Measures of Central Tendency: Mean, Median and Mode
Strategy Templates
1. Strategy Templates
Jo Whitehead, Director
Ashridge Strategic Management Centre
2. Strategy: Answering a set of questions
2. What is the Internal
situation?
4. What is the
6. Which Option
primary
is best?
Issue?
3. How might the 5. What are the
situation Evolve? Options?
1. What is the External
environment?
“EIEIO”
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3. Introduction
• What follows is a set of templates that I find most
useful in designing a strategy
• There are certainly many others and many variants
that could be used
• I have limited myself to those I teach and find I most
commonly use when doing a strategy
• I have added some notes in the notes section –
although these are not comprehensive.
• The templates are best used in conjunction with
attending one of my strategy courses and/or my
book: What you need to know about strategy (also
see Whatyouneedtoknowaboutstrategy.com)
• I hope they help – please send comments and
questions to jo.whitehead@ashridge.org.uk
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5. In general, can segment on “Who, What, How”
How? What? Who?
Part of the industry Products/ service/ Geographies
value chain/ Value proposition customers, customer
organisation design needs, channel
Wholesale, Coffee, other Franchisees, city versus
Cafes beverages, food provincial, mass market
“US” versus “?” versus niche, country
Source: All the Right Moves; C. Markides
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6. Picking a segmentation: Coffee shop example
Potential Helps highlight Large differences
segmentation practical choices in size, growth,
about aims and profitability or
pathway? “ways to win”?
Wholesale versus cafes
Franchisees (big and
small) versus
concessions versus
company owned
City versus provisional
versus suburbs
Product mix
Brand Positioning
(e.g., “US”)
Customer Niche
Country
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7. Evaluation of industry/segment profitability
Group: ………………………………………….... Market segment: ………….……………………..
Score 1-5
1)
Potential entrants
• …
• …
• …
Score 1-5
1)
Score 1-5
1)
Score 1-5
1)
Supplier power Industry rivalry Buyer power
• … • … • …
• … • … • …
• … • … • …
Score 1-5
1)
Substitutes
• …
• …
• …
Segment profitability2) Comments on opportunities / threats
1 2 3 4 5 • …
• …
Low High • …
1) 1 = high power 5 = low power (= good for segment profitability)
2) Note: Low scores in, for example, supplier power, correspond with high scores in segment profitability
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9. Customer advantage: Value Curve example
High
Borders and Barnes & Noble
Relative
offering
level Chain Bookstores
Independent Bookstores
Low
Key elements
Adapted from Blue Ocean Strategy, Kim and Mauborgne, 1999
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10. Positional Advantage
Source of advantage Relevant? Drives Lower Cost or
Higher Value?
• Size: Market share, scale,
scope and experience
curve
• Brand and Differentiation
• Value chain design and
vertical integration
• Input costs
• Access to unique resources
or relationships e.g.,
patents, raw materials,
technology, suppliers,
customers, government
relationships
• Focus on a particular
product line
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11. Capability Advantage
Source of advantage Relevant? Drives Lower Cost or
Higher Value?
• IT and logistics e.g.,
Walmart, Tesco
• Processes e.g., Cisco M&A
and integration
• Skills e.g., credit risk
management at a bank
• People e.g., Goldman
Sachs
• Organisational culture,
values and behavioural
norms e.g., Southwest
Airlines
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12. Competitive Advantage Table Template
Target market segment: Product characteristics that drive customer
value:
% %
Sources of Our Compet- Compet- Mgt. Financial
Weight Weight
advantage Company itor A itor B Effort resources
now 2015
*Should be weighted – for simplicity, not shown here
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13. Evaluation of competitive advantage
Group: …………………….. Competitor: ……………………..
Market / segment (s): ……………………..
Importance Evaluation of competitors1)
Sources of Your
competitive advantage2) Your company Competitor
2010 2020 company Competit
today one
potentially
1
2
3
4
5
Overall 100% 100%
Competitive advantage Comments on strengths / weaknesses
1 2 3 4 5 • …
• …
Worst Best
in class in class • …
1) 1 = Worst in class, 3 = industry average, 5 = Best in class
2) Hint: Think of 3-5 drivers of current advantage and 3-5 drivers of ability to build new
sources of advantage
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14. Economics View of Advantage
Cost per customer
kilometre Revenue = 100
100
Overheads 15
80
Sales and
12 67
marketing With charges for baggage and food
60 Airport
8 57 Revenue from flight only
charges
Streamlined organisational structure
Cabin staff, 15 8
pilots Web-based, no travel agents used
5
40 Smaller airports
4
Plane 12 Higher utilisation
10
of staff
50% more time in 20% more seats
7
20 the air 30% higher
utilization
Fuel 28
19
0
Traditional European Airline Low cost airline
Lower costs from different business model
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15. Systems view of Advantage
Point to No baggage
point routes On time transfers,
– no hub departures no seat
and spoke reservations
Short
turnaround
Higher time
demand
Lower prices
for price Higher Under-
utilised, low
sensitive utilisation cost,
customers airports
Flexible
pricing
Lower costs
No frills –
pay only for
what you Web based
use sales
Culture
focused on
eliminating
costs
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16. Evaluation of overall competitive position
Group: …………………….. Competitor: ……………………..
Market / segment (s): ……………………..
Attractiveness / advantage matrix Comments
Competitive position
• …
High • …
• …
Average segment profitability
Average
Short-term challenges Mid- / long-term challenges
1-2 years > 3 years
• … • …
• … • …
• … • …
Low
Low Average High
Competitive advantage
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17. Evaluation of position: The Strategy Triangle
“Aims” (goals, ambitions, vision, objectives, intent)
“Capabilities” “Opportunities “
• Assets • Markets
• Technology Fit • Products
• Skills • New customers
• Culture • Competitors/
• Market positions Acquisitions
• Customer • Etc
relationships • Should include even
• Brand changes that you think
• Etc. are a threat (as every
change is, in theory,
an opportunity if you
have the right
capabilities)
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19. Framework for prioritising uncertainties
Likely Example: Changes Example: Resistance
in demand for power by grid company to
power plant
Action: Adapt in Action: Mould
Probability real time strategy to manage
of variance
from the
base case Example: Changes in Example: Forced
quality of water supply closure of all CO2
to the power plant emitting power plants
Action: Ignore Action: Hedge
Very downside, retain upside
unlikely
Low Very significant
Potential Impact of variance from the base case
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21. Definition of issue and generation of options
Group: …………………….. Opportunity: …………………….. Market / segment: ……………………..
Opportunities/ Threats No. Option description Time-frame
1
2
3
4
5
6
Issue
7
8
9
10
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22. Different horizons for issues and options
Type of Typical Approach for generating options
option time frame
“Planning” 1 – 3 years • Look for low hanging fruit
• Redouble current initiatives
• Incrementally improve position
Medium 3 – 5 years • Address important issues and
term challenges
strategy • Build new sources of advantage
• Position in more attractive segments
Long term 5+ years • Define your ideal outcome
objective • Analyse megatrends, scenarios –
or vision prepare for potential developments
• Share the future
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We can evaluate what are the most important segmentations by thinking about which help us make practical decisions, and which are truly distinctive in terms of size, growth, profitability or “ways to win” (i.e., sources of competitive advantage).
Note that segments are profitablewhen the power of the five forces is low. That means that if there is low power for a force it will contribute to a higher score for segment profitability. If the power is high will contribute to a lower score.
A very simple table to get you thinking about what are the sources of positional advantage in your business and (just to check they really are significant sources of advantage) the extent to which they drive differences versus the competition in cost or customer value.
This is a relatively simple way to get a first view of competitive advantage
This approach, showing how various aspects of the business model create advantage, is one that can be helpful if you are trying to sort out how various factors work together to create advantage. For example, people sometimes cannot decide which is more important – market share or lower costs. Market share provides scale which drives lower costs and lower costs allow the organisation to grow market share. So, it is the interaction between the two that matters and a diagram such as this can help sort that out.One issue with this approach is that it requires some time to sort through – so it can be hard to do in a short time in even a small group. So, you may need to leave yourself some time to deal with this.This approach sheds light on a particular aspect of advantage - the linked set of different parts of a strategy that make it hard for competitors to imitate. Complex systems of advantage tend to be more strong that types of advantage based on single sources of advantage e.g., A patent (that runs out) or scale (that might be achieved by competitors merging). This approach makes such linked sources of advantage explicit (at least, after the event!)
You will need to evaluate the options. The issue of “corporate value added” can only be completed after you have analysed the corporate strategy (using the following two templates).Note that we have added a section on “internal pre-requisites”. This encourages you to consider in more detail the “do-ability” of the option. For example - do we have the finance? The right people? The right organisational culture?