Strategy Frameworks & Tools Reference Guide

© Operational Excellence Consulting. All rights reserved.
This presentation contains 30 common frameworks, models and
tools for strategic planning. They include stakeholder analysis,
internal analysis, environmental analysis, industry analysis, market
analysis, competitive analysis, strategy development and strategy
implementation.
Strategy Frameworks
& Tools Reference Guide
Strategic Planning Frameworks, Models and
Tools Reference Guide

© Operational Excellence Consulting. All rights reserved. 2
Contents
1. Power/Interest Grid 16. Greiner’s Growth Model
2. VRIO Framework 17. McKinsey’s Three Horizons of Growth
3. Porter’s Value Chain 18. Disruptive Innovation (Christensen)
4. PESTEL Analysis 19. Value Proposition Canvas
5. BCG Matrix 20. Business Model Canvas
6. GE-McKinsey Matrix 21. Core Competencies Model (Hamel & Prahalad)
7. Porter’s Five Forces 22. Risk Management Process
8. Industry Life Cycle Model 23. Probability-Impact Matrix
9. Competitive Profile Matrix 24. Big Hairy Audacious Goal (BHAG)
10. SWOT Analysis 25. Vision, Mission & Values
11. Porter’s Generic Strategies 26. SMART Objectives
12. Value Disciplines Model 27. Hoshin Planning
13. Ansoff Matrix 28. Balanced Scorecard
14. BCG Strategy Palette 29. McKinsey’s 7-S Framework
15. Blue Ocean Strategy 30. Kotter’s 8-Step Process for Leading Change
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The Power/Interest Grid for Stakeholder Prioritization is a useful tool for
stakeholder analysis in the strategic planning process
The Power/Interest Grid for Stakeholder Prioritization
POWER
Monitor
INTEREST
Keep Informed
Keep Satisfied Manage Closely
High
Low
Low High
Source: Based on Eden & Ackermann, 1998

The VRIO framework is a useful internal analysis tool to discover
sources for sustainable competitive advantage
VALUE RARITY IMITABILITY ORGANIZATION
V O
I
R
“Is the firm able to exploit
an opportunity or
neutralize an external
threat with the
resource/capability?”
“Is control of the
resource/capability in the
hands of a relative few?”
“Is it difficult to imitate,
and will there be
significant cost
disadvantage to a firm
trying to obtain, develop,
or duplicate the
resource/capability?”
“Is the firm organized,
ready, and able to exploit
the resource/capability?"
"Is the firm organized to
capture value?”
VRIO Framework

Porter’s Value Chain – Introduction
What It Is
§ Porter’s Value Chain is a strategic management tool
companies use to analyze and improve the value
they offer their customers.
§ The value chain is a tool for identifying key
processes in your business, assessing your firm’s
competitive capabilities in each and thereby
assessing wherein lies the source of your
competitive advantage.
Why We Use It
§ Companies use this management tool to gain an
advantage over their competitors.
§ Improvements in the value delivery process can be
found in any activity along the value chain.
§ Efficiency and effectiveness in these activities could
lead to a sustained competitive advantage.
§ Companies often choose this model because it
focuses on the customers.
How To Use It
§ Follow these steps when using Porter's value chain:
1. Find the sub-activities that relate to each primary
activity
2. Find the sub-activities that relate to each support
activity
3. Find connections between activities
4. Constantly look for new ways to add value
§ Most organizations that achieve long-term success
do so by constantly looking for ways to offer more
value to their customers.
When To Use It
§ You should use value chain analysis when you need
to clarify which activities are most important to your
business success—in other words, which activities
are critical success factors and how you can
improve your capabilities in them.

Analysis of the Value Chain to establish potential match for M&A or
strategic alliances
Porter’s Value Chain – Assessing Potential Match for M&A or Strategic Alliances

The BCG Matrix – Description of the four quadrants
?
QUADRANT DESCRIPTION
Stars
Are products that enjoy a relatively high market share in a strongly growing
market. They are (potentially) profitable and may grow further. It is therefore
advisable to invest in these products.
Cash Cows
Are products that are extremely profitable, and no extra effort or investment
is needed to maintain the status quo. A product becomes a cash cow when
the growth of a product’s market decreases but the company’s market share
remains high and stable.
Question Marks
Are products that have high market growth but small market share, and so
their growth rate is uncertain. Investments to generate further growth may
or may not yield big results in the future. Additional investigation into how
and where to invest is advised.
Dogs
Should be dropped or divested when they are not profitable. If profitable, do
not invest in them, but make the best of their current value. This may even
mean selling the product’s operations and/or brand.
BCG Matrix
Source: Adapted from BCG

BCG Matrix – Example of Apple
Market
Growth
Relative Market Share
High
Low
Small Large
?
BCG Matrix – Example
iPhone
MacBook
iPad
iPod
Apple Watch
Apple TV
AirPods
iMac

The GE-McKinsey Matrix provides a systematic approach to prioritize
investments among its business units
GE-McKinsey Matrix
Low Medium High
Low
Medium
High
Industry
Attractiveness
Business Unit Strength
Invest/
Grow
Selectivity/
Earnings
Harvest/
Divest
Invest/
Grow
Invest/
Grow
Selectivity/
Earnings
Selectivity/
Earnings
Harvest/
Divest
Harvest/
Divest
Source: Adapted from GE-McKinsey

Porter’s Five Forces analysis can be used to better understand the
industry in which it operates
Porter’s Five Forces
1. New Entrants
Are there entry barriers for
new contenders?
2. Substitutes
How easily can your product
or service be substituted with
a different type of product or
service?
3. Buyers
To what extent can buyers
bargain?
4. Suppliers
What level of influence do
suppliers have?
5. Existing competitors
What advantages do
competitors have?
Source: Adapted from Porter

Industry Life Cycle Model is the portrayal of different life stages or
phases that companies experience in the industry
Industry Life Cycle Model
Introduction Growth Maturity Decline
SALES
TIME

The Competitive Profile Matrix assesses how well positioned your
company is in each segment
Competitive Profile Matrix
Critical success factors in UK
engineering niche market
Weightage The company Competitor A Competitor B
Market share 15% 5 3.3 2
Cost factors 35% 4 3.5 2.5
Differentiation factors:
Product capability and range
15% 4 4.5 3
Product reliability 15% 4 4 2.5
Engineering service network 10% 5 3.5 2.5
Customer service 10% 3 3 2
Competitive position 100% 4.2 3.6 2.5
Scoring: 1 = Weak, 2 = Tenable, 3 = Favorable, 4 = Strong, 5 = Dominant
ILLUSTRATIVE
Source: Adapted from Evans, 2014

SWOT Analysis – Introduction
What It Is
§ A SWOT analysis is a strategic planning technique
that you can use to identify a company’s strengths,
weaknesses, opportunities and threats.
§ It can provide new insights, such as where the
company can improve compared to its competitors.
§ This may help you improve the organization,
increase profitability and achieve more success
overall.
§ It is often helpful to perform SWOT analyses
frequently to ensure you monitor any changes
accordingly.
§ SWOT analyses evaluate both internal and external
factors that affect an organization. Strengths and
weaknesses refer to internal factors and
opportunities and threats refer to external factors.
Why We Use It
§ A SWOT analysis provides helpful information for
matching resources and capabilities to the
competitive environment in which the organization
operates.
When To Use It
§ The model can be used as an instrument for
devising and selecting strategy, and is applicable in
any decision-making situation, provided the desired
objective has been clearly defined.
§ The SWOT analysis is also frequently used to assess
the same factors about the organizations, products
and services of your competitors.
§ The SWOT analysis is often used in conjunction with
other strategy tools, such as the PESTEL, Ansoff
matrix and Porter’s 5 Forces frameworks, to support
more robust assessments of drivers of business
growth.

Situation Analysis can be broken down into internal and external
analysis
Situation Analysis
Situation
Analysis
Internal
Analysis
Strength
External
Analysis
Weaknesses Opportunities Threats

Porter’s generic strategies – Examples
TARGET
SCOPE
COMPETITIVE ADVANTAGE
COST LEADERSHIP
IKEA, Southwest Airlines, Wal-Mart,
McDonald’s, EasyJet, Costco and
Amazon.
DIFFERENTIATION
Apple, Harley-Davidson, Nespresso,
LEGO, Nike and Starbucks.
Broad
Narrow
Cost Distinctiveness
COST FOCUS
Home Depot, SanDisk, Claire’s,
Monster and Smart.
DIFFERENTIATION FOCUS
Rolls Royce, Honda motor cycles,
Omega, Prada and Razer.

There are three generic value disciplines that enable an organization to
deliver to its customers
Value Disciplines Model
Source: Adapted from Treacy & Wiersema, 1995
Performance level of
market leaders Minimal performance
level in the industry
PRODUCT
LEADERSHIP
(“Best Product”)
CUSTOMER
INTIMACY
(“Best Total Solution”)
OPERATIONAL
EXCELLENCE
(“Best Total Cost”)
Product
Differentiation
Customer
Responsiveness
Operational
Competence

The Ansoff Growth Matrix offers a logical way of determining the scope
and direction of a firm’s strategic development in the marketplace
Ansoff Growth Matrix
Markets
Market Penetration
Sell more of the same products and
services in existing markets. This growth
vector indicates growth through increase
of market share for the present product-
markets.
Products
Product Development
Sell new products and services into
existing markets. This growth vector
means growth by developing new
products to replace or complement
existing products.
Market Development
Sell more of the same products and
services in new markets.
Diversification
Sell new products and services into new
markets.
New
Existing
Existing New
2 4
1 3
1
4
Low risk
High risk
Relative risk:
Increasing Risk

The BCG Strategy Palette helps leaders match their approach to their
particular business environment and execute strategy effectively
BCG Strategy Palette
Source: Adapted from BCG
ADAPTIVE
CLASSICAL
SHAPING
VISIONARY
RENEWAL
MALLEABILITY
UNPREDICTABILITY
High
Low
High
Low
H
A
R
S
H
N
E
S
S
High
Low

Blue Ocean Strategy focuses attention on the creation of uncontested
marketplaces through value innovation
Red Ocean Thinking Blue Ocean Thinking
Industry Compete in existing market space Create uncontested market space
Strategy Best the competition Make competition irrelevant
Market Exploit existing demand Create and capture new demand
Resources Make the value-cost trade-off Break the value-cost trade-off
Organization
Choose between differentiation or
cost
Simultaneous pursuit of differentiation
and cost
Offerings
Maximize value within industry
boundaries
Offer total solution that transcends the
industry
Blue Ocean Strategy
Source: Adapted from Kim & Mauborgne

Netflix uses the Blue Ocean strategy to create new demand and pursues
differentiation with low cost to open up new market space
Blue Ocean Strategy – Example of Netflix
Netflix became the first online streaming content provider by offering a new
value curve and de-emphasizing the traditional attributes.
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Netflix
Cable TV
Offering
Level
Eliminate Reduce Raise Create
Value
Attributes

Greiner’s growth model describes the phases that organizations pass
through as they grow, regardless of the type of organization
Greiner’s Growth Phases
Source: Adapted from Greiner, 1998
Time
Phase 1
Growth
through
creativity
Organization
Size
Phase 6
Growth
through
alliances
Phase 5
Growth
through
collaboration
Phase 4
Growth
through co-
ordination
Phase 3
Growth
through
delegation
Phase 2
Growth
through
direction
Leadership crisis
Autonomy crisis
Control crisis
Red tape crisis
Growth crisis
Small
Large
Young Mature

The Three Horizons of Growth Model helps to distinguish between the
embryonic, emergent and mature phases of a business’s life cycle
Source: Adapted from McKinsey
Three Horizons of Growth Model
Horizon 1:
Extend and defend core
business: Activities that are
most closely aligned to your
current business.
Horizon 2:
Build emerging
businesses: Taking what
you already have, and
extending it into new areas
of revenue-driving activity.
Horizon 3:
Create viable
options: Introducing
entirely new elements
to your business that
don’t exist today.
1 – 3 years
2 – 5 years
5 – 12 years
Time (Years)
Value

Disruptive Innovation – Introduction
What It Is
§ Disruptive innovation has been a buzzword since
Clayton Christensen coined it back in the mid 1990s
to describe the way in which new entrants in a
market can disrupt established businesses.
§ According to Christensen, disruptive innovation is
the process in which a smaller company, usually
with fewer resources, is able to challenge an
established business (often called an “incumbent”)
by entering at the bottom of the market and
continuing to move up-market.
§ Although the concept of disruptive innovation was
received as almost being a radical innovation in
itself, it is a concept that can help explain certain
developments in markets and industries.
§ Disruptive innovation is a method that helps identify
and manage potentially disruptive innovations.
§ Examples of companies that use disruptive
innovation strategy: Uber, Netflix, Spotify, Toyota
Why We Use It
§ Using disruptive innovation helps firms work out
what they can do to avoid displacement brought on
by radical, technological innovations or how they
can pursue such innovations themselves.
§ Whether you are an incumbent intent on defending
your market share and profits or you are a new
entrant seeking to grab a piece of the pie,
understanding disruptive innovation as a process
can offer valuable insights you can incorporate into
your business plan.
When To Use It
§ Disruptive innovation is most useful in highly
dynamic markets and in situations where new
technologies or technological innovations are
emerging.

Disruptive Innovation is an innovation that leads to a product or service
designed for a new set of customers
PRODUCT
PERFORMANCE
Higher
Lower
PERFORMANCE CUSTOMERS WILL PAY FOR
Incumbent’s sustaining trajectory
Entrant’s disruptive trajectory
High end of the
market
Low end of the
market
Mainstream
MOST PROFITABLE
LEAST PROFITABLE
Time
Disruptive Innovation
Source: Adapted from Christensen, 1997

Entire industries have been disrupted by companies who offer the exact
same thing in a more convenient form
Netflix, Spotify, Uber: None of these companies rose to the top by inventing a new
product or service. They offered you the exact same thing their competitors did —
just in a simpler way.
Uber
Uber disrupted the taxi
industry by getting you
from Point A to Point B
without having to wait
out in the rain for a cab.
Spotify
Spotify disrupted the
digital music industry by
allowing you to stream
anyone’s music without
having to own it yourself.
Netflix
Netflix disrupted
Blockbuster by giving us
access to any movie we
wanted without late fees.
Source: Adapted from Hubspot
Disruptive Innovation – Examples

The Value Proposition Canvas allows us to dive deeper into the Value
Proposition and Customer Segments of the business model
- Zoom
?
?
?
? ?
?
?
Are you creating value for your business?
The Business Model Canvas makes explicit how you
are creating and capturing value for your business.
+ Zoom
Are you creating value for your customer?
The Value Proposition Canvas makes explicit how
you are creating value for your customers.
Zoom out to the
bigger picture to
analyze if you can
profitably create,
deliver and capture
value around this
particular customer
value proposition.
Zoom in to the
detailed picture to
investigate if the
customer value
proposition in your
business model
really creates value
for your customer.
Source: Adapted from Strategyzer

Example: Starbucks Business Model
KP KA VP CR CS
KR CH
C$ R$
Coffee
Growers
Specialized
Coffee M/C
Makers
Coffee & Milk Rent
Marketing &
R&D
Marketing
R&D
Packaging &
Bottling
Plants
People
Unique Coffee
Co-created with
Customers
Retail stores
Starbucks
Rewards
Starbucks
Reserve
Supply Chain
Management
People Costs
Starbucks
App
Store Design
Students
Mobile
Professionals
Coffee
Aficionados
Third Place
between the
Home and Office
A Place to
Hangout with
Friends, Do
Homework
Retail Sales
Retail Sales
Retail Sales
Brand

The Core Competencies Model is a strategic tool to determine the
unique assets that can be used to create and offer value to customers
Core Competencies Model
Core
Competencies
Market
Premier plus 10 Mega opportunities
New
Existing
Existing New
Fill in the blanks White spaces
Source: Adapted from Hamel & Prahalad, 1994

Examples of core competencies
Apple
Making user-friendly
computer interfaces
and design
3M
Persistently innovating
adhesives and
substrates
Rolex
Design and production
of high-status watches
Sony
Miniaturization of
electronic equipment

The Probability-Impact Matrix is a tool that helps in the process of
quantifying levels of risk
Probability-Impact Matrix
Impact
of
Risk
Probability of Occurrence
Low Probability/High Impact:
Contingency Planning
High Probability/High Impact:
Strategic Planning
High
Low
Low High
Low Probability/Low Impact:
Planning Not Required
High Probability/Low Impact:
Operational Planning

In articulating a vision, organizations should define its core ideology and
set a 10-to-30-year BHAG (big, hairy, audacious goal)
Big, Hairy, Audacious Goal
Core ideology
§ Core values
§ Core purpose
Envisioned Future
§ 10-to-30-year BHAG
(Big, Hairy, Audacious Goal)
§ Vivid description
Source: Adapted from Collins & Porras, 1996
§ Core values are your
firm’s “essential and
enduring tenets—
timeless guiding
principles that require
no external justification”
§ Core purpose is your
firm’s “fundamental
reason for being”

BHAG: The great success of Facebook is based on long-term thinking
and strategic foresight
Facebook
…Search
…Groups
…Video
Messenger
WhatsApp
Instagram
3
5
10 years
Connectivity
…Drones
…Satellites
…Laser
…Telco Infra
…
Virtual reality/
augmented
reality
…Mobile VR
…Rift
…Touch
…Social VR
…AR Tech
…
Artificial
intelligence
…Vision
…Language
…Planning
…
Source: Adapted from Lewrick et al., 2018
Big, Hairy, Audacious Goal

Vision, Mission & Values – The big picture
Vision
(“Where are we going?”)
Mission
(“What are we doing to get there?”)
Core Values
(“What are our beliefs, principles and philosophy?”)
Current State
(“Where are we now?”)
Vision, Mission & Values

Hoshin Planning is a strategic planning model that uses a catchball
process for goal alignment and deployment
Hoshin
Generation
Hoshin
Deployment
Hoshin
Implementation
Hoshin
Evaluation
Setting the annual goals of a
company and its departments.
Goals address both processes
and outcomes and are usually
developed by senior
management in consultation
with their subordinates.
Entails establishing lower-level
goals and plans, both within and
across departments through
catchball. As the hoshin
cascades through each
department, activities become
more bite-sized. Each level
must translate the hoshin goal
and means into meaningful
action.
Refers to the year-end
assessment of each hoshin.
Were process and outcome
goals achieved? If so, ask why
five times. If not, ask why five
times. What did we learn? How
can we strengthen our
capabilities?
Refers to the management
activities required to implement
the hoshins developed and
involves applying the various
PDCA cycles. There should be
formal and informal reviews
throughout the year to make the
current status and
countermeasures visible.
Hoshin
Planning
Process
Hoshin Planning Process
Source: Adapted from Pascal Dennis, 2015

Hoshin planning process incorporating PDCA cycles
Determine current
condition
Prioritize and select
breakthrough
objectives
Determine desired
condition
Deploy the plan
(catchball)
Create plan to
achieve
breakthrough
objectives
Annual review:
Reflection and
learning points
Confirm and
implement plan
(A3 report)
Review plan
(weekly, monthly,
biannual)
P
D
C
A P
D
C
A
P
D
C
A Note that there is a
3rd PDCA cycle over
a 3-5 year horizon
2nd
PDCA
cycle
1st
PDCA
cycle
Hoshin Planning comprises overlapping PDCA cycles.
Hoshin Planning Process – PDCA Cycles
Source: Adapted from Pascal Dennis, 2015

The Balanced Scorecard focuses the entire organization on financial and
non-financial outcomes
FINANCIAL
BUSINESS PROCESSES
Vision
and
Strategy
To succeed financially, how
should we appear to our
shareholders?
LEARNING & GROWTH
CUSTOMERS
To achieve our vision, how will
we sustain our ability to change
and improve?
To achieve our vision, how
should we appear to our
customers?
To satisfy our shareholders and
customers, what business
processes must we excel at?
Source: Based on Kaplan & Norton
The Balanced Scorecard

The McKinsey 7-S framework is most often used as a tool to assess and
monitor changes in the internal situation of an organization
Source: Adapted from McKinsey
Structure
Systems
Style
Staff
Skills
Strategy
Shared
Values
McKinsey 7-S Framework

The 7-S framework can best be used as a matrix for assessing the impact
of the proposed strategy of the organization
Staff Skills Style
Shared
Values
Systems Structure Strategy
Strategy
- - - - -
- - - - -
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- - - - -
Structure
- - - - -
- - - - -
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- - - - -
- - - - -
- - - - -
Systems
- - - - -
- - - - -
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- - - - -
- - - - -
Shared
Values
- - - - -
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- - - - -
- - - - -
- - - - -
Style
- - - - -
- - - - -
- - - - -
- - - - -
Skills
- - - - -
- - - - -
Staff
Example – Food4U Supermarket is moving away from its traditional middle-of-the-road retail
model towards an upscale, fresh, full-service, convenience-oriented grocery and fresh market.
An initial decision to hire specialists may have consequences reaching far beyond the scope of
the strategy at it was proposed.
Need for specialists:
e.g. butcher, bread,
baker, food display
specialists
Potential conflict:
(older) specialist vs.
(younger) temporary
employees

Kotter’s 8 Steps of Change provides a roadmap for advancing a culture
of performance excellence
Kotter’s 8-Step Change Model
Source: Adapted from John Kotter, 1996 & 2014
1
Sustain
Acceleration
Institute
Change
Generate Short-
term Wins
Enable Action
By Removing
Barriers
Enlist A
Volunteer Army
Form A
Strategic Vision
Build A Guiding
Coalition
Establish A
Sense Of
Urgency
KOTTER’S
8-STEP MODEL
FOR LEADING
CHANGE

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