CC6052 Lecture Wk02 Strategy 2012

7/31/2019 CC6052 Lecture Wk02 Strategy 2012

1/49

Lecture 2

Management and decision-making (1)

Introduction to business strategy

Consequences for management decision-making

1


2/49

Introduction to the module

Scope of study

What is a Management Support System?

Blog for learning materials Coursework

groups of 4: group membership form

case study: Officionado

need to be preparing underlying database will be developing a management support system

2


3/49

Management decision-making what sorts of decisions do business managers need to make?

Business strategy introduction to some strategic planning techniques

Consequences for management decision-making how can strategic planning inform our thinking about key

management decisions?

3


4/49

Techniques Porters generic competitive strategies

Porters value chain analysis

SWOT analysis

BCG matrix SCM and CRM

What is strategy?

Strategic planning - process overview

Performance measurement and the balancedscorecard

4


5/49

Porter identifies

three generic strategies

for achieving competitive advantage in the context

of the five forces identified below

5


6/49

Porters competitive strategies

These are:

Overall cost leadership:

control and reduction of costs across all areas of the business

from the basic premise that:

Profit = Revenue Costs

reduced costsimpliesincreased profit

6


7/49


Differentiation:

involves making the product or service recognisably

differentoruniqueacross the whole industry sector,

thereby enabling an increase in the priceof that product orservice (with a consequent increase inprofit)

7


8/49


Focus:

specialising the product and/or service

for a particular market niche

e.g. by geographical region,

vertical market sector, etc.

8


9/49

Porters Value Chain Analysis

Administration and infrastructure

Human Resource Management

Product technology / development

Procurement

Inbound

logistics

Operations Outbound

logistics

Sales and

Marketing

Services

Value

addedcost=

margin

9


10/49


Pearlson & Saunders, 2003

10


11/49


"Porter's value chain is a framework for considering

key activities within an organisation

and how well they add value

as products and services move from conception

todelivery to the customer

(Chaffey, 2003)

11


12/49

Supply chain management

The planning and control of materialsfrom identifying the need

through to delivery to the customer

Objective:

to optimise performance in meeting customer requirements

i.e. increasing profit by minimising costs

and making thebest use of resources

12


13/49

Supply chain

Administration and infrastructureAdministration and infrastructure

Human Resource ManagementHuman Resource Management

Product technology / developmentProduct technology / development

ProcurementProcurement

InboundInbound

logisticslogisticsOperationsOperations OutboundOutbound

logisticslogisticsSales andSales and

MarketingMarketingServicesServices

ValueValue

addedaddedcostcost==

marginmargin





InboundInbound




ValueValue


marginmargin





InboundInbound




ValueValue


marginmargin

Raw

materials

Consumer

ManufacturersWholesalers /

DistributorsSales outlets

Each link in the supply chain adds value

by developing products (and/or delivering services);

the margin (or profit) is equivalent to the value added13


14/49

Value Chain: Interconnecting relationships between organizations

Pearlson & Saunders, 2003

14


15/49

Porters five forces

"Competition is seen as the crux of an industry's profitabilitywhichis determined by the [five] competitive forcesidentified

Each of the competitive forces is identified in depth

firstly to ascertain the extent to which it is relevantto theparticular industry

secondly to ascertain its strengthin the particular situation...

15


16/49

Porters five forces

... [However], a sixth force, government regulation,can often be the most important factor in determining

the profitability of an industry"

(Pearson, 1999)

16


17/49

Porters five forces

Threat of new

entrants

Threat of

substitutes

Bargainingpower of

buyers

(customers)

Bargainingpower of

suppliers

Rivalry orbasis of

competition

17


18/49

18

1. Threat of New Entrantsnew firms that may enter a market

2. Bargaining Power of Buyersability of buyers to use market power to lower a firms

competitive position

3. Bargaining Power of Suppliersability suppliers of inputs to product/service to reduce a firmscompetitive position

4. Threat of Substitutesproviders of equivalent/superior products

5. Industry Competitorscurrent competitors for the same market

Porters five forces


19/49

SWOT analysis

Involves a detailed and exhaustive assessment of the

strengthsand weaknessesof the business

and the opportunitiesand threats

presented by its product markets and other environments suchas suppliers and technology developers

(Pearson, 1999)

19


20/49

SWOT analysis

Opportunities A B

Threats C D

Externalfactors

Strengths Weaknesses

Internal factors

20


21/49

BCG matrix

The Boston Consulting Group analysis technique models therelationshipbetween the currentand futurepotential of aproduct or serviceand how management wants to deal with it.

It is therefore a marketing analysis and it shows theproducts that are cash generatorsand cash consumers.

Each of these will need to be managed differently andsupported by different kinds of systems

(Cadle and Yeates, 2001)

21


22/49

BCG matrix

High Wild Cats(or problem

children)

Stars

Low

Dogs Cash Cows

Marketgrowth

Low High

Market Share

22


23/49

Customer relationships

Customer relationship management

Marketinghas traditionally been about finding newcustomers

CRMis about maximising the profit from relationships withexistingcustomers through targeting your best customers,repeat-selling, cross-selling, etc.

Putting the customer at the of your business

23


24/49

Customer relationships

Custom

er

satisfact

ion

Customer loyalty

Low High

High

Low

Satisfied

stayers

Hostages

Happy

wanderers

Dealers

Source:Piercy (1997),

from Needle

(2004)

24


25/49

Even from the crudest SWOT model, [strategy]

frameworks have been concerned largely with the

nature of the organisationand its

environmentand how the two might be

advantageously relatedto each other

(Pearson, 1999)

What is strategy (1) ?

25


26/49

The strategic process refers to the way in which

management strategy is formed.

In most organisations this involves amixture of scientific and rational analysis

together with more

subjective and political considerations.

(Needle, 2004)


26


27/49


Mintzberg (1987) considers 5 definitions,

not necessarily mutually exclusive:

Strategy as plan

Strategy as ploy

Strategy as pattern

Strategy as position

Strategy as perspective27


28/49


Strategy as plan:

a deliberate, intentional approach to achieving

(long-term) results

28


29/49


Strategy as ploy:

competitive manoeuvres aimed at generating

some positive effect on the basis of competition

29


30/49


Strategy as pattern:

strategy emerges or is inferred from consistent

natural (i.e. unplanned) behaviour

30


31/49


Strategy as position:

how the organisation positions itself in its

various environments, particularly its marketand competitive environments

31


32/49


Strategy as perspective:

distinctive characteristics of an organisation as

perceived both internally and externally

32


33/49

What is strategy (summary) ?

Mintzberg (1987) considers 5 definitions, not necessarily mutually exclusive:

Strategy as plan: a deliberate, intentional approach to achieving (long-term) results

Strategy as ploy: competitive manoeuvres aimed at generating somepositive effect on the basis of competition

Strategy as pattern: strategy emerges or is inferred from consistentnatural (i.e. unplanned) behaviour

Strategy as position: how the organisation positions itself in itsvarious environments, particularly its market and competitive

environments

Strategy as perspective: distinctive characteristics of an

organisation as perceived both internally and externally

33


34/49

Strategicplanningov

erview

Business Strategy

Strategic planning andmanagement

Analysing theenvironment

Planning thedirection

Planning thestrategy

Implementingthe strategy

SWOT analysis

BCG matrix

Porters fiveforces

Strategy as pattern

Porters generic strategies

Vision

Mission

Objectives

Targets

Organisation Business environment

Organisation structureand culture

Monitor and control

34


35/49

Vision, mission, objectives, targets

Mission

statement

Vision

Objective Objective

KPI KPI KPI

Every business will have some sort of

visionorcore ideologymade up of:

core values

core purpose

visionary goals

35


36/49

Mission

statement

Vision

Objective Objective

KPI KPI KPI

The vision is often captured in a

mission statementoften not more than 50 words


36


37/49

Mission

statement

Vision

Objective Objective

KPI KPI KPI

The vision is often captured in a

mission statement

often not more than 50 words


The mission can be highlighted in a

strapline

using only a few words

London Metropolitan Universitysstrapline is:

transforming lives

meeting needs

building careers

37


38/49

Mission

statement

Vision

Objective Objective

KPI KPI KPI

The mission statement may beexpanded into key goals or

which should be SMART:Specific and written down

Measurable

Agreed, Aligned, Achievable

Realistic, RelevantTime-framed


38


39/49

Mission

statement

Vision

Objective Objective

KPI KPI KPI

Objectives will be supported by

Critical Success Factors (CSFs)

and measurable targets, or

Key Performance Indicators (KPIs)


39


40/49

Vision, mission, objectives, targets (summary)

Mission

statement

Vision

Objective Objective

KPI KPI KPI

Every business will have some sort ofvision

The vision is captured in a mission statement

The mission can be highlighted in a strapline

The mission may be expandedinto SMART objectives

Objectives will be supported by CSFsand measurable targets as KPIs

40

P f t


41/49

Performance measurement

Why measure performance?

Organisations use key performance indicators (KPIs) to: identify success identify whether they are meeting customer requirements help them understand theirprocesses identify where bottlenecks, waste, etc. exist ensure decisions are based on fact

show if planned improvements happened(Parker, 2000)

41

C t l M d l f Add i th G b t


42/49

Conceptual Model for Addressing the Gaps betweenPerformance Measurement and Customer Satisfaction

Word of Mouth

and

Communications

Customer Value Past Experience

Expected Service

Perceived Service

Service Delivery

(including previous

and post)

Service

Performance

MeasurementProcesses

Management

perceptions of

customer

expectations

Customer

Satisfaction

CUSTOMER

PROVIDER Contact staff

perceptionsExternal

Communications

Internal

Communications

Gap1

Gap 2

Gap

3

Gap4

Gap

6

Gap5

Alignment of CRMVision and

Strategy through

streamlined

technology

Actual Perception

Level of Customer

Satisfaction

Gap 7

Wood, Page and Webb (2007)

42


43/49

Balanced Scorecard

Traditional performance measurement basedmainly on financial measures

Balanced scorecard designed to translateoverall mission and business strategyintospecific, quantifiable goals

Usually divided into 4 key areas:

financial customer

internal business process

learning and growth 43


44/49

Strategy triangle

Successful firms have an overriding

business strategy that drives bothorganisational and IS strategy

IS strategy can affect and is affectedby changesin a firms business andorganisational strategy

Changesin anystrategy must beaccompanied by changes in the

others

Source: Pearlson (2001)

Business Strategy

Organisational

Strategy

Information

Strategy

44


45/49

source: http://www.soroc.com/Content.aspx?ID=5

Strategic Planning

45

S i h k i


46/49

Starting the coursework assignment

Consider the following:

Detailed requirements identify datato support chosen decision for proposed MSS

Management Information include ERDand data dictionary

describe how you dealt with any problems in the data

Sample queries

relevant to your choice of decision providing information needed by management

46

R d d di f t k


47/49

Recommended reading for next weekmanagement decision making

Chaffey, D. (ed.), 2003, Business Information Systems, 2nd ed., FT

Prentice Hall

Data and information: pages 4 - 14 + Decision-making: pages 16 - 28

Laudon, K. & Laudon, J., 2004, Management Information Systems, 8th ed.,

Pearson Prentice Hall

Role of managers: pages 85 - 87 + Decision-making: pages 87 - 90

Lucey, T., 1997, Management Information Systems, 8th edition, Continuum

Decision-making: pages 140 - 151

Turban E. & Aronson J.E., 2001, Decision Support Systems and Intelligent

Systems (6th edition), Prentice Hall Business Publishing

Decision-making: (summary) pages 4 - 13 + (detail) pages 33 - 77

Whiteley, D., 2004, Introduction to Information Systems, Palgrave

Management decision-making: pages 171 -178

or similar

https://dspace.lib.cranfield.ac.uk/bitstream/1826/2594/1/Creating%20and%

20Managing%20Value%20in%20Collaborative%20Netwo.pdf

47

R f


48/49

References

Boston Consulting Group (1968), Growth and Financial Strategies, BCG

Cadle J and Yeates, D, (2001), Project Management for Information Systems, 3rd

edition, PrenticeHall

Chaffey D (2003), Business Information Systems, 2nd edition, FT Prentice Hall

Mintzberg H (1987), The Strategy Concept I: five Ps for strategy, California Management Review,Fall

Needle D (2004), Business in Context, 4th edition, Thomson Learning

Parker C (2000), Performance Measurement, Work Study, MCB University Press

Pearlson K (2001), Managing and Using Information Systems, Wiley Pearlson K & Saunders C (2003), Managing and Using Information Systems: A Strategic

Approach, Wiley

Pearson G (1999), Strategy in Action, Prentice Hall

Porter M E (1979), How competitive forces shape strategy, Harvard Business Review, March/April

Porter M E (1980), Competitive Strategy: Techniques for analyzing industries and competitors,Free Press

Robson W (1997), Strategic Management and Information Systems, Prentice Hall

Wood S, Page S, Webb P (2007) Measurement of Customer Satisfaction & Performance

Measurement within a Local Government Framework (available at:

http://chesterrep.openrepository.com/cdr/handle/10034/37773)

48


49/49

Any questions?

49

CC6052 Lecture Wk02 Strategy 2012

Documents

Transcript of CC6052 Lecture Wk02 Strategy 2012