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Strategic Diagnosis: Background
• Evolution of change Agenda makes it dangerous to base future plans on successful responses to historical challenges
• There is no single prescription for future success which will apply to all firms
• Management confronts two Key Problems– Each Organization
needs to diagnose its unique future challenges, threat and opportunities
– Each firm must design and implement its unique response to these challenges
Strategic Diagnosis: Definition
• A systematic approach to determining the changes that have to be made to a firm’s strategy and its internal capability in order to assure the firm’s success in its future environment
• Environmental Turbulence is a combined measure of the changeability and predictability of the firm’s environment– Complexity– Novelty– Rate of Change– Visibility
Strategic Diagnosis: Example
Environmental Turbulence
StrategicAggressiveness
Responsiveness of Capability
RepetitiveSlow
IncrementalFast
Incremental Predictable Unpredictable
Repetitive Expanding Changing Discontinuous Surprising
Custodial Adapts toChange
Seeks FamiliarChange
Strategic Flexible
Stable Reactive Anticipatory Entrepreneurial Creative
Strategic SegmentationStrategic Information ModelCompetitive Positioning
Ansoff and McDonnell, 1990Created by Robert Moussetis, 2000
• How can we systematically “divide” our environment into “workable areas”?
• How do we make sure that the information we received from the environment involves legitimate (perceived) information?
• How do we systematically design a competitive organization?
• How do we interpret qualitative data?• Perception vs. Reality for Organizational
Leaders
SBA:A Strategic Business Area which is a distinct segment of the environment in which a firm does (or may
want to do) business
• In which SBAs will the firm do business in the future?
• What competitive position will the firm occupy in each SBA
• What competitive strategy will the firm pursue to gain this position
SBA Segmentation• Dimensions: Need, Customer
type, Technology and Geography
• Characteristics: Growth, Performance (Profitability), Turbulence and Success factors
• Strategic Resource Area: In the resource based postindustrial universe, managers have to balance what they want to do against what they can do
• Strategic Influence Groups: Firms increasingly legal and societal pressures - Stakeholder ManagementFirm Environment
SBA
SBUSBU
SBASBA1
SBA2
Ansoff and McDonnell, 1990Created by Robert Moussetis, 2000
Critical mass
Optimal Mass
-
+ROI
INVESTMENT IN AN SBA
CRITICAL MASSCM: INVESTMENT BELOW WHICH A FIRM
BECOMES UNPROFITABLE IN AN STRATEGIC BUSINESS AREA
Ansoff and McDonnell, 1990Created by Robert Moussetis, 2000
STRATEGIC SEGMENTATION
STRATEGIC SUCCESSHYPOTHESIS
FIRM’S OBJECTIVESSBA
PROSPECTS
STRATEGICDIAGNOSIS
SBAATTRACTIVENESS
TARGET COMPATITIVEPOSITIONING
PORTFOLIOPOSTURE
ENVIRONMENT
COMPETITIVE POSTURE IN SBA
ENTRPENEURIAL PLANNING
SBA
SBA
SBA
Degree of Preparedness
Ansoff and McDonnell, 1990Created by Robert Moussetis, 2000
Strategic Information Model• Power Filter: It is nature for
managers and departments, whose power is threatened by discontinuities, to minimize or even refuse to recognize the impact of discontinuity.
• Mentality Filter: Rejection of novel information and predisposition on success models
• Strategic and Creative Mentalities focus on– Future, Novel and
Unfamiliar change– Entrepreneurial drive and
tolerance of failure
• Management Information
Environment
DataData
PerceptionPerceptionInformation
Actions
MentalityFilter
SurveillanceFilter
PowerFilter
Ansoff and McDonnell, 1990Created by Robert Moussetis, 2000
Competitive Positioning• Estimating SBA
attractiveness– Global forecast– Future Turbulence– Historical Trends
extrapolated into the future
– Changes in the historical demand
– Overall shifts in growth prospects
– Numerical estimates of Future growth
– Future shifts in the profitability
• Boston Consulting Group matrix
Low
High
High
Low
?
CashCows Dogs
Volume Growth
Market Share as a functionof leading competitor
SBA Attractiveness = G + P + O - TAnsoff and McDonnell, 1990
Created by Robert Moussetis, 2000
Example: North Central College
Ansoff and McDonnell, 1990Created by Robert Moussetis, 2000
• MBA• Educational Leadership• Biology• History
• Administrative Services– Admissions -Registrars -Financial Aid
• Academic Services– Advising - Technology Needs
• Facilities – Buildings and Services
– Recreational Activities
– Classrooms and Teaching Domains
Identify Future TurbulenceEstablish Strategic Aggressiveness
Establish Responsiveness of Capability
• STRATEGY (S)
• CAPABILITY (C)
• STRATEGIC INVESTMENT (I)
• GROWTH THRUST• (Domain) MARKET POSITION• (Domain )MARKET DIFFERENTIATION• SERVICE-PRODUCT DIFFERENTITION• CRITICAL MASS• VERITCAL INTEGRATION
• MANAGEMENT• FINANCE• MARKETING• R&D• PRODUCTION
• IN STRATEGY• IN CAPABILITY• IN FACILITIES
COMPETITIVE POSTURE IN AN SBA
POSTURE = SXCX(I-Icr)Ansoff and McDonnell, 1990
Created by Robert Moussetis, 2000
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