1. What businesses do?
 Meet the needs of stakeholders
 Buy inputs – raw materials, labour, machinery
and equipment, land
 Produce outputs – goods and services
 Focus on efficient use of resources
 Generate profit/surplus

2. Organizational Stakeholders
• Who are the stakeholders? – Anyone who has an
interest in the success of a business

3. Strategy
An organization’s strategy shows what the
organization wants to achieve and how will it
achieve it.
It includes :
 The purpose (reason) of the organization
 Goals and objectives
 Plans and methods to achieve these goals
and objectives

4. Strategy
Strategy involves:
 The determination of basic long term goals
and objectives of the organization
 The adoption of methods and course of
action
 The allocation of resources necessary to
achieve the goals

5. Definition of strategy
" ..the determination of the basic long-term goals and
the objectives of an enterprise, and the adoption of
courses of action and the allocation of resources
necessary for carrying out these goals."
(Chandler, 1962, Strategy and Structures: Chapters in the History of the Industrial
Enterprise, MIT Press, Cambridge) .

6. Strategy
• Organization has a limited set of resources (e.g. time,
people, money, physical resources) and they must
decide how to use those resources.
• Example: You have the following resources:
– Rs 50, 000,000
– A building
– 10 employees
– A patent on new invention
Strategy is deciding what the organization is going to do and how
it will use its resources

7. Examples of Strategy
• Strategy 1: manufacture equipment with the money
and use the building and the people to manufacture
gadgets.
• Strategy 2: Outsource the production of widgets and
use the people and building to be widget distributor -
or perhaps a gadget store.
• Strategy 3: Sell the patent to a larger firm, sell the
building, fire the employees and retire!

8. Competitive Advantage
• What makes strategy difficult is that most
business environments are competitive.
• Competitive advantage: Factors which sets the
firm apart from the rest of its competitors.
• Basis for competition: cost, speed, quality,
variety, level of service,...

9. Goal
Goal: An observable and measurable end result having one or
more objectives to be achieved within a more or less fixed
timeframe.
Goals should be tied to an organization’s strategy or strategic
plan. It simply follows the organization’s vision.
Example:
Reduce overall budget costs by 10% by 2010, increase market
share by 5% by 2011 and increase revenues by 20% by 2012.

10. Objective
Objective: A target that can be reasonably achieved within an
expected timeframe and with available resources.
Example:
Reduce overall budget costs by
10% by 2010.
Goals and objectives should be
SMART and quantifiable.

11. SMART
Goal: I will lose 6 kilograms starting September 19th by cutting
out desserts and snacks and by controlling my portion sizes in
three months.
Is it Specific?
Is it Measureable?
Is it Attainable?
Is it Realistic?
Is it Timely?

12. SMART
Is it Specific? Yes – losing 6 kilograms is very specific. If you had said that you
just want to lose “some weight” in three months it would not be specific
enough to target.
Is it Measureable? Yes – whether or not you lose 6 kilograms in three months
period is the measure.
Is it Attainable? Yes – by changing your diet and portion sizes it is very
attainable. If you didn’t specify “how” you were going to lose the weight it
may not be attainable.
Is it Realistic? Yes – if you had a goal to lose 6 kilograms in two weeks that
would not be realistic.
Is it Timely? Yes – If the goal to start the diet was before the summer
holidays, it may not be good timing for the diet. But since it begins in
September, it is very timely.

13. Mission statement
Mission:
The purpose and unique services or products which an organization is
offering. The reason for existence.
Examples:
 To refresh the world - in mind, body and spirit, to inspire moments
of optimism - through our brands and actions and to create value
and make a difference everywhere we engage. (Coca-Cola)
 To explore the Universe and search for life and to inspire the next
generation of explorers. (NASA)

14. Vision statement
Vision:
A vision statement is called a picture of your company in the future. Your
vision statement is your inspiration and it answers the question, “Where do
we want to go?” What you want the organization to be?
Examples:
 Toyota will lead the way to the future of mobility, enriching lives around
the world with the safest and most responsible ways of moving people.
(Toyota)
 To be led by a globally diverse workforce that consistently delivers
outstanding business results, understands the various cultural demands of
a global marketplace, is passionate about technology and the promise it
holds to utilise human potential, and thrives in a corporate culture.
(Microsoft)
 To become most successful premium manufacturer in the car
industry.(BMW)

15. Strategy
Strategy:
Long term plans designed to achieve the mission and the objectives.
A conceptualization of how the goal could be achieved
Examples:
Get feedback from the subscribers (Goal: Increase magazine sale)
Eat less, exercise more (Goal: lose weight)
Sell stuff in online store (Goal: Make money from my hobby)

16. Tactics
Tactics:
Short term plans for implementing strategies. The methods and actions
taken to accomplish strategies. How you will achieve your strategy ?
A tactic is an action you take to execute the strategy
Examples:
Provide surveys to get subscriber feedback.
Encourage replies to emails to get subscriber feedback
Join weight watchers & get a gym membership
Decide whether to use Ebay or Shopify

17. Strategy vs. Tactics
Strategy Tactics
Long term Short term
Major commitment of Less resources committed
resources
Difficult to reverse Easier to reverse
Made by senior managers Usually made by junior
managers
Decisions are complex and Simpler and more routine
non-routine decisions

18. The three big questions
The starting point for devising a strategy is to
consider the following questions.
 Where are we now?
 Where do we want to go?
 How are we to get there?

19. The five “hows”
After setting the goals, the senior managers need
to address the following questions
 How to grow?
 How to please the customers?
 How to compete with rivals?
 How to respond to changing markets?
 How to achieve the objectives?

20. Hierarchy of Strategy
The strategy has four major tiers:
 Corporate strategy
 Business strategy
 Functional strategies
(R&D, Marketing & Sales, Manufacturing,
Human Resource, Finance)
 Operating strategies
(Regions, Plants, Departments within
Functional areas)

21. Hierarchy of Strategy
 Corporate strategy
What set of business should we be in?
 Business strategy
How should we compete in given business?
 Functional strategy
How can this function contribute to the
competitive advantage of the business?

22. Hierarchy of Strategy
Corporate strategy
Business strategy
Functional strategy

23. Factors to consider when deciding
strategy
 Strategic planning and management
 Skills and resources
 Goals and objectives
 Risk involved
 Stakeholders needs and preferences
 Expected return

24. Why a strategy might fail
 Unrealistic objectives
 Conflicting objectives
 Poor planning
 Poor execution of the plan
 Problem of business culture: resistance to
change

25. Corporate Culture
The beliefs and values shared by people who work in
an organisation
 How people behave with each other
 How people behave with customers/clients
 How people view their relationship with other
stakeholders
 People’s responses to energy use, community
involvement, absence, work ethic, etc.
 How the organisation behaves to its employees
training, professional development, pay
increments, work-load balance etc.

26. Dimensions of Organizational Culture

27. Corporate Culture
The basic factor which can affect the organization
culture is the "Change".
1. Change of Management.
2. Change of Strategies.
3. Change of Business.
4. Change of Geographical location.
5. Change of Employees.

28. Types of Corporate Culture
Common corporate cultures are:
1. Vitalized Culture.
2. Bureaucratic Culture.
3. Stagnant Culture.

29. Vitalized Culture
1. Members are encouraged and emphasized on innovation.
They are not afraid of failures and even attempt trials even
when they are risky.
Example: Sony Corporation
At Canon, a large scale new product development failed after a
large investment in a plant in 1970. No one was punished and
the president remarked himself as “foolish”. This event
contributed to the cultivation of risk taking culture at Canon,
Sony Corporation.

30. Vitalized Culture
2. There is less social distance between members and their
seniors and their colleagues than in other companies. Free
communication flow among members, decisions are made as
a team.
3. There are prompt responses to opportunities which result in
frequent successful new product development. Members are
willing to work for their life time, work hard and do not
hesitate to report errors to their seniors.

31. Bureaucratic Culture
1. In companies with this culture, rules and standards increase,
the behavior of members are bound by these rules and
members do not try to take risk. Deviation from the rules
and standard is not allowed.
2. Hierarchy is important. The vertical social distance is large.
3. Implementation of new ideas is slow and imperfect. There
are many discussions but little implementation occurs.
Commitment to the organization is high but commitment to
the job is low.

32. Stagnant Culture
1. Members show no interest in new experiences. Individuals
are important.
2. Little generation of new ideas occurs. It is more preferable to
stay close to what is known and familiar than to risk
evaluation of things that might go wrong.
3. Rare to try new ventures, low productivity is the norm.
4. The stagnant type of corporate companies cannot survive
competition.

33. Corporate Culture

34. Corporate Culture

35. Corporate Culture

36. Types of Strategies
1. Integration Strategies
2. Intensive Strategies
3. Diversification Strategies
4. Defensive Strategies
5. Acquisitions, Mergers and Leveraged Buyouts
6. Michael Porter’s Generic Strategies

37. Integration Strategies
Forward integration, backward integration, and horizontal
integration are sometimes collectively referred to as vertical
integration strategies.
Forward Integration: It involves gaining ownership or increased
control over distributors or retailers.
Example: when a farmer sells his / her crops at the local market
rather than to a distribution center.

38. Integration Strategies
Backward Integration: It is a strategy of seeking ownership or
increased control of a firm’s suppliers.
Example: If a bakery business bought a wheat farm in order to
reduce the risk associated with the dependency on flour.
Horizontal Integration: When a company expands its business
into different products that are similar to current lines.
Example: A hot dog vendor expanding into selling burgers and
club sandwiches would be an example of horizontal integration.

39. Intensive Strategies
Market penetration, market development, and product development
are referred to as intensive strategies.
Market Penetration: A market penetration strategy seeks to increase
market share for present products or services in present markets
through greater marketing efforts (increasing the number of
salespersons, offering extensive sales promotion items etc)
Example: If there are 100 million people in a country and 60 million of
those people have cell phones then the market penetration of cell
phones would be approximately 60%. This would mean in theory there
are still 40 million more potential customers for cell phones, which
may be a good sign of growth for cell phone makers.

40. Intensive Strategies
Market Development: Market development involves introducing
present products or services into new geographic areas.
Example: If product X is successful in region A why not to
introduce it in region B.
Product development: It is a strategy that seeks increased sales by
improving or modifying present products or services.
Example: A dedicated research and development unit can improve
/ modify the present products but will entails large expenditures.

41. Diversification Strategies
Concentric Diversification: Adding new, but related, products or services
is widely called concentric diversification.
This diversification helps a firm or any business in various ways:
1. Helps in developing new products
2. Provide various advantages while re-engineering existing products
3. Helps in increasing the market share of any firm or business
Example: The addition of tomato ketchup and sauce to the existing
"Maggi" brand processed items of Food Specialties Ltd. is an example of
technological-related concentric diversification.
In this type of diversification, the technology no doubt remains the same
but various new varieties are added in it in order to make it more
beneficial

42. Diversification Strategies
Horizontal Diversification: Adding new, unrelated products or services is
called conglomerate diversification.
Example: A company that was making notebooks earlier may also enter
the pen market with its new product.

43. Defensive Strategies
Joint venture: It is a popular strategy that occurs when two or more
companies form a temporary partnership or consortium for the purpose
of capitalizing on some opportunity. This strategy can be considered
defensive only because the firm is not undertaking the project alone.
Example: A Used Car Dealer obtained his inventory of used cars from
auctions. He made his purchases with money from private investors.
These investors were promised a 50/50 share in the profit from selling
the cars to the public.
This was a wonderful joint venture deal for everyone. The dealer had his
inventory financed at no interest; the investors had their investments
fully secured by the cars; and they were also able to double their money
in a very short time with relatively little risk.

44. Defensive Strategies
Retrenchment: Retrenchment occurs when an organization regroups
through cost and asset reduction to reverse declining sales and profits.
Example: Retrenchment can entail selling off land and buildings to raise
needed cash, reduce product lines, closing obsolete factories,
automating processes, reducing the number of employees etc.
Divestiture: Selling a division or part of an organization is called
divestiture. Divestiture can be part of an overall retrenchment strategy
to rid an organization of businesses that are unprofitable, that require
too much capital, or that do not fit well with the firm’s other activities.
Liquidation: Selling all of a company’s assets for their tangible worth is
called liquidation. Liquidation is recognition of defeat and consequently
can be an emotionally difficult strategy. However, it may be better to
cease operating than to continue losing large sums of money.

45. Acquisitions, Mergers and
Leveraged Buyouts Strategies
Acquisition: It occurs when a large organization purchases
(acquires) a smaller firm, or vice versa.
Merger: It occurs when two organizations of about equal size unite
to form one enterprise.
Leveraged Buyouts: The acquisition of another company using a
significant amount of borrowed money (bonds or loans) to meet
the cost of acquisition. Often, the assets of the company being
acquired are used as assurance for the loans in addition to the
assets of the acquiring company. The purpose of leveraged
buyouts is to allow companies to make large acquisitions without
having to commit a lot of capital.

46. Michael Porter’s Generic
Strategies
Cost leadership: It is a strategy of producing standardized products at
very low per-unit cost for consumers who are price-sensitive.
Examples: Tesco, Wall-mart, Dell Computers
Differentiation: It is a strategy aimed at producing products and services
considered unique industrywide and directed at consumers who are
relatively price-insensitive. Successful differentiation can mean greater
product flexibility, greater compatibility, lower costs, improved service,
less maintenance, greater convenience, or more features.
Examples: Federal Express with superior service; Caterpillar with high
spare parts availability and 3M Corporation with its emphasis on
technology leadership and innovation.

47. Michael Porter’s Generic
Strategies
Focus “Niche”: It is a strategy of producing products and services that
fulfill the needs of small group consumers (cultural, economic, political,
geographical or age-related groups). This strategy employs either cost
focus or differentiation focus within its target region and in this sense it
is a narrower application as compared to the other two strategies.
1. A Cost Focus strategy involves a company gaining competitive
advantage by being the low cost provider to the target region or
audience.
An example would be a company that offers a wide range of juices (e.g.
organic juice, flavored fruit juices) at low prices for kids.
2. A Differentiation Focus strategy involves companies marketing a
distinct or unique product in the target region or audience.
Example: Companies specialized in supplying organic juices to certain
marketing channels. An example is the Demeter brand of organic juices.