Page 91 - DMGT522_SERVICES MANAGEMENT

Services Management

Notes
Example: HDFC the home finance will have different strategic plans when compared to
the retail banking strategies of HDFC that has now merged with its parent company, HDFC
Bank or its insurance ventures HDFC Standard Life and HDFC Chubb.
Then there would be requirement of strategic plans for different functions like marketing,
human resource, finance etc. Thus HDFC Group (which includes home finance, retail bank, life
and general insurance) or the ICICI Group (which includes the universal bank with all its
different divisions of institutional, retail, home and consumer finance, etc. life and general
insurance, informational technology, etc.) can have strategic plans at three levels:
1. Corporate level strategic planning: The service organisation has a clutch of SBUs, and the
planning affects the fortunes of all of them. The focus is to integrate the strategies of the
individual SBUs to conform to the group’s goals.

Example: Ratan Tata and his Board of Directors at Tata Sons makes the decision that the
Tata Group would focus on infrastructure, steel, automobiles, telecommunication, information
technology, hospitality, tea and chemicals. The decision to exit from FMCG (TOMCO, Lakme),
liquor and office products (Forbes, Forbes & Campbell), etc. were made at this level.
2. Business-unit level strategic planning: Decisions that affect an individual SBU as a whole
are taken at this level. Thus, the decision for Taj Hotels, if ever so taken, to grow by
acquisition and not just by organic means will be taken at this level.
3. Functional-level strategic planning: This will affect the different functions of an SBU.
There are some models which are often used for making marketing strategy. We will discuss
them one by one in subsequent subsections.

4.1.1 Boston Consulting Group Matrix

This matrix was developed by the management consulting firm Boston Consulting Group (BCG)
almost thirty five years back. A service firm uses this grid to categorise its SBUs or its products
as Stars, Cash Cows, Problem Children (or Question Marks) and Cash Crunch (or Dogs). The
parameters of classification are market share relative to its competitors and the growth rate of
the industry of the respective SBUs.
Figure 4.1: The Boston Consulting Group Growth/Share Matrix

HIGH Relative Market Share LOW

HIGH

STARS PROBLEM
Additional growth CHILD
potential: Risky – a few go on to
Invest further
become STARS:
Market Invest in some,
Growth divest in others
Rate
CASH CASH
COWS CRUNCH
Limited growth No profits or cash flow
prospects: either now or in the
Minimum investment, can future:
be divested with Divest or liquidate
profitability unless turnaround is
LOW possible

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