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Approach to Strategy Development

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

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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

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