Strategic Analysis Bpsm
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Strategic AnalysisStrategic Analysis
33Chapter
MANDEEP KAUR
HARSHIL SHAH
MONISH SHAH
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Chapter RoadmapChapter Roadmap
Analysing Company’s Resources & Competitive Position
Core Competencies & Distinctive Competitiveness
Organisational Capability ProfileStrategic Advantage Profile
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Strategic ManagementStrategic Management Strategic Management is the art and science of formulating,
implementing and evaluating cross-functional decisions that enable an organization to achieve it’s objectives.
Elements of Strategic Management: Strategic Analysis Strategic Choice Strategic Implementation
Strategic Analysis is the investigation of the objective factors being considered in the process of strategic choice.
Strategic Strategic Strategic Analysis Choice Implementation Evaluation Process
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PYRAMID OF STRATEGYPYRAMID OF STRATEGY
Policies, Procedures, Rules, Regulations, etc
BUDGET
PROJECTS
PROGRAMMES
PLANS
STRATEGY
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Approaches to Assess How Well the Present Strategy Is WorkingApproaches to Assess How Well the Present Strategy Is Working
Qualitative assessment –What is the strategy?
Completeness
Internal consistency
Rationale
Relevance
Quantitative assessment – What are the results? Is company achieving its
financial and strategic objectives?
Is company an above-average industry performer?
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Key Indicators of How Wellthe Strategy Is Working
Key Indicators of How Wellthe Strategy Is Working
Trend in sales and market share Acquiring and/or retaining customers Trend in profit margins Trend in net profits, ROI Overall financial strength and credit ranking Efforts at continuous improvement activities Trend in stock price and stockholder value Image and reputation with customers Leadership role(s) – Technology, quality, e-commerce,
innovation, etc.
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S W O T represents the first letter in S trengths W eaknesses O pportunities T hreats
For a company’s strategy to be well-conceived, it must be Matched to its resource strengths and weaknesses Aimed at capturing its best market opportunities and
erecting defenses against external threats to its well-being
Analysing Company’s Resources & Competitive Position
Analysing Company’s Resources & Competitive Position
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Identifying Resource Strengthsand Competitive Capabilities
Identifying Resource Strengthsand Competitive Capabilities
A strength is something a firm does well or an attribute that enhances its competitiveness Valuable competencies or know-how Valuable physical assets Valuable human assets Valuable organizational assets Valuable intangible assets Important competitive capabilities An attribute that places a company in a position of market
advantage Alliances or cooperative ventures with partners
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Identifying Resource Weaknesses
and Competitive Deficiencies
Identifying Resource Weaknesses
and Competitive Deficiencies A weakness is something a firm lacks, does poorly, or a
condition placing it at a disadvantage Resource weaknesses relate to
Inferior or unproven skills, expertise, or intellectual capital
Lack of important physical, organizational, or intangible assets
Missing capabilities in key areas
Resource weaknesses and deficienciesare competitive liabilities!
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Identifying a Company’sMarket Opportunities
Identifying a Company’sMarket Opportunities
Opportunities most relevant to a company are those offering:
Good match with its financial and organizational resource capabilities
Best prospects for profitable & long-term growth
Potential for competitive advantage
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Identifying External ThreatsIdentifying External Threats
Emergence of cheaper/better technologies Introduction of better products by rivals Entry of lower-cost foreign competitors Onerous regulations Rise in interest rates Potential of a hostile takeover Unfavorable demographic shifts Adverse shifts in foreign exchange rates Political upheaval in a country
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Role of SWOT Analysis inCrafting a Better StrategyRole of SWOT Analysis inCrafting a Better Strategy
The most important part of S W O T analysis is not developing the 4 lists of strengths, weaknesses, opportunities, and threats, but rather
Using the 4 lists to draw conclusionsabout a company’s overall situation and
Acting on the conclusions to
Better match a company’s strategy to itsresource strengths and market opportunities,
Correct the important weaknesses, and
Defend against external threats
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Competencies vs. Core Competencies vs. Distinctive Competencies
Competencies vs. Core Competencies vs. Distinctive Competencies
A competence is the product of organizational learning and experience and represents real proficiency in performing an internal activity
A core competence is a well-performedinternal activity central (not peripheral or incidental)to a company’s competitiveness and profitability
A distinctive competence is a competitively valuable activity a company performs better than its rivals
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Core Competencies -- AValuable Company Resource
Core Competencies -- AValuable Company Resource
A competence becomes a core competence when the well-performed activity is central to a company’s competitiveness and profitability
Often, a core competence results from collaboration among different parts of a company
Typically, core competencies reside in a company’s people, not in assets on a balance sheet
A core competence gives a company a potentially valuable competitive capability and represents a definite competitive asset
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Examples: Core CompetenciesExamples: Core Competencies
Know-how in creating operating systems for cost efficient supply chain management
Speeding new/next-generation products to market
Better after-sale service capability
Skills in manufacturing a high quality product
System to fill customer orders accurately and swiftly
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Distinctive Competence -- ACompetitively Superior Resource
Distinctive Competence -- ACompetitively Superior Resource
It’s a specific ability possessed by a particular organization exclusively, or in a relatively large measure
A distinctive competence is a competitively significant activity that a company performs better than its competitors
A distinctive competence Represents a competitively valuable capability rivals do
not have Presents attractive potential for being a cornerstone of
strategy Can provide a competitive edge in the marketplace —
because it represents a competitively superior resource strength
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Examples: Distinctive Competencies
Examples: Distinctive Competencies
Sharp Corporation Expertise in flat-panel display technology
Toyota and Honda Low-cost, high-quality manufacturing capability and short
design-to-market cycles Intel
Ability to design and manufacture ever more powerful microprocessors for PCs
Wal-Mart Low-cost distribution and use of state-of-the-art retail
technology
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To qualify as competitively valuable or to be the basis for sustainable competitive advantage, a “resource” must pass 3 tests:
1. Should provide access to potential market….
2. Should contribute to the customer benefits of the end product….
3. Should be difficult for the rivals to imitate….
Determining the CompetitiveValue of a Company ResourceDetermining the Competitive
Value of a Company Resource
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Organisational Capability Profile
Organisational Capability Profile
Organisational capability means the potential of the company to use its strengths & to overcome its weaknesses with a view to avail the opportunities provided & face the threats posed by its external enviornment.
Organisational Capability Profile includes 3 factors: General Management Factors Functional Management Factors Operational Management Factors
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General Management Factors
General Management Factors
It is concerned with the accomplishment of organisational objectives by utilising physical, financial & human resources.
A Manager performs 5 basic functions: Planning Organising Directing Staffing Controlling
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PlanningPlanning
Effective Planning
Suitable Organisational
structure
Right People in Right Places
Effective Methods of Motivation
Effective Leadership
Optimum Levels of Control
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OrganisingOrganising
Means to an end. It is essential to carry out pre-determined course of action Organising includes:
Giving a structure to a task Authority – Responsibility Relationship. Co-ordination Control
Pressure to complete the desired objectives. Organising is a medium to complete tasks as per priority
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DirectingDirecting
It involves efforts directed towards achieving organisational goals
The basic function of management is: Motivating Commanding Leading Activating
It deals with inducing the willingness & cooperation of employees towards attaining the objectives
It also enables a sense of coordination of activities
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StaffingStaffing
Centered around human resource management. It includes:
Job Design & Analysis HR Planning Recruitment & Selection Training & Development Performance Appraisal & Compensation Union Mgmt & Grievance Handling Maintaining records
It is one of the most complicated task to handle.
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ControllingControlling
It includes all activities that are undertaken to ensure the actual performance confirm to the planned performance
The controlling activities include:
Take corrective action
Compare actual performance to planned standards
Measure actual performance
Establish performance standards
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Functional Management Factors
Functional Management Factors
Functional competence refers to the strengths of the organisation in the functional areas of management viz; Marketing Finance Production & Operation Human Resource Research & Development
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Marketing ManagementMarketing ManagementCustomer Analysis
Buying
Selling
Product & Service
Planning
Price PlanningDistribution
Marketing Research
Opportunity Analysis
Social Responsibilit
y
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Contd…Contd… Marketing System Audit
Marketing Intelligence system Market & Sales Forecast Marketing Cost
Marketing Productivity Audit Profitability Cost Reduction
Marketing Function Audit Product – line & offerings Distribution Pricing
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Financial ManagementFinancial Management
Financing
Decision
Dividend
Decision
Investment
Decision
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Contd…Contd…
Financial Checklist Liquidity Activity(Turnover) Profitability Growth
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Production & Operation Management
Production & Operation Management
Managing the resources required to produce the products or render services provided by the organisation.
It reflects: Product Design Product Cost Production Efficiencies Production Process Inventory Work Force Product Quality
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Human Resource ManagementHuman Resource Management
It is said that, the difference between two organisations in term of competencies is due to the difference in the capabilities of their Human Resources.
Human Resource Department
Employment HR Development Compensation Human
RelationsIndustrial Relations
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Research & DevelopmentResearch & Development
It is concerned with: creation of knowledge; design of goods & services; & the operation of production process
Survival & Development
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Value Chain Analysis Value Chain Analysis
It separates the activities of the firm into a sequential chain.
Michael Porter’s representation of the value chain distinguishes between: Primary Activities (those involved with the transformation
of inputs and interface with the customer) Support Activities (those involved with other activities
which support the primary function of the organisation)
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Support Activities
Primary Activities
PR
OF
IT M
AR
GIN
FIRM’S INFRASTRUCTURE
HUMAN RESOURCE MANAGEMENT
TECHNOLOGY DEVELOPMENT
PROCUREMENT
INBOUNDLOGISTIC
OPERATION
OUTBOUNDLOGISTIC
MARKETING
SERVICE
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Strategic Advantage ProfileStrategic Advantage Profile
Strategic Advantage
Organisational Capability
Competencies
Synergistic Effects
Strengths & Weaknesses
Organisational Resources + Organisational Behaviour
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Strategic AdvantageStrategic Advantage
It is the outcome of organizational capabilities The rewards are in terms of financial parameters (eg. Profit,
shareholder value) or in terms on non-financial parameters (eg. Market share, goodwill)
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THANK YOU