MODERN STRATEGIC ANALYSIS Theme 3. Process of Strategic Management

Prof. Aleksandr Kozlov
11/10/16
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choice
Strategy implementation
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for the business
Give clear direction for development
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Time-Tabled (Time-bound)

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(Economic trends, currency stability, capital availability, prices for land and

premises rent...)
Technology (depending on the industry)
Society (public sensitivity to the situation, price policy firstly, in this particular field, public institutions, mass-media attitude)

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insp., fire insp., sanitary insp.)
Custom service
Licensing, and certification procedures
Influence upon

arbitrage
Growing state order
Reprivatisation of key industries

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Corporate tax (on profit) - 24 %
VAT - 18

%
Social taxes (health, pension, unemployment, incident insurance) - 30 %

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before 1998 - app. 4000, now - app. 1000 .
Loans for companies only for guarantee (real estate, goods in stock, equipment, stocks)
Low protection of Information
High Interest Rate (20-25 % in Rubles, 8-12 % in USD)
Risk of Bank Bankruptcy (Crisis of year 1998, troubles of summer 2004, crisis of the 2008-09 political situation of the year 2014/16 )
State guarantee for deposits of individuals
App. 20000 USD
Preferences for Quick Money in giving loans (not for industrial companies, mostly trade, currency exchange, stocks)

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USD
Sberbank – 366,0 (477,0 in 2014, 313,7 in 2011)
VTB– 137,1

(160,0 in 2014, 96,8 in 2011)
Gasprombank – 77,4 (104,8 in 2014, 64,3 in 2011)
The # 1 in 2014 in the World
Industrial and Commercial Bank of China 3124,0
Total assets of Russian banking system –
less. 1000 bln USD
Assets of ING Group, (Netherlands), 26th place in the world bank ranking – 1082,0 bln USD

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% of total Russian banks assets
Bank offices - Sberbank –

20 500, next - Rosselhozbank – 1 400
Foreign banks – app. 15 % of total Russian banks assets
Scandinavian banks were active last three years (e.g., Swedbank opened a branch of Hansabank, Sampobank bought local Profibank, SEB bought Petroenergobank)
Undeveloped System of Crediting for Individuals and Families

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are enemies to be crashed, wiped out
Tendency to monopolise the

market
State as a tool for pressure
Tendency to start price wars
Tendency to set up cartels

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Income through the Country Monthly income. (2016)
Russia app. 35000 Rbl

Moscow app. 70000 Rbl
St. Petersburg app. 45000 Rbl
Altaiskii krai app. 19000
Dagestan app. 18000
Kalmykia App. 19000
Undeveloped Distribution Channels
Disbelief (skeptical attitude) in Advertising and trust to rumors

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(custom procedures, custom taxes, international payment transactions)
Undeveloped Information and Distribution

Systems
Undeveloped Marketing System and inexperienced Marketing Staff
High tariffs for Transportation

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and energy machine building, optics)
Focus on Research&Development (10 % of

intellectual potential of the whole Russia, 48 state universities, 250 research institutes, 170 000 scientists and researches)

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Nissan Hyundai)
Nanotechnologies
Information Technologies
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into six main types:
Political,
Economic,
Social,
Technological,
Environmental,
Legal
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developments, ICT innovations, rates of obsolescence, increased spending on R&D).

Environmental Factors: (Environmental protection regulations, energy consumption, global warming, waste disposal and re-cycling.
•Legal Factors: (competition laws, health and safety laws, employment laws, licensing laws, IPR laws)

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the industry, market and organisation in question.
Identify factors which

are important currently but also consider which will become more important in the next few years.
•Use data to support the points and analyse trends using up to date information
•Identify opportunities and threats – the main point of the analysis!

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how the environment of an organisation might develop in the

future based on key drivers of change about which there is a high level of uncertainty.
Build on PESTEL analysis
Do not offer a single forecast of how the environment will change.
An organisation should develop a few alternative scenarios (2–4) to analyse future strategic options.

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and plausible descriptions of the environment that result from opposing

outcomes
Identify the impact of each scenario on the organisation and evaluate future strategies in the light of the anticipated scenarios.
Scenario analysis is used in industries with long planning horizons for example, the oil industry or airlines.
.

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customers
Barriers to entry
Substitute Products
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firms producing products and services that are essentially the same.

For example, automobile industry and airline industry.
A market is a group of customers for specific products or services that are essentially the same (e.g. the market for luxury cars in Germany).
A sector is a broad industry group (or a group of markets) especially in the public sector (e.g. the health sector)

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of company sales
Company products are standard/ undifferentiated
Earn low profits
Have low

switching costs
Have full market information (costs, profits, ...)
Company product unimportant to quality of customers product
Have a capability to backward integration

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few companies and concentrated than industry selling to
No available substitutes
Switching

costs are high (it is disruptive or expensive to change suppliers)
Company is not important customer of supplier
Suppliers products are important of buyers business
Company product unimportant to quality of customers product
Suppliers have a capability to forward integration

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equal size
Competitors are aggressive in seeking leadership
Slow growth

(The market is mature or declining)
High fixed costs
Weak differentiation
High barriers to exit

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buyers, low entry barriers
Increasing rivalry, slower growth, some exits
Stronger buyers,

low growth, higher barriers to entry, standard products

Extreme rivalry, many exits, price competition

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entry is low when the barriers to entry are high

and vice versa.
The main barriers to entry are:
Economies of scale/high fixed costs
Experience and learning
Access to supply and distribution channels
Differentiation and market penetration costs
Government restrictions (e.g. licensing)
Entrants must also consider the expected reaction from organisations already in the market

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may be difficult to identify and hence keep out
Substitutes are

most likely to succeed when
Industry prices are going up
Industry is making high profit

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