Strategic Analysis. Answer Three Questions Answer Three Questions –Where is the organization now?...
-
Upload
lorin-snow -
Category
Documents
-
view
218 -
download
1
Transcript of Strategic Analysis. Answer Three Questions Answer Three Questions –Where is the organization now?...
Strategic AnalysisStrategic Analysis
Answer Three QuestionsAnswer Three Questions– Where is the organization now?Where is the organization now?– Where will the organization be in a Where will the organization be in a
few years – if no changes are madefew years – if no changes are made– What specific actions should What specific actions should
management take if they don’t like management take if they don’t like the answer to #2the answer to #2
Decision Making ProcessDecision Making ProcessP. 12-13P. 12-13
EvaluateCurrentPerformance
Examine &Evaluate theCurrent: - Mission - Objectives - Strategies - Policies
InterviewStrategicManagers: - BOD - Top Mgmt
Decision Making ProcessDecision Making Process
ScanExternalEnvironment - Societal - Tasks
ScanInternalEnvironment - Structure - Culture - Resources
SelectStrategicFactors- Opportunities - Threats
SelectStrategicFactors- Strengths- Weaknesses
AnalyzeStrategicFactors(SWOT) in light ofCurrentSituation
Decision Making ProcessDecision Making Process
Review andRevise asNecessary: - Mission - Objectives
Generate &EvaluateStrategicAlternatives
Select &RecommendBestAlternatives
Decision Making ProcessDecision Making Process
ImplementStrategies: - Programs - Budgets - Procedures
Evaluate AndControl
GoBack ToStep 1
EvaluateCurrentPerformance
Decision Making ProcessDecision Making Process
Customers
Revenue
Operations
P & LBal SheetS & U F
SalesMarketing
HRMIS
Admin
External EnvironmentExternal Environment
General
Env
iron
men
t
General
Environment
Gen
eral
Environm
ent
Socio-culturalSocio-cultural
Global
Global
TechnologicalTechnologicalPo
litic
al/L
egal
Polit
ical
/Leg
al
Dem
ogra
phic
Dem
ogra
phic E
conomic
Econom
icIndustryIndustry
EnvironmentEnvironmentThreat of new entrantsThreat of new entrants
Power of suppliersPower of suppliersPower of buyersPower of buyers
Product substitutesProduct substitutesIntensity of rivalryIntensity of rivalry
CompetitorCompetitorEnvironmentEnvironment
External EnvironmentExternal Environment
A continuous process which includesA continuous process which includes• ScanningScanning: Identifying early signals of : Identifying early signals of
environmental environmental changes and trendschanges and trends
• MonitoringMonitoring: Detecting meaning through : Detecting meaning through ongoing observations of environmental ongoing observations of environmental changes and trendschanges and trends
• ForecastingForecasting: Developing projections of : Developing projections of anticipated outcomes based on monitored anticipated outcomes based on monitored changes and trendschanges and trends
• AssessingAssessing: Determining the timing and : Determining the timing and importance of environmental changes and importance of environmental changes and trends for firms’ strategies and their trends for firms’ strategies and their managementmanagement
Industry Industry EnvironmentEnvironment
Threat of New Entrants
Threat of New Entrants
Barg
ain
ing P
ower
Barg
ain
ing P
ow
er
of S
upplie
rs
of S
upplie
rs
Bargaining Power Bargaining Power of Buyersof Buyers
Thre
at of
Thre
at of
Substitu
te
Substitu
te
Products
Products
Rivalry A
mong
Rivalry A
mong
Competing Fi
rms
Competing Fi
rms
Five Forces ofFive Forces ofCompetitionCompetition
Threat of New EntrantsThreat of New EntrantsBarriers to EntryBarriers to Entry
Economies of scaleEconomies of scale Product differentiationProduct differentiation Capital requirementsCapital requirements Switching costsSwitching costs Access to distribution channelsAccess to distribution channels Cost disadvantages independent of Cost disadvantages independent of
scalescale Government policyGovernment policy Expected retaliationExpected retaliation
Bargaining Power of SuppliersBargaining Power of Suppliers
Dominated by a few large companiesDominated by a few large companies Satisfactory substitute products are not Satisfactory substitute products are not
availableavailable Industry firms are not a significant customer Industry firms are not a significant customer
for the supplier groupfor the supplier group Suppliers’ goods are critical to buyers’ Suppliers’ goods are critical to buyers’
marketplace successmarketplace success Effectiveness of suppliers’ products has Effectiveness of suppliers’ products has
created high switching costscreated high switching costs Suppliers are a credible threat to integrate Suppliers are a credible threat to integrate
forward into the buyers’ industryforward into the buyers’ industry
Bargaining Power of Buyers Bargaining Power of Buyers (Customers)(Customers)
They purchase a large portion of an They purchase a large portion of an industry’s total outputindustry’s total output
Sales of the product being purchased Sales of the product being purchased account for a significant portion of the account for a significant portion of the seller’s annual revenuesseller’s annual revenues
They could easily switch to another productThey could easily switch to another product The industry’s products are undifferentiated The industry’s products are undifferentiated
or standardized, and buyers pose a credible or standardized, and buyers pose a credible threat if they were to integrate backward into threat if they were to integrate backward into the seller’s industrythe seller’s industry
Threat of Substitute ProductsThreat of Substitute Products
Customers face few switching costsCustomers face few switching costs Substitute product’s price is lowerSubstitute product’s price is lower Substitute product’s quality and Substitute product’s quality and
performance capabilities are equal to or performance capabilities are equal to or greater than those of the competing greater than those of the competing productproduct
Intensity of RivalryIntensity of Rivalry
Are numerous or equally balancedAre numerous or equally balanced Experience slow industry growthExperience slow industry growth Have high fixed costs or high storage Have high fixed costs or high storage
costscosts Lack differentiation or low switching Lack differentiation or low switching
costscosts Experience high strategic stakesExperience high strategic stakes Have high exit barriersHave high exit barriers
Components ofComponents ofInternal AnalysisInternal Analysis
Discovering CoreDiscovering CoreCompetenciesCompetencies
ResourcesResources• TangibleTangible• IntangibleIntangible
CapabilitiesCapabilities
CoreCoreCompetenciesCompetencies
CompetitiveCompetitiveAdvantageAdvantage
StrategicStrategicCompetitivenessCompetitiveness
Four CriteriaFour Criteriaof Sustainableof SustainableAdvantagesAdvantages
• ValuableValuable• RareRare• Costly to ImitateCostly to Imitate• Non-substitutableNon-substitutable
ValueValueChainChain
AnalysisAnalysis
• OutsourceOutsourceCorporate CultureR & DCapital SituationTechnology
Marketing Mix
ServiceService
Marketing & SalesMarketing & Sales
Outbound LogisticsOutbound Logistics
OperationsOperations
Inbound LogisticsInbound LogisticsFirm
Inf
rast
ruct
ure
Firm
Inf
rast
ruct
ure
Hum
an R
esou
rce
Mgm
t.H
uman
Res
ourc
e M
gmt.
Tec
hnol
ogic
al D
evel
opm
ent
Tec
hnol
ogic
al D
evel
opm
ent
Pro
cure
men
tP
rocu
rem
ent
Margin Margin
Primary ActivitiesPrimary Activities
Sup
port
Act
ivit
ies
Sup
port
Act
ivit
ies
The BasicThe BasicValue ChainValue Chain
Quiz – Question 1Quiz – Question 1
1.1. When an organization is evaluating its When an organization is evaluating its strategic position, which is NOT one of the strategic position, which is NOT one of the strategic questions it should ask itself?strategic questions it should ask itself?A.A. Where is the organization now?Where is the organization now?
B.B. How can functional and operational areas be How can functional and operational areas be improved?improved?
C.C. If no changes are made, where will the If no changes are made, where will the organization be in one year?organization be in one year?
D.D. If the evaluation is negative, what specific If the evaluation is negative, what specific actions should management take?actions should management take?
E.E. If no changes were made, where will the If no changes were made, where will the organization be in 10 years?organization be in 10 years?
Quiz – Question 1Quiz – Question 1
1.1. When an organization is evaluating its When an organization is evaluating its strategic position, which is NOT one of the strategic position, which is NOT one of the strategic questions it should ask itself?strategic questions it should ask itself?A.A. Where is the organization now?Where is the organization now?
B.B. How can functional and operational areas be How can functional and operational areas be improved?improved?
C.C. If no changes are made, where will the If no changes are made, where will the organization be in one year?organization be in one year?
D.D. If the evaluation is negative, what specific If the evaluation is negative, what specific actions should management take?actions should management take?
E.E. If no changes were made, where will the If no changes were made, where will the organization be in 10 years?organization be in 10 years?
Quiz – Question 2Quiz – Question 2
2.2. Strategic planning within a small Strategic planning within a small organization organization
A.A. May be informal and irregularMay be informal and irregular
B.B. Must be elaborate to allow for future growthMust be elaborate to allow for future growth
C.C. Should be formalized and explicitly statedShould be formalized and explicitly stated
D.D. Should be done by the President onlyShould be done by the President only
E.E. Is unnecessary and a waste of timeIs unnecessary and a waste of time
Quiz – Question 2Quiz – Question 2
2.2. Strategic planning within a small Strategic planning within a small organization organization
A.A. May be informal and irregularMay be informal and irregular
B.B. Must be elaborate to allow for future growthMust be elaborate to allow for future growth
C.C. Should be formalized and explicitly statedShould be formalized and explicitly stated
D.D. Should be done by the President onlyShould be done by the President only
E.E. Is unnecessary and a waste of timeIs unnecessary and a waste of time
Quiz – Question 3Quiz – Question 3
3.3. Research done by Henry Mintzberg Research done by Henry Mintzberg suggests that strategy formulationsuggests that strategy formulation
A.A. Is irregular and a discontinuous processIs irregular and a discontinuous process
B.B. Should be followed unswervingly to ensure Should be followed unswervingly to ensure success of the plansuccess of the plan
C.C. Is worthlessIs worthless
D.D. Should be reviewed after a specific interval of Should be reviewed after a specific interval of time to make sure it is still applicabletime to make sure it is still applicable
E.E. Is merely a checklist of actions following a logical Is merely a checklist of actions following a logical processprocess
Quiz – Question 3Quiz – Question 3
3.3. Research done by Henry Mintzberg Research done by Henry Mintzberg suggests that strategy formulationsuggests that strategy formulation
A.A. Is irregular and a discontinuous processIs irregular and a discontinuous process
B.B. Should be followed unswervingly to ensure Should be followed unswervingly to ensure success of the plansuccess of the plan
C.C. Is worthlessIs worthless
D.D. Should be reviewed after a specific interval of Should be reviewed after a specific interval of time to make sure it is still applicabletime to make sure it is still applicable
E.E. Is merely a checklist of actions following a logical Is merely a checklist of actions following a logical processprocess
Quiz – Question 4Quiz – Question 4
4.4. Which of the following is NOT one of the five Which of the following is NOT one of the five triggering events that are the stimulus for a triggering events that are the stimulus for a strategic change?strategic change?
A.A. Intervention by the organization’s bankIntervention by the organization’s bank
B.B. Entrance of a new competitor into the industryEntrance of a new competitor into the industry
C.C. Change in ownership of the organizationChange in ownership of the organization
D.D. New CEONew CEO
E.E. Decreased profitabilityDecreased profitability
Quiz – Question 4Quiz – Question 4
4.4. Which of the following is NOT one of the five Which of the following is NOT one of the five triggering events that are the stimulus for a triggering events that are the stimulus for a strategic change?strategic change?
A.A. Intervention by the organization’s bankIntervention by the organization’s bank
B.B. Entrance of a new competitor into the industryEntrance of a new competitor into the industry
C.C. Change in ownership of the organizationChange in ownership of the organization
D.D. New CEONew CEO
E.E. Decreased profitabilityDecreased profitability
Quiz – Question 5Quiz – Question 5
5.5. Which of the following is an example of a Which of the following is an example of a strategy?strategy?
A.A. Diversify the product line to appeal to more peopleDiversify the product line to appeal to more people
B.B. Increase sales by 10% over last yearIncrease sales by 10% over last year
C.C. Pay highest salaries to keep high quality Pay highest salaries to keep high quality employeesemployees
D.D. Develop and sell quality appliances world-wideDevelop and sell quality appliances world-wide
E.E. Divide a sales region into a group of sales districtsDivide a sales region into a group of sales districts
Quiz – Question 5Quiz – Question 5
5.5. Which of the following is an example of a Which of the following is an example of a strategy?strategy?
A.A. Diversify the product line to appeal to more peopleDiversify the product line to appeal to more people
B.B. Increase sales by 10% over last yearIncrease sales by 10% over last year
C.C. Pay highest salaries to keep high quality Pay highest salaries to keep high quality employeesemployees
D.D. Develop and sell quality appliances world-wideDevelop and sell quality appliances world-wide
E.E. Divide a sales region into a group of sales districtsDivide a sales region into a group of sales districts
Analysis Tools – SWOTAnalysis Tools – SWOTChapter 5Chapter 5
Strengths Strengths
WeaknessesWeaknesses
OpportunitiesOpportunities
ThreatsThreats
Strategy Development - TOWSStrategy Development - TOWS
TOWS Analysis Opportunity Threat
Strength O/S Strategies T/S Strategies
Weakness O/W Strategies T/W Strategies
Identify strategies that focus the organization’s strengths on opportunities
Identify strategies that shore up weaknesses
Identify strategies that shore up weaknesses to allow the pursuit of opportunities
Identify strategies that focus strengths against threats
SWOT Example – Bicycle Co.SWOT Example – Bicycle Co.
Strengths Strengths – InnovationInnovation– QualityQuality– Brand in Brand in
segmentsegment– Flexible Flexible
manufacturingmanufacturing WeaknessesWeaknesses
– CostCost– Financial sizeFinancial size
OpportunityOpportunity– International International
growthgrowth– Dirt bikesDirt bikes
ThreatsThreats– Lower cost, higher Lower cost, higher
quality competitionquality competition– Flattening demandFlattening demand
TOWS Example – Bicycle Co.TOWS Example – Bicycle Co.
TOWS Analysis Opportunity• International• Dirt bikes
Threat•Flat demand•Lower cost, higher quality
Strength• Innovation• Quality• Brand in segment• Flexible manufacturing
O/S Strategies T/S Strategies
Weakness
• Cost• Financial size
O/W Strategies T/W Strategies
• Grow international• Develop/enter dirt bikes
• Grow international• Develop/enter dirt bikes
•Grow international to increase economies of scale
•Int’l alliances
• Grow international• Develop/enter dirt bikes