Benchmarking involves comparison of one firm’s processes with that of other firm while reengineering is concerned with redesign of operational processes. Benchmarking involves thorough research into the best practices followed by other organisations in the industry where the company operates and it helps in breaking down the organisations’ activities down to process operations and modifies them to the best-in-class for a particular operation. The word benchmarking has been derived from the set of activities used by cobblers to mark the size of the foot of their customers. For measuring the size of the foot they used to ask the customer to put their foot on the “bench” so that they can “mark” the foot using a pen. In Benchmarking processes of one company are compared with the processes of the industry leader to see the practices and the ways in which these industry leaders operate and to modify their own Continue reading
Strategic Management Tools
Ansoff Matrix Analysis of Toyota
Toyota is the most leading Japanese automobile company. By creating more innovative car design and spending billions dollars in advertisement a year, Toyota has appeared in the eyes of many auto consumers worldwide. By producing high quality vehicles at affordable prices, Toyota has built its reputation globally. Toyota has reduced their prices as compared to other automobile makers. Toyota believes that the role of purchasing should be long term at the lowest price and no compromise on the production of quality products. Normally, companies do not want to cut their targeted return and they follow the strategy which is formulated in to the cost + profit = selling price. But Toyota takes a slightly different strategy which is formulated in to the price-cost=profit. Strategic management has a direct impact on its business in all organizations. That’s why Toyota has become leading company in auto industry because of the attractive strategic Continue reading
McKinsey’s 7S Model – A Great Strategic Management Tool
The McKinsey’s 7S Model was created by the consulting company McKinsey and Company in the early 1980s and subsequently has become the de facto standard used by practitioners and academics alike in analysing the performance of an organization. The McKinsey’s 7S model is a value based management (VBM) model that describes how one can holistically and effectively organize a company and together, these factors determine the way a company operates. There are seven variables in the model which include structure, strategy, systems, skills, style, staff and shared values. All beginning with ‘s’, justifying why it was termed as the 7S model. These seven variables can be classified as soft components and hard components. Strategy, structure and system were hard components which are usually feasible and easy to identify because they are usually in the policy statements, business plans, organizational charts, organizational structures and systems as recorded in the report. The 7S Continue reading
Strategic Inflection Point
A term coined by Andrew Grove, former CEO of Intel to describe a dramatic change in competitive forces. At that time, the leaders must give up the past, see closely how the industry is evolving and find new ways of competing. This point of dramatic change in the industry is known as Strategic Inflection Point. “a strategic inflection point is a time in the life of business when its fundamentals are about to change. That change can mean an opportunity to rise to new heights. But it may just as likely signal the beginning of the end” Andrew S. Grove, Only the Paranoid Survive. For example, the arrival of containers marked a strategic inflection point in the shipping industry. The introduction of the IBM PC was a strategic inflection point in the computer industry. The emergence of large discount store chains like Walmart and Tesco may well turn out to Continue reading
Seven Strategy Questions
“The most serious mistakes are not being made as a result of the wrong answers. The truly dangerous thing is asking the wrong questions.” – Peter Drucker Executing a successful business strategy often requires making tough, sometimes uncomfortable choices. But we frequently avoid making choices in the mistaken belief that we can have it all. Robert Simons, Professor of Business Administration at Harvard Business School, addresses this issue in his latest book, Seven Strategy Questions: A Simple Approach for Better Execution. He identifies what he calls the questions that will “stress test your strategy”. The goal of this seven strategy questions is to help marketers identify the weakest parts of their business strategy in order to understand where confusion and inefficiency lie. Simons presents the seven strategy questions you and your team must regularly explore together: Who is your primary customer? Have you organized your company to deliver maximum value Continue reading
Business Model Canvas – Business Model Generation
Business Model Canvas is the most popular tool for entrepreneurs to create their business models. The Business Model Canvas is an analytical tool outlined in the book Business Model Generation by Alex Osterwalder. It is a visual template preformatted with the nine blocks of a business model, which allows you to develop and sketch out new or existing business models. It’s an amazing and powerful too and instantly creates a shared visual language while defining a business. A business model describes the rationale of how an organization creates, delivers and captures value. Using the Business Model Canvas, the business model is defined across 9 key areas. With a central focus on the value proposition facilitated groups are able to quickly capture (i) how the business will actually create the products, (ii) how customers will access the products, and (iii) how the business will monetize the transactions. The nine building Continue reading