BPSM - M4

Dr. Ashish Ghosh

Strategy Implementation : The PRIL way
• Future Group : All needs – Pantaloons, Big Bazaar, Home Town,
Food Bazaar, eZone, Central.
• Understanding Indian consumers thru extensive interaction.
• Visited & studied the neighborhood markets.
• Site details of store opening… INDIANNESS Aesthetics
• Did not replicate any business model from elsewhere.
• Pantaloon 97 & BB 2001 @ Kolkata.
• USP : CHOICE – CONVENIENCE - HYGIENE
• OPEN LAYOUT – WIDE AISLES – SPACIOUS RACKS ( Eg. Layout /
Aisles : shower curtains, Towels, bathroom accessories > Purchase maxm.).
• VALUE FOR MONEY PRICING ( 5 TO 60%, SABSE SASTA DIN )
• DECISION MAKING : decentralized.
• 40-45 ANCHOR VENDORS: economies of scale achievement
• SMALL VENDORS : 40 % growth > pass on benefits
What is Strategic Implementation

• Process by which Strategies & Policies are put into

action … (activities & choices for execution of plan).
• Through development of programs, tactics, budgets,
procedures.
• Implementation flaws survey results :
• 1 / 4 acquisitions unsuccessful ; 50% don’t achieve full.
• 2 years time period… else opportunity lost in M&A (A T Kearney)
• 70-80% synergy to be achieved in 12 months (Bert,
McDonald, Herd).
• Implementation Key Points
• Who are the people to do this?
• What must be done to align the operations?
• How is everyone going to work together for goal?
MAJOR IMPLEMENTATION CHALLENGES –
93 of Fortune 500 study
• More time than planned.
• Unanticipated major problems
• Coordination issues between departments.
• Emergent / crisis situation taking out attention from
implementation.
• Competencies of individuals.
• Inadequate training to lower level.
• External factors – uncontrollable
• Leadership issues.
• KPI vague – not well defined.
• MIS not robust.
Who are the people to do this?

• Implementation people are different from those who

developed the strategies (corporate & business).

• Implementation team – SBU head, Plant manager,

Functional heads, Supervisors & all employees.

• To prevent resistance – changes in mission, strategies,

policies to be communicated clearly & in advance.

• To prevent abandoning of plans -- Involve people

from all levels during formulation.
What must be done : Programs & Tactics - Timing
• Tactic = specific operating plan detailing how strategy to be
implemented & Program = collection of tactics.
• Tactics have narrow scope & shorter time than strategy.
• Link between formulation & implementation.
• Eg. Wipro : Telecom application - for Performance & QoS… they did
• Six Sigma implementation – reduced data transfer time ; less
downtime ; crisis mgmt in downtime by switching to admin tasks
• 91% projects complete in time (industry average = 55%)
• Timing of Tactic … When to Compete :
• The FIRST MOVER advantages – leader reputation, cost leader, market
share, high profits temporary, standard sets. Profit: 10 years for consumer &
12 years for industrial goods*. Eg. Gillette (70% share in Razors)
• LATE MOVERS advantages – technological advances, low R&D cost,
low risk ( as market established), segments ignore by 1st mover.
• Basically large firms with high resources & experience.
• Eg. MS Internet Explorer attack on Netscape (90). By 2004 MS was leader.
Reliance Jio
What must be done : Location Tactics (Where to compete)
• 5 OFFENSIVE TACTICS -

• FRONTAL : Head to Head on all 4P. Should have high resources &
perseverance. Its expensive & low margin. Eg. Huggies (Kimberley Clark –
less profit) …. on Pampers (P&G)
• FLANKING MANEUVER : attack the market where competitor is
weak. Eg. Microprocessors - Texas Instruments focus on cell phones, medical devices,
consumer electronics & not on Intel microprocessor for computers.
• BYPASS ATTACK : change the rules by new product offering &
cutting the market…. make competitor product old dated. Eg. Apple
Ipod ….. done to MS Pocket PC , Sony Walkman.
• ENCIRCLE : Attacker focus on product range and serves more
markets, thus encircling on these 2 fronts. Eg. ERP s/w – Oracle using by
acquisitions to challenge SAP. Steinway-Yamaha piano.
• GUERRILLA WAR : Hit & Run tactics. Assaults on few chosen
markets from established players. Small gains & avoid pushing deep
w/o any retaliation.. Eg. Hunter beer with Kingfisher, Foster.
What must be done : Location Tactics, Budgets , Procedures
 BUDGETS (Cadbury Schweppes – Ghana Cocoa – 70%-
• 3 DEFENSIVE TACTICS - Cadbury Cocoa Partnership – 87 mil USD for 10 yr budget
 PROCEDURES – SOP (Home Depot accessories)

• RAISE STRUCTURAL BARRIERS : Putting up entry barriers

• Full product lines in every profitable mkt. segments. Eg. Coke non
carbonated beverages … unprofitable > to ward off shelf display.
• Block distributor channel access by exclusive agreements.
• Raise switching costs by low cost training to users (Samsung, IFB)
• Increase scale of economy for price reduction (Chinese)
• Close alternate technologies by patents / licensing.
• Tie up with suppliers for exclusivity.
• INCREASE XPECTED RETALLIATION: Drastic price cut ,
matching promotional policies. This tactic should be used for
markets which needs to be defended much. Eg. P&G launching liquid
bleach & Lemon Comet vs Clorox Super detergent
• LOWER INDUCEMENT TO ATTACK: Lowering the profit
expectations. Dependencies to be low (Ruchi Soya). Eg. South West
Airlines low pricing & focus on cost reducing measures always.
How is everyone going to work together - SYNERGY
• SYNERGY : Cooperation – Bonding – Coordination (functions, BU)
• Exist when ROI > than independent business…. In divisional corpn.
• FORMS (Goold & Campbell) :
• Sharing of Knowledge or Skills : Eg. P&G (female consumer)
taking over Gillette (male consumer)
• Aligning Business Strategies of 2 or more Business : reduce
inter unit competition Eg. TTL-EBS & TCL for serving big business.
• Sharing Tangible Resources like Mfg. Plants, R&D : Pfizer-Wyeth
• Economies of Scale (Scope) : Coordinating the flow of one BU
with other BU. Reduce inventory, high capacity utilization,
market access. Eg. Jet Airways bought Sahara Air ; Code sharing
• Pooled Negotiating Power : Combining the common items
volume of purchase towards price reduction & quality
improvement. Eg. Tata Sons on stationeries.
• Creating New Business : Eg. Google between 2010-2012
acquired 100 business units towards organizing the IT market.
How Strategy to be Implemented – Structure Follows Strategy
• Centralized, Decentralized, Tall , Flat ?
• By Alfred Chandler – study on DuPont, GM, Sears, Standard Oil.
• Changes in Strategy lead to Changes in Structure.
• Pattern of development from one type of structure to another
as it expands.
• SEQUENCE: New strategy > New admin issues > Business
performance decline > New structure created>Performance rise.
• DuPont – Centralized functional structure (limited range of
products) to Decentralized divisional structure (when large,
emphasis on product development, ROI)
• STAGE 1 : SIMPLE STRUCTURE – Birth / Evolution (concentration)
• STAGE 2 : FUNCTIONAL STRUCTURE – Growth (Horizontal /
Vertical growth)
• STAGE 3 : DIVISIONAL STRUCTURE (SBU) – Maturity (Concentric/
Conglomerate diversification)
• STAGE 4 : MATRIX / NETWORK STRUCTURE – Beyond SBU too Large
Function Stage 1 Stage 2 Stage 3
Sizing Survive, Growth. Growth, rationalization, Trusteeship, investment,
Short term problems expansion. Product control. Divsn.
problems. Problems.
Objectives Personal, subjective Profits, budget & ROI, EPS
performance targets.
Strategy Implicit, 1 opportunity One product/ service Growth, diversification,
exploitation move consolidation opportunities lookout
Structure 1 unit, 1 man show 1 unit, functional groups Multi unit, decentralized
Msmt. & Simple accounting, Structured controls, Formal system of comp.
Control daily communication, function operational assessment, problem
observation assessment solving ability
KPI Personal criteria, Functional & internal ROI, ROE, ROCE,
efficiency, problem criteria, performance vs Profits, P/E, RMS,
solving budget, business size employee dev. etc.
Reward Informal, personal, Structured , as per Formal & systematic
system subjective, key policies follow due process.
performers only Applicable across all.
 ACTION PLANNING MBO TQM
• Specific actions to • Participative • Focus on customer
be taken to make decision making satisfaction :
program thru shared goal everyone
operational • Performance • Customers –
• Dates – to begin & assessment based Internal & External
end each action on achievements • Accurate
• Person identified of stated objectives measurements &
to carry out each • Process : interpret of critical
action Establish & variables
• Expected financial communicate • Continuous
& physical cos. Objectives, improvement
consequences for Set individual • Working: Open
each action Objectives, culture,
• Contingency plan Develop action Commitment,
plan, Periodic Employee
review Eg. PMS empowerment

LEADING ALTERNATIVES OF IMPLEMENTATION

 EVALUATION & CONTROL:

 Eg. Yearly projects

POINTS THE WEAKNESS OF
IMPLEMENTED STRATEGIES
 corporate driven &
monitored process
 By comparing – desired vs
actual.
 take corrective actions &
resolve problems
APPROPRIATE MEASURES
• Fin measures = ROI, ROE, EPS, Cash Flow. Shareholder value = EVA, MVA
• STEERING CONTROLS: variable that influence future profitability (cost /
avail. seat mile ; inventory turnover ratio ; customer satisfaction index)
• CONTROL TYPES : Output control – Performance results. (targets / milestones)
• Behavior control - activities that generate performance. (policies, SOP, Orders)
• Input control – resources used for performance (knowledge, skill, values)
BALANCED SCORE CARD (Kaplan & Norton)
• Includes non financial (50-80% impact on value) & financial measures.
• Combination of steering & output controls.
63% Fortune
• 4 areas taken for developing goals … KPA:
500 use
• Financial – How we appear to shareholders?
• Customer – How customers see us?
• Internal business prospective – What must we excel at?
• Innovation & Learning – Can we continue to improve & create value?
• Each goal / area assigned measures , target & initiative.. .. KPI.
• Measures :
• Eg. Financial = AVOID BANKRUPTCY - cash flow, RoE, Qtr sales
growth
• Eg. Customer = CUSTOMER ACCEPTANCE GOAL - Market share , C-
Sat index, new product sales %
• Eg. Internal business = MFG EXCELLENCE GOAL - Mfg cost, cycle
time, inventory cost.
• Eg. Innovation & Learning : TECH LEADERSHIP GOAL - new product
development, time period, acceptance
Eg. DuPont Polymer Business Balanced Score card
Align employees , SBU and Shared services
On Strategy -- Productivity Improvements and Revenue Growth.

BLUE OCEAN TOOLS NEXT 3 SLIDES

STRATEGY CANVAS - IT’S A POWERFUL TOOL TO VISUALIZE
• Blue Ocean Strategy – 150 strategic moves, 100 years, 30
industries.
• Can’t identify new market spaces, but provide a visualization that
might give a ‘eureka’ moment
• A line graph that plots factors against importance for a company
and then overlays competitors or industry benchmarks.
• Information built to help formulate a competitive strategy.
Grand Daddy of all mistakes

Car Travel
Thinking

RED = Airline Industry ; BLUE = SW Airlines ; GREY = Car Travel (related, similar)
ERRC GRID … ……………….Talks about the CX Factors &
Questions + Act thus creating new value curve
• Eliminate: Factors, the industry has long competed on but people take
for granted and should be eliminated as it no longer add value.
• Reduce: should be reduced well below the industry standard as they
come with high cost & provide little competitive advantage or profit.
• Raise: should be raised above the industry standard that can add value
to existing customers.
• Create: should be created that the industry has never offered and can
attract new customers.
BENEFITS

• Pursue differentiation and low cost to break the value-cost trade off.
• Flags companies that are focused only on raising and creating, (
increased cost structure , over-engineering & services)
• Easy to use & understand
• Facilitates scrutinizing every factor the industry competes on, helping
them discover the range of implicit assumptions.
 Air Asia
Step 1 (Eliminate the competitive factors):
Which competing factors should be eliminated from the industry’s standard?
Example: Eliminate free food/beverage on the plane. They are taken for
granted by the customers and removing them might lower the ticket price and
attract new customers who couldn’t afford plane tickets before.
Step 2 (Reduce the investment in them):
Which competing factors should be reduced below the industry’s standard?
Example: Reduce Luxury facilities provided by airport lounge. Also, make the
attendance service on the plane optional.
Step 3 (Raise the investment in them):
Which competing factors should be raised above the industry’s standard?
Example: Focus on several key destination cities and increase the frequency
of flight. This can attract more customers who travel a lot and need a more
convenient flight schedule.
Step 4 (Create totally new factors):
Which competing factors to be created that the industry has never offered?
Example: Add online booking option and create point to point travel system
to add value to existing customers.
Read : Case of Nintendo WII…
which changed the gaming industry