Session 1 What is Strategy? 2

Learning Objectives The successful graduate of this course… knows the components of business and corporate strategy and what can make strategies more or less successful analyzes differences between industries, markets, and competitors integrates analytical skills from various functional fields into a holistic, strategic perspective understands the merits and limits of both theory and intuition in the strategy-making process appreciates the value of diverse perspectives and approaches in making strategic decisions applies this understanding to relevant competitive problems uses this knowledge to develop effective, sustainable strategies for their organization

Problem Framing Matters The mere formulation of a problem is far more often essential than its solution... To raise new questions, new possibilities, to regard old problems from a new angle requires creative imagination… - Einstein What gets us into trouble is not what we don't know. It's what we know for sure that just ain't so. - Yogi Berra

Defining Strategy “…determination of the basic long-term goals and objectives of an enterprise, and the adoption of courses of action and the allocation of resources necessary for carrying out these goals” (Chandler, 1962) “…the pattern of objectives, purposes, or goals, and major policies and plans for achieving these goals, stated in such a way as to define what business the company is or is to be in, and the kind of company it is or is to be” (Andrews, 1965) “ …strategy is a pattern in a stream of decisions… (Mintzberg, 1975)

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Strategy, the Link between the Firm and its Environment 5

Porter - What is Strategy? Operational efficiency is not strategy, but both OE and strategy are needed Strategy rests on unique positioning Sustainable strategies involve tradeoffs Strategy is about achieving fit in the organizational configuration of activities Why do strategies fail?

Intel History Intel Strategy 2009 1968 - Robert Noyce and Gordon Moore incorporate NM Electronics 1970 - The development of DRAM and dynamic RAM 1971 - The world’s first microcomputer is introduced 1974 - The first general purpose microprocessor is introduced to the world 1980 - The Intel microprocessor is chosen by IBM for the first ever personal computer.  1992 -  Intel’s net income tops the one billion dollar point 1993 - The Pentium is introduced, a fifth generation chip 1996 - Intel’s revenue exceeds twenty billion dollars and the net income surpasses $5B 1997 - The Pentium 11 microprocessor is introduced to the world 1999 - Intel is added to Dow Jones Averages. 2000 - The world’s very first Intel 1 gigahertz processor hits the shelves. Intel Strategy 2009 Our goal is to be the preeminent provider of semiconductor chips and platforms for the worldwide digital economy. As part of our overall strategy to compete in each relevant market segment, we use our core competencies in the design and manufacture of integrated circuits, as well as our financial resources, global presence, and brand recognition. We believe that we have the scale, capacity, and global reach to establish new technologies and respond to customers’ needs quickly.

Intel 10 year stock performance

How would you describe the historical evolution of Intel’s strategy? Has Intel achieved “unique positioning” ? Have they acknowledged tradeoffs? Do they have “4+2”? What strategic challenges does Intel face today? What should Intel do?

What Really Works - 4+2 A clearly stated, focused strategy Flawless operational execution A performance-oriented culture Fast, flexible, flat organization Hold on to talent, and find more Industry transforming innovation Leaders committed to business and people Growth through mergers and partnerships

The Strategy Design Process Strategic Analysis Strategic Choice Strategy Implementation and Evaluation Identify Sustainable Competitive Advantage Select Sustainable Competitive Advantage Create Sustainable Competitive Advantage Understand Industry Context and Competition Craft and Communicate Vision and Mission Develop Action Plans, Programs, and Processes Analyze Industry and External Environment Develop Strategic Goals and Specific Long Term Objectives Craft Changes in Structure and Processes Implement the Strategy Evaluate The Current Situation Evaluate and Select Strategy Analyze Resources and Internal Capabilities Establish the Basis for Sustainable Competitive Advantage Develop a Strategic Control System Understand and Critique Current Strategy Generate Feasible Alternative Strategies Evaluate the Strategies Results Feedback and Rethinking

10 Ways of Thinking about Strategy Design - strategy as process of conception Planning - strategy as a formal process Positioning - strategy as an analytical process Entrepreneurial - strategy as a visionary process Cognitive - strategy as a mental process Learning - strategy as an emergent process Power - strategy as a process of negotiation Cultural - strategy as a collective process Environmental - strategy as a reactive process Configurational - strategy as a process of transforming Mintzberg, 1998

The “Calvin Effect”