Ch.7 Developing a Business Strategy
INTERDEPENDECY OF STRATEGY AND TACTICS
Well-directed and positioned strategy + efficient and effective tactics execution = business growth and
1. The ability to define and create a strategic direction and market position for the organization (strategic
2. The ability to execute the core tactical initiatives within the plan in a manner that ensures the
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
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
4. Resources –refers to the allocation of a business’s resources in support of its strategic
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
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
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