Spelade
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Question 4, defining the issue, is perhaps the most critical step in the strategy process, but it is often skipped over without sufficient reflection and debate.
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Sometimes forecasting is not possible. Perhaps the uncertainties are hard to quantify. Perhaps there is too much uncertainty for any one forecast to make sense
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We present three frameworks for analysing competitive advantage. A systems diagram shows how the various capabilities and positions combine to drive cost and value advantage. A cost structure comparison puts that into numbers. The third approach is my go-to tool for a quick but thought-provoking analysis.
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We present a framework for understanding how capabilities and positions combine to create cost and value advantages. This framework integrates many theories about competitive advantage, which is one of the most critical concepts in strategy - even for non-profits!
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Looking at your company, charity, product (or yourself) through the eyes of your customer is always instructive. We discuss one simple tool for doing so - the Value Curve, popularised by the controversial but interesting book "Blue Ocean Strategy". This bit they got right - thinking about how to improve the customer offer, not forgetting lowering price, is a great place to start with developing options. The first step is to understand your customer value proposition - a critical part of the "internal situation" and the value curve is a neat and easy way to do it.
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In this bonus episode we chat to Caroline White, ex-CEO of the Youth Hostel Association, about the role of segmentation in the revitalisation of the YHA. Caroline is an experienced strategist and didn't use the structure we covered in episode 2 but whether you use a tool or a more intuitive approach, the key is to be aware of the many segments that you can and do serve, and thus the range of options on offer. At the end we discuss how the segmentation approach we described in our episode might have been used at the YHA, so you have an idea about how to use this tool in practice.
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How does the the general context of an industry influence other factors, such as the five forces? PESTLE analysis is a common tool for developing a full analysis of this - PESTLE stands for Political, Economic, Social, Technological, Legal and Environmental factors.
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Our next episode starts drilling down into how to answer the first question - what is the External Environment? The first thing you need to do to make sense of your environment is to segment it - which involves clumping the incredible range of customers, products, markets etc. into broad segments. We describe a clip from The Hunger Games to illustrate this, as well as a business example from the car rental market, and finally introduce a four step process for getting creative with segmentation.
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In week 1 we deal with three topics. First, we define strategy as a Goal (or Aim) and a Pathway for achieving that Goal. Next we discuss why strategy is important, highlighting how a good strategy makes a major contribution to the success of an organisation (or part of an organisation). Third, we introduce our approach to designing strategy - six questions that lead you through the strategy design process.
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Thinking of an opportunity in terms of its attractiveness (an external perspective) versus your chance of success (an internal perspective) is a good way to summarise the nature of that opportunity and the options you should consider.
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One of the most fundamental ideas in strategy is that success comes (partly) by investing in attractive markets. Attractiveness for a profit seeking business is typically defined as being from a mix of size, growth and profitability. Of these, the hardest to estimate is profitability because it is of the market (rather than your current profitability - which might be more or less than the average for the market). Porter's Five Forces is a famous framework that allows you to estimate, in a qualitative way, how profitable a segment is likely to be.
