THOUGHT FOR THE DAY
The Winner is always part of the answer:
The loser is always part of the problem.
BE A WINNER – ACTION
STEPS
Ashta sutras
• Be a good finder
• Make a habit of doing it now
• Develop an attitude of gratitude
• Get into a continuous education program
• Build positive self-esteem
• Stay way from negative influences
• Learn to like the things that need to be done
• Start our day with a positive
STRATEGIC MANAGEMENT
After the process of LPG was initiated by the Govt. of India,
there has been sweeping changes in the business scenario.
Ongoing liberalization process – made imperative for Indian
companies to consider Starategic Management seriously.
1995 - 25th National Business Conference –sponsored by
Harvard Business School highlighted the powerful
“Strategy” as an important variable in the study of organization.
Three Big Strategic Questions
• Where Are We Now?
• Where Do we Want to
Go?
• How Will We Get
There?
1. Present situation
2. direction3. C&E S
STRATEGY
Dictionary meaning: STRATEGY - long term
Plan or Policy.
Ex: Company decides – sales growth of 35% and
device to achieve this by acquiring other Co’s
instead of introducing new products.
Acquisition –becomes strategy chosen by
Company.
•
Strategy
Strategy is management’s “game plan” for
running the business.
A company’s strategy consists of the competitive moves,
internal operating approaches, and action plans
devised by management to produce successful
performance.
Why Managers need strategies?
HOW the organization’s business will be conducted ?
HOW performance targets will be achieved?
What is a Strategic Plan?
• A strategic plan
specifies where a
company is
headed and HOW
management
intends to achieve
the targeted levels
of performance.
What is the purpose of strategic management?
- To exploit and create new and different
opportunities for tomorrow; long range
planning, in contrast, tries to optimize for
tomorrow the trends of today.
What is STRATEGIC MANAGEMENT?
The strategy of the firm is the match
between its internal capabilities & its
external relationships.
It describes how it responds to its
suppliers, its customers, its competitors &
the social & economic environment within
which it.
1.What is strategic Management?
2. Define Srategic management?
Nature of Strategic Management
The Nine Task of Strategic Management
1. Determining the mission of the Company, about its purpose,
philosophy, & goals.
2. Developing A Company Profile that reflects internal
conditions & capabilities.
3. Assessment of the Company’s external environment in terms
of both competitive & general contextual factors.
4. Analysis of possible options uncovered in the matching of the
company profile with the external environment.
5. Identifying the desired options uncovered when possibilities
are considered in the light of the company mission.
10
10
Nature of Strategic Management
The Nine Task of Strategic Management
6.
Strategic choice of a particular set of long-term objectives and
grand strategies.
7.
Development of annual objectives and short term strategies
compatible with long term objectives and grand strategies.
8.
Implementing strategic choice decisions based on budgeted
resource allocations and emphasizing the matching of tasks,
people, structures, technologies, and reward systems.
9.
Review and evaluation of the success of the strategic process to
serve as a basis for control.
11
11
CHARACTERISTICS OF STRATEGIC
MANAGEMENT
Three Levels of Strategy
• Corporate level: board of directors, CEO &
administration [Highest]
• Business level: business and corporate
managers [Middle]
• Functional level: Product, geographic, and
functional area managers [Lowest]
12
Three levels of Strategic
Management Structures
13
LEVELS OF STRATEGIC
PLANNING – CORPORATE LEVEL
• It addresses fundamental questions such as what is the
purpose of enterprise.
• What type of business to be choosen & how resources to
be allocated.
•
• Strategy – developed by (BOD,CEO etc., ) Decisions are
broad based carry greater risk, cost, and profit potential.
• EX: Diversification & M&A’s.
• Include decisions : Choice of businesses, dividend policies,
sources of long-term financing, and priorities for growth
15
Levels of Strategic Planning:
Business level
Process concerned primarily how to manage the interests and
operations of a particular unit within the organisaion(SBU).
The heads of respective Business units develop strategies with the
approval of top management.
Decisions include allocation of resources within the unit and co-ordinating
functional level strategies developed by functional managers.
Help bridge decisions at the corporate and functional levels.
Less costly, risky, and potentially profitable than corporate-level decisions.
Include decisions on plant location, marketing segmentation, and
distribution
16
Levels of Strategic Planning:
Functional level
• Implement the overall strategy formulated at the
corporate and business levels.
Functional Managers: Marketing, Finance,
Production, Personnel(HR) etc., are reviewed by
business heads.
• Involve action-oriented and operational issues.
• Relatively short range and low risk.
• Modest costs: depend upon available resources.
17
CHARACTERISTICS OF CORPORATE, BUSINESS
AND FUNCTIONAL STRATEGIES
Characteristics
Corporate
Strategy
Business Strategy
Functional
Strategy
Scope
Entire
Organisation
SBU or single
business unit
Functional Area
Source and
Motivation
/direction
Board of Directors Corporate
/ CEO
Strategy
SBU strategy or
single business
company
strategy
Responsibility
Top level
corporate
managers
Top level SBU
managers or top
level business
company
managers
Functional level
managers
Time Horizon
Long term
Medium to long
term
Short to long
term
Specificity
General
statements of
overall direction
and intent
Concrete and
operationally
oriented
Action and
implementation
oriented
18
Importance & relevance of
Strategic Management
• Managers at all levels interact in planning and
implementing strategy.
• Similar to participative decision making.
• Assessing strategy formulation requires looking at
non-financial evaluations as well as financial ones.
• Promoting positive behavioral consequences
enables achievement of financial goals
19
STRATEGIC MANAGEMENT
PROCESS
The term “Strategic Management Process’
refers to the steps by which management
converts a firm’s mission, objectives and
goals into a workable strategy”
In a dynamic environment, each firm needs
to tailor its SMP in ways best suits its own
capabilities & situational requirements.
20
Strategic Management Process
The strategic management process
has two parts:
1. The information process- involves collecting
and analyzing information about the external
and internal environments.
Information about the organization's strength
& weaknesses, when combined with
information about external opportunities &
threats, offer a stronger foundation for
informed decisions about strategic direction. 21
Contd………..
2.
The decision process covers four important steps:
a) Development of strategic alternatives – reach its
mission & objectives
b) Strategic Choices –Planners decide how & when to
translate strategic choice into action.
C) Implementations
d) Assessment: Evaluation of the effectiveness and
efficiency of the strategic direction that organization
has followed.
22
Strategic Management –Business Model
23
COMPANY’S STRATEGY AND ITS
BUSINESS MODEL
•
•
•
•
•
Company Mission
External Analysis
•
Long-Term Objectives •
Short-Term Objectives
Policies Empowering •
Action
•
• Strategic Control &
Continuous
•
Improvement
Internal Analysis
Strategic Analysis &
Choice
Generic & Grand
Strategies
Functional Tactics
Restructuring,
Reengineering &
Refocusing
24
Significance of crafting & execution of
strategy
• It provides the roadmap for the firm: it shows the
way for achieving targets.
• It helps the firm utilize its resources in the best
possible manner.
• It allows more effective allocation of time and
resources for identifying opportunities.
• The firm can respond to environmental changes
in a better way – by exploiting opportunities to its
advantage and avoiding costly mistakes in
investment decisions.
25
Significance of crafting & execution of
strategy
• It helps prepare the firm to confront future challenges
through certain proactive steps and even shape the future
to its advantage.
• It gives encouragement to forward thinking.
• It encourages a favorable attitude towards change.
• C&E Strategy is all about winning the business game plan.
26
VISION
• Vision- A vividly descriptive image of what a
company wants to be or wants to be known for in
future.
• Basic element of vision
• An organization fundamental reason for existence
beyond just making money.
• Who we want to be and where we want to go?
Reliance- Dhirubai Ambani vision
28
Examples of corporate vision
statements
• BHEL: “ A world class innovative, competitive &
profitable engineering enterprise providing total
business solutions”.
• Colgate- Palmolive:" To be the Co. of first choice
in oral & personal hygiene by continuously caring
for consumers and partners”
• NTPC: “To make available, reliable and quality
power in increasingly large quantities”
29
What is a Company Mission?
• Company Mission:
A broadly framed but enduring statement
of a firm’s intent.
It defines an organization business & it
is a reflection of a vision.
Mission
Empower people through great
software anytime, anyplace, and
on any device.
31
31
Mission
DELTA AIRLINES
. . . . . . we want Delta to be the
WORLDWIDE AIRLINE OF CHOICE.
32
32
The Need for an Explicit Mission
• Why is this firm in business?
• What are our economic goals?
• What is our operating philosophy in terms of quality,
company image, and self-concept?
• What are our core competencies and competitive
advantages?
• What customers do and can we serve?
• How do we view our responsibilities to stockholders,
employees, communities, environment, social issues,
and competitors?
Formulating a Mission
• The typical business begins with the beliefs, desires, and
aspirations of a single entrepreneur
• These beliefs are usually the basis for the company’s
mission
• As the business grows or is forced to alter its product,
market, or technology, redefining the company mission
may be necessary
Mission Statement Components
1.
2.
3.
4.
5.
6.
7.
8.
Customer-market
Product-service
Geographic Domain
Technology
Concern for Survival
Philosophy
Self-concept
Concern for Public Image
Setting Objectives
•
The purpose is to convert the mission
into Specific Performance Targets
•
Serve as yardsticks for company
progress and performance.
•
Objectives and Goals - provide the
foundation for all managerial activities.
They can be considered as ends or
aims towards which all activities are
directed.
36
36
Two Types of Objectives
• FINANCIAL
OBJECTIVES
• STRATEGIC
OBJECTIVES
• Short-Run
• Long-Run
37
37
Types of Objectives Required
Financial Objectives
Strategic Objectives
Outcomes focused on
improving financial
performance
Outcomes focused on
improving long-term,
competitive business
position
$
38
38
Financial Objectives
Grow
earnings per share 15% annually
Boost
annual return on investment from
15%
to 20% within three years
39
39
Strategic Objectives
Increase firm’s market share .
Overtake key rivals on quality or customer service
or product performance.
Attain lower overall costs than rivals
40
40
Formulating Strategy is an Exercise in
Entrepreneurship
• Risk-taking and venture
someone's
• Innovation and business
creativity·
• A keen eye for spotting
emerging market
opportunities·
• Choosing among alternatives
42
42
Formulating /Crafting a
Strategy
• HOW to out compete rivals and win a
competitive advantage.
• HOW to respond to changing industry and
competitive conditions
• HOW to defend against threats to the
company’s well-being
• HOW to pursue attractive opportunities
43
43
Strategy Makers: The CEO
• A firm’s CEO plays a dominant role in
strategic planning
• The CEO’s principal duty is giving long-term
direction to the firm
• The CEO bears ultimate responsibility for the
firm’s success and strategic success
• CEOs are typically strong-willed,
company-oriented individuals
44
Strategy Makers
• Ideal strategic team includes
decision makers from all three
levels
• Top managers must give final
approval
• Strategic decisions coincide with
managers’ responsibilities
45
Why is a Company’s Strategy Constantly
Evolving?
•
•
•
•
•
•
•
•
Changing market conditions·
Moves of competitors·
New technologies and production capabilities·
Evolving buyer needs and preferences·
Political and regulatory factors·
New windows of opportunity·
Fresh ideas to improve the current strategy·
A crisis situation
46
46
Three Essential Components:
• Basic Product or Service
• Primary Market
• Principal Technology
If a firm uses a “silver bullet”
mission for outsiders to read, it
will include these three
components.
Primary Company Goals:
• Survival – A firm that is unable to survive will
be incapable of satisfying the aims of any of its
stakeholders.
• Profitability – A firm’s profitability is the
mainstay goal of a business.
• Growth – A firm’s growth is tied inextricably to
its survival and profitability. Growth in this
sense must be broadly defined.
Company Philosophy
• Company philosophy is often called
company creed.
• Usually companies are appears within the
mission statement
• Reflects the basic beliefs, values, aspirations,
and philosophical priorities to which strategic
decision makers are committed in managing
the company
Public Image
• Both present and potential customers
attribute certain qualities to particular
businesses.
• Firms seldom address the question of their
public image in an intermittent fashion.
• Firms should be concerned with their public
image even when there is no public agitation.
Strategic intent
What is strategic intent?
Strategic intent is about clarity, focus and
Inspiration
strategic intent of a company describes how a
company is going to realize its vision.
Strategic intent provides a particular point of
view about the long term vision or aspiration of
the company.
Is it time for you, your team or your
organization to move beyond a Vision or
Mission Statement to a compelling design
of your future?
The famous Goethe quote
says it all: "Whatever you can do or dream
you can do, begin it now. Boldness has
genius, power and magic in it
Balanced Score Card
• The concept of Balanced Scorecard was
developed in the early 1990’s by Robert S.
Kaplan and David P. Norton.
• The Balanced Scorecard (BSC) is a conceptual
framework enabling an organization in clarifying its
vision and strategy, thus effectively translating them
into action.
• .
Balanced Score Card
• The BSC provides a "measurement tool" to
evaluate businesses in a balanced way.
• Help to assess improvement opportunities.
• It is very useful, and the most advanced way to
monitor (measure) business performance.
It is the measurement part of the Demming (Plan,
Do, Check and Adjust) Circle. In order to
achieve Performance Improvement, structured
improvement implementation programmes are
needed.
Balanced Score Card
• The BSC method of
Kaplan and Norton is a
strategic approach and
performance management
system that enables
organizations to translate a
company's vision and
strategy into
implementation, working
from 4 perspectives:
Balanced Score Card
• This performance management approach provides
feedback around both the internal processes and
external outcomes, essentially focusing on four
indicators:
• 1. Financial perspective,
• 2. customer perspective,
• 3. business process perspective,
• 4. learning and growth perspective.
•
BALANCED SCORE CARD
• In the Design and Deployment of the BSC, 5 key
stages can be distinguished:
• 1. Select Critical Success Factors (CSF) in the 4
BSC perspectives and explore interrelationships
2. Identify Performance Indicators
3. Set Targets
4. Deploy whole scorecards to business sites
5. Deploy goals within business sites.
BSC- FINANCIAL PRESPECTIVE
. Timely and accurate funding data will always be a
priority, and managers will do whatever necessary
to provide it.
The current emphasis on financials leads to the
"unbalanced" situation with regard to other
perspectives.
There is perhaps a need to include additional
financial-related data, such as risk assessment and
cost-benefit data, in this category.
BSC –CUSOMER
PERSPECTIVE
• Ad 2: The BSC / Customer perspective: recent
management philosophy has shown an increasing
realization of the importance of customer focus and
customer satisfaction in any business. These are leading
indicators: if customers are not satisfied, they will eventually
find other suppliers that will meet their needs. Poor
performance from this perspective is thus a leading indicator
of future decline, even though the current financial picture
may look good. In developing metrics for satisfaction,
customers should be analyzed in terms of kinds of
customers and the kinds of processes for which we are
providing a product or service to those customer groups.
Business Process perspective
• Ad 3: The BSC / Business Process
perspective refers to internal business
processes.
• Metrics based on this perspective allow the
managers to know how well their business is
running, and whether its products and
services conform to customer requirements
(the mission).
BSC- Learning Growth
Perspective
• Includes employee training and corporate cultural
attitudes related to both individual and corporate
self-improvement.
• In a knowledge-worker organization, people are
the main resource. In the current climate of rapid
technological change, it is becoming necessary for
knowledge workers to be in a continuous learning
mode.
MODULE 3
Analysing a Company’s External
Environment
Learning Objectives
1. Analysing Company’s
External Environment.
2. SWOT
3. Strategically relevant
components of a company’s
external environment.
Economic, social, political,
technological, and ecological
influences on a business
4. The five forces model of
industry analysis
Entry barriers, supplier
power, buyer power,
substitute availability, and
Analyzing Company’s External
Environment
• Features of Exernal Environmental
Analysis
• Holistic Exercise: . It is a way of looking at the
forest, rather than the trees.
• Exploratory Process: tries to explore the
unknown terrain, putting emphasis on what
could happen. The focus is clearly on
alternative future choices.
• Continuous Activity: It is not one shot deal: it
is continuous process.
• What are the strategically relevant components
of a company’s external environment?
Strategically relevant components
of a company’s External
Environment
•
•
•
•
•
•
•
•
Comprised of following Components:
Economic Environment
Socio-cultural Environment
Political Environment
Legal Environment
Technological Environment
Ecological environment
International environment
The survival and growth of a firm depends on
its ability to adopt its strategies and
organizational structure to a rapidly changing
environment
Economic Factors
Economic factors throw light
on the nature and direction
of the company in which a
firm operates
1. Prime interest rates
2. Inflation rates
3. Trends in the growth of
the gross national
product
4. Unemployment rates
Economic Factors
• Interest Rates: encourage consumer spending, retailers,
construction companies, automobile manufactures benefit because
lower rates trigger demand for durable goods. Lower rates are
conducive to capital expenditures and to merger and acquisitions.
• In contrast, high rates dampen business plans to raise funds to
expand or to replace outdates facilities.
• Inflation Rate: High rates boost costs of doing
business.
• Unemployment Rate: When unemployment is high, the company
is able to be very selective whom it hires but consumer buying may
decline.
• GDP: It is the value of a nations annual production of goods and
services and serves as a major indicator of economic growth.
Socio-cultural Environment
• Cultural sensitiveness:
• Business firms operates in a socio-cultural
environment and their strategies are formulated
keeping this factor in view.
• Western countries are modern and liberal.
• Muslim societies are generally conservative.
• Japanese society despite a very high level of
economic development still remains certain tenets
of orthodoxy.
Business firms aiming at capturing markets for its
products in
these diversified societies has to be careful about the
68
Socio-cultural Environment
Each society has its own culture which consists
of the customs, habits, beliefs, values, attitudes,
language and other forms of interaction
between the members of the society.
Business firms aiming at capturing markets for
its products in these diversified societies has to
be careful about the cultural sensitizer's.
69
Ex: Western societies are modern and
liberal, people belonging to these societies
are more receptive to new products. They
have no prejudice against any kind of
advertising.
Ex: Mc Donald –fast food giant –not
been much headway into lunch mark in
India.
1. Premium look –tag –for high society’
2. Non-oily & less spicy
Political Environment
• What constitutes Political Environment?
• Business activity has suffered a lot due to political
instability. In countries like Afghan and Iraq has suffered
due to political instability.
• In India over the past ten years there has been political
uncertainty in this country on account of coalition
Governments at the centre.
• These Governments have been very much unstable and71
lacked a clear cut policy direction. This is not an ideal
Technological Environment
• In India, this happened in automobile
industry for about four decades since
independence. The technology of
Fiat was unsophisticated. The users
had no choice and thus the product
survived for a long period.
• With the setting up of Maruti Udyog
limited the situation changed due to
72
Technological Factors
•
•
•
Technological forecasting helps
protect and improve the profitability of
firms in growing industries.
It alerts strategic managers to impending
challenges and promising opportunities.
The key to beneficial forecasting of
technological advancement lies in
accurately predicting future technological
capabilities and their probable impacts.
Ecological Factors
•
Ecology refers to the relationships
among human beings and other living
things and the air, soil, and water that
supports them.
•
Threats to our life-supporting ecology
caused principally by human activities in
an industrial society are commonly
referred to as pollution
International Environment
•
•
Monitoring the international environment
involves assessing each non-domestic
market on the same factors that are used
in a domestic assessment.
While the importance of factors will differ,
the same set of considerations can be
used for each country.
Economic, political, legal, and social
factors are used to assess international
environments.
• .
FIVE FORCES MODELPORTER’S
• Porter's framework consists of five fundamental
competitive forces:
1. Entry of competitors
2. Threat of substitutes
3. Bargaining power of buyers
4. Bargaining power of suppliers
5. Rivalry among the existing players
Porter's framework consists of five fundamental
competitive forces:
1. Entry of competitors
assessing the ability of new entrants to start operations
and the structural barriers they must overcome;
2. Threat of substitutes
assessing the ability of new products with superior
characteristics to replace existing product(s) or
service(s);
3. Bargaining power of buyers
assessing the relative strength and number of buyers;*
4. Bargaining power of suppliers
assessing the relative strength and number of sellers;*
5. Rivalry among the existing players
assessing the relative competitive strength of rival firms.*
The Five Forces are Unique
to Your Industry
• Five-Forces Analysis is a framework
for analyzing a particular industry.
– Yet, the five forces affect all the other
businesses in that industry.
The purpose of
Five-Forces Analysis-Industry driving forces
• The five forces are
environmental forces that
impact on a company’s
ability to compete in a given
market.
• The purpose of five-forces
analysis is to diagnose the
principal competitive
pressures in a market and
assess how strong and
important each one is.
PORTERS FIVE FORCES
MODEL
• The model of the Five Competitive Forces was developed by
Michael E. Porter in his book „Competitive Strategy: Techniques for
Analyzing Industries and Competitors“ in 1980.
• Since that time it has become an important tool for analyzing an
organizations industry structure in strategic processes.
• Porters model is based on the insight that a corporate strategy
should meet the opportunities and threats in the organizations
external environment. Especially, competitive strategy should base
on and understanding of industry structures and the way they
change.
•
PORTER’S FIVE FORCES
MODEL
• Porter has identified five competitive forces that shape every
industry and every market. These forces determine the intensity of
competition and hence the profitability and attractiveness of an
industry.
• The objective of corporate strategy should be to modify these
competitive forces in a way that improves the position of the
organization.
• Porters model supports analysis of the driving forces in an industry.
Based on the information derived from the Five Forces Analysis,
management can decide how to influence or to exploit particular
characteristics of their industry.
•
Porter’s Five Forces
Model of Competition
Threat of
Threat of
New
New
Entrants
Entrants
MICHEAL PORTER- 5 FORCES
MODEL
Threat of New Entrants
Economies of Scale
Barriers to
Entry
Product Differentiation
Capital Requirements
Switching Costs
Access to Distribution Channels
Cost Disadvantages Independent
of Scale
Government Policy
Expected Retaliation
Porter’s Five Forces
Model of Competition
Threat of
Threat of
New
New
Entrants
Entrants
Bargaining
Power of
Suppliers
Bargaining Power of Suppliers
Suppliers are likely to be powerful if:
Suppliers exert power
in the industry by:
* Threatening to raise
prices or to reduce quality
Powerful suppliers
can squeeze industry
profitability if firms
are unable to recover
cost increases
Supplier industry is dominated by a
few firms
Suppliers’ products have few substitutes
Buyer is not an important customer to
supplier
Suppliers’ product is an important
input to buyers’ product
Suppliers’ products are differentiated
Suppliers’ products have high
switching costs
Supplier poses credible threat of
forward integration
Porter’s Five Forces
Model of Competition
Threat of
Threat of
New
New
Entrants
Entrants
Bargaining
Power of
Suppliers
Bargaining
Power of
Buyers
Bargaining Power of Buyers
Buyer groups are likely to be powerful if:
They buy large volumes, there is a
concentration of buyers.
Purchase accounts for a significant
fraction of supplier’s sales
Buyers compete
with the supplying
industry by:
Supplying industry comprises a large No.
* Bargaining down prices
Of small operators.
* Forcing higher quality
Buyers face few switching costs
Buyer presents a credible threat of
backward integration
Product unimportant to quality
Buyer has full information
*
Porter’s Five Forces
Model of Competition
Threat of
Threat of
New
New
Entrants
Entrants
Bargaining
Power of
Suppliers
Bargaining
Power of
Buyers
Threat of
Substitute
Products
Threat of Substitute Products
Products
with similar
function
limit the
prices firms
can charge
Threat from substitutes exists if
there are alternative products
with lower prices of better
perform parameters for the
same purpose.
Electronic security systems in
place of security guards
Fax machines in place of
overnight mail delivery
Porter’s Five Forces
Model of Competition
Threat of
Threat of
New
New
Entrants
Entrants
Bargaining
Power of
Suppliers
Rivalry Among
Competing Firms
in Industry
Threat of
Substitute
Products
Bargaining
Power of
Buyers
Rivalry Among Existing
Competitors
Intense rivalry often plays out in the following ways:
Jockeying for strategic position
Using price competition
Staging advertising battles
Increasing consumer warranties or service
Making new product introductions
Occurs when a firm is pressured or sees an opportunity
Price competition often leaves the entire industry worse off
Advertising battles may increase total industry demand, but
may be costly to smaller competitors
Rivalry Among Existing Competitors
Cutthroat competition is more likely to occur when:
Numerous or equally balanced competitors
Slow growth industry
High fixed costs
High storage costs
Lack of differentiation or switching costs
Capacity added in large increments
Diverse competitors
High strategic stakes
High exit barriers
Competitor Analysis
The follow-up to Industry Analysis is effective
analysis of a firm’s Competitors
Industry
Environment
Competitive
Environment
Competitor Analysis
Assumptions
What assumptions do our
competitors hold about the future
of industry and themselves?
Current Strategy
Does our current strategy support
changes in the competitive
environment?
Future Objectives
How do our goals compare to our
competitors’ goals?
Capabilities
How do our capabilities compare
to our competitors?
Response
What will our
competitors do in the
future?
Where do we have a
competitive
advantage?
How will this change
our relationship with
our competition?
Competitor Analysis
Future Objectives
How do our goals compare
to our competitors’ goals?
Where will emphasis be
placed in the future?
What is the attitude
toward risk?
What Drives the competitor?
Competitor Analysis
Future Objectives
How do our goals compare
to our competitors’ goals?
Where Current
will emphasis
be
Strategy
placed inHow
the future?
are we currently
What is the
attitude
competing?
toward risk?
Does this strategy
support changes in the
competitive structure?
What is the competitor doing?
What can the competitor do?
Competitor Analysis
Future Objectives
What does the competitor believe
about itself and the industry?
How do our goals compare
to our competitors’ goals?
Where Current
will emphasis
be
Strategy
placed in the future?
How are we currently
What is the
attitude
competing?
Assumptions
toward risk?
Does thisDo
strategy
we assume the future
support changes
in the
will be volatile?
competition
structure?
What
assumptions do our
competitors hold about the
industry and themselves?
Are we assuming stable
competitive conditions?
Competitor Analysis
Future Objectives
What are the competitor’s
capabilities?
How do our goals compare
to our competitors’ goals?
Where Current
will emphasis
be
Strategy
placed in the future?
How are we currently
What is the
attitude
competing?
Assumptions
toward risk?
Does this
Dostrategy
we assume the future
supportwill
changes
in the
be volatile?
competition
Whatstructure?
assumptions do our
competitors
hold about the
Capabilities
industry and themselves?
What are my competitors’
Are we operating under
strengths and weaknesses?
a status quo?
How do our capabilities
compare to our
competitors?
Competitor Analysis
Response
Future Objectives
How do our goals compare
to our competitors’ goals?
Where Current
will emphasis
be
Strategy
placed in the future?
How are we currently
What is the
attitude
competing?
Assumptions
toward risk?
Does this
Dostrategy
we assume the future
supportwill
changes
in the
be volatile?
competition
Whatstructure?
assumptions do our
Capabilities
competitors
hold about the
industry and themselves?
What are my competitors’
Are we operating
strengths under
and weaknesses?
a status quo?
How do our capabilities
compare to our
competitors?
What will our competitors
do in the future?
Where do we have a
competitive advantage?
How will this change our
relationship with our
competition?
END OF MODULE - 3
THANK YOU
MODULE4
ANALYSING A COMPANY’S RESOURCES
AND COMPETITIVE POSITION
Analysis of the company’s strategies
SWOT ANALYSIS
VCA
BENCHMARKING
SWOT Analysis
•
•
•
•
Strengths
Weaknesses
Opportunities
Threats
Appraising a company’s strengths and weaknesses & its
external opportunities & threats, known as SWOT
Analysis.
SWOT analysis - powerful tool for sizing up a
Company’s resource capabilities and deficiencies, its
market opportunities, and the external threats to its future
well-being.
The purpose of SWOT
Analysis
• It is an easy-to-use tool for developing an
overview of a company’s strategic
situation.
– It forms a basis for matching your
company’s strategy to its situation
SWOT is the starting point
• It provides an overview of the strategic
situation.
• It provides the “raw material” to do more
extensive internal and external analysis.
Opportunities
• An OPPORTUNITY is a chance for firm
growth or progress due to a favorable juncture
of circumstances in the business environment.
• Possible Opportunities:
–
–
–
–
Emerging customer needs
Quality Improvements
Expanding global markets
Vertical Integration
Threats
• A THREAT is a factor in your
company’s external
environment that poses a
danger to its well-being.
• Possible Threats:
– New entry by competitors
– Changing
demographics/shifting demand
– Emergence of cheaper
technologies
– Regulatory requirements
Opportunities and Threats form a
basis for EXTERNAL analysis
• By examining opportunities:
• you can discover untapped markets,
• and new products or technologies, or identify
potential avenues for diversification.
• By examining threats, you can identify
unfavorable market shifts or changes in
technology, and create a defensive posture
aimed at preserving your competitive position.
What to look for identifying a Company’s
strengths, weaknesses, opportunities &
Threats
Potential Resource Strengths & competitive capabilities:
A powerful strategy
A strong financial condition
Superior technology
Cost advantage over rivals
Strong advertising & promotion
Product innovation capabilities
Good customer service capabilities
Better product quality to rivals
Wide geographical coverage /strong global distribution
Alliances /joint ventures with other firms –provide access to valuable
technology ,competencies, & attractive geographic markets.
What to look for identifying a Company’s
strengths, weaknesses, opportunities &
Threats
Potential Resource WEAKNESSES & competitive DEFICIENCIES:
No clear strategic direction
A weak balance sheet
Weak R&D
Weak Brand image or reputation
Loosing market share
Lack of Product innovation capabilities
Too much underutilized plant capacity
Strained relations –labor & management
Obsolete technology
Resources are not matched to industry key success
factors.
What to look for identifying a
Company’s strengths,
weaknesses, opportunities &
Threats
Potential Market OPPORTUNITIES:
Openings to win market share from rivals
Sharp Rise in buyer demand for product
Expanding into new geographic markets
Integrating forward & backward
Falling trade barriers in attractive foreign
markets
Acquiring rival firms with attractive
technological know-how to enter new
product lines
Entering into Alliances or joint ventures
What to look for identifying a Company’s
strengths, weaknesses, opportunities &
Threats
Potential External THREATS to a company’s well
being:
Slowdowns in market growth
Entry of potent new competitors
Loss of sales to substitute products
Growing bargaining power of customers
or suppliers
Restrictive trade policies on the part of foreign
governments
Increasing intensity of competition among
industry rivals- may squeeze profit margins.
Entering into Alliances or joint ventures