Copyright Jeff Dyer, 2001 An Introduction to Strategic Management Key Issues in Strategic Management

Copyright Jeff Dyer, 2001

An Introduction to Strategic ManagementAn Introduction to Strategic Management

Key Issues in Strategic Management

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Copyright Jeff Dyer, 2001

Strategic Management IssuesStrategic Management Issues

• What does it mean to have a strategy?

• What is the “goal” of strategic management?

• How can you evaluate a “good” or “bad” strategy?

Copyright Jeff Dyer, 2001

Strategic ManagementStrategic Management

Strategy Profit

Strategy: goal and set of policies designed to achieve competitive advantage in a particular marketplace

Competitive Advantage: ability to transform inputs into goods andservices at a maximum profit on a sustained basis, better than competitors

FirmCompetitive Advantage

ShareholderValue

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The Goal of Strategy: Imperfect CompetitionThe Goal of Strategy: Imperfect Competition

• Numerous sellers and buyers (no monopolies)

• Perfect Information

• Homogenous products

• No Barriers to entry or exit

Normal/Average Profits

• Few competitors, numerous suppliers and buyers

• Asymmetric Information• Heterogeneous Products• Barriers to entry

Supernormal Profits

Perfect Competition Imperfect Competition

Copyright Jeff Dyer, 2001

Mini-Case: Marketing Strategy at DeltaMini-Case: Marketing Strategy at Delta

In the mid 1980s Delta’s market researchers found that customers (particularly business customers) were strongly influenced to choose a particular airline by the airline’s frequent flyer program. Consequently, to motivate customers to choose Delta, they teamed up with American Express (an exclusive arrangement) to offer a special program: customers could receive triple miles if they would fly on Delta and purchase the tickets using the American Express card.

How would you evaluate Delta’s strategy? (Good or bad?)

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Evaluating Good StrategyEvaluating Good Strategy

• What is the cost of the strategic initiative?

• How long will it take for competitors to replicate the strategic initiative?

• What is the Barrier to Imitation???What is the Barrier to Imitation???

Copyright Jeff Dyer, 2001

Strategic ManagementStrategic Management

• Fundamental Assessment of:

– What business and markets should we compete in?

– What are the key success factors in this business?

– What resources and capabilities are necessary for competitive advantage?

Copyright Jeff Dyer, 2001

BUILDING COMPETITIVE ADVANTAGEBUILDING COMPETITIVE ADVANTAGE

Examples of Competitive Success

CostChanging the

Rules of the Game Differentiation

• Southwest Airlines

• Wal-Mart

• IKEA

• Amazon.com (Internet model)

• Harley Davidson

• Toyota (Quality)

Copyright Jeff Dyer, 2001

Strategy Module

• Focus:– Introduction to strategic models/frameworks for creating

sustainable competitive advantage• How can we better understand and address the

challenges facing firms in the 2000s?• What models/frameworks can we as managers use to

help guide our decision making as we respond to these challenges?

• Sessions are meant to be discussions, not lectures– Focus on thinking strategically