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1. STRATEGIC MANAGEMENT
3. INDUSTRY ANALYSIS
In an industry, competition depends on several factors and the success of a company
depends on how efficiently it handles these factors and survives in the face of stiff
competition.
(i) Porter’s Industry Analysis : The Five Forces Model
The Five Forces Model is a framework which has been developed by Michael E. Porter
of the Harvard Business School to assist managers in analyzing the business
environment. The five forces that play a crucial role in shaping a company’s future are as
follows
(a) Bargaining power of customers
(b) Threat posed by substitute products
(c) Bargaining power of suppliers
(d) Threat posed by new entrants
(e) Competition among existing firms
(ii) Concept of Value Chain
In value chain analysis, the organization is viewed as an orderly process of activities
aimed at creating value. This approach is useful in understanding the building blocks of
competitive advantage. Value is defined as the amount buyers pay to a firm for their
products or services.
According to Michael Porter, there are two broad categories of activities
(i) Primary activities
(ii) Support activities
Primary activities help in contributing to the manufacturing of the product or service in
physical terms. They are
(a) Operation
(b) Marketing and Sales
(c) Inbound logistics
(d) Outbound logistics
(e) Service
Secondary activities either add to the value of the product or service on their own or in
combination with primary activities or other support activities. They include

2. (a) Human resource management
(b) General administration
(c) Procurement
(d) Technology development
STRATEGIC PROFILE OF A FIRM
A strategic profile of a firm is created by understanding its strategic personality. When
the competitive strategy matches with its market behavior, the firm creates for itself a
strategic personality.
The factors are Organizational structure, Organizational culture, Leadership.
FRAMEWORK FOR ANALYSING COMPETITION
The application of Game Theory in business strategy was put forward by two authors (a)
Adam. M. Bradenburger and Barry. J. Nalebuff. Game Theory makes it possible to move
beyond simple ideas of competition. And cooperation to reach a vision of competition.
The five essential elements in any game are
(i) Scope
(ii) Participants
(iii) Additional values
(iv) Rules and regulations
(v) Moves, tactics or strategies
Concept of Complementarity
The process of creating value in the marketplace involves four types of players
(i) Customers
(ii) Suppliers
(iii) Competitors
(iv) Complementers

3. 4. STRATEGIES
A strategy is a plan of action designed to achieve a particular goal. Proper strategy is
essential for the success of a firm. The three strategies that firms follow are growth
strategies, reduction strategies and turn around strategies.
Two ways firms grow. (i) organic growth and (ii) inorganic growth
Organic growth means that firms grow through better penetration in the market, improve
market share, introduce more product varieties and increase production capacity. This
kind of growth is slow. The other growth is very fast. It is mainly by the process of
merging or acquisition. It also explores new businesses.
Growth in related areas is quite common. Growth strategy when decided by a firm can be
achieved in the following ways.
(a) Vertical growth
(b) Horizontal growth
(c) Merger and acquisitions
(d) Joint ventures
(e) Strategic alliances
(f) Consortium
REDUCTION STRATEGIES
Reduction Strategy also known as retrenchment strategy means that the firm decides to
discontinue some of the products or remove itself from some of the markets.
The businesses that still have sufficient potential to make profits but not attractive enough
for a firm can be sold off to other firms. This method is known as divestment or sell-out
strategy. Firms can also liquidate a business. That means winding up. This happens when
there is no other alternative.
The absorption of employees to other business units from closed down business units is
an issue to be resolved.
TURN AROUND STRATEGY
Loss to company should not happen periodically. If it happens, the company should look
into the reasons for the losses.
The external and internal factors affect a company’s business. A turnaround strategy
implies a firm’s operational effectiveness.

4. CORPORATE STRATEGY
A company has to identify its strengths, weaknesses, opportunities and weakness
(TOWS) to survive and prosper in today’s highly competitive market. An effective
corporate strategy comprises of five elements that together make the corporate strategy
triangle. The three sides of the triangle are resources, businesses and organization which
have to be aligned with vision, goals and objectives to seek corporate advantage.
TOWS matrix is a good method by which a corporate strategy can be identified. The
matrix consists of four quadrants that contain the different combinations of these features.
The generic strategy that a firm follows could be classified into one of the below
(i) Stability strategy
(ii) Growth strategy
(iii) Retrenchment
(iv) A combination of the above
BUSINESS STRATEGY
A business strategy is also a competitive strategy. The various types of businesses
strategies are the following
(i) Cost leadership
(ii) Cost focus
(iii) Differentiation strategy
(iv) Differentiation focus
Organisational level Strategies
(a) Corporate Level Strategies
World wide large corporate groups have spent considerable time, effort and money in
seeking to justify their continued existence by developing world wide vision or mission
statements.
The two sources of corporate advantage
(a) Economies of sale
(b) Knowledge
The first generic strategy is overall cost leadership. The potential pitfalls of overall cost
leadership strategies
(a) Too much focus on one or few value chain activities
(b) All rivals share a common input or raw material
(c) The strategy is imitated too easily

5. (d) Lack of parity on differentiation
(e) Decrease in cost advantages
Risks of focus
A focus strategy is vulnerable to the following risks
(a) Increasing the cost differential between broad range competitors and the focus
firm might offset the differentiation achieved through focus and turn the
customers towards firms that offer a broad range of products
(b) Perceived or actual differences between products and services might disappear
(c) Other firms might find submarkets within the target market of the focus firm and
the focuser may gout of focus
An international strategy will only make sense if a company possesses such as skills and
competencies that their indigenous counterparts in the foreign markets lack.
Reasons for Cross-Border Mergers and Acquisitions
(i) Growth
(ii) Technology
(iii) Government policy
(iv) Differential labor costs and productivity
(v) Source of raw materials
CORPORATE RESTRUCTURING
Restructuring can be defined as a strategy by which a company changes its business or
financial structure.
The various forms of restructuring are
(i) Expansion
(ii) Sell-offs
(iii) Corporate Control
(iv) Changes in ownership structure

6. STRATEGY, IMPLEMENTATION, EVALUATION AND CONTROL
Strategies can be implemented only if firms have proper organizational structures, The
common types of organizational structures are
(a) Simple
(b) Functional
(c) Divisional
(d) Matrix
The divisional form of organizational structure has two variations
(i) Strategic Business Unit
(ii) Holding company structures
If none of the above structures work, managers have the option of matrix structure. The
benefits of a matrix structure are that it makes it possible to take advantage of specialized
personnel, special equipments as well as facilities. Instead of duplicating functions, the
resources are shared as required.
Impact of culture on two different types of organizations.
Consider a MNC and a family business. MNCs emphasis on professional qualification
and rank where as the other one emphasizes on demonstrated skills, depth and quantity of
knowledge. MNCs emphasis on information gathering but in a family business, selective
information is used. The former depends on comprehensive, formal and written reporting
whereas latter emphasis on the primary use of verbal reporting and remedial action.
Approaches to creation of strategy supportive culture
(i) To ignore corporate culture
(ii) To adapt strategy implementation to suit corporate culture
(iii) To change the corporate culture to suit strategic requirements
(iv) To change the strategy to fit the corporate culture
OPERATIONAL STRATEGY
Cost reduction and maintenance of quality can be brought about by effective operational
strategies.
1. Location for manufacturing.
The main factors are (i) Country
(ii) Cost of technology
(iii) Customization and cost effectiveness

7. 2. Product
The features are (i) Value-to-weight ratio
(ii) Nature of need – universal or local
3. Global Sourcing
Companies are confronted with make or buy decisions. The main risk of outsourcing
component requirements is the resulting dependence on the supplier. The risk of such
dependency has led companies to integrate business activities. The three types of
integration are (i) backward (ii) forward and (iii) forward integration
.
Global Supply Chain Management (GSCM)
Supply chain management (SCM) integrates the activities of demand forecasting,
procurement, manufacture, distribution and inventory management.
Logistic management is primarily concerned with the effective transportation of goods.
MARKETING STRATEGY
Strategies for marketing must take into consideration different aspects of product,
pricing, distribution and promotion. A product might be considered as a set of attributes.
The influential factors are
(i) Cultural differences
(ii) Economic differences
(iii) Technical standards
Distribution refers to the choice of the mode of delivery of products to the customer.
Product specific, market specific and environment factors influence international pricing.
The following factors are considered by a MNC before pricing its products for different
countries.
(i) Competitive structure
(ii) Price discrimination
Barriers to international communication
Push vs pull strategy
A push strategy emphasizes on personal selling as part of promotion rather than
advertising in the mass media. A pull strategy employs the mass media to communicate
the message to target customers.

8. The factors that influence the firm’s choice of strategy are
(i) Customer awareness
(ii) Length of the channel
(iii) Media availability
(iv) Configuring the marketing mix
HUMAN RESOURCES STRATEGY
HR guides the functioning of HRM. Some factors are
(i) Equity in recruitment and pay
(ii) Types of staffing policy
This means finding the right person for the right job. Three approaches are
(i) Ethnocentric approach
(ii) Polycentric approach
(iii) Geocentric approach
Other factor is employing expatriates.
Subsidiaries autonomy in decision making often lies in the distribution of power between
the parent firm and the subsidiary. Three types of autonomy are
(i) Limited autonomy
(ii) Variable autonomy
(iii) Negotiated autonomy
Labor relations refer to the relationship between organized labor and management. Labor
relation management seeks to maintain a cordial relationship between labor and
management. The Indian Industrial Disputes Act 1947 defines an industrial dispute as a
dispute between employer and employer, employer and worker and other workers
regarding employment, non-employment, terms of employment or conditions of work.
FINANCIAL MANAGEMENT STRATEGY
Currency risk is one of the unique problems faced by internationally operating firms. In a
foreign exchange market, individuals, banks and other institutions trade in currencies.
The price of one currency in terms of another is called exchange rate. The sensitivity of a
firm’s cash flows to changes in exchange rates is called exposure. The exposure can be
long term, short term or only of an accounting nature.

9. The different types of exposure
(i) Economic exposure
(ii) Transaction exposure
(iii) Translation exposure
Forecasting exchange rates is an important function of a corporate manager. The model
used for forecasting exchange rates is classified as the following
(a) Fundamental analysis model
(b) Technical analysis model
Operational Control Systems
They are action controls. For these systems to be effective, the following four steps
should be taken
(i) Setting standards of performance
(ii) Measuring actual performance
(iii) Identifying deviations from standards
(iv) Initiating corrective action or adjustment
The three types of operational control systems are
(i) Budgets (revenue, capital, expenditure)
(ii) schedules
(iii) key success factors (high employee morale, improved product service
quality,..)
CRISIS MANAGEMENT
Crisis management addresses certain risks and uncertainties that arise over period of
time. Three decisions that ensure crisis strategy is effective
(i) Decisions concerning what can go wrong
(ii) Decisions about investing in preventive measures
(iii) Decisions on mechanisms for contingency management
Strategy in manufacturing concentrates on improving efficiency, quality and
responsiveness to customers.
Research and development strategy aims at developing a distinctive competency in
innovation.
The sales function operates with a flat structure. Flat structures are useful because this
function does not depend only on direct supervision.