Crafting and Executing Startegy (Chapter 1)
CHAPTER 1
WHAT IS STRATEGY AND
WHY IS IT IMPORTANT?
1. Understand why every company needs a sound strategy to compete successfully, manage the conduct of its business, and strengthen its prospects for long-term success.
2. Develop an awareness of the four most dependable strategic approaches for setting a company apart from rivals and winning a sustainable competitive advantage.
3. Understand that a company’s strategy tends to evolve over time because of changing circumstances and ongoing management efforts to improve the company’s strategy.
4. Learn why it is important for a company to have a viable business model that outlines the company’s customer value proposition and its profit formula.
5. Learn the three tests of a winning strategy.
Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.
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
Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.
1–3
WHAT IS STRATEGY ABOUT?
♦ Strategy is all about How:
●
How to outcompete rivals.
●
How to respond to economic and market conditions conditions and growth opportunities.
●
How to manage functional pieces of the business. ●
How to improve the firm’s financial and market performance.
Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.
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
WHAT IS STRATEGY AND
WHY IS IT IMPORTANT?
1. Understand why every company needs a sound strategy to compete successfully, manage the conduct of its business, and strengthen its prospects for long-term success.
2. Develop an awareness of the four most dependable strategic approaches for setting a company apart from rivals and winning a sustainable competitive advantage.
3. Understand that a company’s strategy tends to evolve over time because of changing circumstances and ongoing management efforts to improve the company’s strategy.
4. Learn why it is important for a company to have a viable business model that outlines the company’s customer value proposition and its profit formula.
5. Learn the three tests of a winning strategy.
Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.
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
Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.
1–3
WHAT IS STRATEGY ABOUT?
♦ Strategy is all about How:
●
How to outcompete rivals.
●
How to respond to economic and market conditions conditions and growth opportunities.
●
How to manage functional pieces of the business. ●
How to improve the firm’s financial and market performance.
Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved.
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