MODERN STRATEGIC ANALYSIS Theme 2. Process of strategic management, internal презентация

MODERN STRATEGIC ANALYSIS Theme 2. Process of strategic management, internal analysis , strategy choice Dr. Prof. Aleksandr Kozlov 18/10/2016

Process of strategic management

Internal analysis Production Finance Purchasing Marketing Sales HRM Management Innovations

Internal analysis criteria Comparison with the past Comparison with competitors External evaluation (experts) Official recognition Public recognition

Strengths Advantages of proposition? Capabilities? Competitive advantages? USP's (unique selling points)? Resources, Assets, People? Experience, knowledge, data? Financial reserves, likely returns? Marketing - reach, distribution, awareness?

Weaknesses Disadvantages of proposition? Gaps in capabilities? Lack of competitive strength? Reputation, presence and reach? Financials? Own known vulnerabilities? Timescales, deadlines and pressures? Cashflow, start-up cash-drain?

Profile of competitive advantages

Modern tools of strategic analysis. Value chain Value chain analysis a process where a firm identifies its priorities and support activities that add value to its final product and then analyze these activities to reduce costs or increase differentiation. Value chain represents the internal activities a firm engages in when transforming inputs into outputs.”

Modern tools of strategic analysis. Value chain

Business Strategy Choice Choice about business positioning relative to competitors, creating strategic capabilities and competitive advantage

Competitive advantage principles -VRIN Value, Rarity, Inimitability and Non-substitutability From: Jay Barney: ‘Firm resources and sustained competitive advantage’, Journal of Management, vol. 17 (1991), no. 1, pp. 99–120.

VRIN: Value Strategic capabilities are of value when they: take advantage of opportunities and neutralise threats, provide value to customers provide potential competitive advantage at a cost that allows an organisation to realise acceptable levels of return

VRIN: Rarity Rare capabilities are those possessed uniquely by one organisation or by a few others only. (E.g. a company may have patented products, have supremely talented people or a powerful brand.) Rarity could be temporary. (Eg: Patents expire, key individuals can leave or brands can be de-valued by adverse publicity.)

VRIN: Inimitability Inimitable capabilities are those that competitors find difficult to imitate or obtain. Competitive advantage can be built on unique resources (a key individual or IT system) but these may not be sustainable (key people leave or others acquire the same systems). Sustainable advantage is more often found in competences (the way resources are managed, developed and deployed) and the way competences are linked together and integrated

VRIN: Non-substitutability Competitive advantage may not be sustainable if there is a threat of substitution. Product or service substitution from a different industry/market. For example, postal services partly substituted by e-mail. Competence substitution. For example, a skill substituted by expert systems or IT solutions

Alternative strategies Growth Diversification Conglomerated Concentric Focus Integration Vertical Horizontal Withdrawal

Strategy selection matrix