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Chapter Five

Chapter Five. Business Mission and Strategy. 5- 2. Learning Outcomes. 5.1 Recognize how mission statements guide a new business 5.2 Explain what constitutes a sustainable competitive advantage 5.3 Identify a new business’s assets and capabilities

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Chapter Five

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  1. Chapter Five Business Mission and Strategy

  2. 5-2 Learning Outcomes 5.1 Recognize how mission statements guide a new business 5.2 Explain what constitutes a sustainable competitive advantage 5.3 Identify a new business’s assets and capabilities 5.4 Distinguish which of those assets and capabilities are standard and which are extraordinary

  3. 5-3 Learning Outcomes 5.5 Apply a resource-based analysis approach to arrive at a list of true competitive advantages 5.6 Determine a strategy to match the new business mission

  4. 5-4 Mission Statement • According to the author, “A firm’s mission statement is a brief statement that summarizes how and where the firm will compete.” • From the mission statement, the business develops its strategy, which specifies the broad approaches the new business will use to accomplish that mission.

  5. 5-5 Mission Statement and Strategy • Mission Statement-a brief statement that summarizes how and where a firm will compete • Strategy-the broad approaches a small business will use to accomplish its mission

  6. 5-6 Philo Asian Grille Mission Statement: Philo is a small, intimate Asian dumpling restaurant in Uptown Charlotte that is known for its dedication to authentic food, creative drinks, and exceptional service. • Positioning • Product Mix • Staffing • Location

  7. 5-7 Designing a Mission Statement • Keep it short • Keep it simple • Make it universal • Be specific • Establish measurable goals

  8. 5-8 Mission Statement Impact • In order to consider the range of decisions that are impacted by the mission statement, consider the following three domains: • Advertising • Location of the Business • Staffing

  9. 5-9 Sustainable Competitive Advantage • Defined as an advantage that others cannot immediately copy • All competitive advantages eventually disappear • All businesses should seek to maintain an advantage for as long as possible by continually refining their business model

  10. 5-10 Identifying a Sustainable Competitive Advantage Step 1-Develop a list of your business’s assets and capabilities. Step 2-Break that list into two groups: standard and extraordinary Step 3-Evaluate the extraordinary resources and capabilities

  11. 5-11 Develop a List of Your Business’s Assets and Capabilities • Tangible Assets-hard assets such as equipment or a location • Intangible Assets-things that are not physical but are just as critical to success

  12. 5-12 Split the List into Standard and Extraordinary Assets • First mover advantage-the benefit of gaining customer loyalty by being the first firm to the market • Followers-firms that enter a market after the first mover

  13. 5-13 Evaluate Competitiveness of Extraordinary Resources/Capabilities • Only those that meet all four of the following criteria are truly keys to the new business’s strategy: • Is it Rare? • Is it Easily Substituted? • Is it Durable? • Is it Valuable?

  14. 5-14 Strategy The firm’s strategy is how the firm plans to accomplish its mission. Michael Porter argues that there are fundamentally two broad means to view a business’s strategy: Low cost and Differentiation

  15. 5-15 Four Steps to Developing Strategy Step 1-the firm’s mission statement is employed to specify where the firm will compete and how Step 2-a detailed strategic plan is laid out Step 3-the strategy needs to meet the criterion of being defendable for some length of time Step 4-The firm’s strategy needs to be constantly evaluated

  16. 5-16 Applying the Strategy • Implementing a strategy is all about fit and alignment within the business • The key is that the firm seeks out a consistent set of activities around what typically will be a focus differentiation strategy

  17. 5-17 Summary • Develop the Mission Statement: keep it short, keep it simple, make it universal, be specific, and establish measurable goals • Identify a Sustainable Competitive Advantage: develop a list of assets and capabilities, establish whether they’re standard or extraordinary, evaluate the extraordinary resources and capabilities

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