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4
Strategy
Learning Outcomes:
1. specify the components of sustainable competitive
advantage and explain why it’s important
2. describe the steps involved in the strategy-making
process
3. explain the different kinds of corporate-level strategies
4. describe the different kinds of industry-level strategies
5. explain the components and kinds of firm-level
strategies
6. Blue Ocean Strategy
Competitive Advantage
• Resources
– assets, capabilities, processes, employee time,
information, and knowledge that an organization
controls.
• Competitive advantage
– providing greater value for customers than
competitors can
• Sustainable competitive advantage
– when other companies cannot duplicate the value a
firm is providing to customers
Sustainable Competitive Advantage
Resources must be…
• Valuable
• Rare
• Imperfectly imitable
• Nonsubstitutable
Three Steps of the
Strategy-Making
Process
Corporate Level Strategy
•Growth strategy
•Stability strategy
•Retrenchment strategy
– make significant cuts
– recovery
Industry-Level Strategies
• Differentiation
• Focus
Adaptive Strategies
• Defenders
• Prospectors
• Analyzers
• Reactors
Firm-Level Strategies
•Market commonality
•Resource similarity
Strategic Moves of Direct
Competition
• Attack
– a competitive move designed to reduce a rival’s
market share or profits
• Response
– a countermove, prompted by a rival’s attack,
designed to defend or improve a company’s market
share or profit
Blue Ocean Strategy
• A Blue Ocean is a new market which is
untouched by competition.
• The Blue Ocean Strategy aims at creating a new
market space, where the competition becomes
irrelevant
5& Planning and
6 Decision Making
1. discuss the benefits and pitfalls of planning
2. describe how to make a plan that works
3. discuss how companies can use plans at all
management levels, from top to bottom
4. explain the steps and limits to rational decision
making
5. explain how group decisions and group
decision-making techniques can improve
decision making
Benefits of Planning
• Intensified effort
• Persistence
• Direction
• Detachment of planners
How To Make a
Plan That Works
Setting Goals
S.M.A.R.T. Goals
• Specific
• Measurable
• Attainable
• Realistic
• Timely
Developing Commitment to Goals
• Goal commitment
– the determination to achieve a goal
• Performance feedback
Maintaining Flexibility
• Options-based planning
– keep options open by making, small simultaneous
investments in many alternative plans.
• Slack resources
– a cushion of resources, like extra time or money, that
can be used to address and adapt to unanticipated
changes.
Planning from
Top to Bottom
Starting at the Top
• Strategic plans
– make clear how the company will serve customers
and position itself against competitors in the next 2 to
5 years
• Purpose statement
– a statement of a company’s purpose or reason for
existing
• Strategic objective
– a more specific goal that unifies company-wide
efforts, stretches and challenges the organization, and
possess a finish line and a time frame.
Bending in the Middle
• Tactical plans
– specify how a company will use resources, budgets,
and people to accomplish specific goals related to its
strategic objective
– time frame: 6 months to 2 years
Existing state
Desired state
Identify Decision Criteria
The standards used to guide judgments and
decisions.
Weight the Criteria
• Absolute comparisons
• Relative comparisons
Generate Alternative
Courses of Action
After identifying and weighting the criteria that
will guide the decision-making process, the next
step is to identify possible courses of action that
could solve the problem.