BusinessDrivers and MS

Strategy workshop

Strategy Workshop -BASICS

BMG

Strategy workshop 1.

• Business Drivers

• Market Position

• Market share

• Analysis

Business Drivers ?

The Business Drivers can be used as a performance

measurement system that considers not only financial measures, but also customer, business

process and learning measures. It can be used as a management system to implement strategy at

all levels of the organisation by facilitating the following functions:

• Clarifying strategy – the translation of strategic objectives into quantifiable measures

• Communicating strategic objectives – it can serve to translate high level objectives into operational objectives and communicate the strategy effectively throughout the organisation

• Planning, setting targets and aligning strategic initiatives – achievable targets are set for each perspective and initiatives are developed to align efforts to reach the targets

• Strategic feedback and learning – management receives feedback on whether the strategy implementation is proceeding according to plan and on whether the strategy itself is successful

Strategy workshop

Market Position

• The percentage of a specific market or market segment currently held by you, i.e. your turnover in percent of the total turnover of the entire market. Your Ideal Market Position indicates where you want to go; your strategy will answer how to get there. Your current market share is an indication of whether an offensive or a defensive strategy is the best strategy for your company. But your strategy will also depend on your desired market position. Different marketing challenges and strategies face market leaders, challengers, followers and market penetrators.

Strategy workshop

Market Position

• A Market Leader can generally strive to expand the total market generally through: new users, new uses and more usage (e.g. Johnson and Johnson produced an advertising campaign for their baby shampoo aimed at adults), defend or protect its market share, increase its market share even further.

• The Challenger will often in the pursuit of greater profitability aim to increase its market share by attacking other players within the market and exploring new opportunities. The Challenger may position its product to compete head-on with another brand. To successfully do so the challenger must have some advantages over the leader, either with regards to resources, competence, strength or endurance etc.

Strategy workshop

Market Position

• The Follower is generally not as aggressive as the Challenger but seeks its growth path through cloning, imitation or adaptation. The Follower must know how to retain current customers while attracting new customers.

• The Market Penetrator will generally aim to get a foothold on the market and may aim to expand sales of present products in the present market or specialise in some way in order to become a Niche Player. Improving quality or productivity and increasing marketing activities could all be means of achieving market penetration.


Estimate your Market Share (The Four Factors)

• Market Awareness Out of 100 potential customers how many of these know of you and could potentially do business with you? The figure below illustrates that in this example out of 100 potential customers, 70 know of you. You can thus exclude 30% of the total market.


• Product Acceptance "If our product/service does not meet customers‘ requirements they will not buy from us”. Of the remaining market, 90% feel that your product meets their requirements. Product Acceptance is thus estimated at 90% and you can exclude 10% of the remaining market.



• Company Ability “If we do not match the customers‘ expectations they will not do business with us”. Of the remaining market, 60% feel that you match their expectations as a supplier. Consequently, you can exclude 40% of the remaining market.

Strategy workshop


• Competitive Edge "If our price and trading conditions are not competitive the customer will not do business with us". Of the remaining market, 50% consider your price and trade conditions competitive. Consequently, you can exclude 50% of the remaining market.



• The Estimated Market Share The market share is calculated by multiplying the four factors as illustrated below. Understanding how the 4 factors influence– your market share and evaluating– your performance accordingly, provides you with a clear overview of company‘s strengths and weaknesses. In the example below you perform a lot stronger on Product Acceptance (PA) than you do on Competitive Edge (CE).



• To increase your market share at least one of the drivers need to show an improvement. The method also enables you to assess the strategic capability of your segment, e.g. can you realistically improve any of the Market Share Drivers? Such considerations are necessary if sensible choices of future strategies are to be made.



Analysis Basics • Company Ability

Reflects the company‘s ability to fulfill the demands of the market. It involves services, distribution, references, image, etc

• Competitive Edge The company‘s ability to create an advantageous position for the customer by fulfilling criteria such as price, payment, delivery terms and warranty.

• Competitive Rivalry If entry to an industry is easy then competitive rivalry is likely to be high. If it is easy for customers to move to substitute products then again rivalry will be high. Generally competitive rivalry will be high if:

– There is little differentiation between the products sold between

customers Competitors are approximately the same size of each other If the competitors all have similar strategies It is costly to leave the industry hence they fight to just stay in ( exit barriers) Strategy workshop

Analysis Basics

• Competitor Analysis

The ultimate aim of competitor analysis is to determine how a competitor might behave when faced with various environmental and competitive changes. Competitors represent a major determinant of corporate success and any failure to take detailed account of their strengths, weaknesses and strategies is likely to lead not just to a sub-optimal performance, but also to an unnecessary greater exposure to aggressive and unexpected competitive moves. Competitor analysis seeks to:

– Provide an understanding of your competitive advantage/disadvantage relative to your

competitors‘ position Help in generating insight into competitors‘ strategies – past, present and future Give an informed basis for developing future strategies to sustain/establish advantages over you competitors

Strategy workshop

Strategy workshop

Estimate your Market Share (again)

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Documents

BusinessDrivers and MS