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STRATEGY MAKING TASKS IN VARIOUS INDUSTRY SETTINGS

STRATEGY MAKING TASKS IN VARIOUS INDUSTRY SETTINGS 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

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STRATEGY MAKING TASKS IN VARIOUS INDUSTRY SETTINGS

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  1. STRATEGY MAKING TASKS IN VARIOUS INDUSTRY SETTINGS • 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. 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. 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. 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: • VISION/ MISSION • OBJECTIVES • 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: • GROWTH STRATEGY: Firms strive towards enhancing growth rate – accelerating increase in market share, market reach an access market penetration  AS FEASIBLE • STABILITY CRITERIA: Firms work towards stabilizing and systemizing operations to the extent feasible – Stabilize operations and remain competitive • 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. TURNAROUND STRATEGY • Internal Measures • External Measures • RESTRUCTURING STRATEGY: • ORG Restructuring HR Aspects • Streamline & Revamp Business Processes • Extensive BPR & Downsizing – If Read • 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 Overcome Weakness • Turnaround • Divestiture • Liquidate • Vertically Integrate • Conglomorate Diversification B A Internal (Redeploying Resources within the firm) External (Mergers/ Acquisition) C D • Horizontal Integration • Concentric/ Related Diversification • JVS/ Alliances • Focused Growth • Market Development • Product Development • Innovation Maximizing Strengths

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

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