FOR INDICATIVE PURPOSES ONLY!

Analyze the internal and external environment of the company and evaluate the business model and strategy of the firm.

Review the strategic options available to the company, recommend a future strategic direction and suggest an implementation plan. THESE ARE NOT THE FINAL GUIDING STATEMENTS

FOR INDICATIVE PURPOSES ONLY! A: Work of distinguished quality which demonstrates an authoritative grasp

of the concepts and content appropriate to the subject and to the assessment task. There is clear evidence of originality and insight and an ability to sustain an argument, to think analytically and/or critically and to synthesise material effectively.

B: Work of above expected quality which demonstrates a sound level of understanding of the concepts and content appropriate to the subject. There is clear evidence of critical judgement in selecting, ordering and analysing content. Demonstrates some ability to synthesise material and to construct responses that reveal insight and may offer some occasional originality.

C: Competent work of an acceptable level which demonstrates a grasp of relevant material and key concepts and an ability to structure and organise arguments. The performance may be rather routine but the work will be accurate, clearly written and include some critical analysis and a modest degree of original insight. There will be no serious omissions or irrelevancies, but often will contain less critical analysis.

D: Work which covers the basic subject matter adequately and which is appropriately organised and presented but which is rather too descriptive and insufficiently analytical.

E: Work that covers the basic subject matter inadequately, which is not appropriately organised and presented, is insufficiently analytical and is much too descriptive. There may be some misunderstanding of certain key concepts, and limitations in the ability to select relevant material so that some omissions and irrelevancies may flaw the work. There may be evidence of appropriate reading but it is likely to be too narrowly focused.

FOR INDICATIVE PURPOSES ONLY!

Considerations Dont just follow the 5 steps you decide what is

important and what the order should be. Dont simply provide bullet pointsAnalyse! Analyse.

What is the impact to the firm? How significant is it? What are the positive and negatives? Justify your opinions, suggestions,

recommendations, conclusions. Dont forget the implementation plan!

Prepare Practice together with classmates. Take a case study from the

book and analyse it. Give formative feedback to each other. Revisit the lecture slides, the book seminar notes and

feedback that you received from your presentation. Make sure you fully understand the concepts.

Plan! Create a word document and add the different section that you will consider in your analysis. You can consider including: Cover page Structure (what will you analyse and when)? Prepare the figures/tables of models you will use (PESTLE) Prepare the reference list

Decide the location where you will be working from

Strategic analysis Step1: I. Define which organisations and industries/sectors does the

case study relate to. II. Is the organisation doing well or badly and how has it

performed in the past? Success record? III. Get insights about the organisation itself: VRIN

What kind of strategic resources does the organisation have and which does it lack?

Think about which of these have provided advantage over competitors; or could provide competitive advantage.

Draw these analyses together by considering in what ways the organisation has strengths or weaknesses greater than competition.

IV. Look at the development of the organisation over time. What strategies has it pursued? Which have succeeded and which have failed? How successful has the organisation been and on what bases do you know?

V. What are your initial impressions of the main issues and choices confronting the organisation? Is it in an expanding industry/sector, or a maturing one? Are customer needs changing? Does the organisation confront a variety of opportunities? Or is there a particular strategic issue which the case is oriented towards?

VI. Look at issues about the organisation's stakeholders. What are their expectations? Are they similar or in conflict? Who has more power and influence over the organisation's strategy?

VII. And consider the organisation's culture. How has this influenced past strategies and is it likely to influence future strategy or constrain attempts to change strategy?

Overall internal strategic analysis

Components of Strategic Capabilities

Threshold and distinctive capabilities

VRIN

The four key criteria by which capabilities can be assessed in terms of providing a basis for achieving sustainable competitive advantage are:

Strategic analysis Step 2: Analyze the external environment of the firm (Macro

and industry analysis) Analyse the external environment where the firm operates

in (PESTEL, Porters 5 forces etc.) What are the Opportunities and threats originating from

the external environment and how do these affect the competitive advantage of the firm?

Which are the types of environment where the organisation has been able to succeed, and in which types has it had problems?

Beware of regarding different frameworks of analysis as distinct and separate; they relate to each other. For instance, the results of a value chain analysis could be put in the context of data from a PESTEL and 5-Forces analysis and are likely to provide more insight if they are.

The PESTEL framework The PESTEL framework categorises

environmental influences into six main types: political, economic, social, technological, environmental legal Thus PESTEL provides a comprehensive list of

influences on the possible success or failure of particular strategies.

Scenarios Scenarios are detailed and plausible views of how the environment of an organisation might develop in the future based on key drivers of change about which there is a high level of uncertainty. Build on PESTEL analysis . Do not offer a single forecast of how the environment will change. An organisation should develop a few alternative scenarios (24) to analyse future strategic options.

Carrying out scenario analysis Identify the most relevant scope of the study the

relevant product/market and time span. Identify key drivers of change PESTEL factors that

have the most impact in the future but have uncertain outcomes.

For each key driver select opposing outcomes where each leads to very different consequences.

Porters five forces framework

Porters five forces framework helps identify the attractiveness of an industry in terms of five competitive forces: the threat of entry, the threat of substitutes, the bargaining power of buyers, the bargaining power of suppliers and the extent of rivalry between competitors. The five forces constitute an industrys structure.

Issues in five forces analysis Apply to industries not individual companies Apply at the most appropriate level not necessarily

the whole industry. E.g. the European low cost airline industry rather than airlines globally.

Dont confuse new entrants with substitutes Dont confuse buyers/customers with suppliers Make sure to look in detail at each of the several

factors influencing each of the five forces

The industry life cycle

Benchmarking

Benchmarking is a means of understanding how an organisation compares with others typically competitors.

Two approaches to benchmarking:

Industry/sector benchmarking Best-in-class benchmarking

Uses of strategic group analysis

Understanding competition - enables focus on direct competitors within a strategic group, rather than the whole industry.

Analysis of strategic opportunities - helps identify attractive strategic spaces within an industry.

Analysis of mobility barriers i.e. obstacles to movement from one strategic group to another.

Bases of market segmentation

Strategic analysis Step 3: Identify the key success factors in the industry

What have been and are likely to be the key drivers in the external environment that may give rise to changes that could provide opportunities or give rise to threats?

What is the nature of the competitive environment? Step 4: Identify the companys strategic position,

summarise your analysis and name/classify any potential problems/threats that the company was, is or is expected to face in the future Identify the companys strategic position using e.g.

Competitive strategies and Strategy clock So you will have built up a picture of the relative strengths,

weaknesses, opportunities and threats (SWOT) for the organisation.

Pull together your analyses and ask: 'What are the major issues that future strategy needs to address?'.

Critical success factors (CSFs)

Critical success factors are those factors that are either particularly valued by customers or which provide a significant advantage in terms of cost.

Critical success factors are likely to be an important source of competitive advantage if an organisation has them (or a disadvantage if an organisation lacks them).

Different industries and markets will have different critical success factors (e.g. in low cost airlines the CSFs will be punctuality and value for money whereas in full service airlines it is all about quality of service).

Dangers in a SWOT analysis

Long lists with no attempt at prioritisation. Over generalisation sweeping statements often

based on biased and unsupported opinions. SWOT is used as a substitute for analysis it

should result from detailed analysis using frameworks.

SWOT is not used to guide strategy it is seen as an end in itself.

The TOWS matrix

Three generic strategies

Strategy clock

Strategic analysis Step 5: Suggest a viable future strategy/solution, including alternatives Develop and evaluate strategic options Evaluate the options by asking the following questions:

Which are most suitable in terms of the strategic position of the organisation; i.e. the strengths and weaknesses it has and the opportunities and threats it faces?

Would a strategy, if followed, achieve competitive advantage for the organisation and provide bases for the sustainability of such advantage?

Which are most likely to be acceptable in terms of the expectations of major stakeholders?

Which are feasible in terms of the likelihood of implementation: for example in terms of resourcing the strategy and managing change.

Justify your conclusions with reference to the case

Relate your analysis to the task or questions you have been set. What elements of the strategic analysis do you require to answer the question? (don't try to justify your arguments by using all the information you have select what is most powerful to support your argument)?

Support your conclusions and recommendations with hard evidence (events and results)? Have you been influenced by the opinions of the organisation's own managers? Do the facts support their claims of success, or their excuses for failure?

State your recommendations clearly. There is no point gathering a list of fifteen possible reasons why the organisation should do this or that without making it clear which one(s) is your preferred option. Make sure that you present a balanced view.

Consider the alternatives to your recommendations. There is hardly ever just one single option available to an organisation.

Clearly explain why the recommendation you have chosen is the best of the available alternatives and examine the downsides of your options.

Strategic analysis

Corporate strategy directions

To outsource or not?

The decision to integrate or subcontract rests on the balance between two distinct factors: Relative strategic capabilities: Does the subcontractor have the potential to do the work significantly better? Risk of opportunism: Is the subcontractor likely to take advantage of the relationship over time?

The growth share (or BCG) matrix

Strategy methods

Modes of entry

Exporting

Joint ventures and alliances

Licensing

Foreign direct investment

The SAFe criteria to evaluate strategic options

Stages of strategic planning

Initial guidelines from corporate centre

Business-level planning

Corporate-level integration of business plans

Financial and strategic targets agreed

Strategy development routes

Balanced Scorecard: Probably the best-known device for strategic plan control developed by Kaplan and Norton

The Balanced Scorecard is not a way of formulating strategy. It is a way of checking what you have to do throughout the organisation to make your strategy work.

Four main principles: Translating the vision through clarifying and gaining

consensus Communicating and linking by setting goals and rewards Business planning to align objectives, resources and

milestones Feedback and learning to review subsequent performance

against the plan

Controlling the Strategic Plan

The Balanced Scorecard Strategy perspective Example Example of a scorecard measure

called a key performances indicator Financial perspective Shareholders views of performance x Return on capital

x Economic value added x Sales growth x Cost reduction

Customer perspective Customer satisfaction x Customer satisfaction x Customer retention x Acquisition of new customers

Internal perspective Assess quality of people and process

x Manufacturing cost x Job turnover x Product quality x Stock turnover & inventory

management

Future perspective Examine how an organisation learns and grows

x New product development record

x R&D core competencies x Employee retention x Employee profitability

Three horizons for strategy

Horizon 1 extend and defend core business

Horizon 2 build emerging businesses

Horizon 3 create viable options

Levels of Strategy

Corporate-Level strategy is concerned with the overall purpose and scope of an organisation and how to add value to business units.

Business-Level strategy is concerned with the way a business seeks to compete successfully in its particular market.

Operational Level strategy is concerned with how different parts of the organisation deliver the strategy in terms of managing resources, processes and people.