used for its advertisement along with FM radio
channels in about 60 cities with large hoardings at strategic places. Analysts believes that
Ringo's success story owes a lot to PTC's widespread distribution channels and
Aggressive advertisements. Humour appeal was a big success. The `Ringo' was made visible
by painting the Railway bogies passing across the States. It has also been successful to
induce Lovely Brothers' Future Group to replace Trito in their Big-Bazaar and chain of food
Bazaars. PTC is paying 4% higher margin than Trepsico to Future group and other retailers.
Ringo to giving Trepsico a run for its money. Trito's share has already been reduced
considerably. Retail tie-ups, regional flavors, regional humour appeals have helped PTC.
But PTC still wants a bigger share in the market and in foreign markets also, if possible.
Answer the following questions:
i.
ii.
iii.

What is SWOT Analysis?


What are the weaknesses PTC for entering into the branded snacks market?
What kind of marketing strategy was formulated and implemented for Ringo? What
else need to be done by Ringo so as to enlarge its market?

Answers
1) SWOT Analysis is at used by organization for revolving strategic options. For the future.
The term Swot refers to the analysis of strength, weaknesses, opportunities and that facing a
company. Strength and weaknesses are identifying in the internal environment, whereas
opportunities and threats are located in the external environment.
Strength: Strength is an inherent capability of the organization which it can used to gain
strategic advantage over its competitor.
Weakness: A weakness is an inherent limitation or constraint of the organization which
creates strategic disadvantage to it.
Opportunity: An opportunity is a favorable condition in the external environment which
enables to the organization its position.
Threat: An favorable condition in external environment which cases a risk for, or damage
to the organization position.
2)
Weaknesses are inherent limiting factors of an organization. They are internal by nature to
the working of the organization. The case study does not clearly mention the points that can
conclusively be weaknesses of the company. However, a deeper analysis will bring out that
the company is totally new to the snacks business and is highly aggressive in its approach.
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The experience in the food business may not result in the required competencies in the
business of chips.
Seemingly, the company has also gone overboard in its advertisement expenditure. It may be
that the margins justify expenditure of 20% in value of the total market size of Rs.250
Crores. Otherwise, the company may who are trying to get attention of existing and new
customers. The business is already cluttered with regional and national players and is highly
competitive. Further, the company is overly relying on young segment of the population.
This segment can be highly receptive to the new products and the company may lose them
easily to the competitors
3) Formulation and implementation of marketing strategy was as under.
The Product: To launch its snack product, an easy to remember brand name RINGO was
decided upon. To understand the snacking habits of Indian customer a large survey was
undertaken. Chefs on the basis of the market survey came out with sixteen flavors. The
target group was identified as youngsters of 15-24 years.
The Promotion: The Company spent about Rs.50crore on marketing communication.
Different Media Including print, electronic and outdoor advertising were put to use. Appeal
used was that of humour. A huge visibility through point-of-sale was also arranged.
Promotion policy was very aggressive considering that 50crores were spent in a market of
250crores.
The Place: Getting Trito replaced by Ringo in Big-Bazaar and food bazaar chain of stores
was a great success for PTC. To motivate a higher margin than the Trepsico was provided
for. PTC even otherwise has extensive distribution network.
A perfect blend of marketing mix has made it possible to go so far and so early. Since the
marketing strategy has remained successful, they need to carry it forward. However, they
also need to keep a restrain on promotion as spending huge amount of money on marketing
for a share in the market being too high. Such an expensive campaign is only suitable if the
company is able to increase the market size itself and not merely its own in the existing
market share. To achieve this it requires competencies. Otherwise, it might be difficult to
sustain high expenditure over a very long period of time

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Chapter 11
Conclusion
Business history shows that high performing enterprises often initiate and lead, not just react
and defend. They launch strategic offensive to secure sustainable competitive advantage and
then use their market edge to achieve superior financial performance. Aggressive pursuit of
a creative, opportunistic strategy can propel a firm into a leadership position, paving the way
for its goods and services to become the industry standard. In a dynamic and uncertain
environment, strategic management is important because it can provide managers with a
systematic and comprehensive means for analyzing the environment assessing their
organization's strengths and weakness and identifying opportunities for which they could
develop and exploit a competitive advantage. The strategic management process includes
eight steps identifying the organization's current mission, objectives and strategies,
analyzing the environment, identifying opportunities and threats in the environment,
analyzing the organization resources, identifying the organization's strengths and
weaknesses, formulating strategies, implementing strategies and evaluating

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Andrews K.R. 1987. The Concept of Corporate Strategy. Richard D. Irwin.
Gluck F.W. 1985 A Fresh Look at Strategic Management. Journal of Business
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