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Chapter 6

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Department
Commerce
Course
COMM 103
Professor
Gregory Libitz
Semester
Fall

Description
Chapter 6: Developing a Business Strategy The Concept of Business Strategy  The development of an org’s business strategy is one of the most imp responsibilities of a senior management team/business owner – Different for every business  To be successful in the long term, managers need to have a plan as to when and how to compete in the markets in which they intend to serve.  The long term success of an org, and its ability to evolve and grow, is predicted on 2 fundamental principles o The ability to design and create a strategic direction & market position for the org o The ability to execute the core tactical initiatives within the plan & ensure success Strategy made Simple  Business strategy is all about understanding what opportunities exist in the marketplace, and which ones should be pursued o Managers then decide a plan of action that they should take pursue them o Where do we want to play? How do we want to win?- Seeds of deliberate strategy: the direction actions we plan in order to guide our org’s decisions Core Elements for Assessing Business Strategy  A strategic plan defines a specific route the organization intends to take, provides benchmarks to measure success along the way, and identifies where/how the org will interact with its customers as it seeks to meet its overall mission and vision. Purpose  Refers to the mission of the organization and the vision which its managers/owners have for the business  Mission refers to the fundamental purpose which the business has identified as being its predominant reason for existence – Identify broad goals around which firm was formed o Also reflects on how an org will get to where it wants to go o Guides the overall direction and activities of an org – combined w. ethics policies  A Vision statement is a forward thinking statement which defines what a company wants to become and/or where it is going  Managers must revisit these statements to ensure they are still applicable/need to change Markets  Refers to which market/market segments the business sees itself competing in  Managers need to assess their success in existing markets & evaluate potential new ones o In terms of current and future profitability and growth potential  If markets have enhanced ^ will receive more attention & resource support  If markets don’t, will be evaluated in terms of exit/harvesting strategies Products and Services  Refers to a review of the current prod/serv offered by the business, as well as potential ones, which are to be added  As time goes on, products become obsolete – a critical part of the strategy development process it to choose which products and services will stay in production Resources  Refers to the allocation of a business resources in support of business decisions  Businesses have finite amount of resources - limitations on amount of products business can produce, amount of $$ to commit on projects, & # of tasks which workers can handle o Must make decisions on where to allocate resources o May also need to decide if they need to hire expertise in this area to succeed Business System Configuration  Refers to the modifications which are required to be made to the org’s infrastructure and the way it does business in order to ensure the success of a plan o Incl. changes in distribution, changes in warehousing/product delivery, new plant additions/expansions, changes to manufacturing/assembly, changes in marketing Responsibility and Accountability  Refers to identifying who will be responsible for each aspect of the strategic plan  To assist managers in meeting objectives, initiative within the strategy are built around a term known as SMAC  Specific, Measurable, Actionable, Controllable o Another is SMARTspecific, measureable, actionable, reasonable, time sensitive o Could be further expanded to define segments that will be attacked, budget, staff# The Strategic Planning Process 1. Revisit the Purpose – who are we and where do we want to go? 2. Internal/External (I/E) Analysis – Understanding our internal & external environments. What changes or shifts are occurring which threaten us/provide opportunities? 3. Our View of our World – Competitive Advg Identification, capabilities 4. Choose a Direction – Given our capabilities, competencies, competitive advgs, and resources, which strategic choices should we pursue? What threats must we respond to? 5. Strategic Implementation – Developing the strategic thrusts and tactics to achieve our objectives and successfully execute the plan (how will we win?). The planning process is really an organizing framework around which a company can first assess its changing macro-economic environment, what strategies are its competitors using, who are its customers and how they are changing, and what are the capabilities, competencies, and advantages. Given this analysis, the company then focuses on future threats and opportunities. Internal/External Analysis  Assessing business risk and change in four key areas o Marco-economic, Industry, Competitor, Company o External – PESTEL, Porter’s Five Forces, Competitor SWOT, types of competition (Monopoly, Oligopoly, Perfect competition, monopolistic comp.) o Internal – Company SWOT, 3C Analysis (competencies, capabilities, capacity) o Customers – Changes in attitudes, behaviour, needs  Focuses on understanding what is influencing markets now and in the future o Assessing degree of change within a market & what business risks have occurred  Business need to anticipate & react to new initiatives, changes in strategies, & marketing positions of competitors  Customer analysis focuses on trying to identify what shifts have taken place in our customer base in terms of attitudes, behaviours, and needs o Key outcome is the identification of any significant shifts in customers’ expectations and product requirements o Also to find new opportunities to
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