Framework For Business Strategy

A Framework for Business StrategyUtility is not sufficientfor successPrice must create a large pool of customers•Attractioncustomers must be convinced they cannot find better value elsewhere•RetentionWinning Business Ideas(article by Kim and Maugborgne)Key questions at each stage of the Buyer Experience CycleWinning Business Ideas(article by Kim and Maugborgne)Winning Business Ideas(article by Kim and Maugborgne)CoffeeOldDellNewLight bulbOldStarbuck’sNewLight bulbNewUtility Creation is the keyBuyer ExperienceUtility LeversCustomer productivityPurchasesimplicityConvenienceRiskFun/ImageEnvironmentalfriendlinessDeliveryUseSupplementsMaintenanceDisposalInnovationCommitment to QualityEmployee RetentionMarket DrivenReceptivity to ChangeValuesControlFinancialBest PracticesINDICATORS OF SUCCESSWilliams Company-costs drop as transport volume grows-they ride the declining cost curve-they stick to their formula of big projects/big customersCore Business(article by Wysocki)What is a core business?-product?-intellectual property?-process?-business design?It is critical to pick a specialtyCore Business(article by Wysocki)Amazon.com: (business design) -gathering customers over the InternetCapital One: (process) -You have been pre-approved; computer-based marketingCore Business(article by Wysocki)“We make people happy” -this is what is of value to Disney customersFocused pursuit of customer value energizes Disney cast membersNational Grange Mutual -independent agent is their customer-they are “trustees” of customer livelihoodvalue statement-clear sense of purpose-guide for decision making-involvement creates advantage (people!)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 founder’s gut feelMarket Reality Matters...(article by Lancaster)Mission* Purpose* What you do* For whenVision* articulates the futureWhat's Your Mission?(article by Sweeney)What’s at the Heart of Your Brand?(article by Gschwandtner)Building brand conscience begins with* Mission* Vision* ValuesValue of brand in marketplace is related to clarity of MVVWhy does your organization exist?What is the essence of your brand?Where do you plan to take your brand?What are yourcore beliefs?What do youdobest? How does this relate to market needs?How does your brand make a difference?Brand ConscienceSouthwest Airlines –dedication to highest quality customer service delivered with a sense of worth, friendliness, individual pride, and company spirit.Memorable Mission StatementsStatement of aspiration –where you want to be in the future-provides energy-gives direction-gains commitmentQualityTeamworkInnovationHonestyintegrityExcellenceLeadershipResponsibilityaccountabilityThe ValuesMISSION(What Need Will You Serve)S.W.O.T.MARKETS SERVEDOBJECTIVESSTRATEGIES/TACTICSPERFORMANCECORRECTIVE ACTIONBusiness Strategic PlanningStrengthsWeaknessesOpportunitiesThreatsMISSION(What Need Will You Serve)MARKETS SERVEDOBJECTIVESSTRATEGIES/TACTICSPERFORMANCECORRECTIVE ACTIONBusiness Strategic PlanningWhoSizeTrendsCompetitorsCompetitiveadvantageS.W.O.T.MISSION(What Need Will You Serve)OBJECTIVESSTRATEGIES/TACTICSPERFORMANCECORRECTIVE ACTIONBusiness Strategic PlanningToday1 year5 yearsS.W.O.T.MARKETS SERVEDTraits of Good ObjectivesQuantitativeRealisticShort/Long termLinked to financial analysisambitiouslinked to strategyOBJECTIVESLong term -10 years(University)Increase entrance SAT scores from 1100-1200Increase endowment by $500MShort-term -1 year(University)Increase entrance SAT scores by 10Increase endowment by $50MShort-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 ScholarsLong term (UNIT)Increase active alumni by 25%Increase National Merit Scholars by 20%Reduce “conditional” acceptances by 15%OBJECTIVESALUMNI RELATIONSSTUDENT RECRUITINGOBJECTIVESFINANCIAL AIDINDIVIDUAL ACADEMIC UNITSLong term (Unit)Increase student scholarship money by 50%Increase public relations coverage (not advertising) by 50%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 yearMISSION(What Need Will You Serve)STRATEGIES/TACTICSPERFORMANCECORRECTIVE ACTIONBusiness Strategic PlanningProductPriceCommunicationsCustomer AccessNew products/old marketsNew products/new marketsOld products/old marketsOld products/new marketsS.W.O.T.MARKETS SERVEDOBJECTIVESMISSION(What Need Will You Serve)PERFORMANCECORRECTIVE ACTIONBusiness Strategic PlanningSales revenueProfitability (Income Statement)Cash flowAssets/Liabilities (Balance Sheet)Break evenCustomer satisfactionS.W.O.T.MARKETS SERVEDOBJECTIVESSTRATEGIES/TACTICS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 resourcesPERFORMANCE MEASUREMENTPERFORMANCE MEASUREMENT(CUSTOMER)Gap Analysis: difference between customer satisfaction and customer expectationsGAP SOURCEBUSINESSYOUincorrect expectations over-promisingdegree/jobincorrect performance defective product non-current teachinginadequate follow-up warranty problems? Studying? PAR methodsMISSION(What Need Will You Serve)CORRECTIVE ACTIONBusiness Strategic PlanningStatus quoTactical changeStrategic changeS.W.O.T.MARKETS SERVEDOBJECTIVESSTRATEGIES/TACTICSS.W.O.T.PERFORMANCEBACKGROUND SLIDESYou Will be Responsible for this Material!These will help you on the Edward Jones Project.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 competitorsKEY 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(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)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 usePERFORMANCE 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 easierPERFORMANCE 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 patentsPERFORMANCE MEASUREMENT(INNOVATION)R&D investment as a percent of total salesNumber of changes after product introductionDevelopment cost overrunsNew ideas generatedLow turnoverLow absenteeism“Overtime” hoursPERFORMANCE MEASUREMENT