ࡱ> ܥhW e[d@[SRRS S bUbUbUDlWlWlWlWlWW(WlWc1XX4XXX^^^aaaa-abbccX dRcbU^$X^^^c^bUbUXX^^^^bUXbUXa 9jUPVSFTbUbU^a^^ ECONOMIC FRAMEWORK FOR STRATEGY ANALYSIS A PRIMER ON THE USE OF SCENARIO PLANNING BY DAVID NEATH JAMES HANSEN 1991 DAVID NEATH JAMES HANSEN Revised Edition 1998 DAVID NEATH JAMES HANSEN ECONOMIC FRAMEWORK FOR STRATEGY ANALYSIS PART ONE WHERE PROFIT COMES FROM The need to consider economic strategy for the individual business enterprise arises from your prospective career opportunities. You as a student are more than likely to be involved in the operation of a business that confronts a heavily competitive market. You will daily be involved in or be affected by competitively oriented business decisions. The world out there is cut throat. If you are going to make a go of it, you need to have your competitive skills honed. What you need to understand, to begin with, is what drives the business you work for. So we start off with an investigation of the driving forces behind profit accumulation. The first problem encountered concerns "who" is the person that we are concerned with in terms of profit. If you have your thinking cap on, your first profit priority has got to be YOU. But that raises a corollary question -- How many other profit priorities are there? Who else needs to be served in terms of profit? Answering this question requires consideration of who is involved with the operation of a business enterprise. We can start with the more complex form of enterprise, the publicly listed company. The accompanying model (Figure 1) illustrates the basic shell structure of such a company. Figure 1 illustrates a very basic classification of interests represented within the company. Each of the groups portrayed has a set of vested interests to protect while participating in the day to day operations of the company. If we were to pursue such a breakdown further, it would be possible to identify numerous if not myriads of smaller sub-groups within each of these basic groups. Potentially, this breakdown could be extended to the level of each individual working within the company. The possibilities for individual, group coalition and overall corporate behaviour analysis are endless. This classification of interests is extended even further once we move outside the company and consider the interests of all those economic agents with which the company deals in its business operations. Figure 2 represents such an extended picture of the company, taking into account the individuals and institutions supplying goods or services to the company or buying goods or services from it. Added to this growing list of individuals and groups that have an interest in the profit returns generated by a company are the full range of competitor enterprises that line up alongside the company in the market place. It is helpful to think of competition in terms of a spectrum. If we dig up the notion of "substitution" from our basic microeconomic studies, then what we are looking at here is a spectrum of substituting possibilities confronted by a company in the markets for its products. Goods and services that are very similar to those offered by the company can be referred to as competitive goods and services. For example, imported Japanese steel products are competitive goods for BHP in this country. Goods or services that are only competitive in limited use areas, we can refer to as substitute goods and services. Aluminum products in some uses are competitive with steel. Hence aluminum is a substitute for steel. Naturally, direct competitors for a company's products are more threatening than substitutes, other things being equal. All told, this list of potential claimants on the profits of a company makes for a formidable task of analysis in sorting through strategic options. But that is the bread and butter of every day commercial life. And once we have established exactly whose interests we are serving according to our "rational" priorities, we can then concentrate on making the actual profit. Let's make a profit.... Easy? A Theory of Profit Creation: The world is a complex environment to live in. It is so complex that I can be your teacher because I have lived longer than you, and I know more about the show than you. But there is someone older than me who knows more than me because that person has had more years to think about it. In other words, there is too much information out there for anyone to take in overnight, less so over years. Bad fact? No, good fact. If there is a lot of stuff to know, and it is so complex that no one can know it all, there will always be some "new" bit of information to pick up. "New" information we can define as something that nobody else has known before. We will analyse this. If I know something that nobody else knows, I have an advantage. I can let others know my "secret" or I can use it to my advantage before someone else finds it out. An example? Take the Coca Cola formula - That has been a secret for over a hundred years. Made a lot of money, haven't they? It can be very lucrative to have a good secret up your sleeve. Secrets come from gaining first knowledge of a new event/happening/development in the competitive world we live in. Once you have a secret though, you have to know how to make it work for you. This is where strategy comes in. Using hard work and the skills from experience to gain from exclusive information is the key to all competitive success. In a competitive environment we are facing the known and the unknown. Take a small business in a large number situation (many suppliers/many buyers), let's say a wheat producer. The producer knows current local crop conditions, etc., but does not know what might be happening in Russia or the USA or elsewhere, or indeed what the weather might hold in store locally. With advance knowledge of these elements of the competitive environment what action could the producer take to gain a better position? For example, if the producer knew that Russia and the USA were going to experience a drought, gains could be had from extra planting of crop. If those countries were known to be headed for bounteous crops, it would pay to avoid wheat and plant something else. The trouble is, the wheat producer knows little or none of what might happen overseas, let alone weather or crop disease problems here. But the poor producer still has to make a buck. How can a decision be made? It can't be made with any certainty, but contingencies can be allowed for. When we use the word "contingencies", we are referring to something that may or may not occur in the future. The idea then is to build up a list of contingency situations regarding unpredictable future events. Why? If we ignore the potential for change in the future, when some new development does occur, we are going to be least well equipped to cope with it. Whereas if we put together a list of potential future occurrences now, then we can think about them and their consequences for our business operations. Further we can have prepared a set of responses we could put into action immediately the changes begin to become apparent. And if we have done our contingency planning well, the speed with which we can respond to change will give us what Michael Porter calls "First Mover Advantage". That is we will lock into the change before anyone else and gain the most from it in the way of profits or other forms of gain. A List of Contingencies As profit seekers, we are looking for contingencies, ie potential future developments, that could cause our profits to go up or down. In other words we are looking for the sources of profit. From what has been said already, it is obvious that the sources of profit are heavily linked to the availability of information about how to generate products that will be extremely popular in the market place. Market popularity is geared to what the ultimate consumer can get for each dollar laid down on the counter. This suggests two things: People purchase products because they will perform certain required functions in satisfying consumer goals, and The cheapest source of the product will usually be availed of by the consumer, other things being equal. So what counts is having a product that has the right attributes and that is cheap in relation to competitive products. Having the right attributes attaching to the product is a matter of making sure it is better than its competitors - that it is different from them. Hence a key element in profit generation is what we call "Product Attribute Differentiation". The other element is obviously Cost Differentiation - Producing a product with given attributes more cheaply than anyone else. Cost and Differentiation Performance Controlling the cost of producing something boils down to three chief variables: . Personal Management Skills, . Labour Quality/Effort, and . Technology. In other words, we have to be efficient in our management of people and of the technological environment. The technological environment is determined ultimately by the state and the course of development of natural conditions. It is tempting to refer to this as the "Laws of Nature" except that natural conditions change on a continuous basis and the so called laws of nature are not immutable, certainly not for the breadth of human experience. The 1998 volcano activity in Papua New Guinea serves as an example of nature's continuing "progress", as did the emergence of the AIDS virus in the 1980's. The enormous progress of scientific knowledge across the whole spectrum of human experience continuously throws up an infinitely broad range of new developments of potential profit significance for economic agents. In classifying sources of profit then, we can employ the term "Natural Conditions" to denote such forms of change as scientific discovery, technological research and development, natural phenomena (earthquakes), mineral discovery and so on. On the human front, changes in our knowledge of human beings capacities in terms of, say, productive effort or the application of skills can be combined with the never ending development of consumer tastes and preferences under the banner of "Human Conditions" in our classification. New fashion, better management skills, better worker skills, demographic change (eg ageing of the population) and so on would be included under this heading. It would be a neat classification of profit sources if we could halt at this point. However there is a further, "non-natural" source of determinants affecting the cost of products and their popularity in the market place. This refers to the vast array of human composed laws that govern our activities. I use the term "laws" in a broad sense, meaning not only government law (common, statute or regulation), but also the many other forms of institutional law such as religious law, customs, private organisation rules and regulations and so on. This massive body of regulation is in itself endlessly changing to reflect the interplay of political, social and special interest forces in the game of life. These changes in the law are of immense significance to eventual profit opportunities. To the extent that an economic agent manages to prepare before anyone else for the profit opportunities emerging from changes in these three broad categories of profit sources, then the gains are available to be had by that agent. We need to look at the various ways of making ready for such opportunities. Gaining from Change If you are interested in making money from change and you have not seen the movie, "Wall Street", I would seriously advise you to do so. The film contains all the essential elements required for a successful round in the game of money-making. Set in the treacherous arena of the American stock markets, paricularly Wall Street, the tale centres on the exploits of big time player, Gordon Gekko. Gekko is aready a multi-milllionaire - he earns millions of dollars a year. But he wants more. He wants to take on the world, and win. The game plan is straightforward. The only sure way to make money in the financial scene is to get hold of information before anyone else gets it, often by some secret and devious means. And this information must come from an absolutely reliable source. Gekko unscrupulously makes his money from trading in shares of publicly listed companies. Therefore the information he receives must come from deep within the hearts of these companies, taking his activities into the lucrative and illegal world of insider trading. The basic technique employed by Gekko is simple: Gain access to previously unknown information, Invest heavily on the open market, Make sure the secret information about the assets/shares involved becomes widely known amongst traders in the markets concerned, and As the market bids up the value of the assets/shares, gradually liquidate your holdings, taking care to avoid upsetting the underlying strength of the assets/shares involved. Gaining the First Mover Advantage The technique empoloyed by Gekko in the film has been labelled "Gaining the First Mover Advantage" by internationallly renowned strategic analyst and Harvard academic, Michael E. Porter. Porter's work though avoids the illegalities of insider trading, concentrating on developing comprehensive techniques for handling strategic opportunitiies over the entire range of busineess activities. On this broader front, it should be remembered that very few businesses have at their disposal the enormous resources employed by one such as Gordon Gekko in "Wall Street". However Gekko's secret information came from within companies or from the govenment agencies regulating them. Whether these secrets involved new production techniques, new mineral discoveries, new financial information, new product developments or some new twist to the range of government regulation, there would be individuals aware of the facts long before Gekko. Those on the business side who are first to be in on the secrets are usually the "creators" in the production chain, the research scientists, mineral explorers, financial accoutants and marketers. Also included in this list are the entrepreneurrs who take on the role of pulling all these efforts together into a commercial success. In fact creating such new opportunities is the heart and soul of any business activity. Challenging Uncertainty So money making depends on gaining the first mover advantage: finding out or creating the secrets before anyone else does, then using entrepreneurial skills to bring the results to the market. For any business there is an orderly way of going about this process: Step 1 Carefully examine the business environment in which you operate. What you are looking for is all the potential sources of dramatic change to the market, production or regulation conditions in the industry. Step 2 Decide on the best strategies for handling any of these changes once they occur. Different Players in the Game There are the likes of Gekko out there making money illegally or at least in suspicious ways. These are the "immoral" manipulators of the system, bent on exploiting information about the creative activities of others. They do bring about change though, or at least news of change. Hence we refer to them as "Manipulators". The other type of manipulator is the "Moral Manipulator" - the creative person who actually invents the new product, technology or marketing concept. The activities of the moral are much more productive fromm society's view, as they add to the material or other wealth of society. The second basic type of profit maker is the anticipator. The individual who does nothing to actually bring about change, but who can foresee its occurrence and its consequences. Such an individual predicts some new development, then buys assets likely to benefit from the development. The consequent profits on sale of the assets are a reward for having insight. This type of operator benfits society by disturbing markets in the buying process, thus warning market perticipants that change is coming. The third basic type of operator making profits is the individual who purely by luck, happens to own assets benefiting from change. Naturally for all the lucky or chance profit makers there are as many unlucky loss makers as so many changes will have adverse consequences for some, and in some cases for all (e.g. earthquakes). The Value Chain The idea of the creative nature of profit making activities raises one of Michael Porter's most powerful concepts, that of the "Value Chain". In this concept, Porter asks us to look upon a productive enterprise as an institution that takes in raw materials and services and, employing them with labour and capital, adds value to them. The concept is akin to the notion of value added with which we are familiar from other studies. The idea is stronger though for its emphasis on each and every minor section of the firm's activities as being a core contributor to profit making achievment. All sections of the company must be striving to make a contribution to the value creation process. All activity must be seen in terms of value creation. Hence the scope for strategy analysis extends to even the most minor of tasks. That is why every individual detail of corporate activity needs to be strategically assessed and reoriented, where necessary, to the corporate value creating goals. And likewise, each individual must similarly question each activity they engage in. PART TWO MICHAEL PORTER'S STRATEGY ANALYSIS Building this analysis of profit making opportunity into a workable model for everyday application seems a daunting task. Fortunately we are lucky to have a ready made methodology, based on similar lines of thinking. While you will not find anywhere in the works of Michael E. Porter an analysis of profit opportunity set out as in Part 1 above, the basic ingredients are spread throughout his writings and certainly form the basis of his strategic modelling techniques. Porter's analysis of the principles of strategy formation is contained in two chief works, Competitive Strategy (1980) and Competitive Advantage (1985). This makes for quite a bit of reading as the books are lengthy. On the other hand the basic principles involved are really not that voluminous in content. The books, in fact, contain an enormous amount of case study material. And rightly so, for the skills of creative strategic thinking are not to be learnt over night but rather from many years of devoted practice. This is not to say that you as a student cannot come up with a valuable research exercise for the company you are about to investigate. The product of previous classes will make that obvious to you. Your performance will be strongly supported by the lecturer in the unit through a process of continuous assessment and feed-back. In this way you will gain the benefit of our personal business experience, plus that arising from the more than 600 companies that have been investigated in the past 13 years. What is Strategy? Think of the basic aim of making a profit. Profit is derived as a residual after deducting all contracted costs of production from revenue raised during a particular production period. Improving on profit performance involves greater revenue generation for a given level of cost outlay, or lower cost outlay for a given level of revenue generation, or some combination of both. So, strategy formation involves the design of some plan to achieve these ends. In brief, we are seeking either improved cost control or greater revenue generation, or both of these. This is not saying much. We need to develop some means of categorising the enormous range of initiatives that could be available to generate improved profit performance. If we take product attribute differentiation as the chief means of improving revenue generation, then we can initially categorise strategic initiatives into either cost or differentiation tactics. Further, the choice is then available to adopt a narrow range of focus with these intitatives or a very broad one. For instance, we could choose to concentrate on developing a product, say a motor vehicle, that has a very broad appeal in the market. The GMH Commodore might be seen as such a case, with the Toyota Land Cruiser, in contrast, being focused in on a very much smaller "niche" segment of the car market. The Commodore involves an across the spectrum product, based on differentiation by reputation as "Australia's Own" car. The Land Cruiser as a product is based on a focused differentiation strategy. Similarly, we can classify cost initiatives as broad, as in a general strategy aimed at improved cost control throughout the company's operations, or a cost strategy may be focused in on securing cheap supplies of a particular input as when BHP Petroleum searches for cheaper oil supplies in Bass Strait. These broad/narrow combinations of strategic options are depicted in Figures 3, 4, 5 and 6. These options represent our first level of strategy classification and we refer to them as generic strategy options because they are of such general significance. AVOIDING A NARROW STRATEGY BASE At this point it is important to note that no enterprise can afford to concentrate exclusively on any particular strategy option. To ignore costs entirely in favour of obsession with a differentiation strategy is to court disaster, as would be a totally cost oriented strategy package. Similarly, companies will always need to look out for broad differentiation problems even when their chief product is narrowly focused. For example, if Toyota were to concentrate totally on the land cruiser, they might miss out completely on a trend in the market that made such vehicles totally obsolete. In your strategy design, you will need to employ tactics from every option area, the variations coming from the relative emphasis you give to different strategy options under different economic conditions. To take the classification of strategy options beyond these generic cases, it is necessary to actually examine different types of companies or enterprises in terms of their relative strengths within individual markets. No real world company will fit exactly into any of these company-type categories, as there positions will vary between the different supplier and buyer markets in which they deal. Do not think your company fits any of these cases exactly. Other strategy parameters from other company types will be relevant. All we are trying to do with this company-type break down is to find a convenient way of getting to the core of strategic analysis in different situations. BHP may totally dominate steel markets in Australia, but it is only a bit player in the market for limestone, one of its crucial raw material requirements. Figures 7, 8, 9, 10 and 11 (provided in class) provide strategic option maps for a range of different operating conditions that may apply to any company in markets in which it deals from time to time. The rationale behind the diagrams centres on the choice process involved in selecting what to do under various conditions. Almost a yes/no decision tree format is portrayed. In most cases, the pitfalls/risks attaching to commitment to any particular type of strategy are indicated. These diagrams are an attempt to summarise the underlying framework of Porter's analysis (1980, 1985). There is no way in the world the full import of strategic thinking can be explained in any theoretical or summary fashion. As Porter has found, something approaching an effective explanation can only be achieved by reference to a vast array of case study examples. In class you will be confronted with many such examples developed by the lecturer or in the work of the other members of the class. You should supplement this class experience with long sessions devoted tor eading Porrter's books. There is not all that much point in trying to take notes from Porter as the case study details will not be directly relevant to your own work. Rather, you should set yourself up in a reading environment that allows you to fully concentrate on what he has written. Only then will the creative nature of the decisions he describes be fully brought home to you. PART THREE MICHAEL PORTER'S SCENARIO MODELLING What You Will Achieve The product of the Porter scenario modelling process has been shown repeatedly in the past to be a report that far exceeds the expectations of the individuals involved in the training program. And it is a training program. You are not going to sit down and learn a whole load of theoretical jargon and analysis for regurgitation at the end of the semester in an artificial examination environment (Although there will be an exam). Rather you are going to learn how to apply a process that is at this very moment being applied in numerous innovative companies around the world. Michael Porter does not come cheap. recently, he was reportedly earning US$100 000 a day from consulting. There is a reason for this. His methods work. At the end of the semester, you will have a very good idea of how they operate. You will have a report on your company that is very possibly going to tie down a job for you. This has happened on numerous occasions in the past, as have promotions for students already in a work environment. The Porter process will by definition produce very innovative ideas for the company you choose to analyse. It has to, because of its very design. How You Will Achieve This - The Model If we go back and think about the profit generating process, the basic idea is to pursue first mover advantage in the company's various areas of operation. First mover advantage can only be gained by latching on to an idea or some bit of knowledge before any one else, and then buying the assets that are likely to gain most from this new information (and selling the assets that will lose by it). So we are looking for new information. And by definition we are looking for information that will become available in the future. Profit is by definition a product of future opportunities. How are we going to "predict" what will happen in the future? A. - The Current Environment We need to start somewhere in this search. The most obvious kick-off point is to look at the operating environment of the company. In your copy of Competitive Advantage, you will find the basic Porter 5 Sector Model of an enterprise's operating environment. There are 43 different items listed in this model. Each item has some potential profit significance for the company to be analysed. What we need to do then is to analyse each of these items in the operating environment, and try to work out whether any of them are likely to be sources of change that will represent either a threat or an opportunity for the company. To begin with then, we need to look at the various specific items of the company's operating environment and how they have actually behaved over the last few years. In other words we need a potted history of what has happened to the company in the last five years, and, for thoroughness, what precisely has happened over the last three years. But to do that we cannot just cover individual company data. We also need to analyse what has occurred in the industry. So we need to gather data at company and industry level. Ideally, the annual company financial statistics are required, together with the Chairman's report explaining what has been going on and why. Larger companies publish company reports with this data. These can be examined at any of a number of points. The company itself will in most instances provide access to these reports. If your company does not have such annual reports available, you will need to rely on whatever they are prepared to supply. For industry data, the most likely source is the internet via sites such as the Australian Bureau of Statistics. Other government bodies conduct enquiries into industries and these should be searched for relevant material. The business press is also likely to be handy as are a number of academic journals. Finally, industry associations (Yellow Pages Directory: - Organisations, Business) can be of assistance in some cases. Go to my listing of Australian industry web sites at http://www2.deakin.edu.au/dneath/Sites/OzIndustry.htm In many cases students will actually approach the company for an interview. At an interview, the respondent is likely to reveal far more information than in written form. You will be supplied with a set of potential questions for this purpose. Having studied what is available in written form concerning the industry and the company, you should have a good idea of what you are going to need to ask at the interview. Don't be surprised if they ask for written questions in advance. Supply these quickly. When you actually get in the office, the questioning will naturally stray from the written set. Attend the interview in your most professional outfit - this may be your future employer. It is obvious that your manners should be impeccable. B. - Company and Industry Summaries It is crucial to present the data you collect in a format to give it a truly professional quality. On Page of Competitive Advantage, you will find Porter's potted history/description of the US chain saw industry. Analysis in class will demonstrate the power of this summary. Nothing is left out and there are only three words that could be deleted without changing the meaning of the passage. This is the kind of powerful writing you should adopt for your future business career - maximum meaning in the simplest, most concise prose. The final component of your descriptive introduction to the company and its industry is an assessment of what types of company are succeeding in the industry and why. Then a comparison between your company's current major strategy initiatives and those required to be successful under current conditions. This summary of current strategy is to be submitted as part of your ultimate report. C. - Identifying Potential Profit Sources The next step in the process is to examine the list of industry environment parameters you have assembled in an effort to determine the most important potential future sources of disruptive change for the industry and ultimately for the company. You are looking for both positive and negative developments that seem likely to have a substantial impact on the company's performance. This process can be viewed as a brain storming session. This is the point at which creative skills first come into use. The idea is to think beyond the known experience of the company. There is in business a tendency to opt for what is called the conventional wisdom when it comes to looking at potential future developments. This tendency is discussed by Porter in terms of what he refers to as single point referencing. To understand Porter's meaning, we need to diverge slightly into a consideration of basic probability theory. D. - What is Probable and What is Not If I take a coin and toss it we know that there is a 50% chance it will come up heads and a 50% chance it will come up tails (assuming that an earthquake does not occur during the toss, swallowing up the coin - nothing is really certain!). When the odds are quoted on the coin toss they are formed from an objective mathematical calculation of the potential outcomes. In an everyday business environment, there is no way a decision maker can work out all the potential consequences of a particular development in the operating conditions confronted. Hence there is no way an objective probability can be calculated for any particular expected occurrence. The business operator works in the dark in that sense. But people do assign guestimates of the likelihood of particular outcomes of events, even though they have no mathematical objectivity to back them up. Their guestimates are stabs in the dark - cross your fingers and hope for the best. This involves the estimate of what is called subjective probability. Now the trouble is as soon as a business person places a subjective probability estimate down on paper (there's a 70% chance we will beat last year's sales achievement by 20%) that estimate tends to take on a status it does not deserve. The use of figures lends a pseudo mathematical strength to the estimate. This is dangerous in that people will assign too much weight to the numbers quoted and they will tend to ignore the chances of a totally different result. To avoid this single point referencing problem, we need to be very careful in using figures. In particular, if figures are used, it is important to place a range on them, and a substantial range of variation is called for. In the mineral industries, it is common to use historical growth figures as a basis for estimating potential future outcomes. For instance, in the seventies, world aluminum consumption grew at around 4% per annum. It was commonly thought in the industry that this annual growth rate would continue beyond 1978, once allowance had been made for a consumption fall in that year. The growth rate in fact lagged around the zero level for several more years, thus leaving many new production operations with no buyers. The "conventional wisdom" had won out and caused severe financial problems for many producers. It is this conventional wisdom that we need to guard against. The Porter scenario model provides good protection against conventional wisdom. E. - Finding True Uncertainty Let us assume that you have now come up with either qualitative (verbal/prose) or quantitative data on the behaviour of the 43 or more parameters that make up the Five Forces Model picture of your company's industry environment at present. In the next 3 years the behaviour of some of these variables will change while that of others remains the same. This is your first task - to decide which variables are likely to alter. You will be analysing this choice in class with your lecturer and the rest of the class. Having decided which variables are likely to alter, the next step is to determine whether the changes are predictable or not. Some items, say for instance sales growth, might be expected to be fairly steady in their rate of change. Others, say for instance industrial unrest, might be very uncertain as to their potential behaviour. This choice will boil down to your own (by now) informed judgement guided by discussion with the lecturer. Once the more uncertain elements have been determined, the time arises for some economising. If it appears that there are more than four truly uncertain parameters, the time that we have available in the course restricts our ability to us them all. We really only have scope to deal effectively with four major uncertain variables for any industry analysis. It may be necessary to pick out thee four most significant uncertain variables and leave any others for casual mention as non-analysed uncertainties. This process of selecting our four uncertainties requires a deeper investigation of the ultimate causes of potential variability in the variables. We can better understand this by reference to Figure 12. Here we have a model representing the ultimate sources of uncertain change in the industry environment. The idea is that should one of our industry parameters appear to be a potentially unpredictable item, we have to analyse what is causing its unpredictably. The cause may arise from some other item in the industry structure being uncertain. For instance, a sudden future increase in advertising expenditure in the industry may result from the radical re-staffing of one of the competitors. Then we would term the changing level of advertising as "dependent" and it could be left out of our analysis, its significance being catered for by the change in competitor management, which we would use as a key variable. On the other hand, the change in the level of advertising might be brought on by a change in general economic activity, coupled with, say, the advent of a new advertising medium such as the internet. In this case the change in industry advertising expenditure is not caused by any other variation in industry conditions. The "causal factors" that bring about the change lie outside the industry environment. Hence we would have to include advertising uncertainty as a crucial variable for analysis. So what we need to do is to hunt out the causal factors influencing the potentially uncertain parameters of the industry structure. If these lie outside the industry environment, we will term the uncertain variable a"scenario variable", and it will become a core unit of our continuing analysis. (This is subject to our limit of four key variables for analysis.) F. - Working With Scenario Variables (1): Allowing for Uncertainty From all the potential variables affecting the operating environment of the enterprise, we have selected four only for analysis. This seems a meagre quantity in terms of our ambition to analyse the basic uncertain outlook for the company. But it is surprising how powerful the use of just four parameters can be in terms of generating a very broad range of alternative future outcomes. This last notion, concerning the range of alternative possible outcomes is an extremely important one. Earlier we spoke of the need to overcome the conventional wisdom that tends to prevail in a corporate environment. The business world is extremely complex and for any operator, a bit daunting. When it comes to looking to the future, there is a natural tendency to engage in single point referencing, to generate a single forecast of what might happen. Such a forecast is more comfortable than facing up to the actual great uncertainties that really exist. It is part of the job of the Porter scenario analysis to overcome this tendency towards narrowing down the possibilities. The means of achieving this lie in the range of potential outcomes we are to place on each of our four scenario variables. There is a need to make sure the ranges set are broad enough to generate potentially very different consequences for the company. What we are going to do is to cast together the various values we assign to the scenario variables into alternative pictures of the operating conditions facing the company in three years time. In other words we will end up with a number of Five Forces Model pictures of the potential future, each picture being radically different from the others. The key word here is "radical". It is only radical variation in our alternative scenario pictures of the future that will prepare management for the true uncertainty that they actually face in the real world operating environment. On the other hand, we have to tread carefully here, particularly if management has not been used to handling scenario analysis in the past. If everyone in the company believes single point referenced forecasts are quite acceptable, we are going to confront a credibility problem. If we assign excessively radical variations to our scenario variable ranges, there is a danger our work will be written off as absurd. The point is to balance the need for radical variation against the need to preserve credibility, particularly at the beginning of the analysis. Later, when people get used to the idea of considering a range of possible future outcomes, there will be scope to widen the variation in the scenario variable values. NOTE: THE NEED FOR QUANTIFICATION In Porter's analysis in Chapter 13 of Competitive Advantage, there is no quantification of the range of potential outcomes for the US Chain Saw Industry. It is extremely important that we avoid this error in our analysis. If we merely put Low, Medium and High cases into our model, management will have their own ideas on what is meant by each of these cases. To get away from conventional wisdom thinking, we need to introduce specific figures for each of our scenario variable ranges. Then, there will be no avoiding the radical variation that we seek to confront management with. The task of quantifying some variables will not be straight forward, but we have yet to be beaten. For instance, in considering a range of possible outcomes for office technology, it was first established that the average turnaround time for repurchase of mainframe hardware was 5 years. By posing a turnaround period of 3 years, the implied rate of technological change was accelerated. With an 8 year turnaround, it was slowed down. Similar methods can always be found for other less easily quantified variables G. - Working With Scenario Variables (2): Bounding Uncertainty The task of bounding the uncertainty of each of our scenario variables centres on the range of potential values we are prepared to attach to each of them. Let us say that one of the variables is "company sales". In our review of the company's experience over the past 3-5 years, we will have established, for instance, that sales levels had varied between 85% and 120% of current levels. Now we have chosen sales as a variable because we think it might be subject to radical variation in the future. It could be that we think that Pauline Hanson may get into power as Prime Minister at the next election, in which case a true depression is possible and sales could fall by 40%. Alternatively, David Neath might leave academia, enter politics and become Prime Minister, in which case the economy will be booming and, with Neath's new export scheme as well, sales could rise by 100%. Who gets to be Prime Minister is the causal factor that will determine the sales outcome. The potential for variation in the Prime Minister variable establishes the potential for scenario variable variation. So we need to study the potential behaviour of causal variables for each of our scenario variables. The we can bound the uncertainty attaching to each scenario variable by quantifying the range of its potential values. It is not expected that you will establish these ranges for your scenario variables without assistance. Discussion with the lecturer, together with the continuous review of written work will ensure your ranges are satisfactory. Presentation of your scenario variable ranges must be clear. You need to be quite specific about what is going on. Figure 13 presents a sample set of ranges, together with a suitable explanation. FIGURE 13 - A SAMPLE RANGE OF UNCERTAIN VARIABLES Uncertain VariablePotential Range of OutcomesIndustry Sales (Ave % Change Per Annum to 30.9.01) -5 0 +5Wage Rates (Ave % Change Per Annum to 30.9.01) -3 +1 +5New Entry (Entry/Exit per Year) -1 +1 +3 Industry Adveritising Expenditure (Ratio of 2000/01 year expenditure to current year expediture) 70%  100% 130% H. - Working With Scenario Variables (3): The Matrix Analysis We are now going to combine different scenario variable values with each other to construct scenario pictures of the industry in three years time. These scenario pictures will consist of three different components: a. All those elements in the five sector model of our industry that we do not expect to be subject to any significant variation, plus b. Those elements that we do expect to vary, but in a reasonably predictable way, plus c. Combinations of the radically different variations in value we have assigned to each of our four scenario variables. The elements represented in Items a. and b. above will be present in all scenario pictures of the future, because they are predictable. The substantial variation in scenario pictures will come from differing combinations of scenario variable values. Because we have introduced a radical degree of variation to the scenario variables, and because the variables will be linked by connections either in the general economy or within the industry, we need to ensure that any values we combine over two or more variables are consistent or compatible with each other. For instance it would not make sense to have 3 new companies entering a large scale industry when it was experiencing a 40% fall off in sales. Consistency amongst scenario variables is achieved by using a relatively straightforward matrix analysis. Let's suppose we have the following values attaching to our four scenario variables: FIGURE 14 - UNCERTAINTY RANGES FOR SCENARIO VARIABLES Scenario Variable Value RangeCase 1 Case 2Case 3A Industry Sales (Ave % Change p.a. over next 3 yeara) - 8 % 0 %+ 8 %B Wages/Sales Ratio (In 3 Years Time) 20 %30 %40 %C No of New Entrants (In 3 Years Time) -113D Advertising Expenditure (% Change Over next 3 Years) + 20 % Same- 20 % We could compare, say, variables A and C, using a matrix as follows: FIGURE 15 - CONSISTENCY MATRIX 1 NUMBER OF NEW ENTRANTS-113 -8% p.a.  Y N  N INDUSTRY SALES 0% p.a.  N Y N +8% p.a.  N Y Y The letters 'Y` and 'N` denote possible and impossible cases respectively. For instance it would not seem reasonable to have new entry occurring at all when industry sales are collapsing at 8 % p.a. On the other hand, when sales are expanding at the rate of 8 % p.a., there could be new entry of either one or two new companies. The next step follows on with consistency testing for Scenarios B and D. This can be done in either of two ways. We can either compare Variable B or Variable D with the results coming from Matrix 1 (This option is not illustrated here) or we can compare Variable B with Variable D in their own Matrix. In Figure 15, variables B and D are tested for consistency in a second matrix. Then it is a matter of combining Matrixes 1 and 2 for an overall comparison of the full range of scenario variable values. FIGURE 16 - CONSISTENCY MATRIX 2 ADVERTISING EXPENDITURE+20%zero-20% 20%  Y N  N WAGE TO SALES RATIO 30%  N Y Y 40%  N N Y In establishing the consistency of various combinations of our four scenario variables, we have actually generated the full set of scenario pictures of the future industry environment. Each combination in Matrix 3 represents such a scenario picture. Stressing again the need to provide management with radical variation in the scenario outlooks they must consider, we need to pick out three of these scenarios from Matrix 3, choosing two extreme cases, and one mid case. It may be that there is a fourth peculiar case requiring analysis, because it is also very different from the normal extremes/mid range cases. In the case represented here, the Scenarios 1, 6 and 8 are chosen as the two extreme and one mid range cases, while Scenario 9 is chosen as a peculiar case. I. - Scenario Analysis We can assemble our Scenarios by identifying their key variations. FIGURE 17 - CONSISTENCY MATRIX 3 Advertising Expenditure+20%zero-20%-20%Wages/Sales Ratio20%30%30%40%Industry SalesNo of New Entrants -8% p.a  -1 Y 1 Y 2 Y 3 Y 4 0% p.a.  1  Y 5 Y 6 N Y 7 +8% p.a.  1  N N N Y 8 +8%  3 Y 9 N N N FIGURE 18 - ALTERNATIVE INDUSTRY ENVIRONMENT SCENARIOS Scenario NumberScenario Variable 1  6 8 9 Industry Sales  -8% p.a. 0% p.a. 8% p.a. 8% p.a. No of New Entrants  -1 +1 +1 +3 Wages/Sales Ratio  20% 30% 40% 20% Advertising Expenditure  -20% Zero -20% +20% You have at the outset of the analysis constructed a picture of the current status of the industry. What you need to do now is very briefly summarise the main features of that review, then add in the types of continuous change that will have been going on over the three year period of the analysis, then add in the major variations according to the scenarios depicted in your summary as in Figure 17. This will leave you with a short sharp description of each of the scenarios you have developed. J. - Strategy Analysis The next step is to identify the sources of competitive advantage in each of the scenarios you have described. This is a matter of working out what type of companies would be most successful under the various conditions applying for each scenario. The idea is that if you can work out the most likely type of company to be successful, then you can design a series of initiatives that your company could take to make sure it is one of if not the sole winner under these conditions. NOTE: You will need to have a different picture of the most likely company to succeed for each of the scenarios you analyse. In other words there will be, in the case we have followed above, four different types of company described. This will then lead to four different types of strategy packages that could be followed as we move towards the three year target time in the future. This is a crucial point: When you make up a strategy package, it will consist of a series of recommended initiatives to be taken up NOW and then on through the three years to the target date. We are trying to find a path for the company to follow in anticipation of the events unfolding as depicted in each of the scenarios. Each recommended plan of action will be quite different from the others as this is the whole purpose of the study: To build a set of scenarios requiring very different strategy packages to capture the benefits available in each. Do not develop strategies to react to what might have occurred by the end of the period. It is too late by then. The company must anticipate uncertain future developments. It must act in advance if it wants to gain a first mover advantage. The process of forming strategies will be heavily dependent on your involvement in class and independently with the lecturer. You will find this difficult, but that's why good strategy planners earn a lot of money. The only written clue you can get in advance is that the process calls for as much creative thinking as you can muster. The natural skills of some people mean that they can do a better job if they apply themselves. But the advantage of lecturer and class brainstorming makes the playing field much more level. You must not fail to use this opportunity to maximize the value of your analysis. One further element re your quest for good marks in the subject. The formation of strategies should be pursued as far as possible into the minutest detail of recommended initiatives. Even as far as specifying the daily content of say a month long training program that you believe will be required, or even the design of a new logo for the company, or a new financial package, with the new financing institutions nominated. Detail! Detail! Detail! There can never be too much of it in strategy design. This, along with creative thinking will produce the excellence that attracts the highest marks. FIGURE 1 - MODEL OF PUBLICLY LISTED COMPANY STRUCTURE  SHAREHOLDERS  BOARD OF DIRECTORS  CHIEF EXECUTIVE OFFICER  EXECUTIVE MANAGEMENT  MANAGEMENT HIERARCHY   WORKFORCE FIGURE 2 - MODEL OF COMPANY'S TRADING RELATIONS  SHAREHOLDERS  BOARD OF DIRECTORS  CHIEF EXECUTIVE OFFICER  EXECUTIVE MANAGEMENT  MANAGEMENT HIERARCHY   SUPPLIERS BUYERS FINANCE SOURCES CORPORATE BUYERS RAW MATERIALS CAPITAL EQUIPMENT CONSUMER BUYERS  WORKFORCE CAPITAL SERVICES UNION INTERESTS GOVERNMENT BUYERS CONSULTANCY SERVICES GOVERNMENT SERVICES THE VALUE CREATION PROCESS FIGURE 3 - THE RANGE OF STRATEGY GENERIC STRATEGIES FOR DIFFERENT PLAYERS LEADER/DOMINANT FIRMS  COST RUNNER UP FIRMS ALSO RAN/DECLINING FIRMS FOCUS/SPECIALISATION  DISTRESSED/TURN AROUND FIRMS DIFFERENTIATION YOUNG EMERGING INDUSTRIES MATURE DECLINING INDUSTRIES FIGURE 4 - COST BASED STRATEGIES   PRICE WAR   RIVALS SALES GROWTH  PRICE ELASTICITY HIGH  PROFIT GROWTH  BUYERS HOMOGENEOUS PRODUCT  BARGAINING LOW COST SUPPLIERS BEST WHEN WEAK DIFFERENTIATION SCOPE  ENTRY THREAT UNIFORM BUYER USE OF PRODUCT THREAT OF PRICE CUTTING    SUBSTITUTION LOW BUYER SWITCHING COSTS     RISKS   TECHNOLOGICAL IMITATION EASY TUNNEL VISION BREAKTHROUGH WITH LOW COST TECHNOLOGY   AVOID SUNK COSTS OF OLD  TECHNOLOGY CHANGING CHANGING CHANGING CHANGING BUYER INDUSTRY PRICE USES FOR  NEED CONTINUOUS TECHNOLOGY IMPROVEMENT PREFERENCES STRUCTURE SENSITIVITY PRODUCT SPEEDY SCRAPPING OLD TECHNOLOGY SPEEDY RESPONSE TO NEW BUYER NEEDS    MUST BE THE CHEAPEST ALL COULD BE IGNORED FIGURE 5 - FOCUS AND SPECIALISATION STRATEGIES  CUSTOMER SEGMENTS  COST POSITION FOCUS AND CREATING A  SPECIALISATION GEOGRAPHIC LOCALE TOGETHER WITH DISTINCTIVE BASED ON COMPETENCE  DIFFERENTIATION  ATTRIBUTES IN USE  BEST WHEN   DISTINCT BUYER RIVALS IGNORE RESOURCES INSUFFICIENT INDUSTRY SEGMENTS GROUPINGS FOCUS TO COPE WITH TOTAL MARKET VARY ON  SIZE  RATE OF GROWTH  PROFITABILITY  COMPETITIVE INTENSITY  RISKS  A LARGE DIVERSE COMPANY BUYER PREFERENCES FOCUSER "OUT-FOCUSED" "HAPPENS ON" EFFECTIVE FICKLE BY RIVALS IMITATION FIGURE 6 - THE STRATEGY OF DIFFERENTIATION WHAT IS IT? THE PAY OFF  PHYSICAL TASTE FACILITIES/ATTRIBUTES  BRAND/PRODUCT LOYALTY CUSTOMER SERVICE  AVAILABILITY  SPARE PARTS  USER FRIENDLY BARRIERS TO COMPETITION  DESIGN/PERFORMANCE SUPPLIERS  DISTINCTIVENESS BARGAINING ADVANTAGE  RELIABILITY BUYERS  QUALITY (PLUSH) SUBSTITUTION/ENTRY PREPAREDNESS TECHNOLOGICAL REFINEMENT  CONVENIENCE IN USE PROFIT/CASH STRENGTH COMPREHENSIVE RANGE  "FASHION" REPUTATIION  RISKS   COST OF CHANGING LOCKED IN AS PREFERENCES OTHERS IMITATE ATTRIBUTES OR INDUSTRY STRUCTURE AND LEFT WITH CHANGE SUNK COSTS   LASTING EDGE MANY DIFFERENCES POSSIBLE   TECHNICAL SUPERIORITY DIFFERENCES EASILY PERCEIVED  GENUINE QUALITY BUYER NEEDS DIVERSE DEPENDS ON  GENUINE SUPPORT SERVICES FEW FIRMS SEEK TO DIFFERENTIATE  TRUE VALUE FOR BUYER DOLLAR UNUSUAL OPPORTUNITIES AVAILABLE  EASY TO TAKE UP  HARD TO GIVE UP  We will actually udse these variables as the basis for building our example scennarios. ECONOMIC FRAMEWORK FOR STRATEGY ANALYSIS PAGE  PAGE 2 PAGE 9 )@p.AQS %@7.An %@7.An 7YB8n 00& a A00& a A00& a A00& a A00& a A00&@a`00& aQ00&#x0 0&#x00&9 a A00&9 a A00&9 a A00&9 a A00&9 a A0 0&iC00&9 a Q0 0&)#x00&)#x0 0&c4x00&y c4x00&   (00& @aQ00& a ` (00& aQ00&B! (00&b(0 0&R (00&R (00&R (00&"@(00&"@(00&(00&! (0 0&R `(00&! (00& a`(0 0&R (00&"(0 0& P ! (00& ! (00& ! (00&R (00&" (00&r (00&! (0 0&"a`(00& ! (00&"(00&"! (00&"P(00&! (00& P! (0!0&-! (0 0&! (00&B! (00&B! (0#0&! (00&q,p,(0+0&bP! (0"0&(0'0&!P! (0&0&P! (0%0&P! (0$0&P(0-0&!a`(0(0&2@ A @ (0,0&2!! (020&(#(010&##(000&#(0/0&#(0.0&#(0*0&2%! (040&b@)(050&B*@)(060&!)(030&b)(0)0&2+! (00&(00&(00&! (00&! (0 0&b"(00&"(0 0&(00&(00&" (00& (00& (0 0&b" (0 0& (0 0&(00&(00&r! (00&r! (00&r (00&b"! (00&b! (00&! (00&r ! (00& (00& (00& P(00& (00& (00&#))(00& '! (00&'! (0 0&"'! (00&"'(00&(00&Bqp(00&R@a ` (00&R@(0 0&b(00&b(00&"A@(00&R(00&b(00&P (0 0&P (00&Rp (0 0& (0 0&R(0 0&R(00&p(00&b(00&""(00&b(00&(00&(00&(00& (00&b (00& (00& QP(00&r!(0'0&"QP(0 0&"(00&r"(0!0&#(00&r#(0"0&P%(00&rP%(00&r'(0$0&p&(0%0& ((0&0&)(!*D!$ )7LD \ D%i%A0U02266X6;;>>CC"H#H,H.HQHRH;NMNLVSVVYm[[bcc+cDcghjjr suuv8vvvy z}}}f؝ߝ#}Ȫɪ,78BUccU^^UcUc U^Bgst}WFGHI̲*,4Okmس "-./12568RSTVWYZ]hijlmopݷ :;<>?ABEKLMOPRSnʻ uDPUUUcc_ʻ->`sƼм޼߼*,KLѽҽ{;` $%(/09;Kd !$%)2KQdfjlUc uDacuD^ac^cc uDa^UWLM %&'BCUYyz "#%'TWXYZ\^_`ijmqyzz|}~#'<@qt !$^c uDUaUcuDac uDa^Y$):;=EGK>ik67IK"#89hjkx|;=$%?@APaP uDP uDPUcUc^cUcuDacUXuPUaPU uDPU      <=>ghijklmnqrs$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$$ n3 @ n3 @* !*+,DE !7 8 $ % M$$$$$$$$$%{%{%%%K%%%%%%%%%%%%%%%%% 3@  3@ @@ n3@n @@ 3@n @@ 3 @ n3 @!MNEFtuuvB C D \ ] y"z"""%%%%%%%%%%%%%%%%%%%%%%%%%%%%E%*( @3 4h @& @3 4h@ 3 @"U#V#B%C%D%i%j%%%%%& &f(g(0*1*++ / /?0@0A0U0V0m2n2y4|444%E%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%% 3 @ 3 @ 03 @& @3 4h@ 4455465666X6Y677::;;;;;<<<<====>>%*%*%E%E%%%%%%%%%%%%%%%%%%%%%%%3 3_ 3 @"3 4h@& 3 4h@>>@@~BBCCCCCEEHHHHHHHHHH H!H"H#H,H-H.HQHRHSHeKfK9N:N;NMNNNPP_T`TV%%%%%%%%%%%%%%%%%%%%%%%%%%%K%%%K%%%%%%%%%%% %%% 3 @,VVVYYYYYY(])]w_x_bbbbbbbbbbbbbbbbbbbbbbbb"" """%% %%% %%%%%%%%%%%%%%%%%%%%%%%% 3 @"& X' X( X) X1%-ы3"& X' X( X) X1%-ы @$bbbbbbbbbbbbbcccc+c,c-c.cDcEceegggh hjjjjjnnqqrr s!svv%%%%%%%%%%%K%K%%%%K%%%%%%%%%%%%%%%%% %%%%%%%%%% 3 @,vv8v9vWxXxyyy z z}}}}}}~^_defܙݙ%&%%%%%%%%%% %%%%%%%%% %%%% %% %%%% %%%%%%%%%% 3 @'$%֡סyz{|}~klͩΩȪɪܪ " " " " " "%%%%%%%%%%%%%%%%%5 cc5 l  ! 1% 3@` 3 @31 "& X' X( X) X107%-@@`31 "& X' X( X) X107%-@ @,-013478Cghklopst~ī 5 5 5 5 5 5 5  3@`l  s! 1%&WX01NOHI[\hijry%%%%%%%%%%%%%%%%%%%%  .. ?,, l  }! l  ! 3@` 03@` 3@`Ų˲̲+,/134Nlmtuz  ?,,   ?,,   ?,,   ?,,%% 3@`3@` b]l  }!l  }! 3@`ɳس !"#,-.013457%%%%% RR  &l@ Fm# l( Fp# 3@` 3@`789HIQRSUVXY[\]^ghiklnoq   &l@ Fm# 3@`&l@ Fm# qrsݷ޷߷ %%%%%%%%%V @6V @l,J bp#).  3@` 3@`&l@ Fm#   459:;=>@ACV @@@V V @@@&l@J bl# 3@`&l@J bl# CDEFJKLNOQRTUdϺкmnɻʻ V @@@%%%%%%%%%%%! 3@`&l@J bl# 3@`&l@J bl# -159=>GM`abcdefno!!!v!!!"l8J \n# ,lLJ \n# ,lLJ \n# 3@`opstvxy{}~!!!,lLJ \n# 3@` 3@` ¼ļƼǼȼ̼ͼμмѼӼռּؼټۼܼ޼߼!!!!!! 3@` 3@`,lLJ \n# ߼+,>?ABCEFHIKLM\]^ghpqy%%%%%5 5 5 5 5 &l@ zm# l k# 3@` 3@` 3@`yz½ýǽȽ̽ͽѽҽӽ5 5 5 5 5 5 5 5 5  3@`&l@ zm# 3@`"<=^_`%%%%%%%%%%%%%%%%%%%%%%%% 3 @ 3 @ 3@`&l@ zm# 3@` $&'(/123456789EFGHIJKLMNOP%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%% 3@` 3 @ 3 @( "#$RSTU%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%% :3 @ 3 @ 3 @ 3 @ 3 @#89NOcdefghij%%%%%%%%%%{%{%{%{%{%%%QQQQQQQQQQQQQQQQ3[@3[ 3 @ 3 @ 3 @ 3 @#67LNmno %BSTUxyQQQQQQQQQQQQQQQQQQQQQQQQQQQQQ 3J 9!@@@@@ 3J 9!@@@@ 3J 9!@@@@@ 3J @@@@ 3 `P 3 @3[@y"%STXZ]^_iklmQQQQQQQQQQQQQQQQQQQQQQQQQ 3 @@@ 3@@@@ 3F}@@@@ 3F@@@@ 39!@@@@ 3J 9!@@@@@ 3J 9!@@@@@ 3J 9!@@@@ 3J 9!@@@@ 3J f9!@@@@@mrstBy%&z}QQQQQQQQQQQQQQQQQQsQsQ 37n@@@@@@37n@@@@@@@3SU"&@@@@@@@@3 [n!U"&@@@@@@@@3nU"&@@@@@@@ 3@@@@ 3Sn@@@@@@ 3n@@@@@ 3J @@@@ 3 @@@ !"#:;<QRSq QQQQQQQQQQQQQQQQQQQQQQQQQQQQ 3 b"@@@@ 3 %@@@@ 3 "@@@@ 3 `P33n@ 37Sn@@@@@@ 37n@@@@@@ "#$*+789:<=EFGLMNQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQQ   3 &"@@@@ 3 "@@@@ 3 "@@@@3j  "%@@@@@@@3  Y"%@@@@@@@9:;<=jkY6HI"VQQQQQQQQQQQQQQQQQQQQQQQQQ 3`P@@3`3O @@@ 3`O@ 3`P@ 3`Pf@@ 3 `P 3 "@@@@ 3 "@@@@ 3 &@@@@Du78fghkmnx}~UQQQQQQQQQQQQQQQQQQQQQQQQQQ 3`P@ 3`P@ 3`P>@@ 3`P @@ 3 `P 3`P@@ 3`P@@ 3`P@:;u #$9:;<=>?@QQQQQQQQQQQQQQQQQQQh`% 3 @ 3 `P 3`P@ 3P @@ 3P@ Qh3K@Normala c*@* Heading 1 <Uc k(@( Heading 2 <Uc$@$ Heading 3 <U"A@"Default Paragraph Font @ Footer !)@ Page Number @ Header !"@"" Footnote Textc &@1 Footnote ReferencehFZ]     ZZZZZZZZZZZ] N + R y  !       !     !    !!!!!> &63v?eHS__7kx^oٰϷaN>?"E  N   S;!6!0,,7DRUBʻ$XM"4>Vbv7q Co߼yym ,37>@DKMU!!! $/9: $jkL %&BUVWXy"%&TUVXZ[_imnopyz{}~#$%&<=>?qrs $%&'(:GHIJ6IJ"8hixyz{;<$(XHx8h(XHx8h(XHx8h(XHx8h(XHx8h(XHx8h(XHx8h(XHx8h(XHx8h( DAVID NEATH/A:\ECONOMIC FRAMEWORK FOR STRATEGY ANALYSIS.doc DAVID NEATH\C:\My Documents\Word Docs98\UNIBIT97\Syllabi_98\ECONOMIC FRAMEWORK FOR STRATEGY ANALYSIS.doc DAVID NEATH\C:\My Documents\Word Docs98\UNIBIT97\Syllabi_98\ECONOMIC FRAMEWORK FOR STRATEGY ANALYSIS.doc DAVID NEATHO\\WEBSERVER\ECONOMICS\staff\dneath\ECONOMIC FRAMEWORK FOR STRATEGY ANALYSIS.doc DAVID NEATH\C:\My Documents\Word Docs98\UNIBIT97\Syllabi_98\ECONOMIC FRAMEWORK FOR STRATEGY ANALYSIS.doc DAVID NEATH\C:\My Documents\Word Docs98\UNIBIT97\Syllabi_98\ECONOMIC FRAMEWORK FOR STRATEGY ANALYSIS.doc DAVID NEATH\C:\My Documents\Word Docs98\UNIBIT97\Syllabi_98\ECONOMIC FRAMEWORK FOR STRATEGY ANALYSIS.doc DAVID NEATHO\\WEBSERVER\ECONOMICS\staff\dneath\ECONOMIC_FRAMEWORK_FOR_STRATEGY_ANALYSIS.doc@HP DeskJet 500LPT1:HPDSKJETHP DeskJet 500HP DeskJet 500@f ,,@MSUDHP DeskJet 500dHP DeskJet 500@f ,,@MSUDHP DeskJet 500dXZXZ XZDZ1Times New Roman Symbol &Arial"1h'F'F\YR(ECONOMIC FRAMEWORK FOR STRATEGY ANALYSIS DAVID NEATH DAVID NEATH  !"#$%&'()*+,-./0123456789:;<=>?@ABCDEFGHIJKLMNOPQRSTUVWXYZ[\]^_`abcdefghijklmnopqrstuvwxyz{|}~Root Entry. FW鵽 9jWordDocumentņ 0[dCompObj - B}IjSummaryInformation(  FMicrosoft Word Document MSWordDocWord.Document.69qOh+'0   4@ h t  )ECONOMIC FRAMEWORK FOR STRATEGY ANALYSISndoD DAVID NEATH FaD Normal.dotp DAVID NEATH2FMicrosofDocumentSummaryInformation8 ՜.+,0HPlt|  DEAKIN UNIVERSITYH\ )ECONOMIC FRAMEWORK FOR STRATEGY ANALYSISt Word for Windows 95@G@@j@j՜.+,0HPlt|  DEAKIN UNIVERSITYH\ )ECONOMIC FRAMEWORK FOR STRATEGY ANALYSIS