Strategy: A View From the Top Cornelius A. de Kluyver & John A. Pearce II Chapter 1: What is Strategy? Presentation By: Matt Anderson, Walter Park & Brittany Thiery

Introduction How did Google become the world’s number one search engine? What is the secret to Toyota’s success? Why does Southwest Airlines consistently outperform it’s many rivals?

Strategic Thinking Continues to Evolve - The evolution of strategic thinking over the last 50 years is characterized by a gradual shift in focus from an industrial economics to a resource-based perspective to a human and intellectual capital perspective.

Strategy versus Tactics There is a difference between strategy and the application of operational tools and managerial philosophies focused on operational effectiveness Strategy focuses on doing things differently Managerial tools are aimed at doing things better than their competitors which is tactical by nature

Strategy Forces Trade-offs -Choosing different approaches to delivering customer value -Choosing different sets of activities that cannot easily imitated Creating a competitive advantage

Strategy Should focus on Value Creation -A good strategy focuses on creating value - Shareholders, partners, suppliers, employees, and the community -Ex: Dell’s elimination of intermediaries

Value Creation A good strategy focuses on creating value

Creating Options Long-term vision Learning is an essential component

An Ecosystem Perspective Companies rely heavily on networks Networks function like a biological ecosystem Banking, biotechnology, insurance, and software Boundaries are fluid and difficult to define Technology is connective tissue Wal-Mart

Strategy as Alignment Aligning resources and capabilities with strategic goals Strategic capability gaps Closing the gap between what it takes to succeed and what the company can do Better technologies, creating faster delivery mechanisms, adopting stronger branding, building stronger distribution network Maintaining strategic focus Ensuring what is said by organization is done Objectives are communicated, allocating the necessary resources, creating proper incentives for effective alignment

Levels of Strategy Corporate level Business unit Functional What kinds of businesses firm should compete in How the overall portfolio should be managed Business unit What product or service to offer How to manufacture or create it How to take it to the marketplace Functional Marketing, HR, technology

Stakeholders External and Internal Ownership stake, economic stake, social stake Formal power, economic power, political power

Vision and Mission 2 important lessons in crafting a vision statement Focus on few activities an do them well Adopt vision far greater than resource base would allow Vision statement Clear Meet legitimate interests and values of all stakeholders Feasible Mission statement Guides the actions of the organization Spells out its overall goal Provides a sense of direction Guides decision making for management

Dell’s Mission Statement "Dell's mission is to be the most successful computer company in the world at delivering the best customer experience in markets we serve. In doing so, Dell will meet customer expectations of: Highest quality Leading technology Competitive pricing Individual and company accountability Best-in-class service and support Flexible customization capability Superior corporate citizenship Financial stability"

Strategic Intent and Stretch Summary of the strategic goals a company has adopted and a motivational message Focuses on key competitive targets Provides goals about which competencies to develop What kinds of resources to harness What segments to concentrate on Stretch reflects what can be Every company must create a fit between its resources and opportunities Over what time frame?

Strategy and the Non-Profit Sector 3 kinds of performance metrics: Measure success in mobilizing resources Evaluate effectiveness of its people Assess progress towards mission Narrowly define mission Invest in research Develop “micro level goals”

Strategy Formulation Process Steps Where are we now? Where do we go? How do we get there? Ex: Dell

Strategy & Planning Strategy Review Strategy Planning – imposing structure to the process comes from: Need to cope with complex issues Changing competitive environment Planning Cycle

Evaluating Strategic Options Criteria A strategy should: Create a competitive advantage and above avg. returns Focus on future competitiveness and long term obj. Be consistent and achievable Shareholder Value Value to shareholders, not customers Can create inconsistencies

Works Cited “Strategy A View From the Top” by Kluyver and Pearce