L123 Intro to Strategic Mgt

7/29/2019 L123 Intro to Strategic Mgt

1/12 Notes by Gautam Chitanis Pg 1

L123: Introduction to Strategic Management

Two broad objectives for learning the subject called as STRATEGIC MANAGEMENTI.

II.

Why this subject . ??? A 5 pointer1. Improve decision making2. Thoughtful reasoning and analysis3. Build skills in long run relations4. Develop the ability to analyze a complex business situation, identify key issues, and develop

recommended strategies and actions necessary for implementation.5. Improve ability to communicate clearly, cogently, and effectively. (Justifying your stance)



Some Realities of the World we are living in



3 "Revolutions we have seen .Oxford defines "Revolution" as "a drastic and far-reaching change in ways of thinking andbehaving."

Industrial RevolutionThe Industrial Revolution (IR) began in the 18th century, and marked the point when the growth ofmechanical work began outpacing the growth of manual work. The technologies that shaped IRwere the steam engine, iron founding and textile manufacturing. The business model wascentralized, patent-based monetization, where few were granted IP rights, and they built huge

economic machines. Resulting innovations in transportation (rail, ship, automobile) caused theeffects of the industrial revolution to go global, albeit over a generation or three.

Information RevolutionThe Information Revolution (IR2) began in the mid-20th century. It was marked by the connection ofeasily-stored content to widely-available distribution. The technologies that shaped this time werereduction in storage prices, improved data transmission through telephony, TCP/IP for networking,the massively widespread use of PCs, and the invention of the World Wide Web and Internet(thanks to Al Gore of course). The business model shifted from big to small, from centralized todecentralized, and most critically away from just Western centers of power. Moreover, banking hadevolved to the point where people almost anywhere in the world were able to buy things from

anywhere else, thereby monetizing their content. The proliferation of PCs combined with theavailability of phone lines that could handle data (via modems to start) made this revolution goglobal in a matter of decades.

Communication RevolutionThe next revolution (which we are now at the beginning of) is the Communication Revolution(CR). It is marked by the proliferation of mobile telephony; search engines (which is really thetransition between IR2 and CR); and non-verbal communication modes (SMS, data, email, etc.) andInternet access via cell phones.v Facebookv Twitter

v Other Social Networking Sites



Business Basics .



Core components of business modelHow do you:

v Create value?v Select customers?v Do it better than anyone else?v Differentiate your solution?v Make a profit?

v Grow your business?

A Major Shift. . .. . . from financial capital to intellectual capital.

v Humanv Systemsv Customer



Case of IBM:



Strategy & Strategic Management Defined

What is strategy?In simplest terms an action a company takes to attain superior performance.

In other words Strategy is ....a unified, comprehensive and integrated game plan that relates the strategic advantages of thefirm to the challenges of the environment and that is designed to ensure that the basic objectivesof the enterprise are achieved through proper execution by the organisation.



Benefits of strategic management:1. Establish the mission deciding on the business or businesses that the company or division

should engage in and other fundamentals that will guide and characterize the business, suchas continuous growth. The companys mission is usually timeless. In other words, it shouldnot be changed every year. It should, however, guide the changes in the companysobjectives and strategies.

2. Formulate philosophy establish the beliefs, values, attitudes, and unwritten guidelines thatadd up to the way we do things around here. This is what makes one company differentfrom other companies.

3. Establish policies deciding on the plans of action to guide the performance of majoractivities in carrying out strategy in accordance with company philosophy

4. Setting objectives deciding on achievement targets within a defined time range. Objectivesare narrower in scope than the mission, and are designed to aid in making operational plansfor carrying out strategy.

5. Develop strategy developing concepts, ideas, and plans for achieving objectivessuccessfully and meeting and beathing the competition. Strategic planning is part of the totalplanning process that includes management, marketing, and operational planning.

6. Planning the organizational structure developing the plan of orgaization and the activitiesthat help people work together to perform activities in accordance with strategy, philosophy,and policies.

7. Provide personnel recruiting, selecting, and developing people to fill the positions in theorganizational plan.

8. Establish procedures determining and prescribing how all important and current activitieswill be carried out.

9. Provide facilities providing the plant, equipment, and other physical facilities required tocarry on the business.



10. Provide capital making sure the business has the money and credit needed for workingcapital (money to operate on) and physical facilities.

11. Set standards establishing measures of performance that will enable business to bestachieve its long-term objectives successfully.

12. Establish management programs and operational plans developing programs and plansgoverning activities and the use of resources that, when carried out with accordance withestablished strategy, policies, procedures, and standards, will enable people to achieveparticular objectives. These are phases of the total palnning process, which includesstrategic planning.

13. Provide control information supplying facts and figures to help people follow the strategies,policies, procedures, and programs; to keep alert to forces at work inside and outside thebusiness; to measure overall company performance against established plans andstandards.

14. Activate people commanding and motivating people to act in accordance with philosophy,policies, procedures, and standards in carrying out the plans of the company.



Two Cases:



March 10, 2013; GCPL plans to expand its international market presence through thisstrategic move, with a focus on Asia, Africa and South America/Latin America

Godrej Consumer Products Ltd (GCPL) has chalked out a new plan for focusing on the internationalmarket. It is concentrating on a 3x3 strategy to penetrate deeper into Asia, Africa and South

America/Latin America, with three product segmentspersonal wash, hair care and insecticides.It (the 3x3 strategy) is part of our globalisation strategy where we are concentrating on threecategories and three continents. We are focussing on these continents to understand the marketbetter. Our strategy always has been to focus on developing countries, because they have high

populations. Even consumption of our products is high in these places, said Hoshedar K Press,vice chairman, GCPL.

The company spent Rs100 crore-Rs125 crore to acquire Tura, a Nigerian beauty productscompany. This is the companys third acquisition in Africa.In April 2010, GCPL acquired Megasaria leading consumer products company in Indonesia,which has notched up revenues of $120 million in the past fiscal with estimated profit-after-taxmargins of 11%-12%.

It is also the second-largest player in the insecticides market, enjoying 35% market share ofIndonesias household insecticides market (with a total size of $150 million, growing at 20%). It also

has 45% market share (of a total $68 million market, growing at 45%) in the air-care segment and80% market share of the $21-million wipes market (growing at 45%). Megasari has 15% share ofthe breakfast cereals market. Earlier in October 2005, GCPL had acquired UK-based Keyline forapproximately 13 million. During the same year in September, it acquired the South Africanbusiness of British company Rapidol for Rs50 crore. South Africa-based Kinky Group was boughtout for around $34 million in April 2008.

Last year, GCPL acquired a 49% stake in Godrej Sara Lee and is looking to buy out the remainingstake. It has passed an enabling resolution to raise Rs30 billion in order to fund inorganic growth(India and other emerging markets would be key focus areas).


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All the big players in the FMCG market are now eyeing Africa. Marico Ltd acquired the Fianceehair care brand owned by Egypt-based Ready Group; Emami is looking at buying an FMCG firm inEgypt. Emami is also looking at buying several other personal care firms in the region and thecompany is almost certain of having its first manufacturing facility up and running in Africa this year.Emami also has plans to set up three more manufacturing bases in Africa over the next two-threeyears.

Assignment as discussed in the class..

L123 Intro to Strategic Mgt

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