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The strategy gap lavaraging thechnology to execute winning strategies - Goveney M.

Goveney M. The strategy gap lavaraging thechnology to execute winning strategies - Wiley & sons , 2003. - 242 p.
ISBN 0-471-21450-7
Download (direct link): thestrategygapleveraging2003.pdf
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• Environmental analysis. This is sometimes called PEST analysis. It identifies the major political, economic, social, and technological influences coming from outside the organization and their potential impact on the organization’s near-term and long-term direction.4
• Resource and capability analysis. An organization fulfills its short-and long-term vision and objectives by deploying its tangible assets (financial and physical resources) and intangible assets (intellectual property, brands, employee skills and knowledge, etc.). This type of analysis not only determines which of those assets are key to the organization’s strategy, it also determines the organization’s capacity to employ these assets for accomplishing particular productive activities. Benchmarking and portfolio analysis are two techniques used to assess the viability of these assets and their relative position with respect to competitors.
• Stakeholder analysis. Value created by the firm is distributed among a variety of parties (e.g., investors, employees, suppliers, partners, etc.). Each of these stakeholders has different expectations that can impact the scope and direction of the organization. This form of analysis provides an understanding of the various expectations. Stakeholder mapping can be used to establish the interest and power of key stakeholders.5
The output of this process are organizational objectives and goals to be achieved in the short and medium term.
Once the situation analysis is complete, the next step is to specify the options available for achieving those goals and objectives, delineate the criteria for evaluating those options, and employ the criteria to select those options the organization will pursue. In a general sense, all strategies either revolve around the preservation of existing opportunities or the development of new opportunities. A traditional product/market matrix (see Exhibit 3.4) provides a broad outline of
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The Strategy Gap
Exhibit 3.4 Traditional product/market matrix.
Products and Services
Markets Existing New
Existing Protect/Build • Withdrawal • Consolidation • Market Penetration Product Development • On existing competencies • With new competencies
New Market Development Diversification
• New segments • On existing competencies
• New territories • On new competencies
• New uses
Source: From Exploring Corporate Strategy, Gerry Johnson and Kevan Scholes. © Prentice Hall Europe 1984, 1988, 1993, 1999, reprinted by permission of Pearson Education Limited.
some of the potential options available to an organization for determining forward direction.
In the same vein, Adrian Slywotzsky, David Morrison, and others have delineated 22 models/patterns of profitability that explain how profits are generated in various businesses. Some examples include “customer solutions profit,” “product pyramid profit,” and “multi-component system profit.”6 In contrast to classic productcentric models that focus on market share, increased volume, and economies of scale, these profit models answer the questions: Where can we make profit in our industry? and How should I design my business to be profitable? Another way for managers to understand potential directions and strategic options is by understanding the various models.
The different options are evaluated in the scenario analysis process where they can be selected singly and in combination to go forward to the plan and budget process. Having a portfolio of such options means that alternatives can be substituted should any selected scenario fail to achieve expectations.
The output from this process will be a strategic plan that specifies in detail the organization’s forward direction (the mission, vision, and values), higher-level goals, objectives, and strategies. It will also incorporate the strategic analysis on which its forward direction is based. Goals will be supported by a summary financial plan that shows how resources will
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Corporate Performance Management Processes
be deployed and identifies the assumptions about the internal and external business conditions that were made.
Scenario Analysis
This process works in conjunction with the strategy formulation process. It encompasses the evaluation and selection of suitable options for the strategic plan. The evaluation process usually involves a sequence of four steps:
1. The suitability of each option is weighed. Suitability addresses the simple question of Why is this a good idea in the overall context of the organization? Some of the techniques for assessing suitability include life-cycle analysis, portfolio analysis, and value chain analysis.
2. The relative merits of the suitable options are compared using techniques such as ranking, decision trees, and scenario planning.
3. The acceptability or expected performance and risk of each of the highly ranked options are determined next. Expected performance can be determined by using various numerical tests, such as profitability analysis, cost-benefit analysis, and shareholder value analysis. Risk can be assessed using financial ratio analysis, sensitivity analysis, and simulation modeling.
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