Firm A’s Firm A’s Actions Actions Firm B’s Firm B’s Actions Actions Rivalry Rivalry Competitive Competitive Outcomes Outcomes Industry Industry Characteristics Characteristics Organizational Organizational Characteristics Characteristics
Jan 12, 2016
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What Is Strategy?• Plan/course of action...to achieve favorable
position
• Alignment of course of action with long-run goals
• A plan that integrates the goal, action pattern/sequence, and resources into a cohesive whole
• Steps taken to achieve competitive advantage…sustainable edge over competitors
Why Strategy? …Action that Creates Value
Lynagh’s
TwoKeysTavern
TwoKeysTavern
Is Strategy Important?
• Execs, consultants, and B-school professors: “...strategy is the single most important management issue and will remain so for many years.” Business Week, Aug. 1996
• Companies that now rely on “strategy groups”:
• UPS• Applied Materials• H-P• Smucker’s
• Sears• Nokia• EDS
Beyond SWOT
Environment:Outside-in (I/O)
Firm:Inside-out
(RBV)
Strategy
Destroying Strategic Management MythsFortune, June 1997
• Life is easy as “king of the hill” Hypercompetition erodes advantages
• Industry analysis is the key to strategy
Difficult to define “industry”
• Focus on your direct competitors
Potential competitors greater threat
• For CEOs, it’s you against the world
Savvy CEO involve more people
What Makes Shareholders Rich?...Create New Wealth
• Vision looks beyond current boundaries
• Strategy as continuous process
• New perspectives, voices, conversations
• Change rules of game
• Experimentation, surprise
New Strategy Glossary• value migration: movement of growth and profit opportunities
from one industry player to another
• co-evolution: by working with direct competitors, customers, and suppliers, a company can create new businesses, markets, and industries
• white-space opportunity: overlooked areas of growth possibilities that don't exactly match existing skills
• strategic intent: corporate goal or destiny that represents a stretch for the organization, a point of view about the competitive position a company hopes to build over the coming decade
Breaking the Rules...
SOUTHWEST
Dynamic Strategy Reborn...August 1996 June 1997
Where Does Strategy Occur?
Top Management
Functional Management
What do strategists do?
• Strive for competitiveness / above-average returns
• Assess external factors causing change
• Develop internal factors that create advantage
• Navigate stakeholder landscape
• Strategic management process… Five Stages
What else…..?
External Stuff• Globalization• Technological change• Diverse and increasingly
vociferous stakeholders• Wall Street• Environment
Internal Stuff• Building capabilities &
core competence• Organizational culture• Leadership• Strategic HR• Board of Directors
1. Articulate Mission / Intent
• Sense of purpose, direction…
• In which industries does firm compete?
• How does firm compete?
• Who are customers?
• Who are competitors?
2. Set Objectives & Performance Targets
• Financial: 10% ROI and $1.55 EPS by YE99
• Strategic: Achieve lowest prices and enter 5 new country markets by 2001
3. Craft Strategy
• How to compete:
– Differentiated innovator
– Multinational markets
– Market-push
4. Implement Strategy
• Delegate responsibility to functional mgt.
• Develop action plan:
– Establish European distribution center
– Create new ad campaign for 2004 Olympics
– Launch new version of product
– Cut prices on older version by 33%
5. Evaluation and Adjustment
• Assess results relative to goals
• Identify new opportunities / constraints
• Change strategy / implementation (as needed)
DroppedStrategicActions
IntendedStrategy
StrategyCarried Out
EmergentStrategicActions
Planning vs. Strategy “Process”:What’s the Difference?
a b c d e f g h
Competitive Interaction in Chess
This Sequence:
Black: Knight b4
White: Pawn c3
Black: Bishop g4
White: Queen b5
Black: Pawn c5
Named Sequences:
Epaulette’s Mate
Sicilian Defense
8
7
6
5
4
3
2
1
Different Approaches to Strategy• Blueprint
• Structural Equation
• Drama
• Journey
• Conversation
• Stimuli-Responses
• Conversation
Firm A’sFirm A’sActionsActions
Firm B’sFirm B’sActionsActions
RivalryRivalry
CompetitiveCompetitiveOutcomesOutcomes
IndustryIndustryCharacteristicsCharacteristics
OrganizationalOrganizationalCharacteristicsCharacteristics