R PJ M D B U M D J AWA B A R AT

Juli 2 0 1 9

© Biro BUMD dan Investasi Sekretariat Daerah Provinsi Jawa Barat

STRATEGIC PLANNING PROCESS
BUMD PEMPROV JABAR

MARYAT NIRWANDI
HOTEL PREANGER, 10 – 11 JULY 2019
 Strategic Process
Analysis
External
Current Strategy Internal Environment
Environment

Assess Current
Goals and Future
Strategy and
Performance
Environment

Strategic Alternatives
Evaluation

Recommendations

corporatefinanceinstitute.com
Strategic Planning Framework
 Levels of Strategy

Corporate-level (Portfolio) Portfolio

approach to managing multiple businesses

Business-level
Market positioning strategies to gain
competitive advantage in one or multiple
industries

Functional-level
Activities within and between different
functions aimed at improving efficiency of the
overall business

corporatefinanceinstitute.com
SWOT Analysis

Swot analysis – an analysis of an organization’s

SWOT strengths and weaknesses alongside the
Analysis opportunities and threats present in the
external environment.

Swot analysis involves the collection and portrayal

of information about internal and external factors
SWOT
Analysis which have, or may have, an impact on business.”

It is a framework that allows managers to synthesize

insights obtained from an internal analysis of the
SWOT company’s strengths and weaknesses with those
Analysis
from an analysis of external opportunities and
threats.”
 SWOT Analysis SWOT Analysis
A better life with the better planning

Strengths S W Weakness

• Edit text here • Edit text here

• Edit text here • Edit text here

SWOT
Analysis

• Edit text here • Edit text here

• Edit text here • Edit text here

Opportunities
O T Threats
SWOT Analysis
Factors should be action orientated. For
example, “slow introduction of new products” is
Factors have to be identified relative SWOT
SWOT to the competitors Analysis
action orientated weakness.
Analysis

List between 3 – 5 items for each

SWOT category. Prevents creating too
Analysis short or endless lists.

Items must be clearly defined and as

SWOT specific as possible
Analysis

Rely on facts not opinions. Find

SWOT some external information or
Analysis involve someone who
could provide an unbiased opinion.
 SWOT Analysis Example
A better life with the better planning

Strengths

1. Customer loyalty combined with expanding

S W Weakness
closed eco system
2. Apple is a leading innovator in mobile device 1. High price
technology 2. Incompatibility with different OS
3. Strong financial performance 3. Decreasing market share
($10,000,000,000 cash, gross profit margin 4. Patent infringements
43.9% and no debt) 5. Further changes in management
4. Brand reputation 6. Defects of new products
Retail stores 7. Long-term gross margin decline
5.
6. Strong marketing and advertising teams SWOT
Apple -
Opportunities 2013 Threats
1. High demand of iPad mini and iPhone 5 1. Rapid technological change
2. iTV launch 2. 2013 tax increases
3. Emergence of the new provider of application 3. Rising pay levels for Foxconn workers
processors 4. Breached IP rights
4. Growth of tablet and smartphone markets 5. Price pressure from Samsung over key
5. Obtaining patents through acquisitions components

O T
6. Damages from patent infringements 6. Strong dollar
7. Strong growth of mobile advertising market 7. Android OS growth
8. Increasing demand for cloud based services 8. Competitors moves in online
9. music market
TOWS Analysis
External Opportunities (O) External Threats (T)

TOWS 1 1
Analysis
2 2
3 3

Internal Strengths (S)

1
SO 'Maxi-Maxi' Strategy ST 'Maxi-Mini' Strategy

Strategies that use Strategies that use

2 strengths to maximise strengths to minimise
3 opportunities. threats.

Internal Weaknesses (W)

1
WO 'Mini-Maxi' Strategy
WT 'Mini-Mini' Strategy
Strategies that minimise
Strategies that minimise
2 weaknesses by taking
weaknesses and avoid
advantage of opportunities.
3 threats.
External Environment of Firm

The Firm

(Pearce and Robinson, 2015)

PESTLE (PEST) Analysis

Political Technological
This is a sample text. Insert PP TT This is a sample text. Insert
your desired text here. your desired text here.

Economy Legal
This is a sample text. EE LL This is a sample text.
Insert your desired Insert your desired
text here. text here.

Social Environment
This is a sample text. Insert
SS EE This is a sample text. Insert
your desired text here. your desired text here.

This is a sample text. Insert your desired text here. This is a sample text.
Insert your desired text here.
Broad factors analysis (PEST)

Examples of forces Impacts

Low barriers to international trade and
investment
Political
factors Regulatory environment change, free trade
change, country-specific political risk change
Increases intensity of competition and lowers profitability
Constraint the operations of organizations and pose
opportunities and threats to the companies

Affects cost of capital and a company’s ability to raise funds

Interest rates
and invest in new assets

Low exchange rates reduce threats from foreign competitors

Currency exchange rates
and create overseas opportunities
Economic
factors Destabilizes the economy and makes the future less
Inflation
predictable

High growth increases customer expenditures and eases

Growth rate of the economy
competitive pressures

corporatefinanceinstitute.com
Broad factors analysis (PEST)

Examples of forces Impacts

Education level changes, health consciousness,

Changing social mores and values can impact the business of an entire
preferences relating to the nature environment
industry
Socio-
demographic
factors
Characteristics of population can have major implications for
Population and age cohort changes
organizations

Scientific advances, R&D investment,

Technological Affects the height of barrier to entry and reshapes the
emerging technologies, diffusion of industry structure
factors
technologies

corporatefinanceinstitute.com
Porter’s 5 Force

Porter ’s five forces model is an analysis tool that uses five forces to determine the
profitability of an industry and shape a firm’s competitive strategy.

It is a framework that classifies and analyzes the most important forces affecting
the intensity of competition in an industry and its profitability level.

Five forces model was created by M. Porter in 1979 to understand how five key
competitive forces are affecting an industry.

companyname.com 15
Porter's Five Forces
Threat of New Entry Competitive
This is a sample text. Rivalry
Threat of
Insert your desired Threat of
New Entry This is a sample
text here. New Entry text. Insert your
desired text
here.

Supplier Power Buyer Power

This is a sample text. This is a sample text.
Insert your desired Supplier
Supplier Competitive Buyer
Buyer
Power er Competitive Power
Insert your desired
text here. Pow Rivalry
Rivalry Power text here.

Threat of Threat of Substitution

Substitution
Threat of
This is a sample text.
Substitution Insert your desired
text here.
Using the Porter’s 5 Forces Tool

Step 1

Gather the information on

VRIO each of the five forces

Step 2

Analyze the results and

display them on a diagram

Step 3

Formulate strategies based

on the conclusions
The Most Important Factors of Porter's Five Forces

Threat of Supplier Buyer Threat of Rivalry among existing

New Entry Power Power Substitutes competitors

• Amount of capital • Number of suppliers • Number of buyers • Number of substitutes • Number of

required • Suppliers’ size • Size of buyers • Performance of competitors
• Retaliation by existing • Ability to find substitute • Size of each order substitutes • Cost of leaving an
companies materials • Buyers’ cost of • Cost of changing industry
• Legal barriers (patents, • Materials scarcity switching suppliers • Industry growth rate
copyrights, etc.) • Cost of switching to • There are many and size
• Brand reputation alternative materials substitutes • Product differentiation
• Product differentiation • Threat of integrating • Price sensitivity • Competitors’ size
• Access to suppliers and forward • Threat of integrating • Customer loyalty
distributors backward • Threat of horizontal
• Economies of scale integration
• Sunk costs • Level of advertising
• Government regulation expense
Competitors Analysis
Competitive Analysis Matrix

Current Market Competence and Business From a

Economic Situation Customer Market Position
Position Product Line Perspective

Our Business 4 3 1 2 10 Market Leader

Competitor 1 2 3 1 3 9 Market Leader

Competitors

15 Niche
Competitor 2 4 2 5 4
supplier

Competitor 3 5 3 2 3 13 Contender

10 Niche
Competitor 4 3 1 2 4
supplier

12 Niche
Competitor 5 5 1 4 2 supplier

mnirwandi@yahoo.com; @mnirwandi 19
Value Chain Analysis (VCA)

Value chain analysis (VCA) is a process where a firm identifies its primary and support
Value activities that add value to its final product and then analyze these activities to reduce
Chain costs or increase differentiation.
Analysis

VCA is a strategy tool used to analyze internal firm activities. Its goal is to recognize,
which activities are the most valuable (i.e. are the source of cost or differentiation Value
advantage) to the firm and which ones could be improved to provide competitive Chain
advantage Analysis

companyname.com 20
Primary and support
activities
Primary activities
Activities related to the design, creation and delivery of the
product; its market, support and after-sales service
• Inbound logistics: inbound movement of materials,
parts and inventory
• Operations: the business a company is in
• Outbound logistics: storage and movement of final
products to customers
• Marketing and sales: sales and promotion of products or
services
• After-sales service: maintenance or follow-up activities
Support activities
Activities that provide inputs that allow the primary
activities to take place
• Firm infrastructure: including accounting, legal,
finance, quality assurance, control systems and culture
• Financial management: management of cash inflows and
outflows
• Human resource management: recruiting, training,
supervising and compensating
• Technology development: R&D and innovations in
business activities
• Procurement: acquisition of goods, services or
materials from external source
Value Chain Analysis
Firm Infrastructure

Activities
Human Resources
Support

Technology development
Procurement
Activities
Primarily

Inbound Outbound Marketing

Operations Service
Logistics Logistics and Sales

Sourcing and Customer

Procurement Systems
Industry Value Chain Relationship Management Systems

Suppliers’
Suppliers
Suppliers FIRM Distributors Customers
Using the VCA Tool
Step 2

Step 1
Step 1
Establish the relative importance Identify the customers’ value
Identify the firm’s primary
of each activity in the total cost of creating activities
and support activities
the product

Step 3 Step 2
Cost Advantage:
Differentiation
Identify opportunities for Advantage:
This approach is
used when reducing costs
Identify cost drivers Evaluate the differentiation The firms that
organizations try
for each activity strategies for improving strive to create
to compete on
customer value superior products
costs and want to
or services use
understand the
Step 5 differentiation
sources of their
advantage
cost advantage or Step 3
approach.
disadvantage and Step 4
what factors drive
those costs. Identify links between
activities
Identify the best sustainable
differentiation
 Value Chain Analysis (VCA)
Purchasing Testing &
Step 1 Design & Sales & Distribution &
Materials & Assembly Quality
Engineering Marketing Dealer Support
Components Control

Step 2 • $164 M less • $410 M very • $524 M very • $10 M not • $384 M important • $230 M less
important important important imortant important
Step 3
• Size of advertising
• Number and • Order size • Scale of plants • Level of quality budget • Number of dealers
frequency of new • Average value of • Capacity utilization targets • Strength of • Sales per dealer
models purchases per • Frequency of existing reputation
• Risk identification • Frequency of
• Sales per model supplier defects • Sales volume defects requiring
• Location of plants repair recalls
• Location of
suppliers

Step 4
1. High-quality assembling process reduces defects and costs in quality control and dealer support activities.
2. Locating plants near the cluster of suppliers or dealers reduces purchasing and distribution costs.
3. Fewer model designs reduce assembling costs.
4. Higher order sizes increase warehousing costs.

Step 5
1. Create just one model design for different regions to cut costs in designing and engineering, to increase order sizes of the same materials, to simplify assembling
and quality control processes and to lower marketing costs.
2. Manufacture components inside the company to eliminate transaction costs of buying them in the market and to optimize plant utilization. This would also lead
to greater economies of scale
Value ChainExample - Walmart

Management incentive compensation based on earnings; high inventory turnover

Firm Infrastructure
to minimize costs
Financial
Strict cost control to achieve economies of scale
Management
Human Resource Training program focused on performance of sales personnel; performance feedback
Management for improvement; compensation partly performance-based
Technology
Development Apps for inventory management; transformation to e-commerce

Procurement Long-term relationships with suppliers to maintain low material costs

Efficient supply Operatesa chainof Cross docking at Cost leadership Inventory

sourcing and low hypermarkets, distribution centers to genericstrategy management
costs throughhigh discount department minimize inventory techniques to
“Everydaylow
volumepurchases stores and grocery and transportation deliverproducts
prices”
stores around the costs and savestime directly to
Supply chainand
world customers
inventory
management

Inbound Outbound Marketing &

Operations Service
Logistics Logistics Sales

corporatefinanceinstitute.com
Value ChainExample - Amazon

Central customer data warehouse for online services and customer

Firm Infrastructure
consumption behavior analysis

Financial Huge economies of scale and effective supply chain strategies allow the minimization of overall
Management unit costs
Human Resource
Management Provision of great compensation and benefits to motivate employees
Technology
Development In-house computing cloud for Amazon Web services and customer consumption behavior analysis

Procurement Extensive network of warehouses, multi-tier inventory management and efficient transportation

Marketing to sellers Provide online Over 100fulfilment Increased global Provision of large product
andbuyers platform for centers globally to marketexpenses to selections,fast delivery
buying and selling provide fast delivery promote their and great customer
Fulfilment by
products commitment to services
Amazon(FBA) Amazon Robotics in
customer
producthandling Amazon Primetwo-
experience
day delivery
Return policy

Inbound Outbound Marketing &

Operations Service
Logistics Logistics Sales

corporatefinanceinstitute.com
VRIO Framework

“VRIO framework is the tool used to analyze firm’s internal resources and
capabilities to find out if they can be a source of sustained competitive
advantage.”

“Value chain represents the internal activities a firm engages in when transforming inputs
into outputs.”

VCA is a strategy tool used to analyze internal firm activities. Its goal is to recognize,
which activities are the most valuable (i.e. are the source of cost or differentiation
advantage) to the firm and which ones could be improved to provide competitive
advantage

27
VRIO Framework

Valuable Rare Hard to Imitate Organized to Exploit

Valuable + Rare = Temporary Competitive Advantage Valuable + Rare +

Valuable + Rare + Difficult to imitate +
Difficult to Imitate = Organized to Exploit =
Sustainable Competitive Core Competence
Advantage
Using the VRIO Tool

Orga-
Costly nized to
Valuable Rare to capture
Imitate Value

Yes Yes
Yes

No No No No

Competitive Competitive Short – Term Unused

Disadvantage Equality/Parity Competitive Advantage Competitive Advantage

Long – Term/Sustained
Competitive Advantage
VRIO Framework

Is the firm
Is it hard to What is the
Is it valuable? Is it rare? organized
imitate? result
around it?
Competitive
No Disadvantage

Competitive
Yes No Equality

Short - Term
Yes Yes No Competitive Advantage
Unused
Yes Yes Yes No Competitive Advantage

Long - Term
Yes Yes Yes Yes Competitive Advantage
Using the VRIO Tool

Step 1

Identify valuable, rare and

VRIO costly to imitiate resources

Step 2

Find out if your company

Constantly review VRIO
Is organized to explote
resources & capabilities
These resources

Step 3

Step 4

Protect the resources

Resources and Activities
Benchmarking
To identify strengths and weaknesses, managers should benchmark the efficiency and effectiveness in resource
employment and performance of business activities against competitors and/or against historic
performance of the company itself.

Some examples of questions managers should ask about the company’s current operation:

Resources Organizational Structure Activities

Are financial resources distributed to Do departments collaborate with

Are the activities adding value to the
projects and business units according each other to improve product business?
to task priorities? quality?

Are human resources allocated and Are the activities performed at

Is the current structure optimal to
utilized efficiently across departments? minimum cost and maximum
the company’s operation?
efficiency?

Are intangible resources being Do the departments contribute to the Are there ways to improve processes in
protected from imitation by company the way they are supposed the business to boost profitability?
competitors? to?

corporatefinanceinstitute.com
Threats to sustaining
competitive
Barriers to imitation
Greater opportunity for a company to build a
strong market position when it takes
competitors a long time to imitate a core
competency
Tangible resources are easier to imitate while
capabilities and intangible resources are
more difficult to imitate
advantage
Capabilities of competitors Industry dynamism
Companies with a strategic commitment usually High rate of product innovation in an
finds it more difficult responding to new industry poses threats to companies
competition
Competitors with high absorptive capacity are
more likely to imitate competitive advantage of
others
Threats to sustaining
competitive advantage
Porter’s GenericStrategies
Source of Competitive Advantage

Low Cost Differentiation

Differentiation
Cost Leadership
Differentiate products by recognizing
Broad Lower costs in different segments
different segments or offering
Target to offer lower prices and make
different products to each segment
profits

Competitive
Scope

Cost Focus Differentiation Focus

Narrow Become low-cost player in a Customize product offerings to the

Target certain targeted segment or needs of targeted segment or niche
niche

corporatefinanceinstitute.com Source: Porter, M. E. (1980). Competitive Strategy: Techniques for Analyzing Industries and Competitors. New York: Free Press.
Functional-level
strategies
Functional-level strategies are strategies aimed at improving the effectiveness of a company’s
operations and its ability to attain superior efficiency, quality, innovation and customer
responsiveness.

Build
Resources

Functional Strategies:
Differentiation
• Superior efficiency
Distinctive Shape • Quality Value Superior
competencies
• Innovation creation profitability
• Customer
responsiveness Low cost
Build
Capabilities

corporatefinanceinstitute.com
Functional-Level
Strategies
• Improving efficiency
• Economies of scale
• Learning effects
• Just-in-time ( JIT) inventory system
• Ease-of-manufacture product design to
• minimize development time
• Advancing innovation
• Close integration between R&D,
operations and marketing functions
• Marketing intelligence
• Continuous improvement of existing
• product attributes
Enhancing quality
• Economies of scale
• Learning effects
• Total quality management (TQM)
• Marketing insights which help improve
product attributes
Increasing customer responsiveness
• Mission statement that emphasizes customer value
• Shaping employee attributes
• Customer feedback analysis
• Product customization
• Reduced response time to customers
Strategy Mapping

“To succeed
‘financially, how Lower Increase Increase
should we appear to FINANCIAL Cost Profitability Revenue
our shareholders?” Leading
Question:
How?
“To achieve our
vision, how should
Lower Wait Improve
we appear to our
customers?” CUSTOMER Time customer
Retention
“To satisfy our
shareholders and
customers, what Improve Lower
business processes INTERNAL Process Cycle
must we excel at?”
PROCESS Efficiency Time
Leading
“To achieve our Question:
vision, how will we If … Then ….?
sustain our ability Improve Improve
to change and ORGANIZATIONAL Knowledge and Tools and
improve?”
CAPACITY Skills Technology
Financial Projection 2019-
2023 Income
Statements Balance Sheets
Statement
of Cash Flow

Sales Revenue Receivables Collect ion duration

Growth Rate Inventory turnover

BPS Accumulate balances

Profit-sales ratio Receivables changes

Cost of sales Other Inventory Inventory changes

Rate of turnover
overhead costs Payables Payables changes

Depreciation Real estate, properties Operational CF

EBIT Long-term payables Investments

BPS Accumulate balances

Income form interest Financial assets Requirements for liquid
funds
Profit before tax Net Tax rate Equity capital Financing

Income Dividend Dividend Payout Ratio Liquid funds Liquid funds changes
THANK YOU mnirwandi@yahoo.com; @mnirwandi; 0811872103
39