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Overview
• Frameworks• How do we assess a framework
– Foundation framework (Porter)
– Trilevel framework (Parson)
– Value chain framework
– Strategic opportunities framework
– Strategic impact/value framework
– Risk assessment framework
• Concluding remarks
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Frameworks
• In general terms a framework is a structure used to analyse the issues
• Frameworks provide a shorthand method of describing the relationship between communications networks and competitive strategy
• They highlight important dimensions as well as suggest dimensions that are unimportant
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Framework Limitations
• Frameworks are not theories, they are merely a language for classification
• The development of an appropriate framework is not prescriptive, as it is only the beginning of the strategic planning process
• Many frameworks are also static - and fail to capture the dynamics of changing technologies and their use
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How Do We Assess a Framework?
• There are 3 principles which attempt to account for the complexities inherent in developing a competitive strategic plan
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Principles
• The principle of persons:
– The people who devise and act on a strategy have their own agendas (provides for intentional actions)
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Principles
• The principle of factors:
– There is a need to pay attention to
• product quality,
• customer service,
• employee commitment,
• competition,
• and other fundamental factors identified
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Principles
• The principle of timely decisions:
– There is a need for management to make timely decisions and to act decisively.
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How Do We Assess a Framework?
• Unfortunately there are few frameworks that abide by all of these three principles
• No single framework can be everything to everyone
• An assessment of the suitability of a framework based on these three principles informs us of the areas to be emphasised
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Framework Assessment
• Frameworks are also assessed in terms of:
– specific uses
– scope
– advantages
– disadvantages
• Astute planners & managers often combine frameworks to hedge against the risk of framework failure
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1: Foundation Framework
• Most foundation frameworks are based on the seminal work of Michael Porter of the Harvard Business School
Fig. 1 ~ Porter’s 5 forces in the competitive arena
SubstitutesPotential newentrants
Suppliers
Intra-industry rivalry
STRATEGIC BUSINESS UNIT
Buyers
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1: Foundation Framework
• Porter maintained that the competitive stance of a company depends on the collective strength of 5 basic forces.
• The strategic network plan can be a powerful tool to change this balance of power.
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1: Foundation Framework
• Porter suggests three generic strategies as logical approaches to obtain competitive advantages:
– cost leadership (aim to lower production costs)
– differentiation (aim for ‘unique’ product/service)
– focus (niche market or wide product/service range)
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2: Trilevel Framework
Parsons identified 3 levels of interaction where the strategic network plan can be used for competitive advantage:
– industry level (impact on nature of service/products provided)
– firm level (specific competitive strategy)
– strategy level (at the strategy level the strategic network implementation and management plan supports the corporatestrategies)
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3: Value Chain Framework• The value chain is an analytical framework used to examine the
value-adding activities in the firm and between firms. It was proposed by Porter
• Value activities consist of
– primary activity (production and delivery)
– and support activities
Product
DevelopmentManufacturing Distribution Marketing
Customers
FocusLower costLower costDifferentiate
Suppliers
When and where can value be added?
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4: Strategic Opportunities Framework
• The strategic opportunities framework suggests that strategic network planners should focus on:
– External vs. Internal
– Traditional Business vs. Business transformed by strategic use of the network
External Operations Internal OperationsIT-intensiveproducts and services
Traditional products and processes
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5: Strategic Impact/Value Framework• The value or impact of an advantage or strategy can
be measured by how much is it worth :
– to possess that advantage, or
– to create an opportunity by following that strategy (identifying grid sections and actions)
High
Low
Strategic impact of existing networks
Factory
Support
Strategic
Turnaround
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5: Strategic Impact/Value Framework• This framework expands on the grid to account for 2 interacting
dimensions : IMPACT and VALUE• The IMPACT is segregated into :
– time
– geography
– relationships• There are 3 different types of value :
– efficiency
– effectiveness
– innovation• This framework can be used as a strategic network planning
guide to help organise and analyse network-intensive areas of activity
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5: Strategic Impact/Value Framework• For a network, what might it mean to examine
the IMPACT of Time (use time compression) on the three values:
– EFFICIENCY = ACCELERATE BUSINESS PROCESSES
– EFFECTIVENESS = REDUCE INFORMATION FLOAT
• (make data rapidly available)
– INNOVATION = CREATE SERVICE EXCELLENCE
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5: Strategic Impact/Value Framework• For a network, what might it mean to
examine the IMPACT of Geography (Overcome geographical restrictions) on the three values:
– EFFICIENCY = RECAPTURE SCALE
– EFFECTIVENESS = ENSURE GLOBAL MANAGEMENT CONTROL
– INNOVATION = PENETRATE NEW MARKETS
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5: Strategic Impact/Value Framework• For a network, what might it mean to examine
the IMPACT of Relationships (Restructure business relationships) on the three values:
– EFFICIENCY = BYPASS INTERMEDIARIES
– EFFECTIVENESS = REPLICATE SCARCE KNOWLEDGE
– INNOVATION = CREATE CUSTOMER LOYALTY
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6: Risk Assessment Framework
• Risk Assessment (RA) can be arrived at in different ways. One way is:
• RISK = LIKELIHOOD x IMPACT x VULNERABILITY
• The best way to determine the likelihood is using historical data (eg: “a 300 year flood”)
– However, this is usually not available in the current dynamic business environment
• Threat Identification and Risk Analysis should be an integral part of any strategic network plan and used as a part of any strategic decision-making process.
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6: Risk Assessment Framework
• Risks can be identified as
– Intrinsic
• (internal and generally within the control of the organisation)
– or
– Extrinsic
• (external and beyond the control of the organisation).
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Concluding Remarks• These are some of the many possible
strategic frameworks that might be adopted by the strategic network planner
• New ones are also continuing to appear • The important thing for network planners to
decide is which one (or combination) is most suited for a particular organisation and its goals
• There are many dimensions to consider • The value of each would be lost if all
frameworks were simply combined together into one big super-framework