Professional Documents
Culture Documents
21/10/2010
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Strategic Analysis
globalisation strategic position
THE ENVIRONMENT
ORGANISATIONAL
STRATEGIC
CAPABILITIES
Strategic Analysis CULTURE /
ROUTINES
STAKEHOLDER
EXPECTATIONS
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External Business Environment
The external business environment of the firm can
provide both opportunities and threats to firms
Opportunities refer to events or processes in the
external business environment, which may help the
company to achieve competitive success
Threats refer to events or processes in the external
business environment, which may prevent the
company from achieving competitive success
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Internal Business Environment
The internal business environment of the firm can
provide both strengths and weaknesses to firms
Strengths refer to resources and capabilities that
exceed those of competitors and provide a source of
competitive advantage
Weaknesses refer to organisational capabilities that
are redundant or insufficient to provide support to
business development and growth
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Analysis of the
Business
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Analysis of the Strategic Position
BCG Growth Share Portfolio Matrix
STAR QUESTION
MARKS
High GROWTH LAUNCH PHASE
PHASE
Cash Neutral Cash User
Market
Growth
CASH COWS DOGS
%
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Product Life Cycle
Model
The Product Life Cycle model suggests that every basic product
evolves through a cycle of roughly four stages – introduction,
growth, maturity and decline – which correspond to the rate of
growth of industry sales.
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Life Cycle / Portfolio Matrix
(Strategic Orientation)
Stages of industry maturity
Embryonic Growth Mature Ageing
Fast grow Fast grow Defend position Defend position
Start up Attain cost leadership Attain cost leadership Focus
Dominant Renew Renew Renew
Defend position Fast grow Grow with ind.
Competitive position
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Industry
Attractiveness is
Determined by:
Market growth rate
Market size
Demand variability (cycles)
Industry profitability
Industry rivalry
Global opportunities
Macro-environmental factors (
PESTEL)
Market concentration
Seasonality
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Strength of the Business Unit and
Competitive Position is
Determined by:
Market share
Growth in market share
Brand equity
Distribution channel access
Production capacity
Profit margins relative to competitors
Reputation
Quality
Geographic strengths
Customer knowledge
Market knowledge company
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Ansoff Positioning Matrix
(1957)
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Blue Ocean Strategy : “ How to create uncontested Market Space
and make the competition irrelevant”, by W. Chan Kim and Renee
Maugorned, Harvard Business Review 2005.
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Analysing the Nature of Competition
Industry structure
Nature of
competition:
Power of suppliers
Macro- • How
environment: Power of customers
concentrated?
•Political Threat of entry
• How fierce?
•Economic Threat of substitution
• How global?
•Social/Legal
•Technological
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Porter's Generic Strategies
Advantage
Target Scope
Focus Focus
Narrow
(Market Segment) Strategy Strategy
(low cost) (differentiation)
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Generic Strategies
Porter’s Original Framework
Porter: viable strategies consist of:
Differentiation – offering something unique,
commanding a price premium
Cost leadership – being the lowest-cost
producer in the industry
Focus – concentrating on a narrow
customer segment
If not clearly in one of these categories, a
firm risks being stuck in the middle
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Problems with Porter’s Generic
Strategy Framework
Cost leadership rarely observed:
many firms may vie for lowest costs
industry boundaries fuzzy and permeable
Not comparing like with like:
cost leadership set at level of firm
differentiation may vary between products
Most successful strategies mix cost and
differentiation advantage
‘stuck in the middle’ an outdated concept
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Thompson & Strickland’s
Generic Strategies
COMPETITIVE ADVANTAGE
Lower
Differentiation
Cost
COMPETITIVE SCOPE
Cost Differentiation
Broad Leadership
Target
Broad
Best
Cost
Narrow
Best Cost
Narrow
Target Cost Differentiation
Focus Focus
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Five Business-Level Strategies
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Types of Business-Level Strategies
2. Differentiation
Competitive advantage: Differentiation
Competitive scope: Broad
market
May be able to more effectively serve a narrow
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Types of Business-Level Strategies (Cont’d)
5. Integrated CL/Differentiation
Efficiently produce products with differentiated
attributes
Efficiency: Sources of low cost
Differentiation: Source of unique value
Can adapt to new technology and rapid changes in
external environment
Simultaneously concentrate on TWO sources of
competitive advantage: cost and differentiation –
consequently…
…must be competent in many of the primary and
support activities
Three sources of flexibility useful for this strategy 36
C. Bowman - The Strategy Clock
Differentiation
High 4
Hybrid Focused
3 5 differentiation
Perceived
use Low
2 6
price
value
1 7 Strategies
‘No frills’ destined for
ultimate failure
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Low 37
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The Strategy Clock –
Differentiation Strategies
4.(a) Differentiation without price premium
adds value to user increased market
share
4.(b) Differentiation with price premium:
added value must justify premium
price
5. Focused differentiation – adds value to
particular segment price premium
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The Strategy Clock
Strategies Destined to Fail
6. Increased price/standard value – viable:
in monopoly situation
if customers lack information on where to
find superior value
7. Increased price/low value – viable only in
monopoly situation
8. Low value/standard price decline in
market share
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