[15:06:28] ysbq: Okay guys the session for today would be covering Syllabus reference A-6 and 7 (chapter 4 and 5 for kaplan) [15:07:05] ysbq: First of all we will be discussing stakeholders, Ethics and Governance and then, we will switch to strategic chioces [15:07:16] ratna1238: ok [15:07:57] ysbq: okay last time we did stakehoolder mapping [15:08:06] ysbq: now we gonna do governace [15:08:15] ysbq: knowledge level disucssion [15:08:35] ysbq: What is corporate governance? [15:09:07] ms1689: a system where an organisation is controlled [15:09:21] savvy2012: its the way company is directed [15:09:35] potter2009: they way in which a company directed and controlled [15:09:38] ysbq: ok [15:10:00] ysbq: why there is need for corporate governance [15:10:02] ysbq: ? [15:10:20] ms1689: in order to achieve best practice [15:10:34] ysbq: hmmm....fine but vague [15:10:38] ratna1238: because the people who run the company may not be the one who owns the company [15:10:47] ysbq: {ratna1238} yes [15:10:55] savvy2012: to ensure that directors run the company in best interests of stakeholders, mainly shareholdres [15:10:56] potter2009: to ensure companies act ethically and thing about their wider society [15:11:07] ysbq: {savvy2012} can u remember the agency theorey from p1 [15:11:17] ms1689: {savvy2012} agree [15:11:24] ysbq: {ysbq} yes [15:11:26] savvy2012: {ysbq} i think so [15:12:08] savvy2012: theres agent (directors) and other one (shareholders) and directors have .................. duty to shareholdres [15:12:09] savvy2012: :D [15:12:18] ratna1238: fiduciary [15:12:21] savvy2012: fill in the gaps [15:12:25] savvy2012: {ratna1238} yeah! [15:12:25] ratna1238: :P [15:14:08] ysbq: so it is due to the agency relationship between the shareholders and the management that leads them to persue their own goals, hence, to ensure goal congruence and to keep up with their fudiciary duty , corporate governance is adopted and implemented to keep a check on management [15:14:13] yaroslava: hi [15:14:17] ysbq: {yaroslava} hi [15:14:35] savvy2012: ok [15:14:35] ysbq: all agree [15:14:40] potter2009: yup [15:14:52] ms1689: yes [15:15:33] ratna1238: ya [15:15:36] ysbq: since self interest of management like salaries and bonuses can result in less wealth maximisation [15:15:44] ysbq: for shareholdrs [15:16:08] ysbq: how the corporate governance is implemented? [15:16:16] ysbq: any body [15:17:16] savvy2012: by using a code of corporate governance [15:17:33] savvy2012: by putting strong internal controls in place [15:17:42] ysbq: ok [15:17:47] ysbq: wht else [15:18:09] yaroslava: ensuring a balance in the board structure [15:18:10] ysbq: who will oversee them [15:18:16] ysbq: {yaroslava} good [15:18:26] potter2009: non execs and execs [15:18:30] ysbq: by induction of independent and knowledgeable directors - NEDs [15:18:34] ysbq: {potter2009} yes [15:18:41] potter2009: ceo [15:18:45] ysbq: NEDs are very important [15:18:46] potter2009: will oversee [15:18:53] potter2009: but cant be the same person as md [15:19:14] ysbq: i meant how will oversee the bod [15:19:29] ysbq: ceo overseed the organisation operations and working [15:19:41] potter2009: coo [15:19:42] potter2009: ? [15:20:10] ysbq: chairman runs the bod and committees that act as control over executive directors [15:20:23] potter2009: oh yeah [15:20:27] ysbq: {potter2009} executive director [15:20:55] ysbq: okay wht will be the benefits of NED on a whole to entity and its investors [15:20:57] ysbq: ? [15:21:16] potter2009: they bring knowledge and independency [15:21:17] ms1689: independent viewpoint [15:21:24] ysbq: ok [15:21:47] ysbq: booost investor confidence [15:21:49] savvy2012: improve credibility [15:21:53] ysbq: {savvy2012} yes [15:22:05] potter2009: they can look make up audit comittee and nomination committees [15:23:02] ms1689: bring experience [15:23:16] ysbq: {potter2009} well infact , that is the requirement of Code of corporate governace , we could say that they make the working of these commitees more effective and objectiive [15:23:52] yaroslava: People, Internal controls, Strategy and Scrutiny...they PISS thus thier role. excuse my french but you wont forget that. [15:23:59] ysbq: one of their advantages could be identifcation of risk to bod members [15:24:12] ysbq: {yaroslava} ok [15:24:30] ysbq: {ysbq} fine if it does not offend others [15:25:24] ysbq: okay lets see the practical aspect of CCG [15:25:53] ysbq: have the companies became more risk savvy or less after this [15:25:56] ysbq: code [15:25:57] ysbq: ? [15:26:51] potter2009: co's are more risk aware however they have to comply with a lot more rules and regulations [15:26:58] ysbq: guys am i making sense or is it greek? [15:27:25] ratna1238: the risk of the company still exist [15:27:26] potter2009: however it is hard to find ned's or execs to replace these days [15:27:34] ratna1238: with or without Good Corp Gov [15:27:53] ysbq: {ratna1238} yes [15:28:08] ratna1238: but with the GCG they identify the risk n try to work/avoid it for the benefit n going concern of the business [15:28:09] ysbq: {ratna1238} can u eloborate [15:28:35] ms1689: they would have a better approach on how to deal or avoid the risk [15:28:36] ysbq: {ratna1238} yes the risk mitigation process is there intact [15:29:18] ysbq: yes so risk assessment and mitigation will be there to assist the continuty of entity [15:29:22] ysbq: lets move on [15:29:49] ysbq: what are business ethics? [15:29:54] ms1689: As they would have a rik management team in place it would be easier control the risk [15:30:10] yaroslava: Not really some banks still pay massive bonuses regardless of the financial screw that has been put in place by the govenment in place to protect economies from going down under ,eg Diamond {exec in Barcklays} [15:30:15] ysbq: {ms1689} yes most organisations now have risk committess [15:30:48] yaroslava: not that its wrong to pay good talent a bonus but within reason [15:31:25] ysbq: okay any one wanna comment on this [15:31:46] ysbq: i think it will come under the ambit of P1 [15:31:52] ysbq: lets move on [15:32:14] ysbq: what are business ethics? [15:32:39] ratna1238: is a code of behaviour? [15:33:22] potter2009: co's culture [15:33:47] ysbq: {potter2009} well i do not totally agree to that [15:33:55] ratna1238: is written and unwritten codes of principles and values that govern decisions and actions within a company [15:33:57] ms1689: a guide where companies can keep good behaviour [15:34:07] yaroslava: you were asking if the companies have become risky or not after the code? thus why i came with that example. this is not only a p1v topic but a 3 as well but yes lets move on. [15:34:45] ysbq: {yaroslava} oh i do not want u to be disgruntled..... [15:34:49] ysbq: {ratna1238} yes [15:35:03] potter2009: by companies thinking about right and wrong will also help them to look internaly as well as externally [15:35:04] yaroslava: {ysbq} i am good mann. [15:35:31] potter2009: hence it could enhance their culture and think about their behaviour on society [15:35:34] ysbq: i say business ethics is way the business deals with its stakeholders and environment [15:35:56] ysbq: based on written and unwritten codes of principles and values [15:36:02] ysbq: as ratna wrote [15:36:28] ysbq: now ethical stances vary from organisations to organisations [15:37:01] ratna1238: ok [15:37:28] ysbq: like u might have read in P1, the graham holt stuff that talk abt pristine capitalist stance to deep ecologist [15:37:41] ysbq: savvvyy u agree [15:37:55] savvy2012: yes [15:38:27] savvy2012: comoanies can have diff views on ethics.. they might do pure minimum reuired or they might go extra mile because they feel they are responsible [15:38:37] ysbq: {savvy2012} would u eloborate on prisitine capitalist [15:38:44] ysbq: {savvy2012} tes [15:39:25] ratna1238: the focus is only to increase the shareholder´s wealth [15:39:25] savvy2012: i think pristine capitalists say that companys exist because of shareholders who invested in them so they should please shareholders wishes and needs and no one elses [15:39:47] ysbq: {savvy2012} yes only legal complinace nothing above [15:39:56] savvy2012: yeah [15:40:42] ysbq: so we have the body shop and Britiish petroleum as examples which tell us how much they differ on their ethical stances [15:40:46] yaroslava: pristine capitalist ignore environmental issues and the society that gives them the right to operate [15:41:30] ysbq: BP could be more inclined to pristine capitalist and body shop to deep ecologists [15:41:34] ysbq: all agree? [15:41:53] ratna1238: maybe [15:42:29] ratna1238: body shop maybe cuz they claim themselves refuse to do test on animals on their product developments [15:42:30] savvy2012: ok... [15:42:38] ysbq: yes [15:42:43] yaroslava: Bp has been cleaning up after the disaster in the gulf i will say they have repented [15:43:15] ysbq: {yaroslava} yeah after showing the leak from different camra angle [15:43:21] ysbq: :D [15:43:39] ysbq: okay what are the level of ethical issues? [15:44:23] ysbq: hi sue i though i alienated u last time.... [15:44:34] ysbq: again what are the level of ethical issues? [15:44:40] ysbq: anybody.... [15:44:55] savvy2012: what do u mean by your question? [15:45:08] ratna1238: Macro level, Corporate Level, Individual Level [15:45:38] ysbq: {savvy2012} well i meant that at wht levels the business have to face ethical issues [15:45:41] ysbq: {ratna1238} yes [15:45:44] yaroslava: {ratna1238} yes [15:45:54] ysbq: {ratna1238} can u explain one by one [15:46:49] ratna1238: On Macro Level.. it is looking at the role of the business at the national n international level [15:47:08] ratna1238: looking outside the business [15:47:58] ysbq: corporate lvl? [15:48:18] savvy2012: at corporate level -maybe company culture and control environment [15:48:20] ratna1238: where the Corporate Level... we r looking at the ethics of the individual business when they formulate n implement their strategies [15:48:33] ratna1238: {savvy2012} i think so [15:48:51] ysbq: {savvy2012} that would be individual leve; [15:48:57] savvy2012: ok.. [15:49:06] ratna1238: Individual Level... would be looking at the ethics of the individual in the business [15:49:29] ysbq: {ratna1238} yes that sums up all [15:49:45] savvy2012: ok maybe corporate - how business views itself in its environment, e.g. local community, nature environment [15:50:25] ysbq: yes issues that an individual company faced [15:50:28] ysbq: faces [15:50:32] yaroslava: I think ratna1238 is right [15:50:38] ysbq: {yaroslava} yes [15:50:48] ysbq: {ratna1238} all definitions well put [15:50:55] ratna1238: ah.. thx [15:51:01] ratna1238: learning myself at the same time [15:51:32] ysbq: so now if individual level ethics are bad can we expect beter ethics at corporate level? [15:52:25] ysbq: any comments [15:52:58] sue888: not really since the individuals forms the basis of the company [15:53:06] ratna1238: hmm that is hard to say [15:53:13] ysbq: {sue888} {ratna1238} ok [15:53:31] ratna1238: an individual may have bad ethics but if the corporate have an ethic where everybody follows [15:53:41] ratna1238: that individual may not do what they do when they r at home [15:53:44] yaroslava: it actually impacts on the company's reputation and the way its seen by the outside world. Individuals define the company's image [15:53:50] ratna1238: cuz they may be allienated at work [15:54:34] ratna1238: an example is the customer service, if everyone in the company put high value on customer service, then the new employee would put high value on it too [15:55:10] ratna1238: he may not find working there very exciting tho [15:56:12] ysbq: hmmmm all are right, but even if individual level ethics are low there could be ethical behavious at corporate level provided the nation / country has strict laws and heavy fines , if breach is discovered [15:56:35] ysbq: so order and punishement approach [15:56:45] ratna1238: yeah [15:56:49] ysbq: but i would be though [15:56:51] ysbq: i agree [15:57:18] ysbq: okay lets move on [15:58:09] ysbq: what are ethical stances according to JSW [15:58:10] ysbq: ? [15:59:00] yaroslava: the extend to which the org exceeds its minimum obligation to stakeholders [15:59:41] ysbq: {yaroslava} yes that is the definition of ethical stance, can u list the types [15:59:43] ysbq: ? [16:01:10] yaroslava: Short term shareholder interest...longterm shareholder interest,,, multiple stakeholder obligations and the Shaper of society [16:01:45] ysbq: yes , i wanna ask sth here [16:02:13] ysbq: what is meant by "exceeds its minimum obligation to stakeholders"??? phrase [16:02:40] ysbq: anybody likes to share his./her thoughts [16:02:59] ratna1238: the minimum it can do, so that it is not in "trouble" ?? [16:03:19] savvy2012: it means doesnt do anything for stakeholdres above of shareholders wealthh maximisation and complying with laws and regulations [16:03:48] yaroslava: propably becoz most companies a set up to make profits and the go all the way to ensure this occurs but this will mean going beyond this objective i guess. [16:04:19] ratna1238: {yaroslava} still comply to the law like wot Savvy said, i think [16:04:19] savvy2012: e.g. making Xmas party for emplyees [16:04:30] savvy2012: employees are stakeholders [16:04:33] yaroslava: its like looking at other non.financial issues [16:04:49] yaroslava: {ratna1238} yep [16:04:52] savvy2012: if company was to comply with minimum obligations - it doesnt have to provide employees with Xmas party [16:05:09] savvy2012: as it costs money and takes money away from shareholdes [16:05:18] savvy2012: thats short term shareholders interests [16:06:08] savvy2012: but if company is more clever (long term shareholders interests) if they provide Xmas party - employees will feel more valuable, they will make friends at work, they will be happy in their job and will stay for longer and create wealth for shareholers [16:06:32] ysbq: {ratna1238} {yaroslava} {savvy2012} okay [16:06:41] yaroslava: giving to charity and so forth, cleaning up the environment after ,say extraction [16:06:51] ysbq: so every thing is down to money [16:07:12] ysbq: how gets the bucks... [16:07:53] ysbq: what i wanted as any answer was the linkage with the Mendelows matrix.... [16:08:31] yaroslava: {ysbq} wrong question then? [16:08:32] ysbq: that puts different stakeholders based on power and intrest [16:09:04] sue888: high power, high int-> key player [16:09:14] yaroslava: {ysbq} thus stakeholder mapping [16:09:31] ysbq: {yaroslava} no all are fine but lets use some of our mind [16:09:34] ysbq: {sue888} yes [16:09:37] sue888: high power, lower int-> keep satisfied [16:09:40] ysbq: {sue888} yes [16:09:58] sue888: so we need to get these two groups on our side [16:10:51] yaroslava: not rying to be difficult but we did the matrix last week, unless we a revising it. [16:12:10] ysbq: so the stakeholders will low influence would be treated as they have high influence based on the face the entity has exceeded its minimum obligation by being ethical [16:12:18] ysbq: does that make sense [16:13:05] ysbq: ? [16:13:19] savvy2012: not really :) [16:13:28] ysbq: okay let me try again [16:13:53] yaroslava: if thus part of the stances yes but via the matrix no [16:14:41] ysbq: supose the entity is pristine capitalist and the stakeholder in question is local environment , what would be the power and interst of such stakeholder [16:15:00] ysbq: i mean what would be the influnnce? [16:15:18] ysbq: low ... [16:15:22] ysbq: all agree [16:15:48] savvy2012: yeah [16:17:10] yaroslava: what if there is a lobby grouprepresenting the environmental issues? High power, high interst then as we all know what type of stakeholder the envrment is. [16:17:46] ysbq: ok now the ethical stance of entity changes and it jumps to higher level of being ethical , now the local environment would become a high infuence stakeholder based on the ethical stance of entity, this is what we call the entity has exceeded its minimum obigation to stakeholders [16:18:09] savvy2012: ok.. [16:18:21] ysbq: does that make sense? [16:18:29] savvy2012: a little :) [16:18:44] ysbq: all agree with me/.... [16:18:51] ysbq: {savvy2012} fine [16:19:26] ysbq: what is short term shareholder intrst stance? [16:19:37] savvy2012: e.g. they dont want to lose their status of an ethical company so they need to keep environmental agencies happy now not to lose that status [16:20:43] savvy2012: thye just do everything to maximise shareholders wealth now, in short term, without doing anything for other stakholders, even if doing something for other stakeholders would benefit shareholders in long term (my xmas pparty example) [16:21:10] ysbq: {savvy2012} yes but wht is the purpose is imporatnt , is it getting more customers, or benefiting the society as whole , the purpose will determine the stance on ethics [16:21:29] savvy2012: such short term stance comapnies usually have lots of shareholders who buy and sell shares often and are not really botheres about long term, they just concerned with share price NOW [16:21:55] ysbq: {savvy2012} ok [16:22:19] ysbq: STSI is concerned woth short term profits of entity [16:22:29] savvy2012: yeah [16:23:33] ysbq: LTSI is concerned abt maximization of profits in the long term by doing sth good for the society to reap its benefits for the business not society [16:24:16] savvy2012: yeah [16:24:19] yaroslava: concerned with longterm profits, establishing a brand a good reputation in the envrment in which it operates [16:24:35] ysbq: what abt Multiple stakeholdrs obligation? [16:25:22] savvy2012: maybe company has interests of various stakeholders as priority, not just shareholders [16:26:04] yaroslava: concentrating not only on profit max but also on other non.financial issues and various stakeholders like the envrment, employees, community etc [16:26:07] ysbq: {savvy2012} yes they have a purpose beyond financial [16:26:29] savvy2012: ok [16:26:33] ysbq: now lastly, we have shapers of scoiety [16:26:38] ysbq: SOS....... [16:26:43] ysbq: what are these [16:27:21] savvy2012: hmm.. are they those which dont njust take stakeholders interest into account but also promote it and encourage others to do the same? [16:28:28] yaroslava: building schools, donating to charity, being involved in programmes that benefit the nation as a whole? [16:28:40] ysbq: well they exist to serve a purpose, financial and other stakeholdrs interst are secondary [16:28:51] ysbq: any examples.? [16:29:30] ysbq: ? [16:29:36] savvy2012: hmm [16:29:45] savvy2012: Jamie Oliver and school dinners :D [16:30:02] savvy2012: but thats long term stance i think [16:30:11] savvy2012: making him famous and make money on books [16:30:26] savvy2012: its usually charities [16:30:50] ysbq: {savvy2012} i have an example of SOS , it could be the nazi party in germany... [16:30:53] savvy2012: Save the children, Oxfam, Brittish Heart foundation [16:30:55] ysbq: :D [16:30:58] savvy2012: lol [16:31:52] ysbq: yeah the strived for powerful germany....yet no interst in stakeholders [16:32:08] ysbq: ok lets move on [16:32:41] ysbq: okay what would be the benefits to an organisation of being ethical [16:32:44] ysbq: ? [16:32:54] savvy2012: good reputation [16:33:00] ysbq: ok [16:33:03] savvy2012: support from those stakeholders [16:33:07] ysbq: what else [16:33:13] savvy2012: so animal lovers will buy from bodyshop [16:33:29] savvy2012: and could buy shares in ethical companies [16:33:40] ratna1238: increase in profit [16:33:42] ratna1238: n sales [16:33:42] ysbq: more people would like to work in such compamies [16:33:45] yaroslava: employees pride in working for such an org [16:33:46] ysbq: yes [16:34:11] ysbq: and less spent on fines and penalties [16:34:47] ysbq: so more prospective employees, investors, cusotmers etc... [16:35:06] ysbq: better share price [16:35:16] yaroslava: government is haapy to let you carry on with you work without constant scrutiny [16:35:34] ysbq: yes [16:36:21] yaroslava: gives the company a competitive adge [16:36:27] yaroslava: edge [16:37:10] ysbq: yeah a unique recognition, like the body shop gained against not trial testing its products on animals... [16:37:26] ysbq: okay lets move on [16:37:31] yaroslava: help cement culture in the org [16:37:57] ysbq: what is CSR....corporate social responsibility,.....explain plz. [16:39:16] savvy2012: its same as what weve been talking about :) [16:39:41] savvy2012: its how company views itself in relation to dociety and environment [16:39:51] yaroslava: the imact the company has on the enviroment it operates and defines social footprint and environemt footprint [16:40:08] ysbq: yeah i guessed it right , it was a sloppy trick question [16:40:19] ysbq: *u [16:40:47] yaroslava: the impact i mean [16:40:51] savvy2012: :) [16:41:13] ysbq: well that complete our stakeholder, ethics and governance topic...... [16:41:27] ysbq: lets move on to strategic choices [16:41:55] savvy2012: ooo [16:42:00] ysbq: Syllabus Reference A-5 done [16:42:11] savvy2012: ur going to get bombarded with answers now :D [16:42:34] ysbq: {savvy2012} yeah i am ready with my shining armor :D [16:43:19] savvy2012: shouldnt strategic options be before strategic choices? [16:43:37] yaroslava: no [16:46:04] ysbq: Well syllabus refer A-5 and 6 are done we gonna start with B-1, that is strategic choices....my mistake abt ref, [16:46:19] ysbq: chapter 5 in kaplan just for refernce.. [16:46:44] ysbq: we are done with value chain all agree.. [16:47:03] ysbq: ? [16:47:06] ms1689: yes [16:47:17] yaroslava: yes that is in capabilities [16:47:26] ysbq: yes [16:47:45] ysbq: okay what are competitive strategic options... [16:47:46] ysbq: ? [16:47:58] ysbq: Generic Strategies? [16:48:34] ms1689: it is ways of gaining long term competitive advantage? [16:48:37] savvy2012: market penetration [16:48:44] yaroslava: this describes how the org can achieve competitive advantage [16:48:46] savvy2012: market development [16:49:00] ysbq: {savvy2012} well that is ansoff [16:49:05] yaroslava: {savvy2012} wrong [16:49:06] savvy2012: ok ok [16:49:14] ysbq: we are talkin abt generic stuff [16:49:20] ms1689: by either market penetration or improving product or both [16:49:23] yaroslava: porter's generic strategies [16:50:00] yaroslava: cost leaders, differentiators and focus strategy [16:50:13] ms1689: {savvy2012} chp 6 in LSBF [16:50:31] ysbq: {yaroslava} yes u r right [16:50:33] savvy2012: {ms1689} yeah i saw that lol. they said its wrong :D [16:51:05] ysbq: what is the aim of all , one by one ppl. [16:52:11] savvy2012: Cost leaders - try to achieve best price by saving on costs, usually its achievable by buying in bulk, havving mass production etc [16:52:34] ms1689: cost leadership would be trying to be the cheapest in the industry [16:52:38] ysbq: {savvy2012} yes and employing the EEE employee [16:52:41] ysbq: :) [16:53:02] ysbq: less cost = low selling price [16:53:12] yaroslava: cost leader make an ordinary product but with more efficincy that the rival, ideal lowest cost [16:53:39] ysbq: low cost of what higher margins or lower price [16:53:50] ysbq: for what i meant [16:54:14] savvy2012: for lower price i think [16:54:49] yaroslava: lower costs means the company achieve a competitive edge on the competition [16:55:07] ysbq: yes to be a cost leader means that u are most EEE in the industry and competitve edge is gained by quoting lower prices [16:55:27] ysbq: next differentiation? [16:55:30] yaroslava: this also means money can be invested in new machinery to mantain efficiency [16:55:36] savvy2012: they make money by selling lots of items but at low margin [16:56:06] ysbq: yeah high stock turnover , economies of scale [16:56:08] ysbq: etc [16:56:22] yaroslava: make products and deliver services which are better than the ordinary product [16:56:46] ysbq: forget abt differentiation lets discuss the cost leadership strategy in detail [16:56:50] savvy2012: thats diffirintiators strategy [16:57:07] yaroslava: they make a product that the customer wants and moreover are willing to pay for it [16:57:22] ysbq: ok how cost leadership attained? [16:57:55] savvy2012: by EEE [16:58:11] savvy2012: constantly look for ways to cut costs [16:58:17] ysbq: by EEE, economies of scale, standardisation, moving to cheaper factors of production [16:58:34] ysbq: use the learning effects [16:58:36] savvy2012: e.g. replace some metal parts with plastic, but still serving same function [16:58:47] ysbq: yeah [16:58:54] ysbq: wht abt benefits [16:59:00] ysbq: of this strategy [16:59:18] savvy2012: ability to be market leader, have high market share [16:59:46] savvy2012: be able to come up on first page on price comparison websites :))) [16:59:49] ysbq: yeah could be based on volume [17:00:01] ysbq: nice one [17:00:26] ysbq: lets see it from industry prespective [17:00:37] savvy2012: have less wastage, because of standardised processes [17:00:51] ysbq: creates .............. to entry for new entrants.. [17:00:57] ysbq: fill in the blank [17:01:05] savvy2012: be able to benefit from learning curve better than companys who produce at lower scale [17:01:12] savvy2012: creat barriers [17:01:12] yaroslava: barriers [17:01:13] ysbq: win price wars [17:01:19] savvy2012: {yaroslava} i was first :p [17:01:37] yaroslava: {savvy2012} haha, im a cost leader [17:01:43] ysbq: has the ability to operate in different segmenst [17:02:02] ysbq: and reduces the power of substitutes.... [17:02:33] ysbq: what are the threats of this strategy ? [17:02:53] yaroslava: lower costs allow the org to charge lower prices..this could be a strategy to prize out competition [17:03:36] ysbq: {yaroslava} yes [17:03:42] ysbq: threats? [17:03:50] savvy2012: threats are that other competitors could undercut us [17:03:51] yaroslava: powerful entrants and substitudes to the product or service [17:04:08] ysbq: {yaroslava} no [17:04:11] ysbq: {savvy2012} yes [17:04:13] savvy2012: and then we wont be able to sell in such large volumes and make sufficient profit to cover our fixed costs [17:04:25] ysbq: no fallback position [17:04:30] ysbq: u are right [17:05:10] ysbq: okay strong currency could make imports cheaper [17:05:21] yaroslava: {ysbq} the fact that another producer can achieve achieves even lower costs [17:05:30] ysbq: {yaroslava} yes [17:05:53] ysbq: a larger firm enters the market with low cost structures [17:05:59] ysbq: and Eco. of scale [17:06:19] yaroslava: {ysbq} you said not to your own point [17:06:47] ysbq: oh u new barriers to new entrants... [17:06:50] yaroslava: i said powerful you said no, now you say large, whats the difference? [17:07:30] ysbq: no was for substitutes.. [17:07:39] ysbq: :) [17:07:47] yaroslava: i take that [17:08:18] ysbq: ok to which organ. this strategy would be suitable? [17:08:37] ysbq: small or large, or middle ones [17:09:10] savvy2012: large [17:09:28] ysbq: {savvy2012} yes since they have eco. of scales [17:09:35] savvy2012: small ones wouldnt be able to obtain sufficient economies of scale [17:09:38] savvy2012: yeah [17:09:39] yaroslava: large with lots of strategic business units able to produce at a lage scale with lots of investment injections [17:09:47] ysbq: {yaroslava} yes [17:11:04] ysbq: {ysbq} lets move on to the differentiation strategy, AIM, how is it achived, benefits of such strategy , threats and suitability.... [17:11:18] ysbq: first of all AIK [17:11:23] ysbq: AIM [17:11:45] savvy2012: Aim - to be best on the market for this type of product [17:11:58] ms1689: yes [17:12:08] ysbq: {savvy2012} yes to charge a premium for the difference [17:12:15] yaroslava: to make a product and deliver a service whgich is better than the ordinary product or service [17:12:24] ysbq: {yaroslava} yes [17:12:33] ysbq: {yaroslava} how is it achieved? [17:12:45] yaroslava: customers must need the product and happy to pay [17:12:54] savvy2012: by having some special features which rivals dont have [17:13:24] savvy2012: bby building a popular brand [17:13:25] yaroslava: better quality [17:13:34] ysbq: {savvy2012} yes....we did sth in capabilty chapter anyone remember [17:13:49] yaroslava: fashinable and uptodate product [17:14:04] ysbq: unique resources and core competences...sth like that [17:14:16] yaroslava: {ysbq} yes [17:14:28] ysbq: so try to link it here [17:14:35] savvy2012: {ysbq} yeah [17:14:51] yaroslava: ye [17:15:04] savvy2012: by being up to date or ahead of technology [17:15:11] ysbq: branding, IT, innovation, Support, unique professionals etc [17:15:31] ysbq: does that sum up all [17:15:32] ysbq: ? [17:15:55] ysbq: what abt the benefits of this strategy? [17:16:35] savvy2012: yeah [17:16:56] yaroslava: money can be invested in developing new and special products becoz of higher profits and low costs [17:17:01] savvy2012: benefits... having high demand due to unniqueness of product [17:17:09] savvy2012: higher margin can be changed [17:17:18] ysbq: yes [17:17:41] ysbq: sth called brand loyalty... [17:17:46] yaroslava: The pace at which products are developed may frighten rivals out of the market [17:17:46] savvy2012: yeah [17:17:54] ysbq: like apple and 501 levis etc [17:18:10] ysbq: {yaroslava} this is interesting [17:18:15] savvy2012: until rivals have worked out how to rich same product quality etc we can be the only ones on the market [17:18:19] yaroslava: High profits mean better reutrns for investors [17:18:30] ysbq: {savvy2012} {yaroslava} yes [17:18:49] ysbq: ok what are the threats [17:19:01] ysbq: to this strategy? [17:19:18] savvy2012: again competitors could rich same standard or become even better [17:19:30] savvy2012: threat of pirate copies/fakes [17:19:42] ysbq: performs poorly in recession since disposable percapita income decreases [17:19:44] yaroslava: If every producer starts imitating the diferrentiated product then the product becomes standard [17:19:52] savvy2012: {ysbq} yeah [17:19:53] ysbq: {yaroslava} yes [17:20:26] ysbq: such companies have to continously innovate to live keep their edge [17:20:55] ysbq: okay lets move on to suitability part [17:21:13] ysbq: for which companies it is suitable? [17:21:44] savvy2012: large too... the ones which have substantial resources/competences [17:21:49] ysbq: yes [17:21:57] yaroslava: yes [17:22:10] ysbq: innovative companies with large resources at disposal [17:22:21] ysbq: like apple is an example [17:23:06] ysbq: okay wht do u think websites based companies are? [17:23:15] ysbq: like facebook and google [17:23:27] ysbq: any suggestions? [17:23:28] savvy2012: large.. [17:23:39] savvy2012: differentiators [17:23:40] ysbq: with strategy they follow [17:23:45] ysbq: {savvy2012} good [17:23:58] yaroslava: {savvy2012} you are on the ball [17:24:17] savvy2012: {yaroslava} thanks yaro :) [17:25:09] ysbq: {savvy2012} we could say that they are initially based on focus strategy but move on to differentiators as the progress and gather mass... [17:25:24] ysbq: focus is yet to be discusse [17:25:25] ysbq: d [17:25:31] savvy2012: ok.. [17:25:36] yaroslava: ok [17:25:51] ysbq: i gonna take 5 min break here i will brb [17:26:03] ysbq: then, we will study focus [17:26:05] savvy2012: what time u reckon we will finish? [17:27:09] ysbq: i thnk we will take half an hour more and finish till strategic clock ....finiish till 1300 GMT [17:27:26] ysbq: {yaroslava} u fine with tht [17:27:40] yaroslava: ok, come exactly in five guys [17:35:17] savvy2012: i have a toast with nutella and banana :D [17:35:51] savvy2012: what strategy is that? [17:36:07] ms1689: lol [17:37:27] ms1689: {savvy2012} focusing on particular buyer group [17:37:39] ms1689: focus/niche [17:37:51] savvy2012: lol [17:38:06] savvy2012: i think its differentiators [17:38:22] savvy2012: because noone else can do such a great hazelnut chocolate spread like them [17:38:46] ms1689: oh...got you now...your sandwitch [17:38:46] savvy2012: i tried other ones.. they r just not the same :) [17:38:55] savvy2012: {ms1689} ya [17:39:25] savvy2012: {ms1689} but yeah they focus on choco lovers :D [17:39:29] ms1689: I had last week ...banana..fried egs...and crispy bacon... [17:39:46] savvy2012: {ms1689} together? [17:40:24] ms1689: yes in toasted sandwitch and my friends were like making faces. [17:40:28] yaroslava: there is no need to talk abt food like that some of us are hungry [17:40:39] savvy2012: {yaroslava} sorrrrry [17:40:40] ysbq: woopsi [17:40:52] ysbq: someone does not like food i guess [17:40:55] ms1689: {yaroslava} sorry...will shat up [17:41:00] ysbq: :D [17:41:18] yaroslava: love food didn have a chance to make it in five,,haha [17:41:37] yaroslava: just joking guys dont mind me [17:41:44] ysbq: ok lets start with focus strategy... [17:41:47] ysbq: aim? [17:42:18] ms1689: to focus on a specific customer and keep their loyality [17:42:42] yaroslava: to focus on a give n small market segement ruther thasn trying to serve all market segments [17:42:44] ysbq: {ms1689} talk in business terms mate [17:42:49] ysbq: {yaroslava} yes [17:43:00] ysbq: niche....is this the missiing word [17:43:17] ysbq: focus on particular niche [17:43:23] ysbq: is the aim [17:43:35] yaroslava: wot does the word niche mean? [17:43:42] ms1689: {ysbq} what do you mean? that is focusing on a particular buyer group...isn't it? [17:43:47] savvy2012: {ms1689} think its like a shelf [17:43:53] savvy2012: {yaroslava} i mean u [17:44:15] yaroslava: {savvy2012} i see [17:44:18] ysbq: niche market - a segment of market [17:44:30] yaroslava: {ysbq} thank you [17:44:41] ms1689: or section of the product range [17:44:58] ysbq: okay how is it done? [17:45:44] savvy2012: {yaroslava} an ornamental recess in a wall or the like, usually semicircular in plan and arched, as for a statue or other decorative object. [17:45:53] savvy2012: so its like a hole in the wall for something [17:46:25] ysbq: remember we did market analysis and discussing the unmet needs and uncatered customers..... [17:46:26] yaroslava: {savvy2012} i am with you now, thanxs [17:46:33] ms1689: it could be done by focusing on a particular market and making products specifically for that market [17:46:38] savvy2012: {ysbq} its done by concentrating on needs of that particular segment [17:46:44] ysbq: yes [17:47:03] savvy2012: e.g. young people need networking sites [17:47:07] ysbq: for a moment i was lost by looking at answers of savvy [17:47:13] ysbq: {savvy2012} yes [17:47:22] ysbq: how will it be done? [17:47:29] yaroslava: could be demographic or geographic [17:47:36] savvy2012: {ysbq} sorry that was explaination to yaroslava what word "niche " actually means in real word [17:47:38] savvy2012: world [17:47:44] ysbq: {savvy2012} okay [17:48:22] ysbq: so u reduce ur product range and target customers that r unsatisfies [17:48:24] ysbq: d [17:48:26] ysbq: ok [17:48:37] ysbq: lets move on , wht are the benefits [17:49:05] savvy2012: loyalty of that group [17:49:38] ysbq: {savvy2012} yes brand loyalty like in case of high scale fashion labes [17:49:41] savvy2012: when we specialise on certain market we can save costs [17:49:43] savvy2012: maybe.. [17:49:50] yaroslava: meet the needs of the customer as you focus on the required features and designs [17:50:04] ysbq: {savvy2012} well we could say less competition [17:50:11] savvy2012: yeah [17:50:28] ysbq: {yaroslava} yes very customer focused [17:50:36] ysbq: what are the threats [17:50:45] savvy2012: if we concentrate on one group then we maybe will know more about them than other competitors [17:51:01] ysbq: {savvy2012} yes [17:51:07] ysbq: Threats? [17:51:12] savvy2012: so by providing a special focused products which that group requires we can charge premium [17:51:28] yaroslava: big guns might out-muscle you if the segment is profitable eg cost leaders and differentiators [17:51:28] ysbq: {savvy2012} that is the aim [17:51:35] savvy2012: threats... we might outgrow that market/group and want to expand to other groups [17:51:46] ysbq: {yaroslava} yes nice [17:52:15] ysbq: u operate on a low scale so low volumes and few barriers to entry [17:52:56] savvy2012: or say if we only concentrate on one geografical segment - once we supply everyone in that area with our product - there will be no customers left [17:53:21] yaroslava: It requires that the segment focused on has liitle competition, it reality this is not true, some companies do a 'watch strategy' and will always come in if the segment is attractive [17:53:52] ysbq: {yaroslava} yes u only persue segment if it is profitable [17:53:58] ysbq: and attractive [17:54:23] ysbq: {savvy2012} welll i guess tht would be quite remote [17:54:29] ysbq: to happen [17:54:32] yaroslava: Normall the small co can not deal with all segenmnt and that on its own reduces its competitive edge [17:54:45] ysbq: ok [17:55:05] ysbq: Suitability? to whom this strategy will suit [17:55:34] yaroslava: small company will less resources and competencies [17:55:39] savvy2012: i think smaller businesses could have a chance to have this strategy [17:56:15] ysbq: {yaroslava} {savvy2012} yes with enterpreneurial falir [17:56:18] ysbq: flair [17:56:31] ysbq: high risk taking organisations [17:56:41] ysbq: do or die ones [17:57:11] yaroslava: But it is worht bearing in mind that whether a co is a cost leader or differentitor it can still decide whether or not to adopt a focus strategy [17:57:30] savvy2012: yeah true.. [17:57:39] ysbq: {yaroslava} yes [17:57:59] ysbq: ok what is Nutella strategy? [17:58:19] savvy2012: differentiators [17:58:24] savvy2012: they are the best :D [17:58:35] savvy2012: and focus - chocolate lovers [17:58:46] savvy2012: not cost leaders deffinitely.. [17:58:49] yaroslava: never heard of that thus interesting [17:58:58] savvy2012: {yaroslava} Nutella? [17:59:16] yaroslava: {savvy2012} yeah [17:59:35] savvy2012: {yaroslava} oh man, you got to try :) its like chocolate spread with hazelnut flavour [17:59:50] savvy2012: on toast or on croasant its the best :) [17:59:57] ysbq: i my opinion they are focus, since they have hazelnut flavor [18:00:02] ysbq: :D [18:00:05] savvy2012: {yaroslava} sorry talking of food again [18:00:14] savvy2012: {ysbq} hmm.. not sure [18:00:19] ysbq: we are talking abt product [18:00:34] yaroslava: {savvy2012} never mind..the point is they are focussed [18:00:41] ysbq: {savvy2012} how many hazelnut product u have [18:00:46] savvy2012: hazelnut flavour just makes them different :) so differentiation.. actually i tried tescos hazelnut spread - its not as good [18:01:13] ysbq: {savvy2012} ok they are differentiators i agree, [18:01:22] savvy2012: {ysbq} good u agree with me :) [18:01:32] ysbq: lets move on to strategic clock [18:01:47] yaroslava: i think a hazel nut is a feature{uniques} but the focus on chocolate lovers like savvy [18:01:49] savvy2012: oh.. [18:02:01] savvy2012: {yaroslava} yeah their focus is to make me fat [18:02:20] ysbq: hmmmm.... thats an intresting focus [18:02:26] ysbq: lol [18:02:30] yaroslava: haha, stategic clock please [18:02:38] savvy2012: and then they will sell me diet products to make money on me :) [18:02:50] savvy2012: no frills strategy [18:03:51] ysbq: the clock is an arrangment of different strategies based on product benefit and price [18:04:09] ysbq: so low price and low benefit = no frills [18:04:19] savvy2012: yeah [18:04:21] ysbq: an example [18:04:26] ysbq: of no frills [18:04:27] yaroslava: it is a development of porter's generic strategises [18:04:49] savvy2012: good for entering the market - need lots of price conscious customers [18:04:57] ysbq: yes [18:05:30] savvy2012: example...hmmm... [18:06:00] savvy2012: a basic mobile phone which makes calls and texts but nothing else [18:06:06] savvy2012: but its cheap and it works [18:06:22] ysbq: {savvy2012} yes the ones with green leds [18:06:23] savvy2012: nokia 8300 :) [18:07:07] ysbq: okay low price and higher product benefit = low price produc [18:07:14] savvy2012: they might not sell them any more as theres no margin in ti.. [18:07:14] ysbq: any example [18:08:12] ysbq: low price products could be of low price detergents [18:08:19] yaroslava: these a hybrids [18:08:39] ysbq: well hybirds are with high benefit [18:09:11] ysbq: {yaroslava} higher product benefit was in comparison with no frills [18:09:16] savvy2012: low price ones - are medium added value, hybrid - are high added value [18:09:28] ysbq: {savvy2012} yes [18:09:33] ysbq: any example [18:09:40] yaroslava: but they have low price high benefits, maybe you should have said medium benefit [18:10:06] ysbq: {yaroslava} well i am sorry abt that [18:10:15] savvy2012: ok. maybe say low ones are mobile phones which apart from texts and calls also take pictures and videos. and hybrid - maybe mobile phones which in addition to above also have internet connection and emails [18:10:19] yaroslava: i am confused can we go logically here please [18:10:48] ysbq: ok [18:11:00] ysbq: low benefit + low price = no frills [18:11:04] savvy2012: i cant think of other examples [18:11:27] ysbq: meduim benefit + low price = low price products [18:11:55] ysbq: eg. business class on airplanes [18:12:19] ysbq: any one agrees [18:12:20] savvy2012: is this medium benefit? [18:12:31] savvy2012: low price? :o [18:12:53] savvy2012: id say its high price :) or u mean that private jet is high price ? : ) [18:13:09] ysbq: ok not such a good example [18:13:21] ms1689: {yaroslava} Eg. for low price (from kaplan book) is Dell computers...good quality computers at low price. [18:13:28] savvy2012: maybe extra leg room is medium benefit [18:13:37] ysbq: {savvy2012} yes [18:13:40] ysbq: {ms1689} yes [18:13:49] yaroslava: {ms1689} thank you [18:13:59] ysbq: okay nxt [18:14:13] ysbq: high benefit and low price = hybird products [18:14:47] ysbq: examples [18:15:00] ms1689: {yaroslava} and for hybrid would be Ikea...cheap furnitures but smart design and large range of inventories [18:15:04] ysbq: IKEA [18:15:06] ysbq: yes [18:15:18] yaroslava: these products can be used in the st term for market entry or to build up the market [18:15:34] yaroslava: {ms1689} nice [18:15:44] ysbq: {yaroslava} yes and sustain competitve advantage [18:16:26] ysbq: nxt we have medium price and high benefit - differentiated products [18:16:35] ysbq: example [18:17:10] ysbq: ? [18:18:28] ysbq: it could be apple i-pads and levis' 501 jeans etc [18:18:47] savvy2012: ok.. [18:19:14] yaroslava: i see [18:19:16] ysbq: the last we have the high benefit and high price - premium products [18:19:19] ysbq: examples [18:19:39] ysbq: focused differentiation strategy [18:19:51] savvy2012: mayme tailor made suits [18:19:57] savvy2012: maybe [18:20:01] ysbq: yes [18:20:22] savvy2012: goldplated i-phone :) [18:20:26] ysbq: high fashion end labels like gucci [18:20:31] ysbq: {savvy2012} yes [18:20:34] savvy2012: yeah [18:21:27] ysbq: {savvy2012} like motorazr came by with a unique gold phone designed by dolce and gabana [18:21:46] ysbq: stuff like that [18:21:47] savvy2012: ok... [18:21:56] yaroslava: i see [18:22:12] savvy2012: its basically for people with stupid money [18:22:46] yaroslava: stupendous amount of money [18:23:07] ysbq: yes [18:23:09] ysbq: ok i am gonna conclude the session here , we will discuss this is detail and move further to complete the straegic choices [18:23:20] ysbq: all fine with that [18:23:29] yaroslava: yep [18:23:44] yaroslava: more models on here [18:24:35] savvy2012: yeah [18:24:50] ysbq: yeah they require a lot of detailed discussion which i cannot do at the end of session , i should be done at start when i am fresh and kickin.. [18:24:59] ysbq: :D [18:25:07] savvy2012: ok shall we start with ansoff next time? [18:25:34] yaroslava: yep [18:25:37] ysbq: {savvy2012} we will revise this in 15 min and then. start ansoff [18:25:44] savvy2012: ok cool [18:26:28] yaroslava: see you on sunday, thank you for the session guys, it was bril. [18:26:43] ysbq: {savvy2012} {yaroslava} thanks alot once again to all for participation... [18:26:55] ms1689: thanks [18:27:00] ysbq: {ms1689} thanks [18:27:21] ysbq: guys same time next week [18:27:27] savvy2012: {ms1689} {yaroslava} {ms1689} thank you , see u next week