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
Business Strategies
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
Case Study of Toyota: International Entry Strategies
Toyota is being known world-wide and being accepted as the world most popular car manufacturer. Wherever we go, not even a single soul did not know what a Toyota is. This is what we called as Toyotaism. But, to accomplish this was not that easy compared to how it sounds. Toyota had to face several issues and problems also had taken multiple actions to solve them. Hiroshi Okuda had identified 3 issues relating to the management of Toyota. Those management issues are; (1) Lag in product Planning, (2) Declining market share in Japan, and (3) was behind in overseas expansion. Due to these main issues, Toyota had taken several steps for the manufacturer to survive in its own name in own country and also to the world outside. For Toyota to make known of its brand name, a number of development strategies had been taken by Toyota. The first stage Continue reading
Operating Economies through Mergers
A merger, which results in meeting the test of increasing the wealth of the shareholders, is said to contain synergistic properties. Synergy is the increase in value of the firm combining two firms into one entity i.e., it is the difference value between the combined firm and the sum of the value of the individual firms. There may be various sources for this extra value arise i.e., the increase in wealth of the shareholders as a result of merger. The key to the existence of synergy is that the target firm controls a specialized resource that becomes more valuable when combined with the bidding firm’s resources. The sources of synergy of specialized resources will vary depending upon the merger. In case of horizontal merger, the synergy comes from some form of economies of scale, which reduce costs, or from increased market power, which increases profit margins and sales. There are Continue reading
Business Level or Generic or Competitive Strategies
Business level strategies are popularly known as generic or competitive strategies. Business level strategies are intended to create differences between the firm’s position relative to those of its rivals. To position itself, the firm must decide whether it intends to perform activities differently or to perform different activities as compared to its rivals. Michael Porter classified these strategies into overall cost leadership, differentiation and focus. The first two strategies are broader in concept as their competitive scope is wide enough whereas the third strategy i.e the focus strategy has a narrower competitive scope. The experience curve: Cost has been correlated with the accumulated experience by the experience curve. The underlying principle behind the experience curve is that as total quantity of production of a standardized item is increased, its unit manufacturing cost decreases in a systematic manner. The concept of the experience curve was presented by BCG in 1966 Continue reading
Role of Mission Statements in Guiding Marketing Planning
It is vital that a marketing plan has a mission statement that states the purpose of the marketing plan, and explaining why a person is in a business. Both personal and business goals should be included in the mission statement. Although the mission statement is usually a short paragraph, of one to three sentences long, but it is important because it focuses a company’s attention on the company’s most important goal. The mission statement will review company’s business goals and objectives and identify marketing strategies that will achieve them. The managers and employees who do not understand their organizations goals and objectives will face a significant challenge and have a higher likelihood will not achieve it. Without a clear understanding, managers and employees might be making a decisions without the benefit of the guidance that provided by the organizations goals and objectives. Many of them will get lost along the Continue reading