The document provides an overview of basic concepts in strategy and strategic management. It discusses key strategic questions around where a company is currently, where it wants to go, and how it will get there. The document defines strategy and explains that it consists of competitive moves and approaches used by managers. It also discusses the importance of strategy in providing direction and competitive advantage for a company. The document outlines different levels of strategy from corporate to business to functional strategies. It emphasizes that good strategy plus good execution is important for managerial and company success.

1. Basic Concept of Strategy &
Strategic Management
Clinton
Corporate
Strategy
2m30
Djadja Achmad Sardjana:
www.slideshare.net/djadja / djadja@bapinger.web.id

2. “If you don’t know where
you are going, any road
will take you there.”
The Qur’an
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3. “Management’s job is not
to see the company as it is
. . . but as it can become.”
John W. Teets
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4. “Without a strategy the
organization is like a
ship without a rudder.”
Joel Ross and Michael Kami
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5. Thinking Strategically:
The Three Big Strategic Questions
1. Where are we now?
2. Where do we want to go?
• Business(es) to be in and market positions to stake out
• Buyer needs and groups to serve
• Outcomes to achieve
3. How will we get there?
• A company’s answer to “how
will we get there?” is its strategy
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6. What Is Strategy?
• Consists of the combination of competitive moves
and business approaches used by managers to run
the company
• Management’s “game plan” to
• Attract and please customers
• Stake out a market position
• Compete successfully
• Grow the business
• Achieve targeted objectives
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7. The Hows That
Define a Firm's Strategy
• How to please customers
• How to respond to changing Strategy
market conditions is HOW
to . . .
• How to outcompete rivals
• How to grow the business
• How to manage each functional piece of the business
and develop needed organizational capabilities
• How to achieve strategic and financial objectives
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8. What Are a Company’s Strategic
Choices?
Strategic choices are based on . . .
• Trial-and-error organizational learning about
• What has worked and
• What has not worked
• Management’s appetite for taking risks
• Managerial analysis and strategic thinking about how
best to proceed, given prevailing circumstances
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9. Identifying a Company’s Strategy
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10. Striving for
Competitive Advantage
• To achieve sustainable competitive advantage, a
company’s strategy usually must be aimed at either
• Providing a distinctive product or service or
• Developing competitive capabilities rivals can not match
• Achieving a sustainable competitive advantage greatly
enhances a company’s prospects for
• Winning in the marketplace and
•What separates a powerful profits from an ordinary strategy
Realizing above-average strategy
is management’s ability to forge a series of moves,
both in the marketplace and internally, that
produces sustainable competitive advantage!
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11. Strategic Approaches to
Building Competitive Advantage
• Strive to be the industry’s low-cost provider
• Outcompete rivals on a key differentiating
feature
• Focus on a narrow market niche, doing a better
job than rivals of serving the unique needs of
niche buyers
• Develop expertise, resource strengths, and
capabilities not easily imitated by rivals
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12. Examples of Strategies Based
on Distinctive Capabilities
• Sophisticated distribution systems – Wal-Mart
• Product innovation capabilities – 3M Corporation
• Complex technological process – Michelin
• Defect-free manufacturing – Toyota and Honda
• Specialized marketing and merchandising know-how
– Coca-Cola
• Global sales and distribution capability – Black &
Decker
• Superior e-commerce capabilities – Dell Computer
• Personalized customer service – Ritz Carlton
hotels
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13. A Company’s Strategy Is Partly
Proactive and Partly Reactive
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14. Why Do Strategies Evolve?
• A company’s strategy is a work in progress
• Changes may be necessary to react to
• Fresh moves of competitors
• Evolving customer preferences
• Technological breakthroughs
• Shifting market conditions
• Crisis situations
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15. What Is a Business Model?
• A business model addresses “How do we make money
in this business?”
• Is the strategy capable of delivering
good bottom-line results?
• Do the revenue-cost-profit economics
of the strategy make good business sense?
• Look at revenue streams the strategy is expected to produce
• Look at associated cost structure and potential profit margins
• Do resulting earnings streams and ROI indicate the strategy
makes sense and the company has a viable business model for
making money?
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16. Relationship Between
Strategy and Business Model
Strategy - Deals with a Business Model -
company’s competitive Concerns whether
initiatives and business revenues and costs
approaches flowing from the
strategy demonstrate
the business can be
amply profitable and
viable
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17. Microsoft’s
Business Model
Employ a cadre of highly skilled programmers to
develop proprietary code; keep source code hidden from
users
Sell resulting OS and software packages to PC makers
and users at relatively attractive prices and achieve
large unit sales
Most costs in developing software are fixed; variable
costs are small - once breakeven volume is reached,
revenues from additional sales are almost pure profit
Provide technical support to users at no cost
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18. Redhat Linux’s
Business Model
Rely on collaborative efforts of volunteer programmers to create the
software
Add value to free, downloadable version of Linux by offering users Red
Hat Linux systems containing upgraded and tested features
Charge a modest fee to those preferring to subscribe to Red Hat Linux
version
Release updated versions of Red Hat Linux every 4-6 months to small
users and every 12-18 months to corporate users
Make source code open and available to all users
Make money by providing fees-based training, consulting, support,
engineering, and content management services
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19. Tests of a Winning Strategy
• GOODNESS OF FIT TEST
• How well does strategy fit
the firm’s situation?
• COMPETITIVE ADVANTAGE TEST
• Does strategy lead to sustainable
competitive advantage?
• PERFORMANCE TEST
• Does strategy boost firm performance?
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20. Other Criteria for Judging the
Merit of a Strategy
• Internal consistency and unity among all pieces of the
strategy
• Degree of risk the strategy poses as compared to
alternative strategies
• Degree to which the strategy is flexible and adaptable
to changing circumstances
While these criteria are relevant, they seldom
override the importance of the three tests of a winning
strategy!
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21. Why Is Strategy Important?
• A compelling need exists for managers to
proactively shape how a firm’s business
will be conducted
• A strategy-focused firm is more likely
to be a strong bottom-line performer
than one that views strategy as secondary
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22. Good Strategy + Good Strategy Execution
= Good Management
• Crafting and executing strategy are core management
functions
• Among all things managers do, nothing affects a
company’s ultimate success or failure more
fundamentally than how well its management team
• Charts the company’s direction,
• Develops competitively effective strategic moves and business
approaches, and
• Pursues what needs to be done internally to produce good day-
in/day-out strategy execution
Excellent execution of an excellent strategy is the best test of
managerial excellence -- and the most reliable recipe for
winning in the marketplace!
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23. 5 ways of looking@Strategy
• Plan
• Pattern
• Position
• Perspective
• Ploy
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24. The Strategy - Making, Strategy-
Executing Process
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25. A Company’s
Strategy-
Making
Hierarchy
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26. Levels of Strategy-Making
in a Diversified Company
Corporate-Level Corporate
Managers Strategy
Two-Way Influence
Business-Level Business
Managers Strategies
Two-Way Influence
Functional
Managers Functional Strategies
Two-Way Influence
Operating
Managers Operating Strategies
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27. Levels of Strategy-Making
in a Single-Business Company
Business-Level Business
Managers
Strategy
Two-Way Influence
Functional
Managers Functional Strategies
Two-Way Influence
Operating
Managers Operating Strategies
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28. Tasks of Corporate Strategy
• Moves to achieve diversification
• Actions to boost performance of individual businesses
• Capturing valuable cross-business synergies to
provide
1 + 1 > 2 effects!
• Establishing investment
priorities and steering
corporate resources into the
most attractive businesses
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29. Tasks of Business Strategy
• Initiating approaches to produce successful
performance in a specific business
• Crafting competitive moves to build
sustainable competitive advantage
• Developing competitively valuable
competencies and capabilities
• Uniting strategic activities of functional areas
• Gaining approval of business strategies by
corporate-level officers and directors
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30. Tasks of Functional Strategies
• Game plan for a strategically-relevant
function, activity, or business process
• Detail how key activities
will be managed
• Provide support for
business strategy
• Specify how functional objectives
are to be achieved
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31. Tasks of Operating Strategies
• Concern narrower strategies for
managing grassroots activities and
strategically-relevant operating units
• Add detail to business
and functional strategies
• Delegation of responsibility
to frontline managers
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32. What Is a Strategic Plan?
Its strategic vision
and business mission
A
Company’s
Strategic Its strategic and
Plan financial objectives
Consists
of
Its strategy
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33. Developing a Strategic Vision
Phase 1 of the Strategy-Making Process
Strategy-
• Involves thinking strategically about
• Future direction of company
• Changes in company’s product/market/customer technology
to improve
• Current market position
• Future prospects
A strategic vision describes the route a company intends
to take in developing and strengthening its business. It
lays out the company’s strategic course in preparing for
the future.
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35. Key Elements of a Strategic Vision
• Delineates management’s aspirations for the business
• Provides a panoramic view of “where we are going”
• Charts a strategic path
• Is distinctive and specific to a particular organization
• Avoids use of generic language that is dull
and boring and that could apply to most
any company
• Captures the emotions of employees
and steers them in a common direction
• Is challenging and a bit beyond a company’s immediate
reach
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36. Role of a Strategic Vision
• A well-conceived and well-communicated vision functions
as a valuable managerial tool to
• Give the organization a sense of direction, mold organizational
identity, and create a committed enterprise
• Inform company personnel and other stakeholders what
management wants its business to look like and “where we are
going”
• Spur company personnel to action
• Provide managers with a reference point to
• Make strategic decisions
• Translate the vision into hard-edged objectives and strategies
• Prepare the company for the future
A strategic vision exists only as words and has no organizational impact unless and until
it wins the commitment of company personnel and energizes them to act in ways that move
the company along the intended strategic path!
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37. 2/23/2011 IM Telkom - Basic Concept of 37
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38. 2/23/2011 IM Telkom - Basic Concept of 38
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39. Examples of Strategic Visions
Red Hat
To extend our position as the most trusted Linux and open source
provider to the enterprise. We intend to grow the market for
Linux through a complete range of enterprise Red Hat Linux
software, a powerful Internet management platform, and
associated support and services.
Wells Fargo
We want to satisfy all of our customers’ financial needs,
help them success financially, be the premier provider
of financial services in every one of our markets, and
be known as one of America’s great companies.
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40. Examples of Strategic Visions
Hilton Hotels Corporation
Our vision is to be the first choice of the world’s travelers. Hilton
intends to build on the rich heritage and strength of our brands by:
Consistently delighting our customers
Investing in our team members
Delivering innovative products and services
Continuously improving performance
Increasing shareholder value
Creating a culture of pride
Strengthening the loyalty of our constituents.
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41. Examples of Strategic Visions
Dental Products Division
of 3M Corporation
Become THE supplier of choice to the global dental
professional markets, providing world-class quality and
innovative products. [All employees of the division wear
badges bearing these words, and when- ever a new product or
business procedure is being considered, management asks “Is
this representative of THE leading dental company?”]
Caterpillar
Be the global leader in customer value.
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42. Examples of Strategic Visions
H. J. Heinz Company
Be the world’s premier food company, offering nutritious,
superior tasting foods to people everywhere. Being the
premier food company
does not mean being the biggest but it does
mean being the best in terms of consumer value, customer
service, employee talent, and
consistent and predictable growth.
eBay
Provide a global trading platform where practically anyone can
trade practically anything.
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43. Strategic Vision vs. Mission
• A strategic vision • The mission statement of a
concerns a firm’s future firm focuses on its present
business path - “where business purpose - “who we
we are going” are and what we do”
• Markets to be pursued • Current product and
• Future product/market/ service offerings
customer/technology • Customer needs being
focus served
• Kind of company
• Technological
management is
and business
trying to create
capabilities
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44. Characteristics of a Mission Statement
• Identifies the boundaries of the current business and
highlights
• Present products and services
• Types of customers served
• Geographic coverage
• Conveys
• Who we are,
• What we do, and
• Why we are here
A well-conceived mission statement distinguishes a company’s business
makeup from that of other profit-seeking enterprises in language specific
enough to give the company its own identify!
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45. Key Elements of a Mission Statement
• Three factors need to be identified
for completeness
• Customer needs being met
What is being satisfied
• Customer groups or markets being served
Who is being satisfied
• What the organization does (in terms of business
approaches, technologies used, and activities
performed) to satisfy the target needs of the target
customer groups
A company’s mission is not to make a profit! Its true mission is its
How customer needs are satisfied
answer to “What will we do to make a profit?” Making is profit is
an objective or intended outcome!
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46. Trader Joe’s Mission Statement
(a unique grocery store chain)
To give our customers the best food and beverage values
that they can find anywhere and to provide them with the
information required for informed buying decisions. We
provide these with a dedication to the highest quality of
customer satisfaction delivered with a sense of warmth,
friendliness, fun, individual pride, and company spirit.
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47. Communicating the Strategic Vision
• Winning support for the vision involves
• Putting “where we are going and why” in writing
• Distributing the statement organization-wide
• Having executives explain vision to the workforce
• An engaging, inspirational vision
• Challenges and motivates workforce
• Articulates a compelling case for where company is
headed
• Evokes positive support and excitement
• Arouses a committed organizational
effort to move in a common direction
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48. Examples: Vision Slogans
Levi Strauss & Company
“We will clothe the world by marketing the most
appealing and widely worn casual clothing in the world.”
Nike
“To bring innovation and inspiration
to every athlete in the world.
Mayo Clinic
“The best care to every patient every day.”
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49. Examples: Vision Slogans
Scotland Yard
“To make London the safest major city in the world.”
Greenpeace
“To halt environmental abuse and
promote environmental solutions.”
Charles Schwab
“To provide customers with the most useful and
ethical financial services in the world.”
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50. Overcoming Resistance to
a New Strategic Vision
• Mobilizing support for a new vision entails
• Reiterating basis for the new direction
• Addressing employee concerns head-on
• Calming fears
• Lifting spirits
• Providing updates and progress
reports as events unfold
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51. Recognizing Strategic
Inflection Points
• Sometimes an order-of-magnitude change occurs in a
company’s environment that
• Dramatically alters its future prospects
• Mandates radical revision of its strategic course
• Critical decisions have to be made about where to go
from here
• A major new directional path may have to be taken
• A major new strategy may be needed
• Responding quickly to unfolding changes in the
marketplace lessons a company’s chances of
• Becoming trapped in a stagnant business or
• Letting attractive new growth opportunities slip away
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52. Intel’s “Strategic
Inflection Points”
• Prior to mid-1980s
• Focus on memory chips
• Starting in mid-1980s
• Abandon memory chip business (due to lower-cost Japanese
companies taking over the market) and
• Become preeminent supplier of microprocessors to PC industry
• Make PC central appliance in workplace and home
• Be undisputed leader in driving
PC technology forward
• 1998
• Shift focus from PC technology to becoming the preeminent
building block supplier to Internet economy
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53. Linking the Vision with Company Values
• Companies often develop a statement of values to guide a company’s
pursuit of its vision and strategy and paint the white lines for how the
company’s business is to be conducted
• Company values statements typically
contain four to eight beliefs, traits, and
behaviors relating to such things as
• Integrity, doing the right thing, product quality, customer satisfaction,
treatment of people, teamwork, operating excellence, giving back to the
community
• But values statements remain a bunch of nice words until
the espoused beliefs, traits, and behaviors
• Are incorporated into company’s operations and work practices
• Are used as the benchmark for job appraisal, promotions, and rewards
If company personnel are not held accountable
for displaying company values in doing their jobs, then the
company values statement is an empty box!
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54. Payoffs of a Clear Strategic
Vision
• Crystallizes an organization’s long-term direction
• Reduces risk of rudderless decision-making
• Creates a committed enterprise
where organizational members
enthusiastically pursue efforts to
make the vision a reality
• Provides a beacon to keep strategy-related actions
of all managers on common path
• Helps an organization prepare for the future
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55. HBR-The
References Secret Origins
of Corporate
Strategy-10m
• Arthur A. Thompson, Jr. and A.J. Strickland III,
Crafting and Executing Strategies – The Quest for
Competitive Advantage: Concepts and Cases, 17th
Edition, 2010, McGraw-Hill Irwin. (required)
• Henry Mintzberg, Joseph Lampel and Bruce
Ahlstrand, Strategy Safari, 1998, The Free Press
• Kaihan Krippendorff, The Art of Advantage, 2003,
TEXERE
• Robert S. Kaplan and David P. Norton, Translating
Strategy into Action: The Balanced Scorecard, 1996,
Harvard Business School Press
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