CHAPTER 1
WHAT IS STRATEGY AND
WHY IS IT IMPORTANT?
Student VersionStudent Version
McGraw-Hill/IrwinCopyrightCopyright ®20...
1–2
WHAT DO WE MEAN BY STRATEGY ?
♦ What is our present situation?
● Business environment and industry conditions
● Firm’s...
1–3
WHAT IS STRATEGY ABOUT?
♦ Strategy is all about How:
● How to outcompete rivals.
● How to respond to economic and mark...
1–4
WHY DO STRATEGY ?
♦ A firm does strategy:
● To improve its financial performance.
● To strengthen its competitive posi...
1–5
STRATEGY AND COMPETITORS
♦ Strategy is about competing differently
from rivals—
● Doing what they don’t do or doing it...
1–6
The Quest for Competitive Advantage
♦ Competitive Advantage
● Meeting customer needs more effectively,
with products o...
1–7
STRATEGIC APPROACH CHOICES
Low-cost
provider
Differentiation
on features
Focus on
market niche
Best-cost
provider
Buil...
1–8
GAINING SUSTAINABLE COMPETITIVE
ADVANTAGE
♦ How to create a sustainable competitive
advantage:
● Develop valuable expe...
1–9
Why a Firm’s Strategy Evolves over Time
♦ Managers modify strategy in response to:
● Changing market conditions
● Adva...
1–10
The Evolving Nature of a Firm’s Strategy
♦ Realized (current) strategy is a blend of:
● Proactive (deliberate) strate...
1–11
THE RELATIONSHIP BETWEEN A
FIRM’S STRATEGY AND ITS
BUSINESS MODEL
Realized
Strategy
Competitive
Initiatives
Business
...
1–12
Business Model Elements (cont’d)
♦ The Profit Formula
● Creating a cost structure that allows for
acceptable profits,...
1–13
IS OUR STRATEGY A WINNER?
Winning
Strategy
The Strategic
Fit Test
The Competitive
Advantage Test
The Performance
Test
1–14
WHY CRAFTING AND EXECUTING
STRATEGY ARE IMPORTANT TASKS
♦ Strategy provides:
● A prescription for doing business.
● A...
1–15
THE ROAD AHEAD
♦ Strategy is about asking the right questions:
● What must managers do, and do well, to make a
firm a...
Upcoming SlideShare
Loading in …5
×

Chap001 service marketing , IIT Roorkee, Business Management

242 views

Published on

service marketing , IIT Roorkee, Business Management

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

No Downloads
Views
Total views
242
On SlideShare
0
From Embeds
0
Number of Embeds
4
Actions
Shares
0
Downloads
6
Comments
0
Likes
1
Embeds 0
No embeds

No notes for slide

Chap001 service marketing , IIT Roorkee, Business Management

  1. 1. CHAPTER 1 WHAT IS STRATEGY AND WHY IS IT IMPORTANT? Student VersionStudent Version McGraw-Hill/IrwinCopyrightCopyright ®2012 The McGraw-Hill Companies, Inc.®2012 The McGraw-Hill Companies, Inc.
  2. 2. 1–2 WHAT DO WE MEAN BY STRATEGY ? ♦ What is our present situation? ● Business environment and industry conditions ● Firm’s financial and competitive capabilities ♦ Where do we want to go from here? ● Creating a vision for the firm’s future direction ♦ How are we going to get there? ● Crafting an action plan that will get us there
  3. 3. 1–3 WHAT IS STRATEGY ABOUT? ♦ Strategy is all about How: ● How to outcompete rivals. ● How to respond to economic and market conditions and growth opportunities. ● How to manage functional pieces of the business. ● How to improve the firm’s financial and market performance.
  4. 4. 1–4 WHY DO STRATEGY ? ♦ A firm does strategy: ● To improve its financial performance. ● To strengthen its competitive position. ● To gain a sustainable competitive. advantage over its market rivals. ♦ A creative, distinctive strategy: ● Can yield above-average profits. ● Makes competition difficult for rivals.
  5. 5. 1–5 STRATEGY AND COMPETITORS ♦ Strategy is about competing differently from rivals— ● Doing what they don’t do or doing it better! ● Doing what they can’t do! ● Doing that which sets the firm apart and attracts customers. ● Doing what we should or should not do to produce a competitive edge.
  6. 6. 1–6 The Quest for Competitive Advantage ♦ Competitive Advantage ● Meeting customer needs more effectively, with products or services that customers value more highly, or more efficiently, at lower cost. ♦ Sustainable Competitive Advantage ● Giving buyers lasting reasons to prefer a firm’s products or services over those of its competitors.
  7. 7. 1–7 STRATEGIC APPROACH CHOICES Low-cost provider Differentiation on features Focus on market niche Best-cost provider Building Competitive Advantage
  8. 8. 1–8 GAINING SUSTAINABLE COMPETITIVE ADVANTAGE ♦ How to create a sustainable competitive advantage: ● Develop valuable expertise and competitive capabilities over the long-term that rivals cannot readily copy, match or best. ● Put the constant quest for sustainable competitive advantage at center stage in crafting your strategy.
  9. 9. 1–9 Why a Firm’s Strategy Evolves over Time ♦ Managers modify strategy in response to: ● Changing market conditions ● Advancing technology ● Fresh moves of competitors ● Shifting buyer needs ● Emerging market opportunities ● New ideas for improving the strategy
  10. 10. 1–10 The Evolving Nature of a Firm’s Strategy ♦ Realized (current) strategy is a blend of: ● Proactive (deliberate) strategy elements that include both continued and new initiatives. ● Reactive (emergent) strategy elements that are required due to unanticipated competitive developments and fresh market conditions.
  11. 11. 1–11 THE RELATIONSHIP BETWEEN A FIRM’S STRATEGY AND ITS BUSINESS MODEL Realized Strategy Competitive Initiatives Business Approaches Business Model Value Proposition Profit Formula $$$?
  12. 12. 1–12 Business Model Elements (cont’d) ♦ The Profit Formula ● Creating a cost structure that allows for acceptable profits, given that pricing is tied to the customer value proposition.  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.
  13. 13. 1–13 IS OUR STRATEGY A WINNER? Winning Strategy The Strategic Fit Test The Competitive Advantage Test The Performance Test
  14. 14. 1–14 WHY CRAFTING AND EXECUTING STRATEGY ARE IMPORTANT TASKS ♦ Strategy provides: ● A prescription for doing business. ● A road map to competitive advantage. ● A game plan for pleasing customers. ● A formula for attaining long-term standout marketplace performance. Good Strategy + Good Strategy Execution = Good Management
  15. 15. 1–15 THE ROAD AHEAD ♦ Strategy is about asking the right questions: ● What must managers do, and do well, to make a firm a winner in the marketplace? ♦ Strategy requires getting the right answers: ● Good strategic thinking and good management of the strategy-making, strategy-executing process. ● First-rate capabilities and skills in crafting and executing strategy are essential to managing successfully. Welcome and best wishes for your success!

×