saa figures.ppt

Strategic Analysis and Action (5th edition) © 2002 Pearson Education Canada

Strategic Analysis and Action (5th edition)

Figures


GeneralManager

Setting Directionvision

missionvalues

ImplementingChange

making it happen

Creating Strategydetermining the way

forward

AssessingPerformance

today and tomorrow

The Job of the General Manager


Quadrant 1Quadrant 2

Quadrant 3Quadrant 4

complacentorganization

desired state

crisistroubled

organization

Operating Performance

Org

aniz

atio

nal H

ealth

+

+

–

–

three years ago tomorrow?

today

The Performance Matrix


Environment

Purpose

Core Beliefs & Values

Mission

Vivid Description

Organizational Vision

Tangible ImageGuiding Philosophy

Collins and Porras Vision Framework

Source: Copyright ©1991, by The Regents of the University of California. Reprinted from the California Management Review, Vol. 34, No. 1. By permission of The Regents.


Product MarketFocus

Goals

CoreActivities

ValueProposition

Business Strategy Components


Strategic Choice: Product/Market Scope

Source: Ansoff, I., The New Corporate Strategy. Copyright © 1987, John Wiley & Sons, Inc. Reprinted by permission of John Wiley & Sons, Inc.

DiversificationMarket developmentNEW

Product developmentMarket penetrationEXISTING

MARKET

NEWEXISTING

PRODUCT


Product MarketFocus

Goals

CoreActivities

ValueProposition

• Everyday low prices• Always in stock• Courteous, reliable

• Branded general merchandise• Value-oriented customers• Develop easier markets first: work

from regional hubs

• Integrated logistics: supplier to checkout

• Intensely managed• Local tailoring

• Dominate markets• Lowest cost system• High growth• Do it Wal-Mart way

The Wal-Mart Business Strategy


Product MarketFocus

Goals

CoreActivities

ValueProposition

• Differentiation on product and service through a user-friendly graphic interface and integrated products

• Complete desktop solution• 50% US; 50% foreign• Education (50%MS); home• Hardware, software, peripherals• High end

• “Change the world through technology”

R&D Mnf’g Dist’n

• Fully integrated

Apple’s Strategy


Functional/ Functional/ Functional/Product Product Product

Industry A

BusinessStrategy

A

Functional/Product

Functional/ProductProductProductProduct

Functional/Functional/ Functional/

Strategy

BusinessStrategy

B

Functional/

CorporateStrategy

StrategyStrategy

Industry B

ProductStrategy Strategy

Industry C

BusinessStrategy

C

StrategyStrategy Strategy Strategy

Corporate, Business and Functional Strategy


Management Preferences

Organization

Resources

Strategy Environment

The Diamond-E Framework


Strategic Risks

Source: Ansoff, I., The New Corporate Strategy. Copyright © 1987, John Wiley & Sons, Inc. Reprinted by permission of John Wiley & Sons, Inc.

Internal capabilities develop inconsistently with strategy

Strategic demands exceed the capacity to execute

CAPABILITY RISKS

Environmental changes make the strategy obsolete

Errors in reading the environment cause strategic

failureENVIRONMENTAL RISKS

LONG-TERMSHORT-TERM

TIME HORIZON


WANTManagement Preferences

Individual

NEEDEnvironmentIndustry

CANResource Capabilities

and OrganizationFirm

StrategicTension

The Strategic Analysis Triangle


The Process of Strategic Analysis

Activities

Step 1: Base Case Analysis Assess the strategic position of the business and the urgency for action.

1. Assess past performance. 2. Identify and evaluate current strategy using the Diamond-E

drill. 3. Forecast future performance under current strategy. 4. Decide on the need, nature, and urgency of change.

Step 2: Strategy Formulation and Testing Develop and evaluate proposals to address business opportunities and challenges.

1. Work from the environment and capabilities to generate new proposals.

2. Use the Diamond-E drill to shape and short-list proposals. 3. Prepare performance forecasts for short-listed proposals.

Step B: Decision and Implementation Commit, implement, and review.

1. Decide on proposal(s) to implement. 2. Move to build commitment and develop required

capabilities. 3. Implement.


INDUSTRY COMPETITORS

Rivalry AmongExisting Firms

POTENTIAL ENTRANTS

SUPPLIERS BUYERS

SUBSTITUTES

Threat of new entrants

Bargaining power of buyers

Threat of substitute products or services

Bargaining power of suppliers

Porter’s Five Forces Model

Source: Reprinted with the permission of The Free Press, a Division of Simon & Schuster, Inc., from COMPETITIVE STRATEGY: Techniques for Analyzing Industries and Competitors by Michael E. Porter. Copyright © 1980, 1998 by The Free Press.


Prisoner’s Dilemma Matrix

I: $2,000II: $2,000

I: $0II: $10,000

Strategy B

I: $10,000II: $0

I: $6,000II: $6,000Strategy A

Strategy BStrategy A

FIRM TWO

FIRM TWO


Macro Forces

Micro Forces

Political Social TechnologicalEconomic

Supply DemandCompetition

PEST Forces


Need for Local ResponsivenessLow High

HighN

eed

for G

loba

l Int

egra

tion

Global• Economies of scale• Customers accept standardized products

Multidomestic• Locally tailored products

• Benefits of being local outweigh added costs

Internalization: Global/Local

Source: Reprinted with the permission of The Free Press, a Division of Simon & Schuster,Inc., from THE MULTINATIONAL MISSION by C.K. Prahalad and Yves L. Doz. Copyright © 1987 by The Free Press.


Internalization: Global/Local

Step 1: Focus the Environment Analysis Work from the strategic proposal to define the boundaries of the relevant environment, highlight the questions that need to be asked about demand, supply, competition, and government. Establish a time horizon for analysis.

Step 2: Test the Strategy-Environment Linkage How well does the strategic proposal anticipate the opportunities and challenges in demand, supply, competition, and government? For serious misfits, recycle to develop a more attractive proposal.

Recycle

Step 3: Forecast Performance Decide if the strategic proposal, implemented as planned, will meet its goals. For clearly failing proposals, recycle to develop a more attractive proposal.

Recycle

Step 4: Rank Against Other Proposals Consider the strategic proposal in the light of alternative proposals. If it is competitive, proceed with the Diamond-E drill. If not, consider dropping it and recycle to develop a more attractive proposal.

Recycle

Step 5: Move to Next Step in Diamond-E Drill Assess the strategy-resource linkage.

GENERATE NEW

STRATEGIC PROPOSAL(S)


How well does the strategy

anticipate...

Government

Competition

DemandSupply

E.G.,• Customer needs and

performance• Market growth• Buyer bargaining power

E.G.,• Aggregate competitive

conditions• Individual competitor

strategies

E.G.,• Advances in product,

process technology• Supplier competence and

bargaining power• Competition for raw materials

and people

E.G.,• Industry support programs• Economic and trade policy• Regulation of structure and

conduct

Testing the Strategy-Environment LinkageBusiness Environment Analysis Model (BEAM)


Resource Analysis

Step 1: Identify Resource Requirements Work from the strategic proposal to clarify and project the resources required for implementation and ongoing success. Prepare at a level of detail that will facilitate analysis and management action.

Step 2: Test the Strategy-Resource Linkage Compare the resource requirements with the counterpart resources in the business or readily available to it. Identify current and anticipated gaps between the two. For serious misfits, recycle to develop a more attractive proposal.

Recycle

Step 3: Develop Gap-Closing Analysis Assess the feasibility of closing any material gaps. If the costs, chances of success, and consequences of failure are acceptable, carry the proposal forward. If not, recycle to develop a more attractive proposal.

Recycle

Step 4: Move to Next Step in Diamond-E Drill Assess the strategy-management preference linkage.

GENERATE NEW



Management Preferences

Strategic Choices

Organization, Resources & Capabilities

Environment

Indirect RoleA management preferencesfilter through which theenvironment and resourcesare assessed.

DirectRole

The Indirect Role of Management Preferences


Management Preference Analysis

Step 1: Identify the Required Management Preferences Work from the strategic proposal to develop a list of required management preferences implied by each of the four elements of strategy.

Step 2: Test the Strategy-Preferences Linkage Compare the required preferences with the observed preferences of influential managers and management groups. Identify current and anticipated gaps between the two. For serious misfits, recycle to develop a more attractive proposal.

Step 3: Develop Gap-Closing Analysis Assess the feasibility of closing any material gaps. If the costs, chances of success, and consequences of failure are acceptable, carry the proposal forward. If not, recycle to develop a more attractive proposal.

Step 4: Move to Next Step in Diamond-E Drill Assess the strategy-management preference linkage.

GENERATE NEW



Strategy-Organization Analysis

Step 1: Identify Required Organizational Capabilities Identify the key organizational capabilities that will be required to successfully implement the strategic proposal.

Step 2: Identify Capability Gap Compare the required organizational capabilities with those currently in the business. Identify the most important capability gaps. If the gaps are clearly too large to close, reject the proposal and recycle to develop a more attractive one.

Recycle

Step 3: Identify Required Organizational Changes Identify the changes in organization structure, management processes, and leadership behaviour that would be needed to develop the missing capabilities identified in Step 2.

Recycle

Step 4: Assess Feasibility Assess the probability that the proposed organizational changes will in fact result in the creation of the required new capabilities, in the time available. Identify the major areas of risk.

Recycle

Step 5: Move to Next Step in Diamond-E Drill Decide which of the strategic proposals you have been examining to adopt, based on an analysis of risk and expected performance.

RETURN TO FIRST STEPS

OF DIAMOND-E DRILL


OrganizationalCapabilities

Behaviour

Behaviour

Behaviour

Culture

Culture

Culture

Leverage PointLeadershipBehaviour

Leverage PointOrganization

Structure

Leverage PointManagement

Processes

Organizational Capabilities Model


Basic Organization Structure (Partial)

etc. etc. etc. etc.

etc. etc.

two boss etc.managers

Production

Manager

Functional Organization

Marketing

CEO

Product Organization

Books

Magazines

Newspapers

Human

Editorial

General

Editorial

Asia

Books

Resources

Geographic Organization

Production Marketing

Finance

Magazines

Newspapers

CEO

NorthAmerica

Europe

Books

Magazines

Newspapers

Resources

Matrix Organization

FinanceHuman

Books Magazines Newspapers

CEO

EuropeNorth

AsiaAmerica


UnrealizedStrategy

RealizedStrategy

IntendedStrategy

EmergentStrategy

Intended and Emergent Strategy

Source: Mintzberg, H.; Ahlstrand, B.; Lampel, J.;Strategy Safari, New York: The Free Press, 1998.


Creating a Change Plan


Change Agenda

What change needs have you identified in your Diamond-E analysis?

Analysis of Starting Conditions

Urgency Organizational Readiness Personal Readiness

Are you dealing with anticipatory, reactive, or

crisis change?

Who will be most affected by the proposed change?

How ready are they?

How ready are you to lead the change

process?

Establishing Guidelines for Action

Priority Objective Priority Targets and Actions Leadership Style Pace

What do you need to accomplish

first?

Who are your priorty targets? What will your first steps be?

How are you going to manage the

change process?

How fast do you need to

move?

Creating an Action Plan Period 1, etc. Objectives Targets First Steps Style Timing 1. …………. ……….. ……………. …………….. …………….. 2. …………. ……….. ……………. …………….. ……………..


Time

Good

Poor

StrategicPerformance

Anticipatory Change

ReactiveChange

CrisisChange

Urgency for Action: The Crisis Curve


Time

Good

Poor

StrategicPerformance

Anticipatory Change

ReactiveChange

CrisisChange

Readiness for Change

StrategicCapability

Readiness for Change and Strategic Capability


ProactiveResistors

DefensiveResistors

ChangeAgents

ChangeAgents in Waiting

Bystanders

ActivelyOpposed Neutral Strongly

Supportive

Commitment to Proposed Change

NoYe

s

Have

Req

uire

d C a

pabi

lit ies

Assessing Potential Priority Targets

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