Business Strategy Development Application PDF

Fourth BUSINESS Edition Strategy Development Application Chapter 6 Developing and Executing Business Strategy Gary Bissonette © 2024 McGra...

Fourth BUSINESS Edition Strategy Development Application Chapter 6 Developing and Executing Business Strategy Gary Bissonette © 2024 McGraw Hill Limited  BUSINESS Fourth Edition Strategy Development Application Learning Objectives 1. An understanding of the concept of business strategy 2. An appreciation of the importance of developing a strategy within a business operation 3. An overview of the key areas around which business strategy is developed 4. Exposure to the fundamentals of strategy planning and implementation process 5. An understanding of the unique strategy planning requirements of the not-for-profit sector © 2024 McGraw Hill Limited 6-2  BUSINESS Fourth Edition Strategy Development Application The Concept of Business Strategy The long-term success of an organization is based on two fundamental principles: © 2024 McGraw Hill Limited 6-3  BUSINESS Fourth Edition Strategy Development Application Strategy Made Simple Strategies are customized given market conditions / goals. Business strategy is all about understanding what opportunities exist in the marketplace and which ones should be pursued. Where do we want to play? Why is this the best use of our resources? How do we plan to win? © 2024 McGraw Hill Limited 6-4  BUSINESS Fourth Edition Strategy Development Application Business Strategy in Simple Terms © 2024 McGraw Hill Limited 6-5  BUSINESS Fourth Edition Strategy Development Application Core Element s for Assessi ng Busines s Strateg y © 2024 McGraw Hill Limited 6-6  BUSINESS Fourth Edition Strategy Development Application Products and Services Portfolio Analysis © 2024 McGraw Hill Limited 6-7  BUSINESS Fourth Edition Strategy Development Application The Strategic Planning Process, 1 A business’s strategic plan is its road map to success. The building of the road map is called the strategic planning process. The process is all about observations, analyses, choices, and actions. © 2024 McGraw Hill Limited 6-8  BUSINESS Fourth Edition Strategy Development Application The Strategic Planning Process, 2 The general steps associated with the development of a strategic plan include: Revisit Our Purpose Undertake an I/E analysis Assess our view of the world Choose a direction Implement our strategy © 2024 McGraw Hill Limited 6-9  BUSINESS Fourth Edition Strategy Development Application Strategic Planning Process Model © 2024 McGraw Hill Limited 6-10  BUSINESS Fourth Edition Strategy Development Application Where is Our Focus? Stage Focus Revisiting Our Assessing the fit of the current mission and vision of the Purpose organization Understanding the external and internal environment External—PESTEL, Porter’s Five Forces, competitor SWOT I/E Analysis Internal—company SWOT, 3C analysis—competencies, capabilities, capacity Customer—changes in attitudes, behaviour, needs Given what we know about ourselves, our customers, our Our View of competitors, and the overall environment, what are our options? Our World What is/are our competitive advantage(s)? Which opportunities make the most sense, given our market Strategic position, resources, and environmental dynamics? What threats Choices must we respond to? Strategy Develop the plan. Define the key performance indicators for Implementatio monitoring it. Execute it. n © 2024 McGraw Hill Limited 6-11  BUSINESS Fourth Edition Strategy Development Application Internal/External Analysis I/E Analysis is all about assessing business risk and change in 4 key areas: 1.Macroeconomic: Use PESTEL Analysis 2.Industry: Use Porter’s Five Forces 3.Competitor: Use SWOT Analysis 4.Company: Use SWOT and 3C Analyses © 2024 McGraw Hill Limited 6-12  BUSINESS Fourth Edition Strategy Development Application I/E Analysis: What the Models Tell Us Business Focus of Analysis Model Guides us in developing an understanding of the macro- PESTEL economic environment—Political, Economic, Societal, Technological, Environmental, Legal Guides us in understanding the dynamics of the industry within which we compete—Porter’s Five Forces are: Intensity of rivalry within the industry Porter’s Five Threat of new entrants into the industry Forces Threat of new product/service substitutes within the industry Power or control of suppliers within the industry Power or control of buyers within the industry © 2024 McGraw Hill Limited 6-13  BUSINESS Fourth Edition Strategy Development Application I/E Analysis: What the Models Tell Us, 2 Business Focus of Analysis Model Guides us in understanding the nature of the Types of industry’s competitive landscape: Competition Perfect Competition / Monopolistic Competition Oligopoly / Monopoly Strengths, Weaknesses, Opportunities, Threats S & W = Strengths and Weaknesses focus internally O & T = Threats and Opportunities focus externally SWOT Analysis (macro-environment) Emphasis is to leverage strengths, mitigate weaknesses, pursue opportunities, and manage threats An assessment of our competencies, capabilities, and 3C Analysis capacity with respect to the resources we possess © 2024 McGraw Hill Limited Figure 6.9 6-14  BUSINESS Fourth Edition Strategy Development Application Internal/External Analysis External Analysis focuses on understanding what is influencing markets today and what will influence them going forward Internal Analysis focuses on company competencies, resources, capacity and capabilities and should include a full internal audit. Customer analysis focuses on identifying what shifts have taken place in the customer base in terms of attitudes, values and needs. © 2024 McGraw Hill Limited 6-15  BUSINESS Fourth Edition Strategy Development Application Competitive Advantage(s) Identification A key outcome of the I/E analysis is identifying the competitive advantages an organization has compared to its competitors © 2024 McGraw Hill Limited 6-16  BUSINESS Fourth Edition Strategy Development Application Areas for Establishing Competitive Advantage Opportunities © 2024 McGraw Hill Limited 6-17  BUSINESS Fourth Edition Strategy Development Application Strategy Development After completing the I/E analysis and identifying the organization’s competitive advantages, the next step is to make decisions as to which opportunities to pursue and how resources will be allocated – this forms the strategic plan. The organization’s strategic plan possesses:  Corporate-level strategy  Business-level strategy  Operating plan © 2024 McGraw Hill Limited 6-18  BUSINESS Fourth Edition Strategy Development Application Strategy Alignmen t © 2024 McGraw Hill Limited 6-19  BUSINESS Fourth Edition Strategy Development Application Fundamen tals to Operating Plan Formulati on © 2024 McGraw Hill Limited 6-20  BUSINESS Fourth Edition Strategy Development Application Five Critical Questions to Review When Developing Strategy 1. Does your strategy leverage your organization’s resources and capabilities? 2. Does your strategy fit with current and anticipated industry/market conditions? 3. Are the competencies that you plan to leverage considered to be sustainable for the required period? 4. Are the key drivers of your strategy consistent with the organization’s strategic objective and position? 5. Do you have the ability and wherewithal to © 2024 McGraw Hill Limited 6-21  BUSINESS Fourth Edition Strategy Development Application Strategy Execution The final phase of the strategic planning process is the strategy execution phase. The organization becomes fully committed to the plan resulting in a degree of “directional lock-in” taking place. © 2024 McGraw Hill Limited 6-22  BUSINESS Fourth Edition Strategy Development Application Monitoring Plan Success © 2024 McGraw Hill Limited 6-23  BUSINESS Fourth Edition Strategy Development Application Strategy Challenges in the SME Sector Lack of time/expertise/resources Planning is to often focused on short-term, current-year initiatives SME owners must assess and anticipate changes occurring in their markets, the need for their products, and new opportunities that exist The need to plan strategically is just as important for a small business as it is for a major multinational organization © 2024 McGraw Hill Limited 6-24  BUSINESS Fourth Edition Strategy Development Application Strategic Planning in the NFP Sector (Social Economy) NFPs must develop strategies and tactics that produce positive financial results otherwise they will not be able to sustain their operations NFP strategies involve a stronger inclusion of needs delivery based on the collective interest and social goals © 2024 McGraw Hill Limited 6-25  BUSINESS Fourth Edition Strategy Development Application Social Economy: Strategic Conclusions Private Sector Social Economy Needs Delivery via Profitability Overarching Collective Interest and Maximizing Gains Objective Social Goals Management Democratic Foundation Influences Shareholders Organized Collective Debt/Equity Diversified Base— Financing Internal Financing Members, Government, Reserves Community Sponsorship— Government, Model Sales of Goods and Predominant Foundations, etc. Services Revenue Sales of Goods and Services © 2024 McGraw Hill Limited 6-26  BUSINESS Fourth Edition Strategy Development Application Social Economy: Strategy Considerations © 2024 McGraw Hill Limited 6-27  BUSINESS Fourth Edition Strategy Development Application Strategic Planning in the NFP Sector (Social Economy) 1.Mission Balance 2.Vitality 3.Collective Entrepreneurship 4.Rootedness 5.Operational Effectiveness © 2024 McGraw Hill Limited 6-28  BUSINESS Fourth Edition Strategy Development Application Management Reflection – The Need to Plan Businesses must leverage their competitive advantage to ensure their business is “best of breed” A successful strategy: – Properly assesses the external environment – Defines changes and opportunities within the market – Effectively allocates resources and “Strategy withoutcapabilities maximizes tactics is the long road to victory; tactics without strategy is the noise before defeat.” - Sun Tzu (The Art of War) © 2024 McGraw Hill Limited 6-29  BUSINESS Fourth Edition Strategy Development Application Chapter Summary, 1 The Concept of Business Strategy: Strategy Made Simple Core Elements for Assessing Business Strategy Purpose Markets Products and Services Resources Business System Configuration Responsibility and Accountability © 2024 McGraw Hill Limited 6-30  BUSINESS Fourth Edition Strategy Development Application Chapter Summary, 2 The Strategic Planning Process – Internal/External Analysis – Competitive Advantage(s) Identification – Strategy Development – Strategy Execution Strategy Challenges in the SME Sector Strategic Planning in the NFP Sector Management Reflection – The Need to Plan © 2024 McGraw Hill Limited 6-31