Strategy a view from the top
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Strategy: A View From the Top. Team 3 Randy Greinert Mason Mitchell Sarah Yelverton Alec Cooper. A View From the Top. Positioning a company for competitive advantage by focusing on unique ways to create value for customers. Mission Vision Strategic intent Stretch.

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Strategy a view from the top

Strategy: A View From the Top

Team 3

Randy Greinert

Mason Mitchell

Sarah Yelverton

Alec Cooper


A view from the top

A View From the Top

Positioning a company for competitive advantage by focusing on unique ways to create value for customers.

Mission

Vision

Strategic

intent

Stretch


Strategy defined

Strategy Defined

Slowing down the erosion process by protecting current sources of advantage against the actions of competitors.

Investing in new capabilities that form the basis for the next position of competitive advantage.


Good to great into strategy

Good to Great into Strategy

Level five leadership must be obtained before an overall strategy can be developed

Financial gain is not as important as long term benefit of the company

With the correct management in the correct places, management complications hurting the firm will cease.


What can you be the best at the world at

What can you be the best at the world at?

Driving success towards a goal, or hedgehog.

Going back to BOS and steering the firm to a blue ocean un dominated by the cut throat business world of today.

Understand technology and the business environment.

What drives you, $?


Ch 4 industry is defined in 4 dimensions

CH. 4Industry is defined in 4 dimensions

Products (wine, beer, and spirits)

Customers ( +21, Drinkers, segmented )

Geography

Stage in the production-distribution


Industry structure concentration and product differentiation

Industry Structure, Concentration, and Product Differentiation

  • Rule of Three and Four

    • “Many stable markets will have only three significant competitors and the market shares of these competitors will roughly be proportioned as four-to-two-to-one, reflecting a concentration level of approximately 70% of total industry sales for the three competitors.“

    • 2007 Big three 78%


Product life cycle

Product Life Cycle

Intro- High level of uncertainty

Growth- Most intense competition

Mature- Sales growth stagnant

Declining- Industry considered unattractive

Example- Bud Light Lime


Ch 5 to evaluate the relative worth of a company s strategic resources 4 questions should be asked

CH.5 To evaluate the relative worth of a company's strategic resources, 4 questions should be asked;

1- How valuable is a resource; does it help build and sustain competitive advantage?

2- Is this a unique resource or do other competitors have similar resources?

3- Is the strategic resource easy to imitate?

4- Is the company positioned

to exploit the resource?


Human capital

Human Capital

First and foremost – Companies are run by and for people

Understanding people’s aspirations and concerns and capabilities is key to determine strategic position

Dallas Cowboys


Motorola

Motorola

Execs report that their company receives $33 for every $1 invested in employee education


Organizational strategic resources

Organizational Strategic Resources

Include a firm’s knowledge and intellectual capital base

Reputation with customers partners suppliers and the financial community

Specific competencies processes and skills sets

And its corporate culture


Ch 6 introduction formulating business unit strategy

Ch.6 Introduction formulating business unit strategy

  • Involves creating competitive strategy within the industry.

  • - SABMiller and Molson Coors merge US operations in 2007

  • Focus on howfirms should compete in given setting.


Factors concerning business unit strategy

Factors Concerning Business Unit Strategy

Nature of the Industry

Company’s Mission, Goals and Objectives

Current position

Core competencies

Competitors’ strategic choices


Two generic strategies

Two Generic Strategies

Low cost

Differentiation

Which one do you choose?


Critique of porter s generic strategies

Critique of Porter’s generic strategies

Low cost production and differentiation are mutually exclusive, and when they exist together they result in sustained profitability.

Differentiation can permit a firm to attain a low-cost position.

The possibility of providing both improved quality and lower costs exists within the total quality management framework.


Chapter 7

CHAPTER 7

Emerging Industries- presents new opportunities

Ex: Solar energy and Internet technology

Growth Industries- challenges are faced as firms transition to market maturity

Mature and Declining Industries- important to choose balance between differentiation and costs

Fragmented Industries- thriving requires creative strategy

Deregulating Industries- the removal of government rules and regulations that constrain a market force has reshaped several industries

Ex: AT&T quickly reduced prices to high-volume buyers to counter

MCI and Sprints aggressive marketing efforts

Hypercompetitive Industries- companies disrupts the market with quick and innovative change to gain advantage over competitors


Business unit strategy speed

Business Unit StrategySpeed

-Least understood critical success factor

  • Pace of progress that a company displays in responding to current or anticipated business needs

  • 4 sources of pressure to speed: customers, need for creating a new basis for competitive advantage, competitive pressures, and idustry shifts

  • Requirements of Speed: refocusing the business mission, creating a speed-compatible culture, upgrading communication, refocusing business process reengineering, and committing to new performance metrics

  • Methods to Speed: streamlining operations, upgrading technology, and forming partnerships (Ford Motor Company with GM and DaimlerChrysler)


Innovation

Innovation

  • Value creation greatly depends on innovation

    -“MillerCoors will have more flexibility and resources for brand-building initiatives and increased levels of innovation in taste, product attributes and packaging”

  • Disruptive innovation: launching new products that are not as good as existing products but are cheaper (IMB personal computer disrupted the minicomputer)

  • Sustaining innovation: focuses on “better” products

  • Creating a culture of innovation that time and effort

  • Innovation does not always create profitable performance

    1. Products must be truly innovative

    2. Innovative products must be commercialized once one the market

    3. Products must be introduced into the market in a timely manner

    -To improve performance through innovation: plan synergy between strategy and innovation, and involve customers early and often


Chapter 8 global strategy formulation

CHAPTER 8Global Strategy Formulation

  • Globalization is needed and important because some countries or regions of the world are more efficient that others in producing particular goods

    Ex: Australia-Mining and US-Agriculture

  • In the absence of natural comparative advantages industrial clustering occurs

  • Factor conditions match a countries endowments to the characteristics and requirements of the industry

    Include: climate, minerals, skill levels, capital, infrastructure, etc.

  • Demand Conditions demand in home country

  • The presence of related and supporting industries

  • Competitiveness- the more domestic competition, the more successful firms will likely be competing globally

  • Molson Coors operates in the United States, United Kingdom, and Canada


Industry globalization drivers

Industry Globalization Drivers

1.) Market Drivers: Evolution of customer needs, Global Channels and Transferability

There is an important need to meet customers expectations, Hamburgers in India

2.) Economic Drivers: Nature of the industry, Economies of scale/ location, Differences in country costs

3.)Competitive Drivers: Interdependence between countries/ regions and globalization of competitors

4.)Government Drivers: trade barriers, regulatory climate, and technology/standards


Strategy a view from the top

  • Global opportunity- went global because there was a need to grow

  • Target Markets- focused on most attractive markets such as the Americas for the first 5 years

  • Mode of Entry- Acquisition, Start-Up, and Joint Venture

  • Local Adaptation- China, smaller satellite stores fit better with local needs

  • Local Competition- launching a frontal attack on the incumbent, took over (Woolco) a weak player

  • Gains and Setbacks- Not all global moves were successful but overseas was the only place with markets that offer Wal-Mart the room it needs to grow


Economies of scale and scope

Economies of scale and scope

Economies of scale- unit cost of performing an activity decreases as the scale of the activity increases

Economies of scope- when the unit of cost of an activity falls because the asset used is shared with some other activity


Strategy a view from the top

Core

Most valuable customers

Most valuable products

Most important channels

Their distinctive capabilities

Defining core is important because there is a tendency to under exploit the full potential.

There is increasing returns to leadership instead of a linear relationship

Molson Coors started defined cost reduction as part of the core. Saving 178 million in 2007


Growth strategies

Growth strategies

Build Buy or Bond

-Organic or internal growth

-growth through acquisitions

-growth through alliance-based initiatives

MillerCoors alliance started in order to compete with Anheuser Busch


Strategy a view from the top

Concentrated growth- a corporation that continues to direct its resources to the profitable growth of a single product category in a well defined market

Vertical integration- if Coors were to buy farms to grow hops

Horizontal integration- if Coors started making and selling Koozies also if they set up a wider number of plants

Diversification strategies- were good at making beer we would be good at making cars


Diversification implementation

Diversification implementation

  • Mergers and Acquisitions

  • Cooperative Strategies- joint ventures, strategic alliances and other

    Why would you do this

  • Risk sharing

  • Funding limitations

  • Market access

  • Technology access


Disinvestments

Disinvestments

Sell offs

Spin offs

And liquidations


Managing a portfolio

Managing a portfolio

Early perspective: structure follows strategy-build and set up the company to followstrategy

BCG approach

-growth/share

matrix


Strategy a view from the top

General electric business screen

-uses long term industry attractiveness


Strategy a view from the top

MACS Matrix

-recognizes that a corporations ability to extract value from a business unit should be benchmarked


Life cycle matrix

Life cycle matrix

Plots business on stage of industry's evolution and strength of company’s competitive position


How to decide

How to decide

Deciding on an overall, theoretically consistent, quantitative methodology for evaluating a complex corporate strategy proposal involving multiple options is not a simple undertaking.

How to run a company will always require keen managerial insight, intuition, and creativity.


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