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Chapter 2

BU481 Chapter Notes - Chapter 2: Vertical Integration, Balanced Scorecard, Product Market

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Karin Schnarr

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Chapter 2: Strategy
The Essentials of the Strategy Model
-Goals: What does the business propose to achieve? What are its aims with respect to growth,
profitability, and risk?
-Product Market Focus: What are the g/s that the business plans to sell and to what specific
-Value Proposition: How does the business intend to attract customers? What benefits constitute
its ‘offer’ or ‘value proposition’ in the marketplace?
-Core Activities: What are the primary value-adding activities that the business intends to
perform and how does it intend to perform them?
The Role of Strategy
-Strategy plays central role in efforts of general managers to establish, sustain, and monitor the
direction of their businesses
-A Hub for Analysis:
Retrospectively, strategy provides base point for organizing and discussing your
understanding of what a business is all about
o Strategy helps sort out what a business is doing and what it’s doing differently
than its competitors
Prospectively, strategy provides you with starting point for analyzing and debating
choices that affect the future direction of the business
o “Base case” choice in most situations – pressing forward with current strategy
o Any decision that is hard to reverse needs to be considered with direction of
-A Link to Action:
Strategy translates ideas about direction and performance into explicit, actionable terms
Goals set targets against which performance and progress can be assessed
Product market focus provides critical direction to people throughout business so they
can focus effort on targeted markets and products, and avoid wasting time on tangential
Value proposition illuminates what business is trying to do for customers and
requirements of employees’ roles
Core activities highlights key jobs that have to be done and capabilities that need to be
developed and reinforced
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