H1:: What is strategy Flashcards
What is strategy? + origin of strategy
Plan that is intended to achieve particular purpose
Origin:
comes from warfare –> victory tactics
MINTZBERG STRATEGY AS AN EMERGENT PROCESS
Mintzbergs critique of formal strategic planning:
Give the 3 fallacy’s
1) fallacy of prediction
2) fallacy of detachment
3) fallacy of formalization
MINTZBERG STRATEGY AS AN EMERGENT PROCESS
Mintzbergs critique of formal strategic planning:
Explain fallacy of predicition
The future is unkown: we don’t know what is gonna happen
Accidental discoveries can have dramatic effects on strategic direction –> most succesfull business have had succes with accedental discoveries
MINTZBERG STRATEGY AS AN EMERGENT PROCESS
Mintzbergs critique of formal strategic planning:
Fallacy of detachment
Assumes that strategist sits behind desk and plans it all out:
strategists sits behind desk and plans it out and the lower people will just do it without faults
–> disconnection between formalization and implementation
- there will be people that act differently than planned
MINTZBERG STRATEGY AS AN EMERGENT PROCESS
Mintzbergs critique of formal strategic planning:
Fallacy of formalization
has to do with if you sit behind desk and you develop strategy:
–> you are simplifying the reality
–> the reality is more complicated than this simple picture
inhibits flexibility, spontaneity, intuition and learning
Strategy evolves through …x..
autonomous action, a pattern in a stream of decisions:
een bedrijfs strategie die veranderd doorheen de tijd ge past die constant aan door nieuwe dingen enzo die op uw pad komen.
EISENHARDT: STRATEGY AS SIMPLE RULES
kritiek op wat?
critized of design and positioning schools:
Bv internet:
- intense rivalry
- intant imitation: easy for other people to copy
- few barriers to entry
- WTP (willingness to pay) is extremely low
EISENHARDT: STRATEGY AS SIMPLE RULES
explain
Eisenhardt wants managers to not have a strategy but to apply a couple of simple ‘rules’ –> quick and constant decision
- strategy is then the craft of knowing wich fleeting opportunities to seize –> how?
by identifying a small number of strategically significant processes, and crafting a few simple rules to guide them.
EISENHARDT: STRATEGY AS SIMPLE RULES
Give the 5 rules
1) how-to rules= key features of how process is executed- what makes process unique
2) boundry rules= focus on wich opportunities can be persued and wich are outside the pale
3) priority rules= help managers rank the accepted opportunities
4) timing rules= synchronize managers with the pace of emerging opportunities and other parts of the company
5) exit rules= help managers decide when to pull out of yesterday’s opportunities
EISENHARDT: STRATEGY AS SIMPLE RULES
where do the rules come from?
- own experience
- imported experience of management
- rules exist in some implicit form
PORTER POSITIONING SCHOOL
explain how to compete
Porter begins with differentiating with: strategy and operational efficiency
competing to be the best is not strategy –> strategy is to be competing to be unique/different:
Problem: market keeps catching up: the better you get the more cost effective you get, the market gets there quickly –> people will quickly immitate what you do
–> SOLUTION: COMPETING TO BE DIFFERENT= unique value proposition + distinctive, different activities
–> POSITIONING FOR PORTER= offering unique value using unique activities
–> STRATEGIC POSITION= PREFORMING DIFFERENT ACTIVITIES THAN RIVALS OR PROFORMING SIMILAR ACTIVITIES IN DIFFERENT WAYS
–> porter is not about selecting industries and segments
PORTER POSITION SCHOOL
3 types of positioning
variety based positioning
needs based positioning
access based positioning
PORTER POSITION SCHOOL
variaty based positioning
Produce particular products or services using distinctive sets of activities
Bv: specializing in a narrow range or serving basic service at a reasonable cost. Jiffy lube is an example. product, looking at wide market. We will only produce one partical type of product or service
PORTER POSITION SCHOOL
needs based positioning
Meeting unique customer needs using unique activities. Bessemer Trust Company and Ikea are examples.
PORTER POSITION SCHOOL
access based positioning
This is to segment customer according to how to reach them in a different way (i.e. access). Carmike Cinemas is an example. look at geography: offer same products to customer
PORTER POSITION SCHOOL
what is key to achieve sustainable competitive advantage?
Deterring imitations (de imitatie afschrikken/bedrijven die willen kopiëren moet ge afschrikken en buiten houden)
Competitor repositioning or straddling vanaf het moment dat ge alleen de ‘linker kant’ (foto hierboven) offert wordt het heel makkelijk om te kopiëren voor concurrenten.
PORTER POSITION SCHOOL
strategic fit
Strategic fit drives both competitive advantage and sustainability:
3 types of fit:
1) First-order fit is simple consistency between each activity and the overall strategy e.g. Vanguard
2) Second-order fit occurs when activities are reinforcing e.g. Neutrogena
3) Third-order fit occurs when coordination and information exchange across activities to eliminate redundancy and minimise wasted effort e.g. Gap stores
- Implications of greater strategic fit:
Rivals have a hard time imitating a total system because it is a blend of too many variables in action that enforces internal effectiveness.
In sum porter positioning school
- strategy is about being different, increasing differentiation from competitors
- activities are the unit if strategic differentiation, strategy then is to preform activities differently from rivals
- strategic fit makes it imperative that organizational structure, systems and proceesses are strategic- specific (create system that is difficult to imitate by competitors)
DESIGN SCHOOL
leg uit
looks at inside (!) and outside, swot analyse
core competenties= recourse and capabilities –> serves as source of comp adv
DESIGN SCHOOL
explain sustainable competitive advantages
occurs when firm implements a value-creating strategy of wich other companies are unable to duplicate the benefits or find it too costly to imitate
important basis for sustainable competitive adv= development of recources and capabillities
DESIGN SCHOOL
3 horizons for strategy
- first horizon= extend and defend core business
- second horizon= build emerging business
- third horizon= building options for the future
Categorizing strategy: levels of strategy/categorizing different schools of thought
Give the 3 levels
- CORPORATE-LEVEL STRATEGY: where to compete? –> concerned with the overall purpose and scope of the organisation and how to add value
- BUSINESS-LEVEL STRATEGY: how to compete? –> concerned with the way a business seek to compete
- OPERATIONAL LEVEL STRATEGY: how to implement –> directed at improving the effectiveness of functional operations
