You are on page 1of 32

Amity School of Business

Business Policy and


Strategic Management
Kareena Bhatia
Module 3
Semester VI

Amity School of Business

Strategic Advantage
Profile

Amity School of Business

Organizational Capability Factors


Financial Capability
Factors related to sources of funds: Capital
structure, Procurement of capital, Financing pattern,
Working capital availability, Reserves and surplus
etc, and Relationship with lenders, banks and
financial institutions.
Factors related to usage of funds: Capital
investment, Fixed Assets acquisition, Current
Assets, Loans and advances, Dividend distribution
and Relationship with shareholders.
Factors related to management of funds: Financial,
Accounting and budgeting systems, Management
control systems, Return and risk management, Cost
reduction and control, Tax planning and advantages.

Amity School of Business

Organizational Capability Factors


Typical strengths that support financial
capability

Access to financial resources


Amicable relationship with financial institutions
High level of credit worthiness
Efficient capital budgeting system
Low cost of capital as compared to competitors
High level of shareholders confidence
Effective management control system
Tax benefits resulting from government policies

Examples: Mahindra & Mahindra, Reliance


Industries, Gujarat Ambuja
4

Amity School of Business

Mahindra & Mahindra has followed a policy


of being a low asset company,
accumulating a high surplus. It also
maintains a low debt-equity ratio, raising
its borrowing capacity substantially.
Reliance Industries has superior ability to
raise finances, easy access to financial
resources and an efficient capital budgeting
system.
Gujarat Ambuja accumulated high savings
from higher cement prices and sales
volume growth over the past few years.
After Holcim took over equity in the
company, the companys financial strength
to raise finances increased considerably.
5

Amity School of Business

Organizational Capability Factors


Marketing Capability
Product-related factors: variety, differentiation,
positioning, packaging etc.
Price-related factors: pricing, objectives, policies,
changes, etc.
Place-related factors: distribution, transportation &
logistics, marketing channels, marketing
intermediaries, etc.
Promotion-related factors: promotional tools, plans,
etc.
Integrative and systemic factors: marketing mix,
market standing, company image, marketing,
organization, marketing system, marketing
information system, etc.
6

Amity School of Business

Organizational Capability Factors


Typical strengths that support marketing
capability

Wide variety and better quality of products


Sharply-focused positioning
Low prices as compared to competitors
Effective distribution system
Effective sales promotion
High-profile advertising
Favorable company and product image
Effective marketing organization

Examples: Parle, LG India, Pfizer India, Real


Value

Amity School of Business

Parle is a company well recognized


for its strong imagery and appeal.
Several of its biscuits and
confectionery brands are leaders in
the industry.
LG India can take justified pride in its
extensive distribution network.
Pfizer India has the distinction of
having brands that have achieved
top rank in the pharmaceuticals
industry, like Becosules and Corex.
Real Values effective marketing
communications has turned the
product concept of fire extinguisher
from being perceived as an industrial
equipment to a household necessity.
8

Amity School of Business

Organizational Capability Factors


Operations Capability
Factors related to production system: capacity,
location, layout, product or service design,
work system, degree of automation etc.
Factors related to operations and control
system: aggregate production planning,
material supply, inventory, cost and quality
control, maintenance systems and procedures
etc.
Factors related to the R&D system: product
development, patent rights, level of
technology used, technical collaboration and
support etc.
9

Amity School of Business

Organizational Capability Factors


Typical strengths that support operational
capability

High level of capacity utilization


Favorable plant location
High degree of vertical integration
Reliable sources of supply
Effective control of operational costs
Existence of good inventory control system
Availability of high caliber- R&D personnel
Technical collaboration with reputed firms

Examples: JK Tyres, Mumbai Tiffin Box


Suppliers Association, Lakshmi Machine Works
10

Amity School of Business

JK Tyres pioneered radial tyres in India,


but has not been able to capitalize on
it, technologically, competitors such as
Bridgestone has proved better.
Mumbai Tiffin Box Suppliers
association is a 120-year old
organization, well streamlined, working
through meticulous teamwork and
timing.
The capability to absorb technology is
a great strength as seen in the case of
Laxmi Machine Works, one of the top
five companies of the world to make
the entire range of textile spinning
machinery, in collaboration with Rieter
Machine Works of Switzerland.
11

Amity School of Business

Organizational Capability Factors


Personnel Capability
Factors related to the personnel system: systems
of manpower planning, selection, development,
compensation, communication and appraisal, etc.
Factors related to organizational and employee
characteristics: quality of managers, staff and
workers perception about organization,
availability of developmental opportunities for
employees, working conditions, etc.
Factors related to industrial relations: unionmanagement relationship, collective bargaining,
safety, welfare and security, employee
satisfaction and morale etc.
12

Amity School of Business

Organizational Capability Factors


Typical strengths that support personnel capability

Genuine concern for HR management and development


Efficient and effective personnel systems
Excellent training opportunities and facilities
Congenial working environment
Satisfied and motivated workforce
High level of organizational loyalty
Low level of absenteeism

Examples: Covansys, Metal Box India Ltd, DRS


group

13

Amity School of Business

Covansys attempts to build a human


resource-friendly company environment
in order to retain skilled employees, by
providing culture for growth, ensuring
employee empowerment.
DRS group, a third-party logistics
company realized the value of human
resources in the fast growing organized
retail industry in India. To develop its
prospective employees , it has set up an
institute to train them in a variety of
jobs.
Metal Box India Ltd. Faced the problem
of a large and militant workforce which
hampered the personnel capability of
the company and ultimately caused
shut down of its several plants across
the country.
14

Amity School of Business

Organizational Capability Factors


Information Management Capability
Factors related to acquisition and retention of
information
Factors related to processing and synthesis of
information
Factors related to retrieval and usage of
information
Factors related to transmission and dissemination
Integrative, systemic and supportive factors:
availability of IT infrastructure, its relevance and
compatibility to organizational needs,
upgradation of facilities
15

Amity School of Business

Organizational Capability Factors


Typical strengths that support information
management capability
Ease and convenience of access to information
resources
Widespread use of computerized information system
Availability and operability of high-tech equipment
Wide coverage and networking of computer systems
Presence of foolproof information security systems
Presence of buyers and suppliers conversant with IT
applications
Top management understanding of, and support to
IT and its application within organization

Examples: SBI, NIIT, Web.com


16

Amity School of Business

SBI has a good network of branches all


across the country which are all
computerized and integrated , increasing the
information capability of the company.
NIIT, a major player in the IT industry has
been able to create a significant information
capability for itself by networking its
widely-dispersed offices in several
countries around the world.
Web.com is a reputed software development
company whose high information capability
is based on its PIPS system (project
implementation planning study) that is
made by focusing on client-requirements.
17

Amity School of Business

Organizational Capability Factors


General Management Capability
Factors related to general management system:
strategic planning process, management
information system
Factors related to general managers: orientation,
risk-propensity, values, goals, capacity for work,
functional experience, etc.
Factors related to external relationships: influence
and rapport with the government, regulatory
agencies and financial institutions, PR, social
responsibility, public image, etc.
Factors related to organizational climate:
organizational culture and processes, balance of
vested interests, nature of organizational structure
and controls, etc.
18

Amity School of Business

Organizational Capability Factors


Typical
strengths
that
management capability

support

general

Effective system for corporate planning


Entrepreneurial orientation and high propensity for
risk-taking
Good rapport with government and bureaucracy
Favorable corporate image
Development-oriented organizational culture
Effective management of organizational change

Examples:
Manorama

Infosys,

Yes

Bank,

Malayalam

19

Amity School of Business

Infosys is not the biggest IT company, nor is it


having the widest market segment coverage, yet
it evokes awe and respect owing to the middleclass success story of its legendary founders and
their wealth sharing philosophy.
Yes bank leveraged its entry into the banking
industry on the basis of the record of its top
management. The bank was able to target niche
segments and using high technology was able to
keep fixed costs under control thus enabling it to
become operationally profitable in a very short
time.
Malayalam Manorama is India's largest selling
newspaper. Behind the success of the company is
the unified, decisive and unchallenged leadership
of the family whose members have had
significant political and social life in Kerala.
20

Amity School of Business

Preparing the Organizational


Capability Profile (OCP)
Capability Factors

Weaknes Normal
s
0
-5

Strength
+5

Financial Capability
Factors
Marketing Capability
Factors
Operations Capability
Factors
Personnel Capability
Factors
Information Management
Capability Factors
General Management

21

Amity School of Business

Strategic Advantage Profile (SAP)


Capability
Factors

Nature of
Impact

Competitive Strengths or
Weaknesses

Financial
Capability
Marketing
Capability
Operations
Capability
Personnel
Capability
Information
Management
General
Management
Up arrows indicate strength; down arrows indicate weakness; while horizontal
Capability
arrows indicate a neutral position.

22

Amity School of Business

Strategic Advantage
Profile (SAP) of
Capability
Factors

Nature of
Impact

Competitive Strengths or
Weaknesses

Financial
Capability

Improved cash flow and


resource utilization.
Zero billing day environment.
Stable market share prices.
Strong equity support

Marketing
Capability

Diversified portfolio of
products and services.
Caters to every segment.
Competitive pricing offering
best value.
Every ad focused at
customer value chain
23

Amity School of Business

Operations
Capability

Personnel
Capability

Information
Management

3G services.
Consolidation of telecom
business under one entity
has brought various
operational level
advantages.
Airtel decided to go in for a
very young team. Average
age is just 26 years.
Invite criticism from
employees concept has
changed the look of the
business.
Substantial amount of
leverage with British
Telecom.
Massive networking

24

Amity School of Business

General
Management
Capability

Implemented industry best


practices: via on job training
and an effective knowledge
transfer program.

25

Amity School of Business

SWOT Analysis

26

Amity School of Business

SWOT Analysis
SWOT analysis is a structured approach to
evaluate the strategic position of a business
by identifying its strengths, weaknesses,
opportunities and threats.
Strengths and Weaknesses are Internal to the
Organization where as Opportunities and
Threats are external to the Organization.
27

Amity School of Business

The following diagram shows how a


SWOT analysis fits into a strategic
situation analysis.

28

Amity School of Business

SWOT Analysis
STRENGTHS

LEVERAGE

VULNERABILITY

WEAKNESSES

OPPORTUNITIES

CONSTRAINTS

PROBLEMS

THREATS
29

Amity School of Business

SWOT Matrix
STRENGTHS

WEAKNESSES

OPPORTUNITIE
S

SO strategies
Use strengths
to take
advantage of
opportunities

WO strategies
Overcome
weaknesses by
taking
advantage of
opportunities

THREATS

ST strategies
Use strengths
to avoid threats

WT strategies
Minimize
weaknesses and
avoid threats
30

Amity School of Business

Strengths

Weaknesses

Infrastructure
Employees
Marketing Team
Latest Product Innovation
International Quality
Standards
Closeness to the market

Incompetent Management
Unattained employees
Untrained sales force
Poor marketing strategies
Low quality product
Lack of financial capabilities

Opportunities

Threats

New potential market


Collaborative advantages
Latent Market

Any such activity in the


environment that helps the
organization to grow, is an
opportunity for it.

New Competitor
Price
reduction
in
competitors product
New product in the market
Poor marketing strategies
Low quality product
Lack
of
financial
31
capabilities

Amity School of Business

Thank You

32