Académique Documents
Professionnel Documents
Culture Documents
Type of business
Geographic domain
Culture of senior management
Competitive situation
A- Introduction
Background and historical information about the company under study
An introduction to the case: in it you outline briefly what the company does, how it developed historically, what problems
it is experiencing, and how you are going to approach the issues in the case write-up. Do this sequentially by writing, for
example, "First, we discuss the environment of Company X...Third, we discuss Company X’s business-level strategy... Last,
we provide recommendations for turning around Company X’s business."
Strategy Formulation
The organization objectives directs activities toward key and specific results, the coming objectives are extracted from the case
describes and quantifies the organization operating objectives in the following fields :( extract from the case)
1. Cost reduction; highlighting the cost awareness of the organization with good improvement in figures.
2. Innovation; as one of the competitive advantage in the pharmaceutical business
3. Co-petition; as an objective to increase enthusiasm between different parts of the organization
4. Export; show with 20% of production as a strategic choice to secure hard currency.
Growth Strategy
It is the most appropriate strategy designed to achieve higher sales, assets, profits or combination of all. Continuing to
grow is increased sales, improve the per unit cost and a better experience curve with an increased profit and market share.
(If the company is intending to share the market, the company must peruse growth strategy)
Either growth is internally through expanding of operations both globally and domestically or it can grow externally
through mergers, acquisitions and strategic alliance.
The company is already applying a vertical growth through vertical integration with some of its distributors outside and
suppliers. It must increase both backward and forward integration to include or to add additional suppliers for more
material that is input to COMPANY X' products and to reduce the power of the suppliers over its business, also to include
more distribution channels either owned, or agents to ensure the distribution of COMPANY X's product all over the world
and to achieve its objective of increasing its exports to 50% by the year 2010 but without affecting the local market
Horizontal growth
is also an applied strategy in expanding COMPANY X's products in range and in other geographical locations and/or
increasing the range of products in the same location. The first step of acquisition of AMC is a very good example and start
for horizontal integration where COMPANY X would enriches its range of products with a unique and additional product
and applying its cost leadership strategy to the new product will result in a very good market position, also there are many
other options for growth strategy.
(Stability strategy:
if the company is operating in reasonably stable environment, stability strategy will be very appropriate for successful
operation)
(Retrenchment strategy: when the company is in a weak competitive position, some or all of its products results in a poor
performance, sales are down and profits are becoming losses. Therefore using retrenchment strategy to eliminate the
weakness that are dragging the company down)
5. Policies
State whether the firm has clear and written policies and fitting to its mission and objectives.
I. Corporate Governance
Board of Directors
Who are they, are they internal or external, do they own shares, do they have different voting rights and for how long
they are serving on the board?
Do they contribute knowledge, skills and connections to the firm? And if the firm has international operations do they
have international experience?
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Top Management
Who are the top managers and what are their characteristics in terms of knowledge, skills, background
and style? And if the firm has international operations do they have international experience?
Are they responsible for the performance of the firm and how well they interact with the lower level and
the BOD?
What is there level of involvement in the strategic management process?
Shareholders
Marketing Audit:
External environment - Macro environment (PEST)
The company's internal and external environmental scanning reflects its strengths over its weaknesses and its opportunities over its
threats.
B- External Audit
The key external factors can be divided into five broad categories:
2- Economical Forces
Monetary policies
Fiscal policies
Tax rates
Money market rates
GDP trend
Consumption patterns
Availability of credit
Interest rtes
Inflation rates
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Worker productivity levels
Price fluctuations
Income differences by region/customer
Stock Market trends
Foreign countries economic conditions
Unemployment trends
Propensity of people to spend
Import / export factors
Demand shifts for different categories of goods and services
Level of disposable income
investment laws and regulations,
4- Technological Forces
Major Impact –
• Internet (changing the nature of opportunities and threats)
• Communications
• Semiconductors
Significance of IT
• Chief Information Officer (CIO)managing the overall external audit
• Chief Technology Officer (CTO)focus on technical issues
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Essential for nearly every strategic decision
5-Competitive Forces
• Collection & evaluation of data on competitors is essential for successful strategy formulation
• Identifying Rival Firms
Strengths
Weaknesses
Capabilities
Opportunities
Threats
Objectives
Strategies
Response to external factors
The relation among these factors is significantly affected our company’s service, market and the organization
structure.
any change in the external factors translate into change in customer demand for our product and service , also it will
affect our service developed , nature of positioning and market segmentation ,the choice of business to acquire or to
sell.
the external factors also affect both suppliers and distributors of our business
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(3) Suppliers
The structure of the supplier’s network.
The new source of supply
The objectives and strategies of the major suppliers
The efficiency level.
The cost and availability
(5) Competitors
The structure, bases and intensity of competition.
The existing major competitors.
The major strengths and weakness of each competitor.
The objectives, strategies and the level of profitability of each competitors.
The market share level.
The entry barriers.
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Potential Entrants
Threat of New
Entrance
Relative power of
Unions,
Governments, etc.
Industry Competitors
Other Stakeholders
Bargaining power
of Suppliers
Threat of
substitute product
or service
Substitutes
Porter 5 forces:
1- Rivalry among existing firms
Number of firms, few equally balanced giants
Industry growth rate
Very high or fixed storage cost
Commoditization, low differentiation
Capacity
Diversity of rivalry
High exit barriers
2- Threats of new entrants
Barriers to entry:
The need to gain economic of scale quickly
The need to gain technology and specialized knowhow
The lack of experience
Strong customer loyalty
Strong brand preference
Large capital requirements
Lack of adequate distribution channels
The potential saturation of market.
Government regulatory
3- Threats of substitutes
Availability of substitute products
Relative price of substitute products declines
Consumers’ switching cost decreases
4- Bargaining power of suppliers
Product Dominated by few companies, more concentrated than the target industry
The target industry is NOT important to the supplier
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Supplier product is unique, or high switching cost
Substitutes are not easily available
Product is critical for the business
Real threat of backward integration from buyer
5- Bargaining power of Buyers
When customers are:
concentrated
large
buy in volume
Buyer is in low profit business (sensitive to cost)
Product standards (undifferentiated)
Real threat of backward integration from buye.
C- Internal Audit
A. Corporate structure: describe the current organization structure of the company
The organization is the process of arranging people and other resources to work together to accomplish a goal
and as a result of the company strategy the organization structure must be adjusted to cope with the new
strategy and achieve its goals.
The organization's strategy to grow and go more international must be reflected on the organization structure to
achieve the required result.
1- SIMPLE STRUCTURE:
Owner-manager makes decisions.
Little specialization of tasks.
Few rules, little formalization.
ADVANTAGES:
Provides high flexibility
Rapid product introduction
Few coordination problems
2- FUNCTIONAL STRUCTURE:
The company rather being lead by an entrepreneur, he is replaced by as team of managers who have functional specializations. The
entrepreneur must learn now to delegate his responsibilities; otherwise, the new structure will yield no benefit
ADVANTAGES
Centralized control of operations
Promotes in-depth functional expertise
Enhances operating efficiency where tasks are routine
DISADVANTAGES
Functional coordination problems
Inter-functional rivalry
Overspecialization and narrow viewpoints
Hinders development of cross-functional experience
Slower to respond in turbulent environments
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3- DIVISIONAL
STRUCTURE:
It occurs especially
when the
organization is managing diverse product line or when the organization is expanding to cover wider geographical areas
ADVANTAGES:
Decentralized decision making
Each business is organized around products
Puts profit/loss accountability on manager
Facilitates rapid response to environmental changes
Allows efficient management of a large number of units
DISADVANTAGES
May lead to costly duplication of functions
Inter-divisional rivalry
Corporate managers may lose in-depth understanding
4- MATRIX STRUCTURE
The matrix structure (some times called the matrix organization) it combines the functional and divisional structure. It is designed to
gain the advantage and minimize the disadvantages of the functional and divisional structures.
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The matrix is formed by using permanent cross functional teams to integrate functional expertise in support of a clear divisional focus
on project, product or program.
The matrix structure in the multinational organizations offers a flexibility to deal with the regional differences as well as the multi
products, programs or regional needs.
The matrix structure is the common solution for the organizations that pursues the growth strategies in a dynamic and complex
environment
Functional & product form are combined simultaneously at the same level.
Employee have 2 superior, functional superior & horizontal product manager
WHEN TO USE?
Scarce resources
Ideas need to be cross fertilized across projects
External environment is very complex and changeable
3. Mature matrix: A true dual authority structure, functional & product structure are permanent
5- NETWORK STRUCTURE
many activities are outsource
series of independent firms or business units that are linked together by computers in an IS
Used when the environment is unstable
Nike, Reebok, Benetton use the network structure on there operation functions by subcontracting manufacturing to other companies in
low cost location around the world.
ADVANTAGES:
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Rapid response time
Firm’s emphasize their own core competencies
Very flexible
Reduces capital intensity
Leadership Style
The founder (SA) at this point is following a telling leadership style, which is characterized by giving a specific task directions and closely
supervising tasks. At this point of time and according to the current circumstances the leadership style must be adapted to match the
near future circumstances.
1. Laissez-faire shows low concern for both people and task. Turn most decisions over the work group and show less interest in
the work process or its results.
2. Directive or Autocratic, High concern for task and low concern for people. Make most of the decisions, gives directions
and expect his orders to be followed.
3. Supportive or human relations leader shows high concern for people and low concern for tasks. Warm in interpersonal
relationships, avoid conflict, and seek harmony in decision-making.
4. Participative or democratic, shows high concern for both people and task. Share decisions with the work group,
encourage participation and support the work efforts of others.
B. Corporate Culture: if available highlight the main corporate cultural aspectsAre shared beliefs, expectations
and values well defined? And do the firm has diversity of cultures?
How the corporate culture perceive quality and adaptability to change in conditions.
B: Corporate Culture
Organization culture can be defined as “a pattern of behavior developed by organization as it learns to cope with its problems of
external adaptation and internal integration, and to be taught to new members as the correct way to perceive, think, and feel.”
It is the collection of beliefs, expectations and values learned, shared by a corporation's members, and transferred from one generation
of employees to another. It might be changing or elaborating but hardly completely fades away. It gives the corporation its identity.
There are thee main forces help to sustain the organization culture, these forces are; selection, actions of top management and
socialization methods.
The selection method to identify and hire individuals' lies within human resource practices such as the selection process, performance
evaluation criteria, training and career development, and promotion activities, which will ensure that the hired persons will fit into the
culture.
The action of top management through what they say and how they behave establish the norms that filter down through the
organization in which defines how much freedom mangers should give to their employees, the acceptable dress code by the
companion different locations, what is being rewarded at what is of a good value to the organization and the like.
Socialization is one of the most important factors to adapt employees to the organization culture no matter how good is the hiring and
selection process as long as the selected persons do not fit into the same organization culture; the new employees need to be adapted
to the company's culture.
Taking into consideration the above three factors the organization can sustain its organization culture with a minimum changes for the
change in the leadership.
Strong culture:
Clear/ well defined
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Widely shared among members
Encourage positive work behaviours
Performance oriented
Emphasize teamwork
Allow risk taking
Encourage innovation
Changing a firm’s culture to fit a new strategy is usually more effective than changing a strategy to fit an existing
culture.
Organization culture.
Managing workforce diversity( if the organization is going internationally)
Enhance employee participation: in implementing our strategy, all employees from different organizational levels must make a
meaningful contribution in decision-making .this will increase employee's involvement and enhance their working life balance.
Enhance employee organizational commitment : by increasing job involvement, which results in lower levels of
absenteeism and turnover.
Implementing employee recognition programs: starting with personal attention and ending with appreciation for a job well
done.
Develop effective staffing plans supporting the organizational strategies by allowing to fill job openings proactively (in
terms of number and the quality of the workforce for the short and long term) VIP in case of international operations.( if the
company is multinational)
Managerial skills
Technical skill: is the ability to use a special proficiency or expertise in one’s work ( lower level)
Human skill: is the ability to work well in cooperation with other people (all levels)
Conceptual skill: is the ability to think analytically & solve complex problems (top management) management process?
Personal competencies: Leadership: ability to influence others to perform tasks
Self objectivity: Ability to evaluate people realistically.
Analytical thinking
Flexibility
Oral/written communication
Personal impact
Resistance to stress
Tolerance to uncertainty
C. Corporate Resources
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According to the Resource Based View; resources are classified into 3 categories:
1. Physical resources (assets, equipments…)
2. Human resources (Employees, Training,.etc.)
3. Organizational resources (Structure, planning,.etc.)
Resources to be valuable it must:
1. Rare
2. Hard to imitate
3. Not easily substituted
The following list represents the main functions that should exist and analyzed within any organization:
1- Management 2- Marketing 3- Finance 4- R&D
5- Operations 6- Human Resources 7- Information Systems
1. Management
The following chick list questions can help determine specific strengths and weaknesses in the functional area of business. If the
answer of any question is “no” ; this might indicates a potential weakness.
2. Marketing
A. Marketing Issues
Market segmentation
Subdividing of a market into distinct subsets of customers according to needs and buying habits. Directly affect marketing mix
variables:
Product
Place
Promotion
Price
Basis of Segmentation
Geographic
Region
County size
City size
Density
Climate
Demographic
Age
Family Size
Family Life Cycle
Income/Occupation
Education
Religion
Race/Nationality
Psychographic
Social Class
Lifestyle
Personality
Behavioral
Use occasion
Benefits sought
User status
Usage rate
Loyalty status
Readiness stage
Attitude toward product
Targeting
- evaluate attractiveness of each segment
- select the target segment(s)
Product positioning
-- Schematic representations that reflect how products/services compared to competitors’ on dimensions most important to success in
the industry
Product positioning guidelines
Look for vacant niche
Avoid sub optimization
Don’s serve 2 segments w/ same strategy
Don’t position in the middle of the map
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Choosing a Specific Positioning
• Best quality
• Best performance
• Most reliable
• Most durable
• Safest
• Fastest
• Best value for the money
• Least expensive
• Most prestigious
• Best designed or styled
• Easiest to use
The organization from the available financial information shows a strong and improving financial position in all aspects (liquidity, debt,
etc.)
Financial ratio analysis is the most widely used method for determining an organization’s strengths and weaknesses in the investment,
financing, and dividends area.
Financial ratios can be classified into the following five types:
calculate financial ratios highlighting the changes over time of each ratio, compare to industry norms and to key competitors such as
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4- R&D
Are R&D facilities available and adequate
Cost effectiveness of outsourced R&D
R&D personnel well qualified
Effective allocation of R&D resources
Adequate management information and computer systems
Effective communication between R&D and other units
Are present products technologically competitive
5- Operations / Production
Are suppliers of raw materials … reliable and reasonable
Are facilities machinery and offices in good condition
Are inventory control policies and procedures effective
Effectiveness of quality control policy and procedures
Are facilities resources and markets strategically located
Does the firm have technological competencies
6- Human Resources
Human resource management is one of the most important key success factors in organization, which is not totally
implemented in Egypt, and its improvement will greatly improve the organization performance
1. Human Resource Objectives
The human resource objective reflects the intention of the senior management (strategy) with a balance to the related topics such as
HR functions, society, governing rules, etc.
There are four major objectives for the Human resource management;
1. Organizational objectives: to achieve the required organization effectiveness and objectives and ensure that the
organization always has people with the right abilities available to do the right work
2. Functional Objectives: maintain the department’s contribution at a level appropriate to the org. needs
3. Societal Objective : respond ethically and socially to the challenges of the environment while minimizing the negative
impact of such demands on the organizations
4. Personal objectives: to assist retain and motivate the employees for achieving their personal goals and guide them to
better achievement (most important )
b. Succession Planning: the preparation of the company succession plan will enable the organization to stand any future
challenges.
c. Career Path and development: the preparation of the career path for the employees will help the stability and minimize the
turnover of the employees.
d. Recruitment: designing a good recruitment process (Selection, interviews) with a high level of orientation to ensure the
compatibility of the new recruited employees with the existing culture to achieve organizational objectives.
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e. Training and development: on-the- job” training, Off-the-Job training and Provide career planning assistance for employees.
f. Incentive system will ensure the motivation of the employees to better performance (linking incentive to production)
g. Compensation Policies and protection: What employees get in exchange for their contribution to the organization
maintains, retain productive workforce, achieve the org. objectives.
i. Enhance employee participation : in implementing our strategy, all employees from different organizational levels must make
a meaningful contribution in decision-making .this will increase employee's involvement and enhance their working life balance.
j. Enhance employee organizational commitment : by increasing job involvement, which results in lower levels of
absenteeism and turnover.
k. Implementing employee recognition programs : starting with personal attention and ending with appreciation for a job
well done.
l. Develop effective staffing plans supporting the organizational strategies by allowing to fill job openings proactively (in terms
of number and the quality of the workforce for the short and long term) VIP in case of international operations.( if the company is
multinational)
7- Information Systems
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SWOT Matrix
Internal Organizational strengths Organizational weaknesses
External
Strategic options
Environmental SO: Strengths can be used to WO : The strategies developed need to
opportunities (and capitalize or build upon existing or overcome organizational weaknesses if
risks) emerging opportunities existing or emerging opportunities are
to be exploited
Environmental threats ST : Strengths in the organization can WT : The strategies pursued must
be used to minimize existing or minimize or overcome weaknesses and
emerging threats as far as possible cope with threats
1- Growth Strategy
It is the most appropriate strategy designed to achieve higher sales, assets, profits or combination of all.
Continuing to grow is increased sales, improve the per unit cost and a better experience curve with an increased
profit and market share.
(If the company is intending to share the market, the company must peruse growth strategy)
Either growth is internally through expanding of operations both globally and domestically or it can grow
externally through mergers, acquisitions and strategic alliance.
Types of Strategies
Corporate Level = 75% long term – 25% annual objectives
Division Level = 50% long term – 50% annual objectives
Functional Level = 25% long term – 75% annual objectives
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1- Integration Strategies
Forward Integration – distributors and retailers
Backward Integration – suppliers
Horizontal Integration – competitors
2- Intensive Strategies
Market Penetration
o Current markets not saturated
o Greater marketing efforts with present products / services
o Usage rate of present customers can be increased significantly
o Shares of competitors declining; industry sales increasing
o Increased economies of scale provide major competitive advantage
Market Development
o New channels of distribution – reliable, inexpensive, good quality
o New geographic areas
o Firm is successful at what it does
o Untapped/unsaturated markets
o Excess production capacity
o Basic industry rapidly becoming global
Product Development
o Products in maturity stage of life cycle
o Industry characterized by rapid technological development
o Competitors offer better-quality products @ comparable prices
o Compete in high-growth industry
o Improving present product or developing new ones
3- Diversification Strategies
o Concentric Diversification
New & related products/services
o Conglomerate Diversification
New & unrelated products/services
o Horizontal Diversification
New & unrelated products/services for current customers
4- Defensive Strategies
o Retrenchment = regrouping through cost and asset reduction to reverse declining sales and profit
o Divestiture = selling a division or part of an organization
o Liquidation = selling all of a company’s assets in parts for their tangible worth
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Type of strategies Ways to achieve the strategy Benefits Possible problems
Cost Leadership Size and economies of scale The ability to: Vulnerability to even lower
Globalization outperform rivals cost operators
Relocating to low-cost parts of erect barriers to Possible price wars
the world entry The difficulty of sustaining it
Modification/simplification of resist the five in the long term
designs forces
Greater labor effectiveness
Greater operating effectiveness
Strategic alliances
New source of supply
Focus Concentration upon on or a A more detailed Limited opportunities for
small number of a strong and understanding of sector growth
specialist reputation particular segments The possibility of
The creation of outgrowing the market
barriers to entry The decline of the sector
A reputation for A reputation for
specialization specialization which
The ability to ultimately inhibits growth
concentrate efforts and development into other
sectors
Differentiation The creation of strong brand A distancing from The difficulties of sustaining
identities others in the marketthe bases for differentiation
The consistent pursuit of pursuit The creation of a Possibly higher costs
of those factors which customers major competitive The difficulty of achieving
perceive to be important advantage true and meaningful
High performance in one or Flexibility differentiation
more of a spectrum of activities
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- Conclusion & Recommendation :
Assuming that the implementation of the above recommendations is an easy, and risk free process is undoubtedly
irrational…
Any change in the way the organization runs its business, manages its people and processes is surely a difficult task for all
parties concerned. Most difficult of all are the people and culture related changes. These, in most cases require a
paradigm shift to bring changes into life
Below are some limitations that would be expected to accompany changes recommended for xxx company:
- The general tendency to have a hard time distinguishing between the cost of paying people and the value of investing in them.
- Need for sufficient capital that secures gaining and sustaining a superior level of innovation and on R&D.Resistance to change
is one of the factors that is commonly overlooked while planning and implementing a new organization style, structure and
culture.
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