Class 3

Internal Analysis
611407 Strategic Management
King Mongkut’s University of Technology North Bangkok

Dr. Pard Teekasap

 Class Outline

 Recap of last class

 Submit last week reading assignment

 Internal Analysis

 Term project proposal

 Recap of the last class

 Strategy is to be unique, not just to have low cost with high

quality

 Strategy needs trade-off

 Fit within an organization is essential

 3 generic strategies – low cost, differentiate, and focus

 Internal Analysis

 SWOT

 Product Life Cycle

 Product Portfolio Matrix

 Core Competency
 SWOT

Strengths Weaknesses

Opportunities Threats
 SWOT exercise

 Conduct a SWOT analysis of these companies:

 AIS

 Starbucks
 Drawback of SWOT

 The lists are lengthy

 No requirement to prioritize the factors

 Unclear and ambiguous words and phrases

 No resolution of conflicts

 No obligation to verify statements

 Single level of analysis

 No logical link with an implementation phase

 Product Life Cycle

Decline
Maturity

Growth

Birth
Factors that drive change - Birth

 Perceived comparative advantage of new product relative

to the best available alternative

 Perceived risk or estimate by a prospective buyer of the

probability of a negative outcome

 Barriers to adoption

 Information and availability

 Change in the position of complementary products and

government regulations and policies
 Strategy for birth period

 Invest in promotion and distribution coverage

 Expand sales activity

 Provide technical service, warranty, after-sales service

 Reduce the delivered price or adding new features

 Experience curve – lower cost

Factors that drive to Rapid Growth

 Changes in relationship with substitute products

 Growth from new competitors

 Influence of repeat buying

 Opportunity for segmentation and adaptation

Factors that drive to Maturity

 Expansion from demographic, social, and economic

changes

 Buyer learning’s curve toward elasticity

 Stronger competition from excess capacity

 Factors that lead to declining

 Fashion, demographic, or technological change

 Drawback of the PLC

 Hard to identify which position we are in

 No robust tool for the forecasting

 PLC is only a conceptual idea, the real behavior is depended on

change factors and company’s strategy

 What is the strategy for each life period?

Product Portfolio Matrix/BCG Matrix
Goal of Product Portfolio Matrix

 Balance the cash flow

 Manage between products that

make profit with products that
require capital investment
Market Share

 Market share is correlated with

the product profitability
(Economies of scale &
Experience curve)

 Relative market share – the ratio

of the company’s share of the
market to the share of the largest
competitor
Market Growth Rate

 Present or forecast market

growth

 Rapid growth stage – market

share can be increased at
relatively low cost

 Maturity stage – new market

share is time-consuming and
costly
 Product Portfolio Exercise

 Apple

 CP
 Product Portfolio Strategy
Star Problem Child/Question
Mark
• reinvest earnings in the form • Invest heavily to get new
of price reduction, product share
improvement, better market • Acquire competitors
coverage, production • Market segmentation
efficiency strategy
Cash Cow Dog/Pet

• Maintain market dominance • Focus on a specialized

segment
• Use excess cash to support • Harvesting
other products • Divestment
• Abandonment
Overall strategy
 Pitfalls in the assumption

 Market share may not relate to the profitability

 Market share during the maturity stage may not be stable

 Product portfolio balances only cash and growth, but not risk

 Strategy may not be implemented

 Pitfalls in the measures

 Should product-market be broad or narrow?

 How much market segmentation?

 Should the focus be on the total product-market or a portion served

by the company?

 Which level of geography: local VS national VS regio-centric

markets?
 Core Competency

 Instead of looking at the product, we look at key

competences that make all products success

 “Real sources of advantage are to be found in

management’s ability to consolidate corporate-wide
technologies and production skills into competencies that
empower individual business to adapt quickly to changing
opportunities”
Core Competency
Example of core competencies
Test to identify core competencies

1. A core competence provides potential access to a wide

variety of markets

2. A core competence should make a significant

contribution to the perceived customer benefits of the end
product

3. A core competency should be difficult to imitate

Core competencies of True corporation

 What is the core competencies of True corporation?

Is it ok to outsource core competency?

 Outsourcing provides an opportunity to shortcut into a

more competitive product

 However, it contributes little to create skills required to

sustain product leadership

 What if technology providers step up and become direct

competitors?
 Core competence VS SBU

SBU will affect core competence building and maintaining

 Underinvestment in developing core competencies and core

products

 Imprisoned resources

 Bounded innovation
Strategic architecture & Core competencies

 Proper strategic architecture is essential for competence

building

 Strategic architecture is a roadmap of the future that

identifies which core competencies to build and their
constituent technologies
Which core competency should be focused

 How long could we preserve our competitiveness in this

business if we did not control this particular core
competence?

 How central is this core competence to perceived customer

benefits?

 What future opportunities would be foreclosed if we were to

lose this particular competence?
Term Project Proposal Presentation