Você está na página 1de 71

Prof.

Rushen Chahal

BUSINESS STRATEGY CONCEPTS & THE IS/IT STRATEGY IMPLICATIONS

Prof. Rushen Chahal

Learning Objectives:1. Evolution of strategic planning in organizations 2. Strategic framework 3. Business planning process 4. Business planning tools & techniques

Prof. Rushen Chahal

CHAPTER 1 Evolution of IS/IT. IS strategies MUST BE developed within the context of corporate and business strategic planning processes. $$$ IS/IT
Achievement of business objectives/goals Maximize ROI Enabling strategic use of information

Gain competitive advantage


Prof. Rushen Chahal

Repel competitive Threat

PLANNING INVOLVEMENT
IS managers should understand the corporate perspective of the world

IS Managers

Business Managers

Formal approaches to business planning 1950s Evolved to cater for changes of the dynamic business environment
Prof. Rushen Chahal

Strategic Planning in Organization


The formal approaches to business planning started in 1950s. They have evolved since in order to take account of technological, economics, social and political changes. They will continue to evolve in response to the dynamics of the business environment.
Prof. Rushen Chahal

Evolution of Strategic Planning

Prof. Rushen Chahal

Evolution of Strategic Management Maturity

Prof. Rushen Chahal

The Evolving Nature of Strategic Planning in Organisations


In 1980, a model was developed to describe the increasing maturity of strategic planning in organisations. The model consists of 4 phases. In phase 1, the focus is on cash flow and annual financial planning. It involves simple techniques to develop medium term budgets. The focus of the management is to reduce everything to a single financial issue meeting the budget.

Prof. Rushen Chahal

Cont
In phase 2, the focus is on trying to predict, or forecast, what is likely to happen within a 5 years horizon. Historical performance analysed and projected into the future using internal trends and external parameters such as economic and market research data. It forecasts sales and market growth and predicts the effects on income and expenses and changes to the balance sheet. Plans are still quantitative and internally oriented, focusing on what is targeted and the resources available.
Prof. Rushen Chahal

Cont
In phase 3, the organisation starts to look outside itself an concentrate on understanding the nature of competition in its industry, and positions itself to gain advantage. Managers try to shift companys product portfolio to more attractive market sectors. In phase 4, the organization is driven by innovation and becomes capable of creating its own business environment. Thus, the organisation gains a leading role in the industry. Obviously, the leadership will require continuing innovation.

Prof. Rushen Chahal

Strategic Planning in Organizations

Prof. Rushen Chahal

What is Strategy?
A strategy is a collection of statements that express or propose a means through which an organization can fulfill its primary purpose or mission A chosen strategy must focus and coordinate the firms activity from the top down toward accomplishing its mission Developing a strategy begins with:
a thoughtful understanding of the firms mission analysis of the environment a detailed assessment of how various business units interact

Strategy (text book) An integrated set of actions aimed at increasing long-term well-being and strength of enterprise relative to competitors
Prof. Rushen Chahal

Why Are Strategies Needed?


To proactively shape how a companys business will be conducted To mold the independent actions and decisions of managers and employees into a coordinated, company-wide game plan

Prof. Rushen Chahal

Relationship of Strategies to Plans


Strategy is a collection of statements that expresses or proposes a means through which an organization can fulfill its mission
Identifies the goal or objective Insights

Plan is a detailed description of how an organization can accomplish its mission


Lays out in detail the steps necessary for the organization to accomplish the goal Plans turn insights into actions
Prof. Rushen Chahal

Missions vs. Strategic Visions


A mission statement focuses on current business activities -who we are and what we do

A strategic vision concerns a firms future business path -where we are going
Markets to be pursued Future technologyproduct-customer focus Kind of company that management is trying to create

Current product and service offerings Customer needs being served Technological and business capabilities

Prof. Rushen Chahal

What is a Strategic Plan?


Where firm is headed -Strategic vision and business mission Short and long term performance targets -- Strategic and financial objectives Action approaches to achieve targeted results -- A comprehensive strategy
Prof. Rushen Chahal

Establishment of Strategy
There are essentially three processes that can contribute to the establishment of a strategy: 1. Strategic thinking creative, entrepreneurial insight into
the ways the enterprise could develop.

2. Strategic planning systematic, comprehensive analysis to


develop a plan of action.

3. Opportunistic decision-making effective reaction to unexpected threats and opportunities.


Prof. Rushen Chahal

Thinking Strategically : The Three Big Strategic Questions


1. Where are we now? 2. Where do we want to go? Business(es) to be in and market positions to stake out? Buyer needs and groups to serve? Outcomes to achieve?
Prof. Rushen 3. How do we get there?Chahal

A Companys Strategy is Partly Planned and Partly Reactive


Company Experiences, Know-how, Resource Strengths and Weaknesses, and Competitive Capabilities Reactive Strategy
Prof. Rushen Chahal

Actual Compan y Strategy

The Strategic Framework


Any organization in stages 3 and 4 of the model will need to consider most aspects of the FW (see page 71) to succeed. Three layers factors:1. The external environment 2. Pressure groups and stakeholders 3. Internal business planning

Prof. Rushen Chahal

A Strategic FW
The external environment
Economic/ Social / Political / Legal / Ecological / Technological

Pressure groups and stakeholders


Shareholders / Competitors / Customers/Suppliers / Government / Unions / Employees / The public / Media / Financial Institutions

Internal business strategizing and planning


SBU / Objectives / Situation analysis / Future strategies Page 71 - Text
Prof. Rushen Chahal

A Strategic Framework

Prof. Rushen Chahal

The External Environment


PEST (Political, Economic, Social and Technological )Analysis
Political: Government type and stability Freedom of press, rule of law and levels of bureaucracy and corruption Regulation and de-regulation trends Social and employment legislation Tax policy, and trade and tariff controls Environmental and consumer-protection legislation Likely changes in the political environment Economic: Stage of business cycle Current and project economic growth, inflation and interest rates Unemployment and labor supply Labor costs Levels of disposable income and income distribution Impact of globalization Likely impact of technological or other change on the economy Likely changes in the economic environment

Prof. Rushen Chahal

Socio-Cultural: Population growth rate and age profile Population health, education and social mobility, and attitudes to these Population employment patterns, job market freedom and attitudes to work Press attitudes, public opinion, social attitudes and social taboos Lifestyle choices and attitudes to these Socio-Cultural changes

Technological Environment: Impact of emerging technologies Impact of Internet, reduction in communications costs and increased remote working Research & Development activity Impact of technology transfer

PEST Analysis is a useful tool for understanding the big picture of the environment in which firms are operating, and the opportunities and threats that lie within it.

Firms can draw conclusions By understanding the as to the significant forces of environment, firms can take change operating within the advantage of the opportunities environment. Prof. Rushen Chahal and minimize the threats.

Pressure Groups & Stakeholders


Pressure Groups:
Make demands of the organization; Demand their existence and effects be acknowledged; Expect appropriate responses from mgmt to satisfy their particular interest;

Stakeholders:
Have a direct financial interest in the organization and demand a fair share of the wealth created; Expect some form of material and financial benefit;

Prof. Rushen Chahal

Pressure Groups:
Media Shareholders Competitors Suppliers Government Unions Customers Public Financial Institution Employees

Stakeholders: Shareholders Customers Public Suppliers Unions Employees Government

Prof. Rushen Chahal

Internal Business Strategy

Formulation and Planning


Value System Objectives Market analysis Competitive analysis PEST analysis Industry analysis Where are we now? Strengths & Weaknesses Threats and Opportunities

Identify future strategies

Feedback Analysis of Internal resources and competencies

Evaluate Select

Monitor And Control

Implement
Prof. Rushen Chahal

Business Strategy Formulation


Identify, evaluate, and decide strategies to be pursued; Establish how to achieve the strategies by planning for the required actions and by effective development and use of resources; Determine scope:
Whole organization versus Strategic Business Unit (SBUs): a unit that sells a distinct set of products & services, serves a specific set of customers and competes with a well-defined set of competitors; Can be reconciled by considering the enterprise strategy as combination of achievement of corporate objectives via SBU contributions; Reflect Corporate/SBU relationship and possible inter-SBU relationships
Prof. Rushen Chahal

Business Planning Process Elements


Described by reference to profitability, growth, market share, customer satisfaction, new product development, employment, social responsibility, etc. Changes from year to year, evolve quite significantly over a period of time; Reflect values of organization, management, and major stakeholders; Values are expressed in terms of MISSION or VISION statement Long term aims and purpose;
Prof. Rushen Chahal

1. Objectives 2. Situation Analysis 3. Future Strategies

Types of Objectives Required


Strategic Objectives
Outcomes focused on improving longterm, competitive business position

Financial Objectives
Outcomes focused on improving financial performance

Prof. Rushen Chahal

Situation Analysis
Where are we now ? Consists of two essential elements: looking inside the organization; looking outside the organization.
INTERNAL Resources available in the organization; Financial health of the organization; Employees, skills, training, experience, motivation, resulting business competencies; Physical assets, age, technology, usefulness; R&D The organization, its structure and relationships, attitudes and culture, and effectiveness of operational and management processes, and its ability to change the circumstances;

EXTERNAL Market segments, and within them, identifying competitors (current & potential); Market shares within segments increase share or increase the total size of market; The organizations position in the product life cycles An examination of all current and potential competitors to understand their current and potential strategies, Strengths & Weaknesses; Future competitive actions concerning potential substitute products and thrusts into new markets;

Prof. Rushen Chahal

S.W.O.T Analysis
Strengths: attributes of the organization that are helpful to achieving the objective. Weaknesses: attributes of the organization that are harmful to achieving the objective. Opportunities: external conditions that are helpful to achieving the objective. Threats: external conditions that are harmful to achieving the objective.
Prof. Rushen Chahal

Creative Use of SWOTs: Generating Strategies


How can we Use each Strength? How can we Stop each Weakness? How can we Exploit each Opportunity? How can we Defend against each Threat?

Prof. Rushen Chahal

TOWS analysis
Strengths and Opportunities (SO) How can you use your strengths to take advantage of the opportunities? Strengths and Threats (ST) How can you take advantage of your strengths to avoid real and potential threats? Weaknesses and Opportunities (WO) How can you use your opportunities to overcome the weaknesses you are experiencing? Weaknesses and Threats (WT) How can you minimize your weaknesses and avoid threats?
Prof. Rushen Chahal

Business SWOT

Prof. Rushen Chahal

IS SWOT
Business application Technical infrastructure People, organization, culture Processes

Prof. Rushen Chahal

Application Strengths and Weaknesses

Prof. Rushen Chahal

Technical Infrastructure Analysis

Prof. Rushen Chahal

IT Organization, Culture

Prof. Rushen Chahal

IS Process Analysis

Prof. Rushen Chahal

Future Strategies
This can provide both defensive mechanism against possible future threat and capability to exploit the opportunities by identifying the pressure groups and the stakeholders; Future options can be discovered by undertaking scenario planning to identify discontinuities and predict the potential implications or bring in outside experts to facilitate breakthrough thinking;
Prof. Rushen Chahal

Future Strategies
Future possible strategies are evaluated against criteria, such as the following :
The risks financial and managerial; and likely responses of main competitors; The degree to which the organization needs to create new capabilities to be offensive or improve control to be defensive; Appropriateness of current organization structure to achieve intended strategies; The ability of the organization to implement the strategy in terms of ability, resources, processes and culture; The implications for customers and trading partners; Requirement for alliances or joint ventures to enable or secure strategies;
Prof. Rushen Chahal

Strategy Implementation

Prof. Rushen Chahal

Realities of Strategy Development


Imposed changes New opportunities

INTENDED STRATEGY

plans

EMERGENT STRATEGY

REALISED STRATEGY

Unexpected constraints or options

Failed implementation
Prof. Rushen Chahal

Unrealized Strategies

Strategy Tools and Techniques

Prof. Rushen Chahal

Business Planning Tools & Techniques


The Boston Consulting Group Business Matrix (Product Portfolio) Policy/portfolio matrices Competitive Forces and Competitive Strategies Industry Analysis

Prof. Rushen Chahal

Product Life Cycles & Product Portfolios


High Star Market Growth & Cash Use Wild Cat or ? or Problem Child

FUNDS $000 Cash Cow Dog

Low High Market Share & Cash Generation


Boston Consulting Group Prof. Rushen Chahal

Low

IS/IT Support for Wildcat Products


Low market share, high growth market Focus on:
Product and/or process development or Customer identification, segmentation

Prof. Rushen Chahal

IS/IT Support for Star Products


High market share, high growth market Focus on:
Identifying customers & requirements and/or Business innovation to meet market requirements & differentiate

Prof. Rushen Chahal

IS/IT Support for Cash Cow Products


High market share, low growth market Focus on:
Keeping costs low and Control of business relationships & activities $ $ $

Prof. Rushen Chahal

IS/IT Support for Dog Products


Low market share, low growth market Focus on:
Reducing costs or securing customers to improve profit performance Very little innovation as line may be discontinued

Prof. Rushen Chahal

Threat of New entrants

Bargaining Power of Suppliers

Rivalry Among Existing Competitors

Bargaining Power of Buyers

Threat of Substitute Products or Services


Prof. Rushen Chahal

Industry Competitive Forces

Prof. Rushen Chahal

Factors Affecting the Impact of Competitive Forces


New entrants will be inhibited by:
Capital requirement Patents and specialist skills required Distribution channels available Achieved/required economics of scale and resultant cost advantages Number and size of existing rivals and intensity of competition Differentiation and brand establishment/loyalty Access to raw materials/critical resources, etc.
Prof. Rushen Chahal

Factors Affecting the Impact of Competitive Forces


Substitute product/service:
Customer awareness of need and means of satisfaction Customer sensitively to value for money and ability to compare Existing loyalty of customers-impact of industry promotion Ability to differentiate product etc.
Prof. Rushen Chahal

Factors Affecting the Impact of Competitive Forces


Competitive rivalry will be intensified by:
Market growth slow (or in decline) Small number of similar sized competitors dominate High fixed costs and/or high exit barriers for all rivals Overcapacity, and/or capacity increments are large units Commodity-like, undifferentiated products, etc.
Prof. Rushen Chahal

Factors Affecting the Impact of Competitive Forces


Buyers power will be increased by:
Concentrated/few buyers making high volume and/or high value of purchases Low switching costs across suppliers Price sensitive and many alternative sources of supply Weak brand identities, products not differentiated Buyers capable of backward integration due to low entry costs, etc.
Prof. Rushen Chahal

Factors Affecting the Impact of Competitive Forces


Suppliers power will be increased by:
Few suppliers-high switching costs for rivals and suppliers deal with many small customers Potential substitute suppliers/resources not easily available Supplied goods make up large part of firms costs Suppliers capable of forward integration or bypass to customers, etc.
Prof. Rushen Chahal

Implications for IS/IT Strategy


The opportunities and threats that IS/IT can offer and pose will vary over time in an industry, partly due to the role IS/IT can play and partly due to the economic and competitive situation of the industry. IS/IT innovation can stimulate new industry growth or, in some cases, hasten the decline of certain industries. IS/IT can be immediate impact and obvious. But, in other, the effects are secondary and require other changes in business economics and social behavior or parallel developments in other fields before the become fully effective.
Prof. Rushen Chahal

Industry Analysis
How can IS/IT affect nature & value of product or service and its life cycle?
Electronic financial and business services, e.g. Banks Online publishing, e.g. online journals Recruitment services via Internet

Prof. Rushen Chahal

Industry Analysis (Cont.)


How can IT affect demand, extend markets geographically, or provide new distribution channels?
Direct financial services Online marketing, e.g. Amazon Auctions & financial markets

Prof. Rushen Chahal

Industry Analysis (Cont.)


How can IT affect the cost base of key processes or change the balance between flexibility & standardization?
Publishing, from preparation of materials by authors to the final printing process. Automated warehousing/tracking Document digitization, for back-office process

Prof. Rushen Chahal

How IS/IT Has Affected Competitive Forces: The airline Industry


1. How can IS/IT build barriers? By increasing IT entry cost for reservation systems By tying in distribution channels (travel agencies) By sharing capacity and ticketing costs via alliances and integrated systems By linking purchasing and remittance systems to reduce overheads of customer Discount/volume packages to discourage piecemeal purchase
Prof. Rushen Chahal

2. How can IS/IT build in switching cost for customers?

How IS/IT Has Affected Competitive Forces: The airline Industry


3. How can IS/IT change the basis of competition? Lower costs: optimize yield per aircraft Differentiate service: reconfiguring aircraft due to demand Niche/focus service into high yield sectors (e.g. business travel) Low-cost/low-price no frills service with online direct booking, bypassing agents

Prof. Rushen Chahal

How IS/IT Has Affected Competitive Forces: The airline Industry


4. How can IS/IT change the balance of power in supplier/customer relationship? Agent is constantly aware of seat availability of competing airlines Airline can readily promote unsold capacity via chosen agents or direct to customers via online booking with variable pricing based on sales patterns Integrated travel package to high mileage business customers, bypassing agencies New routes/schedules to cater for demand
Prof. Rushen Chahal

5. How can IS/IT generate new products/services?

Impact of Competitive Forces and Potential IS/IT Opportunities


Key force impacting the industry Business implications Potential IS/IT effects

Threat of new Additional capacity entrants Reduced prices New basis for competition

Provide entry barriers/reduce access by - exploiting existing economies of scale - differentiate products/services - controls distribution channels - segment markets

Buyer power high

Differentiate products/services and Forces prices down improve price/performance Demand higher quality Increase switching costs, of buyers Require service flexibility Facilitate buyer product selection Prof. Rushen Encourage competitionChahal

Impact of Competitive Forces and Potential IS/IT Opportunities


Key force impacting the industry Supplier power high Business implications Potential IS/IT effects

Raises prices/costs Reduced quality of supply Reduced availability Limits potential market and profit Price ceilings

Supplier sourcing systems Extended quality control into suppliers Forward planning with supplier Improve price/performance Redefine products and services to increase value Redefine market segments

Substitute products threatened Intense competition from rivals

Improve price/performance Price competition Product development Differentiate products and services in distribution channel and to consumer Distribution and service critical Get closer to the end-consumerCustomer loyalty Prof. Rushen Chahal understand the requirement required

Generic Strategies: low-cost


IS/IT implications:
Deal with basic business information process efficiently and link them together Flexibility system increases the cost of development and operation=> simple systems, often standard packages implemented w/o change Integration can reduce the opportunities to improve the efficiency of any particular process Information is not seen as a key resource for exploitation, but as an overhead cost to be processed efficiently with minimum additional IS/IT overhead
Prof. Rushen Chahal

Generic Strategies: Differentiation Strategy


IS/IT implications:
Flexible systems to extract information from an integrated database or comprehensive data warehouse =>sophisticated systems and user tailoring rather than standard solutions If mismanaged this can lead to unnecessary spending on IS/IT=> ask the following issues:
Find out more about customer requirements Monitor customer perception of service Enable rapid and accurate response to customer queries Provide a range of delivery options to meet customer needs Reduce new product introduction lead times Enable knowledge sharing across the organization to facilitate innovation Prof. Rushen Chahal

Generic Strategies: Niche/Focus Strategy


IS/IT implications:
Identifying the target market, and developing a unique base of information about the selected market and its needs Establishing a specialist process via system to produce a clear cost advantage or distinctive customer value proposition Linking the organization via systems into the business processed of customers to increase switching costs and establish potential barriers to re-entry from general market servers
Prof. Rushen Chahal

CONCLUSION
IS Strategies must be developed within the context of business strategic planning processes. Thus, the investment in IS/IT throughout an organization can be directed towards the achivement of business objectives
Prof. Rushen Chahal

Você também pode gostar