Top 5 Strategy Development Tools - Free eBook in PDF Format

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Book Description - ISBN 978-1-88821-734-9 (44 Pages)
This free eBook describes five essential business strategy development tools. You can use these to help you develop a strategy for your business unit or organization.

Chapter 1 - The Three Levels of Strategy
Knowing how to create a wining strategy is essential for any organization. Successful strategies consist of three levels, which combined put your organization on the path to a prosperous future.
The three strategy levels are Corporate, Business and Functional. Together they ensure that your daily operations and your long-term goals are addressed.

Chapter 2 - Bowman’s Strategy Clock
Bowman’s Strategy Clock is an excellent strategy tool for defining your organization’s market position. This method breaks down your potential strategy options into eight segments. These are – low price/low value, low price, hybrid, differentiation, focused differentiation, increased price/standard product, high price/low value & low value/standard price.

Chapter 3 - Simonson and Rosen’s Influence Mix
The Simonson and Rosen’s Influence Mix looks at a variety of important elements that frequently come together in a buying decision and you use this tool to relate them to your market. It is one of the few strategy tools that accounts for the impact technology has on the decision to buy. There are three main factors involved in the influence mix - ‘Prior Preferences Beliefs, and Experiences’, ‘Information from Marketers’ and ‘Input from Other People’.

Chapter 4 - Blue Ocean Strategy
W. Chan Kim and Renée Mauborgne developed their Blue Ocean Strategy after ten-years of studying over 150 strategies spanning over thirty industries. It is an innovative way to think about strategy it encourages organizations to seek out uncontested market space rather than battling against competitors. A ‘blue ocean’ is space that has yet to have been explored by any other business. It helps you to develop a strategy that allows you to exploit this market until the ocean becomes ‘red’ as competitors enter. This tool uses the four points - raise, eliminate, reduce and create to identify such opportunities.

Chapter 5 - Scenario Analysis
The Scenario Analysis tool will help you to develop a strategy based on your ‘best guess’ of what the future holds for your specific market. This tool has five steps – defining the problem, gathering data, separate certainties from uncertainties, develop scenarios and use the scenarios in your planning - that build in to the scenario analysis process.

You will learn:
  • The three strategy levels (Corporate, Business and Functional) that need to be considered to ensure success in achieving your organisation’s long term goals.
  • How to use Bowman’s Strategy Clock to define your organization’s market position.
  • How the Simonson and Rosen’s Influence Mix affects buying decisions and how to relate these factors to your market.
  • An innovative way to think about strategy that encourages you to seek out uncontested market space rather than battling against competitors.
  • How to use Scenario Analysis to develop a strategy based on your ‘best guess’ of what the future holds for your specific market.

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What are the Three Levels of Strategy?

  • All organizations have competition, and it is strategy that allows one business to rise above the others to become successful.
  • There are three levels of strategy that are typically used by organizations.
  • Corporate level strategy covers actions dealing with the objective of the organization, including acquisitions and the coordination of strategies of individual business units for optimal performance.
  • Strategic decisions tend to be value-oriented, conceptual and less concrete than decisions at the business or functional level. It is concerned mainly with growth and renewal rather than in market execution.
  • Business level strategies detail actions taken to provide value to customers and gain a competitive advantage by exploiting core competencies in specific, individual product or service markets.
  • Functional strategy involves providing objectives for specific functions, allocation of resources among different operations within that functional area and coordination between them.

 

What is Bowman’s Strategy Clock?

  • Bowman’s Strategy Clock is used to analyse the competitive position of a company’s offerings in comparison to those of it’s competitors.
  • There are 8 possible options, three of which (6, 7 and 8) are uncompetitive because the price is greater than the perceived value.
  • 1) Low Price and Low Value Added: The product is not differentiated and the customer perceives very little value, despite a low price.
  • 2) Low Price: Businesses positioning themselves here look to be the low-cost leaders in a market. Margins on each product are low, but the high volume of output can still generate high overall profits.
  • 3) Hybrid: This involves an element of low price and some product differentiation. It can be a very effective strategy if the added value is offered consistently.
  • 4) Differentiation: This requires high quality product with strong brand awareness and loyalty.
  • 5) Focused Differentiation: This the strategy adopted by luxury brands, who aim to achieve premium prices by highly targeted segmentation, promotion and distribution.
  • 6) Increased Price-Standard Product: This is a very short-term strategy as the opportunity to sell for a high price without justification seldom lasts long.
  • 7) High Price-Low Value: This is only sustainable where the organization has a monopoly.
  • 8) Low Value-Standard Price: Setting a standard price for a product with low perceived value is likely to lead to an ongoing loss of market share.
  • As with Porter’s Generic Strategies, Bowman’s Strategy Clock considers competitive advantage in relation to cost advantage or differentiation advantage.

 

What is Simonson and Rosen’s Influence Mix?

  • There is more information available now than ever before, meaning buyers have plenty of resources to consult before they make a purchase.
  • While you have plenty of opportunities to present your target market with information, you have to make sure they are seeing the right information at the right time.
  • Different markets will feature a different blend of the various factors, and it is up to you to decide which ones are going to play the biggest role in your specific market.
  • Prior preferences and experiences influence most low-cost everyday purchases and buyers will usually stick with their established preference unless they see a good reason to try something new.
  • Traditional forms of marketing (pricing, packaging, positioning, etc.) still have a part to play in persuading customers to try something new.
  • Many one-off purchases are decided on the basis of information from review sites and social media rather than ‘word of mouth’ from friends, family members, and co-workers.
  • Products such as computers, cell phones, tablets, vehicles, and more can all be helped or harmed by input from others.

 

What is Blue Ocean Strategy?

  • Blue Ocean Strategy is a book published in 2005 and written by W. Chan Kim and Renée Mauborgne, professors at INSEAD and co-directors of the INSEAD Blue Ocean Strategy Institute.
  • The premise of the book is that companies can succeed by creating ″blue oceans″ of uncontested market space rather than by battling entrenched competitors.
  • They produce evidence that these strategic moves create a leap in value for the company, its buyers, and its employees while unlocking new demand and making the competition irrelevant.
  • They define ‘red oceans’ as those which already contain a high level of competition where there is a natural cap in place on the potential of your business.
  • You won’t be able to ‘hit the jackpot’ in terms of business growth or sales figures, because the market is already set.
  • Finding open space is difficult but there are four points that are presented in the book that will help you look for blue oceans around the edges of your business market.
  • The four principles are: create uncontested market space by reconstructing market boundaries, focus on the big picture, reach beyond existing demand and get the strategic sequence right.

 

What is Scenario Analysis?

  • Scenario analysis is a 5-step process of analyzing possible future events by considering alternative possible outcomes.
  • Step 1) Define the Problem – Before you can make plans and devise strategies to move forward, you need to know exactly what the problem is that you are trying to solve.
  • Step 2) Gather Data – Take the time and effort to do detailed analysis of the current state of the market and any threats or opportunities that will affect that market moving forward.
  • Step 3) Separate Certainties from Uncertainties – Separate the points that you feel are certain from those that seem uncertain in nature.
  • Step 4) Develop Scenarios – Go through this process on the points that you would consider important, ignoring incidental points on your list that won’t have much of an effect on business as a whole.
  • Step 5) Use the Scenarios in Your Planning – Now that you have some scenarios created based on your various predictions and projections, you can alter your business planning as necessary.
  • This process does not try to show one exact picture of the future but presents several alternative future developments.
  • It is useful to generate a combination of an optimistic, a pessimistic, and a most likely scenario.

 

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