FOR INDICATIVE PURPOSES ONLY!

Analyze the internal and external environment of the

company and evaluate the business model and
strategy of the firm.
Review the strategic options available to the
company, recommend a future strategic direction
and suggest an implementation plan.
THESE ARE NOT THE FINAL GUIDING STATEMENTS

FOR INDICATIVE PURPOSES ONLY!

A: Work of distinguished quality which demonstrates an authoritative grasp
of the concepts and content appropriate to the subject and to the
assessment task. There is clear evidence of originality and insight and an
ability to sustain an argument, to think analytically and/or critically and to
synthesise material effectively.
B: Work of above expected quality which demonstrates a sound level of
understanding of the concepts and content appropriate to the subject.
There is clear evidence of critical judgement in selecting, ordering and
analysing content. Demonstrates some ability to synthesise material and
to construct responses that reveal insight and may offer some occasional
originality.
C: Competent work of an acceptable level which demonstrates a grasp of
relevant material and key concepts and an ability to structure and
organise arguments. The performance may be rather routine but the
work will be accurate, clearly written and include some critical analysis
and a modest degree of original insight. There will be no serious omissions
or irrelevancies, but often will contain less critical analysis.

FOR INDICATIVE PURPOSES ONLY!

D: Work which covers the basic subject matter adequately and
which is appropriately organised and presented but which is
rather too descriptive and insufficiently analytical.
E: Work that covers the basic subject matter inadequately,
which is not appropriately organised and presented, is
insufficiently analytical and is much too descriptive. There
may be some misunderstanding of certain key concepts, and
limitations in the ability to select relevant material so that
some omissions and irrelevancies may flaw the work. There
may be evidence of appropriate reading but it is likely to be
too narrowly focused.

Considerations
Dont just follow the 5 steps you decide what is
important and what the order should be.
Dont simply provide bullet pointsAnalyse!
Analyse.
What is the impact to the firm?
How significant is it?
What are the positive and negatives?
Justify your opinions, suggestions,
recommendations, conclusions.
Dont forget the implementation plan!

Prepare
Practice together with classmates. Take a case study from the
book and analyse it. Give formative feedback to each other.
Revisit the lecture slides, the book seminar notes and
feedback that you received from your presentation. Make
sure you fully understand the concepts.
Plan! Create a word document and add the different section
that you will consider in your analysis. You can consider
including:
Cover page
Structure (what will you analyse and when)?
Prepare the figures/tables of models you will use (PESTLE)
Prepare the reference list
Decide the location where you will be working from

Strategic analysis
Step1:
I.

Define which organisations and industries/sectors does the

case study relate to.
II. Is the organisation doing well or badly and how has it
performed in the past? Success record?
III. Get insights about the organisation itself: VRIN
What kind of strategic resources does the organisation have
and which does it lack?
Think about which of these have provided advantage over
competitors; or could provide competitive advantage.
Draw these analyses together by considering in what ways the
organisation has strengths or weaknesses greater than
competition.

Overall internal strategic analysis

IV. Look at the development of the organisation over time. What
strategies has it pursued? Which have succeeded and which have
failed? How successful has the organisation been and on what bases
do you know?
V. What are your initial impressions of the main issues and choices
confronting the organisation? Is it in an expanding industry/sector, or a
maturing one? Are customer needs changing? Does the organisation
confront a variety of opportunities? Or is there a particular strategic
issue which the case is oriented towards?
VI. Look at issues about the organisation's stakeholders. What are their
expectations? Are they similar or in conflict? Who has more power and
influence over the organisation's strategy?
VII. And consider the organisation's culture. How has this influenced past
strategies and is it likely to influence future strategy or constrain
attempts to change strategy?

Components of Strategic Capabilities

Threshold and distinctive capabilities

VRIN
The four key criteria by which capabilities can be assessed in
terms of providing a basis for achieving sustainable
competitive advantage are:

Strategic analysis
Step 2: Analyze the external environment of the firm (Macro
and industry analysis)
Analyse the external environment where the firm operates
in (PESTEL, Porters 5 forces etc.)
What are the Opportunities and threats originating from
the external environment and how do these affect the
competitive advantage of the firm?
Which are the types of environment where the
organisation has been able to succeed, and in which types
has it had problems?
Beware of regarding different frameworks of analysis as
distinct and separate; they relate to each other. For
instance, the results of a value chain analysis could be put
in the context of data from a PESTEL and 5-Forces analysis
and are likely to provide more insight if they are.

The PESTEL framework

The PESTEL framework categorises
environmental influences into six main types:
political,
economic,
social,
technological,
environmental
legal
Thus PESTEL provides a comprehensive list of
influences on the possible success or failure of
particular strategies.

Scenarios
Scenarios are detailed and plausible views of how the
environment of an organisation might develop in the
future based on key drivers of change about which there
is a high level of uncertainty.
Build on PESTEL analysis .
Do not offer a single forecast of how the environment
will change.
An organisation should develop a few alternative
scenarios (24) to analyse future strategic options.

Carrying out scenario analysis

Identify the most relevant scope of the study the
relevant product/market and time span.
Identify key drivers of change PESTEL factors that
have the most impact in the future but have uncertain
outcomes.
For each key driver select opposing outcomes where
each leads to very different consequences.

Porters five forces framework

Porters five forces framework helps identify the
attractiveness of an industry in terms of five competitive
forces:
the threat of entry,
the threat of substitutes,
the bargaining power of buyers,
the bargaining power of suppliers and
the extent of rivalry between competitors.
The five forces constitute an industrys structure.

Issues in five forces analysis

Apply to industries not individual companies
Apply at the most appropriate level not necessarily
the whole industry. E.g. the European low cost airline
industry rather than airlines globally.
Dont confuse new entrants with substitutes
Dont confuse buyers/customers with suppliers
Make sure to look in detail at each of the several
factors influencing each of the five forces

The industry life cycle

Benchmarking
Benchmarking is a means of understanding
how an organisation compares with others
typically competitors.
Two approaches to benchmarking:
Industry/sector benchmarking
Best-in-class benchmarking

Uses of strategic group analysis

Understanding competition - enables focus on
direct competitors within a strategic group, rather
than the whole industry.
Analysis of strategic opportunities - helps identify
attractive strategic spaces within an industry.
Analysis of mobility barriers i.e. obstacles to
movement from one strategic group to another.

Bases of market segmentation

Strategic analysis
Step 3: Identify the key success factors in the industry
What have been and are likely to be the key drivers in the
external environment that may give rise to changes that
could provide opportunities or give rise to threats?
What is the nature of the competitive environment?
Step 4: Identify the companys strategic position,
summarise your analysis and name/classify any potential
problems/threats that the company was, is or is expected
to face in the future
Identify the companys strategic position using e.g.
Competitive strategies and Strategy clock
So you will have built up a picture of the relative strengths,
weaknesses, opportunities and threats (SWOT) for the
organisation.
Pull together your analyses and ask: 'What are the major
issues that future strategy needs to address?'.

Critical success factors (CSFs)

Critical success factors are those factors that are either
particularly valued by customers or which provide a
significant advantage in terms of cost.
Critical success factors are likely to be an important source of
competitive advantage if an organisation has them (or a
disadvantage if an organisation lacks them).
Different industries and markets will have different critical
success factors (e.g. in low cost airlines the CSFs will be
punctuality and value for money whereas in full service
airlines it is all about quality of service).

Dangers in a SWOT analysis

Long lists with no attempt at prioritisation.
Over generalisation sweeping statements often
based on biased and unsupported opinions.
SWOT is used as a substitute for analysis it
should result from detailed analysis using
frameworks.
SWOT is not used to guide strategy it is seen as
an end in itself.

The TOWS matrix

Three generic strategies

Strategy clock

Strategic analysis
Step 5: Suggest a viable future strategy/solution, including alternatives
Develop and evaluate strategic options
Evaluate the options by asking the following questions:
Which are most suitable in terms of the strategic position of the
organisation; i.e. the strengths and weaknesses it has and the
opportunities and threats it faces?
Would a strategy, if followed, achieve competitive advantage for the
organisation and provide bases for the sustainability of such
advantage?
Which are most likely to be acceptable in terms of the expectations
of major stakeholders?
Which are feasible in terms of the likelihood of implementation: for
example in terms of resourcing the strategy and managing change.
Justify your conclusions with reference to the case

Strategic analysis
Relate your analysis to the task or questions you have been set. What
elements of the strategic analysis do you require to answer the question?
(don't try to justify your arguments by using all the information you have
select what is most powerful to support your argument)?
Support your conclusions and recommendations with hard evidence
(events and results)? Have you been influenced by the opinions of the
organisation's own managers? Do the facts support their claims of
success, or their excuses for failure?
State your recommendations clearly. There is no point gathering a list of
fifteen possible reasons why the organisation should do this or that
without making it clear which one(s) is your preferred option. Make sure
that you present a balanced view.
Consider the alternatives to your recommendations. There is hardly ever
just one single option available to an organisation.
Clearly explain why the recommendation you have chosen is the best of
the available alternatives and examine the downsides of your options.

Corporate strategy directions

To outsource or not?
The decision to integrate or subcontract rests on
the balance between two distinct factors:
Relative strategic capabilities:
Does the subcontractor have the potential to do
the work significantly better?
Risk of opportunism:
Is the subcontractor likely to take advantage of
the relationship over time?

The growth share (or BCG) matrix

Strategy methods

Modes of entry
Exporting
Joint ventures and alliances
Licensing
Foreign direct investment

The SAFe criteria to evaluate strategic options

Stages of strategic planning

Initial guidelines from corporate centre

Business-level planning

Corporate-level integration of business plans

Financial and strategic targets agreed

Strategy development routes

Controlling the Strategic Plan

Balanced Scorecard: Probably the best-known device for
strategic plan control developed by Kaplan and Norton
The Balanced Scorecard is not a way of formulating strategy. It
is a way of checking what you have to do throughout the
organisation to make your strategy work.
Four main principles:
Translating the vision through clarifying and gaining
consensus
Communicating and linking by setting goals and rewards
Business planning to align objectives, resources and
milestones
Feedback and learning to review subsequent performance
against the plan

The Balanced Scorecard

Strategy perspective
Financial perspective

Customer perspective

Example

Example of a scorecard measure

called a key performances indicator
Shareholders views of performance
Return on capital
Economic value added
Sales growth
Cost reduction
Customer satisfaction

Customer satisfaction
Customer retention
Acquisition of new customers

Internal perspective

Assess quality of people and

process

Manufacturing cost
Job turnover
Product quality
Stock turnover & inventory
management

Future perspective

Examine how an organisation learns

and grows

New product development

record
R&D core competencies
Employee retention
Employee profitability

Three horizons for strategy

Horizon 1
extend and defend core business

Horizon 2
build emerging businesses

Horizon 3
create viable options

Levels of Strategy
Corporate-Level strategy is concerned with the
overall purpose and scope of an organisation and
how to add value to business units.
Business-Level strategy is concerned with the way a
business seeks to compete successfully in its
particular market.
Operational Level strategy is concerned with how
different parts of the organisation deliver the
strategy in terms of managing resources, processes
and people.