Frameworks

Frameworks are useful tools that help you analyze business issues, structure your thinking and communicate recommendations. Business frameworks can help you articulate goals with strong business writing and develop a blueprint for success. You can take a broader conceptual framework and scale it to fit your needs. A business framework also gives you a starting place and a common vocabulary that you can edit to fit your own purpose. Down below is a list of the most prominent frameworks and models in today’s business world. Frameworks can be categorized based on several levels of analysis:

Business Frameworks

Macro-Level

Industry-Level

  • Industry Life Cycle
  • Porter’s Five Forces
  • Value Net Model

Corporate-Level

  • Acquisition Integration Approaches
  • A.T. Kearney Strategy Chessboard
  • BCG Growth-Share Matrix
  • GE/McKinsey Matrix
  • McKinsey 7S Model
  • Strategy Diamond

Business-Level

  • Ansoff Matrix
  • Business Model Canvas
  • OLI Paradigm
  • Porter’s Generic Strategies
  • Profit Tree
  • SWOT Analysis
  • Value Chain Analysis
  • Value Disciplines
  • VRIO Framework

Product-Level

  • Marketing Funnel
  • Product Adoption Curve
  • Product Life Cycle
  • Price Elasticity

Management-Level

  • Blake and Mouton’s Managerial Grid
  • Fiedler’s Contingency Model of Leader-Situation Matches
  • Hersey and Blanchard’s Leadership Styles
  • Kotter’s 8 Steps of Change (Management) Model
  • Lewin’s 3 Step Model of Change (Management)

Macro-level Frameworks

Hofstede’s Cultural Dimensions

Hofstede’s cultural dimensions theory is a framework for cross-cultural communication, developed by Geert Hofstede. It describes the effects of a society’s culture on the values of its members, and how these values relate to behavior, using a structure derived from factor analysis. Over the years, this study led to six cultural dimensions on which nations can be ranked: Power Distance, Individualism/Collectivism, Masculinity/Femininity, Uncertainty Avoidance, Long-term/Short-term Orientation and Restraint/Indulgence.

Cultural Dimensions Geert Hofstede

More informationhttp://www.business-to-you.com/hofstedes-cultural-dimensions/ or https://geert-hofstede.com/national-culture.html
Source: Hofstede, G. (1984). Culture’s Consequences: International Differences in Work-Related Values. Beverly Hills CA: SAGE Publications.

Complexity: High

 

Porter’s Diamond of National Advantage

The Porter Diamond is a model that is designed to help understand the competitive advantage nations or groups possess due to certain factors available to them, and to explain how governments can act as catalysts to improve a country’s position in a globally competitive economic environment.

Afbeeldingsresultaat voor porter diamond

More information: –
Source: Porter, M.E. (1990). The Competitive Advantage of Nations. New York: Free Press.

Complexity: High

 

PESTEL Analysis

Originated as PEST Analysis, this framework is used in the early phases of strategy development to describe the landscape and environment in which a firm operates (PESTEL stands for Political, Economic, Social, Technological, Environmental and Legal). Note: It is sometimes transformed into SLEPIT (Social, Legal, Economic, Political, Intercultural, Technological), STEEPLE (Social, Technological, Economic, Environmental, Legal, Ethical) and DESTEP (Demographic, Economic, Social, Technological, Environmental, Political). This tool is especially useful when starting a new business or entering a foreign market. It is often used in collaboration with other analytical business tools such as the SWOT analysis and Porter’s Five Forces to give a clear understanding of a situation and related internal and external factors.

PESTEL ANALYSIS

More information: http://www.business-to-you.com/industry-analysis/scanning-the-environment-pestel-analysis/
Complexity: Low




Industry-level Frameworks

 

Industry Life Cycle

More information: –
Source: Porter, M.E. (1980). Competitive Strategy: Techniques for Analyzing Industries and Competitors. The Free Press
Complexity: Low

 

Porter’s Five Forces

Porter’s Five Forces analysis is a framework that helps analyzing the level of competition within a certain industry. It is especially useful when starting a new business or when entering a new industry sector. According to this framework, competitiveness does not only come from competitors. Rather, the state of competition in an industry depends on five basic forces: threat of new entrants, bargaining power of suppliers, bargaining power of buyers, threat of substitute products or services, and existing industry rivalry.

 

Afbeeldingsresultaat voor porter's five forces

More informationhttp://www.business-to-you.com/porters-five-forces/
Source: Porter, M.E. (1979). How Competitive Forces Shape Strategy. Harvard Business Review
Complexity: Medium

 

Value Net Model

The Value Net Model is an alternative to Porter’s Five Forces and recognizes the importance of competitors’ as well as complementary products in the industry. The model focuses on the four main groups that influence a company’s direct environment: Customers, Complementors, Competitors and Suppliers. Customers and Suppliers are described in similar terms to Porter’s model. Competitors however entails the Existing Rivals, New Entrants and the Substitutes in this model. The Complementors are a new element to the model.

Value Net Model

More informationhttp://www.business-to-you.com/value-net/ 
Source: Brandenburger, A.M. & Nalebuff, B.J. (1996). Co-Opetition: A Revolution Mindset that Combines Competition and Cooperation. Crown Business.
Complexity: Medium




 

Corporate-level Frameworks

 

Acquisition Integration Approaches

This framework distinguishes four different approaches to Acquisition Integration or Merger Integration depending on a company’s need for Strategic Interdependence between the acquirer and the target firm and the need for Organizational Autonomy: Preservation, Symbiosis, Holding and Absorption.

Acquisition Integration Approaches Merger Integration Framework

More information: –
Source: Haspeslagh and Jemison (1991). Managing Acquisitions: Creating Value Through Corporate Renewal 

Complexity: Medium

A.T. Kearney Strategic Chessboard

A.T. Kearney proposes four distinct strategic approaches using these two dimensions—predictability and a company’s ability to shape or adapt to its industry.

at-kearney-strategy-chessboard

More information: http://www.atkearney.com/paper/-/asset_publisher/dVxv4Hz2h8bS/content/playing-on-the-new-strategy-chessboard/10192
Source: A.T. Kearney (2010). Playing on the New Strategy Chessboard.
Complexity: Medium

 

BCG Growth-Share Matrix

The BCG matrix (also known as Boston Box) is a framework to help decision making on existing product lines. Developed in the 1970s, it has been used to evaluate how a company should think about its portfolio based on two criteria: the relative market share of a product and the market growth rate resulting in four archetypes: the Dogs, Question Marks, Stars and Cash Cows.

BCG Matrix

More information: https://www.bcgperspectives.com/content/articles/corporate_strategy_portfolio_management_strategic_planning_growth_share_matrix_bcg_classics_revisited/
Source: Henderson, B. (1970). Growth-Share Matrix. BCG Perspectives.
Complexity: Low

 

GE/McKinsey Matrix

The nine-box matrix offers a systematic approach for the decentralized corporation to determine where best to invest its cash. Rather than rely on each business unit’s projections of its future prospects, the company can judge a unit by two factors that will determine whether it’s going to do well in the future: the attractiveness of the relevant industry and the unit’s competitive strength within that industry.

Afbeeldingsresultaat voor ge business screen matrix

 

More information: http://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/enduring-ideas-the-ge-and-mckinsey-nine-box-matrix
Source: McKinsey & Company (2008). Enduring Ideas: The GE–McKinsey Nine-box Matrix. McKinsey Quarterly.
Complexity: Medium

McKinsey 7S Model

The McKinsey 7S Framework is a management model developed by business consultants Robert Waterman Jr. and Tom Peters in the 1980s. The 7 S’s are Structure, Strategy, Systems, Skills, Style, Staff and Shared values. The model is most often used as an organizational analysis tool to assess and monitor changes in the internal situation of an organization. The model is based on the theory that, for an organization to perform well, these seven elements need to be aligned and mutually reinforcing. So, the model can be used to help identify what needs to be realigned to improve performance, or to maintain alignment (and performance) during other types of change

Afbeeldingsresultaat voor mckinsey 7s

More information: http://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/enduring-ideas-the-7-s-framework
Source: McKinsey & Company (2008). Enduring Ideas: The 7-S Framework. McKinsey Quarterly.
Complexity: Medium

 

Strategy Diamond

The framework (developed by Donald Hambrick and James Frederickson) puts the economic logic at the center of the analysis. Five dimensions are analyzed: Arenas, Vehicles, Differentiators, Staging and Economic logic. Strategy is about making important choices, and the real power of the Strategy Diamond is that it integrates important choices into a bigger picture instead of as a piecemeal approach.

More informationhttp://www.business-to-you.com/what-is-strategy/
Source: Hambrick & Fredrickson (2005). Are You Sure You Have a Strategy? The Academy of Management Executive.
Complexity: Medium




 

Business-level Frameworks

 

Ansoff Matrix

There are different ways of growing a business. Igor Ansoff identified four strategies for growth and summarized them in the so called Ansoff Matrix. The Ansoff Matrix (also known as the Product/Market Expansion Grid) allows managers to quickly summarize these potential growth strategies and compare them to the risk associated with each one. The idea is that each time you move into a new quadrant (horizontally or vertically), risk increases.

Ansoff Matrix

More informationhttp://www.business-to-you.com/ansoff-matrix-grow-business/
Source: Ansoff, I. (1957). Strategies for Diversification. Harvard Business Review.
Complexity: Medium

 

Business Model Canvas

The excellent work by Alex Oesterwalder opens the door to companies that need to rethink their business model. It offers a practical step-by-step process to find new ways to create value and analyze a company’s current model.

 

More information: http://www.businessmodelgeneration.com/ or http://alexosterwalder.com/
Source: Osterwalder et al. (2004). The Business Model Ontology: A proposition in a Design Science Approach.

Complexity: Medium

OLI Paradigm/Eclectic Paradigm

The OLI Paradigm is a tool that helps management choose between several foreign market entry-mode strategies such as exporting, licensing and Foreign Direct Investment (FDI). According to this framework, a company needs three advantages in order to be able to successfully engage in FDI: Ownership advantage, Location advantage, Internalization advantage. If any of these advantages is not present, management might want to choose different entry-mode strategies such as exporting or licensing instead. The framework was initially developed by John Dunning in 1979 under the name Eclectic paradigm. Dunning draws upon theories such as the internalization theory and the transaction cost theory to validate his framework.

Eclectic paradigm OLI

More information: http://www.business-to-you.com/choosing-the-right-entry-mode-strategy/
Source: Dunning (1979). Toward an Eclectic Theory of International Production: Some Empirical Tests. Journal of International Business Studies.
Complexity: Medium

 

Porter’s Generic Strategies

Porter’s generic strategies describe how a company pursues competitive advantage by positioning itself in between its rivals. There are three generic strategies for competitive advantage: Cost Leadership, Differentiation and Focus. A company chooses to pursue one of two types of competitive advantage, either via lower costs and thus a lower price or by differentiating itself along dimensions valued by customers to command a higher price. A company also chooses one of two types of scope, either focus (offering its products to selected segments of the market) or industry-wide, offering its product across many market segments. Combined these strategies offer four potential ways of companies to position themselves. Companies that try to excel in all of these ways would end up somewhere ‘stuck in the middle’, according to Porter.

 Generic Strategies Porter

More information: –
Source: Porter, M.E. (1985). Competitive Advantage: Creating and Sustaining Superior Performance. Harvard Business Review.
Complexity: Low

 

Profit Tree

The profit tree is a simple but very effective way to structure a company’s revenue and cost streams. It allows a company to see where improvements can be made in case of profitability issues.

Profitability Framework Revenues - Costs

More informationhttp://www.business-to-you.com/case-interview/profitability-case/
Complexity: Low

 

SWOT Analysis

SWOT Analysis (Strenghts, Weaknesses, Opportunities and Threats) is a structured method to analyze both internal and external factors that are likely to affect a company’s success. This framework needs little introduction as it has been used and overused in virtually every strategic planning discussion. It needs to be combined with the TOWS matrix  to gain additional insights.

 

SWOT Analysis

More informationhttp://www.business-to-you.com/swot-analysis/
Complexity: Low

 

Value Chain Analysis

A systematic approach to analyze your value chain, and identify where to create the greatest value for the customer.

Porter's Value Chain Analysis

More informationhttp://www.business-to-you.com/value-chain/
Source: Porter (1985). Competitive Advantage: Creating and Sustaining Superior Performance. Simon and Schuster.
Complexity: Medium

 

Value Disciplines

Value Disciplines Treacy and Wiersema

More information: –
Source: Treacy, M. & Wiersema, F. (1993). The Discipline of Market Leaders. NY: Addison-Wesley
Complexity: Low

 

VRIO Framework

VRIO framework (formerly known as VRIN) is a business analysis tool that helps assessing the internal sources of sustainable competitive advantage and is therefore part of the Resource-Based View (RBV). According to this model, resources and capabilities should have four attributes that lead to sustainable competitive advantage. Resources should be Valuable, Rare, Inimitable and Organisation-wide supported: VRIO.

VRIO Model

More informationhttp://www.business-to-you.com/vrio-from-firm-resources-to-competitive-advantage/
Source: Barney. (1995). Looking Inside for Competitive Advantage. Academy of Management Executive.
Complexity: Low




 

Product-level Frameworks

Marketing Funnel

Marketing Funnel

More informationhttp://www.business-to-you.com/marketing-funnel/
Source: –
Complexity: Medium

Price Elasticity

More information: –
Source: –
Complexity: Low

 

Product/Technology Adoption Curve

More information: –
Source: Rogers, E.M. (1962). Diffusion of Innovations. New York: Free Press of Glencoe
Complexity: Medium

 

Product Life Cycle

 

More information: http://productlifecyclestages.com/
Source: Levitt (1965). Exploit the Product Life Cycle. Harvard Business Review.
Complexity: Medium

 

Management-level Frameworks

Blake and Mouton’s Managerial Grid

More information: –
Source: –
Complexity: Low

 

Fiedler’s Contingency Model of Leader-Situation Matches

fiedler-contingency-model

More information: –
Source: –
Complexity: Medium

Hersey and Blanchard’s Leadership Styles

 

More information: –
Source: –
Complexity: Medium

Kotter’s Eight Steps of Change (Management) Model

Kotter 8 Steps Change Managment

More information: –
Source: –
Complexity: Low

Lewin’s Three Stage Model of Change (Management)

 

Afbeeldingsresultaat voor lewin change model

 

More information: –
Source: –
Complexity: Low

 

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