Strat Mgmt NM PP 0908

7/28/2019 Strat Mgmt NM PP 0908

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Strategic Management Globalization

You have no choice but to operate in a worldshaped by globalization and the Informationrevolution. There are only two options: Adapt orDie Andrew Grove, Chairman, Intel Corp .

You do not choose to become global. The marketchooses for you; it forces your hand

Alain Gomez , CEO, Thomson. S.A.

There is no purely domestic industry anymore.Morgan Stanley


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Growing economic interdependence of countriesworldwide through increasing volumes and variety of cross border transactions in goods and services and of International capital flows and also through a more

rapid and widespread diffusion of technology. IMF DEFINiTION

Shift towards more integrated and interdependentworld economy


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Adopting a global outlook for the business andbusiness strategies aimed at enhancing Globalcompetitiveness.Stop thinking of National boundaries or markets.Thewhole world is market.Transform into worldwide manufacturing facilities,marketing, financial flows and logistical systems.To develop genuine equidistance of perspective.

(All customers are equidistant from the corporatecentre and there is nothing like overseas )


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Why companies expand into foreign markets?

To gain access to new customers e.g. ToyotaTo capitalize on its core competencies e.g.Nokia

To achieve lower costs And Enhance firmscompetitiveness e.g. Nestle moving to Asia To spread its business risk across a wider market base


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Cross country differences

Cultural, Demographic and Market conditionsProduct StrategyPotential for locational advantages stemming

from country to country cost variationsFluctuating FX ratesHost country restrictions


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Competing in foreign markets where there are significant crosscountry variations in cultural, demographic and marketconditions poses a much bigger strategy making challenge thancompeting at home.Market demographics and customer tastes : Washing machines

: French prefer Top loading and Europeans prefer Front loading.USA appliances run at 110 V and Europeans at 240 VRefrigerators : Indians prefer brighter colours. Korea has 4 highas the top is used as something else.Hong Kong prefers compact, European style appliances butTaiwan prefers large American style appliances.


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India has efficient and well developednational channels for distribution throughabout 3 million retailers. By contrast, Chinadistribution is primarily, local and provincial.The biggest concern of firms competing inforeign markets is whether to customize their offerings in each country market to match the

tastes and preferences of local buyers or whether to offer standardized productsworldwide.


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Diff i


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Different countries Different ways

OrientMake a point but do not let the adversary loose faceItalyArgue to win and thus be taken seriously

UKSoft sellGermanyHard sellMexicoEmphasize on the priceSwitzerlandSpeak precisely and therefore be taken literally

P i l f l i l d i f


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Potential for locational advantages stemming fromcountry to country cost variations

A companys potential for gaining CA based onwhere it locates its foreign activities or being at adisadvantage because the rivals have lower costlocations is a matter of serious strategic concern.

Wage rates, inflation, energy costs, tax rates, Govt.regulations, unique natural resources (Malaysia) for manufacturing locations.Ireland, worlds most pro business environment andhence Intels largest chip plant with investment of US

$ 2.5 bn and employs 4000 personnel.Short delivery times and low shipping costs(Singapore) for Distribution centres.


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Fluctuating FX rates and host country restrictions

Volatility of FX rates complicates the issue of geographical cost advantages.Restrictions may be in the form of

Local RM contentTariffs and quotas on importsRestrict exports to ensure adequacy to meetdomestic needs.

Ownership patternInterest and tax rates for domestic and foreigncompanies


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Multi country Global competition

Multi country or multi domestic competition whereeach country market is self sustained with buyershaving different expectations and like different stylingand features and each national market isindependent. E.g. Banking industry with competitive

battles being fought in each country independent of other countries.Each country market is separate. And hencereputation, customer base and competitive position inone country has little relevance on the other country.

Hence power of a firms strategy in a nation and CAgained remains confined to that nation.Beer, Life Insurance, metal fabrication, food products


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Global competition exists when competitiveconditions across national markets are linked stronglyenough to form a true international market and whenleading competitors compete head on in manydifferent countries.Companys competitive position in one country bothaffects and gets affected by its position in the other country.In global competition, a firms overall CA grows out of

its worldwide operations. Automobiles, TV, Copiers, watches, commercialaircrafts etc.


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Multi country competition, rivals vie for nationalmarket shares /leadership positionsGlobal competition the rivalry is attain globalleadership.

An industry may have some segments which areglobally competitive and some segments are countryto country competition. E.g. Hotels.Lubricants for marine are globally competitive and for automotives, it is country to country. Hence Pennzoilis the leader in USA & Castrol in the UK


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NEXT SECTIONWHY GOOD COMPANIES GO BAD?

This section will deal with some of the bestcompanies languishing when market conditions

change despite creating best strategic planning.They plummet from the pinnacle of success,because they are paralyzed?On the contrary, they engage in too much activity of the wrong kind. Suffering from ACTIVE

INERTIA.Because they insist on doing only what hasworked in the past.

WHY GOOD COMPANIES GO BAD?


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THEY GET STRUCK IN THEIR TRIED AND TRUE ACTIVITIES, EVENIN THE FACE OF DRAMATIC SHIFTS IN THE ENVIRONMENT.INSTEAD OF DIGGING THEMSELVES OUT OF THE HOLE, THEYDIG THEMSELVES IN DEEPER.Such companies are victims of their own success. They have been sosuccessful, they assume theyve found the winning formulae.But these same formulas become rigid and no longer work when themarket changes significantly.Instead of asking what they should do, they should ask what hindersus? They shd look deeply on the assumptions they make about their business and industry. Pay particular attention to hall marks of activeinertia;Strategic frames becoming blinders, processes hardening into routines,relationships becoming shackles, and values hardening into dogmas.LET US SEE SOME EXAMPLES



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WHY GOOD COMPANIES GO BAD?Strategic frames become blinders .

Strategic frames shape how managers view their business;they help managers stay focused. But these frames canalso blind managers to new options and opportunities.Example:

After 7 decades of uninterrupted growth Firestone reigned supreme in the US tire industry in the 1970s.Then Michlein introduced the safer and moreeconomical radial tire. FS competed with M h-h inEurope, but was blind to the threat to its core USmarket, and so continued to produce conventionaltires only. FS lost significant market share and wasacquired a decade later



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WHY GOOD COMPANIES GO BAD?Processes harden into routines.

Established processes can become ends in themselves,even when theyre no longer effective. People overlookbetter ways of working.Example:

McDonalds built its success on standardizedprocesses, all dictated by HQ. By rigidly followingthese procedures into the 90s Mac lost MS to Burger King and Taco Bell, who were much quicker to meetcustomers changing desires for healthier foods.



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WHY GOOD COMPANIES GO BAD?Relationships become shackles

Every Company needs strong relationships with its constituencies customers, suppliers, employees, society, etc. When conditionschange, however, these relationships can restrict flexibility.Example:

Apple vision of technically elegant computers and its

freewheeling culture attracted the worlds mostcreative engineers. Once computers becamecommodities, however, the Cos health depended oncutting costs and speeding up production time. But

Apples engineers refused to change, and the cos

relationship with the star employees soured, anddamaged its ability to respond to market changes .



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WHY GOOD COMPANIES GO BAD?Values harden into dogmas

A companys vibrant values unify and inspire its people.Over time, however, they can harden into rigid, self-defeating rules and regulations.Example:

Polaroid placed very high value on cutting-edgeresearch to the point of defining itself by thatresearch. Eventfully, that value turned into dogmaticdisdain for marketing, finance and even customer preferences. The Cos single -mindedness nearlydestroyed it.



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Royal Dutch/Shell is another co. whosevalues became a hindrance. Dominated by aNazi sympathizer, a strong leader, a strongimprint on the co. for central control. When hewas forced out, the distaste for central controlwas replaced by fiercely independent countrymanagers. But when oil prices fell during the

1990s the belief in decentralized authorityprevented the company from quicklyrationalizing its operations and cutting costs.



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The womens apparel maker Laura Ashley also fell victim toactive inertia. She spent her youth in Wales she tried torecreate the mood of the British Countryside, and introduceddesigns to evoke a romantic vision of English ladies.They also established close relationships with franchises, andgenerous benefits to employees, avoiding labor unrest whichcrippled England at those times.Hwr, as more women entered the workforce, they felt thewomanly garb was too uncomfortable, and better suited to1980 milkmaids than CEOs in the 1990s. At the same time

apparel mfg. was undergoing a transformation with tradebarriers falling. Fashion houses were rushing to moveproduction offshore (outsourcing), but old values were toodifficult for LAshley and its group and suffered a deep fall.


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The Dynamic of Failure

ALL WERE VICTIMS OF ACTIVE INERTIAThe fresh thinking that led to a companys initial success isoften replaced by a rigid devotion to the status quo.Leading cos can become stuck in the modes of thinkingand working that brought them their initial success. Whenbusiness conditions change, their once winning formulasinstead bring failure.LET US AGAIN GO THROUGH THE 4 DYNAMICS OFFAILURE.


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The Dynamic of Failure

STRATEGIC FRAMES B lindersThe set of assumptions that determine how managers viewthe business

PROCESSES Routines The way things are done

RELATIONSHIPS ShacklesThe ties to employees, Stake Holders

VALUES DogmasThe act of shared beliefs that determine corporate culture.


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Examples of Core Competencies

SHARP LCDs (flat panel display tech);Toyoto-Honda low cost, high quality mfg, design-to-mktshort cycles for new models Intel semi-conductor chips development

Starbucks store ambience and innovative coffee drinks Motorla 6-sigma defect free manufacture Rubbermaid innovative rubber and plastic products HP three in one Printer technology Vodofone / Reliance / Mittal leaders / MS / Funds / CloutParke Davis R&D on ethical drugs Capsugel Exceptional tech in high quality capsulemanufacture

VERTICAL INTEGRATION STRATEGIES A PLUS


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OR A MINUS:

Backward into sources of supply and/or forwardtowards end users of the final product.Make or Buy or Outsourcing decisions. discussAppeals only if it provides Competitive adv. (RIL)Backward to achieve greater competencies, andForward to enhance competitiveness.Depends on product lines Specs, capacity, skills,price factors, etc. also product lines logisticscosts.

The disadvantage mainly is: if it locks a firmdeeply into its VC, and unless this is proven to beeffective (C/B analysis), it is not worthwhile.


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Strategies based on M&A, SA, JV et al

Last decade many have felt the need tocollaborate and formed Strategicalliances, partnerships thru SPV, JVs etc.basically to strengthen domestic and

global marketsThey are therefore in the midst of 2demanding competitive races:

The global race to find a market world wideThe technology race to capitalize on todaysIT age.

To build a strong global presence.

b d l


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The Increasingly pervasive use of Alliances:

Tata-Corus, RIl-DOW, Mittal-Ancelor,Vodafone-Essar, Wal-Mart-Bharati, Tata-Fiat, FIs, Stock Exchanges (BSE-Deutsche), M&M-Ford-Renault, PharmaDr.Reddy, Glenmark, Pfizer-J&J, IT Cos.,

This has shifted competition to groups of companies against groups of companies.

S i b d M&A SA JV l


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Why and How Strategic Alliances are Advantageous:Bundle competencies and resources that are morevaluable in a joint effort than hen kept separateVery beneficial in racing against rivals for global marketleadershipTo build the expertise and market position needed towin a strong position in the industries of the future.A Co. That is racing for global market leadership needsalliances to help it do what it cannot do alone: For example:

Get into critical country markets quickly and build a potentglobal market presence

Gain inside knowledge about unfamiliar markets andculturesAccess valuable skills and competencies that areconcentrated in particular geographic locations (S/W)

S i b d M&A SA JV l


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A Co. wanting this has to ally:To establish a beach head for participating in thetarget industryMaster new tech. and build new expertise andcomp. faster than through internal effortsOpen up expanded opportunities in the targetindustry by melding the firms own capabilitieswith the expertise and resources of partners.Example:

Joint Research, Tech know-how, collaborate or complement new tech., products, ally with parts andcomponent suppliers (SCM) Volvo, Renault,distribution synergy (p176 Ill.cap.24, some SA)

S i b d M&A SA JV l


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Why many alliances are unstable or Break ApartStands the test of time depends on Frictions andconflictsPartners should value the R / C / Skills etc. eachone brings.P&G HLL many divorce rates Ongoing commitment, mutual learning, andcontinued close collaboration are essential tokeeping alliances

No- confidence on secrecy clauses So relying heavily on SA is also bad. A firm hasto create its own strength and competitivecapabilities.

S i b d M&A SA JV l


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MERGERS & ACQUISITION STRATEGIESNo company can ignore this avenue of newopportunity

Combining operations offer considerablecost-saving.The advantages can be more or less thesame as outlined above in JVs etc.

St t i b d M&A SA JV t l


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UNBUNDLING & OUTSOURCING STRATEGIES NARROWING THE BOUNDARIES OF BUSINESSThis is Vertical Disintegration, or Unbundling. Q. asked is which activity should be brought within the fold andwhich outsourced O/S makes strategic sense if:

An activity can be performed better or cheaply O/SActivity is not crucial to the firm, and dont hollow outcompetencyReduces the cos risk exposure to changing technology and/or changing buyer preferencesEnables organizational flexibility, cut cycle time, speed decision-making and reduce coordination costsAllows to concentrate on its core business and do what it doesbest.Socially complex organizational considerations can be avoided.Well, it can be disadvantages to roll back an arrangement, or itcan pose a legal problem.Sometimes an alliance or o/s could be better than acquisition.

St t gi b d M&A SA JV t l


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The advantages of Outsourcing:obtaining higher quality or cheaper componentsthan internal sources can provideInter- acting ability with best -in- world suppliers Enhance strategic flexibility should customer needs and market conditions suddenly shift seeking out outside suppliers having thiscapabilities is much easier Increasing the firms ability to assemble diversekinds of expertise speedily and efficiently

Allowing the Co. to do better what it does best,and within its own strategic control.

St t gi b d M&A SA JV t l


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The pitfalls of Outsourcing:Possibility of farming out too many wrongtypes of activitiesHollow out its own capabilities, CCLoses sometimes with key activities over which it had expertise and determines itssuccessIII Party Pharma -- NK discuss.

Strategy The ITC way business models


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gy yfocused on Rural India

The vocal of the SH of the land and the growingmarginalization of poor rural people (Single) willnot be an isolated incident.While urban India shines in terms of bestamenities.. rural India is bound to impugn them

for a slice of the cake or some modestimprovement in their dreary existence.Its no wonder therefore that ITC (TO $19 bn.Market capitalization, and $5 bn. Turnover with adiversified portfolio ranging from FMCG, hotels,paperboards, packaging, agri business, hasforged unique business models that focuses onrural India and attracted universal approval.Lets see what they are doing.



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e-choupal initiativeis designed to enhance farm productivity and providemarket linkagesSocial forestry schemeHas greened over 80000 hectares

R&D projectsHave evolved high-yielding, site specific, disease-resistantclonesComprehensive packageof plantation mgmt practices

Watershed developmentProjects which benefit 333111 farmers in 24 districts



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Renewable energy96% energy required by Co. planned outinternally with > 24% generated from

renewable resources.ITC has been a water positive firm and todaythe co. generates three times morefreshwater harvesting potential than it

consumes and sequesters almost twice theamount of carbon its plants emit.



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focused on Rural India

Recycling solid wasteIn 2007-08 the co. also compassed he100% benchmark in recycling solid waste

in several of its operations.AlsoA total of 2178 water harvesting structureshave been created, providing criticalirrigation to 18,482 hectares of farmland.



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ITCs Mission Sunehra kal encompassingits sustainable development initiatives wouldcontinue to provide thrust to identified tripleinterventions viz. natural resourcemanagement (wasteland, watershed and agri.Development), sustainable livelihoodscomprising genetic improvement in livestock

and econ. Empowerment of women andcommunity development with focus onprimary education, health and sanitation.



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Social policy analysts contend that if corporate social responsibility (CSR) is takenby all companies earnestly with a view tobuilding PPP for sustainable and inclusivegrowth, the simmering tensions andresistance to industrial development throughsetting up economic enclave (SEZ) or big

project would gradually fade as rural peoplewould hopefully find a decent way out of their dire predicament of penury.

Hyderabad Metro Rail/Bus project


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Gets US authority boost from FTA US BusRapid transit system, and Metro Rail.Outstanding, especially for the concessionagreement under the PPP.Really the way Americawas build over the last 100 years. The US govt.granted land for taking up infrastructure developmentby the private parties and now we see it here.A/g tohim, it was outstanding to have private sectorsdollars to spend for public service without casting anyburden on the tax payers money.The AP govt. wouldenter into a MoU with the FTA on public transport,which would involve strengthening and sharing of knowledge, science and technology in the sector.



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Other opportunities for business :Head-hardened rails, high speed rails, metrorail technology, manufacture and supply of

coaches, automatic fare collection points, etc.

z


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z

NEXT SECTION

STRATEGIC PLANNING IN ACTION

GO TO WLG PRESENTATION

a


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a

The next few are BLOCKS NMStarted with Ch 1.

Z


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Z

BLOCK 1

UNIT 1

CONCEPT OF STRATEGY

1 1 INTRODUCTION


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1.1. INTRODUCTION

Overall plan to move towards a desired, setobjective.Involves program of action, deployment of

resources, coordination between strategiesand objectives.Without an appropriate strategy the future isunclear (dark), and hence more the chances

of failure.

1 2 Meaning of Strategy


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1.2. Meaning of Strategy

Associated with military services.Strategos greek word (generalship) Glueck Strategy is the unified, comprehensive and integrated plan tharelates the strategic advantage of the firm to the challenges of environmenand is designed to ensure that basic objectives of the enterprise areachieved through proper implementation process

Definition lays stress onUnified comprehensive and integrated planStrategic advantage related to challenges of environmentProper implementation ensuring achievement of basic obj.

Strategy is organizations pattern of response to its environment over a period of time to achieve its goals and mission

Again here it is the same stress as per earlier definition


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Strategy as action, inclusive of objective setting:Chandler 60 the determination of basic long termgoals and objectives of an enterprise and theadoption of the courses of action and allocation of resources necessary for carrying out these goals.

3 types of action (a) determination of LT g/0, (b)adoption of courses of action, and allocation of resources.the Co is strategically positioned performs differentactivities from rivals or performs similar activities in

different ways. So, a unified comprehensive andintegrated plan. Involves, thinking of alternate plansand eventually take the best choice.

1.3 NATURE OF STRATEGY


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1.3 NATURE OF STRATEGY

A major course of action relates to environment, (spec. ExtFactors) to facilitate actionsBlend of internal and external factors to meet OT

Aimed to meet a particular condition, o solve, or meet a desiredend. Actions diff. for diff. situations.

Due dependence on environmental variables, may involved acontradictory action either immediately or with a gap of time.(closing down same time, expanding)Future oriented, requiring actions for new situations and requiresystems and norms.Provides overall framework for guiding employees thinking andaction. Well defined, guides managerial action and thought.Integrated approach meeting challenges posed by environment.

1.4 Essence of Strategy


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1.4 Essence of Strategy

Evaluation of alternative paths to an established mission has 4important aspectsLong term objectives

Future oriented, LT perspectiveCompetitive Advantage

While working out plans competition may be ignore, but inmaking strategies, competitors are given due importance.

Vector Series of decisions are directed to a same objective. Clarityprovides the momentum,

Synergy Associated benefits due to certain positive factors of theorganization.

1.5 Strategy vs. Policies


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.5 St ategy vs. o c es

Not a synonym.Both are means towards end.Policy: o/all guidance, commonly accepted u/s of decisionmaking.Course of action chosen, written or implied. Clear andconsistent.Policies need to be integrated for success of strategyE.g. Buy wisely, quality & economic considerationsStr: concerned with direction in which human efforts and

resources are deployed. Action oriented and everyoneempowered. Cannot be delegated downwards.Strategy is a rule for making decision while policy is contingentdecision.

Strategy vs. Tactics


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gy

1.6V ProgramsV ProceduresRules

1.7 Levels of Strategy


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gy

Corporate LevelBusiness LevelFunctional Level

E.G. Distinct Business Areas (DBAs)GEC SBU, Ashok Leyland RelianceTatas

1.7 Levels of Strategy (contd)


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gy ( )

Strategic decisions at different levels:Dimensions: Corp./Business & functional lvls:Impact significant, major, insignificant

Risk involved high, medium and lowProfit Potential high, medium and lowTime horizon long, medium and low

Flexibility high, medium and low Adaptability insignificant, med., significant.

1.8 Importance of Strategy


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p gy

Good companies have become extinct.Some new ones, are market leaders.Strategy provides various benefits to users:

Enables take decisions on long range fcsts. Allows meet new trends and competitionsBecomes flexible to meet unanticipated changes.Financial benefits increased profitsOgnzl effectiveness implementationSatisfaction to personnel motivation, habit of thinking,paves the way to shape their work in the context of sharedgoals

Enables mgmt to involve different levels of mgmt.Improves corp. communication, coordination and allocationof resources.STRATEGY LIFEBLOOD OF BUSINESS ACTIVIIES.

Unit 2


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Unit 2

PROCESS OF STRATEGY

2.1 Process of Strategy


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gy

Structure elementsNo unanimity among various authors about the elements andtheir interaction.

Also, their sequential arrangement.

2.2. Process of Strategy


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gy

It is cyclical in nature.Discussed say, in terms of: 4 phases: Identification,Development, Implementation, Monitoring phasesPr. Of Str. Prahlad: comprises 5 StepsStrategic Intent

Environmental AnalysisEvaluation of strategic alternatives and choiceStrategy implementationStrategy evaluation and control.In our Book,

Str Intent / Env & Org. analysis / Identification of Str. Alternatives/ Choice of strategy / implementation of strategy / evaluation andcontrol

2.3 Strategic Intent


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Setting org. vision, mission, purpose, goals, target, objectives startingpoint hierarchy of str. Intent is the foundationReflected through Vision, mission, business definition and objectives.Vision serves the purpose of stating what an organization wishes toachieve in long run.The process of assigning a part of a mission to a particular departmentand then further sub dividing the assignment among sections andindividuals creates a hierarchy of objectives, each sub unit contributingto the larger unitFrom Spv must define Why it exists, how it justifies that existence,and when it justifies the reason for its existence.

Ans. To these Q lies in the org. mission, bus. Defn, obj. and goals.P 18 19 Flow chart for Single SBU and multiple SBUs.


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The next few are Adv. S M

Nature and Scope of CorporateM


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Management

AdhocismPlanned PolicyEnvironment-Strategy InterfaceCorporate Planning

Corporate Management

Corporate Planning


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Co po ate a g

Corporate planning is a comprehensive planningprocess which involves continued formulation of objectives and the guidance of affairs towards their

attainment. It is undertaken by top management for the company as a whole on a continuous basis. According to Hussey Corporate long range planningis not a technique. It is a complete way of keeping thecompanys eyes open.

Reasons Attributed to the failure


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Failure to keep the corporate planning system simpleFailure to develop awareness about corporate planning processCorporate planning tries to do all planning by itself Chief Executive gives planner a low statusFailure to modify the corporate planning structure system with thecharging conditionsPlanner has only a part time interest in planningThere is conflict between available soft database and managersneed for hard answersTop management engrossed in current problems spends little timeon corporate planning process

Need for corporate Management


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p g

Scarcity of resourcesFast Technological ChangesChanging Human ValuesMultiplicity of stake holdersGrowing Competition

Liberalisation,Privatisation and globalizationGrowing scale of business operationsFaster and Quicker Modes of Transportation andcommunicationProfessionalism in management

Concept and Nature of corporateSt t g


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Strategy

It is plan or course of action or a set of decision rulesIt is derived from its policies, objectives and goalsIt is related to pursue those activities which move anorganization from its current position to a desiredfuture stateIt is concerned with the requisite resources toimplement a plan

Functions of corporate Strategy


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p gy

Dual approach to problem solvingFocuses attention upon changes in the organizationalset up, administration of organizational processIt offers a technique to manage changes.Gives equal importance to present and futureopportunitiesIt provides the management with a mechanism

Corporate policy


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p p y

According to Koontz and ODonnellPolicies are plans in that they are general

statement of principals which guide thethinking ,Decision making and action in anorganization.

Determinants of CorporateP li


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Policy

Corporate MissionCorporate objectivesThe Resources

Management Values

External determinants


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Industry StructureEconomic EnvironmentPolitical EnvironmentSocial EnvironmentTechnology

Policy Formulation Process


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y

Environmental AnalysisIdentification of Policy Alternatives

Evaluation of AlternativesChoice of Policy

Introduction


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The major players in the area of corporategovernance, within the co-operation are corporationare corporate board, shareholders and employees.Externally, the pace for corporate governance is set

by the government as the regulator, customers andlenders of finance and social ethos of our times.

Role of Board of Directors


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Oversee the management of the companys assets Establish or approve the companysmission,objective,strategy and policiesReview management actions and financialperformance of the companyHire and fire the principal executive and officers of the company

Role Of A chairman


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To manage the board and ensure that itspolicies are put into practice by managementTo work closely with the company secretaryto address legal issuesTo act as a representative of the companyTo ensure that policies and practices are in placeTo act firmly in times of crisis

To upgrade the competence of directors so as tomeet the current and future needs of the company

The role of CEO


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Present the company to major investorsProvide leadership and direction to all executivedirectors

Assist the executive directors in formulating strategies

and proposals that have to be endorsed by the boardBe a source of inspiration, leadership and direction to allemployees, customers and suppliersTake firm decision when situation demands

Reports Of Committees onCorporate Governance


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Corporate Governance

Cadbury Committee ReportCII Committee ReportKumara Mangalam BirlaNarayana Murthy Committee

Report

Strategic Choices In a DynamicEnvironment


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Environment

Changing the orientation of its suppliers andchannel partnersExploiting the supply chain in the early stagesof the industryExploiting their innovations and building anenduring long run competitive advantagebased on low cost differentiation

Appropriate Timing of Entry

Strategies in a stable industryenvironment


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environment

Product ProliferationRationalizing the product MixProcess InnovationPrice cutting

Excess capacityBuying cheap assetsCompeting internationallyMarket penetration

Product DevelopmentMarket developmentProduct Proliferation

Strategic Choice


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International StrategyMultidomestic strategyGlobal StrategyTransitional Strategy

Perfect competition


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The product is homogeneousThere is free entry and exit in the industryEvery firms action is independent of the other firmIn this market there is perfectly mobility of factorsThe sellers operate in conditions of certaintyhaving complete knowledge of costs demand

price and quantities

Monopoly


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There is only one firm selling the productThe firm has no rivals or direct competitors.Substitutes may exist.However,close substitutes are nonexistent.Difficult entry for no other firmsThe monopolist is the price maker and tries to take thebest of whatever demand and cost conditions

Monopoly is not a permanent situation

Duopoly and Oligopoly


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Duopoly-the duopoly market structure has the followingcharacteristicsCharacteristics:

The number of sellers in this market structure is onlytwoThe decision of the sellers is not independent of eachother The change in price and output by one seller affectsthe other seller who reacts to the change

The product can be homogeneous or differentiated


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The decision variables include price,product differentiation, sellingexpenses,etc,selling expenses but the decisions depend upon thestrategies of the competitor Product differentiation is the entry barrier and also the firmdominating the market can pose as an entry barrier.

OligopolyOligopoly-is a situation where a few large firms compete against oneanother and are independent with respect to decision making


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CharacteristicsThere are small number of large sellers.The product they sell can be differentiated or homogeneous.The policies of each seller have a noticeable impact dueto the extent of influence of each seller.The element of interdependence existsCross elasticity of demand is very high due to the closesubstitutes of the product.Existence of rigidity.The firms may enjoy some monopoly power.


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Strategies available to an oligopolist include advertising,quality improvement etc.

Oligopoly can be classified as Perfect and imperfectOpen or closedPartial or Full

When the firms follow a common price policy, it is known ascollusive oligopoly

Strat Mgmt NM PP 0908

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