Debrief - Strategic capability

Strategic capability is a sum total of the competences and the resources that are employed by the organization to create sustainable competitive advantage. Strategic management focuses on achieving long termgoals of the organization by identifying,procuring,aligning and applying these competences and resources. It also deals with scanning and understanding the external environment of the organization to identify and capitalize on the opportunities available. Debrief - strategic capability

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Debrief – strategic capability

CHALLENGES IN STRATEGIC MANAGEMENT

Involves complexity

Entails uncertainty

Affects operational decisions

Requires integrated approach

Involves sustenance of external relations

Necessitates change

EIGHT STRATEGIC GOALS OF THE ORGANIZATION The following are the eight strategic goals of the organization.All the strategies of the organization relate to one or more of these goals.

Market standing

Profit requirements

Innovation

Social responsibility

Human resources

Productivity

Financial resources

Physical resources

PESTEL MODEL PESTEL model classifies environmental factors into six major types,which are,political, economic, social, technological, environmental, and legal. All of these factors are linked to one another in some way or the other. PESTEL framework helps to identify main factors of change that are likely to impact the structure of an industry.

Political

Legal

Economic

ORGANIZATION

Environmental

Social

Technological

Debrief – strategic capability

PORTER’S FIVE FORCES An industry analysis can be performed using a framework developed by Michael Porter known as Porter’s five forces.This framework can be used extensively to understand the dynamics of any industry.It also gives an indicator of the attractiveness of an industry.For example, increase in the bargaining power of suppliers and buyers,reduces the profits of the organization. Similarly, higher the number of substitutes and competitors in the market, the more is rivalry in the industry.

SUPPLIER POWER Brand reputation Geographical coverage Product/Service level quality Customer relationships Bidding processes/capabilities

NEWMARKET ENTRANTS Entry ease/barriers Geographical factors Incumbents resistance Learning curve Routes to market

BUYER POWER Price sensitivity Buyer choice, size, number Volumes/JIT scheduling Substitutes available

RIVALRY

PRODUCT & TECHNOLOGY DEVELOPMENT Fashion & trends Price performance Switching costs Market distribution changes

ORGANISATION POWER V/S VENDOR POWER MATRIX

HIGH

Expensive Substitutes are available Technology change

Monopoly Long term contract

Uncertainty Increase rivalry Block capacity

Ideal

LOW

LOW

HIGH

Organization power

PORTER’S DIAMOND MODEL The model aims to evaluate effect of macro environment on the competitive setting of the industry. According to Porter the organization’s national home base plays a significant role in producing global advantage

Firm strategy, structure & rivalry

Demand conditions

Factor conditions

Related & supporting industries

Debrief – strategic capability

VALUE CHAIN ANALYSIS Value chain analysis is an important technique for understanding a firm’s core competencies and the activities.It can be used to identify the steps which the organization can initiate to get a competitive advantage. Competitive advantage is of two types: Cost advantage – With a better understanding of the costs associated with each activity and process, the organization can better manage its cost Differentiation – By focus on core competencies and capabilities associated with the activities organization can outperform its competitors

SUPPORT ACTIVITIES

Firm infrastructure

Human resource management

Technology development

Procurement

PRIMARY ACTIVITIES Inbound logistics Operations

Outbound logistics

Marketing & sales

Service

SUSTAINABLE COMPETITIVE ADVANTAGE

RESOURCES

COMPETENCES

Threshold resources Resources needed to meet customers’minimum requirements and continue to exist Unique resources Resources that underpin competitive advantage and are difficult for competitors to imitate or obtain

Threshold competences Activities and processes needed to meet customers’ minimum requirements and continue to exist Core competences Activities that underpin competitive advantage and are difficult for competitors to imitate or obtain

Threshold capabilities

Capabilities for competitive advantage

STRATEGIC CLOCK Strategic clock is an ideal tool for managers to understand their choices for segmentation, targeting and positioning of their products and services in the market. Each position on strategic clock symbolizes a different requirement of customers in terms of value for money.

Differentiation

Hybrid

Focused differentiation

Low price

Strategies destined for ultimate failure

No frills

Low

Price

High

Debrief – strategic capability

BCG MATRIX This model helps us to identify the exact location of organization’s SBU in one of the four quadrants based on the market share and market growth.This information can be used to design strategies to further improve the profitability of the SBU.

HIGH

Stars

Question marks

Market growth

Cash cows

Dogs

LOW

HIGH

LOW

Market share

ANSOFF MATRIX The Ansoff matrix explains that the amount of risk associated with business strategies increase as they move away from known/existing markets and products.Thus, strategies involving new products and/or new markets are more risky.

Existing

Consolidation

Product development

Market development

Diversification

New

Existing

Products

New

MCKINSEY’S 7S MODEL This model helps us to understand the internal environment of the organization. It also serves as a means to align all the processes to increase the effectiveness of the organization.The seven important S’s of the organization are: Strategy Structure System Style Staff Skills Shared values

THE BALANCED SCORECARD The balanced scorecard is a strategy formulation and implementation tool that helps the

organization to systematically align all its initiatives and activities in order to achieve its goals and objectives. It is popular because it takes into account the holistic view of the organization (financial and non-financial). It also helps to evaluate the effectiveness of the strategy implementation process.

Assessment

Strategy

Evaluation

FINANCIAL

Objectives

Cascade

MISSION VISION

ORGANIZATIONAL CAPACITY

Strategic map

Automation

Performance measure

Initiatives

Debrief – strategic capability

HIGHLIGHTS OF THE EXERCISES

Insights from “Hi-fly Airways case study”

SWOT, TOWS, and competitive advantage framework

Insights from “What it really takes to be a world class company”

KEY TAKEAWAYS FROM THE PROGRAM

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