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Business Analysis (BA)

Chapter 1:
The Nature of Strategic Business Analysis
The Strategic Planning Process
Levels of Strategic Planning
Johnson, Scholes and Whittington
Johnson and Scholes Lenses
Business Analysis
Chapter 2:
The Environment and Competitive Forces
PESTEL Analysis
This model examines the growth prospects for the industry
as a whole. This is achieved by examining 6 factors that
are outside the control of the companies in the industry:

• Political factors
• Economic factors
• Social factors
• Technological factors
• Environmental factors
• Legal factors
Porter’s Diamond
Convergence in Industries
Porter’s 5 Forces Model
The Product Life Cycle

The four stages of a products life


Introduction Growth Maturity Decline

Strategic Groups

These are organisations with:

• same industry
• similar strategic characteristics
• following similar strategies/ competing
on a similar basis
• can have similar assets and skills
Strategic Group Positioning
Chapter 3:
Marketing and the value of goods and services
Customers and Markets

•There are 3 strategic questions that are

used to analyse customers:

– segmentation

– motivation

– unmet needs
Market Segmentation
Marketing styles

There are three ways to market a product

in order to account for the fact that
different segments have different needs:

• undifferentiated marketing

• differentiated marketing

• niche/target marketing
Marketing Mix Strategies
Critical Success Factors

“performance requirements that are

fundamental to an organisation's success. In
this context CSFs should thus be viewed as
those product features that are particularly
valued by customers. This is where the
organisation must outperform competition.”
Value Chain Analysis

“to provide a target for action in order to

improve competitive position.”

They can take many forms:

• strategic
• historical
• industry
• best-in-class
• international
Chapter 4:
Internal resources and competencies
Same as Competitor Different and
Easy to Copy Difficult to Copy

Resources Basic Unique

Competencies Threshold Core

Resource Audit (M’s model)

An organisations resources can be

organised into the following categories:

• Men
• Money
• Markets
• Materials
• Management
• Make-up
• Manufacturing/Machinery
Sustaining Competitive
The capabilities needed to sustain
competitive advantage are:

• Value of strategic capabilities

• Rarity of strategic capabilities

• Robustness of strategic capabilities

Other ways to gain
competitive advantage
• innovation
– by the time the competition catch up, the innovator
has built up brand loyalty and a defendable position

• knowledge management
– this encourages innovation and sharing, and it
reduces complexity. It also ensures continuity as
staff turnover
SWOT Analysis
Chapter 5:
Stakeholders, ethics and culture
The need for corporate
• The gap between ultimate beneficiaries and
those making day-today decisions can be large
and agents might not know what the
beneficiaries want.

• Self-interest can cause agents to work for

their own benefit at the expense of their
principals (remuneration packages, share
options, budget padding, short-termism to make
current results look good at the expense of
long-term performance).
Typical features

• boards should have non-executive directors – to advise

and warn the executive directors. Executive and non-
executive directors (NEDs) should be in balance so that
neither group dominates

• there should be a separation of the roles of chairman and

chief executive

• executive remuneration should be decided by a

remuneration committee, consisting of non-executive

• an audit committee, comprising non-executive directors

should look after the appointment of supervision of auditors.
Impact of Corporate Governance

• Greater shareholder power

• Greater pressure

• Greater scrutiny

• Greater need for risk assessments

Stakeholder Mapping


Minimal Keep
Effort (A) Informed (B)

Keep Key
Satisfied (C) Players (D)
Low Level of Interest High

Ethical issues arise at three levels:

• Macro level

• Corporate level

• Individual level
Ethical Stances

„The extent to which an organisation will

exceed its minimum obligations to
Corporate Social Responsibility
The following are common areas where
businesses get involved in CSR issues:

• work creation and training programmes

• sponsorship of the arts and sport
• employee welfare programmes
• community welfare programmes
• support for educational institutions and links with
• contributions to overseas aid
• environmental programmes.
Organisational culture

The concept of the cultural web is a useful device for mapping

out change but its real worth is in the fact that we can identify
which elements of culture need to change.
Mission Statements
A mission statement should contain the following:

• purpose
• strategy
• policies and Standards of Behaviour
• values.

• mission statements should be short – typically half a page
• note that mission statements can have a valuable role in
setting ethical standards and organisational culture.
Chapter 6:

Strategic Choice I
Corporate Parenting

The issue for corporate parents whether


• add value to the organisation and give

business units advantages that they
would not otherwise have

• add cost and so destroy the value that

the business units have created.
Rationales for adding value

A well-managed corporate parent should be able

to add value. Johnson, Scholes and Whittington
identify three corporate rationales or roles adopted
by parents in order to do this:

• portfolio managers

• synergy managers

• parental developers.
Boston Consulting Group Matrix
% rate market growth


+1 Relative Market Share -1

Chapter 7:
Strategic Choice II
TOWS Analysis
Internal Factors
Strengths (S) Weaknesses (W)

Opportunities Examine strategies Examine strategies

(O) that use strengths that take advantage
to make use of of opportunities by
External opportunities (SO). overcoming or
Factors avoiding
weaknesses (WO).
Threats (T) Examine strategies Examine strategies
that use strengths that minimise the
to overcome or effect of
avoid threats (ST). weaknesses and
avoid or overcome
threats (WT).
Directions for Growth - Ansoff
Existing New

Existing Market Product


penetration development

New Market Diversification





Implementing growth
Organic Growth

• Internal development
• Easier to control?
• Can be risky if not enough skills or
Implementing growth

Mergers & Acquisitions

Assess by synergy

Transfer of Skills Sharing activities

Implementing growth
Joint Venture Alliance

Joint Development

Licence Agency
Strategies for Competitive
There are three generic strategies through which an
organisation could achieve competitive advantage:

• Cost leadership, where there is great emphasis on

keeping costs down. This opens up the profit margin by
lowering costs, ideally more than any competitor can.

• Differentiation, where a better product or service is

sold. This opens up the profit margin by raising selling

• Additionally an organisation can choose a focus strategy,

where the organisation concentrated on a small segment
of the market. Within the focus strategy, the organisation
must choose whether or not to become a cost leader or a
The Strategy Clock
Strategies for hyper-competition

• Reposition on the strategic clock

• Competing successfully

• Fight and overcome competitors‟


• Overcome previous barriers to entry

Strategy Evaluation

Key words

Suitability Feasibility

Chapter 8:
Organisational Structure
Organisational structure

Entrepreneurial structure

The boss

Everyone else
Organisational structure

Functional Structure


Production Sales R&D Finance HR

Organisational structure

Divisional Structure

Central functions
eg finance, HR

Division 1 Division 2 Division 3

Production Sales R&D

Organisational structure

Matrix Structure

Production Purchasing
Manager Manager

Customer A

Customer B
Virtual Organisations

An example:
Chapter 9:
Business Process Change
Business Processes

• Every business has unique characteristics embedded in

its core processes that help it achieve its goals and create
competitive advantage.

• Strategic business processes, such as new product

design or high sensitivity customer care, provide unique
and durable business advantages to organisations.

• Looking at the business in terms of activities and

processes opens up scope for challenging the ways
in which things are done, and coming up with
improvements, or sometimes more radical changes.
Harmon’s process-strategy

According to Harmon, BPR should be

focused on those activities which are:

– of high strategic importance

– likely to be complex and dynamic

These are normally the processes that

provide competitive advantage and overall
company success.
Business Process Redesign
Software Solutions

BPR will often mean there is a need for new

software in order for the change to work
effectively and efficiently.

The key decision here is whether to buy in a

“ready made”/generic software package or
to pay for a bespoke system
Chapter 10:
Information Technology
Strategic Context
IT can form an important part in the entire strategic
planning process. For example
• it can help provide new technological developments
which open up growth opportunities
• It can help a business cope with it‟s competitive
environment and market position
• Strategic choice can be made easier through the use of
• IT can help in strategy implementation
• IT can help review performance and monitor controls
McFarlan’s Grid

The stages of e-business:

1. Web presence
2. E-commerce
3. Integrated e-commerce
4. E-business
Supply Chain Management

The transformation of product from node to

node includes activities such as:

• production planning
• purchasing
• materials management
• distribution
• customer service
• forecasting
Push vs Pull SCM

• Push = supplier-led.

• Pull = customer/ market led. Consumers

have a direct voice in the functioning of the
supply chain. This is what e-commerce
facilitates and this was very rare prior to
the development of e-commerce. Many
businesses have developed this further
into upstream SCM
Impact of successful
downstream SCM

• Customers become more reluctant to

• Disintermediation
• Continual updates
• Cheaper communication
• Consumer/ user groups
• Better information on consumers
• Customers can start to customise products
E-marketing: the 7Ps

E-marketing involves extending the original 4Ps of

marketing (product, price, promotion and place) to
incorporate the following:

– people/participants
– processes
– physical evidence
6Is: Benefits over Traditional
Marketing Methods
Customer Relationship Management

There are 4 stages in the customer life cycle:

• Selection
• Acquisition
• Retention
• Extension

IT can play a pivotal role in improving all aspects of

Chapter 11:
Benefits of Improving Quality

• It is a differentiator
• Reduced internal failure costs
• Reduced external failure costs
• Potentially requires less capital investment

However there may be an increase in:

• Prevention costs
• Appraisal costs
Quality Control vs Quality

• Quality control = reactive (old way to do


• Quality management = proactive (the

modern way to improve quality)
Total Quality Management

• Everyone‟s involved
• Customer focused
• Internal and external buyer/supplier
relationships established
• Try to get it right first time
• Use a “kaizen” system
The ‘V-model’
Capability Maturity Model
Integration (CMMI)
The Six Sigma Approach

• This is an extension of the TQM approach.

• It is a data-driven approach – it uses a wide

range of statistical calculations and techniques to
examine and analyse quality problems

• It aims to reduce the variation in process output

so that there are no more than 3.4 defects per
million opportunities

• Define
• Measure
• Analyse
• Improve
• Control
Chapter 12:
Project Management


Project Managing and

Project Risk Project
features and Leading
Management Planning
constraints Projects

Project The Project Project

Initiation Plan Completion
Project Constraints

• Cost

• Time

• Scope
Project Risk Management

Risk management comprises:

• risk assessment (identifying and

analysing risk) – assessing the loss
probability and magnitude for each item

• risk control (taking steps to reduce

risk, provide contingency and monitor
How to manage risk

• Ignore it

• Insure against it

• Transfer it

• Mitigate it
Contents of a project plan
Assessing Project Quality

• Define
• Measure
• Analyse
• Design
• Verify
Chapter 13:
Finance & Strategy
Different Organisational Types

• Listed Companies

• Non-listed businesses

• Not for Profit organisations

Funding Sources
What to consider

• Cost
• Gearing
• Control
• Security
• Cash flow
• Availability
• Exit routes
Funding of NFPs

• Strategic funding
• Self-generated income
• Developmental funding
• Cost minimisation
• Project returns
Working Capital Management
Investment Appraisal Ratios
Chapter 14:
Strategy and People
Objectives of HRM

• Identifying the kinds of talent needed

• Recruiting an adequate supply
• Developing people‟s potential by training,
development and education.
• Retaining as high a proportion as possible
• Motivating the talented personnel
• Improving the performance and productivity
of the most talented.
• Creating an organisational culture in which
talent is nurtured and can flourish

An effective leader will need

• Vision
• Communication
• Passion and motivation
• Flexibility
Appraisal Systems

A good appraisal system should have:

• Relevance
• Fairness
• Serious intent
• Cooperation
• Efficiency
Facilitating change

Project and strategic change need staff

support. In order for these changes to be
effective they may need:

• new output measures

• new skills and competences required
• changes to roles and job descriptions
• changes to responsibilities
Reward Systems

When designing a reward system we

should consider:

• Organisational objectives
• CSFs and KPIs
• Desired behaviour
• Competitor systems
• Legislation
• Constraints
Human Resources and Strategy
HRM is becoming increasingly important to businesses:

• people are seen as a major source of competitive advantage,

• training and development is seen as an investment, not a cost
• learning is seen as essential
• employees expect to learn and change and retrain as necessary
as strategy demands
• Staff development is seen as a key management role
• changes outside the organisation are reflected in changes to
training and development needs
• human resource implications are considered as part of strategic
Chapter 15:
Managing Change
Reasons for Strategic Change
There are many ways in which a business‟
strategy might change. But these fall into two
general categories:

• planned/intended strategic changes

• emergent strategic changes

In either case, the change process will have to

be managed and led well by senior
Types of Strategic Change
Extent of Change
Transformation Realignment
Speed of Change

Evolution Adaptation

Revolution Reconstruction

Big Bang
Barriers to Change
The Change Process

Lewin suggested that successful change is

achieved in three stages:

– Unfreezing existing behaviour

– Making the change
– Refreezing the new behaviour
Contextual Features
Leadership Styles