Entrepreneurship Business Strategy This presentation contains material adapted from Hill C amp Jones G 2004 Strategic Management Theory An Integrated Approach 6 th ed Boston MA Houghton ID: 599248
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Shad ValleyEntrepreneurship
Business Strategy
This presentation contains material adapted from Hill, C. & Jones, G. (2004). Strategic Management Theory: An Integrated Approach (6
th
ed.). Boston, MA: Houghton.Slide2
Vision StatementsYour organization’s purpose, articulated
“why are you doing business?”“what problem are you trying to solve?”“what overarching goal do you want to achieve?”“is what you are doing important?”“should people have confidence in what you do?Slide3
Strategic Management Process
An action a company takes to attain superior performance.A pattern or plan that integrates an organizations major goals, policies, and action sequences into a cohesive whole. A well formed strategy helps to marshal and allocate an organization’s resources into a unique and viable posture based on its relative internal competencies and shortcomings.If the vision is “why”, then the strategy is “how”
What is Strategy???Slide4
Strategic Management Process
Approaches to Strategy ….
Planning:
a procedure to produce an articulated result, through a system of decisions.
Pattern:
views strategy as consistency, regardless of the intentions of an action.
Ploy:
a ploy is essentially a “specific maneuver” that is intended to outwit a competitor.
Perspective:
an integrated way of perceiving the world.
Position:
locating a company within its environment to achieve a competitive advantage.Objective of Strategy is to achieve a competitive advantage!!!
What is Strategy???Slide5
Strategic Management Process
Five Steps of the Strategic Planning Model…
Selection of the Corporate Mission and Major goals
Analysis of the Organization’s external competitive environment to identify
O
pportunities and
T
hreats
Analysis of organization’s internal operating environment to identify the organizations
S
trengths and
W
eaknesses.
A Basic Planning Model
SWOT ANALYSISSlide6
Strategic Management Process
Five Steps of the Strategic Planning Model…
Selection of strategies that build on the organizations
strengths
and correct its
weaknesses
in order to take advantage of external
opportunities
and counter external
threats
.
Evaluate against mission and goals
Which strategy best meets the goal?
Implementation & Control
A Basic Planning ModelSlide7
Strategic Management Process
Five Steps of the Strategic Planning Model…
A Basic Planning Model
Vision and
Goal
Implementation
Internal Analysis
S & W
SWOT
Strategic Choice
External Analysis
O & T
Control/
FeedbackSlide8
Strategic Management Process
SWOT ANALYSIS
A Basic Planning Model
Strengths
Threats
Opportunities
Weaknesses
INTERNAL
EXTERNALSlide9
Strategic Management Process
External Analysis – Industry Structure
Bargaining Power
Of Suppliers
Risk of Entry By
Potential
Competitors
Bargaining Power
Of Buyers
Threat of
Substitutes
Rivalry Amongst
Established
FirmsSlide10
Porter’s Five ForcesRisk of EntryBrand LoyaltyEconomies of Scale
Absolute Cost AdvantagesCustomer Switching CostGovt RegulationRivalry among Established CompaniesIndustry Competitive Structure (fragmented, consolidated)Industry DemandExit BarriersBargaining Power of BuyersBuyers are fewerBuyers purchase in large quantitiesCompanies depend solely on buyersBuyers can switch easilyBuyers can buy from multiple companiesBuyers can enter the industry easilyEtcBargaining Power of SuppliersSupplier provides specialized productSwitching costsCompanies cannot enter the supplier industryEtcSubstitute Products
Other Considerations
Strategic Groups within Industry
Complementary ProductsSlide11
Strategic Management Process
External Analysis – Macroenvironment
Bargaining Power
Of Suppliers
Risk of Entry By
Potential
Competitors
Bargaining Power
Of Buyers
Threat of
Substitutes
Rivalry Amongst
Established
Firms
Political & Legal
Technological
Demographic
MacroeconomicSlide12
Strategic Management Process
Industry Structure
Bargaining Power of Buyers
Bargaining Power of Suppliers
Industry Rivalry
Risk of Entry
Threat of Substitutes
Macroenvironment
Political/Legal
Technological
Macroeconomic
Demographic
External Analysis - Summary
Rate each of these “Favourable”, “not favourable”Slide13
Strategic Management Process
Core Competencies are the Resources and Capabilities that allow your firm to gain competitive advantageThey are unique to you, and not easily imitatableResources – equipment, land, trademark, reputationCapabilities – rules, routines, procedures with embedded knowledge
Internal Analysis - Core CompetenciesSlide14
Strategic Management Process
Competitive Advantage: Advantage gained over competitors by offering consumers greater perceived value, either through lower prices or greater benefits. Leads to higher rates of profit than the industry. Two factors determine CA:
Differentiation
Low Cost
Internal Analysis - Competitive Advantage
Source for image: Hill & Jones (2004) Strategic Management Theory. 6
th
ed. Boston, USA: Houghton Mifflin Slide15
Strategic Management Process
Internal Analysis
– Competitive Advantage Building Blocks
Superior Efficiency
“we can make things for the lowest cost!”
Superior Quality
“we make the most reliable/durable/etc things!”
Superior Innovation
“we innovate the best when it comes to our products/processes!”
Superior Customer Responsiveness
“we are the best at detecting and responding to our customer’s changing needs!”Slide16
Strategic Management Process
Core Competencies
What do you do really well?
Dynamic Capabilities
Can you change in a way that is appropriate for your environment?
Competitive Advantage (pick one)
Low Cost?
Differentiation?
Building Blocks
Superior Efficiency
Superior Quality
Superior Innovation
Superior Customer Responsiveness
Internal Analysis - Summary
What do you do well, what do you need to be in order to be the cheapest/differentiatedSlide17
Developing Strategies
Business-Level Strategies
Customer Needs (What is to be satisfied?)
Product Differentiation
Customer Groups (Who is to be satisfied?)
Market Segment : demographics, psychographics, size, etc
Distinctive Competencies (How will they be satisfied
by your company
?)
Developing StrategiesSlide18
Developing Strategies
Business-Level Strategies
Low Cost
Differentiation
Focus (Niche)
Examples of each?
Developing StrategiesSlide19
Business-Level Strategies
Developing Strategies
Developing StrategiesSlide20
Strategic Management Process
Develop THREE options that will accomplish your goalsAt least one Low Cost, and at least one DifferentiationEvaluate each - A matrix will HELP
Developing a Business Model
Strategy
Effectiveness
Startup
Capital Needed
Factor
3
Etc
Low
Cost 1
4
4
2
4
Low Cost 2
3455Differentiation2363TOTAL
………..….