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Strategic management Toolkit

BPM
Marco van der Woude

How are strategies built?

What is a strategy?
How do you develop it?

From Mission to Action


Mission: Why we exist
Core Values: What we believe in
Vision: What we want to be
Strategy: How to get there
BSC: Implement & Focus
Initiatives: What we need to do
Personal Objectives: What I need to do

Strategy is an assumption

A strategy is a set of activities intended to


lead to a desired result

The outcome is not certain!

Toolkit to translate mission and vision to


strategy

Process

Define Mission & Vision


Analyze using strategic Toolkit
Define a Strategy to realize vision
Define Critical Success Factors
Choose Performance Indicators
Prepare a Balanced Scorecard

Influences on strategy
Environment

Suppliers
Customers
Where
we are
today

What we
want to be

STRATEGY

Regulations
Shareholders

Technology
Competition
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Analysis

What is our environment?


Where are we today?
Where could we go?
What are our possibilities?
Tools: PESTEL, Porter 5 forces, SWOT,
BCG

PESTEL

Describe relevant external developments


in six areas

Political
Economic
Socio-cultural
Technological
Environmental
Legal

PESTEL examples
Technological:
lower price of electronic components
makes it possible to produce complex
electronic equipment at lower prices

PESTEL Examples
Socio-Cultural:
Ageing population provides market
opportunities for products sold to older
people

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PESTEL

Relevant info: trends that have an effect


on the organization under study (e.g. general
comments about political stability or whether a country is a
kingdom or not are usually not relevant)

Mention the expected effect of the trend


described (e.g.: the increase in the number of tablet
PCs makes it possible to sell more apps)

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PESTEL

Analysis of the MACRO environment

Translate to general opportunities and


threats

PESTEL trend: Opportunity or Threat?


Economic
crisis

Use cheaper
flights
Opportunity

Less money
to spend

Less travel

Threat

Threat

Bank
Crisis
Credit not
available

Strength:
low
inventory
Strategy:
focus on low cost

Weakness:
long
distribution
chain, high
iinventory
Strategy: change production
system

Strength:
money in
the bank
Strategy: buy suppliers

Porters 5 forces model

http://hel.org.uk/studies/internationalmanagement/strategicmanagement/gsm5porter5.htm

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Threat of new entrants

Legal restrictions

Economies of scale

Can a new entrant start on a small scale?

Entry Barriers

Which permits apply? Accreditations?

Knowledge base? High Investments?

Access to distribution

Products to end users? Is distribution


available?

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Competition

(Un)balance in market

Market growth

Is existing capacity utilized?

Differentation

How is the market as a whole developing?

Capacity and fixed costs

Who is doing what, how are market shares


developing? (Nielsen, intercompany comparisons)

Are new customers coming into reach?

Exit?
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Never ever underestimate the


competition

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Customer Bargaining power

Concentration on buying side

Number of competitors

Buying groups, or simply scale


Loyalty, availability of alternatives,
uniqueness

Switching cost
Added Value

Is your added value priced correctly?

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Supplier Power

Dependence

Only one supplier? Trouble.

Widely spread base

Is it possible to find more suppliers?

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Substitution

Replacement

Changing pattern

Who still remembers what a fax machine


is? Or an analog camera?
From SUVs to small cars to electric

Different choice
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Example De Beer Refinish


None

Many knowledgeable
suppliers

Many small B2B


customers

Barriers: Color Collection


Distribution
http://hel.org.uk/studies/internationalmanagement/strategicmanagement/gsm5porter5.htm

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Porter 5 forces

Similar for all organizations operating in


the same product/market combination
(PMC)

Translate to specific opportunities and


threats

SWOT analysis

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SWOT

Internal Factors:

Strengths: The things we do well, the


capabilities we have

Examples: very good product designers, low cost


production, loyal customer base

Weaknesses: Capabilities we do not have,


processes were not that good at

Examples: poor logistics, outdated costing system, high


personnel turnover

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SWOT

External Factors:

Opportunities: possibilities to develop,


grow, sell more

Geographic expansion, New technology, New markets

Threats: what is endangering our position


from the outside?

Competition with lower prices, New laws, New entrants

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Internal

External

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SWOT matrix
Opportunity

Threat

Geo expansion
Strength

Employees
from many
countries

Weakness

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SWOT Matrix
Opportunity

Threat

Geo expansion
Strength

Weakness

Only
English
speakers

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SWOT Matrix
Opportunity

Threat
New Laws
demanding extra
testing

Strength

In house
testing
available

Weakness

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SWOT Matrix
Opportunity

Threat
New Laws
demanding extra
testing

Strength

Weakness

Product
doesnt pass
test
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SWOT Matrix
External Analysis

Strengths
Weaknesses

Internal Analysis

Opportunities

Threats

Grow

Defend

Improve

Withdraw

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SWOT

Specific for each organization

Combines External issues (Opportunities


and Threats) with internal issues
(Strenghts and Weaknesses)

Leads to specific strategic choices

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BCG Matrix

Portfolio Management
For each combination of product and
market (Product Market Combination or
PMC), determine:

Market Share
Market Growth

Make separate matrix for current position


and desired position (before after)

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BCG Matrix
Market Share
High

Low

High
Market
Growth

Low

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Assignment 1

Gather information about a company


Find out about their activities
Analyze using PESTEL, Porter, SWOT
matrix
Write a report (max 4 pages)
Prepare for presentation .
Reports: AMT 1 group X.doc(x)
Email to marco.vanderwoude@han.nl

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Companies
Group

Company

Ryanair

easyJet

KLM Air France

ZARA

Hennes & Mauritz

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Presentations next week Thursday

All groups prepare, two people from each


group present
5 minute presentation, < 10 slides
Prepare PPT or Prezi to support
Q&A
Presenting tips

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Dont forget

Dont copy/paste !
Mention your sources, plagiarism will
result in a 0 score.
Submit your reports by email to
Marco.vanderwoude@han.nl
Deadline is this Friday (13-2) 23:59

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Assignments

Edit your report to harmonize the writing


style
Mention your sources (APA style)
Use title page / introduction / table of
contents / page numbers / conclusion

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Some technicalities

Please submit in WORD (.doc or .docx)


format, any version
I can also handle other formats but no
PDF please
Please name your document as follows:
Amt 1 group X.docx

Answer the assignment questions.

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MC trial question
What is a strategy?
A plan to achieve your goals
A set of assumed relationships between
causes and results
A set of activities designed to make
things happen
An action plan

MC trial question
What is the correct order?
SWOT before PESTEL
5-Forces before PESTEL
5-Forces before SWOT
PESTEL after BSC

MC trial question
What is the best overall strategy for an area
where Threats correlate with Strenghts?
Defend
Grow
Withdraw
Improve

Sources

Kaplan and Norton, The Balanced Scorecard, HBS


Press 1996, ISBN 0-87584-651-3
Kaplan and Norton, The strategy focused organization,
HBS Press 2001, ISBN 1-57851-250-6

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