Documente Academic
Documente Profesional
Documente Cultură
•Speed involves quick response to customer needs ( Cisco’s 72 hrs supply system from
Singapore / Malaysia warehouse) faster development of new product ( Nokia produces new
models / features of mobile telephones every few hours), average life cycle of a expensive
Fast production cycle ( Honda City car in India can switch over from one model to another in
less than 7 days ) Managers of tomorrow would need speed based competitive advantage to meet
fast changes in business environment.
Factors of speed which give competitive advantage
•Technical Development- new, improved products, faster / flexible production cycles, user
friendly products (Microsoft Windows & MS Office), electronic & mobile telephones, new
product / models in few weeks / months
•HRM – self managed work teams, few layers of management, employees empowered to take
decisions at every level (paperless office – Cisco, work without )
•General Administration- Highly automated / integrated information system with or without
line controls
•Procurement – online suppliers, vendors, distributors, system integrated with production
•Inbound Logistics- online supply system with minimum delivery, time & inventory levels
•Operations – Quick changeover time from one product to another, in case of popular models of
cars Japan has brought over the changeover time to seven hours as against USA’s 7 days, faster
cycles are achieved thru’ CNC machine with pre set CAD softwares.
•Outbound Logistics - JIT delivery system with online replenishment at distributor point based
on customer bookings
•Marketing & Sales – customer requirements are met thru’ a computerized network between
dealer, distributor & factory warehouse. 5
•Service & Spares – toll free help line for emergency service, intensive network of service
workshops, reasonable pricing of spares, periodic customer satisfaction surveys to assess
quality of service & satisfaction levels.
MARKET FOCUS AS COMPETITIVE ADVANTAGE
Another point of focus used by many small & medium scale concerns to gain competitive
advantage by special focus on a narrow segment called niche market. Examples are Zodiac ties,
Maruti’s focus on A & B segment less on C&D & practically nil on E. Honda City on C&D,
BMW, Mercedes on E & E plus.
GRAND STRATEGY FOR GROWTH
This depends on following two important factors, namely -
•Growth rate of market
•Firms competitive position in the market (market share & profitability)
•With these factors the business strategy can be categorized in following 4 quadrants
Rapid Market Growth
Concentrated growth Reformulation growth
Vertical growth Horizontal integration
Strong competitive Concentric diversification I II Divest/ liquidation Weak competitive
position Concentric diversification IV III Retrenchment, divest/ liquidation position
Conglomerate diversification Conglomerate, conc. diversification
Joint venture Slow market growth 6
•Quadrant I shows strong competitive position in rapidly growing market
•Quadrant II shows weak competitive position in a rapidly growing market
•Quadrant III shows weak competitive position in a slow growing market
•Quadrant IV shows strong competitive position in a slow growing market
•Firms in Qr I are in excellent strategic position – grand strategy for such firms is continued
concentration on their current businesses due to strong competitive position as customer seems
satisfied with firms current strategy, good examples are Maruti strength in A&B auto car
segment, Mc Donald’s strength in burger market. In such firms because of high liquidity
generally resources are more than demand of concentrated growth. In that case firm can look
for vertical integration & concentrated diversification. In case of Maruti they have diversified
into manufacture of engines, gear boxes which were earlier imported & in marketing services
diversified into financing of cars, insurance business & sale & purchase of used cars in the
name of True Value
•Firms in Qr II when they are competitively weak in a strong market – they should
evaluate / analyze their weaknesses which could be in any of the major areas like product
quality & cost, marketing strategy, distribution & service plans & choose reformulation of
concentric strategy after removing above problems they could also look at horizontal
integration. If the problems are such that they cannot be solved then final answer could be to
divest or liquidation. Examples in Indian context are Standard Herald cars with UK
collaboration, Premier cars with Fiat of Italy & recently launched electric car as Reva brand
7
•Firms in Qr III of weak competitive position & slow market growth – is the worst
combination in a business strategy, in such cases business usually trim down their overheads &
operation costs to become efficient & cost effective so as to become strong & in competitive
position if not successful they divest investment to other businesses which are more promising.
Final choice could be divest & sell off, examples are most of the power plants, electric supply
co’s, textile mills 140 in no’s owned by NTC in the govt sector which are being sold to private
sector for running them efficiently.
•Firms in Qr IV strong competitive position in a slow growth market strategy – in such
cases the firm should diversify in more promising market growth area either in concentric or in
conglomerate businesses examples are Reliance Industries diversifying from petroleum refining
to oil exploration, oil marketing or getting into new areas like power, telecom & now retail
marketing & real estate- setting up SEZ in various parts of the country like China & Middle
East