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Business Strategy
Webinar
CMA Rajendra D AphaleB. Tech., MMS, ACMA, LL.B.
Cost Accountant
Rajendra.Aphale@gmail.com, +91-77385 91521
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Introduction
Raj is a practicing cost accountant, consultant and trainer and helps his clients in--Strategy planning and implementation,
balanced score cards, business analytics-Interim Management-Lean management, kaizen etc-Human resource management- OD,
compensation, competency, performance management-Costing systems, cost management, cost audit,
compliances, performance management
Raj has done work in 16 countries other than India, including US, UK, Germany, Singapore
Rajendra.Aphale@gmail.com, +91-77385 91521
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Introduction
Raj is a practicing cost accountant, consultant and trainer and helps his clients in--Strategy planning and implementation,
balanced score cards, business analytics-Interim Management-Lean management, kaizen etc-Human resource management- OD,
compensation, competency, performance management-Costing systems, cost management, cost audit,
compliances, performance management
Raj has done work in 16 countries other than India, including US, UK, Germany, Singapore
Rajendra.Aphale@gmail.com, +91-77385 91521
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Agenda
What is Strategy? Why Strategy? Mission Values Vision Competitive advantage Core competency
Rajendra.Aphale@gmail.com, +91-77385 91521
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Agenda
Levels of Strategy Forms of Strategy
Defining your business Stages in Strategy Management Focus Strategy tools – environment scanning SWOT, PESTEL, Porter's 5 forces
Rajendra.Aphale@gmail.com, +91-77385 91521
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Agenda...
Strategy tools – others Strategy execution Organising for strategy
Rajendra.Aphale@gmail.com, +91-77385 91521
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What is Strategy
Many experts have defined strategy in many ways-* Plan of action to achieve goals* Plan of action with some patterns* Path to reach milestones* Pattern or common thread related to organisation's activity* Optimum allocation or resources*....
Rajendra.Aphale@gmail.com, +91-77385 91521
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What is Strategy....
Michael Porter defines it as
“Strategy is the creation of a unique and valuable position, involving a different set of activities”
Rajendra.Aphale@gmail.com, +91-77385 91521
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Why Strategy?
Strategy is expected to provide direction to an organisation
Strategy creates predictability Strategy helps aligning different functions in an
organisation Strategy helps achieve vision
Rajendra.Aphale@gmail.com, +91-77385 91521
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Why Strategy?
Strategy involves creating a fit among different activities of a business
Strategy helps achieving better return on investment than industry average consistently
“A company can outperform its rivals only if it can establish a difference it can preserve” - Michael Porter
Rajendra.Aphale@gmail.com, +91-77385 91521
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Mission
Purpose of existence of an organisation What is your company's mission? What is your mission?
Rajendra.Aphale@gmail.com, +91-77385 91521
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Mission...
Mission should indicate -– Who our customers are– What needs of our customers are we serving– What are the unique ways we are serving the
needs
Rajendra.Aphale@gmail.com, +91-77385 91521
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Values
What the organisations live by Created by leaders' behaviour, Demonstrated
by employees' behaviour Will decide how a company will do business,
what businesses it may or may not do; whether it will focus long term or short term
May limit an organisation's growth
Rajendra.Aphale@gmail.com, +91-77385 91521
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Vision
How do we see our future? (Where do you see yourself in 5 years?)
Word picture of what the organisation will be in the next few years
Vision needs to be SMARTS What is your company's vision? What is your vision?
Rajendra.Aphale@gmail.com, +91-77385 91521
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Competitive Advantage
What an organisation can do better than its competitors, based on KSFs for the industry
Quantify, as far as you can
Rajendra.Aphale@gmail.com, +91-77385 91521
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Core Competency
A harmonised combination of multiple resources and and skills that distinguish a firm in the marketplace
Core competencies must -– Provide potential access to several markets– Should make significant contributions to
perceived customer benefits of the end product – Should be difficult to copy
Rajendra.Aphale@gmail.com, +91-77385 91521
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Levels of Strategy
Corporate level - business portfolio management, allocation of corporate resources, broad policies
Business unit level (SPU level) – Business growth, product / service portfolio, competitive advantage
Functional level – how different functions will support business strategy
Rajendra.Aphale@gmail.com, +91-77385 91521
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Forms of Strategy
Emergent strategy – Mintzberg Deliberate strategy – Porter
Rajendra.Aphale@gmail.com, +91-77385 91521
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Mintzberg
Forms of strategy- Entrepreneurial Adoptive Planned (unconnected, imposed, consensus, confused!)
Rajendra.Aphale@gmail.com, +91-77385 91521
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Mintzberg
5Ps of strategy Plan Plot Pattern Position Perspective
Rajendra.Aphale@gmail.com, +91-77385 91521
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Porter
Deliberate strategy Generic strategies
Cost leadership Differentiation Choice of the market
Rajendra.Aphale@gmail.com, +91-77385 91521
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Defining your business
What business are you in?
Rajendra.Aphale@gmail.com, +91-77385 91521
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Focus
“Strategy is defining what to do and what not to do” - Michael Porter
What has your business decided to do? What has your business decided not to do?
Rajendra.Aphale@gmail.com, +91-77385 91521
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Stages in Strategy Management
Strategic analysis Strategic choices Strategy execution
Rajendra.Aphale@gmail.com, +91-77385 91521
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Thank you
CMA Rajendra D Aphale
+91-77385 91521
rajendra.aphale@gmail.com
Rajendra.Aphale@gmail.com, +91-77385 91521
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Strategy Management
Part II
Rajendra.Aphale@gmail.com, +91-77385 91521
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Strategy tools
Environment scanning tools PESTEL SWOT Michael Porter's Industry Analysis
Rajendra.Aphale@gmail.com, +91-77385 91521
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PESTEL
P-political factor e.g. changes in international trade, taxation policy
E-economic factor e.g. interest rates, exchange rates, national income, inflation, unemployment, Stock Market
S-social factor e.g. ageing population, attitudes to work, income distribution
Rajendra.Aphale@gmail.com, +91-77385 91521
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PESTEL
T-technological factor e.g. innovation, new product development, rate of technological obsolescence
E-environment factor e.g. global warming, environmental issues
L-legal factor e.g. competition law, health and safety, employment law
Rajendra.Aphale@gmail.com, +91-77385 91521
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SWOT
Internal and external scan Strengths is what we can do better than
competition, based on KSFs Quantify all four elements Take opinions out, facts only please
Rajendra.Aphale@gmail.com, +91-77385 91521
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Industry Analysis
5 forces in any industry- Internal Rivalry Entry barriers Substitutes Buyers Sellers (Collaborators or complementors)
Rajendra.Aphale@gmail.com, +91-77385 91521
Degree of RivalryExit barriersIndustry concentrationFixed costsIndustry growthIntermittent overcapacitySwitching costsBrand identityDiversity of rivalsCorporate stakes
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Rajendra.Aphale@gmail.com, +91-77385 91521
New Entrants and Entry BarriersAbsolute cost advantagesAccess to inputsGovernment policyEconomies of scaleCapital requirementsBrand identitySwitching costsAccess to distributionProprietary products
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Rajendra.Aphale@gmail.com, +91-77385 91521
SubstitutesSwitching costsBuyer inclination to substituteVariety of substitutesPrice-performance tradeoff of substitutesNecessity for product or service
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Rajendra.Aphale@gmail.com, +91-77385 91521
Buyer Power
Buyer volume and informationBrand identityPrice sensitivityThreat of backward integrationProduct differentiationSubstitutes
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Rajendra.Aphale@gmail.com, +91-77385 91521
Supplier PowerSupplier concentrationDifferentiation of inputsSwitching costsThreat of forward integrationCost relative to total purchases in industry
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Rajendra.Aphale@gmail.com, +91-77385 91521
Role of ComplementorsNumber of complementsRelative value addedDifficulty of engaging complementsBuyer perception of complementsComplement exclusivityTend to increase profits by increasing demand for an industry’s products
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Rajendra.Aphale@gmail.com, +91-77385 91521
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Strategy tools
Portfolio analysis BCG Matrix GE McKinsey matrix
Rajendra.Aphale@gmail.com, +91-77385 91521
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GE McKinsey Matrix
Industry attractiveness v/s firm competitiveness 3x3 matrix
Rajendra.Aphale@gmail.com, +91-77385 91521
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GE McKinsey Matrix
Rajendra.Aphale@gmail.com, +91-77385 91521
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Strategy tools
Other tools Value Discipline Ansoff Matrix McKinsey 7S framework (organisational
effectiveness) Game Theory Ohme framework
Rajendra.Aphale@gmail.com, +91-77385 91521
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Value Discipline
3 possible value disciplinesProduct LeadershipCustomer IntimacyOperational Excellence
Rajendra.Aphale@gmail.com, +91-77385 91521
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Ansoff Matrix
Product Market matrix Penetration Market Development Product Development Diversification
Rajendra.Aphale@gmail.com, +91-77385 91521
McKinsey 7-S Framework (org effectiveness)
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Rajendra.Aphale@gmail.com, +91-77385 91521
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Game Theory
Anticipate competitors' response to your strategic actions, and its impact on overall industry and your business
Anticipate competitors' actions and possible impact on your business
Tackle uncertainty situations Appropriate and needed in today's uncertain
world as we know solutions for future which is vaguely predictable
Rajendra.Aphale@gmail.com, +91-77385 91521
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Ohme framework
Integrate 3Cs to create competitive advantage Corporation – Selective and sequencing, trade
off of make buy Competition – people, money, and things
(assets)- allocation; cost structure Customers – segmentation by objectives,
market coverage trade off, further segmentation
Rajendra.Aphale@gmail.com, +91-77385 91521
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Strategy and Culture
Why is culture important?
Rajendra.Aphale@gmail.com, +91-77385 91521
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Strategy Execution
Isn't it obviously easy after the hard work in creating the plan
Over 90% of well crafted plans fail in execution Need proper organisation and focus Need alignment of business objectives to
strategy, of different departments to each other and of different employees to each other
Balanced scorecard as a tool
Rajendra.Aphale@gmail.com, +91-77385 91521
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Balanced scorecard
Rajendra.Aphale@gmail.com, +91-77385 91521
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Organising for Strategy
Strategy office Top Management driven Cross functional Rotating team
Rajendra.Aphale@gmail.com, +91-77385 91521
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Role of CMAs
Understand business Unbiased assessment of business, not to please
the management Continuous exercise Forecasting, reassessing assumptions Evaluating alternatives Sensitivity analysis Shareholders' perspective, customer perspective
Rajendra.Aphale@gmail.com, +91-77385 91521
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Why managers don't think strategy
Short term vs long term thinking Fear of failure Overconfidence Prior bad experience Self-interest Fear of the unknown Honest difference of opinion Suspicion
Rajendra.Aphale@gmail.com, +91-77385 91521
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Thank you
CMA Rajendra D Aphale
+91-77385 91521
rajendra.aphale@gmail.com
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