The Importance of Strategy

The Importance of Strategy

• Strategy defined as a pursuit, discipline, cause, and explanation for organizational actions
• Strategy determines the direction for organizational decision-making
• Strategy leads towards goals, establishing a path for better organizational performance and success or failure
• Tactics are about immediate needs, are tangible and easily accomplished by one person
• Strategy is like the organizational body's invisible hand while tactics are more visible
• The difference between strategy and tactics are important, especially to the military

Strategy & Tactics

• Strategy is generals world, tactics are sergeants
• People usually associate with sergeants or managers that tell them what to do
• Strategy and tactics should be linked
• Starts up begin with strategy from one or a few minds
• Strategy and tactics become muddled as organizations grow
• Tactics require fewer resources and have lesser consequences than strategic actions
• Dysfunctional tactics and strategies will oppose each other
• Tactics flow in the same general direction as strategy

Defining Strategy

• Defining strategy is important
• In organizations 'strategy' can mean anything
• Organization strategies have commonalities such as:
  • Scope in geography, products, and markets
  • Resources in research and development, manufacturing, and financing
  • Timing in when and the sequence of actions
• Fahey and Randall added the following to be common strategy aspects:
  • A means to create or leverage environmental change
  • Always conditional, depending on internal & external conditions
  • An intellectual activity of outwitting and outmaneuvering competitors
  • Marketplace intent to be better than competition in getting customers
• Strategy principles are dynamic, fluid, and provide enlargement to simple definitions
• Dynamic and Fluid strategies contrast with those of, In Search of Excellence
• Text authors offer different definitions of strategy, even changing their own definitions
• Few words are as abused in the lexicon of organizations, as ill-defined in the management of literature, and as open to multiple meanings as strategy
• Strategy is a synonym for choices, and the sum of the choices determines organizational wins or losses

Strategy in History

• Strategy is intrinsic to human experience and inseparable with the past
• Strategy stems from the great human desire to plan and better the future
• Earliest visible manifestation of strategy comes from war, becoming the "art of the general"
• The military model is used by leaders who see their competitors as the enemy
• Alfred Sloan connected strategy to structure by combining centralization and decentralization when he redesigned General Motors

Perspectives on Strategy

• There is no consensus or dominant definition of strategy
• Practitioners avoid agreeing on a definition of strategy
• There is an obligation to inform without judgement, presenting two different schools of thought about strategic management
• Notable strategy leaders and major firms are compared
• Good strategies start with quantitative analysis
• The hardest part of good strategy is competitive analysis
• Great companies have strategies that are believable and executable
• Amazon advocates that business strategies should be built on stable things and customers will always prefer lower prices
• Starbucks strategy focuses on growth and employee retention
• Richard Branson focuses on asking the right questions including how to approach different business sectors
• You will grab attention when you present fresh takes to partners
• Customer service begins at the top and companies should strive to create a welcoming environment
• Define what your new brand will stand for
• Include all employees in on new expansion planning and ask for input

Downfall of Strategies in Business (Target v. Radio Shack)

• Target based in Minneapolis-St. Paul operates a chain of discount stores
• 1,800 Target stores, its second to Walmart as a discount retailer, and differentiated itself with being open and clean
• Target customers tend to be younger than Walmart and K-Mart customers.
• The company pursued opportunities in which it could sell things outside the US because international opportunities seemed to appear
  • They considered Canada as one of the strongest expansion routes: proximity allowed the company to advertise in both the US and Canada
  • Furthermore, the recession did not impact Canada as much as the US
• Cultural and social connections posed some problems
  • Target had no experience with the Canadian market and the US competitors were formidable
• Despite these issues, in 2011 the Target Canada Company was created -Leases for 189 Zeller discount chain stores were acquired
• Advertising campaigns were successful
• A 2014 Target push into Canada stumbled due to inconvenient store locations and that Canadian customers did not find the US look
  • Stores were poorly stocked
  • Price differences were not explained, and prices were inexplicably higher in Canada
• Analysts noted that Target was not appreciating geographic distances -The consumer changes depending on their location (Vancouver consumers are more cosmopolitan than Alberta)
• Zeller's store conversions were slow, the discount store prices were too high, and Walmart countered the low-price advantage

Target's Strategy Flaws cont.

• Apple in Canada does not have the same brand perception problem due to a different experience when dealing with them
• The company was unable to attract customers and could not keep up with staff at 124 stores opening in a year
• Target Canada lost over $941 million in 2013 leading to revenue-underperformance and supply chain shortages
• There as a late December data breach during the time, and a poor 2014 holiday season
• Store visits declined rapidly
• Target Canada filed for bankruptcy, closed its Canadian stores, and their inventory was sold off
• Radio Shack known as the company that encompasses the history of electronic devices (founded in 1921 by Theodore and Milton Deutschmann)
  • The company sold to amateur radio operators and was second to allied electric
  • hobbyists flocked to Radio Shack due to lower prices and new technologies
• Tandy's business is built on customer service that knew about inexpensive products sold to electronics hobbyists

The Radio Shack Story

• 1962: Nine stores had been established
• The firm's $7 million debt and 7.5 million losses were unsustainable
• Main creditor, Boston First National Bank, found a buyer in Charles Tandy
• Tandy moved it to Fort Worth with 100 stores in 1996
• Radio Shack sold cellphones and its services but it had difficulty competing with Sam's Club and Walmart
• Radio Shack transitioned to small electronics like cables abandoning TVs and stereos
• An innovation was created with the license-free Family Radio Service two-way service
• By 1993, operations were being closed down
  • Computer business sold to AST, trademarks sold to Memorix
• Repair services were introduced at The Repair Shop
• New slogan was "You've Got Questions, We've got Answers" - The company added more devices, stores, and acquisitions
• Problems arose when the internet started taking over and they did not jump on the e-commerce bandwagon
• Leonard Roberts became CEO in 1999 after being hired 1993 -He focused the company on cellphone activation
• Cost cutting was introduced in 2006 led by Julian Day
• Over time the company shifted away from customer support in electronics and the name was changed to RadioShack Corporation -Realistic and Optimus were stopped in the 1990's, RCA Digital Equipment store contract was revoked
  • CueCat barcode reader proved to be a fail
• In 2005, Radio Shack fired Sprint and Verizion for a 10-year contract with Cingular
  • In 2009 the brand attempted to rebrand into 'The Shack'
  • Parcel pickup services with Amazon were abandoned
• Problems simered as sales were taking precedence and the pressure increased