Management Models...

150 Slides Product

Price

People

Processes

Place

Promotion

Customer

Service

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Key Words...

Break-even – Financing Life Cycle – Economies of

Scale – Elasticity – Sales Cycles – Market Potential –

Portfolio Matrix – Product Model – Four P’s –

Push/Pull Strategy – Marketing Mix – PDCA Cycle –

SWOT – Value Chain – Ansoff Matrix – BCG Matrix –

7-S Model – Core Competencies – GE Business

Screen – Nine Cell Industry – Risk/Reward Diagram –

Porter’s Five Forces – Industry Competition – Generic

Strategies – Geobusiness Model – Porter’s Diamond –

Matrix Design – PIMS – Leavitt’s Diamond – Belbin’s

Team Roles – Theory X/Y – Maslow’s Hierarchy –

Herzberg’s Theory – Cultural Web – Pareto Curve –

CIM Concept – Value Drivers

The General Electric Business Screen

Low

High

Medium

Strong Average Weak

COMPETITIVE POSITION

INDUSTRY

ATTRACITVENESS

Attractiveness/Competitive Position

Strategies

High

• Grow

• Seek dominance

• Maximize

investment

• Evaluate

potential for

leadership via

Segmentation

• Identify

weaknesses

• Build strengths

• Specialize

• Seek niches

• Consider

acquisitions

• Identify

growth

segments

• Invest strongly

• Maintain

position

elsewhere

• Identify growth

segments

• Specialize

• Invest

selectively

• Specialize

• Seek niches

• Consider exit

• Maintain

overall

position

• Seek cash flow

• Invest at

maintenance

levels

• Prune lines

• Minimize

investment

• Position to

divest

• Trust leader‘s

statesmanship

• Sic on

competitor‘s

cash generators

• Time exit and

divest

Medium

Low

Strong Average Weak

COMPETITIVE POSITION

INDUSTRY

ATTRACTIVENESS

Company Position/Industry

Attractiveness Screen

HOLD

HARVEST

HARVEST

BUILD BUILD

HARVEST

HOLD

HOLD

BUILD

Industry attractiveness

Medium Low High

Low

M

ediu

m

Hig

h

Bu

sin

ess

un

it s

tren

gth

s

A Representative Nine-Cell Industry

Attractiveness-Competitive Strength

Matrix

Business C

Business E

Strong Average

High

Low

Business F Business A

Business B

Business D

Weak

Medium

Low priority for investment

Medium priority for investment

High priority for investment

COMPETITIVE STRENGTHS/BUSINESS POSITION

LONG-TERM

INDUSTRY

ATTRACTIVENESS

GE / McKinsey Multifactor Portfolio Matrix

INDUSTRY ATTRACTIVENESS

BU

SIN

ES

S S

TR

EN

GT

H

Invest

Manage

Selectively

for Earnings

Invest

Invest

Manage

Selectively

for Earnings

Manage

Selectively

for Earnings

Harvest or

Divest

Harvest or

Divest

Harvest or

Divest

Portfolio Positions and

Defensive Strategic Market Plans

Very Attractive

Mark

et A

ttra

ctiv

enes

s

Very Unattractive

Very Strong Very Weak Competitive Advantage

Harvest or Divest

Protect

Protect or Harvest

Harvest or Divest

Protect or Harvest

Protect or Focus

Protect or Focus

Protect

Market Attractiveness – Portfolio Classification and Strategies

MA

RK

ET

AT

TR

AC

TIV

EN

ES

S

Medium Weak 5.00

3.67

2.33

1.00

Strong

Joints

Hydraulic

Pumps

Clutches

BUSINESS STRENGHT

Low

Medium

High

(a) Classification

Aerospace Fittings

Relief Valves

Fuel Pumps

Flexible

Diaphragms

2.33 3.67 5.00 1.00

Invest / grow

Harvest / divest

Selectivity / earnings

High

Low

Low High

REWARD (NPV)

RIS

K

The Risk-Reward Diagrams

Contrasting Characteristics of Upstream

and Downstream Companies

Raw Primary Product Consumer

materials manufacturer Fabricator producer marketer Retail

Supply flow

UPSTREAM

ORGANIZATIONS

DOWNSTREAM

ORGANIZATIONS

Centre of gravity

of a manufacturing

industry

Consumer

Contrasting characteristics of upstream and downstream companies

Upstream

Commodity

Standardize

Maximize end users

Low-cost producers

Sales push

Line-driven organization

Process innovation

Capital budget

Capital-intensive

Technological know-how

Supply and trading/manufacturing and engineering

Downstream

Proprietary

Customize

Target end users

High margins

Marketing pull

Line/staff

Product innovation

R & D/advertising budget

People-intensive

Marketing skills

Product development/marketing

Supply stages in a manufaturing industry (supply chain)

Porter‘s Five Forces I

Potential Entrants

Substitutes

Buyers Suppliers

Industry

competitors

Rivalry among

existing firms

Threat of substitute products

Threat new entrants

Bargaining

power of

suppliers

Bargaining

power of

buyers

Porter‘s Five Forces II

RIVALRY

AMONG

COMPETING

SELLERS

Potential

New Entrants

Buyers

Suppliers of

raw materials,

parts,

components or

other resource

inputs

Firms in other

industries

offering

Substitute

Products

Forces Driving Industry Competition

Potential Entrants

Industry

competitors

Rivalry among

existing firms

Substitutes

Buyers Suppliers

Threat of

substitute products

or services

Bargaining power

of suppliers Bargaining power

of buyers

Threat of

new entrants

Barriers and Profitability

Low

High

High Low

ENTRY

BARRIERS

EXIT BARRIERS

PROFITS=LOW

RETURNS=STABLE

PROFITS=HIGH

RETURNS=STABLE PROFITS=HIGH

RETURNS=RISKY

PROFITS=LOW

RETURNS=RISKY

Four Routes to Strategic Advantage

KFS

Intensify funtional

differentiation

Relative superiority

Exploit competitor‘s

weakness

Strategic degrees of

Freedom

Maximize user

benefit

Aggressive

initiatives

Ask „why-why‘s“

Compete

(wisely)

Route 1

Avoid

head-on

competition

Route 2 Route 4

Route 3

Business/Product Offered

Old/Existing New/Creative

The Generic Strategies I

Differentiation Cost Leadership

Focus

The Generic Strategies II

Cost Leadership Differentiation

Cost Focus Differentiation Focus

Broad

Target

Narrow

Target

Lower Cost Differentiation

COMPETITIVE ADVANTAGE

COMPETITIVE

SCOPE

Five Modified Competitive Strategies

Overall

Low-Cost

Leadership

Strategy

Broad

Differentiation

Strategy

Focused

Low-Cost

Strategy

Focused

Differentiation

Strategy

Best-Cost

Provider

Strategy

A Narrow

Buyer-Segment

(or Market Niche)

A Broad

Cross-Section

of Buyers

Lower Cost Differentiation

TYPE OF COMPETITVE

ADVANTAGE BEING PURSUED

MARKET

TARGET

Sweeney‘s Generic Strategies

Marketer

Emphasizes

• Quality

• Dependability

• Range

Innovator

Emphasizes

• Quality

• Product/service

• Performance

• Speed

• New product/service

• Development

Caretaker

Emphasizes

• Price/ cost

• Dependability

• Quality

Innovator

Emphasizes

• Quality

• Product/service

• Performance

• Flexibility

• Speed

Traditional Enhanced

Enhan

ced

B

asic

Cust

om

er s

ervic

e cr

iter

ia

Str

ateg

ic c

han

ge

involv

es e

nhan

cing

the

oper

atio

n‘s

infr

astr

uct

ure

Strategic change involves enhancing

The operation‘s structure