Learning Outcomes
Upon successful completion of this module, the student will be able to satisfy the following outcomes:
- Case
o Assess how well a company's strategic choices align with firm strengths, weaknesses, opportunities, and threats, making recommendations for change in corporate-level strategy.
- SLP
o Demonstrate how CVP analysis may be used in the creation of more effective product pricing strategies.
- Discussion
o Determine which Generic Porter strategy is followed by an organization, using the Grand Strategy Selection Matrix to support choice of strategy.
Module Overview
A good strategy will outline the fundamental steps that an organization needs to take in order to achieve a set of objectives. Management develops a strategy by evaluating options available to the organization and choosing one or more of the available options.
Strategies exist at different levels in an organization, and they are classified according to the scope of their coverage.
Strategies that address which businesses a multi-business organization should compete within, and how resources will be allocated among those businesses, are called corporate strategies. Corporate-level strategies are established at the highest levels of the organization, and they involve a long-range time horizon.
Business-level strategies focus on how a company should compete in a given business. The scope of a business strategy is narrower than a corporate strategy, and it generally applies to a single business unit or strategic business unit (SBU).
A third level of strategy is the functional strategy, which is narrower yet in scope than business strategies. Functional strategies are concerned with the activities of the different functional areas (e.g., production, finance, marketing, and human resources). Usually, functional strategies exist for a relatively short period of time. Although functional strategies must support corporate and business unit strategies, they are primarily concerned with "how-to" issues.
In this module, we will be evaluating the various levels of strategies and the different means for evaluating options.
Module - Background
STRATEGIC CHOICES
In Module 3, we will concentrate our efforts on strategic alternatives at the corporate, business, and functional levels. Companies follow strategies at each of these levels, as well as at the global level.
- At the functional level, strategies are short term in nature, and refer to company functions such as marketing, manufacturing, materials management, customer service, and R&D.
- At the business level, strategies are of medium range. They include the company's market positioning, geographic locations, and distribution channels.
- At the corporate level, strategies are long term, and include options such as horizontal and vertical integration, diversification, strategic alliances, and mergers and acquisitions (M&A).
Module - SLP
STRATEGIC CHOICES
Simulation
In Module 3, you will use CVP analysis to inform the pricing of your 3 products.
You've now completed SLP2, and it the date is (once again) January 1, 2016.
You turn on the TV, and once again, the local television news anchor is talking about events that occurred on January 1, 2012.
Your decision-making process will be different this time, as you will be using CVP analysis, a technique with which you recently became familiar.
You analyze the results of the decisions you made in SLP2. But this time, you aim to improve your Final Total Score by using the CVP Calculator to help you determine a new and improved strategy.
You analyze your SLP2 results using CVP and develop your complete four-year strategy, again taking notes, documenting your reasoning.
You finish the report that shows your revised strategy for the next four years.
Session Long Project
Write a 6- to 7-page paper, not including cover and reference pages, in which you use the results from SLP2 and CVP analysis to develop a revised strategy.
Keys to the Assignment
The key aspects of this assignment that should be covered and taken into account in preparing your paper include:
1. The revised strategy consists of the Prices, R&D Allocation %, and any product discontinuations for the X5, X6, and X7 tablets for each of the four years: 2012, 2013, 2014, and 2015.
2. You must present a rational justification for this strategy. In other words, you must provide clear and logical support for your proposed strategy using financial analysis and relevant business theories.
3. Use the CVP Calculator and review the PowerPoint that explains CVP and provides some examples.
4. You need to crunch some numbers (CVP Analysis) to help you determine your prices and R&D allocations.
5. Make sure all of your proposed changes are firmly grounded in CVP analysis, on the financial and market data provided you, and on sound business principles.
6. Present your analysis professionally, making strategic use of tables, charts, and graphs.
- Time Line Summary:
SLP1
- 2015: Hired on December 15.
- Turned first report in to Sally on December 30th.
SLP2
- Time Warp 1 begins: January 1, 2016 warps into January 1, 2012.
- You realize you have to make decisions for 2012 - 2015, which you do.
- December 31, 2015 - You have gone through all four years, and you write your report to summarize how you did.
SLP3
- Despite your efforts in SLP2, you are once again taken back to January 1, 2012. You decide to use CVP analysis to revise the four-year plan you developed in SLP2. You analyze the results of your decisions from SLP2, taking detailed notes. You use the CVP Calculator to help develop your revised strategy, taking additional notes explaining the logic your decisions.