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If a company has $1 million to spend on a new strategy and is considering market development versus product development, what determining factors would be most important to consider? Explain your reasoning. BUS 4302, Business Policy & Strategy 1 Course Learning Outcomes for Unit IV Upon completion of this unit, students should be able to: 1. Analyze the nuances of strategic management. 1.1 Analyze the company’s strategy, mission, and organizational structure. 2. Correlate the characteristics of vision and mission to business success. 2.1 Explain the strategy, mission, and organizational structure of a successful company. 5. Diagram the strategy analysis process. 5.1 Describe the strategy analysis process. Course/Unit Learning Outcomes Learning Activity 1 Unit Lesson Chapter 5 Chapter 6 Unit IV Project 2 Unit Lesson Chapter 5 Chapter 6 Unit IV Project 5.1 Unit Lesson Chapter 5 Chapter 6 Unit IV Project Required Unit Resources Chapter 5: Strategies in Action Chapter 6: Strategy Analysis and Choice Unit Lesson Previously, we have discussed how to assess your internal and external factors. In this unit, we are going to expand on that by discussing strategies. Chapters 5 and 6 will really focus on past strategies that have been successful and effective. These will include formulation and an introduction of the SWOT analysis. This unit will also begin laying the framework for a successful strategic plan. The final project for this course will be initiated during this unit and will build upon each section as we move forward in the term together. Strategy Formulation Every strategy also encompasses long-term and short-term objectives. We will begin with a discussion of long-term objectives and how these impact the strategy. A long-term objective is defined as the results expected from pursing specific strategies. These objectives generally take between two to five years to attain. The objectives must be attainable and realistic for the organization to achieve. Common long-term objectives include growth, profitability, earnings, and social responsibility. Each level within the organization can have UNIT IV STUDY GUIDE Strategy BUS 4302, Business Policy & Strategy 2 UNIT x STUDY GUIDE Title long-term objectives. This includes the levels of corporate (highest level), division (middle level), and function (lowest level) within an organization. An example of a long-term oriented company could be your local taxi company and its plans to remain competitive in the digital age. For example, taxis have interactive apps like Curb, which allow riders to request a ride, split fares, and even receive a digital receipt. Companies like Uber and Lift are now competing heavily with the taxi industry. Financial Objectives Financial objectives are similar to long-term objectives but are more specific to financial themes. Examples of financial objectives include growth in revenues, profit margins, cash flow, and other financial considerations. There is a delicate balance when considering financial objectives. An organization may create a short-term objective that may be harmful or even detrimental to the organization in the long term. Let us use Kodak as an example; their short-term objective led to their overall failure. Kodak has been around for several decades as the lead photo developer. They produced an array of products to include the introduction of the digital camera. What Kodak failed to do was to ensure they remained technologically savvy with their digital camera production and trademarks. Ultimately, the digital camera (their own creation) put them behind in the industry. Because Kodak did not have the foresight to create a long-term (and financial) objective, they were not able to remain relevant to consumers and ultimately lost market share. Strategic Model There are many different models that can be incorporated into an organization’s strategy. Most organizations incorporate one strategy to achieve their goals and expected outcomes. A few examples of different types of strategies include: forward integration, market penetration, product development, and liquidation. Below are examples of how these strategies could be applied: • Forward integration: Think of Apple Pay, which would enable the customer to be validated and pay for physical merchandise from a brick and mortar retailer via his or her phone. • Market penetration: Coca Cola personalized cans and bottles with individual names and catch phrases, which has increased the popularity of the brand and are an example of this strategy. This personalization has increased Coca Cola’s bottom line and presence in the domestic and international households. • Product development: Think of a drug manufacturer creating a vaccine to prevent COVID-19. This product would serve a specific purpose and, if successful, would benefit the world. • Liquidation: An example would be Blockbuster Video selling all of their merchandise before closing all of their stores. This is an opportunity to pay creditors and investors a portion of what is owed before dissolving. • Bankruptcy: You may be asking yourself how bankruptcy is a strategy, but it is a potential strategy to assist an organization restructure or dissolve itself. There are five varying types of bankruptcy in the United States. The specific types are Chapter 7, Chapter 9, Chapter 11, Chapter 12, and Chapter 13. The below chart outlines the different chapters of bankruptcy: Bankruptcy Chapter Description Chapter 7 All of the organization’s assets are wiped out in order to eliminate debt. Chapter 9 Municipalities or incorporated areas that file this bankruptcy do not have to shut down vital operations. Chapter 11 This type allows for reorganization and a comeback. An example is an airline that reorganized and comes back. Chapter 12 This provides special relief to family farmers. Chapter 13 Similar to Chapter 11, this provides relief to small businesses. The specific chapter a company may choose would depend on its size and goals. For example, Kodak would not file for Chapter 12 bankruptcy as it applies to family farms. The company must also consider whether or not they want to dissolve the business or try and start fresh. However, in looking to start fresh, the company must determine how it will reorganize itself to avoid future issues. BUS 4302, Business Policy & Strategy 3 UNIT x STUDY GUIDE Title Strategy Analysis The SWOT matrix is a tool to assist managers and leaders identify strategies within and outside their organization. The strength, weakness, opportunity, and threat (SWOT) model has four strategies used to evaluate and compare the organization related to its strength and weaknesses. This analysis is often used to compare and contrast an organization against other competing organizations. The analysis is also used to evaluate its internal operations to determine where improvements can be made. The chart below outlines the functions of a SWOT matrix: Strategy Description SO: Strength-opportunity Evaluation of the organization’s internal strengths to identify external opportunities WO: Weakness-opportunities Improving internal weaknesses by taking advantage of external opportunities ST: Strength-threats The reduction of external threats WT: Weakness-threats Reducing internal weaknesses The SWOT matrix and strategy go hand-in-hand. Suggested Unit Resources In order to access the following resources, click the links below. The chapter presentations below will provide you with additional information on this unit’s concepts. Access the Chapter 5 Presentation. Access the PDF version of the Chapter 5 Presentation. Access the Chapter 6 Presentation. Access the PDF version of the Chapter 6 Presentation. https://online.columbiasouthern.edu/bbcswebdav/xid-136194220_1 https://online.columbiasouthern.edu/bbcswebdav/xid-136174355_1 https://online.columbiasouthern.edu/bbcswebdav/xid-136194210_1 https://online.columbiasouthern.edu/bbcswebdav/xid-136174359_1 Course Learning Outcomes for Unit IV Learning Activity Required Unit Resources Unit Lesson Strategy Formulation Financial Objectives Strategic Model Strategy Analysis Suggested Unit Resources