strategic management13
TRANSCRIPT
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Strategic ManagementModule 1 (A)How do we define Strategic Management?
According to Peter Drucker
Strategic Management is not a box of tricks or a bundle of techniques . It
is analytical thinking and commitment of resources to action
How do we define Strategic Management?
According to Lawrence R Jaunch and William F Glueck
Strategic Management is a stream of decisions and actions which leads
to the development of an effective strategy of strategies to help achieve
corporate objectives . The strategic management process is the way in
which strategists determine objectives and make strategic decisions
According Thompson and Strickland
The tasks of crafting , implementing and executing company strategies
are the heart and soul of managing a business enterprise
As per Ireland , Hoskisson , Hitt
A strategy is an integrated and coordinated set of commitments and
actions designed to exploit core competencies and gain a competitive
advantage .
A firm has a competitive advantage when it implements a strategy
competitors are unable to duplicate or find too costly to try to imitate .
According Thompson and Strickland
In crafting a strategy , management is saying , in effect , Among all thepaths and actions we could have chosen , we have decided to move in this
direction , focus on these markets and customer needs , compete in this
fashion , allocate our resources and energies in these ways . And rely on
these particular approaches to doing business .
How Stakeholders relationship could be source of competitive
advantage ?
Stakeholders are the individuals and groups who can affect the vision and
mission of the firm are affected by the strategic outcomes achieved , andhave enforceable claims on a firms performance . Claims on a firms
performance are enforced through the a stakeholders ability to withhold
participation essential to the organisations survival , competitiveness , and
profitability .
Classification of Stakeholders
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A : Capital Market Stakeholders
1.Shareholders
2. Debenture holders
3 . FIs , Banks , MFs , FIIs, PEs , VCs Etc.
B. Product Market Stakeholders
1.Primary customers
2. Suppliers
3. Host communities
4.Unions
C . Organisational Stakeholders
1.Employees
2. Managers
3. Non- ManagersStrategic Leaders
Strategic leaders are people located in different parts of the firm using the
strategic management process to help the firm using the strategic
management process to help the firm reach its vision and mission .
Their location in organisational structure is not that important .
Organisational Culture
Refers to the complex set of ideologies , symbols , and core values that
are shared through out the firm and that influences how the firm conductsbusiness . It is social energy that drivesor fails to drivethe organisation
. For example , highly successful Southwest Airlines is known for having
a unique and valuable culture . Its culture encourages employees to work
hard and have fun too . The firm also pays importance by its commitment to
provide POS ( Positively Outrageous Service )
Average returns
Above average returns are returns in excess of what an investor expects to
earn from other investments with a similar amounts of risk .
Risk is an investors uncertainty about the economic gain or losses that
will result from a particular investment .
Average returns are returns equal to those an investor expects to earn
from other investments with similar amount of risk .
The I / O Model of Above Average Returns
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Industrial Organisation ( I/O ) model of above average returns explains
the external environments dominant influence on a firms strategic actions
.
The model specifies that the industry in which a company chooses to
compete has stronger influence on performance than do the choices
managers make inside their organisations .
The performance is believed to be determined by primarily by a range of
industry properties :a) economies of scale , b) barriers to market entry ,
diversification , and the degree of concentration of firms in the industry .
Assumptions of I / O Model
1. External environment is assumed to impose pressures and constraints
that determine the strategies that result in above- average returns .
2.Most firms competing within an industry or within a segment ofindustry are assumed to control similar strategically relevant resources and
to pursue similar strategies in light of those resources .
3.Resources used to implement strategies are assumed to be highly mobile
across firms , so any resource differences that might develop between
firms will be short lived .
4.Organisational decision makers are assumed to be rational and
committed to acting in the firms best interests
The I/ O Model of Above Average ReturnsResource Based Model of Above Average Returns
As per this model , differences in firms performances across time are due
primarily to their unique resources and capabilities rather than to the
industrys structural characteristics .
Resources are inputs into a firms production process , such as capital
equipment , the skills of individual employees , patents , finances , and
talented managers . Put under 3 categories viz., physical , human and
organisational capital .
Resource Based Model of Above Average Returns
A capability is the capacity for a set of resources to perform a task or an
activity in an integrative manner .
Core competencies are resources and capabilities that serve as source of
competitive advantage for a firm over its rivals .
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When resources are valuable , scarce , costly to imitate , and non
substitutable , they have potential to constitute competitive advantage .
Strategic Vision
Strategic Vision so as to provide long term direction , delineate what kind
of enterprise the company is trying to become and infuse the organisation
with a sense of purposeful action.
Instances of Strategic VisionMicrosoft Corporation
In the past A computer on every desk and in every home using great
software as an empowering tool .
In 1999 , in the light of latest technology , it changed to
Empower people through great software anytime , any place and on any
device
Instances of Strategic VisionMicrosoft Corporation Bill Gates
We see a world where people can use any computing device to dowhatever they want to do anytime , anywhere . The PC will continue to
have a central role -- but it will be joined by an incredibly rich variety of
digital devices accessing the poweer of the Internet
Instances of Strategic VisionINTEL
Our vision : Getting to a billion connected computers worldwide ,
millions of servers, and millions of dollars of ecommerce . Intels core
mission is being the building-block supplier to the Internet company and
spurring efforts to make the Internet more useful . Being conncted is nowthe centre of peoples computing experience . We are helping to expand the
capabilities of the PC platform and internt .
Instances of Strategic VisionOTIS ELEVATOR
Our mission is to provide any customer a means of moving people and
things up , down , and sideways over short distances with higher reliability
than any other enterprise in the world
Instances of Strategic Vision
AMERICAN RED CROSS
The mission of the American Red Cross is to improve the quality of
human life , to enhance self-reliance and concern for othrs , and to help
people avoid , prepare for and cope with emergencies
AVIS RENT-A-CAR
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Our business is renting cars . Our mission is total customer satisfaction
Mission Statement
A mission specifies the business or businesses in which the firm intends to
compete and the customers it intends to serve.
Mission statement tends to deal with companys present business scope
who we are and what we do where as Strategic Vision portrays a
companys future business scope.
Examples of Mission Statements
Mc Donalds
Be the best employer for our people in each community around the world
and deliver operational excellence to our customers in each of our
restaurants.
LNPGE Plastics CompanyOur mission is to be recognized by our customers as the leader in
applications engineering. We always focus on the activities customers
desire: we are highly motivated and strive to advance our technical
knowledge in the areas of material, part design and fabrication technology.
Business Model
According Thompson and Strickland , a business model deals with the
revenue-cost-profit economics of its strategy - the actual and projected
revenue streams generated by the companys product offerings andcompetitive approaches , the associated cost structure and profit margins
and the resulting earnings stream and return on investment.
Strategy vs Business Model
According Thompson and Strickland , strategy relates to a companys
competitive initiatives and business approaches ( irrespective of the
financial and competitive initiatives and business approaches while the
term business deals with whether revenues and costs flowing from the
strategy demonstrate business viability .
Strategy vs Business Model
According Thompson and Strickland, Companies that have been in
business for a while and are making acceptable profits have a proven
business model - there is a clear evidence of that their strategy is capable of
profitability and that they have viable enterprise .
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Striking Business Models
Microsoft [[Linux
Highly secretive code
In house R &D
Highly paid Employees with SOPS
Highly Priced Software
Open code
Open R &D
External Experts
Free software
Striking Business Models
HLL
Nirma
Super QualityHighly focussed R &D
Superior Technology
Targeting high income groups
Compatible Quality
Indigenous R &D
Manual Process
Targeting low income groups
The Environment AnalysisModule 1 BExternal Environment Analysis
Components :
Scanning : Identifying early signals of environmental changes and trends .
Monitoring : Detecting meaning through ongoing observations of
environmental changes and trends .
Forecasting : Developing projections of anticipated outcomes based on
monitored changes ,and trends .
Assessing : Determining the timing and importance of environmentalchanges and trends for firms strategies and their management .
Series of Layers
The most general layer of the environment is macro environment .
Any specific factor in the general environment will affect some
organisations more than others .
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If the future environment is likely to be very different from the past it is
helpful to construct pictures or scenarios .
Strategic groups are organisations within an industry that have similar
characteristics to each other but are quite different from those in other
strategic groups .
The concepts of market segmentation , customer value and life cycles are
relevant .
General Environment /PESTEL Framework
Political- Govt stability , taxation policy ,foreign trade regulation , social
welfare policies , labour laws , anti-trust laws etc.
Economic factors : Inflation , interest rates , Trade deficits / surpluses ,
Budget deficits /surpluses , Personal / Business savings rates , GDP
Socio-cultural : Work force diversity , Attitudes about quality of life ,
Shifts in work and career preferences , shifts in preferences regarding
product and service characteristics .
Global : Important political events , critical global markets , newly
industrialised countries , different cultural and institutional attributes .
Technological : Product innovations , Applications of knowledge , Focus
of private and government support , R & D Expenditures , New
communication technologies .
Demographic : Population size , Age structure , Geographic distribution ,
Ethnic mix , Income DistributionEnvironmental : Green house effect , environmental pollution , global
warming etc.
PESTEL Framework
Lobbying : GOI opening up Telecom industry for private players . DOT
auctioning spectrum region wise
Demographics (Demography forecasting ): India having over 50 per cent
of population below age group of 35 years .
Socio-cultural (Environmental sensing ) : Growing health consciousnessand social pressures have led to severe restrictions on use of tobacco
products .
PESTEL framework
Technology ( R & D Policy ) :The introduction of new multi media
mobile service such as data , entertainment and text messaging has been
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more than just the next level . These new data services require secure
transactions over mobile networks , more processing power , and increased
memory capacity . As a result , smart-card manufacturers , banking
applications developers and billing software developers have all increased
their investments in R &D in order to capitalise on this technology ,
PESTEL framework
Capital Markets (Financial Policy ) : Boom in IT stocks during 1999 and
2003 . Burst of Dotcom . Current phase of global recession .
Labour market ( Labour Policy and industrial relations ) : Government
notifying certain services as Essential Services . Regulating Strikes in such
areas .
Competition ( Marketing policy ) : Deregulation of Banking , Oil Sector ,
Telecom etc.
Economic forecasting (Economic policy ):Taiwan with a population of 22million people played vital role in electronics industry . Taiwans
electronics factories evolved from contract manufacturers into designer
manufacturers . Taiwans prosperity as an electronics workshop has been
the result of partnering with the US Computer industry .
PESTEL framework
Ecology ( Environmental sensing and R & D policy )Huntingdon Life
Sciences , the biggest drug-testing company in Europe was targetted by
anti-vivisection protestors and animal groups following a documentaryabout the company in 2000 . HLS used about 70,000 animals a year to test
the effectiveness of pharmaceuticals . As a result of protestors tactics and
negative publicity , many shareholders sold their shares and banks called
back loans , leaving HLS on the verge of bankruptcy .
Suppliers ( Purchasing ) : The price of crude oil rose to near $140 per
barrel . During last 4 months , crude prices collapsed to below $ 40 per
barrel . OPEC and suppliers are have cut down their production levels .
Poters Fundamental Determinants of a Firms ProfitabilityFive competitive forces :
The entry of new competitors
The threat of new substitutes
The bargaining power of buyers
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The bargaining power of suppliers
The rivalry among existing competitors
Impact of Five Competitive Forces
The Five Forces determine industry profitability because they influence : Prices
Costs
Required investments
Entry Barriers for New Entrants
Economies of scale
Proprietary product differences
Brand Identity
Switching costs
Capital requirements
Access to distribution
Absolute cost advantages
- proprietary learning curve
- access to necessary inputs
- Proprietary low cost product design
Govt policyLicensing , FDI , Tax etc.
Determinants of suppliers power
Differentiation of inputs
Switching costs of suppliers and firms in the industry .
Presence of substitute products
Supplier concentration
Importance of volumes to suppliers
Cost relative to total purchases in the industry
Impact of inputs on cost or differentiationThreat of forward integration relative to threat of backward integration
by firms in the industry .
Determinants of Buyer Power
Bargaining Leverage
Buyers concentration vs Firms concentration
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Buyer volume
Buyer switching costs relative to firms switching costs
Buyer information
Ability to backeward integration
Substitute productsPrice Sensitivity
Product Differences
Brand Identity
Impact on quality Performance
Buyer Profits
Decision Makers Incentives
Rivalry Determinants
Industry GrowthFixed Storage Costs / value added
Intermittent overcapacity
Product differential
Brand Identity
Switching Costs
Concentration and balance
Informational complexity
Diversity of competitors
Corporate stakes
Exit barriers
New Products
A new product design that undercuts entry barriers or increases volatility
of rivalry , for example , may undermine the long run profitability an
industrythough imitator may enjoy higher profits temporarily .
In the Tobacco industry , generic cigarettes are a potentially a serious
threat to industry structure . Generics may enhance the price sensitivity of
buyers , trigger competition , and erode the high advertising barriers that
have kept out new entrants .
Structural Drivers of Change
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Are forces likely to affect the structure of industry , sector or market . It
will be the combined effect of some of these separate factors that will be
so important rather than factors separately .
Drivers of Globalization in some Industries
Global market convergence : 1.Similar customer convergence 2.Globnal
customers .3. Transferable marketing .
Government influence : 1.Trade policies 2.Technical standards. 3.Host
government policies .
Cost advantages : 1. Scale economies 2.Sourcing efficiencies 3. Country
specific costs 4.High product development costs .
Global competition : Interdependence 2. Competitors global 3. High
exports / imports
Building scenarios
The book publishing industry is facing changing environments which are
hard to predict on the basis of experience or historical analysis .
1. Development of electronic communications market
2.Consumer perception of books compared with electronic substitutes .
3.Costs of paper and other raw materials
4.Government spending and regulation .
Key Success Factors
Key Success Factors (KSFs) are those competitive factors that most
industry members ability to prosper in the market place the particular
strategy elements , product attributes , resources , competencies ,
competitive capabilities and market achievements that spell the difference
being a strong competitor and a weak competitor .
In apparel industry , the KSFs are appealing designs and colour
combinations ( to create buyer interest ) and low cost manufacturing
efficiency ( to permit attractive retail pricing and ample profit margins )
Common Types of KSFs
Technology related :1. Expertise in a particular technology or in scientific
research ( important in pharmaceuticals , Internet applications , mobile
communications ,and most high tech industries ).2. Proven ability to
improve production processes .
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Manufacturing related KSFs :1. Ability to achieve scale economies and /
or capture learning curve affects. 2. Quality control knowhow.3.High
utilisation of Fixed Assets .4.Access to attractive supplies of skilled labour
.High labour productivity etc.
Distribution related KSFs : 1. A strong network of wholesale distributors
.2.Strong direct sales capabilities via the internet and/or having company
owned retail outlets.
Marketing-related KSFs :Breadth of product line and selection 2. A well
known and well respected brand name . 3.Fast , accurate technical
assistance .4.Courteous , personalised customer service .5.Accurate filling
of buyers orders . 6.Customer guarantees and warranties . 7. Clever
advertising .
Skills and capabilityrelated KSFs :1. Talented workforce .2.National or
Global distribution capabilities 3.Product innovation capabilities 4.Design
expertise 5.Short-delivery-time capability .6.Supply chain capabilities
.7.Strong e commerce capabilities .
Other types of KSFs : Overall low costs 2. Convenient locations 3. Ability
to provide fast , convenient fter sales services etc.
Driving Forces
Industry conditions change because important forces are driving industry
participants ( competitors , customers , or suppliers ) to alter their actions .
Driving forces in an industry are the major underlying causes of changing
industry and competitive conditions some driving forces originate in the
macro environment and some originate from within a companys immediate
industry and competitive environment .
Most Common Driving Forces
1.Growing use of the Internet and emerging new internet technology
applications
2.Increasing Globalisation of industry
3.Changes in the long term industry growth rate
4.Changes in who buys the product and how they use it .
5.Product innovation
6.Technological change and manufacturing process innovation
7.Marketing Innovation
8.Entry or exit of major firms
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9.Diffusion of technical know how across more companies and more
countries
10.Changes in cost and efficiency
11. Growing buyer preferences for differentiated products in stead of
standardized commodity products
12.Reduction in uncertainty and business risk
13.Regulatory influences and government policy changes
14.Changing social concerns , attitudes and life styles .
Assessing the Impact of the Driving Forces
The following three questions are to be answered
1.Are the driving forces causing demand for the industrys product to
increase or decrease ?
2.Are the driving forces acting to make competition more or less intense ?
3.Will the driving forces lead to higher or lower industry profitability ?
Strategic Group Mapping
Strategic group mapping is a technique for displaying the different market
or competitive positions that rival firms occupy in the industry.
A strategic group is a cluster of firms in an industry with similar
competitive approaches and market positions .
Steps in constructing a Strategic Group Map
1. Identify the competitive characteristics that differentiate firms in theindustry , typical variables are price / quality range ( high , medium , low ) ,
geographic coverage , ( local , regional , national , global ) , degree of
vertical integration , product line breadth , use of distribution channels
and degree of service offered ( no frills , limited , full ) .
2.Plot the firms on a two variable map using pairs of these differentiating
characteristics .
3.Assign firms that fall in about the same strategy space to the same
strategic group .4.Draw circles around each strategic group , making the circles
proportional to the size of the groups share of total industry sales revenue .
What can be learned from Strategic Group Maps ?
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Driving forces and Competitive pressures donot affect all strategic groups
evenly . Profit prospects vary from group to group according to the relative
attractiveness of their market position .
What extent industry driving forces and competitive pressures favour
some strategic groups and hurt others.
What extent the profit potential of different strategic groups varies due to
the strengths and weaknesses in each groups market position .
Closer strategic groups are to each other on the map , the stronger the
cross-group competitive rivalry tends to be .
Modules2
Internal Analysis
Liberalisation and Globalisation
Indian Industry exposed to sudden spurt in competition due to
- reduction in Custom Tariffs
- removal of restrictions on imports
-new ventures by MNCs
- expansion and diversification by existing players
Necessity is the mother of invention To survive and grow in competition ,
Indian Industry realised to focus on
Quality and Standardisation
Reduce costs
Become customer friendly
International business practices
Sources of Competitive Advantage
A low cost advantage may stem from such disparate sources as a low
cost physical distribution system , a highly efficient assembly process , or
superior sales force distribution .
Differentiation can stem from similarly diverse factors including the
procurement of high quality raw materials , a responsible order entry
system , or superior design system .
SingleIndustry Firm
Diversified Firm
McKinsey Cos Business System Concept
A firm has a series of functions e.g R & D , manufacturing , marketing ,
channels and and each is performing relative to others .
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Value
Value is measured by total revenue a reflection of the price a firms
product commands and the units it can sell .
Value activities classified into Primary and Supportive .
Primary Activities
Inbound Logistics : Activities associated with receiving , storing , and
disseminating inputs to the product such as material handling , warehousing
, inventory control , vehicle scheduling , and returns to suppliers .
Operations : Activities associated with transforming inputs into the final
product firm , such as machining , packaging , assembly , equipment ,
maintenance , testing , printing , and facility operations .
Outbound Logistics : Activities associated with collecting , storing and
physically distributing the product to buyers , such as finished goods
warehousing , material handling , delivery vehicle operations , orderprocessing , and scheduling .
Marketing and Sales : Activities associated with providing a means by
which buyers can purchase the product and inducing them to do so , such as
advertising , channel selection , channel relations and pricing .
Service : Activities associated with providing service to enhance or
maintain the value of the product adjustment .
Supportive Activities
Procurement
Technology Development
Human Resource Management
Firm Infrastructure
Activity Types
Within category of primary and support activities , there are three
activity types that play a different role in competitive advantage :
1.Direct : Activities directly involved in creating value for the buyer ,
such as assembly , parts machining , sales force operation , advertising ,
product design , recruiting , etc.
Indirect : Activities that make it possible to perform direct activities on a
continuing basis such as maintenance , vendor record keeping , etc.
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Quality Assurance : Activities that ensure the quality of other activities
such as monitoring , inspecting , testing , reviewing , checking , adjusting ,
and reworking.
Linkages among value activities arise from number of generic causes
:
The same function can be performed in different ways : High quality
inputs or high quality assurance :
The cost or performance of direct activities is improved by greater efforts
in indirect activities Better scheduling (an indirect activity ) reduces sales
force travel time or delivery vehicle time .
Activities performed inside a firm reduce the need to demonstrate explain
or service a product in the field .
Quality assurance function can be performed in multiple ways .
Vertical LinkagesLinkages exist not only within a firms value chain but between a firms
chain and the value chains of suppliers and channels .
The linkages between suppliers value chain and a firms value chain
provide opportunities for the firm to enhance its competitive advantage .
Channel linkages are similar to supplier linkages .
Competitive Scope and Value Chains
Competitive scope can have a powerful effect on competitive advantage ,
because it shapes the configuration and economies of the value chain .Segment scope : The product varieties produced and buyers served
Vertical scope : The extent to which activities are performed in-house
instead of by independent firms .
Geographic scope : The range of regions , countries or groups of countries
in which a firm competes with a coordinated strategy .
Industry scope : The range of related industries in which the firm
competes with a coordinated strategy .
Coalition and Scope
A firm can pursue the a broader scope internally or enter into coalitions
with independent firms to achieve some or all of the same benefits
.Coalitions are long term agreements among firms that go beyond normal
transactions but fall short of mergers .
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Examples : technology licenses , supply agreements , marketing
agreements , and joint ventures .
The Value Chain and Organisational Structure
The value chain provides a systematic way to divide a firm into its
discrete activities and thus can be read to examine how the activities in a
firm are and could be grouped .
What is meant by Core Competence ?
Core Competence may be defined as inherent superior strength of an
organisation in a product or service line arising out of Technology ,
Governance Process ( ability to work across business and functional unit
boundaries ) and Collective Learning :
Core competency
Core competences are activities that critically underpin an
organisations competitive advantage . They create and sustain ability tomeet the critical success factors of particular customer groups better than
other providers in ways that are difficult to imitate .
Criteria for Core Competency
1. The competence must relate to an activity or process that
fundamentally underpins the value in the product or service features .
2.The competence leads to levels of performance from an activity or
process that are significantly better than competitors .
3.The competence must be robust .
Core Competencies for Consumer Goods
. Brand
. Innovation Success
.Good Service
.Reliable delivery:
.Solving buyers problems
. Good personal relations with buyers
Accepting returned goods :
Fast turnaround of orders .
Using sub contractors for transport
24 hour dispatch
What is meant by Competitive Strategy ?
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A Strategy that gives advantage to compete successfully with
competitors could be under stood as Competitive Strategy .
Various functional areas in a Company
Corporate Planning
Purchases
Stores and Inventory Control
Production
Finance
Accounting and MIS
Marketing
Advertisement and Sales Promotion
Personnel and Administration
HR and Training
Various kinds of industriesCommodity Process Industries
Agro Commodities
Mineral and Metal Based industries
Chemical
Capital Goods Sector
Hi -Tech Industries
Service Industries
Hospitality , Finance , Marketing , Consultancy , Education etc.
Inter-Related Aspects which make Core Competence
Production Technologies
Human Processes
Systems
Customer Synergies
Cost Efficiency
Cost efficiency is a measure of the level of resources needed to create a
given level of value . Sources are :
1. Economies of scale
2.Supply costs
3.Product or process design
4.Experience
Effectiveness
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Effectiveness is the ability to meet customer requirements on product
features at a given cost . It will be achieved only if managers are able to do
the following :
Clear about which product feaures are valued by customers .
Drivers of uniquness within the organisaion
Price that customers ready to pay for uniqueness
Products featurs are communicated .
Competitive advantage is more of product service rather than product per
se .
Critical Success Factors and Core Competencies that change over time
Market Access :1. Global network . 2. Overseas plants .
Quality / Reliability : 1. Production processes 2. Supplier management
Product features (at low volume ) : 1. Life style niche marketing .
2. Agile ProductionHistorical Comparison
Historical comparison looks at the performance of an organisation in
relation to previous years in order to identify any significant changes .
Industry norms compare the performance of organisations in the same
industry or sector against a set of agreed performance indicators
Benchmarking Health Care
In January 2001 , Sunday Times -Hospital Guide (in association with Dr.
Foster ) published the first guide to hospitals in Britain :Mortality Index :
Doctors per 100 beds
Nurses per 10 beds
Waiting time for in-patient treatment
Waiting time for out-patient treatment
Patients trust in doctors
Sources of Robustness
A. Rarity : 1.Unique Resources .2. Preferred access . 3. Situation
dependent :4. Sunk costs .
B. Complexity : 1.Internal linkage :2. External linkages .3. Linked
technologies .
C. Causal ambiguity : Competitors are unclear about bases of success .
Culture : Culturally embedded comptences : Dificult to identify .
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Knowledge creation and integration
Socialisation : Honda set up brain storming campus .to solve p roblems
in developing projects .
Externalisation : In Canons case the origin of using a disposable drum
came from Hiroshi Tanakaa team leader of task force .
Combination : EPOS Electronic Point of Sale produced a unique
classification of stores and shoppers and were capable of pinpointing who
shopped where and how
Internalisation : GE documented all customer enquiries and complaints (
more than 14, 000 per day ) and then programmed into 1.5 million potential
problems and their solutions .
Spiral of knowledge creation :
Reliance Industries Ltd
Started trading in PFYManufacturing PFY
Refineriery
Oil exploration
A Back ward integration - Core Competence in Petrleun Technology and
Processes .
Using Core Competence as competitive strategy companies opted for
Expansions - Horizontal
Expansion - vertical - backward or forward .integration .
Merger and Amalgamation with a company engaged in same or similar
line -
Getting controlling stake in a company having similar product line and
technological strengths
Philips / Sony / BPL/Videocon
Radios
Tape Recorders
Televisions and VCRs
Washing machines
Pencil Bastteries
Mobile phones
Core competence Electronics and Targetting family segment business
Bajaj / Hero/TVS
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Scooters
Motor bikes
Mopeds
General Motors , Ford , Toyoto, Suzuki
Cars
Vans
Trucks
Ashok Leyland , TELCO, Mahindra & Mahindra
Trucks
Vans
Medium and Heavy Motor Vehicles .
Bayers , Du pont ,
Industrial Chemicals
Indian MNCs abroadSwaraj Paul Capro group in steel industry group in UK
Mittals in different countries
Difference old Pharma and new Pharma Groups of India .
Old Groups Sarabhai alembic New Groups Ranbaxy Cipla Sun Pharma
Dr Reddy Labs
Oberoi
Hotel Industry
Indian Express /Times of IndiaMedia Print
Media ) Electronic
CDS
Business India Group
Print Medias - Business India
Electronic Media - Aaz Thak
MARG which merged with PRG became ORG MARG
Nirma Ltd
Washung Powder
Detergent Cake
Toilet Soaps
Caustic Soda
Plans to get in to Tea etc., using distribution network .
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Shri Kumaram Birla of A V Birla group emphasing
Concentrate on Commodities like
Cement
Fertlisers
Textiles
Keeping that Grasim took shares of L & T
Want to get out of BATATA
Why companies diversify in to industries where they lack core
competence
1. To spread risk over different industrial segments . rather than
concentrate on only one industry .
2. When a company has huge reserves and surpluses , promoters
decide to expand their industrial empire and they diversify in to new
areas for the following reasons : a) Current industrial segment has reached saturation and has huge
capacities .
b) Find new sun rising industries where the growth potentials are
excellent .
When promoters are very big industrial houses . The industrial houses
diversify in to new areas
Promoters place themselves more as entrepreneurs leaving all
managerial functions to top class Professionals in the world . The bestexamples in the world are
1. GE
2. 3 M
3. Lever
In India , it is Government of India where industries spread over highly
capital intensive Oil and Petroleum to TVs ,
Many State Governments role of Promoter very effectively .
Tata Group
Birlas
Hindustan Lever
Industrialists also realised core competency does not ensure success always
:Examples are
Binny group which was wedded to only textiles .
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Kirloskars by concentrating in Engineering and Electrical industries
To conclude Like any other strategy , Core Competence as Competitive
Strategy also to be used with caution : Care competence as strategy could
fail in areas :
1. If over all demand is shrinkingdue slackness in demand like in case of
jute and cotton and handloom
2. If the overall performance in given industrial segment is below
industrial average for various reasons
Strategy FormulationModule 3
Characteristics of Strategic Decisions
Strategy is likely to be concerned with the long term direction of an
organisation .
Strategic decisions are normally about trying to achieve some advantage
for the organisations over competition .
Strategic decisions are likely to be concerned with the scope of an
organisations activities .
Strategy can be seen as the matching of resources and activitiesof an organisation to the environment in which it operates This is also
known as strategic fit . Strategic fit is developing strategy by identifyingopportunities in the business environment and adapting resources and
competences so as to ka advantage of these .
Strategy can be seen as building on or stretching an organisations
resources and competences to create opportunities or to capitalise on them .
Strategies may require major resources changes for an organisation
Strategic decisions are likely to affect operational decisions .
Characteristics of Strategic Decisions
The strategy of an organisation is affected not only by environmental
forces and resource availability but also by the values and expectations of
those who have power in and around the organisation .
Consequences of Characteristics of Strategy
Strategic decisions are likely to be complex in nature .
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Strategic decisions may also have to be made in situations of uncertainty .
Strategic decisions may also have to be made in situations of uncertainty .
Strategic decisions may also have to manage and perhaps to change
relationships and networks outside the organisation .
Involve change in organisations which may prove dificult because of theheritage of resources and because of culture
Elements of Strategic Management
Strategic Management : Three major elements of strategic management are
: 1.Strategic position :2.Strategic choices and 3. Strategy into action .
Strategic position is concerned with impact on strategy of the external
environment , internal resources and competences and the expectations and
influence of stakeholders .
Elements of Strategic Management
Strategic Choices involve understanding the underlying bases for future
strategy at both the corporate and business unit levels and the options for
developing strategy in terms of both the directrions in which strategy might
move and the methods of development .
Strategy into action is concerned with ensuring that strategies are working
in practice .
Levels of Strategy
Corporate levels of strategy
Business unit strategy
Operations strategies
Business Level Strategy
Is an integrated and coordinated set of commitments and actions the firms
uses to gain a competitive advantage by exploiting core competencies in
specific product markets .
Business level strategy indicates the choices the firm has made about
how it intends to compete in individual product markets .
How could we say business level strategy is core strategy ?
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A firm competing in a single product market area in a single geographic
location does not need a corporate level strategy to deal with product
diversity or an international strategy to deal with geographic diversity .
In contrast a diversified firm will use one of the corporate level strategies
as well as a separate business level strategy for each product market areain which it competes .
Every firmfrom the local dry cleaner to the multinational corporations
choose at least one business level strategy . Thus business-level strategy is
the core strategy the strategy that the firm forms to describe how it
intends to compete in a product market .
In terms of customers , the firm must determine :
1. Who will be served ?
2.What needs those target customers have that it will satisfy ?
3.How those needs to be satisfied ?
Customers : Their relationship with Business Level Strategies
Example of Dell vs HP
Dell captured a significant market share in the personal computer market
by using a low cost strategy while simultaneously satisfying customer needs
Hewlett Packard learned how to manage its supply chain to lower costs ,
thereby gaining competitive parity with Dell . It also provided a broaderportfolio of goods and services that better satisfied customer needs and
thereby customers from Dell
Who : Determining the Customers to Serve :
Basis for Customer Segmentation :
Consumer Markets :
1. Demographic factors
2.Socioecomnomic factors ( social class , stage in the family life cycle )
3.Geographic factors (cultural , regional and national differences )
4.Psyxchological factors (life style , personality traits )
5.Consumption patterns ( heavy , moderate , and light users )
6.Perceptual factors ( benefit segmentation , perceptual mapping )
Who : Determining the Customers to Serve :
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Basis for Customer Segmentation :
Industrial Markets :
1. End use segments (identified by SIC codes )
2. Product segments (based on technological differences or production
economics )
3. Geographic segments (defined by boundaries between countries )
4. Common buying factor segments (cut across product market and
geographic segments )
5.Customer size segments
Five broad approaches of Competitive Strategy
A focussed (or market niche ) strategy based on lower cost relying on
narrower buyer segment and out competing rivals by serving nichemembers at a lower cost than rivals .
5. A focussed ( market niche ) strategy based on differentiation :
Concentrating on a narrow buyer segment and out competing rivals by
offering niche members customised attributes that meet their tastes and
requirements better than rivals products .
A best-cost provider strategy upscale attributes
HDFC Bank and iCICI Bank .
Bata
TVS , Bajaj
Agro Industry
Nescafe and BRU
Annapuna
Tata Salt
A low cost provider strategy
Nirma
Akai
Parle
Link
Zenith
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SBI Loans
Lifebuoy soap of HLL
A broad differentiation strategy :.
Tooth pasteTooth Powder
Face cream
Health Beverage Drink
VIP
Vicco Vajradhanti Daburs Laldant Manjan Vicco Vanishing Cream Horlics Safety : Less Weight and DurabilityA focussed (or market niche ) lower cost than rivals
Citi Bank
British Airways
Sterling Resorts
Transport , Food ,
Concentrating on a narrow buyer segment and out competing rivalsby offering niche members customised attributes
Apollo Hospitals
Eimco Elecon Capital Equipment
SOTC
YMCA LIONS CLUB ROTARY
In respect of thirteen customers provide imported equipment
Life time members get Heavy discounts
CITI BANK , ANZ , AMEX
Thomas Cook and Western Union .
Hero Honda Passport
Flying Clubs :
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Golf Clubs
Race Clubs
Strategy at Business Level
Customers : Their Relationships with Business Level Strategies
Dell captured a significant market share in PC market by using low cost
strategy .
HP learned how to manage its supply chain to lower costs .
Dell became too inward focused and did not take actions to avoid the
imitation of the capabilities .
Effectively Managing Relationships with Customers
The firms relationships with its customers are strengthened when it
delivers superior value to them .
Harrahs Entertainment believes that it provides superior value tocustomers by beingservice oriented company in gaming ..
Amazon.com is an Internet based venture widely recognised for the
quality of information it maintains about its customers , the services it
renders , and its ability to anticipate its customers needs .
CEMEX SA a leading building-solutions company in the world uses
internet to link its customers , cement plants and main control rooms ,
allowing the firm to automate orders and optimise truck deliveries .
Reach , Richness and Affiliation
Reach dimension of relationships with customers is concerned with the
firms access and connection to customers .Amazon.com offers more than
4.5 million titles and is located on tens of millions of computers.
Richness is concerned with the depth and detail of the two way flow of
information exchanges with their customers .Amazon bills itself as
customer centric company .
Affiliation is concerned with facilitating useful information with
customers . E.g MSN Autos helps online clients find and sort information .
In terms of customers , the firm must determine :
1. Who will be served ?
2. What needs those target customers have that it will satisfy ?
3.How those needs to be satisfied ?
Who : Determining the Customers to Serve :
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Basis for Customer Segmentation :
Consumer Markets :
1. Demographic factors
2.Socioecomnomic factors ( social class , stage in the family life cycle )
3.Geographic factors (cultural , regional and national differences )
4.Psyxchological factors (life style , personality traits )
5.Consumption patterns ( heavy , moderate , and light users )
6.Perceptual factors ( benefit segmentation , perceptual mapping )
Who : Determining the Customers to Serve :
Basis for Customer Segmentation :
Industrial Markets :
1. End use segments (identified by SIC codes )
2. Product segments ( technological differences or production economics
)3. Geographic segments (defined by boundaries between countries )
4. Common buying factor segments (cut across product market and
geographic segments )
5.Customer size segments
What : Determining Which Customer Needs to Satisfy
Successful firms learn how to deliver to customers what they want and
when they want it .
Needs are related to a products benefits and features . From strategicperspective , a basic need of all customers is to buy products that create
value for them .
Most effective firms continuously strive to anticipate changes in
customers needs .
How Determining Core Competencies Necessary to Satisfy Customer
Needs.
Firms use core competencies (how) to implement value-creating
strategies and thereby satisfy customers needs .SA Institute is the worlds largest privately owned software company .
Allocating more than 30% of revenues on R&D SAS relies on its core
competence in R & D t satisfy the data related needs of customers US
Census Bureau etc.
Purpose a Business Level Strategy
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To create difference between the firms position and those of its
competitors .
Choosing to perform activities differently or to perform different
activities than rivals is the essence of business-level strategy .
Firms develop an activity map to show how they integrate the activities
they perform .
Types of Business Level Strategies
Cost Leadership
Differentiation
Focused Leadership
Focused Differentiation
Integrated cost leadership / differentiation
Cost Leadership Strategy
The cost leadership strategy is an integrated set of actions taken to
produce goods or services with features that are acceptable to customers at
the lowest cost , relative that of competitors .
Cost leaders concentrate on finding ways on finding ways to lower their
costs relative to those of their competitors by constantly rethinking their
primary and support to reduce costs still further while maintaining
competitive levels of differentiation .
Firms implement a cost leadership strategy through each of 5 forces
Rivalry with Existing Competitors :Walmart is known for its ability to
both control and reduce costs making it difficult for firms to compete .
Bargaining Power of Buyers : Powerful customers can force a cost leader
to reduce its prices . Walmart has to compete with Costco.
Bargaining power of Suppliers : Cost leader operates with greater margins
than those of competitors make it possible for the cost leader to absorb
increases .
Potential entrants : Because of ever improving levels of efficiency (
economies of scale ) enhance profit margins they serve as a significant
entry barrier to potential competitors .
Product substitutes : A product substitute becomes an issue for the cost
leader when its features and characterstics are potentially attractive to the
firms customers
Competitive Risks of the Cost Leadership Strategy
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1.Risk of Process of obsolescence : Process used by cost leader may
become obsolete because of innovation by competitors .
2.Too much focus by the cost leader on cost reduction may occur at the
expense of trying to understand customers perceptions of competitive
levels of differentiation
Differentiation Strategy
Is an integrated set of actions taken to produce goods or services (at an
acceptable cost ) that customers perceive as being different in ways that are
important to them .
Firms implement a differentiation strategy through each of 5 forces
Rivalry with Existing Competitors : Customers tend to be loyal purchasers
of product differentiated in ways that are meaningful to them . As loyalty
increases , sensitivity to price increases decreases .
Bargaining Power of Buyers : Customers are willing to accept a price
increase when a product still satisfies their perceived unique needs better
than a competitors offering can .
Bargaining power of Suppliers : The high margins the firm earns partially
insulate it from the influence of suppliers in that higher supplier costs .
Potential entrants : Customer loyalty and the need to overcome the
uniqueness of a differentiated product present substantial barriers to
potential entrants .
Product substitutes :Firms selling brand-name goods and services to loyalcustomers are positioned effectively against product substitutes .
Competitive Risks of Differentiated Strategy
1. Customers might decide that the price differential between the
differentiators product and the cost leaders product is too large .
2. A differentiated product becomes less valuable if imitation by rivals
cause customers to perceive that competitors offer essentially same goods .
3.Experience can narrow customers perceptions of the value a products
differentiated features .Focus Strategies
Firms choose a focus strategy when they intend to use their core
competencies to serve the needs of a particular industry segment or niche to
the exclusion of others .
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The focus strategy is an integrated set of actions taken to produce goods
or services that serve the needs of a particular competitive segment .
Firms can create value for customers in specific and unique product
segments by using focused cost leadership or focused differentiated
strategy
Competitive Risks of Focus Strategies
A competitor may be able to focus on more narrowly defined competitive
segment and out focus the focus .
A company competing on an industry wide basis may decide that the
market system served by the focus strategy firm is attractive and worthy of
competitive pursuit .
The needs of customers within narrow competitive segment may
become more similar to those of industry wide customers as a whole over
time .
Integrated Cost Leadership / Differentiation Strategy
The objective of using this strategy is to efficiently produce products
with differentiated attributes .
Efficient production is the source of maintaining low costs while
differentiation is the source of unique value .
Flexible Manufacturing System
Flexible Manufacturing System increases the flexibilities of human ,
physical , and information resources that the firm integrates to create
relatively differentiated products at relatively low costs .
FMS is a computer controlled process used to produce a variety of
products in a moderate , flexible quantities with a minimum of manual
intervention .
Information Net Works and TQMFirms develop and use TQM systems in order to 1. increae customer
satisfaction 2. cut costs 3. reduce the amount of time required to introduce
innovative products to the market place .Competitive Risks of Integrated Cost Leadership / Differentiation Strategy
Firms that fail to perform the primary and support activities in an
optimum manner become stuck in middle means that the firms cost
structure is not low enough to allow it so attractively price its products and
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that its products are not sufficiently differentiated to create value for the
targeted customer .
Firms can be stuck in middle when they fail to successfully implement
cost leadership or differentiation strategy .
Corporate Level Strategy
Specifies actions a firm takes to gain competitive advantage by selecting
and managing a group of different businesses competing in different
product markets.
Product diversification , primary form of corporate level strategies ,
concerns the the scope of the markets and industries in the firm competes
as well as how managers buy , create and sell different businesses to
match skills and strengths with opportunities presented to the firm .
Reasons of Diversification
A. Value Creating Diversification
1.Economies of Scope ( related diversification)
a) Sharing Activities
b) Transferring core comptencies
2. Market Power (related diversification )
a) Blocking competitors through multipoint competition
b) Vertical integration
3.Financial Economies (unrelated diversification ) a) Efficient internal capital allocation
b) Business restructuring
B. Value Neutral Diversification
i. Anti Trust Legislation
2. Tax Laws
3.Low performance
4..Uncertain future cash flows
5. Risk reduction for firm6. Tangible resources
7. Intangible resources
C. ValueReducing Diversification
1. Diversifying managerial employment risk
2.Increasing managerial compensation
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Value Creating Diversification Related Constrained and Related
Linked Diversification
Firm builds upon or extends its resources and capabilities to create value .
Economies of Scope are cost savings that the firm create by
successfully sharing some of its resources and capabilities or transferring
one or more corporate level core competencies that were developed in one
of its businesses to another of its businesses .
Operational Relatedness : Sharing Activities : P&G s paper towel business
and baby diaper business .
Market Power : exists when a firm is able to sell its products above the
existing competitive level or to reduce the costs of its primary and support
activities below the competitive level or both .
Nestle is attempting to do by acquiring Gerber Products , firms can create
market power through multipoint competition and vertical integration .Multi point competition exists when two or more diversified firms
simultaneously compete in same product areas or geographic markets .
ValueNeutral Diversification
Incentives to Diversify : External Incentives include anti trust regulations
and tax laws .Internal incentives include low performance , uncertain
future cash flows , and the pursuit of synergy and reduction of risk for the
firm .
Value Reducing Diversification :The desire for increased compensation
reduced managerail risk are two motives for top-level executives may
diversify a firm beyond value creating and value neutral levels . Top
executives may diversify a firm in order to diversify their own employment
risk as long as profitability does not suffer excessively .
Acquisitions and Restructuring Strategies
Merger is a strategy through which two firms agree to integrate their
operations on a relatively co-equal basis . Daimler Chrysler AG was termed
a merger of equals .
Acquisition is a strategy through which one firm buys a controlling or 100
percent interest in another firm with the intent of making acquired firm a
subsidiary business within its portfolio .
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A takeover is a special type of an acquisition strategy where in target firm
does not solicit the acquiring firms bid .
Reasons for Acquisitions
1.Increased Market Power : exists when a firm is able to sell its goods and
services above competitive levels or when the cost of its primary or support
activities are lower than those of its competitors . Companies resort to a)
Horizontal Acquisitions ( increases a firms market power by exploiting
cost-based and revenue based synergies) . B) Vertical Acquisitions (a firm
acquiring a supplier or distributor of one or more of its goods or services )
c. Related Acquisition ( acquisition of a firm in a highly related industry ) .
2. Overcoming Entry Barriers : Factors associated with the market or with
the firms currently operating the market or with the firms currently
operating in it , which increase the expense and difficulty faced by newventures trying to enter that particular market .
Ex: Cross border acquisitions : Acquisitions made between two companies
with headquarters in different countries are called cross-border acquisitions
3.Reshaping the Firms Competitive Scope : To reduce the negative effect
of an intense rivalry on their financial performance , firms may use
acquisitions to lessen their dependence on one or more products or markets
. Reducing a companys depence on one specific markets alters the firms
competitive scope .3.Learning New Capabilities
Pharma , IT Software etc., are industries
Problems in Achieving Success
1. Integration dificulties
2.Inadequate evaluation of target
3.Large or extraordinary debt
4.Inability to achieve synergy
5.Too much diverisification
6.Managers overly focused on acquisitions
7.Too large
International Strategy
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Is a strategy through which the firm sells its goods and services outside its
domestic market
Raymond Vernon suggested that typically a firm discovers an innovation
in its home market , especially in countries like USA , often demand for the
product then develops in other countries .Another motive for firms to become multinational is to secure needed
resources .
New largescale , emerging markets , such as China and India , provide a
strong internationalization incentive based on their potential demand for
consumer products and services .
Identify International opportunities
Increased market size
Return on investment
Economies of scale and learning
Location advantages
Explore Resources and Capabilities
International strategies :
International business level strategy
Multi-domestic strategyGlobal Strategy
Transnational strategy
Use Core Competence
Modes of Entry
Exploring
Licensing
Strategic Alliance
Acquisitions
Newly wholly owned subsidiary
Strategic Competitiveness outcomes
Better Performance
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Innovation
Michael Porters National Advantage International Corporate Level
Strategy
Multi-domestic strategy :is an international strategy in which strategic and
operating decisions are decentralized to the strategic business strategy in
each country so as to allow that unit to tailor products to the local market .
Global strategy: to offer standardized products across country markets.
Transnational Strategy: is an international strategy through which firm
seeks to achieve both global efficiency and local responsiveness.
AXIS Bank Banking on Technology and Market Segments for
Competitive Space
Vision 2015 and Core Values
VISION 2015:To be the preferred financial solutions provider excelling in customer
delivery through insight, empowered employees and smart use of
technology
Core Values
Customer Centricity
Ethics
Transparency
Teamwork
Ownership
The Bank Today Is Capitalized To The Extent Of Rs. 408.84 Crores With
The Public Holding (Other Than Promoters And Gdrs) At 53.81%.
The Bank Has A Very Wide Network Of More Than 1095 Branches
(Including 57 Service Branches/Cpcs As On 30th September 2010).
The Bank Has A Network Of Over 4846 Atms (As On 30th September
2010) Providing 24 Hrs A Day Banking Convenience To Its Customers.
This Is One Of The Largest Atm Networks In The Country.
Performance in 2008
1. Expansion of Branch Network143 new branches during year (total to
651 )
2.Significant Presence in Semi Urban and Rural Areas .( 158 branches
about 25% )
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3.Geographical Reach extends to 29 States and 3 Union Territories
covering 405 Centre (as per Annual Report 2008) and
Shift in Strategy
Initial Business Model :
Corporate assets being the main focus area .
Corporate advances witnessed a high growth rate and accounted for 80 %
funds lent till 2002
Strategic Inflection Point :
In 1999 , the Banks net NPAs to advances ratio jumped to 6.3% in FY
1999 from 3.7% in FY 97.
Reflected from a marginal in 17% growth in Banks Total Advances in FY
02 from a CAGR of 44% .
Shift in Strategy from Corporate to RetailRetail Focus with building up of physical and technological infrastructure
Branches increased to 450 from just 35 in FY 99
95 extension counters and 1890 +ATMs
First Bank in the country to adopt Finacle as its core banking software 9
of Infosys)
First Indian Bank to have a remote disaster recovery management system
to protect its business from any eventualities .
AXISs Current Strategy
Broad Differentiation :
1.Managing changing customer needs :
a. Moving to increasingly powerful back office hubs
b. Centralised Phone Banking Centre
c. Zonal level Nodal Offices to ensure quick redressal of Customers
Grievances
d . Implementation of KYC norms
Growth Strategy
Objectives
1. Increasing the market share in various businesses resulting in an
enhancement in its core income streams .
2. Improve the quality of its income streams .
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Complementary Strategies for Growth and Development
A. Strategic alliances and Collaborative partnerships :
i) Tie-ups with Maruti and Hyundai
Co-financing pact with India Infrastructure Finance Company Ltd.
Tieup with Bajaj AlliancZ General Insurance Tieup with MetLife as
Bancassurance Partner .
ATM sharing with other Banks
Economic Times Remit 2India for money transfer .
Outsourcing Selected Value Chain Activities
1. Outsourcing recruitments to Monster India .com BenefitTime costs
are halved . Relies on headhunters for specialised positions .
2. Outsourcing Print operations to Xerox : Benefit : able to mail
personalised cheque books to its customers within 24 hours of a request .
3.Outsourcing of electronic bill payment (EBP) and ATM management to
Billjunctiona specialist bill management service provider .
Offensive Strategic Moves
Aggressive strategy to to tap retail domain via the use of ATMs and
alternate tech-enabled business .
Superior Customer service : Customer oriented approach , deepening of
customer relationships and increasing cross-selling activities
Range of services on ATM machines : Network of more than 18000 ATM
machines , LIC premium payments for service providers like MTNL andBSNL and mobile facilities for Airtel , Hutch , Orange and Idea cellular
service providers .
Aggressive growth in cards business : Debit Cards (grew from by nearly
10 lacs in 2005-06 ) in association with VISA and MasterCard .First to
introduce travel currency card , a foreign denominated pre-paid card ,
Remittance Card and Rewards Card .
Offensive Strategic Moves
Risk Management : processes are guided by well-defined policiesappropriate for various risk categories , independent risk oversight and
independent risk management committee of the Board .
Risk limits are set according to a number of criteria like market analysis ,
business strategy and management experience .
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Dealing with Regulations : Undertaken an internal assessment of its
preparedness for the implementation of the Basel II Accord .
Keeping pace with Technology :The Banks IT team developed a process
called SETU (Seamless Electronic Transfer to AXIS Bank ) internet
based funds transfer . I trade to route corporate procurement transactions .
Product and service innovation : Low cost ATMS , Channel Finance Hub ,
ATM-centred delivery models .
Expansion of geographical reach to semi urban , rural aras . SMI and
agricultural sectors .
Financial advisory services
Q1.Banking Industry Scenario and Global Driving Forces
Scenario for Banking Industry :
Consolidation and move towards Universal Banking
Moving from a regime of "large number of small banks" to "small numberof large banks."
The new era is going to be one of consolidation around identified core
competencies.
Mergers and acquisitions in the banking sector are going to be the order of
the day.
Successful merger of HDFC Bank and Times Bank earlier and Stanchart
and ANZ Grindlays three years ago has demonstrated that trend towards
consolidation is almost an accepted fact. NPAs,.
Financial super market chain, making available all types of credit and non-
fund facilities under one roof.
Potentially dramatic changes that include, among others, a sliding dollar,
rising interest rates, introduction of Basel II accord and international
accounting standards, and the possible flattening of consumer lending
boom.