External-environment-and-competitive-advantage.ppt

Course Outline I. Corporate Planning Overview • Leadership, Strategy, and Competitive Advantage • Opportunities and Threats – Analyzing the External

Environment

II. Competitive Advantage • Competencies and Profitability Analyzing Internal Resources • Strategy at the Functional Level

Course Outline

III. Formulating Strategies • Strategy at the Business Level • Strategy at the Corporate Level • Corporate Diversification Strategy

IV. Implementing the Corporate Plan • Performance and Governance • Corporate Single Industry Strategy • Corporate Strategies across Countries and Industries

DELBROS, INC. Supply Chain Solutions

Company Background

Serving the

1940’s Introduced an innovative and enterprising concept called “Caltex Floating Station”

NATION

56years for over

1950’s Introduced “Pallet System”

1960’s Introduced

1970’s Built the largest fully integrated

“Containerization”

transportation company in the Philippines commonly known today as “Freight Forwarding”.

1980’s Became the

“Total Transportation Company” through its joint venture with UPS

1990’s Through technology transfer we modernized the Materials Handling needs of companies by offering Third Party Logistics.

2000 Supply Chain Solutions Provider

DELBROS’ CLIENTS

PLANET SPORTS, INC.

COMPUTER SCIENCES CORPORATION

AD CIRCLES

Vision Mission Statement

DELBROS’ MISSION: “To provide the BEST TRANSPORT and LOGISTICS SERVICES possible at all times and maintain commitment to Total Service Excellence with the use of modern techniques to enhance our service to our clients’ business as our contribution to nation building” DELBROS’ VISION: “To pursue TOTAL SERVICE EXCELLENCE in all aspects of transport and logistics while promoting utmost dignity, integrity and mutual benefit in our relationships with clients, shareholders, employees, suppliers other friends in the business and the public in general”.

Vision/Mission Statement Evaluation Criteria Customers

Evaluation To pursue TOTAL SERVICE EXCELLENCE in all aspects of transport and logistics while promoting utmost dignity, integrity and mutual benefit in our relationships with our clients…

Products/Services

To provide the

Markets

Total Service Excellence with the use of modern techniques to enhance our service to our clients’ business

Concern for survival, growth & profitability

promoting utmost dignity, integrity and mutual benefit in our relationships with our clients, shareholders, employees, suppliers and other friends in business

Technology

Total Service Excellence with the use of modern techniques to enhance our service to our clients’ business with the use of modern techniques

Philosophy

To pursue TOTAL SERVICE EXCELLENCE in all aspects of transport and logistics while promoting utmost dignity, integrity and mutual benefit

Self-concept

To pursue TOTAL SERVICE EXCELLENCE in all aspects of transport and logistics

Concern for public image

mutual benefit in our relationships with clients, shareholders, employees, suppliers other friends in the business and the public in general

Concern for employees

promoting utmost dignity, integrity and mutual benefit in our relationships with our clients, shareholders, employees

Concern for nationbuilding

Total Service Excellence with the use of modern techniques to enhance our service to our clients’ business as our contribution to nation building

BEST TRANSPORT and LOGISTICS SERVICES

possible at all times

Segmentation and Strategic Positioning

Market Segmentation

Market Positioning Efficiency STRONG

Strength of Other Brands (Customer Awareness) Company DHL

DHL

Rate

2GO

HIGH

LOW

Revenue Growth from Delivery

68%

DELBROS

17%

2GO

15%

DELBROS

WEAK

RELATIVE POSITION AS CUSTOMER’S MOST MARKET KEY PURCHASE CRITERIA DELBROS DHL VALUED SUPPLIER (MVS)

SEGMENT Freight Service

Efficiency Technology Experience Rate

Other value added service OVERALL POSITION

2GO

External and Internal Environment

PORTER’S 5 FORCES OF COMPETITIVE ANALYSIS THREAT OF NEW ENTRANTS: MODERATE

BARGAINING POWER OF BUYERS: High

RIVALRY AMONG COMPETITORS: HIGH

THREAT OF SUBSTITUTE PRODUCTS: LOW

BARGAINING POWER OF SUPPLIERS: Moderate

Competitive Profile Matrix Delbros

Revenues ('000) 2003 101,204 2004 105,030 2005 115,530 market share 3%

DHL

LBC

1,196,861 1,555,032 1,719,890 38%

77,528 72,625 89,046 2%

* Source: Securities & Exchange Commission

4,500,000

CPM - COMPETITIVE PROFILE MATRIX DELBROS

DHL

2GO

CRITICAL SUCCESS FACTORS Weight

Rating

Score

Rating

Score

Rating

Score

1

Experience

0.25

4

1.00

4

1.00

4

1.00

2

Efficiency

0.25

3

0.75

4

1.00

3

0.75

3

Rate

0.20

3

0.60

2

0.40

2

0.40

4

Technology

0.15

2

0.30

4

0.60

2

0.30

5

Other Value Added Service

0.15

3

0.45

3

0.45

3

0.45

Total

1.00

3.10

3.45

2.90

E-F-E Matrix Key External Factors

Force

Weight

Rating

Weighted Score

Competition

0.20

3

0.60

Socio Cultural

0.15

3

0.45

Economic

0.15

3

0.45

Socio Cultural

0.10

3

0.30

EXTERNAL OPPORTUNITIES 1

Many businesses are streamlining their operations and look for

a third party logistics specialist 2

Businesses require highly efficient inventory management in order to anticipate their products demand.

3

4

Growth in GDP

Businesses want more value added services EXTERNAL THREATS

1

Fast paced technology in logistics

Technology

0.15

2

0.30

2

Price Competitiveness

Competition

0.15

2

0.30

3

Oil Price Hike

Economic

0.05

2

0.10

4

Across the Board Wage Increase

Economic

0.05

2

0.10

18

ATENEO GRADUATE SCHOOL OF BUSINESS

I-F-E Matrix Key Internal Factors

Function

Weight

Rating

Weighted Score

INTERNAL STRENGTHS 1

Experience

Management

0.20

4

0.80

2

Efficiency

Operations

0.20

3

0.60

3

Customer Profiles

Marketing

0.15

4

0.60

4

Higher Audit Standards on Process and Performance

Operations

0.10

3

0.30

INTERNAL WEAKNESSES 1

Marketing activities is not that efficient

Marketing

0.15

2

0.30

2

Slow growth rate in Sales and GP

Finance

0.10

2

0.20

3

Manpower Turnover is fairly high

Management

0.05

1

0.05

4

Too many process audit sometimes paralyzes the operations & the performance of its manpower

Operations

0.05

2

0.10

Total

1.00

2.95

Strategy Selection

TOWS ANALYSIS DELBROS 1. 2. 3. 4.

1.

2.

3. 4.

OPPORTUNITIES Many businesses are streamlining their operations and look for a third party logistic specialist Businesses require highly efficient inventory management in order to anticipate their product’s demand Growth in GDP Businesses want more value added services

STRENGTHS Experience Efficiency Customer Profiles Higher Audit Process on Process and Performance

SO STRATEGIES 1. Take advantage of the business' reputation as the country's pioneer in logistics to draw quality clientele that are willing to sub contract their warehousing & logistics. (S1, S3, O1,O3) 2. Serve clients efficiently through high quality service that meet if not exceed their expectations. (S4, O2, O4)

1. 2. 3. 4.

WEAKNESSES Market Prospecting is not that Efficient Slow growth rate in Sales, GP and ROI Manpower Turnover is fairly high Too many process audit sometimes paralyzes the operations & the performance of its manpower

WO STRATEGIES 1. Upgrade present client's service by anticipating their growing demands in their business.(W1, O2, O4) 2. Adequate planning to cut on manpower requirements and other operational costs related to the clients warehousing and logistics need. (W2, W3, W4, O1, O3) 3. Focus on the company's core expertise and attention to details that are deemed to give value to Delbros as well as to their clients. (W2, O1, O4)

THREATS 1.Fast paced technology in logistics 2.Price Competitiveness 3.Oil Price Hike 4.Across the board wage increase

ST Strategies 1. Capitalize on one of its major strength which is Experience and high quality performance to offset latest breakthrough in warehouse & delivery information systems. (S1,S4,T1) 2. Optimize the use of warehouse space and overall capacity in its distribution system which would save a lot in terms of manpower requirement. (S2, S4, T2, T3, T4) 3. Maintain High profiled clientele in its roster to give premium to its price proposal activities to prospective clients. (S1, S3, T2)

WT Strategies 1. Carefully choose clients that would not give greater value to the company in the long run. (W1, W2, T2) 2. Balance processes with management by objective by allowing some sense of authority and decision making even to rank and file employees who are also capable in certain situations. (W3, W4, T4)

TOWS STRATEGY: •Market Penetration •Market Development

8.2 Strategic Position and Action Evaluation Matrix (SPACE) X – AXIS

Industry Strength (IS) 6 best, 1 worst 1

Growth Potential for freight Industry

4

2

Advancement in Technology

4

3

Technological Know-how

3

4

Bargaining power of Customers is high

5

IS Average

4.00

Competitive Advantage (CA) ) -1 best, -6 worst 1

Company’s Reputation

-1

2

Industry Connections

-2

3

Technological Know-how

-3

4

High Audit Standards

-3

CA Average Directional Vector Coordinate X = IS Average + CA Average

-2.25 1.75

Y – AXIS Financial Strength (FS) 6 best, 1 worst 1

High Profit Margin on freight

2

2

Sales Growth Rate

2

3

Operating Efficiency issues

2

FS Average

2.0

Environmental Stability (ES) ) -1 best, -6 worst 1

2

3

Logistics is essential to everyday life

Freight transportation threatens the environment due to the need of

material resources to build and maintain a functional infrastructure.

Logistics is moving towards “environmental friendly” practices. ES Average

Directional Vector Coordinate Y = FS Average + ES Average

-1

-4

-2 -2.3

-0.30

CONSERVATIVE

AGGRESSIVE

6 5 4 3 2

1 -6

-5

-4

-3

-2

-1

(1.75, -30) 1

2

3

4

5

-1 -2 -3 -4 -5 DEFENSIVE

-6

COMPETITIVE

6

SPACE MATRIX: COMPETITIVE STRATEGY •Backward Integration •Forward Integration •Horizontal Integration •Market Penetration •Market Development •Product Development •Joint Ventures The SPACE Matrix of Delbros points that it should take a competitive stance, although it is an established company which already gained a reputation in the industry as a pioneer, having strong industry connections, it still has some disadvantages especially since it belongs to a very dynamic industry

8.3 Internal-External Matrix (IE)

THE EFE TOTAL WEIGHTED SCORE

THE TOTAL WEIGHTED SCORE

IFE = 2.95

STRONG

AVERAGE

WEAK

EFE =2.50

(3.0 -4.0)

(2.0 – 2.99)

(1.0 – 1.99)

I

II

III

HIGH (3.0 – 4.0) MEDIUM

V IV

(2.0 – 2.99)

VI DELBROS

LOW VII (1.0 – 1.99)

VIII

IX

CELL V STRATEGIES market penetration product development

8.4 Grand Strategy Matrix

QUADRANT I QUADRANT II

DELBROS

QUADRANT III

QUADRANT IV

SLOW MARKET GROWTH

STRONG COMPETITIVE POSTION

WEAK COMPETITIVE POSTION

RAPID MARKET GROWTH

Quadrant I Strategies •Market Development •Market Penetration •Product Development •Forward Integration •Backward Integration •Horizontal Integration •Concentric Integration

9.0 Summary of Matrices and Analysis STRATEGY OPTIONS

TOWS

SPACE

IEM

GSM

TOTAL

INTEGRATION STRATEGIES 1

Forward Integration

1

1

2

2

Backward Integration

1

1

2

3

Horizontal Integration

1

1

2

1

4

1

3

1

3

1

1

INTENSIVE STRATEGIES 4

Market Penetration

1

1

5

Market Development

1

1

6

Product Development

1

1

1

DIVERSIFICATION STRATEGIES 7

Concentric Diversification

8

Conglomerate Diversification

0

9

Horizontal Diversification

0

DEFENSIVE STRATEGIES 10

Retrenchment

0

11

Divestiture

0

12

Liquidation

0

10.0 Quantitative Strategic Planning Matrix (QSPM) Market

Market

Product Development Penetration Development Critical Success Factors

Weight

AS

TAS

AS

TAS

AS

TAS

0.20

1

0.20

3

0.60

2

0.40

1

Many businesses are streamlining their operations and look for a third party logistics specialist

0.15

2

0.30

4

0.60

3

0.45

2

Businesses require highly efficient inventory management in order to anticipate their products demand.

3

Growth in GDP

0.15

2

0.30

3

0.45

4

0.60

4

Businesses want more value added services

0.10

4

0.40

2

0.20

3

0.30

0.15

3

0.45

1

0.15

2

0.30

OPPORTUNITIES

THREATS 1

Fast paced changes in Logistics technology

2

Price Competitiveness

0.15

2

0.30

3

0.45

1

0.15

3

Oil Price Hike Across the board wage increase

0.05 0.05

0

0.00

2

0.10

1

0.05

1

0.05

2

0.10

3

0.15

4

Market

Critical Success Factors

Weight

Market

Product Development Penetration Development AS TAS AS TAS AS TAS

STRENGTHS 1

Experience

2

Efficiency

3

Customer Profiles Higher Audit Standards on Process and Performance

4

0.20 0.20

2 1

0.40 0.20

4 2

0.80 0.40

3 3

0.60 0.60

0.15

2

0.30

4

0.60

3

0.45

0.10

1

0.10

4

0.40

2

0.20

0.15

3

0.45

1

0.15

2

0.30

0.10

3

0.30

2

0.20

1

0.10

0.05

0

0.00

1

0.05

0

0.00

0.05

0

0.00

1

0.05

0

0.00

WEAKNESSES 1 2 3 4

Marketing activities is not that efficient Slow growth rate in Sales and GP Manpower turnover is fairly high Too many process audit sometimes paralyzes the operations and the performance of its manpower

TOTAL

3.75

5.30

4.65

Strategic Objective

11.0 Proposed Strategy Based on Delbros’ internal strengths and weaknesses as well as the external opportunities and threats in which the company operates; the company should pursue a market penetration strategy.

11.1 Strategic Objective The strategic objective of Delbros is to increase its revenue annually by 25% for the next three years beginning 2008 by way of market penetration.

11.2 Market Penetration Market penetration for Delbros will involve the following: •Revising Some of Present Clients’ Rate: •Improve Marketing Activities •Increasing the Value of Other Services

12.0 Action Plans and Programs

PERSON

ACTIVITIES

TIMETABLE

EXPECTED OUTPUT RESPONSIBLE

1.

Review freight rate chart as well as client’s contract rate for possible revision for next year.

Dec 2007

Make sure that clients are Financial Analyst properly being charged of their due to the company as well as making sure that the standard freight rate chart is more or less within the industry standards.

2.

Review mall routes within Metro Manila of a certain retail client and coordinate with National Network Distribution (NND) in scheduling its distribution.

Nov 2007

To optimize trips as well as QEG Capacity the stops of the retail Planning Analyst clients’ goods along with other clients scheduled distribution for efficiency.

3. Hire a Marketing Specialist that is versed in the area of logistics operations

Jan 2008

To assist the current VP for Operation Business Development (BD) Manager in prospecting potential major clients.

4. Develop program for continuous training of current Marketing/BD team.

Jan 2008

Keep the marketing/BD team Business highly motivated and Development (BD) consistently excited in going Manager about their daily tasks

5. Review present set up of consumer warehouse facility and identify room for improvement.

Dec 2007

To accommodate either present clients’ or future clients’ more diversified warehouse needs next year (ie, additional cold storage)

Consumer Contract Manager

6. Review current M.O.P. for all Departments especially those in the operations and asses whether overall goal for the company is being achieved

Nov 2007

To asses whether some of the M.O.P. are getting to be counterproductive not just for the performance of employees but to the whole operation as well

Managers & Supervisor Alike for each department/division within the company.

7.

Review Manpower requirement for next year beginning the first six months of 2008.

Dec. 2007

To avoid over or shortage of Manpower / manpower that may lead to Capacity Planning slowdown of the operation, of the QEG undue layoff and high manpower costs.

8.

Develop employee benefit program for Agency hired employees.

Jan 2008

For agency employees who HR Manager are deserving to be regular employees which they could not get as being agency hired.

9.

Develop an IT infrastructure on Mail Management System (MMS)

Nov 2007

To help Insurance Co. clients Chief Information as well as other Officer (CIO) mail/document client business, who availed of Delbros services to track their document until it passes to their own customers.

10. Market slow moving revenue generating activities such as bundling or shrink wrapping aside from delivery and warehousing not only to its present clients but also to potential clients.

Jan 2008

11. Conduct training on how to attend to callers (i.e.,US Visa, Mail, Manning Processing and other documents) and assist their to needs

Dec. 2007

To increase company’s Business further potential for growth of 25% in Development revenue. Manager

To reduce complaints as VP Admin well as to address their complaints whether attributable or not to the company.

KEY STRATEGY: Target growing industries (Mining, Power, Infrastructure, technology etc.) in marketing the services of Delbros, with its vast experience in logistics, serving a variety of clients in different industries, taking care of their logistics needs which spans the whole archipelago. PERSON ACTIVITIES 1.

Make a process / capacity study of the aforementioned growing industries.

TIMETABLE Nov. 2007

EXPECTED OUTPUT RESPONSIBLE This will asses Delbros’ Capacity Planning strength and weakness and Officer of QEG how they would be able to handle the clients’ logistic requirements.

2. Study existing warehouse facility and initiate suggestions regarding room for its improvement and or capacity.

Nov. 2007

To accommodate possible Capacity Planning transaction with any of the Officer of QEG aforementioned industries.

3. Coordinate with National Network Distribution (NND) regarding the loading and unloading of different clients’ SKUs and how it could be able to handle other SKUs/Items of other businesses as the one mentioned above.

Nov. 2007

To accommodate possible Capacity Planning transaction with any of the Officer of QEG aforementioned industries.

4.

Make a Sensitivity and Profitability Analysis on the said industries.

Dec. 2007

To forecast the viability of Financial each of the said industries. Analyst

5.

Conduct a meeting to concerned persons regarding the issues in taking up transactions with any of the said industries above.

Dec. 2007

To bring to light key VP for issues that would be Operation important in the decision making.

6.

Conduct a seminar to Marketing/ Business Development Department on various industries with potential growth.

Jan. 2008

To gain knowledge HR Manager sufficient enough to present to prospective clients of growing industries.

7. Coordinate with Systems Development Department (SSD) on how to be able to best serve the above clients’ information needs.

Dec. 2007

To give prospective clients Chief the information they Information would need as well as the company by developing Officer (CIO) one or using the existing system.

8.

Develop marketing team and devise marketing strategies to close a deal with prospective clients.

Feb 2008

To further reinforce Business objective of increasing Development revenue by 25% (BD) Manager

9.

Develop an incentive scheme to employees that would be aligned with the objective of the company.

June 2008

To Motivate employees to work on the common goal of the company.

HR Manager

Nov. 2007

Increase overall revenue and client satisfaction.

VP for Operation

10. Review other services’ viability and how it can be incorporated and customized with present as well as proposed clients needs.

13.0 Strategy Evaluation and Control In order to assess the success of the strategies mentioned above, evaluation and control techniques should be put in place.

13.1 Balanced Scorecard 13.1.1 Customer Perspective GOALS

-

Customer Satisfaction

-

Increase in Customer

MEASURES

-

Increased in Volume of Delivery

TARGETS

30% inc

20% inc -Number of First time Customers who availed the Service

-

Customer Retention

- Improved Total Quality Service to Customers

Number of Major Customers who are still with Delbros since 2004

-

Needs of Customers regarding Visa delivery and other document delivery that are met satisfactorily.

-

50% inc. 50%dec

Lesser Complaints from callers regarding their Visa, document processing/delivery

-

23

Inventory Variance Report

10% or Below

13.1.2 Financial Perspective GOALS

MEASURES

TARGETS

-

Revenue Growth

-

Total Revenues

-

Profitability

-

Profit Margin

50%

-

Operational Efficiency

-

Cost of Sales % of Revenue

50%

25% inc

13.1.3 Innovation & Learning Perspective GOALS

MEASURES

-Employee Satisfaction And

-Employee Opinon Survey

High

Employee Turnovers

Low

Motivation

-

Talent Retention

-

Performance & Competency Evaluation

-Continuous Improvement

-

TARGETS

-Overall Performance index on Master Operating Procedure

91%

(MOP)

-

Investment in training and education

90% participation

Internal Business Perspective GOALS

MEASURES

-percentage of revenues

-Efficiency in prospecting of

TARGETS

25%

Clients

-Inventory Variance Report -Lesser or Zero Complaints on

10% or below

Clients’ Inventories

-Domestic Rate Chart Review -Charge reasonably

Clients’

delivery

45% inc in rev.

Thank You