Commonly used frameworks and tools for developing strategy in your organization.

1. Commonly Used Strategic
Frameworks and Tools

2. Strategic Planning Process
Frame
What are our objectives and constraints?
Evolve
How will the strategy unfold and evolve over
time? How do we manage strategic risks?
Baseline
What is the reality of our performance and
capabilities?
Forecast
What do we expect of the future environment?
Search
What options do we have to create value?
Choose
What packages of choices will define our
strategy?
Commit
How will we deliver the changes required in
the strategy?
• Define decisions to be considered
• Understand scope of potential solutions
• Clarify rules that will govern work
• Execute agreed-upon action plans
• Track ongoing progress
• Determine revisions to be made
• Determine when to compete
• Understand sources of value and past performance
• Identify major changes in market and drivers
• Analyze available capabilities
• Identify emerging trends and implications
• Isolate critical uncertainties
• Develop realistic divergent scenarios
• Establish and refine option set
• Assess possible competitive responses
• Evaluate options in given scenarios
• Decide where and how to compete
• Determine what, if any, hedging is needed
• Create coherent package
• Develop action plans for selected options
• Reallocate resources to finance plans
• Determine how to communicate changes
• Delegate key jobs to pivotal roles
Idea
Generation
Development
& Selection
Execution &
Refinement

3. Corporate Strategy Planning Calendar
Source: McKinsey & Company

4. Value Chain & Areas Where Client Can Play
Operations
Human Resources
Technology Development
Risk Management
Products
Investment
Trans-
actions
Sales
Credits
Securities
Fin. Products
Corp. Invest.
Other assets
Deposits
Securitization
Credits
Funding
Acct. Mgmt.
Services
Asset Mgmt.
Issuance/IPO
M & A
Advis. Serv.
Other Serv.
Payments
Trading
Clearing &
Settlement
Custody
Acquisition
Offering
Multichannel
Management
Advertising
Branding
Sales
Support
Marketing
Funding
CORE COMPETENCY SOME COMPETENCY NO COMPETENCE
Consumer
Insights

5. McKinsey/GE Matrix – Industry Analysis
High Medium Low
LowMediumHigh
Business Strength
SegmentAttractiveness
• The circle represents
the size of the customer
segment.
• The “slice” represents
the share of their
business potentially
available to the firm
Early conclusions:
•While Large FI appears
attractive in terms of size,
client’s opportunity in this
segment is to maximize
the share it has rather
than to acquire new.
• Commercial, Medium FI
and Small FI appear to
hold growth potential.
• It will be difficult to grow
additional Retail , GSP
and Subprime share.
5 4 3 2 1
1234
=Potential Business
=Client’s Current Business Invest/Grow
Manage Selectively
or for earnings Harvest
Segment Attractiveness
Small FI
GSP
Subprime
GSP
Large FI
Medium FI
Retail
Commercial

6. Product Space Map
DRUG WHOLESALERS
Marketing
Reg. filing
Manufacturing
Trials
R&D
DRUG WHOLESALERS (e.g. MCKESSON)
PFIZEREISAINUCLEON
Multiple DrugsSingle Drug

7. Value Added Analysis
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000

8. SWOT Analysis Reveals Many Obstacles
STREAGTHS
OPPORTUNITIES
WEAKNESSES
THREATS
 Well defined payment & banking infrastructure
 Pilots failed to produce evidence of sustainable biz case
 Different payment methods available to consumers in US
 Currently uncertain consumer demand
 Unbanked will not be innovators and early adopters of
mobile payments
 Robust fraud analytics around mag-stripe technology
 Stakeholders are reluctant to invest in terminals & handsets
 Potential conflicts and barriers to development of a
ubiquitous, interoperable solution for mobile payments due
to different ideas by industry stakeholders
 Banks are conservative and less eager to invest in M-
Wallet
 High cost of deploying of software and hardware
 Adopting existing systems to changing and new standards
 Risk of making the wrong costly business decisions in the
new and evolving industry
 Limited experience dealing with banking and payments
rules
 Until common industry standards developed, firms must
make relationship specific investments
 18 percent of US households do not have a bank account
 Most large U.S banks offer customized banking applications
 34 percent of US consumers now own a smart phone
 Smart phone market is growing at compound annual growth
rate of 17 percent
 Opportunity to reduce merchants’ royalty and rewards
program management costs
 New marketing opportunities for couponing, targeted
advertisements
 15-20 percent of all gift cards are never redeemed –
component of new value proposition to customers
 Contactless mobile technology resident on the cell phone
chip reduce payment fraud
 Mobile payments may reduce PCI compliance cost for
merchants
 Some POS are already equipped with NFC technology
 NFC is compatible and interoperable with other current
systems existing hardware and communication protocols
(e.g. security)
 Company’s brand recognition and many location in the US
 Relationships with Mobile Network Operator(s)

9. BCG’s Growth-Share Matrix
Star Question Mark
Dog
?Cash Cow
High Share Low Share
HighGrowthSlowGrowth

10. Responding to Threats to Sustainability
Response to Imitation
• Building Barriers
• Learning/private information
• Contracts and relationships
• Network externalities
• Threats of retaliation
• Time lags
• Strategic complexity
• Upgrading
Response to Substitution
• Not responding
• Fighting
• Switching
• Recombining
• Straddling
• Harvesting
Response to Holdup
• Building bargaining power
• Bargaining hard
• Reducing asset-specificity
• Building relationships
• Developing trust
• Contracting
• Integrating
Response to Slack
• Gathering information
• Monitoring behavior
• Offering performance incentives
• Shaping norms
• Bonding resources
• Changing governance
• Mobilizing for change
Added
Value
Approriated
Value

11. Strategy Wheel
Target Markets
Marketing
Sales
Distribution
ManufacturingLabor
Purchasing
Research &
Development
Finance &
Control
Product Line
GOALS
Definition of
how the
business is
going to
compete
Objectives for
profitability,
growth, market
share, social
responsiveness
etc.

12. Generic Strategies
Lower Cost Differentiation
Broad
Target
Narrow
Target
Competitive Advantage
Competitive
Scope
COST
FOCUS
FOCUSED
DIFFERENTIATION
COST
LEADERSHIP
DIFFERENTIATION
Lower Cost Differentiation
Broad
Target
Narrow
Target
Competitive Advantage
Competitive
Scope
COST
FOCUS
FOCUSED
DIFFERENTIATION
COST
LEADERSHIP
DIFFERENTIATION
COST
FOCUS
FOCUSED
DIFFERENTIATION
COST
LEADERSHIP
DIFFERENTIATION

13. CORE
Leveraging existing
customers, channels,
and geographies
without significant
changes to the
offering mix or
competitor base
ADJACENT
Implementing significant
changes in channel,
geography, new
customers, enter new
industry space
UNRELATED
Radical changes to the
offering mix to serve
customers, industry
spaces, completely
unconnected to the
existing businessSource: Growth Restarts: Reinvigorating Principled Revenue Growth in Mature Companies, Corporate
Strategy Board, 2003
New Product
Pipeline
Development
хлебные изделия
кондитерские изд.
CORE
производство
муки и масла
ADJACENT
UNRELATED
Производство
пшеницы
Strategic Growth Around Core Competencies

14. Business Scenario Analysis
OPERATOR-CENTRIC MODEL
PROBABILITY OF ADOPTION
LOW HIGH
BANK-CENTRIC MODEL COLLABORATION MODEL
Description: The mobile operator
acts independently to deploy mobile
payment applications to NFC-enabled
mobile devices. The customer may
prepay, or the operator may add
charges to the customer's existing
wireless bill.
Pros: Sufficient profits can be
recognized and allocated to all
parties.
Cons: Does not adequately address
all business concerns. Mass adoption
from merchants and consumers will
be difficult.
Concerns of risk, privacy, and fraud.
Billing and customer service
requirements challenge to mobile
operators. Lack of business
relationships between merchants and
operators.
Description: Issuing bank owns the
relationship with customer and is
responsible for getting payment into
customers' hands in much the same
way as bank cards are distributed.
The merchant relationship is owned
by the acquiring bank.
Pros: 4 Players in the payment
transaction model can be modified for
M-Payments easier. The value chain
for each participant is relatively clear
and easily understood. A merchant
gets faster transaction times and
increased spend.
Cons: Small chance for reducing
merchants’ transaction fees.
Partnerships and revenue sharing
with mobile operators would be
impossible to avoid. Multiple wallets
on consumers’ phones and hence
slower adoption. Banks are reluctant
to invest into new technology.
Description: Model involves
collaboration among banks, mobile
operators and other stake-holders in
value chain, including a potential new
third party to manage the deployment
of mobile applications.
Pros: Comparable models exist in the
credit card industry for customer
acquisition and marketing fees
between partners. Model supported
by all stakeholders. Stakeholders
focus on their own core
competencies. Creates new revenue
from incremental services.
Cons: The amount paid and collected
by each stakeholder is the source of
considerable contention. Slow
adoption due to the number of players
who must agree on standards and
business models. No comment
platform or standards.

15. Multigenerational Plan for Industry
GENERATION
I-STEP II-STRETCH III-LEAP
VISION
Create a Mobile Payment platform that
capitilizes on existing mobile capabilities
at POS in order to perform rudimentary
"riskless" mobile transfactions.
Smart phone use NFC technology is
used as a new channel for existing
credit and debit cards schemes.
True Open M-Wallet
STRATEGY
Partner with 3rd parties and existing
partner FI's to leverage their and
merchant's POS infrastructure and
financial resources to offer rewards and
offers redeemable by M-payments. Use
existing rails, including the ACH.
Establish infrastructure to NFC
payments initiated through credit and
debits cards issued by conventional
players. Develop consortiums of non-
competing merchants to fund joint
product/service development.
Develop partnerships among banks,
insurance, and ancillary product
companies. Establish 3rd party entities
to promote certification program to
ensure both domestic and global
interoperability.
PRODUCTS
▪ Loyalty & rewards programs
▪ Loyalty programs with other firms
▪ Gift/prepaid cards redeemed through
M-payment
▪ UPC/Bar Codes used to redeem
coupons or existing reward programs
▪ Promotional coupons in addition or
instead of email blasts or direct mail
▪ Prepaid and gift cards
▪ CASA (Checking/Savings)
▪ Virtual debit and creadit cards residing
on a chip in the smart phone
▪ Diversification into consultative selling
to other merchants
▪ Integrated banking services with full
suite of products
▪ P2P M-payments
▪ Cash disbursements

16. Value Chain is Complex
P
A
Y
M
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P
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B
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B
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H
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W
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V
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N
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S
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A
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A
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S
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I
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I
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N
S
Unless disintermediated, everyone must derive benefits. Otherwise, the chain will break down!

17. Product Life Cycle
Sales and
Profits ($)
Sales
Profit
Introduction Growth Maturity Decline
Sales
Profit
Introduction Growth Maturity Decline
Competitive
Turbulence

18. Tactical Implications of PLC
Stage in PLC
Introduction Growth Maturity Decline
Strategy Stimulate
Primary
Demand
Build Share -
Solidify Position
Maintain Position Harvest
Product Basic Extensions,
service
Diversify brands,
items
Phase out
weak items
Price Skimming or
Penetration
Penetration
price
Price to match or
beat competition
Reduce or
Hold
Communications High - build
awareness
and trial
High – build
brand preference
Reduce–increase
retention
Minimal level
Distribution Selective Intensive More intensive Selective

19. Porter’s 5 Forces Analysis
Industry Analysis
Attribute Rating Comments
Entry
Barriers
High
▫ Minimum Efficient Scale (MES) is 200-300 clients per year.
▫ New entrants need relatively low capital requirements around $200K.
▫ None of the current players has established a well-recognized brand.
▫ There is no significant experience-based advantages for incumbents.
▫ Medical services providers do not have exclusive partnership
arrangements with existing Medical Tourism facilitators.
▫ The number of players in the value chain and the number of processes
that must be in place create a significant learning curve.
▫ Entrants must be comfortable navigating through complex environment
of health care, insurance and medical procedures.
Rivalry Low
▫ 100% industry growth rate per year expected to continue during the next
2-3 years.
▫ Circa 20 companies are in market; only 5 considered serious players.
▫ Lack of economies of scale, economies of scope or capacity utilization
contribute no major effects to cost differentiation.
▫ Medical Tourism firms have rather lean operations (3-5 employees) and
thus much excess capacity exists.
▫ Degree of product differentiation is very small.
▫ Exit barriers are low. Partnerships can be dissolved relatively easily.
Buyer
Power
Moderate
▫ Revenue coming from one single patient does not represent a large
fraction of company’s sales revenue.
▫ Patients have alternatives to treatments outside the U.S. However, these
alternatives will always be 30-60% more expensive.
▫ Price elasticity for patients’ procedures varies based on procedures.
▫ $2K-3K medical procedures are a significant fraction of patients’ budgets.
Supplier
Power
Low
▫ There are around 120 medical facilities worldwide, which treat the
majority of medical tourism patients.
▫ Relationship-specific investments to support transactions with specific
suppliers are low and may range between $4,000 and $8,000 and
require 20-30 hours of time.
▫ Lack of marketing skills and travel agency competencies in countries
outside their own discourage suppliers from vertical integration.
▫ Stiff competition in the travel industry may prompt some companies to
consider entering this more profitable market.
Substitutes Low
▫ Available domestic medical care is the closest substitute. Currently, the
higher cost of domestic care will prevent it from becoming a major threat.
▫ The price-value of self-arranged medical trips is low, given the risk of
medical incidents stemming from lack of medical facility evaluation.
▫ Travel industry is a great complement and will continue to exert a
favorable influence on medical tourism.

20. Value Chain & Areas Where Client Can Play
Funding
Bond Issues,
Loans,
Guarantees
Loan Program
Design &
Management
Program &
System
Management
Client
Prospecting
Risk
Management
Model
Loan
Disbursement
& Collections
Deposit
Management
There are three areas in the value chain where client could participate
today with its current skill-set.
CORE COMPETENCY SOME COMPETENCY NO COMPETENCE

21. M
edR
etreat
PlanetH
ospitalG
lobalC
hoice
H
ealthC
are
Patients
W
ith
Passports
BridgeH
ealth
International
M
edVoy
Safe Locations
Travel Related
Customer Service
Assurance for
Mishaps
Tourism in Host
Countries
Attractive Website
Depth of Advertising
Breadth of
Procedures Offered
Lowest Grade Highest Grade
Competitive Analysis

22. AGENT FEE
$2,000
TRAVEL LODGING
EXPENSES
$4,000
Value-Based Pricing Strategy
COST OF
TREATMENT
OUTSIDE U.S.
$12,000
TREATMENT
SAVINGS
$22,000
Reference Value
($40K surgery in U.S.)
Differentiation Value
Total Economic Value
($18,000)

23. Economics of Price Change
Price
Sales Volume
Unit Variable or
Incremental
Cost
$10
$9
Contribution
Gained from
volume
Contribution
Lost Due to
Lower Price
Unaffected
Contribution
Demand
Curve

24. Mapping Out Options with Decision Tree
Rf 0.07 0.5
Discount Rate 0.1 Event 7
144
Decision 5 0 144
-100 120 0.5
0.5 Event 8
Event 3 96
1 0 96
0 120
Decision 1 Decision 6
0
-100 100 0 0
0.5
Event 4
1 80
100 0 80
Decision 2
0
0 0
Decision Tree technique allows to map out possible options and to
incorporate probabilities into management’s decision making process.

25. Pricing Strategy
Competitive Advantage and Pricing Strategy
Type of Advantage
Cost Advantage
(lower C than that of competitors)
Benefit Advantage
(higher B than that of competitors)
High Price Elasticity of
Demand
(weak horizontal
differentiation)
• Modest price cuts gain lots of market
share.
• Exploit advantage through higher
market share than competitors.
• Share Strategy: Underprice competitors
to gain share.
• Modest price hikes lose lots of market
share.
• Exploit advantage through higher
market share than competitors.
• Share Strategy: Maintain price parity
with competitors (let benefit advantage
drive share increases).
Low Price Elasticity of
Demand
(strong horizontal
differentiation)
• Big price cuts gain little share.
• Exploit advantage through higher profit
margins.
• Margin Strategy: Maintain price parity
with competitors (let lower costs drive
higher margins).
• Big price hikes lose little share.
• Exploit advantage through higher profit
margins.
• Margin Strategy: Charge price premium
relative to competitors.
Firm's Price
Elasticity of
Demand