Porter’s Five Forces Model INDUSTRY COMPETITORS SUBSTITUTES BUYERSSUPPLIERS NEW ENTRANTS 1.

Porter’s Five Forces Model

INDUSTRYCOMPETITORS

SUBSTITUTES

BUYERSSUPPLIERS

NEW ENTRANTS

11

Market-ing & Sales

Service

TECHNOLOGY DEVELOPMENT

FIRM INFRASTRUCTURE

HUMAN RESOURCE MANAGEMENT

PROCUREMENT

Inbound Logistics

Oper-ations

Out-bound Logistics

Porter’s Generic Value Chain

Adapted from Michael Porter, Competitive Advantage, Free Press, New York, 1985, p. 46

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MARG

INM

ARGIN

RawMaterials

Transport Processing

GENERAL VALUE CHAIN

Forming

Assembly

Distribution

SalesService

What’s your value chain?What are the margins in each link?Where are your competitive strengths?Where is your strategic intent?

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Creating Core Capabilities• The building blocks of corporate strategy are not products

and markets but business processes.• Competitive success depends upon transforming a

company’s key processes into strategic capabilities that consistently provide superior value to customers

• Companies create these capabilities by making strategic investments in a support infrastructure that links together and transcends traditional functions.

• Capability-based strategies, because they cross functions, must be championed by senior leadership.

Stalk, Evans, and Shulmand (1992)

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Success• Performance• Satisfaction• Growth

Situation and Stakeholders

• Economic and Socio-Political Environment

• Customers and Suppliers• Industry Structure• Competitive Dynamics• Employee Groups and

Communities• Shareholders and Other

Stakeholders

Super-ordinate Goals

Structure

A Leader’s Guide to Understanding Organizations: An Expanded “7-S” Perspective

Systems

Shared ValuesAdapted from McKinsey & Co. and other sources

© James G. Clawson

SELF (Leader)

Skills

Strategy

Staff

Style

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Economic DevelopmentWhere are the margins?

(Pine and Gilmore, The Experience Economy)

5. Transformations (pay for how time with you transforms me)

4. Experiences (pay for time with you)

3. Services supplant goods (what I do for you, and margins are … declining, becoming commoditized)

2. Goods out of commodities (margins?)

1. Commodities out of the earth (margins?)

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MARGINS

© James G. Clawson

Commoditization of Margins

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Pine and Gilmore,The Experience

Economy

© James G. Clawson

STRATEGY is the art of creating value. It provides the intellectual frameworks, conceptual models, and governing ideas that allow a company’s managers to identify opportunities for bringing value to customers and for delivering that value at a profit. In this respect, strategy is the way a company defines its business and links together the only resources that really matter in today’s economy: knowledge and relationships or an organization’s competencies and customers.Normann, R. and Ramirez, R., “From Value Chain to Value Constellation: Designing Interactive Strategy,” Harvard Business Review, July-August 1993, p.65.

88© James G. Clawson

STRATEGIC FIT MODEL

Strategic MindsetsSTRATEGIC INTENT

MODEL

Source, Hamel and Prahalad, Strategic Intent, HBR

Strategic thinking is driven by the match between current capabilities and existing opportunities

Searching for sustainable advantages

Finding protected niches

Strategic thinking is driven by bridging gap between today’s reality and tomorrow’s vision

Finding ways to leverage resources

Outpacing competitors in building new advantages

Making new industry rules

99© James G. Clawson

Realized Strategy

1010

IntendedStrategy

ActualStrategy

EmergentStrategy

RealizedStrategy

OpportunisticStrategy

© James G. Clawson

Realized Strategy

1111

Realized strategy is the result of the collision between dreams and economic realities….

© James G. Clawson

STRATEGIC CYCLES

1212

CURRENTREALITY

VISIONINTENT

DESIGN, COGNITIVE

ACTION, IMPLEMENTATION

CoreCompetencies

© James G. Clawson

Christensen’s Innovator’s Dilemma

1313

Utilization of Features

Overshoot

Not good enough, cheap disruptive

technology attracts non users

Learning high margin

culture

© James G. Clawson

Motivator’s Dilemma

1414

Utilization of Energy

Goal Overshoot

Not for profit disruptive substitutes

attract employees’ energy

Learning goal oriented

culture

EnergyDecline

© James G. Clawson

The Balanced Scorecard Framework

1515

FINANCIAL PERSPECTIVE

CUSTOMER PERSPECTIVE

INTERNAL PROCESS PERSPECTIVE

Productivity Revenue Growth

Long TermShareholder

Value

Price Quality Time Function Partnership Brand

ImageRelationshipProduct/Service Attributes

ManageOperations

ManageCustomers

Manage Regulatory &

Social Processes

Manage Innovation

LEARNING AND GROWTH PERSPECTIVEHuman Capital

InformationCapital

Organization Capital+ +

Strategy Maps, Kaplan & Norton, HBSP, 2004