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MGM101H5 (376)
Chapter 7

Chapter 7 Notes Summary.docx

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Dave Swanston

Chapter 7: Developing a Business Strategy Concept of Business Strategy Interdependency of Strategy and Tactics • Well directed and positioned strategy + efficient and effective tactics execution = business growth and profitability • 2 fundamental principles o Ability to define and strategic direction and market position for organization (strategic plan) o Ability to execute core tactical initiatives within the plan in a manner that ensures organization’s success Strategy made simple Core Elements for Assessing Business Strategy • Purpose o Refers to mission of organization and vision of managers or owners for business o Mission: fundamental purpose business has identified as being predominant reason for existence  reflects broad examples and where firm wants to go o Vision: forward thinking statement that defines what a company wants to become and where it is going • Markets o Refers to specific markets or market segments the business sees itself competing in o Managers asses their success in existing markets and evaluate potential of new markets o Harvesting: strategy that reflects a reduced commitment to particular market given its perceived weak future growth or profitability potential • products and services o refers to review of current products and services offered by business as well as potential new g/s that are to be added to product profitability o critical part of strategy developmental process is determining which g/s to keep as part of business’s portfolio • Resources o Refers to allocation of business’s resources in support of its strategic decisions o Capacity limitations, amt of money they commit to projects and variety of tasks their workforce can handle at given time • business system configuration o refers to modifying organization’s infrastructure and way it does business to ensure success of plan o could mean making changes to organization’s distribution outlets, warehousing or product delivery, plants and facilities, manufacturing or assembly processes, marketing campaign and so on • responsibility and accountability o refers to identifying who within the business will be responsible for each aspect of strategic plan o fundamental underlying element to success of business strategy is to identify key objectives to be achieved and who will be responsible for their attainment o to assist managers in meetings such as objectives, initiatives within strategic plan are built around what are termed SMAC principles (specific, measurable, actionable and controllable) Strategic Planning Process • Steps o Revisit our purpose: who are we? Where do we want to go? o Undertake an I/E (internal/external) analysis to understand our environment : changes or shifts are occurring that threaten us or provide us with opportunities o Assess our view of our world : based on what we know, what are our choices? o Choose a direction : given our capabilities, competencies, competitive advantages and resources o Implement our strategy: how to develop strategic tactics Internal/External Analysis • Assessing business risk, and change in four key areas: macroeconomic, industry, competitor and company • External part focuses on what = influencing markets today and what will influence them going forward – magnitude of change that is occurring within given market arena and shift business risk has occurred • SWOT analysis : strength, weakness, opportunity, threats • PESTAL analysis: enables to get sense of broad market environment and external influences that could impact demand for our g/s and change in nature of way in which we do business o Assessing potential impact of factor such as geopolitical events, new regulations, economic growth potential , etc • Porter’s five forces: lies in its ability to assist us in identifying fundamental changes or disruptions to indust
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