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What is Strategy?
• Story of Kodak
– $16 billion company in 1996, with 65% share of
film, 5th most powerful brand in the world
employing 1,45,000 people with a market cap of
$31 billion.
– Invented digital camera in 1975. Commercialised it
in 1996, first in world, with DC 20
– Never made profit after 2004
– Filed for bankruptcy in 2012 and got delisted form NY
exchange
• Fuji, the perennial no 2 , made changes and is still
surviving with quick acquisition/ diversification,
cost slashing, closers of labs/ factories etc.
• Stories of Fiat, Ideal Jawa, Anil Ambani, IL&FS,
Deewan Housing
• Learning????
What is Strategy?
What is Strategy?
• It is a high level plan to achieve one or more goals
under conditions of uncertainty.
• The term came into use in the 6th century in Roman
terminology, and was translated into Western
vernacular languages only in the 18th century. From
then until the 20th century, the word "strategy" came
to denote "a comprehensive way to try to pursue
political ends, including the threat or actual use of
force, in a dialectic of wills" in a military conflict, in
which both adversaries interact.
• ?
What is Strategy?
• It is not a quest for achieving operational
effectiveness by using tools such as TQM,
Benchmarking, Outsourcing, Partnering,
Reengineering, Change management.
• It is not even positioning. According to new
dogma, rivals can quickly copy any market
position. Strategic positioning means
performing different activities from rivals or
performing similar activities in different ways.
What is Strategy?
• Strategy is the creation of a unique and valuable position,
involving a different set of activities, e.g., serving few needs
of many customers or subset of an industry product
(Variety- based positioning e.g, Castrol lube- any machine
that needs lubrication), broad needs of few customers
(Need – based positioning e.g, Ikea & Citi Bank HNI reach),
broad needs of many customers (Access- based positioning
e.g, ITC Choupal, Carmike Cinemas)
• It requires you to make trade-offs in competing-to choose
what not to do. Straddling is not a good options.
• It involves creating ‘fit’ among company’s activities
What is Strategy?
• The essence of strategic positioning is to
choose activities that are different from rivals.
(Southwest airline, IKEA)
What is Strategy?
• A sustainable strategic position requires Trade-
offs (Jet Airways with Jet lite V/S Indigo)
• Strategy is making trade-offs when competing.
Without trade –offs , their would be no need for
choices and thus no need for strategy.
• Strategy is creating fit among company’s
activities.
• Fit between positioning of company and its
activities drives both competitive advantage and
sustainability.
Types of Fit
• First- order fit: Consistency between each
activity (e.g. low cost)
• Second- order fit: When activities are
reinforcing (Indigo- using one type of aircraft)
• Third- order fit: Optimisation of efforts
(turnaround time of aircraft)
• The more a company’s positioning rests on
activity systems with second and third order
fit, the more sustainable its advantage will be.
7. Strategic fit: Ryanair’s activity system
MISSION
• Present-oriented
• Informational
OBJECTIVES