A Framework for Business Strategy

1
A Framework for Business Strategy
2
Winning Business Ideas (article by Kim and
Maugborgne)

• Utility is not sufficient for success
• Price must create a large pool of customers
• Attraction customers must be convinced
  they cannot find better value elsewhere
• Retention

3
Winning Business Ideas (article by Kim and
Maugborgne)

• Key questions at each stage of the Buyer
  Experience Cycle

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Winning Business Ideas (article by Kim and
Maugborgne)
Utility Creation is the key
Buyer Experience
Use
Disposal
Purchase
Delivery
Supplements
Maintenance
Customer productivity
simplicity
Convenience
Utility Levers
Risk
Fun/ Image
Environmental friendliness
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INDICATORS OF SUCCESS
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Core Business (article by Wysocki)

• Williams Company
• - costs drop as transport volume grows
• - they ride the declining cost curve
• - they stick to their formula of big
  
  projects/big
  customers

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Core Business (article by Wysocki)

• What is a core business?
• - product?
• - intellectual property?
• - process?
• - business design?
• It is critical to pick a specialty

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Core Business (article by Wysocki)

• Amazon.com (business design) - gathering
  customers over the Internet
• Capital One (process) - You have been
  pre-approved computer-based marketing

9
We Make People Happy (Guaspair)

• We make people happy - this is what is of value
  to Disney customers
• Focused pursuit of customer value energizes
  Disney cast members

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We Make People Happy (Guaspari)

• National Grange Mutual - independent agent is
  their customer
• - they are trustees of customer livelihood
• value statement
• - clear sense of purpose
• -guide for decision making
• -involvement creates advantage (people!)

11
Market Reality Matters... (article by Lancaster)

• Missions can motivate
• Missions can blind you from marketplace realities
• No individual is smart enough to figure it all
  out
• Companies need many people who can sense change
• decisions cannot be based on the founders gut
  feel

12
What's Your Mission? (article by Sweeney)

• Mission
• Purpose
• What you do
• For when
• Vision
• articulates the future

13
Whats at the Heart of Your Brand?(article by
Gschwandtner)

• Building brand conscience begins with
• Mission
• Vision
• Values
• Value of brand in marketplace is related to
  clarity of MVV

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Brand Conscience

• Why does your organization exist?
• What is the essence of your brand?
• Where do you plan to take your brand?
• What are your core beliefs?
• What do you do best? How does this relate to
  market needs?
• How does your brand make a difference?

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Memorable Mission Statements

• Southwest Airlines dedication to highest
  quality customer service delivered with a sense
  of worth, friendliness, individual pride, and
  company spirit.

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The Vision

• Statement of aspiration where you want to be in
  the future
• - provides energy
• - gives direction
• - gains commitment

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The Values

• Quality
• Teamwork
• Innovation
• Honesty
• integrity

• Excellence
• Leadership
• Responsibility
• accountability

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Business Strategic Planning
MISSION (What Need Will You Serve)

• Strengths
• Weaknesses
• Opportunities
• Threats

S.W.O.T.
MARKETS SERVED
OBJECTIVES
STRATEGIES/TACTICS
PERFORMANCE
CORRECTIVE ACTION
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Business Strategic Planning
MISSION (What Need Will You Serve)

• Who
• Size
• Trends
• Competitors
• Competitive
• advantage

S.W.O.T.
MARKETS SERVED
OBJECTIVES
STRATEGIES/TACTICS
PERFORMANCE
CORRECTIVE ACTION
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Business Strategic Planning
MISSION (What Need Will You Serve)
S.W.O.T.

• Today
• 1 year
• 5 years

MARKETS SERVED
OBJECTIVES
STRATEGIES/TACTICS
PERFORMANCE
CORRECTIVE ACTION
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Traits of Good Objectives

• Quantitative
• Realistic
• Short/ Long term
• Linked to financial analysis
• ambitious
• linked to strategy

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OBJECTIVES

• Short-term - 1 year
• (University)
• Increase entrance SAT scores by 10
• Increase endowment by 50M

• Long term - 10 years
• (University)
• Increase entrance SAT scores from 1100-1200
• Increase endowment by 500M

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OBJECTIVES

• Short-term 1 year
• (UNIT)
• Increase number of alumni events by 15
• Hold alumni events in 5 new locations
• Increase public relations about current BU NM
  Scholars

• Long term
• (UNIT)
• Increase active alumni by 25
• Increase National Merit Scholars by 20
• Reduce conditional acceptances by 15

ALUMNI RELATIONS
STUDENT RECRUITING
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OBJECTIVES

• Short-term 1 year (Unit)
• Increase student scholarship money by 5
• Find 25 new scholarship donors
• Each unit submits at least 5 more public
  relations releases than last year

• Long term (Unit)
• Increase student scholarship money by 50
• Increase public relations coverage (not
  advertising) by 50

FINANCIAL AID
INDIVIDUAL ACADEMIC UNITS
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Business Strategic Planning

• Product
• Price
• Communications
• Customer Access
• New products/old markets
• New products/new markets
• Old products/old markets
• Old products/new markets

MISSION (What Need Will You Serve)
S.W.O.T.
MARKETS SERVED
OBJECTIVES
STRATEGIES/TACTICS
PERFORMANCE
CORRECTIVE ACTION
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Business Strategic Planning

• Sales revenue
• Profitability (Income Statement)
• Cash flow
• Assets/Liabilities (Balance Sheet)
• Break even
• Customer satisfaction

MISSION (What Need Will You Serve)
S.W.O.T.
MARKETS SERVED
OBJECTIVES
STRATEGIES/TACTICS
PERFORMANCE
CORRECTIVE ACTION
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PERFORMANCE MEASUREMENT

• EFFECTIVENESS the degree to which a business
  achieves its goals
• Financial Quality
• Customer Innovation
• Employee performance Customer loyalty
• EFFICIENCY the relationship between inputs and
  outputs
• Human resources Intellectual resources
• Financial resources

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PERFORMANCE MEASUREMENT

• (CUSTOMER)
• Gap Analysis difference between customer
  satisfaction and customer expectations
• GAP SOURCE BUSINESS YOU
• incorrect expectations over-promising
  degree/job
• incorrect performance defective product
  non-current teaching
• inadequate follow-up warranty problems?
  Studying? PAR methods

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Business Strategic Planning
MISSION (What Need Will You Serve)
S.W.O.T.
S.W.O.T.
MARKETS SERVED
OBJECTIVES

• Status quo
• Tactical change
• Strategic change

STRATEGIES/TACTICS
PERFORMANCE
CORRECTIVE ACTION
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BACKGROUND SLIDES

• You Will be Responsible for this
• Material!
• These will help you on the Edward Jones Project.

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KEY BUSINESS TERMS

• CORE COMPETENCY
• an activity or set of activities that an
  organization performs very well
• a quality an organization possesses in abundance
• DISTINCTIVE COMPETENCE
• a skill, activity, or quality that makes an
  organization unique in comparison to competitors

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KEY BUSINESS TERMS

• COMPETITIVE ADVANTAGE
• consumers really value a competence
• The business is capable of exploiting the
  competence
• SUSTAINABLE COMPETITIVE ADVANTAGE
• one not easily imitated by competitors

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PERFORMANCE MEASUREMENT

• (FINANCIAL)
• PROFIT total revenues minus total expenses
• RETURN ON EQUITY (ROE) profit per dollar
  invested
• EARNINGS PER SHARE (EPS) profit divided by
  number shares of stock
• CASH FLOW actual cash coming into or out of a
  business
• NET WORTH stock price times number shares of
  stock
• INCOME STATEMENT performance for a specific
  time period
• BALANCE SHEET lists assets (what is owned),
  liabilities (what is owed)

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PERFORMANCE MEASUREMENT

• (QUALITY)
• RELIABILITY frequency of breakdown / need for
  repair
• DURABILITY how long a product will
  last/resistance to abuse
• EASE OF MAINTENANCE how easy a product is to
  service
• EASE OF USE how easy a product is to use

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PERFORMANCE MEASUREMENT

• (QUALITY)
• KNOWLEDGEABLE STAFF training/expertise to
  respond to customer questions
• RESPONSIVENESS how quickly a customer receives
  service or information
• EMPATHY how much company cares about
• TANGIBLE how company makes customers lives
  easier

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PERFORMANCE MEASUREMENT

• (INNOVATION)
• Number of new products developed in last years
• Percent of new products
• Sales of new products as a percent of total sales
• Time develop new products (concept to customer)
• Number of new patents

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PERFORMANCE MEASUREMENT

• (INNOVATION)
• RD investment as a percent of total sales
• Number of changes after product introduction
• Development cost overruns
• New ideas generated
• Low turnover
• Low absenteeism
• Overtime hours