strat mgt-module~2

Environmental Analysis

Dr. T.K. Vijay Kumar

Strategic Management

Module ~2

© Dr. T.K. Vijay Kumar

“Things are always Different—

the art is figuring out which differences matter….”

Laszlo Birinyi

“Analysis is the Critical starting point of Strategic thinking.”

~ Kenichi Ohmae

© Dr. T.K. Vijay Kumar

THREE PRIMARY ASPECTS OF STRATEGIC BUSINESS MANAGEMENT

Industry and Competitive Analysis

Strategy and Competitive Advantage

Company Situation and Analysis

© Dr. T.K. Vijay Kumar

Four Basic Elements

Strategic Management Basic model

Strategic management is the process of moving where you are to where you want to be in future – through

sustainable competitive advantages

Options onCompetitive Positioning

Learning points from deviations

© Dr. T.K. Vijay Kumar

Situation AnalysisComponents of Internal & External Envt.

Two Considerations: Company’s External or

Macro-Environment Industry and Competitive conditions

Company’s Internal orMicro-Environment

Competencies, Capabilities, Resources Strengths and Weaknesses, and Competitiveness

© Dr. T.K. Vijay Kumar

Thinking Strategically to Choosing a Strategy

© Dr. T.K. Vijay Kumar

Scanning the Environment ~ STEEEPL…

Internal, External, Domestic and Global environment,

Macro Environmental Factors Demographic, Socio-Cultural, Economic, Political, Natural,

Technological, Legal, Govt. Policies…..

Environmental Analysis

© Dr. T.K. Vijay Kumar

Analyzing the Industry & Competitive Environment

1. What are the industry’s strategy-shaping economic features?2. What kinds of competitive forces are industry members

facing, and how strong is each force?3. What forces are driving changes in the industry, and what

impact will these changes have?4. What market positions do industry rivals occupy?5. What strategic moves are rivals likely to make next?6. What are the key factors for future success?7. Does the outlook for the industry present the company with

sufficiently attractive prospects for profitability?

Ref: STEEEPL

© Dr. T.K. Vijay Kumar

External and Internal AnalysesBy studying the firm’s (internal) capabilities & resources, firms identify what they can do (over time)

Unique Resources, Capabilities, and Competencies

(Sustainable Competitive Advantage)

© Dr. T.K. Vijay Kumar

Internal Analysis (Resources, Capabilities)

How do we effectively manage current core competencies while simultaneously developing new ones? (Exploit/ Explore)

How do we assemble bundles of resources, capabilities and core competencies to create value for customers?

How do we learn to change rapidly?

© Dr. T.K. Vijay Kumar

Assessing the firm’s capabilities/strengths & weaknesses in the various areas:

Finance / Marketing/ Human Resources / Operations/ R & D / General Management

Developing the strength-weakness profile Appraising the individual businesses/strategic business units

(SBUs) of the firm Identifying the competitive advantages and core competencies

and developing the competitive advantage profile (CAP) Examining the capability gap (gap between existing

capabilities and the ones needed for pursuing the spotted opportunities)

Internal appraisal (of the firm)

© Dr. T.K. Vijay Kumar

Components of Internal Analysis

Identifying CoreCompetencies

Resources• Tangible• Intangible

Capabilities

CoreCompetencies

Identify sustainable competitiveadvantages

StrategicCompetitiveness

Four Criteriaof Sustainable

Advantage

• Valuable• Rare• Imitation/Substitutes = costly• Organized properly

ValueChain

Analysis

• In/Outsource• decisions

* Value-Add Info.

© Dr. T.K. Vijay Kumar

Discovering CoreCompetencies

Resources• Tangible• Intangible

Tangible • Financial• Physical• Labor

Intangible• Technological• Innovation• Reputation• Organizational activity systems• Knowledge

© Dr. T.K. Vijay Kumar

Discovering CoreCompetencies

CompetitiveCapabilities

Competitive Capabilities describe the firm’s ability to Create, Deploy, Modify, Reconfigure, and Leverage resources.

Valuable capabilities permit resources to be combined in unique ways to create Core Competencies

© Dr. T.K. Vijay Kumar

Environmental Factors specific to the business concerned :~

Industry & Competition / Market/Customer / Technology Supplier Factors / Govt. Policies Spotting the opportunities & threats Checking the attractiveness and probability position of

these opportunities Highlighting those opportunities the pursuit of which will help

the firm bridge its strategic planning gap Developing the opportunities-threats profile (OTP)

Environmental Scanning Techniques

© Dr. T.K. Vijay Kumar

Industry Analysis (Porter’s Model)

© Dr. T.K. Vijay Kumar

SWOT ~ Analysis of Strengths, Weaknesses, Opportunities, & Threats.

© Dr. T.K. Vijay Kumar © Dr. TK Vijay Kumar

TOWS Matrix

© Dr. T.K. Vijay Kumar

MC KINSEY’S 7S FRAMEWORK

* Value-Add Info.

© Dr. T.K. Vijay Kumar

Balanced Score Card Example

* Value-Add Info.

© Dr. T.K. Vijay Kumar

BCG Matrix

BCG Matrix can help understand a frequently made strategy mistake: having a one-size-fits-all-approach to strategy,

* Value-Add Info.

© Dr. T.K. Vijay Kumar

GE Matrix

* Value-Add Info.

© Dr. T.K. Vijay Kumar

Thank U