Strategic Planning Challenges & Practices in the Technology Industry.

Putting our imprint on technologysince 1921.

A c c e l e r a t i n g Y o u r S u c c e s s ™

Strategic Planning Challenges & Practices

in the Technology Industry.

Therese BassettVP Strategic Planning and Business

Intelligence

Avnet Incorporated


Avnet Confidential

Agenda

• About Avnet

• Surviving and succeeding in today’s technology market

• Avnet’s Strategic Planning and Management Process

• Rules governing our planning process– Thinking and planning

– Challenges

– Cadence, discipline, alignment

– Communication


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Avnet Inc. Vision

Avnet will deliver the highest value to our customers, suppliers, employees and

shareholders as the premier technology marketing, distribution and services

company, globally.


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TS39%

EM61%

Asia Pac21%

EMEA31%

Amer48%

Avnet Inc Company Snapshot

• Founded in 1921• Incorporated in 1955

• NYSE: AVT in 1959• Relocated headquarters to Ariz. in 1998• No. 172 on Fortune 500• June 30 fiscal year end• FY07 Annual Revenue

– Avnet, Inc. - $15.7 billion– Electronics Marketing - $9.7 billion– Technology Solutions - $6 billion

• ~ 300 locations in over 70 countries• 300 suppliers/100,000 customers• 52 Acquisitions since 1991

As of Q1 FY 2008

As of Q1 FY 2008


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Vital Link in Global Technology Supply Chain

Avnet effectively manages the complexity of the technology supply chain in a cost-efficient manner, delivering value to suppliers and customers

Original Equipment

Manufacturers

Original Equipment

ManufacturersEnd Users

End UsersEMS / ODM

EMS / ODM Resellers andSystems Builders

Resellers andSystems Builders

Semiconductors Interconnect

PassiveElectro-

mechanical

Semiconductors Interconnect

PassiveElectro-

mechanical

Software Vendors

Software Vendors

EM TS


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Global Logistics Scale & Scope

5.9 Million Orders

35 Billion Units

7.6 Million Line Items

134 Million Devices Programmed

250,000 Integrated Systems

Value-added

Regional Distribution Centers

Quality Systems

Pinpoint Logistics

2.0 Million Square Feet

Computer Integration


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AsiaJapanKoreaTianjinShanghaiTaiwanHong KongSingaporeShenzhenMelbourneIndia

EMEAGermanyNetherlandsBelgiumIsraelS. Africa

AmericasArizonaCaliforniaKentuckyTexasMexicoCanada

>100k <100K Prog. Ctrs. V/A Integration Ctrs. 3PLs

Avnet Logistics Network

7 11 8 5 12 44=1



Surviving and Succeeding in

Today’s Technology Market


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The World of Technology Distribution


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Commoditization EM & TS

Margin


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Margin

ServicesDifferentiation

Evolution


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Margin


Evolution

ConsolidationCompetitorsCustomersSuppliers


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Margin


Evolution


GlobalizationSuppliersCustomersInformation


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Margin


Evolution



RegulationsRoHSWEEE

Sarbanes-Oxley


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Margin


Evolution



Information Visibility Knowledge

RegulationsRoHSWEEE

Sarbanes-Oxley


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Margin


Evolution




RegulationsRoHSWEEE

Sarbanes-Oxley

TechnologiesWireless

RFIDVoIP


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Margin


Evolution




ConsumersPurchasing PowerKnowledge

RegulationsRoHSWEEE

Sarbanes-Oxley


RFIDVoIP


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Margin


Evolution



Keeping pace in a decade of change…


ConsumersPurchasing PowerKnowledge

RegulationsRoHSWEEE

Sarbanes-Oxley


RFIDVoIP


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So what…

• Traditional technology distribution businesses are getting squeezed

• In order to remain the competitive global leader, we must develop new service and product solutions that are differentiated and high-value Expand our customer base

• We must leverage our strengths in mature regions and develop similar competencies in each region of the world

• Leveraging our scale, scope, and supply chain visibility will be our differentiator and allow us to achieve competitive advantage

• Our strategic thinking, planning, and intelligence models need to address all of the above within a more complex global supply chain…


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Global Acquisition

Our Strategy Evolution…

VBM

•Focus on regional achievement of ROWC•Greater scrutiny of engagement profitability

•First global acquisition•Required coordination and harmonization of strategy across regions

•Predominantly a U.S. business•Established global footprint & consolidated industry thru acquisition•Emphasis on Asia expansion in latter part of the decade•Strategies developed and executed regionally

Consolidation Era

Global Differentiation

• Accelerated investment in strategy that leverages scale & scope advantages for competitive differentiation•Increased cross-regional partnering•Structural alignment

•Development of strategy extensions•Core business productivity enhancement acceleration

Regional Excellence

1990 2000 2008…



Avnet’s Strategic Planning and Management

Process


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Avnet’s Strategic Long-Range Planning

SL

R

P

trategicWhat do

we want to look like?

What’s changing?

What are we good

at?

Where are we

deficient?

What to invest in today for

tomorrow?

A good strategy is one that asks and answers the right

questions before everyone else

A good strategy is one that asks and answers the right

questions before everyone else


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Avnet’s Strategic Long-Range Planning

SL

R

P

trategicong

ange

lanning

Prioritizing Opptys

Investment

Alignment

Structure

3-5 Years

Measures & Goals

Execution

“Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat.” ---- Sun Tzu


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Rules that govern our process…

1. Clearly define Thinking and Planning processes


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Thinking vs. Planning

StrategyStrategy

StrategicThinkingStrategicThinking

Strategic thinking is the capability of an individual or group to capture disparate pieces of information, identify inherent themes or patterns, and synthesize these learnings into a vision of the long-term direction that a business should pursue.

--Adapted from Corporate Strategy Board


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StrategyStrategy


Thinking Activities Interpreting environmental changes

Identifying opportunities & threats

Generating & evaluating alternatives

Assessing core competencies

Challenging assumptions/models

Creating visions, missions, and strategic imperatives

Proposing strategies

Redesigning organizational structure & business processes


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StrategyStrategy


PlanningPlanning

Planning Activities Documenting thinking outputs

Setting tactics & targets

Creating balanced scorecards & measures

Developing detailed action plans

Aligning resources with initiatives

Communicating the plan & the organization’s role in achieving it

Linking individual performance & development plans with team plans

Adjusting rewards to reinforce the objectives


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2. Understand your leadership team’s de facto starting point and challenge from there


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Challenges we – and others – face…

• Because companies that want breakthrough performance must fight some basic laws of nature:

– Tomorrow’s strategy will be the same as yesterday’s strategy

– Leadership focus on attainment of short-term goals– Long term risk avoidance– Tendency to isolate focus on internal performance – limit

to within the scope of control– Biases and mental models shape what we see– Belief that continuous “challenging” of strategy creates

chaos


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3. Build cadence, discipline, and alignment into your process…but limit bureaucracy


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Strategic Strategic PlanningPlanning

Feb – JuneFeb – June

ExecutionExecution

All YearAll Year

The Right ResultsThe Right Results

Continuous LearningContinuous Learning

Performance Performance Monitoring/ Monitoring/

ManagementManagement

All YearAll Year

QSPRs & QSPRs & Performance Performance AppraisalsAppraisals

Avnet’s Strategic Management Process

ResultsResults

When?When?

Strategic Strategic ThinkingThinking

All YearAll Year


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Achieving Alignment

Define Global Objectives and LRP Targets

Define Group Strategic Imperatives

Define Divisional Strategies,and Goals

Define TacticalAction Plans

Define Projects

Define Milestones

CEO Group President

DivisionalPresident

Strategy Owner

Tactic Owner

Team Leader

RegionalPresident

Define Regional Strategic Imperatives


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3. Build cadence, discipline, and alignment into your process…but limit bureaucracy

4. Mobilize the critical mass

"Leadership is a combination of strategy and character. If you must be without one, be without the strategy.“

Gen H. Norman Schwarzkopf


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The Role of Communication

• External

– Wall Street

– Lending Institutions / Rating Agencies

– Customer / Suppliers

– Alliance partners

• Internal

– Board of Directors

– Employees Line of Sight Index 84%+

IndexAvnet

Overall


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In Closing…

Business is a race against time --- Where there is never enough time to answer all possible questions; And

everyone gets the right answers eventually; Therefore, asking and

answering the right questions first is vital to winning.

Business is a race against time --- Where there is never enough time to answer all possible questions; And

everyone gets the right answers eventually; Therefore, asking and

answering the right questions first is vital to winning.

Modified from University of Chicago

Strategic Planning for Executives



Q&A

Thank You

Strategic Planning Challenges & Practices in the Technology Industry.

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