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