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Copy of SM - S1 - What is Strategy?
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Strategic Management
What is Strategy?
Joe Arun, SJ
1885
Herman Ebbingghaus did a psychographic experiment
DIFFERENT
Three Letter Trigrams
- RUP
- SFH
ROTE
nonsense syllables did not create any impact in one's life - but anything that is a personal significance made an impact in his/her life
1. the deeper the personal significance the more reliably something learned
SIGNIFICANCE
2. putting the individual at the heart of learning process by doing (teaching, learning, assessing) things that matter in individual lives, YOU, F19
Strategic Management
1. know what it is: Basics
2. understand how they apply to you personally, and in your future work in companies
STM
3. apply to contexts - companies...
4. learn strategic thinking
5. be successful by achieving goals
Why these companies EXCEL?
4 BEST Strategies
TESLA valued twice as much as Ford and 44 % more than GM
Their unconventional strategy certainly seems to be working, but why???
Best Business Strategies
More..
Tesla Playing the Long Game
What we can learn from
TESLA
More...
- Their business strategy was actually forced upon them.
- In reality there was no way that they could have created a cost-effective mass-market electric car without economies of scale
- What they were building was so unique they couldn't rely on outsourcing or partnerships to gain those economies of scale.
What we can learn from
TESLA
More....
- All strategies required vast quantities of capital and external fund-raising
(Elon is rich, but not quite rich enough to fund it all himself!).
More...
- That's where the marketing genius of Tesla kicks in. Except that for the most part, their marketing efforts are only partially about the cars themselves
What we can learn from
TESLA
- Its Elon Musk's personal brand that got the investment needed.
- He's smart, divisive, wild and ambitious.
- Whatever you think about Elon Musk, you'd be hard pressed to traverse more than a couple of consecutive news cycles without seeing him on the front page.
- That's a fantastic recipe for getting the attention of investors.
Best Business Strategies
AirBnb
Forgetting all about Scalability
History - AirBnb
History
The first Airbnb rental that ever took place, was the renting out of 3 air mattresses on the floor of co-founders Brian and Joe's apartment. They made $80 per guest. It seemed like a great idea for a startup, so they put up a website and started inviting other people to list their own mattresses for hire.
History - AirBnb
More....
They got a few bookings here and there - but for the most part, things didn't go well. So much so, that in 2008, they resorted to selling cereal to make some extra cash.
History - AirBnb
More....
The co-founders grabbed their camera, and went to knock on the doors of each and every one of their NYC listings. When someone answered the door, they would persuade the owner to let them in, and then take a ton of photographs of the inside.They touched up the photos a bit and uploaded them to the website in place of the old photos the owners had taken. Within a month of starting this strategy - sales doubled.
Then tripled. Then....well, the rest is history.
What we can learn from
AirBnb
More.....
The most commonly stated principles of building a tech startup - that you must make everything scalable.
What Brian & Joe did was anything but scalable. But it got them enough traction to prove that their concept could work. Later, they did find a way to make this solution scalable, by hiring young photographers in major locations and paying them to take professional photos of owner's listings
(at no charge to the owner).
Best Business Strategies
TOYOTA
Humility can be the Best Business Strategy
What we can learn from
TOYOTA
More......
What makes this particular story so unique
Toyota spent years studying the production lines of American car makers such as Ford. They knew that the US car industry was more advanced and more efficient than the Japanese one. So they waited.
What we can learn from
TOYOTA
More....
They studied their competitors and tried to copy what the Americans did so well. They blended these processes with the strengths of their own, and came up with something even better.
Toyota proved that knowing their own weaknesses can be the key to success - and be one of the best business strategies you can ever deploy.
What can we learn from
TOYOTA
More...
Not just that. Can you name a single famous executive at Toyota? I can't. And one of the reasons is that Toyota's number one corporate value is humility.
Not even the most senior plant executives have named car spaces of their own. The humility that helped them to crack the US market runs deep in the organization, from the executives to the assembly workers.
Best Business Strategies
PAYPAL
Daring to Challenge the Status Quo
The don't mess with Industry
Banking
There are certain industries that you just don't mess with. Industries like Aerospace, big Supermarkets, Semi Conductors, and Banking. Actually, banking is probably the hardest industry of all to try to disrupt, because the barriers to entry are huge.
You need mountains of capital, a ton of regulatory approval, and years of building trust with your customers around their most important asset - their CASH!
PAYPAL
didn't seem to care
More....
Banks are old, insanely powerful and almost impossible to displace.
But for some crazy reason - PayPal didn't seem to care.
The name that strikes the most fear into the executives of the banks is PayPal.
What we can learn from
PAYPAL
Pillars to Success
There are two huge pillars of success to PayPal's story.
The first - they got a fairly lucky break when they accidentally became the favored payment provider for eBay transactions.
eBay were smart enough to mostly leave them alone, and their new-found sense of boldness saw them strike a series of deals with other online retailers to try and replicate the success they'd had with eBay.
What can we learn from
PAYPAL
More......
PayPal commends an amazing 20% market share of online payments in the US - and 62.7% of the eWallet space.
Almost all of that growth has come from their direct relationships with merchants large and small.
Course PLAN
Course Plan
Analyze the main structural features of an industry and develop strategies that position the firm most favourably
Recognize the different stages of industry evolution and recommend strategies appropriate to each stage
AOL
- - - - - - - - -
Assurance of Learning (AOL)
Appraise the resources and capabilities of the firm in terms of their ability to confer sustainable competitive advantage and formulate strategies that leverage a firm’s core competencies.
Demonstrate understanding of the concept of competitive advantage and its sources and the ability to recognize it in real-world scenarios.
More....
- - - - - - - - -
Assurance of Learning (AOL)
Distinguish the two primary types of competitive advantage: cost and differentiation and formulate strategies to create a cost and/or a differentiation advantage.
6. Formulate strategies for exploiting international business opportunities including foreign entry strategies and international location of production.
More....
- - - - - - - - -
Assurance of Learning (AOL)
7. Recognize strategic decisions that present ethical challenges and make appropriate recommendations for ethical decision-making.
To expose the participants to the theoretical and practical aspects of strategic management
To impart the participants , basic concepts of Strategic Management process.
Course Objectives
Course
Objectives
- - - - - - - - -
To make them learn how firms formulate, implement and evaluate corporate business strategies.
To equip the participants with the tools to analyze the industry.
Learning Objectives
a
1. Learn how to think strategically?
a
2. Learn the application of analytical tool kit
Learning
Objectives
3. Learn to plan , execute and control a strategy
a
4. Learn Managerial Skills
a
5. Learn to be ethical and deliver excellent performance
f
Course Content
1. Introduction to Strategic Management
4. Formulating Strategies
Course
Content
2. Corporate Strategy:
3. Building Competitive Advantage
Guide to Case Analysis
1. Rapidly read the assigned case and other materials to gain a general understanding of the industry, the firm, and the general competitive situation and issues.
Case
Analysis
2. Carefully review the discussion questions provided for the session for clues as to what issues require special attention.
Guide to Case Analysis
3. Carefully re-read the case, taking notes that sort information, facts, and observations under a number of relevant headings. Use the discussion questions to guide your own thinking about the issues.
More...
4. Formulate theories or hypotheses about what is going on as you read ("the company loses money on small orders"), modifying or rejecting them as new information surfaces ("Table 2 shows that shipping costs per unit are higher for small orders, but only for long-distance shipments").
Guide to Case Analysis
More....
5. Perform quantitative analyzes, “crunching” whatever numbers are available. It is also very important to provide quantitative support wherever possible, particularly when exploring various hypotheses as to the nature and importance of certain phenomena.
It is usually worthwhile to identify trends in the firm or industry, preferably with a quantitative measurement. Some of these trends, often very important ones, will not be flagged in the text of the case.
Guide to Case Analysis
6. Prepare definitive conclusions before you come to class concerning the issues raised in the discussion questions.
More....
7. Bring your detailed notes with you to class to help guide your interventions in class discussions.
Guide to Article Analysis
1. What is the purpose of this article? What problem or issue does it address?
Article
Analysis
2. What are the basic assumptions/assertions/values that underlie this piece? (View of human nature;
purpose of organization--e.g. economic efficiency vs. human satisfaction; degree to which
planning is possible etc.) Are these assumptions explicit or implicit?
Guide to Article Analysis
3. What is the basic argument/thesis? What are the major findings and conclusions?
More...
4. What is the nature of the evidence presented in support of the argument/thesis? Are the conclusions well supported?
Guide to Article Analysis
5. What problems or concerns are you left with?
More...
6. How does the article relate to other articles you have read and to your own knowledge and experience? How does it contribute to your overall understanding of business strategy?
2. Gather Information about the Industry on competitors, market share, market growth, opportunities, challenges
3. Analyse the Industry structure, performance and conclude on the basis about the attractiveness of the industry. Use tools from the tool kit ( SWOT, 5 force model, Mullins model, BCG, GE, etc)
Live
Project
1. Choose an Industry
4. Select two competitors from the same industry with different performance/strategy/size.
Live Project
7. Compare the internal and external environment of two firms
6. Evaluate the current performance of both the firms. How strategy was helpful for financial performance in relation to the Industry and competitors.
Contd.
8. Recommend for each of them the strategies and how to execute it.
5. Identify the current strategy of the firm, internal resources, capabilities. How the competencies are helping the firm to compete In the industry and perform.
Live Project
How we assess your learning?
- basics of the subject (concepts, theories, models)
- application of the concepts in successful companies/ strategies
- developing strategic thinking
assessment
- group
- individual
- cases
- articles
- games
Why study Strategy?
Effort
Hard Work
In the old days, hard work, commitment, effort, dedication, and “following the rules” were how you succeeded. It worked, but it was very, very costly in all areas: physically, emotionally, and spiritually.
Commitment
What is STRATEGY
Dedication
However, in the new millennium, smart people are no longer willing to suffer for success- not even a little bit. The answer? STRATEGIES : CREATIVE CUSTOMIZED CLEVER strategies. Strategies are the keys to success, no matter what the goal.
What is Strategy
“deliberately choosing a different set of activities to deliver a unique mix of value"
-Michael Porter
What is Strategic Positioning??
“Strategic positioning attempts to achieve sustainable competitive advantage by preserving what is distinctive about a company. It means performing different activities from rivals, or performing similar activities in different ways.”
Strategic Positioning
Three key principles underlie strategic positioning
1. Strategy is the creation of a unique and valuable position, involving a different set of activities
3 key principles
2. Strategy requires you to make trade-offs in competing—to choose what not to do.
3. Strategy involves creating “fit” among a company’s activities.
The Five Competitive Forces That Shape Strategy
5 forces
To sustain long-term profitability you must respond strategically to competition. And you naturally keep tabs on your established rivals
How Competitive Forces Shape Strategy??
Savvy customers can force down prices
by playing you and your rivals against
one another.
How?
- - - - - - - - -
Powerful suppliers may constrain your
profits if they charge higher prices
Aspiring entrants, armed with new capacity and hungry for market share, can
ratchet up the investment required for
you to stay in the game
Substitute offerings can lure customers
away.
What is Strategic Thinking ?
Strategic Thinking
Strategic Thinking is a higher level approach to issue identification and resolution. It enables a concurrent view of the start line, the goal line, and all the relevant features in between, and at the same time.
Articles Quiz
Diagnose, forecast, search, choose, commit
1. What are the 5 core building blocks of strategy that help companies make strategic choices and carry them through to operational reality?
2. In which block the strategy is selected and the company needs to create an action plan and reallocate resources to deliver it?
Commit
QUIZ
Re-create
3. If new competitors arrive or markets unexpectedly shift companies must ________ their strategies
Revisiting
4. Formulating good strategies typically involves __________fundamental and deeply held beliefs about a company’s past and future.
5. What are the three types of Strategic postures?
Shaping, adapting, and
reserving the right to play.
Case Summary:
Volkswagen strategy 2025: Shifting gears in disruptive times
CASE
Volkswagen was being challenged by tectonic changes in the automotive industry.
Having burnt its hands in the Diesel gate scandal, Volkswagen is trying hard to clean its dented image. For this, the company has devised “Strategy 2025,” to reshuffle the company's existing formal and informal structures and restructure the automaker.
The new chief executive officer faced huge expectations concerning the effectiveness and sustainability of Strategy 2025. Was the automaker doing enough to transform into a competitive mobility company?