The external factors

1. PEST analysis
PEST analysis stands for "Political, Economic, Social, and Technological analysis" and describes a framework of macro-environmental factors used in the environmental scanning component of strategic management.. Objective: It is a part of the external analysis when conducting a strategic analysis or doing market research, and gives an overview of the different macro-environmental factors that the company has to take into consideration. It is a useful strategic tool for understanding market growth or decline, business position, potential and direction for operations.

Factors:

Political factors are how and to what degree a government intervenes in the economy. Specifically, political factors include areas such as tax policy, labor law, environmental law, trade restrictions, tariffs, and political stability. Political factors may also include goods and services which the government wants to provide or be provided (merit goods) and those that the government does not want to be provided (demerit goods or merit beds). Furthermore, governments have great influence on the health, education, and infrastructure of a nation. Economic factors include economic growth, interest rates, exchange rates and the inflation rate. These factors have major impacts on how businesses operate and make decisions. For example, interest rates affect a firm's cost of capital and therefore to what extent a business grows and expands. Exchange rates affect the costs of exporting goods and the supply and price of imported goods in an economy Social factors include the cultural aspects and include health consciousness, population growth rate, age distribution, career attitudes and emphasis on safety. Trends in social factors affect the demand for a company's products and how that company operates. For example, an aging population may imply a smaller and less-willing workforce (thus increasing the cost of labor). Furthermore, companies may change various management strategies to adapt to these social trends (such as recruiting older workers). Technological factors include technological aspects such as R&D activity, automation, technology incentives and the rate of technological change. They can determine barriers to entry, minimum efficient production level and influence outsourcing decisions. Furthermore, technological shifts can affect costs, quality, and lead to innovation. Environmental factors include ecological and environmental aspects such as weather, climate, and climate change, which may especially affect industries such as tourism,

farming, and insurance. Furthermore, growing awareness of the potential impacts of climate change is affecting how companies operate and the products they offer, both creating new markets and diminishing or destroying existing ones.

Legal factors include discrimination law, consumer law, antitrust law, employment law, and health and safety law. These factors can affect how a company operates, its costs, and the demand for its products.

Mechanism:

The model's factors will vary in importance to a given company based on its industry and the goods it produces. For example, consumer and B2B companies tend to be more affected by the social factors, while a global defense contractor would tend to be more affected by political factors. Additionally, factors that are more likely to change in the future or more relevant to a given company will carry greater importance. For example, a company which has borrowed heavily will need to focus more on the economic factors (especially interest rates). Furthermore, conglomerate companies who produce a wide range of products (such as Sony, Disney, or BP) may find it more useful to analyze one department of its company at a time with the PESTEL model, thus focusing on the specific factors relevant to that one department. A company may also wish to divide factors into geographical relevance, such as local, national, and global (also known as LoNGPESTEL).

Outcome:
A framework of macro-environmental factors that gives the firm the full picture of its external environment.

The benefits of the PEST in IT sector (pharmaceutical company)

The PEST factors, combined with external micro-environmental factors and internal drivers, can be classified as opportunities and threats in a SWOT analysis

2. SWOT
SWOT analysis is a strategic planning method used to evaluate the Strengths, Weaknesses, Opportunities, and Threats involved in a project or in a business venture. It involves specifying the objective of the business venture or project and identifying the internal and external factors that are favorable and unfavorable to achieve that objective.

Objective:
Is to highlight and identify strengths, weaknesses, opportunities and threats which are helpful in identifying areas for development. A SWOT analysis may be incorporated into the strategic

planning model. It is also used as a base for generating alternative strategies using the TWOS tool.

Mechanism:
A SWOT analysis must first start with defining a desired end state or objective as following:

Strengths: characteristics of the business or team that give it an advantage over others in the industry. Weaknesses: are characteristics that place the firm at a disadvantage relative to others. Opportunities: external chances to make greater sales or profits in the environment. Threats: external elements in the environment that could cause trouble for the business.

Identification of SWOTs is essential because subsequent steps in the process of planning for achievement of the selected objective may be derived from the SWOTs. First, the decision makers have to determine whether the objective is attainable, given the SWOTs. If the objective is NOT attainable a different objective must be selected and the process repeated.

Outcome:
1. Is to find competitive advantages by matching the strengths to opportunities. 2. Is to apply conversion strategies to convert weaknesses or threats into strengths or opportunities. 3. SWOT analysis may limit the strategies considered in the evaluation An example of conversion strategy is to find new markets. If the threats or weaknesses cannot be converted a company should try to minimize or avoid them.

The benefits of the SWOT in IT sector (pharmaceutical company)

1. To highlight and identify strengths, weaknesses, opportunities and threats which are

helpful in identifying areas for IT development.

2. To find competitive advantages by matching the strengths to opportunities. 3. To apply conversion strategies to convert weaknesses or threats into strengths or

opportunities. 4. To be used in any decision-making situation when a desired end-state (objective) has been defined

3. TOWS:
Based on the SWOT analysis, Match between organizations internal resources & skills and the opportunities & risks created by its external factors Objective: to create four types of alternative strategies Strengths-Opportunities (SO) Weaknesses-Opportunities (WO) Strengths-Threats (ST) Weaknesses-Threats (WT)

Mechanism:

Outcome:
1. Is to find competitive advantages by matching the strengths to opportunities. 2. Is to apply conversion strategies to convert weaknesses or threats into strengths or opportunities.

The benefits of the TOWS in IT sector (pharmaceutical company):

Matching the internal environment with the external environment in IT department, this will generate alternative strategies.

4.

Break through model:

The Breakthrough Model is a tool used to identify what an organization needs to be able to do in order to execute its strategy.

Mechanism:
The model asks managers to be clear in their thinking about the results they want in their business and what their organization must be able to do over time to achieve those results. Staged objective. Incremental adjustments are made within the shortest timeframe of the three levels. These changes are thought of as low-hanging fruit because they are the easiest and most obvious to achieve. Substantial changes describe objectives that can be accomplished in the midterm. They are significant changes that take time to achieve, but they are not transformational in nature. Transformational changes are accomplished over the longer-term and represent an extremely significant leap for the organization. Once transformational objectives have been attained then the organization has reached its destination.

Outcome:
Identification of the organizations needs to perform the selected strategy.

The benefits of the Break through model in IT sector (pharmaceutical company):

The identification of the needs of the IT department, in order to implement its selected strategy

5.BCG Matrix:
The BCG matrix is a chart that had been created by Bruce Henderson for the Boston Consulting Group in 1968 to help corporations with analyzing their business units or product lines. This helps the company allocate resources and is used as an analytical tool in brand marketing, product management, strategic management, and portfolio analysis.

Objective:
The objective of this ranking was to help corporate analysts decide which of their business units to fund, and how much; and which units to sell. Managers were supposed to gain perspective from this analysis that allowed them to plan with confidence to use money generated

Mechanism:
To use the chart, analysts plot a scatter graph to rank the business units (or products) on the basis of their relative market shares and growth rates.

Cash cows are units with high market share in a slow-growing industry. These units typically generate cash in excess of the amount of cash needed to maintain the business. They are regarded as staid and boring, in a "mature" market, and every corporation would

be thrilled to own as many as possible. They are to be "milked" continuously with as little investment as possible, since such investment would be wasted in an industry with low growth. Dogs, or more charitably called pets, are units with low market share in a mature, slowgrowing industry. These units typically "break even", generating barely enough cash to maintain the business's market share. Though owning a break-even unit provides the social benefit of providing jobs and possible synergies that assist other business units, from an accounting point of view such a unit is worthless, not generating cash for the company. They depress a profitable company's return on assets ratio, used by many investors to judge how well a company is being managed. Dogs, it is thought, should be sold off. Question marks (also known as problem child) are growing rapidly and thus consume large amounts of cash, but because they have low market shares they do not generate much cash. The result is a large net cash consumption. A question mark has the potential to gain market share and become a star, and eventually a cash cow when the market growth slows. If the question mark does not succeed in becoming the market leader, then after perhaps years of cash consumption it will degenerate into a dog when the market growth declines. Question marks must be analyzed carefully in order to determine whether they are worth the investment required to grow market share. Stars are units with a high market share in a fast-growing industry. The hope is that stars become the next cash cows. Sustaining the business unit's market leadership may require extra cash, but this is worthwhile if that's what it takes for the unit to remain a leader. When growth slows, stars become cash cows if they have been able to maintain their category leadership.

Outcome
The natural cycle for most business units is that they start as question marks, then turn into stars. Eventually the market stops growing thus the business unit becomes a cash cow. At the end of the cycle the cash cow turns into a dog. By the cash cows to fund the stars and, possibly, the question marks. Only a diversified company with a balanced portfolio can use its strengths to truly capitalize on its growth opportunities. The balanced portfolio has: stars whose high share and high growth assure the future; cash cows that supply funds for that future growth; and Question marks to be converted into stars with the added funds.

The benefits of the BCG Matrix in IT sector (pharmaceutical company):

The matrix ranks only market share and industry growth rate, and only implies actual profitability, the purpose of any business. The initial intent of the growthshare matrix was to evaluate business units, but the same evaluation can be made for product lines or any other cash-generating entities. So the IT department can use the matrix to evaluate its own products and define its categories (question marks, cash cows, stars and dogs). This will help the firm to focus its cash towards the profitable sectors or division.

5.

Kottlers 8 Steps:

Its a model designed by John Kotter. A professor at Harvard Business School and worldrenowned change expert, Kotter introduced his eight-step change process in his 1995 book, "Leading Change."

Objective:
Is to help the organization to apply change through 8 steps.

Mechanism:
Step One: Create Urgency For change to happen, it helps if the whole company really wants it. Develop a sense of urgency around the need for change. This may help you spark the initial motivation to get things moving.

This isn't simply a matter of showing people poor sales statistics or talking about increased competition. Open an honest and convincing dialogue about what's happening in the marketplace and with your competition. If many people start talking about the change you propose, the urgency can build and feed on itself. What you can do: Identify potential threats, and develop scenarios showing what could happen in the future. Examine opportunities that should be, or could be, exploited. Start honest discussions, and give dynamic and convincing reasons to get people talking and thinking. Request support from customers, outside stakeholders and industry people to strengthen your argument.

Step Two: Form a Powerful Coalition Convince people that change is necessary. This often takes strong leadership and visible support from key people within your organization. Managing change isn't enough you have to lead it. You can find effective change leaders throughout your organization they don't necessarily follow the traditional company hierarchy. To lead change, you need to bring together a coalition, or team, of influential people whose power comes from a variety of sources, including job title, status, expertise, and political importance. Once formed, your "change coalition" needs to work as a team, continuing to build urgency and momentum around the need for change. What you can do: Identify the true leaders in your organization. Ask for an emotional commitment from these key people. Work on team building within your change coalition. Check your team for weak areas, and ensure that you have a good mix of people from different departments and different levels within your company.

Step Three: Create a Vision for Change When you first start thinking about change, there will probably be many great ideas and solutions floating around. Link these concepts to an overall vision that people can grasp easily and remember. A clear vision can help everyone understand why you're asking them to do something. When people see for themselves what you're trying to achieve, then the directives they're given tend to make more sense. What you can do: Determine the values that are central to the change. Develop a short summary (one or two sentences) that captures what you "see" as the future of your organization.

Create a strategy to execute that vision. Ensure that your change coalition can describe the vision in five minutes or less. Practice your "vision speech" often.

Step Four: Communicate the Vision What you do with your vision after you create it will determine your success. Your message will probably have strong competition from other day-to-day communications within the company, so you need to communicate it frequently and powerfully, and embed it within everything that you do. Don't just call special meetings to communicate your vision. Instead, talk about it every chance you get. Use the vision daily to make decisions and solve problems. When you keep it fresh on everyone's minds, they'll remember it and respond to it. It's also important to "walk the talk." What you do is far more important and believable than what you say. Demonstrate the kind of behavior that you want from others. What you can do: Talk often about your change vision. Openly and honestly address peoples' concerns and anxieties. Apply your vision to all aspects of operations from training to performance reviews. Tie everything back to the vision. Lead by example.

Step Five: Remove Obstacles If you follow these steps and reach this point in the change process, you've been talking about your vision and building buy-in from all levels of the organization. Hopefully, your staff wants to get busy and achieve the benefits that you've been promoting. But is anyone resisting the change? And are there processes or structures that are getting in its way? Put in place the structure for change, and continually check for barriers to it. Removing obstacles can empower the people you need to execute your vision, and it can help the change move forward. What you can do: Identify, or hire, change leaders whose main roles are to deliver the change. Look at your organizational structure, job descriptions, and performance and compensation systems to ensure they're in line with your vision. Recognize and reward people for making change happen. Identify people who are resisting the change, and help them see what's needed.

Take action to quickly remove barriers (human or otherwise).

Step Six: Create Short-term Wins Nothing motivates more than success. Give your company a taste of victory early in the change process. Within a short time frame (this could be a month or a year, depending on the type of change), you'll want to have results that your staff can see. Without this, critics and negative thinkers might hurt your progress. Create short-term targets not just one long-term goal. You want each smaller target to be achievable, with little room for failure. Your change team may have to work very hard to come up with these targets, but each "win" that you produce can further motivate the entire staff. What you can do: Look for sure-fire projects that you can implement without help from any strong critics of the change. Don't choose early targets that are expensive. You want to be able to justify the investment in each project. Thoroughly analyze the potential pros and cons of your targets. If you don't succeed with an early goal, it can hurt your entire change initiative. Reward the people who help you meet the targets.

Step Seven: Build on the Change Kotter argues that many change projects fail because victory is declared too early. Real change runs deep. Quick wins are only the beginning of what needs to be done to achieve long-term change. Launching one new product using a new system is great. But if you can launch 10 products, that means the new system is working. To reach that 10th success, you need to keep looking for improvements. Each success provides an opportunity to build on what went right and identify what you can improve. What you can do: After every win, analyze what went right and what needs improving. Set goals to continue building on the momentum you've achieved. Learn about kaizen, the idea of continuous improvement. Keep ideas fresh by bringing in new change agents and leaders for your change coalition.

Step Eight: Anchor the Changes in Corporate Culture Finally, to make any change stick, it should become part of the core of your organization. Your corporate culture often determines what gets done, so the values behind your vision must show in day-to-day work. Make continuous efforts to ensure that the change is seen in every aspect of your organization. This will help give that change a solid place in your organization's culture. It's also important that your company's leaders continue to support the change. This includes existing staff and new leaders who are brought in. If you lose the support of these people, you might end up back where you started. What you can do: Talk about progress every chance you get. Tell success stories about the change process, and repeat other stories that you hear. Include the change ideals and values when hiring and training new staff. Publicly recognize key members of your original change coalition, and make sure the rest of the staff new and old remembers their contributions. Create plans to replace key leaders of change as they move on. This will help ensure that their legacy is not lost or forgotten.

Outcome:
The firm can applied change successfully through the organization and transform its employees to a change agents.

The benefits of the Kottlers 8 Steps in IT sector (pharmaceutical company):

If the IT department decided to apply change, by using this model in the right way, the department guarantees a successful and change process.

7.External Factors Evaluation Matrix (EFEM)

External Factor Evaluation (EFE) matrix method is a strategic-management tool often used for assessment of current business conditions. The EFE matrix is a good tool to visualize and prioritize the opportunities and threats that a business is facing.

Objective:
To understanding the factors used in the EFE Matrix is more important than the actual weights and ratings assigned.

Mechanism:
the EFE matrix is concerned solely with external factors. External factors assessed in the EFE matrix are the ones that are subjected to the will of social, economic, political, legal, and other external forces. How do I create the EFE matrix? Developing an EFE matrix is an intuitive process which works conceptually very much the same way like creating the IFE matrix. The EFE matrix process uses the same five steps as the IFE matrix. List factors: The first step is to gather a list of external factors. Divide factors into two groups: opportunities and threats. Assign weights: Assign a weight to each factor. The value of each weight should be between 0 and 1 (or alternatively between 10 and 100 if you use the 10 to 100 scale). Zero means the factor is not important. One or hundred means that the factor is the most influential and critical one. The total value of all weights together should equal 1 or 100. Rate factors: Assign a rating to each factor. Rating should be between 1 and 4. Rating indicates how effective the firms current strategies respond to the factor. 1 = the response is poor. 2 = the response is below average. 3 = above average. 4 = superior. Weights are industry-specific. Ratings are companyspecific. Multiply weights by ratings: Multiply each factor weight with its rating. This will calculate the weighted score for each factor. Total all weighted scores: Add all weighted scores for each factor. This will calculate the total weighted score for the company. You can find more details about this approach as well as about possible values that the EFE matrix can take on the IFE matrix page. What should I include in the EFE matrix? Now that we know how to construct or create the EFE matrix, let's focus on factors. External factors can be grouped into the following groups:

Social, cultural, demographic, and environmental variables: Economic variables Political, government, business trends, and legal variables

Outcome:
Total weighted score of 4.0
Organization response is outstanding to threats and weaknesses Firms strategies not capitalizing on opportunities or avoiding threats

Total weighted score of 1.0

The benefits of the (EFEM) in IT sector (pharmaceutical company):

The IT department can evaluate the degree of response to its key external factors (external environment).

The internal analysis

1. Porters Value Chain Analysis:
Value Chain Analysis is used to identify an organization's major business processes and how they interact.

Objective:
To understand the internal environment of the organization by identifying an organization's major business processes and how they interact.

Mechanism:

The mechanism of this chain implemented by determining the following: Value Chain Every organization is comprised of processes and activities that are performed to develop, produce, sell, and distribute its services and products. These activities can be depicted using a value chain. The value chain describes how an organization does what it does (i.e., how it implements its business strategy). Value Activities Value activities are the activities within an organization that create a product or service of value to the organization's customers. Value activities can be classified into two main categories, primary activities and support activities.
Primary Activities

Primary Activities are the activities involved in the development, production, sale, and distribution of an organization's products and services to its customers and after sale support: receiving, storing, and distributing incoming products (i.e., inputs to the business process), creating the final product or service, gathering, storing, and distributing the product to the customer, marketing and selling the product or service to the customer, Enhancing or maintaining the product or service.
Support Activities

Support Activities are the activities that sustain primary activities and other support activities: purchasing materials/inputs used in the organization's value chain (i.e., primary and support activities), developing technologies to improve the product or process, employee staffing, training, and compensation, support activities (e.g., planning, finance, accounting, legal, and information systems management).
Activity Classification

There are three activity types present for both primary activities and support activities that play a distinct role in an organization's competitive advantage: direct activities (i.e., value added tasks) that create value for the customer,

indirect activities that support direct activities (e.g., maintenance and administration), quality assurance activities that ensure the quality of products and services.
Linkages

Activities in a value chain are not a collection of autonomous activities, but a structure of interdependent activities connected by linkages within the value chain. Linkages are the relationships between activities. To reduce cost and improve performance an organization must not focus on each value activity independently; the analysis must include both related activities and linkages between activities. There are three types of linkages, internal linkages, vertical linkages, and customer value chain linkages.
Internal Linkages

Linkages may exist between activities in the same category or between categories (i.e., primary activities and support activities) within an organization (e.g., the quality of purchased goods affect the cost of production, the quality of a product affects the cost of maintenance).
Vertical Linkages

Linkages exist not only within an organization's value chain but also cross organizational boundaries (e.g., suppliers and intermediaries). These linkages are comparable to an organization's internal linkages and affect the cost or performance of the organization's activities (and vice versa) (e.g., "just in time" inventory management).
Customer Value Chain

An organization's product and/or service is an input to its customer's value chain. To be successful an organization must create competitive advantage for its customer through its influence on the customer's value chain (i.e., must have a positive effect on its customer's costs and/or performance).

Outcome:
A full picture to the organizations value chain management.

The benefits of the (VCA) in IT sector (pharmaceutical company):

To help the IT department to assess its value chain for the purpose of evaluation improvement.

2. (7 s Mackensy Model):
Is a framework. Developed in the early 1980s by Tom Peters and Robert Waterman, two consultants working at the McKinsey & Company consulting firm, the basic premise of the model is that there are seven internal aspects of an organization that need to be aligned if it is to be successful

Objective:
Improve the performance of a company. Examine the likely effects of future changes within a company. Align departments and processes during a merger or acquisition. Determine how best to implement a proposed strategy.

Mechanism:
First we started by Description of 7 Ss Strategy: Strategy is the plan of action an organization prepares in response to, or anticipation of, changes in its external environment. Strategy is differentiated by tactics or operational actions by its nature of being premeditated, well thought through and often practically rehearsed. It deals with essentially three questions (as shown in figure 2): 1) where the organization is at this moment in time, 2) where the organization wants to be in a particular length of time and 3) how to get there. Thus, strategy is designed to transform the firm from the present position to the new position described by objectives, subject to constraints of the capabilities or the potential (Ansoff, 1965). Structure: Business needs to be organized in a specific form of shape that is generally referred to as organizational structure. Organizations are structured in a variety of ways, dependent on their objectives and culture. The structure of the company often dictates the way it operates and performs (Waterman et al., 1980). Traditionally, the businesses have been structured in a hierarchical way with several divisions and departments, each responsible for a specific task such as human resources management, production or marketing. Many layers of management controlled the operations, with each answerable to the upper layer of management. Although this is still the most widely used organizational structure, the recent trend is increasingly towards a flat structure where the work is done in teams of specialists rather than fixed departments. The idea is to make the organization more flexible and devolve the power by empowering the employees and eliminate the middle management layers (Boyle, 2007).

Systems: Every organization has some systems or internal processes to support and implement the strategy and run day-to-day affairs. For example, a company may follow a particular process for recruitment. These processes are normally strictly followed and are designed to achieve maximum effectiveness. Traditionally the organisations have been following a bureaucraticstyle process model where most decisions are taken at the higher management level and there are various and sometimes unnecessary requirements for a specific decision (e.g. procurement of daily use goods) to be taken. Increasingly, the organizations are simplifying and modernizing their process by innovation and use of new technology to make the decision-making process quicker. Special emphasis is on the customers with the intention to make the processes that involve customers as user friendly as possible (Lynch, 2005).

Style/Culture: All organizations have their own distinct culture and management style. It includes the dominant values, beliefs and norms which develop over time and become relatively enduring features of the organizational life. It also entails the way managers interact with the employees and the way they spend their time. The businesses have traditionally been influenced by the military style of management and culture where strict adherence to the upper management and procedures was expected from the lower-rank employees. However, there have been extensive efforts in the past couple of decades to change to culture to a more open, innovative and friendly environment with fewer hierarchies and smaller chain of command. Culture remains an important consideration in the implementation of any strategy in the organization (Martins and Terblanche, 2003). Staff: Organizations are made up of humans and it's the people who make the real difference to the success of the organization in the increasingly knowledge-based society. The importance of human resources has thus got the central position in the strategy of the organization, away from the traditional model of capital and land. All leading organizations such as IBM, Microsoft, Cisco, etc put extraordinary emphasis on hiring the best staff, providing them with rigorous training and mentoring support, and pushing their staff to limits in achieving professional excellence, and this forms the basis of these organizations' strategy and competitive advantage over their competitors. It is also important for the organization to instill confidence among the employees about their future in the organization and future career growth as an incentive for hard work (Purcell and Boxal, 2003). Shared Values/Super ordinate Goals: All members of the organization share some common fundamental ideas or guiding concepts around which the business is built. This may be to make money or to achieve excellence in a particular field. These values and common goals keep the employees working towards a common destination as a coherent team and are important to keep the team spirit alive. The organizations with weak values and common goals often find their employees following their own personal goals that may be different or even in conflict with those of the organization or their fellow colleagues (Martins and Terblanche, 2003).

Outcome
A full analysis covers almost all aspects of the business and all major parts of the organization.

The benefits of the 7 s Mackensy Model in IT sector (pharmaceutical company):

The IT department what are the component of the model and how one component is affected by changes in the other. Especially the "cause and effect" analyses of soft and hard components this will yield a very interesting analysis and provides the department with an in-depth understanding of what caused the change. On other hand improve the performance of the company and examine the likely effects of future changes within the company.

3.Core Competencies Analysis:

Core competencies are a set of unique internal skills processes and systems that provide competitive advantage in the market.

Objective:
To provides an opportunity to insightfully look at the skills, processes and systems of the company.

Mechanism:
A good way to think of core competency analysis is to list the values of both product and services from the point of manufacturer or distribution to consumption. In what activities or skills does your company add value better than competitors? Are you better at research? Distribution? Marketing or Selling? Or perhaps manufacturing? In what functional disciplines does your company add value for the customer?

Outcome:
A disciplined approach to identifying those activities that the business must Undertake to compete in the market. A process for evaluation and prioritization of the collective know how of the business. A process for identifying values and prioritizing the activities of the business in a way that lends itself to making strategic decisions on the use of company resources or the need for new or additional resources.

The benefits of the Core Competencies Analysis in IT sector (pharmaceutical company):

Provides IT department a review format useful in identifying the need for improvement in key strategic activities, practices and systems.

4. GAP Analysis:
Is a tool that helps a company to compare its actual performance with its potential performance.

Objective:
The goal of gap analysis is to identify the gap between the optimized allocation and integration of the inputs (resources) and the current level of allocation.

Mechanism:
The gap analysis process involves determining, documenting and approving the variance between business requirements and current capabilities. Gap analysis naturally flows from benchmarking and other assessments. Once the general expectation of performance in the industry is understood, it is possible to compare that expectation with the company's current level of performance. This comparison becomes the gap analysis. Such analysis can be performed at the strategic or operational level of an organization.

Outcome:
Is a formal study of what a business is doing currently and where it wants to go in the future.

The benefits of the GAP Analysis in IT sector (pharmaceutical company):

This helps provide the company with insight into areas which could be improved

5.Benchmarking:
Is the process of comparing one's business processes and performance metrics to industry bests and/or best practices from other industries. Dimensions typically measured are quality, time and cost

Objective:
To evaluate various aspects of their processes in relation to best practice companies' processes, usually within a peer group defined for the purposes of comparison. This then allows organizations to develop plans on how to make improvements or adapt specific best practices, usually with the aim of increasing some aspect of performance.

Mechanism:
1. Identify your problem areas - Because benchmarking can be applied to any business process or function, a range of research techniques may be required. They include: informal conversations with customers, employees, or suppliers; exploratory research techniques such as focus groups; or in-depth marketing research, quantitative research, surveys, questionnaires, re-engineering analysis, process mapping, quality control variance reports, or financial ratio analysis. Before embarking on comparison with other organizations it is essential that you know your own organization's function, processes; base lining performance provides a point against which improvement effort can be measured.

2. Identify other industries that have similar processes - For instance if one were interested in improving hand offs in addiction treatment he/she would try to identify other fields that also have hand off challenges. These could include air traffic control, cell phone switching between towers, transfer of patients from surgery to recovery rooms. 3. Identify organizations that are leaders in these areas - Look for the very best in any industry and in any country. Consult customers, suppliers, financial analysts, trade associations, and magazines to determine which companies are worthy of study. 4. Survey companies for measures and practices - Companies target specific business processes using detailed surveys of measures and practices used to identify business
process alternatives and leading companies. Surveys are typically masked to protect confidential data by neutral associations and consultants.

5. Visit the "best practice" companies to identify leading edge practices - Companies typically agree to mutually exchange information beneficial to all parties in a benchmarking group and share the results within the group. 6. Implement new and improved business practices - Take the leading edge practices and develop implementation plans which include identification of specific opportunities, funding the project and selling the ideas to the organization for the purpose of gaining demonstrated value from the process.

The benefits of the Benchmarking in IT sector (pharmaceutical company):

Allows organizations to develop plans on how to make improvements or adapt specific best practices, usually with the aim of increasing some aspect of performance.

6.Value Analysis
Value analysis is an approach to improving the value of a product or process by understanding its constituent components and their associated costs

Objective:
It seeks to find improvements to the components by either reducing their cost or increasing the value of the functions.

Mechanism:
To understand value analysis it is necessary to understand some key concepts:

Value: the ratio between a function for customer satisfaction and the cost of that function.

Function: the effect produced by a product or by one of its elements, in order to satisfy customer needs. Value analysis: methodology to increase the value of an object the object to be analyzed could be an existing or a new product or process, and it is usually accomplished by a team following a work plan. Need: something that is necessary or desired by the customer. Value analysis is based on the application of a systematic workplan that may be divided into six steps: orientation/preparation, information, analysis, innovation/creativity, evaluation and implementation and monitoring. The application of value analysis only needs to make use of basic techniques such as matrixes, pareto chart, pert and gantt diagrams, etc., in most of the value analysis steps. tion of looking attractive.

The benefits of Value Analysis in IT sector (pharmaceutical company):

A high customer orientation, focusing on those aspects of the product/service that better satisfy customer needs. Cost reduction by eliminating functions that do not supply specific advantages to satisfy customer requirements/needs. New ideas that arise from the creativity/innovation phase and may add radical changes and therefore competitive advantages that will be regarded by the market. A new systematic mentality to be taken into account for next designs of new products or to systematically improve the existing ones.

However, IT department should looks carefully to the problems that may arise during the application of value analyses can be of different nature. In order to arrive at a successful completion of the process, one has to bear in mind the following rules: Avoid making generalizations and superficial statements it is important to be precise at every moment. Collect, determine and examine all costs involved only when one is cost conscious will it be possible to determine the value of the thing being assessed. Make use of information from the best possible sources.

7.Profit Pool:
The Profit Pools method was given by Orit Gadiesh and James L. Gilbert.

Objective:
To help the companies so that they can focus on profits. This model also helps to create strategies for the profitable growth

Mechanism:
There are four steps that are required in mapping the pool which are:

1) Pools Boundaries are defined: for the mapping process the initial step should be identifying the activities that include the chain of industry value. Analysis should first begin at the individual firm level and then it will expand to include customers, suppliers and competitors. The traditional boundaries must be redefined. 2) Pools Overall Size is estimated: the overall size of the industry and the profits must be estimated correctly. As the boundaries will get redrafted after the first step, so it is insufficient to make the full picture. The performance of companies can be aggregated so that overall profits can be anticipated and build up. 3) Estimate the Size of each activity which is present in the pool: this step is the most challenging one in the process. The performance helps to understand the baseline economics of the firm. The profit for each activity will be estimated. 4) Check and Reconcile Calculations: this is the last step which includes profit estimation of the entity activities and comparisons of the total with the cumulative estimate of the profitability of the industry. The concept of this method is simple but its structure is complex. It is deeper in some segments of the value chain than in another. The framework is used to identify new sources of profit, make pricing, product, operating decisions etc.

The benefits of the Profit Pool in IT sector (pharmaceutical company):

It is essential to IT department to map and analyze the profit pool of an industry which can help the company to take strategic decisions effectively. With the help of profit pool the understanding of where, how and how much money is made can also be done.

8.Financial analysis:
Also referred to as financial statement analysis or accounting analysis) refers to an assessment of the viability, stability and profitability of a business, sub-business or project.

Objective
To be presented to top management as one of their bases in making business decisions

Mechanism:
Financial analysis assesses the firm's: 1. Profitability - its ability to earn income and sustain growth in both short-term and long-term. A company's degree of profitability is usually based on the income statement, which reports on the company's results of operations; 2. Solvency - its ability to pay its obligation to creditors and other third parties in the long-term; 3. Liquidity - its ability to maintain positive cash flow, while satisfying immediate obligations; Both 2 and 3 are based on the company's balance sheet, which indicates the financial condition of a business as of a given point in time. 4. Stability- the firm's ability to remain in business in the long run, without having to sustain significant losses in the conduct of its business. Assessing a company's stability requires the use of both the income statement and the balance sheet, as well as other financial and non-financial indicators.

The benefits of the Financial Analysis in IT sector (pharmaceutical company):

The financial analysis supports the companys ability to take the following example decisions: Continue or discontinue its main operation or part of its business; Make or purchase certain materials in the manufacture of its product; Acquire or rent/lease certain machineries and equipment in the production of its goods; Issue stocks or negotiate for a bank loan to increase its working capital; Make decisions regarding investing or lending capital; Other decisions that allow management to make an informed selection on various alternatives

9. Re-Engineering:
Is the analysis and design of workflows and processes within an organization. A business process is a set of logically related tasks performed to achieve a defined business outcome.

Objective:
To help organizations fundamentally rethink how they do their work in order to dramatically improve customer service, cut operational costs, and become worldclass competitors.

Mechanism:

Business Process Reengineering (BPR) is basically the fundamental rethinking and radical redesign, made to organizations existing resources. It is more than just business improvising.

 It is an approach for redesigning the way work is done to better support the organization's mission and reduce costs. Reengineering starts with a high-level assessment of the organization's mission, strategic goals, and customer needs. Basic questions are asked, such as "Does our mission need to be redefined? Are our strategic goals aligned with our mission? Who are our customers?" An organization may find that it is operating on questionable assumptions, particularly in terms of the wants and needs of its customers. Only after the organization rethinks what it should be doing, does it go on to decide how best to do it. Within the framework of this basic assessment of mission and goals, reengineering focuses on the organization's business processesthe steps and procedures that govern how resources are used to create products and services that meet the needs of particular customers or markets. As a structured ordering of work steps across time and place, a business process can be decomposed into specific activities, measured, modeled, and improved. It can also be completely redesigned or eliminated altogether. Reengineering identifies, analyzes, and redesigns an organization's core business processes with the aim of achieving dramatic improvements in critical performance measures, such as cost, quality, service, and speed. Reengineering recognizes that an organization's business processes are usually fragmented into subprocesses and tasks that are carried out by several specialized functional areas within the organization. Often, no one is responsible for the overall performance of the entire process. Reengineering maintains that optimizing the performance of subprocesses can result in some benefits, but cannot yield dramatic improvements if the process itself is fundamentally inefficient and outmoded. For that reason, reengineering focuses on redesigning the process as a whole in order to achieve the greatest possible benefits to the organization and their customers. This drive for realizing dramatic improvements by fundamentally rethinking how the organization's work should be done distinguishes reengineering from process improvement efforts that focus on functional or incremental improvement.

The benefits of the Re-Engineering in IT sector (pharmaceutical company):

A fundamental rethinking and radical re-design, made to an organizations existing resources which leads to the improvement to all business processes.

Competitive Analysis Model 1.Porter 5 forces:

Is a framework for the industry analysis and business strategy development formed by Michael E. Porter of Harvard Business School in 1979. It draws upon Industrial Organization (IO) economics to derive five forces that determine the competitive intensity and therefore attractiveness of a market. Attractiveness in this context refers to the overall industry profitability. An "unattractive" industry is one in which the combination of these five forces acts to drive down overall profitability. A very unattractive industry would be one approaching "pure competition", in which available profits for all firms are driven down to zero.

Objective:
To measure the attractiveness of the market.

Mechanism

The threat of the entry of new competitors Profitable markets that yield high returns will attract new firms. This results in many new entrants, which eventually will decrease profitability for all firms in the industry. Unless the entry of new firms can be blocked by incumbents, the abnormal profit rate will fall towards zero (perfect competition). The existence of barriers to entry (patents, rights, etc.) The most attractive segment is one in which entry barriers are high and exit barriers are low. Few new firms can enter and non-performing firms can exit easily. Economies of product differences Brand equity Switching costs or sunk costs Capital requirements Access to distribution Customer loyalty to established brands Absolute cost* Industry profitability; the more profitable the industry the more attractive it will be to new competitors

The intensity of competitive rivalry For most industries, the intensity of competitive rivalry is the major determinant of the competitiveness of the industry. Sustainable competitive advantage through innovation Competition between online and offline companies; click-and-mortar -v- slags on a bridge[citation needed] Level of advertising expense Powerful competitive strategy The visibility of proprietary items on the Web used by a company which can intensify competitive pressures on their rivals. How will competition react to a certain behavior by another firm? Competitive rivalry is likely to be based on dimensions such as price, quality, and innovation. Technological advances protect companies from competition. This applies to products and services. Companies that are successful with introducing new technology, are able to charge higher prices and achieve higher profits, until competitors imitate them. Examples of recent technology advantage in have been mp3 players and mobile telephones. Vertical integration is a strategy to reduce a business' own cost and thereby intensify pressure on its rival.

The threat of substitute products or services The existence of products outside of the realm of the common product boundaries increases the propensity of customers to switch to alternatives: Buyer propensity to substitute

Relative price performance of substitute Buyer switching costs Perceived level of product differentiation Number of substitute products available in the market Ease of substitution. Information-based products are more prone to substitution, as online product can easily replace material product. Substandard product Quality depreciation

The bargaining power of customers (buyers) The bargaining power of customers is also described as the market of outputs: the ability of customers to put the firm under pressure, which also affects the customer's sensitivity to price changes. Buyer concentration to firm concentration ratio Degree of dependency upon existing channels of distribution Bargaining leverage, particularly in industries with high fixed costs Buyer volume Buyer switching costs relative to firm switching costs Buyer information availability Ability to backward integrate Availability of existing substitute products Buyer price sensitivity Differential advantage (uniqueness) of industry products RFM Analysis

The bargaining power of suppliers The bargaining power of suppliers is also described as the market of inputs. Suppliers of raw materials, components, labor, and services (such as expertise) to the firm can be a source of power over the firm, when there are few substitutes. Suppliers may refuse to work with the firm, or, e.g., charge excessively high prices for unique resources. Supplier switching costs relative to firm switching costs Degree of differentiation of inputs Impact of inputs on cost or differentiation Presence of substitute inputs Strength of distribution channel Supplier concentration to firm concentration ratio Employee solidarity (e.g. labor unions) Supplier competition - ability to forward vertically integrate and cut out the buyer

The benefits of the Porter 5 forces in IT sector (pharmaceutical company):

Help the company to measure the degree of attractiveness of the current market or potential new market. This will help the company to take the strategic decision regarding this market.

3C's Model:
Is a business model, which offers a strategically look at the factors needed for success. It was developed by Kenichi Ohmae, a business and corporate strategist.

Objective:
To identify the strategic factors required for success.

Mechanism:
The 3Cs model points out that a strategist should focus on three key factors for success In the construction of a business strategy, three main players must be taken into account: 1. The Corporation 2. The Customer 3. The Competitors Only by integrating these three Cs (Corporation, Customer, Competitors) in a strategic triangle, a sustained competitive advantage can exist. Ohmae refers to these key factors as the three Cs or strategic triangle.

The Corporation
The Corporation needs strategies aiming to maximize the corporations strengths relative to the competition in the functional areas that are critical to achieve success in the industry.
Selectivity and sequencing

The corporation does not have to lead in every function to win. If it can gain decisive edge in one key function, it will eventually be able to improve its other functions which are now average..
Make or buy

In case of rapidly rising wage costs, it becomes a critical decision for a company to subcontract a major share of its assembly operations. If its competitors are unable to shift production so rapidly

to subcontractors and vendors, the resulting difference in cost structure and/ or in the company's ability to cope with demand fluctuations may have significant strategic implications.
Cost-effectiveness

Improving the cost-effectiveness can be done in three ways. First by reducing basic costs, second by exercising greater selectivity (orders accepted, products offered, functions performed) and third by sharing certain key functions with a corporations other businesses or even other companies.

The Customer
The Customer

Clients are the base of any strategy according to Ohmae. Therefore, the primary goal supposed to be the interest of the customer and not those of the shareholders for example. In the long run, a company that is genuinely interested in its customers will be interesting for its investors and take care of their interests automatically. Segmentation is helping to understand the customer.
Segmenting by objectives

The differentiation is done in terms of the different ways that various customers use a product.
Segmenting by customer coverage

This segmentation normally emerges from a trade-off study of marketing costs versus market coverage. There appears always to be a point of diminishing returns in the cost versus coverage relationship. The corporations task is to optimize its range of market coverage, geographically and/ or channel wise.
Segmenting the market once more

In fierce competition, competitors are likely to be dissecting the market in similar ways. Over an extended period of time, the effectiveness of a given initial strategic segmentation will tend to decline. In such situations it is useful to pick a small group of customers and reexamine what it is that they are really looking for. A market segment change occurs where the market forces are altering the distribution of the user-mix over time by influencing demography, distribution channels, customer size, etc. This kind of change means that the allocation of corporate resources must be shifted and/ or the absolute level of resources committed in the business must be changed.

The Competitors
Competitor based strategies can be constructed by looking at possible sources of differentiation in functions such as: purchasing, design, engineering, sales and servicing. The following aspects show ways in order to achieve this differentiation:
Power of image

When product performance and mode of distribution are very difficult to distinguish, image may be the only source of positive differentiation.
Capitalizing on profit- and cost structure differences

Firstly, the difference in source of profit might be exploited, from new products sales etc. Secondly, a difference in the ratio of fixed costs and variable costs might also be exploited strategically. A company with lower fixed cost ratio can lower prices in a sluggish market and hence gain market share.

The benefits of the 3Cs Model in IT sector (pharmaceutical company):

To develop a frame work for the success factor of the firm. This will help in taking strategic decision in order to enhance and strengthen those factors.

3.CPM ( competitive profile matrix):

A model identifies firms major competitors and their strengths & weaknesses in relation to a sample firms strategic positions.

Objective:
To evaluate the firm strategic position comparing to its major rivals.

Mechanism:
The same mechanism of the EFE and IFE.

Outcome
A weighted score ranked the firm strategic position comparing to its major rivals. But just because one firm receives a 3.2 rating and another receives a 2.8 rating, it does not follow that the first firm is 20 percent better than the second. The matrix just gives an indication of the strategic position of the firm.

4. Strategic Group Mapping

Strategic group mapping is used for the purpose of displaying the competitive positions that rival firms occupy in the industry.

Objective:
1. Identification of close and distant rivals. This is important to know because close strategic groups have stronger cross-group competitive rivalry. 2. Identification of attractive and unattractive positions of the firms in industry. This attractiveness depends upon the industry driving forces, prevailing competitive pressures and profit potentials of different strategic groups.

Mechanism:
1. Analyzing the overall industry and indentifying those competitive characteristics that differentiate firms in the industry. Variables selected as axes for the map could be identified during the process of industry analysis. 2. Variables selected as axes for the map could be product-line breadth (wide, narrow), price (high, medium, low), quality (high, medium, low), geographic coverage (local, regional, national, global) etc. Using two-variable map, plot all the firms in the industry. For example price (high, medium, low) can be taken on x axis whereas product-line breadth (wide, narrow) on y axis and all the firms can be plotted accordingly. 3. All the firms that fall in the same strategy space should be allocated to the same strategic group. 4. Finally, sketch circles around each strategic group. The size of the circles depends upon the share of a strategic group in the total industry sales revenue.

The benefits of the Strategic Group Mapping in IT sector (pharmaceutical company):

1. Strategic group mapping helps in identifying the strategic group a firm should consider entering. 2. It helps in analyzing the type and level of entry barriers the firm will face. 3. It also examines the number and type of entry barriers the firm will face.