Download Strategy - School of Business Administration

MGT 535
Policy, Strategy and Goals
Professor Cynthia Miree
413 Elliott Hall
[email protected]
(248) 370-2833
Skills Needed at Different Levels
Administrative Skills, Critical Thinking Skills
and Emotional Intelligence
Top
Managers
Middle
Managers
First-line
Managers
Technical
Skills
Human Relations
Skills
Technical
Skills
Technical Skills
Conceptual
Skills
Human Relations
Skills
Conceptual Skills
Human Relations
Skills
Conceptual
Skills
Strategy
The creation of a unique and valuable position
involving a different set of coordinated and
internally-consistent activities.
(Porter, 1998)
http://www.terracycle.net/story.htm
TerraCycle produces a potent, all-natural, eco-friendly plant food that is the first massproduced product in the world to be packaged in used plastic soda bottles.
The company is located in Trenton, NJ
Business Definition: Eco-capitalisim
TerraCycle seeks to take waste, process it, and turn it into a useful product.
Business Model
Answers the following questions:
How do we make money in this business?
What is the underlying economic logic that explains how we can deliver value to
customers at an appropriate cost?
Revenue Streams
-Sale of organic and natural plant foods and fertilizers, bird feeders, potting mix, seed starter
and Deer Repellent
-Customers (Whole Foods, Home Depot, Wal-Mart)
Expenses are contained through
-Containers are reused soda bottles (partnerships with recycling centers and environmental
fundraisers
-Spray tops are unwanted extras that have been dumped by the manufacturer
-Boxes used in shipping are misprinted rejects
-Raw Materials: Worms do not charge for their labor, never take a day off, produce their
body weight in waste every 24 hours, copulate while they eat (thereby doubling their
numbers every three months
- Low/no cost facilities and production equipment
Unique? Why or why not?
Valuable?
Unique? Why or why not?
Valuable? (TerracycleRetailers have gross margins
2-3 times higher than competitor products)
Decisions about
Business Definition
Mission and
Objectives
Managers’
Mental Models
Beliefs and
Understandings
About:
Macro Env.
Industry Env.
Appropriate Size
and Diversity
How to Organize
Decision about
Corporate Strategy
and Diversification
Decisions about
Business Strategy
Activities,
Resources
and
Capabilities
Market
Position
Performance
and
Competitive
Advantage
Decisions about
Organizational
Structure and
Implementation
Feedback (Reinforces or suggests changes in managers’ mental models)
Decisions about Where and How to Compete
Corporate Level Strategy (Defines Scope: What industries should the firm compete in?)
Business Level Strategy (Defines Positioning: How will the firm compete?)
Functional Level Strategy (Maximizes resource productivity)
Decisions about Where and How to Compete
Corporate Level Strategy (Defines Scope: What industries should the firm compete in?)
(None)
Business Level Strategy (Defines Positioning: How will the firm compete?)
Best Cost (Value for Low Price)
What are some of the key differentiators?
Functional Level Strategy (Maximizes resource productivity)
How do they do this?
Competitive Advantage
The set of internal (e.g., resources/capabilities and external
factors (macro, industry, etc.) that allow a firm to consistently
outperform its rivals.
A competitive advantage is good……….
a sustained competitive advantage is better.
Is TerraCycle’s “competitive advantage” sustainable?
Strategic Issues and Decisions
1.
Involve a Significant Commitment of Resources
2.
Not Easily Reversible
3.
Involve Multiple Areas of the Firm
Mission Statements
Vision: What do we want to become (an ideal state, a utopia);
What the organization hopes to become in the future.
Mission: What is our business? (typically associated with the present)
What are the basic purposes and activities of the organization
What does the organization seek to achieve over the long term?
Does every organization need one of each?
If not, who doesn’t need one? Why wouldn’t they need one?
What Makes a Mission Statement Effective?
Mission Specific
Characteristics
Credibility of
Seller
(e.g., Top
Management)
Process of
Selling the
Mission
Process Used to
Develop the
Mission
Organizational
Commitment