Lecture 3 Strategic Framework and eBiz

Source/Reference:

Marketing & Competitive Intelligence FAQ SWOT & PEST analysis

http://www.marketing-intelligence.co.uk/help/Q%26A/question24.htm 

ParknShop

http://en.wikipedia.org/wiki/ParknShop

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Response:

In lecture three, we mainly learnt SWOT and PEST analysis. These two analyses can be applied to all business and they are used very frequently. They are very useful for business in planning. They are always used together in business so that companies can know both internal and external environment deeply. Usually, when a company wants to produce a new product or starts a new project, it would use these two analyses.

Explanation of SWOT and PEST analysis:

SWOT:

Strengths: The characteristics of the company or the business that take an advantage over other companies. E.g. The Company can produce a good with same quality using less resource.

Weaknesses:  The disadvantage or limitation of the company or business. E.g. A company cannot produce a good in lower cost than others.

Strengths and weaknesses are about the internal environment of a company.

Opportunities:  Trend or chances faced by the company for profits and growth. E.g. Provide wifi service in the shop to attract more customers.

Threats: External factors which are bad for the company. E.g. Increase in tax.

Opportunities and threats are about the external environment of a company.

PEST:

PEST describes the external macro-environment factors which affect the company.

P-Political: Factors which are about how the government influences the economy, including tax policy, trade law, tariffs and labour law.

E-Economic: Factors which are about the economic cycle, the growth or the decline of the economy. Also, the interest rates, inflation rate and exchange rates which affect the overall economy of society.

S-Social: The cultural factors such as the population growth rate, career attitudes and age distribution.

T-Technological: The technological factors like the new technological invention or technological change.

Case Study:

ParknShop

It is one of the largest supermarkets in Hong Kong. There are more than 260 outlets in Hong Kong.

PEST analysis for ParknShop:

Political:

Recently, government set a minimum wage, it increase the production cost of ParknShop.

Economic:

The overall economy in Hong Kong is fine. People would like to spend more. However, due to the rapid increase in inflation rate, the price of the product increases, and this may lower the demand for the goods and affect the revenue of ParknShop.

Social:

In Hong Kong, housewives are usually responsible to buy the daily accessories. They have no jobs and they can go to different supermarkets or stores to compare the price of the product. The price of the product should keep at the level of others. Besides, nowadays working class like going to supermarket after work, so ParknShop should concern these customers. For example, assign more cashiers at the peak hours to shorter their waiting time. 

Technological:

The new technology, the new system allows ParknShop to collect data from customers so that it can know more about the favor of the customers.

The newly cashdrawer enable the cashiers to do the work more quickly and shorter the time of purchasing of the customers.

SWOT analysis for ParknShop

Strengths:

• ParknShop has very good brand name
• Have high bargaining power with suppliers
• Can get the supplies of goods at low price
• Have a large market size

Weaknesses:

• Too many employees so that it is difficult in management
• Too many product à cannot always sell the product in lowest price compare with other competitors (cannot observe the price of all the product from different competitors)

Opportunities:

• Can cooperate with other company to develop its own product
• There are more product including both low and high price productà attract more customers
• Provide online shopping à more convenient
• Some larger branch can sell fresh fish, pork and beef

Threats:

• There are other huge competitors such as wellcome and China Resource Vanguard.
• Some small stores sell some product at lower prices.

Conclusion:

SWOT and PEST analyses are good tools for companies to understand the internal and external environment. They are used especially before starting a new project or a new business. Usually, PEST analysis is applied first and followed by the SWOT analysis. With the help of these two analyses, companies can have better plans and use different strategies in different situations.

Week 4 - Strategic Alignment Model

Source / Reference:
1)  "Strategic Alignment: Leveraging Information Technology for transforming Organizations
Based on the paper of J.C. Henderson, N. Venkatraman (1993)" by Philipp Maderthaner

http://www.123helpme.com/view.asp?id=87646

2) "Explanation of Strategic Alignment"

http://www.valuebasedmanagement.net/methods_venkatraman_strategic_alignment.html

Subject: 
In Lect 4 - Which alignment strategy in SAM model is the best? and why?
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Response:

In my opinion, there is no Best alignment strategy in SAM. Whether the alignment strategy is the best for an organization is mainly depend on its own situation. Different companies have different background, characteristics and situations, an approach fits this company may not be the best approach for another company. The four approaches in the SAM model have their own advantages. 

The four alignment perspectives:

1. Strategy execution

Business strategy is the driver to the design of both organization and IT. It is the most common perspective.

2. Technology Transformation

Business strategy is supported by both IT strategy and IT infrastructure. 

3. Competitive Potential

Design IT strategy to affect the business scope and develop new forms of relationship

4. Service Level

Focusing on the IT service organization in order to satisfy customers.

For the Strategy execution, it will be more suitable to small shops and small companies. It is not necessary for them to develop very good IT infrastructure since they have only simple structure and they may not have enough money. For these companies, IT is not very important for their business. Therefore, they will focus on business strategy and the IT infrastructure is just only develop to implement the business strategy in a more efficient way.

 On the other hand, if the company is doing a business that requires good technology and information system, Technology Transformation will suit for the case. For example, the American Express. It is a company well known for its credit cards. In order to let its customers to enjoy using the credit cards conveniently and efficiently. It is extremely significant for American Express to have very good IT strategy and IT infrastructure in supporting its business strategy. 

For the company which wants to develop new products or service, Competitive Potential would be effective in this case. For instance, the smartphone companies such as Samsung, LG and Motorola. They must be innovative and develop new products in order to compete with others. The Competitive Potential strategy will be the best approach for them.

Satisfying customer's needs is the main point in success of a business. Companies can apply the service level approach if they are mature enough and want to provide high quality service. Nowadays, all banking companies provide many online services for customers so that customers can do so many things conveniently. They are applying this approach to attract more customers and keep the current customers.

To conclude, there is no best alignment strategy in SAM. All the strategy can provide different benefits for companies. Each company should select its own strategy depends on its business and situation. Although companies may focus on doing one business, the world keeps on changing. Companies should consider the current situation and change to other approach when necessary.