n 1960 â 80 n Canon & Ricoh n Fuji âXerox: quality & cost relationship n Suppliers: 5000 to 500. â 325 n D
Environmental Scanning
Page 1 of 170
Organisational Capability Profile (OCP)
Page 2 of 170
Weakn ess (-5) 1
Financial Capability
a
Source of Funds
b
Usage of Funds
c
Management of Funds
2
Marketing Capability
a
Product Capability
b
Price
c
Promotion
3
Operations
a
R&D
b
Production system
c
Control System
4
HR
a
HR Culture
b
Industrial Relations
c
Employee characteristics
Page 3 of 170
Norma l (0)
Streng th (+5)
Weakness (-5)
1
Financial Capability
a
Source of Funds
b
Usage of Funds
c
Management of Funds
Page 4 of 170
Normal (0)
Strength (+5)
2
Marketing Capability
a
Product Capability
b
Price
c
Promotion
Page 5 of 170
3
Operations
a
R&D
b
Production system
c
Control System
Page 6 of 170
4
HR
a
HR Culture
b
Industrial Relations
c
Employee characteristics
Page 7 of 170
5
General Management
a
Organization climate
b
External relations
c
General Management system
Page 8 of 170
Strategic Advantage Profile ( SAP )
Page 9 of 170
Strategic Advantage Profile ( SAP ) Functional Area 1
Finance
2
Marketing
3
Operations
4
Personnel
5
Information
6
General Management
Page 10 of 170
Environment Threat Opportunity Profile (ETOP)
Page 11 of 170
Environment Threat Opportunity Profile (ETOP) External Environ ment 1
Technological
2
Demographical
3
Economic
4
Political
5
Legal
6
Cultural
Page 12 of 170
Balance Score Card
Page 13 of 170
Balance Score Card
Page 14 of 170
SWOT
Page 15 of 170
SWOT
Page 16 of 170
Page 17 of 170
Michael Porter’s 5 Force Model
Page 18 of 170
Page 19 of 170
Barriers to Entry … … large capital requirements or the need to gain economies of scale quickly. … strong customer loyalty or strong brand preferences. preferences. … lack of adequate distribution channels or access to raw materials or absolute cost advantages. advantages Page 20 of 170
Rivalry among competitors … intensity increases as * Market Structure. * Demand for the industry’s products declines or industry growth slows. slows * Fixed costs or barriers to leaving the industry are high high.
Page 21 of 170
Power of Suppliers … … high when * A small number of dominant, highly concentrated suppliers exists. * Few good substitute raw materials or suppliers are available. * The cost of switching raw materials or suppliers is high. Page 22 of 170
Power of Buyers … … high when * Customers are concentrated concentrated, large or buy in volume . * The products being purchased are standard or undifferentiated making it easy to switch to other suppliers. * Customers’ purchases represent a major portion of the sellers’ total revenue. Page 23 of 170
Substitute products … … competitive strength high when * The relative price of substitute products declines . * Consumers’ switching costs decline. decline * Competitors plan to increase market penetration or production capacity. capacity
Page 24 of 170
Boston Consultancy Group
Page 25 of 170
Strategic Groups … Firms that face similar threats or opportunities in an industry but which differ from the threats and opportunities faced by other sets of firms in the same industry.
Page 26 of 170
Strategic Groups … Rivalry generally is more intense within strategic groups than between them because members of the same group focus on the same market segments with similar products, products strategies and resources. resources Page 27 of 170
Functional Level Strategies
Page 28 of 170
Case Example: Xerox Corporation n n n n n n n n
Page 2 of 170
1960 – 80 Canon & Ricoh Fuji –Xerox: quality & cost relationship Suppliers: 5000 to 500 – 325 Defectives: 25,000 to 1,000 – 300 Standardization Central logistics & asset management 1985
The Value Chain n -
n -
Page 30 of 170
Primary Activities Manufacturing Marketing Secondary Activities Materials Management R&D HR Infrastructure
Competitive Advantage n n n n
Page 31 of 170
Efficiency Quality Innovation Customer Responsiveness
Efficiency Manufacturing: - Manufacturing Model: Ford’s Model T n Marketing -Customer Defection Rate n Materials Management - JIT n R & D Texas Instruments: 47 to 12 parts, 56 to 13 steps, 123 to 20 mins n
Page 32 of 170
Efficiency HR - Training : Sanyo - Self Managed Team - Pay to Performance: Nucor Steels n Infrastructure - Cross Functional Teams n
Page 33 of 170
Quality n
n
n
n n
Page 34 of 170
Focus on customer: quality gap Measure quality: Banks – defections, error statements Set Goals & Incentives: Xerox Listen to employees Supplier Relations
Innovation n
n -
-
Page 35 of 170
Du pont – nylon, teflon, freon & cellophane Failure: Uncertainty Poor Commercialisation: first PC’s No demand: Concord Cycle time: GM v Ford
Customer Responsiveness n
n
n
Page 36 of 170
Leadership: Tom Monaghan of Domino’s Customisation: Panasonic bicycles 11,000 & Honda v Yamaha Response time : Caterpillar v Komatzu, Fedex
Business Level Strategy
Page 37 of 170
Foundation of BLS Customer NeedsWhat to satisfy - Product differentiation - Low priced product n
Page 38 of 170
Foundation of BLS n
-
-
Page 39 of 170
Market Segmentation – How to satisfy Do not recognise eg: Gilette Grouping eg: Sony Recognise but concentrate eg: DTC
Foundation of BLS n -
Page 40 of 170
Deciding on DC Efficiency Quality Innovation Customer Responsiveness
BLS 1. 2. 3.
Page 41 of 170
Cost Leadership Differentiation Focus
1.Cost Leadership 1. Lower cost but same profit 100+50 =150 - competitor 80+ 70 = 150 – cost leader 2. Manages if rivalry increases 100+30=130 - competitor 80+50= 130 – cost leader
Page 42 of 170
Strategic Choice of Cost Leader n n
n
Low differentiation Low market segmentation DC: Efficiency in Manufacturing & MM
Page 43 of 170
2. Differentiation n
n n
n
Customer perceives it as unique – so premium price Honda v BMW Benz, Sri Krishna, Satyam Cinema’s DC :Customer Responsiveness –FedEx Innovation – Dell , R&D
Page 3 of 170
3.Focus n
n
n
n
Limited customer group or segment Cuban cigars, Bentley – Differentiator Saravana Stores – Low cost DC: If low cost –Efficiency IF Differentiation -CR
Page 45 of 170
Why Co’s Fail ? n
n
They get stuck in the middle
Combining both is a winning formula: TTDC
Page 4 of 170
Investment Strategy at BL Two factors decide investment: 1.Competitive position: Strong or weak Market share & DC
Page 47 of 170
Investment Strategy at BL 2.Life Cycle Effects: Embryonic, Growth, Shakeout, Maturity & Decline
Page 48 of 170
Strong CP
Weak CP
Embryonic Share Building
Share Building
Growth
Growth
Shakeout
Share increase
Market Concentration Harvest/Liquidate
Maturity
Hold & Maintain Harvest/Liquidate
Decline
Market conc./Harvest Page 5 of 170
Turnaround/liquida te
Global Level Strategy
Page 50 of 170
Swan Opticals n n
n
n n n
Page 51 of 170
Strong $ -1970 Hongkong- labour cost, skilled workforce & tax breaks Problems – quality & delivery schedules China – JV Fashion & quality Italy & France
Strategic Choice n
n
n
n
International Strategy: Centralised control , no differentiation- P&G Multi – domestic: maximum local responsiveness- Pharmacia Global Strategy: Location economies – Intel, Motorola & TI Transnational Strategy: cost economy & local responsiveness - Caterpillar Page 6 of 170
Choice of Entry 1. 2. 3. 4. 5.
Page 53 of 170
Exporting Licensing Franchising Joint Ventures Wholly owned subsidiaries
Export n -
n -
Page 7 of 170
Advantages Avoids establishment cost Location economy Disadvantages Transport cost Trade barriers Local marketing agents
Licensing n n -
-
-
Page 8 of 170
Advantages Low development cost Low risk Disadvantages Lack of control over technology No global strategic coordination Location economy Eg: RCA & FSX fighters
Franchising n n -
-
-
Page 56 of 170
Advantages Low development cost Low risk Disadvantages Lack of control over quality No global strategic coordination Eg: McDonalds, KFC & Hilton
Joint Venture n -
n -
-
-
Page 9 of 170
Advantages sharing development cost political acceptability Disadvantages Lack of control over technology No global strategic coordination Eg: Maruti Suzuki, HPCompaq
Wholly owned subsidiary n -
n -
Page 58 of 170
Advantages Protection of technology Global coordination Location economy Disadvantages High costs & risks Eg: Nokia, Hyundai & Saravana Bhavan
Corporate level strategy Oracle – California n Aspired to become, market leader in corporate applications n SAP 45%, Oracle 19% n Larry Ellison- acquired 19 suppliers- Peoplesoft & Siebels Build integrated software New customers Consolidated to No.2 Oracle gained 47% in ’06 SAP 15% n
Page 10 of 170
Vertical Integration
Page 60 of 170
Vertical Integration A company producing its own inputs (upstream or downstream) n
Page 61 of 170
Raw materials Intermediate Manufacturer Assembly Distribution End User Page 11 of 170
Raw materials
-Union Carbide, Dow
Intermediate Mfr- Intel, Motorola Assembly
- Apple, Compaq
Distribution- Computerworld End User Page 63 of 170
VI n n
Full Integration Taper Integration
Page 64 of 170
Full Integration n
n
When a company provides all of a particular input Eg: TVS, TISCO
Page 65 of 170
Taper Integration n
n
When independent suppliers and company owned entity are involved
Eg: BPCL, IOC
Page 66 of 170
Arguments against VI 1.
2.
3.
Cost Disadvantage: when low cost supply exist already – GM 68%; Toyota 28% Technological Change : Vacuum tubes in radio, Intel –from semi –conductors to ic’s. Demand Uncertainty : Arvind Mills
Page 13 of 170
Horizontal Integration n
It is the process of acquiring or merging with industry competitors
Page 68 of 170
Acquisition n
n
An acquisition occurs when one company uses its capital resources such as stock, debt or cash to purchase another company. Arcelor-Mital
Page 14 of 170
Merger n
A merger is an agreement between equals to pool their operations creating a new entity. Eg:Daimler-Benz to Daimler-Chrysler.
Page 70 of 170
Tyco Intnl n n n
CEO- Dennis Kozlowski in 1992 From $ 3.1 b to $38 b Strategy – Acquisitions
-step -step -step -step -step n n
1: Auditors 2: Formal bid 3: Old management & workforce slashed 4:New Management 5: unprofitable lines & sales force merged
CEO & CFO were convicted. Edward Breen –reversed strategy- non diversification & spin off. Page 15 of 170
Diversification n
n
Related: linked to a co’s existing business activity. Eg: Airtel- landline, mobile telephony, internet and set top boxes. Unrelated: no obvious connection
Page 72 of 170
Limitations 1.
2.
No. of businesses: complexities of business, information processing, overload. Eg: Megamart , More Coordinating among business: LG – Super Enz & Ciden
Page 16 of 170
Corporate level strategy Oracle – California n Aspired to become, market leader in corporate applications n SAP 45%, Oracle 19% n Larry Ellison- acquired 19 suppliers- Peoplesoft & Siebels Build integrated software New customers Consolidated to No.2 Oracle gained 47% in ’06 SAP 15% n
Page 74 of 170
Strategy Implementation Politics, Power & Conflict
Page 17 of 170
Merck & Co n
n
n
n
Page 76 of 170
Block buster drugs by Dr.Roy Vagelos Successor – Markham, R&D offended Medco – generic drugs Medco – acquired in 1993.
Change n
n
n
Page 18 of 170
Organisational Inertia Inability to change – IBM Power & Politics
Organisational politics n
Page 78 of 170
Use of power to influence the goals & objectives of the organisation to further their own interest.
Politics n
n n
Page 79 of 170
Personal reasons – bad connotation Pyramid Increase in visibility
Source of Politics – Rational vs Political Total information available Agreement over goals Agreement over means Decision by calculated planning Page 19 of 170
Source of Politics – Rational vs Political Selected information available Disagreement over goals Disagreement over means Decision by negotiated, bargaining & compromise Page 81 of 170
Power n
n
Page 20 of 170
To play politics, managers need power Ability to make others do something that would not have been otherwise done.
Source of Power n
n
n n n
Ability to cope with uncertainty – VI, low cost – sales, differentiation – R &D. Centrality – resource transfer, oil exploration & refinery Control over information Non-substitutability Control over contingencies Page 21 of 170
Organisational Conflict n
n
Page 84 of 170
When one group blocks the behaviour of another Good or Bad
Optimal level
Page 22 of 170
Process of conflict Latent conflict Perceived conflict Felt conflict Manifest conflict Conflict aftermath Page 86 of 170
Conflict Resolution Strategy n n
Using authority Changing task relationship – reduce dependency
Page 87 of 170
Strategy Implementation
Page 88 of 170
Strategy Implementation n n n n
Page 89 of 170
Strategic control IT Culture Structure
Strategic Control- Process n
n n
n
n
Page 24 of 170
Establish standards & targets Measure actuals Compare standards with actuals Take corrective action Eg: McDonald’s, Big bazaar & Hyndai
Types of Control Personal control- direct supervision, peers in teams n Output control- MBO, link to rewards- Skinner, Kodak & GM – stocks. BoD, corporate heads, divisional heads, functional heads, first level managers n Behaviour Controlstandardisation through rules. n
Page 91 of 170
IT n
Cross-functional software, Walmart
Case Example:Cypress Semi conductors – CEO:Rodgers, MBE – 4 hrs, 1500 employees
Page 25 of 170
Organisational Culture n n
n n
Values & Norms Means & Ends GE, TVS, Nokia: Innovate LIC, IOC, SBI: Conservative & Vigilant
Page 93 of 170
Microsoft Value
Norms
Ownership, creativity, honesty, frankness, open communication
Long working hours, casual dress, junk food, email & intranet
Page 26 of 170
Culture & Leadership n
n
n
n n
Page 95 of 170
Walt Disney- Disney land Sam WaltonWalmart Tom Monagan – Dominno’s Jamsetji Tata – Tata Narayana Murthy – Infosys
Traits of a strong & adaptive culture n n
n
Bias for action : Coke Nature of the Mission: Toyota , Godrej How to operate the organisation: respect for employees
Page 27 of 170
Culture at the functional level n
n
n
Manufacturing: low cost through TQM, QC R&D: coordination between scientists & engineers – Self Managed Teams Sales: Output & Behaviour controls
Page 97 of 170
Restructuring 1. Reduce the levels in the structure: GM, JacK Smith- 22 levels & 20,000 corporate level managers. 2. Reduce no. of employees
Page 98 of 170
Reasons n n
n
n
Business environment Obsolete technologyKodak Product out datednessMetalbox, Getmore Too tall or inflexible: IBM
Page 28 of 170
Reengineering n
n
n
Improve the business process – high quality, low price Hallmark cards: artists, writers, editors Wilkinson’s, Bajaj
Page 100 of 170
IBM – Credit Division n n n n n n -
Sales person Credit Checking Dept Contracts Dept Pricing Dept Dispatch Dept Sales person 7 days vs 90 mins Individual or team 4 hrs
Page 29 of 170
Organisational Structure n
Page 102 of 170
Case example : Dell Computers
Strategy & Technology
Page 103 of 170
Format war – Case Example n n n
n
n n n
Sony’s- Blue Ray v Toshiba’s HD-DVD Incompatible Others: VHS v Betamax; Windows v Machintosh Film studios: MGM, Columbia Pictures, Disney, Fox, Warner Brothers, ParamountSony Universal Studio-HD DVD P3, Vaio, HP, Dell& Samsung P3 delayed; Bad chip –Samsung Page 30 of 170
n
n n n n
Technology: body of scientific knowledge used in production of goods & services High Technology: rapid advancement Pharma: Cell biology, genomics, DNA Agriculture: genetic engineering Retail: online- amazon, ebay, etc,
Page 31 of 170
Standards n
n
n
Technical Standards: set of technical specifications that producers adhere, when making a product. Battle to set technical standards is referred as format war. Eg: Keyboards, Containers, USB
Page 106 of 170
Post Establishment n
n
Network Effects of complementary products: automobiles- roads & petrol bunks, mobiles – towers Positive Feedback: MS, Dolby
Page 107 of 170
Strategies for winning a Format War 1. Ensure supply of complements & Killer Applications n n
P3- 30 games Nitendo & Sega
Page 32 of 170
Strategies for winning a Format War 2. Aggressive Price & Market n n n
Razor & blade strategy HP – printer & cartridges P3 – displays in-store
Page 109 of 170
Strategies for winning a Format War 3. Co-operate with competitors n
CD market- Sony, Philips, JVC & Telefunken
Page 33 of 170
Strategies for winning a Format War n
License the format
n
Matsushita’s VHS v Sony’s Betamax
Page 111 of 170
Costs in Hi Tech Markets n
-
n
Fixed costs are very high but, producing cost is very low. MS-Windows Vista- $5 b, marginal cost is 0. Videogames Cost Economy: Economy of scale is not applicable.
Page 34 of 170
Managing IPR n
Expensive, risky & time consuming. Eg: Cancer drug- 12 to 18 years, 18 m, can fail –only 20% marketed. Imitated?
Page 34 of 170
Piracy n n
n
1/3 of music sold is pirated. Worst country? Adobe – Acrobat Reader: Razor Blade Strategy
Page 114 of 170
Capturing First Mover Advantage n n
n
n n
Advantages & Disadvantages Cisco- Internet Protocol in 1986, still dominates Handheld computers: Apple’s Newton v Palm DeHavilland v Boeing Motorola v Nokia
Page 35 of 170
Advantages n n n
Positive feedback loop Brand loyalty – Xerox, FedEx Switching Cost
Page 116 of 170
Disadvantages n n n
Educate customers Pioneering cost May invest in inferior or obsolete technology
Page 117 of 170
Organisation Structure
Page 118 of 170
Dell – Organizational Structure n
n
n
1984, Dell 19, took $ 1000 to assemble computers, 6 employees joined him 1993, 4,500 workers, functional structure 1995, 35 sub divisions
Page 119 of 170
Building blocks of organisational structure 1. Grouping of tasks 2. Allocate authority & responsibility - hierarchy of authority - span of control 3. Level of co-ordination
Page 120 of 170
Page 121 of 170
Page 122 of 170
Page 38 of 170
Page 124 of 170
Page 125 of 170
Page 39 of 170
Functional Structure
Page 127 of 170
Page 40 of 170
Page 129 of 170
Page 130 of 170
Page 41 of 170
Page 132 of 170
Page 133 of 170
Page 134 of 170
Re-structuring & Reengineering n
n n n
Jack Smith – Gm – 22 levels, 20,000 corporate managers Kodak – 20% Hallmark cards- cross functional teams IMB – finance & leasing
Page 135 of 170
Page 45 of 170
Page 137 of 170
From Wikipedia.org n Organizational change management is the process of developing a planned approach to change in an organization. n
Typically the objective is to maximize the collective benefits for all people involved in the change and minimize the risk of failure of implementing the change. The discipline of change management deals primarily with the human aspect of change, and is therefore 46 ofindustrial 170 related to pure Page and psychology.
n It
can be very difficult to introduce change to an organization. Failure to recognize and deal with this fact has been the cause of many project failures. nFolger & Skarlicki (1999) - "organizational
change can generate skepticism and resistance in employees, making it sometimes difficult or impossible to implement organizational improvements" Copyright CVR/IT Consulting 2004
Page 48 of 170
n
From Dr. William Bridges, Ph.D., Transition — The Personal Path Through Change : n
n
n
Phase 1: Endings: Every transition begins with an ending, a loss. When things change, people leave behind the way things were — and the way they were in the previous situation. They may be left searching for a new way to define themselves. Phase 2: The Neutral Zone The neutral zone is a confusing inbetween state, when people are no longer who and where they were, but are not yet who and where they're going to be. Although the neutral zone can be distressing, it also provides many opportunities for creative transformation. Phase 3: New Beginnings A new beginning can only happen after people have let go of the past and spent some time in the neutral zone. In this phase, people accept the reality of the change and start to identify with their new situation.
Page 49 of 170
F EAR nU NCERTAINTY nD OUBT n
141
Page 50 of 170
Change Management Skills Workshop
Jul y 13 , 20 06
n Why
is Organization-wide Change difficult to accomplish? nOrganizations go through four stages on
the way to achieving their strategic objective: n n n n
Denial Resistance Exploration Renewal
Page 51 of 170
nAs the Organization works its way through
these stages, there can be a negative impact on Productivity. This is referred to as the Productivity Dip and is portrayed on the next slide.
Page 52 of 170
Page 54 of 170
nMinimizing the size and duration of this
Productivity Dip is dependent upon quickly creating acceptance to the strategic plan and all that it entails.
nBut gaining that acceptance is often a
difficult process, as some employees will, for various reasons, seek to block the change
Page 55 of 170
n How
prevalent is Resistance to Change?
nIt is generally acknowledged that in an
average organization, when the intention for change is announced: n n n
15% of the workforce is eager to accept it 15% of the workforce is dead set against it 70% is sitting on the fence, waiting to see what happens
Page 57 of 170
n
Provide adequate attention to the human side of technology projects and you will eliminate one of the greatest causes of technology project failure.
Page 58 of 170
1. 2.
Stakeholder Analysis Develop Strategies n n n
3.
Staffing Strategy Communications Strategy Change Management Strategy
Execute
Page 59 of 170
Page 60 of 170
1. 2. 3. 4. 5.
Identify Stakeholders Analyze Needs and Wants Identify Barriers to Change Best Means for Communication Ideas for Participation and Leveraging their Skills and Knowledge
Page 61 of 170
Stakehold Needs er and Wants
Barriers Best Ideas for to Means to Participati Change communic on ate
Page 62 of 170
Executive Management n Management n Employees n Customers n Shareholders n Distributors n Retailers n
Page 63 of 170
Page 64 of 170
n
Group 1: Staffing Strategy – Come up with a Strategy for how jobs will be filled in the resulting organization n n
n
Group 2: Communications Strategy – Develop 2 Key Messages n n
n
Come up with alternatives Pick the one that makes the most sense for the scenario
Come up with what you think will be the most frequently asked questions Choose 2 and develop key messages for each
Group 3: Change Management Strategy – Come up with a strategy to determine the location(s) of Head Office functions for the combined organization n n
Come up with alternatives Pick the one that makes the most sense
Page 65 of 170
LOGISTICS MANAGEMENT
Page 155 of 170
Page 66 of 170
What is Logistics? Logistics is the . . . “process of planning, implementing, and controlling the efficient, effective flow and storage of goods, services, and related information from point of origin to point of consumption for the purpose of conforming to customer requirements.“ Council of Logistics Management
Page 67 of 170
Is it different from SCM? Not really! “Supply Chain Management deals with the management of materials, information, and financial flows in a network consisting of suppliers, manufacturers, distributors, and customers.” (Stanford Supply Chain Forum) So, Logistics and Supply Chain are equivalent terms. Page 68 of 170
Page 69 of 170
Logistics Functions Purchasing / Procurement
Facility Location / Network Design
Inventory Control
Transportation
Warehousing
Customer Service
Materials Handling
Order Processing
Page 160 of 170
A Sample Logistics Firm: EKOL
Page 161 of 170
Value Added Services Value added services, such as quality control, labeling, sorting, repacking, etc. can be included in the logistics processes.
Page 70 of 170
Logistics Experience will be different from one sector to another Textiles n
speed and variety due to seasonality concerns
Retailing (FMCG) n
n
Health n
prevents stores from having empty shelves or shelves with overstocks Frozen storage and transportation hygienic, have limited shelf life, require special storage conditions and entertain high inventory risks
Automotive n
just in time (JIT), delivering parts from thousands of kilometers, special packaging
Fuel and Petroleum Transportation n
very special tanker security systems
Page 71 of 170
Fuel and Petroleum Transportation n
n
Fuel tankers have bodies, including the chassis, made of aluminum alloy and are the lightest tankers in weight and highest in volume (20.000 to 38.000 liters). The tanks have a bottom loading and unloading system and all the necessary security equipments for overloading.
Page 71 of 170
Page 165 of 170
Page 166 of 170
Cargo air Carriers
Page 72 of 170
Container Carriers
Page 168 of 170
Page 74 of 170
RFID n
n
Radio-frequency identification (RFID) is the use of an object (typically referred to as an RFID tag) applied to or incorporated into a product, animal, or person for the purpose of identification and tracking using radio waves. It comprises interrogators (also known as readers), and tags (also known as labels).
Page 170 of 170