Linking Strategic Control to Business-Level and Corporate-Level Strategy Presentation

8/3/2019 Linking Strategic Control to Business-Level and Corporate-Level Strategy Presentation

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LINKING STRATEGIC CONTROL

TO BUSINESS-LEVEL ANDCORPORATE-LEVEL STRATEGY

Ameya Kaple(P41008)Amit Jagtap(P41009)

Gopal Khandelwal(P41020)


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STRATEGIC MANAGEMENT

What is Strategic control?

it is the process by which managers monitor

the ongoing activities of an organization andits members to evaluate whether activitiesare being performed efficiently and

effectively and to take corrective action to

improve performance if they are not


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Purpose of Strategic Controls:

To provide managers with a means to

motivate employees towards organizationalperformance;

Solicit data on how well the organization is

performing


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The importance of Strategic Control

The success of a chosen strategy

The implementation compass Organizational performance

Ensuring competitive advantage


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Strategic Control:

Requires more than re-acting on past

performance Keeps the organization on track

Anticipating events that might occur in future

Allows the organization to respond to new

opportunities that may present itself


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The importance of Strategic Control

Control & Innovation:

Managers must create an environment inwhich people feel free to experiment and takerisks

Managers are challenged to build control

systems that encourage risk taking Measures cost reduction, process

improvement and improved qualitymeasures.


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Business Level Strategy

Actions taken to provide value to customersand gain a competitive advantage byexploiting core competencies in specific,

individual product markets. It is concerned primarily with answering the

question: How to compete in a particular industryor product/market segment. Distinctivecompetences and competitive advantage are the

most important components of business levelstrategy.

The major policy decisions are product/marketsegmentation and evolution.


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Breadth of

Competitive

Scope

Source of CompetitiveAdvantage

BroadTargetMarket

NarrowTargetMarket

Cost

FocusedDifferen-

tiation

CostLeadership

Differen-tiation

Focused LowCost

GenericBusiness Level Strategies

Uniqueness


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Relatively standardizedproducts

Features acceptable tomany customers

Lowest competitiveprice

RequirementsConstant effort to reduce coststhrough:

*B

uilding efficient scale facilities

*

*State of theArt manufacturingfacilities

* Simplification of processes

*

Minimizing costs of sales, R&D andservice

*Monitoring costs of activities providedby outsiders

Tight control of production costs andoverhead

Cost Leadership


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Choices that Drive Costs

Economies of scale

Asset utilization

Capacity utilization pattern

Value chain linkages

Product features

Interrelationships

- Advertising & Sales

- Logistics & Operations

- Seasonal, cyclical

- Order processingand distribution

Product features

Product Performance

Mix & variety of products

Service levels

Small vs. large buyers

Process technology

Wage levels

Hiring, training, motivation


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Differentiation

RequirementsConstant effort to differentiate productsthrough:

*Developing new systems and processes

* Quality focus

*

*Maximize Human Resource contributionsthrough low turnover and high motivation

Capability in R&D

* Shaping perceptions through advertising

Value provided byunique features and

value characteristics

Command premium price

Superior quality

Rapid innovation

Prestige or exclusivity

High customer service


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Drivers of Differentiation

Unique product features

Unique product performance

Exceptional services

Quality of inputs

New technologies

Exceptional skill or experience

Detailed information

Some Examples:


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Relationships between Rewards & Evaluation

Systems and Business-level and Corporate-level

Strategies


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Corporate Level Strategy

An action taken to gain a competitive advantagethrough the selection & management of a mix ofbusinesses competing in several industries or

product markets Corporate Strategy: is concerned primarily with

answering the question:What set of businessesshould we be in?Scope and resource

deployments among businesses are the primarycomponents of corporate level strategy.

The major policy decisions are financial structureand organizational structure.


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Diversification

It is a strategy adopted by the firms to acquire new firms to expand its product base

and to maximize its revenue. There are two types of diversifications RelatedDiversification & Unrelated Diversification

Motivating factors for Diversification

Increase the firms stock value

Increase the growth rate of the firm

Better utilization of firms resources

Improve the stability of the firm

Balance or fill out the product line

Diversify the product line

Acquired the needed reasons


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Reasons for Diversification

Value-Creating Diversification

Economies of scope (relateddiversification)

Sharing activities

Transferring core competencies

Market power (relateddiversification)

Blocking competitors throughmultipoint competition

Vertical integration

Financial economies (unrelateddiversification)

Efficient internal capital allocation

Business restructuring

Value-Neutral Diversification

Antitrust regulation

Tax laws

Low performance

Uncertain future cash flows

Risk reduction for firm Tangible resources

Intangible resources

Value-Reducing Diversification

Diversifying managerial

employment risk

Increasing managerialcompensation


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Related vs. Unrelated

Diversification

Related Diversification

Involves diversifying into

businesses whose value

chains possesscompetitively valuable

strategic fits with value

chain(s) of firms present

business(es)

UnrelatedDiversification

Involves diversifying into

businesses with nodeliberate effort to seek

out businesses having

strategic fit with firms

present business(es)


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Levelsof Diversification


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Related Diversification

Firm creates value by building upon orextending: Resources

Capabilities Core competencies

Achieved by: Transferexpertise/capabilities/technology

Combine related activities into a single operation andreduce costs

Leverage use of firms brand name reputation

Conduct related value chain activities in a collaborativefashion to create valuable competitive capabilities


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Unrelated Diversification

Involves diversifying into businesses with

No strategic fit

No meaningful value chain

relationships

No unifying strategic theme

Achieved by:

Financial indicators:UnitCosts, Profits AndRevenues

Value Chain Analysis


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CASE

Nucor Steel Plant


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THANK YOU

Documents

Linking Strategic Control to Business-Level and Corporate-Level Strategy Presentation