PPT includes factors that cause failure of strategies + real examples of companies whose strategies fails due to some reasons.

2. Topic:
Real time examples where strategic
management fails.

3. GROUP MEMBERS:
•
•
•
•
•
Maha riaz.
Samia ahmad.
Fatima arshad.
Farah nasir.
Noshiza nazir.

4. Strategic management??

5. Strategic management
• Formulation.
• Implementation.
• Evaluation.

6. Why strategic management
fails??

7. 1)Formulation versus
implementation.

8. 2)People versus paper process.

9. 3)Communication barriers.

10. 4)Management and employees
conflicts.

11. 5)Doing a formal planning that
rigid flexibility and creativity.

12. 6)Over confidence of employees

13. 7)Culture orientation.

14. 8)Lack of commitment and focus.

15. 9) External factors and lack of
resources.

16. Maha Riaz
Roll no.04

17. Why did Subhiksha fail?
• One of the pioneers of discounted retail
format in food and grocery retail Industry.

18. Started by R. Subramanian

19. Subhiksha
• In 1996 ,a discounted organized retail format.
• Cost leadership strategy focusing on indian
middle class segment.
• Began operations in 1997 from its first store in
chennai through food, grocery and pharmacy
retailing, mobile phones.

20. Research of three months
• Grocery was one of the largest categories of
spending
• Price sensitive on groceries.
• Prefer to buy grocery as fresh and to buy it
from close by.

21. Strategic decisions
• Sanskrit word Subhiksha (prosperity) was chosen.
• Setup of multiple small stores across the city
rather than one big store centrally within the city.
• To differentiate , decided to sell the branded
products at discounted prices.
• Acheiving economies from scale.
• Tracking their customers through
loyalty cards.

22. Cost strategy
• Their retail stores should operate from low
cost properties to keep the cost structures
down.
• Using IT to efficiently run operations. Each
store would be updating the central database
about the stocking requests by end of day.

23. Financial strategy
• ICICI bought 10% stake by investing Rs. 15
Crores in the business
• Azim Premji’s Zash Investments in Subhiksha.

24. Expansion strategy
• Strategy to grow by over 600 stores in 6 every
6 months
• Opening of around 500 stores in 6 months
during their later years.
• Economies of scale

25. Then ......things started to change
• In the year 2004 FDI started in
india, subhiksha decided to expand their
operations on national level.
• Raised 160 crores of equity, 220 crores of
debt and loan on 125 crores to fund their
plans of going national.
• The growth of economy had put pressure on
the people and property costs.

26. Where they went wong ?
• Financed most of their operations and
expansion plans debt from banks
• Reduced working capital.
• Ignored the need to strengthen supply
chain, distribution and logistics.
• Economic environment in 2008-2009 also
contributed to the downfall of Subhiksha.

27. Where they went wong ?
• Unpaid employees and cash losing investors
lost their trust which led no support from
them.
• Closed operations in 2009.

28. What they should have done
differently ?
• Had opportunity to raise money by offering an
IPO in 2007 and early 2008.
• Only one store at one time.
• Planned supply chain management for
expansion plans nationally.

29. Samia Ahmad
Rollno:06

30. Why did Kodak fail?
Kodak’s Strategy

31. Company Overview

32. Company Overview…. Cont…
Kodak, is an American technology company
Founded by George Eastman in 1888
1888: Introduced paper roll film
1935: Introduced color film
• Kodak was the Google of its days. Highly
inventive, highly innovative
• It was known for its pioneering technology
and innovative marketing.
“You press the button, we do the rest,”
was its slogan in 1888.

33. Company Overview….
Cont…
• By 1976 Kodak accounted for 90% of film and 85%
of camera sales in America.
• 1990′s, Kodak was rated as one of the world’s
most valuable brands
Then Digital hits…
2001: Kodak is pushing aggressively into China, an
important growth market
2004: Kodak announced that it would stop selling
traditional film cameras in Europe and North
America, and cut up to 15,000 jobs

34. Company Overview….
Cont…
2005: The Kodak EasyShare-One Digital Camera,
the world’s first Wi-Fi consumer digital camera
capable of sending pictures by email, was
unveiled
January 19, 2012: Kodak filed for Chapter 11
Bankruptcy Protection

35. Brand Logo Evolution

36. Kodak Product
• Four distinct sub-product
–
–
–
–
Digital cameras
Home printing
Online services
Retail kiosks and mini-labs

37. Strategic Group mapping
Firm
% Market Share
Average Price
Canon
Sony
40%
15%
$220.00
$300.00
Samsung
Nikon
10%
10%
$260.00
$250.00
High Price
P
r
i
c
e
Leica
Sony
Samsung
Olympus
Nikon
Kodak
Cannon
Low Price
Low Market
Share
High Market
Share
Market share

38. Then Things started to change
• Rapid decline in demand for traditional
photography equipment
• Rapid growth in demand for digital cameras
in developed economies
• Steady decline in demand for film and photo
processing
• Development of new imaging technology
such as photo-enabled wireless telephones and
high-megapixel digital cameras

39. Value chain pre digital age
Storage
Image Capture
Processing
Printing
- Film Camera
- Video Camera
- Retailer Processing
- All Retail Stores
- Reprints
Projection

40. Value Chain post digital age
Retrieval
Image
Capture
Digitalization
Storage
Transmission
-Digital Camera
-Digital Cameras Software -Hard Disk
- Video Camera
-Scanner at home
-Floppy Disk/CD
-Online (email)
-Digital mini-labs
-Removable
Storage
- Kiosks at retailers
-Online Services
Printing
Manipulation
Projection

41. Kodak Strategy
In 2003, CEO Daniel carp revealed 4
pillars Strategy:
1. Managing the traditional film business
2. Leading in distributed output
3. Growing the digital capture business;
and
4. Expanding digital imaging services

42. Kodak Strategy….Cont..
1. Managing the Traditional Film
Business:
•
•
Slow exit strategy from film business
Looking forward to digital technology

43. Kodak Strategy….Cont..
2. Leading The Distributed Output
• Now a day digital photography is much easer to
view & share photo(i.e. integrated display on
camera & sharing through electronic mail or
kiosks etc.) and its affecting the photography
industries.
• Then Kodak is able to bring fewer profit through
digital technology (i.e. digital print) instead of
traditional printing.

44. Kodak Strategy….Cont..
3. Growing the digital capture business
• Profit much lower in digital photography than
traditional photography
• Success in this part of the business is
dramatically opposed to the traditional
photography business .

45. Kodak Strategy….Cont..
4.Expanding digital imaging service
• Strategy take place by expanding product &
services. For example Kiosks that could print
image directly from mobile phone.
• In case of expanding service/online service
Kodak acquires companies like Ofodo to boost
Kodak Easy Share Gallery.

46. Low Cost Provider Strategy
• Introduced cheapest Inkjet printers Cost
$150-$300;Almost 50% less then competitor,
i.e. HP, Lexmark.
• Ink Cartridges sold $9.99 Black & $14.99
color. Competitor avg. price $ 30.
• Encourage more people to print at home.
Photo value pack will allows to print at home
for 10 cent, 60% cheaper then HP system

47. Current Strategy
Current CEO Antonio Perez adopt new
strategy, such as_
1. Outsourcing Manufacturing
2. Huge invest in digital technology;
3. Spent hundreds of millions of dollars to build up a
high-margin printer ink business to replace film sales
4. Aggressive patent litigation in order to generate
revenue;
5. Expand current brand licensing program

48. Flaw
• But there was a fatal flaw in Kodak's
strategy. Its executives didn't anticipate how
fast these digital cameras would become
commodities, with low profit margins, as
every competitor raced into the market.
• Kodak was late to recognize the problem,
slow to react, and then went down the wrong
innovation path

49. Reason For Failure
1.Core competency became core rigidities
2.Lack of market research
3.Late mover of digital photography
4. Innovation and transformation Failure
5.Unwillingness to change

50. Why Kodak failed to exploit
its digital photography
• In 1975, Steve Sasson, the Kodak engineer
who invented the first digital camera, but the
initial corporate response to his invention
was:
• As it was filmless photography, so
management’s reaction was, ‘that’s cute—
but don’t tell anyone about it.’
• At that point of time promotion of digital
photography would be the direct competition
of photo film business.

51. • But the top manages decided not to promote
digital photography
• By the time Kodak realized the importance of
digital photography, others like Canon had
already jumped in.
• Kodak was too strongly associated with the
photo film that it never caught the
imagination of digital camera consumer.

52. What they should have done
differently ?
• Discontinue unprofitable products
• Launch new and innovative product
• Move to another business segment such as movie
and entertainment
• Focus on high potential products
– Kiosks and mini-lab
– Online services such as photo printing and sharing
• Emphasize on niche market i.e. medical market
and professional

53. Conclusion
• Great example of strategic failure.
• Lessons we can learn:
•
•
•
•
•
External environment can be deceiving
Change happens
Greatest strength can be weakness
Innovation is not the perfect solution
Its not all over till its over

54. Farah Nasir
Roll no# 13

55. WHEN GLOBAL
STRATEGIES GO WRONG?

56. Globalization
• Globalization:
– The process of doing business worldwide
• Global strategy includes considering global needs
during
– Design
– Production
– Marketing

57. Potential Advantages of International
Operations
•
•
•
•
•
•
Gain new customers
Absorb excess capacity, reduce unit costs, and spread economic risks
Allow firms to establish low-cost production facilities
Competition may be less intense
Reduced tariffs, lower taxes, and favorable political treatment
Joint ventures can enable firms to learn new technology, culture, and
business practices
• Economies of scale
• Power and prestige in domestic markets may be significantly enhanced

58. Potential Disadvantages of International
Operations
• Foreign operations could be seized
• Different and often little-understood social, cultural, demographic,
environmental, political, governmental, legal, technological,
economic, and competitive forces
• Weakness of competitors overestimated
• Different language, culture, and value systems
• Understanding of regional organizations needed
• Dealing with two or money systems

59. Global Issues
• Global considerations impact virtually all
strategic decisions.
• A world market has emerged.
• It is difficult for a firm to survive relying solely
on domestic markets.

60. The Global Challenge
• How to gain and maintain exports to other
nations.
• How to defend domestic markets against
imported goods.

61. Multinational Organizations
International firms or multinational corporations face many complex variables:
Social
Cultural
Governmental
Demographic
Environmental
Legal
Competitive opportunities and threats
Technological
Political

62. Politics and Economics
• Political factors, such as government stability, trade
regulations, tax policies and other laws, impact an
organization's ability to achieve strategic goals in some
countries.
• Economic factors likes low credit accessibility, high
unemployment rates and rising interest rates can also make
it difficult for a company to conduct business in some
locations.

63. Social Trends
• Global strategic management activities may not
produce the desired results if company leaders
fail to assess local social factors accurately.
• Businesses also need to take into account lifestyle
changes, such as a reliance on social networking
websites, when planning marketing and
advertising campaigns.

64. Technology
• Innovation occurs at a rapid pace. Companies need to
bring products to market faster than their competitors
in order to achieve their strategic goals and maintain a
competitive edge.
• Unless they adapt to these changes, companies risk
being left behind and becoming obsolete and
unprofitable.

65. Environment and Law
• Environmental factors can impact how a
company does business. To overcome
some of these obstacles, effective
managers recognize popular attitudes and
adjust a company's promotional
campaigns to promote and pursue
"green" strategies for preserving the
environment and saving precious
resources.
• Additionally, global strategic management
initiatives may be difficult to implement
because of local rules, including health
and safety regulations. By adhering to
laws that govern employment and
business conduct, companies can avoid
costly lawsuits.

66. Cultural Differences
•
•
•
•
•
•
•
•
•
•
Language
Time
Space
Family roles
Religious factors
Family time
Values
Eating
Rules of etiquette
Importance of relationships

67. FATIMA ARSHAD

68. Examples of Failures of
Multinationals

69. Failure of Wal-Mart in Germany
• Wal-Mart’s German adventure ends which began in 1997 with
the acquisition of Wertkauf chain (24 stores) and unprofitable
Interspar chain (74 stores).
• The two chains made up only less than 3% of the market.
• Wal-Mart started talks to buy the German retailing giant
Metro, but Metro board rejected the idea.

70. Initial Strategy of Wal-Mart in
Germany
• To refurbish the stores to improve appearance
• High quality customer service
• To maintain price leadership through cost
leadership
• They would overhaul the supply chain systems
• Incorporate new scanning systems
• Centralized distribution

71. In Short….
Wal-Mart could be trusted to implement its US strategy
and fully owned distribution network, gain
efficiency, low prices, and inventory control and thus
propel the underdeveloped German market into the
future.

72. Biggest Factors of
Wal-Mart Failure in
Germany

73. Zoning
In 1977, Germany had enacted strict planning and zoning
regulations designed to protect traditional retailers and thus
prohibited construction of stores with more than 800m2 sales
area in locations not designated for retailing. This resulted in
large-store development being restricted to town/city centers.
Yet, even within cities, where retail restrictions were less
onerous, the approval process for a new store still could
require from 1 to 4 years.

74. Labor Union Relations
Germany service sector union Ver.di, the largest union in the
world, filed a lawsuit against Wal-Mart for not releasing yearend figures that could be used to negotiate wages. This
ultimately led brought Wal-Mart to the negotiating table with
Ver.di and increase salaries up to 0.5%.

75. Store Hours
• Wal-Mart stores are designed for customers who are
willing to spend lot of time shopping.
• But in Germany, the shopping hours are shorter: Shops
close by 5 PM on weekdays, and no shopping on
Sundays. This meant that customers don’t have the habit
of spending lots of time in a store – wandering around
for the things they need.

76. Customers
What Wal-Mart did
What German Customers Want
• German customers do not like to
be assisted by Wal-Mart’s friendly
store assistants
• Germans like to see the
advertised discount products
upfront without having to ask the
store assistant.
• German retailers stock more of
food products. For example for
Metro,
•
•
•
But Wal-Mart hire warm &
welcoming employees who greet
customers, and standardized ERP
systems.
Wal-Mart chose to use its US style
merchandise display strategy –
where discount products are kept
at higher shelf
Wal-Mart also got its store
inventory wrong, Wal-Mart stocked
its store with clothes, hardware,
electronics and other non-food
products were given much bigger
floor space than food products, he
bottom racks.

77. What German Customers
Want
• German customers were
not accustomed to friendly
greetings, they focused
more on how much more
is Wal-Mart charging
customers for these
additional services.
What Wal-Mart Did
• Wal-Mart offered credit
card payment and free bags
for goods
purchased, improved store
interiors, etc

78. Suppliers and Competitors
• Wal-Mart experienced great difficulties in dealing
with suppliers. The retailer did not have the
bargaining power to buy goods from suppliers at low
cost
• In 2001, a consumer study showed that Wal-Mart’s
prices were 11-25% higher than Metro, Aldi and its
other German rivals.

79. Inefficient Top Management
• Mal-Mart appointed CEO Rob Tiarks for German
operations ,an expat from the USA – who did not
understand Germany or its culture.
• He also ignores the complexities and the legal
framework of the German retail market, ignoring
any strategic advice presented to him by former
Wertkauf executives .
• English was the official company language at the
management level

80. HEINEKEN BEER
During the 1994 World Cup, bottles of
Heineken beer displayed the flags of all the
participants in soccer's biggest tournament,
including Saudi Arabia.
The country's flag shows a verse from the
Quran, Islam's holy book. The Quran forbids
the use of alcohol, so thousands of Muslims
registered complaints with the brewer
for displaying the verse.

81. TIZ RAZOR
• An Iranian razor manufacturer used the brand
name "Tiz," the Persian word for "sharp," to
illustrate the quality of its product. When the
company began exporting the razors to nearby
Qatar, they learned that "tiz" was the Arabic
slang word for "buttocks," which the Arabicspeaking residents of Qatar found highly
offensive.

82. PEPSI Slogan
• Original:"Come alive with
Pepsi!"
• Translation: "Pepsi
bring your ancestors
back from the dead!“
in Chinese

83. KFC’s Slogan
• Original: "Finger-lickin' good"
• Translation:
"We'll eat your fingers off"
in China

84. FORD
• Original: "Every car has a high quality body"
• Translation: "Every car has a high quality
corpse" in Belgium

86. Conclusion
Formulation and implementation of right strategy may
also the biggest challenge even for the large
companies.
If you want to avoid strategic failure do consider all
the factors which directly or indirectly influence your
organization operations
And if you are going global and want to expand your
business in an other country Companies have to be
sensitive to the local cultures and tailor their offerings
to local market and should hire local staff to know
more about country’s culture, values, traditions, etc