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Class notes Strategic Management (HBA10c). Includes the summary of all slides.
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Chapter 1: What is Strategy and why is it important?- Strategy is about winning
o Strategic myopia: Blinded by successes of the past
Self-serving bias: cognitive or perceptual process that is distorted by the need to
maintain and enhance self-esteem
Hindsight bias: cognitive bias that causes people to convince themselves that a
past event was predictable or inevitable.
- Lady Gaga
o No luck, but strategy
o Clear, simple, LT goal (clarity of direction)
o Clear understanding of the environment (external)
o Clear understanding of the resources (internal)
- What is strategy
o Strategy is about competing differently from rivals
Competitive advantage: an advantage that a firm has over its competitors, allowing
it to generate greater sales or margins and/or retain more customers than its
competition.
o How to create a sustainable competitive advantage?
Having resources, developing valuable expertise and competitive capabilities
over the long-term that rivals cannot readily copy, match or best.
o Strategy is not a one-time thing, but always a work in progress.
- A realized strategy
o Intended/deliberate/proactive strategy
o Emergent/reactive strategy
- Strategy and business model
o Value proposition: the greater the value provided and the lower the price, the more
attractive the value proposition is to customers.
o By generating revenues sufficient to cover costs and produce attractive profits.
- Why crafting and executing strategy are important
o Road map to competitive advantage
o It motivates
, Chapter 2: Charting an Organization’s Direction: Vision and Mission, Objectives, and Strategy
- What does the strategy-making, executing process entail?
o 6 Ds of Strategy
Diagnosis: analysis of the environment
Direction: Vision, mission
Decisions: How to compete, how to fund
Delivery: R&D, network, ecosystems
Disorder: are the competitors same, with same resources and capabilities
Dynamism: how fast is the market rotating
- Stage 1: Direction
o Vision: mental image of a possible and desired future of the firm, its aspirations
o Advantages of good vision:
Path for growth, it prepares for the future
Motivation
Inspiration
Framework for strategy
Part of organization culture
o Mission: identity kit of the firm (what/who/how are we?)
What the company is doing
o Advantages of a good mission:
Internal motivation and external communication
Guides decisions
Basis for strategy
o Values: are the beliefs, traits, and behavioral norms that employees are expected to
display in conducting the firm’s business and in pursuing its strategic vision and mission.
Espoused vs enacted values
Espoused is what the company believes in
Enacted is what actually happens in the company
- Business ethics
o Managers have an obligation to observe ethical principles when crafting a strategy
Ethical universalism: follow the universal ethical standards that apply to all societies
Ethical relativism: follow the ethical standards of the local standards
Social contracts theory: use both but when the local standards are stricter, follow the
local rule.
o Do the litmus test?
Measures whether the company or the strategy is following the code of ethics
and the values of the company.
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