tutorial-on-strategy-management-ch01 17 slides estupendo.ppt
TRANSCRIPT
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What Is Strategy and
Why Is It Important?
1
Chapter
Screen graphics created by:
Jana F. Kuzmicki, Ph.D.Troy State University-Florida and Western Region
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Chapter Roadmap
What Is Strategy?
Identifying a Companys Strategy
Strategy and the Quest for Competitive Advantage
Strategy Is Partly Proactive and Partly Reactive
Strategy and Ethics: Passing the Test of Moral Scrutiny
The Relationship Between a Companys Strategy and Its
Business ModelWhat Makes a Strategy a Winner?
Why Are Crafting and Executing Strategy Important?
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Thinking Strategically:The Three Big Strategic Questions
1.Where are we now?
2.Where do we want to go?
Business(es) to be in and market positions to stake out
Buyer needs and groups to serve
Outcomes to achieve
3.How will we get there?
A companys answer to how
will we get there? is its strategy
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What Is Strategy?
Consists of the combinationof competi tive movesandbusiness approachesused by managers to run the
company
Managements game planto
Attract and please customers
Stake out a market position
Compete successfullyGrow the business
Achieve targeted objectives
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Howto please customers
Howto respond to changing
market conditions
Howto outcompete rivals
Howto grow the business
Howto manage each functional piece of the business anddevelop needed organizational capabilities
Howto achieve strategic and financial objectives
Strategyis HOW
to . . .
The Hows ThatDefine a Firm's Strategy
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Fig. 1.1: Identifying a Companys Strategy
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Striving forCompetitive Advantage
To achieve sustainable competitive advantage, acompanys strategy usually must be aimed at either
Providing a distinctive product or service or
Developing competitive capabilities rivals can not match
Achieving a sustainable competitive advantage greatlyenhances a companys prospects for
Winning in the marketplace and
Realizing above-average profits
What separates a powerful strategyfrom an ordinary strategyis managements ability to forge a series of moves,
both in the marketplace and internally, thatproduces sustainable competi tive advantage!
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Strategic Approaches toBuilding Competitive Advantage
Strive to be the industrys low-cost provider
Outcompete rivals on a key differentiating feature
Focus on a narrow market niche, doing a better job
than rivals of serving the unique needs of niche
buyers
Develop expertise, resource strengths, and
capabilities not easily imitated by rivals
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Fig. 1.2: A Companys Strategy IsPartly Proactive and Partly Reactive
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A companys strategy is a work in progress
Changesmay be necessary to reactto
Fresh moves of competitors
Evolving customer preferences
Technological breakthroughs
Shifting market conditions
Crisis situations
Why Do Strategies Evolve?
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Ethical and moral standards go beyond
Prohibitions of law andthelanguage of thou shalt not
to issues of
Dutyand right vs. wrong
Ethical and moral standards address
What is the right thing to do?
Two criteria of an ethical strategy:
Does not entail actions and behaviors that cross the line from
can doto should not doand unsavoryor shadyand
Allows management to fulfill its ethical duties to all stakeholders
Linking Strategy With Ethics
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A Firms Ethical Responsibilitiesto Its Stakeholders
Owners/shareholdersRightfully expect some form ofreturn on their investment
Employees- Rightfully expect to be treated with dignityand respect for devoting their energies to the enterprise
Customers- Rightfully expect a seller to provide themwith a reliable, safe product or service
Suppliers- Rightfully expect to have an equitablerelationship with firms they supply and be treated fairly
Community- Rightfully expect businesses to be goodcitizens in their community
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What Is a Business Model?
A business model addresses How do we make money inthis business?
Is the strategy capable of delivering
good bottom-line results?
Do the revenue-cost-profit economics
of the strategy make good business sense?
Look at revenue streamsthe strategy is expected to produce
Look at associated cost structureand potential profi t margins
Do resulting earnings streams and ROI indicate the strategy
makes sense and the company has a viable business model for
making money?
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Strategy- Deals with acompanys competitive
initiatives and business
approaches
Business Model -
Concerns whether
revenues and costs
flowing from the strategydemonstrate the business
can be amply profitable
and viable
Relationship BetweenStrategy and Business Model
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Tests of a Winning Strategy
GOODNESS OF F IT TEST
How well does strategy fit
the firms situation?
COMPETITIVE ADVANTAGE TEST
Does strategy lead to sustainable
competitive advantage?
PERFORMANCE TEST
Does strategy boost firm performance?
Oth C it i f J d i
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Other Criteria for Judgingthe Merits of a Strategy
Internal consistency and unity among all pieces of thestrategy
Degree of risk the strategy poses as compared to
alternative strategies
Degree to which the strategy is flexible and adaptable to
changing circumstances
While these criteria are relevant, they seldom override
the importance of the three testsof a winning strategy!
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Good Strategy + Good StrategyExecution = Good Management
Crafting and executing strategy are core management functionsAmong all things managers do, nothing affects a companys
ultimate success or failure more fundamentally than how well
its management team
Charts the companys direction, Develops competitively effective strategic moves and business
approaches, and
Pursues what needs to be done internally to produce good day-
in/day-out strategy execution
Excellent executionof an excellent strategy is the besttest of manager ial excellence-- and the most reliable
recipe for winning in the marketplace!