Strategic Management - II

Identifying Core Competence

1. Provides potential access to a wide variety of markets
2. Should make a significant contribution to the perceived customer benefit of the end products
3. Should be difficult for competitors to imitate and it will be difficult if it is a complex harmonization

Components of a mission statement

• Customers: who are the firms customers
• Products or services: what are the firms major product or services
• Markets: Geographically where does the firm compete
• Technology: Is the firm technologically current?
• Concern for survival, growth and profitability
• Philosophy: what are the basic beliefs, values, aspirations and ethical priorities of the firm
• Self Concept: what is the firms distinctive competence
• Concern for public image
• Concern for employees

Criteria for setting objectives

•  Suitable
• Measurable
• Feasible
• Acceptable
• Flexible
• Motivating
• Understandable
• Commitment
• Participation
• Linkages

Internal External Matrix

• I, II, and IV Grow and Build
• III, V, and VII Hold and Maintain
• VI, VII, and IX Harvest and Divest

Grand Strategy Matrix

Quadrant I

• Market Development
• Market Penetration
• Product Development
• Forward Integration
• Backward Integration
• Horizontal Integration
• Concentric Diversification

Quadrant II

• Market Development
• Market Penetration
• Product Development
• Horizontal Integration
• Divesture
• Liquidation

Quadrant III

• Retrenchment
• Concentric Diversification
• Horizontal Diversification
• Conglomerate Diversification
• Liquidation

Quadrant IV

• Concentric Diversification
• Horizontal Diversification
• Conglomerate Diversification
• Joint Venture

Corporate Strategy

• Concerned with entire organisation
• Resource allocation
• Diversification
• Portfolio Management
• Business, divisional, or strategic business unit (SBU) strategy
• What product or service to offer
• How to compete
• Strategy within business
• Functional plans

Need for Integration

• Avoid duplication and wastage of resources
• Trasfer pricing
• Information sharing
• Knowledge transfer

Remult's Criteria to Evaluate Strategy

• Consistency
• Consonance
• Feasibility
• Advantage

Process of Evaluating Strategies

• Reviewing bases of strategy (IFE EFE)
• Measuring organisational performance
•  compare actual results with expected
• investigate deviations
• evaluate individual performance
• examining the progress in meeting the objectives
• Taking Corrective Actions

Characteristics of Effective Evaluation System

• Economical and simple
• timely information
• true picture of what is happening
• should not dominate decision
• foster mutual understanding, trust and common sense