Google:

http://www.google.co.uk/url?sa=t&source=web&cd=5&ved=0CE4QtwIwBA&url=ht
tp%3A%2F%2Fmoney.cnn.com%2Fvideo%2Ftechnology%2F2009%2F05%2F27%2Ff
ortune.google.tt.052709.cnnmoney%2F&ei=73_NTO5h0M2zBvusjZcI&usg=AFQjCN
GwYi_5933aop--DCVPHr8B-NzswA

Bullmer: http://news.cnet.com/1606-2_3-26627.html

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1. Framework for Analysis

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Scholes - 2006

1. Simple or complex, static or dynamic – evaluate uncertainty (diversity of

influences, knowledge required, extent of interaction) - contingency approach,
incremental approach
2. PESTEL
3. Five Forces
4. Strengths and Weaknesses
5. Opportunities and Threats

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Waitrose Pestel (2008)
Political:
Uncertainty due to the financial crisis
Increased government borrowing
Changes in taxation of bonuses
Planning changes – move back into town centres
Forthcoming election
Economic:
Recession to potentially lead to lost market share to budget supermarkets? – introduced their own value line
Lower prices for commodities coould lead to lower prices in store.
Credit crunch led to developers pulling out of new retail developments
Sociocultural
Demographic:
Aging population could benefit waitrose
Increasing awareness of sustainability and other ethical issues
Technology
Growth of internet shopping – tie in with Ocado and their own delivery service
Environment
Stated commitment to meeting governments carbon reduction targets
Implementation of green IT
BREEAM stores
Legal
Competition commission ruled on large supermarkets holding landbanks to prevent competitor expansion

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Scholes - 2006

1. Simple or complex, static or dynamic – evaluate uncertainty (diversity of

influences, knowledge required, extent of interaction) - contingency approach,
incremental approach
2. PESTEL
3. Five Forces
4. Strengths and Weaknesses
5. Opportunities and Threats

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Competitive Rivalry:
Supermarkets fiercely competitive – ASDA, Sainsbury’s, Tesco & Morrisons
Waitrose at the premium end
Barriers to entry:
Small number of successful companies with good brand recognition.
High start up costs and aggressive tactics and plentiful economies of scale.
Threat of substitutes
Internet shopping
Buyer Power
Very high – customers tend to have a number of local options
Waiotros has strong customer loyalty
Supplier power
Low because of limited differentiation
Loss leaders

ALSO CONSIDER SWOT: strengths, weaknesses and opportunities and threats.

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Scholes - 2006

1. Simple or complex, static or dynamic – evaluate uncertainty (diversity of

influences, knowledge required, extent of interaction) - contingency approach,
incremental approach
2. PESTEL
3. Five Forces
4. Strengths and Weaknesses
5. Opportunities and Threats

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Use a TOWS matrix to develop options

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RESOURCES & STRATEGIC CAPABILITY

1. Analysis of organisational resources with the objective of matching strategies to resources and competencies – what is
possible, what is sustainable, what additional resources are required.
2. The aim is to provide resources and strategic capabilities that are valuable to customers, but not easily replicated by
competitors.
3. Types of resource
Physical
Human
Financial
Intangible

Must also consider:

The quality of the resources
How well the resources are being utilised

Value Chain Analysis considers the performance of resources available in achieving strategic targets, highlights spare
capacity
Comparative Analysis - Benchmarking, allows comparison over time or against industry best practice

SWOT, Strengths, Weaknesses, Opportunities and Threats – Highlights the key areas to consider when developing a strategy,
and provides the basis for potential strategic options

Note:
Resources Analysis draws heavily on current use and availabilty of resources which where designed to meet current
strategic requirements. If too much emphasis is placed on current resources this will limit strategic potential in the
future, but if too little emphasis is placed on resources any strategy is likely to be unsustainable.

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EXPECTATIONS AND PURPOSES

Why is the strategy being developed – what are the goals and vision of the
organisation and of it’s stakeholders?
For private enterprise, profit will always be a key objective, but their may be other
objectives or goals that are motivated by stakeholders – employees, customers,
suppliers, government etc.
Social or ethical objectives may be formalised in the companies CSR report
Corporate governance may influence strategy.
The organisation’s paradigm will also influence the strategic position and so should
be considered.

Tools –
1. Stakeholder mapping – How interested is the stakeholder in the organisations
choice of strategies, and how much power does it have to influence strategic
decisions. Mapping helps direct political priorities.
2. The cultural web

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Paradigm: collective, taken for granted assumptions and beliefs
Useful when attempting to identify an organisation’s culture – forms a framework
of questions to ask and things to look for.

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Strategic business unit (Scholes) – is part of an organisation for which there is a
distinct market for goods or services different from another SBU – and this will
require differing strategies.

Competitive strategies (See Porter):

1. Cost leadership – to have the lowest costs – consistently over a period of time
but to sell at or near the market price
2. Differentiation - to offer something above the industry standard, for which
customers are prepared to pay a premium
3. Focus – to concentrate on one segment of the market to the exclusion of the
remainder, and then concentrate on either cost or differentiation.

Expanded by Bowman – The strategy clock

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1, No Frills: commodity-like, price sensitive customers, high buyer power & low
switching costs
2, Low price: Requires a low cost base for success, may lead to margin reductin or
an inabiolity to invest
3, Hybrid: Differentiation and a lower price than competitors – IKEA
4, Differentiation: Offer benefits different “better” products or services than those
of competitors at the same or slightly higher prices
5,Focused differentiation: Provide products/services that offer high perceived
benefits and justify a substantial price premium

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CORPORATE LEVEL STRATEGY
Many companies are multi-business, through product or geographic diversity.
Product/Market diversification – a strategy that takes the company into new markets and products or services
Aims:
1) Efficiency gains – Economies of scope utilised for both tangible and intangible resources
2) Applying corporate managerial capabilities to new markets – Parenting skills
3) Increase market power – Cross-subsidisation for competitive advantage
4) response to environmental change – technological convergence
5) Spread risk
6) Pressure from stakeholders

Related Diversification – strategy development beyond current products and markets but within the capabilities or value network of the
organisation.
Vertical integration relating to the organisation’s inputs and outputs.
Horizontal integration relating to activities complementary to the existing.

Unrelated Diversification – “conglomerate strategy”

Why:
1) To exploit a dominant logic
2) To exploit underdeveloped markets

International diversification
Why?
1. Market based reasons:
• Globalisation of markets and competition – Homogenisation of demand
• Follow customers
• Bypass limits of home market
• Exploit differences in regions
2. To exploit strategic capabilities
• In new underdeveloped markets
• Outsourcing
• Enhance knowledge base
3. Economic Benefits
• Economies of scale
• Stabilisation of earnings

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Direction and methods

Ansoff’s Matrix:
Protect/Build
Market development
Product development
Diversify

Can be achieved by:

1. Internal development of existing or new resources
2. Merger or acquisition
3. Joint development or strategic alliance

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Direction and methods
Ansoff’s Matrix
Consolidation: may mean continued growth in a growing market or protective
strategies in a mature market
Market penetration: Increasing market share in existing market

Withdrawal may also be a sensible option.

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Direction and methods
Ansoff’s Matrix
Consolidation: may mean continued growth in a growing market or protective
strategies in a mature market
Market penetration: Increasing market share in existing market

Withdrawal may also be a sensible option.

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Organising:
Structure - Significant structural change may be required to implement a specific strategy, but
where strategy is incremental, structural change may be less critical. The chosen structure
should provide a good fit with both the organisation and the strategy to be implemented.
Processes – Supervision, Planning processes, self control and personal motivation Cultural
processes (such as fostering of innovation), performance targets, internal markets
Relationships – Devolution or centralisation – where are stratgic decisions made?

Enabling Success:
1. Managing People.
• HR can support strategies through identifying requirements, setting goals and
rewards, recruiting staff and training to improve strategic capability.
• Managers need to strike a balance between hard and soft management skills
2. Managing Information
• Can add customer value and/or lower costs (faster processing, short development
times, greater personalisation, pre-purchase information)
• Better management control systems
3. Managing Finance
• Managing for value – maximising the long-term cash generating capability of an
organisation
• Identify cost and value drivers
• Funding strategy development
4. Managing technology – Affects the competitive forces of an organisation and also it’s strategic
capability

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Managing Change

The type of strategy required should determine how the strategic change is
managed:
Is change incremental or transformational (requiring a paradigm change)?
Adaption – most common, incremental within the current paradigm
Reconstruction – rapid but within current paradigm
Evolution – Paradigm change, but over time
Revolution – Rapid and major strategic and paradigm change, often the result of
crisis

Management of change should be taken in context, considering:

Time, Scope, Preservation, Diversity (of experience), Capability, Capacity,
Readiness, Power

Tools:
The cultural web
Forcefield Analysis

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Levers for change:
Turnaround (focus on speed):
Crisis stabilisation
Management changes
Gaining stakeholder support
Clarifying the target markets
Re-focusing
Financial restructuring
Prioritisation of critical improvement areas

Changing the paradigm:

Challenge the taken for granted
Changing organisational routines
Symbolic processes
Power and political processes
Communicating and monitoring change
Change tactics

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