descriptions of all business frameworks compiled PDF

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A compilation of all business frameworks described, with examples on how to use them in case studies...

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PESTLE Framework used in case studies to evaluate the influence of external factors on a business. Political deals with the competition policy, industry regulation, Government spending and tax policies, finally business policy and incentives. Economic deals with the interest rates, consumer spending and income, exchange rates and the business cycle based on the GDP. Social deals with the demographic change, impact of pressure groups, consumer tastes and fashions and finally, changing lifestyles. Technological deals with disruptive technologies like cellphones, adoption to mobile technology, like the increased use of robotics needs to be adapted to by the businesses and finally, big data and dynamic pricing is something businesses have to adapt to. Legal deals with employment laws, minimum wage or living wage, the health and safety laws, and environmental legislation. The businesses have to learn to adapt to these factors in order to be able to move forward. Ethical or Environmental deals with sustainability such as green technology, tax practices, ethical sourcing- making sure the businesses choose suppliers that operate at the same degree as you do.

STEEP Framework used in case studies to evaluate the influence of external factors on a business. Social deals with society and its description. It deals with demographics, lifestyles, religion, education and age distribution throughout the population. Technological deals with the monitoring and measurement of the consequences the technological aspect will have on their “product development strategies”. Economic deals with how capable a company is in order to get the products or services they want based on the condition of the economy. It is the analyst’s job to make sure they can assess how the consumers will react when there is a change in the economic environment and base their strategy on the analysis. The Ecological element deals with the problems that the company can face in both physical and biological environments. They need to spend their time learning and understanding the ecological environments of the countries where the goods and services will be offered. Political/ Legal deals with understanding the legal and political barriers that are put into place in the operating countries.

PESTLE analysis for Nike Political - Food, Beverages, Cosmetic (FDA) Act Rules

Environment - need of water supplies STEEP analysis for Uber Social - quick pick up for busy society

Economical - worldwide market Technological - mobile app for users Social - different taste for each country Economical - affordable fees Technological - high technology for fast production

Environmental - increase in traffic and fuel consumption

Legal - copyrights issues Political - insured driver and vehicle The PESTLE analysis is used to help you assess the main structures of the external environment that a business would go through. It is mostly used when the SWOT analysis doesn’t show the situation of the current market properly. Companies use it when they want to enter a new market or launch a new product. Finally, companies also use it when they are facing an external problem. There are three times when it would be a good idea to use the STEEP analysis. The first is when there is a time of uncertainty. Using a STEEP analysis and providing the proper information can help reduce the uncertainty for the team members. The second is a time of information overload. By using the STEEP analysis, analysts can organize the data in one place as they receive the information to keep the key things and discard the outdated information. Finally, there is a time of disorganization. The STEEP analysis can help make everything clear about the environment, by letting you organize all your data.

SWOT Analysis What is it? For? SWOT Analysis is an analytical method for companies and any other entities to assess their competitive strength and the nature of their external environment. SWOT Analysis, by its name, is an acronym consisting of four words: Strengths, Weaknesses, Opportunities, and Threats. It helps the company analyse two spheres of the business, internal (strengths and weaknesses) and external (opportunities and threats).

How to use it? To assess a company’s internal environment: strengths and weaknesses, 3 factors should be brought into consideration: Competitive Advantages, Role for Benchmarking, and Key Performance Indicators. Competitive advantages must be genuinely sustainable to the company, to have a long-term positive effect on the company’s development. To measure these specified sustainable competitive advantages, it is necessary to have a benchmarking system. Several performance indicators are very important, and they can be focused on individually and/or separately, depending on the company’s demands: market share percentage, profitability aka operating profit margin, efficiency (unit costs), brand recognition & loyalty, market capitalization (value & growth), and reputation for quality.

When evaluating strengths and weaknesses, it is crucial to focus on what is the most important to the company. Moreover, 3 questions should be answered in this evaluation: 1. Is the judgement made reliable (independent)? The analysis can be strongly biased in favour of the department who made it, or in favour of the senior management team(s). 2. How sustainable are the strengths? 3. Can weaknesses be overcome? and how? To assess a company’s external environment: opportunities and threats, another analysis called PESTLE Analysis can be used. The PESTLE Analysis, by its name, is another acronym that includes factors in fields of: Political, Environmental, Social, Technological, Legal, and Ethical. These are factors that need to be considered when analysing opportunities and threats. When assessing opportunities and threats, 3 questions should be paid attention: 1. How to take advantage of opportunities? If there are any opportunities in any area(s) listed in PESTLE Analysis, they should be exploited to benefit the company. 2. How to protect against threats? If there are any threats in any area(s) listed in PESTLE Analysis, they should be alerting the company for future implementation to protect itself from them. 3. Role of risk management and contingency planning. How can the company deal with risks that can affect its future in a big way? A good risk management and a well-done preparation can be a good “safety-belt” for the company.

When to use it? SWOT Analysis has advantages and disadvantages, and it is important to know when to utilize it to maximize its advantages and when to not use it to avoid the opposite. When a company or any other entities want to have a board view for its current internal and external environments, SWOT Analysis is extremely useful. It provides a logical structure in 4 sections with each focus on different strategic issues. In addition, the SWOT Analysis encourages analysis of the external environment, where the company may have threats coming from its competitors, and opportunities for exploitation and development. However, a company needs to avoid the disadvantages of the SWOT Analysis. It lacks focus too often: it has 4 parts, and each is very difficult to be well-focused. The reliability of the whole finished SWOT Analysis could be biased or manipulated by those who have executed it; for example, the senior management team(s). Therefore, the independence of the analysis can be doubted sometimes. Other than having a lack of focus and lack of independence, the SWOT Analysis can quickly become outdated meaning that the company’s internal and external environments change fast in this high-paced world. Today’s opportunities might become tomorrow’s threats, and the strengths today might become weaknesses tomorrow.

Pros & Cons of SWOT Analysis Pros

Cons

Logical structure

Lack focus

Focuses on strategic issues

Can quickly become out-of-date when you are in a dynamic environment

Encourages the analysis of external environments.

Can become a subjective analysis

Zero cost

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Perfect planning technique when it comes to analysing a business

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KEY SUCCESS FACTORS (KSF) What is it? For? Key Success Factors are components and aspects that can be measured for distinguishing a good company from a company that needs improvement. There are 5 key success factors: 1. Strategic Focus (Leadership, Management, Planning) 2. People (Personnel, Staff, Learning, Development) 3. Operations (Processes, Work) 4. Marketing (Customer Relations, Sales, Responsiveness) 5. Finances (Assets, Facilities, Equipment) Each of these factors represents a different department of a company, and each has its impact on the company’s success or failure. How to use it? To evaluate a company’s Industry Key Success Factors, 3 questions are involved: 1. What do customers want? 2. How do firms compete? 3. Are there any death bells? It is important to identify the customers of the company. For example, the demographics and consumer behavior. Knowing the customers better means that the company can have opportunities for more good quality customer relations, and potentially, more sales. Knowing the competitors well, including strategies, tactics, places, times, etc., may help the company for its development and success. A company’s weaknesses and threats can harm its brand image and directly affect its sales and cause a failure. Quality, for instance, is a key part for the company to pay attention to. However, there are 3 tips for the company when determining its Key Success Factors: 1. Focus on some of them, but not all. Only focus on what is important 2. Focus on them to change the future. If the company determines the right factors and sticks to the plans and strategies, those factors can help the company be the game changer. 3. Focus on them to not fall behind. If the company does not focus on its unique Key Success Factors, it has a huge chance of falling behind the tide and eventually become obsolete.

When to use it? Key Success Factors are very useful for a company at any stage. By identifying the company’s unique factors and preparing plans to enhance them, the company can become a big (or a decent) player in the business. This analytical method can help a company at the start-up period, during its operations… at any

point. Besides, the method of Key Success Factors is very beneficial for a company when it is ambitious being in a competitive market and does not want to fall behind.

Pros & Cons of KSF Analysis Pros

Cons

Can be very beneficial if only important factors are focused (approx. 3 to 5)

Hard to focus, but possible

For the future: For a long-term plan

Not for a short period of time

Precision: Encourages analyzing the internal environment & Focuses on a company’s different departments

Not so much on analyzing the external environment

Can be ran at any stage

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May also be major flaws that need to be corrected or preserved for other goals

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Examples in Cases

Samsung: Samsung is one of the biggest smartphone companies in the world. It provides services and products related to smartphones, tablets, computers, and any other electronic devices. Samsung’s biggest competitor is Apple. The future of the industry occupies a big amount of attention for both companies, and if we want to identify the top 2 Key Success Factors of Samsung, marketing and finances would be the spots to look at. By focusing on marketing, Samsung can define its target markets, so it can provide services and design products in correlation to the consumers’ needs, values, and satisfaction. Therefore, if Samsung has excellent marketing, it would have an advantage in competition with Apple. Finances is the other factor Samsung should focus on. It can give Samsung an idea how the income distribution looks like in its defined target markets, so it can have competitive pricing to keep customers with Samsung and maintain their value. Moreover, by focusing on finances, Samsung can have a better understanding of how the future of the economy is going to look like, predicting how the shareholders would like to see, and preparing its strategies related to cash-flows, corporate financial management, and payrolls & maintenance of facilities.

COSCO Shipping: COSCO Shipping is a supplier company who offers logistics services. It is the third largest in both number of container ships and aggregate container volume in

the world. Because COSCO is in the shipping industry, it therefore may need to consider focusing on the following 2 factors: operations and finances.

COSCO Shipping handles cargos from different companies and it is a huge responsibility to take. The nature of materials in those cargos can vary, general objects, chemicals, explosives, etc. Through focusing on operations, COSCO can ensure the safety control over its ships, goods being dealt, and communication in the ports. Also, COSCO can monitor its crew members to strictly follow the company’s policies and encourage innovation and collaboration through its subsidiaries and partners. In addition, COSCO Shipping needs to focus on finances. A good financial management can enable COSCO Shipping to have an opportunity to enlarge its fleets, to establish new routes for future businesses, and to have better corporate relationships with its international clients.

Porter’s 5 Forces What is it? Porter’s 5 Forces are used to be able to understand the competitiveness of a business environment you may be wishing to enter. The five forces include competitive rivalry, threat of new entrants, power of the suppliers, power of the customers, and threat of substitutes. This model is used to evaluate the competitive environment and organize them to make it easier. The point of Porter’s 5 Forces is to be able to better understand the forces in your environment that can affect your profitability, thus, allowing you to adjust your strategy accordingly. The Forces are applicable to a specific industry and not to a specific organization as opposed to a swot analysis. There are also collisions among buyers and suppliers. It also works primarily for-profit oriented organizations and not non-profit or government entities. Competitive rivalry is the number of competitors, as well as their strengths in comparison to you. If the competitive rivalry is intense, companies need to lower their prices and provide incentives to attract customers. If the competitive rivalry is not intense, the profits can remain high.

What Influences Competitive Rivalry? ● The (Bargaining) Power of Suppliers: If suppliers have a high bargaining power, they can influence pricing, which influences profits. A supply is powerful when there are few in the industry, customers are small, few substitutes are available, and the cost to switch suppliers is high.

● The (Bargaining) Power of Customers: Customers can exert pressure and drive prices down when there are few customers, there are plenty of suppliers to choose from, low switching costs, and when the customer purchases significant quantities. ● Threat of Substitutes: They are alternatives that serve the same need. The higher the number of substitutes, the lower the prices. The lower the number of substitutes, more market share. In some cases, a monopoly can be reached. Ex: example of this is choosing a budget airline over driving to another city or choosing taxi services over personal vehicles. ● Threat of New Entrants: Every market has established market leaders. New entrants can eat into the market share. If barriers to entry are low for the new entrants, the threat to existing players is high. These barriers include high startup investments, government regulations, and access to suppliers with good retail prices.

The Marketing Mix 4C’s What is it? The 4 C’s is not the marketing mix but rather an extension that will result in financial success. It is important to devise a plan that balances profit, client satisfaction, brand recognition, and product availability. It is also very important to consider the overall “how” aspect that will help determine success or failure. It was created to better suit our current market, since it has drastically changed over the last few decades. A lot of the methods that were previously used were rendered ineffective to today’s society, as our lives are much more fast-paced and work-oriented than ever before. Understanding the 4 C’s and the marketing mix will allow you to achieve future financial success. ● Cost: When purchasing a product, price is not the only cost incurred. Cost of conscience or opportunity cost is also part of the cost of product ownership.

● Consumer Wants and Needs: This is when a company should only sell a product that addresses consumer demand. Marketers and business researchers should carefully study the consumer wants and needs as they will allow the business to fill those needs efficiently. ● Communication: Marketers should aim to create an open dialogue with potential clients-based on their needs and wants. ● Convenience: When the product is readily available to the consumers. Marketers should strategically place the products in several visible distribution points in order to maximize the number of consumers that see the product.

How Do You Use the 4 C’s? Cost: First, analyze your business unit’s strategic cost position relative to its competitors, then identify opportunities for cost reduction. You need to make sure you go over relative cost position, experience curve, cost-sharing analysis, best demonstrated practices, and lastly product-line profitability/cost allocation/activity-based costing. Address the following subjects and questions: Relative cost position. Do competitors have a cost advantage? Why are we (or they) performing above or below what we would expect, given our relative market position? What is our full potential cost position? Experience curve. To what extent is the business unit using its experience curve to drive down unit costs? Where are we versus our competitors? What will prices be like five years from now? Cost-sharing analysis. Is this business separate from another? How well can competitors with similar businesses attack us? Does the benefit of sharing costs with our other business units outweigh any lack of focus that sharing costs across multiple businesses would introduce? Best demonstrated practices. How much can we lower our costs if we employ the best internal and external practices? How much can competitors lower their costs? (Benchmarking is a related tool in this analysis.)

Product-line profitability/cost allocation/activity-based costing. Which products and customers generate the most profit? Which ones should we consider dropping? Customers: Use customers to identify revenue- and profit-maximizing strategies. You want to investigate the market overview and map, customer segmentation, distribution-channel analysis, customer retention and loyalty, and lastly customer acquisition.

Address the following subjects and questions: Market overview and map. What is the market size? Is it growing? How is it broken down by geography, products, and segments? What is each competitor’s market share? Customer segmentation. Which parts of the market require different offerings? Are we fully penetrated in some segments and neglecting others? Can we adjust our offerings to grow sales or increase price realization? Which segments are financially attractive for us to invest in? Distribution-channel analysis. What range of channels is possible for each product/service? Do some offer superior economics? Are we reaching our full potential in each? Customer retention and loyalty. How can we identify the most profitable customers? How many more of them are there yet to reach? How do we increase our retention of our best customers? What is the profit impact of increasi...