Summary #1FOS Chs. 1-3BOS Chs. 1-3Group 2: Paul, Cameron, Chase, Sarita, Nathan, Zach

Strategy

• A plan, method, or series of actions designed to achieve a specific goal or purpose.

• A unifying theme that gives coherence and direction to the actions and decisions of an individual or an organization.

• Strategy is NOT a detailed plan or program of instructions

The 4 common Factors of Strategy

• Goals that are simple, consistent, and long term.• Profound understanding of the competitive environment.• Objective appraisal of resources.• Effective implementation.

Corporate vs. Business Strategy

• Corporate Strategy- defines the scope of the firm in terms of the industries and markets in which it competes.

• Business Strategy- Is concerned with how the firm competes within a particular industry or market.

Corporate Social Responsibility• What are the company’s

obligations interest as a whole?

• Milton Friedman “there is on and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.”

Under Armour• UA is a market leader, not only in innovation, but in ethical

standards as well. (as stated in the UA “Code”)

• Code was challenged by the Apparel Supply Chain Compliance Program survey

Chapter 2: Key Points

• PEST Analysis• The Industry Environment• Porter’s Five Forces

PEST Analysis

The importance of PEST? Helps recognize basic factors that can shape an environment.

PoliticalEconomicSocialTechnology

The Industry Environment• Suppliers

• Competitors

• Customers

How do these 3 players effect profit opportunity?

Porter’s Five Forces

Foundation Of StrategyCh.1: Matched the firms resources & capabilities to the opportunities

in the external environment.

Ch.2: Identified profit opportunities in the external

environment.

Ch.3: Moves the focus of strategy from the external environment to

the internal environment.

Why the Shift?• Important: As firms’ industry environments become unstable…• Resources & Capabilities are a safe bet for formulating strategy.

Instead of focusing on the changing external market.• Also, • “Competitive Advantage rather than industry attractiveness is the

primary source of superior profitability”

Resources:

Capabilities

• Organizational Capability- a firm’s capacity to deploy resources for a desired end result• Core Competences according to Hamel and Prahalad

include- • Make a contribution to ultimate customer value, or to the

efficiency with which that value is delivered• Provide a basis for entering new markets

• Functional Analysis- identifies organizational capabilities in relation to each of the principal functional areas of the firm• Value Chain Analysis- separates the activities of the firm

into a sequential chain

Guide to putting resource & capability analysis to work• Step 1: Identify the key resources and capabilities. • Step 2: Appraising resources and capabilities. • Step 3: Developing strategy implications.

BOS: Chapter One

• We looked at the creation of Blue Ocean Industries

• Cirque Du Soleli

• Entering new market space

• Under Armour

• Took a look back on the history of Blue Ocean Strategy

• Automobiles, Aviation and Music recording

• The difference between Blue and Red Oceans

• Under Armour created the industry but has quickly turned into a red ocean

BOS: Ch. 1 continued…

• Rising Imperative of Blue Oceans

• Globalization, Brand similarity

• Globalization

• Loss in brand loyalty

• Choosing a product because of price

• Value Innovation

• Answering previously unmet needs

Chapter 2: Blue Ocean Strategy

Strategic Canvas4 Actions FrameworkHow Cirque Du Soleil did itHow Under Armour follows it

Strategy Canvas

To fundamentally shift the strategy canvas of an industry, you must begin by reorienting your strategic focus from competitors to alternatives, and from customers to noncustomers of the industry

Why is it Important? gain insight into how to redefine the problem the industry

focuses on

How do you do it?

Four Actions Framework

Four questions to challenge an industry’s strategic logic and business model:

Which of the factors that the industry takes for granted should be eliminated?

Which factors should be reduced well below the industry’s standard? Which factors should be raised well above the industry’s standard? Which factors should be created that the industry has never offered?

Cirque Du Soleil Eliminate: Animals, star performers, and the 3 ring circus feel Reduce: the overall circus feel; fun and humor, thrill and danger Raise: Unique Venue Create: A new form of entertainment by intertwining the circus

and the theater together. A more refined environment.

Under Armour Eliminate: Cheap raw materials that most sporting clothing companies

use Reduce: Only sell their brands in certain stores. Don’t overstretch

themselves in all markets. Raise: Brand Loyalty. UA has a powerful Brand identity. They built team

and athlete endorsements early on to start and maintain their brand identity.

Create: Started new kind of athletic apparel. Technology advanced products to keep sweat away from skin, regulate body temperature, and perform in any weather condition. Their design and style in their differing factor.

Six Paths Framework• Six different means for reconstructing market boundaries.

• Directly associated with reducing search risk.

• Mostly concerned with broadening scope and understanding of business operations.

Six Paths• Look across...• alternative industries• strategic groups• the chain of buyers• complementary product and service offerings• functional or emotional appeal to buyers• time

• What is the commonality?

The Big Picture• As a developer of strategy, an understanding of just the

industry you are within is not adequate to create reconstruction opportunities.

• The six paths demand insight in fields outside of your own.

• The paths draw focus to the proper areas, but little more. Is intuition a necessity?