Professional Documents
Culture Documents
Strategic Management
Unit-I
Strategy and Process
Strategic Management
Introduction
Concept of Strategy
STRATEGY: It is Unified, Comprehensive, and Integrated
long term plan that relates to the strategic advantages of the
firm to the challenges of the environment.
STRATEGIC MANAGEMENT: It is a stream of decisions and
actions which leads to the development of an effective
strategy to help achieve the corporate objective. It is a
continuous, iterative, & Cross functional process of matching
firm with its environment.
COMPETITIVE ADVANTAGE: is delivering superior value
advantage to your target customers relative to your
competitors. Or delivering equivalent customer value to your
target customers relative to your competitors , but at a lower
cost.
Strategic Management
FIRM/BUSINESS
MISSION
OBJECTIVES
PURPOSE
7
The Five Task of Strategic Planning
• Developing a Vision and a Mission
• Setting Objectives
• Crafting a Strategy
• Implementing and Executing Strategy
• Evaluating Performance, Reviewing the
Situation and Initiating Corrective Action
8
An organization’s MISSION
• reflects management’s vision of what the
organization seeks to do and to become
• sets forth a meaningful direction for the
organization
• indicates an intent to stake out a particular
business position
• outline “Who we are, What we do, and Where
we are headed”.
9
Setting Objectives
• The purpose is to convert the mission into Specific
Performance Targets
10
What is a Strategic Plan?
• A strategic plan specifies where a
company is headed and HOW
management intends to achieve the
targeted levels of performance.
11
Strategic Management Basic model
Options on
Learning
Competitive
points from
Positioning
deviations
Four Basic Elements
13
STRATEGIC PLANNING DESIGN AND IMPLEMENTATION PROCESS
Characteristic of the Strategic
Management Process
• An ongoing exercise
• Boundaries among the tasks are blurry rather than clear-
cut
• Doing the 5 task is not isolated from other managerial
responsibilities and activities.
• The time required to do the tasks of strategic
management comes in lumps and spurts rather than
being constant and regular.
• Involves pushing to get the best strategy supportive
performance from each employee, perfecting the current
strategy.
14
ENVIRONMENTAL APPRAISAL
ENVIRONMENTAL ENVIRONMENTAL
ANALYSIS DIAGNOSIS
O S
T W
ETOP
SAP
OFPP
ENVIRONMENTAL FACTORS
GOVERNMENTAL INTERNATIONAL
ECONOMICAL
POLITICAL
TECHNOLOGICAL
FIRM/BUSINESS
LEGAL
SOCIETAL
CULTURAL
16
What is a Business level strategy
17
Stake holders in Business
• A stakeholder is any individual or organisation that
is affected by the activities of a business. They
may have a direct or indirect interest in the
business, and may be in contact with the business
on a daily basis, or may just occasionally.
• Person, group, or organization that has direct or indirect
stake in an organization because it can affect or be
affected by the organization's actions, objectives, and
policies. Key stakeholders in a business organization
include creditors, customers, directors, employees,
government (and its agencies), owners (shareholders),
suppliers, unions, and the community from which the
business draws its resources.
18
The main stakeholders are:
Shareholders (not for a sole trader or partnership though) –
they will be interested in their dividends and capital growth of
their shares.
Management and employees – they may also be
shareholders – they will be interested in their job security,
prospects and pay.
Customers and suppliers.
Banks and other financial organisations lending money to
the business.
Government – especially the Inland Revenue and the
Customs and Excise who will be collecting tax from them.
Trade Unions – who will represent the interests of the
workers.
Pressure Groups – who are interested in whether the
business is acting appropriately towards their area of interest.
Stakeholders versus Shareholders
It is important to distinguish between a STAKEHOLDER and
a SHAREHOLDER. They sound the same – but the
difference is crucial!
Shareholders hold shares in the company – that is they
own part of it.
Stakeholders have an interest in the company but do not
own it (unless they are shareholders).
Often the aims and objectives of the stakeholders are not the
same as shareholders and they come into conflict.
The conflict often arises because while shareholders want
short-term profits, the other stakeholders’ desires tend to
cost money and reduce profits. The owners often have to
balance their own wishes against those of the other
stakeholders or risk losing their ability to generate future
profits (e.g. the workers may go on strike or the customers
refuse to buy the company’s products).
Social Responsibility
Social responsibility is the duty and obligation of a
business to other stakeholders. Social responsibility for
one group can conflict with other groups, especially
between shareholders and stakeholders
26
Business
Definition
• Economic system in which goods and services
are exchanged for one another or money, on the
basis of their perceived worth. Every business
requires some form of investment and a
sufficient number of customers to whom its
output can be sold at profit on a consistent basis.
• A commercial activity engaged in as a means of
livelihood or profit, or an entity which engages in
such activities.
27
Business
• A business is an enterprise or entity that provides
products or services to customers. Business is doing
commercially viable and profitable work. Commerce
is buying and selling products or services.
• A business: A legally recognized organization or
enterprise that operates with the objective of earning
a profit from the sale of goods or services
• Business: The activity in which you participate in
order to earn money (i.e. "I'm in the computer
business.")
28
Objectives and Goals
Definition
Objectives and goals are used interchangeably in
Management literature but the recent strategic literature
shows a suitable distinction between these two terms.
Objective is the end, which the organisation tries to achieve
through its operations. Goal is an open ended statement,
which does not qualify what needs to be achieved and the
time frame for completion.
So growth is a goal where as an objective is to increase
growth by 10% in terms of market share and sales over
last year.
Long term goals and short term objectives are derived from mission.
29
Objectives and Goals
Objectives form the basis for all other functional decisions such as
finance, manufacturing, marketing and human resource. It is split
into business wise and functional targets and performance targets.
Objectives indicate the organisational performance to be realised and
expected over a period of time.
Areas where Objectives are set
•Growth
•Profitability
•Market share
•Productivity
•Technology
•R&D and Innovation
•Corporate Social Responsibility, Image, employee satisfaction
30
Objectives and Goals
Characteristics of Objectives
Objective setting is a complex Process. It has certain
characteristics
•Specific
•Time Bound
•Measurable
•Challenging
•Objectives form a hierarchy
•Constraints
•Verifiable
•Time frame- Long term and short term
31
Objectives and Goals
Formulation of Objectives
It is a complex Process.
•The forces in the environment
•Realities of firm’s resources and power relationship
•The values of top management
•Past strategies
Objectives are important for strategic management for the
following reasons:
•Objectives help to relate the organisation in the environmental
context. It helps to attract people.
•Objectives help to coordinate decisions. All of them aware of
company’s objective to coordinate
•Objectives serve as standards of appraising organisational
performance and evaluate the success and failure of Orgn. 32
Corporate Governance &Social Responsibility
Corporate Governance
Corporate governance is the set of processes, customs,
policies, laws, and institutions affecting the way a
corporation (or company) is directed, administered or
controlled. Corporate governance also includes the
relationships among the many stakeholders involved
and the goals for which the corporation is governed. The
principal stakeholders are the shareholders, the
board of directors, employees, customers, creditors,
suppliers, and the community at large. Sound corporate
governance is reliant on external marketplace
commitment and legislation, plus a healthy board culture
which safeguards policies and processes.
33
Corporate Governance
The basic objective of Corporate
Governance would be "enhancement of the
long-term shareholders value while at the
same time protecting the interests of other
stakeholders."
•3 key constituents of Corporate Governance are :
1. the Shareholders,
2. the Board of Directors and
3. the Management.
Dr.S.Sundararajan
What, Why and How of Good Governance?
– Good governance: balance or match between the culture
(mutual expectations) and self-interest of the participants
– Why Good Governance? To make all participants better
off
– Elements of Good Governance: balance among
regulation, market forces, and social norms
Dr.S.Sundararajan
Objectives of good corporate
governance
1. Strengthen management oversight functions and accountability
2. Balance skills, experience and independence on the board appropriate to
the nature and extent of company operations
3. Establish a code to ensure integrity
4. Safeguard the integrity of company reporting
5. Risk management and internal control
6. Disclosure of all relevant and material matters
7. Recognition and preservation of needs of shareholders
Dr.S.Sundararajan 36
Principles of Corporate Governance
39
Corporate Governance &Social Responsibility
Theories of Corporate Social Responsibility
• The instrumentation theories
• Political Theories
• Integrative theories
• Ethical Theories
Wealth creation is main aim of CSR
40
Unit II
Competitive Advantage
Competitive advantage is delivering superior value advantage to
your target customers relative to your competitors. Or delivering
equivalent customer value to your target customers relative to
your competitors , but at a lower cost.
It has four dimensions namely efficiency, quality, innovation and
customer responsiveness. These are developed by building
competencies, resources and capabilities. Three critical issues are
relevant in this regard i.e. 1) What are the factors influence CA?
2) Why do successful companies lose their CA? 3) How can
companies avoid failures and CA over time.
41
Unit II
Competitive Advantage
Generic Building blocks of Competitive advantage
Efficiency, quality, innovation and customer responsiveness
are four basic ways for lowering costs and achieving
differentiation. The four factors are interrelated in the sense,
superior quality leads to superior efficiency and innovation
will increase efficiency and innovation will increase
efficiency, quality and customer responsiveness.
Efficiency
Quality
Innovation
42
Unit II
Competitive Advantage
Distinctive Competence: It is a unique strength that allows a
company to achieve superior efficiency, quality, innovation
and customer responsiveness.
Sources of Distinctive Competencies
1.Resources and
2.Capabilities
1. Resources is an asset, competency, process, skill or
knowledge. It may be tangible like land, building, plant,
machinery and intangible like brand names, reputation,
patents, know-how and R&D. It should satisfy three
conditions i.e. value, Unique, Extendibility. 43
Unit II
Competitive Advantage
2. Capabilities
Capabilities are skills, which bring together and put
them to purpose use. The organisation’s structure and
control system gives rise to capabilities, which are
intangible.
Capability drivers are patents, licenses, favorable location,
established distribution networks, process improvement, and
interrelationship.
Ex: HLL. HPCL, Sony, Hitachi, Toshiba, Sanyo, ICICI,
HDFC
44
Distinctive Competence
48
External Environment
Factors Relevant to Specific Business
•Market environment
•Supplier environment
•Environmental Scanning
•Task Environment
49
Porter’s Five Forces Model and Strategic Group
Five Forces
1.Threat of New entrants
2.Bargaining power of Suppliers
3.Bargaining Power of Buyers
4.Threats of Substitutes
5.Rivalry among Existing Firms
50
Porter’s Five Forces Model and Strategic Group
51
Porter’s Five Forces Model and Strategic Group
4. Threats of Substitutes
•Tea is a substitute of a coffee
•Water is considered a substitute of soft drinks
•Saccharine is substitute for sugar
Availability of few substitute provides opportunity for the
company to raise the price and get higher profit
5. Rivalry among Existing Firms
Reasons for intensity of rivalry among established players
Industry competitive structure (ICICI vsSBI)
Demand conditions
The height of Exit Barriers in the industry. 54
Industry Analysis
55
External Environment
Factors Relevant to Specific Business
•Market factors: Market size, growth rate, seasonality, Profitability,
captive markets, Product differentiation
•Technological factors: Maturity, Complexity, patents, Process
and product R&D requirements
•Social Factors: Ecological impact, Work ethics, consumer
protection,Demographicchanges,unionisation,Personnel adaptability
•Competitive factors: Competitive Intensity, Degree of
concentration, Barriers to entry, Barriers to exit, Share volatility,
Degree of integration, availability of substitutes, Capacity utilization
•Economic and Govt.factors: Inflation, Wage level Foreign
Exchange Impact, Manpower supply, Legislation/protection,
Regulations, Taxation
56
Strategic Groups
Within an Industry a strategic Group refers to a set of
Business units which pursue similar strategies with similar
resources. In a strategic group, each member company
almost follows the same basic strategy as other companies in
the group.
For ex. Mc Donald, Burgar King and Domino are the
restaurant industry and have many things in common.
Haldiram, though in the same restaurant industry, has
different mission, objective, strategies and in different
strategic group.
A company’s close competitors are members of the same
strategic group.
57
Strategic Groups
Since the companies in a strategic group follow similar strategy
the product of such companies are viewed by consumers as
substitutes for each other.
Members of the strategic group mainly threaten a company’s
profitability.
Strategic group in an industry can be mapped by two
dimensional graph by selecting two variables.
Three major strategic group emanate from the mapping such as
i)mini steel plants,
ii)integrate steel plants
iii)specially steel and cheap import
58
Limitations of Strategic Group model
1. The two models provide a static picture of competition which
overlooks the possibility of innovation in business.
2. Critics of five forces model are of the view that innovation brings in
new products, process and enormous profits.
3.No attention to individual differences of companies but they
overemphasize the importance of industry and strategic group
structure.
4. Very weak evidence of a link between strategic group membership
and company profit rates.
5. 5-forces model assumes a clear recognisable industry
6. The issues like partnerships are not addressed in this model
7. 5-forces model does not consider the possibility of industry
structure being altered.
59
Strategic Types
Different Strategic types
• Defenders
• Prospectors
• Analysers and
• Reactors
60
Strategic Types
The industry life cycle model is used for analysing the effect of industry
evolution on competitive forces
Based on the industry life cycle model, industry environment could be
identified i.e.
•Embryonic industry environment
•Growth industry environment
•Shakeout environment
•Mature industry environment and
•Declining industry environment
61
Globalisation and Industry Structure
In conventional economic system, national markets are separate entities
separated by trade barriers of distance, time and culture.
With globalisation, markets are moving towards a huge global market
place. The tastes and preference of customers of different countries are
converging on common global norms.
The world economy has undergone a fundamental change.
Globalisation of production and global markets are taking place.
The increasing globalisation of markets and production has two
underlying reasons. Trade barriers got decrease and free flow of goods,
capital and services has been set in motion.
62
Globalisation and Industry Structure
The revolution that took place in communication, information and
transportation technologies enabled companies to reduced cost of
information processing, to establish worldwide communication
network and to link together worldwide operations.
Technological innovations have revolutionalised globalisation of
markets. Channel televisions such as HBO, CNN, MTV are
received and watched in many countries.
For example US auto market was swept by Japanese auto giant all
of sudden.
The intense rivalry forces all firms to maximise their efficiency,
quality innovative power and customer satisfaction.
63
National Context and Competitive Advantage
In globalisation successful companies in certain industries are found in specific
countries.
Japan- consumer electronics company in the world
German – Chemical and engineering companies in the world
US – computer and bio technology
India – raw material resources and food industry sector
Intensity of rivalry
Competitiveness of related
and supporting industries 64
Globalisation and Industry Structure
Hyper Competition
It occurs in any industry due to intense environmental
uncertainty, which makes competitive advantage superficial
and temporary.
Market stability is threatened by short product life cycles,
short product design cycles new technologies frequent entry
by unexoected outsiders, repositioning by incumbents and
tactical redefinitions of market boundaries as diverse
industries merge.
So companies try to imitate the market leader to sustain the
competitive advantage and try to establish good relationship
with supplier to reduce cost, improve quality and gain latest
technology. 65
Motivation No.1: Strategic Management
1.What is strategy? Define Strategic management and write the elements of
strategic management.
2.Mention the objectives and benefits of strategic management.
3. Discuss the steps involved in strategic Management Process.
4.Name the components of external environment and explain any two of them.
5. How do companies formulate mission statement that contribute to Strategic
Management ? illustrate with example.
6.Discuss Competitive Advantage of Textile industries in India with help often
illustration
7.What do you mean by CSR illustrates with examples how Indian companies
pursue CSR.
8. Explain the Environmental analysis in Strategic Management process. Write
the steps involved in this process.
9.Explain the Strategic Groups and Limitations.
10.Briefly Explain the Capabilities and Competencies in Strategic Management.
66
Assignment No.1: Strategic Management
Case Study on Strategic Management
Kindly refer the page Number 73&74
Strategic Management An Integrated Approach
Author: Charles W.L.Hill Gareth R.Jones
2009 Edition
67
Unit-III
Strategies
Corporate Strategy
Approach to future that involves (1) examination of the
current and anticipated factors associated with
customers and competitors (external environment) and
the firm itself (internal environment), (2) envisioning a
new or effective role for the firm in a creative manner,
and (3) aligning policies, practices, and resources to
realize that vision.
68
Unit-III
Strategies
Corporate Strategy
Corporate Strategy will ask you to answer
fundamental questions such as "Why are you in
business?" and "Why are you in this particular
business?". This may appear to be a strange starting
point but unless you can answer these type
of questions you cannot produce vision statements
and mission statements that have any real meaning.
Corporate coaching may produce a business plan as a
summary document but that is almost incidental.
69
DIRECTIONAL STRATEGIES
•Combination
E.g. Wide variety of services to customers (stability)
-New products in product range (expansion)S
STRATEGIC ALTERNATIVES
Michael Porter -Three type of generic strategies
(Business Level Strategies)
2.Differentiation strategy
Competitive Pressures
1.Pressure for cost reduction and
2.Pressure for local responsiveness-
Differences in consumer tastes and preferences
Differences in infrastructure and traditional practices
Differences in distribution channel and Host GovernmentDemands
Strategic Choice
In international Business, companies pursue four
Strategies such as
1.International strategy
2. Multi domestic strategy
3. Global Strategy
4. Transnational strategy.
Unit-III
Corporate Strategies
Vertical Integration
The degree to which a firm owns its upstream suppliers and its downstream
buyers is referred to as vertical integration. Because it can have a
significant impact on a business unit's position in its industry with respect to
cost, differentiation, and other strategic issues, the vertical scope of the firm
is an important consideration in corporate strategy.
• Expansion of activities downstream is referred to as forward integration, and
expansion upstream is referred to as backward integration.
• The concept of vertical integration can be visualized using the value chain.
Consider a firm whose products are made via an assembly process.
81
Benefits of Vertical Integration
Vertical integration potentially offers the following
advantages:
•Reduce transportation costs if common ownership results
in closer geographic proximity.
•Improve supply chain coordination.
•Provide more opportunities to differentiate by means of
increased control over inputs.
•Capture upstream or downstream profit margins.
•Increase entry barriers to potential competitors, for
example, if the firm can gain sole access to a scarce
resource.
•Gain access to downstream distribution channels that
otherwise would be inaccessible.
•Facilitate investment in highly specialized assets in which
upstream or downstream players may be reluctant to invest
and *Lead to expansion of core competencies.
Drawbacks of Vertical Integration
While some of the benefits of vertical integration can be quite
attractive to the firm, the drawbacks may negate any potential
gains. Vertical integration potentially has the following
disadvantages:
•Capacity balancing issues. For example, the firm may need to
build excess upstream capacity to ensure that its downstream
operations have sufficient supply under all demand conditions.
•Potentially higher costs due to low efficiencies resulting from
lack of supplier competition.
•Decreased flexibility due to previous upstream or downstream
investments. (Note however, that flexibility to coordinate
vertically-related activities may increase.)
•Decreased ability to increase product variety if significant in-
house development is required.
•Developing new core competencies may compromise existing
competencies.
•Increased bureaucratic costs.
Factors Favoring Vertical Integration
The following situational factors tend to favor vertical integration:
•Taxes and regulations on market transactions
•Obstacles to the formulation and monitoring of contracts.
•Strategic similarity between the vertically-related activities.
•Sufficiently large production quantities so that the firm can benefit from economies of
scale.
•Reluctance of other firms to make investments specific to the transaction.
I.Internal/External
III. Horizontal/Vertical
IV. Active/Passive
1. Vertical Integration
-make new products to serve its own needs
-backward/forward integration
2. Horizontal Integration
-Same product -more customer group
-merger similar companies
-Spartek Ceramics takeover of Neycer Ceramics
STRATEGIC ALTERNATIVES
DIVERSIFICATION AND INTEGRATION STRATEGIES
3. Concentric diversification
•Marketing & technology related -rain coat manufacturer -rubber
based items - gloves, shoes
•Technology related- leasing company -hire purchase
•Marketing related - Unrelated technology (cosmetic & sewing
machines -women)
4. Conglomerate diversification
- Unrelated to customer groups, function, technology
•ITC -Cigarette & Hotel
•TTK group -Chemicals, hosiery, contraceptives
STRATEGIC ALTERNATIVES
MERGER, TAKEOVER AND JOINT VENTURE STRATEGIES
Danger signs:
Approaches:
- Surgical
- Human approach
ACTION PLAN FOR TURNAROUND
SWOT
ETOP
Economic
ETOP FOR BICYCLE COMPANY
Growing affluence among
urban consumers, rising
disposable incomes & living
standards.
Financial Capability
Bajaj - Cash Management
LIC - Centralized payment, decentralized collection
Reliance - high investor confidence
Escorts - Amicable relation with Ford
Marketing Capability
Hindustan Lever - Distribution Channel
IDBI/ICICI Bank - Wide variety of products
Tata - Company / Product Image
EXAMPLES OF ORGANIZATIONAL
CAPABILITY PROFILE
Operations Capability
Lakshmi machine works - absorb imported technology
Balmer & Lawrie - R&D - New specialty chemicals
Personnel Capability
Apollo tyres - Industrial relations problem
EXAMPLES OF ORGANIZATIONAL
CAPABILITY PROFILE
General management capability
Malayalam Manaroma - largest selling newspaper
Unchallenged leadership - Unified, stable
Best edited & most professionally produced
STRATEGIC ADVANTAGE PROFILE
(SAP)
A picture of the more critical areas which can have a
relationship of the strategic posture of the firm in the
future.
Capability Factor Competitive strengths / Weakness
High
Invest
Grow
Attractiveness
Hold
Harvest
Divest
Low
GE 9 Cell Matrix for Pepsico
High Competitive Strengths Low
High
Snack Foods
Attractiveness
Soft Drinks
Low
Distinctive Competence –
A Competitively Superior Resource
Financial Perspective
How do we look to
our Shareholders?
Strategy
Customer Financial
Internal Process
Learning
Unit IV-Strategy Implementation
Strategy implementation is essential part of strategic
management process.
•Evolve a systematic procedure to implement the strategy
chosen
•Procedural implementation plan
•Proper resource allocation plan
•Structural implementation plan
•Functional implementation plan
•Behavioural implementation plan
•Evaluate and control through strategic and operational control
measures
•Success of a strategy is very much dependent on how the
strategy is execute
Strategy Implementation
Problems while implementing Strategy
•Implementation takes longer time than required
•Unanticipated major problems crop up
•Ineffective coordination of activities
•Crisis management took lot of time
•Employees have less than required capabilities
•Inadequate training of lower level employees
•Problems arising from uncontrolled external environment
•Inadequate leadership on the part of departmental
environment
•Lack of precise definition of implementation of tasks and
activities
•Inadequate monitoring of activities through information
system.
Strategy Implementation
Strategy implementation process requires
•Development of programmes
•Budgets
•Procedures
•Strategy is implemented through appropriate structure
•Control system
•Corporate strategy leads to changes in organisationstructure
•i.e. Creation of new strategy
•Emergence of administrative problems
•Economic performance declines
•Invention of new appropriate structure
•Profits return to its previous level.
Strategy Implementation
Basis of designing Structure
1.Differentiation (vertical and Horzontal)and
2.Integration
Vertical Differentiation
1.Flat structure
2.Tall structure
Problems with tall structure
1.Coordianation
2.Information distoration
3.Motivational problems
4.Number of middle managers.
5.Centralisation/ Decentralisation
Strategy Implementation
Horizontal Differentiation
•Simple structure
•Functional Structure
•Multidivisional structure
Advantages and Disadvantages of Multidivisional structure
1.Distortion of information
2.Competition of resources
3.Transfer pricing
4.R&D
5.Bureaucratic Costs
•Matrix structure
•Product team structure
•Geographic structure,
•Network structure
Strategy Implementation
Integration and control
Staffing
Staffing and strategy
Matching Managers to strategy
Executive succession and strategy
Issues in Downsizing
International issues in staffing
Strategy Implementation
Designing strategic Control system
Strategy control is the process by which suitable control
systems are established at the corporate business and
functional levels in a company in order to evaluate whether a
firm is able to achieve superior efficiency, quality, innovation
and customer responsiveness.
Four steps involved in strategic control system
1.Establish standards and targets
2.Create measuring and monitoring systems
3.Compare actual with targets
4.Evaluate and take corrective actions.
Strategy Implementation
1. Establish targets or standards
•Physical standards
•Cost standards
•Capital standards
•Revenue standards
•Program standards
•Strategic plan as control points
2. Develop a measuring systems
3. Comparison of actual performance against the target
4. Initial corrective actions in the wake of deviations
Performance Measurement
Performance Measurement is a significant part of evaluation and control.
•ROI
•EPS
•RE
•EVA
•MVA and Financial Ratios
Strategy Implementation
Implementing Strategic Change:
Politics, Power and change conflict
1.Organisational Power and Politics
Sources of Power
1.Ability to cope up with uncertainity
2.Centrality
3.Control over information
4.Non Substitutability
5.Control over contingencies
6.Control over resources
Organisational conflict
Sources of Conflict
•Differentiation
•Task relationship
•Scarcity of resources
Strategy Implementation
Organisation’s conflict Process
1.Latent conflict
2.Perceived conflict
3.Felt conflict
4.Manifest conflict
5.Conflict aftermath
Managing Conflict Strategically
1. Conflict resolution Strategies
•Changing task relationship-
•Changing controls-
•Changing leadership-
•Changing strategy-
•Changing organisation
•Unfreezing Refreezing, Movement.
Strategy Implementation
Steps in Changing Process
1.Determining the need for change
2.Determining the obstacles to change
3.Implementing change and
4.Evaluating Change
mortar model. ”
NEW BUSINESS MODELS AND STRATEGIES
FOR THE INTERNET ECONOMY
• Internet Technology and Market Structure
• Strategy-Shaping Characteristics of the E-
Commerce Environment
• E-Commerce Business Models and Strategies
• Internet Strategies for
Traditional Businesses
• Innovative Business Models
and Fast-Evolving Strategies
are KSFs in E-Commerce
Impact of the Internet and E-Commerce
• Impact on external industry environment
– Changes character of the market and
competitive environment
– Creates new driving forces and
key success factors
– Breeds formation of new strategic groups
• Impact on internal company environment
– Having, or not having, e-commerce capabilities tilts
the scales toward valuable resource strengths or
threatening weaknesses
– Creatively reconfiguring the value chain will affect a
firm’s competitiveness vis-à-vis rivals
Characteristics of Internet
Market Structure
• Internet is composed of
– Integrated network of users’ connected computers
– Banks of servers and high-speed computers
– Digital switches and routers
– Telecommunications equipment and lines
Supply Side of the Internet Economy
• Major groups of Internet and e-commerce firms
comprising the supply side include
– Makers of specialized communications
components and equipment
– Providers of communications services
– Suppliers of computer components and hardware
– Developers of specialized software
– E-commerce enterprises
• Business-to-business merchants
• Business-to-consumer merchants
• Media companies
• Content providers
Strategy-Shaping Characteristics
of the E-Commerce Environment
• Internet makes it feasible for companies
everywhere to compete in global markets
• Competition in an industry is greatly intensified by
new e-commerce strategic initiatives of existing
rivals and by entry of new, enterprising e-
commerce rivals
• Entry barriers into e-commerce world are relatively
low
• On-line buyers gain bargaining power
Strategy-Shaping Characteristics of the
E-Commerce Environment (continued)
• Internet makes it feasible for firms to reach
beyond their borders to find the best suppliers
and, further, to collaborate closely with them to
achieve efficiency gains and cost-savings
• Internet and PC technologies are advancing
rapidly, often in uncertain and unexpected
directions
• Internet results in much faster diffusion of new
technology and new ideas across the world
• E-commerce environment demands that firms
move swiftly - “at Internet speed”
Strategy-Shaping Characteristics of the
E-Commerce Environment (continued)
• Internet and e-commerce technology open up a
host of opportunities for reconfiguring industry
and company value chains
• Internet can be an economical means of
delivering customer service
• Capital for funding potentially profitable e-
commerce businesses is readily available
• Needed e-commerce resource in short supply is
human talent, in the form of both technological
expertise and managerial know-how
Effects of the Internet and E-Commerce