Diamond E & Strategy-Enviro Analysis
THE ROLE OF STRATEGY
• Hub for Analysis
– Retrospective
– Prospective
• Link to Action
• Goals – Value Proposition – Core
Activities - PMF
Business Strategy Components
GOALS
V l
Value
Proposition
PRODUCT-MKT
FOCUS
CORE
ACTIVITIES
2
The Wal-Mart Business Strategy
• Dominate Markets
•Lowest cost System
•High Growth
•Do it the Wal-Mart way
GOA:LS
• Everyday low prices
•Always in stock
•Courteous
•Reliable
Reliable
Value
Proposition
PRODUCT-MKT
FOCUS
• Branded general merchandise
•Value-oriented customers
•Develop easier markets first:
•work from regional hubs
CORE ACTIVITIES
• Integrated Logistics: Supplier
to checkout
•Intensely managed
•Local Tailoring
3
BUSA 4800/4810 Lecture
1
Diamond E & Strategy-Enviro Analysis
The Diamond E Framework
Management
Preferences
The ability to
Analyze this
Is Key
Organization
Strategy
Environment
Goals
Product/Mkt
Competitive Premise
Business System
Capabilities
& Resources
4
Diamond E Framework: Tensions
Management
Preferences
WANT TO DO
Organization
Strategy
CAN DO
Environment
NEED TO DO
Capabilities
& Resources
Strategic Tension & The Business
Model
WANT
Goals
Value
Proposition
CAN
Core
Activities
BUSA 4800/4810 Lecture
Product/
Market
NEED
2
Diamond E & Strategy-Enviro Analysis
Strategic Risks
TIME HORIZON
Short-Term
RISKS
Enviro
Capability
Long-Term
Errors in
E
i reading
di
the enviro
cause failure
Enviro changes
g
Make the
Strategy
obsolete
Strategic demands
Exceed the
Capacity to
execute
Internal cap’y
Develop inconsit’y
With strategy
7
Strategic Tension
WANT
Management Preferences
Individual
Strategic
Tension
NEED
Environment
Industry
CAN
Org’n, Res. & Cap’s
Firm
The Process of Strategic Analysis
Step 1: Base Case Analysis
Assess the strategic position of the bus
and the urgency for action
1.
2.
3.
4.
Step 2: Strategy Formulation and
Testing
Develop and evaluate proposals to
address business opp’y and challenges
1.
2.
3.
Step 3: Decision and Implementation 1.
Commit, implement, and review
2.
3.
BUSA 4800/4810 Lecture
Assess past performance
Identify and evaluate the current
strategy
Forecast future performance under
current strategy
Decide on the need, nature, and
speed of change
Work from the enviro and
capabilities to generate new
proposals
Use the drill to shape and shortlist proposals
Prepare performance forecasts
Decide on Proposals to implement
Move to build commitment and
develop required capabilities
Implement
3
Diamond E & Strategy-Enviro Analysis
Strategy and Environment Linkage
New Strategy
Must Fit
MANAGEMENT
PREFERENCES
STRATEGIC
CHOICES
ORGANIZATION
ENVIRONMENT
RESOURCES &
CAPABILITIES
Strategy and Environment Linkage
New Strategy
Must Fit
MANAGEMENT
PREFERENCES
STRATEGIC
CHOICES
ORGANIZATION
ENVIRONMENT
Strategic Choices
Repeatedly
Reviewed
RESOURCES &
CAPABILITIES
Strategy and Environment Linkage
New Strategy
Must Fit
MANAGEMENT
PREFERENCES
STRATEGIC
CHOICES
ORGANIZATION
RESOURCES &
CAPABILITIES
BUSA 4800/4810 Lecture
ENVIRONMENT
Need to understand
Industry economics
and competitive
environment
4
Diamond E & Strategy-Enviro Analysis
Comparison of Focused Enviro Analysis and Macro‐enviro Scanning
Key
Primary
Chara’tics Subjects
Output
Focused
Enviro
Analysis
•Driven by
strategic
proposal
•Relatively
formal
•Forecast of
performance
•Decision to
proceed
MacroEnviro
Scanning
•Issue Seeking
•Fundamental
social,
•Continuous
informal process economic, and
technical trends
•Analysis of fit
with forces in
the defined
environment
•Identify events
of potential
impact on the
business
Cooperation and Competition: Game Theory
Few
Players
ZeroSum
Gain
NonZero
Sum
Gain
Identifiable Suppress
Players
Uncertainties
•Product
•Price
Homogeneit leaders
y (Price)
establish
order
•High order •Large
frequency & inventories
small order
sizes
•Industry
Social
Structure
•Entry Barriers
as per Porter
SCENARIO PLANNING
1. Define Time & Scope
2. Identify Major Stake Holders
3. Identify Key Identify Key
Uncertainties
4. Identify Basic Trends
5. Construct initial Scenario themes
BUSA 4800/4810 Lecture
5
Diamond E & Strategy-Enviro Analysis
SCENARIO PLANNING
1. Define Time & Scope
2. Identify Major Stake Holders
3. Identify Key Identify Key
Uncertainties
4. Identify Basic Trends
5. Construct initial Scenario themes
6. Check for Consistency
7. Develop learning for groups
8 ID further research 8.
ID f h
h
needs
9. Develop Quantitative Models
10. Evolve towards Decision
The Process of Environment Analysis
Step 1:
Focus the Environment
Analysis
1.
2.
3.
Work from the strategic
proposals to define the
boundaries
Highlight the questions
concerning demand,
supply, competition, and
governmentt
Establish a time horizon
for analysis
The Process of Environment Analysis
Step 2: Test the StrategyEnvironment Linkage
BUSA 4800/4810 Lecture
1.
How well does the
strategic proposal
anticipate the opp’ys and
challenges
2 What is the impact on
2.
demand, supply,
competition, and
government?
3. For serious mis-fit,
recycle to develop a more
attractive proposal
6
Diamond E & Strategy-Enviro Analysis
The Process of Environment Analysis
Step 3: Forecast
Performance
1.
Decide if Proposals will
meet its goals
2. With scenario planning
see if implementation
will
ill lead
l d to
t desired
d i d
results
3. If fails – recycle to
develop more attractive
proposals
The Process of Environment Analysis
Step 4: Rank against other
proposals
1.
2.
3.
Consider the proposal in
light of alternative
proposals
If it is competitive –
proceedd with
ith Diamond
Di
dE
Drill
If not – consider
dropping and recycle to
develop a more attractive
proposal
The Process of Environment Analysis
Step 5: Move to the Next
1.
Step in the Diamond-E Drill
BUSA 4800/4810 Lecture
Assess the strategyResource Linkage
7
Diamond E & Strategy-Enviro Analysis
The Process of Environment Analysis
Step 1: Focus the
Environment Analysis
Step 2: Test the StrategyEnvironment Linkage
GENERATE NEW
STRATEGIC
PROPOSAL(S)
RECYCLE
Step 3: Forecast
Performance
RECYCLE
Step 4: Rank Against Other
proposals
RECYCLE
Step 5: Move to Next Step
in Diamond-E Drill
BUSA 4800/4810 Lecture
8