Models for Strategic Analysis

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Models for Strategic Analysis
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Mintzbergs Ten Planning Schools
SCHOOL STRATEGY FORMATION APPROACH
Design Process of Conception
Planning Formal Process
Positioning Analytical Process
Entrepreneurial Visionary Process
Cognitive Mental Process
Learning Emergent Process
Power Process of Negotiation
Cultural Collective Process
Environmental Reactive Process
Configurational Process of Transformation
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Mintzbergs Definitions of Strategy

• Strategy is a PLAN ? Direction, Guide or Course
  of Action ? Intended
• Strategy is a PATTERN ? Reflects past decisions ?
  Reactive
• Strategy is a POSITION ? Locating products and
  activities in markets
• Strategy is a PERSPECTIVE ? Theory of the
  business
• Strategy is a PLOY ? A maneuver against opponents

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Strategy for Better or Worse
STRATEGIC ASPECT ADVANTAGE DISADVANTAGE
Strategy Sets Direction Charting a course through uncertainty Binders that hide potential dangers
Strategy Focuses Perspective Coordination of Activity Groupthink
Strategy Defines the Organization Shorthand Meaning and Comprehension Excessive Simplicity and Stereotyping
Strategy Provides Consistency Reduces Ambiguity and Provides Order Misrepresentation and Distortion
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Elements of Strategy
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Models for Global Strategic Analysis
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Seven Approaches to Planning
APPROACH CRITICAL FACTOR
Resource based view Resources
Core Competency Knowledge/ Skill
Competitive Advantage of Nations National Location
Strategic Groups Assets
Cognitive Communities Shared Ideas
Network Approaches Relationships
Competing for the Future Opportunities
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Resource Based View

• Object is to acquire or create resources that
  others do not have
• Types of resources
• Financial
• Human
• Physical
• Organizational
• Technological
• Growth happens when managers think of better ways
  to use resources to create value
• Bad performance happens with bad assessments or
  lack of attention to resources

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Resources
What a firm Has...
What a firm has to work with
its assets, including its people and the value of
its brand name
Tangible Resources
Resources represent inputs into a firms
production process...
such as capital equipment, skills of employees,
brand names, finances and talented managers
Intangible Resources
Some genius invented the Oreo. Were just
living off the inheritance.
F. Ross Johnson, Former President CEO, RJR
Nabisco
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Competence Based Competition

• Competence is the bases for all new moves
• Skill/Knowledge/Learning
• Four bases for competence
• Adds value
• Applies to a wide variety of businesses
• Difficult to copy
• Cannot substitute other products or services

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Mobilizing Company Resources to Produce
Competitive Advantage
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Competitive Advantage of Nations

• Home Base for
• Strategy
• Core product/process development
• Essential Skills
• Determinants of National Advantage
• Factor Conditions
• Demand Conditions
• Related/Supporting Industries
• Firm Strategy/Structure/Rivalry
• Difficulty at home can make strength outside

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Strategic Group Theory

• Firms with similar strategies compete with each
  other
• Industries have more than one group
• Barriers to change between groups
• Functional/National/International differences

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Strategic Group Mapping

• Firms in same strategic group have two or more
  competitive characteristics in common
• Sell in same price/quality range
• Cover same geographic areas
• Be vertically integrated to same degree
• Have comparable product line breadth
• Emphasize same types of distribution channels
• Offer buyers similar services
• Use identical technological approaches

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Strategic Group Map of the Video Game
Industry
Video arcades, coin-operated machines
Arcade operators
Publishers of games on CD-ROMs
Home PCs
Sony, Sega, Nintendo, several others
Types of Video Game Suppliers/Distribution
Channels
Video game consoles
MSN Gaming Zone, Pogo.com, America Online, HEAT,
Engage, Oceanline, TEN
Online game sites
Low (Coin-operated equipment)
Medium (Video players cost 100-300)
High (Use PC)
Overall Cost to Players of Video Games
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Categorizing Objectivesand Strategies of
Competitors
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Mental Communities

• Mental map of competitive landscape
• Firms develop experience
• Firms work together across industries and within
  industries
• Competitors
• Suppliers
• Buyers
• Uses Managers views to classify firms

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Levels of Strategy-Making in a
Single-Business Company
Executive-Level Managers
Business Strategy
Functional Managers
Functional Strategies
Operating Managers
Operating Strategies
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Levels of Strategy-Making in a Diversified
Company
Corporate-Level Managers
Corporate Strategy
Business-Level Managers
Business Strategies
Functional Managers
Functional Strategies
Operating Managers
Operating Strategies
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Who Performs the FiveStrategic Management
Tasks?

• Senior Corporate Executives
• Managers of Subsidiary Business Units
• Functional Area Managers
• Operating Managers

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Approaches to Performingthe Strategy-Making
Task

• Chief Architect
• Manager personally functions as chief strategist
• Delegate-It-to-Down-the-Line Managers
• Manager delegates some strategy-making
  responsibility to subordinates in charge of key
  organizational units
• Collaborative/Team
• Manager enlists assistance and advice of key
  subordinates in hammering out a consensus
  strategy
• Corporate Intrapreneur
• Manager encourages subordinates to develop and
  champion proposals for new ventures

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Strategic Role of a Board of Directors

• Critically appraise and ultimately approve
  strategic action plans
• Evaluate strategic leadership skills of the CEO
  and candidates to succeed the CEO

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Strategic Management Principle

• A board of directors role in the strategic
  management process is to critically appraise and
  ultimately approve strategic action plans and to
  evaluate the strategic leadership skills of the
  CEO and others in line to succeed the incumbent
  CEO.

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Network Theory

• Firms succeed by alliances and joint ventures
• Patterns of relationships are as important as
  firm abilities and resources
• Network relations assist and restrain

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Supply Network
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CHAIN TYPE SYSTEM

• CLIENT

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NETWORK TYPE SYSTEM
CLIENT
CLIENT
CLIENT
CLIENT
CLIENT
CLIENT
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SHOP TYPE SYSTEM
Resources
INTERACTIONS
CLIENT
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Strategic Vision

• Firm compete for the ability to define the future
• Firms define the future for their own benefit
• Important in emerging markets
• Competitive leadership in new markets happens
  through defining and anticipating markets
• Design/market development/resource
  development/human development

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Business Mission The McGraw Hill Companies

• The McGraw-Hill Companies is a global publishing,
  financial, information and media services company
  with such renowned brands as Standard Poors,
  Business Week, and McGraw-Hill educational
  and professional materials.
• The Company provides information via various
  media platforms books, magazines and
  newsletters on-line via television, satellite
  and FM sideband broadcast and software,
  videotape, facsimile and CD-ROM products.
• The Company now creates more than 90 of its
  information on digital platforms and its business
  units are represented on more than 75 Web
  sites.

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Managements job is not to see the company as it
is.but as it can become. John W. Teets
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Broad vs. Narrow Scope

• Broad Definition
• Furniture
• Telecommunications
• Beverages
• Global mail delivery
• Travel tourism

• Narrow Definition
• Wrought-iron lawn furniture
• Long-distance telephone service
• Soft drinks
• Overnight package delivery
• Caribbean cruises