8/3/2019 Template for Strategy Review and Reformulation Revised
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Strategy Analysis
Indicative template*
D Karthik
*Indicative Template based on Are you sure you have a strategy?" Donald C. Hambrick and
James W. Frederickson Academy of Management Executive 2001 Vol. 15 No. 4
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Strategy Analysis Steps
1.Map
2.Evaluate
3.Reformulate
4.Document
5.Check
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Map the Current Strategy
What is the
aspiration ?
What are the
values espoused by
the organization
What is the Balanced
scorecard for the
organization?
What are the key metrics
to track under Financial
Customer
Internal process
Learning and
growth
Have these been linked as
given in Exhibit 1 of Wells
Fargo Online Financial
Services (A)
See next slide What is the current
organizational
structure
What are the key
processes How is the culture of
the organization
What are the key
functional policies
What are the key
activities of the
organization
Bundle of
activities for
the
Organization
Aspirations
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Map the Current Strategy (Cont'd)Where is the organization active?Customers market segments
Products /service categories
Geographic areas
Core Technologies
Value gridof the organization and the Org role in
the Value grid
Emphasis on each arena
How has the organization obtained the needed
presence in the identified arenas?
For each cell of the value grid assess if
organization has done
-internal development
-acquired or merged other companies
-alliances/joint ventures
-Franchising/licensing arrangements
-long term contracts
-simple purchase transactions
The reason Customers choose the
organization?
Image
Customization
Price
Styling
Product reliabilityAnything else
What has been the speed of expansion and the
sequence of initiatives till date?
What have been the milestones toguide strategy execution?
Is the organization successful in
obtaining returns above its cost of
capital?
Compute and assess:Cost of capital, Beta,
Risk free rate of return, ROI(IRR, NPV),
Pay back period, Break even volume
Evaluate:What generates cash ?
What decides margins ?
What generates market share growth ?
How fast do sales turn into cash ?
What numbers/ ratios tell us if the
organization is successful ?
Is there guiding economic theory/concept?
e.g. economics of Scale, scope, network
effects, experience curve, life cycle
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Evaluate the current Strategy:
Identify Strategy GapsIs the organizations arena attractivein the context of the anticipations inthe environment? Has it chosen theright differentiators?
For each arena analyze Is there a healthy profit potential in
the chosen arenas? Industry attractiveness as per
Porters Five forces model.Intended/potential vs actual impacton five forces.
Evaluation of portfolio of arenasusing BCG matrix
Any changes/evolution in key
technologies? Product life cycle
Is the organization innovating tosustain differentiators?
Are there synergies between thechosen arenas?
To what extent the arenas span Life stage and Daily life cycle of
consumers
Has the organization chosen right
vehicles for each arena(s)
Identify the competences and
resources used by the
organization at each stage of the
value grid
Unbundle the value gridof the
organization
Apply VRIO to each bundle
Valuable
Rare
Inimitable
Organization
Assess the fit between vehicle
and Arena(s)5
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Evaluate the current Strategy:
Identify Strategy Gaps (Cont'd)Staging
Does the organization have anycriteria for selection of initiatives,their timing, sequencing and speed?
e.g. Exhibit 3 and Exhibit 5
of Wells Fargo Online FinancialServices (B)
Does it have any problems/issues inthe speed or sequencing of theinitiatives in the past
Economic Logic
Are there any imbalances (desiredvs actual, potential vs actual) in theperformance of the firm?
Is the trade-off between short term
and long term appropriate?Is there a potential to reduce costs(including cost of capital) andincrease revenues?
Can the causal linkages of the BSCbe verified and validated?
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Evaluate the current Strategy:
Identify Strategy Gaps (Cont'd)Aspirations
Has the organization achieved theobjectives through its strategy?
Is the strategy aligned with the
aspirations of the organizations?Are the aspirations and the strategycommunicated well throughout theorganization?
Are there imbalances between theaspirations, objectives, strategy and
achievements
Supporting Org Arrangements
Is there a fit between the structure
of the organization and its strategy?
Are the systems/processes
impeding or facilitating theexecution of the strategy?
Is the culture helping in execution?
Does the corporate HQ/Top
Management play a role in helping
the divisions grow?
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Evaluate the current Strategy:
Identify Strategy Gaps (Cont'd)Anticipated Changes in theenvironment
What are the anticipated changes inthe environment (technology,customers, competition, vendors,regulatory etc.)?
How do these changes affect theaspirations, strategy and supportingorganizational arrangements?
How can the organization respond
to these changes? How do wegenerate options?
What element(s) need to bechanged and how?
Is there consistency between theelements?
Fit between individual activities andthe overall strategy?
Are the activities Mutuallyreinforcing?
Is there an optimization of effortwhen the whole system ofaspirations, strategy andorganizational arrangements is
considered?
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Evaluate the current Strategy:
Identify Strategy Gaps (Cont'd)Do you have enough resources topursue this strategy?
Do you have the money, managerialtime and talent, infrastructure andother capabilities to do all you
envision?Are you sure youre not spreadingyour resources too thinly, only to beleft with a collection of feeblepositions?
Is the strategy implementable?
Will your key stakeholders(employees, investors, suppliers,customers) allow you to pursue thisstrategy or will they resist?
Can the organization make itthrough the transition throughlearning and unlearning?
Is the top management team ableand willing to lead the requiredchanges?
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DocumentExisting Strategy New Strategy
What would youContinue? Why?
Discontinue? Why?
Add? Why? How?
Modify?Why?How?
Write how theanalysis in the
previous steps has
helped you arrive
at your decisions?
What would be theimpact of the
strategy on
The environment
Five forces
Any other
The aspirations: Towhat extent the
Aspirations would
be fulfilled?
How would youimplement the
strategy?
How would you
overcome
resistance from
stakeholders?What changes
would you make to
Structure, Systems,
Processes, People,
culture? Why?
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What are thetradeoffs?
What are the risks
involved?
Give an assessment
of gains and losses
from your strategy?
Demonstrate the soundness of your strategy?
See next slide
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Document new strategy
What should be the
aspiration ?
What should be the
values of theorganization
See next slide What would be
organizational
structure
What would be thekey processes
What would be the
culture of the
organization
What would be the
key functional policies
What would be the
key activities of the
organization
What is the Balanced
scorecard for the
organization?
What are the key metrics
to track under
Financial
Customer
Internal process
Learning and
growth
How should these be
linked (refer to Exhibit 1 of
Wells Fargo Online
Financial Services (A)
Bundle of
activities for
the
Organization
Aspirations
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Document new strategy (Cont'd)Where will the organization be active?Customers market segments
Products /service categories
Geographic areas
Core Technologies
Value gridof the organization
Emphasis on each arena
How will the organization obtain the needed
presence in the identified arenas?For each cell of the value grid assess if
organization should do
-internal development
-acquire or merge other companies
-Ally or create a joint ventures
-Franchise/license
-long term contracts
-simple purchase transactions
The reason Customers would choose the
organization?
Image
Customization
Price
Styling
Product reliabilityAnything else
What should be the timing, sequencing and
speed of rolling out the initiatives?
What would be the milestones for guiding
execution?
Will the organization be successful in
obtaining returns above its cost of
capital?
Project future values and assess:Cost of
capital, Beta, Risk free rate of return,
ROI(IRR, NPV), Pay back period, Break
even volume
Evaluate: What would generates cash ?
What would decide margins ?
What would generates market share
growth ?
How fast would sales turn into cash ?
What numbers/ ratios would tell us if the
organization is successful ?
What are the guiding economic
theory/concept? e.g. economics of Scale,
scope, network effects, experience curve,
life cycle
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Check For Strategy Gaps in your new strategy using slides 5-9 If you have you missed any strategy gap(s). If gaps exist then articulate
the reasons and identify the tradeoffs
If you have done a balanced analysis
qualitative and quantitative
Financial and non financial
Soft issues are covered
Whether supported the decisions with logical reasoning
Whether interpreted each analysis and linked it to the strategy
FinallyIf you have demonstrated
Completeness All dimensions covered in as much detail as
possible Concreteness All reasoning is supported by qualitative and
quantitative evidence and relevant assumptions stated clearly
Clarity You are clear on your comprehension, analysis,
assumptions and ethical implications
Connectedness All dimensions are linked to each other
Consistency dimensions reinforce each other 13
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