Shuping Li
Assistant Professor of Strategy
Jan 23 , 2019
Shuping Li
Assistant Professor of Strategy
Jan 25 , 2019
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A strategy is a choice
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Yet, not all the choices are strategic
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You have exactly 2 weeks to get to the claims office.
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If you arrive late and attempt to secure the property (with
the owners knowing you have visited it), there will probably
be an auction at which you could be easily outbid.
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You’ve remained relatively healthy except for an injured left
hand, which can suddenly become quite weak.
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The weather is only moderately favorable. You will know
within 48 hours if the storm is coming, and whether the
mountain is passable (if the storm comes) about one day
later.
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Option
#1
(wait 3-4 weeks)
#2
(over top)
#3
(valley)
#4
(wait 3 days)
Min. Time
Max. Time
Outcome
No $$$s
Personal Risk
None
Option 1: wait 3-4 weeks until the weather
warms up and enjoy a safe trip home.
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Option
#1
(wait 3-4 weeks)
#2
(over top)
#3
(valley)
#4
(wait 3 days)
Min. Time
7 days
Max. Time
10 days
Outcome
Personal Risk
No $$$s
None
For sure $$$s
Life
Option 2: go over the mountains.
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Option
#1
(wait 3-4 weeks)
#2
(over top)
#3
(valley)
#4
(wait 3 days)
Min. Time
Max. Time
Outcome
Personal Risk
No $$$s
None
7 days
10 days
For sure $$$s
Life
14 days
21 days
Maybe $$$s
None
Option 3: go through the valley passes
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Option
#1
(wait 3-4 weeks)
#2
(over top)
#3
(valley)
#4
(wait 3 days)
Min. Time
Max. Time
Outcome
Personal Risk
No $$$s
None
7 days
10 days
For sure $$$s
Life
14 days
21 days
Maybe $$$s
None
10 days thru
top
13 days thru
top
$$$, if no storm
Some risk for over
the mountains
17 days thru
valley
24 days thru
valley
No $$$s, if storm
Option 4: wait 2-3 days, take #2 if weather permits;
if not, take #3.
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The Environment “Threats & Opportunities”
Utilization of resources
and capabilities“Strengths & Weaknesses”
Performance
Choice
Inherent attitude toward risk
Trade-off among
alternatives
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Option
#1
(wait 3-4 weeks)
#2
(over top)
#3
(valley)
#4
(wait 3 days)
Min. Time
Max. Time
Outcome
Personal Risk
No $$$s
None
7 days
10 days
For sure $$$s
Life
14 days
21 days
Maybe $$$s
None
10 days thru
top
13 days thru
top
$$$, if no storm
Some risk for over
the mountains
17 days thru
valley
24 days thru
valley
No $$$s, if storm
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¡
4 days later you are halfway to the claims office.
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You’ve pushed too hard and sprained your ankle.
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Pat, an old friend on a trapping expedition, comes
along and takes you to a cabin.
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Pat, you suspect, both need and desire financial
independence.
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Option
#1
(Go with Pat )
#2
(Go alone)
#3
(Send Pat)
Min. Time
Max. Time
Outcome
Personal Risk
10 days
14 more days
20% likely
Moderate
15 days
19 more days
0%
Low
8 days
9 more days
50% likely
High
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The Environment “Threats & Opportunities”
Competitive advantage
RELATIVE to rivals
management
Utilization of resources
and capabilities“Strengths & Weaknesses”
STRATEGY
Inherent values &
attitude toward risk
Trade-off among
strategic alternatives
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¡
Is there a competition involved?
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Is the performance an absolute outcome or a
relative advantage?
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Can the performance be influenced through
“management” of internal and external
conditions?
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¡
A set of major choices managers make to utilize
a firm’s internal resources to enhance the firm’s
competitive advantage in its external
environments.
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Corporate strategy
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Business strategy
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Functional strategy
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¡
Competitive advantage: The ability to obtain a
profitability greater than the average, usually in
an industry
§ Shareholder return (ROE)
§ Investment return (ROIC, ROA)
§ Changes in stock price
§ Profit growth
§ Sales growth
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Sustained competitive advantage: A firm
maintains competitive advantage for a long
period of time
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Source: Bloomberg.com
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Source: The Economist
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Source: yahoofinance.com
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1990
1) Merck
2) Philip Morris
3) Rubbermaid
4) Procter & Gamble
5) 3M
6) PepsiCo (tie)
7) Wal-Mart (tie)
8) Coca-Cola
9) Anheuser Busch
10) DuPont
2000
1) General Electric
2) Microsoft
3) Dell Computer
4) Cisco Systems
5) Wal-Mart
6) Southwest Airlines
7) Berkshire Hathaway
8) Intel
9) Home Depot
10) Lucent Technologies
2010
1) Apple
2) Google
3) Berkshire Hathaway
4) Johnson & Johnson
5) Amazon.com
6) Procter & Gamble
7) Toyota Motor
8) Goldman Sachs
9) Wal-Mart
10) Coca-Cola
The Fortune “Most Admired” Survey
Source: http://money.cnn.com/magazines/fortune/mostadmired/2010/full_list/
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What to
sell?
Who to
serve?
How to
win?
Choices about Who, What, How
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Who are the
interviewers
What to sell
about myself?
How to deliver
my unique
value to
outperform?
Choices about Who, What, How
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¡
16% sales from the AsiaPacific region v. 19% from
the U.S. during 2013 fiscal
year.
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Trying to return to growth
after declining phone
shipments dragged it to net
losses in the past 3 years
BlackBerry CEO John Chen
“I’m here this time to look at what
opportunities there may be. We have not really
focused on this market. It’s a huge market but
it’s a very highly competitive market too.”
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What
needs?
Who to
serve?
Enterprises,
government
How to
win?
security,
encryption ,
and privacy
Partnership:
licensing,
distribution
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Trade-off
§ Choose what not to do
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Overarching and integrated
§ “Big Picture” and “Fit”
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Unique
§ Position differently from the competitors
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Sustainable
§ Not easily reversible; sustainable competitive advantage
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¡
Tactics: maneuvers for pursuing an objective
associated with a strategy
§ Below the shoulders
§ Short-term
§ Flexible to specific market changes
Necessary but NOT sufficient
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¡
Operational effectiveness: Performing similar
activities better, cheaper, faster, or wider than rivals
§ Not unique in “how to do”
§ Temporary performance
Necessary but NOT sufficient
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¡
Internal organizational arrangements:
compensation policies, information systems, training
programs
§ Not involving external environment
Necessary but NOT sufficient
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External
Analysis
Mission
Strategic
Choice
Objectives
Internal
Analysis
Strategy Formulation
Strategy
Implementation
Competitive
Advantage
Strategy
Implementation
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External
Analysis
Mission
Strategic
Choice
Objectives
Strategy
Implementation
Competitive
Advantage
Internal
Analysis
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WHY? What is our purpose? What are we
about?
§ Present
§ Describes the major product/services/markets
§ Externally focused
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Provides the framework or context within
which strategies are formulated
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Mission Statement
Vision
Our Mission is to discover, design and
deliver Innovation-driven Education
and Scholarship (IDEAS) of
international standing that has an
impact on students, organizations and
the understanding of business issues.
To be a leading
business school in Asia.
Present
Future
Who we are, what we do, and
why we are here!
Where are we going?
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¡
Not necessary…
§ Many firms don’t have a mission (e.g., Ruby’s)
§ Weak sense of how a business competes or how it
delivers value to a customer
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But, can be very useful (if well written)
§ Helps differentiate a firm from its competitors at the
highest level
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“To be the happiest place on
earth”
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“To organize the world’s
information and make it
universally accessible and
useful.”
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“To help people save money
so that they can live better.”
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“To build a place where
people can come to find and
discover anything they might
want to buy online.”
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“A computer on every desk
and in every home.”
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External
Analysis
Mission
Strategic
Choice
Objectives
Strategy
Implementation
Competitive
Advantage
Internal
Analysis
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Timely
§ Fixed time frame (e.g., 1 yr)
§ Both long-term and short-term
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Measurable
§ Indicators (e.g., sales growth) that reflect progress
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Specific
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Realistic
§ Challenging but achievable (e.g., increase ROA by 2%)
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External
Analysis
Mission
Strategic
Choice
Objectives
Strategy
Implementation
Competitive
Advantage
Internal
Analysis
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External analysis
§ Identify strategic opportunities and threats
▪ Industry environment
▪ National environment
▪ Socioeconomic or macro-environment
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Internal analysis
§ Identify strengths and weaknesses of firm
resources and capabilities
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External
Analysis
Mission
Strategic
Choice
Objectives
Internal
Analysis
Strategy
Implementation
Competitive
Advantage
Function level strategy
How to support
a business strategy?
Business level strategy
How to position a
business in a market?
Corporate level strategy
Which businesses to enter?
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Implementation Levers:
ØOrganization structure
ØOrganizational control
ØOrganizational culture
External
Analysis
Mission
Strategic
Choice
Objectives
Strategy
Implementation
Competitive
Advantage
Internal
Analysis
Balance between control and incentive
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Feedback
External
Analysis
Mission
Strategic
Choice
Objectives
Strategy
Implementation
Competitive
Advantage
Internal
Analysis
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1. What are the typical views of Strategy in the U.S. vs.
in Japan?
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2. Why did the British demise in the world’s motorcycle
industry diminish U.S.?
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3. Summarize Honda’s success in Japan and in the U.S.
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4. According to BCG report, what are the major
contributors to Honda’s success in the U.S.?
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5. According to the article, what are the real reasons for
Honda’s success?
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6. What are the implications for firms’ strategy making?
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¡
Major competitors in the U.S. motorcycle market
prior to 1960s: Harley-Davidson, Tiumph and
Norton, and Moto-Guzzi
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From 1959 to 1973, the British share of the U.S.
motorcycle industry had dropped from 49% to 9%,
while Honda’s share increased from 4% to over 63%
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1975, BCG presented Strategic Alternatives for the
British Motorcycle Industry
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Deliberate (design) view
§ Logical, rational analysis of the firm and the environment
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§
§
§
Communicated downwards by TMT
Conscious redefinition of the market—region by region
Aggressive advertising campaigning
Scale economies
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Planned to sell 250-350cc motorcycles to
“black leather jacket” customers
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Product related problems arose
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Honda executives rode around Los Angeles on 50cc
bikes
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Eventually, attracted new types of customers for its
small bikes and became phenomenally successful
§ $500k to $77m from 1960 to 1965
§ 63% of the lightweight motorcycles in 1966
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Deliberate (design) view
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§
§
§
§
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Logical, rational analysis of the firm and the environment
Communicated downwards by TMT
Conscious redefinition of the market—region by region
Aggressive advertising campaigning
Scale economies
Emergent (process) view
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§
§
§
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Strategy “emerges” from an unplanned pattern of decisions
Lower level managers and employees
Adaptation and continuous learning
Key segmentation (young families)– happened by chance
Made by lower level employees
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Realized strategy consists of both intended and emergent strategies.
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