strategic english 1
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WHAT DO WE MEAN BYWHAT DO WE MEAN BY STRATEGY STRATEGY ??
What is our present situation?What is our present situation? Business environ ent an! in!ustr" #on!itionsBusiness environ ent an! in!ustr" #on!itions $ir %s &inan#ia' an! #o petitive #apa(i'ities$ir %s &inan#ia' an! #o petitive #apa(i'ities
Where !o )e )ant to *o &ro here?Where !o )e )ant to *o &ro here? +reatin* a vision &or the &ir %s &uture !ire#tion+reatin* a vision &or the &ir %s &uture !ire#tion
Ho) are )e *oin* to *et there?Ho) are )e *oin* to *et there? +ra&tin* an a#tion p'an &or hea!in* the &ir in the+ra&tin* an a#tion p'an &or hea!in* the &ir in the
inten!e! !ire#tion, sta-in* out a ar-et position,inten!e! !ire#tion, sta-in* out a ar-et position,attra#tin* #usto ers, a#hievin* the tar*ete! &inan#ia'attra#tin* #usto ers, a#hievin* the tar*ete! &inan#ia'an! ar-et per&or an#e, an! *ettin* the &iran! ar-et per&or an#e, an! *ettin* the &ir)here it )ants to *o is its)here it )ants to *o is its strategy strategy ..
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WHAT IS STRATEGY ABOUT?WHAT IS STRATEGY ABOUT?
Strate*" is a'' a(outStrate*" is a'' a(out How How // How How to attra#t an! p'ease #usto ers.to attra#t an! p'ease #usto ers.
How How to #o pete a*ainst riva's.to #o pete a*ainst riva's.
How How to position the &ir in the ar-etp'a#e.to position the &ir in the ar-etp'a#e. How How (est to respon! to #han*in* e#ono i#(est to respon! to #han*in* e#ono i#
an! ar-et #on!itions. an! ar-et #on!itions.
How How to #apita'i0e on attra#tive opportunitiesto #apita'i0e on attra#tive opportunitiesto *ro) the (usiness. to *ro) the (usiness.
How How to a#hieve the &ir %s per&or an#e tar*ets.to a#hieve the &ir %s per&or an#e tar*ets.
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WHY BOTHER WITH STRATEGY?WHY BOTHER WITH STRATEGY?
A &ir nee!s a strate*" to spe#i&" )hat A &ir nee!s a strate*" to spe#i&" )hata#tions are *oin* to (e ta-en/a#tions are *oin* to (e ta-en/ To i prove its &inan#ia' per&or an#e.To i prove its &inan#ia' per&or an#e. To stren*then its #o petitive position.To stren*then its #o petitive position. To *ain a sustaina('e #o petitive a!vanta*eTo *ain a sustaina('e #o petitive a!vanta*e
over its ar-et riva's.over its ar-et riva's.
A #reative, !istin#tive strate*"/ A #reative, !istin#tive strate*"/
He'ps pro!u#e a(ove1avera*e pro&its.He'ps pro!u#e a(ove1avera*e pro&its. In#reases #o petitive pressures on riva's.In#reases #o petitive pressures on riva's.
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FIGURE 1.1 Identifying C!"# ny$% St& tegy'W( t t! )!!* F!&
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STRATEGY AND THE +UEST FORSTRATEGY AND THE +UEST FORCOMPETITI,E AD,ANTAGECOMPETITI,E AD,ANTAGE
+o petitive A!vanta*e+o petitive A!vanta*e Re2uire eetin* #usto er nee!s either oreRe2uire eetin* #usto er nee!s either ore
effectively effectively 3)ith pro!u#ts or servi#es that #usto ers3)ith pro!u#ts or servi#es that #usto ers
va'ue ore hi*h'"4 or oreva'ue ore hi*h'"4 or ore efficiently efficiently 3(" provi!in*3(" provi!in*pro!u#ts or servi#es at 'o)er #ost4.pro!u#ts or servi#es at 'o)er #ost4.
Sustaina('e +o petitive A!vanta*eSustaina('e +o petitive A!vanta*e Re2uires *ivin* (u"ersRe2uires *ivin* (u"ers lasting lasting reasons to pre&er areasons to pre&er a
&ir %s pro!u#ts or servi#es over those o& its&ir %s pro!u#ts or servi#es over those o& its#o petitors.#o petitors.
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WHY A COMPANY$S STRATEGYWHY A COMPANY$S STRATEGYE,O),ES O,ER TIMEE,O),ES O,ER TIME
Mana*ers o!i&" strate*" in response to/Mana*ers o!i&" strate*" in response to/ +han*in* ar-et #on!itions+han*in* ar-et #on!itions
A!van#in* te#hno'o*" A!van#in* te#hno'o*"
$resh oves o& #o petitors$resh oves o& #o petitors
Shi&tin* (u"er nee!sShi&tin* (u"er nee!s
E er*in* ar-et opportunitiesE er*in* ar-et opportunities
Ne) i!eas &or i provin* the strate*"Ne) i!eas &or i provin* the strate*"
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FIGURE 1.- A C!"# ny$% St& tegy I% B end !f P&! /ti0e Initi ti0e%nd Re /ti0e Ad 2%t"ent%
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A COMPANY$S STRATEGYA COMPANY$S STRATEGYAND ITS BUSINESS MODE)AND ITS BUSINESS MODE)
Ho) the (usiness )i'' a-e one" /Ho) the (usiness )i'' a-e one" / B" provi!in* #usto ers )ith va'ue.B" provi!in* #usto ers )ith va'ue.
The &ir %s #usto er va'ue propositionThe &ir %s #usto er va'ue proposition
B" *eneratin* revenues su&&i#ient to #overB" *eneratin* revenues su&&i#ient to #over#osts an! pro!u#e attra#tive pro&its.#osts an! pro!u#e attra#tive pro&its.
The &ir %s pro&it &or u'aThe &ir %s pro&it &or u'a
It takes a proven business modelone thatIt takes a proven business modelone thatyields appealing profitabilityto demonstrateyields appealing profitabilityto demonstrateviability of a firms strategy.viability of a firms strategy.
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BUSINESS MODE) E)EMENTSBUSINESS MODE) E)EMENTS
The +usto er 5a'ue PropositionThe +usto er 5a'ue Proposition Satis&"in* (u"er )ants an! nee!s at a pri#eSatis&"in* (u"er )ants an! nee!s at a pri#e
#usto ers )i'' #onsi!er a *oo! va'ue.#usto ers )i'' #onsi!er a *oo! va'ue.
The *reater the va'ue provi!e! 3The *reater the va'ue provi!e! 3 V V 4 an! the 'o)er4 an! the 'o)erthe pri#e 3the pri#e 3 P P 4, the ore attra#tive the va'ue4, the ore attra#tive the va'ueproposition is to #usto ers.proposition is to #usto ers.
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BUSINESS MODE) E)EMENTS 3CONT$D4BUSINESS MODE) E)EMENTS 3CONT$D4
The Pro&it $or u'aThe Pro&it $or u'a +reatin* a #ost stru#ture that a''o)s &or+reatin* a #ost stru#ture that a''o)s &or
a##epta('e pro&its, *iven that pri#in* is tie!a##epta('e pro&its, *iven that pri#in* is tie!to the #usto er va'ue proposition.to the #usto er va'ue proposition.
V V 6the va'ue provi!e! to #usto ers6the va'ue provi!e! to #usto ers
P P 6the pri#e #har*e! to #usto ers6the pri#e #har*e! to #usto ers
C C 6the &ir %s #osts6the &ir %s #osts
The 'o)er the #osts 3The 'o)er the #osts 3 C C 4 &or a *iven #usto er4 &or a *iven #usto erva'ue proposition 3va'ue proposition 3 VP VP 4, the *reater the a(i'it"4, the *reater the a(i'it"o& the (usiness o!e' to (e a one" a-er.o& the (usiness o!e' to (e a one" a-er.
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IS OUR STRATEGY A WINNER?IS OUR STRATEGY A WINNER?
WinningWinning
St& tegySt& tegy
T(e St& tegi/Fit Te%t
T(e C!"#etiti0eAd0 nt ge Te%t
T(e Pe&f!&" n/eTe%t
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WHAT MA5ES A STRATEGY A WINNER?WHAT MA5ES A STRATEGY A WINNER?
A )innin* strate*" ust pass three tests/ A )innin* strate*" ust pass three tests/ The $it TestThe $it Test
Does it e7hi(it !"na i# &it )ith the e7terna' an!Does it e7hi(it !"na i# &it )ith the e7terna' an!interna' aspe#ts o& the &ir %s overa'' situation?interna' aspe#ts o& the &ir %s overa'' situation?
The +o petitive A!vanta*e TestThe +o petitive A!vanta*e Test
+an it he'p the &ir a#hieve a si*ni&i#ant an!+an it he'p the &ir a#hieve a si*ni&i#ant an!sustaina('e #o petitive a!vanta*e?sustaina('e #o petitive a!vanta*e?
The Per&or an#e TestThe Per&or an#e Test
+an it pro!u#e *oo! per&or an#e as easure! ("+an it pro!u#e *oo! per&or an#e as easure! ("the &ir %s pro&ita(i'it", &inan#ia' an! #o petitivethe &ir %s pro&ita(i'it", &inan#ia' an! #o petitivestren*ths, an! ar-et stan!in*?stren*ths, an! ar-et stan!in*?
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WHY CRAFTING AND E6ECUTINGWHY CRAFTING AND E6ECUTINGSTRATEGY ARE IMPORTANT TAS5SSTRATEGY ARE IMPORTANT TAS5S
Strate*" provi!es/Strate*" provi!es/ A pres#ription &or !oin* (usiness. A pres#ription &or !oin* (usiness. A roa! ap to #o petitive a!vanta*e. A roa! ap to #o petitive a!vanta*e.
A *a e p'an &or p'easin* #usto ers. A *a e p'an &or p'easin* #usto ers. A &or u'a &or attainin* 'on*1ter stan!out A &or u'a &or attainin* 'on*1ter stan!out
ar-etp'a#e per&or an#e.ar-etp'a#e per&or an#e.
Good Strategy Good Strategy !"e#ution $Good Strategy Good Strategy !"e#ution $ Goo! Mana*e entGoo! Mana*e ent