CORPORATE PLANNING & STRATEGIC MANAGEMENT

ESTONE THEOR

trategy: Art of War

Strategic planning is a systematic process of
envisioning a desired future, and translating this vision
into broadly defined goals or objectives and a sequence
of steps
to achieve them.
Strategic planning begins with the desired-end and
works backward to the current
status.

trategy: Landmarks
Mintzbergs theories
Porters Five Forces
Porters Value Chain
Ansoff Matrix
SWOT
SMART
Force Field Analysis

trategy: Milestones

Blue Ocean Strategy

Bottom of the Pyramid
Core Competency
GE under Welch

UE OCEAN STRATE

w to create uncontested ma
and make competition irrel

Cirque Du Soleil

created a new,
highly-profitable
market within the
ailing circus
industry. The
companys
management
eliminated the
main cost drivers
of conventional
circuses: the
animals and the
stars. At the same
time they
incorporated
elements from
opera, ballet and
concerts.
The result was a
totally new
entertainment
concept targeting
former non-

Nintendo Wii

games like Sonys

Playstation, MSs
Xbox 360. At the
time, the market
was fairly narrow
and focused but
they have now
evolved to become
more of an
entertainment
centerpiece in the
living room. In
2006, Nintendo
introduced the Wii
and with it several
advanced,
revolutionary
features. Wireless
motion-sensitive
remote controllers,
built-in Wi-Fi
capability, and a

Nintendo DS or
Nintendo Wii. With
Nintendo Wii they
departed from a Red
Ocean dominated by
Sonys Playstation and
Microsofts Xbox by
creating a totally new
video game concept. On
one hand the Wii
created new benefits,
such as innovative,
intuitive control with
movement sensors. On
the other hand it
generated massive cost
reductions eliminating
high end graphics and
CPU power. Thus
Nintendo was able to
sell the Wii at a price
that appealed to the

face four hurdles:

A cognitive hurdle: Waking employees
up to the need for a strategic shift.
Red oceans may not be the paths to
future profitable growth, but they feel
comfortable to people and may have
even served an organization well until
now, so why rock the boat?
Limited resources: The greater the
shift in strategy, the greater it is
assumed are the resources needed to
execute it. But many companies find
resources in notoriously short supply
Motivation: How do you motivate key
players to move fast and tenaciously
to carry out a break from the status
quo?
Politics: As one manager put it, In
our organization you get shot down
before you stand up.
Although all companies face different

 The Body Shop also created a Blue Ocean and

in the fiercely competitive cosmetics industry.
The Body Shop ignored most glamorous aspects
of the industry. Instead The Body Shop designed
its image around functionality, reduced prices
and modest packaging. Increased value was
given to natural ingredients, a healthy lifestyle
and ethical concerns.
As a result The Body Shops products spoke to a
totally new group of customers and achieved a

CREATION OF BLUE OCEANS

IN MARKETING STRATEGIES
3 UNIQUE EXAMPLES

THE COCA-COLA

for new ways to promote its

perennial theme of
HUG MACHINE A SIMPLE WAY
TO SPREAD
happiness and joy. In
SOME HAPPINESS Singapore, agency Ogilvy &
Mather unveiled a CocaCola vending machine that
dispensed free cans when
given a tight hug. The
machine was placed on the
campus of the National
University of Singapore,
quickly attracting lines of
students keen to give the
Coca-Cola machine a hug.
Leonardo OGrady, ASEAN
IMC director of the CocaCola Company explains:
Happiness is contagious.
The Coca-Cola Hug Machine
is a simple idea to spread
some happiness. Our
strategy is to deliver doses

consumers to stop by
your shop window and
browse? Gap is using a
novel technology
developed by FeONIC
called whispering
window. The
technology turns solid
materials such as
glass, wood or
plasterboard into
music speakers. At the
London flagship Gap
store the external
windows play music to
passersby, who
frequently stop to try
to fathom where the
sound is coming from.

THE GAP WHISPERING WINDOW

with Lavazza coffee. In addition

to flat whites and espressos,
there is a library and space for
Italian style loafing. The cafe
has car brochures and vehicles
for test drive, should
customers get the urge. Tarun
Khanna, head of marketing at
Fiat India says: We are trying
to give the true Fiat experience
to our customers, potential
customers and consumers in
general. We want more and
more people to be touched by
the Fiat brand in different
ways. Fiat Caffe is a unique
concept where we bring the
brand alive in various manners
be it in terms of a product
demo, or browsing through
information about the brand

BOTTOM OF THE PYRAMID

INTRODUCTION
In economics, bottom of the pyramid is the largest, but the
poorest socio-economic group.
In global terms, this is the 3 billion people who live on less than
2.5 USD per day.
Bottom or base of the pyramid (BOP) is used in particular by
people developing new models of doing business that
deliberately target this demographic, using new technology.
The phrase bottom of the pyramid first coined by US president
Franklin D. Roosevelt on April 7, 1932 radio address, The

BOTTOM OF THE PYRAMID

ESSENCE

The concept of Bottom of the Pyramid is more glamourized and

popularized by the books namely Fortune at the Bottom of
the Pyramid, C K Prahlad (2004) and Capitalism at the
Crossroads, Stuart L Hart (2005).
BOP refers to the billions of people living on less than 2 dollars
per day who strive hard to earn a basic living.
The socio economic pyramid as per BOP concept

BOTTOM OF THE PYRAMID

FUNDAMENTAL PROPOSITIONS
Businesses, governments, and multinationals should stop thinking of
the poor as victims and instead start seeing them as resilient and
creative entrepreneurs as well as value demanding consumers.
There exists tremendous benefits to MNCs who choose to serve this
Tier 4 demographic in ways responsive to their needs.
The poor of today is the middle class of tomorrow that is always a
larger chunk than the haves of the society.
There are poverty reducing benefits if MNCs work with civil society
organizations and governments to create new local markets.
The poor and middle class are to be considered as business partners
and innovators, rather than jus potential producers or consumers.
Orient and nurture the thinking of companies in developing business
partnerships with income-poor communities in order to co-create

BOTTOM OF THE PYRAMID

STRATEGIC LINKAGE

The concepts of BOP and corporate social responsibility have a strategic

linkage on the basis of tools of implementation
Microcredit startling example of BOP is the growing microcredit market in
S. Asia, particularly Bangladesh (the concept of grameen banks). Lend
tiny amounts of money to people with even tinier assets. (Called Sa-Dhan
in India).
Market-specific-product - products designed with the needs of the very poor
in mind is that of a shampoo that works best with cold water and is sold in
small packets to reduce barriers of upfront costs for the poor. (Hindustan
Unilever introducing sachets for shampoo, detergent etc.)
Innovation in BOP - BOP consumers do not want to adopt innovation easily
(traditional view) whereas the modern view proclaims that the BOP market
is very eager to adopt new innovations (for instance using kiosks, mobile
phone, mobile and net banking).

BOTTOM OF THE PYRAMID

ESSENCE
The world economic pyramid
ANNUAL PER CAPITA
INCOME
MORE THAN 20,000USD
1500-20,000USD
LESS THAN 1500USD

TIER
1
2&3
4

-------POPULATION IN
MILLIONS
75-100
1500-1750
4000

MNCs take forth

Multinationals by virtue of their huge financial, technological and razor
sharp managerial capabilities possess the grit and ability to serve to the
4 billion poorest people in the bottom of the economic pyramid.
MNCs look at globalisation strategies through a new lens of inclusive
capitalism, that prospect towards growth, profits, and incalculable
contributions to humankind.
The bottom of the pyramid represents a huge untapped market of

BOTTOM OF THE PYRAMID

CONTINUED
MNC investment at the bottom of the pyramid implies lifting
billions of people out of poverty and desperation, averting social
decay, political chaos, terrorism and environmental meltdown.
Doing business with the worlds 4 billion poorest people (two
thirds of world population) requires radical innovations in
technology and business model.
Strategies should involved re-evaluating priced-performance
relationships for products/services, improving capital efficiency
and incorporating a paradigm shift from a bigger is better

BOTTOM OF THE PYRAMID

FACTUAL INSIGHTS... THE BOTTOM OF THE PYRAMID
REALITIES

As per UNO, the richest 20% in the world accounted for about
80% of the total income and wealth in 1990. In 2000, the figure
reached a whopping 85%.
Over the same period, fraction of income accruing to the poorest
20% in the world fell from 2.3 to 1.1 percent.
Extreme inequity of wealth distribution reinforces that poor
cannot participate in the global market economy that forms a
peril of socio economic development.
Given its vast size, the tier 4 represents a multi-trillion dollar
market offering unending opportunities for businesses around

BOTTOM OF THE PYRAMID

THE VAST INVISIBLE OPPORTUNITY
Most MNCs dismiss the BOP because they judge the market based on income or
selections of products/ services appropriate for developed countries.
The orthodox assumptions regarding TIER 4 that dramatically needs to be reexamined
#1 poor is not the target customer segment because current cost
structures of products catering to developed countries cannot earn profitable
revenues in this segment.
#2 the poor cannot afford and have no utility for products/services sold in
developed markets.
#3 only developed markets appreciate and will pay for new technology, the
poor affords outdated technology.
#4 the BOP is not important to long term viability of business houses, it can
be left for the government and non-profits.
#5 - managers are not excited by business challenges that have a

BOTTOM OF THE PYRAMID

THE BOP (TIER 4) PIONEER - HLL
Hindustan Lever Ltd. (HLL) a subsidiary of Great Britains
Unilever PLC is widely considered the best-managed company in
India for decades. It has been a pioneer among MNCs exploring
markets at the BOP.
For more than 50 years, HLL served Indias small elite who could
afford to buy MNC products.
The HLL NIRMA face off, 1990s.
Integrating the best of technology and a global resource base to
address local market conditions. Cheap and low quality can

BOTTOM OF THE PYRAMID

KEYS TO SUCCESS

The propagators of the re-engineered strategies for serving the

BOP better and more profitably puts forth four key elements that
assures success for MNCs
Creating buying power IM SINGER & COMPANY, GRAMEEN
BANK LTD. (Mohammad Yunus).
Shaping aspirations sustainable product innovations,
Unilever and Solar Electric Light Fund (SELF).
Improving access ensuring effective and robust rural

BOTTOM OF THE PYRAMID

PUTTING IT ALL TOGETHER
Creati
ng
buyin
g
power

Tailori
ng
local
solutio
ns

Botto
m of
the
pyram
id
Impro
ving
access

Shapi
ng
aspira
tions

GE UNDER WELCH
INTRODUCTION

Multinational corporation founded in New York

Thomas Edison invented the electric lamp in 1879
In 1890 Edison General Electric Company formed
In 1892 merged with Thomas Houstan Electric Company
Headquarter at Fairfield, U.S
As of 2015, the company operates in segments like power,
water,oil and gas, energy management, healthcare, aviation,
transportation and capital.

GE UNDER WELCH
ABOUT JACK WELCH

ovember, 1935
can chemical engineer, businessman and author
ctor at Boston and Maine Corporation
e maker
960 and was not happy with the excessive bureaucratic culture of the company
CEO in 1981 as the 8th and youngest Chairman and CEO in the history of GE
ger of the Century by Fortune in 1999

ACQUISITIONS UNDER WELCH

Employers Reinsurance and Radio
Corporation of America

GE UNDER WELCH

HIS LEADERSHIP STYLE AND WHAT WE LEARNT

FROM THEM
NOVATION

ovation, he launched a program called work out.

ght various departments together to assess performance and make sugge

REAL TIME PLANNING

Five page strategy play book
One page answer to five
questions:
Current market dynamics
Competitors recent
activities
GEs response

GE UNDER WELCH
LEADERSHIP QUALITIES
Motivation: Welch was good at motivating employees and
stirring them into action.
Eg: he frequently wrote notes to employees appreciating their
contribution.
Get less formal : Maintenance of corporate informality that
encourages a training class to comfortably challenge the bosss
ideas.
Energize others: Ability to spark others to extraordinary
performance
Accept change as an opportunity
Get rid of bureaucracy: eliminate boundaries that prevent the

GE UNDER WELCH

PLANNING AND IMPLEMENTATION

discussion forum
te responses to the ideas and opinions of employees
n avoiding red tapism
ntation team formed with 24 consultants
pot decision on 80% proposals

IMPROVING PERFORM

Keeping a close tab on top 3000 exe

Improved packages and stock option
Training institute at Crotonville
360 degree feedback

GE UNDER WELCH
CULTIVATE LEADERS

Cultivate leaders who have the four Es of leadership.

GE UNDER WELCH

GE UNDER WELCH

NDARYLESS BEHAVIOUR

ning from others

We quickly began to learn from each other: productivity solutions
from LIGHTING, Quick response asset management, transaction
effectiveness from GE CAPITAL, Cost reduction techniques from
AIRCRAFT ENGINES by Welch

FOCUS IN THE SERVICE IND

Reduce dependence on traditional industrial

Biggest growth opportunity
We have changed the very nature of what we do for a living.
Today services account for two-thirds of our revenue. by Welch

GE UNDER WELCH
SIX SIGMA INITITATIVE
Six sigma is a process to improve productivity, quality, speed
and efficiency.
At the business level it improves profitability and long-term
viability.
At the process level it reduces defects and variations.
Motorolas Six sigma adoption in mid 1990s
Employees were dissatisfied with the quality of its product.
GE was operating at error rates 10,000 time the six sigma
quality level of 3.4 defects/million
Series of planning, resource allocation, review and
communication meetings were initiated.

GE UNDER WELCH

GE UNDER WELCH

ER COMMUNICATION

management levels trimmed from 9 to 6

time and enables better follow up.

NUMBER 1, NUMBER

n youre number four or five in a market, if number one sneezes you g

n you are number one, you control your destiny by Welch

nsisted that GE should be among the top two players in every segme
ling to do so, it should close that particular segment.
eved in Fix it, sell it or close it

GE UNDER WELCH

OOD IDEAS FROM EVERYWHERE

g from other industries

g from competitors

BEHAVE LIKE A SMALL

COMPANY

Small companies have huge

competitive advantages.
Uncluttered, simple and informal
They thrive on passion
They reward/remove people according

GE UNDER WELCH
STRENGTHS AND WEAKNESSES OF HIS LEADERSHIP
STYLE
STRENGTHS
Motivating employees
Constantly identified and
appreciated good leaders
at GE
Effective leadership
Effective communication

WEAKNESS
Putting too much pressure
on employees
Formed opinions too
quickly
Criticized for certain failed
acquisitions like
Honeywell Inc and
Black & Decker

GE UNDER WELCH
CONCLUSION
MARKET CAPITALIZATION

In 1981, US $13 billion when Jack Welch was appointed as CEO

at GE
In 2000, US $500 billion when Jack Welch steps down as CEO at
As mentioned by Fortune,
GE ten thousand dollars
put into GE at the start of Welchs term. In
1980 would be worth $367,479

CORE COMPETENCY
INTRODUCTION

Concept in management theory introduced byC. K.

PrahaladandGary Hamel.It can be defined as "a
harmonized combination of multiple resources and skills
that distinguish a firm in the marketplace".
Core competencies fulfill three criteria:
Provides potential access to a wide variety of markets.
Should make a significant contribution to the perceived
customer benefits of the end product.
Difficult to imitate by competitors.

CORE COMPETENCY
CHARACTERISTICS

Core
Compe
tency
Core
Produ
ct
End
Produ
ct

Provide competitive advantage to

the firm
Make significant contribution to
customer value and the end
products offered by the firm.
Provide access to a wide variety
of markets.
Difficult to imitate: Competence is rare.
Concerned with management

CORE COMPETENCY

CORE COMPETENCE & COMPETITVE ADVANTAGE

CORE COMPETENCE

COMPETITIVE ADVANTAGE

Underlying strengths of a firm that Anything that a firm does especially well
give it a competitive advantage.
compared to its rival firms gives it
business/product.
Core competence is
and unique to a firm.

fundamental Competitive advantage is not unique to

any firm over the long term.

Core competence leads to the

development of core products, which
in turn can be used in an array of
end products.

Competitive advantage can come from

many other sources, such as a strong
band, exclusive patent or a superior
geographical location etc., which are not
connected with core competencies.

A firm can have core competence in Competitive advantage may arise from a
its technology/process/expertise etc. number of sources, especially when a firm
is able to differentiate its products or sell

CORE COMPETENCY
EXEMPLARY FLAG-BEARERS

FIRM

CORE
COMPETENCY/PRODUC
T

HONDA Design & manufacture of

engines.

END PRODUCT

Cars, motorcycles, generators, lawnmowers etc.

SONY

Miniaturisation

INTEL
P&G

Design of ICs
Computer processors etc.
Excellence in
Wide variety of market dominating
marketing/distribution and products
R&D

CANON Optics

Pocket TV, miniature card calculators,

cam-corders etc.

Cameras, Fax & photocopy machines,

CORE COMPETENCY

TYPES OF CORE COMPETENCIES

CORE COMPETENCY

DEVELOPING CORE COMPETENCY

CORE COMPETENCY
THE SHIFTING LOCUS