Strategic Management

STRATEGIC MANAGEMENT
Dr Guntur S. Siboro, BSEE, M.Eng, MBA
PhD, Universitas Indonesia (2015)

INSEAD Executive Course (2008)
HBS Executive Education (2007)
Visiting Fellow, Center for Corporate Strategy & Change, Univ of Warwick (1996)
MBA, Monash University (1991)
M. Eng., Cornell University (1987)
BSEE, University of Southern California (1986)
Country Head HOOQ Indonesia (2015-now)

President Director & CEO Aora TV (2010-2015)
President Commissioners PT Centratama Telekomunikasi Tbk (2010-now)
President Commissioners PT Global Teleshop Tbk (2010-2016)
Marketing Director PT Indosat Tbk (2007-2010)
President Commissioners PT Indosat Mega Medai (2009-2010)
President Commissioner PT StarOne Mitra Telekomunikasi (2007-2010)
Commissioners PT Aplikanusa Lintasarta (2009)
Chairman Camintel SA (2003-2005)
SVP Corporate Strategy PT Inodsat Tbk (2002-2004)
Member of the Board Acasia Sdn Bhd (2001-2002)
Syllabus
SESSION
1
TIME
TOPIC
CONTENTS
21-Sep
5:00-6:20
- Changing world of business

- Different types of Strategies
- Article: What is Strategy?

- Class discussion
21-Sep
7:00-8:20
- Vision, Mission, Goals, Objectives and

Policies
- Characteristics of strategic decisions
- Strategy Process & Strategic Analysis An
overview
- Industry and Competitive Analysis Five
forces Analysis, competition analysis, generic
competitive strategy
- Class discussion
21-Sep
8:20-10:00
- Class discussion
- Article: How competitive forces shape strategy?
- Article: How industries change?

- Article: Creating competitive advantages
4
22-Sep
5:00-5:40
22-Sep
5:40-7:00
- Industry and Competitive Analysis [continued] - Class discussion

- Case -1: Crown Cork [Five forces Analysis, competition analysis]
- Resources & Capability Analysis [including - Class discussion
Value Chain Analysis]
- Case - 2: Matching Dell [Competitive Strategy and Value Chain Analysis]
Syllabus
SESSION
6
TIME
22-Sep
7:30-8:50
TOPIC
CONTENTS
- Strategic options, evaluation and choice
- Class discussion
- Case -3: Shimla Dairy
22-Sep
8:50-10:00
- Special topic: Turnaround Strategy
- Article on strategic transformation

- Class discussion
- Case -4: Ford Turnaround
26-Sep
5:00-5:55
- Special topic:Growth Strategy
- Article on Growth strategy

- Class discussion
- Case 5: Apple at 2010
26-Sep
5:55-6:50
- Special topic: Internationalization Strategy
- Article on internationalization
- Class discussion
- Case -6: CUMI in China [growth and internationalization strategy]
26-Sep
7:20-8:05
- Strategy Implementation and Management of

Change
- Articles: Implementing strategy
10
11
26-Sep
8:30-10:00
Case -7: Allentown Electronic Products [B]

Examination [case based]
EVALUATION
Assignment (individual or group)
and class participation: 20%
Quiz or minor paper: 30%
Examination: 90 minutes @ 50%
Session 1
SESSION
1
TIME
TOPIC
CONTENTS
21-Sep
5:00-6:20


- Class discussion
21-Sep
7:00-8:20

Policies
overview
- Class discussion
21-Sep
8:20-10:00
- Class discussion

4
22-Sep
5:00-5:40
22-Sep
5:40-7:00

SESSION 1
Changing world of business

Different types of Strategies
REALITY OF THE NEW BUSINESS CONTEXT

Customers are not just demanding but they also have infinite options
Competition is not just intensifying but there are also new sources of
competition
Resources are not just limited but they are also migrating all the time
Re-regulation, following a series of deregulations over the last 20 years has now become a reality
Investors are not just dissatisfied with the level of returns they got in the
past but they are also becoming impatient
OLD Economy companies continue to exist but economic power has
shifted to organizations who are better positioned to face the reality of
the Information Economy characterized by blurring industry boundaries,
Smart and Connected products, Social Media, BIG Data, Analytics, State
of the art IT hardware and software and their impact on the way
strategic choices are being made to dominate the unfolding future
Both huge opportunities and risks are existing simultaneously
SELECT THE STRATEGIC POSTURE

FUTURE
FUTURE
STRATEGY
STRATREGY
SHAPE THE FUTURE
ADAPT TO THE FUTURE
FUTURE
STRATEGY
RESERVE THE RIGHT TO PLAY
SELECT THE STRATEGIC POSTURE

A STRATEGIC POSTURE is not a complete strategy. It clarifies strategic
intent but not the actions required to fulfil that intent. Three possible
Strategic Postures are:
SHAPE THE FUTURE
Play a leadership role in establishing how the industry operates in
the future, for example:
Setting standards
Creating demand
ADAPT TO THE FUTURE
Win through speed, agility and flexibility in recognizing and
capturing opportunities in existing markets
RESERVE THE RIGHT TO PLAY
Invest sufficiently to stay in the game but avoid premature
commitments
DIFFERENT TYPES OF STRATEGY
Competitive Strategy
and
Corporate Strategy
COMPETITIVE STRATEGY:
Competitive strategy usually looks at a single business unit focusing on specific

product [service]- market and examines whether the business has competitive
advantage or disadvantage
Competitive Strategy essentially involves making three CHOICES with reference
to 3 questions, that together determine the POSITIONING being aimed as the
FUTURE unfolds :
1. Where will we compete? Choice of buyer segments and identification
of competitor[s] to be hedged against
2. How will we compete? Choice of core value propositions [ such as
Cost Leadership and Differentiation] that will be valued by prospective
customers [Q1] vs. competition [Q1]
3. How will we deliver? Choices made regarding the mix of in-house and
outsourced activities and their inter-relationships that [a] competition
[Q1] will find it difficult to imitate and that [b]optimizes investments in
assets and people in a way that help create and deliver the value [Q2]
to targeted buyers [Q1] at desired margin
The CHOICES in above mentioned 3 areas, along with supportive cross-functional

decisions and actions - need to be:
A. Different ref the Value proposition [Q 2] in the eyes of customers [Q1]
relative to competition [Q2] and
B. Smart ref optimized investments in Assets and People for ensuring the
desired operating excellence and earning targeted returns [Q 3]
If the CHOICES made with regard to Q1, 2 and 3 ensure [A] and [B], the same will
help the business achieve SUSTAINABLE COMPETITIVE ADVANTAGES vis--vis
Customers, Suppliers, Substitutes, New Entrants, Complements and of course
Competition, which in turn will help the business achieve its long term market
and financial goals
Thus, a RIGHT competitive strategy comprising CHOICES made by managers with regard to
Q1, 2 and 3 mentioned above, against the backdrop of their unique external and internal
context, and rolled out through an integrated set of cross-functional decisions and
activities will make the business look and perform DIFFERENTLY & SMARTLY which will help
the business develop SUSTANTABLE COMPETITIVE ADVANTAGE leading to achievement of its
LONG TERM MARKET AND FINANCIAL GOALS
COMPETITIVE STRATEGY: CONTEXT

External Environment -Macro-economic and general
environment and Industry and competitive
environment
Infrastructural Constraints [external and internal]
Internal Environment Including Organization Policies,
Culture, Political Dynamics and Leadership
The STRATEGIST His/her Attitude, Mindset, Risk
appetite and Strategic skills
Core business Strategy
Choices made ref the 3 questions [a] Q1: Where
will we compete? [b] How will we compete [ What
will be our Competitive Advantage?] and [c] How
will we create for, communicate with and deliver to
the target group we have chosen
Growth strategy [Having selected our Core

business Strategy, how will we grow the business]
Internationalization strategy[Having selected our
Core business Strategy, how will we grow the
business in the global market]
Competitive Strategy as defined above - is a CHOICE made
out of strategic options developed through a Strategic
Analysis of business context along several dimensions,
particularly:
Macro-economic and general environment analysis
Industry and competitive analysis
Resources and capability analysis
Organization and culture analysis
Stakeholder expectation analysis
Each Strategic Option is evaluated along 3 criteria viz. [a]
Suitability, [b] Acceptability and [c] Feasibility
Corporate Strategy
CORPORATE STRATEGY:
Corporate Strategy captures a set of choices that a
corporation makes to create value through configuration and
coordination of its multi-market activities.
Corporate Strategy seeks to achieve synergy among various
businesses in companys portfolio of multi-market operations
from 2 perspectives - external and internal
Thus, Corporate strategy addresses choices about multimarket activities while competitive strategy deals with a set of
choices confined to a single market
Corporate Strategy
Though there are differences between corporate and
competitive strategies, the former can enhance business
units competitive advantage over and above what they could
otherwise achieve. When this happens, business units benefit
from corporate advantage
Two significant choices coming under corporate strategy are:
Corporate Scope that specifies the product-markets the
corporation has chosen to maintain a competitive presence
Corporate Ownership that specifies which part of each
business unit will be owned by the corporation
Corporate Strategy
Two principles can be used to decide the presence and
ownership issues. These are:
Better off Test
Ownership Test
Choice of markets [presence issue]
Does the presence of the corporation in a given market improve the
total competitive advantage of various business units over and above
what they achieve on their own?
A negative answer will suggest exit from the market.
A positive answer will mean a simultaneous presence in multiple
industries will be beneficial
Corporate Strategy
The OWNERSHIP question:
Does ownership of the business unit produce a greater
competitive advantage than an alternative arrangement
would produce?
Ownership means outright control including majority stake in
the business unit
Alternative here means licensing, long term contract, strategic
alliance or joint venture
When both tests are satisfied, we should conclude that a
corporation made an appropriate decision to be present in
another industry and own the unit there
CORPORATE STRATEGY
CORPORATE STRATEGY [essentially can be called PORTFOLIO
STRATEGY ] thus deals with CONTEXT-SPECIFIC strategic
choices ref
Portfolio of distinct businesses [distinct in terms of market mission,
customer segments and competition and capabilities]
Portfolio of geographical markets [more relevant for global cos.]
Role of the corporate office to support value creation at business level
[corporate parenting role]
Resource allocation
Development of enterprise wide capabilities that can be used
by more than ONE Business Unit
Talent scouting and development
TWO OTHER TYPES OF STRATEGY

FUNCTIONAL STRATEGY dealing with CONTEXT-SPECIFIC
strategic choices made at individual functional level
[manufacturing, R&D, marketing , sales , Finance, HR, SCM
etc] thereby contributing to business level strategies for
achieving sustainable competitive advantages
OPERATIONAL STRATEGY dealing with CONTEXT-SPECIFIC
[at branch, department or unit level] actions and programs
under each functional areas and their cross functional
alignments for achieving sustainable competitive advantage
at the business level.
NOTE: There must be a clear LINE OF SIGHT among all 4
levels of strategies
Session 2
SESSION
1
TIME
TOPIC
CONTENTS
21-Sep
5:00-6:20


- Class discussion
21-Sep
7:00-8:20

Policies
overview
- Class discussion
21-Sep
8:20-10:00
- Class discussion

4
22-Sep
5:00-5:40
22-Sep
5:40-7:00

SESSION 2
Vision, Mission, Goals,

Objectives and Policies
Characteristics of strategic
decisions
Key vocabulary of strategy
Mission
Vision
Goal
Objectives
Key vocabulary of strategy [Continued]
Policies
Strategy
Control
Rewards
CHARACTERISTICS OF STRATEGIC DECISIONS

CONTEXT-SPECIFIC
INDICATES LONG TERM DIRECTION OF AN
ORGANIZATION
DEFINES CONTEXT
SPECIFIC SUSTAINABLE
COMPETITIVE ADVANTAGE
DETERMINES SCOPE OF THE ORGANIZATION
STRATEGIC FIT BETWEEN RESOURCES AND
ACTIVITIES AND ENVIRONMENTAL CONTINGENCIES
CHARACTERISTICS OF STRATEGIC DECISIONS[Contd]

EXPLOITS EXISTING RESOURCES AND CAPABILITIES
OR EXPLORES NEW OPPORTUNITIES USING
COMPETENCIES
MAJOR RESOURCE COMMITMENT, IRREVERSIBLE IN
THE SHORT RUN
AFFECTS ORGANIZATIONAL DECISIONS
SHAPED BY VALUES AND EXPECTATIONS OF KEY
STAKEHOLDERS
WEALTH CREATING
Key implications of strategic decisions

They are complex in nature
Requires a Point of View on the FUTURE
since future is uncertain and has not yet
happened
Demands integrated approach to managing
an organization
Requires management of relationships and
networks outside the organization
Involves change within the organization
Session 3
SESSION
TIME
TOPIC
CONTENTS
21-Sep
5:00-6:20


- Class discussion
21-Sep
7:00-8:20

Policies

overview
- Class discussion
21-Sep
8:20-10:00
- Class discussion

4
22-Sep
5:00-5:40
22-Sep
5:40-7:00

SESSION 3
Strategy Process &
Analysis An overview
Strategic
Industry and Competitive Analysis

Five forces Analysis, competition
analysis,
generic competitive
strategy
STRATEGY PROCESS
STRATEGY DEVELOPMENT PROCESS
STRATEGIC ANALYSIS
Political, Regulatory, Economic, Social Technological
[PREST] Analysis
Stakeholder expectations
DEVELOPMENT OF STRATEGIC OPTIONS, EVALUATION
AND CHOICE
STRATEGY IMPLEMENTATION
Strategic Analysis
[Session 3 ]
INDUSTRY AND
COMPETITIVE ANALYSIS
INDUSTRY STRUCTURE AND INDUSTRY

ECONOMICS [I.E. PROFIT POTENTIAL]
INDUSTRY ECONOMICS AND NATURE OF

COMPETITION ARE INFLUENCED BY THE
COLLECTIVE STRENGTHS OF FIVE
COMPETITIVE FORCES:
POWER OF CUSTOMERS
POWER OF SUPPLIER
THREATS OF SUBSTITUTE
THREATS OF NEW ENTRANTS
JOCKEYING AMONG CURRENT PLAYERS
STRUCTURAL ATTRACTIVENESS OF AN
INDUSTRY
An industry is called structurally
attractive [i.e. High profit potential] if
all or most of the forces are weak
unattractive
[i.e.
Low
profit
potential] of all or most of the forces
are strong
HOW DOES AN INDUSTRY EVOLVE? THINGS TO

UNDERSTAND
Long term changes
DEMOGRAPHICS,
LIFESTYLE AND SOCIAL CONCERNS,
TRENDS IN RELATION TO SHIFTS IN CUSTOMER
NEEDS
EMERGENCE
OF
SUBSTITUTE
AND
COMPLIMENTARY PRODUCTS
Changes in adjacent industries/ buyer segments/
learning by buyers

UNDERSTAND
Reduction in uncertainty/ diffusion of

proprietary knowledge
Accumulation of experience
Innovations across value network
product and process
Changes in government policies
Entry and exit
Session 4
SESSION
TIME
TOPIC
CONTENTS
21-Sep
5:00-6:20


- Class discussion
21-Sep
7:00-8:20

Policies

overview
- Class discussion
21-Sep
8:20-10:00
- Class discussion

4
22-Sep
5:00-5:40
22-Sep
5:40-7:00

Strategic Analysis
[Continuing from Session 3 & 4]
INDUSTRY AND
COMPETITIVE ANALYSIS
+
Crown Cork Case
INDUSTRY STRUCTURE AND INDUSTRY

ECONOMICS [I.E. PROFIT POTENTIAL]
INDUSTRY ECONOMICS AND NATURE OF

COMPETITION ARE INFLUENCED BY THE
COLLECTIVE STRENGTHS OF FIVE
COMPETITIVE FORCES:
POWER OF CUSTOMERS
POWER OF SUPPLIER
THREATS OF SUBSTITUTE
THREATS OF NEW ENTRANTS
JOCKEYING AMONG CURRENT PLAYERS
STRUCTURAL ATTRACTIVENESS OF AN
INDUSTRY

attractive [i.e. High profit potential] if
all or most of the forces are weak
unattractive
[i.e.
Low
profit
potential] of all or most of the forces
are strong

UNDERSTAND
Long term changes
DEMOGRAPHICS,
LIFESTYLE AND SOCIAL CONCERNS,
TRENDS IN RELATION TO SHIFTS IN CUSTOMER
NEEDS
EMERGENCE
OF
SUBSTITUTE
AND
COMPLIMENTARY PRODUCTS
Changes in adjacent industries/ buyer segments/
learning by buyers

UNDERSTAND
Reduction in uncertainty/ diffusion of

proprietary knowledge
Accumulation of experience
Innovations across value network
product and process
Changes in government policies
Entry and exit
UNDERSTANDING COMPETITIVE
ADVANTAGE
Concept of Customer Value
Analysis of Competition
Alternative Core Value Propositions
Competitive Threats and Options
Strategic Choices
UNDERSTANDING COMPETITIVE
ADVANTAGE
THREE IMPORTANT AREAS OF UNDERSTANDING:
Concept of customer value
Competitor's capabilities and strategic options
available to them
Firms capabilities to create value in a unique way
that is valuable to customers
DEVELOPMENT OF SUSTAINABLE COMPETITIVE

ADVANTAGES BY A FIRM REQUIRE DEEP
UNDERSTANDING OF THESE THREE ASPECTS
CUSTOMER VALUE
VALUE=PERCEIVED BENEFITS IN THE EYES OF
THE CUSTOMERS
CUSTOMER PERCEIVES VALUE UNDER THREE HEADS [V= P +S

+E:]
Product or core offerings [P]
+
Delivery [D] +
Solution of customers central problem or aspirations [S] +
Experience of customer during acquisition and use of the
offerings [E]
CUSTOMER VALUE
VALUE THUS IS:
Perceived
Individualistic
To a great extent subjective
Relative
Dynamic
THE KEY CHALLENGE OF A COMPANY IS HOW

TO CONVERT ITS PRODUCT TO VALUE IN
THE MIND OF THE CUSTOMER
REMEMBER CUSTOMER DECISION IS FINAL
CUSTOMER VALUE PROPOSITION:

WHAT TO OFFER?
Which attributes , which are currently
taken for granted, can be eliminated?
Which attributes should be reduced to
below industry standards
Which attributes should be increased to
above industry standards?
Which new attributes should be created
that the industry has never offered?
VALUE PRICE RELATIONSHIP

Perceived value must be more than the effective price
charged[ equal to actual cash outflow]
Value-price ratio [v/p] of a companys offerings must be
more than the same of its competitors for it to
dominate the market
Premium pricing is possible only if v/p of the concerned
company is higher than v/p of its competitors
For offerings that are perceived by customers as
standard, customers perceive value only when the
prices charged are lowest
ANALYSIS OF COMPETITION
Competition in an industry cannot be fully
appreciated by looking at the strategies of
individual players. Actions and relative power
of other 4 forces shape competitive dynamics
and firm level strategic choices
Developments in adjacent industries and
strategic choices made by customers,
suppliers, new entrants and companies
offering substitute products affect the rivalry
and relative power of various competitors
ANALYSIS OF COMPETITORS: KEY COMPONENTS

[ANALYSIS IS A MUST BEFORE DEVELOPMENT OF BUSINESS STRATEGY]
FUTURE
GOALS
CURRENT
STRATEGY
COMPETITORS
RESPONSE
PROFILE
CAPABILITIES
ASSUMPTIONS

FUTURE GOALS OF COMPETITORS

What drives the competitor overall and at all levels of
management and in multiple dimensions
CURRENT STRATEGY OF COMPETITORS
What the competitor is currently doing and can do
ASSUMPTIONS MADE BY COMPETITORS
Held about itself and the industry [as assessed by the
competitor]
CAPABILITIES OF COMPETITORS
Both strengths and weaknesses [as assessed by us]

COMPETITORS RESPONSE PROFILE

Is the competitor satisfied with its current
position?
What likely moves or strategy shifts will the
competitor make?
Where is the competitor vulnerable?
What will provoke the greatest and most
effective retaliation by the competitor?
COMPETITOR ANALYSIS
CHECK SPECIFICALLY:
Core capabilities across value network

Ability to grow [resources/ skill/ intent]
Quick response ability
Ability to adapt to changes
Staying power
IDENTIFY CHANCE OF ANY OFFENSIVE MOVE
How satisfied with current position?

Probable moves
Changes being contemplated in internal operations
Strengths and seriousness of each move
COMPETITOR ANALYSIS
DEFENSIVE CAPABILITY OF THE COMPETITOR
Extent of vulnerability to strategic moves / government
policy/ industry events
Which move competitor cannot retaliate
What action will provoke maximum retaliation?
How effective the retaliation going to be given its
strengths
PICKING THE BATTLE GROUND:
Where the competitor is ill prepared [from strategy,

organization and resource point of view]
Where retaliation, even if effective, will cause resource
reallocation/ diversion from other priorities
COMPETITIVE THREATS AND OPTIONS

SUBSTITUTION B&N SUBSTITUTED BY AMAZON
IMITATION AMAZON ITSELF GETS ATTACKED BY
IMITATORS
POSSIBLE RESPONSES TO SUBSTITUTION:
NO RESPONSE [extreme option]

HARVESTING [extreme option]
FIGHTING [remain focused and fight substitution ]
SWITCHING [ exit from the present and switch to substitution]
STRADDLING [ do both present and substitution]
RECOMBINING [ do both but get the best practices and
resources from the present mode to substitution item]

IMITATORS WILL HAVE TO OVERCOME ADVANTAGES OF THE
INCUMBENT:
Brand name
Ability to offer industry-first products
Superior infrastructure
Customer loyalty and retention
Entry barriers built by the incumbent such as long term contracts with
suppliers and customers
Access to privileged resources
Ability to reduce prices to stop imitators
Scale economies and economies of scope
Marketing spend
Tacit knowledge of the business
Ability to step up investments thereby making cost of imitation
higher

SOMETIMES, INCUMBENTS WHO MAY NOT BE
THAT MUCH AFECTED BY IMITATORS CAN
FACE PROBLEMS OF SUSTAINABILITY
RESULTING FROM:
Substitution - threat of being displaced by different business
model rather than being imitated by look-alike imitators
Hold up - diversion of value to complementors and business
associates and also key employees leaving the organization with
knowhow
Slack persistent sub optimization by employees who spend time
on issues not related to customer value creation
BASES OF COMPETITIVE ADVANTAGE:
Anything , tangible and/or intangible, that helps create
advantages over competition
Lowest price is a competitive advantage when offerings are
perceived as standard
Competitive advantages based on value added offerings lead
to either premium prices or higher market share or both
COMPETITIVE ADVANTAGES ARE ACHIEVED BY

COMPANIES THROUGH 3 GENERIC STRATEGIES/
CORE VALUE PROPOSITIONS:
Overall cost leadership
Differentiation
Focus
CORE VALUE PROPOSITIONS AT BUSINESS LEVEL:

VARIOUS TYPES OF DIFFERENCES
PRICE BASED DIFFERENCES [LOW COST
STRATEGY]
No frills which combines low price, low perceived
product/service benefits and a focus on price sensitive
markets
Products are commodity type
Price sensitive customers
Buyers have high power and/or low switching cost
Competitors have equal market power and imitation is easy
and thus price is a key competitive weapon
Low price segment is an opportunity for smaller players to
avoid the major competitors who concentrate on higher
price points

BENEFIT BASED
STRATEGY]
DIFFERENCES
[DIFFERENTIATION
Provide products or services that offer benefits different from

those of competition and that are widely valued by customers
Normally a combination of differences in product,
solutions [ref problems faced by target customers in
acquiring and consuming the product/services] and
experience
Key requirements for success: market selection [ viz. right
identification of customer and its decision maker and
competitors who are also trying to create differentiation]
Sustainable competitive advantages will accrue only if
the proposed differences are created through a set of
firm-specific distinctive capabilities that customers value
and competition cannot imitate easily

HYBRID seeking to achieve simultaneously
DIFFERENTIATION and PRICE based DIFFERENCES
[Hybrid strategy]- particularly useful when;
It is felt that much greater volume can be achieved vs.
competition implying higher margin due to lower per unit
cost structure
the firm is clear about the areas where it has capabilities to
create differentiation and, except those, it is able to reduce
cost in other areas
the firm is intending to enter a new market segments
where there are already established competitors whose
competitive advantage in such segments are not strong

NICHE STRATEGY - FOCUSSED DIFFERENTIATION
for a select segment that seeks to provide high
perceived product/service benefits justifying a
substantial price premium which large
companies following differentiation strategy find
unattractive to pursue
NICHE STRATEGY - COST/LOW PRICE FOCUSSED
for a select segment that seeks to provide
standard product/services al lowest price which
large companies following cost leadership
strategy find unattractive to pursue
SUSTAINABLE COMPETITIVE
ADVANTAGES
Required for medium to long term success in the
market place
Competitive advantages result when an organization is
able to deploy its resources [including unique
resources] and competencies [processes to deploy
resources] in a unique way that create value customer
truly wants
Organizational resources and competencies that
create sustainable competitive advantage are:
Valuable to customers
Difficult to imitate
Rare
Structure, systems and processes that facilitate taking numerous
small decisions all aligned and creating customer value
ENSURING SUSTAINABILITY OF
Keep investing in and strengthening the
sources of current advantages
Resources
Competencies to deploy resource
Size in the target market
Superior access to resources
Restricting competitors choice
REINVENTING THE VALUE NETWORK FOR

SUSTAINING COMPETITIVE ADVANTAGE
Avoid fixed cost wherever possible

If there are any fixed cost, make it work
harder than the rest of the industry
Eliminate intermediaries, through use of
technology, and reduce variable cost
Keep any variable cost to a minimum
Convert variable cost factors to revenue
generators
LIKELY FAILURE SCENARIO

INCREASED PRICE, STANDARD VALUE RISK
OF LOSING MARKET SHARE
INCREASED PRICE, LOW VALUE FEASIBLE
ONLY IN MONOPOLY SITUATION
LOW VALUE, STANDARD PRICE LOSS OF
MARKET SHARE
SUSTAINING COMPETITIVE
ADVANTAGE
SUSTAINABLE
COMPETITIVE
ADVANTAGE
Price-based
strategies
Differentiation
based strategies
Lock in
ADVANTAGE: KEY ACTIONS
PRICE BASED
Accept reduced margin

Win a price war
Reduce cost
Focus on specific segment
DIFFERENTIATION
Create difficulties of imitation
Achieve imperfect mobility [of resources/ competencies
should not be available for purchase by competition]
Reinvest margin
ADVANTAGE: KEY ACTIONS
LOCK IN
Achieve Size/Market dominance

Fast-mover advantage
Reinforcement
Rigorous enforcement
SUSTAINING COMPETITIVE ADVANTAGE IN

HYPERCOMPETITIVE CONDITIONS
REPOSITIONING
Cost leadership
Differentiation
Hybrid
Focus cost or differentiation
OVERCOMING COMPETITORS MARKET-BASED

MOVES
Block the first mover advantages
Imitate product/ market moves
SUSTAINING COMPETITIVE ADVANTAGE IN

HYPERCOMPETITIVE CONDITIONS
OVERCOMING COMETITORS BARRIERS

Take advantage of shorter life cycles
Undermine competitors strongholds
Counter deep pocket advantages
COMPETING SUCCESSFULLY
Pre-empt competition [new strategies]

Do not attack competitors weaknesses
Disrupt the market
Be unpredictable
Mislead competitors
INCREASE COMPETITIVENESS THROUGH

COLLABORATION: KEY OBJECTIVES
Take over work of customers [ to weaken
customer power]
Increase selling power
Increase buying power vs. suppliers [using say
ERP or having a cartel with others who are buying
the same inputs]
Increase barriers to entry by new competitors
Entry to new markets
Decrease risk of substitution
Stakeholder expectation
CONCLUDING REMARKS ON INDUSTRY

ANALYSIS AND COMPETITIVE ADVANTAGE
Industry economics and nature of competition
are influenced by the collective strengths of five
competitive forces
Development of sustainable competitive
advantage requires deep understanding of
industry and also the concept of customer value
and strategic options available to competitors
Sustainability of competitive advantage will
depend on uniqueness of positioning
or
strategic posture that is ensured at any point of
time based on the underlying capabilities the
firm has put in place across the value network
STRATEGIC CHOICES
STRATEGIC CHOICES INVOLVE:
Positioning, based on companys capabilities,
that helps in defending against competitive
forces[ all 5 competitive forces]
Influencing the balance of forces trough
offensive strategic moves thereby improving
companys positioning
Anticipating shift in factors underlying the 5
forces and responding to them ahead of
opponents
STRATEGIC CHOICES
POSITIONING vis--vis current five forces
is the business model of the firm that
and reflects choices regarding:
TARGET CUSTOMERS
TARGET COMPETITION
VALUE PROPOSITION
VALUE DELIVERY MODEL
STRATEGIC CHOICES
Objective of POSITIONING is to either
defend against competitive forces or find
position in the industry where the forces
are weakest.
INFLUENCING goes beyond defending
and is offensive enough to alter the
relative power of 5 forces
STRATEGIC CHOICES
ANTICIPATING takes into account the future
changes in the power of 5 competitive forces

caused by developments in macro-economic
environment, technology, regulations, social
concerns, life style, innovations etc and their
impact on the future profit potential of the
industry [which can be very different from the
present one]
Such an anticipation goes beyond scenario
building and requires managers to build a Point
Of View [POV] on future industry evolution
STRATEGIC CHOICES
The key to survival and growth in an industry is to stake
a position that is less vulnerable to attack from head-tohead opponents, whether established or new, and less
vulnerable to erosion from the direction of buyers,
suppliers and substitute goods
Establishing such a position can take many forms viz.:
Building relationship with customers
Product/service differentiation[either substantively
or psychologically]
Integrating forward or backward
Establishing technological leadership and so on
CROWN CORK CASE

1. Define the industry and the 5 forces, considering
information provided in the case
2. Is the industry, as defined by you, was profitable as
at 1989? Whatever be your answer, use Porters 5
forces model to justify your answer.
3. Do an analysis of top 6 to 7 Competitors based on
the data provided in the case and explain the
similarities and differences between the strategies
adopted by each as at 1989.
Session 5
SESSION
1
TIME
TOPIC
CONTENTS
21-Sep
5:00-6:20


- Class discussion
21-Sep
7:00-8:20

Policies
overview
- Class discussion
21-Sep
8:20-10:00
- Class discussion

4
22-Sep
5:00-5:40
22-Sep
5:40-7:00

Session 5
Strategic Analysis:
Resources and capability
Analysis [including Value
Chain Analysis + Matching
Dell
STRATEGY PROCESS
STRATEGY DEVELOPMENT PROCESS
STRATEGIC ANALYSIS
Political, Regulatory, Economic, Social Technological
[PREST] Analysis
Stakeholder expectations
DEVELOPMENT OF STRATEGIC OPTIONS, EVALUATION
AND CHOICE
STRATEGY IMPLEMENTATION
RESOURCES AND CAPABILITY

ANALYSIS: STRATEGIC CAPABILITIES
RESOURCE BASED VIEW OF THE FIRM:
The Competitive Advantage of an organization is explained by its Strategic
Capabilities i.e. the distinctiveness of its capabilities
Such distinctiveness helps explain how some businesses are able to
achieve extraordinary profits or returns compared to others
Such high performing firms have capabilities that permit them to produce
at a lower cost or generate a superior product or service at standard cost
in relation to businesses run with inferior resources or competencies
Definition of Strategic Capabilities = Resources ( tangible+ intangible
assets + people )+ Competencies [i.e. processes and activities that help
deploy the resources effectively] of the organization that collectively
create SUSTAINABLE advantage over its competitors and are appreciated
by its customers
NEED FOR RESOURCES AND CROSS FUNCTIONAL

ALIGNMENT TO EXECUTE BUSINESS STRATEGY
Generic Strategy
Commonly Required Skills

and Resources
Common Organizational
Requirements
Overall Cost Leadership
Continuing need to invest

capital and access to
capital
Process engineering skills
Intense supervision of
productivity at all levels
Low cost per unit at each
point of the value chain [
procurement
manufacturing, supply
chain management,
distribution, support
services etc]
Tight cost control

Frequent and detailed
control reports
Structured organization
and responsibilities
Incentives based on
meeting strict quantitative
targets
NEED FOR RESOURCES AND CROSS FUNCTIONAL

ALIGNMENT TO EXECUTE BUSINESS STRATEGY
Generic Strategy
Commonly Required Skills

and Resources
Common Organizational
Requirements
Differentiation
Strong marketing abilities

Product engineering
Creative flair
Strong capability in basic
research
Corporate reputation for
quality or technological
leadership
Long tradition in the
industry or unique
combination of skills drawn
from other businesses
Strong cooperation from
channels
Strong coordination among

functions in R&D, product
development, and
marketing
A combination of
subjective and quantitative
measures
Amenities to attract highly
skilled labor, scientists and
creative people
STRATEGIC CAPABILITIES AND

Resources
Threshold
capabilities
Threshold
resources :
Tangible
Intangible
Strategic
Unique
Capabilities for resources
competitive
Tangible
advantage
Intangible
Competencies
Threshold
competencies
Core
Competencies
DEFINITIONS
Threshold resources minimum required to operate the business
Tangible- plant, labor, finance
Intangible information, reputation and knowledge
Threshold competencies minimum activities and processes required by a
business through which it deploys its resources [tangible+ intangible]
effectively
Unique resources- these are resources that critically underpin competitive
advantage and that others cannot imitate or obtain
Tangible
Intangible
DEFINITIONS
Core competencies these are the activities and processes
through which resources are deployed in such a way as to
achieve competitive advantage in ways that others cannot
imitate or obtain
Strategic capabilities - = Resources ( tangible+ intangible
assets + people )+ Competencies [i.e. processes and activities
that help deploy the resources effectively] of the organization
that collectively create SUSTAINABLE advantage over its
competitors and are appreciated by its customers
Dynamic capabilities- ability of an organization to learn and
adapt to new conditions and sustain the advantage created by
strategic capabilities at a point of time
SOURCES OF COST EFFICIENCY

Supply cost
Product/process
design
Economies of
Scale
experience
Cost
Efficiency
CRITERIA FOR THE ROBUSTNESS OF

STRATEGIC CAPABILITY
Culture and history
Taken for granted
activities
Path dependency
Causal ambiguity
Complexity
Internal linkages
Characteristic
ambiguity
External linkages
Linkage ambiguity
Robustness
of strategic
capability
VALUE CHAIN WITHIN AN

ORGANIZATION
SUPPORT ACTIVITIES
--------------------------------------------------------------------------------------------Firm infrastructure
--------------------------------------------------------------------------------------------Human Resources Management
---------------------------------------------------------------------------------------------Technology Development
---------------------------------------------------------------------------------------------Procurement
----------------------------------------------------------------------------------------------
PRIMARY ACTIVITIES
Inbound
logistics
operations
Outbound
logistics
Marketing
and sales
services
Margin
ALIGNING FUNCTIONAL ACTIVITIES

TO SET BUSINESS GOALS AND
DEVELOP AND IMPLEMENT BUSINESS STRATEGY
UNDERSTANDING THE CONCEPT OF VALUE

CHAIN AND VALUE NETWORK
Value Chain: A set of activities performed within an
organization which together create a product or service
Primary activities directly concerned with the creation or
delivery logistics, operations, marketing and sales, service
[installation, repair, technical support etc]
Support Activities which help improve the effectiveness and
efficiency of primary activities procurement, technology
development, HRM and infrastructure such as F&A, MIS,
Processes and procedures

UNDERSTANDING THE CONCEPT OF VALUE

CHAIN AND VALUE NETWORK
Value Network : It the set of INTER-ORGANIZATIONAL
links and relationships that are to be ALIGNED with
value chain of the organization
Supplier Value Chain

Organizations Value Chain
Channel Value Chain
Customer Value Chain

ANALYZE THE VALUE NETWORK TO FIND OUT:

Where COST AND VALUE are created
Which activities are CENTRALLY IMPORTANT TO
CREATE COMPETITIVE ADVANTAGES
Where are the PROFIT POOLS?
Economics of MAKE OR BUY DECISIONS
Who might be the BEST PARTNERS and what
kind of RELATIONSHIPS are important to create
competitive advantage
CASE: MATCHING DELL

1. How and why did the personal computer industry come to
have such low average profitability?
2. Why Dell has been so successful despite the low average
profitability of PC industry? Specifically, what were Dells
competitive advantages?
3. Describe Dells Value Chain.
4. Which advantages of Dell will be difficult to imitate at the
time of the case? In other words, what are barriers to
imitation?
5. Why competitive options such as straddling adopted by
competitors like IBM and Compaq did not help while Dells
effort to find a Niche worked?
Session 6
SESSION
6
TIME
22-Sep
7:30-8:50
TOPIC
CONTENTS
- Class discussion
22-Sep
8:50-10:00

- Class discussion
26-Sep
5:00-5:55

- Class discussion
26-Sep
5:55-6:50
- Class discussion

Change
10
11
26-Sep
7:20-8:05
26-Sep
8:30-10:00

Session 6
Strategic options,
Strategy Evaluation and
Choice +
CASE: SHIMLA DAIRY
STRATEGIC ANALYSIS: A RECAP

Strategic Analysis is done to analyze in depth the CONTEXT against
which the FUTURE Strategy will need to be developed
Strategic Analysis is done under 5 categories and at three levels:
5 Categories of Analysis are:
Political, Regulatory, Economic, Social,
Technological Analysis [PREST]
Industry and Competitive Analysis [ICA]
Resources and Capability Analysis [RCA]
Organization and Culture Analysis [OCA]
Stakeholder Expectations Analysis [SEA]
The 3 Levels are:
From past to the present INSIGHTS
Present to find EARLY SIGNALS if any
From present to the future FORESIGHT
STRATEGIC ANALYSIS: A RECAP
Outputs of Strategic Analysis: Key understanding in the following areas [past

to the present and present to the future]
PREST + ICA: Opportunities and Threats
RCA+ OCA: Strengths and weaknesses
SEA: Expectations of key stakeholders that the strategy to be selected
must achieve [ref desired competitive positioning, new products,
Shareholder return vs. underlying risks, employee satisfaction etc]
Based on the Insights and Foresights [ both are generally held collectively
within the organization], a POINT OF VIEW [POV] is developed by the team of
STRATEGISTS on what they personally believe are likely to happen [or wish to
make these happen] in the FUTURE BUSINESS CONTEXT. The POV is really a
mix of Foresight [ that is generally held collectively at the level of
organization and the industry] and ALSO aspiration of key members of the
strategy team regarding what they truly want the FUTURE to be [which can be
quite a bit different from the collectively held foresight].
STRATEGIC ANALYSIS LEADS TO GENERATION OF STRATEGIC

OPTIONS AGAINST THE BACKDROP OF FORESIGHT AND POV
SEA
[GOALS]
PREST
OCA
[O&T]
[S&W]
STRATEGIC
OPTIONS
ICA
RCA
[O&T]
[S&W]
STRATEGIC OPTIONS, EVALUATION

AND CHOICE
At this stage, STRATEGIC OPTIONS are
generated, based on key understanding
developed at STRATEGIC ANALYSIS stage, under
different heads:
OPTIONS FOR PORTFOLIO OF BUSINESSES
OPTIONS FOR CORE BUSINESS MODEL FOR EACH BUSINESS OF THE
PORTFOLIO
OPTIONS FOR GROWTH STRATEGIES FOR EACH BUSINESS
OPTIONS FOR STRATEGY DEVELOPMENT FOR EACH BUSINESS
Scope of various OPTIONS:

OPTIONS FOR PORTFOLIO OF BUSINESSES - Mix of businesses
with desired SYNERGIES customer-facing end and back-end [ref
capabilities, systems and processes and infrastructure]

AND CHOICE
OPTIONS FOR CORE BUSINESS MODEL FOR EACH BUSINESS
OF THE PORTFOLIO Comprising DIFFERENT AND SMART
answers to 3 key questions: [1] WHERE TO COMPETE
[Market selection], [2] HOW TO COMPETE [Competitive
advantage - Differentiation vs. cost leadership [ including
whether to focus on all key segments vs. niche] and [3]
HOW TO DELIVER [value delivery model]; options under this
head include strategies for exploiting and exploring current
capabilities within current product market spaces and also
business turnaround if necessary
OPTIONS FOR GROWTH STRATEGIES - Building future
businesses, starting from the CORE BUSINESS MODEL
selected. Includes several options:

AND CHOICE

OPTIONS FOR CORE BUSINESS MODEL FOR EACH BUSINESS OF THE
PORTFOLIO
OPTIONS FOR GROWTH STRATEGIES - Building future businesses,
starting from the CORE BUSINESS MODEL selected. Includes
several options:
1.
2.
3.
4.
5.
6.
7.
8.
Consolidation
Existing products/services to existing customers
New customers
New products/services
New delivery approaches
New geographies
New industry structure
New competitive arenas including going international [if applicable]

AND CHOICE
OPTIONS FOR CORE BUSINESS MODEL FOR
EACH BUSINESS OF THE PORTFOLIO
OPTIONS FOR GROWTH STRATEGIES
OPTIONS FOR STRATEGY DEVELOPMENT [such
as organic vs. inorganic and use of M&A and
strategic alliances and JVs]

AND CHOICE
Articulating a particular STRATEGIC OPTION:
Normally, it is useful to articulate a STRATEGIC OPTION for a
product/ product group/business as a combination of the
following:
Core business model How DIFFERENT in terms of
WHERE to compete and HOW to compete [cost
leadership/ differentiation/ niche] and How SMART in
terms of HOW to deliver [ensuring right mix of
VC/FC/NFA/NCA and associated flexibility to scale up or
down]
Given the option being considered ref core business model
, the growth option being proposed [ 8 options]
Given the option chosen with regard to the core business model and
growth strategy, option being considered regarding method for
strategy development [3 options organic, inorganic and JV/SA]

AND CHOICE
Each option, under the 3 heads just mentioned, has

to be evaluated against 3 key criteria and the FINAL
CHOICE has to be made accordingly:
Suitability in terms of meeting the current and future

competitive and strategic positioning desired [as
assessed and articulated during PREST and stakeholder
expectation analysis]
Acceptability ref performance outcomes [IRR/NPV] vs.
expectations of stakeholders and risk profile of new
capital structure & risk-reward trade offs
Feasibility ref funding issues relating to each strategic
option being considered and execution capabilities and
senior management team s acceptance of the
concerned strategic option and their commitment to
execute

AND CHOICE
SUITABILITY:
The 3 part of each strategic option -core business model,

growth path and method for strategy development - must be
INTERNALLY CONSISTENT ; the 3 part must work as part of
one package for the concerned option to work effectively
As strategies are developed incrementally, these 3 parts often
become INCONSISTENT over time
Real test of SUITABILITY is the RATIONALE behind the strategic
option - i.e. how suitable is the strategic option must be
clear in terms of:
Exploiting emerging opportunities and threats/risks
Leveraging strengths and removing weaknesses
Meeting stakeholder expectations relating to overall market leadership being
aimed and socio-cultural- ethical aspects to be kept in view

AND CHOICE
SUITABILITY [Continued]
Understand how a strategic option can be
UNSUITABLE.
If all 3 factors are not addressed properly [viz.
environmental contingency, internal capability and
expectation of stakeholders], there may be bias in
favor of one or the other of the 3 options
Important thing is to note that we are talking of
RELATIVE SUITABILITY of each option vs. the other

AND CHOICE
SUITABILITY [Continued]
Three methods are used generally while
testing the suitability of a strategic option:
RANKING of Options in this method, all options
are identified in the beginning
DECISION TREE- In this method, preferred option
is developed step by step
SCENARIO in this method, each option is evaluated
against a range of future scenarios [the backdrop]

AND CHOICE
ACCEPTABILITY [Financial and Risk Dimension vs. Stakeholders Expectations in

these 2 areas]
Three key aspects;
RETURN
RISKS
STAKEHOLDERS REACTIONS
RETURN
Profitability ROCE/IRR/NPV/Payback/ Key Ratios
This is sometime difficult to do since the analysis may overlap with
existing strategy; also , how to assess indirect cost of a strategy [diversion
of attention/ resources]
Cost- benefit: wider cost-benefit issue and look at intangible returns
This approach put value on cost and benefit of all items [including those not clear
at the beginning [for example setting up an airport = land price in nearby areas
will go up]
It is a good method if the limitation is kept in view [since both intangible and tangible factors
are considered and the audience includes people and organizations outside the firm]
Even if value put on intangibles are not acceptable, the argument can be useful to evaluate a
strategic option.

AND CHOICE
ACCEPTABILITY [Financial and Risk Dimension vs. Stakeholders Expectations in

these 2 areas]
Three key aspects;
RETURN
RISKS
RETURN [continued]
Real options future benefits likely to open up
Any strategy provides a framework within which series of decisions are
taken over a period of time; these options open up as the strategy takes
shape as a result of previous choices made
Some such decisions are: no action, expand, extend, contract, defer, close
down etc
Real option method provide clear understanding of both strategy and
financial returns
DCF method does not value the flexibility that opens up in the future. Real
options helps in such cases
Shareholder Value Analysis DCF method to assess impact on shareholder
value

AND CHOICE
ACCEPTABILITY [Financial and Risk Dimension vs. Stakeholders
Expectations in these 2 areas]
Three key aspects;
RETURN
RISKS
RISKS
Projection of key ratios to assess the underlying risks
under each strategic option being considered [if a ratio will
become adverse over time under an option, there is some
underlying risks which the concerned option has not
considered]
Sensitivity analysis test assumptions, what-if analysis,
stress test

AND CHOICE
ACCEPTABILITY [Financial and Risk Dimension vs.

Stakeholders Expectations in these 2 areas]
Three key aspects;
RETURN
RISKS
STAKEHOLDER REACTIONS
Regulatory issues
Political issues
Shareholder reactions to issue of new shares [if it
is proposed]

AND CHOICE
FEASIBILITY
Financial
Funds flow from operations in the future

Break Even analysis [feasibility of meeting the target
return]
Ability to raise money to fund the strategy
Resource deployment
Can we compete effectively given the need for Unique
Resources and Core Competence as assumed under the
option being considered and what the firm currently have
Senior managers commitment and support to execute the
option being considered
SELECTING THE RIGHT BUSINESS

STRATEGY: KEY POINTS TO NOTE
Selecting the RIGHT BUSINESS STRATEGY must
be based on :
Suitability vis--vis competitive positioning being
aimed and vision set - present and future
Balancing of risk-reward criterion
Net cash generation potential of each business model
or strategic option being considered
Funding options available and implications relating to
financial risks under each option
Buy-in of the new strategic directions by managers
and employees
Ability and readiness to EXECUTE the STRATEGY
Corporations need to ENSURE that they are adopting a

Resilient Strategy to survive, expand, and grow in the
globalized world
1.
2.
3.
4.
5.
Diversity [ counter-cyclical cash flows and natural hedge in forex inflow

and outflows].
Redundancy and buffers [redundancy seems like a waste if nothing
unusual happens. Except that something unusual happens usually]
A love/hate relationship with risk [its a paradoxical idea, but one way
to build resilience, or anti-fragility, is to keep the vast majority of the
business as safe as possible, but then take big risks ones that may pay
off 10-fold or more with a smaller part of the business].
Fast feedback on possible failure areas [we need to know fast what is
not working and, if we are sure, drop the same to change course in time]
Modular and distributed design [if some part of a system fails, it would
be great if it didnt bring down the rest of it]
These principles alone may not make for resilience in a hotter, scarcer, more open world, but they
go a long way. And they point toward one key pathway for managing and even thriving
in a Volatile, Uncertain, Complex and Ambiguous [VUCA] world: RE-IMAGINE & RE-NEW
SESSION 6:
CASE DISCUSSION - 3
SHIMLA DAIRY
SHIMLA DAIRY: QUESTIONS

1. What macro-environmental issues are relevant for Dinesh
Khannas strategy development?
2. Describe the industry? What are the most powerful industry
forces?
3. What should Shimlas strategy be?
4. Shimla owns it own refrigerated storage. Should it outsource
this function or continue to run its own storage facility?
5. Should Shimla integrate backwards into dairy production to
ensure continuous high quality supply of milk?
6. What should Dinesh Khanna do for the long term to
implement the strategy and to ensure the future of the firm?
Session 7
SESSION
6
TIME
22-Sep
7:30-8:50
TOPIC
CONTENTS
- Class discussion
22-Sep
8:50-10:00

- Class discussion
26-Sep
5:00-5:55

- Class discussion
26-Sep
5:55-6:50
- Class discussion

Change
10
11
26-Sep
7:20-8:05
26-Sep
8:30-10:00

SESSION 7
TURNAROUND STRATEGY
+
CASE: FORD
TURNAROUND WHAT IS NEEDED IS

A TWO DIMENSIONAL APPROACH
Firms may experience declining performance over several years whenever
their managers fail to timely anticipate and respond to a variety of
developments such as:
Economic recession
Technological obsolescence
Infra and operating inefficiencies
General decline in competitive advantages
Such failures leads to unsatisfactory performance in such areas, poor

growth, decline in relative market share, poor price realizations, rising
inefficiencies and cost, poor cash flows and of course adverse valuation.
A turnaround situation arises when such decline in performance
continues over an extended period of time and no further delay in action
is possible. Also, possibly, medication will not help and some surgery
cannot be avoided.
TURNAROUND
A PROPOSED TWO DIMENSIONAL APPROACH
A turnaround strategy can work only if there is still a Viable
Core and the managers think and feel a turnaround is indeed
possible and feasible with a comprehensive turnaround
strategy
When faced with a turnaround situation as defined,
companies can adopt a 2 dimensional approach to turnaround
comprising:
DIMENSION I: TRADITIONAL APPROACH TO TURNAROUND [mostly
reactive in nature, the aim being to stabilize financial performance]
DIMENSION II: PRO-ACTIVE Strategic Transformation [aim being to
redirect the company toward a more promising competitive position]
TURNAROUND
TRADITIONAL APPROACH: DIMENSION I
TRADITIONAL APPROACH TO TURNAROUND comprises 2 basic
approaches:
Revenue increase in current product-market segments
Reducing cost through
Retrenchment
Restructuring and rationalization
Revenue increase in current product-market segments can be

achieved through:
Ensure that marketing mix is tailored to key market
segments
Review pricing strategy to maximize revenue
TURNAROUND
Revenue increase in current product-market segments can be
achieved through [continue]:
Refocus/ fine tune organizational activities to the needs of target
segments
Explore cross sell/ up-sell opportunities
Invest funds from reduction in cost in business development activities
Reduce cost through Retrenchment
Close down uneconomic units

Reduce labour cost through retrenchment
Reduce cost of senior management
Reduce unproductive marketing expenses
TURNAROUND
Reduce cost through Restructuring and rationalization
Focus on productivity and efficiency improvement
Rationalize product lines
Tighten financial controls
Tighter control on cash expenses
Establish competitive bidding for procurement
Tighter management of debtors and inventory
Portfolio restructuring
Organizational restructuring
Financial restructuring
TURNAROUND
Some IMPLEMENTATION ISSUES on DIMENSION I [ turnaround through
Retrenchment, Restructuring and rationalization]
When it is comes to turnaround, speed is of the essence
Regaining the control over deteriorating position early is key
Retrenchment, Restructuring and rationalization programs must be
aggressively pursued [with appropriate metrics, targets and
controls]and broadly scoped
Gaining stakeholders support will be key
Prioritization of areas where attention must be given
Management of change will be crucial, since managers and employees
at large must accept the NEW WAY of working post turnaround phase.
It will imply a change in behaviour, a very difficult task for most people
Managers must take full ownership; specific accountability and
rewards/ incentives for TURNAROUND MANAGER
Once the stability is ensured, the next MUST step is transformation
TURNAROUND: STRATEGIC TRANSFORMATION

[DIMENSION II]
While the steps UNDER Dimension I has their own value, turnaround
will never be complete and hence not sustainable.
To develop basis for strong future performance, managers face one or
more of the following 3 strategic choices:
1. Rebuild the company on its prior strategic footprint this option
looks comfortable but two inescable truths can create problems viz.
The companys competitive landscape has been irrevocably altered
and old strategy is unlikely to be suited now
The old strategy made the company vulnerable to the downturn
and, unless changed, will leave the company exposed to similar
assaults going forward
2. Accept the companys reduced form, to redefine product/market
segments and attempt to compete in a more restricted scope
TURNAROUND: STRATEGIC TRANSFORMATION

[DIMENSION II]
3. Undertake strategic transformation - defined as DIMENSION II
mentioned earlier - which is a PRO-ACTIVE move to Strategically
Transform the business. Driven by a complete different perspective on
how the industry space - where the company is in currently - will
evolve, such a strategic transformation will involve entering into new
business areas requiring acquisition of new assets and reconfiguring
the existing and new assets to create improve competitive position
and enhance wealth creation
Two broad options that make it possible to rapidly undergo strategic
transformation are:
Growth through acquisition [several routes exist under this option]
Collaborative growth through alliances and JVs
It is important to understand the relationship between speed and
magnitude of change as one decides one route over the other
SPEED
OF
CHANGE
MAGNITUDE OF CHANGE
LESS
MORE
FASTER
Strategic
alliance [C]
Conglomerate
acquisition
[A]
Equity Joint
Venture[C]
Horizontal
acquisition[A]
Related
diversificati
on [A]
Vertical
integration
[A]
SLOWER
innovation[C]
A: Acquisition strategy; C: Collaborative Strategy;
Can be dealt but elusive option
TURNAROUND:
SOME TAKEAWAYS
Managers will need robust metrics to assess if a turnaround situation has
really arisen. In general, several years of decline along key metrics vis-avis industry and key competitors will signal the need for turnaround.
In most turnaround cases, simple medication may not work; many a
times, surgery in select part of the business cannot be avoided
Principal objective in any turnaround situation has to be towards
achieving financial stabilization at the earliest through a combination of
retrenchment, restructuring and rationalization
It is complex because it may involve difficult negotiations, legal
complications, emotional turbulence among people and of course
incurring associated restructuring cost.
Such a turnaround strategy [defined as DIMENSION I] may need to be
followed by strategic transformation [defined as DIMENSION II] to
reposition the business, particularly when it is felt the future industry
evolution is going to be vastly different from the past industry dynamics
ADDITIONAL CONCEPTS:
TURNAROUND
Blinded
Inaction
Faulty Actions
Performance
Crisis
Dissolution
Time
SOME COMMON CAUSES OF

COMPANYS DECLINES
EXTERNAL CAUSES
Economic downturns
Industry-wide issues
Shifts in consumer
demand
Changes in technology
Government regulations
Changing interest rates
Changes in business
model
INTERNAL CAUSES
Blind pursuit of
growth
Over-extension of
credit
Insufficient capital
Fraud and
dishonesty
Product issues
SESSION 7: CASE DISCUSSION - 4
AT FORD,
TURNAROUND IN JOB 1
FORD: QUESTIONS
What were some of the main problems with Fords previous turnaround
efforts?
What was the state of Fords products [quality, design etc] when Mulally
took over?
In what ways were consumer preferences changing and why was Ford so ill
prepared to meet their changing needs and interest?
What were the internal and external warning sign that indicated Ford was
in trouble?
In what ways was Mulally a surprising choice to be Fords next CEO?
What are advantages/ disadvantages of an OUTSIDER to manage a
turnaround?
Session 8
SESSION
6
TIME
22-Sep
7:30-8:50
TOPIC
CONTENTS
- Class discussion
22-Sep
8:50-10:00

- Class discussion
26-Sep
5:00-5:55

- Class discussion
26-Sep
5:55-6:50
- Class discussion

Change
10
11
26-Sep
7:20-8:05
26-Sep
8:30-10:00

Sessions 8
SPECIFIC STRATEGIC CHOICES
Growth Strategy +
CASE: APPLE 2010
KEY OBJECTIVES OF AN
ORGANIZATION
TWIN OBJECTIVES:
INNOVATE AND MANAGE EXISTING BUSINESSES
SIMULTANEOUSLY BUILD NEW BUSINESSES
TO ACHIEVE THESE TWIN OBJECTIVES, HIGH

PERFORMING ORGANIZATIONS MASTER THE
ART OF MANAGING THEIR PIPELINE SO THAT
FADING SOURCES OF GROWTH ARE
REPLENISHED AT THE RIGHT MOMENT
THREE HORIZONS OF GROWTH

Horizon 3
Create viable
options
Horizon 2
Build Emerging business
Horizon 1
Extend and defend core business
LAYING THE FOUNDATION FOR

GROWTH
EARNING THE RIGHT TO GROW:
Superior operating performance
Strategic divestment
Building investors confidence
RESOLVING TO GROW
Gaining senior team commitment
Raising the bar
Removing organizational barriers
LAYING THE FOUNDATION FOR

GROWTH
CREATING A POINT OF INFLECTION
The right and resolve to grow are both
preconditions of growth
If a company is underperforming, it must first get
out of trouble before working on right and resolve
to grow cost cutting, quality improvement,
divestment etc
Developing the right to grow is a must for building
the resolve to start the journey towards growth
GROWTH DIRECTIONS [ comprising

7 ways to spot opportunities]
PRODUCTS
Existing
Existing
MARKETS
New
New
PROTECT/BUILD
Consolidation
Market penetration
PRODUCT DEVELOPMENT
With existing capabilities
With new capabilities
Beyond current
expectations
MARKET DEVELOPMENT
New segments
New territories [including
internationalization]
New uses
Beyond current expectation
DIVERSIFICATION
With existing capabilities
Beyond current
expectations
Seven Ways to search for

opportunities
1.
2.
3.
4.
5.
6.
7.
Existing products/services to existing customers

New customers
New products/services
New delivery approaches
New geographies [including overseas markets]
New industry structure
New competitive arenas
1. Existing products/services to
existing customers
Could new approaches to advertising or
promotion persuade customers to increase the
size or frequency of their purchase?
How could one increase customer loyalty and
existing share of each customers purchase?
Could prices be adjusted to boost volume and
revenue?
Could other existing products/services be crosssold
to
current
customers
of
core
products/services?
2. New customers
Could new approaches to advertising and promotion
capture new customers in existing segments?
Are there entirely new customer segments that might
be interested in existing products/services?
How can these products or services be repositioned for
new segments
Are there partnerships or alliances that could be
formed to increase the reach of existing
products/services?
Could one bundle products/services in ways to appeal
to new customers?
3. New products/services
What extensions or modifications to existing
products/services could fill gaps in market coverage?
What customer needs are existing products/services
satisfying, and what is the ideal product or service
for that need?
What fundamentally new products/services could be
developed to cater for emerging or latent demand?
Are there products/product lines that can be
purchased or licensed to complement existing range?
4. New delivery approaches

What new sales channels are yet to be
explored [direct sales, electronic channels,
new distributors]?
Are there substitute channels for existing
products? Is a direct channel now feasible?
Can the delivery system be reengineered to
improve time, cost and quality?
5. New geographies
[including overseas markets]
Are there opportunities to deepen points of
distribution in existing territories?
Are there opportunities to enter underserved
regions within the boundaries of an existing
national business?
Could production cost or quality advantages be
exploited via exports?
Could global coverage drive economies of scale?
In which new markets could the existing business
model be exploited?
6. New industry structure

Which troubled industry player could be
acquired at the right price and turned around?
Which parts of the industry could be
consolidated via acquisition?
Are there scale economies or other
competitive advantages in doing so?
Short of outright acquisition, what assets or
sub-businesses could be bought?
7. New competitive arenas

Are there opportunities to integrate vertically and
create competitive advantages?
Could existing business skills be used in other
industries?
Does one has unique assets that could be used to
create new businesses?
Could any existing relationship be used to gain
access to new businesses?
Are other industries converging on an existing
industry one understands?
SOME OBSERVATION ON HIGH GROWTH

COMPANIES
These companies in general have simple focused strategies
They structure themselves to enable entrepreneurial
behaviour with customers.
They possess cultures of constant iterative learning and
improvement.
They have high employee engagement, loyalty, and
productivity driven by culture and humble passionate
leadership that in most cases acted as stewardship leaders.
They are execution champions, and they create internal
aligned systems to drive desired behaviours
SMART GROWTH: THINGS TO REMEMBER
Growth can be good, and growth can be bad.

Being better is more important than being bigger.
Grow or Die should be replaced by Improve or Die.
Continuous linear growth is rarely achieved and not a good objective or
standard.
Growth is a complex experimental learning process dependent, in most
cases, on humans whom we know are not always efficient, rational, or
unbiased cognitive processors; therefore, growth is not a mechanistic,
linear predictable process.
Growth is much more than a strategyit is a comprehensive internally
linked system.
Continuous growth requires specific types of leaders, internal
environments, and processes.

Growth cultures, leaders, and processes encourage diversity
of thinking, strategic reframing, high employee engagement,
customer co-creation, experimentation, hypothesis testing, a
tolerance for mistakes and heightened paranoia about [a]
complacency, [b] group think, [c] legacy mental models, and
[d] management elitism
The enemies of continuous growth are a short-term mentality,
ROI-tis, arrogance, cognitive blindness, legacy mental models,
penalizing mistakes, product centricity, and measurement and
reward policies that are too short-term oriented.
Growth and innovation are enabled by growth mind-sets, high
employee engagement, and customer co-creation.

Constant improvement is the DNA of growth; scaling is the
foundation of high organic growth; and strategic acquisitions
can be scaling accelerators.
Growth is probability-based, requiring a diversified portfolio
of growth initiatives.
Growth can stress people, processes and controls, and even
dilute the companys brand, culture, and customer value
propositions.
Growth creates risks that need to be managed.
Every business does not have to grow in the Wall Street sense;
but every business does have to continuously improve its
customer value proposition better than its competitors.
CASE 5:
APPLE IN 2010: QUESTIONS
1. What historically have been Apples competitive
advantages?
2. Analyse PC Industry. Are the dynamics favourable or
problematic for Apple?
3. How sustainable is Apples competitive position in PCs?
4. How sustainable is Apples competitive position in MP3
players?
5. How do you assess Apples competitive position in
Smartphones?
6. What are the prospects of iPads?
Session 9
SESSION
6
TIME
22-Sep
7:30-8:50
TOPIC
CONTENTS
- Class discussion
22-Sep
8:50-10:00

- Class discussion
26-Sep
5:00-5:55

- Class discussion
26-Sep
5:55-6:50
- Class discussion

Change
10
11
26-Sep
7:20-8:05
26-Sep
8:30-10:00

Session 9
Internationalization
Strategy +
Case discussion: CUMI
CHOOSING CORPORATE
& GLOBAL SCOPE
Difference between Competitive Strategy and Corporate
Strategy:
Competitive strategy usually look at single business unit
looking at specific product [service]- market and examine
whether the business has competitive advantage or
disadvantage
Corporate Strategy captures a set of choices that a
corporation makes to create value through configuration and
coordination of its multi-market activities.
Thus, Corporate strategy addresses choices about multimarket activities while competitive strategy deals with a set of
choices confined to a single market
CHOOSING CORPORATE
& GLOBAL SCOPE
Difference between Corporate Strategy and Competitive
Strategy:
Though there are differences between corporate and
competitive strategies, the former can enhance business
units competitive advantage over and above what they could
otherwise achieve. When this happens, business units benefit
from corporate advantage
Two significant choices coming under corporate strategy are:
Corporate Scope that specifies the product-markets the corporation
has chosen to maintain a competitive presence
Corporate Ownership that specifies which part of each business unit
will be owned by the corporation
CHOOSING CORPORATE
& GLOBAL SCOPE: KEY QUESTIONS
Two principles can be used to decide the presence and
ownership issues. These are:
Better off Test
Ownership Test
Choice of markets [presence issue]
Does the presence of the corporation in a given market improve the
total competitive advantage of various business units over and above
what they achieve on their own?
A negative answer will suggest exit from the market.
A positive answer will mean a simultaneous presence in multiple
industries will be beneficial
CHOOSING CORPORATE
The OWNERSHIP question:
Does ownership of the business unit produce a greater
competitive advantage than an alternative arrangement
would produce?
Ownership means outright control including majority stake in
the business unit
Alternative here means licensing, long term contract, strategic
alliance or joint venture
When both tests are satisfied, we should conclude that a
corporation made an appropriate decision to be present in
another industry and own the unit there
CHOOSING CORPORATE
In international business context, both better-off and ownership test need
to be applied to choose global scope. The relevant questions will be:
Does the presence of the corporation in a given geographic market
improve the total competitive advantage of various business units over
and above what they achieve on their own? [better-off test]
Does ownership of the business unit in a geographic market produce a
greater competitive advantage than an alternative arrangement would
produce? [ownership test ]
When answers to both the above tests are positive, one can conclude that
the corporation can enter another country with direct ownership [i.e.
outright control through branch or wholly-owned subsidiary or at least a
majority stake]
A positive answer to the better-off test accompanied by a negative answer to

ownership test suggest import/export or other contractual arrangement, while
negative answers to both will indicate no need to go global
GLOBAL ECONOMY AN
OVERVIEW
Trade among nations has increased dramatically in recent years and it is

anticipated that trade across nations will soon exceed trade within nations
In most industries, R&D, manufacturing and also marketing cost has increased so
enormously during the last few decades that unless a firm produces for global
consumption and sell products/services globally, it will not be able to sustain its
market lead
It is worth noting that there are no more any domestic industry as every industry
has become global, with each industry getting affected - directly or indirectly - by
global forces.
It also has now become clear that where does a firm produce or where its HO is
located is no more important. What is important is where its customers are
located and where it creates value for such customers.
Given this change in business context, managing and doing business in many
places will require a willingness to accept good ideas, no matter where they come
from. Managers and their organizations will need a global mind-set and attitude
to accept the new reality
Core concepts: Competitive

Advantage of a Nation [Porter]
Four broad attributes of a country jointly influence the
international competitiveness of industries of that country :
Factor conditions the nations relative position ref factors of production
in such areas as basic [ say availability of raw materials or basic skills] and
advanced [in such areas as infrastructure, R&D institution, existence of
organizations to develop specialized skills etc. ]
Demand conditions quantum and sophistication of home market
demand for an industrys products/services and how demanding are
domestic customers
Related and supporting industries the presence of suppliers and other
related industries within the nation which themselves are internationally
competitive.
Firm strategy, structure, and rivalry the regulatory and conditions in the
nation governing how firms are created, organized and managed, as well
as the nature of domestic rivalry
Core concepts:
Motivations for expanding globally
Increase size of potential markets of a firms products and
services, thereby achieving economies of scale of various
activities of the firm
[ Boeing, Microsoft etc.]
Reduce R&D and operating cost by locating overseas units in
countries which have cost advantage [such as availability of
cheap raw materials] or availability of low cost but highly
skilled labour
Attain greater purchasing power in relation to inputs by virtue
of access global markets and operating in global scale
Extend life cycle of products [ for example a product which is in maturity
phase in the home country can be launched in a developing or emerging
market to further generate revenue out of that mature product]
Core concepts:
Motivations for expanding globally
Optimize physical location for every activity in a firms value chain [instead
of putting up every activity in the home country]. This is an important
reason why firms go global. Specifically, 3 objectives dominate a firms
thinking process in this regard:
Performance enhancement through taping talented people of other countries
[ location decision based on access to best talent since talented people can
help in enhancing a firms performance. For example, Microsoft established a
corporate research centre in Cambridge, UK. ]
Cost reduction- location decision based on cost consideration [for example,
many Fortune 500 companies have set up their manufacturing plant in China,
Nike sourcing athletic shoes from Asian countries, companies setting up plants
in Mexico for low cost labour and minimize transport cost to USA]
Risk reduction Location decision based on such consideration as
political/economic risks [ that can disrupt global supply chain since many
activities of a firms value chain are spread out in various countries] or
exchange rate fluctuation risks
Core concepts: Definitions of 4 types of strategies used

in global business context
HIGH
Pressure
to Lower
Cost
Global
Strategy
Transnational
International
Strategy
Multi-Domestic
Strategy
Strategy
LOW
LOW Pressure for local adaptation HIGH
Core concepts:
Definitions of 4 types of strategies used in global business context
INTERNATIONAL STRATEGY:
Diffusion and adaptation of parent companys knowledge and
expertise in foreign markets.
Country managers are allowed to make minor adaptations to product
and ideas coming from the parent company in the home country but
they have very little autonomy compared to country managers of
multi-domestic companies [to be defined].
Examples are Ericsson [small home market], McDonald, Coke, Kellogg
etc., all of whom used products and services that were successful at
home market to develop grow business in international market with
marginal adjustments in design/services.
Core concepts:
GLOBAL STRATEGY:
Global strategy is most useful when there are strong pressures for
reducing cost and comparatively weak pressures for adaptation to
local market.
A global strategy emphasizes economies of scale through
standardization of products and services and centralization of
operations in a few locations; world-wide standardization can help a
company become industry standard [Intel, Microsoft, Google etc.]
Identifying potential economies of scale becomes an important
consideration. Focus also needs to be there on establishing global
scale and efficient logistics and distribution network.
Competitive strategies are developed centrally and controlled to a
large extent by the Corporate office
Companies in pharmaceutical, semiconductors, jet aircraft etc. follow
global strategies.
Core concepts:
MULTI-DOMESTIC STRATEGY
A company follows a multi-domestic strategy when its
emphasis is on differentiating its products/services
through adapting the same to individual country context.
Decisions involving multi-domestic strategy tend to be
more decentralized in order to allow country management
to make changes in offerings quickly as and when demand
conditions change.
Country specific culture, language, income level etc.
influence such a strategy significantly and hence strategies
of same MNC across countries can differ
Core concepts:
TRANSNATIONAL STRATEGY
An MNC following transnational strategies strives to optimize the
trade offs associated with efficiency, local adaptation and learning.
TNCs aim efficiency for global competitiveness, local adaptation for
increased flexibility in the TNC system and cross border learning for
flexibility in international operations.
No single location is important and a TNCs assets and capabilities are
dispersed [for example, for a particular product, several components
can be manufactured at global scale in different countries]
TNCs opt in favour of the most beneficial location for a specific activity. Thus
TNC managers avoid the tendency to either concentrate activities in a central
location [as with a global strategy] or disperse them across many locations to
enhance adaptation [as with a multi-domestic strategy]
In TNCs, every location-specific unit makes unique contribution to make the
world-wide operations highly efficient
ENTRY MODES OF
INTERNATIONAL EXPANSION
High
Wholly Owned Subsidiary

Joint Ventures
Strategic Alliance
Extent of
Investment &
Risks
Franchising
Licensing
Low
Exporting
Low
Degree of ownership and control
HIGH
INTERNATIONALIZATION STRATEGY: KEY

CONSIDERATIONS THE OLI MODEL
OWNERSHIP OF SOME SPECIFIC CAPABILITIES [O]
Firms invest directly in overseas markets to exploit a
unique advantage they own- called ownership advantage
LOCATIONAL SPECIFIC CONSIDERATION [L]
The destination where a firm invests has several
advantages called location advantage
INTERNALIZATION CONTEXT[I]
The objectives of the firm or its structure or mode of
operation favour or facilitate internalization called
internalization advantage. Going international is
considered as a preferred choice vs. remaining domestic
INTERNATIONALIZATION STRATEGY: KEY

CONSIDERATIONS THE OLI MODEL
Ownership
Advantage
[Why? What is
special?]
Internalization
Advantage
[How to exploit
?]
Locational
Advantage
[Where?]
AAA TRIANGLE AS A STRATEGY

TOOL IN CROSS-BORDER BUSINESS
Adaptation
Local responsiveness
Adaptation: Adjust to
differences
Aggregation
Aggregation: Overcome
differences
Arbitrage: Exploit Differences
Arbitrage
Absolute Economies
Scale Economies
AAA TRIANGLE AS A STRATEGY

TOOL IN CROSS-BORDER BUSINESS
ADAPTATION: Adjusting to
Difference in CAGE
distance
AGGREGATION:
Overcoming to Difference
in CAGE distance
ARBITRAGE: Exploiting
Difference in CAGE distance
REGION
Other country
Groupings
PRODUCT/ BUSINESS
Function
Platform
Competence
Client industry
Key accounts
CULTURAL
Country-of-origin effects
ADMINISTRATIVE
Taxes, regulations,
institutional protection
GEOGRAPHIC
Taking advantage of
distance
ECONOMIC
Differences in prices,
costs, knowledge,
competitive position etc.
Decentralization
Partitioning
Modularization
Partnering
Recombination
Innovation
Transformation
Scope selection
AAA STRATEGIES: INTEGRATION

1.
2.
3.
4.
5.
6.
7.
Must keep all 3 in mind

Importance varies and can change over time
Objective is to optimize, not maximize
Build at least one A advantage
Try to go for two As?
Three tend to be elusive
Can take long time to align structure and
build capabilities
AAA STRATEGIES:
3 FUNDAMENTAL QUESTIONS
How does the MNCs cross-border strategy plan to
make progress on the AAA dimensions
Adaptation
Aggregation
Arbitrage
Which AAA tension the MNC is planning to manage
particularly well
What is going to be its fundamental source of cross
border advantage relative to competition?
A SAMPLE GLOBALIZATION
SCORECARD
Adaptation
Local responsiveness
Rate of development
products
Pricing relative to
Local competition
Mentions in local media
% of locals in top leadership team
Aggregation
Scale Economies
Share of global account

Cross selling to global accounts
Lags in roll out of key products
across geographies
cross border work by COEs
System integration across countries
Arbitrage
Absolute Economies
% of back-end activities Off-shored to low cost countries
CORE CONCEPT: COUNTRY RISK

Political risks
Stability of local political environment

Consensus across political parties regarding various policies that affect business
Attitude of host government
Insurgency/war
Legal
Stability of regulations
Mechanisms for expression of discontent
Enforceability of legal contracts
Economic risks
Inflation rate
Current and potential state of the countrys economy
Resource base [natural, human and financial]
Ability to adjust to external shocks [vulnerability in import/export as a % of GDP,
diversification of imports/exports, vulnerability of the economy ref changing prices of
major imports/ exports
CORE CONCEPTE:
MITIGATING SOVEREIGN OR COUNTRY RISKS
Use international partners

Make money in related operations
Get a local partner
Develop innovative forms of agreement
Locate projects near developed nations where some of the
partners are domiciled
Appropriate project selection and structuring
Involve multilateral agencies such as IFC
Use high leverage
Use project finance route and not corporate finance route
Political risk insurance
GLOBAL MINDSET
In global corporations, interactions and relationships among people who
are culturally different are realities of daily life.
Also a growing reality is the need to form virtual teams for dealing with
projects requiring cross country resources and capabilities. Such virtual
teams comprises diverse members from different countries and cultures.
Members of such virtual teams must be dynamic, flexible and culturally
intelligent in order to deliver speedily tailored products and services
globally.
Since lack of appreciation of how cultural differences can adversely
impact cooperation and collaboration across countries, a key imperative
for managers is to have a global mind-set in order to operate
successfully.
GLOBAL MINDSET
Global mindset is a set of attitudes that help managers cope
constructively with competing priorities [for example global vs. local
priorities] rather than advocating one dimension at the expense of others.
Such a global mindset helps in building an ability to accept and work with
cultural diversity.
LOCAL MINDSET
GLOBAL MINDSET
PERSONAL
CHARACTERISTICS
Functional expertise
Prioritization
Structure
Individual
responsibility
Predictability
Trained against
surprises
Broad and multiple

perspectives
Duality balance
between contradictions
Process
Teamwork and diversity
Change as opportunity
Open to what is new
Knowledge
Conceptual ability
Flexibility
Sensitivity
Judgment
learning
GLOBAL MANAGERS
Business Manager
Strategist + Architect + Coordinator
Country Manager
Sensor + Builder + Coordinator
Functional Manager
Scanner + Cross-Pollinator + Champion
Corporate Manager
Leader + Talent Scout + Developer
COMPETENCIES OF GLOBAL
MANAGERS
Cross cultural leadership- required for building trust and relationships
Cultural intelligence
It is the ability to interact effectively with people from different
cultural background. Possessing cultural intelligence enables
individuals to recognize cultural differences, adjust to new cultures
and situations, understand local practices and behave
appropriately and effectively
Culturally intelligent persons suspends judgment until information
beyond the other persons ethnicity becomes available
Cultural competence among managers and employees and
openness to different ways of working are paramount to team
effectiveness
Communication and interpersonal skills greater the cultural difference,
more difficulties are expected while communicating
STRATEGIES FOR DEVELOPING

GLOBAL MINDSET
Experiences
International transfers and assignments- these
assignments help develop integrative leadership skills,
develop skills in handling cultural diversity and dealing
with tasks such as championing global strategy, facing
conflict, and handling complexity
Membership in cross border project teams and task
forces these help individuals to work through local vs.
global pressures and related problems
Regional and global coordination roles help
individuals to addressing competing priorities, multiple
perspectives and dealing with teams with diverse
membership
STRATEGIES FOR DEVELOPING

GLOBAL MINDSET
Training
Focus is on assessing cultural intelligence of each individual and then
train around areas of weaknesses
Such a training helps global managers find commonalities across
members, determine effective and appropriate role allocations and clearly
define rules for interaction based on the needs and interest of team
members
Training involves overcoming HQ mindset, stressing the importance of
empathy and placing oneself in the shoes of anothers culture and
remaining open to other cultures and methods of accomplishing tasks.
Use of short case studies focussing on critical incidents leading to
misunderstanding or miscommunication is an useful approach
In general, cross border projects, experiential methodologies and action
learning are key training methods for developing global mindset
CASE 6 QUESTIONS:CUMI IN CHINA

1.
2.
3.
4.
5.
6.
What is driving CUMIs success? Is it sustainable? Which part of it is

transferable internationally
What is driving CUMIs internationalization strategy? Specifically analyse
the industry level drivers Country level drivers.
Evaluate CUMIs Russian and South African ventures. What is the level of
success in each of these 2 markets and to what would you attribute
Evaluate CUMIs experience in China. What is CUMIs problem in China?
Why do you think CUMI is not able to translate its Russian success in
China
How important is China to CUMI? Is the management right in thinking
about a China-centric strategy?
What are CUMIs options in China? What would you recommend to
CUMI as China strategy? How will you implement this?
Session 10
SESSION
6
TIME
22-Sep
7:30-8:50
TOPIC
CONTENTS
- Class discussion
22-Sep
8:50-10:00

- Class discussion
26-Sep
5:00-5:55

- Class discussion
26-Sep
5:55-6:50
- Class discussion

Change
10
11
26-Sep
7:20-8:05
26-Sep
8:30-10:00

SESSION 10
Strategy Implementation and

Management of Change +
CASE: Allentown Electronic
STRATEGY IMPLEMENTATION:
Select Best practices
Management of 3 key
processes:
Strategy process,
Operations process and
People process
THREE PROCESSES
Strategy
Process
Operations
Process
X
People
Process
X = ROLE OF
THE
BUSINESS
LEADER
STRATEGY IMPLEMENTATION:
Select Best practices
Management of 3 key processes strategy process,
operations process and people process
High quality strategy execution presupposes high
quality operations process [action planning and
control]
Right person for the right job
Robust MIS [based on Balanced Scorecard concept]
and review process
Follow through
Confronting reality
STRATEGY
IMPLEMENTATION[Continued]
Dealing with star performers not performing
up to expectation
Dealing with non-performers
Optimum balancing of 7 key variables strategy, structure, systems, staff, skill, style
and shared values
Strategy execution is the job of the business
leader
STRATEGY
IMPLEMENTATION[Continued]
EXECUTION IS A DISCIPLINE AND MUST BE
LEARNED SPECIALLY:
- Project management planning and review
- Scheduling
- Cost management
- People management
- Time management
- Inter-personal skills
- Negotiation and conflict resolution
- Problem solving skills
- Communication skills
- Relationship management
STRATEGY IMPLEMENTATION :
RESEARCH FINDINGS
WHAT MATTERS MOST IN STRATEGY
EXECUTION] [in decreasing order of
importance]: FOUR BUILDING BLOCKS
Information flow
Clarification of decision rights of
managers
Right motivators
Right structure
ALLENTOWN MATERIALS
CORPORATION [B]
What are the business and organizational challenges
Allentown faced when Rogers took over?
What were the broad design solutions selected by Rogers [
recommendations were made by OE Consultants]? Do you
think these will improve quality of decision making and alter
managerial behaviour?
What were the strengths and weaknesses of the change
efforts made?
Do you think the performance of Allentown will improve in
next few years post implementation of the recommendations
described in the case[ considering the strengths and
weaknesses together]?
SOME STEPS TO IMPROVE THE ABILTY TO

EXECUTE STRATEGY
Focus corporate staff on supporting business

unit decision making
Clarify and streamline decision making at
each operating level
Focus headquarters on important strategic
questions
Create centers of excellence by consolidating
similar functions into a single organizational
unit
SOME STEPS TO IMPROVE THE

ABILTY TO EXECUTE STRATEGY
Assign process owners to coordinate activities
that span organizational functions
Establish individual performance measures
Improve field-to-headquarters information
flow
Define and distribute daily operating metrics
to the field
Create cross functional teams
SOME STEPS TO IMPROVE THE ABILTY

TO EXECUTE STRATEGY
Introduce differentiating performance awards

Expand non financial rewards to recognize
exceptional performers
Institute lateral moves and rotations
Broaden spans of control
Decrease layers of management
HOW THE BEST OF THE BEST INDIVIDUAL GET BETTER

AND BETTER? THE ESSENCE OF EXECUTION
Elite performers do not get distracted by the

victories of competitors or anything
Superstars have insatiable demand for honest,
constructive and immediate feedback
Champions trains with the competition to push
themselves to the new limits. They continually
reinvent themselves especially after they
become the benchmarks
Elite performers know how to party. But
celebrating ranks 9th on their list of top 10
reasons for wanting to win

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Dr Guntur S. Siboro, BSEE, M.Eng, MBA

PhD, Universitas Indonesia (2015)

Country Head HOOQ Indonesia (2015-now)

- Changing world of business

- Article: What is Strategy?

- Vision, Mission, Goals, Objectives and

- Article: How competitive forces shape strategy?

- Article: How industries change?

- Industry and Competitive Analysis [continued] - Class discussion

- Strategic options, evaluation and choice

- Special topic: Turnaround Strategy

- Article on strategic transformation

- Special topic:Growth Strategy

- Article on Growth strategy

- Special topic: Internationalization Strategy

- Strategy Implementation and Management of

- Articles: Implementing strategy

Case -7: Allentown Electronic Products [B]

- Changing world of business

- Article: What is Strategy?

- Vision, Mission, Goals, Objectives and

- Article: How competitive forces shape strategy?

- Article: How industries change?

- Industry and Competitive Analysis [continued] - Class discussion

Changing world of business

REALITY OF THE NEW BUSINESS CONTEXT

Both huge opportunities and risks are existing simultaneously

SELECT THE STRATEGIC POSTURE

SHAPE THE FUTURE

ADAPT TO THE FUTURE

RESERVE THE RIGHT TO PLAY

SELECT THE STRATEGIC POSTURE

DIFFERENT TYPES OF STRATEGY

Competitive strategy usually looks at a single business unit focusing on specific

The CHOICES in above mentioned 3 areas, along with supportive cross-functional

COMPETITIVE STRATEGY: CONTEXT

Growth strategy [Having selected our Core

TWO OTHER TYPES OF STRATEGY

- Changing world of business

- Article: What is Strategy?

- Vision, Mission, Goals, Objectives and

- Article: How competitive forces shape strategy?

- Article: How industries change?

- Industry and Competitive Analysis [continued] - Class discussion

Vision, Mission, Goals,

Key vocabulary of strategy

Key vocabulary of strategy [Continued]

CHARACTERISTICS OF STRATEGIC DECISIONS

CHARACTERISTICS OF STRATEGIC DECISIONS[Contd]

Key implications of strategic decisions

- Changing world of business

- Article: What is Strategy?

- Vision, Mission, Goals, Objectives and

- Article: What is Strategy?

- Strategy Process & Strategic Analysis An

- Article: How competitive forces shape strategy?

- Article: How industries change?

- Industry and Competitive Analysis [continued] - Class discussion

Industry and Competitive Analysis

INDUSTRY STRUCTURE AND INDUSTRY

INDUSTRY ECONOMICS AND NATURE OF

HOW DOES AN INDUSTRY EVOLVE? THINGS TO