UNIT-1: UNDERSTANDING STRATEGY

1. Concept of Strategy

 Strategy = Long-term plan to achieve big goals.

 It answers 3 questions:

o Where are we now?

o Where do we want to go?

o How will we reach there?

 Example: Netflix decided “We will move from DVD rental to online streaming” → That
was a STRATEGY.

2. Levels of Strategy

1. Corporate Level (Top bosses decide)

o What business should we be in?

o Example: Tata Group decides to enter aviation (Air India).

2. Business Level (How to win in one business)

o How to beat competitors?

o Example: Air Asia = Low cost airline.

3. Functional Level (Departments)

o How HR, Marketing, Finance will support?

o Example: HR hires pilots at low salary to keep costs low.

3. Strategic Management – Meaning

 Full process of making strategy + implementing + controlling.

 Characteristics:

o Long-term (3-5 years)

o Future-oriented

o Involves top management

o Affects whole organization

o Done in uncertain environment

4. Strategy vs Tactics
Strategy Tactics

Long-term Short-term

“What” and “Why” “How”

Example: Enter e-commerce market Run 50% discount this Diwali

5. Strategic Management Process (7 Steps)

1. Define Vision & Mission

2. Set Objectives

3. Analyze External Environment

4. Analyze Internal Environment

5. Formulate Strategy

6. Implement Strategy

7. Evaluate & Control

6. Stakeholders in Business

 Anyone who affects or is affected by company.

 Types:

o Internal: Employees, Owners

o External: Customers, Suppliers, Government, Society, Banks

7. Strategic Intent

 Big dream + ambition of company.

 Hierarchy: Vision → Mission → Goals → Objectives → Strategies → Tactics

8. Vision & Mission

 Vision = Future dream (10-20 years)

o Example: Microsoft: “A computer on every desk”

 Mission = What we do today + for whom + why

o Example: Google: “To organize world’s information and make it universally

Good Mission Statement (9 points) Clear, Short, Customer-focused, Unique, Inspiring,

9. Abell’s 3 Dimensions (Business Definition)

2. Customer Groups (Who we serve?)

3. Technology (How we deliver?)

Example: Dominos Need: Fast food Group: Youth Technology: 30-min delivery

10. Objectives & Goals

 Must be SMART (Specific, Measurable, Achievable, Relevant, Time-bound)

 Linked to Vision & Mission

11. CSF, KPI, KRA

 CSF = Critical Success Factors (must do well to survive)

o Example: For Zomato → Fast delivery

 KPI = Key Performance Indicators (measures)

o Example: Delivery time < 30 min

 KRA = Key Result Areas (important departments)

o Marketing, Finance, HR, Operations

12. Components of Strategic Plan

1. Vision & Mission

2. Objectives

3. SWOT/ETOP

4. Strategies

5. Action Plan

6. Budget

7. Control system

13. External Environment Analysis

 Scenario Planning: Imagine 3 future scenarios (Best, Worst, Most likely)

 ETOP (Environmental Threat & Opportunity Profile)

text

Sector Opportunity Threat

Economic High GDP growth Inflation

Political Stable govt New tax laws

14. Porter’s 5 Forces (Industry Analysis)

2. Bargaining Power of Suppliers

3. Bargaining Power of Buyers

4. Threat of Substitutes

5. Rivalry among existing firms (High forces = Unattractive industry)

Entry Barriers: Brand, Capital, Patents, Govt license Exit Barriers: High fixed cost, emotional
attachment

UNIT-2: INTERNAL ENVIRONMENT

1. Resource-Based View (RBV)

 Company = Bundle of resources

 Success comes from unique resources

2. Types of Competitive Advantage

1. Competitive Advantage (better than rivals)

2. Competitive Parity (equal)

3. Competitive Disadvantage (worse)

3. VRIO Framework (to check if resource gives advantage)

V → Valuable? R → Rare? I → Imitable (costly to copy)? O → Organized to exploit? → If YES to

4. Core Competence

 Special strength that gives advantage.

 Example: Apple → Design + Ecosystem

 Characteristics:

o Hard to copy

o Gives entry to many markets

o Customer sees value

5. Benchmarking

 Compare yourself with best company.

 Types: Internal, Competitive, Functional, Generic

6. Porter’s Value Chain

Primary Activities

1. Inbound Logistics
 2. Operations

3. Outbound Logistics

4. Marketing & Sales

5. Service

Support Activities

1. Firm Infrastructure

2. HR Management

3. Technology Development

4. Procurement

7. Strategic Advantage Profile (SAP)

 Internal analysis table:

text

Functional Area Strength Weakness

Marketing Strong brand High price

Finance Good cash High debt

8. Stretch, Leverage, Fit

 Stretch = Use small resource for big goal

 Leverage = Maximize resource use

 Fit = Match resources with environment

9. Ways to Leverage Resources

1. Concentrating (focus on one thing)

2. Accumulating (learn from experience)

3. Complementing (combine resources)

4. Conserving (use again & again)

5. Recovering (get money fast)

10. Portfolio Analysis

BCG Matrix

High Market Growth Low Market Growth

High Share STAR (invest) CASH COW (milk)

Low Share QUESTION MARK (?) DOG (divest)

GE 9-Cell Matrix X-axis: Industry Attractiveness Y-axis: Business Strength → Invest in high-
high cells

UNIT-3: COMPETITIVE STRATEGIES

1. Generic Competitive according to Porter

1. Cost Leadership → Be cheapest (Patanjali, Walmart)

2. Differentiation → Be unique (Apple, BMW)

3. Focus → Serve one small segment very well

o Focus Cost (Big Bazaar)

o Focus Differentiation (Rolls Royce)

2. Grand Strategies

Growth Strategies

1. Concentration (same product, more market)

2. Market Development (same product, new area)

3. Product Development (new product, same market)

4. Diversification

o Related (Honda bike → car)

o Unrelated (Tata salt → hotel)

5. Vertical Integration

o Forward (company opens own stores)

o Backward (company buys supplier)

6. Mergers & Acquisitions

7. Strategic Alliances (JVs, partnerships)

Stability → Pause (do nothing new) Retrenchment

 Turnaround (fix sick unit)

 Divestment (sell division)

 Liquidation (close company)

Outsourcing → Give non-core work outside (Nike outsources manufacturing)

1. Barriers to Implementation

 Poor communication

 Resistance to change

 Lack of leadership

 Inadequate resources

2. Mintzberg’s 5 Ps

1. Plan

2. Ploy (trick competitors)

3. Pattern (consistent actions)

4. Position (where we stand)

5. Perspective (culture)

Deliberate (planned) vs Emergent (happens automatically)

3. McKinsey 7S Framework

Hard S: Strategy, Structure, Systems Soft S: Shared Values, Skills, Style, Staff

4. Organization Structures

1. Entrepreneurial (small startup)

2. Functional (Marketing, HR separate)

3. Divisional (product-wise divisions)

4. SBU (Strategic Business Units)

5. Matrix (dual reporting)

6. Network (outsourced everything)

7. Cellular (small independent teams)

Stable environment → Functional structure Turbulent → Matrix/Network

5. Reengineering

 Radical redesign of processes

 Principles: Combine jobs, Empower employees, Use IT

6. Corporate Culture

 Learning Organization (always improving)

 MBO (Management by Objectives) → Boss & employee set goals together

 Strategic Control (check if strategy is right)

 Operational Control (check daily work)

 Symptoms of bad strategy: Falling sales, low morale, missed targets

Balanced Scorecard (4 perspectives)

1. Financial

2. Customer

3. Internal Process

4. Learning & Growth

UNIT-5: BLUE OCEAN + MODERN CONCEPTS

1. Blue Ocean Strategy

 Red Ocean = Bloody competition

 Blue Ocean = Create new market (no competition)

 Example: Cirque du Soleil (circus + theatre = new industry)

6 Principles Reconstruct market boundaries Focus on big picture Reach beyond existing
demand Get strategic sequence right Overcome organizational hurdles Build execution into
strategy

Strategy Canvas → Graph to compare with rivals Four Actions Framework

1. Eliminate

2. Reduce

3. Raise

4. Create

2. Business Models

 How company creates & captures value

 Components: Value proposition, Customer segment, Revenue model, Cost structure

Internet Business Models

1. E-shop (Flipkart)

2. Subscription (Netflix)

3. Freemium (Spotify)

4. Marketplace (Amazon)

5. Advertising (Google)
Virtual Value Chain

1. Gather info

2. Organize

3. Select

4. Distribute digitally

3. Sustainability & Strategic Management

 Triple Bottom Line: People + Planet + Profit

 Startups grow fast but fail due to:

o No cash

o Wrong team

o No market need

 Threats to sustainability: Climate change, regulations, social pressure

 Integrate ESG (Environment, Social, Governance) in strategy