2 AGENDA Hierarchy of Strategy Two Foundational Schools of Thought What is Strategy?Crafting StrategyStrategy Concept I: 5 P’sHonda Cases
3 Hierarchy of Strategy Corporate Business Functional In which businesses should we be?How should we manage the array of businesses?BusinessHow should we compete in a given business?FunctionalHow best can each function support the business level strategy?
4 External Analysis Mission & Vision Strategy Control Internal Analysis What is Strategy?Simulated CompanyExternal AnalysisMission& VisionBusinessInternationalStrategyControlInternal Analysis
5 Two Schools of Thought IO Model of Superior Profitability Resource-Based Theory of the Firm
6 IO Model of Superior Profitability Assumptions:The external environment imposes constraints that determine the strategies that can result in superior profitability.Competing firms control similar resources and pursue similar strategiesResources utilized by firms are highly mobile - - thus homogeneous
7 IO Model of Superior Profitability Prescriptions: Firms must look for attractive industries in which to competeEmphasis: External environment, especially the Industry - analyze it!
8 Resource-Based Theory of the Firm Assumptions:Firms acquire different resources over timeResources heterogeneity within a particular industryResources may not be highly mobile across firmsDifference in resources and how they are used form the basis of competitive advantage
9 Resource-Based Theory of the Firm Prescriptions: Firms should look at their resources and then see how they can be usedWhat about the resource makes it a source of competitive advantage?ValuableRareImperfectly imitableOrganized
10 Resource-Based Theory of the Firm Emphasis: Organization, especially its resources
13 The Five P’s Plan: A consciously intended course of action Ploy: A maneuver intended to outwit a competitorPattern: Consistency in a stream of actionsPosition: Niche or product-market domain place in the industryPerspective: An ingrained way of perceiving the world