WHAT IS
STRATEGY
Manoj Patel
Asst. Professor
JHUNJHUNWALA BUSINESS SCHOOL
What Is Strategy?
• Distinguishing strategy from tactics:
• Strategy is the overall plan for deploying resources
to establ...
Successful
Strategy
Long-term,
simple and
agreed
objectives
Profound
understanding of
the competitive
environment
Objectiv...
Sources of Superior Profitability
RATE OF PROFIT
ABOVE THE
COMPETITIVE
LEVEL
How do we make
money?
INDUSTRY
ATTRACTIVENESS...
Resources As the Basis for Superior
Profitability
Rate of Profit
in Excess of the
Competitive Level
Industry
Attractivenes...
The Value Chain:
The Mckinsey Business System
TECHNOLOGY PRODUCT DESIGN MANUFACTURING MARKETING DISTRIBUTION SERVICE
The Porter Value Chain
FIRM INFRASTRUCTURE
HUMAN RESOURCE MANAGEMENT
TECHNOLOGY DEVELOPMENT
PROCUREMENT
INBOUND OPERATIONS...
The Rent-earning Potential
of Resources and Capabilities
Scarcity
Relevance
Durability
Mobility
Replicability
Property rig...
The Framework for Analyzing
Resources and Capabilities
5. Identify resource gaps that need
to be filled.
4. Select a strat...
SWOT Analysis
• Acronym derived from Strengths, Weaknesses,
Opportunities, and Threats.
– Used for analyzing industry envi...
Exhibit 5: SWOT Analysis
Overcome
Weakness Grow
DiversifyRestructure
Numerous Environmental
Opportunities
Major Environmen...
SWOT Analysis (Cont.)
• Advantages of SWOT analysis
• Easy to use.
• Can be helpful framework for getting managers to thin...
SWOT Analysis (Cont.)
• For example, managers of strong firms will likely view environmental
phenomena as opportunities, w...
The Emergence of Competitive
Advantage
How does competitive
advantage emerge?
External sources of
change e.g.:
•Changing c...
Sustaining Competitive Advantage Against
Imitation
REQUIREMENTS FOR IMITATION ISOLATING MECHANISMS
Identification - Obscur...
Sources of Competitive Advantage
COST
ADVANTAGE
DIFFERENTIATION
ADVANTAGE
COMPETITIVE
ADVANTAGE
Upcoming SlideShare
Loading in...5
×

What is strategy

175
-1

Published on

Published in: Business
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total Views
175
On Slideshare
0
From Embeds
0
Number of Embeds
0
Actions
Shares
0
Downloads
7
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

What is strategy

  1. 1. WHAT IS STRATEGY Manoj Patel Asst. Professor JHUNJHUNWALA BUSINESS SCHOOL
  2. 2. What Is Strategy? • Distinguishing strategy from tactics: • Strategy is the overall plan for deploying resources to establish a favorable position. • Tactic is a scheme for a specific maneuver. • Characteristics of strategic decisions: • Important. • Involve a significant commitment of resources. • Not easily reversible.
  3. 3. Successful Strategy Long-term, simple and agreed objectives Profound understanding of the competitive environment Objective appraisal of resources Common Elements in Successful Strategy EFFECTIVE IMPLEMENTATION
  4. 4. Sources of Superior Profitability RATE OF PROFIT ABOVE THE COMPETITIVE LEVEL How do we make money? INDUSTRY ATTRACTIVENESS Which industries should we be in? COMPETITIVE ADVANTAGE How should we compete? CORPORATE STRATEGY BUSINESS STRATEGY
  5. 5. Resources As the Basis for Superior Profitability Rate of Profit in Excess of the Competitive Level Industry Attractiveness Competitive Advantage Differentiation Advantage Cost Advantage Vertical Power Monopoly Barriers to Entry Brands Product technology Marketing capabilities Process technology Plant size Low-cost inputs Firm size Financial resources Market share Patents Brands Retaliatory capability
  6. 6. The Value Chain: The Mckinsey Business System TECHNOLOGY PRODUCT DESIGN MANUFACTURING MARKETING DISTRIBUTION SERVICE
  7. 7. The Porter Value Chain FIRM INFRASTRUCTURE HUMAN RESOURCE MANAGEMENT TECHNOLOGY DEVELOPMENT PROCUREMENT INBOUND OPERATIONS OUTBOUND MARKETING SERVICE LOGISTICS LOGISTICS & SALES PRIMARY ACTIVITIES SUPPORT ACTIVITIES
  8. 8. The Rent-earning Potential of Resources and Capabilities Scarcity Relevance Durability Mobility Replicability Property rights Relative bargaining power Embeddedness of resources THE EXTENT OF THE COMPETITIVE ADVANTAGE ESTABLISHED SUSTAINABILITY OF THE COMPETITIVE ADVANTAGE APPROPRIABILITY THE PROFIT EARNING POTENTIAL OF A RESOURCE OR CAPABILITY
  9. 9. The Framework for Analyzing Resources and Capabilities 5. Identify resource gaps that need to be filled. 4. Select a strategy 3. Appraise the rent-earning potential of resources/ capabilities 2. Identify capabilities 1. Identify the firm’s resources. Appraise strengths and weaknesses STRATEGY CAPABILITIES RESOURCES POTENTIAL FOR SUSTAINABLE COMPETITIVE ADVANTAGE
  10. 10. SWOT Analysis • Acronym derived from Strengths, Weaknesses, Opportunities, and Threats. – Used for analyzing industry environments and firms’ internal strengths and weaknesses. • Performed in a 2-step process: – Managers thoroughly evaluate their firm’s internal strengths and weaknesses and its environmental (external) opportunities and threats. – Managers use the evaluation developed in the first step to place the firm in one of the quadrants of the SWOT matrix shown in Exhibit 5.
  11. 11. Exhibit 5: SWOT Analysis Overcome Weakness Grow DiversifyRestructure Numerous Environmental Opportunities Major Environmental Threats Substantial Internal Strengths Critical Internal Weaknesses
  12. 12. SWOT Analysis (Cont.) • Advantages of SWOT analysis • Easy to use. • Can be helpful framework for getting managers to think constructively about their firms’ external environments and internal strengths and weaknesses. • Drawbacks of SWOT analysis • Subjective. • Biased by managers’ perceptions of their firms’ strengths and weaknesses
  13. 13. SWOT Analysis (Cont.) • For example, managers of strong firms will likely view environmental phenomena as opportunities, while their counterparts in weak companies will likely view them as threats. • The use of SWOT analysis is likely to yield few clear-cut recommendations.
  14. 14. The Emergence of Competitive Advantage How does competitive advantage emerge? External sources of change e.g.: •Changing customer demand •Changing prices •Technological change Internal sources of change Resource heterogeneity among firms means differential impact Some firms faster and more effective in exploiting change Some firms have greater creative and innovative capability
  15. 15. Sustaining Competitive Advantage Against Imitation REQUIREMENTS FOR IMITATION ISOLATING MECHANISMS Identification - Obscure superior performance - Deterrence--signal aggressive Incentives for imitation intentions to imitators - Pre-emption--exploit all available investment opportunities - Rely upon multiple sources of Diagnosis competitive advantage to create “causal ambiguity” - Base competitive advantage upon Resource acquisition resources and capabilities that are immobile and difficult to replicate
  16. 16. Sources of Competitive Advantage COST ADVANTAGE DIFFERENTIATION ADVANTAGE COMPETITIVE ADVANTAGE
  1. A particular slide catching your eye?

    Clipping is a handy way to collect important slides you want to go back to later.

×