Coursera – Strategy Formulation

marcus

The course concentrates on the variety of aspects that need to be taken into consideration during the process of strategy formulation.

Industry Analysis one of the consideration – the concept of “attractiveness” of a specific industry was interesting.  My guess, it can also apply to a supplier company looking for a “beach head” as a specialist in a specific industry – the industry needs to be selected carefully to assure that it has the resources for the offered product.

industry

A very interesting point on off-shoring was discussed with a Lego case study.  Lego outsourced its operations to lower-cost location at one point, and then, reversed its decision.  Though the decision made sense at the time when it was made, the additional knowledge gained by the company with the experience of outsourcing suggested that it was not a good approach for Lego.

A rather eye-opening article The Hidden Costs of Offshore Outsourcing gives an excellent overview of additional costs that need to be considered.

  • The cost of selecting a vendor
  • The cost of transition
  • The cost of layoffs
  • biasesThe cultural cost

On average, IT organizations going offshore will experience a 20 percent decline in application development efficiency during the first two years of a contract as a result of such differences… lags in productivity can add as much as 20 percent in additional costs to the offshore contract.

Bottom line: Expect to spend an extra 3 percent to 27 percent on productivity lags.

  • The cost of ramping up
  • The cost of managing an offshore contract

A nice link from the course materials to an infographic of 20 cognitive biases with cute images and examples worth saving for…  future decisions of any kind 🙂

As all strategic decisions are made by boundedly rational humans in the situation of incomplete information, the image from the course below describes the situation perfectly.  The good news?  Everybody experiencing the same problem 🙂

wave

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