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PowerPoint Presentation by Charlie Cook Gordon Walker McGraw-Hill/Irwin Copyright © 2004 McGraw Hill Companies, Inc. All rights reserved. Chapter 1 What Is Strategy?

1–2 StrategyStrategy StrategyStrategy –The underlying variability among firms that leads to a significant difference in their performance. Benefits of an effective strategyBenefits of an effective strategy –A source of economic gain –A framework for resource allocation –A guide for decisions regarding management and organization

1–3 What Determines Firm Profitability? Macroeconomic factorsMacroeconomic factors –Global market growth Industry factorsIndustry factors –Industry growth –Competitive rivalry –Entry barriers\New entrants –Technological innovation –Customer tastes Market positionMarket position –Overall competitive capability (strategy implementation) –Productivity through efficient and effective resource allocation –Adaptability to changing market conditions

1–4 Origins of Strategy The field of strategy emerged from:The field of strategy emerged from: –Industrial economics –Case studies of exemplary companies –Business and industry history –Economic and organizational sociology –Strategic planning tools –Institutional economics

1–5 Contributions of Economic and Organizational Sociology Contributions to strategy through analysis of:Contributions to strategy through analysis of: –Industry trends –Internal structures and process of firms –The development of organizational networks –Advantages of geographic location –Corporate governance

1–6 Institutional Economics and Strategy Institutional economics focuses on effective governance of the firm’s boundaries through:Institutional economics focuses on effective governance of the firm’s boundaries through: –Vertical integration –Outsourcing –Partnering

1–7 Strategy in Single Business Firms Single business strategySingle business strategy –Focuses on achieving superior performance in both domestic and global product markets. »Maintaining a competitive position »Establishing supplier relationships »Discouraging new entrants

1–8 Strategy in Multibusiness Firms Multibusiness strategyMultibusiness strategy –Managing a portfolio of businesses such that their performance increases as a result of being managed together rather than separately. »Providing resources—capital technology, materials, and know how »Furnishing specialized management skills »Establishing interunit relationships

1–9 General Outline of the Book Chapter 2:Competitive Advantage Chapter 3:Industry Analysis Chapter 4:Competing over Time: Industry and Firm Evolution Chapter 5:Strategy Execution Chapter 6:Vertical Integration and Outsourcing Chapter 7:Partnering Chapter 8:Competing in Global Markets Chapter 9:New Business Development Chapter 10:Managing a Mutltibusiness Firm Chapter 11:Corporate Governance Chapter 12:Strategic Planning and Decision Making