Strategic Mnangement
rubenagkjwnr
strategic_management_tutorial_notes.pptPart 1 Part 2 Part 3 Part 4
Sessions 1-6 Sessions 7-8 Sessions 9-11 Sessions 12-14
Strategic
Analysis
+
Planning
Strategic
Purpose
Strategy
Options
Strategic
Choice
+
Implementation
Assignment
Assignment
Core
Reading
+
Reflection
Workshop 1 - 4
Workshop 5 - 6
Workshop 7 - 9
- Strategy, strategic thinkers
- Strategic planning
- Strategic management process model
- Drivers for change
- Environmental analysis
- Strategic response
- CSF’s
- Competition analysis
- Value Chain Analysis
- Resource audit
- Classical models
MODULE OVERVIEW
- Strategic direction
- Vision
- Mission
- Core values
- Culture
- Positioning
- Stakeholders
- Strategy determination
- Strategic options for growth
- Blue ocean strategy
- Criteria for evaluation
- Gap analysis
- Strategy implementation and control
- Change management
Strategic
Analysis
+
Planning
Part 1
Where are we now? And where have we come from?
Where do we want to be? And by when?
2
3
How might we get there?
1
Which way is best?
How do we ensure arrival?
What are the expected outcomes?
4
5
6
THE BASIC QUESTIONS OF STRATEGIC PLANNING
A STRATEGIC MANAGEMENT PROCESS MODEL
DRIVERS FOR CHANGE
EXTERNAL & INTERNAL
INTERNAL ENVIRONMENTAL ANALYSIS
OUTCOMES FROM CHANGE
EXTERNAL ENVIRONMENTAL ANALYSIS
STRATEGIC DIRECTION
STRATEGY DETERMINATION
- STRATEGY OPTIONS
- CRITERIA FOR EVALUATION
- CRITICAL SUCCESS FACTORS
- STRATEGY CHOICE
STRATEGY IMPLEMENTATION & CONTROL
MANAGING CHANGE
Massingham
OPPORTUNITIES
STRENGTHS
THREATS
WEAKNESSES
PORTER’S 5 FORCES
MODEL OF INDUSTRY COMPETITIVENESS
New Entrants
Substitutes
Buyers
Suppliers
Industry
Competitors
Intensity of rivalry
Threats
Bargaining
Power
Bargaining
Power
Threats
5
4
2
3
1
ENTRANTS
Competitor Rivalry
Substitutes
Supplier Power
Buyer Power
POTENTIAL IMPACT
SUBSTITUTES
Competitor Rivalry
Substitutes
Supplier Power
Buyer Power
POTENTIAL IMPACT
(Business Sustainability)
BUYER POWER
Competitor Rivalry
Entrants
Supplier Power
Substitutes
POTENTIAL IMPACT
(Brand Switching Behaviour & Price Pressures)
(Rebalancing of Demand & Supply)
(Adoption or Avoidance)
COMPETITOR RIVALRY
Entrants
Buyer Power
Supplier Power
Substitutes
POTENTIAL IMPACT
(Industry Restructuring Potential)
(Brand Switching Behaviour & Price Pressures / Margin Pressures)
(Collaborative Alliances)
(The Need for Innovation)
SUPPLIER POWER
Competitor Rivalry
Entrants
Buyer Power
Substitutes
POTENTIAL IMPACT
(Collaborative Alliances)
(Downstream Development)
(Rebalancing of Supply & Demand)
(Business Sustainability)
THE ROUTE TO STRATEGY THROUGH RESOURCE & CORE COMPETENCE
- Identify the firms resources.
Assess strengths and weaknesses
relative to competitors
- What does the enterprise currently
deliver through existing core
competencies?
- Assess the potential of resources
and competitiveness for creating,
sustaining, exploiting and
delivering a competitive edge.
- Select the strategy which best
exploits the company’s capabilities
relative to external opportunities.
RESOURCES
CAPABILITY
POTENTIAL FOR SUSTAINABLE
COMPETITIVE ADVANTAGE
STRATEGY DETERMINATION
Identify the resource gaps that need
to be filled. Then invest in developing
the resource base for future strategy.
PORTER’S VALUE CHAIN -- A GENERIC APPROACH
SUPPORT ACTIVITIES
PRIMARY ACTIVITIES
Infrastructure of the firm
Human resource management
Technology development
Procurement
In bound logistics
Operations
Outbound logistics
Marketing and sales
Service
Margin
Margin
Ministry of higher education vision
8 SUPPORT
ACTIVITIES
11 PRIMARY ACTIVITIES
Human Resource
Organisational Transparency
Finance & Funding
Infrastructure
Leadership
QA & MEF
Establishment & Registration,Licensing, Approvals
Student Intake & Welfare
Enforcement
Curriculum Development
Internationalisation
Legal & Administration
Procurement
MIS/ ICT
Enforcement
Curriculum Development
Technical Education
Industrial Linkages & Alliances
Policy
Business Development & Marketing & Promotion
R & D
Governance
Ministry of higher education
Perceived
Image
Ministry of higher education mission
Ministry of higher education value chain
A SIMPLE VALUE CHAIN:
McKINSEY & COMPANY’S BUSINESS SYSTEM
TECHNOLOGY
SOURCE
SOPHISTICATION
PATENT
PRODUCT
DESIGN
FUNCTIONS
PHYSICAL CHARACTERISTICS
AESTHETICS
QUALITY
MANUFAC-
TURING
INTEGRATION
RAW MATERIALS
CAPACITY
LOCATION
PROCUREMENT
PARTS PRODUCTION
ASSEMBLY
MARKETING
PRICES
ADVERTISING/
PROMOTION
SALES FORCE
PACKAGE
BRAND
DISTRIBUTION
CHANNELS
INTEGRATION
INVENTORY
WAREHOUSING
TRANSPORT
SERVICE
WARRANTY
SPEED
PRICES
DIFFERENTIATION ADVANTAGE THROUGH THE VALUE CHAIN
INFRASTRUCTURE
RESEARCH, DEVELOPMENT, DESIGN
HUMAN RESOURCE DEVELOPMENT
SUPPORT ACTIVITIES
PRIMARY ACTIVITIES
PURCHASING,
INVENTORY
HOLDING,
MATERIAL
HANDLING
PRODUCTION
WAREHOUSING & DISTRIBUTION
SALES & MARKETING
DEALER SUPPORT & CUSTOMER SERVICE
MARGIN
Market leading corporate reputation. MIS that supports innovation and responsiveness to customer needs through close internal coordination, customer centric culture
Quality and reliability of components and material
Just in time Inventory Systems
Preferred Supply Chain Relationships
Fast manufacturing, Defect-free manufacturing. Ability to produce to customer specification
Partnership with key customers.
Fast delivery. Efficient order processing. Sufficient inventories to meet unexpected orders.
Key account management.
Iconic Advertising that enhances brand reputation. Effective sales force. Superior Quality sales literature & support
Database ICT linkages with Customers
Unique product features. Fast new product development. Design for reliability /serviceability.
Training that supports the channel. Total commitment to customer service
Training for customers. Fast, reliable repairs. Availability of spare parts. Training for dealers. Customer credit terms
v.
v.v.
DISTRIBUTION
MARKETING
CANNING
PROCESSING
INVENTORY HOLDING
PURCHASING
SERVICE & TECHNICAL
SUPPORT
SALES
DISTRIBUTION
MANUFACTURING
INVENTORY HOLDING
DESIGN ENGINEERING
INVENTORY HOLDING
PURCHASING
SUPPLIES OF STEEL
& ALUMINUM
CAN MAKER
High quality inputs
Reliability of supply even during metal shortages
Containers for specialized uses.
Special designs of containers. Specially strong or light containers
Consistency of product. Quality of
product. Flexibility of manufacturing
Speed and competence in maintaining customer ‘s canning
Fast, reliable order processing
Speed and flexibility of delivery
Ability to meet unexpected orders
from customers at short notice
CANNER
1
2
3
4
5
P R I M A R Y A C T I V I T I E S
P R I M A R Y A C T I V I T I E S
SUPPLIES OF COMPONENTS
AND MATERIALS
PURCHASING
INVENTORY HOLDING
R & D/ DESIGN/ENGINEERING
COMPONENT MANUFACTURE
ASSEMBLY
TESTING/QUALITY
CONTROL
INVENTORIES OF
FINAL GOODS
SALES & MARKETING
DISTRIBUTION
SERVICE/DEALER SUPPORT
PRICES OF BOUGHT-IN COMPONENTS.
ORDER SIZES + FREQUENCY.
TOTAL VALUE OF PURCHASES OVER TIME PER
SUPPLIER.
RELATIVE BARGAINING POWER
TOTAL COSTS
SIZE OF R&D COMMITMENT
NUMBER & FREQUENCY OF NEW MODELS
SALES PER MODEL
SCALE OF PLANT FOR EACH TYPE OF
COMPONENT
VINTAGE OF THE PROCESS-TECHNOLOGY USED
LOCATION OF PLANTS
RUN LENGTH PER COMPONENT
LEVEL OF CAPACITY UTILIZATION
SCALE OF PLANTS
NUMBER OF MODELS PER PLANT
DEGREE OF AUTOMATION
WAGES COSTS
EMPLOYEE COMMITMENT & FLEXIBILITY
CAPACITY UTILIZATION
QUALITY TARGETS.
FREQUENCY OF DEFECTS
CYCLICALITY OF SALES
FLEXIBILITY AND RESPONSIVENESS OF PRODUCTION
CUSTOMERS’ WILLINGNESS TO WAIT
DIRECT COSTS
NUMBER OF DEALERS
SALES/DEALER
DESIRED LEVEL OF DEALER SUPPORT
FREQUENCY AND SERIOUSNESS OF DEFECTS
REQUIRING WARRANTY REPAIRS/RECALLS
CHANNEL COSTS
CRITICAL FACTOR ANALYSIS
VALUE CHAIN SYNERGIES
EMPLOYEE
VALUE
CHAIN
ERM
CRM
CRM
SCM
SCM
COMPETITOR
VALUE
CHAIN
COMPETITOR
VALUE
CHAIN
THE ONION MODEL FOR LEADING UK RETAIL BRAND OF MENS & WOMEN APPAREL
PURCHASING SYSTEMS
SUPPLIER LINKS
MARKET SHARE
CUSTOMER
VALUE FOR
THE BRAND
PRODUCT
FOCUS
MONEY
SERVICE
CULTURE
IN STORE MERCHANDISING
INNOVATION
MKiS
SITE
LOCATIONS
INVENTORY
MANAGEMENT
SITE
LOCATIONS
A BAD ONION OF COMPETITIVE DISADVANTAGE
PAROCHIAL TOP MANAGEMENT
MIND SET
CONSERVATIVE
CORPORATE
CULTURE
MANAGERIAL INFLEXIBILITY
EMPLOYEE ENGAGEMENT
COMB CHART
1
2
3
4
5
Brand Name
Terms of
Trade
After Sales
Service
On time
Delivery
Price
Product
Quality
Promotional
Support
Industry Scores
Competitor ‘A’
Competitor ‘B’
PURCHASE CRITERIA
1
2
3
4
5
Price
Quality
Service
Packing
Delivery on Time
Complaints Handling
Credit
RANKING CRITERIA
0
HIGH
LOW
X
X
X
X
X
X
X
X
X
X
X
X
X X Segment Purchase Criteria
X X Overall Perception of Catering Suppliers by all schools
From the chart, the ‘gaps’ between customer needs and perceived customer deliverables from suppliers in general is significant.
Market : Catering Supplies For Frozen Meat to Comprehensive Schools
Market Segment
THE PRODUCT LIFE CYCLE
Introduction
Growth
Maturity
Decline
SALES
AND
PROFIT
PRODUCT PORTFOLIO ANALYSIS
BCG PRODUCT PORTFOLIO MATRIX
HIGH
LOW
HIGH
LOW
RELATIVE
MARKET
GROWTH
RATE
“STARS”
“PROBLEM CHILDREN”
“CASH COWS”
“DOGS”
RELATIVE
MARKET SHARE
Product
D
Product
B
Product
A
Product
C
* The breakpoint depends on the industry eg : Steel 3%, Food Retailing 8% and based on Country Market Segments.
** Market Share is your share relative to the four largest Players in the market.
THE DIFFUSION OF INNOVATION MODEL
Innovation
(2.5%)
Early Adoption
(13.5%)
Early Majority
(34%)
Late Majority
(34%)
Laggards
(16%)
SALES
ENVIRONMENT
STRATEGY
VALUES
RESOURCES
ORGANISATION
SERVO
Part 2
Strategic
Purpose
Amazon vision statement
“ Our vision is to be the earth’s most customer-centric company; to build a place where people can come to find and discover anything they might want to buy online”
McDonalds vision statement
“ McDonalds vision is to be the world’s best quick service restaurant experience. Being the best means providing outstanding quality, service, cleanliness and value, so that we can make ever customer in every restaurant smile.”
Toys ‘R’ US vision statement
“ Our vision is to put joy in kids hearts and a smile on parents’ faces”
Toyota mission statement
“ To sustain profitable growth by providing the best customer response and dealer support”
DHL mission statement
“ DHL enhances the business of our customers by offering highest quality express and logistics solutions based on strong local expertise combined with the most extensive global network presence. Customers trust DHL as the preferred global express and logistics partner, leading the industry in terms of quality, profitability and market share”
Red Cross mission statement
“ The international committee of the Red Cross ( ICRC) is an impartial, neutral and independent organisation whole exclusively humanitarian mission is to protect lives and dignity of victims of armed conflict and other situations of violence and to provide them with assistance.”
“The ICRC also endeavours to prevent suffering by promoting and strengthening humanitarian law and universal humanitarian principles.”
IBM mission statement
“ At IBM, we strive to lead in the invention, development and manufacturer of the industry’s most advanced information technologies, including computer systems, software, storage systems and micro-electronics.
“We translate these advanced technologies into value for our customers through our professional solutions, services and consulting business worldwide.”
Estee Lauder mission statement
“ Bringing the best to everyone we touch”
THE CULTURAL WEB (JOHNSON, 1992)
The
Paradigm or
Mindset
Control
System
Organisational
Structures
Stories
Rituals and
Routines
Power
Structures
Symbols
SECURED
POSITIONING
POTENTIAL FOR LOST BUSINESS
SUSTAINABLE DIFFERENTIATION FROM THE COMPETITION
CUSTOMER NEEDS, WANTS, VALUES & EXPECTATIONS
COMPANY CAPABILITIES & IDENTITY
RELEVANT, SUPERIOR
PERCEIVED VALUE
RELATIVE COMPETITOR OFFERINGS
1.
CORE CAPABILITY
(BUSINESS STRENGTHS & EFFECTIVE STRUCTURE)
2.
CORE VALUES
(THE BELIEF SYSTEM TO GUIDE BEHAVIOUR)
3.
OPERATIONAL COMPETENCE
(eg. TRAINING & ORGANISATIONAL DEVELOPMENT)
4.
SOURCES OF COMPETITIVE ADVANTAGE
(APPLY PORTERS VALUE CHAIN)
5.
SUSTAINING THE COMPETITIVE ADVANTAGE
(TRACKING STUDIES + SUSTAINED RESOURCING)
6.
LINKING THE COMPANY VALUE CHAIN WITH THE CUSTOMERS (SYNERGISE VALUE LINKAGES)
7.
RESOURCING THE VALUE CHAIN LINKAGES
(RELATIONSHIP & DELIVERY BONDING)
8.
MONITORING THE CONTINUED RELEVANCE
(FEEDBACK & REVIEW)
ACHIEVING COMPETITIVE EDGE
Part 3
Strategy
Options
PRODUCT / MARKET GROWTH MATRIX
- Withdraw
- Consolidate
- Produce / Build
PRODUCT / SERVICE DEVELOPMENT
Existing
New
PRODUCTS / SERVICES
New
MARKETS
Existing
DIVERSIFICATION
MARKET PENETRATION
MARKET DEVELOPMENT
- New Territories
- New Segments
- New Users
- New to the world
- New to the territory
- Related Markets
- Horizontal or Vertical Integration
- Unrelated Markets
1
3
2
4
REDUCE COSTS ADD VALUE
1. ELIMINATE 3. RAISE
2. REDUCE 4. CREATE
THE FOUR ACTIONS FRAMEWORK FOR VALUE INNOVATION
REDUCE COSTS
ADD VALUE
VALUE INNOVATION
REDUCE COSTS ADD VALUE
1. ELIMINATE 3. RAISE
UNIQUE VENUES
ANIMAL SHOWS STAR TALENT
MULTIPLE SHOWS SPECIALIST TEAM
CHOREOGRAPHY
2. REDUCE 4. CREATE
NOISE A THEME
HUMILIATION REFINED ENVIRONMENT
ROUGH ENVIRONMENT MULTIPE PRODUCTIONS
ARTISTIC MUSIC & DANCE
FROM THE TRADITIONAL CIRCUS TO CIRQUE DU SOLEIL
KEY ACTIVITIES
REVENUE
SUPERIOR VALUE PROPOSITIONS
CHANNELS
CUSTOMERS
PARTNERSHIPS
RELATIONSHIPS
COSTS
VALUE CHAIN BASED RESOURCES
COMPETITION & COMPETITIVE STRATEGY
PRIORITY
CUSTOMERS
SUPERIOR VALUE
PROPOSITIONS
CHANNELS
KEY ACTIVITIES
COMPETITION /
COMPETITIVE
STRATEGY
RELATIONSHIPS
KEY PARTNERSHIPS
COSTS & COST BUDGET
REVENUE STREAMS & CASHFLOW
Strategic
Choice
+
Implementation
Part 4
PERFORMANCE
Shows the current performance position, most often explained in quantitative or functional terms.
Shows the desired future position defined in the same terms as the current position. This is the projected (or forecasted future position).
‘ The Gap’ is between positions and .
THE STRATEGIC GAP
THE DESIRED FUTURE POSITION
THE STRETCHED FUTURE POSITION
THE STRETCHED STRATEGIC GAP
3
2
THE CURRENT POSITION
1
1
2
1
2
.
KEY * MILESTONE TIMELINE
RESULT ALLOCATED
TASK AREA RESPONSIBILITY
1. _______ _______ __________________
2. _______ _______ __________________
3. _______ _______ __________________
4. _______ _______ __________________
N. _______ _______ __________________
F - FORECAST * Also Known as KRA’s
A - ACTUAL
T1
T2
T3
T4
T5
T6
F
A
F
A
F
A
F
A
F
A
VISION & STRATEGY
“if we succeed,
how will we
look to
our shareholder?”
Financial Perspective
“To achieve my vision, how must I look to my customer?”
Customer Perspective
Objectives
Measures
Targets
Targets
“To satisfy my
Customer, at
Which processes
must I excel?”
Internal Perspective
Objectives
Measures
Initiatives
Initiatives
Learning and Growth Perspective
“To achieve my
Vision, how must
My organisation
learn and improve?”
Objectives
Measures
Targets
Initiatives
Objectives
Measures
Targets
Initiatives
MC KINSEY 7 S
Shared
Values
Structure
Systems
Strategy
Style
Skills /
Staffing
THE CHANGES NEEDED FOR NEW STRATEGY
MOOD
PRECHANGE POST CHANGE PERIOD OF ADJUSTMENT
TIME
LOSS
DENIAL
DISCARDING
PLANNING
INTEGRATION
INITIAL
ADAPTATION
THOSE AGAINST CHANGE THOSE FOR CHANGE
SOURCE POWER WEIGHT WEIGHT POWER SOURCE OF
OF BASE OF OF BASE SUPPORT
RESISTANCE RESISTANCE RESISTANCE
[ LOCATION ] HI LOW 1 – 10 1 - 10 HI LOW [ LOCATION ]
1. __________ ___ ___ ____ ____ ___ ____ ________
2. __________ ___ ___ ____ ____ ___ ____ ________
3. __________ ___ ___ ____ ____ ___ ____ ________
4. __________ ___ ___ ____ ____ ___ ____ ________
Total ==== ====
DISEQUILIBRIUM ?
Thank you
Dr. Lester Massingham
*
