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Group 5. Brad Maryman Cristina Matthews Todd Duncan Tom Tran Sean Rose. Agenda. Chapter 2 Overview Case 2-3 SWOT analysis Reading 2-1 Value chain analysis Reading 2-3, Case 2-1 Value chain analysis The balanced scorecard. Chapter 2 Overview.

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group 5
Group 5

Brad Maryman

Cristina Matthews

Todd Duncan

Tom Tran

Sean Rose

agenda
Agenda
  • Chapter 2 Overview
  • Case 2-3
    • SWOT analysis
  • Reading 2-1
    • Value chain analysis
  • Reading 2-3, Case 2-1
    • Value chain analysis
    • The balanced scorecard
chapter 2 overview
Chapter 2 Overview

Important management tools for implementing strategy:

  • SWOT analysis
  • Value chain analysis
  • The balanced scorecard
swot analysis
SWOT Analysis

SWOT analysis is a procedure for identifying a firm’s critical success factors: its internal strengths and weaknesses and its external opportunities and threats.

Critical Success Factors (CSFs) are measures of those aspects of the firm’s performance that are essential to its competitive advantage.

value chain analysis
Value-Chain Analysis

Firms use this tool to identify the specific steps required to provide a competitive product or service. It is specifically used to:

  • Better understand a firm’s competitive advantage
  • Identify where to add value or reduce costs
  • Better understand external connections to the firm (suppliers, customers, competitors)
the balanced scorecard

Learning improves

business processes.

Improved business processes

improves customer satisfaction.

Improving customer

satisfaction improves

financial results.

The Balanced Scorecard
the balanced scorecard7
THE BALANCED SCORECARD
  • Financial -insistsevery corporate action culminates in improving short- and long-run financial performance
  • Customer -allows companies to align their measures of customer values (i.e., satisfaction, loyalty, retention) with targeted customers and segments
  • Internal Business Process -defines and measures an internal process value chain that identifies current and future customer needs and subsequent solutions
  • Learning and Growth - drives successful outcomes of the first three perspectives
link between strategic resources
Link Between Strategic Resources

SWOT

Analysis

Value

Chain

Analysis

Balanced

Scorecard

case 2 3 accounting tax practice
Case 2-3: Accounting & Tax Practice
  • Background on Terry Merton
    • CPA, controller for small manufacturing firm
    • Dreams of owning her own business
  • Who should be her target market?
    • Tax practice = cost leadership
    • Tax and accounting practice = differentiation
  • Bill Anderson, the loan officer
    • Maximum loan of $8,000
    • Annual payments of $2,110
strategy analysis
Strategy Analysis
  • Terry’s perspective
    • More total income with cost leadership strategy
      • $48,240 vs. $40,000
    • More opportunity with differentiation strategy
    • Differentiation strategy preferred
  • Bill’s perspective
    • Differentiation strategy preferred
    • More operating income before depreciation
      • $10,400 vs. $3,840
strategy focused performance measures
Strategy Focused Performance Measures
  • Strategy and performance are inseparable
  • First strategy, then performance measures
  • Metrics should change as strategy changes
  • Align strategy and performance measures with the right goal
  • Use performance measures that help synchronize strategic activities
why align performance measures with the firm s strategy
Why Align Performance Measures With the Firm's Strategy?
  • Accurate evaluation of the firm's success in implementing its strategy.
  • How well are we really doing? You don't know until you measure the right parameter, be it revenue growth, customer satisfaction, cost savings, etc.
  • On-going and iterative process
how the value chain determines strategic performance measures
How the Value Chain Determines Strategic Performance Measures

To utilize value chain analysis:

  • Step 1: Identify the value chain activities
  • Step 2: Develop a competitive advantage by reducing cost or adding value
  • Step 3: Plan and achieve strategic objectives to optimize the competitive advantages.
  • Step 4: Ensure the performance measures align and change with the strategic goals
slide16

Financial Perspective

“To succeed financially, what kinds of financial performance should we provide to our investors?”

Internal Business

Processes

Customer Perspective

VISION &

STRATEGY

“To satisfy our shareholders and customers, at what business processes must we excel?”

“To satisfy our shareholders and customers, at what business processes must we excel?”

“To achieve our vision, how should we be seen by our customers?”

Learning & Growth Perspective

“To achieve our vision, how will we sustain our ability to change and improve?”

Balanced Scorecard: Translating Strategy into Operational Terms

the balanced scorecard 4 new management processes
THE BALANCED SCORECARD4 NEW MANAGEMENT PROCESSES
  • Translating the vision - a consensus of opinions among management regarding a set of objectives and measures that will drive long-term success
  • Communicating and Linking - assure all levels of the organization understand the company’s long-term strategy
  • Business Planning - integrates business and financial plans while providing a basis for allocating resources
  • Feedback and Learning - helps direct the organization toward strategic learning
the balanced scorecard19
THE BALANCED SCORECARD

FOOD INGREDIENTS COMPANY

  • Financial Perspective
    • Industry Growth
    • Secure base
    • Expand globally
  • Customer Perspective
    • Be low cost supplier
    • Tailored Products
  • Internal Perspective
    • Maintain Lowest Cost
    • Maintain Consistent Production
    • Improve Distribution Process
  • Learning and Growth
    • Link Strategy to Reward System
    • Foster a culture that supports innovation

*Low Cost

Strategy

the balanced scorecard20
THE BALANCED SCORECARD

COMMERCIAL BANK

  • Financial Perspective
    • Return on Assets/Equity
    • Efficiency Ratio
    • Asset Growth
  • Customer Perspective
    • Personalized quality service
    • Competitive products
    • Price
  • Employee Perspective
    • Competitive wages and benefits
    • Participation in Success of Organization
    • Enhanced Job Skills
  • Community Perspective
    • Support community activities
    • Act as good corporate citizens

*Differentiation/Quality

Strategy

the balanced scorecard21
THE BALANCED SCORECARD

BIOTECHNOLOGY FIRM

  • Customer Perspective
    • New Products
    • Early purchase of seasonal products
    • Accurate invoices
  • Internal Business Perspective
    • Low Cost Producer
    • Reduce Inventory
    • New Products
  • Innovation Perspective
    • New Active Ingredients
    • Proprietary positions
  • Financial Perspective
    • Growth
    • Profitability
    • Industry leadership

*Differentiation/Quality

Strategy

case 2 1 atlantic city casino
Case 2-1: Atlantic City Casino
  • Background
    • HCA purchased LV casino, constructed another
    • Casino is an independent operating unit
    • Low ROI (better return in CDs)
    • Casino located several blocks off of main strip
    • Proposal for new entertainment center at casino
    • Management is cautious
value chain analysis for hca
Value Chain Analysis For HCA
  • Value chain analysis
    • Casino operations (4th)
    • Hotel operations (5th)
    • Food/beverage operations (1st)
  • Casinos with similar revenues have greater net income
  • Casino has been profitable from day one
  • Cost reduction ideas
    • Need more information
  • Value-added ideas
    • Improve access to the casino
    • Carry carnival theme into casino
    • Headline attractions to draw customers
    • Complimentary gaming chips for theme park customers
investment decision for hca
Investment Decision For HCA
  • Yes, HCA should invest
    • Increase the walk-in rate
    • Current ROI inadequate
    • Need an attraction
    • Potential risks:
      • Too difficult to attract people off of main strip
      • Change customer base, turn off original customers
      • People may not want to pay for the entertainment center
    • What are hotels 1, 3, and 5 doing?
      • All have higher profit margins
balanced scorecard for hca
Balanced Scorecard For HCA
  • Customer Perspective
    • Are past customers coming back?
    • Number of walk-ins?
    • Measures of enjoyment/customer satisfactions?
  • Financial Perspective
    • Return on investment, profitability, sales growth, cost of sales?
  • Internal Process Perspective
    • How well is theme park integrated into casino?
    • Measure success with complimentary gaming chips
    • Customer retention rate
  • Learning and Innovation
    • Staying up-to-date with latest casino trends
    • Training employees on creating “carnival” atmosphere
    • Entertainment focus