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BUSINESS PLAN OUTLINE http://www.sbm.temple.edu/iei/competitions.html

BUSINESS PLAN OUTLINE http://www.sbm.temple.edu/iei/competitions.html. Executive Summary Company Description Including product/service & technology/core knowledge Industry Analysis & Trends Target Market Competition Strategy/Business Model Marketing and Sales Plan

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BUSINESS PLAN OUTLINE http://www.sbm.temple.edu/iei/competitions.html

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  1. BUSINESS PLAN OUTLINEhttp://www.sbm.temple.edu/iei/competitions.html • Executive Summary • Company Description • Including product/service & technology/core knowledge • Industry Analysis & Trends • Target Market • Competition • Strategy/Business Model • Marketing and Sales Plan • Production/Operations Plan • Technology Plan • Management & Organization • Social Responsibility • Development & Milestones • Financials • Including Capital Requirements & Financial Statements • Appendix

  2. Environmental Trends Customer &Benefits IndustryStructure Segment,SizeChannels CompetitiveSpace Market Industry PerceptualSpace CompetitiveDynamics ValueProposition Strategic Positioning STRATEGY FUNNEL Goal: Articulate and execute long-term, defensible offer of unique value to customers

  3. Strategic Management • Strategic Position • Strategic Navigation WHAT IS STRATEGY? • Plan • Process • Position • Pattern • Perspective • Procedure • Play • Ploy • Strategic Tactics

  4. Environmental Scanning Mission Evaluation &Control StrategyFormulation StrategyImplementation STRATEGIC MANAGEMENT Vision • Disciplined, iterative process of driving towards vision, by finding or making and maintaining a defensible space or trajectory in a given business environment.

  5. STRATEGY CHECKLIST • Value proposition • Vision • Position or direction • Structure or resource base • Revenue & business model • Timeline or guidelines • Fit

  6. VALUE PROPOSITION • Specific, concrete offer of benefits • Price, quality, convenience, choice, cost-savings, reliability, etc • To precisely defined customers • Who recognize that the offer solves a problem for the • EG: Our clients grow their business, large or small, typically by a minimum of 30-50% over the previous year. They accomplish this without working 80 hour weeks and sacrificing their personal lives.

  7. VISION • Stable core • Mission: Central audience + core product/service • Ideology: Values, principles, culture • Focused ambition • Concrete picture of successful impact • Serious, scary stretch goals • Disciplined experimentation

  8. VISION EXERCISE • Stable core • Mission: • Ideology: • Focused ambition • What success will look like – in the marketplace: • One audacious goal:

  9. POSITION OR NAVIGATION? • Position Strategies • Unique, valuable, defensible position in a market or industry • Supported by a tightly integrated value chain / activity system • Good for relatively stable industries/markets • Navigation Strategies • Vision-driven nurturing and leveraging of core resources • Supported by tight culture and explicit learning • Good for dynamic industries/markets

  10. STRATEGIC POSITIONS REQUIRE NICHES • A niche includes the market the firm is uniquely qualified to serve External Opportunities& Threats Niche Internal Strengths & Weaknesses

  11. STRATEGIC SITUATION Social, political, regulatory, technological & community Industry Attractiveness, dynamics, & competition Unmet customer needs & desires External Factors Strategic Situation Competitive position (through customers eyes & in industry) Resources (know-how, people, money, etc) Internal Factors Vision, values & culture

  12. Match SW to OT Internal Factors Strengths(S) Weaknesses (W) External Factors SO Strategies ------------------------- WO Strategies ------------------------ Opportunities (O) Offset weaknesses to take advantage of opportunities Use strengths to take advantage of opportunities ST Strategies -------------------------- WT Strategies ------------------------- Threats(T) Use strengths to avoid threats Min. weaknesses to avoid threats

  13. Environment Industry Customer External Factors Strategic Situation Competitive Position Resources Culture Internal Factors SWOT EXERCISE • Map SW to OT..

  14. TWO LEVELS OF STRATEGY • Corporate • Growth • Retrenchment • Stability • Business • Cost (price) Leadership • Differentiation • Focus

  15. GROWTH STRATEGIES • Concentration • Vertical and Horizontal • Diversification • Concentric • Conglomerate

  16. GROWTH THROUGH CONCENTRATION • Concentrate resources on a single business • Concentrate vertically, i.e., backward or forward (supply or distribution) • Concentrate horizontally by growing geographically or by expanding product or service offering

  17. MEANS TO ACCOMPLISH GROWTH • Mergers • Acquisitions • Internal Growth • Strategic Alliances • International

  18. DIVERSIFICATION • Used if firm’s current product lines do not have much growth potential • Benefits • Economies of Scope • Increase market power • Share infrastructure • Maintain growth

  19. CONCENTRIC (RELATED) DIVERSIFICATION • Outperform unrelated diversification • Best when • low industry attractiveness • strong business strengths • strong competitive position • Allows use of distinctive competence • Seek synergy

  20. CONGLOMERATE (UNRELATED) DIVERSIFICATION • Best when • Firm operates in unattractive industry • Firm lacks abilities or skills easily transferable to related industry • Focus is financial & not core competence or synergy • Balance cash flows • Reduce risk

  21. STABILITY STRATEGIES • Pause and Proceed with Caution • No Change • Profit

  22. RETRENCHMENT STRATEGIES • Turnaround • Captive Company • Sell out or Divestment • Spin-off • Management buyout (MBO) • Bankruptcy or Liquidation

  23. BUSINESS LEVEL STRATEGIES • Cost (price) leadership • Efficiency and scale • Differentiation • Quality, design, support/service, image -- that make a product or service special • Focus • Explicit tie to a broad or narrowmarket segment

  24. EXAMPLES • Cost (price) leadership • Dell Computers (logistics, volume) • Motel 6 (location, services, salespeople). • Southwest Airlines (corporate culture, service) • Differentiation • Quality (Mercedes) • Design (Apple) • Service (Nordstrom). • Image (Nike). • Special niches (Zitner’s candied apples; independent films)

  25. EXAMPLES • Focus • Broad (Wal-Mart - rural) • Narrow (NSP - activists, NRI - network administrators) • Segmented (Computer security – spooks and commerce, Financial services – rich, poor and in-between.)

  26. VALUE DISCIPLINE POSITIONING • Product Leadership • (Differentiation) • Operational Excellence • (Cost Leadership) • Customer Intimacy • (Focus)

  27. VALUE DISCIPLINES • Product Leadership - Compete on Speed • Good design, great execution • Educate & lead the market • Ad hoc, risk oriented culture • Organization designed for innovation • Operational Excellence - Compete on Scale • Low price, limited options, ultimate convenience • Managed customer expectations • Measurement culture • Processes & transactions continually redesignedfor efficiency

  28. VALUE DISCIPLINES • Customer Intimacy - Compete on Scope • Offerings tailored to customers & segments • Deep insight into customer needs • Problem solving service culture • Full range of services, so customers stay • Breakthrough thinking, unique solutions

  29. Product Leadership • (Differentiation) • Operational Excellence • (Cost Leadership) • Customer Intimacy • (Focus) POSITION STRATEGY EXERCISE Choose a position strategy and explain how you will achieve it.

  30. STRATEGIC POSITIONS REQUIRE FIT • Fit refers to the integration of every part of firms’ internal structures to better serve a niche. • Well-positioned firms craft themselves to serve niches better than others.

  31. FIT: ENTREPRENEURIAL ADVANTAGE • Possibility of crafting a perfect fit between specific opportunities and internal capabilities • Firms that fit opportunities extremely well have an advantage over bigger, stronger opponents… • Examples: • Dollar Express vs Dollar Tree • Youthbuild vs School District • Giovanni’s Room vs Borders

  32. Human Resources Technology Infrastructure Procurement Margin VALUE CHAIN After SalesService Marketing/Sales InboundLogistics OutboundLogistics Operations • A strong value chain is a cross-linked net of activities that affects the cost or performance of the whole. • Supporting a strategy by optimizing both individual functions and the links between them to support a strategy yields a powerful, durable, hard-to-duplicate advantage.

  33. ACTIVITY SYSTEM • A less linear way of thinking about the internal fit that supports strategy. • Map crucially interrelated features and functions that define a firm’s unique skills and strategy. • Support competitive advantage with reinforcing patterns or systems.

  34. Self-serviceSelection LimitedCustomerService ModularDesigns Low MfgCost High-traffic store layout Design focused on low cost Most items in stock Year-round stocking Flat packing kits Self-transport Limitedsales staff Customer loyalty Self -assembly Suburban Location On-site inventory Easy to make Wide variety Long-term suppliers Easy transport Impulse buying Explanatory labeling IKEA’S ACTIVITY SYSTEM

  35. EXPERIENCE CURVE • For positional strategies, experience is the ultimate source of advantage. • Experience fuels the tacit knowledge that drives productivity improvements, innovations, elaborations of strategy, etc • Successful firms are especially good at creating the social and institutional structures that support the shared development of such tacit knowledge

  36. FIT EXERCISE • Draw the value chain for your firm • Note reinforcing (and jarring) pieces • Try to create more reinforcements OR • Jot down functions and features • Look for patterns and connections • Try to crystallize patterns

  37. BUSINESS MODEL • A business model describes what a firm will do, and how, to build and capture wealth for stakeholders • Effective business models operationalize good strategies -- turning position and fit into wealth

  38. FOUR ASPECTS OF BUSINESS MODELS • Revenue Sources • Cost Drivers • Investment Size • Critical Success Factors

  39. REVENUE SOURCES • Subscription/Membership • Fixed amount at regular intervals prior to receiving product/service • Volume/Unit-based • Fixed price in exchange for product/service • Advertising-based • Exempt from fee or pays fraction of the value • Licensing & Syndication • One time fee • Transaction fee • Fixed fee or percentage of total value of transaction

  40. COST DRIVERS • Fixed: item costs do not vary with volume • Semi-variable: variable & fixed costs • Variable: item costs vary with volume • Non-recurring: item of cost occurs infrequently

  41. INVESTMENT SIZE • Maximizing finance needs • Positive cash flow • Cash Breakeven

  42. CRITICAL SUCCESS FACTORS • An operational function or competency that a company must possess in order to be sustainable & profitable • Perform sensitive analysis

  43. EFFECTIVE BUSINESS MODELS BUILD & CAPTURE WEALTH • Build wealth: • By efficiently (profitably) transforming inputs into something that customers value enough to pay for – again and again and again • By supporting growth • Capture wealth: • By siphoning off some of the accumulated wealth for stakeholders • And by developing recognizable value – strategic positions, know-how, customers, free cash flow, lifestyles, social impact – that can be captured

  44. EFFECTIVE BUSINESS MODELS REQUIRE HARD CHOICES • About who matters • Owners, investors, family, workers, community • About what kind of wealth matters • Financial capital, social capital, intellectual capital...ie., cash, good life, rich family life, entrepreneurial impact, social impact • About the strategy that will deliver the wealth that matters to the stakeholders that matter • About the structure that supports strategy

  45. BUSINESS MODELS START WITH WHAT THE WORLD GIVES 1.Describe the landscape: • Porter • Environment, industry, and relevant trends. 2. Paint in competitors: • Competitor table. Perceptual maps. • What do you need to play? How do competitors compete? What opportunities exist? 3. Identify strengths & weaknesses • Vision, skills, core technologies

  46. BUSINESS MODELS ARE BASED ON STRATEGY 4. Identify stakeholders you must serve • Owners, family, workers, community 5. Identify the wealth you will capture • Capital, good life, family life, fameentrepreneurial effectiveness, social value 6. Choose a position or approach • And elaborate a strategy to realize this • Especially a revenue model

  47. BUSINESS MODELS DEFINE STRUCTURE 7. Sketch a structure to operationalize the strategy • Value chain, activity system, culture, simple rules 8. Work out the implications • Functional strategies • Timeline and milestones • Financial projections & capital needs • Path to profitability, sale, or other realizationof value

  48. BUILD A BUSINESS MODEL EXERCISE • Opportunity • Stakeholders • Wealth • Strategy • Revenue Sources • Cost Drivers • Investment Size • Critical Success Factors • Model • Structural implications, timing, capital needs, etc.

  49. GOOD EXECUTION IS MORE IMPORTANT THAN GOOD STRATEGY! • Seeing a position or approach is fundamentally creative • Immersion, scenarios, future search, • Constructing a strategy involves careful analysis and planning • Executing a strategy requires relentless discipline

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