Strategy Development

1
Session 3 Strategy Development
1. Why have a strategy plan 2. Assumptions about
the environment 3. Strategic choice 4.
Cost/Benefit analysis 5. Action plans to support
the strategic plan.
2
1. Why have a strategic plan?
Then we reconcile between The external
environment The desired goals
The internal environment SHOULD
WANT CAN
GOALS OBJECTIVES STRATEGIES
Lastly, we end with a set of GOS and
rationale to focus the direction of the orgn.
3
Strategy What is it?

• From the Greek term strategos which referred to
  the behavior of the general in defeating the
  enemy.
• Now refers to the master plan to guide the
  organization.

4
What are we trying to do in developing strategy?

• Creating a focus

From this
To this
5
Leadership goals
Customer and market analysis
Assessing organization capabilities
Assessing employee capabilities (including
ldrship)
Strategy development
Strategy deployment
Organization sub-units
Organization sub-units
Departments
Departments
Departments
Departments
individuals
individuals
individuals
individuals
individuals
6
One way to look at strategy is.
It is not so much doing the thing right, but
finding the right thing to do!
7
Gettsyburg, June 1863

• Lee needed to act fast
• Foreign recognition needed
• Bufford -the 1st day
• Ewell -the 1st day
• Chamberlain -2nd day
• Pickett-3rd day
• Mead-the 4th day

8
June 1, 1863
800 a.m.
Gettysburg
Early
Bufford
Hill
9
2. Key assumptions about the environment.
What areas should we consider? What assumptions
would be appropriate for us to make?
10
Note we then (see q 1-oral) ask you to reflect
on your organizations current ability to meet
this assumption. Are they aligned well or are
there some things that might hurt them or help
them better than others in this industry? (this
is col 3 of q 1)
11
3. Strategic Choice
Next we develop strategies to direct the means to
reach the objectives, that is, how are we to
reach the objectives
To help people understand the types of strategies
that can be used to meet a particular goal, I
have set up a set of generic strategies
which appears on the session notes.
12
The second set of generic strategies on the
web are based on the environmental conditions
that can influence the course we chart
for the organization
I can fly!
Titanic
13
The following provides some samples of generic
strategies that might give direction to the
organization.....
But, the smart organization goes beyond these
considerations
14
What sorts of environment conditions influence
goal /strategy choice?

• 3 concepts apply here
• PLC location
• BCG location
• Hostility/control issues

picking strategies from these lists would
make your justification of strategies easier.
15
The Product Life Cycle (PLC)
Maturity
Replacement Market
Shakeout
Decline
Above 10
Product death
Inflection point
Intro
Growth
16
Pg. 215 in text
BCG
?
20
Market growth rate
10
or cash trap
5
75 market share of nearest rival
1000 1.0
.10
Market share
17
4. Cost/Benefit Analysis
This is an important step in determining the
feasibility of the plan Need to look at two
dimensions. Investment cost of the proposal
(payback, return on investment) Operational
issues changes in revenues and costs leading
to changes in profits
How would we show all of this in question 5?
Expected investment costs
xxxx Citation and rational for this
amount Projected annual revenue
xxxx Citation and rational for this
amount Project annual operational expenses
xxxx Citation and rational for this
amount Project annual operating profit
xxxx This would be a simple calculation (revenue
less expenses) Projected payback xxx.x
years This would be calculated as (expected
investment costs)/(projected operating profit per
year)
18
How would we find all of this in question 5?
Expected investment costs
xxxx Articles that discuss costs or, in a pinch,
your best guess. Programs costs money too, it
is not just fixed asset increases. Projected
annual revenue
xxxx Current revenue comparison or change in
market share impact change revenue There
may not be a revenue increases in cases where you
are focusing on internal improvements, it may
focus only on reduction of expenses - that is
fine. Project annual operational expenses
xxxx Current comparisons or, in a pinch, your
best guess Project annual operating profit
xxxx This would be a simple calculation (revenue
less expenses) Projected payback xxx.x
years This would be calculated as (expected
investment costs)/(projected operating profit per
year)
19
5. Action Plans
The last thing we need to do!
20
Action Plan for xyz activity
Activity
Performance Objective (deliverables)
Due Date
Person/Group Responsible
Here we might have some upstream
and downstream metrics and mile post objectives
21
Lets see how companies have an understanding of
the environment their own S W.
For Coke, what were the external opps
threats and what were their strategies to
meet those O T?
For Ford, what were the external opps
threats and what were their strategies to meet
those O T?
For Ben Jerrys same as well
Video