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Assignment on strategy and strategy formulation
Submitted to:
Submitted by:
Prof. S. Goswami
MD.Atif farhan PGFA0823 2nd year
Q: Different strategic groups will have different level of profit. Do you think it is possible for a company to move from low profit to a high profit group? Justify.
Ans:1st part Strategic group is a concept used in strategic management that groups companies within an industry that have similar business models or similar combinations of strategies. For example, the restaurant industry can be divided into several strategic groups including fast-food and finedining based on variables such as preparation time, pricing, and presentation. Because of their structural similarities, firm in the same group are likely to respond in the same way to disturbances from outside the group and to competitive activities within the group. Here we can see oligopolistic interdependence at work on the basis of ability to imitate the moves of rivals. However, it is possible to argue that mobility barriers (i.e. strategy differences) could explain persistence difference in the profits rates between groups in an industry. Profits may be differentially affected across strategic groups for the following reasons: 1. There may be differences in bargaining power that some strategic groups may have towards customers and/or suppliers. These differences may be due to differences in scale, threat of vertical integration, or product differention following from differing strategies. 2. The degree of exposure of different strategic groups to substitute products produced by other industries can also be reason for the difference in the profitability of firms. 3. There may be wide difference in the degree to which firms within the group compete with each other. It is always difficult to sustain a mutual dependence, if there are numerous firms operate in a strategic group. 4. The difference in the cost of mobility into a strategic group is also a critical factor. Those firms which are earlier mover and able to establish brand names, have always advantages over the late entrants. Thus timing in this case may impact profit differences. 5. The ability of the firm to execute or implement its strategy is also very important in an operational sense. Some firms may be superior in their ability to organize and manage operations, develop creative advertising themes, make technological breakthroughs with given inputs of resources and the like. Those firms in a group with superior abilities to execute strategies will be more profitable than other firms in the same group. There are other reasons too like the firm operating in a particular country,its political and other situational factors, however the mentioned above are more critical one for the difference in the profitability of firms operating into strategic group. Thus it can be easily said that different strategic group have different levels of profits.
Ans:2nd part Mobility barriers are within-industry factors that control the movement of campanies between strategic groups.A campany can move from low profit to high profit strategic group,if it is able to sense an opportunities and may contemplate to change their business model as most high profit
strategic groups do.The campany wish to enter into another strategic group mmust evaluate whether it has the ability to imitate and indeed outperform,its potential competitors in that strategic group.Here manager role become more prominent.He should check the feasibility whether adopted strategies overcome the mobility barriers before deciding the move is worthwhile.
Submitted to:
Submitted by:
Prof. S. Goswami
MD.Atif farhan PGFA0823 2nd year
Q: Different strategic groups will have different level of profit. Do you think it is possible for a company to move from low profit to a high profit group? Justify.
Ans:1st part Strategic group is a concept used in strategic management that groups companies within an industry that have similar business models or similar combinations of strategies. For example, the restaurant industry can be divided into several strategic groups including fast-food and finedining based on variables such as preparation time, pricing, and presentation. Because of their structural similarities, firm in the same group are likely to respond in the same way to disturbances from outside the group and to competitive activities within the group. Here we can see oligopolistic interdependence at work on the basis of ability to imitate the moves of rivals. However, it is possible to argue that mobility barriers (i.e. strategy differences) could explain persistence difference in the profits rates between groups in an industry. Profits may be differentially affected across strategic groups for the following reasons: 1. There may be differences in bargaining power that some strategic groups may have towards customers and/or suppliers. These differences may be due to differences in scale, threat of vertical integration, or product differention following from differing strategies. 2. The degree of exposure of different strategic groups to substitute products produced by other industries can also be reason for the difference in the profitability of firms. 3. There may be wide difference in the degree to which firms within the group compete with each other. It is always difficult to sustain a mutual dependence, if there are numerous firms operate in a strategic group. 4. The difference in the cost of mobility into a strategic group is also a critical factor. Those firms which are earlier mover and able to establish brand names, have always advantages over the late entrants. Thus timing in this case may impact profit differences. 5. The ability of the firm to execute or implement its strategy is also very important in an operational sense. Some firms may be superior in their ability to organize and manage operations, develop creative advertising themes, make technological breakthroughs with given inputs of resources and the like. Those firms in a group with superior abilities to execute strategies will be more profitable than other firms in the same group. There are other reasons too like the firm operating in a particular country,its political and other situational factors, however the mentioned above are more critical one for the difference in the profitability of firms operating into strategic group. Thus it can be easily said that different strategic group have different levels of profits.
Ans:2nd part Mobility barriers are within-industry factors that control the movement of campanies between strategic groups.A campany can move from low profit to high profit strategic group,if it is able to sense an opportunities and may contemplate to change their business model as most high profit
strategic groups do.The campany wish to enter into another strategic group mmust evaluate whether it has the ability to imitate and indeed outperform,its potential competitors in that strategic group.Here manager role become more prominent.He should check the feasibility whether adopted strategies overcome the mobility barriers before deciding the move is worthwhile.
