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


THREE PRIMARY ASPECTS OF STRATEGIC BUSINESS MANAGEMENT

Industry and Competitive Analysis

Strategy and Competitive Advantage

Company Situation and Analysis


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


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


Thinking Strategically to Choosing a Strategy


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


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


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)


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?


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)


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.


Discovering CoreCompetencies

Resources• Tangible• Intangible

Tangible • Financial• Physical• Labor

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


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


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


Industry Analysis (Porter’s Model)


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


MC KINSEY’S 7S FRAMEWORK

* Value-Add Info.


Balanced Score Card Example

* Value-Add Info.


BCG Matrix

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

* Value-Add Info.


GE Matrix

* Value-Add Info.


Thank U

strat mgt-module~2

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