Strategy A View From The Top Book Review Group 4 Katy Neely Matt Tevis Andrew McDonald Shelly Brown Hunter Pond

Strategy A View From The TopBook ReviewGroup 4Katy NeelyMatt Tevis Andrew McDonaldShelly BrownHunter Pond1Chapter 1What is Strategy?2Strategy DefinedStrategy is about positioning an organization for competitive advantage.Competitive advantageCreating a StrategyLong term visionFlexibleadapt3Strategic EvolutionStrategic EvolutionIndustrial Economic ProspectiveResource based ProspectiveHuman and Intellectual Prospective

4Competitive Advantage Cycle

5Levels Of StrategyCorporate- Concerned with the types of businesses a firm should compete in and how the overall portfolio should be managedBusiness unit-Focused on deciding what product or service to offer, how to create it, and how to get it to the marketplaceFunctional-Often used in a narrow division such as marketing, human resources, or technology

6Strategy Formulation Process

7Chapter 2Strategy and Performance84+2 FormulaStrategy ExecutionCultureStructureTalentInnovationLeadershipMergers and Partnerships9A Conceptual Framework3 interrelated ComponentsPurpose Strategy Leadership5 Interacting componentsStructureSystemsProcessesPeopleculturePerformance/control

10The Balanced Scorecard4 basic questions:How do customers see us?At what must we excel?Can we continue to improve and create value?How do we look to our companys shareholders?

11The Role Of The BoardDefine its role, agenda, and information needs.Ensure that management not only performs, but performs with integrity.Set expectations about the tone and the culture of the company.Formulate corporate strategy with managementEnsure that the corporate culture, the agreed strategy, management incentive compensation, and the companies approach to audit and accounting, internal controls, and disclosure are consistent and aligned.Help management understand the expectations of shareholders and regulators.

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Chapter 3

Analyzing The External Strategic Environment13GlobalizationGlobalization as a political, economic, social, and technological force, seems unstoppable. In this era the lines between countries has been broken and the flow of information is being shared at and incredibly fast pace. 3 reasons for globalization:PoliticalEconomictechnological1412 Global trendsPopulation trendsUrbanizationSpread of infectious diseaseRecourse managementEnvironmental degradationEconomic integrationKnowledge disseminationInformation technologyBiotechnologyNanotechnologyConflictGovernance

15A New Compact Between Business and Society?Size means ScrutinyCutting cost raises compliance risk Strategy must involve society Reducing risks means building trustSatisfying shareholders means satisfying stakeholdersGlobal growth requires global gainsProductivity requires sustainabilityDifferentiation relies on representationGood governance needs good representation

16Chapter 4Analyzing An Industry17Porters Five ForcesThe threat of entrySix major barriers to market entryPowerful suppliers and buyersSubstitute products and servicesHBO and Pay-per-viewRivalry among participantsAndrew Groves sixth force: complementary products

18Trajectories of Industry ChangeIndustry structure, concentration, and product differentiationVertical vs. horizontalrule of three and fourProduct life cycleNew patternsThree phase model

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Strategic Segmentation, Targeting, and PositioningCompetitor analysisAnalyzing immediate competitors LeaderChallengersFollowersnichersStrategic groups

20Product and Market combination AnalysisFuture ProductsPresent ProductsPresent MarketsFuture MarketsConcentrationProduct DevelopmentMarket DevelopmentDiversification21Gap analysisGap analysisProfit pool analysisFour steps

22Chapter 5Analyzing An Organizations Strategic Resource Base23Strategic Resources

PhysicalFinancialHuman ResourceOrganizational Assets

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25Forces For ChangeInternal ForcesCompany Life Cycle ForcesStrategic Forces26Chapter 6Formulating Business Unit Strategy27Formulating a Competitive Strategy Analyzing the competitive environmentWith whom will we compete?What relative strengths do we have as a basis for creating a sustainable competitive advantage?Anticipating key competitors actionsUnderstanding how competitors will react to our competitive strategyGenerating strategic optionsBalancing opportunities and constraints to create optionsChoosing among the alternativesAnalysis of the long-term impact of different strategy options

28The Value Chain

Firm InfrastructureHuman Resource ManagementTechnology DevelopmentProcurementOperationsOutbound LogisticsMarketing and SalesServiceMarginInbound LogisticsPrimary ActivitiesMarginPrimary ActivitiesSupport ActivitiesFirm Infrastructure29Generic Strategy Choices

FocusIndustry-wideOverall Cost LeadershipDifferentiationParticularsegment onlyStrategic TargetUniqueness perceivedby the customerLow-cost positionStrategic Advantage

30Different Value Disciplines Call for Different CompetenciesStrategic FocusWork EnvironmentEmployee CompetenciesCustomer intimacyValues-driven, dynamic, challenging, informal, service-oriented, qualitative, employee as customer, whatever it takesRelationship-building, listening, rapid problem-solving, independent action, initiative, collaboration, quality-focusedOperational excellencePredictable, measurable, hierarchical, cost-conscious, team-based, formalProcess control, continuous improvement, teamwork, analysis, financial/operational understandingProduct leadershipExperimental, learning-focused, technical, informal, fast-paced, resource-richInformation sharing, creativity, group problem solving, breakthrough thinking, artistic, visionary31Chapter 7Business Unit Strategy: Contexts and Special Dimensions32Strategy in Various Industries (Emerging, Growth, Mature, Declining)Speedpace of progress that a company displays in responding to current or anticipated business needsNewest and lease understood of the critical success factorsSpeed merchantsBuild their strategies on the rapid pace of their operationsAAA, Dell, Dominoes33Value and InnovationValue creation greatly depends on innovationCompanies recognize that they need to generate more value from core businesses and leverage their coreSustaining innovation and disruptive innovation34Creating Culture of InnovationThere are five common characteristics to creating a culture of innovation:First, a business needs a top level commitment to innovationSecond, they need a long term focusThird, a business needs a flexible organization structureFourth, a business needs a combination of loose and tight planning and controlLast, they need to create an environment for innovation and appropriate incentives35Innovation, Performance, Profitability Evidence on the relationship between research and development (R&D), innovation, and financial performance is inconsistent.Studies have shown that the single biggest growth inhibitor for large companies was mismanagement of the innovation process.Half of all companies do not closely track the efficiency of their innovation process36Chapter 8Global Strategy Formulation37Porters National DiamondFactor conditionsNatural vs. createdHome country demandRelated and supporting industriesCompetitiveness in the home industryPorters 5 forcesChanceOutside the control of the firmPublic policyDeregulationLocal, regional, national

38Industry Globalization DriversMarket driversCost driversCompetitive driversGovernment drivers

39The global Branding StrategyGlobal mixGlobal offerGlobal messageGlobal change

40Global Strategy and RiskTypes of risk:PoliticalLegalFinancial/economic riskSocietal/ cultural risk41Chapter 9Corporate Strategy: Shaping the Portfolio42Economies of Scale and ScopeEconomics of learning3 Decision opportunity classes:Horizontal scopeGeographical scopeVertical scope What is Core?

43Growth StrategiesTo formulate a successful growth strategy, a company must:Carefully analyze its strengths and weaknesses.Deliver value to its customers.Ask what growth strategies its culture can effectively support.3 avenues to grow revenue baseOrganic or internal growthGrowth through acquisitionGrowth through alliance-based initiatives.44Vertical and Horizontal IntegrationVertical integrationBackward integrationForward IntegrationHorizontal Integration45Diversification StrategiesDiversification is defined as a strategy of entering product markets different from those in which a company is currently engaged4 different forms of relatedness:Tangible links between business units Intangible resourcesGain or exercise market powerStrategic relatedness46The Strategic Logic of Alliances4 different alliance models based on the role the alliance plays in the participates corporate strategy and structure of the leadership of joint venture:Franchise modelPortfolio modelCooperative modelConstellation model

47The Strategic Logic of Alliances continued4 groups alliances are divided into on the basic of whether participants are competitors and on the relative depth/breadth of the alliance:Expertise alliancesNew business alliancesCooperative alliancesM&A like alliances

Cooperative alliancesM&A like alliances New business alliances Expertise alliances NarrowBroadCompetitors Partnership TypeNon-CompetitorsAlliance Scope48Chapter 10Corporate Strategy: Managing the Portfolio49The Boston Consulting Groups Approach to Portfolio Analysis

50Using a Portfolio Approach For Managing AlliancesBusiness AlliancesStrategic AlliancesRelationship AlliancesCorporate Alliances51Five Attributes That Distinguish the Planning ProcessA well understood conceptual framework that sorts out the many inter related types of strategic issues.Strategic-thinking capabilities that are widespread throughout the company, not limited to the top echelons.A process for negotiating tradeoffs among competing objectives that involves the series of feedback loops rather than a sequence of planning submissions.A performance review system that focuses attention on top mangers.A motivational system and management values that reward and promote the exercise of strategic thinking.52Creating a Learning OrganizationEncouraging more systems thinkingFostering a shared visionChallenging existing mental modelsEnhancing team learningMotivating employees to improve their personal mastery of their job.53