A collection of core strategy models which are essential to every strategist's toolkit.

1. Essential Strategy Models
A collection of essential models for every strategist’s toolkit

2. SWOT analysis
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Strengths Weaknesses
Opportunities Threats
Summarise the firms Strengths,
Weaknesses, Opportunities and
Threats
 Strengths and Weaknesses are
typically internal to the firm and
describe the current reality
 Opportunities and Threats typically
arise from factors in the firms
competitive environment and may
exist already or have the potential to
occur in the future.
 Strengths and Opportunities should be
leveraged, Weaknesses and Threats
should be mitigated.
A SWOT is a useful tool to summarise
the insights gained from using other
models.

3. McKinsey 7-S analysis
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Describe and analyse strengths and
weaknesses in terms of:
 the “hardware”
◦ Strategy: alignment, implementation,
communication, planning vs
opportunism, rigour, depth,
transformative vs incremental
◦ Structure: committees, governance,
depth, breadth, collaboration,
◦ Systems: IT, operational, finance, HR,
etc. level of rigour
 the “software”
◦ Style: culture, leadership, managerial
versus transformational
◦ Staff: selection, reward, autonomy,
empowerment
◦ Skills: ability, training, experience
◦ Shared Values: alignment, positive
or negative, hard minds vs soft hearts
Consider applying this lens to each process
in the Value Chain
Structure
Systems
Style
Staff
Skills
Strategy
Shared
Values
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Insights from a 7-S analysis can be summarised
as Strengths or Weaknesses in a SWOT
analysis

4. Porter’s 5 Forces analysis
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Analyse the competitive forces in the
industry
Sample issues to consider:
 Bargaining power of suppliers
◦ Extracting a higher margin
◦ Forward integrating
 Bargaining power of buyers /
distributors
◦ Price sensitivity
◦ Backward integration
◦ Switching costs
 Threat of new entrants
◦ Industry profitability
◦ Barriers to entry
 Threat of substitutes
◦ Disruptive change
◦ Perceived level of differentiation
 Rivalry
◦ Concentration & stability
◦ Industry growth rates
Threat of
Substitutes
Bargaining
Power of
Suppliers
Bargaining
Power of
Buyers
Threat of New
Entrants
Rivalry
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Insights from a 5 Forces analysis can be
summarised as Opportunities or Threats in a
SWOT analysis

5. PEST analysis
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Political Economic
Social Technological
Identify environmental trends in the
competitive environment:
 Political: Changes in the political,
regulatory, legal and special interest
groups sphere.
 Economic: Macro-economic trends such
as interest rates, equity markets, inflation
/ purchasing power and disposable
income; and micro-economic trends such
as supply, demand and elasticity.
 Social: and socio-economic trends such
as health, longevity, family and living
patterns, behaviour and fashions.
 Technological: trends in product
development, procurement,
manufacturing, distribution and customer
engagement.
The model is sometimes extended as PESTLE
to include:
 Legal: as a separate sphere
 Environmental: an increasing
consideration in many industries
Insights from a PEST analysis can be
summarised as Opportunities or Threats in a
SWOT analysis

6. Business Model Canvas
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KP
Which Key
Partners does
the firm rely on,
and for what?
KA
What Key
Activities must
the firm perform?
VP
What Value
Proposition does
the firm offer to
solve its
customers’
problems or
satisfy their
needs?
CS
What Customer
Segments does
the firm target?
KR
What Key
Resources does
the firm need?
CR
What kinds of
Customer
Relationships
does the firm
have?
CH
Through which
CHannels does
the firm deliver its
products and
services?
C$
What is the Cost structure of the firm?
R$
What is the Revenue structure of the firm?
Firms extract value from the markets in which they compete by integrating the 9 elements of their
business model.

7. Target Operating Model
Identify the People, Processes and
Technology required to deliver each value add
in the Value Chain
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8. Activity System
 A subset of Southwest Airlines’ activity
system
 Key strategic activities are mutually
reinforcing
 Individual activities are easy for
competitors to copy; the whole system
is harder to copy = sustainable
competitive advantage
 Focused – will not appeal to all
passengers; not trying to be the best at
everything
 Specific – regarding what is done and
what is not done
 Differentiated – no other airline
pursues the same strategy
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Limited
passenger
service
Frequent
Reliable
Departures
High
Aircraft
utilisation
Very low
ticket
prices
Short-haul
point-point
2ndary
airports
Lean
productive
ground
crews
No meals
No seat
assigns
No bag
transfer
No
connec-
tions
15 min
turn-
around
737s only
High
compen-
sation
Flexible
union
contracts
“low cost
airline”
Competitive Strategy is about being different. It means deliberately choosing a set of activities to
deliver a unique mix of value.
Michael E. Porter, 1998
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9. Customer segmentation
Kaplan and Norton, 1996
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Some managers object to choosing targeted customer segments; they have never seen
a customer they didn't like, and want to be able to satisfy all customers' preferences.
But this approach runs the risk of doing nothing well for anybody.
The essence of strategy is not just choosing what to do, it also requires choosing what
not to do.
Segment
Value
Proposition Objectives Measures TargetsProducts
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10. Strategy Canvas
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A sample Strategy Canvas for Southwest Airlines
A Strategy Canvas is a visual representation of how a firm differentiates its value proposition(s) from
those of its competitors:
 Identify the factors which your customers consider important.
 Chart how well your competitors/substitutes perform against each category.
A Strategy Canvas can be used to understand an existing value proposition, or to identify a new
opportunity. Individual canvases can be produced for different target customer segments.

11. BCG Matrix
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 For multi-line portfolios, map market
growth against market share
 Interpretation:
◦ Invest in Stars – they are the
source of future profitability
◦ Improve efficiencies in Cash Cows
– they are funding the investment
in your Stars
◦ Decide whether you can turn
Question Marks into Stars or not
◦ Exit Dogs – unless there are cross-
line synergies (e.g. loss leaders);
remember that all costs are
variable in the long term
 Variations: e.g. Bubble size for profit
contribution
 Market scope definition is key
 Portfolio analysis can be performed for
different products, services, customer
segments, geographic markets,
channels, brands, etc.
Cash Cows Stars
Dogs Question Marks
MarketShare
HighLow
Market Growth
Low High
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12. A Balanced Scorecard
Define measureable outcomes
 Answer 4 simple questions using SMART
objectives
 For a mutual, replace shareholders with
customers and regulators. For business
units, treat the parent as the shareholder.
 Define measures and targets
 Aim for between 16 and 24 measurable
outcomes (in total)
 Aim for a balance between the four questions
– don’t let one aspect of the strategy
dominate the others
 You get what you measure. If you can’t
measure it, you can’t manage it.
 Don’t confuse balanced scorecard metrics
with benchmarking – strategy is non-
comparable
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To succeed
financially,
how should
we appear to
our
shareholders?
To achieve our
vision, how
should we
appear to our
customers?
To satisfy our
customers and
shareholders,
what business
processes
must we excel
at?
To achieve our
vision, how
will we sustain
our ability to
learn and
improve?
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Registered Office: Unit 4 Vista Place, Coy Pond Business Park, Ingworth Road, Poole BH12 1JY
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For a confidential
discussion, contact
Chris C Fox Consulting
Limited
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