1.

Porter’s Five Forces Model

Definition:

Porter’s Five Forces Model is a framework used to analyze the level of competition within an
industry and business strategy development. It evaluates five forces that influence the intensity
of competition and the attractiveness of a market.

The Five Forces:

1. Threat of New Entrants:

o Refers to how easy or difficult it is for new competitors to enter the industry.

o If the entry barriers (like capital requirement, brand loyalty, legal regulations) are
low, the threat is high.

o High threat = More competition and less profitability.

2. Bargaining Power of Buyers:

o The power customers have to drive prices down or demand better service.

o If buyers are few but buy in large quantities, they have more power.

o High buyer power = Lower prices and profit margins for sellers.

3. Bargaining Power of Suppliers:

o The ability of suppliers to increase prices or reduce the quality of goods/services.

o Fewer suppliers = More power for them.

o High supplier power = Increased costs and reduced profitability.

4. Threat of Substitute Products or Services:

o Refers to the presence of alternative products that customers can switch to.

o More substitutes = Higher threat.

o High threat of substitutes = Limited price-setting ability.

5. Industry Rivalry:
 o The intensity of competition among existing competitors in the market.

o High rivalry may result from many firms, slow market growth, or lack of
differentiation.

o High rivalry = Pressure on prices, margins, and profits.

Purpose of the Model:

• To assess industry attractiveness

• To identify strategic positioning

• To make decisions regarding entry, expansion, or exit

• To gain competitive advantage

Example:

In the automobile industry, rivalry is high (many firms), buyer power is moderate (many
choices), supplier power is moderate (global sourcing), threat of new entrants is low (high
capital needed), and threat of substitutes is high (electric vehicles, public transport).

2. Strategy Management Process

Definition:

Strategic Management Process refers to the systematic analysis, planning, implementation, and
evaluation of actions and decisions that help an organization achieve its long-term objectives
and gain a competitive advantage. It ensures that the organization’s goals are aligned with the
changing business environment.

Steps in the Strategic Management Process:

The Strategic Management Process generally consists of six key steps:

Goal Setting / Defining the Vision and Mission

• Purpose: Identify the purpose of the organization, its long-term vision, and overall
mission.

• Includes:

o Setting short-term and long-term objectives.

o Defining the organization's values and culture.

• Example: A company like Apple defines its mission as "to bring the best user experience
to its customers through innovative hardware, software, and services."

Environmental Scanning / Situation Analysis

• Purpose: Assess internal and external factors affecting the organization.

• Tools Used:

o SWOT Analysis (Strengths, Weaknesses, Opportunities, Threats)

o PESTEL Analysis (Political, Economic, Social, Technological, Environmental, Legal)

o Porter’s Five Forces

• Internal Analysis: Evaluates company resources, competencies, and capabilities.

• External Analysis: Examines market trends, competition, customer behavior, etc.

• Example: Tesla conducts market analysis to understand electric vehicle trends and
competitors like BYD and Hyundai.

Strategy Formulation

• Purpose: Develop strategic plans based on environmental analysis.

• Types of Strategies:

o Corporate-level strategy – Overall scope and direction of the firm.

o Business-level strategy – Competitive positioning (Cost Leadership,

Differentiation).

o Functional-level strategy – Departmental strategies (marketing, HR, operations).

• Example: Amazon follows a cost leadership and customer-centric strategy.

Strategy Implementation

• Purpose: Put the formulated strategy into action.

• Activities:

o Allocating resources (financial, human, technological)

o Designing organizational structure

o Communicating plans across departments

o Creating policies and assigning responsibilities

• Challenges: Resistance to change, poor communication, lack of resources.

• Example: McDonald's implements standardized global operations with local adaptations.

Strategy Evaluation and Control

• Purpose: Monitor and assess the effectiveness of the implemented strategy.

• Tools Used:

o Key Performance Indicators (KPIs)

o Balanced Scorecard

o Benchmarking

• If necessary: Take corrective actions and adjust strategies based on feedback.

• Example: Coca-Cola evaluates brand performance and market response to new product
launches.

Feedback and Continuous Improvement

• Strategic management is a cyclical process, not a one-time activity.

• Feedback helps improve future strategies and adapt to environmental changes.

• Continuous improvement ensures sustainability and relevance in the market.

 Diagram: Strategic Management Process

scss

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[ Mission & Vision ]

[ Environmental Scanning ]

[ Strategy Formulation ]

[ Strategy Implementation ]

[ Evaluation & Control ]

↺ (Feedback)

Benefits of Strategic Management Process:

• Provides direction and purpose

• Enhances organizational performance

• Helps in resource optimization

• Improves competitive positioning

• Facilitates proactive decision-making

• Encourages long-term sustainability

Conclusion:

The Strategic Management Process plays a vital role in guiding organizations to success by
aligning internal capabilities with external opportunities. By continuously evaluating and
refining strategies, businesses can stay ahead in a dynamic environment and achieve sustainable
competitive advantage.
3. Strategy Formation Process (Diagram)

+-----------------------------+

| Vision, Mission, Objectives |

+-------------+---------------+

+-----------------------------+

| Environmental Scanning |

| (SWOT, PESTEL, Porter's 5F) |

+-------------+---------------+

+-----------------------------+

| Identify Strategic Options |

+-------------+---------------+

+-----------------------------+

| Evaluate & Select Strategy |

+-------------+---------------+

+-----------------------------+

| Set Long-Term Strategic Goals|

+-------------+---------------+

+-----------------------------+

| Create Functional Action Plans|

+-----------------------------+.
4. Competitive Advantage

Definition:

Competitive Advantage refers to the unique strengths or conditions that allow a firm to
perform better than its competitors and achieve superior margins, market share, or customer
loyalty. It helps a company to create more value for customers than rival firms, either by
offering lower prices or by providing greater benefits.

Defined by Michael Porter as the ability of a firm to outperform rivals through either cost
advantage or differentiation.

Types of Competitive Advantage:

Porter suggested three generic strategies through which a firm can achieve competitive
advantage:

Cost Leadership:

• A firm becomes the lowest-cost producer in the industry.

• Achieved through economies of scale, efficient operations, and tight cost control.

• Attracts price-sensitive customers.

• Example: Walmart – uses supply chain efficiency and large-scale operations to offer
lower prices.

Differentiation:

• A firm offers unique products or services that are valued by customers.

• Customers are willing to pay a premium for features like quality, brand image,
innovation, or customer service.

• Example: Apple – differentiates with design, ecosystem, and innovation.

Focus Strategy:
 • Targets a specific market niche, rather than the whole market.

• Can be either cost focus or differentiation focus.

• Allows firms to serve their niche better than competitors.

• Example: Rolls-Royce – focuses on high-end luxury car buyers.

Sources of Competitive Advantage:

1. Technology & Innovation – Offering advanced or patented products (e.g., Tesla).

2. Brand Reputation – Strong emotional and psychological connection (e.g., Nike).

3. Customer Service – Superior support and after-sales service (e.g., Amazon).

4. Operational Efficiency – Streamlined production or logistics (e.g., Toyota's Lean

Manufacturing).

5. Unique Resources & Capabilities – Skilled labor, proprietary software, etc.

Sustaining Competitive Advantage:

To stay ahead, firms must:

• Continuously innovate

• Protect intellectual property

• Build customer loyalty

• Invest in training and capabilities

• Monitor market trends and competitor actions

Diagram: Competitive Advantage Framework (Porter’s Generic Strategies)

COMPETITIVE ADVANTAGE

------------------------

| |

Lower Cost Differentiation

 | |

↓ ↓

Cost Leadership Differentiation Strategy

↘ ↙

↘ Focus ↙

→ Cost Focus / Differentiation Focus

Example:

Let’s take Southwest Airlines:

• Maintains cost leadership through low-cost operations and standardized fleet.

• Delivers affordable air travel, beating competitors on price.

Another example: Starbucks uses differentiation by offering premium coffee, ambience, and
experience, creating brand loyalty.

Importance of Competitive Advantage:

• Helps a firm stand out in a crowded market.

• Improves profitability and growth.

• Builds brand loyalty and customer retention.

• Acts as a barrier to entry for new competitors.

• Drives strategic success in the long term.

Conclusion:

Competitive advantage is not just about being different, but about being better in ways that
matter to customers. In a dynamic business environment, firms must continuously build,
adapt, and protect their advantages to ensure long-term success.

5. Building Blocks of Competitive Advantage (Important)

 Definition:

The Building Blocks of Competitive Advantage are the core internal factors or capabilities that
an organization must develop and strengthen to outperform competitors. These blocks enable
firms to deliver superior value to customers, reduce costs, and sustain profitability over time.

Key Building Blocks:

Strategic experts have identified four essential building blocks of competitive advantage. These
elements work together to create a strong and sustainable edge in the market.

Efficiency

• Definition: Using resources (human, capital, time) in the most productive way to lower
costs and increase output.

• Why It Matters: Greater efficiency means lower production costs and better pricing
power.

• How to Achieve:

o Lean production

o Economies of scale

o Automation and technology

• Example: Toyota uses lean manufacturing (Just-in-Time system) to achieve high

operational efficiency.

Quality

• Definition: Delivering superior products or services that meet or exceed customer

expectations.

• Types:

o Product quality: Durability, reliability, performance

o Service quality: Responsiveness, courtesy, problem-solving

• Why It Matters: High quality builds customer loyalty and allows firms to charge
premium prices.

• Example: Apple is known for its high-quality and innovative products, which justifies its
higher pricing.

Innovation

• Definition: Creating new or improved products, services, or processes that offer better
value.

• Why It Matters: Innovation allows firms to differentiate and stay ahead of competition.

• Types:

o Product Innovation (e.g., new smartphone features)

o Process Innovation (e.g., faster manufacturing methods)

• Example: Tesla uses innovation in electric vehicles and autonomous driving systems to
lead the market.

Customer Responsiveness

• Definition: Understanding and meeting the needs of customers more effectively than
competitors.

• Why It Matters: Builds brand loyalty, improves satisfaction, and increases lifetime
customer value.

• How to Achieve:

o Fast delivery

o Personalized services

o Excellent customer support

• Example: Amazon excels in customer responsiveness through fast shipping, user-friendly

services, and 24/7 support.

Diagram: Building Blocks of Competitive Advantage

 +------------------------+

| Competitive Advantage |

+-----------+------------+

+----------------+----------------+

| | | | |

Efficiency Quality Innovation Customer Responsiveness

Interdependence of Blocks:

These building blocks are interconnected:

• Efficient processes reduce costs (Efficiency) → Enable competitive pricing.

• High product quality leads to fewer defects → Improves customer satisfaction.

• Innovation creates unique features → Enhances differentiation.

• Good responsiveness builds loyalty → Increases market share.

Example of All Four Blocks:

Samsung:

• Efficiency: Mass production of smartphones.

• Quality: Durable, feature-rich devices.

• Innovation: Foldable screens, camera tech.

• Customer Responsiveness: Global support centers, regular updates.

Sustaining Competitive Advantage:

• Continuously invest in these building blocks.

• Monitor changing customer needs.

• Keep improving processes, products, and people.

 • Build core competencies around these capabilities.

Conclusion:

The four building blocks—efficiency, quality, innovation, and customer responsiveness—are

essential for creating and sustaining a firm’s competitive advantage. Organizations that master
these areas can position themselves as market leaders and achieve long-term success in a
competitive environment.

6. Capabilities and Competitive Advantage

Definition:

• Capabilities refer to an organization’s ability to deploy resources effectively to achieve

desired outcomes.

• These are skills, knowledge, processes, and routines that enable firms to create value.

• Competitive Advantage is the result of using these capabilities better than competitors
to deliver superior customer value, reduce costs, or differentiate products/services.

Relationship Between Capabilities and Competitive Advantage:

Capabilities are the foundation of competitive advantage. They allow a firm to:

• Do things differently or better than rivals.

• Respond quickly to market changes.

• Innovate continuously and sustain performance.

Simply put: Resources are what you have; capabilities are what you do with them.

Types of Capabilities That Build Competitive Advantage:

Core Capabilities / Core Competencies

• These are unique strengths deeply embedded in a company’s operations.

• Help deliver value and cannot be easily imitated by competitors.

• Example: Honda’s core competency in engine design and manufacturing.

Dynamic Capabilities

• Ability to adapt, renew, and reconfigure resources and strategies in a changing

environment.

• Key to sustained competitive advantage in volatile markets.

• Example: Netflix’s shift from DVD rental to streaming, then to content creation.

Technological Capabilities

• Use of advanced systems, R&D, and innovation processes.

• Lead to product and process innovation.

• Example: Apple’s design and software integration capabilities.

Operational Capabilities

• Efficiency in manufacturing, logistics, and supply chain.

• Lead to cost leadership.

• Example: Toyota’s lean production system (Just-in-Time, Kaizen).

Customer Relationship Capabilities

• Skills in understanding and responding to customer needs.

• Build loyalty and repeat business.

• Example: Amazon’s recommendation engine and responsive customer service.

Marketing Capabilities

• Branding, market sensing, and promotion skills.

 • Enable firms to position themselves effectively in the market.

• Example: Coca-Cola’s global branding and emotional advertising campaigns.

Example:

Google

• Capabilities: AI algorithms, data analytics, innovation culture.

• How It Helps: Delivers personalized search and advertising → Competitive edge in digital
services.

Zara (Fashion Retailer)

• Capabilities: Fast fashion supply chain, customer data analytics.

• Competitive Advantage: Rapid product turnover and trend responsiveness.

Module 2

1. Business Level, Corporate Level, Functional Strategies

Corporate-Level Strategy

Definition:

Corporate-level strategy is the highest level of strategic decision-making. It deals with the
overall scope and direction of the corporation and how value will be added across different
businesses.

Focus Areas:

• Which industries or markets to compete in?

• Allocation of resources among business units.

• Decisions on diversification, mergers, acquisitions, joint ventures, and divestments.

 Types of Corporate Strategies:

1. Growth Strategy – Expanding into new markets or increasing operations.

2. Stability Strategy – Maintaining current business operations.

3. Retrenchment Strategy – Downsizing or divesting to regain focus.

4. Diversification Strategy – Entering into new industries (Related or Unrelated).

Example:

Tata Group – Operates in IT (TCS), steel (Tata Steel), automobiles (Tata Motors), hotels (Taj). Its
corporate-level strategy involves managing a diversified portfolio of businesses.

Business-Level Strategy

Definition:

Business-level strategy focuses on how a single business unit or division competes in its market.
It’s about achieving a competitive advantage in a specific industry.

Focus Areas:

• How to compete successfully in a specific market.

• What products or services to offer.

• How to serve target customers better than competitors.

Types of Business Strategies (Porter’s Generic Strategies):

1. Cost Leadership – Offering low-cost products (e.g., Walmart).

2. Differentiation – Offering unique, premium products (e.g., Apple).

3. Focus Strategy – Targeting a niche market (e.g., Rolls-Royce).

 Example:

Airtel – Competes in the telecom sector with cost-effective mobile and data services in
developing markets. Its business strategy is focused on cost leadership and market expansion.

Functional-Level Strategy

Definition:

Functional-level strategies are action plans developed by departments (HR, Marketing, Finance,
Operations, etc.) to implement the business-level strategies effectively.

Focus Areas:

• Efficient execution of departmental tasks.

• Coordination across functions to support competitive advantage.

• Resource utilization, cost efficiency, and performance improvement.

Examples of Functional Strategies:

• Marketing Strategy: Promotions, branding, product pricing.

• Operations Strategy: Lean production, quality control.

• HR Strategy: Recruitment, training, performance incentives.

• Finance Strategy: Budgeting, cost reduction, capital structure.

Example:

In Maruti Suzuki, the marketing department may run a cost-focused campaign, while the
production team focuses on lean manufacturing to support the company’s cost leadership
strategy.
2. Organizational Capability Profile & Strategic Analysis

. Definition of Organizational Capability:

Organizational capability refers to the firm’s ability to perform coordinated tasks and use
resources effectively to achieve competitive advantage. It is the combination of skills,
processes, technologies, and human talent that enables a company to execute its strategies
efficiently.

2. Organizational Capability Profile:

The Organizational Capability Profile (OCP) is a structured analysis of a company’s internal

strengths. It highlights the firm's key capabilities and competencies across different functions
like:

• Marketing

• Finance

• Operations

• Human Resource Management

• Research & Development (R&D)

• Information Technology (IT)

The purpose is to assess how well-equipped the organization is to implement strategies and
compete in the market.

Components of an Organizational Capability Profile:

Functional Area Key Capabilities

Marketing Brand strength, market reach, customer knowledge

Finance Capital structure, access to funds, cost control

Operations Productivity, quality systems, inventory control

Human Resources Skill base, motivation, leadership, training

Functional Area Key Capabilities

R&D/Innovation Innovation capability, product development

IT Data analytics, systems integration, automation

Example:

Let’s consider Infosys (IT Company):

Function Capabilities

HR Skilled engineers, leadership development

Operations Scalable global delivery model

Finance Strong financial reserves and cost management

R&D AI, automation, and blockchain research labs

IT Infrastructure Digital platforms and cloud infrastructure

This shows Infosys’s strong organizational capability in service delivery, innovation, and talent
management.

Strategic Analysis

1. Definition of Strategic Analysis:

Strategic analysis is the process of researching and analyzing the internal and external
environment of an organization to make informed strategic decisions. It helps identify the firm’s
strengths, weaknesses, opportunities, and threats (SWOT) and align them with its goals.

2. Purpose of Strategic Analysis:

• To identify current position and future potential

• To align resources with market demands

 • To gain and sustain competitive advantage

• To make strategic decisions based on facts and data

Major Tools Used in Strategic Analysis:

Tool Purpose

Identifies internal strengths/weaknesses and external

SWOT Analysis
opportunities/threats

PESTEL Analysis Examines Political, Economic, Social, Technological, Environmental, Legal

Porter’s Five Forces Analyzes industry competition and market attractiveness

Value Chain
Studies activities that create customer value
Analysis

BCG Matrix Helps portfolio planning of products/business units

VRIO Framework Evaluates whether capabilities provide sustained competitive advantage

Link Between OCP and Strategic Analysis:

• Organizational Capability Profile is a key input for internal analysis in tools like SWOT
and VRIO.

• It helps firms identify core competencies and resource strengths.

• Aligning capabilities with strategic goals is essential for strategy formulation and
implementation.

Example:

Tata Motors:

• OCP reveals strong manufacturing, R&D, and cost efficiency.

• SWOT shows strength in domestic market but weakness in global branding.

• Strategic analysis suggests investing in electric vehicle R&D and global expansion.
 Diagram: Link Between Capability Profile & Strategy

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Organizational Capability Profile

Internal Strategic Analysis

Identification of Core Strengths

Strategy Formulation & Execution

Conclusion:

The Organizational Capability Profile provides a clear understanding of a firm’s internal

strengths. Combined with strategic analysis tools, it enables the organization to formulate
effective strategies, seize opportunities, manage threats, and achieve long-term success in
competitive environments.

3. Corporate Portfolio Analysis

. Definition:

Corporate Portfolio Analysis is a strategic planning tool used by diversified companies to

evaluate and manage their business units or product lines as a portfolio of investments. It
helps in resource allocation, growth planning, and risk balancing across the corporate group.

2. Purpose of Corporate Portfolio Analysis:

• To assess the performance and potential of different businesses.

• To balance risk and return across business units.

 • To decide where to invest, divest, or grow.

• To ensure strategic alignment with overall corporate goals.

3. Steps in Portfolio Analysis:

1. Identify strategic business units (SBUs)

2. Assess each SBU’s internal and external position

3. Use models/tools like BCG, GE Matrix, or ADL Matrix

4. Classify SBUs into categories

5. Formulate strategic recommendations for each unit

4. Popular Tools for Corporate Portfolio Analysis:

A. Boston Consulting Group (BCG) Matrix

A 2x2 matrix based on:

• Market Growth Rate (vertical axis)

• Relative Market Share (horizontal axis)

BCG Matrix Categories:

Category Description & Strategy

Stars High market growth, high share – Invest for growth

Cash Cows Low growth, high share – Maintain and generate cash

Question Marks High growth, low share – Analyze carefully, invest or divest

Dogs Low growth, low share – Divest or reposition

Example:

For Tata Group:

• TCS = Cash Cow

• Tata Motors EV = Question Mark / Star

• Tata Steel Europe = Dog (possibly)

B. GE McKinsey Matrix (9-Cell Grid)

A more advanced model than BCG. It evaluates:

• Industry Attractiveness (Y-axis)

• Business Unit Strength (X-axis)

Categories:

Cell Strategy Recommendation

Invest/Grow High attractiveness & high strength

Selective Medium ratings – invest selectively

Harvest/Divest Low attractiveness & low strength

Use Case:

A company like Reliance may use this to evaluate:

• Telecom (Jio): High industry attractiveness + high strength = Grow

• Retail: Medium strength = Selective investment

• Oil & Gas: Low attractiveness = Harvest

5. Importance of Corporate Portfolio Analysis:

1. Resource Optimization: Ensures proper fund allocation.

2. Strategic Focus: Identifies where to expand or exit.

3. Performance Tracking: Monitors the health of business units.

 4. Supports Diversification: Aids decision-making in multi-business firms.

5. Risk Management: Spreads risk across different markets/products.

6. Limitations of Portfolio Models:

• Too simplistic (e.g., BCG only uses 2 variables)

• Ignores synergy between SBUs

• Static – does not reflect dynamic market changes

• Subjective assessment of market strength and attractiveness

8. Conclusion:

Corporate Portfolio Analysis is a vital strategic tool for companies with multiple business units.
It guides top management in investment planning, strategic priorities, and long-term
profitability. When used with other tools (like SWOT, Value Chain, VRIO), it helps build a robust
corporate strategy.

4. SWOT Analysis, GAP Analysis, DGC Matrix

SWOT Analysis

Definition:

SWOT stands for Strengths, Weaknesses, Opportunities, and Threats. It is a strategic planning
tool used to assess the internal capabilities and external environment of an organization.

Components:

Category Description

Strengths Internal capabilities that give an advantage

Weaknesses Internal limitations that hinder performance

Opportunities External factors that the organization can exploit

Threats External factors that can cause trouble or risks

 Purpose:

• Helps in strategy formulation

• Identifies areas for growth and improvement

• Aligns company’s internal strengths with external opportunities

Example (Skoda India):

SWOT Element Example

Strength German engineering, strong parent brand (Volkswagen)

Weakness Limited rural market reach

Opportunity Growing demand for premium mid-size SUVs in India

Threat Intense competition from Hyundai, Kia, and Toyota

Diagram:

SWOT Analysis

Internal Factors | External Factors

-------------------------|----------------------------

Strengths | Weaknesses | Opportunities | Threats

GAP Analysis

Definition:

GAP Analysis is a strategic tool used to compare the current performance of an organization
with its desired future state. It identifies the "gap" between where you are and where you
want to be.
 Components:

Element Description

Current State The existing condition or performance

Future State The target or desired goal

Gap The shortfall between current and desired state

Action Plan Strategies to close the gap

Uses:

• Performance improvement

• Resource planning

• Skill development

• Strategic realignment

Example:

If Skoda’s current market share in India is 2% and its target is 5% in 3 years:

• Gap = 3%

• Action Plan = Launch new models, increase dealerships, aggressive advertising.

Diagram:

GAP Analysis

Desired Performance → 5% Market Share

| ← GAP →
 ↓

Current Performance → 2% Market Share

Directional Policy Matrix (DGC Matrix)

(Also called GE-McKinsey Matrix)

Definition:

The Directional Growth-Control (DGC) Matrix is a portfolio analysis tool that evaluates
business units or products based on:

• Market Attractiveness (Y-axis)

• Business Strength / Competitive Position (X-axis)

Matrix Structure (9-Cell Grid):

High Attractiveness Medium Attractiveness Low Attractiveness

Strong Grow/Invest Grow Selectively Protect and Refocus

Average Grow Selectively Hold Position Limit Investment

Weak Divest Limit Investment Harvest or Exit

Purpose:

• Allocate resources efficiently

• Identify units for growth, stability, or exit

• Prioritize strategic business units (SBUs)

Example (Tata Group):

SBU Attractiveness Strength Strategy

TCS High Strong Grow/Invest

Tata Steel Europe Low Weak Divest/Exit

Tata Power Medium Average Hold/Improve

Diagram: DGC Matrix

Market Attractiveness

High | Invest/Grow

Medium | Hold/Selective

Low | Divest/Exit

+----------------------→

Weak Average Strong

Business Strength

Conclusion:

Tool Purpose

SWOT Analysis Understand internal & external factors

GAP Analysis Identify performance gaps and improvement areas

DGC Matrix Manage business portfolio and resource allocation

Together, these tools provide a comprehensive strategic analysis framework to help managers
make informed, evidence-based decisions.
Module 3

1. Strategy Implementation and Control (7S Framework)

1. Introduction

Strategy implementation is the process of putting strategic plans into action. It involves aligning
organizational resources, structure, systems, and people to achieve strategic objectives.

Strategy control, on the other hand, ensures that the implementation is on track and that
deviations are corrected promptly through monitoring, evaluation, and feedback.

One of the most effective tools used in implementation and control is the McKinsey 7S
Framework, which helps align all elements of the organization to successfully execute a
strategy.

2. Strategy Implementation

Key Components:

1. Organizational Structure – Defines roles, responsibilities, hierarchy

2. Resources Allocation – Budgeting manpower, money, time

3. Leadership & Communication – Drives motivation and clarity

4. Policies & Procedures – Guidelines for action

5. Culture Alignment – Matching values with strategy

6. Change Management – Overcoming resistance during implementation

Example:

If a company like Skoda Auto India plans to enter the EV market, it must:

• Redesign its production structure

• Allocate R&D and marketing budgets

 • Train employees in EV technologies

• Build partnerships with charging network providers

3. Strategy Control

Purpose:

To monitor the progress of implementation, identify deviations, and take corrective action.

Types of Strategic Control:

Control Type Description

Premise Control Checks if assumptions behind strategy are valid

Implementation Control Monitors if the strategy is being executed properly

Strategic Surveillance Broad control to track unexpected issues

Special Alert Control Response to sudden crises or opportunities

Tools Used:

• Balanced Scorecard

• Performance Dashboards

• KPI Reports

• Audit Reviews

4. McKinsey’s 7S Framework
 Definition:

The 7S Framework developed by McKinsey helps align seven interrelated elements of an

organization to successfully implement strategy and ensure control.

These elements are:

Category Elements (7S) Description

Hard S Strategy, Structure, Systems Easily identified and changed

Difficult to quantify, culture-

Soft S Skills, Staff, Style, Shared Values
related

The 7S Elements:

1. Strategy – The long-term plan to gain competitive advantage

2. Structure – The organization’s hierarchy and reporting lines

3. Systems – Daily processes and procedures (IT, HR, Finance)

4. Shared Values – Core beliefs and culture driving the firm

5. Style – Leadership style and management behavior

6. Staff – Workforce quality, size, and capabilities

7. Skills – Competencies and capabilities within the organization

Diagram of 7S Framework:

Shared Values

/ | \

Style --- | --- Staff

\ | /

Skills Systems

/ \

Strategy --- Structure

 Application Example: Tata Motors EV Division

• Strategy: Market leadership in electric vehicles

• Structure: Separate EV division with agile teams

• Systems: Integration with green tech & IoT platforms

• Shared Values: Focus on sustainability and innovation

• Style: Transformational leadership for change

• Staff: Technologists, engineers, marketing experts

• Skills: R&D in batteries, AI, lightweight materials

5. Importance of 7S in Strategy Implementation

• Ensures all parts of the organization are aligned

• Identifies gaps or inconsistencies in strategy execution

• Helps manage organizational change

• Supports a holistic approach to implementation

• Enhances coordination and performance across departments

6. Conclusion

Successful strategy implementation and control depend on a balanced approach that connects
planning with action. The 7S Framework is a powerful tool that ensures all aspects of the
organization work in harmony to achieve strategic goals. By using controls and aligning the 7
elements, firms can adapt, grow, and sustain competitive advantage.

2. Strategic Control Techniques

1. Introduction:

Strategic control techniques are tools and methods used by organizations to monitor, evaluate,
and adjust their strategic plans during and after implementation. These techniques ensure that
the actual performance aligns with the intended strategic goals and that corrective actions are
taken when deviations occur.

They help managers make informed decisions in dynamic environments and sustain
competitive advantage.

2. Types of Strategic Control Techniques:

Strategic controls can be classified based on when and how they are applied:

Type of Control Purpose

Premise Control Validates key assumptions in strategic planning

Implementation Control Monitors execution of strategic plans

Strategic Surveillance Broad monitoring of external/internal threats & trends

Special Alert Control Responds to sudden or unforeseen events

3. Key Strategic Control Techniques:

1. Balanced Scorecard (BSC)

• Developed by Kaplan and Norton

• Measures performance from four perspectives:

1. Financial – ROI, profits, revenue growth

2. Customer – Satisfaction, retention

3. Internal Processes – Efficiency, productivity

4. Learning and Growth – Training, innovation, employee development

Use: Links strategy with performance, ensures strategic alignment

2. Key Performance Indicators (KPIs)

• Specific, measurable values that indicate progress toward strategic goals

 • KPIs can be financial (e.g., Net Profit Margin) or non-financial (e.g., Customer Retention
Rate)

Use: Tracks operational and strategic performance consistently.

3. Management by Objectives (MBO)

• Developed by Peter Drucker

• Involves setting clear, measurable objectives at all levels and evaluating performance
based on the achievement of those goals.

Use: Encourages employee involvement and goal alignment between individuals and the
organization.

4. Benchmarking

• Compares an organization’s performance with best-in-class companies (internal or

external)

• Can be competitive, functional, or generic benchmarking

Use: Identifies performance gaps and best practices for strategic improvement

5. Gap Analysis

• Identifies the difference between actual and desired performance

• Focuses on understanding the "gap" in strategy outcomes and planning corrective

measures

Use: Supports performance evaluation and future planning.

6. Variance Analysis

• Compares planned outcomes vs. actual results

• Focuses on identifying favorable/unfavorable deviations

Use: Commonly used in financial planning and control to maintain strategic direction.
 7. Strategic Audit

• A comprehensive review of strategy, environment, resources, and implementation

effectiveness

• Includes SWOT, industry analysis, and stakeholder analysis

Use: Helps ensure strategy remains relevant and aligned with external environment

8. Scenario Planning

• Developing and analyzing multiple "what-if" scenarios

• Helps organizations prepare for uncertain futures

Use: Enhances adaptability and resilience in strategic decisions

9. Critical Success Factors (CSFs)

• Identifies key areas that must go right for the strategy to succeed

• Focuses on strategic priorities and tracking performance in these areas

Use: Ensures that management attention remains focused on mission-critical issues

5. Importance of Strategic Control Techniques:

• Ensures effective strategy execution

• Allows early detection of deviations

• Supports adaptive decision-making

• Aligns strategy with organizational performance

• Enables course correction and continuous improvement

6. Limitations:

• May rely on historical data which can become outdated

 • Complex KPIs can be difficult to track

• Over-focus on control may limit creativity and innovation

• Requires time, cost, and effort to set up and maintain systems

3. Types/Steps in Strategic Control

. Types of Strategic Control

Strategic control can be classified into four main types, each serving a specific purpose in the
implementation and evaluation of strategy.

1. Premise Control

• Ensures that the assumptions made during strategy formulation (such as market trends,
competition, economy) remain valid and relevant.

• If the premises are no longer true, the strategy may become ineffective.

Example: If Skoda planned EV expansion based on fuel price hikes, but petrol prices fell
drastically, the strategy premise must be rechecked.

2. Implementation Control

• Focuses on the actual execution of the strategy.

• Monitors whether strategic initiatives and action plans are being carried out properly.

• Often done through milestone reviews and monitoring key activities.

Example: Tracking product launch stages, budget utilization, and hiring plans.

3. Strategic Surveillance

• A generalized, broad-based control system.

 • Monitors a wide range of internal and external events to detect threats or
opportunities not identified earlier.

• It provides a 360° view to avoid strategic blind spots.

Example: Competitor suddenly launching a disruptive new technology or changes in

government policy.

4. Special Alert Control

• Deals with sudden and unexpected events or crises that demand an urgent strategic
response.

• Involves contingency planning and rapid decision-making.

Example: COVID-19 pandemic forcing automobile companies to shift focus to digital showrooms
and contactless deliveries.

3. Steps in Strategic Control Process

Strategic control is a cyclical process that ensures alignment between strategy and
performance.

Step 1: Set Strategic Goals and Standards

• Define specific objectives, KPIs, and performance benchmarks for evaluating strategic
performance.

• These should be measurable, realistic, and time-bound.

Example: Increase market share by 5% in 2 years.

Step 2: Measure Actual Performance

• Collect and analyze data related to strategic activities (sales figures, customer feedback,
innovation rates, market expansion, etc.)

• Performance can be measured using tools like Balanced Scorecard, KPIs, and
Dashboards.
 Step 3: Compare Actual Performance with Strategic Goals

• Identify the gaps or deviations between what was planned and what has been achieved.

• This helps detect whether implementation is on track or not.

Example: If the company aimed for 10 new dealerships but achieved only 6, the gap must be
analyzed.

Step 4: Analyze Deviations and Causes

• Determine why deviations occurred:

o Were the resources insufficient?

o Was there employee resistance?

o Did external market conditions change?

Step 5: Take Corrective Action

• Modify strategies, plans, or operations based on the analysis.

• This may include resource reallocation, policy changes, or restructuring.

Step 6: Review and Learn

• Strategic control is a continuous process.

• Learn from past performance and adapt the strategic approach as needed.

• Encourages organizational learning and agility.

4. Blue Ocean Strategy

1. Introduction

Blue Ocean Strategy is a revolutionary approach to strategy formulation, introduced by W. Chan

Kim and Renée Mauborgne in their book "Blue Ocean Strategy" (2005). It suggests that instead
of competing in existing markets (red oceans), companies should create new, uncontested
market spaces (blue oceans), thereby making the competition irrelevant.

2. Red Ocean vs. Blue Ocean

Red Ocean Strategy Blue Ocean Strategy

Compete in existing market space Create uncontested market space

Beat the competition Make the competition irrelevant

Exploit existing demand Create and capture new demand

Make the value-cost trade-off Break the value-cost trade-off

Align strategy with differentiation OR low Align strategy with both differentiation AND low
cost cost

3. Key Principles of Blue Ocean Strategy

1. Reconstruct Market Boundaries

– Look across industries, buyers, offerings, time, etc.

2. Focus on the Big Picture, Not the Numbers

– Use strategic visualisation like the strategy canvas.

3. Reach Beyond Existing Demand

– Focus on non-customers and unexplored segments.

4. Get the Strategic Sequence Right

– Ensure commercial viability by aligning:

o Buyer utility → Price → Cost → Adoption

5. Overcome Key Organizational Hurdles

– Deal with resource constraints, resistance to change, etc.

6. Build Execution into Strategy

– Involve people from the beginning for ownership and commitment.
 4. Tools of Blue Ocean Strategy

1. Strategy Canvas

• Visual tool to compare current industry offerings and identify gaps

• X-axis = key factors of competition

• Y-axis = level of offering to customers

2. Four Actions Framework (ERRC Grid)

Used to redefine value propositions by asking:

Action Purpose

Eliminate What factors should be eliminated?

Reduce What should be reduced below industry standard?

Raise What should be raised above industry standard?

Create What new factors should be created?

6. Example: Indian Context – BYJU’S

• Created a new learning experience (digital + visual)

• Combined education + gamification + AI-based personalization

• Reduced physical classroom dependency

• Created a new market space between e-learning and school education

7. Benefits of Blue Ocean Strategy

• No direct competition → high profitability

• Focuses on innovation and customer value

• Opens new opportunities for growth and differentiation

• Reduces the risk of price wars and market saturation

 8. Challenges in Blue Ocean Strategy

• Difficult to identify untapped opportunities

• Requires organizational change and innovation mindset

• Risk of imitation over time by competitors

• May require large investments in market creation

The Blue Ocean Strategy is a bold, proactive approach to strategy formulation. It enables firms
to break free from competitive battles, redefine industry rules, and create new demand. For
companies operating in saturated markets, this strategy provides a way to achieve profitable
growth, long-term sustainability, and market leadership by focusing on innovation,
differentiation, and value creation.