P3 Business Analysis

2 A1. The need for, and purpose of, strategic business analysis A2. Environmental issues affecting the strategic position of an organisation A3. Competitive forces affecting an organisation A4. Marketing and the value of goods and services A5. The internal resources, capabilities and competences of an organisation Section A: Strategic position Designed to give you the knowledge and application of:

3  Establish appropriate critical success factors for products and services.  Explore the role of the value chain in creating and sustaining competitive advantage.  Assess different approaches to benchmarking to an organisation’s performance. A4: Marketing and the value of goods and services Learning Outcomes

4 Establishing appropriate critical success factors Critical success factors (CSF)  product features  particularly valued by group of customers  where entity aims to excel and outperform competition In what area do we give our best performance in order to achieve overall success?  Industry structure: consider industry specific factors  Competitive strategy: smaller players react to actions of larger players  Geographic location: brand positioning in local market & distribution costs  Environmental factors: adequate use of natural resources  Temporary factors: short-term factors significant to entity’s success  Functional management: depends upon managerial level Prime sources of CSF

5 Six step approach to using CSF (JSW) STEP 1 Identify success factors critical for profitability STEP 2 Identify critical competencies to achieve superior performance in CSF STEP 3 Develop critical competence level to achieve competitive advantage STEP 4 Identify KPIs for each critical competence STEP 5 Focus on developing critical competencies that are difficult to match by competitors STEP 6 Monitor self and competitor’s achievement

6 Porter’s value chain  a model which helps a company break down the business cycle into strategic activities that add value to a product or service  Helps in identifying where costs are too high, or are reasonable, and also understand where and how differentiation from competitors can be achieved  This model is equally applicable to services as well as the manufacturing sector.  The core activities can be seen as a simple process model as shown in this diagram  All the core activities can be populated in the value chain model. Once the activities have been identified and the model populated, the business can analyse the costs of each element, as in the traditional model.  In the context of managing business information, the company can also decide where information systems can help reduce costs and deliver competitive advantage.

7 Value chain Refer to Example (Tables and Trees Limited) (page 80)

8 Benchmarking Meaning Process of improving performance by  continuously identifying processes  understanding (studying and analysing)  adapting outstanding practices and processes found inside and outside the organisation, and  implementing the results Approaches to benchmarking Metric Process Diagnostic Your numbers v. our numbers Your process output v. our output Is there a problem in our processes? TYPESTYPES Industry / Sector Historical Best-in-class

9 Recap  Establish appropriate critical success factors for products and services.  Explore the role of the value chain in creating and sustaining competitive advantage.  Assess different approaches to benchmarking to an organisation’s performance.