Strategy comes from the integration of all the concepts in the course and is the key to successful business.
· Steps for strategy
o Define a vision (revisit, revise and agree upon)
o SWOT analysis
§ Strengths and weaknesses internal, opportunities and threats external
§ Some non-profit and governmental entities use “Challenges” rather than “Threats” – model is SWOC
o Define outcomes and processes
§ How do you know if you have achieved your strategies?
· Should be measurable
· Strategic Planning
o Three levels of strategy
§ Functional level – how can we improve the operation (efficiency, value to customer, etc.)?
§ Business level – how can we beat the competition?
· Management-level decisions
§ Corporate – what business should we be in?
· Board-level decisions
o There are no perfect answers
o It’s not easy to experiment
o Errors are usually costly
o Seven “S” model to generate strategies (Tom Peters, McKinsey)
§ Tool to help solve complex problems by analyzing and improving organizations
§ Each S should support the others
§ Take a company and analyze it:
· Shared values (core)
· Strategy (hard)
o This is the strategic planning process, not a recursive reference to the strategy itself.
· Structure (hard)
· Systems (hard)
· Skills (soft)
· Style (soft)
· Staff (soft)
§ For each of these look at ways to improve or come up with a new strategy.
§ Example: Apple uses a matrix structure (products along horizontal, functional areas along vertical creates a responsibility matrix)
· Apple keeps high profit portion internal and outsources areas of lower profit, but also functions that are not part of their mission or core values.
§ Innovative companies should have a mechanism to bring a new product to market
· Otherwise just like Foxcom
· Often this role is the CEO or some internal committee
o Mission statements
§ Include values, vision and purpose
· Single-minded, narrow and concise, focused on a worthwhile goal.
· Personal mission
o Value Chain (Porter 1985)
§ Important analysis tool
· Overhead
o Firm infrastructure
o HRM
o Technology Development
o Procurement
· Primary activities
o Inbound logistics
§ How you get materials into your store
o Operations
§ How do you produce your product
o Outbound logistics
§ Delivery to customer
o Marketing and sales
o Service
§ Allows you to provide value after the sale
· Each step in the value chain can add value and facilitate higher price. Value to the customer, dollars to the company.
o Expansion strategy (Ansoff Matrix)
§ 2x2 strategy matrix New versus Exsiting Markets and Products
o Five Forces Analysis (Michael Porter 1979)
§ Five forces that shape industry competition
· Threat of new entrants
o Limit entry of new competitors
· Bargaining power of buyers
· Threat of substitute products or services
o Make your product unique to reduce the impact of substitutes
· Bargaining power of suppliers
· Rivalry among existing competitors
§ Use this to analyze the environment before entering a business.
§ BofA no longer a US company, moved to Cayman Islands – this is when they rebranded and included the US flag in their logo.
o Growth-Share Matrix (Bruce Henderson, Boston Consulting Group 1968)
§ Stars (high growth, high market share)
· Prioritize these
· Google, Facebook
§ Cow (low growth, high market share)
· Invest in these
· Utilities (PG&E, Comcast)
§ Dog (low growth, low market share)
· Sell these
· Book store
§ ? (high growth, low market share)
· Evaluate further and either build market share (to create a star) or divest
o Globalization
§ Of fortune 500 most have >25% overseas business
§ Enhancers of globalization
· Better communication and transportation
· Fewer trade restrictions
· Convergence of consumer needs
§ Roadblocks to globalization
· Cost of coordination
· Geographic restraints
· Protectionism
§ Consider these topics when evaluating globalization
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