Porter’s Five Forces Model
Five Forces Radar Diagram
The relative power of each force is reflected in each of the five axes from a high to a low rating.
The total area enclosed by the lines between the axes represent the profit potential of the industry (Johnson et al., 2014, p.53).
In the text book two radar diagrams are plotted, illustrating competitive forces over time.
Industry Life Cycle
Segmentation – Scout Group
Part 2 – Environmental analysis
4. Internal environment analysis (Chapter 3 Johnson)
Resource based view (RBV) of strategy:
McKinsey’s 7S Framework (1980) to assess fit between the company’s strategy, structure, systems, staff, style, skills and superordinate goals
Barney’s VRIN/VRIO Framework (1991) applied to the distinctive capabilities
Value chain analysis identifying where the strategic capabilities reside in the value chain
Summary identifying the internal strengths and weaknesses.
McKinsey 7S Framework
Exploring Strategy: Text & Cases, 10th edition (2014) pp. 454-455 by Johnson et al.
Internal Analysis – Education Provider
Internal Analysis – WTSI
VRIN Framework (Barney, 1991)
Exploring Strategy: Text & Cases, 10th edition (2014) pp. 76-82 by Johnson et al.
VRIN vs VRIO Framework (Barney, 1991 & 1995)
Exploring Strategy: Text & Cases, 10th edition (2014) pp. 76-82 by Johnson et al.
Originally developed in his work ‘Firm Resources and Sustained Competitive Advantage’ four attributes that a firm’s resources must possess in order to become a source of sustained competitive advantage were identified; valuable, rare, imperfectly imitable and non-substitutable.
In his later work ‘Looking Inside for Competitive Advantage’ Barney introduced the VRIO framework, which was an improved version of VRIN;
valuable?
rare?
costly to imitate?
firm organised to capture the value of the resources?
VRIO Framework (Barney, 1995)
VRIO analysis – Education Provider
Value chain analysis
Example: Value chain mapping can used to understand how to improve quality (or lower costs) to understand how the various activities in delivering care fit together with the patient as the focus as opposed to the creation and delivery of a product or service. Connecting patients to the right services so that they benefit from the entire set of activities required for proper care.
Part 2 – Environmental Analysis
5. Strategic fit with the operating environment
SWOT Analysis summarising main findings from macro and micro trend analyses.
Application of the EVR framework (Thompson 2005) to evaluate the company’s strategic fit in respect of its congruence with its operating environment.
[Topic 3 refers]
SWOT Analysis – Scout Group
SWOT analysis – Education Provider
SWOT analysis – WTSI
EVR Framework
An organisation achieves congruence when its environment, resources and values are mutually reinforcing.
Strategic drift
Strategic drift
Exploring Strategy: Text & Cases, 10th edition (2014) pp. 162-166 by Johnson et al.
Part 3 – Strategic options
Based on the SWOT map the strategic options onto a TOWS matrix.
Evaluate the feasibility, acceptability and suitability (SAFe) of the strategic options to inform selection of one preferred option.
TOWS Matrix
Part 4 – Proposed strategy & implementation challenges
Change in business strategy for a SBU
Porter’s generic strategies
Faulkner & Bowman’s strategy clock
New corporate strategy direction
Ansoff matrix
Boston Consulting Group (BCG) matrix
Feasibility, implementation challenges & risks
Conclusion with triangulation
Strategy clock
Non-competitive strategies are ultimately destined for failure.
