Business Strategy: what is it, who's it for and how to create one Chris Eaton LLB (Hons) C Dir CEO, The ILS Group Limited

Strategy “We must plan for the future because those who stay in the present will remain in the past.” Abraham Lincoln

Evaluating Strategy A well formulated strategy helps to marshal and allocate an organisation's capability into a unique competitive position based on its relative internal strengths, weaknesses, anticipated changes in the environment, stakeholders’ expectations and likely moves by present and potential competitors. Source J B Quinn - Adapted

Mission Statement To have each guest leave the hotel completely satisfied -Marriott Hotel Dubai Shareholder is King - Hanson Industries No 1 goal is to provide outstanding customer service - Nordstrom Kill Caterpillar - Komatsu

Getting Started Start Big – Start Wide P – Political E – Economic S – Social T – Technological L – Legal E - Environmental

Understanding the Competitive Situation – Porter’s Five Forces Potential Entrants Substitutes Supplier Power Buyer Power Current Competition

SWOT Analysis Should provide a clear statement of strategic position Involve all Do regularly Perception or Objective Analysis? Prioritise and discuss impact Compare against competitors

Product Market Matrix Original idea by Ansoff Product Development Market Development Diversification Penetration New product Current product Current marketNew market

Strategic Options Two Core Strategies :  Differentiation  What don’t we do?  Cost Leadership  Cost not Price

Implementation Identification of sub-strategies:  Growth  Turnaround  Defender/Reactor

Reasons for Failure Cost Leadership Basis of leadership duplicated – “Me Too” (N.B. Organisational and management skills most difficult to copy) Differentiation Price differential becomes too great to hold brand loyalty Buyer’s need for differentiating factor fails Imitation narrows perceived differentiation

Key Elements to Remember Start Big - Start Wide (PESTLE) Analyse the Competition (including new entrants and possible substitutes) Assess internal strengths and weaknesses Decide whether to cost lead or differentiate Decide what you don’t do And remember… Strategy is a process, not an activity