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Lecture 7

MGM101 Lecture 7 - Book+ Lecture notes.pdf

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Department
Management
Course
MGM101H5
Professor
Dave Swanston
Semester
Fall

Description
Lecture 7 October-25-13 12:26 PM Planning, business strategy The long term success of an organization is based on two fundamental principles: 1. Ability to create a strategic direction and market position (strategic plan) 2. Ability to execute core tactical initiatives within plan Strategic plans provide clarity, planning is critical. If there is no plan, it is hard to know who you are, how resources should be allocated Strategic planning process model Mature firms will spend more time in analysis/ monitoring changes Starting firms will spend more time planning Best execution = best success • Revisit our purpose: Who are we and where do we want to go? • Undertake an I/E (internal/external) analysis to understand our environment: What changes or shifts are occurring that threaten us or that provide us with opportunities? • Assess our view of our world: Based on what we know, what are our choices? • Choose a direction: Given our capabilities, competencies, competitive advantages, and resources, which strategic choices should we pursue (where will we play)? What threats must we respond to? • Implement our strategy: How do we develop the strategic thrusts and tactics to achieve our objectives and successfully execute the plan (how we will win)? Strategies • Customized for each business given market conditions and desired goals • Understanding what opportunities exist in market place and which to pursue • “Where do we want to play?” • “How do we plan to win?” Core Elements For Assessing Strategy Development of a business strategy means making decisions and determining direction in 6 key areas: 1. Purpose Mission: organization’s purpose/reason for existence; company’s broad goals Vision: a forward-thinking statement that defines what a company wants to become and where it’s going 2. Markets Markets the business sees itself competing in Harvesting: a strategy that reflects a reduced commitmentto a particular marketgiven its perceived weak future growth or profitability potential Value proposition is different in different markets Value proposition is different in different markets 3. Products & Services Review of current and potential new products/services 4. Resources Allocation of a business’s resources in support of strategic decisions 5. Business System Configuration Modifying infrastructure and system to ensure success of plan 6. Responsibility & Accountability Identifying key objectives to be achieved and who’s responsible Initiatives within a strategic plan are built around SMAC principles: specific, measurable, actionable, and controllable (also SMART: specific, measurable, actionable, realistic, and time sensitive) For businesses, a strategic plan is the road map to success. It defines a specific route the business intends to undertake, provides benchmarks to measure its success along the way, and identifies where and how the organization will interact with its customers as it seeks to meet its overall mission and vision. Five critical questions - helps identify strategic tensions BB technology is an example - they cannot sustain their competitiveadvantage Strategic model: • What do we need to do? • What can we do? ○ What are we good at and not good at? ○ Money to facilitate the growth plan • What do we want to do?' ○ What owners want to do? • Goal is to align these objectives and reduce strategic tensions ○ Strategic tension - Three componentsmay not be harmonized. Managers want to stay in Europe even if there is more expansion in US (which is what the market is telling them) because brand name is more known there • Effective strategy harmonized the three components ***important Internal - External Analysis - this is to understand our environment/ as well as the business itself • I/E Analysis is all about assessing business risk and change in 4 key areas: i. Macro-economic: Use PESTEL Analysis ii. Industry: Use Porter’s Five Forces iii.Competitor: Use SWOT (Strengths, Weaknesses, Opportunities, Threats) Analysis iv. Company: Use SWOT and 3C Analyses (competencies, capabilities, capacity) • External Analysis focuses on understanding what is influencing markets today and what will influence them going forward – it is an assessment of the magnitude of change in a market influence them going forward – it is an assessment of the magnitude of change in a market arena and associated shifts in business risk ○ Use PESTEL, Porter’s five forces, competitor SWOT ○ Businesses need to anticipate and react to new initiatives and changes in strategy and market positioning by their competitors • Internal Analysis focuses on company competencies, resources, capacity and capabilities(3C analysis) and should include a full internal audit
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