The document provides a framework for conducting a strategic fit assessment using a value chain approach. It involves high-level assessment of an organization's current assets, capabilities, and commercial relationships. It then assesses these elements for different strategic options. Gaps are identified for each option and priorities set for closing gaps internally, through acquisitions, or partnerships. The framework allows conclusion of strategic options based on overall fit with key issues and suggests next steps.

1. 1
How to conduct a strategic fit
assessment – a value chain approach
Updated version - 2013
Michael Ling

2. 2
A Value Chain Approach

3. Approach 3
Step High-level assessment of current assets capabilities
and commercial relationships
Strategic Assessment of Current Organisation
(Assets, Capabilities and Commercial Relationships)
Content
Marketing Transport Billing & Customer
Product Sales and Aggregation Service
and and Collection Care
Development Distribution and Provioning
Branding Access
Management
Enterprise Network Management
support
Capability IT Infrastructure
Alliance and Supplier Management
People and Organisation Management
Financial and Corporate Services
Key Partner and
Commercial
Relationships AAA BBB

4. Approach 4
Step Assessment of assets capabilities and commercial
relationships for each strategic option
Strategic Option 1 Strategic Option 2
Content Content
Marketing Transport Billing & Customer Marketing Transport Billing & Customer
Product Sales and Aggregation Service Product Sales and Aggregation Service
and and Collection Care and and Collection Care
Development Distribution and Provioning Development Distribution and Provioning
Branding Access Branding Access
Management Management
Network Management Network Management
IT Infrastructure IT Infrastructure
Alliance and Supplier Management Alliance and Supplier Management
People and Organisation Management People and Organisation Management
Financial and Corporate Services Financial and Corporate Services
For each element of the organization’s value chain we need to identify the core
capabilities and assets for each specific strategic option
Pricing • Description of the Capability • Why the capability is important
Segmentation • Description of the Capability • Why the capability is important

5. Approach 5
Step Identify Gaps for each Strategic Option
Identify gaps and priorities and consider how they should be closed internally
through acquisitions or business partners and alliances
We conclude options based on the overall fit of each strategic option with the key
issues and suggest next steps and priorities
VC Segment /Capability Significance of Gap Priority How to fill the Gap
A xx H Internal
Marketing B x M Internal + Partner
and C x L Acquisition ?
Branding
(example) D xxx M Internal
E x M-H Partner

6. 6
The Framework (a sample)

7. Marketing & Branding Commercial market 7
Business customers are less receptive to mass marketing and branding messages. Marketing needs
capability to identify and campaign focus on customer base to promote 1-2-1 sell via sales teams and
alliance partners
Capability Description Driver
Detailed • Precise information for eg matrix segmentation • Customer needs are diverging as
• Primary research and rigorous analysis of customer products become more sophisticated
understanding • Exploit opportunities for tiered marketing
base
of customer as customer requirements mature
base
Pricing based • Less price sensitivity than mass market for • Greater opportunity for value add
on value add personalised service mix. Value add factors: decision making since decisions are
not pure price functionality, established relationship, ongoing more complex over a wider portfolio
competition support, flexible bundling
• Marketing channels and product promotions be • Ability to address marketing messages
One to One tailored to target customers eg demos at trade directly to target customer
marketing conventions, roadshows in target locations, IT
dealership/VAR- based promotions
• Much of the application portfolio will be from • Access to extended customer base; new
Co- marketing companies with their own valuable brand marketing channels; strengthened value
and branding • High level solutions branding is needed to give proposition; complementary expertise
stability as product packages change

8. Marketing and Branding: segment focus 8
The SME market is not uniform. Needs for vertical and horizontal solutions vary widely
between and within segments. It is essential to conduct market research to understand
customer base, target SMEs and develop products and services to address their needs...
SME
Industry Segmentation
•Import/export trade Client locations
•Wholesale/retail •SME density
•Finance, Insurance, etc
Supply/Distribution Partners •Industry mix
•Transport •Community of interest
•Manufacturing
Local Supplier Mainland Local Retailer Foreign
A Supplier B C Importer D
Product and Service needs SME Trading Characteristics
Service Support needs
•Fixed/mobile voice •Employees, client branches
•IT/SI consultancy
•Segment packages •Telephony, IT & e-coms usage
•Technical Helpdesk
•Managed business services •Supply chain characteristics
•Account Managers
•Supply chain integration •Number/location suppliers
•Call centre support
•B2B e-marketplace •Type/number retail outlets
•Applications hosting •Geographic markets

9. Product Development Commercial market 9
SME product development will require capability to co-ordinate elements from a variety of
internal and external sources, to integrate E-applications in the operational environment and
deliver using a common portal framework
Capability Description Driver
• Capability to coordinate elements from internal and • End-to-end nature of solutions requiring
Integrated external sources and integrate applications in the ability to package internal and external
cross-functional operational environment products to provide solutions
project • Solutions are getting more complex and
management require implementation and integration
capability
Mass • Products should be designed to be scaleable and to • Potential to realise the cost advantages,
support incremental additions speed of implementation and flexibility
customised of mass customisation
solutions
Complementary • Applications will be embedded in a complex • Product development needs deep cross-
product operational environment and delivered using a platform technical expertise to develop
development unified portal interoperable solutions
with ASPs
Micropackaging • Product development will need the capability • Optimise current portfolio and gain
of products for leverage existing infrastructure and platforms to added value from existing base of
service provide new combinations with potentially different products
bundling pricing models

10. Product Development Commercial market 10
Product development focus is changing towards co-ordination of inputs and technologies in a
complex environment. Internal/external cross-functional collaboration is the KEY to success.
•Service portfolio mix •Market trends
•Business model •Competitor Analysis
Joint working with Internal Units Complementary development
Conception with external partners
Marketing and
Branding •Customer needs •Functionality
Hardware &
•Innovations CPE Suppliers
Portal •Portal framework •Lead time
Provision and •Content manage-
Management ment Feasibility
Analysis
Network •Scaleability
Provisioning •Scaleability Systems
•Interoperability Integrators
and Operations •Lead time
IT and Technology
•Support system
Management functionality Product Design
•Data models
Service •Synergies
•Interfaces ASPs
Provision and •Lead time
•Customisation
Management •CPE functionality
Lifetime
Billing •Billing enhancement
Billing functionality

11. Sales and Distribution Commercial market 11
Selling to the Commercial market is primarily accomplished through account teams that
target and customise sales approach for each SME.
Capability Description Driver
• Strong account management capability will be • SME needs are unique, based on
required to understand and develop solutions for differing size, industry, location, etc.
Account specific customer needs, supported by integrated • SME’s have unique needs which cannot
Management systems (internal, supplier, alliance), be satisfied fully by off-the-shelf
propositions
In-depth • Account sales team (internal and alliance partners) • Sales team may need to educate off-Net
segment and collectively need technical understanding across SMES
product solutions range knowledge of vertical segment • Knowledge essential to maintain
knowledge needs credibility with target companies
• Permanent outlets in commercial districts can attract • Sales prospects will want to see
Leverage walk-in customers, provide demonstration site for solutions demonstrated in a real
multiple prospects and be a retail outlet for immediate sales environment and talk through the
channels • IT dealerships are potential sales/distribution technology/service elements with
channel extensions, with staff qualified to knowledgeable staff
demonstrate applications and SI solution aspects
• On-line product/service catalogue, contacts, self- • Extends sales channels and has major
On-line provisioning capability potential for integration across back-
management office functions

12. Content Aggregation and Management Commercial market 12
E-commerce Portal provision is increasingly an extension of product development for SMEs
which needs to be integrated with overall product development approach for all lines of
business
Capability Description Driver
Integration with • There is an accelerating trend towards cross- • Cross-functional product development
firm-wide platform applications which are front-ended with management is needed to systematise
product internet portals interfaces and leverage existing
development infrastructure and processes
• Portal platform should be designed to support • Flexibility and open standards are major
Scaleable smooth expansion of the application base and factors in gaining competitive advantage
platform and incremental addition of services without further through speedy implementation
applications customisation
Streamlined • Content management should support real-time data • Content management is a core
content and changes, be automated, maintain consistent data capability which has to be right first time
transaction descriptions and fully reflect business terms of users and all the time
management
Interoperability • Solutions should have a bottom line narrowband • SME sales are to a community rather
capability (in the medium term) and reflect than an individual, so all parties need to
in a community industry/community standards for business be able to play at some level
environment exchanges

13. Transport and Access Commercial market 13
Transport and Local Access are critical for delivering end-to-end solutions to where
customers need them, but is quickly being commoditised and is increasingly not a source of
sustainable competitive advantage
Capability Description Driver
• Reducing basic access costs and shifting customer • Commoditisation of transport and
Low Cost/High value to added services and solutions access caused by hyper-competition
• Compete with low fixed cost to customer, increasing • Regulatory unbundling of Telco and
Bandwidth
perception of value by shifting cost to high value cable local loop
Transport/Access portions of propositions • Customer looking for ways to reduce
fixed costs of access
• Giving customer common experiences and • Customers want access to information
Multi-platform applications in the office, at home (tele-commuting) and applications wherever they are
Delivery and in the field (mobile). • Most competitors are limited in their
Capability • Making value-added services always accessible ability to provide both fixed and mobile
• Enable e-commerce anywhere applications cost effectively
• Ability to transact business in the field - at customer • Significant value add for business will be
Mobile Data locations, away from office, etc. access to office applications and
Capability • Ability to have access to information and solutions in solutions anywhere they transact
Hong Kong and Greater China business
• Reduce perception of fixed cost for customers • Customers increasingly unwilling to pay
Cost Effective • Minimum fixed costs associated with service for access
Access Network provision • Access still fundamental bottleneck and
cost of service provision

14. Service Provisioning Commercial market 14
SME service bundles need co-ordination for service management, to ensure that the whole
solution is delivered in a co-ordinated and timely fashion
Capability Description Driver
• Systems and processes need to support integrated • Alignment of logical and physical
Co-ordinated management of service activation, co-ordination and processes is increasingly complex
one-step timing cross-service, but users will expect the
provisioning package to be available from day one
• External elements, logical and physical components • Full provisioning capability will be
Co-ordinated (eg CPE, human resource, host system activation) critically dependent on third parties so
supplier and required to complete service offering supply chain integration will be a major
alliance issue
logistics
• On-line customer interaction for information and • Gives customer hour capability
action on service provisioning, account checking, independent of business hours and staff
Self follow up progress on order etc availability
provisioning • Potential to cut costs through direct
service activation and amendment

15. Billing and Collection Commercial market 15
Billing systems are critical for the SME segment. Flexible and powerful billing systems are
needed to support charging and billing across multiple services, tariff bundles and charging
models
Capability Description Driver
• Ability to create individualised billing formats • Flexible billing is a major factor in
which are tailored to requirements customer satisfaction and potentially
Customised customer retention
billing • Single billing model is not sufficient to
meet their needs
Integration of • Billing/charging capability to take elements from • A new range of services are
transactional a variety of pricing models and integrate these developing that are not appropriately
elements into the billing stream and bill format charged through current models,
Support for • Multiple permutations of cross-bundle charging • Typically, agility and innovation in
cross-service and discounts potentially applied across a range tariff/service bundling is constrained
tariff innovation of services mainly by limits on billing system
functionality.

16. Customer Care Commercial market 16
Differentiated customer care by segment service level and integration with other functions
and processes is required to be able to retain and enhance customers Integrated CRM
systems and processes are vital to supprt this Account management teams will be critical
customer care element
Capability Description Driver
• Combination of fast customer identification through • Ensuring that the most important
CLI customer code identification etc and fast links to customers, at a minimum, get the best
Tiered relevant profile on CRM systems possible service and that all customers
customised get consistent service levels
service levels • Business customer expectation for
service level agreements for solutions
• A smooth process whereby customers are able to go • Troubleshooting complexity is increased
Streamlined directly to technical support sources when they by complexity of service and its
escalation and recognise problems and are seamlessly managed technical elements, but users will expect
resolution of through resolution of (initially) unknown service a holistic response
technical queries problems
• Customer is able to access a range of services • Customers increasingly expect to have
On-line self- electronically, e.g. bill payment, reporting of non- on-line alternatives/supplements to real-
urgent issues, review of service portfolio and, time telephone contact with CRM staff.
management by increasingly, to interact transactionally • Customer self-management can reduce
customer CRM staff costs and workload

17. Enterprise Support Capability Commercial market 17
Important enterprise support capabilities will be required to address the E-SME opportunity.
These capabilities tend to cut across the traditional value chain elements. For the E-SME
option, we see three critical areas of enterprise support required.
Network Management
IT Infrastructure
Alliance and Supplier Management
People and Organisation Management
Financial and Corporate Services (including IPR management, Tax, Legal, Risk Management, Procurement)
Capability Description Driver
• Mediated, potentially interactive, access to elements • Integrated support systems, coupled
of a single data model of all company and linked with data warehouse techniques, are
IT Integration
supply chain information available, at suitably vital to give global access to company,
aggregated/ secured level to staff, customers and market and supply chain info
suppliers
• Capability to manage alliances and suppliers across • Alliances and partnerships will be
Alliance and functional and value chain element boundaries. essential to complete service offerings,
Supplier • Taking a corporate level approach and identifying develop innovative products and give
Management synergy potential across the industry value chain. complementary expertise in sales,
marketing and customer care

18. 18
Gap analysis

19. Gap Analysis 19
Capabilities are analysed in terms of the significance of gap, relative priority, and how to fill the gap
VC Segment /Capability Significance of Gap Priority How to fill the Gap
Customer Understanding XXX H Internal/Partner
Marketing Value-based Pricing XX H Internal
and
Branding
Co-Marketing and Branding XXX M Internal / Partner
1 to 1 Marketing XXX M Internal / Partner
Project Management XX H Internal
Product Mass-Customised Solutions XX L Internal / Partner
Development
Joint Product Development XX H Internal
MicroPackaging for Bundling XX M Internal / Partner
Account Management
Account Management XXXX H
H Internal / Partner
Internal / Partner
Sales and Segment/Product
Sales and
Distribution
Segment/Product Knowledge
Knowledge
XXX
XXX M
M Internal / Partner
Internal / Partner
Distribution On-Line Management
On-Line Management XXXX M
M Internal / Partner
Internal / Partner
Leverage Multiple
Leverage Multiple Channels
Channels
XXXX M
M Internal / Partner
Internal / Partner

20. Gap Analysis 20
VC Segment /Capability GAP / Strength Priority How to fill the Gap
Integrated Product Dev. XX M Internal / Partner
Content
Aggregation
and Scalable Platform/Applications X H Internal
Management
Streamlined Content Mgmt XX M With Partners
Interoperable/Community X M Internal
Environment
Low Cost/High Bandwidth
Transport XXX M With Partners
Transport/Access
and
Access Multi-platform Delivery Capability XXX M Internal / Partners
Mobile Data Capability XXX H Internal / Partner
Cost Effective Access Network XXX H Internal / Partner
Service One-Stop Provisioning X M With Partners
Provisioning /
Activation Partner Logistics coordination XXX M With Partners
Self-provisioning XXX M Internal / Partner

21. Gap Analysis 21
VC Segment /Capability Significance of Gap Priority How to fill the Gap
Tiered, Customised Service Levels XX M Internal / Partners
Customer
Care
Stream-lined Escalation XXX M Internal
On-line Self-Care XXX M Internal / Partners
Broadband Network Deployment &
X H Internal / Partners
Mgmt
Enterprise IT/Network Integration XX H Internal / Partners
Support
IT Integration XXX M Internal / Partners
Alliance & Supplier Mgmt XXX H Internal

22. 22
Next steps

23. Next Steps 23
 Both opportunities will require XX to develop or acquire a range of new capabilities that have either not been
required in its current business, or in which they have not developed the sufficient level of capability required.
 Both opportunities will require a significant amount of partnering. XX must carefully consider how they can build
the appropriate partnering capability and culture to be successful initiating and managing the number of strategic
and tactical partnerships that will be required.
There are still a number of questions that need to be addressed:
 Timing - can we pursue option #1 now, and focus resources on early success?
 Do we have a clear enough view of the economics of the option, its financial impact and the risks involved?
 Can we bring in the right resources (people, funding) and establish the right partnerships quickly?
 Segmentation analysis - have we developed enough knowledge of the customer segments and their specific
needs to appropriately target our efforts, and how do we proceed with gaining this market knowledge?
The next recommended next steps are:
 Develop detailed business models of the options to provide input to decision
 Decide on which strategic option(s) to pursue
 Develop long-term strategic goals based on option(s) selected
 If the option is chosen, move quickly on initiating a partnership with Y
 Inform Organisation Design and Business Planning effort of strategic focus
 Review Technology and Systems Strategy with respect to strategic options chosen