COMM200 Chapter 6.docx

COMM200 Week 4 Readings Chapter 6: Developing a Business Strategy The Concept of Business Strategy - The long-term success of an organization, and its ability to evolve and grow, is predicated on two fundamental principles: o 1) ability to define/create a strategic direction and market position for the organization (strategic plan) o 2) ability to execute the core tactical initiatives within the plan in a manner which ensures the organization’s success Strategy Made Simple - Business strategy -> it’s about understanding what opportunities exist in the marketplace and, given these opportunities, which ones should be pursued o Then based on these conclusions -> decide path of action to capitalize on opportunities  Can also think of strategy as answering the questions: • “Where do we want to play?” • “How do we plan to win?”  Answering these questions develops what is called our intended/deliberate strategy [specific direction and actions we plan to take to guide the organization’s decisions moving forward] Core Elements forAssessing Business Strategy Purpose - Purpose: refers to the mission of the organization and the vision which its managers or owners have for the business o Mission: the fundamental purpose which the business has identified as being its predominant reason for existence  Usually identify the broad goals around which a company was formed  Also reflect on how an organization will get to where it wants to go  Mission statements (in combination with ethics policies) guide the overall direction + activities of a business o Vision statement: a forward-thinking statement defining what a company wants to become and/or where it is going Markets - Markets: refer to which markets and/or market segments the business sees itself competing in o should be assessed in terms of their current + future profitability and growth potential o markets which have become unprofitable and/or marginally profitable and lack significant future growth -> may result in market exit strategies and/or harvesting strategies Products and Services - Products and services: refer to a review of the current products and services offered by a business, as well as potential new products and/or services which are added to the products portfolio o Critical part of the strategy development process: determine which products and related services are to remain part of a business portfolio, as well as those which are to receive additional R&D support, and which new products and services are to be added to the portfolio Resources - Resources: refers to the allocation of a business’resources in support of its strategic decisions o Businesses may also not have the expertise in-house to effectively execute strategies  In this situation -> decide if they need to go and acquire required expertise or if plans need to be modified due to lack of competencies and/or technologies within a business Business System Configuration - Business System Configuration: refers to modifications required to be made to the organization’s infrastructure and the way it does business in order to ensure the success of the plan o E.g.  Changes to distribution outlets who may be selling the products/services offered  Changes to the way warehousing and/or product delivery is set up  New plant and facility additions and expansions  Changes to manufacturing and/or assembly processes  Changes to the marketing campaign etc. Responsibility andAccountability - Responsibility andAccountability: refers to identifying who, within the business, will be responsible for each aspect of the strategic plan o To assist managers in meeting key objectives of a plan, initiatives within a strategic plan are built around what are termed SMAC (specific, measurable, actionable, and controllable) or SMART (specific, measurable, actionable, realistic, and time sensitive)  Provides a means of measuring success and making goals - Developing a business strategy looks at each of these areas individually (SMAC, SMART) but also holistically in determining the road which an organization should take The Strategic Planning Process - The building of this strategic plan is done through the strategic planning process which is all about observations, analyses, choices, and actions - There are five stages: a) revisiting our purpose, b) I/E analysis, c) identify opportunities and threats, d) strategic choices – define our objectives, and e) strategy implementation I/EAnalysis - I/E analysis -> all about assessing business risk and change in four key areas: macro-economic, industry, competitor, and company - ExternalAnalysis o PESTEL analysis: enables us to get a sense of the broad market environment and external influences o Porter’s Five Forces: assists in identifying fundamental changes or disruptions to the industry within which we compete - Competitor Analysis o Identifying anticipated moves by major and up and coming competitors  Businesses need to anticipate and react to new initiatives and changes in strategies and market positioning by their competitors • One method -> SWOT analysis - Customer Analysis o Customer Analysis focuses on trying to identify what shifts have taken place in our customer base, in terms of attitudes, behaviours, and needs  Key outcome of this analysis = identification of any significant shifts in customer expectations and requirements for our products/services  Also assesses our existing customer base for new sales and revenue generation opportunities - INTERNALANALYSIS - Organizational Evaluation o Need to assess competencies of own organization and level of resources available in order to determine what the organization’s capacities and overall capabilities are as a company o Managers are encouraged to conduct a SWOT analysis on their own organization Competitive Advantage Identification - Competitive advantage: when a company can offer customers a product/service with more value than alternate products and services offered by its competitors o Can either be strategic or operational  Strategic: • Thought of as “F