accounting - environmental scan eu
TRANSCRIPT
-
8/3/2019 Accounting - Environmental Scan EU
1/68
Strategic Planning:
EnvironmentalScanning
Dr. Clive Vlieland-Boddy
FCA FCCA MBA
-
8/3/2019 Accounting - Environmental Scan EU
2/68
I think you should be more explicithere in step two.
-
8/3/2019 Accounting - Environmental Scan EU
3/68
How can you govern a
country which has 246varieties of cheese?
-- Charles De Gaulle
-
8/3/2019 Accounting - Environmental Scan EU
4/68
The nicest thing about not
planning is that failure comes as a
complete surprise, and is notpreceded by a period of worry anddepression.
-- John Perton
-
8/3/2019 Accounting - Environmental Scan EU
5/68
STRATEGIC MANAGEMENT: CONCEPT
Ongoing process , evaluates and
controls the business and the
industries in which the company
is involved.
Assesses its competitors and
sets goals and strategies to meet
all existing and potential
competitors.
Reassesses each strategy
regularly.
-
8/3/2019 Accounting - Environmental Scan EU
6/68
MISSION AND OBJECTIVES
Describes the company's business vision:unchanging values and purpose of the firm,
forward-looking visionary goals that guide the
pursuit of future opportunities.
Define measurable financial and strategic
objectives:
Financial objectives involve measures such
as sales targets and earnings growth.
Strategic objectives are related to the firm's
business position, and may include measures
such as market share and reputation.
-
8/3/2019 Accounting - Environmental Scan EU
7/68
Environmental Scanning
Common part of strategic analysis
There are internal elements & external
elements All interrelate
-
8/3/2019 Accounting - Environmental Scan EU
8/68
Tools/Methods of AnalysisResults Interpretation
TOOLS ANDMETHODS
SWOT
Strenghts,
Weaknesses,Opportunities andThreats Analysis
Economic
DevelopmentScenarios
OtherTools
-
8/3/2019 Accounting - Environmental Scan EU
9/68
SWOT
E t l M k ti
-
8/3/2019 Accounting - Environmental Scan EU
10/68
External MarketingEnvironment
Demographics
SocialChange
Economic
Conditions
Political &Legal Factors
Technology
Competition
EnvironmentalScanning
Target Market
ProductDistributionPromotion
Price
External Environmentis not controllable
Ever-ChangingMarketplace
-
8/3/2019 Accounting - Environmental Scan EU
11/68
SWOT Framework
-
8/3/2019 Accounting - Environmental Scan EU
12/68
SWOT analysis
Popular method used for summarising ofthe innovation analysis results;
Provides an overview of regionalstrengths and weaknesses as well asopportunities and threats the region iscurrently facing or may face in the future.
-
8/3/2019 Accounting - Environmental Scan EU
13/68
ENVIRONMENTAL SCAN
The environmental scan includes the following components:
Internal analysis of the firm
SWOT Analysis Analysis of the firm's industry
Porter's five forces External macro-environment
PEST Analysis
-
8/3/2019 Accounting - Environmental Scan EU
14/68
Definitions: Strengths (S)
An organizational resource or capability
May be used to advance the organizations /
programs interests
-
8/3/2019 Accounting - Environmental Scan EU
15/68
Definitions: Weaknesses (W)
The absence of certain strengths orcapabilities that are needed to move theorganization forward
-
8/3/2019 Accounting - Environmental Scan EU
16/68
Internal factors
A STRENGTH is a is a resource orcapacity of the region that it can takeadvantage of to improve its innovation
system and competitiveness, e.g. Access to well-educated labour force;
Good communication and infrastructure;
Diversified regional economic structure; Well-functioning public services;
Etc.
-
8/3/2019 Accounting - Environmental Scan EU
17/68
Internal factors
WEAKNESS is a limitation, fault or defectin the region that will keep it fromimproving the innovation system, e.g.
Limited number of start ups in the region;
Peripheral location and low population density;
High degree of long-term unemployment; Lack of cooperation between companies;
Etc.
-
8/3/2019 Accounting - Environmental Scan EU
18/68
Strengths & Weaknesses
May be identified by asking questions:
Why does we do well?
What do we do less well?
In what areas are we healthy & robust?
In what areas are we weak or struggling?
-
8/3/2019 Accounting - Environmental Scan EU
19/68
Strengths & Weaknesses
May be identified by asking questions:
What might someone looking at our industry ingeneral point out as unique or distinctive either
positive ornegative about us?
What resources can we call upon?
How do these resources compare with ourneeds?
-
8/3/2019 Accounting - Environmental Scan EU
20/68
Definitions: Opportunities (O)
Chances for growth or positive change indirection revealed by changes or trends in theexternalenvironment
-
8/3/2019 Accounting - Environmental Scan EU
21/68
Definitions: Threats (T)
Changes or trends in the externalenvironment
May also reveal a treat to overcome orchallenge to meet
Threats are sometimes described as
Traps
-
8/3/2019 Accounting - Environmental Scan EU
22/68
External factors
OPPORTUNITY is a favourable situation inthe region's environment, e.g.
Availability of EU funds and programmes; New markets through increased
internationalisation;
New educational opportunities;
Cross-border cooperation;
Global increase for demand in tourism services;
Etc.
-
8/3/2019 Accounting - Environmental Scan EU
23/68
External factors
THREAT is an unfavourable situation inthe region's environment that maypotentially damage the strategy, e.g.
Increasing of energy prices;
Termination of regional development funding;
Decrease of population; Emigration of high-qualified labour force;
Etc.
-
8/3/2019 Accounting - Environmental Scan EU
24/68
Opportunities & Threats
Are identified by looking beyond theboundaries of the organization
Questions might include the following:
What are the external trends that will affect us?How?
What is changing in our communities that will
affect us? How?
-
8/3/2019 Accounting - Environmental Scan EU
25/68
Opportunities & Threats
Questions might include the following:
What are the the needs in the externalenvironment that could be met us?
Do any of our weaknesses make us particularlyvulnerable to a changing environment?
-
8/3/2019 Accounting - Environmental Scan EU
26/68
SWOT Design
One SWOT strategy for the whole region;or
A set of SWOT strategies Relevant if different views of the actors involved
in the SWOT process;
E.g. a regional economic strength may beregarded as a weakness from environmental
point of view; May be structured along different sectors
(economic, environmental, social, etc) or targetgroups (companies, public agencies, R&D
sector, etc).
-
8/3/2019 Accounting - Environmental Scan EU
27/68
Identify
Strategic
Factors
Strengths
Weaknesses
Scan Internal
Environment
Core
Competence
Synergy
Value
Creation
Identify
Strategic:
Corporate
Business
Functional
Define New:
Mission
Goals
Grand Strategy
Evaluate Current:Mission
Goals
Grand
Strategy
Scan ExternalEnvironment
National
GlobalOpportunities
Threats
IdentifyStrategic
Factors
SWOT
ImplementingStrategy via Changes
in:
Structure
Human resources
Information &
control systems
STRATEGIC MANAGEMENT: MODEL
-
8/3/2019 Accounting - Environmental Scan EU
28/68
A scan of the internal and external environment is
an important part of the strategic planning process.
Environmental factors internal to the firm usually can
be classified as strengths (S) or weaknesses (W),and those external to the firm can be classified as
opportunities (O) or threats (T). The SWOT analysis provides information that is
helpful in matching the firm's resources and
capabilities to the competitive environment in which
it operates
STRATEGIC MANAGEMENT:
SWOT ANALYSIS
-
8/3/2019 Accounting - Environmental Scan EU
29/68
SWOT Analysis Main Steps
SWOT Matrix
Strenghts
123
Weaknesses
123
Opportunities123
Threats123
OS ActionsOxSxOxSxOxSx
OW ActionsOxWx
OxWx
OxWx
TS Actions
TxSxTxSxTxSx
TW Actions
TxWxTxWxTxWx
Scaning ofRegional
Environment
Analysis ofStrenghts
andWeaknesss
Analysis ofOpportunities
andThreats
-
8/3/2019 Accounting - Environmental Scan EU
30/68
STRATEGIC MANAGEMENT: SWOT ANALYSISStrengths
Patents
Strong brand names
Good reputation among
customers
Cost advantages from
proprietary know-how
Exclusive access to high grade
natural resources
Favorable access to distribution
networks
Weaknesses
Lack of patent protection
A weak brand name
Poor reputation among
customers
High cost structure
Lack of access to the best
natural resources
Lack of access to key
distribution channels
-
8/3/2019 Accounting - Environmental Scan EU
31/68
STRATEGIC MANAGEMENT: SWOT ANALYSIS
pportunities An unfulfilled customer
need
Arrival of new technologies
Loosening of regulations
Removal of international
trade barriers
Threats Shifts in consumer tastes
away from the firm's
products
Emergence of substitute
products
New regulations
Increased trade barriers
-
8/3/2019 Accounting - Environmental Scan EU
32/68
STRATEGIC MANAGEMENT: SWOT MATRIX
To develop strategies that take into account the SWOT
profile, a matrix of these factors can be constructed.
S-O strategies pursue opportunities that are a good fitto the company's strengths.
W-O strategies overcome weaknesses to pursueopportunities.
S-T strategies identify ways that the firm can use itsstrengths to reduce its vulnerability to external threats.
W-T strategies establish a defensive plan to preventthe firm's weaknesses from making it highlysusceptible to external threats.
-
8/3/2019 Accounting - Environmental Scan EU
33/68
Using SWOT as a Basis forRegional Development Strategy
The strategy shall define priorities and actionsthat
Build on STRENGTHS;
Eliminate WEAKNESSES;
Exploit OPPORTUNITIES;
Mitigate the effect of THREATS.
-
8/3/2019 Accounting - Environmental Scan EU
34/68
SWOT Golden Rules
Be realistic about the strengths andweakness of your region whenconducting the SWOT;
Avoid general SWOT! It should always bespecific;
Distinguish between where your region is
today and where it could be in the future; Keep your SWOT short and simple.
-
8/3/2019 Accounting - Environmental Scan EU
35/68
DevelopmentScenarios
-
8/3/2019 Accounting - Environmental Scan EU
36/68
Development Scenarios
An alternative to SWOT analysis
Development scenarios are not predictionsor forecasts of the future!
They intend to explore a number of wide-ranging possible futures and access theirimplications for the region and its main
actors
-
8/3/2019 Accounting - Environmental Scan EU
37/68
Development Scenarios MainSteps
Identificationof RegionalDrivers and
RegionalIssues
Assessmentof RegionalDrivers andDependency
Analysis
Elaborationof
DependencyMatrix
DevelopmentScenario 1
DevelopmentScenario 2
DevelopmentScenario 3
DevelopmentScenario 4
-
8/3/2019 Accounting - Environmental Scan EU
38/68
Scenarios Design
Elaboration of a DEPENDENCY MATRIXHigh Dominance Regional Leadership Environmental Technologies Entrepreneurship
Globalisation Gaps in the skills base
Gateway to the Sky Importance of flexiblebusinesses
R&D base
Medium Dominance Importance of Knowledge Network SocietyAnd service Sector
Gateways to the sea Importance of knowledgespecialists
Business composition &Lifecycle
Surface transport
&Connectivity
Low Dominance Quality of Life Polarisation
Homes not Houses
Low dependency Medium Dependency High Dependency
-
8/3/2019 Accounting - Environmental Scan EU
39/68
Using Scenarios as a Basis forRegional Development Strategy
Definition of OPPORTUNITIES andTHREATS for the region under each of the
scenarios; Selection of number of STRATEGIC
THREATS and STRATEGICOPPORTUNITIES from all scenarios;
Finally definition of STRATEGICPRIORITIES and ACTIONS based on theabove strategic risks and preferences;
-
8/3/2019 Accounting - Environmental Scan EU
40/68
Stages of your RIS project
Stage 1Stage 0 Stage 2
Needanalysis
Offeranalysis
Networkanalysis
SWOTandSynthesis
Coordination
Detailedelabora-
tion
of theworkprogram
Definitionof
strategicpriorities
andactions
Definitionand
selectionofpilot
actions
Preparingfor
Monitoring
Interpretation& discussionof analyses
results;
Consensusbuilding
06/05 05/06 04/07 01/08
Your
Regional
Innovation
Strategy
-
8/3/2019 Accounting - Environmental Scan EU
41/68
Porters 5 Forces
-
8/3/2019 Accounting - Environmental Scan EU
42/68
PORTERS FIVE FORCES
Potential new entrants
Bargaining power of buyers
Bargaining power of suppliers
Threat of substitute products
Rivalry among competitors
-
8/3/2019 Accounting - Environmental Scan EU
43/68
PEST or PESTEL
-
8/3/2019 Accounting - Environmental Scan EU
44/68
PEST ANALYSISA scan of the external macro-
environment in which the firm
operates can be expressed in terms
of the following factors:
Political Economic Social Technological
Some add Environmental and Legal to extend PEST to PESTEL
-
8/3/2019 Accounting - Environmental Scan EU
45/68
PEST ANALYSISPolitical Factors
Tax policy Employment laws
Environmental regulations
Trade restrictions and tariffs
Political stability
Economic Factors
Economic growth
Interest rates
Exchange rates
Inflation rate
Social Factors
Health consciousness
Population growth rate
Age distribution
Career attitudes
Emphasis on safety
Technological Factors
R&D activity
Automation
Technology incentives
Rate of technological change
FORMULATION
-
8/3/2019 Accounting - Environmental Scan EU
46/68
FORMULATIONStrategy formulation is vital to the well-
being of a company or organization.
A leadership skill
A process that leaders use to focus
for positioning the firm
Iterative
Assess, decide, act, and review
Leaders determine how much to
stretch
How to create the benefits for
customers
-
8/3/2019 Accounting - Environmental Scan EU
47/68
PESTEL
E is for Environmental and
L is for Legal
-
8/3/2019 Accounting - Environmental Scan EU
48/68
Strategic Issues
-
8/3/2019 Accounting - Environmental Scan EU
49/68
HIERARCHICAL LEVELSStrategy can be formulated on three different levels:
Corporate level: Company's overall direction in terms of its general attitude towards growthand management of its various business and product lines.
Directional strategy
Portfolio analysis
Parenting strategy
Business unit level: It usually occurs at the business unit or product level and itemphasizes improvement of the competitive position of a corporation's products or services
in the specific industry or marketing segment served by that business unit.
Functional or departmental level
It is the approach taken by a functional area to achieve corporate and
business unit objectives and strategies by maximizing resource productivity
-
8/3/2019 Accounting - Environmental Scan EU
50/68
SIX SUPPORTING FACTORS1. Action Planning
2. Organization Structure
3. Human Resources
4. The Annual Business Plan
5. Monitoring and Control
6. Linkage.
STRATEGY EVALUATION
-
8/3/2019 Accounting - Environmental Scan EU
51/68
STRATEGY EVALUATION
The implementation of the strategy must be monitored
and adjustments made as needed.
Evaluation and control consists of the following steps:
Define parameters to be measured
Define target values for those parameters
Perform measurements
Compare measured results to the pre-defined
standard
Make necessary changes
Evaluation Criteria:
Suitability
Feasibility
Acceptability
SUITABILITY
-
8/3/2019 Accounting - Environmental Scan EU
52/68
Suitability deals with the overall rationale of the strategy. The
key point to consider is whether the strategy would address thekey strategic issues underlined by the organization's strategic
position.
Does it make economic sense?
Would the organization obtain economies of scale, economies
of scope or experience economy?
Would it be suitable in terms of environment and capabilities?
Tools that can be used to evaluate suitability include:
Ranking strategic optionsDecision treesWhat-if analysis
SUITABILITY
-
8/3/2019 Accounting - Environmental Scan EU
53/68
Feasibility is concerned with the resources required to
implement the strategy are available, can be developed or
obtained.
Resources include funding, people, time and information.
Tools that can be used to evaluate feasibility include:
Break-even analysis
Resource deployment analysis
Cash flow analysis and forecasting
FEASIBILITY
-
8/3/2019 Accounting - Environmental Scan EU
54/68
Acceptability is concerned with the expectations of the identified
stakeholders (mainly shareholders, employees and customers) with
the expected performance outcomes.
Return deals with the benefits expected by the stakeholders(financial and non-financial).
Risk deals with the probability and consequences of failure of astrategy (financial and non-financial).
Stakeholder reactions deals with anticipating the likely reaction ofstakeholders.Tools that can be used to evaluate acceptability include:
what-if analysisstakeholder mapping
STRATEGY EVALUATION: ACCEPTABILITY
-
8/3/2019 Accounting - Environmental Scan EU
55/68
STRATEGIC MANAGEMENT: GENERAL APPROACHES
In general terms, there are two main approaches, which are opposite but complement each
other in some ways, to strategic management:
The Industrial Organizational Approach
Based on economic theory deals with issues like competitive rivalry, resource
allocation, economies of scale Assumptions rationality, self disciplined behavior, profit maximization
The sociological approach
Deals primarily with human interactions
Assumptions bounded rationality, satisfying behavior, profit sub-optimality. An
example of a company that currently operates this way is Google
Strategic management techniques can be viewed as bottom-up, top-down, or collaborative
processes.
-
8/3/2019 Accounting - Environmental Scan EU
56/68
STRATEGIC MANAGEMENT: LIMITATIONS
Stifle creativity, especially if it is rigidly enforced. When a strategy becomes internalized into a corporate culture, it can
lead to group think
Can cause an organization to define itself too narrowly.
In 2000, Gary Hamel coined the term strategic convergence Explain the limited scope of the strategies being used by rivals in
greatly differing circumstances.
Strategies converge more than they should, because the more
successful ones are imitated by firms that do not understand that thestrategic process involves designing a custom strategy for the
specifics of each situation.
-
8/3/2019 Accounting - Environmental Scan EU
57/68
Other Issues
Social Forces
-
8/3/2019 Accounting - Environmental Scan EU
58/68
A lack of time to doanything but work, commute
to work, handle family
situations, do housework,shop, eat, sleep...
Social Forces-The Poverty of Time
A i t l f t d k t l
-
8/3/2019 Accounting - Environmental Scan EU
59/68
An environmental scan of todays marketplace
SOCIAL FORCES Demographics
-
8/3/2019 Accounting - Environmental Scan EU
60/68
SOCIAL FORCES- Demographics
Implications?
The World Population at a Glance
6.4 billion
Growth in developing nations
Shift of age structure of populations
Rising income levels and living standards
ECONOMIC FORCES E
-
8/3/2019 Accounting - Environmental Scan EU
61/68
ECONOMIC FORCES -Economy
Macroeconomic Conditions Inflation-rise in prices without rise in wages
Recession-drop in income, production and employment
Microeconomic Conditions
Consumer Income
Gross Income100% of earnings
Disposable Income-85% of earnings
Discretionary Income-15% of earnings
Technological Factors
-
8/3/2019 Accounting - Environmental Scan EU
62/68
New technology is a weapon against inflationand recession
U.S. excels at basic research
Japan excels at applied research
Information technology and the Internet haveincreased productivity
Technological Factors
COMPETITIVE FORCES C titi
-
8/3/2019 Accounting - Environmental Scan EU
63/68
COMPETITIVE FORCES -Competition
-
8/3/2019 Accounting - Environmental Scan EU
64/68
Demographics
Demographics describes apopulation according to selected
characteristics such as age,gender, ethnicity, income, and
occupation.
-
8/3/2019 Accounting - Environmental Scan EU
65/68
Baby Boomers
Baby boomers is the generation ofchildren born between 1946 and 1964.
-
8/3/2019 Accounting - Environmental Scan EU
66/68
Generation X
Generation X includes the 15% of theU.S. population born between 1965 and
1976.
-
8/3/2019 Accounting - Environmental Scan EU
67/68
Generation Y
Generation Y includes the 72 millionAmericans born between 1977 and 1994.
-
8/3/2019 Accounting - Environmental Scan EU
68/68
THANK
YOU