Concepts & Context of Business Strategy

Business Strategy

Mission

Goals

Objectives

Strategies

TacticsSales oriented efforts

Marketing oriented efforts

BusinessBusiness Strategy Hierarchy

Functional AreaStrategies

Product

Strategies

Functional AreaStrategies

Product

Strategies

Functional AreaStrategies

Product

Strategies

Critical Elements of Strategy Development

Set Goals and ObjectivesUnderstand Environment of

Business OperationsLearn from Experience,

Update ExperienceCritical Thinking

Key Strategy Concepts

Seek to establish a fit between business environment and strategy

Fit - Providing superior value through differentiated pieces of total offering

Key Strategy Concepts Drive change rather than adapting

to ito Quality and process improvement

are essential to superior valueo Measuring and tracking results is

necessary for continuous improvement

Summary Strategy Concepts Change in customers,

channels or competitors cause discontinuities in evolution of industries or markets

Companies seldom impact change in market

Keep up with changes in rules of the market

Resource Allocation

Includes infrastructure, personnel, finances etc.

Are not limitless

Strategic Planning Process is a resource allocation process

Boston Consulting Group: Growth Share Matrix

Market GrowthRate

High

Low

Stars

Cash Cows

Question Marks

Dogs

Relative Market Share

LowHigh

Growth Share Matrix: Star

High Growth, high Share Needs heavy investment; builds

market share Manage with market ownership

Eventually become Cash Cows

Stars

Cash Cows

Question Marks

Dogs

Growth Share Matrix: Cash Cows

Low growth, high Share Established, successful, invest

enough to hold market Cash generators Harvest to increase short term

cash

Stars

Cash Cows

Question Marks

Dogs

Growth Share Matrix: Question Marks

Low share, high growth markets

Requires cash to hold share What should be done? Match with organization’s

distinctive competencies Obtain resources needed Build these into stars or phase out, sell

Stars

Cash Cows

Question Marks

Dogs

Growth Share Matrix: Dogs

Low growth, low share May be self-sustaining One organization’s dog could be

another’s cash cow Discontinue, divest

Stars

Cash Cows

Question Marks

Dogs

DeclineDecline

IntroductionIntroduction

GrowthGrowth

MaturityMaturity

TimeTime

Sales Revenue/

period

Sales Revenue/

period

Growth Share Matrix and Product Life Cycle

Strategy of Market Ownership

Define Evolve Collaborate

Strategy of Market Ownership

Define market niche Work towards domination Brand identified as standard Competitors note

equivalence to such products

Define

Strategy of Market Ownership

Continue to evolve offerings Keep definitions of value current

with market Present these values to consumers

Evolve

Strategy of Market Ownership

Development of ancillary products by other organizations help owners build market

Third parties define their products as compatible with market owner

Market owner gains insight to other points of view within market

Collaborate

GE Multi-Factor Attractiveness/Strength

MatrixMARKET

ATTRACTIVENESS

BUSINESS STRENGTH

High

Weak

Low

Strong

Medium

Medium

Protect Position Invest to Build Build Selectively

LimitedExpansion or

Harvest

Manage forEarnings

Divest

Build Selectivelyor Manage for

Earnings

Protect &RefocusInvest/Grow

Selectively EarnHarvest/Divest

Build Selectively