The sketch of strategy

Definition:

According to Drucker, Strategy is a pattern of activities that seek to achieve the objectives of the organization and adapt its scope, resources and operations to environmental changes in the long term.
In other words, strategy includes the following elements.
Strategy is more of a long term issue, ie a change in strategy involves a change in the following elements which may not be achieved in the short term.

Elements	Explanations	Examples from companies
Core activities	Ranging from Inbound logistics Operations Outbound logistics Marketing and sales After sales service Procurement HR Technology Firm infrastructure Gucci – Technology (Design); Production (Operation); Marketing and sales – rely on high end physical stores. Airbnb – maintain strong hosts networks
Core resources	Ranging from Brands Supply chain Customer base Management Intangible assets such as broadcasting rights Coca-Cola – Brands Toyota – Supply chain with Just In Time (JIT) inventory management Alibaba – Online marketplace Tesla – Battery production Uber – Surge pricing technology to adjust prices based on changes in demand
Value propositions	Define good, bad and neutral experience Try to differentiate from other products or services Apple – States smartphones should be more than a collection of features Uber – Tab the app and get a ride. This effectively differentiates from traditional taxi (need phone calls to dispatchers of where you need to be. Payment in cash) Zara – Fast trend following fashion items Wikipedia – Provide knowledge to other people
Customer relationships	Ranging from: Personal Assistance – Using emails or point of sale by having a real customer representative. Dedicated Personal Assistance – Banking service and luxury stores. Self-Service – Ikea: customers need to collect and assemble furniture themselves. Automated Services – Meituan: provide automatic ranking for different types of services. Communities – GoDaddy: for technical problems in servers, submit a ticket in communities and technical staff will help. Co-Creation – YouTube: invite customers to publish contents for public use. Tesla – To acquire customers through test drive and other customers events and retain customers through maintenance Ikea – To retain customers by offering family card to allow members to enjoy discounted products Airbnb – To provide home insurance to hosts to encourage them to provide their homes to other travellers
Channels	Ranging from: Physical stores Online such as social media Amazon – online sales Luxuries – Physical stores Apple – Combination of physical stores and online sales
Customer segments	Ranging from: Celebrities Fashionistas Generation Z Millennials Business to Business (B2B) or Business to Consumer (B2C) Airbnb – Price conscious travellers and hosts Alibaba – B2C and B2B online buyers Ikea – Students and young families Tesla – Early adopters of new technology Uber – Customers who do not want to own a car or drive themselves
Cost and revenue structure	Ranging from: Low cost and low price High cost and high price Different products or services offered	Joseph Cheaney & Sons (shoes) – UK quality; hand made and high price. PRIMARK – Low price fast fashion Irish retailer. Tesla – Direct sales of car models and licensing agreements with Toyota and Mercedes for Electric Power Train Designs Wikipedia – Community donations Uber – Commissions from each ride
Key stakeholders	Customers Local suppliers Governments Investors Influencers (bloggers) Management team Gucci – Giving Gucci products to bloggers (influencers) Airbnb – Legal institutions. Paris banned Airbnb Alibaba – Work with Alipay to allow customers to make payments online. Wikipedia – Community members for quality control over contents

Examples of business models:

The following business modes could be used together. For example, McDonald uses both franchise mode together with the bundling mode.

Number	Business models	Explanations	Examples of companies
1	Subscription model	Usually pay a monthly fee for recurring service.	Baidu Cloud; Kugoo Music
2	Bundling model	Sell two or more items together at a lower price than a single item.	McDonald offering value meals
3	Free + Premium model	Free access to basic service with additional fees to be paid if other services to be used.	Wind (A financial analysis software) Financial Times (FT)
4	Razor Blades model	High margin items followed by low margin items.	iPhone + Apps from apple store
5	Product to service model	Customers do not need to buy the asset but to simply pay for the service to achieve what they want.	Uber Mobike (Meituanbike)
6	Leasing model	Businesses buy big ticket items and lease them to others.	Enterprise Rent-A-Car (Similar to car.ctrip.com); U-Haul (Moving equipment and storage rental company in the US)
7	Crowdsourcing model	Receive information from different users from the internet.	YouTube Tiktok
8	One-for-one model	Businesses donate an item to a charitable source for every item received or purchased.	TOMS (shoes and accessories) - for every pair of shoes sold, TOMS would provide a new pair to a person in need.
9	Franchise model	Franchisor allows franchisee to use the idea to start its business. Franchisor receives prepaid income and share its revenue.	McDonald Subway
10	Producer model	Businesses produce the final product with its components being produced by other companies.	Apple Dell
11	No frills model	Focus on basic items with low price.	H&M – Staff are mainly responsible for refill racks and shelves but not meant to help customers in their shopping experience. McDonald’s – Standardized restaurants with cheap price which is unlike high end restaurants where customers have to be served. China United Airlines – Budget airline with low ticket price

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Categories: : Strategic Business Leader (SBL)