Slide 1Strategy is “Strategos”Why do we need strategy?Strategy defines….Slide 5Strategic Management DefinedCompetitive AdvantageSlide 8What is the nature of today’s competitive landscape?Changes in the Competitive LandscapeGlobalization of Markets and IndustriesTechnological TrendsThe Competitive FieldNew Realities in the Competitive LandscapeDisruptive TechnologiesNew Sources of Competitive AdvantageWhat is Strategy?What is Strategy?What is Strategy?What is Strategy?What is Strategy?Three Perspectives on Value CreationSlide 23Slide 24Slide 25Slide 26Slide 27Slide 28The Resource-Based Model of Above-Average ReturnsThe Resource-Based Model of Above-Average ReturnsThe Resource-Based Model of Above-Average ReturnsThe Resource-Based Model of Above-Average ReturnsSlide 33The Three Stakeholder GroupsSecondary StakeholdersSlide 36Slide 37Slide 38It’s all about prioritizing…Competing For AdvantagePart I – Strategic ThinkingChapter 1 – Introduction to Strategic ManagementStrategy is “Strategos”Objective – define and attainableOffensive – seize and exploit the opportunityUnity of command – directed in a single directionMass – gather and direct sufficient resources Economy of force – invest resources efficientlyManeuver – create disadvantages for rivalsSurprise – attack in unexpected waysSecurity – don’t let rivals gain the upper handSimplicity – use clear, concise, uncomplicated plansFrom http://www.wpi.edu/Academics/Depts/MilSci/Resources/prinwar.htmlWhy do we need strategy?The reasons why firms succeed and fail is perhaps the central question in strategyStrategy defines….Who are you?Where are you going?How are you going to get there?Alice: Which way should I go?Cat: That depends on where you are going.Alice: I don’t know where I am going.Cat: Then it doesn’t matter which way you go.Lewis Carroll, Though the Looking-GlassOrganizations should make two types of decisions1) Strategic decisions2) Strategically driven decisionsCompany ACompany BCompany CStrategic Management Defineddecisions and actions required for the firm to create value and earn returns higher than those of competitorsformulation and implementation of plans designed to achieve objectivesunifying theme that gives coherence and direction to organizational/individual decisionsgame plan management has for positioning the company in its chosen market, competing successfully, satisfying customers, and achieving good business performanceintegrated and coordinated set of commitments and actions designed to exploit core competencies and gain a competitive advantageWhat is a competitive advantage?Competitive AdvantageWhen a firm implements a strategy that rivals can’t duplicate, or find it too expensive to do try to imitateCompetitive advantages become sustainable competitive advantages when rivals stop trying to replicateWhat is the nature of today’s competitive landscape?Changes in the Competitive LandscapeGlobalization of Markets and IndustriesReduced restraints on business transactions across national boundaries (such as tariffs)Difficulty in recognizing or determining boundaries of an industry (for example, the blur among television, telephone, and computer service providers)Greatly increased range of opportunities for acquiring resources (such as equipment, capital, raw material, or even employees) and for selling goods and servicesIncreasing rate of technological change and diffusion, and increasing speed at which technologies become available and are used Dramatic information technology changes of recent years, and different ways that information is being used Increasing knowledge intensity, the basis for technology and its application Technological TrendsThe Competitive FieldHypercompetition resulting from the dynamics of strategic maneuvering among global and innovative competitorsIncreased performance standards in many areas, including quality, cost, productivity, product introduction time, and operational efficiencyContinuous improvement in all areas is necessary for continued survivalNew Realities in the Competitive LandscapeQuick competitive information needsShorter product life cyclesIndistinguishable products Rapid technology replacementAvailability of inexpensive information New business culture from electronic-business models Continuous learning is necessaryDisruptive TechnologiesValue of existing technologies is destroyedCreative destruction process replaces existing technologies with new onesNew markets are createdNew Sources of Competitive AdvantageSpeed to marketAccess and use of informationRapid diffusion of new, transformed knowledge throughout the companyInnovationIntegration of new conditions into organization mind setGlobal standard achievementStrategic flexibilityWhat is Strategy? Strategy is not doing similar activities better than your rivals – that’s operational effectivenesscontinual improvement not a sustainable advantageindustry-wide cost reductions do not lead to increased profitabilityexamples: PCs, automobiles, airlinesWhat is Strategy? 1) Strategy is performing different activities or performing similar activities in a different wayStrategy is about positioninga) Variety-based positioningoffering a unique choice of goods/services - Chic-fil-a, GameStopb) Needs-based positioningserving most/all of a particular group of customers’ needs - Babies R Usc) Access-based positioningserving 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 dowithout tradeoffs, all firms would imitateTradeoffs arise frominconsistent image/reputationdifferent activities, products, equipment, employees, skills, systems, machinespriorities, internal coordination, and controlWhat 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 strategy Blurs uniquenessCreates compromisesReduces fitErodes original advantagesThree Perspectives on Value CreationIndustrial/Organization (I/O) Economic ModelResource-Based
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