Welcome To The Class of 'Strartegic Management'
Welcome To The Class of 'Strartegic Management'
Welcome To The Class of 'Strartegic Management'
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Chapter-1
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LEARNING OBJECTIVES
THIS CHAPTER WILL HELP YOU UNDERSTAND:
1. What we mean by a company’s strategy
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CORE CONCEPT
A company’s strategy is the set of
actions that its managers take to
outperform the company’s competitors
and achieve superior profitability.
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WHAT DO WE MEAN BY STRATEGY?
♦ What is our present situation?
● Business environment and industry conditions
● Firm’s financial and competitive capabilities
♦ Where do we want to go from here?
● Creating a vision for the firm’s future direction
♦ How are we going to get there?
● By crafting an action plan that heads the firm in the
direction of its intended market position, attracts
customers, achieves financial and market performance
targets, and gets it where it wants to go—that is, its
strategy
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WHAT IS STRATEGY ABOUT?
Strategy is all about How:
● How to position the firm in the marketplace
● How to attract customers
● How to compete against rivals
● How to achieve the firm’s performance targets
● How to capitalize on opportunities to grow the business
● How to respond to changing economic and market
conditions
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STRATEGIC MANAGEMENT PRINCIPLE
♦ Strategy as a choice
● Is about deciding to compete differently from rivals—
doing what competitors do not do or, even better,
doing what they cannot do!
● Is likely to be successful when its actions, business
approaches, and competitive moves appeal to buyers
in ways that
Set a company apart from its rivals
Stake out a market position that is not crowded with
strong competitors
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STRATEGY AND COMPETITORS
♦ Strategy is about competing differently from rivals.
● Doing what they do not do or doing it better
● Doing what they cannot do
● Doing things that attract customers and set a firm apart
from its rivals
● Doing things calculated to produce a competitive edge
over rivals
● Doing what the firm must do and also knowing what it
must not do
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WHY BOTHER WITH STRATEGY?
♦ A firm needs a strategy to specify what
actions will be taken.
● To improve its financial performance
● To strengthen its competitive position
● To gain a sustainable competitive advantage
over its market rivals
♦ A creative, distinctive strategy
● Helps produce above-average profits
● Increases competitive pressures on rivals
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Starbucks’s Strategy in the Coffeehouse Market
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STRATEGY AND THE QUEST FOR COMPETITIVE ADVANTAGE
♦ Competitive advantage
● Requires meeting customer needs either more
effectively (with products or services that customers
value more highly) or more efficiently (by providing
products or services at a lower cost to customers)
♦ Sustainable competitive advantage
● Requires giving buyers lasting reasons to prefer a firm’s
products or services over those of its competitors
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BASIC STRATEGIC APPROACHES
Low-cost Broad
provider differentiation
Focused Focused
low-cost Best-cost differentiation
provider
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STRATEGIC APPROACHES
Building a competitive advantage by:
● Striving to become the industry’s low-cost provider
Efficiency in controlling provider costs
● Outcompeting rivals on differentiating features
Effectiveness in delivering value to customers
● Offering customers the lowest prices for differentiated
goods
Best-cost provider
● Focusing on better serving a niche market’s needs
Efficiency and effectiveness
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CORE CONCEPT
A firm achieves a competitive advantage when
it provides buyers with superior value compared to
rival sellers or offers buyers the same value as its
rivals but at a lower cost to the firm.
The firm achieves a sustainable competitive
advantage if the basis for its advantage persists
despite the best efforts of competitors to match or
surpass its advantage.
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GAINING SUSTAINABLE COMPETITIVE ADVANTAGE
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WHY A COMPANY’S STRATEGY EVOLVES OVER TIME
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STRATEGIC MANAGEMENT PRINCIPLE
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THE EVOLVING NATURE OF A FIRM’S
STRATEGY
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CORE CONCEPT
A firm’s deliberate strategy consists of proactive
strategy elements that are both planned and
realized as planned.
Its emergent strategy consists of reactive
strategy elements that emerge as changing
conditions warrant.
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FIGURE 1.2 A Company’s Strategy Is a Blend of Proactive
Initiatives and Reactive Adjustments
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A FIRM’S STRATEGY AND ITS BUSINESS
MODEL
How the firm will make money:
● By providing customers with value
The firm’s customer value proposition
● By generating revenues sufficient to cover
costs and produce attractive profits
The firm’s profit formula
It takes a proven business model—one that
yields appealing profitability—to demonstrate
viability of a firm’s strategy.
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THE RELATIONSHIP BETWEEN A FIRM’S STRATEGY AND ITS BUSINESS MODEL
Realized Business
Strategy $$$? Model
Competitive
Initiatives
Value
Business
Proposition
Approaches
Profit
Formula
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CORE CONCEPT
A firm’s business model sets forth the logic for
how its strategy will create value for customers,
while at the same time generate revenues
sufficient to cover costs and realize a profit.
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BUSINESS MODEL ELEMENTS: The Customer Value
Proposition
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BUSINESS MODEL ELEMENTS: The Profit Formula
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FIGURE 1.3 The Business Model and the Value-Price-
Cost Framework
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IS OUR STRATEGY A WINNER?
Three
The Competitive Tests of a The Performance
Advantage Test Winning Test
Strategy
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WHAT MAKES A STRATEGY A WINNER?
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WHY CRAFTING AND EXECUTING STRATEGY ARE IMPORTANT
TASKS
Strategy provides:
● A prescription for doing business
● A road map to competitive advantage
● A game plan for pleasing customers
● A formula for attaining long-term standout
marketplace performance
Good Strategy + Good Strategy Execution =
Good Management
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THE ROAD AHEAD
♦ Strategy is about asking the right questions.
● What must managers do, and do well, to make
a firm a winner in the marketplace?
♦ Strategy requires getting the right answers.
● Good strategic thinking and good management of the
strategy-making, strategy-executing process
● First-rate capabilities and skills in crafting and executing
strategy are essential to managing successfully
♦ Welcome and best wishes for your success!
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Appendix 1 Figure 1.1 Identifying a Firm’s Strategy–What to Look For
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♦Questions??????
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ALHAMDULILLAH
Thank You
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