models

Cover financials

Other

Factor Potential

Impact

Time Frame Type Impact Relative

Importance

SWOT,

PESTLE

High medium

low

Months Positive,

negative,

unkown

Increasing,

decreasing,

unchanged

Critical

Important

Unimportant

Unknown

Prioritizing

ANSOFF MATRIX

The market penetration strategy is the least risky since it leverages

many of the firm's existing resources and capabilities. In a growing

market, simply maintaining market share will result in growth, and

there may exist opportunities to increase market share if

competitors reach capacity limits. However, market penetration has

limits, and once the market approaches saturation another strategy

must be pursued if the firm is to continue to grow.

Market development options include the pursuit of additional market segments or geographical regions. The development of new markets for the product may be a good strategy if the firm's core competencies are related more to the specific product than to its experience with a specific market segment. Because the firm is expanding into a new market, a market development strategy typically has more risk than a market penetration strategy.

A product development strategy may be appropriate if the firm's strengths are related to its specific customers rather than to the specific product itself. In this situation, it can leverage its strengths by developing a new product targeted to its existing customers. Similar to the case of new market development, new product development carries more risk than simply attempting to increase market share.

Diversification is the most risky of the four growth strategies since it requires both product and market development and may be outside the core competencies of the firm. In fact, this quadrant of the matrix has been referred to by some as the "suicide cell". However, diversification may be a reasonable choice if the high risk is compensated by the chance of a high rate of return. Other advantages of diversification include the potential to gain a foothold in an attractive industry and the reduction of overall business portfolio risk.

PEST ANALYSIS

TOWS

TOWS strategies

S - O strategies: Explain how specific company strengths could help the firm take advantage

of market opportunities.

S - T strategies: Explain how specific company strengths could be used to avoid or minimize

external threats.

W - O strategies: Explain how the company can minimize its weaknesses to take advantage

of market opportunities.

W - T strategies: Explain how, acting defensively, the company the company can minimize its

weaknesses and, in the process, avoid or minimize external threats

Explain the potential strategies developed in the previous step in terms of three response options:

prospect, defend or harvest. This requires you 1) determine the relative magnitude of your various

SWOT entries and 2) develop logically feasible matches between internal and external factors.

McKinsey 7s Model

Strategy:

What is our strategy?

How do we intend to achieve our objectives?

How do we deal with competitive pressure?

How are changes in customer demands dealt with?

How is strategy adjusted for environmental issues?

Structure:

How is the company/team divided?

What is the hierarchy?

How do the various departments coordinate activities?

How do the team members organize and align themselves?

Is decision making and controlling centralized or decentralized? Is this as it should be, given what we're doing?

Where are the lines of communication? Explicit and implicit?

Systems:

What are the main systems that run the organization? Consider financial and HR systems as well as communications and document storage.

Where are the controls and how are they monitored and evaluated?

What internal rules and processes does the team use to keep on track?

Shared Values:

What are the core values?

What is the corporate/team culture?

How strong are the values?

What are the fundamental values that the company/team was built on?

Style:

How participative is the management/leadership style?

How effective is that leadership?

Do employees/team members tend to be competitive or cooperative?

Are there real teams functioning within the organization or are they just nominal groups?

Staff:

What positions or specializations are represented within the team?

What positions need to be filled?

Are there gaps in required competencies?

Skills:

What are the strongest skills represented within the company/team?

Are there any skills gaps?

What is the company/team known for doing well?

Do the current employees/team members have the ability to do the job?

How are skills monitored and assessed?

GAME THEORY:

Provided a systematic way to understand the behaviour of players in situations where their fortunes

are interdependent.

There are 2 types of games, rule-based games (rules from contracts, agreements etc) and

freewheeling games(where buyer and seller interact without any external constraints)

For rule based games, game theory follows the principal of, for every action, there is a reaction,

need not be equal in magnitude. You have to look forward into the game and then reason

backwards, regarding which action of today will lead to where.

For freewheeling games, the game theory follows the principle which says that you cannot take

away from the game more than you bring to it.

The main insight of game theory is, allocentrism, focussing on all the players.

Eg: US Automobile Industry

Problem: Cut throat competition, dealer discounts and customer rebates were killing the companies.

Customers were expecting the rebates and hence sales were held up until they were offered.

Solution: General Motors

It introduced a credit card, and changed the game to win win situation.

The only thing which matters in changing the game is “value”

ValueNet

Customers

Complimentors Company Substitutors

Suppliers

A player can play numerous roles at the same time.

Reveals 2 fundamental symmetries in the game of business.

1. Between customers and suppliers

2. Between subsitutors and complementors.

Along the vertical dimension, there is a mix of competition and cooperation.

Along the horizontal dimension, there can be cooperation among the substitutors and competition

among the complementors.

Changing the game:

1. Draw the value net to analyse all the interdependencies.

2. Indentifying all the elements of the game, there are five, players, added values, rules, tactics

and scope i.e., PARTS

To change the game, we need to change one or more elements.

Changing the Players:

A company can benefit from bringing players into the Subsitutors market, Eg,

nutrasweet

A company can benefit from bringing players into the complements market. Eg: 3DO

Company

Changing the Added Value:

Increasing your value Eg: TWA Airlines

Decreasing the value of the other player. Eg: Nitendo, video games company

Changing the Rules:

One price for all. Concept of judo economics.

Eg: Kiwi International Airlines. Vs Eastern Airlines.

Changing the tactics:

Tactics work in 2 ways, by reducing misperceptions Eg: New York daily News, and

Maintaining the fog

Changing the Scope:

One can expand a game by linking it with the other games or shrink the game by

severing the linkages.

Linking to other games: Sega Vs Nitendo

SCENARIO PLANNING

It is a disciplined method for imagining possible futures that companies have applied to a great

range of issues.

Royal Dutch/ Shell have used this process in forecasting the demands of oil.

It simplifies the avalanche of data into a limited number of possible states. Each scenario tells a

different story of how various elements might interact under certain conditions. When relationships

between the elements can be formalized, a company can develop quantitative models.

Different from other planning tools like, contingency planning (presents a basic case of “what if?”,

sensitivity analysis(change in one variable keeping all the variables constant)

When should a company go for scenario planning?

Scenario planning deals avoids two main errors, over prediction and under prediction.

It starts with dividing our knowledge into two halves,

1. Things we believe we know something about.

2. Things which we consider uncertain or unknowable.

Steps involved:

Define the Scope

Identify the Stakeholders

Identify basic trends

Identify key trends

Construct Initial scenario themes

Check for consistency and plausibility

Develop learning scenarios

Identify research needs

Develop quantitative models

Evolve towards decision scenario

5 force model

Threat of new entrant

Economies of scale

Capital requirement

Access to distribution channel

Cost advantage independent of size

Expected retaliation

Legislation or Govt.

Differentiation

Power of buyers

Concentration of buyers

Large no. of small operators

Alternative sources of supply

Material cost is high percentage of total cost

Cost of switching supplier is low

Threat of backward integration by buyer

Power of supplier

Conc of supplier

High switching cost from 1 to another

supplier

Brand of supplier is powerful

Forward integration is possible

Threat of substitute

Product for product substitution

Substitution of needs

Generic substitution

Doing without

Internal Rivalry

Competitors in balance

Growth rates in market

Existence or development of global customer

High fixed cost (price wars)

Extra capacity is in large increments

Differntiation

Acquisition

High exit barriers

Delta model

Balance Score card

Cultural Web

Stories

What stories do people currently tell about your organization?

What reputation is communicated amongst your customers and other stakeholders?

What do these stories say about what your organization believes in?

What do employees talk about when they think of the history of the company?

What stories do they tell new people who join the company?

What heroes, villains and mavericks appear in these stories?

Rituals and Routines

What do customers expect when they walk in?

What do employees expect?

What would be immediately obvious if changed?

What behavior do these routines encourage?

When a new problem is encountered, what rules do people apply when they solve it?

What core beliefs do these rituals reflect?

Symbols

Is company-specific jargon or language used? How well known and usable by all is this?

Are there any status symbols used?

What image is associated with your organization, looking at this from the separate viewpoints of clients and staff?

Organizational Structure

Is the structure flat or hierarchical? Formal or informal? Organic or mechanistic?

Where are the formal lines of authority?

Are there informal lines?

Control Systems

What process or procedure has the strongest controls? Weakest controls?

Is the company generally loosely or tightly controlled?

Do employees get rewarded for good work or penalized for poor work?

What reports are issued to keep control of operations, finance, etc...?

Power Structures

Who has the real power in the organization?

What do these people believe and champion within the organization?

Who makes or influences decisions?

How is this power used or abused?

Global

Going GLobal

Why Companies Expand Into Foreign Markets?

1. Gain access to new customers

2. Achieve lower costs & enhance the firm’s competitiveness

3. Capitalize on its core competencies

4. Spread its business risk across a wider market base

Competing Internationally v/s Globally

• International/ Multinational Competitor: When a company competes in a select few foreign

markets

• Global Competitor: When it has or is pursuing a market presence on most continents & in

virtually all of the world’s major countries

International Scale & Scope

1. Which markets to enter internationally?

2. Which elements of the value chain might be located in different parts of the world?

3. Extent to which products & services or assets are standardized or locally specific?

Generic Strategy Options In Foreign Markets

1. Export strategies- maintain a national production base & export goods to foreign markets

2. License foreign firms to use the company’s technology or produce & distribute the

company’s products

3. Franchising strategy

4. Multi-country strategy

5. Global strategy

6. Strategic alliances/ Joint-ventures

GE Matrix

Market size is represented by the size of the circle.

Market share is shown by using the circle as a pie chart.

The expected future position of the circles is indicated by an arrow.

The sample diagram shows the relative position of an SBU with a market share of 65%. The arrow in the

upward right position indicates that the SBU is expected to lose strength relative to competitors, and the

that the business unit is in an industry that is projected to become increasingly less attractive. The tip of

the arrow indicates the future position of the center point of the circle

The nine cells are grouped into three zones:

The Green Zone consists of the three cells in the upper left corner. If the SBU falls in this

zone, it’s in a favorable position with relatively attractive growth opportunities. This position

indicates a "green light" to invest and grow this SBU.

The Yellow Zone consists of the three diagonal cells from the lower left to the upper right. A

position in the yellow zone is viewed as having medium attractiveness. Management must

therefore exercise caution when making additional investments in this SBU. The suggested

strategy is to protect or allocate resources on a selective basis rather than growing or

reducing share.

The Red Zone consists of the three cells in the lower right corner. A harvest strategy should

be used in the two cells just below the three-cell diagonal. These SBUs shouldn’t receive

substantial new resources. The SBUs in the lower right cell shouldn’t receive any resources

and should probably be divested or eliminated from a firm’s portfolio.

Prospect o Develop new distinguishing competency

o Initiate R&D in new technology

o Learn new manufacturing process

o Learn how to design and promote new product

Defend o Preserve existing distinguishing competency

o Reduce price of existing product

o Increase price of existing product

o Intensify R&D in existing technology

Harvest o Gradually dissolve the business

o Increase promotion of existing product

o Reduce expenditures for existing product

Bowman Strategy Clock

The clock accounts for eight major strategic options:

Low Price/Low Added-Value. This strategy is commonly considered to be appropriate only

on a segment-by-segment basis.

Low Price. This strategy calls for the company to position itself as the 'low cost leader.' The

company risks low margins and a price war.

Hybrid of Low Price/Differentiation. Here, the company establishes a low cost base and

reinvests to keep prices low, while still seeking differentiation.

Differentiation. There are two versions of this strategy-with and without a price premium.

With a price premium, the company adds enough value to the product to justify its relatively

high price and so, increase margins. Without a price premium, the company adds value to

the product in hopes of gaining market share despite lower margins.

Focused Differentiation. Here, the company adds enough value to the product for a specific

customer segment to justify a price premium.

Increased Price/Standard Product. With this strategy, the company raises prices without

adding value to the product in hopes of higher margins. Unless the product is the de facto

industry standard, however, the company risks losing market share.

Increased Price/Low Values. This strategy pertains only to monopoly situations.

Low Value/Standard Price. This strategy invariably means loss of market share.

Value Chain

IFE MATRIX

Internal Factor Evaluation (IFE) matrix is a strategic management tool for auditing or evaluating major

strengths and weaknesses in functional areas of a business. IFE matrix also provides a basis for identifying

and evaluating relationships among those areas.

Steps:

1. Identify 10 to 20 internal factors, 2. Assign a weight that ranges from 0.00 to 1.00 to each factor 3. Assign a 1 to X rating to each factor. e. Practitioners usually use rating on the scale from 1 to

4. major weakness (rating = 1) , a minor weakness (rating = 2), a minor strength (rating = 3), or a

major strength (rating = 4) 4. Multiply each factor's weight by its rating. 5. The last step in constructing the IFE matrix is to sum the weighted scores for each factor.

This provides the total weighted score for your business.

Total weighted scores well below 2.5 point to internally weak business. Scores significantly above

2.5 indicate a strong internal position.

EFE matrix

List factors: The first step is to gather a list of external factors. Divide factors into two groups:

opportunities and threats.

Assign weights: Assign a weight to each factor. The value of each weight should be between 0 and 1 (or

alternatively between 10 and 100 if you use the 10 to 100 scale). Zero means the factor is not important.

One or hundred means that the factor is the most influential and critical one. The total value of all weights

together should equal 1 or 100.

Rate factors: Assign a rating to each factor. Rating should be between 1 and 4. Rating indicates how

effective the firm’s current strategies respond to the factor. 1 = the response is poor. 2 = the response is

below average. 3 = above average. 4 = superior. Weights are industry-specific. Ratings are company-

specific.

Multiply weights by ratings: Multiply each factor weight with its rating. This will calculate the weighted

score for each factor.

Total all weighted scores: Add all weighted scores for each factor. This will calculate the total weighted

score for the company.

You can find more details about this approach as well as about possible values that the EFE matrix can

take on theIFE matrix page.

EFE matrix example

Total weighted score of 2.46 indicates that the business has slightly less than average ability to respond to

external factors. (See the page on IFE matrix for an explanation of what category the 2.46 figure falls to.)

COMPONENTS OF A EFFECTIVE ORGANISATION

CHANGE MANAGEMENT

“ When the rate of change outside exceeds the rate of change inside, the end is in sight”

Jack Welch

Five Activities Contributing to Effective Change Management

1. Motivating Change- Motivating change and creating readiness for change Sensitize

organizations to pressure for change Reveal discrepancies between current and desired states

Convey credible positive expectations for the change

2. Creating Vision of Change - Constructing the Envisioned Future Bold and Valued Outcomes

Desired Future State

3. Developing Political Support - Assessing Change Agent Power Identifying Key Stakeholders

Influencing Stakeholders Developing Political Support

4. Managing the Transition of Change

5. Sustaining Momentum Effective Change Management

1. Start phase, engage, and motivate your team, and create understanding for the

process as a whole. This we call the “Unfreeze phase”

2. Action phase, where we solving the project. This is called “the Move Phase”

3. End phase, finishing the job and celebrating – called “The Freeze Phase”

Mission and vision What Is the Purpose of a Vision or Mission Statement?

Vision and mission statements are most commonly prepared as initial steps in the strategic planning

process. The planning team develops the vision of the desired future state. Next, the mission is developed

to describe current reality. The vision (what we want to become) and mission (what we are) are usually

compared with a rather wide gap between present and future.

INDUSTRY BEST PRACTICES

A best practice is a technique, method, process, activity, incentive, or reward which conventional

wisdom regards as more effective at delivering a particular outcome than any other technique,

method, process, etc. when applied to a particular condition or circumstance. The idea is that with

proper processes, checks, and testing, a desired outcome can be delivered with fewer problems and

unforeseen complications. Best practices can also be defined as the most efficient (least amount of

effort) and effective (best results) way of accomplishing a task, based on repeatable procedures that

have proven themselves over time for large numbers of people.

BENCHMARKING Benchmarking is the process of comparing one's business processes and performance

metrics to industry bests and/or best practices from other industries. Dimensions typically measured are quality, time, and cost. Improvements from learning mean doing things better, faster, and cheaper.

Benchmarking involves management identifying the best firms in their industry, or any other

industry where similar processes exist, and comparing the results and processes of those studied (the "targets") to one's own results and processes to learn how well the targets perform and, more importantly, how they do it.

1. Identify your problem areas - Because benchmarking can be applied to any business process or function, a range of research techniques may be required. They include: informal

conversations with customers, employees, or suppliers; exploratory research techniques such as focus groups; or in-depth marketing research, quantitative research,surveys, questionnaires, re-engineering analysis, process mapping, quality control variance reports, or financial ratio analysis. Before embarking on comparison with other organizations it is essential that you know your own organization's function, processes; base lining performance provides a point against which improvement effort can be measured.

2. Identify other industries that have similar processes - For instance if one were interested in improving hand offs in addiction treatment he/she would try to identify other fields that also have hand off challenges. These could include air traffic control, cell phone switching between towers, transfer of patients from surgery to recovery rooms.

3. Identify organizations that are leaders in these areas - Look for the very best in any industry and in any country. Consult customers, suppliers, financial analysts, trade associations, and magazines to determine which companies are worthy of study.

4. Survey companies for measures and practices - Companies target specific business

processes using detailed surveys of measures and practices used to identify business process alternatives and leading companies. Surveys are typically masked to protect confidential data by neutral associations and consultants.

5. Visit the "best practice" companies to identify leading edge practices - Companies typically agree to mutually exchange information beneficial to all parties in a benchmarking

group and share the results within the group.

6. Implement new and improved business practices - Take the leading edge practices and develop implementation plans which include identification of specific opportunities, funding the project and selling the ideas to the organization for the purpose of gaining demonstrated value from the process.

IMPLEMENTATION

BALANCE SCORECARD

PMS, ESOPSCULTURE

ORGANISATIONAL HIERACHY

CHANGE MANAGEMENT

CENTRALISATION VS DECENTRALISATION

BUSINESS PROCESS RE ENGINEERING