Frameworks & Processes IACT 302 Corporate Network Planning

2 Overview Frameworks How do we assess a framework –Foundation framework (Porter) –Trilevel framework (Parson) –Value chain framework –Strategic opportunities framework –Strategic impact/value framework –Risk assessment framework Concluding remarks

3 Frameworks In general terms a framework is a structure used to analyse the issues Frameworks provide a shorthand method of describing the relationship between communications networks and competitive strategy They highlight important dimensions as well as suggest dimensions that are unimportant

4 Framework Limitations Frameworks are not theories, they are merely a language for classification The development of an appropriate framework is not prescriptive, as it is only the beginning of the strategic planning process Many frameworks are also static - and fail to capture the dynamics of changing technologies and their use

5 How Do We Assess a Framework? There are 3 principles which attempt to account for the complexities inherent in developing a competitive strategic plan

6 Principles The principle of persons: –The people who devise and act on a strategy have their own agendas (provides for intentional actions)

7 Principles The principle of factors: –There is a need to pay attention to product quality, customer service, employee commitment, competition, and other fundamental factors identified

8 Principles The principle of timely decisions: –There is a need for management to make timely decisions and to act decisively.

9 How Do We Assess a Framework? Unfortunately there are few frameworks that abide by all of these three principles No single framework can be everything to everyone An assessment of the suitability of a framework based on these three principles informs us of the areas to be emphasised

10 Framework Assessment Frameworks are also assessed in terms of: –specific uses –scope –advantages –disadvantages Astute planners & managers often combine frameworks to hedge against the risk of framework failure

11 1: Foundation Framework Most foundation frameworks are based on the seminal work of Michael Porter of the Harvard Business School Fig. 1 ~ Porter’s 5 forces in the competitive arena Substitutes Potential new entrants Suppliers Intra-industry rivalry STRATEGIC BUSINESS UNIT Buyers

12 1: Foundation Framework Porter maintained that the competitive stance of a company depends on the collective strength of 5 basic forces. The strategic network plan can be a powerful tool to change this balance of power.

13 1: Foundation Framework Porter suggests three generic strategies as logical approaches to obtain competitive advantages: –cost leadership (aim to lower production costs) –differentiation (aim for ‘unique’ product/service) –focus (niche market or wide product/service range)

14 2: Trilevel Framework Parsons identified 3 levels of interaction where the strategic network plan can be used for competitive advantage: –industry level (impact on nature of service/products provided) –firm level (specific competitive strategy) –strategy level (at the strategy level the strategic network implementation and management plan supports the corporate strategies)

15 3: Value Chain Framework The value chain is an analytical framework used to examine the value-adding activities in the firm and between firms. It was proposed by Porter Value activities consist of –primary activity (production and delivery) –and support activities Product Development ManufacturingDistribution Marketing Customers FocusLower cost Differentiate Suppliers When and where can value be added?

16 4: Strategic Opportunities Framework The strategic opportunities framework suggests that strategic network planners should focus on: –External vs. Internal –Traditional Business vs. Business transformed by strategic use of the network External OperationsInternal Operations IT-intensive products and services Traditional products and processes

17 5: Strategic Impact/Value Framework The value or impact of an advantage or strategy can be measured by how much is it worth : –to possess that advantage, or –to create an opportunity by following that strategy (identifying grid sections and actions) High Low Strategic impact of existing networks Factory Support Strategic Turnaround

18 5: Strategic Impact/Value Framework This framework expands on the grid to account for 2 interacting dimensions : IMPACT and VALUE The IMPACT is segregated into : –time –geography –relationships There are 3 different types of value : –efficiency –effectiveness –innovation This framework can be used as a strategic network planning guide to help organise and analyse network-intensive areas of activity

19 5: Strategic Impact/Value Framework For a network, what might it mean to examine the IMPACT of Time (use time compression) on the three values: –EFFICIENCY = ACCELERATE BUSINESS PROCESSES –EFFECTIVENESS = REDUCE INFORMATION FLOAT (make data rapidly available) –INNOVATION = CREATE SERVICE EXCELLENCE

20 5: Strategic Impact/Value Framework For a network, what might it mean to examine the IMPACT of Geography (Overcome geographical restrictions) on the three values: –EFFICIENCY = RECAPTURE SCALE –EFFECTIVENESS = ENSURE GLOBAL MANAGEMENT CONTROL –INNOVATION = PENETRATE NEW MARKETS

21 5: Strategic Impact/Value Framework For a network, what might it mean to examine the IMPACT of Relationships (Restructure business relationships) on the three values: –EFFICIENCY = BYPASS INTERMEDIARIES –EFFECTIVENESS = REPLICATE SCARCE KNOWLEDGE –INNOVATION = CREATE CUSTOMER LOYALTY

22 6: Risk Assessment Framework Risk Assessment (RA) can be arrived at in different ways. One way is: RISK = LIKELIHOOD x IMPACT x VULNERABILITY The best way to determine the likelihood is using historical data (eg: “a 300 year flood”) –However, this is usually not available in the current dynamic business environment Threat Identification and Risk Analysis should be an integral part of any strategic network plan and used as a part of any strategic decision-making process.

23 6: Risk Assessment Framework Risks can be identified as –Intrinsic (internal and generally within the control of the organisation) –or –Extrinsic (external and beyond the control of the organisation).

24 Concluding Remarks These are some of the many possible strategic frameworks that might be adopted by the strategic network planner New ones are also continuing to appear The important thing for network planners to decide is which one (or combination) is most suited for a particular organisation and its goals There are many dimensions to consider The value of each would be lost if all frameworks were simply combined together into one big super-framework