Strategic Planning

Quick Review of Terms from IB Competitive Advantage Sustainable competitive advantage

What is a Strategy? Come up with a strategy for…being on time? …winning at a sport? …not getting bored during travel? A Strategy is a plan that guides resource allocation (who gets what) to achieve long-term organization goals. Companies want to achieve sustainable competitive advantage. Strategic Intent focuses and applies organization energies on a unifying and compelling goals

What is a Strategy? Coca-Cola - “Put a Coke within ‘arm’s reach’ of every consumer in the world.” This tells us the focus of that company. PepsiCo is different.

What is Strategy? Long-term…has changed. It is shorter nowadays. Consumers have a lot more say. “The customer can have any colour he wants as long as it’s black.”

What is a Strategy?

Strategic Management Strategic Management is the process of making and carrying out strategies. Should be easy; figure out what customers want then provide it for them at the best prices and service. But, all companies in the same industry are trying the same thing so they have to be creative, aggressive, quick, innovative, etc.

Strategic Management We have to look ahead Understand the environment Position the organization for competitive advantage in changing times.

Strategic Management Goals What do you think the TOP goal for a business should be?

Strategic Management Goals Businesses need high-profits to attract investment. Investors are looking for above-average returns. This means that the money the investors get back is more than they could get from other companies.

Strategic Management Goals The ability to earn profits changes depending on the environment the companies are in.

Monopoly Environment Ideal for businesses to make profit. There is no competition so companies can make very high profits.

Oligopoly Environment Market is dominated by a few players. Some division between the companies, (different segments for example) Very little competition, not good for customers.

Environment of Hypercompetition Many players who compete directly with each other. Customers have a lot of options. Competitive advantage is hard to sustain.

The Strategic Management Process This is the whole process of creating a corporate strategy. Companies need to have a good understanding of the environment it is operating in. The first management responsibility is strategy formulation or simply, making a strategy. Five good questions to ask (from Peter Drucker) are: