Strategic Management – SEM 2
Batch – December 2022
Student ID - 77221395297
Question:
1. You are the marketing director of Citibank, your bank is making huge profits globally in the
consumer banking division, your organization now wants to cut back on consumer banking and wants
to focus on business-to-business segment. What type of strategy is it? Create a strategic plan for the
disinvestment? How will you handle employee reactions, anger? Prepare a communication strategy.
(10 Marks)
Answer:
Introduction: Strategy Formulation: Corporate Strategy
Meaning of Strategy:
Strategy is an action that managers take to attain one or more of the organization's goals. Strategy
can also be defined as “A general direction set for the company and its various components to
achieve a desired state in the future. Strategy results from the detailed strategic planning process”
Meaning of Corporate Strategy:
A corporate strategy is a long-term plan that outlines clear goals for a company. While the objective
of each goal may differ, the ultimate purpose of a corporate strategy is to improve the company. A
company's corporate strategy may be to focus on sales, growth or leadership.
For example, a business might implement a corporate strategy to expand its sales to different
markets or consumers. It may also use corporate strategy to prioritize resources. Another purpose of
corporate strategy is to create company value and to motivate employees to work toward that value
or set of goals.
Concepts and Application:
Retrenchment Strategies:
The Retrenchment Strategy is used when a company wants to scale back one or more company
operations to save costs and improve its financial situation. In other words, the strategy used when a
company discontinues its operations through a significant reduction in its business operations is
known as the retrenchment strategy. This can be applied to customer groups, customer functions,
and technology alternatives individually or collectively.
Now that we have understood the retrenchment strategy let us look at the different types of
retrenchment strategies.
Types of Retrenchment Strategy
• Turnaround Strategy
• Captive Company Strategy
• Sell - Out / Divestment Strategy
• Bankruptcy / Liquidation Strategy
Following are the various retrenchment strategy types explained:
➢ Turnaround Strategy:
Simply, a turnaround strategy is backing out or retreating from the decision wrongly made
earlier and transforming from a loss-making company to a profit-making company.
It is a strategy to convert a loss-making industrial unit to a profitable one.
Turnaround is a restructuring process that converts the loss-making company into a
profitable one.
There are three phases in turnaround management:
1. Diagnosis of the problem faced by the company.
2. Choosing the appropriate turnaround strategy.
3. Implementation of the strategy.
➢ Captive Company Strategy
When a company depends on another company to survive, it defines a captive company
strategy. When the industry prospects are not promising enough to justify the work needed
to turn the firm around, a company with weak competition may choose not to pursue a
turnaround strategy.
➢ Sell-Out / Divestment Strategy
A divestment strategy is deployed by organizations to scale down the range of their business
activities.
Divestment involves –
o Sale of an organization’s business assets
o Divisions or subsidiaries in an effort to streamline operations
o Improve financial health.
o Sometimes, it also includes separating a struggling division from the parent
organization and establishing it as an independent entity—also known as a spin-off.
A divestment strategy is the way to go when a particular business line doesn’t perform to
expectations and becomes a liability instead of an asset. Organizations may also turn to a
divestiture strategy to prevent insolvency, reduce debts and maintain a low debt-to-equity
ratio.
➢ Bankruptcy / Liquidation Strategy
A liquidation strategy is a closure strategy when businesses sell their assets in order to wind
up their business operations.
Many business experts consider it an unpleasant strategy because you terminate the
business operations permanently.
For instance, a retailer had heavy losses in the company and he couldn’t find any suitable
party to buy the whole business a complete entity. Therefore, he decides to sell off all the
assets like doors, equipment, fixtures, and inventory to extract some value out of the
business and minimize the losses.
Conclusion:
The rationale for this shift is that the consumer banking market is becoming increasingly
competitive and saturated, whereas the business-to-business banking market is still relatively
undeveloped at this time.
Citibank believes that the business-to-business market has greater potential for growth and profit,
and as a result, the company intends to focus its efforts there.
The retrenchment strategy adopted by Citibank is Sell-Out / Divestment Strategy:
(Source – Google)
As per the agreed terms, Citi will be selling all its credit cards, retail banking, wealth management
and consumer loans businesses to Axis Bank. Further, the sale comprises Citi’s non-banking financial
company, Citicorp Finance (India) Limited.
Citi plans to keep its institutional client businesses in India and continue to serve them.
Upon completion, about 3,600 Citi employees, working in its consumer business, will be transferred
to Axis Bank as part of the deal.
Further, the deal is expected to release about $800 million of allocated tangible common equity. Citi
expects the transaction to close in the first half of 2023.
Strategy formed by Citibank to handle angry employees: To win, the bank needs to break a cycle of
underinvestment that leads to subpar returns.
✓ Citigroup is picking its spots, adding 500 front office workers in its wealth business, 200
corporate and investment bankers, and working to digitize parts of its flagship corporate
cash management business, CFO Mark Mason said in October.
✓ Citigroup has dedicated more than 4,000 workers spread over six projects to the sweeping
mandate to fix risk management systems while pouring billions of dollars into technology
upgrades.
✓ That has left some frustrated that both traditional and fintech competitors have a funding
advantage, giving them an edge in hyper-competitive markets. Venture capital investors
poured $134 billion into fintech start-ups last year, prompting traditional players including
JPMorgan to pump up their investment budget to compete.
Communication Template to communicate Bank strategy over email or letter:
Date
Name
Address
City, State, ZIP Code
Dear Bank Customer:
At (time) on(date), our (Bank Name) located (branch location) will close. All accounts currently
maintained at this branch will be transferred to our (Another Bank Name and Branch location
details) Your accounts will be transferred automatically to the branch. No action by you will be
necessary.
[Optional: Include information on the services offered at Bank where the accounts have been
transferred.]
[Optional: If you have any questions, call us at (telephone number). We look forward to serving your
banking needs for years to come.]
Sincerely,
-SignatureName and Title
Question:
2. The IPL has never missed a season. Despite the Pandemic, the IPL organized its seasons
in the UAE. In the past the IPL has organized its event in South Africa. Why would IPL
be so insistent on continuing with its seasons despite the challenges it faced? Do you
think the IPL brand would have been tarnished had a couple of seasons got missed?
Would missing a season affect the IPL brand. Analyze and evaluate. (10 Marks)
Answer:
Introduction: Organizational Analysis and Competitive Advantage
Strategic Marketing Issues
Marketing is an important process that companies use to find consumers and turn them into paying
customers.
When marketing teams experience challenges, it may inhibit businesses' ability to sell their
products successfully. This can prevent those companies from being profitable.
However, there are many techniques marketers can use to overcome challenges and ensure
positive results from their campaigns.
The marketing manager is a company’s primary link to the customer and the competition. The
manager, therefore, must be especially concerned with the market position and marketing mix of
the firm as well as with the overall reputation of the company and its brands.
Market
Position and
Segmentation
Brand and
Corporate
Reputation
Strategic
Marketing
Issues
Marketing
Mix
Product Life
Cycle
Concepts and Application:
Below are the Strategic Marketing issues faced by the organization:
➢ Market Position and Segmentation
Market segmentation allows the company to divide their market into smaller groups, which
comes with a whole range of powerful benefits.
Companies can generally use three criteria to identify different market segments:
• Homogeneity, or common needs within a segment
• Distinction, or being unique from other groups
• Reaction, or a similar response to the market
Example
A sports-shoe manufacturer might define several market segments that include elite
athletes, frequent gym-goers, fashion-conscious women, and middle-aged men who want
quality and comfort in their shoes.
In all cases, the manufacturer's marketing intelligence about each segment enables it to
develop and advertise products with a high appeal more efficiently than trying to appeal to
the broader masses.
➢ Marketing Mix
The marketing mix, as most of you may know, is the set of marketing tools that a firm uses
to pursue its marketing objectives in the target market.
It consists of everything that a company can do to influence demand for its product.
It is also a tool to help marketing planning and execution.
The marketing mix can be divided into four groups of variables commonly known as the four
Ps:
• Product: The goods and/or services offered by a company to its customers.
• Price: The amount of money paid by customers to purchase the product.
• Place (or distribution): The activities that make the product available to consumers.
• Promotion: The activities that communicate the product’s features and benefits and
persuade customers to purchase the product.
Within each of the four Ps, they have their own tools each to contribute to the marketing
mix:
✓ Product: variety, quality, design, features, brand name, packaging, services
✓ Price: list price, discounts, allowance, payment period, credit terms
✓ Place: channels, coverage, assortments, locations, inventory, transportation,
logistics
✓ Promotion: advertising, personal selling, sales promotion, public relations
➢ Product Life Cycle
The product life cycle contains four distinct stages. Each stage is associated with changes in
the product's marketing position.
We can use various marketing strategies in each stage to try to prolong the life cycle of our
products:
• Introduction
The introduction stage is when a product is first launched in the marketplace. T
his is when marketing teams begin building product awareness and reaching out to
potential customers.
Typically, when a product is introduced, sales are low and demand builds slowly.
• Growth
During the growth stage, consumers have accepted the product in the market and
customers are beginning to truly buy in. That means demand and profits are
growing, hopefully at a steadily rapid pace.
• Maturity
•
The maturity stage is when the sales begin to level off from the rapid growth period.
At this point, companies begin to reduce their prices so they can stay competitive
amongst growing competition.
Decline
Unfortunately, if your product doesn't become the preferred brand in a
marketplace, you'll typically experience a decline. Sales will decrease during the
heightened competition, which is hard to overcome.
Example of The Typewriter
The typewriter was the first mechanical writing tool — a worthy successor to pen and paper.
Ultimately, however, other technologies gained traction and replaced it.
• Introduction: In the late 1800s, the first commercial typewriters were introduced.
• Growth: The typewriter quickly became an indispensable tool for all forms of writing,
becoming widely used in offices, businesses, and private homes.
• Maturity: Typewriters were in the maturity phase for nearly 80 years, because this was
the preferred product for typing communications up until the 1980s.
• Decline: Overall, the typewriter couldn't withstand the competition of new emerging
technologies and eventually the product was discontinued.
➢ Brand and Corporate Reputation
On my research, I came across the best-case study which we can easily relate and
understand the consequences faced by company once the Brand Corporate Reputation is
affected:
Example –
For over a century now, Coca-Cola has been the number one soft drink company in the
world. They have vast profitable resources and some of the greatest marketing minds
existing at their disposal. Despite all of that, Coca-Cola failed glumly when it introduced New
Coke to the public back in 1985.
The reason was that they were unable to understand the marketing threats and could not
target the right market and were fail to arrangement their new product in the market. The
simple reason of failure was people did not like the new coke.
In spite of all the research that was done, and despite the thousands of taste tests
conducted; the buying public just didn't like the taste of New Coke. And completely nothing
Coca-Cola said or did could change that one simple fact.
Unfortunately, that crooked out to be a very expensive lesson for Coca-Cola. They lost
millions of customers to their bitter rival and number two soft drink giant, Pepsi.
Conclusion:
The answers to the questions asked on the IPL matches will be as under in my opinion:
Why would IPL be so insistent on continuing with its seasons despite the challenges it faced?
Ans - The IPL would be so insistent on keeping the matches as it did not want the cricket-crazy public
to miss even one match. People were so much interested in these matches that they would have
missed them when these matches were not played.
Do you think the IPL brand would have been tarnished had a couple of seasons got missed?
Ans - No the IPL brand's image will not get tarnished. It was the fact that they would lose all the
sponsorship money that they are insistent on having these matches so regularly without missing a
single season.
Would missing a season affect the IPL brand?
Ans - Yes, missing the season would affect the brand financially. As there are lots of other people
who are dependent on them and live a livelihood on them. In case, we do not consider the financial
aspect, then the answer would be no. Missing a season will not affect the IPL brand.
Question 3.a: You are the head corporate strategy for cinema express a successful theatre
chain having 20 theatres with 80 screens in tier two towns of India with the Pandemic hitting
hard at the theatre business with prolonged shut downs business has been badly hit. Along
with this consumer sentiment has been dampened deeply.
a. As the company’s head of strategy what strategies would you evolve in ensuring your
organization remains relevant in the post pandemic world. Create a strategy plan. (5 Marks)
Answer:
Introduction: Basic Concepts of Strategic Management
A strategy of a business forms a comprehensive master approach that states how the business will
achieve its mission and objectives. It maximizes competitive advantage and minimizes competitive
disadvantage.
Concepts and Application:
Types of Strategy:
Corporate Strategy
Business Strategy
Functional Strategy
➢ Corporate Strategy:
A corporate strategy is a multi-level strategy employed by a company to define its goals and
structure its approach to attain them. Depending on the size and nature of the business, the
strategy may be formed with the aim of increasing profits, selling a business or expanding to
new markets.
➢ Business Strategy:
A business strategy refers to all the decisions taken, and actions undertaken by a business
for achieving the larger vision. Knowing what business strategy is and how to execute it
properly can help businesses become market leaders in their domain.
➢ Functional Strategy:
A functional strategy helps set objectives that guide the optimum allocation of resources
among different business functions.
This strategy also guides and facilitates coordination among the functions to maximise their
outcomes.
Strategy plan as the company’s head of strategy remains relevant in the post pandemic world:
1. Creating a pandemic preparedness framework:
Build a team that represents all key business functions and reports directly to executive
management. The primary priority of this team is to assess the relative importance of business
activities and organize them into tiers for response or recovery.
For example, critical IT infrastructure such as network or VPN servers may be at the highest level for
corrective action, while deferred activities such as training or budgeting may be at a lower level.
2. Monitor the situation to determine the change in severity:
Numerous sources of information can help you monitor the rate and severity of an infection. Many
organizations rely on the comprehensive information found on the World Health Organization site.
3. Review financial and financial impact:
Be sure to check revenue projections and communicate with investors and suppliers about potential
financial issues. It's also important to ensure your organization has the working capital it needs to
weather the storm.
4. Personal hygiene protocols:
Establish protocols for handling workers returning from affected areas and expand your
organization's existing hygiene practices for cleaning and provision of hygiene supplies.
5. Review HR policies and practices:
Identify essential employees and ensure your organization can function in their absence. Be as
prepared as possible for up to 40% absence.
6. Create a pandemic communication program:
Create a pandemic communications program with pre-approved messages and scripts for various
stakeholders, including employees, customers, supply chain partners, any many more.
Conclusion:
Coronavirus has impacted the world at an unprecedented level.
Companies need to act today in order to bounce back successfully in a post-corona marketplace with
respect to Live entertainment's:
Strategic questions to be considered are:
1. What protected and exclusive events can they offer to high-paying customers interested in
live events these days?
2. Can entertainment venues extend their offerings and scopes to be in-demand multipurpose
venues?
3. What can company in the entertainment industry do to meet the needs of every kind of
customer and create experiences that can blend the in-person with the digital?
Question 3.b: How would you reposition your company’s brand in the future? Create two
new products for your theatre chain, which can ensure relevance and protect the company
from unforeseen circumstances. (5 Marks)
Answer:
Introduction: Strategy Formulation: Business Strategy
Brand Repositioning:
When a company changes the status of a brand in the marketplace but maintains its identity at the
same time, it is called “brand repositioning”. As part of this process, changes are typically made to
the marketing strategy such as product, price, place, or promotion.
Repositioning is usually done when a company sees a decrease in sales and they realize it is time to
implement some changes and develop. This is a necessity if they are to stay on top of consumer
wants and needs in order to keep the brand alive.
Concepts and Application:
Hyper competition and Competitive Advantage Sustainability:
Hyper competition can be defined as organizations' use of tactics to disrupt the competitive
advantage held by industry leaders. Hyper competition typically occurs at a rapid pace.
For example, let's say that you own a fast-food restaurant and your items are priced slightly higher
than a rival fast-food chain. If you decide to adjust your prices to be closer to or lower than your
rival, that is hyper competition.
For organizations looking to succeed in a hypercompetitive market, there are four factors that need
to be mastered:
• Technology and innovations
• Customer changes
• Decline of boundaries
• Financial independence
D’Aveni 7s framework comes into action and tells us that we can indeed succeed even in
hypercompetitive environment by considering the help of the following seven key points:
Superior stakeholder satisfaction:
•maximize customer satisfaction by adding value strategically.
Strategic soothsaying:
•seek as much new knowledge as possible for predicting new opportunities
Positioning for speed
•make sure you always seize opportunities as well as being ready to deploy effective counterattacks in
response to any move from your competition.
Positioning for surprise
•develop the ability to be always be the one coming out ahead of the curve
Shifting the rules of the game
•this tactic could create considerable disruption among your competitors
Signalling strategic intent
•announce business moves and new product releases as means to manipulate your rivals and force
them to even rethink their business strategy.
Announce Simultaneous and sequential strategic thrusts
•such as entering new markets, releasing new products, etc., to either mislead or confuse the
competition.
Corporate Examples who have taken necessary steps to be active in the competitive market:
Maggi
This brand has been successful in sending us back to some sweet nostalgic state of mind.
The Food Safety & Standards Authority of India (FSSAI) accused this brand of having the lead &
monosodium glutamate above the permissible limits during 2015.
To everyone’s surprise, rapidly this news was spread in the market like wildfire & Maggi was off the
shelves for several months.
Despite this massive set back, they kept the cord live with their consumers. A series of videos with
hashtags WEMISSYOUTOO were launched by the company to remind its consumers of the good
time they had while having their product.
Certainly, this campaign was a success & people get its beloved Maggi back on market racks.
Godrej
They have been in India for several decades with a rich legacy dedicated to quality.
To get a fresh look & identity, they changed their logo appearance in 2008. Instead of the maroon
colour, they chose a pink, blue & green logo to make it look more contemporary.
This transformation did an excellent job in combination with their venture into various new sectors
such as real estate.
Conclusion:
Empty arenas, cancelled shows, no films, as the Coronavirus pandemic hit India; the
offline entertainment industry took a tumble. Among the principal industry to be hit by the
outbreak, out-of-home (OOH) entertainment is expected to be the last to revive.
Below strategies can ensure bringing profit to Cinema express:
❖ “FREE” events –
Associates with content makers, who need to engage with their crowd, and give them the
stage to interface with them. The free-to-view events – theatre, singing, open mics, and
workshops – should be live on online networking platforms, such as Facebook, Instagram,
and YouTube to engage more consumers attention.
❖ The online streaming platform should be accessible over Cinemas application and web stage.
It should be populated with large group of virtual live entertainment contributions – music,
components of theatre, stand-up comedy sessions, e-sports, food, family entertainment,
wellness and environment conservation, which could be experienced from the security of
one’s home.