Lecture Ten: Outline

1
Lecture Ten Outline

• Integrating Strategic and Operational Decisions/
  Reviewing Relevant Financial And Marketing
  Models
• Converting Customer Value Expectations Into
  Customer Satisfaction
• Identifying Processes And Capable Partners
• Designing An Interorganisational Structure For
  Value Delivery
• Modelling the Value Chain
• Establishing Performance Criteria For An
  Interorganisational Enterprise
• Stakeholder Models
• Auditing The Value Chain For Risk And Return
  Alternatives
• Using The Capability Balance Sheet To Identify
  Asset Deployment Options

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Integrating Strategic and Operational Decisions/
Reviewing Relevant Financial And Marketing Models

• Minzberg and Quinn (cited in Buttery and
  Richter-Buttery, 1998) offer The Five Ps for
  Strategy plan, ploy, pattern, position and
  perspective.

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Integrating Strategic and Operational Decisions/
Reviewing Relevant Financial And Marketing Models

• Day defines strategy as a combination of highly
  interdependent choices or directional
  statements The direction is set by four
  choices
• Arena
• Advantage
• Access
• Activities

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Integrating Strategic and Operational Decisions/
Reviewing Relevant Financial And Marketing Models
(contd)

• Operations Walters et al (1997) suggests that
  the role of operational marketing is to deliver a
  relevant product offer to targeted customers in
  such a way that it creates more value for the
  customer than any offer from its competitors

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Integrating Strategic and Operational Decisions/
Reviewing Relevant Financial And Marketing Models
(contd)
Source Walters (2002)
6
Integrating Strategic and Operational Decisions/
Reviewing Relevant Financial And Marketing Models
(contd)
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Integrating Strategic and Operational Decisions/
Reviewing Relevant Financial And Marketing Models
(contd)
Source Walters (2002)
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Integrating Strategic and Operational Decisions/
Reviewing Relevant Financial And Marketing Models
(contd)

• Relationship management
• Relationship management is the managerial
  activity which identifies, establishes, maintains
  and reinforces economic relationships with
  customers, suppliers and other partners with
  complementary (and supplementary) capabilities
  and capacities so that the objectives of the
  organisation and those of all other partners may
  be met by agreeing and implementing mutually
  acceptable strategies.

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Integrating Strategic and Operational Decisions/
Reviewing Relevant Financial And Marketing Models
(contd)

• Technology management
• The integration process and product technology to
  address the planning, development and
  implementation of technological capabilities and
  capacities to meet the strategic and operational
  objectives of an organisation or combination of
  organisations. Technology management can enhance
  the value delivered by planning manufacturing
  responses that deliver market volume and product
  and service delivery characteristics.

10
Integrating Strategic and Operational Decisions/
Reviewing Relevant Financial And Marketing Models
(contd)

• Knowledge management
• Knowledge management can be defined as the
  organisational capability which identifies,
  locates (creates or acquires), transfers,
  converts and distributes knowledge into
  competitive advantage

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Converting Customer Value Expectations Into
Customer Satisfaction

• Customer Centricity
• Slywotzky et al (1997) cited in Walters suggests
  that in the old economic order, the focus was on
  the immediate customer. Today business no longer
  has the luxury of thinking about just the
  immediate customer. To find and keep customers
  our perspective has to be radically expanded. In
  a value migration world, our vision must include
  two, three or even four customer along the value
  chain.

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Converting Customer Value Expectations Into
Customer Satisfaction (contd)

• The Value Proposition
• Sheehy, Bracey and Frazier (1996) assert that
  the bundle of value that an organisation
  delivers to its customers is called the value
  proposition. More than just the product itself,
  it includes price, service, selection, and
  intangibles such as image and brand equity. The
  value proposition, in short, is not just what the
  customer is buying but what he or she thinks they
  are buying.

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Converting Customer Value Expectations Into
Customer Satisfaction (contd)
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Converting Customer Value Expectations Into
Customer Satisfaction (contd)
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Converting Customer Value Expectations Into
Customer Satisfaction (contd)
Source Walters (2002)
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Identifying Processes And Capable Partners
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Identifying Processes And Capable Partners
(contd)

• Thakor et al (2000) propose the Four Quadrant
  Value Propositions (FQVP) hypothesis, derived
  from their Wholonics Model, a total-value
  approach, described as a means for aligning
  strategy and leadership.
• The four quadrants comprise
• Collaborate/ capability
• Create/ innovation
• Control/ efficiency
• Compete/ market awareness

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Identifying Processes And Capable Partners
(contd)
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Identifying Processes And Capable Partners
(contd)

• New product development
• New process development
• Organisational design and development
• Market intelligence
• Competitive analysis

Source Walters (2002)
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Designing An Interorganisational Structure For
Value Delivery
Source Walters (2002)
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Designing An Interorganisational Structure For
Value Delivery (contd)
Source Walters (2002)
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Modelling the Value Chain
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Modelling the Value Chain (contd)
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Modelling the Value Chain (contd)
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Modelling the Value Chain (contd)

• The Virtual Organisation
• Bovet and Martha (2000) describe the virtual
  company as companies who have taken outsourcing
  to an extreme. They sell products and services
  but own few, if any, production or delivery fixed
  assets instead, they leverage the assets and
  strengths of business partners. Unburdened by
  assets, these companies can adapt quickly to
  changing market conditions and operate with
  little or no working capital. The Internet
  provides ample opportunity for the virtual
  company because it offers a universal method of
  information sharing.

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Establishing Performance Criteria For An
Interorganisational Enterprise
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Establishing Performance Criteria For An
Interorganisational Enterprise
Kaplan and Norton(1996) introduce the Balanced
Scorecardas a method of presenting a balanced
perspective of operational and financial
measures.It allows managers to view the business
from 4 perspectivesa customer perspective, an
internal perspective, an innovation and learning
perspective and a financial perspective.Each of
these areas, when properly understood, can be
improved through constant management attention.
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Establishing Performance Criteria For An
Interorganisational Enterprise(contd)
Source Walters (2002)
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Establishing Performance Criteria For An
Interorganisational Enterprise(contd)
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Establishing Performance Criteria For An
Interorganisational Enterprise (contd)
Source Walters (2002)
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Auditing The Value Chain For Risk And Return
Alternatives
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Auditing The Value Chain For Risk And Return
Alternatives (contd)
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Auditing The Value Chain For Risk And Return
Alternatives (contd)
The Capital Assets Pricing Model (CAPM) displays
a combination of risk/return alternatives. If
the investments fall above the Securities Market
Line(which indicates a relationship betw risk and
return), they are performing better than the
market. If an investment falls below the line,
it is performing worse than the market. The goal
of a manager is to have all investments on or
above the SML line. However, this doesnt
usually happen.
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Using The Capability Balance Sheet To Identify
Asset Deployment Options
When a value chain approach is considered, the
options become much wider for a manager. The
manager will have to ask questions concerning
core competencies in order to make product-market
decisions. As Walters points out some forward
thinking must be undertaken to determine the
direction of potential product markets prior to
investing in core competence leadership.