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Slide 1Slide 2Why do we need strategy?Strategic Management DefinedCompetitive AdvantageToday’s Competitive LandscapeWhat is Strategy?What is Strategy?What is Strategy?What is Strategy?Time MagazineWhat is Strategy?What is Strategy?Slide 14Slide 15Slide 16Slide 17Slide 18Slide 19Slide 20What is Strategy?What is Strategy?What is Strategy?So….how can firm’s be profitable?Two Models of ProfitabilityI/O Model Environment Drives Strategy & PerformanceI/O Model Environment Drives Strategy & PerformanceSlide 28Slide 29What is strategic effectiveness?What is strategic effectiveness?What is strategic effectiveness?What is strategic effectiveness?Strategic Vision vs. MissionMission StatementsSlide 36Slide 37Slide 38Slide 39Slide 40Slide 41Slide 42Slide 43Slide 44ObjectivesTypes of Objectives Required6 Characteristics of a Good Objective6 Characteristics of a Good Objective6 Characteristics of a Good Objective6 Characteristics of a Good ObjectiveSlide 516 Characteristics of a Good Objective6 Characteristics of a Good ObjectiveObjectivesObjectivesSlide 56StakeholdersLevels of Strategic ManagementLevels of Strategic ManagementLevels of Strategic ManagementHP’s Corporate StrategyHP’s Business StrategyHP’s Business StrategyTeam Special for MondayChapter OneWhat is Strategy and Why is it Important?Why do we need strategy?The reasons why firms succeed and fail is perhaps the central question in strategyAnswers the fundamental question of the firmWhere we are now?Where we going?How are we going to get there?Strategic Management Defineddecisions and actions that determine long-term performanceformulation and implementation of plans designed to achieve objectivesunifying theme that gives coherence and direction to organizational/individual decisionsgame plan management has for positioning the company in its chosen market, competing successfully, satisfying customers, and achieving good business performanceintegrated and coordinated set of commitments and actions designed to exploit core competencies and gain a competitive advantageWhat is a competitive advantage?Competitive AdvantageWhen a firm implements a strategy that rivals can’t duplicate, or find it too expensive to do try to imitateToday’s Competitive LandscapeGlobal EconomyKnowledge IntensityInformationTechnologyTechnology Change & DiffusionHypercompetition•Strategic Flexibility•Intelligence Management•Global Perspective•Speed, Innovation & IntegrationNew Managerial MindsetWhat is Strategy? Strategy is not doing similar activities better than your rivals – that’s operational effectivenesscontinual improvement not a sustainable advantageindustry-wide cost reductions do not lead to increased profitabilityexamples: PCs, automobiles, airlinesWhat is Strategy? 1) Strategy is performing different activities or performing similar activities in a different wayWhat is Strategy? 1) Strategy is performing different activities or performing similar activities in a different wayStrategy is about positioninga) Variety-based positioningoffering a unique choice of goods/services - Chic-fil-a, GameStopb) Needs-based positioningserving most/all of a particular group of customers’ needs - Babies R Usc) Access-based positioningserving a set of customers that require unique access – Kinkos, Movie Gallery, SuperetteWhat is Strategy? 2) Strategy is about choosing a position which requires tradeoffs, choosing what not to dowithout tradeoffs, all firms would imitate vs. vs. vs. vs.Time MagazineSo why haven't American, United, US Airways and the three other full-service carriers, which lost $11 billion last year and stand to lose an additional $5 billion this year, followed the lead of the profitable discounters by cutting costs and fares? Because that's not the way their business works. They have made, and lost, their money by providing the frequent departures, quick connections, spacious seats and other amenities that have been demanded by business flyers and charging them dearly for that service — more than five times the cost of a discount fare.HARD TO STRADDLE AND REPOSITION!What is Strategy? 2) Strategy is about choosing a position which requires tradeoffs, choosing what not to dowithout tradeoffs, all firms would imitateTradeoffs arise frominconsistent image/reputationdifferent activities, products, equipment, employees, skills, systems, machinespriorities, internal coordination, and controlWhat is Strategy? 3) Strategy is about combining activities as advantages come from fit and reinforcingQuick TurnsNo mealsShort haulsStandard FleetNo baggagetransfersLow FaresNo seatsLean ground crewsSecondary AirportsQuick TurnsNo mealsShort haulsStandard FleetNo baggagetransfersLow FaresNo seatsLean ground crewsSecondary AirportsQuick TurnsNo mealsShort haulsStandard FleetNo baggagetransfersLow FaresNo seatsLean ground crewsSecondary AirportsQuick TurnsNo mealsShort haulsStandard FleetNo baggagetransfersLow FaresNo seatsLean ground crewsSecondary AirportsQuick TurnsNo mealsShort haulsStandard FleetNo baggagetransfersLow FaresNo seatsLean ground crewsSecondary AirportsQuick TurnsNo mealsShort haulsStandard FleetNo baggagetransfersLow FaresNo seatsLean ground crewsSecondary AirportsNo baggagetransfersLow FaresSecondary AirportsQuick TurnsNo mealsNo baggagetransfersQuick TurnsNo mealsShort haulsStandard FleetNo baggagetransfersLow FaresNo seatsLean ground crewsSecondary AirportsNo baggagetransfersLow FaresSecondary AirportsQuick TurnsNo mealsNo baggagetransfersHow can Delta copy that?What about Jet Blue?What is Strategy? 3) Strategy is about combining activities as advantages come from fit and reinforcing Operational effectiveness is about excellence in individual activitiesFit/integration increases sustainability by reducing imitabilityWhat is Strategy? 4) The desire to grow is most threatening to an effective strategyWhat is Strategy? 4) The desire to grow is most threatening to an effective strategy Blurs uniquenessCreates compromisesReduces fitErodes original advantagesSo….how can firm’s be profitable?1) Choose an attractive industry in which to compete - Where we compete? •Corporate level strategy2) Attain a competitive advantage within an industry - How we compete?•Business level strategyTwo Models of ProfitabilityI/O Model (Industrial/Organizational Economics Model)Resource Based ModelI/O ModelEnvironment Drives Strategy & PerformanceThree Key


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