CHAPTER 4 Environmental Scanning and Industry Analysis Continuation of last session’s lecture THOMAS L. WHEELEN J. DAVID HUNGER Prentice Hall 2006

Rivalry Among Existing Firms – Number of competitors Porter’s Approach to Industry Analysis Rivalry Among Existing Firms – Number of competitors Rate of industry growth Product or service characteristics Amount of fixed costs Capacity Height of exit barriers Diversity of rivals Prentice Hall, Inc. © 2008 Prentice Hall 2006

Overall customer care market shares for 2009 Executive summary Overall customer care market shares for 2009 The customer care market generated USD2.118 billion in revenue in 2009, 3.1% higher than the USD2.055 billion in 2008. The revenue for 2008 is higher than was reported last year (USD1.186 billion) because it was restated. The difference came primarily from a restatement of the size of the customer care market in China, of which we gained substantial visibility this year. Customer care is more consolidated than many other BSS and OSS markets, and two vendors, Oracle and Amdocs, clearly dominate. However, 50 suppliers command revenue of several million dollars in this market. Two vendors, Huawei and AsiaInfo, dominate the Chinese market and there are many other smaller, geographically focused suppliers. The customer care market is driven by greater competition in the emerging markets, the increasingly complex services and service bundles being offered by CSPs, the strong desire of consumers for instant service, the increasing need of CSPs to offer many new services quickly and the need to reduce customer support costs. Figure 1: Customer care market shares by revenue, worldwide, 2009 [Source: Analysys Mason, 2010]

Overall service fulfilment market shares for 2009 Executive summary Overall service fulfilment market shares for 2009 Figure 1: Service fulfilment market shares by revenue, worldwide, 2009 [Source: Analysys Mason, 2010] The service fulfilment market generated USD2.233 billion in revenue in 2009, up by 2.8% from USD2.173 billion in 2008. This represents slightly more growth than we forecasted last year (2.3%). Service fulfilment continues to be a very fragmented market. The top-six vendors accounted for only 44% of the market, while more than 30 other vendors achieved over USD10 million in revenue. The service fulfilment market grew more than some other areas of BSS/OSS since it is considered to be related to revenue generation. Growth in the service fulfilment market was driven by network evolution towards optical/packet technology, the push towards instant availability for complex service bundles, the need to operate in uncertain and changing business environments, deregulation of broadband and mobile in growth markets and the increasing desire to meet the needs of SMEs.

Continuum of International Industries International Risk Assessment Continuum of International Industries Prentice Hall, Inc. © 2008 Prentice Hall 2006

Strategic Groups Prentice Hall, Inc. © 2008 Prentice Hall 2006

Competitive Matrix Company Size Service Quality Monitoring Viewpoint Ericsson Network IQ™ IBM Tivoli Netcool Customer Experience Management SW Large (>$100M) OSI (SRIT) Service Assurance Nokia Mobile Quality Analyzer Agilent + Teradata Customer Experience Management System Medium ($10M-$100M) TTI Netrac™ Company Size Arantech touchpoint™ Nexus Netview Small (<$10M) Network Service Customer Service Quality Monitoring Viewpoint 1 February 2008 Proprietary - Mortensen Consulting Group and DAX Technologies

Example of Strategic Positioning Chart: Gartner Magic Quadrant

General Types of Strategies – Strategic Types General Types of Strategies – Defenders – hold on; cost & market share Prospectors – create; innovation Analyzers – portfolio; large companies Reactors – watch what happens, try to react quickly and effectively Prentice Hall 2006

Gathering information on a company’s competitors Competitive Intelligence Competitive Intelligence is often called business intelligence Gathering information on a company’s competitors Product/offering – features, functionality, pricing, targets, etc. Company – size, profitability, margins, target markets, apparent strategy, etc. Prentice Hall, Inc. © 2008 Prentice Hall 2006

Forecasting Techniques -- Extrapolation – from the past to the future Brainstorming – informed people mapping out possibilities Expert opinion – buy reports or commission a study Delphi technique – structured polling technique; ‘The Wisdom of Crowds” Statistical modeling – projecting past patterns into the future Scenario planning – a formal technique for mapping out futures, of various probabilities Prentice Hall 2006

Synthesis of External Factors -- EFAS Prentice Hall, Inc. © 2008 Prentice Hall 2006

CHAPTER 5 Internal Scanning: Organizational Analysis STRATEGIC MANAGEMENT & BUSINESS POLICY 13TH EDITION THOMAS L. WHEELEN J. DAVID HUNGER Prentice Hall 2006

Internal strategic factors -- Resource-Based Approach to Organizational Analysis Internal strategic factors -- Critical strengths and weaknesses that are likely to determine if the firm will be able to take advantage of opportunities while avoiding threats Resources Capabilities Competency Core competency Distinctive competency Prentice Hall 2006

VRIO Framework -- Value Rareness Imitability Organization Core and Distinctive Competencies VRIO Framework -- Value Rareness Imitability Organization Prentice Hall 2006

5-Step Approach Strategy Analysis -- Resource-Based Approach to Organizational Analysis 5-Step Approach Strategy Analysis -- Identify and classify resources Combine strengths into capabilities Appraise profit potential of capabilities Select strategy that best exploits Identify resource gaps invest in weaknesses Prentice Hall 2006

Continuum of Sustainability Prentice Hall 2006

Imitability -- Durability -- Sustainability of Advantage Imitability -- Rate at which a firm’s underlying resources and capabilities can be duplicated by others Durability -- Rate at which a firm’s underlying resources and capabilities depreciate or become obsolete Prentice Hall 2006

Core Competency can be imitated -- Sustainability of Advantage Core Competency can be imitated -- Transparency Transferability Replicability Prentice Hall 2006

Company’s method for making money in the current business environment. Business Models BUSINESS MODEL: Company’s method for making money in the current business environment. Prentice Hall 2006

Types of Business Models -- Customer Solutions Model Profit Pyramid Model Multi-Component System/Installed Base Model Advertising Model Switchboard Model Prentice Hall 2006

Types of Models -- Time Model Efficiency Model Blockbuster Model Business Models Types of Models -- Time Model Efficiency Model Blockbuster Model Profit Multiplier Model Entrepreneurial Model De Facto Standard Model Prentice Hall 2006

Typical Value Chain for a Manufactured Product Value-Chain Analysis Linked set of value-creating activities beginning with basic raw material and ending with distributors getting final goods into hands of customers Typical Value Chain for a Manufactured Product Prentice Hall 2006

Corporation’s Value Chain Prentice Hall 2006

Basic Organizational Structures -- Scanning Functional Resources & Capabilities Basic Organizational Structures -- Simple structure Functional structure Divisional structure Strategic business units (SBU’s) Conglomerate structure Prentice Hall 2006

Basic Organizational Structures Prentice Hall 2006

Corporate Culture Collection of beliefs, expectations, and values learned and shared by a corporation’s members and transmitted from one generation of employees to another Prentice Hall 2006

Market Position & Segmentation Marketing Mix Product Life Cycle Strategic Marketing Issues Market Position & Segmentation Marketing Mix Product Life Cycle Brand & Corporate Reputation Prentice Hall 2006

Product Life Cycle Prentice Hall 2006

Financial leverage Capital budgeting Strategic Financial Issues Prentice Hall 2006

Technological Competence Technology Transfer Strategic Research & Development Issues R&D Intensity Technological Competence Technology Transfer Prentice Hall 2006

Technological Discontinuity Prentice Hall 2006

Human Resources Management Increasing use of teams Union relations Strategic Human Resource Management Issues Human Resources Management Increasing use of teams Union relations Temporary workers Quality of work life Human diversity Prentice Hall 2006

Internal Factor Analysis Summary Table Prentice Hall 2006