STRATEGY

PRIMER 2024

JAYAD DUBEY
NITIN E MATHEW
SYED MAROOF HASSAN

GOA INSTITUTE OF MANAGEMENT

 CONTENTS
Foreword................................................................................................1
Strategy: A Brief Intro........................................................................... 2
PESTEL ................................................................................................. 4
Porter’s 5 Forces.................................................................................... 7
SWOT....................................................................................................11
TOWS................................................................................................... 13
VMOST ................................................................................................18
VRIO ....................................................................................................21
BCG Matrix ......................................................................................... 23
GE Mckinsey ....................................................................................... 25
Porter’s Generic Strategy.....................................................................29
Bowman’s Strategy Clock ................................................................... 32
Balance Scorecard................................................................................36
Strategy Diamond ............................................................................... 39
Ansoff Matrix ...................................................................................... 42
Diffusion of Innovation....................................................................... 45
Industry Life Cycle...............................................................................48
Product Life Cycle................................................................................50
Blue Ocean .......................................................................................... 53
Kotter’s 8-Step Change........................................................................ 56
Decision-Making Matrix .....................................................................60
Triple Bottom Line ..............................................................................63
Miles and Snow framework................................................................. 65
McKinsey 7S Model............................................................................. 69
Tools For Analysis ...............................................................................72
 FOREWORD
“It's not about ideas. It's about making ideas happen.”
– Scott Belsky.

This document was envisioned as we found out that there can be a more structured approach
for knowledge transfer among peers than what is currently happening. Strategy being the
core for solving various cases and problems, we decided that a document stating various
types of strategic frameworks would be a great place to start. This document will hopefully
help PGP1 in making sense of the chaos of the first-year cases. It will help both PGP1 and
PGP2 in various case competitions and other problem-solving areas (Company Analysis,
Business Expansion, and Valuation to name a few).

Each framework is complete in its entirety and includes three major parts (if not more):
1. Theory (Which is how it is generally taught in a class)
2. Use and Working (Which will help you in applying the framework)
3. Industry Example (This includes practical application of framework in an
industry/company)

The frameworks that are mentioned in this document are incredibly useful in understanding
the environments, industries and companies. Any in-depth case you come across, you will
realize that you can apply one or the other or even a combination of these frameworks to
understand the case better and make much more informed decisions.

A generalized list of the situation and the applicable framework is given below:

Finally, even though frameworks are useful for making sense of the chaos, all they do is
provide a structure to the problem which may seem all over the place at first, they should not
be used to replace your common sense. Remember, you can’t blame Porter for your
own lack of common sense, analysis or understanding of the overall situation.

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 STRATEGY : A BRIEF INTRO
“Effective execution of a bad idea is better than the bad execution of a
good idea.” – Bill Gates.

What is Strategy?

In general parlance, strategy can be understood as the effective utilization of resources to

facilitate the achievement of objectives. The most common strategy that almost
everyone is familiar with is making a timetable for exams where you use time (resource) to
achieve your objective (completing a portion of the syllabus) and come out with an action
plan (the timetable).

This is how we understand strategy in the general context, however, in the business
context we delve a little deeper into it. At its core, strategy is the art of making deliberate
choices. It's about allocating resources, defining a path towards achieving long-term goals,
and creating a sustainable competitive advantage utilizing Core Competencies. It
goes beyond simply setting goals; it encompasses the "how" as well as the "what." A well-
defined strategy provides direction, fosters alignment within the organization, and equips
leaders to anticipate and adapt to changing circumstances.

As per Michael Porter, “Competitive strategy is about being different. It means

deliberately choosing a different set of activities to deliver a unique mix of value.”

This is where the concept of strategy diamond comes into play which enumerates the
elements of strategy as Arenas, Vehicles, Differentiators, Staging and Economic Logic. As
you are navigating through these, it's important to remember that in the end, to use
marketing terminology blatantly, it is always about creating value for customers and
creating a sustainable competitive advantage for ourselves by utilizing resources
effectively.

Porter classifies the sources of competitive advantage into three major categories: Cost
Leadership, which means producing the same value to customers at a lower cost than the
competitors. Differentiation, which means creating a unique value proposition to
customers which are different from competitors and Focus, which means focusing on a
niche but profitable segment using one of the above two strategies.

These 3 strategies are collectively known as Porter’s generic strategies which are
described in detail in the document.

The competitive advantage that you gain using these strategies needs to be valuable, rare,
inimitable and organized so that your company can derive long term benefit from it. This is
further discussed in the VRIO Framework.

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But before we get on our high horses and start implementing these strategies and
frameworks, it is important to analyze the overall environment in which the company
functions as well as our own company for which we are thinking of implementing a strategy.
The EIC (Economy, Industry and Company) analysis accomplishes exactly that and provides
an overall frame of reference for developing further strategies and tactics.

For the Environmental Analysis, PESTEL is a wonderful tool which can help make sense of
the noise of the external environment.

For Industry analysis consider Porter’s 5 Forces to be the holy grail which can provide
significant inputs as to whether the industry we work in or are looking to expand to is
attractive or not.

As for Company Analysis SWOT and TOWS are frequently used which help ascertain
whether we can capture the opportunities and fend off threats using our strengths. There is
always a debate on whether we should minimize weaknesses or focus on strengths more.
Most successful CEOs and companies have focused on playing to their strengths rather than
getting stuck trying to eliminate weaknesses. Weaknesses should be managed well, of course,
but the sole focus on eliminating weakness by consequence results in a lesser focus on
strengths and that has historically not worked well.

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 PESTEL ANALYSIS
"Strategy is not the consequence of planning, but the opposite: its starting point."
— Henry Mintzberg

THEORY
PESTEL analysis is a framework used to identify and analyze the macro-environmental
factors that can impact a business. These factors are external to the organization and can't
be directly controlled, but understanding them is crucial for strategic decision-making.
PESTEL stands for:
Political: Government policies, regulations, tax laws, trade agreements, political stability.
Economic: Economic growth, inflation rates, interest rates, currency exchange rates,
consumer spending patterns.
Social: Demographics, cultural trends, consumer preferences, attitudes towards health,
safety, and sustainability.
Technological: Technological advancements, innovation, automation, impact of
technology on the industry.
Environmental: Environmental regulations, climate change, resource scarcity, waste
disposal.
Legal: Laws concerning employment, health and safety, product liability, and intellectual
property.

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 USE AND WORKING
How it Works:
1. Identify the Relevant Factors: For each PESTEL category, brainstorm the specific
factors that could affect the business.
2. Analyze the Impact: Assess the impact of each factor on the business. Is it a Threat or
an Opportunity? How significant is the impact (High, Medium, Low)? Give ratings (-3 to
+3) for each factor.
3. Develop Strategies: Based on your analysis, develop strategies to mitigate threats and
capitalize on opportunities.

INDUSTRY EXAMPLE:
PESTEL Analysis of Hindustan Unilever (HUL): (Suggestive example)

Political: (+1 , since changes towards health and well-being are expected more than
formulation changes)
Threat: Changes in government policies or regulations regarding formulations, and
environmental/human concerns could impact HUL's product, pricing, or distribution
channels.
Opportunity: Government initiatives promoting health and hygiene could benefit HUL's
sales of personal care products, especially the new wellness portfolio.

Economic: (-3 , since high food inflation impacts rural demand a lot)
Threat: Economic slowdown could lead to decreased consumer spending, impacting
HUL's sales volume. Especially in the rural areas which were previously thought to be the
green shoots for HUL since urban demand seems to have plateaued in core areas.
Opportunity: Growing disposable income in India could create a market for HUL's
premium product lines.

Social: (-1 , since customer perception is changing towards use of more natural products)
Threat: Shifting consumer preferences towards natural and organic products could pose
a challenge to HUL's traditional product lines.
Opportunity: Growing awareness of sustainability could create a demand for HUL's eco-
friendly products.

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Technological: (+1 , since HUL can use quick commerce and its app to reach customers)
Threat: Disruption by e-commerce platforms could change consumer buying habits and
impact HUL's traditional distribution channels.
Opportunity: HUL could leverage technology to improve its supply chain efficiency and
develop innovative new products.

Environmental: (0 -Neutral , since currently no major opportunities or threats are present)

Threat: The scarcity of water resources could impact HUL's manufacturing processes.
More awareness among people can result in people not liking plastic packaging.
Opportunity: HUL could develop water-efficient products and promote sustainable
practices to gain a competitive advantage.

Legal: (0 - Neutral , since the legal landscape is relatively stable and HUL can comply easily
with any changing law)
Threat: Changes in labelling laws or product safety regulations could require HUL to
reformulate or repackage products. This is especially true for the food category.
Opportunity: HUL's strong compliance record could position it as a trusted brand in
the market.

PESTEL Conclusion: The external environment is relatively adverse for HUL as the
total comes to -2 primarily due to the economic scenario. HUL should see where the growth
opportunities lie to fend off adverse economic outlooks.

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 PORTERS 5 FORCES
“Victorious warriors win first and then go to war, while defeated warriors go to
war first and then seek to win." — Sun Tzu

THEORY
Ever wondered why some industries seem more ATTRACTIVE than others? Michael Porter's
Five Forces is a framework that helps analyze the competitive landscape of an industry and
assess its overall attractiveness. By understanding these five forces, businesses can develop
strategies to navigate competition and achieve success.

The Five Forces:

https://unstop.com/blog/porters-5-forces-an-indispensable-tool-for-marketers-and-strategists

Threat of New Entrants: This force examines how easy or difficult it is for new companies
to enter an industry. High barriers to entry, such as significant capital requirements, complex
regulations, or strong brand loyalty, can discourage new entrants and make the industry more
attractive to existing players.

Bargaining Power of Suppliers: This force considers the influence suppliers have on the
industry. If there are few suppliers, or if they provide a unique or essential product, they can
exert significant power by demanding higher prices or limiting supply. Conversely, a large
number of competing suppliers weakens their bargaining power.

Bargaining Power of Buyers: This force analyzes the influence buyers have on the
industry. If buyers are concentrated and have a high volume of purchases, they can pressure
businesses to lower prices or offer better terms. Conversely, a large number of fragmented
buyers with low purchase volumes give businesses more control over pricing.

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The threat of Substitutes: This force considers the existence of alternative products or
services that can fulfil the same customer needs. The presence of close substitutes can limit
pricing power and profitability for businesses within the industry.

Competitive Rivalry: This force examines the intensity of competition among existing
players within the industry. A high number of competitors, similar products or services, and
low barriers to exit can lead to price wars, reduced profitability, and difficulty in
differentiating offerings.

USE AND WORKING

Using the Five Forces:
By analysing each force and its strength, businesses can gain valuable insights. A strong
force indicates a challenge that needs to be addressed, while a weak force suggests an
opportunity for growth. Companies can then develop strategies to:

Reduce the threat of new entrants: By raising barriers to entry, such as through
brand loyalty or technological advancements.

Manage supplier power: By diversifying suppliers, building strong relationships,

or developing backward integration (acquiring suppliers).

Counteract buyer power: By offering product differentiation, building strong

customer relationships, or focusing on niche markets.

Minimize the threat of substitutes: By innovating, differentiating products, or

controlling the cost structure to remain competitive with substitutes.

Navigate competitive rivalry: By focusing on cost leadership, differentiation

through product features or customer service, or targeting specific market segments.

Working: Give each force a rank (1-3) where 1 means the force is very powerful and 3
means the force is weak. The higher the overall score (Out of 15) the more attractive the
industry.

Note: 5 Forces measures the ATTRACTIVENESS for an outside firm for

the industry (should we enter or not?), and the PROFITABILITY of a
firm inside the industry (how much profit can we generate?).This
profitability is usually measured in terms of Return on Invested Capital
(ROIC)

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 INDUSTRY EXAMPLE:
Airline Industry
1. Threat of New Entrants (Medium)
Barriers to Entry: Setting up an airline requires significant capital for aircraft,
infrastructure, and licenses. However, the Indian government's relaxation of FDI (Foreign
Direct Investment) policies in recent years has made entry easier for joint ventures with
foreign airlines. Further leasing of aircraft also reduces the costs significantly.
Brand Loyalty: Established airlines like IndiGo and SpiceJet have built brand loyalty
among budget travellers. However, new entrants like Akasa Air, backed by Rakesh
Jhunjhunwala, are targeting specific segments with innovative offerings.

Ranking for Indian Airlines Industry: 2

2. Bargaining Power of Suppliers (High)

Aircraft Manufacturers: Airbus and Boeing dominate the global aircraft
manufacturing market, limiting airlines' negotiation power on pricing and delivery
schedules.
Fuel Costs: Jet fuel prices are a significant operational expense for airlines. Dependence
on international oil prices reduces airlines' control over these costs.

Ranking for Indian Airlines Industry: 1

3. Bargaining Power of Buyers (High)

Price Sensitivity: Indian air travellers are highly price-sensitive, with a significant
budget segment. This gives them leverage to negotiate fares, especially on short-haul
routes.
Availability of Options: With multiple airlines operating on major routes, travellers
have a wide range of choices, putting pressure on airlines to offer competitive fares and
services.

Ranking for Indian Airlines Industry: 1

4. Threat of Substitutes (Low)

High-Speed Rail: The development of high-speed rail networks could pose a threat on
specific routes, especially for shorter distances. However, India's high-speed rail network
is still in its nascent stages.
Video Conferencing: Technological advancements in video conferencing can replace
business travel on certain routes. However, the need for face-to-face interaction remains
crucial for many sectors.

Ranking for Indian Airlines Industry: 3

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5. Competitive Rivalry (High)

Fragmented Market: The Indian airline industry is fragmented, with several players
like IndiGo, SpiceJet, Go First, and Air India vying for market share. This leads to
intense price competition and pressure on margins.
Low-Cost Carriers (LCCs): The rise of LCCs with their focus on operational
efficiency and lower fares has put pressure on traditional airlines to adapt their pricing
strategies and cost structures.

Ranking for Indian Airlines Industry: 1

Total Ranking: 8/15 (Moderately Attractive)

Overall Attractiveness of the Indian Airline Industry:

Based on Porter’s five forces analysis, the airline industry in India is moderately
attractive. Airlines need to focus on cost optimization, differentiation through service
offerings, and catering to specific market segments to succeed in this dynamic environment.

Notes on Sector, Industry and Segment identification:

Previously it was easier to identify which industry a firm competes in and do an analysis
based on that, however, as the businesses became complex, it became important to classify
the specific segment in which the company operates and do the analysis accordingly since the
sector and industry became large. For Example, Apple and Casio, both are in the Wearables
sector and even in the same industry which is the watch industry but they don’t compete
directly since the segment is very different, smartwatch vis a vis analog/digital watches.

Answer these 5 questions:

Supplier Profile
Segment Growth Rate
Rivals
Distribution
Buyer Type

If the answers to at least 3 of these 5 questions are not similar i.e., the two products do not
have the same supplier profile, similar growth rate, similar kind of rivals, distribution
channels and buyer profiles then it can be said that they are operating in different segments
and a 5 forces analysis undertaken on one does not apply on the other.

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 SWOT ANALYSIS
"The real challenge in crafting strategy lies in detecting subtle discontinuities
that may undermine a business in the future. And for that there is no technique,
no program, just a sharp mind in touch with the situation." — Henry Mintzberg

THEORY

Overview:
SWOT analysis is a fundamental tool
used for strategic planning. It stands for
Strengths, Weaknesses, Opportunities,
and Threats, and helps businesses assess
their internal capabilities and external
environment. By analyzing these factors,
businesses can identify strategic
advantages, address shortcomings,
capitalize on opportunities, and mitigate
threats. https://projectwidgets.com/swot-analysis-project-management/
The Framework:
SWOT analysis is a 2x2 grid with two internal factors (Strengths & Weaknesses) and two
external factors (Opportunities & Threats).
Strengths: Internal attributes that give a business an advantage over competitors. (e.g.,
brand reputation, skilled workforce, efficient operations)
Weaknesses: Internal limitations that hinder a business's performance. (e.g., high
operating costs, limited product diversification, lack of technological innovation)
Opportunities: External factors that present favourable conditions for business growth.
(e.g., growing market demand, emerging technologies, favourable government policies)
Threats: External factors that could potentially harm a business's performance. (e.g.,
economic downturn, rising fuel costs, competition from new entrants)

USE AND WORKING

How to Conduct a SWOT Analysis:
1. Brainstorming: Gather a team with diverse perspectives to brainstorm ideas for each
SWOT category. Consider Annual Reports, Concalls, and News reports regarding the
company/firm you’re assessing. You can find these on screener.com or the company’s
website as well as the Economic Times subscription that you were given but you never use.
2. Prioritization: Rank the identified strengths, weaknesses, opportunities, and threats
based on their significance.

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 INDUSTRY EXAMPLE:
SWOT Analysis of Indigo Airlines
Strengths:
Strong Brand Reputation: Indigo is known for its on-time performance, low fares,
and efficient operations.
Large and Young Fleet: Indigo has a modern fleet of fuel-efficient aircraft, reducing
operating costs. Most of the fleet is on lease as well which reduces upfront costs.
Extensive Network: Indigo boasts a wide domestic network and a growing
international presence. However, the international travel segment needs to be carefully
evaluated as most of the fleet consists of narrow-body aircraft which are not suitable for
long haul flights.
Weaknesses:
Over-reliance on Low-Cost Model: Indigo's primary focus on low fares limits its
profit margins compared to airlines offering premium services.
Limited Product Differentiation: Indigo offers a standardized service experience,
which may not appeal to all customer segments.
High Dependence on Single Aircraft Type: Indigo's dependence on a single aircraft
type (A320 family) could pose challenges if there are grounding issues or maintenance
delays.
Opportunities:
Growing Indian Aviation Market: The Indian aviation market is expected to
experience significant growth in passenger traffic, creating expansion opportunities.
Increasing Disposable Income: Rising disposable income in India could lead to
increased demand for air travel.
Expansion into Premium Services: Indigo could explore offering premium cabins
or services to cater to a broader customer base.
Threats:
Fuel Price Fluctuations: Fluctuations in fuel prices can significantly impact airlines'
operating costs.
Competition: Indigo faces competition from established airlines and new entrants in
the low-cost carrier segment.
Economic Downturn: An economic slowdown could lead to decreased passenger
demand and affect profitability.

Strategic Action Planning:

Based on the SWOT analysis, Indigo can:
Leverage its brand reputation and efficient operations to maintain its competitive edge in
the low-cost carrier segment.
Invest in diversifying its fleet to mitigate risks associated with dependence on a single
aircraft type.
Explore offering premium services or amenities to attract a wider customer base and
potentially increase revenue.
Continuously monitor fuel costs and implement cost-saving measures when necessary.
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 TOWS ANALYSIS
"Strategic planning is worthless unless there is first a strategic vision." — John
Naisbitt

THEORY

TOWS Analysis
The TOWS (Threats, Opportunities, Weaknesses, Strengths) analysis is a powerful strategic
planning tool that builds upon the foundation laid by the SWOT (Strengths, Weaknesses,
Opportunities, Threats) framework. While SWOT identifies internal and external factors
impacting an organization, TOWS takes those factors a step further by exploring how they can
be strategically combined to create actionable plans.

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Key Components:
Threats (External): These are potential future events or conditions that could negatively
impact the organization's performance. Examples include:
Economic: Economic downturns, currency fluctuations, rising material costs.
Technological: Technological advancements by competitors, and disruptions in key
technologies.
Social: Changing consumer preferences, shifts in demographics, social unrest.
Political: Changes in government regulations, trade policies, and political instability.
Environmental: Climate change regulations, resource scarcity, environmental disasters.

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Opportunities (External): These are favorable external factors that the organization can
leverage for growth and success. Examples include:
Market growth: Expanding markets for existing products or emerging markets for
new products.
Technological advancements: New technologies that can improve efficiency,
product development, or customer experience.
Mergers & acquisitions: Opportunities to expand market share or gain access to new
resources.
Changes in customer preferences: Trends favouring the organization's products or
services.
Government incentives: Tax breaks, subsidies, or other support for specific
industries or technologies.

Weaknesses (Internal): These are internal limitations or deficiencies that hinder the
organization's performance. Examples include:
Financial: Limited resources, high debt levels, inefficient financial management.
Operational: Inefficient production processes, poor quality control, supply chain
disruptions.
Marketing & Sales: Weak brand recognition, ineffective marketing strategies, and
underdeveloped sales channels.
Human Resources: Lack of skilled workforce, low employee morale, high turnover.
Research & Development: Limited innovation capabilities, outdated technology.

Strengths (Internal): These are positive internal attributes that give the organization an
advantage. Examples include:
Strong brand reputation: Brand loyalty, positive customer perception.
Financial stability: Strong cash flow, low debt, access to capital.
Operational efficiency: Highly skilled workforce, efficient production processes,
strong quality control.
Marketing & Sales: Effective marketing strategies, strong distribution network, well-
trained sales force.
Research & Development: Culture of innovation, strong R&D capabilities, access to
cutting-edge technologies.

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Constructing the TOWS Matrix
The TOWS Matrix is a simple 2x2 grid:
SO Strategies: Use strengths to exploit opportunities.
ST Strategies: Use strengths to counter threats.
WO Strategies: Overcome weaknesses by exploiting opportunities.
WT Strategies: Defensive strategies aimed at reducing weaknesses and avoiding threats.

USE AND WORKING

1. Conduct a SWOT Analysis: Identify the organization's strengths, weaknesses,
opportunities, and threats.
2. Construct the TOWS Matrix: Place the SWOT components into the TOWS grid.
3. Develop Strategies:
SO Strategies: Identify ways the organization can use its strengths to exploit
opportunities.
ST Strategies: Determine how the organization can use its strengths to minimize
threats.
WO Strategies: Explore how the organization can leverage opportunities to address
its weaknesses.
WT Strategies: Develop plans to minimize weaknesses and defend against external
threats.
4. Evaluate and Prioritize Strategies: Assess each strategy's feasibility and potential
impact.
5. Implement and Monitor: Implement the chosen strategies and continuously
monitor their effectiveness, making adjustments as necessary.

Benefits of TOWS Analysis:

Provides a more actionable approach: By focusing on the strategic application of SWOT
factors, TOWS allows for the development of concrete action plans to address both
internal and external factors.
Encourages Creative Thinking and Strategy Development: The process of exploring
different combinations of strengths, weaknesses, opportunities, and threats can spark
innovative ideas and help develop effective strategies.
Improves Strategic Planning: TOWS provides a framework for considering not only
internal capabilities and external factors but also how they can be strategically combined
to achieve organizational goals.

By using both SWOT and TOWS analyses, organizations can gain a comprehensive
understanding of their strategic landscape and develop effective plans to navigate the
challenges and opportunities that lie ahead.

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 INDUSTRY EXAMPLE:
Electric Vehicle (EV) Manufacturer

SWOT Analysis:

Strengths:
Strong brand reputation in traditional vehicles: This gives the EV manufacturer a
loyal customer base and a positive brand image that can be leveraged for EV
adoption.
Technological expertise in battery development: This internal strength allows the
manufacturer to develop high-quality batteries, a crucial component of EVs.
Weaknesses:
Limited experience in EV production: The company may lack the specific skills and
knowledge required for efficient EV manufacturing processes.
High initial costs of EVs compared to gasoline vehicles: This can be a barrier to entry
for some consumers, hindering market penetration.
Opportunities:
Growing market demand for EVs: Shifting consumer preferences towards
environmentally friendly transportation creates a significant market opportunity for
EVs.
Government incentives for EV adoption: Many governments offer tax breaks,
subsidies, and other incentives to promote EV sales, which can make EVs more
attractive to consumers.
Threats:
Competition from established EV manufacturers: Existing players like Tesla have a
head start in terms of experience and brand recognition in the EV market.
Potential changes in government regulations: Changes in government policies or
incentives could negatively impact EV sales.

TOWS Analysis:

SO (Strengths-Opportunities):
Leverage the strong brand reputation to promote EVs to existing customers and build
trust in the new technology.
Utilize technological expertise in battery development to create high-performance, long-
range EVs that address a key consumer concern.

WO (Weaknesses-Opportunities):
Partner with established EV manufacturers to gain production experience and
knowledge, while reducing initial investment costs.
Develop innovative financing options or leasing programs to make EVs more affordable
for a wider range of consumers.

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ST (Strengths-Opportunities):
Utilize existing manufacturing infrastructure and workforce for efficient EV
production, adapting current capabilities to the new technology.
Capitalize on government incentives to promote EV adoption through competitive
pricing strategies and marketing campaigns highlighting government support.

WT (Weaknesses-Opportunities):
Invest in research and development to improve battery technology, focusing on
reducing costs and extending driving range to address consumer concerns and
compete effectively.
Actively engage with policymakers to advocate for continued government support
for EVs, such as tax breaks or infrastructure investments in charging stations.

By analyzing both SWOT and TOWS frameworks, the EV manufacturer can develop a
comprehensive strategic plan. This plan can leverage the company's strengths and
brand reputation (SO), address its lack of experience through strategic partnerships
(WO), utilize its existing infrastructure for efficient production (ST), and proactively
address cost concerns through R&D and government relations (WT). By implementing
such a multi-faceted strategy, the EV manufacturer can increase its chances of success
in the ever-growing electric vehicle market.

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 VMOST FRAMEWORK
"Tactics without strategy is the noise before defeat."
- Sun Tzu

THEORY
This framework is used to define future
strategies and prepare a business plan.
It helps organizations establish a strong
foundation by defining their Vision,
Mission, Objectives, Strategy and
Tactics. These elements work together
to create a clear sense of purpose,
direction, and guiding principles.

1. Vision: Vision is the most

a critical part of the framework
and it sits at the top of the
triangle. In identifying
the vision for the company,
it is necessary to state
https://www.slidesalad.com/product/vmost-analysis-google-slides-template-diagrams/
very clearly where it is
going. Having done this, it is now necessary to analyze the vision by asking questions such as
"Will people throughout the company understand it?", "Is it engaging and achievable?".

2. Mission: Below the Vision in the triangle is Mission. Consultants and academics might
also call the mission “the purpose” of the company – why does it exist? What we are looking
for here in a mission or purpose is something that motivates people to want to work at the
company.

3. Objectives: Next the framework moves to Objectives which are the goals that must be
achieved to fulfill the mission. The goals should be specific, measurable, achievable, relevant
and timely (SMART).

4. Strategies: Goals do not just happen, they have to be made to happen and this requires
strategies. The strategy is the plan of action designed to achieve the long-term aim of the
company. It is the overall plan of how the company will play its business game.

5. Tactics: Tactics are the base of the pyramid. They are the detailed activities that will
ensure that the strategy is achieved. They are the moves in the game that can be adjusted
according to a changing business environment.

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 USE AND WORKING
For any organization to be successful, all five components should be well-aligned – whether
we view them from top to bottom or from bottom to top.
Looking from the top down, we need alignment because a clear vision drives the
mission – which, in turn, lets us set our objectives or goals to achieve that mission. We
design strategies to meet our objectives, and we implement our strategies with specific
tactics or activities.
Looking from the bottom up, our tactical actions should fulfil our strategies, which
help us meet our objectives, which help us accomplish our mission, which, in turn, helps
us realize our company's overall vision.
Benefits of a VMOST Framework
Clarity and Focus: A clear VMOST framework provides a shared understanding of the
organization's purpose and direction for all stakeholders, including employees,
customers, and investors.
Motivation and Engagement: A well-defined vision can inspire employees and
stakeholders to work towards a common goal. Values that resonate with employees can
create a sense of ownership and engagement.
Strategic Decision-Making: The VMOST framework can serve as a guiding light for
strategic decision-making, ensuring that all decisions are aligned with the organization's
overall goals and values.
Brand Identity: A strong VMOST framework can contribute to a positive brand
identity by communicating the organization's values and aspirations to the public.

INDUSTRY EXAMPLE
Green Revolution Organic Farm

Green Revolution Organic Farm (GROF) is a small, family-owned farm committed to

sustainable and ethical agricultural practices.
1. Vision: To be a leading model for sustainable and organic farming, inspiring a shift
towards a healthier food system.
2. Mission: To provide fresh, high-quality organic produce to local communities while
promoting environmental responsibility and fostering a connection between people and their
food.
Values:
Sustainability: Minimize environmental impact and promote long-term soil health.
Quality: Grow nutritious and flavourful produce free from harmful chemicals.
Community: Support local communities and build relationships with our customers.
Transparency: Operate with honesty and open communication.

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3. Objectives (SMART):
Increase organic vegetable sales by 20% within the next year.
Reduce water usage for irrigation by 15% within the next two years.
Develop and implement a community outreach program to educate 100 local
residents about organic farming practices within the next year.

4. Strategies:
Expand distribution channels: Partner with local restaurants and grocery stores to
increase product availability.
Implement water conservation techniques: Invest in drip irrigation systems and
rainwater harvesting methods.
Organize educational workshops and farm tours: Connect with the community
and share knowledge about organic farming.
5.Tactics:
Attend local farmers markets: Promote GROF products directly to consumers and
build relationships.
Develop a cooperative buying program: Offer subscription boxes to customers
with regular deliveries of seasonal produce.
Host "Farm-to-Table" dinners: Partner with local chefs to showcase the farm's bounty
and connect with food enthusiasts.
Create educational materials: Develop pamphlets and online content explaining
organic farming practices and the benefits of local produce.
Organize volunteer opportunities: Engage the community in farm activities and
promote hands-on learning.

By implementing the VMOST framework, GROF can achieve its vision of becoming a
leader in sustainable agriculture. Setting clear objectives, developing effective
strategies, and implementing concrete tactics ensure their commitment to providing
quality organic produce, protecting the environment, and fostering a strong
connection with the local community.

How this compares to Porter's Five Forces:

The VMOST framework focuses on internal factors that shape the organization's
culture and direction, while Porter's Five Forces analyses external competitive forces
in an industry. These frameworks work together - a strong VMOST foundation can
position a company to better navigate the competitive landscape identified by Porter's
Five Forces.
Note: We can conduct a VMOST analysis both for an existing business and for
proposed changes.

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 VRIO FRAMEWORK
An organization’s ability to learn, and translate that learning into action rapidly,
is the ultimate competitive advantage." — Jack Welch

THEORY
The VRIO framework is a strategic management tool that helps companies identify and
leverage their internal resources and capabilities to achieve a sustainable competitive
advantage. It's based on the premise that a firm's performance is driven by its unique
strengths, not just industry factors. VRIO stands for:
Valuable: Does the resource or capability create a benefit that customers are willing to
pay for?
Rare: Do few competitors possess this resource or capability?
Inimitable: Is it difficult or costly for competitors to imitate?
Organized: Can the company effectively organize and utilize its resources and
capabilities to capture value?

USE AND WORKING

The VRIO framework works by analyzing a company's resources and capabilities through
these four lenses. A resource or capability can be:

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Benefits of the VRIO Framework: A tool for internal analysis
Identifies Sources of Competitive Advantage: Helps companies understand what
truly makes them unique and valuable to customers.
Informs Strategic Decision-Making: Guides resource allocation decisions, focusing
on developing and leveraging VRIO resources.
Promotes Continuous Improvement: Encourages companies to constantly evaluate
and improve their resources and capabilities.

INDUSTRY EXAMPLE:
A Look at Starbucks (Illustrative Example, your analysis may vary):

Analysis:
Starbucks' brand recognition and Global Supply Chain are clear VRIO strengths, offering
a sustainable competitive advantage.
Its coffee expertise, sourcing & store experience have the potential to be VRIO strengths
but require continuous investment and effort to maintain its competitive edge.

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 BCG MATRIX
"There is nothing so useless as doing efficiently that which should not be done at
all." — Peter Drucker

THEORY

The BCG Matrix, developed by the Boston

Consulting Group is a strategic framework
used to analyze and categorize a business's
product portfolio based on market growth
and market share. This helps with
resource allocation, product development,
and overall portfolio management.

Always Remember: This market share is the

Relative Market Share of the company vis
a vis its competitors.

Further, it is important to note that the BCG

matrix is more like coordinate geometry https://www.professionalacademy.com/blogs/marketing-theories-boston-
consulting-group-matrix/
rather than just a classification grid. What
we mean by that is that although some
products may be stars but they may be so only by a thin margin (Just above the mid-point on
the growth axis), these may be products in a market that has a declining growth rate and may
convert into cash cows soon. Therefore, it becomes important to tweak to the strategy based
on the position rather than considering the products similar when they fall in the same grid.

The BCG Matrix is a 2x2 grid with market growth on the vertical axis (high or low) and market
share (high or low) on the horizontal axis. This creates four quadrants:

Stars: High market share in a high-growth market (e.g., iPhones for Apple). These
products are the stars of the company, generating high cash flow that can be used to invest
in further growth.
Cash Cows: High market share in a low-growth market (e.g., MacBooks for Apple).
These mature products generate significant cash flow that can be used to support Stars
and Question Marks.
Question Marks: Low market share in a high-growth market (e.g., Apple Watch for
Apple). These products have growth potential but require significant investment.
Dogs: Low market share in a low-growth market (e.g., iPods for Apple). These products
generate little cash and may require divestment or harvesting of remaining value.

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 USE AND WORKING
How it Works:
1. Identify Products: List all the products or services offered by the business.
2. Market Growth & Share: For each product, determine its market growth rate and
market share relative to competitors.
3. Positioning on Matrix: Plot each product on the BCG Matrix based on its market share
and growth.
4. Strategic Implications: Develop strategies for each quadrant:
Stars: Invest for continued growth and market share leadership.
Cash Cows: Maintain market position and maximize cash generation.
Question Marks: Decide whether to invest for growth or divest.
Dogs: Consider harvesting remaining cash flow or divestment.

Benefits of BCG Matrix:

Provides a simplified framework for portfolio analysis.
Helps with resource allocation decisions.
Identifies potential growth opportunities and challenges.
Promotes strategic product development and portfolio management.

INDUSTRY EXAMPLE:
Apple Products (Suggestive Example, real figures maybe different)

Here's a possible categorization of Apple products using the BCG Matrix:

Stars: iPhones - Dominant market share in the high-growth smartphone market.
Cash Cows: MacBooks - Strong market share in a mature laptop market, generating
steady cash flow.
Question Marks: Apple Watch - Growing market for smartwatches, but Apple faces
stiff competition. Requires investment to solidify market share.
Dogs: iPods - Declining market due to the rise of smartphones. Little to no growth
potential.

Strategic Implications for Apple:

Continue to invest in iPhone innovation and development to maintain its Star status.
Leverage MacBook's cash flow to support Question Marks like Apple Watch.
Consider phasing out iPods or harvesting the remaining value.

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 GE MCKINSEY MATRIX
"However beautiful the strategy, you should occasionally look at the results."
- Winston Churchill

THEORY
The GE McKinsey Matrix, also known as the GE Matrix or the 9-box matrix, is a strategic tool
used by businesses to evaluate their Strategic Business Units (SBU) based on two key factors:
Market Attractiveness: This assesses the overall health and growth potential of the
industry in an SBU operates. Factors like market size, growth rate, profitability, and
technological advancements are considered.
Competitive Strength: This evaluates the SBU's relative position within its industry.
This considers factors like market share, brand reputation, technological capabilities, and
cost structure compared to competitors.

What is an SBU? In the context of the GE McKinsey Matrix, a Strategic Business Unit (SBU)
is a distinct unit within a larger company that focuses on a particular product line or market
segment.

The following are the key characteristics of an SBU:

Focus: An SBU has a well-defined area
of business, often centred around a specific
product category or customer group. For
example, Hindustan Unilever Limited
(HUL) could have separate SBUs for soaps,
detergents, and personal care products.
Autonomy: While operating under the
umbrella of the larger company, an SBU
often has a degree of autonomy in its
decision-making. This allows it to be
nimbler and more responsive to the specific
dynamics of its market segment.
Profit and Loss (P&L) Responsibility:
Many SBUs are held accountable for their
own profitability. They track their revenue,
costs, and overall financial performance. https://www.cascade.app/blog/ge-matrix

Resources: An SBU may have its own

dedicated resources, including personnel, marketing budgets, and manufacturing facilities (if
applicable).
Strategic Alignment: The goals and strategies of an SBU should align with the overall
corporate strategy of the larger company.

25
Examples of SBUs:
A major bank might have separate SBUs for retail banking, investment banking, and
wealth management.
A consumer goods company could have SBUs for food and beverages, personal care
products, and household cleaning supplies.
A large automobile manufacturer might have SBUs for luxury cars, SUVs, and electric
vehicles.

By dividing a company into strategic business units, management can allocate resources
more effectively, tailor strategies to specific market segments, and empower individual units
to be more responsive and competitive within their areas of focus.

The Matrix Explained:

The GE McKinsey Matrix is a 3x3 grid with each axis divided into high, medium, and low.
This creates nine boxes, each representing a different strategic position for an SBU:

High Market Attractiveness & High Competitive Strength: These are ideal SBUs
with strong market positions in growing industries. Invest in these for further growth and
market leadership.
High Market Attractiveness & Medium Competitive Strength: These SBUs have
potential but may need investments to improve their competitive edge. Invest in growth
strategies to capture a larger market share.
High Market Attractiveness & Low Competitive Strength: These SBUs operate
in attractive industries but lack a strong position. Decide whether to invest heavily to
improve competitiveness or consider divesting.
Medium Market Attractiveness & High Competitive Strength: These SBUs are
mature businesses in stable industries, generating healthy cash flow. Milk these cash
cows to fund investments in other SBUs.
Medium Market Attractiveness & Medium Competitive Strength: These SBUs
are in a holding pattern. Monitor them closely and consider strategies to improve their
position or exit if the market weakens.
Medium Market Attractiveness & Low Competitive Strength: These SBUs may
not be worth keeping in the long run. Evaluate if there's potential for improvement or
consider divesting.
Low Market Attractiveness & High Competitive Strength: These SBUs operate
in declining industries but have a strong position. Extract maximum cash flow before
divesting.
Low Market Attractiveness & Medium Competitive Strength: These SBUs are
in a weak position in a declining industry. Divesting is often the best option.
Low Market Attractiveness & Low Competitive Strength: These SBUs offer little
potential and should be divested.

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 USE AND WORKING
How to Use the GE McKinsey Matrix:
1. Define Your SBUs: Identify the different business units within the required company.
2. Evaluate Market Attractiveness: Analyze industry trends, growth potential, and
profitability for each SBU's industry. Other factors can be Market Size, Level of
Competition etc. (Porter’s 5 Forces can be used)
3. Evaluate Competitive Strength: Assess each SBU's market share, brand reputation,
and cost structure compared to competitors. Other factors can be customer loyalty,
Strength of value chain and sustainable competitive advantages (VRIO can be used).
4. Plot SBUs on the Matrix: Based on your evaluations, position each SBU in the
appropriate box on the matrix.
5. Develop Strategies: Using the matrix as a guide, develop appropriate strategies for
each SBU (invest, grow, hold, harvest, or divest).

Benefits of the GE McKinsey Matrix:

Provides a structured approach to portfolio management.
Helps businesses prioritize investments and resource allocation.
Offers a visual framework for strategic decision-making.
Encourages consideration of both market dynamics and competitive position.

INDUSTRY EXAMPLE
Hindustan Unilever Limited (HUL) (Illustrative Example)

High Market Attractiveness & High Competitive Strength: Lux Soaps leverage a
strong brand and a growing personal care market in India.

High Market Attractiveness & Medium Competitive Strength: Surf Excel is the
market leader in detergents but faces competition from other established brands and private
labels. Investment in product innovation or marketing might be needed to maintain market
share.

High Market Attractiveness & Low Competitive Strength: Lever Ayush

Chyawanprash operates in a niche market (Ayurvedic health tonics) with significant growth
potential. HUL might need to invest in brand building and wider distribution to capitalize on
this opportunity. Horlicks Nutritional Drink is a recent example of a product undergoing a
relaunch to regain market share in the competitive health drink category

27
Medium Market Attractiveness & High Competitive Strength: Pepsodent has a
large market share in the toothpaste market but faces competition from established and
challenger brands. Its brand recognition and market share position it as a potential cash cow.

Medium Market Attractiveness & Medium Competitive Strength: Knorr Soups &
Instant Meals operate in a growing convenience food market but compete with regional
players and private labels. Growing awareness regarding healthy foods also impacts the
industry’s attractiveness.

Medium Market Attractiveness & Low Competitive Strength: While Kwality Walls
is a strong brand, ice cream is a seasonal market with competition from local players. HUL
might need to decide whether to strengthen its position through innovation or consider
divesting if the overall market weakens.

Low Market Attractiveness & High Competitive Strength (Hold or Divest): One
example of this can be modern foods which HUL divested due to low market attractiveness.

Low Market Attractiveness & Medium Competitive Strength: Brooke Bond tea can
fall in this category. Even though HUL has built up competitive advantage and brand
recognition in the area, the market is still flooded with local tea brands which are cheap and
hampers the profitability of the company.

Low Market Attractiveness & Low Competitive Strength: Pureit Water Purifier can
be an example of an SBU that falls in this category. HUL doesn’t have the competitive
prowess to fight against bigger players like Aquaguard and the market attractiveness in low
due to intense competition in the segment.

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 PORTERS GENERIC STRATEGIES
“Strategy is making trade-offs in competing. The essence of strategy is choosing
what not to do.”
― Michael E. Porter

THEORY

Michael Porter's Generic Strategies framework is a fundamental tool used by businesses to

achieve a competitive advantage in their industry. It outlines three core strategies that
businesses can adopt to outperform competitors:
1. Cost Leadership: This strategy focuses on minimizing costs throughout the value chain
to offer products or services at the lowest possible price. You may sell the lowest-priced
good for the set of features it offer (like Xioami) or you can disregard the competition by
giving the lowest price for the same goods (Like Walmart). Success here, hinges on
efficient operations, economies of scale, and leveraging cost advantages throughout
production and distribution. Controlling the value chain becomes very important for this
strategy.
2. Differentiation: This strategy emphasizes creating unique value propositions that
differentiate a business's offerings from competitors. Differentiation can be based on
factors like product features, brand image, customer service, or innovation. Apple, for
example, differentiates itself through its product design, unique OS and seamless
ecosystem. Tesla Differentiates itself through its focus on electric cars which are not
boring and feel like sports cars. Innovation and creating a perceived value of the product
are important here.
3. Focus: This strategy targets a specific market niche or customer segment. The business
tailors its offerings and operations to cater to the unique needs and preferences of this
focused market, achieving a competitive edge within that segment. Focus can be combined
with either Cost Leadership (cost focus) (Generic Auto Parts Manufacturers focusing on a
limited number of parts) or Differentiation (differentiation focus) (Ferrari Focusing on
extremely high-end customers).

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https://www.linkedin.com/pulse/porters-generic-strategies-competitive-advantage-hsint-hsint-sanda/
 USE AND WORKING

How it Works:
1. Industry Analysis: Analyze the industry's competitive landscape, cost structure, and
buyer behaviour.
2. SWOT Analysis: Do a SWOT analysis to determine the company’s strengths and
weaknesses (E.g., Do you have a state-of-the-art R&D department which will help you in
constant innovation or do you have control over the supply chain so that you can
negotiate the best prices for raw materials)
3. Choose a Generic Strategy: Select the strategy that best aligns with the company's
strengths, resources, and industry dynamics.
4. Implementation: Develop and implement strategies that support the chosen generic
strategy. (e.g., cost-cutting measures for cost leadership, product innovation for
differentiation, targeted marketing for focus)

INDUSTRY EXAMPLE
Practical Application for an Indian Firm: Let's consider a hypothetical Indian
company, "V Bikes".
V Bikes manufactures bicycles in a competitive Indian market. Here's how they can
utilize Porter's Generic Strategies: (We have to do an Industry and SWOT analysis before
choosing the below-mentioned strategies)
Cost Leadership: V Bikes could focus on streamlining production processes, using
cost-effective materials, and building strong relationships with suppliers to negotiate
lower prices. This strategy would allow them to offer bicycles at competitive prices,
appealing to budget-conscious customers.
Differentiation: V Bikes could differentiate itself by focusing on:
Innovation: Developing unique bicycle designs or incorporating innovative features.
Customization: Offering custom-built bicycles or a wide range of customization
options for customers.
Sustainability: Using eco-friendly materials and promoting sustainable practices
throughout the manufacturing process. This could appeal to environmentally conscious
consumers.
Focus: V Bikes could target a specific niche market within the bicycle industry, such as:
High-performance bicycles: Focus on manufacturing high-quality bicycles for
professional cyclists or enthusiasts.
Children's bicycles: Specialize in designing and manufacturing safe and fun bicycles
for children at a lower price than competition (Cost Focus)
Electric bicycles: Focus on the growing market for e-bikes, catering to customers
seeking a more eco-friendly and convenient mode of transportation.

30
Choosing the Right Strategy:
The best strategy for V Bikes depends on factors like:
Industry cost structure
Buyer behaviour in the target market
Company's strengths and resources

The Perils of Playing in the Middle: Why Companies Need a

Clear Strategy
Imagine a company trying to be everything to everyone - affordable yet luxurious, basic yet
innovative. This attempt to juggle all of Porter's strategies lands them squarely in "no man's
land" - stuck in the middle.
Here's why being stuck in the middle is not a viable strategy:
No Competitive Edge: Without a clear focus on cost leadership, differentiation, or
focus, the company lacks a distinct advantage.
Outmatched by Specialists: Cost leaders can offer lower prices, while differentiators
have unique features that attract customers. Stuck-in-the-middle companies struggle to
compete with either.
Profitability Problems: Unless the industry itself is booming or competitors are
equally lost, profitability becomes difficult. Balancing cost-cutting and differentiation
efforts can be expensive and ultimately unsuccessful.

Sometimes, even companies stuck in the middle can make good money. This can happen for
two reasons:

The industry is Booming: If the entire industry is booming, even average companies
can ride the wave of success and earn decent profits.
Everyone is stuck in the middle: If all their competitors are also stuck in the middle,
it creates a level playing field. In this scenario, an "average" company might still perform
adequately because they aren't facing strong competition. However, this phenomenon
usually subsides as industries mature.

But remember, these are exceptions! Generally, trying to be both a cost leader and offer
differentiation (low price and unique features) is very difficult. It's like trying to run a
marathon in flip-flops - not the best recipe for success.

Why Chasing All Rabbits is a Bad Idea?

Porter argues that each strategy requires a distinct approach. Offering the lowest price often
means sacrificing some features, while differentiation usually involves higher costs. Trying to
do both stretches resources thin and weakens your position.
Bottom Line: Companies that excel choose a lane and own it. They become the cost champion,
the innovative leader, or the niche master. A clear strategic direction is vital for sustainable
success.

31
 BOWMANS STRATEGY CLOCK
"There are many paths to the top, but some are shorter and less treacherous than
others."
- Michael Porter

THEORY
Bowman's Strategic Clock is a strategic positioning tool used to analyze a company's
competitive advantage based on two key dimensions:
Price: The relative price of a product or service compared to competitors.
Value Proposition: The perceived value offered to customers, including factors like
quality, features, brand image, and customer service.

This model of corporate strategy extends Porter's three strategic positions (Cost leadership,
Product differentiation, and Market segmentation) to eight, and explains the cost and
perceived value combinations many firms use, as well as identifying the likelihood of success
for each strategy. The framework is visualized as a clock with eight positions representing
different strategic approaches:

https://www.mindtools.com/a2rq300/bowmans-strategy-clock

32
1. Low Price/Low Value: Low-cost, low-quality products or services targeting price-
sensitive customers (e.g., Discount stores, discount airlines). This position targets
customers who are highly price-sensitive and prioritize affordability over features or
quality. They may be willing to compromise on brand recognition or durability.

2. Low Price: Competing primarily on price with little differentiation (e.g., Budget retail
chains). This position focuses on offering the lowest possible price in the market, often
achieved through economies of scale, efficient production processes, or limited features.

3. Hybrid (Moderate Price/Moderate Differentiation): Offering a balance between

price and value (e.g., Mid-range department stores). This position balances price and
value, offering a good balance of features and functionality at a reasonable price point. It
appeals to a broad customer base seeking practical solutions.

4. Differentiation: Competing on features, quality, brand image, or customer service at a

premium price (e.g., Luxury car brands). This position focuses on creating a unique value
proposition that sets the product apart from competitors. It may involve superior quality,
innovative features, cutting-edge technology, strong brand recognition, or exceptional
customer service.

5. Focused Differentiation: Targeting a specific niche market with a differentiated

offering at a premium price (e.g., High-end athletic apparel for a particular sport). This
position targets a specific niche market with a differentiated product offering. It caters to
customers who are willing to pay a premium for specialized features or cater to a specific
need.

6. High Price/Standard Product or Risky High Margins: Selling a standard product

at a high price, often relying on a brand image or limited competition (e.g., Designer
handbags). This position leverages a strong brand image or limited competition to charge
premium prices for a standard product. It carries the risk of losing customers to more
value-oriented alternatives or new entrants offering similar products at lower prices.

7. High Price/Low Value: Offering a high-priced product or service with limited perceived
value (e.g., Some overly-priced consultancy services). This position offers little perceived
value to justify its high price. It's generally not a sustainable strategy in the long run and
may rely on limited customer knowledge or lack of alternatives

8. Loss Leader/Undervalued: Selling a product or service at a loss to attract customers to

buy other, more profitable offerings (e.g., Mobile phone plans with heavily subsidized
phone costs). This position offers a standard product at a price that is not considered
particularly attractive to customers. It may struggle to compete with better value
propositions or lower prices offered by other players.

33
Positions 6, 7, and 8 are not viable competitive strategies in truly competitive
marketplaces. Whenever price is greater than perceived value we have an uphill battle on
our hands. There will always be competitors offering better quality products at lower
prices so we have to have our value and price aligned correctly.

When considering which competitive strategy to pursue, here are some questions we should
ask ourselves.
If we intend to compete on price:
Are we a price leader?
Can we sustain a cost leader position? Can we control our costs and sustain a good
margin?
Are we able to exploit all of the cost advantages available to us?
Can we balance low prices against the perception of too low value?
Is our cost advantage limited to one or a few small market segments? Are these segments
capable of sustaining our business, given the volume and margins we project?
If you intend to compete on perceived value:
Do we have a well-identified target market?
Do we understand what our target market truly values?
Are we aware of the perceived value of our competitor's products?
Are there areas of differentiation that we can capitalize on that others cannot easily copy?
Do we have alternate methods of differentiation in the event we lose our competitive
advantage in that area?

USE AND WORKING

Using Bowman's Strategic Clock:
1. Identify our company's position: Analyze your pricing strategy and perceived value
proposition to determine your location on the clock.
2. Evaluate your competitive landscape: Identify where your competitors are
positioned and how their offerings compare.
3. Develop strategic plans: Based on your position and industry dynamics, choose a
strategy to optimize your competitive advantage. This might involve:
Cost reduction: Improving efficiency to lower prices and compete effectively.
Differentiation: Enhancing your product or service to offer unique value.
Targeting: Focusing on specific market segments with tailored offerings.
Price adjustments: Repositioning your pricing strategy to better align with perceived
value.

Benefits of Bowman's Strategic Clock:

Simple and easy to understand: The visual framework allows for quick analysis and
communication of strategic positioning.
Focuses on customer value: It encourages companies to consider both price and
perceived value when making strategic decisions.
Identifies opportunities and threats: By analyzing the clock, companies can see
potential gaps in the market and areas where competitors are vulnerable.
34
 INDUSTRY EXAMPLE
Applying Bowman's Strategic Clock to the Indian Smartphone Market

The Indian smartphone market is a dynamic and competitive landscape. Here's how
Bowman's Strategic Clock can be used to analyze the positioning of different players:
1. Low Price/Low Value: This segment caters to the most budget-conscious consumers.
Feature phones with basic functionalities and low internet connectivity fall under this
category. Example: Reliance Jio's JioPhone series offers a basic phone with internet
access at a very affordable price point.
2. Low Price: Several Chinese smartphone brands like Xiaomi and Realme compete on
price. They offer smartphones with decent specifications at aggressive price points.
3. Hybrid (Moderate Price/Moderate Value): This segment is crowded with brands
like Samsung and Motorola offering a good balance of features and price. They cater to a
broad range of consumers looking for reliable smartphones without necessarily needing
the latest bells and whistles.
4. Differentiation: Apple stands out with its premium iPhone range, offering a strong
brand image, innovative features, and a seamless user experience. They charge a
premium price for this differentiation.
5. Focused Differentiation: OnePlus positions itself as a "flagship killer," offering high-
end specifications at a price point lower than traditional premium brands. They target
tech-savvy consumers who prioritize performance over brand name.
6. High Price/Standard Product or Risky High Margins: This position is less
common in the Indian market. Luxury brands with limited availability, like Vertu, might
fall into this category if their high price isn't justified by significant technological
advancements.
7. High Price/Low Value: This position is generally unsustainable. A phone with an
exorbitant price tag without features or brand recognition wouldn't find a significant
customer base in India.
8. Low Value/Standard Price: Offering a standard phone at an uncompetitive price
wouldn't be attractive to Indian consumers. Brands need to find a balance between price
and features to survive in this market.

Key Takeaways:
The Indian smartphone market is dominated by players competing on price and value.
Differentiation strategies like Apple's premium brand image or OnePlus' focus on
performance create a niche in the market.
Understanding competitor positions using Bowman's Strategic Clock helps companies
identify opportunities and develop strategies for sustainable growth.

The positions of various brands can change based on their latest offerings and market
dynamics.

35
 BALANCED SCORECARD
"The key is not to do business. The key is to understand your business."
- Jim Rohn

THEORY
The Balanced Scorecard (BSC) is a strategic management tool that translates an organization's
vision and mission into a comprehensive set of performance measures. It goes beyond
traditional financial metrics to assess performance across four key perspectives:

https://www.youtube.com/watch?v=C0JZdyb6hZE

Financial: Measures the financial health and profitability of the organization.

Objectives: Increase profitability, improve return on investment, and manage costs
effectively.
Metrics: Revenue growth, profit margin, return on investment (ROI), customer lifetime
value.
Customer: Measures customer satisfaction, loyalty, and how well the organization is meeting
customer needs.
Objectives: Increase customer satisfaction, acquire new customers, and improve customer
retention.
Metrics: Customer satisfaction scores, customer retention rate, market share, new
customer acquisition rate.
Internal Processes: Measures the efficiency and effectiveness of internal operations that
create value for customers.
Objectives: Improve process efficiency, reduce errors, and develop innovation capabilities.
Metrics: On-time delivery rate, product defect rate, production cycle time, and employee
productivity metrics.

36
Learning & Growth: Measures the organization's capability to learn, innovate, and adapt
to changing conditions.
Objectives: Develop employee skills and knowledge, improve employee satisfaction, and
foster a culture of innovation.
Metrics: Employee training hours, employee satisfaction scores, number of new product
launches, investment in research & development.

USE AND WORKING

The Balanced Scorecard Links Performance Measures
How do customers see us? (customer perspective)
What must we excel at? (internal perspective)
Can we continue to improve and create value? (innovation and learning perspective)
How do we look to shareholders? (financial perspective)

1. While giving senior managers information from four different perspectives, the balanced
scorecard minimizes information overload by limiting the number of measures used.
Companies rarely suffer from having too few measures. More commonly, they keep
adding new measures whenever an employee or a consultant makes a worthwhile
suggestion. The balanced scorecard forces managers to focus on a handful of the most
critical measures.
2. The scorecard guards against suboptimization. By forcing senior managers to consider all
the important operational measures together, the balanced scorecard lets them see
whether improvement in one area may have been achieved at the expense of another.

Benefits of the Balanced Scorecard:

Improved Strategic Alignment: Links everyday actions with long-term goals.
Performance Measurement: Provides a comprehensive view of organizational
performance beyond just financial metrics.
Communication & Focus: Ensures everyone in the organization is working towards
the same goals.
Strategic Learning & Improvement: Identifies areas for improvement and
facilitates continuous improvement processes.

Developing a Balanced Scorecard:

1. Define your vision and mission: What are you trying to achieve?
2. Identify strategic goals: What are the key objectives for each perspective?
3. Develop performance measures: How will you measure progress towards your goals?
4. Set targets: Define specific and measurable targets for each measure.
5. Implement and monitor: Track progress, analyze results, and make adjustments as
needed.

37
 INDUSTRY EXAMPLE
Telecom Company in India

The Indian telecom industry is a highly competitive landscape. Here's how a Balanced
Scorecard (BSC) can be applied:
Financial:
Objectives: Increase market share by 5% within the next year and improve return on
investment (ROI) by 3% within two years.
Metrics: Market share percentage, Customer acquisition cost (CAC), Average revenue per
user (ARPU).

Customer:
Objectives: Improve customer satisfaction score by 10% within the next year and reduce
customer churn rate by 2% within two years.
Metrics: Customer satisfaction surveys, Net Promoter Score (NPS), Customer complaints
resolution time.

Internal Business Processes:

Objectives: Reduce network downtime by 15% within the next year and improve data
network speed by 10% within two years.
Metrics: Network uptime percentage, Average data transfer speed, Number of new cell
towers deployed.

Learning & Growth:

Objectives: Increase employee training hours in new technologies by 20% within the next
year, Introduce a customer-centricity training program for all employees within six
months.
Metrics: Average number of training hours in new technologies per employee, Customer
satisfaction with employee interactions.

Strategic Alignment:
The financial objectives of increasing market share and ROI are supported by customer
acquisition and retention strategies reflected in the customer perspective.
Improving network performance and expanding coverage (internal processes) contribute
to customer satisfaction and market share growth.
Investing in employee training on new technologies and customer service (learning &
growth) empowers employees to deliver on the company's strategic goals.
By implementing a Balanced Scorecard, Indian telecom companies can achieve a
balanced view of their performance, improve customer loyalty, optimize operations, and
remain competitive in the dynamic telecom market.

38
 STRATEGY DIAMOND
"The key is not to do business. The key is to understand your business."
- Jim Rohn

THEORY
The Strategy Diamond, developed by Donald
Hambrick and James Fredrickson, is a
framework that helps businesses translate their
vision into actionable strategies. It focuses on
five key elements that must be aligned for a
successful strategy:

Arenas:
Definition: This element defines the
specific markets or customer segments
where the company will compete. It
involves choosing where to play and
identifying the battlegrounds for
competitive advantage.
Considerations: Market size, growth
potential, profitability, competition,
customer needs.

Vehicles:
Definition: This element describes how
the company will reach its target, markets. It encompasses the channels, distribution
methods, and resources used to deliver value to customers.
Examples: Direct sales force, online marketplaces, franchise network, partnerships.

Differentiators:
Definition: This element identifies the unique value proposition that sets the company
apart from competitors. It highlights the specific features, benefits, or competitive
advantages that attract and retain customers.
Examples: Product innovation, superior customer service, brand reputation, cost
leadership, operational efficiency.

Staging:
Definition: This element outlines the timing and sequencing of strategic initiatives. It
defines the pace of growth, resource allocation, and investment decisions across different
markets and product lines.
Considerations: Market maturity, resource availability, technological advancements,
competitive landscape.
39
Economic Logic:
Definition: This element explains how the chosen strategy will create sustainable
financial value for the company. It connects the other elements and demonstrates how
they contribute to achieving financial goals.
Considerations: Revenue streams, cost structure, profit margins, return on investment.

USE AND WORKING

The first three facets of the strategy diamond—arenas, differentiators, and economic logic—
might be considered the traditional facets of strategizing in that they cover the basics: (1)
external environment, (2) internal organizational characteristics, and (3) some fit between
them that has positive performance consequences. The fourth facet of the strategy diamond is
called vehicles. If arenas and differentiators show where we want to go, then vehicles
communicate how the strategy will get us there.
Internal development?
Joint ventures?
Licensing/franchising?
Alliances?
Acquisitions?

Benefits of the Strategy Diamond:

Clarity & Focus: Provides a clear and concise framework for strategy development.
Alignment: Ensures all strategic elements are aligned and support each other.
Communication: Simplifies communication of complex strategies to stakeholders.
Evaluation: Helps assess the internal consistency and potential effectiveness of a
strategy.

Limitations of the Strategy Diamond:

Oversimplification: Strategy development can be more nuanced than the five
elements represent.
Static View: The framework may not fully capture the dynamic nature of business
environments.
Implementation Focus: The Diamond emphasizes strategy development, not
necessarily implementation.

When to use the strategy diamond model

A strategy diamond is designed to help us consider the most important questions we’ll need
to answer when our team defines our business strategy. Organizing the strategy as a whole –
so that each part integrates with the others – helps us figure out our business’s goals and the
best way to achieve them.

40
 INDUSTRY EXAMPLE
Online Food Delivery Company

Arenas:
Focus on major metropolitan cities in India with high smartphone penetration and a
growing demand for convenience.

Vehicles:
Develop a user-friendly mobile app for ordering food.
Partner with a network of restaurants to offer a diverse menu selection.
Implement a robust delivery network with efficient logistics management.

Differentiators:
Offer a wide variety of restaurants and cuisines to cater to diverse customer preferences.
Provide fast and reliable delivery service within a promised timeframe.
Implement a user-friendly loyalty program to reward repeat customers.

Staging:
Initially focus on establishing a strong presence in a few key cities.
Gradually expand to smaller cities and explore partnerships with regional restaurant
chains.
Invest in technological advancements to improve app functionality and delivery efficiency.

Economic Logic:
Generate revenue through commission fees charged to restaurants on each order.
Leverage economies of scale to reduce delivery costs and maintain competitive pricing.
Offer subscription plans with additional benefits to increase customer loyalty and
recurring revenue.

By aligning these five elements, the online food delivery company can establish a robust
strategy for success in the competitive Indian market.

41
 ANSOFF MATRIX
"In real life, strategy is actually very straightforward. You pick a general
direction and implement like hell." — Jack Welch

THEORY
Ansoff Matrix: A Tool for Restaurant Growth Strategies
The Ansoff Matrix is a strategic framework used by businesses to identify growth
opportunities. It helps companies decide how to expand their market reach and product
offerings, considering both existing and new markets and products/services

The Matrix:
The Ansoff Matrix is a 2x2 grid with two dimensions:
Market: Existing Market (Current Customers) vs. New Market (New Customers)
Product/Service: Existing Products/Services vs. New Products/Services

https://awware.co/blog/ansoff-matrix/

This creates four quadrants, each representing a different growth strategy:

Market Penetration: Increase sales of existing products/services in the existing market.
Market Development: Introduce existing products/services to new markets.
Product Development: Develop new products/services for the existing market.
Diversification: Offer new products/services to new markets (highest risk, highest
potential reward strategy).

42
 USE AND WORKING
How it Works:
1. Analyze Current Situation: Identify the business's current products/services and
target market.
2. Evaluate Growth Options: Consider the feasibility and potential of each quadrant
based on the resources and market dynamics.
3. Develop Strategies: Choose suitable strategies and develop specific action plans for
each quadrant.

INDUSTRY EXAMPLE
Ansoff Matrix for Restaurant Business (Illustrative example, other strategies can be
perfectly viable as well)
Market Penetration:
Implement loyalty programs to encourage repeat business.
Offer happy hour specials or combo meals to attract new customers within the
existing market.
Host themed events or introduce seasonal menus to keep existing customers
engaged.

Market Development:
Offer delivery or takeout services to reach new customers in the local area.
Cater to corporate events or offer private dining options to tap into a new market
segment.
Expand to a new location with a similar target market.

Product Development:
Introduce new menu items like healthy options or plant-based dishes to cater to
evolving customer preferences.
Offer breakfast or brunch menus to expand your service hours and reach a new
customer base.
Develop a line of gourmet food products or meal kits for retail sale.

Diversification (high risk, but potentially high reward):

Open a fast-casual version of your restaurant with a more limited menu and lower
price points.
Launch a food truck to reach customers at events or new locations.
Partner with a grocery store to offer prepared meal options under your restaurant
brand.

43
Choosing the Right Strategy:
The most suitable strategy will depend on the restaurant's specific circumstances, resources,
and risk tolerance.
Market penetration and market development strategies are generally less risky as they
leverage existing products/services or target markets.
Product development and diversification involve more risk as they require investment in
new offerings or entering uncharted territory.

Benefits of Ansoff Matrix:

Provides a structured approach to identifying growth opportunities.
Helps businesses consider both existing and new markets/products.
Encourages strategic thinking about market expansion.

44
 DIFFUSION OF INNOVATION
"Innovation distinguishes between a leader and a follower."
- Steve Jobs

THEORY
The Diffusion of Innovation theory, developed by Everett Rogers, explains how, why, and at
what rate new ideas and technologies spread within a social system. It outlines a five-stage
decision-making process individuals go through when adopting an innovation:

1. Awareness: Individuals become aware of the innovation but lack detailed knowledge
about its benefits and functionalities.

2. Interest: Individuals develop a specific interest in the innovation and seek more
information to understand its potential value.

3. Evaluation: Individuals mentally weigh the pros and cons of adopting the innovation and
consider its applicability to their needs.

4. Trial: Individuals experiment with the innovation on a limited scale to assess its usefulness
and compatibility.

5. Adoption: Individuals decide to integrate the innovation fully into their routine and
behaviour if the trial proves successful.

https://www.smartinsights.com/marketing-planning/marketing-models/diffusion-innovation-model/

45
 USE AND WORKING
Categories of Adopters:

Innovators (Tech Enthusiasts): The first 2.5% who are eager to try new ideas and
technologies and want to be the first to try the innovation. They are venturesome and
interested in new ideas. These people are very willing to take risks and are often the first
to develop new ideas. Very little, if anything, needs to be done to appeal to this
population.
Early Adopters (Visionaries): The next 13.5% are opinion leaders and validate the
innovation for others. They enjoy leadership roles and embrace change opportunities.
They are already aware of the need to change and so are very comfortable adopting new
ideas. Strategies to appeal to this population include how-to manuals and information
sheets on implementation. They do not need information to convince them to change.
Early Majority (Pragmatics): The 34% who adopt after seeing successful
applications by early adopters. These people are rarely leaders, but they do adopt new
ideas before the average person. That said, they typically need to see evidence that the
innovation works before they are willing to adopt it. Strategies to appeal to this
population include success stories and evidence of the innovation's effectiveness.
Late Majority (Conservatives): The 34% who are more cautious and adopt only after
widespread acceptance. These people are skeptical of change, and will only adopt an
innovation after it has been tried by the majority. Strategies to appeal to this population
include information on how many other people have tried the innovation and have
adopted it successfully.
Laggards (Skeptics): The final 16% are very resistant to change and adopt innovations
only after they become the norm. These people are bound by tradition and very
conservative. They are very sceptical of change and are the hardest group to bring on
board. Strategies to appeal to this population include statistics, fear appeals, and pressure
from people in the other adopter groups.

Factors Influencing Diffusion:

Relative Advantage: The perceived benefit and value proposition of the innovation
compared to existing solutions.
Compatibility: The degree to which the innovation aligns with existing values, beliefs,
and practices.
Complexity: The ease of understanding and using the innovation.
Trialability: The ability to experiment with the innovation on a limited basis before full
adoption.
Observability: The visibility of the innovation's results and the experiences of others
who have adopted it.

46
Benefits of Diffusion of Innovation:
Helps predict the rate of adoption of new products, services, or ideas.
Provides insights into factors that influence user behaviour and decision-making.
Informs marketing and communication strategies for promoting innovation
adoption.

INDUSTRY EXAMPLE
Adoption of Electric Vehicles (EVs)
The transportation industry is witnessing a gradual shift towards electric vehicles (EVs). Let's
see how the Diffusion of Innovation framework applies:
Awareness: Consumers are becoming increasingly aware of EVs due to media coverage,
government incentives, and growing environmental concerns.
Interest: Rising fuel prices, environmental consciousness, and technological advancements
pique consumer interest in EVs.
Evaluation: Potential EV adopters assess factors like charging infrastructure, range anxiety,
upfront costs, and potential savings compared to gasoline vehicles.
Trial: Consumers may take test drives, participate in car-sharing programs with EVs, or rent
EVs for short periods to experience the technology firsthand.
Adoption: Those who find EVs to be a viable alternative to gasoline vehicles fully integrate
them into their transportation needs.

Factors Influencing Adoption:

Relative Advantage: Lower operating costs, environmental benefits, and government
incentives.
Compatibility: Charging infrastructure availability, and compatibility with daily driving
needs.
Complexity: Ease of use of charging stations, understanding of EV technology.
Trialability: Availability of EV test drives and car-sharing programs.
Observability: Positive experiences shared by early adopters, media coverage of EV
benefits.

Marketing Strategies:
Focus on the relative advantage of EVs (environmental benefits, cost savings).
Address concerns about range anxiety and charging infrastructure availability.
Highlight the ease of use and growing compatibility of EVs with daily lifestyles.
Partner with car-sharing companies to offer EV trial opportunities.
Showcase positive experiences and testimonials from early EV adopters.

By understanding the Diffusion of Innovation framework and the categories of adopters,

businesses in the EV industry can develop targeted marketing strategies to accelerate EV
adoption and cater to the needs of different user segments.

47
 INDUSTRY LIFECYCLE
"In preparing for battle I have always found that plans are useless, but planning
is indispensable." - Dwight D. Eisenhower

THEORY
The Industry Life Cycle Model is a framework that depicts the stages of growth, maturity, and
decline that an industry goes through over time. It helps businesses understand their
competitive landscape, identify potential opportunities and threats, and formulate strategic
plans for different stages of the industry lifecycle

https://www.shiksha.com/online-courses/articles/industry-life-cycle-blogId-151313

Stages of the Industry Life Cycle:

1. Embryonic Stage: The industry is in its early stages, characterized by:
Technological innovation: New products or services are emerging.
Uncertain market demand: Customer needs and preferences are not fully established.
Few competitors: Limited competition exists.
2. Growth Stage: The industry experiences rapid growth due to:
Increasing market demand: Customer adoption accelerates as the value proposition
becomes clearer.
Product standardization: Industry standards and dominant designs emerge.
Entry of new competitors: Attracted by the growth potential, new players enter the
market.
3. Maturity Stage: The industry reaches a peak in growth:
Stable market demand: Demand plateaus or grows slowly.
Product differentiation: Competition focuses on features and branding to differentiate
products.
Consolidation: Mergers and acquisitions occur as companies seek economies of scale.
4. Decline Stage: The industry experiences a decrease in demand:
Technological substitution: New technologies emerge, posing a threat to existing
products.
Saturation: The market becomes saturated, with limited growth opportunities.
Exit of competitors: Less profitable companies may exit the market.

48
 USE AND WORKING
How to Use the Model:

1. Identify the Industry Stage: Analyze the industry's current characteristics to

determine its stage in the life cycle.
2. Competitive Landscape: Understand how the competitive landscape evolves at each
stage (e.g., fewer competitors in the embryonic stage, consolidation in maturity).
3. Strategic Implications: Develop strategies that align with the industry's stage:
Embryonic Stage: Focus on innovation, building brand awareness, and securing
market share.
Growth Stage: Expand production capacity, invest in marketing and distribution, and
maintain a competitive edge.
Maturity Stage: Optimize costs, focus on product differentiation, and explore
diversification opportunities.
Decline Stage: Harvest cash flow, consider product line rationalization or explore
strategic exits.

INDUSTRY EXAMPLE
Automobile Industry Life Cycle (For Illustrative Purpose)
The automobile industry is a mature industry, but it's currently undergoing significant
transformation due to several factors:
Embryonic Stage: The early 1900s saw the invention of the automobile and the
emergence of car manufacturers like Ford and General Motors.
Growth Stage: The mid-20th century witnessed mass production and increased
affordability, leading to rapid growth.
Maturity Stage: The latter half of the 20th century saw a focus on fuel efficiency, safety
features, and brand differentiation.
(Shifting towards): New Era: The industry is now facing disruption driven by:
Technological advancements: Electric vehicles, autonomous driving, and connected
car technologies.
Environmental concerns: Growing demand for cleaner and more sustainable
transportation solutions.

Strategic Implications for Automakers:

Invest in R&D: Develop electric vehicles, and autonomous driving technologies, and
improve fuel efficiency.
Embrace new business models: Explore car-sharing services and subscription
models.
Sustainability focus: Develop eco-friendly manufacturing processes and source
sustainable materials.
Partnerships: Collaborate with technology companies to accelerate innovation.

49
 PRODUCT LIFECYCLE
"Success breeds complacency. Complacency breeds failure. Only the paranoid
survive." - Andy Grove

THEORY
The Product Life Cycle (PLC) model is a marketing framework that describes the stages a
product goes through in its journey from introduction to decline. It helps businesses
understand the characteristics of each stage and develop appropriate marketing strategies for
each phase. Here's the framework following the prompt's format:

https://haltian.com/resource/new-product-development-cycle-infographic/

USE AND WORKING

The Product Life Cycle (PLC) model is a marketing framework that describes the stages a
product goes through in its journey from introduction to decline. It helps businesses
understand the characteristics of each stage and develop appropriate marketing strategies for
each phase. Here's the framework following the prompt's format:

1. Introduction Stage:
Characteristics: The product is new and entering the market. Sales volume is low, and
customer awareness is limited. Pricing is often high due to research and development
(R&D) costs.
Marketing Strategies: Focus on creating awareness, building brand image, and generating
excitement through product launch campaigns, and premium pricing to recoup
development costs.
Challenges: High marketing and R&D costs, limited brand awareness, and competition
from established products.
Similarity to Porter's Five Forces: This stage may face a high threat of new entrants offering
similar products, but the bargaining power of buyers and suppliers is likely lower due to
limited competition and established supplier relationships.
50
2. Growth Stage:
Characteristics: Sales volume rapidly increases as the product gains market acceptance.
Pricing may stabilize or decrease slightly as production costs become more efficient.
Marketing Strategies: Focus on brand building, expanding distribution channels, and
attracting new customer segments.
Challenges: Managing rapid growth, facing increased competition from entrants who see
the product's success.
Similarity to Porter's Five Forces: The threat of new entrants and the bargaining power of
buyers may increase in this stage due to the product's growing popularity.

3. Maturity Stage:
Characteristics: Sales volume reaches its peak and then starts to plateau. The market
becomes saturated, and competition intensifies. Pricing becomes a key differentiator.
Marketing Strategies: Focus on product differentiation, cost reduction, brand loyalty
programs, and exploring new market applications for the product.
Challenges: Maintaining market share, facing intense competition on price and features,
and potential product commoditization.
Similarity to Porter's Five Forces: The bargaining power of both buyers and suppliers may be
higher in this stage due to increased competition and product maturity.

4. Decline Stage:
Characteristics: Sales volume and profitability decline as customer preferences shift
towards newer products. The product may be phased out or repositioned for niche
markets.
Marketing Strategies: Reduce costs, minimize marketing expenses, consider product line
rationalization or harvesting remaining sales.
Challenges: Managing declining sales and profitability, deciding when to discontinue the
product.
Similarity to Porter's Five Forces: The threat of substitutes is highest in this stage as newer
products become readily available.

Benefits of the Product Life Cycle Model:

Provides a framework for understanding product market dynamics.
Helps in developing effective marketing strategies for each stage of the product life cycle.
Assists in resource allocation decisions for product development, marketing, and pricing.

Limitations of the Product Life Cycle Model:

The model is a simplification and may not apply perfectly to all products.
The duration of each stage can vary significantly across different product categories.
The model may not account for unexpected market changes or product innovations that
can revitalize a declining product.

51
 INDUSTRY EXAMPLE
Smartphone Industry

The smartphone industry is a highly dynamic market with a rapid product life cycle:
1. Introduction Stage:
New smartphone models are launched with cutting-edge features and technologies.
High initial pricing due to research and development costs.
Limited brand awareness for new entrants.
Marketing Strategies: Focus on creating buzz through innovative features, celebrity
endorsements, and exclusive pre-order offers. (Similar to Porter's Five Forces: Consider the
threat of new entrants with disruptive technologies.)

2. Growth Stage:
Rapid sales growth as the product gains popularity.
More competition enters the market with similar features at competitive prices.
Manufacturers focus on expanding distribution channels and carrier partnerships.
Marketing Strategies: Emphasize brand differentiation through marketing campaigns,
highlight unique selling propositions, and offer attractive data plans with carrier partners.
(Similar to Porter's Five Forces: Address the bargaining power of buyers and the threat of
substitutes by offering compelling features and value propositions.)

3. Maturity Stage:
Sales growth slows down as the market becomes saturated.
Intense competition leads to price wars and focus on cost reduction.
Manufacturers may introduce minor upgrades or budget-friendly versions of the
smartphone.
Marketing Strategies: Target specific customer segments with customized features (e.g.,
camera-centric phones for photography enthusiasts). Offer loyalty programs and upgrade
incentives to retain existing customers. (Similar to Porter's Five Forces: Strategies to counter
the bargaining power of buyers and the threat of substitutes become crucial in this stage.)

4. Decline Stage:
Sales decline significantly as newer models with advanced features are introduced.
Manufacturers may offer significant discounts or discontinue the product.

Marketing Strategies: Clearance sales to maximize remaining inventory, focus on selling

accessories and services related to the product. (Similar to Porter's Five Forces: The threat of
substitutes is particularly strong in this stage.)
By understanding the product life cycle and its connection to Porter's Five Forces,
smartphone manufacturers can develop strategic marketing approaches for each stage,
maximizing product success and profitability throughout its lifecycle.

52
 BLUE OCEAN STRATEGY
"Winning should be at the heart of every strategy."
— A.G. Lafley & Roger L. Martin

THEORY
Imagine a vast ocean teeming with various participants, there is so much competition that the
waters have become red with the blood of constant battles - that's the Red Ocean. Now, picture
a calm, unexplored expanse, no creature other than you exists, and you have a lucid landscape
to rule that’s the Blue Ocean. The Blue Ocean Strategy is all about creating new market
spaces, not competing in existing ones. Here's a breakdown of the key concepts:
Red Oceans vs. Blue Oceans:
Red Ocean: Existing industries where companies compete head-to-head, often leading
to price wars and shrinking profits.
Blue Ocean: Unexplored market space, creating new demand and high profitability.
Companies create and capture new value, rather than competing for existing value.

https://www.blueoceanstrategy.com/tools/red-ocean-vs-blue-ocean-strategy/

The Strategy Canvas: A Tool for Blue Ocean Exploration

The Strategy Canvas is a visual tool used to analyze the current state of competition in an
industry and identify opportunities for creating a Blue Ocean. It captures the factors
companies compete on and the value proposition delivered to customers.

Key Components of the Strategy Canvas:

Value Propositions: The factors companies offer to customers (e.g., features, services,
price).
Customer Value: How well these factors are perceived by customers (e.g., high quality, low
cost, convenience).
53
 USE AND WORKING
Using the Strategy Canvas:

1. Identify Competing Factors: List the key factors companies compete on within your
industry. (E.g., For Wines they can be Wine Age, Price, Complexity, Ease of access, Ease
of selection, Retail store involvement etc.).
2. Customer Value Rating: Rate the level of customer value offered on each factor (high,
medium, low).
3. Strategic Differentiation: Analyze the canvas to identify areas for differentiation
(offering a higher level of a desired factor) or elimination (removing factors customers
don't value). The company can use the ERRC framework to Eliminate, Reduce, Raise
and Create various factors according to customer study and make the industry less
competitive for itself. For Example, the wine manufacturer may eliminate the ageing
criteria to compete on, it may reduce wine complexity, raise retail store involvement and
create ease of selection.

https://www.blueoceanstrategy.com/blog/strategy-canvas-examples/%20)

54
 INDUSTRY EXAMPLE
How Marvel Created a Blue Ocean:

Red Ocean: The traditional comic book industry relied on high prices and complex
storylines, appealing to a limited audience.

Blue Ocean: Marvel created a Blue Ocean by:

Focusing on Characters: They emphasized relatable superheroes with flaws and real-
world struggles, broadening their appeal.
Crossover Events & Shared Universe: They created interconnected storylines across
different comic books, increasing reader engagement.
Movie Adaptations: They leveraged movies to expand their audience and brand further.

Marvel's Blue Ocean Strategy resulted in:

Increased Market Share: Marvel attracted new readers who weren't interested in
traditional comics.
Higher Profitability: They created a loyal fan base willing to pay for comics, movies, and
merchandise.

Key Takeaways:

The Blue Ocean Strategy encourages companies to look beyond existing competition.
The Strategy Canvas helps visualize opportunities for creating uncontested market space.
Companies that successfully create Blue Oceans achieve sustainable growth and high
profitability.

55
 KOTTER’S 8 STEP CHANGE MODEL
"The key is not to do business. The key is to understand your business."
- Jim Rohn

THEORY
John Kotter’s 8-step change model is a
popular framework for successfully
implementing organizational change and is
used across many industries. Change can
come as new technologies, mergers, and
acquisitions, new strategies, cultural
transformation, etc.
The 8 Steps in Kotter’s Change Model

1. Creating a Sense of Urgency

2. Putting Together a Guiding Coalition
3. Developing Vision and Strategies
4. Communicating the Change Vision
5. Remove Barriers to Action
6. Accomplish Short-Term Wins
7. Build on the Change
8. Make Change Stick
https://creately.com/blog/strategy-and-planning/kotters-8-step-change-model/

Implementing change isn’t always easy. Barriers can come in various forms; lack of
teamwork or leadership, rigid workplace cultures, arrogant attitudes, general human fear,
etc. can disrupt any change implementation project.

USE AND WORKING

Kotter highlights 8 steps organizations should follow to overcome such challenges and put
large-scale change into effect successfully. Following these steps will ensure that at the end of
the process, the organization will not only be prepared but also be committed to embracing
the changes.
1. Create a Sense of Urgency:
Actions: Highlight the burning platform, the need for change, and the potential
consequences of inaction. Use data, stories, and compelling communication to create a
sense of urgency among employees.
Similar to Porter's Five Forces: Analyze external threats and internal weaknesses to
demonstrate the urgency for change.

56
2. Form a Powerful Guiding Coalition:
Actions: Assemble a diverse group of leaders from different departments and levels who
are committed to the change vision. They will champion the initiative and guide its
implementation.
Similar to Porter's Five Forces: Consider including representatives from departments
most impacted by the change to ensure a well-rounded perspective.

3. Develop a Vision and Strategy:

Actions: Craft a clear, inspiring vision for the desired future state of the organization.
Develop a detailed strategy outlining the steps to achieve that vision.
Similar to Porter's Five Forces: Consider how the vision and strategy will address the
competitive landscape and industry trends identified in Porter's Five Forces analysis.

4. Communicate the Change Vision:

Actions: Effectively communicate the vision and strategy to all employees using various
channels. Foster open communication and address concerns to build buy-in.
Similar to Porter's Five Forces: Communicate how the change will benefit employees and
ensure their job security in the changing landscape.

5. Empower Broad-Based Action:

Actions: Remove barriers and empower employees at all levels to participate in the
change process. Provide training and resources to help them develop the skills and
knowledge needed for the new way of working.
Similar to Porter's Five Forces: Consider how the change might impact different
employee roles based on the competitive landscape analysis.

6. Generate Short-Term Wins:

Actions: Identify and celebrate early wins to demonstrate the progress and benefits of the
change. This keeps employees motivated and reinforces the value of the initiative.
Similar to Porter's Five Forces: Short-term wins can showcase how the change helps
navigate the competitive landscape more effectively.

7. Consolidate Gains and Produce More Change:

Actions: Use the momentum from short-term wins to drive further change initiatives.
Refine the vision and strategy as needed based on learnings and feedback.
Similar to Porter's Five Forces: Continuously monitor the external environment and
adjust the change strategy if necessary to maintain a competitive advantage.

8. Anchor New Approaches in the Culture:

Actions: Integrate the new behaviours, processes, and values into the company culture.
Recognize and reward employees who embrace the change and champion new ways of
working.
Similar to Porter's Five Forces: A culture that embraces change allows the organization to
adapt and remain competitive in the long run.
57
 INDUSTRY EXAMPLE
Healthcare Industry Adopting Telemedicine

The healthcare industry has witnessed a surge in telemedicine adoption due to advancements
in technology and the growing demand for convenient access to healthcare services. Let's see
how Kotter's 8-Step Change Model can be applied in this scenario:

1. Create a Sense of Urgency:

Highlight the benefits of telemedicine for patients (convenience, reduced wait times,
access to specialists) and the healthcare system (increased efficiency, cost savings).
Showcase data on patient satisfaction with existing telemedicine pilot programs.
Emphasize the potential for improved patient outcomes through remote monitoring and
early intervention.

2. Form a Powerful Guiding Coalition:

Assemble a team with representatives from physicians, nurses, IT specialists, insurance
companies, and patient advocacy groups.
Ensure the team has a strong understanding of telemedicine technology and its potential
impact on different stakeholders.

3. Develop a Vision and Strategy:

Vision: To become a leader in delivering high-quality healthcare services through a
comprehensive telemedicine platform.
Strategy: Develop a user-friendly telemedicine platform for patient consultations, remote
monitoring, and e-prescriptions.
Invest in training for healthcare professionals on effectively utilizing telemedicine tools.
Establish clear policies and protocols for telemedicine consultations, data privacy, and
reimbursement.

4. Communicate the Change Vision:

Communicate the vision and strategy to all healthcare professionals, patients, and
insurance companies.
Address concerns about job security for healthcare workers and emphasize the potential
for new roles in telemedicine.

5. Empower Broad-Based Action:

Train physicians and nurses on conducting effective teleconsultations and using
telemedicine technology.
Provide technical support and resources to healthcare professionals to ensure smooth
adoption of telemedicine.

58
6. Generate Short-Term Wins:
Launch pilot telemedicine programs for specific patient populations or medical
conditions.
Celebrate successful outcomes achieved through telemedicine consultations.

7. Consolidate Gains and Produce More Change:

Expand telemedicine services to cover a wider range of healthcare needs.
Integrate telemedicine data with electronic health records (EHR) for improved patient
care coordination.
Develop innovative applications of telemedicine, such as remote mental health services.

8. Anchor New Approaches in the Culture:

Promote collaboration between in-person and telemedicine healthcare teams.
Recognize and reward healthcare professionals who champion telemedicine and
demonstrate excellence in its use.
Foster a culture of continuous learning and adaptation to keep pace with evolving
telemedicine technologies and best practices.

By following Kotter's 8-Step Change Model and considering the competitive landscape (e.g.,
the emergence of new healthcare delivery models), the healthcare industry can effectively
integrate telemedicine into its operations, improve access to care for patients, and optimize
healthcare delivery.

59
 DECISION MAKING MATRIX
"In the world of business, the people who are most likely to succeed are those
who have a good sense of what to refuse." - James C. Collins

THEORY
The decision-making matrix is a visual tool that helps evaluate and compare multiple options
based on a set of pre-defined criteria. It facilitates a structured approach to decision-making
by considering the strengths and weaknesses of each option against the established criteria.
Also called: Pugh matrix, decision grid, selection matrix or grid, problem matrix, problem
selection matrix, opportunity analysis, solution matrix, criteria rating form, criteria-based
matrix

USE AND WORKING

When to use a decision matrix
When a list of multiple but similar options must be narrowed to one choice
When the decision must be made based on the evaluation of several criteria

Typical situations are:

When one improvement opportunity or problem must be selected to work on
When only one solution or problem-solving approach can be implemented
When only one new product can be developed

1. Define the Decision: Clearly identify the problem or opportunity requiring a decision.

2. Identify Options: List all the potential courses of action you are considering.

3. Establish Criteria: Determine the key factors that are important when making the
decision. These criteria should be relevant to the specific decision and may include:
Financial considerations (cost, profitability, ROI)
Strategic fit (alignment with overall goals)
Operational feasibility (resources, skills, timeline)
Risk assessment (potential downsides of each option)
Market impact (customer needs, competitive landscape)

4. Weight the Criteria: Assign weights to each criterion reflecting its relative importance in
the decision-making process. The sum of all weights should equal 1 (or 100%).

5. Evaluate the Options: Score each option against each criterion based on a predetermined
scale (e.g., 1-5, low-high).

60
6. Calculate the Weighted Score:
Multiply the score for each option by the corresponding weight for each criterion.
Sum the weighted scores for each option across all criteria.

7. Analyze and Choose:

Analyze the weighted scores and consider qualitative factors not captured in the matrix.
Choose the option with the highest overall score, considering both quantitative and
qualitative factors.
The decision-making matrix allows us to incorporate relevant aspects from the
competitive landscape (e.g., customer needs, threat of substitutes) as criteria when
evaluating different options.

Benefits of the Decision-Making Matrix:

Provides a structured and systematic approach to decision-making.
Facilitates clear communication and comparison of different options.
Helps identify trade-offs between different criteria.

Limitations of the Decision-Making Matrix:

Relies on the subjective weighting of criteria and scoring of options.
May not capture all relevant factors or nuances of a complex decision.

INDUSTRY EXAMPLE
Airline Industry – Choosing a New Long-Haul Aircraft
Decision: Airline XYZ is deciding which new long-haul aircraft to add to its fleet to meet
increasing passenger demand for long-distance travel.
Options:
Option 1: Aircraft A – Large, fuel-efficient aircraft with high passenger capacity.
Option 2: Aircraft B – Smaller, more maneuverable aircraft with lower operating costs.
Option 3: Aircraft C – Newest model with cutting-edge technology and passenger
amenities.

Criteria and Weighting:

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Decision: Airline XYZ might decide to:
Negotiate with the manufacturer of Aircraft C to potentially reduce operating costs.
Conduct a route analysis to identify which routes would benefit most from the increased
passenger capacity of Aircraft A.
Develop a pricing strategy to potentially charge premium fares for flights on Aircraft C to
offset its higher operating costs.

By using the decision-making matrix alongside Porter's Five Forces analysis, Airline XYZ can
make a well-informed choice that considers both quantitative and qualitative factors,
operational efficiency, and the competitive landscape, ensuring the new aircraft contributes
to its long-term success.

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 TRIPLE BOTTOM LINE
"The earth has enough for everyone's need, but not for everyone's greed." -
Mahatma Gandhi

THEORY
The triple bottom line is a business concept that states firms should commit to measuring
their social and environmental impact—in addition to their financial performance—rather
than solely focusing on generating profit, or the standard “bottom line.”
The triple bottom line can be broken down into “3 P's”: profit, people, and the planet.
Firms can use these categories to conceptualize their environmental responsibility and
determine any negative social impacts to which they might be contributing.
From there, companies can integrate sustainable practices into every facet of their business
operations—including supply chains, business partners, and renewable energy usage—to
positively impact society and the environment in addition to turning a profit.

USE AND WORKING

1. People (Social):
Focus: Employee well-being, diversity
and inclusion, community
engagement, ethical sourcing,
responsible labour practices, customer
satisfaction, and social impact
initiatives.
Metrics: Employee turnover rate,
safety record, training hours, diversity
statistics, community investment,
customer satisfaction surveys, and
social impact measurement.

2. Planet (Environmental): https://online.hbs.edu/blog/post/what-is-the-triple-bottom-line

Focus: Resource efficiency, energy consumption, waste reduction, pollution control,

climate change mitigation, sustainable resource sourcing, and environmental restoration
efforts.
Metrics: Carbon footprint, water usage, waste generation, recycling rates, use of
renewable energy, environmental certifications.

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3. Profit (Financial):
Focus: Traditional financial performance measures such as profitability, revenue growth,
return on investment, and shareholder value.
Metrics: Profit margins, revenue growth rate, return on equity (ROE), return on
investment (ROI), shareholder value metrics.
Overall, the TBL model encourages businesses to consider the long-term sustainability of
their operations and their impact on society and the environment.

INDUSTRY EXAMPLE
Sustainable Clothing Brand

A sustainable clothing brand can utilize the TBL model as follows:

People (Social): Fair wages and working conditions for garment workers, use of organic
cotton and recycled materials, commitment to diversity and inclusion within the company.
Planet (Environmental): Reduce water usage in textile production, minimize energy
consumption throughout the supply chain, and minimize waste generation through
efficient manufacturing processes.
Profit (Financial): Charge a premium for sustainable clothing that resonates with
environmentally conscious consumers, achieve cost savings through resource efficiency,
and build brand loyalty through strong social and environmental practices.

By focusing on all three aspects of the Triple Bottom Line, the clothing brand can achieve
financial success while minimizing its environmental impact and ensuring ethical labour
practices. This approach can also help the brand differentiate itself in a competitive market
and attract customers who value sustainability.

Additionally, a TBL analysis alongside Porter's Five Forces can help the clothing brand
identify opportunities and threats:
Opportunities: Growing consumer demand for sustainable clothing, the potential for
partnerships with other eco-conscious brands, and government incentives for
environmentally friendly businesses.
Threats: Higher production costs due to sustainable practices, competition from
established brands that may not prioritize sustainability, and potential for greenwashing
by competitors.

By considering both frameworks, the sustainable clothing brand can make informed decisions
about its business strategy, ensuring long-term success and positive social and environmental
impact.

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 MILES AND SNOW FRAMEWORK
“Between stimulus and response there is a space. In that space is our power to
choose our response”
-Viktor E Frankl

THEORY
The Miles and Snow framework is a strategic management tool that helps organizations
categorize their overall strategy based on how they respond to their environment. It proposes
that firms can be classified into four types based on two key dimensions:
Competitive Environment: Is it stable or dynamic (changing rapidly)?
Internal Organization: Is there an emphasis on exploration (innovation) or
exploitation (efficiency)?

These dimensions create a matrix with four quadrants, each representing a different strategic
type:
Prospectors: Thrive in dynamic environments by actively seeking new market
opportunities and innovations. They are comfortable with taking risks.
Defenders: Operate in stable environments with a focus on efficiency and cost
leadership. They prioritize maintaining their market share.
Analyzers: Combine elements of prospecting and defending. They adapt their strategies
based on the situation, balancing innovation with efficiency.
Reactors: Lack a clear strategic direction and react passively to environmental changes.
They are often less successful than the other types.

By understanding their strategic

type, organizations can make
better decisions about resource
allocation, competitive positioning,
and overall strategic direction.
Here are some additional points to consider:
The Miles and Snow framework
is a useful starting point for
strategic analysis, but it's
not a rigid classification system.
Organizations may exhibit
characteristics of more than one type.
The framework can be used alongside https://www.linkedin.com/posts/rosse-partners-certified-public-accountants_some-
old-things-are-too-good-to-forget-this-activity-7024072828622680064-A3K6/
other strategic management tools like
Porter's Five Forces to gain a more comprehensive understanding of the competitive
landscape.

Overall, the Miles and Snow framework provides a valuable framework for organizations to
assess their strategic posture and make informed strategic choices.

65
 USE AND WORKING
Miles and Snow framework can be applied by the following steps:
Step 1: Analyze the Competitive Environment
Stability: Evaluate the rate of change in your industry. Consider factors like technological
advancements, customer preferences, and competitor activity.
Stable: If the environment changes slowly, predictability is key. Focus on factors like
market share, cost efficiency, and maintaining existing products.
Dynamic: Rapid changes require constant innovation and adaptation. Look for new
market opportunities, embrace new technologies, and be comfortable with some level
of risk.
Industry Structure: Analyze the level of competition, fragmentation, and market
maturity.
Highly Competitive: Requires aggressive strategies to gain market share and defend
against rivals.
Fragmented: Opportunities for niche strategies and specialization may exist.
Mature: Focus on cost leadership and process optimization.

Step 2: Assess Internal Organization

Strategic Orientation: Evaluate your organization's preference for exploration or
exploitation:
Exploration: Focuses on innovation, research and development, and seeking new
opportunities. It involves a willingness to take risks and experiment.
Exploitation: Prioritizes efficiency, cost reduction, and maximizing returns from
existing products and processes.

Step 3: Identify Your Strategic Type

By combining your analysis of the environment and internal organization, you can identify
your strategic type using the Miles and Snow framework:

Prospectors: Thrive in dynamic environments and focus on exploration. They actively

seek new markets, technologies, and opportunities. Traits include:
Strong R&D focus
Willingness to take risks
Adaptable and flexible structure
Examples: Tech startups, pharmaceutical companies developing new drugs

Defenders: Operate in stable environments and prioritize exploitation. They focus on

cost leadership, maintaining market share, and operational efficiency. Traits include:
Strong emphasis on cost control
Efficient and streamlined operations
Established product lines
Examples: Fast-food chains, commodity producers
66
 Analyzers: Exhibit a balanced approach between exploration and exploitation. They
adapt their strategies based on the situation. Traits include:
Strong market research capabilities
Ability to balance innovation with efficiency
Flexible and adaptable structure
Examples: Large consumer goods companies, diversified technology firms

Reactors: Lack a clear strategic direction and passively react to environmental changes.
They often struggle to achieve sustained success. Traits include:
Poorly defined goals and strategies
Uncoordinated decision-making
Difficulty adapting to change
Examples: Companies in decline or facing major disruptions

Step 4: Implications for Strategic Decision-Making

By understanding your strategic type, you can make informed decisions about:
Resource Allocation: Prospectors should prioritize R&D and marketing budgets, while
Defenders may focus on production and cost-cutting initiatives.
Competitive Positioning: Prospectors aim to be first-movers in new markets, while
Defenders prioritize maintaining market share through efficient operations.
Organizational Structure: Prospectors benefit from flexible and decentralized
structures to facilitate innovation, while Defenders may thrive with centralized control
and standardized processes.

INDUSTRY EXAMPLE
Streaming Industry

The streaming service industry is a great example to showcase the Miles and Snow framework
in action. Here's a breakdown of how different players might approach their strategies:

Prospectors:
Company: Netflix (early days)
Environment: Highly dynamic with constant innovation in content creation and delivery
methods.
Internal Organization: Strong focus on exploration with high investment in original
content, data analytics, and personalization algorithms.
Strategy: Netflix was a pioneer in the streaming space, constantly seeking new content
formats (documentaries, stand-up specials) and distribution channels (mobile apps, smart
TVs). They took risks with high-budget productions and leveraged data to personalize
content recommendations.

67
Defenders:
Company: Walmart Vudu
Environment: While the industry is dynamic, Vudu focuses on a specific segment –
budget-conscious consumers.
Internal Organization: Emphasis on exploitation with efficient operations and a large
library of licensed content acquired at favorable rates.
Strategy: Vudu prioritizes cost leadership by offering a large library of older movies and
TV shows at low prices. They leverage Walmart's existing infrastructure for distribution
and marketing, keeping operational costs down.

Analyzers:
Company: Disney+
Environment: Disney+ operates in a dynamic environment but caters to a well-defined
audience (families).
Internal Organization: Disney+ balances exploration with exploitation. They leverage their
vast library of classic content while investing in original shows and movies based on
popular franchises (Marvel, Star Wars).
Strategy: Disney+ offers a curated selection of high-quality content targeted towards
families. They combine established franchises with strategic investments in originals to
maintain subscriber growth.

Reactors:
Company: Blockbuster (post-streaming rise)
Environment: Blockbuster failed to adapt to the changing environment of online
streaming.
Internal Organization: Lack of clear strategic direction and slow response to the rise of
streaming services.
Missed Strategy: Blockbuster initially offered limited online options and clung to their
traditional brick-and-mortar rental model. This lack of adaptation ultimately led to their
decline.

This example demonstrates how different companies within the same industry can adopt
varying strategic approaches based on the Miles and Snow framework. By understanding their
environment and internal strengths, companies can position themselves for success in a
competitive landscape.

68
 McKINSEY 7S MODEL
"Alignment is the holy grail of change management."
- Peter Capelli

THEORY
The McKinsey 7S Framework is a tool used to analyze and understand the internal factors
that influence an organization's ability to change and achieve its strategic goals. It
emphasizes the interconnectedness of these seven elements, highlighting that a change in one
element can necessitate adjustments in others to maintain overall effectiveness.

The focus of the McKinsey 7s Model lies in the

interconnectedness of the elements that are
categorized by “Soft Ss” and “Hard Ss” – implying
that a domino effect exists when changing one
element in order to maintain an effective balance.
Placing “Shared Values” as the “center” reflects the
crucial nature of the impact of changes in founder
values on all other elements.
The Seven Elements:
Strategy: The organization's long-term plan for
achieving its goals, including its competitive
advantage, target markets, and growth plans.
Structure: The formal organizational chart that
defines how tasks and responsibilities are
divided, coordinated, and controlled.
Systems: The formal and informal processes, https://corporatefinanceinstitute.com/resources/management/mc
procedures, and routines that govern how work kinsey-7s-model/

gets done within the organization.

Shared Values: The core beliefs, principles, and philosophies that guide the
organization's behaviour and decision-making.
Skills: The knowledge, abilities, and talents of the people within the organization.
Style: The leadership style and how decisions are made within the organization.
Staff: The human resources of the organization, including their skills, experience, and
attitudes.
Key Considerations:
Alignment: All seven elements should be aligned and reinforce each other to create a
cohesive and effective organizational system.
Change Management: When implementing strategic changes, it's crucial to consider
how all seven elements will be impacted and potentially adjusted to support the new
direction.
Organizational Culture: The 7S Framework acknowledges the strong influence of
organizational culture, which is shaped by a combination of shared values, skills, style,
and staff.
69
 USE AND WORKING
The subjectivity surrounding the concept of alignment concerning the seven key elements
contributes to why this model seems to have a complicated application. However, it is
suggested to follow a top-down approach – ranging from broad strategy and shared values to
style and staff.

Step 1: Identify the areas that are not effectively aligned

Is there consistency in the values, strategy, structure, and systems? Look for gaps and
inconsistencies in the relationship of elements. What needs to change?

Step 2: Determine the optimal organization design

It is important to consolidate the opinions of top management and create a generic optimal
organizational design that will allow the company to set realistic goals and achievable
objectives. The step requires a tremendous amount of research and analysis since there are no
“organizational industry templates” to follow.

Step 3: Decide where and what changes should be made

Once the outliers are identified, the plan of action can be created, which will involve making
concrete changes to the chain of hierarchy, the flow of communication, and reporting
relationships. It will allow the company to achieve an efficient organizational design.

Step 4: Make the necessary changes

Implementation of the decision strategy is a make-or-break situation for the company in
realistically achieving what it set out to do. Several hurdles in the process of implementation
arise, which are best dealt with in a well-thought-out implementation plan.

Benefits of the Model

It enables different parts of a company to act in a coherent and “synced” manner.
It allows for the effective tracking of the impact of the changes in key elements.
It is considered a longstanding theory, with numerous organizations adopting the model
over time.

Limitations of the Model

It is considered a long-term model.
With the changing nature of businesses, it remains to be seen how the model will adapt.
It seems to rely on internal factors and processes and may be disadvantageous in
situations where external circumstances influence an organization.

70
 INDUSTRY EXAMPLE
Retail Banking

Scenario: A traditional brick-and-mortar bank is facing increasing competition from online

banking platforms. To maintain its customer base and market share, the bank decides to
embrace online banking and invest in a robust digital presence.

Applying McKinsey's 7S Framework:

Strategy: The bank's strategy shifts to focus on offering a seamless omnichannel
banking experience, integrating online banking with physical branches.
Structure: The bank may need to create a new department dedicated to online banking
operations and technology. Existing branch structures might be adjusted to provide
support for online banking inquiries.
Systems: New online banking platforms and secure transaction processing systems
need to be implemented. Existing internal systems may need to be integrated with the
new online platform.
Shared Values: The core values of customer service, security, and financial well-being
remain constant. However, the bank might emphasize innovation and embracing
technology as additional values.
Skills: The bank needs to invest in training existing staff on online banking processes
and customer support for online services. Additionally, recruiting tech-savvy personnel
with expertise in online security and digital marketing may be necessary.
Style: Leadership style may need to become more adaptable and open to new ideas to
foster innovation and collaboration between traditional banking and online platforms.
Staff: Current employees might need to develop new skills and adapt to a more
technology-driven work environment. The bank may also need to hire additional staff
with expertise in online banking technologies.

Alignment for Change:

By aligning all seven elements of the 7S Framework, the bank can create a more integrated
and effective approach to online banking.
Training and development programs (Staff) can equip employees with the necessary
skills (Skills) to operate effectively within the new online banking systems (Systems).
Clear communication about the bank's strategic shift (Strategy) can help employees
understand the rationale behind changes and encourage them to adapt their work style
(Style) to embrace the new online platform.
The bank's core values (Shared Values) can be emphasized to ensure that online banking
operations prioritize customer service and security just like traditional services.

By carefully analyzing and aligning these elements, the bank can transition smoothly towards
a successful online banking presence while maintaining its core strengths and customer base.

71
 TOOLS FOR ANALYSIS

CMIE INDUSTRY OUTLOOK ECONOMIC OUTLOOK

https://industryoutlook.cmie.com https://economicoutlook.cmie.com

PROWESS DATABASE REFINITIV DATABASE

https://prowessiq.cmie.com https://eikon.refinitiv.com

Find it in finance lab

DGCA: AIRLINE BLOOMBERG DATABASE

https://www.dgca.gov.in/digigov-portal/ https://www.bloomberg.com/
professional/products/bloombergterminl/

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 TOOLS FOR ANALYSIS
S0CIETY FOR INDIAN WORLD BANK INDICATORS:
AUTOMOBILE MANUFACTURES ECONOMIC INDICATORS DATABASE
https://databank.worldbank.org/source/
https://www.siam.in
world-development-indicators

RBI WEBSITE: BANKING SCREENER: STOCK ANALYSIS

https://www.rbi.org.in https://www.screener.in

GOOGLE SCHOLAR: RESEARCH JSTOR: RESEARCH PAPERS

PAPERS
https://scholar.google.com https://www.jstor.org/stable/24583143

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Marketing Theories – Boston Consulting Group Matrix. (n.d.).
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EPM. (2022, November 25). The Balanced Scorecard Explained with Examples [Video]. YouTube.
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Red Ocean Strategy vs Blue Ocean Strategy I Learn the Difference. (2024, April 12). Blue Ocean Strategy.
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Team, B. O. (2023, January 27). 5 Compelling Strategy Canvas Examples You Can Learn From. Blue Ocean
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https://creately.com/blog/strategy-and-planning/kotters-8-step-change-model/
The Triple Bottom Line: What It Is & Why It’s Important. (2020, December 8). Business Insights Blog.
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Kraaijenbrink, J. (2023, January 25). Jeroen Kraaijenbrink on LinkedIn: #organizationaldevelopment
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activity-7024043161328963587-z_eV
Team, C. (2023, October 15). McKinsey 7S Model. Corporate Finance Institute.
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