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1
What Is Strategy and
Why Is It Important?
Screen graphics created by:
Jana F. Kuzmicki, Ph.D.
Troy State University-Florida and Western Region
1-1
Chapter Roadmap
What Is Strategy?
Identifying
a Companys Strategy
Strategy
Strategy
Strategy
Business Model
What Makes a Strategy a Winner?
Why Are Crafting and Executing Strategy Important?
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Thinking Strategically:
The Three Big Strategic
Questions
1. Where are we now?
2. Where do we want to go?
Outcomes to achieve
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What Is Strategy?
Consists of the combination of competitive moves and
Compete
Grow
the business
Achieve
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successfully
targeted objectives
market conditions
How to outcompete rivals
Strategy
is HOW
to . . .
1-6
Striving for
Competitive Advantage
To achieve sustainable competitive advantage, a
Strategic Approaches to
Building Competitive
Advantage
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Why Do Strategies
Evolve?
A companys strategy is a work in progress
Changes may be necessary to react to
Fresh
moves of competitors
Evolving
customer preferences
Technological
Shifting
Crisis
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breakthroughs
market conditions
situations
to issues of
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Does not entail actions and behaviors that cross the line from
can do to should not do and unsavory or shady and
A Firms Ethical
Responsibilities
to Its Stakeholders
Owners/shareholders
Owners/shareholdersRightfully
Rightfullyexpect
expectsome
someform
formof
of
return
returnon
ontheir
theirinvestment
investment
Employees
Employees--Rightfully
Rightfullyexpect
expectto
tobe
betreated
treatedwith
withdignity
dignity
and
andrespect
respectfor
fordevoting
devotingtheir
theirenergies
energiesto
tothe
theenterprise
enterprise
Customers
Customers--Rightfully
Rightfullyexpect
expectaaseller
sellerto
toprovide
providethem
them
with
withaareliable,
reliable,safe
safeproduct
productor
orservice
service
Suppliers
Suppliers--Rightfully
Rightfullyexpect
expectto
tohave
havean
anequitable
equitable
relationship
relationshipwith
withfirms
firmsthey
theysupply
supplyand
andbe
betreated
treatedfairly
fairly
Community
Community--Rightfully
Rightfullyexpect
expectbusinesses
businessesto
tobe
begood
good
citizens
citizensin
intheir
theircommunity
community
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What Is a Business
Model?
A business model addresses How do we make money in
this business?
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Relationship Between
Strategy and Business
Model
Strategy - Deals with a
companys competitive
initiatives and business
approaches
y
eg
t
ra
St
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ss
ne l
i
s e
Bu od
M
Business Model
-Concerns whether
revenues and costs flowing
from the strategy
demonstrate the business
can be amply profitable
and viable
Tests of a Winning
Strategy
GOODNESS OF FIT TEST
PERFORMANCE TEST
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strategy
Degree of risk the strategy poses as compared to
alternative strategies
Degree to which the strategy is flexible and adaptable to
changing circumstances
While these criteria are relevant, they seldom override
the importance of the three tests of a winning strategy!
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