1. By: Team # 1 Jade Black Lauren Heldreth Roger May Kody Roach

2.  Shaped by the competitive environment  Constraints were given by the market  Choosing where, what segment/industry, and controlling specific recourses  Globalization and new technologies brought this under the microscope  Short lived competencies/resource ownership

3.  Resource based  Change from capturing to creating value  Nurturing recourses and capabilities  Human and intellectual capitol in new knowledge-based eco.  Physical and financial resources no longer road block  Companies ecosystems overall health

4. Tactical is doing thing better  Able to imitate ◦ Short term technological advantages  Advantage erosion ◦ Environment changes

5. Strategy is doing things differently  Long term vision w/ flexibility and learning  Preservation of meaningful differences

6.  Differentiation must be valuable  Must be maintained  Must be comprehensive

7.  Must create value, not capture value  Change of what is valuable  Preventing erosion of advantages  Looking to the next possible advantage

8.  Preventing myopia  Look in the direction of potential  Continual learning

9.  Rely on networks for success and sustainability ◦ ‘Biological ecosystem’: succeed/fail as a whole  Sophisticated technology essential for connections and collaboration  Interdependency vs. Stand-alone strategies ◦ Companies depend on influence to outside assets  Example: Wal-Mart’s supply-chain— manufacturer to consumer creates value to suppliers

10.  Goal: Align resources/capabilities with strategy  Can consist of ‘closing strategic capability gaps’ or ‘maintaining strategic focus’  How do we do this? ◦ Acquire and/or allocate resources efficiently ◦ Build capabilities or shape corporate culture ◦ Use of technology

11.  Substantive disparities in competences, skills, and resources between what customers demand/could demand in the future and what the organization currently can deliver  CLOSE the gap between what it takes to succeed and what we can do ◦ Better technology, stronger branding, stronger distribution network ◦ Ex: Apple-- Brand Management

12.  Difficult because strategy formulation and implementation are human activities  How to ensure that what is said is done? ◦ Communication ◦ Allocate necessary resources ◦ Proper incentives for effective alignment

13.  Time between a strategy is formulated and when it is implemented…what can change? ◦ New product ◦ New regulations  Results: Realized strategy and intended strategy can end up different  Strategy formulation at 3 levels: ◦ Corporate: what businesses should the firm compete in? ◦ Business Unit: What product/service should we offer? How do we create it and get to the marketplace? ◦ Functional: General marketing, HR, or technology decisions

14.  External Stakeholders: Suppliers, partners, sometimes competitors ◦ Create value to customers  Internal Stakeholders: All employees ◦ Motivate  How much stake/influence do people have? ◦ Ownership stake: Shareholders, directors ◦ Economic stake: Creditors, employees, customers, suppliers ◦ Social stake: Regulatory agencies, charities, community  Different forms of power: ◦ Formal: Legal obligations or rights ◦ Economic: Withhold products, services, or capital ◦ Political: Persuade other stakeholders to influence firm behavior

15.  Vision: Summarizes a company’s broad strategic focus for the future ◦ Focus on few activities and excel ◦ Adopt a vision greater than resources and competencies allow ◦ Focus on “a new future” rather than competition  Gaps become challenges, not constraints  Apple vision statement: ◦ "To make a contribution to the world by making tools for the mind that advance humankind." ◦ Clear, meets interests of stakeholders, feasible

16.  Mission: Documents the purpose of an organization ◦ Often include corporate values  Ex: Ethical behavior, honesty, integrity, social concerns ◦ Creates expectations from employees  Apple mission statement: ◦ Apple computer is committed to protecting the environment, health and safety of our employees, customers and the global communities where we operate. We recognize that by integrating sound environmental, health and safety management practices into all aspects of our business, we can offer technologically innovative products and services while conserving and enhancing resources for future generations. Apple strives for continuous improvement in our environmental, health and safety management systems and in the environmental quality of our products, processes and services.

17.  “ an executive summary of the strategic goals a company has adopted and a motivational message.”  Focuses organization on key targets  Provides goals  Resources needed  Segment concentrations  Focuses on closing the capability gap

18.  “Reflects the recognition that successful strategies are built as much around what can be as around what is.”  Create fit between resources and opportunities  Establish a time frame  Too short or too long has different affects

19.  Experiencing fundamental shifts ◦ Becoming more strategic in how they operate  Performance Metrics: 1.Measure success in gathering their resources  EX: fundraising performance, membership growth, and market share 2.Evaluate effectiveness of organizations jobs/tasks  EX: number of projects organization completes 3.Assess progress of meeting its chosen mission  Three approaches to measurement:  Define mission narrowly  Invest in research to evaluate activities results  Develop set of goals

20.  Steps: Three Key Questions 1.Where are we now? 2.Where do we go? 3.How do we get there?

21.  Asses the current state of the business or company  Revisit organizations mission, vision and who stakeholders are  Detailed evaluation of performance  Trends in various environments  Opportunities/threats within industry  Internal strengths and weaknesses

22.  Use answers to previous questions to: ◦ Generate and explore strategic alternatives  Business Unit Level options: ◦ Growth in few markets or adopting wider market focus ◦ Go it alone or partner with another company  Corporate Level options: ◦ Shaping the portfolio  Strategic Intent: identifies guiding business concept to move company forward

23.  How to achieve desired objectives  How to Bridge capability gap ◦ Separating current organizational skills from those needed to reach strategic intent  Strategic Alignment ◦ Core competences ◦ Emerging market needs ◦ Key success factors  End product: detailed set of initiatives for implementing strategy

24.  Various reasons for strategy review: ◦ New leadership ◦ Disappointing performance ◦ Changes in ownership ◦ Emergence of new competitors ◦ EX: General Motors: Chairman of the Board  Formal system ensures quality execution  Planning Cycle 1.Review at corporate level 2.Update of long-term strategies 3.Plans are reviewed 4.Detailed operating plans developed

25.  Criteria: ◦ Does it produce competitive advantage? ◦ Long-term objectives appropriate? ◦ Objectives consistent and achievable?  Can/should be quantified?  ROI was most common measure

26.  Shareholder Value ◦ Now most widely accepted measurement ◦ Shareholder Value Approach (SVA) def: “Value of the corporation is determined by the discounted future cash flows it is likely to generate”  Strategic initiatives are treated as investments ◦ Economic Value Added (EVA): “after-tax operating profit minus the cost of capital”  Various problems  Strategists: ◦ Measures value delivered to customers ◦ Evaluation schemes have gained acceptance  SVA: ◦ Measures value to shareholders ◦ Not universally embraced