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See all Premium member Presentation Transcript Slide 1: Planning & Strategic Management PLANNING AND STRATEGY : PLANNING AND STRATEGY Introduction to planning Difference between strategic and operational plans Evolution of strategy The strategic management process Types of strategy corporate level strategy business level strategy Functional level strategy Slide 3: Seven S model Operational sing strategy Case study – Federal Express PLANNING : PLANNING 3 main concepts : 3 main concepts Planning Strategy Strategy management Slide 6: Examples Wal-Mart – EDPC BMW,Hen-Blane – High Price Apple – Free Replacement EBay – B2B Marketing Introduction & Importance of Planning : Introduction & Importance of Planning Its 1st of the 4 major activities in management process (planning-organizing-leading-controlling). “it is process of setting goals and choosing the means to achieve them” Goals’ importance : Goals’ importance Goals provide a sense of direction Goals focus our efforts Goals guide our plans and decisions Goals help us evaluate our progress The hierarchy of plan : The hierarchy of plan Mission statement (organization’s goal) 2. Strategic plans (way to achieve the goal) 3. Operational plans (way to acieve strategic plan) Strategic v/s OperationalPlans : Strategic v/s OperationalPlans STRATEGIC PLAN Long term Affects widely Generic Org’s people and people of other org OPERATIONAL PLAN Short term Narrow/limited scope Detailed Within org’s people The evaluation on the concept of strategy : The evaluation on the concept of strategy From Greek – straregeia – art or science of being a general Most important outcome of planning process “the broad program for defining and achieving an org’s objectives; the response to its environment” Strategy management : Strategy management “Its an ongoing practice of establishing a broad program of org’s goal and the means to achieve them” EXAMPLES : EXAMPLES Strategy used by colors channel : Strategy used by colors channel Launching a high profile program on day 1 opening with ‘khatron ke khiladi’ : Launching a high profile program on day 1 opening with ‘khatron ke khiladi’ Slide 17: Content Fiction shows Reality show Slide 18: Mythology Slide 19: Reality shows on weekdays Achieving distribution and TRP Rating Hindi general entertainment channel share Sep-Oct 2008 : Hindi general entertainment channel share Sep-Oct 2008 Slide 21: McDonald Slide 22: McDonald’s Street Smart Social Marketing Strategies used in telecom industry : Strategies used in telecom industry TATA DOCOMO “A 1 second pulse instead of the usual 1 minute pulse offered by other mobile service providers”. Slide 24: How much can you really save? Explaining how it works. The VAS (value added service) like 24 hour Music, Voice Chat, Caller Tune Search etc are being charged on per second pulse rate. Virgin mobile :- “Get paid for INCOMING calls” 10 paisa/min Reliance communication:- 50 paisa/min in all over India for LIFE-TIME just in Rs.48 Strategy used while promotion of movie “Ghajini” : Strategy used while promotion of movie “Ghajini” Slide 26: The Look-Haircut & Tattoos Tied up with Many Multiplex like Big Cinemas, PVR & Cinemax to give distinctive Buzz-Cut to ushers and ticket-sellers. Aamir Personally went to Delhi for Buzz Cut to his fans Find Ghajini –Game & 3D Games Slide 27: Getting media involved (online) Release Date-25th December Tata Sky (Contest & Asin-New Brand Ambassador) Tata Indicom(10 Million Customers) Slide 28: Samsung Launched Ghajini Edition Phones Model No- L700 & M200 Phone Number issue Slide 29: World's Largest Pouched Milk Brand World's Biggest Vegetarian Cheese Brand Strategies used by “AMUl” Slide 30: Wide range of product categories caters consumers across all market segments. For example, Amul Kool is targeted at children, while teenagers prefer Kool Café. High profile locations: Amul parlors are today present on campuses of Infosys, Wipro, IIM-A, IIT-B, Temples, Metro rail and railway stations in Gujarat. Amul’s approach is to promote its brands in a rotational cycle of 2 to 3 years. Ice-cream 1996, category re-visited in 1999, in order to improve availability of the product and make it affordable. Cheese in 2001, Amul Masti Chaas in 2004-05, Nutramul and Kool Kafe in 2006 Amul Koko — cold chocolate drink in 2009 Slide 39: Umbrella brand strategy “use of common brand for most product categories” “Food festival competition” Technology and e-initiative 1st firm in India implementing B2C commerce Amul butter girl is one of the longest run ad campaigns in the country for 41 years Strategy used by Britannia : Strategy used by Britannia Britannia has adopted a three-pronged strategy. Freshness (lower pipeline stock), Availability (improve distribution network) Visibility (more shelf space at modern trade). It have entered some fresh milk markets, such as Delhi and Kolkata, where AMUL does not have a presence. It is concentrating on just 30 cities, and that too through select class A & B outlets Butter and Cheese Slide 41: THE STRATEGIC MANAGEMENT PROCESS Slide 42: (1) Identify the Org.’s current mission and strategies (2) Analyze the environment (4) Analyze the Org.’s ` resources (3) Identify the Opportunites and threats (5) Identify strengths and weaknesses (6) Formulate strategies (7) Implement strategies (8) Evalute result SWOT Analysis STEP 1:-IDENTIFYING THE ORGANISATION’S CURRENT MISSION,OBJECTIVES AND STRATEGIES : STEP 1:-IDENTIFYING THE ORGANISATION’S CURRENT MISSION,OBJECTIVES AND STRATEGIES Slide 44: Mission statement :- A statement of the purpose of an organisation. It give answer the question “what is our reason for being in business” Componentes of mission statement : Componentes of mission statement (1)Customers (2)Products or services (3)Markets (4)Technology (5)Philosophy (6)Self concept (7)Concern for public image (8)Concerns for employee (9)Concern for survival growth and profitability (1) Customers : (1) Customers Who are the organization’s customer For Amul `Teenagers Children For Parle-G all age group people (2) Products or services : (2) Products or services AMUL’S main products are - Amul Milk - Amul Pizza - Amul Butter - Amul Chocolates - Amul Cheese - Amul Shrikhand -Amul ice cream - Amul Curd - Amul chaas -Amul koko (3)Markets : (3)Markets Where does organization compete geographically? E.G.---Amul emphasis is on whole india. (4)Technology : (4)Technology (5)Philosophy What are the organization’s basic belief,values,and ethical priorities? (6)Self concept What is the organization’s major competitive advantage and core competencies? (7)Concern for public image : (7)Concern for public image How responsive is organization to societal and environmental concern? (8)Concerns for public employee Dose the organization consider employee a valuable asset? CURRENT OBJECTIVE : CURRENT OBJECTIVE Reliance communication’s current objective is to capture 30% indian market share CURRENT STRATEGIES 50 paisa/min in all over India for LIFE-TIME just in Rs.48 STEP:- 2ANALYZING THE ENVIRONMENT : STEP:- 2ANALYZING THE ENVIRONMENT STEP:-3IDENTIFYING OPPORTUNITIES AND THREATS : STEP:-3IDENTIFYING OPPORTUNITIES AND THREATS Slide 57: OPPORTUNITIES:-positive trends in external environmental factors THREATS:- Negative trends in external environmental factors `. STEP-4Analyzing the organization’s resources and capabilities : STEP-4Analyzing the organization’s resources and capabilities Slide 59: Skills and abilities of employee Available resources Financial position Quality of it’s product and services Example:- Every day Amul collects 7 million litres of milk from 2.6 million farmers (many illiterate), converts the milk into branded, packaged products, and delivers goods to over 500,000 retail outlets across the country Slide 60: Core competencies:- The main ideas about Core Competencies were developed by C K Prahalad and G Hamel through a series of articles in the Harvard Business Review followed by a best-selling book - Competing for the Future. An organization’s major value creating skills,capabilities,and resources that determine its competitive weapons Slide 61: Example 1:-Tesco have been successful in capturing leadership of the market for online grocery shopping Reasons for it:- (1) Designing and implementing supply systems that effectively link existing shops with the Tesco.com web site (2) Ability to design and deliver a "customer interface" that personalises online shopping and makes it more efficient (3) Reliable and efficient delivery infrastructure (product picking, distribution, customer satisfaction handling) Slide 62: Example 2:- Dell have a strong position in the personal computer market Reasons for it:- (1)Minimisation of working capital in the production process (2)High manufacturing and distribution quality – (3) Reliable products at competitive prices STEP-5Identifying strengths and weaknesses : STEP-5Identifying strengths and weaknesses Slide 64: Strengths:- Any activity the organisation does well or any unique resources that it has Weaknesses:- Activity the organisation does not well or any resources It needs but does not posses Pepsi : Pepsi Strength • Pepsi has a broader product line and outstanding reputation. • Increasing market share and revenues. • Availability of large free cash flow o Great brands, strong distribution, innovative capabilities o Number one maker of snacks, such as corn chips and potato chips • PepsiCo sells three products through the same distribution channel. For example, combining the production capabilities of Pepsi, Gatorade and Tropicana is a big opportunity to reduce costs, improve efficiency and smooth out the impact of seasonal fluctuations in demand for particular product.` Slide 66: Weakness (1)PepsiCo is far away from leader Coca-cola in the international market - demand is highly elastic. (2) Pepsi had to inspire vision and direction for large global company. (3)Not all PepsiCo products bear the company name Slide 67: Opportunity (1) Food division should expand internationally (2) Noncarbonated drinks are the fastest-growing part of the industry (3) There are increasing trend toward healthy foods (4) Focus on most important customer trend - "Convenience". Slide 68: Threats (1) Pepsi is blamed for pesticide residues in their products in one of their most promising emerging market e.g in India (2) PepsiCo now competes with Cadbury Schweppes, Coca-Cola, and Kraft foods (because of broader product line) which are well-run and financially sound competitors. (3) Size of company will demand a varied marketing program; Social, cultural, economic, political and governmental constrains. ` STEP 6 : STEP 6 FORMULATING STRATEGIES Established at corporate, business and functional level Follows the decision making process Strategy formulation for competitive advantage STEP 7 : STEP 7 IMPLEMENTING STRATEGIES Top managers should act as leaders For better implementation managers should seek advise Motivation to the workforce STEP 8 : STEP 8 EVALUATING THE RESULTS Assessing the results of the current strategy with the previous ones Adjustments should be made if necessary. LEVELS OF STRATEGY : LEVELS OF STRATEGY 3 LEVELS OF STRATEGY CORPORATE LEVEL BUSINESS LEVEL FUNCTIONAL LEVEL : 3 LEVELS OF STRATEGY CORPORATE LEVEL BUSINESS LEVEL FUNCTIONAL LEVEL Slide 74: Corporate level strategy “management of activities which define the overall character & mission of the orgnisation,the product/service segment it will enter or leave and allocation of resources & management of synergy among its SBU.” Business level strategy “plans & actions that firm devise to complete in a given product or market scope or setting; it addressees a questions like how do we compete within an industry.” Functional level strategy “management of relatively narrow areas of activities,which are of vital, pervasive or continuing importance to the total organization” Slide 75: Difference between Corporate,Business & Functional Strategy Slide 78: CORPORATE STRATEGY CORPORATE STRATEGY : CORPORATE STRATEGY Management of activities which define the overall character and mission of the organisation, the product/service allocation of resources and management of synergy among its SBU. “Big picture” view of organization SCOPE – Entire Organization RESPONSIBILITY- TOP LEVEL Corporate Managers TIME HORIZON - Long-Term ISSUES ADDRESSED – Diversification, acquisition, divestment, formulation of new business ventures Critical questions answered by corporate-level strategists : Critical questions answered by corporate-level strategists scope – what business should the firm be in? How should the firm allocate its resources among existing businesses? What level of diversification should the firm pursue? Which kind of diversification? Related or Unrelated Slide 81: STABILITY STRATEGY GROWTH STRATEGY RETRENCHMENT STRATEGY STABILITY STRATEGY : STABILITY STRATEGY A corporate-level strategy characterized by an absence of significant change. i.e. continuing to serve the same clients by offering the same product or service, maintaining market share, and sustaining the organization's return-on investment. when should managers pursue stability?When companies find stable environment,when firm is making a comfortable income : when should managers pursue stability?When companies find stable environment,when firm is making a comfortable income GROWTH STRATEGY : GROWTH STRATEGY Growth Strategies are designed an org’s performance, use as measured by sales, profits, product mix, market coverage, market share. Growth through:- Direct expansion Vertical integration Horizontal integration Diversification Horizontal Integration : Horizontal Integration E.g. TATA-CORUS BRUKEBOND INDIA LTD-LIPTON TEA DIVERSIFICATION : DIVERSIFICATION DIVERSIFICATION : DIVERSIFICATION RELATED DIVERSIFICATION When a co. grows by merging with or acquiring firms in different but related industries. FOR e.g. VIDEOCON Walt Disney Theme Parks, Movie Production, Videos, Children’s apparel, Toys, TV Broadcasting Slide 88: UNRELATED DIVERSIFICATION TATA, RELIANCE ITC:- HOTEL&TOURISM CIGARETTES BISCUITS FMCG AGRI BUSINESS PAPER BOARD & PACKAGING RETRENCHMENT STRATEGY : RETRENCHMENT STRATEGY It is a corporate-level strategy designed to address organizational weaknesses that are leading to performance declines. BCG-MATRIXBOSTON CONSULTANCY GROUP : BCG-MATRIXBOSTON CONSULTANCY GROUP DEF: A strategy tool that guides resource allocation decisions on the basis of market share and growth rate of SBU’s. Helps to evaluate company’s position in terms of its range of products. Helps to make decision regarding which product/service to be kept, which it should let it go and in which it should invest in further. STARS: : STARS: High market growth rate High market share Huge cash generation Huge cash consumption Huge investment in growing market Becomes cash cows when market growth rate declines CASH COWS: : CASH COWS: Low market growth rate High market share LEADER in mature market. Huge cash generation than consumption Low prospects for future growth-so no new investment in this category. Investment into STARS and QUESTION MARKS. QUESTION MARKS: : QUESTION MARKS: High market growth rate Low market share Low cash generation than cash consumption. Analyze carefully the market situation Investment into high growth potential market. critical decision making for managers. DOG: : DOG: Low market growth rate Low market share Neither large cash generation nor consumption. Also known as CASH TRAPS. Dogs should be sold off or liquidated. Slide 96: BCG Matrix for ITC Slide 97: BCG Matrix for Bajaj Two-wheelers LIMITATIONS OF BCG-MATRIX: : LIMITATIONS OF BCG-MATRIX: It considers market growth rate as the only factor in industry attractiveness and market share as the only factor in competitive advantage. Sometimes even DOGS help in gaining competitive advantage over other products of the company. Slide 99: Business Level Strategy Slide 100: Can we apply Same strategy on the product which is being sold in all over India or, say, all over the World? -North, East, West, South…. => Should we apply same strategy for those products which are different in nature but are being sold in same Region? Concept of SBU Slide 101: When an organization is in several different business, these single different business that are Independent and that formulate their own strategies are called SBU In Other words, SBU is grouping of related Business based on same strategic application. Strategic Business Unit Slide 104: It is useful for multi-product and multi related enterprise Each SBU will have different Mission, Vision, Objectives etc Each SBU will have its own set of competitors and own set of strategy SBU may be of -Functional based -Product based Each SBU will have CEO who has responsibility for strategic planning and profit performance. Examples Slide 105: Competitive Advantage -Meaning -Ways to Acquire Competitive Advantage *Core Competencies *Assets & Resources *Quality *Product innovation Slide 106: Michael Porters Competitive Strategies Slide 108: Cost Leadership Strategy Slide 109: Lowest Cost Producer in the industry Firms do everything to cut the cost You don’t give unnecessary Extra Features (Frills). Product should be comparable in Quality Slide 110: . Examples Tata Nano Deccan Airlines Slide 111: Differentiation Strategy Slide 112: Exceptionally High Quality Extraordinary Service Innovative Design Technological Capability Unusually Brand Image How to differentiate Product? Slide 113: Examples Sony McDonalds Dell Raymond Slide 114: Focus Strategy Slide 115: Cost Focus or Differentiation Focus Narrow Segment It Can be based on -Variety -Type of End Buyer -Distribution Channel -Geographical location Where it can succeed? Slide 116: Stuck in the Middle Situation Slide 117: Porter Says Successful Organizations end up here Dual Emphasis on Cost & Differentiation Should Maintain Quality in Differentiation It will lead to Increase Sell Economies of Scale & Lower Cost Competitive strategy : Competitive strategy Purpose: The purpose of five forces analysis is to diagnose the principal competitive pressures in a market and assess how strong and important each one is. Michael Porter’s Five Forces Model : Michael Porter’s Five Forces Model 1.Threat of new entrants 2.Bargaining power of buyers(customers) 3.Bargaining power of suppliers. 4.Threat of substitute product 5.Rivalry among existing firms Threat of New Entrants : Threat of New Entrants Some of the Common Important Entry Barriers 1.Government Policy 2.Economies of Scale 3.Cost Disadvantages Independent of Scale 4.Product Differentiation 5.Monopoly Elements 6.Capital Requirements Example of Aviation Industry : Example of Aviation Industry History of Aviation Industry 1932-launch of TATA Airlines 1948-Air India International 1953-Nationalizaton of aircraft industry 1986-Private sector players permitted as Air taxi 1994-Private carriers permitted to operate scheduled services 2003-Entry of low cost airlines Threat of New Entrants For Aviation Industry : Threat of New Entrants For Aviation Industry High start up costs-capital Intensive Industry Over-crowded low cost airline market(too many budget airlines in the Indian skies) Dearth of aviation professionals(pilots, aviation engineers) Limited infrastructure facilities Price wares against newcomers. Exit Barriers Long gestation period Net impact-Low Bargaining power of buyers : Bargaining power of buyers Buyers have the potential customers. The important determinants of the buyer’s power: 1.the volume of purchase relative to the total sale of the seller. 2.Differentiation of the product. 3.Profitability of the buyer. 4.Importance of the industry product with respect to the quality of buyer’s product or services. 5.Extent of buyer’s information. Bargaining power of Buyers(Customers) in Aviation Industry : Bargaining power of Buyers(Customers) in Aviation Industry Price dominated short-haul market with little or no product differentiation. Low switching costs Price conscious consumers-little or customer loyalty. Net impact-High Bargaining power of Suppliers : Bargaining power of Suppliers The important determinants of supplier power are as follows: 1.Extent of concentration and domination in the supplier industry. 2.Importance of the product to the buyer. 3.Importance of the buyer to the supplier. 4.Extent of substitutability of the product. 5.Switching cost. 6.Standardisation of the product. Bargaining Power of Suppliers in Aviation Industry : Bargaining Power of Suppliers in Aviation Industry No control over ATF(Aviation Turbine fuel)prices Negotiate favourable deals with most of their suppliers(eg., Airline operators do not have their own catering department for on-flight consumables.) Leased aircrafts Specialized spare parts and limited number of manufacturers Net impact-High Threat of Substitute products : Threat of Substitute products Factor such as switching cost and buyer loyalty determine the degree to which customers are likely to buy a substitute product. Threat of substitute products in aviation industry : Threat of substitute products in aviation industry Video conferencing and other telecommunication technologies Super fast trains for short haul flights Net impact-law Rivalry among firms : Rivalry among firms 1.Number of firms and their relative market shares, strength etc. 2.State of growth of industries 3.Fixed or storage costs. 4.Indivisibility of capacity augmentation. 5.Product standardization and switching costs. 6.Strategic stake. 7.Exit barrier. 8.Diverse competitors. 9.Swithing cost. 10.Expected retaliation. Rivalry among existing firms in aviation industry : Rivalry among existing firms in aviation industry Competitive and overcrowded market. Commoditized nature of product-aggressive pricing, efficient distribution and innovative communication maximize. Differentiation- e. g. narrow v/s wide customer base. Regional towns v/s main cities. Rivalry among existing firms in aviation industry : Rivalry among existing firms in aviation industry Competition with conventional careers-with low fairs but higher level of service(more frills and main airport servicing.)they are a big threat. Consolidation in the market- mergers , acquisions and alliance(e .g .kingfisher airlines acquired air deccan,jet airways acquired air Sahara and merger of air India with Indian airlines. Net impact-high Functional level strategy : Functional level strategy An organizational strategy that seeks to determine how to support business level strategy. Slide 133: Federal Express Case Study Slide 134: FIRST PHASE Transformation of company from small package delivery service into major force in overnight delivery--- “information delivery” Competitors--- UPS (United parcel services), U.S. Postal Service, MCI, AT&T They make overnight-delivery service of a great importance of doing business and become profitable and leader in the industry Technology and the attitude of innovation……... (40 packages – 1.7 million) 1. Post office and UPS’ prices were a direct challenge 2. Threat of offering of new methods by competitors International business became more common, information-transfer system have to keep pace. (recognizing needs of tomorrow’s business, anticipating them and implement strategy to meet them were major decisions for them) Slide 135: SECOND PHASE Fed Ex failed in it’s ZapMail innovation (Fred Smith’s responsiveness) which was introduced to compete with MCI’s mail system. (MISTAKE) Therefore to be at top and become market player---it concentrated on foreign market and acquisition. 2 major moves which made it “UNDISPUTED LEADER” 1.acqired Tiger International 2.built a new facility in Anchorage. Alaska which were center of transportation triad THIRD PHASE New services---logistic planning for global companies You do not have the permission to view this presentation. In order to view it, please contact the author of the presentation.