1. Chapter 1

2. What Is Strategy? Strategy involves …
Time - the present, the future, and the track between
Choices – products, markets, services, ….
Resources – money, people, tools, etc.
Competencies – what we are good at
Something that is VRI-O
Much more!

3. What Is Strategy? Strategy is …
The combination of competitive moves and business approaches used by managers to run the company
Management’s theory about how to gain competitive advantage – BTW, what’s a theory?
A comprehensive plan stating how the firm will achieve its mission and objectives

4. What Is Strategy? Strategy is …
Management’s “game plan” or, its HOW TO
Attract and please customers
Stake out a market position
Compete successfully
Grow the business
Achieve targeted objectives

5. What Is Strategy? Strategy is … The General’s view (Strategos)
Integrated
Externally oriented
Cyclical:
Conceptual … Planned … Executed … Reviewed

6. Walt Disney Company 1984 Profits: $242 Million
Theme Park Operations: 77 percent of profits
Consumer Products: 22 percent of profits
Filmed Entertainment: 1 percent of profits

7. Walt Disney Company Hired Michael Eisner - 1984
1. Increased admission prices at theme parks
$186 m $787 m
2. Focused on movie studios (character development)
$2.42 m $845 m
Diversified into television (ABC), hotels, retail stores,
sport team, cruise line, publishing, consumer
products, licensing, etc. (Huey & McGowan, 1995)
Market Cap: = $2 billion = $28 billion

8. Inferring Strategy A company’s strategy is reflected
in what it does and says (see p. 6 of your text)
What do you think Eisner’s strategy was?
Eisner’s basic theory (strategy) may have been:
People will pay a premium price for extraordinary
entertainment. We have the necessary resources to
create extraordinary entertainment. Therefore, let’s
redeploy our resources in a different way and offer
something extraordinary to people.

9. Management ! So Why is Strategy Important? Strategy + Execution = ?
It is management’s job to get results

10. Strategy is about creating a desirable future,
Summary
Strategy is about creating a desirable future,
and it is important because that future is desired.

11. But remember … The future is foggy!

12. Recommended reading:

13. The Managerial Process Crafting and Executing Strategy
Chapter 2
The Managerial Process of
Crafting and Executing Strategy

14. The Strategic Management Process
External
Analysis
Strategic
Choice
Strategy
Implementation
Competitive
Advantage
Mission
Objectives
Internal
Analysis

15. The Strategic Management Process
External
Analysis
Strategic
Choice
Strategy
Implementation
Competitive
Advantage
Objectives
Internal
Analysis
Mission

16. The Strategic Management Process
Objectives:
• specific, measurable targets, etc. (SMART)
• the things a firm needs to ‘do’ to achieve
its mission
• should influence other elements in the strategic
management process
See text p. 28 for examples

17. Systematic Examination
The Strategic Management Process
External and Internal Analysis
Systematic Examination
of the Environment
External Analysis
Internal Analysis
• human resources
(knowledge)
• interest rates
• demographics
• manufacturing
abilities
• social trends
• technology
• technology

18. The Strategic Management Process
Strategic Choice
External
Analysis
Internal
Analysis
Strategic
Choice
Business
Level
Corporate
Level
• which
businesses?
• positioning
a business

19. The Strategic Management Process
Strategy Implementation
• how strategies are carried out
• who will do what
• organizational structure and control
• who reports to whom
• how does the firm hire, promote, pay, etc.

20. The Strategic Management Process
Strategy Implementation
• every strategic choice has strategy implementation
implications
• strategy implementation is just as important as
strategy formulation (or maybe more so – my view)
A Strategy Is Only As Good As Its Implementation

21. The Strategic Management Process
Competitive Advantage
Definition: the ability to create more economic value
than competitors
External
Analysis
Strategic
Choice
Strategy
Implementation
Competitive
Advantage
Mission
Objectives
Internal
Analysis
• all other elements of the strategic management
process are aimed at achieving competitive advantage

22. Competitive Advantage
The Ability to Create More Economic
Value Than Competitors
• there must be something different about a firm’s
offering vis-à-vis competitors’ offerings
• if all firms’ strategies were the same, no firm
would have a competitive advantage
• competitive advantage is the result of doing
something different and/or better than competitors

23. Competitive Advantage
Two Types of Difference
1) Preference for the firm’s output
• people choose the firm’s output over others’
• people are willing to pay a premium
Example: Nordstrom
2) Cost advantage vis-à-vis competitors
• lower costs of production/distribution
Example: Wal-Mart

24. Competitive Advantage
The Strategic Management Process
External
Analysis
Strategic
Choice
Strategy
Implementation
Competitive
Advantage
Internal
Analysis
• identify and exploit differences that may lead
to competitive advantage
Example: Apple’s iPod

25. Competitive Advantage
Temporary & Sustainable
• competitive advantage typically results in high profits
• profits attract competition
• competition limits the duration of competitive
advantage in most cases
Therefore,
• most competitive advantage is temporary
• competitors imitate the advantage or offer
something better

26. Competitive Advantage
Measuring Competitive Advantage
Superior Economic Performance Is Viewed as
Evidence of Competitive Advantage
• it is rather easy to see the evidence of
competitive advantage
• measuring the source of the advantage per se
is typically impossible
• it’s difficult to ‘measure’ technology

27. Competitive Advantage & The Strategic Management Process
Emergent vs. Intended Strategies
• the strategic management process leads managers
to intended strategies
However,
• conditions often change or new information
becomes available
• managers respond and adopt emergent strategies

28. The Strategic Management Process
Summary
This course is not about mere survival, it is about
thriving—achieving competitive advantage
• the strategic management process helps managers
achieve competitive advantage
• competitive advantage depends on differences
• strategy is about discovering and exploiting
these differences

29. The Strategic Management Process
Applying Strategy to Your Career
• a solid understanding of strategy concepts will
help set you apart from other job candidates
• you can use the process to identify and
exploit difference between you and others
• you can use the process to determine if you
want to stay with a company

30. The Strategic Management Process
& Competitive Advantage
Strategy Matters!
Strategy is often the difference between:
• success and failure, between mediocrity and excellence
• a great manager and average managers
• stumbling through life and moving ahead with purpose