Foundations of Strategy: Chapter 1

Foundations of Strategy: Chapter 1 Group 1 Allyson Hatz Alexa McDaniel Molly Moseley Bonnie Lee Rafael Garcia

Strategy • Strategy: The means by which individuals or organizations achieve their objectives or goals • Corporate strategy • Defines the scope of the firm in terms of the industries and markets in which it competes • Business strategy • Concerned with how the firm competes within a particular industry or market

Role of Strategy in Success • Goals that are simple, consistent, and long term • Single-minded commitment to clear goal • Profound understanding of competitive environment • Objective appraisal of resources • Exploit internal strengths and protect areas of weakness • Effective implementation • Emergence of organizations and responding to changes in the environment

Strategy Design • Intended strategy • Conceived by top management • Negotiation, bargaining, and compromise • Realized strategy • Actual strategy implemented • Only 10-30% of intended strategy is realized • Emergent strategy • Interpret the intended strategy and adapt to changing external circumstances

Roles of Strategy • Decision support • Coordinating device • Communication • Target • Motivation and inspiration • Animation and orientation • Map: Focus and direction

Profit and Purpose • Desire to create vs. desire to be rich • US, Canada, and Australia • Shareholder interest • Europe • Employee, state, and the enterprise as a whole interests • Corporate Social Responsibility • Firm as property • Firm as social entity

Lady Gaga • New York University’s Tisch School of the Arts drop out • At age 19, landed recording contract and was dropped after 3 months • Accused of being “imitative” with her look • Formed a band and was finally recognized • Released debut album, The Fame, in 2008

James Dyson • Initially studied architecture at the Royal College of Art in London • Took 5 years to develop his cyclone bagless vacuum • Couldn’t find a company in the UK to distribute his product-too risky • Supported by his wife’s income who was an art teacher • Entered into partnership with Japanese company and product was launched

Alex Ferguson • Manchester United Football Club Manager • Relentless pursuit of excellence • Rebuilt scouting and youth development-went global to find talent • Would sell some of his most outstanding players (Beckham, Ronaldo) if he believed that their celebrity created impediment to team unity

Routes to Success: Effectively Implemented Strategy • Lady Gaga- Understanding of the role that live performances and social media play in developing a fan base • James Dyson- When he was shot down in the UK, went to Japan • Alex Ferguson- Combined old-fashioned virtues with critical insight to success in soccer in the modern era.

Goals that are Simple, Consistent, Long-term • Lady Gaga- Didn’t go to New York School of Arts that was offered to her to pursue her quest for fame • James Dyson- Persisted for over 5 years to make his vacuum • Alex Ferguson- Keeps his main focus on his team

Understanding of the Competitive Environment • Lady Gaga- Created a ‘brand’ for herself, focused on live shows, merchandising, and social media • James Dyson- Realized significance of TV advertising to sell his product, moved his manufacturing base from the UK to Malaysia to cut costs • Alex Ferguson- Recognized need to look worldwide for talent

Objective Appraisal of Resources • Lady Gaga- Compensated in any weakness of performing abilities by developing her image and relying on a large team of designers for her live performances • James Dyson- Patented his product so when Hoover copied his design, he took them to court and won significant damages. • Alex Ferguson- Masterful in including the psychological factors that are critical to success

Effective Implementation • Effective leadership in terms of capacity to reach decisions • Loyalty and commitment among subordinates • Quick responses to change in the competitive environment

IKEA • Ingvar Kamprad • Established IKEA in 1943 • Entrepreneur • Cost cutting solution to compete • 330 stores in 40 countries • The IKEA vision is to create a better everyday life for the many people. • Wide range of well-designed and functional home furnishing • Low prices

IKEA Strategy • Competitive advantage: • Price tags • Low cost manufacturing process at large volumes • Assembled furnishings at home • Minimizes transportation costs • Recycling left over materials • Product Range • “ The many people” • Small space storage innovations • Focus on what’s important • Hard wearing and easy to live with products

Emergent Strategy • “Offer even lower prices to customers, while positioning itself for long term growth” • Separating good costs from bad • Lowering operational costs • Increase volume • Better functioning supply chain • Empowering co-workers

Apple • Price your products to customer segments • iPhone 3gs $99 • Keep your eye to the future • Listen to your customers

Under Armour • Enter the soccer world • Tottenham Hotspur, English Premier League • Start player?

Strategy for Management • Good relationships and communication at all levels • Effective leadership at all levels • Resource based views of strategy • Motivation and inspiration of all members • Motivation factors other than profits

Strategy for Marketing • Product placement • Social media • Being better than competitors • Use of questionnaires and interviews • Competitive advantage

Strategy for Profit • Reduce costs to survive competition • Use of economic forecasts • Value: Monetary vs. Nonmonetary • Customer satisfaction • Goal is to maximize profits over the long run

Strategy at Every Level • Setting goals: simple, consistent, long term • Having the proper knowledge • Technology reshaping the way we do business • Corporate Social Responsibility and ethics • Competitive advantage • Creating goals: • Mission statements • Statement of principles or values • Vision statements • Strategy statements • Success through coordinated efforts • External vs. Internal environments of a firm

Foundations of Strategy: Chapter 1