FOUNDATIONS OF STRATEGY: CHAPTER 1

Group 1Allyson 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