Strategy : The logic of superior performance

A presentation based on the Book “what management is” by Joan Magretta.

Rupesh Kumar EPGDBM-4 NMIMS, Bangaluru

Overview

1) What Business Strategy is Strategy and Competition The rise of Wall mart- What was the Strategy

2) The Aim of Business Strategy

3) How to make strategy

4) Thinking strategically- The Game Theory

5) Staying power of a Strategy

Defining Strategy

“Doing better by being different”

Defining Strategy- contd..

A Successful Strategic Thinking

Begins with a good business model - that describes the economic relationships central to fulfilling an organizations purpose.

And completes with a good Strategy - having a systematic approach to achieve and sustain a competitive edge.

Strategy and Competition strategic choices enable an enterprise to outperform its competitors.

The Fundamental premise of doing better by being different is that you are playing in the world of alternatives- and you need to make choices.

The business choices you make - positions and configures your business in relation to other alternatives your competitors have.

The choices are about –which customers and markets to serve, what products and services to offer and what kind of value to create.

The rise of WalMart How having a strategy made Sam Walton the richest American.

“Discount retailing” was the Business Model, but what was the strategy?

Walton chose to serve a different group of customers in a different set of markets- putting good sized stores in small towns- and being First there. (First mover Advantage)

Different Approach to Merchandising and Pricing- Selling Best brands at low prices.

Cutting costs on Supply Chain, logistics and Advertising.

Using advance Information Technology

The Aim of a Business Strategy

“To move an Enterprise away from Perfect competition and in the direction of Pure Monopoly.”

The Fundamentals of Strategy Making

Revenue costs Profit

There are only 2 ways a company can outperform another:

1) Increase Revenue 2) Reduce costs.

How to formulate a strategy for a competitive advantage?

The essence of strategy is cho0sing what not to do

- Micheal E. Porter

How to formulate a strategy for a competitive advantage?

A ) CREATING ROADBLOCKS TO PURE COMPETITION:

1. Patents – To prevent competitors from copying

2. Creating Brand Identity- To prevent customers switching brand

3. Intellectuals property rights- protecting the know-how about company’s core competency- Either in form of product development or Customer Service.

4. Unique positioning- Unique positioning with strategic tradeoff has real staying power in the market

How to formulate a strategy for a competitive advantage?

(B) THINKING STRATEGICALLY

No organization acts in vacuum- World is filled with potential rivals and allies.

Thinking strategically means recognizing others whose aims may constrain or challenge yours.

Thinking strategically

Three Important lessons from game Theory

1. Look Forward - Every Move will Evoke a response – factor in all possible responses from all possible players before you decide your move.

2. Keep eye on whole value Chain- and on value that each player adds to the whole.

3. Think from Competitor’s perspectives

You made a strategy – so what?

Others can copy your strategy and spoil your game plan

Others can come out with counter-strategy and again spoil your game plan.

Strategies with real Staying Power

Only that strategy which not only creates a difference but also prevents competitors from countering that strategy will stay .

Its not the strategy , but the staying power of the strategy which will decide whether it helps the business retain its competitive edge.

Strategies with real Staying Power

The Most Important part of a Strategy

Keep Looking Forward in the Game.

A Successful Strategy is always Dynamic

It must keep changing to maintain the competitive advantage.