The Department of Company Affairs, in May 2000, invited a group of leading industrialists, professionals and academics to study and recommend measures to enhance corporate excellence in India. The Study Group in turn set up a Task Force, which examined the subject of Corporate Excellence through sound corporate governance and submitted its report in Nov. 2000. The task force in its recommendations identified two classifications namely essential and desirable with the former to be introduced immediately by legislation and the latter to be left to the discretion of companies and their shareholders. Some of the recommendations of the task force include: Greater role and influence for nonexecutive independent directors Stringent punishment for executive directors for failing to comply with listing and other requirements Limitation on the nature and number of directorship of managing and whole-time directors Proper disclosure to the shareholders and investing community Interested shareholders to Continue reading
Strategic Management
Strategic management is the art and science of formulating, implementing and evaluating cross-functional decisions that will enable an organization to achieve its objectives. It involves the systematic identification of specifying the firm’s objectives, nurturing policies and strategies to achieve these objectives, and acquiring and making available these resources to implement the policies and strategies to achieve the firm’s objectives. Strategic management, therefore, integrates the activities of the various functional sectors of a business, such as marketing, sales, production etc. , to achieve organizational goals. It is generally the highest level of managerial activity, usually initiate by the board of directors and executed by the firm’s Chief Executive Officer (CEO) and executive team.
Marketing Strategies for Gaining Market Share
Marketing strategies used by companies to achieve or defend its competitive advantage. The main strategies used are defensive and offensive strategies. Offensive strategies are used to secure the company’s competitive advantage whereas a defensive strategy is used to defend the competitive advantage of the company. These strategies have various types that are further explained with the help of techniques used by companies to capture or defend their competitive advantages. The examples elaborate in simplified terms the marketing warfare that takes place to maintain and capture market share. The Defensive Marketing Strategies This strategy aims at maintaining the market share the company has already achieved. It does not enhance the firm’s competitive advantage but helps fortify the firm competitive position. Normally a defensive strategy should be employed by the market leader due to its market share advantage and position. There are various types of defensive strategies which are elaborated below. 1. Continue reading
McKinsey’s Three Horizons Framework
Mehrdad Baghai, Stephen Coley and David White in their book “The Alchemy of Growth” define the three horizons for growth. The book was based on a study of 40 growth companies, where the authors tried to identify how these successful companies approach and implement growth strategies. The key pattern that the authors identified is one of a step-by-step approach, a “staircase of initiatives.” Companies certainly keep an eye on the longer term strategy, but also simultaneously manage the near term. Each time a short term target is reached, a new capability is developed, a small acquisition is integrated, successful growers look at this as a platform for the next step. This may be a platform to continue to execute towards a strategic goal that had been set in the past. But it may also be a stage where new opportunities arise, that the company may not have been aware of Continue reading
Conventional/Traditional Approaches to Strategic Management
In any business venture, strategy is a vital factor for the efficient functioning, growth, development, continuity and success of a firm. It aims to achieve a set goal and embarks a direction for the future. Organizations require collaboration, cautious planning and the mindful implementation of planning. To maximize the effectiveness of strategies and to ensure the smooth functioning and success of the business, they have to be managed skillfully. So what is strategy? What role does strategic management play in this global economic world? The word “strategy” has been implicitly used in various ways even if it has been conventionally defined in only one. It is widely accepted that there is no single or universal definition of strategy, however the various descriptions of strategy allows people to maneuver and manipulate through this difficult pitch. Mintzberg(1994) defines strategy in 5 different ways. Plan – A consciously intended course of action to Continue reading
Financial Evaluation of a Divestiture
A divestiture involves the sale of a division or plant or unit of one firm to another. From the seller’s perspective, it is a form of contraction; from the buyer’s point of view it represents expansion. Hence a divestiture is the obverse of a purchase. It is important to recognize that companies often achieve external expansion by acquiring an operating unit — plant, division, product line, subsidiary, etc — of another company. In such a case the seller generally believes that the value of the firm will be enhanced by converting the unit into cash or some other more productive asset. The selling of some of a firm’s assets is called divestiture. Unlike business failure, the motive for divestiture is often positive; to generate cash for expansion of other product lines, to get rid of a poorly performing operation, to streamline the corporation, or restructure the corporation’s business consistent with Continue reading
Porter’s Model of the Five Competitive Forces
The nature of competition in an industry in large part determines the content of strategy, especially business-level strategy. Based as it is on the fundamental economics of the industry, the very profit potential of an industry is determined by competitive interactions. Where these interactions are intense, profits tend to be whittled away by the activities of competing. Where they are mild and competitors appear docile, profit potential tends to be high. Yet a full understanding of the elements of competition within an industry is easy to overlook and often difficult to comprehend. Porter’s Competitive Forces Model is one of the most recognized framework for the analysis of business strategy. It is based on the insight that a corporate strategy should meet the opportunities and threats in the organizations external environment. Especially, competitive strategy should base on an understanding of industry structures and the way they change. Porter’s Competitive Forces Model Continue reading