Capstone: Strategy

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REVIEWING THE BIG PICTURE

A tutorial of what you have already learned in Weeks 1 to 11

MBA600 Week 12

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DO NOT REMOVE THIS NOTICE.

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WEEK 12 FOCUSES ON ONE LEARNING OBJECTIVE

Discuss and translate theory, skills and knowledge into effective management practice.

Other learning objectives Acquire advanced knowledge and apply it in real workplace contexts to improve performance and competitive advantage. Critically assess a diverse range of theories accumulated throughout the Masters’ qualification and the connections that exist between each one. Undertake independent research to solve complex business problems.

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WHAT IT IS AND ISN’T

our agenda

OUR TUTORIAL OBJECTIVES

Week 12 is a review of MBA600

We will highlight the important points for a deep understanding of business strategy

It is not a workshop to present new concepts

So … look through the slides and reassure yourself that you understand the important points

Ask questions and participate in discussions

Get the most from the tutorial

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STRATEGY CONCEPTS

MBA600 Week one

Strategy theories

Competitive advantage

Strategic complexity

Dynamic Capabilities

Industry Change

Sustainable Performance

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HOW DO FIRMS CREATE

COMPETITIVE ADVANTAGE?

DEFINITIONS

‘When two or more firms compete within the same market, on firm possesses a competitive advantage over its rivals with it earns (or has the potential to earn) a persistently higher rate of profit.’ (Grant, 2016, p. 169)

The key research question What mix of capabilities and resources does a firm possess that would create profits above the industry average?

Capability means a firm’s capacity to successfully perform a unique business activity

Resources mean the factors of production Land: natural resources

Labour: human resources, knowledge, automation

Capital: finance, access to funding

RESULTS ARE HIGHER RATES OF PROFIT

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RECALL WHAT YOU LEARNED IN THE MBA the core subjects

CORE SUBJECT QUICK SUMMARY MBA401 People, Culture and Contemporary Leadership key concepts in managing the human resources

MBA402 Governance, Ethics and Sustainability the role of the board in the assessment of strategy and risk

MBA403 Financial and Economic Interpretation and Communication

assessing the liquidity, performance, and financial position of a company

MBA404 Consumer Behaviour and Marketing Psychology

how consumer behaviour is linked to business strategy for market share

MBA501 Dynamic Strategy and Disruptive Innovation developing corporate strategy; creating value through innovation; and applying dynamic capabilities

MBA502 Emotional Intelligence, Cultural Intelligence, and Diversity

appraising cultural differences are within the organisation

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MBA600 SUBJECT LEARNING OUTCOMES

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LEARNING OUTCOME 1:

CRITICALLY ASSESS A DIVERSE RANGE OF

THEORIES

Sources of Competitive Advantage Low cost or differentiation

Competitive rivalry Porter’s 5 Forces

SWOT and PESTLE Market and industry risk

Resource-based View VRIN model of assets

Distinctive Capabilities Business Model Canvas

Performance of Strategy Balanced Scorecard

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LEARNING OUTCOME 2:

APPLY KNOWLEDGE IN WORKPLACE

CONTEXTS

Industry Research Opportunities to change industry profitability

Competitive Differentiation Sources of competitive advantage

Financial Performance Analysis Commercial feasibility of change

Leadership and Resource Endowments Distinctive Capabilities

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LEARNING OUTCOME 3: SOLVE COMPLEX

BUSINESS PROBLEMS

Apply MBA subjects and specialisations to research key strategy problems in a company of your choice

Australian and New Zealand Standard Industrial Classification codes Search Wikipedia for Australian and New Zealand Standard Industry Classification codes

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LEARNING OUTCOME 4:

PLAN TO IMPLEMENT STRATEGY IN

MANAGEMENT PRACTICE

Porter’s Five Forces Model

SWOT and PESTLE

Resource-based View

McKinsey 7S Model

Business Model Canvas

Balanced Scorecard

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INTERNAL SOURCES OF

COMPETITIVE ADVANTAGE

MBA600 WEEK 2

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STRATEGIES FOR A COST ADVANTAGE

Economies of scale From technology inputs From large output From specialisation

Economies of learning Experience curve, or ‘learning by doing’

Process technology and process design

Increase productivity

Product design Reduce operating costs via standardisation

Capacity utilisation Keeping machines running

Lower input costs Geographical location Ownership of sources of supply Bargaining power

Residual efficiency Reduction in overhead costs

The objective is to ‘beat’ the

competition with existing products

and services

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STRATEGIES FOR A DIFFERENTIATION ADVANTAGE

Differences in quality

Differences in function features or design

Differences in availability Timing and location

Sales promotion activities

Customer loyalty or ignorance The objective is to develop products,

services, and reputation that are unique in the minds of consumers

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RESOURCE- BASED VIEW AND

THE VRIO FRAMEWORK

Valuable Strategies for improving efficiency and effectiveness by exploiting opportunities and mitigating threats Objective is to change industry profitability

Rare Firm’s inability to exploit resources the same way Patents, copyrights, legal protections, scarcity

Inimitable Copying reduced by unique history, causal ambiguity, social complexity (network, relationships, culture, reputation)

Organisation Capability to gather and coordinate resources Innovation, capital budgeting and project management

https://www.business-to-you.com/vrio-from-firm-resources-to-competitive-advantage

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DEVELOPING DYNAMIC CAPABILITIES FOR CORPORATE AGILITY

SEIZING TRANSFORMINGSENSING Renewing process and maintaining relevance

to consumers (streamlining,

improving, changing an organisation’s

practices

Ability to benefit from opportunities

by designing innovative business

models; and securing access to capital and

resources

Assessment of opportunities and

customer needs the exist outside the

organisation

https://cmr.berkeley.edu/blog/2016/8/dynamic-capabilities/

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Resource matching Able to anticipate changes in the external environment

Speed (pace) Some firms are faster and more effective at exploiting change

Transforming processes Some firms have greater creative and innovative capability

RESOURCE-BASED VIEW OF COMPETITIVE ADVANTAGE

Dynamic Capabilities

Sensing external opportunities Changing customer demand Changing prices of inputs Technological change

Seizing internal capabilities Innovative business models Securing access to capital Forming strategic alliances

Read this! https://www.mckinsey.com/business-functions/operations/our-insights/matching-the-right-projects- with-the-right-resources

Creative destructionEntrepreneurship

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COMPETITION STRATEGY

MBA600 Week 3

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COMPETITION STRATEGY

Porter’s Five Forces of Competition

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PRODUCT LIFE CYCLE STAGES

INTRODUCTION GROWTH MATURITY DECLINE

Overall Marketing Goals

Stimulate product awareness and trial

Grow market share with new customers

Maximise profit by defending market share or taking it from competitors

Reduce expenses to maximise profit

Product Strategy Limited models and features; frequent product changes

Introduce new models and features; continuous innovation

Full model line; add supplementary products to reposition brand

Eliminate unprofitable products and brands

Pricing Strategy Higher price to recover investment

Drop prices to match or beat competition

Drop prices to match or beat competition

Prices stabilise at a lower level

Distribution Strategy Gradual product rollout Intensify efforts to expand market reach

Extensive product availability Maintain brand loyal customers; phase out unprofitable channels

Promotion Strategy Build awareness to encourage trials

Aggressive brand advertising, selling to encourage product switching

Emphasise brand position and switching; reposition brand

Minimise or eliminate promotion costs

Source: adapted from William M. Pride and O. C. Ferrell, Marketing 2010 Edition. (Mason, OH: Cengage Learning, 2010), pp. 290-295

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APPRAISING PERFORMANCE AND

STRATEGY MBA600 Week 4

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WHAT WE WILL LEARN THIS

WEEK

Strategy planning processes related to resources

Capabilities have been discussed in previous weeks

Capital management

Financial stability

Cash flow

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CONSTRUCTING BUSINESS MODELS

MBA600 Week 5

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3 IDEAS

IMPEDING RIVALS FROM IMITATING

Systems, processes and assets in a business model may be hard to implement

Non-transferability in VRIO as an isolating mechanism

Creating value in the minds of customers may lessen complexity and uncertainty for them!

Causal ambiguity in VRIO is an isolating mechanism for competition

Rivals may be reluctant to cannibalise existing sales and profits, or upset important business relationships

Non-substitutable in VRIO as an isolating mechanism

TEECE, D. J. 2010. Business Models, Business Strategy and Innovation. Long Range Planning, 43, 172-194.

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Value Propositions What value do we deliver to the customer?

Which one of the customer’s problems are we helping to solve?

What bundles of products and services are we offering to each customer segment?

What customer needs are we satisfying?

Key Partners Who are key partners and suppliers?

What key resources to we acquire from them?

What key activities do the perform?

Key activities What key activities strengthen Value Propositions?

What are the distribution channels?

What are the revenue streams?

Nature of customer relationships?

Key Resources What key resources strengthen Value Propositions?

What key resources strengthen customer relationships?

What key resources strengthen revenue streams?

Customer Relationships What type of relationship does each customer segment want from us?

What customers have an established relationship?

How are relationships integrated in the business model?

How costly are relationships?

Customer Segments For whom are we creating value?

Who are the most important customers?

Cost Structure What are the most important costs/investments in the business model?

What key resources and key activities are most expensive?

Revenue Streams What value will customers pay for?

What value do customers currently pay for?

What is the customer experience when paying?

What is the proportion of revenue streams to total revenue?

Channels What channels do customers what to be reached?

How are we reaching them now?

How are our channels integrated?

What channels work best?

What channels are most cost-efficient?

How are channels integrated with customer routines?

Source: https://en.wikipedia.org/wiki/Business_Model_Canvas

WHAT A BUSINESS MODEL CANVASS LOOKS LIKE

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ROLE OF METRICS IN STRATEGY MBA600 Week 7

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Shareholders

Customers

Internal Process

Capability

Financial performance

Effective utilization of resources

Customer value

Satisfaction and/or retention

Efficiency

Quality

Human capital and organisational culture

Infrastructure and technology

Strategy Objectives (perspectives)

Key Measures & Metrics

Goals: superior profitability

Measures: cash flow, sales, EBITDA, market share, ROE

Goals: New products, flexible supply, loyalty, partnerships

Measures: new & existing product sales, on-time delivery

Goals: technology capability, new product development (NPD)

Measures: lead-time, unit cost, engineering efficiency, plan accuracy

Goals: leadership, lean production, product focus, time to market

Measures: NPD lead-time, maturity, superior capability

CSF (actions)

BALANCED SCORECARD

PERSPECTIVES

Kaplan, R. S., & Norton, D. P. (1993). Putting the Balanced Scorecard to Work. Harvard Business Review.

https://www.balancedscorecard.org/ BSC-Basics/About-the-balanced- scorecard

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GOVERNANCE: DEFINING

OBJECTIVES FOR CONTROLS

RATIONALISING AND SIMPLIFYING GOVERNANCE

What metrics are currently implemented by firms in an industry? Are existing metrics rationalized to the extent possible?1

Existing

What metrics should be implemented to track new business activities? Do new metrics duplicate or conflict with existing metrics?2

New

How can managers link strategic actions to the metrics? Does readily available data exist to track the metric?3

Actionable

How do metrics relate to customer value and firm performance; and create superior profitability?4

Relevance

What are the implementation issues as a firm migrates to the metrics?5

Migration

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TECHNIQUES FOR IDENTIFYING ESSENTIAL CSF AND KPI

VRIO Criteria

PESTLE

SWOT

INDUSTRY WHITEPAPERS AND ANALYSIS

FINANCIAL STATEMENTS

PORTER’S 5 FORCES Balanced Scorecard

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QUINT- ESSENTIAL STRATEGY PROBLEM

Positive Customer Experience

MBA600 Week 8

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PRODUCT DESIGN

SHOP TILL YOU DROP

DESIGN THINKING PRODUCT/SERVICE DESIGN RESEARCH FOR COMPETITION STRATEGY

Equally applicable to all stages in the supply chain A supply chain refers to the network of suppliers and distributors of a specific product/service to a final customer

The d.school at Stanford University is a prominent approach to user experience (UX) research

https://dschool.stanford.edu/

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DESIGN THINKING MODEL STANFORD UNIVERSITY

Ideate TestEmpathise Define Prototype

Research the customer/user needs

Define the strategy problem you’re trying to solve

Cautiously consider the validity of your assumptions

Research objective is to gain insight, not data and analytics

State the customer’s/user’s needs and problems

Gather the data that you identified in the Empathise stage

Analyse data to define the strategy problem statement, as human-centred as possible

Challenge assumptions and create ideas

Interpret primary and secondary data for meaning, ‘think outside the box’

Identify alternative and innovative solutions to the problem statement

Start to create solutions

Experiment to identify the best possible solution

Produce inexpensive, scaled- down versions of the solution

Try out your solutions

Check for positive customer experience and/or technology adoption

May discover or refine other problems to solve in the future

Adopt a ‘growth mindset’, learn to finish the project and start another

Sources: Interaction Design Foundation, UX Collective

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DESIGN THINKING MODEL STANFORD UNIVERSITY

Ideate TestEmpathise Define Prototype

Researching

Primary and Secondary Research

Field study (ethnography)

Diary study (observation)

Structured and semi- structured Interviews

Focus groups

Conceptualising

Competitive analysis

Comparative (design) review

Persona building

Requirements analysis, user stories, journey mapping

Appraising

Benchmarking

Accessibility evaluation

Design sprints (agile projects)

Consulting

Sketch

Wireframes

Concept models (low fidelity design)

Application mock-up (high fidelity design)

Verifying and validating

Primary and Secondary Research

Requirements testing

User/customer evaluation

Source: Interaction Design Foundation; Nielsen Norman Group

We will discuss primary research in Week 9

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DESIGNING PRIMARY RESEARCH

MBA600 Week 9

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1 Identify the research problem

2 Determine research purpose

3 Develop theoretical framework

4 Develop research questions / hypotheses

6 Identify research scope limitations

5 Define terms

7 Decide methodology

8 Determine expected outcome

RESEARCH DESIGN

PROPOSAL CONTENTS

COLLIS, J. & HUSSEY, R. 2013. Business Research: A Practical Guide for

Undergraduate and Postgraduate Students, Palgrave Macmillan, Chapter

10% wordcount

30% wordcount

40% wordcount

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A research problem is a statement about a concern, a condition to be improved, a difficulty to be eliminated, or a troubling question (e.g. the SWOT conditions)

Checklist to determine if the research is feasible Does the research answer the strategy problem, how to earn superior profitability with a capability or resource? Is the project researchable given the constraints of time, resources, available data? Is management or the client committed to sustaining the research effort, despite setbacks? Does the research outcome meet standards of professional ethics? Does the research project further your career goals?

1 Identify the research problem

Chapter 4, Collis and Hussey (2013)

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2 Determine research purpose

A compelling purpose or reason convinces investors/executives how the research should create future capability, thus solving a strategy problem

Suggestion – state your research purpose in a user story template As a [persona, customer segment, function or capability], I want to [why it solves the strategy problem, why it contributes to profitability growth], so that {how it sustains the competitive strategy]

The type of research is suggested by its goals, for example identify or describe a concept, perhaps using descriptive statistics* explain or predict a situation, perhaps using several qualitative and/or quantitative methods* define a solution to a situation, perhaps using grounded theory*

(* see Week 8)

Chapter 4, Collis and Hussey (2013)

A) B) C)

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MBA600 Week 10 LEADING CHANGE

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LEADING CHANGE AT THE ORGANISATION LEVEL Mission Critical Factors

Urgency Most senior managers must be

convinced that business-as- usual is unacceptable

#1 Influence

Establish a powerful guiding coalition who can overcome the

natural resistance to change

#2 Vision

Create a picture of success that appeals to stakeholders (owners,

employees, others)

#3 Communication Use all communication

channels! Inspire beliefs that change is possible and probable

#4

Empowerment Support others’ conviction for

change by removing system and process blockers; and cynicism

#5 Gratitude

Celebrate quick wins; provide evidence of success to motivate

continued commitment

#6 Perseverance

Change can take years; avoid complacency from declaring

victory too soon

#7 Anchor in Culture

Articulate the legacy of change; define how change has improved performance

#8

John P. Kotter, 1995, Leading Change: Why Transformation Efforts Fail, Harvard Business Review

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LEADING CHANGE AT THE

INDIVIDUAL LEVEL

SHOCK Surprise or shock at the event

DENIAL Disbelief, looking for evidence that it is not true

FRUSTRATION Recognition that things are different; sometimes angry

EXPERIMENT Initial engagement with the new situation

DECISION Learning how to work in the new situation, feeling more positive

INTEGRATION Changes are integrated; a renewed individual

DEPRESSION Low mood; lacking in energy

M or

al e

an d

Co m

pe te

nc e

Time

The Change Curve, Elizabeth Kubler-Ross

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LEADING CHANGE AT THE INDIVIDUAL LEVEL

Awareness • What is and isn’t

working in my organisation

• What are my options • Communicate that

there is a problem

• Focus attention on the most important (compelling) reasons to change

Desire • Communicate benefits

for adopting change

• Identify risks involved • Build momentum • Address fears

Knowledge • Communicate benefits

for adopting change

• Identify risks involved • Build momentum • Address fears

Ability • Employ a suitable

governance framework

• Training, develop competence

• Start small • Don’t manage by

stealth

• Adjust processes that impact team performance

Reinforcement • Engage coaches,

mentors, role models

• Identify champions • Share experiences • Learn from early

mistakes

Enablement Zone Engagement Zone

https://www.prosci.com/adkar/adkar-model

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WHAT STRATEGY

LED TO THIS?

MBA600 Week 11

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BRAND COMPETITION

WE EVALUATED THE MESSAGES THAT MAY CREATE COMPETITIVE ADVANTAGE

https://youtu.be/A1kBlVWKmZg https://youtu.be/Gz9sfr5mGa4

https://youtu.be/GguNetv_vb4

https://youtu.be/rreyC4L7xI8 https://youtu.be/f-NIAUhU2E0

https://youtu.be/CGTv6CZd2yY

https://youtu.be/yBGZKaQyyx8

BANKS FINTECH

BENDIGO BANK

RIVALRY BETWEEN COMPETITORS WHO OFFER A SIMILAR PRODUCT OR SERVICE IN

THE SAME TARGET MARKET

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S e e k h e l p w h e n yo u n e e d i t !

Thank you