STRATEGIC CONCEPTS

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STRATEGIC CONCEPTS

• 1. Text Chapter 1
• Reading Recommendations
• 2. What is Strategy? Michael Porter, Harvard
  Business Review, 1996.
• 3. Marketing Myopia Theodore Levitt, Harvard
  Business Review, 1960.
• 4. Of Strategies, Deliberate and Emergent,
  Mintzberg Waters, Strategic Management
  Journal, 1985.
• 5. Wall Street Journal
• 6. BusinessWeek

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Definitions of Strategy

• Oxford Dictionary The art of war, especially the
  planning of movements of troops and ships etc.,
  into favorable positions plan of action or
  policy in business or politics etc.
• Alfred D. Chandler Jr. The determination of the
  long run goals and objectives of an enterprise,
  and the adoption of courses of action and the
  allocation of resources necessary for carrying
  out these goals.
• Kenneth Andrews Strategy is the pattern of
  objectives, purposes or goals and the major
  policies and plans for achieving these goals,
  stated in such a way as to define what business
  the company is in or is to be in and the kind of
  company it is or is to be.

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Strategy Origins

• Business strategy is a young field but its
  roots go back to early military strategy.
• Strategy comes from the Greek word strategos,
  which is formed from stratos, meaning army, and
  ag, meaning to lead.
• Carl von Clausewitz wrote in the early 1800s
  that tacticsinvolve the use of armed forces
  in the engagement, strategy is the use of
  engagements for the objects of war.

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How do you define Strategic Management?

• Strategy The unifying theme that gives coherence
  and direction to the decisions of an organization
  
• (entails choices among alternatives and signals
  organizational commitments, competitive
  approaches, and ways of doing business)
• DL Strategic management consists of the
  analysis, decisions, and actions an organization
  undertakes in order to create and sustain
  competitive advantages.
• Note Also known as analysis, formulation, and
  implementation
• (strategic management active)

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More History of Business Strategy

• Not until very large companies with the ability
  to influence the competitive environment within
  their industries did strategic thinking in the
  business world begin to be articulated.
• Alfred Sloan, CEO of GM, 1923 1946 - One of
  the first to analyze competition, Ford, and
  devise a strategic plan based on its strengths
  and weaknesses.
• Chester Barnard, Senior Executive of New Jersey
  Bell, 1930s - Argued managers should pay
  attention to strategic factors which depend on
  personal or organizational action.
• Wartime (WWI and WWII) efforts also impacted
  strategic thinking and use of formal strategic
  tools and concepts
• Allocation of scarce resources
• Use of quantitative analysis in planning
• The concept of learning curves
• The concept of distinctive competence
  (capability) - first mentioned by Philip
  Selznick, a sociologist, in a debate about
  whether or not to combine the military forces
  into a single unit (i.e., no Army, Navy, Air
  Force, Marines, just the US Military).

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More History

• It wasnt until the 1950s that strategy was
  truly introduced in business schools as a way of
  analyzing the competitive environment and setting
  organizational goals and objectives to fit that
  environment.
• These concepts serve as the foundation of
  strategic management study
• Previous Business Policy perspectives looked at
  maintaining a balance in accord with the
  underlying policies of the business as a whole.
  Harvard
• Kenneth Andrews SWOT Analysis was developed
  still in use today.
• Theodore Levitts Marketing Myopia argued that
  when companies fail it typically is because firms
  focus on the product rather than the changing
  patterns of consumer needs and tastes.
• Igor Ansoff argued, in response to Levitt, that a
  firms mission should exploit an existing need in
  the market, rather than using the consumer as the
  common thread in business. In reality a given
  type of customer will frequently have a range of
  product missions or needs. Corporate Strategy,
  1965.
• BCG developed the experience curve and
  portfolio analysis concepts.
• McKinsey Companys development of SBUs and the
  nine-block matrix.
• Mintzbergs Deliberate, Emergent Realized
  Strategies
• Porters Generic Strategies

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More History

• Max Webers traditional bureaucracy- this
  started research on Organizational Theory, but
  gives us a strong example of strategy.
• Webers (1947) description of the ideal type of
  bureaucracy
• Hierarchy of Authority
• Limited Authority
• Division of Labor
• Technically Competent Participants
• Procedures for Work
• Rules for Incumbents
• Differential Rewards

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Ansoffs Product / Mission Matrix
Categories define the common thread in an
organizations business/corporate strategy.
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BCGs Growth-Share Matrix
?
Bark!!
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Forms of Strategy
Intended Strategy
Deliberate Strategy
Realized Strategy
Unrealized Strategy
Emergent Strategy
Normally emergent strategy comes from learning
and dissemination within the organization.
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Porters Generic Strategies
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Are Strategies Needed ?

• To proactively shape how a companys business
  will be conducted.
• To mold the independent actions and decisions of
  managers and employees into a coordinated,
  company-wide game plan.
• To help the organization to succeed against its
  competition!!
• Key Attributes of Strategic Management (DL)
• Directs the organization toward overall goals and
  objectives.
• Involves the inclusion of multiple stakeholders
  in decision making.
• Needs to incorporate short-term and long-term
  perspectives.
• Recognizes tradeoffs between efficiency and
  effectiveness.

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Strategy, Survival and Success

• The ultimate goal of the organizations is to be
  successful success is
• Survival (long-term success)
• Achievement of Goals
• Profitability (probably most important, because
  it determines the ability to achieve the above
  two)
• Strategy can help achieve success, but it doesnt
  guarantee itcertain features of strategy
  directly contribute to success
• Goals that are simple, consistent, and long-term.
  
• Profound understanding of the competitive
  environment.
• Objective appraisal of resources.
• Effective implementation.
• These observations concerning the role of
  strategy can be made in relation to most human
  endeavors be it warfare, chess, politics, sport
  or business.

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Competition and Competitive Advantage

• Competition provides the rationale for strategy
  without competition, strategy is of no concern.
• The essence of strategy is the interdependence of
  competitorsor the establishment of sustainable
  competitive advantage over rivals.
• The study of strategy involves how we go about
  identifying, establishing, and sustaining
  competitive advantage.

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Competitive Advantages

• Difference between competitive advantage,
  sustainable competitive advantage, and
  distinctive competency.
• NFL example
• Will be seen in Princess Bride Video.
• Competitive advantage through Life-Time customer
  (customer service).

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Thinking StrategicallyThe Three Big
Strategic Analysis Questions

• 1. Where are we now? What is our situation?
• 2. Where do we want to go?
• Business(es) we want to be in and market
  positions we want to stake out
• Buyer needs and groups we want to serve
• Outcomes we want to achieve
• 3. How will we get there?

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The Strategy ConceptKey Elements
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DL
Where are we now?
Where do we want to go?
How will we get there?
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The Strategy ConceptLevels of Analysis

• Where to Compete?
• How to Compete?
• How to Contribute?