1. Strategic Management-Part 1
ITU-D
Regional Workshop on
Strategic Management-Part 1
Cairo, Egypt
December 2005
Strategy Analysis
19-22 Dec 2005
Regional Workshop, Cairo- Egypt

2. Regional Workshop, Cairo- Egypt
CONTENT
Strategic Management Cycle
Strategy Analysis: What, Why, When and How?
Analysis Tool
Porter’s Model
The SWOT Analysis method
Analysing Trends
Lessons to Learn
19-22 Dec 2005
Regional Workshop, Cairo- Egypt

3. Strategy Implementation
Strategic Management
Strategy Formulation
Strategy Implementation
Allocation of Resources
Establish Chain of Command
Assign Responsibilities
Manage the Process
Monitor, Eval., Adjustment
Strategy Analysis
Setting Objectives
Strategy/ Strategic Plan
19-22 Dec 2005
Regional Workshop, Cairo- Egypt

4. Strategy Analysis: What, When, Why & How?
What is Strategy Analysis?
In the broadest term: Do your homework to be able to craft a strategy.
Explore all (?) variables that influence the strategy
When?
All the time! Strategy is not a single exercise that’s done once
Why?
To develop a viable strategy that copes with the changing environment of the business and enables success
How?
Study internal and external factors
Use suitable methodologies and tools
Flexibility for unexpected changes
Think outside the box
Use own and external think tanks
Most likely scenarios
Careful of Trends
19-22 Dec 2005
Regional Workshop, Cairo- Egypt

5. Substitutes(Threat of)
Methods and Tools
Proter’s Model
Potential Entrants
(Threat of)
Suppliers
(Bargaining Power of)
Buyers
(Bargaining Power of)
Competitors
(Rivalry)
Substitutes(Threat of)
19-22 Dec 2005
Regional Workshop, Cairo- Egypt

6. Regional Workshop, Cairo- Egypt
Methods and Tools (2)
Porter’s Model
Porter’s Five Forces model:
Outside-in business strategy tool
Used to make analysis of the attractiveness (value) of industry structure
5 fundamental competitive forces:
Entry of competitors: How easy or difficult is it for new entrants to start competing, which barriers do exist
Threat of substitutes: How easy can a product or service be substituted, especially made cheaper
Bargaining power of buyers: How strong is the position of buyers
Bargaining power of suppliers: How strong is the position of sellers. Do many potential suppliers exist or only few potential suppliers, monopoly?
Rivalry among the existing players: Does a strong competition between the existing players exist? Is one player very dominant or are all equal in strength and size.
19-22 Dec 2005
Regional Workshop, Cairo- Egypt

7. Regional Workshop, Cairo- Egypt
Methods and Tools (2)
Porter’s Model
Porter’s Five Forces model:
Some times a 6th force I added: the government
Careful: not to underestimate the importance of the (existing) strengths of the organization (Inside-out strategy)
It provides useful input for performing a SWOT analysis.
19-22 Dec 2005
Regional Workshop, Cairo- Egypt

8. Regional Workshop, Cairo- Egypt
Methods and Tools (2)
SWOT Analysis
The SWOT analysis is a good tool for analyzing Strengths, Weaknesses, Opportunities and Threats of a company
Strengths and weaknesses are:
Internal factors that create value or destroy value
They can include assets, skills, or resources that a company has at its disposal, compared to its competitors
They can be measured using internal assessments or external benchmarking.
Opportunities and threats are:
External factors that create value or destroy value
A company cannot control them
They emerge from either the competitive dynamics of the industry/market or from demographic, economic, political, technical, social, legal or cultural factors
19-22 Dec 2005
Regional Workshop, Cairo- Egypt

9. Regional Workshop, Cairo- Egypt
Methods and Tools (3)
SWOT Analysis
Strengths
Specialist marketing expertise
New, innovative product or service
Location of your business
Cost advantage through know-how
Quality processes
Strong reputation
Weaknesses
Lack of marketing expertise
Competitors have superior access to distribution channels
Poor quality of products or services
Damaged reputation
Opportunities
Developing market
M&A, strategic alliances
New attractive market segments
A new international market
Loosening of regulations
Removal of international trade barriers
A market led by a weak competitor
Threats
A new competitor
Price war
Competitor has a new, innovative substitute product or service
New regulations
Increased trade barriers
Potential new taxation
19-22 Dec 2005
Regional Workshop, Cairo- Egypt

10. Example: Incumbent Telecom Operator
SWOT Analysis
Strengths
Established Infrastructure
Customer base
Market knowledge
Cost advantage through know-how
Efficient processes
Good product quality
Weaknesses
Lack of marketing expertise
High usage customers vulnerable
Slow in deploying new services
Delay new technology
Poor quality of customer service
Easy departure of qualified staff
Damaged reputation
“Nothing fails like success”
19-22 Dec 2005
Regional Workshop, Cairo- Egypt

11. Example: Incumbent Telecom Operator
SWOT Analysis
Opportunities
Growth potential
New attractive market segments
International market
Loosening of regulations
Removal of international trade barriers
M&A, strategic alliances
Competitor induced revenue
Threats
A new competitor- aggressive, marketing, backed by strong partner
Price war
Competitor has a new, innovative substitute product or service
New regulations
Increased trade barriers
Potential new taxation
19-22 Dec 2005
Regional Workshop, Cairo- Egypt

12. Example: Threat of loosing customers
19-22 Dec 2005
Regional Workshop, Cairo- Egypt

13. Regional Workshop, Cairo- Egypt
Analysing Trends
Trends in Telecoms Market:
Convergence of services: Voice+video+data+internet+
Wireless data: WiFi, Hot Spots, WiMAX,
Wide Band to the home, DSL, Cable TV
Mobile is booming: growth potential, new technologies (3G mobile), voice+video+data+internet+
New network solutions: IP based-ivpn, NGN, last mile (fiber-to-the home)
Corporate customers dictating the market: e-business, e-government, e-health, e-education, e-sport, e e e
19-22 Dec 2005
Regional Workshop, Cairo- Egypt

14. Regional Workshop, Cairo- Egypt
Analysing Trends (2)
Trends in Telecoms Market:
Content industry booming, powerful players: video, music,..
Powerful terminal equipment manufacturers pushing the limit (mobile makers, PC makers, ..)
Giant software companies pushing: e.g online games
Electronic gadgets: Mobile does everything and more!
Digital age: “digital” kids a significant player
19-22 Dec 2005
Regional Workshop, Cairo- Egypt

15. Regional Workshop, Cairo- Egypt
Analysing Trends (3)
Trends in Telecoms Market:
Everyone wants (needs) wide band
Tomorrows wideband is different from today’s
Your mobile reflects your social status!
What if the pace of change over the next decade is the same as of the past one? What if more?
19-22 Dec 2005
Regional Workshop, Cairo- Egypt

16. Regional Workshop, Cairo- Egypt
Analysing Trends (4)
Factors of Change:
Complex ownership structures
M&A: no need to “kill” your competitor, by him, or sell yourself
Drastic fall of high capacity cost/price: cost structure change
Tariffs against distance
Globalisation
Customer is first: customer-driven vs product driven
19-22 Dec 2005
Regional Workshop, Cairo- Egypt

17. Regional Workshop, Cairo- Egypt
Lessons to Learn
Best strategies my fail miserably: GMPCS
Success my come from unexpected product/ activity- seize the moment: e.g iPod
Sense the change- rebalance priorities
You cannot defeat technology: call back, resale, VoIP, IM, Satellite TV, etc – better ride the wave
Exit Strategy
19-22 Dec 2005
Regional Workshop, Cairo- Egypt

18. Regional Workshop, Cairo- Egypt
Thank You
19-22 Dec 2005
Regional Workshop, Cairo- Egypt