Strategic Fit Analysis
1 School of Business Administration University of Houston‐ Victoria MGMT 6369: International Business Strategy Team Project Introduction While you have worked independently on your project so far, it is time to share your works with your teammate(s). All members in a team will receive the same grade (adjusted for peer review scores); so, you want to choose the best of the best works from all team members. Notes on the final term project report: Do NOT assume that a team member’s submission which received the higher grade (on the midterm) necessarily represents the ‘right’ or best work or approach in every section. As a team, you need to evaluate each individual reports, improve them and come up with a high quality final report. You can copy and paste from individual projects to get started, but you must proofread and edit it carefully so that the final result is considerably ‘improved’. It should not include repetitive and/or redundant information, or read as if it was written by different people with different styles of writing. Do NOT spend too much time reworking the existing report; you all worked hard on these already. Instead, plan to revise Part I and II within 1 week. The goal of the final team project is to use what you’ve learned about the external environment analysis (Part I) and the company internal analysis (Part II) to identify the main challenges facing the company (Part III). Collectively, all team members may have come up with several different challenges; however, as a team, you need to identify the top two (2) strategic challenges that you believe are the most significant ones. As a team, you need to justify why these are the most significant challenges based upon your combined research. The most of the remaining time of your team project needs to be devoted to develop alternatives and recommendations for the company. The two (2) strategic challenges and the recommendations need to be very specific. For example, don’t say the “the problem is the profits are down”, but “Company x has innovated ___and this has reduced market share from X to Y in the last 3 years”. In the same vein, your recommendations should not be general statements like “the company should innovate or improve customer service” but something specific like “we recommend the company expand its northeast coast operations to permit access to those population centers through a balanced combination of retail outlets and direct sales approaches”. Then explain each recommendation and explain how it is likely to solve the challenge the company faces. You should clearly link your SWOT analyses (Part III) to your recommendations (Part IV). Make sure that the logical progression be very clear to the people reading your final report. You should provide enough details on how your recommendations will be implemented (convincing that it can be done), and what the likely outcomes are (such as an increase in profitability, or brand recognition or improvement in whatever challenge you identified). Remember to be reasonable. Provide working 6 months, 1 year, 2 years milestones, etc. Don’t make wild or unsupported claims (e.g. 100% improvement will occur in 10 years when you really have no idea what will happen in 10 years, and can’t guarantee 100% improvement etc.). Last, but not least, have a contingency plan, that is, have alternatives, or additional steps the company can take if the plan isn’t working. 2 Team Project (Final Exam) Instruction 1. General information: Please refer to the individual project (Midterm) instruction. 2. Project description: Please refer to the individual project (Midterm) instruction. 3. Report Format: Please refer to the individual project (Midterm) instruction. 4. Report Structure: The team project report consists of Parts I, II, III and IV. Please refer to Appendix A for detailed report structure. Please follow the structure in Appendix A and number each section and its subsections. Part I includes an analysis of the general environment, the industry and the assigned firm’s competitors. You are expected to provide a specific definition of the industry and an in‐depth analysis of the industry’s current and future outlook. Your focus in Part I is the external environment. Part II requires you to analyze the assigned firm. Part III is the section where you need to summarize the strategic challenges (issues) from both the general environment and the industry environment (Part I). Rank the strategic issues according to their significance to the firm and identify two major challenges before you match them with the internal capabilities and resources through SWOT analysis. Part IV is the section of recommendations. Note: Your individual projects (midterm) covered the first two parts. Now it is the high time to exchange your individual projects among your team members to learn from one another. Your team project is expected to have higher quality because it is the results of team efforts. 4.1. Executive Summary: Please refer to the individual project (Midterm) instruction. 4.2. PART I: External Environmental Analysis: Please refer to the individual project (Midterm) instruction. 4.3. PART II: Internal Analysis: Please refer to the individual project (Midterm) instruction. 4.4. PART III: Strategic Fit Analysis Page limit: 10‐15 pages total, excluding figures or tables which should be included at the Appendix section. A. Critical Strategic Challenges (3‐5 pages): Based on Part I analysis, this section lists 2‐4 opportunities and 2‐4 threats. An external challenge may be considered as an opportunity or threat depending on the level of company capabilities to respond to that challenge. With a relevant and strong internal capability, the company may see the challenge as an opportunity. However, when a company lacks the necessary capabilities to properly respond to a strategic challenge then that challenge becomes a threat. Each challenge needs to be framed as a question and described succinctly in a single paragraph. The factors that make the issue a fundamental challenge should be listed. In particular, what in terms of the organization’s mandates, mission, values, internal strengths and weaknesses, and external opportunities and threats, make this a strategic issue? The consequences of failing to address the issue should be identified. Out of all opportunities and threats identified, you need to select the top two strategic issues/challenges that confront the company as it heads into the future. You need to explain how and why those 2 strategic issues were determined as the most important challenges compared to other ones. B. Core competencies /Capabilities (3‐4 pages): Based on Part II analysis, this section lists 2‐4 internal strengths and 2‐4 internal weaknesses. Using the VRIO framework (Chapter 3 in your textbook, you need to justify which of the internal strengths may be considered as the most important core competency of the company. C. Strategic Fit (SWOT) Analysis (4‐6 pages): This section explains the link between Critical Strategic Challenges (O&T) and the organizational capabilities (S&W). You need to provide a table that summarizes the strengths, weaknesses, opportunities, and threats. After strengths and weaknesses are matched with opportunities and threats, strategic recommendations emerge at their intersections. You need to identify 4‐5 such strategic recommendations. The following matrix describes the 4 types of matching with related questions which may help you identify the strategic recommendations. Needless to say, not all internal and external factors may match well with each other. Therefore, you need to only focus on the meaningful, relevant, and significant fits. 3 List of Strengths (internal) List of Weaknesses (internal) List of Opportunities (external) 1 – S/O Match ‐ Obvious attractive options ‐ Likely to produce greatest ROI (Return On Investment) ‐ Likely to be q
uickest to implement and easiest to justify immediate action‐ planning or feasibility study ‐ Executive question: “If we are not already looking at these areas and prioritizing them, then why not?” 2 – W/O Match ‐ Potentially attractive options ‐ Likely to produce good returns if capability and implementation are viable ‐ Potentially exciting and rewarding due to change, challenge, surprise tactics, and benefits from achieving improvements ‐ Executive questions: “What’s actually stopping us doing these things, provided they truly fit strategically and are realistic and substantial?” List of Threats (external) 3 ‐ S/T Match ‐ Easy to defend and counter ‐ Only basic awareness, planning, and implementation required to meet these challenges ‐ Investment in these issues is generally safe and necessary ‐ Executive question: “Are we properly informed and organized to deal with these issues, and are we certain there are no hidden surprises?” ‐ and ‐ “Since we are strong here, can any of these threats be turned into opportunities?” 4 ‐ W/T Match ‐ Potentially high risk ‐ Where risk is low , we must ignore these issues and not be distracted by them ‐ Where risk is high we must assess capability gaps and plan to defend/avert in very specific controlled ways ‐ Executive question: “Have we accurately assessed the risks of these issues, and where the risks are high do we have specific controlled reliable plans to avoid/avert/defend?” 4.5. PART IV: Recommendations Page limit: 10‐15 pages total, excluding figures or tables which should be included at the Appendix section. A. Selection and Justification of the Top Two Recommendations (2‐3 pages): In part III, you have identified a set of strategic recommendations. In this section, you need to select the top 2 recommendations and include a complete discussion to justify your selection. Each of your top 2 recommendations needs to answer the questions of what, why, how, and when. What: You need to develop specifics rather than vague, general statements like “they should innovate.” Your recommendations should include detailed descriptions. Be specific about what you are recommending and how you propose it be accomplished. For example, “we recommend the company expand its northeast coast operations through a balanced combination of retail outlets and direct sales approaches”. Why: You need to explain why it is important that the company implement your recommendations. For example, “Our recommendation will produce needed sales growth, utilize excess capacity, build on our reputation for quality products and is projected to produce $30 million in revenues in the first year”. How: You need to explain how the company may implement the recommendations and how to acquire the required capital to pay for it. For example, “Since sixty percent of our current customers purchase our products in retail outlets we propose forming an exclusive relationship with PDQ Corporation to provide the needed additional retail channels. PDQ Corporation is the Northeast’s leading retailer of products and has 156 locations in the most densely populated regions of the northeast. Our proposal will be funded by issuing $50 million in debt and financing the rest of the needed working capital through short‐term credit. Please refer to appendix 3C which illustrates. . . ”. When: Describe the time horizon for the plan. How long will the plan take to implement? 4 B. Implementation of the Top Recommendation Action Plans, Deliverables, and Milestones (2‐3 pages): The first step in strategic implementation is to develop action plans. A 3‐year or 5‐year projection is very helpful. Your action plans should be a straightforward description of the specific actions that are required to accomplish your strategies. Action plans are effective when they incorporate the following elements. Specific tactics and actions. Action plans should specify what exactly needs to be done today, tomorrow, next week, next month, or next quarter. Clear period for completion. You action plan must specify when actions start and when objectives will be reached. Deliverables. The next step is to define major deliverables—the expected outputs over the life of the improvement project. Deliverables typically include time and quantity. Milestones. A milestone is a significant event in a project that occurs at a point in time. Resources, Technical requirements, and Budgeting (2‐3 pages): This section the following elements: Identification of personnel involved: You must specify which organizational department or manager is responsible for each action in the plan. Will current staff handle the strategies? Are you planning for staffing increases or layoffs? Identification of materials and costs: You must specify at what cost, if at all, can the raw materials be procured? Can the materials be found in time to support the effort? Technical requirements: You must specify technical requirements to ensure proper performance of the new product or service. Examples from IS projects include speed and capacity of database systems and connectivity with alternative systems. Budgeting: Allocating scarce resources involves funding capital projects, shifting resources, downsizing some areas, upsizing others, killing activities no longer justified, and funding new activities with a critical strategy role. Specifically you should suggest a project budget to explain resource allocation, the cost control metrics you think are valid, and milestone reports. You must specify the Key Performance Indicators for each phase of the plan. Explain why you chose each of them. You should also discuss cash flow considerations and resource constraints. The best way to approach that is with pro forma financials including Income Statements, Balance Sheets and Sources and uses of funds statements. Risk Assessment and Contingency Plan (2‐3 pages): Project risks cannot be eliminated. It is impossible to be aware of all things that might happen when a project is being implemented. In you project, you may want to identify 1‐2 risks and briefly discuss each with their probability to occur and the seriousness of impact. Contingency plans with trigger points and responsibility should be established on one major risk. Contingency planning is developing response if the risk occurs. Long term Effects, Feedback Mechanisms and Limitations (2‐3 pages): You should describe the consequences of the recommendation both short term (1 ‐ 2 years) and long term (3 ‐ 5 years). You need to explain how the recommendation may change the organization in terms of strategy, structure, culture, people, management policies, products, impact on various stakeholders, profitability, competitive position, resources and any other aspect. This section also includes the following elements: Feedback Mechanisms. Discuss the control systems needed to monitor the success of the recommendation. Limitations. The limitations of your recommendations should be defined. Failure to do so can lead to false expectations. 5 MGMT 6369: Final Team Project Report Outline Title page Table of content 1.0. Executive Summary…………………………………………………………………………………………………………………………… 2.0. Company History 2.1. Background…………………………………………………………………………….……………………….………………………… 2.2. Purpose of this study …………………………………………………………………………………………………………………. PART I: External Environmental Analysis 3.0. External Analysis 3.1. General Environmental Analysis 3.1.1. Political and Legal Segment ………………………………………………………………………………………. 3.1.2. Economic Segment ………………………………
……………………………………………………………………. 3.1.3. Socio‐Cultural and Demographic Segment ………………………………………………..……………… 3.1.4. Technological Segment………………………………………………………………………………………………. 3.1.5. Global Segment …………………………………………………………………………………………………………. 3.1.6. External Environment Driving Forces …………………………………………………………………………. 3.2. Industry Description (e.g., Market Size, Market Growth Rate, Industry Trends)………………………… 3.3. Five Forces Analysis 3.3.1. Threat of New Entrants…………………………………………………………………………………. 3.3.2. Power of Suppliers ………………………………………………………………………………………… 3.3.3. Power of Buyers……………………………………………………………………………………….……. 3.3.4. Power of substitutes …………………………………………………………………………………..… 3.3.5. Intensity of Rivalry …………………………………………………………………………………………. 3.3.6. Summary of Five Forces Analysis ………………………………………………………..………… 3.4. Industry Competitors Analysis and Analysis of their Anticipated Strategic Moves…………………….. 3.5. Industry Key Success Factors……………………………………………………………………………………………………… PART II: Internal Analysis 4.0. Internal Analysis 4.1. Organizational Strategy Analysis 4.1.1. Corporate Mission…………………………………………………………………………………………..……………… 4.1.2. Products and Services …………………………………………………………………………….………….…………… 4.1.3. Strategy (corporate level & business level) ……………………………………………………………………… 4.1.4. Organizational Culture and Core Values…………………………………………………………………………… 4.1.5. Leadership ……………………………………………….………………………………………………..…………………… 4.2. Financial Analysis 4.2.1. Valuation Analysis…………………………………………………………………………………………………………… 4.2.2. Growth Analysis………………………………………………………………………………………………………………. 4.2.3. Profitability Analysis………………………………………………………………………………………………………… 4.2.4 Management Efficiency Analysis ……………………………………………………………………………………… 4.2.5. Summary of Financial Analysis……………………………………………………………………………………….… 4.3. Value Chain Analysis 4.3.1. Support Activities 4.3.1.1. Structure (organizational chart, communication system, etc.)………….…… ……… 4.3.1.2. Design, Research and Development (R&D)……………….……………………………………… 4.3.2. Primary Activities 4.3.2.1. Input (tangible and intangible resources) …………………..…………………………………… 4.3.2.2. Operation Processes (e.g. production, logistics, product/service cost structure) 4.3.3.3. Marketing and Customer Service………………………………………………………………………… 6 PART III: Strategic Fit Analysis 5.0. SWOT Analysis 5.1. Critical Strategic Challenges (based on Part I)………………………………………………………..………………………… 5.2. Core Competencies /Capabilities (based on Part II)……….……………………………………………………………….… 5.3. Strategic Fit (SWOT) Analysis ……………………………………………………………………………………………….…… PART IV: Recommendations 6.0 Recommendations 6.1. Selection and Justification of the Top Two Recommendations………………………………………………….….. 6.2. Implementation of the Top Two Recommendations 6.2.1. Action Plans, Deliverables, and Milestones…………………………………………………………………..… 6.2.2. Resources, Technical Requirements, and Budgeting………………………………..……………….……… 6.2.3. Risk Assessment and Contingency Plan…………………………………………………………………………… 6.2.4. Long term Effects, Feedback Mechanisms and Limitations…………………………………….………… References………………………………………………………………………………………………………………………….. ………………………. Appendix …………………………………………………………….……………………………………………………………………………………….
