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8/8/2019 3.the Balance Score Card_Grand Strategies
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MBA 0941 UNIT 3 0
Strategic Management
M.Karunakaran Lecturer
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MBA 0941 UNIT 3 1
Overview of last class
UNIT 2
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Today's topic
The Balance Score Card
Grand Strategies Growth, Expansion, Stability, Retrenchment, Combination
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The Balance Score Card
Grand Strategies Growth, Expansion, Stability, Retrenchment,
Combination
Business Policy and Strategic Management Mr.M.Jeyarathnam, VSP Rao, Upendra Kachru
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The Balance Score Card
- Rs. Kaplan and DP Norton
Balance score card :
Linking corporate goals with strategic actions
undertaken at Business unit
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Why - The Balance Score Card
To give superior returns to stakeholders
To give superior value to customers
To develop operations with necessary capability
To develop operations capability employee should have skills, creativity,diversity and motivations
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Grand Strategies
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Grand Strategy
Grand Strategy is a general plan of major action by which a firm intends to
achieve its long term goals
Provides basic directions of a firm
Example:McDonalds ----More products line ----low cost ----food business----
overtime customers fall---profit fall ----Diversification
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Meanings
Concentric Sharing the same circle
Conglomerate A Large corporation formed by merging of separate firms
Divestment Deprive something(remove)
Liquidation Easily converted in to cash
Bankrupt officially declarednot to have the money to pay yourdebt
Joint Venture Legal entity formed between two ormore partied to undertake an economic
activity together
Strategic Alliance Formalrelationship between two ormore parties to pursue a set ofagreed
upon goals orto meet acritical business need while remaining independent organisation
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Increase sales, market shares
Growth is more they expand the business
Expand to related or unrelated products
Internal growth External growthIntensification Mergers
Diversification Takeovers
Joint ventures
Growth/ Expansion
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When to adopt growth?
Organization achieves stability, then go for strategies
Should look for environmental demands
If government offers benefit
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Why to Pursue Growth?
To ensure survival E.g. : Ambassador car
To obtain scale of economics
To stimulate talent E.g. : Hero Honda,Wipro
To reach commanding heights E.g. : ITC, Britannia (Low pricehigh quality)
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Problems created by Growth?
Essar Group Mr.Ravi Ruia & Mr. Shashi Ruia
Raised fund $ 4000 m
Loan $ 13,000 m
Diversified in all markets
Cash flow became less
(Business today, Feb, 16,2003: Essar group erased from the Industrial map)
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How to manage growth?
According to peter drucker
Minimum Growth
Economic objectives is more important than the volume objectives
Internal Preparation
Opportunity knocks the door once, if we dont open it knocks the next door
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Diversification
E.g. : Colgate Close up is the competitor
Diversification in to related or unrelated business
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Examples
Forward : To set up selling units (TITAN)
Backward : To manufacture raw material phallic anhydride (ASIAN PAINTS)
Concentric - : Related products computers, terminals, communication (IBM)
Conglomerate -: Unrelated products Oil, hotel, financial services (ITC)
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Retrenchment
Defensive strategy
E.g. Xerox face bankruptcy 2 times because of Japanese competitors like canon
and sharp
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Combination
Large, diversified organization generally use a mixture of stability, expansion or
retrenchment strategies
In recent times, three more strategies have gained popularity namely,
1. Joint ventures - A joint venture is a legal entity formed between two or more parties to
undertake an economic activity together.
2. Strategic alliance - A Strategic Alliance is a formal relationship between two or more parties to
pursue a set of agreed upon goals or to meet a critical business need while remaining
independent organizations.
3. Consortia - An association or a combination, as of businesses, financial institutions, or
investors, for the purpose of engaging in a joint venture.
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Overview of today's class
The Balance Score Card
Grand Strategies Growth, Expansion, Stability, Retrenchment, Combination
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Questions
1. What is Balance score card?
2. Explain different types of grand strategies?
3. What is grand strategy?
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