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Growth Strategy Toolkit
 

Growth Strategy Toolkit

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This toolkit includes instructional slides and templates covering the following areas:...

This toolkit includes instructional slides and templates covering the following areas:
*Growth challenges
*Traditional strategy thinking (e.g. Porter’s Five Forces)
*Modern strategy thinking (e.g. Blue Ocean Strategy)
*A growth strategy project initiative (project approach, design, frameworks & analytics, deliverables)
*Case examples

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  • 93 09/15/98 11 25
  • 93 09/15/98 11 25
  • © 2006 learnppt - All rights reserved
  • 93 09/15/98 11 25
  • © 2006 learnppt - All rights reserved Prior to 1979 there were a variety of analytical tools that were used in the strategy development process Each one relied on comprehensive analysis of the market and of the company’s position within it Some of the early tools were mostly qualitative, and were developed by large corporations such as General Electric and Shell, or consulting firms such as McKinsey and Arthur D Little BCG pioneered a quantitative approach, and their matrix became the reference tool of the late seventies It is worth mentioning that many of these tools are still in use . Comment on some of the matrices if you feel like it. It is important to show that you’ve mastered them
  • 94 09/15/98 12
  • 93 09/15/98 11 25
  • © 2006 learnppt - All rights reserved
  • © 2006 learnppt - All rights reserved
  • © 2006 learnppt - All rights reserved A fundamental observation is that value can be created during the life cycle of the offering along three platforms The product platform The service platform The delivery platform It’s not by accident that the platforms are listed in that order : most firms tend to focus their value generation activities on the product platform, which is also where they are most likely to be imitated Overall, in a sample of 100 companies, the vast majority of launches takes place within the Settler frontier as companies attempt to meet customers’ expressed needs. However, the majority of profits occur as companies innovate to meet needs that customers do not articulate Give an example or mention that the Compaq example will be presented later

Growth Strategy Toolkit Growth Strategy Toolkit Presentation Transcript

  • PowerPoint Diagram Pack Growth Strategy Toolkit
    • This toolkit includes instructional slides and templates covering the following areas:
      • Growth challenges
      • Traditional strategy thinking (e.g. Porter’s Five Forces)
      • Modern strategy thinking (e.g. Blue Ocean Strategy)
      • A growth strategy project initiative (project approach, design, frameworks & analytics, deliverables)
      • Case examples
    • Check out our site for all your PowerPoint needs!
    • http://learnppt.com – Find our ebook on creating effective and professional presentations. Covers basic to advanced concepts, including storyboarding, diagramming, and the Consulting Presentation Framework.
    • http://learnppt.com/powerpoint -- Shop our catalog of Diagram Packs. We try to add more Packs monthly. All of our diagrams are professionally designed by ex-management consultants from top firms.
    Competitive Advantage Lower Cost Differentiation Cost Leadership Differentiation Cost Focus Differentiation Focus Competitive Scope Broad Narrow
  • Contents
    • Growth Challenge 4
    • Traditional Strategy Thinking 10
      • Porter’s Five Forces
    • Modern Strategy Thinking 15
      • Blue Ocean Strategy
      • Blue Ocean Examples
    • Growth Strategy Project 26
      • Project Approach
      • Project Design
      • Analytics & Frameworks
      • Deliverables
  • Contents
    • Growth Challenge
    • Traditional Strategy Thinking
      • Porter’s Five Forces
    • Modern Strategy Thinking
      • Blue Ocean Strategy
      • Blue Ocean Examples
    • Growth Strategy Project
      • Project Approach
      • Project Design
      • Analytics & Frameworks
      • Deliverables
    View slide
  • All companies are faced with the challenge of achieving sustainable growth Not many companies achieve significant growth Most difficult for large companies Those that do, find it difficult to sustain
    • Fortune 500 median revenue growth rate between 1963 and 2003 is 6.3% in real terms and 10.2% in nominal terms
    • Real revenue growth fluctuates more than Return on Invested Capital (ROIC) ranging from 1 to 11%
    Source: “The do-or-die struggle for growth”, McKinsey Quarterly, 2005 November 3
    • Large companies struggle to grow
      • Excluding the first year, companies entering the Fortune 50 grow at an average of 1% above inflation over a 15 year timeframe
    • Only 1/3 of the Fortune 500 are able to sustain top-line growth above GDP and generate returns above the S&P500
      • 90% of them concentrated in 4 sectors (FSI, HC, Tech, Retail)
    • High-growth rates decay very rapidly
    • Companies above 20% sales growth typically slide down to 8% within 5 years, and down to 5% by the 10 year marker
    The Challenge – Sustainable Growth THIS IS A PARTIAL PREVIEW You can preview the full PowerPoint document and download it at http://learnppt.com/powerpoint/ View slide
  • Growth is commonly inhibited by a lack of breakthrough ideas, balancing cost-out and margin trade-offs, and execution challenges Few breakthrough growth offerings identified Focus is on existing markets and demand (e.g., line extensions, substitutes) Current Situation Strategic Issues Create customer value (Value Innovation) Growth at the expense of profitability Benefit trade-offs are not made (e.g., the right mix of attributes) Pricing and cost structure are driven by competition Align value proposition with operations/organization Lack of execution follow-through for growth initiatives Effectively execute strategy Consumers are increasingly sophisticated and hard to please The Resolution Metrics and rewards based on current operations Lack of committed financial resources Organizational structure is not in line with new business Opportunities are defined by internal/operational capabilities Structure and processes to develop and manage growth do not exist Growth Challenges THIS IS A PARTIAL PREVIEW You can preview the full PowerPoint document and download it at http://learnppt.com/powerpoint/
  • Successful companies balance the competing demands of optimizing existing core businesses while building new ones Description Source: The Alchemy of Growth , Baghai, Coley and White, 1999. Profit Time Horizon 1 Horizon 2 Horizon 3 Extend and defend the core business Build emerging businesses Create viable options for future growth
    • Core business of the company
    • Critical to near-term performance, cashflow and profits
    • Some growth potential, but typically will flatten over time
    • Lay foundation for future growth
    Manage for profitability Continuing innovation Efficiency optimization Strong Operational Managers / Leaders Stage Objectives Managing for Growth requires…
    • Build new business and streams of revenue
    • Extend current business or move in new directions
    • After a few years, these businesses should be accelerated to replicate success like the core
    Business Builders / Entrepreneurial Value Creators
    • Seeds of the future businesses that will transform the industry
    • New ideas backed by investments
    • Could take form of research, alliances, pilots, minority stakes
    • Eventually take hold (10 year horizon)
    Visionaries / Unconventional Thinkers Drive ventures to take root Replicate the business model Seed growth options Test business model Framing the Growth Challenge THIS IS A PARTIAL PREVIEW You can preview the full PowerPoint document and download it at http://learnppt.com/powerpoint/
  • However, many companies are inconsistent in managing short and long-term thinking and investment to create growth-enabled organizations Source: The Alchemy of Growth , Baghai, Coley and White, 1999. Horizons 1 2 3 Common Barriers
    • Core business underperforming, lack ideas in the pipeline
    • Need to earn the right to grow by putting the core business back on track
    • Obsessive focus on new business without developing the core, spreading the organization and management thin
    • Basic performance improvement in core required
    • Strong focus on core business, but no focus on next big idea; businesses could mature, position could be threatened
    • Start journey toward growth
    • Due to external triggers (regulatory change, technology), company must transition out of core business to new space
    • Good core business with a lot of new ideas, but lack initiatives to translating ideas into real businesses (Dot.com)
    • Have strong core and new businesses to drive returns for several years, but lack institutional capabilities for innovation
    Barriers to Growth THIS IS A PARTIAL PREVIEW You can preview the full PowerPoint document and download it at http://learnppt.com/powerpoint/ Under siege Losing the right to grow   Running out of steam  Inventing a new future   Generating ideas but not new businesses   Failing to seed for the future  
  • Faced with challenges to grow profitably, we work clients to identify their path to value creation and innovation Increasing Value from Current Business Improve Pricing Optimize Product Mix Expanding Business Scope Growth Opportunities Expand Into New Segments / Categories Develop New Products/Brands Develop New Formats/ Channels Improve/Change Value Proposition Expand Geographically Solidify Customer Relationships Penetrate markets with existing products Paths to Growth Build, Buy, Ally THIS IS A PARTIAL PREVIEW You can preview the full PowerPoint document and download it at http://learnppt.com/powerpoint/
  • Contents
    • Growth Challenge
    • Traditional Strategy Thinking
      • Porter’s Five Forces
    • Modern Strategy Thinking
      • Blue Ocean Strategy
      • Blue Ocean Examples
    • Growth Strategy Project
      • Project Approach
      • Project Design
      • Analytics & Frameworks
      • Deliverables
  • Traditional concepts of growth strategy are based on internal analysis and interpretation of the marketplace Question Marks Growth Boston Consulting Group Competitive Position McKinsey, General Electric, Shell Competitive Position Arthur D. Little Maturity Infancy Growth Maturity Ageing High Medium Low Divest Harvest Protect and refocus Manage Manage for for earnings earnings Protect Position Build selectively Invest to Build Build selectively Dominant Strong Favorable Unfavorable Marginal Natural Development Selective Development Reorientation Reorientation Divestment Harvest Relative Market Share 10 1 0.1 Stars Cash Cows + 50 % + 5 % - 10 % Dogs Attractiveness
    • Focus on current business and capabilities
    • Define opportunities by relative competitor position
    • Look internally and to competitors, as opposed to customers, for growth options
    M. Porter, Competitive Strategy Competitive Scope Competitive Advantage Low Cost Differentiation Broad Target Narrow Target Differentiation Focus Cost Leadership Common Growth Concepts THIS IS A PARTIAL PREVIEW You can preview the full PowerPoint document and download it at http://learnppt.com/powerpoint/ Strong Medium Weak
  • Traditional approach to growth strategy is based on the teachings of Michael Porter—namely Porter’s Five Forces framework Traditional Strategy Thinking – Porter’s Five Forces THIS IS A PARTIAL PREVIEW You can preview the full PowerPoint document and download it at http://learnppt.com/powerpoint/ 4. Suppliers Suppliers negotiation power 2. Competitors in the industry Rivalry among existing companies 1. Potential new competitors Threat by new competitors 3. Substitution products Threat by substitution products 5. Customers Buyers’ negotiation power
  • Porter’s Five Forces assesses the attractiveness of an industry along each competitive force to determine the correct competitive strategy Pressure from Substitute Products Bargaining Power of Buyers Bargaining Power of Suppliers Threat of New Entrants Intensity of Rivalry Low, stable returns Low, risky returns High, stable returns High, risky returns Exit Barriers Entry Barriers L H L H Cost Leadership Differentiation Cost Focus Differentiation Focus Competitive Advantage Competitive Scope Broad Narrow Lower Cost Differentiation
    • A supplier group is powerful when:
    • It is dominated by a few companies and is more concentrated than the industry it sells to.
    • There are no substitute products.
    • The industry is not an important customer.
    • Its products are important to the industry.
    • Products are differentiated or suppliers have built up switching costs.
    • It poses a credible threat of forward integration.
    • Barriers to entry:
    • Economies of scale (including shared resources)
    • Product differentiation (proprietary)
    • Capital requirements
    • Switching costs
    • Access to distribution channels
    • Cost disadvantages independent of scale
    • Government policy
    • Expected reaction of incumbent
    • Intense rivalry results from:
    • Numerous or equally balanced competitors
    • Slow industry growth
    • High fixed or storage costs
    • Lack of differentiation or switching costs
    • Capacity augmented in large increments
    • Diverse competitors
    • High strategic stakes
    • High exit barriers
    • A buyer group is powerful when:
    • It is concentrated or purchases large volumes relative to seller sales.
    • The products represent a significant fraction of the buyers’ costs or purchases.
    • The products are standard or undifferentiated.
    • It faces few switching costs.
    • It earns low profits.
    • It poses a credible threat of backward integration.
    • The bought product is unimportant.
    • It has full information.
    • Search for products that can perform the same function.
    • Assess buyers’ propensity to substitute.
    • Focus on those that:
    • Are improving their price performance trade-off compared with the industries products.
    • Require low switching costs.
    • Are produced by industries earning high profits.
    • Take offensive or defensive actions to create a defensible position against the forces:
      • Positioning the firm so its capabilities provide the best defence
      • Influencing the balance of forces through strategic moves
      • Anticipating shifts in the factors underlying the forces and responding to them
    Porter’s Five Forces THIS IS A PARTIAL PREVIEW You can preview the full PowerPoint document and download it at http://learnppt.com/powerpoint/
  • Headline message Porter’s Five Forces – Template Suppliers Internal Rivalry New Entrants Substitutes Buyers
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    Competitive Advantage Lower Cost Differentiation Cost Leadership Differentiation Cost Focus Differentiation Focus Competitive Scope Broad Narrow INDUSTRY COMPETITIVE ASSESSMENT COMPETITIVE STRATEGY THIS IS A PARTIAL PREVIEW You can preview the full PowerPoint document and download it at http://learnppt.com/powerpoint/
  • Contents
    • Growth Challenge
    • Traditional Strategy Thinking
      • Porter’s Five Forces
    • Modern Strategy Thinking
      • Blue Ocean Strategy
      • Blue Ocean Examples
    • Growth Strategy Project
      • Project Approach
      • Project Design
      • Analytics & Frameworks
      • Deliverables
  • The modern strategy thinking of Blue Ocean Strategy focuses on enabling innovation, value creation, and effective execution Growth Focus Source: C. Kim, R. Mauborgne, Harvard Business Review (1997). Value Identification Value Creation Effective Execution
      • Start with customer needs
      • Look beyond traditional markets, industries and competitors
      • Create multi-horizon portfolio
      • Develop growth platforms for “market mining”
      • Understand what the customer values
      • Prioritize initiatives
    Value
      • Select and develop growth option
      • Align operating model to deliver value and fair value
    • Concept Execution
      • Venture Launch
      • Organizational alignment
      • Funding / Resource Allocation
      • Measurements
      • Accountability
    • Sustainable Growth Structure
      • Infrastructure
      • Culture
      • Alliance Management
      • M&A
    Modern Strategy Thinking Eliminate Reduce Raise Create Costs Value Value Innovation THIS IS A PARTIAL PREVIEW You can preview the full PowerPoint document and download it at http://learnppt.com/powerpoint/ Growth Platform Consumer Need Market Trends
  • Modern thinking moves away from a traditional focus on competition to “blue oceans” of opportunity Source: C. Kim, R. Mauborgne, Harvard Business Review (1997) Shift to “Make Competition Irrelevant” THIS IS A PARTIAL PREVIEW You can preview the full PowerPoint document and download it at http://learnppt.com/powerpoint/ Traditional Thinking Modern Thinking Industry Industry conditions are given – compete in existing market space Industry conditions can be shaped – create uncontested market space Strategy Companies must build competitive advantages to beat competition Make competition irrelevant Market Exploit existing demand Create and capture new demand Resources Make the value-cost trade-off Break the value-cost trade-off Organization Align the whole system of a firm’s activities with its strategic choice of differentiation or low cost Align the whole system of a firm’s activities in pursuit of differentiation and low cost Offerings Maximizing the offering’s value within industry boundaries Offering buyers the total solution that transcends the industry
  • Value is created from more than just “meeting customer needs” Pioneers (Need beyond buyers cognition) 14% of launches 38% of sales 61% of profits 86% of launches 62% of sales 39% of profits (Company sampling) Source: C. Kim, R. Mauborgne, Harvard Business Review (1997) Deliver Platform Product Platform Service Platform Portfolio Positioning Migrators (Need known but not articulated by the buyer) Settlers (Need identified) THIS IS A PARTIAL PREVIEW You can preview the full PowerPoint document and download it at http://learnppt.com/powerpoint/
  • END OF PARTIAL PREVIEW You can preview the full PowerPoint document and download it at http://learnppt.com/powerpoint/
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