Introduction to Business Strategy - Free eBook in PDF Format

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Book Description - ISBN 978-1-54345-822-4 (40 Pages)
This free eBook describes top five business strategy models that are regularly used by management to assess long-term strategy and ensure that the organization’s activities, resources, relationships and processes are aligned to ensure a profitable future. Typical scenarios where you could be asked to provide information and data for your organization’s strategic decision making include:

• Analyzing the organization’s external environment.
• Assessing the organization’s internal capabilities and how well it can respond to external forces.
• Assisting with the definition of the organization’s strategy.
• Aiding in the implementation of the organization’s strategy.

Chapter 1 - Lafley and Martin’s Five-Step Strategy Model
This is a new strategy model first published in 2013 and helps you to develop a strategy that suits the needs of 21st century organizations. It consists of five steps that as you work through a clear strategy, from the top-down, will appear of how your organization should operate in the future.

Chapter 2 - Hambrick and Fredrickson’s Strategy Diamond Model
Often referred to as ‘Strategy Diamond’ because of how its five elements are often visualized this strategy model is very adaptable. It can easily be applied to a wide variety of market environments. The five facets of the model that make up this ‘diamond’ are - arenas, differentiators, vehicles, staging & pacing and economic logic.

Chapter 3 - The Business Model Canvas
This model consists of nine building blocks that allow organizations to create an overall picture of their ‘ideal’ structure. The typical building blocks are - key activities, key resources, key partners, value propositions, customer relationships, channels, customer segments, cost structure & revenue streams. It is a very useful model for start-up or fledgling business ventures.

Chapter 4 - Porter’s Generic Strategies Model
Strategies are a fundamental requirement of any organization and using Porter’s Generic Strategies places your organization on the path to success. This model consists of four high-level strategies, which are cost leadership, differentiation, cost focus and differentiation focus.

Chapter 5 - Mintzberg’s 5 P’s of Strategy Model
This strategy model takes into account that strategies need to be amended regularly to ensure sustainability and profitability. Mintzberg’s 5 P’s of strategy – plan, ploy, pattern, position and perspective - use these five different approaches to develop your organization’s strategy.

You will learn:
  • How Lafley and Martin’s Five Step Strategy Model can help you to develop a top-down strategy.
  • How Hambrick and Fredrickson’s Strategy Diamond Model can help you to visualise where your organization fits into the larger business environment.
  • How the Business Model Canvas can help start-ups to create an overall picture of their ‘ideal’ structure.
  • How to use Porter’s Generic Strategies Model to gain competitive advantage in your market.
  • How Mintzberg’s 5 P’s of Strategy Model uses five different approaches to help you develop your organization’s strategy.

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What is Lafley and Martin’s Five Step Strategy Model?

  • Lafley and Martin’s Five-Step Strategy Model was published in a 2013 book, making it one of the most-modern strategy models in business.
  • What should be the winning aspiration? Organizations should define exactly what winning means to them.
  • Where you are going to play? Organizations can choose where to play in terms of services and product lines.
  • How you are going to win? In order to make the above decisions work, they have to be supported by the things that an organization can do better than the competition.
  • What capabilities you should build? The organization should look at its strong points and core competencies and tailor them to support the first three points.
  • What management systems are needed? The organzation must decide who they need, what they need, how they will deliver, and how they can tell whether the strategy is succeeding or not.


What is Hambrick and Fredrickson’s Strategy Diamond Model?

  • The model covers strategy formulation and helps answer questions about what the strategy is and what it will be in the future.
  • It suggests that good strategies include answers to a series of related questions spanning target markets, growth vehicles, speed and path of strategic change, and financial deliverables.
  • Arenas encompass choices made about where to compete: the external environment such as product or service markets, geographic markets or channels. They also identify activities that are outsourced.
  • Differentiators are those factors that are believed to allow the firm to compete effectively in its targeted arenas, and include image, price, and reliablity.
  • Vehicles identify the degree to which the strategy relies on internal development efforts relative to partnering with external parties.
  • Staging and pacing refer to the sequence and speed of strategic moves, helping identify decision points since strategic moves don’t have a single possible pathway.
  • Economic logic reflects how all the pieces tie together in a way that satisfies key stakeholders.


What is Business Model Canvas?

  • The Business Model Canvas has quickly become a popular tool for those planning out a new business venture.
  • It takes the form of a visual chart with elements describing a firm’s or product’s value proposition, infrastructure, customers, and finances.
  • While there are a variety of iterations of this tool that have been put into use, you will commonly find that the model includes nine unique building blocks.
  • Key Activities: What unique things does the business do to deliver its proposition?
  • Key Resources: What unique strategic assets must the business have to compete?
  • Key Partners: Who are your key partners/suppliers? What are the motivations for the partnerships?
  • Value Propositions: When someone asks you what it is that your business does, what is your answer?
  • Customer Relationships: What relationship is it that the target customer expects you to establish?
  • Channels: How are your value propositions promoted and delivered?
  • Customer Segments: Who are the customers?
  • Cost Structure: What are the business’ major costs?
  • Revenue Streams: How are you going to make money?
  • The Business Model Canvas is an effective strategic management template for developing a new or documenting an existing business model.


What is Porter’s Generic Strategies Model?

  • The two basic types of competitive advantage combined with the scope of activities for which a firm seeks to achieve them, lead to four generic strategies for achieving above average performance in an industry: cost leadership, differentiation, cost focus and differentiation focus.
  • A company chooses to pursue one of two types of competitive advantage, either via lower costs than its competition or by differentiating itself along dimensions valued by customers to command a higher price.
  • A company also chooses one of two types of scope, either focus (offering its products to selected segments of the market) or industry-wide, offering its product across many market segments.
  • The generic strategy reflects the choices made regarding both the type of competitive advantage and the scope.


What is Mintzberg’s 5 P’s of Strategy Model?

  • Mintzberg suggests there are five ways in which the term ‘strategy’ is used. These are called his ‘5Ps for Strategy’. Strategy can mean any of the following:
  • Strategy as Plan: The strategy is made in advance of its implementation and is followed up by actual implementation and development.
  • Strategy as Ploy: This is a specific manoeuvre intended to outperform a competitor.
  • Strategy as Pattern: Strategy ca sometimes be explained in terms of a pattern that emerged rather than something that was preplanned.
  • Strategy as Position: This is represented by finding a niche, providing distinctive product, or by exploiting existing competences to deter competitors.
  • Strategy as Perspective: This refers organisational culture as strategy can be a result of the way a company views itself.

 

 

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