c

2




 


2

 


 
 



c  

  

 !
"#
$ 
^

  ^
 
  !
D2 


 


#

 % 
&

#$
'
#


c



  What Do We Mean By Strategy?
Strategy and the Quest for Competitive Advantage
Identifying a Company¶s Strategy
Why a Company¶s Strategy Evolves Over Time
A Company¶s Strategy Is Partly Proactive and Partly Reactive

  Strategy and Ethics: Passing the Test of Moral Scrutiny

  The Relationship Between a Company¶s Strategy and Its
Business Model
  What Makes a Strategy a Winner?
  Why Are Crafting and Executing Strategy Important?
c
 
  




   
c What¶s the company¶s present situation?

 Where does the company need to go from here?

Business(es) to be in and market positions to stake out

Buyer needs and groups to serve

Direction to head

r £ow should it get there?

A company¶s answer to ³how
will we get there?´ is its 

c
 2
2 !"#

  Consistsof ˜

 and


 ˜ used by managers to run the
company
  Management¶s M˜  to
urow the business
Attract and please customers
Compete successfully
Conduct operations
Achieve target levels of
organizational performance
c
 
$%

& ' (
 £  to grow the business
 £  to please customers 
£

 £  to outcompete rivals 

 £  to manage each functional

piece of the business (R&D, production, marketing,
£R, finance, and so on)
 £  to respond to changing market conditions
 £  to achieve targeted levels of performance

c

 
!$%"&

  Strategic choices about ³how´ are based on

Trial and error organizational learning about what has worked and
what has not worked
Management¶s appetite for taking risks
Managerial analysis and strategic thinking about how best to
proceed, given market conditions and the company¶s circumstances
  In choosing a strategy, management is in effect saying,
!)


 &&* 


%& %

+
,%
+
 

 
*  &
  + 
 + 

 
   ,
  
  ,  +,* 
&"
c
 °-
&&


  Developing a successful strategy  on making

˜

 aimed at
Appealing to buyers in ways to set the enterprise apart from
rivals 
Carving out its own market position
  Involves   a ˜M
element to
Attract customers 
Produce a competitive edge

‘ ˜

   


˜˜
˜
   
c
 °-

.
  



/0**+ + 

*

  %+ //+ 

%  

* *%
1%
+
%
  + //+   

%
//+ %+ 
  % 
, 2 ,
3+ && 
  410 

&&* *0/*

+ & &

*

  4+ // 1&& * 
  &

1+ 
  -

&

+  * 
%


& +  

& %
 *

    & 
 ++ 
c
 '  56  

rom your perspective as a cable or satellite service

consumer, does Comcast¶s strategy (as described in
Illustration Capsule cc) seem to be well matched to
industry and competitive conditions?

Does the strategy seem to be keyed to a cost

advantage, differentiating features, serving the unique
needs of a niche, or developing resource strengths and
competitive capabilities rivals can¶t imitate or trump (or a
mixture of these)?

What is there about Comcast¶s strategy that can lead to

sustainable competitive advantage?

c c
 
&
  +)+
  The heart and soul of any strategy are the actions
and moves in the marketplace that a company
makes to strengthen its competitive position and
gain a competitive advantage over rivals
  A creative distinctive strategy that sets a company
apart from rivals and yields a competitive
advantage is a company¶s most reliable ticket to
above average profitability
‘
˜


  ˜
 
‘
˜
 
 
     
c cc
 ) %&
7
á
    +)+
  A company achieves 
 ˜

when an attractive number or buyers prefer its
products/services over those of rivals and when the basis
for this preference can be maintained over time
Its nice when a strategy produces a temporary
competitive edge but a durable edge over rivals greatly
enhances a company¶s prospects for winning in the
marketplace and realizing above average profits

2
  
  & 
 .*
& &
+,*
 

 

,

 
˜
 ˜


c c

 '!" )


  *
   +)+
  Being the industry¶s low cost provider (a cost based
competitive advantage)
  Incorporate differentiating features (a ³superior product´
type of competitive advantage keyed to higher quality,
better performance, wider selection, value added
services, or some other attribute)
 
ocusing on a narrow market niche (winning a
competitive edge by doing a better job than rivals
of serving the needs and preferences of
buyers comprising the niche)
  Developing expertise and resource
strengths not easily imitated or matched by rivals
(a capabilities based competitive advantage)
c c
   +)+-3


  Strive to be the industry¶s low cost provider

 
á
 
  Outcompete rivals on a key differentiating feature
r  r    Reliability in baby products
£    ing of the road styling
K   Top of the line prestige
 ˜  Engineering design and performance
o o   uood value

  ˜
 Wide selection and convenience
c c
   +)+-3
89

 
ocus on a narrow market niche
  Online auctions
ro
     Quick oil changes
˜ 
irus protection auctions
á
˜  Premium coffees and coffee drinks
V
 ‘  Cable T

  Develop expertise, resource strengths, and
capabilities not easily imitated by rivals
!  ext day delivery of small packages

  Theme park management and family entertainment
V    Sophisticated production system
K‘   Personalized customer service
c c
' cc0 &  .

c c
 5°%

). :&  ++
 


*
) . %

 %


+
%



 +

*  ++
 +
   ++  

+ & *

* 

 
   ++




%

* 
  
   ++*

+ 
 *; +
- 

 *
  ++ 
.
*
&
+ *+/+
& *
&  
&
c c
 2
 -+
+#

 A company¶s   is a    

  Changes may be necessary to react to
Shifting market conditions
Technological breakthroughs

resh moves of competitors
Evolving customer preferences
Emerging market opportunities
ew ideas to improve strategy
Crisis situations
c c
 ' c) .0

  + 
 +

c c
 & 0
-3  -

  Strategy making is a market driven activity involving
Studying market trends and competitors¶ actions
een observation of customer needs
Scrutinizing business possibilities based on new
technologies
Building firm¶s market position via acquisitions or new
product introductions
Pursuing ways to strengthen firm¶s competitive
capabilities
Proactively searching out opportunities to

Do new things or

Do existing things in new or better ways

c

 7  2 
-


  Ethical and moral standards go beyond

Prohibitions of law and the language of ³thou shalt not´
  to issues of
Duty and ³right´ vs ³wrong´
  Ethicaland moral standards address
³What is the right thing to do?´
  Two criteria of an ethical strategy:
Does not entail actions and behaviors that cross the line
from ³should do´ to ³should not do´ and ³unsavory´ or
³shady´ and
Allows management to fulfill its ethical duties to all
stakeholders
c
c
 )' .-


 *
 0


 "      
&

3&&

  +

!
  /  
&

3*% 
  

&+ 
  
 

‘

  /  
&

3

+ 

% 

*
,&+ 

á
  /  
&

3
+: *


 
% 
& 

*& 


‘


 /  
&

3* *
  < 
  
c


 
& -3 +
7  % 
-

 
orbid pursuit of ethically questionable business
opportunities
  Insist all aspects of company strategy
reflect high ethical standards
  Make it clear all employees are
expected to act with integrity
  Install organizational checks and balances to
Monitor behavior
Enforce ethical codes of conduct
Provide guidance to employees in gray areas
  Display genuine commitment to conduct business
activities ethically
c

 5°%

)(* !

"
) &

&  && 



 

% 
+


 
 
  *
+ 
&!

 "*+* 
&* 

 *
, ; 
,


&

+ 
 
 &


&
 % 
%
 


 *  
+

* &
 

 

 
  
3& 

!%" 
. 
- &   
% 

.&


*+*
.
&
&& 
c

 2
0  
#

 Abusiness model addresses M£  



#
Is the strategy capable of delivering
good bottom line results?
  Do the 
˜  ˜ 
˜
of the strategy make good business sense?
oook at 
 
 the strategy is expected to
produce
oook at associated ˜ 
˜
 and potential  

 
Do resulting earnings streams and ROI indicate the
strategy makes sense and the company has a viable
business model for making money?
c

 
 
%
  

á     
   
Deals with a company¶s Concerns whether revenues
competitive initiatives and and costs flowing from the
business approaches   demonstrate a
business can be amply
profitable and viable

c

 &.  

-
&




+
 
=
&




 6&% 

 +
 + 
+>?@


 +
 &%& 3=+ *


=
*/++
 
,+&  



& 

+ 
+
&
 


;++*  

  3/ 

&%% 
&   
  

c

$.  




* +&&&+


&%


%
 * *
+
&+
  
  %

&7 3
&
&$

 ,
 *  &
 
AB
% 
c
 B


+
*




 
< 
<3 : 7 3*
+  &/*  ,
 ,&% < ,

/   7 
c

 5°%



 /   .* 


 %


) 
 *
&  *

  ++

 

.3
 
  

 

* &
/  +

 
. +

 +

- 
.


&

 
/ 


c

'  56  

Who has the best business model 

Microsoft or Red £at?

c 
 &2  

 u $!áá  VV!áV

£ow well does strategy fit
the firm¶s situation?

 ‘ %!V V &!&$Vu!V!áV
Does strategy lead to sustainable
competitive advantage?

  %!K K$‘!V!áV
Does strategy boost firm performance?
c c
 6
   &C 

  &
  Internal consistency and unity among all pieces of
the strategy

  Degree of risk the strategy poses as compared to

alternative strategies

  Degree to which the strategy is flexible and

adaptable to changing circumstances

2


  
+,

+ 

 &
  & 

c 

 2
00#

 A compelling need exists for
 

to  ˜  a firm¶s

will be ˜ 
˜

 A   ˜

is

to be a   
 

than one that views strategy as secondary
c 
2D2-3 
E2 
  Crafting and executing strategy are core management
functions
  Among all things managers do, nothing affects a
company¶s ultimate success or failure more
fundamentally than how well its management team
Charts a company¶s direction,
Develops competitively effective strategic moves and business
approaches, 
Pursues what needs to be done internally to produce good
day in/day out strategy execution
!˜˜
  &3

 

 
 ˜˜  


*
 &%   

F
c