1. What is Strategy and Why is it Important?
Chapter One
What is Strategy and Why is it Important?

2. Why do we need strategy?
The reasons why firms succeed and fail is perhaps the central question in strategy
Answers the fundamental question of the firm
Where we are now?
Where we going?
How are we going to get there?

3. Strategic Management Defined
decisions and actions that determine long-term performance
formulation and implementation of plans designed to achieve objectives
an action managers take to achieve one or more of an organization’s goals
unifying theme that gives coherence and direction to organizational/individual decisions
game plan management has for positioning the company in its chosen market, competing successfully, satisfying customers, and achieving good business performance
management’s action plan for running the business and conducting operations; commitment to pursue a particular set of actions in growing the business, attracting customers, competing successfully, conducting operations, and improving financial and market performance

4. What is Strategy?
Strategy is not doing similar activities better than your rivals – that’s operational effectiveness
continual improvement not a sustainable advantage
industry-wide cost reductions do not lead to increased profitability

5. What is Strategy?
Strategy is performing different activities or performing similar activities in a different way
As suggested by the book: 4 of the most dependable approaches are 1) low cost, 2) differentiating features, 3) fulfilling specialized needs, and 4) build unassailable set of capabilities.

6. What is Strategy?
1) Strategy is performing different activities or performing similar activities in a different way
Strategy is about positioning
a) Variety-based positioning
b) Needs-based positioning
c) Access-based positioning

7. What is Strategy? Tradeoffs arise from
2) Strategy is about choosing a position which requires tradeoffs, choosing what not to do
without tradeoffs, all firms would imitate
Tradeoffs arise from
inconsistent image/reputation
different activities, products, equipment, employees, skills, systems, machines
priorities, internal coordination, and control

8. What is Strategy?
3) Strategy is about combining activities as advantages come from fit and reinforcing

9. What is Strategy?
3) Strategy is about combining activities as advantages come from fit and reinforcing
Operational effectiveness is about excellence in individual activities
Fit/integration increases sustainability by reducing imitability

10. What is Strategy?
4) The desire to grow is most threatening to an effective strategy
Blurs uniqueness
Creates compromises
Reduces fit
Erodes original advantages

11. Fig. 1.2: A Company’s Strategy Is Partly Proactive and Partly Reactive
Emergent strategy elements

12. What is Strategic Effectiveness?

13. Managerial Process of Crafting and Executing Strategy
Chapter Two
Managerial Process of Crafting and Executing Strategy

14. Fig. 2.1: The Strategy-Making, Strategy-Executing Process

15. Developing a Strategic Vision
A strategic vision describes the route a company intends to take in developing and strengthening its business. It lays out the company’s strategic course in preparing for the future.
A strategic vision exists only as words and has no organizational impact unless and until it wins the commitment of company personnel and energizes them to act in ways that move the company along the intended strategic path!

16. Elements of a Strategic Vision
Delineates management’s aspirations for the business
Provides a panoramic view of “where we are going” by charting a strategic path
Is distinctive and specific
Avoids use of generic, dull & boring language that could apply to most any company
Captures employees’ emotions steers them in a common direction
Is challenging and a bit beyond a company’s immediate reach

19. Strategic Vision vs. Mission
A strategic vision concerns “where we are going”
Markets to be pursued
Future product/ market/ customer/ technology focus
Kind of company management is trying to create
The mission statement focuses on its “who we are and what we do”
Current product and service offerings
Customer needs being served
Technological and business capabilities

20. Mission Statements Boundaries of the current business
A well-conceived mission statement distinguishes a company’s business makeup from that of other profit-seeking enterprises in language specific enough to give the company its own identify!
Boundaries of the current business
Fundamental purpose that sets it apart from other firms of its type
Conveys
Who we are,
What we do, and
Why we are here

21. Objectives Turns mission into performance outcomes
Organizations produce what is measured
Long and Short term
All levels of the organization
Top-down, not Bottom-up

22. Types of Objectives Required
Financial Objectives
Strategic Objectives
Outcomes focused on improving financial performance
Outcomes focused on improving competitive vitality and future business position $

23. 6 Characteristics of a Good Objective

24. Leading versus Lagging Indicators
Current financial results are “lagging indicators” reflecting results of past decisions and actions—good profitability now does not translate into stronger capability for delivering better financial results later
However, meeting or beating strategic performance targets signals growing competitiveness & strength in the marketplace, thus developing the capability for better financial performance in the years ahead
Good strategic performance is thus a “leading indicator” of a company’s capability to deliver improved future financial performance
Unless a company sets and achieves stretch strategic objectives, it is not developing the competitive muscle to deliver even better financial results in the years ahead!

25. One Balanced Scorecard
A balanced scorecard for measuring company performance is optimal; it entails
Setting financial and strategic objectives
Placing balanced emphasis on achieving both types of objectives
Just tracking financial performance overlooks the importance of measuring whether a company is strengthening its competitiveness and market position.
The surest path to sustained future profitability year after year is to relentlessly pursue strategic outcomes that strengthen a company’s business position and give it a growing competitive advantage over rivals!

26. A Second Balanced Scorecard
Comprehensive view of the firm from the customer, internal, financial and innovation/learning perspectives
1) How do customers see us?
Time, quality, service & performance, costs
2) What must we excel at?
3) How do we look to shareholders?
4) Can we continue to improve and create value?

27. A Third Balanced Scorecard
Triple Bottom-line
Economic, social and environmental performance

28. Levels of Strategic Management

29. HP’s Business Strategy
Financial
Services
Enterprise
Storage &
Servers HP
Services
Software
Personal
Systems
Imagining
and Printing

30. So….how can firm’s be profitable?
Choose an attractive industry in which to compete -
2) Attain a competitive advantage within an industry -

31. Two Models of Profitability
I/O Model (Industrial/Organizational Economics Model)
Resource Based View of the Firm

32. I/O Model Strategy & Performance General Environment
Industry Environment
Competitive Environment
General Environment
Industry Environment
Competitive Environment
3 Assumptions 1) 2) 3)

33. Resource Based View Strategy The Firm’s & Resources & Performance
Capabilities
Strategy
&
Performance
3 assumptions 1) 2) 3)