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Business Policy and Strategy Midterm - Kocur

Terms in this set (60)

Pfiser
sold dog section of their business and sold it because it wasn't their core
-focused on pharmaceuticals
strategy
the are and science of formulation, implementing, and evaluating cross-functional decisions that enable an organization to achieve it's objective
art aspect of strategy
intuition and judgement take a large role in decision making
formulating
creating the strategy
implementing
complex- get everyone on the same page for a goal
Evaluating
Comparing observations and data to reach a conclusion about them
-occurs as soon as you start implementing
Strategic Planning Process
examine current situation
cross functional teams bring expertise together
fact finding
emphasis on strategic thinking
multiple rounds of input
What are the biggest challenges in developing a strategic plan?
time
resources
understanding
agreement
external and internal environment
THE CHOICES YOU MAKE
stratego
military word for general
stratos
army/organization
ago
to lead
military vs business
M- initiate conflict- eliminate enemy
B- not conflict but competition
"The Art of War"
by Sun Tzu
War is a vital importance to the state- a matter of life and death- needs to be studied
"Victorious warriors win then go to war, while defeated wars go to war first then seek to win"
formulation
the thinking phase
A mission statement should answer
What is our business/purpose?
Mission statment
broader in scope
less than 250 words
focus on utility of the organizations products and services
a balance between generalities and specifics
should be motivational, enduring, forward looking
9 components of a mission statement
customers
products and service
markets
technology
survival, growth, profitability
philosophy
self concept
public image
employees
A vision statement should answer
What do you want the business to become?
vision statement
desired end state and works as a guide to employees
a starting point
concise
less than 25 words
clear
memorable
take stakeholders into account
Built to Last - HBR
Collins and Porras
Enduring visions contain 2 elements
-core ideology (values and purpose)
-envision future (BHAG)
Core values
should be timeless and not externally justified
may not be universal (my values don't need to be justified by others)
Core purpose
Why you do what you do
BHAG
Big Hairy Audacious Goal
-long term
Envisioned future
BHAG and vivid description
Leadership
View yourself as a leader
Prepare yourself to be a leader
When an opportunity comes, take it
why, what
Live in the ________ not the ________
External audit
focuses on identifying and evaluating trends and events beyond the control of a single firm
-reveals key opportunities and threats
-help formulate strategies to address them
ex: tariffs, taxes, customer beliefs, laws trends
External forces
economic
competitive
technology
social, demographic, culture
political, gov't
Internal audit
looks at what we can control
strengths and weaknesses
SWOT analysis
strengths, weaknesses, opportunities, threats
created by Internal and External Audit
Sections to look at within a company when doing SWOT
Marketing
Finance
Operations
Research and Development
Technology
Distinctive competancy
a firms strengths than cannot be easily copied by others
Resource Based View (RBV)
approach that internal resources are more important to a firm than external factors in achieving a competitive advantage
-Performance determined by: physical resources, human resources, organizational resources
-Part of strengths and weaknesses
For a resource to be valuable it must be
1. Rare
2. Hard to imitate
3. Not easy to substitute
Industrial approach (I/O)
external factors are important for performance
Prioritizes- economies of scale, barriers, product differentiation, the economy industry specific, level of competitiveness
-Opportunities and threats
Difference between objective and strategy
o- what you want to do
s- how we get there
SMART objectives
Specific
Measurable
Achievable
Relevant
Time-bound
Operational strategies
integration, intensive, diversification
forward integration
I get the product and I control it from that point forward
Ex: American Eagle- can't buy clothes anywhere besides their own store
Pros- price control, maintain brand and experience
Con- limited reach
backward integration
worried about the production of the product
Ex: Ben and Jerry's- own farms and raw materials
Pros- product availability, quality, no suppliers
cons- tough to manage, requires capital, if something goes wrong there is nothing to fall on
Vertical Integration
control process from start to finish
Ex: Andrew Carnegie and the Steel industry
(monopolistic behavior)
horizonal integration
buying competitors to keep up
Ex: Anheuser-Busch
market penetration
can we use better marketing to get a better share
Ex: Nicoderm CQ - patch to reduce smoking advertises in Jan because of New Years resolutions
If your company is strong from a marketing point of view, what strategies should you use?
Intensive Strategies
Market development
expanding geographic element
Ex: Goodies- was only in south east but tried to expand regions
Product development
making the product better
Ex: Tums- texture and flavor outdated
Ex 2: Lays- more flavors
Related diversification
2 things together that are similar
Ex: Kureig- Green Mountain- Snapple and Dr. Pepper create a better distribution channel
Unrelated diversification
value chains are so dissimilar that no competitively valuable cross-business relationships exist
Ex: Berkshire Hathaway
Developing a road map
1. think about satisfying customer
2. build model to fix problem
3. compare to previous model
Customer Value Proposition
a cluster of benefits that an organization promises customers to satisfy their needs
profit formula
how to create value for company and consumer
key resources
elements that make value
key process
operations that deliver value
What is the most important attribute of CVP?
precision
Why might you need to change our business model?
if you can capture large groups that aren't currently in the market
capitalize on new tech
there a job where it doesn't exist
fending off a low end distributor
response to shifting competition
Retrenchment
pull back and focus on what you're good at
Ex: Toshiba- lost money from Westinghouse and sold them
forced on company
Divestiture
selling to put money into other sections
Ex: Pfizer- sells animal health business
-voluntary
Liquidation
everything is sold
Ex: Toys R Us
Porters generic strategy
What leads to the most profit?
Porter's Five Forces
threat of entry, threat of substitute products, supplier power, buyer power, and competitive rivalry
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