Estrategia Sessao 9 03 11 2014

Estratgia
Session 9 03/11/2014
Prof. Filipe Castro Soeiro
LEARINING OUTCOMES
Strategic, Tactical and Processes Frameworks (from

Strategy to implementation)
- Porter 5 Forces
- SWOT
- TOWS
- Critical Success Factors and Critical Processes
- Value Chain Analysis
(source: JOHNSON, Gerry; SCHOLES, Kevan and WHITTINGTON, Richard (2011), Exploring Strategy, Financial Times Press)
Prof. Filipe Castro Soeiro | Lisbon, Portugal, 2013 / 2014
INDUSTRIES, MARKETS AND SECTORS
An industry is a group of firms producing

products and services that are essentially the
same. For example, automobile industry and
airline industry.
A market is a group of customers for specific
products or services that are essentially the
same (e.g. the market for luxury cars in
Germany).
A sector is a broad industry group (or a group of
markets) especially in the public sector (e.g. the
health sector)
PORTERS FIVE FORCES FRAMEWORK
Porters five forces framework helps identify the

attractiveness of an industry in terms of five
competitive forces:
the threat of entry,
the threat of substitutes,
the bargaining power of buyers,
the bargaining power of suppliers and
the extent of rivalry between competitors.
The five forces constitute an industrys structure.
Slide 2.5
THE FIVE FORCES PROTERS FRAMEWORK (2)
Figure 2.2
The five forces framework
Source: Adapted with the permission of The Free Press, a Division of Simon & Schuster Adult Publishing Group, from Competitive Strategy: Techniques for Analyzing Industries and
Competitors by Michael E. Porter. Copyright 1980, 1998 by The Free Press. All rights reserved
5
Johnson, Whittington and Scholes, Exploring Strategy, 9th Edition, Pearson Education Limited 2011
THE FIVE FORCES PROTERS FRAMEWORK (2)
The Threat of Entry & Barriers to Entry
The threat of entry is low when the barriers to entry are high and
vice versa.
The main barriers to entry are:
Economies of scale/high fixed costs
Experience and learning
Access to supply and distribution channels
Differentiation and market penetration costs
Government restrictions (e.g. licensing, foreign taxes, etc.)
Entrants must also consider the expected retaliation from
organisations already in the market
THE FIVE FORCES PORTERSS FRAMEWORK (3)
Threat of Substitutes
Substitutes are products or services that offer a similar benefit
to an industrys products or services, but by a different process.
Customers will switch to alternatives (and thus the threat
increases) if:
The price/performance ratio of the substitute is superior (e.g.
aluminium maybe more expensive than steel but it is more cost
efficient for some car parts)
The substitute benefits from an innovation that improves
customer satisfaction (e.g. high speed trains can be quicker
than airlines from city centre to city centre)
THE FIVE FORCES PORTERS FRAMEWORK (4)
The bargaining power of buyers
Buyers are the organisations immediate customers, not

necessarily the ultimate consumers.
If buyers are powerful, then they can demand cheap prices
or product / service improvements to reduce profits .
Buyer power is likely to be high when:
Buyers are concentrated
Buyers have low switching costs
Buyers can supply their own inputs (backward vertical
integration)
The bargaining power of suppliers

Suppliers are those who supply what organisations need to
produce the product or service. Powerful suppliers can eat
into an organisations profits.
Supplier power is likely to be high when:
The suppliers are concentrated (few of them).
Suppliers provide a specialist or rare input.
Switching costs are high (it is disruptive or expensive to
change suppliers).
Suppliers can integrate forwards (e.g. low cost airlines
have cut out the use of travel agents).
Rivalry between competitors

Competitive rivals are organisations with similar products and
services aimed at the same customer group and are direct
competitors in the same industry/market (they are distinct from
substitutes).
The degree of rivalry is increased when :
Competitors are of roughly equal size
Competitors are aggressive in seeking leadership
The market is mature or declining
There are high fixed costs
The exit barriers are high
There is a low level of differentiation
10
IMPLICATIONS OF FIVE FORCES ANALYSIS
Identifies the attractiveness of industries

which industries/markets to enter or leave.
Identifies strategies to influence the impact of
the forces, for example, building barriers to
entry by becoming more vertically integrated.
The forces may have a different impact on
different organisations e.g. large firms can deal
with barriers to entry more easily than small
firms.
11
ISSUES IN FIVE FORCES ANALYSIS
Apply at the most appropriate level not

necessarily the whole industry. E.g. the European
low cost airline industry rather than airlines
globally.
Note the convergence of industries particularly in
the high tech sectors (e.g. digital industries mobile phones/cameras/mp3 players).
Note the importance of complementary products
and services (e.g. Microsoft windows and McAfee
computer security systems are complements). This
can almost be considered as a sixth force.
12
THE
VALUE
NET
Figure 2.3
The value net
Reprinted by permission of Harvard Business Review. From The Right Game by A. Brandenburger and B. Nalebuff, JulyAugust 1996, pp. 5764. Copyright 1996
by the Harvard Business School Publishing Corporation. All rights reserved
13
Comparative industry structure analysis
Figure 2.5
Comparative industry structure analysis
14
The industry life cycle
Figure 2.4
The industry life cycle
15
Hospitality Management Industry - Example
Porters Five Forces

Bargaining Power
of Customers
Threat of new
entrants
HIGH
MODERATE
Bargaining Power
of Suppliers
Rivalry
HIGH
MODERATE
Threat of
Substitutes
HIGH
16
S.W.O.T. Analysis
SWOT summarises the strengths, weaknesses,

opportunities and threats likely to impact on
strategy development.
INTERNAL
ANAYSIS
STRENGTHS WEAKNESSES
EXTERNAL
ANALYSIS
OPPORTUNITIES THREATS
17
Uses of S.W.O.T. Analysis

Key environmental impacts are identified using the
analytical tools explained in Chapter 2.
Major strengths and weaknesses are identified using
the analytic tools explained in Chapter 3.
Scoring (e.g. + 5 to - 5) can be used to assess the
interrelationship between environmental impacts and
the strengths and weaknesses.
SWOT can be used to examine strengths,
weaknesses, opportunities and threats in relation to
competitors.
SWOT can be used to generate strategic options
using a TOWS matrix.
18
SWOT Analysis
Hospitality Management Industry / European region
- Example Amorim Turismo Group
Excellent
location
of
the
resorts
STRENGTHS
Good services quality

International
awards
and
recognition
Knowledge
of
different
customers cultures
19
SWOT Analysis
Only few resorts to offer
Strong seasonality
Focused only on very specific
WEAKNESSES
locations
Low levels of profitability

Weak customer relationship
management
20
SWOT Analysis
Cross-selling through other
companies (partnerships)
Increase customer retention
OPPORTUNITIES
Differentiate from competition

with innovative services
There exists the opportunity to
internationalize to other
(exotic/not well explored )
markets and/or segment
21
SWOT Analysis
The current crisis is affecting the
business
International crisis reducing
purchasing power
Increase of 5 stars hotels and
tendency to decrease prices
THREATS
Players are diversifying the supply

with promotions/ bundles and
innovative services
22
Dangers in a S.W.O.T. Analysis

Long lists with no attempt at prioritisation.
Over generalisation sweeping statements
often based on biased and unsupported
opinions.
SWOT is used as a substitute for analysis it
should result from detailed analysis using the
frameworks in Chapters 2 and 3.
SWOT is not used to guide strategy it is seen
as an end in itself.
23
The T.O.W.S. Matrix
Figure 3.6
The TOWS matrix
24
The T.O.W.S. Matrix
Opportunities
Strengths
Weaknesses
S1: Excellent location of the resorts

S2: Good services quality
S3: National and International awards
S4: Knowledge of different customers
cultures
W1: Only few resorts to offer

W2: Strong seasonality (Demand)
W3: Focused only on exotic locations
W4: Low levels of profitability
W5: Weak CRM
SO
WO
- Increase customer service and
retention and differentiate from
competition in order to increase
profitability in partnership with SIEBEL
(e.g.) (W5O3)
- Cross-sell through other companies
(Partners) as a way to increase Portfolio
Offering, improve customer relationship
management and also reduce
seasonality (W2O1)
O1:
Cross-selling
through
other
companies (partnerships)
O2: Increase customer retention
O3: Differentiate from competition with
innovative services
O4: There is the opportunity to
internationalize to emergent markets
- Combine the existing knowledge of

other cultures to internationalize (S4O4)
- Cross-selling opportunities to increase
customer retention with good services
quality (S2O4)
- Use the good services quality to
differentiate from competition (S2O3)
Threats
ST
WT
- There is an increase of 5 stars hotels,

but should communicate better and
reinforce brand awareness and excellent
and exotic location (S1/S3T3)
- Players are diversifying but this HM
chain can do it as well and anticipate,
reinforcing partnerships (S1T4)
- Low levels of profitable are related with

the current economic crisis, with the
increase of 5 stars hotels competition
and tendency to decrease the prices and
increase performance and promotions
(W4T2), which lead to diversification
- Since there are only few hotels to offer
(regionally), HM chain could also
diversify and innovate (W3/W5T4)
T1: The current crisis is affecting the

business
T2: International crisis Reducing
purchasing power
T3: Increase of 5 stars hotels and
tendency to decrease the prices
T4: Players are diversifying the supply
with promotions and bundles
25
Logoplaste has more than three decades of international experience in

selling solutions rigid plastic packaging to the food and beverage,
personal and household care and oil sectors
Facts
Manufacturing rigid plastic packaging.
Founded in 1976, for over 35 years, has
pioneered in-house manufacturing with the
"hole in the wall" concept, supplying plastic
bottles "just-in-time" from factories installed
directly on the site of the clients
More than 60 factories, more than 350
machines, with locations in 16 countries:
.
Products & Services
Food and beverage, personal care,
household care and oil and lubricants
sectors.
History, Mission, Vision and

Potential
Our Mission/Vision:
To be the natural choice in the supply of rigid
plastic packaging solutions.
Logoplaste is 1st largest Brazilian rigid
plastics converter and it is 1st in hole-in-wall
operations in Europe and Brazil and one of
the top global players in the world.
Markets & Customers

Logoplaste have more than 60 factories
spread by 4 continents (16 Countries) and is
in the top 5 largest European rigid plastic
converters.
International experience in selling solutions
rigid plastic packaging to the food and
beverage, personal and household care
(FMCG) and oil sectors
Prof. Filipe Castro Soeiro | Universidade Europeia
26
27
28
Logoplaste a top global player and the Hole in the wall concept
Hole in the Wall concept: http://www.youtube.com/watch?v=CUdhVV2XmV4

1. Logoplaste company integrated in the customers
building and infrastructure.
2. Logoplaste invest in machinery, plant equipment,
utilities and training.
3. Purchasing of raw materials.
4. Fully integrated in the supply chain process.
5. Delivering packaging just- in- time according to the
customer requirement.
6. Management of the entire packaging production,
including employees.
7. Investing for a sustainable medium to long term
partnership.
29
Logoplaste a top global player and the Hole in the wall concept
Differentiation factors of Logoplaste:

1. Product innovation and design.
2. Faster time-to-market.
3. Reduction of capital expenditure and increase in
ROI (return on investment).
4. Shareholder commitment that comes with a
family founded business.
5. A business model that reinforces a long-term view
of business collaboration.
6. A proven expert in hole in the wall.
30
Business Expansion - Internationalization of Logoplaste to

Philippines a Market that offers high potential
Republic of Philippines
1.
2.
94 Million people and a GDP of over 189 Billion USD

GDP growth for 2011 estimate is about 3.4% for 2014 is
about 6,4%
Philippines Industry/ Sector

1.
2.
Exports growth of 28,6%

Annual growth of 21,2% of the food manufacturers and
10% of the beverage industries (mainly plastic packaging)
Philippines Main Specificities

1. High uncertainty of local market demand (negative)
2. High rotation on the sector suppliers (negative impact
Inbound Logistics)
3. Tax and tariff restrictions: High taxes to imports
(negative)(protectionism politics) Local Partnerships
31
Mode of Entry Strategy to Philipines

Target Multinationals (Hypothesis Unilever) Example
Why Multinationals?
o Global contracts
o Risk minimization
o Need of scale
Example: Average units produced per year: 42,000,000 units of
packaging
1st stage
Cost Leadership
2nd stage
Differentiation
32
Vision, Mission, Objectives, Strategy and

Success Critical Factors for the firm
Market
Vision
Mission
Objectives
Strategy
Success
Critical
Factors
33
Strategic Objectives (Strategic, Financial

and Commercial)
Traduce strategic objectives in exact terms,
quantifiable in the majority of times;
A
Success Critical Factors
Produce a huge and decisive
impact regarding competitiveness
(time delivery,
qualified personnel,
innovative products
Design major sets of initiatives and actions, as

for example, (Obj1)to reduce cost of products
in 10%, or (Obj 2) to launch a new category of
products in 1 year, or (Obj 3) to achieve a
market share of 20% in 3 years
2
Operational Objectives
Traduce operational activities with specific

targets and results, as for example, (Obj 4)
increase productivity of the filling line in 15%
34
Business Model Analysis (1)

Strategy of the company
E
N
V
I
R
O
N
M
E
N
T
A
L
C
O
N
T
E
X
T
Value Proposition
Target
segment
P&S
Offering
Revenue
Model
Internationalization Business Model
Value
Chain
Cost
Model
Organisation
and
Partnership
Operating Model
C
O
M
P
E
T
I
T
I
V
E
A
D
V
A
N
T
A
G
E
35
Critical Success Factors (I)

Waste of raw materials on
production
Critical Sucess Factors

Competitive costs for raw
materials
Financial tools contract usage
Strategic Objectives
Financial Efficiency: to increase net margin by 5% annually
Core Processes
Operations
Negotiation and Procurement
Contract Management
KPIs
Raw material scrape rate
Product efficiency (total manufacturing

cost per unit / raw material cost)
Reduce 5% of raw material waste

(quarterly)
KPIs Objectives
Higher product efficiency by 5%
(monthly)
Ratio of cost expected variation

over real cost variation per year
Lower cost of capital by 10%/year
36
Critical Success Factors (II)

Commitment to Partnerships
Reinforce partnerships with strategic clients
Core Processes
Contract Management
KPIs
Volume and Quality of contracts per client
KPIs Objectives
Increase volume and Quality on existing contracts of 10%
37
Critical Success Factors (III)

Client Satisfaction
Improve service level agreement
Core Processes
Operations (Quality) Management
Customer Relationship Management
KPIs
Client satisfaction (i.e. feedback, survey, interviews)
KPIs Objectives
Increase client satisfaction level on 10%
38
Critical Success Factors (IV)

R&D involvement with Production teams
Use innovation to build competitive advantages
Core Processes
R&D
Operations
KPIs
New innovation concepts launched per year
KPIs Objectives
20% Increase innovations to production
39
The Critical Success Factors and Processes Matrix
Five steps to implement the Critical Success Factors to Critical

Processes Matrix Methodology
!Important!
Step # 1 Considering the Objectives of the firm identify the Success
Critical Factors
Step # 2 Define the key Processes
Step # 3 Establish the relation between the Success Critical Factors
and the Key Processes
Step # 4 Evaluate the importance of Key Processes and rank them
Step # 5 Review the implications for the Internationalization Strategy
40
Processes Matrix - Methodology

!Important!
Section
Analysis
Spender Process
Quality of the process
Detailed
Section
Total of impacts
1. Design the matrix
Business/Core Processes
41
Determine the sum total

of impacts of the
processes that
have relationships with
SCF
Spender Process
Business | Core
Processes
Total of impacts
Success Critical
Factors
2. Insert in the Matrix the Critical Success Factors

and Processes
!Important!
Business Processes
42

3. Success Critical Factors and Key Processes Aptitude Test
!Important!
To double-check if the Key Processes that were

identified are enough for an efficient management of
the Critical Success Factors that are being analysed in
the Internationalization Process (or other)
If the answer is Negative, other Key Processes should be
added. This Aptitude Test should be done to all Critical
Success Factors relevant for the Internationalization
Process
43

4. Fill the section of the Matrix Analysis
!Important!
Spender Process
Total of impacts
Quality of the
process
Spender
Process
44

Quality of the Process - varies between A and E and has the following meaning:
!Important!
A - Needs to improve
B - works well, but there is room for improvement
C - It works, but there are several areas for improvement
D - Process in place but not functional
E - embryonic state
(A, B, C , D and E, or 1, 2, 3, 4 and 5)
Spender Processes - processes that consume a significant

proportion of financial, human resources, etc. Quantify those in
terms % cost contribution for the whole value chain Refer
Value Chain of the firm
45
5. Review implications for the Management

Important
processes
Most critical
processes
!Important!
Less
important
processes
Number of
Impacts in
CSF
Level of the
quality of the
process
46
Determine the sum total

of impacts of the
processes that
have relationships with
SCF
Spender Process
Business | Core
Processes
Total of impacts
Success Critical
Factors
CSF - Processes Matrix Methodology (1)
Business Processes
47
CSF - Processes Matrix Methodology (2)
Most critical
processes
Important
processes
!Important!
Less
important
processes
Number of
Impacts in
CSF
Level of the
quality of the
process
48
Critical Succes Factors and Core Processes Matrix

9
Spender process
Quality of the
process
Total of impacts
R&D involvement
production teams
Client satisfaction
Commitment with
partnerships
Infracstructure
Management
Human Resources
Management
R&D
Financial tools
contract usage
Competitive costs
for raw materials
Processes
Waste of raw
materials in
production
5%
3%
5%
Procurement
60%
Inbound Logistics
5%
Operations
15%
49
Hypothesis 1 - Competitive Costs for Raw Materials

Procurement optimized, ceteris paribus
o Global Consortium buying (Headquarters)
o Usage of derivative financial tools
50
Hypothesis 2 - Competitive Costs for Raw Materials

Flexible procurement (integration on global and local processes: allow local teams to
manage their own procurement)
51
Hypothesis 3 - Waste of Raw Materials in Production

Operations optimized, ceteris paribus. (Waste of raw materials reduction)-Six
Sigma implementation, Process Reengineering and Total Quality Management >
reduce the defects rate on production from 1% to the theoretical value of 0,01%.
52
Hypothesis 4 Inbound Logistics quality and inventory

Inbound logistics optimized, ceteris paribus. (Organization of raw materials and
inventory management optimization)
(+2%)
3%
(-2%)
53

54
Critical
Success
Factors
Business
Processes
Brand
Awareness
Management
of technological
Infrastructure
Customer
Satisfaction
Rapid
Sales
Market
Knowledge
Acquisition
Partnership
Access
Music
Producers
Access
Technological
infrastructure
Total
Impact
Quality of
the
Process
Spender
Process
10%
2,5%
30%
HRM
R&D
Negotiation and
Contract
Manag.ement
20%
Content
Management
5%
Customer
Service
10%
55
Number of Impacts on CSF
7
Negotiation and
Contract
Management;
A - Needs to improve off

B - works well, but there is
room for improvement
Content
Management
5
C - It works, but there are

several areas for
Customer Service
improvement
D - Process in place but not
functional
R&D
E - embryonic state
2
Human
Resources
Management
Management of
Technological
Infrastructure
1
0
Level of Quality of the Process
56
Developing strategic capabilities (1)
Internal capability development:

Leveraging capabilities identifying capabilities
in one part of the organisation and transferring
them to other parts (sharing best practice).
Stretching capabilities - building new products
or services out of existing capabilities.
57
Developing strategic capabilities (2)

External capability development adding
capabilities through mergers, acquisitions or
alliances.
Ceasing activities non-core activities can be
stopped, outsourced or reduced in cost.
Monitor outputs and benefits to understand
sources of consumer benefit and enhance
anything that contributes to this.
Managing the capabilities of people training,
development and organisation learning.
58
Take the Opportunities and Avoid Threats (1)
Take the Opportunities explore Blue Ocean areas

and rapid growth, while reinforcing capabilities and
alliances
Avoid Threats avoid and protect from threats,
while establishing partnerships
Risk Management prepare a good Risk
Management analysis and build a Contingence
Plan
Implementation Plan prepare a good
Implementation Plan in advance
59
Bibliographic References
Exploring Strategy , Gerry Johnson, Kevan Scholes and WHITTINGTON,
Richard Whittington, Pearson (Financial Times), 2011
International Business, Alan Rugmann, Simon Collinson, 4 th edition,
Prentice Hall, 2008
International Business: a managerial perspective, Pearson Education
International, Ricky W. Griffin and Michael W. Pustay, 2005
International Business, Environments and Operations, John D. Daniels and
Lee H. Radebaugh, 11 th edition, Addison Wesley Longman, Inc., 2007
Global Marketing Strategy, Kotabe, M. and Helsen, K., New York; Wiley
and Sons, 2007
Nurturing Sciencebased Ventures | An International Case Perspective
Seifter, Leleux and Tucci | Springer, 2008
60
Any questions? Or comments?

Or personal / professional experiences
you want to share?
Thanks for listening

I hope you enjoy the session.
61

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Estratgia

Prof. Filipe Castro Soeiro

Strategic, Tactical and Processes Frameworks (from

Prof. Filipe Castro Soeiro | Lisbon, Portugal, 2013 / 2014

INDUSTRIES, MARKETS AND SECTORS

An industry is a group of firms producing

Prof. Filipe Castro Soeiro | Lisbon, Portugal, 2013 / 2014

PORTERS FIVE FORCES FRAMEWORK

Porters five forces framework helps identify the

THE FIVE FORCES PROTERS FRAMEWORK (2)

The five forces framework

THE FIVE FORCES PROTERS FRAMEWORK (2)

The Threat of Entry & Barriers to Entry

Prof. Filipe Castro Soeiro | Lisbon, Portugal, 2013 / 2014

THE FIVE FORCES PORTERSS FRAMEWORK (3)

Prof. Filipe Castro Soeiro | Lisbon, Portugal, 2013 / 2014

THE FIVE FORCES PORTERS FRAMEWORK (4)

The bargaining power of buyers

Buyers are the organisations immediate customers, not

Prof. Filipe Castro Soeiro | Lisbon, Portugal, 2013 / 2014

THE FIVE FORCES PORTERS FRAMEWORK (5)

The bargaining power of suppliers

Prof. Filipe Castro Soeiro | Lisbon, Portugal, 2013 / 2014

THE FIVE FORCES PORTERS FRAMEWORK (6)

Rivalry between competitors

Prof. Filipe Castro Soeiro | Lisbon, Portugal, 2013 / 2014

IMPLICATIONS OF FIVE FORCES ANALYSIS

Identifies the attractiveness of industries

Prof. Filipe Castro Soeiro | Lisbon, Portugal, 2013 / 2014

ISSUES IN FIVE FORCES ANALYSIS

Apply at the most appropriate level not

Prof. Filipe Castro Soeiro | Lisbon, Portugal, 2013 / 2014

The value net

Prof. Filipe Castro Soeiro | Lisbon, Portugal, 2013 / 2014

Comparative industry structure analysis

Comparative industry structure analysis

Prof. Filipe Castro Soeiro | Lisbon, Portugal, 2013 / 2014

The industry life cycle

The industry life cycle

Prof. Filipe Castro Soeiro | Lisbon, Portugal, 2013 / 2014

Hospitality Management Industry - Example

Porters Five Forces

Prof. Filipe Castro Soeiro | Lisbon, Portugal, 2013 / 2014

SWOT summarises the strengths, weaknesses,

Prof. Filipe Castro Soeiro | Lisbon, Portugal, 2013 / 2014

Uses of S.W.O.T. Analysis

Prof. Filipe Castro Soeiro | Lisbon, Portugal, 2013 / 2014

Good services quality

Prof. Filipe Castro Soeiro | Lisbon, Portugal, 2013 / 2014

Low levels of profitability

Prof. Filipe Castro Soeiro | Lisbon, Portugal, 2013 / 2014

Differentiate from competition

Prof. Filipe Castro Soeiro | Lisbon, Portugal, 2013 / 2014

Players are diversifying the supply

Prof. Filipe Castro Soeiro | Lisbon, Portugal, 2013 / 2014

Dangers in a S.W.O.T. Analysis

Prof. Filipe Castro Soeiro | Lisbon, Portugal, 2013 / 2014

The T.O.W.S. Matrix

The TOWS matrix

Prof. Filipe Castro Soeiro | Lisbon, Portugal, 2013 / 2014

The T.O.W.S. Matrix

S1: Excellent location of the resorts

W1: Only few resorts to offer