Ch 01-Strategy and Its Importance

8/18/2019 Ch 01-Strategy and Its Importance

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The Concept and theThe Concept and the

Importance of StrategyImportance of Strategy


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Strategy: Business and Military Strategy: Business and Military

The termThe term strategystrate

gy derives from the Greekderives from the Greekwordword strategia,strate

gia, meaning “generalship”meaning “generalship”Its words from stratos, meaning “army”, andIts words from stratos, meaning “army”, and–ag, “to lead”–ag, “to lead”Business and military share commonBusiness and military share commonconcepts of strategyconcepts of strategy

The overall plan for deploying resourcesThe overall plan for deploying resourcesto establish a favorable positionto establish a favorable position

owever, both have di!erent purposesowever, both have di!erent purposes"ilitary# the ob$ective of war is %usually&"ilitary# the ob$ective of war is %usually&to defeat the enemyto defeat the enemyBusiness# seeking coe'istence rather thanBusiness# seeking coe'istence rather thanthe destruction of competitorsthe destruction of competitors


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Strategic ThinkingStrategic Thinking

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(hat)s a company)s presentsituation*

(here does the company need togo from here*

ow should the company getthere*


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A Logic Sequence of Thinking A Logic Sequence of ThinkingStrategically and What WillStrategically and What Will

Managers to oManagers to o

(hat)s thecompany)s

presentsituation*

To evaluate

internal ande'ternalenvironment ofthe company –

industryconditions and its

resourcesstrength and

(here doesthe

companyneed to gofrom here%present&*

To push managersmaking choices

about the directionin which the

company is headed+market, customers,

and products

ow shouldthe

companyget there*

To challengemanager to

craft ande'ecutestrategy

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company)s answer to “how

will we get there*” is itsstrategy


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A Company !s Strategy A Company !s Strategy

““ ow” to achieve the intended directionow” to achieve the intended direction%vision and goals-ob$ectives&%vision and goals-ob$ectives&

The strategy contains as followsThe strategy contains as follows

"anagerial commitment on resources to reali.e"anagerial commitment on resources to reali.ethe strategythe strategy

/ompetitive moves which aims to establish/ompetitive moves which aims to establishfavorable positions in the market %competition &favorable positions in the market %competition &

Business approaches which suit resourcesBusiness approaches which suit resourcesstrength and capabilitiesstrength and capabilities


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"" Without a strategy the Without a strategy theorgani#ation is like aorgani#ation is like a

ship $ithout a rudder%&ship $ithout a rudder%&

'(oel )oss and Michael *ami+'(oel )oss and Michael *ami+


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"" Strategy means makingStrategy means makingclear,cut choices a-outclear,cut choices a-out

ho$ to compete%&ho$ to compete%&

'(ack Welch'(ack Welch.ormer C/01 2eneral /lectric+.ormer C/01 2eneral /lectric+


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Choosing Strategies forChoosing Strategies forCompaniesCompanies

(ith the similar intended(ith the similar intendeddirections, companies would havedirections, companies would havedi!erent strategies to achieve it,di!erent strategies to achieve it,

becausebecause ##

individual strategies have to 0t withindividual strategies have to 0t withthe company)s situation# resourcethe company)s situation# resourcestrengths and capabilitiesstrengths and capabilities

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Television %broadcasting& IndustryTelevision %broadcasting& IndustryT1 2ne, "etro T1, 3/TI, GlobalT1, 4/T1,T1 2ne, "etro T1, 3/TI, GlobalT1, 4/T1,T13IT13I

irlines 4ervices irlines 4ervicesGaruda, ir sia, "andala, 4riwi$aya, BataviaGaruda, ir sia, "andala, 4riwi$aya, Batavia

3etail Industry3etail Industry/arrefour, lfa "art, "irota 5ampus, /ircle/arrefour, lfa "art, "irota 5ampus, /ircle

5, Indomaret65, Indomaret6Telecommunication IndustryTelecommunication Industry

Telkomsel, 78, 9siaTelkomsel, 78, 9sia

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irlines 4ervices "arket irlines 4ervices "arket:urposes# to ;y passenger6 to attract:urposes# to ;y passenger6 to attract


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3etail Industry3etail Industry/arrefour, lfa "art, "irota 5ampus,/arrefour, lfa "art, "irota 5ampus,/ircle 5, Indomaret/ircle 5, Indomaret

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4ustainable strategy re=uired4ustainable strategy re=uiredto create competitiveto create competitive

advantage is based on theadvantage is based on thefollowing criteria#following criteria#

aving been hard to be copyaving been hard to be copy3elying on distinctive resources3elying on distinctive resources

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Strategy to 2enerates Competiti3eStrategy to 2enerates Competiti3e Ad3antage Ad3antage

4trive to be the industry)s low+cost provider4trive to be the industry)s low+cost provider AirAsia AirAsia

2utcompete rivals on a key di!erentiating feature2utcompete rivals on a key di!erentiating feature

Mercedes-Benz Mercedes-Benz – 9ngineering design and– 9ngineering design andperformanceperformance

>ocus on a narrow market niche>ocus on a narrow market niche

StarbucksStarbucks – premium co!ees and co!ee drinks– premium co!ees and co!ee drinks

3elying on resource strengths not easily imitated3elying on resource strengths not easily imitatedSony Sony – innovative electronic products– innovative electronic products


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4ince the dynamic nature of4ince the dynamic nature ofcompetition, strategies could becompetition, strategies could be

changed to respond with itchanged to respond with it

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Strategies to /3ol3e:Strategies to /3ol3e: 4roacti3e4roacti3eand )eacti3eand )eacti3e


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Why o Strategies /3ol3e5 Why o Strategies /3ol3e5

company)s company)s strategy strategy is ais a work in progress andwork in progress anddynamic because of competitiondynamic because of competition

/hanges may be necessary to react to/hanges may be necessary to react to

Technological breakthroughs# e+businessesTechnological breakthroughs# e+businesses

>resh moves of competitors# local players %electronic>resh moves of competitors# local players %electronicproduct+competitive prices&product+competitive prices&

9volving customer preferences+ healthy and saving9volving customer preferences+ healthy and savingenergy productenergy product

9merging market opportunities# the rising9merging market opportunities# the risingopportunities in sia marketsopportunities in sia markets?ew ideas to improve strategy# innovative product in?ew ideas to improve strategy# innovative product in

ITIT


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What Is a Business What Is a BusinessModel5Model5

business model addresses business model addresses

““ How do we make money in this How do we make money in thisbusiness?”business?”

Simp y! how does a company obtain pro"tSimp y! how does a company obtain pro"t

in pursuing the committed strategies?in pursuing the committed strategies?


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In connection with both, when aIn connection with both, when acompany needs to pursue strategiescompany needs to pursue strategies

for gaining the favorable position infor gaining the favorable position inthe market, the company still has tothe market, the company still has toproduces revenue su!icient to coverproduces revenue su!icient to covercosts and pro0ts and help thecosts and pro0ts and help the

company achieving the strategiccompany achieving the strategicob$ectivesob$ectives

BS-MMFEBUGM201019

Business Model and Strategy: itsBusiness Model and Strategy: its)elationship)elationship


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Strategy and BusinessStrategy and BusinessModelModel


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The Importance of Crafting andThe Importance of Crafting and/6ecuting Strategy/6ecuting Strategy

/rafting and 9'ecuting 4trategy are/rafting and 9'ecuting 4trategy areinseparable managerial tasks to ensure that theinseparable managerial tasks to ensure that thecompany run on the intended direction6company run on the intended direction6

/rafting strategy means that the company/rafting strategy means that the companydevelop the committed action matching thedevelop the committed action matching thecompetitioncompetition9'ecuting strategy means that the company is9'ecuting strategy means that the company iscapable to run the planned actionscapable to run the planned actionsBoth actions are re=uired to achieve theBoth actions are re=uired to achieve theintended direction %survival and favorableintended direction %survival and favorableposition in the market&position in the market&


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Crafting and /6ecutingCrafting and /6ecutingStrategy Strategy

/rafting4trategy

9'ecuting4trategy

The Intended


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The strategy has to result theThe strategy has to result theimproving performanceimproving performance

In terms of pro0tability andIn terms of pro0tability and0nancial performance0nancial performance

In terms of market standingIn terms of market standingand competitive strengthand competitive strength

BS-MMFEBUGM201023


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Strategy on )e7ectionStrategy on )e7ection

(hat is strategy*(hat is strategy*

Documents

Ch 01-Strategy and Its Importance