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Presented By:

Archana

Strategic Analysis

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The Concept of Strategy

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• The determination of the long run goals and objectives of an enterprise, the adoption of courses of action and the allocation of resources necessary for carrying out these goals.

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Common Elements in Successful Strategy

Successful Strategy

Profound understanding of the competitive environment

Objective appraisal of resources

Long-term, simple and agreed uponobjectives

$

EFFECTIVE IMPLEMENTATION

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CORPORATE STRATEGIES

• It is a overall managerial game plan.

• How management plans to achieve mission and objectives of the organization.

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Comprehensive Strategy-Formulation Framework

Stage 1:The Input Stage

Stage 2:The Matching Stage

Stage 3:The Decision Stage

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Strategy-Formulation Analytical Framework

Stage 1:The Input Stage

Internal Factor EvaluationMatrix (IFE)

External Factor EvaluationMatrix (EFE)

Competitive Profile Matrix(CPM)

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Stage 2:The Matching Stage

Portfolio Analysis

GE Analysis

SWOT Analysis

Industry Analysis

Grand Strategy Matrix

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Alternatives for Growth Market Penetration

Market Development

Product Development

Expansion of

Exiting Business

Vertical Integration

Alternatives for growth

Related

Diversification into

New Business

Unrelated

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Portfolio Analysis

• Corporate portfolio analysis defined as a set of technique that helps strategist in taking strategic decision with regard to individual product or business in a firms portfolio.

• It is primarily used for competitive analysis and strategic planning in multi-product and multi-business firm.

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Advantage of portfolio analysis

• The main advantage in adopting a portfolio approach is that resources could be targeted at a corporate level to those business that posses the greatest potential for creating competitive advantage.

• For e.g.

A diversified company may decide to divert resources from its cash rich business to more prospective ones that hold promise of a faster growth so that the company achieve its corporate level objectives in an optimal manner.

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• Encourage top management to evaluate each business individually; to set objectives and consider resources.

• It stimulates use of external data to supplement management judgment.

• It graphic representation makes interpretation and communication easier.

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GE Matrix/McMinsey Matrix

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Importance of GE matrix

• It incorporate a large variety of strategic variables like the market share and the industry size.

• The GE-matrix is also a powerful analytical tool to channel corporate resources to business that combine medium to high industry attractiveness with average to strong business strength/or competitive position.

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• Other benefits include a more perceptive understanding of the businesses, leading to better strategic decision and availability of an interesting graphic aids for communication.

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SWOT Strategy

StrengthsWeaknesses

OpportunitiesThreats

SWOT

SOStrategies

Use a firm’sinternal strengthsto take advantage

of external opportunities

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Ch 6 -17

WO Strategies

Improving internalweaknesses by

taking advantageof external

opportunities

WOStrategies

StrengthsWeaknesses

OpportunitiesThreats

SWOT

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Ch 6 -18

ST Strategies

Use a firm’s strengthsto avoid or

reduce the impactof external

threats

STStrategies

StrengthsWeaknesses

OpportunitiesThreats

SWOT

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Ch 6 -19

WT Strategies

Defensive tacticsaimed at reducing

internal weaknesses &

avoidingenvironmental

threats

WTStrategies

StrengthsWeaknesses

OpportunitiesThreats

SWOT

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THE INDUSTRYENVIRONMENT

• Suppliers• Competitors• Customers

Social structure

The national/ The national/ international international economyeconomy

TechnologyTechnology

GovernmentGovernment& Politics& Politics

The natural The natural environmentenvironment

Demographic Demographic structurestructure

Social structureSocial structure

From Environmental Analysis to Industry Analysis

From Environmental Analysis to Industry Analysis

•The Industry Environment lies at the core of the Macro Environment.

•The Macro Environment impacts the firm through its effect on the Industry Environment.

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Porter’s Five Forces of Competition FrameworkPorter’s Five Forces of Competition Framework

SUPPLIERS

POTENTIALENTRANTS SUBSTITUTES

BUYERS

INDUSTRYCOMPETITORS

Rivalry amongexisting firms

Bargaining power of suppliers

Bargaining power of buyers

Threat of

New entrants

Threat of

substitutes

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Neutralizing The Five Competitive Forces

Force Entry

Rivalry

Substitutes

Buyers

Suppliers

Method for Neutralizing Force Erecting barriers (isolating

mechanisms) create & exploit economies of scale, aggressive deterrence, design in switching costs, etc.

Compete on nonprice dimensions: cost leadership, differentiation, cooperation, etc.

Improve attractiveness compared to substitutes: better service, more features, etc..

Reduce buyer uniqueness: forward integrate, differentiate product, new customers, etc..

Reduce supplier uniqueness: backward integrate, obtain minority position, second source, etc..

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Life Cycle Analysis

• Life cycle is a conceptual model that suggests products, markets, businesses, and industries evolved through sequential stages of introduction, growth, maturity, and decline.

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An Alternate Model of Industry Life Cycle

Time

Sal

es v

olum

e

Emergence Convergence Coexistence Dominance

Established Industry

Emerging Industry

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Advantage of Life Cycle Analysis

• It can be used to diagnose a portfolio of products (markets, business, and industries) in order to establish the stage at which each of them exist.

• Attention to be paid on the business that are in the decline stage by adopting the selective harvesting and retrenchment strategies.

• It provides a useful frame work for analysis for the formulation of business level strategies.

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THANK YOU