lecture 1 Flashcards
Origin of the word strategy
Stems from the army: Establishing a favorable position through effective use of resources
Elements of successful strategies
consistent and long-term goals
Formulated based on analyses
Effectively exploit resources
Business environment recent changes
Less predictable environment
Analytical reasoning necessary
Strategic positioning necessary
Busines strategy
Definitions in the business context
An idea, a business concept, a plan
The search for a favourable competitive positioning
A thoughtful plan by a company to produce desired outcomes in the marketplace vis-a-vis customers, channel members and competitors
Marketing strategy
A functional strategy aimed at customer value creating, market orientation, segmentation, targeting, and positioning
Decisions that involve selling products on the market
Other functional strategies in a firm include production strategy, financial strategy,…
5 Ps that can be related to a strategic planning logic
Perspective (vision, mission, values)
Position (corporate strategy, business strategy)
Plan (ploy) (strategic goals, metrics and targets, strategic action programs)
Pattern (realized planning actions, emergent actions)
Different events might act as stimuli for a company to rethink its strategy
International expansion
performance gap
Changes in ownership
Anticipated trends
new CEO or executive leadership team
interventions from external stakeholders
more unstable environment
Mergers and aquisitions
strategy to develop a new product: Two successful factors
Relevance and uniqueness
Unique and relevant: relevant enough to survive in the long run, breakthrough
Unique, not relevant: customers dont need it, no repeat purchase, only product on the market
Not unique, relevant: customers need it, much tough competiton, tough to be profitable
Not unique, not relevant: same old things that nobody wants
standardization strategy (e.g. mcdonalds)
anywhere the company operates, it offers identical food products such as mcnuggets, happymeal or fish fiilet
Adaption stratagy (also e.g. mcdonalds)
Mcdonalds adapts to the needs of the consumers as required by the cultures of specific countries
heuristics
are helpful in strategic management as they provide time pressured professionals with a simple way of dealing with a complex world
sometimes, however, heuristics lead to severe and systematic errors in decision making (people are typically unaware that they rely on heuristics)
Moving to quantitative applications of entrepreneurship
moving from opinion-based or intuitive decision making (conceptual entrepreneurship) to data-based decision making (with an experience component) to make good decisions, you need to develop the right balance between intutive and data based decision making
Two models of thinking
Intuitive thinking (system 1)
automatic, unconscious, quick, implicit, emotional and effortless
Reflective thinking (system 2)
Controlled, conscious, slow, explicit, logical and effortful
Six principles describe the essentials of strategy for company practice
Quest for competitive advantage
Fit of markets and resources
Being different and making choices
Path to a destination
Multiple level and theme alignment
Consistnce in behavior
Quest for competitive advantage
Principle 1
strategy is about gaining, sustaining and renewing competitive advantage to ensure superior performance
Strategies –> competitive advantage –> superior performance
Fit of markets and resources
Principle 2
Strategy is about creating a dynamic “fit” between the company and its environment
Market based view of strategy (outside-in) + Resource based strategy (inside-out) = Dynamic perspective on markets and resources for competitive survival
Being different and making choices
Principle 3
Strategy is about being different and choosing what to do and what not to do
mix of strategy (performing different activites from rivals) and operational excellence (performing similar activities better than rivals perform then)
if both high = superior performance
Path to a destination
principle 4
strategy pursues the achievement of a desired long term aspiration - it is a means to an end
Mission and values today –> strategy –> vision
A companys vision, mission, and values represent its fundamental strategic intent and identity which guide strategy formulation
consistency in behavior
principle 5
strategy is consistency in behavior, whether intended or not intended
Intended strategy –> unrealized strategy + deliberate strategy (patterns develop when existing intentions are reaized) + emergent strategy (patterns develop unplanned) –> realized strategy (consistend patterns in a stream of actions)
Multiple level and theme alignment
Principle 6
strategy is the “symphony” that results form multiple areas and strategic themes in an organization
Corporate -> corporate/divisional strategy
Business -> SBU strategy/competitive strategy/ business models
Function -> Functional strategy (core and support functions)
Region -> regional/country strategy
Product/service -> product/service strategy
All this must be aligned
There are different ways for easuring a companys performance
economic value
Accounting performance (profitability)
Economic performance and shareholder value
Corporate sustainability performance
