Now, let's use this video to bring together pretty much everything

we've been talking about to some extent, throughout the course.

And in particular some of the tools we've been talking about.

This is somewhat large set of slides

compared to a lot of the slide decks that we posted online.

I don't really have much new to say, so

I'm gonna go through it relatively quickly.

Because I just have each of these slides in here more as a place holder to

illustrate, how you might walk through a strategic analysis that

draws all the way back into making use of political

assessment and analyzing supply and demand.

So I really want to use this video to illustrate tools but

we're gonna apply it to the case we've been discussing.

And let's say most important takeaway from this

slide is just thinking about the sequence that you would go through to really,

this is not something a single individual would do maybe this is something that

would require all kinds of input from across an entire organization.

But thinking about strategic analysis and planning for

either business enterprise or as I've said in other videos any

kind of organization can evaluate their plan.

And set goals to achieve their objectives and

achieve their ultimately establish a pathway to achieve

their vision of the organizations essentially by using these steps.

First, you need obviously to define your situation and

the options facing you to achieve these broad set of general goals that you have.

And then what you would do is presumably conduct some kind of strategic

analysis of the situation you're in and the options facing you.

We've talked in detail about two different tools, the SWOT analysis and the Porter

5 Forces as approach to evaluating the different forces in your market.

As I mentioned there are a bunch of other tools that you may find useful.

Now this importantly,

is going to be a preliminary analysis under currently known conditions.

In one of those currently known conditions is the strategy you are currently

implementing.

So keep that in mind what you're gonna notice is we're gonna be doubling back and

making use of these tools over and over.

So what happens is we keep coming back essentially to make use of whatever

tools you wanna use, as you're refining your understanding of your environment,

your options, and your plan going forward.

Once you do this preliminary analysts,

presumably it's going to identify some needs for a deeper analysis or it might.

It might or it might not.

Maybe you already know everything.

Maybe you anticipated those needs and you just did those analysis up front.

But for instance, the type of analysis you might need to do is you

might need to do a thorough market analysis.

You might really need to study supply and demand.

Maybe what you learn from your preliminary analysis is that I need

better cost to revenue models.

So that would lead you to more thorough economic analysis.

Maybe what you learn in your preliminary analysis is that you have to

better understand the regulatory environment or

some of these non market risks or political risks.

So then of course, you would do some kind of issue analysis using tools

that we developed or at least previewed in week five.

Then what you would do is, construct

a strategic analysis of your situation and

options thinking now from the perspective

of some improvement in your assumptions.

So here presumably you've improved your assumptions, but

what you're gonna do again is use some of these tools to maybe evaluate once again.

Because the first step you simply identified

where you had to do the deep dive analysis.

Now, that you've incorporated that into your situation and options,

you might want to double back and verify that your strategic assessment is right.

So now, you have a final analysis under these currently known

conditions then presumably you would develop some kind of strategy.

And then what you can do is, you can use these tools again to

evaluate this strategy that you developed.

So your basically these are very general tools again that can be applied to

business organizations or social mission organizations.

But the thing is you're constantly using them over and

over again, probably throughout the process of getting

down to what you feel is going to be a robust strategy.

It's not just dump information in and then sort of see what comes out and

run with it.

Assume that all the while it's these tools themselves that are helping

you identify more information and you need to do a better analysis.

So let's quickly go through this for our example.

Again, I'm not going to discuss much of this in detail because you've seen it all.

But I wanna just sort of walk you through the way I would think about it and

even if it's just in a hurried fashion.

So we have a certain case situation here.

[COUGH] We're already familiar with this.

This is the information you saw in previous videos.

We have a refinery we can invest in.

We've got an existing local supply of crude.

It's gonna depend obviously, on the XL pipeline coming in.

We don't really have an organization in place even though we have a leadership

team in place and so on, and so forth.

So you have to identify from that what are your options?

What do you need to know, and so forth.

We have a little bit of a financial summary here.

I'm not going to do a financial analysis that would be

another dimension of your analysis, obviously.

But depending on your cost of capital it just turns out the way

we structured these numbers that this could be profitable.

But if certain things don't break your way, it might not be profitable.

It might be quite costly.

So that's another factor that that we kind of blew over is the financial analysis.

So you basically have a handful of options.

You either pass on the opportunity or

you buy it and you upgrade and compete regionally or

you upgrade immediately and sell both regionally and elsewhere.

Or you upgrade later, you kinda defer some of those investments and

then coupled with that you either compete regionally or predominantly elsewhere.

So those are your options.

Now, recall our SWOT analysis that we pulled together really quickly.

This was for our current.

This is our preliminary analysis of the current situation without really having

much of a plan on hand other than the broad strokes of,

we're gonna buy this thing and here are our strengths and here are our weaknesses.

So that's how we use the SWOT Analysis to help us first start to organize some of

that thinking.

And then we also, without having done much of a deep dive into anything we kinda used

the Porter 5 Forces Analysis to analyze the market.

Again, this is a preliminary analysis of the current situation.

And this may help us prethink a little bit where some of the main forces

suppressing our ability to achieve our financial goals would be.

And that's presumably where we're gonna deep dive a little bit.

And what you do is you kind of find out through that first pass,

well there's some things we probably need to know better.

We really to understand our costs, we need to probably understand transportation and

in particular this XL Pipeline addition seems key.

We probably need to understand the competitive environment because even

the very first pass at this makes it look like we're gonna be selling into

pure price competition world.

So then what we can do is go into that more thorough economic analysis.

Well one of the markets we had to really think about is

what we're selling into, our output market.

The region is a net importer of crude but it exports refined products.

So we wanna think a little bit about how our refinery is gonna affect supply and

demand and what are the prices we are gonna achieve for

whatever it is we produce?

And so that analysis would lead you to

something ultimately graphically that would look like this.

You have a certain situation and if you add

your refinery to the mix, you're going to shift out supply.

Some big questions, how far is it shifting out supply?

How steep is this demand curve which is going to then determine

whether prices fall a little bit or do they fall a lot more?

Okay?

So those are some of the factors that you would want to think

about in your market analysis.

But that's why you're doing that kind of analysis, kind of identifying the key

factors in each of these markets you're selling into or buying from.

And what you might do is then summarize what you've

learned here is that you're gonna have the key issue

is really obviously all on the supply side.

The supply curve is gonna move out so we're mostly

gonna be interested in what's going on here.

I know this is all obvious, technology may matter a little bit for

controlling your costs but these are all the supply side factors.

And then the determinants of demand, it's not obvious there's a lot of action there.

So that's some of the takeaways just in words that you'll get from this analysis.

Another issue we identified was the political issue.

So I'm not gonna go through this slide.

It's just here symbolically to remind you that we can do explicitly analyse this

this issue which is very central to the ultimate success of our opportunity.

We may have a whole bunch of different stakeholders here.

Additional stakeholders we can add to the analysis that could maybe

make our assessment of influence even more robust

and put some effort into verifying how we feel about the issue position.

But basically, this is the deep dive into the political issue that we identified

through our thorough understanding or

our preliminary understanding of the strategic opportunity we're facing.

So what you'll then do, as I mentioned is double back and

maybe revisit the analysis of the current situation.

This will be our final analysis and

you're gonna decide well, some things are maybe less important.

Maybe this availability of new supplies doesn't belong in the positive

column for or strengths column for this business opportunity.

Because actually we conclude this is much more, this is a significant risk and

it's not obvious that we really want to plan on excess supply here.

Actually, we really have to build a strategy that mitigates that problem.

And then we also know with maybe a higher degree of certainty we're really gonna be

facing peer price competition,

which starts getting us thinking about cost control.

The other thing you might do is also double back on your market analysis.

So you really understand where these forces are that are going to put

pressure on your ability to achieve some of your financial goals.

So again, without thinking to hard about what your strategy is going forward yet,

what is our current just sort of humming along and

moving ahead without really thinking intricately about an intricate strategy.

But this is our more final analysis and a few things that we might highlight is

actually maybe we should upgrade the degree of the force that is here.

And I kind of put the suppliers as a bit between

relatively strong and moderate now, because I have less confidence in

the XL Pipeline showing up.

The other thing we might do is even,

I can't really make our industry competitors much redder.

But you might decide wow, we really have concluded that this all about

price competition because we are in a commodity market that gets you focused

actually, a little more acutely on cost containment or something like that.

So what you can do is really hone in on those particular assumptions that

put you at risk.

Because you now know where the key risks and all of the sort of strong and

week forces, and the action is in your competitive environment,

and within your organization.

And you can start to address those risks depending on which ones are either

likely or have a severe impact or both.

So you can come up with mitigation plans to address

in particular those risks that are particularly

likely as I said and particularly severe.

And what you do is you come up with a strategy which I've just organized sort of

in a SWOT framework.

A bit here or at least I wanted to highlight how it

addresses some of the key issues in your final SWOT analysis.

So if we know we're gonna be in a price driven market,

what we're gonna have to do is a part of our strategy's gonna be to

develop an effective workforce very quickly.

We have some opportunities in that regard because we're in a region that probably

has excess supplies of workers who are technically proficient in this

somewhat high tech industry.

We'll have to also probably prethink some these distribution customary relationships

because that can take some of the in securing longer term contracts for

sale of a product.

And take some of the edge off the peer price competition rather than just selling

sort of feeling like your selling day to day into a spot environment.

And you might even think about we're going to actually stage some of our

commitments contingent on the XL Pipeline.

So either expansion might be contingent on

how exactly that political decision breaks or maybe the entire

acquisition, if there's a way to actually stage it and get yourself lined up.

So that you pretty much just have to sign on the dotted line as soon

as the president would sign on the dotted line or or don't sign, if he doesn't sign.

There's lots of front end work that you can do to make sure that works.

But ultimately what this does specifically is,

it addresses these key weaknesses here.

It leverages some of your strengths to address these key weaknesses and threats.

It focuses on the keystone Excel Pipeline.

It focuses on cost control and

getting that workforce in place to compliment the leadership team.

And ultimately you could even, when you present

this kind if illustrate how your plan

assessed within say one of these tools in this case, I'm using the SWOT framework.

Actually, does a job of getting rid of some of these threats or

risks and mitigating some of these weaknesses and

specifically move some of these items in the positive column to some extent.

So that's just a quick illustration of how we very quick, obviously.

This would take a number of days or weeks or

months to actually [LAUGH] to put all of this together, well maybe not months.

But you can actually, it would take a considerable amount of time with a number

of people to do this thoroughly.

But I just wanted to quickly step through and show you how you're utilizing

these tools for thinking about strategic analysis and planning.

And also how they invoke your need to go back and maybe do deeper dives with more

technical tools to evaluate particular risks in real and political markets.

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