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7/28/2019 Business Strategy Development - Key Concepts
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Strategy Development
KeyConceptsSep2008
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In peace prepare for war, in war prepare for peace.
The art of war is of vital importance to the state.
512 BC
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Thefollowingoverviewaimsatgivinganunderstandingof
thenatureofstrategydevelopmentandtoguideandinspire
thepractical
application
by
presenting
key
frameworks,
conceptsandissuesthatareparticularrelevanttostartup
companies.BenjaminTeeuwsen
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Structure
1. Whatis
Strategy?
2. StrategicAnalysis
3. StrategyDevelopment
4. StrategyImplementation
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CarlvonClausewitz
Tacticsistheartofusingtroopsinbattle;
strategy
is
the
art
of
using
battles
to
win
wars.
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HelmuthKarlBernhard
Grafvon
Moltke
Strategyisthepracticaladaptationofthe
meansplacedatageneral'sdisposaltothe
attainmentof
the
object
in
view.
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MichaelEPorter
Competitivestrategyisaboutbeingdifferent.Itmeansdeliberatelychoosingadifferentsetof
activitiesto
deliver
aunique
mix
of
value.
Porter(1996:64)
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Subhash CJain
Strategyinafirmisapatternofmajorobjectives,
purposes,orgoals ......andessentialpoliciesandplans for
achievingthosegoals......,statedinsuchwayastodefine...
...whatbusinessthecompanyis inoristobeinandthe kindofcompanyitisoristobe.
(Jain2004
p.
9)
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MarketingStrategy
Marketingstrategydealsessentiallywiththeinterplayofthreeforces:
thecustomer,thecompetition,andthecorporation(strategicthreeCs)
Characteristicsofgoodmarketingstrategy:
Aclearmarketdefinition
Agood
match
between
corporate
strengths and
the
needs of
the
market;
Superiorperformanceinthekeysuccessfactorsofthebusiness
BasedontheinterplayofthethreeCs,strategyrequiresthreedecisions:
Where
to
compete
(market,
segments,
)?
Howtocompete(meansforcompeting)?
Whentocompete(timing)?
(Jain2004)
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Putdifferently
Strategydevelopmentisaquestionbased process:
Wherearewenow?
Wherewould
we
like
to
go?
Howdowegetthere?
(PeterEdelmann,SeniorExecutivePresidentVoith Turbo)
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2.
Strategic
Analysis
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PESTELAnalysis
EconomicalEnvironment
EnvironmentalEnvironment LegalEnvironment
SocialEnvironment TechnologicalEnvironment
What are the key issues we face in our business?
PoliticalEnvironment
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Politicalenvironment
ecological/environmentalissues
currentlegislationhomemarket
futurelegislation
European/internationallegislation
regulatorybodiesandprocesses
governmentpolicies
governmenttermandchange
tradingpolicies
funding,grantsandinitiatives
home
market
lobbying/pressure
groups
internationalpressuregroups
warsandconflict
Economicalenvironment
homeeconomy
situation
homeeconomytrends
overseaseconomiesandtrends
generaltaxationissues
taxationspecifictoproduct/services
seasonality/weatherissues
marketandtradecycles
specificindustryfactors
marketroutesanddistributiontrends
customer/end
user
drivers
interestandexchangerates
internationaltrade/monetaryissues
Exampleissues
www.businessballs.com
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SWOT
Strength Opportunities
Weaknesses
Risks
FITmatters:Internalstrengthandweaknessesneedtomatch
withexternalopportunitiesandrisks (KennethAndrews)
Task: Keeping findings descriptive ; Investigating both internal AND external issues
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Exampleissues
Strength
Advantagesof
proposition?
Capabilities?
Competitiveadvantages?
USP's(uniquesellingpoints)?
Resources,Assets,People?
Experience,knowledge,data?
Financialreserves,likelyreturns?
Marketing reach,distribution,awareness?
Innovativeaspects?
Location
and
geographical?
Price,value,quality?
Accreditations,qualifications,certifications?
Processes,systems,IT,communications?
Cultural,attitudinal,behavioural?
Managementcover,
succession?
Weaknesses
Disadvantagesof
proposition?
Gapsincapabilities?
Lackofcompetitivestrength?
Reputation,presenceandreach?
Financials?
Ownknownvulnerabilities?
Timescales,deadlinesandpressures?
Cashflow,startupcashdrain?
Continuity,supplychainrobustness?
Effects
on
core
activities,
distraction?
Reliabilityofdata,planpredictability?
Morale,commitment,leadership?
Accreditations,etc?
Processesandsystems,etc?
Managementcover,
succession?
www.businessballs.com
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Exampleissues
Opportunities
Marketdevelopments?
Competitors'vulnerabilities?
Industryorlifestyletrends?
Technologydevelopmentandinnovation?
Globalinfluences?
Newmarkets,vertical,horizontal?
Nichetargetmarkets?
Geographical,export,import?
NewUSP's?
Tactics
surprise,
major
contracts,
etc?
Businessandproductdevelopment?
Informationandresearch?
Partnerships,agencies,distribution?
Volumes,production,economies?
Seasonal,weather,
fashion
influences?
Threats
Politicaleffects?
Legislativeeffects?
Environmentaleffects?
ITdevelopments?
Competitorintentions various?
Marketdemand?
Newtechnologies,services,ideas?
Vitalcontractsandpartners?
Sustaininginternalcapabilities?
Obstacles
faced?
Insurmountableweaknesses?
Lossofkeystaff?
Sustainablefinancialbacking?
Economy home,abroad?
Seasonality,weather
effects?
www.businessballs.com
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StakeholderAnalysis
Thinkofallofyourstakeholdergroups:
Whatdo
they
expect
from
your
company?
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3.Strategy
Development
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Pointofview
Developinggoodstrategies:
Havingmanagersunderstandingthebenefitofhavingawellarticulated,stablepurpose,andtheimportanceofdiscovering,
understanding,documenting,andexploitinginsightsabouthowto
create
more
value
than
other
competitors
do
Universalobjectives(profitability,costs,turnover,sales,quality,etc.)definewhatacompanymustdotosurvive
butdonotautomaticallysuggestuniquestrategiesnorprovide
direction
Theessenceofwhyanorganizationexistsdoes provideguidancetoachieve theseuniversalobjectives
(Campbell 1997 p 42)
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Whatbusinessareweinandwhy?
Vision longterm,encouraging,aspirationforthefuture
Mission
purposeofthebusiness
Values
attitudes,behaviours,characteroforganizationtoguideactionslikeaninternalcompass
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PlanningProcesses
Processesofdevelopinggoodstrategiesaremuchmoremessy,
experimental,iterative;
and
driven
from
the
bottom
upthan
manyplanningprocessessuggest
Besides,iftherewereonebestway everyonecoulduseit
Howeverprocessesandframeworksdoprovidestructure,helptosystematizethebasisandcontextfordecisiontakingand
document
results
along
the
way (Campbell 1997 p 46)
A good plan is not a neat document put in a folder after print a good plan that is a
piece of paper, which has been crumpled up a hundred times, thrown into the corner, buttaken again to get changed, modified, extended (Robert Grant, Lecturer UOW)
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GenericStrategies
CompetitiveAdvantage
CostLeadershipDifferentiation
Differentiation LowerCost
Narrow
Targ
et
BroadT
arget
Competit
iveScope
Focus
(Porter 1985)
Niche Market Efficiency
Cost LeadershipDifferentiation
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Operational
Excellence
Product
Leadership
Customer
Intimacy
Strategic
Direction
Sharpendistribution
systemsandprovide
nohassleservice
Nurtureideas,translate
themintoproducts,and
marketthemskillfully
Providesolutionsand
helpcustomersruntheir
business
Organizational
Arrangement
Hasstrong,
central
authorityandafinite
levelofempowerment
Actsin
an
ad
hoc,
organic,looselyknit,and
everchangingway
Pushesempowerment
closetocustomer
contact
Systems
Support
Maintainstandard
operatingprocedures
Rewardindividuals
innovativecapacity
and
newproductsuccess
Measurethecostof
providingservice
and
of
maintainingcustome
loyalty
Corporate
Culture
Actspredictablyand
believesonesizefits
all
Experimentsandthinks
outofthebox
Isflexibleandthinks
haveityourway
(Pearcy,Wiersema 1995)
CoreMarketingStrategies
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Current Markets NewMarkets
MarketPenetration MarketDevelopment
Product Development Diversification
CurrentProducts
New
Products
(Ansoff)
MarketStrategies
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Howcanwebestcompete?
Whichcustomersandmarketswillwetarget?
Whatisthevaluepropositionthatdistinguishesus?
What
key
processes
give
us
competitive
advantage? Whatarethehumancapitalcapabilitiesrequiredto
excelatthesekeyprocesses?
Whatarethetechnologyenablersrequiredforthestrategy?
(Kaplan 2008)
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KeySuccess Drivers
What factors are especially important
to perform superior inour industry?
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Defining StrategicBusinessUnits
AnSBUiscomposedofaproductorproductlineshavingidentifiableindependencefromotherproductsorproductlinesintermsofcompetition,prices,substitutabilityofproduct,style/qualityandimpactofproductwithdrawal.
(Jain2004p.18)
(Jain 2004)
- unique business mission, independent of other SBUs
- clearly definable set of competitors
- able to carry out integrative planning relatively independently of other SBUs
-large enough to justify senior management attention but small enough to serve a
useful focus for resource allocation
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DefiningSBUs TargetingMarketSegments
CustomerFunctions
4.Dimension:
Levelof
Distribution
CustomerGroups
Technologies
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Targeting:Whichsegmentstogofor?
Identifiability
Ability
to
identify
and
measure
the
relevant
characteristics
Size Sufficientnumberofbuyers
Stability Needsorfactorsdonotchangetoorapidly
Accessibility
Ability
to
reach
target
segment
in
economical
way
Responsiveness Segmentrespondshomogeneouslytoaspecificmarketingmix
(Schiffman et al. 2005)
>Meaningful
>Actionable
>Financially
attractive
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BusinessModel
CutomerInterface
Fulfillment&Support
Information&
Insight
RelashionshipDynamics
PricingStructure
StrategicResources
CoreCompetencies
StrategicAssets
CoreProcesses
ValueNetwork
Suppliers
Partners
Coalitions
CoreStrategy
BusinessMission
Product/MarketScope
BasisforDifferentiation
CustomerBenefits CompanyBoundariesConfiguration
Efficient/Fit/ProfitBoosters(1)
(1)
Increasing
Returns,
Competitor
Lock
Out,
Strategic
Economies,
Strategic
Flexibility
(Gary Hamel 2002)
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TypesofRules
Howtorules
guidingexecution
of
key
processes
Boundaryrules
limitingrangeofopportunities(companyscope)
Priorityrules
settingprioritiesforresourceallocation(rankingopportunities)
Timingrules
adaptinginternal
schedules
(e.g.
NPD)
to
the
pace
of
markets
Exitrules
definingcriteriatoexitopportunitiesinthelightofunpredictable
developments
(Eisenhardt 2001 p. 111)
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Innovation&Change
Understandingmentalmodels
Managers
mindsets
(industry
dogmas)
that
influence
the
interpretation
ofsituations(sensemaking)andassuchdecisionmaking
Tasktomaketheimplicitexplicitandtoconstantlyquestionandchallengethoselongheldbelieves
Thinkingbeyond
best
practice
processreengineering,TQM,etc.necessarybutnotsufficientandleadtowardsperformancebarrier
Dream,create,
explore,
invent,
pioneer,
imagine
(HamelG
2002
p.
28)
Changingtherulesofthegame!
Frommarketdriventomarketdrivingbyinnovatingregardingvalue
propositionAND
business
system
(Bickhoff N 2008, Hamel G 2002, Kumar N 2000, Porter 1996)
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StrategyEvaluation
Suitability: Isthereasustainablecompetitiveadvantage?
Validity:Areassumptionsrealistic?
Feasibility: Doesfirmhavetheskills,resources,and
commitments?
Internalconsistency:Doesstrategyhangtogether?
Vulnerability:Whataretherisksandcontingencies?
Workability: Canweretainourflexibility?
Timing:Whatistheappropriatetimehorizon?
(Jain 2004)
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4.Strategy
Implementation
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Strategy Maps
Tovisualizestrategyandcauseeffectrelationshipsamong
strategic
objectives Eachperspectivehelpstoexecutetheoneabove
Bestappliedatvariouslevels(corporate,SBU,)
StrategyMapssupportstrategyalignment
Visualrepresentationofthelinkedcomponentsfacilitates
strategy
communication MapslinktoBalancedScoreCard(performancemetrics)
Genericmapsprovideguidancetodevelopuniquemaps
tailoredto
company
(Kaplan, Norton 1996, 2004, 2008)
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Generic Strategy Map (reduced)
Expandandbuild
strategic
skills,
capabilities,andexpertise
Developleadershipand
executiondriven
culture
Enableandrequire
continuouslearning
and
sharingofknowledge
ImproveOperating
QualityandEfficiency
GrowHighValue
CustomerRelationships
AccelerateProduct
Innovation
Financial
Perspective
Learning
andGrowth
Perspective
Process
Perspective
Customer
Perspective
Increasereturn
on
capital
Increaserevenuesin
existingsegments
andmarkets
Growrevenuesinnew
productsandservicesImproveproductivity
Bealeaderinquality
andreliability
Providevaluedservice,
applicationsexpertise,
andsupport
Introduceinnovative,
highperformance
productsandsolutions
Improvequality,cost,
and
flexibility
ofoperatingprocesses
Improvesupplychain
efficiencyandeffectiveness
Optimizecustomer
profitability
Expandchannels
offerings,andmarkets
Buildand
maintain
strong
customerrelationships
Excelattechnology,
productdevelopment
andlifecycle
management
Identifynextgeneration
marketopportunities
CreateahighPerformanceCulture
(Kaplan, Norton 2008)
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Generic Strategy Map (detailled)
LongTerm
ShareholderValue
Financial
Perspective
Customer
Perspective
Internal
Perspective
Learningand
Growth
Perspective
ProductivityStrategy GrowthStrategy
ImproveCost
Structure
IncreaseAsset
Utilization
Enhance
CustomerValue
ExpandRevenue
Opportunities
Price Quality Availability Selection Functionality Service Partnership Brand
CustomerValue
Proposition
ImageRelationshipProduct/ServiceAttributes
OperationsManagement
Processes
CustomerManagement
Processes
InnovationProcesses RegulatoryandSocial
Processes
Supply
Production
Distribution
RiskManagement
Selection
Acquisition
Retention
Growth
Opportunity
R&DPortfolio
Design/Develop
Launch
Environment
SafetyandHealth
Employment
Community
HumanCapital
InformationCapital
Culture LeadershipOrganizationCapital
Alignment Leadership
(Kaplan,Norton2004)
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Balanced ScoreCard
Performancemeasuring system to quantify alsointangible
assets
Customerperspective,internal processes and learning asbuilding blocks
Financialperformance as ultimate indicator
Companiesvision and mission standabove providing overall
direction You cannot manage,what you cannot measure.
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Balanced ScoreCard
Objectives Measures Targets Initiatives
Financial
Perspective
Customer
Perspective
Process
Perspective
Learningand
Growth
Perspective
Visionand Mission
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Finally,askyourself
Therearethreekindofcompanies,thosethat
makethingshappen,thosethatwatchthings
happen and
those
that
wonder
what
happened.
(anonymous)
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Andconsider
Predictingraindoesnotcount
building
arks
does.
(anonymous)
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Literature
AndrewsKR(1987)TheConceptsofCorporateStrategyRichardDUnwin,Homewood
Bickhoff N(2008)QuintessenzdesstrategischenManagements WasSiewirklich
wissenmssen,
um
im
Wettbewerb
zu
berleben
Springer
Verlag,
Berlin
CampbellA,AlexanderM(1997)WhatsWrongwithStrategy?HBRNovDec,pp.4251
Eisenhardt KM,Sull DN(2001)StrategyasSimpleRulesHBRJanMar,pp.107116
HamelG
(2002)
Leading
the
Revolution
Harvard
Business
School
Press,
Boston
USA
JainSC(20047thed.)Marketing:PlanningandStrategyThomson,OhioUSA
KaplanRS,NortonDP(2008)MasteringtheManagementSystemHBR,Jan,pp.6377
KaplanRS,NortonDP(2004)StrategyMapsBoston
KaplanRS,NortonDP(1996)TheBalancedScorecardBoston
KumarN,Scheer L,Kotler P(2000)FromMarketDrivetoMarketDrivingEuropeanManagementJournalVol.18No.2,pp.129142
PorterM
E(1996)
What
is
Strategy?
Harvard
Business
Review,
No.
6,
Nov
Dec,
pp.
61
78
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Literature
PorterME(1985)CompetitiveAdvantageFreePress,NewYork
Schiffman Letal.(2005)ConsumerBehaviourPearsonEducationAustralia,FrenchsForest
NSW
Treacy M,Weirsema F(1995)TheDisciplineofMarketLeaders:ChooseYourCustomers,NarrowYourFocus,DominateYourMarketPerseus Books,Cambridge
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FurtherConcepts
BlueOcean Strategies (Kim,Mauborgne )
CoreCompetencies (Hamel,Prahalad);
Resourcebased view (Barney,Clark)
Five Forces (Porter)
MarktetOrientation(Kohli,Jaworski,Narver,Slater,Day)
OperationalExcellence
PortfolioAnalysis
Product Lifecycle,Industry Lifecycle
Six Sigma
(Pande,
Neuman,
Cavanagh) StrategicIntent (Hamel,Prahalad)
Sustainable Competive Advantage
TotalQualityManagement
ValueChain(Porter)
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Further Readings
BarneyJB,ClarkDN(2007)ResourceBasedTheory:CreatingandSustainingCompetitiveAdvantageOxfordUniversityPress
DayG
S(1994)
The
capabilities
of
market
driven
organizations
Journal
of
Marketing,
Vol.
58,
No.4,pp.3752
KimWC,Mauborgne R(2005)BlueOceanStrategy:HowtoCreateUncontestedMarketSpaceandMakeCompetitionIrrelevantHarvardBusinessSchoolPress
Kohli AK,
Jaworski B
J(1990)
Market
Orientation:
The
Construct,
Research
Propositions,
and
ManagerialImplicationsJournalofMarketing,Vol.54,No.2,pp.118
Narver JC,SlaterS.F.(1990)TheeffectofamarketorientationonbusinessprofitabilityJournalofMarketing,Vol.54,No.4,pp.2036
Senge PM(1990)TheFifth Discipline:TheArtand Practiceof the learning OrganizationCurrencyDoubleday
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FurtherQuestions?
Ifyoucouldneedsomeadviceonhowtoapplytheconceptsto
yourcase,pleasefeelfreetodropmealine.
BenjaminTeeuwsen
www.chiligum.com
Bytheway,Iappreciateprettymuchanyfeedback,e.g.ifthiswashelpfulandwhy
orwhynot soIknowbetterhowtoimprovethispresentationaswellasIdoenjoy
hearing,whenthisledtonewinsightsforuniversitystudies: )
mailto:[email protected]?subject=perspectives%20on%20strategy%20development%20--%20key%20conceptshttp://www.chiligum.com/http://www.chiligum.com/mailto:[email protected]?subject=perspectives%20on%20strategy%20development%20--%20key%20concepts7/28/2019 Business Strategy Development - Key Concepts
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