2. COMPETITIVE STRATEGY  Why Strategy?  What is Strategy?

3. COMPETITIVE STRATEGY THE ART OF WAR – CHINA 500 BC To win every battle by actual fighting before a war is won, it is not the most desirable. To conquer the enemy without resorting to war is the most desirable. The highest form of generalship is to conquer the enemy by STRATEGY. The next highest form of generalship is to conquer the enemy by alliance. The still next form of generalship is to conquer the enemy by battles. The worst form of generalship is to conquer the enemy by besieging walled cities.

4. COMPETITIVE STRATEGY  What is Strategy?  Strategy is the long-term plans and policies of a company  Strategy is a direct and intelligent response to uncertainty  Companies develop a strategy to cope with competition  Strategy consists of activities to create a Sustainable Competitive Advantage

5. Strategic Management StrategyProfit Strategy: goal and set of policies designed to achieve competitive advantage in a particular marketplace Competitive Advantage: ability to transform inputs into goods and services at a maximum profit on a sustained basis, better than competitors Firm Competitive Advantage Shareholder Value

6. COMPETITION  Different competitive forces influence the development and effectiveness of a Strategy  Five Forces  Rivalry among existing firms  Threat of new entrants  Threat of Substitutes  Power of Buyers (Government)  Power of Suppliers

7. 5-FORCES MODEL Industry Rivalry among Current Firms Substitute Products BuyersSuppliers New Entrants

8. INTERNAL PERSPECTIVE  Ability of Firm to compete is impacted by strengths and weaknesses  Resources and Capabilities  Core Competence defines the essential characteristics and abilities of the company

9. Perspectives on Strategic Management Industry Opportunities STRATEGY Firm Resources and Capabilities “Industry Structure” “Firm Capability” -Analyze industry structure -Superior product positioning in an attractive industry -Analyze firm resources -Develop unique resources and capabilities HOW TO BUILD SUSTAINABLE COMPETITIVE ADVANTAGE