MGMT 310 Lecture 4: Chapter 4 Lecture Notes Introduction to Strategy

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Management
Lecture Notes 2/6/2017
Introduction to Strategy
Introduction to Strategy
Strategy and Competitive advantage
Strategy
o Pursuing a set of unique activities that provide value to customers, making
trade-offs about which businesses to pursue, what products to produce, and
which customers to serve; and aligning resources to achieve organizational
objectives
Competitive Advantage
o A firm achieves a competitive advantage when it creates more economic value
that competitors by engaging in a strategy that is difficult or impossible for
others to duplicate
Brief History of Strategy
The Art of War- Chinese military treatise written by Sun Tzu
o More important to out0think than to outmaneuver the opponent through
physical force
The Roman Empire
o Tactical implementation of military strategies that were contingent on internal
and external assessment
Rules of engagement
o Generate better information than your rivals
o Analyze that information to make informed choice
o Quickly select among choices
o Convert strategic choices into decisive action
Corporate Planning
o The needs to understand the competitive landscape led early business leaders
to focus on corporate planning
o It became popular in the post-World War II era as businesses grew in size,
scope, and complexity
o The planning process involved the development of detailed forecasts and
business-level goals and objectives
Strategy
o Views as a framework, or tool for managers to allocate resources and evaluate
activities, rather than a fixed plan
Conglomerate
o Act of growing through unrelated diversification, essentially by acquiring
companies in different industries
Strategy and the Organization: A Framework
Questions in the development strategy
o What is the purpose of our business?
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Management
Lecture Notes 2/6/2017
Introduction to Strategy
o How will environmental forces impact our firm?
o What stakeholders are important?
o In what business or areas will we compete?
o Who will we serve?
o How to distinguish our firm from competitors?
The purpose of Business
Milton Freedman
o The only goal of business is to focus exclusively on making profits so
that it creates the most value for its shareholders or owners
Stakeholder view
o While the fir’s priar goal is to aiize profits for its shareholders
or owners, it has ethical duties and moral responsibilities to a wider
array of constituents, including the community and even environment
Analyzing the Internal and External Environments of a Firm
Internal environment
o Goals
o Internal resources
o Culture
o Employee Capabilities
External environment
o Industry analysis
o Customer analysis
o Supplier analysis
o Competitor analysis
Goal and Core Competencies
Goal
o An organizationally desired result, product, or end state
Core competencies
o A network of unique activities that strategically fit together and are difficult to
replicate
Strategic Framework
1. External Environment
a. Maager’s role
i. Industry analysis
ii. Customer analysis
iii. Supplier analysis
iv. Competitor analysis
Internal Environment
a) Maager’s role
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