Chapter One. What is Strategy?. Cornelis A. de Kluyver and John A. Pearce II Third Edition. It is a pattern in a stream of actions. What is Strategy?. Positioning an organization for competitive advantage Deciding what to do and what NOT to do Which industries to participate in
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What is Strategy?
Cornelis A. de Kluyver
John A. Pearce II
Positioning an organization for competitive advantage
Deciding what to do and what NOT to do
Which industries to participate in
What products and services to offer
How to allocate resources, add value
Creating value for shareholders and other stakeholders by providing value to customersStrategy is About…
Differs from Tactics:
Forces trade-offs and should focus on differentiation from rivals
Focuses on value creation
Allows for learning and adaptation
Takes a long-term perspective
Responds to the needs of all stakeholdersStrategy…
Whowill you target as customers and who will you not?
What will you offer these customers and what will you not offer them?
How will you do all this? – What activities will you perform; which will you not?Strategy is About Making Choices…
Dell’s manufacture-to-order system forced competitors to make trade-offs(Key to Differentiation)
Southwest Airlines has created fit(Key to competitive advantage through Operational excellence)Choosing is Not Enough; You Must Force Trade-offs and Create Fit
Limited passenger service
Limited use of
point to point
fleet of 737
Frequent reliable departures
and gate crews
Very low ticket prices
High aircraft utilization
The environment make
International lawStrategy Should Consider the Company’s Ecosystem
Simply put, it's the idea that today's companies are embedded in multiple, complex relationships that make them interdependent on each other for success.
But it's only recently that corporate leaders are realizing that an ecosystem is more than a concept.
The ecosystem has intense implications for how companies plan for the future, and they ignore those implications at their own risk.What is an Ecosystem?
“A Computer on Every Desktop”
“Be #1 or #2 in every business…”
Write the rules; Don’t copy someone else’s
Basic Competitive Requirements Success
Latent Core Competencies
Future Core CompetenciesCompetencies Must Be Nurtured Continuous innovation and learning are critical
AdvantagesThe Competitive Advantage Cycle: Value, unless constantly nourished, erodes over time
Documents the purpose of the organization’s existence, may guide conduct
Represents organization’s strategic intent
Sets stretch targets
Creates a vision for the organization
Is primarily top-down (CEO/Senior management driven)
Requires creativity, analysis and synthesis
Is both top down and bottom-up
Plays supporting role focused on analysis, communicationStrong Leadership at All Levels of the Organization is Key
How do we get there?
Where should we go?
Where are we now?A Clear Process Provides Structure…
Strategy is Successnot about creating a detailed, long-term plan
Strategy should focus on a long-term strategic intent and flexible means for realizing that intent
Learningand continuous renewalare essential parts of strategyStrategy as a Portfolio of Options…
IncentivesStrategic Choices Must Be Supported by Organizational Choices