Stage 1: Strategic Direction

This is where you will answer the question "Who do we want to be?". Strategy is all about how - how it will achieve a competitive advantage, how management intends to grow the business (NPD is only one type of growth strategy), how it will gain market share, etc. Strategy therefore consists of the competitive moves and business approaches that management employs to grow the business, attract and please customers, compete successfully, conduct operations, and achieve the desired levels of operational and financial performance. Within large organizations strategy is developed at four levels:

  1. Corporate level strategy (developed for large diversified corporations that own many businesses)
  2. Business level strategy (for single business firms)
  3. Functional level strategy (for each of the functional areas of the business such as marketing, operations, and human resources)
  4. Operational strategy (strategy developed for strategically important activities, e.g. advertising, website operations)

For this exercise you will focus on business level strategy. Corporate level strategy is not relevant here, and you will develop functional and operations strategy in stages 3 and 4 of the NPD process.

At the business level you will compete the following tasks:

  1. Craft your vision, mission, and values statements: The vision statement takes the long view of the future and describes who you will be in the future, that is, what can be. The mission describes what is and describes why the organization exists, who it serves and what function is performs. The values reflect how the business will conduct its affairs, and its responsibility to its stakeholders, its customers, employees, community, and shareholders. 
  2. Develop a generic business strategy: Will you pursue a low cost strategy, or a differentiation strategy? You must choose one, since you cannot do both.
  3. Develop a competitive advantage strategy: How will you achieve market leadership in your chosen market segment?
  4. Develop your business model: The business model describes how and why the business will generate revenues sufficient to cover costs and produce a acceptable return on investment.