Friday, September 2, 2011

Military tactics in Business


Military tactics have formed an integral part in business ever since. Since many a time business is compared to war many military tactics are also used in business.
These tactics are generally used in a competitive environment where one company needs to capture the other companies market. These tactics may be defensive or aggressive depending on whether one is defending market share or capturing it.

The different types of aggressive tactics are


Frontal Attack- Frontal Attack is a direct head on attack to your competitor where you attack your competitor in the market where he is strong. This is generally between companies of equal strength. It is an attack directly on the opponent’s strength and is, therefore, not the sharpest form of attack. Companies should consider such an attack if they have the resources of that can be committed to such an attack for a long time and have no other option available


Flank Attack- Flank attack is the form of attack where a company engages the competitor in an area where the opponent is weak. The target area is not one where the opponent is initially engaged but it is merely to distract the opponent. The idea is to split the competitor’s resources and distract him so that an attack can be launched at the main area later on.


Guerilla Attack- It aims at weakening the opponent by launching small attacks in different areas. The idea is to destabilize the opponent while remaining mobile.


Encirclement Attack- Encirclement attack is the form of the attack where you surround your competitor and then down him from the centre. The company must be able to block the opponent in whatever direction he turns thereby diluting his ability to retaliate in strength.


The different types of defensive tactics are


Position Defense- This is the form of defense where the company holds its position in the area where it is strong. This generally demobilizes the defender who may then become a sitting duck for the competitor.


Mobile Defense- This is the form of defense where a company creates more than one base and therefore the competitor does not know where to attack. In the meanwhile the company can collect its resources to launch a final attack to save its position. Such sort of a defense can be obtained by diversification of businesses.


Counter attack- Attack is sometimes considered the best form of attack and counter attack is generally used by companies which means attacking the area where the attacker is strong thereby making him withdraw to protect his own base. Another variation of counter attack is the pre-emptive attack where the company attacks in anticipation of an attack thereby saving its position.


Flanking Defense- In flanking defense a company generally occupies a position that could be of importance to the competitor in the future. This would provide the company with a vantage point and may prevent the competitor from attacking in the first place.


Withdrawl- Sometimes it is best to withdraw from the battlefield if the opponent is way too strong based on your resources. However, withdrawl is generally not a preferred option by business mainly due to emotional attachment, a feeling of loss, exit barriers in the industry etc.

Diversification, Over diversification and Re-focusing


Ansoff Matrix - A video


Strategy Vs Tactics

Strategies are on one end of the organizational decisions spectrum while tactics lie on the other end.
Carl Von Calusewitz, a Prussian army general and military scientist defines military strategy as making use of battles in the furtherance of the war and the tactics as "the use of armed forces in battle". A few points of distinction between the two are:


1) Strategy determines the major plans to be undertaken while tactics is the means by which previously determined plans are executed.


2) The basic goal of strategy according to military science is to break the will of the army, deprive the enemy of the means to fight, occupy his territory, destroy or obtain control of his resources or make him surrender. The goal of tactics is to achieve success in a given action and this forms one part of a group related to military action.


3) Tactics decisions can be delegated to all the levels of an organization while strategic decisions cannot be delegated too low in the organization. The authority is not delegated below the levels than those which possess the perspective required for taking decisions effectively.


4) Strategy is formulated in both a continuous as well as irregular manner. The decisions are taken on the basis of opportunities, new ideas etc. Tactics is determined on  a periodic basis by various organizations. A fixed time table may be made for the following tactics.


5) Strategy has a long term perspective and occasionally it may have a short term duration. This the time horizon in terms of strategy is flexible but in case of tactics its is short run and definite.


6) The decisions taken as  part of strategy formulation and implementation have a high element of uncertainty and are under the conditions of partial ignorance. In contrast tactical decisions are more certain as they work upon the framework set by the strategy. So the evaluation of strategy is difficult than the evaluation of tactics.


7) Since an attempt is made in strategy to relate the organization with its environment, the requirement of information is more than that required in tactics. Tactics use information available internally in the organization.


8) The formulation of strategy is affected considerable by the personal values of the person involved in the process but the same is no the case in tactics implementation.


PAC Model

PAC model is a term we coined to explain the necessary characteristics to have to run a good business


P- Perseverance 


Success comes to those who perseveres over a long period of time even in the face of staggering adversities.

The key is to set your business goals, determine the strategies that will help you reach that goal and pursue that goal with everything you've got .

Steve Jobs , started Apple when he was 20 years old
Within a decade the company blossomed into a $2 billion empire. 
At age 30, Jobs was fired from the company he created
Jobs went on to found NeXT, a software company, and Pixar, the company that produces animated movies such as Finding Nemo
At the 2000 Macworld Expo, Jobs was renamed Apple’s CEO (iCEO)


A- Adapt


Change is inevitable; you must adapt fast enough to survive in the highly competitive business environment.
To be a successful entrepreneur, you must have the ability to recognize, and then leap, on new opportunities in the midst of misfortunes.

Bill Lederer, founder of Art.com, has shown the ability to transform a tragedy into an opportunity
When his father developed cancer, he quit his successful Wall Street career in 1997 to return to his family's framing and art supplies business
He then expanded his business to the Internet, where it became the online poster and print shop Art.com
In 1999, Art.com was bought by Getty Images, the giant stock photo and film footage company, for $84 million in cash and $200 million worth of stocks


C- Core Competency


When you are thinking of expanding your markets and/or your products,it is best to begin in fairly 
familiar territory.
If you will move to an area where you have inadequate knowledge and you have insufficient resources to cover your expansion, you run the risk of failure.
Avoid spreading yourself too thinly, particularly during the start-up phase.

Topps was known in the industry as one of the top two producers of baseball cards
Also successful  in selling the formula and base materials for the chewing gum that went into the packs of cards
Decided to expand and begin competing with larger confectioners, such as Wrigley’s and Beech Nut
This proved disastrous and new products, such as chocolate flavored gum failed, the company neared bankruptcy
In 1984, the firm was bought by the leveraged buy out firm of Forstmann Little & Co


Porter 5 Forces in the Indian Telecom Industry

Let us look at the various factors influencing the telecom industry in India. Telecom Industry in India has shown an amazing growth and has grown at a CAGR of 20% over the past 5 years. The growth in the telecom industry has recently been driven by the enormous growth in the Value Added Services which has grown at a CAGR of 51% over the past 5 years.

Let us apply the porters 5 forces on the Indian Telecom Industry

1) Bargaining Power of Supplier -With a large number of equipment providers the bargaining power of suppliers is low in the fixed asset sector. However when we talk about the HR supply, their power remains high. This is due to the fact that the number of engineers and managers well versed with the technology remain low. After 3G, 4G is set to come to the Indian market and the number of people exposed to this technology is even fewer.

2) Bargaining Power of Buyers - With a uniform service provided by the telecom companies and the entry of a large no. of players in the market the power of the buyers has gone up. The increase has also been driven by mobile number portability which allows the users to switch between service providers without incurring much of a cost.

3) Threat of New Entrants - Telecom requires a huge amount of capital. Therefore, the threat goes up when the capital markets are going good since it is much easier to arrange for capital. Since the industry requires ownership of licenses the entry barriers remain high. Also even though players may enter the market, the number of good spectrums is low so all in all the threat of new entrants remains low.

4) Threat of substitutes - Internet Telephony is the biggest threat to the telecom industry. With its advent many people has shifted to it thereby affecting the telecom industry. The cable and satellite operators have lines that are reaching directly to homes. Another threat to the telecom industry is the fact that railway companies have started laying telephone cables next to their railway track and thus many substitutes to this industry seem to be emerging.

5) Competitive Rivalry -Cut throat competition in this industry has made the prices of the services the lowest in the world. It has also adversely affected the industry with average revenue per user declining to Rs. 176 from Rs. 191. The rivalry continues to remain high due to high exit barriers and the difficulty in liquidating the specialized assets owned by these companies.

Strategic CSR and its implementation


Currently the global public’s expectation that business will operate in society’s best
interests has rapidly increased to an all-time high, while the public’s perception that
business is operating in society’s best interests has rapidly declined to an all-time low.
Several key factors have caused corporate social responsibility (CSR) to explode and
finally make its way into mainstream business thinking in recent years:
• The rise of technology giving citizens immediate access to transparent information
and news
• The NGO sector’s increasing sophistication in targeting corporate malfeasance
• Workers demanding that their employers contribute to bettering the world
• Pockets of consumer pressure
• Generation Y proving to be the most cause-focused generation in decades
While CSR is not meant to be presented as the panacea to all that ails the world or
global business, it is increasingly being viewed as a viable component of overall business
strategy, along with marketing, branding, research and development, innovation, talent
management, and operations.
I view CSR from the lens of corporate strategy, and encourage firms to use CSR as part
of their portfolio of overall business strategies designed to create both top - and bottom-line growth. My definition of strategic corporate social responsibility is: a business
strategy that is integrated with core business objectives and core competencies to create
business value and positive social/environmental value, and is embedded in day-to-day
business culture and operations. To be effective, CSR must be aligned with two things:
• Core business objectives of the firm
• Core competencies of the firm


If CSR is to be treated as a part of an effective corporate strategy, then
its definition should in fact be unique to each firm based upon that
company’s specific objectives, risks, opportunities, and competencies.

Putting CSR into practice


1) Senior leadership must make an authentic, firm, and public
commitment to CSR.

2) The firm should clearly define the specific business objectives
it seeks with CSR strategy.

3) CSR strategy must be aligned with the firm’s core competencies. This requires focus and discipline.

4) CSR should be fully integrated into the governance of the company and into
existing management systems.

5) Companies should view CSR as both a risk mitigation strategy and an opportunity-seeking strategy.

6) Companies should develop clear performance metrics to measure the impact
of their CSR strategies.