Posts Tagged ‘Tools’

The six forces model

The six forces model ( an expansion from the traditional Five forces by Michael Porter) is a strategic business tool used primarily as an industry model which assess the competiveness of a market. It is often used as in strategic management and it can also be used as an alternative to the SWOT model. It’s advantages over the SWOT model is that a bit more specific in it’s areas of analysis drilling down to the main drivers of a market.

As suggested by it’s name it analyzes six areas:

1/ Competition – is their a lot of competition in the market? Are there dominant players?
2/ New entrants – Is it easy for new entrants to enter the market and compete
3/ Buyers – How easy is it for buyers to affect the price, can they work together – how strong is their position
4/ Suppliers – What is the state of the supply base – is it a monopoly – are there many sellers?
5/ Substitutes – how easy can a product or service be substituted?
6/ Complementors – influence of complimentary products and services on the market.

What is the 6 forces model used for?

The primary use of the six forces model is to enable a detailed analysis of an organizations strategic position within the marketplace and calculate the market’s attractiveness with regard to competition and profitability. This assessment is a key step prior to investing resources and deploying strategy as if the market should prove ultra-competitive it may be more prudent to look at obtaining revenues from alternative markets.

The 6 forces model is not a one off activity, markets continually change and any changes in the model requires a re-assessment. As stated the model should form part of a regular strategic planning process and should be reviewed at least annually.

Differences between the 5 forces model and the 6 forces model.

As with all models – Porters original 5 forces model has been criticised for a number of reasons – primarily that elements of the market such as buyers and competitors do not collude. There have been some changes to the 5 forces model and the six forces model expands on the original by assessing complimentary areas of the market.

Training Matrix Template

Staff competency is a key factor in all businesses – the ability to carry out the job in the right way and produce the right result is paramount whether your organization’s producing widgets or selling services. Skill levels of staff can have a significant impact on both your productivity and the quality of the product produced. A workforce that lacks training can contribute significant cost through excessive production practices and rework requirements.

Maintaining the appropriate skill levels within the company is therefore a key task. This is often achieved through developing and deploying a skills matrix coupled with a training matrix. The skills matrix will typically cover job roles and the associated skills. The training matrix will then provide a mechanism for analyzing the staff against the skill requirement and then tracking their training plan to achieve full competency.

Purpose of a training matrix

The main purpose of a training matrix is to plan the alignment of staff skills against the job requirements – producing a template for a training matrix isn’t complicated (check out the video below) there are a few basic steps and principles to follow (also you don’t need any special software Microsoft Excel will do fine!).

Producing a training matrix template

A training matrix template can be produced easily using Microsoft Excel –

1/ Gather a list of the employees that you’ll track (note you could choose to do this grouped by department or trade)

2/ List the requirements against the roles

3/ use the matrix to annotate against the individuals where skill levels are adequate or where training is required

4/ Establish a training plan to “fill in the gaps”.

5/ Review regularly to keep the matrix up-to-date regarding training undertaken and staff changes.

Watch the video

Management analysis PEST tools & techniques

There are a number of tools available for business managers when undertaking either
strategic planning or analyzing performance. Tools such as SWOT Analysis, SOFT reports and standard financial reports such as Profit & Loss reports all offer some standard best practice that are easy to deploy and don’t require specialist tools.

Another common tool which can be used as a reporting mechanism is the PEST report. PEST analysis stands for “Political, Economic, Social, and Technological analysis”. When completed the PEST analysis communicates a series of environmental factors which can also be used when strategic planning.

When carrying out any strategic planning its vital to review external factors. For example government policy in the form of tax and
environmental policy could each play a factor in the success of your business.

However, you can also use PEST reports outside of strategic planning as in the guise of a monthly reporting tool it provides a standardized mechanism of regularly reviewing external factors on your business or department.

Breaking down the PEST analysis tool

When constructing your PEST analysis there are various attributes to consider:

Political factors

Political factors can include a range of issues that government can impact. They notably include obvious spheres of influence such as tax and employment law but also include areas such as trade policies (especially international law) including trade restrictions and tariffs.

Governments can also promote trade in certain sectors (consider the recent promotion of environmentally sound products as opposed to those that may be thought of as contributing to global warming.)

Economic factors

There is a range of economic factors to consider in your pest report – these tend to articulate financial constraints or opportunities for the organization and range from Exchange rates, Tax, Economic growth, Interest rates.

Financial issues can impact a number of things from export and import opportunities through to how capital is invested.

Social factors

Social factors can have a big part to play on the market appetite for a product. They can also influence how an organization functions: for example the demographics of the population can influence a range of functions not the least recruitment policy.

Social factors are built up from a variety of elements such as ethnicity, age, social attitudes (from career planning through to thoughts on trends and social causes)

Social factors are important as they reflect the barriers organizations might face into selling and producing their products and these factors often require mitigation strategies.

What’s included in a project charter

A project charter is a common Project Management tool used to convey key information around the Project and its deliverables. It is produced early on in the project process and is often used to gain approval from key stakeholders for the project to proceed.

When new projects are being proposed its important to collate and share key information amongst decision makers – the project charter provides a vehicle for that activity and in doing so provides a snapshot of the project at approval stage and what led to decisions being made.

Using a project charter infers a certain discipline in project management as a robust charter will include determining objectives, risks and issues and helps mitigate ambiguity about the project approach and targets. This final point is important – for a project to be approved stakeholders need to know beyond reasonable doubt what’s it about and how it will achieve. As such the power of a project charter as a communication tool should not be ignored.

The project charter will usually be authored by a mix of the Project Manager and the Project Sponsor – the actual mix will vary from project to project (and also organization to organization).

What to include in your charter?

While there’s no set template for your charter you’ll want to consider the following:

1/ Objectives
2/ Scope
3/ Stakeholder assessments
4/ Risks
5/ Assumptions and Constraints
6/ Approvals
7/ Cost Appraisal
8/ Initial Timeline

Once signed off by relevant stakeholders the Project Charter acts as the Project Managers authority to proceed and certain elements of the charter can be transferred into a Project Initiation Document if required.

SWOT Analysis Example

Following on from our article on the SWOT business tool we thought we should put theory into practice with an example swot analysis

For this example we we’ll take a look at a SWOT analysis from the perspective of a small manufacturing company.  Their looking to develop themselves and develop thier strategy to understand their issues and exploit their marketplace – well make some assumptions that it’s a niche provider and that it’s customers key drivers are cost and quality.

So jets get too it!

Brainstorming your SWOT Analysis


Firstly when brainstorming your SWOT it’s helpful to have some data around you – SWOT’s can sometimes be subjective which can lead to personal opinion getting in the way of fact.  But what should you consider?  We often like to think of four variables when building our SWOT.

People, processes, systems and Market

However you might want to also include key issues that affect your business (the above should give you a start!).


So let’s take a look at the SWOT

 

Strengths

 

  • Loyal staff with low turnover
  • Existing long term order book
  • Established high quality product line
  • Strong design ties with customer product

Weaknesses

 

  • Old inefficient capital equipment
  • High rate of yield
  • Bottlenecks in some production cells
  • Knowledge not shared evenly across workforce
  • Inefficiencies due to legacy IT system

Opportunities

  • Introduce effective IT system
  • Introduce new, more efficient, capital equipment
  • Expand customer base
  • Introduce training plan for all staff

 

Threats

·         Long term customer strategies to move to lower cost providers

·         Capabilities not aligned with market needs

·         Poor cash flow



 

What next

The SWOT should be seen as a planning tool and help in the strategic process and therefore the end result of your SWOT analysis should not be the SWOT by itself but coupled with an action plan that capitalizes on your strengths and mitigates your weaknesses and threats.

 

This last point is crucial without a plan to correct key issues your business could suffer as a consequence.

 

Finally consider the frequency you’ll review your SWOT this shouldn’t be a onetime only process regular SWOT assessments will help capture new issues and ensure appropriate action plans are delivering the changes required to keep our organization efficient and competitive.