Analysing the strategic Environment

Mark Holbourn & Laila Kasem

Common Elements in Successful Strategies

Successful Strategy

Effective Implementation

Simple, consistent, longterm goals

Profound understanding of the competitive environment

Objective appraisal of resources

Grant, (2013, p9) Contemporary Strategy Analysis

What is Strategy?
Some elements / characteristics
Long term Competitive advantage Planning Distinctiveness Big decisions
Significant resources Important Not easily reversible

What is Strategy?
Where to compete? How to compete?

What is Strategy?
Where to compete?
Which businesses should we be in? A corporate strategy decision

How do we create / build / defend a competitive advantage? A competitive strategy / business strategy decision

How to compete?

Interlinked but, in principle, distinct

The Questions Raised by Reading

How do you do strategy? What is it?

Strategy: some Working Assumptions

Strategy is a complex concept! Companies need strategies We can devise and develop strategies The intended strategy may change / have to be adapted in implementation Intended strategies still have value Theory is useful if it generates insights

Where to Start?
Analysis Understand existing situation Forecast likely / possible change Intended, deliberate, prescriptive model

Analysing the main elements of the environment

Options
Environment

This session

Purpose

Options

Choice

Implement

Resources Options

Lynch, (2012,p71)

Environmental Analysis
If you were starting your own business: What do you want to know about the environment ? In pairs you have one minute how many things can you think of? Debrief

Analysing the strategic environment 1

The nine basic analytical tools

Environment basics Customer analysis Degree of turbulence

Competitor analysis

Company or public sector organisation

PESTEL analysis

Four Links analysis Five Forces analysis Key factors for success

Industry life cycle

Lynch, (2012,p72)

All the above tools ask questions!

Market size
How big is a big company going to be in this industry?

Growth
Is it fast growing, maturing, declining? Are there one / several / many PLCs here?

What are the market shares of the key competitors? Our market share?

The Basics
What is the market????

The Basics
For strategy:
Often wider market or industry Cant neglect the details

Raises questions
How many markets / segments do we / should we compete in? How do the markets / segments connect? Does competing in one / some help us extend into others?

Porters 5 Forces Model of Industry Competitiveness

Grant (2010)

PESTEL Analysis
Political Economic Socio-cultural Technological Environmental Legal

And it is not A structure What it is: for your A reminder, checklist, Tool reports!!!!!!!!! What it is NOT: An injunction to cover everything You would not leave nutcrackers If any element isnt important, dont or shell include it buried inofyour cake Eg University Bedfordshire would you?

PESTEL

Scenario Planning
The future is uncertain Your PESTEL might be wrong It may be very hard Why are these industries particularly hard?

Scenario Planning Process

Map the Future Identify key uncertainties
What really matters What might be very different

Create scenarios showing different futures Plan for most likely future Have contingencies ready for futures which would have big impact

From JISC http://www.jiscinfonet.ac.uk/infokits/learning-spacedesign/imagination/techniques/scenario-planning

Scenario planning
http://www.youtube.com/watch?v=STn PHoPfFQE

Industry Life Cycle

Development Growth Shakeout Maturity Decline

Few customers, few competitors

Entry of competitors, fighting for share, undifferentiated products.

May be many competitors, seeking volume, shakeout of weak players.

Rely on repeat purchase. Hard to take share Emphasis on efficiency (and maybe NPD)

Drop-off in usage

Exit of some competitors

Preparation for the Seminar

Case Study Johnson et al. (9th ed) P. 79-81. Find it in BREO Seminar Material. Key Note Report - Breweries & the Beer Update Market Report 2012 (Access through university).
Market Trends: P.3-8 Current Issues: P. 23-24 Market Growth + Future Trends p. 29-31

Research 3 recent news articles which complement the case study.

Tasks
Consider the external environment using relevant strategic models. You will be asked to write and present on these issues within the seminar.

You will not be allowed to remain in the seminar unless we see evidence of your preparation, including a copy of the case study Review the guidance on case study in the folder on Breo.