0000 RMJJ SPNotes December2010

7/26/2019 0000 RMJJ SPNotes December2010

1/55

Strategic Planning

Notes

Author: Remi Malahieude

Based on: Release SP-A3-engb 1/2009 (100! "ohn Rhoton #s PM $otes %rom 2010 &ate: &e'ember 0 2010

Dear fellow students,

These notes are based on John Rhotons notes from 200! The" are #rett" much the same, in a slightl" different

la"out and with some additions and remo$als, based on m" own taste!

%" final notes were much more com#lete that this document! The reason being is that & #rinted the whole file on

one sided #ages, bonded the whole, and com#leted them with either hand'written notes from Past Pa#ers, or the

blac( boo( such as diagrams and figures )not hand'written, *ust #rinted them on big eti+uette and #asted them in

m" notes binder!

hate$er "ou decide to do, m" suggestion is to customi-e an" notes to "our own taste so that the" become

./R notes!

& wish "ou all the best in "our stud"!

Remi %alahieude

- 1/))-


2/55

%odule &ntroduction to Strateg", Planning and Structure 1 Strategi' Planning: *he +onte,t 2 hat .s Strategi' Planning 3 *he Pro'ess o% Strateg and &e'ision Maing Business nit and +or4orate Strateg ) .s Strategi' Planning 5nl %or *o4 Management

%odule 2 %odelling the Strategic Planning Process 1 *he Modelling A44roa'h 2 Strateg Maing

%odule 1 om#an" /b*ecti$es 1 Setting 5b6e'ti7es 2 8rom ision to Mission to 5b6e'ti7es 3 *he a4 +on'e4t +redible 5b6e'ti7es ) ;uanti%iable and $on-;uanti%iable 5b6e'ti7es < Aggregate 5b6e'ti7es &isaggregated 5b6e'ti7es = *he Prin'i4al-Agent Problem 9 Means > ?nds10 Beha7ioural 7s@ ?'onomi' > 8inan'ial 5b6e'ti7es11 ?'onomi' 5b6e'ti7es12 8inan'ial 5b6e'ti7es13 So'ial 5b6e'ti7es1 Staeholders1) ?thi'al +onsiderations1< Are 5b6e'ti7es SMAR*

%odule 3 The om#an" and the 4conom" 1 *he +om4an in the ?'onomi' ?n7ironment:P?S* ?*5P 2 Re7enue and +osts: *he Basi' Model 3 *he orings o% the ?'onom

8ore'asting: hat ill a44en $e,t) P?S* Analsis

< ?n7ironmental S'anning S'enarios = *he ?'onom and Pro%itabilit 9 ?n7ironmental *hreat and 544ortunit Pro%ile: Part 1

%odule 5 The om#an" and The %ar(et 1 *he Maret 2 *he &emand +ur7e 3 +om4etiti7e Rea'tion: ame *heor *he ined &emand +ur7e

+om4etiti7e Pri'ing

Segmentation

) Produ't ;ualit < Produ't Ci%e +'les Port%olio Models = Su44l 9 Marets and Pri'es10 Maret Stru'tures: Per%e't +om4etition Mono4ol

Barriers +ontestable Mts 5ligo4ol

11 *he Role o% o7ernment12 *he Stru'tural Analsis o% .ndustries: Pro%iling the 8i7e 8or'es13 Strategi' rou4s1 8irst mo7er ad7antage1) An 57er7ieD o% Ma'ro and Mi'ro Models1< .s +om4etition +hanging1 ?n7ironmental *hreat and 544ortunit Pro%ile: Part 2

%odule 6 &nternal 7nal"sis of the om#an" 1 544ortunit +ost 2 8i,ed +osts ariable +osts and Sun +osts 3 Marginal Analsis &iminishing Marginal Produ't ) Pro%it Ma,imisation < Produ'tion +osts A''ounting *e'hniEues Brea-?7en Analsis Paba' Period Sensiti7it Analsis

= A''ounting Ratios 9 Ben'hmaring10 R>&11 uman Resour'e Management12 *he S'o4e o% the +om4an ?'onomies o% S'ale ?'onomies o% S'o4e &i7ersi%i'ation Snerg erti'al .ntegration

13 *he alue +hain1 +om4eten'e1) Strategi' Ar'hite'ture: +om4etiti7e Ad7antage

1< Strategi' Ad7antage Pro%ile

%odule 8 %a(ing hoices among Strategies 1 A Stru'ture %or Rational +hoi'e 2 Strengths eanesses 544ortunities and *hreats 3 eneri' Strategies .denti%ing Strategi' ariations ) Strateg +hoi'e

%odule 9 &m#lementing : 4$aluating Strateg" 1 .m4lementing Strateg 2 5rganisational Stru'ture

3 Resour'e Allo'ation ?7aluation and +ontrol ) 8eedba' < *he Augmented Pro'ess Model Posts'ri4t: Strategi' Planning ors

2


3/55

%odule ' &ntroduction to Strateg", Planning : Structure

! Strategic Planning; The onte issues!

- Pro%itabilit sales groDth maret share relati7e 'osts 'om4etiti7e 4osition 4ri'ing en7ironmental s'anninghuman resour'e management timing neD 4rodu't laun'h di7idend 4oli' 'om4an 'ulture

A44roa'h: - Merge business 'on'e4ts to understand hoD 'om4anies o4erate in competitive environment- &e7elo4 understanding o% inter-relationships- ?,4lain Dh 'om4anies ha7e su''eeded/%ailed in the past> hoD to o4erate su''ess%ull in future

A44l the integrating a44roa'h to Madonna

ManagersG &e%initions o% Strateg

Man di%%erent de%initions: Setting ob6e'ti7es long-term thining maret alignment sele'ting best o4tions@@@

A'ademi' &e%initions o% Strateg

.n%ormal 7ersus %ormalStrategi' 4lanning taes 4la'e in 'om4le, and dnami' en7ironmentAttem4t to identi% 'riti'al su''ess %a'tors

&e4ends on 'orrelating a'tions and out'omes ('ause/e%%e't!: &i%%i'ult in business

&e4ends on beha7iour o% 'om4etitorsH about the unnoDable and un4redi'table

*hree A44roa'hes to Strategi' Planning

1@ Planning2@ +ourse o% a'tion emerging o7er time3@ 5ut'omes o% the resour'es

1@ Planning a44roa'h: 4res'ri4ti7e rational ob6e'ti7es &etermine ob6e'ti7es

Analse business en7ironment

Mae %ore'asts

&esign 4lan and 4ass doDn %or e,e'ution

Assum4tions: 8uture 'an be 4redi'ted a''uratel enough to mae rational 'hoi'e

Possible to deta'h strateg %ormulation %rom e7erda management Rele7ant in%ormation 'an be e,tra'ted %or strateg maers

- Possible to %orego short-term bene%it %or long-term ad7antage

- Strategies 'an be managed as 4ro4osed- +?5 has noDledge and 4oDer to 'hoose %rom o4tions does not need 'onsensus- 5n'e de%ined strateg de'ision does not need to 'hange- .m4lementation is distin't 4hase that onl begins on'e strateg is agreed

3


4/55

2@ ?mergent strateg: strateg is not 4lanned but emerges in an un4redi'table manner- $o 'ause e%%e't relationshi4- Managers onl 'an handle limited o4tions- Managers are biased- Managers see satis%a'tor (not o4timal! solution- 5rganisations are 'oalitions o% interest grou4s im4lementation reEuires negotiation- Managers 'onsider 'ulture > 4oliti's as mu'h as resour'e a7ailabilit > e,ternal %a'tors- Bounded rationalit F rational based on limited (in'om4lete unreliable! in%ormation F satis%i'ing

3@ Resour'e-based strateg:- +om4an not 4assi7e 'olle'tion o% resour'es- &e7elo4s abilit to tae ad7antage o% o44ortunities and 'reate neD o44ortunities- +ore 'om4eten'es &istin'ti7e 'a4abilitiesStrategi' 'a4abilities

RittellGs *ame > i'ed Problems

Pro#ert" Tame ic(ed

! 7bilit" to formulate the #roblem +an be Dritten doDn $o de%initi7e %ormulation

2.Relationshi# between #roblem : solution +an be %ormulated inde4endentl o% solution nderstanding 4roblem is same as sol7ing it

1! Testabilit" ?ither true or %alse Solutions good or bad relati7e to ea'h other

3! >inalit" +lear solution $o 'lear end and no ob7ious test

5! Tractabilit" .denti%iable list o% o4erations 'an be used $o e,hausti7e identi%iable list o% o4erations

6! ?e$el of anal"sis +an identi% root 'ause $e7er sure Dhether a 4roblem or a sm4tom

8! Re#roducibilit" +an be tested o7er again as in a laborator 5nl one tr: no room %or trial and error

9! Re#licabilit" Ma o''ur o%ten niEue

*he 5rigins o% Strateg and *a'ti's

ree StrategioI generalH stratus I arm agein I leadTaktosI ordered (manoeu7re! ta'ti'sMilitar: Business analog not 'om4lete

Strateg and the S'ienti%i' A44roa'h

$o agreement on Dhat s'ienti%i' method isarl Po44er: *heories 'an onl be %alsi%ied (4roblem: not 4ossible to 4ro7e the re7erse either!alaos: *esting not im4ortant but the o7erall resear'h 4rogramme8eerabend: S'ienti%i' method undul 'onstri'ti7e lateral thining ne'essaruhn: S'ienti%i' 4aradigm 'hanges o7er time

.ntra'table 4roblems:- &i%%erent 7ieDs o% strategi' 4lanning

- Range o% 7ariables ('om4an t4e en7ironment! enormous- Signi%i'ant intera'tion among 7ariables- +hanging 7ariables 'ombined Dith time lags betDeen a'tions > out'omes di%%i'ult to disentangle

'ause and e%%e't- i'ed nature o% business

*Do le7els o% 4roblem- S'ienti%i' method 'annot 4ro7ide de%initi7e ansDers- &ata not su%%i'ient to test h4otheses

*Do a44roa'hes: in-de4th 7ersus larges-s'ale edu'ational studies- Strateg resear'h more in-de4th (ane'dotal! 'asual em4iri'ism- ?n Sear'h o% ?,'ellen'e: = attributes o% 3 Jsu''ess%ulK 'om4anies not eEuall 4redominant

Alternati7e inter4retation: 'om4anies Dill 'ontinue- all > Banbur: strategi' 4lanning leads to higher 4er%orman'e

At least 'orrelated 'ausation 'ould be in7erse

4


5/55

Strategi' Planning > Strategi' *hining

+hallenges:- *hree a44roa'hes to strategi' 4lanning- i'ed 4roblem- S'ienti%i' method 'annot be a44lied

*Do %undamental sills %or strategi' 4lanner- Snthesis (breadth! a'ross dis'i4lines- ?7aluation (de4th! b a44ling models

!1 The Process of Strateg" and Decision %a(ing

Strategi' de'ision maing

- +annot be e,4ressed in me'hanisti' %ashion- $onetheless sus'e4tible to stru'tured analsis

Strateg &nami's

+om4le, interde4endent non-linear dnami' sstem- $ot random: deterministi' not 'haoti' not 4redi'table- ?7en i% 4ossible to 4in-4oint strategi' su''ess

Must ensure not tem4orar and 'an be sustained

*he Mthi'al +om4an

1@ oD ell Are e Per%orming

2@ hat Should e Be &oing in the 8uture3@ oD +an e A'hie7e Su''ess%ul +hange

&i%%erent 7ieDs o% strateg e,4ressed in ea'h %un'tionGs language+?5 must arri7e at strateg su44orted b all

- Sin'e all %un'tions must im4lement

Strateg and +rises

Strateg 'hallenges:- rgent da-to-da 4roblem@ &i7ert attention

+?5 o4tions:

- &e%er strategi' 'hanges- Amend 'hanges (mo7ing target!- .nsist on strateg

5


6/55

?lements o% Strategi' Planning

?lements1@ Managers use stru'ture to ta'le 4roblems in their areas2@ Manager a44lies stru'ture to data analsis3@ +?5 integrates analses to arri7e at a de'ision@ ?7aluation sstem monitors resour'e allo'ation)@ Strateg ma be modi%ied in %uture

Stru'ture- &i%%erent e,4ertise %or ea'h %un'tional manager- Bod o% theor introdu'es order to real-Dorld 'om4le,it- Stru'ture Dithin Dhi'h 'an establish 4riorities and identi% ob6e'ti7es- Ca' o% stru'ture rea'tion arbitrar- +aution: stru'ture ma be ina44ro4riate or obsolete

Analsis- *ools and te'hniEues to mae sense o% relationshi4s and data- el4 to identi% Dhat is im4ortant > irrele7ant- &onGt 'on%use rigour Dith numbers

- Pre'ision is not essential- &ata 'an be: relati7e order o% magnitude 4ositi7e / negati7e Eualitati7e / Euantitati7e

.ntegration- .m4li'ations o% re'ommendations in one area (5B ?+ M L! %or other as4e'ts o% 'om4an o4erations- +hallenge: re'on'ile im4li'ations

?7aluation- Per%orman'e hoD Dell resour'es Dere being allo'ated- ariet o% measurements

(+n 4er%: R5. Pro%it Margin F Resour'e allo'ation e%%i'ien': Asset *urno7er +ontribution on Assets Sales 4er ?m4loee!

- el4 identi% 4roblems or 'on'ern earl Darnings- $ot 4ossible to e,4ress all targets Euantitati7el

- +om4etiti7e ben'hmars in7aluable- 8or 4ersons > grou4s: not aggregated must relate to ob6e'ti7es 5r 'an be irrele7ant 'ounter4rodu'ti7e

8eedba'- Maintain alignment Dith a'tual e7ents

!3 @usiness nit and or#orate Strateg"

SB strateg- hat is the maret- hi'h target segments

- hat is the 'om4etition- oD to sustain 'om4etiti7e ad7antage

+or4orate strateg- &etermining the 4ort%olio o% SBs- Allo'ating resour'es among SBs- &e7elo4ing neD business 7entures- A44ointing SB +?5s

Su''ess%ul SB strateg is ne'essar no su%%i'ient 'ondition %or su''ess%ul 'or4orate strateg

Allo'ating +or4orate Resour'es

*Do a44roa'hes to 'or4orate resour'e allo'ation (e@g@ Dith tDo grou4s o% three SBs ea'h!- B SB (most e%%i'ient but not alDas best 'hoi'e!- B grou4

6


7/55

&e7elo4ment o% +or4orate Strategies

+or4orate stru'ture: $alue creation 'ost bene%its (else brea-u4!

ecade Strategic issues Strategic once#ts or#orate Strategies

9)0s +entralised 'ontrol &e7ol7e res4onsibilit I de'entralise &i7isionalisation

9


8/55

%odule 2 ' %odelling the Strategic Planning Process

2! The %odelling 7##roach

Model 4ro7ides stru'ture Dithin Dhi'h 4roblems 'an be analsed- SP model not based on 'ause > e%%e't relationshi4s- Attem4t to rationalise 'om4le, 4ro'esses o% de'ision maing

*he +om4onents o% a Model

Planning as a %loD 4ro'ess

1@ Setting goals2@ 8ore'asting 4ao%%s3@ 8ore'asting short%alls@ .denti%ing 4otential strategies)@ Sele'ting the best strateg mi,


9/55

;uestions %or model:- &o strategists ha7e a44ro4riate 'hara'teristi's- Are ob6e'ti7es 'lear- as en7ironment analsed adeEuatel- as 'orre't alternati7e sele'ted- Are resour'es allo'ated e%%e'ti7el- &oes the model ada4t to %eedba'

$o single 'riti'al su''ess %a'torH hoD man Deanesses 'an a strategi' 4ro'ess bear

2!2 Strateg" %a(ing

Peters > aterman (.n Sear'h %or ?,'ellen'e!: strong leaderis re'urring %a'tor o% su''ess%ul 'om4anies

Strateg and the ?7olution o% the +om4an

+om4anGs Je7olutionK:- Small or entre4reneurial F 'ontrolled b oDner- .ntegrated F oDner 'ontrols strateg delegates o4erations- &i7ersi%ied F ob6e'ti7e 'riteria e7aluation 4rodu't/maret de'isions are delegated to heads o% SBs

Strategists

Resear'h into managerial stles and a44roa'hes- nable to identi% 'ausal relations betDeen beha7iour and out'omes

?nsuring that the right t4e o% 4erson is in 'harge

Strategi' 4lanning: multidimensional multile7el

Management roles:- Strategist entre4reneur goal setter- Analser ('om4etition en7ironment!- Strateg de'ision maer (ad7isor!- .m4lementer and 'ontroller (resour'e allo'ation!- +ommuni'ator ('om4etiti7e hen'e strategi' dnami' 'hange!

+on%li't inherent in 4ro'ess: e%%i'ien' %le,ibilit @@@

Re$iew Auestionase ; Ro$er 7ccelerates into the >ast ?ane )BB3Case 2; The %illennium Dome; ow to ?ose %one" in the 2st entur" )200C

9


10/55

%odule 1 ' om#an" /b*ecti$es

1! Setting /b*ecti$es

Managers tend to rea't to 'ir'umstan'es and seiOe o44ortunitiesStrategi' 4lan is based on a'hie7ement o% s4e'i%ied ob6e'ti7es

?,4li'it ob6e'ti7es: balan'e betDeen in%orming managers and ensuring that 'om4etitors 'annot 4re-em4t strategi' mo7esMission statement:- *he are o%ten de7oid o% o4erational im4li'ations- eneral %rameDor Dithin Dhi'h strategies are Dored out (elaborated!

1!2 >rom Eision to %ission to /b*ecti$es

Eision: long-term 7ieD o% Dhat the 'om4an is about and the marets Dithin Dhi'h it should be o4erating- &e7elo4ed b +?5

*ranslate the 7ision into tangible set o% dire'tion ste4s:1@ &e7elo4 the mission statement2@ &isaggregate the mission

3@ &eri7e ob6e'ti7es

Mission statement 'hara'teristi's:- &e%ine business that organisation is in- Be 'learl understood b em4loees- Pro7ide %o'us %or a'ti7ities

&e%ining the Business o% the 5rganisation(on a regular base!

Produ'ti7e s'o4e (e@g@ mae or bu! im4a'ts sill setMaret 4ositioning (distribution and mareting 'hannels!Breadth > 8o'us o% business*arget marets

&eri7ing the Mission Statement (%rom the business de%inition!

Mission statement 'an relate to e@g@: hoD the 'n intends to o4erate Dithin that business area- Produ't Eualit- &egree o% di%%erentiation- eogra4hi'al area- *arget segments

?a'h statement im4lies di%%erent %o'us di%%erent allo'ation o% resour'es and mareting a44roa'hes

Sometimes mission statement des'ribes status Euo (merel des'ribes Dhat the 'n is!Sometimes des'ribes managementGs JDishK %or the %uture

- Must be attainable- ?m4loees must relate to

&isaggregating the Mission

Mission statement a44lies to Dhole 'om4anShould be a44lied to indi7idual 4arts o% the organisation (e@g@ %un'tional de4artments!

Setting 5b6e'ti7es

&etermine Dhat has to be a'hie7ed %or the mission to be su''ess%ul

Stated as measurable 4er%orman'e targets

- .ntrodu'e a''ountabilit into business

10


11/55

1!1 The Fa# once#t

a4: di%%eren'e betDeen desired > e .n'enti7es (moti7ation!

+urrent in'enti7e sstem usuall aligned to e,4e'ted state rather than desired state- Ma be ne'essar to 'hange in'enti7es to 4romote ga4 'losure

1!3 redible /b*ecti$es

5b6e'ti7es must be a44ro4riate to 'om4an 'ir'umstan'es&nami' 4ro'ess 'onstantl under re7ieDRele7ant to managers and a'hie7able

1!5 Auantifiable and Non'Auantifiable /b*ecti$es

+ost bene%it analsis 'an hel4 assign relati7e im4ortan'e o% intangibles*ranslate non-Euanti%iable ob6e'ti7es into Euanti%iables (R5.! trade-o%%s o44ortunit 'ost

1!6 7ggregate /b*ecti$es

*he 'or4orate ob6e'ti7e as deri7ed %rom the mission statement is an aggregate 'on'e4t in the sense that ita44lies to o7erall 'n 4er%@ siOe target marets %inan'ial stru'ture et'@

- Ma,imiOing shareholder Dealth / 7alue- ;uantitati7e aggregate ob6e'ti7es measure the e%%e'ti7eness o% 'or4orate e,e'uti7es- Prin'i4al-agent 4roblem

1!8 Disaggregated /b*ecti$es

+or4orate ob6e'ti7es SB ob6e'ti7es Sales ob6e'ti7es Produ'tion ob6e'ti7es

Ma be 'on%li'ting: e@g@- Sales: in'rease maret share- Produ'tion: de'rease in7entor

11

Specifc

future

future


12/55

1!9 The Princi#alG7gent Problem

Problem enerate a series o% in'enti7es Dhi'h ensure that 'or4orate > SB ob6e'ti7es are a'hie7ed

+ontra't betDeen manager (4rin'i4al! > subordinate (agent! ensuring that agent attem4ts to a'hie7e the ob6e'ti7esRoot 'ause: asmmetri' in%ormation I agent has more in%ormation

1!B %eans and 4nds

Alternati7e to disaggregating ob6e'ti7es: s4e'i% series o% means %or ea'h end

1!0 @eha$ioural $s! 4conomic : >inancial /b*ecti$es

Beha7iourist a44roa'h .nter4ersonal 4ro'esses im4a't 4robabilit o% su''ess:

- ?%%i'ient 'ommuni'ations- ood labour relations- +ontented Dor%or'e

$o 'n 'an a%%ord to ignore e'onomi' > %inan'ial ob6e'ti7es (Dhi'h are sus'e4tible to measurement > e7aluation!

1! 4conomic /b*ecti$es

?'onomi' ob6e'ti7es di%%erent than %inan'ial:- hat is being ma,imised &iminishing marginal 4rodu't Additional resour'es liel to ield diminishing returns

- .ndi7iduals ma,imise Del%are / ha44iness- +om4anies ma,imise 4ro%its- Altruism not ne'essaril non-ma,imising but 'n no 4ro%it ma,@ as its goal is unliel to su''eed - ?urotunnel

Ma,imising 4roblems:- ast number o% o4tions bounded rationalit satis%i'ing 'riterion (eg@ hurdle rate used in %inan'ial a44raisal!

- &nami' en7ironment (insu%%i'ient time %or analsis!

1!2 >inancial /b*ecti$es

?nable Euanti%i'ation o% 4ro%it ma,imising ob6e'ti7e

&is'ounting and Present alue$et Present alue+a4italised alue

.n'ome/ 'ost stream &i7+a4italised 7alue o% in'ome streams: +a4ital sum I ----------------------------- Share 4ri'e ?0I -------

.nterest rate re

+hoi'e o% .nterest Rate: *he +ost o% +a4ital

*Do %inan'ing methods: debt eEuit?Euit rate not noDn F must be estimated +a4ital asset 4ri'ing

Return on .n7estment

Misleading 7ieD o% single in7estment but a7erage R5. o% 'om4an su%%i'ient to monitor 4er%orman'e

Shareholder ealth

Stage 1 &e'ide on the Planning Period F t4i'all around %i7e earsStage 2 &etermine the +ost o% +a4italStage 3 &e'ide on the Residual +ash 8loDF 'onstant net 'ash %loD 4redi'ted a%ter the end o% the 4lanning 4eriodStage &etermine the +ash 8loDs during the Planning Period

Stage ) +al'ulate $et Present alue o% +ash 8loDs during the Planning PeriodStage < +al'ulate the Present +a4italised alue o% the Residual +ash 8loDStage Add the $et Present alue +a4italised Residual alue Maretable Se'urities minus &ebt

.n Dhat sense is this a'ti7it adding 7alue to the 'nG %o'us on the rele7an'e o% alternati7e 'ourses o% a'tion

12

Expected income streamShareholder ealth ! "al#e $ ---------------------------------- %nterest rate


13/55

1!1 Social /b*ecti$es

+or4orate So'ial Res4onsibilit (+SR! Minimisation o% 4ollution F +reating em4loment %or disad7antaged

8riedman: An goal other than 4ro%it ma,imisation leads to misallo'ation o% resour'esSmith: So'iet interests ser7ed b sel%-seeing indi7idualsH ta'le undesirable side-e%%e'ts Dith 'olle'ti7e a'tionae: nintended 'onseEuen'es o% human a'tion F ma harm both 'om4an and so'iet

Ca' o% e%%i'ien':

- oD mu'h o% resour'es %or ea'h ob6e'ti7e- Redu'e 'om4etiti7eness- ?%%i'ien' 7s@ eEuit .t ma be that 4ursuit o% eEuit (+SR! is 'onsistent Dith 4ro%it ma,imisation

1!3 Sta(eholders

Staeholder .nterest

- +on%li't o% interest: Dhi'h is more im4ortant- .n%luen'e o% staeholders on 'om4an

Staeholder .nterestsF Priorities

Shareholders R5. risFighest 4riorit staeholder ('ontrol the su44l o% 'a4ital!but o%ten short-term 7ieD

Managers Salar ad7an'ementFigh im4a't de'isions but there is a maret %or managers

?m4loees Salar ad7an'ement se'urit %air treatmentF +an be re4la'ed on labour maret

Su44liers Prom4t 4ament re4eat ordersF &e4ends on bargaining 4oDer o% su44lier (number substitutes@@@ !

+ustomers Relati7e 7alue %or mone ;ualit A7ailabilitF CoD 4riorit staeholder

+reditors +ash %loD %inan'ial stabilitF 5nl need assuran'e that debts Dill be ser7i'ed no other interest

Co'al 'ommunit Ca' o% negati7e e,ternalities ?m4loment 4ros4e'tsF Mutual de4enden' 7alid staeholder interest

o7ernment Pament o% ta,es abide b laDF $o staeholder interest unless in g7t run organisations

Staeholder .n%luen'e

?@g@ trade unions interest grou4s in%luen'e o%ten in 'on%li't

Shareholders Cittle da-to-da in%luen'e re4resented b e,e'uti7es Prin'i4al-agent 4roblems.nstitutional shareholders ma Dield some 4oDer F 8amil oDned dual role (manager shareholder!

Managers .n%luen'e o% manager in'reases (> shareholder diminishes! Dith siOe o% 'om4an

.n'enti7e stru'ture must be aligned Dith shareholder interest?m4loees .n%luen'e o% trade unions is diminishing (legislation number o% members!

?,4erien'e 'ur7e: not %easible to re4la'e entire Dor%or'e at on'e&ire't in%luen'e less im4ortant than e,tent o% 'ollaborationRelated to 'ulture organisational stru'ture in'enti7es

Su44liers &e4ends on number o% su44liers substitutes

+ustomers &e4ends on number o% 'ustomers substitutes

+reditors Ma Dant re4resentati7e on board (e@g@ %or a start-u4 Dith + %unding!.n%luen'e diminishes Dith tra' re'ord

Co'al 'ommunit Series o% 'onstraints:

- ood em4loer re4utation: eas re'ruitment at the going Dage rate- Pollution: di%%i'ult obtaining 4ermission %or e,4ansion

o7ernment RegulationRole as 4ur'haser (de%ense industr!Poli'ies on subsidies and trade(im4ort / e,4ort!

13


14/55

Ma44ing Staeholders

Staeholder in%luen'e > 4riorit 'an ha7e a signi%i'ant im4a't on hoD an organisation o4erates> on its 4otential %or 'hange@

Staeholder .n%luen'e Priorit

Shareholders (%amil! igh igh

Managers CoD igh?m4loees igh CoD

?,isting 'ustomers CoD igh

Su44liers CoD igh

Pre'ise lo'ation o% staeholders is sub6e'ti7e

1!5 4thical onsiderations

&i'ensian (amoral! 'a4italist is rare

eogra4hi'al 7ariation in ethi's (bribes!Moral 7alues as means toDards the ends o% 4romoting 4ositi7e image

- onest integrit de4endabilit?m4loee 4er'e4tion:

- (Sur7e! +om4an 7alues loalt but not Dhistle-bloDing

1!6 7re /b*ecti$es S%7RT=

S4e'i%i' %easurable 7'hie7able Rele7ant Time-bound

Rele7ant ob6e'ti7es are lined to the organisationGs strateg

> a'hie7ement o% the ob6e'ti7e is seen to mo7e the business toDards its goals@

Rele7ant: it is 'learl im4ortant that ob6e'ti7es are aligned Dith the resour'e 'a4abilities (resour'e based strateg!

ase; Porsche; Flamour at a Price )BB1C

14


15/55

%odule 3 ' The om#an" and the 4conom"

3! The om#an" in the 4conomic 4n$ironment

?n7ironmental s'anning:P?S* F Politi'al ?'onomi' So'ial *e'hnologi'al?*5P F ?n7ironmental *hreat > 544ortunit Pro%ile

3!2 Re$enue and osts; The @asic %odel

Re7enue I *otal maret , Maret share , Pri'e

5utla I $umber o% Dorers , age rate

Nnits o% 'a4ital , Pri'e

Nnits o% material , Pri'e

Eariable Determining factors

Total mar(et $ational in'ome 8oreign national in'ome Po4ulation Pre%eren'es +om4eting 4rodu'ts

Produ't li%e ''le%ar(et share Pri'e Mareting e,4enditure Mareting strategies +om4etitor mareting e,4enditure

+om4etitor strategies

Price &emand 'onditions +om4etiti7e rea'tion +om4etiti7e ad7antage Maret segmentation

or(force Cabour maret 'onditions Regional su44l 7ariations age rate o%%ered oring 'onditions

age rate Cabour maret 'onditions nem4loment rate

a#ital +a4a'it o% the 'a4ital goods se'tor

a#ital #rice +a4ital maret 'onditions

%aterials +a4a'it o% su44liers

%aterials #rice Materials maret 'onditions

3!1 The or(ings of the 4conom"

Reasons %or analsing e'onom- &istinguish betDeen internal and e,ternal in%luen'es- .denti% o44ortunities and threats- ?'onomi' 'onte,t ne'essar to inter4ret e,4ert 4redi'tions

nderstanding and sing ?'onomi' .n%ormation

Minimum: 7ieD o% 'urrent state o% e'onom- ?@g@ unem4loment industrial out4ut 'onsumer s4ending- +a4a'it / 7olume 4lanning de4ends on e,tra4olation o% trends

Su44l and &emand in the ?'onom

Potential or 8ull em4loment $P- .% all labour %or'e %ull em4loed > no e,'ess 'a4a'it- A'tual out4ut ma e,'eed 4otential out4ut shortages o% labour o7ertime

Managers should as: Dhat is the di%%eren'e betDeen 4otential and a'tual out4ut

*hree elements o% unem4loment- Stru'tural: large s'ale disru4tions Dhen industries %old ( 19=0s: Mining!- 8ri'tional: 6ob sear'h transition (+orrelation to unem4loment 'om4ensation!- &emand-related: di%%eren'e betDeen a'tual and 4otential out4ut

nem4loment and .n%lation

hen maret e'onom a44roa'hes %ull em4loment su44l bottlene's emerge- .n'reased Dage rates 'a4ital 'osts material 4ri'es (Dage rate sti' Dith signi%i'ant unem4loment!- &emand-4ull in%lation: too mu'h mone 'hasing too %eD goods

Phili4s 'ur7e (19)0s!: in7erse relation betDeen in%lation and unem4loment

15


16/55

190s stag%lation: Phili4s 'ur7e shi%ted ?,4e'tations (e,tra4olation o% in%lation!

?limination o% e,4e'tation: Monetarist: ee4 mone su44l groDth 'onstant

Alternati7e: in'rease unem4loment and Dait

.n%lation de4ends on:

nem4loment (demand-4ull! Cast 4eriodGs Dage in%lation ('ost-4ush: 4rodu'tion 'osts!

Cast 4eriodGs in%lation (e,4e'tations!

*he .nternational ?'onom

Relati7e in%lation rates .m4li'ations on 4ri'es and 'osts

?,'hange rate %lu'tuations .nternational 'a4ital %loDs are =0, real trade %loDs

- e,'hange rate inde4endent o% balan'e o% trade

Primar %a'tors: relati7e interest rates and e,4e'tations *enden' to o7ershoot > undershoot

- Bias toDard ''li'al 7ariations

+om4anies not in %oreign e,'hange business- edge bets b buing/selling 'urren' %orDard- But: im4ossible to 4redi't 'ash %loD 4re'isel so residual ris remains

+om4etiti7e ad7antage o% nations Porter: 'om4etiti7e 4osition geogra4hi'all 'on'entrated

ome nation sha4es o44ortunit 4er'e4tion- Pressure to inno7ate and in7est

8a7ourable domesti' %a'tor 'onditions(highl s4e'ialised!

8a7ourable demand 'onditions (so4histi'ated 'onsumers! &anger o% 4rote'tionism (sti%les inno7ation!

$ational en7ironment .n%luen'es &omesti' %a'tor 'onditions(Sili'on alle Plasti' 7alleL!

Related and su44orting industries (a''essible su44liers!

&emand 'onditions ("a4an gadget F erman 'ar!

Strateg stru'ture and ri7alr ('om4etitioninno7ation!

+ountr-s4e'i%i' ad7antage F e,4loit maret b e,4orting ('ost ad7antage!+om4an-s4e'i%i' ad7antage F in7est in 'ountr i% ad7antage 'an be trans%erred*rade-o%% betDeen 4er'ei7ed 'om4etiti7e ad7antage and e,'hange rate

3!3 >orecasting; hat ill a##en Ne


17/55

- Random %lu'tuations (e'onomi' 4oli' e,'hange rates@@@!3!5 P4ST 7nal"sis

.denti%i'ation o% rele7ant %a'tors and interrelationshi4sPoliti'al mono4ol beha7iour labour laDs?'onomi'So'ial demogra4hi' 'om4osition so'ial norms (t4i'all Eualitati7e not Euantitati7e!*e'hnologi'al 'ontinuous 4ro'ess but 'an be disru4ti7e

3!6 4n$ironmental Scanning

Monitor 'ontinuousl all o% the P?S* t4e 7ariables Predi't 'hanges

Assess im4li'ationsider range o% 7ariables than P?S*Predi't beond e,tra4olationsighl sub6e'ti7e?arl Darning sstem

3!8 Scenarios

.m4li'ations o% 4ossible %utures not %ore'aste@g@ 4ri'e redu'tion o% 'om4etitormaret share 'ash %loDe@g@ in%lation %alls@@@

3!9 The 4conom" and Profitabilit"

.m4li'ations %or +om4an Sales and Re7enues

$P elasti'it F res4onsi7eness o% 4rodu't demand to 'hanges in $P (rough idea o% magnitude!$ot Dhole stor: not onl siOe o% $P but distribution o% national e,4enditure

+om4etiti7e Rea'tion and the ?'onomi' ?n7ironment

7ntici#ate com#etitor reactionto en$ironmental changes(e@g@ 4ri'e 'ut!

.m4li'ations %or .n4uts and +om4an +osts

$P groDth ma lead to in'reased 'osts Cabour rates in4ut 4ri'es

Ma e,'eed re7enue groDth

3!B 4n$ironmental Threat and /##ortunit" Profile )4T/PC; Part

8rameDor %or identi%ing %a'tors:

1@ se the P?S* a44roa'h as a 'he'list2@ A44l ma'roe'onomi' ideas to e'onom Dide in%luen'es3@ +onsider international %a'tors both in terms o% e,'hange rates and international 'om4etiti7e in%luen'es

@ se the en7ironmental s'anning a44roa'h to thin beond the immediate situation)@ Put together some s'enarios to hel4 4ut %a'tors into 'onte,t


18/55

ase; Re$isit Porsche; Flamour at a Price

18


19/55

%odule 5 ' The om#an" : The %ar(et

5! The %ar(et

Maret is 4rin'i4al me'hanism %or resour'e allo'ation in industrialised nations@ nderstanding o4eration is 'riti'al %or insight into 'ustomer 'om4etitor beha7iour

Strengths > eanesses are basis %or legitimate go7ernment inter7ention

5!2 The Demand ur$e

Pri'e elasti'it o% demand+eteris 4aribus F 'hanging one 7ariable and holding others 'onstant

&emand 8a'tors

&eterminants o% maret siOe (largel outside 'om4an 'ontrol! Produ't li%e ''le

Business ''le

?,ogenous sho's

$P elasti'it ?,'hange rates

&eterminants o% maret share ('an be in%luen'ed! Pri'e

Mareting

&emand 'ur7e: 4ri'e a%%e'ts 4osition other %a'tors shi%t 'ur7e

&emand +ur7e and Maret Share

igh inelasti'it means stee4 4ri'e redu'tion is ne'essar to in'rease maret share: Ma 4ro7oe 'om4etitor rea'tion shi%ting the & 'ur7e to le%t

igher maret share (determinant o% 'om4etiti7e ad7antage F through 4ri'e redu'tion! .n'reases 'om4etiti7e ad7antage

Ma lead to loDer re7enue (de4ending on elasti'it!

&emand +ur7e and Mareting ?,4enditure

Mareting e,4enditure in'reases sales (> maret share! ?,a't sha4e o% res4onse 'ur7e not usuall noDn

Shi%ts demand 'ur7e to right

Re7enue I *otal maret , Maret share , Pri'e*otal maret: 4ri'e o% substitute/'om4lementar goods 'an shi%t demand 'ur7e (a%%e't total maret!

Maret share: maret e,4enditure 'an shi%t demand 'ur7e

?stimating the &emand +ur7e

+annot e,tra4olate on di%%erent em4iri'al data 4oints (%rom di%%erent time 4eriods! &emand 'ur7e ma shi%t o7er time

5!1 om#etiti$e Reaction

Predi't 'om4etiti7e rea'tion .m4ortant to be aDare o% dilemmasF rather than 4res'ribing 'om4le, gaming rules

ame *heor

ero-sum game

an gain made b one 4art is at the e,4ense o% the otherF e@g@ stati'/de'lining maret ('igarettes!Pri'e setting D/o 'ollusion4risonerGs dilemma(4otential 'osts > bene%its high degree o% un'ertaint 'om4etitor un4redi'tabilit!nless there is trust and 'ommitment / agreement there is in'enti7e %or one 4art to brea rans

.ntrodu'e another 7ariable situation re4eated o% time (1 ear! legal agreement

19


20/55

*he ined &emand +ur7e

At 4ri'e P sales re7enue ( P , ; ! is ma,imised

Maret 'onditions ma 'hange in

.ndustr 'onsolidation in'reases slo4e beloD in (de'reases elasti'it!

+om4etiti7e Pri'ing

*hree main %orms o% 'om4etiti7e 4ri'ing:

Pri'e leadershi4: (%ragilesituation! &ominant %irm initiates 4ri'e 'hanges

Retaliates against de%e'tors

&i%%i'ult Dithout sending 'on%li'ting signals- Penalising de%e'tor 4enalises all the small 'om4anies

Cimit 4ri'ing:

?re't entr barrier b setting loD 4ri'e to deter entr 5nl DorthDhile i% 'ost ad7antage

?7en then: Euestionable Dhether it Dill be sustainable/o4timal in long-term it be'omes a game

Predator 4ri'ing: &ri7e neD entrants (and Dea 'om4etitors! out o% business

ReEuires strength (e@g@ 'ash reser7es!

*hese a44roa'hes are rarel i% e7er %ound in 4ra'ti'e

5!3 Segmentation

Maret segment: grou4 o% 'onsumers Dith 'ommon set o% 'hara'teristi's

Maret demand 'ur7e: sum o% maret segment demand 'ur7es

Segmentation characteristics;

.n'ome so'ial 'lass geogra4hi'al lo'ation age se, %amil siOe edu'ation

&i%%i'ult to di%%erentiate 4ri'e e,'e4t b geogra4h

Re+uired characteristics to enable e


21/55

+ustomer 'hara'teristi's +ustomer Dillingness to 4a ?nough 'ustomers +an the be rea'hedPri'ing in Segments

Pri'es ma 7ar a'ross segments e7en Dhen 'osts are eEui7alent

54timum 4ri'e to 'harge in ea'h segment Discriminating mono#ol"

Mono4olist 'harges higher 4ri'es in maret Dith loD & elasti'it than in maret Dith high & elasti'it

Ste4 1: &etermine segment 'hara'teristi's and mat'hing 4rodu't 'hara'teristi'sSte4 2: &eri7e 4ri'e in'ome elasti'it (also 'alled res4onsi7eness!

Mareting .denti% 7iable 4rodu't segmentation?'onomi's Measure demand 'al'ulate marginal 'osts re7enueA''ounting +ost allo'ation to segments/4rodu'ts ma,imise 4ro%its

Produ't &i%%erentiation

&i%%eren'es ma be more a44arent than real Per'e4tion o% buers

Most im4ortant determinants o% 4rodu't su''ess Per'ei7ed 4ri'e 7s@ 'om4etition Per'ei7ed di%%erentiation 7s@ 'om4etition

Caun'h 4ro6e't mae time Eualit and 'ost trade-o%%s Relati7e 4er'ei7ed Eualit

&nami' 4ositioning: monitor 'urrent and %uture 4rodu't 4osition (en7ironmental s'anning F P?S* ?*5P!

5!5 Product Aualit"

ague de%inition o% Eualit

+om4arati7e studies: di%%eren'es onl marginal- A'tual di%%eren'es not ne'essaril 'orrelated to manu%a'turer 'laims

?m4loee 7ieDs- Produ'tion 4ro'ess- Produ't reliabilit

*rans'endent Eualit Platoni' ('ir'ular! de%inition: 'an onl be re'ognised in light o% e,4erien'e@

Produ't-based Eualit Bundle o% 'hara'teristi's Dhi'h 'an be measured

- Asso'iate 4ri'e elasti'it o% Dith 'hara'teristi'

Some 4rodu'ts in'lude irrele7ant 'hara'teristi's- *oo mu'h Eualit: e@g@ 100m Dater4roo% Dat'h

Ser7i'e industries- +orrelation betDeen Eualit and 'onsisten'- Mean-time betDeen %ailure

ser-based Eualit (4er'ei7ed! A44earan'e: onl o4tion Dhere %un'tion is 4rede%ined (e@g@ ettle!

8un'tional 'hara'teristi's: &urabilit %le,ibilit strength s4eed@@@

.ntera'tion o% Eualit dimensions 'an 4rodu'e more utilit than sum o% 'om4onents

Produ'tion-based Eualit +on%orman'e to s4e'i%i'ations

Statisti'al Eualit 'ontrol

+ost redu'tion

alue-based Eualit +ombines 'ost Dith Eualit

21


22/55

Marginal > total utilit

;uestion: Produ'tion 4ro'ess merel adds to 'osts rather than to maret a44eal&imensions o% ;ualit

ar7inGs dimensions o% Eualit Per%orman'e

8eatures

Reliabilit

+on%orman'e &urabilit

Ser7i'eabilit

Aestheti's

57erall 4er'ei7ed Eualit

Statisti'al methods 'an estimate Deights@+luster analsis 'an relate maret segments and 4rodu't dimensions identi% e,4loitable ni'hes

?@g@ higher in'omes ma Deight aestheti's higher

edoni' 4ri'e inde, F %ormula %or determining 4ri'e 'onsumers are Dilling to 4a Pri'e I T Deights , 'hara'teristi's

;ualit and Strateg

;ualit im4li'ations are not straight%orDard ;ualit and Pri'e not alDas 4ositi7el related

igher Eualit does not sstemati'all mean higher 4ri'e

.n7estment in higher 4er'ei7ed Eualit might be a substitute %or ad7ertising e,4enditure

igh 4er'ei7ed Eualit does not guarantee 4ro%itabilit (Uagen-&aOs!

*otal ;ualit Management (*;M! Be'ame more o% a 4hiloso4h than business te'hniEue

- Su''ess de4endent on energ and 'ommitment

- Sur7es: =0Q o% initiati7es %ailed Asso'iated %eatures do not 4rodu'e 'om4etiti7e ad7antage

- ;ualit training 4ro'ess im4ro7ement ben'hmaring- +an be imitated b 'om4etitors

Beha7ioural %eatures asso'iated Dith ad7antage- 54en 'ulture em4loee em4oDerment e,e'uti7e 'ommitment

Some initial su''ess in eliminating ine%%i'ien'ies- &i%%i'ult to %ind subseEuent 'ostless im4ro7ements: 'ost/Eualit trade-o%%

5!6 Product ?ife "cles

.ntrodu'tion: .n7estment in 4rodu'tion and mareting

$egati7e 'ash %loD igh un'ertaint regarding maret 'om4etition 4ro%itabilit

roDth: 5b6e'ti7e: in'rease maret share

igh mareting e,4enses

CoD 4ri'es

nderutilised 'a4a'it

Maturit: ear 4rodu'ti7e 'a4a'it to demand (".*!

+om4etiti7e ad7antage based on maret share

Redu'ed 'osts (redu'e mg e,4enditures selling 'osts! 4otential high 4ositi7e 'ash %loDs

&e'line: &e'ide on e,it 4hase-out

22

Transitionor

Shakeout

Decision Introduction

Growth

Transition

Maturity Decline

(rice o o %ncrease ,aret ,aret,aretin+

*i+h *i+h /ed#ce o o

apacit *i+h *i+h /ed#ce %' /ed#ce

%n"estme *i h *i h /ed#ce /e laceme ero


23/55

Produ't Ci%e +'le model a%%e'ted b business ''le

Basis %or PC+ de%inition +om4an sales maret sales 4ro%it

Maret de%inition- +umulati7e sales annual sales sales 7alue unit numbers @@@

Predi'tion o% sha4e and duration o% PC+ is im4re'ise@

.m4a'ted b: F SubstitutesF *e'hnolog (obsoles'en'e!F &urabilit and re4la'ement (a%ter maret saturation!

alidit o% 4rodu't li%e ''le 'on'e4t is 'ontro7ersial &i%%erent sha4es durations seEuen'es

Still 4ro7ides stru'ture Dithin Dhi'h to inter4ret data

5!8 Portfolio %odels

?'onomi' models o% demand analsis di%%erentiation segmentation based on 'om4arati7e stati'sPort%olio e,4li'itl taes dnami's into a''ount

*he B+ Relati7e Share roDth Matri,

Relati7e maret share is sour'e o% 'om4etiti7e ad7antage: ?'onom o% s'ale

?,4erien'e e%%e't

igher maret share loDer unit 'ost

roDth stage: Aggressi7e selling strateg

- igher mareting e,4enditure- CoDer 4ri'e

Build 'a4a'it ahead o% demand

Mature stage: Maret share be'omes more se'ure

- Redu'e mareting- Raise 4ri'es

Dog: CoD maret share loD groDth rate Ma still be 4ro%itable: $i'he (%ragmented maret!F Relati7e e%%i'ien' o% the 'om4an

.% not 4ro%itable e7en though e%%i'ientl 4rodu'ed then little %uture

Auestion %ar(: CoD maret share high groDth rate 8uture Star or &og

oD mu'h resour'es to allo'ate

Star: igh maret share high groDth Maintain maret share until groDth 'eases (Dith 'om4etiti7e 4ri'ing!

igh mareting 'osts(to %end o%% 'om4etition!

ash ow: igh Maret share loD groDth ?'onomies o% s'ale ".* redu'e mareting e,4enditure generate high 4ositi7e 'ash %loDs

5ther Port%olio Models More 'om4le, than B+

M'inse 4ort%olio model Business Strength ariables: 'a4a'it utilisation relati7e 'osts

.ndustr attra'ti7eness ariables: roDth rate 4ro%itabilit 'ost trends industr stru'ture

23

BCG Market Growth / Relative Share Matri


24/55

Cimitations o% Port%olio Models

.m4li'ations not uni7ersal Based on assum4tions

$ot alDas e'onomies o% s'ale

Ma be e7en dise'onomies o% s'ale

Port%olio Models and +or4orate Strateg

54timum 4ort%olio: +ash 'oDs generate 'ash to satis% shareholders and %inan'e Stars and ;uestion Mars

Sele'tion not me'hanisti'

&i%%i'ult to identi% Dhi'h ;uestion Mars / Stars liel to su''eedMatri, 7ariables do not 'a4ture all rele7ant in%ormation

Port%olio o% Dholl unrelated 4rodu'ts ma be unmanageable$eed to be lined to bene%it %rom 'or4orate 'om4eten'ies

Analsis o% 'om4etitor 4ort%olio rele7ant&e%end Star b atta'ing +om4etitor +ash +oD rather than +om4etitor StarPro7ide insights into 'om4etitor a'tions

Prin'i4al-Agent 4roblem betDeen +or4orate and SB +?5s- SB ma be unDilling to dis4ose o% Star but it might add more 7alue to allo'ate resour'es elseDhere

7nsoff Frowth Eector %atri Mareting strategies

Produ't re4la'ement:- ?@g@ 4rodu't at end o% li%e ''le- 8ul%ils e,isting reEuirements- Satis%ies 'hanging 'onsumer 4re%eren'es

Maret &e7elo4ment- $eD geogra4hi'al lo'ations segments ni'hes- &e4ends on 4ri'ing and mareting strategies

&i7ersi%i'ation:- nrelated di7ersi%i'ation (neD marets neD 4rodu'ts!

Strateg and Produ't .n%ormation

ReEuired in%ormation

Pri'e elasti'it

.n'ome elasti'it

Mareting e%%e't on the demand 'ur7e

+om4etiti7e 'onditions

Maret siOe > groDth

Relati7e maret share

Produ't li%e ''le

*he ob6e'ti7e o% a maret analsis is to go beond the 4rodu't and Euanti% the 'on'e4tual %a'tor as %ar as 4ossible@

24


25/55

5!9 Su##l"

4Dard slo4ing su44l 'ur7e: PI %(;!Position and sha4e de4end on 4rodu'tion 'osts

*he .ndustr Su44l +ur7e > Strateg

.m4li'ations o% sha4e on 'om4an strateg: .n'rease in demand (right shi%t o% demand 'ur7e! anti'i4ated then:

- Stee4 (inelasti'! su44l 'ur7e: Carge in'rease in 4ri'e Produ'e same amount 'harge more- 8lat (elasti'! su44l 'ur7e: Carge in'rease in Euantit Produ'e more

Shi%ting the .ndustr Su44l +ur7e

8a'tor 'ost in'rease: shi%t su44l 'ur7e le%t8a'tor 'ost de'rease: shi%t su44l 'ur7e right

5!B %ar(ets and Prices

.n%ormation on industr S > & 'onditions 'an hel4 assess im4a't o%: Rough magnitude o% 'hange

?ntr o% 'om4etitors (in'rease o% su44l!

?mergen'e o% substitutes (de'rease in demand!

5!0 %ar(et Structures

Maret stru'ture is the main determinant o% long-term 4ro%itabilit

Per%e't +om4etition

Per%e't maret: omogeneous 4rodu't $o entr barriers

$o e'onomies o% s'ale

ni7ersal a7ailabilit o% in%ormation

Carge number o% buers and sellers

&emand 'ur7e is horiOontal (4er%e'tl elasti'! 8irm is 4ri'e taer

;uantit is at loDest a7erage 'ost- .nterse'tion o% marginal and a7erage 'ost

Per%e't 'om4etition is not realisti' But: use%ul as ben'hmar

&i%%erentiation and im4er%e't 'onsumer noDledge

.denti% im4er%e'tions and 'a4italise on these %a'tors ?ntr barriers F enable mono4ol 4ro%its

$on-homogeneit: 4rodu't di%%erentiation- Pa'aged ser7i'es e@g@ maintenan'e and su44ort- $eD %eatures (e@g@ P+ memor 'olour @@@!

Mono4ol

&emand 'ur7e slo4es doDn: %irm is not 4ri'e taer@

Pro%it ma,imisation: M+ I MR

?ntr o% 'om4etitor (mono4olisti' 'om4etition! ould 4ush demand 'ur7e doDn

25

P I AR I M+ I MR


26/55

ould also a%%e't 'ost side ('om4etition %or in4ut!

26


27/55

Barriers to ?ntr

Stru'tural barriers (outside 'ontrol o% %irm! SiOe o% maret

+a4ital reEuirements

Sun 'osts (e,it 'osts! F ?,it barriers 6ust as im4ortant as entr barriers

Cegislation or ta'it agreementF Patent &e Beers 5P?+

?'onomies o% s'ale

?,4erien'e e%%e'tF +ost ad7antage o% %irst mo7ersStrategi' barriers (de4end on a'tions o% %irm!

Re4utation F ;ualit Reliabilit

Pri'ingF Cimit 4ri'ing Predator 4ri'ing but both doubt%ul

A''ess to distribution 'hannels

suall im4ossible to 4re7ent 'om4etition in the long run &eterring strategies ma de%er entr Su%%i'ient time to build maret share e'onomies o% s'ale@@@

?ntr barriers are more imagined than real

+ontestable Marets

?ntr 'osts are not sun e,it is 'ostless

here no stru'tural barriers: entr deterring ine%%e'ti7e ( 'ost V bene%it !$e7er o%%ers more than normal rate o% 4ro%it

5ligo4ol +om4etition among the 8eD

ame theorined demand 'ur7e

5! The Role of Fo$ernment

Cess e%%i'ient at resour'e allo'ation than maret but legitimate role due to maret %ailures.n4ut into P?S* analsis and en7ironmental s'anning

o7ernment and Rule Maing?m4loment laD

Statutor rights

Mobilit o% labour

Mono4ol S more o44osed than ?uro4e

ealth and sa%et Standards add 'osts

Attra't better labour

Se4aration o% management and oDnershi4 (Prin'i4al-Agent Problem!

?,tent to Dhi'h manager 'an be made res4onsible to shareholdersRules 'hanges Dhen go7ernments 'hange

o7ernment and Regulating

?,ternalities: 'osts and bene%its Dhi'h do not a''rue to 4arties in e,'hange Pri7ate 'ost (I 'n 'ost! 7s@ so'ial 'ost (I 'n > en7ironment 'ost!

o7ernment a'tions: .nternalise the e,ternalit (I %ishing rights to a 'hemi'al 'n!

Regulating out4ut

Setting emission standards

.m4osing ta,es

o7ernment and Allo'ating I 4ro7ision o% 4ubli' goods

Publi' goods: not 4ossible to e,'lude non-4aing 'onsumers it is a maret %ailure

&e%en'e

Cighthouse

27


28/55

&emand is di'tated b go7ernment-4er'ei7ed Jright EuantitK

28


29/55

5!2 The Structural 7nal"sis of &ndustries

PorterGs %i7e %or'es

&ndustr" com#etitors ri$alr"

- $umber o% 'om4etitors- .ntensit based on mt stru'ture PC+ > re'ent 'om4etiti7e a'ti7it

Threat of new entrants

- ?'onomies o% s'ale

- Regulation- ?ntr 4ri'e- *e'hnologi'al %a'tors (e@g@ R>& 'osts!- $eD entrant Dill ha7e similar 4rodu't > 'om4ete mainl on 4ri'e

Threat of substitutes

- *e'hnologi'al 4rogress- Substitute %ul%il same needs > e%%e'ti7el redu'es maret siOe

Su##liers bargaining #ower

- Mono4ol (e@g@ trade unions s'ar'e sills su'h as %inan'ial s4e'ialists!- Mono4son (1 buers man sellers su4ermaret 7s@ %armers!

@u"ers bargaining #ower

- &e4ends on elasti'it o% demand- Mono4ol 4oDer- Brand identi% loalt- SDit'hing 'osts- $umber o% buers- .n'ome elasti'it (mainl saturated maret or lu,ur! I res4onsi7eness o% a good demanded to 'hanges in in'ome- Per'ei7ed di%%erentiation- .n%ormation

+olle'ti7el determine abilit to earn rates o% R5. abo7e the o44ortunit 'ost o% 'a4ital

Pro%iling the 8i7e 8or'es

8o'us o% 'om4an e%%orts Dill be on %or'es Dith high threats

+ommon %ailure is la' o% re'ognition o% 'hanges in balan'e and realignment o% strateg

+riti'isms o% the 8i7e 8or'es Model

i7es the im4ression that all %or'es are eEuall im4ortant

8o'uses on threats rather than 'oo4eration and allian'es

&oes not deal Dith internal issues su'h as human resour'es and e%%i'ien'

5!1 Strategic Frou#s

+hallenge: identi%ing dire't 'om4etitors

&e%ine e dimensions o% 'hara'teristi's and strateg 5rganisation: s'ale degree o% 7erti'al integration di7ersi%i'ation distribution 'hannels

Produ't 'hara'teristi's: Eualit image le7el o% te'hnolog

8inan'ial stru'ture: return on assets gearing

Ma44ing Eualit s4e'ialisation o% ethni' restaurantsrelati7e 4ri'e 4er'ei7ed Eualit

'om4uting s4eed 7s@ 'a4a'it

29

Number of firms T"#e of mar(et @asis for com#etition

Man Per%e't Pri'e8eD 5ligo4ol &i%%erentiation5ne Mono4ol Pri'e (to deter

entrants!

8o'us on the 'onditions that mae entr attra'ti7e instead o%Dhat 'om4etitors are a'tuall doing

om#etiti$e force @efore su#ermar(ets 7fter su#ermar(ets

*hreat o% neD entrants L/L igh L/L CoD*hreat o% substitutes L/L igh L/L CoDBargaining 4oDer o%su44liers

L/L CoD L/L igh

Bargaining 4oDer o% buers L/L CoD L/L igh.ndustr ri7alr L/L CoD L/L igh

Relati$e #rice

om#uting s#eed

Percei$ed +ualit"

a#acit"


30/55

5!3 >irst mo$er ad$antage

?'onomies o% s'ale (a7erage 'ost de'reasing Dith out4ut!

?,4erien'e 'ur7e (limited time!

+osts: ?,4erimentation > %ailure

Produ'tion te'hniEues

Mareting

5!5 7n /$er$iew of %acro and %icro %odels

%acro models >ocus

%acroeconomics &etermination o% $P and business ''les $P elasti'it interest rates in%lationunem4loment and their relationshi4 to 'om4an 'osts re7enues and 4ro%its

om#etiti$e ad$antage of nations $ational maret %a'tors Dhi'h relate to the sour'e o% 'om4etiti7e ad7antage

>orecasting Predi'ting 'hanges in e %a'tors in the e'onom and the maret 4la'e

P4ST +he'list o% %a'tors Dhi'h ma a%%e't the 'om4an in the %uture

4n$ironmental scanning .denti%ing and tra'ing 4otentiall im4ortant 'hanges

Scenarios S4e'ulating about the %uture and assessing the 'om4anGs abilit to res4ond%icro models >ocus

Demand and su##l" .nter4reting the im4a't o% 'hanges in maret 'onditions

%ar(et structures *4es o% 'om4etition and intensit o% ri7alr

Fame theor" &eri7ing 'om4etiti7e res4onse Dith limited in%ormation

Segmentation .denti%ing une,4loited o44ortunities in e,isting marets

Differentiation Produ't 4ositioning

Aualit" &eterminant o% demand and di%%erentiation

?ife c"cle &nami' 4rodu't management

Portfolio models Strategi' management

Strategic grou#s +om4an 4ositioning

>i$e forces anal"sis .denti%ing 'om4etiti7e %or'es

>irst mo$er ad$antage +a4italise on earl lead

5!6 &s om#etition hanging=

.n'reased 4a'e o% te'hnologi'al 'hange

im4ro7ements in 'ommuni'ations

.nternet

lobalisation

$eD terminolog: 4er'om4etition F &nami' 'om4etition

Are marets be'oming more 4er%e'tl 'om4etiti7e

Are 4rodu't li%e ''les be'oming shorter

Are the %i7e %or'es be'oming more 4oDer%ul

Wes %or some industries no %or others

5!8 4n$ironmental Threat and /##ortunit" Profile; Part 2

See @9@

ase ; 7##le om#uter )BBCase 2; Salmon >arming )BB2Case 1; ?"meswold heese )BBCase 3; igarette Price ars )BB3Case 5; 7 Prestigious Price ar )BB6C

30


31/55

ase 6; 7n &nternational Romance that >ailed; @ritish Telecom and %& )BB9C

31


32/55

%odule 6 ' &nternal 7nal"sis of the om#an"

6! /##ortunit" ost

Best o4tion %oregone.denti% all o4tions and 'om4are Dith ea'h other

6!2 >i


33/55

Pri'e F ariable unit 'ost $et +ontributionX X +om4etition 4ri'e F Produ'tion 'ost

33


34/55

Paba' Period

.ssues: B? Et .gnores dis'ounting (but 'an be in'luded! PB I ----------------------

.gnores 4ost-4eriod 'ash %loDs Wearl sales Et

Ma ha7e im4li'ations %or sele'tion o% 4rodu't 4ort%olio ?@g@ ma be una''e4table to in'rease debt ratio

Sensiti7it AnalsisMinimum: Best / orst s'enario %or ea'h im4ortant 7ariable&i%%erent dimensions o% 4er%orman'e: $P Paba' 4eriod 'ash %loD brea-e7en@@@

$on-ob7ious out'ome: identi% the combination o% 'onditions Dhi'h are ne'essar %or su''ess

6!9 7ccounting Ratios

R5. Return on .n7estment $et 4ro%it

R5$A Return on $et AssetsF Re4la'ement 7alue not ob7ious (es4e'iall i% in%lation is high! I --------------- $et assets

R5+? Return on +a4ital ?m4loed

R5*A Return on *otal Assets

R5? Return on oDnersG eEuit

?PS ?arnings 4er Share

earing ratio *otal &ebt *otal &ebtood tra' re'ord should be able to raise debt I -------------------------- I -----------------igh gearing ration reliant on stead 4ro%its Shareholder ?Euit *otal assets

;ui' ratio (the a'id test! +urrent assets F .n7entories +urrent assets

I ------------------------------------------- +urrent ratio I ------------------------------ &ebtX X +urrent liabilities (I debt!

6!B @enchmar(ing

Starting 4oint: Annual re4orts o% 'om4etitors in same industr

+aution- +om4arison onl a44ro,imate (lie-Dith-lie is di%%i'ult!

- Are 4ort%olios similar- Are there snergies not easil identi%ied- Same li%e-''le stages 'om4etiti7e 'onditions

- $o guarantee 'om4etitors are 4ursuing best 4ra'ti'es- &onGt re7eal JhoDK 'om4etiti7e ad7antage is a'hie7eed

6!0 R:D

S'hum4eter: idea o% +reati7e destru'tionGPeriods o% 'alm 4un'tuated b sho's Dhen old sour'es o% +A are destroed and re4la'ed

4er'om4etition*e'hnologi'al 4rogress / .n%ormation te'hnolog sour'es o% +A eroded at a''elerating rate

Resear'h and .nno7ation

Rate o% return on resear'h e,4enditure 30Q R5. on in7entions ha7e rea'hed mareting stage

*Do 'hallenges: 1@ oD mu'h to s4end2@ .denti% 4otentiall 4ro%itable 4rodu'ts

544ortunit 'ost a44roa'h or resear'h e,4enditure (i@e@ rate o% return a44roa'h! F based on un4redi'table returns in the %uture

ee4 resear'h e,4enditure at 'onstant 4er'entage o% *otal 'osts or *otal sales Sim4le a7oids 'on%li't

Arbitrar F misallo'ation o% resour'es

+om4li'ation: $ot alDas 4ossible to segregate resear'h %rom de7elo4ment

Produ't resear'h 7s@ 4ure resear'h

34


35/5535


36/55

&e7elo4ment

Starts %rom the 4rotot4e (resear'h out4ut/out'ome! stage throughout the 4rodu't li%e

54en Euestions- oD mu'h to s4end on de7elo4ment- hen to laun'h- Pri'e to 'harge- Mareting e%%ort

Produ't de7elo4ment 'on%li'tsF time 'ost Eualit trade-o%%s De$elo#ment engineer: ;ualit ma,imisationPeer re4utation

>inancial controller: +ost Dithin budget

%ar(eting manager: ?arl laun'h %irst mo7er ad7antage

Marginal analsis: &oes last dollar s4ent on de7elo4ment ield more or less than one dollar 4ro%it

.nno7ation as a 4ro'ess F *he stage-gate 4ro'ess

1@ .n7ention: in'enti7es %or dis'losure .P rights2@ .n7ention to 4rotot4e: s'reening me'hanism

3@ Protot4e: 'riteria to determine 4otential@ Protot4e to 4atent: is dela 6usti%ied or b4ass this ste4

)@ Patent: de%inition o% in7ention imitabilit


37/55

6!2 The Sco#e of the om#an"

?'onomies o% S'ale

Relation betDeen a7erage 'ost o% 4rodu'tion and 4rodu'ti7e 'a4a'it

?merge reasons .ndi7isibilitiesF ea'h 4rodu'tion addition 'omes in dis'rete amount (e@g@ steel 4lant!

*e'hni'al relationshi4sF de'lining relationshi4 betDeen 'a4a'it and unit 'ost

S4e'ialisationF more %easible as the siOe o% the 'om4an in'reases

Signi%i'ant in some industries hardl e,ist in others@&i%%i'ult to measure as it is more based on e%%i'ient 'ombination o% labour and 'a4ital@

?'onomies o% S'o4e

nit 'ost redu'tion as number o% 4rodu'ts (rather than number o% units! in'reases Sharing in4uts

ood re4utation

R>& s4ill-o7er e%%e'ts +om4eting in related industr Dith a 'oordinated strateg

&ise'onomies o% s'o4e: unrelated marets di%%erent resour'es di%%erent management sills (s4read thinl!

&i7ersi%i'ation

A'Euisitions: sto' 4ri'e out'omes +ombined 7alue o% 4arent and target rises %olloDing announ'ement (tem4orar!

Abnormal returns a''rue to target %irm

A'Euiring %irms returns statisti'all small

.n'enti7es %or di7ersi%i'ation Minimise ris Manager ris not shareholder ris

Add 7alue through 4arenting %un'tion un'on7in'ing (see 1@)!

A44ling the dominant management logi'e@g@ Ri'hard BronsonGs business em4ire Shared re4utation brand stret'hing

Snerg

hole is greater than the sum o% the 4arts*he 'or4oration is 7alued at more than the sum o% the 7alue o% its indi7idual 4arts

.ntuiti7e a44eal but di%%i'ult to 4in doDn in 4ra'ti'e

*Do 4roblems .denti% Dhere the bene%its o% snerg are generated

Cittle em4iri'al e7iden'e to guide 'om4an in a'tual situations

Snerg sour'es: +or4orate management Ma be identi%iable a%ter the e7ent but di%%i'ult to 4redi't (e@g@ %or a'Euisition!

?'onom o% s'ale S'o4e e,4erien'e

erti'al integration ?'onomies 'a4a'it utilisation trans4ort 'osts

+a4a'it utilisation S4are 'a4a'it 'an be reallo'ated to other SB

"oint 4rodu'tion Merged o4erations %a'ilitates the sum o% the s4e'ialisations

.nno7ati7e stimulus +ertainl 4ossible di%%i'ult to 4redi't

+on'lusion: 'hallenge snerg 'laims b Euestioning sour'e

37


38/55

erti'al .ntegration

8orDard ba'Dard integration

%a(e or bu"

8alla'ious arguments %or maing A7oid 4aing a 4ro%it margin to other %irms

A7oid 4aing high 4ri'es during 4ea demand or s'ar'e su44l

Maret (JbuK! Bene%its -Maret %irms Dith e'onomies o% s'ale-Maret %irms sub6e't to dis'i4line o% maret 'om4etitionF Rigorous internal 'ontrols unne'essar

+osts -+om4romise o% 4rodu'tion %loD 'oordination (di%%eren'e o% 4riorities!-Pri7ate in%ormation leaed to 'om4etitors-*ransa'tion 'osts

Mae Bene%its -More 4oDer%ul go7ernan'e stru'turesF &is4utes settled internall-.n'enti7es to get things right-&i7isionsG 'oo4eration more liel due to 'ommon 4ur4ose

+osts -nliel s'ale e'onomies-&i%%erent stages 'an be di%%erent 4resenting di%%erent strategi' 4roblems-+om4ounding o% ris (sum o% ea'h stage ris!

+om4lete 'ontra't 'annot be a'hie7ed in same Da as internal 'ontra't *oo 'om4le, to 'onsider all e7entualities F Bounded rationalit

&i%%i'ult in s4e'i%ing and measuring 4er%orman'e Dith a''ura'

$either 4art Dill re7eal all in%ormation (4la'es buer at disad7antage! F Asmmetri' in%ormation (a PA4b %eature!

oldu4 4roblem e,4loit other 4artGs 7ulnerabilit on'e 'ontra't signedF PGs & Dhere 4arties ha7e in'enti7e to de%ault

erti'al integration in7ol7es 'om4le, trade-o%%s

Balan'e betDeen e%%i'ien' bene%its o% using the maret Dith maret ris e,4osure

brid solution alloD o4tion o% buing %rom outside su44liers i% their 4ri'e is loDer

6!1 The Ealue hain(Porter breas 7alue 'hain into!

Primar" acti$ities(logisti's o% 4rodu'tion and sales!- .n-bound logisti's Re'ei7ing storing handling in4uts to 4rodu'tion- 54erations *rans%orming in4uts into out4uts I maing testing 4a'aging- 5ut-bound logisti's Mo7ing 4rodu't to buer (tangible 4rodu't! or brining buer to 4rodu't (ser7i'es!- Mareting > sales Pro7iding in%ormation to buer indu'ement and o44ortunities to bu- Ser7i'e Maintain the 7alue o% the 4rodu't

Su##ort acti$ities

- Pro'urement Pro'ess o% a'Euiring resour'es- *e'hnolog de7elo4ment *e'hnolog %or ea'h 7alue a'ti7it (learning b doing 4rodu't design de7elo4ment@@@!- uman resour'e management Managing the Dor%or'e- Management sstems ;ualit 'ontrol %inan'e o4erational 4lanning

alue 'hain bene%its: *ool %or analsing e%%e'ti7eness and basis %or 'om4etiti7e ad7antage

.denti%ing strategi' o4tions

.denti%ing strengths and Deanesses

Sim4le disaggregating doesnGt tell Dhole stor Cinages 'ontribute to 'om4etiti7e ad7antage

+om4etitors 'an identi% areas o% su''ess using ben'hmaring but more di%%i'ult to re4li'ate linages Must be 7isualised as a holisti' sstem

niEueness and di%%i'ult o% imitating the 7alue 'hain result in sustainable +A@

38


39/55

6!3 om#etence

&istin'ti7e 'om4eten'e 5%ten not single 'om4eten'e but integration o% 'om4eten'ies that generate 'om4etiti7e ad7antage /edge

+ore 'om4eten'ies hat business the 'om4an should be in

.m4ortant %or restru'turing delaering doDnsiOing@@@ to rationalise a'ti7ities

Also im4ortant %or e,4ansion

+on7entional SB mentalit leads to nderin7estment in 'ore 'om4eten'ies (%o'us on oDn e%%e'ti7eness Dithout Dider 7ieD o% linages!

.m4risoned resour'es ('a4ital budgeting Dors %or homogenous resour'es but not human sills!

Bounded inno7ation (no 4ursuit o% hbrid o44ortunities!

+ore 'om4eten'e is $5* 5uts4ending on R>&

Sharing resour'es (e@g@ e,'ess 'a4a'it!

erti'al integration

*hree tests to identi% a 'ore 'om4eten'e i7es 4otential a''ess to a Dide arra o% marets

Maes a signi%i'ant 'ontribution to 4er'ei7ed 'ustomer bene%its

&i%%i'ult to imitate

Rare t4i'all no more than ) or < 4er 'om4an

.% unre'ogniOed the 'an be unDittingl surrendered Dhen 'ontra'ting out or di7esting@

+ore 'om4eten'ies lead to 'ore 4rodu'tsF might be 'om4onent rather than 'om4lete end 4rodu't e@g@ +anon 4rinter enginesG

Three le$els of com#etence(+hiesa > ManOini!: Sstems oals 'ulture organisational design o% 'om4an

&istin'ti7e 'a4abilities Re4eatable 4atterns enabling 'oordinated de4loment o% noDledge and resour'es

+ore out4ut +an be e,4loited %or neD 4rodu'ts/ser7i'es/marets

Sour'e o% di7ersi%i'ation: Routines ('a4abilities! 7s@ resour'es (e@g@ 'ore in4uts!

Routine based di7ersi%i'ation F S'ottishPoDer: managing Dater gas tele'om

Resour'e based di7ersi%i'ationF ?BS MBA: $eD routines %or distan'e learning

Re4li'ation basedF Ceast ris F Based on e,4ansion

nrelated F Most ris F 5nl resour'e shared I %inan'ial stru'ture > 'ontrol sstemF e@g@ irgin

&i7ersi%i'ation tra6e'tor: &nami' elementH ma signal a mo7e aDa %rom 'ore

6!5 Strategic 7rchitecture

Strategi' Ar'hite'ture I *he Da in Dhi'h the 'om4anGs 'olle'tion o% uniEue attributes is 'ombined together

&eri7ed %rom 7alue 'hain and 'ore 'om4eten'ies

Strategi' Ar'hite'ture: $etDor o% relational 'ontra'ts

.nternal Ar'hite'ture Relations Dith ?m4loees

?,ternal ar'hite'ture Relations Dith Su44liers > +ustomers

$etDors Relations Dith rou4s o% 8irms in related a'ti7ities

+om4etiti7e Ad7antage

nder 4er%e't 'om4etition there is no 'om4etiti7e ad7antage@ hen the 'onditions %or 4er%e't 'om4etition are notmet then an o44ortunit arises to mae mono4ol 4ro%its and +A but this is alDas under threat@

39

/o#tine ased nrelatedc#ired

Resourc

es /eplication

ased

/eso#rce

ased#rrent

#rrent de"eloped

Routines


40/5540


41/55

Sour'e o% 'om4etiti7e ad7antage: 1@ Pure 'han'e 2@ .nno7ation 3@ 8irst mo7er @ &i%%erentiation

;uestion is Dhether it is sustainable

Two sources of sustainable 7:

1@ Maret 4osition (Strategi' assets I stru'tural entr barriers!- Relati7e siOe o% maret- Sun 'osts

- Cegislation- ?'onomies o% s'ale- ?,4erien'e e%%e'ts

2@ .nternal strengths (&istin'ti7e 'a4abilities!- Ar'hite'ture- Re4utation- .nno7ation- +ore 'om4eten'es

Prote'tion o% +A: +ausal ambiguit di%%i'ult to establish e,a'tl Dhat 'hara'teristi's 'ontribute to su''ess

n'ertain imitabilit due to 'ausal ambiguit imitation ma not Dor

Sustainable I long run

Time #eriod 4conomics Strateg"

Short run ar one %a'tor o% 4rodu'tion &eal Dith 'ash %loD 4roblems rea't to 'om4etitors seiOe neD o44ortunities

Cong run ar all %a'tors o% 4rodu'tion &e7elo4 a lined 4ort%olio build on 'ore 'om4eten'e %o'us on generi' strategies

*here is a 4arallel betDeen the e'onomi' and the strategi' de%initions in the sense that both are based onconce#ts rather than defined time #eriods

7ssessing the com#an"s strategic ca#abilit"

Dimension &ssues

Primar a'ti7ities .n-bound logisti's Bargaining 4oDer o% su44liers

54erations Ben'hmaring

?,4erien'eSnerg?'onomies o% s'ale

5ut-bound logisti's &istribution 'hannels

Mareting and sales Maret share

Bargaining 4oDer o% buersPri'ing;ualit

Ser7i'e Re4eat orders

Su44ort a'ti7ities Pro'urement erti'al integration?'onomies o% s'o4e

*e'hnologi'al de7elo4ment .nno7ation 4ro'ess

uman resour'e management +ulture

Ceadershi4

Management sstems &ominant logi'

+om4eten'e

Cinages Ar'hite'ture

Pro%itabilit &e%inition o% 4ro%itA''ounting ratios8inan'ial stru'ture

Shareholder 7alue

*he salient 4oint o% the 7alue 'hain is the end result: 4ro%itabilit > shareholder 7alue@

41


42/55

6!6 Strategic 7d$antage Profile

Similar to ?*5P but %or internal strengths and Deanesses

Strategi' ad7antage 4ro%ile SAP

&nternal area om#etiti$e strength )HC or wea(ness )IC

Resear'h N Re'ent in7entionY ision (Dide narroD!

&e7elo4ment N Cead timeY +ost o7erruns

Produ'tion N 8ull 'a4a'itY *urno7er rate

Mareting N +ustomer databanY ;uali%ied sales4eo4le

8inan'e N Share 4ri'eY CiEuidit

ase ; 7nal"sing om#an" 7ccountsase 2; 7nal"sing om#an" &nformationase 1; ?ufthansa as a Rough ?anding )BB1Case 3; Feneral %otors; the Stor" of an 4m#ire )BB9C

42


43/55

%odule 8 ' %a(ing hoices among Strategies

8! 7 Structure for Rational hoice

Pro'ess: 5b6e'ti7es

?'onomi' en7ironment

*he marets ?*5P +om4an SAP

+an ne7er generate 'ourse o% a'tion automati'all Pro7ides basis %or in%ormed 'hoi'e

8!2 Strengths, ea(nesses, /##ortunities and Threats

Built on ?*5P and SAP

T"#e 7 T"#e @

Mobilise strengths to tae ad7antage o% o44ortunities and*a'le Deanesses to 'ounter threats

+on7ert Deanesses to strengths in order to e,4loit o44ortunities@

S5* uses:1@ nderstand 'om4an its o4eration and hoD di%%erent %un'tions %it together2@ nderstand 'om4etition its strengths and Deanesses

3@ &e'ide strategi' mo7es > allo'ate resour'es

Ambiguit&nami'sF ReEuires imagination

8!1 Feneric Strategies

Re4resented di%%erentl at 'or4orate and B le7el +or4orate le7el S'o4e o% 'om4an dire'tion it Dill 4ursue F Produ't 4ort%olio M>A

Business le7el +om4eting in area 'urrentl o''u4ied

43

Strengths /##ortunities

ea(nesses Threats

Strengths /##ortunities

ea(nesses Threats


44/55

+or4orate Ce7el eneri' 54tions

S'ale and s'o4eX o% 'om4an o4erations XMg 'ourse: S'o4e I mission statementH Dhat 'ustomerGs needs are > Dhat %irm must do to satis%$ot dire'tl tied to 4ro%itabilit (ob6e'ti7e o% all three!

Stabilit" $o 'hange in siOe o% marets 4rodu't lines a'Euiring neD businesses

$ot ne'essaril Jstead stateK- Small 4er%orman'e ga4 +on7ergen'e Dithout 'hange to 4oli'- Mature marets PC+ ma mean no need %or in7estment

- .nternal Deanesses.n'rease o4erating e%%i'ien' e,4ansion not 'ost-e%%e'ti7e- nstable %inan'ial histor &anger o% hostile tae-o7er- Poor e'onomi' 4ros4e'ts &oDnturn de'lining maret- +om4etiti7e threat ReEuires %o'used de%en'e- Per'ei7ed 'osts o% 'hange Stabilit is Drong to 4ursue- Ris-a7erse managers

4


45/55

+om4etiti7e S'o4e ($arroD/$i'he Broad! and +om4etiti7e Ad7antage (+ost &i%%erentiation!

alue 'hain > eneri' strateg must be aligned otherDise it Dill end u4 stu' in the middle@

Feneric strateg" oncerns and characteristics

+ost leadershi4 54timum 4lant siOePro'ess engineering sillsSim4le 4rodu't design

Statisti'al Eualit 'ontrol;uantitati7e in'enti7es*ight resour'e 'ontrols*ight %inan'ial re4orting sstemA'hie7ing e'onomies o% s'ale

&i%%erentiation Branding&esignMaretingAd7ertisingSer7i'e;ualit+reati7it in R>&

8o'us Mat'hing 4rodu'ts Dith 'ustomersA%ter sales ser7i'e&edi'ated Dor %or'e

&e'ision Maer eneri' Strategies Miles > SnoD

Pros#ector .denti% neD maret o44ortunities Pursue groDth Dith di%%erentiated or loD-'ost 4rodu'ts7nal"ser so4histi'ated in%ormation sstems detailed in7estigations Start %rom 'ore and e,4and into related areasDefender maintain maret 4osition Dithout neD de7elo4ment 54erate in mature marets 'ulti7ate 'ash 'oDsReactor &eals Dith situation as the arise $o 'learl de%ined strateg

Man managers ha7e no 'lear idea o% the strateg o% their oDn 'om4an5%ten Rea'tors 4retending to be Pros4e'tors

eneri' Strategies > +om4an Per%orman'e

$ot 4ossible to 4ros'ribe o4timal strateg based on 'om4an and 'onte,t1@ Strateg is a means Per%orman'e is the end2@ Pro%itabilit re%le'ts added 7alue not short-term 'ash %loDsH there ma be other 'onsiderations (%amil 'ontrol!3@ 4othesis testing not %easible 'onditioned b e,4erien'e o% the strategist@

8!3 &dentif"ing Strategic Eariations

.denti% 'ourses o% a'tion a7ailable to a'hie7e the ob6e'ti7esS5* analsis hel4 to identi% the a44ro4riate strategi' 7ariation

?,am4le ariations: .nternal 7s@ e,ternal maret de7elo4ment

oriOontal 7s@ 7erti'al integration

.nno7ation 7s@ imitation

1@ Related and nrelated 54tions (&i7ersi%i'ation!2@ erti'al .ntegration3@ A'Euisitions@ Allian'es and "oint entures)@ .nternational ?,4ansion


46/55

Related and nrelated 54tions (&i7ersi%i'ation!F see 432

Arguments %or related di7ersi%i'ation 8amiliarit Dith business F Mareting > selling te'hniEues F Similar 4rodu'tion 4ro'esses

Shared o7erheads

+om4etition is Dell noDn

Argument against related di7ersi%i'ation

+om4etiti7e legislation Raning o% relatedness ma %o'us on Drong 7ariables

8a'tors 'ontributing to short term returns ('an be re4li'ated! +osts e%%i'ien' maret noDledge

8a'tors 'ontributing to long term returns (less ob7ious! ?'onomies o% s'ale/ s'o4e a'ross SBs F 'ommon distribution sstem

se an e,isting 'ore 'om4eten'eF mareting 'hild 4rodu'ts (bab %ood > tos!

tilise 'ore 'om4eten' to 'reate neD strategi' assets

?,4and the 4ool o% 'ore 'om4eten'ies

erti'al .ntegration

Some bene%its but ma be 'ountera'ted b 'osts o% unrelated di7ersi%i'ation

+riti'al Euestion: Dould 'om4an add 7alue b 'ontrolling other 4arts o% the 4rodu'ti7e 'hain

A'Euisitions

Reasons:1@ nrealised 7alue 4otential2@ Buing maret share

3@ Redu'ing 'om4etiti7e 4ressures@ Snerg)@ Balan'ing 4ort%olio


47/55

Allian'es and "oint entures

$o signi%i'ant long-term e%%e'ts on 6oint 7enture a'ti7it on 4ro%itabilitPrisonerGs dilemma: no 'ontra't 'an 'o7er all e7entualities one side alDas has in'enti7e to 'heat@Prin'i4al agent 4roblems

.nternational ?,4ansion

+A in one lo'ation does not easil trans%er abroad F 8o'us on the elements o% +A Dhi'h 'an be trans%erred

ariables Dhi'h 'om4li'ate o4erations olatile e,'hange ratesF Produ'e as 'lose as 4ossible to 'onsumers thin glo'alG

Relati7e %a'tor 'osts 7ar b 'ountrF labour 'a4ital

Produ'ti7it 7aries among 'ountries

o7ernment 4rote'ts home 4rodu'tion

+ultural norms 7ar

?'onomies o% di%%erent 'ountries rarel mo7e in ste4

8rom eneri's to ariations

Strategi' 7ariations must satis% a number o% 'riteria

+onsisten' Dith ob6e'ti7es

Suitabilit in terms o% resour'es F S5*

8easibilit

8!5 Strateg" hoice

Sele't the strateg that ma,imises shareholder Dealth F P o% all %uture 'ash %loDs

+hallenges in real Dorld

8uture is too un'ertainF +annot be 'a4tured in 'ash-%loD 4ro6e'tionStrateg must 'onsider means as Dell as ends F Pro4osed 'ourses o%

a'tion

1@ Shareholder ealth2@ Per%orman'e a4s3@ +or4orate Management@ SB Management)@ Ris and n'ertaint Analsis


48/55

+or4orate Management

+or4orate management ob6e'ti7e &e'ide 'om4onents o% 4ort%olio

SB Management Management o% the sele'ted 4rodu'ts

Strateg o4tions based on the B+ relati7e groDth share matri, ?liminate &ogs

.denti% Stars to re4la'e +ash +oDs (Dhen the 'ome to an end!

*rans%orm ;uestion Mars into Stars- ReEuires signi%i'ant e%%ort- Ma be'ome ine%%e'ti7e i% 'om4etitor is Eui'er- Ma need to abandon i% +ash +oD is under threat

A'hie7e a balan'ed but lined 4ort%olio: %amiliarit matri, F related to Anso%% groDth 7e'tor

+or4orate strateg 'on'erned Dith intangible %a'tors (not measurable! $o JrightK balan'e o% 4rodu'ts in 4ort%olio matri,

$o hard 'riteria %or sele'ting marets to enter

$o ob7ious resour'e allo'ation betDeen SBs

ard to translate into +8 terms

SB Management

5b6e'ti7e - ?,4loitation o% 4rodu'ts and marets- ?%%i'ient allo'ation o% resour'es- A'hie7e 'om4etiti7e ad7antage in 4rodu'ts sele'ted b 'or4orate

.ssues - .m4a't o% maret share on R5.- *arget marets- Redu'ing unit 'ost

Pro6e't a44raisal:

.ear 1 2 3 ) <

De$elo#ment (Zm! = =Total mar(et (000! 100 120 1)0 200 2)0 2)0 100%ar(et share (Q! 13 1) 1) 1) 1)Price (Z! 139) 1200 1200 139) 139)nit cost (Z!


49/55

Ris and n'ertaint Analsis

All strateg o4tions are un'ertain

Attem4t to in'or4orate de'ision maing into a stru'tured %rameDor

Assign 4robabilities to e,4e'ted 7aluesSub6e'ti7e estimates Dhi'h de4end on 'redibilit o% indi7idual managers

+onsider ris a7ersion: riss are not smmetri'al

n%oreseen ris (un'ertaint! 'annot be Euanti%ied- Mae alloDan'es- +ontingen' 4lanningF address Dide 7ariet o% s'enarios

1@ Minimise 4robabilit o% loss due to ris identi% alternate 'ourses o% a'tion2@ Strategi' res4onse to ma6or un4redi'table e7ents (di%%i'ult!

Managerial Per'e4tions

.n%ormation gathering > Analti'al te'hniEues do not generate strategi' 'hoi'e&i%%i'ult %or outside obser7ers to assess rationalit o% de'ision maing 4ro'ess

8a'tors:

?,ternal de4enden'eF +ustomers su44liers shareholders Ris attitude F Related to 'om4an 'ulture F Ris a7erse/ seeing/ neutral

- Ris a7ersion: e@g@ minima, 'riterionF Sele'ting the o4tion Dith the loDest 4otential lost- Ris a7ersion not the same as 'onser7atism(ee4ing status Euo F Dhi'h ma be higher ris F ris ignorant!

Pre7ious strategF Sun in7estments lead to 4assi7e stan'e

Managerial PoDer Relationshi4sF Prin'i4al agent issues ('on%li't o% interest Dith SB manager!

+onsensus de'isionsF Parado, o% 7oting F +an be mani4ulated

&e'ision are rarel 4urel rational

8rom S5* to eneri's

Start Dith S5* analsis using 4rioritisation %rom ?*5P and SAPAlign strengths Dith o44ortunities and Deanesses Dith threatsMa lead to diametri'all o44osed strategies de4ending on %o'us on strengths or Deanesses@

544ortunit %or in7enti7e thining@ *hining di%%erentl 'on%ers +A@

4armingase 2; Re$isit ?"meswoldase 1; Re$isit a Prestigious Price arase 3; Re$isit Feneral %otorsase 5; The Rise and >all of 7mstrad )BB1Case 6; hat &s a Jaguar orth= )BB2Case 8; Food %orning Tele$ision as a @ad Da" )BB1Case 9; The Rise and >all of @rands )BB6C

49


50/55

%odule 9 ' &m#lementing : 4$aluating Strateg"

9! &m#lementing Strateg"

.m4lementation 7isualised as starting a%ter strateg de%inition +onstant %eedba' Dith earlier stages

Strateg is not end in itsel% F 4ro'ess &etailed 4lans not ne'essar ma be 'ounter-4rodu'ti7e F .nhibit agilit

9!2 /rganisational Structure

5rganisational stru'ture a%%e'ts 4oDer stru'tureA 'hange in organisational stru'ture 'an lead to 'hanges in 4er%orman'e

1@ 8un'tional -&orm$nitar =orm

2@ &i7isional ,-&orm $Multi-di7isional %orm3@ olding 'om4an *-&orm

@ Matri,)@ $etDors

8un'tional Ad7antages - S4e'ialisation &i7ision o% Cabour Sim4li%ied training Strategi' 'ontrol 4reser7ed

&isad7antages - +ross-%un'tional 'oordination %un'tional %o'us interde4artmental 'oordinationla' o% broadl trained managers %un'tional 4ro%itabilit di%%i'ult to measure

&i7isional Ad7antages - Based on 4rodu't geogra4h 'ustomer- &i7isional 4er%orman'e e,4ressed in 4ro%it .nter%un'tional 'oordination

broadl trained managers- Resol7es 4rin'i4al agent 4roblem: di7isional 4ro%itabilit is measurable

&isad7antages - +oordination among s4e'ialised areas 'ommuni'ation betDeen %un'tionsdu4li'ation o% %un'tions loss o% strategi' 'ontrol to di7isional manager

olding $o 4arti'ular logi' to the in'or4oration o% indi7idual businesses8inan'ial 'ontrol allo'ate resour'es > e,4loit o44ortunities through in7estment M>A A>P- Ad7antage Ris s4reading 8inan'ial strength %or neD maret entr- &raDba' Ca' o% snerg game theor 4roblems

Matri, hen e'onomies o% s'o4e lead to more than one dimension o% organisationMan indi7iduals re4ort to tDo hierar'hies > ha7e tDo bosses Prin'i4al agent 4roblems

- Ad7antage 8le,ibilit > ada4tabilit Cess bureau'rati' +lose 'oordination- &raDba' SloD de'ision maing (general agreement reEuired! S4e'i%i' res4onsibilit o%ten un'lear

ighl de4endent on e%%e'ti7e teams

$etDor rou4s organised b %un'tion geogra4h or 'ustomer baseo7erned b 'hanging im4li'it / e,4li'it reEuirements o% 'ommon tass (no %ormal re4orting lines!- Problems o% dire'tion and 'ontrol

Sele'tion 'riteria: hi'h stru'ture adds most 7alue

hi'h is best able to ada4t to 'hange

Stru'ture in terms o% the 'om4an 7alue 'hain

*he stru'ture as a method o% resour'e allo'ation should be aligned to the 'om4an ob6e'ti7es and the'om4etiti7e en7ironment@

50


51/55

9!1 Resource 7llocation

Resour'e allo'ation to be aligned Dith strategi' thrust F se the 7alue 'hain

Management o% +hange

Reallo'ation o% resour'es in7ol7es 'hanging Dhat 4eo4le do&e7elo4 a 'or4orate 'ulture Dhi'h reDards ada4tabilit inno7ation and %le,ibilit+onsider the dominant 'om4an 'ulture PoDer Role *as Personal

Reallo'ation o% resour'es is more than in7esting retooling and hiring*e'hniEuesSur7e %eedba's *eam building +on%rontation *ransa'tional analsisResol7e 4rin'i4al agent 4roblem b re-aligning in'enti7e sstem 'onsistent Dith 'om4an > indi7idual ob6e'ti7es

+riti'al Su''ess 8a'tors

.denti% e7ents Dhi'h must o''ur or things Dhi'h must be done to ensure su''ess@

.n7ol7es understanding o% A7ailable resour'es

ReEuired resour'es

SeEuen'e o% e7ents

Ciel indi7idual rea'tions

Management Stle

Management sills ma not mat'h the reEuirements o% strategi' 'hange@Ceadershi4 stle and 'om4an 'ulture im4a't the abilit o% the organisation to '[email protected]% ga4s in management stle > in'onsisten'ies betDeen 4lanned > 'urrent reEuirements@

Budgets

+or4orate le7el 57erall budget rationed among 'om4eting alternati7es

SB or 8un'tional le7el Resour'es allo'ated to indi7idual managers to 'arr out the ob6e'ti7es

*he 'or4orate rules ensuring e%%i'ient resour'e allo'ation:

1@ +om4etiti7e bidding: allo'ate 'a4ital based on the ratio o% the total %unds reEuested b ea'h di7ision2@ Allo'ate 'a4ital dire'tl to SBs using the 7alue o% 7alue added ($P!

*hereGs a long term dimension to 'or4orate dimension Dhi'h 'annot be Euanti%ied@Budget allo'ation 'an be ha4haOard and 'an go Drong@

51


52/55

9!3 4$aluation and ontrol

Ste4s:1@ &e'ide Dhat to measure2@ &e'ide hoD to measure3@ .nter4ret out'omes@ +on7ert to 4oli'ies

+ategorisation o% 'om4anies a''ording to: &egree o% 4lanning

A44roa'h to e7aluation and 'ontrol

Balan'ed Deighting best

Re'ommendations1@ Sele't %eD ob6e'ti7es2@ &eri7e suitable targets3@ &e7elo4 milestones ben'hmars4. Sub6e'ti7e e7aluation Dill be ne'essar

Control ste" Strategic %oose &lanning 'inancial

&e o>ecti"es chie"e competiti"ead"anta+e

?a+#e@

hi+h #alit hi+h techprofle

chie"e 15A maretshare ithin 3 ears

eedbac(

+om4anies must 4a e,4li'it attention to %eedba'

+ommuni'ation 'hannels: ensure that in%ormation is 'ommuni'ated to the right 4eo4le

Ada4tabilit: 4art o% 'om4an 'ulture F Dillingness to listen admit mistaes and be 4roa'ti7e Cearning organisation: build on 4ast e,4erien'e@

8ormalised stru'ture does not ensure %eedba' integration

?nsure that the strateg 4ro'ess remains robust in the %a'e o% dnami' e7ents@

52


53/55

9!6 The 7ugmented Process %odel

Be aDareA*ACC*.M?So% the 'om4anGs +5MP?*.*.?P5S.*.5$

ho Decides To Do hat 7nal"sis 7nd Diagnoses 7nal"sis : Diagnoses )contdC hoice &m#lementation

ObjectivesBusiness de%inition

MissionShareholder Dealtha4 analsisMeans and ends?thi'sPro%it ma,imisationroDth 7e'torStaeholder ma4+redible;uanti%iable&isaggregated?'onomi'8inan'ial

StrategistsPrin'i4al agentPros4e'tor analser de%ender rea'torRis a7ersion*eam 'om4ositionrou4 dnami's

The general environmentMa'roe'onomi' analsis:

unem4loment in%lation interest rate e,'hange rate8ore'asting+om4etiti7e ad7antage o% nations?n7ironmental s'anningP?S*S'enarios

The industry & intalenvironment&emand and su44l 4ri'edetermination elasti'itBarriers to entr8orms o% 'om4etition:

4er%e't im4er%e'toligo4ol mono4ol

Segmentation&i%%erentiation;ualitStrategi' grou4s

Internal factorsalue 'hain

Shareholder 7alue analsis+om4eten'e

Ar'hite'ture?,4erien'e 'ur7e?'onomies o% s'ale.nno7ation?'onomies o% s'o4eSnerg"oint 4rodu'tion544ortunit 'ostMarginal analsisRatiosearing+ash %loDBen'hmaringuman resour'e management+ulture:

4oDer role tas 4ersonal

Competitive positionProdu't li%e ''leMaret sharePort%olio analsisPer'ei7ed di%%erentiationStrategi' grou4s+om4etiti7e rea'tion8irst mo7er8i7e %or'es?lements o% +A?*5PSSAP Strategi' ad7antage 4ro%ile

Generic strategy alternatives+or4orate > business strateg

Stabilit e,4ansion retren'ht

+ombination+ost leadershi4&i%%erentiation8o'usSegmentation

Strategy variations&i7ersi%i'ation: related > unrelatederti'al integrationMergers > a'Euisitions"oint 7entures and allian'es.nternational ?,4ansionPri'ing: leadershi4 limit 4redator

Strategy choiceRis analsisManagerial 4er'e4tions$et 4resent 7alue8amiliaritS'enariosBrea e7enPaba'Sensiti7itS5*ame theor

Resources & structure&i7isional %un'tional matri,

Managerial stle+riti'al su''ess %a'tors.n'enti7es

Resource allocation544ortunit 'ostMarginal analsis54timisationBudgets+riti'al su''ess %a'tors+ontingen'ies

Evaluation and controlPer%orman'e measuresRatios&egree o% Planning >

t4e o% +ontrolMonitoring sstems

>eedbac(

+ommuni'ation,ana+ement stledaptailit

earnin+ or+anisation

57er7ieD o% 'om4etiti7e 4osition: integration o% models relating to nit 'ost 'om4etiti7e rea'tion and maret share

.ntegrated a44roa'h: Basis %or e7aluating o7erall 'om4etiti7e 4osition

$eD 4rodu't de7elo4ment laun'h in7estment a44raisal entering neD marets

Rationale %or taeo7er mae 7s@ bu@@@

9!8 Postscri#t; Strategic Planning or(s

Strateg: et big 4i'ture right

&ire't resour'es a''ordingl

Re$iew Auestion 9!ase ; The @od" Sho# )BB2Case 2; Daimler in a S#in )BB6Case 1; 4urotunnel a >inancial ole in the Fround )BB6Case 3; The @alanced Scorecardase 5; Re$isit 7n &nternational Romance that >ailed; @ritish Telecom and %&

53


54/55

Strategic Process %odel

ho Decides what=

Strateg Pros4e'tor Analser &e%ender Rea'tor

o7ernan'e Staeholders Prin'i4al-Agent +ulture: PoDer Role Personal *as

5b6e'ti7es SMAR* a4s Marets 8inan'ial

7nal"sis : Diagnosis

Ma'ro P?S*

.ndustr PC+ B+ ) 8or'es

.nternal %a'tors alue 'hain: Primar Cogisti's 54erations MaretingSe'ondar: R &e7elo4ment Pro'urement

+ore 'om4eten'ies +ost stru'ture M earing +ash %loD@@@

+om4etiti7e Position &i%%erentiation Segmentation Strategi' rou4s Pri'ing: ?lasti'it (&emand $P!

hoice

eneri' Retren'hment Stabilit ?,4ansion +ombination

Business le7el +ost di%%erentiation %o'us stu'-in-the-middle

Strategi' ariations Related/nrelated erti'al/oriOontal A'Euisitions " > Allian'es .nternational

&m#lementation

Resour'e allo'ation

?7aluation > +ontrol o7ernan'e Planning > +ontrol matri,: Coose Planning 8inan'ial Strategi'

8eedba'

>eedbac(

Pros4e'ts / 8uture: S5*

Brea-e7en 4oint 4aba' sensiti7it

Sun 'osts

?*5P/SAP

Short/long term

alue +hain im4a't: erti'al integration Pro'urement

Cabour R

54


55/55

0000 RMJJ SPNotes December2010

Documents

Transcript of 0000 RMJJ SPNotes December2010