Capstone Project

BUSINESS STRATEGY TEMPLATE

MGMT 790 Fall 2022

Strategy : In the broadest sense, a strategy is a plan (i.e. set of interrelated choices) for achieving desired outcomes. The primary aim of a commercial firm is to achieve a desirable level of long-term economic performance. Business-level (aka competitive) strategy is a plan to compete in a specific product-market. This contrasts with functional-level strategies which are specific to the aims of a functional department (such as marketing or human resources) and corporate-level strategy which is about how to best manage resource allocations across a portfolio of different business units competing in different product-markets. Thus, for our purposes, a firm’s business-level strategy is a set of choices for delivering value to a market in a way to achieve sustainable (i.e. long-term) superior performance … their strategy is how they intend to achieve lasting success .

Long-term performance of a company or business unit is partly a function of strategic alignment . Ideally, all facets of strategy align and fit to customer and competitive demands. The internal choices and facets of a firm must also align. That is, the firm ideally possesses (and exploits) the resources and capabilities to execute their strategy in a distinctively attractive manner.

THEREFORE, before we can begin to identify ways to improve a firm’s long-term performance, we first have to understand their current strategy….we need to clearly understand how they are currently trying to compete and succeed. We need to be clear on their Strategic CHOICES. We need to have a clear answer to questions such as:

· What do they sell? To whom do they want to sell? Where do they hope to sell?

· How do they position themselves to be uniquely attractive to customers?

· Through what channels will they deliver value and how do they transact business with buyers?

· What are the major sources of revenue? What is their ‘system’ for of making money?

To help answer these, we can use the following systematic and structured approach to identifying and describing firm business-level strategy:

First is what some call their Strategic Orientation – WHAT, WHERE, TO WHOM, AND WHY:

1. Define their PRODUCT FOCUS – Describe the primary product or service category(ies) the firm offers.

2. Define their GEOGRAPHIC MARKET FOCUS – What is the extent of the geographic market in which they intend to compete (e.g. East coast, national, global…?). Note that this is NOT the ‘location/site selection’ strategy of a retail business.

3. Characterize their primary TARGET CUSTOMERS – Do they sell to consumers, businesses, governments? What are the primary characteristics that define their ‘target’ customer? (Example of individual target customers: what ages, genders, lifestyles, income levels, core values…)

4. Describe their VALUE PROPOSITION – How do they claim to be different or better than competitors to attract customers? What would their ‘sales pitch’ be to potential customers….why should they buy from them? Look to their marketing messages for clues!

Second, we have the HOW:

Describe the main aspects of their BUSINESS MODEL:

A business model describes a firm’s system of choices and activities designed to deliver value to customers in a way that enables the firm to make money . Although a business model can be distinctive and have competitive value, think of ‘business models’ more as descriptions of how the firm does business and not – like strategic orientation – of how they intend to compete.

To describe the basics of a firm’s business model, address the following:

1. Describe the nature of the transaction (retail, wholesale, contracts, subscriptions, lease, etc.).

2. Describe how they operate to deliver value to the customers (do they own and operate stores? An e-commerce website? Do they deliver and service? etc.).

3. Describe how the firm makes money. Describe the primary source(s) and nature of revenue . Examples: a franchise business will likely have revenue from directly selling goods to customers, franchise fees from signing up new franchisees, and royalties from all operating franchisees. Google’s revenue comes from advertising. Auto manufacturers sell cars and parts to franchise dealers; Car dealers, in turn, get revenue from selling new and used cars, repair parts and services, warranties, and accessories.

4. Finally, based on their revenue model, operations, and cost structure, what part(s) of their business seem to be the primary driver(s) of profit ? For example, does a movie theater derive more profit from ticket sales or concessions? Consider a restaurant/bar…some make far more money at the bar, even though they ‘seem’ to be about the food. A franchise fast food company can have a majority of their profits derive from franchisee royalties even though they may operate hundreds of owned outlets.

Therefore, a brief yet comprehensive way to describe a firm’s competitive strategy needs to explain each of these components. (For clarity, use the component terms in your communication!)

Product Focus

Geographic Market Focus

Target Customers

Value Proposition

Summary Business Model description

TIP: Go and review how this method is used in the example capstone/major case reports provided in the Files Directory.