Description
Coursework Brief
Students should produce a report on the strategic position adopted by the case study organisation.
Your case study is British Airways.
The report should include relevant introductory information on the company, including details on which industry or industries it is operating in, and the scope of its activities. Brief historical details may be presented to help set out the current up to date details of the firm.
The main part of the report should use Bowman’s Strategy Clock as a framework to identify the strategic position of the case study organisation.
You should also select four competitor organisations and identify their position on the framework. These should be firms on which adequate information is publicly available.
The report should provide evidence for the position identified for the case study organisation on the framework, with reference to resources available to the organisation supporting the selected position. This analysis should form the main focus of the report. However, a brief rationale should be set out for the four competitor organisations you have selected.
Support for the Coursework Report
There are a number of support mechanisms to help you with your coursework:
1. More detailed guidance will be provided for the coursework as the module develops.
2. The coursework case will be introduced and discussed in detail in seminars. Students will be directed to sources of evidence for the analysis, but you MUST undertake your own research.
3. The necessary analytical techniques are covered in the second lecture and specifically rehearsed with regard to the case study in the related seminar activity.
4. A briefing note on structuring your coursework will be published.
5. The Week 6 seminar will be a dedicated drop-in session for final questions related to the coursework.
6. Module team members will be available during office hours for meetings related to the coursework.
Unformatted Attachment Preview
MN-2040 Strategic Analysis
Week 1 Lecture: Module Overview and Introduction to Strategy
Part 1 –
Module Overview
Module team
Teaching timetable
Module assessment
Module
Overview
Feedback
Reading
Module content summary
Strategic analysis: an
overview
Module
Team
Module Co-Ordinator
Module Lecturer
Dr Fern Davies
Mr Mark Bell-Davies
• Office: School of Management,
Room 311
• Office: School of
Management, Room 341
• Email: [email protected]
• Email:
• Consultation times:
[email protected]
Thursday 1.30-2.30 (Campus)
• Consultation times:
Wednesday 11.30-12.30 (Zoom)
Thursday 1.30-2.30 (Campus)
Wednesday 1.30-2.30 (Zoom)
More information and Zoom links are available on Canvas on
the Module Team Contact Details page.
Module Lecturer
Module Lecturer
Dr Paul Davies
Andrew Miller
Email: [email protected]
Module
Team
• Office: School of Management,
Room 342
• Email: [email protected]
• Consultation times:
Thursday 9.30-10.30 (Campus)
Wednesday 10.30-11.30 (Zoom)
Module Teacher
Alisha Gibbons
Email: [email protected]
More information and Zoom links are available on Canvas on
the Module Team Contact Details page.
Module Timetable
Lecture:
• There will be one in-person lecture each week
on Thursday in the Great Hall Room 43 from 111pm.
• There is a live streaming of the lecture to
Singleton Faraday B for economics students only.
• Materials will be posted to the ‘Module
Content‘ page on Canvas for each teaching
week.
• Please check Canvas regularly for announcements
and uploads.
Module Timetable
Seminars:
There will be ten in-person seminars for this module every week. These will take place on Bay Campus.
Group 1 – Monday 5-6pm SOM 111
Group 2 – Tuesday 10-11am Y Twyni 106
Group 3 – Tuesday at 11-12 Y Twyni 106
Group 4 – Tuesday at 1-2pm Y Twyni 106
Group 5 – Tuesday at 2-3pm Y Twyni 106
Group 6 – Tuesday at 4-5pm Y Twyni 106
Group 7 – Tuesday at 5-6pm Y Twyni 106
Group 8 – Wednesday 11-12pm Y Twyni 106
Group 9 – Wednesday 12-1pm Y Twyni 106
Group 10 – Friday Y Twyni 103
Module Timetable
Seminars:
• The activities feed directly into the coursework and the examination.
• You have been allocated one seminar (full list in the handbook and on Canvas).
• Generally take place one week after the related lecture.
• Based on discussion so engagement is crucial to your success.
• You may be required to read short case study material in advance or a longer
journal article.
• Content may vary to reflect current issues but will focus on the coursework and
exam case in the main.
Module Assessment
Deadline:
40%
Coursework report on a
live case study
60%
Open book online exam
(2 hours)
January 2024
examination period
100%
Resit examination
August 2024
examination period
(2 hours)
13th November 2023
before 2pm
• 40% individual coursework report of 2000 words
•
•
•
•
Module
Assessment
Students should produce a report on the strategic position adopted by the case study
organisation.
The case study is British Airways.
You can find more information in the module handbook and over the coming weeks.
Deadline Monday November 13th 2023 before 14:00pm.
• 60% open book examination taken online
•
•
•
•
Students will have a 2 hour window in which to complete the exam.
The questions are unseen but based on a seen case study – a copy will be provided for the open
book examination.
Four compulsory questions.
January 2024 examination period.
• Resit is 100% open book examination taken online
•
•
If you fail this module you will be required to take an examination during the supplementary
assessment period.
The resit examination will be weighted as 100% of the overall module mark – the initial
assessment weightings do not apply for resits.
General Feedback
• Feedback is embedded within all aspects of this module
• Summative feedback such as your coursework and exam feedback
• Formative feedback through Canvas discussions, seminars and meetings/office
hours with the module team
Feedback
Individual Coursework Report
• Students will receive feedback in December – date to be confirmed.
• Cohort feedback on the coursework report will be provided.
Open book examination taken online
• Students will receive feedback following the January examination period.
• Results are subject to change until the results have been moderated by the
examination board.
• All summative feedback is moderated by an external and internal
moderator.
Reading
Exploring Strategy: Text and Cases. (2020, 12th
Edition). Whittington, R., Regnér, P., Angwin, D.,
Johnson, G. and Scholes, K.
• The textbook is available as an e-book from the library.
• A core textbook is only a starting point and provides
introductory and background information only.
• Other readings and materials will be on Canvas.
• Journal articles.
• Case studies – some from the textbook, other material
supplied as needed.
• Keep up to date with business news – quality sources
please!
Module Content Summary
1. Module overview and introduction to strategy.
2. Strategic positioning.
3. Macro-level analysis of the external environment.
4. Industry-level analysis.
5. Analysing strategic capabilities.
6. Mid-module interim feedback and re-cap.
7. Stakeholder analysis.
8. Organisational culture.
9. Option identification and evaluation.
10. Module review and exam practice.
Strategic Analysis – A Simplified Overview
Strategic position/
direction
Resources
Macro External
Analysis
Strategic capabilities
Sector/Industry
Factors
Culture
Key Success Factors
(SWOT?)
Option Identification and Evaluation
Stakeholders
Module Introduction
Quiz
Part 2 –
Introduction to Strategy
Defining strategy
Strategic decisions
Strategy in different contexts
Introduction
to Strategy
Levels of strategy
Working with strategy
‘Context’, ‘Content’ and ‘Process’
Summary
ACTIVITY
What is strategy?
Contribute one word to
the mentimeter word
cloud that relates to your
perception of strategy.
www.menti.com
Code:
Strategy Definitions
‘..the determination of the long-run goals and objectives of an enterprise and the adoption
of courses of action and the allocation of resource necessary for carrying out these goals’
Alfred Chandler (1963)
‘Competitive strategy is about being different. It means deliberately choosing a different set
of activities to deliver a unique mix of value’
Michael Porter (1996)
Strategy Definitions
‘..a pattern in a stream of decisions’
Henry Mintzberg (2007)
‘..the long-term direction of an organisation’
Exploring Strategy (2020)
Strategic
Decisions
In each context the balance of strategic issues differs:
Small Businesses
Strategy in
Context
(e.g. purpose and growth issues)
Multinational Corporations
(e.g. geographical scope and structure/control issues)
Public Sector Organisations
(e.g. service/quality and managing change issues)
Not For Profit Organisations
(e.g. purpose and funding issues)
Levels of Strategy
Corporatelevel
strategy
Business-level
strategy
Operational strategy
Concerned with the overall
purpose and scope of an
organisation and how to
add value to business
units.
Concerned with the
way a business
seeks to compete
successfully in its
particular market.
How different parts
of the organisation
deliver the strategy
in terms of managing
resources, processes
and people.
Working with Strategy
All managers are (should be) concerned with
strategy:
• Top managers – frequently formulate and control
strategy but may also involve others in the process.
• Middle and lower level managers – have to meet
strategic objectives and deal with constraints.
• All managers – have to communicate strategy to their
teams.
Working with Strategy
• Organisations may also use strategy specialists:
• Many large organisations have in-house strategic planning
or analyst roles.
• Strategy consultants can be engaged from one of many
general management consulting firms (e.g. Accenture, Cap
Gemini, PWC, IBM etc…)
• There are a number of specialist strategy consulting firms
(e.g. McKinsey &Co, The Boston Consulting Group).
•
Strategy – A Basic Framework
Context
Content
Internal and External
Strategic Options
Process
Formation and
Implementation
This module is mainly concerned with analysing the context and arriving at strategic options.
Strategic Context
The strategic context involves analysing the strategic position of an organisation.
Fundamental questions that underpin this module:
Context
Internal and External
•
What is the basic purpose of the organisation?
•
What are the environmental opportunities and threats?
•
What are the organisation’s strengths and weaknesses?
•
How does culture shape strategy?
•
The role of stakeholders.
•
Re-visit organisational purpose.
Strategic Context
Strategic content involves choices and/or options and performance and will be explored further in Lecture 9.
Content
Strategic Options
• Strategic choices involve the options for strategy in terms
of both the directions in which strategy might move and
the methods by which strategy might be pursued.
• The methods are arguably more concerned with what
follow the identification and evaluation of options,
namely strategic implementation.
Lecture Summary
Strategy is the long-term direction of an organisation. This includes the goals
of an organisation, the scope of the organisation’s activities and the
capabilities the organisation brings to these goals and activities.
Strategy is relevant at different levels of an organisation. This can be simply
divided into corporate, business and operational levels.
Strategy work is done by managers throughout an organisation, as well as
specialist strategic planners and strategy consultants.
Lecture Summary
The Exploring Strategy Model (based on context, content and process) has three
major elements: understanding the strategic position, making strategic choices
for the future and managing strategy-in-action (implementation).
Strategic issues encompass a variety of perspectives.
There are often different theoretical and philosophical assumptions
underpinning these different perspectives.
Next week:
• Week 2 Lecture: Strategic Positioning
• Week 2 Seminars: Case Study Introduction
• Check which seminar you have been allocated to in
your personal timetable and please turn up to the
correct time/location.
Questions?
Sources
• Chandler, A. D. (1969). Strategy and Structure: Chapters in the History of American Enterprise.
MIT Press, 120, 13.
• Mintzberg, H. (2007). Tracking Strategy: Toward a General Theory. Oxford University Press.
• Porter, M. E. (1996). What is strategy? Harvard Business Review, 37-55.
• Whittington, R., Regnér, P., Angwin, D., Johnson, G., & Sholes, K. (2020). Exploring Strategy.
Pearson.
MN-2040 Strategic Analysis
Week 3 Lecture: Macro Environment Analysis (Chapter 2)
Strategic position/
direction
Resources
Macro External
Analysis
Strategic capabilities
Sector/Industry
Factors
Culture
Key Success Factors
(SWOT?)
Stakeholders
Option Identification and Evaluation
Basic strategic positioning
Generic Strategies
Bowman’s Strategy
Clock
External analysis
Macro-level analysis
(e.g. PESTLE)
Industry analysis
Week 3:
Macro
Environment
Analysis
External Business
Environment
PESTEL
Drivers of Change
Overview
Summary
Week 3:
Macro Environment
Analysis
Learning
Outcomes
Appreciate the complexity and uncertainty of the
external environment.
Analyse the broad macro-environment of
organisations in terms of political, economic, social,
technological, environmental (ecological) and legal
factors.
Apply this analysis to understand the ‘key drivers of
change’ affecting industries and organisations.
Part 1 –
External Business
Environment
• The environment means everything and everyone outside the
organisation: competitors, customers, suppliers, plus other
influential institutions such as local and national governments.
(Lynch, 2009)
Definitions and
Fundamentals
• The environment is (to a greater or lesser extent)
• Uncertain
• Turbulent
• Dynamic
• The environment presents opportunities and threats.
• Environmental analysis helps organisations make sense of this
complexity.
Layers of the
Business
Environment
(Whittington et al., 2020, p. 35)
Part 2 – PESTEL
The PESTEL Framework
The PESTEL framework categorises
environmental influences into six main
types:
• Thus, PESTEL provides a comprehensive list
of external influences on the possible
success or failure of particular strategies.
Political
Economic
Social
Technological
Ecological
Legal
• It is important to recall that in reality these
are all interlinked to some degree.
(Aguilar, 1964)
Political Factors
Political
• The role of the state (e.g. as an owner, customer or supplier of businesses).
• Government policies.
• Taxation changes.
• Foreign trade regulations.
• Political risk in foreign markets.
• Changes in trade blocks (e.g. BREXIT).
• Exposure to civil society organisations (e.g. lobbyists, campaign groups, social
media).
Economic Factors
• Business cycles – growth and recession.
• Interest rates.
• Inflation rates – RPI and CPI.
• Personal disposable income.
• Exchange rates.
• Unemployment rates.
• Differential growth rates around the world.
Economic
Economic Factors
Economic
Different industries and organisations will be affected differently by
the same factors.
Some industries are particularly vulnerable to economic cycles:
•
Discretionary spend industries (e.g. housing, cars).
•
High fixed cost industries (e.g. airlines, hotels).
Social Factors
Social
• Changing cultures and demographics (e.g. ageing population in Western
societies etc.)
• Income distribution.
• Lifestyle changes.
• Consumerism.
• Changes in culture and fashion.
• Social networks within an organisational field (e.g. with regulators,
campaign groups, trade unions).
Technological Factors
Technological
New discoveries and technology developments, but these can be
industry specific.
General examples include:
• Blockchain for transactions
• Nano-technology
• New composite materials
• Increasing speed of connectivity.
Technological Factors
Technological
There are five primary indicators of innovative activity:
• Research and development budgets.
• Patenting activity.
• Citation analysis.
• New product announcements.
• Media coverage.
Ecological Factors
Ecological
This refers to ‘green’ or environmental issues, such as pollution, waste and
climate change.
Closely linked to social factors, media intervention and buyer behaviour
Examples include:
Environmental protection regulations,
Energy shortage
Global warming
Circular economy
Ecological Factors
Three sorts of ecological challenges that organisations may need to meet:
• Direct pollution obligations: minimizing the production of pollutants; cleaning up
and disposing of waste.
• Product stewardship: managing ecological issues throughout the organisation’s
entire value chain and the whole life cycle of the firm’s products.
• Sustainable development: whether the product or service can be produced
indefinitely into the future.
Ecological
Legal Factors
Examples include:
• Labour, environmental and consumer regulations.
• Privacy laws – GDPR
• Taxation and reporting requirements.
• Rules on ownership.
• Competition regulations – affects mergers and acquisitions (e.g Asda
and Sainsbury 2018).
• Regulation of corporate governance.
Legal
Legal Factors
Legal
This analysis should consider not only formal laws and
regulations but also more informal norms of behavior – linked
to social factors.
Informal rules are patterns of expected (‘normal’) behaviour
that are hard to ignore (e.g. proper respect for the ecological
environment).
Legal Factors – International Variations
Varieties of capitalism. Formal and informal rules vary
sufficiently between countries to define very different
institutional environments:
• Liberal market economies – formal & informal rules favour
competition between companies (US, UK).
• Coordinated market economies – encourage more coordination
between companies, supported by industry associations or similar
frameworks (Germany, Japan).
• Developmental market economies – strong roles for the state, which
own or influence companies that are important for economic
development (China, India).
Legal
Part 3 – Drivers of
Change
Key Drivers for Change
• Key drivers for change are those external factors that are likely to have a high impact on
industries and sectors, and impact on the success or failure of strategies within them.
• Typically, key drivers vary by industry or organisation.
• For example, retailers are concerned with social changes and customer behaviour which has
driven a move to ‘out-of-town’ shopping. Personal disposable income also drives demand for
retailers.
• The different elements of PESTEL are linked.
Using the PESTEL framework
Apply selectively – identify specific factors which impact on the industry, market and organisation in
question.
Identify factors which are important currently but also consider which will become more important in the
next few years.
Use data to support the points and analyse trends using up to date information
Identify opportunities and threats – the main point of the exercise!
However (again) these can only be truly understood in combination with industry level analysis (next week).
TIPS – PESTEL framework
Identify
the country
of focus
or external
context.
Do not provide
a generic
list of
factors from the lecture. You need to be
specific.
Howtodointernal
factorsactivities
ultimately
impact
the
Do not refer
and
instead
organisation?
focus
the external
environment
(e.g. with
PESTELonanalyses
are constantly
changing
technology)
the external environment. It is unlikely that
any found online are updated/timely for the
Identify
factors
that
will
impact
the
long-term
organisation.
direction of an organisation.
Lecture Summary
The external environment is complex but offers both opportunities and
threats.
Analysis can help to make sense of this complexity.
Techniques include the PESTEL framework.
Identification of key drivers of change needs to be done in conjunction with
the industry level analysis (next week).
Next week:
• Week 4 Lecture: Industry Analysis
• Week 4 Seminars: Macro Environment Analysis
(PESTEL)
Questions?
MN-2040 Strategic Analysis
Week 4 Lecture: Industry Analysis
Week 4:
Industry
Analysis
Introduce Industry
Analysis
Explore Porter’s
Competitive Five Forces,
applying it to a particular
sector
Examine the Implications
Aims of the
Session
of the Competitive Five
Forces
Provide a Summary of Key
Ideas
Strategic position/
direction
Resources
Module
Context
Macro External
Analysis
Strategic capabilities
Sector/Industry
Factors
Culture
Key Success Factors
(SWOT?)
Stakeholders
Option Identification and Evaluation
Macro Level:
Industry Level:
PESTEL
Porter’s Five Forces
Key Drivers of
Change
Week 4:
Industry Analysis
To define an
industry and sector.
Learning
Outcomes
To use Porter’s
competitive five
forces framework
to analyse the
attractiveness of
industries or
sectors
To understand the
implications of
Porter’s five
competitive forces
Part 1 –
External Business
Environment
Layers of the
Business
Environment
Figure 2.1: Layers of the Business Environment
Industries, Sectors and Markets
An industry is a group of firms
producing products and services
that are essentially the same.
For example, the automobile
industry and the airline industry.
A market is a group of
customers for specific products
or services that are essentially
the same.
For example, the market for
luxury cars in Germany.
A sector is a broad industry
group (or a group of markets)
especially in the public sector.
For example, the health sector.
Part 2 – Industry
Analysis; Porter’s
Competitive Five
Forces
What Are We Aiming to
Achieve?
• A clear sense of how our Industry is
structured
• What level of activity are we exploring
• Corporates need to think about the Strategic
Business Unit (SBU)
• Where does the balance of power exist
• Particularly, are we in a strong position?
• If not, can we impact the forces
• How do the Forces impact on each other?
The Five Forces
Framework
Porter’s 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 industry’s ‘structure’.
An important question to consider is:
How do we define the Industry?
Figure 3.2 The Five Competitive Forces Framework
Applying the 5 Forces
• As with any model or framework there are varied
ways in which it can be applied
• However, the focus of thinking is the way that FORCES
are operating and how they may be used for
COMPETITVE ADVANTAGE
• It can be useful to consider a two-stage view of the
model:
1. The Horizontal
2. The Vertical
The Horizontal View
• This follows the more traditional supply chain flow of goods
and services
• A fundamental aspect to explore is the degree of CHOICE
Bargaining power and
Scarcity
Intensity of
Rivalry within the
Industry
Bargaining power of
Customers
The Vertical View
• This perspective
can be considered
the disrupters to
the established
Horizontal balance
• To an extent these
factors inform the
degree of CHOICE
in the industry
Threat of
entrants
Intensity of Rivalry within
the Industry
Threat of
substitutes
Considerations When
Using the Five Forces
• The focus should be at the SBU level not the corporate
• Understand connections between forces
• It is dangerous to consider the forces as separate from
each other
• Behaviour may come from disrupting the forces
• The model should not be seen as a static picture
• Are there more forces?
• What are the underlying industry critical success
factors?
Rivalry Between Existing Competitors
The degree of rivalry depends on:
Competitive rivals are organisations with
similar products and services aimed at the
same customer group and are direct
competitors in the same industry/market
(distinct from substitutes).
Competitor concentration and balance.
Industry growth rate.
High fixed costs.
High exit barriers.
Low differentiation.
The Threat of Entry
The main barriers to entry are:
Barriers to entry are the factors that need to be
overcome by new entrants if they are to
compete. The threat of entry is low when the
barriers to entry are high and vice versa.
•
•
•
•
•
•
•
Economies of scale/experience/network
effects.
Access to supply and distribution channels.
Capital requirements
Differentiation and market penetration costs.
Legislation or government action
Expected retaliation.
Incumbency advantages
The Threat of Substitutes
Customers will switch to alternatives (and thus the threat
increases) if:
Substitutes are products or services that offer a
similar benefit to an industry’s products or services,
but have a different nature i.e. they are from
outside the industry.
•
The price/performance ratio of the substitute is superior (e.g.
aluminium is more expensive than steel but it is more cost
efficient for 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 on short haul routes).
•
Extra-industry effects. Substitutes come from outside the
incumbents’ industry which forces managers to look outside
their own industry to consider more distant threats and
constraints.
The Bargaining Power of Buyers
Buyers are the organisation’s 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).
• Low buyer profits (under pressure to improve profits)
and the purchased inputs have a low impact on quality
(can cut costs without loss of quality).
The Bargaining Power of Suppliers
Supplier power is likely to be high when:
Suppliers are those who supply the organisation
with what they need to produce the product or
service. Powerful suppliers can reduce an
organisation’s profits.
• 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).
Part 3 – Application
of the Competitive
Five Forces
The Automotive Industry
– VW’s Perspective
Questions that need to be asked to refine
our thinking:
1. What is the focus of the Sector?
• Electric/Hybrid
2. What is the Market being examined?
• Europe
Key PESTLE Drivers
Remember, the Industry is informed by the
wider trends in the Environment:
• Political/Legal
• Zero emissions targets impact the sale
of Petrol & Diesel cars
• Economic
• Cost of living is mixed but growing
consumer confidence in some
countries e.g. France
• Social/Environmental
• Concerns about climate change
impacting on how society needs to act
• Technology
• Improved battery design and
production
Level of Rivalry (Strong)
• Unsurprisingly, this is a competitive market
• The usual suspects have been developing models over the
last decade:
• Tesla, Nissan, Vauxhall, BMW, etc.
• The market is significantly growing; 16.6% of all car sales in
2022 (Marketline, 2023)
• Balance of Market is shifting i.e. Electric cars now account
for 34.5% of all Hybrid/Electric sales (Marketline, 2023)
• Traditional car brands can draw on financial strengths of
the Petrol/Diesel markets to support investment in
research and design
• As with the main car market the development of a range of
models is an important factor in ensuring competition
Supplier Power (Moderate)
• As with the automotive sector generally, levels of supplier need to be identified
• Key parts include:
• Electronics
• Battery cells
• Raw materials e.g. Steel, Nickel, Lithium
• Need for high quality or scarce materials shifts the balance towards suppliers
• This is part of Tesla taking some battery production in-house to ensure supply and logistics
• External factors need to be understood e.g. price of steel is impacted by market
forces as it is used in many industries so will impact the balance of power
• Many suppliers are large providers of components to the wider automotive sector
so have a power base that they can leverage
• Developing relationships with key suppliers has been a tactic of large players for a
number of years
Buyer Power (Moderate)
• Market is across Europe with Germany, UK & France accounting
for over 50% of car sales so territories need to be understood
• A range of buyers exist with varying degrees of buying power:
• Individual consumers
• Independent dealers
• Car leasing/rental companies
• Higher pricing compared to petrol/diesel models impacts the
size of the market, linking to the levels of disposable income of
consumers
• More choice exists in the Hybrid sector giving consumers more
influence in the balance of power
Threat of New Entrants (Weak)
• A key consideration here is the existence of barriers to entry
• As with the wider car industry, brand strength and reputation
are significant factors
• High fixed costs are required for design and production hence
the main products in the market are from established brands
• However, the market is a growing one and the direction in
which the wider automotive sector is going.
• Level of infrastructure for electric vehicles in Europe is a factor
for new companies to aware of
• Other international markets may be currently more attractive
for new manufacturers e.g. China
Existence of Substitutes (Strong)
• We are examining a specific sector within the car industry so a current substitute
would be Petrol & Diesel models
• However, despite these fuels making up the largest share of the market the
medium term will see this substitute reduce as Zero-Emission Targets kick in
around 2030-35
• In the short term the price difference, particularly for electric cars is a major
consideration for consumers.
• ‘Range anxiety’ is also relevant in switching to electric cars
• Public transport is always a substitute to cars but this will be impacted by a
number of factors:
• Convenience
• Infrastructure
• Price
• Alternative methods of traveling e.g. Motorcycles have a niche impact
• Bicycles can be attractive where urban infrastructure supports practical use
Part 4 –
Implications of the
Competitive Five
Forces
• Which industries to enter (or leave)?
Identifies the relative attractiveness of industries, for
example, those where forces are weak.
Implications of
the Five Forces
Analysis
• How can the five forces be managed?
Managers should identify strategic positions to defend
itself and exploit forces, for example, building barriers to
entry by becoming more vertically integrated.
• How are competitors affected differently?
Large firms with more resources can often deal with
barriers to entry more easily than small firms.
• Defining the ‘right’ industry. Applying the model at the
most appropriate level – not necessarily the whole industry.
For example, the European low-cost airline industry rather
than airlines globally.
Issues in the
Five Forces
Analysis
• Converging industries – particularly in the high tech arenas
where industries overlap. For example , digital industries –
mobile phones/cameras; IT and Car manufactuers
• Complementary organisations – which enhance the
attractiveness of a business to customers or suppliers. For
example, Microsoft Windows and McAfee computer
security systems are complementors. This can almost be
considered as a sixth force.
Steps in an Industry Analysis
There are several important steps in an industry analysis before and after analysing the five forces:
1
2
3
4
5
6
Define the
industry clearly.
Identify the
actors of each of
the five forces
and define
different groups
within them and
the basis for this.
Determine the
underlying
factors of and
total strength of
each force.
Assess the overall
industry structure
and
attractiveness.
Assess recent and
expected changes
for each force.
Determine how
to position your
business in
relation to the
five forces.
Lecture Summary
We have looked at two levels of analysis: 1) macro level 2 )industry level.
Understanding how these operate to present drivers of change is crucial to the identification
of threats and opportunities.
These should guide strategic choice, particularly deployment of resources.
Opportunities and threats form one half of the analysis that shapes strategy.
Next week we will begin analysis of the internal environment, looking at resources and
organizational activities
Next week:
• Week 5 Lecture:
Analysing Strategic
Capability
• Week 5 Seminars:
Industry Analysis
Questions?
MN-2040 Strategic Analysis
Week 5 Lecture: Analysing Strategic Capabilities
Week 5:
Analysing
Strategic
Capabilities
Aims of the
Session
Examine Resources and
Capabilities
Analyse Strategic Impact
(VRIO Framework)
Introduce the Value
Chain (linking
capabilities)
Consider the role of
S.W.O.T.
Strategic position/
direction
Resources
Macro External
Analysis
Strategic capabilities
Sector/Industry
Factors
Culture
Key Success Factors
(SWOT?)
Stakeholders
Option Identification and Evaluation
Week 5:
Analysing Strategic
Capabilities
Learning
Outcomes
organisational
resources
and
Analyse how
capabilities
and how
resources and
these
relatemight
to the
capabilities
strategies
of
provide
sustainable
organisations.
competitive
advantage on the
basis
of theirhow
Value,
Understand
Rarity,
Inimitability
resources
and
and
Organisational
capabilities
can
support
combine(VRIO).
in a value
chain analysis.
Internal Analysis
Resources
Capabilities
What the organisation has.
What the organisation does
well.
Physical
Financial
Human
Intangible
VRIO
Value, Rarity, Inimitability,
Organisational Support
Part 1 –
Resources and
Capabilities
Resourcebased
strategy
The resource-based view (RBV) of strategy asserts that the competitive
advantage and superior performance of an organisation is explained by the
distinctiveness of its capabilities.
In the 1970s and 1980s strategy was focused more on the external
environment.
However, work by Wernerfelt, B. (1984), Hamel and Prahalad (1990), and
Barney, J.B. (1991), among others, led to emphasis on the importance of
resources as the basis for strategic success.
This swing towards a more internal focus became known as the ‘resource
based view’ and also includes an increasing acknowledgement of the
importance of knowledge management in organisations.
• Therefore an understanding of the internal capabilities of an
organisation is a crucial part of strategic analysis
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Foundations of resources
and capab
