Business Strategy

PPT - 1

Business strategy is the plan a company uses to achieve its long-term objectives and gain a competitive
advantage in the market. It guides decision-making, resource allocation, and responses to challenges and
opportunities.

Elements of Strategy

1. Strategic leadership involves influencing others to make decisions that enhance the organization's
long-term success while maintaining adaptability and innovation.

Real Example:
Satya Nadella (CEO of Microsoft) transformed the company’s strategy by shifting focus
from Windows to cloud computing and AI. His leadership revived Microsoft’s relevance
and profitability.

2. Strategy Foundation This is the process of developing a strategy based on analysis and planning.

Key Steps: Environmental Analysis (SWOT, PESTLE), Define Vision/Mission, Set Objectives,
Develop Strategic Options, Choose the Best Strategy

Example:
Netflix’s strategy formulation involved moving from DVD rentals to streaming based on
market trends and customer behavior. Later, they expanded into original content (like
Stranger Things) to reduce dependency on third-party studios.

3. Strategy Implementation This is the execution phase—putting the chosen strategy into action by
aligning resources, structures, systems, and people.

Key Elements: Action plans and timelines, Organizational structure, Resource allocation, Performance
monitoring

Example:
Starbucks implemented its strategy of global expansion by partnering with local firms,
adapting menus to local tastes, and investing in employee training to ensure consistent
customer experience worldwide.

What do shareholders expect?

Profitability, Shareholder value, Profit Growth, Effectiveness of strategies

Maximizing shareholder value is the ultimate goal of profit making companies…”

Shareholders provide a company with the risk capital that enables managers to buy resources required
(Purpose: produce and sell goods & services)

Risk capital? Capital that cannot be recovered if a company fails and goes bankrupt

Competitive Advantage - results when a company’s strategies lead to superior performance compared to
competitors

Sustainable Competitive Advantage - A company’s… strategies enable it to maintain above average

profitability for a number of years.

Strategic managers - operate at three key levels in an organization: corporate, business, and
functional. Each level has different responsibilities when it comes to formulating and implementing
strategy.

1. Corporate-Level Managers - Oversee the entire organization. Set long-term vision and decide on
which industries or markets the company should operate in. Diversification, mergers, acquisitions,
entering/exiting markets. Example:
Sundar Pichai (CEO of Alphabet/Google) decides whether to expand into new areas like AI, cloud
computing, or healthcare tech.

2. Business-Level Managers - Focus on one specific business unit or division (also called a Strategic
Business Unit or SBU). Develop strategies for competing successfully in a particular market.
Competitive positioning, pricing, customer targeting. Example: The GM of Xbox at Microsoft develops
strategies specifically for the gaming industry—such as Game Pass, console pricing, or exclusive titles.

3. Functional Managers - In charge of specific departments (like marketing, HR, operations, finance).
Their strategies support the business unit’s goals. Day-to-day operations, process improvements, aligning
departmental work with overall strategy. Example: The Marketing Manager at Nike might run
campaigns that align with the brand's business strategy of connecting emotionally with athletes.

Strategy Formulation

1. Functional-Level Strategy - Day-to-day operations and how to improve efficiency, quality, and
productivity in specific departments (like marketing, HR, production, IT). Example:
Dabur’s supply chain strategy uses automation and data analytics to improve inventory turnover and
reduce delivery time — making its operations more efficient.
2. Business-Level Strategy - How a company competes within a specific market — pricing, customer
targeting, differentiation, cost leadership, etc. Example: Zerodha’s business strategy is cost leadership
— offering zero brokerage on equity investments and low-cost trading to attract price-sensitive retail
investors.

3. Global Strategy - How a company competes and grows internationally — global branding,
localization, market entry strategies, etc. Example: Dabur’s global strategy includes entering emerging
markets like the Middle East and Africa with Ayurvedic products tailored to local preferences.

4. Corporate-Level Strategy - The overall direction of the organization — which businesses to be in,
how to allocate resources, mergers/acquisitions, diversification. Example: Tata Group’s corporate
strategy involves managing a diversified portfolio across industries (automobiles, steel, IT, retail),
aiming to maximize overall profitability and synergy.

Intended Strategy - This is the planned strategy — what a company intends to do from the beginning,
based on analysis and vision. Example: Dabur planned to focus on Ayurvedic and natural health
products — this was its intended strategy to position itself as a leader in traditional wellness

Emergent Strategy - This is the unplanned or adaptive strategy — it emerges over time as companies
respond to unexpected opportunities or challenges. Example: Zerodha didn’t originally plan to build an
education platform, but seeing the growing demand for investor education, they created Varsity — an
emergent strategy that became a key brand asset.

Scenario Planning -

Definition: A strategic tool where companies create and analyze multiple "what-if" future scenarios
(best case, worst case, etc.) to prepare flexible strategies. Helps companies handle uncertainty (economic
shifts, tech changes, pandemics, etc.) by staying prepared for different outcomes.

Example:
Shell uses scenario planning to anticipate energy market changes — for example, planning
for a future with reduced fossil fuel dependency.

Decentralised Planning
Definition: Planning done at lower levels of the organization, not just top management. Business units
or departments have more autonomy to make strategic decisions. Encourages faster decision-making,
more innovation, and local adaptability, especially in large or global firms.

Example:
Unilever lets regional managers design marketing strategies tailored to local cultures and
preferences — a form of decentralized planning.

Cognitive Biases in Decision-Making

Cognitive biases are mental shortcuts or errors in thinking that can lead to poor strategic or business
decisions. Here are key types:

1. Prior Hypothesis Bias - Sticking to initial beliefs even when new evidence contradicts them.

Example: A manager believes that TV ads are best for sales and ignores digital data showing better ROI
from online campaigns.

2. Escalating Commitment -Continuing to invest in a failing project due to the amount already spent
(also called the sunk cost fallacy).

Example: A company keeps pouring money into a failing product launch to "recover" past
investments, instead of cutting losses.

3. Reasoning by Analogy - Making decisions based on similar-looking past situations, even if the
contexts are very different.

Example: A tech startup copies Apple’s design strategy assuming it’ll work the same, ignoring

4. Representativeness Bias - Judging a situation based on how similar it appears to a stereotype,

rather than using actual data or probability.

Example: An investor assumes a startup will succeed just because it has a young, hoodie-wearing
founder like Mark Zuckerberg — ignoring real performance metrics.

5. Availability Error - Making decisions based on information that is easily recalled or recent,
rather than what is most relevant or accurate.

Example: A manager overestimates the risk of cyberattacks right after hearing news about a major
data breach — even if the actual risk to their company is low.

PPT - 2
Industry - A group of companies offering products or services that are close substitutes for each
other These satisfy the same customer needs
Example: Soft drink industryHector beverages, Pepsico, Coca Cola
Sector – a group of closely related industries
Examples - Computer hardware industry, software industry
Porter’s 5 Forces Model

1. Competitive Rivalry - Intensity of competition among existing firms. High rivalry = lower
profits. Example: Pepsi vs Coca-Cola

2. Threat of New Entrants - How easy it is for new competitors to enter the market. High threat =
pressure on prices and profits Example: New D2C brands in FMCG challenging big players like
Dabur.

3. Bargaining Power of Suppliers - Power suppliers have to raise prices or reduce quality. Few
suppliers = more power. Example: Intel has high power in the PC chip market.

4. Bargaining Power of Buyers - Power of customers to demand lower prices or better service.
Many options = higher buyer power. Example: In online trading, users can easily switch from
Zerodha to Groww.

5. Threat of Substitutes - Risk of customers switching to alternative products. More substitutes =

higher threat. Example: Herbal medicines (like Dabur) vs modern pharmaceuticals.

Strategic Groups: Strategic groups are clusters of firms within an industry that follow similar
strategies based on key dimensions like pricing, quality, product range, branding, or innovation.

They help us understand:

● Competitive dynamics within an industry

● Why some companies compete more directly with each other

● Mobility barriers between groups

Example: Pharmaceutical Industry

Group 1 – Proprietary/Innovative Drug Makers

Focus: R&D, patents, branded drugs. High innovation, high prices, long development cycles

Group 2 – Generic Drug Makers

Focus: Cost-efficiency, off-patent drugs. Low cost, fast production, compete on price

Stages in the Industry Life Cycle

1. Embryonic Stage: New industry, low demand, high investment, uncertain future Focus: Product
awareness, R&D, early adopters
 Example: Quantum Computing
Company: D-Wave Systems – pioneering quantum tech but still in early, experimental
stages.

2. Growth Stage: Rapid increase in demand, rising sales, new entrants, economies of scale
Focus: Building brand, expanding market share

Example: Electric Vehicles (EVs)

Company: Tesla (2010s) – led the charge as the EV industry grew rapidly worldwide.

3. Shakeout Stage: Growth slows, competition intensifies, weaker firms exit. Focus: Cost control,
differentiation, consolidation

Example: Ride-sharing
Company: Uber – now focusing on profitability, cutting less profitable segments (like food
delivery in some markets).

4. Mature Stage: Market is saturated, growth is flat, only a few strong competitors remain Focus:
Efficiency, customer loyalty, incremental innovation

Example: Soft Drinks

Company: Coca-Cola – dominates a mature, stable market with brand loyalty and global
presence.

5. Decline Stage: Demand drops due to new tech, shifting preferences, or regulations Focus: Cost-
cutting, exiting markets, harvesting

Example: Landline Telephones

Company: AT&T (landline segment) – slowly phasing out traditional phone services in
favor of mobile and fiber.

Life Cycle Issues: The industry life cycle model is a generalization – “one size does not fit all”
•Some industries skip stages
E.g. Media consumption skipped personal computers, but hopped onto handheld devices (phones, tablets)
•In some cases, industries fail to get past embryonic stage
E.g. space travel?, autonomous vehicles?
•In some cases, industry growth can be revitalized after consistent declines (or) slow growth
E.g. bicycle industry: as a result of health-focused society
•Despite mature stage, sudden growth due to consumption of specific services
E.g. wireless data revenue in US surged from $19 B to $68 B during 2007 to 2012

Limitations of Porter’s Five Forces – In Simple Terms

Porter’s Five Forces is great for understanding industry structure and competitive pressure, but it
assumes industries are stable and predictable. In reality, many industries face rapid innovation,
disruption, and constant change. For example, in the 1960s, the U.S. steel industry was a typical
oligopoly dominated by giants like US Steel. Porter’s model would predict stable competition. But then,
new firms like Nucor and Chaparral Steel entered with a disruptive technology (electric arc furnace).
This unexpected innovation fragmented the industry and made it more price-competitive and dynamic.
So, the model doesn’t fully account for things like punctuated equilibrium (sudden shifts after long
stability), hypercompetition, or disruptive innovation, which are common today in tech-driven
industries.

Punctuated Equilibrium (in business strategy)

Punctuated equilibrium is a concept where an industry or company goes through long periods of
stability, followed by sudden, rapid change due to innovation, disruption, or external shocks.

Example: The mobile phone industry was stable for years with brands like Nokia dominating. Then
came a sudden shift in 2007 when Apple launched the iPhone, transforming phones into smart,
touchscreen devices. This punctuated the old equilibrium and reshaped the entire industry almost
overnight.

How can we internally analyse a company?

We can by understanding -

1. Core competencies - Core competencies are the unique strengths or capabilities that lie deep
within a firm and give it a long-term competitive edge. These are not always visible but drive the
success of products and services. For example, Honda’s core competency is its expertise in
engine design, developed over decades through experimentation and innovation. This capability
has allowed Honda to compete across different markets—cars, bikes, lawnmowers, generators,
and even Formula One racing. While the products are what customers see, it’s the underlying
engine expertise that powers Honda’s success across industries.

2. Resources - Resources are the assets a firm owns—such as cash, property, technology, or
intellectual property—that can be used to build and execute strategies. They form the
foundation for competitive advantage. For example, IBM uses its strong financial resources to
invest in new areas like consulting and AI services, while Walt Disney leverages its iconic
theme parks and media assets to expand its global entertainment empire. These resources
support growth, innovation, and long-term success.

3. Capabilities - Capabilities are the organizational and managerial skills that enable a firm to
effectively use its resources. Unlike resources, they are intangible and are reflected in a
company’s structure, culture, routines, and decision-making processes. They allow firms to
coordinate activities, adapt to change, and deliver value. For example, a company’s ability to
launch products quickly or manage a global supply chain efficiently is a result of its internal
capabilities.
 4. Activities - Activities are the specific tasks and processes a company performs to create value,
guided by its organizational and managerial skills. Though often built on intangible
capabilities, they become visible through the company’s routines, structure, and culture.
These include things like product design, marketing, logistics, or customer service. When done
efficiently and in sync with strategy, these activities help the firm deploy resources effectively
and gain a competitive edge.

VRIO Framework - The VRIO Framework is a tool to evaluate a firm's resources and
capabilities to see if they provide sustainable competitive advantage. It stands for:

| V | Valuable – Does it help the company exploit opportunities or neutralize threats?

| R | Rare – Is it something few or no competitors have?
| I | Inimitable – Is it hard to copy or imitate?
| O | Organized – Is the firm structured to fully capture its value?

Example: Google’s Search Algorithm

● Valuable: Yes – Delivers accurate search results, driving ad revenue

● Rare: Yes – No other algorithm works at the same level

● Inimitable: Yes – Built on years of data, machine learning, and secret tech

● Organized: Yes – Google is structured to support and scale it

Value Chain - The Value Chain is a concept by Michael Porter that explains how a company
creates value through a series of activities — from raw materials to the final product.

● Primary activities: directly involved in making and delivering the product (e.g., inbound
logistics, operations, marketing, sales, after-sales service)

● Support activities: help the primary ones work efficiently (e.g., HR, tech, procurement)

Example: Apple

● Primary: Designs (operations), manufactures through partners (inbound/outbound

logistics), markets via sleek campaigns (marketing & sales), and offers support via
AppleCare (service)

● Support: Invests heavily in R&D (technology development), hires top talent (HR)

➡ Result: All activities are aligned to deliver a premium user experience,

creating value and customer loyalty.

Building blocks of competitive advantage:

1. Superior Quality: Offering products or services that consistently meet or exceed customer
expectations. Example: Toyota is known for its reliable, high-quality vehicles.
2. Superior Innovation - Creating new products, services, or processes that add unique value.
Example: Apple with the iPhone and its constant tech upgrades.

3. Superior Efficiency - Using resources in the best possible way to reduce costs and increase
productivity. Example: Walmart’s supply chain system reduces inventory costs and maximizes
margins.

4. Superior Customer Responsiveness - Quickly and effectively responding to customer needs and
feedback. Example: Amazon with its fast delivery, easy returns, and personalized
recommendations.

DYNAMIC CAPABILITIES - Dynamic capabilities are a firm’s ability to adapt, integrate, and
reconfigure its resources and strategies in response to changing environments. Unlike regular
capabilities, which focus on efficiency, dynamic capabilities help companies innovate, respond to
disruptions, and seize new opportunities. For example, Netflix shifted from DVD rentals to streaming
and then to original content — showing strong dynamic capabilities in adapting its business model over
time. These capabilities are crucial for staying competitive in fast-changing industries.

PPT 3

This presentation based on Charles Hill's text illustrates how functional strategies at the enterprise level
contribute to building competitive advantage. Let’s break it down across the key learning objectives using
the examples provided:

🔹 1. Functional Strategies and Efficiency

Definition: Efficiency refers to reducing the cost of operations and optimizing resource use.

Examples:

● Amazon:
○ Uses a global distribution network and software-assisted decisions to manage inventory
smartly.
○ Acquired Kiva Systems to automate fulfillment centers, cutting labor costs by 30–40%.
● Zara:
○ Uses a mix of in-house and outsourced production to quickly react to fashion trends and
keep inventory lean.
● Toyota:
○ Pioneered lean manufacturing with JIT (Just-In-Time), reducing waste and increasing
efficiency.
● Walmart:
○ Maintains same service levels as competitors with less inventory by replenishing more
frequently.
● Texas Instruments:
○ Reduced parts and assembly steps in product design, lowering costs and time.
● GE’s Salisbury Plant:
○ Combined self-managed teams with flexible manufacturing to boost productivity by
250%.

🔹 2. Functional Strategies and Quality

Definition: Functional strategies improve product/service reliability, consistency, and customer
satisfaction.

Examples:

● McDonald’s:
○ Standardized operations led to consistent quality and high customer satisfaction.
○ Supplier relationships helped ensure consistent inputs and service quality.
● GE (Six Sigma):
○ Used Six Sigma to improve CT scanner reliability — solved internal design flaws,
extending product life.
● Marks & Spencer:
○ Built a reputation around high-quality products at fair prices, enhancing brand loyalty.

🔹 3. Functional Strategies and Innovation

Definition: Driving technological or product/process change to improve customer value or efficiency.

Examples:

● Amazon:
○ Launched the Kindle and AWS, transforming digital reading and cloud services.
● Corning:
○ Learned from the failure of DNA chip development.
○ Applied learning to “Epic”, which succeeded by incorporating customer feedback.
● Siemens:
○ Encouraged innovation through “open innovation” teams and intrapreneurship.
● Dell:
○ Used mass customization and flexible production to offer personalized yet cost-efficient
products.

Failures highlight the risk:

● Theranos, Windows Mobile, and Segway failed due to misjudging market need, poor positioning,
or tech limitations.

🔹 4. Functional Strategies and Customer Responsiveness

Definition: Meeting or exceeding customer expectations rapidly and effectively.

Examples:

● Zara:
○ Fast replenishment cycle ensures customers always get trending products.
● Four Seasons (Toronto):
○ Doorman Roy Dyment’s quick resolution of a guest issue reflected a strong customer
service culture.
● BigBasket:
 ○ Uses cashback to retain customers who haven’t ordered for weeks — adapting quickly to
behavioral shifts.
● Credit Card Companies:
○ Invest heavily in acquiring customers, focusing on retention to spread costs and enhance
profit per customer.
● McDonald's:
○ Adapted menu to include chicken and better coffee in response to customer demand.

🧠 Key Concepts Explained

● Learning Effects: Cost reductions over time as employees and systems become more efficient.
● Experience Curve: Greater volume and accumulated experience = lower unit costs.
● Customer Loyalty & Profitability:
○ Longer retention reduces marketing costs per customer.
○ Small reductions in churn lead to major profit increases (e.g., 75% in credit card
business).
● HR Practices:
○ Empowerment (self-managed teams, variable pay) enhances productivity and innovation.

📌 Takeaway

Functional strategies are the building blocks that support the broader business and corporate strategies. By
improving efficiency, ensuring quality, fostering innovation, and enhancing customer responsiveness,
companies create sustainable competitive advantages.

PPT 4

organizational structure, control, and culture, and how organizational design supports competitive
advantage, including the centralization vs. decentralization debate and types of organizational structures
— all in a clear, connected way:

🌐 1. Importance of Organizational Structure, Control, and Culture

These three pillars of organizational design influence how work gets done, how decisions are made, and
how employees behave.

📌 A. Organizational Structure

Structure is the framework that defines:

● Roles and responsibilities of people.

● How information flows.
● The hierarchy of authority.
● How teams and departments are grouped.

🧠 Why it matters:
A good structure ensures efficiency, accountability, and clarity. A poor structure leads to confusion,
duplication of efforts, and delays.
📌 B. Control Systems

These are tools and processes used to monitor, evaluate, and guide employee performance toward
strategic goals.

● Output controls (results-focused) – e.g., sales targets.

● Behavior controls (process-focused) – e.g., SOPs.
● Personal controls (people-focused) – e.g., direct supervision.

🧠 Why it matters:
Control systems help align employee behavior with company goals and provide feedback to improve
performance.

📌 C. Organizational Culture

Culture is the personality of the organization — shared values, norms, and unwritten rules.

🧠 Why it matters:
Culture shapes motivation, team dynamics, and resilience. A strong culture can act as an informal control
system.

🏁 2. How Organizational Design Supports Competitive Advantage

Organizational design can enable or hinder strategic goals like cost leadership, differentiation, and
innovation.

A. Cost Leadership

Firms focused on minimizing costs (e.g., Walmart, McDonald’s) need:

● Centralized decision-making for standardization.

● Behavior controls through rules and procedures.
● Functional structures to improve operational efficiency.

🧠 Design Tip: Efficiency > flexibility.

B. Differentiation Strategy

Firms that differentiate through customer experience or innovation (e.g., Apple, Nike) need:

● Decentralized structures to empower creativity.

● Output controls to track innovation outcomes.
● Flexible structures like matrix or team-based units.

🧠 Design Tip: Flexibility > rigid rules.

C. Focus/Niche Strategies

For specialized products or markets, design must allow local responsiveness, often via:

● Divisional structures (geographic or product-based).

● Cross-functional teams to tailor offerings.
🧠 Design Tip: Customization > uniformity.

🧭 3. Centralization vs. Decentralization

Feature Centralization Decentralization

Decision-making Top-level executives Lower levels / local managers

Speed of response Slower (rigid hierarchy) Faster (local autonomy)

Standardization High Lower (adaptable to local needs)

Employee empowerment Limited High

Best for Cost leadership, efficiency Innovation, local responsiveness

🔎 Example:

● Unilever faced issues with localized products. By decentralizing, local units could make decisions
tailored to regional tastes, increasing relevance and sales.

🏢 4. Types of Organizational Structures

A. Functional Structure

● Grouped by departments (e.g., HR, Marketing, Sales).

● Best for smaller or stable companies.
● Clear lines of command, efficient.

Challenge: Poor cross-department collaboration.

B. Divisional Structure

● Based on products, geographies, or customers.

● Each division acts like a mini-business.
● Suits large, diversified firms (e.g., Tata Group).

Challenge: Duplication of resources, less synergy.

C. Matrix Structure

● Dual reporting: functional + project or product manager.

● Encourages collaboration, used in MNCs or R&D.
Challenge: Complex, can cause confusion or conflict.

D. Team-based or Network Structures

● Fluid, dynamic teams form around tasks/projects.

● Used in agile companies (e.g., software firms).

Challenge: Requires strong culture and leadership.

🧩 Final Takeaway

Organizational design is not one-size-fits-all. It must align with:

● The company’s strategy (cost, differentiation, focus).

● The external environment (stable vs. dynamic).
● The desired level of innovation, control, or flexibility.

When structure, control, and culture are well-aligned with strategy, the result is a competitive advantage.

# Three Elements of Organizational Design

1. Structure
Structure defines how tasks are divided, grouped, and coordinated. It lays out the roles and
responsibilities of employees, the flow of information, and how authority is distributed.
○ Example: In a traditional manufacturing company, production, sales, HR, and finance
might each be separate departments with specific roles.
2. Control Systems
These are systems that monitor and regulate how well an organization is performing. They
provide feedback loops to employees and management. They also include incentives to align
behavior with organizational goals.
○ Example: Performance reviews, KPIs, bonuses based on targets, etc.
3. Culture
This refers to the shared beliefs, values, and norms that influence how people behave in an
organization. It's often unwritten but very powerful in shaping behavior.
○ Example: A startup culture might encourage experimentation and flexibility, while a bank
may emphasize accuracy and caution.

# Building Blocks of Organizational Structure

1. Grouping
Organizations are typically grouped by:
○ Function (e.g., Marketing, HR, Finance)
○ Division (e.g., Geography – Asia/Europe; Products – Phones/Laptops)
Grouping helps specialize roles and improve operational efficiency.
2. Authority
This defines the chain of command and how many people report to a single manager (i.e., span
of control).
○ Narrow span = More supervision, common in complex tasks.
○ Wide span = More autonomy, common in creative or routine tasks.
 3. Coordination
Ensures that departments work together effectively, preventing silos and ensuring shared goals. It
becomes more critical as companies grow.
○ Example: Coordination between marketing and production when launching a new
product.

Tall vs. Flat Structures

● Tall Structure
Many hierarchical levels. Each manager supervises a few people.
○ Pros: Clear chain of command, tight control.
○ Cons: Slower decision-making, less flexibility.
● Flat Structure
Fewer management layers. Wider span of control.
○ Pros: Fast communication, agile decision-making.
○ Cons: Risk of overburdened managers and unclear responsibilities.

Centralization vs. Decentralization

● Centralization
Decisions made at the top. Uniformity and control.
○ Suitable for companies where consistency is key.
○ Example: Fast food chains like McDonald's.
● Decentralization
Authority pushed to local or lower levels. More autonomy and responsiveness.
○ Example: Unilever found that giving regional units control over product variants helped
them cater better to local markets.

# Integration Mechanisms

Used to bridge communication and collaboration gaps between departments or units:

● Direct Contact – One-on-one discussions between managers.

● Liaison Roles – A person dedicated to coordinating between departments.
● Cross-functional Teams – Teams with members from different departments working together on
a project.

These mechanisms ensure alignment across the organization.

Strategic Control Systems

1. Personal Control
Involves direct supervision, coaching, and mentoring.
○ Effective in small teams or high-skill environments.
2. Output Control
Based on setting measurable goals and rewarding achievements.
○ Example: Sales targets, bonuses linked to performance.
3. Behavior Control
Focus on rules, standard operating procedures (SOPs), and standardized processes.
 ○ Ensures compliance and consistency. Useful in industries like healthcare or aviation.

Balanced Scorecard – A holistic framework that tracks:

● Financial Metrics (e.g., revenue, profit)

● Customer Satisfaction
● Internal Processes
● Learning and Innovation
It helps ensure strategic alignment and performance across the board.

# Role of IT

Information technology enhances control and coordination without bureaucracy.

● Example: Cypress Semiconductor

Used IT systems to track project progress and employee contributions.
Managers could monitor tasks, timelines, and output digitally, ensuring accountability without
micromanagement.

Organizational Culture

Culture acts as a soft control — it’s not enforced through rules but rather through shared values and
behaviors.

● Example: Microsoft under Bill Gates

Gates promoted:
○ Innovation – Encouraged creativity and product innovation.
○ Ownership – Employees took full responsibility for their work.
○ Open Communication – Teams collaborated and shared ideas freely.

This culture enabled Microsoft to scale rapidly while retaining agility and a sense of mission.