COMM 401 Strategy & Competition

Introduction (Ch 1 & 2)

Noor Shawwa

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Defining Strategy
A pattern of resource allocation that allows organizations to improve or at least maintain performance (Mintzberg) A good strategy is one that neutralizes threats, exploits opportunities, capitalizes on strengths, and fixes weaknesses.

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Defining Strategy

Strategy is the great work of organization. In situations of life and death, it is the Tao of survival or extinction. Its study cannot be neglected. Sun Tzu, The Art of War

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Defining Strategy
Strategy is the pattern of objectives, purposes, or goals and the major policies and plans for achieving these goals, stated in such a way as to define what business the company is in or is to be in and the kind of company it is or is to be. Kenneth Andrews, The Concept of Corporate Strategy

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Strategic Management

The strategic management process is the full set of commitments, decisions, and actions required for a firm to achieve strategic competitiveness and earn above-average returns

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Strategic Inputs

Chapter 3 External Environment Chapter 4 Internal Environment

Strat. Intent Strat. Mission

The Strategic

Management Process
Chapter 11 Corporate Governance

Strategic Actions

Strategy Formulation
Chapter 5 Bus. - Level Strategy Chapter 6 Chapter 7 Competitive Corp. - Level Dynamics Strategy Chapter 10 Cooperative Strategies

Strategy Implementation
Chapter 12 Structure & Control

Chapter 9 Chapter 8 Acquisitions & International Strategy Restructuring

Chapter 13 Chapter 14 Strategic Entrepreneurship Leadership & Innovation

Strategic Outcomes

Chapter 2 Above Average Returns

Chapter 1 Strategic Competitiveness

Feedback

The Strategic Management Process

Strategic Management Process

EXTERNAL ANALYSIS
(Chapter 3)

INTERNAL ANALYSIS
(Chapter 4)

Opportunities Threats Key Success Factors

Strengths Weaknesses Competences

STRATEGIC INTENT
Corporate Strategy
(Chapters 7-8-10)

Business Strategy (Ch.5) FORMULATION

Functional Strategies F M O IT HR

FORMULATION

Corporate Governance (Ch. 11) Organizational Structure and Controls Strategic Leadership

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Strategic - Purpose

Primary purpose of the strategic management process is to enable firms to achieve strategic competitiveness and earn above-average returns Strategic competitiveness: achieved when a firm successfully formulates & implements a value-creating strategy When competitors are unable to duplicate your value-creating strategy, you achieve a sustainable competitive advantage As long as a firm can sustain/maintain a competitive advantage, it will earn above average returns returns that exceed what investors expect to earn from other investments with equivalent risk (long-term, companies must maintain at least average returns to survive)

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Strategic Management Process

Strategic management process: a framework to assist firms achieve & maintain strategic competitiveness Strategic inputs: information from internal & external environment, used to develop firms strategic intent & strategic mission Strategic actions: strategies that are formulated, developed, and implemented -- guided by strategic intent & strategic mission Strategic outcomes desired: strategic competitiveness & above average return -- results of successful implementation of value-creating strategies that competitor cannot duplicate Feedback: links the elements and allows firm to adjust/revise inputs & actions to achieve desired strategic outcomes
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Mintzbergs Strategy as a Pattern

Intended Strategies Realized Strategies

Deliberate Strategies

Unrealized
Strategies

Emergent
Strategies

Thus, strategy can emerge from a Pattern in the stream of decisions or actions

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Deliberate Strategies

Force managers to look ahead periodically; Require rigorous communications about goals and resource allocations; Stimulate longer-term analyses than would otherwise be made; Provide the company with a sense of direction; Provide an information framework for the future; Provide detailed budgets; Generate a basis for evaluating short-term plans; Protect long-term investments, such as R&D.

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Emergent Strategies

A corporations strategy is rarely written down in one place; Intuition rather than rational analysis often plays a large role in crafting strategy; Bargaining and politics in organizations do not stop at the end of the planning cycle; All people, strategic planners included, are regularly confronted with their own cognitive limitations; New internal & external events are continuously being assimilated into the corporate strategy; Emergent strategies allow companies flexibility.

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Corporate Mission some definitions

The mission of a company is what the company is trying to achieve over the medium to long term as formally declared in its mission statement (Charles Hill & Gareth Jones).
A firms mission is its fundamental purposes and long-term objectives (Jay Barney).

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Some definitions (continued)

The strategic mission is a statement of a firms unique purpose and the scope of its operations in product and market terms (Michael Hitt, Duane Ireland, Robert Hoskisson, Glenn Rowe, and Jerry Sheppard). A strategically relevant mission statement incorporates three elements (Derek Abell, used in Thompson & Strickland): 1. Customer needs, or what is being satisfied. 2. Customer groups, or who is being satisfied. 3. Company activities, or how those needs are satisfied.

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Sample Mission Statement: Apple

Apple Computer, Inc., ignited the personal computer revolution in the 1970s with the Apple II, and reinvented the personal computer in the 1980s with the Macintosh. Apple is now committed to its original mission to bring the best personal computing products and support to students, educators, designers, scientists, engineers, business persons and consumers in over 140 countries around the world.

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Sample Mission Statement: Apple

Apple ignited the personal computer revolution in the 1970s with the Apple II and reinvented the personal computer in the 1980s with the Macintosh. Today, Apple continues to lead the industry in innovation with its award-winning desktop and notebook computers, OS X operating system, and iLife and professional applications. Apple is also spearheading the digital music revolution with its iPod portable music players and iTunes online music store.

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Sample Mission Statement: 3M

We are committed to: Satisfying our customers with superior quality and value; Providing investors with an attractive return through sustained, high-quality growth; Respecting our social and physical environment; Being a company that employees are proud to be a part of.

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Missions: Narrow or Broad? (1)

Few businesses fail because they are focused on a sharply targeted market opportunity, but many fail or do badly because managements attention is divided and resources are scattered across too many areas

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Missions: Narrow or Broad? (2)

Narrow mission: Gives employees a better sense of direction; Is easier to understand for all other stakeholders; Focuses managerial time and attention on a few concrete tasks and responsibilities; Is easier to implement and/or realize

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Missions: Narrow or Broad? (3)

Broad mission: Is often more robust against internal and external changes; Need not be updated as frequently as narrow missions (March of Dimes: Established in 1938 to save Americas youth from Polio. Now: To improve the health of babies by preventing birth defects and infant mortality) Are often more heroic and inspiring Allow organizations to seize new opportunities without restraint

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Strategic vision

A mission highlights the boundaries of the companys current business activities A vision prepares a company for the future by providing an answer to the following questions:

What changes are occurring in our markets today? What new or different customer needs should we start satisfying? What buyer segments should we focus on? What new geographical markets should we cover What should the companys business makeup look like in five years?

Hence, missions describe the status quo, visions are images of (a) how the companys environment will evolve in the future, and (b) what changes should be made inside the company to preserve the companys fit with its environment how to make sure that the company keeps on playing a vital role in society.
Noor Shawwa