Recommended analysis task 2 MGT703 STRATEGIC MANAGEMENT DR JANE CRAIG

The task Identify a firm’s current growth strategy (if any) Evaluate the current growth strategy ◦ Taking account of both external and internal factors Recommend any changes that would result in higher levels of growth performance ◦ Demonstrating how they would address issues identified in the preceding evaluation

Describe the current strategy for the core business in the organisation you are analysing Provide a business model statement (Who/What/How) Identify the resources and capabilities needed to deliver the chosen strategic positioning (Who/What) ◦ use value chain to identify activities ◦ combine benefits with activities to create a statement of core capabilities ◦ eg flexible responsive service delivery, or reliable standardised service delivery

Evaluate the need to innovate the core business Examine the external environment for potential threats, or opportunities ◦ Threats might suggest (risk of) disruptive innovation ◦ If yes, then proposed option should be of this nature ◦ Particularly consider customer-based frameworks for generating new business models from Module 5

Examine the firm’s portfolio of growth options … The aim is to identify whether they have a mix of growth options as well as strong current businesses identify what mix of products and geographies they have – Ansoff Identify whether they have some strong and emerging businesses – BCG and GE matrix identify whether they have options for the future horizons of growth framework if not, what trends might suggest a direction for seeding new opportunities

Evaluate at least one of the emerging businesses in detail Use the MACS framework to evaluate ◦ industry attractiveness and competitive position ◦ Task 1 tools ◦ parent’s ability to add value ◦ value chain comparisons of existing and proposed new business

Evaluate with Market Activated Corporate Strategy (MACS) Low High High (Natural owner) Low (One of the pack) Parent's ability to extract value Industry Attractiveness & Competitive Position Source: McLeod & Stuckey (2000) ‘MACS: The market-activated corporate strategy framework’, McKinsey Quarterly. b) What capabilities, resources or systems can be shared - Comparative value chains a) GE framework, builds on tools used for task 1

To determine where to locate the business on each axis … For horizontal axis industry attractiveness & competitive position analyse the value of the stand-alone opportunity using tools from Modules 2 and 3 the GE matrix summarizes these (see next slide). For vertical axis parent’s ability to extract value identify synergies, using resources and capability analysis from Module 4 (see two slides on) evaluate how VRIA the capabilities and resources used for these synergies are

(Market Size, Industry growth rate, Industry profitability, Cyclicality, Barriers to entry, Bargaining Power with Suppliers/Buyers, Threat of Substitutes, Rivalry) Low High Industry attractiveness High Low Competitive Position (Market share, Profitability, Cost position, Quality/Differentiation, Technology, Manufacturing, Distribution & Marketing ) Use GE Framework to evaluate industry attractiveness and competitiveness Five forces plus industry data – growth rate and market size Capability evaluation (VRIA), position relative to competitors

Business A Value Chain Activities Inbound Logistics TechnologyOperations Sales and Marketing DistributionService Business B Business C Business D Business E Opportunity to combine purchasing activities to gain more leverage with suppliers Opportunity to share technology, transfer technical skills, combine R&D Opportunity to combine sales & marketing activities, use common distribution channels, leverage use of a common brand name, and/or combine after-sale service No sharing opportunities Use comparative value chains to identify what resources and capabilities can be shared across the existing and proposed new businesses

Low High High (Natural owner) Low (One of the pack) Parent's ability to extract value Industry Attractiveness & Competitive Position Source: McLeod & Stuckey (2000) ‘MACS: The market-activated corporate strategy framework’, McKinsey Quarterly. These two come together in the Market Activated Corporate Strategy (MACS) framework b) What capabilities, resources or systems can be shared - Comparative value chains a) GE framework, builds on tools used for task 1

Evaluate resourcing ◦ Consider whether the resourcing approach is appropriate for the business being analysed ◦ ie organic, acquisition or joint venture, taking account of ◦ Availability in house of needed resources and capabilities ◦ Competitive considerations

Acquire existing company Internal start-up Joint ventures/strategic partnerships Then ask what approach should they take to entering the new business and why

Evaluate a firm’s overall portfolio of businesses and a promising emerging product Examine their portfolio and identify whether they have a mix of growth options as well as strong current businesses Choose one of a company’s new businesses and analyse it as a growth option Recommend what it could do to improve its growth performance this may include recommending a new business