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Overview Strategy: A View From The Top. Ashley Burnett Shawn Buck Whitney Horton Kelly Riester Jennifer Shotts Sam Snelling Mickea Smith. Strategy. Strategy is about positioning an organization for a competitive advantage Good strategies: Reflect a company’s clear strategic intent
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OverviewStrategy: A View From The Top Ashley Burnett Shawn Buck Whitney Horton Kelly Riester Jennifer Shotts Sam Snelling Mickea Smith
Strategy • Strategy is about positioning an organization for a competitive advantage • Good strategies: • Reflect a company’s clear strategic intent • Have a deep understanding of a company’s core competencies • Create the best value • Strategies are not all planned • Many things can change as the plan is implemented. • Important to be open-minded and realize that many factors can influence and change intended strategy
Vision and Mission Statements • Vision Statement: a road map for upper management’s long run goals for their organization. Inspirational image that will be remembered and become synonymous with your establishment • Frames a company’s strategic focus on the future • Expresses core competencies used or needed to attain goals • Mission Statement: Purpose for an organization’s existence • A guide for management to use to reach their goals • Important values and ethics that are essential to the company
The Importance of Stakeholders • Stakeholders include partners, suppliers, and even competitors • Internal stakeholders include employees, managers, top executives, and directors • Motivating these stakeholders is vital; companies greatly rely on them to supply their customers with value • A mistake with any stakeholder can affect a company for years • Stakeholders have different types of stakes held with a company • Formal, Economic, or Political
Four Primary Practices • Strategy • Must be clear • Focus on growth • Focused value proposition • Execution • Exceed customer expectations • Increase productivity • Identify most important processes to customer needs • Culture • Encourage outstanding contributions • Look outside the industry for competitors • Structure • Too great a focus on protocols and procedures can impede progress • Successful companies try to eliminate unnecessary bureaucracy
Product Life Cycle Model • Definition: Based on the theory of diffusion of innovations and its logical counterpart and the pattern of acceptance of new ideas • The model states that industry passes through stages: • Introduction • Growth • Maturity • Decline • These stages are defined by changes in the rate of growth of industry sales
Ratio Analysis • Financial Ratio Analysis • Can provide a quick overview of a company’s or businesses unit’s current or past profitability, liquidity, leverage, and activity • Profitability Ratios • Measures how well a company is allocating its resources • Liquidity Ratios • Focus on cash flow generation and a company’s ability to meet its financial obligations • Leverage Ratios • May suggest potential improvements in the financing of operations • Activity Ratios • Measure productivity and efficiency
Profit Impact of Market Strategy (PIMS) • Was developed with the intention of providing empirical evidence of which business strategies lead to success, within particular industries. • Seeks to answer three basic questions: • What is the typical profit rate for each type of business? • Given current strategies in a company, what are the future operating results likely to be? • What strategies are likely to help improve future operating results? • Six Major Findings: • characteristics of the business environment • competitive position of the business • structure of the production process • how the budget is allocated • strategic movement • operating results. Source: Wikipedia
Value Disciplines • The different ways a company can create value for customers • Choosing a value discipline and focusing on it sharpens a company’s strategic focus • Three different value discipline strategies: • Product leadership • Operation excellence • Customer intimacy
Business Models • Creating an effective model requires a clear understanding of how the firm will generate profits and the strategic actions it must make to succeed over the long term • Is a critical part of formulating a business unit strategy • The two most important productive questions asked of executives: • What is our business model? • How do we make a profit?
Business Unit Strategy • In order to identify a clear business unit strategy, a company must analyze the industry characteristics in which it will be competing • First, we look at three contexts that relate to the various evolutionary stages of an industry: • Emerging • Growth • Mature • Decline • Next, we discuss three industry environments that pose a unique strategic challenges: • Fragmented • Deregulating • Hypercompetitive
Global Strategy Formulation • “Going Global” • Gradual process • Core competencies, mission, structure, culture, and processes of international corporations evolve in the creation of global corporations • Truly global strategies are extremely rare • To create a vision, a company must accurately define what globalization means for its particular business • Each company and industry will have very different requirements for global success • Four Types of Global Strategy Formulation: • Multinational • International • Global • Transitional
“9 Laws” of Globalization • Size means scrutiny • Cutting costs raises compliance risk • Strategy must involve society • Reducing risks means building trust • Satisfying shareholders means satisfying stakeholders • Global growths requires global gains • Productivity requires sustainability • Differentiation relies on reputation • Good governance needs good representation