c1 strategy taft (1)

8/9/2019 C1 Strategy Taft (1)

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Chapter one, What is Strategy?

What is our presentsituation?

Business environment andindustry conditions

Firms fnancial andcompetitive capabilities

Where do we want to gorom here?

Creating a vision or the frmsuture direction

ow are we going to getthere?

Crating an action planthatwill get us there


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!he Strategy"#a$ing, Strategy"%&ecuting 'rocess


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W(! )S STRATEGY (B*+!?

Strategy is all about

Howto outcompete rivals

Howto respond toeconomic and mar$etconditions and growthopportunities

Howto manage unctionalpieces o the business

Howto improve thefrmsfnancial and mar$etperormance


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W- .* STRATEGY ?

( frm does strategy/

!o improve its fnancialperormance

!o strengthen its competitive

position!o gain a sustainable

competitive advantage overits mar$et rivals

( creative, distinctive

strategy/ Can yield above"average

profts

#a$es competition di0cult orrivals


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STRATEGY(1.C*#'%!)!*2S

Strategy is aboutcompeting diferentlyrom rivals3

.oing what they dontdo or doing it better4

.oing what they cantdo4

.oing that which setsthe frm apart andattracts customers SunnyD and Rum - THE POP SINGLE!


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Common elements in successulstrategies

6


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Sources o superior proftability

7


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1.1 Identifying a Company St"ategy#$%at to Loo& 'o"


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!he 5uest or Competitive (dvantage

Competitive (dvantage #eeting customer needs more

e6ectively, with products or services

that customers value more highly, ormore e0ciently, at lower cost

Sustainable Competitive (dvantage

7iving buyers lasting reasonsto preera frms products or services overthose o its competitors


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Why a Firms Strategy %volves over !ime

#anagers modiy strategy inresponse to/ Changing mar$et conditions

(dvancing technology

Fresh moves o competitors

Shiting buyer needs

%merging mar$et opportunities 1ew ideas or improving the strategy


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1.( ) Company St"ategy I a *+end of P"oa,tie Initiatie

and Rea,tie )dutment


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Strategy as DecisionSupport

Strategy as a Coordinating

Device

Strategy as Target

Improves the qualityo decision ma!ing

Creates consistency

and unity

Improves perorm"

ance #y setting

high aspirations

$hat %oles does Strategy &erorm'

Strategy as (nimation and

)rientation

*otivates

and mo#ilises

+,89:;9 2obert # 7rant < =udith =ordanwwwoundationsostrategycom
http://www.foundationsofstrategy.com/http://www.foundationsofstrategy.com/


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What )s a Strategic 'lan?

It t"ategi, iion/ 0uinemiion/ and ,o"e a+ue

It t"ategi, and finan,ia+

o0e,tie

It ,%oen t"ategy

E+ement of a 'i"m

St"ategi, P+an


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The Strategy"*a!ing 3ierarchy

Co"po"ateSt"ategy

*ulti#usiness Strategy4ho. to gain synergies rom managing aportolio o #usinesses together rather than as separate #usinesses

*uine

St"ategy

3o. to strengthen mar!et position and gain competitive advantage (ctions to #uild competitive capa#ilities o single #usinesses *onitoring and aligning lo.er"level strategies

'un,tiona+ )"ea

St"ategie

(dd relevant detail to the ho.5s o the #usiness strategy

&rovide a game plan or managing a particular activity in .ays that

support the #usiness strategy

Ope"ating

St"ategie

(dd detail and completeness to #usiness and unctional strategies

&rovide a game plan or managing speciic operating activities .ith

strategic signiicance

T.o"$ay Inluence

T.o"$ay Inluence

T.o"$ay Inluence


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)S *+2 S!2(!%7- (W)11%2?

$inning

St"ategy

T%e St"ategi,

'it Tet

T%e Competitie

)dantage Tet

T%e Pe"fo"man,e

Tet


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( winning strategy must pass three tests/

The Fit Test.oes it e&hibit dynamic ft with the e&ternal and internal aspects o the frms overallsituation?

The Competitive Advantage TestCan it help the frm achieve a signifcant and sustainable competitive advantage?

The Performance TestCan it produce good perormance as measured by the frms proftability, fnancial andcompetitive strengths, and mar$et standing?


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Strategy (nalysis 3o. to gain a

competitive advantage-

$hat do you thin! the *ission and ision or this #usiness is'

$hat is the pro#lem or issue to #e resolved'1inance/ 3%/ *ar!eting/ gro.th opportunity/ merger or acquisition etc

)#ectives " 8$hat do you thin! this irm .ould li!e to accomplish over the ne9t : years';

Situation analysis 8S$)T;

$hat internal t"engt% and 3ea&nee does this company have'

3o. .ell is the irm5s present strategy .or!ing'

$hat are the irm5s competitively important resources and capa#ilities'

Is the irm a#le to ta!e advantage o mar!et opportunities and overcome e9ternal threats to its e9ternal .ell"#eing'

(re the irm5s prices and costs competitive .ith those o !ey rivals/ and does it have an appealing customer value

proposition'

Is the irm competitively stronger or .ea!er than !ey rivals'

$hat strategic issues and pro#lems merit ront"#urner managerial attention'


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$hat e9ternal environmental oppo"tunitie and t%"eat

8driving orces; should this company #e a.are o'

&


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Financial (nalysis

2*( proft ater ta&>total assets 2*% proft ater ta&>owners e@uity

Current 2atio Current assets>current liability

5uic$ 2atio Current assets " )nventory>current liability

.ebt to assets .ebt>(ssets

.ebt %@uity .ebt>%@uity

Financial (nalysis/

*n what basis do customers choose between competing brands o sellers?

(re the driving orces causing demand for productto increase or decrease?

(re the driving orces acting to ma$e competitionmore or less intense?

Will the driving orces lead to higher or lower industryprotability?

.oes this industry o6er good prospects or attractive profts?


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Structural determinants o the

competitive orces

Please analyze the following

competitive forces

ow intense is the rivalry o e&isting

competitors or consumer dollars

ow li$ely>easy would it be or new

competitors to enter this mar$et?

(re there a lot o suppliers to this industry or

very ew?

.o customers have a lot o competitors to

choose rom or very ew?

(re there any frms in other industries

o6ering suitable substitutes?


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es

>es

>es

>es

>es >es >es

2o

2o

2o Disadvantage

&arity

Temporary

(dvantage

Sustained

(dvantage


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sustainable competitiveadvantage tests

.oes this business have a resource that is valuable/rare

)s the resource competitively superior?

.o they have a resource that is hard to copy?

Can the resource be made obsoleteby the di6erent capabilities o

competitors?

)s the frm organizedto e&ploit its valuable, rare, costly to imitate resource?

.o you thin$ this company has a sustainable competitive advantage?


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What competitive strategy is this

business ollowing?

)s this the best competitive strategy or them to ollow?

)s their strategy well"matched to the industrys uture $ey

success actors?


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7rowth Strategies

ow are customer needs

and e&pectations

changing?

(re there any promising

mar$et opportunities that

ought to be pursued?

What strategy would you

recommend and why?


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Strategic 2ecommendation/What do you advise the frm to do?

!ests o a winning Strategy

!he tests o strategic leadership are whether the frm has a good strategy and business model,

whether its strategy is competently e&ecuted, and whether the frm is achieving its

perormance targets

GOODNESS OF FIT TEST

ow is your strategy well"matched to their resource strengths, competencies, and competitiveadvantages?

O!"ETITI#E $D#$NT$GE TEST

ow does your strategy lead to sustainable competitive advantage?

"E%FO%!$NE TEST

ow does your strategy boost frm perormance?


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'roft and 'urpose

Companies and

individuals who are

most ocused on

proftability and the

creation o wealth areoten remar$ably

unsuccessul

Successul companies

and people tend to bemotivated by

something other than

proft

Robert Kearns invented the intermittentwindshield wiper systems used on

most automobilesfrom 1969 to the present. Ford and Chrysler had to pay him

$30 million for patent infrinement
http://en.wikipedia.org/wiki/Windscreen_wiperhttp://en.wikipedia.org/wiki/Automobilehttp://en.wikipedia.org/wiki/Automobilehttp://en.wikipedia.org/wiki/Automobilehttp://en.wikipedia.org/wiki/Windscreen_wiper


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W- C2(F!)17 (1. %%C+!)17S!2(!%7- (2% )#'*2!(1! !(SS

Strategy provides/ ( prescription or doing business

( road map to competitive advantage ( game plan or pleasing customers

( ormula or attaining long"termstandout mar$etplace perormance

Good Strategy + Good Strategy Execution =

?ood *anagement


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c1 strategy taft (1)

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