Week 1: Business Strategy

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• Week 1 Business Strategy
• Introduction to the Business Strategy Module

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Learning Outcomes

• Describe the characteristics of strategic
  decisions
• Define what is meant by strategy and strategic
  management
• Understand the role of value creation in
  strategic management
• Understand the essence of current strategic
  debate

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Lecture Format

• Ice-breaker (group introduction)
• Module Overview (see teaching plan)
• Essence of Strategy
• Strategy as an Academic Subject
• Current Strategic Debate
• Value Creation and Strategic Management
• Welcome to the Experience Economy

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Essence of Strategy

• - Long term direction
• - Achieving advantage over competitors
• - Scope of firms activities
• - Matching firms resources and activities to
  environment
• - Stretching firms resources and competencies
• - May require major resource changes
• - May affect operational decisions
• - Influenced by values and expectations of
  power/culture carriers
• (Johnson and Scholes, 2002)

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What is Business Strategy?

• Long military history- strategies are employed to
  deal with opponents
• Fundamental premise of strategy is
• an adversary can defeat a rival - even a
  larger, more powerful one - if it can manoeuvre a
  battle or engagement onto terrain that is more
  favourable to its own capabilities, (Pitts and
  Lei, 1996, p. 6).

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Defining Strategy

• Strategy is the direction and scope of an
  organisation over the long term which achieves
  advantage for the organisation through its
  configuration of resources within a changing
  environment and to fulfil stakeholder
  expectations
• (Johnson and Scholes, 2002, p. 10).

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Basis of Strategy

• The essence of strategy is to match strengths
  and distinctive competence with terrain in such a
  way that ones own business enjoys a competitive
  advantage over rivals competing on the same
  terrain
• Competitive strategy for organisations aims at
  achieving a favourable match between a firms
  distinctive competence and the external
  environment in which it competes
• (Pitts and Lei, 1996, p. 7)

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Strategy as an Academic Subject

• long-established academic interest strategic
  management
• various schools of management thought emerged
  over time
• no one theory is set in stone
• every thesis has its antithesis
• much debate on relevance of traditional
  theory/thought in current business climate

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Current Strategic DebateDiscussion Topics

• Value in Management Theoretical and Practical
  Linkages
• Evolution of the Value of the Economic Offering
  in Management Theory, Thought and Practice
• Perspectives on a Changing Business World

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Value in Management Theoretical/Practical
Linkages

• Value is
• central tenet and cornerstone concept of
  strategic management
• transactions/interactions/exchanges create value
• purpose of business is to create value for
  stakeholders (e.g. customer value shareholder
  value)

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Evolution of the Value of the Economic Offering

• Value Creation and Competitive Positioning
• Commodity
• Tangible Product
• Service
• Experience
• (Pine and Gilmore, 1999)

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Strategies for Value Creation in a Changing
Business World

• Experience Economy (Pine and Gilmore, 1999)
• Old Vs New Economy (Gobe, 2001)
• Entertainment Economy (Wolf, 1999)
• Emotional Branding (Gobe, 2001)

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Relevant to

Differentiation
Stage Experiences
Customisation
Commoditisation
Deliver Services
Customisation
Competitive Position
Needs of customer
Make Goods
Commoditisation
Extract Commodities
Irrelevant to
Undifferentiated
Pricing
Premium
Market
(Source Pine and Gilmore, 1999)
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Entertainment Economy

• From buying and selling "real goods" to "feel
  goods
• Entertainment (not autos, steel or financial
  services) is fast becoming the driving wheel of
  the new world economy
• In the US, entertainment ranks ahead of clothing
  and health care as a percentage of household
  spending (clothes 5.2 , health care 5.2,
  entertainment, 5.4)
• (Wolf, 1999)

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Welcome to the Experience Economy!The Million
Dollar QuestionsHow can firms effectively
compete in the experience economy? What
strategic issues need to be addressed?
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References

• Pitts, R. and Lei, D. 1996, Strategic management.
  building and sustaining competitive advantage,
  West Publishing Co., MN, p. 6
• Gobe, M. (2001), Emotional brandingThe new
  paradigm for connecting brands to people,
  Allworth Press, New York.
• Pine, B. and Gilmore, J. (1999), The experience
  economy Work is theatre every business a
  stage, Harvard Business School Press, Boston.
• Wolf, M. (1999), Welcome to the Entertainment
  Economy, Penguin Books, London.