Strategic Analysis


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Introduction Of Strategic Analysis

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Strategic Analysis

  1. 1. ©2007JohnWiley&Sons Presented By: Archana Strategic Analysis
  2. 2. ©2007JohnWiley&Sons The Concept of Strategy
  3. 3. ©2007JohnWiley&Sons • 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.
  4. 4. ©2007JohnWiley&Sons Common Elements in Successful Strategy Successful Strategy Profound understanding of the competitive environment Objective appraisal of resources Long-term, simple and agreed upon objectives $ EFFECTIVE IMPLEMENTATION
  5. 5. ©2007JohnWiley&Sons CORPORATE STRATEGIES • It is a overall managerial game plan. • How management plans to achieve mission and objectives of the organization.
  6. 6. ©2007JohnWiley&Sons Comprehensive Strategy- Formulation Framework Stage 1: The Input Stage Stage 2: The Matching Stage Stage 3: The Decision Stage
  7. 7. ©2007JohnWiley&Sons Strategy-Formulation Analytical Framework Stage 1: The Input Stage Internal Factor Evaluation Matrix (IFE) External Factor Evaluation Matrix (EFE) Competitive Profile Matrix (CPM)
  8. 8. ©2007JohnWiley&Sons Stage 2: The Matching Stage Portfolio Analysis GE Analysis SWOT Analysis Industry Analysis Grand Strategy Matrix
  9. 9. ©2007JohnWiley&Sons Alternatives for Growth Market Penetration Market Development Product Development Expansion of Exiting Business Vertical Integration Alternatives for growth Related Diversification into New Business Unrelated
  10. 10. ©2007JohnWiley&Sons 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.
  11. 11. ©2007JohnWiley&Sons 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.
  12. 12. ©2007JohnWiley&Sons • 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.
  13. 13. ©2007JohnWiley&Sons GE Matrix/McMinsey Matrix
  14. 14. ©2007JohnWiley&Sons 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.
  15. 15. ©2007JohnWiley&Sons • Other benefits include a more perceptive understanding of the businesses, leading to better strategic decision and availability of an interesting graphic aids for communication.
  16. 16. ©2007JohnWiley&Sons SWOT Strategy Strengths Weaknesses Opportunities Threats SWOT SO Strategies Use a firm’s internal strengths to take advantage of external opportunities
  17. 17. ©2007JohnWiley&Sons Ch 6 -17 WO Strategies Improving internal weaknesses by taking advantage of external opportunities WO Strategies Strengths Weaknesses Opportunities Threats SWOT
  18. 18. ©2007JohnWiley&Sons Ch 6 -18 ST Strategies Use a firm’s strengths to avoid or reduce the impact of external threats ST Strategies Strengths Weaknesses Opportunities Threats SWOT
  19. 19. ©2007JohnWiley&Sons Ch 6 -19 WT Strategies Defensive tactics aimed at reducing internal weaknesses & avoiding environmental threats WT Strategies Strengths Weaknesses Opportunities Threats SWOT
  20. 20. ©2007JohnWiley&Sons THE INDUSTRY ENVIRONMENT • Suppliers • Competitors • Customers Social structure The national/ international economy Technology Government & Politics The natural environment Demographic structure Social structure 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.
  21. 21. ©2007JohnWiley&Sons Porter’s Five Forces of Competition Framework SUPPLIERS POTENTIAL ENTRANTS SUBSTITUTES BUYERS INDUSTRY COMPETITORS Rivalry among existing firms Bargaining power of suppliers Bargaining power of buyers Threat of New entrants Threat of substitutes
  22. 22. ©2007JohnWiley&Sons 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..
  23. 23. ©2007JohnWiley&Sons 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.
  24. 24. ©2007JohnWiley&Sons An Alternate Model of Industry Life Cycle Time Salesvolume Emergence Convergence Coexistence Dominance Established Industry Emerging Industry
  25. 25. ©2007JohnWiley&Sons 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.
  26. 26. ©2007JohnWiley&Sons THANK YOU