Balanced

Scorecard
External analysis

Luis Mamani, Systems Engineer, MBA, PMP

Session 2
INSIDE-OUT OUTSIDE-IN
 WHICH OF THESE
APPROACHES IS
BETTER?

The best organizations skillfully employ

both approaches. They are aware of their
strengths and gaps while using their
organizational "radars" to detect
opportunities or threats.
 1
Strategic 3
horizon
Impact
analysis
4
2
Strategic VUCA world
analysis
(external)
 Strategic horizon
Session 1
 Strategic horizon

Source: Strategic Horizon by Mihai Ionescu

 Nokia's hand-held PDA Strategic
Horizon case

Source: Strategic Horizon by Mihai Ionescu

 Nokia's hand-
held PDA
Strategic
Horizon case

Source: Strategic Horizon by Mihai Ionescu

If we attempt to extend our STRATEGIC HORIZON
beyond its next anticipated major change point, we'll
face a high level of uncertainty regarding the impact
of the respective changes on the industry, taking a
high risk that the Strategy may become invalid or
obsolete beyond that point in time.

Source: Strategic Horizon by Mihai Ionescu

 Strategic analysis
(external)
Session 2
 The STRATEGIC ANALYSIS needs to
identify the INFLUENCE FACTORS that
are relevant for our business, over
the STRATEGIC HORIZON considered,
using tools like PESTEL and PORTER'S
5 FORCES. 
WHAT ARE Opportunities
favorable Influence
THE Factors

INFLUENC
EFACTORS Threats
? unfavorable
Influence Factors

Source: Competitive advantage by Michael Porter

 Influence factors in:
Private Universities

OPPORTUNITIES THREATS

• Increase of GDP • Better possibilities to study

• Increase of private schools
• Increase of foreign talented
professionals
• SUNEDU improves the
qualification of universities
outside the country
• Increase in the offer of on-line
programs
• Peruvian universities are not well
qualified in LATAM ranking
 Political
PESTEL
5 FORCES
Bargaining
Legal power of Buyers Economical

Competition
Bargaining power
among existing
of Suppliers
Participants
Industry
INFLUENC
E FACTORS
Threat of
Threat of New
Ecological Substitute
entrants Social
products

Technological
 BUYER POWER
How many buyers are there?
How big are their orders?
How much would it cost them to switch from
your products and services to those of a rival?
Are your buyers strong enough to dictate terms
to you?.
COMPETITIVE
RIVALRY
How many rivals do you have?
How does the quality of their products and
services compare with yours?
Is there aggressive price cuts and high-impact
marketing campaigns?.
THREAT OF NEW
ENTRY
How easy is it to get a foothold in your
industry or market? How much would it cost,
and how tightly is your sector regulated?

SUPPLIER POWER THREAT OF COMPLEMENTARY

How many potential suppliers do you have?
How unique is the product or service that they
provide?
How expensive would it be to switch from one
supplier to another?
SUBSTITUTION INDUSTRIES
How easy is to find an alternative?
How is the performance of the alternative?
How much would it cost them to switch
 P E
POLITICAL
Does a government may impose a new
tax or duty due to which entire revenue
generating structures might change?
Does a government may levy around the
fiscal year and it may affect the business
environment (economic environment) to
a great extent?
ECONOMIC
Does a rise in the inflation rate of any
economy would affect the way
companies’ price their products and
services?
Would it affect the purchasing power of a
consumer and change demand/supply
models for that economy?
S
SOCIAL
Do these factors scrutinize the social
environment of the market, and gauge
determinants like cultural trends,
demographics, population analytics etc.?

Economic factors include inflation rate,

interest rates, foreign exchange rates,
economic growth patterns etc. It also
accounts for the FDI (foreign direct
investment) depending on certain specific
industries who’re undergoing this
analysis.
 T E
TECHNOLOGIC
AL
Do these factors pertain to innovations in
technology that may affect the operations
of the industry and the market favorably
or unfavorably?
This refers to automation, research and
development and the amount of
technological awareness that a market
possesses.
L
ENVIRONMENT LEGAL
AL Are there certain laws that affect the
business environment in a certain country
Do these factors include all those that while there are certain policies that
influence or are determined by the companies maintain for themselves?
surrounding environment.
Crucial for certain industries particularly
for example tourism, farming, agriculture
etc. Factors of a business environmental
analysis include but are not limited to
climate, weather, geographical location,
global changes in climate, environmental
offsets etc.
 Are all those aspects, areas, activities in
which you should not fail, because of
CRITICAL doing so, you seriously commit the
product or service provided.
SUCCESS
FACTORS ARE
There are usually a few ones that
RELEVANT FOR can affect the business the most.

THE DEFINITION
OF THE They can change over time.

STRATEGY
 e.g.: Hotel industry

High quality Technological

standards in the Personalized and innovation to offer Location in
infrastructure and highly qualified national, foreign modern areas in
services of the service and executive the city
hostel. tourists
What happened with Sheraton
hotel?

Does Sheraton located in modern areas

in Lima…?
 Impact analysis
Session 3
5 FORCES PESTEL

O A

Filter by the PROBABILITY of

happening and by its IMPACT on
Mission, Vision and Values

O A
Qualification of influential
factors
Opportunity / Probability Impact Exposition (P x I)
Threat
Finding 1, Low 1, Low 1, Low exposition
probability impact 25, High exposition
5, High 5, High
probability impact
 VUCA world
Session 4
HOW CAN WE
RECOGNIZE TRENDS...
AND RESPOND
APPROPRIATELY?
 V Volatility
Recognize that new U Uncertainty
"normality" is ...
C Complexity
A Ambiguity
 How well can
you predict the
results of your
actions?

V U
C A
How much do you know
Source: HBR
about the situation?
 COMPLEXITY VOLATILITY
• Many variables and interconnected parts • Unexpected, unstable, could be variable time
• Predictable, but the amount of information or • Not necessarily complex, available
How well can its nature is complex to process information
you predict the
results of your Ex .: multiple governments, regulated, many Ex .: price fluctuation due to a disaster that
actions? currencies, cultures affects suppliers

AMBIGUITY UNCERTAINTY
• Difficult to establish cause and effect • Cause-effect relationships are established,

V U relationships
• There are no precedents, it faces the unknown
what is not available is information
• Change is known, not the moment

Ex.: immature or emerging markets; unknown Ex.: markets where the competitors "dirty" the

C A market entry market, it is unknown how they will operate.

How much do you know

Source: HBR
about the situation?
 COMPLEXITY VOLATILITY
Low High Low High

V U
AMBIGUITY UNCERTAINTY
C A Low High Low High

Source: Forbes
 COMPLEXITY VOLATILITY

V U  Restructure, bring or develop specialists.

 Recruit the right resources to handle
complexity
 Work with ease, make the equipment always
ready (Ex .: additional stock, reserve
equipment)
 Invest according to risk (expensive)

C A The more complex the world, the harder to

analyze!
The more volatile, the more constant and faster
are the changes!

AMBIGUITY UNCERTAINTY
N

 Experiment, understand the cause-effect  Invest in information, collect, interpret and

O

rules, generate hypotheses, test. share it

TI

 Design the experiments, so that the lessons  Work in information analysis networks,
AC

learned can be applied reduce uncertainty

The more ambiguous the world, the harder it is The more uncertain the world is, the harder it is
to interpret! to predict!

Source: HBR
 V U
CLARIFY VISION
C A
N

ADAPTABILITY / UNDERSTANDIN
O
TI

AGILITY G
AC

Source: VUCA-world.org
 FIVE FORCES

• Buyer power PESTEL

• Supplier power
• Threat of new entry
• Threat of substitution • Political
• Competitive rivalry • Economical
• Social
• Technological
• Ecological
• Legal
End of session!
Source: LinkedIn, Where do our strategic objectives come from? by Mihai Ionescu
 9 STEPS TO
SUCCESS

Source: Balanced Scorecard Institute