Business Strategy and Environment Analysis

1. Business Strategy and Environment Analysis

2. Strategic Planning Strategic planning is long-range planning that focuses on the organization as a whole. 1. Environmental analysis. 2. Establishment of an organizational direction. 3. Strategy formulation. 4. Strategy implementation. 5. Strategic control.

4. Analyzing the organization and its environment • Organizational analysis involves looking at (scanning) the internal environment for strengths and weaknesses. • Strengths include surplus cash, a dedicated workforce, technical expertise of the company and other positive internal factors that make the company successful.

5. Analyzing the organization and its environment • Environmental analysis involves looking (scanning) the external environment for threats and opportunities. • Threats include changing consumer tastes, hostile takeover offers, and some competitor actions.

6. The Internal Environment • Organizational/Human resources • Financial • Marketing • Operations • Processes

7. The Internal Environment • Organizational Direction • Mission • Structure • Human Resources • Reward Systems • Goal Integration

8. The Internal Environment • Financial – Perform a vertical and horizontal analysis • Marketing – Understand the brand positioning and the market plan to support it • Operations – Efficient use of capital • Process – Decision-making

9. The Internal Environment • Key Business Measures • What are they? • Is there a balanced score card? • Are there lead and lag measures? • Benchmarking • Targeting similar processes measures.

10. The General External Environment • Economic • Social/Cultural/Demographic • Political/ Legal • Global • Technological

11. The External Environment • Economic environment • Economic conditions affecting products include: • Interest rates • Inflation rates • Consumer spending habits/patterns • Companies’ plans for product offerings, prices and promotion to consumers.

12. The External Environment • Social and cultural environment includes: • Changing demographics • demographics are characteristics of target populations • Recognizing personal values and religious issues • Buying behaviors of target populations • Buying preferences and behaviors • Such as purchasing more healthy foods rather than junk food

13. The External Environment • Political and legal environment • Laws and regulations that impact organization (i.e. tax, safety, environmental, antitrust) • Political activities may result in favorable laws and regulations that may open new international business opportunities. • But these political activities may also limit access to these new markets.

14. The External Environment • Technological environment • How is technology impacting the organization and industry • Technology changes include new products and new processes. • Research and development

15. External Environment • Global Environment • Eurodollar\European Union • Cultural differences • Political differences • Developing countries

16. Porter’s FORCES MODELFactors that Determine Competitiveness Within an Industry New Entrants Threat of New Entrants INDUSTRY COMPETITORS Bargaining Power of Buyers Suppliers Buyers Bargaining Power of Suppliers Intensity of Rivalry Threat of Substitutes DETERMINATION OF SUBSTITUTION THREAT Relative price performance of substitutes Switching costs Buyer propensity to substitute Substitutes

17. Porter’s FORCES MODELThreat of New Entrants • Barriers To Entry • Economies of scale • Production differentiation • Capital requirements • Switching costs • Access to distribution costs

18. Porter’s FORCES MODELBargaining Power of Customers • Concentration • Volume of purchases • Product differentiation • Switching costs

19. Porter’s FORCES MODELBargaining Power of Suppliers • Number of suppliers • Availability of substitute products • Product differentiation • Switching costs

20. Porter’s FORCES MODELThreat of Substitute Products • Products that produce the same functionality for a customer • Email and Snail mail • Security guard and Security system

21. Porter’s FORCES MODELRivalry Among Competitors • Number and balance of competitors • Industry growth • Product differentiation • Switching costs

22. Competitive Strategies • Differentiation – Uniqueness in product quality, design, after-sale service, relationship management • Cost Leadership – Products can be produced cheaper and savings are passed along in lower prices • Focus – Targeting a particular customer

23. Porter Model – Keller Graduate School • Threat of New Entrants – Medium • Capital requirements • Bargaining Power of Customers • High before enrollment • Medium after enrollment (Switching costs) • Bargaining Power of Suppliers - Low • Threat of Substitute Products - Medium • Rivalry Among Competitors – High/Medium • Some profit potential but lots of competitors

24. SWOT Analysis • Strengths, Weaknesses, Opportunities and Threats

25. SWOT Analysis – Keller Graduate School • Strengths • Good reputation throughout US • Evening Offering • Faculty with Real Word Focus • Project Management Masters • Weaknesses • Relatively unknown in Columbus market • Limited Masters Degree Offerings compared to State Universities

26. SWOT Analysis – Keller Graduate School • Opportunities • Expansion to New Markets • More Degrees • Online Offerings • Threats • Local Competition • Online Training vs. Degree Seekers • Government Regulation

27. Strategy Formulation Types • Differentiation – adding value through differences in quality, design, after-sale relationship • Cost Leadership – producing products less expensive/more efficient and offering at a lower price • Focus – targeting a narrowly defined segment • First Mover – first to enter the market with an innovation (usually technologically based)

28. Sample Organizational Strategies • Growth – increase the amount of business that a unit is generating • Stability – maintain or slightly improve sales/market share • Retrenchment – strengthen or protect existing market share • Divestiture – elimination of a unit