Module 3 Strategy Implementation and Control Syllabus leadership in strategic management; Portfolio analysisBCG Matrix, GEC Model, etc, Control Process Analysis and Follow-up Action for Control, Evaluation Strategy.
Module 3 Strategy Implementation and Control Syllabus leadership in strategic management; Portfolio analysisBCG Matrix, GEC Model, etc, Control Process Analysis and Follow-up Action for Control, Evaluation Strategy.
Module 3 Strategy Implementation and Control Syllabus leadership in strategic management; Portfolio analysisBCG Matrix, GEC Model, etc, Control Process Analysis and Follow-up Action for Control, Evaluation Strategy.
Control Syllabus Leadership in Strategic Management; Portfolio Analysis- BCG Matrix, GEC Model, etc, Control Process Analysis and Follow-up Action for Control, Evaluation Strategy. Strategy Implementation Who ? BOD Top Management Division manager Low level mangers Consideration /problems/conflicts Strategy formulation (Does the strategy fit to organization recourse and environment)
Implementation (How well the strategy has been executed)
Shared Knowledge Shared resources Pooled negotiation power Economies of scale Creative involvement
Strategy Implementation 7S Model by Mc Kinsey&co
1. Strategy Set of actions - start with and must maintain 2. Structure - Organisation Chart 3. Systems - All the processes and information flows that link the organisation together (budgeting systems ,Information systems, productions ) 4. Style culture values belief 5. Staff How you develop managers (current and future) 6. Super ordinate Goals Longer-term vision, Shared objectives 7. Skills capabilities that exist in the organisation
7S Model by Mc Kinsey&co Bill plan for effective implementation 1. Action Planning 2. Organization Structure 3. Human Resources 4. The Annual Business Plan 5. Monitoring and Control 6. Linkage. Leadership and strategy What is meant by Leadership? What is meant by strategic leadership? Ability to anticipate events, Envisage possibilities Maintain flexibility Empowers others to make strategic change
Stories of Ratan Tata N R Naramoorthy -1981 Karsanbhai Patel -1976 Azim Pemji Kochaoseph Chittalppally Beena Kannan Leaders Functions Developers team work Representative of sub ordinates Appropriate counselor uses power properly Manages time well Strives for effectiveness
Transactional and transformational leaders Who is strategic leader? A manager who primarily responsible for creating and implementing strategic change Responsibility ----Ensures that Long term objective are converted to strategic plan of actions understood and supported by people working at various levels Plans implemented through Organization structure Communication two set up
7 point responsibility
Managing change
Strategic Vision, Pragmatism (Make things happen thing &positive results )
Communication network Structure and policies
Culture Governance and Management
Leadership as competitive advantage Strategic leadership BCG matrix Portfolio Analysis
15 BCG growth-share matrix BCG (Boston Consuting Group ) is a simple way to anayse a firms portfolio of investments , products , or business units.
The classification is most attractive, potentially attractive, moderately attractive, and least attractive based on growth rates and market share.
STRATEGY FORMULATION Boston Consulting Group (BCG) BCG Matrix Analyzes business opportunities according to growth rate and market share
SETTING STRATEGIC DIRECTIONS Growth Strategies: Where Do We Want to Go? Business Portfolio Analysis (BCG Matrix) Relative Market Share-horizontal axis Market Growth Rate-vertical axis Cash Cows (LH) Stars (HH) Dogs (LL) Question Marks or Problem Children (HL) 18 BCG matrix ( cont. ) Stars and question marks are businesses that operate in high growth industries. Cash cows and dogs are businesses that operate in low growth industries. Stars are net users of resources but hold potential for future.question marks are also net users of resources but are in high risk categories. A cash cow brings lot of cash to the company. Dogs are weak in market share and also in low growth market.they are a drag on company resources. Boston Consulting Group portfolio analysis for Kodak sbus in 2003 Kodak self- service kiosk Kodak film sales: US, Canada, & W. Europe Kodak digital photo printer Kodak digital camera The GE/ McKinsey Matrix Classification of SBUs/products into nine cell matrix based on Market Attractiveness Multiple Indicators
Business Strength Multiple Indicators
How does it differ from the Boston Matrix? There are similarities: Two dimensions are used to create a matrix Each cell suggests an appropriate strategy In both cases we are concerned with the future strategy for a particular area (eg a division) within the firm
There are major differences The GE matrix involves a wider analysis of the firms operations The dimensions of the GE matrix are industry attractiveness and business strength (rather than market share and market growth) There are nine cells and a wider choice of strategies The Boston Matrix focuses on products within the firms product range The GE matrix can be extended to look at strategic business units Steps In Developing GE Matrix 1. Select Factors & Indicators. 2. Assign each indicator a weight (total = 1) based on its importance. 3. Rate the industry on industry indicators and company on business indicators on scale of 1(weak) 5 (strong). 4. Multiply weight times rating and total for summary measures.
Criteria which makes a market attractive Market size Growth rate Overall returns in the industry Industry profitability Intensity of competition Profit margins Differentiation Industry fluctuations Customer/supplier relations
Variability of demand Rate of technological change Volatility Availability of market intelligence Availability of work force Global opportunities PEST factors Entry and exit barrier Government regulation Assessing internal strengths Production capacity Production flexibility Unit costs R and D capabilities Quality Reliability Company image Product uniqueness Cost and profitability Profit margins relative to competitors Manufacturing capability Organisational skills
Market share Growth in market share Marketing capabilities Management competence Skills of workforce Distribution network Size and quality of sales force Service quality Customer loyalty Brand recognition
GE Portfolio Analysis Sample Industry/Market Indicators Market Factors Size Growth Rate Cyclicality Seasonality Competition Type of competitors Degree of Concentration Financial & Economic Contribution Margins Barriers to Entry or Exit
GE Portfolio Analysis Industry/Market Indicators Technological Patents & copyrights Will it become obsolete Sociopolitical Social attitudes & trends Laws & government regulations GE Portfolio Analysis Business Strength Indicators Market Companys Market Share Companys Sales or Share Growth Rate Competition Strength of product, promotion, price, distribution, financial resources, management relative to competition Financial & Economic Companys Margins Economies of scale GE Portfolio Analysis Business Strength Indicators Technological Companys ability to cope with change Technological skills Patent Protection Sociopolitical Companys responsiveness & flexibility GE Portfolio Example .68 2.66 2 .34 Distribution Net 1.65 5 .33 Product Quality .33 1 .33 Market Share Business .68 3.32 2 .34 Profit Margins .99 3 .33 Growth 1.65 5 .33 Size Value Rating (1- 5) Weight Market Factor GE Portfolio Analysis
Market Low Medium High Low Medium High Business GE Portfolio Analysis
Market Low Medium High Low Medium High Business Business / Competitive Position
Market
Market Attractive- ness High Medium Low
High Maintain Leadership Invest to Grow Concentrate on Maintaining Strength
Challenge Leader Invest to Build Selectively Reinforce Strengths
Overcome Weakness, Find Niche or Quit Build Selectively
Medium Challenge Leader/Build Selectively In most attractive markets Or counter competition Emphasize profitability by raising productivity
Manage for Earnings Protect existing programs Concentrate on profitable, less risky segments
Harvest (Gradual Withdrawal) or Limited Expansion Look ways to expand without high risk Or Minimize investment
Low Generate Cash Manage for current earnings Concentrate on attractive Segments Defend Strengths
Harvest Minimize Investment Protect positions in most profitable segments
Divest Sell at time that will maximize cash value Cut fixed costs and avoid investment
36 GE multifactor portfolio planning matrix Different businesses or products are rated based on the following two parameters, Industry attractiveness & Companies business strength. How attractive is the industry and how strong is the firm in the industry. If both are very strong such businesses needs more investment and allowed to grow. Invest and develop such SUBs. If they are medium the stategy should be selective. If they are low the policy should be harvest / divest Evaluation and controll 'Evaluation and control' is a process in which firm activities and performance results are monitored so that actual performance is compared with desired performance Steps Evaluation aspects Performance bench marking Why performance are measured? How performance evaluated Financial measures ROI, EPS,ROE Stakeholders based Shareholders Customer based Supplier based Employee based Value based EVA,MVA Functional based >>functions , responsibility centre based
responsibility centre based
Concerns of performance measurement 1. bench mark 2. Sufficient period 3. Goal displacement
Control Input Control Output control Behavior control (sales call, work .