Implementing Yin-Yang

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• Implementing Yin-Yang

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WELCOME To ALL OF YOU (Strategy)

• RAHUL JAIN
• (Striving for excellence)
• BCOM (H), PGPM, FCS

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Strategy formulation ...

• An organization must select any of
  innumerableways of seeking to attain its
  objectives.
• Strategies define how organizations shoulduse
  their resources to meet their objectives.
• Hence, strategies put constraints on
  employees to focus activities on what the
  organization does best or areas where it
  has an advantage over competitors.

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Mission Basic reason for existence

• Mission How do we intend to win in this
  business?
• Factors influencing Mission
• Stakeholders
• Internal resources and Power
• Values of top management
• Past development of firm
• Business definition
• Products
• Markets
• Function (Technology and Processes)

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Vision- Yin Yang

• Core Ideology (Core values and Purposes)
• Envisioned Future (BHAG and vivid description)
• A vision, is more encompassing. It answers the
  question, "What will success look like?" It is
  the pursuit of this image of success that really
  motivates people to work together.

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Starbucks Mission and Vision

• Starbucks Mission
• Starbucks mission is to establish Starbucks as
  the premier purveyor of the finest coffee in the
  world while maintaining our uncompromising
  principles as we grow (Starbucks Website, 2006,
  p.1).
• Starbucks strategic plan to make its mission a
  reality is evidence by the companys rapid
  expansion worldwide. Starbucks has locations in
  all 50 States in the US, plus the District of
  Columbia and Puerto Rico (Starbucks Company Fact
  Sheet, 2006). Starbucks can also be found in 36
  countries outside the US (Starbucks Company fact
  Sheet, 2006). Starbucks is committed to buying
  only certified coffee in pursuit of selling the
  finest coffee.
• Starbucks Vision
• According to the companys profile, (2006) its
  vision is to make Starbucks coffee the most
  recognized and respected brand in the world by
  using high quality roast beans to make coffee
  beverages along with other products. The company
  wants to develop enthusiastically satisfied
  customers at all times. They want to make
  positive contributions to their communities and
  their environment.

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A Diversified Company Has Two Levels of Strategy
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Cost Leadership Strategy

• Key Criteria
• Standard Product
• Compete Based on Price
• Low costs
• High volume
• Low margins

• Achieving Low Costs
• Controlling Cost Drivers
• Reconfiguring Value Chain
• Characteristics of Cost Leader

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Controlling Cost Drivers

• Economies of Scale / Capacity Utilization
• Learning Curve Effects
• Reduce Input Costs (monitor suppliers)
• Economies of Scope
• Consider Vertical Integration Outsourcing
• Process Engineering / Simplification
• Minimize Overhead

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How to obtain a Cost Advantage
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Control Cost Drivers
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Alter production process
New raw material
Change in automation
Forward integration
New distribution channel
Backward integration
New advertising media
Change location relative to suppliers or buyers
Direct sales in place of indirect sales
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Technological changes
The Major Risks involved with a Cost Leadership
Business Level Strategy
Competitors imitate Value Chain
Focus on efficiency causes Cost Leader to
overlook changes in customer preferences
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Examples of Cost Leadership

• Nissan Wal-Mart Dell Computers

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Differentiation Business Level Strategy
Key Criteria
Value provided by unique features and value
characteristics
Command premium price
High customer service
Superior quality
Prestige or exclusivity
Rapid innovation
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Differentiation Business Level Strategy
Requirements
Value provided by unique features and value
characteristics
Constant effort to differ-entiate products
through
Developing new systems and processes

Command premium price
High customer service
Shaping perceptions through advertising

Superior quality

Product RD capabilities
Prestige or exclusivity
Maximize Human Resource contributions through low
turnover and high motivation

Rapid innovation
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Differentiation Business Level Strategy
Effectiveness with Differentiation grows out of
Value Chain activities
Examples
Heineken beer
Raw materials
Steinway pianos
Raw materials Workmanship
Mercedes Benz autos
Technology and Workmanship
Intel microprocessors
Technological superiority
Service buyers needs quickly anywhere in the
world
Caterpillar tractors
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Focused Business Level Strategies
Focused Business Level Strategies involve the
same basic approach as Broad Market Strategies
Opportunities exist because
Large firms overlook small niches

Firm lacks resources to compete industry-wide


Serve narrow market segment more effectively than
industry-wide competitors
Direct resources to certain value chain
activities to build competitive advantage

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Outfocused
The Major Risks involved with a
Focused Differentiation Business Level Strategy
Large competitors enter niche market
Preferences of niche market change to those of
broad market
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Focus

• Examples of Differentiation Focus any successful
  niche retailers (e.g. The Perfume Shop) or
  specialist holiday operator (e.g. Carrier)
• Strategy - Cost Focus
• Here a business seeks a lower-cost advantage in
  just on or a small number of market segments. The
  product will be basic - perhaps a similar product
  to the higher-priced and featured market leader,
  but acceptable to sufficient consumers. Such
  products are often called "me-too's".
• Examples of Cost Focus Many smaller retailers
  featuring own-label or discounted label products.

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Integrated Low Cost/Differentiation Strategy
Firms using an Integrated Strategy

• Dual Strategic Emphasis
• Upscale product
• Competitive pricing (best value)

Flexible Manufacturing Systems
Information Networks across multiple business
units
Total Quality Management (TQM)
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Key Questions of Corporate Strategy
1. What businesses should the corporation be in?
2. How should the corporate office manage the
array of business units?
Corporate Strategy is what makes the corporate
whole add up to more than the sum of its business
unit parts
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Levels and Types of Diversification
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BCG Matrix Product Portfolio strategy

• BCG MATRIX helps in determining the product
  portfolio strategy of the organization. It
  leverages the knowledge of the corporation to
  optimally utilize the resources. Resources are
  channelized in the right direction by appropriate
  product strategy.
• The BCG matrix method is based on the product
  life cycle theory that can be used to determine
  what priorities should be given in the product
  portfolio of a business unit. It involves rating
  products according to their market share and
  market growth rate.

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BCG Matrix Product Portfolio strategy
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Industry Attractiveness- Porter 5 Forces

• The five forces are environmental forces that
  impact on a companys ability to compete in a
  given market.
• The purpose of five-forces analysis is to
  diagnose the principal competitive pressures in a
  market and assess how strong and important each
  one is.

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Porters Five Forces Model of Competition
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Threat for New Entrants
Expected Retaliation
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Porters Five Forces Model of Competition
Threat of New Entrants
Threat of New Entrants
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Bargaining Power of Suppliers
Suppliers are likely to be powerful if
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Porters Five Forces Model of Competition
Threat of New Entrants
Threat of New Entrants
Bargaining Power of Suppliers
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Bargaining Power of Buyers
Buyer groups are likely to be powerful if
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Porters Five Forces Model of Competition
Threat of New Entrants
Threat of New Entrants
Bargaining Power of Buyers
Bargaining Power of Suppliers
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Threat of Substitute Products
Keys to evaluate substitute products
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Porters Five Forces Model of Competition
Threat of New Entrants
Threat of New Entrants
Bargaining Power of Buyers
Bargaining Power of Suppliers
Threat of Substitute Products
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Rivalry Among Existing Competitors
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Rivalry Among Existing Competitors
Cutthroat competition is more likely to occur
when