4 Multi Dimensions We’ll explore PEST analysis Five Forces Resource Based View of the FirmQ: How many people here use/know these tools?OUR COMPANYMICRO ENVIRONMENTMACRO ENVIRONMENT
5 Macro Environment P.E.S.T. Analysis Step 1Step 2PoliticalEconomicGovernment budget cutsContinued low cost of capitalLow growthWarValue of $/£/EuroSales Tax to 20%Double dip recessionLOW MED HIGHPROBABILITYSocialTechnicalSocial MediaGoogle TranslateEconomic MigrationTMS & WorkflowBroadbandE-ProcurementLOW MED HIGHIMPACT
6 The Micro Environment Threat of a NEW ENTRANT Threat of a NEW ENTRANT Bargaining power of SUPPLIERSBargaining power of SUPPLIERSThe Rivalry within the INDUSTRYBargaining power of CUSTOMERSBargaining power of CONSUMERSSupply ChainThreat of SUBSTITUTE product or serviceThreat of SUBSTITUTE product or serviceThreat of SUBSTITUTE product or serviceAdapted from Michael Porter, “How Competitive Forces Shape Strategy”, Harvard Business Review 1979
7 The OrganizationThe Resourced Based View of the Firm examines the link between ‘the internal characteristics of a firm and a firm’s performance’.States that a firm can be regarded as a bundle of resources. And it’s the resources which are simultaneously valuable, rare, imperfectly imitable, non-substitutable that provide the firm with the main source of sustainable competitive advantage.List your resources… are they valuable? Are they easy to imitate? Are they easy to leverage? Do you have any VRIN resources?Is it?Imperfectly ImitableNon SubstitutableResourceValuableRareKey Learning PointsMAKE RARE RESOURCES VALUABLEYOUR REPUTATION IS VERY IMPORTANT IN THIS INDUSTRYTACIT KNOWLEDGE is a key VRIN resourceCOMPARE WITH COMPETITION – WHERE ARE THE DIFFERENCES?BuildingsWorkflow systemDatabasesReputationStaffAdapted from Barney “Firm resources and sustainable competitive advantage”, Journal of Management 1991
8 Growth via COLLABORATION Growth via COORDINATION Greiner’s CurveCrisis of ???Crisis of RED TAPECrisis of CONTROLGrowth via COLLABORATIONCrisis of AUTONOMYGrowth via COORDINATIONCrisis of LEADERSHIPGrowth via DELEGATIONGrowth via DIRECTIONGrowth via CREATIVITYLarry Greiner, “Evolution and revolution as organizations grow”, Harvard Business Review August 1972
9 To sum upTraditional strategy tools are vital but can lead to generic strategies (eg Porter’s 3 generic strategies (low cost, focus and differentiation)) – watch out for them at your competitors.RBV lets you explore the internal characteristics of your own companies and see what works and what should be invested in.Need to look at time factors when developing corp strategy – this can be your company’s developmental stage AND/OR the state the surrounding industry is in.If you are in a period of stable growth… BEWARE!Sustainable growth needs to be designed into the strategy, it won’t just happen.
10 Thank you Richard Brooks K International plc, UK #1 Supplier of Translation Services to the UK GovernmentTel:blog.k-international.com@K_International@RichardMBrooks