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GE Nine Cell Matrix

GE Nine Cell Matrix
GE NINE CELL MATRIX Another popular “Corporate Portfolio Analysis” technique is the result of pioneering effort of General Electric Company along with McKinsey Consultants which is known as the GE NINE CELL MATRIX. GE nine-box matrix is a strategy tool that offers a systematic approach for the multi business enterprises to prioritize their investments among the various business units. It is a framework that evaluates business portfolio and  provides further strategic implications. Each business is appraised in terms of two major dimensions – Market Attractiveness and Business Strength. If one of these factors is missing, then the business will not produce desired results. Neither a strong company operating in an unattractive market, nor a weak company operating in an attractive market will do very well. The vertical axis denotes industry attractiveness, which is a weighted composite rating based on eight different factors. They are: Market size and growth rate Industry profit margins Intensity of Competition Seasonality Product Life Cycle Changes Economies of scale Technology Social, Environmental, Legal and Human Impacts PORTFOLIO ANALYSIS-BCG MATRIX What does the horizontal axis represent? It indicates business strength or in other words competitive position, which is again a weighted composite rating based on seven factors as listed below: Relative market share Profit margins Ability to compete on price and quality Knowledge of customer and market Competitive strength and weakness Technological capability Caliber of management The two composite values for industry attractiveness and competitive position are plotted for each strategic business unit (SBU) in a COMPANY’S PORTFOLIO. The PIE chart (circles) denotes the proportional size of the industry and the dark segments denote the company’s respective market share. The nine cells of the GE matrix are grouped on the basis of low to high industry attractiveness, and weak to strong business strength. Three zones of three cells each are made, indicating different combinations represented by green, yellow and red colors. So it is also called ‘Stoplight Strategy Matrix’, similar to the traffic signal. The green zone suggests you to ‘go ahead’, to grow and build, pushing you through expansion strategies. Businesses in the green zone attract major investment. Yellow cautions you to ‘wait and see’ indicating hold and maintain type of strategies aimed at stability. Red indicates that you have to adopt turnover strategies of divestment and liquidation or rebuilding approach. This matrix offers some advantages over BCG matrix in that, it offers intermediate classification of medium and average ratings. It also integrates a larger variety of strategic variables like the market share and industry size. Advantages Helps to prioritize the limited resources in order to achieve the best returns. The performance of  products or business units becomes evident. It’s more sophisticated business portfolio framework than the BCG matrix. Determines the strategic steps the company needs to adopt to improve the performance of its business portfolio. Disadvantages Needs a consultant or an expert to determine industry’s attractiveness and business unit strength as accurately as possible. It is expensive to conduct. It doesn’t take into account the harmony that could exist between two or more business units. PORTER’S FIVE FORCES-INDUSTRY...
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Top Five Reasons Why Strategic Plans Fail

Top Five Reasons Why Strategic Plans Fail
Why Strategic Plans Fail What are Strategic Action Plans? Action plans refer to definite actions that are related to either short- or longer-term strategic goals. Action plans should include details of resource commitments, allocation and time horizons for accomplishment. Action plan development represents the key stage in planning that facilitates effective communication of plans throughout the organization followed by resource planning and deployment. Action plans are also referred to as projects, strategies, tactics, or initiatives. Plans in paper may look more creative and feasible in nature; in reality it is a big quest unanswered. Are executives showing the same kind of enthusiasm in giving shape to the plans they charted out in paper? Most plans fail or do not give the expected optimum results and the reasons attributed may be listed out as follows: 1. Authority is delegated but Responsibility is forgotten: #Senior management executives are the STRATEGIC DECISION-BRAHMAS obviously but do they demonstrate what needs to be done? Demonstration is one of the powerful forms of communication and if the strategies are only to be communicated down the line and not to be followed by the senior officials how do you expect your team to perform efficiently? 2. Confusion between #strategy and Ideas: An idea is a conceptual construct about a particular thing. It is more abstract in nature. But when it comes to strategy, you need to have a solid FUTURISTIC action plan that is bound to give you the desired results in the long term. The elements essential for a good action plan are Availability of Resources (Men, Material and Money) Efficient #Resource Allocation to the various Strategic Business Units Proper Deployment Regular Follow-up until #accomplishment of goals Minor Modification of plans in accordance with the macro environment (legal, economic, financial etc.,) 3. Dis-Orientation of Senior Leaders: If a senior leader reaches that higher position through internal promotion, he loses touch with day-to-day activities though he has a strong contextual understanding of the business. If a senior #management leader happens to reach the top through external recruitment, it takes time for him to understand the business and the nature and needs of the organization. Only few leaders are capable of devising action plans that exactly nails the problem-situation (as we all know when an organization is looking for a turn around, the first blow is to the CEO of the organization). 4. Laissez Faire attitude doesn’t work out for strategic action plans: A senior leader has to monitor an action plan from the start till the end until the expected result is achieved. No strategy succeeds without a visionary in the background. The passion that a leader exudes is overwhelmingly infectious and motivates the team to complete a project. Here the leader is the initiator who is involved throughout strategic planning process so that momentum is sustained during the critical transition from planning to action. Follow ManagementGuru Net’s board Strategic Management – The Inevitable on Pinterest. 5. There might be one good goal but definitely no one good strategy: Understand strategies are subjected to change in accordance with the internal and external environment. Say, you have invested quite a good amount of money in shares of a particular reputed company and you come to know that there is a senior level management leadership change and feelers are that prices are likely to crash. What will you do?  Just being able to conceive bold new strategies is not enough. The management must also be able to translate its strategic vision into concrete steps that is “getting things...
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Portfolio Analysis and Implementation

Portfolio Analysis and Implementation
What is Portfolio Analysis ? Portfolio Planning is best advised for diversified companies than the more product coherent ones. Portfolio analysis plays a vital role in planning and implementation of  various #strategic business units of the organization as a whole. Portfolio planning recognizes that diversified companies are a collection of businesses, each of which makes a distinct contribution to the overall corporate performance and which should be managed accordingly. Companies dealing with a wide #product range and divisions are expected to redefine their strategies for each of the SBU’s or Strategic Business Units. Then they classify these units on a portfolio grid according to the competitive position and attractiveness of a particular product market. What are strategic business units? A strategic business unit is a fully functional and discrete unit of the business that builds its own strategic vision and direction. Within large companies there are smaller specialized divisions that work towards specific projects and #objectives. The strategic business unit, often referred to as an SBU, remains an important element of the company and is accountable to their head office about their operational status. Typically they will operate as an independent organization with a specific focus on target markets and are large enough to maintain internal divisions such as finance, HR, and so forth. Types of Portfolio Planning: Analytical Planning: Planning is only at the initial level where traditional administrative tools are used. Process Planning: Here planning is a central part of the ongoing #management process and strategic mission is explicit in activities. Advantages of Portfolio Planning: It promotes substantial improvement in the quality of strategies formulated both at the business and corporate levels. It provides a guideline for adopting their overall management process to the needs of each business. It provides selective #resource allocation to the various SBUs. It furnishes companies with a greatly improved capacity for strategic control when portfolio planning is applied intelligently and with attention to its limitations and problems. Since the road to portfolio planning is a long one, companies often face difficulties trying to implement it and cannot realize the full potential of the approach. In implementing portfolio planning, there is a tendency for the focus to be shifted towards #capital investment rather than resource allocation. #Resource Development is the key: Implementing Corporate Level and Business Level Strategies: Corporate level #strategy is concerned with the strategic decisions a business makes that affect the entire organization. Financial performance, mergers and acquisitions, #human resource management and the allocation of resources are considered part of corporate level strategy. Business level strategy focuses on how to compete in a particular product/market segment or industry. Competitive advantages and distinctive competencies thus become dominant strategic concerns at this level. At the functional level, the primary focus of strategy is efficiency.  Boston Consulting Group Matrix: The business policy portfolio models are most popular and useful to understand the firm’s strategic concerns and choices. They define the firm’s scope or domain by highlighting the inter-relatedness of the diverse factors, such as: #Market Growth #Market Share Cash and Cash flow patterns Capital Intensity #Product Maturity #Stars – Star category represents high growth and high market share – High investments are needed to maintain the share – High cash flow outward movement in this category to maintain status – Usually in the end of the ‘Growth’ #Product Life Cycle stage – Represents emerging and good business for the company, though they need alot of attention and priority #Cash Cows – Represents low growth, high market share – This is the best quadrant of the portfolio as the company basically enjoy the ‘milk’ of success – This is where the revenue stream flows inwards...
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“Introduction to Strategic Management”

“Introduction to Strategic Management”
Strategic Management by David Kryscynski This is the introduction lecture for Strategic Management. Very Innovative and Informative video.   A List of Strategic Management Terms Business – A strategy that pertains to single departments or units within a company. Combination – A type of grand strategy that employs several different grand strategies at once. Concentration – A growth strategy that extends the sale of current products or services to a company’s current market. Differentiation – A business strategy that strives to make the company’s product or service unique. Diversification – A growth strategy that moves a company into a similar kind of business with new or different products or services. Divestiture – A type of defensive strategy in which a company sells some part of its business, often an unprofitable part. Evaluating – The process of continuously monitoring the company’s progress toward its long-range goals and mission. Focus – A business strategy that directs marketing and sales towards a small segment of the market. Formal – The type of planning that involves systematic studying of an issue and the preparation of a written document to deal with the problem. Formulating strategy – Developing the grand- and business-level strategies to be used by the company. Functional – A strategy which involves short-range operational plans which support business strategies by emphasizing practical implementation. Goal – A concise statement that provides direction for employees and set standards for achieving the company’s strategic plan Grand – A type of strategy that provides overall direction for the company. Growth – A type of grand strategy developed when a company tries to expand sales, products, or number of employees. Implementing – Putting a strategy to work after it has been formulated. Intermediate – Covers the time span between short-range and long-range, usually 1-3 years or 1-5 years Liquidation – A type of defensive strategy in which the entire company is sold or dissolved. Long Term– A three-to-five year period of time, but possibly as far as 20 years into the future. Mission Statement – A brief summary explaining why a company exists. Operational – Short-range planning that focuses on forming ideas for dealing with specific functions in the company. Overall Cost Leadership – A business strategy that is designed to produce and deliver a product or service for a lower cost than the competition. Planning – The process that businesses use to decide the company’s goals for the future and the ways to achieve those goals. Policy – A broad general guide to action that establishes boundaries within which employees must operate. Procedure – A detailed series of related steps of tasks written to implement a policy. Retrenchment – A type of strategy that aims to reverse negative trends in a company, such as losses in sales. Rule – A specific and definite corporate action that employees must follow. Short Term– A one-year period of time. Stability – A type of strategy that aims to keep the company operating at the same level that it has for several years. Strategic – Long-range planning done by the highest management levels in the company. Strategic Management – The application of the basic planning process at the highest levels of the company. Strategy – An outline of the basic steps management is going to take to achieve a goal. SWOT Analysis – The most utilized process for determining a company’s overall health; it involves analyzing internal strengths, internal weaknesses, external opportunities, and external threats. Turnaround – A type of defensive strategy that is used to regain success. Vertical Integration – A growth strategy that moves a company into a market it previously served either as a supplier or as a customer....
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Contributions of Entrepreneurs to the Society

Contributions of Entrepreneurs to the Society
Contributions of Entrepreneurs to Boost Productivity Productivity Accelerators: Entrepreneurship raises productivity through technical and other forms of innovation. Entrepreneurs as risk bearers find resources and fill market gaps that would be missed by larger, more bureaucratic organizations. They allow a country to extract every last bit of marginal capacity out of whatever resources exist within the society. Brilliant Tips on Productivity by some Popular Entrepreneurs: Focus on one thing at a time: It may seem like a no-brainer, but multitasking can actually cut back on your productivity. Instead of juggling multiple projects at once, schedule out blocks of time — or even entire days — during which you only focus on one task or one project. Steph Auteri, @stephauteri, Word Nerd Pro Outsource, outsource, outsource: Everything may be a priority, but you are not equally brilliant at everything. Eliminate the unnecessary tasks and outsource your weaknesses so your time and focus is directed to where you’ll make the biggest impact for the business. Kelly Azevedo, @krazevedo, She’s Got Systems Define roles and divide work: Make sure everyone on the team has distinct roles defined, and divide work accordingly. Everyone on a proactive team will want to do everything, and clearly defined roles make it clear who should do what. David Gardner, @david_gardner, ColorJar Job Creators: It is a powerful tool of job creation -Entrepreneurship as a whole contributes to social wealth by creating new markets, new industries, new technology, new institutional forms, new jobs and net increases in real productivity. The jobs constructed through their activities in turn lead to equitable distribution of income which leads to higher standards of living for the population. Entrepreneurship facilitates the transfer of technology. Entrepreneurs play a strategic role in commercializing new inventions and products. They play a critical role in the restructuring and transformation of economy. Their behavior breathes vitality into the life of large corporations and governmental enterprises.  Market Competitiveness: They make the markets more competitive and thereby reduce both static and dynamic market inefficiencies. Micro-preneurs working in the informal sector circumvent established government authority when governments and their programmes inhibit economic development. They stimulate redistribution of wealth, income and political power within societies in ways that are economically positive and without being politically disruptive. Social Welfare: They improve social welfare of a country harnessing dormant, previously overlooked talent. They create new markets and help in expansion into international markets. The unique feature of entrepreneurship – that it is a low cost strategy of economic development, job creation and technical innovations. Technology Innovation: In recent years China has become a chief contributor to world economic development. China is efficient-driven economy, not yet an innovation based economy. China seeks to become a world leader in science, technology and innovation within the next few decades. In addition to the role technology entrepreneurship has in moving China’s economy towards innovation-based economy, technology entrepreneurship is also important for sustainable development as Nobel Prize Laureate prof. Dan Schechtman puts it: “Technological entrepreneurship is a key to the well-being of the world”. India has been the first among the few developing countries to have assigned a significant and categorical state role to small scale industries from the first Five Year Plan itself, and the small scale sector has emerged as a dynamic and vibrant sector of the economy during the eighties. If the country develops pucca infrastructure and removes the hurdles in the operative environment politically and legally, no doubt the Indian economy will be scaling to greater heights. Surplus manpower (educated and un-educated), which has been a great liability can become an asset once those with potential are selectively groomed for self-employment and enterprise formation, leading to further job opportunities. Loading… You...
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