Day 9 – Strategy (BUS-600)

1. Strategy is one of the most critical practices in managing a business. It is a company’s plan to achieve its goal. Strategy thinking involves a comprehensive analysis of a business in relation to its industry, its competitors, and the business environment in both short and long term.
2. Strategic planning can be characterized into two stages:  formation and implementation.  One has to consider the strategy as part of an organization. The well-known seven S models provide a structure with which to consider a company as a whole so that the organization’s problems may be diagnosed and strategy may be developed and implemented.
3. The seven S model include Structure (of a corporation), Strategy (actions), Style (new addition Culture to the basic organization model), Staff (the people), Skill (distinct ability and talent), System ( the procedures to operate and gather information constitute the systems of a company), and Superordinate goals/ Shared value (the value and aspirations, the core of the organization).
4. To make a good identification for a company, we need to introduce the value chain and integration concept. The value chain is the entire process of producing and delivering goods and services. It starts from raw material, tools and equipment, manufacture, distribution all the way to retailers to service the customer.  
5. When business needs to be expanded, the way to expand the business is called as integration. The forward and backward integration are the expansions downstream or upstream along the value chain.  The vertical integration is for the company that participating at many levels of the value chain in an industry. The horizontal integration is related to the expanding on similar or same industry (usually through acquisition).
6. There are three levels of strategies: Functional strategy (the value activities engaged in), Business Strategy (fight with competitions and tactics), and Corporate Strategy (changing company’s course).
7. Business expansion strategy should go with the market-product diagram to identify which quadrant you are in depending on it is a new or old market and product.
8. Industry analysis gives summarize industry competitions into five forces: Threat of substitutes, Threat of new entrants, Bargaining power of supplies, Bargaining power of customers/Buyers, and Intensity of Rivalry among competitors.
9. More generic strategies are the strategies for cost leadership (reduce cost), differentiation (distinguish yours from other competitors), and focus (concentrate on a market area, a market segment or a product). The cost leadership is to achieve lowest cost of production in an industry. The economy of scale shows the cost per unit drops as one more product is made. The learning efficiency comes from six sources: Labor efficiency, New processes an improved methods, Product redesign, Product standardization, Efficiencies of scale, and Substitution.