sm wk 3 - internal analysis
TRANSCRIPT
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Class 3Internal Analysis611407 Strategic ManagementKing Mongkuts University of Technology North Bangkok
Dr.PardTeekasap
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Recap of the last class
Strategy is to be unique, not just to have low costwith high quality
Strategy needs trade-off
Fit within an organization is essential
3 generic strategies low cost, differentiate, andfocus
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Internal Analysis
SWOT
Product Life Cycle
Product Portfolio Matrix
Core Competency
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SW OT
S trengths W eaknesses
Opportunities Threats
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SW OT exercise
Conduct a SWOT analysis of these companies:
AIS
Starbucks
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D rawback of SW OT
The lists are lengthy
No requirement to prioritize the factors
Unclear and ambiguous words and phrases
No resolution of conflicts
No obligation to verify statements
Single level of analysis
No logical link with an implementation phase
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P roduct Life Cycle
Birth
Growth
Maturity
Decline
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Factors that drive change - Birth
Perceived comparative advantage of newproduct relative to the best available alternative
Perceived risk or estimate by a prospectivebuyer of the probability of a negative outcome
Barriers to adoption
Information and availability
Change in the position of complementaryproducts and government regulations andpolicies
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S trategy for birth period
Invest in promotion and distribution coverage
Expand sales activity
Provide technical service, warranty, after-salesservice
R educe the delivered price or adding new
features
Experience curve lower cost
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Factors that drive to RapidGrowth
Changes in relationship with substitute products
Growth from new competitors
Influence of repeat buying
Opportunity for segmentation and adaptation
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Factors that lead to declining
Fashion, demographic, or technologicalchange
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P roduct P ortfolio Matrix/BCGMatrix
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Goal of P roduct P ortfolio Matrix
Balance the cash flow
Manage betweenproducts that make profitwith products that requirecapital investment
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Market Share
Market share is correlatedwith the productprofitability (Economies ofscale & Experience curve)
R elative market share theratio of the companysshare of the market to theshare of the largestcompetitor
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Market Growth Rate
Present or forecast marketgrowth
R apid growth stage market share can beincreased at relatively lowcost
Maturity stage newmarket share is time-consuming and costly
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P roduct P ortfolio Exercise
Apple
CP
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P roduct P ortfolio S trategyS tar
reinvest earnings in theform of price reduction,
product improvement,better market coverage,production efficiency
P roblem Child/QuestionMark
Invest heavily to getnew share
Acquire competitorsMarket segmentationstrategy
Cash Cow
Maintain marketdominance
Use excess cash to
support other products
D og/ P et
Focus on a specializedsegment
H arvestingDivestment
Abandonment
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Overall strategy
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P itfalls in the measures
Should product-market be broad or narrow?
H ow much market segmentation?
Should the focus be on the total product-market or aportion served by the company?
Which level of geography: local VS national VS regio-centric markets?
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Core Competency
Instead of looking at the product, we look at keycompetences that make all products success
R eal sources of advantage are to be found inmanagements ability to consolidate corporate-wide technologies and production skills into
competencies that empower individual businessto adapt quickly to changing opportunities
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Example of core competencies
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Test to identify corecompetencies
1. A core competence provides potential accessto a wide variety of markets
2. A core competence should make a significantcontribution to the perceived customer benefitsof the end product
3. A core competency should be difficult toimitate
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Core competencies of Truecorporation
What is the core competencies of Truecorporation?
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Is it ok to outsource corecompetency?
Outsourcing provides an opportunity to shortcutinto a more competitive product
H owever, it contributes little to create skillsrequired to sustain product leadership
What if technology providers step up andbecome direct competitors?
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Core competence V S SBU
SBU will affect core competence building andmaintaining
Underinvestment in developing core competenciesand core products
Imprisoned resources
Bounded innovation
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S trategic architecture& Corecompetencies
Proper strategic architecture is essential for competence building
Strategic architecture is a roadmap of thefuture that identifies which core competenciesto build and their constituent technologies
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Term P roject P roposalP resentation