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5-Part Process for Building a Business Strategy

PART ONE: Build a strategic business plan beginning with defining the vision and mission statements.

Step 1: Your job is to identify five criteria that you believe are crucial to devising good mission statements.

Step 2: Identify five criteria you think are critical to good vision statements.

Step 3:
- List the five criteria you have chosen for mission and vision (5 each). This can be a bulleted list.
- Justify your choices. Explain why you think these particular criteria are important.
- Compare what the two lists have in common and in what ways they differ.

PART TWO: Develop the component of our strategic toolkit that relates to 5-Forces and PEST Analysis.

Step 1: The first step in an external analysis is to determine the industry to which your target business is classified. Usually this is done through North American Industry Classification System, or NAICS code. Find a website or library reference that would enable you to determine the NAICS code of any business.

Step 2: Research web and library sources that would give you the kinds of data you would need to conduct a Porter 5-Forces analysis. We are not looking for sites that describe the 5-Forces, but for sites that would have data that you will be able to use to analyze the degree of competition in an industry, or the ease of substitution, for instance. Typically, they are government sources providing statistical data, industry or trade magazines or journals, general business publications, finance websites, websites for trade associations, etc.

Step 3: This is a two step process: First, determine what kinds of information you would need to evaluate each of Porter's forces (see the background materials), and then find a source that will give you that information. Find a minimum of 2 different sources for each of Porter's Forces. Then research web and library sources that would give you data to support a PEST analysis. Find at least 2 different sources for each PEST variable.

Step 4: List your resources from steps 1-3 above. For each source, provide a title and a URL, if applicable. Write a short paragraph explaining what information is available, how it would be useful in an external analysis, and critiquing the source (for example, what are the limitations of the source? Is one better than the other? Why?)

PART THREE: Discuss the process and utility of conducting an internal analysis as a means of critically assessing a company's strengths and weaknesses. Two different tools of methods were discussed: The Value Chain Analysis and the Resource Based View.

Step 1: RBV is based on the concept of the creation of economic rent though the company's distinctive capabilities. Thus, the first step is to find a way to value a firm's economic rent or Economic Value Added (EVA). A firm's EVA is the amount of capital it generates above and beyond the cost of doing business. Find out how EVA is measured and how you can determine a company's economic rent. According to RBV, a firm's competitive advantage is driven by its ability to manage its unique capabilities and resources to achieve above average returns.

Step 2: Resources are the inputs into a production process. They can be capital, equipment, patents, skill sets of individual employees and/or managers, financial resources, etc. Resources can be tangible or intangible. Individually, they may not necessarily lead to a competitive advantage - it is how they are used and the synergies they create that make them strategically valuable. Research web and library sources that will give you data on a company's unique resources. Find a minimum of 2 different sources for data and information related to each of the following 6 resources, noting that some sources may give you information on more than one factor:
Tangible Resources
1. Physical Resources
2. Financial Resources
3. Human Resources
Intangible Resources
1. Technical Resources
2. Intellectual Resources
3. Goodwill

Step 3: Distinctive capabilities are those competencies possessed by a firm that cannot be copied or can be replicated only with great difficulty or resources. Research web and library sources that will give you data on a company's unique resources. Find a minimum of 2 different sources for data and information related to the following:
1) Architecture,
2) Reputation, and
3) Innovation.

Step 4: List your resources from steps 1-3 above. For each source, provide a brief paragraph explaining what information is available, how it would be useful in an internal analysis, and critiquing the source (for example, what are the limitations of the source? Is one better than the other? Why?)

PART FOUR: Strategy Implementation

Step 1: Define the organizational structure best suited for the target company.

Step 2: Define the systems the organization should use to operate. Budgets, and performance evaluation.

Step 3: Define the organizational culture of the target organization.

Solution Preview

Greetings. Please review the following for your solution. I attempted to keep the resources as general as possible in order to help you apply this to any target company. There were a few areas, however, that I thought a specific example would help illustrate the concept. I chose Southwest Airlines as the example company--it represents a successful business in a struggling industry and I thought it would capture a few effective examples of the ideas.

-Benjamin
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PART ONE: Vision, Mission, Goals

Criteria for Mission Statement
1- Define the purpose (Adams, nd.)
2- Define the client
3- Define core values (McNamara, 2010)
4- Be universally understandable (Zahorsky, 2011).
5- Be as concise as possible (McNamara, nd.)

Criteria for Vision Statement
1- Provide a vivid image of the organization as conceived (Adams, nd.)
2- Provide visionary goals (QuickMBA.com, 1999)
3- Inspire and direct employee action (McNamara, nd.)
4- Summarize client expectations
5- Be as concise as possible

> Building a Mission Statement
The first criterion for a mission statement is to define the purpose of the organization. The overall purpose can be quickly lost to employees consumed by daily tasks. This element should answer the age old question: "why are we/you here?" Clearly defining the organizational purpose allows enterprising employees to tailor their actions to best support the overall goal.

An effective purpose without a target audience, however, is just noise. Thus, the second criteria: defining the organization's client. While this element should not always be taken as an exclusive definition of the client--"it should define the core customer base in order to define the weight of effort.

The actions behind such effort are ultimately guided by the third criteria: the core values of the organization. In many ways, this element is the most important link between strategy and tactics. Core values "represent an individual's highest priorities and deeply held driving forces and beliefs," (Heathfield, 2011). While organizational leadership cannot define personally held priorities and beliefs, it certainly can dictate what those priorities and driving forces are professionally. Effectively aligning these core values with the purpose of the organization allows leaders to also align autonomous decisions across the organization toward the common goal.

The last two criteria: universally understandable, and concise, are closely related--and enable the first three to a great degree. Because effective mission and vision statements are so powerful, they are also often misused--they have often been "hijacked by business school professors and consultants, [and] have largely devolved into fatheaded jargon. Almost no one can figure out what they mean," (Welch, J. & Welch, S, 2008). Ensuring that the mission statement is universally understandable allows all stakeholders--from the lowest ranking employee, all the way to the most sophisticated customer--"to clearly understand the organization. Add to this a general rule of thumb-- the more concise a communication, the more easily understood it becomes--and necessity for the final criteria becomes clear.

> Building a Vision Statement
Another useful tool for strategic management is the vision statement. Similar to the mission statement, the first criterion of a vision statement should be broad. Providing a vivid image of the organization offers tangible goals for stakeholders. Articulating a mental image of the organization as it should be provides holistic direction for employees.

This direction should be forward looking--the second criteria for effective vision statements. If the image constructed in element one describes the ideal organization, then criteria two sets that image moving into the future. Movement--like any progress--requires effort. This is where criteria three steps in. While any business organization motivates people with compensation, effective organizations motivate people with more than money. Establishing inspiration-based effort in employees yields results far beyond anything the time-clock can offer. Focusing this effort brings autonomous employee action in line with strategic planning.

The first three criteria are primarily internally focused, leaving large groups of stakeholders without a clear vision of their future with the organization. Thus, criteria four specifically addresses external stakeholders. Clients--and potential clients--should quickly realize what their expectations of the organization should realistically be. This is a dangerous element of a vision statement--these expectations must be both high, yet realistically attainable over a realistic time horizon. If not, then the vision statement becomes meaningless hyperbole. Wrapping up required criteria for a vision statement - just like the mission statement--is the requirement to be concise. Keeping a vision statement useful requires stakeholders to remember"keeping it short" will enable this (Heathfield, 2011).

>Mission vs. Vision
Strategic management is the modern pastime of kings. This is not to say it is exclusively practiced by statesmen, CEOs, or company presidents--rather, effective practical leadership requires strategic management. Leaders determine --where an organization is going over ...

Solution Summary

Five part solution that is general enough to be tailored to any company but highly detailed, exploring strategic management process. Begins with defining a vision and mission statement, progresses through detailed illustration for how to conduct a SWOT analysis, and finally discusses strategy implementation methods. 2954 words with many, many references and resources.

2,800 words with references and specifics for conducting a strategic analysis of a target company. APA format.

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