case framework

8/14/2019 Case Framework

1/15

Case Analysis

Framework - Strategic

ManagementIan Lee, Ph.D

Carleton University

Ottawa, Canada

[email protected]

Stratrategic Management

National/MacroContext

IndustryContext

Company Resources,Capabilities, and

Strategies

CompanyPerformance

Strategic Analysis = Choices

Thinking StrategicallyAbout Industry

and CompetitiveConditions

Thinking StrategicallyAbout FirmsOwn Situation

IDStrategic Options

Open to Firm

Choice ofBest

Strategy


2/15

Case Background

xBrief factual summary

x1/2 page or so

xname of firm, time of case

xbroad issue(s)

PEST or TESP Analysis

xTechnological O/T

xEconomic O/T

xSocio-cultural O/T

xPolitical-legal O/T

Competitive

EnvironmentThreat of new entrants

Bargaining power of suppliers

Bargaining power of buyers

Threat of substitute products

Competitive rivalry

General Environment

Demographics

Political/Legal

Technological

Macroeconomic

Sociocultural

Global

Macro and Competitive Environments


3/15

Summary

xMost important or significant O/T

xnot all O/T equally significant

xfocus on those with greatest impact

Industry Analysis

5 Forces Model of Competition

SubstituteProducts

Rivalry

AmongCompeting

Sellers

PotentialNew

Entrants

Suppliers Buyers


4/15

Porters 5 Forces

xHead to head competition L-M-H

xsubstitutes L-M-H

xthreat of entry L-M-H

xpower of buyers & suppliers L-M-H

Strategic Group Map

xCluster the major competitors

xaccording to their niche

xgraphically

Upscale

National

Chain

Discount

Warehouse

High

Low

Perceived

Quality

Low High

Retail Price

Strategic Groups in Department Store Industry


5/15

Major Competitor Analysis

xWho are they?

xwhat strategies are they pursuing

xrelative market share? profitability?

Driving Forces

xmajor forces of change affecting all firms

xe.g. entry of new competitors

xde-integration

xglobalization of industry

Key Success Factors

xGeneric characteristics for all firms

xnecessary for success

xregardless of particular business strategy

xwhether low cost or differentiation


6/15

Overall Industry Attractiveness

xBased on:

x Porters 5 forces analysis

xdriving forces, KSFs, competitor analysis

xindustry (un)attractive e.g. ROI?

Business Unit Analysis

Value Chain

xApply S/W to Porters VC

xunder each heading

xalso helps understand Hamel Framework


7/15

Value ChainValue Chain

OutboundLogistics

OperationsInboundLogistics

Sales andMarketing

ServiceProfit

Margin

Product R&D, Technology, Systems Development

Human Resources Management

General Administration

Primary Activities and Costs

SupportActivitiesand Costs

Value Chain SystemValue Chain System

Activities,Costs, &

Margins ofFowardChannel

Allies

InternallyPerformed

Activities,Costs, &

Margins

Buyer/User

ValueChains

Activities,Costs, &

Margins ofSuppliers

UpstreamValue Chains

CompanyValue Chains

DownstreamValue Chains

Hamels Framework

xCore Competencies

xCore Product

xEnd Product

xSCA


8/15

Pathway to

Foundation

of

Source ofSource of

ResourcesResourcesResources

*** TangibleTangibleTangible

*** IntangibleIntangibleIntangible

CapabilitiesCapabilitiesCapabilities

Teams of

Resources

Teams ofTeams of

ResourcesResources

Sources of

Competitive

Advantage

Sources ofSources of

CompetitiveCompetitive

AdvantageAdvantage

CoreCoreCoreCompetenciesCompetenciesCompetencies

Gained through

Core Competencies

Gained throughGained through

Core CompetenciesCore Competencies

SustainedSustainedSustainedCompetitiveCompetitiveCompetitiveAdvantageAdvantageAdvantage

Components ofInternal AnalysisComponents ofComponents of

Internal AnalysisInternal Analysis

Above-Average

Returns

AboveAbove--AverageAverage

ReturnsReturns

StrategicStrategicStrategicCompetitivenessCompetitivenessCompetitiveness

Hamels Competency Framework

Core CompetenciesCore Competencies

Core Competencies must be:

ValuableValuable

RareRare

Costly to ImitateCostly to Imitate

NonsubstitutableNonsubstitutable

What a firm Does...

that is Strategically

Valuable

Outcomes from Combos of Criteria for SCAOutcomes from Combos of Criteria for SCAOutcomes from Combos of Criteria for SCA

ValuableValuable RareRare

Costly toCostly to

ImitateImitate

NonsubNonsub--

stitutablestitutable


ConsequencesConsequences

PerformancePerformance

ImplicationsImplications

Above

Average

Returns

Above

Average

Returns

NONO NONO NONO NONO

YESYES NONO NONO YES/NOYES/NO

YESYES NONO YES/NOYES/NOYESYES

YESYESYESYES YESYESYESYES


AdvantageAdvantage

BelowBelow

AverageAverage

ReturnsReturns


ParityParity

AverageAverage

ReturnsReturns

TemporaryTemporary


AdvantageAdvantage

Aver./AboveAver./Above

AverageAverage

ReturnsReturns

SCASCA


9/15

Financial Statement Analysis

A. Investment Return

xCapital Market Ratios:

!EPS

!P/E

B. Financial Strength

xLiquidity Ratios:

!Current, Acid Test

xSolvency Ratios:

!D/A, D/E, Interest Coverage, Cash Flow/Debt

C. Management Performance

xProfitability Ratios:

!Gross Margin

!Net Profit Margin

!Return on Assets

!Return on Equity

!Return on Capital


10/15

D. Resource Utilization Ratios

xAsset Turnover

xPayables Turnover

Mission Statement

xConstruct firms mission from data

xmay recommend changes in mission

xunder strategies

Corporate Objectives

xPresently followed by firm

xquantitative objectives

xqualitative objectives


11/15

Relationships between ...

Corporate

Level

Objectives

Overall Scope

and Strategic

Mission

Level 1 CorporateLevel

Strategy

Business

LevelObjectives

Business

LevelMissions

Level 2 BusinessLevel

Strategies

Functional

AreaObjectives

Functional

AreaMissions

Level 3 FunctionalArea

Strategies

Level 4Field UnitObjectives

OperatingMissions

OperatingStrategies

Two-Way Influence Two-Way Influence Two-Way Influence

Two-Way Influence Two-Way Influence Two-Way Influence

Two-Way Influence

Corporate-LevelMgrs

Business-LevelGeneral Mgrs

Heads of MajorFunctional Areas

Plant Managers,

Lower-Level Supervisors

Two-Way Influence Two-Way Influence

Business LevelBusiness LevelStrategyStrategy

External EnvironmentExternal Environment

PEST

Five Forces Analysis

PEST

Five Forces Analysis

Internal EnvironmentInternal Environment

Resources, Capabilities and

Core Competencies

Resources, Capabilities and

Core Competencies

Sustainable

Competitive

Advantage

Sustainable

Competitive

Advantage

Overall Firm (un)Attractiveness

xBased on:

! value chain analysis

!core competency analysis

!F/S analysis

!sustainable competitive advantage

xis firm attractive e.g. ROI or profitability?


12/15

Strategic Issues

A Diversified Company

Operating Strategies

Functional Strategies

Business

Strategies

CorporateStrategy

Corporate-LevelManagers

Business-LevelGeneral Managers

Heads of MajorFunctional Areas

Plant Managers,Lower-LevelSupervisors

Two-Way Influence

Two-Way Influence

Two-Way Influence

Corporate Issues

1. What businesses should we be in?

xre macro, industry, firm O/T, S/W analysis

!vertical, horizontal, international diversification

!internal growth vs acquisitions vs alliances

2. How should corporate govern SBUs?

!Centralized vs decentralized

!large HQ vs small HQ

!portfolio approach vs competencies approach


13/15

Business Level Issues

1. What product markets should we be in?

!horizontal (McDonalds sells chicken)

!vertical (outsourcing)

2. How should firm produce SCA?

!Which of 4 generic strategies?

Functional Level Issues

xHow should the functional depts support the

SBU strategy

xwhat functional strategies needed

Corporate and Business Strategy


14/15

Corporate Strategy Alternatives

xList and analyze major alternatives:

!vertical, horizontal, intl diversification

!internal growth vs acquisitions vs alliances

xshould address issues defined above

Business Strategy Alternatives

xList and analyze strategy alternatives

xshould address issues at SBU defined above

Breadth ofBreadth of


ScopeScope

Source of CASource of CA

BroadBroad

TargetTarget

MarketMarket

NarrowNarrow

TargetTarget

MarketMarket

CostCost

Focused

Differen-

tiation

Focused

Differen-

tiation

Cost

Leadership

Cost

Leadership

Differen-

tiation

Differen-

tiation

Focused

Low Cost

Focused

Low Cost

Generic Business Level StrategiesGeneric Business Level Strategies

UniquenessUniqueness


15/15

Factors Shaping Strategy

Industry

Attractiveness

Societal,Political,

RegulatoryFactors

Opportunities

andThreats

Companys Strategic Situation

Key

ExecutivesInfluences

InternalStrengths

andWeaknesses

Shared Values

andCulture

ConclusionsaboutHow

Internal/ExternalFactors

Matter

Identificationand

Evaluationof

Alternatives

CraftingStrategy

forOverall

Situation

External Factors

Internal Factors

Summary

xSummarize major O/T in PEST

xsummarize strength of 5 forces

xsummarize industry (un)attractiveness

xsummarize VC & major competencies

xsummarize major strategic issues

xsummarize corporate & business strategiesxsummarize how strategy recommendations

solve problems

case framework

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