p 3-Business Analysis Models

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Business Analysis Models

STRATEGY

#1 Model: Strategic Planning Model

Stage 1: Strategic Position

Stage 2: Strategic Choices

Stage 3: Strategic Implementation

#2 Model: Johnson and Scholes – Three Levels of Strategy

Corporate Strategy

Business Strategy Operational Strategy

#3 Model – Johnson and Scholes – Strategic Lenses

Design

Ideas

Experience



STAKEHOLDERS, ETHICS AND CULTURE

#4 Model: Mendelow’s Stakeholders’ Mapping

Low

Interest

High Power Low

#5 Model: Charles Handy – Types of Culture

Power culture Heavily centralized. Allows quick response to changes in environment

Few people make the decisions in the organisation Role culture Lots of formalized procedures. Very bureaucratic. Useful in an

environment that is stable.

Task culture Emphasis on getting tasks done. Work is complex. Rules are hardly

followed . Works well in complex, unstable environments.

Person culture Purpose is purely to look after the individuals

#6 Model : Miles and Snow – Strategic CulturesOrganizations and the type of strategies they try to follow

Defender

organizations

Like strategic options that have worked in the past

Low risks. Secure markets Prospector

organizations

Like options that would deliver results even if it entails high risks

Analyzer

organizations

Will move into new areas only after someone else have done so

Reactor organizations

Do not plan ahead

3. Keep Informed 1. Key Players

(Most Important

Stakeholders)

4. Minimal Effort2. Keep Satisfied



#7 Model: Johnson and Scholes - The Culture Web

Culture is made up of seven elements. Tells why we do things like we do.

Rituals and routines What procedures are emphasized?

Symbols Are status symbols used as rewards? – Employee of the month.What are rewards given for?

Control Systems What is most closely monitored?

Organizational structures How tall/flat?

Power structures How much centralization is there?

Stories Does news in the Co. focuses on successes or failures?

The Paradigm What assumptions are taken for granted?

#8 Model: Johnson and Scholes – Key Drivers of Change in the business environment

Market Globalization Worldwide customers. Facilitated mainly by the internet

Cost Globalization Worldwide suppliers. Being able to get products and services from

anywhere in the worldGlobal competition Worldwide competitors/rivals

In addition to these if you have a UK Company use:

Economic Conditions are they are at the time of the exam

Environmental The move towards more environmentally friendly products

Legal Minimum wage for unskilled labor

ENVIRONMENTAL ISSUES

#9 Model – PESTEL – How to analyse the Macro Environment

P Political Govt.’s policy on education & infrastructure

E Economic State of the economy, interest rates & tax levels

S Social Attitudes, demographics and household structures

T Technological New technologies making current products obsolete

E Environmental The move toward environmentally cleaner products

L Legal Changes in law making it harder or more expensive to operate



#10 Model - Porters 5 Forces

Competitors (new)

Entrants of new competitors cause prices to dropTo prevent new entrants barriers to entry are needed (high fixed costs

or high capital requirements)

Competitors (existing) Lots of rivalry would cause profit margins to be lower. Market growthis usually slow.

Customers Powerful customers prevent companies from increasing prices or

implementing other changes

Suppliers Powerful suppliers cannot be stopped from increasing the cost of their

supplies

Substitutes Substitutes are of three types: Direct, Indirect and Monetary

Direct – customer buys the same product from another company

Indirect – customer buys a substitute product for the original one

Monetary – customer buys a product that is not similar to the original.

E.g takes a vacation instead of purchasing a TV.

#11 Model – Porter’s National Diamond

Reasons why companies in certain countries are more competitive (successful) than others.

Factor Conditions Natural resources – timber, raw materials

Climate (some products can only grow in some countries)

Communication infrastructure (roads, bridges etc.)

Knowledge bases and logistic systems

Firm StrategyStructure &

Rivalry

Attitude to short term profits

National culture

Level of domestic rivalry

Demand Conditions Market segmentation of home market

Sophistication of buyers (Japanese demand high quality vehicles)

Position within product life cycle in home market

Anticipation of buyer needs

Related and

Supporting Industries

Strengths of suppliers

Quality of suppliers

Porter’s national diamond must only be used when a company is moving to another country. Will

it gain or lose benefits?



STRATEGIC CAPABILITY

#12 Model: The nine M Model

Nine possible areas where an organization can be strong:-

M achinery

M oney

M aterials

M en and Women

M akeup (culture)

M arkets

M anagement information

M anagement

M ethods (processes)

#13 Model: Porter’s Value Chain

Porter divides a business into nine different areas:

The five primary activities: (What customers are interested in)

Inbound logistics e.g. JIT system

Operations Manufacturing the products

Outbound logistics Getting the products to the customers

Marketing and Sales After sales service

ServiceThe four secondary activities: (what happens at Head Office)

Firm infrastructure How is the Co. organized? Tall/ flat

Human Resource mgt. The quality of staff

Technology Development Technology is anything that is not people

Procurement Buying the things that we store. Economies of scale

Who our suppliers are etc.



#14 Model Porter’s Value Network

This is an extension of the value chain to include customers and suppliers. For example:

Customers – retailer selling low priced basic products.

The customer value chain will place heavy emphasis on low cost inbound logistics means that

The manufacturer’s value chain should emphasize low cost production means that

The manufacturer will choose suppliers whose value chain emphasize low cost materials.

#15 Model: The product Life Cycle

Introduction Low sales and the problem of attracting new customers

Growth Product grows in popularity. May enter new markets

Maturity Profits at their highest but may have many rivals

Senility Sales fall to zero

#16 Model – Nanaka and Takeuchi – Tacit and explicit knowledge

Tacit knowledge is knowledge that staff possesses

Explicit knowledge is knowledge that has been recorded by the organization

Nanaka and Takeuchi say knowledge can be transferred by:

Socialization

–

informal exchanges/discussions where knowledge is shared Externalization – Formal. The knowledge is documented or recorded.

Internalization – using own ideas to

Combination – putting together different areas



STRATEGIC OPTIONS:

#17 Model: Ansoff’s Growth vector matrix

Existing Markets New Markets

New Products

Existing Products

#18 Model: Porter’s Generic Strategies One possibility is to change how the company competes. Porter describes three possibilities:

Cost Leadership Being the cheapest within a category

Product differentiation Being the best within a particular category

Focusing on a particular type of customer

#19 Model: Johnson and Scholes’ Strategic Clock Strategies can be placed on a clock

1 No frills Low price Low added valueUsed for market entry – need a great deal of customers who are price conscious

2 Low price Low Price Medium added valueUse cost leadership to provide a better value product than rivals

3 Hybrid Low price High added value Needs low cost base (economies of scale). Can be used short term for the market entry or to build up market

share.

4 Differentiation Medium Price High added value Aim is to build up market share by charging reasonable price

5 Focused differentiation High Price Medium added value Looks for high premium for high degree of differentiation

6 Failing strategy High Price Medium added value

7 Failing Stretegy High Price Low added value

8 Failing Strategy Medium price Low added value

Product Development

Diversification

- Direct

- Indirect

Market Penetration Market Development



#20 Model: The BCG MatrixLow Market Share High

High

Market

Growth

Low

STRATEGIC CHOICE:

#21 Model: Johnson and Scholes - Strategic RationaleThe three ways that Head Office can create value in the business

Portfolio Managers These businesses find undervalued companies, acquire them and then aim to

improve profitability.

Synergy managers These businesses look for synergy between existing and future SBUs.

Parental developers These companies look to use the competencies based at Head Office, such as tight

financial control, to improve the performance of all SBUs.

#22 Model: The Ashridge Portfolio ModelThis model links with the Strategic Rationale Model to see which divisions are the most useful to

keep and which should be closed or sold off.

Feel(How much overlap between the CSFs of the division and the parent)

High Benefits/Low Field

Value Trap (business may not be of benefit

unless the parent can develop itsskills)

High Feel/High Benefits

Heartland Business

(Parent should concentrate on thesebusinesses)

Low Field/Low Benefits

Alien Business(should be sold out)

High Feel/Low Benefits

Ballast Business(parent should leave business to

run on its own)

Question mark Stars

Dogs Cash Cows



#23 Model: Johnson and Scholes SFA testJohnson and Scholes suggest that for any option to be considered seriously it must pass threetests.

Suitable

Feasible

Acceptable

MARKETING:

#24 Model: Value Based Marketing

#25 Model: The Marketing MixThe marketing mix states that once a market segment has been identified then the following

needs to be decided.

Product Price

Place

IMPROVING BUSINESS PROCESSES

#26 Model: Hammer and Champy – Business process re-engineering (BPR)The ideas behind BPR are:

Managers try to see how processes affect each other

Try to think of one continuous process from when the customer makes contact with the

company until payment is received This long process can then be broken down into a number of smaller processes

IT can be used to make processes more efficient /effective

Look at the processes from the customers point of view

#27 Model: Rummler and Brache – Gaps and DisconnectsThe emphasis in this model is on the problems involved when different department need to

communicate. This identifies three levels where problems occur.

The organization as a whole

The process

The job

They also divide the types of problems into three kinds:

Those to do with departments trying to pursue different goals Those to do with processes being poorly designed or being implemented poorly Those to do with processes being managed poorly



#28 Model: Harmon’s Process Strategy Matrix There are four approaches to change depending on:

Is the process strategically important? (does it tie up with SWOT?)

Is the process complex?This leads to

High Importance/Complex processes – focusing on staff High Importance/Simple - Use an automated ERP solution

Low Importance/Complex – Outsource

Low Importance/Simple – Automate

Low Complexity High

ERP(Bespoke Enterprise Resource Planning

System)

High Importance/Low Complexity

STAFF(make sure they are able to do it)

High Complexity/High Importance

AUTOMATE(off the shelf system)

Low Complexity/Low Importance

OUTSOURCE(Marketing. IT)

High Complexity/Low Importance

#29 Model: Skidmore and Eva – Stages in selecting softwareWhen a company decides to purchase a specially written package (bespoke model) there are five

stages it goes through.

Obtain tenders

First pass selection

Second pass selection Implementation

Managing long term relationships



E-BUSINESS:

#30 Model: Mc Farland’s Grid This looks at how important IT is to the organization in particular how it can help with the

organization’s strategy

The grid looks at:

The impact of current IT systems on gaining an advantage

The potential impact of future IT systems on gaining an advantage

Current High/Future Low

Factory Position

Current High/Future High

Strategic

Current Low/Future Low

Support

Future High/Current Low

Turnaround

# 31 Model: Nolan’s use of IT within the organizationNolan argues that organizations go through six distinct stages in their use of IT

Initiation – use of IT for support functions

Contagion – rapid and uncoordinated growth in the use of IT

Control – senior management attempt to control the use of IT, often preventing newdevelopments

Integration – IT hardware is used to support the organization’s strategy

Data Administration – the emphasis switches to using information and knowledgerather than the technology

Maturity – IT and information are used to support the organization’s strategy

Like with all other types of strategy we should ensure that any approach to e-commerce is

Suitable

Feasible

Acceptable

#32 Model: The 6 I’s of e-marketing

Interactivity

Integration

Intelligence

Industry

Independence

Individualisation



#33 Model: Adcock’s guide to Customer Relationship Management (CRM) In order to build relationships with customers, businesses need to:

Build a customer database

Develop customer oriented service systems

Have more direct contacts with customers

#34 Model: The customer life cycleThe relationship with customers goes through four stages.

Customer selection – what type of customer do we want?

Customer acquisition – pursuing the customer to buy for the first time

Customer retention – keeping the existing customers by continually meeting their needs

Customer extension – persuading existing customers to buy more through:

o Upgrading to newer versions

o Upgrading to more expensive versions

o Cross-selling

PEOPLE IN ORGANISATION:

# 35Model: Mintzberg’s Structural configurations Mintzberg divides the organization into six areas:

Ideology – the culture of the organization

Strategic Apex – senior management

Middle Line – middle managers

Operating core – employees directly involved in the production of goods and services

Technostructure – providing technical support

Support staff – providing general support

Mintzberg then classifies organizations based on which of the areas are most important

Machine bureaucracy – operating core is the most important

Simple structure – strategic apex is the most important



# 36 Model: Hackman characteristics of job enrichment

Range of skills and talents

Task closure

Task significance

Autonomy

Feedback

Japanese managementThis includes a number of techniques:

Total Quality Management (TQM)

Cellular manufacturing where multi-skilled teams of workers are responsible for thecomplete assembly of something

Just-in-time manufacturing

Job re-engineering

This is simply the change in the tasks of an individual after the business processes have

been re-engineered. This is likely to be significant if IT is being used to radically alter the process.

PROJECT MANAGEMENT

#37 Model: Tuckman’s stages of Group Formation

Forming

Storming

Norming

Performing

#38 Model: Belbin’s Personality Mix

Co-ordinator

Shaper

Plant

Monitor-evaluator

Resource-investigator

Implementer

Team worker Finisher



CHANGE AND DEVELOPMENT

#39 Model: Johnson and Scholes – Types of Change

There are two aspects to change:

The scope of the change – minor or fundamental The nature of the change – gradual or sudden

Johnson and Scholes then classify change as:

Adaptation – minor and gradual

Reorganization – minor and sudden

Evolution – fundamental and gradual

Revolution – fundamental and sudden

#40 Model: Balogun and Hope Hailey – Acceptance of Strategic Change

Fundamental change is likely to be resisted unless there are good reasons for stakeholders to

accept it.

Balogun and Hope Haley list the contextual features which stakeholders will consider:

Time – is the organization in a crisis or is there time for gradual change?

Scope – will many people/divisions/depts.. be affected or just a few?

Preservation – are there processes, competences and staff that will need to be retained?

Diversity – different parts of the business may have their own culture and interests. Will

the proposed change impact on these?

Capability – do senior mgt. have the knowledge and experience to deal with change?

Capacity – does the organization have the resources required to undertake the change?

Readiness – are the key stakeholders aware of why change is needed and are they likely

to accept it?

Power – can senior managers force change even if it is against the wishes of other

stakeholders?

They argue that it is necessary to answer all the above questions before change is implemented.



#41 Model: Lewin’s Force Field Analysis

Lewin identifies that there are always two forces at work whenever change is being considered:

Driving Force

Restraining Force

He argues that change will not take place unless the driving force outweighs the restraining ones.

To do this:

Build up the driving forces

Reduce the restraining forces

#42 Model: Maurik – Qualities of the Transformational Leader

Leaders in a dynamic environment need to:

Change from within

Empower others

Work with teams

Provide clarity of direction

To be visionary

#43 Model: Lewin’s 3 step process

Lewin identifies that three stages are necessary for something to change

Unfreeze – it must be accepted that change is needed

Change – the change takes place

Refreeze – it should be made difficult to go back to the earlier position



#44 Model: Johnson and Scholes - Approaches to Change Management

The approaches to change management are:

Participation – involving employees directly in decision-making

Coercion – forcing employees to accept change Negotiation – employees and employer bargain over approach and goals.

In addition:

Education – mgt explain what is happening and why

Support – mgt provide counseling and other services to help individuals

Finally:

Manipulation – mgt. only tell employees information which supports change, not telling them

information which would build resistance.

#45 Model: Johnson and Scholes – management of Turnaround

The seven elements to successfully turnaround a company are:

Crisis stabilization – stop things from getting worse

Changes to management – fire some managers

Communication with stakeholders – tell them the what and the why

Attention to target markets Concentration of effort – concentrate on core business

Financial restructuring – turning debts to equity

Prioritization – do most urgent things first

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