Technical Session 2

Session 2 Study Material (Part 1 & 2)

Strategy Formulation Steps:
1. Strategic Analysis
2. Strategic Direction Generation
3. Generic Strategy Formulation
4. Strategic Entity Building
5. Organization Development
6. Objectives and Goals strategic Meeting
7. Tactical Planning
8. Evaluation and Control

Strategic Analysis
In order to analyze the corporate position strategically, we have to analyze:

• Close range environment (COSMIC)

Customer insights
Organization insights
Suppliers insights
Marketing Intermediaries insights
Competitors insights (Direct, Indirect & New Entries possibility)
• Wide range environment (PESTEL)
Political
Economical
Sociocultural
Technological
Ecological (Environmental)
Legal
• Asking Jack Welch strategic Questions
What have we done lately?
What future events or possible changes keep us up at night with worry?
After looking at COSMIC & PESTEL, given all that, what’s our winning move?

N.B.
This replaces the SWOT Analysis as it covers all the

• Internal positive factors (Strengths)

• Internal negative factors (Weaknesses)
• External positive factors (Opportunities)
• External negative factors (Threats)

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COSMIC
Insights about customers including:
• Sales: Numbers, Time (Frequency) & SBUs
Customers • Number of customers
• Segment of Customers (Demographic, Geographic, Psychographic, Behavioral)
• Cashflow (Amount or Pattern)
• History and data of Customers
• Customer Classification
✓ True Friends (High Profitability & Long term)
✓ Butterflies (High Profitability & One shot)
✓ Barnacles (Low Profitability & Long term)
✓ Stranger (Low Profitability & One shot)
Insights about Organization including:
• Human Resources (Headcount, Employee Cost, Turnover, Development status)
• Physical Resources (Number and codes, Handling Costs, Depreciation, Maintenance,
Organization Security and Safety plans
• Information Resources (Information Management plans, Security standards, Physical
hardware control system)
• Financial Resources (Financial Ratios)
Insights about Suppliers
• Items: Categories and content
Suppliers • Number of Suppliers for each item
• Cashflow for each category and item
• Quality history for each supplier
• Quantity of each item
Insights about Marketing Intermediaries
• Number of Marketing Intermediaries
• Items: Categories and content
Marketing • Number of intermediaries for each item
Intermediaries • Cashflow for each category and item
• Audit score for each intermediary
• Quantity of each item distributed
Insights about Competitors
• Competitors’ Products (Categories & Items, Features, Design and Quality)
• Competitors’ Price
• Competitors’ Place
Competitors • Competitors’ Promotion
• Competitors’ Process
• Competitors People
• Competitors’ Physical Evidence

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PESTEL

These determine the extent to which government and government policy may impact
Political on an organization or a specific industry. This would include political policy and
stability as well as trade, fiscal and taxation policies too.
These factors impact on the economy and its performance, which in turn directly
Economical impacts on the organization and its profitability. Factors include interest rates,
employment or unemployment rates, raw material costs and foreign exchange rates.
These factors focus on the social environment and identify emerging trends. This
Socio-cultural helps a marketer to further understand their customers’ needs and wants. Factors
include changing family demographics, education levels, cultural trends, attitude
changes and changes in lifestyles.
These factors consider the rate of technological innovation and development that
could affect a market or industry. Factors could include changes in digital or mobile
Technological technology, automation, research and development. There is often a tendency to focus
on developments only in digital technology, but consideration must also be given to
new methods of distribution, manufacturing and also logistics.
These factors relate to the influence of the surrounding environment and the impact of
Ecological ecological aspects. With the rise in importance of CSR (Corporate Sustainability
Responsibility), this element is becoming more important. Factors include climate,
recycling procedures, carbon footprint, waste disposal and sustainability
An organization must understand what is legal and allowed within the
territories they operate in. They also must be aware of any change in
legislation and the impact this may have on business operations. Factors
include employment legislation, consumer law, health and safety, international
as well as trade regulation and restrictions.
Legal
An organization must understand what is legal and allowed within the territories they
operate in. They also must be aware of any change in legislation and the impact this
may have on business operations. Factors include employment legislation, consumer
law, healthy and safety, international as well as trade regulation and restrictions.

N.B. Remember, sometimes especially in Egypt, we do not have the right indicators, insights or
even data regarding the PESTEL factors so we just have to measure the impact of any of
the PESTEL factors on the COSMIC

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Jack Welch Strategic Questions

• What have we done lately?

✓ Are there any running projects?
✓ What are the insights about our latest movements in developing our COSMICs?
• What future events or possible changes keep us up at night with worry?
✓ What are the expected positive or negative turns in the PESTEL?
✓ What are the expected positive or negative turns in the PESTEL?
• After looking at COSMIC & PESTEL, answering the above questions, what’s our winning
move?
The answer to this last question will determine the second step in strategy
formulation process,
Strategic Direction Generation