Presentation Transcript

1. Introducing Strategic Management

2. Who remembers Hannibal? (Second Punic War?)

3. Hannibal
4. Hannibal
5. Hannibal
6. Hannibal
7. Hannibal
8. Hannibal illustrates what we need for effective strategy:
9. Hannibal illustrates what we need for effective strategy: A mission
10. Hannibal illustrates what we need for effective strategy: A mission A map (a plan)
11. Hannibal illustrates what we need for effective strategy: A mission A map (a plan) Elephants
12. What we need for effective strategy: A mission A plan Elephants That’s the strategic process
13. Why do we need strategy? The reasons why firms succeed and fail is perhaps the central question in strategy
14. Strategy defines…. Who are you? Where are you going? How are you going to get there? Alice: Which way should I go? Cat: That depends on where you are going. Alice: I don’t know where I am going. Cat: Then it doesn’t matter which way you go. Lewis Carroll, Though the Looking-Glass
15. Organizations should make two types of decisions 1) Strategic decisions 2) Strategically driven decisions
16. Organizations should make two types of decisions 1) Strategic decisions 2) Strategically driven decisions Company B Company C Company A
17. All firms have strategy. The only decision is whether you manage it, or simply back into it…

    What are we doing here?

18. Strategic Management Defined decisions and actionsrequired for the firm to create value and earn returns higher than those of competitors formulationand implementation of plans designed to achieve objectives unifying theme that gives coherence and direction to organizational/individual decisions game plan management has for positioning the company in its chosen market, competing successfully, satisfying customers, and achieving good business performance integrated and coordinated set of commitments and actions designed to exploit core competencies and gain a competitive advantage What is a competitive advantage?
19. Competitive Advantage When a firm implements a strategy that rivals can’t duplicate, or find it too expensive to do try to imitate
20. Competitive advantages become sustainable competitive advantages when rivals stop trying to replicate
21. The Strategic Management Process Strategic analyses Internal External Strategy Vision and mission Arenas Vehicles Differentiators Staging Economic logic Implementation levers and Strategic leadership Fundamental organizational purpose Organizational values The central, integrated, externally oriented concept of how a firm will achieve its objectives
22. Two levels of Strategy ? Corporate-level strategy In which markets do we compete today? In which markets do we want to compete tomorrow? How does our ownership of a business ensure its competitiveness today and in the future? ? Business-level strategy How do we compete in this market today? How will we compete in this market in the future?
23. What is Strategy? Strategy is not doingsimilar activitiesbetter than your rivals – that’s operational effectiveness continual improvement not a sustainable advantage industry-wide cost reductions do not lead to increased profitability examples: PCs, automobiles, airlines
24. What is Strategy? Strategy is performingdifferent activitiesor performing similar activities in adifferent way
25. What is Strategy? 1) Strategy is performingdifferent activitiesor performing similar activities in adifferent way Strategy is about positioning a) Variety-based positioning offering a unique choice of goods/services - Chic-fil-a, GameStop b) Needs-based positioning serving most/all of a particular group of customers’ needs - Babies R Us c) Access-based positioning serving a set of customers that require unique access – Kinkos, Movie Gallery, Superette
26. What is Strategy? 2) Strategy is about choosing apositionwhich requirestradeoffs, choosing whatnotto do without tradeoffs, all firms would imitate vs. vs. vs. vs.
27. Time Magazine So why haven't American, United, US Airways and the three other full-service carriers, which lost $11 billion last year and stand to lose an additional $5 billion this year, followed the lead of the profitable discounters by cutting costs and fares? Because that's not the way their business works. They have made, and lost, their money by providing the frequent departures, quick connections, spacious seats and other amenities that have been demanded by business flyers and charging them dearly for that service — more than five times the cost of a discount fare. HARD TO STRADDLE AND REPOSITION!
28. What is Strategy? 2) Strategy is about choosing apositionwhich requirestradeoffs, choosing whatnotto do without tradeoffs, all firms would imitate Tradeoffs arise from inconsistent image/reputation different activities, products, equipment, employees, skills, systems, machines priorities, internal coordination, and control
29. What is Strategy? 3) Strategy is aboutcombiningactivities as advantages come fromfitandreinforcing
30. Secondary Airports No meals Short hauls No seats No baggage transfers Quick Turns Standard Fleet Lean ground crews Low Fares
31. Secondary Airports No meals Short hauls No seats No baggage transfers Quick Turns Standard Fleet Lean ground crews Low Fares
32. Secondary Airports No meals Short hauls No seats No baggage transfers Quick Turns Standard Fleet Lean ground crews Low Fares
33. Secondary Airports No meals Short hauls No seats No baggage transfers Quick Turns Standard Fleet Lean ground crews Low Fares
34. Secondary Airports No meals Short hauls No seats No baggage transfers Quick Turns Standard Fleet Lean ground crews Low Fares
35. Secondary Airports Secondary Airports No meals No meals Short hauls No seats No baggage transfers No baggage transfers No baggage transfers Quick Turns Quick Turns Standard Fleet Lean ground crews Low Fares Low Fares
36. Secondary Airports Secondary Airports No meals No meals Short hauls No seats No baggage transfers No baggage transfers No baggage transfers Quick Turns Quick Turns Standard Fleet Lean ground crews Low Fares Low Fares How can Delta copy that? What about Jet Blue?
37. What is Strategy? 3) Strategy is aboutcombiningactivities as advantages come fromfit andreinforcing Operational effectiveness is about excellence in individual activities Fit/integration increases sustainability by reducing imitability
38. What is Strategy? 4) The desire to grow is most threatening to an effective strategy
39. What is Strategy? 4) The desire to grow is most threatening to an effective strategy Blurs uniqueness Creates compromises Reduces fit Erodes original advantages
40. What is Strategy Application Consider the firms on a previous slide Starbucks, Dell, Ebay, Amazon, Southwest, and Target Who’s continued to do well? Who has struggled? Is there a pattern?
41. Strategy Application Consider one of the struggling firms (Starbucks, Dell, perhaps Ebay). What lessons from the 4 points in Porter’s article can you identify? What pitfalls have these firms fallen into? How has each deviated from the insights of Porter? How successful have those deviations been?
42. Four Perspectives on Competitive Advantage Industrial/Organization (I/O) Economic Model – External Perspective Resource-Based View – Internal Perspective Dynamic Perspective – Combination of the two Stakeholder Approach
43. The Industrial/Organization (I/O) Model of Above-Average Returns Basic Premise of the I/O Model– to explain the dominant influence of the external environment on a firm's strategic actions and performance
44. The Industrial/Organization (I/O) Model of Above-Average Returns Underlying Assumptions That the external environment imposes pressures and constraints that determine the strategies resulting in above-average returns That most firms competing within a particular industry or industry segment control similar strategically relevant resources and pursue similarstrategies in light of those resources
45. The Industrial/Organization (I/O) Model of Above-Average Returns Underlying Assumptions (cont.) That resources for implementing strategies are highly mobile across firms, and that due to this mobility any resource differences between firms will be short lived
46. The Industrial/ Organization (I/O) Model of Above-Average Returns
47. The Industrial/Organization (I/O) Model of Above-Average Returns Michael Porter’s Five-Forces Model Reinforces the importance of economic theory Offers an analytical approach that was previously lacking in the field of strategy Describes the forces that determine the nature/level of competition and profit potential in an industry Suggests how an organization can use the analysis to establish a competitive advantage
48. The Resource-Based Model of Above-Average Returns Basic Premise of the Resource-Based Model– to propose that a firm's unique resources and capabilities should define its strategic actions and be used effectively to exploit opportunities in the external environment to ensure successful performance
49. The Resource-Based Model of Above-Average Returns Underlying Assumptions That the internal environment imposes pressures and constraints that determine the strategies resulting in above-average returns That most firms competing within a particular industry or industry segment control unique strategically relevant resources and pursue dissimilarstrategies in light of those resources
50. The Resource-Based Model of Above-Average Returns Underlying Assumptions (cont.) That resources for implementing strategies are not highly mobile across firms, and that due to this immobility any resource differences between firms can be sustainable
51. The Resource-Based Model of Above-Average Returns
52. Dynamic Perspective Market dynamism renders advantages temporary Future advantages based on the ability of the firms resources and capabilities to develop a continuous flow of advantages
53. The Stakeholder Model of Responsible Firm Behavior and Firm Performance Basic Premise of the Stakeholder Model– to propose that a firm can effectively manage stakeholder relationships to create a competitive advantage and outperform its competitors
54. The Three Stakeholder Groups
55. Secondary Stakeholders Government entities and administrators Activists and advocacy groups Religious organizations Other nongovernmental organizations
56. The Stakeholder Model of Responsible Firm Behavior and Firm Performance
57. Ways Stakeholder Relationships Contribute to Competitive Advantage A trustworthy reputation draws valuable customers, suppliers, and business partners to acquire or develop competitive resources A trustworthy reputation attracts investors to offer financial resources Firms that have fair and respectful treatment of employee relationships attract high-quality human resources
58. Ways Stakeholder Relationships Contribute to Competitive Advantage Transactions costs associated with making and enforcing agreements can be reduced Implementation of strategies can be enhanced by improving commitment from stakeholders who are involved with strategic decisions Responsible behavior can protect a firm from the expense and risk associated with negative actions (such as adverse regulations, legal suits and penalties, consumer dissatisfaction, employee work outages, or bad press)
59. It’s all about prioritizing…
60. Charting a Good Strategy The Strategy Diamond Arenas Vehicles Differentiators Staging & Pacing Economic Logic
61. Strategy Diamond Strategy is an integrated set of choices…. Arenas Economic Logic Staging Vehicles Differentiators
62. Arenas Where are we going to be active? Product categories Channels Market Segments Geographic Segments Core Technologies Value-creating strategies Arenas Economic Logic Staging Vehicles Differentiators
63. Vehicles How are we going to get there? Means of participating in chosen markets Internal Development Joint Venture Licensing/Franchising Alliances Acquisition Arenas Economic Logic Staging Vehicles Differentiators
64. Differentiators Product/service attributes that beat competitors, for example… Image Customization Price Styling Product reliability Speed to market Safety Arenas Economic Logic Staging Vehicles Differentiators
65. Staging Timing, pace and sequencing of strategic moves When to launch moves Function of resources, urgency and market signals Arenas Economic Logic Staging Vehicles Differentiators
66. Economic Logic How will returns be obtained? Low cost through scale, scope design, or process advantages Premium prices through superior products or service Arenas Economic Logic Staging Vehicles Differentiators
67. JetBlu’s Strategy Low-fare commercial airliner in underserved/overprices US markets, focusing on JFK Low-costs through uniform, fuel- efficient fleet, saving on maintenance, and training. Favorable gate fees at JFK. Secondary airports Arenas Focused initial growth in NE corridor, with westward expansion Economic Logic Completely internalized growth Staging Vehicles Low price, mixed with exceptional service, e.g. leather seating and in-seat satellite TV
68. JetBlu’s Strategy Low-fare commercial airliner in underserved/overprices US markets, focusing on JFK Low-costs through uniform, fuel- efficient fleet, saving on maintenance, and training. Favorable gate fees at JFK. Secondary airports Arenas Focused initial growth in NE corridor, with westward expansion Economic Logic Completely internalized growth Vehicles Low price, mixed with exceptional service, e.g. leather seating and in-seat satellite TV
69. JetBlu’s Strategy Low-fare commercial airliner in underserved/overprices US markets, focusing on JFK Low-costs through uniform, fuel- efficient fleet, saving on maintenance, and training. Favorable gate fees at JFK. Secondary airports Arenas Focused initial growth in NE corridor, with westward expansion Completely internalized growth Differentiators Low price, mixed with exceptional service, e.g. leather seating and in-seat satellite TV
70. JetBlu’s Strategy Low-fare commercial airliner in underserved/overprices US markets, focusing on JFK Low-costs through uniform, fuel- efficient fleet, saving on maintenance, and training. Favorable gate fees at JFK. Secondary airports Arenas Focused initial growth in NE corridor, with westward expansion Completely internalized growth Staging Low price, mixed with exceptional service, e.g. leather seating and in-seat satellite TV
71. JetBlu’s Strategy Low-fare commercial airliner in underserved/overprices US markets, focusing on JFK Low-costs through uniform, fuel- efficient fleet, saving on maintenance, and training. Favorable gate fees at JFK. Secondary airports Arenas Focused initial growth in NE corridor, with westward expansion Economic Logic Completely internalized growth Low price, mixed with exceptional service, e.g. leather seating and in-seat satellite TV
72. Framework for Strategy Implementation Key Factors of Strategy Implementation Implementation levers Organizational structure Systems and processes People and rewards Realized and Emergent Strategies Intended Strategy Strategic leadership Lever- and resource-allocation decisions Decision support among stakeholders
73. Importance of execution “The important decisions, the decisions that really matter, are strategic . . . [But] more important and more difficult is to make effective the course of action decided upon.” – Peter Drucker
74. Importance of execution “Well, we didn't block, but we made up for it by not tackling” – John McKay
75. When asked what he thought of his team’s execution after another loss… “I’m in favor of it” – John McKay Coach, Tampa Bay Buccaneers