strategy a view from the top prentice hall 1-1 copyright © 2009 pearson education, inc. publishing...
TRANSCRIPT
StrategyA View From
The Top
Prentice Hall
1-1Copyright © 2009 Pearson Education, Inc.Copyright © 2009 Pearson Education, Inc.Publishing as Prentice HallPublishing as Prentice Hall
Chapter One
What is Strategy?Cornelis A. de Kluyver
and
John A. Pearce II
Third Edition
Strategy is About…
Positioning an organization for competitive advantage
Deciding what to do and what NOT to do Which industries to participate inWhat products and services to offerHow to allocate resources, add value
Creating value for shareholders and other stakeholders by providing value to customers
Strategy…
Differs from Tactics: Forces trade-offs and should focus on
differentiation from rivals Focuses on value creation Allows for learning and adaptation Takes a long-term perspective Responds to the needs of all stakeholders
Strategy is About Making Choices…
Who will you target as customers and who will you not?
What will you offer these customers and what will you not offer them?
How will you do all this? – What activities will you perform; which will you not?
Choosing is Not Enough; You Must Force Trade-offs and Create Fit
Dell’s manufacture-to-order system forced competitors to make trade-offs (Key to Differentiation)
Southwest Airlines has created fit (Key to competitive advantage through Operational excellence)
Lean, highlyproductive ground
and gate crews
Southwest Airlines’ Activity System
No seatassignments
15 minutegate
turnaround
Highcompensationof employees
Flexible unioncontract
High levelof employee
stockownership
“Southwest,the low-fare
airline”
Short-handpoint to point
routes betweenmidsize citiesand secondary
airports
No meals
Noconnections
with otherairlines
Standardizedfleet of 737
aircraft
Limited use oftravel agents
Automaticticketing
machines
No baggagetransfers
Limited passenger
service
High aircraft utilization
Very low ticket prices
Frequent reliable
departures
The environmentThe environment
International lawInternational lawInternational lawInternational law
GovernmentsGovernmentsGovernmentsGovernments
Standards bodiesStandards bodiesStandards bodiesStandards bodies
StakeholdersStakeholdersStakeholdersStakeholders
Supplier’s suppliersSupplier’s suppliersSupplier’s suppliersSupplier’s suppliers Customer’s customersCustomer’s customersCustomer’s customersCustomer’s customers
New entrantsNew entrantsNew entrantsNew entrants
CustomersCustomersCustomersCustomersSuppliersSuppliersSuppliersSuppliers
CompetitorsCompetitorsCompetitorsCompetitors
SubstitutesSubstitutesSubstitutesSubstitutes
OrganisationOrganisationOrganisationOrganisation
Strategy Should Consider the Company’s Ecosystem
What is an Ecosystem?
Simply put, it's the idea that today's companies are embedded in multiple, complex relationships that make them interdependent on each other for success.
But it's only recently that corporate leaders are realizing that an ecosystem is more than a concept.
The ecosystem has intense implications for how companies plan for the future, and they ignore those implications at their own risk.
Sound Strategy Development Focuses On:
Articulating strategic intent
Creating and leveraging organizational capabilities
Fostering innovation and learning
Embedding strategic leadership
A Clear Strategic Intent Provides Focus…
“Beat Xerox”
“A Computer on Every Desktop”
“Be #1 or #2 in every business…”
Matching Competitive Advantages of Rivals is No Longer Enough…
Write the rules; Don’t copy someone else’s
Toyota Canon Microsoft Google
“Companies that have risen to global leadership invariably began with ambitions that were out of all proportion with their resources and capabilities...” (Hamel and Prahalad)
Organizational Capabilities are Increasingly Critical to Success
3M Core competencies in abrasives, adhesives, and thick film coatings, supported by a corporate culture and processes that foster innovation have successfully been leveraged into over 60,000 end products
Honda Core competencies (in internal combustion engine/ power train and product realization) and core products (small engines) have successfully been leveraged across multiple markets
Canon Core competencies in fine optics, microelectronics controls, precision mechanics, imaging and other core products (laser engines, cartridge-based imaging systems, lens systems) have provided a new strategic focus
Competencies Must Be Nurtured Continuous innovation and learning are critical
Core Competencies(CC’s)
Customer benefit Cost benefit
Competitive differentiation
Basic Competitive Requirements
Essential to all competitors
No industry differentiation
Latent Core Competencies
UnexploitedInsufficient
breadth/ depthHigh potential
Future Core Competencies
Important in the futureAgenda for competence
building
The Competitive Advantage Cycle: Value, unless constantly nourished, erodes over time
Rewards:• Satisfaction
• Loyalty• Profits• Share
Positional Advantages Realized
•Superior Customer Value
InvestmentsIn Renewal
Sources of Advantage•Superior Assets
•Superior capabilities
Competitive Dynamics
ErodeAdvantages
KeySuccessFactors
Barriers toImitation
Strong Leadership at All Levels of the Organization is Key
MissionDocuments the
purpose of the organization’s existence, may guide conduct
VisionRepresents
organization’s strategic intent
Sets stretch targets
Strategic ThinkingCreates a vision for the
organization Is primarily top-down
(CEO/Senior management driven)
Requires creativity, analysis and synthesis
Strategic Planning Is both top down and
bottom-up Plays supporting role
focused on analysis, communication
A Clear Process Provides Structure…
Evaluate CurrentPerformance•Mission•Goals•Objectives•Strategies
EnvironmentalAnalysis•Economic•Socio-cultural•Technological•PoliticalOpportunities & Threats
Company Analysis•Structure•Resources•Processes•Staffing•CultureStrengths & Weaknesses
Industry Analysis•Structure•Evolution•CompetitionCompetitiveAnalysis &Positioning
Evaluation•Resource Requirements•Risk/return
Implementation
StrategyOptions•Business Unit•Corporate
Where are we now?
Where should we go?
How do we get there?
Strategy as a Portfolio of Options…
Strategy is not about creating a detailed, long-term plan
Strategy should focus on a long-term strategic intent and flexible means for realizing that intent
Learning and continuous renewal are essential parts of strategy
Not All Strategy Can Be Planned…
Intended Strategy
Emergent
Strategy
UnrealizedStrategy
Deliberate Strategy
Realized Strategy