Professional Documents
Culture Documents
STRATEGY ?
What is our present situation?
Business environment and industry conditions
Firms financial and competitive capabilities
WHY DO STRATEGY ?
A firm does strategy:
To improve its financial performance.
To strengthen its competitive position.
To gain a sustainable competitive.
advantage over its market rivals.
STRATEGY AND
COMPETITORS
Strategy is about competing
differently from rivals
STRATEGIC APPROACH
CHOICES
Building Competitive Advantage
Low-cost
provider
Differentiation
on features
Focus on
market niche
Best-cost
provider
STRATEGIC APPROACHES
Building a competitive advantage by:
1. Striving to become the industrys lowcost provider (efficiency).
2. Outcompeting rivals on differentiating
features (effectiveness).
3. Focusing on better serving a niche
markets needs (efficiency and\or
effectiveness).
4. Offering the lowest (best) prices for
differentiated goods (best-cost provider).
GAINING SUSTAINABLE
COMPETITIVE ADVANTAGE
How to create a sustainable
competitive advantage:
Develop valuable expertise and
competitive capabilities over the longterm that rivals cannot readily copy,
match or best.
Put the constant quest for sustainable
competitive advantage at center stage
in crafting your strategy.
$$$?
Business
Model
Competitive
Initiatives
Value
Proposition
Business
Approaches
Profit Formula
Partner network
Core capabilities
Customer relationship
Value configuration
Cost structure
Value proposition
Distributional channel
Revenue stream
Customer channel
IS OUR STRATEGY A
WINNER?
The Strategic
Fit Test
The Competitive
Advantage Test
Winning
Strategy
The Performance
Test
Strategic Competitiveness
Achieved when a firm formulate & implements a
value-creating strategy
Strategy
Integrated and coordinated set of commitments
and actions designed to exploit core
competencies and gain a competitive advantage
Competitive Advantage (CA)
Implemented strategy that competitors are
unable to duplicate or find too costly to imitate
Above Average Returns
Returns in excess of what investor expects in
comparison to other investments with similar risk
Nature of Competition:
McDonalds
Product Innovation
Upgrading existing restaurants
Listened to customers value menu,
healthier items, more convenience
Purchasing European property for future
expansion
Corporate-level strategies
Disposed of its interests in other restaurants
The Competitive
Landscape
The Competitive Landscape (CL)
Pace of change is rapid
Industry boundaries are blurring
Financial capital is more scarce and markets
are increasingly volatile
Other CL characteristics: Economies of
scale, advertising budgets not as effective as
before, change in managerial mind-set from
traditional to more flexible and innovative
Disruptive technologies
Technologies that
Resources
Capability
Core Competency
A firms resources and capabilities that serve
as sources of competitive advantage over its
rival
Summary
A firm has superior performance because of
Unique resources and capabilities, and the
combination makes them different, and better,
than their competition driving the competitive
advantage
Mission
Specifics business(es) in which firm intends to
compete and customers it intends to serve
More concrete than the vision
Strategic Leaders
Strategic Management
Process
Rational approach used by firms to
achieve strategic competitiveness and
earn above-average returns (AAR)
1: Strategic Mgmt Inputs
2: Strategic Actions: Strategy Formulation
3: Strategic Actions: Strategy
Implementation