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Strategy by idrees waris IUGC

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  • Welcome and Introduce self here
  • Transcript

    • 1. WHAT IS STRATEGY? BY Michael E. Porter Presented by: IDREES WARIS 3095
    • 2. Operational Effectiveness
      • It is the process of producing faster or with fewer inputs and defects than rivals.
      • How is achieved ?
      • Eliminate wasted efforts.
      • Employ advanced technology.
      • Motivated employees better.
      • Greater insight into managing particular set of activities.
      • Operational effectiveness is necessary to compete but not sufficient to win.
    • 3. Strategic positioning
      • Strategic positioning means doing things different from competitors.
      • Strategic position are often not obvious and finding them requires creativity and insight.
    • 4. ↓ costs + ↑ prices = ↑ profitability
    • 5. OE is necessary but not sufficient: Weaknesses
      • Competitors can quickly imitate management techniques, technologies, input improvements and superior ways to meet customer’s needs.
        • Eg: Japanese companies (1970-1980) enjoy substantial cost & quality advantages (productivity frontier). Now they need to learn strategy.
    • 6.
      • Strategy Rests On Unique Activities
    • 7. STRATEGY
      • “ Competitive strategy is about being different”
      • Doing thinks differently than rivals do.
      • So, strategy is not serving customers but serving them better than others do by deliberately choosing a set of activities to deliver a unique mix of value .
      • Example: southwest airline.
    • 8. Competitive Advantage Examples
      • Strive to be the industry’s low-cost provider
        • Southwest Airlines
        • Wal-Mart
      • Outcompete rivals on a key differentiating feature
        • Johnson & Johnson – Reliability in baby products
        • Rolex – Top-of-the-line prestige
        • Mercedes-Benz – Engineering design and performance
    • 9. Competitive Advantage Examples (cont)
      • Develop expertise, resource strengths, and capabilities not easily imitated by rivals
        • FedEx – Next-day delivery of small packages
        • Walt Disney – Theme park management and family entertainment
        • Toyota – Sophisticated production system
    • 10. The Origins of Strategic Positions
      • Strategic positions can be based on:
        • 1) Variety based positioning (product/services)
        • 2) Need based positioning ( Customers’ needs)
      • Way of accessing customers ( serving the broader needs of customer in a narrow market)
    • 11. Variety based positioning
      • Based on the choice of product or service varieties rather than customer segments.
      • feasible only when a company can best produce particular products or services using distinctive sets of activities.
      • Example: jiffy lube international, specializes in automotive lubricants and does not provide other maintenance services.
    • 12. Need based positioning (serving board needs of few customers)
      • Serving the most or all the needs of a particular group of customers.
      • It is based on targeting a segment of customers
      • Example: IKEA seeks to meet all the home furnishing needs of its target customers, not just a subset of them.
    • 13. Access based positioning
      • Segmenting customers who are accessible in different ways.
      • Access can be a function of customer geography or customer scale or of anything that requires a different set of activities to reach customers in the best way.
      • Example: Carmike cinemas
    • 14.
      • A Sustainable Strategic Position Requires Trade-offs
    • 15. Unique position is not enough to guarantee a sustainable advantage.
      • A competitor can choose to reposition itself to match the superior performer.
      • A competitor can seek to match the benefits of a successful position while maintaining its existing position (known as straddling).
      • Example: continental airlines decided to straddle.
    • 16. Trade off
      • Trade off occur when the activities are incompatible.(mismatch)
      • Trade off create the need for choice and protect against repositioners and straddlers.
      • Example: Neutrogena's marketing strategy looks more like a drug company’s than a soap maker’s.
    • 17. Trade off arises for 3 reasons
      • Inconsistencies in image or reputation
      • Example: ivory soap, inexpensive soap.
      • Trade offs arise from activities themselves
      • Example: IKEA activities lowering the cost by having its customer do assembly and delivery less satisfied the customers.
      • Trade offs arise from limits on internal coordination and control.
    • 18. Trade offs
      • Trade-offs create the need for choice and protect against re-positioners and straddlers.
      • So strategy is defined as making trade-offs in competing.
      • The essence of strategy is choosing what not to do.
    • 19.
      • Fit drives both sustainability and competitive advantage
    • 20. Operational effectiveness
      • Operational effectiveness is about achieving excellence in individual activities.
      • Strategy
      • Strategy is about combining activities.
    • 21. Sustainable Competitive Advantage
      • Unique competitive position for a company.
      • Activities tailored to strategy.
      • Clear trade-offs and choices vis-à-vis competitors.
      • Competitive advantage arises from fit across activities.
        • And sustainable barriers to entry
      • Sustainability comes from the activity system, not the parts.
      • Example: one activity’s cost is lowered because of way others are performed and vice versa.
    • 22. Three TYPES OF FIT
      • Simple consistency
      • Activities are reinforcing
      • Optimization of effort.
    • 23. Simple consistency
      • Consistency between each activity and the overall strategy.
      • Example: vanguard align all with its activities with its low cost strategy.
    • 24. Activities are reinforcing
      • Fit occur when the activities are reinforcing.
      • Example: Neutrogena, markets to upscale hotels eager to offer their guest a soap recommended by dermatologists.
    • 25. Optimization of effort
      • Coordination and information exchange across activities to eliminate redundancy and minimize wasted efforts.
      • Example: product design choices can eliminate the need for after sale service.
    • 26. Fit and sustainability
      • Strategic fit among activities is fundamental not only to competitive advantages but also to the sustainability of that advantage.
      • Example: continental lite’s disastrous attempt to imitate southwest.
    • 27. Rediscovering strategy
      • Failure to Choose:
      • External changes can pose a threat to a company’s strategy
      • A greater threat to strategy often comes from within the company
      • Do not understand the need to have a strategy
      • Conventional wisdom
      • Risking blame for a bad choice
    • 28. The Growth Trap
      • Companies often grow by :
        • Extending their product lines ( e.g.: Neutrogena extended product line, in which it was not unique)
        • Adding new features
        • Imitating competitors’ popular services
        • Matching processes and
        • Making acquisitions
      • Compromises and inconsistencies in the chase of growth eventually erode the competitive advantage of a company and their uniqueness with their rivals
    • 29. Profitable Growth
      • Deepening a strategic position by:
        • Distinctive activities
        • Strengthen fit
        • Communicating strategy in a better way
      • Globalization often allows growth that is consistent with a company’s strategy
    • 30. What should companies and leaders do ?
      • They should reevaluate their strategies and challenge themselves to start over.
      • They should refocus on the unique core and realign the companies activities with it.
      • Evaluate the vision of the founder and reexamine the original strategy.
      • Leaders should be in charge of defining and communicating the company’s unique position, making trade-offs and forging it among activities.