Frameworks & Processes IACT 302 Corporate Network Planning.

Frameworks & Processes

IACT 302

Corporate Network Planning

2

Overview

• Frameworks• How do we assess a framework

– Foundation framework (Porter)

– Trilevel framework (Parson)

– Value chain framework

– Strategic opportunities framework

– Strategic impact/value framework

– Risk assessment framework

• Concluding remarks

3

Frameworks

• In general terms a framework is a structure used to analyse the issues

• Frameworks provide a shorthand method of describing the relationship between communications networks and competitive strategy

• They highlight important dimensions as well as suggest dimensions that are unimportant

4

Framework Limitations

• Frameworks are not theories, they are merely a language for classification

• The development of an appropriate framework is not prescriptive, as it is only the beginning of the strategic planning process

• Many frameworks are also static - and fail to capture the dynamics of changing technologies and their use

5

How Do We Assess a Framework?

• There are 3 principles which attempt to account for the complexities inherent in developing a competitive strategic plan

6

Principles

• The principle of persons:

– The people who devise and act on a strategy have their own agendas (provides for intentional actions)

7

Principles

• The principle of factors:

– There is a need to pay attention to

• product quality,

• customer service,

• employee commitment,

• competition,

• and other fundamental factors identified

8

Principles

• The principle of timely decisions:

– There is a need for management to make timely decisions and to act decisively.

9

How Do We Assess a Framework?

• Unfortunately there are few frameworks that abide by all of these three principles

• No single framework can be everything to everyone

• An assessment of the suitability of a framework based on these three principles informs us of the areas to be emphasised

10

Framework Assessment

• Frameworks are also assessed in terms of:

– specific uses

– scope

– advantages

– disadvantages

• Astute planners & managers often combine frameworks to hedge against the risk of framework failure

11

1: Foundation Framework

• Most foundation frameworks are based on the seminal work of Michael Porter of the Harvard Business School

Fig. 1 ~ Porter’s 5 forces in the competitive arena

SubstitutesPotential newentrants

Suppliers

Intra-industry rivalry

STRATEGIC BUSINESS UNIT

Buyers

12

1: Foundation Framework

• Porter maintained that the competitive stance of a company depends on the collective strength of 5 basic forces.

• The strategic network plan can be a powerful tool to change this balance of power.

13

1: Foundation Framework

• Porter suggests three generic strategies as logical approaches to obtain competitive advantages:

– cost leadership (aim to lower production costs)

– differentiation (aim for ‘unique’ product/service)

– focus (niche market or wide product/service range)

14

2: Trilevel Framework

Parsons identified 3 levels of interaction where the strategic network plan can be used for competitive advantage:

– industry level (impact on nature of service/products provided)

– firm level (specific competitive strategy)

– strategy level (at the strategy level the strategic network implementation and management plan supports the corporatestrategies)

15

3: Value Chain Framework• The value chain is an analytical framework used to examine the

value-adding activities in the firm and between firms. It was proposed by Porter

• Value activities consist of

– primary activity (production and delivery)

– and support activities

Product

DevelopmentManufacturing Distribution Marketing

Customers

FocusLower costLower costDifferentiate

Suppliers

When and where can value be added?

16

4: Strategic Opportunities Framework

• The strategic opportunities framework suggests that strategic network planners should focus on:

– External vs. Internal

– Traditional Business vs. Business transformed by strategic use of the network

External Operations Internal OperationsIT-intensiveproducts and services

Traditional products and processes

17

5: Strategic Impact/Value Framework• The value or impact of an advantage or strategy can

be measured by how much is it worth :

– to possess that advantage, or

– to create an opportunity by following that strategy (identifying grid sections and actions)

High

Low

Strategic impact of existing networks

Factory

Support

Strategic

Turnaround

18

5: Strategic Impact/Value Framework• This framework expands on the grid to account for 2 interacting

dimensions : IMPACT and VALUE• The IMPACT is segregated into :

– time

– geography

– relationships• There are 3 different types of value :

– efficiency

– effectiveness

– innovation• This framework can be used as a strategic network planning

guide to help organise and analyse network-intensive areas of activity

19

5: Strategic Impact/Value Framework• For a network, what might it mean to examine

the IMPACT of Time (use time compression) on the three values:

– EFFICIENCY = ACCELERATE BUSINESS PROCESSES

– EFFECTIVENESS = REDUCE INFORMATION FLOAT

• (make data rapidly available)

– INNOVATION = CREATE SERVICE EXCELLENCE

20

5: Strategic Impact/Value Framework• For a network, what might it mean to

examine the IMPACT of Geography (Overcome geographical restrictions) on the three values:

– EFFICIENCY = RECAPTURE SCALE

– EFFECTIVENESS = ENSURE GLOBAL MANAGEMENT CONTROL

– INNOVATION = PENETRATE NEW MARKETS

21

5: Strategic Impact/Value Framework• For a network, what might it mean to examine

the IMPACT of Relationships (Restructure business relationships) on the three values:

– EFFICIENCY = BYPASS INTERMEDIARIES

– EFFECTIVENESS = REPLICATE SCARCE KNOWLEDGE

– INNOVATION = CREATE CUSTOMER LOYALTY

22

6: Risk Assessment Framework

• Risk Assessment (RA) can be arrived at in different ways. One way is:

• RISK = LIKELIHOOD x IMPACT x VULNERABILITY

• The best way to determine the likelihood is using historical data (eg: “a 300 year flood”)

– However, this is usually not available in the current dynamic business environment

• Threat Identification and Risk Analysis should be an integral part of any strategic network plan and used as a part of any strategic decision-making process.

23

6: Risk Assessment Framework

• Risks can be identified as

– Intrinsic

• (internal and generally within the control of the organisation)

– or

– Extrinsic

• (external and beyond the control of the organisation).

24

Concluding Remarks• These are some of the many possible

strategic frameworks that might be adopted by the strategic network planner

• New ones are also continuing to appear • The important thing for network planners to

decide is which one (or combination) is most suited for a particular organisation and its goals

• There are many dimensions to consider • The value of each would be lost if all

frameworks were simply combined together into one big super-framework