MBA students and Business Majors this presentation introduces you to the leading strategy gurus over the past few decades. Michael Porter, generic strategy, Blue Ocean Strategy, and more are examined in this easy to follow presentation

1. Five Perspectives of
Business Strategy?
By
Dr. Michael McDermott
mcdermottm1@nku.edu
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2. Perspectives on Strategy:
Five Schools of thought
Author Published Key Concept Comments
Michael Porter 1980s Competitive Positioning The Dominant view
Kim & Maubergne Early 2000s Blue Ocean Strategy
Richard Rumelt 2011 Good vs Bad Strategy
Cynthia 2008 Leadership and Strategy
Montgomery
Brian Solis, others 2011 Social Business Evolving
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3. Perspectives on Strategy:
Five Schools of thought
Author Key Concept Objective
Michael Porter Competitive Establish a clear
Positioning (i.e. competitive position
Generic Strategy)
Kim & Maubergne Blue Ocean Strategy Create a new market
with no competition
Richard Rumelt Good vs Bad Strategy Focus on the “big
problem”
Cynthia Leadership and Strategy and leadership
Montgomery Strategy must be interconnected
Solis and others Social Business Engagement to create
value
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4. Michael Porter and Strategy
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5. Michael Porter & Competitive Position
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6. Operational Effectiveness Explains Initial Success of
Asian Companies (i.e. a low cost generic strategy)
2020s-
Chinese
1990s-2010s companies
South are winners
Korean
companies
1960s-80s are winners
Japanese
companies
are winners
© McDermott, 2012. 6

7. Where we place a
company depends
upon the definition of
the
industry that it
competes in.
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8. Porter’s value chain – this has to focus on achieving
cost minimization or differentiation.
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9. Generic Strategy and Porter’s Five Forces
The Five Forces of Industry analysis
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12. Competitive Position – Strategy Clock
The “greenish” area
is non-viable
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13. 2. Blue Ocean Strategy
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21. This looks at the Strategy Canvass for traditional circuses (i.e. red) vs Cirque du Soleil
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22. Wii
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27. Rumelt on Strategy
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31. Apple’s Strategy Journey
Flourishing,
2001-
Turnaround present
Survival
mode, mid Company defines its problem at each stage
1990s
Consider what the company did at each stage
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32. 1990s: BMW and Mercedes
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33. Figure 1: BMW’s Decision to invest in the U.S.A. in the 1990s Push Factors
Strength of High Labor Strong Remote from
DM vs US$ Costs unions key market
BMW’s Decision to
Invest in the USA Overcome 10%
Weak unions in
import tax
South
Low labor Largest
costs international
market
Response to
Opportunity to introduce competitive threat
manufacturing processes from Japan
Pull Factors

34. What’s the “Big problem” facing these
companies?
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35. Moneyball (2011)
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36. 4. Strategy and Leadership
No matter how accomplished
the strategy, can it “work” in
the absence
of effective leadership?
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39. The Role of the Strategist
• To find and examine all the evidence to
determine the problem
– It’s vital to be able to ask the right questions
– If you do not ask the right questions, then you
cannot find the right answer
• To design a solution
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40. The Strategist is both
Detective and Designer
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41. Strategy at the Corporate Level
• A blurring of competitive position is clearly a
problem
• This causes rampant confusion internally and
externally
• So establish an unambiguous competitive
position
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42. Strategy at the Corporate Level
• Sources of problems
can be found when
examining:
1. The remote external
environment
2. The broad competitive
environment
3. Rivals
4. The market
5. The company
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43. The Strategy Detective’s Tools:
The External Environment
The External
• PEST or PESTEL analysis
Remote • Political, Economic, Social, Technological
Environment
The Broad • Porter’s Industry Analysis Five Forces Model
Competitive • Industry Life Cycle
• Company analysis (see section on internal analysis)
Environment
• Market Segmentation
The Market • Customer Relationships
• Product Life Cycle
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44. The Strategy Detective’s Tools:
The Internal Environment
•Core competencies;
The Internal
•Porter’s Value Chain;
Environment Functional Analysis;
BCG Matrix; Ansoff’s
Matrix
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45. Strategy is all about choice
and saying ‘no’
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46. What is a Strategist?
• A decision-maker?
– Look at options and pick ‘the best’
• Or a designer?
• Yes, he/she designs a novel response
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47. The Strategy Designer
• You are allowed only one objective and it must be
feasible
• What one single feasible objective, when
accomplished, would make the biggest
difference?
• Now design a strategy and make it happen.
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48. Leadership Casualties in 2012
• How many CEOs of US Fortune 500 companies
were fired in 2012?
• How many coaches/managers in the NBA,
NFL, English Premier League were sacked?
• How many incumbent politicians were
defeated in the polls?
• Clearly employers believe that strategy and
leadership are interconnected
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49. Meaning-Maker “strategy has been narrowed to a
competitive game plan, divorcing it
from a firm's larger sense of
purpose; the CEO's unique role as
arbiter and steward of strategy has
been eclipsed; and the exaggerated
emphasis on sustainable competitive
advantage has drawn attention away
from the fact that strategy must be a
dynamic tool for guiding the
development of a company over
The time” (Montgomery, HBR, 2008)
Strategist
The Reasoner The Operator
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50. • If you ask young men what they want to accomplish by the time
they are 40, the answers you get fall into two distinct categories.
There are those - the great majority - who will respond in terms of
what they want to have. This is especially true of graduate students
of business administration. There are some men, however, who will
answer in terms of the kind of men they hope to be. These are the
only ones who have a clear idea of where they are going. The same
is true of companies. For far too many companies, what little
thinking goes on about the future is done primarily in money terms.
There is nothing wrong with financial planning. Most companies
should do more of it. But there is a basic fallacy in confusing a
financial plan with thinking about the kind of company you want
yours to become. It is like saying, "When I'm 40, I'm going to be
rich." It leaves too many basic questions unanswered. Rich in what
way? Rich doing what?
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51. • Strategy and the Strategist In most popular
portrayals the strategist's job would seem to be
finished once a carefully articulated strategy has
been made ready for implementation. The idea
has been formed, the next steps specified, the
problem solved. But don't be fooled. The job of
the strategist never ends. No matter how
compelling a strategy is, or how clearly defined, it
is unlikely to be a sufficient guide for a firm that
aspires to a long and prosperous life
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52. The Prevailing Approach: Strategy as a Set Solution
• Goal A long-term sustainable competitive
advantage
• Leadership The CEO and strategy consultants
• Form Unchanging plan that derives from an
analytical, left-brain exercise
• Time Frame Intense period of formulation
followed by prolonged period of implementation
• Ongoing Activity Defending an established
strategy through time
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53. What Is Missing: Strategy as a Dynamic Process
• Goal Creation of value
• Leadership CEO as chief strategist; the job cannot
be outsourced
• Form Organic process that is adaptive, holistic,
and open-ended
• Time Frame Everyday, continuous, unending
• Ongoing Activity Fostering competitive
advantages and developing the company through
time
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54. 5. THE SOCIAL BUSINESS
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55. http://www.amazon.com/gp/mpd/permalink/m2RUMCDP83GAAX/ref=ent_fb_link
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57. Social CRM
• “The underlying principle for Social CRM’s
success is very different from its
predecessor….traditional CRM is based on an
internal operational approach to manage
customer relationships effectively. But Social CRM
is based on the ability of a company to meet the
personal agendas of [its] customers while, at the
same time, meeting the objectives of [its] own
business plan. It is aimed at customer
engagement rather than customer
management.”
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58. Where is my company along the Social Business Journey?
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61. GENUINE STRATEGY AND OPERATIONAL
EFFECTIVENESS: THE UNBEATABLE
COMBINATION
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62. Genuine Strategy and Operational Effectiveness
Deliver
Enduring Competitive Advantage
Genuine Sustainable
Operational
Effectiveness Competitive
Strategy Advantage
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63. Genuine Strategy and OE
Both are essential for superior performance
Excellence in one is not enough for enduring
success or competitive advantage
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64. Establishing Organizational
Competitive Advantage
• Deliver greater value to customers; or
1
• Create comparable value at lower
2 prices; or
• Do both
3
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65. Creating Competitive Advantage:
Effectiveness vs Efficient
• Leads to greater value
More • Higher unit prices
Effective • Apple, BMW
• Leads to Lower unit costs
More • Can offer lowest prices
Efficient • Costco, Lenovo
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66. OE and Buyers
• Continuous improvements in OE proves of
enormous benefits to buyers;
– Today we can buy a USB stick at Walmart for less than
$5 that has more memory than a computer that cost
$000s in the 1980s;
• But this is a nightmare scenario for companies
that are sucked into damaging price wars;
– Who makes a profit selling only PCs today?
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67. Examples of Strategically Smart
The Smarts The Laggards
• Tend to be ‘different’ • Imitate and emulate their
• Are innovative national rivals
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68. OE and Competition
• Companies converge
• They all follow the exact same strategic path
– From made-in-China to sold-in-Walmart
• And this is a race that no producer wins
– So let’s reduce the number of ‘runners’ – and
acquire our rivals
• In a ‘buy or be bought’ world, no one enjoys
true competitive advantage
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69. It does not
have to be
this way!
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