Ch. 5: Concepts and Context of Business Strategy

1. Ch. 5: Concepts and Context of Business Strategy

2. Business Strategy Mission Goals Objectives Marketing oriented efforts Strategies Tactics Sales oriented efforts

3. Corporate Strategy Business UnitStrategy Product Product Product Strategies Strategies Strategies Functional Area Strategies Functional Area Strategies Functional Area Strategies Business Strategy Hierarchy Business UnitStrategy Business UnitStrategy

4. Critical Elements of Strategy Development • Set Goals and Objectives • Understand Environment of Business Operations • Learn from Experience, Update Experience • Critical Thinking

5. Strategic Management Process • Setting Goals and Objectives • Analysis of the current situation • SWOT Analysis: Strengths, Weaknesses,Opportunities and Threats • Strategy design and choice of the best strategy • Implementation plan design • Strategy implementation • Monitoring of environment and performance results • Analysis of variance from desired performance levels • Adjustments based on analysis of variance

6. Key Strategy Concepts • Seek to establish a fit between the business environment and the strategy Fit—providing superior value through differentiated pieces of the total offering

7. Key Strategy Concepts • Drive Change rather than adapting to it • Quality and Process improvement are essential to superior value • Measuring and Tracking results necessary for continuous improvement

8. Summary Strategy Concepts • Change in customers, Channels and Competitors cause discontinuities in the evolution of industries or markets • Companies seldom impact change in market • Keep up with changes in the rules of the market

9. Resource Allocation • Includes Infrastructure, personnel, finances etc. • They are not limitless • Strategic Planning Process is a resource allocation process

10. ? Question Marks Stars Dogs Cash Cows Boston Consulting Group: Growth Share Matrix Relative Market Share High Low High Market GrowthRate Low

11. ? Stars Question Marks Dogs Cash Cows Growth Share Matrix: Star • High Growth, High Share • Needs heavy investment, Builds market share • Manage with market ownership • Eventually become Cash Cows

12. ? Stars Question Marks Dogs Cash Cows Growth Share Matrix: Cash Cows • Low Growth, High Share • Established, Successful, invest enough to hold market • Cash Generators • Harvest to increase short term cash

13. ? Stars Question Marks Dogs Cash Cows Growth Share Matrix: Question Marks • Low Share, High Growth Markets • Requires cash to hold share • What should be done? • Match with organization’s distinctive competences? • Obtain the resources needed? Build these into stars or phase out, sell

14. ? Stars Question Marks Dogs Cash Cows Growth Share Matrix: Dogs • Low Growth, Low Share • May be self-sustaining • One organization’s dog could be another’s cash cow • Discontinue, Divest

15. Growth Share Matrix and Product Life Cycle Maturity Sales Revenue/ period ? Decline Growth Introduction Time

16. Strategy of Market Ownership • Define • Evolve • Collaborate

17. Strategy of Market Ownership Define Evolve Collaborate • Define Market Niche • Work towards domination • Brand identified as standard • Competitors note equivalence to such products

18. Strategy of Market Ownership Define Evolve Collaborate • Continue to evolve offerings • Keep definitions of value current with market • Present these values to consumers

19. Strategy of Market Ownership Define Evolve Collaborate • Development of ancillary products by other organizations help owners build the market • Third parties define their products as compatible with market owner • Market owner gains insight to other points of view within the market

20. Invest/Grow Selectively Earn Harvest/Divest GE Multi-Factor Attractiveness/Strength Matrix MARKET ATTRACTIVENESS Protect Position Invest to Build Build Selectively High Build Selectivelyor Manage for Earnings LimitedExpansion or Harvest Build Selectively Medium Protect &Refocus Manage forEarnings Low Divest Medium Strong Weak BUSINESS STRENGTH

21. The Balanced Scorecard • Focus on forward-looking measures in four core areas: • Financial Performance Perspective • Customer Perspective • Stakeholder Perspective • Upper Management • Partners • Channels • Value Perspective

22. Special Issues in Business Strategy • Strategy Implications of Value Networks and Integrated Supply Chain • Strategy Development and the Internet • Volatility and Uncertainty Require Flexibility • Strategy Development in New Businesses

23. Special Issues in Business Strategy Strategy Implications of Value Networks and Integrated Supply Chain • Agility • Adaptability • Alignment of members’ interests • Strong supply chains lead to inflexibility • Value networks

24. Special Issues in Business Strategy • Manage customer relationships • Streamline purchasing relationships • Increase the speed with which the environment changes • Reduce transaction, shipping and inventory costs Strategy Development and the Internet

25. Special Issues in Business Strategy Volatility and Uncertainty Require Flexibility • Increased uncertainty and speed of change makes future inexact • A pursued task is short lived as definition and boundaries of a business become blurred • Resource allocations across businesses become more critical • Core competencies take on increased importance