Software EngineeringBackground for Question 1-7 Kean Universi.docx

Software Engineering
Background for Question 1-7: Kean University is planning on
doing away with the parking permits used previously and
moving towards a “pay as you go” system employing price
elasticity (i.e., the parking price will change based on current
demand for that particular parking garage at a particular time).
In such a system, each parking space will be fitted with an
RFID sensor to detect if the spot is being used and each parking
garage will have a number of parking pass kiosk systems that
will allow a user to purchase a ticket for a requested period of
time. To determine the parking price, the kiosk will determine
the current system usage (i.e., the demand for parking in all
parking garages across campus as well as the kiosk’s home
garage) and utilize historical parking demand data for that time
period. Users will be able to pay for their parking using a credit
card or their KU Card.
Your company has won the contract and you will lead the entire
project. Answer the following questions based on the
background.
1. Which software process model would you use in this project?
Please provide all the assumptions you use for making the
decision, and please justify your answer.
Hint: Only giving the name of the process model will not get
any grade.
2. Please list three functional requirements in this project. For

each functional requirement you list, please identify whether it
is functional user requirement, or functional system
requirement.
3. Please list three measurable non-functional requirements in
this project.
Hint: Non-measurable non-functional requirements will not get
any grade.
4. Please draw one use case diagram for this project.

5. For the use case of “purchase a ticket for a period of time at
kiosk”, please provide use case specification using the below
template
6. For the use case of “purchase a ticket for a period of time at
kiosk”, please draw one sequence diagram based on the use case
specification.
Hint: Make sure it is consistent with your use case specification
in Question 5.

7. Please describe what software architectural style you would
use for this project. Please provide all the assumptions you use
for making the decision, and please justify your answer.
Hint: Only giving the name of the architectural style will not
get any grade.
8. In your own words, please describe open-closed principle.
Devise an example that shows your understanding of the
principle.
9. In user interface design, please provide three principles that
can reduce the user’s memory load. Devise a simple example
that shows your understanding of the one of the three principles.
Hint: you can paste screenshots when describing your example.

10. In your own words, please describe the software quality
dilemma.
11. We have talked about one measure of software reliability is
mean-time-between-failure (MTBF), where MTBF = MTTF +
MTTR, and software availability is defined as Availability =
[MTTF/(MTTF + MTTR)] x 100%. Please describe these two
formulas in your own word .., and provide an actual example
(with actual numbers of hours), to show your understanding of
the two formulas.
12. In your own words, please describe unit, integration, and
regression testing. (6 pts) Explain how they are related.
13. In your own words, please describe top-down and bottom-up
integration testing. Devise a simple example that shows your
understanding of both topics.

14. In your own words, please describe verification and
validation , and discuss the differences between them.
15. Below is a small program that computes the standard
deviation of an array.
public static void computeSD (int [ ] numbers)
{
int length = numbers.length;
double var, sd, mean, sum, varsum;
sum = 0;
for (int i = 0; i < length; i++)
{
sum += numbers [ i ];
}
mean = sum / (double) length;
varsum = 0;
for (int i = 0; i < length; i++)
{
varsum = varsum + ((numbers [ i ] - mean) *
(numbers [ i ] - mean));
}

var = varsum / ( length - 1.0 );
sd = Math.sqrt ( var );
System.out.println ("standard deviation: " + sd);
}
Based on the program’s control flow graph below, answer the
following questions.
a. What are the test requirements for edge coverage?
b. List test path(s) that achieves the edge coverage.
c. Provide test inputs and expected outputs for each test path
you list. If it is not possible to find the test input for certain test
path, describe the reason.
Hint: Not providing expected outputs will get 1 point deduction.
Not matching test paths with their corresponding input/output
will get 1 point deduction.
d. What are the test requirements for edge-pair coverage?
e. List test paths that achieve the edge-pair coverage.

f. Provide test inputs and expected output for each test path you
list. If it is not possible to find the test input for certain test
path, describe the reason.
Hint: Not providing expected outputs will get 2 points
deduction. Not matching test paths with their corresponding
input/output will get 2 points deduction.
2
STARTtwSAM tw = Strategic Analysis Model that
worksTABLE OF CONTENTSPHASE ICompany
AnalysisFinancial Analysis--This module is contained in
separate files on the SAM tw CD-Rom.SWOT AnalysisTOWS
MatrixPHASE IGeneral Company InformationGeneral Internal
AnalysisCore Competence AssessmentIndustry and Competitive
AnalysisValue AnalysisIndustry AnalysisSPACE Chart /
AnalysisCompetitive AnalysisPHASE IIStrategic Analysis &
ChoicePorter's Five ForcesStrategic Alternatives and
AnalysisStrategic Group MapPHASE IIIRecommendationsGE
MatrixRecommendationsMarket AnalysisMission
StatementsEnvironmental AnalysisVision Statements
Financial Analysis is contained in separate modules on the
SAM-tw CD-Rom. Use the Launch Pad to open them or simply
look for them on the CD-Rom. There is a separate file for
either 3, 4, or 5 years of financial data.

There is a separate Strategic Group Map for either 4, 5, or 6
groups. Choose the appropriate sheet for your particular
industry / company's situation.
Print Cover Page
Go To Input
Print All Industry and Competition
Print Industry
Go To Input
Print Comp
Go To Input
Print Porter
Go To Input
Print GE Matrix
Go To Input
Print Market
Go To Input
Print Environmental
Go To Input
Print All Company Analysis Output
Print SWOT
Go To Input
Print Internal
Go To Input
Print SPACE
Go To Input
Print Strategy
Go To Input
Print Recommendations
Go To Input
Print Mission
Go To Input
Go To Input
Print Value
Print SGM4
Go To
SGM5

Print Mission
Go To Input
Print ALL Strategy Output Worksheets
Go To
SGM4
Go To SGM6
Print All Recommendations Output
Print SGM5
Print SGM6
Print TOWS
Go To Input
Print CC
Go To Input
Strategy ChecklisttwSAM tw = Strategic Analysis Model that
worksStrategy Toolbox ChecklistIndicate which tools are
appropriate for completing a Strategic Plan for this company.
Indicate completion for tools used, and space is allowed to
record comments regarding any of the
tools.Appropriate?Description of
ToolComplete?Comments?PHASE I: Situation AnalysisGeneral
Company InformationIndustry and Competitive
AnalysisIndustry AnalysisCompetitive AnalysisPorter's Five
ForcesStrategic Group MapGE MatrixMarket
AnalysisEnvironmental AnalysisCompany AnalysisFinancial
AnalysisSWOT AnalysisTOWS MatrixGeneral Internal
AnalysisCore Competence AssessmentValue AnalysisSPACE
Chart / AnalysisPHASE II: STRATEGIC ANALYSIS AND
CHOICEPHASE II: Strategic Analysis & Choice and PHASE
III: RecommendationsStrategic Alternatives and
AnalysisPHASE III: RECOMMENDATIONSPHASE II:
Strategic Analysis & Choice and PHASE III:
RecommendationsRecommendationsMission StatementsVision
Statements
Gen InfoOnce input is complete for this screen, click here to
print Cover Sheet which incorporates the data entered
here.Input General Company InformationSporting Goods -

RetailName of CompanyYour Company
NameSegmentIndustryNumber of
EmployeesProducts/ServicesCEO NameCEO StyleNo. Years in
BusinessNo. Locations1How Many
States/Countries?Headquarters LocationPublic or Privately
Held?Parent Corporation/CompanyStock Price Range (12
Mo)Ticker SymbolStrategy Designer
Write in the name of the company being analyzed here.
Industries are typically divided into segments that are highly
related to one another. The entertainment industry, for example,
is divided into segments of radio, TV, movies, movie-theaters,
pro sports, concerts, theaters, cabarets, etc. Insurance has
segments of auto, health, dental, whole/universal life, housing,
commercial, marine, earthquake, etc.
The key is to label the segment in which the company competes
accurately and precisely. Sometimes, you will have to label the
segment yourself, i.e., there is no recognized label in existence.
If a company does compete in a segment, it's OK later to refer
to it as "the industry." Whatever it's ultimately called, it's the
arena in which the company competes.
This is the general name given to the category in which you and
your rivals compete, for example, auto, health care, leisure
products, entertainment, defense, aerospace, general
manufacturing, etc. A more specific label usually connotes the
segment in which the company competes.
An industry (or segment) is defined as the collection of
competitors who produce similar or substitute products or
services to a defined market.
This is you. Write your name here.
Stands for Chief Executive Officer. If there isn't one in the
company, write in the name of the president.
How would you characterize the CEO's style? Write in 3-5
adjectives that best describe it, e.g., aggressive, democratic,
ambitious, knowledgeable, caretaker, charismatic, personable,

etc.
Write in how long the company has been in business, if you
know it.
How many locations does the company have? You might break
this down by number of manufacturing plants, number of sales
offices, number of warehouses, etc. For multidivisional
companies, count the locations of all subsidiaries and divisions.
Complete this only if the company in question is a division or
subsidiary of a parent corporation.
Complete this only for a public company.
This is the trading symbol for publicly held companies.
Print Cover Page
Publicly Held
Privately Held
Goto START
IndustryPrint after input is complete
for this screenYour Company NameIndustry SnapshotTotal
Industry or Segment Sales ($M)Industry or Segment Growth
Rate (%/yr)Lifecycle StageDegree of Vertical IntegrationDegree
of Technological Innovation1Emerging1No vertical
integration1None2Growth2Some vertical integration
backwards2Slight1Purchasing3Shakeout3Some vertical
integration forwards3Somewhat2ManufacturingScale
EconomiesIndustry ProfitabilityDegree of
Concentration4Mature4Most companies vertically
integrated4Moderate3Distribution5Declining1Over
20%5Considerable4Advertising215 - 20%6Intense310 -
14.9%1Highly concentrated45 - 9.9%2Moderately
concentratedIndustry Driving Forces50 - 4.9%3Neither
concentrated nor fragmented6Negative4Highly
fragmented7UnknownIndustry Attractiveness
MatrixFactorsWeightRatingProduct0.00.00.00.00.00.00.00.00In
dustry
Attractiveness
Index0.0This index indicates that this is NOT an attractive
industry to enter or remain in.

Industries have lifecycle curves similar to products, divided
into 5 major lifecycle stages. "Emerging" characterizes an
industry before market acceptance of its product. Once a market
is established, it enters a "growth" period when demand exceeds
supply and other competitors enter the industry. Growth wanes
when supply exceeds demand, customers are harder to find and
prices drop. Weak competitors fail or are acquired by stronger
ones during a period called "shakeout." When growth drops to
5% or less, the industry is said to be "mature." With negative
growth rates year after year, the industry is said to be in
"decline." In what lifecycle stage is this industry?
Being vertically integrated means controlling at least one
additional stage of the value chain. Vertical integration also
means either making what you used to buy, or buying a supplier
(backward vertical integration), or competing with or acquiring
a customer (forward vertical integration). For this industry,
state your perception of the extent of vertical integration in the
industry by selecting one of the choices listed.
Estimate the extent to which the industry depends on
technological innovation for its growth, and the extent to which
technological innvovation forms the basis of competition in the
industry. Choose one of the descriptors here that best describes
the situation in your industry.
Some industries are able to achieve scale economies, i.e., to
lower unit manufacturing, purchasing, and distribution costs as
volume increases. Is this one of them? Enter all areas in which
companies in the industry are achieving scale economies.
This refers to the average profitability of the industry or
segment, as measured by return on sales (NIAT/revenues)
expressed as a percentage.
Industries with fairly high average profitability typically have
bargaining power over their suppliers and customers, while
those with low average profitability do not. The former contain
companies with highly differentiated products, while the latter's
products are more like commodities. Choose one of the listed

ranges that best describes your industry.
When a large proportion of an industry's sales are produced by a
small number of companies, the industry is said to be
concentrated, e.g., the Big Six accounting firms auditing over
95% of all U.S. public companies, or Boeing and Airbus
Industrie being the only manufacturers of large commercial
aircraft in the world. At the other extreme, a fragmented
industry is one in which no competitor holds more than 0.5%
market share. A moderately concentrated industry is somewhere
in between, e.g., where ten competitors account for 50% of
industry sales. Estimate how concentrated your industry is.
Driving Forces are factors that cause the industry to change.
Examples include:
Changes in the industry growth rate
Changes in buyers or uses of the product
Product/marketing innovations
Entry or exit of major firms
Increasing globalization
Buyer preferences for differentiation
Changes in regulation or government policies
Changing societal concerns, attitudes, lifestyles
Reductions/increases in uncertainty and risk
Industry attractiveness depends on several factors. To help you
identify these factors, imagine the ideal industry you would like
to be in or enter, e.g., large market, high industry growth, no
regulation, little competition, low or high entry barriers if
outside or inside the industry, and high profitability. With such
factors in place, one could then assess the attractiveness of a
particular industry by weighting the factors (allocating 100
points among them--the weights will be automatically totaled),
and rating them from your company's point of view (between 0-
1.0, 1.0 being highest). The weights will be multiplied
automatically by the ratings in the last column, and the last
column totaled automatically to give an I.A. index (%).
1

2
3
4
5
1
2
3
4
5
Print Industry Snapshot
PURCHASING
MANUFACTURING
DISTRIBUTION
ADVERTISING
Goto START
CompetitionPrint after input is complete
for this screenYour Company NameCompetitive Analysis:
Snapshot of the CompetitionType of CompetitionBasis of
CompetitionEnter Market Share DataYour Company
Name0%Competitor 10%`Competitor 20%Competitor
30%Competitor 40%Competitor 50%Others0%0%Are Market
Shares Stable or Changing?CRITICAL SUCCESS
FACTORSName 5 Success FactorsWeight each item (sum
should be 100)Total (should = 100)0Competitor Analysis for
Critical Success FactorsScore companies on a scale of 1 to 10
for relative strength for each factor (10 indicates
greatest/highest level)FactorYour Company NameCompetitor
1Competitor 2Competitor 3Competitor 4Competitor
500000ADDITIONAL COMPETITIVE DATACompetitor
1Competitor 2Competitor 3Competitor 4Competitor 5Name up
to 2 things each competitor does better than Your Company
NameName up to 2 things that Your Company Name does better
than each competitorStrategic FactorYour Company
NameCompetitor 1Competitor 2Competitor 3Competitor
4Competitor 5Competitive AdvantageStrategic
IntentGeographic ScopePositioningGeneric Strategy

Choose from among:
Monopoly--the only competitor in the business (true if first to
market, or if granted an exclusive territory)
Duopoly--only two competitors in the industry
Oligopoly--a small number of independent rivals
Monopolistic Competition--a small number of rivals having
strongly differentiated and branded products
Monopsony--a monopoly on the buyer's side, i.e., the whole
industry serving one customer
Pure Competition--a large number of competitors.
You may choose from the following, or indicate one that is
more appropriate for your company:
Price--typical in commodity industries, or where people
sacrifice quality or service for a lower price
Quality--where people will pay more for higher perceived
quality
Service--where customers go because of how well they're
treated
Technology--where advantages accrue through superior
technology or patents
Low-Cost Leadership--power through having the lowest costs in
the industry.
Market share is calculated typically using total dollar sales in
the industry, taking into account not only number of units sold
but also their price.

Sometimes, market share is calculated on a different basis, e.g.,
number of screens in the movie-theater industry, or installed
base in the telecommunications-switching industry, or # beds in
hospitals.
Enter top five competitors below your company and market
share percentages.
A critical success factor in an industry is something a company
must do well in order to succeed in the industry. They attach to
an industry and not to a company. Think of these as "rules of
the game" for a particular industry. Every industry has its own
rules, which a company must "play by" if it wants to succeed in
the industry.
A competitive advantage is an edge over your competitors that
your company possesses. It could take the form of a proprietary
product or process, a developmental lead-time, or a discipline or
level of service that cannot easily be emulated. Companies that
have a core competence usually have a sustainable competitive
advantage. A competitive advantage can erode over time if the
company does not work at sustaining it.
This has to do with market shares and changing or defending
your ranking in the industry. For example, if you are the market
leader, you should maintain your leadership position; if not the
leader, you might want to overtake the leader, or overtake #4
from #5, or maintain your #2 position, or defend against #8 who
is creeping up to challenge you, etc. Note that maintaining
one’s market share means growing at the same rate as the
industry (rather than not growing at all).
Replace the words "Generic Strategy" with something that
makes sense for your company. Generic strategies include
differentiation, cost-leadership, and focus (differentiated or
specialized for a narrow market segment), developed originally
by Michael Porter in the early 1980s
Does the company compete very locally (1-2 mi. radius), locally
(to include several zip codes), narrow-regionally (several
counties within a state, e.g., Southern California), broad-

regionally (e.g., West or East Coast of the U.S., Central
America), nationally, or internationally?
Is the company positioned at the high end of the market,
typically highest prices and best products, the low end,
typically lowest prices and mass produced, or somewhere in the
middle, typically priced relatively low for the value offered?
With which end does it want its brand identified?
Is there a competitor rapidly gaining market share? Is the
market-share gap between established competitors growing or
shrinking? Is a rival making a concerted bid for market share?
1
2
3
4
5
Print Competitive Snapshot
Make sure to input names of competitors here. They are used in
numerous instances within the model.
Goto START
PorterPrint after input is complete for this screenYour Company
NameCompetive Analysis: Porter's Five
ForcesRivals/CompetitorsYour Company NameTop 5
competitors of this company:Competitor 1Competitor 2Do not
Input - These ComeCompetitor 3From Competition
Input!Competitor 4Competitor 5Identify
Buyers/CustomersIdentify SuppliersIdentify SubstitutesIdentify
Potential EntrantsIntensity of RivalryBargaining Power of
BuyersBargaining Power of SuppliersThreat of
SubstitutesBarriers to Entry
To help you identify substitutes in an industry, imagine being a
customer and ask, "What are my alternatives to buying the
industry's product?"
Potential entrants include any company that may enter the
industry at any time. Because this happens without warning,
they are difficult to identify. However, don't worry about
potential entrants if barriers to entering the industry are high.

Is the intensity of competition among rivals low? Medium?
High? Is it getting stronger? Weaker? Why?
Who has bargaining power in the industry--the producers
(rivals) or customers? Who dictates terms? Who needs the other
more? Are buyers' switching costs high? Typically, in a
commodity industry where all rivals produce identical products
and buyers choose the lowest price, the buyer has bargaining
power. When all rivals are differentiated, the industry has
bargaining power.
A similar logic exists for ascertaining who has the bargaining
power between the industry and its suppliers. Typically, if
suppliers are aplenty, the industry has bargaining power; if only
one supplier can fulfill the company's needs, then the supplier
has the bargaining power.
The threat is high if there is a high likelihood the industry will
adopt the substitute or if substitute sales are increasing, and low
if opposite conditions exist.
High barriers to enter an industry deter potential entrants from
entering the industry. Barriers to entry include capital
investment required, the need to set up a distribution system,
the time it takes to develop a brand identity (especially if
companies compete on the basis of brands) and loyal customers,
technological know-how, and manufacturing expertise. A
common mistake is to imagine barriers to entry to be very high,
whereas certain companies deciding to enter would find the
barriers much lower. For example, a company wanting to enter
the U.S. motorcycle industry would find the barriers to entry
very high, but a foreign motorcycle manufacturer would find the
barriers to entry very low.
Print Porters 5 Forces
Goto START
Strat Grp Map4Print after input is complete for this screenUse
this Strategic Group Map when you have four or fewer strategic
groups.Your Company NameCompetive Analysis: Strategic
Group MapCriteria BCriteria AUser Defined Criteria for X & Y
AxesRelative Indication of SizeStrategic Group

Map DataCriteria ACriteria BGroup SizeUser Defined Titles of
Groups(X)(Y)(Diameter)Group 1Group 2Group 3Group 4
Firms in same strategic group have one or more competitive
characteristics in common . . .
Sell in same price/quality range
Cover same geographic areas
Be vertically integrated to same degree
Have comparable product line breadth
Emphasize same types of distribution channels
Offer buyers similar services
Use identical technological approaches
Variables selected as axes should NOT be highly correlated
Variables chosen as axes should expose BIG differences in how
rivals compete. Variables do NOT have to be either quantitative
or continuous
Indicating sizes of circles proportional to combined sales of
firms in each
strategic group allows map to reflect relative sizes of each
strategic
group.
Indicate circle sizes for each strategic group, making circles
proportional to size of group's respective share of total industry
sales.
An example would be to have the total add to 10 or 100,
indicating the relative share for each group.
STEP 1: Identify competitive characteristics that differentiate
firms in an industry from one another
STEP 2: Plot firms on a two-variable map using pairs of these
differentiating characteristics
STEP 3: Assign firms that fall in about the same strategy space
to same strategic group
STEP 4: Indicate circle sizes for each strategic group, making
circles proportional to size of group's respective share of total

industry sales
INTERPRETING STRATEGIC GROUP MAPS
Driving forces & competitive pressures often favor some
strategic groups & hurt others.
Profit potential of different strategic groups varies due to
strengths & weaknesses in each group's market position.
The closer strategic groups are on map, the stronger the
competitive rivalry among member firms tends to be.
Print Strategic Group Map4
Goto START
Strat Grp Map4
Group 1
Group 2
Group 3
Group 4
Strategic Group Map
this Strategic Group Map when you have five strategic
Groups(X)(Y)(Diameter)Group 1Group 2Group 3Group 4Group
5

or continuous
firms in each
strategic
group.
sales.
industry sales

Goto START
Strat Grp Map5
Group 1
Group 2
Group 3
Group 4
Group 5
Strategic Group Map
this Strategic Group Map when you have six strategic
Groups(X)(Y)(Diameter)Group 1Group 2Group 3Group 4Group
5Group 6
industry sales

firms in each
strategic
group.
sales.
or continuous
Goto START
Strat Grp Map6
Group 1
Group 2
Group 3
Group 4

Group 5
Group 6
Strategic Group Map
GE MatrixPrint after input is complete for this screenYour
Company NameG.E. MatrixThe G.E. Matrix was named after the
corporation that first developed and used it as a guide to
strategic choice.
The G.E. Matrix plots Industry Attractiveness (0) against
Competitive Strength (0).If the company plots in the top three
boxes (shaded light green), the GE Matrix indicates a possible
strategy of 'Grow, Invest, and Build." If it ends up in the
bottom three squares (shaded light red), the matrix indicates a
'Harvest' or 'Exit' strategy. The grey shaded boxes require a
strategy on a case-by-case basis.G. E. Matrix ChartData for
chartC.S.I.A.0.00.0Industry Attractiveness Matrix (I.
A.)FactorsWeightRatingProduct0Industry
Attractiveness (I.A.) Index0.0This index indicates that this is
NOT an attractive industry to enter or remain in.Competitive
Strength Matrix (C. S.)Success
FactorsWeightRatingProduct0Comp Strength (C.S.)
Index0.0This index indicates that this company is NOT
competitive.
NO DATA ENTRY REQUIRED HERE!! This table is
duplicated from the "Industry" Worksheet
Industry attractiveness depends on several factors. To help you
identify these factors, imagine the ideal industry you would like
to be in or enter, e.g., large market, high industry growth, no
regulation, little competition, low or high entry barriers if
outside or inside the industry, and high profitability. With such
factors in place, one could then assess the attractiveness of a
particular industry by weighting the factors (allocating 100
points among them--the weights will be automatically totaled),
and rating them from your company's point of view (between 0-
1.0, 1.0 being highest). The weights will be multiplied
automatically by the ratings in the last column, and the last

column totaled automatically to give an I.A. index (%).
Just as you did for Industry Attractiveness in the Industry
Analysis, do a similar analysis here, only the factors involved
are different. Here, the factors are similar to critical success
factors. Think of 5-8 factors that account for a company's
competitive strength in the industry, enter them in the table,
assign weights as before (they will be automatically totaled--
just make sure they add to 100), and rate your company on each
one (on a scale of 0-1.0, 1.0 being best). The weights will be
automatically multiplied by the ratings and the products shown
in the last column, which is also totaled automatically to yield a
C.S. index (%). The CS Index is plotted automatically below
against the IA Index in the G.E. Matrix.
GE Matrix
I.A.
C.S. Index
I.A. Index
MarketPrint after input is complete for this screenYour
Company NameMarket Analysis: Snapshot of the MarketWho is
the market?Who is the target market?Who is the served
market?What is the size of the target market?How fast is the
market growing (%/yr)?How far is the market penetrated
(%)?WhatWhat are customers' current needs?What are
customers' future needs?What are current distribution
channels?What are channel markups at each stage?How price-
sensitive are customers?What is the current pricing
strategy?What are some market/customer trends?1
Print GE Matrix
Goto START
Who are the firm's customers? Describe them precisely and
concisely, including their geographic scope, e.g., not just banks,
but banks worldwide.
This is a subset of the total market that the firm wants to reach
or target over the next three years (e.g., if your market is banks,
your target market could be California banks, instead of a total
market of U.S. banks).

Using the same example of California banks as the target
market, how many such banks are there? In other words, how
many customers in your target market?
Don't confuse this with industry growth. E.g., if your market is
California banks, how fast are they growing in numbers of
banks/yr or in the total dollar sales of California banks? In a
consumer market, how fast are your target consumers growing
per year?
A brand new market for an industry is 0% penetrated, while a
saturated market is 100% penetrated. How far is your target
market penetrated, not by you but by your industry? If your
product is unique, then answer this question for your company.
Distribution channels are how your product reaches your
market. Choices typically include sales people, sales reps,
distributors, wholesalers, retailers (independents, chains,
boutiques, mass merchandisers).
What is your price out of the factory, what is the retail (final)
price, and what are the various in-between prices to wholesalers
and distributors, if applicable?
Customers are extremely price-sensitive if they view the
industry's products as commodities (i.e., all products are alike),
hence go for the lowest price. However, if the industry's
products are differentiated, customers will seek the products
they want without regard to price. Another test to apply is: If
you lowered your price a little, how many more customers
would buy your product? If a lot, they are price-sensitive; if
very few, they aren't.
Pricing strategy is complex. For now, consider one of the
following options: Low-price leader, pricing to allow for a
reasonable profit, pricing to position the company in the
marketplace (esp. high end), pricing to force competitors out of
business, monopoly pricing (esp. for introducing a first-time
product), or pricing what the market will bear.
What changes are occurring with your customers or your
market? Do they now buy differently? Do they use the product
differently? Are their needs changing? Write down here any

changes you're aware of.
This is a subset of the target market that can be realistically
served. For example: California banks with not more than 20
branches or $1B in deposits. Another example: a company
targeting young adults with high-end fashion products (target
market) would consider as the served market only the more
wealthy among them that could afford the product.
Print Market Analysis
Goto START
EnvironmentPrint after input is complete for this screenYour
Company NameEnvironmental Analysis: Impact of
Environmental TrendsStatement of TrendSeverity of Impact on
CompanyNegative PositiveCategoryH M L
Neutral L M HEconomicRegulatory/
LegislativeDemographicAttitude/
LifestyleSocio-
CulturalPolitical/
LegalTechnologicalOther Trends
For each category of trend below, write down the trends, i.e.,
something must be getting smaller or larger, slower or faster,
higher or lower. Describe the trends and HOW it is changing.
Finally, estimate the severity of the impact on the company by
choosing either a positive (H, M, or L), neutral, or negative (H,
M, or L) impact. The larger the potential impact, either positive
or negative, the more data may need to be collected about the
trend or change.
Print Environmental Analysis
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SWOTPrint after input is complete for this screenYour
Company NameCompany Analysis: SWOT
AnalysisSTRENGTHSList up to eight strengths specific to this
company:12345678WEAKNESSESList up to eight weaknesses
specific to this company:12345678OPPORTUNITIESList up to
eight opportunities specific to this
company:12345678THREATSList up to eight threats specific to
this company:12345678

Strengths are special capabilities or expertise, things a company
does well that has enabled it to be successful to this point, and
how it has prepared itself to compete in the future.
Weaknesses are internal. They include problems that need to be
corrected, deficiencies recognized only through a comparison
with competitors, or deficiencies relative to proposed strategies
(e.g., not enough resources to grow)
Opportunities are product-market issues, i.e., current, improved,
or new product (or service) for an existing, expanded, or new
market.
A threat is an external force or impending event that may slow
or prevent you from achieving your objectives.
Print SWOT Output
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TOWS MatrixPrint after input is complete for this screenNOTE:
In order to complete the TOWS Matrix, the SWOT input must
be completed. SWOT input will automatically carry forward.
Enter up to four strategies each in the boxes labeled "SO, WO,
ST & WT Strategies".Your Company NameCompany Analysis:
TOWS Matrix1.1.2.2.3.3.4.4.5.5.6.6.7.7.8.8.SO StrategiesWO
Strategies1.2.3.4.5.6.7.8.ST StrategiesWT
Strategies1.2.3.4.5.6.7.8.
Strategies that use strengths to take advantage of opportunities
Strategies that take advantage of opportunities by overcoming
or mitigating weaknesses.
Strategies that use strengths to avoid or mitigate threats
Strategies that minimize weaknesses and avoid or mitigate
threats
Print TOWS Matrix
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INTERNAL
FACTORS
EXTERNAL
FACTORS
Strengths (S)
Weaknesses (W)

Opportunities (O)
Threats (T)
InternalPrint after input is complete for this screenYour
Company NameGeneral Internal AnalysisCurrent StrategyWhen
was it last changed?Does a written Strategic
Plan exist?Corporate CultureIs the Company involved in a
planned change program?WhatAny constraints?Is the MIS
effective?1
Strategy can always be inferred from what a company is doing.
Sometimes it's very clear, e.g., acquisition, market expansion,
or new product development. Sometimes, it's less clear, e.g.,
differentiation, low-cost leadership, or strategic alliances. Other
strategies include vertical integration (forwards or backwards),
retrenchment (or downsizing), turnaround, joint venture (a form
of strategic alliance), diversification (entering another
industry), focus (being specialized and serving a narrow
market), and liquidation.
What's worth noting is whether the company's strategies have
been changing a lot or steadfast over a period of time. If
changed recently, what was it before? Why did it change?
Companies that record and review their strategic-planning
process and decisions every year tend to improve the quality of
those decisions. If a written strategic plan does not exist, it may
be time to put one in writing.
What is it like to "do business in this company?" What is the
atmosphere like? Are people innovative, approachable,
competitive, cost-conscious, or customer-focused? What
adjectives would you use? How would you characterize the
company's culture?"
Planned change programs include producing products based on a
new technology, using radically different manufacturing
processes, installing highly integrated IT systems, changing the
culture to one that is innovative, or customer-focused, or
market-driven, or cost-conscious, etc. Such programs typically
take more than a year to implement, are costly, and involve
outside consultants using a planned, phased approach.

Constraints include anything the board or CEO imposes on the
company. When Edwin Land was CEO of Polaroid Corp., he
would not let the company borrow any money or acquire any
other company. Rand Corp., the Santa Monica, CA "think tank,"
for many years refused to take on nongovernmental clients (and
turned away millions of dollars in business by so doing). These
are examples of constraints. Does this company have any
constraints around which planning must take place?"
The quality of control and decision-making in a company
depends almost entirely on the right information getting into the
hands of those that most need it when they need it. How good is
the company's management information system and use of IT.
Print General Internal Analysis
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Core CompPrint after input is complete for this screenYour
Company NameCore Competence AssessmentThe four criteria
that distinguish capabilities from core competencies are related
to competitive advantage and firm performance. Valuable
capabilities are those that create value for a firm and help it
deliver customer value by exploiting opportunities or
neutralizing threats in its external environment. Rare
capabilities are those possessed by almost no current or
potential competitor. Costly-to-imitate capabilities are those
that other firms cannot develop easily, quickly, or
inexpensively. And nonsubstitutable capabilities are those that
do not have strategic equivalents.Criteria for Core Competence
(A capability that meets all 4 criteria is a core
competence)CapabilityIs the capability valuable?Is the
capability rare?Is the capability costly to imitate?Is the
capability nonsubsti-
tutable?Competitive ConsequencesPerformance Implications
Alternative entries for this column:
Competitive disadvantage
Competitive parity
Temporary competitive disadvantage
Sustainable competitive advantage

Alternative entries for this column:
Below-average returns
Average returns
Average to above-average returns
Above-average returns
Print Core Comp Assessment
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ValuePrint after input is complete for this screenYour Company
NameValue Analysis1. Indicate the extent to which the
following value shifts are taking place in the
industry:Operational ExcellenceProduct LeadershipCustomer
IntimacyValue-based Management2. What signs of shifting
value are occurring in the industry?Are there higher than usual
margins in a particular product or product line?Is there higher
than usual sales growth in a particular product or product
line?Is there a higher than expected market valuation in certain
companies or among newcomers to the industry?Is there rising
or declining brand equity for companies in the industry?3.
To what extent are the following activities taking place in the
industry’s traditional value chain using technology or other
enabling
mechanisms:Disintermediation?Transmigration?Relative Scores
for Each Value DisciplineIndicate a score for the company,
competitors and industry on the following value disciplines,
from 1 to 10 (1=worst and 10=best).Operational ExcellenceYour
Company NameCompetitor 1Competitor 2Competitor
3Competitor 4Competitor 5IndustryInformation
SystemsProduction EfficiencyRe-Engineering using S.A.I.L. :-
Simplification- Automation- Integration-
LeadershipOtherOtherOtherSCORE0000000Product
LeadershipYour Company NameCompetitor 1Competitor
2Competitor 3Competitor 4Competitor 5IndustryR&D
Capability (Innovation)Product DevelopmentMarketing and
SalesDistributionBrand Equity ManagementValue Chain
IntegrationOtherOtherOtherSCORE0000000Customer
IntimacyYour Company NameCompetitor 1Competitor

2Competitor 3Competitor 4Competitor 5IndustryCustomer
ServiceCustomer SatisfactionCustomer LoyaltyEmployee
CapabilityEmployee SatisfactionEmployee LoyaltyEmployee
ProductivityOtherOtherOtherSCORE0000000Value-Based
ManagementYour Company NameCompetitor 1Competitor
2Competitor 3Competitor 4Competitor 5IndustryManagement
SkillsMaking Managers into OwnersManagerial
PerformanceOtherOtherSCORE0000000TOTAL
SCORE0000000Note: This tool has been adapted from a
version created by Cal Poly Pomona MBA Students Karie Cole,
David Tang and John Walker, Winter 2000.
Rate from 1 to 5, which value disciplines the company's
industry seems to be shifing towards (1=industry shifing
towards, 5=industry shifing away from)
Operational excellence is a strategic approach that focuses on
improving production and delivery mechanisms. Companies
that have successfully developed operational excellence include
Dell, Wal-Mart, Southwest Airlines and Federal Express.
Product leadership is the continuous production of innovative
products and services. These companies are driven by product
improvement and constantly raise the standard by offering
better products and solutions to service problems. Companies
that are successful at product leadership include Johnson &
Johnson and Microsoft
Customer intimacy focuses on obtaining customer loyalty and
the foundations of customer service which includes employee
satisfaction. These companies tailor services to customers'
changing needs. Companies that have focused on and have been
successful at customer intimacy include Nordstrom and Home
Depot.
Value-Based Management is a framework that encourages
management to create value by providing incentives to
pursueprojects that provide capital at returns that exceed the
cost of capital. It also includes incentives for management
approaches that promote an environment of learning,
empowerment, collaboration and continuous change.

Companies that have focused on value-based management
include Westinghouse and Marriott.
Indicate the presence or non-presence of the following
categories within the industry.
Ranking: 1=No, 5=To a large extent.
Have competitors or participant in an existing value chain*
taken the place of traditional participants in that value chain?
*Value Chain: The entire sequence of value-added processes
that transform raw materials into end-user products in stages.
The sequence of value-added activities a company performs to
produce a product or service from R&D through production to
after-sales service.
Ranking: 1=No, 5= To a large extent.
Have new competitors from completely different industries
entered the industry's market?
Rank the company, competitors and industry on the following
value disciplines listed, from 1 to 10 with 1=worst and
10=best.
Operational excellence is a strategic approach that focuses on
improving production and delivery mechanisms. Companies
that have successfully developed operational excellence include
Dell, Wal-Mart, Southwest Airlines and Federal Express.
Companies with updated information systems allow their
operations to run more effectively and add value to the overall
efficiency of operations.
The operation that is set up for efficiency will streamline the
production process, thus adding value to the company's bottom
line. Extensive and ongoing use of continuous quality
improvement, statistical process control, and automation are
examples of ensuring production efficiency. To what extent
does the company implement tools to ensure production
efficiency?
Reducing non-value added activities could reduce the cycle time
of an operation without requiring any increased use of
information systems, personnel or other company resources. To

what extent does the company implement work simplification
methods?
The integration of increased workforce empowerment and better
use of information and automation systems will improve the
operation and reduce labor. This step integrates functions
within a single core process.
Multiple core processes within a business are integrated to
include extended enterprises, e.g., SCM (supply-chain
management) and CRM (customer-relationship management)
systems, where appropriate.
To what degree do production leaders implement the strategic
plan at the operational level? This includes the "more is better"
approach in regard to implementation of work teams, employee
empowerment, downward delegation, and the promotion of
collaboration, learning and change.
Include other relevant performance measures within the
Operational Excellence section.
Product leadership is the continuous production of innovative
products and services. These companies are driven by product
improvement and constantly raise the standard by offering
better products and solutions to service problems. Companies
that are successful at product leadership include Johnson &
Johnson and Microsoft
The degree of continual innovation of products and services and
the extent of the ability to come up with innovative ideas,
technologies, and processes.
The ability to improve existing products and develop new ones
for specific markets.
The extent to which a company is innovative, using non-
traditional methods for marketing and selling products and
services.
The degree of close integration with downstream value chain
participants
The extent to which the company develops, strengthens, and
manages its brand equity.
The extent to which enterprise networks develop upstream and

downstream value chain participants
Include other relevant performance measures within the Product
Leadership section.
Customer intimacy focuses on obtaining customer loyalty and
the foundations of customer service which includes employee
satisfaction. These companies tailor services to customers'
changing needs. Companies that have focused on and have been
successful at customer intimacy include Nordstrom and Home
Depot.
Consumers are value-oriented and seek results and service
quality that exceed the price and acquisition costs they incur for
a service. If services are difficult to obtain, a cut-rate price will
not produce high value to the customer. On the other hand, a
service may be of high value if it is convenient enough for the
customer. In this case, s/he may be willing to pay a relatively
high price and any other costs to acquire the service. The extent
to which a company places a high emphasis on service is the
extent to which it satisfies the customer.
Customer satisfaction factors may vary among industries, but
may include factors such as speed, efficiency, quality of
service, quality of product, perceived value, pleasantness,
follow-through and problem resolution. High levels of
customer satisfaction are closely correlated with high levels of
customer loyalty.
Customer loyalty is the degree to which customers repurchase a
company’s services or products. Customer loyalty is a more
important determinant of profit than market share in a wide
range of industries according to a study by Reicheld and
Sasser*. How loyal are your customers to your services or
products?
*Frederick F Reichheld and W. Earl Sasser, Jr., Zero
Defections: Quality Comes to Services, Harvard Business
Review, September-October 1990, pp105-111.
Employee capability is the extent to which employees believe
they can accomplish their jobs. It is also the extent to which

employees are given the resources, tools and autonomy to
accomplish their responsibilities. Employee capability is
strongly linked to employee satisfaction.
Employee satisfaction is influenced by the internal quality of
life, which is the feeling employees have toward their jobs,
colleagues, and companies. This feeling can be shaped by
factors such as attitudes employees have toward one another,
how they serve each other within the company, physical
surroundings, workplace safety and, in general, “how things get
done”. High levels of employee satisfaction in most industries
are associated with high levels of employee loyalty.
One measure of employee loyalty is employee turnover. Highly
successful companies typically have annual turnover rates of
less than 5%. High employee retention rates are associated
with high levels of employee satisfaction, high productivity and
high profits.
High levels of productivity are strongly correlated with
customer service value (as in #1). How does the company’s
employee productivity stack up to competitors and to internal
standards? Is there room for improvement? If so, start by
examining employee capability.
Include other relevant performance measures within the
Customer Intimacy section
Value-Based Management is a framework that encourages
management to create value by providing incentives to pursue
projects that yield returns that exceed the cost of capital. It also
includes incentives for management approaches that promote an
environment of learning, empowerment, collaboration and
continuous change. Companies that have focused on value-
based management include Westinghouse and Marriott.
The management teams in a company are what make up the
character and success of a company. To what extent is the
company investing in the knowledge and skills of good
management teams? Does management promote overall
(personal and organizational) learning, creativity, collaboration
and change?

To revitalize and redirect managerial incentives, companies
should give managers bonuses that are a share of EVA. This
helps to motivate them to create value and make them think and
behave like owners. Basing bonuses on attainment of planned
level of performance only makes managers manage earnings and
expectations of the corporate office instead of maximizing
value.
Do the performance ratings for managers include the degree to
which they choose and successfully implement projects that
provide returns that exceed the cost of capital? Do they take
into the account the extent to which management successfully
develops and implements competitive strategies?
Include other relevant performance measures within the Value-
Based Management section.
The term "value disciplines" was developed by Treacy and
Wiersema* to describe different ways companies create value
for customers. They describe three general strategies that have
been successfully used by many companies: Product
Leadership, Operational Excellence, and Customer Intimacy. A
fourth strategy not included in Treacy and Wiersema's model,
involves the dimension of Value-Based Management. Most
successful companies excel in at least one of these dimensions
and have, as a result, strengthened their strategic focus. By
fully developing at least one of these value disciplines, a
company can create a gap between itself and its competitors.
By fully developing two or more of these disciplines, an even
wider gap can be attained. Based on these concepts, this
spreadsheet assists a company to rate its performance in these
four value disciplines and compare it to the industry,
competitors, and itself. It will help the company identify where
its strengths and weaknesses lie and provide a frame of
reference from which to focus desired value-added activities.
*Cornelis A. de Kluyver, Strategic Thinking, An Executive
Perspective, 2000, Prentice Hall.
Competitive pressures coming from the market attempts of

outsiders to win buyers over to their products.
Competitive pressures coming from the threat of entry of new
rivals.
Competitive pressures growing out of ability to exercise
bargaining power and leverage.
Competitive pressures growing out of ability to exercise
bargaining power and leverage.
Value
Industry Value Analysis - Relative Scores
SPACEPrint after input is complete for this screenYour
Company NameSPACE AnalysisStrategic position and action
evaluation (SPACE) is used to determine the appropriate
strategic posture for acompany. Financial Strength (FS) and
Competitive Advantage (CA) are the two primary determinants
of a firm'sstrategic position. Industry Strength (IS) and
Environmental Stability (ES) characterize the entire industry.
You are toassign scores (below) for each of the 4 dimensions.
Each factor contains a comment to assist in scoring.
Averages(or average minus 6 as indicated) for each dimension
are plotted on the chart. The result is a four-sided
polygondisplaying the weight and direction (the "thrust") of the
strategic assessment. By adding the results of the two X-
axisdimensions (CA & IS) and the two Y-axis dimensions (FS&
ES), an (X,Y) coordinate is obtained and plotted on the chartto
determine the appropriate strategic posture. Keep in mind that
the SPACE Chart is a summary device and eachdimension
should be analyzed individually as well, especially if any
dimension results in a high or low score.Strategic Dimensions
and ScoringFactors Determining Financial Strength (FS)Factors
Determining Industry Strength (IS)Indicate a score for each of
the following criteria.Indicate a score for each of the following
criteria.Return on InvestmentGrowth PotentialLeverageProfit
PotentialLiquidityTechnological Know-HowCapital Required
Versus Capital AvailableResource UtilizationCash FlowCapital
IntensityRisk Involved in BusinessEase of Entry into
MarketInventory TurnoverProductivity, Capacity

UtilizationEconomies of Scale and
ExperienceOther:Other:Average0.0Average0.0Factors
Determining Environmental Stability (ES)Factors Determining
Competitive Advantage (CA)Indicate a score for each of the
following criteria.Indicate a score for each of the following
criteria.Technological ChangesMarket ShareRate of
InflationProduct QualityDemand VariabilityProduct Life
CyclePrice Range of Competing ProductsProduct Replacement
CycleBarriers to Entry into MarketCustomer
LoyaltyCompetitive Pressure/RivalryCompetition's Capacity
UtilizationPrice Elasticity of DemandTechnological Know-
HowPressure from Substitute ProductsVertical
IntegrationOther:Differentiation, UniquenessOther:Average -
60.0Average - 60.0Strategic Position and ACtion Evaluation
(SPACE)00000Thrust coordinates:X0.0Y0.0<--- DATA IS IN
THESE CELLSFinancial StrengthFS0.0- 0Industry
StrengthIS0.0- 0Environmental StabilityES0.0- 0Competitive
AdvantageCA0.0- 0Descriptions of Strategic
PosturesConservativeAggressiveThis posture is common in a
market which is stable with low growth. Focus should be on
financial stability and product competitiveness. Common
practices for companies in this situation: prune product line,
reduce costs, cash flow improvement, protection of competitive
products, new product development, and entering more
attractive markets.This situation is typical in a very attractive
industry without environmental uncertainty. Financial strength
helps protect the company's competitive advantage. Critical to
this company is risk of entry of new competition. Common
practices for companies in this situation: explore new
opportunities, acquisitions, increase market share, and focus
resources on products that have a competitive
advantage.DefensiveCompetitiveThis posture is common in an
industry which is unattractive where the company lacks
financial strength and lacks a competitive product. Focus should
be on product competitiveness. Common practices for
companies in this situation: retreat from the market,

discontinue products with low profitability, aggressive cost
cutting measures, cut capacity, halt or reduce further
investment.This situation is typical in a company with a definite
competitive advantage in a very attractive industry with some
environmental uncertainty. Critical to this company is
financial strength. Common practices for companies in this
situation: acquire financial resources to increase marketing
effort, increase sales force, expand/improve product offerings,
productivity investments, cost reduction, or merge with cash-
rich company.This model is adapted from Strategic
Management: A Methodological Approach by Rowe, Mason,
Dickel, Mann and Mockler, 1994, p.255-265.
1
2
3
4
5
Yes
No
1
2
3
4
5
Print Value Analysis
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0 = Low
6 = High
0 = Imbalanced
6 = Balanced
0 = Imbalanced
6 = Solid
0 = High
6 = Low
0 = Low
6 = High

0 = Much
6 = Little
0 = Slow
6 = Fast
0 = Low
6 = High
0 = Small
6 = Large
0 = Inferior
6 = Superior
0 = Late
6 = Early
0 = Variable
6 = Fixed
0 = Low
6 = High
0 = Low
6 = High
0 = Low
6 = High
0 = Low
6 = High
0 = Little
6 = Much
0 = Many
6 = Few
0 = High
6 = Low
0 = Large
6 = Small
0 = Wide
6 = Narrow
0 = Few
6 = Many
0 = High
6 = Low

0 = Elastic
6 = Inelastic
0 = High
6 = Low
0 = Low
6 = High
0 = Low
6 = High
0 = Simple
6 = Complex
0 = Inefficient
6 = Efficient
0 = Low
6 = High
0 = Easy
6 = Difficult
0 = Low
6 = High
Add additional factor if appropriate. Keep in mind that higher
score is relatively positive or "good."
Make sure if you do not use the "Other" factor, that there is not
a zero in the score field, as this will affect the average. Simply
leave it blank.
leave it blank.
leave it blank.

leave it blank.
Stands for Strategic Position and ACtion Evaluation. A tool to
help determine the appropriate strategic posture of a firm.
Involves plotting competitive advantage, industry strength,
financial strength, and environmental stability on a two-
dimensional graph. Each of these four dimensions itself
comprises a number of factors that are evaluated independently
and then combined to yield an average score. The resulting plot
could end up favoring one of four quadrants (the strategic
postures), which are aggressive, competitive, defensive, and
conservative
SPACE
StrategyPrint after input is complete for this screenYour
Company NameAlternatives Analysis and ChoiceStrategies
Developed Using TOWS MatrixSO Strategies0000WO
Strategies0000ST Strategies0000WT Strategies0000Key
External Strategic Issues1.2.3.4.5.Key Internal Strategic
Issues1.2.3.4.5.6.7.8.9.10.11.12.Strategic AlternativesBundle
1Bundle 2Bundle 3Bundle 4Name Bundle 1Name Bundle 2Name
Bundle 3Name Bundle 4Describe each bundle fullyCriteria
MatrixChoose NO MORE than 6 of the following criteria to use
in your evaluation of the bundles:Choose the most relevant of
the following positively correlated criteria to use in your
evaluation of the bundles. To add your own, overwrite "Other"
cells.Choose the most relevant of the following negatively
correlated criteria to use in your evaluation of the bundles. To
add your own, overwrite "Other" cells.Fit with corporate
cultureExtent to which culture must changeAdverse effect on
competitorsCapital investment requiredContribution to
shareholder valueLikelihood of competitive retaliationGrowth
in revenuesTime to breakeven pointGrowth in profitsOverall

riskinessReturn on investmentOtherStrength of value
propositionOtherIncrease in bargaining
powerOtherOtherOtherOtherOtherCriteria MatrixIndicate a
score from 0 to +10 (10 being best) for the positively correlated
criteria chosen (indicated by "P")Indicate a score from -10 to 0
(0 being best) for the negatively correlated criteria chosen
(indicated by "N")Bundle 1Bundle 2Bundle 3Bundle 4Name
Bundle 1Name Bundle 2Name Bundle 3Name Bundle 4Fit with
corporate culturePAdverse effect on competitorsPContribution
to shareholder valuePGrowth in revenuesPGrowth in
profitsPReturn on investmentPStrength of value
propositionPIncrease in bargaining powerPOtherPOtherPExtent
to which culture must changeNCapital investment
requiredNLikelihood of competitive retaliationNTime to
breakeven pointNOverall
riskinessNOtherNOtherNOtherNOtherNOtherNOVERALL
SCORE00004Indicate Bundle ChoiceName Bundle 1Name
Bundle 2Name Bundle 3Name Bundle 4Bundle Description(will
appear based onchoice above)Rationale for selecting the
preferred choice
Aggressive -
Strength on all dimensions
Competitive -
Comp. advantage in good
industry, but weak in financial
and environmental stability
Defensive -
Relative weakness
on most dimensions
Conservative -
Financially sound, but
market is very competitive
and is waning
Print SPACE Analysis
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(High)

(High)
(Low)
(Low)
A key internal strategic issue is a decision the company might
make about its future that would have a strategic impact on it,
e.g., merge with or acquire another company, focus on
technological development, expand internationally, diversify,
etc. Think of strategic issues also as something that keeps the
CEO up at night or that is constantly on his or her mind. List
up to 12 strategic issues. Many come from your earlier listings
of weaknesses, opportunities, and threats.
A key external strategic issue is an external force or impending
event that could impact the company dramatically, e.g., an
economic downturn, upcoming regulation, or an advance in a
new technology.
Create "bundles" of strategic alternatives based on the strategic
issues identified above. You may choose to use two, three or
four bundles. As you develop them, check that they are
mutually exclusive (doing any one means you cannot do the
others) and plausible (both feasible and leading to a successful
outcome). Bundles may contain elements of strategic intent,
strategies, programs, or other components. Everything you
intend to do if adopting a bundle must be in it at this time. To
distinguish the bundles, choose a label for each one that
captures the essence of it and write it on the gold-highlighted
line.
A number of criteria are listed here to assist you in choosing
which bundle the company should adopt and pursue. All the
criteria may not be relevant in your case. Use only those (plus
any additional ones you can think of) that pertain to your
situation.
Tell here which bundle you chose and why. Don't just tell why
the bundle you chose was good. You must ARGUE for why it is
better than the others, or WHY you specifically rejected the
ones you did not choose.
These strategies will automatically appear based on input from

"TOWS Matrix."
Print Strategic Analysis
Bundle 1
Bundle 2
Bundle 3
Indicate Selection
Click to Update Matrix Before Entering Scores
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Bundle 4
RecommendationsPrint after input is complete for this
screenYour Company NameRecommendationsDecisions for the
Next Three YearsINPUT SHEETEnter Data to be used for
chartingMost Recent YearRevenuesNet Income After Taxes
(NIAT)Overwrite cell B11 with first
yearObjectives200520062007Use this section to indicate annual
changes in absolute dollarsRevenues- 0- 0- 0Net Income After
Taxes (NIAT)- 0- 0- 0Use this section to indicate annual
changes as percentage changesRevenuesNet Income After Taxes
(NIAT)OtherOtherStrategic IntentProgramsTrigger-Contingency
Pairs200520062007TriggerContingencyTriggerContingencyTrig
gerContingency
Express the objectives for Revenues and NIAT as either an
absolute $ figure or a percentage increase over the previous
year. Use the appropriate section (either $ or %) for your input
-- do not enter data in both sections. This allows Excel to chart
your results.
For financial ratio objectives, it is best to state the value of the
ratio itself as the objective.
This has to do with market shares and changing or defending
your ranking in the industry. E.g., if the market leader, you
should elect to maintain your leadership position; if not, you
might want to become #4 from #5, or overtake the leader, or
maintain your #2 position, or defend against #8 who is creeping
up on you to challenge you, etc.
These are actual activities the company should do in order to

achieve the objectives set for a particular year. Remember that
programs which take several years to implement must be started
in the next year, even though they would not be completed that
year.
Murphy's Law ("if anything can go wrong it will") is alive and
well. Therefore we should acknowledge it. A trigger is
something that might go wrong in the future, such as a key
result not being achieved, loss of a key manager, an assumption
being proved wrong, etc. In order to know precisely when the
back-up plan (contingency) should be invoked, the trigger
should be quantitatively expressed.
A contingency plan is a back-up plan. Use it only when a trigger
point is reached. It must be something the company would do
differently if the trigger occurred. Two types of contingency are
not acceptable: (1) changing the strategy to one you have
previously rejected, and (2) doing something you do regularly
that gave rise to the trigger in the first place. When things go
wrong, a good manager tries first to correct or improve
implementation of the strategy, i.e., operations or programs.
Only when those have been tried and failed should you consider
changing the strategy.
Enter in absolute dollar values
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MissionPrint after input is complete for this screenYour
Company NameMission StatementsCURRENT MISSION
STATEMENTPROPOSED MISSION STATEMENT
A mission statement is a concise statement of a company's
reason for being. It should contain what products or services the
company produces for which target market, as well as how it
considers itself different or unique. Avoid statements of values,
strategies, or objectives. Typically, once formulated, it should

guide and constrain the activities and strategies of a company.
However, only after a thorough strategic analysis of a company
is someone able to decide whether an existing mission statement
is still relevant or ought to be changed. If it should be changed,
make sure it embraces what the company does now and what it
is going to do over the next few years. Try not to formulate it
too broadly (it will fail to guide) or too narrowly (it will force
the company to miss out on opportunities). Make it accurate,
short, and memorable.
A mission statement is a concise statement of a company's
reason for being. It should contain what products or services the
company produces for which target market, as well as how it
considers itself different or unique. Avoid statements of values,
strategies, or objectives. Typically, once formulated, it should
guide and constrain the activities and strategies of a company.
However, only after a thorough strategic analysis of a company
is someone able to decide whether an existing mission statement
is still relevant or ought to be changed. If it should be changed,
make sure it embraces what the company does now and what it
is going to do over the next few years. Try not to formulate it
too broadly (it will fail to guide) or too narrowly (it will force
the company to miss out on opportunities). Make it accurate,
short, and memorable.
Print Mission Statements
Goto START
VisionPrint after input is complete for this screenYour
Company NameVision StatementsCURRENT VISION
STATEMENTPROPOSED VISION STATEMENT
This is a concise statement of where you would like to see your
company 5-10 years from now.
A vision statement, in many ways, is more important as a
direction-setter for a company than is a mission statement. It
answers the question of where a company aspires to go and what
it aspires to become in the future (5-10 years). It embodies the
vision articulated by the company's leader. To be more
effective, a vision statement should contain numbers that give it

greater precision. Like a mission statement, a vision statement
should be short and memorable, but in addition should be
inspiring and achievable. Remember it's the VISION that drives
the company, not the mission.
This is a concise statement of where you would like to see your
company 5-10 years from now.
A vision statement, in many ways, is more important as a
direction-setter for a company than is a mission statement. It
answers the question of where a company aspires to go and what
it aspires to become in the future (5-10 years). It embodies the
vision articulated by the company's leader. To be more
effective, a vision statement should contain numbers that give it
greater precision. Like a mission statement, a vision statement
should be short and memorable, but in addition should be
inspiring and achievable. Remember it's the VISION that drives
the company, not the mission.
Print Vision Statements
Goto START
Cover SheettwStrategic AnalysisforYour Company NameA
Public Corporation0Prepared by0Company
SnapshotSegmentIndustry00Products/Services0CEO NameCEO
Style00No. LocationsHow Many States/Countries?00Number of
EmployeesNo. Years in Business00Parent
Corporation/CompanyTicker SymbolStock Price Range (12 Mo)
Competition OutputYour Company NameCompetitive Analysis:
Snapshot of the CompetitionType of CompetitionBasis of
Competition00Market Share DataYour Company
Name0%Competitor 10%`Competitor 20%Competitor
30%Competitor 40%Competitor 50%Others0%0%Are Market
Shares Stable or Changing?Critical Success Factors - Weighted
Score ResultsFactorYour Company NameCompetitor
1Competitor 2Competitor 3Competitor 4Competitor
500000000000000000000000000000000000TOTAL
WEIGHTED SCORE000000Matrix of Strategic FactorsStrategic
FactorYour Company NameCompetitor 1Competitor
2Competitor 3Competitor 4Competitor 5Competitive

Advantage000000Core Competence000000Strategic
Intent000000Geographic
Scope000000Positioning000000Generic Strategy000000Things
that Your Company Name does better than the
competition:Competitor 1Competitor 2Competitor 3Competitor
4Competitor 50000000000Things that the competion does better
than Your Company Name:Competitor 1Competitor 2Competitor
3Competitor 4Competitor 50000000000
Market share is calculated typically using total dollar sales in
the industry, taking into account not only number of units sold
but also their price.
Sometimes, market share is calculated on a different basis, e.g.,
number of screens in the movie-theater industry, or installed
base in the telecommunications-switching industry, or # beds in
hospitals.
Enter top five competitors below your company and market
share percentages.
Competition Output
&A
Page &P
Porter OutputAdapted from Michael E. Porter, "How
Competitive Forces Shape Strategy," Harvard Business Review
57, no. 2 (March-April 1979), pp. 137-45.Porter's Five Forces
Model of CompetitionABC Corp.POTENTIAL NEW
ENTRANTSIntensity of Rivalry:Bargaining Power of
Buyers:RIVALSSUPPLIERS OF KEY INPUTSYour Company
NameBUYERSCompetitor 1Competitor 2Competitor
3Competitor 4Competitor 5SUBSTITUTE PRODUCTSThreat of
Substitutes:Barriers to Entry:
Competitive Advantage
Core Competence
1
2
3

4
5
Critical Success Factors - Total Weighted Scores
Porter Output1
&A
Page &P
[1]Step2!#REF!
1
SWOT OutputYour Company NameSWOT
AnalysisSTRENGTHSWEAKNESSES0000000000000000OPPO
RTUNITIESTHREATS00000000000000000
Recommendations OutputYour Company
NameRecommendationsDecisions for the Next Three
YearsObjectives200520062007Chart DataMost Recent
Year200520062007Revenues0.0%0.0%0.0%Revenues- 0- 0- 0-
0Net Income After Taxes (NIAT)0.0%0.0%0.0%Net Income
After Taxes (NIAT)- 0- 0- 0- 0Other000Other000Strategic
Intent000Programs000000000000000000000000000000Trigger-
Contingency PairsYear 1Year 2Year
3Trigger000Contingency000Trigger000Contingency000Trigger0
00Contingency000
Companies used to engage in five-year planning exercises but,
because of the rapid pace of change, have now switched to a
three-year planning horizon, viewed as the "long term" in terms
of decision-making. Of course, depending on the industry and
company in question, the planning horizon could be
considerably longer, in which case you should feel free to make
the necessary changes, e.g., instead of Years 2 and 3, you might
want to substitute Years 5 and 10.
Recommendations Output
Revenues
Data
Net Income After Taxes (NIAT)
Module1Check boxes - Basic Data1A Public CorporationA
Private CompanyForms - Industry1Lifecycle Stage1Degree of
Vertical Integration1Degree of Technological InnovationScale

EconomiesPurchasingDistributionManufacturingAdvertising1In
dustry Profitability1Degree of ConcentrationSTRATEGYFit
with corporate cultureAdverse effect on
competitorsContribution to shareholder valueGrowth in
revenuesGrowth in profitsReturn on investmentStrength of
value propositionIncrease in bargaining powerOtherOtherExtent
to which culture must changeCapital investment
requiredLikelihood of competitive retaliationTime to breakeven
pointOverall riskinessOtherOtherOtherOtherOther
&A
Page &P
HBR CASE STUDY
For years, HomeStar was the most
inventive company in the appliance business.
Now, upstarts are stealing its thunder, and its top engineer
doesn't seem to care.
The Sputtering
R&D Machine
(

A
)H al Marden watched his morning muffin spin slowly in the
lunchroom micro- wave, he marveled at how this smal l
appliance had forever changed the way people cook and eat.
"The perfect invention;' he mused to himself. " Small, fast,
convenient, and energy- efficient. We thought microwaves
would do away with conventional ovens. But instead, they
became a whole new category of kitchen applia nce.”
After 2s years with HomeStar, Hal was still
fascinated by the appliance business - and by the innovations
that fueled it. As CEO for the last 12 years, he'd steadfastly
maintained the company's commitment to research and
development, vowing to uphold HomeStar's reputation for
being "the first, the best, the only" name in applIances.
That's why the latest turn of events was so distressing.
Hal grabbed his coffee and muffin, retreated
to his office, and closed the door, relieved that his assistant
wasn't in yet. Then he reread the
by Martha Craumer
newspaper article "Gaga for Retro;' the head- line proclaimed.
"Vanguard, already the fastest- growing appliance maker in the
country, has another major hit with its new retro line of
refrigerators, ranges, and dishwashers. Rounded lines, chrome
detailing, and color s like tur- quoise, yellow, and red give the
appliances the look and feel of classic automobiles. And con-
sumers seemingly can't get enough of them. 'We've got an
emotional hit on our hands that cuts across demographic lines;
said a Vanguard spokesperson. 'People are having a love affair
with these appliances. At the same time, we're showing old-
schoolers like HomeStar that the industry can move beyond a
needs-based market and appeal to consumers who follow
trends and seek luxury"'
Hal folded the paper and shook his head. As much as 1t pained

him to see his company called "old school;' he had to admit that
HomeStar had stumbled lately."We should've seen this
coming;' he thought. "For the last three years the auto industry
has been looking back in time for
HBR's cases, which are fictional, present common managerial
dilemmas and offer concrete solutions from experts.
THE INN O VATI VE ENTERPRI SE AUGUST 2002 25
HBR CASE STUDY
inspiration. The PT Cruiser, the Mini Cooper, the VW Bug - all
the biggest hits are riding a wave of nostalgia. How did we miss
it? We're losing our edge."
This wasn't the first time HomeStar had been beaten to the
punch. Just six months earlier, Vanguard had pulled off another
coup: Its line of "Clean 'n' Eat" refrigerators had been the
runaway hit of the Homebuilders trade show. Featuring a
separate compartment for triple- washing and draining fruits
and vegetables, the new line touted the importance of fresh
produce and healthy eating and the dangers of lingering
pesticides. The refrigerators flew off showroom floors.
Deli cate Cycle
An urgent knock interrupted Hal's thoughts. "Come in;' he
answered wearily. Kelly Dowd, the company's head of
marketing, stomped into his office. "Did you read about
Vanguard?" she asked. "They've done it again-and insulted us in
the process. How are they getting these products out so fast?"
"Well, they're not exactly technological breakthroughs;· Hal

smiled wryly. "But Vanguard does seem to have a finger on the
pulse of the consumer. They're doing what we should be doing.
It seems we've dropped the ball:'
"That's because we're focusing on the wrong things. Charlie
should pull his head out of the research lab and knock on the
kitchen doors of a few real people for a change. He's obsessed
with 'smart' appliances and this 'networked home' concept. But
you know what? Except for a handful of techno-geeks,
consumers aren't particularly interested. Most people we talk to
couldn't care less.
Hal flinched. Charlie Hamad was one of his heroes. A brilliant
and visionary engineer, he'd headed HomeStar's R&D unit for27
years. Enor- mously respected outside the company and beloved
within it, he had spearheaded almost every major technological
advance in the in· dustry; he was a key reason for HomeStar's
past success.
"Look, Kelly," said Hal, "market research is your area. So if
there's a disconnect between what your group thinks the market
wants and what R&D is actually producing, then we need

to work on fixing that. Remember, Charlie's had a huge hand in
making this company what it 1s." Kelly shook her head. "You
mean making this company what it was. The market's changing,
Hal. The rate of product innovation is skyrock- eting. Global
competition is growing - those guys would love to eat us for
lunch. And consumer tastes are changing. People want more
choices. Some folks get a new car every two years. Why
shouldn't they upgrade their appliances, too? We've got to get
more new stuff out
there, and fast!'
Kelly was right. The market was changing dramatically. For
years, innovation in the industry had focused on incremental
gains-making appliances that were a little faster, a little quieter,
or a little more efficient. As the prod-

ucts themselves became virtually interchange-
Martha Craumer is a business writer based in Cambridge,
Massachusetts.
able, the dominant players began competing on price, eroding
profit margins. But in the last
26 HARVARD BUSINESS REVIEW
The Sputtering R&D Machine

18 months, a wave of innovation had washed over the industry.
Appliance makers had begun recombining existing technologies
to create entirely new products and designing them in appealing
ways. Suddenly, the appliance industry was more like the
consumer electronics industry; its rallying cry had become "to
get customers to buy new products, create new products."
Now, more than ever, churning out new products was critical to
HomeStar's success. But unfortunately, Charlie hadn't changed
with the times. He pooh-poohed the new, flashy products -
despite their higher profit margins, the fact that they
encouraged consumers to upgrade more often, and their pop-
ularity with builders seeking the latest thing for their model
homes. And that put HomeStar in the unenviable position of
having to play catch-up.
"The next Homebuilders show is six months away;' said Kelly.
"If we don't roll out something new something that gets people
excited - we might as well kiss our reputation for innovation
good-bye. We can't afford to lose our edge. Un- less we want to

go the way of the icebox:'
Just thenJ.J. Knight, HomeStar's PR manager, poked her head
into Hal's office. "Hey Hal, the 'What's New' section of
HomeView magazine is on the line. Do we have anything for
them this month?"
"Ouch! Sore subject, J.J. Tell them we do, but we can't talk
about it right now-for competitive reasons."
Combustion Hazard
Charlie Hamad's office was a mess. A white- board covered
with scribbles, flowcharts, and yellow Post-its spread across
one wall. Stacks of magazines and files filled every inch of
space.
THE INN OVATI VE ENTERPRISE AUGUST 2002 27
HBR CASE ST U D Y
"Never trust a man with a tidy desk;' he was fond of saying. "A
tidy desk is the sign of an un- tidy mind." With a PhD in
mechanical engineering and a passion for technology, Charlie
oversaw HomeStar's global research, design, and product
development groups. A wall filled with design and engineering
awards attested to his record of accomplishment. Eccentric but
brilliant, Charlie was a magnet for smart, dedi- cated scientists,
designers, technologists, and engineers, and he inspired intense
loyalty among his people.
Hal removed a pile of magazine from a chair and sat down.
"Did you read about Vanguard's new retro line?" he asked.
Charlie snorted derisively. "Form over func- tion. Nothing new
there but a fancy paint job and higher prices."

"Consumers are jumping for joy."
"Wait tiII they see our networked appliances. Listen carefully,
Hal:' Charlie paused for
effect. "The networked home is the future. These products will
"They 're superb products, Charlie. From a technology
standpoint, they're the best ones out there. And the margins are
great-we can charge three times more for them. But ours were
still in development when the first ones hit the U.S. market.
Besides losing the early sales, we hurt our reputation for being '
the first: What can we do to speed things up?"
" If you'll recall;' Charlie said, "the folks in marketing were
convinced that American consumer s weren't interested in
water- and energy- saving appliances, that they'd never pay the
premium. Kelly kept pointing to the popularity of gas-guzzling
SUVs as 'proof' that Americans weren't serious about
conservation. I got the distinct message from you and from
others that our energy-saving line wasn't a priority. Re- member
what got the big push instead? Jumbo appliances.''
Hal winced and nodded. Someone in marketing had noticed the
boom in "McMansions ;' those huge houses that people were
building, often after tearing down more modest homes.
"Just keeping up on
the latest technologies isn't enough anymore. You need more
sizzle, less steak."
transform the way we live.
They'll cook, clean, and shop for you - even do your house-
hold chores - using Internet technology. Imagine being able to
automatically restock the fridge when you're out of food or
download recipes right to your oven!"
That and the fact that every new house and major renovation

project seemed to have at its heart a "great room" - a big, open
space that combined the kitchen and living areas - had
convinced a persistent and vocal group within the company that
bigger is better in consumers' minds. But the jumbo appliances
had bombed - the first major failure in HomeStar 's history .
Charlie smiled smugly. "I don't need to re-
"That's the future, Charlie. We need some-
thing now." Hal rubbed his eyes and sighed. "Look, we've got a
problem. We're losing our position as industry leader. We
haven't come up with anything new in months.''
Charlie reminded Hal of the company' s recent line of energy-
saving washers, dryers, and dishwashers, inspired by the
European market. Five years ago, Charlie had set up an R&D
unit overseas to monitor market trends. It was- and continued to
be - an expensive venture, but Charlie felt it was money well
spent. He sur- mised that the fragmented and highly competi-
tive nature of the overseas market s would drive innovations
that hadn't yet hit the U.S. mar - ket- innovations that would
shape the appliance industry's future. One of the first things
he'd noticed was the growing popularity of energy-saving
appliances in Europe , so he'd set about developing HomeStar's
own line, despite opposition within the company.
mind you what a disaster that was. Meanwhile , our energy-
saving appliances were a hit, and now you're asking me why it
took so long. You need to trust my instincts, Hal: '
"Your instincts are legendary, Charli e. That's not the issue.
We've got the biggest trade show of the year in six months and
nothing new to offer. Meanwhile, Vanguard is making new
product announcements every quarter. The industry as a whole
is moving toward fast-cycle innovation. If we can't keep up,
we're sunk:'
" Product extension s and paint jobs aren't innovations. The
fact is, an elegant, technology - driven solution has its own time
frame; it can't be rushed. And I've got my own reputation to

consider. I don't develop crap . Never have, never will.''
"Nobody wants you to develop 'crap.' But we need to make sure
that we' re developing products that consumers want. Frankly,
I'm worried that you're devoting too many resources to net-
28 HARVARD BUSINESS REVIEW
The Sputtering R&D Machine
worked appliances. What if the market doesn't bite? I don't want
to put all our eggs in one bas- ket. I'd like to see you and your
people work more closely with marketing. I think you could
learn a lot from each other - recent missteps notwithstanding.
Maybe you need more face time with them, Charlie." Hal looked
at his watch. "Look, I've got a luncheon to get to. Let's talk
some more when you get back from Europe next week."
Limited Warranty
Hal sank wearily into the back seat of a taxi, grateful for some
time to think. It was increas- ingly clear that whatever had made
HomeStar an industry leader in the past was no longer working.
The market had changed, seemingly overnight. It felt as 1f
everyone 1n the industry was playing by new rules-ones that
HomeStar didn't have. Even worse, Charlie didn't seem to want
them. Maybe it was time for new blood. But Charlie was a
legend, an institution. Making any major change would feel like
a betrayal. Hal didn't usually have time for the Executive
Roundtable luncheons, but he didn't want to miss this one. The
featured speaker was Caro- line Broderick, an old business
school chum, and the subject was timely: "Is loyalty a liability?
Managing in times of change."
Traffic was unusually light, and the taxi pulled in front of the
City Club well before the opening reception. With time on

his hands a rare occurrence Hal decided to indulge in some
impromptu market research. Approach-
ing the maitre d', he introduced himself and asked for a tour of
the kitchen. Hal loved nothing more than talking to consumers
of all stripes and observing how they cooked, cleaned, and
interacted with their appliances. As he toured the kitchen,
noting the oversized range that two sous-chefs were cooking on,
Hal had a brainstorm. Pulling out a small notebook, he Jotted
down a note to himself: "Repackage and reposition jumbo
appliances for institutional use?" Then he joined the reception
in the din- ing room.
Hal sought out Caroline after her talk."Good to see you!"he said
warmly."I enjoyed your pre- sentation. But unfortunately, it hit
a little too close to home." He briefly explained HomeStar's
recent challenges.
Caroline nodded sympathetically."It's tough when markets
change and your people don't.
Sounds like Charlie needs to develop some business savvy.
Just keeping up on the latest technologies isn't enough
anymore. You need more sizzle, less steak:'
"It's hard to find someone who can do 1t all," said Hal. "But
enough about business. How are your children?"
Caroline laughed. "My' children' are19 and 21 now. And, I'm
about to rejoin the workforce full time. Consulting and writing
were great when the kids were younger and I wanted more
flexibility, but I'm ready for something new." She hesitated,
then continued. "I don't know how serious you are about making
changes at Home- Star, Hal, but do you remember Peter Fortuna
from B-school?"
"Of course! The man we thought would be a permanent
student!" Hal said with a laugh After getting a degree in
computer science, an MBA, and a PhD in engineering, Peter had
helped launch a very successful company that offered contract
R&D services to a wide range of industries.
"Peter's company was Just bought;' said Car- oline,"and I know

he's looking for a new oppor- tunity. Just something to think
about."
The traffic on the way back to the office was slow and
congested, like the tangle of thoughts in Hal's head. In his mind,
there were two critical issues. The first was urgent and short
term: How to come up with at least one hot new product for the
trade show in six months when there was nothing in the
pipeline. The second issue - and the most difficult challenge of
his career-was how to fix R&D."Is this Just a fund- ing and
organizational problem that could be solved by a brainstorming
session?" Hal won- dered. "Or is it time for Charlie to move
on?" Peter Fortuna's change of status offered a promising
alternative. Maybe Charlie could be appointed chief technology
officer and move away from running the whole show. "On the
other hand, maybe I should drastically cut back the R&D group
and outsource a larger piece of the pie," he mused. "Or maybe
I'm simply being too impatient. Perhaps, as Charlie says, true
innovation can't be rushed. If he's right about networked
appliances and we get there first, we'll own a huge market:'
It was time for some tough decisions.
How can HomeStar revitalize its R&D efforts?
Four commentators offer expert advice.
THE INNOVATIVE ENTERPRISE AUGUST 2002 29

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