Strategic Leverage and Fit

Parul Mathur - 068

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Leverage

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Is doing more with less resources.

Creating

strategic alliances Building customer bases Transporting skills across business units.

Leveraging implies spreading the unique set of  capabilities of a business ( driving force and areas of excellence) across business units, products and markets.

Str etch

relates to aspiration. Leverage relates to the use of capabilities and resources to achieve these aspirations « doing more or adding more value with what you have« Hamel and Prahlad

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Company

with more resources: I have more resources than my competitors and therefore, I am more powerful is the mindset of larger companies. Company with less resources: I have less resources and therefore, I must innovate more, offer the best products and compete better. I should outmaneuver rather than outpower.

Resource-surplus firms `

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much on technology, R&D, etc. But, they do not match with employee training, technology-absorption, or  new product introductions. Resources wasted

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Spend

Resource

- Scarce firms

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Exploit

opportunities ± a niche market (Dell, Amazon) Focus more on corecompetencies and doing more with less. Find alternative ways of  doing things, leaner  manufacturing

Five basic items to focus: 1. On concentrating resources on key strategic goals 2. By accumulating resources efficiently, 3. On efficient use by complementing one resource with another; 4. On conserving resources where possible; and, 5. Earn resources back by spread between outflows and inflows.

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At inception could not have matched IBM or  Compaq Leveraged available resources by: 

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Direct Sales Model Lean Manufacturing Expertise in Logistics and supply chain management Industry standard technology Customers configure their own computers

Changed

rules of engagement through competitive innovation.

The extent to which the activities of a single organization or of organizations working in partnership complement each other in such a way as to contribute to competitive advantage. `

The benefits of good strategic fit include cost reduction, due to economies of scale, and the transfer of  knowledge and skills.

The success of a merger, joint venture, or strategic alliance may be affected by the degree of strategic fit between the organizations involved.

Operating Fit

Market related Fit

Management Fit

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Nestlé

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In 2001, Nestlé¶s Chief Executive set out the company¶s vision when he stated: µWe want to grow from the respected and trustworthy food company that we are known as now, into a respected and trustworthy food, nutrition and Wellness company¶.

is the world¶s biggest food and beverage company and produces a wide range of products. Many of its best known brands are household names.

Environment

Fit Resources

Value

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Match the strategy to the pr evailing Envir onment, in which the business operates. In this case, it is a social environment, in which consumers are seeking nutritional products to complement a healthy lifestyle. V Ensur e the strategy is consistent with the organization's Values. One key principle is that of  meeting consumers¶ needs for nutrition, enjoyment and quality they can trust. R Ensur e the company has the necessary Resources to support the strategy. With its science and technology base, Nestlé is well equipped to develop the required science-based improvements to existing products. It can also handle the development of new products that contribute to Wellness. E

Im r ve existi g r ts

et i e lt

lre r

Devel r e i v tive r ts t t meet well ess riteri

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Nestle

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Using

this approach, over the next five years Nestlé developed or reformulated over 700 products so that they have a lower fat, sugar and salt content. In addition, the Company looks to educate consumers about healthy lifestyles and proper nutrition. Nestlé is one of the world¶s leading food companies and intends to remain so.

The company¶s Wellness strategy is carefully geared to delivering to customers what they now clearly want in relation to the foods they eat; a high nutritional value and a positive contribution to their general Wellness