Strategic Management

Strategic Management
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12/17/2009
Strategic Management2
Table of Contents
Table of Contents...........................................................................................................................2
Strategic Management ..................................................................................................................3
Kotter’s model............................................................................................................................3
Role played by Sales ..................................................................................................................3
Types of organizations ..................................................................................................................4
M.Porter’s five forces model ........................................................................................................5
Task 2..............................................................................................................................................7
Drivers of Organization Growth...............................................................................................7
Market Segmentation as Drivers of Growth............................................................................8
Product development as Drivers of Growth............................................................................8
Core strategic factor in growth.................................................................................................9
Task 3............................................................................................................................................10
Reasons for corporate failure..................................................................................................10
Joint ventures strategic alliance and collaborations.............................................................11
Why form Strategic Alliance...................................................................................................11
Overview on car industry and their activities.......................................................................12
Areas of risk for medium sized businesses in the UK...........................................................15
Strategies for Risk Minimizing...............................................................................................15
Handling Risk in Organization...............................................................................................16
Bibliography.................................................................................................................................18
Assessment
Strategic Management
Strategic Management is the process of managing or implementing strategies for a company for
achieving the long-term goals and objectives.
There are many change management theories which can help to drive the company for success.
Some are McKinsey's 7-S Model, Lewin's Change Management Model and Kotter's Eight Step
Change Model. There are many models and theories, and each one has potential benefits or
weaknesses for each organization.
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Kotter’s model
John Kotter. A professor at Harvard Business School and world-renowned change expert, Kotter
introduced his eight-step change process in his 1995 book, "Leading Change." We look at his
eight steps for leading change below.
Role played by Sales

Assessment
The process of organizational change can include a variety of key roles. These roles can be filled
by various individuals or groups at various times during the change process. Sometimes,
individuals or groups can fill more than one role. One way companies learn to cope with rapid
changes is by increasing their abilities to learn and change. In a learning organization, each
employee is charged with identifying and solving problems. This allows the organization to
continuously experiment, improve, and increase its capabilities.
Sales department has to provide operating sales executives and managers with the best tools,
techniques, and concepts for improving the total effectiveness of the sales force.
An organization can have an enormous mission, huge team, great management, etc. but still
show poor performance because of poor industrial design. Sales group gets awarded for
maintenance of customers in spite: As a result once again the performance of company will be
compromised.
Factors that affect performance of the organization directly-on the way the work is done, process
of the business, sharing the information and the incentive structure. These factors are the phases
of an industrial design and also every phase is very important for a successful business.
The organizational design process provides a clear definition of goals and responsibilities for
each unit within the organization
Types of organizations
The following are the type of organizations
• Business Units
• Service Centers
• Corporate Functions
Value Chain
Value – measured by the amount that buyers are willing to pay for a product or service
Michael Porter’s Value Chain model

Assessment
Primary Activities
• Manufacturing
• Marketing and Sales
• Service
Secondary Activities
• Company Infrastructure
• Information systems
• Human Resources
• Research and Development
• Materials Management
M.Porter’s five forces model

Michael Porter provided a framework that models an industry as being influenced by five forces.
The strategic business manager seeking to develop an edge over rival firms can use this model to
better understand the industry context in which the firm operates.
Assessment
Assessment
Task 2
Drivers of Organization Growth

It is a change in an organizational performance which will affect the other aspects of the business
(leader ship roles). A change is realized when a severe attempt is made to improve the
performance of an organization. A constant strive is made to be in touch with customer markets
and their employees, when they are clear about their priorities and guidelines.
The focus is exclusively on technology (new tools, equipments, processes etc….) when it comes
to change in most of the high tech organizations like IBM. But every one ignores the need for
medication in culture and behavior. It is important to recognize that cultural and behavioral
factors are the core of organizational change.
Drivers of Organization growth along with the questions which can help organizations assess
their readiness for a change initiative:
1. Leadership –Is there adequate leadership at every level in an organization?
2. Vision and Planning –Does every one understand the aims and objectives of an
organization that has formulated a flexible plan?
3. Reasonable Alternatives – Does an organization considered and analyzed any alternative

paths?
4. Culture and Behavior -- Is the organization think to build a bridge between “what it is
Assessment
and what it wants to be?”

5. Skills, Resources, and Personnel -- What new talents, tools, and experiences will be
required to drive and uphold this change?
6. Technology -- What new technologies (tools, process, equipment, etc.) does the business
need and who will use them?
Market Segmentation as Drivers of Growth

It is a Process of dividing a market into segments having similar requirements, demands and
characteristics. It is a strategy which is used to gain more number of sales in a subgroup rather
concentrating on a limited purchase by all divisions.
IBM (Global Technology Company) is now concentrating on the Indian steel market as a growth
driver. Solutions and services are offered to steel major companies like Ispat, Bokaro, Jindal and
Tata Steel. As the activities are growing in integrated power plants, infrastructure department ;
the power utility sector is rising and IBM is finding this segment enthusiastic.
Product development as Drivers of Growth

Introducing goods and services that fit customer requirements is the first priority for a product
development. Lower introduction costs and first-to-market strategies pale in evaluation to bring
innovative products to market that meet customer wants and requirements. High-performing
companies –that generated annual total investor return in excess of 37 percent and have also seen
a steady revenue growth over the last five years – average 61 percent of their sales from
successful launches of new products and services.
These positive results, will continue to be realized, when traditional leadership and cultural styles
Assessment
are replaced by new leaders who encourage a culture of network professionals. All with the
objective of realizing combined and individual positive approach contributing to the product
launch (IBM).
Core strategic factor in growth

Productivity Growth is Core Strategy. Finding prospective customers and negotiating the price
are two important key factors to promote a business. In the early stages it is very important to
create your own estimate of standards of the organization and find some diverse ways to measure
the standards This explains to find some latent customers and show the way to approach them.
Reliance Industries Ltd (RIL), that clocked an annual turnover of Rs 13,509 crore for the first
quarter of 2003-04 with 20 per cent net profit growth, focus on productivity growth as a core
strategy even as the momentum of asset building continues. “A rupee is one factor among a host
of others that disturbs export growth. RIL’s export competitiveness did not spoil, despite the
rising rupee.” Exports were at Rs 3,466 crore in the first quarter as against Rs 2,535 crore in the
first quarter of 2002-03, a 37 per cent jump.
(Mr. Ambani said):”My father (Dhirubhai) used to say, “Give the shareholder an opportunity to
make money and he will come back to you with more money”. He told,”This was at the heart of
Reliance’s strategy”.
Assessment
Task 3
Reasons for corporate failure

Why does a company fail? "The Business Owner presents every reason in the book; may be
because of -bad financial system, turbulence of the market, weak desire, hundred-year floods,
perfect storms, and aggressive refuge--forces, which they cannot manage. Commercial collapse
suggests- acts of God aside, most of the organizer for a simple reason: “management blunder.”
At the end, entrepreneurs become unsuccessful because of "common material of individual

foolishness: rejection, hubris, personality, thinking, lack of communication, careless mistake,
greed, pretense; all these combines to accomplish the failure.
Some of the reasons for corporate failure are listed below:
• Cash flow
• Poor business plan
• Decrease in the demand for the product
• Rise in cost or a lack of control of costs.
Cash flow problems: For many small scale and recently organized businesses, this is one of the
most important reason for business failure. The problems arise when the money coming into the
company from sales is not enough to cover the costs of the production.
Poor business planning: Most of the upcoming businesses have to put together a business plan to
present to the bank before it receives loan of financial help. Industry leads to face difficulties due
to a bad planning or poor information on which a plan is based.
For example, Industry plans to sell 2,000 units per month in the first year but ends up only
selling 500 per month; it will soon be in a serious danger of a fall down.
Fall in demand for the product: There are a lot of reasons why demand falls. Some of the reasons
are- not paying enough amount of attention to their customer requirements, product is not up to
Assessment
the mark, poor quality, cost.

Rise in cost (or) lack of control of costs: Cost of production can be for many reasons. Some
reasons are- salary rises; increase in the price of raw material like the price of oil or gas. In such
cases, industry can plan for such changes and is able to take them into account. If the costs rise
suddenly, this can hold industry off guard and tie them into insolvency.
Joint ventures strategic alliance and collaborations

Joint ventures facilitate in formation of a third-party legal entity, whereas strategic alliances do
not. In addition, rather than concentrating on joint ventures strategic alliances focus on projects
that are smaller in scope. Just as acquisition is extremely popular during the early and mid-
1980s, international and domestic joint ventures have been formed extensively since the mid-
1980s.
A report by David Ernst and Joel Bleeke of McKinsey & Company indicated that ventures
between U.S. and international companies have been growing by 27 percent annually since 1985
(Sherman 1992). Others believe that alliances are inherently bad, and that they result in reduced
competition and ultimately higher prices for consumers.
Why form Strategic Alliance

Strategic alliances are formed for many reasons, which consist- entering into new markets,
decreasing the manufacturing costs, development and diffusion of new technologies rapidly.
Industries frequently enter into alliances based on opportunity rather than linkage with their
overall goals. When a company has surplus of cash then the risk is more. In recent years,
Mercedes-Benz and Toyota Motor Corporation started investing surplus funds into seemingly
unrelated businesses, with Benz already facing difficulties as a result.
Some examples of joint venture strategic alliance and collaboration:
1. Joint ventures created to serve a domestic market after the partnership between Time-Warner,
Inc. and three black-owned cable companies in New York City. Time Warner won the
acceptance of the cable customers and assistance from an improved image in the black
community by joining with some local companies
Assessment
2. In September 2005, we (Edwards Angell Palmer & Dodge licensing collaborations joint
ventures) represented Genzyme in connection with a strategic collaboration agreement with
RenaMed Biologics, Inc. for the joint development and commercialization of a renal assist
device for the treatment of acute renal failure. The agreement provides for a sharing of costs and
profits, with Genzyme contributing research and development funds and making payments upon
the completion of certain milestones.
Overview on car industry and their activities

In earlier days, cars available in Indian Market were Ambassador and the Premier Padmini.
Ambassador is a replica of the Morris Oxford – an old British car, while the Premier Padmini
was a Fiat 1100 assembled in India.
Earlier in 1983, manufacture of Maruti Suzuki 800 hatchback car– a joint venture between
Government of India and Suzuki Motors of Japan covered the way for a new start in the Indian
automobile sector.
At present, India is the second largest two-wheeler market and the fourth largest commercial
vehicle market in the world. It is the eleventh biggest passenger car market globally, it is also
projected to be the seventh largest by 2016.
Few car manufacturers who set up their base in India are- Audi, BMW, Chevrolet Fiat, Ford,
Honda, Hyundai, Mahindra, Maruti, Mercedes, Mitsubishi, Skoda, Suzuki, Tata, Toyota,
Volkswagen, and Volvo. These manufacturers framed manufacturing facilities in India and
import cars and spares to meet the requirements of this growing market.
For example, Ford is planning to make India a provincial hub for exports of both small cars as
well as engines. According to (Mr. Michael Boneham), President Designate for Ford India, the
company’s strategy is to export small cars and the engines for market in abroad.
Clarion Company Ltd, in cooperation with Microsoft Corp, developed the Clarion AutoPC car
computer. A device, which combine Microsoft’s AutoPC platform with Clarion's audio/visual
technologies, permits functions such as wireless communication, data transfer and travel-distance
Assessment
measurements. The Clarion AutoPC, which features verbal command recognition, is expected to
have a major impact in the future design of automobile multimedia systems.
Task 4
Areas of Risk
"Business risk" can be measured as the risk of a critical change in assumptions and targets that
Assessment
supports a company initiative. Strategic risk is similar thing at a diverse level: it involves many
questions such as-should a company remain within the industry or under a complete different set
of assumptions whether it should come within reach of its marketplace?
Business Risk – a trouble in two parts

From the view of a financial organization, the problem of business risk management cascade into
two parts.
The most difficult of these is how a financial organization approaches its business risks, as
clearly reverse in our Business Risk field. Particularly, as an official risk does it add up for a
bank and its stakeholders to handle some business risks?
Rather depending on, “characteristics of risk” the answer lies in the “severe point of risk”.If the
serious capability of business or strategic risks increases, organizations find themselves under
lots of pressure to clarify, how their approach to organizations risk "fits" with their management
of few risks as- approval, merchandise and practical risks.
Another part of the problem is wide. Company should use any type of use risk as transport and
finance tools to handle a business risks which stretch outside the conventional provision, market
and approval risk organization markets? This is the most important questions because, if answer
is yes, it will open many new risk management markets and expose some organization to new
kinds of risk portfolios.
Let us take an example, take a look first that has transferred a risky enduring liability rooted
within a company's marketing policy.
Rolls Royce is the world’s successful aerospace manufacture. One of the world's most
successful aerospace manufacturers is Rolls-Royce.
As a business strategy, the company has offered guarantees to certain prospects for some years
covering a segment of the future significance of aircraft powered by its engines, which has
helped the customers to arrange cheaper economy for buying Rolls-Royce powered goods.
Assessment
As time went on, the risks associated with these guarantees accumulated into a considerable
financial exposure.
In order to handle the risk Rolls Royce continued with the practice. One of its biggest
transactions in February 2001,it entered in a provision agreement with XL capital ltd, which
limited aerospace industries. In one of the larger transactions of its kind, in February 2001, Rolls-
Royce entered into an insurance agreement with XL Capital Ltd that restricted aerospace
industries exposure to Boeing and Airbus aircraft standards. This was not a unique but an It was
an inventive agreement.
These deals are division of wider and superior risk supervision market for handling the residual
standards of possessions that any organizations either own or economically exposed to a part of
their strategy. Few unexpected risks that are there for some decades seem an inevitable part of
doing trade has become "convenient" - at a price.
Areas of risk for medium sized businesses in the UK
A recent survey done for 7,200 entrepreneurs across 32 countries, asked whether the companies
have official documentation for dealing with critical risk areas as- suppliers/customers loss, key
workers loss, recovery of the failure and protection of electronic information.
Organizations in UK appear doing well in finding solutions for risk originating from recent and
elevated profile pressure. 77% organizations consists documentation in order to deal with
adverse revival, also for a main IT collapse, considering UK in fourth and fifth position
correspondingly and comparing positively with global averages of 57% (57%) and 61% (63%).
After scoring well on these current issues UK organizations are not well prepared in the areas of
risks. Formal procedures are made by only 26% of UK organizations to deal with latent
reputation or madia catastrophe comparing with an average of 35%. Taiwan topped the table
with 61%, followed by Turkey with 57%.
UK businesses appear to overlook the fundamental risks areas which are very disturbing. Not as
a very high profile or remarkable as few measures, the unexpected defeat of key personnel or a
trader could have destructive impact on a business.
Assessment
Strategies for Risk Minimizing

The important decisions an entrepreneur should make from years of cautious or careful planning
is exit from an organization. Business Owners, who does not identify importance for the
preparation of risk, put the continuous success of the business in threat. Business owners of UK
are prepared well, comparing to their global counterparts; in terms of planning than many of their
global counterparts when it comes to preparation key risk of businesses.
Method
1. identify, characterize, and assess threats
2. assess the vulnerability of critical assets to specific threats
3. determine the risk (i.e. the expected consequences of specific types of attacks on specific
assets)
4. identify ways to reduce those risks
5. prioritize risk reduction measures based on a strategy.
At the time, strategic risks are predicted most of them will not easily deal in terms of the
standard areas of Risk Management when the strategic risks are predicted. It makes the risk
management fatal business and strategy risks a critical problem for risk managers. It suggests
any solution should be found for tying business and strategic risk management firmly into
enterprise-wide approaches to risk management and corporate governance.
Handling Risk in Organization

According to the United Nations’ Brundtland Commission, sustainable development is a process
of change in which the exploitation of resources, direction of investments, orientation of
technological development, and institutional change are in harmony, and enhance both current
and future potential to meet human needs and aspirations. Sustainable development seeks to find
the balance between economic, environmental, and social performance. Organizations following
the Global Reporting Initiative’s (GRI) reporting guidelines use specific performance indicators
to identify reportable sustainability achievements and challenges.
Assessment
Management is responsible for implementing the sustainability management system, and internal
audit should perform an assessment of its adequacy and effectiveness like as follows
• Policy and strategy
• Planning risk management
• Implementation and operation
• Checking and corrective action
• Management review and continual improvement and
• Adding value.
Conclusion
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Assessment
Bibliography
Assessment

Strategic Management

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Strategic Management

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Strategic Management ..................................................................................................................3

Role played by Sales ..................................................................................................................3

Types of organizations ..................................................................................................................4

M.Porter’s five forces model ........................................................................................................5

Drivers of Organization Growth...............................................................................................7

Market Segmentation as Drivers of Growth............................................................................8

Product development as Drivers of Growth............................................................................8

Core strategic factor in growth.................................................................................................9

Reasons for corporate failure..................................................................................................10

Joint ventures strategic alliance and collaborations.............................................................11

Why form Strategic Alliance...................................................................................................11

Overview on car industry and their activities.......................................................................12

Areas of risk for medium sized businesses in the UK...........................................................15

Strategies for Risk Minimizing...............................................................................................15

Handling Risk in Organization...............................................................................................16

Role played by Sales

Michael Porter’s Value Chain model

• Marketing and Sales

• Research and Development

M.Porter’s five forces model

Drivers of Organization Growth

1. Leadership –Is there adequate leadership at every level in an organization?

3. Reasonable Alternatives – Does an organization considered and analyzed any alternative

and what it wants to be?”

Market Segmentation as Drivers of Growth

Product development as Drivers of Growth

Core strategic factor in growth

Reasons for corporate failure

At the end, entrepreneurs become unsuccessful because of "common material of individual

Some of the reasons for corporate failure are listed below:

• Poor business plan

• Decrease in the demand for the product

• Rise in cost or a lack of control of costs.

the mark, poor quality, cost.

Joint ventures strategic alliance and collaborations

Why form Strategic Alliance

Some examples of joint venture strategic alliance and collaboration:

Overview on car industry and their activities

Business Risk – a trouble in two parts

Areas of risk for medium sized businesses in the UK

Strategies for Risk Minimizing

1. identify, characterize, and assess threats

2. assess the vulnerability of critical assets to specific threats

4. identify ways to reduce those risks

5. prioritize risk reduction measures based on a strategy.

Handling Risk in Organization

• Policy and strategy

• Planning risk management

• Implementation and operation

• Checking and corrective action

• Management review and continual improvement and

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