SCENARIO

ANALYSIS
PROCESS
Scenario analysis is making assumptions on what the future is going to be
and how the business environment will change overtime in light of that
future. Scenario analysis is identifying a specific set of uncertainties,
possibilities of what might happen in the future of the business.
Eg. Farmers use scenarios to predict whether the harvest will be good or
bad, depending on weather. It helps them forecast their sales but also their
investments.

1. Frequent changes in government, wars, reforms.

2. Uncertainities like inflation, deflation, increasing unemployment,
strikes.
3. Difficult labour force, scarcity due to high demand.
4. Import restrictions due to law, shortage due to ecological reasons.
5. Prohibitions on sale or production, new tax rules.
6. Pressure from ethical, religious or environment protection groups.
7. New technology not comfortable to use.
1. Orient
Identification of organisation’s readiness to accept change. Clarity of business
issues and time period. Internal interviews and review of existing reports and
planning documents.
2. Explore
Review shifts in PESTEL context for industry and organisation. Interviews with
experts outside the company, review of articles and reports to identify signs of
change.
3. Synthesize
Shows how forces and uncertainties might interact and evolve to create surprisingly
new conditions. Outcome gives an idea about future of your organisation and
industry in various possible futures. Creative work sessions, reviews with key
stakeholders, research.
4. Choose / Act
A current or proposed strategy is tested to see how it might play out under different
scenarios along with identifying new opportunities arising from changing
conditions.
5. Monitor
Process for evaluating whether to take actions when conditions are changing. An
essential and ongoing part of the process.
BCG
Matrix
The BCG (Boston Consulting Group) growth share matrix is a tool used internally
by management to assess the current state of value of a firm/s units or product
lines. It aids the company in deciding which products or units to either keep, sell
or invest more in.
The matrix plots a company’s offerings in a 4 square matrix with Y axis
representing the rate of market growth and X axis representing market share.
It contains 4 distinct categories “Dogs”, “Cash cows”, “Stars” & “Question
marks”.
RELATIVE MARKET SHARE
High Low

STARS QUESTION
MARKET High MARK
GROWTH
RATE
CASH DOGS
Low
COW
Stars
Products that are in high growth markets and that make up as sizable portion of that
market are considered “stars” and should be invested in more. They generate high
income.

Cash Cows
Products that are in low growth areas but for which the company has a relatively
large market share are considered “cash cows” and the company should thus milk
the cash cow for as long as it can. They are typically leading products in market
that are mature. These products generate returns that are higher than the market’s
growth rate.

Question marks
Questionable opportunities are those in high growth rate markets but in which the
company does not maintain a large market share. Products in this quadrant should
be analysed frequently and closely to see if they are worth maintaining.

Dogs
If a company’s product has low market share and is at a low rate of growth, it is
considered a “dog” and should be sold or liquidated. They are cash traps tying up
company’s funds for long period of time.
Advantages of BCG Matrix

1. Easy to understand
2. Identification of opportunities
3. Helpful in removing the weak areas

Disadvantages of BCG Matrix

1. Ignores other factors of business

2. General approach for complex situation
(cash flow, growth rate & market share only 3 considered factors)
3. No middle path
BCG of Amul

Stars
Amul ice cream and Amul ghee can be considered under this category. Amul ice
creams have very targeted ads to become more appealing with words like ‘creamy’
‘medium fat’. These products have a high market share and have possibilities to
grow in near future.

Question mark
Amul lassi can be brought to this category as it has been brought in the market
with the objective to give a tough competition to other beverages available in the
market.

Cash cows
Amul milk, Amul butter Amul cheese comes under this category. These products
genearet a steady and high revenue. They have high shares in markets that have
relatively low growth.

Dogs
Amul chocolates have not been able to generate sales and revenue as per
estimation. If the sales figures do not process towards betterment a probable
measure would be to take the path of divestment.
Ansoff
Grid
The Ansoff matrix also called the Product / Market
expansion grid, is a tool used by firms to analyse and plan
their strategies for growth. The matrix shows 4 strategies
that can be used to help a firm grow and also analyses the
risk associated with each strategy.
The matrix was developed by mathematician and business
manager H. Igor Ansoff.
 Existing product New product

Existing
Market Product
market
Penetration Development

New Market
market Diversification
Development
4 strategies are:

1. Market penetration
This focuses on increasing sales of existing products to an existing
market by
• Decreasing prices to attract new customers
• Increasing promotion and distribution efforts
• Acquiring a competitor in the same marketplace

2. Product development
Focuses on introducing new products to an existing market by
• Investing in R&D to develop new products
• Merging resources to create a new product
• Forming strategic partnerships with other firms to gain access to
each partner’s distribution channel
3. Market development
Focuses on entering a new market using existing products by
•Catering to a different customer segment
•Entering into a new domestic market
•Entering into a foreign market

4. Diversification
Focuses on entering a new market with the introduction of new
products. It could be related diversification or unrelated
diversification.
McDonald’s
 Existing product New product

Market Product
Penetration Development
Existing Fries, burgers, beverages, Cheese & Bacon McSpicy,
market salads and desserts. McChicken, Deluxe
Drive –thru facility along
with home delivery in
some countries.

Market Diversification
Development
New Mccafe (coffee house) to
Started from USA
market compete with coffee houses.
expanded and currently
Opened 2 hotels in
operating in 118
Switzerland ‘Golden Arch
countries.
Hotel’ in 2001, however it
closed in 2003.
 GE 9 CELL
PLANNING GRID
The GE McKinsey matrix is a product portfolio analysis matrix. When you
have a complex product portfolio, then it is difficult to take decisions. This
is a strategy based tool that contains a 9 box matrix and provides a
systematic way to the multi business corporation for the purpose of
prioritizing its investments among its subunits. This is because each
product will have its own demands and requirements. But resources are
limited. For this some products should be given a boost by investing
money, some products should be held by letting them as they are and divest
products which are not working as planned.
But it becomes very difficult for companies to decide which products to
invest in. This can be done with ease by GE-McKinsey matrix as it supports
businesses in decision making in a more informed and systematic way.
It is a tool that solves investment problems by making a comparison of
business units and further assigning these units into relevant groups that are
either worth investing or should be divested or harvested.
Following factors affect industry attractiveness.
•Growth rate in the long run
•Size of industry
•Profitability of industry ( entry & exit barriers, powers of buyer and supplier,
threat of substitutes)
•Structure of industry
•Changes in product life cycle
•Demand changes
•Price trends
•Labour availability
•Market segmentation
•Seasonality

Strength of business unit

•Growth of market as compared to competitiors
•Brand value
•Customer loyalty
•Strength of supply chain
•Product differentiation level
•profitability
Grow
If the business units have high market attractiveness and high business unit
strength. This means, that higher percentage of resources should be
invested in these business. They are most likely to be successful if backed
up with more resources.

Hold
If the business unit has average attractiveness, business should be hold as it
is. It is possible that market is dropping in value or there is much high
competition which business unit can not take up easily, so the business
might not give optimum returns even if resources are invested. In such a
case wait and hold the business is the method to see if the market
environment changes.

Harvest
If the business unit strength is weak and market has become unattractive
then it should be sold or liquidated. The best method in this is to harvest
and reinvest the money earned into business units which are in growth.
M BUSINESS UNIT STRENGTH
A
R
K HIGH MEDIUM LOW
E
T GROW GROW HOLD
HIGH
A
T
T GROW HOLD HARVEST
R MEDIUM
A
C
T HOLD HARVEST HARVEST
I LOW
V
E
N
E
S
S
Patanjali’s Dantkanti, Honey and Ghee operate in the
green segment giving the organisation opportunities to go
ahead and grow and build the product.

Patanjali’s candy, fruit juice and medicines takes place in

yellow category signifying that brand should hold the
product for some time and make necessary developments.

Patanjali’s cosmetic products, personal care products,

agarbatti etc comes under red area due to the presence of
other strong competitiors.
McKinsey’s 7 S
Model
It is a tool to analyse a company’s
organisational design. It is framework for
organizational effectiveness that postulates
that there are 7 internal factors of an
organisation that need to be aligned and
reinforced in order to be successful. The goal
of the model is to depict how effectiveness
can be achieved in an organisation through
the combination of 7 key elements that are
classified as “hard” and “soft” elements.
 Hard ‘S’
System
Strategy Structure
Shared
values

Skills Style
Staff
Soft ‘S’
1. Strategy
It is the plan deployed by an organisation to stay competitive in industry
and market. business plan that allows the company to formulate plan of
action to achieve competitive advantage.

2. Structure
Way in which a company is organised. It is made up of corporate hierarchy,
chain of command and divisions that determines how the operations
function. It outlines responsibilities of workers.

3. Systems
It refers to the daily procedures and decisions along with technical
infrastructure of the company.

4. Shared values
It relates to the actual accepted behaviour within the workplace. They are
the commonly accepted standards and norms within the company that
influence the behaviour of management and staff.
5. Skills
It includes the talents and capabilities of the people in the
organisation that determines the types of achievements company can
accomplish.

6. Staff
It refers to the personnel of the company, how large the workforce is
and how they are trained and prepared to accomplish the task. It also
includes training, recruiting and reward systems.

7. Style
Approach that management has to lead the company and how it
influences performance and productivity.
Corporate Culture
Corporate culture refers to the beliefs, values and norms that are shared in an
organization. Culture affects not only the way managers behave within an
organisation but also the decisions they make about the organisation’s relationship
with its environment and its strategy. It facilitates communication, decision
making, control and create cooperation and commitment.
Good corporate culture support involvement and provide positive, fun ways for
their employees to get together for personal and professional development
activities.
Following are some elements of culture that matter most to employees
• Feeling of respect
• Supportive leaders
• Leaders live core values
• Benefits
• Perks
• Learning and development
• Job security
• Lacking integrity and unethical behaviour
Reengineering
Business process reengineering is the practice of rethinking and
redesigning the way work is done to support an organisation’s
mission and reduce costs. Reengineering is redesigning or
reinventing how daily work is performed.

Reasons
1. To reinvent the way they do work
2. To be competitive
3. To cure system process and behavioural problems
4. To enhance their capability to expand to other industries
5. To accommodate an era of change
6. To satisfy customers, employees and stakeholders
7. To survive successfully in the long run
8. To invent
Strategy Implementation
Strategy Implementation refers to the execution of the plans and
strategies, so as to accomplish the long-term goals of the
organization. It converts the opted strategy into the moves and
actions of the organisation to achieve the objectives.
Strategy implementation is also defined as the manner in which an
organization should develop, utilize, and amalgamate organizational
structure, control systems, and culture to follow strategies that lead
to competitive advantage and a better performance.

Process
•Set Clear Goals and Define Key Variables
• Determine Roles, Responsibilities, and Relationships
•Delegate the Work
•Execute the Plan, Monitor Progress and Performance and Provide
continued Support
•Take Corrective Action (Adjust or Revise as necessary)
•Conduct a review of how the process went
Model of Strategy
Implementation
 Activating
Managing Achieving
strategies
change effectiveness
Project
implementation
Structural
Implementation Functional
Implement
ation
Procedural Leadership
Strategic
implementation Implementation Evaluation
plan
& control
Behavioural
implementation Operational
implementati
on
Resource
allocation

feedback
Organization Life
Cycle
Organizational life cycle, is the life cycle of an organization from the point of its creation to
the point it is terminated. It has five distinct stages which
are conception, expansion, stability, growth, and termination.

1. The start-up or existence phase

This is the stage when the companies have to accumulate capital, develop products and
services and hire workers. Thus this phase is all about entrepreneurial thinking and includes
writing and forming a business plan, formation of various teams, making investment plans
to kick-start the business.
2. The growth or survival phase
at this point; the companies are looking to solidify their roots, establish a framework, pursue
growth and develop their capabilities. The growth stage is crucial for an organization, and
this is why it puts its onus on early product diversification and sales growth. Product lines
are broadened; efforts are on tailoring products to suit new markets, managers try to identify
subgroups of customers and make small modifications in product and services to serve them
in a better way.
3. The maturity phase
In this phase, the companies pay fewer onuses on expansion and more on safeguarding their
interests and maintaining the existing growth and development strategies and plans. It is the
middle and top levels management that take up the mantle of specialising in tasks like
routine work, planning, strategising etc.
By the time an organization reaches its maturity level one can see stabilisation in the sales.
This happens because of market saturation and high levels of competitive activities.
4. The renewal phase
The renewal stage is also referred to as the revival stage because of its functions. The revival
stage generally occurs between maturity and a decline stage of the organizational life cycle.
This happens because an organization recognises the need for drastic changes and initiates
plans to implement the set strategies that can alter their current path. the revival stage is
considered for expansion and diversification of product-market scope. Companies try to
follow a policy of rapid growth through diversification, innovation and acquisition. This
stage involves increased investment and high risks.

5. The decline phase

The last stage of the organizational life cycle is the decline stage that signifies the death of
an organization. This can be identified by minimizing sales figures and profitability in the
organization. This happens because of market stagnation, reluctance for risk-taking, external
challenges, and lack of innovation.
In this stage of the organizational life cycle, organizations start putting the onus on
conserving resources. Their sales figures go plummeting downhill because of unappealing
product lines and lack of new technologies in the products.
Strategic Budgeting
Strategic Budgeting is a budget prepared by the companies
that takes into consideration long term objectives and costs
that take more than one year to achieve. This involves
preparing multiple budgets and forecast for short term
costs that are aligned with the long term.

Goals of the Budgeting Process

1. Aids in the planning of actual operations
2. Coordinates the activities of the organization
3. Communicating plans to various managers
4. Motivates managers to strive to achieve the budget goals
5. Control activities
6. Evaluate the performance of managers
Types of budgets
1. Operating budget
Revenues and associated expenses in day-to-day operations are budgeted in detail
and are divided into major categories such as revenues, salaries, benefits, and
non-salary expenses.

2. Capital budget
Capital budgets are typically requests for purchases of large assets such as
property, equipment, or IT systems that create major demands on an
organization’s cash flow. The purposes of capital budgets are to allocate funds,
control risks in decision-making, and set priorities.

3. Cash budget
Cash budgets tie the other two budgets together and take into account the timing
of payments and the timing of receipt of cash from revenues. Cash budgets help
management track and manage the company’s cash flow effectively by assessing
whether additional capital is required, whether the company needs to raise money,
or if there is excess capital.
Budgeting Process
Levels of Resources
management availability
Desired long and Approval &
short run goals sanction
Corporate
Policy
Top guidelines Strategic
management budget

Minimising
proposals
Executive gaps
management
Position
Papers
(eg. Environment,
core competencies
marketing & past
performance)

Operating Target / opeartional Implementation

management plans
Organisation Structure
Functional structure
It seeks to distribute decision making and operational authority alongwith functional lines.

CEO

Public legal
relations

Finance Marketing HRM Production

Divisional structure
Work is divided on the basis of product lines, types of customers served or geographic area
covered. Divisons or groups are created and placed under divisional level management.

CEO

Corporate finance Corporate legal / PR

General manager General manager

Division A Division B

Marketing Marketing

Operations Operations

HRM HRM
Matrix Structure
In large organisations there is need to work on major products or projects each of which is
strategically different. Such a structure is created by assigning functional specialists to work
on a special project or a new product. Simultaneously they may also work in their
respective parent departments.

Advantages
1. Allows individual specialists to be assigned when their talent is most needed.
2. Fosters creativity because of pooling of diverse talents
3. Provides good exposure to specialists

Disadvantages
1. Dual accountability creates confusion and difficulty for individual team members
2. Requires high level of vertical and horizontal combination
3. May create communication problems.
 CEO

Finance Marketing HRM operations

Project
Manager
A
Functional
specialist

Project
Manager
B

Project
Manager
C
Network structure
The increasing volatility of environment along with the emergence of knowledge
based industries has led to the creation of a network structure. Also called ‘spider
web structure’ or ‘virtual organisation’ it is composed of a series of project groups
or collaborations linked by constantly changing non hierarchical, cobweb like
networks. It is highly decentralised and organised around customer groups or
geographical regions. Business functions are scattered far and wide. The network
design underlying the network structure subcontracts some or many of its
operations to other firms and coordinates them to accomplish specific goals.

Advantages
1. Flexibility to change structural arrangements
2. Permits concentration on core competencies
3. Adaptability to cope with rapid environmental change

Disadvantages
1. Loss of control and lack or cordination due to several partners
2. Most tasks are performed by others
3. Duplication of resources could exist.
 Project
Group M
structure
Region A
Function X
structure
structure

Corporate
headquarter

Region B
structure Function Y
structure

Project
Group N
structure
Modular organisation structure
A modular organisation structure is that can be separated and
recombined to work more efficiently. Automotive, computer and
appliance manufacturers are examples. The key lies in determining
departments effective in the business and which can be outsourced
to create a tighter organisation.
Strategic Leadership
Strategic leadership is the ability to lead an organisation
towards the achievement of its objectives. The tasks
involved in exercising strategic leadership are to
anticipate, envision, maintain flexibility and empower
others to create strategic change as and when necessary.

Tasks of strategic leaders

1. Determining strategic direction

2. Effectively managing the organisational resources
portfolio
3. Sustaining an effective organisational culture
4. Emphasising ethical practices
5. Establishing balanced organisational controls
Styles of leadership

1. Autocratic leadership
Also known as authoritarian directive or monothetic style. In this manager
centralises decision making power in himself.

2. Participated leadership
Also called democrative, consultative or ideographic. Metal and emotional
involvement of a person in a group which encourages him to contribute to group
goals and shares responsibility.

3. Free rein leadership

Also called laissez-faire means giving complete freedom. In this manager once
determines policy, programmes and limitations for action and the entire process is
left to subordinates.
Developing programmes
It is a course designed with the same objective to help
participants develop their competence in strategic
management process. All activities and resources should
now be focused on developing a low cost structure and
reducing cost.
When all the areas of marketing, finance, operations,
personnel and information management contribute to
the objective of developing a low cost structure and
reducing cost then the business is likely to be successful.
 Corporate level strategies

Business level strategies

Functional level
strategies

Marketing Financial Operations HRM plans Information

plans & plans & plans & & managemen
programmes programmes programmes programmes t plans &
programmes
Corporate development
It refers to the planning and execution of strategies to meet organisational
objectives. It may include phasing in or out of markets or products, arranging
strategic alliances, mergers & acquisitions, corporate financing, divestment of
assets or units. Corporate development helps corporations improve their financial
performance, reach a greater level of organisational efficiency and create
opportunities to raise the company’s value and competitiveness in the market.

Goals
1. Improving client and customer experiences
2. Optimizing productivity
3. Increasing revenue
4. Decreasing expenses
5. Making smarter investments
6. Increasing capital adequacy ratio
7. Developing and implementing better business strategies