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Submitted By: Ravindra Kumar (MBA/15004/13)

Birla Institute of Technology, Mesra
Department of Management
Patna Campus








Assignment
of
Strategic Management




Submitted to: Submitted By:
Mr. Iftekhar Ahmad Ravindra Kumar
Faculty- Department of Management MBA 2
nd
Semester
Strategic Management MBA/15004/13
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Submitted By: Ravindra Kumar (MBA/15004/13)
Questions:-

1. What is strategic gap and how it can be identified?

2. Explain the concept of unique resource, give examples. Justify your choice and
explain why these are important.

3. What is Critical Success Factor (CSF)? How CSF are identified? Explain. What
roles CSF contributes to the analysis of strategic gap?

4. Explain the concept of core competencies. Give examples. Justify your choice
and explain why these are important.

5. Explain the resources and the core competencies of Hero Motors. Examine and
explain which are threshold and which are distinctive.

6. Involves: -
a. Identify one event comprising either a merger or an acquisition or joint
venture that involved two companies from different countries of origin
(to the extent possible).
b. Establish, is this event is success or failure.
c. Provide factor or reason for the success or failure of the event.

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Submitted By: Ravindra Kumar (MBA/15004/13)
1. A strategy gap refers to the gap between the current performance of an
organisation and its desired performance as expressed in its mission, objectives,
goals and the strategy for achieving them.
A strategic gap is defined by Johnson, Whittington and Scholes as:
Opportunities in the environment that are not being fully exploited by
competitors

The purpose of the tools of strategic gap identification is a systematic way to
allow manager to think outside the box. It is used to identify evolutionary
and disruptive strategies to retain competitive advantage by identifying as yet
unfulfilled consumer needs.

Identifying strategic gaps was popularised by academics such as Ansoff who
created the Ansoff product-market matrix. Ansoff matrix identifies gaps using
a demand side view and includes:
Product development; new
product development
Market penetration; such as
growing market share or
increasing product usage
Market development; creating
new markets for existing
products
New product development; this may include brand extensions and creating
original products for existing markets. Porter advanced the theory by creating
the five forces model which identifies supply side, demand side, alternatives,
overall industry attractiveness and their relationship. These assist planners in
identifying strategic gaps. Porters five forces include:
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Submitted By: Ravindra Kumar (MBA/15004/13)
Threat of new entry; looking at the
industry broadly, the greater the
availability of capacity, the lower
the ease of entry. The higher the
competition intensity the lower the
ability to make profits, which
makes the industry less attractive.
Suppliers; a lack of intense
competition, high switching costs
and low availability allow the
supply side to dictate terms making
the industry less attractive.
Buyers: low switching costs, low differentiation, few purchasers and low
marginal costs allow buyers to be more prices sensitive, giving the demand side
more power and making the industry less attractive.
Substitutes: similar outcomes, achieved by different means, these keep a
dampener on profitability and make an industry less attractive.

The current idea created by Kim and Mauborgne is called blue oceans
thinking looks at the demand side and tries to identify customer expectation
and demands that havent currently been exploited. They use a grid format
similar to Porters, it identifies:
Eliminate: which areas can the task not be completed without?
Reduce: which areas can be achieved at below industry standard?
Raise: which areas can be achieved at above industry standard?
Create: what has the industry never invented before?

The strategic gap assessment has moved from identifying performance gaps to
exposing aspects such as consumer perception and expectations of
organisational performance (Saunders, Yusuf, 2004). Strategic gap research
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Submitted By: Ravindra Kumar (MBA/15004/13)
continues to evolve and identify incremental aspects of the strategic gap to be
exploited.
While important, the lack of discovery of new ways to exploit potential profit
centres mean academic interest in the area seems to be waning.
Often unseen, the strategy gap is a threat to the future performance and even
survival of an organisation and is guaranteed to impact upon the efficiency and
effectiveness of senior executives and their management teams. The strategy
gap is considered to be real and exists within most organisations. An article in
the "Fortune magazine" (June 1999 edition) stated that some 70% of CEOs'
failures were the result of poor execution rather than poor strategies.
In the book The Strategy Gap: Leveraging Technology to Execute Winning,
the authors argue that the main causes of the strategy gap could be grouped into
three areas, each of which interacts with the others. These three areas are:
i. The way management acts to implement strategic initiatives
(management induced gaps)
ii. Traditional processes (for example: budgeting, forecasting;
reporting) used to implement strategy (process induced gaps)
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Submitted By: Ravindra Kumar (MBA/15004/13)
iii. Technology systems used to support those processes (technology
induced gaps).
2. To understand the concept of unique resources, it is necessary to understand the
concept of resources. Resources refers to an economic or productive factor
required to accomplish an activity, or as means to undertake an enterprise and
achieve desired outcome. Three most basic resources are land, labour, and
capital: other resource include energy, entrepreneurship, information, expertise,
management and time.
A unique or strategic resource is one that allows ongoing competitive
advantage and enhanced outcomes. They are product or project dependent and
can be tangible or intangible. A unique tangible resource by itself is unlikely to
give an ongoing competitive advantage, it is normally the combination of the
resource and its deployment that gives it value. These aspects are underpinned
by the VRIN model which identifies the strategic capability of the resources.
The VRIN model includes:

Value: This is the unique resources that can unlock value and competitive
advantage.

Rarity: These are the resources that possessed by few other organisations.

Imitability: The resources that a difficult to copy.

Non substitutability: These are the pinch points, the resources that cant be
replaced.

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Submitted By: Ravindra Kumar (MBA/15004/13)
Rolls Royce cars are an example of using reputation as a unique resource.
There are many car manufacturers that produce high quality vehicles but Roll
Royce is still the best known aspirational car in the market place. This
reputation is important because a Rolls Royce is still a large expensive chunk
of metal to which the same laws of physics apply as other cars, and for which
there is no need only desire.

Wine is an example of a product that in combination with reputation achieves a
competitive advantage. The product is unique because there are many so many
variables that cant be controlled and each time it is made the result is slightly
different. Every person who tries the product has a slightly different palate and
so their tastes are slightly different making each brand a unique experience. If
this is marketed and distributed successfully to the consumer, then the
manufacturer can achieve a sustainable competitive advantage.



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Submitted By: Ravindra Kumar (MBA/15004/13)
3. Critical Success Factor is related to strategic factor or key factor for success.
Every manager are concerned about knowing those critical factor which lead to
success for their organisation.
That's where Critical Success Factors (CSFs) can help in so many important
matters that can compete for your attention in business that it's often difficult to
see the "wood for the trees" and it can be extremely difficult to get everyone in
the team pulling in the same direction and focusing on the true essentials.
CSFs, also known as Key Results Areas (KRAs), are the essential areas of
activity that must be performed well if you are to achieve the mission,
objectives or goals for business or project.
By identifying Critical Success Factors, a firm can create a common point of
reference to help you direct and measure the success of the business or project.
As a common point of reference, CSFs help everyone in the team to know
exactly what's most important. And this helps people perform their own work
in the right context and so pull together towards the same overall aims.
The idea of CSFs was first presented by D. Ronald Daniel in the 1960s. It was
then built on and popularized a decade later by John F. Rockart, of MIT's Sloan
School of Management, and has since been used extensively to help businesses
implement their strategies and projects.
Inevitably, the CSF concept has evolved, and it may have seen it implemented
in different ways. This article provides a simple definition and approach based
on Rockart's original ideas.

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Submitted By: Ravindra Kumar (MBA/15004/13)
Rockart defined CSFs as: "The limited number of areas in which results, if
they are satisfactory, will ensure successful competitive performance for
the organization. They are the few key areas where things must go right
for the business to flourish. If results in these areas are not adequate, the
organization's efforts for the period will be less than desired."
He also concluded that CSFs are "areas of activity that should receive
constant and careful attention from management."
Critical Success Factors are strongly related to the mission and strategic goals
of the business or project. Whereas the mission and goals focus on the aims and
what is to be achieved, Critical Success Factors focus on the most important
areas and get to the very heart of both what is to be achieved and how you will
achieve it.
Critical success factors (CSFs) can be considered the critical pinch points,
which are the areas, products, costs, quality etc. that must be achieved for the
project to work and compete in the market place successfully. Identifying CSFs
allows planners to recognise if the company has the capacity to move from
analysis to exploitation of the potential strategic gap. Planners can more
realistically assess possible opportunities and threats when they understand
more closely the problem areas that any new direction may expose. The current
ongoing financial crisis is an example of the fluid nature of CSFs. Until
recently the ability to borrow money was relatively easy. In South Australia
there are many mining projects that are ready to proceed that either will not go
ahead or proceed in a reduced form because of their inability to raise capital.
When these projects were initiated the planners would have considered raising
the funds as an issue but not the CSF that it has become.


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Submitted By: Ravindra Kumar (MBA/15004/13)
Using the Tool: An Example
CSFs are best understood by example. Consider a produce store "Farm Fresh
Produce", whose mission is:
"To become the number one produce store in Main Street by selling the highest
quality, freshest farm produce, from farm to customer in under 24 hours on
75% of our range and with 98% customer satisfaction."
The strategic objectives of Farm Fresh are to:
Gain market share locally of 25%.
Achieve fresh supplies of "farm to customer" in 24 hours for 75% of
products.
Sustain a customer satisfaction rate of 98%.
Expand product range to attract more customers.
Have sufficient store space to accommodate the range of products that
customers want.
In order to identify possible CSFs, we must examine the mission and objectives
and see which areas of the business need attention so that they can be achieved.
We can start by brainstorming what the Critical Success Factors might be
(these are the "Candidate" CSFs.)


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Submitted By: Ravindra Kumar (MBA/15004/13)
4. Core competencies are the bundle of skills and resources that allow a company
to compete successfully, achieve profitability and be the foundation of
competitive advantage. Business in the past would have considered core
competencies something that was to be held in house and closely guarded. The
increasing complexity of businesses means that what a core competency is and
how it should be controlled has become less obvious. The ability to keep these
competencies in house is almost impossible. At Holden, for example, a core
competency would be the design of cars. Even within this core competency
there are many aspects that would be outsourced.

For example: they wouldnt write the software that is used to draw the car and
they probably use outside design houses, engineers and mathematicians to look
at certain aspects of a new design.

Dell for example looks like it has computer manufacturer as a core
competency, but doesnt make anything just assembles the parts. The
complexity, high level of dynamism (rate of change) and number of
manufacturers with in the computer market mean the power of suppliers is low
enough that it doesnt need to keep these competencies in house.

In the past the outsourcing of core competencies has been cyclical in nature.
Companies have been prepared to outsource more in good times and as times
get tough or there is a problem they are brought back in-house again. With the
rise of better communications, complexity of projects and efficiency of
transport infrastructure many companies will be forced to outsource core
competencies to compete. Taking this to its logical conclusion is outsourcing
everything.


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Submitted By: Ravindra Kumar (MBA/15004/13)
5. Hero MotoCorp Ltd. (Formerly Hero Honda Motors Ltd.) is the world's largest
manufacturer of two - wheelers, based in India.
In 2001, the company achieved the coveted position of being the largest two-
wheeler manufacturing company in India and also, the 'World No.1' two-
wheeler company in terms of unit volume sales in a calendar year. Hero
MotoCorp Ltd. continues to maintain this position till date.
Vision
The story of Hero Honda began with a simple vision - the vision of a mobile
and an empowered India, powered by its two wheelers. Hero MotoCorp Ltd.,
company's new identity, reflects its commitment towards providing world class
mobility solutions with renewed focus on expanding company's footprint in the
global arena.
Mission
Hero MotoCorps mission is to become a global enterprise fulfilling its
customers' needs and aspirations for mobility, setting benchmarks in
technology, styling and quality so that it converts its customers into its brand
advocates.
The company will provide an engaging environment for its people to perform
to their true potential. It will continue its focus on value creation and enduring
relationships with its partners.
Strategy
Hero MotoCorps key strategies are to build a robust product portfolio across
categories, explore growth opportunities globally, continuously improve its
operational efficiency, aggressively expand its reach to customers, continue to
invest in brand building activities and ensure customer and shareholder delight.

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Brand
The new Hero is rising and is poised to shine on the global arena. Company's
new identity "Hero MotoCorp Ltd." is truly reflective of its vision to strengthen
focus on mobility and technology and creating global footprint.
Building and promoting new brand identity will be central to all its initiatives,
utilizing every opportunity and leveraging its strong presence across sports,
entertainment and ground-level activation.
Manufacturing
Hero MotoCorp two wheelers are manufactured across 3 globally benchmarked
manufacturing facilities. Two of these are based at Gurgaon and Dharuhera
which are located in the state of Haryana in northern India. The third and the
latest manufacturing plant is based at Haridwar, in the hill state of Uttrakhand.
Distribution
The Company's growth in the two wheeler market in India is the result of an
intrinsic ability to increase reach in new geographies and growth markets. Hero
MotoCorps extensive sales and service network now spans over to 6000
customer touch points. These comprise a mix of authorized dealerships, service
& spare parts outlets, and dealer-appointed outlets across the country.

Threshold in their own language:
A company that believes in maintaining ecological standards along with
business standards. "We must do something for the community from whose
land we generate our wealth." - Chairman Dr.Brijmohan Lall Munjal..
At Hero MotoCorp, our goal isn't limited to business but encompasses the
broader spectrum of serving humanity through social initiatives. Hero
MotoCorp takes a stand as a socially responsible enterprise respectful of its
environment.
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Hero MotoCorp has been strongly devoted not only to environmental
conservation programs but also expresses the increasingly inseparable balance
between economic concerns, environmental and social issues faced by
business. A business must not grow at the expense of mankind but must serve
humankind at large.
Environment Policy
We at Hero MotoCorp have been committed to demonstrate excellence in our
environmental performance on a continuous basis, as an intrinsic element of
our corporate philosophy
To achieve this we commit ourselves to:
Integrate environmental attributes and cleaner production in all our
business processes and practices with specific consideration to
substitution of hazardous chemicals and strengthening the greening of
supply chain.
Continue product innovations to improve environmental compatibility.
Comply with all applicable environmental legislation and also
controlling our environmental discharges through the principles of
"alara" (as low as reasonably achievable).
Institutionalize resource conservation in the areas of oil, water, electrical
energy, paints and chemicals.
Enhance environmental awareness of our employees and dealers /
vendors, while promoting their involvement in ensuring sound
environmental management.

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Submitted By: Ravindra Kumar (MBA/15004/13)
Quality Policy
Excellence in quality is the core value of Hero MotoCorp philosophy.
We are committed at all levels to achieve high quality in whatever we do,
particularly in our products and services which will meet and exceed
customer's growing aspirations through:
Innovation in products, processes and services..
Continuous improvement in our total quality management systems.
Teamwork and responsibility.
Safety Policy
We believe that safe work practices lead to better business performance,
motivated workforce and higher productivity.
We shall create a safety culture in the organization by:
Integrating safety and health matters in all our activities.
Promoting safety and health awareness amongst employees, suppliers
and contractors.
Continuous improvements in safety performance through precautions be
ides participation and training of employees.
Ensuring compliance with all applicable legislative requirements.
Empowering employees to ensure safety in their respective work places.


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Submitted By: Ravindra Kumar (MBA/15004/13)
6. The Tata acquisition of Jaguar Land Rover is a superb example to include in
research notes on takeovers and mergers. At the time (early 2008), Tatas
investment in JLR seemed to be poorly timed and there were many critics who
questioned the strategic logic of the move as well as its timing. Shortly after the
takeover, demand in the global market for luxury cars collapsed as a result of
the financial crisis and Tata was forced to refinance to support its investment.
Several years later, however, the takeover appears to be a compelling example
of a successful acquisition which is generating substantial shareholder value for
Tata as well as continued support from JLRs many stakeholder groups in the
UK.
Background
J aguar Land Rover (J LR):
- Jaguar Cars bought by Ford in 1989.
- Land Rover bought by Ford from BMW for $1.4bn in 1989.
- A difficult relationship between the UK firm and its US owners.
- Jaguar fell into heavy losses whilst owned by Ford (reaching up to $600million
per year).
- However, Ford invested heavily in new model development.
Tata Group:
- One of Indias largest private conglomerates - used to investing in the UK.
- Bought Tetley Tea in 2000.
- Bought Corus Steel - a big supplier to JLR - in 2007.
- Tata Motors - was already Indias third largest car-maker, but struggling with a
poor image and hampered by rising raw material costs.
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Submitted By: Ravindra Kumar (MBA/15004/13)
The Deal
- Ford sells JLR to Tata for in March 2008 just over 1bn - just a few months
before a collapse in global demand in the international car market.
- Tata financed the takeover with $3bn of new long-term loans.
- The price paid by Tata was approximately half of what Ford paid to buy Jaguar
and Land Rover.; + Ford had continued to incur heavy losses in Jaguar as it failed
to turn the business around.
- The deal took over a year to agree - which may have helped with the post-merger
integration. Tata recognised that it would continue to need support from Ford who
are a main supplier of car components to the two brands.
- No significant change proposed to the businesses by Tata. They claimed that
staff, trade unions and the UK government had been kept informed about the
proposed takeover and supported the move.
- The deal has been endorsed by trade unions, which secured a commitment from
Tata to continue with JLRs production plans until the end of 2011. This includes
development of new models.
Key drivers of / motives for the takeover
- Acquiring JLR would provide significant potential for revenue synergies,
including giving Tata greater international distribution, broader product range and
better customer service skills.
- Tata gains access to world-class engineering capability.
- Strengthens relationship between Tatas steel and motoring businesses.

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Submitted By: Ravindra Kumar (MBA/15004/13)
What happened next?
Significant slump in new car sales in late 2008 as a result of the credit crunch; Tata
had to refinance in order to keep JLR solvent. UK government considered a
financial aid package, indicating the strategic importance of JLR to the UK
economy.
February 2010: Tata secures a 340million loan from the European Investment
Bank to support JLR through recession.
May 2011: Tata announces 5b five year investment programme in JLR - focused
on new product development & new equipment at JLR three UK plants +
investment in a planned factory in China. JLR also to link closer with Tata Steel
to provide new lightweight steel alloys for new car models.
November 2011: JLR announces 1,000 new jobs a Land Rover plant in Solihull
boosted by rising demand for SUVs in China, Russia, India and Brazil.
February 2012: Soaring sales of Jaguar and Land Rover cars have helped Indian
firm Tata Motors to a huge rise in profits (up 41% on 2010). JLR arm saw sales
rise 37%, helped by selling 32,000 of its new Range Rover Evoque. China
overtakes the UK as JLRs biggest market.
March 2012: JLR and Chery Automobile agree a joint venture that should pave
the way for production of Jaguar and Land Rover cars in China.
April 2012: JLR announces that it will build a successor to its previous sports cars
called the F-type at its factory in Birmingham.




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Submitted By: Ravindra Kumar (MBA/15004/13)
References:
1.
http://en.wikipedia.org/wiki/Strategy_gap
Ngram viewer, 2011, Strategic gap, viewed 13 August 2011
Saunders, M, Yusuf, A, 2004, An Investigation of Strategic Gaps
between Projected and Target Student Recruitment in a Regional
College of Technology: A Managerial Perspective, International
Journal of Management, vol. 21 no. 4, pp. 464-470
2.
http://www.mindtools.com/pages/article/newLDR_80.htm
Porter, M, 2008, The five Competitive Forces that Shape Strategy,
Harvard Business Review, Vol. 86, no. 1, pp. 78-93
3.
Dexter, B, 2010, Critical success factors for developmental team
projects. Team performance management, vol.16, no 7-8, pp. 343
4.
Merrifield, B, 2006, Make Outsourcing a Core Competency. Research
technology management, vol. 49, no. 3, pp. 10
Shreefal, M, 2007, Outsourcing a Core Competency. Research
technology management, vol. 50, no. 3, pp. 28
5.
https://www.heromotocorp.com/
http://www.heromotocorp.com/en-in/about-us/about-us.html
http://www.heromotocorp.com/en-in/about-us/key-policies.html
http://www.heromotocorp.com/en-in/about-us/milestones.html
6.
http://www.tatamotors.com/
http://www.jaguarlandrover.com/gl/en/
http://www.tutor2u.net/blog/index.php/business-studies/comments/6-
essential-ma-cases-tata-group-buys-jaguar-land-rover