Explanation : Some strategic decisions are made in a flash by one person (often an entrepreneur or a powerful chief executive officer) who has a
brilliant insight and is quickly able to convince others to adopt his or her idea. Other strategic decisions seem to develop
out of a series of small incremental choices that over time push the organization more in one direction than another. According to
Henry Mintzberg, the three most typical approaches, or modes, of strategic decision making, are entrepreneurial, adaptive, and
planning. A fourth mode, logical incrementalism, was added later by Quinn.
> Entrepreneurial Mode: Strategy is made by one powerful individual. The focus is on opportunities; problems are secondary. The strategy is guided by the founder’s own vision of direction and is exemplified by large, bold decisions. The dominant goal is the growth of the corporation. Satyam Computer Services Limited, founded by Ramalinga Raju, is an example of this mode of strategic decision making. The company reflects his vision of the computer services provider industry.
> Adaptive Mode: Sometimes referred to as “muddling through,” this decision-making mode is characterized by reactive solutions
to existing problem s, rather than a proactive search for new opportunities. Much bargaining goes on concerning
priorities of objectives. The strategy is fragmented and is developed to move the corporation forward incrementally. This mode is typical of most universities, many large hospitals, a large number of governmental agencies, and a surprising number of large corporations. Encyclopedia
Britannica, Inc., operated successfully for many years in this mode. It continued to rely on the door-to-door selling of its prestigious books long after dual-career couples made this marketing approach obsolete. Only after it was acquired in 1996 did the company change
its marketing strategy to television advertising and Internet marketing. (See www.eb.com.) It now offers an online version of the encyclopedia in addition to the printed volumes.
> Planning Mode: This decision-making mode involves the systematic gathering of appropriate information for the situation analysis, the generation of feasible alternative strategies, and the rational selection of the most appropriate strategy. It includes both the proactive search for new opportu cities and the reactive solution of existing problems. Hewlett- Packard (HP) is an example of the planning mode. After a careful study of trends in the computer and communication ns industries, management noted that the company needed to stop thinking of itself as a collection of stand-alone products with a primary focus on instrumentation and computer hardware. Led by its CEO,
Carty Fiorina, top management felt that the company needed to become a customer-focused and integrated provider
of information appliances, highly reliable information technology infrastructure, and electronic commerce services. Consequently,
products were merged into packages for electronic services solutions, such as software for building internal company portals and “e-speak,” a software platform that can quickly create and combine different kinds of online services. HP also sold its venerable test and
measurement unit—the business in which the company had begun. HP’s research labs also received significant support and were encouraged to quit focusing on incremental improvements so that they could develop “disruptive technologies”, such as molecular computing, technology to build integrated circuits using molecules.
> Logical Incrementalism: A fourth decision-making mode, which can be viewed as a synthesis of the planning, adaptive, and to a lesser extent, the entrepreneurial modes, was proposed by Quinn. In this mode, top management has a reasonably clear idea of the corporation’s mission and objectives, but, in its development of strategies, it chooses to use “an interactive process in which the organization probes the future, experiments and learns from a series of partial (incremental) commitments rather than through global formulations of total
strategies.” Thus, although the mission and objectives are set, the strategy is allowed to emerge out of the debate, discussion, and experimentation. This approach appears to be useful when the environment is changing rapidly and when it is important to build
consensus and develop needed resources before committing the entire corporation to a specific strategy. The growth of Infosys in the IT industry may be attributed to this approach.
Explanation : According to the Boston Consulting Group, which compiled the BCG matrix in 1960, products of a multi-product organization can
be categorized in a matrix classification. A broad interpretation is attached to the term “products”. Products are not necessarily only
physical objects. They can also be services, while departments or branches of a large organization, or enterprises that operate as
independent SBUs, are often regarded as “product” of the larger parent organization. The BCG matrix measures a firm’s SBUs
according to two factors: the annual growth rate of the SBU, and the SBU’s market share relative to that of its largest competitor,
suggesting that long-term profitability is best predicted by these two indicators. The matrix is defined by the market growth
rate and the products’ relative market share. Four different product classes with very descriptive names are distinguished and
represented in the matrix.
> Stars are relatively new products in the themarket-growth phase of their life cycle. Each star has attained a relatively large
market share and has growth potential. However. they need cash to maintain their position because of the many competitors
entering the target market under such satisfactory circumstances. Traditionally the stars use more cash than they generate.
The growth rates will necessarily dwindle with time and stars will either become “cash cows” or lose their position in the
> Cash cows are the successful stars of the preceding period. They are well established in respect of market share, but
few prospects exit for further market growth. They are probably in the maturity phase and do not require much cash to
keep them in this profitable position. These products generate cash.
> Problem children (also called “wildcats”) have a relatively small market share and require a continued marketing effort just
to retain their market share. The problem child is often a new product which can become a star if it develops successfully.
However, much cash is required to develop the problem child to its full potential.
> Dogs have a low market share and market growth possibilities are limited (or do not exist at all). Because prospects are poor,
cash flow to these products is limited. Dogs can be sold to other organizations or they can be withdrawn from the market.
> New products that are still in the developmental phase have no place in the market growth-market share classification
of products because it is not known whether growth possibilities exist for them. The success of the organization nevertheless depends on the quality of new products that can be manufactured. The BCG matrix is therefore an original portfolio analysis tool that uses single
measures of market attractiveness and company strength to predict future cash flows for SBUs. The matrix is an objective measure
and relatively straightforward to use, however, managers should beware of oversimplifying the situation.
Explanation : Culture can be defined as the cumulative preference of some states of life over others (values), response predispositions towards several significant issues and phenomena (attitudes), organised ways of filling time in relation to certain affairs (rituals), and ways of promoting desirable and preventing undesirable behaviour (sanctions).
Explanation : Essentially, entrepreneurs recognize an opportunity and turn it into a successful business. An opportunity is a favorable set
of circumstances that creates a need for a new product, service, or business. Most entrepreneurial firms are started in one of two
ways. Some firms are externally stimulated. An entrepreneur decides to launch a firm, searches for and recognizes an opportunity,
and then starts a business, as Jeff Bezos did when he created Amazon.com. In 1994, Bezos quit his lucrative job at a New York City
investment firm and headed for Seattle with a plan to find an attractive opportunity and launch an e-commerce company. Other firms
are internally stimulated. An entrepreneur recognizes a problem or an opportunity gap and creates a business to fill it. This was the
case with BuyAndHold.com.
Regardless of which of these two ways an entrepreneur starts a new business, opportunities are tough to spot. It is difficult to
identify a product, service, or business opportunity that isn’t merely a different version of something already available. Opportunity
recognition is part art, part science. An entrepreneur must rely on instinct, which makes it an art, and on purposeful action and analytical
techniques, which makes it a science. An opportunity has four essential qualities: it is (1) attractive, (2) durable, (3) timely, and
(4) anchored in a product, service, or business that creates or adds value for its buyer or end-user.
For an entrepreneur to capitalize on an opportunity, its window of opportunity must be open. The term ‘window of opportunity’
is a metaphor describing the time period in which a firm can realistically enter a new market? Once the market for a new product is
established, its window of opportunity opens. As the market grows, firms enter and try to establish a profitable position. At some point,
the market matures, and the window of opportunity closes.