BU111 Midterm

Diamond-E Framework

A firm’s strategy must align with the external environment and be consistent with internal conditions (internal + external consistency).

External alignment (Diamond-E)

The strategy makes sense given opportunities and threats in the environment

Internal consistency (Diamond-E)

Internal parts of the organization align with the strategy and each other.

External conditions answer what question?

“What should we do?”

Internal conditions answer what questions?

“What do we want to do? What can we do?”

Four components of the Diamond-E

Environment (PEST), Managerial Preferences, Resources, Organization

Environment in Diamond-E

Asks: “What MUST we do?”

Managerial preferences (Diamond-E)

Shape what management is willing to do, what opportunities they see, and affect culture, structure, and resource acquisition

Resources (Diamond-E)

Determine what strategies are feasible; can be acquired to enable new strategies.

Organization (Diamond-E)

Culture, structure, leadership, and capabilities that influence what strategies are possible.

Strategy in Diamond-E

Links internal capabilities with the external environment to combat threats and capitalize on opportunities.

Key Success Factors (KSFs)

Employees, Customers, Products/Services, Innovation, Uniqueness, Financial Resources.

Why employees are key

They enable operations, create value, and drive productivity.

Why customers are key

They provide revenue and loyalty reduces costs of acquiring new ones.

Why products/services are key

They provide value and reason for customers to pay.

Why innovation is key

The environment changes; innovation keeps the company competitive and efficient.

Why uniqueness is key

It allows differentiation, premium pricing, loyalty, and attraction of resources/opportunities.

Why financial resources are key

They fund activities, allow growth, and support sustainability.

Achieving employee commitment

Hire for fit, train/motivate, reward, create belonging.

Achieving customer satisfaction

Know your customer, anticipate needs, reduce churn, build loyalty

Achieving product/service quality

Define value, use quality inputs, and have consistent processes.

Achieving innovation

Build culture of change, reward new ideas, embrace creativity.

Achieving uniqueness

Build sustainable advantages with unique resources, capabilities, and differentiation.

Measuring employee commitment

Turnover, applications, productivity per employee.

Measuring customer satisfaction

Market share, share of wallet, churn, net promoter score.

Measuring product quality

Returns, defects, warranties, waste.

Measuring innovation

# of ideas generated, implemented, cycle time

Measuring uniqueness

Market research reputation, competitiveness vs. rivals

Measuring financial performance

Profitability (margin, ROI), firm value, revenue/profit growth.

PEST – Political

Laws, regulations, trade agreements

PEST – Economic

GDP, inflation, unemployment, exchange rates, interest rates.

PEST – Social

Values, attitudes, customs, demographics, trends

PEST – Technology

IT, R&D, materials, innovation speed.

Porter’s Generic Strategies

Cost Leadership, Cost Focus, Differentiation Leadership, Differentiation Focus.

Example of cost leadership

Walmart – low costs, broad audience

Example of cost focus

Freedom Mobile – low cost, narrow audience.

Example of differentiation leadership

Apple – unique products, broad audience.

Example of differentiation focus

Ferrari – unique, luxury cars, narrow audience

Purpose of Porter’s Five Forces

To analyze industry attractiveness and competitive pressures

The five forces

Rivalry, New Entrants, Substitutes, Suppliers, Buyers.

Most influential force (Porter’s Five)

Rivalry among competitors.

Effect of substitutes on profitability

More substitutes + low switching costs = lower profits.

Effect of suppliers on profitability

High supplier power raises costs, lowers profits

Effect of buyers on profitability

Few or powerful buyers can demand lower prices

Case analysis – 6 steps

1. Identify Issues, 2. Objectives/Aspirations, 3. Constraints/Components, 4. Options, 5. Recommendations/Implementation, 6. Prove Effectiveness.

Tool for identifying underlying issues

The “3 Whys” approach and frameworks like Diamond-E or profitability tree.

Decision criteria

Standards to evaluate options: must satisfy objectives, stay within constraints, support aspirations.

Forcefield analysis

Tool to assess internal/external enabling and resisting forces for strategy implementation.

GANTT chart purpose

Schedule and track implementation activities over time

APA citation parts

Who (author), When (date), What (title), Where (source/URL).

When to cite

When using anything not common knowledge, statistics, or ideas from other sources.

Two citation requirements

In-text citations + full reference list.