SFI Finals Reviewer
SFI Finals Reviewer
SFI Finals Reviewer
• Strategy - The plan of action that prescribes resource allocation and other activities for dealing with the
environment, achieving a competitive advantage, and attaining organizational goals.
• Strategic Management - The set of decisions and actions used to formulate and implement strategies that will
provide a competitively superior fit between the organization and its environment so as to achieve organizational
goals.
• Top-Down Approach - The top-down approach relies on higher authority figures to determine larger goals that
will filter down to the tasks of lower level employees.
• Bottom-Up Approach - a decision-making process that gives the entire staff a voice in company goals.
• Role of a Strategist
o Creating or designing out of nothing
o Define opportunities, take those opportunities, and set boundaries.
o Filter the information you get and get only the relevant information.
o Look at the big picture. Provide a direction and guide the people included in the planning.
1. Problem Definition
2. Alternatives
3. Criteria
4. Analysis
5. Decision
6. Implementation Plan
o Company must be organized to sustain and take advantage of the resources that the company has: valuable,
Rare, difficult to imitate, and not easily substitutable
• Porter’s Diamond Model – determinants that create the national environment which companies are born and learn
how to compete
• Industry Analysis: Porter’s 5 Forces – Opportunities & threats, industry attractiveness, industry position, stability
o Defend or Influence?
internal and external analysis together: SWOT - Not yet actionable, just basis for strategies, leads to the business model
• Identify company vs. industry position that will dictate investment decisions and strategic actions
STRATEGIC ACTIONS
• Vertical Integration
o Forward Integration – acquiring distributors/retailers
o Backward Integration – acquiring suppliers
• Horizontal Integration – Acquiring competitors
• Diversification (would want to use similar value chain to minimize cost)
LONG TERM OBJECTIVES
• Value innovation
• Create uncontested new market space
• Make competition irrelevant
• Break the value/cost trade off
• Cost:
o Eliminate – factors the industry takes for granted
o Reduce – factors that can be reduced well below standard
• Buyer’s Value
o Raise – factors that can be raised well above standards
o Create – factors that the industry has never offered
• Turn arounds require 3 things: (most will fail if not all are met)
o Cost Reduction
o Revenue Growth
o Strategic Leaps in the business
• Aside from ERRC, it was essential for Marvel to have an emotional connection with the customers.
• Value innovation vs. Value Extraction
o Balancing short-term profit making vs. long-term goals, no decisions made that will benefit short term at the
expense of long term.
▪ No quarterly guidance to wall street, just annual guidance – not to distract their strategies
▪ Starts with board members (company executives) to be adamant about this
▪ Never ran to business to exit or to be sold, focus in continuous growth: value of stock, free cash flow.
• Alignment of Value, Profit, and People
o Changing culture takes time. It needs action so people see the value, and you mean it.
o Wanted, needed, and rewarded in terms of employees
o Biggest factor why leaders fail: They are incapable of making hard decisions
▪ Decisions that will grow the business but make people unhappy
▪ Human beings do not like change (even positive)
▪ To avoid failure, the company needs 90% of good leadership and a positive culture
Disruptive Innovation – PROCESS
• Change in the business model that is enabled by TECHNOLOGY that creates the disruptive impact.
1. Sustaining innovation - Incumbents continue to innovate to appeal to their most profitable customers IGNORING
those down market
2. New Entrants FOCUS on this ignored or new market by offering simpler and cheaper products
3. Incumbents DO NOT respond to the new entrants since markets are different
4. Incumbents are DISPLACED
• Translating STRATEGIC PILLARS into ACTIONABLE PROJECTS over a defined period (marketing objectives)
• It identifies the DETAILS of the company’s PROCESSES AND OPERATIONS incl. the roles and responsibilities of
employees and REQUIRED RESOURCES.
STRATEGIC ALIGNMENT
• ALL ELEMENTS of the businesses are ARRANGED in such a way as the BEST SUPPORT the fulfilment of its LONG-TERM
PURPOSE.
o Strategy – HOW the business will achieve its long-term goals.
o Organizational Capabilities – readiness to execute the strategy.
Before execution, the strategy is evaluated first through BMC. (pre-execution stage)
THE 7-S Model – Alignment, Consistency, Fit, Reinforcement
• Strategy Execution
EX:
Balanced Scorecard
• Measures accountability
• Does not consider changes in the environment
• Strategy translating framework: A way to simplify plan, top to bottom approach
• Can be a part of internal analysis prior to SWOT
1. Mindtree Consulting
• How to ensure that today’s ‘Special Touch’ remains Special even in a hyper-growth environment?
• Focused framework: Mission, Vision, Values
6. Netflix in 2011
• How did Netflix displace Blockbuster?
• Focused framework: Sustainable innovation, disruptive innovation
How do we do it?