Strategic Analysis presentation managment.ppt

Strategic Analysis presentation managment

1. Strategic AnalysisStrategic Analysis

2. 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 few Where will the organization be in a few
years – if no changes are madeyears – if no changes are made
–What specific actions should What specific actions should
management take if they don’t like the management take if they don’t like the
answer to #2answer to #2

3. Decision Making ProcessDecision Making Process
P. 12-13P. 12-13
Evaluate
Current
Performance
Examine &
Evaluate the
Current:
- Mission
- Objectives
- Strategies
- Policies
Interview
Strategic
Managers:
- BOD
- Top Mgmt

4. Decision Making ProcessDecision Making Process
Scan
External
Environment
- Societal
- Tasks
Scan
Internal
Environment
- Structure
- Culture
- Resources
Select
Strategic
Factors
- Opportunities
- Threats

Select
Strategic
Factors
- Strengths
- Weaknesses
Analyze
Strategic
Factors
(SWOT)
in light of
Current
Situation

5. Decision Making ProcessDecision Making Process
Review and
Revise as
Necessary:
- Mission
- Objectives

Generate &
Evaluate
Strategic
Alternatives

Select &
Recommend
Best
Alternatives

6. Decision Making ProcessDecision Making Process
Implement
Strategies:
- Programs
- Budgets
- Procedures

Evaluate
And
Control

Go
Back To
Step 1
Evaluate
Current
Performance

7. Decision Making ProcessDecision Making Process
Customers
Revenue
Operations
P & L
Bal Sheet
S & U F
Sales
Marketing
HR
MIS
Admin

8. External EnvironmentExternal Environment
G
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General
Environment
G
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Socio-culturalSocio-cultural
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G
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TechnologicalTechnological
P
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P
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IndustryIndustry
EnvironmentEnvironment
Threat of new entrantsThreat of new entrants
Power of suppliersPower of suppliers
Power of buyersPower of buyers
Product substitutesProduct substitutes
Intensity of rivalryIntensity of rivalry
CompetitorCompetitor
EnvironmentEnvironment

9. 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 ongoing : Detecting meaning through ongoing
observations of environmental changes and observations of environmental changes and
trendstrends
•ForecastingForecasting: Developing projections of anticipated : Developing projections of anticipated
outcomes based on monitored changes and outcomes based on monitored changes and
trendstrends
•AssessingAssessing: Determining the timing and : Determining the timing and
importance of environmental changes and trends importance of environmental changes and trends
for firms’ strategies and their managementfor firms’ strategies and their management

10. Industry EnvironmentIndustry Environment
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N
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B
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S
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Bargaining Power of Bargaining Power of
BuyersBuyers
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o
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S
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P
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P
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R
ivalry A
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R
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g

C
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p
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Firm
s
C
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p
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Firm
s
Five Forces ofFive Forces of
CompetitionCompetition

11. Threat of New EntrantsThreat of New Entrants
Barriers 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 scaleCost disadvantages independent of scale

Government policyGovernment policy

Expected retaliationExpected retaliation

12. Bargaining Power of SuppliersBargaining Power of Suppliers

Dominated by a few large companiesDominated by a few large companies

Satisfactory substitute products are not availableSatisfactory substitute products are not available

Industry firms are not a significant customer for Industry firms are not a significant customer for
the supplier groupthe supplier group

Suppliers’ goods are critical to buyers’ Suppliers’ goods are critical to buyers’
marketplace successmarketplace success

Effectiveness of suppliers’ products has created Effectiveness of suppliers’ products has created
high switching costshigh 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

13. Bargaining Power of Buyers Bargaining Power of Buyers
(Customers)(Customers)

They purchase a large portion of an industry’s They purchase a large portion of an industry’s
total outputtotal output

Sales of the product being purchased account Sales of the product being purchased account
for a significant portion of the seller’s annual for a significant portion of the seller’s annual
revenuesrevenues

They could easily switch to another productThey could easily switch to another product

The industry’s products are undifferentiated or The industry’s products are undifferentiated or
standardized, and buyers pose a credible threat standardized, and buyers pose a credible threat
if they were to integrate backward into the if they were to integrate backward into the
seller’s industryseller’s industry

14. 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 performance Substitute product’s quality and performance
capabilities are equal to or greater than those capabilities are equal to or greater than those
of the competing productof the competing product

15. 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 costsHave high fixed costs or high storage costs

Lack differentiation or low switching costsLack differentiation or low switching costs

Experience high strategic stakesExperience high strategic stakes

Have high exit barriersHave high exit barriers

16. Components ofComponents of
Internal AnalysisInternal Analysis
Discovering CoreDiscovering Core
CompetenciesCompetencies
ResourcesResources
•TangibleTangible
•IntangibleIntangible
CapabilitiesCapabilities
CoreCore
CompetenciesCompetencies
CompetitiveCompetitive
AdvantageAdvantage
StrategicStrategic
CompetitivenessCompetitiveness
Four CriteriaFour Criteria
of Sustainableof Sustainable
AdvantagesAdvantages
•ValuableValuable
•RareRare
•Costly to ImitateCostly to Imitate
•Non-substitutableNon-substitutable
ValueValue
ChainChain
AnalysisAnalysis
•OutsourceOutsource
Corporate Culture
R & D
Capital Situation
Technology
Marketing Mix

17. ServiceService
Marketing & SalesMarketing & Sales
Outbound LogisticsOutbound Logistics
OperationsOperations
Inbound LogisticsInbound LogisticsF
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m

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Primary ActivitiesPrimary Activities
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The BasicThe Basic
Value ChainValue Chain

18. Quiz – Question 1Quiz – Question 1
1.1.When an organization is evaluating its strategic 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?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 organization If no changes are made, where will the organization
be in one year?be in one year?
D.D.If the evaluation is negative, what specific actions If the evaluation is negative, what specific actions
should management take?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?

19. Quiz – Question 1Quiz – Question 1
1.1.When an organization is evaluating its strategic 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?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 organization If no changes are made, where will the organization
be in one year?be in one year?
D.D.If the evaluation is negative, what specific actions If the evaluation is negative, what specific actions
should management take?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?

20. 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

21. 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

22. Quiz – Question 3Quiz – Question 3
3.3.Research done by Henry Mintzberg suggests Research done by Henry Mintzberg suggests
that strategy formulationthat strategy formulation
A.A.Is irregular and a discontinuous processIs irregular and a discontinuous process
B.B.Should be followed unswervingly to ensure success Should be followed unswervingly to ensure success
of the planof the plan
C.C.Is worthlessIs worthless
D.D.Should be reviewed after a specific interval of time to Should be reviewed after a specific interval of time to
make sure it is still applicablemake 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

23. Quiz – Question 3Quiz – Question 3
3.3.Research done by Henry Mintzberg suggests Research done by Henry Mintzberg suggests
that strategy formulationthat strategy formulation
A.A.Is irregular and a discontinuous processIs irregular and a discontinuous process
B.B.Should be followed unswervingly to ensure success Should be followed unswervingly to ensure success
of the planof the plan
C.C.Is worthlessIs worthless
D.D.Should be reviewed after a specific interval of time to Should be reviewed after a specific interval of time to
make sure it is still applicablemake 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

24. 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

25. 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

26. 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 employeesPay highest salaries to keep high quality employees
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

27. 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 employeesPay highest salaries to keep high quality employees
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

28. Analysis Tools – SWOTAnalysis Tools – SWOT
Chapter 5Chapter 5

Strengths Strengths

WeaknessesWeaknesses

OpportunitiesOpportunities

ThreatsThreats

29. Strategy Development - TOWSStrategy Development - TOWS
TOWS AnalysisOpportunity Threat
Strength O/S StrategiesT/S Strategies
Weakness O/W StrategiesT/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

30. 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 growthInternational growth
–Dirt bikesDirt bikes

ThreatsThreats
–Lower cost, higher Lower cost, higher
quality competitionquality competition
–Flattening demandFlattening demand

31. TOWS Example – Bicycle Co.TOWS Example – Bicycle Co.
TOWS AnalysisOpportunity
• International
• Dirt bikes
Threat
•Flat demand
•Lower cost, higher
quality
Strength
• Innovation
• Quality
• Brand in segment
• Flexible manufacturing
O/S StrategiesT/S Strategies
Weakness
• Cost
• Financial size
O/W StrategiesT/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