management
tiancaigu
1.pptSTRATEGIC MANAGEMENT
MGMT 490
Yongseok Jang, Ph.D.
Assistant Professor of Entrepreneurship
Chapter 1
What Is Strategy?
- Business model
Grow user base (individual users pay nothing)
Advertisers charged for promotion of goods/services.
Companies pay for promoted tweets.
Ads can be delivered real time.
- Twitter’s current challenges
Turnover / reshuffling in management & engineering
Struggles to grow its user base
Twitter = 300 million; Facebook = 1.5 billion
User growth continues to slow
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What Strategy Is: Gaining and Sustaining Competitive Advantage
Learning Objectives
The strategy
AFI framework
Competitive advantage
Conduct a stakeholder impact analysis
Strategy
- Strategy:
a set of goal-directed actions a firm takes to gain and sustain superior performance relative to competitors
- To achieve superior performance, companies compete for resources:
New ventures: for financial and human capital
Existing companies: for profitable growth
Charities: for donations
Universities: for the best students and professors
Sports teams: championships
Celebrities: media attention
Strategy
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A GOOD STRATEGY CONSISTS OF:
What Strategy Is: Gaining and Sustaining Competitive Advantage
Instructors:
The digital companion to this book McGraw-Hill Connect has an interactive exercise on this section of the textbook. It builds provides more background with a short Nvidia case and builds student confidence on how strategy helps build competitive advantage. (LO 1-1).
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The AFI Strategy Framework
- This model help managers plan and implement a strategy that can
Improve performance
Result in competitive advantage.
- Each of these tasks are interdependent.
- Each of these tasks can happen simultaneously.
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Strategy Is About Creating Superior Value
- The rewards of superior value creation and capture are profitability and market share.
Sam Walton (Walmart): offered lower prices.
Steve Jobs (Apple): “put a ding in the universe.”
Mark Zuckerberg (Facebook): made the world open and connected.
Larry Page and Sergey Brin (Google): made information accessible.
Sam Walton: Wal-Mart
Steve Jobs: Apple
Mark Zuckerberg: Facebook
Larry Page and Sergey Brin: Google
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Strategic Positioning
- Stake out a unique position within an industry to - value to customers, while controlling costs.
- The greater the difference between value creation and cost:
the greater the firm’s economic contribution.
the more likely it will gain competitive advantage.
Strategic Positioning Requires Trade-offs
- Managers must make conscious trade-offs.
Enables competitive advantage
- In the retail industry, for example:
Walmart: “everyday low prices”
Nordstrom’s: professional sales people in a luxury setting
Competitive Advantage
- Competitive Advantage:
a firm that achieves superior performance relative to other competitors in the same industry or the industry average
Always relative, not absolute
Competitive Advantage: Key Points
- Sustainable Competitive Advantage
Outperforming competitors or the industry average over a prolonged period of time
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Competitive Advantage: Key Points
- Competitive Disadvantage
Underperformance relative to other competitors in the same industry or the industry average
- Competitive Parity
Performance of two or more firms at the same level
Q: Please provide an example of companies that have competitive parity..
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Industry Vs. Firm Effects*
Q: Why did bitcoins (crypto currency) stock price crash so dramatically?
Q: What is the difference between IE and FE? How do they contribute to management?
Q: Can we go into depth on industry vs firm effects?
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- Stakeholders make contributions, and they also receive benefits.
Stakeholder Impact Analysis
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Stakeholder Impact Analysis
- Managers must note three stakeholder attributes:
Power
Legitimacy
Urgency
Q: how can you ensure you are taking care of all stakeholders when they may all have different requests..?
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Exhibit 1.3 Stakeholder Impact Analysis
Q: How can a stakeholder strategy affect a firm’s competitive position?
Q: Is ethical responsibility always going to over legal responsibilities?
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Exhibit 1.3 Stakeholder Impact Analysis
Q: Can you go over the SIA using one company?
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Jump to Appendix 1 long image description
Olympians generally do not turn into global phenomena. One reason is that they only are highlighted every four years; e.g., not too many people follow competitive swimming or downhill skiing outside the Olympians. How did Michael Phelps turn into a “global brand”?
Which approach to the strategy process did Michael Phelps, his coach, and manager use? Why was this approach successful?
- Strategic management principles can be applied universally.
- Strategists work in:
Small start-ups and large, multi-national companies
For-profit and nonprofit organizations
Private and public sectors
Developed and emerging economies
Implications of Strategic Management
Take Away Concepts
Explain the role of strategy in a firm’s quest for competitive advantage.
- Strategy is the set of goal-directed actions a firm takes to gain and sustain superior performance relative to competitors.
- It consists of three elements:
A diagnosis of the competitive challenge.
A guiding policy to address the competitive challenge.
A set of coherent actions to implement the firm’s guiding policy.
- A successful strategy requires three integrative management tasks—analysis, formulation, and implementation.
Take Away Concepts
Define competitive advantage, sustainable competitive advantage, competitive disadvantage, and competitive parity.
- Competitive advantage is always judged relative to other competitors or the industry average.
- To obtain a competitive advantage, a firm must either create more value for customers while keeping its cost comparable to competitors, or it must provide the value equivalent to competitors but at a lower cost.
- A firm able to outperform competitors for prolonged periods of time has a sustained competitive advantage.
Take Away Concepts
Differentiate the roles of firm effects and industry effects in determining firm performance.
- A firm’s performance is more closely related to its managers’ actions (firm effects) than to the external circumstances surrounding it (industry effects).
- Firm and industry effects, however, are interdependent. Both are relevant in determining firm performance.
Take Away Concepts
Conduct a stakeholder impact analysis.
- Stakeholder impact analysis is a five-step process that answers the following questions for the firm:
Who are our stakeholders?
What are our stakeholders’ interests and claims?
What opportunities and threats do our stakeholders present?
What economic, legal, and ethical responsibilities do we have to our stakeholders?
What should we do to effectively address the stakeholder concerns?
