Module:Module:STRATEGY FOR MY BUSINESSSTRATEGY FOR MY BUSINESS

Topic of the day:Why do I need a strategy?

Let’s introduce ourselves...

2

Introduction

• Few words about the module and its connection to other modules

• Topic of the day• At the end of the day we will:

– start to think strategically

– know what strategy, vision, mission, objectives, strategic management stand for

– define the lements of strategic planning by ourselves

3

Thinking strategically...

• How to thonk strategically?• Three crucial questions:

– Where are we now?– Where do we want to be?

• What business do we want to be in?

• Who our customers will be?• What results are we striving

for?

– How do we get there?

4

Team work

5

• Assignment:1. Let’s spli in teams

2. Choose a company:• A participant’s business

• Any existing enterprise

• An imagenary enterprise

3. All the teams mus agree on choice above

4. We shall work on a strategy for the chosen enterprises all the way till the end of the module!

Let’s practice strategic thinking...

• Gropu assignment:– Answer the following questions regarding

your company:• Where are we now?

• Where do we want to be?– What business do we want to be in?

– Who our customers will be?

– What results are we striving for?

• How do we get there?

6

Strategic thinking...

• Business approaches:

1. Inactivists

2. Reactivists

3. Preactivists

4. Interactivists

7

Strategic thinking...

• Businessmen categories (attitude towards the change):1. Those who try to make things

happen

2. Those who observe what is happening

3. Those who wonder what happened

• You choose which category you will be in!!!

8

Strategy!?

9

• What is a strategy?

• Strategy = a way of achieving the objectives

• The enterprises have same or similar objectives, only the strategies differ

“The strategy isn’t everything, but without a strategy everything is

nothing”

Why do I need a strategy?

10

• The strategy proactively shapes the conducting of a business

• The purpose of a strategy is to mold independent decisions of managers in order to attain objectives

• Which strategy is the best?

• There isn’t the best strategy, there is only its lasting logic!

Strategic management

11

• Strategic management – a managerial paradigm

• Connects environmental opportunities and threats with strenghts and weaknesses of a company

• Planning is everything, the plan is nothing!

• Do not be affraid of vocabulary, embrace the logic

The tasks of strategic management

12

Defining vision and mission

13

• VISION– The basic benchmark (core values) in

management of a comapny– Inspiration, seeing the invisible,

northern star– Should be present and understandable– Where are we going?– What are our business ambitions in the

future?– Gives an identity to the company

• The vision defines:– The product, the market and technology

in the future– Geographical and product market– Core competencies the will be

developed– “The look” of a comany in the future

Defining vision and mission

14

• MISSION STATEMENT– More concrete, a basis for setting goals and

choosing a strategy– THE PURPOSE OF COMPANY’S

EXISTENCE!– A nission statement should:

• express stakeholders’ interests in an interesting way• be inspiring• be understandable

– A mission statement separates us from our competitors

• How do we formulate a mission statement in three steps:

1. involve as many people as you can

2. ask everyone to describe the company in a one word sentence and write it ona board

3. when the words run out, uste the ones that suits you the best and combine them

Vision vs. mission

15

VISION MISSION

A strategic vision concerns a firm’s future business path - “where we are going”

A mission statement focuses on current business activities - “who we are and what we do”

Markets to be pursued Current product and service offerings

Future technology-product-customer focus Customer needs being served

Kind of company that management is trying to create

Technological and business capabilities

16

Our vision: Getting to a billion connected computers worldwide, millions of servers, and trillions of dollars of

e-commerce.

Intel’s core mission is being the building block supplier to the Internet economy and spurring efforts to make the

Internet more useful. Being connected is now at the center of people’s computing experience. We are

helping to expand the capabilities of the PC platform and the Internet.

17

Mission statement: We intend to give our customers

high quality, delicious and nutritious products every

day, and to help them lead healthy, active, pleasant and

long life.

Vision: Transformation in a company with strong and

acknowledged regional brands, which will be pushed

forward by the needs and desires of customers: quality

food, health and welfare.

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VIZIJA

Our vision is to create a permanent competitive advantage on the market offering our insureds, collaborators and business partners the value of products, services and business relations overshadowing those of others. We are building a successful and secure business future for us and all our associates and collaborators.

MISIJA

Our mission is to offer the top quality and high level of services tailor- made for our clients. We seek to increase and preserve the number of the clients who will acknowledge our focus on service quality and recognize our approach to value added business. We do our best to provide our clients with the top quality insurance under the most favourable conditions. We are looking to establish a long-term and successful business relations with our clients built around a wide range of our services. In our business policy, the state-of-the-art information technology and fast and flexible communication in all business segments is a must.

To ensure continual provision of the best quality services we introduce the most up-to-date business standards, specialized departments, and work procedures. Our staff is comprised of highly skilled and qualified professionals who observe the utmost standards of business code of ethics and are capable of performing the most delicate tasks the insurance market calls for.

19

Mission statement

“Štark” – regional leader in candies and snacks industry – a synonym for sweet in every family.

Vision

Satisfying the needs of consumers, employees andd the society in whole.

With the respect to standards of food quality and safety, we are expanding our product lines by using the contemporary technology and knowledge.Our relationships with the business partners are based on the mutual trust and respect.

We create friendly and open relationship with our employees, bearing in mind their needs and expectations. In this manner we ensure their satisfaction and identification with the company. We encourage team work because we believe that that is the way of encouraging everyone’s professional contribution to the company’s success.

Respecting the ethical principles, we actively participate in projects which aim to improve the quality of life in communities that we conduct our business.

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Mission statementThrough the excellent consulting, development, education and support during and after the information systems introduction, we aim to help our customers to achieve competitive advantage.

VisionTo become the leading SAP consulting agency in the region.

The tasks of strategic management

21

Setting goals

22

• Concrete results that we want to achieve

• Objectives represent the basis for tracking the results achievement

• Objectives push the firm towards invention and focus on results

• Objective do not let you relax and become worse in business

Types of objectives

23

• Financial objectives

–Outcomes focused on improving financial performance

• Strategic objectives

–Outcomes focused on improving long-term, competitive business position

Types of objectives

24

• Objectives should be SMART:

– Specific

– Measurable

– Attainable

– Realistic

– Time-bound

Examples of Financial Objectives

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• Boost annual return on investment from 15% to 20% within three years

• Maintain a positive cash flow every year

• Grow net profit 10% annually

• 15% overall costs reduction in the next year

Examples of Strategic Objectives

26

• Increase firm’s market share

• Overtake key rivals on quality or customer service or product performance

• Boost firm’s reputation with customers

• Achieve technological superiority

• Become leader in new product introductions

Group assignment

• Questionnaires :– Formulate company’s vision

– Formulate company’s mission statement

– Set the business objectives:• Keep in mind vision and

mission• What are your strategic

objectives?• What are your financial

objectives?• SMART 27

The tasks of strategic management

28

The Hows ThatDefine a Firm's Strategy

29

• How to grow the business

• How to please customers

• How to outcompete rivals

• How to respond to changing market conditions

• How to manage each functional piece of the business and develop needed organizational capabilities

• How to achieve strategic and financial objectives

Why Do Strategies Evolve?

30

• There is always an ongoing need to react to

– Shifting market conditions

– Fresh moves of competitors

– New technologies

– Evolving customer preferences

– Political and regulatory changes

– New windows of opportunity

– Crisis situations

The tasks of strategic management

31

Strategy implementation and control and revision

32

• We will discuss this last day of the module

Strategic management process

33

EnvironmentEnvironment ResourcesResources

Expectationsand

purpose

Expectationsand

purpose

Strategicchanges

management

Strategicchanges

management

Resourceallocation,

control

Resourceallocation,

control

Organizationalstructure

Organizationalstructure

Strategyevaluationand choice

Strategyevaluationand choice

Strategicoptions

Strategicoptions

Basics ofstrategicchoice

Basics ofstrategicchoice

Thank you for the attention!

Questions?

Module:Module:STRATEGSTRATEGY FOR MY BUSINESSY FOR MY BUSINESS

Topic of the day:What should I know about my business environment?

Why do we need analysis?

37

Why do we need analysis?

“Analysis is the critical starting point of strategic thinking.”

Kenichi Ohmae

38

Why do we need analysis?

39

Why do we need analysis?

• Situational analysis – strategic management starting point

• Situational analysis – analysis of external and internal factors, evaluation of the starting business point

• Situational analysis helps the company to:– exploit opportunities– avoid and minimize the risk– keep existing and to obtain new capabilities– minimize or remove the company’s

weaknesses

40

Why do we need analysis?

• What is situational analysis?– Two important aspects:

1.External or macro environment

2.Internal or micro environment

41

Business environment components

42

General environment

• General environment analysis:– PEST analysis– Opportunities and threats matrix– SWOT analysis

43

PEST analysis

44

POLITICAL/LEGAL FACTORS Antimonopoly legislation Natural environment protection laws Tax policy Foreign exchange regulations Government stability

ECONOMIC FACTORS Economy cycles GDP trends Interest rates Capital supply Inflation Unemployment Buying power Availability of resources and costs

SOCIO-CULTURAL FACTORS Demography Revenue distribution Social mobility Lifestyle changes Attitude towards working and leisure Consumerism Levels of education

TECHNOLOGICAL FACTORS State’s investment in R&D State’s and industry’s pursuing the new technologies New discoveries, development Transfer of technology tempo Technology aging tempo

• Forms by the two matrices:– Threats matrix– Opportunity matrix

• Threat – challenges from inadequate trends, disturbances in the environment, which could lead (without marketing intervention) to stagnation of the product or brand (Kotler) – EVERYTHING THAT MIGHT HAVE NEGATIVE IMPACT ON OUR BUSINESS!

• Opportunity – attractive arena of certain marketing actions within which, the company will probably succeed to achieve superior competitive advantage (Kotler) – EVERYTHING THAT MIGHT ENABLE US TO SUCCEED IN BUSINESS!

Opportunities and threats matrix

45

High Low

High

Low

Probability of occurrenceT

he s

cope

of

thre

ats

Threats matrix

46

High Low

High

Low

Probability of successP

oten

tial a

ttrac

tiven

ess

Opportunity matrix

47

New matrix – Opportunities and threats matrix

Low High

High

Low

Level of threatsL

evel

of

oppo

rtun

ities Suspicious

position

Mature

company

Ideal

position

Difficult

position

48

• Successful manager exploits the opportunities, rather then just solving the problems!

• We must put together external analysis with our internal strengths!

Strenghts

Weaknesses

Opportunities

Threats

SWOT analysis

49

• Opportunities – favorable influence of PEST and competitive factors

• Pretnje - unfavorable influence of PEST and competitive factors

• Strengths and weaknesses – resources of the company and their analysis (Value chain, core competence)

SWOT analysis

50

Internal factors

Eksterni faktoriStrengths Weaknesses

Opportunities

Threats

SWOT analysis

MAXI - MAXI MINI - MAXI

MAXI - MINI MAXI - MINI

51

Business environment components

52

About competition in general

• Competition – separates successful from the others• Competitive battle takes place within the industry• Who are our competitors?

– only the companies from our industry– partners, other industries, substitutes

• The most dangerous competitor is the one that hasn’t appeared yet!

53

Industry competition

• Industry – a group of companies which produce the similar products

• The elements of an industry:– competitors

– technology

– products

– customers

• The industry – a group of companies which uses specific technology for production of similar or related products, which are sold to certain customers.

54

Competitive forces

COMPETITIVERIVALRY

SUBSTITUTES

BARRIERSTO ENTRY

COMPETITIVEFORCE OF

BUYERS

COMPETITIVEFORCE OFSUPPLIERS

55

COMPETITIVERIVALRY

• Active jockeying for position among rivals and frequent launches of new offensives to gain sales and market share

• Lots of firms that are relatively equal in size and capability

• Slow market growth• Industry conditions tempt some firms to go

on the offensive to boost volume and market share

• Customers have low costs in switching to rival brands

• A successful strategic move carries a big payoff

• Costs more to get out of business than to stay in

• Firms have diverse strategies, corporate priorities, resources, and countries of origin

56

Competitive Force of Suppliers

• Suppliers are a strong competitive force when:

– Item makes up large portion of product costs, is crucial to production process, and/or significantly affects product quality

– It is costly for buyers to switch suppliers

– They have good reputations and growing demand

– They can supply a component cheaper than industry members can make it themselves

– They do not have to contend with substitutes

– Buying firms are not important customers 57

Competitive Force of Buyers

• Buyers are a strong competitive force when:

– They are large and purchase a sizable percentage of industry’s product

– They buy in large quantities– They can integrate backward– Industry’s product is standardized– Their costs in switching to

substitutes or other brands are low– They can purchase from several

sellers– Product purchased does not save

buyer money 58

Barriers to Entry

• Sizable economies of scale

• Inability to gain access to specialized technology

• Existence of strong learning/experience curve effects

• Strong brand preferences and customer loyalty

• Large capital requirements and/or other specialized resource requirements

• Cost disadvantages independent of size

• Difficulties in gaining access to distribution channels

• Regulatory policies, tariffs, trade restrictions 59

Substitute Products

• Substitutes:– Satisfy similar need in a different way

– Other industries’ products• How to Tell Whether Substitute

Products are a Strong Force:– Sales of substitutes are growing rapidly– Producers of substitutes plan to add

new capacity – Profits of producers of substitutes are

up

• Examples

60

More techniques in competitive environment analysis

• Experience curve

• Portfolio models

• Benchmarking

61

Business environment components

62

Internal analysis

• Comparative advantage

• Competitive advantage

• Sources of competitive advantage:– Cost leadership

– Differentiation

• When and how can we realize competitive advantage?

• Importance of evaluation of our strengths and weaknesses

• Types of resources:– Tangible

– Intangible 63

The Four Criteria of Sustainable Competitive Advantage

1. Valuable Capabilities – Help a firm neutralize threats or exploit

opportunities

2. Rare Capabilities – Are not possessed by many others

3. Costly-to-Imitate Capabilities– Historical: A unique and a valuable

organizational culture or brand name

– Ambiguous cause: The causes and uses of a competence are unclear

– Social complexity: Interpersonal relationships, trust, and friendship among managers, suppliers, and customers

4. No substitutable Capabilities– No strategic equivalent

64

Value chain

• Chain of reproduction:

input – production – marketing – distribution

• Primary expertise zone – a source of key competence of every company

• Activities – element of value chain

65

Value chain

66

Company infrastructure

Human resources management

Technology development

Procurement

Inputlogistics

OperationsOutputlogistics

Marketing and sales

Services after the

sale

Value chain

67

Self evaluation

• Core competencies, along with the market position and product, make the most important source of competitive advantage

• Strategy is defines by the analysis of general, competitive and internal analysis!

• Recommendation:– Embrace the knowledge

– Develop core competencies according to the market needs

– Use your resources

– Motivate employees to participate

– Give employees more authority

– Make short deadlines

– make the quality data base 68

Assignment

• Business environment analysis– PEST analysis

– SWOT analysis

– 5 competitive forces

– Value chain

69

Thank you for your attention!

70

Module:Module:STRATEGSTRATEGYY FOR MY BUSINESSFOR MY BUSINESS

Topic of the day:How do I formulate the strategy for my own business? First steps...

Let’s repeat...

72

• What is the strategy and why do I need it?• Three important questions of strategic

thinking• Four business approaches...• What are the main tasks of strategic

management?• Define vision, mission and objectives?• Strategic management process

Overview of business strategies

• EXISTING BUSINESS STRATEGIES

• Generic strategies– Cost leadership– Differentiation– Focus

• Stable growth strategies– Step-by-step growth– Harvesting strategy– Sustainable growth

• Intensive growth strategies– Market penetration– Expanding of market– Product development

• Diversification– Concentric diversification– Conglomerate diversification

• ENTREPRENEURIAL STRATEGIES

• “Fastest with the mostest”

• “Hit them where they ain’t”

• Ecological niches

• Changing values and characteristics

73

• SMALL BUSINESS STRATEGIES

• New venture strategy

• Survival strategy

• Growth strategy

etc...

Important topics in formulating strategy

74

• Growth method– Organic

– Mergers & acquisitions

– Strategic alliances

• Growth tempo– When to attack the new market?

– Leader strategies

– Follower strategies

• Investments • Financing the growth

Small business growth stages

75

Stage I - Existence

76

• Main problems:– Obtaining customers– Delivering the product or service contracted for

• Key questions:– Can we get enough customers, deliver our products

and provide services well enough to become viable business?

– Can we expand from that one key customer to a much broader sales base?

– Do we have enough money to cover the considerable cash demands of this start-up phase?

• The owner does everything!

• The strategy – to exist!

• The ones that succeed move on to the next stage

Stage II - Survival

77

• The business has demonstrated that it is workable entity

• There is a sufficient satisfied customers base

• Main problems:– In short term, can we generate enough cash to

break even and to cover the repair or replacement of our capital assets as they wear out?

– Can we, at the minimum, generate enough cash flow to stay in business?

• Small number of employees (some managers)

• The firm can either move to next stage or stay in this one and eventually go out of business

• “Mom and pop” stores

Stage III - Success

78

• The business has grown (more complicated organizational structure – functional)

• Two possible outcomes:1. Success-Disengagement sub stage2. Success-Growth sub stage

Stage IV – Take off

79

• Main issues:– How can we grow rapidly? – Delegation– How can we finance our growth? – Cash

• Delegation:– Delegate responsibility to others, control the performance – actual

delegation– Formally delegate, informally still holding everything in control– Total exclusion from the business – abdication

• Cash:– Will there be enough cash flow to satisfy great demands that growth

brings?– Will cash flow be eroded by ill-advised investments and inadequate

expenses?

• The organization is decentralized and somewhere divisional

• Strategic and operational planning

• Competent managers

• The owner is separated from management, preferably

• We can grow even more, or we can go back to some previous stages

Stage V – Resource maturity

80

• Priorities:– To consolidate and control the financial gains– To keep the advantages of small business

(flexibility, entrepreneurial spirit)– To prevent inefficiencies that growth may

bring

• There is enough resources to adequately plan, at strategic and operational level

• Management is decentralized, experienced and well educated

• The enterprise is large, has significant resource base – if succeed in keeping entrepreneurial spirit, it can become a serious player on the market!

CRAFTING A STRATEGY

81

Vision, mission,

objectives

General environment

analysisPEST

Self-evaluation

“Value chain”External

environmentanalysis

Competition analysis

“5 forces”

Sources of competitive advantage

Benchmarking

STRATEGY

Should I charge my work cheaply or expensively?

82

• Competitive advantage?• Two sources of competitive advantage:

– low costs

– differentiation

Cost leadership strategy

83

• Costs – very important factor

• Competitors have different types and amounts of costs

• Value chain relation

• Every activity has costs

• Cost leadership is achieved if the total costs in our value chain are lower that the ones that our rivals posses

Differentiation strategy

84

• Differentiation?

• Increasing added value to final product

• The customers see you differently

• Basis of differentiation:– product characteristics

– relationships between business functional areas

– timing

– location

– production program

– relationships with other enterprises

– reputation

Focus strategies

85

• One niche is in focus

• We can focus on low costs

• Or on differentiation

• Parallel implementation of both strategies?

Growth method

86

• Organic – with our own strength– investments in new capacities

– investments in existing capacities expansion

– entering the new areas

• External method – M&A– Acquisition – “A” + “B” = Mother comapny

“A” + daughter company “B” purchase of more than 50% of shares

– Merger) – “A” + “B” = “A”, the target seizes to exists

• Strategic alliances – combined method– Examples: joint ventures, licensing,

franchising, supply contracts, distribution contracts...

Growth tempo

87

• “It’s not that the big ones eat the

small ones, but the fast ones eat the

slow ones”

• Tempo of growing – the speed of

introducing changes

• New markets entry timing

• Corresponding strategies:

– pioneering strategy

– strategy of an early follower

– strategy of the late follower

More strategies...

88

• Stable growth strategies– Step-by-step growth

– Harvesting strategy

– Sustainable growth

• Intensive growth strategies– Market penetration

– Market development

– Product development

• Diversification– Concentric diversification

– Conglomerate diversification

Stable growth strategies

89

• “Status quo-a”, “do not do anything”

• Successful firms in growing markets

• Useful in predictable environment

• For small business owners in a market segment

Step-by-step growth•The same or similar objectives•Objectives realization increasing every year in same percentage•The same or similar products•Management do not strive for change•It is dangerous not to do anything when the market demands changes!

Step-by-step growth•The same or similar objectives•Objectives realization increasing every year in same percentage•The same or similar products•Management do not strive for change•It is dangerous not to do anything when the market demands changes! Sustainable growth

•Slow growth, precaution•Numerous threats and restrictions to growth•Balanced growth with opportunities – baloon!•Pause strategy

Sustainable growth•Slow growth, precaution•Numerous threats and restrictions to growth•Balanced growth with opportunities – baloon!•Pause strategy

Harvest•Profit strategy•There are profitable products•In short term maintain positive cash flow with cutting investments and costs•Selling a product line•Useful when a company needs to overcome temporary difficulties

Harvest•Profit strategy•There are profitable products•In short term maintain positive cash flow with cutting investments and costs•Selling a product line•Useful when a company needs to overcome temporary difficulties

Intensive growth strategies

90

• Possibilities for growth in existing industry:– Production lines gap

• fulfilling existing product lines• introduction of new production lines

– Distribution gap• better geographical market coverage• increase in the number of points of sale in a gepographical area• imrpoving sale on certain points of sale

– Consumer gap• attraction of non-users• usage for greater number of purposes• more intensive usage of a product

– Competitive gap• substitutes introduction• direct confrontation with competitors• defense of current market position

Intensive growth strategies

91

Market penetration•Increasing the sale of existing products on existing markets•More intensive marketing efforts – increase in a market share of existing products•Pricing policy, promotion and distribution – important elements of this strategy

Market development•Increasing the sale of existing products on new markets•Geographical market expansion•Finding new market segments on current geographical area•Product changes are cosmetical•Promotion and distribution – important elementsProduct development

•Increasing the sale of improved products on existing markets•Extending the life cycle of certain products•Existing distribution channels support is vital•To attract the customers with their positive experience with previous version of the product

Diversification

92

• New product + new market

• When we run out of

opportunities to grow in

existing industry

• Types of diversification:

– Concentric diversification

• horizontal

• vertical

– Conglomerate diversification

Assignment: Do we have a preliminary strategy?

93

• There isn’t the best strategy, there is a logic of

it that lasts!

• Combine the strategies

• Take into account your competitive advantage

Thank you for your attention!

Questions? 94

ModulModulee::STRATEGSTRATEGY FOR MY BUSINESSY FOR MY BUSINESS

Topic of the day:How do I formulate the strategy for my business? Beyond...

Let’s repeat...

96

• Remember some of the strategies...• Which strategy suits your business the best

and why?• What is enterprise growth and is it always a

good thing?• What is growth method?• What is growth tempo?• Which strategy did you choose for the

example you have been working on?

Advantages and disadvantages of certain strategies

97

• Let’s point out the advantages and disadvantages of certain strategies together:– generic strategies

– stable growth strategies

– intensive growth strategies

– diversification

– organic growth

– mergers & acquisitions

– strategic alliances

– leader strategies

– follower strategies

Investments and business growth

98

• Simple and extended production

• Investments – prerequisite for survival, growth, development, sustaining and improving competitive position

• Selected strategy is the basis for investment planning

• Elements of investing:– investor

– investment project

– interest rate

– discount rate

Investments and business growth

99

• Types of investing:– objects,

– equipment,

– land,

– shares, bonds...

• Dimensions of investing:– the desired investment effect

– competitors reaction

– type of investing

– attitude towards technological changes

– strategic impact

Investments and business growth

100

• Maximizing the difference between investment and effects

• Cash flow projections• Time value of money• Methods for investment analysis:

– static:• period of return

– dynamic:• net present value• internal rate of return

• Risk and investment:– break even point– sensitivity analysis– probability analysis

How can we finance our growth?

101

• Financial aspect of firm’s life cycle• Introduction

– Negative net profit (loss)– Negative cash flow

• Rapid growth– Profitable business at the end of this stage– Financing growth from external sources

• Slow growth– Positive net cash flow

• Maturity– Cash generator – significant cash inflow– Necessity for profitable reinvesting

• Declining – Minimum profitability– Insufficient cash flow for reinvesting

How can we finance our growth?

102

• Financing growth from two sources (for existing business):– Retained earnings– New credits

• In case of liquidity problem:– new short term debt– new long term debt– cutting costs

• Additional sources of finance:– leasing– spontaneous sources of finance

Strategic resources

103

• The most important strategic resources:– human resources

– technology

– R&D

– marketing

– production

– logistics

– quality

Human resources

104

• Management – ability to conduct business through people

• Competitive advantage and human factor

• Basic functions:– selection– results and evaluation– rewarding– development

• Full time job and continuous employment loose their primary role in people’s lives

• Life-long learning

• Knowledge – the essence of competitive advantage

• “Learning organization”

• Changes and resistance

Human resources

105

Technology

106

• Technology = know-how• Technology = application of knowledge• Technology strategy = the way of acquiring

and using the technology• Fit between technology strategy and

company’s strategy• IT and strategic management

Research & development (R&D)

107

• Importance of R&D for company and economy

• Mechanism for changes in a comapny

• Statistical measure of a country’s R&D effort – percentage of GDP planned for R&D

• Significant R&D questions in a company:– How much should we invest in R&D in order to have

new products and processes?

– How much should we invest in existing processes and products improvement?

– Could we succeed in a new area of R&D, bearing in mind knowledge and experience that we posses?

• Integration of R&D objectives in overall strategy!

• R&D is more important for intensive growth strategies and diversification

• R&D may help in costs reduction and differentiation

Marketing

108

• Key concepts:– marketing communication

– segmentation, targeting and positioning

– differentiation

– relationships and networks

– supply chain

– competitive struggle

– marketing mix

Production

109

• Production system:– Input – transformation – output

• System – work operations

• Products vs. services

• Key production factors:• costs

• quality

• time of delivery

• flexibility

• Production management: planning, organizing, control

• The models of production system organization:– Process oriented

– Product oriented

Logistics

110

• Logistics is a set of activities with the task of achieving economical transfer of products form the place of origin to the place of usage, in regard of customers needs

• Logistics elements:– place

– transport

– warehousing

– data management

– procurement

– supplies

Quality

111

• The customer determines the quality!• Market oriented concept• Marketing sector employees have significant role in

delivering quality product• Different aspects of quality analysis:

– dimensions– functions– tactile characteristics– reliability– safety

• Quality management evolution:– controlling– quality control– quality assurance– total quality management

Assignment: Incorporating strategic resources in strategy

112

• Which strategic resources are the basis of your competitive advantage and why?

• Is there any irrelevant strategic resource for you and why?

• PRESENTATION OF FORMULATED STRATEGIES

Thank you for your attention!

Questions? 113

ModulModulee::STRATEGY FOR MY BUSINESSSTRATEGY FOR MY BUSINESS

Topic of the day:Transforming strategy into action

Short overview of defined strategies

115

• Team representatives have 3 minutes to remind us of their work in previous days

Key success factors (KSF)

116

• “Success is where preparation and opportunity meet”

• KSF – factors which represent the necessity for success

• Assignment:– Fill the blanks:

– In order for our firm to be successful, we have to be particularly skillful in the following activities:1. _______________________

2. _______________________

3. _______________________

The significance of adequate implementation

117

• In order to succeed, implementation is vital (maybe even more important than formulation)!

• 70% of well formulated strategies fail thanks to bad implementation

What needs to be done in order to have good implementation?

118

• To organize adequately

• To allocate resources in the right way (tangible and intangible)

• To motivate the employees

• To have good administrative support (IS, policies, procedures...)

• To create healthy business culture and climate

• To control and audit

Organization

119

• Right man for the right job

• Types of organizational

structures

• Life cycle requires different

organizational structures

• Flexibility, innovations,

entrepreneurial spirit

Resource allocation

120

• Budget and program for every

activity (business function)

• Focus on achieving identified

goals

• Efficient resources exploitation

Employees motivation

121

• Vision, mission, objectives – influence on motivation

• Working conditions and corporate climate – strategy implementation support

• Rewarding systems

• Result orientation!

Administrative support

122

• Policies and procedures

• Company’s information system

• Accounting system

Corporate culture

123

Control and audit

124

• Control – comparing achieved and planned

• Audit – comparing planned and possible

• When to perform control:– after strategy formulation

– during implementation

– after implementation

• Tools for control:– objectives

– budget

– financial statements

Thank you for your attention!

Questions? 125