WELCOME TO SESSION 4

OF
STRATEGIC MANAGEMENT
S G Raja Sekharan
Direct Objectives of the course
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To introduce to you concepts and
management practices at a strategic
level.
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To give you all a hands on experience of
strategic level thinking that senior
managers do everyday.
Indirect Objectives of the course
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To improve your learn_ability skills
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To make you think - think long term
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To improve your team interaction skills
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To build you up for success in life
Strategic management course plan
Session 1
Introduction and overview to SM
Session 2/3
External and Internal environment
Session 3/4
Building SCA though value chains
Session 5
Growth through Integration, Diversification,
Outsourcing and M&A
Session 6
Change management
Session 7
Tailoring strategies to fit specific industry &
company situations
Session 8/9
Strategy Implementation and control
Session 10
Industry interaction
Todays agenda
Team presentations
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Group 6 -"Amitabh Chaturvedi in
Dhanalakshmi Bank - what he did well
and what went wrong"
Todays agenda
Team presentations
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Group 7 -Fabindia and its current
SWOT
Todays agenda
Team presentations
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Group 8 -PC vs Smart phones Vs
Tablet - Changes in the global
computing market in the past decade
and the trends in the future and what
should the key players do
Todays agenda
Team presentations
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Group 9 - trends in the newspaper
market in India (or South India) and
critically examine the strategies of the
new management of The Hindu.
Todays agenda
Team presentations
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Group 10 - SWOT for Jubilant
Foodworks Limited and its growth
strategy
Todays agenda
Team presentations
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Group 11 - SWOT for Future group and
its future strategy
Todays agenda
My Inputs on Building sustainable
competitive advantage through Value
chains - - This will go on till end of next
session.
WHAT IS VALUE CHAIN?
WHAT IS VALUE CHAIN?
A COMPANYS VALUE CHAIN
IDENTIFIES THE PRIMARY ACTIVITIES
THAT CREATE CUSTOMER VALUE
AND THE RELATED SUPPORT
ACTIVITIES.
Building sustainable competitive
advantage through Value chains means
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Breaking down a companys operations
into primary and secondary activities so
as to expose the major elements of the
companys cost structure
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developing data for comparing a
companys costs, activity by activity,
against the costs of key rivals; and
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Identifying which internal activities are a
source of cost advantage or
disadvantage.
Which activity adds max. value in
Cement industry:
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Inbound logistics
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Manufacturing
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Outbound logistics
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Marketing and Sales
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Service and support
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Procurement
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Human resources
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Accounting
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R&D and technology
The key cost elements in cement are coal, power
tariff, railway, freight, royalty and cess on limestone
Which activity adds max. value in
Airline industry:
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Inbound logistics
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Manufacturing
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Outbound logistics
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Marketing and Sales
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Service and support
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Procurement
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Human resources
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Accounting
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R&D and technology
Which activity adds max. value in
Cigarette industry:
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Inbound logistics
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Manufacturing
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Outbound logistics
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Marketing and Sales
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Service and support
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Procurement
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Human resources
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Accounting
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R&D and technology
Which activity adds max. value in
Auto ancillary industry:
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Inbound logistics
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Manufacturing
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Outbound logistics
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Marketing and Sales
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Service and support
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Procurement
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Human resources
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Accounting
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R&D and technology
Which activity adds max. value in
Courier industry:
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Inbound logistics
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Manufacturing
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Outbound logistics
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Marketing and Sales
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Service and support
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Procurement
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Human resources
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Accounting
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R&D and technology
Which activity adds max. value in
Edible oil industry:
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Inbound logistics
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Manufacturing
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Outbound logistics
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Marketing and Sales
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Service and support
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Procurement
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Human resources
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Accounting
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R&D and technology
Which activity adds max. value in
Plantation industry:
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Inbound logistics
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Manufacturing
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Outbound logistics
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Marketing and Sales
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Service and support
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Procurement
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Human resources
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Accounting
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R&D and technology
Ways of Building Sustainable
Competitive Advantage though
functional value chains
Resources, Capabilities, and
Competencies
Resources, Capabilities, and
Competencies
Resources are its financial, human
resources, physical and intangible
resources they are firm specific
and difficult to imitate e.g. a highly
motivated sales team, large cash
reserves etc
Resources, Capabilities, and
Competencies
Capabilities are the firms ability to
use the resources by putting them
to productive use example great
R&D capability or great marketing
capability
Resources, Capabilities, and
Competencies
A competence is something an
organization is good at doing. It is
nearly always the product of
experience, representing an
accumulation of learning and the
buildup of proficiency in performing
an internal activity
Resources, Capabilities, and
Competencies leads to strategy
Strategy is either a low cost
strategy or a differentiated strategy
or a focus strategy
Low cost vs differentiated
strategy
Concept of Value
Creation/unit
Functional level strategies for
Competitive Advantage
Function-level strategies are
strategies aimed at improving the
effectiveness of a companys
operations
Achieving Superior Efficiency
Functional steps to increasing efficiency:
C
Economies of Scale
C
Learning Effects
C
Experience Curve
C
Flexible Manufacturing and Mass Customization
C Marketing
Materials Management and Supply Chain
C
R&D Strategy

Human Resource Strategy

Information Systems
1 Infrastructure
WE WILL DISCUSS ACHIEVING
SUPERIOR EFFICIENCY IN
DETAIL IN THE NEXT SESSION
Achieving Superior Quality
Reliability
They do the jobs they were designed for and do it
well
Excellence
Perceived by customers to have superior attributes
Quality can be thought of in terms of:
Achieving Superior Quality
Reliability
They do the jobs they were designed for and do it
well
Excellence
Perceived by customers to have superior attributes
1. A strong reputation for quality allows a
company to differentiate its products.
2. Eliminating defects or errors reduces waste,
increases efficiency, and lowers the cost
structure increasing profitability.
Quality can be thought of in terms of:
Implementing Reliability
Improvement Methodologies
Imperatives that stand out among companies that have
successfully adopted quality improvement methods:
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Build organizational commitment to quality
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Create quality leaders
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Focus on the customer
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Identify processes and the source of defects
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Find ways to measure quality
Implementing Reliability
Improvement Methodologies
Imperatives that stand out among companies that have
successfully adopted quality improvement methods:
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Set goals and create incentives
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Solicit input from employees
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Build long-term relationships with suppliers
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Design for ease of manufacture
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Break down barriers among functions
ACHIEVING SUPERIOR
QUALITY TAKES TIME AS IT
NEEDS TO BE EMBEDDED IN
THE CULTURE OF THE
COMPANY
Achieving Superior Innovation
Building distinctive competencies that result in
innovation is the most important source of
competitive advantage.
Innovation as a culture is extremely difficult and
time consuming to create and if done well can be
a great competitive advantage
Achieving Superior Innovation
Innovation can:
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Result in new products that satisfy customer
needs better
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Improve the quality of existing products
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Reduce costs
Examples of Indian innovative
companies
Building Competencies in
Innovation
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Many organizations employ a top down
approach to innovation.
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They may solicit input from deeper in
the organization, but the formulation of
the innovative ideas remains at the top
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Some examples of top down innovation
are

Apple Inc

Tata Nano
Building Competencies in
Innovation
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Hybrid approach to innovation creates a
structure in the middle of the
organization that encourages
innovations from bottom up and works
to shape them into viable business ideas

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Some examples are

Design teams in fashion industry

R&D teams in most industries

Creative teams in advertising companies

Building Competencies in
Innovation
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Theoretically the best approach is the
network model where everybody is
creative and contributes an example is
the way Wikipedia is structured.
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It is difficult to create and I cannot think
of one corporate example.
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It needs

an organization full of people with trust on

everyone's ability, open to change and
confident of contributing; and

an organization structure that is not strong

on command and control
Achieving Superior
Responsiveness to Customers
ACHIEVING SUPERIOR
CUSTOMER
RESPONSIVENESS TAKES
TIME AS IT NEEDS TO BE
EMBEDDED IN THE CULTURE
OF THE COMPANY
Achieving Superior
Responsiveness to Customers
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Focusing on the customer

Demonstrating leadership

Shaping employee attitudes

Bringing customers into the company

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Satisfying customer needs

Customization -Tailor to unique needs of groups of

customers

Faster response time

Functional level strategies for
Competitive Advantage
Function-level strategies are
strategies aimed at improving the
effectiveness of a companys
operations
THANK YOU