This document provides an overview of strategic management and strategy. It defines strategy as a company's action plan for outperforming competitors and achieving superior profitability. A successful strategy must pass three tests: fit with the company's situation, provide competitive advantage, and lead to good performance. Crafting and executing the right strategy is important because it provides a roadmap, game plan, and formula for pleasing customers and achieving long-term success. How well a company performs depends on the quality of its strategy and the effectiveness of executing that strategy.
This document provides an overview of strategic management and strategy. It defines strategy as a company's action plan for outperforming competitors and achieving superior profitability. A successful strategy must pass three tests: fit with the company's situation, provide competitive advantage, and lead to good performance. Crafting and executing the right strategy is important because it provides a roadmap, game plan, and formula for pleasing customers and achieving long-term success. How well a company performs depends on the quality of its strategy and the effectiveness of executing that strategy.
This document provides an overview of strategic management and strategy. It defines strategy as a company's action plan for outperforming competitors and achieving superior profitability. A successful strategy must pass three tests: fit with the company's situation, provide competitive advantage, and lead to good performance. Crafting and executing the right strategy is important because it provides a roadmap, game plan, and formula for pleasing customers and achieving long-term success. How well a company performs depends on the quality of its strategy and the effectiveness of executing that strategy.
This document provides an overview of strategic management and strategy. It defines strategy as a company's action plan for outperforming competitors and achieving superior profitability. A successful strategy must pass three tests: fit with the company's situation, provide competitive advantage, and lead to good performance. Crafting and executing the right strategy is important because it provides a roadmap, game plan, and formula for pleasing customers and achieving long-term success. How well a company performs depends on the quality of its strategy and the effectiveness of executing that strategy.
WHAT IS STRATEGY AND WHY IS IT IMPORTANT? A companys strategy is its action plan for outperforming its competitors and achieving superior profitability
13 WHAT DO WE MEAN BY STRATEGY? What is our present situation? Business environment and industry conditions Firms financial and competitive capabilities
Where do we want to go from here?
Creating a vision for the firms future direction How are we going to get there? Crafting an action plan for heading the firm in the intended direction, staking out a market position, attracting customers, achieving the targeted financial and market performance, and getting the firm where it wants to go is its strategy.
14 WHAT IS STRATEGY ABOUT? Strategy is all about How: How to attract and please customers. How to compete against rivals. How to position the firm in the marketplace. How best to respond to changing economic and market conditions. How to capitalize on attractive opportunities to grow the business. How to achieve the firms performance targets.
15 WHY BOTHER WITH STRATEGY? A firm needs a strategy to specify what actions are going to be taken: To improve its financial performance. To strengthen its competitive position. To gain a sustainable competitive advantage over its market rivals. A creative, distinctive strategy: Helps produce above-average profits. Increases competitive pressures on rivals.
16 Strategy is about competing differently from rivalsdoing what competitors dont do or, even better, doing what they cant do!
17 STRATEGY AND COMPETITORS Strategy is about competing differently from rivals Doing what they dont do or doing it better! Doing what they cant do! Doing things in ways that attract customers and set a firm apart from its rivals. Doing things in a manner calculated to produce a competitive edge over rivals.
18 STRATEGY AND THE QUEST FOR COMPETITIVE ADVANTAGE
Competitive Advantage Require meeting customer needs either more effectively (with products or services that customers value more highly) or more efficiently (by providing products or services at lower cost). Sustainable Competitive Advantage Requires giving buyers lasting reasons to prefer a firms products or services over those of its competitors.
19 Identifying a Companys Strategy What to Look For
110 STRATEGIC APPROACH CHOICES
Building Competitive Advantage
Differentiation on Focus on Low-cost provider Best-cost provider features market niche
111 STRATEGIC APPROACHES Building a competitive advantage by: Striving to become the industrys low-cost provider (efficiency). Outcompeting rivals on differentiating features (effectiveness). Offering the lowest (best) prices for differentiated goods (best-cost provider). Focusing on better serving a niche markets needs (efficiency and\or effectiveness).
112 GAINING SUSTAINABLE COMPETITIVE ADVANTAGE
How to create a sustainable competitive advantage:
Develop valuable expertise and competitive capabilities over the long-term that rivals cannot readily copy, match or best. Put the constant quest for sustainable competitive advantage at center stage in crafting your strategy.
113 WHY A COMPANYS STRATEGY EVOLVES OVER TIME
Managers modify strategy in response to:
Changing market conditions Advancing technology Fresh moves of competitors Shifting buyer needs Emerging market opportunities New ideas for improving the strategy
114 THE EVOLVING NATURE OF A FIRMS STRATEGY Realized (current) strategy is a blend of: Proactive (deliberate) strategy elements that include both continued and new initiatives. Reactive (emergent) strategy elements that are required due to unanticipated competitive developments and fresh market conditions.
115 A Companys Strategy Is a Blend of Proactive Initiatives and Reactive Adjustments
116 THE RELATIONSHIP BETWEEN A FIRMS STRATEGY AND ITS BUSINESS MODEL
Realized Business Strategy $$$? Model Competitive Value Initiatives Proposition
Business Profit Formula Approaches
117 A companys business model sets forth the logic for how its strategy will create value for customers, while at the same time generate revenues sufficient to cover costs and realize a profit.
118 BUSINESS MODEL ELEMENTS
The Customer Value Proposition
Satisfying buyer wants and needs at a price customers will consider a good value. The greater the value provided (V) and the lower the price (P), the more attractive the value proposition is to customers.
119 BUSINESS MODEL ELEMENTS (CONTD)
The Profit Formula
Creating a cost structure that allows for acceptable profits, given that pricing is tied to the customer value proposition. Vthe value provided to customers Pthe price charged to customers Cthe firms costs The lower the costs (C) for a given customer value proposition (VP), the greater the ability of the business model to be a moneymaker. 120 IS OUR STRATEGY A WINNER?
The Strategic Fit Test
The Competitive Winning The Performance
Advantage Test Test Strategy
121 WHAT MAKES A STRATEGY A WINNER? A winning strategy must pass three tests: The Fit Test Does it exhibit dynamic fit with the external and internal aspects of the firms overall situation? The Competitive Advantage Test Can it help the firm achieve a significant and sustainable competitive advantage? The Performance Test Can it produce good performance as measured by the firms profitability, financial and competitive strengths, and market standing? 122 WHY CRAFTING AND EXECUTING STRATEGY ARE IMPORTANT TASKS
Strategy provides: A prescription for doing business. A road map to competitive advantage. A game plan for pleasing customers. A formula for attaining long-term standout marketplace performance.
Good Strategy + Good Strategy Execution =
Good Management
123 How well a company performs is directly attributable to the caliber of its strategy and the proficiency with which the strategy is executed.
124 THE ROAD AHEAD Strategy is about asking the right questions: What must managers do, and do well, to make a firm a winner in the marketplace?
Strategy requires getting the right answers:
Good strategic thinking and good management of the strategy-making, strategy-executing process. First-rate capabilities and skills in crafting and executing strategy are essential to managing successfully.
