mrktg mgt - strategies
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Business Strategies
Growth strategies
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Strategic Planning
It is the management taskconcerned with the growthand future of businessenterprise.
It provides the route map forthe firm and helps to takedecision in the future with agreater awareness.
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Ansoff Product Market Growth Matrix
Market Penetration Product Development
Market Development Diversification
PRODUCTSPresent New
M
ARKETS Present
New
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BCG & GE Matrix
MarketA
ttractivene
ss
Business Strength
MarketGrowth
Relative Position
(Market Share)
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About GE Matrix
Developed by McKinsey & Company in 1970s.
GE is a model to perform business portfolio analysison the SBUs.
GE is rated in terms of Market Attractiveness &Business Strength
It is an Enlarged & Sophisticated version of BCG.
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Classification
Mark
etAttractiveness
Strong Medium Weak
Low
Medium
High
Business Strength
5.00 1.002.333.67
5.00
3.67
2.33
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Market Attractiveness
Annual market growth rate
Overall market size
Historical profit margin
Current size of market Market structure
Market rivalry
Demand variability Global opportunities
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Business Strength
Current market share
Brand image Brand equity
Production capacity
Corporate image
Profit margins relative tocompetitors
R & D performance
Managerial personal
Promotional effectiveness
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Invest Heavilyfor Growth
InvestSelectively &
Build
Develop forIncome
InvestSelectively &
Build
DevelopSelectively for
Income
Harvest
or
Divest
Develop
Selectively &build onstrengths
Harvest DivestMa
rketAttractiv
eness
Low
Medium
High
Business PositionHigh Medium Low
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Strategies
Protect Position
Invest to grow
Effort on maintaining strength
Invest to Build
Challenge for leadership
Build selectively on strength
Build Selectively
Invest in most attractive segment
Build up ability to counter competition
Emphasize profitability by raising
productivity
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Strategies
Protect & Refocus
Manage for current earning
Defend strength
Selectivity for earning
Protect existing program
Investments in profitable segments
Build Selectivity
Specialize around limited strength
Seek ways to overcome weakness
Withdraw if indication of sustainable
growth are lacking
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Strategies
Limited expansion for Harvest
Look for ways to expand without risk
Manage for Earnings
Protect position in profitable segment.
Upgrade product line
Minimize Investment
Harvest
Sell at time that will maximize cash
value
Cut fixed costs and avoid investment
meanwhile.
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Over View
Business Strengths
Mark
etAttractiveness
Low
High
LowHigh
Attractive
Moderate
Attractive
Unattractive
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TATA Group
IT (information Technology): TCS
Consumer Durable: Automobiles, Titan, etc.
Textiles: Tata Fabrics, West Sides, etc.
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GE Matrix for TATA
Business Strengths
Mark
etAttractiveness
Low
High
LowHigh
IT
ConsumerDurables
Textiles
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BCG v/s GE
BCG GE
Market Growth Market Attractiveness
Market share Market strength
4 cell 9 cell
Multi Products Multi Business Units
Primary tools Secondary tools
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Five Competitive ForcesThreat of
NewEntrants
Rivalry AmongExisting
Competitors
Bargaining Powerof Customers
Bargaining Powerof Suppliers
Threat ofSubstitutes
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Threat of
NewEntrants
Threat of
Substitute
Products
Threat of
NewEntrants
Rivalry AmongCompeting Firms
in Industry
BargainingPower of
Buyers
BargainingPower of
Suppliers
porters five forces Model of coMpetition
y
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Purpose of Five-Forces Analysis
The five forces are environmental forces that
impact on a companys ability to compete in agiven market.
The purpose of five-forces analysis is todiagnose the principal competitive pressuresin a market and assess how strong andimportant each one is.
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Threat ofNew
Entrants
Threat of
New
Entrants
porters five forces Model of coMpetition
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Barriers to
Entry
Expected Retaliation
Government
Policy
Economies of Scale
Product Differentiation
Capital Requirements
Switching Costs
Access to Distribution Channels
Cost Disadvantages Independent
of Scale
Threat of New Entrants
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Bargaining
Power of
Suppliers
Threat ofNew
Entrants
Threat of
New
Entrants
porters five forces Model of coMpetition
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Suppliers exert power
in the industry by:
* Threatening to raise
prices or to reduce quality
Powerful suppliers
can squeeze industry
profitability if firms
are unable to recover
cost increases
Suppliers are likely to be powerful if:
Supplier industry is dominated by a
few firms
Suppliers products have few substitutes
Buyer is not an important customer to
supplierSuppliers product is an importantinput to buyers product
Suppliers products are differentiated
Suppliers products have highswitching costs
Supplier poses credible threat offorward integration
Bargaining Power of Suppliers
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Bargaining
Power of
Buyers
Threat ofNew
Entrants
Threat of
New
Entrants
Bargaining
Power of
Suppliers
porters five forces Model of coMpetition
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Buyers compete
with the supplying
industry by:
*Bargaining down prices
* Forcing higher quality
* Playing firms off of
each other
Buyer groups are likely to be powerful if:
Buyers are concentrated or purchases
are large relative to sellers sales
Purchase accounts for a significantfraction of suppliers sales
Products are undifferentiated
Buyers face few switching costs
Buyers industry earns low profits
Buyer presents a credible threat ofbackward integration
Product unimportant to quality
Buyer has full information
Bargaining Power of Buyers
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Threat of
Substitute
Products
Threat of
New
Entrants
Threat of
NewEntrants
BargainingPower of
Buyers
BargainingPower of
Suppliers
porters five forces Model of coMpetition
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Products
with similar
functionlimit the
prices firms
can charge
Keys to evaluate substitute products:
Products with improving
price/performance tradeoffs
relative to present industryproducts
Example:
Electronic security systems inplace of security guards
Fax machines in place of
overnight mail delivery
Threat of Substitute Products
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Threat of
Substitute
Products
Threat of
NewEntrants
Threat of
NewEntrants
Rivalry AmongCompeting Firms
in Industry
BargainingPower of
Buyers
BargainingPower of
Suppliers
porters five forces Model of coMpetition
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Intense rivalry often plays out in the following ways:
Jockeying for strategic position
Using price competition
Staging advertising battles
Making new product introductions
Increasing consumer warranties or service
Occurs when a firm is pressured or sees an opportunity
Price competition often leaves the entire industry worse off
Advertising battles may increase total industry demand, but
may be costly to smaller competitors
Rivalry Among Existing Competitors
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Cutthroatcompetition is more likely to occur when:
Numerous or equally balanced competitorsSlow growth industry
High fixed costs
Lack of differentiation or switching costsHigh storage costs
Capacity added in large increments
High strategic stakes
High exit barriers
Diverse competitors
Rivalry Among Existing Competitors
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The Five Forces are Unique to Your Industry
Five-Forces Analysis is a framework foranalyzing a particular industry.
Yet, the five forces affect all the other businesses in that
industry.
Growth
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Growth
Internal
ExternalLicensing
Franchising
Strategic Alliance
Joint venture
Merger & Acquisitions
Green field ventures
Concentration growth
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Concentration growth
If a companys current product lines have real growth
potential. Growing firms in a growing industry tend to choose these
strategies
VerticalForward integration
Assuming a function previously provided by distributors
Backward integrationAssuming a function previously provided by a supplier
Horizontal Extending product variants and scope of operations into other territories
Concentric growth
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Concentric growth
Related diversificationEntering into related businesses opportunities for
Transferring competitively valuable expertise, technological know-how
and other capabilities from one business to another.
Combining related activities to reduced cost
Achieving economies of scope
Exploiting well known common brand name / contact
Achieving synergy 1+ 2 > 3
Examples Rolls royce Aircraft , Automobiles eng
GE
electrical appliances , captive power gensets, energy generation /diesel locomotives
Conglomerate growth
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Conglomerate growth
Un-related diversification Diversifying into an industry unrelated to its current one.
Future growth given importance
To spread the business risk
Ex TATA : steel / Automobile / IT / Tea / FMCG / Life Style / Publishing /
Power & energy
ITC
Cigarettes / FMCG/ Packaging King fisher Hard Drinks / Airlines
Wipro FMCG/ IT / Electricals
Godreg Machine tools / FMCG
Turn Around
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Turn Around
Turn around management refers to the managementmeasures that reverse the negative trends in theperformance indicators of the company (ie) turn asick company back to a healthy one.
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Indicators for the need of Turn around
Persistence negative cash flow
Declining Market ShareDeterioration in physical facilities
Elements that contribute to a Turn around
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Elements that contribute to a Turn around
Changes in Top management
To initiate credibility action
Neutralizing external pressure
Initial control / cost control
Revenue generation thru liquidation of Non-performing assets
Better co-ordination
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