Business Strategy - PowerPoint PPT Presentation

Loading...

PPT – Business Strategy PowerPoint presentation | free to download - id: 420ea1-MzdhN



Loading


The Adobe Flash plugin is needed to view this content

Get the plugin now

View by Category
About This Presentation
Title:

Business Strategy

Description:

Business Strategy What is Strategy? A Game Plan A firms theory about how to gain Competitive Advantage Definition of Strategy Strategy is the direction and scope ... – PowerPoint PPT presentation

Number of Views:964
Avg rating:3.0/5.0
Slides: 18
Provided by: Rory2
Learn more at: http://www.business.ulster.ac.uk
Category:

less

Write a Comment
User Comments (0)
Transcript and Presenter's Notes

Title: Business Strategy


1
Business Strategy
2
Walt Disney Company
1984 Profits 242 Million
Theme Park Operations 77 percent of profits
Consumer Products 22 percent of profits
Filmed Entertainment 1 percent of profits
3
Walt Disney Company
Hired Michael Eisner - 1984
1. Increased admission prices at theme
parks 1984 - 186 m 1989 - 787 m
2. Focused on movie studios (character
development) 1984 - 2.42 m 1994 - 845 m
  • Diversified into television (ABC), hotels, retail
    stores,
  • sport team, cruise line, publishing, consumer
  • products, licensing, etc. (Huey McGowan,
    1995)

Market Cap 1984 2 billion 1994 28
billion
4
What is Strategy?
  • A Game Plan
  • A firms theory about how to gain Competitive
    Advantage

5
Definition of Strategy
  • Strategy is the direction and scope of an
    organisation over the long term, which achieves
    advantage in a changing environment through its
    configuration of resources and competences with
    the aim of fulfilling stakeholder expectations.
  • (Johnson et al, 2005)

6
The Strategic Management Process
External Analysis
Strategic Choice
Strategy Implementation
Competitive Advantage
Mission
Objectives
Internal Analysis
7
Competitive Advantage
The Ability to Create More Economic Value Than
Competitors
there must be something different about a
firms offering vis-à-vis competitors offerings
if all firms strategies were the same, no
firm would have a competitive advantage
competitive advantage is the result of
doing something different and/or better than
competitors
8
(No Transcript)
9
(No Transcript)
10
Competitive Advantage
Competitive Advantage
Economic Returns
Advantage
Above Normal
exceeding expectations
Parity
Normal
meeting expectations
Disadvantage
Below Normal
failing expectations
11
Competitive Advantage
Measuring Competitive Advantage
Two Classes of Measures
1) Accounting Measures
ROA, ROS, ROE, etc. that exceed
industry averages
2) Economic Measures
earning a return in excess of the cost of
capital
12
Accounting Ratios
  • Profitability
  • Liquidity
  • Performance
  • Gearing

13
Ratios
  • Advantages
  • Limitations

14
Economic Measures
  • The Cost of Capital
  • rate of return that companies pay to suppliers of
    capital inn order to induce them to invest
  • Debt and Equity
  • WACC

15
Cost of Equity
  • CAPM (Capital Asset Pricing Model)
  • Exp. (Rf) beta(Rerp)
  • Rf risk free- eg Gov bond
  • Rerp Risk premium(Exp-Rf)
  • Beta risk of investment compared to overall
    market risk

16
Cost of Equity
  • Example
  • McDonalds-
  • Rerp 3
  • Beta .97
  • Rf 5
  • Exp 5 .97(3) 7.91

17
Why Study Strategy?
  • Organisations that engage in strategic management
    generally perform better than those that dont
    (Bain Co.)
  • Clearer sense of strategic vision for the firm
  • Sharper focus on what is strategically important
  • Improved understanding of a rapidly changing
    environment (Wheelen Hunger (2004)
About PowerShow.com