Class 5

Strategic Tool I
611407 Strategic Management
King Mongkut’s University of Technology North Bangkok

Dr. Pard Teekasap

 Agenda

 Discuss on midterm exam

 Lecture on strategic tool 1

 Strategy talk

 Term project progress report

 Comment on midterm exam

 Please don’t send an excel file

 Please use .docx or .pdf

 Content is what I want, not the decoration

 Everything you answer, you need to explain it

What is Vision?
Company’s Vision
 Core values

 Companies have between 3 to 5 core values

 If the circumstances changed and penalized us for holding

this core value, would we still keep it?
 Core values of Philip Morris

 The right to freedom of choice

 Winning – beating others in a

good fight

 Encouraging individual
initiative

 Opportunity based on merit; no

one is entitled to anyone

 Hard work and continuous self-

improvement
 Core purpose

 Organization’s reason for being

 5 Whys?
 Core purpose of Walt Disney

To make people
happy
 Discovering core ideology

 Core ideology can’t be created

 You discover core ideology

 Core ideology is to guide and

inspire, not to differentiate
 Vision-level BHAG

 Big, Hairy, Audacious Goals

 Bold missions to stimulate progress

 Requires 10 – 30 years of effort to complete

 Example of BHAG

 Become a $125 billion company by year 2000 (Wal-Mart,

1990)

 Crush Adidas (Nike, 1960s)

 Become number one or number two in every market we

served and revolutionize this company to have the strengths
of a big company combined with the leanness and agility of a
small company (GE, 1980s)
 Vivid description

 A vibrant, engaging, and specific description of what it

will be like to achieve the BHAG
 Vivid description of Ford

 “I will build a motor car for the

great multitude…It will be so low
in price that no man making a good
salary will be unable to own one
and enjoy with his family the
blessing of hours of pleasure in
God’s great open spaces…When
I’m through, everybody will be
able to afford one, and everyone
will have one. The horse will have
disappeared from our highways,
the automobile will be taken for
granted…give a large number of
men employment at good wages”
Why IPOD successful?
Not just the design, but the function

 IPOD’s design is unique and

cool

 But the key success factor is

Itune.

 This is a new business model

3 Steps for business model innovation

 Identify opportunity to satisfy customers

 Lay out how to make a profit

 Compare with existing model to see what to change

 Business model has 4 elements

 Customer value proposition (CVP)

 Profit formula

 Key resources

 Key processes
 Customer value proposition

 A way to help customers to get an important job done

 Job = a fundamental problem in a given situation that

needs a solution
 Tata’s CVP

Ratan Tata saw

motorcycles carrying
entire families. What if
he could provide these
families with a safe,
enclosed car at a price
they could afford?
KMUTNB wants new business model

What is the CVP the university

should target?
 Profit formula

 Revenue model: price x volume

 Cost structure: direct costs, indirect costs, economies of scale

 Margin model: margin for each transaction

 Resource velocity: how to utilize resource

 Tata’s profit formula

 To build a car for $2,500

 Profit would be generated through high volume

What is the profit formula for KMUTNB?
 Key resources & key processes

 Key elements that create value for the customer and the
company

 Tata form a team of young engineers to develop new processes

 Outsourcing 85% of car component

 60% fewer vendors

 Employing a network of assemblers

What are the key resources & key processes for KMUTNB?
Hints on CVP: 4 common barriers to get jobs done

 Insufficient wealth

 Insufficient access

 Insufficient skill

 Insufficient time
New business model is expensive

 Business innovation should not be used every time

 New products can be created without fundamentally change

the business model

 Business model change should be used when the significant

changes are needed to all elements of existing model
Why global film industry locates together at Hollywood?
 What is cluster?

Geographic concentrations of interconnected companies and

institutions in a particular field

Clusters promote both competition and cooperation

How clusters affect competition

 Increasing the productivity of companies in the area

 Driving the direction and pace of innovation

 Stimulating the formation of new businesses

Strategy Talk
Term Project Progress Report