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Mcocase

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  • 1. How To Do Your Case Study? March 2009 MCO 101 Issue date: 15 June 2008
  • 2. To Think the Case by Answering the Following Questions • Who are we? • Where are we now? • How did we get here? • Where are we going? • How can we get there? MCO 101 Issue date: 15 June 2008
  • 3. Who are we? • Background Introduction • Corporate strategy and business strategy – What kind of product or service do you provide? • Product, service, lifestyle. etc – What’s your advantages and disadvantages? • The business model (profit pattern) MCO 101 Issue date: 15 June 2008
  • 4. Where are we now? • Where is the company or industry now? • How well is it doing financially and in terms of market performance • What’s the main problems? • SWOT analysis for current situation (Page 97) MCO 101 Issue date: 15 June 2008
  • 5. Where are we now? • External environment analysis – Economic situation – Industry situation – Competition situation • Internal environment analysis – What problems do we have, or are we facing? – Performance • Industrial or corporate performance • Financial performance • Five-force model analysis (industry attractiveness) MCO 101 Issue date: 15 June 2008
  • 6. How did we get here? • What have been the environmental and management factors that had led to the present success or failure? • The successful business model or the successful experience • The failed experiences • What can be learned from the past MCO 101 Issue date: 15 June 2008
  • 7. Where are we going? • Where is the business heading? • Does the future environment and application of the present strategy look favorable or unfavorable? – The goal or target – The trade-off and opportunity cost – strategy or planning – The reason to go there MCO 101 Issue date: 15 June 2008
  • 8. Where are we going? Industry Corporate Attractiveness Strategy Which industry should we be in? Rate of Profit Above the competitive Level How do we make money? Competitive Business Advantage Strategy How should we compete? MCO 101 Issue date: 15 June 2008
  • 9. How can we get there? • What should be done? • What strategies and decisions are required to overcome the current problems or capitalize on its opportunities? • How should your suggestions or your recommendations be implemented? – Opportunities – Challenges or difficulties – Resources that have obtained for to be obtained – The solution to solve problems – The prospect • SWOT analysis MCO 101 Issue date: 15 June 2008
  • 10. The Environmental Analysis MCO 101 Issue date: 15 June 2008
  • 11. Components of the General Environment Economic Demographic Socio-cultural Industry Environment Competitive Environment Political/ Global Legal Technological MCO 101 Issue date: 15 June 2008
  • 12. SWOT Analysis • Strengths • Weaknesses • Opportunities • Threats MCO 101 Issue date: 15 June 2008
  • 13. The Purpose of SWOT Analysis • It is an easy-to-use tool for developing an overview of a company’s strategic situation – It forms a basis for matching your company’s strategy to its situation MCO 101 Issue date: 15 June 2008
  • 14. SWOT is the starting point • It provides an overview of the strategic situation. • It provides the “raw material” to do more extensive internal and external analysis. MCO 101 Issue date: 15 June 2008
  • 15. Strengths What advantages or capabilities the firm has R & D Marketing Distribution channel Know-how Business model, etc MCO 101 Issue date: 15 June 2008
  • 16. Opportunities • An OPPORTUNITY is a chance for firm growth or progress due to a favorable juncture of circumstances in the business environment. • Possible Opportunities: – Emerging customer needs – Quality Improvements – Expanding global markets – Vertical Integration MCO 101 Issue date: 15 June 2008
  • 17. Weakness The disadvantages the firm has Financial status: cash flow Marketing: product positioning (competitors) Corporate culture and structure: bureaucratic and motivation R & D, etc. MCO 101 Issue date: 15 June 2008
  • 18. Threats • A THREAT is a factor in your company’s external environment that poses a danger to its well-being. • Possible Threats: – New entry by competitors – Changing demographics/shifting demand – Emergence of cheaper technologies – Regulatory requirements MCO 101 Issue date: 15 June 2008
  • 19. Opportunities and Threats form a basis for EXTERNAL analysis • By examining opportunities, you can discover untapped markets, and new products or technologies, or identify potential avenues for diversification. • By examining threats, you can identify unfavorable market shifts or changes in technology, and create a defensive posture aimed at preserving your competitive position. MCO 101 Issue date: 15 June 2008
  • 20. The purpose of Five-Forces Analysis • The five forces are environmental forces that impact on a company’s ability to compete in a given market (return on capital or ROC). • The purpose of five-forces analysis is to diagnose the principal competitive pressures in a market and assess how strong and important each one is. MCO 101 Issue date: 15 June 2008
  • 21. MCO 101 Issue date: 15 June 2008
  • 22. Porter’s Five Forces Model of Competition Threat of Threat of New New Entrants Entrants MCO 101 Issue date: 15 June 2008
  • 23. Threat of New Entrants Economies of Scale Product Differentiation Barriers to Entry Capital Requirements Switching Costs Access to Distribution Channels Cost Disadvantages Independent of Scale Government Policy MCO 101 Issue date: 15 June 2008
  • 24. Porter’s Five Forces Model of Competition Threat of Threat of New New Entrants Entrants Bargaining Power of Suppliers MCO 101 Issue date: 15 June 2008
  • 25. Bargaining Power of Suppliers Suppliers are likely to be powerful if: Supplier industry is dominated by a Suppliers exert power few firms in the industry by: Suppliers’ products have few substitutes * Threatening to raise prices or to reduce quality Buyer is not an important customer to supplier Powerful suppliers Suppliers’ product is an important can squeeze industry input to buyers’ product profitability if firms are unable to recover Suppliers’ products are differentiated cost increases Suppliers’ products have high switching costs Supplier poses credible threat of forward integration MCO 101 Issue date: 15 June 2008
  • 26. Porter’s Five Forces Model of Competition Threat of Threat of New New Entrants Entrants Bargaining Bargaining Power of Power of Suppliers Buyers MCO 101 Issue date: 15 June 2008
  • 27. Bargaining Power of Buyers Buyer groups are likely to be powerful if: Buyers are concentrated or purchases are large relative to seller’s sales Buyers compete with the supplying Purchase accounts for a significant industry by: fraction of supplier’s sales Products are undifferentiated * Bargaining down prices * Forcing higher quality Buyers face few switching costs * Playing firms off of Buyers’ industry earns low profits each other Buyer presents a credible threat of backward integration Product unimportant to quality Buyer has full information MCO 101 Issue date: 15 June 2008
  • 28. Porter’s Five Forces Model of Competition Threat of Threat of New New Entrants Entrants Bargaining Bargaining Power of Power of Suppliers Buyers Threat of Substitute Products MCO 101 Issue date: 15 June 2008
  • 29. Threat of Substitute Products Keys to evaluate substitute products: Products Products with improving with similar price/performance tradeoffs function relative to present industry limit the products prices firms can charge Example: Electronic security systems in place of security guards Fax machines in place of overnight mail delivery MCO 101 Issue date: 15 June 2008
  • 30. Porter’s Five Forces Model of Competition Threat of Threat of New New Entrants Entrants Bargaining Bargaining Rivalry Among Power of Power of Competing Firms Suppliers Buyers in Industry Threat of Substitute Products MCO 101 Issue date: 15 June 2008
  • 31. Rivalry Among Existing Competitors Intense rivalry often plays out in the following ways: Jockeying for strategic position Using price competition Staging advertising battles Increasing consumer warranties or service Making new product introductions Occurs when a firm is pressured or sees an opportunity Price competition often leaves the entire industry worse off Advertising battles may increase total industry demand, but may be costly to smaller competitors MCO 101 Issue date: 15 June 2008
  • 32. Rivalry Among Existing Competitors Cutthroat competition is more likely to occur when: Numerous or equally balanced competitors Slow growth industry High fixed costs High storage costs Lack of differentiation or switching costs Capacity added in large increments Diverse competitors High strategic stakes High exit barriers MCO 101 Issue date: 15 June 2008
  • 33. The Five Forces are Unique to Your Industry • Five-Forces Analysis is a framework for analyzing a particular industry. – Yet, the five forces affect all the other businesses in that industry. MCO 101 Issue date: 15 June 2008
  • 34. Competitor Analysis The follow-up to Industry Analysis is effective analysis of a firm’s Competitors Industry Environment Competitive Environment MCO 101 Issue date: 15 June 2008
  • 35. Competitor Analysis Assumptions What assumptions do our competitors hold about the future Response of industry and themselves? What will our competitors do in the Current Strategy future? Does our current strategy support changes in the competitive Where do we have a environment? competitive advantage? Future Objectives How do our goals compare to our How will this change competitors’ goals? our relationship with our competition? Capabilities How do our capabilities compare to our competitors? MCO 101 Issue date: 15 June 2008
  • 36. Competitor Analysis Future Objectives What Drives the competitor? How do our goals compare to our competitors’ goals? Where will emphasis be placed in the future? What is the attitude toward risk? MCO 101 Issue date: 15 June 2008
  • 37. Competitor Analysis Future Objectives What is the competitor doing? How do our goals compare What can the competitor do? to our competitors’ goals? Where Current Strategy will emphasis be placed in the future? currently How are we What is the attitude competing? toward risk? Does this strategy support changes in the competitive structure? MCO 101 Issue date: 15 June 2008
  • 38. Competitor Analysis Future Objectives What does the competitor believe How do our goals compare about itself and the industry? to our competitors’ goals? Where Current Strategy will emphasis be placed in the future? How are we currently What is the attitude competing? Assumptions toward risk? Does this strategy Do we assume the future support changes in the will be volatile? competition structure? What assumptions do our competitors hold about the industry and themselves? Are we assuming stable competitive conditions? MCO 101 Issue date: 15 June 2008
  • 39. Competitor Analysis Future Objectives What are the competitor’s How do our goals compare capabilities? to our competitors’ goals? Where Current Strategy will emphasis be placed in the future? How are we currently What is the attitude competing? Assumptions toward risk? Does this strategy Do we assume the future supportwill be volatile? changes in the competition structure? What assumptions do our Capabilities competitors hold about the industry and themselves? What are my competitors’ Are we operating under strengths and weaknesses? a status quo? How do our capabilities compare to our competitors? MCO 101 Issue date: 15 June 2008
  • 40. Competitor Analysis Response Future Objectives What will our competitors How do our goals compare to our competitors’ goals? do in the future? Where Current Strategy will emphasis be Where do we have a placed in the future? competitive advantage? How are we currently What is the attitude How will this change our competing? Assumptions toward risk? relationship with our Does this strategy Do we assume the future competition? supportwill be volatile? changes in the competition structure? What assumptions do our Capabilities competitors hold about the industry and themselves? What are my competitors’ Are we operating under strengths and weaknesses? a status quo? How do our capabilities compare to our competitors? MCO 101 Issue date: 15 June 2008