Description
This is a ppt about Crafting and Executing strategy.
Crafting and Executing strategy
“Without a strategy the
organization is like a
ship without a rudder.”
Joel Ross and Michael Kami
Chapter Roadmap
? What Is Strategy?
? Identifying ? Strategy ? Strategy ? Strategy
a Company’s Strategy
and the Quest for Competitive Advantage
Is Partly Proactive and Partly Reactive
and Ethics: Passing the Test of Moral Scrutiny
? The Relationship Between a Company’s Strategy and Its
Business Model
? What Makes a Strategy a Winner? ? Why Are Crafting and Executing Strategy Important?
What Is Strategy?
Thinking Strategically: The Three Big Strategic Questions
1. Where are we now? 2. Where do we want to go?
? Business(es)
? Buyer
to be in and market positions to stake out
needs and groups to serve to achieve
? Outcomes
3. How will we get there?
?A
company’s answer to “how will we get there?” is its strategy
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 ? Stake
and please customers successfully
out a market position the business targeted objectives
? Compete ? Grow
? Achieve ? For
future
Chapter Roadmap
? What Is Strategy?
? Identifying ? Strategy ? Strategy ? Strategy
a Company’s Strategy
and the Quest for Competitive Advantage
Is Partly Proactive and Partly Reactive
and Ethics: Passing the Test of Moral Scrutiny
? The Relationship Between a Company’s Strategy and Its
Business Model
? What Makes a Strategy a Winner? ? Why Are Crafting and Executing Strategy Important?
What Are a Company’s Strategic Choices?
Strategic choices are based on . . .
? Trial-and-error organizational learning about
? What ? What
has worked and has not worked
? Management’s appetite for taking risks ? Managerial analysis and strategic thinking about how
best to proceed, given prevailing circumstances
Key Elements: Southwest Airlines’ Strategy
? Grow the business by gradually adding more flights on ?
?
? ? ? ?
existing routes and initiating service to new airports Make friendly service a company trademark Maintain an aircraft fleet of only Boeing 737s Encourage customers to make reservations and purchase tickets at the company’s Web site Avoid flying into congested airports Employ a point-to-point route system Economize on ? Amount of time it takes terminal personnel to check passengers in and on-load passengers ? Costs
Chapter Roadmap
? What Is Strategy?
? Identifying ? Strategy ? Strategy ? Strategy
a Company’s Strategy
and the Quest for Competitive Advantage
Is Partly Proactive and Partly Reactive
and Ethics: Passing the Test of Moral Scrutiny
? The Relationship Between a Company’s Strategy and Its
Business Model
? What Makes a Strategy a Winner? ? Why Are Crafting and Executing Strategy Important?
Strategic Approaches to Building Competitive Advantage
A.) Strive to be the industry’s low-cost provider EG:
o
WALMART
o
BSNL
B.) Outcompete rivals on a key differentiating feature EG:
o BMW
o Nike
C.) Focus on a narrow market niche, doing a better job than rivals of serving the unique needs of niche buyers
o MacAfee
o Special Antique Tyres
D.) Develop expertise, resource strengths, and capabilities not easily imitated by rivals
o o o o o
Global sales and distribution capability – Black and Decker Superior e-commerce capabilities – Dell Computer Defect-free manufacturing – Toyota and Hyundai Product innovation capabilities – 3M Corporation Personalized Services –Ritz Carlton Hotels
Fig. 1.2: A Company’s Strategy Is Partly Proactive and Partly Reactive
Why Do Strategies Evolve?
? A company’s strategy is a work in progress ? Changes may be necessary to react to
? Fresh
moves of competitors customer preferences
? Evolving
? Technological
? Shifting
breakthroughs
market conditions
? Crisis
situations
Crafting Strategy Is an Exercise in Entrepreneurship
?
Strategy-making is a market-driven activity that involves
? Studying market ? Keen
trends and competitors’ actions
observation of customer needs business possibilities based on new
? Scrutinizing
technologies
? Building
firm’s market position via acquisitions or new product introductions
ways to strengthen firm’s competitive capabilities
? Pursuing
? Proactively
? ?
searching out opportunities to
Do new things or Do existing things in new or better ways
Chapter Roadmap
? What Is Strategy?
? Identifying ? Strategy ? Strategy ? Strategy
a Company’s Strategy
and the Quest for Competitive Advantage
Is Partly Proactive and Partly Reactive
and Ethics: Passing the Test of Moral Scrutiny
? The Relationship Between a Company’s Strategy and Its
Business Model
? What Makes a Strategy a Winner? ? Why Are Crafting and Executing Strategy Important?
Linking Strategy With Ethics
? Ethical and moral standards go beyond
?
Prohibitions of law and the language of “thou shalt not”
to issues of
?
Duty and “right” vs. “wrong”
?
Ethical and moral standards address “What is the right thing to do?”
?
? Two criteria of an ethical strategy:
Does not entail actions and behaviors that cross the line from “can do” to “should not do’ and “unsavory” or “shady” and Allows management to fulfill its ethical duties to all stakeholders
?
A Firm’s Ethical Responsibilities to Its Stakeholders
Owners/shareholders – Rightfully expect some form of
return on their investment
Employees - Rightfully expect to be treated with dignity
and respect for devoting their energies to the enterprise
Customers - Rightfully expect a seller to provide them
with a reliable, safe product or service
Suppliers - Rightfully expect to have an equitable
relationship with firms they supply and be treated fairly
Community - Rightfully expect businesses to be good
citizens in their community
Role of Senior Executives: Linking Strategy with Ethics
? Forbid pursuit of ethically questionable business
opportunities ? Insist all aspects of company strategy reflect high ethical standards ? Make it clear all employees are expected to act with integrity ? Install organizational checks and balances to
? Monitor
behavior ? Enforce ethical codes of conduct ? Provide guidance to employees in gray areas
? Display genuine commitment to conduct business
activities ethically
Chapter Roadmap
? What Is Strategy?
? Identifying ? Strategy ? Strategy ? Strategy
a Company’s Strategy
and the Quest for Competitive Advantage
Is Partly Proactive and Partly Reactive
and Ethics: Passing the Test of Moral Scrutiny
? The Relationship Between a Company’s Strategy and Its
Business Model
? What Makes a Strategy a Winner? ? Why Are Crafting and Executing Strategy Important?
What Is a Business Model?
? A business model addresses “Whether the revenue-cost-
profit economics of its strategy demonstrate the viability of the business as a whole”
? Is
the strategy capable of delivering good bottom-line results?
Relationship Between Strategy and Business Model
Strategy - Deals broadly with a company’s competitive initiatives and business approaches (irrespective of the financial outcomes) Business Model –deals with whether the revenue and costs flowing from the strategy demonstrate business viability
Microsoft’s Business Model
Employ - 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
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 (best in the world) , consulting, support, engineering, and content management services
? Before :: 2002 ? $ 140 mn losses on revenue of $ 79 mn ? After :: 2004 :: Shift in Red hat’s business model ? Red Hat earned $ 9 mn profit on revenues of $ 89 mn ? Profits came from a shift in RH business model that
involved putting more emphasis on selling subscription to the latest RH Linux updates to corporate user.
Chapter Roadmap
? What Is Strategy?
? Identifying ? Strategy ? Strategy ? Strategy
a Company’s Strategy
and the Quest for Competitive Advantage
Is Partly Proactive and Partly Reactive
and Ethics: Passing the Test of Moral Scrutiny
? The Relationship Between a Company’s Strategy and Its
Business Model
? What Makes a Strategy a Winner? ? Why Are Crafting and Executing Strategy Important?
Tests of a Winning Strategy
? GOODNESS OF FIT TEST ? COMPETITIVE ADVANTAGE TEST ? PERFORMANCE TEST
Other Criteria for Judging the Merits 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!
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
Good Strategy + Good Strategy Execution = Good Management
Excellent execution of an excellent strategy is the best test of managerial excellence -- and the most reliable recipe for winning in the marketplace!
doc_132499292.pptx
This is a ppt about Crafting and Executing strategy.
Crafting and Executing strategy
“Without a strategy the
organization is like a
ship without a rudder.”
Joel Ross and Michael Kami
Chapter Roadmap
? What Is Strategy?
? Identifying ? Strategy ? Strategy ? Strategy
a Company’s Strategy
and the Quest for Competitive Advantage
Is Partly Proactive and Partly Reactive
and Ethics: Passing the Test of Moral Scrutiny
? The Relationship Between a Company’s Strategy and Its
Business Model
? What Makes a Strategy a Winner? ? Why Are Crafting and Executing Strategy Important?
What Is Strategy?
Thinking Strategically: The Three Big Strategic Questions
1. Where are we now? 2. Where do we want to go?
? Business(es)
? Buyer
to be in and market positions to stake out
needs and groups to serve to achieve
? Outcomes
3. How will we get there?
?A
company’s answer to “how will we get there?” is its strategy
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 ? Stake
and please customers successfully
out a market position the business targeted objectives
? Compete ? Grow
? Achieve ? For
future
Chapter Roadmap
? What Is Strategy?
? Identifying ? Strategy ? Strategy ? Strategy
a Company’s Strategy
and the Quest for Competitive Advantage
Is Partly Proactive and Partly Reactive
and Ethics: Passing the Test of Moral Scrutiny
? The Relationship Between a Company’s Strategy and Its
Business Model
? What Makes a Strategy a Winner? ? Why Are Crafting and Executing Strategy Important?
What Are a Company’s Strategic Choices?
Strategic choices are based on . . .
? Trial-and-error organizational learning about
? What ? What
has worked and has not worked
? Management’s appetite for taking risks ? Managerial analysis and strategic thinking about how
best to proceed, given prevailing circumstances
Key Elements: Southwest Airlines’ Strategy
? Grow the business by gradually adding more flights on ?
?
? ? ? ?
existing routes and initiating service to new airports Make friendly service a company trademark Maintain an aircraft fleet of only Boeing 737s Encourage customers to make reservations and purchase tickets at the company’s Web site Avoid flying into congested airports Employ a point-to-point route system Economize on ? Amount of time it takes terminal personnel to check passengers in and on-load passengers ? Costs
Chapter Roadmap
? What Is Strategy?
? Identifying ? Strategy ? Strategy ? Strategy
a Company’s Strategy
and the Quest for Competitive Advantage
Is Partly Proactive and Partly Reactive
and Ethics: Passing the Test of Moral Scrutiny
? The Relationship Between a Company’s Strategy and Its
Business Model
? What Makes a Strategy a Winner? ? Why Are Crafting and Executing Strategy Important?
Strategic Approaches to Building Competitive Advantage
A.) Strive to be the industry’s low-cost provider EG:
o
WALMART
o
BSNL
B.) Outcompete rivals on a key differentiating feature EG:
o BMW
o Nike
C.) Focus on a narrow market niche, doing a better job than rivals of serving the unique needs of niche buyers
o MacAfee
o Special Antique Tyres
D.) Develop expertise, resource strengths, and capabilities not easily imitated by rivals
o o o o o
Global sales and distribution capability – Black and Decker Superior e-commerce capabilities – Dell Computer Defect-free manufacturing – Toyota and Hyundai Product innovation capabilities – 3M Corporation Personalized Services –Ritz Carlton Hotels
Fig. 1.2: A Company’s Strategy Is Partly Proactive and Partly Reactive
Why Do Strategies Evolve?
? A company’s strategy is a work in progress ? Changes may be necessary to react to
? Fresh
moves of competitors customer preferences
? Evolving
? Technological
? Shifting
breakthroughs
market conditions
? Crisis
situations
Crafting Strategy Is an Exercise in Entrepreneurship
?
Strategy-making is a market-driven activity that involves
? Studying market ? Keen
trends and competitors’ actions
observation of customer needs business possibilities based on new
? Scrutinizing
technologies
? Building
firm’s market position via acquisitions or new product introductions
ways to strengthen firm’s competitive capabilities
? Pursuing
? Proactively
? ?
searching out opportunities to
Do new things or Do existing things in new or better ways
Chapter Roadmap
? What Is Strategy?
? Identifying ? Strategy ? Strategy ? Strategy
a Company’s Strategy
and the Quest for Competitive Advantage
Is Partly Proactive and Partly Reactive
and Ethics: Passing the Test of Moral Scrutiny
? The Relationship Between a Company’s Strategy and Its
Business Model
? What Makes a Strategy a Winner? ? Why Are Crafting and Executing Strategy Important?
Linking Strategy With Ethics
? Ethical and moral standards go beyond
?
Prohibitions of law and the language of “thou shalt not”
to issues of
?
Duty and “right” vs. “wrong”
?
Ethical and moral standards address “What is the right thing to do?”
?
? Two criteria of an ethical strategy:
Does not entail actions and behaviors that cross the line from “can do” to “should not do’ and “unsavory” or “shady” and Allows management to fulfill its ethical duties to all stakeholders
?
A Firm’s Ethical Responsibilities to Its Stakeholders
Owners/shareholders – Rightfully expect some form of
return on their investment
Employees - Rightfully expect to be treated with dignity
and respect for devoting their energies to the enterprise
Customers - Rightfully expect a seller to provide them
with a reliable, safe product or service
Suppliers - Rightfully expect to have an equitable
relationship with firms they supply and be treated fairly
Community - Rightfully expect businesses to be good
citizens in their community
Role of Senior Executives: Linking Strategy with Ethics
? Forbid pursuit of ethically questionable business
opportunities ? Insist all aspects of company strategy reflect high ethical standards ? Make it clear all employees are expected to act with integrity ? Install organizational checks and balances to
? Monitor
behavior ? Enforce ethical codes of conduct ? Provide guidance to employees in gray areas
? Display genuine commitment to conduct business
activities ethically
Chapter Roadmap
? What Is Strategy?
? Identifying ? Strategy ? Strategy ? Strategy
a Company’s Strategy
and the Quest for Competitive Advantage
Is Partly Proactive and Partly Reactive
and Ethics: Passing the Test of Moral Scrutiny
? The Relationship Between a Company’s Strategy and Its
Business Model
? What Makes a Strategy a Winner? ? Why Are Crafting and Executing Strategy Important?
What Is a Business Model?
? A business model addresses “Whether the revenue-cost-
profit economics of its strategy demonstrate the viability of the business as a whole”
? Is
the strategy capable of delivering good bottom-line results?
Relationship Between Strategy and Business Model
Strategy - Deals broadly with a company’s competitive initiatives and business approaches (irrespective of the financial outcomes) Business Model –deals with whether the revenue and costs flowing from the strategy demonstrate business viability
Microsoft’s Business Model
Employ - 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
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 (best in the world) , consulting, support, engineering, and content management services
? Before :: 2002 ? $ 140 mn losses on revenue of $ 79 mn ? After :: 2004 :: Shift in Red hat’s business model ? Red Hat earned $ 9 mn profit on revenues of $ 89 mn ? Profits came from a shift in RH business model that
involved putting more emphasis on selling subscription to the latest RH Linux updates to corporate user.
Chapter Roadmap
? What Is Strategy?
? Identifying ? Strategy ? Strategy ? Strategy
a Company’s Strategy
and the Quest for Competitive Advantage
Is Partly Proactive and Partly Reactive
and Ethics: Passing the Test of Moral Scrutiny
? The Relationship Between a Company’s Strategy and Its
Business Model
? What Makes a Strategy a Winner? ? Why Are Crafting and Executing Strategy Important?
Tests of a Winning Strategy
? GOODNESS OF FIT TEST ? COMPETITIVE ADVANTAGE TEST ? PERFORMANCE TEST
Other Criteria for Judging the Merits 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!
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
Good Strategy + Good Strategy Execution = Good Management
Excellent execution of an excellent strategy is the best test of managerial excellence -- and the most reliable recipe for winning in the marketplace!
doc_132499292.pptx