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Strategy, Business Model & Business Plan. IEI Business Plan Workshops. Business plan outline www.sbm.temple.edu/IEI/word/planigenttemplateoutline_003.doc. Technology Plan Management & Organization Social Responsibility Development & Milestones Financials

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strategy business model business plan

Strategy, Business Model & Business Plan

IEI Business Plan Workshops

business plan outline www sbm temple edu iei word planigenttemplateoutline 003 doc
Business plan outlinewww.sbm.temple.edu/IEI/word/planigenttemplateoutline_003.doc
  • Technology Plan
  • Management & Organization
  • Social Responsibility
  • Development & Milestones
  • Financials
    • Including Capital Requirements & Financial Statements
  • Appendix
  • Executive Summary
  • Company Description
    • Including product/service & technology/core knowledge
  • Industry Analysis & Trends
  • Target Market
  • Competition
  • Strategy/Business Model
  • Marketing and Sales Plan
  • Production/Operations Plan
strategy funnel

Environmental Trends

Customer &Benefits

IndustryStructure

Segment,SizeChannels

CompetitiveSpace

Market

Industry

PerceptualSpace

CompetitiveDynamics

ValueProposition

Strategic Positioning

Strategy funnel

Goal: Articulate and execute long-term, defensible offer of unique value to customers

what is strategy

Strategic Management

  • Strategic Position
  • Strategic Navigation
What is strategy?
  • Plan
  • Process
  • Position
  • Pattern
  • Perspective
  • Procedure
  • Play
  • Ploy
  • Strategic Tactics
strategic management

Environmental Scanning

Mission

Evaluation &Control

StrategyFormulation

StrategyImplementation

Strategic management

Vision

  • Disciplined, iterative process of driving towards vision, by finding or making and maintaining a defensible space or trajectory in a given businessenvironment.
strategy checklist
Strategy checklist
  • Vision
  • Value proposition
  • Position or direction
    • Structure or resource base
  • Revenue & business model
  • Timeline or guidelines
  • Fit
value proposition
Value proposition
  • Specific, concrete offer of benefits
    • Price, quality, convenience, choice, cost-savings, reliability, etc
  • To precisely defined customers
    • Who recognize that the offer solves a problem for the
    • EG: Our clients grow their business, large or small, typically by a minimum of 30-50% over the previous year. They accomplish this without working 80 hour weeks and sacrificing their personal lives.
vision
Vision
  • Stable core
    • Mission: Central audience + core product/service
    • Ideology: Values, principles, culture
  • Focused ambition
    • Concrete picture of successful impact
    • Serious, scary stretch goals
    • Disciplined experimentation
vision exercise
Vision exercise
  • Stable core
    • Mission:
    • Ideology:
  • Focused ambition
    • What success will look like – in the marketplace:
    • One audacious goal:
position or navigation
Position or navigation?
  • Position Strategies
    • Unique, valuable, defensible position in a market or industry
    • Supported by a tightly integrated value chain / activity system
    • Good for relatively stable industries/markets
  • Navigation Strategies
    • Vision-driven nurturing and leveraging of core resources
    • Supported by tight culture and explicit learning
    • Good for dynamic industries/markets
strategic positions require niches
Strategic positionsrequire niches
  • A niche includes the market the firm is uniquely qualified to serve

External Opportunities& Threats

Niche

Internal Strengths & Weaknesses

strategic situation
Strategic situation

Social,

political,

regulatory, technological

& community

Industry

Attractive-ness,

dynamics, &

competition

Unmet customer needs & desires

External Factors

Strategic Situation

Resources (know-how, people, money, etc)

Competitive position (through customers eyes & in industry)

Vision, values

&

culture

Internal Factors

match sw to ot
Match SW to OT

Internal

Factors

Strengths(S)

Weaknesses (W)

External

Factors

Opportunities (O)

SO Strategies

-------------------------

WO Strategies

------------------------

Use strengths to

take advantage of

opportunities

Offset weaknesses

to take advantage

of opportunities

ST Strategies

--------------------------

WT Strategies

-------------------------

Threats(T)

Use strengths to

avoid threats

Min. weaknesses to avoid threats

otsw exercise

Environment

Industry

Customer

External Factors

Strategic Situation

Resources

Competitive Position

Culture

Internal Factors

OTSW exercise
  • Map SW to OT..
classic position strategies
Classic position strategies
  • Cost (price) leadership
    • Efficiency and scale
  • Differentiation
    • Quality, design, support/service, image -- that make a product or service special
  • Focus
    • Explicit tie to a broad or narrowmarket segment
examples
Examples
  • Cost (price) leadership
    • Dell Computers (logistics, volume)
    • Motel 6 (location, services, salespeople).
    • Southwest Airlines (corporate culture, service)
  • Differentiation
    • Quality (Mercedes)
    • Design (Apple)
    • Service (Nordstrom).
    • Image (Nike).
    • Special niches (Zitner’s candied apples; independent films)
examples1
Examples
  • Focus
    • Broad (Wal-Mart - rural)
    • Narrow (NSP - activists, NRI - network administrators)
    • Segmented (Computer security – spooks and commerce, Financial services – rich, poor and in-between.)
elaborations
Elaborations
  • Penetrate new markets
    • Insurance in India.
  • Develop new markets
    • Ice hotels
  • Develop new products
    • Gillette. Intel.
  • Become indispensable
    • Microsoft. Best subcontractors.
  • Fortify
    • Borders wholesalers. B&N’s leases.
value discipline positioning
Value discipline positioning

Product Leadership

  • (Differentiation)

Operational Excellence

  • (Cost Leadership)

Customer Intimacy

  • (Focus)
value disciplines
Value disciplines

Product Leadership - Compete on Speed

  • Good design, great execution
  • Educate & lead the market
  • Ad hoc, risk oriented culture
  • Organization designed for innovation

Operational Excellence - Compete on Scale

  • Low price, limited options, ultimate convenience
  • Managed customer expectations
  • Measurement culture
  • Processes & transactions continually redesignedfor efficiency
value disciplines1
Value disciplines

Customer Intimacy - Compete on Scope

  • Offerings tailored to customers & segments
  • Deep insight into customer needs
  • Problem solving service culture
  • Full range of services, so customers stay
  • Breakthrough thinking, unique solutions
position strategy exercise

Product Leadership

  • (Differentiation)

Operational Excellence

  • (Cost Leadership)

Customer Intimacy

  • (Focus)
Position strategy exercise

Choose a position strategy and explain how you will achieve it.

strategic positions require fit
Strategic positions require fit
  • Fit refers to the integration of every part of firms’ internal structures to better serve a niche.
  • Well-positioned firms craft themselves to serve niches better than others.
fit entrepreneurial advantage
Fit: Entrepreneurial advantage
  • Possibility of crafting a perfect fit between specific opportunities and internal capabilities
  • Firms that fit opportunities extremely well have an advantage over bigger, stronger opponents…
  • Examples:
    • Dollar Express vs Dollar Tree
    • Youthbuild vs School District
    • Giovanni’s Room vs Borders
value chain

Human Resources

Technology

Infrastructure

Procurement

Margin

Value chain

After SalesService

Marketing/Sales

  • A strong value chain is a cross-linked net of activities that affects the cost or performance of the whole.
  • Supporting a strategy by optimizing both individual functions and the links between them to support a strategy yields a powerful, durable, hard-to-duplicate advantage.

InboundLogistics

OutboundLogistics

Operations

activity system
Activity system
  • A less linear way of thinking about the internal fit that supports strategy.
  • Map crucially interrelated features and functions that define a firm’s unique skills and strategy.
  • Support competitive advantage with reinforcing patterns or systems.
ikea s activity system

Self-serviceSelection

LimitedCustomerService

ModularDesigns

Low MfgCost

High-traffic store layout

Design focused on low cost

Most items in stock

Year-round stocking

Flat packing kits

Self-transport

Limitedsales staff

Customer loyalty

Self -assembly

Suburban Location

On-site inventory

Easy to make

Wide variety

Long-term suppliers

Easy transport

Impulse buying

Explanatory labeling

Ikea’s Activity System
experience curve
Experience curve
  • For positional strategies, experience is the ultimate source of advantage.
  • Experience fuels the tacit knowledge that drives productivity improvements, innovations, elaborations of strategy, etc
  • Successful firms are especially good at creating the social and institutional structures that support the shared development of such tacit knowledge
fit exercise
Fit exercise
  • Draw the value chain for your firm
  • Note reinforcing (and jarring) pieces
  • Try to create more reinforcements

OR

  • Jot down functions and features
  • Look for patterns and connections
  • Try to crystallize patterns
business model
Business model
  • A business model describes what a firm will do, and how, to build and capture wealth for stakeholders
  • Effective business models operationalize good strategies -- turning position and fit into wealth
effective business models build capture wealth
Effective business models build & capture wealth
  • Build wealth:
    • By efficiently (profitably) transforming inputs into something that customers value enough to pay for – again and again and again
    • By supporting growth
  • Capture wealth:
    • By siphoning off some of the accumulated wealth for stakeholders
    • And by developing recognizable value – strategic positions, know-how, customers, free cash flow, lifestyles, social impact – that can be captured
effective business models require hard choices
Effective business models require hard choices
  • About who matters
    • Owners, investors, family, workers, community
  • About what kind of wealth matters
    • Financial capital, social capital, intellectual capital...ie., cash, good life, rich family life, entrepreneurial impact, social impact
  • About the strategy that will deliver the wealth that matters to the stakeholders that matter
  • About the structure that supports strategy
business models start with what the world gives
Business models start with what the world gives

1.Describe the landscape:

  • Porter
  • Environment, industry, and relevant trends.

2. Paint in competitors:

  • Competitor table. Perceptual maps.
  • What do you need to play? How do competitors compete? What opportunities exist?

3. Identify strengths & weaknesses

  • Vision, skills, core technologies
business models are based on strategy
Business models are based on strategy

4. Identify stakeholders you must serve

  • Owners, family, workers, community

5. Identify the wealth you will capture

  • Capital, good life, family life, fameentrepreneurial effectiveness, social value

6. Choose a position or approach

  • And elaborate a strategy to realize this
  • Especially a revenue model
business models define structure
Business models define structure

7. Sketch a structure to operationalize the strategy

  • Value chain, activity system, culture, simple rules

8. Work out the implications

  • Functional strategies
  • Timeline and milestones
  • Financial projections & capital needs
  • Path to profitability, sale, or other realizationof value
build a business model exercise
Build a business model exercise
  • Opportunity
  • Stakeholders
  • Wealth
  • Strategy
  • Model
    • Structural implications, timing, capital needs, etc
good execution is more important than good strategy
Good execution is more important than good strategy!
  • Seeing a position or approach is fundamentally creative
    • Immersion, scenarios, future search,
  • Constructing a strategy involves careful analysis and planning
  • Executing a strategy requires relentless discipline
bibliography
Bibliography
  • Verna Allee, “Reconfiguring the Value Network,” The Journal of Business Strategy, 21 (4), PP 36-39.
  • R Boulton, B Libert, S Samek, “A Business Model for the New Economy,” The Journal of Business Strategy, 21 (4), July-August 2000, pp 29-35.
  • James Collins & Jerry Porras, Built to Last (HarperBusiness, 1994).
  • Richard D’Aveni, Hypercompetition (Free Press: 1994).
  • Kathleen Eisenhardt & Donald Sull, “Strategy as Simple Rules,” Harvard Business Review, January 2001.
  • Mark Feldman & Michael Spratt, PWC, Five Frogs on a Log: A CEO’s Guide to Accelerating the Transition in Mergers, Acquisitions and Gut Wrenching Change, (HarperBusiness 1999).
  • Craig Fleisher & Babette Bensoussan, Strategic and Competitive Analysis (Prentice Hall, 2003).
  • Pankaj Ghemawat, Strategy and the Business Landscape (Prentice Hall, 2001).
  • G. Hamel & C. K. Prahalad, “Strategic Intent,” Harvard Business Review, May-June 1989.
  • Robert Hamilton lecture notes, 1998.
  • Robert Hamilton, E. Eskin, M. Michael, "Assessing Competitors: The Gap between Strategic Intent and Core Capability", International Journal of Strategic Management-Long Range Planning, Vol. 31, No. 3, pp. 406-417, 1998

(more…)

bibliography continued
Bibliography (continued)
  • TL Hill lecture notes, 1999, 2001, 2002
  • J. D. Hunger & T.L. Wheelan, Essentials of Strategic Management (Prentice Hall, 2001).
  • Ivan Lansberg, Succeeding Generations (Harvard Business School Press, 2000).
  • B. Mahadevan, “Business Models for Internet-based E-Commerce,” California Management Review, 42 (4), Summer 2000, pp 55-69.
  • Henry Mintzberg & James Brian Quinn, Readings in the Strategy Process, 3rd Edition (Prentice Hall, 1998).
  • Henry Mintzberg & Joseph Lampel, “Reflecting on the Strategy Process,” Sloan Management Review, Spring, 1999.
  • Alex Moss, Praxis Consulting presentation on worker ownership, 1999
  • Sharon Oster, Modern Competitive Analysis, 2nd Edition (Oxford University Press, 1994).
  • Michael Porter, Competitive Advantage (Free Press, 1985).
  • Michael Porter, “What is Strategy?”, Harvard Business Review, November-December 1996.
  • Jim Portwood lecture notes, 1998.
  • C.K, Prahalad & G. Hamel, “The Core Competence of Corporations,” Harvard Business Review, May-June, 1990.
  • Pamela Tudor, Notes on responsibility charting, 1999