Download - Group 2
Strategic Management
Tools & Techniques
Tool 17th – Porter’s Five-Forces
INDUSTRY COMPETITIORS (Rivalry among existing firms)
POTENTIAL ENTRANTS
BUYERS
SUBSTITUTES
SUPPLIER
Threats of new
entrants
Bargaining
power of
SuppliersThreats of substitutes
products or services
Bargaining power of
Buyers
Tool 17th – Porter’s Five-Forces
Example:
Five Forces Analysis of Contact Center Outsourcing Market in the Asia Pacific Region
Market Overview:
The Contact Center Outsourcing market in the APAC region has three forms of business:
outsourcing from Western countries,
outsourcing from foreign MNCs in the APAC region
domestic outsourcing
Tool 17th – Porter’s Five-Forces
Contact Center Outsourcing Market for Asia Pacific:
1. Threat of Rivalry (High) – Competition among the existing players is high because of cost pressure among vendors. Hence, the threat of rivalry is high
2. Bargaining Power of Supplier (Low) – The presence of many service providers and low switching costs result in low bargaining power of suppliers
3. Bargaining Power of Buyers (Moderate) – Though there are a number of vendors present in the market, clients prefer to use services from reputable service providers.
Tool 17th – Porter’s Five-Forces
4. Threats of New Entrants (High) – The probability of new players entering the market is high because of the relatively low-entry barrier in the APAC region and the moderate cost structure requirement of the business
5. Threat of Substitutes (Low) – There is no direct substitute for contact center outsourcing. The only alternative possible is for companies to move these functions in-house
Tool 18th - Strategy Clock (1 of 5)
An expansion of Porter’s Generic Strategies, developed by Cliff Bowman and David Faulkner.
• Eight possible strategies or positions
A diagrammatic representation of the relationship between perceived value to the customer and price.
Tool to identify a company’s –
• Competitive position
• Strategy in convincing its customers to buy its product versus competitors.
Tool 18th - Strategy Clock (2 of 5)
Tool 18th - Strategy Clock (3 of 5)
Strategy 1 – Low Price/Low Added Value (No Frills)
Inferior offerings but with very attractive price
Focused on a price-sensitive market segment
Must be volume driven to compensate low price
Air Asia
Strategy 2 – Low Price
Similar offerings to competitors while keeping price low
Key driver is to reduce cost which others cannot imitate
Volume driven
Dell
Strategy 3 – Hybrid
Differentiated offerings but with low price
A combination that builds customer loyalty
IKEA
Tool 18th - Strategy Clock (4 of 5)
Strategy 4 – Differentiation
Differentiated offerings and similar price range with competition
Branding is key to maintain value perception
Apple
Strategy 5 – Focused Differentiation
Differentiated premium offerings with higher price range against competitors
Niche market with high margins
Value perception is crucial
Bentley
Strategy 6 – High Price/Standard Value
Similar offerings to competitors but with higher price
If competitors do not follow price, will lose market share
Can be a short term strategy, price could build value perception
Tool 18th - Strategy Clock (4 of 5)
Strategy 7 – High Price/Low Value
Inferior offerings at a high price
Only effective its there are no competitors in market, monopolistic
Strategy 8 – Standard Price/Low Value
Inferior offerings at a similar price to competitors.
Will lose market share
Tool 19th – Fish Bone Ishikawa
Known as Cause and Effect Analysis
Devised by Professor Kaoru Ishikawa
When to use this tool:-
Discover the root cause of a problem.
Uncover bottlenecks in your processes.
Identify where and why a process isn't working.
Brainstorm The Major Categories Of Causes Of The Problem.
If This Is Difficult Use Generic Heading
HOW TO DO????
Identify the Problem
Work Out the Major Factors Involved
Identify Possible Causes
Analyze Your Diagram
EXAMPLE
Tool 20th – Pareto’s Principle
Named after Italian economist - Vilfredo Pareto
The law of the vital few, and the principle of factor sparsity
Specifies an unequal relationship between inputs and outputs
Most things in life are not distributed evenly
Roughly 80% of the effects from 20% of the causes
Total need not add up to 100
Ideal vs 80/20 Rule
Ideally, effort should rise together with Result
80/20 rule shows the actual result
PROCEDURES FOR PARETO RULE
Identify the issues and root causes from Fishbone Ishikawa strategy
Identify the frequency of the issues
Assign the weightage on the identified issues
Perform the calculations and accumulations
Draft the graph with most critical issues from the left
Identify the 80-20 points from the graph
Solve the 20% which resolves 80% issues
IDENTIFIED ISSUES FOR AIRLINES
Absent Rate and Impacts of Pilots (5 times)
Absent Rate and Impacts of Stewards (200 times)
Absent Rate and Impacts of Groundmen (100 times)
Absent Rate and Impacts of Technicians (100 times)
* Rate is known as the frequency whereas impact is the weightage of the impacts towards airlines schedules.
ISSUES CALCULATIONS
Frequency Weight (%) Freq * Weight Percentage % Accumulation
Technicians 120 20 24 0.42 42
Stewards 200 10 20 0.35 77
Groundmen 100 10 10 0.18 95
Pilot 5 60 3 0.05 100
100% 57
Frequency Weight (%) Total
Pilots 5 60 3
Stewards 200 30 20
Groundmen 120 20 24
Technicians 100 10 10
GRAPH FROM CALCULATIONS
Percentage
100
90
80
70
60
50
40
30
20
10
0
Technicians Stewards Groundmen Pilots Job Functions
QUESTIONS?
THANK YOU