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Strategic Management

Tools & Techniques

Tool 17th Porters Five-Forces


POTENTIAL
ENTRANTS
Threats of new
entrants

Bargaining power of
Buyers

BUYERS

INDUSTRY
COMPETITIORS
(Rivalry among
existing firms)

Threats of substitutes
products or services

SUBSTITUTES

SUPPLIER
Bargaining
power of
Suppliers

Tool 17th Porters Five-Forces


Example:

Five Forces Analysis of Contact Center Outsourcing Market in the


Asia Pacific Region
Market Overview:

The Contact Center Outsourcing market in the APAC region has


three forms of business:

outsourcing from Western countries,


outsourcing from foreign MNCs in the APAC region
domestic outsourcing

Tool 17th Porters Five-Forces


Contact Center Outsourcing Market for Asia Pacific:
1. Threat of Rivalry (High) Competition among the existing
players is high because of cost pressure among vendors. Hence,
the threat of rivalry is high
2. Bargaining Power of Supplier (Low) The presence of many
service providers and low switching costs result in low
bargaining power of suppliers
3. Bargaining Power of Buyers (Moderate) Though there are a
number of vendors present in the market, clients prefer to use
services from reputable service providers.

Tool 17th Porters Five-Forces


4. Threats of New Entrants (High) The probability of new
players entering the market is high because of the relatively
low-entry barrier in the APAC region and the moderate cost
structure requirement of the business
5. Threat of Substitutes (Low) There is no direct substitute for
contact center outsourcing. The only alternative possible is for
companies to move these functions in-house

Tool 18th - Strategy Clock (1 of 5)


An expansion of Porters Generic Strategies,
developed by Cliff Bowman and David Faulkner.
Eight possible strategies or positions

A diagrammatic representation of the relationship


between perceived value to the customer and price.
Tool to identify a companys
Competitive position
Strategy in convincing its customers to buy its product versus
competitors.

Tool 18th - Strategy Clock (2 of 5)

Tool 18th - Strategy Clock (3 of 5)


Strategy 1 Low Price/Low Added Value (No Frills)
Inferior offerings but with very attractive price
Focused on a price-sensitive market segment
Must be volume driven to compensate low price
Air Asia

Strategy 2 Low Price


Similar offerings to competitors while keeping price low
Key driver is to reduce cost which others cannot imitate
Volume driven
Dell
Strategy 3 Hybrid
Differentiated offerings but with low price
A combination that builds customer loyalty
IKEA

Tool 18th - Strategy Clock (4 of 5)


Strategy 4 Differentiation
Differentiated offerings and similar price range with competition
Branding is key to maintain value perception
Apple
Strategy 5 Focused Differentiation
Differentiated premium offerings with higher price range against competitors
Niche market with high margins
Value perception is crucial
Bentley
Strategy 6 High Price/Standard Value
Similar offerings to competitors but with higher price
If competitors do not follow price, will lose market share
Can be a short term strategy, price could build value perception

Tool 18th - Strategy Clock (4 of 5)


Strategy 7 High Price/Low Value
Inferior offerings at a high price
Only effective its there are no competitors in market, monopolistic
Strategy 8 Standard Price/Low Value
Inferior offerings at a similar price to competitors.
Will lose market share

Tool 19th Fish Bone Ishikawa


Known as Cause and Effect Analysis

Devised by Professor Kaoru Ishikawa


When to use this tool:-

Discover the root cause of a problem.


Uncover bottlenecks in your processes.

Identify where and why a process isn't working.

Brainstorm The Major Categories Of


Causes Of The Problem.
If This Is Difficult Use Generic Heading

HOW TO DO????
Identify the Problem

Work Out the Major


Factors Involved

Identify Possible
Causes

Analyze Your
Diagram

EXAMPLE

Tool 20th Paretos Principle


Named after Italian economist - Vilfredo Pareto

The law of the vital few, and the principle of factor sparsity
Specifies an unequal relationship between inputs and outputs
Most things in life are not distributed evenly
Roughly 80% of the effects from 20% of the causes
Total need not add up to 100

Ideal vs 80/20 Rule


Ideally, effort should rise together with Result

80/20 rule shows the actual result

PROCEDURES FOR PARETO RULE


Identify the issues and root causes from Fishbone Ishikawa strategy

Identify the frequency of the issues


Assign the weightage on the identified issues
Perform the calculations and accumulations
Draft the graph with most critical issues from the left
Identify the 80-20 points from the graph
Solve the 20% which resolves 80% issues

IDENTIFIED ISSUES FOR AIRLINES


Absent Rate and Impacts of Pilots (5 times)

Absent Rate and Impacts of Stewards (200 times)


Absent Rate and Impacts of Groundmen (100 times)
Absent Rate and Impacts of Technicians (100 times)
* Rate is known as the frequency whereas impact is the weightage of
the impacts towards airlines schedules.

ISSUES CALCULATIONS
Frequency Weight (%)
Pilots
Stewards
Groundmen
Technicians

5
200
120
100

60
30
20
10

Total
3
20
24
10

Frequency Weight (%) Freq * Weight Percentage % Accumulation


Technicians
Stewards
Groundmen
Pilot

120
200
100
5

20
10
10
60
100%

24
20
10
3
57

0.42
0.35
0.18
0.05

42
77
95
100

GRAPH FROM CALCULATIONS


Percentage
100
90
80
70
60
50
40
30
20
10
0
Technicians

Stewards

Groundmen

Pilots

Job Functions

QUESTIONS?

THANK YOU