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Corporate Strategy
Intro to Business Strategy
| Question | Answer |
|---|---|
| Strategy: What it is | About identifying competitors weaknesses About WINNING About building SUSTAINED advantage About WHERE to compete About HOW to compete |
| Strategy: What it is not | Five force diagrams (tool for analyzing your competitive challenges) segmentation and share scale curves industry supply curves value chain analysis |
| FIST Model | Factors: Background Implications:Helps you understand WHAT of the FACTORS matters Strategies:Tell you what you will do (in response to the FACTORS and IMPLICATIONS) Tactics:The specific operational steps that you use to execute the STRATEGY |
| Three Levels of STRATEGY | Functional Str: the value of activities engaged in (DOING) Business Str: How to fight the competition, tactics (who we compete with and how we do it) Corportate Str: What business should I be in? (face to the customer, what we stand for) |
| Functional Strategy | What do we do... activities engaged in (about DOING) Pursuing EXCELLENCE in a certain type of activity EX. UPS: "We are logistics" |
| FIST Model | Factors: Backgroud Implications:helps you understand WHAT of the FACTORS matter Strategies: Tactics: |
| A simply way to look at the difference between Strategy and Tactics: | Strategy is done ABOVE the shoulders Tactics are done BELOW the shoulders |
| Business Strategy | battle plans to fight the competition. EX. Philip Morris strategy to beat its competition by crowding store shelves with many different brands and by spending heavily on advertising |
| Corporate Strategy | Know who we are as a business Keeps you on track-FOCUSES decision making Looks at the whole gamut of business opportunities. Its dynamic EX. Ralph Lauren: "Lifestyle" image Nike:"Fitness" |
| One MAJOR Purpose of Business Strategy | To help us identify where and how to compete To identify our opportunities and to assign resources What business are we in/not in? |
| Sustainable Competitive Advantage | EX: Apple-simplified technology/integrated approach Walmart-Efficient logistics Walmart has made a commitment to not just growing but to remain efficient Items costing more, and holding their price, is a pretty good signal of a competitive advantage. |
| 2 Signals of what is a STRATEGIC Issue | 1. Its BROAD vs narrow (not isolated) not something that happens in one town, but across the whole company 2. Long lasting vs short lasting |
| Porter's 5 Forces | 1.Competitors 2. Suppliers 3. Customers/Buyers 4. Substitutes (Blockbuster vs Netflix or Redbox) 5. New Entrants |
| Portfolio/BCG matrix (Boston Consulting Group) | Growth High STAR :fund it ? : Assess/test Low CASH COW: milk it DOG: exit High Low Market Share |
| What you need from your CASH COW | Consistent Margin Cows are high market share and low growth Walmart Ex: Grocery |
| What you need from your STAR | Growth and Noise Stars finance and grow themselves High Growth & High market Share |
| What you need from your DOG | until you exit, just don't do damage Dogs are low market share & low growth Walmart Ex: books |
| What you need from your ? | Assess for potential and figure out what your are going to do with it. ? is a small market share business in a high growth industry To grow they need cash Some call them "problem children" If they are successful, they'll be stars, then cash cows |
| Generic Strategies | A generic strategy is one that can be used across many industries |
| Three major Generic Strategies | 1. Cost Leadership 2. Differentiation 3. Focus |
| SWOT | Strengths Weaknesses Opportunities Threats |
| SWOT Benefits | Easily Understood and applied structure for analysis Can be conducted at several levels; Icebreaker or Detailed Competitor Analysis Useful as input for strategic implementation |
| SWOT Drawbacks | Risk of using without sufficient information Important data can be hard to locate Analysis should always verify data collected by several sources |
| SWOT: Strengths | (Positive, internally focused, immediate) Core competencies or characteristics of the business that GIVE it an ADVANTAGE over its COMPETITORS |
| SWOT: Weaknesses | (Internal shortcomings vs. Competitors) Characteristics that put the business at a DISadvantage RELATIVE to competitors (i.e. Customer Service) |
| SWOT: Opportunities | (External, Future opportunity not fully realized) Chances to make greater sales or porfits in the environment. (i.e. where can we create more value for our customers, such as a better product or quicker delivery |
| SWOT: Threats | (External, in the future, beyone their control) Elements in the environment that could cause trouble or a threat that will prevent or make doing business very difficult. (i.e. Legislation that requires costly changes to a business process) |
| 5 Steps to conducting a SWOT Analysis | 1. Determine level&scope 2. Iden.signif. market, competitor, envir. trends 3. Iden. ex'l opportunitiy&threat 4. Iden. in'l strength&weakness 5. Dev.strategic hypotheses to build on strength, improve weakness, capitalize on oppor.& mitigate threat |
| Generic Strategy:Cost Leadership | A company having the lowest cost of production in an industry. This company can either reduce its prices or use increased profits to invest in research to develop new and better products, advertise and market their products. LCP's (low cost producers) |
| Cost Leadership: Economies of Scale | Relates to Cost Leadership As one produces more, cost per unit fall. Achieved thru "learning efficiancies" The "Learning Curve" |
| Cost Leadership:Six sources of "Learning Effeciencies" | 1. Labor Efficiency 2. New Processes & Improved Methods 3.Product Redesign: to lower cost of materials & labor (CAD) 4.Product Standardization 5. Efficiencies of Scale 6. Substitution |
| Cost Leadership:1.Learning Efficiencies: Labor Efficiency: | learning thru repetition or automation |
| Cost Leadership:2.Learning Efficiencies: New Processes & Improved Methods | :less costly ways to do the same task |
| Cost Leadership:3.Learning Efficiencies: Product Redesign: | Redesign to lower cost of materials & labor. If a computer is used to design the product it is called computer-aided design. (CAD) |
| Cost Leadership:4.Learning Efficiencies: Product Standardization | Decreasing the variations of a products components |
| Cost Leadership:5.Learning Efficiencies: Efficiencies of Scale | Doubling factory capacity does not cost twice as much.Adding machines or additional space is not as expensive as starting from scratch. |
| Cost Leadership:6.Learning Efficiencies: Substitution | Using less expensive but adequate materials |
| Cost Leadership:What is the "Learning Curve" | Developed by the BCG Quantifies the Economies of Scale Benefit Each time the "cumulative" volume of production doubled, the cost of manufacturing fell by a constant and predictable percentage. |
| Cost Leadership:80% Learning Curve Example | For every doubling of accumulated production, the next unit produced would cost 80% of the first, or 20% less. "Accumulated production" starts with the very first one off the assembly line using that manufacturing method. |
| Cost Leadership:Strategic implications of "learning curve" | Move down the learning curve BEFORE you competitors One way is to dump products below cost in order to produce and sell more quickly to reach the lower production cost more quickly. |
| Cost Leadership:More about Learning Curves: | 1.The curve becomes less useful for products mature in their life cycle. 2.Jumping: when a new process or material is introduced, reset production units to zero&start over. 3.Not useful for continuously innovated products. |
| Generic Strategy:Differientiation | Involves making your product or service appear different in the mind of the consumer. Products: offering better design, reliability, service, delivery Services: employee courtesy, availability, expertise,location |
| Generic Strategy: FOCUS | A Company concentrates on either a market area, a market segment, or a product. Strength of this strategy is KNOWING the customer and product category WELL |
| Blue Ocean Strategy | When a company creates a New demand in an uncontested market space. |
| Competitive Tactics: SIGNALING | Letting your competitors know what's on your mind |
Created by:
thopwood
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