Strategic Management PDF

 Fundamental Challenge Of Strategic Management Innovate Re-invent Turbulence Survive Complexity Prosper Competitiveness CONTINUOUS C...

 Fundamental Challenge Of Strategic Management Innovate Re-invent Turbulence Survive Complexity Prosper Competitiveness CONTINUOUS CHANGE  Characteristics of Strategic Decisions Major Resource Create Value Commitment Strategic Decisions Long Term Difficult to Commitment Reverse  Create Value Understand what drives value for your customers Talk to them, survey them, and watch their actions and reactions. In short, capture data to understand what is important to your customers and what opportunities you have to help them. Understand your value proposition The value customers receive is equal to the benefits of a product or service minus its costs. What value does your product or service create for them? What does it cost them–in terms of price plus any ancillary costs of ownership or usage (e.g., how much of their time do they have to devote to buying or using your product or service?)  Create Value Identify the customers and segments where you can create more value relative to competitors Different customers will have varying perceptions of your value relative to your competitors, based on geographic proximity, for example, or a product attribute that one segment may find particularly attractive. Create a win-win price Set a price that makes it clear that customers are receiving value but also maximizes your “take.” Satisfied customers that perceive a lot of value in your offering are usually willing to pay more, while unsatisfied customers will leave, even at a low price. Using “cost- plus” pricing (i.e., pricing at some fixed multiple of product costs) often results in giving away margin unnecessarily to some customers while losing incremental profits from others.  Major Resource Commitment Focus investments on your most valuable customers Disproportionately allocate your sales force, marketing funds, and R&D investments toward the customers and segments that you can best serve and will provide the greatest value in return. Also, allocate your growth capital toward new products and solutions that serve your best customers or can attract more customers that are similar to your best customers. Difficult to Reverse Strategic decisions maybe difficult to reverse, firms need to maintain a degree of flexibility as business environments are increasingly unpredictable.  Long Term Commitment  The essential features of strategic decisions is that they are concerned with the future.  It is not simply a continuation of a present, nothing is fixed: everything is variable. Characteristics Of Strategy Incremental Corporate and Revolutionary Business Unit Level Strategy Building Resolving Paradox Competencies Incremental Strategy Revolutionary (Radical) Strategies that manage Strategies that successfully current activities for high create major change in the value market place  The Net present value of  Introduce major new cash flow from legacy assets products or services for (the historic assets tangible which there was no pre- and non tangible owned existing market by the firm)  Estimated cash flow from growth opportunities realizable from these assets i.e. market expansion, achieving competitive superiority  Incremental and Revolutionary Strategy 6 Firm Radical Value 5 Innovation 4 Growth Opportunities 3 Legacy Assets 2 1 0 Time Growth Opportunities Radical Innovation Legacy Assets  Corporate and Business Level Unit Strategy Corporate Level Strategy Business Level Business Level Business Level Strategy Strategy Strategy Business Unit 1 Business Unit 2 Business Level 3  Corporate and Business Level Unit Strategy Corporate Business Level Business Unit Level Strategy  Deciding the overall  How a unit of the firm purpose and mix of competes successfully to businesses, partners, create value in its chosen geographic markets, markets technologies and customers of the firm so that the total entity delivers value to stakeholders which is greater than the value delivered under any other organizational arrangement Strategies as Building Capabilities Strategies must be concerned with building firm capabilities  Skills and Capabilities of Firms  Things that firms do better than its competitors  Strategy as Resolving Paradox Analytical/ Competitive/ Creative Cooperative Short Term/ Committed/ Long Term Flexible Strategic Paradoxes  The Concept of Business Model Business Model The entire system for delivering value to customers and earning a profit on that activity Value Creation Value Capture How the firm creates value for the customer Business through providing an innovative solution to a fundamental problem Model Value Value Capture Capture How the firm gets rewarded for the value it creates, and this value capture is itself dependent on competitive differentiation  Business Models Franchise Model Direct Sales/Network Model  Business Models Freemium Model Subscription Model Strategy Development Process  Achieving balance between exploitation and exploration  Combination rationale and intuitive, formal analysis  Encourage both new perspectives and experimentation  Requires substantial analytical skills , assess the importance of changes in the environment and firm  It is about intuition, judgement and feel  Understand that creative solutions generally go beyond existing data