Post on 13-Jan-2015
description
Strategy Templates
Jo Whitehead, DirectorAshridge Strategic Management Centre
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Strategy: Answering a set of questions
3. How might the situation Evolve?
5. What are the Options?
1. What is the External environment?
4. What is the primary Issue?
6. Which Option is best?
2. What is the Internal situation?
“EIEIO”
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Introduction
• What follows is a set of templates that I find most useful in designing a strategy
• There are certainly many others and many variants that could be used
• I have limited myself to those I teach and find I most commonly use when doing a strategy
• I have added some notes in the notes section – although these are not comprehensive.
• The templates are best used in conjunction with attending one of my strategy courses and/or my book: What you need to know about strategy (also see Whatyouneedtoknowaboutstrategy.com)
• I hope they help – please send comments and questions to jo.whitehead@ashridge.org.uk
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Contents
1. External Environment2. Internal environment3. Prioritising uncertainties4. Issues5. Options6. Evaluating options
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In general, can segment on “Who, What, How”
Part of the industry value chain/
organisation design
Products/ service/ Value proposition
Geographies customers, customer
needs, channel
How? What? Who?
Wholesale, Cafes
Coffee, other beverages, food“US” versus “?”
Franchisees, city versus provincial, mass market versus niche, country
Source: All the Right Moves; C. Markides
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Picking a segmentation: Coffee shop example
Potential segmentation
Helps highlight practical choices about aims and pathway?
Large differences in size, growth, profitability or “ways to win”?
Wholesale versus cafes
Franchisees (big and small) versus concessions versus company owned
City versus provisional versus suburbs
Product mix
Brand Positioning (e.g., “US”)
Customer Niche
Country
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Evaluation of industry/segment profitability
• …• …• …
Supplier power
• …• …• …
Potential entrants
• …• …• …
Substitutes
• …• …• …
Industry rivalry• …• …• …
Buyer power
• …• …• …
Segment profitability2) Comments on opportunities / threats1 2 3 4 5
Low High
1) 1 = high power 5 = low power (= good for segment profitability)2) Note: Low scores in, for example, supplier power, correspond with high scores in segment profitability
Group: ………………………………………….... Market segment: ………….……………………..
Score 1-5 1)
Score 1-5 1)
Score 1-5 1)
Score 1-5 1)
Score 1-5 1)
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Contents
1. External Environment2. Internal environment3. Prioritising uncertainties4. Issues5. Options6. Evaluating options
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Customer advantage: Value Curve example
Low
High
Relative offering level
Price
Knowledgea
ble
Staff
Selectio
n of B
ooks
Store
Am
bience
Store
Hours
Café a
nd Lounge
Area
Key elements
Adapted from Blue Ocean Strategy, Kim and Mauborgne, 1999
Borders and Barnes & Noble
Chain Bookstores
Independent Bookstores
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Positional Advantage
Source of advantage Relevant? Drives Lower Cost or Higher Value?
• Size: Market share, scale, scope and experience curve
• Brand and Differentiation• Value chain design and
vertical integration• Input costs• Access to unique resources
or relationships e.g., patents, raw materials, technology, suppliers, customers, government relationships
• Focus on a particular product line
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Capability Advantage
Source of advantage Relevant? Drives Lower Cost or Higher Value?
• IT and logistics e.g., Walmart, Tesco
• Processes e.g., Cisco M&A and integration
• Skills e.g., credit risk management at a bank
• People e.g., Goldman Sachs
• Organisational culture, values and behavioural norms e.g., Southwest Airlines
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Competitive Advantage Table Template
Sources of advantage
% Weight now
% Weight 2015
Our Company
Compet-itor A
Compet-itor B
Mgt. Effort
Financial resources
Target market segment: Product characteristics that drive customer value:
*Should be weighted – for simplicity, not shown here
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Evaluation of competitive advantage
• …• …• …
Competitive advantage Comments on strengths / weaknesses
Sources of competitive advantage2)
Importance Evaluation of competitors1)
2010 2020 Your company today
Your company
potentially
Competitor one Competit
1
2
3
4
5
Overall 100% 100%
1) 1 = Worst in class, 3 = industry average, 5 = Best in class
1 2 3 4 5
Worstin class
Bestin class
Group: …………………….. Competitor: ……………………..Market / segment (s): ……………………..
2) Hint: Think of 3-5 drivers of current advantage and 3-5 drivers of ability to build new sources of advantage
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Economics View of Advantage
Lower costs from different business model
Traditional European Airline Low cost airline0
20
40
60
80
100
2819
12
7
15
10
8
4
12
5
15
8
Fuel
Plane
Sales andmarketing
Overheads
Airport charges
Cabin staff, pilots
57
67
Revenue = 100
20% more seats30% higher utilization
Higher utilisation of staff
Smaller airports Web-based, no travel agents used
Streamlined organisational structure
50% more time inthe air
With charges for baggage and food
Revenue from flight only
Cost per customer kilometre
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Systems view of Advantage
No baggage transfers, no seat
reservationsShort
turnaround time
On time departures
Under-utilised, low
cost, airports
Web based sales
Flexible pricing
Culture focused on eliminating
costs
No frills – pay only for
what you use
Higher utilisation
Lower prices for price sensitive
customers
Lower costs
Point to point routes
– no hub and spoke
Higher demand
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Evaluation of overall competitive position
Attractiveness / advantage matrix
Competitive position• …• …• …
Comments
• …• …• …
Short-term challenges1-2 years
• …• …• …
Mid- / long-term challenges> 3 years
Group: …………………….. Competitor: ……………………..Market / segment (s): ……………………..
High
LowAverage
Ave
rag
e s
egm
ent
pro
fita
bil
ity
High
Competitive advantage
Average
Low
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Evaluation of position: The Strategy Triangle
“Aims” (goals, ambitions, vision, objectives, intent)
“Capabilities”• Assets• Technology• Skills• Culture• Market positions• Customer
relationships• Brand• Etc.
“Opportunities “• Markets• Products• New customers• Competitors/
Acquisitions• Etc• Should include even
changes that you think are a threat (as every change is, in theory, an opportunity if you have the right capabilities)
Fit
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Contents
1. External Environment2. Internal environment3. Prioritising uncertainties4. Issues5. Options6. Evaluating options
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Framework for prioritising uncertainties
Potential Impact of variance from the base case
Low Very significant
Likely
Very unlikely
Probability of variance from the base case
Example: Resistance by grid company to power plant
Action: Mould strategy to manage
Example: Changes in quality of water supply to the power plant
Action: Ignore
Example: Forced closure of all CO2 emitting power plants
Action: Hedge downside, retain upside
Example: Changes in demand for power
Action: Adapt in real time
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Contents
1. External Environment2. Internal environment3. Prioritising uncertainties4. Issues5. Options6. Evaluating options
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Definition of issue and generation of options
No. Option description Time-frame
1
2
3
4
5
6
7
8
9
10
Market / segment: ……………………..
Opportunities/ Threats
Issue
Group: …………………….. Opportunity: ……………………..
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Different horizons for issues and options
Type of option
Typical time frame
Approach for generating options
“Planning” 1 – 3 years • Look for low hanging fruit• Redouble current initiatives• Incrementally improve position
Medium term strategy
3 – 5 years • Address important issues and challenges
• Build new sources of advantage• Position in more attractive segments
Long term objective or vision
5+ years • Define your ideal outcome• Analyse megatrends, scenarios –
prepare for potential developments• Share the future
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Contents
1. External Environment2. Internal environment3. Prioritising uncertainties4. Issues5. Options6. Evaluating options
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Evaluation of options
Internal prerequisites
• …• …• …• …
Option
Evaluation1)
CommentContribution
to attractivenes
s
Competitiveadvantage
Corporate value added
ImplementationOther Overall
scoreDo-ability Risk2)
1:
2:
3:
1) 1 = low … 5 = high2) 1 = high risk… 5 = low risk
Market / segment: ……………………..Group: …………………….. Issue: ……………………..