Business Strategy

Business Strategy is an extension of Business Policy

Policy refers to the goals and direction of a company that considers the internal dynamics of a firm. (resources, strengths/weaknesses) Policy is a predecessor to what is now a broader field of strategic management. Business Strategy looks not only internally, but also externally.

Strategy Defined

A companys strategy consists of the combination of competitive moves and business approaches that managers employ to grow the business, attract and please customers, compete successfully, conduct operations, and achieve the targeted levels of organizational performance.

Thompson, Strickland and Gamble, Crafting and Executing Strategy 17e, p.4, McGraw-Hill, 2008

Strategy is about..
Resources Planning Processes People Responsibilities
Customer Competition Economy Trends Suppliers Government
That lead to Strategy

External Factors

Product Offerings Services Implementation Plans Policies

Internal Activities

Michael Porter What is Strategy?

(Harvard Business Review, Nov/Dec96 Vol 74, Issue 6)

Operational Effectiveness

Different from Strategy Performing similar activities better than rivals, being efficient Leads to but not sufficient to achieve superior profitability Benchmarking leads to companies looking more and more alike and diluting the impact of OE

Michael Porter What is Strategy?

(Harvard Business Review, Nov/Dec96 Vol 74, Issue 6)

Being different deliberately choosing a different set of activities to deliver a unique mix of value

Value = The Price One Pays minus What One Gets

What makes Burger King Different?

What makes Chick-fil-A Different?

Michael Porter What is Strategy?

(Harvard Business Review, Nov/Dec96 Vol 74, Issue 6)

Strategy requires Fit - Combining activities that are:

Complimentary and Consistent with the overall strategy

Wal-Mart low cost / supply chain emphasis McDonalds breakfast capability with given equipment Cracker Barrel Restaurant and Gift Shop CVS brick and mortar stores and Caremark Google and YouTube

Reinforcing

Michael Porter What is Strategy?

(Harvard Business Review, Nov/Dec96 Vol 74, Issue 6)

Strategy requires Tradeoffs More of one thing results in less of another

Southwest Airlines Describe the strategy Describe the tradeoffs

Strategy is not static, it is dynamic

Internal Factors Change (minor)

Personnel (training, experience, culture, processes, etc.) Facilities (capacity, location, efficiencies) Finances (working capital, leverage, sources of funds) Unplanned events Suppliers Customers Competitors Legal / Regulatory

External Factors Change (major)

Strategy over-simplified

Being Different Making things Fit Choosing Tradeoffs

What Is Strategic Management?

The ongoing process companies use to form a vision and mission, analyze their internal and external environment, select one or more strategies, then develop and implement tactical plans that create value for all stakeholders (customers, shareholders, employees, community, etc.)

Components of Strategic Management

Formulate the Mission
(Vision, Core Values, G&Os)

Internal Analysis

External Analysis
SWOT Analysis

Formulate the Strategy Implement the Strategy Evaluate the Strategy

ASSIGNMENT
1.

Select your team of two to four students

2.

Working with your partners, select two struggling firms Select firms you would enjoy researching and For which information is readily available