Linking Strategic Control to Business-Level and Corporate-Level Strategy Presentation
Transcript of Linking Strategic Control to Business-Level and Corporate-Level Strategy Presentation
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LINKING STRATEGIC CONTROL
TO BUSINESS-LEVEL ANDCORPORATE-LEVEL STRATEGY
Ameya Kaple(P41008)Amit Jagtap(P41009)
Gopal Khandelwal(P41020)
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STRATEGIC MANAGEMENT
What is Strategic control?
it is the process by which managers monitor
the ongoing activities of an organization andits members to evaluate whether activitiesare being performed efficiently and
effectively and to take corrective action to
improve performance if they are not
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STRATEGIC MANAGEMENT
Purpose of Strategic Controls:
To provide managers with a means to
motivate employees towards organizationalperformance;
Solicit data on how well the organization is
performing
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STRATEGIC MANAGEMENT
The importance of Strategic Control
The success of a chosen strategy
The implementation compass Organizational performance
Ensuring competitive advantage
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STRATEGIC MANAGEMENT
Strategic Control:
Requires more than re-acting on past
performance Keeps the organization on track
Anticipating events that might occur in future
Allows the organization to respond to new
opportunities that may present itself
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STRATEGIC MANAGEMENT
The importance of Strategic Control
Control & Innovation:
Managers must create an environment inwhich people feel free to experiment and takerisks
Managers are challenged to build control
systems that encourage risk taking Measures cost reduction, process
improvement and improved qualitymeasures.
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Business Level Strategy
Actions taken to provide value to customersand gain a competitive advantage byexploiting core competencies in specific,
individual product markets. It is concerned primarily with answering the
question: How to compete in a particular industryor product/market segment. Distinctivecompetences and competitive advantage are the
most important components of business levelstrategy.
The major policy decisions are product/marketsegmentation and evolution.
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Breadth of
Competitive
Scope
Source of CompetitiveAdvantage
BroadTargetMarket
NarrowTargetMarket
Cost
FocusedDifferen-
tiation
CostLeadership
Differen-tiation
Focused LowCost
GenericBusiness Level Strategies
Uniqueness
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Relatively standardizedproducts
Features acceptable tomany customers
Lowest competitiveprice
RequirementsConstant effort to reduce coststhrough:
*B
uilding efficient scale facilities
*
*State of theArt manufacturingfacilities
* Simplification of processes
*
Minimizing costs of sales, R&D andservice
*Monitoring costs of activities providedby outsiders
Tight control of production costs andoverhead
Cost Leadership
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Choices that Drive Costs
Economies of scale
Asset utilization
Capacity utilization pattern
Value chain linkages
Product features
Interrelationships
- Advertising & Sales
- Logistics & Operations
- Seasonal, cyclical
- Order processingand distribution
Product features
Product Performance
Mix & variety of products
Service levels
Small vs. large buyers
Process technology
Wage levels
Hiring, training, motivation
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Differentiation
RequirementsConstant effort to differentiate productsthrough:
*Developing new systems and processes
* Quality focus
*
*Maximize Human Resource contributionsthrough low turnover and high motivation
Capability in R&D
* Shaping perceptions through advertising
Value provided byunique features and
value characteristics
Command premium price
Superior quality
Rapid innovation
Prestige or exclusivity
High customer service
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Drivers of Differentiation
Unique product features
Unique product performance
Exceptional services
Quality of inputs
New technologies
Exceptional skill or experience
Detailed information
Some Examples:
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Relationships between Rewards & Evaluation
Systems and Business-level and Corporate-level
Strategies
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Corporate Level Strategy
An action taken to gain a competitive advantagethrough the selection & management of a mix ofbusinesses competing in several industries or
product markets Corporate Strategy: is concerned primarily with
answering the question:What set of businessesshould we be in?Scope and resource
deployments among businesses are the primarycomponents of corporate level strategy.
The major policy decisions are financial structureand organizational structure.
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Diversification
It is a strategy adopted by the firms to acquire new firms to expand its product base
and to maximize its revenue. There are two types of diversifications RelatedDiversification & Unrelated Diversification
Motivating factors for Diversification
Increase the firms stock value
Increase the growth rate of the firm
Better utilization of firms resources
Improve the stability of the firm
Balance or fill out the product line
Diversify the product line
Acquired the needed reasons
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Reasons for Diversification
Value-Creating Diversification
Economies of scope (relateddiversification)
Sharing activities
Transferring core competencies
Market power (relateddiversification)
Blocking competitors throughmultipoint competition
Vertical integration
Financial economies (unrelateddiversification)
Efficient internal capital allocation
Business restructuring
Value-Neutral Diversification
Antitrust regulation
Tax laws
Low performance
Uncertain future cash flows
Risk reduction for firm Tangible resources
Intangible resources
Value-Reducing Diversification
Diversifying managerial
employment risk
Increasing managerialcompensation
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Related vs. Unrelated
Diversification
Related Diversification
Involves diversifying into
businesses whose value
chains possesscompetitively valuable
strategic fits with value
chain(s) of firms present
business(es)
UnrelatedDiversification
Involves diversifying into
businesses with nodeliberate effort to seek
out businesses having
strategic fit with firms
present business(es)
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Levelsof Diversification
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Related Diversification
Firm creates value by building upon orextending: Resources
Capabilities Core competencies
Achieved by: Transferexpertise/capabilities/technology
Combine related activities into a single operation andreduce costs
Leverage use of firms brand name reputation
Conduct related value chain activities in a collaborativefashion to create valuable competitive capabilities
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Unrelated Diversification
Involves diversifying into businesses with
No strategic fit
No meaningful value chain
relationships
No unifying strategic theme
Achieved by:
Financial indicators:UnitCosts, Profits AndRevenues
Value Chain Analysis
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CASE
Nucor Steel Plant
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THANK YOU