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Google:
http://www.google.co.uk/url?sa=t&source=web&cd=5&ved=0CE4QtwIwBA&url=ht
tp%3A%2F%2Fmoney.cnn.com%2Fvideo%2Ftechnology%2F2009%2F05%2F27%2Ff ortune.google.tt.052709.cnnmoney%2F&ei=73_NTO5h0M2zBvusjZcI&usg=AFQjCN
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Bullmer: http://news.cnet.com/1606-2_3-26627.html
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1. Framework for Analysis
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Scholes - 2006
1. Simple or complex, static or dynamic – evaluate uncertainty (diversity of
influences, knowledge required, extent of interaction) - contingency approach,
incremental approach
2. PESTEL
3. Five Forces
4. Strengths and Weaknesses
5. Opportunities and Threats
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Waitrose Pestel (2008)
o ca :
Uncertainty due to the financial crisis
Increased government borrowing
Changes in taxation of bonuses
Planning changes – move back into town centres
Forthcoming election
Economic:
Recession to potentially lead to lost market share to budget supermarkets? – introduced their own value line
Lower prices for commodities coould lead to lower prices in store.
Credit crunch led to developers pulling out of new retail developments
Sociocultural
Demographic:
Aging population could benefit waitrose
Increasing awareness of sustainability and other ethical issues
Technology
Growth of internet shopping – tie in with Ocado and their own delivery service
Environment
Stated commitment to meeting governments carbon reduction targets
Implementation of green IT
BREEAM stores
Legal
Competition commission ruled on large supermarkets holding landbanks to prevent competitor expansion
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Scholes - 2006
1. Simple or complex, static or dynamic – evaluate uncertainty (diversity of
influences, knowledge required, extent of interaction) - contingency approach,
incremental approach
2. PESTEL
3. Five Forces
4. Strengths and Weaknesses
5. Opportunities and Threats
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Competitive Rivalry:
Supermarkets fiercely competitive – ASDA, Sainsbury’s, Tesco & Morrisons
Waitrose at the premium end
Barriers to entry:
Small number of successful companies with good brand recognition.
High start up costs and aggressive tactics and plentiful economies of scale.
Threat of substitutes
Internet shopping
Buyer Power
Very high – customers tend to have a number of local options
Waiotros has strong customer loyalty
Supplier power
Low because of limited differentiation
Loss leaders
ALSO CONSIDER SWOT: strengths, weaknesses and opportunities and threats.
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Scholes - 2006
1. Simple or complex, static or dynamic – evaluate uncertainty (diversity of
influences, knowledge required, extent of interaction) - contingency approach,
incremental approach
2. PESTEL
3. Five Forces
4. Strengths and Weaknesses
5. Opportunities and Threats
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Use a TOWS matrix to develop options
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EXPECTATIONS AND PURPOSES
Why is the strategy being developed – what are the goals and vision of the
organisation and of it’s stakeholders?
For private enterprise, profit will always be a key objective, but their may be other
objectives or goals that are motivated by stakeholders – employees, customers,
suppliers, government etc.
Social or ethical objectives may be formalised in the companies CSR report
Corporate governance may influence strategy.
The organisation’s paradigm will also influence the strategic position and so should
be considered.
Tools –
1. Stakeholder mapping – How interested is the stakeholder in the organisations
choice of strategies, and how much power does it have to influence strategic
decisions. Mapping helps direct political priorities.
2. The cultural web
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Paradigm: collective, taken for granted assumptions and beliefs
Useful when attempting to identify an organisation’s culture – forms a framework
of questions to ask and things to look for.
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Strategic business unit (Scholes) – is part of an organisation for which there is a
distinct market for goods or services different from another SBU – and this will
require differing strategies.
Competitive strategies (See Porter):
1. Cost leadership – to have the lowest costs – consistently over a period of time
but to sell at or near the market price
2. Differentiation - to offer something above the industry standard, for which
customers are prepared to pay a premium
3. Focus – to concentrate on one segment of the market to the exclusion of the
remainder, and then concentrate on either cost or differentiation.
Expanded by Bowman – The strategy clock
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1, No Frills: commodity-like, price sensitive customers, high buyer power & low
switching costs
2, Low price: Requires a low cost base for success, may lead to margin reductin oran inabiolity to invest
3, Hybrid: Differentiation and a lower price than competitors – IKEA
4, Differentiation: Offer benefits different “better” products or services than those
of competitors at the same or slightly higher prices
5,Focused differentiation: Provide products/services that offer high perceived
benefits and justify a substantial price premium
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CORPORATE LEVEL STRATEGY
Many companies are multi-business, through product or geographic diversity.
Product/Market diversification – a strategy that takes the company into new markets and products or services
Aims:
1) Efficiency gains – Economies of scope utilised for both tangible and intangible resources2) Applying corporate managerial capabilities to new markets – Parenting skills
3) Increase market power – Cross-subsidisation for competitive advantage
4) response to environmental change – technological convergence
5) Spread risk
6) Pressure from stakeholders
Related Diversification – strategy development beyond current products and markets but within the capabilities or value network of theorganisation.
Vertical integration relating to the organisation’s inputs and outputs.
Horizontal integration relating to activities complementary to the existing.
Unrelated Diversification – “conglomerate strategy”
Why:
1) To exploit a dominant logic
2) To exploit underdeveloped markets
International diversification
Why?
1. Market based reasons:
• Globalisation of markets and competition – Homogenisation of demand
• Follow customers
• Bypass limits of home market
• Exploit differences in regions
2. To exploit strategic capabilities
• In new underdeveloped markets
• Outsourcing
• Enhance knowledge base
3. Economic Benefits
• Economies of scale
• Stabilisation of earnings
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Direction and methods
Ansoff’s Matrix:
Protect/Build
Market development
Product development
Diversify
Can be achieved by:
1. Internal development of existing or new resources
2. Merger or acquisition
3. Joint development or strategic alliance
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Direction and methods
Ansoff’s Matrix
Consolidation: may mean continued growth in a growing market or protective
strategies in a mature market
Market penetration: Increasing market share in existing market
Withdrawal may also be a sensible option.
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Direction and methods
Ansoff’s Matrix
Consolidation: may mean continued growth in a growing market or protective
strategies in a mature market
Market penetration: Increasing market share in existing market
Withdrawal may also be a sensible option.
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Levers for change:
Turnaround (focus on speed):
Crisis stabilisation
Management changes
Gaining stakeholder support
Clarifying the target markets
Re-focusing
Financial restructuring
Prioritisation of critical improvement areas
Changing the paradigm:
Challenge the taken for granted
Changing organisational routines
Symbolic processes
Power and political processes
Communicating and monitoring change
Change tactics