- SM 2 VisionMission, External Analysis

7/30/2019 - SM 2 VisionMission, External Analysis

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Establishing Company Direction

Develop ing Strategic Vision , Mission,Object ives and Craft ing a strategy


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Determined by

Vision Stakeholders/Founder---------------------------------------------------------------------

Mission Top Management

------------------------------------------------------------objectives Unit together with Top Mgt.

---------------------------------------------------

Plans Unit Mgr. With approval of superior

------------------------------------------

Policies Each organisational level in

---------------------------------- confirmity with other unit policies

Goals Individual managers in------------------------ confirmity with other unit policies

Strategies Individual managers in

and Tactics confirmity with other unitpolicies

Organizational Direction


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Who we are, What we want to do and

where we are now?

Where we want to go?

Communicating vision in clear, excitingterms that arouse organization wide

commitment

VisionThe three elements of Strategic Vision


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Creates commonality of interests

Reduce daily monotony

Provides opportunity & challenge

Shared Vision--meaning that individuals from across the organization have a

common mental image and a mutually supported set of aspirations

that support to unite their efforts. Vision must be injected into the

organization being shared , owned and lived by every single

person in the company

Example : Cutting a stone or ?


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A wor ld c lass innovat ive and prof i tableeng ineer ing enterpr ise pro viding totalbus iness solut ions

Vision Statement Examples

--BHEL.


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What is our business? It def ines the bus iness the company wantsto be in -serves as gu iding princ iple.

It di f ferent iates the company from its

compet i tors It is exci t ing and inspir ing

It is t ime bound and canno t be ach ieved

w ithin a fixed t ime frame

It represents the whole thrus t of the f irmand i ts co re values and bel iefs

Mission StatementFeatures


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Mission Statements

Enduring statement of purpose

Distinguishes one firm from another

Declares the firms reason for being


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Vision & Mission

Profit & vision are necessary to effectively

motivate a workforce


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Importance of Mission

Mission

Resource Allocation

Unanimity of Purpose

Organizational Climate

Focal point for work

structure

Benefits from a strong mission


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Mission

Elements

CustomersMarkets

Employees

PublicImage

Self-Concept Philosophy

Survival

Growth

Profit

Products

Services

Technology


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Example

Empower people

through great software

anytime, anyplace, andon any device.


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Example

DELTA AIRLINES

. . . . . . we want Delta to be the

WORLDWIDE AIRLINE OF CHOICE.


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Example-Continued

WORLDWIDE,because we are and intend toremain an innovative, aggressive, ethical, andsuccessful competitor that offers access to the world at

the highest standards of customer service. We will

continue to look for opportunities to extend our reachthrough new routes and creative global alliances

DELTA AIRLINES


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Example-Continued

AIRLINE,because we intend to stay in thebusiness we know best -- air transportation and

related services. We wont stray from our roots.

We believe in the long-term prospects for

profitable growth in the airline industry, and wewill continue to focus time, attention, and

investment on enhancing our place in that

business environment

DELTA AIRLINES


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Establishing objectives

Outcomes focused on

improving f inancialperformance

Outcomes focused

on improving l ong-term,compet i t ivebusiness position

Financial Objectives Strategic Objectives


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Strategic Objectives

Increase firms market share

Overtake key rivals on quality orcustomer service or product performance

Attain lower overall costs than rivals


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Strategic Objectives v/s Financial Objectives:

Which take precedence?


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Concept of Strategic Intent

Strategic objectives indicate Strategic intent

Strategic intent can be thought of as a big,hairy,

audacious goal(BHAG)

The time horizon of a strategic intent is long term

Strategic intent signals a deep seated commitmentto winning

Sometimes companies strategic intent takes on a

heroic character

Cannons strategic intent beat Xerox Nikes strategic intent in 60s overtake addidas

Komatsus motivating battle cry beat Caterpi l lar


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The need for long range and short range

object ives

How much Stretch should ob ject ives entai l?

stretchin g an organisat ion to reach its ful l potent ial-thismeans set ting the them h igh enoug h to b e challenging -to

Objectives are needed at al l Organ izational

levels


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Understanding Competitive Advantage

A company has competi t ive advantage

whenever i t has an edge over r ivals in

at t ract ing cu stom ers and defend ing against

compet i tive forces


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Del iver ing superior value requ ires

perform ing value chain act iv i t ies di f ferent ly

than rivals and

Bu i ld ing competenc ies and resource

capabi l i t ies that are no t readi ly m atched

Some of the important strategy based competitive


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Some of the important strategy based competitive

advantages are:

Low cost based competitive advantage

Differentiation based competitive advantage

Bestcost provider based competitiveadvantage

Market niche based competitive advantage

Focus based competitive advantage


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India and the Global competitiveness

How competitive?

What is the Competitive advantage

Can we think of a BHAGlike Beat China etc., ?

Think.


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The ExternalEnvironment


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The External

Environment


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General Environment

Dimensions in the broader society that influence

and industry and the firms within it

Economic

Sociocultural

Global

Technological

Political/legal

Demographic


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Industry Environment

Set of factors directly influencing a firm and itscompetitive actions and competitive responses

Threat of new entrants

Power of suppliers

Power of buyers

Threat of product substitutes

Intensity of rivalry among competitors


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Competitor Environment

All of the companies that the firm

competes against.


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Analysis of the External

Environments General environment

Focused on the future

Industry environment

Focused on factors and conditions influencing

a firms profitability within an industry

Competitor environment

Focused on predicting the dynamics of

competitors actions, responses and

intentions


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Opportunities and Threats

Opportunity

A condition in the general environment that if

exploited, helps a company achieve strategic

competitiveness

Threat

A condition in the general environment that

may hinder a companys efforts to achievestrategic competitiveness


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External Environmental Analysis

A continuous process which includes

Scanningfor early signals of potentialchanges and trends in the general environment

Monitoringchanges to see if a trend emerges fromamong those spotted by scanning

Forecastingprojections of outcomes based onmonitored changes and trends

Assessingthe timing and significance of changesand trends on the strategic management of the firm


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Components of the External

Environmental Analysis


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General Environment (contd)

The Economic Segment Inflation rates

Interest rates

Trade deficits orsurpluses

Budget deficits orsurpluses

Personal savings rate

Business savings rates

Gross domestic product


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The Sociocultural Segment Women in the workplace

Workforce diversity

Attitudes about quality ofworklife

Concerns aboutenvironment

Shifts in work and careerpreferences

Shifts in product and

service preferences


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The Global Segment

Product innovations

Applications of

knowledge

Focus of private and

government-

supported R&Dexpenditures

New communication

technologies


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The Technological Segment

Product innovations

Applications of

knowledge Focus of private and

government-supported

R&D expenditures

New communicationtechnologies


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The Political/Legal

Segment

Antitrust laws

Taxation laws

Deregulation

philosophies

Labor training laws

Educational

philosophies and

policies


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General Environment

The Demographic

Segment

Population size

Age structure

Geographic

distribution

Ethnic mix

Income distribution


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Industry Environment

Industry Defined

A group of firms producing products that are

close substitutes

Firms that influence one another

Includes a rich mix of competitive strategies

that companies use in pursuing strategic

competitiveness and above-averagereturns


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The Five Forces of

Competition Model

Th t f N E t t B i


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Threat of New Entrants: Barriers

to Entry Economies of scale

Product differentiation

Capital requirements Switching costs

Access to distribution channels

Cost disadvantages independent of scale Government policy

Expected retaliation


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Barriers to Entry

Economies of Scale

Marginal improvements in efficiency that a

firm experiences as it incrementally increases

its size

Advantages and disadvantages of large-

scale and small-scale entry


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Barriers to Entry (contd)

Product

differentiation

Unique products

Customer loyalty

Products at

competitive prices

Capital

Requirements

Physical facilities

Inventories

Marketing activities

Availability ofcapital


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Switching Costs

One-time costs customers incur when they

buy from a different supplier

New equipment

Retraining employees

Psychic costs of ending a relationship


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Access to Distribution Channels

Stocking or shelf space

Price breaks Cooperative advertising allowances

Cost Disadvantages Independent of Scale

Proprietary product technology

Favorable access to raw materials

Desirable locations


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Cost disadvantages independent of scale

Proprietary product technology

Favorable access to raw materials Desirable locations

Government policy

Licensing and permit requirements

Deregulation of industries


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Expected retaliation

Responses by existing competitors may

depend on a firms present stake in the

industry (available business options)


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Bargaining Power of Suppliers Supplier power increases when:

Suppliers are large and few innumber

Suitable substitute products arenot available

Individual buyers are not large customersof suppliers and there are many of them

Suppliers goods are critical to buyers marketplacesuccess

Suppliers products create high switching costs.

Suppliers pose a threat to integrate forward intobuyers industry


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Bargaining Power of Buyers

Buyer power increase when:

Buyers are large and few innumber

Buyers purchase a large portionof an industrys total output

Buyers purchases are a significant portionof a suppliers annual revenues

Buyers can switch to another product withoutincurring high switching costs

Buyers pose threat to integrate backward into

the sellers industry


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Threat of Substitute Products

The threat of substitute productsincreases when:

Buyers face few switching costs

The substitute products price islower

Substitute products quality and performance

are equal to or greater than the existing

product

Differentiated industry products that are valued

by customers reduce this threat

Intensity of Rivalry Among


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Intensity of Rivalry Among

Competitors Industry rivalry increases when:

There are numerous or equally balancedcompetitors

Industry growth slows or

declines There are high fixed costs or high storage costs

There is a lack of differentiation opportunities or lowswitching costs

When the strategic stakes are high When high exit barriers prevent competitors from

leaving the industry


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Low entry barriers

Interpreting Industry Analyses

UnattractiveIndustry

Suppliers and buyershave strong positions

Strong threats fromsubstitute products

Intense rivalryamong competitors

Low pro f i t po tent ia l


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AttractiveIndustry

High entry barriers

Interpreting Industry Analyses

Suppliers and buyershave weak positions

Few threats fromsubstitute products

Moderate rivalryamong competitors

High prof i t potent ial


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Strategic Groups Defined

A set of firms emphasizing similar strategic

dimensions and using similar strategies

Internal competition between strategic group

firms is greater than between firms outsidethat strategic group

There is more heterogeneity in the

performance of firms within strategic groups

Strategic Groups


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Strategic Groups

Strategic Dimensions

Extent of technological leadership

Product quality Pricing Policies

Distribution channels

Customer service


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Competitor Analysis

Competitor Intelligence

The ethical gathering of needed information and data

that provides insight into:

A competitors direction (future object ives) A competitors capabilities and intentions

(cu rrent strategy)

A competitors beliefs about the industry (i ts

assumpt ions)

A competitors capabil i t ies

Competitor


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Competitor

Analysis

Components

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- SM 2 VisionMission, External Analysis

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