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Arthur A Thom

psonMargaret A PeterafJohn E Gamble

A J Strickland IIIArun Jain 1!eCopyright 2012 The McGraw-Hill Companies, Inc.Copyright 2012 The McGraw-Hill Companies, Inc.

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1!e

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Chapter 1WHAT IS STRATEGY AND WHY IS IT IMPORTANT?

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1#

1$ %nderstand &h' e(er' compan' needs a sound strateg' tocompete successfull') manage the conduct of its business) andstrengthen its prospects for long*term success$

"$ +e(elop an a&areness of the four most dependable strategicapproaches for setting a compan' apart from ri(als and

&inning a sustainable competiti(e ad(antage$

#$ %nderstand that a compan',s strateg' tends to e(ol(e o(ertime because of changing circumstances and ongoingmanagement efforts to impro(e the compan',s strateg'$

-$ .earn &h' it is important for a compan' to ha(e a (iablebusiness model that outlines the compan',s customer (alueproposition and its profit formula$

/$ .earn the three tests of a &inning strateg'$

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WHT !" W# M#$ %& STRATEGY'

( What is o)r present sit)ation'

* %)siness en+ironment an in)stry conitions

* irms /inancial an competiti+e capailities

( Where o we want to go /rom here'

* Creating a +ision /or the /irms /)t)re irection

( How are we going to get there'

* Cra/ting an action planthat will get )s there

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WHT I STRATEGY%"T'

( trategy is all ao)t How3

*Howto o)tcompete ri+als.

*Howto respon to economic an mar4etconitions an growth opport)nities.

*Howto manage /)nctional pieces o/ the

)siness.

*Howto impro+e the /irms /inancial anmar4et per/ormance.

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WH& !" STRATEGY '

( /irm oes strategy3

* To impro+e its /inancial per/ormance.

* To strengthen its competiti+e position.* To gain a s)stainale competiti+e.

a+antage o+er its mar4et ri+als.

( creati+e, istincti+e strategy3* Can yiel ao+e-a+erage pro/its.

* Ma4es competition i//ic)lt /or ri+als.

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STRATEGY$! C"M5#TIT"6

( trategy is ao)t competing differently

/rom ri+als7

* !oing what they ont o or oing it etter8

* !oing what they cant o8

* !oing that which sets the /irm apart an

attracts c)stomers.

* !oing what we sho)lor sho)l noto to

pro)ce a competiti+e ege.

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1$1 Identif'ing a 2ompan',s Strateg'34hat to .ook 5or

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9ey initiati+es o/ the 5lan-to-Win strategy3

: Impro+e resta)rant operations

: //orale pricing

: Wie men) +ariety an e+erage choices

: Con+enience an e;pansion o/ ining opport)nities

: "ngoing resta)rant rein+estment an international

e;pansion

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: Which o/ Mc!onals 5lan-to-Win strategy

initiati+es are associate with meeting

c)stomer nees moreeffectively'

: Which initiati+es are /oc)se on moreefficientlyeli+ering pro)cts an ser+ices'

: Which initiati+es will li4ely res)lt in the most

en)ring competiti+e a+antage'

: Which o/ the initiati+es will competitors li4ely

attempt to o+ercome /irst'

Follow-up

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The

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T6T#GIC 556"CH CH"IC#

.o&*costpro(ider

+ifferentiationon features

5ocus onmarket niche

8est*costpro(ider

8uilding 2ompetiti(e Ad(antage

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T6T#GIC 556"CH#

( %)iling a competiti+e a+antage y3

1. tri+ing to ecome the in)strys low-cost

pro+ier =efficiency>.

2. ")tcompeting ri+als on i//erentiating

/eat)res =effectiveness>.

?. oc)sing on etter ser+ing a niche mar4ets

nees =efficiency and\or effectiveness>.

@. "//ering the lowest =est> prices /or

i//erentiate goos =best-cost provider>.

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GI$I$G TI$%A# C"M5#TITIB#!B$TG#

( How to create a s)stainale competiti+e

a+antage3

* !e+elop +al)ale e;pertise an competiti+e

capailities o+er the long-term that ri+als

cannot reaily copy, match or est.

* 5)t the constant )est /or s)stainale

competiti+e a+antage at center stage incra/ting yo)r strategy.

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Why a irms trategy #+ol+es o+er Time

( Managers moi/y strategy in response to3

* Changing mar4et conitions

*+ancing technology

* resh mo+es o/ competitors

* hi/ting )yer nees

* #merging mar4et opport)nities

* $ew ieas /or impro+ing the strategy

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The #+ol+ing $at)re o/ a irms trategy

( 6ealiDe =c)rrent> strategy is a len o/3

* 5roacti+e=elierate> strategy elements that

incl)e oth contin)e an new initiati+es.* 6eacti+e=emergent> strategy elements that

are re)ire )e to )nanticipate competiti+e

e+elopments an /resh mar4et conitions.

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1$" A 2ompan',s Strateg' Is a 8lend of Proacti(e Initiati(esand 9eacti(e Ad:ustments

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TH# 6#ATI"$HI5 %#TW##$ I6M T6T#G& $! IT %I$#

M"!#A

9eali;ed

Strateg'2ompetiti(eInitiati(es

8usinessApproaches

8usiness

Model

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Companys %)siness Moel

(Howthe )siness will ma4e money 3

* %y pro+iing c)stomers with +al)e.

The /irms c)stomer +al)e proposition

* %y generating re+en)es s)//icient to co+er

costs an pro)ce attracti+e pro/its.

The /irms pro/it /orm)la

It takes a proven business modelone tat

yields appealin! profitabilityto demonstrate

viability of a firm"s strate!y#

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%)siness Moel #lements

( The C)stomer Bal)e 5roposition

* atis/ying )yer wants an nees at a price

c)stomers will consier a goo +al)e.

The greater the +al)e pro+ie =B> an

the lower the price =5>, the more

attracti+e the +al)e proposition is to

c)stomers.

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%)siness Moel #lements =cont>

( The 5ro/it orm)la

* Creating a cost str)ct)re that allows /or

acceptale pro/its, gi+en that pricing is

tie to the c)stomer +al)e proposition. B7the +al)e pro+ie to c)stomers

57the price charge to c)stomers

C7the /irms costs* The lower the costs =C> /or a gi+en c)stomer

+al)e proposition =BE5>, the greater the aility

o/ the )siness moel to e a moneyma4er.

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I "6 T6T#G& WI$$#6'

4inningStrateg'

The Strategic5it Test

The 2ompetiti(eAd(antage Test

The PerformanceTest

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WHT M9# T6T#G& WI$$#6'

( winning strategy m)st pass three tests3* The it Test

!oes it e;hiit ynamic /it with the e;ternal an

internal aspects o/ the /irms o+erall sit)ation'* The Competiti+e +antage Test

Can it help the /irm achie+e a signi/icant an

s)stainale competiti+e a+antage'

* The 5er/ormance Test Can it pro)ce goo per/ormance as meas)re

y the /irms pro/itaility, /inancial an

competiti+e strengths, an mar4et staning'

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1"-

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Who listens to the raio anymore'

: Gi+en the shi/ts in how people listen to m)sic, are

the )siness moels o/ iri)s FM an o+er-the-air

roacasters +iale o+er the long term'

: !oes ir)s FMs strategy pass the three tests o/ a

winning strategy' !oes the strategy o/ o+er-the-air

roacasters pass the same tests'

: What internal an e;ternal /actors will create

i//ic)lties /or either competitor in changing its

strategy or )siness moel'

Follow-up

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WH& C6TI$G $! #F#CTI$GT6T#G& 6# IM5"6T$T T9

( trategy pro+ies3

* prescription /or oing )siness.

* roa map to competiti+e a+antage.* game plan /or pleasing c)stomers.

* /orm)la /or attaining long-term stano)t

mar4etplace per/ormance.

Good Strate!y $ Good Strate!y E%ecution &

Goo Management

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THI$9I$G T6T#GICAA&

( Googles we rowser-ase Chrome operating

system an its online applications s)ite are now

challenging Microso/ts long-term ominance o/

those mar4etplace sectors.* What sho)l e Microso/ts /irst response to this

competiti+e challenge'

* How will Microso/ts response to this competitors

actions a//ect its )siness moel'

* Which competitors strategy will li4ely e the e+ent)al

winner in the mar4etplace'

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TH# 6"! H#!

( trategy is ao)t as4ing the right )estions3

* What m)st managers o, an o well, to ma4e a

/irm a winner in the mar4etplace'

( trategy re)ires getting the right answers3* Goo strategic thin4ing an goo management o/

the strategy-ma4ing, strategy-e;ec)ting process.

* irst-rate capailities an s4ills in cra/ting an

e;ec)ting strategy are essential to managing

s)ccess/)lly.

'elcome and best (ises for your success)