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Chapter Title

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 Thinking Strategically:
The Three Big Strategic Questions
1. What¶s the company¶s present situation?

2. Where does the company need to go from here?

· Dusiness(es) to be in and market positions to stake out

· Duyer needs and groups to serve

· Direction to head

ü. pow should it get there?

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

1-2
 Ôhat Do Ôe Mean By ³Strategy´?

m 2onsistsof ‘

 and


 ‘ used by managers to run the
company
m canagement¶s ‘  to
· row the business
·
ttract and please customers
· 2ompete successfully
· 2onduct operations
·
chieve target levels of
organizational performance
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 Strategy and the Quest for
Competitive Advantage
m he 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
m
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
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 uour ³Best´ Strategic Approaches to
Building Sustainable Competitive Advantage
m Deing the industry¶s low-cost provider (a cost-based
competitive advantage)
m 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)
m Focusing 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)
m Developing expertise and resource
strengths not easily imitated or matched by rivals
(a capabilities-based competitive advantage)
1-5
uig. 1.1: Identifying a Company¶s Strategy

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 Ôhy Do Strategies Evolve?

m
company¶s   is a    
m 2hanges may be necessary to react to
· Shifting market conditions
· echnological breakthroughs
· Fresh moves of competitors
· Evolving customer preferences
· Emerging market opportunities
· New ideas to improve strategy
· 2risis situations
1-7
 uig. 1.2: A Company¶s Strategy Is
Partly Proactive and Partly Reactive

1-8
 ½inking Strategy Ôith Ethics

m Ethical and moral standards go beyond

· Prohibitions of law and the language of ³thou shalt not´
m to issues of
· Duty and ³right´ vs. ³wrong´
m Ethicaland moral standards address
³What is the right thing to do?´
m wo 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
·
llows management to fulfill its ethical duties to all
stakeholders
1-9
 A uirm¶s Ethical
Responsibilities to Its Stakeholders
-       Rightfully expect some form of
return on their investment


  - Rightfully expect to be treated with dignity

and respect for devoting their energies to the enterprise

2

  - Rightfully expect a seller to provide them
with a reliable, safe product or service


  - Rightfully expect to have an equitable
relationship with firms they supply and be treated fairly

2


 - Rightfully expect businesses to be good
citizens in their community
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 Ôhat Is a Business Model?

m
business model addresses   




· Is the strategy capable of delivering
good bottom-line results?
m Do the

‘ 
‘ 
‘
of the strategy make good business sense?
· ½ook at



 the strategy is expected to
produce
· ½ook 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?
1-11
 Relationship Between
Strategy and Business Model

 
 
Deals with a company¶s
competitive initiatives and
business approaches
2oncerns whether revenues
and costs flowing from the

 demonstrate a
business can be amply
profitable and viable

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 Tests of a Ôinning Strategy

m --
-

· pow well does strategy fit

the firm¶s situation?

m 2-
  
· Does strategy lead to sustainable
competitive advantage?

m !-! 2
· Does strategy boost firm performance?
1-13
 Ôhy Is Strategy Important?

m
compelling need exists for
 
to  ‘  a firm¶s

will be ‘ 
‘

m
  ‘

is

to be a   
 

than one that views strategy as secondary
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