SM Core Comp and PLC.pdf. For ca intermediate ca exams

Sm core competition

1. Strategy
Strategy is not the consequence of planning, but the
opposite: it’s the starting point. —Henry Mintzberg
According toGlueck,"Strategyistheunified,
comprehensive andintegratedplanthatrelatesthe
strategicadvantageofthefirmtothechallengesofthe
environment andisdesignedtoensurethatbasic
objectivesoftheenterpriseareachievedthroughproper
implementationprocess

2. Strategy
Strategy is not the consequence of planning, but the
opposite: it’s the starting point. —Henry Mintzberg
Strategyisalongrangeblueprintofanorganisation’s
desiredimage,directionanddestinationwhatitwants
tobe,whattodoandwhereitwantstogo

3. Strategy
•Strategy can never be perfect, flawless and optimal
•Strategy can be flexible and pragmatic
•Strategy is the game plan that the management of the business uses to take
market position, conduct its operations, attract and satisfy customers
•Policy and Strategyare inter-related but they differ
•Policy is thought process and strategy talks about how the policy is
followed

4. Management
Management isaprocessof
planning,
decisionmaking,
organizing,
leading,
motivationandcontrolling
thehumanresources,financial,physical,andinformationresources
ofanorganizationtoreachitsgoalsefficientlyandeffectively.

5. Management
•Keygroupintheorganisationin-chargeoftheaffairs
ofthecompany.
•Management isthechieforganentrustedwiththe
taskofmakingitpurposefulandproductiveentity.
•Theybringtogetherthedisorganisedresourcesof
manpower,money,materialandtechnology

6. Proactive Strategy

8. Proactive Strategy
Proactive strategies are designed to anticipate
possible challenges

9. Reactive Strategy
Reactive business strategies are those that respond to
some unanticipated event only after it occurs

10. RTP Nov 20
Q. Strategy is Partly Proactive and Partly Reactive. Discuss.

11. Core Competency

12. Core Competency

13. Sam Walton

14. •Waltonhadthedreamofopeningalargediscountstore.
Thesestoreswouldbelocatedinruralareasawayfrom
competitionlikeK-Mart.
•Partofhisideawasthattheprofitsontheitemswould
besmallinordertoofferthecustomeragoodprice.
•Hehadatoughtimesellingtheideatoinvestorsatfirst,
butheeventuallygotaloanandopenedhisfirst
WalmartinRogers,Arkansasin1962.

15. •ThestorewasagreatsuccessandWaltoncontinuedto
openmorestores.
•Heopenedhissecondstorein1964andhisthirdin1966.
By1968,therewere24Walmartstoresandgrowing.Over
theyears,thechaingrewandgrew.
•Ithad125storesin1975and882storesin1985.
•Themainaimofthecompanyistoprovideconsistent
discounts,loyalcustomerservice,andfastfriendly
service.

16. Core Competency
Corecompetenciesdistinguishacompany
competitivelyandreflectitspersonality.

17. Core Competency
C.K.PrahaladandGaryHamelhaveadvocatedaconceptofcore
competency,whichisawidelyusedconceptinmanagementtheories.
Theydefinedcorecompetencyasthecollectivelearningintheorganization,
especiallycoordinatingdiverseproductionskillsandintegratingmultiple
streamsoftechnologies
Anorganization’scombinationoftechnologicalandmanagerialknow-how,
wisdomandexperienceareacomplexsetofcapabilitiesandresourcesthat
canleadtoacompetitiveadvantagecomparedtoacompetitor.

18. Core Competency
Corecompetencies,itischaracteristictohaveacombinationofskillsand
techniques,whichmakesthewholeorganizationutilizetheseseveral
separateindividualcapabilities.
Therefore,corecompetenciescannotbebuiltononecapabilityorsingle
technologicalknow-how,instead,ithastobetheintegrationofmany
resources

19. Core Competency
C.K.PrahaladandGaryHamel,majorcorecompetenciesare
identifiedinthreeareas
competitordifferentiation,
customervalue,and
applicationtoothermarkets

20. Core Competency
Competitor differentiation
Competence isunique
anditisdifficultfor
competitorstoimitate
Canprovideacompany
anedgecomparedto
competitors
Customer value
Purchasingaproductor
serviceithastodelivera
fundamentalbenefitfor
theendcustomerinorder
tobeacorecompetence
Theserviceorthe
producthastohavereal
impactonthecustomer
asthereasontochoose
topurchasethem
Application to other
markets
Itcannotbeonlyone
particularskillorspecified
areaofexpertise.
Therefore,althoughsome
specialcapabilitywouldbe
essentialorcrucialforthe
success ofbusiness
activity,itwillnotbe
considered as core
competenceifitisnot
fundamental fromthe
wholeorganization’spoint
ofview

21. How to build Core Competency
Fourspecificcriteriaofsustainablecompetitiveadvantagethat
firmscanusetodeterminethosecapabilitiesthatarecore
competencies.
1.Valuable
2.Rare
3.Costlytoimitate
4.NonSubstitutable

22. Core Competency
Examples:
Smallretailshopshavecorecompetenciesandgaincompetitiveadvantage
intheareasof-
(i)personalservicetocustomers,(ii)extendedworkinghours,(iii)easycredit,
(iv)freehomedeliveries,(v)amicablestyleoftheowner,and(vi)proximity.
Bigretailstores(fore.g.BigBazaar)andsupermarketshavespecialcore
competenceintheareasof-
(i)merchandising,(ii)securingsuppliesatlowercost,(iii)in-houseactivity
management,(iv)computerizedstockordering,billingsystemsand(v)
ownbrandlabels.
Supermarketscompetewithoneanotherwithcorecompetenciesasto–
(i)locationaladvantage,(ii)qualityassurance,(iii)customerconveniencein
shopping,etc.

23. How to build Core Competency
Valuable
Costlytoimitate
means such
capabilities that
competingfirmsare
unabletodevelop
easily
Theproductcanbe
imitatedbutitshould
bedifficulttoimitate
Corecompetencies
are very rare
capabilitiesand
veryfewofthe
competitors
possessthis
Competitive
advantageresults
onlywhenfirms
developandexploit
valuable
capabilitiesthat
differfromthose
shared with
competitors.
Capabilitiesthatdo
nothavestrategic
equivalents are
called non-
substitutable
capabilities
Rare
CostlytoImitate NonSubstitutable
Valuablecapabilities
aretheonesthat
allowthefirmto
exploitopportunities
oravertthethreats
in itsexternal
environment
Human capitalis
importantincreating
valueforcustomers

24. Q.Majorcorecompetencyareidentifiedinthreeareas–
competitordifferentiation,customervalueandapplicationto
othermarkets.Discuss. RTPNOV19
Q.Capabilitiesarevaluable,rare,costlytoimitateandnon-
substitutable.Explain RTPMay20
Q.Corecompetenciesprovideedgetothebusinessoverits
competitors.Discuss.Alsobrieflystatethethreeareasin
whichmajorcorecompetencyareidentified. Jan21

31. •Itisausefulconceptforguidingstrategicchoice.
•PLCisanS-shapedcurvewhichexhibitstherelationshipofsales
withrespectoftimeforaproductthatpassesthroughthefour
successivestagesof
1.introduction(slowsalesgrowth),
2.growth(rapidmarketacceptance)
3.maturity(slowdowningrowthrate)and
4.decline(sharpdownwarddrift).
Product Life Cycle

32. Phases of PLC
ThefirststageofPLCistheintroductionstageinwhich
competitionisalmostnegligible,
pricesarerelativelyhigh,and
marketsarelimited.
Thegrowthinsalesisatalowerratebecauseoflackofknowledgeon
thepartofcustomers.

33. ThesecondphaseofPLCisgrowthstage.
Inthegrowthstage,
thedemandexpandsrapidly,
pricesfall,
competitionincreases,and
marketexpands.
Thecustomerhasknowledgeabouttheproductandshowsinterestin
purchasingit.
Phases of PLC

34. ThethirdphaseofPLCismaturitystage.
Inthisstage,
thecompetitiongetstoughand
marketgetsstablised.
Profitcomesdownbecauseofstiffcompetition.
Atthisstage,organisationshavetoworkformaintainingstability.
Phases of PLC

35. In the declining stageof PLC,
The sales and profits fall down sharplydue to some new product
replaces the existing product.
So, a combination of strategies can be implemented to stay in the
market either by diversification or retrenchment.
Phases of PLC

36. ABCLtd.manufacturesandsellsairpurifier‘FreshBreath’.The‘FreshBreath’
hasseensalesgrowthofaround1%forthelasttwoyears,afterstronggrowth
inthepreviousfiveyears.Thisisduetonewproductsenteringthemarketin
competitionwiththe‘FreshBreath’.ABCLtd.isthereforeconsideringcuttingits
pricestobeinlinewithitsmajorrivalswithahopetomaintainthemarketshare.
Marketresearchindicatesthatthiswillnowcauseasignificantincreaseinthe
levelofsales,eventhoughinpreviousyearspricecutshavehadlittleeffecton
demand.ABCltd.isalsoplanningtolaunchapromotionalcampaigntohighlight
thebenefitsofthe‘FreshBreath’againstitsrivalproducts.
Identifyandexplainthestageoftheproductlifecycleinwhich‘FreshBreath’
falls.
RTP May 21