Business Strategy: what is it, who's it for and how to create one

Chris Eaton LLB (Hons) C DirCEO, The ILS Group Limited

Strategy

“We must plan for the future because

those who stay in the present will

remain in the past.”

Abraham Lincoln

Evaluating Strategy

A well formulated strategy helps to marshal and allocate an

organisation's capability into a unique competitive position

based on its relative internal strengths, weaknesses,

anticipated changes in the environment, stakeholders’

expectations and likely moves by present and potential

competitors.

Source J B Quinn - Adapted

Mission Statement

To have each guest leave the hotel completely satisfied

-Marriott Hotel Dubai

Shareholder is King

- Hanson Industries

No 1 goal is to provide outstanding customer service

- Nordstrom

Kill Caterpillar

- Komatsu

Getting Started

Start Big – Start Wide

P – PoliticalE – EconomicS – SocialT – TechnologicalL – LegalE - Environmental

Understanding the Competitive Situation – Porter’s Five Forces

Potential Entrants

Substitutes

Supplier Power Buyer PowerCurrent

Competition

SWOT Analysis

• Should provide a clear statement of strategic position

• Involve all

• Do regularly

• Perception or Objective Analysis?

• Prioritise and discuss impact

• Compare against competitors

Product Market MatrixOriginal idea by Ansoff

Product Development

Market Development

Diversification

Penetration

New product

Current product

Current market New market

Strategic Options

Two Core Strategies:

Differentiation

What don’t we do?

Cost Leadership

Cost not Price

Implementation

Identification of sub-strategies:

Growth

Turnaround

Defender/Reactor

Reasons for Failure

Cost Leadership•Basis of leadership duplicated – “Me Too”

•(N.B. Organisational and management skills most difficult to copy)

Differentiation•Price differential becomes too great to hold brand loyalty

•Buyer’s need for differentiating factor fails

•Imitation narrows perceived differentiation

Key Elements to Remember

• Start Big - Start Wide (PESTLE)

• Analyse the Competition (including new entrants and possible substitutes)

• Assess internal strengths and weaknesses

• Decide whether to cost lead or differentiate

• Decide what you don’t do

And remember…

Strategy is a process, not an activity