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Chapter 7

Ch.7 MGM.docx

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Department
Management
Course
MGM101H5
Professor
Gill Parveen
Semester
Summer

Description
Ch.7 Developing a Business Strategy INTERDEPENDECY OF STRATEGY AND TACTICS  Well-directed and positioned strategy + efficient and effective tactics execution = business growth and profitability 1. The ability to define and create a strategic direction and market position for the organization (strategic plan) 2. The ability to execute the core tactical initiatives within the plan in a manner that ensures the organization’s success Core Elements for Assessing Business Strategy  For business managers, the development of a business strategy means making decisions and determining direction in six key areas 1. Purpose –refers to the mission of the organization and the vision its managers or owners have for the business –mission: defines an organization’s purpose or reason for existence. Mission statements usually identify the board goals around which a company was formed. Vision: is a forward thinking statement that defines what a company wants to become and where it’s going. 2. Markets –refers to the specific markets or market segment the business sees itself competing in Harvesting: is a strategy that reflects a reduced commitment to a particular market given its perceived weak future growth or profitability potential. 3. Products and services –refers to a review of the current products and services offered by a business, as well as potential new products/services that are to be added to the products portfolio 4. Resources –refers to the allocation of a business’s resources in support of its strategic decisions. 5. Business system configuration –refers to modifying the organization’s infrastructure and the way it does business to ensure the success of the plan. This could mean making changes to the organization’s distribution outlets, warehousing or product delivery; plants and facilities, manufacturing or assembly processes, marking campaign etc. 6. Responsibility and accountability –refers to identifying who within the business wil be responsible for each aspect of the strategic plan. A fundamental underlying element to the success of a business strategy is to identify the key objectives to be achieved and who will be responsible for their attainment. The Strategic Planning Process  Steps of a strategic plan 1. Revisit our purpose: Who are we and where do we want to go? 2. 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? 3. Assess our view of our world: Based on what we know, what are our choices? 4. 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? 5. Implement our strategy: How do we develop the strategic thrusts and tactics to achieve our objectives and successfully execute the plan I/E (Internal/External) Analysis  The I/E (internal/external) analysis is all about assessing business risk and change in four key areas. These areas are identified as macroeconomic, industry, competitor, and company.  The external portion of the I/E analysis focuses on understanding what is influencing markets today and what will influence them going forward.  SWOT stands for strengths, weaknesses, opportunities, and threats  At the industry level, our main focus would be on Porter’s five forces. The value of Porter’s five forces lies in its ability to assist us in identifying fundamental changes or disruptions to the industry within which we compete with respect to five key areas 1. Rivalry among existing competition 2. Threat of new entrants 3. Threat of substitute products or services 4. Bargaining power of suppliers 5. Bargaining power of buyers  Businesses need to anticipate and react to new initiatives and changes in strategy and market positioning by their competitors  A customer analysis focuses on trying to identify what shifts have taken place in our customer base in terms of attitudes, behaviors, and needs. Competitive Advantages Identification  Competitive advantage are more value. The ability to enhance the value of a product or service when measured against competitive offerings is what fundamentally entices customers to select your product as the best solution to their needs  Another way of stating this is that the real measure of a competitive advantage is the reason why a customer chooses to purchase your product over those of your competitors Strategy Development  Next step after completing the I/E analysis and identifying the organization’s competitive advantages is to make decisions as to which opportunities to pursue and how resources will be allocated in support of these market opportunities  Corporate level strategy, the business level strategy, and the operating plan  Corporate Level Strategy: defines what the organization intends to accomplish and where it plans to compete  Business Level Strategy: outlines specific objectives the organization hopes to achieve for each of its identified business initiatives and or business units  Operating Plan: is a detailed, immediate-term set of objectives and corresponding tactics designated to achieve a specific business initiative  DRIVE ONGOING PERFORMANCE THROUGH PRODUCTS  DELIVER GREATER VALUE GLOBALLY 
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