Professional Documents
Culture Documents
Generic Atrategies
Generic Atrategies
SWOT Analysis
Internal Environment
Strengths 1. 2. 3. Weaknesses 1. 2. 3.
External Environment
Opportunities 1. 2. 3.
Threats 1. 2. 3.
TOWS Matrix
Technique used in strategy formulation for combining
External analysis
Opportunities Threats
Internal analysis
Strengths Weaknesses
TOWS Matrix
From Internal Analysis (IFAS)
Opportunities: 1. 2. 3. Strengths: 1. 2. 3. SO Strategies Use strengths to take advantage of opportunities WO Strategies Take advantage of opportunities by overcoming weaknesses
Threats: 1. 2. 3.
Weaknesses: 1. 2. 3.
Business-Level Strategy
Strategic Position
Successful farms will answer a fundamental question: Where will my farm focus its resources and its passion?
Strategic Position
Is the way a firm goes to market. Is the fundamental way the firm creates value for the customer. Is the passion of the organization. Drives the organizations resource investment decisions. Is built around the firms core competencies, the firms primary skills and sources of competitive advantage.
Positioning Options
Example of Possible Positions in an Agricultural Production Firm
Low-cost, bulk commodity producer Customer-oriented specialty products producer Full-service, consumer-focused custom farming operation Efficient, partnership-focused contract animal feeder Technology-focused, cutting-edge animal breeder
Customer Focus
Adding value for customers ultimately determines a firms success. But we need to know who the customers for our product are, what those customers needs are, and how to satisfy those customers needs.
Customer Focus
Who is about determining what segment of customers we will serve.
Is it the broad market? Or a specific customer in our local marketplace?
What is about determining what the customer groups needs are that our products and services can satisfy.
Is it organic GMO-free products? Is it consistent timely delivery of the product over an entire year?
How is about exploiting our core competencies to implement value-creating strategies to satisfy our customers needs.
How can we take advantage of what we do well to deliver our targeted customers needs in a way that gives us a competitive advantage with this set of customers?
Broad
Low-Cost Leader
Coordination Differentiation
Market Scope
Niche Customization
Strategic Orientation
Core Competency
Cost Coordination Differentiation
Broad
Low-Cost Leader
Market Scope
Niche
PRICE = $8
Typically have standardized processes, limited variety, supply chain mentality, and a frugal culture
Low-Cost Leadership
Organization attempts to outperform competitors by doing everything it can to produce goods or services at a lower cost than competitors Emphasis is on operational efficiency May be achieved through process innovations Results in above average returns
Cost Leadership
What are some things that can help us be cost leaders in production agriculture?
Strategic Orientation
Core Competency
Cost Coordination Differentiation
Broad
Low-Cost Leader
Differentiation
Market Scope
Niche
Differentiation
Organization attempts to create a product that is perceived by customers as unique in some important way Emphasis is on strategic positioning May be achieved through Superior quality Superior customer responsiveness Superior innovation Results in above average returns through premium pricing
Differentiation
PRICE = $12 PRICE = $10 PROFIT = $6 PROFIT = $5 COST = $6
DIFFERENTIATION
Differentiation Strategy
Integrated set of actions is designed to produce or deliver goods or services that customers perceive as being different in ways that are important to them. Firms following this business-level strategy rely on unique features of their product or service to drive superior margins to those of their competitors. A firms product can be differentiated in an almost countless number of ways, such as:
Unusual features Responsive customer service Rapid product innovation Technological leadership Perceived prestige and status Different tastes
Differentiation Strategy
What are some activities that we can focus on to differentiate ourselves in the production agriculture marketplace?
Strategic Orientation
Core Competency
Cost Coordination Differentiation
Broad
Low-Cost Leader
Coordination Differentiation
Market Scope
Niche
Coordination
Focus: playing the facilitator role linking suppliers and customers Competitive advantage based on innovative relationships/linkages Key strengths in ability to control without ownership, identify market opportunities Push for a more coordinated agriculture to create a potential role for such organizations
Coordination
May add substantial value through reconfiguring the supply chain Heavy focus on soft assets, information and people, as opposed to hard assets, plant and equipment Real focus on building trust among channel partners, developing incentive, and payment mechanisms that keep partners engaged
Broad
Low-Cost Leader
Coordination Differentiation
Market Scope
Niche Customization
Customization
Focus: developing highly tailored solutions to fit a specific set of customers Deep relationships with the segment of choice Can be applied to differentiation, cost minimization, coordination Pursued by both large and small firms in an increasingly fragmented market
Customization
Focus: solving problems/creating results for chosen segments Unparalleled tailoring of solutions Support tailoring through range of products and services consistent with needs, seamless access to resources, localized decision making Customer wins/we win attitude
Summary
Successful farms of the new millennium will:
Thoroughly understand the dimensions of the external environment Not take the market environment as a given, and will drive change through their own actions Choose a strategic position that is consistent with the marketplace and their own competencies Deliver on the critical elements supporting that strategic position
Exercise
Consider one of the business units on your farm. Who are the customers you are trying to serve from this business unit? What opportunities and threats exist for this business unit? What strengths and weaknesses do you have in this business unit relative to your competitors? Using the TOWS matrix, is there a set of lowcost strategies you can pursue for this business unit? What about differentiation strategies?