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Foundation to Business Strategy image (Topic-1 Strategy & Strategic…

- - - - Threat of New Entrants.
        
        Low amount of capital is required to enter a market
        
        Existing companies can do little to retaliate
        
        Existing firms do not possess patents, trademarks or do not have established brand reputation
        
        There is no government regulation
        
        There is low customer loyalty
        
        Products are nearly identical
        
        Economies of scale can be easily achieved
      - Threat of Substitutes.
        
        First, if the consumer’s switching costs are low
        
        Second, if the substitute product is cheaper than the industry’s product
        
        Third, if the substitute product is of equal or superior quality compared to the industry’s product, the threat of substitutes is high
        
        Fourth, if the functions, attributes, or performance of the substitute product are
        
        equal or superior to the industry’s product
      - Bargaining power of Buyers.
        
        Buying in large quantities or control many customer.
        
        Only few customers exist
        
        Switching costs to other supplier are low
        
        They threaten to backward integrate
        
        There are many substitutes
        
        Customers are price sensitive
      - Bargaining power of Suppliers.
        
        There are few suppliers but many buyers
        
        Suppliers are large and threaten to forward integrate
        
        Few substitute raw materials exist
        
        Suppliers hold scarce resources
        
        Cost of switching raw materials is especially high.
      - The extent of Industry Rivalry.
        
        There are many competitors
        
        Exit barriers are high
        
        Industry growth is slow or negative
        
        Products are not differentiated and can be easily substituted
        
        Competitors are of equal size
        
        Low customer loyalty
- - - - Functional/Operational
        Focused domain
    - - What product and/or service to offer
        How to manufacture, how to get to market, etc.
    - - Overall vision, mission
        Kinds of business, portfolio management
  - - - Micro environmental analysis
        
        SWOT Unit-4
      - Macro environmental Analysis
        
        Porters five force analysis- Unit-3
        
        PEST-Unit 2
- - - - Mission Statement Components
        
        Customers—Who are the firm’s customers?
        
        Products or services—What are the firm’s major products or services?
        
        Markets—Geographically, where does the firm compete?
        
        Technology—Is the firm technologically current?
        
        Concern for survival, growth, and profitability—Is the firm committed to growth and financial soundness?
        
        Philosophy—What are the basic beliefs, values, aspirations, and ethical priorities of the firm?
        
        Philosophy—What are the basic beliefs, values, aspirations, and ethical priorities of the firm?
        
        Concern for public image—Is the firm responsive to social, community, and environmental concerns?
        
        Concern for employees—Are employees a valuable asset of the firm?
- - - - Differentiation
      - Lower Cost
    - - Broadly Targeted Differentiation
        Production emphasis: “Nobody makes it better.”
        Marketing emphasis: “Ours is better than theirs.”
        Many frills – different models, options, features, and services.
        One or more points of difference.
        Frequent innovation.
        Premium pricing to cover the cost of differentiation.
        Intensive advertising and sales efforts.
      - Overall Cost Leadership
        
        Overall Cost Leadership
        Production emphasis: “Nobody does it cheaper.
        Marketing emphasis: “Budget Prices and Good Value.”
        Standardized products – only a few models and limited optional features.
        No Frills operating culture – lean and mean reputation.
        Higher productivity per employee.
        Cost-cutting innovations.
        Accept low profit margins in return for high volume
      - Focus
        Production emphasis: “Made especially for you.”
        Marketing emphasis: “Ours meets your needs better.”
        Specialization for buyer segments, geographic areas or end-use applications.
        Competitive advantage depends on being the low-cost leader in the target segment, or doing something particularly appealing to the targeted customers.
        
        Cost
        
        Differentiation
    - - Broad Target
      - Narrow Target
- - - - Types of resources
        
        Intangible resources
        Ownership of brands, Company image, Trademarks
        
        Tangible resources
        
        Physical resource
        
        Financial resource
        
        Human resource
        
        Four important questions about
        their resources and capabilities.
        
        VALUE: Do a firm’s resource and capabilities add value by enabling it to exploit opportunities and/or neutralise threats?
        
        Rare: How Many competing firms posses valuable resources and Capabilities?
        
        Are the resources Imitable?
        
        Non-Substitutable : Is the firm’s resources/competencies a substitutable one?
- - - - Government Stability
      - Foreign Trade regulations
      - Taxation Policies
      - Employment laws
      - Environment protection laws
      - Deregulation
      - Monopolies act
    - - Business Cycles
      - Interest Rates
      - Inflation
      - Disposable Income
      - Unemployment
      - Energy Availability and Cost
    - - Population Demographics
      - Income Distribution
      - Lifestyle Changes
      - Levels of Education
      - Attitudes to Work and Leisure
      - Consumerism
    - - New Discoveries and Developments
      - Government spending on Research
      - Rate of Obsolescence
- - - - Good brand image
      - Well-known name
      - Good reputation
      - Cost advantage in production
      - High market share
      - Confidence in the market
      - Customer loyalty or repeat business
      - More advanced technology and R & D
    - - Ineffective in production
      - Falling profit
      - Falling sales of the product
      - Declining age of the life cycle of a product
      - Poor reputation
      - Lack of innovation and change
      - Lack of adequate capital or having some financial problems
      - Customers’ losing confidence or increasing complaints on the business
      - Poor management or inefficient organizational structure
    - - Possible development of new products
      - Expansion into new markets
      - Development of a global brand
      - Joint –development with other companies
      - Possible growing demand for a product in the market
      - Possible government policies encouraging the growth of the business and its certain products
      - New sources of profit or income
    - - Changes in law or regulation which may prohibit or affect the production of a business
      - Growing competition from local companies
      - Increasing competition from foreign competitors
      - New products developed by other companies which may replace the product of the business
      - Marketing activities or strategies which will be implemented by competitors
- - - - Primary & Secondary Stakeholders
        Primary: a firm cannot exist without their continuing participation
        Primary stakeholders include: shareholders & investors, employees, contractors, customers & suppliers
        Secondary: those who influence or affect or are influenced/affected by, the corporation, but they are not engaged in transactions with the corporation or essential for its survival
        Secondary stakeholders include: media, action groups, government agencies, trade unions, regulatory authorities
      - Internal & External Stakeholders
      - Differing stakeholder expectations
        Owners Financial Return/Added Value
        Customers Quality Products/Additional Services
        Employees Pay & Benefits/Work Satisfaction
        Creditors Creditworthiness/Timely repayment
        Government Compliance/Improved Competitiveness
        Community Welfare/Safety & Security
        Suppliers Payment/Long term Relationships
        Competitors Fair Competition/play
        
        The Stakeholder Theory of the Firm
        
        Stakeholder Theory of the Firm
        
        Stakeholder Analysis
        Stakeholder analysis is the process of identifying the individuals or groups that are likely to affect or be affected by a proposed action, and sorting them according to their impact on the action and the impact the action will have on them.
        
        Stakeholder Mapping
        Stakeholder mapping refers to the process of generating a stakeholder map by which the stakeholders of a particular organization can be identified and understood appropriately.
        
        Stakeholders Influence = Power x Interest
        
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        Ownership Theory of the Firm
- - - - External Forces
      - Internal Forces
      - Scope of Change
        
        Incremental change - change of a relatively small scope, such as making small improvements
        
        Transformational change - change in which the organization moves to a radically different, and sometimes unknown, future state
        
        Organizational Change
        
        Planned change
        Change resulting from a deliberate decision to alter the organization
        
        Kurt Lewin’s three-step change process
        
        Unfreezing Status quo(1)
        
        Changing
        
        Refreezing Status quo(2)
        
        Kotter’s eight-step plan for implementing
        1.Establish a sense of urgency.
        2.Form a powerful coalition of managers.
        
        Create a vision to direct the change and the strategies for achieving that vision.
        4.Communicate the vision throughout the organisation.
        5.Empower others to act on the vision.
        6.Plan for visible, short-term performance improvements and crate those improvements.
        7.Consolidate improvements.
        8.Articulate the relationship between new behaviors and organizational success.
        
        Models for managing change
        
        Managerialist approach to change
        
        Change agent approach to change
        
        Resistance to change
        lack of trust
        perception that change is not necessary
        perception that change is not possible
        relatively high cost
        fear of personal failure
        loss of status or power
        threats to values and ideas
        social, cultural or organizational disagreements
        resentment of interference
        
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        UnPlanned Change
        Change that is imposed on the organization and is often unforeseen.