IIBF Strategic Management & Innovations cheat sheet

Porter's Five Forces: threat of new entrants, bargaining power of suppliers, bargaining power of buyers, threat of substitutes, rivalry among existing competitors. Industry attractiveness is judged by their collective strength, not by any single force.

Porter's generic strategies: cost leadership (broad market, lowest cost), differentiation (broad market, unique value), and focus (narrow segment, in either cost-focus or differentiation-focus form). Failing to choose one is 'stuck in the middle'.

BCG matrix plots market growth rate (vertical axis) against relative market share (horizontal axis). Relative share = own share ÷ largest competitor's share, with 1.0 as the cut-off. Quadrants: stars, cash cows, question marks, dogs.

Ansoff growth matrix: existing and new products crossed with existing and new markets gives market penetration, product development, market development and diversification. Diversification carries the highest risk because both product and market are new.

VRIO test: a resource yields sustained competitive advantage only if it is Valuable, Rare, costly to Imitate, and the Organisation is set up to exploit it. Any 'no' downgrades the advantage to temporary or parity.

Porter's value chain: primary activities are inbound logistics, operations, outbound logistics, marketing and sales, and service; support activities are firm infrastructure, human resource management, technology development and procurement.

Core competence test (Prahalad and Hamel): a competence must contribute disproportionate customer value, be competitively unique and hard to imitate, and be extendable to new products or markets.

McKinsey 7S: hard elements are strategy, structure and systems; soft elements are shared values, style, staff and skills. Performance depends on alignment across all seven, so a change in one requires re-checking the others.

Blue Ocean Strategy tools: the strategy canvas plots competing factors and the level of offering on each; the ERRC grid sets out what to Eliminate, Reduce, Raise and Create in order to lift buyer value while cutting cost.

Rogers' diffusion of innovation: innovators 2.5%, early adopters 13.5%, early majority 34%, late majority 34%, laggards 16%. The gap between early adopters and early majority is Moore's 'chasm'.

Business Model Canvas (Osterwalder) has nine blocks: customer segments, value propositions, channels, customer relationships, revenue streams, key resources, key activities, key partnerships and cost structure.

Christensen's disruption: disruptors enter at the low end or in a new market with a simpler, cheaper offer, then move upmarket as their performance improves. Incumbents rationally cede the low-margin segment first.

Lean startup loop: build–measure–learn, executed through a minimum viable product. A pivot is a structured change of strategy made while retaining validated learning.

Stage-gate development: projects move through sequential stages separated by gates that specify deliverables and return go, kill, hold or recycle decisions, controlling risk and cumulative resource spend.

Innovation metrics: R&D intensity = R&D expenditure ÷ revenue; new-product revenue ratio = revenue from products launched in the last three years ÷ total revenue; plus patents, time-to-market and idea-to-launch cycle time.

Ambidexterity (March): exploration of new capabilities must be balanced against exploitation of the existing business. The 70-20-10 portfolio rule allocates roughly 70% to the core, 20% to adjacent and 10% to transformational bets.

Open innovation (Chesrow): firms commercialise both internal and external ideas and use outside as well as in-house routes to market, in contrast to closed, vertically integrated R&D.

Technology S-curve: performance improves slowly, then rapidly, then saturates. Once the plateau is reached, switching to a new technology S-curve is required; more effort on the old curve yields diminishing returns.

Open banking exposes customer-permissioned data and payment initiation through APIs. India's equivalents are UPI (payments, launched 2016) and the Account Aggregator framework (RBI master direction 2016, operational 2021, consent-based data sharing via the Sahamati ecosystem).

India Stack components: Aadhaar identity, e-KYC, DigiLocker, e-Sign, UPI and Account Aggregator. As reusable public digital infrastructure they lower the cost of acquisition, onboarding and servicing.

Cloud service models: IaaS provides compute and storage, PaaS provides runtime and development tooling, SaaS provides the application. Deployment is public, private, hybrid or community; core banking migration is normally phased rather than big-bang.

Straight-through processing rate = transactions completed without manual intervention ÷ total transactions. It is the main driver of cost-to-serve, error rate and turnaround time in digital channels.

AI/ML applications in banking: credit underwriting on alternate data, real-time fraud and AML scoring, conversational service, collections prioritisation, and document processing in onboarding and trade finance.

RBI Regulatory Sandbox allows cohorts of innovative products to be tested on limited real customers with relaxed compliance; the first cohort (retail payments) was announced in 2019. Digital Banking Units were launched in October 2022.

Zero trust security grants no implicit trust from network location: every request is authenticated, authorised and encrypted. Tokenisation replaces card data with a surrogate value to limit breach exposure.

CBDC: RBI's e-rupee pilots covered wholesale settlement from November 2022 and retail use from December 2022. It is a direct sovereign liability, unlike UPI, which is a transfer of bank deposits.

Digital KPIs for banks: digitally active customer percentage, digital transaction mix, cost-income ratio = operating expenses ÷ operating income, cost-to-serve per account, and app monthly active users.

Balanced Scorecard (Kaplan and Norton) tracks four perspectives: financial, customer, internal process, and learning and growth, linked by cause and effect on a strategy map. Financial measures are lagging; learning and process measures are leading.

OKRs: one to three qualitative objectives per level, each with three to five measurable key results, set quarterly and reviewed at short cadence. OKRs are normally kept separate from compensation ratings.

Four Disciplines of Execution (4DX): focus on the wildly important goal, act on lead measures, keep a compelling scoreboard, and create a cadence of accountability.

Bank profit drivers: NIM = net interest income ÷ average earning assets; ROA = (net interest income + fee income − operating cost − provisions) ÷ average assets; ROE = ROA × equity multiplier (leverage).

Capital budgeting decision rules: accept a project if NPV > 0 at the hurdle rate; compare IRR with the cost of capital; payback screens liquidity rather than value. Rank mutually exclusive projects by NPV.

Three lines of defence: business units own and manage risk (first line), risk and compliance functions oversee it (second line), internal audit provides independent assurance (third line).

Strategic control levers (Schendel and Hofer): premise control, implementation control, strategic surveillance and special alert control. These are distinct from operational control by budget variance.

Chandler's principle that structure follows strategy: a changed strategy without matching structure, incentives, systems and skills reverts to old behaviour because the 7S configuration stays misaligned.

M&A synergy = value of the combined entity − (standalone value of A + standalone value of B). Most value destruction comes from overpaying and slow post-merger integration rather than from a weak deal rationale.

Kotter's eight steps: urgency, guiding coalition, vision and strategy, communicate, empower action and remove barriers, short-term wins, consolidate gains and produce more change, anchor in culture. Skipping urgency is the most common cause of failure.

Lewin's model: unfreeze, change, refreeze, supported by force-field analysis weighing driving against restraining forces. Sustainable change normally reduces restraining forces rather than adding driving pressure.

ADKAR (Prosci) is an individual-level model: Awareness, Desire, Knowledge, Ability and Reinforcement. All five elements must be present for one person's change to stick.

Bridges' transition model: endings (letting go), the neutral zone (confusion and lower productivity), then new beginnings. It is psychological and runs behind the external change event.

Hersey-Blanchard situational leadership matches style to follower readiness on the task: directing, coaching, supporting, delegating. Readiness combines competence and commitment.

Transformational leadership (Bass) rests on the four I's: idealized influence, inspirational motivation, intellectual stimulation and individualized consideration. Transactional leadership instead trades rewards for performance.

Goleman's six leadership styles: coercive, authoritative (visionary), affiliative, democratic, pacesetting and coaching. Authoritative, affiliative, democratic and coaching generally lift climate; coercive and pacesetting tend to depress it.

Power-interest stakeholder grid: high power and high interest means manage closely; high power and low interest means keep satisfied; low power and high interest means keep informed; low power and low interest means monitor.