Strategic Planning Challenges & Practices in the Technology Industry.

1. Strategic Planning Challenges & Practices in the Technology Industry. Therese Bassett VP Strategic Planning and Business Intelligence Avnet Incorporated

2. Agenda • About Avnet • Surviving and succeeding in today’s technology market • Avnet’s Strategic Planning and Management Process • Rules governing our planning process • Thinking and planning • Challenges • Cadence, discipline, alignment • Communication

3. Avnet Inc. Vision Avnet will deliver the highest value to our customers, suppliers, employees and shareholders as the premier technology marketing, distribution and services company, globally.

4. TS 39% EM 61% Avnet Inc Company Snapshot • Founded in 1921 • Incorporated in 1955 • NYSE: AVT in 1959 • Relocated headquarters to Ariz. in 1998 • No. 172 on Fortune 500 • June 30 fiscal year end • FY07 Annual Revenue • Avnet, Inc. - $15.7 billion • Electronics Marketing - $9.7 billion • Technology Solutions - $6 billion • ~ 300 locations in over 70 countries • 300 suppliers/100,000 customers • 52 Acquisitions since 1991 As of Q1 FY 2008 As of Q1 FY 2008

5. Semiconductors Interconnect Passive Electro-mechanical Original Equipment Manufacturers End Users EMS / ODM Resellers andSystems Builders EM TS Software Vendors Vital Link in Global Technology Supply Chain • Avnet effectively manages the complexity of the technology supply chain in a cost-efficient manner, delivering value to suppliers and customers

6. Global Logistics Scale & Scope 2.0 Million Square Feet 5.9 Million Orders Value-added 35 Billion Units Quality Systems 7.6 Million Line Items Regional Distribution Centers 134 Million Devices Programmed Pinpoint Logistics 250,000 Integrated Systems Computer Integration

7. Avnet Logistics Network >100k <100K Prog. Ctrs. V/A Integration Ctrs. 3PLs Asia Japan Korea Tianjin Shanghai Taiwan Hong Kong Singapore Shenzhen Melbourne India EMEA Germany Netherlands Belgium Israel S. Africa Americas Arizona California Kentucky Texas Mexico Canada 7 11 8 1 5 12 44 =

8. Surviving and Succeeding in Today’s Technology Market

9. The World of Technology Distribution

10.   The World of Technology Distribution Commoditization EM & TS

11.   The World of Technology Distribution Commoditization EM & TS Services Differentiation Evolution

12.   The World of Technology Distribution Commoditization EM & TS Services Differentiation Evolution Consolidation Competitors Customers Suppliers

13.   The World of Technology Distribution Globalization Suppliers Customers Information Commoditization EM & TS Services Differentiation Evolution Consolidation Competitors Customers Suppliers

14.   The World of Technology Distribution Globalization Suppliers Customers Information Regulations RoHS WEEE Sarbanes-Oxley Commoditization EM & TS Services Differentiation Evolution Consolidation Competitors Customers Suppliers

15.   The World of Technology Distribution Globalization Suppliers Customers Information Regulations RoHS WEEE Sarbanes-Oxley Commoditization EM & TS Information  Visibility  Knowledge Services Differentiation Evolution Consolidation Competitors Customers Suppliers

16.   The World of Technology Distribution Globalization Suppliers Customers Information Regulations RoHS WEEE Sarbanes-Oxley Commoditization EM & TS Information  Visibility  Knowledge Technologies Wireless RFID VoIP Services Differentiation Evolution Consolidation Competitors Customers Suppliers

17.   The World of Technology Distribution Globalization Suppliers Customers Information Regulations RoHS WEEE Sarbanes-Oxley Commoditization EM & TS Information  Visibility  Knowledge Technologies Wireless RFID VoIP Services Differentiation Evolution Consolidation Competitors Customers Suppliers Consumers Purchasing Power Knowledge

18.   The World of Technology Distribution Globalization Suppliers Customers Information Regulations RoHS WEEE Sarbanes-Oxley Commoditization EM & TS Information  Visibility  Knowledge Technologies Wireless RFID VoIP Services Differentiation Evolution Consolidation Competitors Customers Suppliers Consumers Purchasing Power Knowledge Keeping pace in a decade of change…

19. So what… • Traditional technology distribution businesses are getting squeezed • In order to remain the competitive global leader, we must develop new service and product solutions that are differentiated and high-value  Expand our customer base • We must leverage our strengths in mature regions and develop similar competencies in each region of the world • Leveraging our scale, scope, and supply chain visibility will be our differentiator and allow us to achieve competitive advantage • Our strategic thinking, planning, and intelligence models need to address all of the above within a more complex global supply chain…

20. Global Differentiation • Accelerated investment in strategy that leverages scale & scope advantages for competitive differentiation • Increased cross-regional partnering • Structural alignment VBM Consolidation Era • Predominantly a U.S. business • Established global footprint & consolidated industry thru acquisition • Emphasis on Asia expansion in latter part of the decade • Strategies developed and executed regionally • Focus on regional achievement of ROWC • Greater scrutiny of engagement profitability Regional Excellence • Development of strategy extensions • Core business productivity enhancement acceleration 2000 2008… 1990 Our Strategy Evolution… Global Acquisition • First global acquisition • Required coordination and harmonization of strategy across regions

21. Avnet’s Strategic Planning and Management Process

22. Avnet’s Strategic Long-Range Planning S trategic What do we want to look like? What to invest in today for tomorrow? A good strategy is one that asks and answers the right questions before everyone else L R What’s changing? Where are we deficient? What are we good at? P

23. ong ange Avnet’s Strategic Long-Range Planning “Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat.” ---- Sun Tzu Prioritizing Opptys S trategic Investment Alignment L 3-5 Years Structure R Measures & Goals P lanning Execution

24. Rules that govern our process… • Clearly define Thinking and Planning processes

25. Thinking vs. Planning Strategic thinking is the capability of an individual or group to capture disparate pieces of information, identify inherent themes or patterns, and synthesize these learnings into a vision of the long-term direction that a business should pursue. --Adapted from Corporate Strategy Board Strategic Thinking Strategy

26. Thinking Activities • Interpreting environmental changes • Identifying opportunities & threats • Generating & evaluating alternatives • Assessing core competencies • Challenging assumptions/models • Creating visions, missions, and strategic imperatives • Proposing strategies • Redesigning organizational structure & business processes Thinking vs. Planning Strategic Thinking Strategy

27. Planning Activities • Documenting thinking outputs • Setting tactics & targets • Creating balanced scorecards & measures • Developing detailed action plans • Aligning resources with initiatives • Communicating the plan & the organization’s role in achieving it • Linking individual performance & development plans with team plans • Adjusting rewards to reinforce the objectives Thinking vs. Planning Strategic Thinking Strategy Planning

28. Rules that govern our process… • Clearly define Thinking and Planning processes • Understand your leadership team’s de facto starting point and challenge from there

29. Challenges we – and others – face… • Because companies that want breakthrough performance must fight some basic laws of nature: • Tomorrow’s strategy will be the same as yesterday’s strategy • Leadership focus on attainment of short-term goals • Long term risk avoidance • Tendency to isolate focus on internal performance – limit to within the scope of control • Biases and mental models shape what we see • Belief that continuous “challenging” of strategy creates chaos

30. Rules that govern our process… • Clearly define Thinking and Planning processes • Understand your leadership team’s de facto starting point and challenge from there • Build cadence, discipline, and alignment into your process…but limit bureaucracy

31. The Right Results Results Strategic Thinking Strategic Planning Performance Monitoring/ Management Execution All Year All Year All Year QSPRs & Performance Appraisals When? Feb – June Continuous Learning Avnet’s Strategic Management Process

32. Achieving Alignment RegionalPresident CEO Group President DivisionalPresident Strategy Owner Tactic Owner Team Leader Define Global Objectives and LRP Targets Define Group Strategic Imperatives Define Regional Strategic Imperatives Define Divisional Strategies, and Goals Define Tactical Action Plans Define Projects Define Milestones

33. Rules that govern our process… • Clearly define Thinking and Planning processes • Understand your leadership team’s de facto starting point and challenge from there • Build cadence, discipline, and alignment into your process…but limit bureaucracy • Mobilize the critical mass "Leadership is a combination of strategy and character. If you must be without one, be without the strategy.“ Gen H. Norman Schwarzkopf

34. The Role of Communication • External • Wall Street • Lending Institutions / Rating Agencies • Customer / Suppliers • Alliance partners • Internal • Board of Directors • Employees

35. In Closing… Business is a race against time --- Where there is never enough time to answer all possible questions; And everyone gets the right answers eventually; Therefore, asking and answering the right questions first is vital to winning. Modified from University of Chicago Strategic Planning for Executives

36. Thank You Q&A