2. Describe the historical roots of strategy
Create a strategic framework for a firm by outlining its purpose, analyzing its internal and external environments, defining its vision, mission, and objectives, and describing its strategic formulation process
Describe how a firm can achieve competitive advantage by defining specific activities, making trade-offs among activities, and creating fit among the activities
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3. Describe the ways in which companies enter global markets
Explain the differences between business-level strategy and corporate-level strategy
Explain the advantages and disadvantages of different global strategies
Describe the ways in which companies enter global markets
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4. Strategy and Competitive Advantage
Pursuing a set of unique activities that provide value to customers; making trade-offs about which businesses to pursue, what products to produce, and which customers to serve; and aligning resources to achieve organizational objectives
Strategy
A firm achieves a competitive advantage when it creates more economic value than competitors by engaging in a strategy that is difficult or impossible for others to duplicate
Competitive advantage
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5. Conglomeration
Act of growing through unrelated diversification, essentially by acquiring companies in different industries
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6. Strategy and the Organization: A Framework
What is the purpose of our business?
In what businesses or areas will we compete?
Questions in the development of strategy
How will environmental forces impact our firm?
Who will we serve?
What stakeholders are important?
How to distinguish our firm from competitors?
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7. Internal Environment Goal Core competencies
An organizationally desired result, product, or end state
Goal
A network of unique activities that strategically fit together and are difficult to replicate
Core competencies
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8. Figure 4.2 - Strategic Framework
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9. Vision, Mission, and Objectives
A concept or picture of what a firm wants to achieve and how it plans to accomplish that
Vision
The activities a firm performs for its customers
Mission
A statement that defines a firm’s reason for existence
Mission statement
Series of quantifiable milestones or benchmarks by which a firm can assess its progress
Objectives
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10. Strategy Formulation
Identifying how a firm can best align its resources to carve out a defensible position in the marketplace
Development of strategy:
Is the first step toward creating value for customers and achieving profitability
Is both a planned and emergent and evolving process
Is directed as a top-down process under the guidance of an upper management team lead by the CEO
Does not always flow in a linear fashion due to the dynamic nature of the business environment
Involves making a series of strategic choices
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11. Operational Effectiveness
Performing certain activities that enable a firm to operate more effectively than its competitors do
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12. Steps in the Strategy Definition Process
Choosing a set of activities
Strategic position: A place in an industry that a firm occupies by way of the products or services it offers and the methods it chooses to deliver them
Making trade-offs
Return on equity (ROE): A measure of the rate of return on the ownership interest of the common stock owners
Creating fit among activities
Aligning activities to reinforce the differentiation of the firm’s products or services such that they cannot be easily copied by competitors
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13. Figure 4.3 - Three Components of Strategy
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14. Table 4.2 - Criteria for Evaluating the Quality of a Firm’s Strategy
Source: Adapted from Donald C. Hambrick and James W. Fredrickson, “Are You Sure You Have a Strategy?” Academy ofManagement Executive, Vol. 15, No. 4, November 2001
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15. Business-Level versus Corporate-Level Strategy
The determination of how a company will compete in a
given business and position itself among its competitors
Business-level strategy
The way a company seeks to create value through the configuration and coordination of multimarket activities
Corporate-level strategy
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16. Figure 4.4 - Business-Level and Corporate-Level Strategy
Source: Adapted from Robert M. Grant, Contemporary Strategy Analysis: Concepts, Techniques, Applications (Cambridge, MA: Blackwell Publishers, 1991), p.20.
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17. Strategies for Going Global
Strategies in which the parent company organizes local subsidiaries and gives them autonomy to develop products tailored to local tastes
Multinational strategies
Strategies that focus on developing overall scale economies and global efficiency instead of catering to local tastes
Global strategies
Strategies that combine elements of multinational and global strategies by using foreign subsidiaries to produce and distribute products
International strategies
Strategies that balance a firm’s international activities among efficiency, local responsiveness, and organizational learning
Transnational strategies
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18. Market Entry Strategies
Shipping a firm’s products from its domestic home base to global markets
Exporting
A contractual arrangement whereby the licensor allows its technology, patents, trademarks, designs, processes, knowhow, intellectual property, or other proprietary advantages to be used for a fee by the licensee
Licensing
An arrangements which involves a corporation sharing management and marketing techniques with the owner in exchange for a fee and some percentage of the unit’s revenues
Franchising
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19. Market Entry Strategies
A structure where two firms come together to form a new company in a market
Joint venture
A structure where partners come together by contract to engage jointly in activities in a market
Alliances
A fully operational, independent entity that a firm sets up in a foreign country to conduct business in that market
Wholly owned subsidiary
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20. KEY TERMS
Alliances Business-level strategy Competitive advantage Conglomeration Core competencies Corporate-level strategy Exporting Franchising Global Strategies Goal International strategies Joint venture Licensing
Mission Mission statement Multinational strategies Objectives Operational effectiveness Return on equity Strategic position Strategy Strategy formulation Transnational strategies Vision Wholly owned subsidiary
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