Competitive Strategy
Session 1
The Concept of Strategy
Assigned Materials:
- Grant: Chapter 1
David Millán Planelles
Agenda
• Business Success & Strategy
• The concept of Strategy
• Fundaments of Strategic Analysis
Assigned material:
Contemporary Strategy Analysis, Grant R., Ed. Wiley (9th Ed), Chapter 1 (mainly pg. 15-21).
David Millán Planelles
Business Success & Strategy
Examples of successful FIRMS
David Millán Planelles
Business Success & Strategy
The underlying idea is:
“some firms are more successful than others”
In this course we aim to understand
Why ?
David Millán Planelles
Business Success & Strategy
Success & Failure
Achieving success is complex, losing it is actually very simple
An example of a firm that “lost” its success
David Millán Planelles
Business Success & Strategy
“…there is a single rule that applies to all (armies, cities and to
the body), that is never allow any of them to remain indolent or
inactive specially when they enjoy prosperity and plenty.”
Polybius (Histories: 11:25)
Companies can lose their success and leadership
David Millán Planelles
David Millán Planelles
The Concept of Strategy
Bottom line, Strategy might be a valuable support to achieve business success.
Characteristics of Strategy that are conductive to Success. Figure 1.1 (Grant)
David Millán Planelles
The Concept of Strategy
What is Strategy ?
(and what role does it play on achieving success?)
David Millán Planelles
The Concept of Strategy
The origins of the concept
Strategy comes from the Greek:
“Stratos” (military)
“Agein” (lead)
Strategy could be translated as:
“The ART of the general”
Notice the difference between:
ART vs SCIENCE
David Millán Planelles
The Concept of Strategy
“All men can see
these TACTICS
Whereby I conquer,
but what none can see
is the STRATEGY
out of which
victory is evolved"
David Millán Planelles
The Concept of Strategy
The focus of Strategic Management has evolved:
From “Planning” to “Changing”
Evolution of Strategic Management. Figure 1.4 (Grant)
Concepts and frameworks help us assess reality, we don’t force reality (my problems) to fit into frameworks.
Hence identifying the concept/s we specifically need for our analysis plays a fundamental role.
David Millán Planelles
The Concept of Strategy
Some Definitions …
… And the key aspects to remeber
“A detailed plan for achieving success in
situations such as war, politics, business, industry
or sport, or the skill of planning for such
situations”.
Cambridge Online Dictionary
In short, Strategy is about defining and achieving
objectives.
“Competitive strategy is about being different. It
means deliberately choosing a different set of
activities to deliver a unique mix of value.“
Michael Porter
Objectives
Strategy is an Art (a way of doing) and firms face
a lot of ambiguity. This opens the door to
multiple alternatives.
Alternatives
This is why it is oftentimes said that “Strategy is about Choosing”
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The Concept of Strategy
A reflection on “Value Creation”
Value for Who: Shareholder vs. Stakeholder
Source: https://medium.com/social-innovation-japan/sanpo-yoshi-japans-responsible-business-philosophy-15db037a840e
David Millán Planelles
The Concept of Strategy
A reflection on “Value Creation”
Can the packaging be more valuable than the product?
David Millán Planelles
The Concept of Strategy
A reflection on “Value Creation”
Can the packaging be more valuable than the product?
David Millán Planelles
The concept of Strategy
A reflection on “Value Creation”
Can the packaging be more valuable than the product?
• Creativity opens limitless
opportunities to “understand”
value creation.
• Creating value does not equal
solving a problem.
• Value is not only a Functional
Benefit, but an Emotional or
Expressive Benefit too.
David Millán Planelles
Fundaments of Strategic Management
Why do companies need a strategy?
David Millán Planelles
Fundaments of Strategic Management
Why do companies need an strategy ?
Strategy as
Strategy as
Strategy as
Decision Support
Coordination Device
Target (Intent)
David Millán Planelles
Fundaments of Strategic Management
Why do companies need an strategy ?
Strategy as
Strategy as
Strategy as
Decision Support
Coordination Device
Target (Intent)
• Facing Complexity
Companies face
complex (and
ambiguos) choices.
• Improving quality
Strategy improves the
quality of decision
making
David Millán Planelles
Fundaments of Strategic Management
Why do companies need an strategy ?
Strategy as
Strategy as
Strategy as
Decision Support
Coordination Device
Target (Intent)
• Consistency
Strategy creates
consistency and unity in
the organisation
This part will be covered on the
Strategy Implementation course
David Millán Planelles
Fundaments of Strategic Management
Why do companies need an strategy ?
Strategy as
Strategy as
Strategy as
Decision Support
Coordination Device
Target (Intent)
• Target as future.
Improves performance by setting high
aspirations.
Asses future development.
• Target as Purpose (not in the book).
Perhaps, even more importantly, to provide
meaning (Mission/Vision, Purpose, Intent)
David Millán Planelles
Fundaments of Strategic Management
Our Framework
A comprehensive overview to help us “Formulate” the Strategy
Describing the Grim Strategy: Present (Positioning) and Future (Direction). Figure 1.6 (Grant)
David Millán Planelles
Fundaments of Strategic Management
Defining our main framework for Strategic Analysis
The Idea
Strategy
As Positioning
Strategy
As Direction
The basic framework. Strategy as the link between the Firm and its Environment. Figure 1.2 (Grant)
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Fundaments of Strategic Management
Analysis
Defining our main framework for Strategic Analysis
The Idea
Strategy
As Positioning
Strategy
As Direction
Two ways to achieve superior profitability
(*)
So, Positioning is a CHOICE that defines
Where & How we aim to Compete
(*) Business Strategy = Competitive Strategy
David Millán Planelles
Fundaments of Strategic Management
Defining our main framework for Strategic Analysis
The Idea
Strategy
As Positioning
Strategy
As Direction
So, Positioning is a CHOICE that defines
Where & How we aim to Compete
(*) Business Strategy = Strategy
David Millán Planelles
Fundaments of Strategic Management
Defining our main framework for Strategic Analysis
The Idea
Strategy
As Positioning
So, Positioning is CHOICE that defines
Where & How we aim to Compete
Strategy
As Direction
David Millán Planelles
Fundaments of Strategic Management
Defining our main framework for Strategic Analysis
The Idea
Strategy
As Positioning
Strategy
As Direction
Defining what the company is all about.
It’s “raison d’etre”
Many similar ways to do it:
Mission / Vision, Goals, Purpose, Strategic Intent
It all deals with the idea of Objectives & Direction
David Millán Planelles
Fundaments of Strategic Management
Defining our main framework for Strategic Analysis
The Idea
Strategy
As Positioning
Strategy
As Direction
Source: Versionmuseum
David Millán Planelles
Fundaments of Strategic Management
Defining our main framework for Strategic Analysis
The Idea
Strategy
As Positioning
Strategy
As Direction
David Millán Planelles
Fundaments of Strategic Management
Defining our main framework for Strategic Analysis
The Idea
Strategy
As Positioning
Strategy
As Direction
David Millán Planelles
Fundaments of Strategic Management
Our Framework
A comprehensive overview to help us “Formulate” the Strategy
David Millán Planelles
Summary
• Strategy analysis improves decision processes, but doesn’t give answers
• Strategy analysis assists us to identify and understand the main issues
• Strategy analysis helps us to manage complexity
• Strategy analysis can enhance flexibility and innovation by supporting learning
Based on Contemporary Strategy Analysis, Robert Grant, Chapter 1
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