Putra Business School GSM5160 Strategic Management MBA Quick Notes

1. INTRODUCTION
• Background (Current Position & Future Intent)
– BCG Matrix
– Johnson Strategy Clock
• Findings (Problem Statement)
– Ishikawa Fishbone
– Pareto Chart
• Analysis (Internal & External Audit)
– Porter 5 Forces = Micro External Factors
– PESTLE = Macro External Factors
– PPT = Internal Factors
– SWOT = Structure of Internal & External Factors
– TOWS = Matching Concept
• Analysis (Growth Strategy)
– Space & Ansoff Matrix
• Recommendations (Strategic Plan)
– Strategy Map
– Balance Score Card
• Conclusion
1
QUICK NOTES
GSM5160 Strategic Management
1. The case study is about the Emirate Group who’s primary business is international airline services.
2. Firstly, we will describe in the background section the Emirates Group current market competitive
structure, position using BCG Matrix, and generic strategy using Johnson Strategy Clock to demonstrate
the business that they operate today.
3. Next, we will discuss on the principal issue which disconcerts operations within the Emirates Group, using
Ishikawa Fishbone Analysis and Pareto chart.
4. Further to that, we will conduct an internal and external audit, using Porter 5 Forces for micro external
factors, PESTLE for macro external factors, People-Process-Technology for Internal Factors, SWOT
(Strength-Weakness-Opportunity-Threat) to structure Internal and External Factors, and TOWS to match
options for future plan.
5. As way forward, we will provide our recommendations using the strategy map and balanced score card.
6. Finally, the presentation ends with the conclusion to the case study.
Similarly, in Conclusion
1. This brings us to the final chapter of the presentation on the Emirate Group
2. In the background section, the team has described on the current market competitive structure, position,
and generic strategy that Emirates operate today.
3. We have also discussed on the principal issue which distresses operations.
4. Further to that, we have demonstrated the internal and external factors involved in matching options for
Emirates’ future plans.
5. The presentation have also summarized the recommendations for implementation through the strategy
map and balanced score card.
6. Based on the information and rationales discussed, we can safely conclude that the Emirates Group is on
the right path to its vision and mission, and shall remain competitive in its core business of international
airline premium service.
1

2. MARKET STRUCTURE
Industry
Rivalry
Product
Type
Barrier to
Entry / Exit
Demand
Elasticity
Market &
Pricing
Power
Max Profit
Condition
& Strategy
Example
Perfect
Competition
Very
Large #
Identical None or
Minimum
•Horizontal
•Perfectly Elastic
•No Market Power
•Price taker
•Normal
•Min Gov Intv
•P=MR=MC
•Night market
•Groceries
•Kiosk shop
Monopolistic
Competition
Large # Heterogeneous
with subtle
differentiation
Low & easy
with some
capital
Imperfect
substitutes
•Downward
Slope
•Relatively
Elastic
•Highly Elastic in
LR
•Low Market
Power
•Imperfect
Completion
•Non-price
Competition
•Economic SR
•Normal to LR
•Min Gov Intv
•MR=MC
•Spare prod’ capacity
•Brand Loyalty
•Fashion clothing
•Mass food prod’
•Café, restaurant
•Fuel Retailers
•Mass Media
•Large manufacturing
industries
•Service industries in cities
Oligopoly
Dominant Firm
Model, 2 = Duopoly
Small #
Top 2-10 firms
takes 85%
market share
Homogeneous
/ Identical
/
Undifferentiated
or Differentiated
Difficult
due to large
investment,
supply and
infrastructure
•Downward
Slope
•Relatively
Inelastic
•Benefit at
Marginal Cost
•Large Market
Power
•Imperfect
Completion
•Non-price
Competition
•Less competition
= higher price
•Losses to normal to
economic in SR & LR
•Mod to High Gov Intv
•Strategic pricing, MR
curve discontinuous
with kink; elastic above
prevailing price &
inelastic below point
•Game Theory response
•Paints, Nails
•Mobile Phones
•Telecommunication
•Oil & Gas Production
•Cable / Pay TV
•Airline Pharmaceuticals
•Steel, Aluminum, Cement
•Computer O/S
•Auto Industry
•Beverages
•Tobacco
Monopoly None Unique Impossible by
legal, patent,
restricted
license, large
investment
•Downward
Slope
•Highly Inelastic
•Complete Market
Power
•Price setter
•Economic Profit
•High Gov Intv by
Nation’ztn
•MR=MC
•Utility
•Patented Medicine
•Sewerage
•Rail
•Post Office
Competition Acting Differentiation Assumption
Cournot
Duopoly
Quantity Simultaneous Homogeneous
Advantageous to
versatile capacity
Stackelberg
Duopoly
Quantity Sequential Homogeneous
Leader sets
quantity
Bertrand
Oligopoly
Price Simultaneous Homogeneous
Market Leader
captures all market
Sweezy Price Simultaneous Differentiated
Rivals neglect
price rise
2
• Giving an account of the company. Example: The Emirates Group exist in an oligopoly market structure in
the global premium airline industry. There are less than 10 airlines which have been able to maintain this
position. The services provided by Emirates is differentiated by the quality of service, punctuality and
brand equity emphasized by Emirates. The large investment involved in the fleet of aircrafts, landing
rights, vast facilities worldwide and central home airport in Dubai ensures a high barrier of entry to
competitors beyond the current oligopoly members, i.e. economy class, national carriers or low cost
airlines. In fact, Emirates have also diversified under a different entity to address challenges in low cost
airline segment. In general, demand remand relatively elastic for more premium services, but relatively
inelastic at lower economic fares. This explains the multiple options within economy segment alone, to
provide strategic pricing schemes and avoid price competition with other oligopoly members.
• End with problem statement. Example: The predicament for Emirates is to remain relevant in the industry
with the rising demand for low cost price airline, which pose real threat to Emirates as a luxury airline.
2

3. PORTER’S GENERIC COMPETITIVE MODEL
• Best-Value Strategy
• Same Quality, Lower Price
and/or Same Price, Higher Quality
1. give customers more value for the money by
emphasizing both low cost and upscale
difference
2. minimized cost through lean floor operations
3. minimize cost through supply chain, inventory,
distribution, suppliers and manufacturing
4. share savings with customers, resulting in
higher number of customers overall
Competitive Advantage
Low Cost Differentiation
Broad
Target
Cost Leader
/ Low Cost
Broad
Differentiation
Narrow
Target
Cost
Focused
Focused
Differentiation
3
CompetitiveScope/Market
Current Future
Best Value
3

4. BCG MATRIX JOHNSON STRATEGY CLOCK
BACKGROUND (CURRENT POSITION & FUTURE INTENT)
The #1
Premium
Airline
High Debt
Leverage
International
As-is
To-be
1
2
3
4
5
6
7
8
High
LowPerceivedAddedValue
Low HighPrice
Differentiation
Focused
Differentiation
Unique Strategies
 Monopoly
 Imperfect Info
 Non-sustainable
 Ultimate failure
Hybrid
/ Best Value
Low Price
Focused
Low Price
/ No Frill
Middle East
As-is
4
The BCG matrix is made up of four quadrants based on the relationship between Relative Market Share on
the horizontal axis (higher market share towards the left) and Market Growth Rate on vertical axis (higher
growth rate towards the top), to provide Basis for current Market Position (As-is) and Direction for future
strategy (To-be)
• Quadrant 1 is a Question Mark made of business with low market share in a high-growth market. This is
the starting point for most businesses.
• Quadrant 2 is a Dog made of business with low market share in a mature, slow-growing industry. These
units typically break even’s.
• Quadrant 3 is a Star made of business with high market share in a fast-growing industry.
Stars have potential to become cash cows when market growth slows.
• Quadrant 4 is Cash Cow made of business with high market share in a slow-growing industry. These units
typically generate cash in excess of the amount of cash needed to maintain.
HYBRID = BEST VALUE
• Low in price, with high perceived value - involves some product differentiation.
• E.g.: McDonalds introduced “Value Meal” package - 100% meat with reasonable price for a meal that comes
with drink & fries.
• The combination of product differentiation with reasonable price during festive season is consistently offered.
• Among competitors (Burger King, Wendy’s) McDonalds is the lowest price in fast food industry.
• High “fast quality” service and efficient delivery system.
• Emirates Group exist in an oligopoly market structure in the global premium airline industry. There are less
than 10 airlines which have been able to maintain this position.
• 50 associate brands which boasts premium and luxury. Emirates leverages on differentiation. The services
provided by Emirates is differentiated by the quality of service, punctuality and brand equity. The large
investment involved in the fleet of aircrafts, landing rights, vast facilities worldwide and central home
airport in Dubai ensures a high barrier of entry to competitors beyond the current oligopoly members, i.e.
economy class, national carriers or low-cost airlines. In fact,
• Emirates have also diversified under a different entity to address challenges in low cost airline segment. In
general, demand remand relatively elastic for more premium services, but relatively inelastic at lower
economic fares. This explains the multiple options within economy segment alone, to provide strategic
pricing schemes and avoid price competition with other members.
4

5. EXTERNAL
PESTLE Macro
Porter 5F Micro
OPPORTUNITY
THREAT
INTERNAL
People
Process
Technology
STRENGTH
WEAKNESS
COMPANY STRATEGIC ANALYSIS
5
Boston Consulting Group Matrix
Relative Mkt Growth vs Relative Mkt Share
SWOT
Porter’s Generic Competitive Model
Porter’s 5 forces
External Micro Environment / Industry Competition
O
T
S
W
PESTLE
External Macro Environment
Political
Economical
Social
Technological
Legal
Environmental
Factors which are contingent events, subject to firm's intention and ability to take advantage of
opportunity and /or avoid threat.
Factors which currently exist and have contributed to the current position
and may continue to exist.
5

6. SWOT ANALYSIS
EXTERNAL
PESTLEMacro::Porter5FMicro
OPPORTUNITY
1. Loyal customers (people)
2. Customer shopping analytics
3. Comprehensive m-Commerce (mobile technology)
4. Green / Eco-friendly & sustainability
5. Economic downturn
6. New markets within the country
7. Borderless market Sourcing global / international products
8. Fair trade
9. Structured advertising campaign
10. Structured social media promotion
O
THREAT
1. Fierce rivalry within same sector, e.g. Costco, Target, Aldi
2. Threat of substitute products from specific product segment
3. Threat of new entrants from specific product segment
4. Increasing of minimum wage
5. Strong media critic Media power
6. Litigation due to changing market conditions
7. New entrants to the market
8. Foreign exchange risk
9. Local community perception / resistance
10. Shopping trends, i.e. e-commerce & crypto-currency
11. Education levelQuality, health awareness
12. Inflation effects to product price
T
WEAKNESS
1. Weak public relation (people)
2. High employee turnover (people)
3. Gender discrimination on employees (process)
4. No benefits to part-time employees (people)
5. Heavy workload on employees (process)
6. Illegal immigrant in contractors (process)
7. Corruption scandal with top management (people)
8. Product offerings under legal challenge (process)
9. Preference to cheaper sources / non-American (process)
10. Size selection limited (process)
11. Over focusing in Cost Cutting (technology)
12. Lacking of sensitivity towards the society (people)
13. Against the law-illegal products, illegal workers (process)
14. Non-ethicalsweatshops produce (technology)
15. Unfair treatmentemployees (people)
16. Bad reputation (people)
W
INTERNAL
PeopleProcessTechnology
STRENGTH 1. Powerful retail brand & loyal customers (process)
2. Cost leader through effective and efficiency SCM (people)
3. Comprehensive company strategy (process)
4. One-stop retail destinationSupercenters one stop retail destination,
wide selections (process)
5. Multiple distribution channel (process)
6. Strong financial working capital & expansion (process)
7. Industry Leading technology in warehousing, distribution & retail
(technology)
8. Leadership style – Sam WaltonCheerleading management style
instilled in Walmart Culture (people)
9. Private satellite links with 1700 vendors supplying 80% of its goods
(technology)
10. Geographic strategysaturate each areaover 200 miles, 1 store (store
of the community) (process)
S
6
Usefulness of SWOT analysis:
1. Foundation tool in informal auditing process before formulating strategies / goals.
2. Structured approach in identifying internal (SW) & external (OT) factors / resources.
3. Outlines company’s current position as well as future potentials or challenges.
4. Prerequisite to TOWS Matrix, Internal Factor Evaluation, External Factor Evaluation, & IE Matrix.
5. Capability to generate more contents will determine the effectiveness of TOWS Matrix.
6

7. INTERNAL FACTOR
EXTERNAL FACTOR
STRENGTH
1. Brand name (Process)
2. Goodwill in market (Process)
3. Offers luxury service (Process)
4. Long-haul flights route (Process)
5. Wealth Asset (Aircrafts) (Process)
6. Strong Financials (Process)
7. Loyalty employee (High Resources) (People)
8. Low maintenance cost for aircrafts (Process)
9. Information distribution (Mobile apps) (Technology)
WEAKNESS
1. Rigid culture (People)
2. High operation cost - big investment on purchasing/leasing
aircrafts (Process)
3. High Prices as comparatively other airlines companies. (Process)
4. Non membership of any International Alliances (unable to enjoy
jointly benefits) (Process)
5. Non availability of hub in Abu (Process)
6. Do not cater to budget traveller. (Process)
OPPURTUNITIES
1. Alliances (Process)
2. Out sourcing (Process)
3. Globalization (Technology)
4. Advanced technology & innovative (Technology)
5. Popular Lifestyle product (Technology)
6. Good growth in Per capita income in UAE. (People)
7. Huge investment plan by Government on the development of
its airports in UAE. (People)
8. Rapidly enhancement in internet users over the world and in
also in UAE (People, Technology)
9. Growth in population of the world and in also in UAE. (People)
10. Safety and sound political situation in Dubai (People)
SO = Take advantages of Opportunities
(S3 S4, O6 O9 O10) More international destination to leverage (offer
continual expansion opportunities for both leisure and business
destinations)
(S3 ,O4 O5 )Use Technology to improve the service (in-flight lounge,
spa, private suite, casino and meeting space)
(S2, O3) Focus on diversified market
WO = Overcome weaknesses by taking advantage of
opportunities
(W2 W3, O4) Use current technology to reduce the fuel cost (using
aircraft Boeing 787)
W4 O1 Joining the alliances to enable the company to enjoy jointly
benefit)
THREATS
1. New arrival of airlines companies with low cost
(Budget/Discount airlines) (Process)
2. Fluctuating fuel price cause high operations cost. (Process)
3. Terrorism activities (Process)
4. Hackers (online system and database) (Technology)
5. Natural crises and deserters in the region like earthquake,
flooding and hurricane
6. The quickly increase of fresh sensitive unprocurable diseases
(SARS and Bird Flue)
ST = Maximizing the strengths to minimize external threats
(S1 S2, T1) Long Term brand loyalty - Customer Engagement/
Loyalty program (miles point)
(S1 S2, T1) Promotion strategy – sport festival/ sales promotion.
(S5, T4) Improve database or increase MIS security by investing in
technology system.
WT = Minimize weaknesses and avoid threats through
Innovation. Has highest risk due to no immediate solution.
(W3 W6, T1) Add some value and benefits with the tickets, like
ticket with subsidies hotel room option and transportation.
(W2, T5) Investment in Green technology aircraft.
(W,T1) Invest more in customer experiences, like on board
experiences & business class aircraft.
TOWS MATRIX
7
O
T
WS
Usefulness of SWOT analysis:
1. Foundation tool in informal auditing process before formulating strategies / goals.
2. Structured approach in identifying internal (SW) & external (OT) factors / resources.
3. Outlines company’s current position as well as future potentials or challenges.
4. Prerequisite to TOWS Matrix, Internal Factor Evaluation, External Factor Evaluation, & IE Matrix.
5. Capability to generate more contents will determine the effectiveness of TOWS Matrix.
7

8. • SO = Take advantages of Opportunities
– S4 O6 Penetrate into new markets
– S6 O3 Mobile platform grocery shopping
– S6 O2 Comprehensive consumer analytics for shopping
behavior study
– S2 O7 International products sourcing for broad
differentiation strategy
– S2 O4 Reduce wastage, improve reputation
• WO = Overcome weaknesses
by taking advantage of opportunities
– W1,2,3,16 ; O9,10 Publicize CSR activities done to rebuild
brand image
– W6,12,13,14 ; O2,3 Market research on culture, law and
regulation
– W2,4,5 ; O3,4 Decrease cost thru application of technology
to increase employee well-fare
• ST = Maximizing the strengths
to minimize external threats
– S1, S5, S8, T1, T2 Walmart offers products with added values
such as free installation/ maintenance
– S2, S4, S5, S6, S7, T3, T7, T9 Increase the barrier entry by
forming strategic alliances with supplier
– S2, S7, S8, T9 Create loyalty programs that rewards the
customers to retain existing and attract new customer
– S4, S5, S8, T9, T10 Establish online retail market that offers
discounts/ voucher with fast delivery while maintaining food
freshness and quality
• WT = Minimize weaknesses and avoid threats
– W1,T1,T2,T3 Focus on existing product line by investing
more on advertising campaign to keep competitors on
pressure
– W2,W4,T4 Better employment screening process and
compensation benefit package restructuring
– W2,T4 Improved working conditions to reduce cost of
manpower
– W13,W14,T9 Avoid unethical practices to reduce
resistance on local and international expansion
TOWS MATRIX
8
8

9. • Uses
– Provides basis for Opportunities and Threat
under SWOT Analysis
– Anticipate changes in External Environment
before crafting strategies using TOWS
– Provide external data for EFE and IE Matrix
• Porter 5 Forces
– External Micro Environment,
e.g. within industry, sector or market segment
• PESTLE
– External Macro Environment,
e.g. National, Regional, International
Macro:
National, Regional, International
Micro:
Industry, Sector
Micro: Market,
Segment, Competitor
Firm
PESTLE & PORTER 5 FORCES IN EXTERNAL ENVIRONMENT PERSPECTIVE
9
9

10. PESTLE ANALYSIS
Political
•Trade relations
limited by
import
restrictions
•Bilateral trade
agreement
promote
borderless
market sourcing
global /
international
products
Economical
•Global economic
downturn
•Decrease in fuel
price promoting
travel & cheaper
logistics
•Instability of
financial market
•Increasing of
minimum wage
•Foreign
exchange risk
•Inflation effects
on product price
•Fair trade
Social
•Increase golden
customers with
traditional
shopping culture
•Education level
quality, health
awareness
•Changing choice
& channels
•Shopping trends,
i.e. e-commerce
& crypto-
currency
•New township
create new
markets within
the country
•Local community
perception /
resistance
•Structured
advertising
campaign
•Strong media
critic Media
power
Technological
•Advancement of
mobile tech
•Comprehensive
m-Commerce
(mobile
technology)
•Advancement of
data sharing
tech
•Advancement of
eco-friendly tech
•Structured social
media
promotion
Legal
•Increased of
minimum wage
laws
•Stricter
hazardous waste
disposal
regulation
•Stricter
merchandizing
regulation
•Increase in
educated
consumer
•Litigation due to
changing market
conditions
Environmental
•Local disaster
and effects of
non-sustainable
approach
•Increasing
demand for
Green / Eco-
friendly &
sustainability
10
External Macro Environment
10

11. Competitive
Rivalry
Threat of
Substitution
Threat of
New Entrant
Buyers’
Power
Suppliers’
Power
PORTER 5 FORCES
• Few substitutes are low priced, efficient,
convenient & one-stop variety
• Addressed different channels, e.g. bulk,
small convenience retail, 24 hour shopping,
online shopping
• Threat of substitute products from specific
product segment, e.g. hipster, organic
• OLIGOPOLY Market Structure
within LARGE SUPERSTORES Industry
• Economies of Scale through Cost Leader / Low Cost
• “Everyday Low Price” strategy flawed by poor reputation
• Today, Oligopoly, few players control 85% of market
• Relatively low competitive rivalry within segment
• Do not compete in price due to kinked demand curve
• Aggressiveness differentiation and marketing strategies
• Homogeneous / identical products
• Threat of New Entrant due to relatively high Entry Barrier
• Gigantic retail chain enterprise at strategic location everywhere
• Large Working Capital & Investment for Infrastructure
• Outstanding Supply and Distribution
• Threat of new entrants from other segments, grew to become
superstore and engaged price war e.g. Costco, Target, Aldi
• Low Bargaining Power of Buyers due to
insignificant buyer pressure
• Buyers are in abundance, highly diverse
& dependent on Low Price products
• Strategic locations & demography
ensure customers can switch freely to
other retailers without sever impact
• Extensive customer shopping analytics
• Low Bargaining Power of Suppliers
due to large number and variety
suppliers
• Supplier also compete for limited
consignment space in retail stores
• Supplier must ensure continuous
supply of product to retail stores
11
When analyzing the external factors on Emirates, we will be using the PESTLE and Porter 5 Forces.
• PESTLE – macro analysis about the country
• Porter 5 Forces – industry analysis that will determine the market structure.
It is very important to establish the market structure by which determine the direction of competitors (i.e.
current industrial rivals, new entrants and substitutions), and how suppliers and buyers dictate competition.
In 2006, Walmart’s position within large superstores industry clearly demonstrate an oligopoly market
structure. There are few players, which conquer majority market share (60-80%). Products are homogeneous
/ identical / undifferentiated to cater for a large market. Demand curve is kinked at a strategic pricing point,
where it is elastic above the point and inelastic below the point. Hence, players do not compete on price.
Instead, benefit from cost leadership, operations efficiency and economies of scale. By this, industry
competitive rivalry is low. Both the threat of New Entrant and Substitution is low. This is due to the high
barrier to entry imposed by the large capital investment in infrastructure and huge inventory, as well as the
established relationships and trust with suppliers and customers.
11

12. Competitive
Rivalry
Threat of
Substitution
Threat of
New Entrant
Buyers’
Power
Suppliers’
Power
INTERNAL & EXTERNAL AUDIT - P5F, PESTLE, SWOT, TOWS
• Few substitutes transport mode – car, train ferry
• Few substitutes at low price
• Singapore Airlines, Middle East
Airlines, British Airways, Delta
• OLIGOPOLY market structure
• High operating cost but low cost of entry
• Large working capital & investment for infrastructure
• Aircraft leasing
• High switching cost
• Insignificant buyer pressure
• Airlines industry –Boeing & Airbus
• Several number and variety
suppliers
Political
Huge investment by government People
Government organization/attitude People
War from others country Process
Safety & sound political in Dubai Process
Economic
Good growth in Per capita income People
No tax on personal wages People
Currency fluctuation Process
Fluctuating in fuel price Process
New arrival of low cost airline Process
Socio-cultural
Growth in population globally People
Culture & religion practice People
Lifestyle changes People
High standard of living People
International learning environment People
Unusual diseases (SARS, Flus) People, Process
Technology
Popular lifestyle product Process
Communication service Process
Rapid enhancement in Internet user People
Hacker and virus attack People, Process
Integrated OS apps People
Legal
Safety regulation Process
Employment law People
Environment
Natural disaster Process
Awareness Environmental friendly Fuel Process
Exploitation impact (ecosystem) Process
PESTLE
12
When analyzing the external factors on Emirates, we will be using the PESTLE and Porter 5 Forces.
PESTLE – macro analysis about the country
Porter 5 Forces – industry analysis that will determine the market structure.
It is very important to establish the market structure by which determine the direction of competitors (i.e.
current industrial rivals, new entrants and substitutions), and how suppliers and buyers dictate competition.
Emirates’s position within premium airline service industry demonstrate an oligopoly market structure. There
are few players, which conquer majority market share (60-80%). Products are homogeneous / identical /
undifferentiated to cater for a large market. Demand curve is kinked at a strategic pricing point, where it is
elastic above the point and inelastic below the point. Hence, players do not compete on price. Instead,
benefit from cost leadership, operations efficiency and economies of scale. By this, industry competitive
rivalry is low. Both the threat of New Entrant and Substitution is low. This is due to the high barrier to entry
imposed by the large capital investment in infrastructure and huge inventory, as well as the established
relationships and trust with suppliers and customers.
Provides basis for Opportunities and Threat under SWOT Analysis
Anticipate changes in External Environment before crafting strategies using TOWS
Provide external data for EFE and IE Matrix
Porter 5 Forces
External Micro Environment,
e.g. within industry, sector or market segment
PESTLE
External Macro Environment,
e.g. National, Regional, International
12

13. STRATEGIC POSITION AND ACTION EVALUATION (SPACE) MATRIX
IP: Industry Position X
Number of Store per State 5
Permanent Employees per Store 2
Barrier for New Entrant 5
Productivity 2
Product Availability 5
Product & Service Variability 3
Average IP 22 / 6
= 3.67
CP: Competitive Position X
Market Share -5
Overall Customer Survey -1
Quality Rejects -1
Average CP -12 / 3
= -2.30
CP IP
SP
FP
CONSERVATIVE
• Market Penetration
• Market Development
• Product Development
• Related Diversification
AGGRESSIVE
• Vertical / Horizontal
Integration
• Market Penetration
• Market Development
• Product Development
• Diversification
• Vertical / Horizontal
Integration
• Market Penetration
• Market Development
• Product Development
COMPETITIVE
1.37
1.35
X = CP + IP = 3.67 2.30 = 1.37
FP: Financial Position Y
Liquidity: Quick Ratio 1
Efficiency: Inventory Turnover 5
Leverage: Debt to Equity 5
Investor: EPS 4
Profitability: ROA 3
Average FP 18 / 5
= 3.60
SP: Stability Position Y
Barriers of Entry -1
Competitive Pressure -4
Price to Demand Elasticity -1
Price Revision -3
Average SP -9 / 4
= -2.25
Y = FP + SP = 3.6 2.25 = 1.35
• Retrenchment
• Divestiture
• Liquidation
DEFENSIVE
13
Company performance evaluated from four different positions anti-clockwise IFCS;
• IP Industry Position against CP Competitive Position
• FP Financial Position against SP Stability Position
Industry Position and Financial Position are ranked between 1 to 5; where
 5 indicates much superior position compared to other firms in the industry
 4 indicates slightly superior position compared to other firms in the industry
 3 indicates equal position to other firms in the industry
 2 indicates slightly inferior position compared to other firms in the industry
 1 indicates much inferior position compared to other firms in the industry
In contrast,
Competitive Position and Stability Position are ranked in reverse -1 to -5.
⁻ 5 indicates much superior position compared to other firms in the industry
⁻ 4 indicates slightly superior position compared to other firms in the industry
⁻ 3 indicates equal position to other firms in the industry
⁻ 2 indicates slightly inferior position compared to other firms in the industry
⁻ 1 indicates much inferior position compared to other firms in the industry
Each position is summed and averaged against the number of performance indicators.
The net effect of Industry Position against Competitive Position gives the X coordinate.
The net effect of Financial Position against Stability Position gives the Y coordinate.
The quadrant when the point is located is the strategy that should be applied:
ACDC = Q1 Aggressive; Q2 Conservative; Q3 Defensive ; Q4 Competitive
13

14. GRAND STRATEGY
Quadrant II
• Market Development
• Market Penetration
• Product Development
• Horizontal Integration
• Divestiture
• Liquidation
Quadrant I
• Market Development
• Market Penetration
• Product Development
• Related Diversification
• Forward/Backward/
Horizontal Integration
Quadrant III
• Retrenchment
• Related Diversification
• Unrelated
Diversification
• Divestiture
• Liquidation
Quadrant IV
• Related Diversification
• Unrelated
Diversification
• Joint Ventures
• Relation between Market Growth and
Competitiveness
• Walmart has strong competitive position
and rapid market growth (Quadrant I)
– Market strategies in Quadrant I
– Focus on current market with current
products and address risks aggressively
Rapid Market Growth
Slow Market Growth
WeakCompetitive
StrongCompetitive
14
14

15. EFE & IFE
Key INTERNAL Factors W R WS = W x R
STRENGTHS
1. Powerful retail brand & loyal customers (process) 6% 4 0.24
2. Cost leader through effective and efficiency SCM (people) 3% 3 0.09
3. Comprehensive company strategy (process) 2% 3 0.06
4. One-stop retail destinationSupercenters wide selections (process) 5% 3 0.15
5. Multiple distribution channel (process) 2% 4 0.08
6. Strong financial working capital & expansion (process) 6% 3 0.18
7. Industry Leading technology in warehousing, distribution & retail (technology) 4% 3 0.12
8. Leadership style – Sam WaltonCheerleading management style 5% 4 0.20
9. Private satellite links with 1700 vendors supplying 80% of its goods (technology) 4% 3 0.12
10. Geographic strategy saturate area over 200 miles, 1 community (process) 3% 3 0.09
WEAKNESS
1. Weak public relation (people) 5% 2 0.10
2. High employee turnover (people) 6% 1 0.06
3. Gender discrimination on employees (process) 4% 2 0.08
4. No benefits to part-time employees (people) 5% 1 0.05
5. Heavy workload on employees (process) 3% 1 0.03
6. Illegal immigrant in contractors (process) 4% 2 0.08
7. Corruption scandal with top management (people) 6% 1 0.06
8. Product offerings under legal challenge (process) 3% 1 0.03
9. Preference to cheaper sources / non-American (process) 8% 1 0.08
10. Size selection limited (process) 2% 1 0.02
11. Over focusing in Cost Cutting (technology) 4% 2 0.08
12. Lacking of sensitivity towards the society (people) 2% 1 0.02
13. Against the law-illegal products, illegal workers (process) 1% 1 0.01
14. Non-ethicalsweatshops produce (technology) 2% 2 0.04
15. Unfair treatmentemployees (people) 4% 2 0.08
16. Bad reputation (people) 1% 2 0.02
Total 100% 2.17
Key EXTERNAL Factors W R WS = W x R
OPPORTUNITIES
2. Customer shopping analytics 4% 3 0.12
3. Comprehensive m-Commerce (mobile technology) 6% 4 0.24
4. Green / Eco-friendly & sustainability 5% 4 0.20
5. Economic downturn 2% 4 0.08
6. New markets within the country 5% 4 0.20
7. Borderless market Sourcing global / international products 3% 3 0.09
8. Fair trade 4% 3 0.12
9. Structured advertising campaign 3% 1 0.03
10. Structured social media promotion 4% 4 0.16
THREATS
1. Fierce rivalry within same sector, e.g. Costco, Target, Aldi 10% 4 0.40
2. Threat of substitute products from specific product segment 8% 3 0.24
3. Threat of new entrants from specific product segment 3% 4 0.12
4. Increasing of minimum wage 5% 4 0.20
5. Strong media critic Media power 2% 3 0.06
6. Litigation due to changing market conditions 8% 3 0.24
8. Foreign exchange risk 9% 1 0.09
9. Local community perception / resistance 1% 4 0.04
10. Shopping trends, i.e. e-commerce & crypto-currency 4% 3 0.12
11. Education levelQuality, health awareness 8% 2 0.16
12. Inflation effects to product price 6% 4 0.24
Total 100% 3.15
• Weightage based on Consultant’s Industrial Database
• Rating: Strength 3-4 Weakness 1-2
Opportunities 1-4 Threat 1-4
15
The Internal-External Matrix is a Strategic Management Tool which indicates the future capacity of a
company, in accordance to overall internal and external position. By this, this tool requires a separate
evaluation of Internal Factors (IFE) and External Factors (EFE).
For IFE,
• The Key Internal Factors are obtained from Strength & Weakness during the SWOT or the internal audit
process.
• Each factor is weighted according industry standards. This usually refers to a proprietary database
maintained by market consultants and analysts.
• The weightage of all Key Internal Factors should sum up to 1. It is based on the company’s position as
compared to other competitors within the same industry and market structure.
• The rating for Strength is 3-4 where 3 is slightly superior, 4 is significantly superior; whereas Weakness is
1-2 where 1 is significantly inferior, 2 is slightly inferior.
• Subsequently, the Weightage is multiplied with Rating to give the Weighted Rating. The sum of Weighted
Ratings give the score for IFE.
• Walmart achieved IFE of 2.17 which is slightly below PAR.
Likewise for EFE,
• The Key External Factors are obtained from Opportunity & Threats during the SWOT or the external audit
process.
• Each factor is weighted according industry standards. This usually refers to a proprietary database
maintained by market consultants and analysts.
• The weightage of all Key External Factors should sum up to 1.
• However unlike IFE, the rating for Opportunities and Threat is 1-4. It is based on the companies position as
compared to other competitor within the same industry and market structure.
• The rating is 1 is significantly inferior, 2 is slightly inferior, 3 is slightly superior, 4 is significantly superior.
• Subsequently, the Weightage is multiplied with Rating to give the Weighted Rating. The sum of Weighted
Ratings give the score for EFE.
• Walmart achieved EFE 3.15 which is above PAR.
15

16. EFEScore
4.0
I
Grow
II
and
III
Maintain
IV
Build
IV
and
VI
Harvest
1.0
VII
Hold
VIII
or
IX
Divest
4.0 1.0
IFE Score
IE MATRIX
• IFE signifies the company’s position with regard to its Internal Factors
(Strength & Weakness)
< 2.5 : Weak internal position
2.5 : Average internal position
> 2.5 : Strong internal position
• EFE signifies the company’s ability to respond to the External
Environment (Opportunities & Threat)
< 2.5 : Below average response
2.5 : Average response
>2.5 : Above average response
• IE Matrix points to the strategy to be employed in its current position
• Walmart’s IE Matrix
– IFE of 2.17 and EFE of 3.15
– Intersects at Cell II Grow and Build Strategy
– Can adopt any strategy, e.g. market penetration,
product development, market development and diversification
– Aligned to oligopoly market structure
– Follow-up using Ansoff Growth Matrix, Space Matrix
and matching tools e.g. TOWS
EFE
3.15
IFE 2.17
Grow and Build Strategy = Near limitless strategies
Maintain and Hold Strategy = Moderate strategies
Harvest or Divest Strategy = Salvage strategies
16
The IE Matric is a strategic management tool which signifies how Internal Factors affects External Condition,
and correspondingly how External Factors affects Internal Condition.
This is the original version of the IE Matrix consisting of three strategies placed diagonally in a 3 by 3 matrix.
The IFE Score represents the X-coordinate and the EFE Score represents the Y-coordinate on the IE Matrix.
Plotting the coordinates will indicate the company’s capacity in adopting future strategies.
Most companies under the oligopoly and monopoly would fall under Cell I, II or IV; which points to Grow and
Build Strategy.
However, some oligopoly markets may fall under Cell III, VI or VII due to the fierce industry rivalry.
This will force the company to adopt a Hold and Maintain Strategy, which is moderate way by reviewing its
market penetration techniques to increase market share.
The final strategy is Harvest or Divest, which calls for the company to adopt a salvaging technique or risk
being diluted and made obsolete.
In this exercise, Walmart scores IFE of 2.17 and EFE of 3.15; which places Walmart in Cell II: Grow and Build
Strategy.
This is not surprising as Walmart competes under the oligopoly market structure. This strategy basically
allows Walmart to adopt any strategy,
e.g. market penetration, product development, market development and diversification.
The second IE method places strategies in three layers instead of diagonal, and rating of 3-4 for Strengths and
Opportunities, and 1-2 for Weaknesses and Threats.
Whichever cell that the IE Matrix point to, must be followed by Ansoff Growth Matrix, Space Matrix and
matching tools such as TOWS.
16

17. SPACE & ANSOFF MATRIX
IS: Industry Strength (1 to 6) X
Manpower Resource 4
Barrier for New Entrant 5
Productivity 4
Growth Potential 3
Operating Adaptability & Dynamics 5
Average IP 21 / 5
= 4.20
CA: Competitive Advantage (-1 to -6) X
Market Share -2
Customer Service -1
Brand Loyalty -1
Cost Leadership -3
Flight Coverage -3
Average CP -10 / 5
= -2.00
CA IS
ES
FS
CONSERVATIVE
• Market Penetration
• Market Development
• Product Development
• Related Diversification
AGGRESSIVE
• Vrt/Hor Integration
• Market Penetration
• Market Development
• Product Development
• Diversification
• Vrt/Hor Integration
• Market Penetration
• Market Development
• Product Development
COMPETITIVE
2.20
2.00
X = CP + IP = -2.00+4.20 = 2.20
FS: Financial Strength (1 to 6) Y
Liquidity: Quick Ratio 3
Efficiency: Inventory Turnover 5
Investor: EPS 5
Profitability: ROA 4
Average FP 17 / 5
= 4.25
ES: Environmental Stability (-1 to -6) Y
Barriers of Entry -1
Technology Changes -3
Landing Rights -2
Pricing Competition -3
Average SP -9 / 4
= -2.25
Y = FP + SP = 4.25-2.25 = 2.00 • Retrenchment
• Divestiture
• Liquidation
DEFENSIVE
INTERNALEXTERNAL
Market
Products
ExistingNew
NewExisting
Diversification
Strategy
Market
Development
Strategy
Product
Development
Strategy
Market
Penetration
Strategy
RISK
RISK
17
Company performance evaluated from four different positions anti-clockwise IFCS;
IP Industry Position against CP Competitive Position
FP Financial Position against SP Stability Position
Industry Position and Financial Position are ranked between 1 to 5 compared to other firms in the
industry; 1 is inferior and 5 is superior. In contrast, Competitive Position and Stability Position are
ranked in reverse -1 to -5; -1 is inferior and -5 is superior. The net effect of Industry Position against
Competitive Position gives the X coordinate. The net effect of Financial Position against Stability
Position gives the Y coordinate. The quadrant when the point is located is the strategy that should be
applied i.e. ACDC = Q1 Aggressive; Q2 Conservative; Q3 Defensive; Q4 Competitive.
Ansoff Matrix: The matrix demonstrates the relation between Market Growth and Product Growth. Links to
the general strategic direction to increase reach to new customer, assess potential strategies for growth, and
analyze the risk in each quadrant.
Market Penetration Strategy
Safest of all four quadrants. Expanding sales on existing product in existing market. Know how the
product works and market held few surprises
Online auction – Allow passenger to bid for seat upgrades
Market Development & Product Development Strategy
Riskier because the company is introducing in the existing market
For Product Development:
Chef specialty menu Airport premium lounges
For Market Development:
Allows passenger to customize their on-board meal Sport lounges at location
outside airport
Diversification Strategy
Riskiest and may not fit Emirates due to its high leverage financial structure
Horizontal Diversification
Hotel/ Holiday divisions Lifestyle accessories
17

18. PORTER’S VALUE CHAIN ANALYSIS
Merchandiser • Walmart cannot translate its merchandising strategies to other counties without decorative amendment
of strategies they are applying to their home.
• understanding shopper attitudes and behaviors and continuously evolving Walmart's value proposition
to meet changing shopper needs.
• "Win, Play, Show" merchandising strategy has improved the efficiency of assortment & merchandising investment.
• Soliciting ideas from vendors, associate, customers for improvements.
Human
Resource
• it has improved the minimum wages to more than $13 and is investing $2.7 billion in wages, education and training.
Promoted more than 200,000 people to jobs with higher responsibility and better pay.
• Performance bonus reward, improved health
Technology • indispensable for efficiency in the retail business-RFID System, Inventory management, private satellite
Procurement • Strategic Supplier Relationship-bargaining power, suppliers control, ensure mutual benefits.
Inbound Logistics
• Strategic partnership with
vendors potential high
volume purchases in long
term.
• The suppliers are responsible
for providing materials in real
time as per requirement.-
RFID tags.
Operations
• Walmart operates across 28
countries and under 63 banners. It
has more than 11500 retail units
operational worldwide.
• Automation
• 12 hours in average for its inventory
life cycle
• Real time inventory
managementRFID
Outbound Logistics
• inventory management technique is
a supply chain practice called cross
docking.(Suppliers cross docked at
distribution centers)
• 150 distribution centers are the hub
of activity for its business. These
distribution centers serve the
stores, clubs and deliver to the
customers directly.
Sales Service
• “Save money, live better”
• Excellent Customer
Service 10 feet rule,
customer convenience
experience, speed
up checkout
(5 sec)
Primary Activities
SupportActivities 18
18

19. ISHIKAWA FISHBONE ANALYSIS
• Single
• Simple
• Specific
1. 1H5W
2. PPT
3. Why’s
WHOWHEREWHY
WHAT WHEN HOW
Walmart has
Bad Reputation
as Employee
Cannibalization in
locale market
No Org Behavior
No Corporate
Governance
Unfair Treatment
1
2
3
POTENTIAL ROOT CAUSES ISSUE
19
The presentation proceeds by dissecting the principal issue which disconcerts operations within the Emirates
Group. We will be using the Ishikawa Fishbone Analysis, followed by the Pareto chart.
The Ishikawa Fishbone uses a landscape orientation, on the right is the fish head representing one specific
issue, and potential root causes on the left. Dividing the issue and causes is a line crossing the fish neck. The
line of questioning revolves from the perspective of 1H5W, i.e. How, Who, Where, When, Why, What; which
forms 6 main bone branching the backbone. Each main bone is then questioned against typical perspectives
of People, Process, and Technology which have direct implication to the respective 1H5W. Consequently,
each main bone is questioned subsequent by why’s to a point where no further answer can be derived by the
question why. The end point forms the probable root cause and must be internal rather than external.
Internal because they are factors which are within control or influence of the company. The end points or
probable root causes can be duplicated. They should be counted and indicated in the Pareto 80:20 Principle.
In the case of the Emirates Group, the budget airlines may pose the largest threat to the firm because
demand for low price flights is growing rapidly and now competitors see great potential to take market share
from Emirates with lower price. However, we shall focus on internal issues which can be resolved internally
to achieve the same result, i.e. achieve cost leadership trough internal efficiency. By this, the principle issue
revolves on the high employee turnover. Hence, the first question is who people…
19

20. 0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
CumulativePercentage
Percentage
% Cumulative %
ID Potential Root Cause
Frequency
(F)
Weightage
(W)
Adjusted
Frequency
(FxW)
%
Cumulative
%
1 Autocratic Management 9 10 90 16.6% 16.6%
2 Wrong Business Strategy 8 10 80 14.8% 31.4%
3 Improper Operation Plan 6 8 48 8.9% 40.3%
4 Poor Marketing Strategy 4 9 36 6.7% 47.0%
5 Poor Financial Plan 4 8 32 5.9% 52.9%
6 Poor Benefits 4 7 28 5.2% 58.0%
7 Lack of Employee Engagement 3 8 24 4.4% 62.5%
8 Fraud and Favoristism 3 8 24 4.4% 66.9%
9 No Corporate Governance 3 7 21 3.9% 70.8%
10 Frequent Operation Change 3 7 21 3.9% 74.7%
11 Lack of Stakeholders Engagement 3 6 18 3.3% 78.0%
12 No Organizational Behavior 3 4 12 2.2% 80.2%
13 Unfair Treatment 2 5 10 1.8% 82.1%
14 Lack of Training 2 5 10 1.8% 83.9%
15 Diverse Products 2 4 8 1.5% 85.4%
16 Criminal Investigations 1 8 8 1.5% 86.9%
17 State Law Violations 1 8 8 1.5% 88.4%
18 POS/ Price Check System Hiccups 1 6 6 1.1% 89.5%
19 Overfocused on Cost Cutting 2 3 6 1.1% 90.6%
20 Senior Management Fraud 2 3 6 1.1% 91.7%
21 Out-dated Point of Sales 2 3 6 1.1% 92.8%
22 Substandard Wages 1 5 5 0.9% 93.7%
23 Unsatisfied Local Business Owner 1 5 5 0.9% 94.6%
24 Cannibalization in locale market 1 5 5 0.9% 95.6%
25 Fast Pace Technology 1 4 4 0.7% 96.3%
26 Poor System Maintenance 2 2 4 0.7% 97.0%
27 Lack of Sensitivity Towards Society 1 3 3 0.6% 97.6%
28 No parental control on merchandise 1 3 3 0.6% 98.2%
29 Part Time Workers 1 3 3 0.6% 98.7%
30 Heavy Workloads 1 2 2 0.4% 99.1%
31 Did not Leverage Social Media 1 2 2 0.4% 99.4%
32 Depending too much on China Supplier 1 1 1 0.2% 99.6%
33 Expensive supply from US Suppliers 1 1 1 0.2% 99.8%
34 Old inventory System 1 1 1 0.2% 100.0%
SUM 541 100.0%
PARETO ANALYSIS
20
In a large company which spans its operations worldwide, the Emirates Group must prioritize resources to
resolved issues which can give greatest leverage. Pareto Analysis is driven by addressing 20% of top root
causes will resolve 80% of issues faced by the company. The 20% will also allow optimal use of scarce
resources. The process is as follows:
a) Potential Root Cause: list of all potential root causes identified from Ishikawa Fishbone Diagram.
b) Frequency (F): number of recurrence for each root cause, identified in the Ishikawa Fishbone Diagram.
c) Weightage (W): seriousness of impact caused to business, determined by Consultant based on
database.
d) Adjusted Frequency (F*W) : value of frequency multiplied by weightage.
*** Frequency and Weightage values are assumption for learning purpose
Based on the Ishikawa Fishbone Analysis and Pareto Chart, in order to mitigate high employee turnover, we
recommend to focus scarce resources on the following problem statements:
1. Autocratic Management
2. Poor employee centricity
3. Wrong business strategy
4. Poor Strategy plan
5. Poor Financial Plan
6. Improper Operation Plan
7. Lack of Employee Engagement
The initiative to each problem statement will be described in the following section, i.e. strategy map and
balance score card.
20

21. WINNING STRATEGY
• A good strategy is well matched to
the company's situation both
internal and external factors and its
own capabilities and aspirations.
• Tools: SWOT, TOWS, PESTLE, Porter 5
and IE Matrix
• Best cost
(Low cost  broad differentiation)
• A good strategy leads to sustainable
competitive advantage. The bigger
the competitive edge that a strategy
helps build, the more powerful and
effective it is.
• Tools: BCG, Space, Ansoff, Grand
Strategy, Generic Model and Value
Chain Analysis
• Country’s largest grocer (widest
number of stores in the US) &
Providing Everyday Low Prices
= Price war
• A good strategy boosts company
performance. Two kinds of
performance improvements are the
most telling: gains in profitability and
gains in the company's long-term
business strength and competitive
position.
• Tools: Ishikawa and Pareto, Strategy
Map, BSC
• Outperform market and Good
financial performance
Three tests is used
- to evaluate the merits of one strategy over another
- to gauge how good a strategy is
Competitive Advantage TestStrategic Fit Test Performance Test
Winning
Strategy
21
The virtues of a Winning Strategy must be supported by 3 underlying tests; Strategic Fit Test, Competitive
Advantage Test, and Performance Test. In other words, a strategy is less likely to succeed should any of the 3
tests fail.
The Strategic Fit Test indicates that a good strategy is well matched between the company's capabilities /
resources and factors / situation which are internal and external to the company. In this exercise, we
dissected “the company e.g. McDonalds Malaysia” against “the toold e.g. SWOT, TOWS, PESTLE, Porter 5 or IE
Matrix”. We found that McDonalds Malaysia well suited for the best value strategy with a broad
differentiation market segment. Explain the findings of tools…
The Competitive Advantage Test indicates sustainable competitive advantage. The bigger the competitive
edge that a strategy helps build, the more powerful and effective it is. By this, we used the tool (e.g. BCG,
Space, Ansoff, Grand Strategy, Generic Model or Value Chain Analysis), and found that ….. In fact, through
Ansoff matrix, McDonalds Malaysia proved to be the country’s largest fast food operator grocer providing
everyday attractive price at the highest quality…
The Performance Test fundamentally looks at growth or potential boosts in company performance. This test
consist of examination against profitability and long-term business position. For this purpose, we have used
…. tools: Ishikawa and Pareto, Strategy Map, BSC. We found McD to outperform market in …. and in terms of
profitability, ……
In conclusion, given that all the execution of each portion of the strategy is feasible and all tests have been
executed comprehensively, we forecast that McD will have a sound and winning strategy.
21

22. Informal/Co-operative Links Formal Co-operative Links Complementers Government Links
& Networks
• The informal links refers to
linkage without any legally
binding contract.
• Created for a common
purposes, whether by design
or by accident.
• General examples includes
Chamber of Commerce,
Industry Organisation like
Federation of Malaysian
Manufacturers
• Where the link is bound by a
legally binding contract.
• Created for a specific purpose.
• General examples include joint
venture, strategic partnership
agreement, shareholders
agreement
• Refers to other organisation or
companies whether that
organisation’s or company’s
products add more value to
the products of the firm.
• General examples includes
games producer being
complementers to game
console producers
• Refers to relationship with any
government body, government
authority or regulating
authority.
• General examples includes
DBKL, Companies Commission
of Malaysia, Registra of Society
McDonalds’s LINKS
• Malaysian Franchise
Association
• With Various Charity
Organisations through
Ronald McDonalds House
Charities Malaysia
• Strategic Partnership with
suppliers like Coca-Cola,
Oreo, M&M
• The formal relationship
between the Franchisor
and Store Owner
• Coca-cola, which
complements the food
McD producers, which is
the reason they entered
into partnership.
• Ministry of Health
• Municipal or state
authority which governs
the business premise
license
• Ofcom, UK which banned
McD’s ads to children.
FOUR LINKED MODEL Links to achieve Competitive Advantage, Low Cost & Sustainable Relationship with External Parties
22
22

23. KEY PLAYERS
Direct Interest &
Direct Control
• Managements
• Shareholders
• Owners
SHOW
CONSIDERATION
Strong Interest &
Indirect Control
• Employees
• Suppliers
• Environmentalist
• Local Retailers
(Competitor)
MEET THEIR NEEDS
Low Interest &
High Power
• Government
• Customer
LEAST IMPORTANT
BUT NEED MONITOR
Low Interest &
Low Power
• Community
• Consumer Association
• Media
• Local Retailers
(Complements)
STAKEHOLDER ENGAGEMENT MATRIX
1. Identify internal and external stakeholders
2. Relations between Interest and Power of different
stakeholders
3. It influences the strategic direction of the company
4. Able to help the management to implement proper
communication plan and anticipate reactions from
stakeholders
5. Understand what motivates the stakeholders and
how to win them
Interest
Power
Low
Low
High
High
23
23

24. MCKINSEY’S 7S CONSIDERATIONS FOR SHARED VALUES
7S Company Issue Risk Alignment Compliance
HARDISSUES
Strategy Walmart Low cost strategy – Provide products
at lower price.
Different generic strategy With cost being a
driving factor. [Medium Risk]
Agree on 1 strategy which would fit best. To
be above the competition.
[YES] To stay ahead of competition, the
merger should adopt low cost to
compete.
Giant Best cost strategy – Provide best price
for differentiated product.
Structure Walmart Lean structure with centralized
management and support services.
Clash of values as the power distance
between two companies are very different.
[High Risk]
The new structure should merge both the
qualities of a lean structure and top down
management line of command,
responsibilities are drawn clearly
[YES] Restructure of the whole
organization might be required however
this would impact employee sentiments
(roles become redundant)Giant De-centralized management with
multiple hierarchy layers.
System Walmart Uses latest technology and
automation for business operation.
Have different level of technological
expertise. Takes time to conduct study if
technology can interconnect. Giant may
have to revamp it’s IT system. [High Risk]
Choose to adopt the best
system/technology so the merged company
can work in the same standard system
[YES] A standardized system used and
proper training given will ensure the
transition of technology to be smooth.
Giant Uses only limited technology (not
latest) in business operations.
SOFTISSUES
Staff Walmart Well trained staff, reward base on
performance
Employee from both company might have
difficulty in communication. [Medium Risk]
Extensive training needed for employee
along with incentive for good performance
[YES] Both focus on customer centric
skill set enhancement.
Giant Minimum training and low motivation,
mostly low education or immigrant
Style Walmart Support staff empowerment style Power struggle could occur on decision
making process. Time needed to assimilate.
[Medium Risk]
Combine support and result based
management
[NO] Adaptability of both companies
employee towards new direction might
be very slow.Giant Top-down approach leadership style
Skill Walmart Highly trained staff, knowledge on
supply chain management
Both companies are good at different areas
which can merge together. [Medium Risk]
More on-the-job training must be made
available
[YES] Employee can be given chance to
learn more and evaluated based on their
improvement.
Giant Minimal skill set, narrow job scope
Shared
Value
Walmart Culture in low cost. Direct contradiction of values. [High Risk] Re-educate and instil former Giant
employee on their new priority.
[NO] Its is not easy to change culture and
environment. Rehiring might be
necessary.Giant Culture in working hard to produce
volume over quality.
24
The merger with Giant Supermarket chain of supermarkets requires an examination over the common values
between the two companies.
The McKinsey 7S method evaluates 4 hard values and 3 soft values between the two companies, by
identifying
The issues, The Risk and severity, The required Alignment, and residual Compliance status.
An overall compliance would indicate excellent common values between the two companies.
However, the outcome should NOT be treated as the definitive decision for merger or otherwise.
24

25. 25
Perspective Co Issue Risk Alignment Compliance
Strategy (Hard) Mcd Implement cost leadership strategy. (minimizing cost to
offer low price products)
Medium. Cannibalization can occur
because both fast food chains have
outlets in same market.
A&W can target the health conscious
consumers who are willing to pay
higher price and McDonald's should
have a broad target market.
Yes.
Because both companies will help in increasing
market share as the target market is slightly
different for both. Therefore it is not difficult
to reach a mutual understanding.
A&W Implement focus differentiation strategy
Structure (Hard) Mcd Vertical structure- CEO directs activities for all business
area. Decentralized
Medium. Because both company
apply the similar organizational
structure. Decentralized structure is
suitable for a business to operate
globally.
Retain the same organizational
structure
Yes. Because both company implement same
organizational structure.
A&W Vertical structure - directive come from top to middle
then to low level. Decentralized
System (Hard) Mcd Use of cutting edge technology (employs the most up-to-
date and high-level IT tools)
High.
Both organizations have
incompatible system.
Upgrade the system of A&W to
become compatible for each other.
No. Because need time to upgrade the systems
and it will incur high cost for system
development and training employees.
A&W Normal operating system. Lessuse of cutting edge
technology system.
Skill (Soft) Mcd High skill employees. Medium
As A&W staff can be trained and
new expertise can be hired,
therefore risk is not very high.
McDonald's staff can help train A&W
staff
Yes.
McD could share expertise with A&W
employee
A&W Medium skill employees.
Style (soft) Mcd Transactional leadership. Employees is offered with
incentive and recognition as a rewards for their
performance by the leaders
High.
Both have compatible leadership
styles
Retain the existing leadership styles
to maintain similar corporate culture
Yes. There will be no conflict of leadership style
between both companies.
A&W Transactional leadership. Employees is offered with
incentive and recognition as a rewards for their
performance by the leaders
Staff (soft) Mcd Well trained staff. Staff are trained to deliver good
customer service
High.
Because of different culture of work
and staff for A&W have difficulties in
adapt with new working
environment.
Inculcate and develop corporate
culture and provide training to A&W
staff
Yes. Can incur less cost by using existing
expertise and skilled staff from McD to provide
training
A&W Less flexible staff. Trained with basic service offering. No
delivery service
Shared Values
(soft)
Mcd The company vision is to practice cost minimization and
offering lower price product.
High.
Incompatible shared values.
Different shared values can work as
the target markets are different
Yes. Mcdonald’s will have a broad target
market, whereas, A&W will focus on a niche.
Therefore, different values will help to capture
a larger market share.A&W More to focus on one target market only. Pricing strategy
using best value (best price for best quality)
25

26. Vision: To become one of the top lifestyle brands in the world
Mission: To maintain as the leading airline globally
RECOMMENDATION - STRATEGY MAP & BALANCED SCORE CARD
Financial
Perspective
Customer
Perspective
Internal
Process
Perspective
Learning
& Growth
Perspective
↑ revenue↓ operational
expenditures
↑ customer
satisfaction
↔ staff scheduling
↑ product & service
quality
↑ sales channel ↑network efficiency
↔ premium product &
service development
↑ loyalty
↑ ROI↑ profit
↑ hospitality
↑ productivity
↑ quality partnership
↔ value for money
↑ Increase
↓ Reduce
↔Meet Standards
Human Capital Information Capital Organization Capital
 High talent workforce management
 Employee benefits and compensation
 Transfer of knowledge
 Cutting edge technology in infrastructure,
network and information system
 Up to date industry information
 Database management
 Strong leadership
 Continuous innovation
 Environmentally responsible
26
The strategy map represents organization’s integrated strategy from four main performance perspectives
(Financial, Customer, Internal Business Processes, Learning & Growth) to support the organization’s vision
and mission in one page.
Financial Perspective consists of strategies which are related to Monetary Resources and long term stategy;
which has most impact to the vision and mission.
Customer Perspective consists of strategies which concerns Customers; which form the greatest contributor
to financial perspective.
Internal Process Perspective consists of strategies which involve internal activities of value within the entity;
which form the greatest contributor to customer perspective.
Learning & Growth Perspective consists of strategies which concerns non-monetary capital, i.e. the human /
individual, group and information; which form the greatest contributor to internal process perspective. It
shows how the organization mobilize their capital to achieve their strategy.
By this, oval shaped strategic objectives are arranged within the corresponding perspective. The bulk arrow
and bullet represents increase, decrease or simply meet standards. This would be useful for the Balance
Score Card. Each strategic objective is connected by arrowed linkages to represent the cause and effect, or
influence that one strategic objective in a lower row has on another strategic objectives in the upper row, or
directly to the company’s vision and mission.
26

27. Financial
Perspective
Customer
Perspective
Internal
Process
Perspective
Learning
& Growth
Perspective
Vision: The leading retail super-store in Malaysia.
Mission: Provide the best value product and services.
STRATEGY MAP
↓ OPEX↑ Asset Utilization
↑ Customer
Friendly
↑ Logistics
Management
↑ Product +
Service Development
↑ Easy Access
↑ Sustainable
Local Supplies
↔ Efficiency
↑ Information
Ease & Availability
↑ Technology
Application
↑ Shopping
Retention
↑ Career Progression
↑ Culture +
Values Engagement
↑ Leadership
↑ Brand Equity
Human Capital Organizational Capital Information Capital
↑ Investor Value↔ Liquidity
↑ Product +
Service Variety
↔ Eco-Friendly
↔ Quality Control
↔ Best Value:
Prices v Quality
↔ Benefits +
Compensation
↑ Increase
↓ Reduce
↔Meet Standards
27
The strategy map represents organization’s integrated strategy from four main performance perspectives
(Financial, Customer, Internal Business Processes, Learning & Growth) to support the organization’s vision
and mission.
• Financial Perspective consists of strategies which are related to Monetary Resources; which has most
impact to the vision and mission.
• Customer Perspective consists of strategies which concerns Customers; which form the greatest
contributor to financial perspective.
• Internal Process Perspective consists of strategies which involve internal activities of value within the
entity; which form the greatest contributor to customer perspective.
• Learning & Growth Perspective consists of strategies which concerns non-monetary capital, i.e. the human
/ individual, group and information; which form the greatest contributor to internal process perspective.
Hence, assuming that Walmart merges with Giant, the vision should allow the new entity to position itself in a
high potential competitive model, in accordance to the Generic Competitive Model, or Ansoff growth matrix,
or the IE Matrix. Proceeding from here;
• Vision is the desired future by the new entity in Malaysia. By this, we have selected the Vision, “The
leading retail super-store in Malaysia.”
• And in the same respect, Mission is the WHY’s and HOW’s of the entity. We have selected the Mission,
“Provide the best value product and services,” is in line with Walmart’s corporate slogan, “Save Money.
Live Better. "
By this, oval shaped strategic objectives are arranged within the corresponding perspective. The bulk arrow
and bullet represents increase, decrease or simply meet standards. This would be useful for the Balance
Score Card. Each strategic objective is connected by arrowed linkages to represent the cause and effect, or
influence that one strategic objective in a lower row has on another strategic objectives in the upper row, or
directly to the company’s vision and mission.
27

28. Stakeholders
Financial
Operations Excellence
Learning & Growth
ONG PRODUCTION ASSET STRATEGY MAP
28
Undeveloped
Fields and
reservoirs &
Exploration
Implement
Schedule 2
Requirements
CAPEX ± 10%
20% Technical
Margin
(Oil & Water)
CSR
OPEX ± 5%
Reduce
Inactive String
(8%)
Technical &
Leadership
Development
IOR/EOR
Projects
Cost
Optimization
Integrated
Asset Master
Plan
Achieve 75%
Emiratization
Adopt New
Technology
Adhere and
Promote HSE
Standards
Facility &
Operational
Activity
Integrity
Maintain BUH
570 Mbd
Undeveloped
Fields and
reservoirs &
Exploration
CSR
IOR/EOR
Projects
Integrated
Asset Master
Plan
Adopt New
Technology
Implement
Schedule 2
Requirements
From the original Balanced Scorecard model by Kaplan & Norton in 1996 with 4 perspectives:
Customer Focus, Financial, Internal Business Processes, Learning & Growth.
ADCO evolved 2015 perspectives into Operations, Value, HSE, Organization.
In 2016 we returned to the original BSC (almost):
Stakeholders (Customer), Financial, Operations Excellence (Internal Business Process), Learning & Growth.
Despite of the revised perspectives, most objectives are accustomed to BUH Operations Division.
After much debate over BSC experience in past years,
Operations Division has selected 11 strategic objectives based SMART criteria
with direct involvement of Operations to contribute to Bu Hasa Asset Strategic Performance.
1. Implementing Schedule 2 is still a black box but review is underway to translate specifics.
2. Maintain BUH 570 Mbd,
3. CAPEX +/-10%,
4. OPEX +/-5% remain from 2015 objectives.
5. Cost Optimization which is driven by the Oil Price crisis will be driven by LCA (Life Cycle Analysis) and
Integrated Planning.
6. Adhere and Promote HSE Standards,
7. Facility & Operational Activity Integrity is kept from 2015 objectives.
8. 20% Tech Margin (Oil & Water) is not new in Operations agenda.
9. Reduce Inactive String (8%) is now a individual Objective, instead of a measure.
10. Technical & Leadership Development,
11. Achieve 75% Emiratization remain from 2015 objectives.
In 2016, Operations Division intend to scrutinize Performance Measures to approximately 20,
with Targets & Initiatives to be more SMART;
• Specific with direct involvement from the line,
• clearly Measurable,
• quantitatively Achievable,
• Realistic application
• & bound monthly.
With your approval of BUH-Division’s Objectives,
we will then finalize the Measures, Targets & Initiatives.
28

29. STRENGTH
 HSE Assurance Program
 ER, CM & BC Milestones
 OPEX Variance
 Bu Hasa Oil Production
 Huwaila Oil Production
 Process Safety
 Integrity Compliance
 Remnant Life
 Emiratization
 ePCR Milestones
 Retention Critical Positions
 RMP
 Rigless Activities
 Well Production Test
WEAKNESS
 Gas Injection
 CAPEX Variance
 Energy Management
 Training Mandays
 Well Availability
 BQ Oil Production
ONG PRODUCTION ASSET BALANCED SCORE CARD
HSE Assurance
ER, CM & BC Milestones
OPEX Var
Bu Hasa Field Oil
Huwaila Field OilBida Al Qemzan OilWater Injection
Gas Injection
Critical Safety Systems
Integrity Compliance
Maintenance Activities
Inspection Plan Execution
Process Safety
Production Availability
Remnant Life
Asset Integrity Plan
Energy Management
Emiratization
Integration UAE Nationals
ePCR Milestones
Resignations Critical Post
Employee Satisfaction
Promotion - Career Ladder
Training Man Days
Timely Wells Tie-in
Wells Availability
Strings Activation
RMP
Coil Tubing Logging
Rigless Activities
Well Production Testing CAPEX Var
29
In 2015, based on 4 perspectives Operations, Value, HSE, Organization; 10 Strategic Objectives; and 32
Measures.
Bu Hasa Operations fare quite well with outstanding performance overall.
Out strongest performance are: HSE Assurance Program, ER, CM & BC Milestones, OPEX Variance,
Bu Hasa Oil Production, Huwaila Oil Production, Process Safety, Integrity Compliance, Remnant
Life, Emiratization, ePCR Milestones, Retention Critical Positions, RMP, Rigless Activities, and Well
Production Test.
On weaker angle, which we have been redressed for improvement in 2016 are
- Gas Injection (attributing to the Gas Plant VSD Motor Failure in Q4 2014 affecting Q1 2015
performance despite of efforts praiseworthy from the Gas Operations team to bring the Year End
Gas Injection rates back to commendable level);
- CAPEX Variance which had always been a bad-actor;
- Energy Management (will continue to improve but will suffer slightly from oil price crisis);
- Training Mandays (attributing to courses which could not be arranged or was cancelled by ADCO
Training Department);
- and Well Availability attributing to the stringent formula and mismatch with RMP strategy and
other unforeseen / uncontrollable factors;
- BQ Oil Production relies heavily on reservoir development plans where we will continue to
support under their guidance.
29

30. BALANCE SCORECARD
P Strategic Objective Strategic Initiative Measure (KPI) Period Target Actual Variance
Finance
↔ Liquidity Asset Ratio
↑ Asset U liza on
↑ Investor Value
↓ OPEX
• Decrease non-moving / holding cost
• Space utilization
• Sales optimization
• Cost optimization in operations
• Quick Ratio
• Return on Asset
• Earnings per Share
• Actual to Budget
Qtrly
Qtrly
Qtrly
Qtrly
0.3
1.0
Plan
95%
16%
16%
0
0
Customer
↑ Brand Equity
↑ Customer Friendly Se ng
↑ Easy Access
↔ Best Value Prices v Quality
↑ Product + Service Variety
• Enhance marketing with logo / slogan
• Benchmark with best industry practice
• Conduct GIS for spatial mapping
• Implement analytics for Best Value
• Implement CRM
• Customer satisfaction index
• Stores per 100K population
• Price of index products
• Project implementation
Mthly
Mthly
Mthly
m/s
16%
35%
plan
Plan
20%
10%
5%
2%
InternalProcesses
↔ Eco-Friendly
↔ Quality Control
↑ Logis cs Management
↑ Sustainable Local Supplies
↑ Shopping Reten on
↔ Efficiency
↑ Product + Service Development
• Replace common non-eco material
• Dedicated Quality Department
• Direct satellite link for Logistics
• Vendor Development Program
• Retail Link System
• Automated Reordering System
• Repackaging & Packaging Opportunities
• Environment Index Score
• Reduction (%) of defects
• Glitches per month
• New suppliers per month
• Avg shopping time
• Inventory Turn-over
• # of new opportunities
Mthly
Mthly
Mthly
Mthly
Mthly
Mthly
Mthly
80%
5%
4
>1hr
14 days
15
77%
3%
3
95%
28 days
7
3%
0
25%
5%
50%
55%
Learning+Growth
↑ Career Progression
↔ Benefits +Compensation
↑ Culture + Values + Engagement
↑ Leadership
↑ Technology Applica on
↑ Info Ease & Availability
• Career Progression Plan with TNI/TNA
• Improve Benefits (Healthcare, Bonus)
• Culture + Values Engagement Program
• Leadership Training
• EPC/RFID for material control
• Price Check using Device & Mobile App
• Number of plans generated
• Plan for Healthcare & Bonus
• Staff trained
• Staff trained
• % of material with EPC/RFID
• Number of errors reports
6mth
m/s
Mthly
Qtrly
Qtrly
Mthly
plan
10%
plan
plan
plan
< 5%
5%
11%
424
38
60%
1.2%
10%
0
0
2%
3%
0
30
Clearly, the factors that need consideration from time to time or periodically to ensure the new entity
remains competitive, relates to the strategy map.
The strategy map provides for a deployment of strategic initiatives, measures, targets and frequency of
measure to the respective departments within the organization.
Monitoring the progress of each strategic objective will ensure the new entity remains competitive.
It is common for many companies today to tabulate using the Balance Score Card (BSC) which had been
developed by Robert Kaplan and David Norton in 1996. As the name would suggest, BSC consist of table with
four column headers which represent the organization’s performance perspectives (Financial, Customer,
Internal Business Processes, Learning & Growth). The row headers typically consist of SMART elements such
as:
• perspectives which correspond to the four perspectives,
• strategic objectives which have been listed in the corresponding perspective within the strategy map,
• strategic initiatives corresponding to how one strategic objective in a lower row can drive another
strategic objective in the upper row,
• measures which represent the extent for the strategic objective or initiative;
• period (when) or frequency (how often) measure is reviewed e.g. annually, 6 monthly, quarterly, monthly,
milestone
• targets corresponding to each measure,
• actual result as opposed to the target,
• variance between actual result to target.
30

31. BALANCE SCORECARD ELEMENT TO MEASURE PERFORMANCE
• Demonstrate a clear and concise organization
strategy within a single page
• Tabulate variance between actual result to target
• Quick means to review performance and gaps in:
– Initiative
– Strategic Objective
– Strategic Perspective
– Overall
• Can select the most critical measures as the
company’s Key Performance Indicators (KPIS)
• Verify implications between strategic objectives
through assessment of causal and effect
Effects
Cause
IndicatorType
Vision&Mission
Financial
Customer
BusinessProcess
Learningand
Growth
Financial Lagging 
Customer Lagging  
Business Process Leading   
Learning and Growth Leading    
31
31

32. MITZBERG'S PAPER ON CRAFTING STRATEGY
Realized
Strategy
Un-Realized
Strategy
Evolution RevolutionWisdom
Pattern Formulated
e.g. management
effectiveness,
economic efficiency,
consumer patterns,
socio-cultural,
compliance, authorities
Change / Situation
Driven
Become part of the
new entity’s strategy
formulation,
implementation and
evaluation framework.
Stability
Whose wisdom’s ?
Internal Conflict @
Mgmt. / Leadership :
To be resolved early.
Emergent
Strategy
Intended
Strategy
Strategy by Mintzberg Strategy in Walmart
Mintzberg summed up strategy as a
process wherein the manager as a
craftsman, crafts his clay which is his
strategy .
Strategy as a process is clearly
depicted in the way that every CEO
made specific strategic moves that
were aimed at keeping Walmart's
competitive advantage through the
years.
Strategy was deductive not
inductive, therefore strategist
recognized patterns, they didn’t plan
them.
As the dynamics in its environment
changed, the company saw the need
to revise its strategies.
An entities strategy is influenced by
the interplay of the environment,
leadership and organizational
culture.
H. Lee Scott’s transformation
strategy was a carefully crafted
response to critics.
There should not be any barriers
between the “doers” and the
decision makers.
Associates at all levels are expected
to be an integral part of the
decision-making process.
There are Deliberate and Emergent
strategies.
Evolutionary change had to be
abandoned by H. Lee Scott for a
slightly more revolutionary strategy
Strategies have to be championed by
the leadership
All Walmart CEOs were very
passionate about the strategic
direction of the company
32
In the long term perspective of a company, strategies are a result of
- Intended Strategy based on systemic management tools / best practices
which is deliberated to form Realized Strategy
and forms the track record for management wisdom;
- The same Intended Strategy sometimes fail to be realized,
and forms lessons learnt (also wisdom). If properly recorded,
future plans will automatically incorporate lessons learnt.
- Emergent Strategy driven by market or situational changes / revolution,
which is deliberated to form Realized Strategies
and forms the track record for management wisdom;
32

33. Strategy
Execution
Strategy
Formulation
Strategy
Evaluation
Ethics, Social Responsibility, and Sustainability
• Comprehensive Strategic Model Process
• Mintzberg Crafting Strategy
COMPREHENSIVE STRATEGIC MODEL PROCESS
Perform
Internal Audit
• PTT in SW (SWOT)
• Internal Factor Analysis
Perform
External Audit
• PESTLE (Macro)
• Porter’s 5 Forces (Micro)
• OT (SWOT)
• External Factor Analysis
Establish Root Cause,
Vision & Mission
• Market Structure
• BCG Matrix
------------------
• Ishikawa Fishbone
• Pareto 80:20
Establish
LT Objectives
• IE Matrix
• Ansoff
------------------
• SPACE Matrix
• Grand Strategy
Generate, Evaluate &
Match Strategies
• TOWS
• Porter Generic Strategies
• Johnson Strategy Clock
Implement
Strategies
• Ishikawa Fishbone
• Pareto 80:20
• Value Chain Analysis
• Stakeholder Engagement
• McKinsey 7S
Measure & Evaluate
Performance
• Winning Strategy
------------------
• Strategy Map
• Balanced Scorecard
33
1. Initial assessment
• Starting point of the process.
• Clearly identify the company’s vision & mission.
• Method: create vision & mission statement
2. Situation analysis
• Assess current situation.
• Evaluate company’s external and internal environment, analyze competitors
• Tools that can be used: PESTLE, Porter’s 5 Forces, SWOT, IFE, EFE, IE
3. Strategy formulation
• Create long term objectives indicating goals that could improve the company’s competitive
position in the long run.
• Tools that can be used: Space matrix, BCG matrix, IE matrix, McKinsey 7S, Porter Generic
Strategies, Value chain analysis & Grand strategy
4. Strategy implementation
• At this stage, managerial skill is important to ensure communication in implementing the
new strategy flow smoothly throughout the company.
5. Strategy monitoring
• Implementation of strategy must be monitored to ensure successfulness and to effectively
respond/adapt to the changes.
• External & internal conditions are constantly changing.
• Managers must continuously review both internal and external environment as new
strength, weakness, opportunity and threats may arise.
• New circumstances affect company, managers must immediately take corrective action.
• Tools that can be used: Strategy Map, Balance Scorecard & Winning Strategy.
33