Study Guide Strategy
,PBL 1
Thompson, Peteraf, Gamble, Strickland,2016 Chapters 1 & 2
1. What is a company strategy?
The set of actions from managers to outperform the competitors and achieve superior profitability. More about
lasting success that can support growth and secure the company’s future over the long term. Achieved through
answering questions on how to compete.
How can we outcompete rivals?
How can we respond to changing economic and market conditions and capitalize opportunities?
How to manage each functional piece of the business? (R&D, Production, Supply Chain etc.)
How to improve the organization's financial market and increasingly sustainability performance?
1. What is our present situation? (now) context
2. Where do we want to go from here? (later) content (vision)
3. How are we going to get there? Process
1. How can we outcompete rivals?
2. How can we respond to changing economic and market conditions and capitalize opportunities?
3. How to manage each functional piece of the business? (R&D, Production, Supply Chain etc.)
4. How to improve the organization's financial market and increasingly sustainability performance?
It is about competing differently doing what competitors don’t do or what they can’t do
Strategy always has to entail points of difference that attract customers and thus create competition provides
direction and guidance, what the company should and should not do – and positions company in a market where the
competition is not too fierce.
A company achieves a competitive advantage when 1) it provides buyers with superior value compared to rival
sellers or 2) offers the same value at a lower cost to the firm. The advantage is sustainable if it persists despite the
best efforts of competitors to match or surpass this advantage – give buyers lasting reasons to prefer a company’s
products or services over those of competitors – POD
to win sustainable competitive edge you need the right strategy, expertise/capabilities (most hard for rivals to
copy!), and a distinctive product
Should be aimed on:
Appeal to buyers differently in a way that sets it apart from rivals
Staking out in a market position with less competitors
- What kind of strategies are there?
A company achieves a competitive advantage when it provides buyers with superior value compared to rival sellers
or offers the same value at a lower cost to the firm. The advantage is sustainable if it persists despite the best efforts
of competitors to match or surpass this advantage..
Two pathways for competitive advantage: Minimum cost efficient and most effective superior value
5 strategies to set a company apart, build customer loyalty and winning competitive advantage
Low cost provider (cost-leadership)
Focussed low cost
Best cost provider
Focussed differentiation
Broad differentiation
Superior value: a good product at a lower price
Superior product: worth paying more
Best-value offering: Attractive combination of price, features, quality, service, etc.
Changing circumstances and ongoing management efforts to improve the strategy cause a company’s strategy to
evolve over time—a condition that makes the task of crafting strategy a work in progress, not a one-time event.
A company’s strategy is shaped partly by management analysis and choice and partly by the necessity of adapting
and learning by doing.
,How to determine a winning strategy:
1) Fit test – how well does the strategy fit the company´s situation?
External fit: matches industry/market/competitive conditions
Internal fit: tailored to company´s resources and competitive capabilities + activities in operations,
mkt, sales…)
Dynamic fit: maintaining close and effective alignment with company even if external an internal
conditions change – evolving strategy
2) Competitive advantage test – is the strategy helping achieve a sustainable comp. adv.?
Long-term production of superior performance
3) Performance test – is the strategy producing good company performance?
Competitive strength and market share
Profitability and financial strength
existing strategies must be scrutinized (examined) on a regular basis to ensure they have good fit, offer a
competitive advantage, and are contributing to above-average performance or performance improvements.
3. What is the business model?
A company’s business model sets forth the logic for how its strategy will create value for customers and at the same
time generate revenues sufficient to cover costs and
realize a profit. Consists of two elements: (1) customer value proposition (V-P) and (2) profit formula (P-C).
- Why is it important?
It shows if it can execute its customer value proposition profitably.
Consists of two elements: The customer value proposition (V-P) lays out
the company’s approach to satisfying buyer wants and needs at a price
customers will consider a good value. The profit formula (P-C) describes
the company’s approach to determining a cost structure that will allow
for acceptable profits, given the pricing tied to its customer value
proposition.
From a customer perspective, the greater the value delivered (V) and
the lower the price (P), the more attractive is the company’s value
proposition. On the other hand, the lower the costs (C), given the
customer value proposition (V – P), the greater the ability of the
business model to be a money maker.
Business plan
, Strategic plan= Strategic vision + mission + objectives + strategy (Stage 1+2+3) Where is the company headed,
establishes strategic and financial targets, outlines competitive moves and approaches to be used in achieving the
desired business results.
Stage 1
Strategic Vision: describes “where we are going and why” Long-term direction (Aim) – should be distinctive
and specific to the particular organization;
- 1) where management intends to position the company in the future,
- 2) gives direction and strategic path to follow,
- 3) lower-level management can set according departmental objectives and strategies,
- 4) helps prepare for the future,
- 5) motivational value the vision is captured in a catchy slogan
Mission Statement: describes “who we are, what we do, and why we are here”, (Identity/purpose)
(Objectives) Present, purely descriptive;
- 1) identifies the company’s products and/or services,
- 2) specifies the buyer needs that the company seeks to satisfy and the customer groups or markets that it
serves
- 3) gives the company its own identity
Company Values are the beliefs, traits, and behavioral norms that company personnel are expected to display in
conducting the company’s business and pursuing its strategic vision and mission.
- 1) window-dressing values or
- 2) core values are actually integrated into company DNA; vision, mission, strategy, and set of operating
practices match established values – no conflicts – repeated emphasis on their importance for business
success
Based on your core values you decide your strategy to achieve your vision.
5 payoffs for a good communicated strategic vision:
1. It crystallizes senior executives’ own views about the firm’s long-term direction;
2. It reduces the risk of rudderless decision making;
3. It is a tool for winning the support of organization members to help make the vision a reality;
4. It provides a beacon for lower-level managers in setting departmental objectives and crafting departmental
strategies that are in sync with the company’s overall strategy;
5. It helps an organization prepare for the future.
Stage 2
setting objectives is to convert the vision and mission into specific performance targets; 1) align actions throughout
organization, 2) help track performance progress, 3) motivate employees
1. Measurable
2. Specific
3. Appropriate (relevant to company and its vision, mission, strategy)
4. Realistic
5. Timely (deadline)
