02-STRAMAN (What and Why of Strategy)
02-STRAMAN (What and Why of Strategy)
02-STRAMAN (What and Why of Strategy)
McGraw-Hill/Irwin
How to attract and please customers. How to compete against rivals. How to position the firm in the marketplace to
market conditions.
How to manage each functional piece of the
business.
How to achieve the firms performance targets.
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FIGURE 1.1
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Core Concept
A companys strategy consists of the competitive moves and business approaches management has developed to attract and please customers, compete successfully, capitalize on opportunities to grow the business, respond to changing market conditions, conduct operations, and achieve performance objectives.
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Core Concept
A firm achieves sustainable competitive advantage when an attractively large number of buyers develop a durable preference for its products or services over the offerings of competitors, despite the efforts of competitors to overcome or erode its advantage.
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Concept to Action
Mimicking the strategies of successful industry rivalswith either copycat product offerings or efforts to stake out the same market position rarely works.
A creative, distinctive strategy that sets a firm apart from rivals and yields a competitive advantage is a firms most reliable ticket for earning above-average profits.
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low-cost provider
broad differentiation
focused low-cost
focused differentiation
best-cost provider
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Competitors make unexpected moves The needs and preferences of buyers change New market opportunities emerge
strategy evolves:
Incrementally or dramatically
Proactively and adaptively
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Concept to Action
Changing circumstances and ongoing management efforts to improve the strategy cause a companys strategy to evolve over timea condition that makes the task of crafting a strategy a work in progress, not a onetime event.
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FIGURE 1.2
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Model
service to customers that will generate revenues sufficient to cover costs and yield an attractive profit.
Business
Model Elements
structure will allow for acceptable profits given the pricing tied to its customer value proposition.
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Core Concept
A firms business model sets forth how its strategy and operating approaches will create value for customers, while at the same time generate ample revenues to cover costs and realize a profit. The two elements of a firms business model are (1) its customer value proposition and (2) its profit formula.
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Redbox
Economical 24-hour movie rentals and purchases that could be picked up at conveniently located DVD kiosks. Revenue Generation: Customers could rent DVDs and purchase DVDs from Redboxs DVD vending machine kiosks. Cost Structure: Fixed and variable costs associated with the kiosk purchases and deployment, DVD acquisitions, licensing fees and revenue sharing agreements, website operation and maintenance, kiosk stocking, and administrative activities. Profit Margin: Redboxs profitability was dependent on generating sufficient revenues from DVD rentals and sales to cover costs and provide for a healthy bottom line.
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Fit
Wettbewerbsvorteil
Performance
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Concept to Action
A winning strategy must fit the firms external and internal situation, build sustainable competitive advantage, and improve company performance.
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requires good strategic thinking and good management of the strategy-making, strategyexecuting process.
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