Slide 1 - Raven Global Training by c7GYv3

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									                   THE IIA’S CIA LEARNING SYSTEMTM


                        Section Topics

 1. Global analytical                  4. Portfolio
    techniques                            techniques of
 2. Industry                              competitive
    environments                          analysis
 3. Strategic                          5. Product life
    decisions                             cycles



                             Part 4, Section A       Part 4 A – 1
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                    Organizational Strategy

                                   Our business?
           Emerging risks?                                Our industry?




             Challenges
           and obstacles?
                                  STRATEGY                 Competition
                                                          and analysis?




           Global concerns?                                New market
                                    Future trends?         expansion?




                             Part 4, Section A, Introduction              Part 4 A – 2
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    Strategic Planning and Implementation
 Strategy—the plans and means for developing
 advantageous positions and outcomes

                           Organizational statements



                           Strategy formulation/plans



                            Strategy implementation



                          Measurement and evaluation




                       Part 4, Section A, Introduction   Part 4 A – 3
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                        SWOT Analysis

                         Opportunities            Threats
SWOT Matrix                                       (External Analysis)
                         (External Analysis)
                         SO Strategies            ST Strategies
Strengths                Capitalize on internal   Draw on internal strengths to
(Internal Analysis)      strengths to maximize    reduce external threats.
                         opportunities.

                         WO Strategies            WT Strategies
Weaknesses               Overcome internal        Reduce internal weaknesses to
                         weaknesses to maximize   guard against external threats.
(Internal Analysis)      opportunities.




                       Part 4, Section A, Introduction                 Part 4 A – 4
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                   Strategic Management
 Strategic management is critical to effective business
 management.
 Skills involve:
 •   Assisting with strategy planning and implementation.
 •   Using analytical techniques to guide strategic positioning.
 •   Understanding industry environments and industry types.
 •   Making strategic decisions about growth opportunities.
 •   Managing business operations with portfolio techniques.
 •   Business planning and marketing around product life
     cycles.


                       Part 4, Section A, Introduction   Part 4 A – 5
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                    Discussion Question
Why is it important for internal auditors to
understand strategy development and
implementation processes?

Answers:
• Important to managing risk.
• See how current plans affect future business.
• Help ensure that activities and controls are
  planned to deal with emerging risks.


                       Part 4, Section A, Introduction   Part 4 A – 6
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                      Strategic Positioning
                        Structural analysis

  Competitive                                         Competitive
   strategies                                          analysis

            Market                                    Industry
            signals                                   evolution


                            Strategic
                           positioning

                         Part 4, Section A, Topic 1          Part 4 A – 7
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                   Industry Structural Analysis

 A study of industry elements and forces
 affecting competition
 • New entrants
 • Substitute products/services
 • Bargaining power of buyers
 • Bargaining power of suppliers
 • Rivalry among firms

 Reference: Competitive Strategy—Techniques for Analyzing Industries and
 Competitors by Michael E. Porter.


                           Part 4, Section A, Topic 1                Part 4 A – 8
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                    Discussion Question
Match the competitive strategy to the
appropriate example.
      Competitive Strategies                   Examples

     1. Differentiation        A. Clothing line geared to teenagers
     2. Pioneering             B. Long-awaited new electronic device
     3. Focus                  C. High-cost automobile with unique
     4. Cost leadership           features
                               D. New coffee flavors at low prices



Answers: 1 = C; 2 = B; 3 = A; 4 = D
                          Part 4, Section A, Topic 1             Part 4 A – 9
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                        Competitive Analysis
                                  Organization   Organization   Organization
 Competitive Intelligence:             A              B              C

 Organizational type?

 Goals/objectives?

 Organizational structure?

 Internal strengths/weaknesses?

 Assumptions about industry?

 Organizational resources?

 Performance/profitability?

 Future potential/growth?




                               Part 4, Section A, Topic 1                      Part 4 A – 10
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                    Discussion Question
New product regulations have just been released for
an industry. XYZ Corporation is making early
promises, saying that they are already poised to meet
and exceed those requirements in their product lines.
ABC Corporation, however, is not yet ready to do this.

What might this market signal mean for ABC?

Possible answers:
• XYZ might indeed be ready to get a jump on releasing
  products sooner than ABC.
• XYZ might be bluffing to draw attention to themselves
  and threaten other competitors.

                         Part 4, Section A, Topic 1       Part 4 A – 11
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           Discussion Question (continued)
What might ABC do to manage competitive risk?
Possible answers:
• Review competitive analysis data (which they should have), such
  as history in this regard and the likelihood of available resources
  to actually meet the new requirements.
• Gather additional data to confirm that the promises are likely.
• Determine what kind of threat this market signal
  poses, given ABC’s ability to revamp and meet the
  new requirement.
• Make strategic changes necessary to compete with XYZ
  and other competitors and not lose ground in the
  marketplace.

                         Part 4, Section A, Topic 1        Part 4 A – 12
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                    Discussion Question
Where in the industry life cycle might each of
the following fall?
I. Assisted living services
II. Traditional nursing homes
III. Cell phones        Introduction Growth Maturity         Decline

IV. Pay phones
                      Industry
                         Sales



                                                    Time



Answers: I. Growth; II. Decline; III. Maturity; IV. Decline
                           Part 4, Section A, Topic 1      Part 4 A – 13
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                   Common Industry Types

 • Fragmented                        • Declining
 • Emerging                          • Global
 • Mature

 Different strategies are used to manage in each
 type of industry. Organizations must recognize
 when an industry is shifting in some way.


                         Part 4, Section A, Topic 2   Part 4 A – 14
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                       Global Industries
 Products and services are similarly created and
 distributed for markets in more than one country.
                           Product creation



                             1         2    3




                          Product competition
                            between nations
                         Part 4, Section A, Topic 2   Part 4 A – 15
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Global Industry Advantages and Impediments

  Competitive Advantages                  Possible Impediments

 • Comparative advantage       • Market needs differences
 • Investment incentives       • Strong leadership in other countries
 • Scale economies             • Distribution channels vary
 • Global knowledge            • Lack of worldwide product interest
 • Cost savings                • Marketing messages received differently
 • Financial advantages        • Government laws and regulations




                           Part 4, Section A, Topic 2            Part 4 A – 16
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                    Discussion Question

What trends do you see affecting global
industries and competition?



Possible answers: Technology,
third-world country development,
financial and safety risks.

                         Part 4, Section A, Topic 2   Part 4 A – 17
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                      Growth Strategies

 • Integration: vertical, horizontal, or
   quasi-integration
 • Expansion: undercapacity vs.
   overcapacity
 • New entry: same industry, different
   industry, or foreign markets



                         Part 4, Section A, Topic 3   Part 4 A – 18
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                   Portfolio Management

 • An organization’s portfolio is its collection
   of strategic business units (SBUs).
 • Synergy results when SBUs are interrelated
   to generate greater economic value.
 • Portfolio analysis techniques provide
   comparisons to competitors.




                         Part 4, Section A, Topic 4   Part 4 A – 19
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                    Discussion Question

Common techniques for portfolio analysis are
the growth share matrix and the GE/McKinsey
matrix. Why are these techniques important?

Possible answers: The growth share matrix
shows the relationship between business
units and cash generation. The GE/McKinsey
matrix shows the relationship between
industry attractiveness and business unit
position.
                         Part 4, Section A, Topic 4   Part 4 A – 20
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                           Product Life Cycles
 Product and service sales follow life cycles (similar to
 industry life cycle stages).
                         Introduction   Growth          Maturity   Decline


              Product
                Sales



                                                 Time



 Portfolio planning involves managing business product
 lines and services carefully over time. Business marketing
 strategies are adapted as products and services move
 through the life cycle.

                                   Part 4, Section A, Topic 5                Part 4 A – 21
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                   Reinforcing Activity 4-1
               Part 4, Section A, Topics 1, 2, and 3
                      Strategic Management




                      Part 4, Section A, Topics 1, 2, and 3   Part 4 A – 22
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                       End of Section A
                            Questions?




                             Part 4, Section A       Part 4 A – 23
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