Peter F.

Drucker

management model with aim to improve

agreed on by management & employees by clearly defined objectives
performance of organization

better participation

commitment among employees basic idea: everyone has a say in goal

setting & action plans
alignment of objectives across whole
organization

breaks down the primary operational

target a specific area for improvement
What exactly should be achieved?
at least indicator of progress
When (quantify) will it be achieved?
e.g. when we hit a 3% increase in X
Who will do it?
"What gets measured gets done" important: measurement
activities of the business into five distinct
segments of the value chain
acronym for criteria to make objective
setting easier
processes relating to the supply of raw
in-bound logistics
materials or inputs
Specific
actual processes/undertakings that create
operations product/service that has value to the
customer
processes necessary for transferring the
Measurable primary activities:
management by objectives outbound logistics product or delivering the service to the
SMART criteria customer
coined by George T. Doran Porter's Value Chain Analysis
processes or activities employed to deliver
Assignable marketing & sales
information to potential client

goal CAN be achieved with available processes employed to support product/

Realistic service
resources service following the sale

When should the goal be achieved?
most common: Specific, Measurable,
Achievable. Relevant, Time-bound
alignment of objectives
Time-related how the firm is organized around the value
organization of firm structure
creation process
many different alternatives for each letter
discovery, hiring, training, and managing the
HR
employment benefits of internal personnel
because of involvement motivation secondary/support activities:
technological processes necessary to
better communication technology development
support operations
advantages
better coordination acquiring the resources necessary to carry
purchasing (procurement/acquisitions)
out the operations that create value
clarity of objectives

supervision of employees
used to analyze an industry on profitability
increased pressure to perform disadvantages
position company where forces are weak

emphasis on quantity rather than quality

exploit changes in forces
used to

e.g. to neutralize supplier power, standardize

most complex instrument reshape forces in one's favour specifications for parts -> switching costs are
lower
added non-financial perf. meas. to financial
metrics ability of new competitors to enter the market

originally: performance measurement Threat of New Entry

concentration on financials only = insufficient low if incumbents seem too powerful (likely
framework
to cut prices, resources to fight back etc.)
gives managers a more balanced view of
organization strategic planning & management system relative strength of suppliers in the industry

Supplier Power
designed to improve communication & high if it's more concentrated than the
against strategic goals
monitor performance industry (e.g. Microsoft), doesn't depend on
Porter's Five Forces the industry, industry faces switching costs
used extensively to align business activities
to vision & strategy of the organization ability of customers to control product prices

developed by Kaplan & Norton
communicate goals/objectives
align day-to-day work with strategy
used to
prioritize projects/products/services
Buyer Power high if negotiating leverage -> few buyers,
standardized products, few switching costs,
able to threaten to produce a product
themselves
Balanced Scorecard (BSC)
ability of other products/services to meet
wants & needs of customer base

towards strategic targets measure & monitor progress

modern Threat of Substitution
high if attractive price-performance trade-

financial
management tools off, low switching costs for buyers

ability of competitors to increase market

customer share
organization is looked at with regards to
4 perspectives high if numerous competitors (equal in size/
processes
power), slow industry growth, high exit
Competitive Rivalry
barriers, highly-committed rivals
learning/growth

What do we want to achieve? objectives can lead to price competition, especially

when products are nearly identical &
switching costs low, fixed costs are high &
"Messgröße"
marginal costs are low, product is perishable
How can we measure our progress? measures
e.g. change in total revenue
each perspective should be looked at with 4
give figures to measures aspects in mind with respect to business costs & sales
targets measures
e. g. by 3%
proceeds through multiple phases
Which action do we have to take to achieve basic idea: life cycle of a product in the
initiatives
the objective? market requires many skills, tools & processes

involves many professional disciplines

connects strategic objectives in cause-and-
effect relationships with each other
better overview
helps to develop BSC
based on biological cycle
diagram that describes how an organization
products have a limited life
creates value
Strategy Map
connects aspects with each other different challenges, opportunities &
3 assumptions sales pass through distinct stages
problems for seller
created on one page -> graphical
products require different strategies in
different departments in the different stages

chart to analyze business units & products development

used to allocate resources sales: low starts slowly

analytical tool
brand marketing investment: very high

product management competition: low or none

used in introduction
strategic management demand has to be created
advertising: very high
portfolio analysis customers have to be prompted to product

for Boston Consulting Group (BCG) created by Bruce Henderson profit: low makes (almost) no money

units with high market share

sales: high

slow-growing industry mature market

investment: high reduced due to economics of scale
cash cows Product Lifecycle Management
generate cash in excess BCG Matrix (Growth-Share Matrix) growth competition: high a few new players

to be "milked" continuously with as little

as many as possible advertising: high public awareness increases
investment as possible stages

profit: high begins to rise

units with low market share
peaks
mature market
sales: high
dogs (pets) market saturation = reached
generate barely enough cash to maintain
"break even"
market share
production volumes increase -> costs are
investment: low
lowered
don't generate cash for company should be sold off
maturity
competition: very high
units with low market share
four types of elements
advertising: high brand differentiation emphasized
fast-growing industry
profit: high
to determine if they are worth investment to
careful analysis needed
grow market share or not question marks (problem children) sales: low

have potential to become a star and

when market growth slows down investment: low
eventually a cash cow

decline competition: low

can also degenerate into dog if market
growth declines
advertising: low
units with high market share
profit: low
fast-growing industry
stars problem: identifying features of the stages

when market growth slows & they maintain

category leadership
should be next cash cows
otherwise: become dogs