Strategy
Upcoming SlideShare
Loading in...5
×
 

Strategy

on

  • 838 views

 

Statistics

Views

Total Views
838
Slideshare-icon Views on SlideShare
836
Embed Views
2

Actions

Likes
1
Downloads
30
Comments
0

1 Embed 2

http://www.slideshare.net 2

Accessibility

Categories

Upload Details

Uploaded via as Microsoft PowerPoint

Usage Rights

© All Rights Reserved

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Processing…
Post Comment
Edit your comment
  • Last week tried to get you to think about who might want the product or service you provide -- and how you might serve them. This week, I will try to help you learn some concepts and tools that will help you think about the competitive context in which you will operate. I want to talk about the industry, the environment in which the industry operates, the structure of the industry itself, and your actual competitors… Next week, we will turn to strategy and business models...
  • In the context of the outline, Last week, we looked at what you provide to whom. This week, we will look at what space the world -- especially your competitors -- gives you. Next week, we will talk about how to use your strengths to take advantage of the opportunities the world gives ya. Ready?
  • 27
  • 27
  • 27
  • 14
  • 14
  • 27
  • 6
  • The steps to building a business model
  • : NRI’s ebusiness Owners - need growth/wealth/new business Family - job for brother Management - cost effective sales Brother design catalog for NRI, then for group Put on web -- adding sales channel, improving inventory control, improving customer service, positioning for e-business Owners get diversification and fast-growing piece that helps buffer consolidation in industry

Strategy Strategy Presentation Transcript

  • Strategy & Business Plans IEI Business Plan Workshops TL Hill thill @ sbm .temple. edu 215-204-3079
  • Business plan workshops
    • Matching Products and Services with Markets
      • First one
    • Competitive Analysis
      • Last week
    • Business Model
      • Tonight
    • Market and Sales
      • Monday, November 19, 2001 - 6:00 pm to 8:30pm
    • Financial Projections
      • Monday, November 26, 2001 - 6:00 pm to 8:30pm
  • Feasibility plan outline
    • Executive Summary
    • Product or Service
    • Technology/Core Knowledge
    • Target Market
    • Competition
    • Industry
    • Strategy/Business Model
    • Marketing and Sales Functional Strategy
    • Production/Operating Functional Strategy
    • Intellectual Property Issues
    • Regulation Issues
    • Critical Risk Factors
    • Timeline
    • Break-even Analysis
  • Strategy can mean many things
    • Plan
    • Process
    • Position
    • Pattern
    • Perspective
    • Procedure
    • Play
    • Ploy
    • Strategic Management
    • Strategic Positioning
    • Strategic Navigation
    • Strategic Tactics
  • Strategic management
    • Is a detailed pattern of decisions that describes in some detail what a company will do
      • in light of what it might do,
      • what it can do,
      • what its leaders want to do, and
      • what it should do.
      • Kenneth Andrews
  • Strategic management
    • Disciplined iterative process … of pursuing a mission, while managing the relationship of the firm to its environment.
    Evaluation & Control Strategy Implementation Strategy Formulation Mission Environmental Scanning
  • Strategic management starts with the situation External Factors Internal Factors Social, political, regulatory, & community considerations Industry attractiveness, industry dynamics, & competitive conditions Other opportunities and threats -- like new technologies Company’s Strategic Situation Firm’s strengths, weaknesses, & competitive market position Ambitions, philosophies, & ethical principles of key executives Shared vision, values and company culture
  • But pushes beyond the situation
    • Strategic management is all about chasing a dream
    • In a disciplined but opportunistic way
    • By developing your assets
    • To take advantage of opportunities the world (environment, industry, market) gives
    • While shaping the world when you can.
  • Strategic management is about finding ways to grow... Vision Environmental Scanning Evaluation & Control Strategy Implementation Strategy Formulation Mission
  • Two basic strategic options
    • Position Strategy
      • Unique, valuable, defensible position in a market or industry
      • Supported by a tightly integrated value chain / activity system
      • Good for relatively stable industries/markets
    • Resource/Navigation Strategy
      • Vision-driven nurturing and leveraging of core resources
      • Supported by tight culture and explicit learning
      • Good for dynamic industries/markets
  • I. Strategic positioning External Opportunities & Threats Niche Internal Strengths & Weaknesses
    • A niche is typically the market the firm is uniquely qualified to serve
  • Classic positional strategies
    • Cost (price) leadership
    • Differentiation
      • Quality, design, support/service, image
      • Always starts with the product
    • Focus
      • Broad or narrow
      • Always starts with a specific market segment
  • Examples of positional strategies
    • Cost (price) leadership
      • Crown, Cork & Seal (pennies, plants). Wal-mart (warehousing, negotiation). Motel 6 (location, services, salespeople). Cintas (plants, logistics).
    • Differentiation
      • Mercedes (quality). Apple (design). Nordstrom (service). Nike (image). G&K (clean rooms, radiation). Most entrepreneurs (Zitner’s, Prompt.)
    • Focus
      • Wal-mart (broad - rural). Specialty bookshops (narrow - Giovanni’s room, NSP). Some entrepreneurs (NRI - changing mix & services).
  • Elaborations of positional strategies
    • Penetrate new markets
      • Insurance in India. IMS.
    • Develop new markets
      • E-government. (Disruptive technologies.)
    • Develop new products
      • Gillette. Intel.
    • Become indispensable
      • Microsoft. Best subcontactors.
    • Fortify
      • Borders wholesalers, B&N’s leases.
  • TOWS analysis Strengths (S) Internal Factors External Factors Opportunities (O) SO Strategies ------------------------- WO Strategies ------------------------ Threats (T) ST Strategies -------------------------- WT Strategies ------------------------- Use strengths to avoid threats Min. weaknesses to avoid threats Use strengths to take advantage of opportunities Offset weaknesses to take advantage of opportunities Weaknesses (W )
  • TOWS analysis exercise
    • List 2 opportunities & 2 threats
    • List 2 strengths & 2 weaknesses
    • Match ‘em up
      • trying to use (or develop) strengths to take advantage of opportunities while offsetting weaknesses and defending against threats
      • avoiding strategies that put weaknesses in way of threats
    • Use classic strategies -- cost, differentiation, focus -- as prompts for ideas
  • Position strategies require fit
    • Fit refers to the niche a firm serves and the way its products or services are positioned
    • But fit also has to do with every other part of the internal structure of the firm.
    • A well positioned firm crafts itself to serve a niche better than anyone else
    • Starting a new firm offers the exciting, seductive, often advantageous opportunity to craft a perfect fit between specific opportunities and internal capabilities.
  • Value chain
    • A strong value chain is a cross-linked net of activities that affects the cost or performance of the whole.
    • Supporting a strategy by optimizing both individual functions and the links between them to support a strategy yields a powerful, durable, hard-to-duplicate advantage.
    Inbound Logistics Operations Outbound Logistics Marketing/ Sales After Sales Service Margin Technology Infrastructure Procurement Human Resources
  • Value chain for NSP Small but steady Editorial Trade pb Galleys - review & hc Library rate UPS Direct mail Distributor Prepay vs Returns Green tax Desk-top, enterprise, email Land trust, warehouse, 501(c)3, friendly capital Prompt press, newsprint Cooperative: multiple skills, networks, low-cost, apprenticeship
  • Activity system
    • Is a less linear way of thinking about the kind of internal fit that supports a strategy.
    • Map crucially interrelated features and functions that define a firm’s unique skills and strategy.
    • Supports competitive advantage with reinforcing patterns or systems.
  • Ikea’s Activity System Limited Customer Service Modular Designs Low Mfg Cost Self-service Selection Self-transport Limited sales staff Customer loyalty Self -assembly Suburban Location Most items in stock Design focused on low cost Explanatory labeling Easy transport Flat packing kits Wide variety Long-term suppliers Year-round stocking On-site inventory Impulse buying High-traffic store layout Easy to make
  • Experience curve
    • For positional strategies, experience is the ultimate source of advantage.
    • Experience fuels the tacit knowledge that drives productivity improvements, innovations, elaborations of strategy, etc
    • Successful firms are especially good at creating the social and institutional structures that support the shared development of such tacit knowledge
  • Value chain or activity chart exercise
    • Draw the value chain for your firm
    • Note reinforcing (and jarring) pieces
    • Try to create more reinforcements
    • OR
    • Jot down functions and features
    • Look for patterns and connections
    • Try to crystallize patterns
  • II. Strategic navigation
    • In a hypercompetitive world, all advantages are very temporary
    • Competition escalates rapidly along certain dimensions
      • Cost/Qualty, Timing/Know-how, Barriers to entry, Deep pockets
    • Leading to sudden shifts in the rules
      • as competition jumps to new arenas, along new ladders
  • Strategic navigation depends on timing
    • Rapid change erodes positions… leading to temporary opportunities
    Competitive Edge Launch Exploitation Counterattack Strategic Window Time
  • Strategic navigation requires vision
    • Vision pulls firms forward
    • Strategic intent is vision manifest as focused ambition:
      • Lengthens organizational horizon
      • Promotes focus on ends
      • Encourages creative means
      • Promotes consistency between evolving short-term goals and more stable long-term ones
      • Promotes focused resource allocation
      • Tends to motivate
  • Strategic navigation builds on core assets
    • Flexible strategies require core assets
      • plus a commitment to developing them
    • Assets are sources of future value
      • Tangible, intangible
      • Owned or not (but available)
      • Often with a useful life
      • Often people: customers, employees, organizational knowledge
      • Especially core competencies: special knowledge and skills embedded in employees and systems
  • Four arena analysis
    • Trace escalating competition along ladders
      • Trying to predict shifts to new areas
    • Cost/Quality
      • Cintas: Ever better plants and routes
    • Timing/Know-how
      • Aramark: Bought into corporate uniforms
    • Barriers to entry
      • New plants, sophisticated logistics, global reach
    • Deep pockets
      • Slugging it out -- and sometimes buying out small fry
  • Navigational strategies
    • Find loose bricks
      • Stake out undefended territory, fly low, cherry pick…looking for a beachhead, not a niche (Honda)
    • Change the terms of engagement
      • Sidestep barriers to entry (Canon)
    • Collaborate
      • License, outsource, joint venture to gain information and knowledge and advantage as go (lamp shades to ceiling fans)
  • Navigational strategy exercise
    • What is the rate of change in your industry or market?
    • What is driving change?
    • In what arenas is competition focused? Cost/Quality, Timing/Know-how, Barriers to Entry, Deep Pockets?
    • How might you take advantage of flux in your field?
    • A business model describes what a firm will do, and how, to build and capture wealth for stakeholders
    • Effective business models operationalize good strategies -- turning position, fit, etc (or vision and resources) into wealth
    • Start-ups offer the opportunity to craft a perfect fit between specific opportunities and internal capabilities.
    III. Business models
    • Build Wealth
      • Through an alchemical transformation of inputs into something that customers value enough to pay for at more than cost
      • Or through developing enough potential to be bought: valuable positions, know-how, customers…
    • Capture Wealth
      • Private or public sale
      • Profit: Revenues plus cost control
      • Plus: The good life, a rich family life, entrepreneurial success, social impact
    Business models build & capture wealth for stakeholders
    • 1. Describe the landscape:
      • Porter + OT.
      • Environment, industry, and relevant trends.
    • 2. Paint in competitors:
      • Competitor table. Perceptual maps.
      • What do you need to play? How do competitors compete? What opportunities exist?
    • 3. Identify strengths & weaknesses
      • Vision, skills, core technologies
    • 4. Choose a position/strategy
    Business models start with strategy
    • 4. Identify stakeholders you must serve
      • Owners, family, workers, community
    • 5. Identify the wealth you will capture
      • Capital, good life, family life, fame entrepreneurial effectiveness, social value
    • 6. Sketch a structure that will operationalize the strategy
      • Value chain or activity system
    Business models enclose wealth
    • 6. Work out the implications
      • Functional strategies
      • Timelines: Ie., the path to profitability, sale or other realization of value
      • Financial projections & capital needs
    Business models define structure
  • Build a business model exercise
    • Strategy
    • Stakeholders
    • Wealth
    • Model
    • Structural implications
    • Revise model
  • IV. Functional implications of the business model
    • Marketing and sales
    • People, management, governance
    • Operations
    • Finances
  • Marketing and Sales Finance
    • Next week: Marketing & Sales
    • Two weeks: Things Financial
    • Now: Miscellaneous thoughts on people, management, governance and operations
  • People
    • Employees, managers, stakeholders
    • More important even than cash
      • Effectiveness, pleasantness
    • Most difficult resource to find, to keep and to manage
  • Business systems Ownership Pressures Managerial Pressures Family/Stakeholder Pressures
  • Business systems dynamics
    • Each system has its own logic, its own bottom line
      • Ownership: Wealth creation & maintenance
      • Family & Stakeholders: Relationships
      • Management: Efficiency & replicability
    • Each has its own time horizon
      • Ownership: Ten years or one working life
      • Family & Stakeholders: Reproduction of generations
      • Management: Quarterly or annual results
  • Governance defines the circles and the relationships
    • Who decides what
      • Owners, key employees, key customers, family members, professional advisors
    • The decision makers for each circle
      • Owners (board of directors)
      • Managers (management team)
      • Family/stakeholders (council)
    • The scope of their decisions
    • Their responsibility to each other
    • Conflict resolution
  • Governance example
    • Company with strong family ties & 3 sons
    • Owner’s retirement needs drive succession
      • Two sons buy business (not land) from father
      • CEO-in-training - 50.+%; Sales manager 50-%
      • Board advisors
    • Family needs led to side business:
      • Graphic artist, co-owned by CEO-in-training and serving main business
    • Management needs turn alliance into new web-based business
  • Governance structures
    • Direction
      • Vision, values, culture
      • Formal visioning
      • Cultural maintenance
    • Agreements
      • Contracts, bylaws
    • Support
      • Facilitators, advisors, models
  • Sharing the vision
    • Vision provides both energy and stability.
    • Core Ideology anchors the team
    • Dynamic Envisioned Future draws the team forward
      • Long-term, audacious goals
      • Concrete, vivid description of the future
  • Value driver analysis Probability of Success Impact [Time Frame] L H H InterventionB InterventionZ InterventionA InterventionX InterventionC InterventionY
  • Value driver analysis
    • Work with teams (management, boards, stakeholders) to
      • List possible projects or initiatives
      • Rank each by magnitude of impact
      • Rank each by probability of success
    • Place them on the matrix
    • Concentrate on high value/high probability options
  • Value of the analysis
    • Focus
      • No low hanging fruit, no wild gambles
    • Process
      • Generates commitment
      • Builds trust
    • Brings data and analysis
      • To what is for most entrepreneurs, intuitive
    • Models a useful tool
  • Legal structures
    • Corporations are liability and task entities
      • With governance implications
    • Sole proprietorships
      • S corporation
    • Partnerships
    • C Corporations
      • LLC
    • Stakeholder Corporations
      • ESOPs, cooperatives, joint ventures, community corporations
  • Support structures
    • Boards of advisors
      • Next size up, pay
    • Professional team
      • Accountant, lawyer, coach, tie-breaker, insurance?
  • Governance section
    • Key stakeholders and how and why they count
    • Legal structure
    • Key agreements that distribute power and responsibility
  • Management responsibilities
    • Vision
      • Blends personal & organizational visions
      • Fosters common culture
    • Strategy
      • Environmental scanning
      • Strategy
      • Measurable objectives
    • Resources
      • Tools, systems, education
  • Management responsibilities
    • Systems
      • Efficient, effective processes
      • Fit between systems
    • Relationships
    • Staff development
  • Responsibility charting
    • Provides a language and forum for discussing decision making -- at governance, management or staff level.
    • Creates greater clarity about how decisions are to be made and who will be accountable for those decisions.
    • Allows for a discussion of the difficult issues of power and authority.
  • Responsibility chart DECISION: Roles Involved CEO Oper. Sales Fin. Approve Responsible Consult Informed Types of Participation
  • Responsibility chart details
    • Approve
      • Sign off on decisions
      • Veto power
      • Final responsibility to commit resources
      • Shares accountability
    • Responsible
      • Takes the initiative, develops alternatives, recommends, implements.
      • Accountable for results
  • Responsibility chart details
    • Consult
      • Input but no veto power
    • Inform
      • Notify
  • Management team section
    • Names & Experience
      • Resumes
    • Missing members
      • Recruiting plan
    • Advisors & roles
      • Recruiting plan
  • Operations
    • What you do
    • How you do it
    • Cost implications
  • Operations Examples
    • Arbill
      • computerized information, pay incentives, training, culture, evidence
    • Anderson
      • architected solution simplifies training and control and resource management
      • ties in with knowledge management
  • Operations section
    • Key processes & strategy
    • Efficiency / cost control
    • Recruiting, training, evaluating strategy
    • Fit with overall strategy
    • Continuous improvement
  • Operations exercise
    • Sketch out basic operational steps
    • Note cost assumptions
    • Create research list to confirm assumptions, fill in gaps, collect numbers
  • Bibliography
    • Verna Allee, “Reconfiguring the Value Network,” The Journal of Business Strategy , 21 (4), PP 36-39.
    • R Boulton, B Libert, S Samek, “A Business Model for the New Economy,” The Journal of Business Strategy , 21 (4), July-August 2000, pp 29-35.
    • James Collins & Jerry Porras, Built to Last (HarperBusiness, 1994).
    • Richard D’Aveni, Hypercompetition (Free Press: 1994).
    • Kathleen Eisenhardt & Donald Sull, “Strategy as Simple Rules,” Harvard Business Review , January 2001.
    • Mark Feldman & Michael Spratt, PWC, Five Frogs on a Log: A CEO’s Guide to Accelerating the Transition in Mergers, Acquisitions and Gut Wrenching Change, (HarperBusiness 1999).
    • Pankaj Ghemawat, Strategy and the Business Landscape (Prentice Hall, 2001).
    • G. Hamel & C. K. Prahalad, “Strategic Intent,” Harvard Business Review , May-June 1989.
    • Robert Hamilton lecture notes, 1998.
    • Robert Hamilton, E. Eskin, M. Michael, "Assessing Competitors: The Gap between Strategic Intent and Core Capability", International Journal of Strategic Management-Long Range Planning, Vol. 31 , No. 3, pp. 406-417, 1998
  • Bibliography, cont.
    • TL Hill lecture notes, 1999, 2001.
    • J. D. Hunger & T.L. Wheelan, Essentials of Strategic Management (Prentice Hall, 2001).
    • Ivan Lansberg, Succeeding Generations (Harvard Business School Press, 2000).
    • B. Mahadevan, “Business Models for Internet-based E-Commerce,” California Management Review , 42 (4), Summer 2000, pp 55-69.
    • Henry Mintzberg & James Brian Quinn, Readings in the Strategy Process , 3 rd Edition (Prentice Hall, 1998).
    • Alex Moss, Praxis Consulting presentation on worker ownership, 1999
    • Sharon Oster, Modern Competitive Analysis, 2 nd Edition (Oxford University Press, 1994).
    • Michael Porter, Competitive Advantage (Free Press, 1985).
    • Michael Porter, “What is Strategy?”, Harvard Business Review , November-December 1996.
    • Jim Portwood lecture notes, 1998.
    • C.K, Prahalad & G. Hamel, “The Core Competence of Corporations,” Harvard Business Review , May-June, 1990.
    • Pamela Tudor, Notes on responsibility charting, 1999
  • Evaluation
    • What was the most useful part of today’s workshop?
    • Least useful?
    • What should I definitely keep the same?
    • What should I change -- and how?