This document outlines the objectives and content of a business strategy course. The primary aims are to develop students' strategic planning and analytical skills. The course emphasizes applying these skills through observation and practice, rather than just reading about strategy. It also stresses the importance of focus for organizations, which requires understanding one's strengths and committing to strategic analysis before implementation. An example is provided about different travelers getting from New York to Los Angeles to illustrate strategic options and how outcomes depend on choices made.

1. What is Strategy?Weeks 1 and 2 Michael McDermott mcdermottm1@nku.edu http://www.linkedin.com/in/michaelcmcdermott www.facebook.com/strategycapstone www.strategycapstone.ning.com www.Mcdermottstrategy.wikispaces.com www.globalbusinessstrategy.wikispaces.com Class meeting 1 1 www.facebook.com/strategycapstone

2. 2 Course Objectives The primary aim is to develop your ability to develop your skills in key aspects of strategic planning The aim is to develop your ability to think in a highly analytical and logical manner www.facebook.com/strategycapstone

3. 3 Course Objectives This ability can only be developed through practice Therefore the emphasis in this class is to encourage you to apply your newly developed skill in this classroom, but that you apply your skills through observation as you go about daily life www.facebook.com/strategycapstone

4. 4 Course Objectives Sports people improve through training and applying themselves ….not reading about their sport And it’s the exact same in terms of students of business strategy www.facebook.com/strategycapstone

5. 5 Course Objectives This class is a paradox My aim is to help you develop a key skill that will be with you for life So I want to keep it simple But at the same time be very challenging in terms of pushing you to ‘raise your game’ www.facebook.com/strategycapstone

6. 6 Lecture Objectives To get you thinking! And develop a clear understanding of the nature of strategy You do not obtain this by memorizing a textbook definition www.facebook.com/strategycapstone

7. Strategic Planning Process 7 Strategic Analysis Strategic Choice Strategic Implementation www.facebook.com/strategycapstone

8. Focus 8 In my experience, the biggest problem companies face is that they suffer from a lack of focus Why is this the case? www.facebook.com/strategycapstone

9. Focus 9 It is precisely because they focus upon strategic choice and implementation But refuse to commit to strategic analysis Even when they are presented with analysis, they often lack the courage to follow through www.facebook.com/strategycapstone

10. Lack of Focus: The Critical Issue 10 Companies do themselves a huge disservice They often do not understand the nature of their own business They fail to recognize their: core competences strongest product(s)/service(s) Market segment with greatest potential due to buyer preferences and nature of competition International markets where the chances of success are greatest www.facebook.com/strategycapstone

11. 11 Becoming Focused Strategic Analysis Strategic Choice Strategic Implementation www.facebook.com/strategycapstone

12. 12 Becoming Focused Knowledge = Strategic Analysis Courage = Strategic Choice Discipline = Strategic Implementation www.facebook.com/strategycapstone

13. Paying Lip-service to Strategic Analysis Often organizations undertake an exercise in SA However, this tends to be a self-congratulatory exercise Challenging and critical contributions are dismissed This is a futile exercise 13 www.facebook.com/strategycapstone

14. 14 Most companies turn the recipe for focus on its head; They begin with Strategic Implementation, and then are bewildered when success is elusive; Lack of Focus www.facebook.com/strategycapstone

15. 15 Lack of Focus: The Causes and Results Strategic Implementation = Confusion Strategic Choice = Panic Strategic Analysis = Fire-fighting www.facebook.com/strategycapstone

16. 16 What is Strategy? Strategy Demystified www.facebook.com/strategycapstone

17. 17 Gaining an Understanding of Strategy Imagine that you are in New York You wish to get to Los Angeles www.facebook.com/strategycapstone

18. What are you? A billionaire? A poor College student? A parent with six children? Your position will have a huge bearing on the choices that are available to you and which ones are best-suited for you. 18 www.facebook.com/strategycapstone

19. What are you? A company like an individual has a particular position Its position is its strategy Its choice of position is determined by what it is best-suited to (internal considerations) and its best match in the market (ie external considerations) 19 www.facebook.com/strategycapstone

20. Strategy is all about competitive position But too often we simply look at the steps or the choices a company makes to achieve growth and perceive these moves as strategy 20 www.facebook.com/strategycapstone

21. The moves are indeed important and have strategic implications But they are not the actual strategy 21 www.facebook.com/strategycapstone

22. Let’s go back to our trip from NY to LA 22 www.facebook.com/strategycapstone

23. 23 Executing our strategy?How can we get there? There are many options… What are some of these options? List the options www.facebook.com/strategycapstone

24. 24 Choosing an option…. What factors do we need to consider? www.facebook.com/strategycapstone

25. 25 Choosing an option…. The comfort/pleasure The cost The level of control The route The risk The speed The timing www.facebook.com/strategycapstone

26. These issues must also be addressed by companies as they consider their strategic options 26 www.facebook.com/strategycapstone

27. 27 Choosing an option…. Now if we consider the nature of our traveler, then we may expect some different choices www.facebook.com/strategycapstone

28. Our travelers and their choices 28 www.facebook.com/strategycapstone

29. Our companies and their choices 29 www.facebook.com/strategycapstone

30. 30 This example Highlights that there is a wide range of options for some, less so for others; They have very different resources and this impacts upon their choices They also have different priorities in terms of control, risk, speed, timing. So although the challenge was the same, different travelers can choose very different means of getting there They need to consider what suits them best www.facebook.com/strategycapstone

31. 31 The Outcomes…. Someone gets there first, but it costs the most Others may get there last, but have the best time Some will rue their choice Others will be glad they chose wisely Some may have to compromise – someone else got the last seat in First Class And some may never get there at all – Dad got a DUI! www.facebook.com/strategycapstone

32. 32 The Outcomes…. Someone gets there first, but it costs the most Others may get there last, but have the best time Some will rue their choice Others will be glad they chose wisely Some may have to compromise – someone else got the last seat in First Class And some may never get there at all – Dad got a DUI! www.facebook.com/strategycapstone

33. 33 This example Some succeed Some fail… Some change their mind and decide LA is not where they want to go…. So some decide to stop at Chicago, others at San Diego etc And some who get to LA, realize that they should never have come in the first place www.facebook.com/strategycapstone

34. 34 The Importance of Strategy Strategy demands careful consideration of a range of factors that enable an organization to achieve competitiveness But it does not guarantee success.. Many organizations have a strategy but they are not competitive And others lack a coherent strategy, but yet they appear to be successful www.facebook.com/strategycapstone

35. 35 Who Benefits from Developing a Strategy? A country? An industry in a country? A large global company? A division in a large global company? An SME A coffee shop? An individual? www.facebook.com/strategycapstone

36. 36 A Country Does the USA have a strategy? Yes/No Do any countries have a strategy? Yes/No Does it matter? Yes/No www.facebook.com/strategycapstone

37. 37 USA What is the fundamental competitive position of the U.S. in the global economy? And what must we do to remain strong when other nations are making rapid progress? www.facebook.com/strategycapstone

38. 38 Porter on the USA (Oct 2008) The stark truth is that the U.S. has no long-term economic strategy—no coherent set of policies to ensure competitiveness over the long haul. Strategy embodies clear priorities, based on understanding the strengths we need to preserve and the weaknesses that threaten our prosperity the most. Strategy addresses what to do, but also what not to do. In dealing with a crisis, experience teaches us that steps to address the immediate problem must support a long-term strategy. Yet it is far from clear that we are taking the steps most important to America's long-term economic prosperity. http://www.businessweek.com/magazine/content/08_45/b4107038217112.htm www.facebook.com/strategycapstone

39. 39 A Good Strategy There needs to be logical consistency Too often businesses suffer because they loose sight of being logically consistent As this class develops, it will become very clear to you that this flaw is a commonplace www.facebook.com/strategycapstone

40. 40 Conclusions Strategy is the company’s position, and also the ‘map’ for the organization It guides the organization But it still allows for some freedom to take advantages of opportunities as they arise or to take account of dangers/threats on the journey Strategy cannot guarantee competitiveness But it can certainly enhance the prospects of success www.facebook.com/strategycapstone

41. 41 Conclusions In this class, we are going to discuss organizations that are ‘winners’ and ‘losers’ in the market-place So consider companies that you believe are presently ‘winners’ and those that are ‘losers’ We will then consider the causes of their situation and the strategy the need to sustain or transform their situation www.facebook.com/strategycapstone

42. Some Key Questions in Strategy Development Week 2 42 www.facebook.com/strategycapstone

43. 43 1. Who/what are we? This is our Strategy – our strategic position This is our choice of Generic Strategy Low-Cost Differentiation Focused Low-Cost Focused Differentiation This is represented in our Mission Statement that is present-oriented www.facebook.com/strategycapstone

44. 44 www.facebook.com/strategycapstone

45. 45 www.facebook.com/strategycapstone

46. 2. Where do we want to be? Do we wish to change our Strategy or our competitive position? Or simply apply similar more widely? In both cases we addressing our Vision which is future-oriented. 46 www.facebook.com/strategycapstone

47. Changes in Competitive Position Today you think of Walmart and you think low cost This company wants us in the future to think ‘green’ and ‘healthy’ 47 www.facebook.com/strategycapstone

48. Changes in Competitive Position Yum Brands has decided to focus upon KFC (chicken), Pizza Hut and Taco-Bell (Mexican?) It has decided too that in order to conquer emerging markets, it cannot afford the distraction of weak performing brands So it will divest them 48 www.facebook.com/strategycapstone

49. Changes in Competitive Position: Toyota 49 www.facebook.com/strategycapstone

50. Changes in Competitive Position:Singapore Airlines 50 www.facebook.com/strategycapstone

51. Changes in Competitive Position:Haier(Chinese producer of white goods) 51 www.facebook.com/strategycapstone

52. 52 3. Why do we want to go there? Change(s) taking place in the external environment? The macro-environment The competitive environment The market The internal environment – ie. Company-related considerations Or combination of both www.facebook.com/strategycapstone

53. Fortune Brands and Titleist Decision to divest Titleist appears due a deterioration in all aspects of the external environment The effect is to reduce potential for profitability – incompatible with a finance driven company – so internal drives for divestment too 53 www.facebook.com/strategycapstone

54. 4. How will we get there? Organic growth the company growing through its own development on new products/services External growth Mergers and Acquisitions (Married) – very costly Joint Ventures (Engaged) – less costly Alliances (Dating) – no ownership stake, just partners Licensing (social acquaintance) – low risk, payments based upon market success 54 www.facebook.com/strategycapstone

55. Let’s Recap on Where We are So Far www.facebook.com/strategycapstone 55

56. What is Strategy? Strategy is competitive position Executives though often pay scant regard to strategy Instead their focus is simply operational effectiveness (is the food hot; are our costs under control) operational effectiveness and strategy are both essential to superior performance 56 www.facebook.com/strategycapstone

57. What is Operational Effectiveness? It’s all about internal performance Better Cheaper Faster Wider (ie more international) 57 www.facebook.com/strategycapstone

58. Strategy vs OE OE and strategy are both essential to superior performance Excellence in one is not enough for enduring success or competitive advantage 58 www.facebook.com/strategycapstone

59. Establishing Competitive Advantage A company can outperform rivals only if it can establish a difference that it can preserve It must therefore: Deliver greater value to customers; or Create comparable value at lower prices; or Do both 59 www.facebook.com/strategycapstone

60. Effectiveness vs Efficient 60 www.facebook.com/strategycapstone

61. Nature of Operational Effectiveness OE means performing similar activities better than rivals perform them So the Japanese auto producers toppled their US rivals South Koreans overtake Japanese electronics companies Taiwanese overtake US computer companies Chinese dominate electronics production Constant improvement in operational effectiveness is necessary to achieve superior profitability. But it is seldom sufficient 61 www.facebook.com/strategycapstone

62. Running out of steam: the limitations of OE Companies that are copycats but simply exploiting differences in operational efficiency soon come undone; Once gaps in OE narrow, such companies struggle; They suffer from a distinct competitive position. In short, they need to learn strategy! 62 www.facebook.com/strategycapstone

63. 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 $20 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? 63 www.facebook.com/strategycapstone

64. Examples of Japanese Companies and Strategy Have Learned? Tend to be ‘different’ Are innovative Yet to Learn? Imitate and emulate their national rivals 64 www.facebook.com/strategycapstone

65. OE and Competition Companies converge They all follow the exact same path From made-in-China to sold-in-Walmart And this is a race that no one 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 65 www.facebook.com/strategycapstone

66. It does not have to be this way! 66 www.facebook.com/strategycapstone

67. Competitive Strategy is about being different! 67 www.facebook.com/strategycapstone

68. Determining Strategic Position 68 www.facebook.com/strategycapstone

69. 69 www.facebook.com/strategycapstone

70. What do they offer? Often low cost Because they do things differently But in addition to that, they often ‘break the rules’ and develop a new business model in order to better meet the needs of their target market Consider Red Box for DVDs Selling spectacles online 70 www.facebook.com/strategycapstone

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72. Nature of Strategic Positioning Means performing different activities from rivals or performing similar activities in differentways Competitive advantage requires developing a distinct strategic position 72 www.facebook.com/strategycapstone

73. Porter 1996 He cites Sega and Jiffy Lube as examples of sound strategic positioning Jiffy Lube offers only oil changes Do you use Jiffy Lube? Why not? The answer to this question perhaps also asks us to reconsider the essence of strategy 73 www.facebook.com/strategycapstone

74. Three Types of Strategic Positioning 74 www.facebook.com/strategycapstone

75. We now get position. But What is Strategy? 75 www.facebook.com/strategycapstone

76. Strategy is the creation of a unique and valuable position, involving a different set of activities. 76 www.facebook.com/strategycapstone

77. Strategy involves trade-offs.The essence of strategy is choosing what not to do. 77 www.facebook.com/strategycapstone

78. OE vs SP OE means performing similar activities better than rivals perform them Strategic Positioning Means performing different activities from rivals or performing similar activities in different ways 78 www.facebook.com/strategycapstone

79. “Why do so many companies fail to have a strategy? Why do managers avoid making strategic choices? Or, having made them in the past, why do managers so often let their strategies decay and blur?” 79 www.facebook.com/strategycapstone

80. “A sound strategy is undermined by a misguided view of competition, by organizational failures, and especially, by the desire to grow” 80 www.facebook.com/strategycapstone

81. < The Growth Trap: “Arises when companies urge for growth results in excessively rapid expansion and is characterized by a lack of prudence and extravagant investments” (McDermott) 81 www.facebook.com/strategycapstone

82. 82 www.facebook.com/strategycapstone

83. “The Times They Are A-Changin’”(Bob Dylan) www.facebook.com/strategycapstone 83

84. Social Media is not a fad This demands a revolution in our thinking. www.facebook.com/strategycapstone 84

85. Strategic Analysis:Phase 1 in Strategic Planning Michael McDermott mcdermottm1@nku.edu http://www.linkedin.com/in/michaelcmcdermott www.facebook.com/strategycapstone www.strategycapstone.ning.com www.Mcdermottstrategy.wikispaces.com www.globalbusinessstrategy.wikispaces.com 85 McDermottm1@nku.edu; facebook.com/strategycapstone Strategycapstone.ning.com

86. Structure Key points thus far Introduction to Strategic Analysis Focus upon PEST analysis McDermottm1@nku.edu; facebook.com/strategycapstone Strategycapstone.ning.com 86

87. Key Points Strategy = competitive position Strategy = competitive position = choice of generic strategy (Porter) Low cost Differentiation Focused low cost Focused differentiation McDermottm1@nku.edu; facebook.com/strategycapstone Strategycapstone.ning.com 87

88. Key Points Strategy also demands consideration of where and how a company will compete This refers to strategic choice – choice of grand strategy McDermottm1@nku.edu; facebook.com/strategycapstone Strategycapstone.ning.com 88

89. A B 89 McDermottm1@nku.edu; facebook.com/strategycapstone Strategycapstone.ning.com

90. Moving from A to B This might simply be trying to maximize returns on existing operations It may involve entering new markets geographically Or targeting new market segments with similar products Or targeting existing market segments with new products/services Key tool in considering grand strategy choice this is Ansoff’s matrix 90 McDermottm1@nku.edu; facebook.com/strategycapstone Strategycapstone.ning.com

91. Moving from A to B Or diversifying Or buying a key rival (horizontal integration Or buying a key supplier or buyer (vertical integration) Or withdrawing from certain areas (divestment/retrenchment) Key tool in considering grand strategy choice this is Ansoff’s matrix 91 McDermottm1@nku.edu; facebook.com/strategycapstone Strategycapstone.ning.com

92. 92 McDermottm1@nku.edu; facebook.com/strategycapstone Strategycapstone.ning.com

93. 93 McDermottm1@nku.edu; facebook.com/strategycapstone Strategycapstone.ning.com

94. 94 McDermottm1@nku.edu; facebook.com/strategycapstone Strategycapstone.ning.com

95. Moving from A to B Or it may involve developing a completely new business model because the traditional model can no longer deliver competitive advantage Consider Blockbuster, Dell. Or it may involve moving from a niche position to a mainstream position Consider Apple, Pepsico’s “good-for-you” products. Or creating a totally new market Consider Nintendo 95 McDermottm1@nku.edu; facebook.com/strategycapstone Strategycapstone.ning.com

96. Traditional PC makers vs Dell’s original business model:both have had to change their business models! 96 McDermottm1@nku.edu; facebook.com/strategycapstone Strategycapstone.ning.com

97. The ‘smiling face’ is the model for many in electronics today There is no-added value in in-house production so outsource it 97 McDermottm1@nku.edu; facebook.com/strategycapstone Strategycapstone.ning.com

98. A2B In order to get from A to B, an organization needs a strategy Strategy is our ‘mapquest directions’, our roadmap to get from our point of origin to our destination 98 McDermottm1@nku.edu; facebook.com/strategycapstone Strategycapstone.ning.com

99. Conclusions Successful businesses tend to have a tight focus and are disciplined They have a very clear goal – or strategic intent They remain true to their values They make sure that decisions are consistent They identify their core competences or key value proposition And the impact that this has on the nature of their generic strategy And they then focus upon delivering their value-proposition to their target market, and are willing to be rejected by the non-target market. 99 McDermottm1@nku.edu; facebook.com/strategycapstone Strategycapstone.ning.com