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Strategic Management Essentials: Building Competitive Advantage

Explore the fundamentals of strategic management, business models vs. strategy, and the importance of good ideas, planning, and execution in achieving success. Learn about different strategy models, industry choices, and the significance of sustainable competitive advantage in today's marketplace.

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Strategic Management Essentials: Building Competitive Advantage

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  1. BUSINESS 189STRATEGIC MANAGEMENT FALL 2008 COB, SJSU DR. MARK FRUIN

  2. WHAT IS STRATEGY? • BUSINESS MODEL VS. STRATEGY • BUSINESS MODEL = HOW DO WE MAKE MONEY? • STRATEGY = WHAT SHOULD BE DONE - MANAGERIALLY, ORGANIZATIONALLY & TECHNICALLY - TO MAKE MONEY? • STRATEGY IS GOOD IDEAS, GOOD PLANNING & GOOD EXECUTION ACROSS AN ORGANIZATION & MARKETPLACE • BUSINESS MODELS ARE A DIME A DOZEN • SUCCESSFUL STRATEGIES ARE RARE

  3. STRATEGY DEFINITION • SHORT DEFINITION • ROB GRANT, “STRATEGY IS WINNING” • LONGER DEFINITION • STRATEGY IS SUPERIOR SUSTAINABLE COMPETITIVE ADVANTAGE RELATIVE TO RIVALS IN THE SAME INDUSTRY • SUPERIOR = RETURN ON INVESTED CAPITAL (BEFORE TAXES) • SUSTAINABLE = LONG LASTING, HARD TO IMITATE • COMPETITIVE ADVANTAGE = SOMETHING YOU’RE CLEARLY BETTER AT; USUALLY COST LEADERSHIP OR DIFFERENTIATION • RIVALS = FIRMS WITH SIMILAR RESOURCES & MARKET POSITIONS

  4. 3 MODELS OF STRATEGY • STRATEGY AS INDUSTRY CHOICE & POSITIONING • MICHAEL PORTER’S MODELS & THINKING • GENERIC COMPETITIVE STRATEGIES MODEL • FIVE FORCES MODEL OR PORTER DIAMOND • STRATEGY AS SUPERIOR CAPABILITIES & COMPETENCIES • RBV OR RESOURCE-BASED VIEW OF THE FIRM • FRUIN’S R-C-C MODEL • DISTINCTIVE VERSUS CORE COMPETENCIES • STRATEGY AS BALANCED SCORECARD/ SUPERIOR CORPORATE GOVERNANCE • DOING BETTER THAN AVERAGE & SATISFYING MORE INSIDE/OUTSIDE STAKEHOLDERS

  5. BASIC CONCEPTS • WHAT IS A FIRM? • POLITICAL V. ECONOMIC V. SOCIOLOGICAL MODELS • SMALL V. LARGE, PRIVATE V. PUBLIC • STAND ALONE V. STAND TOGETHER • WHAT IS AN INDUSTRY? • CLUSTERING OF FIRMS ALONG SEEDS/SOURCES-TO-SALES VALUE CHAIN • INDUSTRY LIFE CYCLE MODELS • WHAT IS COMPETITION? • SATISFICING V. NON-SATISFICING MODELS • MARKET-BASED V. NON MARKET-BASED • WHAT MATTERS MOST FOR FIRM SUCCESS? • INTERNAL V. EXTERNAL FACTORS • SHORT-TERM V. LONG-TERM

  6. STRATEGY STACK • AT LEAST FIVE LEVELS • GLOBAL STRATEGY • CORPORATE STRATEGY • INDUSTRY STRATEGY (BU/DIV OR FIRM- LEVEL VIEW) • PRODUCT/MARKET STRATEGY • FUNCTIONAL STRATEGY • (ORG SUB-UNIT/INDIV STRATEGIES) • HIERARCHICAL OR NON-HIERARCHICAL MODEL?

  7. BEFORE STRATEGY • BEFORE STRATEGY CAN OCCUR • NEEDS SOME HIGHER LEVEL FOLKS WHO AGREE THAT CHANGE IS NECESSARY • NEEDS RESOURCES • NEEDS GAME PLAN FOR HOW CHANGE WILL OCCUR • NEEDS TO ENLIST MAJORITY OF ORGANIZATIONAL MEMBERS, IF A RBV STRATEGY • NEEDS DETAILED, STEP-BY-STEP MANAGERIAL, ORGANIZATION & TECHNICAL MANUAL WITH CONTINGENCY PLANS • NEEDS “NEUTRAL” WAYS OF ASSESSING SUCCESS

  8. FIRST STEPS • VISION, MISSION & GOALS STATEMENTS • LONG-TERM/YEARS 3-5 OR LONGER • MID-TERM/YEARS 2-3 • SHORT-TERM OR NOW/THIS YEAR (QUARTER) • SWOT ANALYSIS • STRENGTHS, WEAKNESSES = ORG-LEVEL • OPPORTUNITIES, THREATS = INDUSTRY-LEVEL • BEYOND SWOT OR THE STATUS QUO • SWOT ANALYSES ARE TOO IDIOSYNCRATIC AND TOO MIRED IN THE STATUS QUO • THINKING OUTSIDE THE BOX IS REQUIRED FOR SUPERIOR, SUSTAINABLE COMPETITIVE ADVANTAGE

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