Download presentation
Presentation is loading. Please wait.
1
Strategic Analysis
2
Strategic Analysis Answer Three Questions
Where is the organization now? Where will the organization be in a few years – if no changes are made What specific actions should management take if they don’t like the answer to #2
3
Decision Making Process P. 12-13
Evaluate Current Performance Examine & Evaluate the Current: - Mission - Objectives - Strategies - Policies Interview Strategic Managers: - BOD - Top Mgmt
4
Decision Making Process
Scan External Environment - Societal - Tasks Select Strategic Factors - Opportunities - Threats Analyze Strategic Factors (SWOT) in light of Current Situation Scan Internal Environment - Structure - Culture - Resources Select Strategic Factors - Strengths Weaknesses
5
Decision Making Process
Review and Revise as Necessary: - Mission - Objectives Generate & Evaluate Strategic Alternatives Select & Recommend Best Alternatives
6
Decision Making Process
Evaluate Current Performance Implement Strategies: - Programs - Budgets - Procedures Evaluate And Control Go Back To Step 1
7
Decision Making Process
Customers Revenue Admin P & L Bal Sheet S & U F HR MIS Sales Marketing Operations
8
External Environment Environment General General Environment
Socio-cultural General Industry Environment Threat of new entrants Power of suppliers Power of buyers Product substitutes Intensity of rivalry General Demographic Economic Global Competitor Environment Political/Legal Environment Environment Technological General
9
External Environment A continuous process which includes
Scanning: Identifying early signals of environmental changes and trends Monitoring: Detecting meaning through ongoing observations of environmental changes and trends Forecasting: Developing projections of anticipated outcomes based on monitored changes and trends Assessing: Determining the timing and importance of environmental changes and trends for firms’ strategies and their management
10
Industry Environment Five Forces of Competition
Rivalry Among Competing Firms Threat of New Entrants Threat of Substitute Products Bargaining Power of Suppliers Bargaining Power of Buyers
11
Threat of New Entrants Barriers to Entry
Economies of scale Product differentiation Capital requirements Switching costs Access to distribution channels Cost disadvantages independent of scale Government policy Expected retaliation
12
Bargaining Power of Suppliers
Dominated by a few large companies Satisfactory substitute products are not available Industry firms are not a significant customer for the supplier group Suppliers’ goods are critical to buyers’ marketplace success Effectiveness of suppliers’ products has created high switching costs Suppliers are a credible threat to integrate forward into the buyers’ industry
13
Bargaining Power of Buyers (Customers)
They purchase a large portion of an industry’s total output Sales of the product being purchased account for a significant portion of the seller’s annual revenues They could easily switch to another product The industry’s products are undifferentiated or standardized, and buyers pose a credible threat if they were to integrate backward into the seller’s industry
14
Threat of Substitute Products
Customers face few switching costs Substitute product’s price is lower Substitute product’s quality and performance capabilities are equal to or greater than those of the competing product
15
Intensity of Rivalry Are numerous or equally balanced
Experience slow industry growth Have high fixed costs or high storage costs Lack differentiation or low switching costs Experience high strategic stakes Have high exit barriers
16
Components of Internal Analysis
Strategic Competitiveness Discovering Core Competencies Competitive Advantage Core Competencies Marketing Mix Capabilities Four Criteria of Sustainable Advantages Value Chain Analysis Resources Tangible Intangible Corporate Culture R & D Capital Situation Technology Valuable Rare Costly to Imitate Non-substitutable Outsource
17
The Basic Value Chain Margin Margin Technological Development Service
Marketing & Sales Human Resource Mgmt. Support Activities Outbound Logistics Firm Infrastructure Procurement Operations Inbound Logistics Primary Activities
18
Quiz – Question 1 When an organization is evaluating its strategic position, which is NOT one of the strategic questions it should ask itself? Where is the organization now? How can functional and operational areas be improved? If no changes are made, where will the organization be in one year? If the evaluation is negative, what specific actions should management take? If no changes were made, where will the organization be in 10 years?
19
Quiz – Question 1 When an organization is evaluating its strategic position, which is NOT one of the strategic questions it should ask itself? Where is the organization now? How can functional and operational areas be improved? If no changes are made, where will the organization be in one year? If the evaluation is negative, what specific actions should management take? If no changes were made, where will the organization be in 10 years?
20
Quiz – Question 2 Strategic planning within a small organization
May be informal and irregular Must be elaborate to allow for future growth Should be formalized and explicitly stated Should be done by the President only Is unnecessary and a waste of time
21
Quiz – Question 2 Strategic planning within a small organization
May be informal and irregular Must be elaborate to allow for future growth Should be formalized and explicitly stated Should be done by the President only Is unnecessary and a waste of time
22
Quiz – Question 3 Research done by Henry Mintzberg suggests that strategy formulation Is irregular and a discontinuous process Should be followed unswervingly to ensure success of the plan Is worthless Should be reviewed after a specific interval of time to make sure it is still applicable Is merely a checklist of actions following a logical process
23
Quiz – Question 3 Research done by Henry Mintzberg suggests that strategy formulation Is irregular and a discontinuous process Should be followed unswervingly to ensure success of the plan Is worthless Should be reviewed after a specific interval of time to make sure it is still applicable Is merely a checklist of actions following a logical process
24
Quiz – Question 4 Which of the following is NOT one of the five triggering events that are the stimulus for a strategic change? Intervention by the organization’s bank Entrance of a new competitor into the industry Change in ownership of the organization New CEO Decreased profitability
25
Quiz – Question 4 Which of the following is NOT one of the five triggering events that are the stimulus for a strategic change? Intervention by the organization’s bank Entrance of a new competitor into the industry Change in ownership of the organization New CEO Decreased profitability
26
Quiz – Question 5 Which of the following is an example of a strategy?
Diversify the product line to appeal to more people Increase sales by 10% over last year Pay highest salaries to keep high quality employees Develop and sell quality appliances world-wide Divide a sales region into a group of sales districts
27
Quiz – Question 5 Which of the following is an example of a strategy?
Diversify the product line to appeal to more people Increase sales by 10% over last year Pay highest salaries to keep high quality employees Develop and sell quality appliances world-wide Divide a sales region into a group of sales districts
28
Analysis Tools – SWOT Chapter 5
Strengths Weaknesses Opportunities Threats
29
Strategy Development - TOWS
TOWS Analysis Opportunity Threat Strength O/S Strategies T/S Strategies Identify strategies that focus the organization’s strengths on opportunities Identify strategies that focus strengths against threats Weakness O/W Strategies T/W Strategies Identify strategies that shore up weaknesses to allow the pursuit of opportunities Identify strategies that shore up weaknesses
30
SWOT Example – Bicycle Co.
Strengths Innovation Quality Brand in segment Flexible manufacturing Weaknesses Cost Financial size Opportunity International growth Dirt bikes Threats Lower cost, higher quality competition Flattening demand
31
TOWS Example – Bicycle Co.
TOWS Analysis Opportunity International Dirt bikes Threat Flat demand Lower cost, higher quality Strength Innovation Quality Brand in segment Flexible manufacturing O/S Strategies T/S Strategies Grow international Develop/enter dirt bikes Grow international Develop/enter dirt bikes Weakness Cost Financial size O/W Strategies T/W Strategies Grow international to increase economies of scale Int’l alliances Grow international Develop/enter dirt bikes
Similar presentations
