Professional Documents
Culture Documents
TYPES OF STRATEGIES
GENERIC STRATEGIES
COST LEADERSHIP STRATEGY(That allows the firm to excel
competitors by least cost)
DIFFERENTIAL STRATEGY(that is making products & services more
valuable than competitors)
FOCUS STRATEGY(it is selecting of one or two segments in the total
market to meet the requirement of target group of customers)
Vertical Integration Strategies
Forward integration
Backward integration
Horizontal integration
o Forward integration
Gaining ownership or increased control over distributors or retailers
o Guidelines for Forward Integration
1. Present distributors are expensive, unreliable, or incapable of meeting
firms needs
2. Availability of quality distributors is limited.
3. When firm competes in an industry that is expected to grow markedly.
4. Present distributor have high profit margins.
Backward integration
Guidelines for
Backward
Integration
federal government
Competes in growing industry
Increased economies of scale provide major competitive advantages
Faltering due to lack of managerial expertise or need for particular
resources
2. Intensive Strategies
Market penetration
Market development
Product development
Concentric
Diversification(Adding
new, but
related,
products
or
services) .Guidelines:
o Competes in no- or slow-growth industry
o Adding new & related products increases sales of current products
o New & related products offered at competitive prices
o Current products are in decline stage of the product life cycle
o Strong management team
Conglomerate Diversification
(Adding new, unrelated products or services)
GUIDELINES:
o Declining annual sales and profits
o Capital and managerial talent to compete successfully in a new
industry
o Exiting markets for present products are saturated.
Horizontal Diversification:- (Adding new, unrelated products or services
for present customers)
Guidelines
a. Firm has failed to meet its objectives and goals consistently over
time
b. Firm is one of the weaker competitors
c. Inefficiency, low profitability, poor employee morale, and pressure
from stockholders to improve performance.
d. When an organizations strategic managers have failed
3. Divestiture (Selling a division or part of an organization)
a. When firm has pursued retrenchment but failed to attain needed
improvements
b. When a division needs more resources than the firm can provide
c. When a division is responsible for the firms overall poor
performance
d. When a large amount of cash is needed and cannot be obtained
from other sources.
4. Liquidation(Selling all of a companys assets, in parts, for their tangible
worth)
a. When both retrenchment and divestiture have been pursued
unsuccessfully
b. If the only alternative is bankruptcy, liquidation is an orderly
alternative
c. When stockholders can minimize their losses by selling the firms
assets
Mc Kinseys 7s Framework
The model is based on the theory that, for an organization to
perform well, these seven elements need to be aligned and mutually
reinforcing. So, the model can be used to help identify what needs to be
realigned to improve performance, or to maintain performance during other
types of change. Whatever the type of change restructuring, new
processes, organizational merger, new systems, change of leadership, and so
on the model can be used to understand how the organizational elements
are interrelated.
Strategy: the plan devised to maintain and build competitive advantage over
the competition.
Structure: the way the organization is structured and who reports to whom.
Systems: the daily activities and procedures that staff members engage in to
get the job done.
Shared Values:
What is the corporate/team culture?
How strong are the values?
What are the fundamental values that the company/team was built on?
Style: the style of leadership adopted.
Staff: the employees and their general capabilities.
Skills: the actual skills and competencies of the employees working for the
company.
Placing Shared Values in the middle of the model emphasizes that these
values are central to the development of all the other critical elements. The
company's structure, strategy, systems, style, staff and skills all stem from
why the organization was originally created, and what it stands for. The
original vision of the company was formed from the values of the creators.
As the values change, so do all the other elements
GAPS MODEL
Customer Gap
This is the focus of the model and in many respects the gap most
providers should address first. It represents the difference between 'expected
service' and 'perceived service. To close this gap, providers need to consider
closing the following four gaps.
GAP 1
It is that the service provider does not accurately know, understand or
appreciate what their customer expects. All service employees should be
charged with closing the resultant gap by changing or influencing service
policies and procedures. The gap can exist because there is insufficient or no
dialogue between providers and users. It can also exist because the
organization is unwilling to investigate expectations of the customer.
GAP 2
It is the difference between a service providers' perception of clients / users
expectations and the subsequent development of customer-driven designs
and standards. It is not enough to simply understand clients / users
perceptions, that knowledge must translate itself to meaningful service
offerings at an appropriate level or to an appropriate standard. The gap may
exist because the personnel responsible for determining and setting
standards are of the opinion that clients / users expectations are unrealistic or
unreasonable.
GAP 3
This is the gap between the service designs and standards and actual service
delivery. In other words having guidelines, manuals and well-communicated
standards is not enough to guarantee excellent service. Resources in the form
of people, systems and appropriate technology also need to be in place and
adequately monitored. Contact personnel must be properly trained,
Strategy implementation
2. Procedural implementation
3. Resource allocation
4. Structural implementation
5. Behavioural implementation
6. Functional & operational implementation
1. Project implementation
Phases of a project
1. Conception phase (idea generation)
2. Definition phase (priority arrangement of ideas)
3. Planning & organizing phase(creation of project team, arrangement of funds,
infrastructure)
4. Implementation phase
5. Clean phase (disbanding of project infrastructure & project is handed over to
those who run it.)
1. Identification of activities.
2. Sequential arrangements of activities.
3. Time estimates of activities
4. Network construction
5. Critical path (where critical activities are determined)
2. Procedural implementation
Any organization which is planning to implement strategies must be aware
of the procedural framework within which the plans, programmes & projects
have to be approved by the government at the central, state & local levels.
1. Formation of company.
2. Licensing procedures.
3. SEBI requirements.
4. Monopolies & Restrictive Trade Practices (MRTP) requirements.
5. FEMA requirements.
6. Import & export requirements.
7. Patenting and trademarks requirements.
8. Labour legislation requirements.
9. Environmental protection & pollution control requirements.
10.Consumer protection requirements.
11.Incentives & facilities benefits.
3. RESOURCE ALLOCATION
Strategic budgeting:
In this the Position papers on different aspects such as environment
, marketing , past performance and so on are prepared and presented to the top
management which uses them to formulate corporate policy guidelines and stating
long & short term goals.
The operating management meanwhile prepares operational plans and sets
targets which are coordinated with corporate objectives . Based on resources and
corporate guidelines, the strategic budget is prepared and presented to top
management for approval and then communicated down the line & task of
implementation taken up.
BCG based budgeting.
PLC based budgeting.
Zero based budgeting(in this the strategist justify resource allocation
demand , not on the basis of the previous years budget, but on ground
zero, which is based on fresh calculation of costs each time a plan is to be
implemented.)
Owner - Manager
Employees
Advantages
Quick decision making.
Timely response.
Informal and simple organisation.
DISADVANTAGES:
Excessive reliance on owner manager.
Inadequate for future requirements if volume of business expands.
Functional Structure
As the volume of business expands , the entrepreneurial structure outlives its
usefulness. The need arises for specialized skills & delegation of authority to
managers who can look after different functional areas.
General manager
Prod mgr.
Mkt mgr.
Fin mgr.
Personnel mgr.
Advantages :
Efficient distribution of work.
Delegation of day to day operational function.
Time for top mgt. to look for strategic decisions.
Disadvantages:
Misuse of authority.
Creates difficulty in coordination.
Complicated
No unity or command.
Divisional Structure
In this work is divided on the basis of product lines, types of
customers served, geographical area covered, and then separate divisions or groups
are created and placed under the divisional level management. The functional
structure still operates under divisional structures.
Advantages
Generates quick response to environmental changes.
Enables top mgt. to focus on strategic matters.
The efficiency level is at its peak.
Disadvantages :
Costly.
Problem in allocation of resources.
Problems of coordination.
Competition between divisions.
CEO
Divisions
A , B, C
ADVANTAGES
Better coordination .
Better control.
Assured accountability.
Divisions
D, E, F
Divisions
G, H, I