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Enterprise Strategy

Erwan Guiziou
Copyright Erwan Guiziou 2013 All rights reserved

2013

Agenda

Strategic analysis

Change

Objectives and strategy

Copyright Erwan Guiziou 2013 All rights reserved

Agenda
STRATEGIC ANALYSIS OBJECTIVES AND STRATEGY CHANGE

Pre-announcement actions Internal analysis Options review HR management Announcement External analysis Strategy Quick wins Performance evaluation SWOT - Strengths - Weaknesses - Opportunities - Threats Services offer

Competitors reaction
Agenda and milestones Consequences

Copyright Erwan Guiziou 2013 All rights reserved

Agenda
STRATEGIC ANALYSIS OBJECTIVES AND STRATEGY CHANGE

Pre-announcement actions Internal analysis Options review HR management Announcement External analysis Strategy Quick wins Performance evaluation SWOT - Strengths - Weaknesses - Opportunities - Threats Services offer

Competitors reaction
Agenda and milestones Consequences

Copyright Erwan Guiziou 2013 All rights reserved

Internal analysis
M.O.S.T. Value system Structure Systems

Human Ressources
Sales / Marketing Finance Operations R&D / after-sale

Copyright Erwan Guiziou 2013 All rights reserved

Internal analysis
M.O.S.T. Value system Structure Systems

Human Ressources
Sales / Marketing Finance Operations R&D / after-sale

Copyright Erwan Guiziou 2013 All rights reserved

Mission, objectives Strategy, tactics (1/3)


Mission and objectives
Has the entreprise defined a mission (why we exist) / values (what we believe in) / a vision (what we want to become) ?

- Are the objectives of the company clearly defined ? - Are the objectives shared by employees ?

- Can the objectives be quantified ?


- Are the objectives appropriate to the current organisation or are they outdated? (has the world changed but not the objectives?)

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Mission, objectives Strategy, tactics (2/3)


Strategy and tactics
- is the strategy of the organisation clearly defined ? If yes, which one is it ? (differentiated / low-cost et large / niche)

- how is the strategy defined ? Emerging, deliberate, planned ?


- is the strategy coherent when looking at the objectives ? Sustainable ? - is the strategy cohrent with the environnement and internally ? Sustainable ? - Basic elements: objectives scope means

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Mission, objectives Strategy, tactics (3/3)


Strategy and tactics
- is the strategy using the ressources optimally ? Or will an alternative strategy deliver a higher net present value ?
Financial capital (focus on the most profitable operations) Human capital (HR strategy) Physical capital (machinery investment) Customer capital (loyalty, reputation, brand)

Is the risk / benefits ratio coherent ?

Copyright Erwan Guiziou 2013 All rights reserved

Now listen carefully


Interview Dame Anita Roddick:
Which company is she the founder of ? Who does it belong to now ? What is she mainly referring to in the video ? What are two themes that seem to oppose themselves ? List all the internal analysis topics she is talking about

Interview Michael Dell:


What is he mainly referring to ? How is the strategy set at Dell ?

List all the internal analysis topics he is talking about

Copyright Erwan Guiziou 2013 All rights reserved

Internal analysis
M.O.S.T. Value system Structure Systems

Human Ressources
Sales / Marketing Finance Operations R&D / after-sale

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The value system (1/1)

Supplier

Firm

Customer

Inventory
- What is the value system in place ? - Advantages / drawbacks ?

Distribution channels

- How does the channel work ? What is it made of ? - Is it possible to change it ?

Copyright Erwan Guiziou 2013 All rights reserved

Internal analysis
M.O.S.T. Value system Structure Systems

Human Ressources
Sales / Marketing Finance Operations R&D / after-sale

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Structure (1/3)
- Classical structure - Simple structure (SOHO)

- Fonctional structure (SMB)

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Structure (1/3)
- Divisional structure (large companies)

- projects structure (building, communication or new product) - professionnal bureaucracy (hospitals, universities)

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Structure (3/3)
- is the structure coherent towards the environnement or is it reaching its limits ? - is the structure sub-optimal and produces insufficient coordination or differentiation for the needs of the organisation ? - is the structure coherent regarding strategy ?

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Exemple: legal structure


IES ACESI France S.A.R.L. prsidence SAS Holding ACESI Suisse ACESI Centre / Est ACESI Canada
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Organisational structure

From simple structure (SOHO)...

Write down what the issues could be in such a transformation?

to fonctional structure(SMB)

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Analyse interne
M.O.S.T. Value system Structure Systems

Human Ressources
Sales / Marketing Finance Operations R&D / after-sale

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Systems (1/2)
- Are the following systems in place? - Control - Coordination of the strategy implementation? - Information

- Do they support the strategy ?


- Can they be easily copied by the competition ? - Is the advantage sustainable ? Patents ?

- Are costs reduced ?


- Do they contribute to the user experience? - If very developped, can they become , can they hinder progress ?

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Systems (2/2) Anthonys triangle

Anthony, Planning and control systems: a framework for analysis, Division of research, Harvard Business School, 1965
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Systems - Anthonys triangle example


1 2 3 4 Strategic

x
Pas assez de sys

x
No sys.

x
No sys.

Tactical

NA
14

P&L

6x

x
Sys. cout du travail mais rien dautre

enXL Pas de systmes budgtaires

Pas de sys planif. Pas de sys employ

10

Knowledge
NA

- Sys prise de commandes. - Data warehouse - Email + XL - Sys de gestion commandes - Data warehouse

11

12

x
- Sys gestion comm. 15

Operational

13 NA Production

- Data warehouse - E-mail + Intra/Internet - Sys crdit

- Sys training et Perf via Intranet - Sys de chemin de carrire

16

- Sys gestion comm. -Paie - Intranet

Finance/ Accountancy

Sales/ Marketing

Human Resources

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ACESI Systems
1 2 3 4 Strategic

6 x

Tactical

P&L en XL ?

x
11

x x

Knowledge

14

10

Intranet pour vision projet


Operational 13 Myde Intranet pour CRS Production
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- Sys prise de Commandes -Email, XL - EPB + CRM - CRM - EBP - XL

12

16

- Intranet

- Intranet

15

- E-mail + Intra/Internet - Sys crdit EBP

- Sys gestion comm. -Paie - Intranet

Finance/ Accountancy

Sales/ Marketing

Human resources

Systems (3/3) another classification

McKenney, McFarlan and Pyburn, The information archipelago plotting a course Harvard Business Review, Jan-Feb 1983
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Now listen carefully


Interview M. Lija at Sony Ericsson
Which systems is he referring too ? What kind of advantages does the IT systems bring to the business ? Why is it important ? What triggered these changes to the IT systems? Which other aspects are covered at the very end of the video?

Copyright Erwan Guiziou 2013 All rights reserved

Exercise for next session


Choose one company and run
an internal analysis on the following topics by answering at least the following questions:

Describe its M.O.S.T


What is its value system ? Does it bring an advantage ? Drawbacks ? Etc.

Describe its structure ? Coherence with the strategy ?


Which systems does it use ? Why ? Any competitive advantage ?

Copyright Erwan Guiziou 2013 All rights reserved

Internal analysis
M.O.S.T. Value system Structure Systems

Human Ressources
Sales / Marketing Finance Operations R&D / after-sale

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Human resources (1/6) - mechanisms


- is the number of employees enough to follow the strategy? - is the quality of employees sufficient to implement the strategy? - Mechanisms:
Rewards Recruitment Performance Evaluation Training
Source: Fombrun, Tichy and Devanna, 1984 (C) John Wiley and Sons Inc.

- Are the mechanims relevant ? Do they support the strategy ? - Does the reward strategy encourage a behaviour compatible with the overall strategy?
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Rajans type of rewards


Group-related

Non-money related

Security-driven: Life-time jobs Corporate prestige

Tradition-driven: Cost of living increases Perks

Money related

Employability-driven: Training and development Personal career plans

Contribution-driven: Performance-related pay Merit bonus

Individual-related
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Human resources (2/6) - culture


- Organisation culture classification:
Source: Goffee and Jones, 2000 Harvard Business Review

high

Mesure of sincere friendship between community members

Sociability

Networked

Communal

Fragmented
low low

Mercenary

Solidarity
Mesure of the possibility for a community to pursue objectives rapidly and efficiently, without taking into account personal ties

high

- is the culture coherent with the strategy ?


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Human resources (3/6) - culture


Sociability
Mesure of sincere friendship between community members -1 0 1 - People try to make friends in the company and have strong relationships - people get on well together

- People in our organisation meet outside work


- People appreciate each other - When people leave the organisation, they stay in contact - People help each other because they appreciate each other

- People share their personal stories

Solidarity

Mesure of the possibility for a community to pursue objectives rapidly and efficiently, with taking into account personal ties

- People in our company understands and share the same business objectives - work is performed efficiently and is productive - Our company takes strong actions to solve inadequate performance - Our collective will to win is strong - When opportunities appear for a competitive advantage, we are quick to seize them* - We have the same strategic goals - We know who our competition is
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Human resources (4/6) - culture


Source: Goffee and Jones, 2000 Harvard Business Review

high

Networked

- Advantages: Creativity, engagement - Drawbacks: Cliques, gossip, low productivity, little idea critics - Example: Unilever - Works when: long-term strategies, critical knowledge of the local market, the global success is a sum of local successses - Advantages : specialists in one domain (surgeons, lawyers) - Drawbacks : critical towards the organisation, little information sharing

- Advantages : Communal organisational identity, risks and rewards sharing, enthousiasm - Drawbacks : linked to the leader, pbs with growth, diversification or internationalisation - Example : start-ups - Works when : innovation with cooperation, long term strategies, dynamic and complexe business environnement - Advantages : competitive sense, will to win, high productivity - Drawbacks : little cooperation, ideas exchanges, creativity - Example : Dell - Works when : rapid change, clear and mesurable corporate goals, clear identified competition

Sociability
low

- Example : University, lawyers practice


- Works when : little dependance at work, individual innovation

Fragmented
low

Mercenary
high

Solidarity
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Human resources (5/6) - culture


Sociability
Mesure of sincere friendship between community members

- Promote ideas sharing, interests and emotions to recruit PLU - increase social interactions between employees (parties, excursions, etc.) - reduce formality between employes - limit hierarchical differences - act as a friend, pay attention to those in need Mesure of the possibility for a community to pursue objectives rapidly and efficiently, with taking into account personal ties

Solidarity

- develop conscience of competition through videos, newsletters, memos, etc. - create a sense of urgency - stimulate the will to win - encourage adhesion to share organisational goals

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Human resources (6/6) - Leadership


- Do we have the right leader or are we at the limits ?
- Management roles: (team leader / role model / referee / negociator) Does the management fulfill all the roles or are some neglected ?

- Is the style of leadership appropriate or anachronic, distant, autocratic ?


- Do we have leaders (through values) or hierarchical control methods?

- Do we have a succession plan in place?

Copyright Erwan Guiziou 2013 All rights reserved

Now listen carefully


Interview Mrs Flanagan
Which type of companies does she refer to ? What is essential according to her for an organisation ? What is the tactic she recommends for the board ? What is the problem she refers to in recruitment ? What can be the consequences ? What does she recommend ? What should be the rule to be followed ? What kind of questions did they ask at the recruitment sessions ? What do you think about it ? Explain your viewpoint

Copyright Erwan Guiziou 2013 All rights reserved

Now listen carefully


Interview Michael Dell
Which processes in the HR area are talked about ? What is Michael Dells view on culture ? Which variable is he refering to ? Does it make sense in his company ? Take a critical view at it, what does the journalist underlines ? What do you think about MDs answer ?

Copyright Erwan Guiziou 2013 All rights reserved

Now listen carefully and analyse

News about EasyJet and Sir Stelios Haji-Ioannou Read on http://www.guardian.co.uk/business/2009/dec/09/easyjetboss-to-stand-down Analyse the document. Which HR issues are illustrated here ? What would you recommend to solve them ?

Copyright Erwan Guiziou 2013 All rights reserved

Internal analysis
M.O.S.T. Value system Structure Systems

Human Ressources
Sales / Marketing Finance Operations R&D / after-sales

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Sales and marketing (1/5)


- Is the company market oriented? Or production first and then try to sell? - National or international quality ?

- Market orientation from the top management or too busy by production? - Status of the marketing in the company? Sophisticated ? Or not developped enough ?
- Segmentation (transactional (SB, consumers) relationship (public, LA, LB)) - Targeting (different type
of offers for different segments)

- Posititioning (create an image of the product for the target and position it towards other products) - What is the process? Monitoring? - CRM in place?
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Marketing / ventes (2/5) exemple ACESI demandes clients

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Marketing / ventes (2/5) exemple ACESI demandes clients

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Marketing / ventes (2/5) exemple ACESI demandes clients

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Sales and marketing (positioning illustration)

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Sales and marketing (positioning illustration)

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Sales and marketing (3/5)

Product (range)

Price
Place (channel) Promotion Services Strengths / weaknesses ?

Physical location
People Process

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Sales and marketing (4/5)


Products positioning
Source: Boston Consulting Group / Kotler, Marketing Management

high

Market growth
low

high

Relative market share

low

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Sales and marketing (5/5)


The result is a marketing plan that contains:

- Targets - Commercial channels

- Operations to do during the year Sales actions or promotions


- Numbers to reach revenues, market share, etc. - Means to put in place (physical, human, financial)

- Milestones

Copyright Erwan Guiziou 2013 All rights reserved

Now listen carefully


Interview Michael Dell
What is continuously present in his speech ? why is it important ? Interview Dame Anita Roddick What does she think about branding ? Why ?

Are there different levels of branding ? For what purpose?


Interview Sir Stelios Haji-Ioannou (2 videos)

What is the strategy here in terms of brand(s) ? choice ?

Why such a

What about brand extension ? Advantages / drawbacks ? Quote other companies that do this Compare with the brand strategy at Body Shop
Copyright Erwan Guiziou 2013 All rights reserved

Now listen carefully


Interview Michael Dell
How does he see marketing?
Summarize the 3 main ideas in the video

Do you know Dave Carroll ? (and United Airlines)

www.youtube.com/watch?v=5YGc4zOqozo http://www.youtube.com/watch?v=_Hd8XI42i2M www.youtube.com/watch?v=n12WFZq2__0&feature=related


Copyright Erwan Guiziou 2013 All rights reserved

Internal analysis
M.O.S.T. Value system Structure Systems

Human Ressources
Sales / Marketing Finance Operations R&D / after-sales

Copyright Erwan Guiziou 2013 All rights reserved

Finance (1/3) Financial ratios


Return on capital employed (ROCE)

Costs

Profit on sales

2 4

Assets

Sales generation

Sales costs / sales

Admin costs / Sales

Other costs / Sales

Fixed assets utilisation

Current assets utilisation

5
Sales / nb of employees

Sales / debtors

Sales / creditors

Sales / stock

Profit / nb employees
Current ratio

7
8
Debtors sales Creditors sales Stock sales

Liquidity ratio

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Finance (2/3) Profitability ratios


1 ROCE : Return On Capital Employed: indicates the efficiency and profitability of a company's capital investments
EBIT Total assets Current liabilities Net profit Sales Sales Total assets

Profit on sales = Profit on sales = measures how much out of every dollar of sales a company actually keeps in earnings
Sales generation = shows the value of sales generated from each $ of total assets. The higher the ratio, the better.

3 4

Fixed assets utilisation ( = sales / fixed assets) and current assets ( = sales / current assets ) utilisation: the same as #3 with more precision

6 7

Sales / # of employees
Profit / # nb of employees

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Finance Financial ratios


But profitability ratios are not enough to gain a balanced view of the performance of a company. Why ? Profitability is important but achieving liquidity is vital for survival. A lot of failure have come from that. A company must be able to meet its financial obligations.

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Finance (3/3) Liquidity ratios


8 Current ratio: measures the ability of a company to meet its financial obligations due within one year. A low current ratio indicates potential difficulties. High current ratio can mean idle resources. Liquid ratio = attempts to measure a companys ability to pay its way in the short-term without having to liquidate stock. The acid test, can we pay our way ? i.e. pay our debts as and when they are due. Stock turn: number of times stock is turned over on average in one year. The higher the ratio the better. Debtors weeks: number of weeks on average debtors take to pay their invoices. The lower the ratio the better. Efficiency of the credit control Creditors weeks: number of weeks on average the company takes to pay its creditors. The higher the ratio the better. But be careful on not overdoing it in a partnership
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Current assets Current liabilities

Current assets - stocks

Current liabilities

Sales

Stocks

Debtors x number of weeks in the period Sales for the period Creditors x number of weeks in the period Sales for the period

Finances (2/2)
- ROCE ? Profitable ? Profit growing ? - Return on sales? Do we have the correct marketing mix ? Are margins reduced because of competition? - Do the shareholders trust the company? - Ratios: compare with competition (part II) - Environnement: how is the company financed ? Coherent? Long-term? - Does the finance position of the company constraints its strategic choices?

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Internal analysis

Finance video

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Internal analysis
M.O.S.T. Value system Structure Systems

Human Ressources
Sales / Marketing Finance Operations R&D / after-sales

Copyright Erwan Guiziou 2013 All rights reserved

Operations a few definitions


- Structure (suppliers, internal operations, customers - Capacity (the measure of usable resources available to a system) - Scheduling (minimizing production time and costs) lead time = getting the materials + building - Inventory - Quality - quality by inspection (eg 10% of the products checked) - quality control, aiming at mistakes prevention - quality insurance (documentation and consistency) - TQM process improvement requests - 6 Sigma: 3.4 defects per million opportunities
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Operations an example Dell

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Operations an example Dell


Step 1 - Preparation and assembly

1. Process initiation - Orders download from IT system (in parts) and description of order called the traveller (paper) 2. Parts availability checked --> orders not started if parts missing. Anti static tote with traveller on conveyor belt 3. Parts added to tote with pick to lights (PTL) system - each part scanned --> inventory and tracability measures 4. Chassis, memories and processors added at the end in a special tray as more costly (damage risks reduced) 5.Operator installs MB into chassis - delicate operation separated - conveyor moves system to furthest BTO cell 6. Three operators per cell - 2 for build, 1 for testing - when system built, quick test applied; if system fails test, it is 7. rerouted to another area where retest occurs. If fails again, disassembly process happens

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Operations an example Dell


Step 2 - Quality checks, Software download and labelling

8. Systems removed from conveyor belt by multi-unit Stacker for SW download and tests - human damages avoided 9. Ten percent of systems pulled off from assembly line for quality assurance checks 10. Two test cycles - diagnostics and hardware. After software downloaded, systems re-tested 11. Common and some customer specific SW download - Final test, systems de-stacked and moved back to conveyor 11A. Specific customer hardware, software, asset tagging and labelling added 12. Brand and model labels applied - FCC and other suppliers label applied(e.g. Intel) - Here as at each stage, capture 13. of routing position - Full quality test (labels, cosmetics, hoods)
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Operations an example Dell


Step 3 - Shipping preparation

14. System scanned - removed from tray by hoist and placed into pre-assembled cardboard box 15. Docs and accessories added and scanned into the box using PTL system (inventory and WIP adjust) 16. Ten percent of systems have contents checked 17. Daily, 1.5 percent of system are totally checked to evaluate customer experience with initial use of the equipment 18. Automatic seal of boxes - multiple orders move to staging area - single orders directly to shipping 19. Multi-unit order consolidated assembled together and placed on conveyor to shipping. Completed orders scanned 20. and moved directly to pre-assigned trucks. Last scan before truck. Peripherals and monitors merged offsite
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Operations Dell - metrics


The Customer Experience metrics available to every employee world-wide region by region updated every week

STT - Ship To Target: It measures the percentage of complete systems which ship from Dells manufacturing facilities within 5 days from the time the order was entered into the sales system
IFIR - Initial Field Incident Rate: It measures customer issues (real or perceived) requiring parts or service or replacement of a system within 30 days of the system shipment. MWD Missing, Wrong and Damaged: It measures customer issues when delivered systems either do not contain the right components or components are missing or systems are damaged. Very important for customer satisfaction. SDOTFTF Service Delivery On-Time First Time Fix: It measures the percentage of service calls completed by a Dell Service Provider (DSP) in which the technician arrived with the required part(s) within the contractual period (for example, 4 hours or Next Business Day) and resolved the issue on the first visit.
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Operations Dell - metrics

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Operations Dell - metrics


EMF operational MWD Trend
EMF MW&D Trend
1.00% 0.90% 0.80% 0.70% 0.60% 0.50% 0.40% 0.30% 0.20% 0.10% 0.00%
Log Quarter To Date Mfg Quarter To Date Weekly Logistic s Actual Weekly Mfg Actual Cumul Fcast Weekly Actual 0.80% FY01Q3 0.14% 0.66% 0.14% 0.66% FY01Q4 0.16% 0.44% 0.16% 0.44% 0.60% 0.60% Q1 W1 0.14% 0.35% 0.14% 0.35% 0.57% 0.49% Q1 W2 0.15% 0.37% 0.16% 0.38% 0.55% 0.54% Q1 W3 0.16% 0.37% 0.17% 0.37% 0.53% 0.54% Q1 W4 0.18% 0.41% 0.23% 0.51% 0.50% 0.74% Q1 W5 0.18% 0.41% 0.16% 0.43% 0.48% 0.60% Q1 W6 0.17% 0.39% 0.15% 0.30% 0.46% 0.45% Q1 W7 0.16% 0.36% 0.13% 0.17% 0.44% 0.29% Q1 W8 0.14% 0.32% 0.05% 0.14% 0.41% 0.18% Q1 W9 0.13% 0.29% 0.05% 0.04% 0.39% 0.08% 0.00% 0.00% 0.37% 0.00% 0.00% 0.34% 0.00% 0.00% 0.32% 0.00% 0.00% 0.30% Q1 W10 Q1 W11 Q1 W12 Q1 W13

Dell Confidential
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Operations Dell managing demand


Forecast / Master Sales Plan (MSP) Demand Management Master Production Plan (MPP) Material Requirement Plan (MRP) Supplier Collaboration

Supplier commits

Materials constraints

Requisition Purchase order placement Customer order received Mfg call off
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Confirmation by supplier Delivery HUB

Operations IT to the rescue


Supply Chain Integration
Internet Speeds the Flow of Information

Suppliers

Dell

Customers

valuechain.dell.com Inside.dell.com

www.dell.com www.dell.com/premier www.support.dell.com

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Operations (2/2)
- What is the structure of the system ? - What are the options chosen to fight against competition? (word document) - Usage of resources vs Usage of material

- Any problems with capacity?

- Is production sufficient to get economies of scale?


- Inventory? Possible improvements? - Quality ? Can it be used as a differentiation? - Are operations linked with marketing?
Copyright Erwan Guiziou 2013 All rights reserved

Internal analysis
M.O.S.T. Value system Structure Systems

Human Ressources
Sales / Marketing Finance Operations R&D / after-sales

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R&D after sales (1/1)


- Does the R&D support the overall strategy or are the managers pursuiing their own goals? - Enough funds to insure products developpment? - Frequency of new products developpment ? Using customer feedback? Formalised ? - Alternative to channel distribution? - After-sales support quality?

Copyright Erwan Guiziou 2013 All rights reserved

Agenda
STRATEGIC ANALYSIS OBJECTIVES AND STRATEGY CHANGE

Pre-announcement actions Internal analysis Options review HR management Announcement External analysis Strategy Quick wins Performance evaluation SWOT - Strengths - Weaknesses - Opportunities - Threats Services offer

Competitors reaction
Agenda and milestones Consequences

Copyright Erwan Guiziou 2013 All rights reserved

External analysis
P.E.S.T.L.E. + Key success factors + scenarii Strategic groups + market segments

Macroenvironnement Industry (sector) Competition Porter 5 forces

Organisation

Market

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External analysis

Macro-environnement
P.E.S.T.L.E. + key success factors + scenarii

Sector analysis
Data Porter 5 forces Industry lifecycle

Competition analysis
Strategic groups Market segments
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P.E.S.T.L.E. + key success factors + scenarii


- do not define too narrow a scope - Goal: determine the key success factors that affect the environnmental change - See document - Derive KSF - Define two scenarii with one KSF and describe the potential impacts on the company

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Analyse externe

Macro-environnement
P.E.S.T.L.E. + key success factors + scenarii

Sector analysis
Data Porter 5 forces Industry lifecycle

Competition analysis
Strategic groups Market segments
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Sector analysis : data


Investors return, 1994 - 2004
25,0

22,6

23,0

20,0

18,4

15,0

14,9 13,0 11,4 13,7

10,0

9,6

Top 500 average (42 sectors) 12,4

5,0

3,5

0,0
0,0

-2,6
-5,0

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Sector analysis : Porter 5 forces

New entrants

Bargaining power of suppliers

Rivalry intensity

Bargaining power of customers

Substitution threat

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Sector analysis : Porter 5 forces


Threat of new entrants
- industry with attractive margins? - Important capital needed to start? - is the brand important? - Cost of operations? - Government influence? - Access to distribution channels? - Competition retaliation high?

Rivalry intensity:
- industry growth? - how many competitors on the market? - easy differentiation? - exit barriers : low / high? - price war ?

Substitution threat:
- Product substitue possible?

Bargaining power of customers:


- customer concentration? - critical size for customers? - number of competitors offering a similar product? - substitution costs? - information availability?

Bargaining power of suppliers:


- purchasing volume? - substitution costs? - input of the company important for the supplier? - competitive market ? - number of suppliers increasing or decreasing?
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Sector analysis : industry lifecycle


Source: Kottler et Armstrong - 1990

Market size

Introduction

Growth

Consolidation

Maturity

Decline

Time
Low rivalry Low rivalry
Strong growth buyers are weak Barriers to entry low Key is capacitiy to growth

Growing rivalry More powerful buyers


Growth is slower a few exits Key: strong finance and management Slow growth Standard products Barriers to entry high Key are market share and costs control

Extreme rivalry
A lot of exits Strong competition on price Cost and implication key

High differentiation Innovation is key

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Sector analysis : industry lifecycle


- Where is your industry on the curve ? - Where are your products on the curve ?

Source: Kottler et Armstrong - 1990

Market size

Introduction

Growth

Consolidation

Maturity

Decline

Time

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Structural map: an example


Suppliers Partners Competition

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Strategic groups market segments

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Agenda
STRATEGIC ANALYSIS OBJECTIVES AND STRATEGY CHANGE

Pre-announcement actions Internal analysis Options review HR management Announcement External analysis Strategy Quick wins Performance evaluation SWOT - Strengths - Weaknesses - Opportunities - Threats Services offer

Competitors reaction
Agenda and milestones Consequences

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SWOT example a local IT services company


Internal
-Culture (and values)
- Technical expertise - Operations (dashboard system) - Management team with 3 people - Sound finances

Strengths

Weaknesses
- Financial independance limits the development - Experts recruitment is difficult - Strategy and marketing not formalised

Positive

- International development
- New services development (consultancy services) - Consultants not treating those aspects - Borders proximity

- The industry is changing quickly, risk


of commoditization - Emerging technologies (Cloud) - Strong competition - Difficult differentiation with the competition

Negative

Opportunities

Threats

External
Copyright Erwan Guiziou 2013 All rights reserved

Agenda
STRATEGIC ANALYSIS OBJECTIVES AND STRATEGY CHANGE

Pre-announcement actions Internal analysis Options review HR management Announcement External analysis Strategy Quick wins Performance evaluation SWOT - Strengths - Weaknesses - Opportunities - Threats Services offer

Competitors reaction
Agenda and milestones Consequences

Copyright Erwan Guiziou 2013 All rights reserved

Generic strategy (part II)

Copyright Erwan Guiziou 2013 All rights reserved

Agenda
STRATEGIC ANALYSIS OBJECTIVES AND STRATEGY
CHANGE

Pre-announcement actions Internal analysis Options review HR management Announcement External analysis Strategy Quick wins Performance evaluation SWOT - Strengths - Weaknesses - Opportunities - Threats Services offer Competitors reaction Agenda and milestones

Consequences

Copyright Erwan Guiziou 2013 All rights reserved

The strategy clock


Source: Johnson and Scholes, 2009

High

4 3 5

1
Low

7 8

Low
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High

Diversification ?

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Diversification ?
Source: Johnson and Scholes, 2009

High

Low

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Performance

Agenda
STRATEGIC ANALYSIS OBJECTIVES AND STRATEGY
CHANGE

Pre-announcement actions Internal analysis Options review HR management Announcement External analysis Strategy Quick wins Performance evaluation SWOT - Strengths - Weaknesses - Opportunities - Threats Services offer Competitors reaction Agenda and milestones

Consequences

Copyright Erwan Guiziou 2013 All rights reserved

SFA analysis
Strategic options
Do nothing Withdrawal Consolidation Penetration Product development Market development Diversification

Suitability

Feasibility Directions

Acceptability

Remarks

Methods
Internal development (organic growth) Mergers and acquisitions Joint ventures and strategic alliances
Copyright Erwan Guiziou 2013 All rights reserved

Out of the box thinking ? (read the article written by W.


Chan Kim and R. Mauborgne !)

The market structure drives performance

Strategy drives the structure

Structural view
or environmental determinism

Blue ocean view

Copyright Erwan Guiziou 2013 All rights reserved

Agenda
STRATEGIC ANALYSIS OBJECTIVES AND STRATEGY
CHANGE

Pre-announcement actions Internal analysis Options review HR management Announcement External analysis Strategy Quick wins Performance evaluation SWOT - Strengths - Weaknesses - Opportunities - Threats Services offer Competitors reaction Agenda and milestones

Consequences

Copyright Erwan Guiziou 2013 All rights reserved

Pre-announcement actions

- Interview M. Brandon
- Retrieve the main ideas - Comment / analyse

- What can be the barriers to change

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Change is good but

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Pre-announcement actions

- Support at top level is crucial to success

- To get change accepted, management needs to identify the stakeholders, both from an interest and power point of view

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The stakeholder power / interest matrix

High

Keep satisfied

Key players
Company management

Customers

Back office staff

Front office staff Shareholders Analysts

Stakeholder power

Parts suppliers Media


Low Low

Services suppliers Competition

Minimal effort Stakeholder interest

Keep informed
High

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Pre-announcement actions

Vision barrier Establish a sense of urgency Operationnal barrier Financial barrier

People barrier
Motivation, rewards*, training, recrutement

* remember Rajans matrix

Copyright Erwan Guiziou 2013 All rights reserved

Agenda
STRATEGIC ANALYSIS OBJECTIVES AND STRATEGY
CHANGE

Pre-announcement actions Internal analysis Options review HR management Announcement External analysis Strategy Quick wins Performance evaluation SWOT - Strengths - Weaknesses - Opportunities - Threats Services offer Competitors reaction Agenda and milestones

Consequences

Copyright Erwan Guiziou 2013 All rights reserved

HR management
Changing the structure
Dells video on structure what are the key lessons ?

Changing the culture


Coming back to the culture matrix, which one is the most appropriate ? If the culture needs changing, which steps should be taken ?
Illustration with the video (John Roberts, former chief executive United Utilities)

Competency gap analysis, staff audit

Finding change agents


Setting a developement and training program for the change leaders

Copyright Erwan Guiziou 2013 All rights reserved

Agenda
STRATEGIC ANALYSIS OBJECTIVES AND STRATEGY
CHANGE

Pre-announcement actions Internal analysis Options review HR management Announcement External analysis Strategy Quick wins Performance evaluation SWOT - Strengths - Weaknesses - Opportunities - Threats Services offer Competitors reaction Agenda and milestones

Consequences

Copyright Erwan Guiziou 2013 All rights reserved

Announcement
Internal announcement
explain the reason for change and instil a sense of urgency

communicate the vision


present the intended roadmap encourage feedback present the new structure and the first change agents

Do not wait for everything to be planned


How do you announce departures of internal staff ? (Video of M. Sharman)

Then public launch

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Announcement effective communication


CHANGES
Routine Face-to-face
(one-to-one or group) Overly rich communication causes confusion

Complex Rich communication for complex change

Interactive

TYPE OF MEDIA

(e.g. telephone video conferencing)

EFFECTIVE COMMUNICATION

Personal memo

And take internal social networks / Intranet into account !

(e.g. tailored memos, letters)

Routine communication for routine change

General bulletins
(e.g. circulars, announcement on noticeboards)

Too little information and sensitivity leads to mistrust and lack of commitment

Lengel and Dafts effective communication of change / Source: Johnson and Scholes, p 564, 2002
Copyright Erwan Guiziou 2013 All rights reserved

Agenda
STRATEGIC ANALYSIS OBJECTIVES AND STRATEGY
CHANGE

Pre-announcement actions Internal analysis Options review HR management Announcement External analysis Strategy Quick wins Performance evaluation SWOT - Strengths - Weaknesses - Opportunities - Threats Services offer Competitors reaction Agenda and milestones

Consequences

Copyright Erwan Guiziou 2013 All rights reserved

Example of actions that can lead to quick wins


Hire new managers ? Acquire a small company ?

Start a complete training program ?

Organise a all employees meeting ? Align employees objectives with the companys objectives until changes sink deeply into a companys culture [], new approaches are fragile and subject to regression (Kotter, 1995) Move dissenters sidelines Letting people go (illustration with John Roberts video)
Copyright Erwan Guiziou 2013 All rights reserved

Agenda
STRATEGIC ANALYSIS OBJECTIVES AND STRATEGY
CHANGE

Pre-announcement actions Internal analysis Options review HR management Announcement External analysis Strategy Quick wins Performance evaluation SWOT - Strengths - Weaknesses - Opportunities - Threats Services offer Competitors reaction Agenda and milestones

Consequences

Copyright Erwan Guiziou 2013 All rights reserved

Performance evaluation: Kaplan and Norton balanced scorecard


Finance
Financial perspective - Return on capital employed - Profitability - Revenue growth - Cashflow - % revenue from services

Sales/Marketing
Customer perspective - Customer satisfaction survey - Call center satisfaction - Market share - Pricing index - Number of customers lost / won Internal business perspective

Operations
- Customer service lead-time - SDOTFTF: Service Delivery On Time First Time Fix - Tender success rate - Spare parts delivery performance

Innovation and learning perspective - Turnover - Staff survey - Number of employee suggestions - Profit per employee - Benchmarking index

HR / R&D

Copyright Erwan Guiziou 2013 All rights reserved

Agenda
STRATEGIC ANALYSIS OBJECTIVES AND STRATEGY
CHANGE

Pre-announcement actions Internal analysis Options review HR management Announcement External analysis Strategy Quick wins Performance evaluation SWOT - Strengths - Weaknesses - Opportunities - Threats Services offer Competitors reaction Agenda and milestones

Consequences

Copyright Erwan Guiziou 2013 All rights reserved

Competitorsmoves
Try not to get into a price war

Reassess your own decisions / moves

Copyright Erwan Guiziou 2013 All rights reserved

Agenda
STRATEGIC ANALYSIS OBJECTIVES AND STRATEGY
CHANGE

Pre-announcement actions Internal analysis Options review HR management Announcement External analysis Strategy Quick wins Performance evaluation SWOT - Strengths - Weaknesses - Opportunities - Threats Services offer Competitors reaction Agenda and milestones

Consequences

Copyright Erwan Guiziou 2013 All rights reserved

Agenda and milestones

Prepare the plans in advance


Which plans do you need to prepare and execute the change ?

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Agenda and milestones


Deliverables
Plans

Base documents to prepare


Communication plan Sponsoring plan

Coaching plan
Training plan Training tools (user guide, e-learning, serious games) Resistance to change plan, feedback plan on change Events and key moments in the project (events limited to the change management team, launch events Metrics to measure plan follow up Roadmap for the change management Roadmap describing mission and objectives of the groupe, actions and means to implement, milestones

Copyright Erwan Guiziou 2013 All rights reserved

Agenda and milestones

Deliverables
Surveys (offline or online) Training tools

Comments
Configuration and questions / answers Guided tours E-learning Questions and answers User guide Training material sandbox

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Agenda and milestones

Copyright Erwan Guiziou 2013 All rights reserved

Agenda
STRATEGIC ANALYSIS OBJECTIVES AND STRATEGY
CHANGE

Pre-announcement actions Internal analysis Options review HR management Announcement External analysis Strategy Quick wins Performance evaluation SWOT - Strengths - Weaknesses - Opportunities - Threats Services offer Competitors reaction Agenda and milestones

Consequences

Copyright Erwan Guiziou 2013 All rights reserved

Consequences
Think about the consequences for the company and its people in terms of :

Skills, capabilities and resources

Rewards and systems

Becoming a learning organisation (ref: Peter Senge)

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A word of conclusion

Encouraging risk (illustration video M. Dell)

Gouvernance about setting the overall strategy in large organisations (illustration video M. Dell)

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Start all over again !

Strategic analysis

Change

Objectives and strategy

Copyright Erwan Guiziou 2013 All rights reserved