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Instructor Profile – Kyle Bergerson
Program: 2nd Year BBA
Extracurriculars:
Interests:
Finance, Law, Gym
Instructor Profile – Vivek Bhardwaj
Program: 2nd Year CS/BBA (UW/WLU)
Extracurriculars:
Interests:
Mixing music, Swimming, and race cars 🏎
Instructor Profile – Arnav Hiremath
Program: 2nd Year BBA, Econ Minor
Extracurriculars:
Interests:
F1, drones, mechanical keyboards
Instructor Profile – Emily Liu
Program: 2nd Year BBA, UX Minor
Extracurriculars:
Interests:
Yoga, kickboxing, bubble tea
Instructor Profile – Sia Bhaskar
Program: 3rd Year BBA
Extracurriculars:
Interests:
Dance, Reading, Sushi
DISCLAIMER
We have not seen the midterm! (i.e. we do not know
what the questions are)
The information presented is based on our experience
in the course as students when we took BU111.
Agenda
1.
2.
3.
4.
5.
6.
7.
8.
Key Success Factors
Diamond-E
Porter’s Generic Strategies
Break (10 mins)
External Analysis
a. Porter’s Five Forces
b. PEST
Analytical Thinking / Case Analysis
Practice Questions
Exam Tips
KEY SUCCESS FACTORS
Key Success Factors
Achieving financial performance
Meeting customer needs
Building quality products and services
Encouraging creativity and innovation
The Six
Gaining employee commitment
Creating a distinctive competitive advantage
Key Success
Factors
Diamond-E
External Analysis
Analytical Thinking
Exam Tips
Key Success Factors
For the key success factors it is important to ask:
1. Why is each KSF important? i.e. What happens if you
don’t achieve them?
2. How are they interconnected?
3. Why must you pursue all of them?
Key Success Factors
Diamond-E
External Analysis
Analytical Thinking
Exam Tips
Key Success Factors
For the key success factors it is important to ask:
1. Why is each KSF important? i.e. What happens if you
don’t achieve them?
2. How are they interconnected?
REMEMBER (in #twitter version ie. Short
form):
3. Why must you pursue all of them?
• Financial, needs, quality, innovation,
employee and competitive advantage
Key Success Factors
Diamond-E
External Analysis
Analytical Thinking
Exam Tips
KSF
Key Success Factors
Importance
Diamond-E
External Analysis
KPI
Analytical Thinking
Exam Tips
Key Success Factors
It is also important to be able to recognize critical success
factors when they come up in examples.
1. Joe’s Java
(Meeting Customer Needs, Achieving Financial Performance)
2. High Tech Bar Top
You can’t recognize them if you don’t know them so
start by being able to list the 6ix factors and
understanding their implications and then you’ll be able
to recognize them on sight
(Innovation & Creativity,
Competitive Advantage)
Key Success Factors
Diamond-E
External Analysis
Analytical Thinking
Exam Tips
Key Success Factors
Example:
Key Success Factors
Diamond-E
External Analysis
Analytical Thinking
Exam Tips
Key Success Factors
Emily and her ridiculously smart co-tutor Arnav run the BU111
SOS review session. SOS is a charity organization that uses the
money from the review sessions to assist in nations around the
world. To be an SOS tutor you must have received an 11 or 12
in the course you are tutoring. SOS is a great way to get
involved in Laurier and they both can’t wait to apply again.
Arnav and Emily are new tutors who brought new slides and
examples to the session. Both tutors who are very
knowledgeable in BU111 have prepared what is sure to be
most exciting session of Fall 2022.
Key Success Factors
Emily and her ridiculously smart co-tutor Arnav run the BU111
SOS review session. SOS is a charity organization that uses the
money from the review sessions to assist in nations around the
world. To be an SOS tutor you must have received an 11 or 12
in the course you are tutoring. SOS is a great way to get
involved in Laurier and they both can’t wait to apply again.
Arnav and Emily are new tutors who brought new slides and
examples to the session. Both tutors who are very
knowledgeable in BU111 have prepared what is sure to be most
exciting session of Fall 2022.
Achieving Financial
Performance
Key Success Factors
Emily and her ridiculously smart co-tutor Arnav run the BU111
SOS review session. SOS is a charity organization that uses the
money from the review sessions to assist in nations around the
world. To be an SOS tutor you must have received an 11 or 12
in the course you are tutoring. SOS is a great way to get
involved in Laurier and they both can’t wait to apply again.
Arnav and Emily are new tutors who brought new slides and
examples to the session. Both tutors who are very
knowledgeable in BU111 have prepared what is sure to be most
exciting session of Fall 2022.
Building Quality
Product/ Service
Key Success Factors
Emily and her ridiculously smart co-tutor Arnav run the BU111
SOS review session. SOS is a charity organization that uses the
money from the review sessions to assist in nations around the
world. To be an SOS tutor you must have received an 11 or 12
in the course you are tutoring. SOS is a great way to get
involved in Laurier and they both can’t wait to apply again.
Arnav and Emily are new tutors who brought new slides and
examples to the session. Both tutors who are very
knowledgeable in BU111 have prepared what is sure to be most
exciting session of Fall 2022.
Gaining Employee
Commitment
Key Success Factors
Emily and her ridiculously smart co-tutor Arnav run the BU111
SOS review session. SOS is a charity organization that uses the
money from the review sessions to assist in nations around the
world. To be an SOS tutor you must have received an 11 or 12
in the course you are tutoring. SOS is a great way to get
involved in Laurier and they both can’t wait to apply again.
Arnav and Emily are new tutors who brought new slides and
examples to the session. Both tutors who are very
knowledgeable in BU111 have prepared what is sure to be most
exciting session of Fall 2022.
Encouraging
Innovation &
Creativity
Key Success Factors
Emily and her ridiculously smart co-tutor Arnav run the BU111
SOS review session. SOS is a charity organization that uses the
money from the review sessions to assist in nations around the
world. To be an SOS tutor you must have received an 11 or 12
in the course you are tutoring. SOS is a great way to get
involved in Laurier and they both can’t wait to apply again.
Arnav and Emily are new tutors who brought new slides and
examples to the session. Both tutors who are very
knowledgeable in BU111 have prepared what is sure to be most
exciting session of Fall 2022.
Meeting Customer
Needs
Key Success Factors
Emily and her ridiculously smart co-tutor Arnav run the BU111
SOS review session. SOS is a charity organization that uses the
money from the review sessions to assist in nations around the
world. To be an SOS tutor you must have received an 11 or 12
in the course you are tutoring. SOS is a great way to get
involved in Laurier and they both can’t wait to apply again.
Arnav and Emily are new tutors who brought new slides and
examples to the session. Both tutors who are very
knowledgeable in BU111 have prepared what is sure to be most
exciting session of Fall 2022.
Creating a
Competitive
Advantage
How are KSF Related?
Quality
Products &
Services
Meeting
Customer
Needs
Achieving
Financial
Performance
Encouraging
Innovation
and
Creativity
Gaining
Employee
Commitment
Creating A
Distinct
Competitive
Advantage
Key Success Factors
Diamond-E
External Analysis
Analytical Thinking
Exam Tips
How are KSF Related?
ving
Meeting Achie
ncial
Customer
Fina Needs
few
of the links between the
Perfor
Quality
Products &
Services These
are just a
mance
KSF’s for this specific example! I encourage
you to try and find some more! It’s
important to recognize that these factors
work forwards backwards and every way in
Encouragin
ing A
between.
g
Creat
Innovatio
and n
Creativity
Gaining
Dist
Employee
Commitment
Compe
inct
titive
ntage
Adva
Key Success Factors
Diamond-E
External Analysis
Analytical Thinking
Exam Tips
How are KSF Related?
For
Example
Achieving
Financial
Performance
Meeting
Customer
Needs
Key Success Factors
Diamond-E
External Analysis
Analytical Thinking
Exam Tips
How are CSF Related?
For
Example
Customers were looking for cold caffeinated drink options,
that didn’t taste like coffee.
So…
Meeting
Achieving
Starbucks
expanded
its cold drink selection with the
CustomerFinancial
Refreshers line. (ex. “Pink Drink”)
Needs Performance
Customers loved the new drinks, and increased the number of
trips they made to Starbucks. Cold beverages contributed to
40% of overall revenue growth last quarter!
Critical Success
How are KSF Related?
For
Example
Encouraging
Creativity
and
Innovation
Critical Success
Factors
Diamond-E
Gaining
Employee
Commitment
External Analysis
Analytical Thinking
Exam Tips
How are CSF Related?
For
Example
Every quarter, employees submit ideas for projects they want to work
on, not restricted to Shopify’s operations.
Encouraging
Employees can
see each others’ ideas and work in teams to implement
Gaining
Creativity
them. They work solely on those projects during Hack Days, and the best
Employee
projects are
presented
at the end.
and
Innovation
Commitment
Any ideas that are viable for business can be incorporated into the
company’s offering. Employees get bragging rights, and free travel to
another office.
Critical Success
Diamond-E
What is the Diamond-E?
DIAMOND
ENVIRONMENT
1.
2.
E
Internal
Key Success Factors
Diamond-E
What we want:
Consistency
Alignment
Example:
External
External Analysis
Analytical Thinking
Exam Tips
The Model
Management
Preferences
Organization
Strategy
Environment
- PEST
- Porter’s 5
Resources
SWOT:
Key Success Factors
Strengths, Weaknesses
Diamond-E
External Analysis
Opportunities,Threats
Analytical Thinking
Exam Tips
Environment
Management
Preferences
Organization
Strategy
Environment
- PEST
- Porter’s 5
Resources
Key Success Factors
Diamond-E
External Analysis
Analytical Thinking
Exam Tips
Environment
Idea: What should we do? What industry do we want to compete in?
1. Porter’s Five Forces
2. PEST Analysis
Help to identify opportunities to pursue or
threats to defend against. Organizations
that fail to do so will not survive.
Key Success Factors
Diamond-E
External Analysis
Analytical Thinking
Exam Tips
Management Preferences
Management
Preferences
Organization
Strategy
Environment
- PEST
- Porter’s 5
Resources
Key Success Factors
Diamond-E
External Analysis
Analytical Thinking
Exam Tips
Management Preferences
Example:
Underlying:
●
●
●
●
Obvious:
History
Motives
Characteristics
Biases
●
●
Vision
Mission
How do managers make decisions? Will they be susceptive to your recommendation?
Key Success Factors
Diamond-E
External Analysis
Analytical Thinking
Exam Tips
Organization
Management
Preferences
Organization
Strategy
Environment
- PEST
- Porter’s 5
Resources
Key Success Factors
Diamond-E
External Analysis
Analytical Thinking
Exam Tips
Organization
Culture
• Flexibility or control
• Adaptive or
conservative
Capabilities
• R&D
• Technical skills
Example: Consider differences between
Structure
• Geographic
• Activities
and
Characteristics of the organization that enable the firm to carry out its strategy
Key Success Factors
Diamond-E
External Analysis
Analytical Thinking
Exam Tips
Resources
Management
Preferences
Organization
Strategy
Environment
- PEST
- Porter’s 5
Resources
Key Success Factors
Diamond-E
External Analysis
Analytical Thinking
Exam Tips
Resources
Human Resources: Employees
Example:
Capital: Buildings, Equipment
Fina
Financial: Cash, Profit
What is the firm’s ‘Tool kit’ that it can use to carry out a strategy
Key Success Factors
Diamond-E
External Analysis
Analytical Thinking
Exam Tips
Strategy
Most Important Piece!
Management
Preferences
Strategy
Organization
Environment
- PEST
- Porter’s 5
Resources
Key Success Factors
Diamond-E
External Analysis
Analytical Thinking
Exam Tips
Strategy
Examples:
Lenses
What is it
Assess:
• Plan of action
• Trying to create a
competitive advantage
• Assess current
strategy
• Generate new one
• Evaluate proposed
strategies
Generate/Evaluate:
High Tech Bar
Top
This piece glues together your internal and external components
Key Success Factors
Diamond-E
External Analysis
Analytical Thinking
Exam Tips
Porter’s Generic Strategies
Competitive Scope
Competitive Advantage
Broad Target
Low Cost
Uniqueness
Key Success Factors
Narrow Target
Cost Leadership
Cost Focus
Differentiation
Differentiation Focus
Diamond-E
External Analysis
Analytical Thinking
Exam Tips
Key Takeaway
Want to do
Management
Preferences
Strategy
Organization
Most successful
strategies satisfy
all three conditions
Environment
- PEST
- Porter’s 5
Resources
Need to do
Can do
Key Success Factors
Diamond-E
External Analysis
Analytical Thinking
Exam Tips
Low Cost
Uniqueness
Competitive Advantage
Porter’s Generic Strategies
Cost
Leadership
Differentiation
Broad Target
Cost Focus
Differentiation
Focus
Narrow Target
Competitive Scope
Key Success Factors
Diamond-E
External Analysis
Analytical Thinking
Exam Tips
Break - 10 Minutes
External Analysis
What is External Analysis?
●
Process of scanning and evaluating
the external environment
●
Where are the opportunities and
threats that exist in the market
●
Environment can be classified as
general (PEST) which effects all
businesses or Specific (Porter’s 5)
which effects only industry
participants
This is the E part of
the Diamond-E!
Key Success Factors
Diamond-E
External Analysis
Analytical Thinking
Exam Tips
Why is it important?
Benefits
Challenges
• Managers are
proactive
• Discover information
useful for planning
• Cope with uncertainty
• Highlight gaps in
resources
• Consistency and
performance
Key Success Factors
Diamond-E
1.
Understanding current situation
2.
Anticipating future trends
3.
Anticipate quick change
• Time consuming
• Forecasts and
analyses imperfect
• Rapidly changing
environment hard to
keep up with
External Analysis
External analysis is key to
aligning business with the
external environment.
Analytical Thinking
Exam Tips
External Analysis:
-Porter’s Five Forces
Porter’s Five Forces
Potential
Entrants
What are the factors that
will predict industry
profitability?
Suppliers
Key Success Factors
Diamond-E
Industry
Competitors
(Rivalry
among
existing
firms)
Buyers
Substitutes
And how can I proactively
manage them?
External Analysis
Analytical Thinking
Exam Tips
Porter’s Five
Forces
Potential
Entrants
What are the factors that will
predict industry profitability?
Suppliers
Industry
Competitors
(Rivalry
among
existing
firms)
Buyers
Substitutes
Key Success Factors
Diamond-E
External Analysis
Analytical Thinking
Exam Tips
Porter’s Five Forces – Rivalry
How it affects industry profitability
Rivalry
among
existing firms
Key Success Factors
Diamond-E
• High rivalry can result in lower
volumes, price competition and
increased costs
• (Arguably) the most
powerful of the five forces
External Analysis
Analytical Thinking
Exam Tips
Porter’s Five Forces – Rivalry
What affects rivalry
Low Industry Growth Rates
• If the industry isn’t growing quickly competitors may try to source their growth from your market
• Established CPG’s such as P&G competing in mature categories such as soup, detergent, household cleaning supplies
Low Consumer Switching Costs
•
•
If consumers have frictionless switching then you have to be more aware of your rivals as customers will be able to
abandon your product for theirs at no extra cost
Groceries vs. bank accounts
Perishable/Commodity Products
• When products are perishable competition intensifies as rivals try to sell their product while it is still good
• Groceries vs. Gold
High Exit Barriers
• Companies that may want to leave the industry but have difficulty doing so or recouping their investment may stay in
the industry and continue competing.
• Auto manufacturing - Hard to liquidate
Key Success Factors
Diamond-E
External Analysis
Analytical Thinking
Exam Tips
Porter’s Five Forces – Rivalry
Methods to reduce its power
A
Acquisition Of Competitors
Create or Increase Customer Switching Costs
Differentiate Products/Services
Key Success Factors
Diamond-E
External Analysis
Analytical Thinking
Exam Tips
Porter’s Five Forces – Suppliers
How it affects industry profitability?
• Organizations or people that
provide your “Key Inputs”
Suppliers
Key Success Factors
Diamond-E
• The higher the force of your
suppliers the higher the cost
of your inputs and the lower
your profitability will be
External Analysis
Analytical Thinking
Exam Tips
Porter’s Five Forces – Suppliers
But what affects the bargaining power of suppliers?
Low Number of Suppliers
• When you don’t have a lot of choice, your bargaining power goes down
• Airlines
Few Good Substitute Suppliers/Inputs
• If switching to a substitute supplier will reduce your quality this affects your bargaining
power
• Windows Vs. Linux
High Switching Costs
• If your suppliers have created a lock-in your threat of switching becomes less credible
• Geographic considerations
Threat of Forward Integration
• If your suppliers pose a credible threat of Forward Integration… that’s not great for you
• Small farmers market relying on one large farm for vegetables and fruits
• Apple making the M1 chips instead of Intel
Key Success Factors
Diamond-E
External Analysis
Analytical Thinking
Exam Tips
Porter’s Five Forces – Suppliers
Methods to reduce its power
Form a Strategic Alliance
Internal Supply
In the Long Run: redesign your product or needed input
Key Success Factors
Diamond-E
External Analysis
Analytical Thinking
Exam Tips
Porter’s Five Forces – Buyers
How it affects industry profitability?
Buyers
Key Success Factors
Diamond-E
• These are the people who
actually purchase your product or
service
• High Buyer force reduces the price
you can demand and increases
your costs
External Analysis
Analytical Thinking
Exam Tips
Porter’s Five Forces – Buyers
But what affects the bargaining power of buyers?
Few/Concentrated Buyers
• If you can only sell to a few people you’re going to offer them great prices to actually make the sale→ Selling an
really niche action figure
Discretionary Purchase
• How much do customers need your product or service or is it just “nice to have” → Water vs Diamonds
Standardized Products
•
Price competition is a larger driver in purchasing when products are standard → Commodities
Low Switching Costs
• Fast Food vs Banking
Key Success Factors
Diamond-E
External Analysis
Analytical Thinking
Exam Tips
Porter’s Five Forces – Buyers
Methods to reduce its power
Form Alliances with other sellers
Engage in Strong Marketing and Differentiation
Create Switching Costs and Lock-In
Key Success Factors
Diamond-E
External Analysis
Analytical Thinking
Exam Tips
Porter’s Five
Forces
Potential
Entrants
What are the factors that will
predict industry profitability?
Suppliers
Industry
Competitors
(Rivalry
among
existing
firms)
Buyers
Substitutes
Key Success Factors
Diamond-E
External Analysis
Analytical Thinking
Exam Tips
Porter’s Five Forces – New Entrants
How it affects industry profitability?
Potential
Entrants
• These are people currently
outside of the industry looking to
get in
• Potential entrants have the ability
to disrupt an industry and can
drive intense competition if the
barriers are low to entry
Question: How does Apple create high barriers to entry?
Key Success Factors
Diamond-E
External Analysis
Analytical Thinking
Exam Tips
Porter’s Five Forces – New Entrants
But what affects the threat of potential new entrants?
No Regulations or Government Policy
• How easy is it to open a new bank?
Lack of Capital Intensity or Economies of Scale
• Your industry is protected from entrants when there is a significant disadvantage to starting
small
• Telecom
Lack of Specialized Assets/Networks/Knowledge/Tech
●
If your industry doesn’t have any special “tricks” or anything that would be difficult to learn the door is wide open to new entrants
• Wood chair builder
Low Switching Costs or Lack of Brand Loyalty & Identity
• Wheat vs iPhones
Key Success Factors
Diamond-E
External Analysis
Analytical Thinking
Exam Tips
Porter’s Five Forces – New Entrants
Methods to reduce its power
Grow to Achieve Scale
Control Distribution Network
Lobby the Government
Differentiate and Create Brand Loyalty/Identity
Lock Customers in
Key Success Factors
Diamond-E
External Analysis
Analytical Thinking
Exam Tips
Porter’s Five Forces – Substitutes
How it affects industry profitability?
Substitutes
Key Success Factors
Diamond-E
• Substitutes aren’t necessarily other
members of your specific industry but
products and services that provide a subset
of the value that you do.
• Freshii: consumer looking for healthy and
good food. Competitors: Salad Days,
Subway. Substitutes: eating food from
home, grocery store meals, fast food.
• Substitutes create a Price Ceiling
External Analysis
Analytical Thinking
Exam Tips
Porter’s Five Forces – Substitutes
But what affects the threat of substitutes?
Lots of Good Quality Substitutes
• Having more high quality options for substitutes reinforces the price ceiling you can
charge
• The Keg vs. Fast Food
Low Switching Costs
• Fast Food
High Buyer Propensity to Substitute
• Function of the two above
Key Success Factors
Diamond-E
External Analysis
Analytical Thinking
Exam Tips
Porter’s Five Forces – Substitutes
Methods to reduce its power
Strong Marketing & Differentiation
Attempt to Lock Customers In
Consider Apple, how do they differentiate? How do they lock in customers?
Key Success Factors
Diamond-E
External Analysis
Analytical Thinking
Exam Tips
Questions to Answer From a Porter’s Analysis
1. Is the industry a realistic place for a new venture to enter? If
yes, then…
2. Can we do a better job than competition at avoiding
or diminishing factors that suppress industry
profitability?
3. Is there a unique position we can pursue?
4. Is there a superior business model that competition would
find hard to duplicate?
Key Success Factors
Diamond-E
External Analysis
Analytical Thinking
Exam Tips
When studying Porters…
Don’t just understand the factors that affect an industry, understand
why.
It’s not enough to say “Having a standardized product gives power over your buyers” you should
extend your response to show you understand why “because you can’t charge high prices or
your customers will switch to your competitors cheaper but identical product.”
Don’t just state a solution… state a solution and why it helps you.
Don’t stop at “creating a strategic alliance reduces the force of your suppliers” continue on to
“because getting them to see you as a partner and not an adversary means they will charge
lower prices as your success becomes their success”
BECAUSE BECAUSE BECAUSE that word
saves lives… and degrees.
Key Success Factors
Diamond-E
External Analysis
Analytical Thinking
Exam Tips
Let’s put it all together
Key Success Factors
Diamond-E
External Analysis
Analytical Thinking
Exam Tips
Porter’s Five Forces -WILFS
Suppliers:
Who are WILFS major suppliers?
What gives suppliers more/less power?
How much power do WILFS suppliers have?
New
Entrants?
Consider
barriers.
Food
Suppliers
No other
on-campus
sit down
restaurants
WLU
Students
Mozy’s,
Freshii, Mels
etc.
Key Success Factors
Diamond-E
External Analysis
Analytical Thinking
Exam Tips
Porter’s Five Forces -WILFS
New Entrants:
What affects the threat of potential new
entrants?
Is there high or low barriers to entry?
What is the threat of new entrants?
New
Entrants?
Consider
barriers.
Food
Suppliers
No other
on-campus
sit down
restaurants
WLU
Students
Mozy’s,
Freshii, Mels
etc.
Key Success Factors
Diamond-E
External Analysis
Analytical Thinking
Exam Tips
Porter’s Five Forces -WILFS
New
Entrants?
Consider
barriers.
Rivals:
Who are WILFS Rivals?
Food
Suppliers
No other
campus sit
downs
WLU
Students
Mozy’s,
Freshii, Mels
etc.
Key Success Factors
Diamond-E
External Analysis
Analytical Thinking
Exam Tips
Porter’s Five Forces -WILFS
Suppliers:
Who are WILFS major suppliers?
What gives suppliers more/less power?
How much power do WILFS suppliers have?
1.
2.
3.
New
Entrants?
Consider
barriers.
Food
Suppliers
SYSCO, GFS (food suppliers)
Availability of other options for WILFS
Low Power
Key Success Factors
Diamond-E
External Analysis
No other
on-campus
sit down
restaurants
WLU
Students
Mozy’s,
Freshii, Mels
etc.
Analytical Thinking
Exam Tips
Porter’s Five Forces -WILFS
Buyers:
Who are WILFS major buyers?
What gives buyers more/less power?
How much power do WILFS buyers have?
New
Entrants?
Consider
barriers.
Food
Suppliers
No other
on-campus
sit down
restaurants
WLU
Students
Mozy’s,
Freshii, Mels
etc.
Key Success Factors
Diamond-E
External Analysis
Analytical Thinking
Exam Tips
Porter’s Five Forces -WILFS
Buyers:
Who are WILFS major buyers?
What gives buyers more/less power?
How much power do WILFS buyers have?
1.
2.
3.
New
Entrants?
Consider
barriers.
Food
Suppliers
WLU Students
Availability of other options for WLU students
Depends: on campus- low power
In general- decently high power
Key Success Factors
Diamond-E
External Analysis
No other
on-campus
sit down
restaurants
WLU
Students
Mozy’s,
Freshii, Mels
etc.
Analytical Thinking
Exam Tips
Porter’s Five Forces -WILFS
New Entrants:
What affects the threat of potential new
entrants?
What mitigates threat of new entrants?
Is there high/low barriers to entry?
New
Entrants?
Consider
barriers.
Food
Suppliers
1. Covered previously: (see next slide)
No other
on-campus
sit down
restaurants
WLU
Students
Mozy’s,
Freshii, Mels
etc.
Key Success Factors
Diamond-E
External Analysis
Analytical Thinking
Exam Tips
Porter’s Five Forces – New Entrants
But what affects the threat of potential new entrants?
No Regulations or Government Policy
• How easy is it to open a new bank?
Lack of Capital Intensity or Economies of Scale
• Your industry is protected from entrants when there is a significant disadvantage to starting
small
• Telecom
Lack of Specialized Assets/Networks/Knowledge/Tech
• If your industry doesn’t have any special “tricks” or anything that would be difficult to learn the door is wide open to new
entrants
• Wood chair builder
Low Switching Costs or Lack of Brand Loyalty & Identity
• Wheat
Critical Success
Factors
Diamond-E
External Analysis
Entrepreneurship
Exam Tips
Porter’s Five Forces -WILFS
New Entrants:
What affects the threat of potential new
entrants?
What mitigates threat of new entrants?
Is there high/low barriers to entry?
1.
2.
3.
New
Entrants?
Consider
barriers.
Food
Suppliers
Covered previously: (see last slide)
growth, control, differentiate
Generally high
No other
on-campus
sit down
restaurants
WLU
Students
Mozy’s,
Freshii, Mels
etc.
Key Success Factors
Diamond-E
External Analysis
Analytical Thinking
Exam Tips
Porter’s Five Forces -WILFS
New
Entrants?
Consider
barriers.
Substitutes:
What affects the threat of substitutes?
What mitigates threat of substitutes?
Is there high/low customer lock-in?
Food
Suppliers
1. Covered previously: (see next slide)
No other
on-campus
sit down
restaurants
WLU
Students
Freshii,
Mels, Meal
hall etc.
Key Success Factors
Diamond-E
External Analysis
Analytical Thinking
Exam Tips
Porter’s Five Forces – Substitutes
But what affects the threat of substitutes?
Lots of Good Quality Substitutes
• Having more high quality options for substitutes reinforces the price ceiling you can
charge
• The Keg vs. Fast Food
Low Switching Costs
• Fast Food
High Buyer Propensity to Substitute
• Function of the two above
Critical Success
Factors
Diamond-E
External Analysis
Entrepreneurship
Exam Tips
Porter’s Five Forces -WILFS
New
Entrants?
Consider
barriers.
Substitutes:
What affects the threat of substitutes?
What mitigates threat of substitutes?
Is there high/low customer lock-in?
No other
Food
Suppliers
1.
2.
3.
Covered previously: (see last slide)
Differentiation, lock-in
Generally high
on-campus
sit down
restaurants
WLU
Students
Freshii,
Mels, Meal
hall etc.
Key Success Factors
Diamond-E
External Analysis
Analytical Thinking
Exam Tips
External Analysis:
PEST
PEST – Why does it matter?
Framework for analyzing the general environment
Identify trends or changes in the environment that will have an
effect on our business
Helps managers identify opportunity and prepare for threats in the
environment
Key Success Factors
Diamond-E
External Analysis
Analytical Thinking
Exam Tips
PEST – Why does it matter?
Political
Economic
• Laws,
regulations
• Taxes
• Trade
agreements
• Political system
• Political stability
• Balance of trade
• Exchange rates
• Productivity
• Inflation
(deflation)
• Interest rates
• Employment
rates/measures
Key Success Factors
Diamond-E
Social
• Customs
• Values
• Attitudes
• Demographics
• Trends
External Analysis
Technological
• Internet and ecommerce
• Information
technologies
• Innovation
cycles
Analytical Thinking
Exam Tips
PEST – Why does it matter?
• Can create incentives for businesses and provide support when needed
P
E
S
T
• Affects uncertainty, risk, and constraints/costs faced by a firm
• Affects costs, sales & financial uncertainty
• Influences customer preferences
• Influences corporate social responsibility and worker attitudes
• Affects how we live, work, consume and produce
• Results in firms needing to constantly scan the environment
Key Success Factors
Diamond-E
External Analysis
Analytical Thinking
Exam Tips
Questions to Answer from PEST
1. Are there any opportunities provided by the government that can
help my business? E.g. Grants, subsidies?
2. Do the economic conditions support my business? What current
and future economic factors affect my industry and product? E.g.
exchange rates in US/Canada, unemployment rates and COVID,
etc.
3. What demographic and social trends affect my business? How?
4. What technological forces affect me now and in the future? How
do they assist or constrain?
Key Success Factors
Diamond-E
External Analysis
Analytical Thinking
Exam Tips
PEST Example
Key Success Factors
Diamond-E
External Analysis
Analytical Thinking
Exam Tips
Analytical Thinking
Tackling A Case
3 Whys:
● Keep asking why until you identify the underlying issue
Issue Trees:
● Profitability Framework, etc. Make Tree Diagrams
Identify the applicable models
● Are they entering a new market?
○ Porter’s Five Forces
● Mentions environmental analysis?
○ PEST
● Strategy does not align with current environment or with internal business?
○ Diamond-E
● Need to analyze feasibility of your strategy
○ Force Field Analysis
Creating a GOOD Solution
Good solution must be:
● Feasible: Can be realistically executed
● Complete: Addresses strategic, tactical, and operational
● Effective: Meets the objectives
It must also:
● Satisfy key success factors of solution
● Address constraints or preferences
● Support the aspirations or vision or top priority of the
organization or decision-maker
Three Levels Of Recommendations
Strategic
1
Tactical
What are the 2-3 main
questions we must
address to make the
strategic
recommendation a
reality?
2
What is the “big idea” for
answering the key
question in the case?
Operational
3
What do we need to
make, buy, borrow,
acquire to implement the
tactical
recommendations?
Case Process
1. Identify the immediate issue, underlying issue and big question
2. Identify objectives, aspirations, and decision criteria
3. Apply models and frameworks relevant to the big question
4. Develop and evaluate hypotheses
5. Propose GOOD solution with implementation
6. Identify risks, mitigation and contingency strategies
7. Demonstrate impact
Case Process
1. Identify the immediate issue and big question
2. Identify objectives, aspirations, and decision criteria
3. Apply models and frameworks relevant to the big question
What’s
theand
difference
objectives
4.
Develop
evaluatebetween
hypotheses
and decision criteria?
5. Propose GOOD solution with implementation
6. Identify risks, mitigation and contingency strategies
7. Demonstrate impact
Objectives vs. Decision Criteria
Objective:
● Target that you are trying to achieve
Decision Criteria:
● Used to evaluate the different options available to us
● A good solution will include these criteria
● A set of “rules” to follow while crafting your recommendation
● Can use these to point to a solution and “yes” it meets the criteria or
“no it doesn’t”
SAMPLE CASE!
KEY SUCCESS
SOUVLAKI
SAMPLE CASE!
Sofy is the owner of the Key Success Souvlaki Restaurant in Uptown Waterloo.
Although she’s a busy professor, it’s been her dream to provide university
students the nourishment they need to succeed in their exams. Since Sofy is an
over-achiever, her business offers in-dining and frozen food. She offers in-house
dining options but only has 4 tables that are usually empty, and also offers
take-home frozen meals since students value convenience. Sofy knows that if she
removes the 4 tables and expands her kitchen, she can increase her capacity to
produce take-home options like her famous Porter’s Panini and Tactical Tzatziki
by 150%. Her customers are loyal and love her dishes and service.
Unfortunately, recently she has faced declining profits and is not sure why. What
would you recommend to her?
1. Immediate Issue
What is the big question that we are trying to answer?
How can Sofy achieve consistent profitability?
2. Objectives, aspirations, decision criteria
Objective: achieve profitability
Decision Criteria:
- Accommodates time constraints (professor schedule)
- Meets customer needs
- Allows her to continue living her dream
3. Applying the Framework
What framework should we use?
Profitability
3. Applying the Framework
3. Applying Framework - DIAMOND E ELEMENTS
Sofy is the owner of the Key Success Souvlaki Restaurant in Uptown Waterloo.
Although she’s a busy professor, it’s been her dream to provide university students the
nourishment they need to succeed in their exams. Since Sofy is an over-achiever,her
business offers in-dining and frozen food. She offers in-house dining options but only has
4 tables that are usually empty, and also offers take-home frozen meals since students
value convenience. Sofy knows that if she removes the 4 tables and expands her kitchen,
she can increase her capacity to produce take-home options like her famous Porter’s
Panini and Tactical Tzatziki by 150%. Her customers are loyal and love her dishes and
service.
Unfortunately, recently she has faced declining profits and is not sure why. What
would you recommend to her?
Organization | Management Preferences | Resources | Strategy | Environment
4. Develop and Evaluate Hypotheses…
Alternatives
1. Expand ability to produce home-made frozen meals
2. Focus on providing a premium dine-in experience
3. Sell the business
4. Develop and Evaluate Hypotheses…
Alternatives
Alternatives
Meet customer needs
Feasible (time)
Live her dream
Focus on Take Out
1
Tie?
Tie?
Focus on in Dining
2
Tie?
Tie?
Sell the Business
3
1
3
Now that we’ve done our analysis, we need to propose a solution that is
COMPLETE, FEASIBLE, and EFFECTIVE. How?
Completeness: THREE LEVELS OF RECOMMENDATION
Feasibility: FORCE FIELD ANALYSIS!
Effectiveness: DEMONSTRATE IMPACT
5. Purpose a GOOD solution and Implementation
Implementation (Operational)
Short Term (0-3 Months)
● Conduct consumer research to determine specific needs
● Evaluate kitchen expansion options
● Develop new product offerings (different types of frozen pastas)
Medium Term (3-6 Months)
● Renovate physical location
● Train staff on new product offerings and recipes
● Develop branding and marketing guidelines
Long Term (6-12 Months)
● Launch social media campaign to drive awareness
● Host special launch for new product offerings
● Conduct consumer surveys to assess success of offering
6. Identify risks, mitigation and contingency
strategies
7.Demonstrate the Impact
Not enough to stop at the recommendation… need to PROVE
that it meets the case objectives:
● What revenues and costs are affected because of my
recommendation?
● Which financial indicators are relevant to the objectives?
○ E.g. market share, profitability, ROI, etc.
Case Process RECAP
1. Identify the immediate issue and big question
2. Identify objectives, aspirations, and decision criteria
3. Apply models and frameworks relevant to the big question
4. Develop and evaluate hypotheses
5. Propose GOOD solution with implementation
6. Identify risks, mitigation and contingency strategies
7. Demonstrate impact
Practice Questions
Practice Question:
1. Bob owns a business selling fried turkeys and he’s excited to
hopefully see some increased success around thanksgiving. Being a
keen business student, you notice that he has a high employee
turnover rate as well as a high customer churn. Define each of these
metrics and explain the success factors that you believe might be in
trouble given this information. Finally, explain the relationship
between high employee turnover and high churn and give Bob a
suggestion to amend these problems. (5 marks)
How to Approach this Question
Practice Question:
2. IA Corp is looking to you for advice to ensure their continued success over
time. They have been experiencing healthy profits for the past 5 years since they
are operating in the high growth e-commerce space, but they haven’t been
experiencing as much success as comparable companies in their industry.
Provide the IA Corp team with three factors they should focus on, explain why
each factor is important and one metric they should use to measure their
progress while improving each factor. Since the IA Corp team is stubborn, include
examples from lecture of companies who have experienced success due to
focusing on the factors you suggest.
How to Approach this Question
Practice Question:
3. Grace is looking to strengthen her position in the Waterloo Region
dating market and has asked you for advice. Using a framework from
BU111, identify and explain two factors that you will need to consider
about her when recommending a strategy. (2)
Then, using another course framework, identify and describe two
external elements she will need to consider that will make her pursuit in
this market more challenging, and provide solution for each. You know
that cuffing season is around the corner, that she can look into both UW
and Laurier since the schools are down the road. Finally, provide an
example of one force that will be working in her favour based on the
provided information. (5)
How To Approach This Answer
Part 1: DIAMOND-E
- Management Preferences: describe what this means. If you recommend a
strategy, you will need to figure out her type, deal breakers and other critical
information that will impact your strategy recommendation.
- Resources: describe what this means. Your strategy will need to be aligned with
the resources she has at her disposal. Does she still live with her parents? Have a
car? Does she have the ability to flex some brains?
Part 2: PORTERS - Threat of new entrants: low capital requirements (describe).
Solution: differentiate.
- Substitutes: good substitutes or low switching costs (describe). Solution: create
switching costs.
- Buyers: does not have few/concentrated ‘buyers’ (describe) as she is down the
road from both schools and has access to both UW and Laurier student
populations.
Exam Tips
Tips from your TAs
Trust us… we’re paid to know what we’re talking about
We are NOT marking for keywords, but you need to be very clear about what you
mean. Sometimes what you meant isn’t what comes across from what you wrote→ we
aren’t mind readers, we can only reward you for what is on the page
Course models are things you should know the exact words for (e.g. the 5 Forces, the
6 KSFs) and using business vocabulary makes your point clearer
Do yourselves a favour and try to avoid leaving questions blank as sometimes you are
closer to the answer than you think!
Make sure you understand how frameworks connect to each other and how the
frameworks connect to the other elements within it
Doing practice questions are key - if you can apply models to real world situations
and issues then you will increase your odds of doing well on the exam
Key Success Factors
Diamond-E
External Analysis
Analytical Thinking
Exam Tips
STAY IN THE LOOP!
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@lauriersos
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