CINDY CAÑETE PASTRANA

4 T H YEAR
BS ENTREPRENEURSHIP
 CHAPTER 3
CRAFTING BUSINESS AND SUPPLY
CHAIN STRATEGIES

Distribution Planning and Control

By David Frederick Ross
 Corporate planners must align corporate-level goals, strategies, and
growth expectations with today’s economic and market place realities

THE FIRST STEP IN THE CORPORATE PLANNING

PROCESS IS:
The crafting of a comprehensive strategic business plan.
 The process begins with an analysis of the external and internal
business environments

The EXTERNAL ENVIRONMENT

reveals the enterprise’s
competitive strengths, the
forces driving marketplace
change, the actions of
competitors, opportunities for
future success, and
attractiveness of the firm’s
products and services to
customers.
The INTERNAL ENVIRONMENT
reveals the internal strengths
and weaknesses (resources,
core competencies, capacities,
and capabilities) and how they
enable the enterprise to
succeed in its competitive
space.
Scanning the External Business Environment

7 Critical Factors to be
considered by
Business Strategic Planners
 Competitive
Environment

Porter’s five-forces model of competition

1. The Natural Competition
2. Potential of new entrants into the industry
3. Threat of substitute products
4. Pressures stemming from the strength of
suppliers.
5. Pressures stemming from the power of the
customer.
Scanning the External Business Environment

7 Critical Factors to be
considered by
Business Strategic Planners
Scanning the Internal Business Environment

The purpose of internal business scanning is to identify these internal

strengths and weaknesses and to understand how companies can
capitalize on the strengths while marginalizing the weaknesses.
Scanning the Internal Business Environment

Internal Environmental
Scanning consists of 6
Assessments
DEFINING THE ENTERPRISE VISIION, MISSION, AND GOALS
Establishing the Enterprise Vision

The APICS Dictionary defines the strategic vision as “the shared

perception of the organization’s future – what the organization will
achieve and a supporting philosophy."
Establishing the Enterprise Mission

The enterprise mission consists of the matrix of values, beliefs, and cultural attitudes
that define the company’s present business scope and purpose.

Hayes and Wheelwright

define it as “the set of guiding principles, driving forces, and ingrained attitudes that
help communicate goals, plans, and policies to all employees and that are reinforced
through conscious and subconscious behavior at all levels of the organization.”
Setting Enterprise Objectives

Enterprise Objectives are aligned with the company’s vision and mission
and serve as a roadmap to success and guide decision-making, resource
allocation, and performance evaluation.

• The key to effective enterprise objectives are that they are quantifiable and
contain a deadline for achievement
Crafting Corporate Strategy

Corporate strategic planning is described as the process of establishing

the courses of action an enterprise must follow if it is to realize the
organization’s mission and objectives.

Strategies provide answers to such questions as;

• “How are enterprise resources to be used to achieve competitive objectives?”
• “How should the firm’s portfolio of products be marketed to customers?”
• “What are the business’s growth targets for a specified time frame.”
3.1.2.4 Crafting Corporate Strategy

The development of business

strategies:
• has four boundaries
• occurs on four levels
• The corporate level strategy is the highest level
strategy in an organization.

• The corporate strategy defines the organization’s

overall direction and the high-level ideas of how
to move towards it.

A corporate strategy is generally broader

than the other strategy levels. Strategies at
this level are more conceptual and futuristic
than the other level strategies. They usually
span a 3-5 year period.
• Sitting under the corporate strategy, the
business strategy is a means to achieve the goals
of the specific business units in the organization.

• The initiatives and objectives within each

business unit’s strategy will be focused on
gaining a competitive advantage in the particular
market in which the business unit operates.

• There are different types of business level

strategies organizations adopt depending on the
competitive advantage they want to gain.
Business Unit Strategy

Effective strategies enable business units to establish the basis by which a

competitive advantage is achieved and maintained.

• Low-cost provider
• Broad differentiation
Porter's five generic competitive • Best-cost provider
strategies • Focused low-cost provider
• Focused differentiation
• Functional-level strategy refers to a functional
area’s approach to achieving corporate and
business unit objectives and strategies by
maximizing resource productivity.

• are designed to address the unique challenges

and opportunities within each functional area
 • Operational level strategy refers to the means
the companies use to accomplish overall
objectives.

• focuses on the day-to-day actions and tactics

needed to run the business, manage processes,
and implement change effectively

• Through the development of operational

strategies, the firm can evaluate and implement
efficient systems for the use of resources and
personnel.

• Without a stable operations strategy, companies may not be

able to keep up with the changing markets and could start
to lose to trendier competitors.
3.1.2.4 Crafting Corporate Strategy

Porter 5 generic categories

Business Unit Operating Strategy involved in business unit
operating strategy creation and
The objective of operating unit strategies execution.
is to ensure that the resources and
capabilities of the organization realize the • Inbound logistics
competitive advantages being sought by • Operations
the business unit and detailed function. • Outbound logistics
• Marketing and sales
• Service
DEFINING SUPPLY CHAIN STRATEGY
CRAFTING THE SUPPLY CHAIN STRATEGY

SUPPLY CHAIN STRATEGY

• A supply chain strategy is an overarching plan for the planning,

design, execution, control and monitoring of supply chain activities.

• Supply chain strategies are created in order to maximize efficiency,

minimize costs and respond quickly to customer demands.
DEFINING SUPPLY CHAIN STRATEGY

A proactive supply chain strategy highlights the question of how value is to

be created.

According to the research of Lee et al., supply chain strategy creates value through five functions.

• Operating cost reduction

• Value creation through increasing revenues.
• Competitive advantage through differentiated customer
service capabilities.
• Competitive advantage through strategic supplier
engagement.
• Value creation through long-term equity improvement
the development of supply chain strategies consists of three major
components:

SUPPLY CHAIN STRATEGY

PERFORMANCE

PERFORMANCE PERFORMANCE PERFORMANCE

ATTRIBUTES DRIVERS MEASUREMENTS
consists of the consists of
consists of the fundamental activities the performance
attributes that describe performed by supply metrics that indicate the
the performance of chain resources that success of the supply
supply chain resources. enable it to drive chain strategy.
competitive advantage
for the business.
 SUPPLY CHAIN STRATEGY PERFORMANCE ATTRIBUTES

customer-
focused
performance
attributes

internally-
focused
performance
attributes.
3.2.3 SUPPLY CHAIN STRATEGY PERFORMANCE ATTRIBUTES

the development of supply chain strategies consists of three major

components:

SUPPLY CHAIN STRATEGY

PERFORMANCE

PERFORMANCE PERFORMANCE PERFORMANCE

ATTRIBUTES DRIVERS MEASUREMENTS
consists of the consists of
consists of the fundamental activities the performance
attributes that describe performed by supply metrics that indicate the
the performance of chain resources that success of the supply
supply chain resources. enable it to drive chain strategy.
competitive advantage
for the business.
3.2.4 PROCESS DRIVERS OF SUPPLY CHAIN PERFORMANCE
3.2.2 STAGES OF SUPPLY CHAIN STRATEGY

Hayes and Wheelwright four-stage model

3.2.2 STAGES OF SUPPLY CHAIN STRATEGY
3.2.4 PROCESS DRIVERS OF SUPPLY CHAIN PERFORMANCE

Customer focus
Being responsive to the market
strategy requires that it must be
able to meet both the daily
requirements as well as the long-
term needs of the customer by
developing a unique set of
competencies and capabilities
that give the market strategy a
distinct of competitive
advantage.
 3.2.4 PROCESS DRIVERS OF SUPPLY CHAIN PERFORMANCE

SOURCING
Is about deciding who will perform
a particular supply chain activity.

Companies generally acquire inventories

from two sources.

• The first is finished goods that are

purchased.
• The second type of sourcing is to
produce the needed goods and
services.
 3.2.4 PROCESS DRIVERS OF SUPPLY CHAIN PERFORMANCE

INVENTORY

• It involves deciding the right inventory

level that must be maintained at all
times.
• Customer demand, lead time,
production rate, etc. ., are the various
factors that must be taken into
consideration.
• The main goal is to minimise the cost of
inventory while ensuring timely
delivery.
3.2.4 PROCESS DRIVERS OF SUPPLY CHAIN PERFORMANCE

TRANSPORTATION
APICS Dictionary defines transportation as “The function of planning, scheduling, and
controlling activities related to mode, vendor, and movement of inventories into and
out of an organization.”

• The availability of inexpensive, efficient, and easily

accessed transportation activates several critical drivers
of competitive advantage
3.2.5 APPLYING THE SUPPLY CHAIN STRATEGY MATRIX