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Aligning Arc And Strategy


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Aligning Arc And Strategy

  1. 1. What you will learn in this Section ? <ul><li>Envisioning Strategy </li></ul><ul><ul><li>Definition </li></ul></ul><ul><ul><li>Framework </li></ul></ul><ul><ul><li>Visual Models </li></ul></ul><ul><li>External Analysis </li></ul><ul><ul><li>PEST </li></ul></ul><ul><ul><li>PEST Impact Analysis </li></ul></ul><ul><li>Industry and Competitive Analysis </li></ul><ul><ul><li>Industry Structure </li></ul></ul><ul><ul><li>Evolution of Industries </li></ul></ul><ul><ul><li>Industry Supply Chain </li></ul></ul><ul><ul><li>Potential Industry Earnings </li></ul></ul><ul><ul><li>Porter’s 5 Forces Analysis </li></ul></ul><ul><ul><li>Competitive Intensity </li></ul></ul><ul><ul><li>Strategies for minimizing competitive forces </li></ul></ul><ul><ul><li>Perceptual Map </li></ul></ul><ul><ul><li>Barriers to Entry/Incumbency advantages </li></ul></ul><ul><ul><li>DSIR effect </li></ul></ul><ul><li>Company Resources and Capabilities </li></ul><ul><ul><li>ARC Analysis/HR </li></ul></ul><ul><ul><li>SWOT Analysis </li></ul></ul><ul><ul><li>Value Creating Processes/Core Competencies </li></ul></ul><ul><ul><li>Strategic Gameboard </li></ul></ul><ul><ul><li>Balanced Scorecard </li></ul></ul><ul><ul><li>Change Management </li></ul></ul>© Sunil Mehrotra
  2. 2. Understanding Strategic Management is like pealing an onion
  3. 3. A Visual Model Business Ecosystem New Paradigm Consulting The environment International law Governments Standards bodies Stakeholders Supplier’s suppliers Customer’s customers New entrants Customers Suppliers Competitors Substitutes Organisation
  4. 4. Business Ecosystem: A more granular view Mbam619 framework models
  5. 5. Firm's Resources-Tangible and Intangible Assets
  6. 6. Aligning Organization, Systems and Processes to Goals and Strategy to create sustainable Competitive Advantage Adapted from: Mckinsey 7-S Framework Structure: The basic organization of the company, its departments, reporting lines, areas of expertise, and responsibility (and how they inter-relate Systems: Formal and informal procedures that govern everyday activity, covering everything from management information systems, through to the systems at the point of contact with the customer (retail systems, call centre systems, online systems, etc). Skills: The capabilities and competencies that exist within the company. What it does best. Shared values: The values and beliefs of the company. Ultimately they guide employees towards 'valued' behavior. Staff: The company's people resources and how they are developed, trained, and motivated. Style: The leadership approach of top management and the company's overall operating approach. Hardware S Software Strategy: The direction and scope of the company over the long term. •
  7. 7. Designing Firm's ARC to align with Strategy
  8. 8. Transforming Resources to Capabilities Advantage
  9. 9. Firm's Resources
  10. 10. Key functions and activities within a firm Suppliers Manufacturers Distributors Retailers Consumers Adapted from: Key Operational Issues
  11. 11. Activity Based View of Value Creation Process Infrastructure Human Resources Technology Development Procurement Inbound Logistics Operations Outbound Logistics Marketing and Sales Service Profit Margin Profit Margin Support Activities Primary Activities Sequence of Activities
  12. 12. Starbuck’s key activities that create Value M A R G I N Inbound Logistics Operations Marketing And Sales Outbound Logistics - Financial Policy - Legal - Accounting - Organizational Form - Incentive Systems <ul><li>New Espresso Machines </li></ul><ul><li>Roasting Coffee </li></ul><ul><li>Operating Stores </li></ul><ul><li>Barista Training </li></ul><ul><li>Buying Coffee </li></ul><ul><li>Other Purchasing </li></ul><ul><li>Superior Rewards </li></ul><ul><li>Better Espresso Machines </li></ul><ul><li>New Clover Method </li></ul><ul><li>Maintaining Stores </li></ul><ul><li>CPG’s in retailers </li></ul><ul><li>Desirable store settings (3 rd Place)‏ </li></ul><ul><li>Excellent Customer Service </li></ul><ul><li>Limited Advertising </li></ul>Firm Infrastructure Human Resource Management Technology Development Procurement <ul><li>Only the best 3% of coffee </li></ul>Nicholas Merriam, April 2008 MBA, Graziadio School of Business and Management Pepperdine University
  13. 13. Progressive's value creating activities Infrastructure HR Technology Procurement <ul><li>Financial Policy </li></ul><ul><li>Regulatory Compliance </li></ul><ul><li>Legal </li></ul><ul><li>Accounting </li></ul><ul><li>Org. structure </li></ul><ul><li>Incentive system </li></ul><ul><li>Actuary </li></ul><ul><li>Training </li></ul><ul><li>Agent </li></ul><ul><li>Training </li></ul><ul><li>Adjuster </li></ul><ul><li>Training </li></ul><ul><li>Actuarial methods </li></ul><ul><li>Investment practices </li></ul><ul><li>Information </li></ul><ul><li>Technology </li></ul><ul><li>New Product Dev. </li></ul><ul><li>Market Research </li></ul><ul><li>Settlement </li></ul><ul><li>Procedures </li></ul><ul><li>Communication </li></ul><ul><li>Technology </li></ul><ul><li>Data Gathering </li></ul><ul><li>Rating </li></ul><ul><li>Underwriting </li></ul><ul><li>Investment </li></ul><ul><li>Policy Issuing </li></ul><ul><li>Billing & Collection </li></ul><ul><li>New Policy sales </li></ul><ul><li>Policy Renewals </li></ul><ul><li>Policy Repricing </li></ul><ul><li>Create Network of </li></ul><ul><li>independent agents </li></ul><ul><li>Build internal sales force </li></ul><ul><li>Agent Management </li></ul><ul><li>Advertising </li></ul><ul><li>Claims Response </li></ul><ul><li>Loss settlement </li></ul><ul><li>Loss Control </li></ul>
  14. 14. Walmart's Value Creating Activities Infrastructure HR Technology Procurement
  15. 15. What is the Firm's ARC? <ul><li>How is the firm organized? </li></ul><ul><ul><li>ARCHITECTURE </li></ul></ul><ul><li>What are the firm's processes for getting things done? </li></ul><ul><ul><li>ROUTINEs </li></ul></ul><ul><li>What are the firm's shared values? </li></ul><ul><ul><li>CULTURE </li></ul></ul><ul><li>How well does the Firm's ARC align with its strategy? </li></ul>
  16. 16. What is the best ARC for the firm seeking.... <ul><li>Product Leadership(Innovation) ? </li></ul><ul><li>Operational Efficiency (Cost leadership)? </li></ul><ul><li>Customer Intimacy (Customer focus)? </li></ul>
  17. 17. Firm's Architecture Geography
  18. 18. Leader on a pedestal
  19. 19. ARCHITECTURE: Functional
  20. 20. ARCHITECTURE: By Product
  21. 21. ARCHITECTURE: Matrix
  22. 22. ARCHITECTURE: By Geography
  23. 26. Components of Culture
  24. 29. How does a firm organize, resource, set policies and procedures, establish behavioral norms for <ul><li>High-growth ? </li></ul><ul><li>Product innovation? </li></ul><ul><li>Cost leadership? </li></ul><ul><li>Customer intimacy? </li></ul><ul><li>Global reach? </li></ul><ul><li>Survival? </li></ul><ul><li>Uncertainty? </li></ul><ul><li>Leveraging core competencies? </li></ul>
  25. 30. Process for Creating sustainable competitive advantage through ARC
  26. 32. Aligning Resources to Market Opportunities and Threats to create sustainable competitive advantage Opportunities Threats $ Strengths + + Weaknesses - -
  27. 33. SWOT Analysis
  28. 34. Nappies 15-17 ARc Analysis Transforming resources to capabilities through firm's ARC Strategic SWOT Analysis
  29. 35. Mnemonic 8 Transforming Resources to Capabilities Advantage
  30. 36. Mnemonic 9 Process for Creating sustainable competitive advantage through ARC
  31. 37. Mnemonic 10 Aligning Resources to Market Opportunities and Threats to create sustainable competitive advantage Opportunities Threats $ Strengths + + Weaknesses - -
  32. 38. Mnemonic 11 Strategic SWOT Analysis
  33. 40. ARC for Product Innovation