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Chapter 6

Chapter 6: Developing a Business Strategy Notes

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Department
Management
Course
MGM101H5
Professor
Dave Swanston
Semester
Fall

Description
Chapter 6: Developing a Business Strategy The Concept of Business Strategey - Necessary in order for an organization to be successful over the long-term - Interdependency of Strategy and Tactics o Well-Directed and Positive Strategy + Efficient and Effective Tactics Execution= Business Growth and Profitability Strategy Made Simple - Strategies are customized for each business - Your strategy can be summarized by two questions: o Where do we want to play? o How do we plan to win? - Intended/Deliberate Strategy- specific direction and actions planned to take in order to guide the organizations decisions going forward Core Elements for Assessing Business Strategy - 6 key areas that determine direction of business plan: o Purpose o Markets o Products and Services o Resources o Business System Configuration o Responsibility and Accountability Purpose - Mission- defines an organization’s purpose or reason for existence o Ex. Wal-Mart’s mission: helping people save money so they can live better - Mission Statements are combined with ethics, policies and behaviours - Vision- forward thinking statement that defines what a company wants to become and where it is going o Ex. Wal-Mart’s vision is to become world leader in retail Markets - Markets- the specific markets or market segments the business sees itself competing in - Markets should be accessed in terms of current and future profitability and growth potential - Harvesting- a strategy that reflects a reduced commitment to a particular marker given its perceived weak future growth or profitability potential Products and Services - Refers to current and future products and services - Reasons products become obsolete: o Technology o Change in needs o Change in taste o New direct substitutes o Competitors - Example of strategic business: offering payment terms/ financing options Resources - Refers to allocation of a business’s resources in support of its strategic decisions - Businesses must make decisions where to allocate limited resources Business System configuration - Refers to modifying the organizations infrastructure and the way it does business to ensure the success of the plan - Ex. Making changes to organizations distribution outlets, warehousing, product delivery etc. - Ex. Ecommerce site for selling products and services Responsibility and Accountability - Refers to identifying who within the business will be responsible for each aspect of the strategic plan - Assigning tasks to certain people - SMAC principles: o Specific o Measurable o Actionable o Controllable - Or SMART principles o Specific o Measurable o Actionable o Realistic o Time sensitive - Key to understand objective of the task you are given - Business strategy is a lot like planning a trip The Strategic Planning Process - Organizing framework - All about observations, analyses, choices, and actions - Steps associated with development of a strategic plan: o Revisit our Purpose- who are we and where do we want to go o Undertake and I/E (internal/external) analysis to understand our environment: What changes are occurring that threaten us or provide opportunity o Assess our view of the world: what are our choices? o Choose a Direction: given our capabilities and competitive advantages which strategic choice should we pursue? What threats will there be? o Implement our strategy: how do we develop strategic tactics to achieve our goal - Helps assess what is changing in macroeconomic environment - Then identify opportunities - Choosing what to pursue I/E (Internal/External) Analysis - About assessing business risk and change in 4 key areas: o Macroeconomic o Industry o Competitor o Company - External portion focuses on understanding what is influencing market today and the future - SWOT- stands for Strengths, Weaknesses, Opportunities, and Threats - Stage of Strategic Planning Process: o Revisiting our Purpose- assessing how the current vision fits organization o I/E Analysis- understanding the external/internal environments  External- PESTEL, Porters five forces, competitor SWOT  Internal- company SWOT, 3c analysis- comp
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