The document discusses business strategy concepts including business level strategy, corporate strategy, core competencies, distinctive competencies, and competitive advantage. It provides definitions and examples of each concept. The key points are:
1) Business level strategy outlines how a company delivers value to customers while gaining a competitive advantage. Corporate strategy encompasses actions to achieve objectives and advantages.
2) Core competencies are unique skills that provide benefits to customers, can be applied across markets, and are hard to replicate. Distinctive competencies provide the basis for competitive advantage through strengths like technology or customer satisfaction.
3) Developing core and distinctive competencies through strategies like differentiation, pricing, segmentation, and product range allows companies to create
2. Business level strategy
The business level strategy is a detailed plan outlined on how to
deliver value to customer at the same time positioning itself as
having a competitive advantages over the competitor.
3.
4. Corporate Strategy
• Corporate strategy encompasses a firm’s corporate actions with
the aim to achieve company objectives while achieving a
competitive advantages.
5. Components of corporate strategy
There are several important components of corporate strategy that leaders of
organizations focus on. The main tasks of corporate strategy are:
1) Allocation of resources
2) Organizational design
3) Portfolio management
4) Strategic trade offs
6. Building and re-constructing the
corporation
• Making a major change in organization structure that often
involves reducing management levels and possibly changing
components of the organization through divestiture and/or
acquisition, as well as shrinking the size of the work force.
• Deals with the structure of organization and is usually associated
with cultural change.
7. Steps of building and re-constructing the
corporation
• Conduct an economic model, which gives where & how value is
created & to ensure that resources can be provided different parts
of the organization as an when required
Step 1
• Alignments of physical infrastructure of the organization & redesign
of the work architecture or process
Step 2
• Develop the organization which will be able to adopt constantly to
changing circumstances
Step 3
8. Types of corporate restructuring
• Mergers : Combination of two or more businesses into one business. Laws in India
use the term ‘amalgamation’ for merger.
Merger through Absorption: - An absorption is a combination of two or
more companies into an ‘existing company.
Example - Absorption of Tata Fertilisers Ltd (TFL) by Tata Chemicals Ltd.
(TCL).
Merger through Consolidation:- Combination of two or more companies
into a ‘new company’.
Example - Merger of Hindustan Computers Ltd, Hindustan Instruments Ltd,
Indian Software Company Ltd and Indian Reprographics Ltd into an entirely
new company called HCL Ltd.
9. • Acquisition: Acquiring effective control by one company over assets or
management of another company without any combination of companies.
Example - In April 2017 Indian e-commerce giant Flipkart acquired the Indian wing
of eBay, which infused $500 million into Flipkart as well as sold its Indian
operations unit for an exchange of equity stake in Flipkart.
• Joint Ventures: An arrangement in which two or more companies (called joint
venture partners) contribute to the equity capital of a new company (called joint
venture) in pre-decided proportion.
Example – Indian Oil Skytanking Limited was established in year 2010 as a joint
venture between Ruchi Soya and Indian Oil & their focuses on Bio-diesel value
chain implementation in UP and to handle jet fuel for airlines.
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10. Factors taken into consideration for strategic
analysis and choice
Internal Factors External Factors
Marketing Political/Governmental/Legal
Management Economy
Operations/Production Social/Demographic/Cultural/Environm
ental
Accounting/Finance Technological
Research and Development Competitive
11. Characteristics of Strategic Analysis and
Choice
• Establishment of long term goals
• Producing strategy options
• Choosing strategies to act on
• Selecting the best option and accomplishing mission and goals
14. “Capability” is the term that describes the quality of being capable. It is the
condition that permits an individual to acquire the power and ability to learn
and do something within their capacity. “Capability” is also known as implied
abilities, or abilities that are not yet developed.
Competence can also result in an increased quality of work or performance. In
return, the work and performance will produce more satisfying and favourable
results from other parties like clients, bosses, and other relevant individuals.
Competence starts as a person’s capabilities. In a sense, competence is the
proven abilities and improved capabilities. Competence can include a
combination of knowledge, basic requirements (capabilities), skills, abilities,
behaviour, and attitude.
Capability & Competency
15. Capabilities & Competencies
• Capability-based strategies are based on the notion that internal resources and
core competencies derived from distinctive capabilities provide the strategy
platform that underlies a firm's long-term profitability. Evaluation of these
capabilities begins with a company capability profile, which examines a
company's strengths and weaknesses in four key areas:
• Managerial
• Marketing
• Financial
• Technical
16. The SWOT analysis helps to suggest which type of strategy, or strategic thrust
the firm should use to gain competitive advantage.
1.Corporate strategy does not depend on products or markets but on business
processes.
2.Key strategic processes are needed to consistently provide superior value to the
customer.
3.Investment is made in capability, not functions or SBUs.
4.The CEO must champion the capability-based strategy.
Capability-based strategies, sometimes referred to as the resource-based view of
the firm, are determined by (a) those internal resources and capabilities that
provide the platform for the firm's strategy and (b) those resources and
capabilities that are the primary source of profit for the firm. A key management
function is to identify what resource gaps need to be filled in order to maintain a
competitive edge where these capabilities are required.
17. Several levels can be established in defining the firm's overall strategy
platform (see figure).
At the bottom of the pyramid are the basic resources a firm has compiled over
time. They can be categorized as technical factors, competitive factors,
managerial factors, and financial factors.
Core competencies can be defined as the unique combination of the resources
and experiences of a particular firm. It takes time to build these core
competencies and they are difficult to imitate. Critical to sustaining these core
competencies are their:
Durability - their life span is longer than individual product or technology life-
cycles, as are the life spans of resources used to generate them, including
people.
In transparency - it is difficult for competitors to imitate these competencies
quickly.
18. Core competency
• Core competencies are the main strengths or strategic advantages of a
business, including the combination of pooled knowledge and technical
capacities that allow a business to be competitive in the marketplace.
Theoretically, a core competency should allow a company to expand into
new end markets as well as provide a significant benefit to customers. It
should also be hard for competitors to replicate.
• Core competency is something that a firm can do well and that meets the
following three conditions.
1. It provides consumer benefits
2. It can be leveraged widely to many products and markets
3. It is not easy to competitors to imitate.
19. Core competencies are a few key traits, experiences or collective aptitudes held by
a company. They are the business equivalent of an individual's strengths and
talents when applying for a job. Competencies should contribute to the
philosophies, structure, vision, goals and direction of your company. A huge key to
successful business is aligning what you know and are good at to a particular
industry or marketplace.
Core Competency Strengths
20. Once managers have a clear understanding of their core competencies and design
ways of leveraging them within and outside the corporation. They are able to
achieve successful growth. This results in gaining a competitive edge. Below, I will
outline the interrelationship between core competencies and the definition of a
corporation itself. They include:
(1) Facilitates strategy development,
(2) Encourages innovation and
(3) Enforces recruitment and selection
The Importance of Core Competencies to
the organisation
21. Distinctive Competencies
• Distinctive competencies, the basis for competitive advantage, can come from
technology, industry position, market relations, cost, business processes, manufacturing
processes, people, customer satisfaction, or just being first.
• The insightful integration of complementary elements of the business model is the
strongest form of competitive advantage known. This is because it is so difficult for
competitors to understand and even more difficult to replicate, especially when the
business model elements of value, purpose, vision, culture, and identity are intertwined
in a powerful business solution.
• Examples of distinctive competency --
Toyota has a distinctive competency in lean manufacturing. GE has a distinctive
competency in management development. These companies also have core
competencies, core to their particular lines of business. They also have competencies
necessary to operate their business but of not of strategic significance, such as payroll,
the processes used to pay their employees. On the other hand, a company like ADP,
which provides payroll and benefits services, certainly has payroll processing as a core
competency, if not a distinctive competency.
22.
23. • A firm’s profitability is greater than the average profitability for all firms in its
industry.
• Excellent business model, distinctive competencies, and excellent strategies
lead to competitive advantage and superior profitability sustained competitive
advantage
• A firm maintains above average and superior profitability and profit growth for
a number of years.
Competitive Advantage
24.
25. To develop a successful business model, strategic managers must devise a set of
strategies that determine:
• How to Differentiate their product
• How to PRICE their product
• How to SEGMENT their markets
• How WIDE A RANGE of products to develop A profitable business model
depends on providing the customer with the most value while keeping cost
structures viable.
Implementing the Business Model
Building Distinctive Competencies
