591-overviewstrategylecture

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OVERVIEWOVERVIEW

OFOF

STRATEGIC PLANNINGSTRATEGIC PLANNING

CONCEPTSCONCEPTS



VISION

STATEMENT ABOUT A COMPANY’S

LONG-TERM DIRECTION



Why is a Stratei! Visi"#

I$%"rta#t& A $a#aeria' i$%erati(e e)ists t" look beyond

today a#* think strategically a+",t

I$%a!t ". #e/ te!h#"'"ies 0"/ !,st"$er #ee*s a#* e)%e!tati"#s are !ha#i#

What it /i'' ta1e t" ",tr,# !"$%etit"rs

Whi!h %r"$isi# $ar1et "%%"rt,#ities ",ht t" +e

aressi(e'y %,rs,e*

E)ter#a' a#* i#ter#a' .a!t"rs *ri(i# /hat a !"$%a#y#ee*s t" *" t" %re%are ."r the .,t,re



MISSION

DEFINES COMPANY’S BUSINESS

23 PRODUCT 4 MAR5ET

63 TERRITORY 4 GEOGRAP0Y



VISION vs. MISSIONVISION vs. MISSION

A

strategic visionconcerns a firm’s future

business path -- “where

we are going”

–Markets to be pursued

–Future technology-product-customer focus

–Kind of company thatmanagement istrying to create

A mission statementfocuses on current

business activities -- “who

we are and what we do”

–Current product andservice offerings

–Customer needs beingserved

–Technological and businesscapabilities



"To enable people

and businessesthroughout theworld to realize

their full potential"

MICROSOFT’S

VISION4MISSION



GE is committed to achievingworldwide leadership in each of itsbusinesses. To achieve thatleadership, GE's ongoing businessstrategy centers on four key growthinitiatives:

- Technology- ervices- !ustomer !entricity- Globali"ation

GE’S

VISION4MISSION



E)a$%'e ". Visi"# 7 Missi"#

Our vision: Getting to a billion connected computers

worldwide, millions of servers, and trillions of dollarsof e-commerce. Intels core mission is being t!e

building bloc" supplier to t!e Internet econom# and

spurring efforts to ma"e t!e Internet more useful.

$eing connected is now at t!e center of peoples

computing e%perience. &e are !elping to e%pand t!e

capabilities of t!e '( platform and t!e Internet.

Intel



Wit Capital (an Internet startup company)

Our mission is to be t!e premier Internetinvestment ban"ing firm focused on t!e offering

and selling of securities to a communit# of online

individual investors.

&e are in t!e picture business.

Eastman Kodak

Si$%'e Missi"# State$e#ts



M"re Missi"# State$e#ts 8

tis Elevator

Our mission is to provide an# customer a meansof moving people and t!ings up, down, and

sidewa#s over s!ort distances wit! !ig!erreliabilit# t!an an# similar enterprise in t!e world.

Our !usiness is renting cars. Our mission is total

customer satisfaction.

"vis #ent$a$Car



Setti# G"a's 7 O+9e!ti(es

C"#(erts stratei! (isi"# a#*$issi"# i#t" s%e!i.i! %er."r$a#!e tarets

Creates yar*sti!1s t" tra!1 %er."r$a#!e

P,shes .ir$ t" +e i#(e#ti(e a#*

."!,se* "# res,'ts 0e'%s %re(e#t !"$%'a!e#!y a#*

!"asti#

Second )as" of Strategic Management



GOALS

BROAD TARGETS

OB:ECTIVES

QUANTIFIED & TIME-BASED



Fi#a#!ia' G"a's

Stri(e ."r st"!1 %ri!e a%%re!iati"#

e;,a' t" "r a+"(e the S7P <== a(erae

Mai#tai# a %"siti(e !ash .'"/ e(ery year

A!hie(e a#* $ai#tai# a AA +"#* rati#



Fi#a#!ia' O+9e!ti(es

Gr"/ ear#i#s %er share 2<> a##,a''y

B""st a##,a' ret,r# "# i#(est$e#t ?"r

EVA@ .r"$ 2<> t" 6=> /ithi# three years

I#!rease a##,a' *i(i*e#*s %er share

t" st"!1h"'*ers +y <> ea!h year



Stratei! G"a's

I#!rease .ir$’s $ar1et share O(erta1e 1ey ri(a's "# ;,a'ity "r !,st"$er

ser(i!e "r %r"*,!t %er."r$a#!e

Attai# '"/er "(era'' !"sts tha# ri(a's

B""st .ir$’s re%,tati"# /ith !,st"$ers Attai# str"#er .""th"'* i# i#ter#ati"#a' $ar1ets

A!hie(e te!h#"'"i!a' s,%eri"rity

Be!"$e 'ea*er i# #e/ %r"*,!t i#tr"*,!ti"#s

Ca%t,re attra!ti(e r"/th "%%"rt,#ities



What is Stratey&

A !"$%a#y’s stratey !"#sists ". the set ".!"$%etiti(e $"(es a#* +,si#ess a%%r"a!hes that

$a#ae$e#t is e$%'"yi# t" r,# the !"$%a#y

Stratey is $a#ae$e#t’s “game plan” t"

Attra!t a#* %'ease !,st"$ers

Sta1e ",t a $ar1et %"siti"#

C"#*,!t "%erati"#s

C"$%ete s,!!ess.,''y

A!hie(e "ra#iati"#a' "+9e!ti(es



Re'ati"#shi% Bet/ee# Strateya#* B,si#ess M"*e'

Strategy - Dea's /ith a

!"$%a#y’s !"$%etiti(e

i#itiati(es a#* +,si#essa%%r"a!hes

Business Model

-C"#!er#s /hether

re(e#,es a#* !"sts.'"/i# .r"$ the

strategy *e$"#strate

the +,si#ess !a# +ea$%'y %r".ita+'e a#*

(ia+'e

S t r a t

e g #

$ u s i n

e s s

M o d e l



(orporate

Strateg#

$usiness Strategies

*unctional Strategies

Operating Strategies

)wo-&a# Influence

)wo-&a# Influence

)wo-&a# Influence

(orporate-+evel Managers

ivision Managers

Operating

Mgrs

*unctional Mgrs

Levels of Strategy-Making in

a Diversified Company



Levels of Strategy-Making in

a Single-Business Company

$usiness

Strateg#

)wo-&a# Influence

)wo-&a# Influence

*unctional Strategies

Operating Strategies

%ecutive-+evel Managers

Operating

Managers

*unctional Managers



Networking of Missions,

Goals/!"e#tives, and Strategies

+evel

+evel /$usiness-+evel

Managers

+evel 0*unctional

Managers

+evel 1'lant Managers,

+ower-+evel

Supervisors

(orporate

+evelGoals2Ob3s

(orporate-wide

StrategicVision

(orporate

+evelStrateg#

$usiness

+evel

Goals2Ob3s

$usiness

+evel

Mission

$usiness

+evel

Strategies

*unctional

Goals2Ob3s

*unctional

Missions

*unctional

Strategies

Operating

Goals2Ob3s

Operating

Missions

Operating

Strategies

)wo-&a# Influence )wo-&a# Influence )wo-&a# Influence



(orporate-

+evel

Managers



S$% &nalysis -

$'at to Look (or

'otential 4esource

Strengt!s

'otential 4esource

&ea"nesses

'otential (ompan#

Opportunities

'otential %ternal

)!reats

'owerful strateg#

Strong financialcondition

Strong brand nameimage2reputation

&idel# recogni5edmar"et leader

'roprietar#tec!nolog#

(ost advantages

Strong advertising

'roduct innovations"ills

Good customerservice

$etter product6ualit#

7lliances or 8Vs

No clear strategicdirection

Obsolete facilities

&ea" balances!eet9 e%cess debt

ig!er overallcosts t!an rivals

Missing some "e#s"ills2competencies

Subpar profits

Internal operatingproblems . . .

*alling be!ind in4;

)oo narrowproduct line

&ea" mar"etings"ills

Serving additionalcustomer groups

%panding to newgeograp!ic areas

%panding product

line )ransferring s"ills

to new products

Vertical integration

)a"e mar"et s!arefrom rivals

7c6uisition of

rivals 7lliances or 8Vs to

e%pand coverage

Openings to e%ploitnew tec!nologies

Openings to e%tendbrand name2image

ntr# of potent newcompetitors

+oss of sales tosubstitutes

Slowing mar"et

growt! 7dverse s!ifts in

e%c!ange rates ;trade policies

(ostl# newregulations

Vulnerabilit# tobusiness c#cle

Growing leverageof customers orsuppliers

4educed bu#erneeds for product

emograp!icc!anges



The Three Ste%s". SWOT A#a'ysis



C"re C"$%ete#!ies -- AVa',a+'e C"$%a#y Res",r!e

A competence +e!"$es a core competence /he#the /e''-%er."r$e* a!ti(ity is central t" a!"$%a#y’s !"$%etiti(e#ess a#* %r".ita+i'ity

O.te# a !"re !"$%ete#!e res,'ts .r"$collaboration a$"# *i..ere#t %arts ". a !"$%a#y

Typically, core competencies resi*e i# a !"$%a#y’s people #"t i# assets "# the +a'a#!e sheet

A core competence i(es a !"$%a#y a %"te#tia''y (a',a+'e competitive capabilitya#* re%rese#ts a *e.i#ite competitive asset



E)a$%'es C"re C"$%ete#!ies

E)%ertise i# i#terati# $,'ti%'e te!h#"'"ies t"

!reate .a$i'ies ". #e/ %r"*,!ts

5#"/-h"/ i# !reati# "%erati# syste$s ."r !"st

e..i!ie#t s,%%'y !hai# $a#ae$e#t S%ee*i# #e/4#e)t-e#erati"# %r"*,!ts t" $ar1et

Better a.ter-sa'e ser(i!e !a%a+i'ity

S1i''s i# $a#,.a!t,ri# a hih ;,a'ity %r"*,!t Syste$ t" .i'' !,st"$er "r*ers a!!,rate'y a#* s/i.t'y



Distin#tive Competen#e -- &Competitively Superior )esour#e

! "

A distinctive competence is a !"$%etiti(e'y si#i.i!a#t a!ti(itythat a !"$%a#y performs better than its competitors

A distinctive competence#epresents a competitively

valua!le capa!ility rivals do not have

$resents attractive potential forbeing a cornerstone of strategy

Can provide a competitive edge in the

marketplace%because it represents a

com etitivel su erior resource stren th



E)a$%'es Disti#!ti(e C"$%ete#!ies

Shar% C"r%"rati"# E)%ertise i# .'at-%a#e' *is%'ay te!h#"'"y

T"y"ta 0"#*a Nissa#

L"/-!"st hih-;,a'ity $a#,.a!t,ri#!a%a+i'ity a#* sh"rt *esi#-t"-$ar1et !y!'es

I#te' A+i'ity t" *esi# a#* $a#,.a!t,re

e(er $"re %"/er.,' $i!r"%r"!ess"rs ."r PCs Star+,!1s

St"re a$+ie#!e a#* i##"(ati(e !"..ee*ri#1s



Deter$i#i# the C"$%etiti(e

Va',e ". a C"$%a#y Res",r!e

T" ;,a'i.y as the +asis ."r sustainable competitive

advantage, a “resource” is $eas,re* +y tests

*+ Is the res",r!e hard to copy &

+ D"es the res",r!e ha(e staying po!r -- is it

d"ra#$! &

+ Is the res",r!e rea''y co%p!titi!$y s"p!rior &

.+ Ca# the res",r!e +e tr"%p!d +y the *i..ere#t

!a%a+i'ities ". ri(a's &



Are the C"$%a#y’sPri!es a#* C"sts C"$%etiti(e&

Assessi# /hether a .ir$’s !"sts are

!"$%etiti(e /ith th"se ". ri(a's is a !r,!ia' %art

". !"$%a#y a#a'ysis

5ey a#a'yti!a' t""'s

Va',e !hai# a#a'ysis

Be#!h$ar1i#



The C"#!e%t ". aC"$%a#y Va',e Chai#

A !"$%a#y’s +,si#ess !"#sists ". a'' a!ti(ities,#*erta1e# i# *esi#i# %r"*,!i# $ar1eti#*e'i(eri# a#* s,%%"rti# its %r"*,!t "r ser(i!e

A !"$%a#y’s (a',e !hai# !"#sists ". a 'i#1e* set ".(a',e-!reati# a!ti(ities %er."r$e* i#ter#a''y

The (a',e !hai# !"#tai#s t/" ty%es ". a!ti(ities

Pri$ary a!ti(ities -- /here $"st ". the (a',e."r !,st"$ers is !reate*

S,%%"rt a!ti(ities -- .a!i'itate %er."r$a#!e ". the %ri$ary a!ti(ities



Chara!teristi!s ".Va',e Chai# A#a'ysis

C"$+i#e* !"sts ". a'' a!ti(ities i# a !"$%a#y’s(a',e !hai# *e.i#e the !"$%a#y’s i#ter#a' !"ststr,!t,re

C"$%ares a .ir$’s !"sts a!ti(ity +y a!ti(ity aai#st !"sts ". 1ey ri(a's

Fr"$ ra/ $ateria's %,r!hase t"

Pri!e %ai* +y ,'ti$ate !,st"$er

Pi#%"i#ts /hi!h i#ter#a' a!ti(ities are a s",r!e ".!"st a*(a#tae "r *isa*(a#tae



Re%rese#tati(eC"$%a#y Va',e Chai#



Re%rese#tati(e Va',e Chai# ."r a#E#tire I#*,stry



The Va',e Chai# Syste$."r a# E#tire I#*,stry

Assessi# a !"$%a#y’s cost competitiveness i#("'(es

!"$%ari# !"sts a'' a'"# the i#*,stry’s (a',e !hai# Suppliers’ (a',e !hai#s are re'e(a#t +e!a,se

C"sts ;,a'ity a#* %er."r$a#!e ". i#%,ts %r"(i*e* +y

s,%%'iers i#.',e#!e a .ir$’s "/# !"sts a#* %r"*,!t

%er."r$a#!e

Forard channel allies’ (a',e !hai#s are re'e(a#t

+e!a,se F"r/ar* !ha##e' a''ies’ !"sts a#* $ari#s are %art ".

%ri!e %ai* +y ,'ti$ate e#*-,ser A!ti(ities %er."r$e* a..e!t e#*-,ser satis.a!ti"#



E)a$%'e 5ey Va',e Chai# A!ti(ities

%im!er farming

Logging

ulp mills

apermaking

'ulp ; 'aper Industr#



arts and #omponents manufa#ture

&ssem!ly$'olesale distri!ution

)etail sales

ome 7ppliance Industr#




ro#essing of !asi# ingredients

Syrup manufa#ture

Bottling and #an filling

$'olesale distri!ution

&dvertising

)etailing 7lbertsons

Soft-rin" Industr#




rogramming

Disk loading

Marketing

Distri!ution

(omputer Software Industr#




A!ti(ity-Base* C"sti# A 5eyT""' i# A#a'yi# C"sts

Deter$i#i# /hether a !"$%a#y’s !"sts are i#'i#e /ith th"se ". ri(a's re;,ires

Meas,ri# h"/ a !"$%a#y’s !"sts !"$%are /ith th"se". ri(a's a!ti(ity-+y-a!ti(ity

Re;,ires ha(i# a!!",#ti# *ata that $eas,resthe !"st ". ea!h (a',e !hai# a!ti(ity

A!ti(ity-+ase* a!!",#ti# syste$s %r"(i*e *ata ."r *eter$i#i# !"sts."r ea!h re'e(a#t (a',e !hai# a!ti(ity





Be#!h$ar1i# C"sts ". 5ey Va',e Chai# A!ti(ities

F"!,ses "# cross!company comparisons ". ho !ertai# a!ti(ities are %er."r$e* a#* the !"stsass"!iate* /ith these a!ti(ities

P,r!hase ". $ateria's Pay$e#t ". s,%%'iers

Ma#ae$e#t ". i#(e#t"ries

Getti# #e/ %r"*,!ts t" $ar1et

Per."r$a#!e ". ;,a'ity !"#tr"' Fi''i# a#* shi%%i# ". !,st"$er "r*ers

Trai#i# ". e$%'"yees

Pr"!essi# ". %ayr"''s



O+9e!ti(es ". Be#!h$ar1i#

Determine w'et'er a #ompany is performing parti#ularvalue #'ain a#tivities effi#iently !y studying pra#ti#es andpro#edures used !y ot'er #ompanies

0nderstand t'e !est pra#ti#es in performing

an a#tivity -- learn w'at is t'e 1!est2 wayto do a parti#ular a#tivity from t'osedemonstrating t'ey are 1!est-in-world2

&ssess if #ompany3s #osts in performing parti#ular value

#'ain a#tivities are in line wit' #ompetitors

Learn 'ow ot'er firms a#'ieve lower #osts

%ake a#tion to improve #ompany3s #ost #ompetitiveness



4ND0S%)5

&N&L5S4S



E#(ir"#$e#ta' C"$%"#e#ts



I#*,stry’s D"$i#a#t E!"#"$i! Traits

Market si6e and growt'rate

osition in life #y#le

Num!er of rivals Buyer needs and

re7uirements

rodu#tion #apa#ity

a#e of te#'nologi#al

#'ange revalen#e of verti#al

integration

rodu#t innovation

Degree of produ#tdifferentiation

S#ope of #ompetitiverivalry

8#onomies of s#ale

89perien#e and learning-#urve effe#ts

4ndustry profita!ility



< F"r!es M"*e' ". C"$%etiti"#



I#*,stry Dri(i# F"r!es

I#ter#et a#* e-!"$$er!e "%%"rt,#ities

I#!reasi# '"+a'iati"# ". i#*,stry

Cha#es i# '"#-ter$ i#*,stry r"/th rate Cha#es i# /h" +,ys the %r"*,!t a#* h"/

they ,se it

Pr"*,!t i##"(ati"#

Te!h#"'"i!a' !ha#e4%r"!ess i##"(ati"#

Mar1eti# i##"(ati"#



E#try "r e)it ". $a9"r .ir$s

Di..,si"# ". te!h#i!a' 1#"/'e*e

Cha#es i# !"st a#* e..i!ie#!y

Mar1et shi.t .r"$ sta#*ar*ie* t" *i..ere#tiate* %r"*,!ts ?"r (i!e (ersa@

Cha#es i# *eree ". ,#!ertai#ty a#* ris1

Re,'at"ry %"'i!ies 4 "(er#$e#t 'eis'ati"#

Cha#i# s"!ieta' !"#!er#s attit,*es a#*'i.esty'es

I#*,stry Dri(i# F"r!esI#*,stry Dri(i# F"r!es



$'at &re t'e :ey (a#tors forCompetitive Su##ess;

C"$%etiti(e .a!t"rs $"st a..e!ti# everyindustry member’s a+i'ity t" %r"s%er S%e!i.i! stratey e'e$e#ts

Pr"*,!t attri+,tes Res",r!es C"$%ete#!ies C"$%etiti(e !a%a+i'ities

"SFs s%e'' the *i..ere#!e +et/ee# Pr".it a#* '"ss C"$%etiti(e s,!!ess "r .ai',re







E)a$%'e 5SFs ."r Beer I#*,stry

F,'' ,ti'iati"# ". +re/i# !a%a!ity -- t"

1ee% $a#,.a!t,ri# !"sts '"/

Str"# #et/"r1 ". /h"'esa'e *istri+,t"rs --

t" ai# a!!ess t" retai' ",t'ets

C'e(er a*(ertisi# -- t" i#*,!e +eer

*ri#1ers t" +,y a %arti!,'ar +ra#*



E)a$%'e 5SFs ."r A%%are'Ma#,.a!t,ri# I#*,stry

A%%ea'i# *esi#s a#*!"'"r !"$+i#ati"#s -- t"

!reate +,yer a%%ea'

L"/-!"st $a#,.a!t,ri#e..i!ie#!y -- t" 1ee%

se''i# %ri!es!"$%etiti(e



CM8%4%)

&N&L5S4S



What Are the Mar1et P"siti"#s ".I#*,stry Ri(a's&

O#e te!h#i;,e ."r re(ea'i# the *i..ere#t!"$%etiti(e %"siti"#s ". i#*,stry ri(a's isstrategic group mapping

A strategic group !"#sists ". th"se

ri(a's /ith si$i'ar!"$%etiti(e a%%r"a!hesi# a# i#*,stry



Stratei! Gr",% Ma%%i#

Fir$s i# same strategic group ha(e t/" "r $"re competitive characteristics i# !"$$"# 0a(e !"$%ara+'e %r"*,!t 'i#e +rea*th

Se'' i# sa$e %ri!e4;,a'ity ra#e E$%hasie sa$e *istri+,ti"# !ha##e's

Use sa$e %r"*,!t attri+,tes t" a%%ea' t" si$i'ar ty%es". +,yers

Use i*e#ti!a' te!h#"'"i!a' a%%r"a!hes

O..er +,yers si$i'ar ser(i!es

C"(er sa$e e"ra%hi! areas

E)a$%'e Stratei! Gr",% Ma%



E)a$%'e Stratei! Gr",% Ma%

". Se'e!te* Retai' Chai#s



Assessi# a C"$%a#y’s C"$%etiti(eStre#th (s3 5ey Ri(a's

*+ List industry key su##ess fa#tors and ot'er relevantmeasures of #ompetitive strengt'

+ )ate firm and key rivals on ea#' fa#tor using rating s#aleof * to *< =* > very weak? @ > average? *< > very strongA

+ De#ide w'et'er to use a weig'ted or unweig'ted ratingsystem =a weig'ted system is usually superior !e#ause t'e#'osen strengt' measures are unlikely to !e e7uallyimportantA

.+ Sum individual ratings to get an overall measure of

#ompetitive strengt' for ea#' rival@+ Based on t'e overall strengt' ratings, determine overall#ompetitive position of firm





Stratey a#* C"$%etiti(e A*(a#tae

#ompetitive advantage e)ists /he# a .ir$’sstratey i(es it a# e*e i# Attra!ti# !,st"$ers and

De.e#*i# aai#st !"$%etiti(e ."r!es

C"#(i#!e !,st"$ers .ir$’s %r"*,!t 4 ser(i!e"..ers superior value A good product at a lo price

A superior product /"rth %ayi# $"re ."r

A best!value product

<e# to Gaining a (ompetitive 7dvantage



< Ge#eri! C"$%etiti(e Strateies

Menu of Strategy ptions



Menu of Strategy ptionsfor $inning in t'e Marketpla#e

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