ED-Class 2-MBA 650 - S.2022

Summer 2022
Ehsan Derayati , PhD
MBA650
Crafting and Implementing Successful Strategies
Class #2
Ehsan Derayati - John Molson School of Business 1
AGENDA
 Today’s Activities
 A quick review on Case Analysis
Process
 External Analysis Review
 Case review : Tesla
 Objective
 Practice external analysis
 Finalize group formation
2
Ehsan Derayati - John Molson School of Business
Case Analysis Process
3
AN EFFECTIVE CASE ANALYSIS PROCESS
Step 1: Gaining a. In general—determine who, what, how, where, and when (the critical facts of the case).
Familiarity b. In detail—identify the places, persons, activities, and contexts of the situation.
c. Recognize the degree of certainty/uncertainty of acquired information.
Step 2: Recognizing a. List all indicators (including stated “problems”) that something is not as expected or as
Symptoms desired.
b. Ensure that symptoms are not assumed to be the problem (symptoms should lead to
identification of the problem).
Step 3: Identifying Goals a. Identify critical statements by major parties (for example, people, groups, the work unit,
and so on).
b. List all goals of the major parties that exist or can be reasonably inferred.
Step 4: Conducting the a. Decide which ideas, models, and theories seem useful.
Analysis b. b. Apply these conceptual tools to the situation.
c. c. As new information is revealed, cycle back to sub-steps a and b.
Step 5: Making the a. Identify predicaments (goal inconsistencies).
Diagnosis b. Identify problems (discrepancies between goals and performance).
c. Prioritize predicaments/problems regarding timing, importance, and so on.
Step 6: Doing the Action a. Specify and prioritize the criteria used to choose action alternatives.
Planning b. Discover or invent feasible action alternatives.
c. Examine the probable consequences of action alternatives.
d. Select a course of action.
e. Design an implementation plan/schedule.
f. Create a plan for assessing the action to be implemented.
Source: C. C. Lundberg and C. Enz, 1993, A framework

1–4 for student case preparation, Case Research Journal, 13 (Summer): 144. Reprinted by
permission of NACRA, North American Case Research Association
TYPES OF THINKING IN CASE PREPARATION
ANALYSIS
External environnement
General environment
Industry environment
Competitor environment
Internal environment
Concise Statements of strengths,

weaknesses, opportunities, and
threats
Alternatives Evaluations of
alternatives Implementation
SYNTHESIS
5
GENERAL OUTLINE OF AN STRATEGY CASE ANALYSIS
I. Strategic Profile and Case Analysis Purpose (Problem Statement)

II. Situation Analysis
A. External environment analysis
i. General environmental analysis
ii. Industry analysis
iii. Competitor analysis
B. Internal analysis
III. Identification of Environmental Opportunities and Threats and Firm Strengths and Weaknesses
(SWOT Analysis)
IV. Strategy Formulation

C. Strategic alternatives
D. Alternative evaluation
E. Alternative choice (recommendation)
V. Strategic Alternative Implementation

F. Action items
G. Action plan
6
The External
Environment
Analysis
Ehsan Derayati - John Molson School of Business 2–7

EXTERNAL & INTERNAL ANALYSIS
Today’s
class
External Product / Market
Analysis Position
Strategy
Formulation
Internal Core
Analysis Competencies
Next class
8
The External
Environment

THE EXTERNAL ENVIRONMENT
- INTEGRATED -
General Industry Competitor
Environment Environment Environment
• The broader society • Set of factors • Gives details about
dimensions that directly influencing a firm’s
influence an • a firm’s • direct and
industry and the competitive indirect
firms within it actions and competitors
responses • The competitive
• the competitor dynamics
analysis expected to
impact a firm's
efforts to generate
above-average
returns
1 2 3
10
1. GENERAL ENVIRONMENT (EXTENDED PEST)
Demographic Economic Physical Environment
• Population • Inflation and interest rates • Global warming
• Age • Trade/budget deficits/surpluses • Energy consumption
• Geography • Savings rates
• Ethnic mix • GDP
• Income distribution
What is the strategic

Political / Legal Socio-cultural relevance of
• Antitrust laws • Women in work environmental
• Taxation laws • Workforce diversity
changes and trends
• Deregulation philosophies • Attitudes about work life
• •
vis-à-vis the industry,
Labour training laws Work/career preferences
• Educational philosophies • Product / service preferences the firm and its
competitors?
Technological Global
• Product Innovations • Political events
• Applications of Knowledge • Critical global markets
• Private / Govt R&D investment • Newly industrialized countries
• New technologies • Culture/ institutional differences
11
How does a Mega Trend/event such as

Covid19 affect different industries through
Class input multiple macro-environment factors?
2. INDUSTRY ANALYSIS
Industry: Group of firms producing products that are
close substitutes
Industry environment has more direct effect on firm’s
• Strategic competitiveness
• Above-average returns
Intensity of industry competition and industry’s profit

potential are a function of 5 forces
13
The Value System
• What does the industry value system look like?

• Where do I fit?
• What does the CUSTOMER VALUE?
Supplier Value Firm Value Channel Value Retailer Value

Chains Chains Chains Chains
Note that the lines between firms represents what may exist, but not
necessarily what does exist. Some industries have channels, some do
not. There could be many suppliers per firm, as well.
COMPETITIVE ENVIRONMENT
2–15
THE INDUSTRY ENVIRONMENT
PORTER’S 5 FORCES
“What are the

underpinnings of
competition and
the root causes of
profitability?”
“A good industry analysis ... sees the industry in overall, systemic terms.”
16
AVERAGE RETURN ON INVESTMENT ON U.S.
INDUSTRIES, 1992-2006
2–17
PROFITABILITY OF SELECTED U.S.
INDUSTRIES
2–18
FACTORS AFFECTING THREAT OF NEW ENTRANTS
2–19
FACTORS AFFECTING BARGAINING POWER OF SUPPLIER
2–20
FACTORS AFFECTING BARGAINING POWER OF BUYERS
2–21
FACTORS AFFECTING THREAT OF
SUBSTITUTES
2–22
FACTORS AFFECTING RIVALRY AMONG COMPETITORS
2–23
QUESTIONS TO CONSIDER
Threat of Competitive
New entrants? Supplier Power? Buyer Power?
substitutes? rivalry?
• Are there • Who are the • Who are the • What other • How competitive
economies of suppliers? buyers? products could is it / will it be?
scale? • Are there • How significant provide the same • Are there many
• What type of substitutes? are they? functionality? or a few
product • How important • Is it easy for competitors?
differentiation is are the suppliers’ them to switch? • Are they all the
there? products? • Are products same size, or
• What are the • How easy is it differentiated or different?
capital for the suppliers commodity • What are the
requirements? to switch? based? fixed costs?
• How much does • Is there a threat • Could buyers • What are the
it cost a of forward integrate costs to change
customer to integration? backwards? industries or
switch? integrate?
• Gov’t policy • How much does
supports it? it cost to leave?
• Retaliation?
This is not an exhaustive list, but questions will help guide you down the right paths
24
25
26
THE 6TH FORCE
27
FACTORS AFFECTING COMPLEMENTS
2–28
What about a 7 th
force?
The threat of potential disruptors ?

Possible Responses to Threats to Profitability

3. THE COMPETITOR
ENVIRONMENT
• Set of firms that follow similar strategies
3A Strategic • Industries have many different strategic groups.
Groups • Competitive rivalry greater within than between groups
• Informs about the objectives, strategies, assumptions,

3B relationships and capabilities of competitors
Competitor • Examines C.A. that sustain a competitor’s strategy
analysis • Attempts to identify / monitor major actions taken by firms
with performance below the industry norm.
3C • Set of data, information, and knowledge that allows the firm

Competitive to better understand its competitors and predict strategies
Intelligence and actions
• Use legal and ethical practices
31
STRATEGIC GROUPS
A collection of firms that follow similar strategies
along similar dimensions
Industries have many different strategic groups.
Because firms within a group compete (offer similar

products) rivalry can be intense
The greater the rivalry the greater the threat to each

firm’s profitability
32
STRATEGIC GROUP MAP OF WORLD
AUTOMOTIVE INDUSTRY
33
USING KEY SUCCESS FACTORS TO CREATE
AN INDUSTRY MATRIX
 Key success factors

 variables that can significantly affect the overall competitive positions of companies
within any particular industry
• Competitive elements most affecting every industry member’s ability to

prosper
– Specific strategy elements
– Product attributes
– Resources
– Competencies
– Competitive capabilities
• KSFs spell the difference between
– Profit and loss
– Competitive success or failure
34
IDENTIFY INDUSTRY KEY SUCCESS FACTORS
 Answers to three questions pinpoint KSFs

 On what basis do customers choose
between competing brands of sellers?
 What resources and competitive
capabilities does a seller need to have to
be competitively successful?
 What does it take for sellers to achieve a
sustainable competitive advantage?
 KSFs consist of the 3 - 5 really major
determinants of financial and competitive
success in an industry
35
COMMON TYPES OF KEY SUCCESS FACTORS
Scientific research expertise; Product innovation capability; Expertise
Technology-
in a given technology; Capability to use Internet to conduct various
related business activities
Low-cost production efficiency; Quality of manufacture; High use of
Manufacturing-
fixed assets; Low-cost plant locations; High labor productivity; Low-
related cost product design; Flexibility to make a range of products
Strong network of wholesale distributors/dealers; Gaining ample
Distribution-
space on retailer shelves; Having company-owned retail outlets; Low
related distribution costs; Fast delivery
Fast, accurate technical assistance; Courteous customer service;
Marketing-
Accurate filling of orders; Breadth of product line; Merchandising
related skills; Attractive styling; Customer guarantees; Clever advertising
Superior workforce talent; Quality control know-how; Design
Skills-related expertise; Expertise in a particular technology; Ability to develop
innovative products; Ability to get new products to market quickly
Superior information systems; Ability to respond quickly to shifting
Organizational market conditions; Superior ability to employ Internet to conduct
capability business; More experience & managerial know-how
Favorable image/reputation with buyers; Overall low-cost; Convenient
Other types locations; Pleasant, courteous employees; Access to financial capital;
Patent protection
36
LETS DISCUSS
Online Storage
Soft drink
(Cloud)
Fast Food
Industry Industry
Industry
37
CASE
ANALYSIS
TESLA
MOTORS
EHSAN DERAYATI - JOHN MOLSON SCHOOL OF BUSINESS 38

Next Class :
Internal (Resource)
analysis
Case Analysis:
Apple
1–39
Ehsan Derayati, PhD John Molson School of Business
What has been Apple keys for success so far?
DISCUSSION
1.
What are their competitive advantages?
QUESTIONS 2. Assess Apple’s strategy for Apple watch. What

were the pros? Cons? Will it be the next home
run?
3. Should apple enter the car business or stay
focused on providing software for future cars?
4. If you had 5 minutes with Tim Cook, what
advice would you offer?

ED-Class 2-MBA 650 - S.2022

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Summer 2022

Ehsan Derayati , PhD

Source: C. C. Lundberg and C. Enz, 1993, A framework

Concise Statements of strengths,

I. Strategic Profile and Case Analysis Purpose (Problem Statement)

IV. Strategy Formulation

V. Strategic Alternative Implementation

Ehsan Derayati - John Molson School of Business 2–7

Ehsan Derayati - John Molson School of Business 2–9

What is the strategic

How does a Mega Trend/event such as

Industry environment has more direct effect on firm’s

Intensity of industry competition and industry’s profit

• What does the industry value system look like?

Supplier Value Firm Value Channel Value Retailer Value

“What are the

The threat of potential disruptors ?

Ehsan Derayati - John Molson School of Business 30

• Informs about the objectives, strategies, assumptions,

3C • Set of data, information, and knowledge that allows the firm

Industries have many different strategic groups.

Because firms within a group compete (offer similar

The greater the rivalry the greater the threat to each

 Key success factors

• Competitive elements most affecting every industry member’s ability to

 Answers to three questions pinpoint KSFs

EHSAN DERAYATI - JOHN MOLSON SCHOOL OF BUSINESS 38

QUESTIONS 2. Assess Apple’s strategy for Apple watch. What

Ehsan Derayati - John Molson School of Business

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