1. Introduction. 2. The Porter's approach: competitive strategies (cost advantage, differentiation advantage and specialization). 3. The Ansoff's approach: the Growth Matrix (market penetration, product development, market development, and diversification). 4. An integrating approach.
© Alfonso VARGAS SÁNCHEZ 1
Hope is not a strategy, specially when internationalizing the company is the intention
Strategic Analysis: Compulsory Questions
What business is the organisation in? manufacturing/retail, etc. Who do they compete with, and how do they compete? Who are the organisation’s stakeholders? Key stakeholders & their influence. What are the external drivers for change? – PEST model, macro environment. – Five Forces model, micro/industry environment. How does the organisation gain value? – Resource audit, tangible & intangible. – Value Chain and Value System analysis. Assess the balance in the corporate portfolio, BCG matrix. How should I compete? Porter’s generic strategies: low cost, differentiation, specialization. What are my strategic movements? Mergers/Acquisitions, etc. 3
Mission - Vision - Values PEST analysis
P.C. Industry Attractiveness S C.C. S.P. B
(threats & opportunities)
activities & linkages
F.I. T.D. HH.RR. PR.
Value System (linkages):
other SBUs (synergies) & suppliers buyers’ value chains
Strategy formulation, at three levels: C–B–F Company’s Competitive Position (Resourcebased View): cost advantage or uniqueness (strengths & weaknesses)
ELEMENTS LEVELS BUSINESS SCOPE RESOURCES & CAPABILITIES COMPETITIVE ADVANTAGES SYNERGIES
Exclusivity perceived by the customer
Position of low costs
Broad (the whole DIFFERENTIATION sector) Reduced (only one segment)
FOCUS or NARROW SEGMENTATION
THE LOW COST PHENOMENON
Two basic ways: -Productivity. -Economies of scale & learning/experience. 7
COSTS LEADERSHIP RESOURCES AND APTITUDES -Sustained investment of capital and favourable access to financial markets. ORGANISATIONAL REQUIREMENTS -Strict control of costs. -Detailed and frequent control reports. RISKS OR LIMITATIONS -Technological change that cancels out the experience gained or investment made. -Competitors who learn easily and rapidly. -Stagnation of the product or of the marketing. -Inflation of costs that annuls the previous price differential.
-Clearly defined organisation -Special aptitudes for and responsibilities. process engineering. -Incentives based on meeting -Close supervision of quantitative objectives. work and operations. -Products designed for ease of manufacturing. -Low cost of distribution.
Reading: “Designers on quest to build $12 computer”
RESOURCES AND APTITUDES ORGANISATIONAL REQUIREMENTS RISKS OR LIMITATIONS
-Significant aptitudes -Coordination between the functions of R&D, product in marketing and in product engineering. development and marketing. -Strong investment -Qualitative assessments in R&D. and incentives. -Prestige in quality -Capacity for and technology. understanding the market -Full cooperation of and how it changes. the distribution -Appropriate channels. organisational structure for -Long tradition in the stimulating and rewarding sector, or a unique creativity. combination of aptitudes obtained in other business activities.
-Competitive levels of product prices, in accordance with a strategy of minimum global cost. -The customers no longer value the product's factors of differentiation. -As the industry matures, imitation reduces the perceived differentiation.
Mention some brands for which you are willing to pay a premium price