Defining Business Opportunity from Technological

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Defining Business Opportunity - from
Technological Strategic
Perspective

• By
• K Hari Krishnan. BE.,MBA.,
• VIT Business School
• Email hari_anith_at_yahoo.co.in

28.11.2006
Session 1
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You cannot change the wind direction but you can
always adjust your sail
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Vision, or Mission

• A statement of purpose (strategic intent)
  committing the organization to ambitious
  overarching (stretch) goals.
• Provides a sense of direction and purpose.
• Drives strategic decision making and resource
  allocations.
• Forces the seeking of significant performance
  improvements to attain goals.

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• Vision
• Future Aspiration
• Mission
• Purpose of Existence
• Defining Business
• To whom to Serve
• What to satisfy
• How to satisfy

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Mission Statement

• A formal commitment to stakeholders that the
  firms strategy incorporates and recognizes their
  claims on the organization.
• Mission statement elements
• A declaration of the overall vision, or mission.
• A summation of managerial philosophical values.
• An articulation of key organizational goals.

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Customer Orientation and Business Definition

• Abells Frameworkfor Defining theBusiness
• Consumer-oriented versus Product-oriented
  business definition

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Components of the General Environment
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The purpose of Five-Forces Analysis

• The five forces are environmental forces that
  impact on a companys ability to compete in a
  given market.
• The purpose of five-forces analysis is to
  diagnose the principal competitive pressures in a
  market and assess how strong and important each
  one is.

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Porters Five Forces Model of Competition
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Porters Five Forces Model of Competition
Threat of New Entrants
Threat of New Entrants
Bargaining Power of Buyers
Bargaining Power of Suppliers
Threat of Substitute Products
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Competitor Analysis
The follow-up to Industry Analysis is effective
analysis of a firms Competitors
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Competitor Analysis
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Competitor Analysis
Future Objectives
What Drives the competitor?
How do our goals compare to our competitors
goals?
Where will emphasis be placed in the future?
What is the attitude toward risk?
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Competitor Analysis
Future Objectives
What is the competitor doing?
How do our goals compare to our competitors
goals?
What can the competitor do?
Current Strategy
Where will emphasis be placed in the future?
How are we currently competing?
What is the attitude toward risk?
Does this strategy support changes in the
competitive structure?
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Competitor Analysis
What does the competitor believe about itself and
the industry?
Assumptions
Do we assume the future will be volatile?
What assumptions do our competitors hold about
the industry and themselves?
Are we assuming stable competitive conditions?
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Competitor Analysis
What are the competitors capabilities?
Capabilities
What are my competitors strengths and weaknesses?
How do our capabilities compare to our
competitors?
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Competitor Analysis
Response
What will our competitors do in the future?
Where do we have a competitive advantage?
How will this change our relationship with our
competition?
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Strengths

• A STRENGTH is something a company is good at
  doing or a characteristic that gives it an
  important capability.
• Possible Strengths
• Name recognition
• Proprietary technology
• Cost advantages
• Skilled employees
• Loyal Customers

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Weaknesses

• A WEAKNESS is something a company lacks or does
  poorly (in comparison to others) or a condition
  that places it at a disadvantage
• Possible Weaknesses
• Poor market image
• Obsolete facilities
• Internal operating problems
• Poor marketing skills

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Strengths and Weakness form a basis for INTERNAL
analysis

• By examining strengths, you can discover untapped
  potential or identify distinct competencies that
  helped you succeed in the past.
• By examining weaknesses, you can identify gaps in
  performance, vulnerabilities, and erroneous
  assumptions about existing strategies.

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Discovering Core Competencies
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Capabilities
What a firm Does...
Capabilities develop over time as a result of
complex interactions that take advantage of the
interrelationships between a firms tangible and
intangible resources that are based on the
development, transmission and exchange or sharing
of information and knowledge as carried out by
the firm's employees.
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Capabilities
What a firm Does...
Capabilities represent
the firms capacity or ability to integrate
individual firm resources to achieve a desired
objective.
Capabilities develop over time as a result of
complex interactions that take advantage of the
interrelationships between a firms tangible and
intangible resources that are based on the
development, transmission and exchange or sharing
of information and knowledge as carried out by
the firm's employees.
Capabilities become important when they are
combined in unique combinations which create core
competencies which have strategic value and can
lead to competitive advantage.
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Discovering Core Competencies
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Core Competencies
are the essence of what makes an organization
unique in its ability to provide value to
customers.
Leonard-Barton, Bowen, Clark, Holloway
Wheelwright
McKinsey Co. recommends identifying three to
four competencies to use in framing strategic
actions.
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Discovering Core Competencies
Outsource
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Core Competencies
What a firm Does...
that is Strategically Valuable
For a strategic capability to be a Core
Competency, it must be
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Core Competencies
What a firm Does...
that is Strategically Valuable
Core Competencies must be
Valuable
Capabilities that either help a firm to exploit
opportunities to create value for customers or to
neutralize threats in the environment
Rare
Capabilities that are possessed by few, if any,
current or potential competitors
Costly to Imitate
Capabilities that other firms cannot develop
easily, usually due to unique historical
conditions, causal ambiguity or social complexity
Nonsubstitutable
Capabilities that do not have strategic
equivalents, such as firm-specific knowledge or
trust-based relationships
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Discovering Core Competencies
Outsource
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Value Chain Analysis
Identifying Resources and Capabilities That Can
Add Value
Support Activities
Primary Activities
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Value Chain Analysis
Identifying Resources and Capabilities That Can
Add Value
Support Activities
Inbound Logistics
Primary Activities
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Value Chain Analysis
Identifying Resources and Capabilities That Can
Add Value
Support Activities
Inbound Logistics
Operations
Primary Activities
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Value Chain Analysis
Identifying Resources and Capabilities That Can
Add Value
Support Activities
Inbound Logistics
Outbound Logistics
Operations
Primary Activities
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Value Chain Analysis
Identifying Resources and Capabilities That Can
Add Value
Support Activities
Marketing Sales
Inbound Logistics
Outbound Logistics
Operations
Primary Activities
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Value Chain Analysis
Identifying Resources and Capabilities That Can
Add Value
Support Activities
Service
Marketing Sales
Inbound Logistics
Outbound Logistics
Operations
Primary Activities
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Value Chain Analysis
Identifying Resources and Capabilities That Can
Add Value
Support Activities
Procurement
Service
Marketing Sales
Inbound Logistics
Outbound Logistics
Operations
Primary Activities
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Value Chain Analysis
Identifying Resources and Capabilities That Can
Add Value
Support Activities
Technological Development
Procurement
Service
Marketing Sales
Inbound Logistics
Outbound Logistics
Operations
Primary Activities
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Value Chain Analysis
Identifying Resources and Capabilities That Can
Add Value
Human Resource Management
Support Activities
Technological Development
Procurement
Service
Marketing Sales
Inbound Logistics
Outbound Logistics
Operations
Primary Activities
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Value Chain Analysis
Identifying Resources and Capabilities That Can
Add Value
Firm Infrastructure
Human Resource Management
Support Activities
Technological Development
Procurement
Service
Marketing Sales
Inbound Logistics
Outbound Logistics
Operations
Primary Activities
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Value Chain Analysis
Identifying Resources and Capabilities That Can
Add Value
Firm Infrastructure
Human Resource Management
Support Activities
MARGIN
Technological Development
Procurement
Service
Marketing Sales
Inbound Logistics
Outbound Logistics
MARGIN
Operations
Primary Activities
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Outsourcing
Strategic Choice to Purchase Some Activities From
Outside Suppliers
Firm Infrastructure
Human Resource Management
Support Activities
MARGIN
Technological Development
Procurement
Service
Marketing Sales
Inbound Logistics
Outbound Logistics
MARGIN
Operations
Primary Activities
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Discovering Core Competencies
Outsource
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The resources and capabilities that have been
determined to be a source of competitive
advantage for a firm over its rivals.
Core Competency
An integrated and coordinated set of actions
taken to exploit core competencies and gain a
competitive advantage.
Strategy
Actions taken to provide value to customers and
gain a competitive advantage by exploiting core
competencies in specific, individual product
markets.
Business Level Strategy
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Generic Business Level Strategies
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Cost Leadership Business Level Strategy
Key Criteria
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Cost Leadership Business Level Strategy
Requirements
Constant effort to reduce costs through
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How to Obtain a Cost Advantage
1. Determine and Control Cost Drivers
2. Reconfigure the Value Chain as needed
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Reconfiguring the Value Chain of Iowa Beef
Packers (IBP)
Save on shipping and cattle weight loss
Utilize cheaper non-union rural labor
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Differentiation Business Level Strategy
Key Criteria
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Differentiation Business Level Strategy
Requirements
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Differentiation Business Level Strategy
Effectiveness with Differentiation grows out of
Value Chain activities
Examples
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Drivers of Differentiation
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Thank u !!!Best wishes to become a Successful
Entrepreneur