STRATEGIC PLANNING AND

MANAGEMENT
Oromiya State University

By

Riyad Dawud (PhD)

 Unit-1
THE NATURE AND SCOPE OF STRATEGIC
MANAGEMENT

1.1 Strategic management:

What Is Strategic Management?
Strategic management is the management of an organization’s
resources to achieve its goals and objectives.
Strategic management involves setting objectives, analyzing
the competitive environment, analyzing the internal organization,
evaluating strategies, and ensuring that management rolls out the
strategies across the organization.
Example of Strategic Management
For example, a for-profit technical college wishes to increase
new student enrollment and enrolled student graduation rates over the
next three years. The purpose is to make the college known as the best
buy for a student's money among five for-profit technical colleges in the
region, with a goal of increasing revenue.
In that case, strategic management means ensuring the school
has funds to create high-tech classrooms and hire the most qualified
instructors. The college also invests in marketing and recruitment and
implements student retention strategies. The college’s leadership
assesses whether its goals have been achieved on a periodic basis.
 1.2. Process of Strategic management:
There are four process of strategic management. They are

1. Environmental scanning
2. Strategy formulation
3. Strategy implementation
4. Strategy evaluation
1.3. Elements of Strategic management:
1.4. Conceptual framework for Strategic management
 1.5. STRATEGIC DECISION MAKING:

WHAT IS STRATEGIC DECISION MAKING?

Strategic decision-making is a process of understanding the
interaction of decisions and their impact upon the organization to gain
an advantage. Wrong decisions taken at the wrong time, may result in
catastrophic consequences. In other words, the power of strategic
thinking lies in combining the power of the right decision with the right
time.
 1.7. STRATEGIC FORMULATION PROCESS:

WHAT IS STRATEGY FORMULATION?

Strategy formulation is the process of using available
knowledge to document the intended direction of a business and the
actionable steps to reach its goals.
This process is used for resource allocation, prioritization,
organization-wide alignment, and validation of business goals.
A successful strategy can allow your organization to share one
clear vision, catch biases by examining the reasoning behind goals, and
track performance with measurable key performance indicators (KPIs).
1.8. Tips for successful Strategic formulation process:

1. Start with purpose

2. Consider current events
3. Consider data, case studies and trends
4. Set and Effectively communicate goals
5. Think of strategy as an ongoing process
 1.9. Strategic management models:
Strategic management involves making decisions and taking actions
that can help organisations achieve their objectives by adopting a systematic
way of formulating the strategy, implementing the strategy, and evaluating
and controlling the strategy implemented. Strategic management, therefore,
integrates various functional areas like marketing, management, finance,
accounting, human resources, production and information systems in a formal
and systematic manner consistent with the objectives of the organisation and
superior performance. This definition also suggests that strategic management
comprises three key components, namely, strategy formulation, strategy
implementation and strategy evaluation and control.
There are three major components in strategic management, namely,
strategy formulation, strategy implementation and strategy evaluation.
 1.11. Corporate Governance:
Definition:
Corporate governance, in strategic management, refers to the
set of internal rules and policies that determine how a company is
directed. Corporate governance decides, for example, which strategic
decisions can be decided by managers and which decisions must be
decided by the board of directors or shareholders.
Principles of Corporate Governance:
Elements of Corporate
Governance
 UNIT-2

STRATEGIC FORMULATION
 2.1. Business level strategy:
Meaning:
Business level strategies refer to the combined set of moves and
actions taken with an aim of offering value to the customers and
developing a competitive advantage, by using the firm’s core
competencies, in the individual product or service market. It determines
the market position of the enterprise, in relation to its rivals.
Business-Level Strategies are mainly concerned with the firms
having multiple businesses and each business is considered as Strategic
Business Unit (SBU).
 2.1.1. Dynamics of Business level strategy:
Definition:
Strategy Dynamics explains how business performance has
developed up to the current date, and how to develop and implement
strategies to improve future performance. The approach emphasises
building and sustaining the resources and capabilities needed to succeed.
Strategy Dynamics focuses on performance over time.
 2.2. Corporate level strategy:
What Is a Corporate-Level Strategy?
A corporate-level strategy can be instrumental in outlining
your company's goal for the following year. You need to break down all
steps that make it clear for your employees the path they're supposed to
take. The type of corporate-level strategy you select can be an indicator
of the company's financial success and the method they take to generate
profits.
 2.2.1. Characteristics of corporate-level strategy:

When you're considering the corporate-level strategies you should undertake, keep
these characteristic examples in mind:
• Diversification
• Forward or backward integration
• Horizontal integration
• Profit
• Turnaround
• Divestment
• Market penetration
• Liquidation
• Concentration
• Investigation
• No change
2.2.2. Types of Corporate-level strategy:
Expansion Strategy:
What is an Expansion Strategy?
An expansion strategy is synonymous with a growth
strategy. A firm seeks to achieve faster growth, compete, achieve higher
profits, grow a brand, capitalize on economies of scale, have greater
impact, or occupy a larger market share. This may entail acquiring more
market share through traditional competitive strategies, entering new
markets, targeting new market segments, offering new produce or
services, expanding or improving current operations.
Types of Expansion Strategy:
Stability Strategy:

What is a Stability Strategy?

As the name implies, a stability business strategy seeks to
maintain operations and market size and position. This strategy is
characteristic of small risk-averse firms or firms operating in a very
precarious market that is comfortable with its current position.
Types of Stability Strategy:
 Retrenchment Strategy:
What is a Retrenchment Strategy?
A redemption strategy seeks to restructure, sell or otherwise
divest a business unit. The purpose is to reduce costs, streamline
operations, or stabilize cash flow.
The three major types of retrenchment strategies are;
1. Turnaround strategy
2. Divestment strategy
3. Liquidation strategy
Types of Retrenchment strategy:
 2.3. Diversification and Strategic alliances:
What is diversification?
Diversification is a business development strategy in
which a company develops new products and services, or enters new
markets, beyond its existing ones.
Diversification strategy can kick-start a struggling
business, or it can further extend the success of already highly profitable
companies. There are four key reasons why businesses adopt a
diversification strategy:
1. The company wants more revenue
2. The company wants less economic risk
3. The company’s core business is in decline
. 4. The company wants to exploit potential synergies
Advantage and Disadvantage of
diversification:
 UNIT – 3
E N V IR O N M E N TAL A N A LY S I S

SYLLABUS:
Environmental Analysis: Environmental Scanning – Industry analysis- Porter’s
Five Forces analysis- Internal Scanning- External factors of analysis – SWOT
analysis- Value Ch ain Analysis Stakeholders Expectations- Scenario Planning
 3.1. ENVIRONMENTAL ANALYSIS
 Environmental analysis is a strategic tool.
 It is a process to identify all the external and internal elements, which can
affect the organization’s performance.
 The analysis entails assessing the level of threat or opportunity the factors
might present.
 These evaluations are later translated into the decision-making process.
 The analysis helps align strategies with the firm’s environment.
 Businesses are greatly influenced by their environment, so they must
constantly analyze the trade environment and the market.
 3.1.1. PESTEL Framework
 There are many strategic analysis tools that a firm can use, but some
are more common.
 The most used detailed analysis of the environment is the P E S T E L
analysis.
 This is a bird’s eye view of the business conduct.
 Managers and strategy builders use this analysis to
find where their market currently.
 It also helps foresee where the organization will be in
the future.
 P E S T E L analysis consists of various factors that
affect the business environment.
 These factors can affect every industry directly or
indirectly.
 P Is for “Political.

 E Is for “Economic”.

 S Is for “Social”.

 T Is for “Technological”.

 E Is for “Environmental”.

 L Is for “Legal”.
 P O L I T I C A L F A C TO R S
 The political factors take the country’s current political
situation.
 It also reads the global political condition’s effect on the country
and business.
 Some of the factors considered for analysis are:
⚫ Government policies
⚫ Taxes laws and tariff
⚫ Stability of government
⚫ Entry mode regulations
 E C O N O M I C F A C TO R S
 Economic factors involve all the determinants of the economy and
its state.
 These are factors that can conclude the direction in which the
economy might move.
 So, businesses analyze this factor based on the environment.

 It helps to set up strategies in line with changes.

 E C O N O M I C F A C TO R S
 Some of the determinants considered for analysis are:
⚫ The inflation rate
⚫ The interest rate
⚫ Disposable income of buyers
⚫ Credit accessibility
⚫ Unemployment rates
⚫ The monetary or fiscal policies
⚫ The foreign exchange rate
 S O C I A L F A C TO R S
 Countries vary from each other.
 Every country has a distinctive mindset.

 These attitudes have an impact businesses. on the

 The social factors might ultimately affect the sales of

products and services.
 S O C I A L F A C TO R S
 Some of the social factors analysed:
⚫ The cultural implications
⚫ The gender and connected demographics
⚫ The social lifestyles
⚫ The domestic structures
⚫ Educational levels
⚫ Distribution of Wealth
 T E C H N O L O G I C A L F A C TO R S
 Technology is advancing continuously.
 The advancement is greatly influencing businesses.
 Performing environmental analysis factors will help you stay
up to date with the changes.
 Technological factors will help you know how the consumers react
to various trends.
 Social media has become a vital part of any business now-a-
days.
 T E C H N O L O G I C A L F A C TO R S
 Companies will have to perform this analysis for their benefit. It
helps them:
⚫ New discoveries
⚫ Rate of technological obsolescence
⚫ Rate of technological advances
⚫ Innovative technological platforms
 E N V I R O N M E N T F A C TO R S
 The location influences business trades.
 Climatic changes can affect the trade of
businesses.
 The consumer reactions to particular offering
can also be an issue.
 This most often affects agri-businesses.
 Some environmental factors to be noticed are:
⚫ Geographical location
⚫ The climate and weather
⚫ Waste disposal laws
⚫ Energy consumption regulation
⚫ People’s attitude towards the environment
 L E G A L F A C TO R S
 Legislative changes take place from time to time.
 Many of these changes affect the business
environment.
 If a regulatory body sets up a regulation for industries, for example, that
law would impact industries and business in that economy.
 So, businesses should also analyze the legal developments in respective
environments.
 Some of the legal factors to be aware of:
⚫ Product regulations
⚫ Employment regulations
⚫ Competitive regulations
⚫ Patent infringements
⚫ Health and safety regulations
 3.1.2. IMPORTANCE OF ENVIRONMENT
ANALYSIS
 There are many external factors other than the ones discussed.
 None of these factors are independent.
 They rely on each other.
 It is true that industry factors have an impact on the company
performance.
 E nvironmental analysis is essential to determine what role certain
factors play in your business.
 P E S T or P E S T E L analysis allows businesses to take a
look at the external factors.
 Many organizations use these tools to project the
growth of their company effectively.
 The analyses provide a good look at factors like
revenue, profitability, and corporate success.
 3.1.3. STEPS TO CO N D U C T ENVIRONMENT
ANALYSIS
 Understand all the environmental factors before moving to the
next step.
 Collect all the relevant information.
 Identify the opportunities for the organization.
 Recognize the threats the company faces.
 The final step is to take action.
 PESTEL Analysis of Food Industry in
India
 Political Factors:
⚫ F D I & growth
⚫ Wide regulations
⚫ E X I M Policy
⚫ Harmonised System for tariff rates
 Economic Factors:
⚫ Growing Disposable Incomes
⚫ Increasing Labor Costs
⚫ GDP
⚫ Inflation
⚫ Fiscal Policy
 Social Factors:
⚫ Health consciousness
⚫ Dietary Regulations

 Technological Factors:
⚫ Growth of e-commerce & digital economy
⚫ Automation

 Environmental Factors:
⚫ Organic farming
 Legal Factors:
⚫ Food Safety & Standards Authority of India (FSSAI)
⚫ Bureau of Indian Standards (BIS) & Indian Standards
Institute (ISI)
⚫ Custom Clearance Procedure
⚫ International Organisation for Standardisation (ISO)
⚫ Agmark
⚫ Food Safety & Standards (Packing & labelling) Regulation
 3.2. ENVIRONMENTAL SCANNING
 Every organization has an internal and external environment.
 In order for the organization to be successful, it is important that it
scans its environment regularly to assess its developments and
understand factors that can contribute to its success.
 Environmental scanning is a process used by organizations to
monitor their external and internal environments.
COMPONENTS OF A BUSINESS
ENVIRONMENT
 I N D U S T R Y A N A LY S I S
• Industry analysis is a tool that facilitates a company's
understanding of its position relative to other companies that
produce similar products or services.
• Understanding the forces at work in the overall industry is an
important component of effective strategic planning.
• Industry analysis enables small business owners to identify the
threats and opportunities facing their businesses, and to focus
their resources on developing unique capabilities that could lead
to a competitive advantage
 P O RT E R ’ S F I V E F O R C E S MODEL
 Originally developed by Harvard Business School's Michael E. Porter in
1979, the five forces model looks at five specific factors that help
determine whether or not a business can be profitable, based on other
businesses in the industry.
 Understanding the competitive forces, and their underlying causes, reveals
the roots of an industry's current profitability while providing a framework
for anticipating and influencing competition (and profitability) over time,"
Porter wrote in a Harvard Business Review article.
 “Porter’s five forces model is an analysis tool that uses five forces to
determine the profitability of an industry and shape a firm’s competitive
strategy”
 “It is a framework that classifies and analyzes the most important forces
affecting the intensity of competition in an industry and its profitability level.”
P ORT E R ’ S F I V E F O R C E S M O D E L
 P ORT E R ’ S F I V E F O R C E S M O D E L
• Competitive rivalry. This force examines how intense the
competition currently is in the marketplace, which is determined
by the number of existing competitors and what each is capable of
doing.
• Rivalry competition is high when there are just a few businesses
equally selling a product or service, when the industry is growing
and when consumers can easily switch to a competitors offering
for little cost.
• When rivalry competition is high, advertising and price wars
can ensue, which can hurt a business's bottom line.
 P ORT E R ’ S F I V E F O R C E S M O D E L
• Bargaining power of suppliers. This force analyzes how much
power a business's supplier has and how much control it has over
the potential to raise its prices, which, in turn, would lower a
business's profitability.
• In addition, it looks at the number of suppliers available: The
fewer there are, the more power they have. Businesses are in a
better position when there are a multitude of suppliers.
• Sources of supplier power also include the switching costs of
firms in the industry, the presence of available substitutes, and
the supply purchase cost relative to substitutes.
 P ORT E R ’ S F I V E F O R C E S M O D E L
• Bargaining power of customers. This force looks at the
power of the consumer to affect pricing and quality.
• Consumers have power when there aren't many of them, but lots
of sellers, as well as when it is easy to switch from one
business's products or services to another.
• Buying power is low when consumers purchase products in
small amounts and the seller's product is very different from
any of its competitors.
 P ORT E R ’ S F I V E F O R C E S M O D E L
• Threat of new entrants. This force examines how easy or
difficult it is for competitors to join the marketplace in the
industry being examined.
• The easier it is for a competitor to join the marketplace, the
greater the risk of a business's market share being depleted.
• Barriers to entry include absolute cost advantages, access to
inputs, economies of scale and well-recognized brands.
 P ORT E R ’ S F I V E F O R C E S M O D E L
• Threat of substitute products or services. This force
studies how easy it is for consumers to switch from a
business's product or service to that of a competitor.
• It looks at how many competitors there are, how their prices and
quality compare to the business being examined and how much of
a profit those competitors are earning, which would determine if
they have the ability to lower their costs even more.
• The threat of substitutes are informed by switching costs, both
immediate and long-term, as well as a buyer's inclination to
change.
 P ORT E R ’ S G E N E R I C ST R AT E G I E S
 Today, companies face their toughest competition ever.
 Companies use their understanding to design market offers to
deliver more value than the offers of competitors seeking to win
the same customers.
 Companies must also understand their competitors, identify and
analyze their strategies to position themselves in such a way as to
gain the greatest possible competitive advantage against
competitors in the marketplace.
P O RT ER ’ S G E N E R I C S T R AT E GY F R A M E W O R K

 Michael Porter has suggested three general types of positioning

strategies to achieve competitive advantage.
 These three generic strategies are defined along two dimensions:
strategic scope and strategic strength.
 Strategic scope looks at the size and composition of the market
you intend to target.
 Strategic strength is a supply-side dimension and looks at the
strength or core competency of the firm.
 1. C O S T L E A D E R S H I P
 With this strategy, the objective is to become the lowest- cost producer in the
industry.
 The traditional method to achieve this objective is to produce on a large scale
which enables the business to exploit economies of scale.
 This strategy is usually associated with large-scale businesses offering
“standard” products with relatively little differentiation that are readily
acceptable to the majority of customers.
 Occasionally, a low-cost leader will also discount its product to maximize sales,
particularly if it has a significant cost advantage over the competition and, in doing
so, it can further increase its market share.
 A strategy of cost leadership requires close cooperation between all
the functional areas of a business.
 To be the lowest-cost producer, a firm is likely to achieve or use
several of the following:
⚫ High levels of productivity
⚫ High capacity utilisation
⚫ U se of bargaining power to negotiate the lowest
prices for production inputs
⚫ Lean production methods (e.g. JIT)
⚫ Effective use of technology in the production process
 Access to the most effective distribution channels
 E XAMPLES
 Wal-Mart is famous for E D L P, achieved by developing close
relationships with its suppliers and vendors to achieve cost savings
through large volume purchases and pass these savings to the
consumers.
 Dell Computers :achieved market share by keeping low
inventories and only building computers to order, procurement
advantages from preferential access to raw materials, or backward
integration.
 India’s largest steel company Tata Steel, the cost leader in the
steel manufacturing sector owns raw material assets such as
coaland limestone mines through joint ventures or completely,
with the assets spread across countries such as Australia, Oman
and Mozambique. Tata Steel has largely been able to withstand
raw material price fluctuations due to captive iron ore mines.
 Disadvantage : Customer loyalty, a reputation for low quality,
ends up in price wars, non sustainable
 2. D I F F E R E N T I AT I O N L E A D E R S H I P
 With differentiation leadership, the business targets much larger
markets and aims to achieve competitive advantage
through differentiation across the whole of an industry.
 This strategy involves selecting one or more criteria used by buyers in a
market - and then positioning the business uniquely to meet those
criteria.
 This strategy is usually associated with charging a premium price
for the product - often to reflect the higher production costs and extra
value-added features provided for the consumer.
 Differentiation is about charging a premium price that more than
covers the additional production costs, and about giving customers clear
reasons to prefer the product over other, less differentiated products.
 There are several ways in which this can be achieved, though it is not
easy and it requires substantial and sustained marketing investment.
The methods includes:
 Superior product quality (features, benefits, durability, reliability)

 Branding (strong customer recognition & desire; brand loyalty)

 Industry-wide distribution across all major channels (i.e. the product or
brand is an essential item to be stocked by retailers)
 Consistent promotional support – often dominated by advertising,
sponsorship etc
 Great examples of a differentiation leadership include global brands like
Nike and Mercedes. These brands achieve significant economies of scale,
but they do not rely on a cost leadership strategy to compete. Their
business and brands are built on persuading customers to become brand
loyal and paying a premium for their products.
 COST FOCUS
 Here a business seeks a lower-cost advantage in just one or a small
number of market segments.
 The product will be basic - perhaps a similar product to the higher-
priced and featured market leader, but acceptable to sufficient
consumers. Such products are often called "me-too's".
 Example: All private brands that acts as substitutes for national
brands.
 Southwest Airlines, famous for its low cost focus follows
basically a linear route structure. It only flies one type of airplane
and it wants to stay in high-density markets and has been highly
efficient.
 D I F F E R E N T I AT I O N F O C U S
 In the differentiation focus strategy, a business aims to
differentiate within just one or a small number of target
market segments.
 The special customer needs of the segment mean that there are
opportunities to provide products that are clearly different from
competitors who may be targeting a broader group of customers.
 The important issue for any business adopting this strategy is to
ensure that customers really do have different needs and wants - in
other words that there is a valid basis for differentiation - and that
existing competitor products are not meeting those needs and
wants.
 Differentiation focus is the classic niche marketing strategy.
 Many small businesses are able to establish themselves in a niche
market segment using this strategy, achieving higher prices than un -
differentiated products through specialist expertise or other ways to
add value for customers.
 Examples on Product differentiation- Harpic, Hit
 3. S T U C K I N T H E M I D D L E
 A company’s failure to make a choice between cost leadership and
differentiation essentially implies that the company is stuck in the
middle.
 There is no competitive advantage for a company that is stuck in the
middle and the result is often poor financial performance .
 However, companies like Toyota and Benetton have adopted more
than one generic strategy. Both these companies used the generic
strategies of differentiation and low cost simultaneously, which led
to the success of the companies.
 C R I T I C I S M S O F P O RT E R ’ S G E N E R I C
S T R AT E G Y F R A M E W O R K
 A business can employ a hybrid strategy without being struck in
the middle. Nissan, for instance.
 Cost leadership does not sell products itself.
 D ifferentiation can be used to increase sales volume rather
than charging a premium price.
 Price can sometimes be used to differentiate.
 The competence based strategy framework
supersede the generic strategy framework.
Despite these criticisms, porter’s model can constitute the basis
of a useful framework for categorizing and understanding
sources of competitive advantage.
 I N T E R N A L A N A LY S I S
 It is the only way to identify the Organisation’s strengths and
weaknesses
 Its needed for making good strategic decisions.

 It identifies and evaluates resources, capabilities

and core competencies.
 Looks at the Organisation’s

-Current vision
-Mission
-strategic objectives
-strategies
 DYNAMICS OF INTERNAL ENVIRONMENT
 Organisational Resources
 Organisational Behaviour

 Strengths and Weaknesses

 Synergy effects

 Competencies

 Organisational capabilities

 Strategic Advantage
 RESOU RCES
 1. Tangible resources- Relatively easy to identify and include
physical and financial assets to create value for the customers
-Financial Resources, Ex: Firm’s capacity to
raise equity, Firm’s borrowing capacity
-Physical resources. Ex: Modern Plant and
facilities, state-of-the art Machineries etc.,
 TANGIBLE RESOURCES
 Technological resources –Ex:Trade secrets, innovative
production process etc.,
 Organisational resources –Ex: Effective strategic planning
process, excellent evaluation and control systems.
 I N TA N G I B L E R E S O U R C E S
 Difficult for the competitors (and the firm itself)to account for
or imitate typical practices that have evolved over time like,
-Innovation and creativity – Ex: in Technical
and scientific skills
- Reputation or goodwill
-Human-Ex: Experience and capabilities, Trust, Managerial
Skills etc.,
 O RG A N I SAT I O N A L C A PA B I L I T I E S
 Competencies or skills that a firm employs to transform inputs
into outputs, and capability to combine tangible and intangible
resources to attain desired end
Ex: -Outstanding customer service
-Excellent product development capabilities
-Ability to hire, train and retain human capital etc.,
 CORE COMPETENCIES
 To be a core competency it must be
-Rare
-inimitable
-valuable
-No substitutable
 SWOT A N A LY S I S
 Swot analysis – an analysis of an organization’s strengths and
weaknesses alongside the opportunities and threats present in the
external environment.”
 “Swot analysis involves the collection and portrayal of
information about internal and external factors which have, or may
have, an impact on business.”
 SWOT A N A LY S I S
 S trengths: factors that give an edge for the company over its
competitors.

 Weaknesses: factors that can be harmful if used

against the firm by its competitors.

 Opportunities: favorable situations which can bring a competitive

advantage.

 Threats: unfavorable situations which can negatively affect the

business.
SWOT M AT RIX
 B E N E F I T S O F SWOT A N A LY S I S
Swot tool has 5 key benefits:
 Simple to do and practical to use;

 Clear to understand;

 Focuses on the key internal and external factors affecting the

company;
 Helps to identify future goals;

 Initiates further analysis.

 L I M I TAT IO N S
 M any managers and academics heavily criticize or don’t even
recognize it as a serious tool.
 According to many, it is a ‘low-grade’ analysis. Here are the
main flaws identified by a research:
 Excessive lists of strengths, weaknesses, opportunities
and threats;
 No prioritization of factors;
 Factors are described too broadly;
 Factors are often opinions not facts;
 No recognized method to distinguish between strengths and
weaknesses, opportunities and threats.
 WHERE TO L O O K F O R T H E M ?

Some strengths or weaknesses can be recognized instantly without

deeper studying of the organization. But usually the process is
harder and managers have to look into the firm’s:
 Resources: land, equipment, knowledge, brand equity,
intellectual property, etc.
 Core competencies
 Capabilities
 F unctional areas: management, operations, marketing,
finances, human resources and R & D
 Organizational culture
 Value chain activities
 S TA K E H O L D E R S E X P E C TAT I O N S
 Primary stakeholders: they are directly related to the firm and
include
-customers
-employees
-suppliers
-shareholders
-creditors
 S TA K E H O L D E R S E X P E C TAT I O N S
 Secondary stakeholders: Those who have only indirect stake in
the corporation but are also affected by the corporations’ activities
and include:
-non-governmental organisations (NGO)
-local communities
-trade associations
-competitors and
-governments.
 SWOT Analysis of TOYOTA
 S T R E N GT H S :
⚫ Strong Human Resource
⚫ Innovative Organizational Culture
⚫ Strong Brand Image
⚫ Strong Diversified Portfolio
⚫ Advanced Technology
⚫ Global Supply Chain
⚫ High Production Capability
 SWOT Analysis of TOYOTA
 WEAKNESS:
⚫ Dependence on Suppliers
⚫ Not Grabbing Markets
⚫ Negative Publicity
⚫ Poor Brand Recognition
 SWOT Analysis of TOYOTA
 O P P O RT U N I T I E S
⚫ The growth of Developing Nations
⚫ Green Vehicle Technology
⚫ Growing Concern for Environmental Pollution
 SWOT Analysis of TOYOTA
 T H R E AT S
⚫ Number of Competitors
⚫ High-priced Raw Materials
⚫ Lower Profits
 SWOT Analysis of BIG BAZAAR
 STRENGTH
⚫ High brand equity enjoyed by Big Bazaar
⚫ State of the art infrastructure
⚫ A vast variety of stuff available under one roof
⚫ Everyday low prices, which attract customers
⚫ Maximum percent of footfalls converted in sales
⚫ Huge investment capacity
⚫ Biggest value retail chain
⚫ It offers a family shopping experience, where entire
family can visit together.
⚫ Available facilities such as online booking and
delivery of goods
 SWOT Analysis of BIG BAZAAR
 WEAKNESS
⚫ Unable to meet store opening targets on time
⚫ Falling revenue per sq ft
⚫ General perception: ‘Low price = Low quality’
⚫ Overcrowded during offers
⚫ L ong lines at billing counters which are time
consuming
⚫ Limited only to value offering low price products. A no of branded
products are still missing from Big Bazaar’s line of products.
 SWOT Analysis of BIG BAZAAR
 O P P O RT U N I T I E S
⚫ A lot of scope in Indian organized retail as it stands
at approximately 4%.
⚫ Increasing mall culture in India.
⚫ More people these days prefer to visit big stores
where they can find large variety under one roof
 SWOT Analysis of BIG BAZAAR
 T H R E AT S
⚫ Competition from other value retail chains such as Shoprite, Reliance
(Fresh and trends), Hypercity and D mart.
⚫ Unorganized retail also appears to be a threat to Big Bazaar’s business. A
large population still prefers to visit local convenient stores for daily
purchases
⚫ Changing Government policies
⚫ International players looking to foray India
 V A L U E C H A I N A N A LY S I S
 A value chain is a chain of activities that a firm operating in a
specific industry performs in order to deliver a valuable product or
service for the market. The concept comes from business
management and was first described and popularized by Michael
Porter in his 1985 best- seller, Competitive Advantage: Creating
and Sustaining Superior Performance.
 V A L U E C H A I N A N A LY S I S
 “Value chain analysis (VCA) is a process where a firm identifies
its primary and support activities that add value to its final
product and then analyze these activities to reduce costs or
increase differentiation.”
 “Value chain represents the internal activities a firm engages in
when transforming inputs into outputs.”
V A L U E C H A I N A N A LY S I S
Primary Activities

Support Activities
 Although, primary activities add value directly to the production process,
they are not necessarily more important than support activities.
 Nowadays, competitive advantage mainly derives from
technological improvements or innovations in business models or
processes. Therefore, such support activities as ‘information systems’,
‘R&D’ or ‘general management’ are usually the most important source of
differentiation advantage.
 On the other hand, primary activities are usually the source of cost
advantage, where costs can be easily identified for each activity and
properly managed.
 WAL-MART’S VALUE CHAIN
Wal-Mart Wal-Mart
S uppliers
Suppliers Distribution Wal-Mart Shopper
Center Store
Vendors are Wal- Mart's
suppliers. They deliver
products to Wal- Mart's Once the products are After products are Customers can
distribution center or delivered to the delivered to the stores, purchase products at
directly to one of the distribution center, they they are placed on the very low prices and
stores. Wal-Mart is able are sorted and placed appropriate shelf have the ability to
to bargain for the on trucks to be delivered location for customers return any item.
lowest possible price to stores. This allows for to view. Store locations
because of the high less than 48 hour are located throughout
volume of sales. deliveries to stores and the country
Therefore, Wal-Mart increased efficiency on
passes this savings to trucks with backhauls.
its customers.
WAL-MART SUPPLY CHAIN
R E TA I L V A L U E C H A I N
 SCENARIO PLANNING
- Scenario planning, also called
scenario thinking or scenario
analysis, is a strategic planning method
that some organizations use to make
flexible long-term plans. It is in large part
an adaptation and generalization of
classic methods used by military
intelligence.
- The original method was that a group of
analysts would generate simulation
games for policy makers. The games
combine known facts about the future,
such as demographics, geography,
military, political, industrial information,
and mineral reserves
 SCENARIO PLANNING
 Sometimes it's helpful to involve stakeholders in thinking laterally
about your shared future: five, 10 or maybe 15 years from now.
 Scenario planning is a tool to help stimulate new
thinking and explore uncertainties.
 Instead of focusing on what you know, you invest
time on what you don't know.
 Scenario planning is used to help assess uncertainties in your
external environment before you begin to open up choices for the
future.
 SCENARIO PLANNING
 Focus of Scenario Planning:
-Environmental
-Social
-Economic
-Institutional
What is Scenario Planning for:
⚫ PolicyDevelopment
⚫ Planning
⚫ Investment decisions
 DYNAMIC SCENARIOS
 In cases when scenario with planning is
integrated a systems thinking
approach to scenario development, it is sometimes referred to
as D Y N A M I C S C E N A R I O S .
 Scenario planning may involve aspects of systems
thinking, specially the recognition that many factors many factors
may combine in complex ways to create sometime surprising
futures.
 SCENARIO PLANNING PRO CE SS
 Specify the scope of planning and its timeframe.
 For the present situation develop a clear understanding
for each of the scenario
 Identify elements that are certain to occur and that will
be driving forces.
 Identify the uncertainties in the environment.
 Identify the more important drivers.
 Create scenarios (like creating scenes/stories) using the
extreme variables.
 Quantify the impact of each scenario on the firm and
formulate appropriate strategies.
 BENEFITS OF SCENARIO PLANNING
 Managers are forced to break out of their standard world view and
overlooking certain uncertainties in the general forecast.
 Decision-makers are better able to recognize
scenario in its early stages
 Managers are better able to understand the source of differences
between scenarios when they are envisioning different scenarios
 UNIT-4
StrategicAnalysis
Strategic Analysis:
What is Strategic Analysis?
Strategic analysis refers to the process of conducting research on a
company and its operating environment to formulate a strategy.
The definition of strategic analysis may differ from an academic or
business perspective, but the process involves several common factors:
1. Identifying and evaluating data relevant to the company’s strategy
.
2. Defining the internal and external environments to be analyzed.
3. Using several analytic methods such as Porter’s five forces
analysis, SWOT analysis, and value chain analysis.
Levels of strategic analysis:
Tools and Techniques for Strategic analysis:

There are three major tools are used

in strategic analysis. They are
1.Planning tools
2.Tracking tools
3.Managing tools
Corporate Portfolio analysis:
Corporate portfolio analysis is a set of techniques that help
strategist in taking strategic decision regard to individual product or business
in a firm’s portfolio.
Each segment of a company’s product line is evaluated
including sales, market share, cost of production and potential market
strength.
Techniques;
• BCG (Boston Consulting Group) Matrix
• GE(General Electric’s 9 cell) model
• Hofer’s Product Market Evolution
• Directional Policy & the strategic position
Strength, Weakness, Opportunity, and Threat
(SWOT) Analysis:
What Is SWOTAnalysis?
SWOT (strengths, weaknesses, opportunities, and threats) analysis is a
framework used to evaluate a company's competitive position and to develop
strategic planning. SWOT analysis assesses internal and external factors, as well as
current and future potential.
A SWOT analysis is designed to facilitate a realistic, fact-based, data-
driven look at the strengths and weaknesses of an organization, initiatives, or within
its industry. The organization needs to keep the analysis accurate by avoiding pre-
conceived beliefs or gray areas and instead focusing on real-life contexts.
Companies should use it as a guide and not necessarily as a prescription.
Gap Analysis:

What Is Strategic Gap Analysis?

Strategic gap analysis is a business management technique that

requires an evaluation of the difference between a business endeavor's best
possible outcome and the actual outcome. It includes recommendations on
steps that can be taken to close the gap.
Strategic gap analysis aims to determine what specific steps a
company can take to achieve a particular goal. A range of factors including
the time frame, management performance, and budget constraints are looked
at critically in order to identify shortcomings.
Steps in GAP Analysis:
McKinsey’s 7s Framework:
The McKinsey 7S Framework is a management model
developed by business consultants Robert H. Waterman, Jr. and Tom
Peters (who also developed the MBWA-- "Management By Walking
Around" motif, and authored In Search of Excellence) in the 1980s. This
was a strategic vision for groups, to include businesses, business units,
and teams. The 7 S's are structure, strategy, systems, skills, style, staff
and shared values.
The model is most often used as an organizational
analysis tool to assess and monitor changes in the internal situation of
an organization. The model is based on the theory that, for an
organization to perform well, these seven elements need to be aligned
and mutually reinforcing.
GE 9 Cell Model:
• The GE McKinsey Matrix is a useful tool for strategic planning.
• Organizations use the GE 9 Cell Matrix to determine their position in
the market and then analyze strategies for growth.
• Developed by McKinsey for its client GE, the GE McKinsey Matrix
helps business strategists analyze three factors: products and markets,
competitors and organizational structure.
Distinctive Competitiveness:

Meaning:
Distinctive Competence is a set of unique capabilities that certain firms possess
allowing them to make inroads into desired markets and to gain advantage over the
competition; generally, it is an activity that a firm performs better than its competition. To
define a firm‟s distinctive competence, management must complete an assessment of both
internal and external corporate environments. When management finds an internal strength
and both meets market needs and gives the firm a comparative advantage in the market
place, that strength is the firm‟s distinctive competence.
Defining and Building Distinctive Competence:
To define a company‟s distinctive competence, managers often follow a
particular process.
1. They identify the strengths and weaknesses in the given marketplace.
2. They analyze specific market needs and look for comparative advantages that
they have over the competition.
Grand strategy selection matrix:
Defintion:
Grand strategy selection matrix is a popular tool for developing
feasible strategies with the help of the SWOTAnalysis, BCG Matrix, IE
Matrix, and SPACE Matrix. It is also known as the grand strategy matrix. It is
the instrument to create alternative and various strategies for the company.
This strategy matrix is developed in 2 dimensions: market growth and
competitive position. Data required for placing SBUs (Strategic Business
Units) in this matrix is got from the portfolio analysis. Grand strategy matrix
gives feasible strategies for organizations that are listed in attractiveness’s
sequential order in the matrix’s each quadrant.
The grand strategy selection matrix has become a powerful tool in
developing alternative strategies for companies. Basically, this strategy matrix
is based on 4 crucial elements:
1.Rapid Market Growth
2.Slow Market Growth
3.Strong Competitive Position
4.Weak Competitive Position
Balanced Scorecard:

What Is a Balanced Scorecard (BSC)?

The term balanced scorecard (BSC) refers to a strategic
management performance metric used to identify and improve various
internal business functions and their resulting external outcomes. Used to
measure and provide feedback to organizations, balanced scorecards are
common among companies in the United States, the United Kingdom, Japan,
and Europe.
Data collection is crucial to providing quantitative results as
managers and executives gather and interpret the information. Company
personnel can use this information to make better decisions for the future of
their organizations.
 The balanced scorecard
model reinforces good behavior in
an organization by isolating four
separate areas that need to be
analyzed. These four areas, also
called legs, involve:
• Learning and growth
• Business processes
• Customers
• Finance1
 UNIT-5

Strategy Implementation and Evaluation

Strategic implementation:
Meaning:
Strategic implementation refers to the process of
executing plans and strategies. These processes aim to achieve long-
term goals within an organization.
Strategic implementation, in other words, is a technique
through which a firm develops. It utilizes and integrates new processes
into the structure of an organization.
Process of Strategy Implementation:

• Building an organization, that possess the capability to put the

strategies into action successfully.
• Supplying resources, in sufficient quantity, to strategy-essential
activities.
• Developing policies which encourage strategy.
• Such policies and programs are employed which helps in continuous
improvement.
• Combining the reward structure, for achieving the results.
• Using strategic leadership.
 Nature of Strategic Implementation
• It is possible to turn strategies and plans into individual
actions, necessary to produce a great business performance.
But it's not easy. Many companies repeatedly fail to truly
motivate their people to work with enthusiasm, all together,
towards the corporate aims. Most companies and
organizations know their businesses, and the strategies
required for success. However many corporations - especially
large ones -struggle to translate the theory into action plans
that will enable the strategy to be successfully implemented
and sustained.
 Nature …
• Here are some leading edge methods for effective strategic corporate
implementation.
• Foresight Leadership organization, and this contribution is gratefully
acknowledged.
• Most companies have strategies, but according to recent studies, between
70% and 90% of organizations that have formulated strategies fail to
execute them.
• A Fortune Magazine study has shown that 7 out of 10 CEOs, who fail, do so
not because of bad strategy, but because of bad execution.
• In another study of Times 1000 companies, 80% of directors said they had
the right strategies but only14% thought they were implementing them
well.
Strategy Implementation
Process:
Models of Strategic implementation
resource:
Strategic Allocation:
Factors Affecting Resource Allocation
Structures for
Strategies:
Techniques of Strategic Evaluation and
Control:
Emerging Trends and Analytical Cases:

The top five emerging trends driving the global management consulting
services market are as follows:
• Increased strategic partnerships with market research firms
• Growth in technology automation
• Increased online collaboration among stakeholders
• Increase in commoditization of services
• Growth in offshoring
Top five suppliers in the global management
consulting services:
• PricewaterhouseCoopers
• Deloitte
• McKinsey & Company
• Boston Consulting Group
• Bain and Company