1. Strategic Management Review of the Basics
Sharon F. Matusik, Ph. D.
Rice University

2. What is Strategy?
The creation of a unique and valuable position involving a different set of activities from those of your competitors.
…choosing what to do and what not to do.
Adapted from Michael Porter’s, “What is Strategy?”

3. Strategy Frameworks from Vault Guide
Industry level analysis
Porter’s 5 Forces
PIE application
Firm level analysis
SWOT
Core competencies
Value Chain
Seven S Model
Other forms of analysis
BCG 2x2 Matrix
Benchmarking, best practices

4. Porter’s 5 Forces THE INDUSTRY Risk of Entry (Barriers to Entry)
brand loyalty
absolute cost advantages
econ of scale, cap req’t
government regulations
distribution access
Bargaining Power of Buyers
High if:
few large buyers
product unimportant to output
buyers purchase in large quantities and purchase large percentage of industry output
low switching costs, little differentiation
threat of vertical integration backward
Bargaining Power of Suppliers
High if:
product has few substitutes and
is important, few suppliers
supplier has many other outlets for product
high switching costs
threat of vertical integration forward
THE INDUSTRY
Rivalry Among Established Firms
competitive structure
demand conditions
exit barriers
Threat of Substitute Products
existence of different products that serve consumers’ needs in
a similar way

5. Firm level analysis First, consider units of analysis Corporate level
Business level
Global level
Implementation of strategy

6. Units of Strategic Analysis
Corporate level strategy
Level and type of diversification
Business level strategy
Low cost, differentiation, niche
Variety, needs, access based
Global level strategy
Global, international, transnational, multi-domestic

7. Firm level analysis SWOT
Firm level strengths and weaknesses, matched to opportunities and threats from competitive environment
Opportunities and threats
“Core competency” analysis Strengths & weaknesses

8. Strategies: Mission, Goals Internal Analysis (strengths, weaknesses)
Strategic Choice
(SWOT)
External Analysis
(opportunities, threats)
Strategies:
--Corporate Level
undiversified, diversified
--Global
transnational, global, intl, multidomestic
--Business Level
low cost, differentiate, niche/focus
OR variety, needs, and access based
Strategy Implementation:
Match Strategy, Structure, Controls

9. Pursuing Competitive Advantage: Core Competencies
imitability
Assets
Core Competencies ↓
Core Products
Super-normal
profits
Competitive
Advantage:
Tangible
Intangible
…leading
to…
--Valuable
*market access
*contributes to perceived customer value
--Rare
--Difficult to Imitate
--Nonsubstitutable
Capabilities

10. Company infrastructure
Value Chain
Chain of activities to transform inputs into outputs that customers value.
Support
Activities
Company infrastructure
Human resources
Materials management
Primary
Activities
Mktg &
Sales
R&D
Production
Services

11. Seven S Model: Organizational Alignment
Staff Style Shared Values
Systems
Strategy Skills Formal Structure
Environment

12. Other Tools/Models Vault Analyses Others BCG 2X2 Matrix
Benchmarking, best practices
Others
Game Theory
Stakeholder Analysis
Aligning Corporate Strategy:
Resource continuum

13. Assumes interdependence among players
Game Theory
Assumes interdependence among players
Allocentrism vs. egocentrism
Consider how you can shape the game, don’t just play the game you find

14. Game Theory Elements of the game Players Added value Rules Tactics
capturing vs. creating value
Rules
Tactics
Scope

15. Potential to Cooperate
STAKEHOLDER ANALYSIS
Potential to Threaten
STAKEHOLDER TYPE 4
MIXED BLESING
STRATEGY:
COLLABORATE
STAKEHOLDER TYPE 1
SUPPORTIVE
INVOLVE
STAKEHOLDER TYPE 3
NONSUPPORTIVE
DEFEND
STAKEHOLDER TYPE 2
MARGINAL
MONITOR
High
Low
Potential to Cooperate ?
From Savage, Nix, Whitehead & Blair, 1991

16. The Resource Continuum
general
nature of resources
specialized
wide
scope of businesses
narrow
transferring
coordination mechanisms
sharing
(continued)

17. The Resource Continuum
general
nature of resources
specialized
financial
control systems
operating
small
corporate office size
large