Crafting and Executing Strategy (Chapter 1) Flashcards
What do we mean by strategy?
set of coordinated actions that its managers take in order to outperform the company’s competitors and achieve superior profitability.
What are the HOW’s to compete?
How to position the company in the market place
How to attract customers
how to compete against rivals
How to achieve company performance goals
How to capitalize on opportunities to grow
How to respond to market conditions
What is the essence of Strategy?
Is about competing differently- doing what others won’t do or cannot do.
A strategy stands a better chance of success when it is predicted on actions, business approaches, and competitive moves aimed at.
1) appealing to buyers in was that set a company apart from rivals
2)Staking out a market position that is not crowded with strong competitors
When does a company have competitive advantage?
When it has type of edge over rivals in attracting buyers and coping with competitive forces
Two basic mechanisms for competitive advantage?
1) A product or service that the customer values more highly than others.
2)They produce the product or service more efficiently (Lower cost)
Five of the most frequently used and dependable strategic approaches to setting a company apart from rivals
1) A lower provider strategy- cost based advantage over rivals
2) A broad differentiation strategy - differentiate the company’s product or service
3) A focused low-cost strategy - concentrating on a narrow buyer segment
4) A focused differentiation strategy - Niche market
5) A best cost provider strategy - giving customers more value for the money by satisfying their expectations.
Why do company strategies evolves over time?
Crafting a strategy is not a one-time event but always a work in progress
A company’s strategy is partly
1) Proactive - planned initiatives to improve financial performance
2) Reactive - responses to unanticipated developlements
What is deliberate strategy?
Consists of proactive strategy elements that are planned
What is Emergent strategy?
Consists of reactive strategy elements that emerge as changing conditions warrant
What is a business model?
Is management’s blueprint for delivering a valuable product or service to customers in a manner that will generate revenues to cover costs and yield profits.
What is the profit formula?
V- The value provided to customers
P - The price charged to customers
C - The firm’s costs
The lower the costs (C) for a given customer value proposition (V-P) the greater the ability of the business model to be a moneymaker.
Three tests of a winning strategy:
1) Exhibits good fit with situation
2) Results in competitive advantage
3) Promotes superior performance
To pass a fit test, a strategy must exhibit fit along three dimensions:
1) External
2) internal
3) Dynamic
