Strategic Management, Vision Mission, Internal Analsysis
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May 02, 2024
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About This Presentation
Strategic Management
Slide Content
402: STRATEGIC
MANAGEMENT
Covers point 1, 2 of Syllabus
(Strictly for personal use and not for circulation)
MANAGEMENT
Covers point 1, 2 of Syllabus
(Strictly for personal use and not for circulation)
402: STRATEGIC MANAGEMENT -
Syllabus
➢1.Strategy and concepts: Strategy, strategic planning, evolution of strategy
➢2. Vision and strategist: vision \mission \strategic intent, goals and objectives
➢3. External environment analysis:SWOT, industry focus, strategic groups, competitors, profit pool
concept and tool
➢4. Internal analysis: Resources,capabilities\competence, knowledge base, use of values chain
and experience curve
➢5. Competitive strategies and competitive advantages: Competitive advantages and strategies in
different industrial settings, matured industries, blue ocean strategies values innovation,
competitive advantage in high tech/emerging industry
➢6. Corporate strategies and portfolio analysis; Strategy for international/global industries;
strategic alliances, M &A
➢7 .Disruption / Business Model Innovation; Design Thinking / Transient Advantage
➢8. Strategy implementation: Structure, systems, resources allocation, leadership style, balanced
scorecard; Evaluation and Control, Strategic Information Systems; Strategic Entrepreneurship
➢9. Strategic Change:Turnaroundand corporate regeneration, managing change
Syllabus
➢1.Strategy and concepts: Strategy, strategic planning, evolution of strategy
➢2. Vision and strategist: vision \mission \strategic intent, goals and objectives
➢3. External environment analysis:SWOT, industry focus, strategic groups, competitors, profit pool
concept and tool
➢4. Internal analysis: Resources,capabilities\competence, knowledge base, use of values chain
and experience curve
➢5. Competitive strategies and competitive advantages: Competitive advantages and strategies in
different industrial settings, matured industries, blue ocean strategies values innovation,
competitive advantage in high tech/emerging industry
➢6. Corporate strategies and portfolio analysis; Strategy for international/global industries;
strategic alliances, M &A
➢7 .Disruption / Business Model Innovation; Design Thinking / Transient Advantage
➢8. Strategy implementation: Structure, systems, resources allocation, leadership style, balanced
scorecard; Evaluation and Control, Strategic Information Systems; Strategic Entrepreneurship
➢9. Strategic Change:Turnaroundand corporate regeneration, managing change
Suggested Readings
⮚Books:
⮚StrategicManagementandBusinessPolicybyWheelen,ThomasL.andJ.DavidHunger
⮚StrategicManagementbyHitt,MichaelA.,R.DuaneIrelandandRobertE.Hokisson
⮚CraftingandExecutingStrategybyThompson,GambleandStrickland
⮚CasesandArticles:
⮚Willbesharedduringthecourse
3
⮚Books:
⮚StrategicManagementandBusinessPolicybyWheelen,ThomasL.andJ.DavidHunger
⮚StrategicManagementbyHitt,MichaelA.,R.DuaneIrelandandRobertE.Hokisson
⮚CraftingandExecutingStrategybyThompson,GambleandStrickland
⮚CasesandArticles:
⮚Willbesharedduringthecourse
3
Why do some companies succeed while
others fail?
•Why has W consistently outperformed than its rivals?
•American discount retail stores-Wal-martand K mart, both founded in
1962. Wall mart outperformed and K mart was taken over by Sears in
1990s
•Why is W so successful? What is it known for?
others fail?
•Why has W consistently outperformed than its rivals?
•American discount retail stores-Wal-martand K mart, both founded in
1962. Wall mart outperformed and K mart was taken over by Sears in
1990s
•Why is W so successful? What is it known for?
Walmart: Facts
•1962 –Sam Walton
•Discount retailer –mantra is Everyday low Prices
•Large and profitable
•2008 –sales of $410 billion, 7400 stores in 15 countries and 2 Million
employees
•14.5% -return on invested capital (ROIC)
•Better than its well managed rivals Costco (11.7%) and Target (9.5%)
•Consistently superior profitability ➔Competitive advantage (based on
strategies)
•1962 –Sam Walton
•Discount retailer –mantra is Everyday low Prices
•Large and profitable
•2008 –sales of $410 billion, 7400 stores in 15 countries and 2 Million
employees
•14.5% -return on invested capital (ROIC)
•Better than its well managed rivals Costco (11.7%) and Target (9.5%)
•Consistently superior profitability ➔Competitive advantage (based on
strategies)
Beginnings..
•1962 –
•First companies to apply self-service supermarket business model
(developed by grocery chains) TO general merchandise
•Rivals –Kmart, Target-focussed on urban and sub-urban locations
•Walmart –small southern towns which were ignored by rivals
•Walmart grew quickly by lowering prices; driving local business out
•Rivalsby this time could not make their mark; it was too late. Walmart had
already pre-empted them
•These small towns could support only one discount retailer –provided a
secure profit base for Walmart
Before their implementation of strategy a lot of Strategic planning
and strategy formulation was done!
•1962 –
•First companies to apply self-service supermarket business model
(developed by grocery chains) TO general merchandise
•Rivals –Kmart, Target-focussed on urban and sub-urban locations
•Walmart –small southern towns which were ignored by rivals
•Walmart grew quickly by lowering prices; driving local business out
•Rivalsby this time could not make their mark; it was too late. Walmart had
already pre-empted them
•These small towns could support only one discount retailer –provided a
secure profit base for Walmart
Before their implementation of strategy a lot of Strategic planning
and strategy formulation was done!
•Is it a price leader or cost leader?
•How was it able to reduce the prices?
•How was it able to reduce the prices?
•Innovator in Information systems, Logisticsand Human
Resource Practices
•led the way among American retailers in developing and
implementing sophisticated product tracking systems by using bar
code technology and checkout scanners
•Helped W to track what was selling and adjust its inventory
•W also linked this IS to nationwide network of distribution centres where
inventory was stored and shipped to stores within 250 –m radius on daily
basis
•=> Distribution centres + Info centres ➔inventory reduced in stores (space
saving + reducing tying of capital)
Resource Practices
•led the way among American retailers in developing and
implementing sophisticated product tracking systems by using bar
code technology and checkout scanners
•Helped W to track what was selling and adjust its inventory
•W also linked this IS to nationwide network of distribution centres where
inventory was stored and shipped to stores within 250 –m radius on daily
basis
•=> Distribution centres + Info centres ➔inventory reduced in stores (space
saving + reducing tying of capital)
•Human Resource Practices
•Sam Walton had set the tone
•He had strong BELIEF –employees should be respected and rewarded
•Employees referred as associates
•Profit sharing plan for all employees and after the company went public in 1970 –
ESOPs
•➔Walmart was rewarded for this approach by higher employee productivity, which
lowered operating costs and higher productivity
•As W grew larger, it could buy in bulk from supplier, and further prices
lowered = > market share increased, demand increased , and further
lowering in prices
•W also shared its sales information with suppliers on daily basis,
configuring the production schedules of supplier with sales at W, thereby
resulting in efficiencies.
•Sam Walton had set the tone
•He had strong BELIEF –employees should be respected and rewarded
•Employees referred as associates
•Profit sharing plan for all employees and after the company went public in 1970 –
ESOPs
•➔Walmart was rewarded for this approach by higher employee productivity, which
lowered operating costs and higher productivity
•As W grew larger, it could buy in bulk from supplier, and further prices
lowered = > market share increased, demand increased , and further
lowering in prices
•W also shared its sales information with suppliers on daily basis,
configuring the production schedules of supplier with sales at W, thereby
resulting in efficiencies.
•By 1990s….
•W was largest general seller of general merchandise in America
•For further growth—
•Diversified into grocery business , opening 200,000 sqfeet supercentre stores that sold
groceries and general merchandise under one roof
•W also diversified into Warehouse club business with the establishment of Sam’s Club.
•Began internationalising in 1991 with Mexico
•Has it always been a success story for W?
•US markets approaching saturation
•Forced to exit Germany and South Korea
•Competition is growing from Costco and target
•W was largest general seller of general merchandise in America
•For further growth—
•Diversified into grocery business , opening 200,000 sqfeet supercentre stores that sold
groceries and general merchandise under one roof
•W also diversified into Warehouse club business with the establishment of Sam’s Club.
•Began internationalising in 1991 with Mexico
•Has it always been a success story for W?
•US markets approaching saturation
•Forced to exit Germany and South Korea
•Competition is growing from Costco and target
Profitability of W and its Competitors
•So, Operational Effectiveness lead to its profitability and market
share?
share?
Really?
•Operational Effectiveness --→did it lead to Walmart’s profitability and
market share?
market share?
Strategies adopted by Wal-mart
15
Location
They opted for rural locations whereas K mart located
their stores in cities.
Positioning
Wal-mart build an organization on price leadership
whereas K mart trapped between Wal-mart (low
cost)and Target (mass with class)
Technology
Wal-mart made technology investment that facilitate
efficient supply chain management for good inventory
control whereas K mart failed to make such investment.
Culture
Unique culture adopted by Sam Walton which motivated
and inspired all its employees. "If we work together," he
said, "we'll lower the cost of living for everyone...we'll
give the world an opportunity to see what it's like to save
and have a better life."
15
Location
They opted for rural locations whereas K mart located
their stores in cities.
Positioning
Wal-mart build an organization on price leadership
whereas K mart trapped between Wal-mart (low
cost)and Target (mass with class)
Technology
Wal-mart made technology investment that facilitate
efficient supply chain management for good inventory
control whereas K mart failed to make such investment.
Culture
Unique culture adopted by Sam Walton which motivated
and inspired all its employees. "If we work together," he
said, "we'll lower the cost of living for everyone...we'll
give the world an opportunity to see what it's like to save
and have a better life."
Course Objectives
•To understand what strategy is
•What strategies to pursue
•Analytical techniques and skills to identify what strategy to choose
and how to implement them
•Strategy:
•Strategy Formulation:
•Strategy Implementation
•First we need to understand what do we mean by Superior
performance and Competitive advantage
•To understand what strategy is
•What strategies to pursue
•Analytical techniques and skills to identify what strategy to choose
and how to implement them
•Strategy:
•Strategy Formulation:
•Strategy Implementation
•First we need to understand what do we mean by Superior
performance and Competitive advantage
•The company aims at
•Superior Performance
•Which can be achieved through:
•Competitive advantage
•Using various strategies (Strategic Choice)
•Right process of strategy making
•Superior Performance
•Which can be achieved through:
•Competitive advantage
•Using various strategies (Strategic Choice)
•Right process of strategy making
•Strategic leadership is concerned with managing the strategy-making
process to increase the performance of a company, thereby
increasing the value of the enterprise to its owners and shareholders
(stakeholders)
•People who are affected by a firm’s performance and who have claims on its
performance -stakeholders
•And, to
•increase shareholder value, managers must pursue strategies that
increase the profitabilityof the company and growth in profits, both
•And, to do this…
•a company must be able to outperform its rivals; it must have a
competitive advantage
process to increase the performance of a company, thereby
increasing the value of the enterprise to its owners and shareholders
(stakeholders)
•People who are affected by a firm’s performance and who have claims on its
performance -stakeholders
•And, to
•increase shareholder value, managers must pursue strategies that
increase the profitabilityof the company and growth in profits, both
•And, to do this…
•a company must be able to outperform its rivals; it must have a
competitive advantage
Determinants of shareholder value
•Who are shareholders?
•Maximizing shareholder value is the ultimate goal of profit-making
companies for two reasons:
•Risk capital
•legal owners
•What do we mean by shareholder value?
•Maximizing shareholder value is the ultimate goal of profit-making
companies for two reasons:
•Risk capital
•legal owners
•What do we mean by shareholder value?
•Walmart’s share price:
•January 2, 2008 -$46.90 per share
•December 31, 2008: $56.06 per share
•Capital appreciation: $9.16
•Walmart paid out a dividend of $0.95 per share during 2008
•Return= an impressive 21.6% return on investment in a year when the stock market as a
whole was down 35%! ----→shareholder’s value
•EPS (earnings per share) increased from $0.59 to $3.50, making each share more
valuable, and leading, in turn, to appreciation in the value of Walmart’s shares
•➔Together, profitability and profit growth are the principal drivers of shareholder value
==➔Profitable Growth is required
•➔For achieving this, managers must formulate and implement strategies that give their
companies a competitive advantage over their rivals
•Achieving Profitable Growth is not easy (both at the same), but success stories of
Microsoft, Google, Intel, and Walmart is because of it!
•January 2, 2008 -$46.90 per share
•December 31, 2008: $56.06 per share
•Capital appreciation: $9.16
•Walmart paid out a dividend of $0.95 per share during 2008
•Return= an impressive 21.6% return on investment in a year when the stock market as a
whole was down 35%! ----→shareholder’s value
•EPS (earnings per share) increased from $0.59 to $3.50, making each share more
valuable, and leading, in turn, to appreciation in the value of Walmart’s shares
•➔Together, profitability and profit growth are the principal drivers of shareholder value
==➔Profitable Growth is required
•➔For achieving this, managers must formulate and implement strategies that give their
companies a competitive advantage over their rivals
•Achieving Profitable Growth is not easy (both at the same), but success stories of
Microsoft, Google, Intel, and Walmart is because of it!
•Strategies that the company’s managers pursue have a major impact
on its profit and profitability
•How can a company grow its profits?
•How was W able to have growth in profits?
on its profit and profitability
•How can a company grow its profits?
•How was W able to have growth in profits?
•One way of measuring the profitability -return on invested capital (ROIC)
•company earns is defined as its net profit over the capital invested in the firm (profit/capital
invested)
•profitability is the result of how efficiently and effectively managers use the capital at their
disposal to produce goods and services that satisfy customer needs.
•Profit growth of a company can be measured by the increase in net profit over
time.
•How can a company grow its profits?
•How was W able to have growth in profits?
•Grabbed market share
•Established new stores
•Entered grocery business
•new international markets
•So, in general, How can a company grow its profits?
•If it increases the amount it sells to existing customers
•gains market share from rivals
•sells products in markets that are growing rapidly
•expands overseas, or diversifies profitably into new lines of business
•company earns is defined as its net profit over the capital invested in the firm (profit/capital
invested)
•profitability is the result of how efficiently and effectively managers use the capital at their
disposal to produce goods and services that satisfy customer needs.
•Profit growth of a company can be measured by the increase in net profit over
time.
•How can a company grow its profits?
•How was W able to have growth in profits?
•Grabbed market share
•Established new stores
•Entered grocery business
•new international markets
•So, in general, How can a company grow its profits?
•If it increases the amount it sells to existing customers
•gains market share from rivals
•sells products in markets that are growing rapidly
•expands overseas, or diversifies profitably into new lines of business
•The role of the strategist is to engineer superior performance within a given
industry. How can a strategist increase profitability?
•The answer lies in having a competitive advantage
•Occurs when a company’s profitability is greater than the average profitability
of firms in its industry
industry. How can a strategist increase profitability?
•The answer lies in having a competitive advantage
•Occurs when a company’s profitability is greater than the average profitability
of firms in its industry
•Walmart had a significant and sustained competitive advantage
over rivals such as Target, Costco, and Kmart between 1994 and
2008
•C.A. -Occurs when a company’s profitability is greater than the average
profitability of firms in its industry
•Sustained C.A. -A company’s strategies enable it to maintain above-average
profitability for a number of years
•Competitive advantage is always relative, not absolute; benchmarking
•A sustained competitive advantage, →gain market share from its
rivals →grow its profits more rapidly than those of rivals
•For achieving CA -company needs to have strategies that fit together
to make a company unique or different from its rivals and able to
consistently outperform them
over rivals such as Target, Costco, and Kmart between 1994 and
2008
•C.A. -Occurs when a company’s profitability is greater than the average
profitability of firms in its industry
•Sustained C.A. -A company’s strategies enable it to maintain above-average
profitability for a number of years
•Competitive advantage is always relative, not absolute; benchmarking
•A sustained competitive advantage, →gain market share from its
rivals →grow its profits more rapidly than those of rivals
•For achieving CA -company needs to have strategies that fit together
to make a company unique or different from its rivals and able to
consistently outperform them
•Is profitability and growth in profits sustainable?
•W –achieved Operational effectiveness, but is it enough?
•Operational effectiveness is necessary but not sufficient.
•Right Strategies must be pursued
•What is Strategy?
•W –achieved Operational effectiveness, but is it enough?
•Operational effectiveness is necessary but not sufficient.
•Right Strategies must be pursued
•What is Strategy?
STRATEGY
•Porter (1996)
•Mintzberg’s 5 Ps of Strategy:
•https://opentextbc.ca/strategicmanagement/chapter/defining-strategic-
management-and-strategy/
•Porter (1996)
•Mintzberg’s 5 Ps of Strategy:
•https://opentextbc.ca/strategicmanagement/chapter/defining-strategic-
management-and-strategy/
Strategy
•Set of related actions that managers take to increase their company’s
performance
•Strategy formulation: Selecting strategies based on analysis of an
organization’s external and internal environment
•Strategy implementation: Putting strategies into action
•Strategic leadership: Creating competitive advantage through
effective management of the strategy-making process
28
•Set of related actions that managers take to increase their company’s
performance
•Strategy formulation: Selecting strategies based on analysis of an
organization’s external and internal environment
•Strategy implementation: Putting strategies into action
•Strategic leadership: Creating competitive advantage through
effective management of the strategy-making process
28
Strategy-Definitions
⚫Chandlar(1962):ThedeterminationofthebasicLTgoalsandobjectivesofan
enterpriseandadoptionofcoursesofactionandtheallocationofresourcesnecessary
forcarryingoutthesegoals.
⚫Glueck(1980):Aunified,comprehensive&integratedplanthatrelatesthestrategic
advantagesofthefirmtothechallengesoftheenvironment.Itisdesignedtoensure
thatthebasicobjectivesofanenterpriseareachievedthroughproperexecutionbyan
organization.
⚫HenryMintzberg(1985):Strategyisapatterninastreamofactionsordecisionsto
achievetheorganizationalgoals.
29
⚫Chandlar(1962):ThedeterminationofthebasicLTgoalsandobjectivesofan
enterpriseandadoptionofcoursesofactionandtheallocationofresourcesnecessary
forcarryingoutthesegoals.
⚫Glueck(1980):Aunified,comprehensive&integratedplanthatrelatesthestrategic
advantagesofthefirmtothechallengesoftheenvironment.Itisdesignedtoensure
thatthebasicobjectivesofanenterpriseareachievedthroughproperexecutionbyan
organization.
⚫HenryMintzberg(1985):Strategyisapatterninastreamofactionsordecisionsto
achievetheorganizationalgoals.
29
MichaelPorter:developingandcommunicatingthecompany’sunique
andvaluedposition,makingtrade-offs,and,forgingfitamong
activities.
◦OperationaleffectivenessisNOTstrategy
◦StrategyrestsonUNIQUEactivities
●Example-SouthwestAirlines(lowcostpointtopointservicebetweenmidsizecitiesand
secondaryairportsinlargecities)
●IKEA(targetsyoungfurniturebuyerswhowantstyleatlowcost)
◦AsustainablestrategicpositionrequiresTRADE-OFFS
◦FITdrivesSustainableCompetitiveAdvantage
30
Source: ‘What is Strategy’ by Michael Porter (1996)
andvaluedposition,makingtrade-offs,and,forgingfitamong
activities.
◦OperationaleffectivenessisNOTstrategy
◦StrategyrestsonUNIQUEactivities
●Example-SouthwestAirlines(lowcostpointtopointservicebetweenmidsizecitiesand
secondaryairportsinlargecities)
●IKEA(targetsyoungfurniturebuyerswhowantstyleatlowcost)
◦AsustainablestrategicpositionrequiresTRADE-OFFS
◦FITdrivesSustainableCompetitiveAdvantage
30
Source: ‘What is Strategy’ by Michael Porter (1996)
•Operational Effectiveness is performing similar activities better than
rivals
•Strategy is performing different activities differently or similar activities
differently than rivals
•O.E and strategy both are necessary for SUPERIOR
PERFORMANCE
•O.E is necessary but not sufficient condition for SUPERIOR PERFORMANCE
rivals
•Strategy is performing different activities differently or similar activities
differently than rivals
•O.E and strategy both are necessary for SUPERIOR
PERFORMANCE
•O.E is necessary but not sufficient condition for SUPERIOR PERFORMANCE
•The issue is that the managers are preoccupied with increasing
profitability through increasing Operational effectiveness
•They try to increase differentiation and reduce cost at the same time,
but don’t realise it is not worth!
•Productivity Frontier
profitability through increasing Operational effectiveness
•They try to increase differentiation and reduce cost at the same time,
but don’t realise it is not worth!
•Productivity Frontier
•So, O.E is not the answer!
•Focus should be on Making the activities UNIQUE –different from
rivals
•Southwest Airlines
•Ikea
•Both are cost leaders but positioning is different
•Ikea-customer based S.P.
•Southwest –variety based S.P.
•And hence their “generic strategies” are different
•(Porter’s “generic strategies” -cost leadership, Differentiation, Focus)
•Focus should be on Making the activities UNIQUE –different from
rivals
•Southwest Airlines
•Ikea
•Both are cost leaders but positioning is different
•Ikea-customer based S.P.
•Southwest –variety based S.P.
•And hence their “generic strategies” are different
•(Porter’s “generic strategies” -cost leadership, Differentiation, Focus)
•It is from this Uniqueness, that Strategic Position emerges
•What is Strategic Positioning?
•➔Strategy is the creation of unique and valuable position involving different set of activities!
•If there is no unique position, and just an ideal position, there is no need for strategy
•Walmart’s S.P is ----?
•Issue is -Firms tend to practise Straddling
•So, S.P. should be sustainable
•How?
•Tradeoffs!
•What is Strategic Positioning?
•➔Strategy is the creation of unique and valuable position involving different set of activities!
•If there is no unique position, and just an ideal position, there is no need for strategy
•Walmart’s S.P is ----?
•Issue is -Firms tend to practise Straddling
•So, S.P. should be sustainable
•How?
•Tradeoffs!
•Trade-offs are essential to Strategy
•Because it leads to STRATEGIC CHOICE
•Trade-offs limits what a company offers and what it does not offer!
•Neutrogena –what tradeoffsit did?
•T/O arise for three things----
•Because it leads to STRATEGIC CHOICE
•Trade-offs limits what a company offers and what it does not offer!
•Neutrogena –what tradeoffsit did?
•T/O arise for three things----
•Positioning choices determine not only which activities, how, but also
how they relate to each other --→Strategic Fit
•Fit locks out imitators by creating a chain that is not easy to decode!
•This Fit ---gives rise to Competitive advantage!
how they relate to each other --→Strategic Fit
•Fit locks out imitators by creating a chain that is not easy to decode!
•This Fit ---gives rise to Competitive advantage!
•Activity System –
•Southwest Airlines
•Ikea
•Any relation that they have with business model?
•Southwest Airlines
•Ikea
•Any relation that they have with business model?
Assignment
•Walmart Activity System
•Walmart Activity System
Competitive Advantage and business
model
•Occurs when a company’s profitability is greater than the
average profitability of firms in its industry
Competitive advantage
•A company’s strategies enable it to maintain above-
average profitability for a number of years
•W-?
Sustained competitive advantage
•Conception of how strategies should work together as a
whole to enable the company to achieve competitive
advantage
Business model
40
model
•Occurs when a company’s profitability is greater than the
average profitability of firms in its industry
Competitive advantage
•A company’s strategies enable it to maintain above-
average profitability for a number of years
•W-?
Sustained competitive advantage
•Conception of how strategies should work together as a
whole to enable the company to achieve competitive
advantage
Business model
40
•Competitive Advantage –does better or differently as compared to its
competitors
•CA = comes from resources and capabilities that lie within the firm
•Capability = It is the ability of the firm to use resources efficiently,
effectively to meet overall goals of the firm
•Leverage = L. is when a firm uses its lesser resources, but with high
capability, to outperform another firm (having greater resources but
less well-developed capabilities)
•“Space Pen”
competitors
•CA = comes from resources and capabilities that lie within the firm
•Capability = It is the ability of the firm to use resources efficiently,
effectively to meet overall goals of the firm
•Leverage = L. is when a firm uses its lesser resources, but with high
capability, to outperform another firm (having greater resources but
less well-developed capabilities)
•“Space Pen”
What unique activities adopted by Walmart is the foundation of its
competitive advantage?
competitive advantage?
•Refer to the case,
•What unique activities adopted by Walmart is the foundation of its
competitive advantage?
•one of the first retailers to make strategic investments in distribution centers
and information systems, which lowered the costs of managing inventory
•This gave Walmart a competitive advantage over rivals such as Kmart,
which suffered from poor inventory controls and thus higher costs.
•So although Walmart and Kmart pursued similar business models, they were not
identical. Key differences in the choice of strategies and the effectiveness of
implementation created two unique organizations: one that attained a competitive
advantage, and one that ended up with a competitive disadvantage
•What unique activities adopted by Walmart is the foundation of its
competitive advantage?
•one of the first retailers to make strategic investments in distribution centers
and information systems, which lowered the costs of managing inventory
•This gave Walmart a competitive advantage over rivals such as Kmart,
which suffered from poor inventory controls and thus higher costs.
•So although Walmart and Kmart pursued similar business models, they were not
identical. Key differences in the choice of strategies and the effectiveness of
implementation created two unique organizations: one that attained a competitive
advantage, and one that ended up with a competitive disadvantage
NEXT…
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•motor and transportation equipment
•turbine generators
•construction and engineering services
•industrial electronics
•medical systems
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•financial services
•What would the role of CEO, H. Lawrence (Larry) Culp?
wide range of businesses, like
•lighting equipment
•major appliances
•motor and transportation equipment
•turbine generators
•construction and engineering services
•industrial electronics
•medical systems
•aerospace, aircraft engines, and
•financial services
•What would the role of CEO, H. Lawrence (Larry) Culp?
•Does H. Lawrence (Larry) Culp has specific responsibility to develop
strategies for competing in the individual business areas, such as
financial services?
•No
•It is responsibility of business-level managers
•His responsibility is
•to probe the strategic thinking of business-level managers to make sure that they are
pursuing robust business models and strategies that will contribute toward the
maximization of GE’s long-run profitability
•to coach and motivate those managers
•to rewardthem for attaining or exceeding goals, and
•to hold them accountablefor poor performance
strategies for competing in the individual business areas, such as
financial services?
•No
•It is responsibility of business-level managers
•His responsibility is
•to probe the strategic thinking of business-level managers to make sure that they are
pursuing robust business models and strategies that will contribute toward the
maximization of GE’s long-run profitability
•to coach and motivate those managers
•to rewardthem for attaining or exceeding goals, and
•to hold them accountablefor poor performance
•Corporate-level managers -linkbetween the people who oversee
the strategic development of a firm and those who own it (the
shareholders)
•agents of shareholders
•ensure that the corporate and business strategies that the company
pursues are consistent with maximizing profitability and profit
growth
•Accountable to the shareholders
the strategic development of a firm and those who own it (the
shareholders)
•agents of shareholders
•ensure that the corporate and business strategies that the company
pursues are consistent with maximizing profitability and profit
growth
•Accountable to the shareholders
Business-Level Managers
•A business unit is a self-contained division (with its own functions, for
example, finance, purchasing, production, and marketing departments) that
provides a product or service for a particular market
•business-level manager is the head of the division
•translate the general statements of direction and intent that come from
the corporate level into concrete strategies for individual businesses
•corporate-level general managers are concerned with strategies that span
individual businesses, business-level managers are concerned with
strategies that are specific to a particular business
•At GE, a major corporate goal is to be first or second in every business in which the
corporation competes.
•General managers in each division work out for their business the details of a
business model that is consistent with this objective
•A business unit is a self-contained division (with its own functions, for
example, finance, purchasing, production, and marketing departments) that
provides a product or service for a particular market
•business-level manager is the head of the division
•translate the general statements of direction and intent that come from
the corporate level into concrete strategies for individual businesses
•corporate-level general managers are concerned with strategies that span
individual businesses, business-level managers are concerned with
strategies that are specific to a particular business
•At GE, a major corporate goal is to be first or second in every business in which the
corporation competes.
•General managers in each division work out for their business the details of a
business model that is consistent with this objective
Functional-Level Managers
•1. responsible for the specific business functions or operations(human
resources, purchasing, product development, customer service, and so on)
that constitute the division/unit in a company
•2. to develop functional strategies in their area that help fulfill the strategic
objectives set by business-and corporate-level managers
•E.g. In GE’s aerospace business, manufacturing managers are responsible for
developing manufacturing strategies consistent with corporate objectives
•3. They provide most of the information that makes it possible for business-
and corporate-level managers to formulate realistic and attainable
strategies. ---because they are closer to the customer, may generate
important ideas that subsequently become major strategies for the
company
•4. managers at the operational level -strategy implementation: the
execution of corporate-and business-level plans
•1. responsible for the specific business functions or operations(human
resources, purchasing, product development, customer service, and so on)
that constitute the division/unit in a company
•2. to develop functional strategies in their area that help fulfill the strategic
objectives set by business-and corporate-level managers
•E.g. In GE’s aerospace business, manufacturing managers are responsible for
developing manufacturing strategies consistent with corporate objectives
•3. They provide most of the information that makes it possible for business-
and corporate-level managers to formulate realistic and attainable
strategies. ---because they are closer to the customer, may generate
important ideas that subsequently become major strategies for the
company
•4. managers at the operational level -strategy implementation: the
execution of corporate-and business-level plans
STRATEGIC MANAGERS/ LEVELS OF
STRATEGY
•The strategies that made Walmart so successful were not chosen by
some abstract entity known as “the company”; they were chosen by
the company’s founder, Sam Walton, and the managers he hired
•Managers are the linchpins in the strategy-making process
•Individual managers must take responsibility for formulating strategies
to attain a competitive advantage and for putting those strategies into
effect
•Let us see the strategic roles of the company’s manager
STRATEGY
•The strategies that made Walmart so successful were not chosen by
some abstract entity known as “the company”; they were chosen by
the company’s founder, Sam Walton, and the managers he hired
•Managers are the linchpins in the strategy-making process
•Individual managers must take responsibility for formulating strategies
to attain a competitive advantage and for putting those strategies into
effect
•Let us see the strategic roles of the company’s manager
Hierarchy of Strategy
•Corporate strategy describes a company’s overall direction in terms of its general attitude towards growth and
management of various businesses and product lines
•3 main categories: Stability ; Growth; Retrenchment
•Business Strategy occurs at the business unit or product level, and it emphasises improvement of the
competitive position of a corporation’s products or services in the specific industry or market segment served
by that business unit
•translate the general statements of direction and intent that come from the corporate level into concrete
strategies for individual businesses
•2 categories: Competitive strategies (differentiation or low cost) ; Cooperative strategies (e.g. alliances)
•Functional Strategy aims at achieving corporate and business unit strategies by maximising resource
productivity
•Concerned with developing and nurturing distinctive competence to provide company or business unit
competitive advantage
•R&D functional strategy –technological followership (imitate competitors); technological leadership
(pioneer in innovation)
•Marketing strategy –P&G is master of “pull” –through advertising-this is in consonance with its
differentiation strategy
➔Nesting of one strategy with another so that they complement and support one another
•Corporate strategy describes a company’s overall direction in terms of its general attitude towards growth and
management of various businesses and product lines
•3 main categories: Stability ; Growth; Retrenchment
•Business Strategy occurs at the business unit or product level, and it emphasises improvement of the
competitive position of a corporation’s products or services in the specific industry or market segment served
by that business unit
•translate the general statements of direction and intent that come from the corporate level into concrete
strategies for individual businesses
•2 categories: Competitive strategies (differentiation or low cost) ; Cooperative strategies (e.g. alliances)
•Functional Strategy aims at achieving corporate and business unit strategies by maximising resource
productivity
•Concerned with developing and nurturing distinctive competence to provide company or business unit
competitive advantage
•R&D functional strategy –technological followership (imitate competitors); technological leadership
(pioneer in innovation)
•Marketing strategy –P&G is master of “pull” –through advertising-this is in consonance with its
differentiation strategy
➔Nesting of one strategy with another so that they complement and support one another
Hierarchy of Strategy
CORPORATE BUSINESS LEVEL STRATEGY
BUSINESS LEVEL STRATEGY
FUNCTIONAL
LEVEL
STRATEGY
CORPORATE BUSINESS LEVEL STRATEGY
BUSINESS LEVEL STRATEGY
FUNCTIONAL
LEVEL
STRATEGY
Levels of Management
•Levels of Management
Top Level Mgt
Middle
Lower
Top Level
Highest level in the Organizational hierarchy
Number--
Responsibility –Long Term , Corporate Level strategies
Scanenvironment-→Opportunities, Threats (External
Environment)
-> Identify Strengths , Weaknesses (Internal
environment)
SWOT analysis
WHAT
Accountableto-------→
Types of Planning -→Strategic Planning
Vision and mission of the company
h.w→websites—org hierarchy, vision, mission
•Levels of Management
Top Level Mgt
Middle
Lower
Top Level
Highest level in the Organizational hierarchy
Number--
Responsibility –Long Term , Corporate Level strategies
Scanenvironment-→Opportunities, Threats (External
Environment)
-> Identify Strengths , Weaknesses (Internal
environment)
SWOT analysis
WHAT
Accountableto-------→
Types of Planning -→Strategic Planning
Vision and mission of the company
h.w→websites—org hierarchy, vision, mission
•Middle Level-
•Departmental heads
•Links
•HOWto implement plans according to directions of top mgt
•Instructions/Directions to LL, Train, Motivate
•Supervision, direct, control --→Functions of Mgt
•Accountable -→to Top level mgt
•Types of Planning -→Tactical Planning/Middle Level Planning
•Departmental heads
•Links
•HOWto implement plans according to directions of top mgt
•Instructions/Directions to LL, Train, Motivate
•Supervision, direct, control --→Functions of Mgt
•Accountable -→to Top level mgt
•Types of Planning -→Tactical Planning/Middle Level Planning
•E.g. -Launch a product
•Lower Level
•Execute /Implement ---Day to day
•Record for sales of this product
•Work out what should be the price
•Ensure safety of tools, machinery, equipment
•Type of Planning →Operational Planning
•Lower Level
•Execute /Implement ---Day to day
•Record for sales of this product
•Work out what should be the price
•Ensure safety of tools, machinery, equipment
•Type of Planning →Operational Planning
Corporate-Level Managers
•The corporate level of management consists of the chief executive
officer (CEO), other senior executives, and corporate staff. These
individuals occupy the apex of decision making
•oversee the development of strategies for the whole organization
•defining the goals of the organization
•determining what businesses it should be in
•allocating resources among the different businesses
•formulating and implementing strategies that span individual
businesses, and
•providing leadership for the entire organization
•The corporate level of management consists of the chief executive
officer (CEO), other senior executives, and corporate staff. These
individuals occupy the apex of decision making
•oversee the development of strategies for the whole organization
•defining the goals of the organization
•determining what businesses it should be in
•allocating resources among the different businesses
•formulating and implementing strategies that span individual
businesses, and
•providing leadership for the entire organization
Strategy Making process
Basic Model of SM
59
59
Strategy Making Process
•It is the process by which managers formulate and implement
strategies.
•Many writers have emphasized that strategy is the outcome of a
formal planning processand that top management plays the most
important role in this process
•Is it true? Not always so…….
•Many a times Plans do not work
•rational planning is a useful starting point for our journey into the world of
strategy …..But……
•valuable strategies often emerge from deep within the organization without
prior planning
•---→We will talk about it later -> intended strategy, emergent strategy
•It is the process by which managers formulate and implement
strategies.
•Many writers have emphasized that strategy is the outcome of a
formal planning processand that top management plays the most
important role in this process
•Is it true? Not always so…….
•Many a times Plans do not work
•rational planning is a useful starting point for our journey into the world of
strategy …..But……
•valuable strategies often emerge from deep within the organization without
prior planning
•---→We will talk about it later -> intended strategy, emergent strategy
Model of the Strategic Planning Process
•The formal strategic planning process has five main steps:
•1. Select the corporate missionand major corporate goals.
•2. Analyze the organization’s externalcompetitive environment to identify
opportunities and threats.
•3. Analyze the organization’s internaloperating environment to identify the
organization’s strengths and weaknesses.
•4. Select strategies that build on the organization’s strengthsand correct its
weaknessesin order to take advantage of external opportunities and
counter external threats.
•These strategies should be consistent with the mission and major goals of
the organization; should be congruent and constitute a viable business
model.
•5. Implementthe strategies.
•2,3,4 ➔Strategy Formulation
•The formal strategic planning process has five main steps:
•1. Select the corporate missionand major corporate goals.
•2. Analyze the organization’s externalcompetitive environment to identify
opportunities and threats.
•3. Analyze the organization’s internaloperating environment to identify the
organization’s strengths and weaknesses.
•4. Select strategies that build on the organization’s strengthsand correct its
weaknessesin order to take advantage of external opportunities and
counter external threats.
•These strategies should be consistent with the mission and major goals of
the organization; should be congruent and constitute a viable business
model.
•5. Implementthe strategies.
•2,3,4 ➔Strategy Formulation
Components
of the
Strategic
Planning
Process
of the
Strategic
Planning
Process
•A sequential step in the strategic planning process
•The strategic plan -look at a period of one to five years
•The SM process may be done every year –to choose a new strategy,
to modify or reaffirm a strategy
•Outcomeof strategic planning process –not just strategy making, but
as input into the budgetary process -to shape resource allocation
•The strategic plan -look at a period of one to five years
•The SM process may be done every year –to choose a new strategy,
to modify or reaffirm a strategy
•Outcomeof strategic planning process –not just strategy making, but
as input into the budgetary process -to shape resource allocation
Crafting the Organization’s Mission
Statement
Provides a framework or context within
which strategies are formulated, including:
❖Mission –
The reason for existence – what an organization does
❖Vision –
A statement of some desired future state
❖Values –
A statement of key values that an organization is
committed to
❖Major Goals –
The measurable desired future state that an
organization attempts to realize
Statement
Provides a framework or context within
which strategies are formulated, including:
❖Mission –
The reason for existence – what an organization does
❖Vision –
A statement of some desired future state
❖Values –
A statement of key values that an organization is
committed to
❖Major Goals –
The measurable desired future state that an
organization attempts to realize
Vision and Mission
•A vision defines what an organization wants to accomplish ultimately,
and thus the goal can be described by the infinitive form of the verb
starting with to.
•A mission describes what an organization does; it defines howthe
vision is accomplished and is often introduced with the preposition by.
•Description of what an organization actually does—
•the products and services it plans to provide, and
•the markets in which it will compete
•A vision defines what an organization wants to accomplish ultimately,
and thus the goal can be described by the infinitive form of the verb
starting with to.
•A mission describes what an organization does; it defines howthe
vision is accomplished and is often introduced with the preposition by.
•Description of what an organization actually does—
•the products and services it plans to provide, and
•the markets in which it will compete
Vision
•Astatementofsomedesiredfuturestate
•Roadmapofthecompany’sfuture
•Company’sLTdirection–whereisthecompanyheading
•“Thebestvisioniswithinsight,butjustoutofreach”
•Astatementofsomedesiredfuturestate
•Roadmapofthecompany’sfuture
•Company’sLTdirection–whereisthecompanyheading
•“Thebestvisioniswithinsight,butjustoutofreach”
The Mission
•What is it that the company does?
•What is the companies business?
•Whois being satisfied
(what customer groups)?
•Whatis being satisfied
(what customer needs)?
•Howcustomer needs are being satisfied
(by what skills, knowledge, or distinctive competencies)?
The mission is a statement of a company’s raison d’etre, its
reason for existence today.
A company’s mission is best approached from
a customer-oriented business definition
•What is it that the company does?
•What is the companies business?
•Whois being satisfied
(what customer groups)?
•Whatis being satisfied
(what customer needs)?
•Howcustomer needs are being satisfied
(by what skills, knowledge, or distinctive competencies)?
The mission is a statement of a company’s raison d’etre, its
reason for existence today.
A company’s mission is best approached from
a customer-oriented business definition
Derek Abell’s Framework for Defining the
Business
Source: D. F. Abell, Defining the Business: The Starting Point of
Strategic Planning (Englewood Cliffs, Prentice Hall, 1980), p. 7.
Business
Source: D. F. Abell, Defining the Business: The Starting Point of
Strategic Planning (Englewood Cliffs, Prentice Hall, 1980), p. 7.
Mission
⚫Purpose&reasonfororganization’sexistence.
⚫Thompson–“essentialpurposeoftheorganizationconcerning
particularly,whyitisinexistence,thenatureofthebusinessitisin,&
customersitseekstoserve&satisfy”
⚫Example
The mission of Kodak is to provide “customers with the
solutions they need to capture, store, process, output, and
communicate images – anywhere, anytime.”
The mission of NIRMA- “A customer focused company
committed to consistently offer better quality products and
services that maximize value to the customers”
⚫Purpose&reasonfororganization’sexistence.
⚫Thompson–“essentialpurposeoftheorganizationconcerning
particularly,whyitisinexistence,thenatureofthebusinessitisin,&
customersitseekstoserve&satisfy”
⚫Example
The mission of Kodak is to provide “customers with the
solutions they need to capture, store, process, output, and
communicate images – anywhere, anytime.”
The mission of NIRMA- “A customer focused company
committed to consistently offer better quality products and
services that maximize value to the customers”
Characteristic of Mission
⚫Realistic & Achievable
⚫Neither be too broad or narrow
⚫Not be ambiguous
⚫Be distinct
⚫Societal linkage
⚫Dynamic & not static
⚫Motivating the employees
71
⚫Realistic & Achievable
⚫Neither be too broad or narrow
⚫Not be ambiguous
⚫Be distinct
⚫Societal linkage
⚫Dynamic & not static
⚫Motivating the employees
71
•Do vision statements help firms gain and sustain competitive
advantage?
•It depends. The effectiveness of vision statements differs by type.
•Customer-oriented vision statement
•Product-oriented vision statement
advantage?
•It depends. The effectiveness of vision statements differs by type.
•Customer-oriented vision statement
•Product-oriented vision statement
•A customer-oriented vision defines a business in terms of providing
solutions to customer needs.
•Customer-oriented vision statements allow companies to adapt to changing
environments.
•For example, “We provide solutions to professional communication needs.”
•A product-oriented vision defines a business in terms of a good or
serviceprovided. Product-oriented visions tend to force managers to take a
more myopic view of the competitive landscape
•Product-oriented vision statements often constrain this ability. This is
because customer-oriented vision statements focus employees to think
about how best to solve a problem for a consumer.
solutions to customer needs.
•Customer-oriented vision statements allow companies to adapt to changing
environments.
•For example, “We provide solutions to professional communication needs.”
•A product-oriented vision defines a business in terms of a good or
serviceprovided. Product-oriented visions tend to force managers to take a
more myopic view of the competitive landscape
•Product-oriented vision statements often constrain this ability. This is
because customer-oriented vision statements focus employees to think
about how best to solve a problem for a consumer.
•e.g. Smith Corona and Underwood (office equipment companies) -
•considered the first widely successful, modern typewriter in US
•its sales “were equal in quantity to all of the other firms in the typewriter
industry combined in US”
•“We are in the typewriter business” -failed
•(they were satisfying customers’ information-processing needs)
•IBM-defined its business as providing a means for info processing
and storage –successful
•considered the first widely successful, modern typewriter in US
•its sales “were equal in quantity to all of the other firms in the typewriter
industry combined in US”
•“We are in the typewriter business” -failed
•(they were satisfying customers’ information-processing needs)
•IBM-defined its business as providing a means for info processing
and storage –successful
Kodak-mission
•Mission of Kodak is to provide “customers with the solutions they need to
capture, store, process, output, and communicate images—anywhere,
anytime.”
•Mission describes what the company does.
•What kind of mission statement is this –customer or product oriented?
•Kodak exists to provide imaging solutions to consumers.
•This mission focuses on the customer needs that the company is trying to satisfy
rather than on particular products.
•This is a customer-oriented rather than a product-oriented mission
Need may be served in many different ways; safeguards companies from being caught
unaware by major shifts in demand; assist companies in capitalizing on changes in
their environments
•Mission of Kodak is to provide “customers with the solutions they need to
capture, store, process, output, and communicate images—anywhere,
anytime.”
•Mission describes what the company does.
•What kind of mission statement is this –customer or product oriented?
•Kodak exists to provide imaging solutions to consumers.
•This mission focuses on the customer needs that the company is trying to satisfy
rather than on particular products.
•This is a customer-oriented rather than a product-oriented mission
Need may be served in many different ways; safeguards companies from being caught
unaware by major shifts in demand; assist companies in capitalizing on changes in
their environments
•Vision and Mission
•DU
•DTU
•DU
•DTU
Ford –Vision and Mission
•Ford’s vision statement is “to become the world’s most trusted
company, designing smart vehicles for a smart world.”
•Ford’s mission statement is “to make people’s lives better by
making mobility accessible and affordable.”
What is your observation?
•Ford’s vision statement is “to become the world’s most trusted
company, designing smart vehicles for a smart world.”
•Ford’s mission statement is “to make people’s lives better by
making mobility accessible and affordable.”
What is your observation?
Values
•Core Values of Ford
•Unwavering commitment to following ethical business practices
•Diverse inclusive workplace
•Safety and well being of its customers and employees
•Transparency
•Trust
•Innovation
While ensuring environmental and social sustainability
•Values:
•core values statement: Statement of principles to guide an organization as it works to
achieve its vision and fulfill its mission, for both internal conduct and external
interactions; it often includes explicit ethical considerations.
•Organizational core values: standards and norms that govern the behavior of
individuals within a firm or organization.
•Core Values of Ford
•Unwavering commitment to following ethical business practices
•Diverse inclusive workplace
•Safety and well being of its customers and employees
•Transparency
•Trust
•Innovation
While ensuring environmental and social sustainability
•Values:
•core values statement: Statement of principles to guide an organization as it works to
achieve its vision and fulfill its mission, for both internal conduct and external
interactions; it often includes explicit ethical considerations.
•Organizational core values: standards and norms that govern the behavior of
individuals within a firm or organization.
Values at Nucor -largest steel producer in
the United States
▪“Management is obligated to manage Nucor in such a
way that employees will have the opportunity to earn
according to their productivity.”
▪“Employeesshould be able to feel confident that if they
do their jobs properly, they will have a job tomorrow.”
▪“Employees have the right to be treated fairly and must
believe that they will be.”
▪“Employees must have an avenue of appeal when they
believe they are being treated unfairly.”
At Nucor, values emphasizing pay for performance, job
security, and fair treatment for employees help to create
an atmosphere that leads to high employee productivity.
https://nucor.com/company
the United States
▪“Management is obligated to manage Nucor in such a
way that employees will have the opportunity to earn
according to their productivity.”
▪“Employeesshould be able to feel confident that if they
do their jobs properly, they will have a job tomorrow.”
▪“Employees have the right to be treated fairly and must
believe that they will be.”
▪“Employees must have an avenue of appeal when they
believe they are being treated unfairly.”
At Nucor, values emphasizing pay for performance, job
security, and fair treatment for employees help to create
an atmosphere that leads to high employee productivity.
https://nucor.com/company
Values
In high-performance organizations, values respect the interests of key
stakeholders.
The values of a company should state:
❖How managers and employees should conduct
themselves
❖How they should do business
❖What kind of organization they need to build to help
achieve the company’s mission
❖shape behavior within a company
❖Shape Organizational culture
•The set of values, norms, and standards that control how employees work to
achieve an organization’s mission and goals
•Often seen as an important source of competitive advantage
In high-performance organizations, values respect the interests of key
stakeholders.
The values of a company should state:
❖How managers and employees should conduct
themselves
❖How they should do business
❖What kind of organization they need to build to help
achieve the company’s mission
❖shape behavior within a company
❖Shape Organizational culture
•The set of values, norms, and standards that control how employees work to
achieve an organization’s mission and goals
•Often seen as an important source of competitive advantage
Values
•A studyfound that deep respect for the interests of customers,
employees, suppliers, and shareholders was associated with high
performance.
•The study also noted that the encouragement of leadership and
entrepreneurial behavior by mid-and lower-level managers and a
willingness to support change efforts within the organization contributed to
high performance.
•Companies that emphasize such values consistently throughout their
organization include Hewlett-Packard, Walmart, and PepsiCo.
•General Motors was held up as an example of one such organization.
According to the research, mid-or lower-level managers who showed
too much leadership and initiative at GM were not promoted!
•A studyfound that deep respect for the interests of customers,
employees, suppliers, and shareholders was associated with high
performance.
•The study also noted that the encouragement of leadership and
entrepreneurial behavior by mid-and lower-level managers and a
willingness to support change efforts within the organization contributed to
high performance.
•Companies that emphasize such values consistently throughout their
organization include Hewlett-Packard, Walmart, and PepsiCo.
•General Motors was held up as an example of one such organization.
According to the research, mid-or lower-level managers who showed
too much leadership and initiative at GM were not promoted!
Key characteristics of well-constructed goals:
1.Precise and measurable –to provide a yardstick or
standard to judge performance
2.Address crucial issues –select limited number of key
goals that help to maintain focus
3.Challenging but realistic –to provide employees with
incentive for improving
4.Specify a time period –to motivate and inject a sense of
urgency into goal attainment
Major Goals
A goal is a precise and measurable desired future state that a company must
realize if it is to attain its vision or mission.
Focus on long-run performance and
competitiveness
1.Precise and measurable –to provide a yardstick or
standard to judge performance
2.Address crucial issues –select limited number of key
goals that help to maintain focus
3.Challenging but realistic –to provide employees with
incentive for improving
4.Specify a time period –to motivate and inject a sense of
urgency into goal attainment
Major Goals
A goal is a precise and measurable desired future state that a company must
realize if it is to attain its vision or mission.
Focus on long-run performance and
competitiveness
Tesla –changed its vision
•When Tesla was founded in 2003, its mission was to accelerate the
world’s transition to sustainable transport.
•Tesla changed its vision to accelerate the world’s transition to
sustainable energy. To reposition Tesla as an integrated clean-tech
energy company, in 2017, Tesla changed its official name from Tesla
Motors to Tesla, Inc
•➔empirical research shows that sometimes vision statements and
firm performance are associated with one another
•➔an effective vision statement can lay the foundation upon which to
craft a strategy that creates competitive advantage.
•When Tesla was founded in 2003, its mission was to accelerate the
world’s transition to sustainable transport.
•Tesla changed its vision to accelerate the world’s transition to
sustainable energy. To reposition Tesla as an integrated clean-tech
energy company, in 2017, Tesla changed its official name from Tesla
Motors to Tesla, Inc
•➔empirical research shows that sometimes vision statements and
firm performance are associated with one another
•➔an effective vision statement can lay the foundation upon which to
craft a strategy that creates competitive advantage.
•Tesla’s mission statement is “to acceleratethe world’stransition to
sustainable energy.”
•reflects company’s commitment to helping lead a global shift away from fossil
fuels and towards renewable forms of energy
•Tesla has responded by expanding its scope beyond just electric vehicles into
solar energy production, battery storage, and other related technologies
•Previously, Tesla’s corporate mission was “to accelerate the
world’s transition to sustainable transport.”
sustainable energy.”
•reflects company’s commitment to helping lead a global shift away from fossil
fuels and towards renewable forms of energy
•Tesla has responded by expanding its scope beyond just electric vehicles into
solar energy production, battery storage, and other related technologies
•Previously, Tesla’s corporate mission was “to accelerate the
world’s transition to sustainable transport.”
Tesla -Vision
•Tesla’s corporate vision statement of “to create the most compelling
car company of the 21st century by driving the world’s transition to
electric vehicles”
•compelling-their top priority is to prove themselves as leaders and
innovators in the automotive sector
•as proof of their dedication to achieving this goal; they have released
several revolutionary models such as semi-trucks, solar roof tiles, and
electric luxury car models (Model S, X, and 3)
•21st-century element focuses on modern technology and sustainable
transport solutions.
•Tesla’s corporate vision statement of “to create the most compelling
car company of the 21st century by driving the world’s transition to
electric vehicles”
•compelling-their top priority is to prove themselves as leaders and
innovators in the automotive sector
•as proof of their dedication to achieving this goal; they have released
several revolutionary models such as semi-trucks, solar roof tiles, and
electric luxury car models (Model S, X, and 3)
•21st-century element focuses on modern technology and sustainable
transport solutions.
•Core Values
•Tesla’s core values include “doing the best, taking risks, respect,
constant learning, and environmental consciousness.”
•guide the overall attitudes and practices of all stakeholders associated
with the company
•Tesla’s core values include “doing the best, taking risks, respect,
constant learning, and environmental consciousness.”
•guide the overall attitudes and practices of all stakeholders associated
with the company
•Search for
•Intel
•Volkswagen
•Intel
•Volkswagen
Walmart
•Mission:“to savepeople money so that they can livebetter.” This has been
its mission since its inception back in 1962.
•The company achieves this through its everyday low price (EDLP) strategy -
customers get the best value for their money
•The company’s goal is to help people live better, in terms of health, education,
and environmental sustainability --make a difference on big social issues---
How?
•investing in sustainable sourcing and reducing waste in its operations
•affordable healthcare services and educational opportunities to their employees
•Vision: to be the destination for customers to save money, no matter how they
want to shop
•Mission:“to savepeople money so that they can livebetter.” This has been
its mission since its inception back in 1962.
•The company achieves this through its everyday low price (EDLP) strategy -
customers get the best value for their money
•The company’s goal is to help people live better, in terms of health, education,
and environmental sustainability --make a difference on big social issues---
How?
•investing in sustainable sourcing and reducing waste in its operations
•affordable healthcare services and educational opportunities to their employees
•Vision: to be the destination for customers to save money, no matter how they
want to shop
•Strategies to meet its vision and mission statement -
•Walmart follows its corporate vision statement and mission statement through the
cost leadership generic strategy (Porter’s Model) that builds competitive
advantage in dealing with competitors, such as Amazon and its subsidiary, Whole
Foods Market, as well as Costco ------→Business Level Strategy
•Also, various intensive growth strategies, which is Market penetration
(Ansoff Growth Matrix) contribute to Walmart’s success in following its corporate
mission and vision statements -------------→Corporate Level Strategy
•Based on its corporate mission statement, Walmart’s business strategies and
purpose involve using price as a selling point to attract target shoppers. This is
noticed even in its 4 Ps of Marketing Mix (Low prices is part of its strategy)
•Walmart follows its corporate vision statement and mission statement through the
cost leadership generic strategy (Porter’s Model) that builds competitive
advantage in dealing with competitors, such as Amazon and its subsidiary, Whole
Foods Market, as well as Costco ------→Business Level Strategy
•Also, various intensive growth strategies, which is Market penetration
(Ansoff Growth Matrix) contribute to Walmart’s success in following its corporate
mission and vision statements -------------→Corporate Level Strategy
•Based on its corporate mission statement, Walmart’s business strategies and
purpose involve using price as a selling point to attract target shoppers. This is
noticed even in its 4 Ps of Marketing Mix (Low prices is part of its strategy)
Walmart
•Mission:“to savepeople money so that they can livebetter.” This has been
its mission since its inception back in 1962.
•The company achieves this through its everyday low price (EDLP) strategy -
customers get the best value for their money
•The company’s goal is to help people live better, in terms of health, education,
and environmental sustainability --make a difference on big social issues---
How?
•investing in sustainable sourcing and reducing waste in its operations
•affordable healthcare services and educational opportunities to their employees
•Vision: to be the destination for customers to save money, no matter how they
want to shop
•Mission:“to savepeople money so that they can livebetter.” This has been
its mission since its inception back in 1962.
•The company achieves this through its everyday low price (EDLP) strategy -
customers get the best value for their money
•The company’s goal is to help people live better, in terms of health, education,
and environmental sustainability --make a difference on big social issues---
How?
•investing in sustainable sourcing and reducing waste in its operations
•affordable healthcare services and educational opportunities to their employees
•Vision: to be the destination for customers to save money, no matter how they
want to shop
Next……………
•"I want to die on Mars"
•"If we do not become interplanetary and go beyond our solar system,
annihilation of all life on Earth is a certainty"
•The dinosaurs, he said, died out because they didn't have spaceships.
•according to court filings, the company will have spent roughly $5 billion on
Starship by the end of 2023.
•Billionaire philanthropist Bill Gates, the co-founder of Microsoft, said in that
there are better ways to use that kind of money.
•"If we do not become interplanetary and go beyond our solar system,
annihilation of all life on Earth is a certainty"
•The dinosaurs, he said, died out because they didn't have spaceships.
•according to court filings, the company will have spent roughly $5 billion on
Starship by the end of 2023.
•Billionaire philanthropist Bill Gates, the co-founder of Microsoft, said in that
there are better ways to use that kind of money.
•"I want to die on Mars," SpaceX CEO Elon Musk
•"If we do not become interplanetary and go beyond our solar system, annihilation
of all life on Earth is a certainty," Musk said
•The dinosaurs, he said, died out because they didn't have spaceships.
•SpaceX, according to court filings, will have spent roughly $5 billion on Starship
by the end of 2023.
•Billionaire philanthropist Bill Gates, the co-founder of Microsoft, said in that there
are better ways to use that kind of money.
https://www.thestreet.com/technology/elon-musk-spacex-starship-interplanetary-
mars
•"If we do not become interplanetary and go beyond our solar system, annihilation
of all life on Earth is a certainty," Musk said
•The dinosaurs, he said, died out because they didn't have spaceships.
•SpaceX, according to court filings, will have spent roughly $5 billion on Starship
by the end of 2023.
•Billionaire philanthropist Bill Gates, the co-founder of Microsoft, said in that there
are better ways to use that kind of money.
https://www.thestreet.com/technology/elon-musk-spacex-starship-interplanetary-
mars
•Musk’s inspirational vision is to make human life multi planetary
•To achieve this what has SpaceX done?
•To achieve this goal, SpaceX aims to make human travel to Mars not
only possible but also affordable.
•SpaceX also sees a role in helping establish a self-sustainable human
colony on Mars
•To achieve this what has SpaceX done?
•To achieve this goal, SpaceX aims to make human travel to Mars not
only possible but also affordable.
•SpaceX also sees a role in helping establish a self-sustainable human
colony on Mars
Strategic Intent
•Basing actions on its vision, a firm will build the necessary resources
and capabilities through continuous organizational learning, including
learning from failure, to translate into reality what begins as a stretch
goal or strategic intent.
•Strategic intent: A stretchgoal that pervades the organization with a
sense of winning, which it aims to achieve by building the necessary
resources and capabilities through continuous learning.
•Strategic Intent
•Avoids the strategicfit model,which focuses too much on the current state
•Sets ambitious vision and goals that stretch a company and then finds ways to build to attain
those goals
•Basing actions on its vision, a firm will build the necessary resources
and capabilities through continuous organizational learning, including
learning from failure, to translate into reality what begins as a stretch
goal or strategic intent.
•Strategic intent: A stretchgoal that pervades the organization with a
sense of winning, which it aims to achieve by building the necessary
resources and capabilities through continuous learning.
•Strategic Intent
•Avoids the strategicfit model,which focuses too much on the current state
•Sets ambitious vision and goals that stretch a company and then finds ways to build to attain
those goals
Western
Companies
trimming their
ambitions to
match resources
Search only for
advantages they
can sustain
Japanese
Companies
Leverage
resources
Try to attain
impossible goals
Strategic Fit, Stretch & Leverage - Gary
Hamel and CK Prahlad
Companies
trimming their
ambitions to
match resources
Search only for
advantages they
can sustain
Japanese
Companies
Leverage
resources
Try to attain
impossible goals
Strategic Fit, Stretch & Leverage - Gary
Hamel and CK Prahlad
•Leverage is when a firm uses its small levels of resources, but with
high capability, to outperform another firm with greater resources but
with less developed capabilities
•Space Pen
high capability, to outperform another firm with greater resources but
with less developed capabilities
•Space Pen
Leveragerefers to concentrating your resources to your
strategic intent, accumulating learning, experiences and
competencies, in a manner that a scarce resource base can
be stretched to meet the aspirations that an organizational
resources to its environment
Strategic Fit, Stretch & Leverage - Gary
Hamel and CK Prahlad
strategic intent, accumulating learning, experiences and
competencies, in a manner that a scarce resource base can
be stretched to meet the aspirations that an organizational
resources to its environment
Strategic Fit, Stretch & Leverage - Gary
Hamel and CK Prahlad
Strategic Intent -
•https://hbr.org/2005/07/strategic-intent
•https://hbr.org/2005/07/strategic-intent
•Vision - Lays the foundation for the Strategic
management process
•Why does the company exist and for what it
stands in the society?
•While strategic intent is clear about ends, it is
flexible as to means.
•Strategic intent implies a sizable stretch for an
organization.
Strategic Intent (SI)
Gary Hamel and CK Prahlad
management process
•Why does the company exist and for what it
stands in the society?
•While strategic intent is clear about ends, it is
flexible as to means.
•Strategic intent implies a sizable stretch for an
organization.
Strategic Intent (SI)
Gary Hamel and CK Prahlad
Next…………….
Strategyas an Emergent Process
•The planning model suggests that a company’s strategies are the
result of a plan, the strategic planning process itself is rational and
highly structured
•Several scholars have criticized the formal planning model for three
main reasons:
•the unpredictability of the real world;
•the role that lower-level managers can play in the strategic management
process; and
•the fact that many successful strategies are often the result of serendipity, not
rational strategizing.
•The planning model suggests that a company’s strategies are the
result of a plan, the strategic planning process itself is rational and
highly structured
•Several scholars have criticized the formal planning model for three
main reasons:
•the unpredictability of the real world;
•the role that lower-level managers can play in the strategic management
process; and
•the fact that many successful strategies are often the result of serendipity, not
rational strategizing.
Planned, Deliberate, Emergent and
Realized Strategies
Source: Adapted from H. Mintzberg and
A. McGugh, Administrative Science
Quarterly, Vol. 30. No. 2, June 1985.
Realized Strategies
Source: Adapted from H. Mintzberg and
A. McGugh, Administrative Science
Quarterly, Vol. 30. No. 2, June 1985.
Intended and Emergent Strategies
❖Intended or Planned Strategies
•Strategies an organization plans to put into action
•Typically the result of a formal planning process
•Unrealized strategies are the result of unprecedented
changes and unplanned events after the formal planning is
completed
❖Emergent Strategies
•Unplanned responses to unforeseen circumstances
•Serendipitous discoveries and events may emerge that can
open up new unplanned opportunities
•Must assess whether the emergent strategy fits the
company’s needs and capabilities
❖Realized Strategies
•The product of whatever intended strategies are actually put
into action and of any emergent strategies that evolve
❖Intended or Planned Strategies
•Strategies an organization plans to put into action
•Typically the result of a formal planning process
•Unrealized strategies are the result of unprecedented
changes and unplanned events after the formal planning is
completed
❖Emergent Strategies
•Unplanned responses to unforeseen circumstances
•Serendipitous discoveries and events may emerge that can
open up new unplanned opportunities
•Must assess whether the emergent strategy fits the
company’s needs and capabilities
❖Realized Strategies
•The product of whatever intended strategies are actually put
into action and of any emergent strategies that evolve
Next…………
Business model
•Business model is a kind of mental model of how the various strategies and
capital investments made by a company should fit together to generate above-
average profitability and profit growth
•Encompasses the totality of HOW a company will
•Select its customers
•Define and differentiate its product offerings
•Create value for its customers
•Acquire and keep customers
•Produce goods or services
•Lower costs
•Deliver those goods and services to the market
•Organize activities within the company
•Configure its resources
•Achieve and sustain a high level of profitability
•Grow the business over time
•Business model is a kind of mental model of how the various strategies and
capital investments made by a company should fit together to generate above-
average profitability and profit growth
•Encompasses the totality of HOW a company will
•Select its customers
•Define and differentiate its product offerings
•Create value for its customers
•Acquire and keep customers
•Produce goods or services
•Lower costs
•Deliver those goods and services to the market
•Organize activities within the company
•Configure its resources
•Achieve and sustain a high level of profitability
•Grow the business over time
ABusinessmodelisacompany’smethodformakingmoneyinthecurrentbusiness
environment.
Strategiesaretheactionsthatthemangerstaketoexecutethefirm’sbusinessmodel.
Itincludesthekeystructuralandoperationalcharacteristicsofafirm—howitearnsrevenue
andmakesaprofit.Abusinessmodelisusuallycomposedoffiveelements:
■■Whoitserves
■■Whatitprovides
■■Howitmakesmoney
■■Howitdifferentiatesandsustainscompetitiveadvantage
■■Howitprovidesitsproduct/service.
•Conceptionof how strategies should work together as a whole to enable the company to
achieve competitive advantage
•This gave Walmart a competitive advantage over rivals such as Kmart, which suffered from
poor inventory controls and thus higher costs.
•So although Walmart and Kmart pursued similar business models, they were not identical. Key differences
in the choice of strategies and the effectiveness of implementation created two unique organizations: one
that attained a competitive advantage, and one that ended up with a competitive disadvantage
environment.
Strategiesaretheactionsthatthemangerstaketoexecutethefirm’sbusinessmodel.
Itincludesthekeystructuralandoperationalcharacteristicsofafirm—howitearnsrevenue
andmakesaprofit.Abusinessmodelisusuallycomposedoffiveelements:
■■Whoitserves
■■Whatitprovides
■■Howitmakesmoney
■■Howitdifferentiatesandsustainscompetitiveadvantage
■■Howitprovidesitsproduct/service.
•Conceptionof how strategies should work together as a whole to enable the company to
achieve competitive advantage
•This gave Walmart a competitive advantage over rivals such as Kmart, which suffered from
poor inventory controls and thus higher costs.
•So although Walmart and Kmart pursued similar business models, they were not identical. Key differences
in the choice of strategies and the effectiveness of implementation created two unique organizations: one
that attained a competitive advantage, and one that ended up with a competitive disadvantage
•business model: Stipulates how the firm conducts its business with its
buyers, suppliers, and partners in order to make money
•Strategy is a set of goal-directed actions a firm takes to gain and
sustain superior performance relative to competitors or the industry
average. The translation of strategy into action takes place in the
firm’s business model, which details the firm’s competitive tactics and
initiatives. Simply put, the firm’s business model explains how the firm
intends to make money.
•The business model stipulates how the firm conducts its business with
its buyers, suppliers, and partners.
buyers, suppliers, and partners in order to make money
•Strategy is a set of goal-directed actions a firm takes to gain and
sustain superior performance relative to competitors or the industry
average. The translation of strategy into action takes place in the
firm’s business model, which details the firm’s competitive tactics and
initiatives. Simply put, the firm’s business model explains how the firm
intends to make money.
•The business model stipulates how the firm conducts its business with
its buyers, suppliers, and partners.
•The business model of Walmart comprises a number of strategies,
including economies of scale, everyday low prices (EDLP), price
leadership, international expansion, and e-commerce. Let's explore
how Walmart became the largest retail mansion in this blog.
including economies of scale, everyday low prices (EDLP), price
leadership, international expansion, and e-commerce. Let's explore
how Walmart became the largest retail mansion in this blog.
•What business model is followed in Walmart’s case?
•Discount stores
•self-service format
•(refer Business Model Canvas)
•Walmart’s Business model is based on what idea?
•To lower the costs
•costs can be lowered by replacing a full-service retail format with a self-service format
and a wider selection of products sold in a large footprint store that contains minimal
fixtures and fittings
•These savings are passed on to consumers in the form of lower price
•Over time, this business model has proved superior to the business models adopted
by smaller, full-service mom and pop stores and traditional high service department
stores
•The business model—known as the self-service supermarket business model—was
first developed by grocery retailers in the 1950s and later refined and improved on by
general merchandisers such as Walmart
•Discount stores
•self-service format
•(refer Business Model Canvas)
•Walmart’s Business model is based on what idea?
•To lower the costs
•costs can be lowered by replacing a full-service retail format with a self-service format
and a wider selection of products sold in a large footprint store that contains minimal
fixtures and fittings
•These savings are passed on to consumers in the form of lower price
•Over time, this business model has proved superior to the business models adopted
by smaller, full-service mom and pop stores and traditional high service department
stores
•The business model—known as the self-service supermarket business model—was
first developed by grocery retailers in the 1950s and later refined and improved on by
general merchandisers such as Walmart
•As developed by Osterwalder and Pigneur, thebusiness model canvashas
nine components, as shown inprevious slide
nine components, as shown inprevious slide
Types
116
Customers solutions model/Expertise
Pyramid Profit model
Multi- component system/ Installed base
model/The Bait and Hook model
Advertising model
Switchboard model
116
Customers solutions model/Expertise
Pyramid Profit model
Multi- component system/ Installed base
model/The Bait and Hook model
Advertising model
Switchboard model
117
Time model
Efficiency model
Collaborative Creation
Profit multiplier model
Collaborative Consumption
De Facto industry standard model
Time model
Efficiency model
Collaborative Creation
Profit multiplier model
Collaborative Consumption
De Facto industry standard model
118
Bricks-and-clicks
Nickel-and-dime
Freemium
Subscription Model
Flat Fee
Bricks-and-clicks
Nickel-and-dime
Freemium
Subscription Model
Flat Fee
•It is not just about the Business Model and associated
strategies…………………….
•A company’s performance is also determined by the characteristics of the
industry in which it competes
•Growing /stagnated industries
•Price wars
•No. of firms
•Technological changes
•Entry into industry is easy or difficult etc.
•➔So, different competitive conditions in industry affects profitability and profit
growth, and the strategy formulation; average profitability in different industries differ
•This brings us to the external environment -(PESTEL, SWOT etc.)
•SWOT analysis helps in choosing between competing business models and for
finetuning the business model that managers choose
strategies…………………….
•A company’s performance is also determined by the characteristics of the
industry in which it competes
•Growing /stagnated industries
•Price wars
•No. of firms
•Technological changes
•Entry into industry is easy or difficult etc.
•➔So, different competitive conditions in industry affects profitability and profit
growth, and the strategy formulation; average profitability in different industries differ
•This brings us to the external environment -(PESTEL, SWOT etc.)
•SWOT analysis helps in choosing between competing business models and for
finetuning the business model that managers choose
•END
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