Porters Theory of Competitive Advantage

Definition of StrategyStrategy is about positioning an organization for sustainable competitive advantage. It involves making choices about which industries to participate in, what products and services to offer, and how to allocate corporate resources to achieve a sustainable competitive advantage. And its primary goal is to create value for shareholders and other stakeholders by providing customer value (de Kluyver, 2000). The Dominant Paradigm of theStrategic Management ProcessStrategyAnalysisStrategyImplementationStrategyEvaluationStrategyFormulationVisionThe Mintzberg PerspectiveFive Ps for StrategyHenry Mintzberg (1987)1. Strategy as a Plan

A consciously intended course of action. The strategy is:

Made in advance of the actions to which they applyDeveloped consciously and purposefullyUNR Master Plan http://www.unr.edu/masterplan/MasterPlanIllustrative.htm

Five Ps for StrategyHenry Mintzberg (1987)2. Strategy as a Pattern

A pattern in a stream of actions

Hume: Strategies may result from human actions but not human designsIntended StrategyEmergent StrategyRealized StrategyUNREALIZEDSTRATEGYDELIBERATESTRATEGYFive Ps for Strategy

3. Strategy as a Ploy: maneuver

4. Strategy as Position

5. Strategy as PerspectiveAn ingrained way of perceiving the worldThe HP WayWhat personality is to the individual

Plan/PloyPerspectivePositionPattern????Strategic PlanningSun Tzu:"All men see the tactics whereby I conquer, but what none can see is the strategy out of which great victory is evolved."

The Hierarchical Business Plan

Building Your Companys Vision By: Collins, James C., Porras, Jerry I., Harvard Business Review, 00178012, Sep/Oct96, Vol. 74, Issue 5

Strategic IntentEnhancing the Benefits and Overcoming the Pitfalls of Goal Setting. Strategic Vision

Vision is the art of seeing the invisible." (Jonathan Swift) "Steps to Build a VisionA well-conceived vision consists of two major components: core ideology and envisioned future:Core ideology, the yin in our scheme, defines what we stand for and why we exist. Yin is unchanging and complements yang, the envisioned future. The envisioned future is what we aspire to become, to achieve, to create-something that will require significant change and progress to attain.Core IdeologyCore values are the essential and enduring tenets of an organization. A small set of timeless guiding principles, core values require no external justification; they have intrinsic value and importance to those inside the organization. Core purpose, the second part of core ideology, is the organization's reason for being. An effective purpose reflects people's idealistic motivations for doing the company's work. It doesn't just describe the organization's output or target customers; it captures the soul of the organization. Envisioned FutureBHAGs - (pronounced BEE-hags and shorthand for Big, Hairy, Audacious Goals) A true BHAG is clear and compelling, serves as a unifying focal point of effort, and acts as a catalyst for team spirit. It has a clear finish line, so the organization can know when it has achieved the goal; people like to shoot for finish lines. A BHAG engages people - it reaches out and grabs them. It is tangible, energizing, highly focused.Vivid Description - a vibrant, engaging, and specific description of what it will be like to achieve the BHAG. Think of it as translating the vision from words into pictures, of creating an image that people can carry around in their heads. To Begin: Start with the Right GoalMantra #1 - The primary goal of Strategic Managers is to produce extraordinary results (superior long term ROI).

Strategic VisionVision = Senior management's "strategic intent."

Strategic Intent

Vision StatementsBill Gates, 1975: "A computer on every desktop and in every home.

Steve Ballmer, 1999: "Empower people through great software anytime, any place and on any device."

Mission StatementMission Statement = Documents the purpose of organizational existence and often contains a code of corporate conduct to guide management in implementing the mission (de Kluluyver, 2000).

Vision into Mission

Backing into a VisionTeam Building and Vision Building ExerciseWhat goals are worth pursuing?Corporate Social ResponsibilityLiberty means responsibility. That is why most men dread it. (George Bernard Shaw)

The Stakeholder PerspectiveThe Business Roundtablehttp://www.brtable.org/

The Roundtable believes that the basic interests of business closely parallel the interests of the American people, who are directly involved as consumers, employees,shareholders, and suppliers. Thus, chief executives, although they speak as individuals, have responsibilities which relate to many factors -- including jobs, products, services, and return on investment -- that affect the economic well-being of all Americans. Milton Friedman"The view has been gaining widespread acceptance that corporate officials...have a "social responsibility" that goes beyond serving the interests of stockholders or their members...Few trends could so thoroughly undermine the very foundations of our free society as the acceptance by corporate officials of a social responsibility other than to make as much money for their shareholders as possible."Adam SmithIt is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own self interest. We address ourselves, not to their humaninty but to their self-love, and never talk to them of our own necessities but of their advanatages (An Inquiry into the Nature and Causes of the Wealth of Nations, 1776).

Pareto Optimal From Wikipedia:Given a set of alternative allocations of, say, goods or income for a set of individuals, a movement from one allocation to another that can make at least one individual better off without making any other individual worse off is called a Pareto improvement. An allocation is Pareto efficient or Pareto optimal when no further Pareto improvements can be made. This is often called a strong Pareto optimum (SPO).Under certain idealized conditions, it can be shown that a system of free markets will lead to a Pareto efficient outcome. This is called the first welfare theorem. The first theorem is often taken to be an analytical confirmation of Adam Smith's "invisible hand" hypothesis, namely that competitive markets tend toward the efficient allocation of resources. The theorem supports a case for non-intervention in ideal conditions: let the markets do the work and the outcome will be desirable. These ideal conditions, however, collectively known as Perfect Competition, do not exist in the real world. Any particular situation may differ from these perfect conditions in less or greater degree, and the degree of this variation must factor into policy choices.

Traditional welfare economics begins with the rationality assumption. The heart of the rationality assumption is the belief that individuals are rational utility maximizers. All people are thought to behave in a highly rational and rigorously logical fashion. They attempt to figure out the consequences of every possible action they might take and the utility they can expect to receive as a result of each different act. Traditional economic analysis then argues that allowing people to act freely, and to exchange goods at will, leads to a Pareto Optimal outcomea situation in which no one can be made better off without making someone else worse off.Since a long tradition in philosophy and economics holds that interpersonal comparisons of utility cannot be made, most economists maintain that Pareto Optimal economic outcomes are the best we can do to promote human well being (Presmman and Summerfield, The Economic Contributions of Amartya Sen, Review of Political Economy, Vol 12, n1, 2000). Is Friedman Correct?Is a corporate officer morally required to maximize profit?

A Not So Simple Question in the Stem Cell DebateWhen does life begin?

Normative PhilosophyDeontologicalMoral Worth of ActionTeleologicalIntentions

UniversalismCategorical ImperativeConsequences

UtilitarianismThe greatest good for the greatest number.Adam SmithThe Theory of Moral Sentiment (1759) begins:

How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortunes of others, and render their happiness necessary to him, though he derives nothing from it, except the pleasure of seeing it. Of this kind is pity or compassion, the emotion we feel for the misery of others, when we either see it, or are made to conceive it in a very lively manner. That we often derive sorrow from the sorrows of others, is a matter of fact too obvious to require any instances to prove it; for this sentiment, like all the other original passions of human nature, is by no means confined to the virtuous or the humane, though they perhaps may feel it with the most exquisite sensibility. The greatest ruffian, the most hardened violator of the laws of society, is not altogether without it.

A First Principle is RequiredThe United States Constitution

WE the people of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America.

A conversation with Jeffrey Immelt

The Hybrid Locomotive 2007