3 - corporate strategy 2012
TRANSCRIPT
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Corporate StrategyMaster Degree
The Faculty of International Business and Economics,
ASE Bucharest
3. The Strategic Position (I)
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Layers of business environment
The macro-environment
Industry (or sector)
Competitors
The Organization
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Analising strategic position
a. External analysis> environment
b. Internal analysis> strategic capability
Expectations
& Purposes
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Introduction
Analyzing environment -> show how managers can make sense of
an uncertain world around their organization
Challanges of analysis:
To make sense of the environment diversity
Problem of complexity(many of the separate issues in the
business environment are interconnected)
Speed of change
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1. General analysis
2. The Macro - environment analysis
3. Industries and sectors analysis
4. Market Analysis
AGENDA for TODAY
3.The Strategic Position (I)
The Environment
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1. General analysis
2. The Macro - environment analysis
3. Industries and sectors analysis
4. Market Analysis
AGENDA for TODAY
3.The Strategic Position (I)
The Environment
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1. General analysis
Techniques general approach
Future evolution: quick or slow?
Future is cyclic or no cyclic?
Future is predictable or unpredictable? The influencing factors over the organization are
complex or simple?
Results
general strategic conclus ions : The environment is too turbulent in order to develop
efficient predictabilities?
Which are the opportunities and threats for theorganization?
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1. Genera l ana lys is
2. The Macro - environment analysis
3. Industries and sectors analysis
4. Market Analysis
AGENDA for TODAY
3.The Strategic Position (I)
The Environment
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2. The Macro - environment analysis
Techniques:
2.1 PESTEL Analysis
2.2 Building Scenarios
2.3 Porters Diamond
Results:
Identifying key factors
Predictability (if possible) Understanding the connections among events
The determinants of national advantage
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2.1 PESTEL Analysis
The
organization
Political
Economic
Socio-cultural
Technological
Environmental
Legal
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Political factors
Government stability
Taxation policy
Foreign trade regulations
Social welfare policies
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Economic factors
Business cycles
GNP trends
Interest rates
Money supply
Inflation
Unemployment
Disposable income
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Socio-cultural factors
Population demographics
Income distribution
Social mobility
Lifestyle changes
Attitudes to work and leisure
Consumerism
Levels of education
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Technological factors
Government spending on research
Government and industry focus on technological effort
New discoveries / developments
Speed of technology transfer
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Environmental factors
Environmental protection laws
Waste disposal
Energy consumption
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Legal factors
Competition law
Employment law
Health and safety
Product safety
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2.2 Building Scenarios
Detailed and plausible views of how the business environment of an organization
might develop in the future based on groupings of key environmental influences
and drivers of change about which there is a high level on uncertainty
Uncertainty
Low High
High
Potential
impact
?
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2.3 Porters Diamond
There are inherent reasons:
why some nations are more competitive than others?
why some industries within nations are more competitive than
others?
The national home base of an organization:
plays an important role in creating advantage on a global scale
provides factors which organizations are able to build on and
extend to provide such advantage
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Porters Diamond the determinants of national advantage
Firm strategy,
structure and
rivalry
Demand
conditions
Factors
conditions
Related and
supporting
industries
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Porters Diamond the determinants of national advantage
Specific factor conditions help explain the basis of advantage on a national level
-> provide initial advantages that are subsequently built upon a yield more
advantaged factors of competition
Home demand conditions
provide the basis upon which the characteristics ofthe advantage of an organization are shaped
One successful industry may lead to advantage in related and supporting
industries
The characteristics offirm strategy,industrystructure and rivalryin different
countries also help explain bases of advantage.
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1. Genera l ana lys is
2. The Macro - env i ronment ana lys is
3. Industries and sectors analysis
4. Market Analysis
AGENDA for TODAY
3. The Strategic Position (I)
The Environment
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Techniques:
3.1 The 5 force framework - PORTER
Results:
The description of the competitive market forces
3. Industries and sectors analysis
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3.1 The 5 force framework - Porter
Competitive
rivalrySuppliers Buyers
Potential
entrants
Substitutes
power power
Bargaining Bargaining
Threat of
Threat of substitutes
entry
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a. The threat of entry:
Depending on which extent there are barriers of entry
Barriers of entry factors that need to be overcome by new entrants if
they are to compete successfully
Typical barriers are as follows:
Economies of scale
The capital requirement of entry
Access to supply or distribution channels
Customer or supplier loyalty Experience
Expected retaliation
Legislation or government action
Differentiation
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b. The threat of substitutes
Substitution reduces demand for a particular class of products, as
customer switches to other alternatives (if a substitute provides a higher
perceived benefit or value)
Substitution may take different forms:
Product-for-product substitution & complementors organizations (with
products more competitive)
Substitution of need by a new product or service, rendering an existing
product or service redundant
Generic product when products or services compete for disposable income
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c. The power of buyers
Constraints the strategic freedom of an organization and influences the
margins
Together with the power of suppliers represent the value network within
which an organization is operating
Buyer power is likely to be high when:
> There is a concentration of buyers
> The cost of switching a supplier is low or involves little risk
> There is a threat of the supplier being acquired by the buyer and / or thebuyer setting up in competition with the supplier (backward integration)
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d. The power of suppliers
Constraints the strategic freedom of an organization and influences the
margins
Together with the power of buyers represent the value network within
which an organization is operating
Supplier power is likely to be high when:
There is a concentration of suppliers
The switching costs from one supplier to another are high
There is the possibility of the supplier competing directly with their buyers(forward integration)
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e. Competitive rivalry
Competitive rivals organizations with similar products and services
aimed at the same customer group
Factors that affect the degree of competitive rivalry in an industry or
sector are:
> The extend to which competitors are in balance
> Industry growth rates may affect rivalry
> High fixed costs in an industry (perhaps through capital intensity, may results
in price wars and low margins)
> High exit barriers to an industry (persistence of excess capacity)
> Differentiation (e.g. in FMCG industry, where many products or services are
undifferentiated)
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The 5 force framework - Porter
a.The threat of entry
b.The threat of substitutes
c.The power of buyers
d.The power of suppliers
e.Competitive rivalry
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1. Genera l ana lys is
2. The Macro - env i ronment ana lys is
3. Indust r ies and sectors ana lys is
4. Market Analysis
AGENDA for TODAY3. The Strategic Position (I)
The Environment
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Techniques:
4.1 SWOT Analysis (Opportunities & Threats);
4.2 Competitors Analysis (critical success factors; the
growth share matrix);4.3 Customers Analysis (customer matrix, market studies &segmentation)
Results
Market Opportunities & Threats
Competitors profile
The analysis of the relative market position
Strategy towards the existing & potential clients
4. Market Analysis
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4.1 SWOT Analysis
Opportunities Threats
W...............S.................
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4.2 Competitors Analysis- Critical success factors
Understanding what customers value: which are the critical
succes factors?
What differentiate competitors within a specific market?
Critical success factors (CSFs) those product features that
are particularly valued by a group of customers and,
therefore, where organization must excel to outperform
competition
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A strategy canvas perceived value by customers-example for the electrical engineering industry
Reputation After-sales service Delivery reliabilityTesting Technical quality
MOST IMPORTANT LESS IMPORTANT
0.25
0.5
0.75
1.0
RATING
Company A
Company B
Company C
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Competitors Analysis - The growth share (or BCG) matrix
Market
growth
Market shareHigh Low
Low
Stars Questionmarks
Cash
CowsDogs
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Competitors Analysis main criteria of differentiation
Objectives
Resources (different types: financial, HR, operational, etc)
Performance history
Existing products and services
Existing strategies
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4.3 Customers Analysis main phases
1.Identify clients and markets
2.Market segmentation and strategic effects
3.The importance and role of the offered services to the clients
& their quality
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Customers Analysis - market studies & segmentation
Type of factor B2C - Consumer marketsB2B - Industrial /
organizational markets
Characteristics
of people/
organizations
Purchase / use
situation
Users needs
and preferences
for product
characteristics
Age, sex, race
Income
Family size
Life-cycle stage Location
Lifestyle
Industry
Location
Size
Technology
Profitability
Management
Application & volume
Importance of purchase
Frequency of purchase
Purchasing procedure
Choice criteria
Distribution channel
Size of purchase
Brand loyalty
Purpose of use
Purchasing behavior
Importance of purchase
Choice criteria
Performance requirements
Assistance from suppliers
Brand preferences
Desired features
Quality
Service requirements
Product similarity
Price preference
Brand preferences
Desired features
Quality
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Whatwewant?
What the customers want?
Whatwewant?
Se
Reao
Relationale
Transactional
SALES
Consultative
SALES
Customers Analysis - customer matrix (applied in sales)
(sourc e: AchieveGlobal, Inc)
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Who are the customers appreciating the products/services we sell
SUGESTIONS Check your resources Be prepared tonegotiate Pay attention to yourprofitabilitySUGESTIONSDont invest time orresources for theseclients
SUGESTIONS Invest resources forbuilding a relationship Build a long termdevelopment plan foreach client
SUGESTIONS Prioritize your clients Invest time andresources for closing thesales as sooner aspossibleV
uosaereeeave
Value for customersSmall
Big
Big
(sour ce: AchieveGlobal, Inc)
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For more information:
Cosmin Jolde
cosmin. jo ldes@achieveglobal . ro
Thank you!
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