1. The Strategy Formulation Process
Analytical Tools to Support the Strategy Formulation Process
(c) Macmillan & Tampoe 2001

2. ‘Thinking’ Tools for Strategists
Intellectual frameworks e.g.,
Porter’s five forces model
Value and supply chain models
Structured Approaches e.g.,
SWOT analysis
Scenario Planning
Encoded Logic as Software
Statistical techniques to test hypotheses and strength of feeling & relationships
(c) Macmillan & Tampoe 2001

3. Models as Analytical Tools
Intellectual Frameworks
Situational Analysis
Simulations
(c) Macmillan & Tampoe 2001

4. Intellectual Frameworks - Models
Models represent reality as understood by the model builder
Models identify the main and secondary influencers associated with an issue
Models represent the inter-relationships and interactions of these influences
Once built and validated the model helps assess the results of different actions and events
(c) Macmillan & Tampoe 2001

5. Situational Analysis
Models that derive the relationships based on the data presented e.g., neural networks, data envelopment analysis
Benefits are that findings are based on data rather than on preconceptions
Risks are that conclusions must be drawn from the results by experienced analysts who have a good understanding of the issues
(c) Macmillan & Tampoe 2001

6. Simulations Models that imitate real life
Simulations have deterministic and random elements
Real value derived from testing for the bizarre ideas
Helps in the learning process where practical experience is limited
E.g., expert systems, heuristic models
(c) Macmillan & Tampoe 2001

7. Strategy Software - Benefits
Makes using the intellectual frameworks easier
The encoded logic is a ‘true’ representation of accepted theory
Useful for those who understand but are not experts in the area
Facilitates far greater analysis and what if testing
(c) Macmillan & Tampoe 2001

8. Strategy Software - Risks
Accepting answers without validating the encoded logic
Invalid inputs and assumptions
Over-modeling because it can be done more easily
‘working the figures’ to get the desired answer
(c) Macmillan & Tampoe 2001

9. Categories of Software
Strategic Modeling
Strategic Thinking
Database Analysis
Knowledge Transfer
Expert Systems
Decision Support Systems
(c) Macmillan & Tampoe 2001

10. Application of Strategy Support Tools
New business, new venture, merger and acquisition analysis
Assessment of risks and rewards
Assessment of trends in industry, economy
Assessing effects of alternative strategies
Evaluating competitors
Assessing strengths of opinion and relationships
Modeling cost structures of organisations
1. The straightforward view of competitive strategy is that it is about beating the competition to the customer.
2. Kenichi Ohmae offers the above diagram of the Strategic Triangle - the three C’s.
3. Note how the company competes on cost and in offering value to the customer.
4. Note how the pool of potential customers may itself be segmented and so different competitors may compete for different segments.
5. Bear Hunting Story
(c) Macmillan & Tampoe 2001

11. Choosing Strategy Software
Look for:
Quality of documentation, training and help
Reliability of encoded logic and repeatability
Longevity of software and vendor
Functionality - too much is as bad as too little
Interfaces with other applications, compatibility with the Web, and data exchange
Commercial terms and conditions
Intellectual property of results
(c) Macmillan & Tampoe 2001