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Effective Strategic Planning: Developing a Path to Success
Profitabilty versus Growth Seminar
Presented to:
Wood Component Manufacturers Association Members
2017 Fall Conference
Speaker:
Jaideep Motwani, Ph.D.
Chair and Professor of Management
Seidman College of Business
Grand Valley State University
Grand Rapids, MI 49304
motwanij@gvsu.edu
Overall
Strategic Business Architecture
F. “Strategic Intent”
E. Business Strategies
D. Markets/Businesses
C. Core Platforms/Products
Components or sub-systems used in multiple products markets, businesses
B. Core Competencies
A. Competitive Skills/Capabilities
Note: Adapted from “The Core Competence of the Corporation” CK Prahalad and Gary
Hamel, Harvard Business Review May-June 1990
Description
Driving Force for a Business
Growth or Profitability?
Opportunity Assessment, Industry Maturity, Technology Position, Business
Profile
Identification of core competencies
SWOT Analysis
Product Life Cycle
A. Strengths, Weaknesses, Opportunities, Threats
SWOT Analysis In filling out this form, give consideration to such items as: products, technology, product quality, engineering, price, delivery, location, service, warranty, technical assistance, policies, procedures, customer needs and wants, training, advertising, administration, innovation, competition, etc.
STRENGTHS WEAKNESSES •_____________________
•_____________________
•_____________________
•_____________________
•_____________________
(Required)
•____________________
•____________________
•____________________
•____________________
•____________________
OPPORTUNITIES THREATS
•_____________________
•_____________________
•_____________________
•_____________________
•_____________________
•_____________________
•_____________________
•_____________________
•_____________________
•_____________________
B. Identification of Core Competencies
Proposed Core Competencies
(Areas of strength or sufficiency to
leverage, build and grow your business)
a.) __________________
b.) __________________
c.) __________________
d.) __________________
e.) __________________
Provides Potential
Access to a Wide Variety
of Markets
Makes a Significant
Contribution to the
Perceived Customer
Benefits of the End
Product.
Difficult for Competitors to
Imitate and Duplicate
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
Criteria
Fill in at least one and up to five proposed Core Competencies from the previous page SWOT analysis. For each proposed
core competency circle as many criteria that the proposed Core Competency meets.
Source: Core Competence, M. Porter and C.K. Prahalad
B. Core Competencies Must meet all three criteria:
- Access to a wide variety of markets e.g. transferable
- Makes a significant contribution to the features and benefits of the customer’s end product e.g. value added
-Difficult for competitors to imitate and more importantly duplicate
______________________________________________________________
Discussion
• Most companies can build leadership positions with one or two up to four to five fundamental Core Competencies. •Development of Core Competencies is about building a competitive strategy at the level of the entire company
•Core Competencies are built through various processes including continuous improvement, TQM, Lean, Six Sigma, and others.
•Losing a Core Competence cannot be totally calculated in advance
Source: Core Competence, M. Porter and C.K. Prahalad
C. Product Life Cycle
Characteristics
Sales Low sales Rapidly rising sales Peak sales Declining sales
Costs Higher cost per customer Average cost per customer Low cost Per customer Low cost per customer
Profits Negative Rising profits High profits Declining profits
Customers Innovators Early adopters Middle majority Laggards
Competitors Few Growing number Stable number beginning to
decline
Declining number
Marketing Objectives
Create product awareness
and Trial
Maximize market share Maximize profit while
defending market share
Reduce expenditure and milk
the brand.
Strategies
Product Offer a basic product Offer product extensions,
service warranty
Diversify brands and models Phase out weak items
Price Use cost-plus Price to penetrate market Price to match or beat
competitors
Cut prices
Distribution Build selective distribution Build intensive distribution Build more intensive
distribution
Go selective: phase out
unprofitable outlets.
Advertising Build product awareness
among early adopters and
dealers
Build awareness and
interests in the mass market
Stress brand differences and
Benefits
Reduce the level needed to
retain hardcore loyals
Sales Promotion Use heavy sales promotion
to entice trial
Reduce to take advantage of
heavy customer demand
Increase to encourage brand
switching
Reduce to minimal level.
Sources: Chester R. Watson, Dynamic Competitive Strategy & Product Life Cycles (Austin, Texas: Austin Press, 1978); John A. Weber, Planning Corporate Growth With Inverted Product Life Cycles, "Long Range Planning”, Oct., 1976; and Peter Doyle, “The Realities of the Product Life Cycle, “ Quarterly Review of Marketing, summer 1976
For each characteristic, marketing objective, and strategy select the one feature of your
product life cycle that best describes that characteristic, marketing objective, and strategy.
C. Product Life Cycle
Characteristics
Sales Low sales Rapidly rising sales Peak sales Declining sales
Costs Higher cost per customer Average cost per customer Low cost Per customer Low cost per customer
Profits Negative Rising profits High profits Declining profits
Customers Innovators Early adopters Middle majority Laggards
Competitors Few Growing number Stable number beginning to decline Declining number
Marketing Objectives
Create product awareness and Trial Maximize market share Maximize profit while defending
market share
Reduce expenditure and milk the
brand.
Strategies
Product Offer a basic product Offer product extensions, service
warranty
Diversify brands and models Phase out weak items
Price Use cost-plus Price to penetrate market Price to match or beat competitors Cut prices
Distribution Build selective distribution Build intensive distribution Build more intensive distribution Go selective: phase out unprofitable
outlets.
Advertising Build product awareness among
early adopters and dealers
Build awareness and interests in the
mass market
Stress brand differences and
Benefits
Reduce the level needed to retain
hardcore loyals
Sales Promotion Use heavy sales promotion to entice
trial
Reduce to take advantage of heavy
customer demand
Increase to encourage brand
switching
Reduce to minimal level.
Sources: Chester R. Watson, Dynamic Competitive Strategy & Product Life Cycles (Austin, Texas: Austin Press, 1978); John A. Weber, Planning Corporate Growth With Inverted Product Life Cycles, "Long Range Planning”, Oct., 1976; and Peter Doyle, “The Realities of the Product Life Cycle, “ Quarterly Review of Marketing, summer 1976
Introduction Growth Maturity Decline
Sale
s
D-1. Opportunity Assessment Matrix
Market Development
Describe:__________________
__________________________
__________________________
__________________________
__________________________
____________________
Time Spent: ________
New Business Development
Describe:__________________
__________________________
__________________________
__________________________
__________________________
____________________
Time Spent ________
Sales Development
Describe:__________________
__________________________
__________________________
__________________________
__________________________
____________________
Time Spent: ________
Product Development
Describe:__________________
__________________________
__________________________
__________________________
__________________________
____________________
Time Spent: ________
Assign time spent in each development area with total time spent equaling 100%
•
•
Source: Adapted, Strategies for Diversification, I. Ansoff, Harvard Business Review
D-1. Opportunity Assessment Matrix
Market Extension, New Market
Growth or Market Development
Time Spent _________
X
Est. Probability of Success 25%
Score _________
New Business Growth or Business
Development
Time Spent _________
X
Est. Probability of Success 5%
Score _________
Current Product Sales Or Sales
Development
Time Spent _________
X
Est. Probability of Success 100%
Score _________
New Product/Technology Sales or
Product Development
Time Spent _________
X
Est. Probability of Success 50%
Score _________
The cumulative score will provide an indication to the company of where overall time is being spent and the
probability of success for those efforts.
Existing New
Ma
rket
s
Exis
tin
g N
ew
Products/Technology
D-2. Industry Maturity Guide
FACTOR
1. Growth Rate Normally much greater than
G.N.P.
(on small base);
accelerating small base
Sustained growth above
G.N.P.; new Customers;
new Suppliers; rate
decelerates toward end of
stage.
Approximately equals
G.N.P.; more subject to
cyclicality
Declining demand; market shrinks as
users’ needs change; industry volume
declining.
2. Predictability of
Industry Growth Potential
Hard to define accurately;
small portion of demand
being satisfied; marketing
forecasts differ widely.
Greater percentage of
demand is met and upper
limits of demand becoming
clearer; discontinuities,
such as price reductions
based on economies of
scale, may occur
Potential well defined;
competition specialized to
satisfy needs of specific
segments;
approaching Saturation.
Known and limited; saturated; supply
capability exceeds long term demand.
3. Product Line Specialized lines to meet
needs of early customer;
frequent changes
Rapid expansion and
proliferation; potential
application multiple
segments.
Proliferation slows or
ceases; product line
turnover
Line narrow as unprofitable products
dropped; focus is on major customer
needs
4. Number of Competitors Unpredictable; few Reaches maximum. new
entrants attracted by growth
and high margins; some
consolidation begins toward
end of stage.
Entrenched positions
established; further
shakeout of marginal
competitors; generally
stable
New entrants unlikely; competitors
continue to decline; many small
regional suppliers.
Source: Adapted Spectrum Chemical Industry Decision Resources.
For each factor 1-9 select the feature for your industry that best describes that factor.
D-2. Industry Maturity Guide
Source: Adapted Spectrum Chemical Industry Decision Resources.
For each factor 1-9 select the feature for your industry that best describes that factor
5. Market Share Stability Unstable. shares react
unpredictably to
entrepreneur insights and
timing.
Increasing stability;
typically, a few
competitors emerging as
strong.
Stable with a few
companies often
controlling much of
industry; niche
competition;
Highly concentrated or
fragmented as industry
and market segments are
localized.
6. Customer Stability Trial usage with little
customer loyalty.
Some loyalty; repeat
usage with many seeking
alternative suppliers.
Well developed buying
patterns with customer
loyalty; competitors
understand purchase
dynamics and it’s difficult
for a new supplier to win
over accounts.
Extremely stable;
suppliers dwindle and
customers less motivated
to seek alternatives.
7. Ease of Entry Normally easy; no one
dominates; customer’s
expectations uncertain; If
barriers exists, they’re
usually technology. capital
or fear of the unknown.
More difficult; market
franchises and/or
economics of scale may
exist; new business is still
available without directly
confronting competition.
Difficult; market leaders
established; new business
must be “won” from
others.
Little or no incentive to
enter.
8. Technology Plays an important role in
matching product
characteristics to market
needs; frequent product
changes.
Product technology vital
early, while process
technology more
important later in this
stage.
Process and material
substitutions focus;
product requirements well
known and relatively
undemanding; may be a
thrust to renew the
industry via new
technology.
Technological content is
known and accessible.
9. Purchasing Patterns Variable; some
customers; with strong
loyalties
Some price sensitivity;
aggressive buyers.
Suppliers well known;
established buyer patterns
Declining customer
loyalty; heavy price,
sensitivity
D-2. Industry Maturity Guide
Feature
Embryonic
Growth
Mature
Aging
1. Growth Rate Normally much greater than G.N.P.
(on small base); accelerating small
base
Sustained growth above G.N.P.;
new Customers; new Suppliers;
rate decelerates toward end of
stage.
Approximately equals G.N.P.; more
subject to cyclicality
Declining demand; market shrinks
as users’ needs change; industry
volume declining.
2. Predictability of Industry
Growth Potential
Hard to define accurately; small
portion of demand being satisfied;
marketing forecasts differ widely.
Greater percentage of demand is
met and upper limits of demand
becoming clearer; discontinuities,
such as price reductions based on
economies of scale, may occur
Potential well defined; competition
specialized to satisfy needs of
specific segments;
approaching Saturation.
Known and limited; saturated;
supply capability exceeds long term
demand.
3. Product Line Specialized lines to meet needs of
early customer; frequent changes
Rapid expansion and proliferation;
potential application multiple
segments.
Proliferation slows or ceases;
product line turnover
Line narrow as unprofitable
products dropped; focus is on major
customer needs
4. Number of Competitors Unpredictable; few Reaches maximum. new entrants
attracted by growth and high
margins; some consolidation
begins toward end of stage.
Entrenched positions established;
further shakeout of marginal
competitors; generally stable
New entrants unlikely; competitors
continue to decline; many small
regional suppliers.
5. Market Share Stability Unstable. shares react
unpredictably to entrepreneur
insights and timing.
Increasing stability; typically, a few
competitors emerging as strong.
Stable with a few companies often
controlling much of industry; niche
competition;
Highly concentrated or fragmented
as industry and market segments
are localized.
6. Customer Stability Trial usage with little customer
loyalty.
Some loyalty; repeat usage with
many seeking alternative suppliers.
Well developed buying patterns with
customer loyalty; competitors
understand purchase dynamics and
it’s difficult for a new supplier to win
over accounts.
Extremely stable; suppliers dwindle
and customers less motivated to
seek alternatives.
7. Ease of Entry Normally easy; no one dominates;
customer’s expectations uncertain;
If barriers exists, they’re usually
technology. capital or fear of the
unknown.
More difficult; market franchises
and/or economics of scale may
exist; new business is still available
without directly confronting
competition.
Difficult; market leaders
established; new business must be
“won” from others.
Little or no incentive to enter.
8. Technology Plays an important role in matching
product characteristics to market
needs; frequent product changes.
Product technology vital early, while
process technology more important
later in this stage.
Process and material substitutions
focus; product requirements well
known and relatively undemanding;
may be a thrust to renew the
industry via new technology.
Technological content is known and
accessible.
9. Purchasing Patterns Variable; some customers; with
strong loyalties
Some price sensitivity; aggressive
buyers.
Suppliers well known; established
buyer patterns
Declining customer loyalty; heavy
price, sensitivity
Source: Adapted Spectrum Chemical Industry Decision Resources.
Factor
Determine the one overall stage of your industry’s maturity
D-3. Technology Profile Matrix
Description of Technological Competitive Position
Powerful technological leader; high commitment, funds, manpower; creativity well recognized in industry; sets pace and direction for technological development in industry.
Able to express independent technical initiatives; sets new directions; technological commitment and effectiveness consistently high; technology plans executed creatively, effectively, on time.
Able to execute plans at an average pace and quality; has strengths that can be exploited to improve technological position; typically not able to provide sustained technological leadership, except in developing niches; can keep business competitive.
In catch-up mode; unable to set independent course; time and/or quality of execution frequently slips.
Low quantity and/or quality of technical output; often in a short-term firefighting focus; products, processes, time frames for which R&D and operations is responsible typically slip badly.
Select the one description that best reflects your technological competitive position
Source: Unknown
D-3. Technology Profile Matrix
Description of Technological Competitive Position
Dominant Powerful technological leader; high commitment, funds, manpower; creativity well recognized in industry; sets pace and direction for technological development in industry.
Strong Able to express independent technical initiatives; sets new directions; technological commitment and effectiveness consistently high; technology plans executed creatively, effectively, on time.
Favorable Able to execute plans at an average pace and quality; has strengths that can be exploited to improve technological position; typically not able to provide sustained technological leadership, except in developing niches; can keep business competitive.
Tenable In catch-up mode; unable to set independent course; time and/or quality of execution frequently slips.
Weak Low quantity and/or quality of technical output; often in a short-term firefighting focus; products, processes, time frames for which R&D and operations are responsible typically slip badly.
Source: Unknown
D-3. Technology Profile Matrix
Embryonic Growth Mature Aging
Dominant
Strong
Favorable
Tentative
Weak
Tech
no
log
ical
Co
mp
eti
tive P
osit
ion
Stage of Industry Maturity
Place the description that best defines your technological competitive position with the overall stage
of your industry’s maturity.
Source: Unknown
D-4. Market Attractiveness Competitive Position Matrix
For each market attractiveness and competitive position factor multiply the factor weight by the rating
importance you give to that with 1 being the least and 5 being the most important for both market
attractiveness and competitive position.
Factor Weight Rating (1-5) Value
Market Attractiveness
• Overall Market Size 0.20
• Annual Market Growth Rate 0.20
• Historical Profit Margin 0.15
• Competitive Intensity 0.15
• Technological requirements 0.15
• Inflationary Vulnerability 0.05
• Energy Requirements 0.05
• Environmental Impact 0.05
• Social/Political/Legal Must Be Acceptable
Total Weight = 1.00 Value =
Factor Weight Rating (1-5) Value
Competitive Position
• Market Share 0.10
• Share Growth 0.15
• Product Quality 0.10
• Brand Reputation 0.10
• Distribution Capabilities 0.05
• Promotional Effectiveness 0.05
• Productive Capacity 0.05
• Productive Efficiency 0.05
• Unit Costs 0.15
• Material Supplies 0.05
• R&D Performance 0.10
• Managerial Personnel 0.05
Total
Weight = 1.00 Value =
Source: Slightly Modified LaRoe T. Hormer, Strategic
Management Prentice Hall, 1982
D-5. Market Attractiveness Competitive Position Matrix
3.67
2.33
1.00
5.00 3.67 2.33 1.00
Plot your market attractiveness and competitive position.
Ma
rke
t A
ttra
ctive
ne
ss
5.00
Competitive Position
Source: Slightly Modified LaRoe T. Homer, Strategic Management Prentice Hall, 1982
D-5. Market Attractiveness Competitive Position
Portfolio Classifications and Strategies
Protect Position
•Invest to grow at maximum digestible
rate
•Concentrate effort on maintaining
strength
Invest to Build
•Challenge for leadership
•Build selectivity on strengths
•Reinforce vulnerable areas
Build Selectivity
•Specialize around limited strengths
•Seeks ways to overcome
weaknesses
•Withdraw if indications of sustainable
growth are lacking
Build Selectivity
•Invest heavily in most attractive
segments
•Build up ability to counter
competition
•Emphasize profitability by raising
productivity
Selectivity/Manage For Earnings
•Protect existing program
•Concentrate investments in
segments where profitability is good
and risk is relatively low
Limited Expansion or Harvest
•Look for ways to expand without high
risk; otherwise, minimize investments
and rationalize operations
Protect and Refocus
•Manage for current earnings
•Concentrate on attractive segments
•Defend strengths
Manage For Earnings
•Protect position in most profitable
segments
•Upgrade product line
•Minimize investment
Divest
•Sell at time that will maximize cash
value
•Cut fixed costs and avoid investment
meanwhile
Competitive Position
Mark
et
Att
rac
tive
ness
High
Medium
Low
Strong Medium Weak
Source: Slightly Modified and adapted with permission from Analysis for Strategic Marketing Decisions by George S. Day (St.
Paul, Minn.: West Publishing, 1986), pp.202 and 204.
5.00
3.67
2.33
1.00
1.00 2.33 3.67 5.00
Description
Category
Market Share, % 35% 34-15% 14-10% 9-4% <4%
Product Line Breadth 1 or 2+ leading product lines;
1 or 2 strong product lines
1 leading product line;
1 or 2 average product
lines
1 strong product line; 2 or 3
average lines
2 or 3 average product
lines; no strong ones
1 average product line
Technological Competency Strong technology portfolio
with complete analytical &
process development
capabilities; strong
management commitment
Strong technology
portfolio to support
products; consistent
commitment
Strong technology platform
to support key product
areas
Aging technology base;
some synthesis/
formulating ability; usually
in the catch up mode
Application testing capability
only; no long term R&D;
minimal technology platforms
Commercialization Abilities Continuous introduction of
new products; first to market
in almost all cases
Commercialize 1 or 2
products per year in
each area; occasionally
first to market
Able to commercialize 1 or
3 new products per year in
key product areas
Able to commercialize 1
or 2 products every 2 to 3
years
Limited or no new products
introduction
Channels to Market Fully national global sales,
customer service &
distribution; logistics
capabilities
Significant regional
sales forces; active in 2
regions; with some
representation in 3rd
Has direct regional sales
force and distribution
dedicated to core market
Some direct sales; limited
distribution network and
service capability
No direct sales force; limited
agent & distributor network;
may piggyback on core
business
Manufacturing Position Low cost producer;
operationally excellent
Strong production
capability with high
quality; not always low
cost producer
Has captive manufacturing
or strong toll suppliers;
sometimes low cost
producer, good quality
Adequate production
capability; high cost
producer; average
product quality
Limited product or capability
with high cost position; poor
quality
Presence/Image Known as industry leader;
global national business
infrastructure; leading brand
names
Strong Industry image
and brand names;
significant regional
infrastructure
Known industry image with
1 or 2 strong brand names;
significant share in one
region
Known in industry; no
strong brand name or
recognition
Unknown or unfavorable
industry
Technical Service
Requirements
Full application technology
capability; customers come to
them for answers, problem
solving and shared customer
programs
Full application
technology capability;
high number of industry
experts
Has application technology
facility staffed with some
industry experts
Has application lab;
limited or no industry
expertise (new personnel
or transferred from core
business)
Limited application testing
capability with no expertise or
field tech. Support
D-6. Business Position
For each category select one description that best fits your business position
Source: Strategic Market Planning, RJ Hamper and LS Baugh
Description
Category
Leader Strong Favorable Tenable Weak
Market Share, % 35 34-15 14-10 9-4 <4
Product Line Breadth 1 or 2+ Leading
product lines; 1 or 2
strong product lines
1 leading product
line; 1 or 2 average
product lines
1 strong product line;
2 or 3 average lines
2 or 3 average
product lines; no
strong ones
1 average product line
Technological
Competency
Strong Technology
Portfolio with complete
analytical & process
development
capabilities, strong
management
commitment
Strong Technology
portfolio to support
products;
consistent
commitment
Strong Technology
platform to support
key product areas
Aging technology
base; some chemical
synthesis/
formulating ability;
usually in the catch
up mode
Application testing
capability only; no long
term R&D; minimal
technology platforms
Commercialization
Abilities
Continuous
introduction of new
products; first to
market in almost all
cases
Commercialize 1 or
2 products per year
in each area;
occasionally first to
market
Able to commercialize
1 or 3 new products
per year in key
product areas
Able to
commercialize 1 or 2
products every 2 to 3
years
Limited or no new
products introduction
Channels to Market Fully global sales,
customer service &
distribution; logistics
capabilities
Significant regional
sales forces; active
in 2 regions; with
some
representation in
3rd
Has direct regional
sales force and
distribution dedicated
to core market
Some direct sales;
limited distribution
network and service
capability
No direct sales force;
limited agent &
distributor network; may
piggyback on core
business
Manufacturing Position Low Cost Producer;
operationally excellent
Strong Production
capability with high
quality; not always
low cost producer
Has Captive
manufacturing or
strong toll suppliers;
sometimes low cost
producer, good quality
Adequate production
capability; High cost
producer; average
product quality
Limited Product or
capability with high cost
position; poor quality
Worldwide
Presence/Image
Known as industry
leader; global
business
infrastructure; leading
brand names
Strong Industry
image and brand
names; significant
regional
infrastructure
Known industry image
with 1 or 2 strong
brand names;
significant share in
one region
Known in industry;
no strong brand
name or recognition
Unknown or unfavorable
industry
Technical Service
Requirements
Full application
technology capability;
customers come to
them for answers,
problem solving and
shared customer
programs
Full application
technology
capability; high
number of industry
experts
Has application
technology facility
staffed with some
industry experts
Has application lab;
limited or no industry
expertise (new
personnel or
transferred from core
business)
Limited application
testing capability with no
expertise or field tech.
Support
D-6. Business Position Determine the one overall description that best represents your business position.
D-6. Business Profile Matrix
Stage of Industry Maturity
Embryonic Growth Mature Aging
Leader
Strong
Favorable
Tentative
Weak
Bu
sin
ess
Po
sit
ion
Place your overall business position with the overall stage of your industry’s maturity
Source: Strategic Market Planning, RJ Hamper and LS Baugh
E. Business Strategies
•Cost Reduction
•Customer Profitability
•Price Increases
•Working Capital Controls
•Organizational Focusing
Time Total Spent _____
•Sales Productivity
•New Promotion Strategies
•Line Extensions
•Marketing Positioning
•Target Market Segments
Time Total Spent _____
•Quality Improvement
•Productivity Improvement
•Reorganization
•Divestitures
•Automation
Time Total Spent _____
•New Products
•New Markets
•Licenses
•Acquisitions
•Business Development
Time Total Spent _____
Time Spent
_______
_______
_______
_______
_______
Time Spent
_______
_______
_______
_______
_______
Time Spent
_______
_______
_______
_______
_______
Time Spent
_______
_______
_______
_______
_______
For each Business Strategy being implemented, provide the time being spent. A minimum of 5% time
spent must be indicated for each strategy. Total time spent must equal 100% for all areas.
Source: Unknown
E. Business Strategies
Growth or Profitability?
•Cost Reduction
•Customer Profitability
•Price Increases
•Working Capital Controls
•Organizational Focusing
Time Total Spent _____
•Sales Productivity
•New Promotion Strategies
•Line Extensions
•Marketing Positioning
•Target Market Segments
Time Total Spent _____
•Quality Improvement
•Productivity Improvement
•Reorganization
•Divestitures
•Automation
Time Total Spent _____
•New Products
•New Markets
•Licenses
•Acquisitions
•Business Development
Time Total Spent _____
Time Spent
_______
_______
_______
_______
_______
Time Spent
_______
_______
_______
_______
_______
Time Spent
_______
_______
_______
_______
_______
Time Spent
_______
_______
_______
_______
_______
Increase Profitability Increase Growth
Longer Term
Shorter Term
Driving Force of a Business
• (4) Product or Service Design Strategy Business Strategy tied to a singular product. Past, current, and future products closely resemble one another. Examples: Boeing (airplanes); IBM (computer)
• (7) Customer or user driven strategy Business strategy focused on specific segment of customers or users. Examples: Johnson & Johnson (“doctors, nurses, patient’s mothers)
• (8) Industry or market driven strategy Business strategy focused on a specific market category. Example: Disney (“wholesome entertainment for families”)
• (3) Production and capacity driven strategy Business Strategy based on investment in production facilities and operating plants that drive capacity. Examples: Northwest (airlines); Marriott (hotels); Nucor (steel)
• (1) Technology driven strategy Business strategy based on proprietary or patented technology Examples: 3M, DuPont, Sony
• (5) Sales-Marketing driven strategy Business strategy based on uniqueness of customer order entry and sales development Examples: Amway (door to door); QVC (TV shopping)
• (6) Distribution driven strategy Business strategy based on a uniqueness of product service delivery Examples: Comcast (network); Wal-Mart (“one stop shopping”)
• (2) Natural Resource driven strategy Business strategy based on access to available natural resources. Examples: Exxon Mobil (oil); Newmont Mining (precious metals).
• (10) Size and Growth driven strategy Business strategy based on pursuit of growth and size at all costs. Example: W.R. Grace (diversified chemical)
• (11) Return- Profit driven strategy Business strategy focused on generating a profit as the only criteria for entering a market. Example: GE
• (9) Geographic driven strategy Business strategy focused on a specific geography or territory. Example: Meijer Food Stores
Source: Strategy Pure and Simple II, Michael Robert, 1998
F. Strategic Intent -- Growth
F. Strategy Intent
Driving Force of a Business
Technology (1)
Natural Resources (2)
Production Capacity/
Capability (3)
Product/ Service (4)
Sale/ Marketing Method (5) __________ Distribution Method (6)
Geographic
Market (9)
Industry
Market (8)
Customer
User (7)
Size/ Growth (10)
Return/
Growth (11)
Source: Strategy
Pure and Simple
Select the one driving force that best describes your
business
Your Organization
Where will we be active? (and with how much emphasis?) • Which product categories?
• Which market segments?
• Which geographic areas?
• Which core technologies?
• Which value-creation stages?
What will be our speed and
sequence of moves?
• Speed of expansion?
• Sequence of initiatives
How will we obtain our
returns? • Lowest costs through scale advantages?
• Lowest costs through scope and replication
advantages?
• Premium prices due to unmatchable service?
• Premium prices due to proprietary product
features?
Arenas
Staging Vehicles
Differentiators
Economic
Logic
How will we get there?
• Internal development?
• Joint ventures?
• Licensing/franchising?
• Acquisitions?
• Image?
• Customization?
• Price?
• Styling?
• Product reliability?
How will we win?
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