Template for Strategy Review and Reformulation Revised

8/3/2019 Template for Strategy Review and Reformulation Revised

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Strategy Analysis

Indicative template*

D Karthik

*Indicative Template based on Are you sure you have a strategy?" Donald C. Hambrick and

James W. Frederickson Academy of Management Executive 2001 Vol. 15 No. 4

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Strategy Analysis Steps

1.Map

2.Evaluate

3.Reformulate

4.Document

5.Check

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Map the Current Strategy

What is the

aspiration ?

What are the

values espoused by

the organization

What is the Balanced

scorecard for the

organization?

What are the key metrics

to track under Financial

Customer

Internal process

Learning and

growth

Have these been linked as

given in Exhibit 1 of Wells

Fargo Online Financial

Services (A)

See next slide What is the current

organizational

structure

What are the key

processes How is the culture of

the organization

What are the key

functional policies

What are the key

activities of the

organization

Bundle of

activities for

the

Organization

Aspirations

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Map the Current Strategy (Cont'd)Where is the organization active?Customers market segments

Products /service categories

Geographic areas

Core Technologies

Value gridof the organization and the Org role in

the Value grid

Emphasis on each arena

How has the organization obtained the needed

presence in the identified arenas?

For each cell of the value grid assess if

organization has done

-internal development

-acquired or merged other companies

-alliances/joint ventures

-Franchising/licensing arrangements

-long term contracts

-simple purchase transactions

The reason Customers choose the

organization?

Image

Customization

Price

Styling

Product reliabilityAnything else

What has been the speed of expansion and the

sequence of initiatives till date?

What have been the milestones toguide strategy execution?

Is the organization successful in

obtaining returns above its cost of

capital?

Compute and assess:Cost of capital, Beta,

Risk free rate of return, ROI(IRR, NPV),

Pay back period, Break even volume

Evaluate:What generates cash ?

What decides margins ?

What generates market share growth ?

How fast do sales turn into cash ?

What numbers/ ratios tell us if the

organization is successful ?

Is there guiding economic theory/concept?

e.g. economics of Scale, scope, network

effects, experience curve, life cycle

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Evaluate the current Strategy:

Identify Strategy GapsIs the organizations arena attractivein the context of the anticipations inthe environment? Has it chosen theright differentiators?

For each arena analyze Is there a healthy profit potential in

the chosen arenas? Industry attractiveness as per

Porters Five forces model.Intended/potential vs actual impacton five forces.

Evaluation of portfolio of arenasusing BCG matrix

Any changes/evolution in key

technologies? Product life cycle

Is the organization innovating tosustain differentiators?

Are there synergies between thechosen arenas?

To what extent the arenas span Life stage and Daily life cycle of

consumers

Has the organization chosen right

vehicles for each arena(s)

Identify the competences and

resources used by the

organization at each stage of the

value grid

Unbundle the value gridof the

organization

Apply VRIO to each bundle

Valuable

Rare

Inimitable

Organization

Assess the fit between vehicle

and Arena(s)5


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Identify Strategy Gaps (Cont'd)Staging

Does the organization have anycriteria for selection of initiatives,their timing, sequencing and speed?

e.g. Exhibit 3 and Exhibit 5

of Wells Fargo Online FinancialServices (B)

Does it have any problems/issues inthe speed or sequencing of theinitiatives in the past

Economic Logic

Are there any imbalances (desiredvs actual, potential vs actual) in theperformance of the firm?

Is the trade-off between short term

and long term appropriate?Is there a potential to reduce costs(including cost of capital) andincrease revenues?

Can the causal linkages of the BSCbe verified and validated?

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Identify Strategy Gaps (Cont'd)Aspirations

Has the organization achieved theobjectives through its strategy?

Is the strategy aligned with the

aspirations of the organizations?Are the aspirations and the strategycommunicated well throughout theorganization?

Are there imbalances between theaspirations, objectives, strategy and

achievements

Supporting Org Arrangements

Is there a fit between the structure

of the organization and its strategy?

Are the systems/processes

impeding or facilitating theexecution of the strategy?

Is the culture helping in execution?

Does the corporate HQ/Top

Management play a role in helping

the divisions grow?

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Identify Strategy Gaps (Cont'd)Anticipated Changes in theenvironment

What are the anticipated changes inthe environment (technology,customers, competition, vendors,regulatory etc.)?

How do these changes affect theaspirations, strategy and supportingorganizational arrangements?

How can the organization respond

to these changes? How do wegenerate options?

What element(s) need to bechanged and how?

Is there consistency between theelements?

Fit between individual activities andthe overall strategy?

Are the activities Mutuallyreinforcing?

Is there an optimization of effortwhen the whole system ofaspirations, strategy andorganizational arrangements is

considered?

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Identify Strategy Gaps (Cont'd)Do you have enough resources topursue this strategy?

Do you have the money, managerialtime and talent, infrastructure andother capabilities to do all you

envision?Are you sure youre not spreadingyour resources too thinly, only to beleft with a collection of feeblepositions?

Is the strategy implementable?

Will your key stakeholders(employees, investors, suppliers,customers) allow you to pursue thisstrategy or will they resist?

Can the organization make itthrough the transition throughlearning and unlearning?

Is the top management team ableand willing to lead the requiredchanges?

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DocumentExisting Strategy New Strategy

What would youContinue? Why?

Discontinue? Why?

Add? Why? How?

Modify?Why?How?

Write how theanalysis in the

previous steps has

helped you arrive

at your decisions?

What would be theimpact of the

strategy on

The environment

Five forces

Any other

The aspirations: Towhat extent the

Aspirations would

be fulfilled?

How would youimplement the

strategy?

How would you

overcome

resistance from

stakeholders?What changes

would you make to

Structure, Systems,

Processes, People,

culture? Why?

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What are thetradeoffs?

What are the risks

involved?

Give an assessment

of gains and losses

from your strategy?

Demonstrate the soundness of your strategy?

See next slide


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Document new strategy

What should be the

aspiration ?

What should be the

values of theorganization

See next slide What would be

organizational

structure

What would be thekey processes

What would be the

culture of the

organization

What would be the

key functional policies

What would be the

key activities of the

organization

What is the Balanced

scorecard for the

organization?

What are the key metrics

to track under

Financial

Customer

Internal process

Learning and

growth

How should these be

linked (refer to Exhibit 1 of

Wells Fargo Online

Financial Services (A)

Bundle of

activities for

the

Organization

Aspirations

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Document new strategy (Cont'd)Where will the organization be active?Customers market segments

Products /service categories

Geographic areas

Core Technologies

Value gridof the organization

Emphasis on each arena

How will the organization obtain the needed

presence in the identified arenas?For each cell of the value grid assess if

organization should do

-internal development

-acquire or merge other companies

-Ally or create a joint ventures

-Franchise/license

-long term contracts

-simple purchase transactions

The reason Customers would choose the

organization?

Image

Customization

Price

Styling

Product reliabilityAnything else

What should be the timing, sequencing and

speed of rolling out the initiatives?

What would be the milestones for guiding

execution?

Will the organization be successful in

obtaining returns above its cost of

capital?

Project future values and assess:Cost of

capital, Beta, Risk free rate of return,

ROI(IRR, NPV), Pay back period, Break

even volume

Evaluate: What would generates cash ?

What would decide margins ?

What would generates market share

growth ?

How fast would sales turn into cash ?

What numbers/ ratios would tell us if the

organization is successful ?

What are the guiding economic

theory/concept? e.g. economics of Scale,

scope, network effects, experience curve,

life cycle

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Check For Strategy Gaps in your new strategy using slides 5-9 If you have you missed any strategy gap(s). If gaps exist then articulate

the reasons and identify the tradeoffs

If you have done a balanced analysis

qualitative and quantitative

Financial and non financial

Soft issues are covered

Whether supported the decisions with logical reasoning

Whether interpreted each analysis and linked it to the strategy

FinallyIf you have demonstrated

Completeness All dimensions covered in as much detail as

possible Concreteness All reasoning is supported by qualitative and

quantitative evidence and relevant assumptions stated clearly

Clarity You are clear on your comprehension, analysis,

assumptions and ethical implications

Connectedness All dimensions are linked to each other

Consistency dimensions reinforce each other 13

Documents

Template for Strategy Review and Reformulation Revised