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Strategic Segmentation Strategic Information Model Competitive Positioning

How can we systematically “divide” our environment into “workable areas”? How do we make sure that the information we received from the environment involves legitimate (perceived) information? How do we systematically design a competitive organization? How do we interpret qualitative data?

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Strategic Segmentation Strategic Information Model Competitive Positioning

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  1. How can we systematically “divide” our environment into “workable areas”? How do we make sure that the information we received from the environment involves legitimate (perceived) information? How do we systematically design a competitive organization? How do we interpret qualitative data? Perception vs. Reality for Organizational Leaders Strategic SegmentationStrategic Information ModelCompetitive Positioning Ansoff and McDonnell, 1990 Created by Robert Moussetis, 2000

  2. In which SBAs will the firm do business in the future? What competitive position will the firm occupy in each SBA What competitive strategy will the firm pursue to gain this position SBA Segmentation Dimensions: Need, Customer type, Technology and Geography Characteristics: Growth, Performance (Profitability), Turbulence and Success factors Strategic Resource Area: In the resource based postindustrial universe, managers have to balance what they want to do against what they can do Strategic Influence Groups: Firms increasingly legal and societal pressures - Stakeholder Management SBA:A Strategic Business Area which is a distinct segment of the environment in which a firm does (or may want to do) business SBA SBA SBA1 SBU SBU SBA2 Environment Firm Ansoff and McDonnell, 1990 Created by Robert Moussetis, 2000

  3. CRITICAL MASS CM: INVESTMENT BELOW WHICH A FIRM BECOMES UNPROFITABLE IN AN STRATEGIC BUSINESS AREA Optimal Mass + ROI INVESTMENT IN AN SBA - Critical mass Ansoff and McDonnell, 1990 Created by Robert Moussetis, 2000

  4. ENTRPENEURIAL PLANNING ENVIRONMENT SBA SBA STRATEGIC SEGMENTATION SBA STRATEGIC SUCCESS HYPOTHESIS FIRM’S OBJECTIVES SBA PROSPECTS STRATEGIC DIAGNOSIS SBA ATTRACTIVENESS TARGET COMPATITIVE POSITIONING Degree of Preparedness COMPETITIVE POSTURE IN SBA PORTFOLIO POSTURE Ansoff and McDonnell, 1990 Created by Robert Moussetis, 2000

  5. Power Filter: It is nature for managers and departments, whose power is threatened by discontinuities, to minimize or even refuse to recognize the impact of discontinuity. Mentality Filter: Rejection of novel information and predisposition on success models Strategic and Creative Mentalities focus on Future, Novel and Unfamiliar change Entrepreneurial drive and tolerance of failure Management Information Strategic Information Model Environment Surveillance Filter Data Mentality Filter Power Filter Perception Actions Information Ansoff and McDonnell, 1990 Created by Robert Moussetis, 2000

  6. Estimating SBA attractiveness Global forecast Future Turbulence Historical Trends extrapolated into the future Changes in the historical demand Overall shifts in growth prospects Numerical estimates of Future growth Future shifts in the profitability Boston Consulting Group matrix Competitive Positioning ? High Volume Growth Cash Cows Low Dogs High Low Market Share as a function of leading competitor SBA Attractiveness = a G + b P + g O - d T Ansoff and McDonnell, 1990 Created by Robert Moussetis, 2000

  7. MBA Educational Leadership Biology History Administrative Services Admissions -Registrars -Financial Aid Academic Services Advising - Technology Needs Facilities Buildings and Services Recreational Activities Classrooms and Teaching Domains Example: North Central College • Identify Future Turbulence • Establish Strategic Aggressiveness • Establish Responsiveness of Capability Ansoff and McDonnell, 1990 Created by Robert Moussetis, 2000

  8. STRATEGY(S) CAPABILITY(C) STRATEGIC INVESTMENT(I) GROWTH THRUST (Domain) MARKET POSITION (Domain )MARKET DIFFERENTIATION SERVICE-PRODUCT DIFFERENTITION CRITICAL MASS VERITCAL INTEGRATION MANAGEMENT FINANCE MARKETING R&D PRODUCTION IN STRATEGY IN CAPABILITY IN FACILITIES COMPETITIVE POSTURE IN AN SBA POSTURE=SXCX(I-Icr) Ansoff and McDonnell, 1990 Created by Robert Moussetis, 2000

  9. Behavioral Resistance Do reasonable people do reasonable things? Does implementation of change follows the plan of change? During Change, the following may occur Procrastination to trigger the change Unforeseen implementation delays Sabotage the change After the change Typical Performance lag Efforts to roll back to pre-change status Resistance to Change Tomorrow we will get organized and plan (Procrastination) Death in the Drawer (Indecision) Paralysis by Analysis (Lack of Implementation Follow up) The more we sell, the more money we loose (strategic Ineffectiveness) What does the boss doesn’t know won’t hurt him (Sabotage) Let’s get back to real work (Regression) Ansoff and McDonnell, 1990 Created by Robert Moussetis, 2000

  10. Implications of change Politically Threatening/Welcome (D P) Change in Culture (D C) R behavioral= (D P+ D C)/ D T Resistance to Change Resistance by Individuals Manager feels uncertain, redundant, diminished control, reduced reward, prestige Resistance by Groups Group of Managers with common behavior, values, norms, own model of reality, power centers, culture, etc. Organizational Loyalty Negative Loyalty (for organizational survival) Perception vs. Reality Ansoff and McDonnell, 1990 Created by Robert Moussetis, 2000

  11. Managing Resistance From Reactive to Proactive Management Building a Launching Platform Minimize startup resistance Accumulating Power for the Change Diagnosing the Nature of Change Expected Discontinuities Time and Extend of Changes needed Building a supportive Climate Eliminate fears and Anxieties Designing the behavioral features into the plan for change Resistance to Change Ansoff and McDonnell, 1990 Created by Robert Moussetis, 2000

  12. Systemic Resistance When Operating work clashes with strategic work Diminished Capacity for Strategic Work Increase in Strategic Budget but not in Managerial Capacity Operating vs. Strategic Work Resistance to ChangeSystemic Resistance Change in Strategy Small Change in Strategic Budget Large Low Resistance Incompetence Resistance Small Overload Resistance Both Incompetence and Overload Resistance Large Ansoff and McDonnell, 1990 Created by Robert Moussetis, 2000

  13. Ti>ta Adaptive Method ta >tc Managed Resistance Method ti =tc Coercive Method ti <tc Prepare for a crisis Managing Change • Coercive Management Change • Adaptive Change • Crisis Management • Managed Resistance • Urgency Indicates Change Method • ti: Time to Impact • tc: Time needed for coercive change • ta: Time needed for Adaptive Change Dual Budgeting: Operating and Strategic Budget Operating:Profit Making Activities-Capacity Expansion - Cost Reduction Strategic:Improve Competitive Posture- Add new and/or related SBAs - Divest undesirable SBAs Ansoff and McDonnell, 1990 Created by Robert Moussetis, 2000

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