Strategy and Strategy Tools

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Strategy and Strategy Tools

• Ron Borrieci
• MAR 4804
• Summer 2008

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What is Strategy?

• A game plan to win in a competitive situation.
• Know yourself your resources, your abilities,
  your strengths, your weaknesses.
• Know your competition how will they react to
  you, their strengths, their weaknesses.
• Identify a plan that leads to a SUSTAINABLE
  ADVANTAGE (something that cannot be readily
  copied and neutralized)
• To win look at both the big picture strategy as
  well as execution details

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Implementation

• SOFT ISSUES are usually the hardest to manage
• Team building
• Leadership
• Culture

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Strategic Analysis

• The 5C framework!

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The 5 C Strategic Analysis Framework

• Customers
• Company
• Competitors
• Context
• Collaborators

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Consumer Behavior Analysis

• Identify decision making unit.
• Who is involved in the purchase?
• What role does each play?
• Possible roles

Initiator
User
Influencer
Purchaser
Decider
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Consumer Behavior Analysis

• Decision Making Process
• Information search
• Criteria of evaluation
• Importance of attributes
• Purchase and Consumption patterns
• Where does the consumer buy?
• How is the product used?
• Frequency of consumption?
• How important is the need that the consumer
  satisfies?

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Consumer Behavior Analysis

• Answer questions like
• What are the benefits sought?
• Likes and dislikes about current offers?
• Image and perceptions of available brands?
• Price sensitivity?
• Segmentation analysis

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Company Analysis SWOT

• Internal
• Strength
• Strategic core competency
• Weaknesses
• Fatal Flaws
• External
• Opportunities
• Attractiveness / chances of success
• Threats
• Seriousness / how likely to occur

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Quantitative Assessment of Elements within a SWOT
matrix (1)

• Ideally be based (at least partly) on customers
  perception (survey). If these are not available
  it can be based on managers intuition and
  expertise.
• Assess the magnitude and importance of each
  element in the SWOT matrix.
• Calculate final ratings by multiplying the
  magnitude ratings by the importance ratings
• Compare the ratings and determine areas for a
  change in Marketing strategy

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Quantitative Assessment of Elements within a SWOT
matrix (2)

• For example use the following scales
• Magnitude
• 1 (low), 2 (medium), 3 (high)
• for strength/opportunities
• -1 (low), -2 (medium), 3 (high)
• for weaknesses/threats
• Importance
• 1 (weak), 2 (average), 3 (major)
• Example Product quality
• Magnitude Importance Final rating
• 2 3 6

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Quantitative Assessment of SWOT
Example Enterprise Rent-a-car STRENGTH
WEAKNESS OPPORTUNITY
THREAT
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Company Analysis Goals

• Business goals should be
• specific
• actionable
• measurable
• time-bound
• What is problematic with the following goals?
• for campusbookstore.com to become market leader
  in on-line sales
• for Taco Bell to make customers happy in two
  years

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Competitor Analysis Basics

• Comparison of costs, capabilities, methods and
  strategies.
• Objective factors
• Size of sales force
• Plant capacity
• Price and Performance
• Sources?

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Competitor AnalysisStrategic

• Strategic analysis
• Future Goals What drives the competition?
• Assumptions What do competitors believe about
  the market?
• Current Strategy What are the competitors doing?
• Capabilities What can the competitors do?
• Competitors Response Profile
• Understanding competitors corporate mindset
• Moves / Vulnerability / Retaliation

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Context Macro Economic, Technology, Industry
Analysis

• Traditional industry analysis
• Size, growth, profitability, concentration,
  business cycles, technology etc.
• Historical trend analysis
• Demographics and economic trends
• Technology discontinuities and market turbulence

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Industry AttractivenessPorters Five Forces
Model
Threat of New Entrants High or low barriers High
or low threats
Industry Competition Numerous? Slow or fast
growth? Low or high differentiantion High or low
exit barriers Intense treat?
Supplier Power Switching costs? Threat of
forward Integration High or low threat
Buyer Power Plentiful alternatives Low switching
costs Intense threat?
Threat of Substitutes Similar function Shifting
preferences Intense threat?
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Collaborator

• Downstream channels
• Upstream suppliers
• Industry level alliances
• Technology alliances
• Market alliances
• Financial linkages
• International linkages

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Generic Strategies

• Overall Cost Leadership
• Lowest production and distribution costs
• Core competencies in engineering, production,
  distribution, purchasing
• Differentiation
• Superior performance in an important customer
  benefit area
• Quality, image, style, technology

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Competitive Advantage

• Definition
• a companys ability to perform in ways that
  competitors cannot or will not match, or be at a
  disadvantage if they try.
• Examples
• Low-cost provider Wal-Mart Compete on prices
• Economies of scale
• Economies of scope
• Differentiated product Harley Davidson Compete
  via positioning
• Customer value and benefits

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Growth Strategies