Bài giảng Crafting & Executing Strategy - Chapter 1: What is strategy and why is it important?

CHAPTER 1WHAT IS STRATEGY AND WHY IS IT IMPORTANT?Student VersionMcGraw-Hill/IrwinCopyright đ2012 The McGraw-Hill Companies, Inc.WHAT DO WE MEAN BY STRATEGY ?What is our present situation?Business environment and industry conditionsFirm’s financial and competitive capabilitiesWhere do we want to go from here?Creating a vision for the firm’s future directionHow are we going to get there?Crafting an action plan that will get us thereWHAT IS STRATEGY ABOUT?Strategy is all about How:How to outcompete rivals.How to respond to economic and market conditions and growth opportunities.How to manage functional pieces of the business.How to improve the firm’s financial and market performance.WHY DO STRATEGY ?A firm does strategy:To improve its financial performance.To strengthen its competitive position.To gain a sustainable competitive. advantage over its market rivals.A creative, distinctive strategy:Can yield above-average profits.Makes competition difficult for rivals.STRATEGY AND COMPETITORSStrategy is about competing differently from rivals—Doing what they don’t do or doing it better!Doing what they can’t do!Doing that which sets the firm apart and attracts customers.Doing what we should or should not do to produce a competitive edge.The Quest for Competitive AdvantageCompetitive AdvantageMeeting customer needs more effectively, with products or services that customers value more highly, or more efficiently, at lower cost.Sustainable Competitive AdvantageGiving buyers lasting reasons to prefer a firm’s products or services over those of its competitors.STRATEGIC APPROACH CHOICESLow-cost providerDifferentiation on featuresFocus on market nicheBest-cost providerBuilding Competitive AdvantageGAINING SUSTAINABLE COMPETITIVE ADVANTAGEHow to create a sustainable competitive advantage:Develop valuable expertise and competitive capabilities over the long-term that rivals cannot readily copy, match or best.Put the constant quest for sustainable competitive advantage at center stage in crafting your strategy.Why a Firm’s Strategy Evolves over TimeManagers modify strategy in response to:Changing market conditionsAdvancing technologyFresh moves of competitorsShifting buyer needsEmerging market opportunitiesNew ideas for improving the strategyThe Evolving Nature of a Firm’s StrategyRealized (current) strategy is a blend of:Proactive (deliberate) strategy elements that include both continued and new initiatives.Reactive (emergent) strategy elements that are required due to unanticipated competitive developments and fresh market conditions.THE RELATIONSHIP BETWEEN A FIRM’S STRATEGY AND ITS BUSINESS MODELRealizedStrategyCompetitive InitiativesBusiness ApproachesBusiness ModelValue PropositionProfit Formula$$$?Business Model Elements (cont’d)The Profit FormulaCreating a cost structure that allows for acceptable profits, given that pricing is tied to the customer value proposition.V—the value provided to customersP—the price charged to customersC—the firm’s costsThe lower the costs (C) for a given customer value proposition (V–P), the greater the ability of the business model to be a moneymaker.IS OUR STRATEGY A WINNER?Winning StrategyThe Strategic Fit TestThe Competitive Advantage TestThe Performance TestWHY CRAFTING AND EXECUTING STRATEGY ARE IMPORTANT TASKSStrategy provides:A prescription for doing business.A road map to competitive advantage.A game plan for pleasing customers.A formula for attaining long-term standout marketplace performance.Good Strategy + Good Strategy Execution = Good ManagementTHE ROAD AHEADStrategy is about asking the right questions:What must managers do, and do well, to make a firm a winner in the marketplace?Strategy requires getting the right answers:Good strategic thinking and good management of the strategy-making, strategy-executing process.First-rate capabilities and skills in crafting and executing strategy are essential to managing successfully.Welcome and best wishes for your success!