Raj Aphale Strategy Presentation

Business Strategy

Webinar

CMA Rajendra D AphaleB. Tech., MMS, ACMA, LL.B.

Cost Accountant

[email protected], +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

mailto:[email protected]


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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



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Agenda

What is Strategy? Why Strategy? Mission Values Vision Competitive advantage Core competency



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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



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Agenda...

Strategy tools – others Strategy execution Organising for strategy



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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*....



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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”



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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



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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



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Mission

Purpose of existence of an organisation What is your company's mission? What is your mission?



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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



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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



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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?



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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



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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



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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



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Forms of Strategy

Emergent strategy – Mintzberg Deliberate strategy – Porter



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Mintzberg

Forms of strategy- Entrepreneurial Adoptive Planned (unconnected, imposed, consensus, confused!)



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Mintzberg

5Ps of strategy Plan Plot Pattern Position Perspective



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Porter

Deliberate strategy Generic strategies

Cost leadership Differentiation Choice of the market



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Defining your business

What business are you in?



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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?



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Stages in Strategy Management

Strategic analysis Strategic choices Strategy execution



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Thank you

CMA Rajendra D Aphale

+91-77385 91521

[email protected]



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Strategy Management

Part II



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Strategy tools

Environment scanning tools PESTEL SWOT Michael Porter's Industry Analysis



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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



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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



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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



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Industry Analysis



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Industry Analysis

5 forces in any industry- Internal Rivalry Entry barriers Substitutes Buyers Sellers (Collaborators or complementors)



Degree of RivalryExit barriersIndustry concentrationFixed costsIndustry growthIntermittent overcapacitySwitching costsBrand identityDiversity of rivalsCorporate stakes

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New Entrants and Entry BarriersAbsolute cost advantagesAccess to inputsGovernment policyEconomies of scaleCapital requirementsBrand identitySwitching costsAccess to distributionProprietary products

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SubstitutesSwitching costsBuyer inclination to substituteVariety of substitutesPrice-performance tradeoff of substitutesNecessity for product or service

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Buyer Power

Buyer volume and informationBrand identityPrice sensitivityThreat of backward integrationProduct differentiationSubstitutes

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Supplier PowerSupplier concentrationDifferentiation of inputsSwitching costsThreat of forward integrationCost relative to total purchases in industry

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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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Strategy tools

Portfolio analysis BCG Matrix GE McKinsey matrix



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BCG Matrix



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GE McKinsey Matrix

Industry attractiveness v/s firm competitiveness 3x3 matrix



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GE McKinsey Matrix



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Strategy tools

Other tools Value Discipline Ansoff Matrix McKinsey 7S framework (organisational

effectiveness) Game Theory Ohme framework



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Value Discipline

3 possible value disciplinesProduct LeadershipCustomer IntimacyOperational Excellence



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Value Discipline



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Ansoff Matrix

Product Market matrix Penetration Market Development Product Development Diversification



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Ansoff Matrix



McKinsey 7-S Framework (org effectiveness)

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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



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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



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Ohme framework



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Strategy and Culture

Why is culture important?



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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



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Balanced scorecard



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Organising for Strategy

Strategy office Top Management driven Cross functional Rotating team



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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



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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



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Thank you

CMA Rajendra D Aphale

+91-77385 91521

[email protected]


Documents

Raj Aphale Strategy Presentation