APM Flashcards
SWOT Analysis
Internal: SW, strengths weaknesses. EG financial, people, products, marketing
External: OT. Opportunities, threats. EG Competition, political, economic
Porters Five Forces
Competitive Rivalry within industry
Threat of substitute products
Bargaining power of suppliers
Threat of new entrants
Bargaining power of customers
Cost leadership
Lowest cost product
Opposite of differentiation
Differentiation
Not price sensitive. Has some kind of luxury/customers are willing to pay more
Opposite of Cost leadership
BCG Matrix
Analyse businesses product lines
Relevant market share vs market growth rate
Stars: high high. profit conscious - bit of non accounting, grow
Question marks: low high.
Cash cows: high low - not gonna grow much so budget style for cost control to keep profits
Dogs: low low
Only the largest player can have a positive market share
Criticisms of the BCG model (5)
Average growth is difficult to define
Many very successful products would be classified as Dogs, e.g. 1 series BMW ranks behind the Audi A3
Finding market share is difficult
BCG makes no attempt to measure cash flows or profit.
Difficult to know how to deal with declining markets.
Ansoffs Growth Matrix
Which direction for the business to grow in. e.g. new product, buy suppliers/competitor
Market: existing. new
Product: existing. new
In 4 squares
Best in class benchmarking / functional benchmarking
Southwest Airlines improved aircraft maintenance, refuelling and turnaround time by studying the
processes around Nascar racing pit stops
Value of benchmarking (7)
Challenges assumptions
Helps cut costs
Improves service if lessons are learned
Helps simplify processes
Improves quality if relevant actions are taken
Changes behaviour
Helps break resistance to change by demonstrating other methods of solving problems
Pitfalls of benchmarking (4)
You get what you measure
Takes too much time and money
Getting the information may be problematic.
Benchmarking will not identify the reasons
Mission statements should include (4)
(1) Purpose: Why do we exist and who for?
(2) Strategy: How and where are we going to compete
(3) Behavioural standards: To guide the actions of employees
(4) Values: What does the organisation believe in?
Benefits of budgeting. PRIME
Planning – It forces you to look ahead and fee plan your resource requirements
Responsibility – Gives managers (budget holders) areas to oversee
Integration – This covers co-ordination and communication where different departments are forced to talk to each other.
Motivation – The budget can be used as the basis for setting targets.
Evaluation – Gives a basis for comparison of actual performance
BPR Engineering
‘The fundamental rethinking and radical redesign of business processes to achieve dramatic
improvements in critical contemporary measures of performance, e.g. cost, quality, service, speed
Add value
Criticisms of BPR (9)
Dehumanised the work place
increased managerial control
An excuse to downsize
Lack of management support and thus poor acceptance in the organisation
Exaggerated expectations regarding the potential benefits from a BPR initiative and
consequently failure to achieve the expected results
Underestimation of the resistance to change within the organisation
Generic “best-practice processes” do not fit specific company needs
BPR performed as a one-off project with limited strategy alignment
Poor project management
Impact of BPR on organisational performance
people and the processes working together
Business Process Re-engineering is the key to transforming how people work.
McKinsey 7-S Model
Premise of an organisation isn’t just structure
3 Hard S’s : Strategy, Structure, Systems. Easy to identify
4 Soft S’s: Shared values, skills, staff and style
Value chain analysis
Porter suggests that once a business has decided the basis on which it would like to compete it needs to make sure all aspects of its primary and support activities are
consistent with this.
Select measures to add value to these areas
Environmental: Conventional, Contingent, Relational, Reputational
Conventional: E.g raw materials and energy costs. Hidden in overheads
Contingent: Cleaning, end of a project life, long term so not considered
Relational: Reporting costs
Reputational: Failure costs, lost revenue etc
Data Silos
Data part of organisation can access but others cant
Lean Management Information Systems (MIS) - 5S’s
Lean = no waste in system
Structurise Sort through components and remove any that are not necessary (i.e. de-cluttering)
Systemise Arrange components to make the workflow as efficient as possible
Sanitise Keep the workplace clean, tidy and well-maintained
Standardise Develop and implement processes to sort, set in order and shine
Self-discipline Maintain regular training and audits to ensure that processes are adhered to
Descriptive Analytics
Data to state what happened. Historical data and trends.
Diagnostic Analytics
Analyse to see why events identified by descriptive Analytics occurred.
Black box algorithms
Black box algorithms are computer processes creating output and models where there is a lack of
understanding about how exactly they work. This lack of understanding can be because they are
combining variables in ways that are too complicated even for their creators to understand
Modified IRR
Modified to fix these limitations, more likely surplus cash would be reinvested into bank etc:
Multiple IRRs for cash flows which change direction
IRR assumed surplus cash reinvested in project
COMPOUND amounts (times by int) to get terminal value
Work out compound rate to get investment to terminal value
