Key Elements of
Business
StrategyCPIM Module 5
Stephan Pire
Strategic Planning
External
Environment
Developing
Competitive
Strategy
Internal
Environment
External Environment
● 7 Issues to address:o Industry Profitability
o Key factors for future success
o Likely moves by Rivals
o Market Positions for members
o Forces driving the changes
o Strength of competitive forces
o Industry Dominant economic features
11 Features to Investigate
● Market size & growth
● Number of rivals
● Scope of rivalry
● Number of buyers
● Product differentiation
● Product innovation
● Supply & Demand
conditions
● Technological changes
● Vertical integration
● Economy of scale
● Learning and
experience
5 Forces of Porter
● Competition
● Substitutes
● Potential
New
Entrants
● Suppliers
● Buyers
14 Most Common Driving Forces
● Emerging New Internet
Capabilities
● Increasing Globalization
● Change Long-Term Growth Rate
● Change in Buyers behaviours
● Product Innovation
● Technological change in Mfg
● Marketing Innovation
● Entry/Exit of Major firms
● Diffusion of Tech know-how
● Changes in Cost/Efficiency
● Shift from Low Cost to
Differentiated in industry
● Reduction in Risk/Uncertainty
● Regulatory changes
● Changing Societal/Lifestyle
concerns
5 Internal Issues
1. Performance of current
strategy
2. SWOT
3. Competitiveness
4. Strength vs Competitors
5. Highest-priority issues to
Managment
Generic Competitive Strategy
1. Focused Low Cost
2. Overall Low Cost
3. Focused
Differentiation
4. Broad Differentiation
5. Best-Cost Provider
Strategy
Key Performance Objectives
● Speedo Customer Query time
o Order Leadtime
● Dependabilityo % of orders delivered late
● Flexibilityo Time needed to develop Products & Services
● Qualityo Number of defects per unit
● Costo Efficiency
5 Key Process Layouts & Choices
● Project - Fixed Functional
● Jobbing - Functional Cells
● Batch - Functional Cells
● Repetitive - Cell Product
● Mass/Continuous - Product Line
4 types of Financial Ratios
● Liquidity Ratioso Current Ratio
o Quick Ratio
● Activity Ratioso Inventory Ratios
o A/R Turnovers
o Days in A/R
● Leverage Ratioso Debt Ratios
o Time-interest-earned Ratios
● Profitability Ratioso Rate of return on net sales
o Rate of return on assets