Foundations of Strategy Chapter 4.The nature and sources of competitive advantage
Foundations of Strategy: Chapter 1
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Transcript of Foundations of Strategy: Chapter 1
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FOUNDATIONS OF STRATEGY: CHAPTER 1
Group 1Allyson HatzAlexa McDanielMolly MoseleyBonnie LeeRafael Garcia
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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
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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
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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
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Roles of Strategy Decision support Coordinating device
Communication Target
Motivation and inspiration Animation and orientation
Map: Focus and direction
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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
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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
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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
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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
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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.
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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
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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
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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
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Effective Implementation
• Effective leadership in terms of capacity to reach decisions
• Loyalty and commitment among subordinates
• Quick responses to change in the competitive environment
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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
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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
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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
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Apple Price your products to customer
segments iPhone 3gs $99
Keep your eye to the future
Listen to your customers
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Under Armour Enter the soccer world Tottenham Hotspur, English Premier
League Start player?
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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
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Strategy for Marketing Product placement Social media Being better than competitors Use of questionnaires and interviews Competitive advantage
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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
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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