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STRATEGIC MANAGEMENT SESSIONS & SEMINARS. Novem ber 1, 2011 Session 7 - 8. Our goal? Learn about & practice all steps of strategic planning process. Choose a company for which to formulate a strategic business plan Identify / formulate:

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strategic management sessions seminars

STRATEGIC MANAGEMENTSESSIONS & SEMINARS

November 1, 2011

Session 7 - 8

our goal learn about practice all steps of strategic planning process
Our goal? Learn about & practice all steps of strategic planning process
  • Choose a company for which to formulate a strategic business plan
  • Identify / formulate:

- mission statement – framework w/in which strategy

shall be crafted

- corporate vision – where do we want to be in # years

- business aims -> specific objectives

  • Scan the environment – carry out external, internal & industry

analysis-> situationalanalysis

-> Internal analysis - core business & competencies, resources

available, corp. structure, required inputs,

corp. culture

=> IFAS (Internal Factor Analysis Summary)

our goal practice all steps of strategic planning process
Our goal? Practice all steps of strategic planning process
  • Environment scanning cont’d:

-> External analysis - PEST(LE) => EFAS (External Factor Analysis Summary)

- Industry Analysis (task environment):

-> Porter’s Five (Six) forces => Industry Matrix

- Situational Analysis – finding a strategic fit b/w external opportu-

nities & internal strengths

- mitigating harmful effects of external threats

due to internal weaknesses

=> SFAS (Strategic Factor Analysis Summary) => SWOT analysis

strategic management model
Strategic Management Model

Existing business model

Existing

Mission, vision, goals, objectives, corp. values

SWOT => Strategic choice

External analysis -> opportunities, threats

Internal analysis -> strengths, weaknesses

Functional-level strategies

Business-level strategies

Corporate-level strategies

Strategy implementation

industry analysis porter s 5 6 forces
Industry analysis – Porter’s 5 (6?) forces

Threat of new entrants

  • Barriers to entry:

- economies of scale

- product differentiation

- capital requirements

- switching costs

- access to distribution channels

- cost disadvantages independent of size

- government policy

industry analysis porter s 5 6 forces1
Industry analysis – Porter’s 5 (6?) forces

Rivalry among existing firms

  • Rivalry related to:

- number of competitors

- rate of industry growth

- produce or service characteristics

- amount of fixed costs

- capacity

- height of exit barriers

- diversity of rivals

industry analysis porter s 5 6 forces2
Industry analysis – Porter’s 5 (6?) forces

Threat of substitute products (goods/services)

  • Products - satisfy the very same need as their direct substitutes
  • Although they appear to be different
  • If switching costs are low => strong effect on an industry

Relative power of stakeholders

  • Labor unions
  • Governments
  • Shareholders
  • Banks …
industry analysis porter s 5 6 forces3
Industry analysis – Porter’s 5 (6?) forces

Bargaining power of buyers

  • Buyers are powerful when:

- they purchase large proportion of seller’s products

- they are capable of integrating backward

- there are many alternative suppliers

- switching to other suppliers is not costly

- the product purchased is NOT important to the final quality/price of

buyer’s products

- the product purchased accounts for a substantial %age of buyer’s costs

- they earn low profits

industry analysis porter s 5 6 forces4
Industry analysis – Porter’s 5 (6?) forces

Bargaining power of suppliers

  • Suppliers are powerful when:

- Suppliers’ industry is dominated by a few players selling to many buyers

- Their products are unique

- Their products have high switching costs

- Substitutes are hardly available or not at all

- They can integrate forward and compete directly w/current customers

- The goods made/sold by them to buyers constitute only a small portion

of suppliers’ total product portfolio

air travel industry
Air-travel industry
  • Rivalry among industry players

- Airbus vs. Boeing (vs. ATR, Tupolev)

  • Threat of new entrants

- severe regulations

- large capital investment

- sophisticated supplier and support industries

- highly skilled labor

- zero/negative profits during an extended start-up phase

- China/Russia/Japan or … ? may encourage a subsidized entry into market

of their own national company

air travel industry1
Air-travel industry
  • Bargaining power of buyers

- limited # of traditional and low cost airlines; leasing companies

=> considerable & growing power b/c of decreased # of orders for new

aircraft

- they have low switching costs -> Boeing is willing & able to offer better

price &/or service than Airbus to steal orders from Airbus

- low cost airlines – order aircraft w/basic equipment easily to be

produced by either of 2 manufacturers

air travel industry2
Air-travel industry
  • Bargaining power of suppliers

- engine manufacturers – crucial for aircraft manufacturers

- gradually undergoing consolidation

- non-existent substitutes due to certification

requirements (high reliability/efficiency)

=> strong bargaining power weakened by shrinking military market to which they also supply

  • Threat of substitutes

- high-speed trains (Germany, France) traveling between points falling into

air-travel network => lower demand for air-travel alternative

- automobile industry – cars, highway network in EU, comfort (A/C)

- IT – e.g. skype conference calls => no need to meet physically in 1 place

air travel industry3
Air-travel industry
  • Relative power of stakeholders

- Banks – loans to aircraft manufacturers backed up by long-term contracts

w/airlines, governments, renting companies ……

- Suppliers, labor unions, international relations in the defense sector …