Business Analysis Models #1 Model: Strategic Planning Model Stage 1: Strategic Position Stage 2: Strategic Choices Stage 3: Strategic

Implementation

#2 Model: Johnson and Scholes Three Levels of Strategy Corporate Strategy

Business Strategy

Operational Strategy

#3 Model Johnson and Scholes Strategic Lenses

Ideas Design

Experience

#4 Model: Mendelows Stakeholders Mapping

Low High

3. Keep Informed

1. Key Players (Most Important Stakeholders) 2. Keep Satisfied

Interest 4. Minimal Effort

High

Power

Low

#5 Model: Charles Handy Types of Culture Power culture Role culture Task culture Person culture Heavily centralized. Allows quick response to changes in environment Few people make the decisions in the organisation Lots of formalized procedures. Very bureaucratic. Useful in an environment that is stable. Emphasis on getting tasks done. Work is complex. Rules are hardly followed . Works well in complex, unstable environments. Purpose is purely to look after the individuals

#6 Model : Miles and Snow Strategic Cultures Organizations and the type of strategies they try to follow Defender Like strategic options that have worked in the past organizations Low risks. Secure markets Prospector Like options that would deliver results even if it entails high risks organizations Analyzer Will move into new areas only after someone else have done so organizations Reactor Do not plan ahead organizations #7 Model: Johnson and Scholes - The Culture Web Culture is made up of seven elements. Tells why we do things like we do. Rituals and routines Symbols Control Systems Organizational structures Power structures Stories The Paradigm What procedures are emphasized? Are status symbols used as rewards? Employee of the month. What are rewards given for? What is most closely monitored? How tall/flat? How much centralization is there? Does news in the Co. focuses on successes or failures? What assumptions are taken for granted?

#8 Model: Johnson and Scholes Key Drivers of Change in the business environment Market Globalization Cost Globalization Global competition Worldwide customers. Facilitated mainly by the internet Worldwide suppliers. Being able to get products and services from anywhere in the world Worldwide competitors/rivals

In addition to these if you have a UK Company use: Economic Environmental Legal Conditions are they are at the time of the exam The move towards more environmentally friendly products Minimum wage for unskilled labor

#9 Model PESTEL How to analyse the Macro Environment P E S T E L Political Economic Social Technological Environmental Legal Govt.s policy on education & infrastructure State of the economy, interest rates & tax levels Attitudes, demographics and household structures New technologies making current products obsolete The move toward environmentally cleaner products Changes in law making it harder or more expensive to operate

#10 Model - Porters 5 Forces Competitors (new) Competitors (existing) Customers Suppliers Substitutes Entrants of new competitors cause prices to drop To prevent new entrants barriers to entry are needed (high fixed costs or high capital requirements) Lots of rivalry would cause profit margins to be lower. Market growth is usually slow. Powerful customers prevent companies from increasing prices or implementing other changes Powerful suppliers cannot be stopped from increasing the cost of their supplies Substitutes are of three types: Direct, Indirect and Monetary Direct customer buys the same product from another company Indirect customer buys a substitute product for the original one Monetary customer buys a product that is not similar to the original. E.g takes a vacation instead of purchasing a TV.

#11 Model Porters National Diamond Reasons why companies in certain countries are more competitive (successful) than others. Factor Conditions y y y y y y y y y y y y y Natural resources timber, raw materials Climate (some products can only grow in some countries) Communication infrastructure (roads, bridges etc.) Knowledge bases and logistic systems Attitude to short term profits National culture Level of domestic rivalry Market segmentation of home market Sophistication of buyers (Japanese demand high quality vehicles) Position within product life cycle in home market Anticipation of buyer needs Strengths of suppliers Quality of suppliers

Firm Strategy Structure & Rivalry Demand Conditions

Related and Supporting Industries

Porters national diamond must only be used when a company is moving to another country. Will it gain or lose benefits?

#12 Model: The nine M Model Nine possible areas where an organization can be strong:         Machinery Money Materials Men and Women Makeup (culture) Markets Management information Management Methods (processes)

#13 Model: Porters Value Chain Porter divides a business into nine different areas: The five primary activities: (What customers are interested in) Inbound logistics e.g. JIT system Operations Manufacturing the products Outbound logistics Getting the products to the customers Marketing and Sales After sales service Service The four secondary activities: (what happens at Head Office) Firm infrastructure How is the Co. organized? Tall/ flat Human Resource mgt. The quality of staff Technology Development Technology is anything that is not people Procurement Buying the things that we store. Economies of scale Who our suppliers are etc.

#14 Model Porters Value Network This is an extension of the value chain to include customers and suppliers. For example: Customers retailer selling low priced basic products. The customer value chain will place heavy emphasis on low cost inbound logistics means that

The manufacturers value chain should emphasize low cost production means that

The manufacturer will choose suppliers whose value chain emphasize low cost materials.

#15 Model: The product Life Cycle Introduction Growth Maturity Senility Low sales and the problem of attracting new customers Product grows in popularity. May enter new markets Profits at their highest but may have many rivals Sales fall to zero

#16 Model Nanaka and Takeuchi Tacit and explicit knowledge Tacit knowledge is knowledge that staff possesses Explicit knowledge is knowledge that has been recorded by the organization Nanaka and Takeuchi say knowledge can be transferred by: y y y y Socialization informal exchanges/discussions where knowledge is shared Externalization Formal. The knowledge is documented or recorded. Internalization using own ideas to Combination putting together different areas

#17 Model: Ansoffs Growth vector matrix

Existing Markets New Markets

Product Development

Diversification - Direct - Indirect

New Products

Market Penetration

Market Development

Existing Products

#18 Model: Porters Generic Strategies One possibility is to change how the company competes. Porter describes three possibilities: Cost Leadership Being the cheapest within a category Product differentiation Being the best within a particular category Focusing on a particular type of customer

#19 Model: Johnson and Scholes Strategic Clock Strategies can be placed on a clock 1 No frills Low price 2 3 4 5 6 7 8 Low price Hybrid Differentiation Focused differentiation Failing strategy Failing Stretegy Failing Strategy Low Price Low price Medium Price High Price High Price High Price Medium price

Low added value Medium added value High added value High added value Medium added value Medium added value Low added value Low added value

Used for market entry need a great deal of customers who are price conscious

Use cost leadership to provide a better value product than rivals Needs low cost base (economies of scale). Can be used short term for the market entry or to build up market share. Aim is to build up market share by charging reasonable price Looks for high premium for high degree of differentiation

#20 Model: The BCG Matrix

Low High

Market Share Question mark Stars

High

Market Growth Dogs

Low

Cash Cows

#21 Model: Johnson and Scholes - Strategic Rationale The three ways that Head Office can create value in the business These businesses find undervalued companies, acquire them and then aim to Portfolio Managers Synergy managers Parental developers
improve profitability. These businesses look for synergy between existing and future SBUs. These companies look to use the competencies based at Head Office, such as tight financial control, to improve the performance of all SBUs.

#22 Model: The Ashridge Portfolio Model This model links with the Strategic Rationale Model to see which divisions are the most useful to keep and which should be closed or sold off. Feel
(How much overlap between the CSFs of the division and the parent) High Benefits/Low Field High Feel/High Benefits

Value Trap
(business may not be of benefit unless the parent can develop its skills) Low Field/Low Benefits

Heartland Business
(Parent should concentrate on these businesses) High Feel/Low Benefits

Alien Business
(should be sold out)

Ballast Business (parent should leave business to

run on its own)

#23 Model: Johnson and Scholes SFA test Johnson and Scholes suggest that for any option to be considered seriously it must pass three tests. y Suitable y Feasible y Acceptable #24 Model: Value Based Marketing

#25 Model: The Marketing Mix The marketing mix states that once a market segment has been identified then the following needs to be decided. y Product y Price y Place #26 Model: Hammer and Champy Business process re-engineering (BPR) The ideas behind BPR are: y Managers try to see how processes affect each other y Try to think of one continuous process from when the customer makes contact with the company until payment is received y This long process can then be broken down into a number of smaller processes y IT can be used to make processes more efficient /effective y Look at the processes from the customers point of view #27 Model: Rummler and Brache Gaps and Disconnects The emphasis in this model is on the problems involved when different department need to communicate. This identifies three levels where problems occur.

y y y

The organization as a whole The process The job

They also divide the types of problems into three kinds:  Those to do with departments trying to pursue different goals  Those to do with processes being poorly designed or being implemented poorly  Those to do with processes being managed poorly

#16 Model: Ansoffs Grpwth Vector Matrix used to generate strategic options The areas a business should consider are: y y Should they carry on selling their existing products? Should they carry on selling to their existing market?

It can also be a business strategy decision to consider improving the quality of their existing products or lowering their prices and costs.

Ansoff comes up with four possibilities: Exiting Markets Product Development New Products New Markets Diversification y Related y Unrelated Market Development

Existing Products

Market Penetration

#17 Model: Porters Generic Strategies Becoming the cheapest supplier of that type of product in the industry as a whole. This could be achieved through: y Changing suppliers y Economies of scale y Use of technology Becoming better in some way than all the rivals in an industry. This could be achieved through: y Building up a brand image y Having special features (a unique resource or core competence) Company focuses on one particular group of customers. The idea is to keep those customers happy and becoming the natural provider that customers think of.

Cost Leadership

Product Differentiation Focusing on a particular type of customer

#18 Model: Johnson & Scholes Strategic Clock 1 No Frills Low price Low Added value Use for market entry needs a great deal of customers who are price conscious 2 Low Price Low price Medium Added Value Use cost leadership to provide a better value product than rivals 3 Hybrid Low price High added value Needs low cost base (economies of scale). Can be used short-term to for market entry or to build up market share. 4 Differentiation Medium price High added value Aim is to build up market share by charging reasonable price

5 6 7 8

Focused differentiation High price High added value Looks for high premium for high degree of differentiation Failing Strategy High price Medium added value Failing Stretegy High price Low added value Failing Strategy Medium price Low added value

#19 Model: The BCG Matrix what options there are for product development

1. ?

Market Share 2. STARS

High

Market Growth

Dogs

Low

3. Cash Cows y Earning reasonable profits y Cannot grow further High

#20 Model: Johnson & Scholes Strategic Rationale Johnson and Scholes suggest three main ways that Head Office (parent Co.) can create value in the business: Portfolio Managers Synergy Parental Developers