Project Summary: C.BUSINESSSTRATEGY ANALYSIS REQUIRES THE FOLLOWING: (MILESTONE #3)1.Identify strategic goals. 3 pointsA firm's strategic goals drive business strategy and address thekey success factors of the industry. Strategic goals often include the vision or mission statement for thebusiness. They should also set the direction and standard for financial and market results against whichactual performance can be measured. The two most common strategic goals are:Competitive and market goals that define market share or market growth and penetration for thefirm's products or services.Financial performance in terms of key ratios. (Compare to competitors)2.Define business strategy.12 pointsThe definition of business strategy includes six areas ofanalysis. The product-market focus is the first step. The underlying capabilities in implementing aproduct-market strategy include the technologies, processes and market access that a firm has. Theseaddress the business and its key success factors. Business strategy includes customer targeting, productlines and positions, technical capabilities, strategic processes, and market access.Describe the customer targeting strategy and its requirements. Without targeting a specificcustomer segment, it is impossible to develop effective products or services that meet specificcustomer needs and requirements. Each segment, by definition, has a different set ofrequirements. While differences may be minor at time, they affect the decision of the customer topurchase the product or service.Describe the product line and product positioning strategies for the market segment. Thebusiness unit must decide what it will offer and how those offerings will be positioned within thecompetitive environment. A firm can have one product or a product line that covers a range ofprices with a variety of features. The price-quality-performance position is a relativedetermination compared with competitors' prices, quality levels and features when comparingyour products with alternative products inthe marketplace.Identify the technologies required to implement the product-market strategy. Technologiesprovide the basic capabilities needed to develop products or services, as well as the associatedprocesses used in developing or delivering them to the marketplace. Technology determines therange of products and speed with which they can be developed and delivered to the marketplace.Identify the strategic process(es) required to implement the product-market strategy. Thecore capabilities of a firm are embedded in the business processes and functions. Strategicprocesses can either improve the product or marketing capabilities of a firm. These processes andfunctions are the basis of a firms competitive strengths and weaknesses, and make up the corecompetencies of the firm. These skills and capabilities are described in section C below.Identify the market access strategy. The final element of strategy requires that a firm haveaccess to its market or customers. Today, the Internet is considered the new channel for accessingmarkets. In the 1960s, 1-800 numbers were the new method of access. At the same time,discount superstores grew their market share in retail walk-in sales markets.3.Identify internal capabilities and skills. 10 pointsThe ability of a firm to implement itsstrategy is dependent upon both the functions and business processes that support its strategy.Depending on the nature of the organization, its functions and business process capabilities and skillsare central to strategy implementation. These capabilities can be classified into product or servicecreation functions and processes, and product or service delivery and satisfaction functions andprocesses.Product-related functions and processes are dependent upon a firm's R&Dandmanufacturing/purchasing capabilities.The R&D function generates proprietary technologies that can be applied to the developmentand production of new products. In the electronics industry, access to basic components, likehard disk drives and floppy disk drives and high precision production equipment are fundamentalto making smaller, lighter, higher quality products. Each generation of smaller products, like palmrecorders, stimulates market growth for the company that is first to the market. Eachgeneration ofsmaller products also reduce packaging and shipping costs, reduce power consumption, extendbattery life, and are more convenient to carry.The time-to-market process is required to integrate new technology into a firm's products andservices. Today, competitive advantage is often related to the speed with which a firm canintroduce the next generation of technologies into the market through new product and processdevelopments. Once the product is developed, production capacity often becomesthe limitingfactor of market growth.The manufacturing function transforms a set of purchased components and software into afirm's products. Having acceptable products available in a timely manner for customers is centralto making sales. The ability toprovide the highest quality products in the most efficient allowscompanies to gain market share by offering competitive prices and ready availability. Experiencecurve effects from high volumes can lead to lower costs.The integrated-supply-chain processcoordinates purchasing of components for assembly,product outsourcing, otherwise making sure products are available to meet customer orderrequirements. Outsourcing and alliances increase a firm's ability to offer a wider range ofproducts or to introduce new products more rapidly. Increased flexibility provides competitiveadvantage in responding to rapid market changes.Market-related functions and processes are directed at serving the customer in the most effectivemanner possible. Distribution and marketing activities, including sales and service, are central tofulfilling customer demands and ensuring customer satisfaction.The distribution function is essential for a firm in gaining market access. The company thatdominates the sales channels for agiven market often controls the market. Market share isrelated to product availability, i.e. the number and type of locations that make the products andservices available to your customer target. The Internet is providing the next generation ofdistribution and marketing system.The market-to-collection process is used to obtain customers and deliver products. The Internetis changing the role of sales from face-to-face communication to phone or computercommunications. It is expected that many intermediary roles (such as distributors and agents)will change to that of infomediary. As product quality and durability improve, service becomesless important, and new channels can be developed.The marketing function provides the customer with information andeducation about a firm'sproducts and services. Product information and education is often needed to let customers knowabout product capabilities. Advertising is the part of marketing that helps pull the customer intothe market-to-collection process bycreating recognition and image for the brand's products andservices. It helps pull the customer into the store and create brand image. Coca Cola, with thelargest advertising budget, spends less money per bottle of soft drink sales than any othercompetitor. That gives them competitive advantage.The customer-service and satisfaction process is critical to sustain a company's brand loyalty. Itis much less expensive to keep an existing customer than to acquire a new customer. Once acustomer relationship is established, it is important that appropriate customer service activitiesare established to maintain the relationship, and solve problems that might hurt the relationship. When after sales service is required, customers need a company contact. 1-800 numbers and theInternet are rapidly providing direct purchase opportunities and technical support capabilities.Dell Computers, for example, guarantees 48 hour repairs of their products (often next dayservice). Xerox provides 7-day, 24-hour repair service to their large system customers.4.Strategic performance. 10 points Performance is an outcome of strategy. The success with whicha firm's business strategy effectively addresses its industry's key success factors will determine itsstrategic performance. Strategic performance is measured in terms of both financial and marketsuccess.Financial performance is essential for continued business operations. Financial capabilities arecritical in supporting functional strategies and making required infrastructure investments. Forexample, a company with adequate funding can expand or invest, or can provide customerfinancing.Market share demonstrates a firm's ability to create and hold customers, which determines thelong term success of a firm. The freshness of product lines and market positioning affect a firm'sability to attract customers ahead of their competition. Business Strategy Evaluation & RecommendationsStrategic analysis is based on assessing the effectiveness and efficiency with which a firm's businessstrategy meets the requirements of its competitive marketplace. After defining the industry and businessstrategy, we can seek ways to improve the firm's strategic performance. This is done by applying thetraditional SWOT analysis to the firm'sstrategy, and then determining the critical issues that need to beaddressed. After ranking critical issues in order of importance, recommendations for action can bemade.5.Evaluate business strategy. 5 pointsThe business strategy definition provides the basis for itsevaluation. This process assesses issues that are both internal and external to the firm.Internal assessments are based on the firm's functional and process capabilities andfinancial resources. The internal assessment leads to an understanding of the firm's strengthsand weaknesses.External assessments are based on the key success factor that have been identified. Theexternal assessment leads to an understanding of the opportunities and threats facing the firm.This assessment is oftenreferred to as a SWOT analysis. 6.Identify critical issues and priorities. 5 pointsThe SWOT analysis will lead to anunderstanding of the critical issues that face a firm in maintaining or improving its competitive andfinancial performance. The combination of strengths, weaknesses, opportunities, and threats must beranked by priorities so that action can be planned in a manageable way. Since managers have limitedtime and resources, it is important that actions be taken in order of importance. 7.Make recommendations. 5 pointsFinally, recommendations must address the critical issues formanagement actions in the short and long term. We are seeking to improve the effectiveness ofcompetitive strategies and the efficiency of their implementation