Business strategy (GROUP 9)

What Is Strategy?
Derivation from the Greek work strategos a general Greek verb stratego means to plan the destruction of ones enemies through effective use of resources

Strategy is a LOT like Sailing

Explanation: There are many strategies which can be used to make a business successful. There may be strategies which are easily implemented; there are also strategies which are not easily used. This depends on situations and circumstances of the business. Some may lead to problem and some may easily become tools to achieve goals.

Sailing Race What do we need? Place to go.. GOAL

Explanation: Sailing race in business means there are a lot of competitions. Thus, a goal must be set. The strategies are use should be clearly defined and specific In order to achieve the objective or the goal. This is important to be able to go with the trend or technology such as proper management, competitions and risks involved, etc. ..

Sailing Race-- Strategy Elements

Place to go Sailing plan, navigation, Charts, timetable Boat, supplies, money, Food, information Captain, decision-maker Procedures, measurement People, skills, experience Decisions, tasks Norms, culture GOAL PLAN RESOURCES LEADERSHIP SYSTEMS STAFF/SKILLS STRUCTURE CORE VALUES

Having designed our Strategy-We set sail.. What happens???

Example: Your goal is to increase sales of cooked chestnuts. The strategy is to acquire a new technology thru a machine that can cook hundreds of pieces of chestnuts.

Presently the business of Mr. Tao Kae Noi is selling hot chestnuts off the streets of the market place in Vietnam. This is a common business many are involved, which Tao Kae Noi is engaged in too. Before he ventured in this business, he first made a survey in the market by interviewing all the vendors individually one at a time. He asked them how they cook. Mr. Tao Kae Noi wrote the procedures involved. Also, he asked how they sell. After which, he secretly spied the vendors at a distance to see their techniques in selling. He also bought chestnuts from them to taste how the taste differs from each vendor. He finally observed that the business is very good and so decided to sell also but in a different market place (shopping malls). Later, demands increased and can no longer supply so he thought of buying chestnut roasting machine instead of just cooking in a frying pan.

Explanation: Your strategy is to acquire machine. You attended expo/exhibit abroad. Why smooth? Because, you have the budget to buy those machine. Also, you made studies about on how to operate those machines and you made surveys, regarding to the area of operations. This is the reason why even if there are problems, you can easily overcome it because you know everything about your business.

Example: Tao Kei Noi decided to produce another product which is fried seaweed that his girlfriend brought for him one afternoon from a nearby town she'd visited. The crispy seaweed had a unique taste that would sell well. He had envision of selling the crispy fried seaweed to 7-11 stores as they are known to have a store all across the country worldwide. Even before selling to 7-11, he had difficulty frying the seaweed without making it taste bitter. He end up wasting 100,000 baht(USD$3000) worth of seaweed trying to find ways to perfect it. With a little money, his uncle and him work tirelessly until an unfortunate incident happen while his uncle was frying the seaweed. He fell over and knocked his head spilling the oil and left the remaining last few seaweeds soaked in rain water. By a stroke of luck, that very incident actually enabled him to make the perfect seaweed. With the seaweed soaked and dried in water, it diminished the bitter taste and after frying them, what's left was a nice crispy crunchy seaweed that taste resoundingly similar to how it taste like from the nearby town. He tweaked it to add better flavour and package it plainly, naming it Tao Kae Noi(Young Boss). He went to the head office of 7-11 and tried to pitch the idea of selling his crispy fried seaweed. His idea was accepted, and the people at 7-11 wanted to see his factory and inspect it for GMP. Once again he had face a stumbling block and with what little money he had, he beg the owner of a rundown workshop to allow him to rent his workshop as his seaweed factory for a short period of time.

With a newly set-up workshop cum factory, he employed people to fry and package the seaweed. However the QA/QC inspector was not impress with the quality and as it failed to qualify for proper handling of food and his product was not accepted by 7-11. The setback throw him off guard but he knew he could try again and improve things, He worked out and changed accordingly on the list of things which didn't meet the criteria and persevered hoping that this time round things would change. The second GMP inspection proved to be the turning point and snowballed tremendously from there. With initially having less then 10 people working for Tao Kae Noi when it started, Tao Kae Noi now employs almost up to 2000 employees. Today Tao Kae Noi Seaweed can be found all across Asia, China, Australia, Canada and even UK.

Explanation: Why rough? Some problems like shortage of budget and lack of knowledge about the business caused him to delay achieving his goal. But still, even though that is the situation, he never gives up. He makes sure that his goal will be achieve. And so he did He becomes one of Thailand's youngest Billionaire*

Strategy in General Strategy, in general, refers to how a given objective will be achieved. Consequently, strategy in general is concerned with the relationships between ends and means, between the results we seek and the resources at our disposal. Strategy and tactics are both concerned with conceiving and then carrying out courses of action intended to attain particular objectives. For the most part, strategy is concerned with how you deploy or allocate the resources at your disposal whereas tactics is concerned with how you employ or make use of them. Together, strategy and tactics bridge the gap between ends and means. Strategy and tactics are terms that come to us from the military. Their use in business and other civilian enterprises has required little adaptation as far as strategy in general is concerned. However, corporate strategy and competitive strategy do represent significant departures from the military meaning of strategy.

Summary: Strategy is a plan related to pursuing activities which move an organization from its current position to a desired future state. This concerned with the resources necessary for implementing a plan or following a course of action. Thus, strategy is a method describing the future position of the company, its objectives, purposes, goals, policies and plans that may be required for guiding the company from its existing position to where it desires to be.

A BUSINESS STRATEGY specifies the way a firm competes in an industry.

TWO ELEMENTS OF THIS DEFINITION

1. The Way a Firm Competes: One of the definitions the MERRIAM WEBSTER DICTIONARY provides for the noun Way is a course (as a series of actions or sequence of events) leading in a direction or toward an objective. Given the definition of this term, a business strategy then should then include both objectives to be accomplished or general direction in which the firm is heading along with the actions or events that lead toward that direction.

Example: within one year our profit will increase at 35%, for us to achieve this we need to improve the quality of our product. - sentence which is in blue is an example of OBJECTIVE, and sentence in red is an ACTION 2. Industry-Based: Business strategies address how firms compete within an industry. A business strategy should consider questions such as: what industry (or industries) is we competing in?, how profitable is our industry?, what changes are taking place within our industry that might affect us? Industries are usually well-defined and the key competitors within an industry are typically known to the players. Examples: commercial airline industry, the soft-drink industry or medical devices industry

THE FIVE Ps OF STRATEGY

1. Strategy is a PLAN Strategy is a plan - some sort of consciously intended course of action, a guideline (or set of guidelines) to deal with a situation. In MANAGEMENT strategy is a unified, comprehensive, and integrated plan, designed to ensure that the basic objectives of the enterprise are achieved Example: the firm has a plan to produce more products for them to achieve their goal of having 50 % increases to their profit 2. Strategy as a PLOY Strategy can be a ploy, too, which is really just a specific "manoeuvre" intended to outwit an opponent or competitor. Example: a telecommunications company might buy up patents that a competitor could potentially use to launch a rival product Here the real strategy is the threat, not the new practice area itself, and as such is a ploy.

3. Strategy is a PATTERN Strategy is also a pattern - specifically, a pattern in a stream of actions.

By this definition, strategy is consistent in behaviour, whether or not intended. The outcome of strategy does not derive from the design, or plan, but from the action that is taken as a result. Example: a company that regularly markets very expensive products is using a "high end" strategy.

4. Strategy is a POSITION How you decide to position yourself in the marketplace. In this way, strategy helps you explore the fit between your organization and your environment Example: in economy, to help to reduce unemployment by giving job to many people 5. Strategy is a PERSPECTIVE A unique way of looking at the world, and interpreting information from it, judging its opportunities choices and acting Example: Say your business discusses withdrawing from a certain market, trough perspective as an strategy, You exercise an enlightened process, exploring how the withdrawal affects your business's priorities.

Sustainability is about ensuring a better quality of life today, for people and our planet. It is about delighting consumers with innovative products and services. It is about growing responsibly and using resources and materials efficiently. At P&G we define sustainability broadly to include both environmental sustainability and social responsibility. Strategy, Goals & Progress At P&G, we are focusing our efforts where we can make the most meaningful difference in both environmental and social Sustainability. Our commitment begins with P&Gs Purpose, Values and Principles, in which Sustainability is embedded, and manifests itself in a systemic and long-term approach. We strive to make our actions matter. In 2007, P&G established five strategies for Sustainability and set goals to be achieved by 2012. In March of 2009, in recognition of the progress weve made so far and to emphasize our commitment to achieving even more significant wins, we increased each of our goals. Its a part of P&Gs culture to continuously raise the bar, and our work in Sustainability is no exception. Our five strategies are as follows: 1. STRATEGY Delight the consumer with sustainable innovations that improve the environmental profile of our products. GOAL Develop and market at least $50 billion in cumulative sales of sustainable innovation products, which are products that have an improved environmental profile.(1) PROGRESS (in billions of U.S. dollars) Cumulative Sales since July 2007

Product Safety

Over four billion consumers use our products every day, so nothing is more important to us than ensuring the safety of our products for our consumers and the environment.

2. OPERATIONS Improve the environmental profile of P&Gs own operations. GOAL Deliver an additional 20% reduction (per unit production) in CO2emissions, energy consumption, water consumption and disposed waste from P&G plants, leading to a total reduction over the decade of at least 50%. PROGRESS (percent reduction per unit production) Energy Usage CO2 Emissions Waste Disposal Water Usage Since Since July 2007 July 2002 11% 10% 30% 13% 48% 52% 53% 52%

3. SOCIAL RESPONSIBILITY Improve childrens lives through P&Gs social responsibility programs. GOAL Enable 300 million children to Live, Learn and Thrive.(2) Prevent 160 million days of disease and save 20,000 lives by delivering 4 billion liters of clean water in our Childrens Safe Drinking Water program.(3) PROGRESS LIVE, LEARN AND THRIVE Number of Children Reached CHILDRENS SAFE DRINKING WATER Liters of Clean Water Delivered Days of Disease Prevented Lives Saved 930 million 39 million > 5,200 135 million Since July 2007

4. EMPLOYEES

Engage and equip all P&Gers to build Sustainability thinking and practices into their everyday work. 5. STAKEHOLDERS Shape the future by working transparently with our stakeholders to enable continued freedom to innovate in a responsible way.

Summary:
Business strategy is about all ways we need to do that will help us to compete effectively within the industry we belong in. it may be trough plans, ploy, pattern, right positioning or perspective or the through the combination of all. Business strategy always involves objectives that we are aiming to achieve and actions that will lead us towards our objective.

Strategy v/s Policies

Policy Policy is guideline for decisions & actions to be taken by subordinates for the fulfilment of the set of objectives. Policies are commonly accepted understanding of decision making. Policies are thought oriented. Policies have to be integrated so that Strategy is implemented successfully and effectively.

Strategy Strategies are concerned with the direction in which human and physical resources are deployed to maximise the chances of achieving organisational objectives in face of variable environment. Strategies are specific actions suggested to achieve objectives. Strategy is action oriented and empowers concerned to implement them. Strategy cannot be delegated downwards. Strategy is rule for making decision and Policy is contingent decision. Explanation: Listed above are the distinctions between strategy and policy but both are the means directed towards meeting organizational objectives.

THREE BASIC KINDS OF BUSINESS STRATEGY

1. Strategy, in general (as discussed by the 1st reporter), refers to how a given objective will be achieved. Consequently, strategy in general is concerned with the relationships between ends and means, between the results we seek and the resources at our disposal. 2. Corporate strategy defines the markets and the businesses in which a company will operate. It is typically decided in the context of defining the companys mission and vision, that is, saying what the company does, why it exists, and what it is intended to become.

3. Competitive or business strategy defines for a given business the basis on which it will compete. It hinges on a companys capabilities, strengths, and weaknesses in relation to market characteristics and the corresponding capabilities, strengths, and weaknesses of its competitors. Factors Affecting Corporate and Competitive Strategy Writers on the subject of strategy point to several factors that can serve as the basis for formulating corporate and competitive strategy. These include:

Products-services offered Sales-marketing methods Users-customers served Distribution methods Market types and needs

Natural resources Production capacity-capability Size/growth goals Technology Return/profit goals

Michael Treacy and Fred Wiersema suggest that "value disciplines" should serve as the basis for settling on strategy (corporate or competitive). The three basic "value disciplines" they present are:

Operational Excellence Strategy is predicated on the production and delivery of products and services. The objective is to lead the industry in terms of price and convenience.

Customer Intimacy Strategy is predicated on tailoring and shaping products and services to fit an increasingly fine definition of the customer. The objective is long-term customer loyalty and long-term customer profitability.

Product Leadership Strategy is predicated on producing a continuous stream of state-of-the-art products and services. The objective is the quick commercialization of new ideas.

Explanation: The preceding discussion asserts that strategy in general is concerned with how particular objectives are achieved, with courses of action. Corporate strategy is concerned with choices and commitments regarding markets, business and the very nature of the company itself. Competitive strategy is concerned with competitors and the basis of competition.

Example: McDonalds Current Business Strategy By shifting the McDonalds focus on quality and customer services instead of merely selling cheapest and convenient food, McDonalds have succeeded in marketing McDonalds image as customers favourite place and way to eat. (McDonalds annual report 2007) Aligning Plan to Win McDonalds is currently aligning its operation globally while focusing on its 2003s Plan to win. With continuous strong growth since unveiling this plan, McDonalds is reinforcing its priorities to continue to brand itself as being better not just bigger. To focus on being more relevant to customers and the communities they live in, the company is committed to shift its resources in efforts to recruit and train employees to empower company in developing leadership and talented management. Current strategy emphasise the importance of being more disciplined and responsible in allocating financial resources of the company to enable a reliable cash flows, spending on operating costs and maintaining a mix of franchised and company owed restaurants. (McDonalds annual report 2007)

Restaurant Modernization In order to make McDonalds restaurants a modern and more relevant place to enjoy the experience of having food, a plan to renovate 10,000 restaurants worldwide is being carried out. This will improve McDonalds acceptability as a brand with modern look and responsive to changes in customers needs. Almost 24,500 restaurants worldwide now open till late or round the clock to allow customers to enjoy their favourite drink or food at almost anytime they require. (McDonalds annual report 2007) Product Promotion The company plans to introduce a new design for its packaging in its 13,900 restaurants in USA than rolling it out in 118 countries of the world. The new packaging will make containers for french-fries and soft drinks more relevant to today's consumers. Company also plans to use local languages across the world by translating menus items, packaging and displays into 21 regional languages. (Vella, 2008)

Customer Satisfaction and Efficiency McDonalds is making necessary changes in making restaurants more accessible and convenient for people of all walks of like. In some Asian cities like Singapore, McDonalds has launched home and office delivery for its customers. Initiatives like, double drive thru for customers in USA and Canada and quick service kiosk in cities with high density of population throughout world have been launched. In USA, McDonalds key interest is to penetrate further into breakfast, chicken, coffee, cold drinks, and convenience segments of the market.

Product Innovation McDonalds continued its leadership in products innovation and bringing new ideas to address the needs, tastes and preferences of the customers. Merging local taste and culinary traditions with McDonalds successful menu items is being integrated into its global acceptability, for example; the Ebi (shrimp) Wrap and McGriddle in Japan, Kenco Rainforest Alliance Certified coffee in the U.K and Espresso Pronto in Australia. McDonalds, in its USA operation, is launching McCaf and new espresso-based drinks to compete in the specialty coffee market. Social Responsibility McDonalds has been included in the Dow Jones Sustainability Index for three consecutive years reflecting its on-going efforts in being social responsibility. Ronald McDonald Houses for families with seriously ill children in more than 259 local communities around the world is a major social services contribution of McDonalds. (McDonalds annual report 2007)

McDonalds SWOT Analysis 2009 Strengths Strong and effective strategic business policy focusing on differentiation at niche markets segments and aligning its policies on all components of worldwide operations. Record revenues, operating profits and consecutive years of comparable sales growth. Strong financial position on shares and positive rating by financial analysts. Market leadership in sales turnover, sales growth, brand image and customer patronage. Robust system of launching successful products for each market segment, constant product evaluation, innovation and development across the globe. System wide extensive employee training program to generate talented teams and management to ensure friendly customer services Weaknesses Core products out of line with the trend towards healthier lifestyles for adults and children. Product line heavily focused towards hot food and burgers.

Quality issues across the franchise network.

Opportunities Respond to social changes by innovation within healthier lifestyle foods. Strengthen its value proposition and offering to encourage customers who visit coffee shops into McDonalds. Continued focus on corporate social responsibility, reducing the impact on the environment and improving community linkages. International expansion into emerging markets like Eastern Europe and China. Developing promotional schemes to turn market opportunities in its favor during recent credit crunch. Threats Impact of existing competitors and superstores on pricing and products, new entrants offering copied McDonalds produces. Pressure from groups companying for obesity, nutrition, balanced meals and environment and consumer awareness due to media campaigns. Evaluation Instead of opening new restaurants in well saturated and matured markets, more emphasise is being given to modernising and making McDonalds relevant to its customers, particularly for adult and families, to overcome the changes in society. McDonalds was labelled as one of the major reason behind obesity and health scares due the contents of its products. To overcome this negative image associated with its brand, McDonalds has focused on modifying, evaluating and inventing a range of healthier products. Currently McDonalds is reaping on its Plan to win strategy, which helped the company to regain its glory to reach at the top once again. The management while focusing on applying differentiating strategy to customer services, and niche product line is also rolling it out to its worldwide operations. Exploring new markets and emphasising on markets with high sales growth is managements primary focal point.

Summary:
Yogi Berra, a former American Major League Baseball catcher, outfielder, and manager, once said that If you dont know where you are going, you will likely end up somewhere else. The same is true in business. Unless you have a carefully crafted business strategy, you are essentially flying blind. As a conclusion, strategy is the big "aha" that makes you more successful and more profitable than your competitors. It is a realistic and detailed action plan backed by resources. It is not an aspiration