Competitive Outcomes Firm A’s Actions Rivalry Organizational Characteristics Firm B’s Actions Industry Characteristics What Is Strategy? • Plan/course of action...to achieve favorable position • Alignment of course of action with longrun goals • A.
Download ReportTranscript Competitive Outcomes Firm A’s Actions Rivalry Organizational Characteristics Firm B’s Actions Industry Characteristics What Is Strategy? • Plan/course of action...to achieve favorable position • Alignment of course of action with longrun goals • A.
Competitive Outcomes Firm A’s Actions
Rivalry
Firm B’s Actions
Organizational Characteristics Industry Characteristics
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
Two Keys Tavern Two Keys Tavern
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)
Destroying Strategic Management Myths
Fortune,
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...
S OUTH W EST
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)
Planning vs. Strategy “Process”:
What’s the Difference?
Intended Strategy Strategy Carried Out Dropped Strategic Actions Emergent Strategic Actions
Competitive Interaction in Chess
2 1 8 7 4 3 6 5 This Sequence: Black: Knight b4 White: Pawn c3 Black: Bishop g4 White: Queen b5 Black: Pawn c5 a b c d e f g h Named Sequences: Epaulette’s Mate Sicilian Defense
Different Approaches to Strategy
• Blueprint • Structural Equation • Drama • Journey • Conversation • Stimuli-Responses • Conversation
Competitive Outcomes Firm A’s Actions
Rivalry
Firm B’s Actions
Organizational Characteristics Industry Characteristics