Crafting Executing Strategy 18e.PPTVIP

1–* CHAPTER 1 WHAT IS STRATEGY AND WHY IS IT IMPORTANT? McGraw-Hill/Irwin Copyright ?2012 The McGraw-Hill Companies, Inc. 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 actions that will get us there WHAT IS STRATEGY ABOUT? Strategy is all about How: How to outcompete rivals. How to respond to economic and market conditions and growth opportunities. How to manage functional pieces of the business. How to improve the firm’s financial and market performance. 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 competition difficult for rivals. STRATEGY AND COMPETITORS Strategy is about competing differently from rivals— Doing what they don’t do or doing it better! Doing what they can’t do! Doing that which sets the firm apart and attracts customers. Doing what we should or should not do to produce a competitive edge. 1.1 Identifying a Company’s Strategy—What to Look For The Quest for Competitive Advantage Competitive Advantage Meeting customer needs more effectively, with products or services that customers value more highly, or more efficiently, at lower cost. Sustainable Competitive Advantage Giving buyers lasting reasons to prefer a firm’s products or services over those of its competitors. STRATEGIC APPROACH CHOICES Low-cost provider Differentiation on features Focus on market niche Best-cost provider Building Competitive Advantage STRATEGIC APPROACHES Building a competitive advantage by: Striving to become the industry’s low-cost provider (efficiency). Outcompeting rivals on differentiating features (effectiveness). Focusing on bette