THOMAS L. WHEELEN J. DAVID HUNGER

1. CHAPTER 4 Environmental Scanning and Industry Analysis Continuation of last session’s lecture THOMAS L. WHEELEN J. DAVID HUNGER

2. Porter’s Approach to Industry Analysis • Rivalry Among Existing Firms – • Number of competitors • Rate of industry growth • Product or service characteristics • Amount of fixed costs • Capacity • Height of exit barriers • Diversity of rivals

3. Overall customer care market shares for 2009 The customer care market generated USD2.118 billion in revenue in 2009, 3.1% higher than the USD2.055 billion in 2008. The revenue for 2008 is higher than was reported last year (USD1.186 billion) because it was restated. The difference came primarily from a restatement of the size of the customer care market in China, of which we gained substantial visibility this year. Customer care is more consolidated than many other BSS and OSS markets, and two vendors, Oracle and Amdocs, clearly dominate. However, 50 suppliers command revenue of several million dollars in this market. Two vendors, Huawei and AsiaInfo, dominate the Chinese market and there are many other smaller, geographically focused suppliers. The customer care market is driven by greater competition in the emerging markets, the increasingly complex services and service bundles being offered by CSPs, the strong desire of consumers for instant service, the increasing need of CSPs to offer many new services quickly and the need to reduce customer support costs. Executive summary Figure 1: Customer care market shares by revenue, worldwide, 2009 [Source: Analysys Mason, 2010]

4. Executive summary Overall service fulfilment market shares for 2009 • The service fulfilment market generated USD2.233 billion in revenue in 2009, up by 2.8% from USD2.173 billion in 2008. This represents slightly more growth than we forecasted last year (2.3%). • Service fulfilment continues to be a very fragmented market. The top-six vendors accounted for only 44% of the market, while more than 30 other vendors achieved over USD10 million in revenue. • The service fulfilment market grew more than some other areas of BSS/OSS since it is considered to be related to revenue generation. • Growth in the service fulfilment market was driven by network evolution towards optical/packet technology, the push towards instant availability for complex service bundles, the need to operate in uncertain and changing business environments, deregulation of broadband and mobile in growth markets and the increasing desire to meet the needs of SMEs. Figure 1: Service fulfilment market shares by revenue, worldwide, 2009 [Source: Analysys Mason, 2010]

5. International Risk Assessment Continuum of International Industries

6. Strategic Groups

7. Competitive Matrix Ericsson Network IQ™ IBM Tivoli Netcool Customer Experience Management SW Large (>$100M) OSI (SRIT) Service Assurance Nokia Mobile Quality Analyzer Agilent + Teradata Customer Experience Management System Medium ($10M-$100M) TTI Netrac™ Company Size Arantech touchpoint™ Nexus Netview Small (<$10M) Service Customer Network Service Quality Monitoring Viewpoint Proprietary - Mortensen Consulting Group and DAX Technologies

8. Example of Strategic Positioning Chart: Gartner Magic Quadrant

9. Strategic Types General Types of Strategies – • Defenders – hold on; cost & market share • Prospectors – create; innovation • Analyzers – portfolio; large companies • Reactors – watch what happens, try to react quickly and effectively

10. Competitive Intelligence • Competitive Intelligence is often called business intelligence • Gathering information on a company’s competitors • Product/offering – features, functionality, pricing, targets, etc. • Company – size, profitability, margins, target markets, apparent strategy, etc.

11. Forecasting • Forecasting Techniques -- • Extrapolation – from the past to the future • Brainstorming – informed people mapping out possibilities • Expert opinion – buy reports or commission a study • Delphi technique – structured polling technique; ‘The Wisdom of Crowds” • Statistical modeling – projecting past patterns into the future • Scenario planning – a formal technique for mapping out futures, of various probabilities

12. Synthesis of External Factors -- EFAS

13. CHAPTER 5 Internal Scanning: Organizational Analysis STRATEGIC MANAGEMENT & BUSINESS POLICY13TH EDITION THOMAS L. WHEELEN J. DAVID HUNGER

14. Resource-Based Approach to Organizational Analysis • Internal strategic factors -- • Critical strengths and weaknesses that are likely to determine if the firm will be able to take advantage of opportunities while avoiding threats • Resources • Capabilities • Competency • Core competency • Distinctive competency

15. Core and Distinctive Competencies • VRIO Framework -- • Value • Rareness • Imitability • Organization

16. Resource-Based Approach to Organizational Analysis • 5-Step Approach Strategy Analysis -- • Identify and classify resources • Combine strengths into capabilities • Appraise profit potential of capabilities • Select strategy that best exploits • Identify resource gaps invest in weaknesses

17. Continuum of Sustainability

18. Sustainability of Advantage • Imitability -- • Rate at which a firm’s underlying resources and capabilities can be duplicated by others • Durability -- • Rate at which a firm’s underlying resources and capabilities depreciate or become obsolete

19. Sustainability of Advantage • Core Competency can be imitated -- • Transparency • Transferability • Replicability

20. Business Models BUSINESS MODEL: Company’s method for making money in the current business environment.

21. Business Models • Types of Business Models -- • Customer Solutions Model • Profit Pyramid Model • Multi-Component System/Installed Base Model • Advertising Model • Switchboard Model

22. Business Models • Types of Models -- • Time Model • Efficiency Model • Blockbuster Model • Profit Multiplier Model • Entrepreneurial Model • De Facto Standard Model

23. Value-Chain Analysis Linked set of value-creating activities beginning with basic raw material and ending with distributors getting final goods into hands of customers Typical Value Chain for a Manufactured Product

24. Corporation’s Value Chain

25. Scanning Functional Resources & Capabilities • Basic Organizational Structures -- • Simple structure • Functional structure • Divisional structure • Strategic business units (SBU’s) • Conglomerate structure

26. Basic Organizational Structures

27. Corporate Culture • Collection of beliefs, expectations, and values learned and shared by a corporation’s members and transmitted from one generation of employees to another

28. Strategic Marketing Issues • Market Position & Segmentation • Marketing Mix • Product Life Cycle • Brand & Corporate Reputation

29. Product Life Cycle

30. Strategic Financial Issues • Financial leverage • Capital budgeting

31. Strategic Research & Development Issues • R&D Intensity • Technological Competence • Technology Transfer

32. Technological Discontinuity

33. Strategic Human Resource Management Issues • Human Resources Management • Increasing use of teams • Union relations • Temporary workers • Quality of work life • Human diversity

34. Internal Factor Analysis Summary Table