Session #7

WHAT IS STRATEGY? <YELLOW TAIL CASE>

PREPARATION FOR THE NEXT CLASS Do this at home for W 13/2 class (also for T1)

#1: Break-Even Analysis Paint Ball Exercise:

Fixed costs Variable costs Sunk cost Break-even graph Break-even calculation

#2: Financial Statements http://www.kgaction.com/financial-

statement-analysis/introduction/ http://www.quickmba.com/accounting/fin/

statements/

Income statement http://www.youtube.com/watch?v=Bpcn7Q

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Cash Flow statement http://www.youtube.com/watch?v=JGcbsj

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Balance sheet http://www.youtube.com/watch?v=mjcy-

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What is STRATEGY ? EXAMPLE: Getting from Point A to Point B

Objective

A Strategic Analysis

Controls

Strategy Formulation

Tactics

B Strategic Option

The Strategic Entrepreneurship Plan

Table of Contents & Executive Summary

Situational Analysis (5 C’s; Customer, Company, Competitor, Context, Collaborators)

Opportunity & Issue Analysis (SWOT, Portfolio Analysis & 4P’s)

Objectives Must be SMART

Strategies (Overall, Competitive, STP, 4P’s, Growth, & other strategies)

Tactics (Action Programs for strategies)

Budget, Projected Financials & Timetable

Implement, Monitor & Control

The Yellow Tail Product Portfolio (ps: this is what you should do after Q2 for your products against competitor products)

http://www.discoveryellowtail.com/our-tale.php

How Much Does It Cost To Produce “Fun”?

http://www.discoveryellowtail.com/news/awards-and-honors.php

The tagline of [yellow tail]’s strategic profile is clear:

a fun and simple wine to be enjoyed every day

SWOT: Strategic Analysis • Internal analysis

• The firm itself

• External analyis • The market • The competition • The environment

Opportunities & Threats

Strengths & Weaknesses

Strategy

SWOT Analysis

Strengths Cost Advantages Financial Resources Customer Loyalty Modern Production Facilities Patents

Weaknesses Too Narrow Product Line Lack Of Management Depth High-cost Operation Due To High Labor Cost Inadequate Financing Weak Market Image

Opportunities Add to Product Line Enter New Markets Acquire Firms New Technology

Threats Changing Buyer Tastes Entry of New Competitors Adverse Government Policies

Pro

blem

s

Leve

rage

Strategic Process

Results to be attained before a certain date

Actual actions and operations that are necessary to execute strategy

Objectives Strategy Tactics

Set of carefully selected / integrated business priorities to achieve objectives

IMPORTANT! Objectives must be S.M.A.R.T. Specific Measurable Attainable Realistic Tangible with a target date

Strategic Plan

Problem Strategy Formulation Tactics

Controls

Strategic Analysis

Objectives Strategy Tactics

•Resources made available •Strategic options •Choice of one option •Strategic Thrusts

•Internal appraisal •External appraisal

•Tactical Plans •Execution

•Definition of problem

Note the order!! OBJECTIVES>STRATEGIES>TACTICS>CONTROLS

Objective: measurable level of performance that we want to achieve on a key operating variable

Strategy: statement that provides theme and direction to the marketing mix

Tactic: specific action move or specific set of action moves over a specific time period

Plan: a larger framework within which we assess the current situation and make decisions about objectives, strategies and tactics.

Southwest Airlines

Goal: Win by charging the lowest prices in order to attract not only passengers of other airlines but also car drivers

Objectives: Financial Profitability Market share Sales revenue Etc

Strategy: Cost leadership =Bring down all critical costs Tactics:

Develop short-distance routes connecting high traffic inter-cities Use only one airplane type to simplify training and inventory Don’t serve food and therefore reduce cabin crew size Don’t use travel agents; sell tickets directly Don’t offer to transfer luggage Don’t offer higher classes of service

Attacker Defender

(3) Encirclement attack

(4) Bypass attack

(2) Flank attack

(5) Guerilla attack

(1) Frontal attack

Offensive Strategies