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MGM 101 Test #3.docx

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University of Toronto Mississauga
Dave Swanston

Planning Business Strategy Fundamental principals for long term success of an organization: 1. Ability to create a strategic direction and market position (strategic plan) 2. Ability to execute core tactical initiatives within plan 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 1. Purpose Mission: organizations purpose/reason for existence; companys broad goals Vision: a forward-thinking statement that defines what a company wants to become and where its going 2. Markets Markets the business sees itself competing in Harvesting: reducing focus in a certain market given perceived weak future growth or profitability potential 3. Products & Services Review of current and potential new products/services 4. Resources Allocation of a businesss 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 whos responsible A businesss strategic plan is its roadmap to success Defines specific route intended to take Provides benchmarks to measure success Identifies where and how business will interacts with customers in meeting missions & vision Strategic Planning Process Model Steps associated with development of strategic plan: Revisit Purpose (Who are we? Where do we want to go?) Assess fit of current mission and vision of organization Undertake Internal/External (I/E) Analysis to Understand Our Environment Accessing business risk and change in o Macro-econ: Use PESTEL Analysis o Industry: Use Porters Five Forces o Competitor: Use SWOT (Strengths, Weaknesses, Opportunities, Threats) o Company: Use SWOT and 3C (competencies, capabilities, capacity) Analysis External: o Focuses on understanding what is influencing markets today and what will influence them going forward o Assessment of magnitude of change in a market arena & associated shifts in business risk o Use PESTEL, Porters five forces, competitor SWOT Internal: o Focuses on company competencies, resources, capacity & capabilities (3C analysis) o Full internal audit o Company SWOT Customer: o Changes in attitudes, behavior, needs Assess our View of the World: Opportunities & Threats What are our options given what we know about customers, competitors, overall environment and ourselves? Competitive advantage(s)? Choose a direction Which opportunities make the most sense, given our market position, resources, & environmental dynamics? What threats must we respond to? Implement Strategy Develop plan Define key performance indicators for monitoring it Execute Business Models PESTEL Guides in developing understanding of macro-econ environment (political, economic, societal, technological, environmental, legal) Porters Five Forces Guides in understanding dynamics of industry within which we compete 1. Intensity of rivalry 2. Threat of new entrants 3. Threat of new product/service substitutes 4. Power or control of supplies 5. Power or control of buyers Types of Competition Guides in understanding nature of industrys competitive landscape o Perfect competition o Monopolistic competition o Oligopoly o Monopoly SWOT Analysis Strengths, weaknesses, opportunities, threats Competitive SWOT: size up competition Company SWOT: define companys SWOTs 3C Analysis Assessment of competencies, capabilities, and capacity with respect to resources we possess Competitive Advantage Identification Key outcome of I/E analysis Why a customer chooses to purchase your products over competitors Strategic o First mover actions in marketplace- ability to see how organization change rules of game in market Operational o Being more efficient and effective in transformation and marketing processes (e.g. superior quality or customer support/response)
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