Strategy Framework - ABC Company -18062009
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This document provides a strategy planning framework for ABC Unit that includes: 1) An internal and external factor evaluation to assess strengths, weaknesses, opportunities, and threats. 2) Strategic analysis matrices like IE, SWOT, CPM to match internal and external factors and identify goals. 3) A decision stage using tools like QSPM to determine the optimal strategy for ABC Unit to pursue its goals.
Strategy Framework - ABC Company -18062009
- 1. Strategy Planning and Implementation Framework For and by ABC Unit
- 2. Strategy Formulation Framework • IFE Input • EFE Stage • CPM • IE Matrix • SWOT Matrix Matching • SPACE Matrix Stage • BCG Matrix • Grand Strategy Matrix Decision • QSPM Stage
- 3. Internal Factors Evaluation - IFE Strengths Weight Rating Score 1 Major player in local market 0.02 4 0.08 2 Strong relationship with government and private sector 0.02 4 0.08 3 JCCS presence/reach across Kingdom 0.02 4 0.08 4 Partnership with major players 0.02 3 0.06 5 JCCS success stories will help in getting projects 0.01 4 0.04 6 Services projects bundled with hardware sales 0.1 4 0.4 7 Existing customer base can generate repeated sales 0.02 3 0.06 8 Technical expertise pool 0.1 4 0.4 9 Management Expertise 0.2 4 0.8 10 Financial Resources 0.02 4 0.08 Weaknesses 1 Disconnected & dispersed technical employees 0.1 1 0.1 2 Poor marketing plan 0.1 2 0.2 3 Poor strategy and target responsibility 0.1 1 0.1 4 Bad reputation in services 0.05 2 0.1 5 No knowledge management 0.03 2 0.06 6 Technical infrastructure not ready 0.01 2 0.02 7 Org. structure not suitable for Functional excellence 0.03 2 0.06 8 Delays and gap in inter-department communication 0.05 1 0.05 Scale used: 4 = Current Response is Superior 2.77 3 = Current Response is Above Average 2 = Current Response is Average 1 = Current Response is Poor max Score = 4.0
- 4. External Factors Evaluation - EFE Opportunities Weight Rating Score 1 IT Service Market expected to be US$ 1350mn in 2012 0.2 2 0.4 2 Companies are unable to generate insight from data 0.05 3 0.15 3 Increasing trend in business aligned IT/IS 0.05 3 0.15 4 Companies are looking to reduce cost by outsourcing 0.2 4 0.8 5 Customers IT staff is under staff or lacks skills 0.1 4 0.4 6 International vendors need local partner 0.05 3 0.15 Threats 1 Increased competition 0.1 2 0.2 2 Difficulty in finding and retaining skill staff 0.05 3 0.15 3 Global financial crises 0.05 3 0.15 4 Mergers and Acquisitions of vendors 0.05 2 0.1 5 Vendors coming in service industry 0.05 2 0.1 6 International service companies presence in KSA 0.05 2 0.1 2.85 Scale used: 4 = Current Response is Superior 3 = Current Response is Above Average 2 = Current Response is Average 1 = Current Response is Poor max score=4.0
- 5. Competitive Profile Matrix - CPM ABC Outsourcing Products and Services Weight Rating Weighted Rating Weighted Score Score Software Development 0.100 2 0.20 3 0.30 Database Consulting 0.175 4 0.70 1 0.18 Infrastructure Management services 0.100 3 0.30 2 0.20 Business Intelligence Services 0.100 2 0.20 2 0.20 Customer Relationship Management 0.100 2 0.20 1 0.10 Marketing Strategy 0.125 1 0.13 2 0.40 Marketing Share 0.025 1 0.03 4 0.10 Technical Resources 0.100 4 0.40 3 0.30 Financial Benefits 0.100 4 0.40 2 0.05 Strategic partnership 0.025 4 0.10 3 0.08 Umrah application service provider 0.025 3 0.08 0 0.00 Product and service portfolio 0.025 4 0.10 2 0.05 TOTAL 1.000 2.83 1.95
- 6. Strategy Formulation Framework • IFE Input • EFE Stage • CPM • IE Matrix • SWOT Matrix Matching • SPACE Matrix Stage • BCG Matrix • Grand Strategy Matrix Decision • QSPM Stage
- 7. Internal External Evaluation Matrix Internal FE Score (2.77) Strong Average Weak 3.0 – 4.0 2.0 – 2.99 1.0 – 1.99 I II III High 3.0 - 4.0 External IV V VI FE Score Low 2.0 – 2.99 (2.85) VII VIII IX Medium 1.0 - 1.99 Generic Goal: Hold and Maintain Strategies: Market Penetration Product Development Integration (Horizontal, Forward, backward)
- 8. SWOT Matrix Strength – S Weakness – W Major player in local market Disconnected & dispersed technical employees Strong relationship with government and private sector Poor marketing plan JCCS presence/reach across Kingdom Poor strategy and target responsibility Partnership with major players Bad reputation in services JCCS success stories will help in getting projects No knowledge management Services projects bundled with hardware sales Technical infrastructure not ready Existing customer base can generate repeated sales Org. structure not suitable for Functional excellence Technical expertise pool Delays and gap in inter-department communication Management Expertise Financial Resources Opportunities – O SO Strategies OW Strategies Market Penetration and Market Product & Service Development Development IT Service Market expected to be US$ 1350mn in 2012 using market opportunities Companies are unable to generate insight from data Offer new services to existing Increasing trend in business aligned IT/IS customers Build and develop teams Companies are looking to reduce cost by outsourcing Customers IT staff is under staff or lacks skills Strategic alliance with service providers Improve and standardize International vendors need local partner Sales promotion processes in new projects Threats - T TS Strategies TW Strategies Horizontal Integration & Increased competition Outsource Projects Service improvement and Difficulty in finding and retaining skill staff Global financial crises horizontal integration Mergers and Acquisitions of vendors Improve Subcontract and CR Vendors coming in service industry management process International service companies presence in KSA
- 9. BCG Matrix Relative Market Share Position High Medium Low 1.0 .50 0.0 High Stars Question Marks +20 Prod Industry Sales Growth Rate D Prod C Prod B Prod E Medium Prod 0 A Low Cash Cows Dogs -20
- 10. SPACE Matrix – (Strategic Position and Action) Space Matrix Rating Score Rating Score Financial Strength (6 best, 1 worst) Environmental Stability (-1 best, -6 worst) 1. Working Capital 5 1. Economic Changes -2 2. Leverage 6 2. Government Control -2 3. Cash Flow 5 3. Risk Premium -3 4. Payable to Customers 6 4. Price Elasticity -3 5. Debt to Asset 5 5. Inflation -2 27 5.4 6. Competition -2 -14 -2.3 Competitive Advantage (-1 best, -6 worst) Industry Strength (6 best, 1 worst) 1. Customer Loyalty -3 1. Growth Potential 5 2. Market Share -3 2. Profit Potential 4 3. Quality of Service -3 3. Consumer Trust 5 4. Number of products -2 4. Investment Reliability 5 5. Technical Expertise -1 5. Resource Utilization 4 -12 -2.4 23 4.6 CA and IS 2.2 FS and ES 3.07
- 11. SPACE Matrix FS Conservative Aggressive +6 +5 +4 +3 IS & CA 2.2 FS & ES 3.07 +2 +1 CA IS -6 -5 -4 -3 -2 -1 -1 +1 +2 +3 +4 +5 +6 -2 -3 -4 -5 Defensive Competitive -6 ES
- 12. Grand Strategy Matrix RAPID MARKET GROWTH Quadrant II Quadrant I 1. Market development 1. Market development 2. Market penetration 2. Market penetration 3. Product development 3. Product development 4. Horizontal integration 4. Forward integration 5. Divestiture 5. Backward integration 6. Liquidation 6. Horizontal integration 7. Concentric diversification WEAK STRONG COMPETITIVE COMPETITIVE POSITION Quadrant III Quadrant IV POSITION 1. Retrenchment 1. Concentric diversification 2. Concentric diversification 2. Horizontal diversification 3. Horizontal diversification 3. Conglomerate diversification 4. Conglomerate diversification 4. Joint ventures 5. Liquidation SLOW MARKET GROWTH
- 13. QSPM – Quantitative Strategic Profiling Matrix Build and Promote Outsource IT ABC Units and Limit ABC team and Services projects to Weight assign projects projects partners Key Internal Factors AS TAS AS TAS AS TAS Strengths Major player in local market 0.02 3 0.06 3 0.06 3 0.06 Strong relationship with government and private sector 0.02 4 0.08 4 0.08 4 0.08 JCCS presence/reach across Kingdom 0.02 4 0.08 4 0.08 4 0.08 Partnership with major players 0.02 3 0.06 3 0.06 3 0.06 JCCS success stories will help in getting projects 0.01 3 0.03 3 0.03 3 0.03 Services projects bundled with hardware sales 0.10 3 0.30 3 0.30 3 0.30 Existing customer base can generate repeated sales 0.02 3 0.06 3 0.06 3 0.06 Technical expertise pool 0.10 3 0.30 3 0.30 3 0.30 Management Expertise 0.20 3 0.60 3 0.60 3 0.60 Financial Resources 0.02 4 0.08 4 0.08 4 0.08 Weaknesses 0.00 0.00 0.00 Disconnected & dispersed technical employees 0.10 4 0.40 2 0.20 0 0.00 Poor marketing plan 0.10 4 0.40 1 0.10 0 0.00 Poor strategy and target responsibility 0.10 4 0.40 1 0.10 0 0.00 Bad reputation in services 0.05 4 0.20 1 0.05 0 0.00 No knowledge management 0.03 4 0.12 1 0.03 0 0.00 Technical infrastructure not ready 0.01 4 0.04 1 0.01 0 0.00 Org. structure not suitable for Functional excellence 0.03 4 0.12 1 0.03 0 0.00 Delays and gap in inter-department communication 0.05 4 0.20 1 0.05 0 0.00 SUBTOTAL 1.00 3.53 2.22 1.65 Key External Factors Opportunities IT Service Market expected to be US$ 1350mn in 2012 0.20 3 0.60 1 0.20 3 0.60 Companies are unable to generate insight from data 0.05 3 0.15 1 0.05 3 0.15 Increasing trend in business aligned IT/IS 0.05 3 0.15 1 0.05 3 0.15 Companies are looking to reduce cost by outsourcing 0.20 3 0.60 1 0.20 3 0.60 Customers IT staff is under staff or lacks skills 0.10 3 0.30 1 0.10 3 0.30 International vendors need local partner 0.05 3 0.15 1 0.05 3 0.15 Threats Increased competition 0.10 2 0.20 1 0.10 3 0.30 Difficulty in finding and retaining skill staff 0.05 2 0.10 1 0.05 4 0.20 Global financial crises 0.05 4 0.20 2 0.10 3 0.15 Mergers and Acquisitions of vendors 0.05 2 0.10 3 0.15 4 0.20 Vendors coming in service industry 0.05 2 0.10 2 0.10 3 0.15 International service companies presence in KSA 0.05 2 0.10 2 0.10 3 0.15 SUBTOTAL 1.00 2.75 1.25 3.10 SUM TOTAL ATTRACTIVENESS SCORE 2.00 6.28 3.47 4.75
- 14. Balances Scorecard for Strategy Execution Framework that translate strategy into operational objectives and drive performance
- 15. ABC Top Issues Low Internal awareness and Buy-In All ABC projects are being out-sourced Outsourced employees are working in their on islands Goals and Responsibility No one is responsible for winning ABC projects No marketing plan for ABC No clear Goals/responsible No clear Road map Communication delays and gaps with head office The vision must be followed by the venture. It is not enough to stare up the steps - we must step up the stairs. (Vance Havne)
- 16. Strategic Action List •Time bound revenue goals and responsibilities •Performance goals Goals and Responsibility •Promote and Develop ABC •JCCS management should be informed about ABC Vision and Services and their part in ABC Success Communication •All outsourced technical staff should be informed •Marketing Team (all regions) should be aware of ABC services •Specialized virtual team for ABC marketing should be nominated Marketing •Time bound Target – reward for ABC marketing should be set Initiatives •Marketing Mix Strategy •Build virtual team of DBAs, Developers, Analyst … •Develop and motivate team members •Make Email groups , make Internal websites Prepare Virtual Team •Share knowledge and arrange training sessions •Document standard procedures •Prepare Virtual NOC •Prepare True DR Site Prepare Infrastructure •Prepare multiple ISP Solution 16
- 17. Marketing Mix •Software Development •Personal Selling •Database Consulting •Sales Promotion •Onsite/remote •Gap Analysis •Infrastructure Mgmt • Health/Security check •BI Consulting • Free DB Management •Pilot Project Product Promotion Place Price •ABC channels will be • Initially market JCCS Marketing Team penetration pricing •All region •Try to Lock Customers •JCCS Support Team at •Value Based Pricing client •Push Strategies 7 Ps – People, Processes, Physical Environment 17
- 18. Scorecard and Cause-effect Terms And Realize the Vision Financial To Drive Financial Results Success... Customer Benefits Needed to Deliver Unique Sets of Benefits to Customers... Internal To Build the Strategic Capabilities.. Capabilities Knowledge, Skills, Systems, and Tools Equip our People... 18
- 19. Building Blocks Financial Perspective 1. The economic model of Return on key levers driving financial Revenue Investment Productivity performance Strategy Strategy Sources of Growth Sources of Productivity Customer Perspective 2. The value proposition of Value Proposition target customers Relation- Price Quality Time Function Image ship Internal Process Perspective 3. The value chain of core “Build the “Make the “Deliver the “Service business processes Brand” Sale” Product” Exceptionally” Learning & Growth Perspective 4. The critical enablers of Staff Climate for performance improvement, Technology Competencies + Infrastructure + Action change and learning 19
- 20. Balanced Scorecard Six Step Development Process Step 3 Step 1 Step 5 Draft a Develop a Strategy Map Select Strategic Project Plan With Linkages Initiatives And Themes Step 2 Step 4 Step 6 Build a Determine Plan for Strategic Measures and implementation Architecture Targets of the SFO 20
- 21. Summary • Evaluation shows that ABC initiative have good potential • Internal awareness and marketing of ABC • Clear goals with responsibilities • Virtual restructuring and readiness 21