13 14 strategic_management

Strategic Strategic management management

General management vs. strategic General management vs. strategic managementmanagement

General management:General management: Is the process of acheiving organizational goal by engaging in four major Is the process of acheiving organizational goal by engaging in four major

functions of planing, organizing, leading and contolring.functions of planing, organizing, leading and contolring. Bartol, Kathryn m 2006, Management: A Pacific Rim Focus, McGraw-Hill/IrwinBartol, Kathryn m 2006, Management: A Pacific Rim Focus, McGraw-Hill/Irwin

GM concerns about the process to manage the company internally – GM concerns about the process to manage the company internally – (operational effectiveness), (operational effectiveness),

GM is not focusing on exploring competitiveness in relation to ext. envir. GM is not focusing on exploring competitiveness in relation to ext. envir. GM does not include the strategyGM does not include the strategyStrategic management:Strategic management: Strategy is focusing on the competitivness of the company by performing Strategy is focusing on the competitivness of the company by performing

different activities from rivals or performing similiar activities in different different activities from rivals or performing similiar activities in different waysways

Porter, Michael E. 1996. What is Strategy? Harvard Business Review. Nov/Dec 1996. Strategic management is the process of 3 primary activities:

1. Formulation: Organization Mission, Competitive Situations, Strategy Development

2. Implementation: Organization alignment that should be considered for changing the organization to support the operations

based on the formulated strategies3. Controling and Evaluation:

financial perspective, customer perspective, internalprocess perspective, and learning and

growth perspective. Suksriwong, Sakorn 2007, Management : From the Executive’s Viewpoint, Bangkok

What is the strategy?What is the strategy? Ethymological fundament - Greek language Ethymological fundament - Greek language “stratçgos”; “stratçgos”; „„StratusStratus““ – army, – army,

„„ago”ago” – move, run, lead – move, run, lead

"Strategy is the "Strategy is the directiondirection and and scopescope of of an organisation over the an organisation over the long-termlong-term:: which achieves which achieves advantageadvantage for the organisation through its configuration of for the organisation through its configuration of resourcesresources within a challenging within a challenging environmentenvironment,, to meet the needs of to meet the needs of marketsmarkets and to fulfil and to fulfil stakeholderstakeholder expect“ expect“

Johnson and Scholes (Exploring Corporate Strategy) Johnson and Scholes (Exploring Corporate Strategy)

Direction:Direction: Where is the business trying to get to in the Where is the business trying to get to in the long-term?long-term?

Scope of act. :Scope of act. : Which markets should a business Which markets should a business compete in and what kind of activities compete in and what kind of activities are involved in such markets? are involved in such markets?

Advantage:Advantage: How can I perform the business better How can I perform the business better than the others? than the others?

Resources:Resources: What resources are abilities are required? What resources are abilities are required? Environment:Environment: What external environmental factors affect the What external environmental factors affect the

ability to compete? ability to compete? Stakeholders:Stakeholders: What are the values and expectations of those What are the values and expectations of those

who have power? who have power?

Strategy definitions:Strategy definitions: The Strategy is over the space and the time The Strategy is over the space and the time

tactical and purpose-build configuration and tactical and purpose-build configuration and exploration of organizational resources, exploration of organizational resources, planed and managed based on actual, planed and managed based on actual, planed and forecasted conditions of the planed and forecasted conditions of the internal and external environment of the internal and external environment of the organization, providing most efficient way organization, providing most efficient way for organizational objectives achievements, for organizational objectives achievements, with limited or acceptable consequences with limited or acceptable consequences from third parties reactions. from third parties reactions.

Strategic management processStrategic management process

Strategy formulationStrategy formulation

Strategy formulation:Strategy formulation: Mission statement:Mission statement:

Reason / reasons to existReason / reasons to exist Scope of operationsScope of operations

Analysing the situation (how particular factors support or depress Analysing the situation (how particular factors support or depress the organization) :the organization) : External Environment (factors):External Environment (factors):

Macro environmentMacro environment National competetiveness (2BCognituss Wiena, De Deught Swizerland) National competetiveness (2BCognituss Wiena, De Deught Swizerland) Industry attractivenessIndustry attractivenessExternal analysis builds on an economics perspective of industry structute External analysis builds on an economics perspective of industry structute and how a firm can make the most of competing in trhat structure. and how a firm can make the most of competing in trhat structure.

Internal Environment (factors):Internal Environment (factors): Correlation among the organization activities and business functionsCorrelation among the organization activities and business functions Core competencies of the organization explorationCore competencies of the organization explorationThe internal analysis based on operation activities and its competencies with in the organization.

Set of strategies Set of strategies that gain supportive environments and prevent obstructive factors

Grand strategy (corporate strategy) – growth, stabilisation, exitGrand strategy (corporate strategy) – growth, stabilisation, exit Business strategy – differentiation (by value, by price)Business strategy – differentiation (by value, by price) Functional strategy – related to the business functions of the companyFunctional strategy – related to the business functions of the company

Basic methods for strategic analysesBasic methods for strategic analyses

Mission - Evaluation sheet methodMission - Evaluation sheet method External Environment:

Macro Environment – 5 major functions model National Competitiveness - The Diamond of

National Advantage Industry Attractiveness - 5 forces model

Internal analysis: Value Chain Analysis, Business Function Analysis, Core Competencies Analysis.

Organization MissionOrganization Mission The organization’s purpose or fundamental reason for

existence, expressed by Mission statement Broad declaration of the basic, unique purpose and scope of

operations that distinguish the organization from other of it type. Bartol, Kathryn M 2006, Management: A Pacific Rim Focus, McGraw-Hill/Irwin.

9 components to formulate mission statement:1. Customers - Who are the organization’s customers?2. Products or services. What are the organization’s major?3. Location. Where does the organization compete?4. Technology. What is the firm’s basic technology?5. Concern for survival. What is the organization’s commitment to

economic objectives?6. Philosophy. What are the basic belief, values, aspirations, and

philosophical priorities of the organization?7. Self-concept. What are the organization’s major strengths and

competitive advantages? 8. Concern for public image. What are the organization’s public

responsibilities,and what image is desired?9. Concern for employees. What is the organization’s attitude toward its

employees?

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The premier purveyor of the finest coffee in the world while maintaining our uncompromising principles as we grow.

  X X   X X X    

Provide a great work environment and treat each other with respect and dignity

          X     X

Embrace diversity as an essential component in the way we do business.

            X    

Apply the highest standards of excellence to the purchasing, roasting and fresh delivery of our coffee.

  X         X    

Develop enthusiastically Satisfied customers all of the time X                

Contribute positively to our communities and our Environment

              X  

Recognize that profitability is essential to our future success.

        X        Zdroj: Internetové materiály spoločnosti Starbucks

Macro Environment CCompetitive situation:ompetitive situation:

affects overall of the business situation. Consideration of 5 major factors as the

information for developing the strategy according to the host country :

Legislation and Regulations, General Economic Conditions, Societal Values and Lifestyles, Population Demographics, Technology

PEST Analysis:PEST Analysis:

PoliticalPolitical EconomicEconomic SocialSocial TechnologyTechnology

Political Political stability stability Tax policies Tax policies Tariffs Tariffs RegulationsRegulationsJustice systemJustice system

Banking systemBanking systemInterest rates Interest rates Exchange rates Exchange rates Earning per Earning per capitacapitaGross Domestic Gross Domestic Product (GDP) Product (GDP) Inflation rate Inflation rate

Dominant religionDominant religionMinoritiesMinoritiesAttitude towards Attitude towards foreign products foreign products Leisure hours Leisure hours EducationEducationWorking skills Working skills Age distributionAge distribution

R&D activities R&D activities Automation Automation Technology Technology incentivesincentives

•external analysis that investigates four macro-environment factors:

Supports better understanding the risk and pitfalls for the environment you operate in. Good tool to identify macro-environment level opportunities and threats in SWOT Can be combined with SWOT

4P4C Analysis:4P4C Analysis:ProductProduct PricePrice PromotionPromotion PlacePlace

Consumer.Consumer.Feature and Feature and qualities of qualities of product wanted product wanted

Suitable pricing Suitable pricing schemes schemes

Customer Customer responded responded promotion promotion

Moste desired Moste desired sales channelsales channel

CompetitorCompetitorProduct Product features offerd features offerd by competitionby competition

Pricing Pricing schemes schemes eployed by eployed by competitorscompetitors

Types of Types of promotion promotion

Competitors Competitors sales sales channelschannels

CompanyCompanyFeatures and Features and qualities offerd qualities offerd by companyby company

Current pricing Current pricing strategiesstrategies

Current Current promotion promotion planplan

Current sales Current sales chanels chanels

Community Community Community Community Features Features Pathers Pathers

Pricing Pricing strategies strategies encouraged encouraged and supported and supported

Favourable Favourable promotion promotion strategiesstrategies

Allowed Allowed distribution distribution channelschannels

•Anables to: •refine company’s current marketing mix in respect with consumer needs, •respond to competitors’ actions, •know the limitations for various strategies within the community.

National Competitiveness: the company should analyze the competiveness in the

state level in order to find the opportunities and threats influenced on the industry that firm challenges

national competitiveness is created and sustained through a highly localized process. It differences in national values, culture, economic structures, institutions, and histories all contribute to competitive success.

The Diamond of National Advantage:1.Factor Conditions. The nation’s position in factors of production,

such as skilled labour or infrastructure, necessary to compete in a given industry.

2.Demand Conditions. Home-market demand for the industry’s product or service.

3.Related and Supporting Industries. The presence or absence in the nation of supplier industries and other related industries that are internationally competitive.

4.Firm Strategy, Structure and Rivalry. The conditions in the nation governing how companies are created, organized, and managed, as well as the nature of domestic rivalry.

Thailand National Competitiveness Thailand National Competitiveness

Thai Automotive CompetitivenessThai Automotive Competitiveness

Industry Attractiveness - 5 forces model Porter, Michael E. 2008, “The Five Competitive Forces That Shape Strategy”, Harvard Business Review, January 2008

Vertical line:•Is about the competition in the certain industry regarding 3 factors;

•Industry Competitors,•New Entrants, •Substitutes

Horisontal line:•Iis about the industry operation showing the correlation among:

• suppliers, producers, • merchandises, and buyerss

Korean Cosmetics Attractiveness Korean Cosmetics Attractiveness 1. Rivalry among competitors: High- Large number of brands in the mkt.- Industry growth: + 3.4% over 2006- Low product differences2. Rarriers to entry: High- Brand Identity preferencees - Government restrictions- Large nubmer of brands in the mkt.3. Threat of substitutes: Low- Substituted product avalaiability4. Bargaining power of suppplier: Moderate- Differentiation of input- Impacct of inputs on costs- Threath of forward integration 5. Bragaining power of buyer: High- Buyers needs- Market size- Brand Identity- Product differentiation

Value Chain AnalysisPorter, Michael E. 1985, How Information Gives You Competitive Advantage, Free Press, New York

a systematic tool to analyze the interaction among all the activities a firm performs

it emphasizes that competitive advantage can come not just from great products or services, but from anywhere along the value chain

it is also important to understand how a firm fits into the overall value system, which includes the value chains of its suppliers, channels, and buyers.

This concept divides a company’s activities, value activities, into the technology and economically distinct activities it

performs to do business.

Malaysian national airline value Malaysian national airline value chain analysischain analysis

Business functions analysis:Business functions analysis:

tools to investigate the organization performance by focusing on organizvational functions,

Examples: Marketing analysis – investigation about companies

market share, customer satisfaction, customer preferencees

Productions analysis – investigation about productivity product quality, ...

Human resource management analysis – investigation about personel competencies, organizational structure, ...

Finantial analysis – investigation about profitability and liquidity

Core Competencies Analysis:Core Competencies Analysis:Bartol, Kathryn M 2006, Management: A Pacific Rim Focus, McGraw-Hill/Irwin

Exmination of the resources, capabilities and competencies Exmination of the resources, capabilities and competencies which are considered as a major and most importat ones in the which are considered as a major and most importat ones in the organization. organization.

„„CCCC’s’s“ are:“ are: Variouse assets of the company, which are different from competitors Variouse assets of the company, which are different from competitors

ones, and is difficult to distinguish and imitate them. F.e.:ones, and is difficult to distinguish and imitate them. F.e.: Financial resources: debt, equity, retained earnings, money reserves. Physical resources: buildings, machinery, vehicles, raw materials. Human resources: skills, abilities, experience, organiyational chart.

part of highly protected know-how of the company part of highly protected know-how of the company supposed to be the fountain of the organizational competetive supposed to be the fountain of the organizational competetive

advantageadvantage collective learning in the organization how to coordinate diverse

production skills and integrate multiple streams of technology. Company should identify the organization regarding 3 factors;

a potential access to wide variety of markets, a significant contribution to end user value, difficulty for competitors to imitate

Examples: Sony - miniaturization. Canon - microprocessor controls copiers, printers, cameras, and image

scanners

SWOT Analysis:SWOT Analysis: The tool to classify the environment effecting the organization by

identification of internal and external factors with the favourable and unfavourable impact to the organization, dividing them in to 4 groups: 1. Strengths - organization’s strong points in internal environment,

comming from resources and competencies available within the organiyation, with a potential to create a competetive advantage

2. Weaknesses - organization’s weak points in internal environment, comming from resources and competencies available within the organiyation, with a potential a competetive disadvantage

3. Opportunities – acciedntal external invironment factors with the potential to support organization activities.

4. Threats – acciedntal external invironment factors with the potential to diminish organization activities

ADVANTAGEADVANTAGE DISADVANTAGEDISADVANTAGE

INTERNAL ENVIRONMENTINTERNAL ENVIRONMENT StrengthsStrengths WeaknessesWeaknesses

EXTERNAL ENVIRONMENTEXTERNAL ENVIRONMENT OpportunitiesOpportunities ThreatsThreats

STRATEGIC ACTIONSTRATEGIC ACTION Move on, GO!Move on, GO! Protect, Improve, Quit Protect, Improve, Quit

Misterious SWOT history?Misterious SWOT history? 1960-1970, Albert Humphrey, Stanford University, research 1960-1970, Albert Humphrey, Stanford University, research

project US Fortune 500. Humphrey developed Team Action project US Fortune 500. Humphrey developed Team Action Model (TAM) - a management concept that enables groups Model (TAM) - a management concept that enables groups of executives to manage change. SWOT was to have of executives to manage change. SWOT was to have originated from his ‘Stakeholders Concept and SWOT originated from his ‘Stakeholders Concept and SWOT Analysis.’ Analysis.’

1960, Harward University (Haberberg, 2000)1960, Harward University (Haberberg, 2000) 1987, Igor Ansoff, Ansoff’s Matrix fame (Turner (2002)1987, Igor Ansoff, Ansoff’s Matrix fame (Turner (2002) Existed publications relates names to SWOT rather users Existed publications relates names to SWOT rather users

then inventors then inventors (http://www.marketingteacher.com/swot/history-of-swot.html).(http://www.marketingteacher.com/swot/history-of-swot.html). Koch (2004) comments he recognised that a series of SWOT/TOWS Koch (2004) comments he recognised that a series of SWOT/TOWS

analyses had the advantages of a single arbitrary matrix.analyses had the advantages of a single arbitrary matrix. Wheelan and Hunger (1998) used SWOT to look for gaps and Wheelan and Hunger (1998) used SWOT to look for gaps and

matches between competences and resources and the business matches between competences and resources and the business environment. environment.

Dealtry (1992) considered SWOT in terms or groups and vectors with Dealtry (1992) considered SWOT in terms or groups and vectors with common themes and interactions. common themes and interactions.

Shinno et al (2006) amalgamated SWOT analysis with an Analytic Shinno et al (2006) amalgamated SWOT analysis with an Analytic Hierarchy Process (AHP) which ranked and prioritised each element Hierarchy Process (AHP) which ranked and prioritised each element using software. using software.

Strengths:Strengths:1.1. Advantages of proposition? Advantages of proposition? 2.2. Capabilities? Capabilities? 3.3. Competitive advantages? Competitive advantages? 4.4. Marketing - reach, distribution, awareness? Marketing - reach, distribution, awareness? 5.5. Innovative aspects? Innovative aspects? 6.6. Location and geographical? Location and geographical? 7.7. Price, value, quality? Price, value, quality? 8.8. Accreditation, qualifications, certifications? Accreditation, qualifications, certifications? 9.9. USP's (unique selling points)? USP's (unique selling points)? 10.10.Resources, Assets, People? Resources, Assets, People? 11.11.Experience, knowledge, data? Experience, knowledge, data? 12.12.Financial reserves, likely returns? Financial reserves, likely returns? 13.13.Processes, systems, IT, communications? Processes, systems, IT, communications? 14.14.Cultural, attitudinal, behavioral? Cultural, attitudinal, behavioral? 15.15.Management cover, succession? Management cover, succession?

Weaknesses:Weaknesses:1.1. Disadvantages of proposition? Disadvantages of proposition? 2.2. Gaps in capabilities?Gaps in capabilities?3.3. Lack of competitive strength? Lack of competitive strength? 4.4. Reputation, presence and reach? Reputation, presence and reach? 5.5. Financials? Financials? 6.6. Own known vulnerabilities? Own known vulnerabilities? 7.7. Timescales, deadlines and pressures? Timescales, deadlines and pressures? 8.8. Reliability of data, plan predictability? Reliability of data, plan predictability? 9.9. Morale, commitment, leadership? Morale, commitment, leadership? 10.10.Accreditation, etc? Accreditation, etc? 11.11.Cashflow, start-up cash-drain? Cashflow, start-up cash-drain? 12.12.Continuity, supply chain robustness? Continuity, supply chain robustness? 13.13.Effects on core activities, distraction? Effects on core activities, distraction? 14.14.Processes and systems, etc? Processes and systems, etc? 15.15.Management cover, succession? Management cover, succession?

Opportnities:Opportnities:1.1. Market developments? Market developments? 2.2. Competitors' vulnerabilities? Competitors' vulnerabilities? 3.3. New USP's? New USP's? 4.4. Tactics - surprise, major contracts, etc? Tactics - surprise, major contracts, etc? 5.5. Business and product development? Business and product development? 6.6. Information and research? Information and research? 7.7. Partnerships, agencies, distribution? Partnerships, agencies, distribution? 8.8. Industry or lifestyle trends? Industry or lifestyle trends? 9.9. Technology development and innovation? Technology development and innovation? 10.10.Global influences? Global influences? 11.11.New markets, vertical, horizontal? New markets, vertical, horizontal? 12.12.Niche target markets? Niche target markets? 13.13.Geographical, export, import? Geographical, export, import? 14.14.Volumes, production, economies? Volumes, production, economies? 15.15.Seasonal, weather, fashion influences? Seasonal, weather, fashion influences?

Threats:Threats:1.1. Political effects? Political effects? 2.2. Legislative effects? Legislative effects? 3.3. Obstacles faced? Obstacles faced? 4.4. Insurmountable weaknesses? Insurmountable weaknesses? 5.5. Environmental effects? Environmental effects? 6.6. IT developments? IT developments? 7.7. Competitor intentions - various? Competitor intentions - various? 8.8. Loss of key staff? Loss of key staff? 9.9. Sustainable financial backing? Sustainable financial backing? 10.10.Market demand? Market demand? 11.11.New technologies, services, ideas? New technologies, services, ideas? 12.12.Vital contracts and partners? Vital contracts and partners? 13.13.Sustaining internal capabilities? Sustaining internal capabilities? 14.14.Economy - home, abroad? Economy - home, abroad? 15.15.Seasonality, weather effects? Seasonality, weather effects?

HP SWOT HP SWOT Analysis:Analysis:

Strenghts:Strenghts: Brand name Brand name

11th most recognizable brand11th most recognizable brand 40% MKT over world share in printer 40% MKT over world share in printer

marketmarket 30% MKT over world shere in server 30% MKT over world shere in server

market market Strategic allaiences:Strategic allaiences:

Compaq Computer Corporation in Compaq Computer Corporation in 2002, 2002,

Mercury Interactive in 2006Mercury Interactive in 2006 Electronic Data Systems Electronic Data Systems

Corporation (EDS) in 2008. Corporation (EDS) in 2008. 3Com in 20093Com in 2009 Thomson eXimius Thomson eXimius

Weaknesses:Weaknesses: MKT segment integration:MKT segment integration:

Lack of particular SW productsLack of particular SW products Lack of management consulting Lack of management consulting

serviciesservicies Complicated organiyational structureComplicated organiyational structure High labor costs High labor costs

Opportunities:Opportunities: Cloud computing market Cloud computing market

The global spending on cloud computing is The global spending on cloud computing is forecast to cross a value of over $40 billion by forecast to cross a value of over $40 billion by 2012 2012

Bratislava – center for cloud computing Bratislava – center for cloud computing Printing solutions:Printing solutions:

commercial printing and capturing high-value commercial printing and capturing high-value pages for industrial applications, outdoor pages for industrial applications, outdoor signage, and graphic artssignage, and graphic arts

3D printing 3D printing

Threats:Threats: over world IT MKT recession:over world IT MKT recession:

8% decline by 2011 worldwide8% decline by 2011 worldwide Worldwide economical recessionWorldwide economical recession

Severe competition in consumer goods Severe competition in consumer goods marketmarket

Dell, Toshiba, Lenova Group and Aver – all of Dell, Toshiba, Lenova Group and Aver – all of them worldwidethem worldwide

Lots of l ocal competitorsLots of l ocal competitors Severe competition in core business Severe competition in core business

market:market: IBM, EMC Corporation, Dell (standard servers) IBM, EMC Corporation, Dell (standard servers)

Sun Microsystems (UNIX-based servers), Sun Microsystems (UNIX-based servers), Canon USA, Lexmark International, Xerox Canon USA, Lexmark International, Xerox

Corporation, Seiko Epson Corporation, Corporation, Seiko Epson Corporation, Samsung Electronics and Dell – in printing and Samsung Electronics and Dell – in printing and imagingimaging

POWER SWOT:POWER SWOT: P – Personal experienceP – Personal experience

Explore own personal and profesional experienceExplore own personal and profesional experience O – OrderO – Order

Distinguish betweenDistinguish between Strengths and opportunitiesStrengths and opportunities Threats and weaknessesThreats and weaknesses

The opportunity can become the threat and v.v.The opportunity can become the threat and v.v. W – WeightingW – Weighting

Weight SWOT elements. Weight SWOT elements. Count final weight of SWOT partCount final weight of SWOT part

E – Emphasize detailE – Emphasize detail Every element (factor) should be preciselly described, reasoned and Every element (factor) should be preciselly described, reasoned and

justified by expected conseqencees. justified by expected conseqencees. R – RankingR – Ranking

Give the SWOT analysis the strategic meaning by ranking and Give the SWOT analysis the strategic meaning by ranking and prioritizing factorsprioritizing factors

Rephrase threats as opportunities and find out how to turn weaknesses Rephrase threats as opportunities and find out how to turn weaknesses in to strengths (Use Gap Analysis)in to strengths (Use Gap Analysis)

GAP AnalysisGAP Analysis

External & Internal factors evaluation matrix:

Value chain SWOT analysis:Value chain SWOT analysis:

SALESSALES MKTMKT HRMHRM ProducitonProduciton WarehouseWarehouse LogisticsLogistics

SS

WW

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SWOT Diagram SoftwareSWOT Diagram Software

The GE/McKinsey MatrixThe GE/McKinsey Matrix A sort of portfolio analysis used for classifying product lines A sort of portfolio analysis used for classifying product lines

or strategic business or strategic business Developed by McKinsey for General ElectricsDeveloped by McKinsey for General Electrics Criteria for the business areas assessment:Criteria for the business areas assessment:

The attractiveness of the industry/market concernedThe attractiveness of the industry/market concerned The strength of the business The strength of the business

Vertical axis:Vertical axis: Industry attractiveness Industry attractiveness Explains the attrectiveness to a firm of entering, remaining or Explains the attrectiveness to a firm of entering, remaining or

quiting of particular industry, based on particular factors of the quiting of particular industry, based on particular factors of the industryindustry

Horisontal axis:Horisontal axis: Strength of the business unit – how strong the SBU is in terms of Strength of the business unit – how strong the SBU is in terms of

the marketthe market Explain the strengths of the company in terms of supplying the Explain the strengths of the company in terms of supplying the

market market

BCG AnalysisBCG Analysis

Growth-share matrix Growth-share matrix

BCG matrix versus GE BCG matrix versus GE matrixmatrix

Similarities:Similarities: The focus is the future strategy for the particular area of the business The focus is the future strategy for the particular area of the business Two dimensions and usually three levels at each dimensionTwo dimensions and usually three levels at each dimension

DifferencesDifferences Dimensions are.Dimensions are.

Industry attractiveness (instead market share)Industry attractiveness (instead market share) Business strength (instead market growth)Business strength (instead market growth)

Each cell represents particular strategy – more strategies to chooseEach cell represents particular strategy – more strategies to choose BSG is focusing on products within the company, GE is focusing on a BSG is focusing on products within the company, GE is focusing on a

strategic business units. strategic business units. SBU:SBU:

The particular market portfolio with own business planThe particular market portfolio with own business plan Part of the company with own market and target groupPart of the company with own market and target group The company unit with responsibility for strategic management of The company unit with responsibility for strategic management of

particular productparticular product The organizational part of the company The organizational part of the company

BCG is part of GE matrix.BCG is part of GE matrix. Market growth is an element of industry attractvnessMarket growth is an element of industry attractvness Market growth is an element in business strengthMarket growth is an element in business strength

Market attractiveness criteriaMarket attractiveness criteria

Market SizeMarket Size Market GrowthMarket Growth SectorSector profitability profitability Profit marginsProfit margins Overall returns of Overall returns of

industryindustry Industry fluctuationIndustry fluctuation Variabiliyty of Variabiliyty of

demanddemand Entry and exit Entry and exit

barriersbarriers ReRegulatory policygulatory policy

Availability of:Availability of: Market intelligenceMarket intelligence Work forceWork force Other resourcesOther resources InfrastructureInfrastructure

Global opportunitiesGlobal opportunities Bank system Bank system Legal systemLegal system Political system Political system Natural resourcesNatural resources

SBU internal strengths criteria:SBU internal strengths criteria:

Market shareMarket share (MS)(MS)

Growth in MSGrowth in MS Product Product

uniquenessuniqueness Company imageCompany image Brand recognitionBrand recognition Customer loyaltyCustomer loyalty SBU reliabilitySBU reliability

Marketing:Marketing: SkillsSkills Distribution networkDistribution network Sales forceSales force

Management:Management: Competence, skillsCompetence, skills Work force skillsWork force skills Service qualityService quality

Production:Production: CapacityCapacity Flexibility Flexibility Costs/ProfitabilityCosts/Profitability QualityQuality

GE / McKinsey GE / McKinsey MatrixMatrix

SBU internal strengthSBU internal strengthHighHigh Medium Medium LowLow

MM

AA

RR

KK

EET T

High attractivenessHigh attractiveness X1X1 Y2Y2 Y3Y3Medium attractivenessMedium attractiveness Y4Y4 Y5Y5 Y6Y6Low attractivenessLow attractiveness

Y7Y7 Y8Y8 Z9Z9X – Successful SBU – strong business, attractive industryY – Mediocre SBU – medium business, industry less attractiveZ – Disappointing SBU – weak business, unattractive business

1 – Protect position2 – Motivation 3 - Reorganisation

4 – Harvest 5 – Think over 6 – Invest

7 – Reorganize 8 – Reorg/Harv6 – Quit

GrowGrow - Strong SBU units in attractive business- Strong SBU units in attractive business-Strong SBU in average businessStrong SBU in average business or or in attractive business in attractive business

HoldHold -Strong SBU in weak businessStrong SBU in weak business-Average SBU in average businessAverage SBU in average business-Weak SBU in attractive businessWeak SBU in attractive business

QuitQuit -Average SBU in unattractive businessAverage SBU in unattractive business-Weak SBU in average businessWeak SBU in average business or or in unattractive businessin unattractive business

Cell no.1:Cell no.1: Highly attractive market & hight SBU strengthHighly attractive market & hight SBU strength Invest for other growth, Search for global opportunities, Maximise Invest for other growth, Search for global opportunities, Maximise

market share, Seek market dominance, Secure position,market share, Seek market dominance, Secure position, Cells 2, 4:Cells 2, 4:

SBU strength and industry attractiveness are in high rating in one, SBU strength and industry attractiveness are in high rating in one, and medium in the other. and medium in the other.

Invest for growth, Invest to expand, Search for new segments, Invest for growth, Invest to expand, Search for new segments, Invest to maintain sompetitiveness, Invest to motivateInvest to maintain sompetitiveness, Invest to motivate

Cells 3,5,7:Cells 3,5,7: The level of the SBU is balanced by market attractivenessThe level of the SBU is balanced by market attractiveness Invest for earnings, Invest selectively, Maintain position, Defend Invest for earnings, Invest selectively, Maintain position, Defend

position, Conctentrate for selected segments, Specialise in position, Conctentrate for selected segments, Specialise in products where strengths can be built, Identify nichesproducts where strengths can be built, Identify niches

Cells 6, 8:Cells 6, 8: In each cell either MA or SBU strangth is low, and the otrher one is In each cell either MA or SBU strangth is low, and the otrher one is

mediummedium Manage for cash, Do not invest unless it is necessary, Move to Manage for cash, Do not invest unless it is necessary, Move to

more profitable segments, Identify niches, more profitable segments, Identify niches, Cell 9:Cell 9:

No strength within SBU & very unattractive marketNo strength within SBU & very unattractive market Quit with reasonable procedure Quit with reasonable procedure

GE/McKinsey matrix GE/McKinsey matrix exampleexample

Market attractiveness FactorsMarket attractiveness Factors WeightWeightin %in %

Rating Rating

1 - 101 - 10

ValueValue

Market size Market size 1515 55 0,750,75

Market growth Market growth 2020 66 1,21,2

Sector profitabilitySector profitability 1010 88 0,80,8

Profit marginsProfit margins 1010 88 0,80,8

Industry fluctuactionIndustry fluctuaction 55 44 0,20,2

Variability of demand Variability of demand 1010 99 0,90,9

Global opportunityGlobal opportunity 1010 99 0,90,9Availability ofAvailability of MarMark. k. intelligenceintelligence 55 66 0,30,3

Distribution structureDistribution structure 1010 99 0,90,9

Regulatory policyRegulatory policy 55 77 0,350,35

TOTAL TOTAL 100100 7,17,1

SBU Strength FactorsSBU Strength Factors WeightWeightin %in %

Rating Rating

1 - 91 - 9

ValueValue

Market shareMarket share 1515 22 0,30,3

Growth in market shareGrowth in market share 1010 66 0,60,6

Product uniqenessProduct uniqeness 2020 88 1,61,6

Customer loyality Customer loyality 55 11 0,050,05

Marketing skillsMarketing skills 1010 77 0,70,7

Managerial skillsManagerial skills 1010 99 0,90,9

Product qualityProduct quality 1515 99 1,351,35Production flexibilityProduction flexibility 55 77 0,350,35

Research&Development skillsResearch&Development skills 55 44 0,20,2

Labour costsLabour costs 55 88 0,40,4

TOTAL TOTAL 100100 6,456,45

GE / McKinsey GE / McKinsey MatrixMatrix – case study – case study

SBU internal strengthSBU internal strength

HighHigh Medium Medium LowLow

MM A A

AA T T

RR R R

KK A A

EE C CT T T T

II

VV

II

TT

YY

High High

Medium Medium

Low Low

9,00 6,00 3,00 0,00

0,00

3,00

6,00

9,00

Differentiation strategy in Differentiation strategy in One Star Hotel – value curveOne Star Hotel – value curveTypical 1*H setlement Customer expectation Differetiation strategy:

Účasť na tvorbe stratégieÚčasť na tvorbe stratégie

Legálnosť účasti na tvorbe stratégieLegálnosť účasti na tvorbe stratégie Legitímnosť účasti na tvorbe stratégieLegitímnosť účasti na tvorbe stratégie

Berie sa do úvahy vplyv:Berie sa do úvahy vplyv: Neformálnych organizačných štruktúrNeformálnych organizačných štruktúr Individuálnych záujmov Individuálnych záujmov

Legálnosť účasti na tvorbe Legálnosť účasti na tvorbe stratégie stratégie Miera legálnej účasti na tvorbe stratégie, Miera legálnej účasti na tvorbe stratégie,

prípadne voľnosti v procese tvorby stratégií je prípadne voľnosti v procese tvorby stratégií je daná mierou inštitucionalizovanej autonómnosti daná mierou inštitucionalizovanej autonómnosti ale hlavne ale hlavne zodpovednostizodpovednosti v rozhodovaní. v rozhodovaní. Úplná účasť: Úplná účasť:

SZČOSZČO Konateľ obchodnej spoločnosti ak je zároveň aj jediný Konateľ obchodnej spoločnosti ak je zároveň aj jediný

vlastníkvlastník Viazaná a obmedzená účasť:Viazaná a obmedzená účasť:

Konateľ obchodnej spoločnosti Konateľ obchodnej spoločnosti Štatutárny orgán verejnoprávnej organizácieŠtatutárny orgán verejnoprávnej organizácie Predstavenstvo obchodnej spoločnosti a družstvaPredstavenstvo obchodnej spoločnosti a družstva Splnomocnenec v rozsahu splnomocneniaSplnomocnenec v rozsahu splnomocnenia

Žiadna účasť:Žiadna účasť: Líniový a funkčný manažérLíniový a funkčný manažér Radový zamestnanec Radový zamestnanec

Legitímnosť účasti na tvorbe Legitímnosť účasti na tvorbe

stratégiestratégie

Nie je determinovaná legálnosťou, t.j. subjekt, Nie je determinovaná legálnosťou, t.j. subjekt, ktorý sa chce podieľať na tvorbe stratégie ktorý sa chce podieľať na tvorbe stratégie

nenesie za jej tvorbu žiadnu zodpovednosť, nenesie za jej tvorbu žiadnu zodpovednosť, nemá za úlohu participovať na tvorbe stratégienemá za úlohu participovať na tvorbe stratégie

Je determinovanáJe determinovaná kompetenciami subjektu (odbornosťou a schopnosťami) kompetenciami subjektu (odbornosťou a schopnosťami) súladom súladom

pohnútok, osobných zámerov subjektupohnútok, osobných zámerov subjektu dôsledkov ním navrhovanej, resp. realizovanej dôsledkov ním navrhovanej, resp. realizovanej

stratégiestratégie

s cieľmi organizácies cieľmi organizácie