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Understanding Strategic Management is like pealing an onion
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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
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Business Ecosystem: A more granular view Mbam619 framework models
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Firm's Resources-Tangible and Intangible Assets
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Aligning Organization, Systems and Processes to Goals and Strategy to create sustainable Competitive Advantage Adapted from: www.buildingbrands.com/didyouknow/14_7s_mckinsey 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. •
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Key functions and activities within a firm Suppliers Manufacturers Distributors Retailers Consumers Adapted from: http://faculty.msb.edu/homak/HomaHelpSite/WebHelp/HomaHelp.htm Key Operational Issues
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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
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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
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Walmart's Value Creating Activities Infrastructure HR Technology Procurement
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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>
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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>