aligning arc and strategy
DESCRIPTION
TRANSCRIPT
What you will learn in this Section ?
• Envisioning Strategy– Definition– Framework– Visual Models
• External Analysis– PEST– PEST Impact Analysis
• Industry and Competitive Analysis– Industry Structure– Evolution of Industries– Industry Supply Chain– Potential Industry Earnings– Porter’s 5 Forces Analysis– Competitive Intensity– Strategies for minimizing competitive
forces– Perceptual Map– Barriers to Entry/Incumbency advantages– DSIR effect
• Company Resources and Capabilities– ARC Analysis/HR– SWOT Analysis– Value Creating Processes/Core
Competencies– Strategic Gameboard– Balanced Scorecard– Change Management
© Sunil Mehrotra
Understanding Strategic Management is like pealing an
onion
The environmentThe environment
International lawInternational law
GovernmentsGovernments
Standards bodiesStandards bodies
StakeholdersStakeholders
Supplier’s Supplier’s supplierssuppliers
Customer’s Customer’s customerscustomers
New entrantsNew entrants
CustomersCustomersSuppliersSuppliers
CompetitorsCompetitors
SubstitutesSubstitutes
OrganisationOrganisation
A Visual Model
Business Ecosystem
New Paradigm Consulting
Business Ecosystem: A more granular view
Mbam619 framework models
Firm's Resources-Tangible and Intangible Assets
Aligning Organization, Systems and Processesto Goals and Strategy
to create sustainable Competitive Advantage
Adapted from:www.buildingbrands.com/didyouknow/14_7s_mckinsey
Mckinsey 7-S Framework
Strategy: The direction and scope of the company over the long term.
•
Structure: The basic organization of the company, its departments, reporting lines, areas of expertise, and responsibility (and how they inter-relate
Systems: Formal and informal procedures that govern everyday activity, covering everything from management information systems, through to the systems at the point of contact with the customer (retail systems, call centre systems, online systems, etc).
Skills: The capabilities and competencies that exist within the company. What it does best.
Shared values: The values and beliefs of the company. Ultimately they guide employees towards 'valued' behavior.
Staff: The company's people resources and how they are developed, trained, and motivated.
Style: The leadership approach of top management and the company's overall operating approach.
Hardware
S
Software
Designing Firm's ARC to align with Strategy
Transforming Resources to Capabilities Advantage
Firm's Resources
Key functions and activities within a firm
Sup
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Man
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Dis
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Adapted from: http://faculty.msb.edu/homak/HomaHelpSite/WebHelp/HomaHelp.htm
Key OperationalIssues
Activity Based View of Value Creation Process
Infrastructure
Human Resources
Technology Development
Procurement
InboundLogistics
OperationsOutboundLogistics
Marketingand
Sales
Service
Profit
Margin
Profit Margin
Support Activities
Primary Activities
Sequence of Activities
Starbuck’s key activitiesthat create Value
MARG IN
InboundLogistics
Operations MarketingAnd Sales
OutboundLogistics
- Financial Policy - Legal- Accounting
- Organizational Form- Incentive Systems
- New Espresso Machines
- Roasting Coffee
- Operating Stores
- Barista Training
- Buying Coffee
- Other Purchasing
- Superior Rewards
- Better Espresso Machines- New Clover Method
- Maintaining Stores
- CPG’s in retailers
- Desirable store settings (3rd Place)
- Excellent Customer Service
- Limited Advertising
Firm Infrastructure
Human ResourceManagement
TechnologyDevelopment
Procurement
- Only the best 3% of coffee
Nicholas Merriam, April 2008 MBA, Graziadio School of Business and Management Pepperdine University
Progressive's value creating activities
Infrastructure
HR
Technology
Procurement
•Financial Policy•Regulatory Compliance
•Legal•Accounting
•Org. structure•Incentive system
•Actuary Training
•Agent Training
Adjuster•Training
•Actuarial methods •Investment practices
•Information Technology
•New Product Dev.•Market Research
•Settlement Procedures
Communication •Technology
•Data Gathering
•Rating•Underwriting•Investment
•Policy Issuing•Billing & Collection
•New Policy sales•Policy Renewals•Policy Repricing•Create Network ofindependent agents•Build internal sales force•Agent Management•Advertising
•Claims Response•Loss settlement•Loss Control
Walmart's Value CreatingActivities
Infrastructure
HR
Technology
Procurement
What is the Firm's ARC?
• How is the firm organized?– ARCHITECTURE
• What are the firm's processes for getting things done?– ROUTINEs
• What are the firm's shared values?– CULTURE
• How well does the Firm's ARC align with its strategy?
What is the best ARC for the firm seeking....
• Product Leadership(Innovation) ?
• Operational Efficiency (Cost leadership)?
• Customer Intimacy (Customer focus)?
Firm's Architecture
Geography
Leader on a pedestal
ARCHITECTURE: Functional
ARCHITECTURE: By Product
ARCHITECTURE: Matrix
ARCHITECTURE: By Geography
Components of Culture
How does a firm organize, resource, set policies and procedures, establish
behavioral norms for
• High-growth ?• Product innovation?• Cost leadership?• Customer intimacy?• Global reach?• Survival?• Uncertainty?• Leveraging core competencies?
Process for Creating sustainable competitive advantage through ARC
Aligning Resources to Market Opportunities and Threats to create sustainable competitive
advantage
Opportunities
Threats
Strengths+ +Weaknesses- -
$
SWOT Analysis
Nappies 15-17
ARc Analysis
Transforming resources to capabilities through firm's ARC
Strategic SWOT Analysis
Mnemonic 8Transforming Resources to Capabilities
Advantage
Mnemonic 9Process for Creating sustainable competitive advantage
through ARC
Mnemonic 10Aligning Resources to Market Opportunities and Threats
to create sustainable competitive advantage
Opportunities
Threats
Strengths+ +Weaknesses- -
$
Mnemonic 11Strategic SWOT Analysis
ARC for Product Innovation