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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
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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
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#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
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#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?
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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.
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#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
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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
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#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
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#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
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#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
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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
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#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
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# 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
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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.
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#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
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#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