effective strategic planning: developing a path to success · pdf file ·...

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

[email protected]

mailto:[email protected]

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:__________________

__________________________

__________________________

__________________________

__________________________

____________________


Product Development

Describe:__________________

__________________________

__________________________

__________________________

__________________________

____________________


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


X


Score _________

Current Product Sales Or Sales

Development


X


Score _________

New Product/Technology Sales or

Product Development


X


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.



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


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


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


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


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


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


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


•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


•Quality Improvement

•Productivity Improvement

•Reorganization

•Divestitures

•Automation


•New Products

•New Markets

•Licenses

•Acquisitions

•Business Development


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


Growth or Profitability?

•Cost Reduction

•Customer Profitability

•Price Increases

•Working Capital Controls

•Organizational Focusing


•Sales Productivity

•New Promotion Strategies

•Line Extensions

•Marketing Positioning

•Target Market Segments


•Quality Improvement

•Productivity Improvement

•Reorganization

•Divestitures

•Automation


•New Products

•New Markets

•Licenses

•Acquisitions

•Business Development


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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