STRATEGIC MANAGEMENT AND
BUSINESS POLICY
Strategic analysis and
choice
(c) Dr. Azhar Kazmi 2008
1
Learning objectives
 Describe the process of strategic choice
 Explore the tools and techniques for strategic
analysis
 Examine the subjective factors in strategic
choice
 Discuss the manner in which organisations
handle unforeseen environmental events
through formulation of contingency strategies
 Itemise the contents of a typical strategic plan
for an organisation
 Discuss the strategic plan preparation and
content for private and public sector
organisations in India
(c) Dr. Azhar Kazmi 2008
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CASE: Strategic Choices for Bajaj
Allianz General Insurance
1-2000 Insurance sector liberalize
2-Bajaj forms Strategic alliance with Allianz of
Germany-74/26 % ( Areas of strengths ?)
3-12 Competitors: Govt-4, Private-8
4- Direct Competition: product offerings; market
segment
5- Major competitors- ICICI Lombard, Reliance; New
India assurance etc
6- Vision Statement- Be first Choice of customers
- Be a preferred employer;
-Be No 1 insurer creating value
(c) Dr. Azhar Kazmi 2008
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CASE: Strategic Choices for Bajaj
Allianz General Insurance
SWOT Analysis:
 Strength: Strong Promoters
 Weakness: All India presence, poaching of
employees
 Opportunities: Untapped market
 Threat: Every one wants bigger share of market
What are strategic choices
before BA ?
Which strategy they should
adopt?
(c) Dr. Azhar Kazmi 2008
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Scope of General Insurance
business
 General Insurance areas:








Health and Medicare
Motor Vehicles
Home
Travel
Employees
Factories
Offices
Other areas
(c) Dr. Azhar Kazmi 2008
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Process of strategic choice
 Focussing on strategic
alternatives
 Analysing the strategic
alternatives
 Evaluating the strategic
alternatives
 Choosing from among the
strategic alternatives
(c) Dr. Azhar Kazmi 2008
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Gap analysis for focussing on
strategic alternatives
Desired performance
Performance gap
P
er
fo
r
m
an
ce
Present
performance
Time
T1
T2
(c) Dr. Azhar Kazmi 2008
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COMPETITIVE SCOPE
Generic business strategies
Broad
target
Narrow
target
Cost
leadershi
p
Differentiatio
n
Focussed
Cost
leadershi
p
Focussed
differentiati
on
Low-cost
products/services
Differentiated
products/services
COMPETITIVE ADVANTAGE
(c) Dr. Azhar Kazmi 2008
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Dynamic competitive
positioning
(c) Dr. Azhar Kazmi 2008
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Possible Business Definition of
an Oral Care Company
.
(c) Dr. Azhar Kazmi 2008
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Strategic analysis
 Tools and techniques for strategic analysis
 Corporate portfolio analysis








GE nine-cell matrix
Corporate parenting analysis
SWOT analysis
Experience curve analysis
Life cycle analysis
Industry analysis
Strategic groups analysis
Competitor analysis
(c) Dr. Azhar Kazmi 2008
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General Electric nine-cell matrix
INDUSTRY
ATTRACTIVENESS
High
ZONE
STRATEGIC
SIGNAL
GREEN
INVEST /
EXPAND
YELLOW
SELECT /
EARN
RED
HARVES
T/
DIVEST
Medium
Low
Strong
Average
Weak
BUSINESS STRENGTH / COMPETITIVE
POSITION
(c) Dr. Azhar Kazmi 2008
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General Electric nine-cell matrix
Eight Factors for Industry
competitiveness:
1.
2.
3.
4.
5.
6.
7.
8.
Market Size and growth rate
Industry profit margin
Competitive intensity
Seasonality
Cyclicality
Economies of scale
Technology and social environment
Legal and human right
(c) Dr. Azhar Kazmi 2008
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General Electric nine-cell matrix
Factors for business strength
Competitiveness:
1. Relative market share
2. Profit Margins
3. Ability to compete on price and quality
4. Knowledge of customer and market
5. Completive strength and weakness
6. Technological capability
7. Caliber of management
(c) Dr. Azhar Kazmi 2008
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Consolidated SWOT profile
-------------------------------------------------------------------------------------------------------ETOP
Sector impact
SAP
Impact factor
-------------------------------------------------------------------------------------------------------Economic
↑
Market
→
Finance
↓
International
↓
Marketing
→
Political
→
Operations
↑
Regulatory
→
Personnel
→
Social
↑
Information management ↑
Supplier
→
General management
↑
Technology
↑
Up arrows indicate favourable impact; down arrows indicate unfavourable impact,
while horizontal arrows indicate a neutral impact.
(c) Dr. Azhar Kazmi 2008
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Porter’s five forces model of
competition in an industry
Potential threats from
firms which make
substitute products or
services
Suppliers’ bargaining
power
Forces of competition
created by rivalry
Buyers’ bargaining
power
Potential threat from
entry of new firms
(c) Dr. Azhar Kazmi 2008
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Components of competitor
analysis
 Future goals of competitor
 Current strategy of competitor
 Key assumptions made by
competitor
 Capabilities of competitor
(c) Dr. Azhar Kazmi 2008
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Subjective factors in strategic
choice
 Considerations for governmental
policies
 Perception of critical success factors
and distinctive competencies
 Commitment to past strategic actions
 Strategist's decision styles and
attitude to risk
 Internal political considerations
 Timing and competitor considerations.
(c) Dr. Azhar Kazmi 2008
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Contingency strategies
 Contingency strategies are formulated
in advance to deal with uncertainties
that are a natural part of the business


The prospects of emergencies or disasters
The phenomenon of serendipity
 A model of contingency planning
consists of three steps:



Identifying the contingent events
Establishing the trigger points
Developing and strategies and tactics
(c) Dr. Azhar Kazmi 2008
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Strategic plan
 A strategic plan (also called
corporate, group, or perspective plan):
It is a document which provides
information regarding the different
elements of strategic management and
the manner in which an organisation
and its strategists propose to put the
strategies into action.
(c) Dr. Azhar Kazmi 2008
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Contents of a comprehensive
strategic plan ….





A clear statement of strategic intent covering
the vision, mission, business definition, goals
and objectives.
Results of environmental appraisal, major
opportunities and threats, and critical success
factors.
Results of organisational appraisal, major
strengths and weaknesses, and core
competencies.
Strategies chosen and the assumptions under
which those strategies would be relevant.
Contingent strategies to be used under
different conditions.
(c) Dr. Azhar Kazmi 2008
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….Contents of a comprehensive
strategic plan




Strategic budget for the purpose of resource
allocation for implementing strategies and the
schedule for implementation.
Proposed organisational structure and the major
organisational systems for strategy
implementation including the top functionaries
and their role and responsibility
Functional strategies and the mode of their
implementation
Measures to be used to evaluate performance
and assess the success of strategy
implementation.
(c) Dr. Azhar Kazmi 2008
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Strategic Plan preparation at
Infosys Technologies
Exhibit 9.10 (Page 301)
 Strategic Group every year July
initiates 3-5 year plan strategic plan
process
 Makes environmental scanning,
Competitive analysis and model
building
 Makes a formal presentation to
Board of Directors followed by
another one to top managers
(c) Dr. Azhar Kazmi 2008
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Strategic Plan preparation
at Infosys Technologies
(c) Dr. Azhar Kazmi 2008
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Nest Session
Activating Strategies
Reading Chapter-10
Case Study:
MP Rural Development Project
(c) Dr. Azhar Kazmi 2008
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