Support de Cours Theme 2

ENCG - Casablanca
Strategic Management
Theme 2
Strategic Assessment : Basic Concepts and Tools

to perform External and Internal Assessment
S8/2021
Pr.Karim GASSEMI - ENCG - 1

Casablanca - 2021
Theme 2 Overview and Objectives
• Understanding the Basic and Fundamental Concepts of
Strategic Diagnosis ;
• Understanding how to perform External and Internal
Assessment;
• Understand the standard approach for conducting strategic
diagnosis Project;
• Perfoming strategic diagnosis tools;
– PESTEL model.
– Industry Competitiveness Analysis – Competitive Profile Matrix
(CPM);
– EFE(External Factor Evaluation) Matrix/ IFE (Internal Factor
Evaluation) Matrix
– SWOT & TOWS Analysis;
– BCG Matrix (Portfolio Analysis) : Level1, Level 2 & Level 3;
– Value Chain Analysis (CVA);
• Trend Monitoring (Indicators Analysis).
• The impact of Big Data and Machine Learning.
Pr.Karim GASSEMI - ENCG -
Casablanca - 2021
2
Strategic Diagnosis/Assessment ?
- Understand the strategic impact of the external

environment, the strategic capacity of the Resources
(resources, skills, finance, Information, etc…) and the
expectations and influences of stakeholders.
- Environment: opportunities and threats
- Resources, skills: strengths and weaknesses
- Stakeholder expectations: corporate governance,
cultural, ethical influences

Casablanca - 2021 3
Part I:
External Assessment
Determining Industry Attractiveness and

Identifying Strategic Opportunities

Casablanca - 2021 4
The scope of External
Environment

Casablanca - 2021 5
External Assessment
• Level 1: External Environment
• Level 2: Market Strctures
• Level 3: Industry Life Cycle
• Level 4: Competition Structure Analysis
• Level 5: Analyzing EFE Matrix

Casablanca - 2021 6
PESTEL ANALYSIS
PESTEL Analysis
General Questions

Casablanca - 2021
7
PESTEL ANALYSIS
• Used mainly in the case of an international

development orientation (New implementation in a
Country # Zone # Region # Market),
• Existence of up-to-date country, region and market
ratings (Moody's, IMF, Coface, etc ...),
• Assessing the notion of RISK(Political, Economic,

Social, etc ...).
Casablanca - 2021 8
PESTEL ANALYSIS: Risk Profile
Following up PESTEL Analysis

Casablanca - 2021 9
PESTEL ANALYSIS : Risk Profile
Level 1: Country RISK ASSESSMENT
COFACE RISK ASSESSMENT

www.coface.com
Level 2: Sector RISK ASSESSMENT

Casablanca - 2021 10
Level 1: Country Risk Assessment www.coface.com
A1: Very Low – A2: Low – A3:Quite Acceptable-A4: Acceptable-B:Significant-C:High-D:VeryHigh–E:Exterme

Casablanca - 2021
Level 2: Sector Risk Assessment www.coface.com

Casablanca - 2021
12
The Scope of Industry/Market
Structures
Competition Oligopoly Duopoly Monopoly
Concentration
Entry and Exit

Barriers
Industry / Market Structure
Product
Differentiation
Relevant Criteria
Information
Strategy Effect
Lobbying Effect Pr.Karim GASSEMI - ENCG - 13

Casablanca - 2021
The Scope of Industry/Market
Structures
Competition Oligopoly Duopoly Monopoly
Concentration Many firms A few firms Two firms One firm
Entry and Exit No/Low barriers Significant barriers High barriers

Barriers
Product Homogeneous
Differentiation Potential for product differentiation
Product
Perfect Imperfect availability of information

Information
Information flow High level of information Asymmetry
Strategy Effect Very High Very Low
lobbying Effect Very Low Very High

Casablanca - 2021
The Traditional Model of
Industry/Market Life Cycle
Standard Curve Analysis
Fermentation Shakeout Maturity Decline

volume
Sales
Time
The Industry/Market Life Cycle
as an S curve
Maturity
Sales volume
Discontinuity
Takeoff
Cannibalization
Zone
Ferment
Time
The Industry/Market Life Cycle
as an S curve
Maturity
Sales volume
Discontinuity
Takeoff
Cannibalization
Zone
Ferment
Time
Casablanca - 2021
17
Analysis of sector's competition and identification
of competitive factors
Porter’s model (5+1)
• This model makes it possible to structure the intellectual
approach of analysis of the competitive environment of a
market, a company or a product and to deduce from it the
factors of competitiveness;
• The environment is broken down according to five axes of

analysis (+ )A regulatory authority: Competitors, New
Entrants (outsiders) , Suppliers, Substitutes and Customers;

Porter’s Model Architecture
ANRT (-----)
The Structural Determinants of Competition (IT TelecommuncationsHow
) is the extent
Intensity of
Regulation ?
SUPPLIER
POWER(++++)
• Supplier concentration
• Relative bargaining
power
THREAT OF ENTRY (----) INDUSTRY RIVALRY SUBSTITUTE (---)

•Capital requirements •Concentration COMPETITION
•Economies of scale •Diversity of
•Absolute cost advantage competitors • Buyers’ propensity
to substitute
•Product differentiation •Product differentiation
• Relative prices &
•Access to distribution •Excess capacity &
channels exit barriers performance of
substitutes
•Legal/ regulatory barriers •Cost conditions
•Retaliation
BUYER POWER (-----)

• Buyers’ price sensitivity
• Relative bargaining
power
Porter ANALYSIS – Competing
Profile
Car Manufacturing in Germany: Industry Competitiveness Profile, 2018

EFE (External Factor Evaluation) Matrix ?
External Factors = Opportunities + Threats
External Factor Evaluation (EFE) matrix method

is a strategic-management tool often used for the assessment of
current strategy efficience and efficacy.
« The EFE matrix is a good tool to visualize

and prioritize the opportunities and
threats that a business is facing »

the Creation of EFE matrix?
1. List of factors (E): list of external factors.

Divide factors into two groups: Opportunities
and Threats.
2. Assign weights: Assign a weight to
each factor. The value of each weight should
be between 0 and 1 (or alternatively between
10 and 100 if you use the 10 to 100 scale).
Zero means the factor is not important. One or
hundred means that the factor is the most
influential and critical one.
The total value of all weights together should be

equal to 1 or 100.

the creation of EFE matrix?
3. Rate factors: Assign a rating to each factor.

Rating should be between 1 and 4. Rating indicates
how effective the firm’s current strategies respond to the
factor. 1 = the response is poor. 2 = the response is
below average. 3 = above average. 4 = superior.
Weights are industry-specific. Ratings are company-
specific.
4. Multiply weights by ratings: Multiply each factor
weight with its rating. This will calculate the weighted
score for each factor.
5. Total all weighted scores: Add all weighted
scores for each factor. This will calculate the total
weighted score for the company.

EFE Score Analysis
- Organization response is
outstanding to threats
- Firms strategy effectively
taking advantage of existing
opportunities and minimizing
the effects of external threats
1 ≤ EFE Total weighted Score ≤ 4
-Firm’s strategies is not

capitalizing on opportunities or
avoiding threats

EFE in pratice
American Airlines operates domestic and
international flights on four continents, from
its many hubs in Dallas-Fort Worth, Los
Angeles, New York / JFK, Miami and
Chicago O'Hare. In 2016, it is the 3rd
largest airline in the world
• Regarding the structures of the Airlines

markets (WorlWide) and also the nature of
the competition (Qatarairways, canadian
airlines, etc….)
• 2018, AA would like to assess the
effectiveness of it’s own strategy.

EFE Matrix
American Airlines, 2018

Specific to
EFE Matrix American Airlines
(Performed by Top
American Airlines, 2018 management)
Opportunities and
Threats
are the same
for all competitors
Specific to
The Industry
(Performed by Airlines
Industry Expert)
The analytical ability to seize opportunities and

Pr.Karim GASSEMI - ENCG - protect against threats from external
Casablanca - 2021 environments 27
EFE Matrix
American Airlines, 2018
What are the results to consider

after performing EFE matrix?

EFE Matrix
Example (American airlines, 2018)
It will be necessary to level
the capacity of AA to
take advantage of the
opportunities.
Action plan for

leveling -
improvement
process
It will be necessary to
level the capacity of the
AA to protect
itself from the impact of
the threats.

Sources of External Information
- Published & Unpublished sources
- Customer survey-Market research-
Speeches at meetings- TV programs-
Interviews.
- Journals-Government documents- books-
newspaper.
- Internet.
- Networking
- Business Intelligence documents
- ………
Part I
Key Learning Concepts.

Casablanca - 2021
Part II
Internal Assessment
RESOURCES,
CAPABILITIES, SKILLS AND
CORE COMPETENCES

Casablanca - 2021
32
Resources ?
-Resources are Assets employed in the activities

and processes of the organization.
-They can be tangible or intangible
-They can be obtained externally or internally

generated.

Resources ?
Several categories:
-Human
-Financial
-Physical/Technics
-Informational
An Audit of resources would be likely to include
an evaluation of resources in terms of
Availability, Quantity,Quality, Extent of
employment/Use, Sources, Control systems and
Performance.
Strategic Resources and Strategic
Capacity
• The classification of Strategic Assets
(Strategic Assets)
– Intangibles (patents, reputation, customers ...)

– Human (workforce, age pyramid, flexibility,
adaptability, etc.)
– Financial (to S.T., to L.T., ability to mobilize ...)
– Techniques (equipment, buildings, stocks ...)
– Information (competitive intelligence, strategic
intelligence information, etc ...)

The relationships between Resources,
Capabilities and Core Competence
Resources Capabilities Core competence
human, financial, skills, technology
physical, skills, relationships, relationships, Perceived
technological, + organizational = knowledge and customer
legal, informational knowledge reputation of the firm benefits/value
Intangible Unique, and added
Tangible and and invisible difficult to copy
visible assets assets (DNA of the firm)
Inputs to Integration of Not all capabilities are core

the firm’s resources into competences – only those
processes value-adding that add greater value than
activities those of competitors
Core competence is the key element

regarding the defining of strategy
Models for performing Internal
Assessment
• Level 1: Performing Swot/Tows Analysis
• Level 2: Performing Chain Value Analysis
• Level 3: Performing BCG Matrix
• Level 4: Performing IFE (Internal Factor

Evaluation) Matrix

Basics of SWOT/TOWS
ANALYSIS
• Strength: A Strength in the strategic sense refers to

a capability that an enterprise has in-house. This
Capacity must necessarily influence the acquisition
of Competitive Advantage.
• Weakness: A weakness in the strategic sense is an

insufficiency of which the company suffers
internally.

SWOT/TOWS- ANALYSIS Internal/External
Diagnosis
• Opportunity: Often refers to a Part/Segment of

a market/Industry in which the Entreprise
could benefit from it through the CA.
• threat : Often refers to an existential constraint

at the level of a market/Industry that may
attempt the survival and durability of the
business (Entreprise).
Opportunities + Threats are industry/market specfic – they are the same
for competitors
SWOT/TOWS- ANALYSIS Internal/External
Diagnosis
SWOT LEVEL 1
(Strenghts) (Weaknesses)
Standard Key Indicators Standard Key Indicators

- Expertise / Patents - Lack of expertise
- New product or service - Undifferentiated products and service
- Good implementation of the activity - Bad implementation
- Cost advantage / know-how - Access to distribution channels
- Quality processes and procedures - Quality of products / services
- Brand or strong reputation. - Bad reputation.
- Etc ... - Etc ...
(Opportunities) (Threats)
Standard Key Indicators Standard Key Indicators
Emerging market -- New competitor on the market
- Mergers, JVs, strategic alliances - Price war
- Enter new market segments - New substitution product
- A new international market - New regulations
- Reduction of regulations - Trade barriers
- Suppression of trade barriers. - New taxation.
- Etc ... - Etc ...
SWOT ANALYSIS Internal/External
Diagnosis
TOWS (SWOT LEVEL 2)

SWOT ANALYSIS Internal/External
Diagnosis
SWOT LEVEL 2
Defense Attack
Strategy Strategy
Survival Adjustment
Strategy Strategy

SWOT Analysis (IAM – Orange)
Internal External Internal External
-Strong reputation - Increasing development -A high rate of - Increasing development
(historical operator) of consumer behavior, modernization of of consumer behavior,
-High degree of control of - A generational management tools; - A generational
telecommunication phenomenon (Existence of -Orientation of the phenomenon (Existence of
infrastructure churn at early age); marketing strategy towards churn at early age);
-High Brand image Competitiveness effect segments with high added Competitiveness effect
developed in the collective between manufacturers value; between manufacturers
memory of Moroccans -A heterogeneous
(Ittisalat). governance structure.
-Low motivation of Human -High threat of new -Limited competitiveness -High threat of new
Resources; entrants (outsider); (partial control of factors of entrants (outsider);
-Low rate of moderization - Scarity of Human production); - Scarity of Human
of management tools, Resources with the -An image / perception of Resources with the
-Low capacity for creativity required skills. follower; required skills.
and innovation

Similarities
++

-Strong reputation - Increasing development -A high rate of - Increasing development
-High degree of control of - A generational management tools; - A generational
infrastructure; churn at early age); marketing strategy towards churn at early age);
-High Brand image Competitiveness effect segments with high added Competitiveness effect
developed in the collective between manufacturers value; between manufacturers
memory of Moroccans -A heterogeneous
(Ittisalat). governance structure.
Crossed effect
-Low motivation of Human -High threat of new -Limited competitiveness -High threat of new
Resources; entrants (outsider); (partial control of factors of entrants (outsider);
-Low rate of moderization - Scarity of Human production); - Scarity of Human
of management tools, Resources with the -An image / perception of Resources with the
-Low capacity for creativity required skills. follower; required skills.
and innovatio
-- Pr.Karim GASSEMI - ENCG -

Similarities
++

-Strong reputation - increasing development -A high rate of - increasing development
-High degree of control of A generational management tools; A generational
infrastructure; early age churn); marketing strategy towards early age churn);
-Brand image developed in Competitiveness effect segments with high added Competitiveness effect
the collective memory of between manufacturers value; between manufacturers
Moroccans (Ittisalat). -A heterogeneous
governance structure.
Analysis of the gaps between the strengths and weaknesses of different

Crossed Effect competitors is often synonymous with source of benefits
-Low motivation of Human -Great threat of new
competitive
-Limited competitiveness -Great threat of new
Resources; entrants; (partial control of factors of entrants;
production); - Growing Rarification of
-Low rate of moderization - Growing Rarification of
of management tools, Human Resources with the -An image / perception of Human Resources with the
required skills. follower; required skills.
-Low capacity for creativity
and innovatio
-- Pr.Karim GASSEMI - ENCG -

The BCG Matrix
-The Boston Consulting Group (BCG) growth-share
matrix is most often used by organizations in
multiproduct and multimarket situations.
-BCG matrix offers a way of examining and making
sense of a company’s portfolio of activities and
market interests.
- Portfolio analysis is used in evaluating the balance of
an organization’s range of SBUs.
-A broad portfolio can spread risk across more than
one market or one activities
Casablanca - 2021
Analysis of the BCG matrix
(Strategic Perspective)
Market growth rate (MGR)
+ 30 Stars Question Mark
SBU 2 SBU 4
20 SBU 3
10%
0
SBU 1
SBU 5 SBU 6
-10 Cash Cows Poor Dogs

- 10 4 1 0,2 0,1
+ Relative Market Share (RMS)
-
Casablanca - 2021
47
BCG matrix 2: Typologies and equilibrium of SBU
(++)
Investment Extent
(--) Competitive position

(++) (--)
Aged Portfolio Balanced Portfolio Juvenile Portfolio
Risk minimization Mobilization of fund’s

Creativity Company (--) Mechanism of creativity company
Risk - Sustainability

Casablanca - 2021
48
BCG matrix 2: Typologies and Equilibrium of SBU
(++)
(--)
(++) (--)
Aged Portfolio Balanced Portfolio Juvenile Portfolio
Risk minimization Mobilization of fund’s

Creativity Company (--) Mechanism of creativity company
Risk - Sustainability

Casablanca - 2021
49
Analysis of the BCG matrix 3 (Financial
Issues) - Funding flow
Market growth rate (MGR)
+ 30
Stars Question Mark

20
10%
0 Cash Cows Poor Dogs
-10
- 10 4 1 0,2 0,1
+ Relative Market Share (RMS)
-
Performing Internal Factors Evaluation (IFE)
- List key internal factors (I);

- Assign a weight that ranges from 10% (not important) to
100% (Very important) to each factor: Weight marks the
relative effect of each factor to influence the success or
failure of the enterprise in the industry.
- Assign a 1-to-4 rating to each factor to indicate whether
that factor represents a strength or weakness: An major
weakness is represented by 1 , 2 for minor weakness, 3
for minor strenght and 4 major strenght.
the score of strenght must be 4 or 3, the score of weakness

must be 1 or 2
Performing Internal Factors Evaluation (IFE)
- Multiply each factor’s weight by its rating to determine a

weighted score for each Factor;
- Sum the weighted scores for each factor to determine the

total weighted score for the organization.

Casablanca - 2021
52
IFE Score Analysis
Internal situation is very strong
1 ≤ IFE Total weighted Score ≤ 4
Internal situation is very weak

IFE in pratice
Air Freight Companies

Fleet Size: 75
Destinations: 150
In terms of volume, it’s hard to match the breadth of the DHL

Aviation air freight operation. The company, with is
comprised of main airlines European Air Freight Transport
claims to be the global leader in air freight, carrying 12
percent of the total worldwide market.

IFE in pratice

IFE in pratice
level
the strenghts of DHL
Action plan
for leveling -
improvement
process
level the capacity of the
DHL to minimize the
effects its weaknesses
Pr.Karim GASSEMI - ENCG - The extent of internal strength /

Casablanca - 2021 weakness
56
Strategy Key Indicators
Competition Indicators
Relative Market Share (RMS) / Part du Marché Relative (PMR):
RMS = (Turnover) / (Turnover of the main competitor or

average of the three main competitors)
Indicator for measuring the effect of the strategy on mid-term
Market Share Value (MSV)/ Part du marché
MSV = (Turnover) / Turnover of the market

Indicator for measuring sales performance

Market Indicators
Market Coverage Rate (MCR)/ Taux de Couverture du Marché (TCM)
MCR (SBU) = (Turnover) / (Total Demand)

Indicator for measuring market saturation / potential of the market
Average Annual Variation(AAV)/ Variation annuelle moyenne
AAV(SBU) = Σ ((Turnover(n) – Turnover (n-1))/ Turnover(n-1 / ))/n -1

Indicator for measuring the average variation of activity
1- Dynamic reference year
2 – Fixed reference year (N-1)

Indicator/SBU (2016) (2017) (2018) (2019)
Turn Over ($$) 100 145 130 80
RSMV(%) 10% 30% 20% 8%
MCR (%) 50% 60% 40% 15%
Question 1: Calculate the value of the AAV indicator over the period 2016/2019. What
conclusions can be draw on the value of the AAV indicator? Calculate the forcast of the
Turnover for 2020 (Dynamic Reference Year).
Question 2: What are the strategic conclusions considering the RSMV indicator analysis?
Question 3: What are the strategic conclusions considering the MCR indicator analysis?

Business Analytics and Strategy Metrics
(Exercice 1 / 2)
Indicator/SBU (2016) (2017) (2018) (2019)
Turn Over ($$) 10 8 12 25
SMV(%) 12% 15% 17% 20%
MCR (%) 0,5% 3% 5% 4%
RSMV 1% 5% 8% 10%
Question 1: Calculate the value of the AAV indicator over the period 2016/2019.
What conclusions can be draw on the value of the AAV indicator? Calculate the
forcast of the Turnover for 2020.
Question 2: What are the strategic conclusions considering the RSMV indicator
analysis? What are the advices to provide to this company?
Question 3: What are the strategic conclusions considering the MCR/MSV

indicator analysis? What are the advices to provide to this company?

Business Analytics and Strategy Metrics
(Exercice 2 / 2)
Indicator/SBU (2016) (2017) (2018) (2019)
Turn Over ($$) 120 100 115 130
SMV(%) 20% 18% 20% 25%
Total Demand 10000 150000 160000 180000
RSMV 1% 5% 8% 10%
Question 1: Calculate the value of the AAV indicator over the period
2016/2019(Considering the year 2016 as year of reference) . What conclusions can be
draw on the value of the AAV indicator? Calculate the forcast of the Turnover for 2020.
Question 2: Calculate the Market Cover Rate from 2016 to 2019. What are the conclusions
to be drawn regarding this indicator ?
Question 3: What are the strategic conclusions considering this entreprise ? What are the
advices to provide to this company?


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ENCG - Casablanca

Strategic Assessment : Basic Concepts and Tools

Pr.Karim GASSEMI - ENCG - 1

- Understand the strategic impact of the external

Pr.Karim GASSEMI - ENCG -

Determining Industry Attractiveness and

Pr.Karim GASSEMI - ENCG -

Pr.Karim GASSEMI - ENCG -

• Level 2: Market Strctures

• Level 3: Industry Life Cycle

• Level 4: Competition Structure Analysis

• Level 5: Analyzing EFE Matrix

Pr.Karim GASSEMI - ENCG -

• Used mainly in the case of an international

• Assessing the notion of RISK(Political, Economic,

Pr.Karim GASSEMI - ENCG -

COFACE RISK ASSESSMENT

Level 2: Sector RISK ASSESSMENT

Pr.Karim GASSEMI - ENCG -

Pr.Karim GASSEMI - ENCG - 11

Pr.Karim GASSEMI - ENCG -

Entry and Exit

Lobbying Effect Pr.Karim GASSEMI - ENCG - 13

Concentration Many firms A few firms Two firms One firm

Entry and Exit No/Low barriers Significant barriers High barriers

Perfect Imperfect availability of information

Strategy Effect Very High Very Low

lobbying Effect Very Low Very High

Fermentation Shakeout Maturity Decline

• The environment is broken down according to five axes of

Pr.Karim GASSEMI - ENCG -

THREAT OF ENTRY (----) INDUSTRY RIVALRY SUBSTITUTE (---)

BUYER POWER (-----)

Car Manufacturing in Germany: Industry Competitiveness Profile, 2018

External Factors = Opportunities + Threats

External Factor Evaluation (EFE) matrix method

« The EFE matrix is a good tool to visualize

Pr.Karim GASSEMI - ENCG -

1. List of factors (E): list of external factors.

The total value of all weights together should be

Pr.Karim GASSEMI - ENCG -

3. Rate factors: Assign a rating to each factor.

Pr.Karim GASSEMI - ENCG -

1 ≤ EFE Total weighted Score ≤ 4

-Firm’s strategies is not

Pr.Karim GASSEMI - ENCG -

• Regarding the structures of the Airlines

Pr.Karim GASSEMI - ENCG -

Pr.Karim GASSEMI - ENCG -

The analytical ability to seize opportunities and

What are the results to consider

Pr.Karim GASSEMI - ENCG -

Action plan for

Pr.Karim GASSEMI - ENCG -

Key Learning Concepts.

Pr.Karim GASSEMI - ENCG - 31

Pr.Karim GASSEMI - ENCG -

-Resources are Assets employed in the activities

-They can be tangible or intangible

-They can be obtained externally or internally

Pr.Karim GASSEMI - ENCG -

– Intangibles (patents, reputation, customers ...)