Strategic Review and Audit

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Presentation On Strategic Review and Audit PRESENTED BY Sarbanandan Mishra (3rd sem, VTU) Preetish B.P. (3rd sem, VTU) Tausif Anwar (3rd sem, VTU) Sagar S. (3rd sem, VTU) Of:- East West Institute of Technology Banglore-91 Yr, 2008-09

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This module describes the five basic competitive strategy options which of the five to employ is a company’s first and foremost choice in crafting an overall strategy and beginning its quest for competitive advantage. COMPETITIVE STRATEGY Concerns the specifics of management’s game plan for competing successfully and achieving a competitive edge over rivals. There are many routes to competitive advantage--- A good product at low price; Superior product that is worth paying; Delivering superior value; Attractive features, quality, service and other attributes.

The Five GenericCompetitive Strategies : 

The Five GenericCompetitive Strategies Market Target Type of Advantage Sought Overall Low-Cost Leadership Strategy Broad Differentiation Strategy Focused Low-Cost Strategy Focused Differentiation Strategy Best-Cost Provider Strategy Lower Cost Differentiation Broad Range of Buyers Narrow Buyer Segment or Niche

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LOW COST PROVIDER STRATEGIES A low cost leaders basis for competitive advantage is lower overall costs than competitors. Successful low cost leaders are exceptionally good at finding ways to drive costs out of their business. This can be done by; (i) out manage rivals in efficiency (ii) to bring changes in firm’s overall value chain to eliminate cost producing activities.

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DIFFERENTIATION STRATEGIES The essence of a broad differentiation strategy is to be unique in ways that are valuable to a wide range of customers. It can be achieved by; (i) R&D activities (ii) Manufacturing activities (iii) Marketing activities (iv) Customer service activities

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BEST COST PROVIDER STRATEGIES It aims at giving customers more value for the money. The objective is to deliver superior value to buyers to satisfy their expectations. To become a best cost provider, a company must have the resources and capabilities to achieve it. It can act powerful in markets where buyer makes product differentiation keeping into account price and value.

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COMPLIMENTARY STRATEGIC OPTIONS (A comp’s second set of strategic options) Employ strategic alliances and collaborative partnerships Outsource selected value chain activities Merge with or acquire other companies Integrate backward or forward Employ defensive strategic moves Initiate offensive strategic moves Functional areas to support the above the choices R&D Production Marketing & Sales HR Finance

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STRATEGIC ALLIANCES AND COLLABORATIVE PARTNERSHIPS Strategic alliances are collaborative partnerships where two or more companies join forces to achieve mutually beneficial strategic outcomes. Thus strategic alliances and collaborative partnerships have emerged as an attractive means of breaching technology and resource gaps. More & more enterprises especially in fast changing industries are making strategic alliances a core part of their overall strategy.

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MERGERS AND ACQUISITION STRATEGIES A merger is a pulling of two or more companies, with the newly created company often taking on a new name. Acquisition is a combination in which one company purchases and absorbs the operations of another company. The main motive behind this is (i) to gain more market share. To expand the geographic coverage. To extends the company’s business into international markets. To gain quick access to new technologies. To go beyond boundaries.

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Outsourcing Strategies Outsourcing strategies involve a conscious decision to abandon or forgo attempts to perform certain value chain activities internally and instead to farm them to outside specialists and business partners. The reasons behind outsourcing are Outsiders can perform certain activities better or cheaper. Reduces the company’s risk exposure to changing technology. Obtaining higher quality components or services than internal sources can provide Allowing the firm to concentrate in those activities internally that it can perform better than outsiders. It helps in improving Organizational flexibility.

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International Strategy International strategies adopted by the company’s try to create value by transferring valuable competencies and products to foreign markets where competitors lack to compete. Most international companies like IBM, Mc Donald’s, Microsoft have created values by transferring differentiated products offerings developed at home to foreign markets.