WHAT IS STRATEGY?

<YELLOW TAIL CASE>

Session #7

PREPARATION FOR THE NEXT CLASS Do this at home for W 13/2 class (also for T1) #1: Break-Even Analysis #2: Financial Statements http://www.kgaction.com/financial Paint Ball Exercise: statement-analysis/introduction/
Fixed costs Variable costs Sunk cost Break-even graph Break-even calculation

http://www.quickmba.com/accounting/fin/ statements/ http://www.youtube.com/watch?v=Bpcn7Q YOTx0 http://www.youtube.com/watch?v=JGcbsj 6FN6c http://www.youtube.com/watch?v=mjcyUI90wE

Income statement

Cash Flow statement

Balance sheet

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

Strategic Option Objective

B
Strategy Formulation Tactics Controls

A
Strategic Analysis

The Strategic Entrepreneurship Plan

Table of Contents & Executive Summary Situational Analysis (5 Cs; Customer, Company, Competitor, Context, Collaborators) Opportunity & Issue Analysis (SWOT, Portfolio Analysis & 4Ps) Objectives Must be SMART Strategies (Overall, Competitive, STP, 4Ps, Growth, & other strategies) Tactics
(Action Programs for strategies)

Budget, Projected Financials & Timetable Implement, Monitor & Control

(ps: this is what you should do after Q2 for your products against competitor products)

The Yellow Tail Product Portfolio

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

How Much Does It Cost To Produce Fun?

The tagline of [yellow tail]s strategic profile is clear: a fun and simple wine to be enjoyed every day
http://www.discoveryellowtail.com/news/awards-and-honors.php

SWOT: Strategic Analysis

Internal analysis The firm itself External analyis The market The competition The environment

Strengths & Weaknesses Opportunities & Threats

Strategy

SWOT Analysis
Strengths Weaknesses
Cost Advantages Financial Resources Customer Loyalty Modern Production Facilities Patents
Leverage

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

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

Threats

Changing Buyer Tastes Entry of New Competitors Adverse Government Policies

Strategic Process
Objectives Strategy
Set of carefully selected / integrated business priorities to achieve objectives

Tactics
Actual actions and operations that are necessary to execute strategy

Results to be attained before a certain date

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

Strategic Plan
Objectives Strategy Tactics

Problem

Strategic Analysis
Internal appraisal External appraisal

Strategy Formulation

Tactics

Definition of problem

Tactical Plans Resources made Execution available Strategic options Choice of one option Strategic Thrusts

Controls

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:

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

Financial Profitability Market share Sales revenue Etc

Develop short-distance routes connecting high traffic inter-cities Use only one airplane type to simplify training and inventory Dont serve food and therefore reduce cabin crew size Dont use travel agents; sell tickets directly Dont offer to transfer luggage Dont offer higher classes of service

Offensive Strategies
(4) Bypass attack (2) Flank attack

(1) Frontal attack

Attacker
(3) Encirclement attack

Defender

(5) Guerilla attack