Strategic Thinking

Topics: Strategic management, Strategic planning, Management Pages: 21 (7039 words) Published: May 2, 2013
Strategic Thinking and Strategic Leadership
The purpose of the study is to evaluate and discuss the concepts of strategic thinking and strategic leadership to gain competitive advantage for organizations. For this, every aspect related to strategy is discussed. The study starts with introducing the concept of strategy, strategic thinking, strategy analysis, strategic leadership, strategic implementation and learning organization. Thus, the challenge to managers is to decide on strategies that provide advantages that can be sustained over time.

Introduction to Strategy
The myriad activities that go into creating, producing, selling, and delivering a product or service are the basic units of competitive advantage. Operational effectiveness means performing these activities better—that is, faster, or with fewer inputs and defects—than rivals. But from a competitive standpoint, the problem with operational effectiveness is that best practices are easily emulated. As all competitors in an industry adopt them, the productivity frontier—the maximum value a company can deliver at a given cost, given the best available technology, skills, and management techniques—shifts outward, lowering costs and improving value at the same time. Such competition produces absolute improvement in operational effectiveness, but relative improvement for no one. And the more benchmarking that companies do, the more competitive convergence you have—that is, the more indistinguishable companies are from one another.Strategic positioning attempts to achieve sustainable competitive advantage by preserving what is distinctive about a company. It means performing different activities from rivals, or performing similar activities in different ways.Three key principles underlie strategic positioning.1. Strategy is the creation of a unique and valuable position, involving a different set of activities. Strategic position emerges from three distinct sources:serving few needs of many customers (Jiffy Lube provides only auto lubricants)serving broad needs of few customers (Bessemer Trust targets only very high-wealth clients)serving broad needs of many customers in a narrow market (Carmike Cinemas operates only in cities with a population under 200,000) 2. Strategy requires you to make trade-offs in competing—to choose what not to do. Some competitive activities are incompatible; thus, gains in one area can be achieved only at the expense of another area. For example, Neutrogena soap is positioned more as a medicinal product than as a cleansing agent. The company says “no” to sales based on deodorizing, gives up large volume, and sacrifices manufacturing efficiencies. By contrast, Maytag’s decision to extend its product line and acquire other brands represented a failure to make difficult trade-offs: the boost in revenues came at the expense of return on sales.

3. Strategy involves creating “fit” among a company’s activities. Fit has to do with the ways a company’s activities interact and reinforce one another. For example, Vanguard Group aligns all of its activities with a low-cost strategy; it distributes funds directly to consumers and minimizes portfolio turnover. Fit drives both competitive advantage and sustainability: when activities mutually reinforce each other, competitors can’t easily imitate them. When Continental Lite tried to match a few of Southwest Airlines’ activities, but not the whole interlocking system, the results were disastrous.Strategy Must Be Distinctive, Focused, and Values-Based. A focused and distinctive strategy for delivering value to a targeted customer segment is essential for sustained competitive advantage.A focused strategy freed management to hire only people who were aligned with low-cost and friendly service. Its organizational design, operating system, and human resource policies were intended to compete with the car, bus, and train travel typically used by leisure travelers.Strategic Thinking Strategic...
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