6 pages BUSINESS STRATEGY ANALYSIS REQUIRES THE FOLLOWING: (MILESTONE #3) 1. Identify strategic goals . 3 points A firm's strategic goals drive business strategy and address the key success factors of the industry. Strategic goals often include the vision or mission statement for the business. They should also set the direction and standard for financial and market results against which actual performance can be measured. The two most common strategic goals are: Competitive and market goals that define market share or market growth and penetration for the firm's products or services. Financial performance in terms of key ratios. (Compare to competitors) 2. Define business strategy. 12 points The definition of business strategy includes six areas of analysis. The product market focus is the first step. The underlying capabilities in implementing a product - market strategy include the technologies, processes and market access that a firm has. These address the business and its key success factors. Business strategy includes customer targeting, product lines and positions, technical capabilities, strategic processes, and market access. Describe the customer targeting strategy and its requirements. Without targeting a specific customer segment, it is impossible to develop effective products or services that meet specific customer needs and requirements. Each segment, by definition, has a different set of requirements. While differences may be minor at time, they affect the decision of the customer to purchase the product or service. Describe the product line and product positioning strategies for the market segment. The business unit must decide what it will offer and how those offerings will be positioned within the competitive environment. A firm can have one product or a product line that covers a range of prices with a variety of features. The price quality performance position is a relative determination compared with competitors' prices, quality levels and features when comparing your products with alternative products in the marketplace. Identify the technologies required to implement the product-market strategy. Technologies provide the basic capabilities needed to develop products or services, as well as the associated processes used in developing or delivering them to the marketplace. Technology determines the range of products and speed with which they can be developed and delivered to the marketplace. Identify the strategic process required to implement the product-market strategy. The core capabilities of a firm are embedded in the business processes and functions. Strategic processes can either improve the product or marketing capabilities of a firm. These processes and functions are the basis of a firms competitive strengths and weaknesses, and make up the core competencies of the firm. These skills and capabilities are described in section C below. Identify the market access strategy. The final element of strategy requires that a firm have access to its market or customers. Today, the Internet is considered the new channel for accessing markets. In the 1960s, 1800 numbers were the new method of access. At the same time, discount superstores grew their market share in retail walk-in sales markets. 3. Identify internal capabilities and skills. 10 points The ability of a firm to implement its strategy is dependent upon both the functions and business processes that support its strategy. Depending on the nature of the organization, its functions and business process capabilities and skills are central to strategy implementation. These capabilities can be classified into product or service creation functions and processes, and product or service delivery and satisfaction functions and processes. Product-related functions and processes are dependent upon a firm's R&D and manufacturing/purchasing capabilities. The R&D function generates proprietary technologies that can be applied to the development and production of new products. In the electronics industry, access to basic components, like hard disk drives and floppy disk drives and high precision production equipment are fundamental to making smaller, lighter, higher quality products. Each generation of smaller products, like palm recorders, stimulates market growth for the company that is first to the market. Each generation of smaller products also reduce packaging and shipping costs, reduce power consumption, extend battery life, and are more convenient to carry. The time-to-market process is required to integrate new technology into a firm's products and services. Today, competitive advantage is often related to the speed with which a firm can introduce the next generation of technologies into the market through new product and process developments. Once the product is developed, production capacity often becomes the limiting factor of market growth. The manufacturing function transforms a set of purchased components and software into a firm's products. Having acceptable products available in a timely manner for customers is central to making sales. The ability to provide the highest quality products in the most efficient allows companies to gain market share by offering competitive prices and ready availability. Experience curve effects from high volumes can lead to lower costs. The integrated-supply-chain process coordinates purchasing of components for assembly, product outsourcing, otherwise making sure products are available to meet customer order requirements. Outsourcing and alliances increase a firm's ability to offer a wider range of products or to introduce new products more rapidly. Increased flexibility provides competitive advantage in responding to rapid market changes. Market-related functions and processes are directed at serving the customer in the most effective manner possible. Distribution and marketing activities, including sales and service, are central to fulfilling customer demands and ensuring customer satisfaction. The distribution function is essential for a firm in gaining market access. The company that dominates the sales channels for a given market often controls the market. Market share is related to product availability, i.e. the number and type of locations that make the products and services available to your customer target. The Internet is providing the next generation of distribution and marketing system. The market-to-collection process is used to obtain customers and deliver products. The Internet is changing the role of sales from face-to-face communication to phone or computer communications. It is expected that many intermediary roles (such as distributors and agents) will change to that of immediacy. As product quality and durability improve, service becomes less important, and new channels can be developed. The marketing function provides the customer with information and education about a firm's products and services. Product information and education is often needed to let customers know about product capabilities. Advertising is the part of marketing that helps pull the customer into the market-to-collection process by creating recognition and image for the brand's products and services. It helps pull the customer into the store and create brand image. Coca Cola, with the largest advertising budget, spends less money per bottle of soft drink sales than any other competitor. That gives them competitive advantage. The customer-service and satisfaction process is critical to sustain a company's brand loyalty. It is much less expensive to keep an existing customer than to acquire a new customer. Once a customer relationship is established; it is important that appropriate customer service activities are established to maintain the relationship, and solve problems that might hurt the relationship. When after sales service is required, customers need a company contact. 1- 800 numbers and The Internet are rapidly providing direct purchase opportunities and technical support capabilities. Dell Computers, for example, guarantees 48 hour repairs of their products (often next day service). Xerox provides 7-day, 24-hour repair service to their large system customers. 4.Strategic performance. 10 points Performance is an outcome of strategy. The success with which a firm's business strategy effectively addresses its industry's key success factors will determine its strategic performance. Strategic performance is measured in terms of both financial and market success. Financial performance is essential for continued business operations. Financial capabilities are critical in supporting functional strategies and making required infrastructure investments. For example, a company with adequate funding can expand or invest, or can provide customer financing. Market share demonstrates a firm's ability to create and hold customers, which determines the long term success of a firm. The freshness of product lines and market positioning affect a firm's ability to attract customers ahead of their competition. Business Strategy Evaluation & Recommendations Strategic analysis is based on assessing the effectiveness and efficiency with which a firm's business strategy meets the requirements of its competitive marketplace. After defining the industry and business strategy, we can seek ways to improve the firm's strategic performance. This is done by applying the traditional SWOT analysis to the firm's strategy, and then determining the critical issues that need to be addressed. After ranking critical issues in order of importance, recommendations for action can be made. 5. Evaluate business strategy. 5 points The business strategy definition provides the basis for its evaluation. This process assesses issues that are both internal and external to the firm. Internal assessments are based on the firm's functional and process capabilities and financial resources. The internal assessment leads to an understanding of the firm's strengths and weaknesses. External assessments are based on the key success factor that have been identified. The external assessment leads to an understanding of the opportunities and threats facing the firm. This assessment is often referred to as a SWOT analysis. 6. Identify critical issues and priorities. 5 points The SWOT analysis will lead to an understanding of the critical issues that face a firm in maintaining or improving its competitive and financial performance. The combination of strengths, weaknesses, opportunities, and threats must be ranked by priorities so that action can be planned in a manageable way. Since managers have limited time and resources, it is important that actions be taken in order of importance.

6 pages BUSINESS STRATEGY ANALYSIS REQUIRES THE FOLLOWING: (MILESTONE #3) 1. Identify strategic goals . 3 points A firm's strategic goals drive business strategy and address the key success factors of the industry. Strategic goals often include the vision or mission statement for the business. They should also set the direction and standard for financial and market results against which actual performance can be measured. The two most common strategic goals are: Competitive and market goals that define market share or market growth and penetration for the firm's products or services. Financial performance in terms of key ratios. (Compare to competitors) 2. Define business strategy. 12 points The definition of business strategy includes six areas of analysis. The product market focus is the first step. The underlying capabilities in implementing a product - market strategy include the technologies, processes and market access that a firm has. These address the business and its key success factors. Business strategy includes customer targeting, product lines and positions, technical capabilities, strategic processes, and market access. Describe the customer targeting strategy and its requirements. Without targeting a specific customer segment, it is impossible to develop effective products or services that meet specific customer needs and requirements. Each segment, by definition, has a different set of requirements. While differences may be minor at time, they affect the decision of the customer to purchase the product or service. Describe the product line and product positioning strategies for the market segment. The business unit must decide what it will offer and how those offerings will be positioned within the competitive environment. A firm can have one product or a product line that covers a range of prices with a variety of features. The price quality performance position is a relative determination compared with competitors' prices, quality levels and features when comparing your products with alternative products in the marketplace. Identify the technologies required to implement the product-market strategy. Technologies provide the basic capabilities needed to develop products or services, as well as the associated processes used in developing or delivering them to the marketplace. Technology determines the range of products and speed with which they can be developed and delivered to the marketplace. Identify the strategic process required to implement the product-market strategy. The core capabilities of a firm are embedded in the business processes and functions. Strategic processes can either improve the product or marketing capabilities of a firm. These processes and functions are the basis of a firms competitive strengths and weaknesses, and make up the core competencies of the firm. These skills and capabilities are described in section C below. Identify the market access strategy. The final element of strategy requires that a firm have access to its market or customers. Today, the Internet is considered the new channel for accessing markets. In the 1960s, 1800 numbers were the new method of access. At the same time, discount superstores grew their market share in retail walk-in sales markets. 3. Identify internal capabilities and skills. 10 points The ability of a firm to implement its strategy is dependent upon both the functions and business processes that support its strategy. Depending on the nature of the organization, its functions and business process capabilities and skills are central to strategy implementation. These capabilities can be classified into product or service creation functions and processes, and product or service delivery and satisfaction functions and processes. Product-related functions and processes are dependent upon a firm's R&D and manufacturing/purchasing capabilities. The R&D function generates proprietary technologies that can be applied to the development and production of new products. In the electronics industry, access to basic components, like hard disk drives and floppy disk drives and high precision production equipment are fundamental to making smaller, lighter, higher quality products. Each generation of smaller products, like palm recorders, stimulates market growth for the company that is first to the market. Each generation of smaller products also reduce packaging and shipping costs, reduce power consumption, extend battery life, and are more convenient to carry. The time-to-market process is required to integrate new technology into a firm's products and services. Today, competitive advantage is often related to the speed with which a firm can introduce the next generation of technologies into the market through new product and process developments. Once the product is developed, production capacity often becomes the limiting factor of market growth. The manufacturing function transforms a set of purchased components and software into a firm's products. Having acceptable products available in a timely manner for customers is central to making sales. The ability to provide the highest quality products in the most efficient allows companies to gain market share by offering competitive prices and ready availability. Experience curve effects from high volumes can lead to lower costs. The integrated-supply-chain process coordinates purchasing of components for assembly, product outsourcing, otherwise making sure products are available to meet customer order requirements. Outsourcing and alliances increase a firm's ability to offer a wider range of products or to introduce new products more rapidly. Increased flexibility provides competitive advantage in responding to rapid market changes. Market-related functions and processes are directed at serving the customer in the most effective manner possible. Distribution and marketing activities, including sales and service, are central to fulfilling customer demands and ensuring customer satisfaction. The distribution function is essential for a firm in gaining market access. The company that dominates the sales channels for a given market often controls the market. Market share is related to product availability, i.e. the number and type of locations that make the products and services available to your customer target. The Internet is providing the next generation of distribution and marketing system. The market-to-collection process is used to obtain customers and deliver products. The Internet is changing the role of sales from face-to-face communication to phone or computer communications. It is expected that many intermediary roles (such as distributors and agents) will change to that of immediacy. As product quality and durability improve, service becomes less important, and new channels can be developed. The marketing function provides the customer with information and education about a firm's products and services. Product information and education is often needed to let customers know about product capabilities. Advertising is the part of marketing that helps pull the customer into the market-to-collection process by creating recognition and image for the brand's products and services. It helps pull the customer into the store and create brand image. Coca Cola, with the largest advertising budget, spends less money per bottle of soft drink sales than any other competitor. That gives them competitive advantage. The customer-service and satisfaction process is critical to sustain a company's brand loyalty. It is much less expensive to keep an existing customer than to acquire a new customer. Once a customer relationship is established; it is important that appropriate customer service activities are established to maintain the relationship, and solve problems that might hurt the relationship. When after sales service is required, customers need a company contact. 1- 800 numbers and The Internet are rapidly providing direct purchase opportunities and technical support capabilities. Dell Computers, for example, guarantees 48 hour repairs of their products (often next day service). Xerox provides 7-day, 24-hour repair service to their large system customers. 4.Strategic performance. 10 points Performance is an outcome of strategy. The success with which a firm's business strategy effectively addresses its industry's key success factors will determine its strategic performance. Strategic performance is measured in terms of both financial and market success. Financial performance is essential for continued business operations. Financial capabilities are critical in supporting functional strategies and making required infrastructure investments. For example, a company with adequate funding can expand or invest, or can provide customer financing. Market share demonstrates a firm's ability to create and hold customers, which determines the long term success of a firm. The freshness of product lines and market positioning affect a firm's ability to attract customers ahead of their competition. Business Strategy Evaluation & Recommendations Strategic analysis is based on assessing the effectiveness and efficiency with which a firm's business strategy meets the requirements of its competitive marketplace. After defining the industry and business strategy, we can seek ways to improve the firm's strategic performance. This is done by applying the traditional SWOT analysis to the firm's strategy, and then determining the critical issues that need to be addressed. After ranking critical issues in order of importance, recommendations for action can be made. 5. Evaluate business strategy. 5 points The business strategy definition provides the basis for its evaluation. This process assesses issues that are both internal and external to the firm. Internal assessments are based on the firm's functional and process capabilities and financial resources. The internal assessment leads to an understanding of the firm's strengths and weaknesses. External assessments are based on the key success factor that have been identified. The external assessment leads to an understanding of the opportunities and threats facing the firm. This assessment is often referred to as a SWOT analysis. 6. Identify critical issues and priorities. 5 points The SWOT analysis will lead to an understanding of the critical issues that face a firm in maintaining or improving its competitive and financial performance. The combination of strengths, weaknesses, opportunities, and threats must be ranked by priorities so that action can be planned in a manageable way. Since managers have limited time and resources, it is important that actions be taken in order of importance.