Briefs and Presentations

 

Cost Leadership

Firms can achieve better than average returns in their industries by achieving the low cost position. To accomplish this, the entire firm’s focus must be on the single objective of cost leadership. Throughout the entire value chain, emphasis is concentrated on driving costs down below the point of the next most efficient competitor (i.e. the second lowest cost competitor). This concentration on driving down costs does not have to be accomplished within every value chain activity; however, it must be done in total.

Read the brief: Ed Barrows Cost Leadership

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Differentiation

Firms can achieve better than average returns in their industries by achieving differentiated positions. To do this, a firm’s overall policies, goals, activities, investments and focus need to be geared toward delivering something different, either in the form of brand, technologies, features or service. Unlike a cost-leader, the firms that differentiate are willing to bear additional costs in selected value chain activities in order to improve margins. It is important to note that firms do not bear additional cost in all areas of the value chain; differentiators still need to be mindful of overall costs. However, firms that differentiate are willing to incur greater costs in those areas of the value chain that directly support their strategies.

Read the brief: Ed Barrows Differentiation

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Focus

Firms can achieve better than average returns in their industries by achieving a focused competitive position. To achieve this focused competitive position, a firm’s overall policies, goals, activities, investments and focus need to be geared toward meeting the needs of the target very well. A focus strategy can combine elements of a cost leadership strategy and/or a differentiated strategy; the difference mainly is that the target is not the broader market as a whole; rather, it is a subset of the market consisting of narrower buying groups, products or services or geographies. Focused competitors typically will not reduce costs or differentiate to the same degree of the broader competitors; however, they will focus enough to serve the needs of their target market particularly well.

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Balanced Scorecard

In 1992, a large public accounting firm contacted Harvard Business School professor, Robert Kaplan and management consultant, David Norton to help them identify what measures—beyond single or financially-oriented measures alone that firms typically used to manage overall business performance. During their yearlong research project with 12 companies, Kaplan and Norton constructed what is now known as the Balanced Scorecard. The Balanced Scorecard provides managers with a „balanced‟ set of business perspectives and associated strategic goals and performance measures that assess both the financial and operational health of a firm. These strategic goals and measures are organized inside four different business perspectives—Financial, Customer, Internal Process and Innovation & Learning as depicted in the brief.

Read the brief: Ed Barrows Balanced Scorecard

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Customer Value Proposition

The centerpiece of a good strategy is a well-crafted value proposition. A firm's value proposition articulates the value that a firm provides through its products and services to its targetd customers. The concept of the value proposition is not new; managers, marketers and sales professionals have for years being sharpening their messaging regarding what their products are worth to customers for years. Within the past decade however, researchers have provided clarity on both the kinds of value propositions that exist and the generic types of value propositions that firms use when developing their strategies.

Read the brief: Ed Barrows Customer Value Proposition

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SWOT Analysis

The SWOT analysis is one of the most widely used tools in all of strategic planning. It is a straightforward analytical framework developed sometime during the 1960s. The premise of the SWOT framework is simple: to succeed in a competitive environment an organization needs to align its internal environment with the external environment in which it operates. The internal environment consists of both strengths and weaknesses while the external environment contains threats and opportunities. A SWOT analysis can be created very quickly at a high level or in considerable depth depending upon time available and the organization’s skill creating the analysis.

Read the brief: Ed Barrows SWOT Analysis

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Resources

The building blocks of strategy are resources. At the most fundamental level, resources represent the productive assets of an organization. Firms work to acquire resources and expand their pool of resources over time. There are two basic types of resources: tangible and intangible resources. Together these resources—of which human assets are a vital component—comprise what might be referred to as the resource base of an organization.

Read the brief: Ed Barrows Resources

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Capabilities

When resources are combined together to accomplish organizational tasks they are called capabilities. Organizations in effect represent bundles of capabilities as they combine resources—such as human, technological, knowledge-based—and produce things of value. Capabilities evolve over time as organizations learn how to improve their activities and build new capabilities. Because they combine many tangible and intangible resources, capabilities are complex to analyze and understand.

Read the brief: Ed Barrows Capabilities

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Core Competencies

A core competence is a capability that has developed to the point where it has become a source of competitive advantage for an organization. Core competencies are not easy to develop nor can they be readily imitated. Organizations that have strong core competencies—such as Honda in engine manufacturing and Proctor & Gamble in brand management—are difficult to compete with. In these examples, it's easy to see how the core competencies form the nucleus of each company's respective strategy.

Read the brief: Ed Barrows Core Competencies

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Strategic Groups

An insightful way to conduct industry specific analysis is through the identification and analysis of strategic groups. Strategic groups are sets of firms within an industry that share the same or highly similar competitive attributes. These attributes include but are not limited to: pricing practices, level of technology investment and leadership, product scope and scale capabilities, go-to-market strategy and product quality. By identifying strategic groups, analysts and managers are better able to understand the different types of strategies that multiple firms are adopting within the same industry.

Read the brief: Ed Barrows Strategic Groups

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Profit Pools

The concept of an industry profit pool was developed by consultants Bain & Company in 1998. A profit pool represents the total profits earned in an industry along all points in the industry value chain. Profit pools provide another way to analyze industry-specific performance. Where the five forces analysis examines the drivers of industry return and strategic groups identify where firms are positioned in the industry, profit pools evaluate profits along all points in the industry value chain. By analyzing profit pools, firms are better equipped to make strategic decisions since they will know specifically where profit maximizing opportunities lie throughout the value chain. Mapping an industry’s profit, while conceptually simple, can prove challenging in practice. Mapping the pool requires four steps.

Read the brief: Ed Barrows Profit Pools

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PESTEL Analysis

One of the basic concepts of business strategy is that organizations operate within an external environment. This environment is complex and constantly changing—sometimes with unfavorable effects on organizational performance. In order to survive within this changing environment, organizations must find a way to fit themselves successfully into it. A means of helping maintain a good fit is by assessing key variables or dimensions of the environment and then adapting the organization to those dimensions. The PESTEL analysis is a general analytical tool for helping with this process.

Read the brief: Ed Barrows PESTEL Analysis

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Five Forces Analysis

Where the PESTEL analysis is a general or macro environmental analysis tool, the Five Forces model is a means to assess the micro or industry environment. Developed by strategy professor Michael Porter of Harvard Business School in the early 1970s, the Five Forces model has become one of the most widely known strategy analysis tools in use today. The tool helps users identify—through detailed examination of each force—what the underlying drivers of industry behavior and performance are.

Read the brief: Ed Barrows Five Forces Analysis

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Values

Simply put, an organization’s values are what it stands for. Every organization has a set of values, regardless of whether they are written or not. The managers and employees in an organization establish a culture in large part based upon the attitudes and behaviors they value (thus the name values). Of the three commonly grouped concepts of mission, vision and values, values are by far the most long-lasting. In fact, they tend to be changeless, often times being identified when the organization is founded or at a critical point early in its lifecycle. What’s important about values is not that they be written so much as the organization widely understands what they are and why they’re important to success.

Read the brief: Ed Barrows Values

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Vision

A vision encapsulates the desired future state for an organization. A vision answers the basic question: “Where do we want to be in the future?” Despite representing the desired future state, there is no guarantee the organization will ever reach its vision. However, because the vision is typically much more desirable than the current state, the organization is willing to vigorously pursue it even in the face of a significant risk of not achieving it. Like a mission, the vision is typically documented in a vision statement—a short written sentence or paragraph that paints a picture of the future of the organization. While visions usually persist for several years—in some cases upward of 20 or 30—they can and do change. They change when the desired future state of the organization changes or when the organization achieves its vision and creates a new one.

Read the brief: Ed Barrows Vision

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Mission

At the most basic level a mission articulates the core purpose of an organization. It answers the fundamental question: “Why do we exist?” A mission specifies the goods and/or services an organization provides, to whom it provides them as well as what contribution the organization makes to society in a larger sense. The mission is typically documented in a mission statement—a short statement that lists the areas mentioned. A mission statement is never fulfilled or achieved; an organization continues to execute on its mission every day it operates. This is different than a vision which is specifically intended to be reached at some point. Lastly, missions are usually long-term in nature; most, organizations do not change their mission frequently.

Read the brief: Ed Barrows Mission

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Strategy Execution

Despite receiving recent focus, strategy execution is not a new concept. “Strategy implementation”—as strategy execution was originally termed—can be found in literature dating back to the 1960‟s. One of the most influential strategy books of all time, Business Policy Text and Cases authored by members of Harvard Business School‟s Business Policy Group in 1965 contains two books one of which is dedicated to execution. Book Two: Implementing Corporate Strategy discusses organizational structure and its relationship to strategy, establishment of standards and measures of performance, as well as leadership toward achievement of purpose. By the 1980‟s much of the strategy execution thinking centered on identifying and managing key programs or initiatives prescribed by the strategic planning process. What these separate ideas lack however is an integrated way of thinking about them. This integrated systems thinking comprises much of the strategy execution literature today.

Read the brief: Ed Barrows Strategy Execution

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Strategic Planning

Strategic Planning can be defined as the process by which an organization develops organizational goals and objectives and makes decisions and identifies actions in order to achieve those goals. Starting formally during the 1940s, strategic planning or long range planning as it was originally coined has grown into a practice that 90% of organizations embrace as a means to aid in determine the overall direction for their enterprise1. There are four key elements of a good strategic planning system managers should keep in mind when conducting strategic planning: establish a process, set goals, make decisions, and control performance.

Read the brief: Ed Barrows Strategic Planning

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Value Chain

Most mangers know that their organization's value chain represents the sequence of activities necessary to develop a product or service, produce or deliver it, market and sell it to customers, distribute or provide it to them while ensuring necessary post sales service or support is completed. Learn more about how the value chain helps an organization identify how it creates value for customers and locate where its sources of competitive advantage lie.

Read the brief: Ed Barrows Value Chain

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Strategy Map

A Strategy Map is a systems model that graphically depicts an organization's strategy across four organizational perspectives: Financial, Customer, Internal Process, and Learning and Growth. The main strengths of the Strategy Map are threefold: the ability to depict an organization's strategy graphically, the embedding of a set of cause and effect relationships that show how components of the strategy interrelate and the power in communicating complex concepts in a straightforward manner. The process of developing a Strategy Map is a valuable as the Strategy Map itself.

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Competitor Analysis

It should come as no surprise that one of the most important analysis areas within the field of competitive strategy is that of competitors. While changes in the macro environment can buffet a firm, the most direct threat to a business typically stems from competitors. The intensity of competitive rivalry varies from industry to industry but within most environments competition only intensifies over time. As such, gaining and thorough understanding of competitors is not only essential to effective strategy formulation, it is critical to survival. To effectively analyze competitors, strategists and strategic planners should develop four specific dimensions: current strategy, resources and capabilities, critical vulnerabilities and likely competitive moves.

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Business Strategy Defined

When it comes to strategy, there is no shortage of definitions. A simple Google search of the words ‘business strategy’ yields 225 million responses. When asked to consider the question, ‘what is strategy?’ most people respond with thoughts such as strategy is ‘a game plan’, ‘a set of objectives and actions’, or ‘coordination and alignment of resources’ all of which are intended to help an organization achieve its long-term goals and vision. In truth, each of these responses is correct, at least in part. But before an organization begins developing a strategy that will be both comprehensive and actionable, a more precise definition should be identified.

Read the brief: Ed Barrows Business Strategy Defined

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Components of a Strategy

Whether explicit or not, every organization has a strategy. Unfortunately, when it comes to describing the components that actually comprise a strategy, there is very little consistency in practice. Some managers state that their vision and mission constitute their high-level strategy. Others believe that their most important projects—such as acquiring a competitor—really encapsulate their strategy. Most refer to their strategic plan or Balanced Scorecard and state confidently that contained therein are all the relevant elements of their strategy. While these different viewpoints provide some insight regarding what a strategy is, they don’t really provide any insight regarding what constitutes a fully integrated strategy. This begs the question: what are the components of a business strategy?

Read the brief: Ed Barrows Components of a Strategy

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