STRATEGIC FRAMEWORKPrepared for course of Information System Strategic Planning

Engineering Aspect

4th Topic

Source:

1. John Ward & Joe Peppard, Strategic Planning for Information System, John Wiley & Sons, Ltd, 3rd ed, 2003

2. Strategic Management of Information Systems, Keri Pearlson & Carol Saunders, John Wiley & Sons, Inc, 2010.

3. Chartered Institute of Personnel and Development (CIPD). http://www.cipd.co.uk/hr-resources/factsheets/pestle-analysis.aspx

4. Husni S. Sastramihardja, Course Handout, 2013

5. James Cadle, Debra Paul, Paul Turner, Business Analysis Techniques - 72 Essential Tools for Success, British Informatics Society Limited, 2010.

Strategy Analysis Strategy Definition

External Business Environment

- PEST(LE)

- 5 Competitive Forces

Internal Capability

- MOST

- Resource Audit

- BCG Matrix

- SWOT Analysis

- Ansoff’s Matrix

- Porter’s

Competitive

Strategy

Strategy

Evaluation

- CSF & KPI

- BSC

STAGE

TOOLS

Strategy

Implementation

- McKinsey 7S

Model

- 4 View Model

Source: - James Cadle, Debra Paul, Paul Turner, Business Analysis Techniques - 72 Essential Tools for Success, British Informatics

Society Limited, 2010.- John Ward & Joe Peppard, Strategic Planning for Information System, John Wiley & Sons, Ltd, 3rd ed, 2003

Objectives Where are we now?Strengths & Weaknesses

Identify future strategies

Value System

Threats and Opportunities

Evaluate

Select

Implement

Analysis ofInternal resourcesand competencies

Feedback

MonitorAnd Control

Organizational Values

Management Values

Market analysis

Competitive analysisPEST analysisIndustry analysis

Share Holders

Allocation of Created Wealth

Customers

Public

PRESSURE GROUPS

Media Shareholders Competitors Suppliers Government

Unions

Customers

Public

Financial Institutions

Employees

STAKEHOLDERS

Suppliers Unions Employees Government

- Demanding recognition and rapid management response

Demanding ‘fair share’ of created wealth -

Technological

Political

EXTERNAL ENVIRONMENT - More rapid change and increasingly global influences

Monitoring Signals from the Environment Economic Social

Ecological Legal

Sumber: John Ward & Joe Peppard, Strategic Planning for Information System, John Wiley & Sons, Ltd, 3rd ed, 2003

Objectives Where are we now?Strengths & Weaknesses

Identify future strategies

Value System

Threats and Opportunities

Evaluate

Select

Implement

Analysis ofInternal resourcesand competencies

Feedback

MonitorAnd Control

Organizational Values

Management Values

Market analysis

Competitive analysisPEST analysisIndustry analysis

Share Holders

Allocation of Created Wealth

Customers

Public

PRESSURE GROUPS

Media Shareholders Competitors Suppliers Government

Unions

Customers

Public

Financial Institutions

Employees

STAKEHOLDERS

Suppliers Unions Employees Government

- Demanding recognition and rapid management response

Demanding ‘fair share’ of created wealth -

Technological

Political

EXTERNAL ENVIRONMENT - More rapid change and increasingly global influences

Monitoring Signals from the Environment Economic Social

Ecological Legal

Sumber: John Ward & Joe Peppard, Strategic Planning for Information System, John Wiley & Sons, Ltd, 3rd ed, 2003

PEST(LE)

5 Competitive Forces

MOST Resource Audit

SWOT Analysis

Ansoff’s Matrix

BCG Matrix

Porter’s Competitive

Strategy

PEST(EL):APPLICABILITY OF THE FACTORS

• The model's factors will vary in importance to a given company based on its industry and the goods it produces.

• Consumer and B2B companies tend to be more affected by the social factors

• Global defense contractor would tend to be more affected by political factors.

• A company which has borrowed heavily will need to focus more on the economic factors (especially interest rates).

• Conglomerate companies who produce a wide range of products (such as Sony, Disney, or BP) may find it more useful to analyze one department of its company at a time with the PESTEL model, thus focusing on the specific factors relevant to that one department. A company may also wish to divide factors into geographical relevance, such as local, national, and global (also known as LONGPESTEL).

VALUE THE IMPACT?

• About your organization.How might the factors listed on below impact your business or part of the organization?

• How about the impact?• H – High

• M – Medium

• L – Low

• U – Undetermined

• Time Frame:• 0 – 6 months

• 6 – 12 months

• 12 – 24 months

• More than 24 months

EXAMPLE OF POLITICAL FACTOR

• ecological/environmental current legislation

• future legislation

• international legislation

• regulatory bodies and processes

• government policies

• government term and change

• trading policies

• funding, grants and initiatives

• home market pressure- groups

• international pressure- groups

• wars and conflicts

EXAMPLE OF ECONOMIC FACTOR

• home economy

• economy trends

• overseas economies

• general taxation

• taxation specific to product/services

• seasonality issues

• market/trade cycles

• specific industry factors

• market routes trends

• distribution trends

• customer/end-user drivers

• interest/ exchange rates

• international trade and monetary issues

EXAMPLE OF SOCIAL FACTOR

• lifestyle trends

• demographics

• consumer attitudes and opinions

• media views

• law changes affecting social factors

• brand, company, technology image

• consumer buying patterns

• fashion and role models

• major events and influences

• buying access and trends

• ethnic/religious factors

• advertising and publicity

• ethical issues

EXAMPLE OF TECHNOLOGICAL FACTOR

• competing technology development

• research funding

• associated/dependent technologies

• replacement technology/solutions

• maturity of technology

• manufacturing maturity and capacity

• information and communications

• consumer buying mechanisms/technology

• technology legislation

• innovation potential

• technology access, licencing, patents

• intellectual property issues

• global communications

EXAMPLE 1: SCHOOL

EXAMPLE OF PEST ANALYSIS FOR SCHOOL

(POLITICAL)Are factors positive or negative?

• Schools being privatised

• A government initiative creates the risk that the school may fail to deliver the policy or be diverted away from local priorities etc.

• Changes to the skills required to be a teacher/ tutor

• Changes to curriculum with short lead times

• Requirement to be self managing

• Requirement to be self financing

• new legislation may create risks of non-compliance with the law, create new administrative burdens etc

• Changes to child protection legislation

• Raise the age of school leaving age

• Raise/ lower the age of starting school. Nursery/ kindergarten

• Change to school opening hours

• Changes to funding of charity based organisations

• Health & safety legislation

EXAMPLE OF PEST ANALYSIS FOR SCHOOL

(ECONOMIC)Are factors positive or negative?

• Central or local government funding decisions may affect school/ establishment finances

• Closure of a local industry may affect fund raising plans etc.

• Ability of parents to raise funds for optional activities

• The need to run breakfast/ after schools clubs

• Ability to invest ’savings/ surpluses’

• Cost of providing resources:• Staff – teaching & support• Basics – books/ paper• Technology solutions laptops etc

• Interest rates

• Shortages of materials on national/ international markets

• Over provision of school places in the area resulting in competition from neighbouring schools

• The risk of highly valued, key staff moving on to more ‘up and coming’ schools/ academies

EXAMPLE OF PEST ANALYSIS FOR SCHOOL(SOCIAL)

Are factors positive or negative?

• Increase in birth rate, reflecting national trends

• Local population changes (increasing/ decreasing numbers)

• Demographic changes may affect likely pupil rolls or the nature of pupils needse.g. pupils with English as a second language etc.

• Closure of local firms providing employment

• Inability to attract staff

• Social networking – blogs, facebook, twitter

• Changes to qualifications expected

• Integration with local community

• Integration of students with special needs

• parental preference – an increase in ‘parent power’ has allowed parents more freedom of choice over their child’s school

• the risk of highly valued, key staff moving on to more up-and-coming establishments

• Information is accessible to staff anywhere in the world via the Internet

• Staff were not given enough training or access to effectively change their habits and how they expected information to be made available

EXAMPLE OF PEST ANALYSIS FOR SCHOOL

(TECHNOLOGICAL)Are factors positive or negative?

• Changes to standards/ equipment required

• Risk of selecting the wrong technology at times of change (i.e. windows -v- open source)

• New computer viruses may affect school/ college operations,

• Disturbing/ illegal images on the internet may affect ICT security measures etc.

• Move from paper based books to e-book readers

• Computer hardware being out of date

• Computer software being out of date

• Time to manage IT systems

PORTER’S 5 COMPETITIVE FORCES

• To sustain long-term profitability we must respond strategically to competition.

• Established rivals compete intensely on price

• Savvy customers can force down prices

• Powerful supplier may constrain profits

• Aspiring entrants can ratchet up the investment required for company to stay in the game

• Substitute offerings can lure customers away

• We could identify that there are pressures, or threats, from competitors and new entrants, whereas the relationships with the buyers and the suppliers are in the company’s favour – these present opportunities.

EXAMPLES: PRIMARY SCHOOL• Threat of New Entrants: New School, New Program

• The government regulations prevent new entrants enter the education sector.

• New entrants need more time to build new brand.

• Bargaining Power of Buyers: Parental / student’s preference

• Parents prefer high quality of education system

• Bargaining Power of Suppliers: Faculty/teacher, or other suppliers.

• Professional faculty with high teaching experience might costs higher

• Other suppliers: Catering services, Laboratorium facilities, etc.

• Threat of Substitutes: Home schooling, online school

• People’s interest in home schooling are low

• People’s trust in online course are low

• Industry Competitors: Other private/public school with different facilities, resources, or qualities

IMPLICATION TO STRATEGY

• Position the company where the forces are weakest

• Ex: RSBI focus on niche market which are less price sensitive

• Exploit changes in the forces

• Ex: iTunes change the music industry forces

• Reshape the forces

Ex:

• standardize education process/ curriculum so school can switch the faculty more easily.

• Improve services to keep the customers

• Invest more to differ significantly among competitors

• etc.

Sumber: Strategic Management of Information Systems, Keri Pearlson & Carol Saunders, John Wiley & Sons, Inc, 2010.

19

Five competitive forces with potential strategic use of information

resources.

5. Industry

Competitors

2. Bargaining

Power of Buyers

3. Bargaining

Power of

Suppliers

1. Potential

Threat of New

Entrants

4. Threat of

Substitute

Products

Strategic Use- Cost-effectiveness- Market access

- Differentiation of product or service

Strategic Use- Switching costs- Access to

distribution channels- Economies of scale

Strategic Use- Buyer selection- Switching costs- Differentiation

Strategic Use- Redefine products

and services- Improve

price/performance

Strategic Use- Selection of

supplier- Threat of

backward integration

INDIVIDUAL EXERCISE

• Analyze external business environment (in selected domain) using PEST and 5 Competitive Forces.

• Exercise should be conducted during class hour.

• Submit the results in the end of class hour (hardcopy)

GROUP ASSIGNMENT

• Select domain of exploration

• Analyze external business environment (in selected domain) using PEST and 5 Competitive Forces.

• Assignment due: Friday, 3 May 2013, 15.00 WIB

• Send to dicky.p.satya@gmail.com

• Subject: Tugas 1 Kelompok X – PEST & 5 Competitive Forces

• File format: Microsoft Word

• Filename: Tugas 1 Kelompok X – PEST & 5 Competitive Forces.doc