Strategic Management I RECAP

What is strategy? Vision and Mission Statement Components of a good Mission statement

A firm’s theory about how to gain competitive advantage Art & science of formulating, implementing, and evaluating, cross-functional decisions that enable an organization to achieve its objectives

Components of a Good Mission Statement must address: Who are the customers What are the major products & services Market- geography Technology – currency Is it committed to growth and financial soundness? Philosophy – beliefs, values, ethics Self concept – distinctive competence Concern for public image- social community, and environment Employees.

Measures of Performance Financial measures Adjusted measures

Evaluating External Environment STEP Porter’s Five Forces Model

Political/ Legal Economic Technological Global Demographic Sociocultural CompetitiveEnvironment Industry Environment Components of the General Environment

Prentice Hall, 2000Chapter 38 Forces Driving Industry Competition Threat of New Entrants Bargaining Power of Suppliers Bargaining Power of Buyers Relative Power of Unions, Governments, etc. Potential Entrants Threat of Substitute Products or Services Industry Competitors Rivalry Among Existing Firms Other Stakeholders Buyers Substitutes Suppliers

Internal Evaluation Resource Based View Competitive advantage is derived from firm’s development of resources and capabilities. Core competence The Value Chain Internal Factor Evaluation

Neither Porter’s model nor the RBV talk of the customer. Delta Model strives to do this. Read : The Delta Model – towards a Unified Framework of Strategy, Hax and Wilde, MIT Working Paper Sep. 2002

Strategy Analysis and Choice SWOT / TWOS Matrix SPACE – Strategic Position & Action Evaluation) BCG Matrix for Portfolio of Products Internal External matrix

Strengths-Opportunities (SO) Weaknesses-Opportunities (WO) Strengths-Threats (ST) Weaknesses-Threats (WT)

13 BCG Matrix Dogs IV Cash Cows III Question Marks (Problem child) I Stars II Relative Market Share Position High 1.0 Medium.50 Low 0.0 Industry Sales Growth Rate High +20 Low -20 Medium 0

Business level Strategies Vertical Integration Cost Leadership Product Differentiation Flexibility Tacit Collusion

Generic Strategies Cost Leadership Differentiation Focus

Corporate Level Strategies Strategic Alliance Corporate Diversification Mergers & Acquisitions

Soon…in 2 nd semester Issues Implementation Evaluation Globalisation Innovation