Case Analysis Framework - Strategic Management Ian Lee, Ph.D Carleton University Ottawa, Canada ianlee@ibm.net

Transcription

1 Case Analysis Framework - Strategic Management Ian Lee, Ph.D Carleton University Ottawa, Canada ianlee@ibm.net Stratrategic Management National/Macro Context Industry Context Company Resources, Capabilities, and Strategies Company Performance Strategic Analysis = Choices Thinking Strategically About Industry and Conditions ID Strategic Options Open to Firm Choice of Best Strategy Thinking Strategically About Firm s Own Situation

2 Case Background Brief factual summary 1/2 page or so name of firm, time of case broad issue(s) PEST or TESP Analysis Technological O/T Economic O/T Socio-cultural O/T Political-legal O/T Macro and Environments General Environment Demographics Global Environment Threat of new entrants Bargaining power of suppliers Bargaining power of buyers Threat of substitute products rivalry Political/Legal Sociocultural Technological Macroeconomic

3 Summary Most important or significant O/T not all O/T equally significant focus on those with greatest impact Industry Analysis 5 Forces Model of Competition Substitute Products Suppliers Rivalry Among Competing Sellers Buyers Potential New Entrants

4 Porter s 5 Forces Head to head competition L-M-H substitutes L-M-H threat of entry L-M-H power of buyers & suppliers L-M-H Strategic Group Map Cluster the major competitors according to their niche graphically Strategic Groups in Department Store Industry High Upscale Perceived Quality Warehouse National Chain Low Discount Low Retail Price High

5 Major Competitor Analysis Who are they? what strategies are they pursuing relative market share? profitability? Driving Forces major forces of change affecting all firms e.g. entry of new competitors de-integration globalization of industry Key Success Factors Generic characteristics for all firms necessary for success regardless of particular business strategy whether low cost or differentiation

6 Overall Industry Attractiveness Based on: Porter s 5 forces analysis driving forces, KSFs, competitor analysis industry (un)attractive e.g. ROI? Business Unit Analysis Value Chain Apply S/W to Porter s VC under each heading also helps understand Hamel Framework

7 Primary Activities and Costs Value Chain Inbound Logistics Outbound Operations Logistics Sales and Marketing Service Profit Margin Product R&D, Technology, Systems Development Human Resources Management General Administration Support Activities and Costs Upstream Value Chains Value Chain System Company Value Chains Downstream Value Chains Activities, Costs, & Margins of Suppliers Internally Performed Activities, Costs, & Margins Activities, Costs, & Margins of Foward Channel Allies Buyer/User Value Chains Hamel s Framework Core Competencies Core Product End Product SCA

8 Hamel s Competency Framework Capabilities Source of Teams of Resources Resources * Tangible * Intangible Components of Internal Analysis Source of Core Competencies Sources of Advantage Strategic ness Above-Average Average Returns Pathway to Sustained Advantage Gained through Core Competencies Foundation of Core Competencies Core Competencies must be: Valuable What a firm Does... that is Strategically Valuable Rare Costly to Imitate Nonsubstitutable Outcomes from Combos of Criteria for SCA Valuable Rare Costly to Imitate Nonsub- stitutable Consequences Performance Implications NO NO NO NO Advantage Below Average Returns YES NO NO YES/NO Parity Average Returns YES YES NO YES/NO Temporary Advantage Aver./Above Average Returns YES YES YES YES SCA Above Average Returns

9 Financial Statement Analysis A. Investment Return Capital Market Ratios:!EPS!P/E B. Financial Strength Liquidity Ratios:!Current, Acid Test Solvency Ratios:!D/A, D/E, Interest Coverage, Cash Flow/Debt C. Management Performance Profitability Ratios:!Gross Margin!Net Profit Margin!Return on Assets!Return on Equity!Return on Capital

10 D. Resource Utilization Ratios Asset Turnover Payables Turnover Mission Statement Construct firm s mission from data may recommend changes in mission under strategies Corporate Objectives Presently followed by firm quantitative objectives qualitative objectives

11 Relationships between... Level 1 Corporate-Level Mgrs Level 2 Business-Level General Mgrs Overall Scope and Strategic Mission Business Level Missions Corporate Level Objectives Business Level Objectives Corporate Level Strategy Two-Way Influence Two-Way Influence Two-Way Influence Business Level Strategies Level 3 Heads of Major Functional Areas Level 4 Functional Area Missions Operating Missions Plant Managers, Lower-Level Supervisors Two-Way Influence Two-Way Influence Two-Way Influence Two-Way Influence Functional Area Objectives Two-Way Influence Field Unit Objectives Functional Area Strategies Two-Way Influence Operating Strategies External Environment PEST Five Forces Analysis Internal Environment Resources, Capabilities and Core Competencies Sustainable Advantage Business Level Strategy Overall Firm (un)attractiveness Based on:! value chain analysis!core competency analysis!f/s analysis!sustainable competitive advantage is firm attractive e.g. ROI or profitability?

12 Strategic Issues A Diversified Company Corporate-Level Managers Business-Level General Managers Heads of Major Functional Areas Corporate Strategy Two-Way Influence Business Strategies Two-Way Influence Functional Strategies Plant Managers, Lower-Level Supervisors Two-Way Influence Operating Strategies Corporate Issues 1. What businesses should we be in? re macro, industry, firm O/T, S/W analysis!vertical, horizontal, international diversification!internal growth vs acquisitions vs alliances 2. How should corporate govern SBUs?!Centralized vs decentralized!large HQ vs small HQ!portfolio approach vs competencies approach

13 Business Level Issues 1. What product markets should we be in?!horizontal (McDonalds sells chicken)!vertical (outsourcing) 2. How should firm produce SCA?!Which of 4 generic strategies? Functional Level Issues How should the functional depts support the SBU strategy what functional strategies needed Corporate and Business Strategy

14 Corporate Strategy Alternatives List and analyze major alternatives:!vertical, horizontal, intl diversification!internal growth vs acquisitions vs alliances should address issues defined above Business Strategy Alternatives List and analyze strategy alternatives should address issues at SBU defined above Generic Business Level Strategies Source of CA Cost Uniqueness Breadth of Scope Broad Target Market Narrow Target Market Cost Leadership Focused Low Cost Differentiation Focused Differentiation

15 Factors Shaping Strategy Societal, Political, Regulatory Factors Industry Attractiveness Opportunities and Threats External Factors Company s Strategic Situation Conclusions about How Internal/ External Factors Matter Identification and Evaluation of Alternatives Crafting Strategy for Overall Situation Internal Strengths and Weaknesses Key Executives Influences Shared Values and Culture Internal Factors Summary Summarize major O/T in PEST summarize strength of 5 forces summarize industry (un)attractiveness summarize VC & major competencies summarize major strategic issues summarize corporate & business strategies summarize how strategy recommendations solve problems