This chapter discusses critical success factors from an industry and organizational perspective. It introduces models for analyzing the industry environment, including stages of industry evolution, to identify industry critical success factors. It also presents the SWOT analysis tool to match industry factors with an organizational profile and determine strategic approaches based on the organization's internal strengths and weaknesses and external opportunities and threats.

1. CHAPTER 4, CRITICAL
SUCCESS FACTORS
I used to be indecisive, but now I am not so sure
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2. Figure 4.1, the Planning Model
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3. Defining Critical Success
Factors
 Figure 4.3. Matching the profile to the environment.
Matching the Profile to the Environment
Examining the Examining the
Doing an
environment organizational profile
independent
Determining the level of and honest Determining the level of
competence required to operate review of each competence the organization
effectively in this environment aspect has as to:
as to:
Marketing and sales Matching what
Marketing and sales
Production needs to be done
Production
Financial Management With what can be
Financial Management
Research and Development done
Research and Development
Human Resource In all aspects of
Human Resource Management
Management the business
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4. Analyzing the Environment,
Opportunities and Challenges (threats)
The terms defined
 An opportunity is something that if taken, will
result in something positive for the organization.
 A challenge (threat) is quite different. Out of the
environment, something with a negative
consequence to your organization is going to
happen unless you act in some way.
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5. Remote environment, opportunities
and challenges (threats)
 Figure 4.4. the remote environment for a ski
area
Remote Environment for a Ski Area
Description o/t
The amount of disposable income available for
Economic recreation, in the hands of customers.
T
The perception of people regarding health and wellness
Social and the use of recreation to achieve those ends.
O
Government regulations regarding development of park
Political land and the environmental impact of the development T
of recreation areas.
Internet based advertising systems and reservation
Technological
systems.
O
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6. The Industry Environment,
Opportunities and Challenges (threats)
 Figure 4.5, Opportunities And Challenges From The
Five Forces Applied To The Recreation Industry (Ski
Area)
Force Issue o/t
Demand is high for the total industry relative to T
Substitute supply O
products
Customers are not product sensitive T
Profits are Low O
New
entrants Large capital investment is required O
to the
market Demand exceeds supply in the industry for the
T
product or service
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7. Opportunities And Challenges From The Five Forces
Applied To The Recreation Industry (Ski Area)
Buying groups are formed T
Buyers
The buyers are brand sensitive O
There are a large number of travel agents O
Suppliers
There are a small number of suppliers of chair
T
lifts and equipment
Industry profits are low T
Rivalries Customer growth rate is high O
Among
Ski Areas Customers are not brand sensitive T
Switching costs are high T
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8. The Local Environment, Opportunities
and Challenges (threats)
 Figure 4.6. Characteristics of the local environment.
Analyzing the local Environment
Issue Questions and answers o/t
Do the features of the product
Customers Demographic match the demographic of the O
market?
Competitive Product Do customers perceive the product
Position Quality
T
as high value for the price paid?
Financial Are creditors willing to let the loan
Creditors
Claims
T
serve its purpose?
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9. Characteristics of the local environment
Can the organization attract and
Employees Availability O
hold the right people?
Are suppliers able to meet your
Quantity present and future demand for T
Suppliers their products?
Does a change in the season or a
Ecological
Impact change in the weather impact O
issues
your operations?
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10. The Organizational Profile,
Strengths and Weaknesses
 A strength means you are already equipped to
handle the situation and you are using state of
the art procedures.
 A weakness means you don’t have the tools to
deal with the issue.
Put another way:
 A strength is something you have that you need,
 A weakness is something you don’t have that
you need.
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11. Step 3, a partially
Figure 4.8,
complete organizational profile.
Major areas Potential issues S/W Explanation
Quality of long and We hired a college
Strategic
short range S graduate to facilitate the
planning development of goals.
objectives
We hold a small market
share of a rapidly growing
Marketing Market share W market. We are not
growing at the same rate.
We earn a rate of return
Financial and
Profitability S that is significantly higher
accounting than the industry average
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12. Step 3, a partially complete
organizational profile.
Our unit production costs
Production, Efficiency of are lower than industry
operations production S average because we have
and technical processes state of the art machinery
and equipment.
Four of the last five rounds
of negotiations were
Union/Management
Human W resolved after a work
relationship stoppage, two strikes and
resource
management two lockouts.
Willingness of Management is willing to
Organization hold others responsible
management to
and W and accountable, but they
delegate tasks and are not willing to delegate
management
authority. authority and control.
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13. Stages of Industry Evolution
 Figure 4.9 , Industry life cycle
Maturity Decline
Growth
Development
Growth
Rate Profits
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14. Critical Success Factors at
Figure 4.10,
Each Stage of Industry Evolution
Function Development Growth Maturity Decline
Hold existing
markets and
Establish brand Focus on the
promote to new
Create wide recognition. Find best channels.
Marketing markets.
spread effective Replace old
& Sales Introduce
awareness. marketing products with
successor
channels. new ones.
products to
extend maturity.
Prune the
Finance
Reinvest profits product line and
Finance initial expansion and
and employ cost harvest the
Finance R&D losses. net cash
controls. resources from
outflows.
liquidation.
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15. Critical Success Factors at Each Stage
of Industry Evolution
Re-deploy
unused
Improve the
Limit number of Increase equipment,
product and
Production designs, use capacity while simplify
reduce
standards. retaining quality. processes and
operating costs.
reduce product
variants.
Focus on quality Improve
Ability to make and ability to processes to Commit
changes and make product reduce costs resources to
R&D take the bugs variants to and introduce new growth
out. satisfy successor products.
customers. products.
Motivated and
loyal workforce Reduce
Flexibility in Reduce and
Human with excellent workforce and
staffing and reallocate
Resources product increase
training. personnel.
knowledge and efficiency.
selling skills.
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16. Critical Success Factors at Each Stage
of Industry Evolution
Development Growth Maturity Decline
Production
Engineering Sales and Finance and
Focus efficiency
and market investment
area and
marketing share recovery
successors
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17. Defining Organizational Critical Factors
 Figure 4.11, SWOT diagram
Environmental
Opportunities
Internal Internal
Weakness Strength
Environmental
Threats
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18. Figure 4.12, SWOT Analysis
Environmental
Opportunities
Internal Internal
Weakness Strength
Environmental
threats
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19. the “cells”
Figure 4.13,
of a SWOT diagram
Environmental
Opportunities
Cell “A” Cell “B”
Redesign practices Be aggressive
Internal Internal
Weakness Strength
Cell “C” Cell “D”
Be Defensive Use your strengths in
new places
Environmental
threats
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20. Cell “A” Grand Strategy,
“Re-design practices”
 An organization with internal weakness
which is facing an industry with numerous
opportunities
 must focus attention on re-designing how
business is done so that the opportunities
can be effectively captured.
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21. Other Cell “A” Strategies
 Retrenchment/turn around
 Joint Venture
 Strategic Alliance
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22. Cell “B” Grand Strategy,
“Be aggressive”
 An organization with internal strengths
which is facing an industry with numerous
opportunities
 expand operations into new markets,
invest in growth and reproduce success in
other areas.
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23. Other Cell “B” Strategies
 Product development
 Market development
 Vertical Integration
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24. Cell “C” Grand Strategy,
“Be Defensive”
 An organization with internal weakness
which is facing an industry with numerous
threats
 needs to revaluate whether or not it is
advisable to stay in business.
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25. Other Cell “C” Strategies
 Divestiture
 Liquidation
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26. Cell “D” Grand Strategy,
“Use your strengths in new places”
 An organization with internal strengths
which is facing an industry with numerous
threats
 evaluate whether or not their expertise
could be transferred to a new, less
threatening environment.
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27. Other Cell “D” Strategies
 Horizontal Integration
 Concentric Diversification
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28. Summary
 The objective of chapter 4 was to define “Critical
Success Factors”. The factors relate to an
industry and an organizational perspective.
 The “Stages of Industry Evolution” was
introduced as a tool to pinpoint the critical
success factors from an industry point of view.
 The SWOT diagram was introduced as a tool to
match the industry critical success factors with
the organizational profile developed in chapter 3.
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