By: Team # 1 Jade Black

Lauren HeldrethRoger May

Kody Roach

Shaped by the competitive environment Constraints were given by the market Choosing where, what segment/industry,

and controlling specific recourses Globalization and new technologies brought

this under the microscope Short lived competencies/resource

ownership

Resource based Change from capturing to creating value Nurturing recourses and capabilities Human and intellectual capitol in new

knowledge-based eco. Physical and financial resources no longer

road block Companies ecosystems overall health

Tactical is doing thing better Able to imitate

◦ Short term technological advantages Advantage erosion

◦ Environment changes

Strategy is doing things differently Long term vision w/ flexibility and learning Preservation of meaningful differences

Differentiation must be valuable Must be maintained

Must be comprehensive

Must create value, not capture value

Change of what is valuable

Preventing erosion of advantages

Looking to the next possible advantage

Preventing myopia

Look in the direction of potential

Continual learning

Rely on networks for success and sustainability◦ ‘Biological ecosystem’: succeed/fail as a whole

Sophisticated technology essential for connections and collaboration

Interdependency vs. Stand-alone strategies◦ Companies depend on influence to outside assets

Example: Wal-Mart’s supply-chain—manufacturer to consumer creates value to suppliers

Goal: Align resources/capabilities with strategy

Can consist of ‘closing strategic capability gaps’ or ‘maintaining strategic focus’

How do we do this?◦ Acquire and/or allocate resources efficiently ◦ Build capabilities or shape corporate culture◦ Use of technology

Substantive disparities in competences, skills, and resources between what customers demand/could demand in the future and what the organization currently can deliver

CLOSE the gap between what it takes to succeed and what we can do◦ Better technology, stronger branding, stronger

distribution network◦ Ex: Apple-- Brand Management

Difficult because strategy formulation and implementation are human activities

How to ensure that what is said is done?◦ Communication◦ Allocate necessary resources◦ Proper incentives for effective alignment

Time between a strategy is formulated and when it is implemented…what can change?◦ New product◦ New regulations

Results: Realized strategy and intended strategy can end up different

Strategy formulation at 3 levels:◦ Corporate: what businesses should the firm compete

in?◦ Business Unit: What product/service should we offer?

How do we create it and get to the marketplace?◦ Functional: General marketing, HR, or technology

decisions

External Stakeholders: Suppliers, partners, sometimes competitors◦ Create value to customers

Internal Stakeholders: All employees◦ Motivate

How much stake/influence do people have?◦ Ownership stake: Shareholders, directors◦ Economic stake: Creditors, employees, customers,

suppliers◦ Social stake: Regulatory agencies, charities, community

Different forms of power:◦ Formal: Legal obligations or rights◦ Economic: Withhold products, services, or capital◦ Political: Persuade other stakeholders to influence firm

behavior

Vision: Summarizes a company’s broad strategic focus for the future◦ Focus on few activities and excel ◦ Adopt a vision greater than resources and

competencies allow◦ Focus on “a new future” rather than competition

Gaps become challenges, not constraints Apple vision statement:

◦ "To make a contribution to the world by making tools for the mind that advance humankind."

◦ Clear, meets interests of stakeholders, feasible

Mission: Documents the purpose of an organization◦ Often include corporate values

Ex: Ethical behavior, honesty, integrity, social concerns◦ Creates expectations from employees

Apple mission statement: ◦ Apple computer is committed to protecting the

environment, health and safety of our employees, customers and the global communities where we operate. We recognize that by integrating sound environmental, health and safety management practices into all aspects of our business, we can offer technologically innovative products and services while conserving and enhancing resources for future generations. Apple strives for continuous improvement in our environmental, health and safety management systems and in the environmental quality of our products, processes and services.

“ an executive summary of the strategic goals a company has adopted and a motivational message.”

Focuses organization on key targets Provides goals Resources needed Segment concentrations Focuses on closing the capability gap

“Reflects the recognition that successful strategies are built as much around what can be as around what is.”

Create fit between resources and opportunities

Establish a time frame Too short or too long has different affects

Experiencing fundamental shifts◦ Becoming more strategic in how they operate

Performance Metrics:1.Measure success in gathering their resources

EX: fundraising performance, membership growth, and market share

2.Evaluate effectiveness of organizations jobs/tasks EX: number of projects organization completes

3.Assess progress of meeting its chosen mission Three approaches to measurement:

Define mission narrowly Invest in research to evaluate activities results Develop set of goals

Steps: Three Key Questions1. Where are we now?2. Where do we go?3. How do we get there?

Asses the current state of the business or company

Revisit organizations mission, vision and who stakeholders are

Detailed evaluation of performance Trends in various environments Opportunities/threats within industry Internal strengths and weaknesses

Use answers to previous questions to:◦ Generate and explore strategic alternatives

Business Unit Level options:◦ Growth in few markets or adopting wider market

focus◦ Go it alone or partner with another company

Corporate Level options:◦ Shaping the portfolio

Strategic Intent: identifies guiding business concept to move company forward

How to achieve desired objectives How to Bridge capability gap

◦ Separating current organizational skills from those needed to reach strategic intent

Strategic Alignment◦ Core competences◦ Emerging market needs◦ Key success factors

End product: detailed set of initiatives for implementing strategy

Various reasons for strategy review:◦ New leadership◦ Disappointing performance◦ Changes in ownership◦ Emergence of new competitors◦ EX: General Motors: Chairman of the Board

Formal system ensures quality execution Planning Cycle

1.Review at corporate level2.Update of long-term strategies3.Plans are reviewed4.Detailed operating plans developed

Criteria:◦ Does it produce competitive advantage?◦ Long-term objectives appropriate?◦ Objectives consistent and achievable?

Can/should be quantified? ROI was most common measure

Shareholder Value◦ Now most widely accepted measurement◦ Shareholder Value Approach (SVA) def: “Value of the

corporation is determined by the discounted future cash flows it is likely to generate” Strategic initiatives are treated as investments

◦ Economic Value Added (EVA): “after-tax operating profit minus the cost of capital” Various problems

Strategists:◦ Measures value delivered to customers◦ Evaluation schemes have gained acceptance

SVA:◦ Measures value to shareholders◦ Not universally embraced