sm wk 3 - internal analysis

8/8/2019 SM Wk 3 - Internal Analysis

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Class 3Internal Analysis611407 Strategic ManagementKing Mongkuts University of Technology North Bangkok

Dr.PardTeekasap


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Recap of the last class

Strategy is to be unique, not just to have low costwith high quality

Strategy needs trade-off

Fit within an organization is essential

3 generic strategies low cost, differentiate, andfocus


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Internal Analysis

SWOT

Product Life Cycle

Product Portfolio Matrix

Core Competency


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SW OT

S trengths W eaknesses

Opportunities Threats


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SW OT exercise

Conduct a SWOT analysis of these companies:

AIS

Starbucks


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D rawback of SW OT

The lists are lengthy

No requirement to prioritize the factors

Unclear and ambiguous words and phrases

No resolution of conflicts

No obligation to verify statements

Single level of analysis

No logical link with an implementation phase


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P roduct Life Cycle

Birth

Growth

Maturity

Decline


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Factors that drive change - Birth

Perceived comparative advantage of newproduct relative to the best available alternative

Perceived risk or estimate by a prospectivebuyer of the probability of a negative outcome

Barriers to adoption

Information and availability

Change in the position of complementaryproducts and government regulations andpolicies


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S trategy for birth period

Invest in promotion and distribution coverage

Expand sales activity

Provide technical service, warranty, after-salesservice

R educe the delivered price or adding new

features

Experience curve lower cost


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Factors that drive to RapidGrowth

Changes in relationship with substitute products

Growth from new competitors

Influence of repeat buying

Opportunity for segmentation and adaptation


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Factors that lead to declining

Fashion, demographic, or technologicalchange


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P roduct P ortfolio Matrix/BCGMatrix


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Goal of P roduct P ortfolio Matrix

Balance the cash flow

Manage betweenproducts that make profitwith products that requirecapital investment


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Market Share

Market share is correlatedwith the productprofitability (Economies ofscale & Experience curve)

R elative market share theratio of the companysshare of the market to theshare of the largestcompetitor


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Market Growth Rate

Present or forecast marketgrowth

R apid growth stage market share can beincreased at relatively lowcost

Maturity stage newmarket share is time-consuming and costly


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P roduct P ortfolio Exercise

Apple

CP


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P roduct P ortfolio S trategyS tar

reinvest earnings in theform of price reduction,

product improvement,better market coverage,production efficiency

P roblem Child/QuestionMark

Invest heavily to getnew share

Acquire competitorsMarket segmentationstrategy

Cash Cow

Maintain marketdominance

Use excess cash to

support other products

D og/ P et

Focus on a specializedsegment

H arvestingDivestment

Abandonment


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Overall strategy


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P itfalls in the measures

Should product-market be broad or narrow?

H ow much market segmentation?

Should the focus be on the total product-market or aportion served by the company?

Which level of geography: local VS national VS regio-centric markets?


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Core Competency

Instead of looking at the product, we look at keycompetences that make all products success

R eal sources of advantage are to be found inmanagements ability to consolidate corporate-wide technologies and production skills into

competencies that empower individual businessto adapt quickly to changing opportunities


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Example of core competencies


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Test to identify corecompetencies

1. A core competence provides potential accessto a wide variety of markets

2. A core competence should make a significantcontribution to the perceived customer benefitsof the end product

3. A core competency should be difficult toimitate


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Core competencies of Truecorporation

What is the core competencies of Truecorporation?


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Is it ok to outsource corecompetency?

Outsourcing provides an opportunity to shortcutinto a more competitive product

H owever, it contributes little to create skillsrequired to sustain product leadership

What if technology providers step up andbecome direct competitors?


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Core competence V S SBU

SBU will affect core competence building andmaintaining

Underinvestment in developing core competenciesand core products

Imprisoned resources

Bounded innovation


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S trategic architecture& Corecompetencies

Proper strategic architecture is essential for competence building

Strategic architecture is a roadmap of thefuture that identifies which core competenciesto build and their constituent technologies


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Term P roject P roposalP resentation

sm wk 3 - internal analysis

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