Future Group diversified into numerous sectors like insurance, financial services, and real estate, expanding too quickly without a strong financial foundation in its core retail business. The rise of strong competitors like Reliance Retail and online platforms like Flipkart and Amazon put pressure on Future Group’s market share and revenue. Covid 19 lockdowns and store closures during the pandemic severely impacted operations and cash flow, forcing Future Group to default on its debts. This proved to be the final blow, as it left no path to recovery.  The lesson to be learned is that a strategic, well-researched diversification plan is crucial for success, ensuring that new ventures offer profitability and are sustainable.

Strategies fail due to poor execution, which shoots from factors like lack of leadership commitment, poor communication, inadequate employee engagement, and a disconnect between strategy and operations. Designing a strategy is one thing but implementing and executing it is more important. Organizations fail strategically when they carry unrealistic goals, inadequate resources, a failure to adapt to changing circumstances, internal misalignment of processes, and a general lack of capability building to support the strategic objectives.  Some of the reasons why strategies fail is as follows:

Execution Problems

The failure of strategy execution is a common and costly issue in organizations today. While there are many reasons why leaders struggle to translate strategy into action, common themes include a disconnect between strategy and operations, overemphasis on internal matters, lazy leading, and a lack of accountability. Kodak invented the first digital camera but failed to execute its strategy to transition fully to the digital market. The company refused to hold its digital strategy for fear of harming its existing, highly profitable film business. This led to a significant loss of market leadership to competitors who adapted to the new digital landscape. Kodak’s decision making delayed the execution, the firm kept on procrastinating its digital strategy. 

Poor Implementation

This is the most common reason for failure; plans are often developed but not properly operationalized or tracked. Lack of timely implementation and misjudging market scenario are some of the reasons why strategies fail. Motorola largely “failed” by missing crucial innovations in the transition from early mobile phones to smartphones, including a slow adoption of 3G technology and the rise of touch-screen devices, leading to a loss of market share to competitors like Nokia, and later, Apple and Samsung. Other factors included internal issues like frequent management changes, a bureaucratic structure, and a failure to innovate beyond their successful Moto Razr line, which was followed by a period of declining product quality and market relevance before its acquisition by Google and later Lenovo, which marked a shift toward low-cost Android phones.

Lack of Alignment

This occurs when departments and employees don’t understand how their work contributes to the overall strategy, leading to wasted effort. eBay is an online auction site where companies and individuals bid on products. eBay represents another strategic planning failure example where a merger was the cause. In 2005, eBay decided to merge with Skype, thinking it would enhance their business. However, the values and systems of the two firms did not integrate well with each other. In 2009, eBay reversed the merger but already experienced significant decreases in stock.

Inadequate Resource Allocation

This can sabotage execution, as teams lack the necessary budget, staff, or technology to achieve their goals. Subhiksha, a prominent Indian retail chain, pursued an aggressive expansion strategy to quickly increase its market share and mark. The rapid expansion was not backed by adequate capital support or robust operational systems. The company expanded faster than its financial resources could sustain, leading to a collapse. This is a clear example of a strategy failing because the necessary financial resources and operational resources.

Leadership and Culture Issues

Insufficient Leadership Commitment is the biggest danger. Also focus on perks over vision can undermine strategy, sending a negative message throughout the organization. An example of how poor leadership can cause organizational strategy failure in India is Satyam Computer Services, where its founder, Ramalinga Raju, engaged in financial fraud and made unethical decisions that led to the company’s downfall and required a forced sale. In the case of Satyam, Ramalinga Raju’s decision-making and lack of ethics led to a massive financial fraud, undermining any articulate strategy the company might have had. Ramalinga Raju’s failure was the massive corporate fraud at Satyam Computer Services, where he, as founder and chairman, fabricated company accounts to inflate share prices and misappropriate money, leading to the company’s collapse and his imprisonment. The fraud, revealed by Raju’s confession in 2009, was discovered after the collapse of the Hyderabad property market exposed the company’s financial irregularities and ultimately resulted in the acquisition of Satyam by Tech Mahindra.

Poor Communication

This prevents employees from understanding and internalizing the strategy, making it difficult for them to act on it. Kingfisher Airlines, owned by liquor baron Vijay Mallya, was once a prominent Indian airline. However, the company faced a major crisis in 2012 when it suffered severe financial difficulties, leading to grounded flights, unpaid employees, and mounting debts. The company’s key stakeholders, including employees, customers, and regulators, did not engage during this crisis. Non-transparent and ineffective communication further damaged the brand’s reputation and contributed to the eventual downfall of the airline.

Toxic Organizational Culture

Can hinder strategic efforts, creating struggle to change and a lack of collaboration. A big example of a specific failed company due to toxic culture is elusive, reports highlight BYJU’S as an Indian company with a toxic, forced sales culture, contributing to widespread negative employee experiences and potentially contributing to its significant failures and downfall. Reports of a toxic organizational culture at Byju’s is cited as a reason for worker dissatisfaction and contributing to the company’s overall struggles, according to World Journal of Advanced Research and Reviews. The company has undergone significant restructuring, including mass layoffs and the closure of almost all its office spaces in India, to reduce costs and streamline operations.

Failure to Adapt

 Adaption to surrounding and market is very important for organizational survival. Bisleri, a household name synonymous with bottled water in India, decided to tap into the booming carbonated beverage market in 2006 with the launch of Bisleri Pop.  However, their established brand identity didn’t translate well to this new category. The branding of Birleri as clean drinking water had built its reputation on trust and purity. Consumers associated the brand with clean, healthy drinking water. Launching sugary sodas under the same brand name created confusion. Why would a company known for its commitment to pure water be making sugary drinks? Consumers remained hesitant to embrace Bisleri Pop. Consumers couldn’t adapt to Bisleri’s Pop sugary soda.

Conclusion

Brands often fail due to poor strategies. Some of them are failures to innovate, understand their target audience, adapt to market trends, and execute plans effectively. Examples like Kodak, which missed the digital photography revolution, and Kingfisher Airlines, undone by reckless expansion and poor finances, highlight how flawed strategic planning can lead to a brand’s downfall.

SWOT analysis is a strategic planning tool which is used in helping an organization to identify Strengths, Weaknesses, Opportunities, and Threats related to competition and in strategic planning. SWOT helps in situational assessment or situational analysis.

Like the 4 Ps of marketing (Product, Price, Place and Promotion) there are 5 Cs of marketing.   The 5 C’s stand for Company, Collaborators, Customers, Competitors, and Climate. These five elements help in performing situational analysis which is strategic process that helps in identifying opportunities and threats both internal and external to an organization. The 5 Cs also help product positioning which helps in reaching the target segment. 

Company

Strengths and weaknesses are internal factors. They are the areas on which organizations have some control over; they can be changed or modified little easily as they are internal. For examples weaker employees can be trained, can be mentored, if organization has patents and intellectual properties it enjoys an upper hand over competitors.  Location advantage is big strength of an organization.  However, opportunities and threats are external in nature. Companies can take advantage of opportunities and protect against threats, but they can’t change them. Examples include competitors’ pricing, prices of raw materials which depend largely on supplier cartel, and buyer behaviour trends.

Before analysing external factors, organizations need to look at internal factors. They need to look at areas in which they enjoy competitive edge over their competitors. If an organization maintains innovative company culture for example Apple whose success largely comes from their approach to innovation. The company continuously improve their existing products which eventually leads to ‘Creative Destruction’. The iPhone which is Apple’s most successful product came from mixing their existing products the iPod and iTunes and combining them with a phone and camera which resulted in a product unlike any other at the time. Apple’s iPhone created huge market disruption. Apple enjoys unique product knowledge, excellent efficiency and productivity among employees and it is too good in giving customer service that creates fantastic sales and happy customers.

Customer

Happy customers build the company brand. Positive brand reputation leads to higher growth. Reputation goes a long way in a business. It attracts customers, investors, partnerships, and employees. While seeking to improve reputation organizations must start with excellent customer service. Keeping current customers happy results in more stable revenue and more accurate predictions. Exceptional customer service is the unconditional commitment to giving the highest level of product or service to every person, regardless of the circumstances.

Today’s digital age is compelling organizations to relook at their customer-centricity promises. Companies struggle to get customer insights from other industries to match their offering. Organizations cannot rely on benchmarking from the industry they exist. For example, HDFC Bank mobile banking app was compared with the Ola app in terms of simplicity. Consumers are now accustomed to best-in-class user experiences both online and offline. A customer-centric organisational culture is no longer just a good thing rather it is a necessity for survival.

With Taj hotels is the best known for its customer service. Customer delight is present in every interaction with guests. The staff whether in housekeeping, at the restaurants, or room service all are very kind and at the service of their customers. Taj employees go out of their way to give the best hotel stay experience to their customers. So, rather than a customer service process, the customer service culture shines through.

Climate

The climate in the 5 Cs of marketing approach stands for external factors opportunities and threats of SWOT. It refers to the attitude of government and lending institutions towards business activity. It also includes the tax rate, inflation and attitude of labour unions towards the employers. Favourable business climates lower risks, reduce costs and connect companies to customers and quality workers. There is no one-size-fits-all approach to business climate change. Each company’s approach depends on its particular business model. Energy, Commodity, Financial, Technology sectors are most volatile industries.

Since past 2 years, sports utility vehicles (SUV) sector is performing well. India’s major automobile manufacturing companies includes Tata Motors, Ashok Leyland, Mahindra & Mahindra, Force Motors, Maruti, Toyota, Hyundai, Kia etc. The craze for SUVs is increasing day by day. At present that waiting periods for some of the most popular models are stretching to over two years, and fresh orders are still flowing in. Car buyers are now willing to spend more on their personal mode of travel and are preferring top-end cars. The SUV segment is enjoying a healthy business climate in India. The SUV segment’s contribution, which was around 19 per cent of the industry, has now gone up to 40 per cent in 2021-22.

Collaborators

In today’s business world, companies are usually deeply tangled, providing each other with services that are vital for day-to-day operations. Collaboration is when a group of people come together and contribute their expertise for the benefit of a shared objective, project, or mission. For example, if an organization needs to control its marketing efforts, it needs to map out entire supply chain, listing all of the third-party distributors, suppliers, partners and contractors. The reason collaborators must be a part of the 5 C analysis is that collaborations create synergy.

Last year Sabyasachi the famous women designer Indian clothing collaborated with H&M global brand. For Sabyasachi Mukherjee also it is a first with a high-street retailer. He has collaborated successfully before with French Shoe Designer Christian Louboutin and New York-based luxury department store, Bergdorf Goodman. Sabyasachi has dedicated a lot of attention to online interactions with consumers and is aware that online interaction with consumers can increase the position of the brand in the market. #SabyasachiSaree is a trend that never goes out of fashion in India. This, he has used to an advantage. It is for the first time that H&M have had a saree in their collection. Being the second largest clothing retailer in the world, it is present in 74 countries with over 5,000 stores under the various company brands, and the saree has never before featured as fast fashion. Imagine, if the trend takes off, this would be what saree enthusiasts only dream of. Sabyasachi’s collaboration with H&M has deepened Sabyasachi’s global market share.

Collaboration leads to more innovation, efficient processes, increased success, and improved communication. Collaboration helps in increasing strengths of a company.

Competitors

No business operates in a vacuum. Whether its sole proprietor shop or a or a large company, a product is always being judged in comparison that provides the same value. Healthy market competition is fundamental to a well-functioning economy. Basic economic theory says that when firms have to compete for customers, it leads to lower prices, higher quality goods and services, greater variety, and more innovation. Competition is critical not only in product markets, but also in labour markets. When firms compete to attract good employees, they must increase compensation and improve working conditions.  Firms grow when they are grounded and they spend sufficiently on market intelligence. Competition is an important C in the 5 Cs model. 

The detergent market in India can be divided into premium (Surf, Ariel), mid-price (Rin, Henko, Tide) and popular segments (Ghadi, Wheel, Nirma, Mr. White). Regional and small unorganized players still account for the 40% market. Per-capita consumption of detergent in India at 2.7 kg is the lowest in the world.

In 1987, Ghadi was launched by RSPL (Rohit Surfactancts Pvt. Ltd.), the product was also less priced and targeted at the rural customers, middle class and lower-middle class customers. It also had more or less the same positioning strategy as Nirma. In 1988, HUL launched Wheel to take on Nirma. In early 2000’s Wheel beats Nirma and takes the No.1 spot. In late 2011 and early 2012, Ghari beats Wheel and takes the number one spot in Indian detergent industry. These detergent brands fought with each other on the basis of price.  Competition reduces prices which helps people from lower income strata to buy products.

Bank rate

It’s the rate charged by the central bank for lending funds to commercial banks.

Balance of Trade

 It’s the difference between the monetary value of a nation’s exports and imports over a certain time period. It is usually expressed in the unit of currency of a particular country.

Black Market

The buying and selling of goods or foreign money in an illegal way.

Black economy

It’s a section of a country’s economic activity that is derived from sources that don’t follow the country’s rules and regulations regarding commerce and trade. The activities are mostly illegal in nature.

Brown economy

It’s an economy that depends on the economic growth of the petrochemicals such as coal, petroleum and natural gas, which in production, great amounts of carbon dioxide and soot are released into the atmosphere. The economic development depends on restricted resources, the environmental pollution is severe.

Blue Economy

Blue economy is a term in economics related to the exploitation, preservation and regeneration of the marine environment. Its scope of interpretation varies among organizations. According to the World Bank, the blue economy is the “sustainable use of ocean resources for economic growth, improved livelihoods, and jobs while preserving the health of ocean ecosystem.

Capital

It’s typically refers to cash or liquid assets being held or obtained for expenditures.

Cost

In production, research, retail, and accounting, a cost is the value of money that has been used up to produce something or deliver a service, and hence is not available for use anymore. In business, the cost may be one of acquisition, in which case the amount of money expended to acquire it is counted as cost.

Consumer Sovereignty

Consumer sovereignty is the economic concept that the consumer has some controlling power over goods that are produced, and the idea that the consumer is the best judge of their own welfare.

Demand  

Demand is an economic principle referring to a consumer’s desire to purchase goods and services and willingness to pay a price for a specific good or service. 

Economics

It’s the study of how people allocate scarce resources for production, distribution, and consumption, both individually and collectively.

Elasticity of Demand

It’s the responsiveness of the quantity demanded of a commodity to changes in one of the variables on which demand depends. In other words, it is the percentage change in quantity demanded divided by the percentage in one of the variables on which demand depends.

Equilibrium

In economics equilibrium is a condition or state in which economic forces are balanced. In effect, economic variables remain unchanged from their equilibrium values in the absence of external influences.

Economic Benefit

Economic benefits are defined as tangible benefits that can be measured in terms of revenue generated or money saved through the implementation of policies. An economic benefit is a benefit that we can quantify in monetary terms. Profits, net cash flow, net income, or revenue, for example, are economic benefits.

Fiscal policy

Itrefers to a government’s spending and how it affects the economy, particularly if spending levels change. Fiscal policy also refers to the tax policies of a government to influence economic conditions. It drives the policy actions of the Government. Budget, tax, subsidies, expenditure etc. form part of the fiscal policy.

GDP

Gross domestic product (GDP) is the standard measure of the value added created through the production of goods and services.  

Golden Economy

The term describes an ideal state for an economic system. In this perfect state, there is full employment, economic stability, and stable growth. It is also called sunshine economy. Emphasis is laid on energy sector. Sunshine Economy depend on non-fossil energy such as wind energy, solar energy, water, biomass energy, geothermal energy, marine energy etc. as basic energy supply to encourage distribution of facilities, to improve the energy structure.

Government spending

It refers to money spent by the public sector on the acquisition of goods and provision of services such as education, healthcare, social protection; the important areas being social welfare and defence.

Grey Market

It’s an unofficial market in goods that have not been obtained from an official supplier.

Grey Economy

The informal economy is also known to be the grey economy. This is an economy that is a diversified set of economic activities, enterprises, jobs, and workers that are not regulated or protected by the state. The grey economy helps to establish self-employment in small, unregistered enterprises. It has been expanded to include wage employment in unprotected jobs.

Green Economy

It’s a three-dimensional focus in sustaining and advancing economic, environmental and social wellbeing, to increase GDP and reduce poverty. A green economy is an economy that aims at reducing environmental risks and ecological scarcities, and that aims for sustainable development without degrading the environment. It is closely related with ecological economics, but has a more politically applied focus.

Incentives

In economics, incentives are what encourage an individual to act in a certain way. In other words, how consumers and businesses respond to market signals such as prices and financial benefits.

Inflation

Inflation is the rate of increase in prices over a given period of time. Inflation is typically a broad measure, such as the overall increase in prices or the increase in the cost of living in a country.

Law of demand

It states that quantity purchased varies inversely with price. In other words, the higher the price, the lower the quantity demanded.

Market

It’s a place where the exchange of goods and services takes place as a result of buyers and sellers being in contact with one another, either directly or through mediating agents or institutions.

Money

It’s a medium of exchange; it allows people to obtain what they need to live. Bartering was one way that people exchanged goods for other goods before money was created. Money has worth because for most people it represents something valuable. The units of measurement are dollars or another currency, with no time dimension.

Market capitalization

It’s the aggregate valuation of the company based on its current share price and the total number of outstanding stocks. It is calculated by multiplying the current market price of the company’s share with the total outstanding shares of the company.

Marginal utility

It refers to the amount of satisfaction a consumer gets by consuming a good or service. Marginal utility can be used by economists to measure how much of a good or service a consumer would buy in a given period of time.

Macroeconomics

Macroeconomics is a branch of economics dealing with performance, structure, behaviour, and decision-making of an economy as a whole; for example using interest rates, taxes, and government spending to regulate an economy’s growth and stability. This includes regional, national, and global economies.

Microeconomics

It’s a branch of mainstream economics that studies the behaviour of individuals and firms in making decisions regarding the allocation of scarce resources and the interactions among these individuals and firms.

Monopoly

It’s a market situation where there is a single seller in the market. In conventional economic analysis, the monopoly case is taken as the polar opposite of perfect competition. By definition, the demand curve facing the monopolist is the industry demand curve which is downward sloping.

Micro Economics

Microeconomics is the study of decisions made by people and businesses regarding the allocation of resources, and prices.

Macro Economics

Macroeconomics focuses on the performance of economies; changes in economic output, inflation, interest and foreign exchange rates, and the balance of payments. 

Opportunity cost

What a business firm misses out on when selecting one option over another. It’s a way to quantify the benefits and risks of each option, leading to more profitable decision-making overall.

Oligopoly

An oligopoly is a market characterized by a small number of firms who realize they are interdependent in their pricing and output policies. The number of firms is small enough to give each firm some market power.

Optimization

It’s the process of making a trading system more effective by adjusting the variables used for technical analysis. A trading system can be optimized by reducing certain transaction costs or risks, or by targeting assets with greater expected returns.

Purple Economy

Purple Economy takes into account the ethnic, cultural, and sociological aspects of the place they operate in. Concepts such as racial equality, cultural transmission, and economic anthropology are the core tenets of this principle which draws from the ideas of both politics and capitalism. It is about looking beyond the economic value of cultural outputs to include the cultural dimension of any asset or service. Purple economy is part of a wider ethical approach.

Repo Rate

It’s the rate at which the Reserve Bank of India (RBI) lends money to commercial banks or financial institutions in India against government securities. Repo Rate in 2022 is 4.40%

Recession

In economics, a recession is a business cycle contraction when there is a general decline in economic activity. Recessions generally occur when there is a widespread drop in spending.

Red Economy

It’s related to the economy that is ruled by a government with style of communism.

Supply

 In economics, supply is the amount of a resource that firms, producers, labourers, providers of financial assets, or other economic agents are willing and able to provide to the marketplace or to an individual. Supply can be in produced goods, labour time, raw materials, or any other scarce or valuable object.

Scarcity

The gap between limited resources and theoretically limitless wants.

Sovereign bond

It’s a debt security issued by a national government to raise money for financing government programs, paying down old debt, paying interest on current debt, and any other government spending needs. Sovereign bonds can be denominated in a foreign currency or the government’s domestic currency.

Silver Economy

Silver economy is the system and structure of production, distribution and consumption of goods and services aimed at using the purchasing potential of older and ageing people and satisfying their needs, wants and consumption for a well living and health needs. All strategies are driven to face new challenges related to an ageing population (geriatrics), especially regarding technology services for wellbeing and health monitoring such as robotic assistance, electrical mobility, or health sports, including health tourism and green care.

Time value of money

It’s the concept that a sum of money is worth more now than the same sum will be at a future date due to its earnings potential in the short-term.

Unemployment

It’s a term referring to individuals who are employable and actively seeking a job but are unable to find a job. Included in this group are those people in the workforce who are working but do not have an appropriate job.

White economy

Focuses on Digital Economy and how it changed business and trading for start-ups and entrepreneurs via digital.

BCG matrix helps in doing a comparative analysis of business potential and the evaluation of environment. Relative market share shows SBU Sales this year leading competitor’s sales this year and market growth share shows industry sales this year minus industry Sales last year. The analysis requires that both measures be calculated for each SBU. The dimension of business based on strength and relative market share will measure comparative advantage indicated by market dominance. The key theory underlying this fact is existence of an experience curve and that market share is achieved due to overall cost leadership.

BCG matrix has four cells, with the relative market share and the vertical axis denoting market growth rate. The mid-point of relative market share is set at 1.0, if all the SBU’s are in same sector, the average growth rate of the industry is used. For example Nestle India’s all SBU exist in food industry. But, if all the SBU’s are located in different sectors of industries, then the mid-point is set at the growth rate of the economy, for example the Tata group’s SBUs exist in a variety of sectors.

The four cells of this matrix have been called as stars, cash cows, question marks and dogs. Each of these cells represents a particular pattern of business. To clarify each cell of the matrix, we will be discussing examples of Amul’s products. Gujarat Cooperative Milk Marketing Federation Ltd. (GCMMF) is India’s largest food product marketing organization with annual turnover (2013-14) US$ 3.0 billion. The word amul is derived from the Sanskrit word amulya meaning rare, valuable. The co-operative was initially referred to as Anand Milk Federation Union limited hence the name AMUL. It has the largest distribution network compared to any FMCG company. It has nearly 50 sales offices spread all over the country, more than 5000 wholesale dealers and more than 700000 retailers. In order to maintain costs at lower levels, Amul India has never spent more than 1% of its budget on advertising. However it has still been successful in creating the same impact. It’s simple yet appealing ad campaigns with its lucky mascot a cute and chubby girl usually dressed in polka dots has not changed so far.

Stars

 Stars represent business units having large market share in a fast growing industry. They usually generate cash because of fast growing market. Stars require huge investments to maintain their flourishing status. The net cash flows of ‘Star’ SBU are usually modest. Please understand that SBU’s located in this cell are attractive as they are located in a robust industry and these business units are highly competitive in the industry. When the industry matures, a successful star will become a cash cow. Amul pure ghee, cheese spread, ice creams, dairy whiteners and flavored bottled milk are examples of ‘star’ in Amul’s product portfolio.

Cash Cows

Cash Cows represent business units having a large market share in a mature yet slow growing industry. Cash cows require little investment but they generate steady cash that can be utilized for investment in other business units. It’s not the stars but cash cow SBU’s which are the key source of cash, and are in particular the core business of a corporation. They are the supporters of an organization. These businesses usually follow stability strategies. When cash cows lose their appeal and move towards descent, then a divestment policy may be followed. Amul butter, fresh milk range, mozzarella cheese are examples of cash cows in their portfolio.

Question Marks

 These SBUs represent business units having relatively low market share in a high growth industry. They require huge amount of cash for maintenance and to gain market share. They require consideration to determine if the venture of the SBU is feasible. Question marks generally possess new goods and services which have a good commercial prospective. There is no specific strategy which can be adopted. If the firm thinks it has dominant market share, then it can adopt expansion strategy, else retrenchment strategy can be adopted. The fact is that most businesses start as question marks as the company tries to enter a high growth market in which there are already existing businesses. If ignored and not rectified in time, then question marks turn into dogs. But, if huge investment is made, then they have potential of becoming stars. Masti dahi, lassi, mithai, tetra packed milk are examples of question marks.

Dogs

Dogs represent businesses having weak market shares and they operate in low-growth markets. They are cash traps. They neither generate cash nor require huge amount of cash. Due to low market share, these business units face cost disadvantages. Generally retrenchment strategies are adopted because these SBUs can gain market share only if they don’t face competition. That means other firms are weaker firms. An SBU can turn into dog because of high costs, poor quality, ineffective marketing, poor strategies etc. A dog is dragged on usually when a firm has strategic reasons to do so. If the SBU has fewer prospects for it to gain market share, it is better to divest the SBU.  The thumb rule is number of dogs should be avoided and minimized in an organization. Amul chocolate, energy drink, infant milk range and pizza are examples of dog.

The BCG Matrix is not free from limitations. The limitations are defined hereby.

• BCG matrix classifies businesses as low and high, but generally businesses run on medium scales too. Thus, the true scale/degree of business needs to be reflected.
• High market share does not always lead to higher profits. The fact is that there are high costs also involved with high market share.
• Growth rate and relative market share are not the only indicators of profitability. This model ignores and overlooks other indicators of profitability.
• Many times, dogs may help other businesses in gaining competitive advantage. The competitive advantage earned by other SBUs because of the dogs is more than cash cows sometimes.

Strategies based on BCG Matrix are as follows:

Build

By increasing investment, the product is given a thrust such that the product increases its market share. For example an organization can push a Question mark into a Star and finally a cash cow.

Hold

A company when cannot invest because it has other investment commitments due to which it holds a product or products in the same quadrant. For example is Amul decides to hold its question mark products in the same quadrant as higher investment to move a question mark into star need to put on hold.

Harvest

This is very well observed in the Cash cow scenario, wherein the company reduces the amount of investment and tries to take out maximum cash flow from the said product which increases the overall profitability. For example, Amul butter has retained its market share for decades. It’s indeed a leader as Amul owns 88 percent share in butter market.

Divest

It is observed in case of Dog quadrant products which are generally divested to release the amount of money already stuck in the business.

This is how the BCG matrix is the best way for a business portfolio analysis. The strategies recommended after BCG analysis help the firm decide on the right line of action and help them implement the same.

Behavioral finance is quite a new subject in the management realm that seeks to combine behavioral and cognitive psychological theory with conventional economics and finance to provide explanations for why people make irrational financial decisions. Classical investment theories are based on the assumption that investors always act in a manner that maximizes their investments returns. Yet, a number of researches show that investors are not always so rational. The fundamental principle of the classical theory is that the economy is self‐regulating.

People get puzzled when the uncertainty regarding investment decision overwhelms them. People are not always rational and same is the case with markets. They are not always efficient. Behavioral finance explains why individual do not always make the decisions they are expected to make and why markets do not consistently behave as they are expected to behave. Many studies have shown that the average investors make decisions based on emotion, not logic; most investor’s buy high on speculations and sale low on panic mood. Most of us do that; do we? Psychological studies reveal that the pain of losing money from investment is almost three times greater than the joy of earning money. Emotions such as fear, impulse and greed often play a pivotal role in investor’s decision; there are also other causes of unreasonable behavior.

It is observed that stock prices moves up and down on a daily basis without any change in fundamental of economies. It is also observed that people in the stock market move in herds and this influence stock prices. Theoretically markets are efficient but in practice, they never move efficiently. For example, a reputed company announces a mega investment in an emerging area over next few years, the stock price of the company starts moving up immediately without looking into the prospects, return or the amount of investment to be made in this project. That is how the behavior of investor moves the stock price. Let me give hear a classical example: there is news since many years that Government o Maharashtra is planning to have another airport in Panvel, Mumbai. Immediately the property prices in Panvel shot up. Even if the Government is planning an airport in Panvel, the execution might take years, but the news itself has already augmented the property prices there.

Behavioral finance is a relatively new field that seeks to combine behavioral and cognitive psychological theory with conventional economic and finance to provide explanations for why people make irrational financial decisions. It is very popular in stock market across the world for decisions related to investments. Behavioral finance is the study of psychology, sociology and anthropology on the behavior of the financial practitioners and the subsequent effect on the security market. It helps to understand why people buy or sell stock without doing fundamental analysis and study. It helps to understand why investors behave irrationally in investment decisions. Some important definitions of behavioral finance are summarized hereby.

According to Olsen (1998) behavioral finance seeks to understand and predict systematic financial market implications of psychological decision process. Belsky and Gilowich (1999) have referred to behavioral finance as a behavioral economics and further defined as combining the twin discipline. Jay R Ritter (2003) has given a brief introduction of behavioral finance published in Pacific Basin Finance Journal. In his research article, he rejected the traditional assumption of expected utility maximization with rational investors in efficient market. The two building blocks of behavioral finance are cognitive psychology (How People Think) and the limit of arbitrage (when market will be inefficient).

Behavioral finance seeks to find how investor’s emotions and psychology affect investment decisions. It is the study of how people in general and investors in particular make common investors make errors in their financial decision due to their emotions. It is nothing but the study of why otherwise rational between cognition. Leon Festinger’s theory of cognitive dissonance states that individual attempts to reduce inner conflict in one of the two ways: (i) he changes his past values, feelings or options; and (ii) he attempts to justify or rationalize his choice. This theory may apply to investors and traders in the stock market who attempt to rationalize contradictory behaviors, so that they seem to follow naturally from personal values or view point. In “Financial Cognitive Dissonance”, we change our investment styles or beliefs to support our financial decisions. For instance, investors who followed a traditional investment style (fundamental analysis) by evaluating companies using financial criteria such as, profitability measures, especially, profit/earnings ratios, started to change their investment beliefs. Many individual investors purchased retail internet companies in which these financial measures could not be applied. Since these companies have no financial track record, very little revenues and no net losses. These traditional investors rationalized the change in their investment style as per past beliefs in two ways: the first argument by many investors is the belief that we are now in a “new economy” in which the traditional financial rules no longer apply. This is usually the point and the economic cycle in which the stock market reaches its peak. The second action that displays cognitive dissonance is ignoring traditional form of investing and buying these internet stock simply based on price momentum.

In behavioral finance, Regret theory states that an individual evaluates his or her expected reactions to a future event or situations. Psychologists have found that individuals who make decision that turn out badly have more regret when that decision was more unconventional. This theory can also be applied to the area of investor psychology within the stock market, whether an investor has contemplated purchasing a stock or mutual fund which has declined or not, actually purchasing the intended security will cause the investor to experience an emotional reaction. Investors may avoid selling stocks that have declined in value in order to avoid the regret of having made a bad investment choice and the discomfort of reporting the loss.

In addition, the investor sometimes finds it easier to purchase the “hot or popular stock of the week”. In essence, the investor is just following “the crowd”. Therefore, the investor can rationalize his or her investment choice more easily if the stock or mutual fund declines substantially in value. The investor can reduce emotional reactions or feelings since a group of individual investors also lost money on the same bad investment. In investing, the fear of regret can make investor either risk averse or motivate them to take greater risk.

In behavioral finance, Prospect theory deals with the idea that people do not always behave rationally. There are different psychological factors which motivate people in investment decision under uncertainty. It considers preference as a function of “decision weights” and it assumes that these weights do not always match with probabilities. It further suggests that decision weights tend to overweigh small probabilities and under-weigh moderate and high probabilities. Prospect theory demonstrates that if investors are faced with the possibility of losing money, they often take on riskier decision at loss aversions. They tend to reverse or substantially alter their revealed disposition towards risk. People consult astrologers, tarot card readers, numerologists to seek divine interventions in their investments. This just proves how irrational investors become while choosing their investment options.

The Anchoring theory is a phenomenon in which in the absence of better information, investors assume current prices are about right. People tend to give too much weight to recent experience, extrapolating recent trends that are often at odds with long run average and probabilities.

The theory of Over and under reactions relies on the fact that market does not reflect the available information. The feelings are euphoric at times and depressing some other times. The information is most of the illusionary in character. Usually they are too pessimistic when it’s bad and too optimistic when it is good says Bill Miller. The consequences of investors putting too much weight on recent news at the expense of other data are market over or under-reaction. People show overconfidence. They tend to become more optimistic when the market goes up and more pessimistic when the market goes down. Hence, prices fall too much on bad news and rise too much on good news. And in certain circumstances, this can lead to extreme events.

Behavioral Finance builds on existing knowledge and skills. The primary focus of this subject relies on how behavioral approaches change the decisions of investors in financial markets.

Marketing plays fundamental role in economic growth in the present global world.  It is therefore basic reason for studying marketing. Marketing stimulates research and new ideas resulting in new goods and services. Late Peter F. Drucker considered marketing to be the responsibility of the managing leadership within a business, not a separate function; he believed that sensible marketing strategies ensure planned economic growth in the developing economy where the scarcity of goods, services, ideas and excessive unemployment create hurdles in the growth of society. Good marketing efforts are needed for mobilization of economic resources for additional production of ideas, goods and services resulting in greater employment. The fundamental objectives of most companies are survival, profits and growth. Marketing contributes directly to achieving those objectives and is in fact seen as a key to profitability.

Marketing strategies represent the plan by which the firm delivers its value to the customers. In Michael Porter’s value chain, Marketing & Sales function occupies the core functions of business after inbound logistics and operations. In today’s business environment marketing is considered crucial – all functions such as sales forecasting, advertising, appointing sensible marketing channels, distribution and CRM are prioritized. Developing marketing strategies and implementing them will only help organizations to get sustainable results in our businesses.

The marketing function requires flexibility and imagination; it cannot remain stagnant, it needs subtle changes as per the environment. Here is an example – Technology maverick Michael Dell founded Dell Computers in 1984. The company was based on the direct-to-consumer model, which eliminated the retailer, allowing for price discounts and constant customer feedback. In 1988, spurred by growing investor interest in technology stocks, the company went public. But it wasn’t until 1991, the height of the 1990-1992 recessions, that Dell chose to make its most aggressive marketing move up to that time, and take on the established computer giants. The campaign coincided with the introduction of its first notebook computer. In 1991 when advertising in the entire computer hardware category was down by 17.5% over the previous year. Apple, Digital, IBM and Tandy – some of the category’s leading spenders went on investing and pouring money in their promotional efforts. Contrary to this, Dell instead kept its pace on eliminating the middleman while offering superior customer service. This and other few innovative strategies put Dell for the first time in the Fortune 500 roster of the world’s largest companies.

Marketing is speaking the consumer’s language; reaching out to them the way they want and communication with them in their fashion. These days the tech savvy consumers turn to online sources for information, which requires a company to establish an effective web presence to reach them, with an interactive site. Using Facebook or Twitter for marketing is one of the latest marketing trends. Many marketers have taken it well and therefore invest a lot of money into twitter advertising, knowing that it is particularly easy to gain the attention of a younger generation through advertising. Digital marketing is the in-thing. World recognizes Procter & Gamble (P&G) as the biggest advertising champion; hence any move by Procter & Gamble (P&G) is closely watched. A lot of attention has been paid to its recent announcement that it will cut $10 billion from its marketing budget over the next five years. Procter & Gamble (P&G) is a smart brand builder. At one of its big events in USA, Procter & Gamble (P&G) declared that it does not intend to focus on digital marketing but it recognizes that it exists in a digital world. Procter & Gamble (P&G) believes in adapting to the consumer behavior and it flexibly redesigns its promotional strategies.  Procter & Gamble (P&G) has adopted digital marketing in markets like Brazil, China, and India where digital marketing offers the best way to engage with consumers. In urbanized markets like the US, Tide and Bounty will continue to rely on TV commercials along side with digital integrated promotion as part of a multichannel brand-building plan.  P&G will look for opportunities to drive smaller brands with smaller budgets like Aussie and Old Spice through digital.

A good marketer can sell a comb to a bald man. Here’s how Coca-Cola’s COO, Steven J Heyer very elegantly describes the aerated drink as “Coca-Cola isn’t black water with a little sugar and a lot of fizz anymore that one of your movies is celluloid digital bits and bytes, or one of your songs is a random collection of words and notes. Coca-Cola isn’t a drink. Coca-Cola is an idea. Like great movies, like great music, Coca-Cola is a feeling.” This says it all. Marketing does the job of a dream merchant.

You can be a copy cat if required; everything fair in love and war when it comes to marketing. Since marketing evolves effective delivery of information to a targeted market which stimulates a demand for a product or service, the ability to effectively identify and reach that market is crucial. ITC in last few years filled it soap product line with products like Essenza Di Wills at the top end, followed by Fiama Di Wills in premium segment, Vivel in mid-segment and Superia at the entry level. ITC followed in the footsteps of HUL by offering each segment a product which suits the customer’s wallet. The retail shelves consist of a dozens of soaps from like Lux, Dove, Pears, Hamam, Breez, Rexona and Ayush and dozens of soaps from ITC. You have the Vivel with its variants like Sandal Sparkle, Sheer Crème and other variants priced at Rs 17 onwards seems to be in competition with Lux’s variants. These marketing wars are so fizzy and at times self-indulgent too.

A study by Harvard researchers several years ago found that in many product classes, consumers “lack either the ability or motivation to conduct a price comparison.” Their conclusions are still true today. We either can’t – or won’t – scrutinize a product price.

And how would you view this piece of advice from Robert G. Allen – the famous author of Multiple Streams of Income, and Nothing down “No matter what your product is, you are ultimately in the education business. Your customers need to be constantly educated about the many advantages of doing business with you, trained to use your products more effectively, and taught how to make never-ending improvement in their lives.”

The market consists of aware, alert, vigilant and watchful customers and also of gullible, trusting, naïve customers; God knows whether marketer are teaching the customers or customers are teaching the marketers??