"I cannot teach (them) anything, I can only make (them) think.

"
Introduction to Strategy - Socrates
Who dare wins
Learn various facets of strategy - Motto of British Special Air Service Regiment
Grasp the concept of sustainable competitive advantage
Perceive the linkages between environment, strategy and Those who make less errors seize the largest victories
superior performance
- Napolean Bonaparte
Understand why customer value creation is paramount in
strategy
Business is uncertain just like war luck plays a significant part
- Winston Churchill

Strategy is about .. 5-Ps of Strategy

It is about (What, Who, Where) of situation than How

Strategy is a Plan, Pattern, Position, Ploy, Perspective
a maneuver designed to trick or surprise competitor
Henry Mintzberg
.ideal exploitation of firms strengths with the market's
needs
Strategy as a plan made in advance of actions, developed consciously
.. a plan of action to achieve a goal
and purposefully
exploring the best possible combination Strategy as a Ploy [Tactic] to deter or maneuver competitors
It is about what you can do in future Strategy as a Pattern of actions or behaviors when there is no initial clear
Choices one can make given the limitation of resources cut plan or ploy
Choices may involve trade-offs Strategy as a Position how organization is located with respect to
Delivering value to customer and building competitive environment
advantage Strategy as a Perspective how company perceives the world
Bringing firm in the best possible position in a given
environment & address the customer demands
about decision making and recognizing the role of
individual cognition and biases
4
 In terms of three key players - competitors, customers, company

Strategy is a framework which guides choices that Strategy is defined as the way in which a corporation endeavors to
determine the nature and direction of an organization differentiate itself positively from its competitors, using its relative
corporate strengths to better satisfy customer needs.

Benjamin B. Tregoe & John W. Zimmerman -Kenichi Ohmae

Top Management Strategy The Mind of the Strategist

5 6

What is Strategy? Strategic Management

Art and science of analyzing, formulating, implementing, and

An integrated and coordinated set of commitments & actions
evaluating cross-functional decisions & actions that organization
designed to exploit FIRMs competencies to create value for the
can take to create, achieve and sustain competitive advantages.
customer and gain competitive advantage for the firm in the
marketplace.

7 8
 Strategy can be seen as consisting of several threads
Strategy is 1627th most common word as per google adwords

Strategy as a Leaders Statement

Strategy as a Communitys Statement
Strategy as a Guiding Track
Strategy as Creating the Competitive Advantage
Strategy as a Practice
Strategy as a Relationship to the Environment

Wars have seen a spike in usage of strategy and then the usage tapers
down. Post 1950 is the era of expansion MBA academia and with it -
strategy.

1900 to 1960 60 years to move 400% from 5 to 20, about 9% CAGR

1960 to 2000 40 years and 4 times again 20 to 80, 16% CAGR

9 10

Strategy as a Leaders Statement Strategy as a Communitys Statement

Strategy is often an expression of

leaders will, beliefs and values, obsessions, inner life
His demographic characteristics (age, training, experience,
social origins)
His emotions, cognitive maturity
Attitude towards change
His overall personality
Therefore, understanding an organizations strategy starts with a
better understanding of who are its leaders.
Strategy is expression of a communitys norms, values and
beliefs.
Strategy involves trials and errors which can not produce
results unless members are willing to collaborate and contribute
to an organizations survival and growth.
Strategy helps build the coalitions that will allow the pursuit of
common goals when individuals have differing goals and
interests
Sex, ethnic support, education, professional skills, capital, outside
recognition, structure etc. contribute to achieving consensus
Organization culture is a source of success in implementing
strategy

Caring for Life has been at the forefront of the business

philosophy of Cipla and remains an important driver for doing
business.
11 12
 Strategy as a Guiding Track
Strategy is a beacon and guide when things get difficult, when
the road ahead is hard to assess.
It provides a lasting set of rules and norms by which reality is
translated and dealt with.
For Example:
To be number 1 or number 2 in all our business, be better than the
best, while remaining in three areas of activities: traditional,
high technology and services - Jack Welch, General Electric
13
Strategy as Practice
Strategy can be used to extend the range of outcomes beyond
economic outcomes. These involve
Practices these affect knowledge production, getting newer
insights, influencing decisions, information asymmetry, enabling
iterations to improve upon
Workshops, meeting for bracketing of issues, turn-taking, voting and stage-
managing
Strategy artefacts - planning documents, flipcharts or other visual
representations of tools and frameworks, strategy presentations,
Praxis Understanding what goes in the practice of strategy
making, how managers interact, interpret (sense making)
Rhetoric using emotions, metaphors, Informal interaction
Practitioners managers socio-political and rhetorical skills,
national culture and gender, can make a difference to how they
work and what they can achieve
Language, Communication & Strategy
As companies undergo adaptation in response to environmental
stimuli, managers have to inspire workers, encourage initiative,
persuade others to undertake new initiatives
Managerial skill in language - impromptu talks, flow of words,
articulation, facial expressions and gestures may affect worker
response to strategic initiatives.
Story telling is a means of motivating and mobilizing an organization
around a new strategic plan. (CEO should engage in mutual
discovery through conversations
Gaining cooperation and influencing others depend upon social
skills - perceiving, attending to, remembering them, thinking
about, and making sense of the people in our social world;
understanding others perspective
Strategy as a Relationship to the Environment
Environment is a critical factor for survival. Strategy helps in
conceptualizing threats and opportunities within the environment
Firm faces various external environments -
General, Industry, Institutional, Regulatory, technological, Ecological
Environment generates most of the uncertainty for organization.
Uncertainty can be dealt with structural and strategic alignments.
(Environment, strategy and organization design are related)
At the micro level, organizational routines provide ability to adapt
Environment analysis depends on the perception (cognitive
influences) of the beholder. Same environment may be seen as a
source of opportunity by some managers and a source of hidden
risk (threat) by others
16
 Organization-Environment Fit
VUCA
Fit of the organization with environmental demands is a precursor of
firm performance. Better fit yields higher performance. To achieve
fitment, organization response variables should match environmental
variables. Multiple factors
High Rate of Change
Environment variables: Speed of changes (turbulence), rate of impacting decisions
technological innovation, Uncertainty, Complexity, Ambiguity
Organizational response variables: Organization Structure, Culture,
Technology, Decision Style

Two types of Fit

Contingency fit Analyze task environment and adapt
organizational structure and style to match the environment
Institutional fit conformation of organization with other Lack of clarity Lack of clarity about
organizations in terms of structure, culture, technology as the present and future
prescribed by institutions surrounding that firm. This fit increases
organizational legitimacy.

Bennett & Lemoine, HBR Jan-Feb 2014

The Strategy-Environment Matching

Predictability (how far and how accurately can you forecast demand,
performance, competitive dynamics, and market expectations) Based on Predictability and Malleability, there can be four ways to match
business environment
Malleability (how much influence firms have on environmental factors)
Classical - works well for companies operating in predictable and
stable environments.
Identify the Predictability and Malleability of following industry Visionary - appropriate in predictable environments in which one has
the power to change.
Oil & Gas, Power
Adaptive more flexible, experimental and works better in
Automobiles immutable environments that are unpredictable.
Software Shaping - best in unpredictable environments where one has the
Real Estate power to change
Biotechnology

19 20

21
Strategy as Building Competitive Advantage
Strategy is a quest for competitive advantage.
Building unique resources to match environmental opportunities
Understanding the firms functional characteristics, and
of their inter-relationships (value chain configuration)
Integrating various functions to position the organization
among competitors
Integrating activities within a function for better productivity and
effectiveness.
23
Creating external and internal fit
22
Markides, C. (1999). Six Principles of Breakthrough Strategy. Business Strategy Review, 10(2), 1-10.
Origin of Competition
Gause's Principle of Competitive Exclusion (1932)
No two species that make their living in the identical way can co-exist.
One having slight edge will dominate in the long run.
Competition existed long before strategy
To maintain equilibrium, nature provided counter-balancing forces that
gave every species an advantage.
Richer the environment, greater is the number of potential variables
that can give each species a unique advantage
Natural competition involved no strategy at all, it used chance
By chance/ luck, competing species found resources that matched
their characteristics
At times, physical & structural characteristics evolved and adapted,
albeit slowly, to match competition.
Business competition & dynamics: Manager uses imagination and
logic to shift the competition and rate of change. It is a deliberate act.
Awareness Motivation Capability framework
24
Origin of Strategy Strategys roots lie in military warfare
Military strategy
Set objectives (e.g. take that hill, cut supply line) collect
intelligence on strengths/weaknesses use intelligence to
decide terrain, timing, tactic, choice Surprise Strike
Military strategy operated in the constants
Hardly any shifts in basic variables - power of weapons
or the range of aircraft
Data was collected by scouts and spies who risked their
lives to find and relay information
Lines of communication were unreliable so minimal and
coded messages
After World War II, military strategy came into the business world as
strategic planning
Outcomes of Strategy
Strategic Competitiveness
Achieved when a firm successfully formulates and implements a
value-creating strategy not simultaneously being implemented by
current or potential competitors.
Sustained Competitive Advantage
Occurs when a firm develops a value creating strategy that competitors
are not simultaneously implementing, and other firms are unable to
duplicate the benefits of this strategy.
Above Average Returns
Returns in excess of what an investor expects to earn from other
investments with similar risk.
27
Key elements of Strategy
Processes (Analyses, Decisions, Actions) to achieve goals
and objectives or addressing or solving a problem
Involvement of multiple stakeholders in the decision
making
Recognition of long term and short term perspectives
Strategies create coherent sets of actions taking a holistic
view of the company
Trade-off among given choices
A good strategy has coherence - coordinating actions, policies
and resources so as to accomplish an important end.
Richard Rumelt ("Good strategy, bad strategy, 2011)
So, the basic principles of strategy to remember are
Earn above the cost of capital (if you want to create value) i.e. you must get a
higher return on your efforts than the average competitor.
To get a higher return than the average competitor, you must have an
advantage or you must compete in an unusually attractive sector.
There are only two ways to get an advantage prices must be higher or
costs, including the cost of balance sheet and taxes, must be lower.
Unusually attractive sectors are those where competition is muted i.e.
few competitors, little legislation, demand growing faster than supply.
These principles have remained constant over last three decades
28
 Some categories of advantages that are sustainable Strategic Management Framework

Size of firm in the market through scale & scope economies,

experience curve benefits
Access to inputs, resources, markets, knowhow
Two conditions affect access - availability of better terms than
competition & enforceability
Input access restricted through contracts and vertical integration
Market access through non-pricing mechanisms like switching
costs, reputation, relationships, complementary products
Options available (denied) to competitors
Govt. policy, lock-in created by past investments, response lags
Capability development and innovations

A strategy must take account of the organizations

29 stakeholders & environment if it has to succeed

Strategic Management Process

Strategy Analysis:
Strategic Analysis Strategic Formulation External environmental scanning & assessment
Internal (organizational) environment assessment
Current & Past performance

Strategic
Implementation

The above three processes strategic analysis, strategic formulation

and strategic implementation are highly inter-dependent and do not
take place sequentially because of;
Unpredictability of environment,
Availability of information,
Limitation of rationality, and
Political processes within the organizations.
Strategy Making:
Addresses a series of strategic hows.
Requires choosing among strategic alternatives.
Promotes actions to do things differently from competitors
rather than running with the herd.
Is a collaborative team effort that involves managers in
various positions at all organizational levels.
Strategy Execution (converting strategic plans into actions)
Directing organizational action
Motivating people
Building/ strengthening firms competitive capabilities and
competencies
Creating and nurturing a strategy-supportive work climate
Meeting or beating performance targets

Initiation of strategy: Triggering Events

Most organizations follow a particular strategic orientation for

about 10-15 years (or less) before making a significant change in
direction.
Schools of Strategy crafting
After long periods of stability or fine tuning of strategy, some shock
to the system is needed to motivate management to reassess the Positioning / Design/ Planning school
corporations situation Learning school

These (triggering) events act as a stimulus for a change in strategy

and can include:

New CEO
External intervention
Threat of change of ownership
Performance gap
Strategic inflection point
36
 Design School of Strategic Formulation Positioning in a 3D Landscape
Proponents: Porter, Andrew, Markides
Firm look for market segments where they can maximize
difference between their opportunity cost and customers WTP
(willingness to pay).
FIRM INDUSTRY Be consistent internally and externally
Goals and Values Competitors,
Resources and Complementors,
Capabilities STRATEGY Customers
Structure and STRATEGY Suppliers
Systems

Firm-Strategy Environment-Strategy
Interface Interface
(Internal Consistency) (External Consistency)

Perform careful analysis of external & internal environment so as achieve best fit;
Identify unique strategic position for the company after generating as many choices as
possible; Choices will reflect a mosaic that need to be implemented
38

Competitive Positioning in Synthesizer Industry Firms strategy evolves over time

How firms position their products in nascent industries In a turbulent world, strategy making must reflect the biological
characterized by lack of understanding of what the product is? principles of variety, selection, and retention.
Synthesizer, a transistor based musical instrument came into Managers modify strategy in response to:
existence in mid-1970s. There were only 4 manufacturers Moog,
Changing market conditions
Korg, Yamaha, Oberheim
Policy, regulations

Different conceptualizations of the synthesizer: Political context

Instrument capable of making novel, creative sounds; Fresh moves of competitors
An acoustic emulator recreating traditional instrument sounds; Shifting buyer preferences & needs
Hybrid of both a new instrument and an acoustic emulator Emerging opportunities because of demographics
Advancing technology
Conceptualizations served as the primary basis of positioning.
Pressure to improve organizational efficiency & effectiveness

Competitors can launch products with different technical features

(one/multiple note, memory, analog/digital, physical features, keys
on the keyboard) and prices to appeal to above conceptualization
40
 Evolving Nature of a Firms Strategy (Learning School) Example:
Deliberate and Emergent Strategies of Apple & Nokia

Mintzberg & Waters, 1985

http://bits.blogs.nytimes.com/2015/11/29/nokia-tries-to-
reinvent-itself-again-by-taking-over-alcatel-lucent/
http://www.cnbc.com/2016/05/18/nokia-phones-are-back-after-
microsoft-sells-mobile-assets-for-350-million-to-foxconn-hmd.html

Realized (current) strategy is a blend of:

Proactive (deliberate) strategy elements that have continued
from past. Deliberate and Emergent Strategy of Cisco
http://www.reuters.com/article/us-cisco-
systems-layoffs-idUSKCN10S05D
Reactive (emergent) strategy elements that are required due to
unanticipated competitive developments and fresh market
conditions. These actions may result from unplanned shift by
TMT, autonomous actions by lower-end managers, serendipity
41 42

How does Strategy become Emergent?

Mirabeau & Maguire, 2014

Where & how does emergent strategy emerge?

http://bits.blogs.nytimes.com/2013/09/04/with-microsoft-nokia-deal-competing-in-the-smartphone-market/?_r=0
43 44
 Role of Middle Managers in Emergent Strategy Bottoms up approach for Emergent Strategy Formation

Middle managers span the boundary between organization and environment;

Implementing the plans given by executive management;
Synthesize information about the environment and give to top management;
Champion alternatives which modify executive managements original
strategic intentions in the light of actual environmental realities.

Floyd and Woolridge, 1992

45 46
Mirabeau & Maguire, 2014

Managerial Cognition & Strategy The Strategy-Making Hierarchy

Transitioning to new areas; adjustment to changed marketplace;

Realizing synergies from managing a portfolio of businesses
identifying potential areas to apply resources; interpretation of business Corporate
- Multi-business Strategy; establishing investment priorities
environment {Examples of Cognition} Strategy
and steering corporate resources
What is Cognition:
Two-Way Influence
Mental activities pertaining to acquiring, organizing, and processing
information e.g. attention, perception, problem solving. These can Business Actions to strengthen market position, competitive
be automatic or controlled. Strategy capabilities or achieve profitable performance of a business
Memory performance improves through practice and training
Reading improves attention Two-Way Influence

In domain specific activities (e.g. medical diagnostics, games). Functional Managing a particular function/ activity in a way that support
development of expertise is a controlled process initially but becomes Strategies the business strategy
automatic with practice.
Mental structures (a.k.a. representations, knowledge structures, mental Two-Way Influence
maps, frame, schema)
Provides a game plan for managing specific operating
Mental models result in superior performance as managers retrieve, Operating
activities with strategic significance; delegation of
generate or modify previous mental models (developed relying upon Strategies
responsibility
beliefs, values, motivations)
 Tasks of Corporate Strategy Tasks of Business Strategy

Actions to boost performance of individual businesses Initiating approaches to produce successful performance in a
Capturing valuable cross-business synergies specific business
1+1=3 Crafting competitive moves to build sustainable competitive
Establishing investment priorities and steering corporate advantage
resources into attractive businesses Developing competitively valuable competencies and capabilities
Scope (products, markets, and firm boundaries) decisions related to business
Integrating strategic activities of functional areas
Product Related Market Related Boundary Related Aligning business strategies with corporate strategy
Building portfolio Internationalization Developing Technology
around platforms internally or externally
Mergers & Acquisitions Entering new markets OEMs
Business Strategy Decisions
Divestments Offshoring
Product Quality
Focused Investments Product Design
Product Support
New features

Tasks of Functional/ Operating Strategies How do we understand strategy of a companies ?

Game plan for a strategically-relevant function, activity, or

business process
Articulations by chief executive and senior managers in
Details on how key activities will be managed speeches, written documents
Functional strategy provides support for business strategy Vision & Mission statement
Narrow strategic approaches to manage key operating units Values statements
and strategically-relevant operating activities statements that highlight intent, objectives, scope and action
Delegation of responsibility to frontline managers Interpretation of actions taken to implement a series of
decisions

Examples:
Customer Satisfaction, Employee Satisfaction
Cost Containment & Recovery
Workforce Reductions, Deploying support resources on
profitable projects
Service Standardization, Process &Tools
Standardization, Six Sigma, Service Quality Standards
52
 Competitive Dynamics

Interpreting Strategy from Actions:

Actions are observable, externally oriented activities carried out Rivalry Competitive & Relational
of firms to enhance their competitive standing cooperative
Actions can be tactical or strategic - Strategic actions are less Mode Attack, Cooperate or co-opt Manage (Compete
frequent, resource intensive and more consequential in the long retaliate, avoid and cooperate
run. attack simultaneously)
Internally directed actions to keep alignment in goals, structure and
Actors Competitors Also alliance Stakeholders
systems (planning, performance measurement and control,
partners e.g., clients, public,
rewards and punishments, training, resource allocation,
suppliers, government
management information and communication)
Repertoire of actions: action volume, action magnitude, action Time Short term Intermediate Short term to build for
heterogeneity, action inertia Horizon long term
Tools Economic Political & Social, ideological
Economics
Chen & Miller (2015)

54

Identifying a companys strategy What actions to look for? Evolution of products & capabilities over lifetime

Sandpaper
Magnetic Tape
Carborundum Floppy disks &
mining Road signs Acetate film data storage
products
Scotchtape Surgical tapes
& dressings Housewares/
PRODUCTS
kitchen products
Pharmaceuticals Solar Film
Post-it notes
Materials sciences
Flexible Ultra-compact
Health sciences
circuitry LED projector
CAPABILITIES Microreplication
New-product
Abrasives Adhesives Thin-film development &
technologies introduction
1902 1920 1940 1960 1980 2008 2012
55 http://solutions.3m.com/wps/portal/3M/en_US/3M-Company/Information/Resources/History/
Source: Thompson et al, 2014e (Figure 1.1)
 Evolution of Products & Technologies

From candles to fats-oils to surfactants Floppy Disc maker enters CD-R in

Crushing seed for oil to absorbent fibers 1998 because it was growing @
Working with hard-water detergents gave 300%; captures 16% of world market
expertise on Calcium for toothpaste of optical media.
From 1999 to 2004, Revenues
rose from $24 Mn to $364 Mn;
profits by 15 times, to $75 Mn
Sudden glut in optical disc
market, rise in raw material prices
& competition from Taiwanese.
Market shifts to new formats DVD,
Blu-ray discs, USB drives
By capitalizing on the strengths in
thin-film coating, company enters
solar power business in 2007 after
PE investment by Warburg Pincus

Annual Report 1999

58

But, after five years, profitability is still a mirage, stability and

growth threatened - a periodic existential crisis for the company
 1959 Estb. as Monsanto Electronic Materials Company (MEMC)
under Monsanto, a MNC
A pioneer in manufacturing of silicon wafers served
semiconductor electronics industry. Early 1970s, opened a
plant in Malaysia, in 1986, opened production and R&D
facility in Japan

1989 - Monsanto sold MEMC to German company Hul AG as it

SunEdison is global renewable (solar) energy manufacturer who develops,
finances, installs and operates distributed solar power systems. faced pricing competition from Japanese players.
Name changes to MEMC Electronic Materials
Estb: 1959, Missouri, USA Revenues: 2015, $7.8 b
Employees: 2015: 7300 R&D Spend: 2.5-3%
International Spread: 30 locations across US, Europe, Asia 1995 Initial Public Offering
1998 - Downturn in silicon wafer & semi-conductor business
Vertically integrated From polysilicon to solar panels because of overcapacity, economic conditions in Asia/
Japan. Company was sold to PE (Texas Pacific Group) for
Polysilicon Solar Wafers Photovoltaic Plants Solar Modules $1, as MEMC became profitable, PE reduced stake to zero
Solar Energy in 2007.

2006 - MEMC enters solar grade silicon wafer market and 2013 - With vertical integration complete, company aims at
signs supply agreement with Chinese & Taiwanese to commercialization of clean energy, changes the
control about 14% of solar wafer market. name to SunEdison
2009 Ties with Q-cells (solar cell player) for construction 2014 - Separates electronics-wafer business from solar- Focus
and operation of photovoltaic plants wafer and solar-energy business. on
New subsidiaries TerraForm Power (solar & wind power) & clean
Acquired SunEdison LLC, North America's largest Vertical TerraForm Global (Solar, Wind, Hydroelectric) to manage energy
solar energy services provider (developing, Integration renewable-energy projects
financing, building, operating, monitoring PV plants) For energy
business Acquires First Wind, largest wind power developer in US
2010 Acquires Solaicx to enter into advanced technologies
2015 Divests semiconductor (electronics-wafer) business
used for production of low-cost, high-performance solar
panels.
2011 Acquires solar-power project developer, Axio Power.
Revenue Mix (2015)
Slump in semiconductor business and photovoltaic Projects- $7.0b
modules. Services- $0.4b
Solar Material- $0.3b
 2016 - $11 billion in debt
caused it to face Vikram Akula, 37 yr old, former McKinsey
bankruptcy consultant, born in India, grew up in USA
founded SKS Microfinance in 1997
Mega promises
Cheap Money Mission to provide financial services to the
Oil market volatility economically weaker sections [financial
Governance arms length inclusion]
dealing with subsidiaries
His goal: to model a business on
McDonald's Corp. or Starbucks Corp.,
using technology and standardized systems
to wring out efficiency from each transaction
to keep cost lower
He raised $52K from more than 300 friends
and family, IPO of $350 Million
oversubscribed by 14 times in 2010.
Attracted foreign capital.
SKS launched operations with a single
employee in Hyderabad in 1998.

Source: Dec2015 company presentation

Company keeps it simple .. No Philanthropy : It was a profitable company

Simple rules. Borrowers have to meet at a certain "I may have the smallest business
Foreign banks in India face (within Citigroup) but I have the
time. Repay each week, same amounts
limits on opening of local branches largest potential client group in
Akula convinced friends from McKinsey and KPMG to the world." Robert Annibale, Global
32% of loans to priority sectors Director of Microfinance, Citigroup.
volunteer time to create simple loan-management including agriculture and rural industry
software to be used by loan managers without
SKS proposition to these banks-
computer experience.
Pay us to find micro-borrowers and
Software helped SKS diversify its risk manage loans for you, and you'll get
A few years ago when it found excess exposure to buffaloes, it
backdoor access to the Indian consumer
started emphasizing other areas like tractor repair, brick making,
market
tire re-treading and tea shops. 200,000 borrowers with a default rate of
less than 2% by 2006
Bottom line: Fast turnaround meant a loan officer
visits three villages each morning instead of one - Between 1996 - 2009, SKS grew its
borrowers by over 200% p.a., making it
meets average of 50 borrowers in each meeting the largest micro-lender in Asia-Pacific.
instead of 20. Promoter makes to the list of 100
men and women, whose power,
talent or moral example is
transforming world The Time,
May, 2006
Various awards on the way
Emergent challenges
Changes in the regulatory environment in 2010
Andhra Pradesh Govt. passes ordinance to regulate micro-finance sector
because of farmers suicides. Political accusations of charging hefty
interest rates from illiterate, poor
Corporate governance issues surfaces. Founder, senior management
sell all their holding in IPO.
Sept 2011 - CEO is fired, founder, Mr Akula, resigns from board
Aug 2015 - RBI denies small finance bank license
Should SKS be run as a typical moneylender or social enterprise?

http://www.sksindia.com/our_journey.php

Indian Aviation Industry

LCC carriers worldwide

AirAsia, Cebu Pacific, Ryanair,
Southwest Airlines, Spirit
Airlines, Wizz Air

Shares of LCCs increased to 64%

in the domestic space (25% CAGR
for 4 years)
LCCs (Indigo, SpiceJet, goAir)
increased foothold on International
routes (~20% share)
LCCs as the business model drives
growth and sustain its operations.

How can Spicejet survive bad phase?

71 72
 Operational Performance
MRO contracts had high number of
exclusions - this cost the airline a lot when
there was a snag
Little understanding of the airline business
Low-cost strategy vs. low fare strategy or
both

Key cost metrics per ASK

Maintenance cost: US 0.90
Fuel Cost US 2.94
Owner Cost US 1.20
Total Cost US 6.68
Within a few months after takeover by Maran in 2010, company
ordered 15 smaller aircraft, Bombardier Q400, to service smaller
cities. Fleet zoomed from 22 planes to 51 in one year.

73 74

Is our strategy a winner ? Finally ..

Does it exhibit dynamic fit with Strategy is all about How:

The Strategic the external and internal How to outcompete rivals.
Fit Test aspects of the firms overall
situation? How to respond to economic and market conditions and
growth opportunities.
How to manage functional pieces of the business.
How to improve the firms financial and market performance.
The Competitive Winning The Performance
Advantage Test Strategy Test

Can it help the firm achieve a Can it produce good

significant and sustainable performance as measured by
competitive advantage? the firms profitability, financial
and competitive strengths, and
market standing?

75 76
It is about asking the right questions: .. and getting the right answers
Good strategic thinking, strategic orientation
What are the broad market trends and less visible undercurrents Managing the strategic process analysis, formulation &
in business environment & industry that might influence upcoming implementation
strategic choices?
Developing the needed capabilities and skills
What are financial capabilities and competitive abilities
What is basis of competition in the industry? Analyze rivals.
Where do we want to go from here? vision for future do we
have clearly defined purposes and goals to follow a deliberately
chosen direction
How are we going to get there? - Crafting an action plan that will
get us there
What aspects (competences) of firm are enduring and can
withstand environmental pressures

77 78

End

79