Capstone Strategy 2005

8/2/2019 Capstone Strategy 2005

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Strategy

Strategic Plan might consist of:

1) Vision or Mission Statement

2) S.W.O.T. Analysis (or Environmental and Internal scans)

3) Tactical and Functional Area Plans

Strategy and Tactics differ mainly around

time scale.

In Capstone, a 5-8 year Strategy is supported withannual tactical decisions.


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Strategy

Michael Porter argues for a top-down view. Strategy is designed

at the top of the organization, with the goal of positioning

resources and building relationships in a unique way.

Eric Banabeau says strategy should emerge from the bottom-upin a sort of dance with the marketplace, and that the goal of

strategy should be to apply simple rules.

From where in the organization strategy shouldemerge?


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Introduction

A strategy is one of four

organizational time drivers.

TIME IN YEARS

Mission Statement

(timeless)

Strategy

(3-5 years)

Operational Intents

(1 year)

Tactics

(Day to day)


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CAPSTONE STRATEGIES

Strategies are declared incorporate missionstatements

Capstone firms may developand execute any strategy (or

none at all - though that isntadvisable). Basic strategiesinclude:

Overall Cost Leader

Cost Leader with Focus

(Low Tech or ProductLife-Cycle)

Differentiator

Differentiator with Focus(High-Tech or Product

Life-Cycle)

STRATEGYMission Statement

PERFORMANCEASSESSMENT

Success Measurements

Analyst ReportRound Analysis - Star

Summary

INDUSTRY AND MARKETANALYSIS

S.W.O.T AnalysisCompetitor AnalysisCompetitive Analysis

FUNCTIONAL PLANNINGR&D

MarketingProduction

HRFinance

TQM


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Porter Curve

ROI

Market Share

High

HighLow

Extensive coverage on Porters theories ofcompetitive advantage are easily located

on the internet.

Those theories in a Capstone context

are explained in a tutorial on the website.


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ROI

Market Share

High

HighLow

Porter CurveFirms with High ROI / Low Overall Market

Share would likely have a clearly defined

focused strategy

High Overall Market Share / High ROI firms

would likely have a strong position in all

segmentsrisky, but effective when executed

properly


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Porter Curve

ROI

Market Share

High

HighLow

Firms in the middle have a less definable identity,

and a hard time competing. They might have anumber of sofa-bed product lines: Not great sofas

not great beds.


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BCG Growth/Share Matrix

Marke

tGrowth

Low

High

Market Share

High Low

?

The Boston Consulting

Group Growth-Share

Matrix was developed in

the 1960s as a tool to

assess a firms StrategicBusiness Unit (SBU) or

product

Long-term success is

achieved by having a mix

of high-growth potential

products that require lots

of cash, and low-growth

cash cows that

generate the required $$


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BCG Growth/Share Matrix

M

arketGr

owth

Low

High

Market ShareHigh Low

?

Star products occupy

strong positions in high

growth markets

Cows occupy strong

positions in low growth

markets

Question Marks havelow market share in

segments with strong

growth

Dogs are low market

share products

positioned in low

potential markets


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Capstone Strategies

The Situation Analysisgenerated an overview of the forces atwork within the Capstone market place.

Now you must decide how to use that information to gain acompetitive advantage.

There are many different approaches - all of which can besuccessful depending on how well they are implementedtactically.


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OVERALL COST LEADER

An overall cost leader will attempt to be the low-cost producer inevery segment of the market. They will have good profit marginson allsales while keeping prices low for price-sensitive customers.

Firm Profile: More likely to re-position products than introduce new ones to

the market

Capacity improvements are unlikely to be undertaken (may runovertime instead)

Automation may be pursued to increase margins

Investments will be financed with debt and/or stock issues

Tend to spend less on promotion and sales

Focus on Market Share, Profits, and Stock Price


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COST LEADER WITH LOW-TECH FOCUS

A low-tech focused cost leader seeks to dominate the price sensitivemarket segments. Their aim is to set prices below all competitors -and still be profitable.

Firm Profile: Multiple product lines in the low-tech segments (Low &

Traditional)

Invest heavily in automation

Spend heavily on advertising to cost sensitive customers (salespeople have more than one product to pitch to prospects)

Investments financed with debt and/or stock issues

Focus on ROS, ROE, and Profits


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COST LEADER WITH PRODUCT LIFE-CYCLE FOCUS

A product life-cycle focused cost leader will seek to minimize costs

through efficiency and expertise. Products will be allowed to age andchange in appeal from high-tech, to traditional, and eventually lowend buyers.

Firm Profile:

Minimum presence in specialty segments (Size & Performance)

Low R&D spending (very little re-positioning & new product every 2-3

years) Invest in automation earlyin the products life-cycle

High spending on promotion and sales

Focus on ROE, ROS, and Profits


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DIFFERENTIATOR

A Differentiator will seek to create maximum awareness andbrand equity. They want to be well known as makers of highquality/highly desirable products.

Firm Profile:

High R&D spending to keep products fresh

Maintain a presence in all market segments

Spend heavily on advertising and sales to create maximumawareness and accessibility

Prices tend to be higher

Focus on Market Share, Profits, and Stock Price


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DIFFERENTIATOR WITH HIGH-TECH FOCUS

A high-tech differentiator seeks to be known far and wide as the topproducer of the best performing state-of-the-art products.

Firm Profile:

Multiple product lines in high-tech segments (High, Performance,and Size)

Minimum focus in other segments

High promotion and sales investments to create maximumawareness and accessibility

High R&D expenditures to continually introduce new product linesand keep existing products fresh

Unlikely to invest in increased automation or production capacity

Focus on ROA, Asset Turnover, and ROE


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DIFFERENTIATOR WITH PRODUCT LIFE-CYCLE FOCUS

A product life-cycle differentiator seeks to be well-known as a topproducer of good performing products in each of the targetedsegments.

Firm Profile: Multiple product lines in targeted segments (High, Traditional, and

Low)

Minimum focus in other segments

High promotion and sales investments to create maximumawareness and accessibility

High R&D expenditures to continually re-position product linesand keep products fresh

Unlikely to invest in increased automation or production capacity

Focus on ROA, Stock Price, and Asset Turnover


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Strategies Evolve

Todays shift istomorrows

nightmare

Poor tactics undermine a good strategy Good tactics can overcome a poor strategy


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SUMMARY

There is no "magic bullet," guaranteed winningstrategy. Each simulation has a unique

competitive dynamic.

Successful firms will focus on planning,

strategic alignment, teamwork, competitoranalysis, and tactical adjustments.

Documents

Capstone Strategy 2005