The Better Business Analysis Institute.
Presence, the Better Business analysis Podcast with.
Hi everybody. This is Ben from the Better
Business Analysis podcast and today we are going to be talking
about strategy. I'm going to start this episode
by thanking all of you out there who have taken time to listen to
the podcast. I think we've hit 2000.
Listen so far and with a decent bunch of you who subscribe and
listen every week. So look, shout out to you people
for firstly you know following, but secondly just making an
effort to improve yourselves and learn a bit more about business
analysis, so you know pat yourselves on the back because
that's what it's all about. OK.
So this week we're going to talk about strategy.
This is completely if we. Drop down to data which is kind
of the lowest level if you like on the spectrum in terms of
business analysis we. Dropped all the way down to data
last week and this. We're going all the way back up.
So I'm trying to as you can. See be quite broad in terms of
the. Topics we cover and some are
going to resonate with you. More than others and that's OK.
And that's that's the point. So if you.
If you see a topic and you think probably not for me, then I can
understand if you're not going to listen to that fully.
But equally I think that it shows you that business analysis
should span quite. A distance in terms of depth and
also worth, so yes. Today it's going to be the
complete flip side of data. However, the reason why this is
quite a good. Topic to follow data is that
data is getting. Closer to strategy, so.
Data is starting to. Actually inform strategy.
Not through committees, not through.
Crystal Reports spreadsheet or a Power BI dashboard that you know
that Samantha and Level 3 and the management team tells her
manager about and then it might get to the SLT or the executive
members who then make a decision.
So data is is getting. Position where it actually is
starting to be, if you like intelligent business
intelligence what we talked about years ago is actually
starting to to really come to fruition for those companies
that are bigger and where the data team is miles away from the
executive team, which is I see it.
More often than not. OK, so strategy, what is
strategy? Under in the Better Business
Analysis Framework. Strategy.
If you're looking for where this fits, there are.
Obviously Skills, you. Need to engage with strategic
leaders like leadership and actually all good, soft and
hard. Skills we talk about.
You do need to be able to communicate.
In a certain way to management, and it's usually in summary
form. So that's, you know there's some
there's some fundamental skills that you that you need then in
the. Delivery journey, we're really
talking about strategic and enterprise.
Analysis here. So even though we say strategic
looking out strategies, the link between the organization, what
what they see strategically in the market and and how they're
going to flip that and look down to the organization which is
actually called enterprise analysis.
And then further down we talk about some of the approaches and
techniques or techniques and approaches.
There are some very. Good strategic templates and
approaches that we. Steal from the world of business
so. These are templates that you if
you've started. Doing BA, which I hop on about
and I know a few of you. Are doing your MB A?
I have good then these are templates that you may have
come. They I would say that more often
than not, one out of every 5B A's I meet know about this
topic. So there is a huge.
Portion if you like the other 80% that.
Are not really aware that this is how.
Projects are put together. Or how strategies put together,
so I thought it would be really. Important and relevant and it
actually do you know what it would help?
Me personally, know that you've become a better BA because
you've actually thought about how your piece of work fits into
the strategy of your organization, your business,
even into your community or your market.
OK, so without further ado, let's get started.
This week and and we're going to be talking about strategy.
So what do we talk? About when we talk about
strategy, what is it? So strategy in the simplest
terms is a plan of action designed to achieve a long term
or overall aim. OK.
So in terms of business or organizations, it is the plan to
achieve goals and so the? In the BA world, the way in
which we talk about those goals as we talk about them in terms
of strategic objectives and that's a really important term
there. So strategic objectives.
Are the long term. Goals that your organization has
planned. To do.
And so on the work walk down from those.
Strategic objectives to. Show how they fit into some of
the methods, tools and techniques, and process steps
along the way for a BA, and then we'll work.
Back up to how do those strategic objectives come about?
So if you go down and let's just say.
I know we haven't defined what they are yet.
But we have. Strategic objectives.
They are smart objectives. You know, go onto our blog if
you're not sure what SMART stands for.
It's an. It's an acronym.
And so they are measurable objectives, if you like, which
are defined to achieve A goal a very.
Clear. Goal by a certain time frame and
they can be measured and so that might be things like increasing
customer engagement by 20% by implementing new web channels
including a new website at by the end of 2026.
So these are the kind of usually they're written as these kind of
outcomes, they're like. Build a new website and with a
little bit. Of finesse or be a.
Helping you along the way, you can turn them into what we call
smart objectives and these are strategic objectives and you'll
see these, the executive team will will include these in their
strategic plan, sometimes known as their five year plan and
these will be communicated, they will communicate and agree these
with. Their.
Or whoever is the controlling interest of the organization and
that you know, helps them reach their financial targets, also
growth targets, whatever the other targets are in terms of
what they're trying to achieve in terms of the organization and
its current. In its current form, I've been
involved both helping executive teams put together strategic
objectives. I've obviously been a BA who's
taken strategic objectives and implemented them as part of a
program of work. But I've also actually been on
an exact presented objectives. To to a board and gone through
that process. So I'm gonna show you those
different perspectives, how they come about, how they are, how
they are formed, and then how they are used.
And then more importantly, how do we then use those later?
What are we using these later? For are we and that will.
Feed us into the world of benefits realization.
You probably have heard that term also done notoriously badly
by everyone. But, but from the executive
point of view, strategic objectives are what they've said
they're going to achieve and strategies do evolve.
But ultimately that will measure whether or not the company's on
track and the that will have usually have.
Implications to the strategy? Team as well as the executive
team and that they will, it will be their measure of how well
they're managing the company. So that's quite important as
well Okay. So that gives you just an idea
about what these. Things are now let's talk about
where where they come about. What it what?
How do you even? How do you even do this thing
called strategy and that starts all the way back?
To what is the point? Of the.
Organization that you're working.
For what is its purpose? So every company has a purpose
and they have. They define that purpose and in
terms of its. So they might have a mission
statement and the mission which is sometimes defined as their
purpose. Is to do.
Something and they become a little bit fluffier.
As the company evolves and becomes bigger, but we'll take
some really basic we'll just make it take a basic example of
a of a mechanic for example, which I always like to use an
example in the real world, but also something simple for us to
understand and mechanics mission statement might be to provide
the the most cost effective as quality service in the lower
heart region for example, that might.
You know, mechanical services in the lower heart region, that
might be the admission statement.
So that could be, I don't know. They'll have a slogan behind it,
which is no one bids our quality and price, and it could be
Mike's Mechanical Store and so this.
There, they've got a very, they know what their brand is.
This is all linked up with brand by the way.
They know what their brand is, they know what their mission is.
They want to be cost effective. So they're going to be very lean
and they suggest options to customers that give them a
choice so they can feel like they're saving and they actually
are and they're going to provide quality.
So their strategic positioning there?
Is that they're meeting where cost and quality meets.
So they obviously wanna have high quality and high cost.
It's very sorry, low cost, very difficult.
But they've decided their sweet spot is somewhere in the middle
there. So they're not the cheapest and
they're not the. This quality, but they're where
cost and quality meet and that might be attractive to the
market in lower Hut for example. And so that is that's their
sweet position and they advertise around those two
points and they create a brand around those two points and
maybe their logo points to those things it has representatives
like representations of. Someone getting value for money,
like a dollar sign for example for example, and then a quality
sign with maybe a tick. So it's like a dollar and a tick
logo and this is how you know you start.
To. Give briefs to marketing.
Companies who start to develop your logo and your mission.
And you know that could be a slogan, so but, but in terms of
we. Just come back to that mission
statement which is to. The most cost effective and
quality service in lower heart region for mechanical repairs
for example, that is the mission statement and that mission
statement, an important thing around that mission statement
even though we've gone. All the way.
To, you know, how do you define a business that doesn't change
so that that is the essence of existence?
And so if that was going to change, then the business model
fundamentally may. Or that what we call.
Pivoted. You've heard this word quite a
lot, where you pivot and you make a change to mission.
So that doesn't happen often at all.
Especially for established businesses, it happens often for
startup, but once you've got your sweet spot.
What we call your. Customer your your kind of
customer market fit. And you've, you know, you're
starting to generate income and the markets responding.
The mission of your company very rarely really changes, and
that's something fundamentally changes, like you start to
acquire the mechanic. Store acquires a car lot.
And then they might change their mission around providing they
might decide that they're all about cost effective in quality.
And so that might expand to include.
Cars. Or they could change completely
change their mission because they've changed their business
model. So just I guess.
What you need to take away from that is that the mission
statement of the company does not change often.
That's its essence. And without like a major, major,
major, significant event. Or something that happens in
response to the market. Aka, they're not making any
money. They need to pivot.
The mission of the company remains solid and even
throughout that turmoil. You'll find that bigger
companies, you know, the Apple Microsoft's their mission
statements don't generally change that often unless they're
changing their it's very, very much associated with their
brand, their essence and purpose.
Of. Existence.
OK, so for Mike's mechanics store or?
In mechanical repair center if you like, they have, they've
defined that so that that that's in stone.
Now the now we think about how we execute on our mission and
how, you know, what are our goals and these.
Goals for a company when they're sitting around deciding with.
Owner with the with the board if they're bigger is what am I
trying to achieve. What does success look like for
me? And success would be defined
probably. Financially that you're making X
amount of dollars. It's, it's usually talked about
sometimes in terms of a word we call margin and so margin is how
much. So if you take away how much
money you're generating, so that's revenue and you get rid
of your. Costs margin is how much the
difference effectively the. Difference there we we can turn
it, we can call it that word is actually profit.
But in terms of margins, how much you're adding on to your
cost base in order to generate a profit?
So your cost might be X and then you add 20% and that's your
margin. So margins usually talked about
in terms. Of percentage.
And you need to make, you know, a decent amount of margin.
A lot of shops. Like if you say homeware stores
for example. Some of the margins, so how much
they pay for each individual item, can be marked up somewhere
between 100 and 200%, so that gives you an example and that's.
When we talk about margin, which is one of these businessy words,
it's really important to understand the context in which
you operate. So a home wear store where
you're walking. In they don't sell.
That much of some of the items in the store.
So they they've got some items that sell really well.
And they'll probably have lower margin, lower cost items and
then they'll have other items and they're like, I don't know,
statues or whatever. And they they have marked those
up 100 to 200 percent generally in order to make profit unless
they're. A very inefficient organization
organization like or a franchise like Bed Bath and Beyond, which
is actually having financial problems at the moment where
their margins might be might be less So they're about having
more people volume we we call it and then lower margins and
volume and margins are two very important words in business and
they are talked about quite a lot.
In terms of your strategy and the reason why margins and
volumes are two words that you should understand is you can
apply that to any kind of business.
So where they are Mike's mechanics, the volume would be
the amount of cars they're servicing.
So the amount of customers and therefore cars that they're
servicing, thinking about that and main, they could have a
commercial contract, so it could be.
One commercial contract that they've got.
Which could be sending all. Of their vehicles through, so I
think they would measure. The volume through the number of
cars that they've serviced as opposed to customers and then
the margin would be, well, OK, I've paid my staff, let's say
I've got Mike myself and you know and I need to be able to
make my wage. So if I minus my wage.
The cost of. The items I've used to repair
the car so the hours spent. Then I then I add a margin and
and you can measure and say well.
Just simply in a in a in terms of business I might mark up 50%.
So every part we buy we add 50% margin to that.
And then my labor, you know the the cost of running me plus the.
You know my wages plus 50%. We know that if we mark the
parts up 50% and my wage up 50%, we will cover not only the cost
of running this shop like electricity, ACC, all the other
bits and pieces and then we walk.
Away with a profit margin of maybe 10%.
So that means that how much money I'm actually making off
the company is 10% of all revenue that comes through.
Now that can be quite complicated.
Very hard to say on a podcast as opposed to spreadsheet, but
margin is a very good way of saying.
If. We don't make X amount of margin
on top of our cost. We won't be able to survive.
So it's just an easy figure in business to talk about.
And so margin is used often and then volume is another thing
that's used quite often in terms of the amount of custom that you
have. And we jump over to.
Petrol for example, that's a really good example.
I've worked in the petroleum industry and literally it is
volume of petrol and the margin how much you're adding, they
work out the cost to get the petroleum petrol to the pump and
and they have a figure for that and then they know that when you
know the price. Of petrol goes up, plus their
costs. Then they might add 1020% margin
and they'll in that case actually margins are quite a lot
in that and the petroleum industry.
Cases or owns the actual station and obviously the distribution
behind it and all the rest of it.
But as petrol fluctuates you know Z Energy, BP will add a
margin to that. And so they can measure
basically the volume times that margin and that gives them an
idea about how much money they might be making.
Obviously those companies both can have asset cost maintenance,
potentially lease costs, a shop cost paying the person.
So there are other things, but that's why.
We talk about margin quite simply because it's something
easy to just work out. We know what our targets are.
OK. So I've gone down this deep hole
in terms of margins. And the reason that's important
is that things like margin and volume are used when we define
our strategic objectives that they're simple terms.
So we know we want to increase margin by 1% or we want to
maintain margin by X is common. For our company's.
Strategic objectives. And then volume, it could be we
want to increase the amount of customers we've had or the
amount of powers we repair by 20% and that's volume.
So that's kind of. The two figures where?
Businesses know now are they making any money?
And then of course they are just, you know, two figures, if
you like, that are. Included in strategic.
But there are a number. There was actually.
More of a framework or a process that that the business goes
through. So we've talked.
About this mission and we've talked about some of the.
Attributes that might go into defining a vision, sorry,
defining our strategic objectives.
But one thing that's missing in between the strategic objectives
and our mission is what's called the vision.
And the vision is this is also there's a soft or hidden.
Strategic vision behind it. So the strategic vision is the
long term goal. So singular for the business.
So it's where you want to be in the future.
So where? It's talking about where we are
now and what we want to achieve. In the future, the long term
future and from there we then we then elaborate on those
measurables through strategic objectives.
Its purpose for existence. So you have a mission again,
which is what the business does its.
Then you have the strategic vision which is the long term
goal for the business. So a tangible.
Where you want to be in the future and then we have
strategic objectives that come under that.
Which is the measurable kind of goals which might be 1-2,
usually defined as either 1/3 or five year strategic objectives,
and that depends on the. The, the, the company and
usually the CEO in terms of what the length of those strategic
objectives are. Cool.
Now the other word that you may have heard in business terms are
values and so values are guiding principles that dictate how a
business operates. It's like now, so in order to
realize the the vision of the company.
Values are defined and so you usually.
Find that when a vision is defined, and I would say that's
when a new leader of the company comes in, they have a.
It's really. They own that, if you like.
If you like the executives or sorry, the board.
Or the owner owns the mission. The executive team.
Generally and the CEO or whatever the leadership.
Structures of your organization owns the vision and then the
vision is like the kind of what now is.
They have values that come along with it, so you usually.
Find that branding and vision statements and values will come
about when you usually have a new leader of the company
because it's usually there five years and that's generally how
long you know. Average as CEO were last so.
That's kind of their their plan of attack and that's generally
how how things work. All right.
So I've just given you kind of a really good snapshot in terms of
how all. Those what you may have thought
of as buzzwords. Actually mean something and
where they come from so now. You've got your executive.
Team They have to find their vision.
And now they need to establish goals for the company and the.
If you like the strategic objectives where we formulate a
plan of action, an actual, you know, like I said, miserable set
of goals that we are going to achieve.
And we don't do. That without in an absence, in a
vacuum. We don't just look at our own
company and go well, OK, let's avoid what's happening in the
market. Let's just focus on what we want
to do. It's very rarely that a company
will do that unless they're hugely big and and have a huge
monopoly in the market. So strategic objectives are
strategic and and so when we talk about strategic business
analysis, they are looking, they use techniques, they look out
and then they look at the company internally to how.
Is this actually and plan the strategic predictive is going to
come about for the company internally.
So let's talk about some techniques that we would use to
define our strategic objectives, right.
So there are from 1:00. Opinion online if you like.
There are 7 strategic planning models.
So what we're talking about is strategic planning.
That might be the word that you hear.
And usually, I mean this can take about 3 months, three to
six months from an exec to actually get it get right.
Especially if there's responses to the market or pressure in
terms of. Profitability.
They might take a while to get these right.
So this particular one of these articles that I've looked at is
what I was looking for to not go through the kind of 1516 plus
different frameworks that I know about.
Just talk about these seven models and they talk about a
basic model, which is what we've just talked about.
With the kind of mission statement, the vision, the
strategic and then there's just a set of actions that you go
about. Then there's also the second one
which they talk about which is the issues based model where
it's also called a goal based kind of planning model and it's
it's a, it's an extension of basic strategic planning, but
it's a bit dynamic and very popular for companies that want
to create a more comprehensive. Plan if you like.
And that is really starting with a technique.
Called the SWOT analysis, which we're going to get into soon.
And a SWOT analysis is where you assess your organization's
strengths, weaknesses, opportunities, and threats.
So strengths The S. Weaknesses, the W opportunities,
the O and threats being the T and that is a prime approach and
technique that you as a BA should understand and so that
this is called the issues based model and there there.
Are others. And I'm going to just quickly
going all the way up and just talk about these seven models.
First, just so you know, there are different ways in which
companies approach strategic planning.
One is called the alignment a model and it's around looking at
potential and terms of competitive potential and
service potential and strategy execution.
There is another one which is called the self organization
organizing model. There is another model which is
called the real time model. There's one called the
inspirational model and so these are the seven so basic issues
alignment sorry scenario that one out self organizing real
time and inspirational and so these.
I'm just saying. Words right now which mean
nothing to you, but the reason these are important is that
there are different ways in which companies have embraced
this, and this will generally be.
Dictated by the CEO or the leader of your company, but they
all are achieving the same point, which is the output of
this process are strategic objectives.
OK. So I'm going to talk about now
go down to some of these techniques which are used by all
of these models in some way, shape or form.
And one of the. We just touched on the the.
Spot analysis before and and I want to.
Talk about that in more detail, because that is.
What Bas use when doing enterprise and strategic
analysis. Now the reason why SWAT is good
is it's looking both internally enterprise and externally in
terms of strategy. And as I said, the SWAT is an
acronym that stands for strength, weaknesses,
opportunities and threats. So strengths refer to internal
initiatives that are performing. Well, So what do we do?
Well, what could we do better? What is actually working really
well? And this needs to be a massively
honest conversation. I have been involved in a few
actually executive conversations, either in the
exec or with an exec, and they've all been very, very
honest here. Usually this is not this is the
reason it's done behind closed doors, by the way, because
sometimes this is so frank that if a team member heard this,
they might feel like that they were a strength the organization
or their group was. But the executive team doesn't
see it that way when looking at these kind of high level
measurable goals. So an example or strength might
be for our mechanics might mechanics store and I do
recommend that they should do this technique and might be the
NPS score so they measured their customer happiness.
Or they could use. They don't use NPS.
Which is you know more of a corporate measurable.
They might look at the Google reviews and say well look we've
got a four plus reviewer or five star rating and say that's
really good compared to our competitors.
So they could say, look the average mechanics.
A Google rating. And it's quite easy.
Just look up your five most competitive organizations or
mechanical stores. In lahat.
Or look at them all. Look at their Google star.
Rating list yours and there. Are you in the top, upper
quarter? Are you in the top?
There were 10. Are you in the top, top three?
And if you're not then that could be a witness and that
could be a goal for you is to get into that top three.
But if you are that could be a strength.
So people know that you are, you know you have happy customers
and that could be a strength. So you need to leverage that.
That would be, you know, talking about our mission to be cost
effective and a quality service that could link quite.
Heavily to those two. Those two two parts of our
mission statement. To suggest that we're actually
on track, so the strengths are almost internal things that we
we we have. And and it could, it doesn't
mean that it is done, it means that it is a specific strength
that we could leverage. So we could.
Make even better, W is weaknesses.
So again, it's internal. It's saying what is
underperforming. And again, when I just mentioned
that you wouldn't, This is why this is not an open door
conversation is that you talk about improvement.
You. Could say look.
The financed the finance team or finances, if you like.
The management of our finances has been pretty bad this year.
We didn't have the information on him we needed.
We didn't have the reports. We needed and we made some
informed decision that informed and uneducated decisions as an
executive team and we need better financial.
So that's a frank conversation that.
Is the conversation that you want to have at the executive
tech. Now, if you were having that
with your finance team, they might be demoralized to hear
that. And you're not talking about the
individuals and you're not even talking about the performance.
You're just talking. About it at a company level,
which is why this is, you know why these conversations do
happen at the exec and and aren't really on the floor.
Or if you're going to communicate this to your team,
your management team as I have, you might soften that a little
bit to not make anyone feel devalued as a result of these
conversations. But the executive team, the, you
know, the the owners of a small. Company.
Need to be have these frank conversations.
This is no time for patting each other on the back.
So weaknesses are what underperforming?
Why are they underperforming? What can be improved?
What resources could we inject in there to improve them?
So moving a weakness to a strength.
Is, is, is great have you need. You always have weaknesses and
you know and you can measure that in terms of ranking against
our competitors. But it could be the fact that
our, you know, for example for Mike's mechanics, it could be
that we just, we just have a really bad website and that
people we know that people are moving more to to the web
compared to our competitors. Our website visibility is low
and we just don't spend any money on it.
So maybe we need to invest in that area.
So that this is how you know you start following these goals.
That we talked about strategic. The next part of a sweat
analysis is opportunities. So you look.
So the opportunities result from your strengths and.
At your what you can improve and what you're doing well and then
what does that mean in terms of your opportunities.
But you are looking at that in an external mindset.
So you're saying what are the opportunities in the market?
How do we fill a gap? In the market.
How do we improve our? What reasons?
We need to improve our weaknesses and so this is and.
It could be around, you know, the fact that we're going to
offer something more than our competitors around.
Price or offers. So this is really around.
What opportunities do you have and it usually is around looking
externally it could be opportunities as a goals that
you're going to set, but I do like.
The idea of looking them at opportunities in the market,
where could we fill a gap? We could find that an
opportunity could. Could be, for example, we knew
that, a competitor. Was struggling.
It could be to acquire that company, you know that is the
kind of strategic planning that is really.
Worth having a conversation about and actually makes a
difference to your company. It's not just make things better
and then finally threats. So threats are.
Areas with the potential to cause problems.
So they they're not weaknesses, they are external and out of
your control. And so this could be the global,
global pandemic. So a lot of people who wouldn't
have done any strategic planning over the COVID situation, you
know, they were at a disadvantage, whereas once COVID
came about strategic planning should have been kicked off for
these companies. It was like, how are we going to
deal with this? And they should have done a SWAT
analysis and looked at opportunities.
Companies that pivoted as a result of SWAT analysis and
changed how they serve their customers, for example, did
better than those who just wrote it out.
And so this is it. Could be you should always be
looking at things like global warming and global pandemic,
just in case, but also just more simple.
Day-to-day things, which is what's is there a recession
happening happening in your area, What are the market
trends, competitors outperforming us, Is there a
change in our industry which like the spread of AI for
example, might should be in a lot of SWOT analysis where your
business might be relying on, I don't know people doing manual.
Tasks and New Zealand, the petroleum industry, for example.
There've been legislation that's talked about the fact that we
won't necessarily mindful anymore fossil fuels outside New
Zealand and there's a whole industry in teriyaki that relies
on that. So that would be a that should
be a threat on any company that's in that region that
relies on that external factor. So that's what we're talking
about. So you generally draw into into
full quadrants. Like with a cross with a.
W sorry, an SWOT and you fill that in and you know it can be
represented on a PowerPoint slide and then that's great and
how you you then do that? Before implementing a large.
Change or doing your strategic objectives.
And it's a really, it's a really simple technique and that matrix
is just really used. It's really a decision making
process and and the execs should argue over it and no one should
necessarily agree 100% and then we and then once you you know
settle on what that's going to be that then it can feed into
your planning. So that's one.
Very, very. Great technique, the SWOT
analysis and as Bas you may help the organization or the exec
team do that. So the other technique that I
think is that I love is called the Porters 5 forces framework
or the Porters 5 forces. So we stuffed that up.
Five forces. Developed by Michael E Porter,
the framework outlines 5 forces that you have to be aware of and
monitor OK. So this is.
This is. Really cool.
A really cool framework for an organization that is in
existence, but it's also actually really great when
you're trying to develop a new business and find an
opportunity. So what the five forces are
about? Is 1 the competition in your
industry OK? How?
These are things that just are true?
OK, these are things that you can examine, right?
Up well, and these are things. That you, as a BA work on a
project you may never, ever think of.
If you're working at a government department, for
example, your competition could be minimal or your competition
is private. Private companies who are
offering services that you and the public service are just not
offering as well or you know, at the right price point, but the
competition here is fantastic. So competition in the industry
would be real, it would be OK. Let's think of competition in
terms of Mike's mechanics. What is the competition in the
mechanical, you know, the mechanics industry, full stop in
New Zealand is that? Is there a lot of competition?
There are a lot of companies. What is our competition in our
immediate area? How many other mechanical?
Stores are there and and you know.
This is something that you should think about before
entering into into the industry or into that particular format,
but you can always always changes, so you need to like I
said. Monitor and be aware of these
things because competition could greatly increase.
There could be a whole lot of mechanics that leave their
apprenticeship at various larger mechanical stores and start to
open up their own garage, you know, to service cars.
And now you've got a bit of a problem also how competition is
actually formed. So in New Zealand we have the A,
A which is the automotive association and they for example
have a very, you know, great network for fuel discounts but
also car repairs, insurance and they also, you know if your car
breaks down you give them a call.
And there will be an equivalent in the states.
And so for example, they've already got quite a lot of
customer reach there. So the idea that you know, they
have these. A.
A service centers where you can take your.
Car that could be. You know, quite a threat to
local mechanics for example. Or if for if there was a change
in the market and one of the petrol companies decided to get
back into mechanical repairs, that would change the
competition in the industry. So that's number one, the
competition. Think about that.
That's really, really important. The other the other four areas,
I'm going to explain what what those are.
So there is #1, the threat of new.
Entrants into your industry. Or into your market.
OK, so you can. Measure that because A.
Threat A. New entry into your market
results and increase pressures on your price and cost.
So we talked about margin and volume so that.
Have a new entrance of a new mechanical store opened up down
the road in the same area as ours in terms of Microsoft.
You're going to. Have a response, an economic
response in terms of price competition potentially.
And they're competing on price because I'll have to if anyone
they want any customers, they can't really be more expensive
than your store. So they'll probably be very
similar and then you might compete on that and the other
one, so that can be on your margins and then your volumes.
And the reason why I've introduced these words earlier
as they're useful now is that the amount you've only got, I
don't know 1000 people in that area and now, you know used to
have 100 people, sorry, used to have the market share, your
percentage of market share in that.
Area could have been 80%, so of those 1000 people, if you like.
You know 80% of them went to you and now and you know the rest
went further. And went into the city or
something for their cars to be repaired.
And now with this new. Store that's opened up down the.
Maybe you've got a chance of losing half of your market share
that they're offering the same price and the same quality of
service and they over time you could start to.
Lose your market. Share So the threat of new
entrants is what is that threat? And so that's important, but the
reason that is. Important is that when you get
down into further detail around the thread of new entrants, it's
around what are the what, What would it take to launch, what
would it take to launch a new entrance.
So it's not just the threat of it is also what is the
likelihood of someone entering that industry?
So I'm going to give you a completely different example
where we talk about search Google search.
The chance of a new industry entrant and to search is so low
because Google has all the infrastructure investment and a
monopoly that if someone tries to create search another search
product. You know, it has to be 10 times
better before anyone's gonna use it, right?
It's gonna take years for that to get established.
And that is why eBay. That is why they don't have to
make their interface. Any better?
There's also other reasons around people getting used to
new interfaces. In New Zealand we have Trade Me,
which is the equivalent of eBay. It's probably one of the only
places in the world where eBay isn't massive and Trade Me is
the New Zealand equivalent. Now what's interesting there is
eBay is so huge, yet they struggle to enter into the New
Zealand market. And they struggle to enter
because trade me already. Has the market.
Their market share is so high everyone knows it and for eBay
have made a determination that they weren't.
You know they're not even going to try and push.
Into New Zealand. The benefit?
It just wouldn't be worth it. And they're only going to get X
amount of market share, so that. I mean that might change but.
That's what we talked about in terms of threat of new entrants.
It's very important to think about.
We talked about the competition in the industry that exists.
The more difficult, obviously the more competition means the
more. Difficult it is to to.
Create value in the market. So in the supermarket industry
in New Zealand, there is minimal competition in the industry and
threat of new entrances #1 threat of new entrance into the
market is low and So what? That's why grocery prices are so
high. In New Zealand because there
isn't. There really isn't any
competition and for someone into the market is really low and and
I've just read an article yesterday around the Commerce
Commission actually finding quite a lot of money like we're
talking about 1,000,000 companies suppliers to these big
supermarkets. For not, they were not supplying
startup companies. So startup companies that wanted
to enter into the market were being hosted out by the
suppliers who said we can't sell you cheaper than the supermarket
AKA, and we can't, we can't allow you to make money or
otherwise the big players are going to stop using our
products. And so there has been a bit of
market unfairness there. And so you know, again, it's
very, very difficult. In the supermarket industry for
people to enter into the market and that's why I find these
really interesting because we don't read an article, I
understand why. And so we're going to get down
to some that relate to that supermarket industry right now,
the next number 3. So we've covered off threat 1-2
competition and three. Is the bargaining power of
suppliers OK? So suppliers can wield more
power if there are less alternatives for buyers.
Or it's expensive, time and consuming or difficult to switch
to a different supplier. So in the example of mic
mechanics, we might be supplying, I don't know,
batteries or we might be supplying something that's.
Critical to most cars that we service.
So we're servicing Japanese cars and we know that a lot of people
have Mazdas, then Mazda supplying those parts, those
genuine Mazda parts to us, for example, if there is, if we can
only buy it from. Mazda.
We know they're going to fix price, so we have to pay that.
So the bargaining power of the supplier is really important if
there are minimal suppliers, if there aren't many supplies to
get the parts. You need to deliver your service
or your product. Then there is huge bargaining
power on the supplies and you're going to be paying.
More and your costs are going to be higher, so you need to
understand the bargaining power of the supplies before entering
into the market, or just build that into your cost model.
Inversely, #4 is the bargaining power of buyers, so buyers can
wear more power. At the same product or service
is available somewhere else with little or no difference in
quality, OK. So in that case with our
mechanic store, if there is other mechanic stores that are
providing exactly the same service that they see it, they
see the quality of these other mechanical stores that are
service centers that are providing.
High quality, which is really important in mechanics because I
would say that there is a huge range of quality.
But let's say we. Guarantee that I don't know.
Someone left our mechanical store and said they're now the
best and they're down the road. Then the bargaining power of.
Of me as a consumer, the buyer, I can wield more power because I
can go, well, I'm going to go somewhere else.
Or are you going to give me 15% off if I go somewhere else?
Like you'll see that Bunnings for example offers 15% discount.
If you find their price anywhere else, they've decided to be, you
know, cost effective and so they've had to offer that to say
I don't go to. What we have might attend and
New Zealand, which is a hardware store.
So that's the binding power of the buyers and then finally.
And this is really important. It's the threat of substitute,
OK. So if another company already
covers the market needs, you have to create a better product
or service. Or make it available at a lower.
Price at the same quality in order to compete.
So it's it's similar in terms of having another substitute.
So if I want to. If.
If someone is offering exactly the same as me the only.
Thing I can do, especially if it's.
Better than my the better than what Ioffer is to make my make
it cheaper. At the same quality in order to
compete. So knowing how many, it's not
competition necessarily, it could just be something that's a
replacement service, so. An example.
It doesn't really relate very well.
To our mechanical. Store, but let's say with the AA
service centre. If AA provided, OK, we're gonna
do a package where we provide. Roadside assistance A a package
fuel discount servicing, car servicing and insurance for a
package price of X that is a substitute.
And so I would buy that and that would mean that as a result that
whole cost car servicing, you know the only way that anyone's
going to come to us if that's that's a great deal that I've
packaged. It's going to be a Wheeler.
Either they have, we have. Goodwill with our customers.
But new customers we will have to offer a properly a lower
price to generate the same level of quality and so threaded
substitutes are really important.
So I think it's. Also really important to
understand that industry static, so the you need to have a
dynamic strategic plan so you can compete in the market and so
the just to cover off the porters 5 forces.
Framework is really good and looking externally and the SWOT
analysis is looking at taking those details and looking at a
bit of a plan. So I'm.
Just going to leave you with those two models today.
There are others. There is the VRIO framework.
That's another really good organization that looks about.
It kind of looks at it, at resources.
So it looks at the viability of resources.
It looks at are the resources rare?
Are they able to be? Are they kind of odd to you
know? Replace or substitute?
How rare or complex are those resources and then the
organizational resources we need?
So there are others. There are lots and lots of
others, but I think the Porters 5 Forces framework and the SWOT
analysis is really great. If you want to look at one other
model, look at the PISTOL framework.
That stands for, again, an acronym, Political Economic
Social Technology. Technological, Legal and
environmental. So you should always do a pest
to analysis too. It's similar to the SWOT
analysis except except for it's focusing on external factors and
external solutions. And so every company like if
you're politically related or economic related or social
related or technologies going to change your industry or legal or
environmental, you would want to look at these forces that are
happening, the pistol model. So I would suggest the three
models are what pistol and the five forces models are we
should. Start and once you've done that.
Strategic planning. Then you have strategic
objectives. You then have goals that you're
putting in place, SMART objectives, and those objectives
link to your, so they are defined.
And then you come up with action plans and the highest level
place that a BA links to strategic objectives are your
business requirements. So you have business
requirements that link to your strategic objectives.
You have strategic objectives, objectives linked to business
requirements, business requirements linked down to your
functional non functional requirements in the agile world.
You will have objectives, then you have your epics, then you
have your user stories, so that's it.
So you don't want to have any other layers around that.
You can bring it all the way up. Your epics can be used.
In a business sense of Epics, not even product epics and they
could be used, there's things you're going after.
In terms of Agile and the framework above Epics, you
usually have things called themes or goals.
They can be one of the same as your strategic objectives.
So when you're doing strategic planning now in terms of the
action plan and how you execute on that?
I have been involved in, I've seen a lot more Bas been
involved in taking those to do objectives, working out how you
what your ethics are, and then grouping those into programs of
work. So that's how your strategic
objectives should match down to the actual work you're doing in
terms of your programs and your projects.
Projects might have a smaller amount of ethics.
Or you know. Business requirements.
And your programs have a have a might be grouped in terms of.
Areas of business or process areas and they might have more
epics or and more business requirements that you are
achieving. And so that that is another
topic for another day which is called program planning and we
talk about how we shape the our action plans, but it shows you
there that you've got your. Just in summary, you've got your
mission statement, It's there for kind of for your purpose for
a long time. You have your vision, which then
drops out from your vision. Is your strategic objectives and
also your values how you're going to operate for this long
term. And then from your strategic
objectives, you then drop down, yes, into a program planning,
the shape of the action plan and then in terms of the BA world.
You're dropping down into your epics and your user stories, or
in the more formal method we call them Business Requirements,
High Level Business Requirements.
And then we drop them down to the detailed business
requirements, which are functional and nonfunctional
requirements. So they are the.
Levels and that's the traceability.
So we've jumped around from a little bit here, but talking
about strategic. Planning where that came from
and then how that relates to you as a BA.
So I hope you got value out of that.
I've tried to dip and just give you a taste of every area and if
there's any specific areas you want to know more about, I'm
more than. Happy to explain them to you.