towards a framework for strategic analysis

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TOWARDS A FRAMEWORK FOR STRATEGIC ANALYSIS

Objectives:

To assess perspectives of strategy To outline the importance of strategy To define the concept of strategy To understand the strategic management process

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STRATEGIC MANAGEMENT: RELEVANCE

INDUSTRY, BUSINESS AND ECONOMIC CYCLES ARE HIGHLY

VOLATILE, UNSTABLE, DYNAMIC AND TURBULENT

THERE HAS BEEN A PARADIGM SIFT FROM

PROGECTIONISM → LIBERALIZED REGIME

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▪ LIBERALISATION/ GLOBALIZATION: CRITICAL COMPONENTS Delicensing And Deregulation Liberalization Of Trade Reduction In Direct And Indirect Tariffs PSU Disinvestment And Privatization Inflow of FDI/ FII Investments

THE CONSEQUENCES Integration of World Markets Free Movement Of Capital, Labour, Goods And Services Promotion of Trade and Investments and reduced Entry And

Trade barriers Vulnerable To Social, Political, and Economic Shocks Aggravate Competition

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■ STRATEGIES TO BE “CUSTOMER CENTRIC”

■ OPPORTUNITIES TO BE “DISCOVERED AND

EXPLOITED” DESPTE IMMENSE AN DFIERCE

COMPETITION.

■ “POTENTIALLY DANGEROUS” TO FULFILL ALL

ASPECTS OF CUSTOMER NEEDS AND EXPECTATIONS

■ STRATEGIES → “CREATE AND ADD VALUE”

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Protected Market High Restrictions High Tariffs/ Regulation Competition Limited

PRE LIBERALIZATION SCENARIO

POST LIBERALIZATION SCENARIO

Liberalized Market Reduced restrictions Reduced Tariffs Low Entry Barriers Severe Competition

3 Things to Remember:1. Strategies to Survive2. Strategies to Grow and Excel3. Strategies to Sustain

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STRATEGIC MANAGEMENT: USEFUL APPROACHES

Morrison and Lee (1989)

Strategy formulation involves knowing:

The competitive environment How to allocate resources How to structure organizations How to implement plans Being able to react to events

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Johnson and Scholes (1999)

Strategy is the direction and scope of an organization over

the long term which achieves advantage for the

organization through its configuration of resources within

a changing environment to meet the needs of markets and

to fulfill stakeholder expectations.

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Thinking strategically – the three big strategic questions

1. Where are we now?

2. Where do we want to go?

3. How will we get there?

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1. Where are we now?

Involves thinking strategically about the company’s external

market environment and its internal situation & capabilities

2. Where do we want to go?

Involves thinking strategically about what top management

wants the company to be like in 5-10 years (levels of

performance, financial and strategic outcomes)

3. How will we get there?

Involves thinking about what strategy the company should

pursue to perform successfully and get from where it is to

where it wants to go

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MINTZBERG VIEW: THE CRITICAL 5 Ps

1. PLAN → A consciously intended course of action, a guideline, or set of guidelines to deal with a situation

2. PATTERN → A stream of actions, a consistency of behaviour

3. PLOY → SPECIFIC MOVES TO OUTWIT AND OUTSMART RIVALS AND COMPETITORS

4. POSITION → In a market or competitive environment (niche), a sort of eco-system where some browse off one segment, and others browse off another

5. PERSPECTIVE → Reflects a firm’s ingrained way of seeing the world, as in corporate culture, dominant ideology, individual’s personality

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Why corporate strategy is important

Corporate strategy involves the entire organization

Corporate strategy is likely to concern itself with the survival of the business as a minimum objective and the creation of value added as a maximum objectives

Corporate strategy covers the range and depth of the organization's activities

Corporate strategy directs the changing and evolving relationship of the organization with its environment

Corporate strategy is central to the development of sustainable competitive advantage

Corporate strategy is crucial to adding value

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Levels of strategy (1)

Corporate Level strategic decisions are concerned with: Overall purpose and scope

Adding value to shareholder investment portfolio issues

Resource allocation between SBUs

Structure and control of SBUs

Corporate financial strategy

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Business Unit strategy is concerned with:

Competitive strategy

Developing market opportunities

Developing new products/ services

Resource allocation within the SBU

Structure and control of the SBU

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Operational Strategies are concerned with:

The integration of resources, processes, people and skills

Implementation of strategy

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The Various Levels of Strategic Management Process

Top Management Decision by Corporate Board Members/ conglomerates/ groups

•Mergers/ Acquisitions•Expansion & Diversification•Product Portfolio Mize•Divestiture•Alliances & Partnerships•Collaborative Strategies

Corporate Level Strategy

SBU Level Strategy

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The Various Levels of Strategic Management Process

Decision of Business Heads/ Unit Managers Comprising the following

• Increase in MKT Share (%)•Change in Product Portfolio• Improve Financial Performance•Positioning Strategy

All Business functions to BE Interrelated•HR Strategy•Marketing Strategy• IT & communication•Financial Strategy

Supervision and Control of•Business functions•Business Processes

SBU Level Strategy

Functional Level Strategy

Operational Level Strategy

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STRATEGIC MANAGEMENT: PROCESS

ETOP INTERNAL RESOURCES/ CAPABILITY

STRATEGY ACTION PLANS

LINK WITH OBJECTIVES.

GOALS/ PURPOSE

ORGANIZATIONS TO POSSSESS DUAL CAPABILITY

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STRATEGIC MANAGEMENT: PROCESS

1. Build and sustain competitive advantage

2. Earn above average profitsMISSION

VISION

OBJECTIVES

STRATEGIC INTENT

FORMULATION OF ACTION PLANS

IMPLEMENTATION OF ACTION PLANS

AUDIT REVIEW

CSO (Common Shared Objectives)

ORGANIZATIONS TO POSSSESS DUAL CAPABILITY

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THE STRATEGIC MANAGEMENT PROCESS

A → ANALYSIS

D → DESIGN

I → IMPLEMENTATION

A → AUDIT

Suitable Framework for formulation implementation and control on strategy

A → ANALYSIS

Analyze and Define External Conditions

The PEST ENVIRONMENTAL SCAN

COMPETITOR ANALYSIS

Identifying Competitive Conditions

Assessing Degree and Structure of Conditions and Competition

PORTERS FIVE FORCES MODEL → INDUSTRY COMPETITIVENESS

VALUE CHAIN ANALYSIS

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INTERNAL SCANNING

Allocation of Resources

Capability and Competency Mapping

Strategic Group Mapping/ GIA

Performance Bench Marking

SWOT Analysis

CSFs

Core Vs Distinctive Competency

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D DESIGN/ FORMATION OF STRATEGY

Design Strategic Action Plans based on external environmental conditions and internal resource mapping

PORTER’S → Generic Strategies

Integrated Strategic Approach

Hyper competition in Fast Cycle Sectors

Early Mover Advantage Sustain Ability

Traditional Grand Strategies

Expansion Market Diversity

Diversification Product Diversity

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BCG Growth Share Matrix and ILC Model

Strategic Options Under Various Industry Settings

International Level Strategy

Turn Around Strategy

Consolidation and Restructuring Options

Mergers/ Acquisition Synergies and Value Addition

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I → IMPLEMENTATION/ EXECUTION

Corporate Governance and Ethics

Strategic Leadership

Change Management

Organization Structure and controls

HRM Initiatives

Revamp of Process, Systems, Resources and Facilitating Strategic Change (Critical 7 S’s MODEL)

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A → AUDIT

Performance Measurement and Audit

Periodic Monitoring and Evaluation

Classify Yardsticks and Measure for Corporate Success

Identify Critical Gaps/ Issues

Introduce Course Corrective Actions

Continuous Cyclical Process

The Balanced Scorecard Model

NGOs/ VOs → Corporate Social ResponsibilityEvaluation → Schemes/ Programs

towards a framework for strategic analysis

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