Describe the business model of the current organization you work for by using the same business model components

/in /by

Instructions:

  1. Read about Business Model page 13. Describe the business model of the current organization you work for by using the same business model components. Is that model effective? Please elaborate on this by using the knowledge learned about strategy. Give your best rationale.
  2. Business Critical Thinking exercise:Bottled water is a hot industry with sales of $11.8 billion in the United States. Bug players in this industry include Nestle, PepsiCo, and Coca-Cola. Nestle is the market leader with four brands among the top 10 leading brands. Nestle’s Pure Life brand was the top-selling brand with sales of $1.18 billion, but the company’s other brands makeup and additional $1.6 billion, giving the company total overall sales of almost $3 billion. Nestle saw an opportunity in this market and launched a new brand called Resource, targeted to affluent women. Resource is fortified with electrolytes and is promoted as “more than hydration, it’s total electrolytenment.” Nestle is attempting to take market share away from Glaceau’s Vitaminwater and Smartwater. If Resource attains just 3 percent market share, it will be among the top 10 selling brands. Find out how to calculate Nestle’s Pure Life and the company’s overall market share in the bottled water industry.
  3. Select one of the following companies: Starbucks (investor.starbucks.com), Pfizer (www.pfizer.com/investors), or Best Buy to find examples of strategic and financial objectives and more. (1) List four objectives for the company, and indicate which of these are strategic and which are financial. (2) Click on the investor relations section, and (1) explore the latest annual reports and/or 10-K filings to see if you can identify the key elements of company’s strategy. Use the framework provided in Figure 1.1 to help identify these key elements. What approach toward winning a competitive advantage does the company seem to pursue? (3) Check whether the company’s recent financial reports indicate that its business model is working. Can the company’s business model remain sound as more consumers go to the Internet to find general information and stay abreast of current events and new stories? Is its revenue stream from advertisements growing or declining? To what degree does its strategic response to changing industry conditions seem positive and deliberate versus reactive and adaptive (emergent)?

Expected outcome: Written answer based on the three questions (All participants must post this written assignment; answers must be submitted in only one word document. Submit the assignment through the W1 Turnitin link shown below.

CHAPTER 1

Save your time - order a paper!

Get your paper written from scratch within the tight deadline. Our service is a reliable solution to all your troubles. Place an order on any task and we will take care of it. You won’t have to worry about the quality and deadlines

Order Paper Now

WHAT IS STRATEGY AND
WHY IS IT IMPORTANT?

McGraw-Hill/Irwin

Copyright ®2012 The McGraw-Hill Companies, Inc.

 

1–*

WHAT DO WE MEAN BY STRATEGY ?

  • What is our present situation?
  • Business environment and industry conditions
  • Firm’s financial and competitive capabilities
  • Where do we want to go from here?
  • Creating a vision for the firm’s future direction
  • How are we going to get there?
  • Crafting an action plan that will get us there

 

1–*

WHAT IS STRATEGY ABOUT?

  • Strategy is all about How:
  • How to outcompete rivals.
  • How to respond to economic and market conditions and growth opportunities.
  • How to manage functional pieces of the business.
  • How to improve the firm’s financial and market performance.

 

1–*

WHY DO STRATEGY ?

  • A firm does strategy:
  • To improve its financial performance.
  • To strengthen its competitive position.
  • To gain a sustainable competitive. advantage over its market rivals.
  • A creative, distinctive strategy:
  • Can yield above-average profits.
  • Makes competition difficult for rivals.

 

1–*

STRATEGY AND COMPETITORS

  • Strategy is about competing differently from rivals—
  • Doing what they don’t do or doing it better!
  • Doing what they can’t do!
  • Doing that which sets the firm apart and attracts customers.
  • Doing what we should or should not do to produce a competitive edge.

 

1–*

1.1

Identifying a Company’s Strategy—What to Look For

 

1–*

The Quest for Competitive Advantage

  • Competitive Advantage
  • Meeting customer needs more effectively, with products or services that customers value more highly, or more efficiently, at lower cost.
  • Sustainable Competitive Advantage
  • Giving buyers lasting reasons to prefer a firm’s products or services over those of its competitors.

 

1–*

STRATEGIC APPROACH CHOICES

Low-cost provider

Differentiation on features

Focus on
market niche

Best-cost provider

 

Building Competitive Advantage

 

 

 

 

1–*

STRATEGIC APPROACHES

  • Building a competitive advantage by:

Striving to become the industry’s low-cost provider (efficiency).

Outcompeting rivals on differentiating features (effectiveness).

Focusing on better serving a niche market’s needs (efficiency and\or effectiveness).

Offering the lowest (best) prices for differentiated goods (best-cost provider).

 

1–*

GAINING SUSTAINABLE COMPETITIVE ADVANTAGE

  • How to create a sustainable competitive advantage:
  • Develop valuable expertise and competitive capabilities over the long-term that rivals cannot readily copy, match or best.
  • Put the constant quest for sustainable competitive advantage at center stage in crafting your strategy.

 

1–*

1.2

A Company’s Strategy Is a Blend of Proactive Initiatives and Reactive Adjustments

 

1–*

THE RELATIONSHIP BETWEEN A FIRM’S STRATEGY AND ITS BUSINESS MODEL

Realized
Strategy

Competitive Initiatives

Business Approaches

Business Model

Value Proposition

Profit Formula

$$$?

 

1–*

A Company’s Business Model

  • How the business will make money :
  • By providing customers with value.
  • The firm’s customer value proposition
  • By generating revenues sufficient to cover costs and produce attractive profits.
  • The firm’s profit formula

It takes a proven business model—one that yields appealing profitability—to demonstrate viability of a firm’s strategy.

 

1–*

Business Model Elements

  • The Customer Value Proposition
  • Satisfying buyer wants and needs at a price customers will consider a good value.
  • The greater the value provided (V) and the lower the price (P), the more attractive the value proposition is to customers.

 

1–*

Business Model Elements (cont’d)

  • The Profit Formula
  • Creating a cost structure that allows for acceptable profits, given that pricing is tied to the customer value proposition.
  • V—the value provided to customers
  • P—the price charged to customers
  • C—the firm’s costs
  • The lower the costs (C) for a given customer value proposition (V–P), the greater the ability of the business model to be a moneymaker.

 

1–*

IS OUR STRATEGY A WINNER?

Winning
Strategy

The Strategic
Fit Test

The Competitive Advantage Test

The Performance
Test

 

1–*

WHAT MAKES A STRATEGY A WINNER?

  • A winning strategy must pass three tests:
  • The Fit Test
  • Does it exhibit dynamic fit with the external and internal aspects of the firm’s overall situation?
  • The Competitive Advantage Test
  • Can it help the firm achieve a significant and sustainable competitive advantage?
  • The Performance Test
  • Can it produce good performance as measured by the firm’s profitability, financial and competitive strengths, and market standing?

 

1–*

 

1–*

WHY CRAFTING AND EXECUTING STRATEGY ARE IMPORTANT TASKS

  • Strategy provides:
  • A prescription for doing business.
  • A road map to competitive advantage.
  • A game plan for pleasing customers.
  • A formula for attaining long-term standout marketplace performance.

Good Strategy + Good Strategy Execution = Good Management