Case Analysis             Framework - Strategic                 Management                       Ian Lee, Ph.D            ...
Case BackgroundxBrief factual summaryx1/2 page or soxname of firm, time of casexbroad issue(s)      PEST or TESP Analysisx...
SummaryxMost important or significant O/Txnot all O/T equally significantxfocus on those with greatest impact            I...
Porter’s 5 Forces  xHead to head competition L-M-H  xsubstitutes L-M-H  xthreat of entry L-M-H  xpower of buyers & supplie...
Major Competitor AnalysisxWho are they?xwhat strategies are they pursuingxrelative market share? profitability?           ...
Overall Industry AttractivenessxBased on:x Porter’s 5 forces analysisxdriving forces, KSFs, competitor analysisxindustry (...
Value ChainPrimary Activities and CostsInbound                  Outbound    Sales and                 Profit            Op...
Hamel’s Competency Framework                      Capabilities     Source of                                            So...
Financial Statement AnalysisA. Investment ReturnxCapital Market Ratios:  !EPS  !P/E         B. Financial StrengthxLiquidit...
D. Resource Utilization RatiosxAsset TurnoverxPayables Turnover          Mission StatementxConstruct firm’s mission from d...
Relationships between ...Level 1                   Overall Scope        Corporate           Corporate                     ...
Strategic Issues          A Diversified Company                                     Corporate          Corporate-Level    ...
Business Level Issues1. What product markets should we be in?  !horizontal (McDonalds sells chicken)  !vertical (outsourci...
Corporate Strategy Alternatives xList and analyze major alternatives:     !vertical, horizontal, intl diversification     ...
Factors Shaping Strategy Societal,                               Opportunities                                            ...
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Strategic analysis case-framework.ppt[1]

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Strategic analysis case-framework.ppt[1]

  1. 1. Case Analysis Framework - Strategic Management Ian Lee, Ph.D Carleton University Ottawa, Canada ianlee@ibm.net Stratrategic Management National/Macro Industry Company Resources, Context Context Capabilities, and Strategies Company Performance Strategic Analysis = ChoicesThinking Strategically About Industry and Competitive Conditions ID Choice of Strategic Options Best Open to Firm StrategyThinking Strategically About Firm’s Own Situation 1
  2. 2. Case BackgroundxBrief factual summaryx1/2 page or soxname of firm, time of casexbroad issue(s) PEST or TESP AnalysisxTechnological O/TxEconomic O/TxSocio-cultural O/TxPolitical-legal O/T Macro and Competitive Environments General Environment Demographics Global Political/Legal Competitive Environment Threat of new entrants Bargaining power of suppliers Bargaining power of buyers Threat of substitute products Competitive rivalry Sociocultural Technological Macroeconomic 2
  3. 3. SummaryxMost important or significant O/Txnot all O/T equally significantxfocus on those with greatest impact Industry Analysis 5 Forces Model of Competition Substitute Products Rivalry Among Suppliers Buyers Competing Sellers Potential New Entrants 3
  4. 4. Porter’s 5 Forces xHead to head competition L-M-H xsubstitutes L-M-H xthreat of entry L-M-H xpower of buyers & suppliers L-M-H Strategic Group Map xCluster the major competitors xaccording to their “niche” xgraphically Strategic Groups in Department Store Industry High UpscalePerceived Quality National Chain Warehouse Discount Low Low High Retail Price 4
  5. 5. Major Competitor AnalysisxWho are they?xwhat strategies are they pursuingxrelative market share? profitability? Driving Forcesxmajor forces of change affecting all firmsxe.g. entry of new competitorsxde-integrationxglobalization of industry Key Success FactorsxGeneric characteristics for all firmsxnecessary for successxregardless of particular business strategyxwhether low cost or differentiation 5
  6. 6. Overall Industry AttractivenessxBased on:x Porter’s 5 forces analysisxdriving forces, KSFs, competitor analysisxindustry (un)attractive e.g. ROI? Business Unit Analysis Value ChainxApply S/W to Porter’s VCxunder each headingxalso helps understand Hamel Framework 6
  7. 7. Value ChainPrimary Activities and CostsInbound Outbound Sales and Profit Operations ServiceLogistics Logistics Marketing MarginProduct R&D, Technology, Systems Development Human Resources Management Support Activities General Administration and Costs Value Chain System Upstream Company DownstreamValue Chains Value Chains Value Chains Activities, Internally Activities, Costs, & Performed Buyer/User Costs, & Margins of Activities, Value Margins of Foward Costs, & Chains Suppliers Channel Margins Allies Hamel’s Framework xCore Competencies xCore Product xEnd Product xSCA 7
  8. 8. Hamel’s Competency Framework Capabilities Source of Source of Teams of Resources Core Competencies Resources Sources of * Tangible Competitive * Intangible Components of Advantage Internal Analysis Strategic Sustained Competitiveness Competitive Foundation Advantage of Above-Average Above- Above-Average Returns Gained through Core Competencies Pathway to What a firm Does... Core Competencies that is Strategically Core Competencies must be: Valuable Valuable Rare Costly to Imitate Nonsubstitutable Outcomes from Combos of Criteria for SCA Costly to Nonsub- Nonsub- Competitive PerformanceValuable Rare Imitate stitutable Consequences Implications Below Competitive NO NO NO NO Average Advantage Returns Competitive Average YES NO NO YES/NO Parity Returns Temporary Aver./Above YES YES NO YES/NO Competitive Average Advantage Returns Above YES YES YES YES SCA Average Returns 8
  9. 9. Financial Statement AnalysisA. Investment ReturnxCapital Market Ratios: !EPS !P/E B. Financial StrengthxLiquidity Ratios: !Current, Acid TestxSolvency Ratios: !D/A, D/E, Interest Coverage, Cash Flow/Debt C. Management PerformancexProfitability Ratios: !Gross Margin !Net Profit Margin !Return on Assets !Return on Equity !Return on Capital 9
  10. 10. D. Resource Utilization RatiosxAsset TurnoverxPayables Turnover Mission StatementxConstruct firm’s mission from dataxmay recommend changes in missionxunder strategies Corporate ObjectivesxPresently followed by firmxquantitative objectivesxqualitative objectives 10
  11. 11. Relationships between ...Level 1 Overall Scope Corporate Corporate and Strategic Level LevelCorporate-Level Mission Objectives StrategyMgrs Two-Way Influence Two-Way Influence Two-Way InfluenceLevel 2 Business Business BusinessBusiness-Level Level Level LevelGeneral Mgrs Missions Objectives Strategies Two-Way Influence Two-Way Influence Two-Way InfluenceLevel 3 Functional Functional FunctionalHeads of Major Area Area AreaFunctional Areas Missions Objectives Strategies Two-Way Influence Two-Way Influence Two-Way InfluenceLevel 4 Operating Field Unit Operating Missions Objectives StrategiesPlant Managers,Lower-Level Supervisors External Environment PEST Five Forces Analysis Sustainable Competitive AdvantageInternal EnvironmentResources, Capabilities andCore Competencies Business Level Strategy Overall Firm (un)Attractiveness xBased on: ! value chain analysis !core competency analysis !F/S analysis !sustainable competitive advantage xis firm attractive e.g. ROI or profitability? 11
  12. 12. Strategic Issues A Diversified Company Corporate Corporate-Level Strategy Managers Two-Way Influence Business-Level Business General Managers Strategies Two-Way Influence Heads of Major Functional Areas Functional Strategies Two-Way InfluencePlant Managers,Lower-Level Operating StrategiesSupervisors Corporate Issues 1. What businesses should we be in? xre 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 12
  13. 13. Business Level Issues1. 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 IssuesxHow should the functional depts support the SBU strategyxwhat functional strategies neededCorporate and Business Strategy 13
  14. 14. Corporate Strategy Alternatives xList and analyze major alternatives: !vertical, horizontal, intl diversification !internal growth vs acquisitions vs alliances xshould address issues defined above Business Strategy Alternatives xList and analyze strategy alternatives xshould address issues at SBU defined above Generic Business Level Strategies Source of CA Cost Uniqueness Broad Cost Differen- Target Market Leadership tiationBreadth ofCompetitive Scope Focused Narrow Focused Target Differen- Market Low Cost tiation 14
  15. 15. Factors Shaping Strategy Societal, Opportunities External Factors Political, Industry andRegulatory Attractiveness Threats Factors Conclusions about Identification Crafting How and Strategy Company’s Strategic Situation Internal/ External Evaluation for of Overall Factors Alternatives Situation Matter Internal Strengths Key Shared Values Executives’ and and Influences CultureWeaknesses Internal Factors Summary xSummarize major O/T in PEST xsummarize strength of 5 forces xsummarize industry (un)attractiveness xsummarize VC & major competencies xsummarize major strategic issues xsummarize corporate & business strategies xsummarize how strategy recommendations solve problems 15

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