Notes#6a: Strategy and Strategic Thinking

What do organizations respond to?

market or external forces

Strategy

the link between the buy side and the sell side in an organization

The Four P’s/The Marketing Mix

• Product, Price, Promotion, Placement, and Target Markets (customers who can relate to the product)

• Static Model

  • You make a product then you have to decide the price you are going to sell it for, then you have to promote it, and then you have to sell it in a place (where the sale occurs)

  • all have to resonate with the target market

Boston Consulting Group (BCG) Growth- Share Matrix

• relative market share left to right goes from high to low

• market growth rate down to up goes from low to high

• question mark: low market share but a high market growth rate want to move over to star

• star: high market share and a high market growth rate

• cash cow: high market share but low market growth rate (as a result of the market being saturated)

• dog: low market share and low market growth rate, could either let the dog out of the dog house (light bulb) or you could reinvent the dog into a question mark (apple ipod)

SWOT Analysis (Strengths, Weakness, Opportunities, and Strengths)

• hardest one to do because you need to have lots of details

• situational analysis (SWOT Profile)

  • internal analysis: include the targets for transformational change

    • strengths and weaknesses

  • external analysis: include the driving forces for transformational change

    • opportunities and threats

Balanced Scorecards (BSC)

• Financial

• Customer

• Internal Business Processes (efficiency)

  • combination of good customer relational and internal business processes lead to good financials

• Learning and Growth (Culture)

• Metrics on the scorecards

• Explains why a firm is profitable

Porter’s Five Forces Model

• Explains why an industry is profitable

  • Industry Members/Competitors: rivalry fuels efficiency/industry

  • Suppliers (have bargaining power)

  • Buyers (have bargaining power)

  • Potential Entrants (threats)

  • Substitutes (threats)

What is a business case?

a way a strategy is communicated, capturing the reasoning for initiating a project or task while emphasizing the quantifiable and non-quantifiable characteristics of a proposed project and if often built by stakeholders and sponsors

• in well written document

• verbal argument/presentation

a decision is made based off of the business case

What is one of the purposes of organizational structures?

to allow for strategic thinking, which gets the managers to link culture with strategy

What are the five things that are present within the framework for strategic thinking?

1) Strategic Intent: a disciplined approached to only do what matters, this one is the most important

2) A systems perspective: what are my resources?

3) Thinking in Time: this is a vision

4) Intelligent Opportunism: How do you connect your resources to your vision?

5) Hypothesis driven- Contingency thinking: What happens when we get there?

What are the two strategic management tools?

1) mission

2) vision

Mission

What we do- focus on the strategic business units (unit driven) and it’s internal view

ex: the mission of Global Financing is to facilitate clients acquisition of IBM hardware, software and services

Vision

How we see ourselves and how we want our stakeholders to see us, this is organization driven and has a focus on the marketplace

• ex: IBM’s vision is to be the world’s most successful and important information technology company

  • successful: helping customers apply technology to solve their problems and introducing new tech to new customers

  • important: will continue to be the basic resource of much what is invented in this industry

Business Model

has to articulate business case and is built to support two principal goals from IBM

• provide business value to clients

• provide long term value to shareholders

business model is developed over time through strategic investments in capabilities and technologies that have the best long term growth and profitability prospects based on the value they deliver to clients