School of Thought
Description
Strategy is formulated through a structured process that aligns the
Design School
organization’s internal capabilities with external opportunities.
Emphasizes formal, step-by-step strategic planning with clear
Planning School
objectives and resource allocation.
Strategy is about finding a competitive position in the market, often
Positioning School
guided by external analysis like Porter’s Five Forces.
Entrepreneurial
Focuses on visionary leadership where strategy emerges from the
School
intuition and bold decisions of a strong leader.
Views strategy formation as a mental process shaped by perceptions,
Cognitive School
biases, and learning.
Strategy evolves dynamically based on organizational learning, trial
Learning School
and error, and adaptation.
Considers strategy as a negotiation process influenced by power
Power School
dynamics within and outside the organization.
Highlights the role of organizational culture in shaping strategy based
Cultural School
on shared beliefs and values.
Environmental
Strategy is a response to external forces, suggesting that organizations
School
adapt to their environment rather than actively shape it.
Configuration
Strategy formation is context-dependent, meaning organizations shift
School
between different strategic approaches over time.
Types of Strategic Control
1. Premise Control: Checks whether the assumptions or premises on which a
strategy is based remain valid during implementation.
2. Implementation Control: Monitors whether the strategy is being executed
according to the planned steps and schedules.
3. Strategic Surveillance: A broad, ongoing review of internal and external changes
that might affect the strategy.
4. Special Alert Control: Rapid response to sudden, unexpected events that could
impact the strategy significantly.
Strategic Approach for a Small Business in a Saturated Market
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•
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A focus strategy targeting niche markets helps small businesses compete
effectively despite limited resources.
This strategy allows differentiation through specialization, brand loyalty, and
tailored offerings.
Example: A startup offering eco-friendly office supplies finds success by catering
to businesses committed to sustainability.
Balanced Scorecard in Strategy Execution
•
The Balanced Scorecard (BSC) is a strategic management tool that helps
organizations translate their vision and strategy into measurable objectives. It
focuses on four perspectives: Financial, Customer, Internal Processes, and
Learning & Growth. By balancing financial and non-financial measures, it
ensures all areas critical to strategy success are tracked. This helps businesses
align daily activities with long-term goals, monitor progress, and take corrective
actions, leading to effective strategy execution.
Pricing Strategy for Competitive Market
A pricing strategy in a competitive market is a method businesses use to set prices to
attract customers while staying profitable. In a highly competitive market, firms often use
competitive pricing, where prices are set close to or slightly below competitors’ prices to
gain market share. Other strategies include:
•
•
•
Penetration Pricing: Setting low prices initially to attract customers and
discourage competitors.
Price Skimming: Setting higher prices if the product is unique or has a
competitive advantage.
Psychological Pricing: Using prices like ₹99 instead of ₹100 to influence buyer
perception.
What is Strategic Intent? Why is it Important?
Meaning:
Strategic Intent is a clear, ambitious, and long-term goal that guides an organization’s
efforts and motivates it to achieve a competitive advantage. It defines what the
organization wants to become in the future, often stretching beyond current resources
and capabilities.
Importance:
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•
•
•
•
It provides a sense of direction and focus for all employees.
Encourages commitment and motivation by setting challenging targets.
Helps firms to allocate resources effectively toward long-term goals.
Drives innovation and continuous improvement as companies strive to achieve
their vision.
Enables businesses to compete effectively by concentrating on a common
objective.
Strategic Alliance vs Joint Venture
Aspect
Strategic Alliance
Joint Venture
A partnership where two or more
A separate legal entity formed by two
firms collaborate to achieve
or more firms pooling resources to
Meaning
common objectives while remaining undertake a specific business activity
independent.
together.
No new company is created;
A new company is formed with shared
Ownership
partners remain independent.
ownership.
Usually informal and flexible, can More formal and long-term
Duration
be short-term or long-term.
commitment.
Each partner controls its own
Control is shared as per the joint
Control
business.
venture agreement.
Blue Ocean Strategy vs. Red Ocean Strategy:
Aspect
Blue Ocean Strategy
Create new, uncontested market
Meaning
space
Competition Make competition irrelevant
Focus on innovation and
Approach
differentiation
Red Ocean Strategy
Compete in existing, crowded
markets
Beat rivals to gain market share
Focus on cost-cutting and
competition
Aspect Blue Ocean Strategy Traditional Competitive Strategy
Strategy
Blue Ocean
Strategy
Traditional
Competitive
Strategy
Definition
Focuses on creating an
entirely new market space
where competition is
irrelevant.
Competes in an existing
market by outperforming
rivals through cost leadership
or differentiation.
Key Features
Example
Innovation, value Apple
creation, market revolutionizing
expansion.
smartphones.
Price wars,
efficiency,
competitive
advantage.
Coca-Cola vs. Pepsi
in the soft drink
market.
Cost-Plus Pricing vs. Value-Based Pricing
Pricing
Method
Description
Example
Adds a fixed margin to production cost,
Supermarkets use this
ensuring consistent profitability but may ignore
model for stable pricing.
market conditions.
Sets price based on perceived customer value,
Value-Based
Luxury brands price
optimizing revenue but requiring strong market
Pricing
based on exclusivity.
research.
Cost-Plus
Pricing
Aspect
SWOT Matrix
Definition Identifies internal & external factors
Main
Focus
Process
Purpose
Output
Analysis of current situation
Lists Strengths, Weaknesses,
Opportunities, Threats
Understand business environment
SWOT list
TOWS Matrix
Uses SWOT to formulate
strategies
Strategy formulation based on
SWOT
Matches SWOT factors to create
strategies
Develop actionable plans
SO, WO, ST, WT strategies
Cost-Based, Competitor-Based, and Value-Based Pricing
Pricing
Strategy
Definition
Key Characteristics
Sets price by adding a Simple to calculate, does
Cost-Based
markup to production not account for customer
Pricing
costs, ensuring profit demand or competitor
margins.
prices.
Prices products based
Market-driven, reactive
Competitor- on competitors' pricing
approach, may lead to
Based Pricing strategies, aiming to
price wars.
stay competitive.
Sets price based on
Requires strong market
Value-Based perceived customer
research, focuses on
Pricing
value rather than cost customer willingness to
or competitors.
pay.
Example
Manufacturing
companies using a
fixed percentage
markup.
Airlines adjusting
fares based on rival
pricing.
Luxury brands
pricing based on
exclusivity and brand
prestige.