tool analysis of strategic competitiveness

1

Tool

Analysis of strategic competitiveness

Management tools have played a substantial role in

optimizing strategic and operational work for decades.

On the following pages, some instruments are

presented that can be used to analyze

competitiveness and strategic positioning.

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tools – Life Cycle Analysis (1)

IEC - Institute of Executive Capabilities der Steinbeis-Hochschule Berlin SHB

Profit

Revenue

DeclineMaturityIntroduction Growth

Course of Time

Re

ve

nu

e o

r. P

rofi

t

3IEC - Institute of Executive Capabilities der Steinbeis-Hochschule Berlin SHB

Profit

Revenue

Increase Familiarity Expand Market Share

Focus on marketing product improvement and product diversification

Defense of Market Share and Product

modifications necessary

Cost ControlEnsure Productivity

Growth PhaseIntroduction Phase Decline PhaseMaturity Phase

▪ Products largely unfamiliar

▪ Low revenue and high initial costs/ development costs

▪ Negative profits in sales and marketing

▪ Growing awareness of the product

▪ Disproportional increase in sales

▪ Positive Profits

▪ Increased competition and competitive pressure

▪ Maximum sales

▪ Declining Profits

▪ saturation of the market

▪ Maximum number of competitors

▪ Degeneration phase with steadily falling profits

▪ Low profits

▪ Changed customer needs

▪ Low demands

▪ Exit market




Introduction Growth Maturity Decline

Features

Customer / Purchase

Pattern

Innovators with mostly high

income/ inert, have to be

convinced

Expanded Customer circle/

Customers accept uneven level

of quality

Mass market, repeated

purchases / Selection among

brands

Experienced Customers ,

Latecomer / demanding in

selection

Turnovers Low Fast Growth Slow Growth Decrease

Profits Not notable Peaks Declines Low or Zero

Cash-Flow Negative Moderate High Low

Competition View CompaniesIncreasingly more / Entries,

Fusions and bankruptcies

Many / Especially price

competitionIncreasingly less/ Exits

Risk High BearableStarting sensitivity to economic

situations

Actions

Main Strategy Expand market shareIncrease market penetration/

Marketing is the key function

Defend market share / Costs

and marketing effectiveness

are important

Secure productivity/ Cost

control decisive

Marketing Costs High High Descending Low

Pressure on Publicity Market preferences Brand loyalty Rationalizing

Distribution Selective / specialized Intensive Intensive Selective

Price High Relatively high Descending to low point Low, rarely ascending

Products Basic Model Improved Differentiated Rationalized

Production

Over capacities/ No Series /

relatively high Qualification of

staff

Lack of capacities / Transition

to mass-production

Optimal size / large Series / low

qualification of workers

Overcapacities / mass-

production




Co

st

per

pie

ce

Production Scope (cummulated)


tools – Learning Curve Analysis


Is the Resscource or Skill …

Of Value? rare?Difficcult to imitate?

extractable?Implicationen for Competition

PresumedPerformance

Competence Level

No - - NoCompetition Disadvantage

Under Norm ValueCompetence1. Order

Yes No - Competition Equality Norm Value

Competence2. Order

Yes Yes NoTemporary Competition Advantage

Above Norm Value

Core Competence

Yes Yes Yes YesConstant Competition Advantage

Clearly Above Norm Value

Analysis of strategic competitiveness–

tools – Core Competence Analysis


Structure

Staff

SharedValues

SystemsStrategy

Skills Style

„Hard“ factors

„Soft“ factors


tools – 7-S-Model (McKinsey Seven-S-Framework)




Structure

Staff

SharedValues

SystemsStrategy

Skills Style

Structure

▪ Who will arrange the structures in the company?

▪ Corresponds to the real structure of the necessary complexity or simplicity?

▪ Is there a clear organization chart?

▪ The corporate structure is a help or a hindrance for the job?

▪ Are the competencies of the organization areas adequately defined?

▪ What structural changes are planned? Who is involved in the change process?




Structure

Staff

SharedValues

SystemsStrategy

Skills Style

Systems

▪ What processes have high importance in the company?

▪ As the excellent experience in doing is assessing these processes?

▪ As the processes are organized? Are they transparent enough?

▪ Which interfaces frequently conflicts occur?

▪ What formal and informal processes are in place to implement the overall strategy?

▪ Where do you see development needs in the processes?




Structure

Staff

SharedValues

SystemsStrategy

Skills Style

Style / Culture

▪ What are the rules and standards are strictly observed by staff?

▪ What are the mechanisms of reward and punishment mechanisms exist?

▪ As shapes from collaboration and cooperation within the company?

▪ What is done with errors?

▪ What is the relationship between staff?

▪ What are the qualities of leadership?


Analysis of strategic competitiveness tools – 7-S-Model (McKinsey

Seven-S-Framework)

Structure

Staff

SharedValues

SystemsStrategy

Skills Style

Staff

▪ Corresponds to the actual staffing formulated the guidelines?

▪ The employees are vital capital, or simply a means to an end?

▪ Bring the strengths of the staff a competitive advantage over its competitors?

▪ Like the employees in the company is encouraged and what are the development possibilities?

▪ How high is the turnover?

▪ In what areas of development is needed on the staff?




Structure

Staff

SharedValues

SystemsStrategy

Skills Style

Skills

▪ About what the company has outstanding abilities?

▪ Competitive advantages resulting from these abilities?

▪ What is the knowledge via the core capabilities in the enterprise? Is it tied to specific people?

▪ How knowledge is shared within the company? What happens to new knowledge?

▪ Are there incentive systems for knowledge processing and dissemination of knowledge?

▪ Which knowledge management systems exist in the company?




Structure

Staff

SharedValues

SystemsStrategy

Skills Style

Strategie

▪ How to shape vision and strategy of the company?

▪ To what extent the intended strategy and the secondary targets are known to the employees?

▪ How big is the opportunity to implement the desired shortterm strategy?

▪ If there are opposing goals?

▪ Is the strategy likely to create challenges in the future?

▪ Is the company clearly enough defined?

▪ Who develops the strategies in the company? Which people and departments are the driversof development?




Checklist for hard factors

Strategy

▪ How to shape vision and strategy of the company?

▪ To what extent the intended strategy and the secondary targets are known to the employees?

▪ How big is the opportunity to implement the desired short-term strategy?

▪ If there are opposing goals?

▪ Is the strategy likely to create challenges in the future?

▪ Is the company clearly enough defined?

▪ Who develops the strategies in the company?Which people and departments are the drivers of development?

Structure

▪ Who will arrange the structures in the company?

▪ Corresponds to the real structure of the necessary complexity or simplicity?

▪ Is there a clear organization chart?

▪ The corporate structure is a help or a hindrance for the job?

▪ Are the competencies of the organization areas adequately defined?

▪ What structural changes are planned? Who is involved in the change process?

Systems

▪ What processes have high importance in the company?

▪ As the excellent experience in doing is assessing these processes?

▪ As the processes are organized? Are they transparent enough?

▪ Which interfaces frequently conflicts occur?

▪ What formal and informal processes are in place to implement the overallstrategy?

▪ Where do you see development needs in the processes?

1 2 3




Checklist for hard factors

Skills

▪ About what the company has outstanding abilities?

▪ Competitive advantages resulting from these abilities?

▪ What is the knowledge via the core capabilities in the enter-prise? Is it tied to specific people?

▪ How knowledge is shared within the company? What happens to new knowledge?

▪ Are there incentive systems for knowledge processing and dissemination of knowledge?

▪ Which knowledge management systems exist in the company?

4 Staff

▪ Corresponds to the actual staffing formulated the guidelines?

▪ The employees are vital capital, or simply a means to an end?

▪ Bring the strengths of the staff a competitive advantage over its competitors?

▪ Like the employees in the company is encouraged and what are the development possibilities?

▪ How high is the turnover?

▪ In what areas of development is needed on the staff?

5 Style and Culture

▪ What are the rules and standards are strictly observed by staff?

▪ What are the mechanisms of reward and punishment mechanisms exist?

▪ As shapes from collaboration and cooperation within the company?

▪ What is done with errors?

▪ What is the relationship between staff?

▪ What are the qualities of leadership?

▪ Does the leadership style to the targeted company culture?

6 Shared Values

▪ What are the common values of the company?

▪ What are the company's philosophy and what self-characterizes the company?

▪ Share the employees an understanding via these values?

▪ If the development of values in a more rigid frame, or it is dynamic and adaptable?

▪ Suitable values in order to promote enterprise culture?

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Staff Skills Style Shared Values Systems Structure Strategy

Strategy … … … … … … …

Structure … … … … … …

Systems … … … … …

Shared Values … … … …

Style … … …

Skills … …

Staff …



tools – Value Chain Analysis

Image of business Model of value chain1

Analysis of Cost Position and value creation 2

Identification of differenciation possibilities of value chain activitiy3

Analysis of Technology Niveaus of value chain activities4

Determination of success-critical value chain activities5

Derivation of concrete recommendations of action6



tools – Market Growth / Market Share Portfolio Analysis

Question Marks

Poor Dogs

Stars

Cash Cows

1

-

+- Relative Market Share

Ma

rke

t Gro

wth

+

Accumulated Units

Co

sts

/Pie

ce

Business Field

Life Cycle

Tim

e

Market - /Sales Volume



tools – Market Growth / Market Share Portfolio Analysis

Evaluation of the position of the Business Unit

Revenue of Business Unit

Revenue of strongest CompetitorRelative Market Share =

Evaluation of Market Attractiveness through Market Growth

Market volume – Market volume previous year

Market volume previous yearMarket Growth = x100



tools – Competition Strength Portfolio Analysis

Success Factors

Weighting Evaluation

Noteslow medium high

poor neutral good

9 8 7 6 5 4 3 2 1 0 1 2 3 4 5 6 7 8 9

Market Volume

Market Growth

Profit Potential of

Market

Innovation Potential

of Market

Competition

Behaviour

Sensitivity to

Economic Activity

Substitution

Possibilities

Customer Behaviour

Supply Security

Government

Influences

Just move spheres

depending on

characteristics to left/right

Just move spheres

depending on

characteristics to left/right



tools – Stakeholder Analysis

Stakeholder

Support of the Project Influence on the Project

Expected Behaviour

++ + o - -- highmoderat

eslight



tools – Benchmarking

Form of Benchmarking …

Objective of Benchmarking …

Benchmarking

ObjectTarget Figure

Benchmarking

Partner

Value of

BenchmarksOwn Value Gap Absolute

Gap in %

of own Value

Possible

MeasuresResponsible Target Date



tools – Analysis of external Market Forces

4. Supplier

Bargaining power of Supplier

2. Competitor in the field

Rivalry among existing companies

1. Potential new competitors

Threat of new competitors

3. Substitution Products

Threat by Substitution Products

5. Customer

Bargaining power of customer




Competition

Dimensions

Influencal Factors on

Competition DimensionsShort Characterization of Industry

Potential

Competition

Marketentry berriers for new Competition are:

▪ Economies of Scale

▪ Product differences, detectible in the appropriate Customer Loyalty

▪ High equity requirements to enter the market

▪ Conversion Costs for Customer when Changing to a different Product

▪ Unusually good and expensive Sales chanels

▪ Size-independent Cost Advantages (Patents, Commodities, Location,

Subventions, Official barriers)

New

Competition

Intensive Rivaliary results from:

▪ Many simmilar Competitioners

▪ Weak Growth of Industry

▪ High dixed costs and high Reserve Capacity

▪ Differentiation between the Competition just about the Price

▪ High strategic insets (Market Share winnings no matter how)

▪ High Exit barriers

Risk of

Substitution

Risk of Substitution happens by:

▪ real or potentially attractive Substitute Products

▪ offensive Marketing für Substitute Products and Services

▪ Impossible Defense of Substitute Products e.g with uniform Standards,

blocking of Sales chanels and so on.

▪ New Products through Technologie Development




Competition

Dimensions

Influencal Factors on

Competition DimensionsShort Characterization of Industry

Supplier

Factors that may raise the bargaining power of supplier:

▪ high competition advantages of delivered products

▪ poor number of potential suppliers

▪ high meaning of products for the quality of products of customer

▪ high conversion costs when changing the supplier

▪ poor meaning of customer for the supplier

▪ believable interest on forward integration

Customer

Factors that may raise the Bargaining power of Customer:

▪ high market power on the side of customer

▪ a large selection of alternative supplier for the customer (Standardized

exchangeable Products)

▪ cost and market transparency for Customer (example: market places)

▪ view customers appear concentrated

▪ low conversion costs and risks for the customer when changing supplier

▪ high share of industry products on overall costs of customer (strategic

purchasing policy)

▪ Earning problems on the side of customers that they want to transfer to the

supplier.

▪ Believable threat of backwards integration in the value chain


Analysis of strategic competitiveness tools

Analysis of external Market Forces

Industry Attractiveness

Now Future

lowmediu

mhigh low

mediu

mhigh

Entry Barriers

Exit Barriers

Rivalary of Competition

Bargaining Power of Customer

Bargaining Power of Supplier

Availability of Substitute Products

Public Measures

Overall Evaluation



tools – Strategic Positioning / Generic strategies

DifferentiationComprehensive

Cost Leadership

Concentration on Specialties

1

3

2

Singularity from

Customers Point of View

Ind

ustr

y-w

ide

Lim

ita

tio

n to

on

e S

egm

en

t

Strategic Advantage

Str

ate

gic

Ta

rge

t O

bje

ct

Cost Advantage




Strategy TypesComprehensive

Cost LeadershipDifferentiation

Concentration

on Specialties

Usually demanded

capabilities and resources

▪ High investment and access to asset

▪ Process inovations and process

improvements

▪ Intensive supervision of workforce

▪ Products created under the aspect of

simple production

▪ Cost effective sales system

▪ Good marketing abilities

▪ Product engineering

▪ Creativity

▪ Strong basic research

▪ Good reputition for quality and

technological leading position

▪ Long industry tradition or unique

combination of skills of other

industries

▪ Close cooperation with supply and

sales chanels

▪ Combination of mentioned

measures, aimed for the strategic

target object

Usual orgenizational

requirements

▪ Intensive Cost Control

▪ Mostly detailed Control reports

▪ Clear structured organization and

responsibilities

▪ incentive system for the strict

fulfillment of quantitative objectives

▪ Strict coordination of activities in

F&E, Product development and

Marketing

▪ Subjective evaluation and incentive

instead of quantitative criterias

▪ Amenities, to attract high qualified,

economical and creative employees

▪ Combination of mentioned

measures, aimed for the strategic

target object




▪ ABC-Analysis

▪ Life Cycle Analysis

▪ Learning Curve Analysis

▪ Cost Structure Analysis

▪ Satisfaction Analysis

▪ Company Structure Analysis

▪ Core Competence Analysis

▪ 7-S-Modell

▪ Value Chain Analysis

▪ Market Growth / Market Share

Portfolio Analysis

▪ Industry Attractiveness/

Competition Strength

Portfolio Analysis

▪ Further Portfolio Analysis

▪ Strength and Weaknesses Analysis

▪ Environmental Analysis

▪ Target Group Analysis

▪ Competition Analysis

▪ Substitution Analysis

▪ Stakeholder-Analysis

▪ Benchmarking

▪ Structural Analysis



tools – SWOT-Norm Strategies

Chances

1.…

2.…

Strength

1.…

2.…

Risks

1.…

2.…

Weaknesses

1.…

2.…

tool analysis of strategic competitiveness

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