Coming up ....
Some key phrases n terms that are used in M & A
Saturday, October 27, 2007
Strategic Direction
In one of the early posts, I mentioned that in due course, I will be talking about Strategic Direction etc... well that time has come now..
Strategy is just one element of the overall strategic direction that leaders must define for their organizations. A strategy is not a mission, which is what the organization’s leaders want it to accomplish; missions get elaborated into specific goals and performance metrics. A strategy also is not the value network/chain -- the web of relationships with suppliers, customers, employees, and investors within which the business co-creates and captures economic value. Finally, a strategy is not a vision, which is an inspiring portrait of what it will look and feel like to pursue and achieve the organization’s mission and goals. Visioning is part (along with incentives) of what leaders do to motivate people in the organization to engage in above average effort.
In a nutshell, as illustrated below, mission is about what will be achieved; the value network is about with whom value will be created and captured; strategy is about how resources should be allocated to accomplish the mission in the context of the value network; and vision and incentives is about why people in the organization should feel motivated to perform at a high level.
Mission & Goals: What
Value Network: Who
Strategy: How
Vision & Incentives: Why
Together, the mission, network, strategy, and vision define the strategic direction for a business. They provide the what, who, how, and why necessary to powerfully align action us complex organizations.
Reference: http://discussionleader.hbsp.com/watkins/2007/09/demystifying_strategy_the_what.html
Thus Spake Socrates....
Strategy is just one element of the overall strategic direction that leaders must define for their organizations. A strategy is not a mission, which is what the organization’s leaders want it to accomplish; missions get elaborated into specific goals and performance metrics. A strategy also is not the value network/chain -- the web of relationships with suppliers, customers, employees, and investors within which the business co-creates and captures economic value. Finally, a strategy is not a vision, which is an inspiring portrait of what it will look and feel like to pursue and achieve the organization’s mission and goals. Visioning is part (along with incentives) of what leaders do to motivate people in the organization to engage in above average effort.
In a nutshell, as illustrated below, mission is about what will be achieved; the value network is about with whom value will be created and captured; strategy is about how resources should be allocated to accomplish the mission in the context of the value network; and vision and incentives is about why people in the organization should feel motivated to perform at a high level.
Mission & Goals: What
Value Network: Who
Strategy: How
Vision & Incentives: Why
Together, the mission, network, strategy, and vision define the strategic direction for a business. They provide the what, who, how, and why necessary to powerfully align action us complex organizations.
Reference: http://discussionleader.hbsp.com/watkins/2007/09/demystifying_strategy_the_what.html
Thus Spake Socrates....
Tuesday, October 9, 2007
Consulting Categories
The types of consulting that firms (that are relevant to the Management Graduates like us) offer can be divided into five general categories: strategy, operations, information technology, e-business, and human resources. An additional category is boutique consulting, which reflects size (small) and focus (narrow). These categories often overlap, and most consulting firms offer multiple areas of consulting. Clients can now hire one firm, not several, to formulate overall strategy, review operational efficiency, and implement technology solutions.
Strategy Consulting
Strategy consulting aims to help a client’s senior executives (for instance, the CEO and board of directors) understand and face the strategic challenges of running their company or organization. Strategy consultants work with the client’s most senior management, since senior management sets a company’s strategy and long-term plans.
Historically, strategy consulting firms made their recommendations, presented a “deck” (a report detailing the issues and recommendations), and walked away. Increasingly, however, clients expect strategists to stick around and implement their suggestions. Consequently, more consulting firms now tout their implementation capabilities. This implementation often involves Internet applications, or what consultants tenderly call “e-consulting.”
Examples of typical strategy consulting engagements:
• Analyzing why a clothing retailer generates lower sales per square foot than its competitors
• Understanding why Broadway theaters keep losing money and how the theaters can reposition themselves to profit most from new markets
• Positioning a snack manufacturer to enter China, determining types of snacks most wanted, and assessing the market’s willingness to pay for snacks
• Determining the value of a PC manufacturer on a stand-alone basis and suggesting possible acquirers to help divest itself of non-core businesses
Leading strategy consulting firms include:
• Bain & Company
• Boston Consulting Group
• McKinsey & Company
• Monitor Group
Operations Consulting
Operations consultants examine a client’s internal workings, such as production processes, distribution, order fulfillment, and customer service. While strategy consultants set the firm’s goals, operations consultants ensure that clients reach these goals. Operations consultants investigate customer service response times, cut operating or inventory backlog costs, or look into resource allocation. They improve distribution, heighten product quality, or restructure departments and organizations (a specialty of the “re-engineering” craze of the early 1990s).
Unlike strategic consultants, who tend to hand off their findings and leave, operations consultants generally assist in assuring implementation of their suggestions. Major consulting firms now offer both strategic and operations services.
Examples of typical operations consulting engagements:
• Streamlining the equipment purchasing process of a major manufacturer
• Determining how a restaurant chain can save on ingredient costs without changing its menu
• Working with a newly-merged commercial bank to increase its customer response efficiency
• Creating a new logistical database for a tire manufacturer
Leading operations consulting firms include:
• Accenture
• Cap Gemini Ernst & Young
• Deloitte Consulting
Information Technology Consulting
Information Technology (or “IT”) consultants help clients achieve their business goals. IT consultants (also called systems consultants) work with corporations and other clients to understand how they can best leverage technology for the organization. They design custom software or networking solutions, test for system and program compatibility, and ensure that the new system is properly implemented.
Most IT consultants, by definition, boast sharply honed technical skills. But IT solutions must be implemented as an overall part of a business solution. Otherwise, clients are sure to scream for cost-justification and/or fire their IT department heads for wasting money when solutions start to fail.
Examples of typical IT consulting engagements:
• Testing an investment bank’s vulnerability to hackers
• Converting a commercial bank’s mainframe system into an Oracle-based
client-server environment
• Implementing a firewall for a retail chain’s customer service servers
• Upgrading a major law firm from a word processing application to an
operating system
• Troubleshooting on a major SAP software installation (software used by
companies to manage accounting, personnel, inventory and other issues)
Leading information technology firms include:
• American Management Systems
• Accenture
• Cambridge Technology Partners
• Computer Sciences Corporation
• Electronic Data Systems
E-consulting
The Internet is still a revolution. E-consultants concern themselves with solving problems connected with electronic business (or e-business) and electronic commerce (e-commerce) on a widespread basis. E-business refers to any kind of business conducted online, whereas e-commerce specifically
involves a transfer of monetary funds over the Internet.
E-consulting began as web consulting, which involved mostly front-end design work: programming, graphic design, and prototypes. With the proliferation of dot-coms, almost all consulting companies now offer a wider range of services: e-commerce, B2B, valuations, branding, marketing, and so on.
Pure-play e-consulting firms have taken a massive beating. Many, like MarchFIRST, are gone; others, such as Razorfish, are probably not long for the business world. Still others, like Sapient, have hunkered down and are waiting for the next tech upturn.
Examples of typical e-consulting engagements:
• Transforming a department store’s online ordering systems
• Creating online catalogues for a mail order company
• Advising a mutual fund company on how to provide its clients with access
to account information online
Leading e-consulting firms include:
• Digitas
• Razorfish
• Sapient
Boutique Consulting Firms
Boutique firms support their clients with highly-specialized expertise. Boutique firms choose to focus on a smaller number of industries (energy, life sciences, retail), functions (M&A, economics and litigation, turnaround), or methodologies (real options, EVA).
There are a couple of common misconceptions about boutique firms. One is that being a “boutique consulting firm” necessarily implies being a small firm. This is not the case. Aboutique is determined not by size, but by focus. L.E.K. Consulting (which was founded by a handful of former Bain partners) has roughly 500 employees, but we would consider the company a boutique because of its specific focus on three types of strategy consulting problems- M&A, shareholder value, and business strategy. Another misconception is that boutiques are less prestigious than the multi-functional firms. This highly depends on the area of focus. For example, BCG is extremely well regarded across many industries for most types of strategy problems, but for a decision analysis or real options strategy problem, clients would turn to Strategic Decisions Group, who has the best reputation in the business for these sorts of problems.
All this said, we should note that many boutiques are indeed small, ranging from upwards of 200 employees down to a single consultant. Often, boutique consulting firms grow from the expertise and client relationships of one to five founding partners, and unless it sells a consistently large flow of work, the firm has no compelling reason to grow quickly. Also, smaller boutiques can deliver services at lower costs than the larger consultancies because a smaller firm requires less overhead and less extra “capacity” (i.e., consultants), so their services might seem more attractive to prospective clients than those of the more expensive firms.
If you are especially interested in a particular industry or type of consulting problem, definitely do your homework on the outstanding boutiques in that field. If you find the right company to match your interests, you will spend all of your time doing the work you dreamt of, and that is a much harder goal to achieve within a more diverse consulting firm.
Examples of boutique consulting projects:
• A consulting firm with a well-known shareholder value methodology helps a beverage company establish value metrics in its business units
• An economics consulting firm helps a foreign government decide how to structure the privatization (sale) of its utilities through an auction
• A niche R&D strategy consulting firm deploys two consultants to a high growth semiconductor company in Silicon Valley for a 3 month project to improve R&D processes
• A process reengineering boutique snares a 6-month project to assist implementation of new supplier standards for an automotive consortium
• A turnaround consulting firm helps a telecommunications hardware firm restructure its organization
Leading boutique and internal consulting firms include:• Charles River Associates (economics and litigation consulting)
• L.E.K. Consulting (shareholder value, M&A, and business strategy)
• Marakon Associates (shareholder value methodology)
Apart from these there are firms which are HR Consultancies (like Hewitt) of which I am not going into the details.
Thus Spake Socrates
Strategy Consulting
Strategy consulting aims to help a client’s senior executives (for instance, the CEO and board of directors) understand and face the strategic challenges of running their company or organization. Strategy consultants work with the client’s most senior management, since senior management sets a company’s strategy and long-term plans.
Historically, strategy consulting firms made their recommendations, presented a “deck” (a report detailing the issues and recommendations), and walked away. Increasingly, however, clients expect strategists to stick around and implement their suggestions. Consequently, more consulting firms now tout their implementation capabilities. This implementation often involves Internet applications, or what consultants tenderly call “e-consulting.”
Examples of typical strategy consulting engagements:
• Analyzing why a clothing retailer generates lower sales per square foot than its competitors
• Understanding why Broadway theaters keep losing money and how the theaters can reposition themselves to profit most from new markets
• Positioning a snack manufacturer to enter China, determining types of snacks most wanted, and assessing the market’s willingness to pay for snacks
• Determining the value of a PC manufacturer on a stand-alone basis and suggesting possible acquirers to help divest itself of non-core businesses
Leading strategy consulting firms include:
• Bain & Company
• Boston Consulting Group
• McKinsey & Company
• Monitor Group
Operations Consulting
Operations consultants examine a client’s internal workings, such as production processes, distribution, order fulfillment, and customer service. While strategy consultants set the firm’s goals, operations consultants ensure that clients reach these goals. Operations consultants investigate customer service response times, cut operating or inventory backlog costs, or look into resource allocation. They improve distribution, heighten product quality, or restructure departments and organizations (a specialty of the “re-engineering” craze of the early 1990s).
Unlike strategic consultants, who tend to hand off their findings and leave, operations consultants generally assist in assuring implementation of their suggestions. Major consulting firms now offer both strategic and operations services.
Examples of typical operations consulting engagements:
• Streamlining the equipment purchasing process of a major manufacturer
• Determining how a restaurant chain can save on ingredient costs without changing its menu
• Working with a newly-merged commercial bank to increase its customer response efficiency
• Creating a new logistical database for a tire manufacturer
Leading operations consulting firms include:
• Accenture
• Cap Gemini Ernst & Young
• Deloitte Consulting
Information Technology Consulting
Information Technology (or “IT”) consultants help clients achieve their business goals. IT consultants (also called systems consultants) work with corporations and other clients to understand how they can best leverage technology for the organization. They design custom software or networking solutions, test for system and program compatibility, and ensure that the new system is properly implemented.
Most IT consultants, by definition, boast sharply honed technical skills. But IT solutions must be implemented as an overall part of a business solution. Otherwise, clients are sure to scream for cost-justification and/or fire their IT department heads for wasting money when solutions start to fail.
Examples of typical IT consulting engagements:
• Testing an investment bank’s vulnerability to hackers
• Converting a commercial bank’s mainframe system into an Oracle-based
client-server environment
• Implementing a firewall for a retail chain’s customer service servers
• Upgrading a major law firm from a word processing application to an
operating system
• Troubleshooting on a major SAP software installation (software used by
companies to manage accounting, personnel, inventory and other issues)
Leading information technology firms include:
• American Management Systems
• Accenture
• Cambridge Technology Partners
• Computer Sciences Corporation
• Electronic Data Systems
E-consulting
The Internet is still a revolution. E-consultants concern themselves with solving problems connected with electronic business (or e-business) and electronic commerce (e-commerce) on a widespread basis. E-business refers to any kind of business conducted online, whereas e-commerce specifically
involves a transfer of monetary funds over the Internet.
E-consulting began as web consulting, which involved mostly front-end design work: programming, graphic design, and prototypes. With the proliferation of dot-coms, almost all consulting companies now offer a wider range of services: e-commerce, B2B, valuations, branding, marketing, and so on.
Pure-play e-consulting firms have taken a massive beating. Many, like MarchFIRST, are gone; others, such as Razorfish, are probably not long for the business world. Still others, like Sapient, have hunkered down and are waiting for the next tech upturn.
Examples of typical e-consulting engagements:
• Transforming a department store’s online ordering systems
• Creating online catalogues for a mail order company
• Advising a mutual fund company on how to provide its clients with access
to account information online
Leading e-consulting firms include:
• Digitas
• Razorfish
• Sapient
Boutique Consulting Firms
Boutique firms support their clients with highly-specialized expertise. Boutique firms choose to focus on a smaller number of industries (energy, life sciences, retail), functions (M&A, economics and litigation, turnaround), or methodologies (real options, EVA).
There are a couple of common misconceptions about boutique firms. One is that being a “boutique consulting firm” necessarily implies being a small firm. This is not the case. Aboutique is determined not by size, but by focus. L.E.K. Consulting (which was founded by a handful of former Bain partners) has roughly 500 employees, but we would consider the company a boutique because of its specific focus on three types of strategy consulting problems- M&A, shareholder value, and business strategy. Another misconception is that boutiques are less prestigious than the multi-functional firms. This highly depends on the area of focus. For example, BCG is extremely well regarded across many industries for most types of strategy problems, but for a decision analysis or real options strategy problem, clients would turn to Strategic Decisions Group, who has the best reputation in the business for these sorts of problems.
All this said, we should note that many boutiques are indeed small, ranging from upwards of 200 employees down to a single consultant. Often, boutique consulting firms grow from the expertise and client relationships of one to five founding partners, and unless it sells a consistently large flow of work, the firm has no compelling reason to grow quickly. Also, smaller boutiques can deliver services at lower costs than the larger consultancies because a smaller firm requires less overhead and less extra “capacity” (i.e., consultants), so their services might seem more attractive to prospective clients than those of the more expensive firms.
If you are especially interested in a particular industry or type of consulting problem, definitely do your homework on the outstanding boutiques in that field. If you find the right company to match your interests, you will spend all of your time doing the work you dreamt of, and that is a much harder goal to achieve within a more diverse consulting firm.
Examples of boutique consulting projects:
• A consulting firm with a well-known shareholder value methodology helps a beverage company establish value metrics in its business units
• An economics consulting firm helps a foreign government decide how to structure the privatization (sale) of its utilities through an auction
• A niche R&D strategy consulting firm deploys two consultants to a high growth semiconductor company in Silicon Valley for a 3 month project to improve R&D processes
• A process reengineering boutique snares a 6-month project to assist implementation of new supplier standards for an automotive consortium
• A turnaround consulting firm helps a telecommunications hardware firm restructure its organization
Leading boutique and internal consulting firms include:• Charles River Associates (economics and litigation consulting)
• L.E.K. Consulting (shareholder value, M&A, and business strategy)
• Marakon Associates (shareholder value methodology)
Apart from these there are firms which are HR Consultancies (like Hewitt) of which I am not going into the details.
Thus Spake Socrates
Friday, September 7, 2007
Strategy Dose - II
Blue ocean Strategy:
A corporate strategy and bestselling business book written by Professors W. Chan Kim and Renée Mauborgne, of INSEAD.
The "ocean" refers to the market or industry. "Blue oceans" are untapped and uncontested markets, which provide little or no competition for anyone who would dive in, since the markets are not crowded.
A "red ocean", on the other hand, refers to a saturated market where there is fierce competition, already crowded with people (companies) providing the same type of services or producing the same kind of goods.
Their idea is to do something different from everyone else, producing something that no one has yet seen, thereby creating a "blue ocean". An essential concept is that the innovation (in product, service, or delivery) must raise and create value for the market, while simultaneously reducing or eliminating features or services that are less valued by the current or future market. The authors critique Michael Porter's idea that successful business are either low-cost providers or niche-players. Instead, they propose finding value that crosses conventional market segmentation and offering value and lower cost.
A current example of this strategy is the success of the Nintendo Wii, which Nintendo designed to target audiences not traditionally known to play videogames.
There is some amount of criticism of this framework because, the authors assume that innovation necessarily brings in success while this is not fully proven by research.
----------------------------------------------------------------------------
Increasingly, private equity players are showing great interest in investing in India.Many Private Equity players such as Actis Partners, Warburg Pincus, Citigroup Venture Capital,Barings and Westbridge Capital, 3i, Blackstone and Goldman Sachs are setting up shop in India,each with deep pockets.
Blackstone group (largest private-equity player in the world) is in news for its recent management buy-out in BPO company called Intelenet Global Services, takeover of Gokaldas Exports and picking up minority stake in Nagarjuna Constructions.
Management Buy-Out (MBO): Form of acquisition where a company's existing managers acquire a large part or all of the company
Management Buy-In (MBI): Occurs when a manager or a management team from outside the company raises the necessary finance, buys it, and becomes the company's new management.
Management Employee Buyout (MEBO): A restructuring initiative that involves both managerial and non-managerial employees buying out a firm in order to concentrate ownership into a small group from a widely dispersed group of shareholders. (This can turn a public company into a private company !)
Leveraged buyout (LBO): Also called as highly-leveraged transaction (HLT), or "bootstrap" transaction. It is a strategy involving the acquisition of another company using a significant amount of borrowed money (bonds or loans) to meet the cost of acquisition. Often, the assets of the company being acquired, in addition to the assets of the acquiring company, are used as collateral for the loans. The purpose of leveraged buyouts is to allow companies to make large acquisitions without having to commit a lot of capital. In an LBO, there is most often a ratio of 70% debt to 30% equity.
Leveraged build-up, (LBU): A leveraged build-up is a situation of a company bought out via a leveraged buy-out that raises even more debt to acquire the companies in the same sector in order to reinforce the strategic positions.
Buy-In Management Buy-Out (BIMBO): A form of a buyout that incorporates characteristics of both a management buyout and a management buy-in. A BIMBO occurs when existing management - along with outside managers - decides to buyout a company. The existing management represents the buyout portion while the outside managers represent the buy-in portion.
By the way, what is the rationale of going for MBOs?? The management might want to make their own jobs more secure. Also they can maximize the profits if they own the majority stake in their own company. Also it wards off some outside company to buy out their company.
Thus Spake Socrates
A corporate strategy and bestselling business book written by Professors W. Chan Kim and Renée Mauborgne, of INSEAD.
The "ocean" refers to the market or industry. "Blue oceans" are untapped and uncontested markets, which provide little or no competition for anyone who would dive in, since the markets are not crowded.
A "red ocean", on the other hand, refers to a saturated market where there is fierce competition, already crowded with people (companies) providing the same type of services or producing the same kind of goods.
Their idea is to do something different from everyone else, producing something that no one has yet seen, thereby creating a "blue ocean". An essential concept is that the innovation (in product, service, or delivery) must raise and create value for the market, while simultaneously reducing or eliminating features or services that are less valued by the current or future market. The authors critique Michael Porter's idea that successful business are either low-cost providers or niche-players. Instead, they propose finding value that crosses conventional market segmentation and offering value and lower cost.
A current example of this strategy is the success of the Nintendo Wii, which Nintendo designed to target audiences not traditionally known to play videogames.
There is some amount of criticism of this framework because, the authors assume that innovation necessarily brings in success while this is not fully proven by research.
----------------------------------------------------------------------------
Increasingly, private equity players are showing great interest in investing in India.Many Private Equity players such as Actis Partners, Warburg Pincus, Citigroup Venture Capital,Barings and Westbridge Capital, 3i, Blackstone and Goldman Sachs are setting up shop in India,each with deep pockets.
Blackstone group (largest private-equity player in the world) is in news for its recent management buy-out in BPO company called Intelenet Global Services, takeover of Gokaldas Exports and picking up minority stake in Nagarjuna Constructions.
Management Buy-Out (MBO): Form of acquisition where a company's existing managers acquire a large part or all of the company
Management Buy-In (MBI): Occurs when a manager or a management team from outside the company raises the necessary finance, buys it, and becomes the company's new management.
Management Employee Buyout (MEBO): A restructuring initiative that involves both managerial and non-managerial employees buying out a firm in order to concentrate ownership into a small group from a widely dispersed group of shareholders. (This can turn a public company into a private company !)
Leveraged buyout (LBO): Also called as highly-leveraged transaction (HLT), or "bootstrap" transaction. It is a strategy involving the acquisition of another company using a significant amount of borrowed money (bonds or loans) to meet the cost of acquisition. Often, the assets of the company being acquired, in addition to the assets of the acquiring company, are used as collateral for the loans. The purpose of leveraged buyouts is to allow companies to make large acquisitions without having to commit a lot of capital. In an LBO, there is most often a ratio of 70% debt to 30% equity.
Leveraged build-up, (LBU): A leveraged build-up is a situation of a company bought out via a leveraged buy-out that raises even more debt to acquire the companies in the same sector in order to reinforce the strategic positions.
Buy-In Management Buy-Out (BIMBO): A form of a buyout that incorporates characteristics of both a management buyout and a management buy-in. A BIMBO occurs when existing management - along with outside managers - decides to buyout a company. The existing management represents the buyout portion while the outside managers represent the buy-in portion.
By the way, what is the rationale of going for MBOs?? The management might want to make their own jobs more secure. Also they can maximize the profits if they own the majority stake in their own company. Also it wards off some outside company to buy out their company.
Thus Spake Socrates
Monday, August 13, 2007
Strategy Dose -1
Often in various interviews, class discussions, viva and other fora, we are asked some very simple sounding questions like, "What is Strategy?","What is the difference between Vision & Mission?", "What is Globalization?" etc.. We often end up giving 100 different definitions, which willonly amuse the questioner at our expense. So, in this post, I will discuss some very basic of the definitions of various terms that we keep coming across.
Vision Statement: A brief description of the ideal state "Where" a company wants to be. Its focus is on the future.
TCS: To be among the Global Top-10 by 2010
Infosys: To be a globally respected corporation that provides best-of-breed business solutions, leveraging technology, delivered by best-in-class people
---------------------------------------------------------------------------------
Mission Statement: Tells you what the company wants to do now. Its focus is on the present. Its the "purpose" of the organization.
Google: Organize the world's information and make it universally accessible and useful
Microsoft: A computer on every desktop and in every home, running Microsoft software (Microsoft- till 2002)
IBM: We want to be the best service organization in the world
Wal-Mart: To give ordinary folk the chance to buy the same thing as rich people
---------------------------------------------------------------------------------
Values: These are what will guide you in take a decision when you have two conflicting choices. Each person/ organization may have different values.
---------------------------------------------------------------------------------
What is Strategy?
Action-plan of how to achieve our vision & goals.
---------------------------------------------------------------------------------
Strategic Planning: Consideration of organization's future course. It involves identifying and defining:
1. What do we do?
2. For whom do we do it?
3. How do we excel? (or how to beat competition)
---------------------------------------------------------------------------------
A simple way to implement a strategic plan is:
1. Set your vision and mission statements, along with your value system. Identify short-term goals.
2. Do a SWOT analysis to understand where you are and what you CAN do.
3. Formulate Actions & Processes to acheive your goals.
4. Implement on the lines of prepared actions and processes5. Monitor and Contol to get feedback from implemented processes.
There are innumerable terms like Strategic Framework, Strategic Maps etc which we will discuss later..
Thus Spake Socrates ...
Vision Statement: A brief description of the ideal state "Where" a company wants to be. Its focus is on the future.
TCS: To be among the Global Top-10 by 2010
Infosys: To be a globally respected corporation that provides best-of-breed business solutions, leveraging technology, delivered by best-in-class people
---------------------------------------------------------------------------------
Mission Statement: Tells you what the company wants to do now. Its focus is on the present. Its the "purpose" of the organization.
Google: Organize the world's information and make it universally accessible and useful
Microsoft: A computer on every desktop and in every home, running Microsoft software (Microsoft- till 2002)
IBM: We want to be the best service organization in the world
Wal-Mart: To give ordinary folk the chance to buy the same thing as rich people
---------------------------------------------------------------------------------
Values: These are what will guide you in take a decision when you have two conflicting choices. Each person/ organization may have different values.
---------------------------------------------------------------------------------
What is Strategy?
Action-plan of how to achieve our vision & goals.
---------------------------------------------------------------------------------
Strategic Planning: Consideration of organization's future course. It involves identifying and defining:
1. What do we do?
2. For whom do we do it?
3. How do we excel? (or how to beat competition)
---------------------------------------------------------------------------------
A simple way to implement a strategic plan is:
1. Set your vision and mission statements, along with your value system. Identify short-term goals.
2. Do a SWOT analysis to understand where you are and what you CAN do.
3. Formulate Actions & Processes to acheive your goals.
4. Implement on the lines of prepared actions and processes5. Monitor and Contol to get feedback from implemented processes.
There are innumerable terms like Strategic Framework, Strategic Maps etc which we will discuss later..
Thus Spake Socrates ...
Saturday, August 4, 2007
IIFT - PHDCCI National Consulting Symposium 2007
The first major event of the Club. This is being conducted in coordination with the Systemix Club.
Click: www.iift-seminars.com/consultancy for complete details !!
Click: www.iift-seminars.com/consultancy for complete details !!
Wednesday, August 1, 2007
Introduction...
One of the most popular texts ever written on Strategy is "The Art of War" by Sun Tzu in 6th Century BC (The English version of the book is highly readable and is available in the markets. It’s just about 100 odd pages). Of course this is about military strategy, but strategy in business too has to do a lot with War. Terms we hear like, target, goal, tactic, manoeuvre, threat, ambush marketing, kill, acquisition, aggressive, campaign etc are all terms derived from wars and battles. For that matter the word Strategy itself has its roots in the military campaigns. "Marketing Warfare" a popular book, written by Al Ries and Jack Trout talks a lot about how the various strategies that are used in wars like "Offensive Warfare", "Defensive Warfare", "Flanking Warfare" and "Guerrilla Warfare". How these can be used as a part of marketing strategy by any company are discussed in detail. The following link gives some interesting details:
http://en.wikipedia.org/wiki/Marketing_warfare_strategies
Talking of strategy, some of the most prominent strategists that ever lived are
Mythical: Lord Krishna, Ulysses
Ancient: Machiavelli, Chanakya, Sun Tzu
Medievial: Julius Caesar, Napolean, etc
Modern:
Philip Selznick (SWOT analysis is based from his notes)
Igor Ansoff (Ansoff Matrix)
Peter Drucker (theory of Management by Objectives or MBO, Age of Discontinuity, Knowledge Worker)
Harry Markowitz (Portfolio Theory- Initially a strategy of maintaining an ideal portfolio of financial assets to reduce risk, but later developed into how to take product portfolio decisions and operational portfolio decisions. BCG Matrix, GE Multi Factor Model are a result of this)
Gary Hamel & C.K. Prahlad (coined phrases like Core-Competence, Strategic Intent, Strategic Architecture, Bottom of the Pyramid, Co-creation)
Kenichi Ohmae (the head of McKinsey Tokyo office, and author of the book- The Mind of the Strategist")
Dave Packard & Bill Hewlett (of HP, devised an active strategic management theory of "Managing by Walking Around or MBWA)
Micheal Potter (Perhaps, the most influential among the modern strategists, gave us concepts like, 5 Forces Analysis, Generic Strategies, The Value Chain, Strategic Groups & Clusters
Philip Kotler (last but not the least !! Kotler is a well known proponent of Marketing Warfare Strategy)
There are various models that one comes across in Business Strategy. Prominent among them that one has to know about are:
1. Ansoff Growth Matrix
2. BCG Matrix
3. Balanced Score Card
4. GE Matrix
5. McKinsey Growth Model
6. SWOT Analysis
7. PEST Analysis
8. Porter's Five Forces
9. Porter's Diamond Model
10. Value Chain Analysis
http://en.wikipedia.org/wiki/Marketing_warfare_strategies
Talking of strategy, some of the most prominent strategists that ever lived are
Mythical: Lord Krishna, Ulysses
Ancient: Machiavelli, Chanakya, Sun Tzu
Medievial: Julius Caesar, Napolean, etc
Modern:
Philip Selznick (SWOT analysis is based from his notes)
Igor Ansoff (Ansoff Matrix)
Peter Drucker (theory of Management by Objectives or MBO, Age of Discontinuity, Knowledge Worker)
Harry Markowitz (Portfolio Theory- Initially a strategy of maintaining an ideal portfolio of financial assets to reduce risk, but later developed into how to take product portfolio decisions and operational portfolio decisions. BCG Matrix, GE Multi Factor Model are a result of this)
Gary Hamel & C.K. Prahlad (coined phrases like Core-Competence, Strategic Intent, Strategic Architecture, Bottom of the Pyramid, Co-creation)
Kenichi Ohmae (the head of McKinsey Tokyo office, and author of the book- The Mind of the Strategist")
Dave Packard & Bill Hewlett (of HP, devised an active strategic management theory of "Managing by Walking Around or MBWA)
Micheal Potter (Perhaps, the most influential among the modern strategists, gave us concepts like, 5 Forces Analysis, Generic Strategies, The Value Chain, Strategic Groups & Clusters
Philip Kotler (last but not the least !! Kotler is a well known proponent of Marketing Warfare Strategy)
There are various models that one comes across in Business Strategy. Prominent among them that one has to know about are:
1. Ansoff Growth Matrix
2. BCG Matrix
3. Balanced Score Card
4. GE Matrix
5. McKinsey Growth Model
6. SWOT Analysis
7. PEST Analysis
8. Porter's Five Forces
9. Porter's Diamond Model
10. Value Chain Analysis
During the course of the Blog, we shall discuss each one of these models in detail and how they are practically being applied in Business.
Thus spake Socrates...
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