Module 2: Strategy Flashcards
What does strategy as an outcome mean?
getting the desired result by meeting strategic objectives
Strategy as positioning
Present:
- where are we competing?
- how are we competing?
What’s the problem with viewing strategy as positioning?
- Too static for today’s rapidly changing markets and technologies (Porter, 1996).
- Yet, it is still important to establish the firm’s position to understand how the firm is competing/ (failing to compete) with rivals.
What should manager’s aim to achieve as they develop the strategic positioning of the firm?
- Establish a difference that it can preserve.
- Greater value or;
- Lower price
Strategic positioning is defined as…
- performing different activities from rivals or;
- performing similar activities in different ways
What is a cost advantage?
A cost advantage arises when a company performs particular activities more efficiently than its competitors.
Operational Effectiveness
Performing similar activities better than how rivals perform them.
How might a company achieve operational effectiveness?
- eliminate wasted effort
- employ more advanced technology
- motivate employees better
- have greater insight into managing particular activities or sets of activities
Productivity Frontier is achieved by creating…
- low relative cost position to high levels of differentiation
How have companies tried to keep up with shifts in the productivity frontier?
Managers have embraced:
- continuous improvement
- empowerment
- change management
- and so-called learning organisation
What has contributed to the proliferation of operational effectiveness techniques?
- consultants
(along with ease of imitating competitor’s management techniques)
Why do companies need to achieve operational effectiveness & strategic positioning?
Because a competitive strategy requires a company to be different - establishing a difference it can preserve -essentially performing activities differently to rivals (activities are the basic units of competitive advantage).
Moreover, efficiency (same level of inputs < greater output) (includes but not limited to OE), helps a company better utilise its inputs, reduce defects in products & product development, and make better products faster.
Why does strategy rest on unique activities?
Again, the company needs to achieve that point of difference, compared to its competitors.
also, having a unique set of activities, allows the company to deliver a unique mix of values, which makes it difficult for competitors to imitate.
What should managers do to improve its strategic positioning?
- create a “bundle” of unique resources (VRIO analysis of resources - then establish core competencies - create a system or well-aligned strategy).
- Seek out greater product/ service innovation (exploration).
The golden rule of strategic positioning:
“Strategy is creating fit among a companies activities. The success of a strategy depends on doing many things well – not just a few- and integrating among them.” (Porter, 1996, p.75)
A sustainable competitive advantage is created through…
- Creating a “bundle” of interlocking activities:
> activities relate to one another
> a system of activities is built so that org. systems, structure and processes are also strategy- specific.
> long-term horizon as shifting positions becomes costly.
Strategy Development is at the core of General Management (Mintzberg’s Conceiving the Frame: Position)
- Managers must define a company’s position (firm’s strengths, skills, core competencies, resources; the established difference the firm has over its rivals).
- Manager’s must make trade-offs (as trade-offs create the need for choice & purposefully limit what a company offers)
- Manager’s must forge fit among activities (alignment of activities with firm strengths & core competencies. Fit enhances a position’s uniqueness & amplifies trade-offs - ultimately locks out imitators => sustainability of the competitive advantage).
Key principles of strategic fit
- (1st- order fit) simple consistency between each activity and the overall strategy to ensure competitive advantages of activities cumulate and do not cancel themselves out.
- (2nd -order fit) activities are reinforcing to ensure that all activities are well-linked and individual activities are not separated from the whole.
- (3rd -order fit) optimisation of effort to ensure coordination and information exchange across activities and this eliminates redundancy & minimises wasted effort (module 7 - social capital & networking).
Management tools for improving productivity, quality, & speed (efficiency gains)
- Total Quality Management
- Bench marking
- Time-based competition
- Outsourcing
- partnering
- re-engineering
- change management
Strategy as direction
Future:
- who are we becoming? (vision)
- what will we achieve? (mission)
- how will we get there? (tactical goals)
Ways to achieve your strategy (Porter)
- Have guidelines for development
- Have priorities for spending
- Have modes of growth (M&A, alliances, organic growth)
Whittington’s (1993) Four Views of Strategy
- Classical Approach
- Evolutionary Perspective
- Processual Approaches (Mintzberg’s Emergent Strategy)
- Systemic Views
Classical Approach to Strategy
Strategy development is a rational, detached, and sequential process.
Aims of the classical approach
- profitability
- competitive advantage
- long-term goals & objectives
