Dream or a picture to Created by consensus.

Forms mental image of future to which people can

Vision be achieved align. Describes something possible, not necessarily predictable.
ultimately. Provides direction and focus. Pulls people, who hold it, towards it.

States the business reason for the organization's existence. Does not state
an outcome. Contains no time limit or measurement. Provides basis for
Mission Statement of
decisions on resource allocation and appropriate objectives. Defines
business.
current and future business in terms of product, score, customer, reason,
and market price.

Describes ideal states to be achieved at some unidentified future time.

Results to be Defined consistent with and related directly to vision and mission. Guide
Goals
achieved. everyday decisions and actions. Do not necessarily deal with measurable
results.

Focuses on critical organization issues and milestones. Describe

How - Actions and
activities to be accomplished to achieve goals. Identify dates when
Objectives Results - to plan to specific results are to be accomplished. Measurable in terms of whether
achieve the desired
or not they are achieved. They may be changed when necessary for
results.
progress towards goals.

Industry Analysis
An industrial analysis is used to examine the past trends in an industry, the current demand and
supply mechanics, and the future outlook of the industry. It also acts as a guide to investors on
the viability of investing in a company.

The analysis is useful in offering recommendations in case an unexpected development happened

in the industry. An industrial analysis takes time and it is very complicated.

Competitor Analysis
Defined Competitor analysis provides both an offensive and a defensive strategic context for
identifying opportunities and threats. The offensive strategy context allows firms to more quickly
exploit opportunities and capitalize on strengths. Conversely, the defensive strategy context
allows them to more effectively counter the threat posed by rival firms seeking to exploit the
firm’s own weaknesses. Through competitor analysis, firms identify who their key competitors
are, develop a profile for each of them, identify their objectives and strategies, assess their
strengths and weaknesses, gauge the threat they pose, and anticipate their reaction to competitive
moves. Firms that develop systematic and advanced competitor profiling have a significant
competitive advantag

Tools for industry and competitor analysis are-

1) SWOT
2) Porters five force model

Porter’s Five Forces Analysis

The Five Forces primary purpose is to determine the attractiveness of an industry. However, the
analysis also provides a starting point for formulating strategy and understanding the competitive
landscape in which a company operates.

The framework for the Five Forces Analysis consists of these competitive forces:

 Industry rivalry (degree of competition among existing firms)—intense

competition leads to reduced profit potential for companies in the same industry
 Threat of substitutes (products or services)—availability of substitute products will
limit your ability to raise prices
 Bargaining power of buyers—powerful buyers have a significant impact on prices
 Bargaining power of suppliers—powerful suppliers can demand premium prices
and limit your profit
 Barriers to entry (threat of new entrants)—act as a deterrent against new
competitors
Grand Strategies
Definition: The Grand Strategies are the corporate level strategies designed to identify the
firm’s choice with respect to the direction it follows to accomplish its set objectives. Simply, it
involves the decision of choosing the long term plans from the set of available alternatives. The
Grand Strategies are also called as Master Strategies or Corporate Strategies.

According to Glueck there are basically four grand strategies alternatives:

Stability

Growth /expansion

Retrenchment

Combination

Stability
Stability strategy implies continuing the current activities of the firm without any significant
change in direction. If the environment is unstable and the firm is doing well, then it may believe
that it is better to make no changes. A firm is said to be following a stability strategy if it is
satisfied with the same market share, satisfied with the improvements of functional performance
and the management does not want to take any risks that might be associated with expansion
growth.

Two examples of stability strategy are:

Phoenix beverages have also been using stability strategy the recent years because of good profit
and good performance
In general, stability strategic can be very useful in the short run, but can be dangerous if followed
for too long.

Growth/expansion
Growth strategies are the most widely pursued corporate strategies. Companies that do business
in expanding industries must grow to survive. A company can grow internally by expanding its
operations or it can grow externally through mergers, acquisitions, joint ventures or strategic
alliances.

Growth strategies can be divided into three broad categories:

A. Intensive strategies
B. Integration strategies
C. Diversification strategies

A. Intensive strategies
Without moving outside the organization’s current range of product and services it may be
possible to attract customers by intensive advertising, and by realigning the product and the
market options available to the organization.

There are three important intensive strategies:

1. Market penetration-seeks to increase market share for existing products in the existing
markets through greater marketing efforts.
2. Market development-seeks to increase market share by selling the present products in
the new market.
3. Product development-seeks to increase market share by developing new or improved
products for present markets.

B. Integration
Integration basically means combining activities relating to the present activity of a firm. A
company performs a number of activities to transform an input to output. These activities include
right from the procurement of raw materials to the production of finished goods and their
marketing and distribution to the ultimate customers.

Two types of integration:

1. Vertical integration- it involves gaining ownership or increased control over suppliers

or distributors. Vertical integration is of two types:

 Backward integration-involves gaining ownership of firm’s suppliers for example, a

manufacturer of finished goods may take over the business of a supplier who
manufactures raw materials, component parts and other inputs.
  Forward integration-it involves gaining ownership or increased control over distributors
or retailers.

2. Horizontal integration- this is a strategy seeking ownership or increase control over a

firm competitor’s.

C. Diversification strategies
It is the process of adding new business to existing business of the company. In other words,
diversification adds new products or markets in the existing ones. The diversification strategy is
concerned with achieving a greater market from a greater range of products in order to maximize
profits.

Types of diversifications:

1. Concentric diversification- adding to new but related business is called concentric

diversification. It involves acquisition of businesses that are related to the acquiring firm
in terms of technology, markets or product.
2. Conglomerate diversification- adding to new, but unrelated is called conglomerate
diversification. The new will have no relationship to the company’s technology, products
or markets.

Retrenchment / defensive strategies

A company may pursue retrenchment strategies when it has a weak competitive position in some
or all of the products lines resulting in a poor performance.

In an attempt to eliminate the weaknesses that are dragging the company down, management
may follow one or more of the following retrenchment strategies:

1. Turn around- a firm is said to be sick when it faces a severe cash crunch or a consistent
downtrend in its operating profits. Such a firm becomes insolvent unless appropriate
internal or external actions are taken to change financial picture of the firm.
2. Bankruptcy- this is a form of defensive strategy. It allows organization to file a petition in
the court for legal protection to the firm in case the firm is not in a position to pay its
debt.
3. Liquidation- it occurs when an entire company dissolves and its assets are sold. It is a
strategy of last resort when there are no buyers for a business which want to be sold, the
company may be wound up and its assets may be sold to satisfy debt obligations.
4. Divesture- selling a division or part of an organization is called divesture.

Examples of retrenchment/defensive strategies:

Infinity BPO
The Infinity Business Process Outsourcing (BPO) owes a sum of Rs 100 million to its creditors.
This company has been bankrupt and did not pay his employees their salary due to a hunger
protestation they finally got their right.

A firm may divest (sell) businesses that are not part of its core operations so that it can focus on
what it does best. Eastman Kodak, Ford Motor Company, and many other firms have sold
various businesses that were not closely related to their core businesses.

Combination strategy
A company pursues a combination of two or more corporate strategies simultaneously. But a
combination strategy can be exceptionally risky if carried out too far. No organization can afford
to pursue all strategies that might benefit the firm. Difficult decision must be made. Priorities
must be established. Organization like individuals have limited resources, so organizations must
choose among alternative strategies.

Examples of combination strategy are:

Texas-based textile producer Cotton Incorporated uses a push/pull promotional strategy. They
push to create customer demand through constantly developing new products and offering these
products in stores; and pull customers towards these products through advertising and promotion
deals.

Candico’s, the domestic confectionery company’s international expansion plan include a

combination of organic and inorganic strategies, through strategic acquisitions and mergers, joint
ventures or setting up independent manufacturing facilities in individual market.
Porter's Generic Competitive Strategies (ways of competing)
A firm's relative position within its industry determines whether a firm's profitability is above or
below the industry average. The fundamental basis of above average profitability in the long run
is sustainable competitive advantage. There are two basic types of competitive advantage a firm
can possess: low cost or differentiation. The two basic types of competitive advantage combined
with the scope of activities for which a firm seeks to achieve them, lead to three generic
strategies for achieving above average performance in an industry: cost leadership,
differentiation, and focus. The focus strategy has two variants, cost focus and differentiation
focus.

1. Cost Leadership
In cost leadership, a firm sets out to become the low cost producer in its industry. The sources of
cost advantage are varied and depend on the structure of the industry. They may include the
pursuit of economies of scale, proprietary technology, preferential access to raw materials and
other factors. A low cost producer must find and exploit all sources of cost advantage. if a firm
can achieve and sustain overall cost leadership, then it will be an above average performer in its
industry, provided it can command prices at or near the industry average.

2. Differentiation
In a differentiation strategy a firm seeks to be unique in its industry along some dimensions that
are widely valued by buyers. It selects one or more attributes that many buyers in an industry
perceive as important, and uniquely positions itself to meet those needs. It is rewarded for its
uniqueness with a premium price.

3. Focus
The generic strategy of focus rests on the choice of a narrow competitive scope within an
industry. The focuser selects a segment or group of segments in the industry and tailors its
strategy to serving them to the exclusion of others.

The focus strategy has two variants.

(a) In cost focus a firm seeks a cost advantage in its target segment, while in

(b) differentiation focus a firm seeks differentiation in its target segment. Both variants of the
focus strategy rest on differences between a focuser's target segment and other segments in the
industry. The target segments must either have buyers with unusual needs or else the production
and delivery system that best serves the target segment must differ from that of other industry
segments. Cost focus exploits differences in cost behaviour in some segments, while
differentiation focus exploits the special needs of buyers in certain segments.