What is strategy?
Central, integrated, externally focused concept of how a firm reaches objectives
What is the main question of strategy?
How do we maintain a competitive advantage?
What are the five elements of strategy?
Staging: What will be our speed and sequence of moves?
Arenas: Where will we be active?
Vehicles: How will we get there?
Economic Logic: How will we obtain our returns?
Differentiators: How will we win?
What are the five forces that shape strategy?
1) Threat of new entrants
2) Threat of substitutes
3) Bargaining power of suppliers
4) Bargaining power of buyers
5) Industry Rivalry
What factors reduce the threat of new entrants?
- economies of scale
- switching costs
- capital requirements
- brand loyalty/reputation
- access to distribution channels
- government regulation
- expected retaliation
When do suppliers have bargaining power?
- there are only a few suppliers
- the industry is not an important customer to the supplier
- differentiation makes it costly for customers to switch suppliers
- suppliers can threaten to integrate forward
Why isn’t the pursuit of operational effectiveness an effective strategy?
1) Advantages are temporary, not sustainable
2) Increased operational effectiveness simply raises the bar for all competing firm
When do buyers have bargaining power?
- few buyers and/or buyers purchase in large quantities
- the product is undifferentiated (many substitutes)
- can threaten to integrate backward
- they are price sensitive
What does the intensity of industry rivalry depend on?
- number of and similarity among competitors
- height of industry exit barriers
- fixed costs are high and/or product is perishable
How can we analyze competitive advantages internally?
By looking at internal resources
- retrospectively: resources to protect
- prospectively: resources to build
What makes a strategic resource?
- in-substitutable
- inimitable
- competitively superior
- scarce
What is the difference between top-down intended and bottom-up emergent strategy?
Top-Down Intended Strategy is a planned, structured approach set by leadership, focusing on control and long-term goals.
Bottom-Up Emergent Strategy evolves organically responding to the environment and unpredictable events prioritizing flexibility and adaptation.
What is vertical integration?
Vertical integration is a business strategy where a company expands its control over multiple stages of its supply chain. This can be backward integration or forward integration.
What is forward integration?
Taking control of a process forward in the supply chain
What is backward integration?
Taking control of a process backward in the supply chain
