Recap
BBBEP PGCPM
Strategic Management
Characteristics of strategic decision Understanding performance from shareholder’s point – EVA, Outperforming the industry Concept of competitive advantage Concept of Value creation, Value delivery and Value capture Growth strategies of firms
Product penetration Product development Market development Diversification Vertical integration
Neeraj Dwivedi
neerajd@iimidr.ac.in 0731-4228546
Strategic Options for Growth
Product penetration Product line extension Market extension Customer extension Diversification Vertical integration
Vertical Integration
Benefits
More control over quality and delivery of inputs Premium or branded products avoided if internally made Leakage of private information to suppliers and possibly rivals avoided Avoid bargaining when suppliers are too few Contract enforcement costs avoided Free riding by distributors on the reputation of the manufacturer avoided
Market development
Vertical Integration
Costs
Absence of market discipline makes internal production inefficient Small production volume reduces economies of scale and learning effects Irreversible investment Pricing internal customers subject to opportunistic behaviour
Military Strategy
Internal
Special capabilities
External
Match Match
Battle terrain
1
The Strategic Management Process
Internal
Strength
Apply, sustain
External
Opportunity
Discover Formulation Analysis
External environment Internal environment Mission Opportunities, Threats Strengths, Weaknesses Customers to be served Competencies to be developed Goals, guidelines for major activities Organization structure, systems, culture, etc. (Cycle to earlier steps)
Slide 1- 8
Strategy Strategy
Overcome Avert Implementation
Policies
Weakness
Threat
Adjustment/ Evaluation
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Formulation and Implementation
Strategy Formulation...