What are these? Brief descriptions of six basic management strategies.

What is the purpose? To help students understand how to prepare their own mission statements.

How do I use it? Print the strategies and the Mission Statement worksheet, then use them to formulate a strategy.

An organization's mission is its reason for existing. A "mission statement" describes the business in terms of goods, markets, services, and client needs. The "mission statement" should define an organization's ultimate strategic intent for profitability, growth, market share, and building competitive advantage.

Capstone firms may develop and execute any strategy.. Basic strategies include:

Cost Leader with Product Life Cycle Focus

Differentiation Strategy with a Product Life Cycle Focus

Broad Cost Leader

Broad Differentiation

Niche Cost Leader

Niche Differentiation

If you want to print a Mission Statement Worksheet, click here. When filling out the worksheet, you will:

• Develop a corporate strategy and mission statement for your team (review your Situation Analysis)
• Outline your company's Marketing, Production, and Financial intents
• Input business decisions for the first year of the game into your student software (to be uploaded via the Internet)

Cost Leader with Product Life Cycle Focus

A Cost Leader with Product Life Cycle Focus will seek to minimize costs through efficiency and expertise. Products will be allowed to age and change in appeal from High End, to Traditional, and eventually Low End buyers.

Firm Profile:

• Minimum presence in "specialty" segments (Size & Performance)
• Low R&D spending (very little repositioning & new product every 2-3 years)
• Invests in automation early in the product's life-cycle
• Spends moderately on promotion and sales
• Focus on ROE, ROS, and Profits

Differentiation Strategy with a Product Life Cycle Focus

A Differentiation Strategy with a Product Life Cycle Focus seeks to be known far and wide as the top producer of the best performing state-of-the-art products.

Firm Profile:

• Multiple product lines in targeted segments (High End, Traditional, and Low End)
• Minimum focus in other segments
• High promotion and sales investments to create maximum awareness and accessibility
• High R&D expenditures to continually reposition product lines and keep products fresh
• Unlikely to invest in increased automation or production capacity
• Focus on ROA, Stock Price, and Asset Turnover

Broad Cost Leader

A Broad Cost Leader will attempt to be the low-cost producer in every segment of the market. It will have good profit margins on all sales while keeping prices low for price-sensitive customers.

Firm Profile:

• More likely to reposition products than introduce new ones to the market
• Capacity improvements are unlikely to be undertaken (may run overtime instead)
• Automation may be pursued to increase margins
• Investments will be financed with debt and/or stock issues
• Tends to spend less on promotion and sales
• Focus on Market Share, Profits, and Stock Price

Broad Differentiation

A Broad Differentiator will seek to create maximum awareness and brand equity. It wants to be well known as a maker of high quality/highly desirable products.

Firm Profile:

• High R&D spending to keep products fresh
• Maintains a presence in all market segments
• Spends heavily on advertising and sales to create maximum awareness and accessibility
• Prices tend to be higher
• Focus on Market Share, Profits, and Stock Price

Niche Cost Leader

A Niche Cost Leader seeks to dominate the price sensitive market segments. Its aim is to set prices below all competitors — and still be profitable.

Firm Profile:

• Multiple product lines in the low-tech segments (Low End & Traditional)
• Invests heavily in automation
• Spends moderately on advertising to cost sensitive customers (sales people have more than one product to pitch to prospects)
• Investments financed with debt and/or stock issues
• Focus on ROS, ROE, and Profits

Niche Differentiation

A Niche Differentiator will seek to be well-known as a top producer of good performing products in each of the targeted segments.

Firm Profile:

• Multiple product lines in high-tech segments (High End, Performance, and Size)
• Minimum focus in other segments
• High promotion and sales investments to create maximum awareness and accessibility
• High R&D expenditures to continually introduce new product lines and keep existing products fresh
• Unlikely to invest in increased automation or production capacity
• Focus on ROA, Asset Turnover, and ROE

Summary

There is no "magic bullet" strategy in Capstone. Successful teams will develop a cogent long-range plan, align their internal functions in support of the plan, and adjust as dictated by the opportunities and realities of the market place.