Value discipline, a term coined by Michael Treacy and Fred Wiersema in their book, “The Discipline of Market Leaders” to describe different ways companies can differentiate itself from competitors. A value discipline is more than just a benefit statement–it is a statement of strategic focus and provides a context for a company to set its corporate vision and objectives, to target its most profitable customers, and to focus and align its activities. Treacy and Wiersema identified three different ways of bringing together a compelling value proposition with an effective operating model. The basic idea is that any company can deliver value to its customers in three value disciplines. Operational Excellence: Delivering quality products or services at the lowest total cost with the least inconvenience and always on time. Companies pursuing operational excellence are relentless in seeking ways to minimize overhead costs, to eliminate intermediate production steps, to reduce transaction and Continue reading
Strategic Management Tools
Stakeholder Analysis – Stakeholder Power and Interest Mapping
We can classify an organization’s stakeholders into Primary and Secondary. The primary stakeholders are those without whose continuing participation a firm cannot exist. They include shareholders & investors, employees, contractors, customers & suppliers. On the other hand, secondary stakeholders are those who influence or affect or are influenced by, the corporation, but they are not engaged in transactions with the corporation or essential for its survival. They include media, action groups, government agencies, trade unions, regulatory authorities. Stakeholder management is the process of managing the expectation of anyone that has an interest in a project or will be effected by its deliverables or outputs. Any company which aims to achieve long term success has to chalk out a strategy for managing its stakeholders. There are two major elements to Stakeholder Management: Stakeholder Analysis and Stakeholder Planning. Stakeholder Analysis is the technique used to identify the key people who have to Continue reading
Moving to Blue Ocean Strategy – Shift from Red Ocean to Blue Ocean
In global market today, it can be supposed that there are two typical kinds of oceans: read oceans and blue oceans. Of two sorts of market, red oceans are defined as a known space for all existent industries nowadays. On the contrary, blue oceans are regarded as an unknown area for industries which do not exist. As a result, red oceans present all existing rules related to business competition and industrial regulations. This market defines and determines the boundaries for all games and rules. In this market, companies strive to compete with their competitors and rivals in order to gain better benefit and dominate more market share of current demand. Therefore, red oceans provide for space for enterprises to focus on their competition for decades. However, the space is limited while competitive battles are becoming increasingly fierce. There are more and more participants wanting to invest in the same products. Continue reading
Economic Environmental Scanning
Firms that anticipate economic change and identify the constituents through which that change will be applied; can better adapt goals and action plans. Shareholder expectations of financial return are dictated in part by alternative investments and their associated return and risks. Interest rates, tax policies, shareholder incomes, availability of funds for margin-purchased equity investments, and expectations of future economic circumstances will shape changes in equity investor profiles and/or the financial performance expectations of the firm’s owners. Personal income, savings, employment, and price-level trends can have dramatic effects on the attractiveness of a firm’s products or services in output markets–not only final markets, but intermediate markets as well. Similarly, total sectoral outputs, movements in private-sector capital replacement and expansion, government spending, and the allocation of the consumer dollar can have dramatic impacts between and within industrial sectors. Each can be set off macroeconomic changes well outside the control of the firm, Continue reading
Case Study of Lenovo: Project Management Improves Strategy Execution and Core Competitiveness
I. Background In recent years, the personal computer (PC) industry has been developing by leaps and bounds. Global sales of PCs totaled 230 million units in 2006, representing a 9 percent increase over the previous year. Lenovo has a product line that includes everything from servers and storage devices to printers, printer supplies, projectors, digital products, computing accessories, computing services and mobile handsets, all in addition to its primary PC business, which made up 96 percent of the company’s turnover as of the second quarter of 2007. Since its acquisition of IBM’s Personal Computing Division in May 2005, Lenovo has been accelerating its business expansion into overseas markets. The company transferred its corporate headquarters from Beijing, China to Raleigh, North Carolina, USA. Today, the group has branch offices in 66 countries around the globe. It conducts business in 166 countries and employs over 25,000 people worldwide. Lenovo is organized into Continue reading
Internal Factor Evaluation (IFE) Matrix
An Internal Factor Evaluation (IFE) Matrix is a strategy formulation tool that summarizes and evaluates the major strengths and weaknesses in the functional areas of a business, and it also provides a basis for identifying and evaluating relationships among those areas. Intuitive judgments are required in developing an IFE Matrix, so the appearance of a scientific approach should not be interpreted to mean this is an all €‘powerful technique. A thorough understanding of the factors included is more important than the actual numbers. An Internal Factor Evaluation (IFE) Matrix can be developed in five steps: List key internal factors as identified in the internal €‘audit process. Use a total of from ten to twenty internal factors, including both strengths and weaknesses. List strengths first and then weaknesses. Be as specific as possible, using percentages, ratios, and comparative numbers. Assign a weight that ranges from 0.0 (not important) to 1.0 (all Continue reading