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LO1 Understand why every company needs a distinctive strategy to

compete successfully, manage its business operations, andstrengthen its prospects for long-term success.

LO2 Learn why it is important for a company to have a viable

business model that outlines the company’s customer value

proposition and its profit formula.

LO3 Develop an awareness of the five most dependable strategic

approaches for setting a company apart from rivals and winning

a sustainable competitive advantage.

LO4 Understand that a company’s strategy tends to evolve over time

because of changing circumstances and ongoing managementefforts to improve the company’s strategy.

LO5 Learn the three tests of a winning strategy.

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Why Strategy Matters?

•Strategy is about choosing how to compete: How  to create products or services that attract and

please customers.

How  to position the company in the industry.

How  to develop and deploy resources to build

valuable competitive capabilities.

How  each functional piece of the business (RD,

supply chain activities, production, sales andmar!eting, distribution, finance, and human

resources" will be operated.

How  to achieve the firm’s performance targets

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CORE CONCEPT

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 # company’s strategy e$plains why the company

matters in the mar!etplace by specifying an

approach to creating superior value for customers

and determining how capabilities and resourceswill be utili%ed to deliver the desired value to

customers.

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The !"orta#$e o% Strategi$ i'ue#ess

•( Co!"a#y)s Strategy is the distinctive set of creative strategic choices

made by its managers that sets it apart from its rivals

and produces its competitive edge.

must tightly fit its own particular situation to achievecompetitive advantage.

defines how it intends to do what rival firms do not do

or, better yet, what rival firms cannot  do.

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Strategy a#* a Co!"a#y)s +usi#ess Mo*e,

•+usi#ess Mo*e, &anagement’s blueprint for delivering a valuable

product or service to customers in a manner that will

yield an attractive profit.

• E,e!e#ts o% the +usi#ess Mo*e,

Customer value proposition defines how the firm will

satisfy buyer wants and needs at a price customers

consider a good value.

Profit formula describes the firm’s approach to

determining a cost structure that will allow for

acceptable profits given the pricing tied to its

customer value proposition.

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Strategy a#* the 0uest %or 

Sustai#ab,e Co!"etiti.e (*.a#tage:

Choosi#g a Strategi$ (""roa$h

,o/$ost

"ro.i*er 

broa*

*i%%ere#tiatio#

%o$use*

,o/$ost

%o$use*

*i%%ere#tiatio#

best/$ost

"ro.i*er 

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Strategi$ a""roa$hes to gai#i#g a

sustai#ab,e $o!"etiti.e a*.a#tage

1 ( ,o/$ost "ro.i*er strategy:achieving a cost-based advantage over

rivals.

2 ( broa* *i%%ere#tiatio# strategy:see!ing to differentiate products or

services from rivals’ in ways that will appeal to a broad spectrum of buyers.

3 ( %o$use* ,o/$ost strategy:concentrating on a narrow buyer segment(or mar!et niche" and outcompeting rivals by having lower costs than rivals

and thus being able to serve niche members at a lower price.

4 ( %o$use* *i%%ere#tiatio# strategy:concentrating on a narrow buyer

segment (or mar!et niche" and outcompeting rivals by offering niche

members customi%ed attributes that meet their tastes and re9uirementsbetter than rivals’ products.

5 ( best/$ost "ro.i*er strategy:giving customers more value for the

money by satisfying buyers’ e$pectations on !ey 9uality;features;

performance;service attributes, while beating their price e$pectations.

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CORE CONCEPT

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 # company achieves sustai#ab,e $o!"etiti.e

a*.a#tage when an attractively large number of

buyers develop a durable preference for its

products or services over the offerings ofcompetitors, despite the efforts of competitors to

overcome or erode its advantage.

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The !"orta#$e o% Ca"abi,ities i# +ui,*i#g

a#* Sustai#i#g Co!"etiti.e (*.a#tage

• Co!"etiti.e,y a,uab,e Ca"abi,ities cannot be easily bested, matched, or imitated by

rivals.

represent superior !now-how and speciali%ed abilitiesthat re9uire time to fully develop and perfect.

result in a sustainable competitive advantage over

rivals.

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'#R3U4

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Why Strategy E.o,.es O.er Ti!e

•( strategy $ha#ges o.er ti!e *ue to: Une$pected moves of competitors

hifts in the needs and preferences of buyers

1merging mar!et opportunities +ew ideas by managers to improve the strategy

&ounting evidence the strategy is not wor!ing well

•

( strategy e.o,.es: ncrementally or dramatically

*roactively and adaptively

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CORE CONCEPT

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 # company’s rea,i7e* strategy is a combination

deliberate planned elements and unplanned

emergent elements. ome components of a

company’s deliberate strategy will fail in themar!etplace and become abandoned strategy

elements.

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The Three Tests o% a Wi##i#g Strategy

Strategi$ it

Per%or!a#$e

Co!"etiti.e

(*.a#tage

s the strategy helping achieve a

sustainable competitive advantage>

s the strategy producing goodcompany performance>

2ow well does the strategy

fit the company’s situation>

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Why Cra%ti#g a#* E8e$uti#g Strategy

(re !"orta#t Tas9s

• 6oo* strategy a#* goo* strategy

e8e$utio# are the !ost te,,i#g sig#s

o% goo* !a#age!e#t

• o e,, a $o!"a#y "er%or!s is*ire$t,y attributab,e to the $a,iber o%

its strategy a#* the "ro%i$ie#$y ith

hi$h the strategy is e8e$ute*

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The Roa* (hea*

? Strategy is about as9i#g a#* a#seri#g a!ost i!"orta#t 'uestio#:

What must managers do, and do well, to make

a company a winner in the marketplace?

'he answer is that doing a good @ob of managing

inherently re9uires good strategic thin!ing and good

management of the strategy-ma!ing, strategy-

e$ecuting process.

Best wishes for your success in the class!!