Strategic Management Case Analysis

see attached 

Strategic Management Case Analysis instructions

This part of your strategic management midterm assignment begins within your team. Confer with your teammates to combine your thoughts and analytical abilities to analyze the assigned firm. Each response should be single spaced and contained on a single page

Work together to answer the following questions. YOU MUST RESPOND TO THE QUESTIONS AS AN INDIVIDUAL. Do discuss your answers with one another but do not write the answers together. After watching the video and gathering the necessary information, talk about the data sources and how they might be used to gain an understanding of the firm, its industry and the issues it is confronting. This is not a situation in which you can cut and paste. Read, discuss and digest the data. Then work independently to formulate your individual response.

1. Describe the driving forces of the firm’s industry

2. Provide a complete description of the economic features of the industry. Be brief.

3. Provide a complete analysis of the competitive nature of the industry using the five-forces model. Be brief.

4. Provide a solid prediction of what relevant competitors are likely to do in the future based on their objectives, capabilities, intentions and beliefs about the industry. Be brief.

5. Provide a complete financial analysis that includes the implications of absolute and relative measures of the firm’s financial statements from a historical and prospective point of view. Be brief.

6. Provide an evaluation of the firm’s prices and costs using value chain approach.

7. Provide a SWOT analysis. Be brief.

8. Provide a description of strategic issues based on other analyses. Be brief. The definition of a strategic issue is provided in the document titled Issues Statement.

https://www.sysco.com/

1. Use the space below to describe the driving forces of the firm’s industry

2. Use the space below to provide a complete description of the economic features of the industry.

3. Use the space below to provide a complete analysis of the competitive nature of the industry using the five-forces model.

4. Use the space below to provide a solid prediction of what relevant competitors are likely to do in the future based on their objectives, capabilities, intentions and beliefs about the industry

5. Use the space below to provide a complete financial analysis that includes the implications of absolute and relative measures of the firm’s financial statements from a historical and prospective point of view

6. Use the space below to provide an evaluation of the firm’s prices and costs using value chain approach.

7. Use the space below to provide a SWOT analysis

8. Use the space below to provide a description of strategic issues based on other analyses. The definition of a strategic issue is provided in the document titled Issues Statement.

Page 1 of 1

Driving Forces and Key Success Factors

 

Driving Forces (or Change Drivers)

Driving forces are forces outside the firm (external factors) that trigger the change of strategy in an organization.  Industry conditions change because important forces (the most dominant ones that have the biggest influence on what kinds of changes will take place in the industry’s structure and competitive environment) are driving industry participants (competitors, customers, or suppliers) to alter their actions. Thus the driving forces in an industry are the major underlying causes of changing industry and competitive conditions.  Driving forces analysis has two steps: identifying what the driving forces are and assessing the impact they will have on the industry.

 

The Most Common Driving Forces

Many forces can affect an industry powerfully enough to qualify as driving forces.  Some are unique and specific to a particular industry situation, but most drivers of change fall into one of the following categories:

 

1. The Internet and new e-commerce opportunities and threats it breeds in the industry;

2. Increasing globalization of the industry;

3. Changes in the long-run industry growth rate;

4. Changes in who buys the products and how they use it.

5. Product innovation;

6. Technological change;

7. Market innovation;

8. Entry or exit of major firms;

9. Diffusion of technical know-how across more companies and more countries;

10. Changes in cost and efficiency

11. Growing buyer for preferences for differentiated products instead of a commodity product (or for a more standardized product instead of strongly differentiated products);

12. Regulatory influences and government policy changes;

13. Changing societal concerns, attitudes, and lifestyles;

14. Reductions in uncertainty and business risk.

 
The link between driving forces and strategy

Sound analysis of an industry’s driving forces is a prerequisite to sound strategy making.  Without keen awareness of what external factors will produce the biggest potential changes in the company’s business over the next one to three years, managers will be ill prepared to construct a strategy tightly matched to emerging conditions.  Similarly, if managers are uncertain about the implications of each driving force or if their views are incomplete or wrong, it’s difficult for them to craft a strategy that is responsive to the driving forces and their consequences for the industry.  Therefore, driving forces is not something to take lightly. The concept has practical strategy-making value and is basic to the task of thinking strategically about where the industry is headed and how to prepare for the changes.

 
Key Success Factors

An industry’s key success factors (KSFs) are those things that most affect industry members’ ability to prosper in the marketplace-the particular strategy elements, product attributes, resources, competencies, competitive capabilities, and business outcomes that spell the difference between profit and loss and, ultimately, between competitive success or failure. KSFs by their very nature are so important that all firms in the industry must pay close attention to them-they are the prerequisites for industry success or, to put it another way, KSFs are the rules that shape whether a company will be financially and competitively successful. The answers to three questions help identify an industry’s key success factors:

 

         On what basis do customers choose between the competing brands of sellers? What product attributes are crucial?

         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?

 

In the beer industry, the KSFs are full utilization of brewing capacity (to keep manufacturing costs low), a strong network of wholesale distributors (to gain access to as many retail outlets as possible), and clever advertising (to induce beer drinkers to buy a particular brand and thereby pull beer sales through the established wholesale/retail channels). In apparel manufacturing, the KSFs are appealing designs and color combinations (to create buyer interest) and low-cost manufacturing efficiency (to permit attractive retail pricing and ample profit margins). In tin and aluminum cans, because the cost of shipping empty cans is substantial, one of the keys is having plants located close to end use customers so that the plant’s output can be marketed within economical shipping distances (regional market share is far more crucial than national share).

Determining the industry’s key success factors, given prevailing and anticipated industry and competitive conditions, is a top-priority analytical consideration. At the very least, managers need to understand the industry situation well enough to know what is more important to competitive success and what is less important. They need to know what kinds of resources are competitively valuable. Misdiagnosing the industry factors critical to long-term competitive success greatly raises the risk of a misdirected strategy. In contrast, a company with perceptive understanding of industry KSFs can gain sustainable competitive advantage by training its strategy on industry KSFs and devoting its energies to being distinctively better than rivals on one or more of these factors. Indeed, companies that stand out on a particular KSF enjoy a stronger market position for their efforts – being distinctively better than rivals on one or more key success factors presents a golden opportunity for gaining competitive advantage. Hence, using the industry’s KSFs as cornerstones for the company’s strategy and trying to gain sustainable competitive advantage by excelling at one particular KSF is a fruitful competitive strategy approach.

Key success factors vary from industry to industry and even from time to time within the same industry as driving forces and competitive conditions change. Only rarely does an industry have more than three or four key success factors at anyone time. And even among these three or four, one or two usually outrank the others in importance. Managers, therefore, have to resist the temptation to include factors that have only minor importance on their list of key success factors-the purpose of identifying KSFs is to make judgments about what things are more important to competitive success and what things are less important. To compile a list of every factor that matters even a little bit defeats the purpose of concentrating management attention on the factors truly critical to long-term competitive success.

MGT 6359 Page 3

Seminar in Strategic Management

Strategic Issues

Strategic Issues1 Definition: Strategic issues are fundamental policy questions or critical challenges that
affect an organization’s:

• mandates, mission and values

• product or service level and mix

• clients, users, or payers, or

• cost, financing, organization or management.

1
John M. Bryson, Strategic Planning for Public and Nonprofit Organizations: A Guide to Strengthening and Sustaining

Organizational Achievement, rev. ed. (San Francisco: Jossey-Bass, 1995), 30

Statement of issues /problem statements

You need to identify two issues/problems statements based on the various analysis you have done in
your individual project as well as the strategic fit analysis above. There could be several issues but you
need to identify the two most important issues that confront the company as it heads into the future.
For each issue identified you need to explain how and why it is the most significant issues facing the
company. To provide such rationale, you need to state explicitly the analysis that is the basis of
identification of issues.

Evaluation Criteria: A statement of a strategic issue should contain these elements:

The issue should be described succinctly, preferably in a single paragraph, and it should be framed as a
question the organization can do something about. 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, so that the organization will know
what kind of issues it faces. There are three kinds:

• those for which no action is required at present, but which must be monitored

• those that are coming up on the horizon and are likely to require some action in the future and
perhaps some action now

• those that require an immediate response

University of Houston – Victoria
School of Business Administration

Strategic MBA Program Assessment Rubric
Learning Goal 2:

MBA students will be able to analyze changes in the business environment to develop strategies that respond to
emerging opportunities and threat.
Assessed in: MGMT 6359 – Seminar in Strategic Management

Traits Tool Used for
Assessment

1: Below Expectations

2: Meets Expectations 3: Exceeds Expectations Rating

1. Analysis of external
environmental forces
and driving forces
causing industry
change.

Midterm
Project

Case does not demonstrate
clear understanding of the
driving forces causing the
industry to change.

All the driving forces are
identified and their linkages
to change are presented.

Complete analysis of the
driving forces that will cause
the industry to change.

2. Analysis of the
economic
characteristics of the
industry.

Midterm
Project

The section communicates a
superficial grasp of the
economics of the industry.

The economics of the
industry are identified, but
may not be clearly described
or depth may be lacking.

Complete description of the
economic features of the
industry demonstrating a solid
grasp of the context.

3. A profitability
analysis of the
industry (five-forces).

Midterm
Project

Superficial application of the
model without exposition of
its nuances. The section fails
to demonstrate mastery of
the tool.

Complete analysis of the
competitive nature of the
industry using the five-forces
model. Implications may not
be complete.

Complete analysis of the
competitive nature of the
industry using the five-forces
model. Implications for
industry profits are clearly
communicated.

4. Analysis of
potential strategic
moves of competitors.

Midterm
Project

The section communicates a
superficial grasp of the likely
future actions of competitors
or provides few insights into
a single or small group of
competitor(s).

A prediction of what some
relevant competitors are
likely to do in the future is
presented. Links to their
objectives, capabilities,
intentions and beliefs about
the industry may be scant.

A solid prediction of what all
relevant competitors are likely
to do in the future based on
their objectives, capabilities,
intentions and beliefs about
the industry.

Updated: 10/28/2009 By RS Reviewed: 10/28/2009 By RS

University of Houston – Victoria
School of Business Administration

Strategic MBA Program Assessment Rubric
Learning Goal 4: MBA students will be able to apply cross-functional approaches to organizational issues.
Assessed in: MGMT 6359 – Seminar in Strategic Management

Traits Tool Used for
Assessment

1: Below
Expectations

2: Meets Expectations 3: Exceeds Expectations Rating

1. Evaluation of
the firm’s
financial
performance.

Midterm
Project

The financial analysis may
be incomplete, missing
absolute or relative
measures of the firm’s
performance. May take
only a historical
perspective.

Performs financial analysis
that measures the firm’s key
financial statements from a
limited point of view. May
take a limited perspective or
not clearly reflect all the
implications.

Performs a complete financial
analysis that includes the
implications of absolute and relative
measures of the firm’s financial
statements from a historical and
prospective point of view.

2. An evaluation
of the firm’s
prices and costs
using value chain
approach.

Midterm
Project

Demonstrates either an
incomplete or superficial
understanding of either
the technique or the value
proposition of the firm.

Demonstrates adequate
understanding of both
technique and the value
proposition of the firm.
Identified major activities
undertaken to deliver value to
the customer. May omit one or
more minor components of the
factors constituting an
excellent analytical product.

Explains, decomposes, and evaluates
the value-creating activities of the
firm, identifying all major activities
undertaken to deliver value to the
customer and considering what
might be done to add the greatest
value and whether changes are
advisable.

3. A SWOT
analysis.

Midterm
Project

Superficial or incomplete
narrative description of
SWOTs of the situation.
May be missing supporting
linkages or overlook key
factors.

The SWOTs may be properly
identified with limited linkages
to context. May overlook
minor dimensions.

Accurately and clearly explains,
decomposes, and evaluates the
quality of the SWOTs in terms that
are applicable to the situation.
Absolute and relative measures are
included.

4. Description of
strategic issues
based on other
analyses.

Midterm
Project

The firm’s strategic issues
are poorly defined or
some key aspects may be
missing. The description
may be poorly written.

The firm’s strategic issues are
adequately defined although
minor aspects may be missing.
The description is adequately
written.

The firm’s strategic issues are well-
defined and concise; all important
aspects are included. The
description is very well written.

Updated: Fall 2009 By RS Reviewed” Fall 2009 By RS

INDUSTRY ANALYSIS

One of the major competences that strategic managers need is the ability to define their business, conduct an effective industry analysis,

and identify the “key success factors” for firms competing in their industry. This brief note discusses the steps most often found in a

solid analysis of an industry.

A.DEFINE THE INDUSTRY.

The boundaries for an industry analysis are determined by the markets and products that best describe the domain of the industry. Once

you fully understand the business segment that is to be analyzed, you are in a position to identify the capabilities required to participate

successfully in that industry, and the competitors that are likewise able to effectively target the same business segments. These

elements set the parameters for understanding and analyzing the industry. As industries converge and shift, business definitions become

more difficult. In virtually all industries, consumers are becoming more demanding for customized products and services. These

demands encourage the development of innovations, products, and competitors.

B. DESCRIBE THE INDUSTRY STRUCTURE.

For each product-market segment, an industry analysis will describe the “five-forces” of competition. The five forces discussed briefly

below predict the long run profitability of an industry and are an important first step in analyzing the industry once it has been identified.

1. Bargaining Power of Buyers: This primary force comes from the customer segments that make up the markets in which firms
compete. The size and importance of customers influences their power to negotiate prices and terms that reduce the overall

profitability of the industry. The sizes and types of buyers present in an industry determine their potential influence on product

development and influence the level of competition to be found in the industry.

2. Intensity of Rivalry: A second force comes from the competitors and the ways they compete. Each competitor offers a set of
products and services that attempts to provide higher value to the product-market segments they address. Strategies can be

designed to provide combinations of higher performance, more fashion and features, higher quality, or lower price. Increased

rivalry always leads to price or service competition that reduces the profitability of the industry.

3. Bargaining Power of Suppliers: A third influence on the profitability of an industry comes from its suppliers. In some industries,
suppliers might control critical inputs that can affect all firms’ ability to compete. Analogous to Bargaining power of Buyers,

whenever suppliers are large or few, their leverage tends to be high. Limited access to critical factors of production, equipment,

materials, or components can increase prices and accordingly limit profit potential.

4. Threat of New Entrants; a fourth force represents the ease with which a new competitor can compete for existing business in the
Industry. When entry is relatively easy, profits fall rapidly as many competitors enter. Barriers to such entry often include

heavy investments in capital, equipment, and market development. Such barriers tend to bolster profits. Barriers to change in

industry structure, either from new competitors entering the industry or current competitors exiting the industry tends to

stabilize prices and thus, profits.

5. Availability of Substitutes: The fifth force represents the potential for change in product-market structure of an industry through
the substitution of products or services with alternative approaches to satisfying the customers’ needs. This can readily be seen

in the case of cell phones displacing traditional telephone services in satisfying the needs of consumers. The identification of

potential substitutes and the characteristics that would cause rapid substitution will form a part of a careful industry analysis.

Price too is often a driver for substitutes, such as the use of plastics for metals in cars and in plumbing supplies. Today, the

Internet is becoming a substitute for mail service and, eventually, telephone service.

6. Prediction of the long run profitability of the industry

C. IDENTIFY KEY SUCCESS FACTORS.

Key Success Factors (KSFs) are the benchmarks that any firm in the industry must possess to stay in the game. Identification of KSFs

should come at the conclusion of your industry analysis. Please be sure to note that not all factors involved in competition in an industry

are success factors. You should consider using the KSFs you identify as a key topic in your presentation. This section should be at the

end of the industry analysis.

An industry’s key success factors (KSFs) are those things that most affect industry members’ ability to prosper in the marketplace-the

particular strategy elements, product attributes, resources, competencies, competitive capabilities, and business outcomes that spell the

difference between profit and loss and, ultimately, between competitive success or failure. The answers to three questions help identify

an industry’s key success factors:

• On what basis do customers choose between the competing brands of sellers? What product attributes are crucial?
• 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?

In the brewing industry for example, the KSFs for any major player include full utilization of brewing capacity, a strong network of

wholesale distributors (to gain access to as many retail outlets as possible); and clever advertising (to induce beer drinkers to buy a

particular brand and thereby pull beer sales through the established wholesale/retail channels).

In apparel manufacturing, the KSFs are appealing designs and color combinations (to create buyer interest) and low-cost

manufacturing efficiency (to permit attractive retail pricing and ample profit margins).

Misdiagnosing the industry factors critical to long-term competitive success greatly raises the risk of a misdirected strategy. In

contrast, a company with perceptive understanding of industry KSFs can gain sustainable competitive advantage by training its strategy

on industry KSFs and devoting its energies to being distinctively better than rivals on one or more of these factors.

Key success factors vary from industry to industry and even from time to time within the same industry as driving forces and competitive

conditions change. Only rarely does an industry have more than three or four key success factors at anyone time. Moreover, even among

these three or four, one or two usually outrank the others in importance. To compile a list of every factor that matters even a little bit

defeats the purpose of concentrating management attention on the factors truly critical to long-term competitive success.

These factors encompass (1) customer requirements, (2) competitive factors that must be met, (3) regulations/industry standards in the

business, (4) the resource requirements to implement competitive strategy, and other (5) technical requirements to build competitive

position.

1. Customers are looking for products that provide satisfactory value for the price they pay. Each buyer segment has requirements
that shape its key success factors. These requirements can include standards for performance, durability, and ease of use. Other

requirements might relate to special features, fashion, or rapid availability.

2. Competing firms often use similar product-market strategies. Competition might be based on price, quality, or delivery.
Depending on its strategic focus, each firm must develop a set of skills (competences) that allow it to perform better than their

competitors on some competitive dimension.

3. Industry regulations or standards often prescribe the minimum requirements for participation in a competitive arena. Government
regulations often address issues related to the environment or consumers. Industry standards often determine technical

compatibility or process performance. Such standards can be like the Industry Standards Organization (ISO), or become ad hoc

standards set by leading competitors, such as Intel and Microsoft.

4. Resource requirements are becoming increasingly critical. The costs of doing business are higher as markets become global and
economies of scale become critical for research and development, manufacturing, and marketing. Minimum investments to

achieve minimum efficient scale can now exceed $1 billion for facilities in semiconductors, papermaking, and steel production.

In certain high technology areas, human resources are becoming critical. In information technology for example, shortages of

qualified personnel are forcing firms to outsource many of their activities.

5. Technical requirements too, are key to today’s competitive environment. Without access certain technologies, firms are not able
to participate in many industries. This is especially important for suppliers for large firms. Some examples are component

suppliers for electronics or automobiles. As firms demand more of their suppliers, suppliers must increasingly add research and

development capabilities to remain competitive.