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BU481 Study Guide - Quiz Guide: Wield, Chipotle Mexican Grill, Cost Leadership


Department
Business
Course Code
BU481
Professor
Karin Schnarr
Study Guide
Quiz

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Strategy & The Diamond-E Framework
The Essentials of the Strategy Model
1. Goals – What does the business propose to achieve?
2. Product Market Focus – What are the products that the business plans to sell, and to what
specific markets?
3. Value Proposition – How does the business intend to attract customers?
4. Core Activities – What are the primary value-adding activities that the business intend to
perform and how does it intend to perform them?
What is Strategy?
-How the organization intends to compete and succeed in the marketplace
-Expression of how the organization can be unique in a way that can’t be imitated by
competitors
-Strategy is about finding a way to compete through creating a long-term, sustainable
competitive advantage that generates above normal financial returns
-Know who you are – Ex. If low cost, don’t spend a lot on marketing
Goal
-An expression, in measurable terms, of what a business intends to achieve
-Can be different time frames – long term vs. short term
-Hard goals (financial – Ex. profit or not-for-profit) vs. soft goals (social – Ex. CSR)
-Often include growth – financial and geographic
-Measurability is essential in order to use goals to manage and influence the conduct of the
business
-Businesses typically pursue a variety of goals simultaneously, so it is useful to think in terms of
a business goal structure (prioritize)
-Growth strategy – priority on market and investments to grow the business
-Harvest strategy – spending is a priority to milking cash and profits from a business
Product Market Focus
-What the company is providing to whom, where
-Four strategic choices:
-Market development – new market, existing product
-Market penetration – existing market, existing product
-Product development – existing market, new product
-Diversification – new market, new product
-A quite typical choice, is to concentrate on product market niches where competitors are
relatively weak or simply uninterested
Value Proposition
-What a product/service does for customers
-The aim should be to express value propositions in terms of fundamental customer benefits
such as price, features, service and execution
-Generic strategies (Porter) – low cost; differentiation; best cost provider; stuck in the middle
-Value proposition can create a competitive advantage when it is hard for the competition to
match/copy

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Core Activities
-Activities within the firm that add value
-Contribute directly to the value proposition
-Need to distinguish between necessary activities and those that add value
-Highlights the key jobs that will have to be done and the capabilities that will need most to be
developed and reinforced
-Ex. Nike – product development
Introducing the Diamond-E Framework
-Identifies key variables that need to be considered in the analysis and critical relationships
among them
Strategic Tension
-β€œTension” suggests there is no perfect strategic choice and firms will always experience some
stretch or tension
-Firms must manage the tension between what they β€œneed” to do given the competitive
environment, what they β€œcan” do given their organization, resources, and capabilities and what
they β€œwant” to do given management preferences
The Process of Strategic Analysis
Step 1: Base Case Analysis
-Establish what will happen if you simply continue to employ the current strategy, or modest
variations of it
-Assess Performance – Test the performance of your business against internal goals and
external pressures using the measures of operating performance and organizational health
-Identify the Strategy – You need a clear understanding of your current business strategy
-Evaluate the Strategy – Assess the consistency of the relationships in the Diamond-E
framework
-Decide on the nature and urgency of required changes
Step 2: Strategy Formulation and Testing
-Develop and evaluate strategic proposals
Step 3: Decision and Execution
-At this stage you will have a number of new strategic proposals to choose from
Strategic Positions
-Value-based positioning – based on choice of product varieties rather than customer segment –
Ex. Vanguard (mutual fund company)
-Needs-based positioning – based on serving most or all the needs to a particular group of
customers – Ex. IKEA

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-Access-based positioning – segments customers who are accessible in different ways – Ex.
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