A Dynamic View of Strategy Presented by: Anne, Kosit, Blake.

A Dynamic View of Strategy

Presented by:

Anne, Kosit, Blake

Activity

What would you do if you were……

Strategy

The Big Three!Who? – who are the customers?

What? – What are the products and/or services?

How? – How will the company go about their business?

Nespresso

The Initial Nespresso strategy was not working!

The Nespresso subsidiary was faced with choosing a new strategy for the product.

Who?

What?

How?

What is Nespresso?

http://youtube.com/watch?v=DfyeXrdZZ1o

Edward Jones

Securities

Competitors Include – Merrill Lynch, Smith Barney, Paine Webber

Differentiated their strategy to compete

Additional Examples

Edward JonesWho – Customers are individual investors who

live in areas with a sense of communityWhat – Long term and low risk investmentsHow – Focus on the end customer, never

manufacture a product but instead offer products from reputable sources

Edward Jones differentiates itself by its strategy

Uniqueness is Transitory

A position’s uniqueness will not last forever.

New strategic positions will be emerging continually.

Example: Xerox

Continually Emerging New Positions

Dominant competitors

- establish unique strategic positions in their respective industries.

Traditional competitors

- imitate their predecessors in an attempt to wrest market share from them.

Strategic innovators

- create a new market and run away with huge chunks of the market.

Continually Emerging New Positions

Industry Dominant Competition Traditional CompetitorStrategic Innovation

U.S. airline American Delta, United, Northwest Southwest

Car rental Hertz Avis , Europcar, National Enterprise Rent-A-Car

U.S. television broadcasting

NBC CBS, ABC CNN

U.K. banking Natwest Lloyds, Barclays First Direct

Earth- moving equipment

Caterpillar International Harvester, John Deere, J.I. Case

Komatsu

Steel U.S. Steel Bethlehem, Inland, National Nucor

U.K. supermarket Sainsbury’s Tesco, Asda, Waitrose Flanagan’s

Coffee General Foods (Maxwell House)

Procter & Gamble (Folger’s), nestle (Nescafe), Sara Lee (Douwe Eqberts)

Starbucks

U.K. insurance Norwich Union Prudental, Royal Sun Alliance Direct Line

Photocopier Xerox IBM, Kodak, Ricoh Canon

U.K. airline British Airways Virgin Atlantic, British Midlands, other European carriers

EasyJet

Securities Merrill Lynch Smith Barney, Dean Witter, Paine Webber Edward Jones

Computer IBM NCR, Control Data Microsoft

Table 10.2 Undermining Established Strategic Positions

Canon’s market share in the copier business jumped from

0% to 35% in about 2 years.

Grow from a chain of 11 stores and sales of $1.3 million in 1987 to

280 stores and sales of $163.5 million in 5 years.

Preparing for the Unknown

Option One: Become the Innovation

Option Two: Exploit someone else’s innovation

Being Ready

Why many companies failed?Lacking competencies Being a late adopterTrapped in customary way of competing Not effectively manage the organization

How to prepare for innovation?

Monitoring system to identify turning point

- Focus on Strategy > $$$

- Company’s performances, i.e.

employees’ morale, customer

satisfaction, and distributor feedback

How to prepare for innovation?

Prevent cultural and structural inertia- A culture welcoming change and learning

- Paul Cook (founder of Raychem)

“to make the company' own products

obsolete everyday”.

How to prepare for innovation?

Develop process allowing experimenting with new ideas

- Experimentation help reveal potential of success of new innovation

- “let chaos reign” ( Intel’s Andrew Grove)

How to prepare for innovation?

Prepare for required competencies- Internal Building the appropriate

competencies and skills

- External look at outside to notice

a significant change

How to prepare for innovation?

Manage the transition

- Decide to adopt the new position

- Keep balance between the “old”

and the “new”

Dynamic Strategy

Find UniqueStrategic position

Complete in this position

By becoming better than others

Make transitionFrom old position

To new

Search for newStrategic Positions

Manage old and new Positions simultaneously

Jump into the new business

Essay questions

1. If you were IBM, how should you respond the Dell entrance in the early 1980s?

2. What is a correlation between a dynamic strategy and distinctive strategy?

3. Identify and describe the 3 big questions that a company choosing a new strategy must answer?

Thank You

It’s fun time