Unit -4

Syllabus

 Functional level Strategies

 Achieving Superior Efficiency
 Quality, Innovation, and Customer Responsiveness
Session -1
Functional Level Strategies

 https://www.youtube.com/watch?
v=6b8u8qkas90
Functional level Strategies

 Functional-level strategies in strategic management

focus on specific business functions such as marketing,
operations, finance, human resources, and R&D to
support overall business or corporate-level strategies.
Functional level Strategies

 Functional-level strategies - Actions that improve

the efficiency and effectiveness of one or more
value creation activities.
 Used to build valuable resources to attain:
 efficiency.
 quality.
 innovation.
 customer responsiveness.
Functional Level Strategies
Efficiency and Economies of Scale

 Efficiency - Measured by the quantity of inputs that

it takes to produce a given output.
 Economies of scale - Reductions in unit costs
attributed to a larger output.
 Ability to spread fixed costs over a large production volume
and produce in large volumes.
To achieve greater division of labor and specialization
Marketing Strategy

• Objective: Create value for customers and achieve competitive

positioning.
• Key Elements:
• Market segmentation, targeting, and positioning (STP).
• Product differentiation and pricing strategies.
• Branding and promotion techniques.
• Digital marketing and customer relationship management (CRM).
• Example: Implementing loyalty programs to retain customers and boost
sales.
Operations Strategy

• Objective: Enhance efficiency and ensure seamless delivery of

products or services.
• Key Elements:
• Process optimization and lean management.
• Quality control techniques like Six Sigma and Total Quality Management (TQM).
• Supply chain management and inventory control.
• Technology adoption for process automation.
• Example: Reducing production lead times through just-in-time (JIT)
practices.
Financial Strategy

 Objective: Ensure optimal allocation of financial resources for

maximizing shareholder value.

 Key Elements: Budgeting and forecasting. Capital structure decisions

(debt vs. equity financing).Cost management and profitability analysis.
Investment strategies and risk management.

 Example: Diversifying the investment portfolio to reduce financial risks

Human Resource Strategy

•Objective: Develop and retain a skilled workforce aligned with organizational goals.

•Key Elements:
•Recruitment and selection processes.
•Employee training and development programs.
•Performance management systems.
•Compensation and benefits planning.

•Example: Introducing competency mapping to align employee skills with job roles.
Research and Development
Strategy

•Objective: Foster innovation to maintain a competitive edge.

•Key Elements:
•Product and service innovation.
•Collaboration with external partners and research institutions.
•Intellectual property (IP) management.
•Continuous improvement and experimentation.

•Example: Investing in AI-driven technologies to enhance product features.

Achieving Superior Efficiency

 Achieving superior efficiency through functional-level strategies

involves optimizing resources, minimizing waste, and enhancing
productivity across business functions.

 Here's how functional-level strategies contribute to this goal

Marketing Strategy
 Efficiency Goals: Reduce customer acquisition costs
and optimize marketing spend.
 Approaches: Use data analytics to identify high-
return marketing channels and avoid wasteful
spending.
 Implement automation tools like CRM systems to
streamline marketing workflows.
 Focus on retargeting strategies to convert leads more
efficiently.
 Example: Using predictive analytics to focus
advertising on high-conversion customer segments.
Operations Strategy
 Efficiency Goals: Streamline production processes,
reduce costs, and minimize waste.

 Approaches:Adopt lean manufacturing to eliminate

non-value-adding activities.Use automation and robotics
to increase speed and reduce errors.Optimize the supply
chain through just-in-time (JIT) inventory
management.Regularly implement Kaizen practices for
continuous improvement.

 Example: Toyota's lean production system that reduces

waste while enhancing quality.
Financial Strategy
• Efficiency Goals: Ensure optimal resource
allocation and reduce financial waste.
• Approaches:
• Use cost-benefit analysis to prioritize high-return
investments.
• Implement zero-based budgeting (ZBB) to justify every
expense.
• Minimize financing costs by optimizing the capital
structure (e.g., balancing debt and equity).
• Example: A company renegotiates vendor
contracts to reduce operational expenses by 10%.
Human Resource Strategy
•Efficiency Goals: Enhance workforce productivity while managing HR
costs.

•Approaches:
•Use competency mapping to align employee skills with job
requirements.
•Streamline recruitment using AI tools to reduce time and cost per hire.
•Implement employee training programs to reduce skill gaps and
improve performance.
•Focus on retention strategies like flexible work policies to minimize
turnover costs.

•Example: Reducing hiring cycle time by implementing automated

screening tools.
Research and Development
Strategy
•Efficiency Goals: Maximize output from R&D efforts while
minimizing costs and time to market.

•Approaches:
•Use prototyping tools and simulations to reduce trial-and-error
costs.
•Collaborate with external research institutions to share R&D costs.
•Apply agile methodologies for faster product development cycles.

•Example: A tech company using rapid prototyping to test product

ideas efficiently.
IT and Digital Strategy
•Efficiency Goals: Use technology to automate processes and improve
resource utilization.

•Approaches:
•Implement cloud-based solutions to reduce IT infrastructure costs.
•Use data analytics to identify inefficiencies and improve decision-
making.
•Invest in cybersecurity to avoid costly disruptions and data breaches.

•Example: An organization saves 30% on operational costs by moving

to a cloud-based ERP system.
Cross Functional Collaboration
 Efficiency gains are maximized when all functional strategies
work cohesively:
• Marketing aligns with operations to ensure demand
forecasts match production capacity.
• HR supports operations by ensuring a skilled workforce is
available when needed.
• Finance collaborates with IT to prioritize technology
investments that yield the highest ROI.
 By aligning functional strategies with the overarching business
goal of superior efficiency, organizations can reduce costs,
improve productivity, and gain a competitive advantage.
Session - 2
Scenario: Expanding Solar Horizons
– Group Activity
 Your company, SolarBright Solutions, is launching a new rooftop solar panel
system designed to be more affordable and efficient. The goal is to make solar
energy accessible to middle-income households. However, several challenges need
to be addressed:
1. Marketing: Educate customers about the cost and environmental benefits of solar
panels.
2. Operations: Ensure timely manufacturing and installation at customer locations.
3. Finance: Balance pricing to remain competitive while ensuring profitability.
4. HR: Train sales and installation teams to deliver exceptional service.
 Task:
1. Identify your department’s main challenge.
2. Propose how you’ll collaborate with two other departments to solve it.
Session - 3
Quality, Innovation, and Customer
Responsiveness

 In strategic management, organizations focus on

 Quality, Innovation,
 and Customer Responsiveness
 to achieve competitive advantage and long-term
success.
 Quality

• Ensures that products/services meet or exceed

customer expectations.

• Includes Total Quality Management (TQM), Six Sigma,

and Lean methodologies.

• Leads to customer satisfaction, brand loyalty, and

reduced costs.
 Innovation

•Involves developing new products, services, or processes

to stay ahead of competitors.

•Can be technological (e.g., AI-driven solutions) or

business model innovations.

•Requires investment in R&D and fostering a culture of

creativity.
Customer Responsiveness

•Focuses on understanding and addressing customer

needs quickly and effectively.

•Includes personalized services, real-time feedback

mechanisms, and agile operations.

•Enhances customer retention and market adaptability.

Strategic Importance

•Companies integrating these elements create

differentiation and cost leadership.

•Cross-functional collaboration (HR, Operations,

Marketing, Finance) ensures alignment with business
goals.
Case Study: Tesla – Excellence in Quality,
Innovation, and Customer Responsiveness

 Company Overview:

 Tesla, led by Elon Musk, has revolutionized the

automobile industry with its focus on electric vehicles
(EVs), sustainable energy solutions, and advanced
technology.

 Tesla’s success is driven by its strategic emphasis on

Quality, Innovation, and Customer
Responsiveness.
1. Quality Excellence
Tesla’s Approach:
• Tesla ensures high safety and performance standards in its vehicles,
often achieving top safety ratings (e.g., Model 3 receiving a 5-star safety
rating from NHTSA).
• The company uses over-the-air (OTA) software updates to
continuously enhance vehicle performance, reducing the need for recalls.
• Tesla controls the entire supply chain, from battery production
(Gigafactories) to retail sales, ensuring quality at every stage.
 Example:
 Tesla’s Autopilot and Full Self-Driving (FSD) system continuously
improves through machine learning and real-world data collection,
ensuring safer and more efficient driving experiences.
2. Innovation Leadership
Tesla’s Approach:
• Tesla pioneered long-range electric vehicles with superior
battery technology and fast-charging infrastructure
(Superchargers).
• It invests heavily in R&D ($3.1 billion in 2023) to develop new
technologies like Cybertruck, AI-driven self-driving, and
energy storage solutions (Powerwall, Megapack).
• Tesla’s direct-to-consumer sales model eliminates dealerships,
reducing costs and improving the buying experience.
 Example:
 Tesla’s Gigafactories enable large-scale battery production,
reducing costs and increasing EV accessibility. The 4680 battery
cells improve energy efficiency, enabling longer driving ranges
and faster charging times.
3. Customer Responsiveness
Tesla’s Approach:
• Tesla gathers real-time customer data through its connected
vehicles, allowing instant software updates and performance
improvements.
• The company listens to customer feedback, frequently rolling
out new features via software updates (e.g., Sentry Mode
for security).
• Tesla’s Supercharger network expansion addresses customer
concerns about charging availability, making EV adoption easier.
 Example:
 During winter storms, Tesla remotely increased battery range
and charging speeds for affected customers, demonstrating
its ability to adapt quickly to customer needs.
Strategic Impact

•Tesla’s focus on Quality ensures safety, reliability, and

long-term customer trust.

•Continuous Innovation drives market leadership in EVs

and sustainable energy.

•Strong Customer Responsiveness enhances customer

satisfaction and brand loyalty.

•By integrating Quality, Innovation, and Customer

Responsiveness, Tesla has disrupted the automotive
industry and established itself as a leader in sustainable
transportation and energy solutions.
Use Strategic Thinking to Create the Life
You Want

 https://www.youtube.com/watch?v=dbiNhAZlXZk
8 Examples of Customer-Focused
Strategies – to be written in class book

 https://www.indeed.com/career-advice/career-development/customer-
focus-examples