Books and Readings

1
Competitive Outcomes
Firm As Actions
Firm Bs Actions
Rivalry
Industry Characteristics
Organizational Characteristics
2
What Is Strategy?

• Plan/course of action...to achieve favorable
  position
• Alignment of course of action with long-run goals
• A plan that integrates the goal, action
  pattern/sequence, and resources into a cohesive
  whole
• Steps taken to achieve competitive
  advantagesustainable edge over competitors

3
Why Strategy? Action that Creates Value
Lynaghs
Two Keys Tavern
Two Keys Tavern
4
Is Strategy Important?

• Execs, consultants, and B-school professors
  ...strategy is the single most important
  management issue and will remain so for many
  years. Business Week, Aug. 1996
• Companies that now rely on strategy groups

• UPS
• Applied Materials
• H-P
• Smuckers

• Sears
• Nokia
• EDS

5
Beyond SWOT
Environment Outside-in (I/O)
Firm Inside-out (RBV)
Strategy
6
Destroying Strategic Management MythsFortune,
June 1997

• Life is easy as king of the hill
• ? Hypercompetition erodes advantages
• Industry analysis is the key to strategy
• ? Difficult to define industry
• Focus on your direct competitors
• ? Potential competitors greater threat
• For CEOs, its you against the world
• ? Savvy CEO involve more people

7
What Makes Shareholders Rich?...Create New Wealth

• Vision looks beyond current boundaries
• Strategy as continuous process
• New perspectives, voices, conversations
• Change rules of game
• Experimentation, surprise

8
New Strategy Glossary

• value migration movement of growth and profit
  opportunities from one industry player to another
• co-evolution by working with direct competitors,
  customers, and suppliers, a company can create
  new businesses, markets, and industries
• white-space opportunity overlooked areas of
  growth possibilities that don't exactly match
  existing skills
• strategic intent corporate goal or destiny that
  represents a stretch for the organization, a
  point of view about the competitive position a
  company hopes to build over the coming decade

9
Breaking the Rules...
SOUTHWEST
10
Dynamic Strategy Reborn...
August 1996
June 1997
11
Where Does Strategy Occur?
Top Management
Functional Management
12
What do strategists do?

• Strive for competitiveness / above-average
  returns
• Assess external factors causing change
• Develop internal factors that create advantage
• Navigate stakeholder landscape
• Strategic management process Five Stages

13
What else..?

• External Stuff
• Globalization
• Technological change
• Diverse and increasingly vociferous stakeholders
• Wall Street
• Environment

• Internal Stuff
• Building capabilities core competence
• Organizational culture
• Leadership
• Strategic HR
• Board of Directors

14
1. Articulate Mission / Intent

• Sense of purpose, direction
• In which industries does firm compete?
• How does firm compete?
• Who are customers?
• Who are competitors?

15
2. Set Objectives Performance Targets

• Financial 10 ROI and 1.55 EPS by YE99
• Strategic Achieve lowest prices and enter 5 new
  country markets by 2001

16
3. Craft Strategy

• How to compete
• Differentiated innovator
• Multinational markets
• Market-push

17
4. Implement Strategy

• Delegate responsibility to functional mgt.
• Develop action plan
• Establish European distribution center
• Create new ad campaign for 2004 Olympics
• Launch new version of product
• Cut prices on older version by 33

18
5. Evaluation and Adjustment

• Assess results relative to goals
• Identify new opportunities / constraints
• Change strategy / implementation (as needed)

19
Planning vs. Strategy ProcessWhats the
Difference?
Intended Strategy
Strategy Carried Out
Dropped Strategic Actions
Emergent Strategic Actions
20
Competitive Interaction in Chess
8 7 6 5 4 3 2 1
This Sequence Black Knight b4 White Pawn
c3 Black Bishop g4 White Queen b5 Black
Pawn c5

• Named Sequences
• Epaulettes Mate
• Sicilian Defense

a b c d e f
g h
21
Different Approaches to Strategy

• Blueprint
• Structural Equation
• Drama
• Journey
• Conversation
• Stimuli-Responses
• Conversation

22
Competitive Outcomes
Firm As Actions
Firm Bs Actions
Rivalry
Industry Characteristics
Organizational Characteristics