TECHNIQUES AND ANALYTICAL METHODS AND STRATEGIC ANALYSIS PLANS

1. Econometric model 10. Moving Averages

2. Trend Analysis
3. Regression Analysis
4. The Delphi Technique
5. Bench Marking
6. Spying
7. Expert Opinion Method
8. Sales Force Composite Method
9. Extrapolation
Strategic marketing plans:
1. Product related factors:
• Variety
• Differentiation
2. Price related factors:
• Pricing policies
3. Place related factors:
• Logistics
• Distribution
4. Promotion related factors:
• Promotion budget
• Advertising
5. System related factors:
• Market intelligence
• Market information system
Typical strengths that build marketing capability:
• Wide variety of goods
• Good quality products
• Focused positioning
• Price protection
• Low prices
Techniques for analyzing the strength and weakness in marketing:
• Market share analysis
• Marketing audit
• Brand monitoring surveys
Strategic Advantage Analysis:
1. Marketing and Distribution
Competitive position and market share:
• Product line
11. Exponential Smoothing
12. Simulation
13. Morphological Analysis
14. Game Theory
15. Monte Carlo Method
16. Fuzzy Logic
17. Genetic Algorithms
18. Quest
• Product positioning
• Packaging
• Pricing methods • Government
policies
• Market intermediaries
• Public relations
• Sales promotion
• Customer relationship
management
• Differentiated products
• High profile advertisement
• Brand building efforts
• Effective distribution system
• Strong R&D for new product
development
• Dealer and consumer panels
• Analysis of profit volume
relationships
• Product life-cycle
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 • Pricing Strategy • Market Research
• Nature of the market • Packaging
• Channels of Distribution • Marketing Policy
• Brand Image
Finance and Accounting:
• Financial resources and strength • Financial planning and
• Capital structure and cost of budgeting
capital • Accounting System and audit
• Relations with owners procedure
• Tax planning and tax
advantages
Strategic Financial Plans:
1. Factors related to sources of fund:
• Capital structure • Working capital availability
• Reserves and surplus • Financing pattern
• Relation ship with bankers
2. Factors relating to usage of funds:
• Fixed assets • Rapport with share holders
• Currents asset • Dividend distribution
• Loans and advances
3. Factors related to the management of funds:
• Tax planning measures • Risk/return management
• Cost reduction measures • Budgeting system
• Financial accounting
Typical strengths that develop financial capability:
• Access to financial resource • Favorable tax provisions given
• High rate of credit worthiness by government
• Availability of low cost capital • High level of shareholders
compared to competitors confidence
• Cordial relationship with
bankers
Techniques adopted for analyzing the strength and weakness in finance
area:
• Liquidity ratio • Payback and IRR analysis
• Profitability ratio • Breakeven analysis
• Leverage ratio • Earning to sales and
• Cash flow analysis • Earning per share
Production and operations management:
• Cost of operations • Production facilities
• Capacity utilization
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 • Cost and availability of materials • Purchasing and inventory
and components control
• Plant location
Strategic operations issues:
1. Factors related to production system:
• Location • Capacity
• Layout • Extent of automation
• Work system • Vertical integration
2. Factors related to operations and control systems:
• Aggregated production planning • Quality control
• Material supply • Maintenance systems
• Capacity utilization
3. Factors related to R&D systems:
• Patents • Technology agreements
• Technology collaboration • Facilities
• Technology transfer
Techniques used for assessing strengths and weakness of operations
management:
• Capacity utilization analysis • New products commercialization
• Inventory analysis record
• Cost of production analysis • Comparison of investments
• Analysis of patents generated made in new product launch
Typical strengths that build operations capability:
• High capacity utilization • High profile scientist
• Suitable plant location • Technical collaboration with
• Good inventory control system world-class R&D firms
like JIT
Human Resources and Organizational Factors:
• Organization Climate • Managerial (leadership) style
• Employee performance record • Union-Management relations
• Personnel policies and practices • Corporate Image
Strategic human resource issues:
1. Factors related to personnel systems:
• Manpower planning system • Compensation and
• Selection and development • Appraisal system
system
2. Factors related to employee characteristics:
• Quality and skill of management • Working conditions
• Image of organization as • leadership
employer
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 3. Factors related to industrial
• Union-management relations:
relationship • Health, welfare, safety,
stress,discipline
• Collective bargaining

Typical strengths that support human resource and capabilities:

• Efficient personnel systems • Need based training programs
• Be a model employer • Absenteeism
• High level of morale • Cordial work environment
• Satisfied workforce • Motivated workforce
• Statutory working conditions
HOSHIN PLANNING PROCESS:
The Hoshin Planning Process is a systematic planning methodology for:
1) defining the long-range key objectives of the organization or company; and
2) ensuring the implementation of 'business fundamentals' required to successfully
run the business on a daily basis.
Hoshin planning, therefore, is a two-prong planning approach that covers the
organization's strategy to achieve breakthrough results through its long-term objectives
and ensure continual improvement through its short-term business fundamentals.
• Like many modern business concepts today, hoshin planning was developed in
Japan.
• The Japanese words 'hoshin kanri' can be translated into 'direction setting'.
• And like many Japanese management concepts, hoshin planning also promotes the
involvement of all employees in the process, on the basic premise that desired
results can only be attained if everybody in the organization fully understands the
goals of the company and is somehow involved in the 'chain' of plans defined to
achieve them.
• The plan generated by the Hoshin process is hierarchical in nature, with the
corporate objectives determining the corporate strategies which, in turn, are
supported by lower-level strategies that cascade down the organization.
• In effect, the goals of every individual should support the goals of the next person
up in the hierarchy.
• Every strategy further consists of tactics or actions that need to be undertaken to
accomplish the strategy.
The hoshin planning process basically consists of the following steps:
1) Identification of critical business issues that the organization faces;
2) establishment of business objectives to address these issues;
3) definition of the company's over-all goals;
4) development of strategies that support the over-all goals;
5) Definition of sub-goals or tactics that support each strategy;
6) Establishment of metrics or indicators for measuring process performance; and 7)
establishment of business fundamental measures.
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 7) The first 3 steps of this process are handled by top management, with the defined
over-all goals supported by the rest of the organization through steps 4-7.
• An important aspect of the Hoshin process is the regular review of the defined
plans.
• It is not enough to have a documented plan - it needs to be checked against actual
performance.
• Hoshin plans must undergo a major review at least once a year.
• During review, Hoshin plans are usually presented using Hoshin review tables,
each of which shows a single objective and its supporting strategies.
• A group or individual responsible for several objectives therefore needs to
generate several review tables in order to cover all objectives.
The following details must be shown for each strategy in the review table:
1) The strategy owner(s);
2) The timeframe;
3) The performance metrics;
4) The target(s) for each strategy as defined during the Hoshin planning process; and
5) The actual results at the time of the review. Any discrepancy between the target and
actual results, whether positive or negative, must be noted along with the impact of the
discrepancy on next year's plans. As mentioned earlier, hoshin plans are hierarchical in
nature, cascading from the top levels to the lower ones, so review tables must likewise
cascade upwards.
STRATEGY - THE STRATEGIC AUDIT:
• In our introduction to business strategy, we emphasized the role of the "business
environment" in shaping strategic thinking and decision-making.
• The external environment in which a business operates can
create opportunities which a business can exploit, as well as threats which
could damage a business. However, to be in a position to exploit opportunities or
respond to threats, a business needs to have the right resources and capabilities in
place.
An important part of business strategy is concerned with ensuring that these
resources and competencies are understood and evaluated - a process that is often
known as a "Strategic Audit".
The process of conducting a strategic audit can be summarized into the following stages:
(1) Resource Audit:
The resource audit identifies the resources available to a business. Some of these
can be owned (e.g. plant and machinery, trademarks, retail outlets) whereas other
resources can be obtained through partnerships, joint ventures or simply supplier
arrangements with other businesses.
(2) Value Chain Analysis:
Value Chain Analysis describes the activities that take place in a business and
relates them to an analysis of the competitive strength of the business. Influential work

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by Michael Porter suggested that the activities of a business could be grouped under two
headings:
(a) Primary Activities - those that are directly concerned with creating and delivering a
product (e.g. component assembly); and
(b) Support Activities, which whilst they are not directly involved in production, may
increase effectiveness or efficiency (e.g. human resource management). It is rare for a
business to undertake all primary and support activities. Value Chain Analysis is one way
of identifying which activities are best undertaken by a business and which are best
provided by others ("outsourced").

(3) Core Competence Analysis:

Core competencies are those capabilities that are critical to a business achieving
competitive advantage. The starting point for analyzing core competencies is
recognizing that competition between businesses is as much a race for competence
mastery as it is for market position and market power. Senior management cannot focus
on all activities of a business and the competencies required to undertake them. So the
goal is for management to focus attention on competencies that really affect competitive
advantage.
(4) Performance Analysis:
The resource audit, value chain analysis and core competence analysis help to
define the strategic capabilities of a business. After completing such analysis, questions
that can be asked that evaluate the overall performance of the business. These
questions include:
- How have the resources deployed in the business changed over time; this
is "historical analysis"
- How do the resources and capabilities of the business compare with others in the
industry -"industry norm analysis"
- How do the resources and capabilities of the business compare with "best-in-class" -
wherever that is to be found- "benchmarking"
- How has the financial performance of the business changed over time and how does it
compare with key competitors and the industry as a whole? - "ratio analysis"
(5) Portfolio Analysis:
• Portfolio Analysis analyses the overall balance of the strategic business units of a
business. Most large businesses have operations in more than one market
segment, and often in different geographical markets. Larger, diversified groups
often have several divisions (each containing many business units) operating in
quite distinct industries.
• An important objective of a strategic audit is to ensure that the business portfolio
is strong and that business units requiring investment and management attention
are highlighted. This is important - a business should always consider which
markets are most attractive and which business units have the potential to achieve
advantage in the most attractive markets.
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 Traditionally, two analytical models have been widely used to undertake portfolio
analysis:
• - The Boston Consulting Group Portfolio Matrix (the "Boston Box");
• - The McKinsey/General Electric Growth Share Matrix
(6) SWOT Analysis:
SWOT is an abbreviation for Strengths, Weaknesses, Opportunities and Threats.
SWOT analysis is an important tool for auditing the overall strategic position of a
business and its environment

FIVE FORCES MODEL:

Strategy - analyzing competitive industry structure:

Defining an industry:
• An industry is a group of firms that market products which are close substitutes for
each other (e.g.the construction industry, the car industry, the travel industry).
• Some industries are more profitable than others. Why? The answer lies in
understanding the dynamics of competitive structure in an industry.
The most influential analytical model for assessing the nature of competition in an
industry is Michael Porter's Five Forces Model, which is described below:

• Porter explains that there are five forces that determine industry attractiveness
and long-run industry profitability. These five "competitive forces" are
• - The threat of entry of new competitors (new entrants)
- The threat of substitutes
- The bargaining power of buyers
•
- The bargaining power of suppliers
- The degree of rivalry between existing competitors

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Threat of New Entrants:
• New entrants to an industry can raise the level of competition, thereby reducing its
attractiveness. The threat of new entrants largely depends on the barriers to entry.
High entry barriers exist in some industries (e.g. shipbuilding) whereas other
industries are very easy to enter (e.g. estate agency, restaurants). Key barriers to
entry include
• - Economies of scale
- Capital / investment requirements
- Customer switching costs
- Access to industry distribution channels
- The likelihood of retaliation from existing industry players.
Threat of Substitutes:
• The presence of substitute products can lower industry attractiveness and
profitability because they limit price levels. The threat of substitute products
depends on:
• - Buyers' willingness to substitute
- The relative price and performance of substitutes
- The costs of switching to substitutes
Bargaining Power of Suppliers:
• Suppliers are the businesses that supply materials & other products into the
industry.
• The cost of items bought from suppliers (e.g. raw materials, components) can have
a significant impact on a company's profitability. If suppliers have high bargaining
power over a company, then in theory the company's industry is less attractive.
The bargaining power of suppliers will be high when:
• - There are many buyers and few dominant suppliers
- There are undifferentiated, highly valued products
- Suppliers threaten to integrate forward into the industry (e.g. brand
manufacturers threatening to set up their own retail outlets)
- Buyers do not threaten to integrate backwards into supply
- The industry is not a key customer group to the suppliers
Bargaining Power of Buyers
• Buyers are the people / organizations who create demand in an industry
• The bargaining power of buyers is greater when
• - There are few dominant buyers and many sellers in the industry
- Products are standardized
- Buyers threaten to integrate backward into the industry
- Suppliers do not threaten to integrate forward into the buyer's industry
- The industry is not a key supplying group for buyers

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Intensity of Rivalry
• The intensity of rivalry between competitors in an industry will depend on:
• - The structure of competition - for example, rivalry is more intense where
there are many small or equally sized competitors; rivalry is less when an industry
has a clear market leader
• - The structure of industry costs - for example, industries with high fixed
costs encourage competitors to fill unused capacity by price cutting
• - Degree of differentiation - industries where products are commodities (e.g.
steel, coal) have greater rivalry; industries where competitors can differentiate
their products have less rivalry
• - Switching costs - rivalry is reduced where buyers have high switching costs -
i.e. there is a significant cost associated with the decision to buy a product from an
alternative supplier
• - Strategic objectives - when competitors are pursuing aggressive growth
strategies, rivalry is more intense. Where competitors are "milking" profits in a
mature industry, the degree of rivalry is less
• - Exit barriers - when barriers to leaving an industry are high (e.g. the cost of
closing down factories) - then competitors tend to exhibit greater rivalry.

STRATEGY - PORTFOLIO ANALYSIS – GE-MATRIX:

• The business portfolio is the collection of businesses and products that make up
the company. The best business portfolio is one that fits the company's strengths
and helps exploit the most attractive opportunities.
The company must:
• (1) Analyze its current business portfolio and decide which businesses should
receive more or less investment, and
• (2) Develop growth strategies for adding new products and businesses to the
portfolio, whilst at the same time deciding when products and businesses should
no longer be retained.
The two best-known portfolio planning methods are the Boston Consulting Group
Portfolio Matrix and the McKinsey / General Electric Matrix . In both methods, the first
step is to identify the various Strategic Business Units ("SBU's") in a company portfolio.
An SBU is a unit of the company that has a separate mission and objectives and that can
be planned independently from the other businesses. An SBU can be a company division,
a product line or even individual brands - it all depends on how the company is
organized.
The McKinsey / General Electric Matrix
The McKinsey/GE Matrix overcomes a number of the disadvantages of the BCG Box.
Firstly, market attractiveness replaces market growth as the dimension of industry
attractiveness, and includes a broader range of factors other than just the market growth

9
rate. Secondly, competitive strength replaces market share as the dimension by
which the competitive position of each SBU is assessed.
The diagram below illustrates some of the possible elements that determine market
attractiveness and competitive strength by applying the McKinsey/GE Matrix to the UK
retailing market:

Factors that Affect Market Attractiveness

• Whilst any assessment of market attractiveness is necessarily subjective, there are
several factors which can help determine attractiveness. These are listed below:
- Market Size industry
- Market growth - Opportunity to differentiate products
- Market profitability and services
- Pricing trends - Segmentation
- Competitive intensity / rivalry - Distribution structure (e.g. retail,
- Overall risk of returns in the direct, wholesale
Factors that Affect Competitive Strength
• Factors to consider include:
- Strength of assets and competitors)
competencies - Distribution strength
- Relative brand strength - Record of technological or other
- Market share innovation
- Customer loyalty - Access to financial and other
- Relative cost position (cost investment resources
structure compared with

PRODUCT PORTFOLIO STRATEGY - INTRODUCTION TO THE BOSTON

CONSULTING BOX
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Introduction
• The business portfolio is the collection of businesses and products that make up
the company. The best business portfolio is one that fits the company's strengths
and helps exploit the most attractive opportunities.
The company must:
• (1) Analyze its current business portfolio and decide which businesses should
receive more or less investment, and
• (2) Develop growth strategies for adding new products and businesses to the
portfolio, whilst at the same time deciding when products and businesses should
no longer be retained.
Methods of Portfolio Planning
The two best-known portfolio planning methods are from the Boston Consulting Group
(the subject of this revision note) and by General Electric/Shell. In each method, the first
step is to identify the various Strategic Business Units ("SBU's") in a company portfolio.
An SBU is a unit of the company that has a separate mission and objectives and that can
be planned independently from the other businesses. An SBU can be a company division,
a product line or even individual brands - it all depends on how the company is
organized.

The Boston Consulting Group Box ("BCG Box")

• Using the BCG Box (an example is illustrated above) a company classifies all its
SBU's according to two dimensions:
• On the horizontal axis: relative market share - this serves as a measure of
SBU strength in the market
• On the vertical axis: market growth rate - this provides a measure of market
attractiveness
By dividing the matrix into four areas, four types of SBU can be distinguished:
• Stars - Stars are high growth businesses or products competing in markets where
they are relatively strong compared with the competition. Often they need heavy
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 investment to sustain their growth. Eventually their growth will slow and, assuming
they maintain their relative market share, will become cash cows.
• Cash Cows - Cash cows are low-growth businesses or products with a relatively
high market share. These are mature, successful businesses with relatively little
need for investment. They need to be managed for continued profit - so that they
continue to generate the strong cash flows that the company needs for its Stars.
• Question marks - Question marks are businesses or products with low market
share but which operate in higher growth markets. This suggests that they have
potential, but may require substantial investment in order to grow market share at
the expense of more powerful competitors. Management have to think hard about
"question marks" - which ones should they invest in? Which ones should they allow
to fail or shrink?
• Dogs - Unsurprisingly, the term "dogs" refers to businesses or products that have
low relative share in unattractive, low-growth markets. Dogs may generate enough
cash to break-even, but they are rarely, if ever, worth investing in.
Using the BCG Box to determine strategy:
• Once a company has classified its SBU's, it must decide what to do with them. In
the diagram above, the company has one large cash cow (the size of the circle is
proportional to the SBU's sales), a large dog and two, smaller stars and question
marks.

Conventional strategic thinking suggests there are four possible strategies for each
SBU:
• (1) Build Share: here the company can invest to increase market share (for
example turning a "question mark" into a star)
• (2) Hold: here the company invests just enough to keep the SBU in its present
position
• (3) Harvest: here the company reduces the amount of investment in order to
maximise the short-term cash flows and profits from the SBU. This may have the
effect of turning Stars into Cash Cows.
• (4) Divest: the company can divest the SBU by phasing it out or selling it - in
order to use the resources elsewhere (e.g. investing in the more promising
"question marks").

SPACE MATRIX STRATEGIC MANAGEMENT METHOD:

• The SPACE matrix is a management tool used to analyze a company. It is used to
determine what type of a strategy a company should undertake. The Strategic
Position & Action Evaluation matrix or short a SPACE matrix is a strategic
management tool that focuses on strategy formulation especially as related to the
competitive position of an organization.

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 • The SPACE matrix can be used as a basis for other analyses, such as the SWOT
analysis, BCG matrix model, industry analysis, or assessing strategic alternatives
(IE matrix).

What is the SPACE matrix strategic management method?

• To explain how the SPACE matrix works, it is best to reverse-engineer it. First, let's
take a look at what the outcome of a SPACE matrix analysis can be, take a look
at the picture below. The SPACE matrix is broken down to four quadrants where
each quadrant suggests a different type or a nature of a strategy:
• Aggressive • Defensive
• Conservative • Competitive
This is what a completed SPACE matrix looks like:

This particular SPACE matrix tells us that our company should pursue
an aggressive strategy. Our company has a strong competitive position it the market
with rapid growth. It needs to use its internal strengths to develop a market penetration
and market development strategy. This can include product development, integration
with other companies, acquisition of competitors, and so on.
Now, how do we get to the possible outcomes shown in the SPACE matrix? The
SPACE Matrix analysis functions upon two internal and two external strategic dimensions
in order to determine the organization's strategic posture in the industry. The SPACE
matrix is based on four areas of analysis.
Internal strategic dimensions: External strategic dimensions:
• Financial strength (FS) • Environmental stability (ES)
• Competitive advantage (CA) • Industry strength (IS)
There are many SPACE matrix factors under the internal strategic dimension.
These factors analyze a business internal strategic position. The financial strength
factors often come from company accounting. These SPACE matrix factors can include
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for example return on investment, leverage, turnover, liquidity, working capital, cash
flow, and others. Competitive advantage factors include for example the speed of
innovation by the company, market niche position, customer loyalty, product quality,
market share, product life cycle, and others.
Every business is also affected by the environment in which it operates. SPACE
matrix factors related to business external strategic dimension are for example
overall economic condition, GDP growth, inflation, price elasticity, technology, barriers to
entry, competitive pressures, industry growth potential, and others. These factors can be
well analyzed using the Michael Porter's Five Forces model.
The SPACE matrix calculates the importance of each of these dimensions and places
them on a Cartesian graph with X and Y coordinates.
The following are a few model technical assumptions:
• - By definition, the CA and IS values in the SPACE matrix are plotted on the X axis.
- CA values can range from -1 to -6.
- IS values can take +1 to +6.
• - The FS and ES dimensions of the model are plotted on the Y axis.
- ES values can be between -1 and -6.
- FS values range from +1 to +6.
How to construct a SPACE matrix?
The SPACE matrix is constructed by plotting calculated values for the competitive
advantage (CA) and industry strength (IS) dimensions on the X axis. The Y axis is based
on the environmental stability (ES) and financial strength (FS) dimensions. The SPACE
matrix can be created using the following seven steps
Step 1: Choose a set of variables to be used to gauge the competitive advantage (CA),
industry strength (IS), environmental stability (ES), and financial strength (FS).
Step 2: Rate individual factors using rating system specific to each dimension. Rate
competitive advantage (CA) and environmental stability (ES) using rating scale from -6
(worst) to -1 (best). Rate industry strength (IS) and financial strength (FS) using rating
scale from +1 (worst) to +6 (best).
Step 3: Find the average scores for competitive advantage (CA), industry strength (IS),
environmental stability (ES), and financial strength (FS).
Step 4: Plot values from step 3 for each dimension on the SPACE matrix on the
appropriate axis.
Step 5: Add the average score for the competitive advantage (CA) and industry strength
(IS) dimensions. This will be your final point on axis X on the SPACE matrix.
Step 6: Add the average score for the SPACE matrix environmental stability (ES) and
financial strength (FS) dimensions to find your final point on the axis Y.
Step 7: Find intersection of your X and Y points. Draw a line from the center of the
SPACE matrix to your point. This line reveals the type of strategy the company should
pursue.
SPACE matrix example

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The following table shows what values were used to create the SPACE matrix displayed
below

Each factor within each strategic dimension is rated using appropriate rating scale.
Then averages are calculated. Adding individual strategic dimension averages provides
values that are plotted on the axis X and Y.
The SPACE matrix can help to find a strategy. But, what if we have 2-3 strategies
and need to decide which one is the best one? The Quantitative Strategic Planning
Matrix (QSPM) model can help to answer this question.

MARKETING STRATEGY:
Marketing Strategy deals with Pricing, Selling and distributing a product
 It can capture a large share of an existing market for current products through
market penetration and market saturation
 It can develop new markets for current products
Product Development Strategy:
 New products for existing markets
 Develop new products for new markets
Advertising and Promotion:
 Push Strategy involves spending a large amount of money on trade promotion
such as discounts, advertising allowances, instore special offers etc.
 Pull strategy involves spending more money on advertising to build brand
awareness so that shoppers will ask for the products. Research studies have
pointed out that a high level of advertising is most beneficial to leading brands in a
market
Distribution:
 The firm can use distribution and dealers/agents to sell products
 It can sell directly to the consumers
Pricing:
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  Skim pricing means high pricewhen the product is novel and competitors are few
 Penetration pricing is aimed at gaining high market share with a low price
 Penetration pricing is considered to be good for the firm in the long term
Strategic Financial Issues:
Factors related to sources of funds:
-Capital structure -Relationship with bankers
-Reserves and surpluses -Working capital availability
-Financing pattern
Factors related to usage of funds:
-Fixed asset -Rapport with shareholders
-Current asset -Dividend distribution
-Loans and advances
Factors related to the management of funds:
-Tax planning measures -Risk/return management
-Cost reduction measures -Budgeting system
-Financial accounting
Techniques used for analyzing the strengths and weakness in finance area:
-Liquidity ratio -Payback and IRR analysis
-Profitability ratio -Breakeven analysis
-Leverage ratio -Earning to sales and
-Cash flow analysis -Earning per share
Strategic Operations Issues:
Issues in R&D
-Choosing among alternative new technologies
-Developing methods of embodying the new technology in new products and process
-Investing in development of technological competence
Factors related to production system:
-Location -Capacity
-Layout -Extent of automation
-Work system -Vertical Integration
Factors related to operations and control systems:
-Aggregated production planning -Capacity utilization
-Material supply -QC and maintenance systems
-Inventory

Factors related to R&D systems:

-Patents -Technology agreements
-Technology collaboration -Facilities
-Technology transfer
Techniques used for assessing strengths and weaknesses:
-Capacity utilization analysis -Cost of production analysis
-Inventory analysis -Analysis of patents generated
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 -New products commercialization record
Strategic Human Resource Issues:
Factors related to personnel systems:
-Manpower planning system -Compensation
-Selection and development system - Appraisal system
Factors related to employee characteristics:
-Quality and skill of management -Working conditions
-Image of organisation as employer -Leadeship
Factors related to industrial relations:
-Union-Management Relationship -Collective bargaining
-Health,welfare,safety,stress,discipline
Techniques used for assesing the strengths and weaknesses:
-HRD Audit -Employee morale surveys
-Personnel turnover ratio
Strategic Marketing Issues:
Product related factors: -Distribution
-Variety -Market Intermediaries
-Differentiation Promotion related factors:
-Product positioning -Promotion budget
-Packaging -Advertising
Price related factors: -Public relations
-Pricing policies -Sales promotion
-Pricing methods System related factors:
-Govt. policies -Market intelligence
Place related factors: -Market information system
-Logistics -Customer relationship management
Techniques used for analyzing the strengths and weakness in Marketing:
-Market share analysis -Brand monitoring surveys
-Marketing audit -Dealer and consumer panels

Strategic Information Management Issues:

Factors related to acquisition and retention of information:
-Source -Retention
-Quantity -Security of information
-Quality
Factors related to processing and synthesis of information:
-Database management -Developing suitable system
-Software development
Factors related to retrieval and usage of information:
-Appropriation of formats -Capacity to assimilate information
Factors related to dissemination and transmission:
-Speed -Scope
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 -Depth -Coverage of info.
-Width
Integrative, systematic and supportive factors:
-Availability of personnel -Compatibility to organizational needs
-I T infrastructure -Top management support
Typical strengths that support information management capability:
-Availability of state of art equipment
-Presence of foolproof information security system
-Internet for marketing,IT support for Top,Positive mindset for sharing/dissemination

STRATEGY DEPLOYMENT:
Why Focus on Strategy Deployment?
 The feeling of many good but unaligned goals
 The need for a consistent top-to-bottom message
 The importance of management effectively communicating directives in a way that
all can engage with and implement.
 The importance of knowing what activities align with goals.
 It’s a Criteria for Performance Excellence (Baldrige)
Strategic Planning and Business Results are two key criteria for
performance excellence
 The transition away from command and control, and the frustrating that may
accompany it.
 Bottom line, it’s a necessary part of realizing success.

Definitions:
 Strategy –
 Is a plan of action designed to achieve a particular goal.
 The word strategy has a strong military connotation.
 Strategy is different from tactics.
 Deployment –
 To arrange in a position of readiness, or to move strategically or
appropriately.
 Again, deployment has a strong military connotation
 In business, it stands for a methodical procedure of introducing an
activity, process, program, or system to all applicable areas of an
organization
 Strategic Management –
 Developing, evaluating and making decisions that will enable an organization
to achieve its long-term objectives
What is Strategy Deployment?
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 The nervous system of a business system
 Guides planning and action across an organization’s total value stream
 Provides a closed circuit between an organization’s business needs and day-to-day
activities.
Pre-requisites to Deployment:
 Company Philosophy and Quality Policy
 Basic Strategic Planning
 Vision and Mission
 Values Statement
 SWOT Analysis
 Strengths, Weaknesses, Opportunities, and Threats
Any others?
Discussion Points
 Questions we should be asking as strategic planners.
 How widely understood is our company’s mission and/or vision and the
company’s top strategy among our employees?
 Are certain industries better at this than others? If so, why?
 Does your company have a published set of values or beliefs?
 How widely known are they?
 Do they make a difference?
 The answers to these simple questions will serve as indicators of the
company’s ability to effectively deploy a strategy.
 A commander can’t effectively deploy troops without each of them clearly
understanding the mission.
Methods of Deployment:
 Management by Objectives
 Cascading Objectives and Goals
 SMART Goals
 Specific  Relevant
 Measurable  Time bound
 Achievable
 Hoshin Kanri
 Catchball, A3-X, and A3-T
 Balanced Score Card
Management By Objective (MBO)
 The Principles of Management by Objective
 Cascading of organizational goals and objectives
 Mission Critical Objectives at the CEO Level
 Mission Critical Objectives at the Plant Level

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  Specific objectives for each member
 Cascaded Goals through Success Factors
 Performance evaluation and provide feedback
 Performance Evaluation System
Management By Objective
 Important features and advantages of MBO are:
 Motivation –
 Involving employees in the whole process of goal setting and
increasing employee empowerment increases employee job
satisfaction and commitment.
 Better communication and Coordination –
 Frequent reviews and interactions between superiors and subordinates
helps to maintain relationships within the enterprise and also solve
many problems faced during the period.
 Clarity of goals –
 The concept of SMART goals
Limitations and Arguments Against:
 Over-emphasizes setting of goals, as opposed to the working of a plan
 Could lead companies to evaluate employees by comparing them to the “ideal
employee”
 “What gets measured gets done”
 W. Edwards Deming
 argued that a lack of understanding of systems commonly results in the
misapplication of objectives
Discussion Points
 When done properly MBO ideally:
 improves motivation and communication
 involves employees in goals setting
 provides frequent feedback on performance
 Is this typically what would be found if a company’s MBO process were reviewed?
 Does MBO provide an opportunity for all employees to provide their input and
understand their importance?
 Any other challenges or short comings experienced by those who have utilized or
been a part of MBO?
Definitions:
 Hoshin = direction, a course, a policy, a plan, an aim
 Kanri = management, administration, or control
 Hoshin Kanri – A method of implementing strategy to get the right thing done.
 Often referred to as:

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  Policy deployment, Strategic Initiatives, Management By Policy, Hoshin
Planning, Policy Management, Managing for Results, Strategic Deployment
and Goal Deployment.
Hoshin Kanri
 Purpose and Usage–
 Long term strategic planning for systems
 Developing shared strategic goals (compare Balanced Score Card)
 Continuous organizational improvement
 Cascading or deploying top management policies and targets down the
management hierarchy
 Steps and Skills Required
 Planning and Communication
 Get Involvement
 Set the course
 X-Chart
 Project Initiation and Execution
 Two Deployment Styles or Target – Top-down and Bottom-up
 “Catch Ball” Target Deployment
 Project Charter
 Standard Process for follow through
 Reflection
 Review of what worked and what didn’t work
 Hoshin Kanri can be thought of as the application of Deming's Plan-Do-Check-Act
(PDCA) cycle to the management process.
 The PDCA cycle represents a generic approach to continual improvement of
activities and processes.
 PLAN = a plan of action is developed to address a problem.
 DO = the plan is implemented.
 CHECK = information is collected on the control parameters.
 ACT = the results are analyzed. Corrective action is identified.
 Three key elements
 Catchball
 Project Charter (A3-T)
 X-Charts (A3-X)
Catchball
 A participative approach to decision-making.
 Used in policy deployment to communicate across management levels when
setting annual business objectives.
 The analogy to tossing a ball back and forth emphasizes the interactive nature of
policy deployment.
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 Used when establishing the terms of the organizational contracts or project
charters.
 Provides employees with an opportunity to review the plan and objective and to
respond with their thoughts and ideas.
Project Charter (A3-T)
 Boil things down to one page
 Clarifies that no one person can accomplish a strategy
 Very reminiscent of PDCA and DMAIC

X-Charts (A3-X)
 A bundle of contracts called team charters
 A visual tool for planning
 Can appear complex at first
 Becomes simple quickly
 The key is the Linkage of high and low level action with people and
results
 Mostly an aid to communication

Hoshin Kanri
 Strengths
 Focuses organization on the vital few
 Communication of a shared vision
 Creates alignment through participation
 Encourages cross functional cooperation
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  Planning is systematic
 Limitations
 A rigid implementation is necessary
 Requires a long term commitment
 Relatively Static – the breakthrough objective must be stable during a 5 year
period
Balanced Score Card
 A Strategic planning and management system
 May mean different things to different people (the BSC spectrum)
 From a Performance Measurement Framework = Dashboard
 To a Robust Organization-wide Strategic Planning, Mgmt, and
Communication System
 Originated by Drs. Robert Kaplan and David Norton as a performance
measurement framework
 Added strategic non-financial performance measures to traditional financial
metrics to give managers a “balanced” view of performance.
 The “new” balanced scorecard transforms an organization’s strategic plan from a
document into “marching orders.”
 View the organization from four perspectives
 Develop Metrics
 Collect Data
 Analyze Data to each perspective
 PDCA

 Why Implement a Balanced Scorecard?

 Increase focus on strategy and results
 Improve organizational performance by measuring what matters
 Align organization strategy with the work people do on a day-to-day basis
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  Focus on the drivers of future performance
 Improve communication of the organization’s Vision and Strategy
 Prioritize Projects / Initiatives
 Scorecards simply for organizing measures aren’t justified.
 Start with the end in mind, focus on the desired results
 Stephen Covey – “People and their managers are working so hard to be sure things
are done right , that they hardly have time to decide if they are doing the right
things.”
 Developing a balanced scorecard system is like putting a puzzle together
 The pieces are strategic components
 They have to be checked for fit
The major system components:
 Engaged Leadership  Customer Value Proposition
 Interactive Communications  Strategy, Strategic
and Change Objectives, and Initiatives
 Management  Performance Measures
 Vision and Mission  Performance Information
 Core Values Reporting
 Organization Weaknesses  Rewards and Recognition
and Strengths  Evaluation
 Customers and Stakeholders
Quality Measurement Systems that Support Strategy Deployment:
Baldrige Criteria
1. Leadership 5. Human Resources
2. Strategic Planning 6. Process Management
3. Customer and Market Focus 7. Results
4. Measurement, Analysis, and
Knowledge Management
2.2 Strategy Deployment:
How do you deploy your strategy? Describe how your organization converts its strategic
objectives into action plans. Summarize your organization’s action plans, how are they
deployed, and KEY action plan performance measures or indicators. Project your
organization’s future performance relative to KEY comparisons on these performance
measures or indicators.
ISO Standards
1. Customer Focus 5. Systems Approach to
2. Leadership Management
3. Involvement of People 6. Fact Based Decision Making
4. Process Approach 7. Mutually Beneficial Supplier
Relationship
With ISO-
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The concentration is on the quality
systems
Takes an adoption of process approach

With Baldrige-
Performance excellence for entire
organization
Focus upon business results

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