1 STRATEGY MAKING TASKS IN VARIOUS INDUSTRY SETTINGS (A) EMERGENT PHASE: e.g. e-banking, e-education, web commerce Strive for Industry leadership Technology Advancement & improve product features Form strategic alliances with by suppliers Price cuts for price-sensitive segment Seek early mover advantage Entry into new customer groups, new application areas, and new geographical areas. Seek aggressive advertising and promotion campaigns

2 (B) GROWTH PHASE:  (Reliance, Tatas; Dow Chemicals) Penetrate and acquire High Market Share Launch new products, expand market presence Scout for opportunities to enter into new business Exploit resource capabilities & internal advantages Look for potential firms for acquisitions Aggressively pursue R & D capabilities

3 (C) MATURITY PHASE:  Replacement Demand  Attracting new Buyer e.g. FMCG Industry Prune down Product lines having low profit margins Improve Value Chain Capabilities (Better Services, Low Costs) BPR & HR Driven Cost Reduction Increase sales to existing customers  Complimentary product offerings Expand Internationally  Limited competition

4 (D) STAGNANT/ DECLINING PHASE: Focus on those industry segments growing rapidly Differentiation based on successful innovation Aggressive Cost cutting Measures Finally, if perceived as unviable business Sell out the Firm Close Down Operations Diversify into other areas Divest/ Harvest

5 SAMPLE FORMAT FOR DRAWING STRATEGIC ACTION PLAN: 1.VISION/ MISSION 2.OBJECTIVES 3.OVERALL BUSINESS STRATEGY SUPPORT/ FUNCTIONAL STRATEGIES Marketing Finance HR Operations Actions to Improve Performance Immediate Long Run

6 TRADITIONAL GRAND STRATEGIES: The grand strategies provide an indication as regards the strategy options available for firms – depending on the environmental condition and life cycle of the industry Traditional and commonly pursued grand strategies comprise the following: (A) GROWTH STRATEGY: Firms strive towards enhancing growth rate – accelerating increase in market share, market reach an access market penetration  AS FEASIBLE (B) STABILITY CRITERIA: Firms work towards stabilizing and systemizing operations to the extent feasible – Stabilize operations and remain competitive (C) INNOVATIVE PHASE: AGGRESSIVE R & D ACTIVITIES NEW PRODUCT DEVELOPMENT TECHNOLOGY ADVANCEMENT

7 (D) EXPANSION STRATEGY: Product Portfolio Increase Market Diversity Scout For Acquisition Partners (E) DIVERSIFY OPERATIONS: Vertical & Horizontal Integration Related Diversification Unrelated/ Conglomerate Diversification

8 (F) MERGERS/ ACQUISITIONS Merge To Enhance Firm Value Acquire Potential Firms Acquisition Based Growth Option (G) DIVESTITUTE/ DISINVEST Shut Down Loss Making Units Divest Business At Dog Stage Disinvest/ Harvest – Sell Off Idle Assets

9 (I)TURNAROUND STRATEGY Internal Measures External Measures (J)RESTRUCTURING STRATEGY: ORG Restructuring HR Aspects Streamline & Revamp Business Processes Extensive BPR & Downsizing – If Read (K)INTERNATIONAL LEVEL/ COLLABORATIVE STRATEGY: Expand Business Beyond Domestic Boundary Forge Strategic/ Business Alliance Extreme Form of Diversification/ Alliance Partnership Focus on Core Business Strengthen Core Areas M & A Diversify

10 RESTRUCTURING/ TURNAROUND PROCESS Create SBU Concept Focus on Core Business Ares Extensive BPR Efficiency Consolidation & Stability M & A Create Value Hive off Unproductive Assets Divert Funds  Problem Child New Venture HR ASPECTS Org. Downsize Develop PMS Training & Development Productivity Boost

11 RESTRUCTURING/ TURNAROUND PROCESS FINANCIAL RESTRUCTURING DEBT SETTLEMENT DEBT REPLACEMENT & RESCHEDULING CAPITAL RESTRUCTURING IPO/ PUBLIC ISSUE

12 GRAND STRATEGY: SELECTION OPTIONS Vertically Integrate Conglomorate Diversification Turnaround Divestiture Liquidate Overcome Weakness Focused Growth Market Development Product Development Innovation Maximizing Strengths Horizontal Integration Concentric/ Related Diversification JVS/ Alliances Internal (Redeploying Resources within the firm) External (Mergers/ Acquisition) A D B C

13 STRATEGY CLUSTERS Concentrated Growth Horizontal Integration Divestiture Liquidation Concentrated Growth Vertical Integration Concentric Diversification RAPID GROWTH Diversification JVS/ Alliances SLOW GROWTH Divestiture Liquidation Turnaround Strategy Aggressive Related/ Unrelated Diversification Strong Competitive Position Weak Competitive Position