Foundations of Strategy: Ch. 1

Shea Gordon, Kyle Harris, Bradley

Peters, Matthew Powers

Lady Gaga As the music industry

changed so did her approach

Ticket sales > CDs

Recognized opportunities in social media

Creative production team “Haus of Gaga”

360 Deals

James Dyson Initially Trained as a

designer at the Royal College of Art

Idea for Bagless Vacuum

Innovation was seen as a danger to the industry

Asian Market

Continued innovations

Alex Ferguson

1.Rebuilt scouting

2. Team > Individual 3. Relatively low funds 4. Knowledge of the

game

Went on to win 12 English Premier league titles

Goals that are simple consistent and long term

Profound understanding of the competitive environment

Objective appraisal of resources

Effective implementation

The Role of Strategy In Success

Greg “Ghostcrawler” Street Jumps From Blizzard To Riot Games

Lead Systems Designer for World of Warcraft (mmorpg)

Lead systems Designer for League of Legends (moba)

Profound understanding of the competitive environment Effective implementation?

Current Event

Sun Tzu’s Art of War

50’s-60’s: Financial Budgeting to Corporate Planning

70’s-80’s: Strategic Management

90’s: External to Internal Profit

A Brief History of Strategy

TMT (technology, media, telecommunications)

Continuous Change

Relentless Competition

CSR

Ethics

Sustainability of Natural Environment

Strategy Today

Overall Objective: How do we make money?Corporate Strategy: Industry Attractiveness: Which Industries?Business Strategy: Competitive Advantage: How to Compete?

Concepts used in ISQS 3344- Intro to Productions and Operations Management!

Corporate vs. Business Strategy

Static Strategy: Where do we want to compete? How do we compete?Dynamic Strategy: What do we want to become? What do we want to achieve? How will we get there?

Dyson’s Static/Dynamic Strategy

Static Strategy: Where does Intel compete? How does Intel compete?Dynamic Strategy: What does Intel want to become? What does Intel want to achieve? How will Intel get there?

Intel’s Static/Dynamic Strategy

Strategy is typically viewed as created by rational analysis, but is often the result of adaptation.

Intended Strategy Realized Strategy Emergent Strategy

How is Strategy Made? Design vs. Emergence

Strategy as decision support› Constrains the range of alternatives

“rule of thumb” Strategy as coordinating device

› Communication device› Strategy through goals, commitments and

performance Strategy as a target

› Sets aspirations to motivate and inspire Strategy as animation and orientation

› Achieves focus and plan

Rules of Strategy

Firms create different value for different groups:› Employees› Lenders› Landlords› Government› Owners

Stakeholder approach balances those interests

Shareholder approach values owner’s interests above all

Strategy: in whose interest?Shareholders vs. Stakeholders

The companies of English-speaking countries typically act in the interest of shareholders

The companies of Asian and continental European countries act in interest of stakeholders

During the 1990s, ‘Anglo- Saxon’ shareholder capitalism was in the ascendency

During the 21st century, shareholder value maximization started receiving bad perception.

The responsibilities of business to employees, customers, society and the natural environment are central ethical and social issues.

Strategy: in whose interest?Shareholders vs. Stakeholders

Profit maximizations provides convenient foundation for strategy analysis

The world’s most successful companies in terms of profit tend to be those that are motivated by factors other than profit.

Profit is only effective guide to action if managers know what determines profit

Profit and Purpose

Google

IKEA

SAP

Gaia House (a Buddhist retreat center in England)

Examples of Purpose in Successful Organizations

What is the purpose of some of your favorite companies?

Can you think of any large businesses that are perceived to value profit more

than purpose?

Discussion

The corporate belief that a company needs to be responsible for its actions – socially, ethically, and environmentally.› UC Berkley

“Firm as property” or “firm as a social entity?”

Corporate Social Responsibility (CSR)

January 27, 2014, Intel ranked first on the Environmental Protection Agency’s Green Power Partnership Top Partner List.

Since 2008, Intel has been the nation's largest voluntary purchaser of green power.

In 2013, Intel increased its purchases of renewable energy to meet 100 percent of its electricity use.

Intel’s CSR

Is CSR a good thing?› Should a company serve the stockholder or

the stakeholder?

› “There is one and only one social responsibility of business – to use its resources and engage in activities designed to increase its profits…” Milton Friedman

Discussion

“The foundations of mainstream strategy lie in analysis of competition and firms’ quests to outperform their rivals.”› Grant, Robert M. (2012-05-01).

Foundations of Strategy (Page 34).

Foundations of Strategy Approach

• As competition increases, the interests of different stakeholders converge around the goal of survival. Competition

• Management teams that fail to maximize the profits of their companies will be replaced by teams that do.

The market for corporate control

• Profitability over the long term requires loyalty from employees, trusting relationships with suppliers and customers, and support from governments and communities.

Convergence of stakeholder

interest• A key problem of the stakeholder approach is that

considering multiple goals and specifying trade-offs between them vastly increases the complexity of decision making.

Simplicity

Four Key Strategy Considerations

Strategic Fit

Strategy can create successful a performance, both for individuals and for organizations

Strategy origin and how it’s changed over time

Key questions and terminology in strategy

CSR debates Foundations of Strategy approach

Conclusion

Q&A