CHAPTER – 3

MENDELOW’S MATRIX
STRATEGIC ANALYSIS : INTERNAL ENVIRONMENT
HIGH KEEP SATISFIED KEY PLAERS
I. Meaning of Internal Environment - Consult often - Manage closely
- Keep them satisfied with - Involve in decision making
1) Sum Total of :
their intended info on - Engage Regularly
POWER regular basis. - Build strong relationship
People Process Physical Infra. Admin Organizational
[Ability - Try to  interest. - Greatest effort to
culture
Space, Lines of to - Can be hindrance to new satisfy them
All Input to
Equipment Authorities, influenc ideas.
stakeholders output Intangible
physical Power, e org’s LOW PRIORITY KEEP INFORMED
aspects of
condition Responsibility strateg
working - Monitor only - Adequately inform to
of working etc.
y or - No Engagement ensure no major issues
That shapes organization identify resourc - General occasional - Utilize high Interest in
2) It is specific to each Organization es] communication decision making
- Track change in interest - Consult in area of
II. Understanding KEY STAKEHOLDER or power expertise.
1) A firm is a coalition of stakeholders Low HIGH
 INTEREST
[How interested they are success of org]
All those individuals &
entities that have III. SWOT ANALYSIS
stake in its success & 1) Strength: Inherent capability which is used to gain strategic
impacts it as well. advantage over competitors.
2) Weakness: Inherent limitation or constraint which creates strategic
2) Includes Management, Employees, Shareholders, Investors
Customers, vendors, Govt, Labour Unions etc. disadvantage to it.
3) Each Stakeholder has differing levels of 3) Opportunity: Favourable condition in org.’s environment helps
strengthen its position.
4) Threat: Unfavourable condition in org.’s environment which causes
Power Interest risk or damage to organization’s position.
And hence managing stakeholder is critical for success of Org. SWOT analysis helps develop a full awareness of all the factors (internal and
external) involved in making a business decision. It helps increase the
It is important to identify KEY Stakeholders since they can influence chances of success in achieving organizational objectives.
organizations strategy. Mendelow’s Matrix is used for managing KEY
STAKEHOLDERS (Bc they are critical to the success of Organization) Page 1
IV. CORE COMPETENCY & COMPETITIVE ADVANTAGE  C.C are
- Visible in form of organizational function
A. COMPETITIVE ADVANTAGE
- Whatever firm does best
- If company's strategies results in superior performance. It is said to
- Knowledge, skills, facilities necessary to design core products.
have competitive Advantage.
- It is a set of unique features of company or products that are perceived FOUR specific criteria of sustainable C.A that firms use to determine
by the customers as significant & superior to rivals. those capabilities that are Core Competencies :-
- C.A. includes having - Profitability > Arg. Profit of Industry. (The VIRs)
The sustainabity of C.A. depends upon 4 major characaristics of Valuable Costly to imitate Rare Non-
Resources & capabilities:- Substituable
Capabilities
- Valuable capabilities
Capabilities that few capabilities
TAID help firm exploit opps
that are competitors that do no have
& avert threats.
difficult to posess any strategic
- By leveraging these
develop by equivalent
Transferability Apporpriability Imitability Durability capabilities, Org can
rivals
create significant
value. C.A results when gives C.A.
Easier it is to Ability of If resources Faster the firm develop and
- Includes placing
transfer firms owner & capabilities firms explot
right people in right
resources & to appropriate can be easily resources & capabilities that
role.
capabilities returns to & quickly built capabilities are different
b/w companies resource base by rivals detoriate

MAJOR core compentencies are identified in :-

less more returns Less less sustainable C.A.
sustainable to base, more sustainable [Ex - CEO expertise, Competitor Application of C.C to
C.A sustainable C.A faster product Customer value
Differentiation other markets
C.A [Ex- culture] innovation]
- unique to the - must deliver - Must be applicable
orgaization fundamental benefit to the whole org
B. CORE COMPETENCY
- difficult to imitate to end customer (Fundamental from
 Collective learning in an organization especially
- Organization must - customer should entire org's POV)
- Coordinating diverse production skills and keep on improving value differentiation - Unique skills that
- Integrating multiple streams of technologies the skills to sustain offered can be used through
 Combination of technological, managerial know-how, wisdom & C.A. out org
experience – that lead to C.A. (CC is not a single skill or a seperate
technology)

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A. Meaning A. Meaning A. Meaning
- Emphasis on producing standardized - Emphasis on producing unique - A successful focus strategy depends on an
products at Low cost for price product/services for price insensitive industry of sufficient size, has good growth
sensitive buyers. consumers. potential, not crucial to success of other
- Low-cost strategy + Broad Mass - Unique features + Broad mass market major competitors.
Market - Uniqueness can be associated with - Most effective when customers have
- Achieved through cost reduction in product design, brand image features, distinctive preferences or requirements and
procurement, production, R&D, technologies, distribution network, rivals are not specializing in same.
Economies of scale, intolerance of customers service etc. - can be done by focusing on particular group
waste, Intensive budgeting, High - Because of Uniqueness, Premium can be of customer, geographic market, product line
efficiencies etc. charged etc.
- Because low costs  org can charge
lower prices and still earn satisfactory B. Achieving Differentiation B. Achieving Focus Strategy
profits 1. Offer utilities that match taste & 1. Selecting specific niche not covered by
preferences of customer others
B. Achieving cost Leadership 2. Faster product innovation 2. Creating Superior skills in the niche.
1. Prompt forecasting of demand 3. High quality product/service 3. Generating High efficiencies to cater
2 Economies & scale 4. Improved performance the niche.
3. Optimum utilization of resources 5. Enhanced brand image & brand value 4. Developing innovative means to manage
4. Resist differentiation 6. Fix price as per the unique features niche.
5. cost saving technologies + Buying capacity of customer.
6. Standardization of products
7. Vertical & Horizontal integration

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 C. Advantages
- Premium pricing due to focused
strategy.
- Tremendous expertise in G/S offered-
rivals find difficult to compete, acts as
barrier to entry.

D. Disadvantages D. Disadvantages
a) Competitors can imitate cost reduction - In long run, niche will disappear.
techniques D. Disadvantages - Limited demand of G/S leads to high
b) Succeeds only when HIGH sales volume. 1. Competitors may develop ways to copy cost.
c) Technology advancement areas – threat areas differentiating features. - Firms lacking distinctive competencies
for cost leader 2. Uniqueness may not be valued enough by cannot attempt focus strategy.
d) Low advertising, R & D spends – may prove customers.
expensive in long run. 3. Standard products meet customer needs.
4. Charging too high prices make customer switch

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 KEY STRATEGIC DRIVERS
Essential elements that influence an organizations abilities to
differntiate itself from competitors and acheive competitive advantage.

INDUSTRY & MARKET CUSTOMERS PRODUCT & SERVICES CHANNELS

Industry & market analysis helps analyze 1) Product/services is central to

1) Understanding Customers = 1) Represents the
organizations relative position in industry & defining business.
First step in deciding Products and distribution channel
market in which it operates. It helps identify 2) Organization must assess
service. through which
one's competitive position as compared to their their offerings, classify
2) Customers are segmented organization distributes
competitors products & services & than make
based on needs & spending capacity their product/services to
 which guides product development strategies for differentiation, customer.
& marketing strategies pricing, branding.
STRATEGIC GROUP MAPPING- A tool to 2) Stronger channel helps
3) Differentiating b/w customers 3) Product innovation &
identify market position of RIVAL companies by in creating Barrier to
& consumers helps in tailor pricing, marketing is important for
grouping them into LIKE POSITIONS. entry.
design, usability strategies. maintaining competitiveness.
STRATEGIC GROUP - Rival firms which has
3) Channel analysis is
similar competitive approach & position in
important to scale up or
market. It can be comparable product line, same
expand beyond existing
price/ quality range. distribution channels,
market.
product attributs etc.

 THREE TYPES OF CHANNELS
Constructing a Strategic Group Map (IPAD) :-
1) Identify competitive characteristics that
differentiates firms in the industry.
(Like- price/quality range; geographic coverage; degree Sales Channel Product Channel Service Channel
of vertical integration; product-line breadth; distribution
channels; and degree of service offered)
Intermediaries involved Intermediaries who Entities that provide
in selling product physically handle necessary services to
2) Plot firms in two-variable map using
through each channel product from producer support product.
differentiating chjaracteristics.
3) Assign firms that fall in same space to same and ultimately to end to end user
startegic groups. consumer
4) Draw circle proportional to size of groups
market share to idustry's total.

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