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Summary Strategic Management (BM22MIM)
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Strategic Management NotesWeek 1
Are you sure you have a strategy? - Donald C. Hambrick and James W. Fredrickson
1. WHAT IS STRATEGY?
a. a set of coordinated decisions that will allow an organisation to realise its mission
(the objecives that it wants to achieve.)
2. 5 Elements of Strategy
a. Arenas: Who are our customers?
b. Vehicles: How should we reach our customers?
c. Differentiators: How can we be different from our competitors?
d. Staging: What are the steps we should take?
e. Economic logic: How can we win the competitions and make a profit?
i. Why would customers choose us over competitors?
ii. How do we ensure that happens?
iii. Why is it profitable?
3. 5 elements are equally essential
4. 5 elements are important for choices, preparation and investment
5. 5 elements must encourage each other.
6. Strategies should be flexible so that they can be adjusted over time.
7. WHAT IS THE DIFFERENCE BETWEEN DIFFERENTIATORS AND ECONOMIC
LOGIC?
a. Economic logic includes profits but differentiators do not.
8. 2 MAIN STRATEGY
a. Low-cost strategy
i. Risk: Risk of losing customers by not offering the least expected service.
b. Differentiation strategy
i. Risk: Customer preferences changes.
c. Hybrid strategy
i. Difficult to keep the balance between costs and differentiate.
,d. Focus strategy (niche strategy)
i. Risk: Very small scale.
, What is Strategy? - Michael E. Porter
-Operational effectiveness (OE) is not strategy: competition to become more cost-effective is not a
good strategy.
-OE: doing the same activities by doing it better than opponents.
-Managers have been putting so much focus on OE. <= Not good.
-Strategic Positioning: doing different activities or the same activities but in different ways. <=
strategy
-3 elements of strategic positioning
1. Variety-based positioning: make the most of what the company have and what it can do.
2. Needs-based positioning: provide a complete solution for a specific group of consumers.
3. Access-based positioning: categorise consumers into different groups based on how they can
be reached.
-A sustainable strategic position requires a trade-off: 3 characteristics of trade-off.
1. Inconsistencies in image or reputation: if a company wants to create and maintain its
reputation, it cannot do something that goes against its position.
2. Different positions require different implementation: Once a company decided their position,
doing something against it would be ineffective.
3. Fails to manage internal coherent: not sticking to a company’s position would cause
misunderstanding within a company.
-Strategy is in other words, choosing what NOT to do.
-Fit is important when choosing its position
-3 types of fit
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