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Approach to Strategy Development

Approach to Strategy Development

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Approach to Strategy Development

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  1. Opportunities Threats Trends Uncertainties Strengths Weaknesses Problems Constraints Approach to Strategy Development • EXTERNAL ANALYSIS • Customer Analysis • Competitor Analysis • Market Analysis • Environment Analysis • INTERNAL ANALYSIS • Performance Analysis • Determinants of • Strategic Options STRATEGY IDENTIFICATION & SELECTION

  2. Internal Analysis

  3. Financial Performance • Sales & Market Share • Profitability • ROA = profits / assets • Shareholder Value: ROA > Cost of Capital

  4. Beyond Financials • Brand Loyalty • 3 out of 6 purchase occasions • Causes for High Loyalty / Low Loyalty • Delight drivers for the loyalists • Exit interview the disloyal customers • Monitor size of loyal customers • Compare it with key competitors

  5. Beyond Financials • Brand Associations • What do they think about the brand? • Perception: Innovative? Expensive? • Strength of each association • Understanding through projectives in FGDs

  6. Beyond Financials • Product Quality / Service Quality • Customer Expectation • Competitor Delivery • Key Performance Indicators • Perceived Quality (Product / Service)

  7. Beyond Financials • New Product Activity • Does R&D deliver on concepts? • Is the process of innovation well managed? • Track record of past launches • Average time-to-market

  8. Beyond Financials • Employee Capability / Performance • People with required capability • Can the human resources deliver on plans? • Are resources well managed? • What is their attitude?

  9. Beyond Financials Raise Price Cost Reduction Change Design Change Process • Relative Cost MORE EXPENSIVE OUR COMPONENT IS… INFERIOR SUPERIOR De-emphasise Upgrade Emphasise Leave alone LESS EXPENSIVE

  10. Strength-Weakness Analysis • Profiling the Company in the areas of • Marketing • Finance • Manufacturing • R&D • Human Resources Ref. Marketing Management by Ramaswamy & Namakumari, 3rdEdn. (page. 130-131, Chart 10.4)

  11. Example: Bajaj Motorcycles • Strengths • Strong brand presence / growth in sales • Nationwide distribution / service network • Strong financial support of corporate • Strong imagery of Pulsar • Weaknesses • Product Mix: Overdependence on Pulsar • No presence in fuel efficient / cruiser categories • Weak R&D: Last 4-5 launches a failure

  12. Determinants of Strategic Options • Past & Current Strategies [YAMAHA] • Consumer Perception [TATA & INDICA] • Organisational Capabilities • Marketing [HUL] • Finance [RELIANCE] • Human Resources [GOOGLE] • R&D [INTEL] • Manufacturing [TATA]

  13. Opportunities Threats Trends Uncertainties Strengths Weaknesses Problems Constraints From Analysis to Strategy • EXTERNAL ANALYSIS • Customer Analysis • Competitor Analysis • Market Analysis • Environment Analysis • INTERNAL ANALYSIS • Performance Analysis • Determinants of • Strategic Options STRATEGY IDENTIFICATION & SELECTION

  14. MARKET NEEDS / ATTRACTIVENESS • Strategic Investment • Value Proposition • Creating the Value Proposition • Communicating the Value Proposition COMPETITORS STRENGTHS / WEAKNESSES ORGANISATIONAL STRENGTHS / WEAKNESSES

  15. Strategic Investment

  16. For Market Attractiveness • Size of market • Market rate of growth • Customer Needs / Satisfaction Levels • Competition: Quantity, Position • Profitability • Sensitivity to economic trends • Environmental impact

  17. For Competitive Position • Market share • Management profile • R & D • Quality of products and services • Customer Loyalty • Margins • Distribution • Marketing • Flexibility