Teguh I Santoso, Teguh I Santoso, MBAMBA

Chapter 3Chapter 3

BPR & BUSINESS STRATEGYBPR & BUSINESS STRATEGY

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What is StrategyWhat is Strategy

A company’s strategy consists of the set of competitive moves and business approaches that management is (or will) employing to run the company

Strategy is management’s “game plan” to Attract and please customers Stake out a market position Conduct operations Compete successfully Achieve organizational objectives Solve “the problem”

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Competitive StrategyCompetitive Strategy

The inverse relationship between profit margins or returns and the intensity of competition: intensity of competition goes up, margins and returns

are driven down This can require changes in competitive strategy :

to remain in an industry and, to exit a business or an industry

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Porter’s Competitive StrategyPorter’s Competitive Strategy

One widely accepted methodology in developing business competitive strategies is Michael Porter’s (1980) Five-Force Model

The force is referred to micro-environment and macro-environment

The forces is close to a company that affect its ability to serve its customers and make a profit

A change in any of the forces normally requires a company to re-assess the marketplace.

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Porter’s (cont.)Porter’s (cont.)

Porter (1980) suggested that “the goal of competitive strategy for a business unit in an industry is to find a position in the industry where the company can best defend itself against [the five] competitive forces or can influence them in its favor”

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Five Forces Porter’s Competitive Five Forces Porter’s Competitive StrategyStrategy

Rivalry amongst existing competitors

Threats of New entrance

Threat of subtitute products or services

Bergaining power of buyers

Bergaining power of suppliers

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Bargaining Power of BuyersBargaining Power of Buyers

The ability of customers to put the firm under pressure and it also the customer's affects the sensitivity to price changes.

Refers to the ability of customers to force : down prices, reduce product delivery cycle time, demand higher quality, and require better service

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Bargaining Power of BuyersBargaining Power of Buyers

These factor tend to increase bargaining power of buyers Buyer volume high Price of total purchase buyer information availability ability to backward integrate availability of existing substitute products Low profit margin Purchase is not very important to buyer

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Bargaining Power of SuppliersBargaining Power of Suppliers

The ability of suppliers to increase input material prices, increase product delivery cycle time reduce the quality of goods supplied

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Bargaining Power of SuppliersBargaining Power of Suppliers

These factor tend to increase bargaining power of suppliers Dominated by a few suppliers Suppliers are more concentrated than the buyers No substitutes Supplier has more important customers Supplier’s input is critical

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Threat of New EntranceThreat of New Entrance

Profitable markets that yield high returns will draw new firms to enter the market

The result is : Many new entrants which will effectively decrease

profitability

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Threat of New EntranceThreat of New Entrance

Factors tend to raise barriers to market entry by new entrants Economies of scale Capital requirements Access to distribution Government policy The existence of barriers to entry (patents, rights,

etc)

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Threat of Substitute ProductsThreat of Substitute Products

Substitute products refers to other products that can be used to satisfy the same need

Factors can be affect to substitute products: Buyer tendency to substitute Price performance of substitute products High elasticity demand

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Rivalry Among Existing CompetitorsRivalry Among Existing Competitors

The major determinant of the competitiveness The degree to which companies respond to competitive

moves of other companies in the same industry Rivals can compete aggressively and rivals compete in

non-price dimensions, such as Innovation New products Marketing or advertising Technology

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Rivalry Among Existing CompetitorsRivalry Among Existing Competitors

Factors that can be affects for high rivalry, Number of competitors Rate of industry growth High exit barriers Low differentiation

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Why BPR?Why BPR?

Do or Die Minimize threat from rival firms Attain sustainable competitive advantage Leverage on unprecedented opportunity to take giant

leap forward

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Type of BPR CompanyType of BPR Company

3 Jenis perusahaan yang menjalankan BPR

1. Perusahaan yang sedang mengalami masalah besar

2. Perusahaan yang belum mengalami kesulitan tetapi manajemen mereka yang mempunyai pandangan ke depan melihat akan ada masalah yang segera datang

3. Perusahaan yang berada dalam kondisi puncak

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Beberapa hal yang dilakukan BPRBeberapa hal yang dilakukan BPR

Beberapa pekerjaan digabungkan menjadi satu

Para pekerja membuat keputusan

Tahap-tahap dalam proses dilakukan menurut kebiasaan

Proses-proses mempunyai banyak versi

Pekerjaan dilakukan pada tempat yang paling berarti

Pemeriksaan dan kontrol berkurang

Rujukan minimum

Manajer kasus membuat satu titik kontak

Sentralisasi dan desentralisasi merata

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The Kinds of ChangesThe Kinds of Changes

Changes Before After

Work Unit Functional Departments Process Teams

Jobs Simple Tasks Multi-dimensional Work

People’s Roles Control Empowered

Job Preparation Training Education

Focus of Performance and Compensation

Activity Result

Advancement Criteria Performance Ability

Values Protective Productive

Managers Supervisors Coaches

Organizational Structures Hierarchical Flat

Executives Scorekeeper Leaders

Text Book: Bab 4

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Who will ReengineerWho will Reengineer

LeaderThe Senior Executive who authorizes money and people, and who provides motivation

Process OwnerOne Manager who already has a serious stake in the process under study, and who guides the effort for that process

Reengineering TeamA group of people who examine the existing process and then redesign it

Steering CommitteeA group of Senior Executives who connect the effort to larger company strategies and who encourage people to join in supporting the changes

Reengineering CzarA Senior Manager who develops reengineering competence in the company and develops synergy across various efforts

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How it is supposed to workHow it is supposed to work

The Leader appoints a Process Owner

The Process Owner assembles and leads the Reengineering Team

The Reengineering Czar develops the skills and abilities of the Reengineering Team

The Steering Committee ensures that this Team develops strategic result

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Thank You