Business Model

- concerns whether the revenues and costs from the strategy demonstrate that the business
can be profitable and viable.
Building Blocks
Value Propositions
Key Partners
Key Activities
Key Resources
Customer Relationship
Customer Segments
Cost Structure
Revenue Streams
Competitive Positioning
Being known for one thing

Scope

Source

The company could target a

Broad market or
A narrow market

Low Cost Leader

Differentiator

Generic Strategies

Broad

Overall Cost Leadership

Overall Differentiation

Scope
Narrow
Cost Focus

Differentiation Focus

Low Cost

Differentiation
Source

Generic Strategies
Companies that tried to do more than one strategy frequently got stuck in the middle.
Its hard to differentiate a product when low cost strategy is aggressively pursued.
Products are not different enough and not cheap enough.
Long Term Objectives
Represent the results expected from pursuing certain strategies
Performance Measures by Organizational Level
Corporate Level
75% based on long term objectives
25% based on annual objectives
Division Level
50% based on long term objectives
50% based on annual objectives
Function Level
25% based on long term objectives
75% based on annual objectives
Desired Characteristics of Objectives
Quantitative
Measurable
Realistic
Understandable
Challenging
Hierarchical
Obtainable
Congruent among Departments
Benefits of having Clear Objectives
Provide Directions
Allow Synergy
Aid in evaluation by serving as standards
Reduce uncertainty
Minimize conflicts
Aid in allocation of resources
Aid in design of jobs

Provide basis for consistent decision making